Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 156766 April 16, 2009

ROSARIO A. GATUS, Petitioner,

vs.
QUALITY HOUSE, INC. and CHRISTOPHER CHUA, Respondents.

DECISION

BRION, J.:

Assailed before this Court via a petition for review under Rule 45 of the Rules of Court are:

(a) the Decision of the Court of Appeals (CA) promulgated on September 25,
20021 which reversed and set aside the decision of the National Labor Relations
Commission (NLRC) promulgated on July 28, 19992 ; and

(b) the Resolution of the CA promulgated on January 15, 2003, which denied the motion
for reconsideration of its September 25, 2002 Decision. 3

THE FACTS

Petitioner Rosario A. Gatus (petitioner) started her employment as an assembler with

respondent Quality House, Inc. (respondent company) on July 14, 1987. The respondent
company placed her under preventive suspension on July 1, 1997 through a notice that partly
stated: "In view of the incident that occurred yesterday, 30 June 1997, between 4:00 to 4:30
p.m. at Mapa Avenue, Sta. Mesa, Manila involving your husband, Ferdinand Gatus, yourself and
your co-employee, Leonilo Echavez,4 you are hereby given a preventive suspension starting
today, 01 July 1997, to end on 08 July 1997, pending investigation of the case." 5

The assailed decision narrated the June 30, 1997 incident as follows:

It appears that on June 30, 1997, Mr. Echavez [petitioner] and her husband and other
employees of [respondent] corporation, namely, Nelia Burabo and Reynaldo Padayao, were in a
waiting shed when [petitioner’s] husband suddenly turned towards Echavez and mauled the
latter. Echavez fell to the ground and sustained several bruises, soft tissue swelling and
musculoskeletal pain, as shown by a medico-legal report (Rollo, p. 65) and Echavez’ affidavit
(Rollo, pp. 70-71). Witnesses executed affidavits stating that private respondent had instigated
her husband by urging him: "Sige pa! sige pa!" 6

The petitioner promptly submitted on the same date her explanation in response to the
respondent company’s July 1, 1997 notice.7 She complained in Filipino that she was
experiencing difficulties in her work, caused by her co-employees Shelly, Rene and Nilo Echavez,
due to her trade union activities. She claimed that she was being harassed by the three,
especially Nilo Echavez, because she did not join the Philippine Association of Free Labor Unions
(PAFLU). She said she preferred to be an independent unionist. She narrated that the
harassment and humiliation persisted to the point of becoming unbearable; she was left with no
recourse but to tell her husband about her workplace problems. This made her husband mad.

The petitioner responded to the preventive suspension by filing, on July 7, 1997, a complaint for
illegal suspension and damages against the respondents. In a memorandum dated July 9, 1997,
the respondent company, through Director Carmelita C. Go, terminated the petitioner’s
employment.8 The petitioner accordingly amended her complaint on September 10, 1997, to
reflect her charges of unfair labor practice and illegal dismissal, with claims for moral and
exemplary damages.

The petitioner reiterated before the labor arbiter her concerns about her workplace difficulties.
She especially bewailed the discrimination against her by the respondents and by supervisor
Leonilo Echavez on account of her active participation in the formation of the Quality House,
Inc. Workers Union (an independent labor union) and her disaffiliation, together with other
employees, from PAFLU. She reported her difficulties to her husband Ferdinand Gatus
(Ferdinand), who promptly confronted Echavez; the confrontation led to the encounter between
Ferdinand and Echavez when the latter was about to attack Ferdinand.9

The respondents’ Reply narrated the infractions the petitioner committed during her
employment that showed her continuing poor work attitude, and for which she received the
penalties of reprimand and two suspensions. She was also transferred to another section when
her work attitude turned from bad to worse. The last infraction was the June 30, 1997 incident
when, at her instigation, her husband Ferdinand physically attacked Leonilo Echavez. The
respondent company terminated her services when it found her explanation unsatisfactory. The
termination was effective upon her receipt of the respondent company’s memo dated July 9,
1997.10

Labor Arbiter Potenciano S. Caňizares, Jr. dismissed the complaint for lack of merit on March 25,
1998.11 The arbiter found no substantial evidence that showed that the respondents committed
unfair labor practice. He likewise found that the mauling incident that occurred outside, but
adjacent to, the respondent company’s premises was instigated by petitioner; that it was a
work-related matter; and that her act of bringing her husband Ferdinand to physically assault
her supervisor was worse than if she did the assault herself. The arbiter concluded that the
petitioner’s continued service with the company would be inimical to the employer’s interest,
and that her dismissal was for a just cause under Art. 282 of the Labor Code.

The petitioner appealed to the NLRC on April 30, 1998. 12 On July 28, 1999, the NLRC affirmed
the labor arbiter’s ruling, finding that the physical assault on Leonilo Echavez that the petitioner
instigated constitutes a just cause for the termination of her employment. 13

The petitioner moved for, and successfully secured, a reconsideration of the NLRC’s
decision.14 The new NLRC ruling, promulgated on June 8, 2001,15 referred the case to Labor
Arbiter Luis D. Flores for review and hearing, with instructions to rely on Article 221 of the Labor
Code if necessary.16 On November 15, 2000, Arbiter Flores submitted a report recommending
the petitioner’s reinstatement, with full backwages and without loss of seniority rights. The
NLRC found the report to be supported by the facts and the law and, on this basis, reversed its
earlier decision. The respondents unsuccessfully moved for the reconsideration of the NLRC’s
reconsidered ruling, and thereafter sought relief from the CA by way of a petition
for certiorari and prohibition under Rule 65 of the Rules of Court.

In view of the variance in the findings of fact of the labor arbiter with those of the NLRC, as well
as the allegation of grave abuse of discretion, the CA opted to review the facts of the case, as an
exception to the rule that factual findings of quasi-judicial agencies, like the NLRC, are accorded
respect and finality, if supported by substantial evidence. On September 25, 2002, the CA
promulgated the decision assailed in the present petition, ruling that the NLRC committed grave
abuse of discretion amounting to lack of jurisdiction when it reinstated the petitioner and
awarded her monetary benefits. The petitioner filed the present petition with this Court when
the CA denied, on January 15, 2003, the motion for reconsideration she subsequently filed. 17

THE PETITION

The petition is anchored on the following grounds —

1. the CA erred in reversing and setting aside the decision of the NLRC and reinstating
that of the labor arbiter, contrary to the evidence and settled jurisprudence.
 2. the CA erred in not resolving the doubt in the evidence presented by the employee
and that of the employer in favor of the employee.

In a memorandum filed on August 13, 2003,18 the petitioner claims that: the CA did not give any
plausible or legal reason in upholding the findings of the labor arbiter and disregarding those of
the NLRC – it merely brushed aside the NLRC’s well-founded conclusions and adopted the
factual findings of the labor arbiter; and, these findings of the labor arbiter rested solely on the
respondents’ naked assertions and self-serving statements, in marked contrast with the findings
of the NLRC which are entitled to respect and finality because they are supported by substantial
evidence. Citing Sanyo Travel Corporation, et al. v. NLRC, et al., 19 the petitioner posits that the
employer must prove the validity of a dismissal; it is not for the employee to prove its invalidity.

The petitioner further contends that the respondents failed to prove that her dismissal was for a
just and valid cause; thus, her dismissal was illegal for contravening Article 277 (b) 20 of the Labor
Code. She essentially questions the CA’s finding that she instigated her husband’s assault on her
supervisor. Her alleged utterance of the words "sige pa, sige pa" was never proven; even the
statements of her supervisor, Leonilo Echavez, regarding the incident (which the labor arbiter
relied upon) were inconsistent. In fact, the affidavit which Echavez submitted to the Office of
the Prosecutor did not state that she uttered the words "sige pa, sige pa"; thus, the Prosecutor’s
Office did not find sufficient evidence to conclude that she participated in the incident. The
petitioner also claims that the CA wrongly adopted the labor arbiter’s conclusion that her act of
complaining to her husband about her supervisor constitutes an admission of her participation
in the assault. She alleges that it is only natural for a wife to relate to her husband her
workplace experiences, as she has no one to talk to except the person closest to her heart; this
communication cannot thus be considered an act of instigation. The petitioner asserts that since
doubts exist regarding the alleged instigation, such doubts should be resolved in her favor.

The petitioner also submits that the act attributed to her does not pertain to the performance
of her duties, and is not an act that would render her unfit to continue working for the
company.

Further, the petitioner faults the CA for citing her poor work attitude as an additional basis for
dismissal and as a reason that militates against her retention in the company; she claimed that
this cited reason is not true, is beside the point and an afterthought. She argues that her
previous infractions may be used as a ground for dismissal only if they directly relate to the
proximate cause of dismissal; this linkage was not shown in the present case.

Lastly, the petitioner claims that she was dismissed without prior administrative investigation
that allowed her to confront her accusers and the witnesses against her; she was simply placed
under preventive suspension and eventually dismissed from work without any hearing.

THE CASE FOR RESPONDENTS

In a memorandum filed on August 21, 2003,21 the respondents raise the following issues –

1. whether the petition distinctly sets forth questions of law;

2. whether the findings of fact of the CA are conclusive;

3. whether the appellate court erred in rendering the decisions subject of the petition;
and

4. whether the petitioner’s termination from employment is valid.

On the first issue, the respondents claim that the petition is fatally defective because it did not
raise questions of law, as required under Rule 45 of the Rules of Court. They contend that the
petition calls for a re-evaluation and re-assessment of the evidence considered and passed upon
by the appellate court.
The respondents see no need for the re-examination of the facts since the CA’s findings of fact
are conclusive on the Court and are supported by substantial evidence. To stress that the
assailed CA rulings are supported by evidence, they point to the previous dismissals of the
petitioner’s complaint: first, by the labor arbiter in his March 25, 1998 decision 22 in NLRC-NCR
Case No. 00-07-04771-97; second, by the NLRC’s July 28, 1999 decision;23 and third, by the CA’s
decision24 dated September 25, 2002, and resolution25 dated January 15, 2003.

The respondents insist that the CA committed no error in reviewing the evidence presented.
While the factual findings of the NLRC are generally conclusive and binding on the appellate
courts, there were conflicting factual findings by the labor arbiter and by the NLRC, which
necessitated a re-examination of the evidence.

OUR RULING

We find no merit in the petition. The CA correctly reversed the NLRC, thereby giving way to the
labor arbiter’s ruling that the petitioner was not illegally dismissed.

At the outset, we clarify that the petition properly raises both factual and legal questions. The
variance in the factual findings below compels us to look at the evidence to settle the factual
issues raised. The petition likewise raises the legal issue of whether the petitioner has been
accorded due process.

The Evidentiary Issue

We concur with the CA that there is substantial evidence to support the conclusion that
petitioner was dismissed for a just cause. We likewise conclude that no doubt exists in the
evidence presented that would call for the application of the rule that doubts must be resolved
in favor of the employee.26

Our own reading of the evidence tells us that the assault on supervisor Leonilo Echavez on June
30, 199727 did indeed take place; that the person who assaulted Echavez was Ferdinand Gatus,
the petitioner’s husband, is also beyond doubt. Thus, the real factual issue is reduced to the
petitioner’s connection with, or participation in, the assault on Echavez. If she did cause,
motivate or participate in the attack, then the labor arbiter and the CA are correct in their
conclusions; otherwise, we should uphold the NLRC’s factual findings.

We find in the first place that the petitioner harbored a deep resentment against Nilo Echavez,
which she reported to her husband Ferdinand. This report infuriated Ferdinand. The petitioner
herself provided the basis for this conclusion when she stated in her June 30, 1997 explanation
that:

Talagang guilty si Nilo na talagang pinahihirapan ako sa trabaho. Hindi sa nagrereklamo ako;
talagang sinasadya nila dahil independent ako. Iyan ang talagang dahilan kaya nila ako
ginaganun sa trabaho. Sinabi ko kay Rene noong Sabado dahil hindi ko na matiis ang ginagawa
nila sa akin. Sabi ni Rene kayo ang nagsisimula eh. At saka sa trabaho nakikita ko si Shelly, Nelia
at Nilo na nagtatawanan tapos nakatingin sa akin. Minsan nahuli ko si Nelia at Shelly na
nahihirapan na raw ako. [sic] Kaya sinumbong ko si Nilo sa mister ko kaya nagalit.

More than providing for the motivation, the petitioner was at the scene of the attack and
actively encouraged it. Thus, the CA concluded—

It is undisputed that private respondent’s act of instigating her husband to inflict more violence
("Sige pa! Sige pa!") on her supervisor enraged and emboldened him. The incident was work-
related having been brought about by respondent’s constant complaints about perceived
discrimination against her in the workplace. The fact that her husband, who was not an
employee of the corporation, came to the waiting shed at the precise time that the
unsuspecting supervisor Echavez was in the waiting shed supported Arbiter Caňizares’ finding
that the husband purposely went to the company’s premises to confront the supervisor and
thereafter to maul the latter.
The petitioner tried to downplay her involvement in the incident of June 30, 1997 with her
denial that she urged her husband to continue hitting Echavez. She contended that she could
not have uttered the exhortatory remarks "sige pa, sige pa" at the moment her husband was
attacking Echavez, because Echavez himself did not mention it in his affidavit before the
Prosecutor’s Office. Echavez, however, referred to the petitioner’s presence and participation in
the Incident Report he filed with the respondent company.28 He was corroborated on this point
by two of the petitioner’s co-employees, Nelia Burabo and Reynaldo Padayao, who witnessed
the incident.29 Significantly, the petitioner had nothing to say about the corroborating
statements of Burabo and Padayao.

Under these facts, Ferdinand Gatus would not have acted as he did in the afternoon of June 30,
1997 had petitioner not worked him up into a sufficiently irate mood that led to the attack. In
effect, petitioner pushed her husband to get back at Echavez for what the latter had done to her
at the workplace. Beyond providing mere motivation, petitioner was even at the scene of the
attack and actively prodded her husband to continue with the attack. This is a form of
participation no less that led the CA to conclude that –

The mauling incident that resulted from the prodding of private respondent shows her to be
unfit to continue working for her employer. Her admitted grievances translated into the
concrete act of violence performed against her supervisor who represented her employer.
Undoubtedly, her continued employment would cause undue strain in the workplace. Taken
lightly, the incident would inspire the breakdown of respect and discipline among the
workforce.

That the petitioner’s transgression merits the penalty of dismissal is fully supported by our past
rulings.30 It is, at the very least, a serious misconduct of a grave and aggravated character that
directly violated the personal security of another employee due to an employment-related
cause. Thus, the disciplinary measure imposed is not a matter where the company and we
should tread carefully and show administrative leniency.

The Due Process Issue

Similarly, the CA was correct when it concluded that the petitioner was not denied due process
in the consideration of her dismissal. The petitioner insinuated in this regard that due process
requires a formal hearing as an absolute requirement in employee dismissals.

The pertinent provision of the Labor Code on the matter of hearing is Article 277, which
provides—

ART. 277. Miscellaneous provisions. – x x x (b) Subject to the constitutional right of workers to
security of tenure and their right to be protected against dismissal except for a just and
authorized cause and without prejudice to the requirement of notice under Article 283 of this
Code, the employer shall furnish the worker whose employment is sought to be terminated a
written notice containing a statement of the causes for termination and shall afford the latter
ample opportunity to be heard and to defend himself with the assistance of his representative if
he so desires in accordance with company rules and regulations promulgated pursuant to
guidelines set by the Department of Labor and Employment. Any decision taken by the
employer shall be without prejudice to the right of the worker to contest the validity or legality
of his dismissal by filing a complaint with the regional branch of the National Labor Relations
Commission. The burden of proving that the termination was for a valid or authorized cause
shall rest on the employer. The Secretary of the Department of Labor may suspend the effects
of the termination pending resolution of the dispute in the event of a prima facie finding by the
appropriate official of the Department of Labor and Employment before whom such dispute is
pending that the termination may cause a serious labor dispute or is in implementation of a
mass lay-off.

We note and stress once more for everyone’s guidance that the law itself only requires "ample
opportunity to be heard." The essence of this requirement as an element of due process in
administrative proceedings is the chance to explain one’s side. Jurisprudence has amply clarified
that administrative due process cannot be fully equated with due process in the strict judicial
sense,31 and that there is no violation of due process even if no formal or actual hearing was
conducted, provided a party is given a chance to explain his side. What is frowned upon is the
denial of the opportunity to be heard.32 We have decisively settled this issue in Felix B. Perez
and Amante G. Doria v. Philippine Telegraph and Telephone Company and Jose Luis Santiago, 33 a
decision penned by Mr. Justice Renato C. Corona, where we held:

Article 277(b) of the Labor Code provides that, in cases of termination for a just cause, an
employee must be given "ample opportunity to be heard and to defend himself." Thus, the
opportunity to be heard afforded by law to the employee is qualified by the word "ample"
which ordinarily means "considerably more than adequate or sufficient." In this regard, the
phrase "ample opportunity to be heard" can be reasonably interpreted as extensive enough to
cover actual hearing or conference. To this extent, Section 2(d), Rule I of the Implementing
Rules of Book VI of the Labor Code is in conformity with Article 277(b).

Nonetheless, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code should
not be taken to mean an actual hearing or conference is a condition sine qua non for
compliance with the due process requirement in termination of employment. The test for the
fair procedure guaranteed under Article 277(b) cannot be whether there has been a formal
pretermination confrontation between the employer and the employee. The "ample
opportunity to be heard" standard is neither synonymous nor similar to a formal hearing. To
confine the employee’s right to be heard to a solitary form narrows down that right. It deprives
him of other equally effective forms of adducing evidence in his defense. Certainly, such an
exclusivist and absolutist interpretation is overly restrictive. The "very nature of due process
negates any concept of inflexible procedures universally applicable to every imaginable
situation."

The standard for the hearing requirement, ample opportunity, is couched in general language
revealing the legislative intent to give some degree of flexibility or adaptability to meet the
peculiarities of a given situation. To continue it to a single rigid proceeding such as a formal
hearing will defeat its spirit.

Significantly, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code itself
provides that the so-called standards of due process outline therein shall be observed
"substantially," not strictly. This is a recognition that while a formal hearing or conference is
ideal, it is not an absolute, mandatory or exclusive avenue of due process.1avvphi1

An employee’s right to be heard in termination cases under Article 277(b) as implemented by

Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code should be
interpreted in broad strokes. It is satisfied not only by a formal face to face confrontation but by
any meaningful opportunity to controvert the charges against him and to submit evidence in
support thereof.

A hearing means that a party should be given a chance to adduce his evidence to support his
side of the case and that the evidence should be taken into account in the adjudication of the
controversy. "To be heard" does not mean verbal argumentation inasmuch as one may be heard
just as effectively through written explanations, submissions or pleadings. Therefore, while the
phrase "ample opportunity to be heard" may in fact include an actual hearing, it is not limited
to a formal hearing only. In other words, the existence of an actual, formal "trial type" hearing,
although preferred is not absolutely necessary to satisfy the employee’s right to be heard.

In the present case, we significantly note that petitioner, after filing her explanation in response
to the employer’s July 1, 1997 memo, never asked for any clarificatory hearing during the plant-
level proceedings. She also had ample opportunity to explain her side vis-à-vis the principal
charge against her — her involvement in the incident of June 30, 1997. It is a matter of record
that the petitioner lost no time in submitting the required explanation, 34 as she submitted it on
the very same day that the memo was served on her.35 The explanation, in Filipino, narrated
among others the indifferent and discriminatory treatment she had been receiving from the
group of Nilo Echavez, which she also told her husband who got mad. Taken together with the
testimonies of other witnesses who gave their statements on how the petitioner encouraged
her husband to attack Echavez (all of which were duly and seasonably disclosed), the petitioner
cannot claim that the respondent company did not give her ample opportunity to be heard. All
told, we are convinced that the respondent company acted based on a valid cause for dismissal
and observed the required procedures in so acting.

On the previous infractions that the CA cited in justifying the petitioner’s dismissal, 36 we note
that the CA did not dismiss the petitioner on the basis of these previous infractions. These were
cited, more than anything else, as background and supporting information, regarding the
petitioner’s work attitude: she had low regard for her job and would not hesitate to disrupt the
workplace and her co-employees, as she had manifested in the June 30, 1997 incident. That
these infractions do not have direct bearing on the proximate cause for her dismissal – the
incident of June 30, 1997 – is not a valid argument, as they were not in fact cited as
considerations directly related to the proximate cause; they merely served as gauges of her
work attitude and her continued fitness to stay in the respondent company.

WHEREFORE, premises considered, we DENY the petition for lack of merit. Costs against the
petitioner.

SO ORDERED.

ARTURO D. BRION
Associate Justice

WE CONCUR:

LEONARDO A. QUISUMBING
Associate Justice
Chairperson

CONCHITA CARPIO MORALES DANTE O. TINGA

Associate Justice Associate Justice

PRESBITERO J. VELASCO, JR.

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.

LEONARDO A. QUISUMBING
Associate Justice
Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s
Attestation, it is hereby certified that the conclusions in the above Decision were reached in
consultation before the case was assigned to the writer of the opinion of the Court’s Division.

REYNATO S. PUNO
Chief Justice

Footnotes
1
Penned by Associate Justice Portia A. Hormachuelos, and concurred in by Associate
Justice Elvi S. John Asuncion and Associate Justice Juan Q. Enriquez; rollo, pp. 51-57.
2
Id., pp. 110-114.
3
Id., p. 59.
4
Also referred to as Nilo Echavez.
5
Id., p. 60.
6
Id., p. 52, par. 1.
7
Id., p. 61.
8
Id., p. 62.
9
Supra note 6.
10
Supra note 8.
11
Rollo, pp. 95-101.
12
Id., pp. 102-109.
13
Id., pp. 110-114.
14
Id., pp. 115-125.
15
Id., pp. 127- 137.
16
Art. 221 - Technical rules not binding and prior resort to amicable settlement. - In any
proceeding before the Commission or any of the Labor Arbiters, the rules of evidence
prevailing in courts of law or equity shall not be controlling and it is the spirit and
intention of this Code that the Commission and its members and the Labor Arbiters shall
use every and all reasonable means to ascertain the facts.
17
Supra note 3.
18
Rollo, pp. 171-202.
19
G.R. No. 121449, October 2, 1997, 280 SCRA 129.
20
x x x The burden of proving the termination was for a valid or authorized cause shall
rest on the employer x x x.
21
Rollo, pp. 205-237.
22
Supra note 11.
23
Supra note 13.
24
Supra note 1.
25
Supra note 3.
26
Sy v. Court of Appeals, G.R. No. 142293, February 27, 2003, 398 SCRA 301.
27
Supra note 5.
 28
Rollo, pp. 79-80; Annex "G," Respondents’ Position Paper in NLRC-NCR-No. 00-07-
04771-97.
29
Id., pp. 80-89.
30
Royo v. NLRC, G.R. No. 109609, May 8, 1996, 256 SCRA 639; Flores v. NLRC, G.R. No.
109362, May 15, 1996, 256 SCRA 735.
31
Concerned Officials of MWSS v. Vasquez, G.R. No. 109113, January 25, 1995, 240 SCRA
502.
32
Phil. Airlines, Inc. v. NLRC, G.R. No. 87353, July 3, 1991, 198 SCRA 748; see also Audion
Electric Co. v. NLRC, G.R. No. 106648, June 19, 1999, 308 SCRA 341.
33
G.R. No. 152048, March 31, 2009.
34
Supra note 6.
35
Supra note 4.
36
Rollo, p. 198.

The Lawphil Project - Arellano Law Foundation

CONCURRING and DISSENTING OPINION

VELASCO, JR., J.:

Insofar as the existence of a valid cause for the dismissal of petitioner Rosario Gatus is
concerned, I concur with the ponencia of my esteemed colleague. I, however, would like to take
exception to the conclusion that petitioner was not denied due process in the consideration of
her dismissal, she having been given the opportunity to be heard when "the company asked her
to explain her side vis-à-vis the principal charge against her––her involvement in the [mauling]
incident of June 30, 1997."1

As can be gathered from the ponencia, on July 1, 1997, respondent company placed petitioner
under preventive suspension pending an investigation on the June 30 incident referred to,
where she allegedly urged her husband to continue hitting her co-employee, one Nilo Echavez.
On the very day she received the preventive suspension notice, petitioner submitted her
explanation. Following petitioner’s filing of a complaint for illegal suspension––later amended to
cover illegal dismissal––the company, via a memorandum of July 9, 1997, terminated
petitioner’s employment without a formal hearing.

My dissent revolves around only on this main issue: Was Gatus, before her dismissal, entitled to
a formal hearing or conference as mandated by the Implementing Rules and Regulations (IRR)
of Book V of the Labor Code?

The ponencia answered the poser in the negative. As there held, Article 277(b) of the Labor
Code merely requires the employer to provide an employee with ample opportunity to be
heard, which in turn means the chance to explain one’s side. The ponencia would seem to
suggest that Section 2(b), Rule XXIII of the IRR of V of the Code,2 by requiring a formal hearing,
went beyond the terms and provisions of the Labor Code.

With due respect, I beg to disagree with the ponencia’s resolution of this issue for the following
reasons:
(1) Art. 277(b) of the Labor Code provides that:

(b) Subject to the constitutional right of workers to security of tenure and their right to
be protected against dismissal except for a just and authorized cause and without
prejudice to the requirement of notice under Article 283 of this Code, the employer shall
furnish the worker whose employment is sought to be terminated a written notice
containing a statement of the causes for termination and shall afford the latter ample
opportunity to be heard and to defend himself with the assistance of his representative
if he so desires in accordance with company rules and regulations promulgated pursuant
to guidelines set by the Department of Labor and Employment. Any decision taken by
the employer shall be without prejudice to the right of the worker to contest the validity
or legality of his dismissal xxx [before] the [NLRC]. The burden of proving that the
termination was for a valid or authorized cause shall rest on the employer. (Emphasis
supplied.)

As I articulated in my concurring and dissenting opinions in a similar case, 3 Art. 277(b)

makes reference to according workers "ample opportunity to be heard and defend
themselves," but without going into specifics as to what would constitute "ample
opportunity." On the postulate, however, that all reasonable doubts in the interpretation
of labor laws should be resolved in favor of labor,4 the words "ample opportunity"
should be given a liberal construction as would advance the rights of workers. Webster
defines "ample" as "considerably more than adequate or sufficient; marked by more
than adequate measure of strength, force, effectiveness or influence." 5 In the context of
Art. 277(b) of the Code, "ample opportunity" connotes any kind of assistance that
management must accord the employee to enable him to prepare adequately for his
defense, including legal representation,6 irresistibly suggesting that ample opportunity
very well covers actual hearing or conference. To put it a bit differently, opportunity to
be heard does not exclude an actual or formal hearing since such requirement would
grant more than sufficient chance for an employee to be heard and adduce evidence. In
this sense, the perceived discrepancy between Art. 277(b) and the IRR in question is
more imagined than real and definitely not irreconcilable.

It is true that Art. 277(b) speaks only of ample opportunity to be heard, not "actual
hearing." But as earlier discussed, if not implied, the requisite hearing is subsumed in
the phrase "ample opportunity to be heard and to defend himself with the assistance of
his representative if he so desires." Even if the term "actual hearing" is not used in Art.
277(b), the same thing is true as regards the second written notice informing the
employee of the employer’s decision which is likewise unclear in said provision. Thus,
the reality that Art. 277(b) does not expressly mention actual hearing is not, without
more, a legal impediment for the Department of Labor and Employment (DOLE)
Secretary issuing a rule (Sec. 2[d][ii], Rule I, Implementing Rules of Book VI of the Labor
Code) implementing the provision that what really is contemplated is an actual hearing
or conference. It cannot be overemphasized that the Secretary of Labor likewise issued a
rule on the need for a second written notice on the decision rendered in illegal dismissal
proceedings notwithstanding the glaring silence of Art. 277(b) on the need for a written
notice of the employer’s/management’s decision.

(2) As earlier indicated and as Art. 4 of the Labor Code no less states, all doubts in the
implementation and interpretation of the provisions of the Code, including its IRR, shall
be resolved in favor of labor. Since the Code itself invests the DOLE the quasi-legislative
power to issue rules and regulations to set the standard guidelines for the realization of
the provision, then the IRR should be liberally construed to favor workers. The IRR, being
a result of such rule-making authority, has the force and effect of a statute. It bears to
stress that Art. 277 of the Code granted the DOLE the authority to develop the
guidelines to enforce the process. It is obviously pursuant to this mandate that the DOLE
formulated the ensuing Rule I, Sec. 2(d) of the Implementing Rules of Book VI of the
Labor Code prescribing due procedural standards in termination cases:
(d) In all cases of termination of employment, the following standards of due process
shall be substantially observed:

For termination of employment based on just causes defined in Article 282 of the Labor
Code:

(i) A written notice served on the employee specifying the ground or grounds for
termination, and giving said employee reasonable opportunity within which to
explain his side.

(ii) A hearing or conference during which the employee concerned, with the
assistance of counsel if he so desires is given opportunity to respond to the
charge, present his evidence, or rebut the evidence presented against him.

(iii) A written notice of termination served on the employee, indicating that upon
due consideration of all the circumstances, grounds have been established to
justify his termination.

The standards of due process embodied in Sec. 2(b), Rule XXIII, Implementing Rules of
Book V of the Labor Code, and now in Sec. 2(d)(ii), Rule I, Implementing Rules of Books
VI of the Labor Code, do not go beyond the terms of the Labor Code. If at all, the IRR
assumes a clarificatory function, encapsulating, as it were, a rather abstract concept into
a concrete idea. Indeed, under what adjudicatory setting can an employer best accord
employees with an ample opportunity to be heard and defend themselves with the
assistance of a representative than in a formal hearing or conference which the IRR
provides? It is in that scenario that the playing field becomes even, where the
employees are at least given a reasonable chance to respond to the charges made
against them, present their evidence in chief, or rebut evidence in a formal hearing or
conference. Therefore, in my humble opinion, there is no discrepancy between the law
and the rules implementing the Labor Code.

(3) Denying the employees of their right to a hearing in a termination case would
necessarily deny them the opportunity to belie the inculpatory allegations made in the
first notice and prove their innocence, if that be the case. Notice can be taken of the
limited opportunity given to the employees by the directive in the first written notice
that embodies the charges. As it usually happens, the directive allows them, within a
fixed limited period, just to explain their side, a veritable show-cause routine, but
without the right to present evidence. Moreover, a hearing gives employees a lead time
to secure expert legal advice to brief him of his rights and obligations under, and the
intricacies of, the law. A mere first notice is not adequate enough for employees to
collate and sift evidence for their defense. Most often, the first notice merely serves as
or is limited to a general notice which cites the company rules breached, without
detailing the facts and circumstances relevant to the charges and without appending the
pieces of supporting evidence. Lastly, the holding of an actual hearing will obviate the
obnoxious practice of railroaded dismissals, as the employers would be compelled
present convincing evidence to support the charges. In all, the advantages far outweigh
the disadvantages in holding an actual hearing.

(4) On the practical viewpoint, a hearing affords both the employer and the employee
the opportunity to address minor irritants and settle any misunderstanding via the use
of alternative dispute resolution to avoid the filing of labor relation cases. It is important
that a hearing is prescribed by the law since this is the most opportune time for
discussing amicable settlement. Relations between the parties may still be cordial, and
the likelihood of a compromise is high during the hearing stage. Once a termination
order issues, the possibility of an amicable settlement is almost nil owing to the ill-
feelings engendered by the dismissal proceedings. Thus, a hearing can most certainly
assist the parties come up with an out-of-court settlement which would be less
expensive, creating a "win-win" situation for them.
 (5) Last, but not least, a liberal interpretation of Art. 277(b) of the Labor Code would
hew with the prescription of Art. XIII of the Constitution on full protection to labor and
the promotion of social justice, a basic postulate that "those who have less in life must
have more in law." Social justice commands that the State, as parens patriae, and
guardian of the general welfare of the people, afford protection to the needy and the
less fortunate members of society, meaning the working class. This command becomes
all the more urgent in labor cases where security of tenure is an integral issue. The Court
said so in Rance v. NLRC, where we declared:

It is the policy of the state to assure the right of workers to "security of tenure" x x x. The
guarantee is an act of social justice. When a person has no property, his job may possibly be his
only possession or means of livelihood. Therefore, he should be protected against any arbitrary
deprivation of his job. Article 280 of the Labor Code has construed security of tenure as
meaning that "the employer shall not terminate the services of an employee except for a just
cause or when authorized by" the code x x x. Dismissal is not justified for being arbitrary where
the workers were denied due process x x x and a clear denial of due process, or constitutional
right must be safeguarded against at all times.7 x x x (Citations omitted.)

In the normal course of an employer-employee relationship, the latter is oftentimes on the

disadvantage or inferior position. Without the mandatory requirement of a hearing, employees
may be unjustly terminated from their work, effectively depriving them from their usual means
of livelihood. One’s right to his work is a property right well within the context of the
constitutional guarantee8 against depriving one of property without due process.

The Court, to be sure, has applied the imperatives of social justice even to instances of
justifiable termination by granting equitable relief to the erring employees. We also termed
social justice as "compassionate" justice.9 As it were, poverty and gross inequality are among
the underlying major problems of the country. Given this postulate, laws and procedures which
have the aim of alleviating those problems should be liberally construed and interpreted in
favor of the underprivileged. Thus, the Labor Code should receive a liberal interpretation as to
attain its lofty purpose.10 That should have been the case here.

PRESBITERO J. VELASCO, JR.

Associate Justice

Footnotes
1
Ponencia, p. 11.
2
Now only Sec. 2(d)(ii), Rule I, Implementing Rules of Book VI of the Labor Code
remains, as amended by Department Order No. 40-03, Series of 2003.
3
Perez v. PT &T, G.R. No. 152048, April 7, 2008.
4
IPI v. Sec. of Labor, G.R. Nos. 92181-83, January 9, 1992.
5
Webster’s Third New International Dictionary of the English Language Unabridged 74
(1993).
6
Balayan Colleges v. NLRC, 255 SCRA 1; Manebo v, NLRC, 229 SCAD 240.
7
No. L-68147, June 30, 1988, 163 SCRA 279, 284-285.
8
Batangas Laguna Tayabas Bus Co. v. Court of Appeals, No. L-38482, June 18, 1976, 71
SCRA 470, 480.
 9
Tanala, v. NLRC, G.R. No. 116588, January 24, 1996, 252 SCRA 314.
10
Manahan v. Employees’ Compensation Commission, No. L-44899, April 22, 1981, 104
SCRA 198, 202.

Rosario A. Gatus vs. Quality House, Inc. and Christopher Chua GR No.
156766 Apr 16, 2009 Brion, J.

Facts:
Petitioner Rosario A. Gatus started her employment as an assembler with respondent Quality
House, Inc. on July 14, 1987. The respondent company placed her under preventive suspension
on July 1, 1997, through a notice, because of the incident that occurred on 30 June 1997
involving petioner’s husband, Ferdinand Gatus, and co-employee, Leonilo Echavez.
Petitioner submitted her explanation in response to the respondent company, providing that
she was experiencing difficulties in her work, caused by her co-employees Shelly, Rene and Nilo
Echavez, due to her trade union activities. She claimed that she was being harassed by the
three, especially Nilo Echavez, because she did not join the Philippine Association of Free Labor
Unions (PAFLU). She narrated that the harassment and humiliation persisted to the point of
becoming unbearable; she was left with no recourse but to tell her husband about her
workplace problems. This made her husband mad.
Petiotioner filed a complaint for illegal suspension and damages against and subsequently after
her dismissal, charges of unfair labor practice and illegal dismissal, with claims for moral and
exemplary damages.
The respondents' Reply narrated the infractions the petitioner committed during her
employment that showed her continuing poor work attitude, and for which she received the
penalties of reprimand and two suspensions.
Labor Arbiter Potenciano S. Cañizares, Jr. dismissed the complaint for lack of merit. The arbiter
found no substantial evidence that showed that the respondents committed unfair labor
practice, and that her dismissal was for a just cause under the Labor Code. The NLRC affirmed
the labor arbiter's ruling.
Petitioner secured a motion for reconsideration from NLRC, which referred the case to Labor
Arbiter Luis D. Flores. Arbiter Flores, who submitted a report recommending the petitioner's
reinstatement, with full backwages and without loss of seniority rights. The NLRC found the
report to be supported by the facts and the law and, on this basis, reversed its earlier decision.
The respondents sought relief from the CA by way of a petition for certiorari and prohibition.
The CA ruled that the NLRC committed grave abuse of discretion amounting to lack of
jurisdiction when it reinstated the petitioner and awarded her monetary benefits.
Issue:
Whether or not the petitioner's termination from employment is valid.
Ruling:
Yes, petioner’s termination from employment is valid. The CA correctly reversed the NLRC.
Beyond providing mere motivation, petitioner was even at the scene of the attack and actively
prodded her husband to continue with the attack. This is a form of participation shows her to be
unfit to continue working for her employer. Her admitted grievances translated into the
concrete act of violence performed against her supervisor, who represented her employer.
Undoubtedly, her continued employment would cause undue strain in the workplace. The
petitioner's transgression merits the penalty of dismissal. It is, at the very least, a serious
misconduct of a grave and aggravated character that directly violated the personal security of
another employee due to an employment-related cause.
We have settled in Perez v. PT&T that, “in cases of termination for a just cause, an employee
must be given "ample opportunity to be heard and to defend himself." Thus, the opportunity to
be heard afforded by law to the employee is qualified by the word "ample" which ordinarily
means "considerably more than adequate or sufficient.”. Moreover, an employee's right to be
heard in termination cases under Article 277(b) as implemented by Section 2(d), Rule I of the
Implementing Rules of Book VI of the Labor Code is satisfied not only by a formal face to face
confrontation but by any meaningful opportunity to controvert the charges against him and to
submit evidence in support thereof. Petitioner was not denied due process.
WHEREFORE, premises considered, we DENY the petition for lack of merit. Costs against the
petitioner. SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION
G.R. No. L-28742 April 30, 1982

VIRGILIO CAPATI, plaintiff-appellant,

vs.
DR. JESUS P. OCAMPO, defendant-appellee.

ESCOLIN, J.:

We set aside the order of the Court of First Instance of Pampanga in Civil Case No. 3188 which
dismissed the plaintiff's complaint on ground of improper venue.

Plaintiff Virgilio Capati a resident of Bacolor, Pampanga, was the contractor of the Feati Bank for
the construction of its building in Iriga, Camarines Sur. On May 23, 1967, plaintiff entered into a
sub-contract with the defendant Dr. Jesus Ocampo, a resident of Naga City, whereby the latter,
in consideration of the amount of P2,200.00, undertook to construct the vault walls, exterior
walls and columns of the said Feati building in accordance with the specifications indicated
therein. Defendant further bound himself to complete said construction on or before June 5,
1967 and, to emphasize this time frame for the completion of the construction job, defendant
affixed his signature below the following stipulation written in bold letters in the sub-contract:
"TIME IS ESSENTIAL, TO BE FINISHED 5 JUNE' 67."

Claiming that defendant finished the construction in question only on June 20, 1967, plaintiff
filed in the Court of First Instance of Pampanga an action for recovery of consequential damages
in the sum of P85,000.00 with interest, plus attorney's fees and costs. The complaint
alleged inter alia that "due to the long unjustified delay committed by defendant, in open
violation of his express written agreement with plaintiff, the latter has suffered great irreparable
loss and damage ... "

Defendant filed a motion to dismiss the complaint on the ground that venue of action was
improperly laid. The motion was premised on the stipulation printed at the back of the contract
which reads:

14. That all actions arising out, or relating to this contract may be instituted in
the Court of First Instance of the City of Naga.

Plaintiff filed an opposition to the motion, claiming that their agreement to hold the venue in
the Court of First Instance of Naga City was merely optional to both contracting parties. In
support thereof, plaintiff cited the use of the word "may " in relation with the institution of any
action arising out of the contract.

The lower court, in resolving the motion to dismiss, ruled that "there was no sense in providing
the aforequoted stipulation, pursuant to Sec. 3 of Rule 4 of the Revised Rules of Court, if after
all, the parties are given the discretion or option of filing the action in their respective
residences," and thereby ordered the dismissal of the complaint.

Hence, this appeal.

The rule on venue of personal actions cognizable by the courts of first instance is found in
Section 2 (b), Rule 4 of the Rules of Court, which provides that such "actions may be
commenced and tried where the defendant or any of the defendants resides or may be found,
or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff." The said
section is qualified by the following provisions of Section 3 of the same rule:

By written agreement of the parties the venue of an action may be changed or

transferred from one province to another.
 Defendant stands firm on his contention that because of the aforequoted
covenant contained in par. 14 of the contract, he cannot be sued in any court
except the Court of First Instance of Naga City. We are thus called upon to rule on
the issue as to whether the stipulation of the parties on venue is restrictive in the
sense that any litigation arising from the contract can be filed only in the court of
Naga City, or merely permissive in that the parties may submit their disputes not
only in Naga City but also in the court where the defendant or the plaintiff
resides, at the election of the plaintiff, as provided for by Section 2 (b) Rule 4 of
the Rules of Court.

It is well settled that the word "may" is merely permissive and operates to confer
discretion upon a party. Under ordinary circumstances, the term "may be"
connotes possibility; it does not connote certainty. "May" is an auxillary verb
indicating liberty, opportunity, permission or possibility. 1

In Nicolas vs. Reparations Commission 2, a case involving the interpretation of a stipulation as to

venue along lines similar to the present one, it was held that the agreement of the parties
which provided that "all legal actions arising out of this contract ... may be brought in and
submitted to the jurisdiction of the proper courts in the City of Manila," is not mandatory.

We hold that the stipulation as to venue in the contract in question is simply permissive. By the
said stipulation, the parties did not agree to file their suits solely and exclusively with the Court
of First Instance of Naga. They merely agreed to submit their disputes to the said court, without
waiving their right to seek recourse in the court specifically indicated in Section 2 (b), Rule 4 of
the Rules of Court.

Since the complaint has been filed in the Court of First Instance of Pampanga, where the
plaintiff resides, the venue of action is properly laid in accordance with Section 2 (b), Rule 4 of
the Rules of Court.

WHEREFORE, the order appealed from is hereby set aside. Let the records be returned to the
court of origin for further proceedings. Costs against defendant-appellee.

SO ORDERED.

Barredo (Chairman), Aquino, De Castro and Ericta, JJ., concur.

Concepcion, Jr. and Abad Santos, J., are on leave.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION
G.R. No. L-52415 October 23, 1984

INSULAR BANK OF ASIA AND AMERICA EMPLOYEES' UNION (IBAAEU), petitioner,

vs.
HON. AMADO G. INCIONG, Deputy Minister, Ministry of Labor and INSULAR BANK OF ASIA
AND AMERICA, respondents.

Sisenando R. Villaluz, Jr. for petitioner.

Abdulmaid Kiram Muin colloborating counsel for petitioner.

The Solicitor General Caparas, Tabios, Ilagan Alcantara & Gatmaytan Law Office and Sycip,
Salazar, Feliciano & Hernandez Law Office for respondents.

MAKASIAR, J.:ñé+.£ªwph!1

This is a petition for certiorari to set aside the order dated November 10, 1979, of respondent
Deputy Minister of Labor, Amado G. Inciong, in NLRC case No. RB-IV-1561-76 entitled "Insular
Bank of Asia and America Employees' Union (complainant-appellee), vs. Insular Bank of Asia and
America" (respondent-appellant), the dispositive portion of which reads as follows: têñ.£îhqwâ£

xxx xxx xxx

ALL THE FOREGOING CONSIDERED, let the appealed Resolution en banc of the
National Labor Relations Commission dated 20 June 1978 be, as it is hereby, set
aside and a new judgment. promulgated dismissing the instant case for lack of
merit (p. 109 rec.).

The antecedent facts culled from the records are as follows:

On June 20, 1975, petitioner filed a complaint against the respondent bank for the payment of
holiday pay before the then Department of Labor, National Labor Relations Commission,
Regional Office No. IV in Manila. Conciliation having failed, and upon the request of both
parties, the case was certified for arbitration on July 7, 1975 (p. 18, NLRC rec.

On August 25, 1975, Labor Arbiter Ricarte T. Soriano rendered a decision in the above-entitled
case, granting petitioner's complaint for payment of holiday pay. Pertinent portions of the
decision read: têñ.£îhqwâ£

xxx xxx xxx

The records disclosed that employees of respondent bank were not paid their
wages on unworked regular holidays as mandated by the Code, particularly
Article 208, to wit: têñ.£îhqwâ£

Art. 208. Right to holiday pay.

(a) Every worker shall be paid his regular daily wage during regular
holidays, except in retail and service establishments regularly
employing less than 10 workers.

(b) The term "holiday" as used in this chapter, shall include: New
Year's Day, Maundy Thursday, Good Friday, the ninth of April the
first of May, the twelfth of June, the fourth of July, the thirtieth of
November, the twenty-fifth and the thirtieth of December and the
day designated by law for holding a general election.
 xxx xxx xxx

This conclusion is deduced from the fact that the daily rate of pay of the bank
employees was computed in the past with the unworked regular holidays as
excluded for purposes of determining the deductible amount for absences
incurred Thus, if the employer uses the factor 303 days as a divisor in
determining the daily rate of monthly paid employee, this gives rise to a
presumption that the monthly rate does not include payments for unworked
regular holidays. The use of the factor 303 indicates the number of ordinary
working days in a year (which normally has 365 calendar days), excluding the 52
Sundays and the 10 regular holidays. The use of 251 as a factor (365 calendar
days less 52 Saturdays, 52 Sundays, and 10 regular holidays) gives rise likewise to
the same presumption that the unworked Saturdays, Sundays and regular
holidays are unpaid. This being the case, it is not amiss to state with certainty
that the instant claim for wages on regular unworked holidays is found to be
tenable and meritorious.

WHEREFORE, judgment is hereby rendered:

(a) xxx xxxx xxx

(b) Ordering respondent to pay wages to all its employees for all regular h(olidays
since November 1, 1974 (pp. 97-99, rec., underscoring supplied).

Respondent bank did not appeal from the said decision. Instead, it complied with the order of
Arbiter Ricarte T. Soriano by paying their holiday pay up to and including January, 1976.

On December 16, 1975, Presidential Decree No. 850 was promulgated amending, among others,
the provisions of the Labor Code on the right to holiday pay to read as follows: têñ.£îhqwâ£

Art. 94. Right to holiday pay. — (a) Every worker shall be paid his regular daily
wages during regular holidays, except in retail and service establishments
regularly employing less than ten (10) workers;

(b) The employer may require an employee to work on any holiday but such
employee shall be paid a compensation equivalent to twice his regular rate and

(c) As used in this Article, "holiday" includes New Year's Day, Maundy Thursday,
Good Friday, the ninth of April, the first of May, the twelfth of June, the fourth of
July, the thirtieth of November, the twenty-fifth and the thirtieth of December,
and the day designated by law for holding a general election.

Accordingly, on February 16, 1976, by authority of Article 5 of the same Code, the Department
of Labor (now Ministry of Labor) promulgated the rules and regulations for the implementation
of holidays with pay. The controversial section thereof reads: têñ.£îhqwâ£

Sec. 2. Status of employees paid by the month. — Employees who are uniformly
paid by the month, irrespective of the number of working days therein, with a
salary of not less than the statutory or established minimum wage shall be
presumed to be paid for all days in the month whether worked or not.

For this purpose, the monthly minimum wage shall not be less than the statutory
minimum wage multiplied by 365 days divided by twelve" (italics supplied).

On April 23, 1976, Policy Instruction No. 9 was issued by the then Secretary of Labor (now
Minister) interpreting the above-quoted rule, pertinent portions of which read: têñ.£îhqwâ£

xxx xxx xxx

 The ten (10) paid legal holidays law, to start with, is intended to benefit
principally daily employees. In the case of monthly, only those whose monthly
salary did not yet include payment for the ten (10) paid legal holidays are entitled
to the benefit.

Under the rules implementing P.D. 850, this policy has been fully clarified to
eliminate controversies on the entitlement of monthly paid employees, The new
determining rule is this: If the monthly paid employee is receiving not less than
P240, the maximum monthly minimum wage, and his monthly pay is uniform
from January to December, he is presumed to be already paid the ten (10) paid
legal holidays. However, if deductions are made from his monthly salary on
account of holidays in months where they occur, then he is still entitled to the
ten (10) paid legal holidays. ..." (emphasis supplied).

Respondent bank, by reason of the ruling laid down by the aforecited rule implementing Article
94 of the Labor Code and by Policy Instruction No. 9, stopped the payment of holiday pay to an
its employees.

On August 30, 1976, petitioner filed a motion for a writ of execution to enforce the arbiter's
decision of August 25, 1975, whereby the respondent bank was ordered to pay its employees
their daily wage for the unworked regular holidays.

On September 10, 1975, respondent bank filed an opposition to the motion for a writ of
execution alleging, among others, that: (a) its refusal to pay the corresponding unworked
holiday pay in accordance with the award of Labor Arbiter Ricarte T. Soriano dated August 25,
1975, is based on and justified by Policy Instruction No. 9 which interpreted the rules
implementing P. D. 850; and (b) that the said award is already repealed by P.D. 850 which took
effect on December 16, 1975, and by said Policy Instruction No. 9 of the Department of Labor,
considering that its monthly paid employees are not receiving less than P240.00 and their
monthly pay is uniform from January to December, and that no deductions are made from the
monthly salaries of its employees on account of holidays in months where they occur (pp. 64-
65, NLRC rec.).

On October 18, 1976, Labor Arbiter Ricarte T. Soriano, instead of issuing a writ of execution,
issued an order enjoining the respondent bank to continue paying its employees their regular
holiday pay on the following grounds: (a) that the judgment is already final and the findings
which is found in the body of the decision as well as the dispositive portion thereof is res
judicata or is the law of the case between the parties; and (b) that since the decision had been
partially implemented by the respondent bank, appeal from the said decision is no longer
available (pp. 100-103, rec.).

On November 17, 1976, respondent bank appealed from the above-cited order of Labor Arbiter
Soriano to the National Labor Relations Commission, reiterating therein its contentions averred
in its opposition to the motion for writ of execution. Respondent bank further alleged for the
first time that the questioned order is not supported by evidence insofar as it finds that
respondent bank discontinued payment of holiday pay beginning January, 1976 (p. 84, NLRC
rec.).

On June 20, 1978, the National Labor Relations Commission promulgated its resolution en
banc dismissing respondent bank's appeal, the dispositive portion of which reads as
follows: têñ.£îhqwâ£

In view of the foregoing, we hereby resolve to dismiss, as we hereby dismiss,

respondent's appeal; to set aside Labor Arbiter Ricarte T. Soriano's order of 18
October 1976 and, as prayed for by complainant, to order the issuance of the
proper writ of execution (p. 244, NLRC rec.).
Copies of the above resolution were served on the petitioner only on February 9, 1979 or
almost eight. (8) months after it was promulgated, while copies were served on the respondent
bank on February 13, 1979.

On February 21, 1979, respondent bank filed with the Office of the Minister of Labor a motion
for reconsideration/appeal with urgent prayer to stay execution, alleging therein the following:
(a) that there is prima facie evidence of grave abuse of discretion, amounting to lack of
jurisdiction on the part of the National Labor Relations Commission, in dismissing the
respondent's appeal on pure technicalities without passing upon the merits of the appeal and
(b) that the resolution appealed from is contrary to the law and jurisprudence (pp. 260-274,
NLRC rec.).

On March 19, 1979, petitioner filed its opposition to the respondent bank's appeal and alleged
the following grounds: (a) that the office of the Minister of Labor has no jurisdiction to entertain
the instant appeal pursuant to the provisions of P. D. 1391; (b) that the labor arbiter's decision
being final, executory and unappealable, execution is a matter of right for the petitioner; and (c)
that the decision of the labor arbiter dated August 25, 1975 is supported by the law and the
evidence in the case (p. 364, NLRC rec.).

On July 30, 1979, petitioner filed a second motion for execution pending appeal, praying that a
writ of execution be issued by the National Labor Relations Commission pending appeal of the
case with the Office of the Minister of Labor. Respondent bank filed its opposition thereto on
August 8, 1979.

On August 13, 1979, the National Labor Relations Commission issued an order which
states: têñ.£îhqwâ£

The Chief, Research and Information Division of this Commission is hereby

directed to designate a Socio-Economic Analyst to compute the holiday pay of
the employees of the Insular Bank of Asia and America from April 1976 to the
present, in accordance with the Decision of the Labor Arbiter dated August 25,
1975" (p. 80, rec.).

On November 10, 1979, the Office of the Minister of Labor, through Deputy Minister Amado G.
Inciong, issued an order, the dispositive portion of which states: têñ.£îhqwâ£

ALL THE FOREGOING CONSIDERED, let the appealed Resolution en banc of the
National Labor Relations Commission dated 20 June 1978 be, as it is hereby, set
aside and a new judgment promulgated dismissing the instant case for lack of
merit (p. 436, NLRC rec.).

Hence, this petition for certiorari charging public respondent Amado G. Inciong with abuse of
discretion amounting to lack or excess of jurisdiction.

The issue in this case is: whether or not the decision of a Labor Arbiter awarding payment of
regular holiday pay can still be set aside on appeal by the Deputy Minister of Labor even though
it has already become final and had been partially executed, the finality of which was affirmed
by the National Labor Relations Commission sitting en banc, on the basis of an Implementing
Rule and Policy Instruction promulgated by the Ministry of Labor long after the said decision
had become final and executory.

WE find for the petitioner.

WE agree with the petitioner's contention that Section 2, Rule IV, Book III of the implementing
rules and Policy Instruction No. 9 issued by the then Secretary of Labor are null and void since in
the guise of clarifying the Labor Code's provisions on holiday pay, they in effect amended them
by enlarging the scope of their exclusion (p. 1 1, rec.).
Article 94 of the Labor Code, as amended by P.D. 850, provides: têñ.£îhqwâ£

Art. 94. Right to holiday pay. — (a) Every worker shall be paid his regular daily
wage during regular holidays, except in retail and service establishments
regularly employing less than ten (10) workers. ...

The coverage and scope of exclusion of the Labor Code's holiday pay provisions is spelled out
under Article 82 thereof which reads: têñ.£îhqwâ£

Art. 82. Coverage. — The provision of this Title shall apply to employees in all
establishments and undertakings, whether for profit or not, but not to
government employees, managerial employees, field personnel members of the
family of the employer who are dependent on him for support domestic helpers,
persons in the personal service of another, and workers who are paid by results
as determined by the Secretary of Labor in appropriate regulations.

... (emphasis supplied).

From the above-cited provisions, it is clear that monthly paid employees are not excluded from
the benefits of holiday pay. However, the implementing rules on holiday pay promulgated by the
then Secretary of Labor excludes monthly paid employees from the said benefits by inserting,
under Rule IV, Book Ill of the implementing rules, Section 2, which provides that: "employees
who are uniformly paid by the month, irrespective of the number of working days therein, with
a salary of not less than the statutory or established minimum wage shall be presumed to be
paid for all days in the month whether worked or not. "

Public respondent maintains that "(T)he rules implementing P. D. 850 and Policy Instruction No.
9 were issued to clarify the policy in the implementation of the ten (10) paid legal holidays. As
interpreted, 'unworked' legal holidays are deemed paid insofar as monthly paid employees are
concerned if (a) they are receiving not less than the statutory minimum wage, (b) their monthly
pay is uniform from January to December, and (c) no deduction is made from their monthly
salary on account of holidays in months where they occur. As explained in Policy Instruction No,
9, 'The ten (10) paid legal holidays law, to start with, is intended to benefit principally daily paid
employees. In case of monthly, only those whose monthly salary did not yet include payment
for the ten (10) paid legal holidays are entitled to the benefit' " (pp. 340-341, rec.). This
contention is untenable.

It is elementary in the rules of statutory construction that when the language of the law is clear
and unequivocal the law must be taken to mean exactly what it says. In the case at bar, the
provisions of the Labor Code on the entitlement to the benefits of holiday pay are clear and
explicit - it provides for both the coverage of and exclusion from the benefits. In Policy
Instruction No. 9, the then Secretary of Labor went as far as to categorically state that the
benefit is principally intended for daily paid employees, when the law clearly states that every
worker shall be paid their regular holiday pay. This is a flagrant violation of the mandatory
directive of Article 4 of the Labor Code, which states that "All doubts in the implementation and
interpretation of the provisions of this Code, including its implementing rules and
regulations, shall be resolved in favor of labor." Moreover, it shall always be presumed that the
legislature intended to enact a valid and permanent statute which would have the most
beneficial effect that its language permits (Orlosky vs. Haskell, 155 A. 112.)

Obviously, the Secretary (Minister) of Labor had exceeded his statutory authority granted by
Article 5 of the Labor Code authorizing him to promulgate the necessary implementing rules
and regulations.

Public respondent vehemently argues that the intent and spirit of the holiday pay law, as
expressed by the Secretary of Labor in the case of Chartered Bank Employees Association v. The
Chartered Bank (NLRC Case No. RB-1789-75, March 24, 1976), is to correct the disadvantages
inherent in the daily compensation system of employment — holiday pay is primarily intended
to benefit the daily paid workers whose employment and income are circumscribed by the
principle of "no work, no pay." This argument may sound meritorious; but, until the provisions
of the Labor Code on holiday pay is amended by another law, monthly paid employees are
definitely included in the benefits of regular holiday pay. As earlier stated, the presumption is
always in favor of law, negatively put, the Labor Code is always strictly construed against
management.

While it is true that the contemporaneous construction placed upon a statute by executive
officers whose duty is to enforce it should be given great weight by the courts, still if such
construction is so erroneous, as in the instant case, the same must be declared as null and void.
It is the role of the Judiciary to refine and, when necessary, correct constitutional (and/or
statutory) interpretation, in the context of the interactions of the three branches of the
government, almost always in situations where some agency of the State has engaged in action
that stems ultimately from some legitimate area of governmental power (The Supreme Court in
Modern Role, C. B. Swisher 1958, p. 36).

Thus. in the case of Philippine Apparel Workers Union vs. National Labor Relations
Commission (106 SCRA 444, July 31, 1981) where the Secretary of Labor enlarged the scope of
exemption from the coverage of a Presidential Decree granting increase in emergency
allowance, this Court ruled that: têñ.£îhqwâ£

... the Secretary of Labor has exceeded his authority when he included paragraph
(k) in Section 1 of the Rules implementing P. D. 1 1 23.

xxx xxx xxx

Clearly, the inclusion of paragraph k contravenes the statutory authority granted

to the Secretary of Labor, and the same is therefore void, as ruled by this Court in
a long line of cases . . . .. têñ.£îhqwâ£

The recognition of the power of administrative officials to

promulgate rules in the administration of the statute, necessarily
limited to what is provided for in the legislative enactment, may
be found in the early case of United States vs. Barrios decided in
1908. Then came in a 1914 decision, United States vs. Tupasi
Molina (29 Phil. 119) delineation of the scope of such
competence. Thus: "Of course the regulations adopted under
legislative authority by a particular department must be in
harmony with the provisions of the law, and for the sole purpose
of carrying into effect its general provisions. By such regulations,
of course, the law itself cannot be extended. So long, however, as
the regulations relate solely to carrying into effect the provisions
of the law, they are valid." In 1936, in People vs. Santos, this Court
expressed its disapproval of an administrative order that would
amount to an excess of the regulatory power vested in an
administrative official We reaffirmed such a doctrine in a 1951
decision, where we again made clear that where an administrative
order betrays inconsistency or repugnancy to the provisions of the
Act, 'the mandate of the Act must prevail and must be followed.
Justice Barrera, speaking for the Court in Victorias Milling inc. vs.
Social Security Commission, citing Parker as well as Davis did
tersely sum up the matter thus: "A rule is binding on the Courts so
long as the procedure fixed for its promulgation is followed and its
scope is within the statutory authority granted by the legislature,
even if the courts are not in agreement with the policy stated
therein or its innate wisdom. ... On the other hand, administrative
interpretation of the law is at best merely advisory, for it is the
courts that finally determine chat the law means."
 "It cannot be otherwise as the Constitution limits the authority of
the President, in whom all executive power resides, to take care
that the laws be faithfully executed. No lesser administrative
executive office or agency then can, contrary to the express
language of the Constitution assert for itself a more extensive
prerogative. Necessarily, it is bound to observe the constitutional
mandate. There must be strict compliance with the legislative
enactment. Its terms must be followed the statute requires
adherence to, not departure from its provisions. No deviation is
allowable. In the terse language of the present Chief Justice, an
administrative agency "cannot amend an act of Congress."
Respondents can be sustained, therefore, only if it could be shown
that the rules and regulations promulgated by them were in
accordance with what the Veterans Bill of Rights provides" (Phil.
Apparel Workers Union vs. National Labor Relations
Commission, supra, 463, 464, citing Teozon vs. Members of the
Board of Administrators, PVA 33 SCRA 585; see also Santos vs.
Hon. Estenzo, et al, 109 Phil. 419; Hilado vs. Collector of Internal
Revenue, 100 Phil. 295; Sy Man vs. Jacinto & Fabros, 93 Phil. 1093;
Olsen & Co., Inc. vs. Aldanese and Trinidad, 43 Phil. 259).

This ruling of the Court was recently reiterated in the case of American Wire & Cable Workers
Union (TUPAS) vs. The National Labor Relations Commission and American Wire & Cable Co.,
Inc., G.R. No. 53337, promulgated on June 29, 1984.

In view of the foregoing, Section 2, Rule IV, Book III of the Rules to implement the Labor Code
and Policy instruction No. 9 issued by the then Secretary of Labor must be declared null and
void. Accordingly, public respondent Deputy Minister of Labor Amado G. Inciong had no basis at
all to deny the members of petitioner union their regular holiday pay as directed by the Labor
Code.

II

It is not disputed that the decision of Labor Arbiter Ricarte T. Soriano dated August 25, 1975,
had already become final, and was, in fact, partially executed by the respondent bank.

However, public respondent maintains that on the authority of De Luna vs. Kayanan, 61 SCRA
49, November 13, 1974, he can annul the final decision of Labor Arbiter Soriano since the
ensuing promulgation of the integrated implementing rules of the Labor Code pursuant to P.D.
850 on February 16, 1976, and the issuance of Policy Instruction No. 9 on April 23, 1976 by the
then Secretary of Labor are facts and circumstances that transpired subsequent to the
promulgation of the decision of the labor arbiter, which renders the execution of the said
decision impossible and unjust on the part of herein respondent bank (pp. 342-343, rec.).

This contention is untenable.

To start with, unlike the instant case, the case of De Luna relied upon by the public respondent
is not a labor case wherein the express mandate of the Constitution on the protection to labor is
applied. Thus Article 4 of the Labor Code provides that, "All doubts in the implementation and
interpretation of the provisions of this Code, including its implementing rules and regulations,
shall be resolved in favor of labor and Article 1702 of the Civil Code provides that, " In case of
doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and
decent living for the laborer.

Consequently, contrary to public respondent's allegations, it is patently unjust to deprive the

members of petitioner union of their vested right acquired by virtue of a final judgment on the
basis of a labor statute promulgated following the acquisition of the "right".
On the question of whether or not a law or statute can annul or modify a judicial order issued
prior to its promulgation, this Court, through Associate Justice Claro M. Recto, said: têñ.
£îhqwâ£

xxx xxx xxx

We are decidedly of the opinion that they did not. Said order, being
unappealable, became final on the date of its issuance and the parties who
acquired rights thereunder cannot be deprived thereof by a constitutional
provision enacted or promulgated subsequent thereto. Neither the Constitution
nor the statutes, except penal laws favorable to the accused, have retroactive
effect in the sense of annulling or modifying vested rights, or altering contractual
obligations" (China Ins. & Surety Co. vs. Judge of First Instance of Manila, 63 Phil.
324, emphasis supplied).

In the case of In re: Cunanan, et al., 19 Phil. 585, March 18, 1954, this Court said: "... when a
court renders a decision or promulgates a resolution or order on the basis of and in accordance
with a certain law or rule then in force, the subsequent amendment or even repeal of said law
or rule may not affect the final decision, order, or resolution already promulgated, in the sense
of revoking or rendering it void and of no effect." Thus, the amendatory rule (Rule IV, Book III of
the Rules to Implement the Labor Code) cannot be given retroactive effect as to modify final
judgments. Not even a law can validly annul final decisions (In re: Cunanan, et al., Ibid).

Furthermore, the facts of the case relied upon by the public respondent are not analogous to
that of the case at bar. The case of De Luna speaks of final and executory judgment, while iii the
instant case, the final judgment is partially executed. just as the court is ousted of its jurisdiction
to annul or modify a judgment the moment it becomes final, the court also loses its jurisdiction
to annul or modify a writ of execution upon its service or execution; for, otherwise, we will have
a situation wherein a final and executed judgment can still be annulled or modified by the court
upon mere motion of a panty This would certainly result in endless litigations thereby rendering
inutile the rule of law.

Respondent bank counters with the argument that its partial compliance was involuntary
because it did so under pain of levy and execution of its assets (p. 138, rec.). WE find no merit in
this argument. Respondent bank clearly manifested its voluntariness in complying with the
decision of the labor arbiter by not appealing to the National Labor Relations Commission as
provided for under the Labor Code under Article 223. A party who waives his right to appeal is
deemed to have accepted the judgment, adverse or not, as correct, especially if such party
readily acquiesced in the judgment by starting to execute said judgment even before a writ of
execution was issued, as in this case. Under these circumstances, to permit a party to appeal
from the said partially executed final judgment would make a mockery of the doctrine of finality
of judgments long enshrined in this jurisdiction.

Section I of Rule 39 of the Revised Rules of Court provides that "... execution shall issue as a
matter of right upon the expiration of the period to appeal ... or if no appeal has been duly
perfected." This rule applies to decisions or orders of labor arbiters who are exercising quasi-
judicial functions since "... the rule of execution of judgments under the rules should govern all
kinds of execution of judgment, unless it is otherwise provided in other laws" Sagucio vs. Bulos
5 SCRA 803) and Article 223 of the Labor Code provides that "... decisions, awards, or orders of
the Labor Arbiter or compulsory arbitrators are final and executory unless appealed to the
Commission by any or both of the parties within ten (10) days from receipt of such awards,
orders, or decisions. ..."

Thus, under the aforecited rule, the lapse of the appeal period deprives the courts of
jurisdiction to alter the final judgment and the judgment becomes final ipso jure (Vega vs. WCC,
89 SCRA 143, citing Cruz vs. WCC, 2 PHILAJUR 436, 440, January 31, 1978; see also Soliven vs.
WCC, 77 SCRA 621; Carrero vs. WCC and Regala vs. WCC, decided jointly, 77 SCRA 297; Vitug vs.
Republic, 75 SCRA 436; Ramos vs. Republic, 69 SCRA 576).
In Galvez vs. Philippine Long Distance Telephone Co., 3 SCRA 422, 423, October 31, 1961, where
the lower court modified a final order, this Court ruled thus: têñ.£îhqwâ£

xxx xxx xxx

The lower court was thus aware of the fact that it was thereby altering or
modifying its order of January 8, 1959. Regardless of the excellence of the motive
for acting as it did, we are constrained to hold however, that the lower court had
no authorities to make said alteration or modification. ...

xxx xxx xxx

The equitable considerations that led the lower court to take the action
complained of cannot offset the dem ands of public policy and public interest —
which are also responsive to the tenets of equity — requiring that an issues
passed upon in decisions or final orders that have become executory, be deemed
conclusively disposed of and definitely closed for, otherwise, there would be no
end to litigations, thus setting at naught the main role of courts of justice, which
is to assist in the enforcement of the rule of law and the maintenance of peace
and order, by settling justiciable controversies with finality.

xxx xxx xxx

In the recent case of Gabaya vs. Mendoza, 113 SCRA 405, 406, March 30, 1982, this Court
said: têñ.£îhqwâ£

xxx xxx xxx

In Marasigan vs. Ronquillo (94 Phil. 237), it was categorically stated that the rule
is absolute that after a judgment becomes final by the expiration of the period
provided by the rules within which it so becomes, no further amendment or
correction can be made by the court except for clerical errors or mistakes. And
such final judgment is conclusive not only as to every matter which was offered
and received to sustain or defeat the claim or demand but as to any other
admissible matter which must have been offered for that purpose (L-7044, 96
Phil. 526). In the earlier case of Contreras and Ginco vs. Felix and China Banking
Corp., Inc. (44 O.G. 4306), it was stated that the rule must be adhered to
regardless of any possible injustice in a particular case for (W)e have to
subordinate the equity of a particular situation to the over-mastering need of
certainty and immutability of judicial pronouncements

xxx xxx xxx

III

The despotic manner by which public respondent Amado G. Inciong divested the members of
the petitioner union of their rights acquired by virtue of a final judgment is tantamount to a
deprivation of property without due process of law Public respondent completely ignored the
rights of the petitioner union's members in dismissing their complaint since he knew for a fact
that the judgment of the labor arbiter had long become final and was even partially executed by
the respondent bank.

A final judgment vests in the prevailing party a right recognized and protected by law under the
due process clause of the Constitution (China Ins. & Surety Co. vs. Judge of First Instance of
Manila, 63 Phil. 324). A final judgment is "a vested interest which it is right and equitable that
the government should recognize and protect, and of which the individual could no. be
deprived arbitrarily without injustice" (Rookledge v. Garwood, 65 N.W. 2d 785, 791).
 lt is by this guiding principle that the due process clause is interpreted. Thus, in the pithy
language of then Justice, later Chief Justice, Concepcion "... acts of Congress, as well as those of
the Executive, can deny due process only under pain of nullity, and judicial proceedings
suffering from the same flaw are subject to the same sanction, any statutory provision to the
contrary notwithstanding (Vda. de Cuaycong vs. Vda. de Sengbengco 110 Phil. 118, emphasis
supplied), And "(I)t has been likewise established that a violation of a constitutional right
divested the court of jurisdiction; and as a consequence its judgment is null and void and
confers no rights" (Phil. Blooming Mills Employees Organization vs. Phil. Blooming Mills Co., Inc.,
51 SCRA 211, June 5, 1973).

Tested by and pitted against this broad concept of the constitutional guarantee of due process,
the action of public respondent Amado G. Inciong is a clear example of deprivation of property
without due process of law and constituted grave abuse of discretion, amounting to lack or
excess of jurisdiction in issuing the order dated November 10, 1979.

WHEREFORE, THE PETITION IS HEREBY GRANTED, THE ORDER OF PUBLIC RESPONDENT IS SET
ASIDE, AND THE DECISION OF LABOR ARBITER RICARTE T. SORIANO DATED AUGUST 25, 1975, IS
HEREBY REINSTATED.

COSTS AGAINST PRIVATE RESPONDENT INSULAR BANK OF ASIA AND AMERICA

SO ORDERED.1äwphï1.ñët

Guerrero, Escolin and Cuevas, JJ., concur.

Aquino and Abad Santos, JJ., concur in the result.

Concepcion Jr., J., took no part.

G.R. No. L-52415 October 23, 1984, Makasiar, J.

(Labor Standards: Proper Construction and Interpretation of Labor Laws)

FACTS

The Secretary of Labor, issued Policy no. 9 interpreting article 94 of Labor Code as regards Right
to Holiday pay, stated among others, that PD 850 principally intended to benefit daily-paid
workers. Those who are paid by the month, i.e., he is paid uniformly from January to December
is presumed to have been paid with legal holidays, unless his salary is deducted for the month
the holiday occurs. Invoking this Policy, the Bank stopped paying its employees for the legal
holidays.

ISSUE

Whether or not, PD 850 was intended only for daily wage workers.

RULING

“It is elementary in the rules of statutory construction that when the language of the law is clear
and unequivocal the law must be taken to mean exactly what it says. In the case at bar, the
provisions of the Labor Code on the entitlement to the benefits of holiday pay are clear and
explicit - it provides for both the coverage of and exclusion from the benefits. In Policy
Instruction No. 9, the then Secretary of Labor went as far as to categorically state that the
benefit is principally intended for daily paid employees, when the law clearly states that every
worker shall be paid their regular holiday pay. This is a flagrant violation of the mandatory
directive of Article 4 of the Labor Code, which states that "All doubts in the implementation and
interpretation of the provisions of this Code, including its implementing rules and
regulations, shall be resolved in favor of labor." Moreover, it shall always be presumed that the
legislature intended to enact a valid and permanent statute which would have the most
beneficial effect that its language permits (Orlosky vs. Haskell, 155 A. 112.)

Republic of the Philippines

SUPREME COURT
Manila
 EN BANC

G.R. No. L-16808 January 3, 1921

ANDRES BORROMEO, plaintiff,

vs.
FERMIN MARIANO, defendant.

Fisher and DeWitt for plaintiff.

Attorney-General Feria for defendant.

MALCOLM, J.:

Quo warranto proceedings have been instituted in this court to determine the right of the
plaintiff and of the defendant to the office of Judge of the Court of First Instance of the Twenty-
fourth Judicial District.

The only facts, and these are undisputed ones, which need be noticed, are the following: Andres
Borromeo was appointed and commissioned as Judge of the Twenty-fourth Judicial District,
effective July 1, 1914. He duly qualified and took possession of the office on that date. On
February, 25, 1920, he was appointed Judge of the Twenty-first Judicial District, and Fermin
Mariano was appointed Judge of the Twenty-fourth Judicial District. Judge Borromeo has since
the latter date consistently refused to accept appointment to the Twenty-first Judicial District.

Judges of First Instance are appointed by the Governor-General with the consent of the
Philippine Senate to serve until they reach the age of 65 years. (Adm. Code, secs. 65, 66, 148.)
One Judge of First Instance is commissioned for each judicial district, except the night. (Sec.
154.) The oath of office of the judge is "filed with the clerk of the court to which the affiant
pertains and shall be entered upon its records." (Sec. 128.) Judges of First Instance may only be
detailed by the Secretary of Justice to temporary duty in a district other than their own for the
purpose of trying land registration cases and for vacation duty. (Sec. 155.) The concluding
portion of section 155 of the Administrative Code, to which particular attention is addressed by
the Attorney-General, is, "but nothing herein shall be construed to prevent a judge of first
instance of one district from being appointed to be judge of another district." A Judge of First
Instance can be removed from office by the Governor-General only if in the judgment of the
Supreme Court sufficient cause shall exist involving serious misconduct or inefficiency in office.
(Sec. 173.)

The cardinal rule of statutory construction requires the court to give effect to the general
legislative intent if that can be discovered within the four corners of the Act. When the object
intended to be accomplished by the statute is once clearly ascertained, general words may be
restrained to it and those of narrower import may be expanded to embrace it, to effectuate the
intent. Along with this fundamental principle is another, equally well-established, that such a
construction is, if possible, to be adopted, as will give effect to all provision of the statute. (2
Lewis' Sutherland, Statutory Construction, pp. 662, et seq.; In re Allen [1903], 2 Phil., 630; Code
of Civil Procedure, sec. 287.)

Leaving out of consideration for the moment the last part of section 155 of the Administrative
Code, the provisions of the Judiciary Law are plain and unambiguous. Judges of First Instance
are appointed judges of the courts of first instance of the respective judicial districts of the
Philippines Islands. They are not appointed judges of first instance of the Philippine Islands.
They hold these positions of judges of first instance of definite districts until they resign, retire,
or are removed through impeachment proceedings. The intention of the law is to recognize
separate and distinct judicial offices.

The concluding portion of section 155 of the Administrative Code, although not beginning with
the usual introductory word, "provided," is nevertheless, in the nature of a proviso, and should
be construed as such. The office of a proviso is to limit the application of the law. It is contrary
to the nature of a proviso to enlarge the operation of the law. It should not be construed so as
to repeal or destroy the main provisions of the statute. A proviso which is directly repugnant to
the purview or body of an Act is inoperative and void. (See generally, 25 R. C. L., pp. 984, et seq.;
and specifically, the leading cases of McKnight vs. Hodge [1909], 55 Wash., 289, 104 Pac., 504,
40 L. R. A. [N.S.], 1207; McCormick vs. West Duluth [1891], 47 Minn., 272, 50 N.W., 128; Idaho
Power & Light Co. vs. Blomquist [1916], 26 Idaho, 222; 141 Pac., 1083, Ann. Cas. [1916 E], p.
282, where these principles concerning provisos are applied.)

To arrive at a correct decision with reference to the proviso before us, let it first be recalled that
the law is emphatic in its specification that, save when judges of first instance are detailed to try
land registration cases or when assigned to vacation duty, "no judge of first instance shall be
required to do duty in any other district than that for which he is commissioned." The keyword
to the proviso which follows is "appointed." This word should here be given its usual
signification. Many of the decisions follow the definition of "appoint" found in the Century
Dictionary and Encyclopedia. "Appoint" is there defined as "to allot, set apart, or designate;
nominate or authoritatively assign, as far a use, or to a position or office." All the authorities
united in saying that the term "appoint" is well-known in law and whether regarded in its legal
or in its ordinary acceptation, is applied to the nomination or designation of an individual.
Appointment signifies no more than selection for public office. (4 C. J., 1402, 1404, citing
numerous decisions.)

The effect to be given to the word "appoint" is corroborated by the principles of the law of
public officers. Appointment and qualification to office are separate and distinct things.
Appointment is the sole act of those vested with the power to make it. Acceptance is the sole
act of the appointee. Persons may be chosen for office at pleasure; there is no power in these
Islands which can compel a man to accept the office. (22 R. C. L. 423.) If, therefore, anyone
could refuse appointment as a judge of first instance to a particular district, when once
appointment to this district is accepted, he has exactly the same right to refuse an appointment
to another district. No other person could be placed in the position of this Judge of First
Instance since another rule of public officers is, that an appointment may not be made to an
office which is not vacant. (29 Cyc., 1373.) In our judgment, the language of the proviso to
section 155 of the Administrative Code, interpreted with reference to the law of public officers,
does not empower the Governor-General to force upon the judge of one district an
appointment to another district against his will, thereby removing him from his district.

Returning again to the principle of statutory construction that a proviso should not be given a
meaning which would tend to render abortive the main portions of the law, it should further be
recalled that judges of first instance are removable only through a fixed procedure. Moreover,
impeachment proceedings, as conducted by the Supreme Court, may be in the nature of
jurisdiction, conferred upon the Supreme Court by ratification of the Congress of the United
States, which, it has uniformly been held, cannot be diminished. (We make no ruling on this
point because unnecessary for the resolution of the case.) But, certainly, if a judge could be
transferred from one district of the Philippine Islands to another, without his consent, it would
require no great amount of imagination to conceive how this power could be used to discipline
the judge or as an indirect means of removal. A judge who had, by a decision, incurred the ill-
will of an attorney or official, could, by the insistence of the disgruntled party, be removed from
one district, demoted, and transferred to another district, at possibly a loss of salary, all without
the consent of the judicial officer. The only recourse of the judicial officer who should desire to
maintain his self-respect, would be to vacate the office and leave the service. Unless we wish to
nullify the impeachment section of the Administrative Code, and thus possibly to encroach
upon the jurisdiction conferred upon the Supreme Court by the Organic Law, section 155 must
be interpreted so as to make it consistent therewith.

What we have said is reinforced by the authorities most directly in point. In the early decision of
Marbury vs. Madison ([1803], 1 Cranch, 137), the Supreme Court of the United States, in
unmistakable terms, explained the powers of the Judiciary in enforcing the Constitution as the
Supreme Law of the Land and held that the President of the United States had no power to
remove a justice of the peace of the District of Columbia from office. Mr. Chief Justice Marshall
said that "When the officer is not removable at the will of the executive, the appointment is not
revocable, and cannot be annulled: it has conferred legal rights which cannot be resumed. The
discretion of the executive is to be exercised, until the appointment has been made. But having
once made the appointment, his power over the office is terminated, in all cases where, by law,
the officer is not removable by him. The right to the office is then in the person appointed, and
he has the absolute unconditional power of accepting or rejecting it." The great jurist further or
observed that "It is, emphatically, the province and duty of the judicial department, to say what
the law is"

In State of Louisiana vs. Downes ([1869], 21 La. Ann., 490), the Supreme Court of Louisiana said
that a judge of a court could, under the Constitution of that State, only be removed from office
by impeachment, by address of the Legislature, or by proceeding under the intrusion act. It was
held that the appointment and commissioning by the Governor of the State of a party to an
office which has legally been filled, without the vacancy being first declared according to law,
was an absolute nullity.

The Attorney-General brings to our notice an obsolete law which had escaped us, and which, if
any lingering doubts exist, would serve to remove that. This law is Act No. 396, enacted by the
Philippine Commission in 1902. Section 4 thereof, separate and distinct from the other
provisions of the Act, and not tacked on as a proviso, provided that "any judge of a Court of First
Instance . . . may be transferred from one judicial district to another by order of the Civil
Governor, with the advice and consent of the Commission. Any judge so transferred shall, upon
such transfer, cease the performance of judicial duties in the district to which he was originally
appointed, and shall be the regular judge thereafter in the judicial district to which he as been
so assigned." But Act No. 396 was thrice repealed by the Philippine Legislature; the first time,
impliedly by the enactment of Act No. 2347, the Judiciary Reorganization Act, and subsequently,
expressly by the Administrative Code of 1916 and the Administrative Code of 1917. Instead,
also, of continuing the phraseology of section 4 of Act No. 396, the Legislature merely included
the proviso to which we have alluded. It cannot, therefore, admit of doubt that the members of
the Philippine Legislature had before them the Act of the Philippine Commission and preferred,
not to perpetuate the old law, but to insert language of their own. The purpose of the Philippine
Legislature was clearly to safeguard the interests of the judiciary, and this laudable purpose, it is
for us now to effectuate.

Far more convincing than precedent or argument are great and basic principles long inherent in
popular government intended to create an independent judiciary. A history of the struggle for a
fearless and an incorruptible judiciary prepared to follow the law and to administer it regardless
of consequences, can be perused with ever-recurring benefit. Since the early days of the
Republic, the judicial system in the United States, with certain exceptions which only served to
demonstrate more fully the excellence of the whole, has been viewed with pride, and
confidently relied upon for justice by the American people. The American people considered it
necessary "that there should be a judiciary endowed with substantial and independent powers
and secure against all corrupting or perverting influences; secure, also, against the arbitrary
authority of the administrative heads of the government." (Woodrow Wilson, Constitutional
Government in the United States, pp. 17, 142.) It was such a conception of an independent
judiciary which was instituted in the Philippines by the American administration and which has
since served as one of the chief glories of the government and one of the most priceless
heritages of the Filipino people.

The Attorney-General in the argument in support of his motion for reconsideration, quotes the
last preceding sentence and says that he dissents therefrom. The number of authoritative
replies to the proposition advanced by the law officer of the government relative to the
intention to establish an independent judiciary in these Islands, is limited only by space in which
to quote them. Possibly we can do no better than to make our own the language of Mr. Justice
Trent, speaking for a unanimous court, in Severino vs. Governor-General and Provincial Board of
Occidental Negro ([1910], 16 Phil., 366, 384), when he said: "This governments in the United
States, now possesses a complete governmental organization, with executive legislative, and
judicial departments, which are exercising functions as independent of each other as the
Federal or State governments." (For the legislative version of the same idea, see Administrative
Code, sec. 17.)
On occasion, the Supreme Court of the Philippine Islands has applied the accepted theory of the
division of powers, termed by the United States Supreme Court as "one of the chief merits of
the American system of written constitutional law" (Kilbourn vs. Thompson [1881], 13 Otto,
168), and has unhesitatingly refused to interfere with the official acts of the Governor-General
or to intrude on the rights and privileges of the Philippine Legislature (In the Patterson [1902], 1
Phil., 93; Severino vs. Governor-General and Provincial Board of Occidental Negros, supra; In re
McCulloch Dick [1918], 38 Phil., 41; U.S. vs. Bull [1910], 15 Phil., 7; U.S. vs. Ten Yu [1912], 24
Phil., 1; Veloso vs. Boards of Canvassers of Leyte and Samar [1919], 39 Phil., 886.) As an instance
of this class of decisions, in Veloso vs. Boards of Canvassers of Leyte and Samar, supra, this
court, in considering the right of the Philippine Senate to be the judge of the elections, returns,
and qualifications of its elective members, said:

The grant of power to the Philippine Senate and the Philippine House of
Representatives, respectively is full, clear, and complete. . . . The judiciary, with its
traditional and careful regard for the balance of powers, must permit this exclusive
privilege of the legislature to remain where the sovereign authority has placed it. Since,
therefore, the Philippine Senate is made the sole judge of the elections, returns, and
qualifications of its elective members, this tribunal neither can, nor ought, to take
jurisdiction of the case.

Although much more reluctantly, and also much more infrequently we are happy to add, the
court has had to defend the judiciary against legislative and executive encroachment.
(Ocampo vs. Cabañgis [1910], 15 Phil., 626; In re Guariña [1914], 24 Phil., 37;
Barrameda vs. Moir [1913], 25 Phil., 44; and Province of Tarlac vs. Gale [1913], 26 Phil., 338.) As
an instance of the latter class of decisions, in Province of Tarlac vs. Gale, supra, Mr. Justice
Moreland, speaking for the court, said:

The judiciary is one of the coordinate branches of the Government. (Forbes vs. Chuoco
Tiaco, 16 Phil., 534; United States vs. Bull, 15 Phil., 7.) Its preservation in its integrity and
effectiveness is necessary to the present form of Government. . . . It is
clear . . . that each department is bound to preserve its own existence if it live up to the
duty imposed upon it as one of the coordinate branches of the government. Whatever a
person or entity ought to do or must do in law, it has the power to do. This being true,
the judiciary has the power to maintain its existence; and whatever is reasonably
necessary to that end, courts may do or order done. But the right to live, if that is all
there is of it, is a very small matter. The mere right to breathe does not satisfy ambition
or produce results. Therefore, courts have not only the power to maintain their life, but
they have also the power to make that existence effective for the purpose for which the
judiciary was created. They can, by appropriate means, do all things necessary to
preserve and maintain every quality needful to make the judiciary an effective institution
of Government. Courts have, therefore, inherent power to preserve their integrity,
maintain their dignity and to insure effectiveness in the administration of justice. This is
clear; for, if the judiciary may be deprived of any one of its essential attributes, or if any
one of them may be seriously weakened by the act of any person or official, then
independence disappears and subordination begins. The power to interfere is the power
to control, and the power to control is the power to abrogate. The sovereign power has
given life to the judiciary and nothing less than the sovereign power can take it away or
render it useless. The power to withhold from the courts anything really essential for the
administration of justice is the power to control and ultimately to destroy the efficiency
of the judiciary. Courts cannot, under their duty to their creator, the sovereign power,
permit themselves to be subordinated to any person or official to which their creator did
not itself subordinate them.

A stirring plea has been made by the learned representative of the Government for a decision
which will work for the public welfare. We agree that, under the peculiar conditions existing in
the Philippines, it is sometimes well for a judge not to remain indefinitely in a particular district.
But it is a far cry from this premise to the use of a method not sanctioned by existing law and
savoring of military discipline. Our conception of good judges has been, and is, of men who
have a mastery of the principles of law, who discharge their duties in accordance with law, who
are permitted to perform the duties of the office undeterred by outside influence, and who are
independent and self-respecting human units in a judicial system equal and coordinate to the
other two departments of government. We are pleased to think of judges as of the type of the
erudite Coke who, three centuries ago, was removed from office because when asked "if in the
future he would delay a case at the King's order," replied: "I will do what becomes me as a
judge."

For the reasons given, we are of opinion that the reasonable force of the language used in the
proviso to section 155 of the Administrative Code taken in connection with the whole of the
Judiciary Law, and the accepted canons of interpretation, and the principles of the law of public
officers, leave from for no other construction than that a Judge of First Instance may be made a
judge of another district only with his consent.

It is our holding that the plaintiff Andres Borromeo is lawfully entitled to the possession of the
office of Judge of the Court of First Instance of the Twenty-Fourth Judicial District. It is our
judgment that the defendant Fermin Mariano shall be ousted from the office of Judge of the
Twenty-fourth Judicial District, and the plaintiff placed in possession of the same. The motion
for reconsideration filed by the Attorney-General is denied. No costs shall be allowed. Let this be
entered as the order of the court. So ordered.

Araullo, Street and Avanceña, JJ., concur.

Johnson, J., signed the original decision, but was not present when the motion for
reconsideration was filed and when this decisions was promulgated.

Separate Opinions

VILLAMOR, J., dissenting:

I dissent. The interpretation, which the majority give to the last clause of section 155 of the
Administrative Code, in the sense that it requires the consent of a judge of the Court of First
Instance in order that he may be transferred from one judicial district to another, is an
amendment of the law, an act which should be done only by the legislative branch of the
government. I am not unaware of the possibility that the power of the Governor-General to
effect such transfers of Judges of First Instance with the consent of the Senate may produce as a
result the resignation of the judge thus transferred if he does not accept the transfer. However,
this fact should be referred to the legislature in order that it may amend the law if it sees fit to
do so. The provisions of the law being clear, the court should apply it in the manner and form in
which it has been passed by the legislature, without attempting to attach thereto a condition, as
that of the consent of the judge transferred, which the legislature did not see fit to require.

It is presented that the appointment to a specific position in the Government requires, among
other elements, the acceptance thereof, without which it would not produce any effect.
However, with reference to the transfer of judges a new appointment is made only to
distinguish a permanent transfer from a temporary assignment to sit in another district, which is
forbidden by law, except for the purposes of land registration cases; and a new oath is taken
only to attest the fact that the transfer has been effected and that the transferred judge has
taken possession of the office in the new district for the purposes of jurisdiction. But, in reality,
in this case there is no new employee, there is not a different office. The transferred judge
continues being a judge as much as before his transfer, holds the same office with all the
attributes and powers thereto annexed, and enjoys the same privileges, with the sole difference
as to the place in which jurisdiction is exercised. In this case, according to the law, the prior
consent of the judge is not necessary in order that he may be transferred to another district, for
the good of the public service, which is the basis of the power to make such transfers, is over
and above the personal interests of every citizen.
It is also contended that the last clause of section 155 is a danger to the independence of the
judiciary. But if this legal provision is considered in relation to section 5 of the Administrative
Code, which presumes that administrative discretion is exercised for the good of the service and
the benefit of the public; and if it is furthermore considered that the executive power to effect
transfers of judges is subject to the approval of a restraining body, that is, the Senate, it seems,
in my opinion, that this legal provision is a prudent measure tending to protect the interest of
good public service.

According to law, the Governor-General has the discretion to make transfers of judges from one
district to another, with the consent of the Senate. Therefore, to the Governor-General and to
the Senate, and not to the judges, is the power granted to determine how such discretion
should be exercised. In the case at bar there is not even a single allegation that such discretion
has been abused in disregard of the law, and therefore, there is no way by which this court may
disapprove the transfer of the petitioner deiced to be effected by the Governor-General in the
exercise of the discretionary powers conferred upon him by law.

If the consent of a judge is an essential requisite to his transfer to another district, it must also
be an essential requisite to his assignment to sit in another district to try land registration cases
or as vacation judge, for in both cases, the same reason exists, that is, the danger to the
independence of the judiciary, which is the foundation of the majority opinion. The result would
be the complete repeal of section 155 of the Administrative Code through the interpretation
given by this court. And an interpretation leading to such result should be discarded for it is
contrary to the doctrines of statutory construction cited in the majority opinion, to wit: that the
court should give effect to the general intention of the legislator, if it may be gathered from all
the viewpoints from which the law is examined; and that, if possible, that construction should
be adopted which gives effect to all the provisions of the law (2 Lewis' Sutherland, Statutory
Construction, page 662 et seq.; In re Allen [1903], 2 Phil., 630; sec. 207 of the Administrative
Code).

But what is the intention of the legislator in the legal provision now under consideration? The
provisions of the law are clear and it is not necessary either to stretch the imagination or resort
to other jurisdictions, to discover the intention of the legislator. Section 155 of the
Administrative Code provides:

For the purpose of trying land registration cases only, a judge of first instance may, if the
public interests so require, be detailed by the Department Head to temporary duty in a
district other than his own. Save when so detailed or when assigned to vacation duty, no
judge of first instance shall be required to do duty in any other district than that for
which he is commissioned; but nothing herein shall be construed to prevent a judge of
first instance of one district from being appointed to be judge of another district.

It is admitted by the authorities on the subject that the object of a saving clause of proviso is (1)
to except something from the legal provision in question, or (2) to restrict the provisions
thereof, or (3) to exclude all possible reason for erroneously construing such provision so as to
make it applicable to cases which the legislature did not intend to include therein.

In whatever sense the proviso in question is interpreted, there is no reason for requiring the
consent of the judge for a temporary or permanent transfer to another district. The intention of
the legislature, as gathered from the provisions of the law, is that no judge shall be required to
render services in another district, except to try land registration cases or to act as vacation
judge, but without prejudice to his being appointed by the Governor-General as judge of
another district.

That discharge is a different thing from transfer is a self-evident proposition requiring no proof.
That a judge appointed to another district may refuse to accept his transfer is not disputed by
anyone. But if he leaves the office by abandonment or resignation, such result is not a necessary
effect of the transfer but of his free will.
The majority decision tries to solve the proposition that if the remedy prayed for is not granted
judges would lose their judicial independence. But we should remember, in this connection
what Judge Cooley, one of the most eminent American jurists, in resolving the proposition that
if it should be held that the Governor cannot be compelled to fulfill purely ministerial duties,
those in possession of legal rights would, in many cases, be without remedy, said in the case of
Sutherland vs. Governor (29 Mich., 329), to wit:

Practically, there are a great many such cases, but theoretically, there are none at all. All
wrongs, certainly, are not redressed by the judicial department. A party may be deprived
of a right by a wrong verdict, or an erroneous ruling of a judge, and though the error
may be manifest to all others than those who are to decide upon his rights, he will be
without redress. A person lawfully chosen to the Legislature may have his seat given by
the house to another, and be thus wronged without remedy. A just claim against the
State may be rejected by the board of auditors, and neither the governor nor the courts
can give relief. A convicted person may conclusively demonstrate his innocence to the
governor, and still be denied a pardon. In which one of these cases could the denial of
redress by the proper tribunal constitute any ground for interference by any other
authority? The law must leave the final decision upon every claim and every controversy
somewhere, and when that decision has been made, it must be accepted as correct. The
presumption is just as conclusive in favor of executive action as in favor of judicial.

A case in which the court discussed the proposition that there can be no wrong whatever
without any remedy is that of People vs. Bissell (19 Ill., 229). In that case the court said:

It is urged upon us, that in a government of laws there must be an adequate remedy for
every wrong, and that where a clear right exists, there must be some mode of enforcing
that right. While human society is governed by so imperfect a being as man, this can be
true only in theory. If we are to compel the Governor or the legislature to right every
wrong which may arise from their omissions of duty, then surely they must, in order to
make this Utopian system perfect, have the power to compel us to do right in every case.
May it not be as well supposed that we will act perversely, and refuse to perform a duty
imposed upon us, to the injury of the citizen, as that the Governor will do so? In the
formation of the government, equal confidence was rightfully reposed in each
department, to which appropriate and independent duties were assigned.

The proceeding instituted in this case is entitled Quo Warranto, a proceeding for determining
the right of a Judge of First Instance to sit in a determined judicial district. But there can be no
doubt that in this question is involved the power of the Governor-General to appoint Judges of
First Instance. While the petition in this case does not include the Governor-General as party
respondent, nevertheless, the judgment of this court must in the same manner necessarily
affect him who authorized the appointment now in dispute and the appointee, now respondent
Judge Fermin Mariano. This conclusion is inevitable for the case deals with the appointment of a
judge made by the Governor-General in the exercise of his discretional powers. Indeed this
court cannot decide this case by granting the prayer of the petitioner without disapproving the
manner in which this power of the Governor-General has been exercised. Has the court
jurisdiction to do this?

Section 26 of the Jones Act provides, among other things:

The Judges of the Courts of First Instance shall be appointed by the Governor-General,
by and with the advice and consent of the Philippine Senate.

In view of this legal provision and of section 155 of the Administrative Code, to maintain that a
Judge of First Instance may not be transferred to another district without his consent amounts
to judicially determining that the Governor-General cannot exercise the power conferred upon
him by law to transfer a judge from one district to another without the consent of the judge
concerned.
The question whether courts possess or do not possess jurisdiction to control the official acts of
the Governor has been raised before many courts of the United States. And this Supreme Court,
in the case of Severino vs. Governor-General and Provincial Board of Occidental Negros (16 Phil.,
366, 387, 400, 402), after examining the various cases in which this question was raised in the
United States, said:

We think that the weight of authority, based upon legal principles and sound reasoning,
supports the proposition that in the United States the supreme courts of the States do
not have jurisdiction to control the official acts of the governor. For better reasons we
conclude that this court has no jurisdiction, either by mandamus or injunction, to control
the official acts of the Governor-General, inasmuch as we have seen that his duties,
powers, and responsibilities are more comprehensive than those conferred upon any
State Governor. When the Philippine legislative body confers upon the Governor-General
powers and duties, it does so for the reason that he is in a better position to know the
needs of the country than any other member of the executive department, and with the
full confidence that he will perform such duties, under his official oath, as his best
judgment dictates. If this had not been the intention of the legislature, they could have
placed the duty upon some other official of the executive department. It no doubt is
sometimes very necessary for the Governor-General to perform certain important
executive duties without delay, and should this court attempt to distinguish between
purely ministerial and discretionary duties, conferred upon him by law, and attempt to
determine in each case which are purely ministerial, which are political, or which are
discretionary, the Governor-General, to that extent would become subservient to the
judiciary. To avoid this is why the three great coordinate departments of the
Government were created and made independent of each other. President McKinley in
creating civil government in this country took into consideration these fundamental
principles of separate and independent departments, which have been demonstrated to
be essential to a republican form of government, and conferred upon the Governor-
General, as the Executive of the Philippine Islands, the power to execute the laws
according to his best judgment, holding him responsible to the President of the United
States, without interference on the part of the judiciary. In so doing he reposed in the
Executive of this country great confidence, realizing that he, the Executive, acting
independently of the judiciary, would be in a better position to carry out the great
underlying principles of American institutions for the peace and happiness of the
inhabitants of this country. The President realized that the final decision of every
question in controversy must be left somewhere, and when such decision has been
made it must be accepted as correct. The presumption is just as conclusive in favor of
executive action, as to its correctness and justness, as it is in favor of judicial action.

In another part of this decision this court added:

Inasmuch as the three coordinated departments of the Government, the executive,

legislative, and judicial, have been established and are operating, as we have said, as
independently of each other as the same three coordinated branches created under the
constitution of the Federal and State governments are operating in the American Union,
and in view of the fact that there have been conferred upon the Chief Executive of these
Islands more extensive powers, duties, and responsibilities than have been conferred
upon the governors of the various States of the Union, we think the reason for the
holdings of the courts of the United States, which have passed upon this question are
worthy of consideration. We might here add that we have no doubt that the present
incumbent of the office of Governor-General, a man who is ready and willing at all times
to render obedience to the law, would follow the mandate of this court, but such
willingness to be governed by the order of this court would not of itself give us
jurisdiction. Nor should he manifest (which he has not done) his intention to not obey
the mandate of this court, this would not be sufficient reason for us to asbtain from
requiring him to comply with such mandate in case we have jurisdiction.
And in the dispositive part of the decision the court among other things said: "That we can not
and should not entertain a complaint which seeks to control or interfere with the official duties
of the Governor-General."

In the case of Forbes vs. Chuoco Tiaco and Crossfield (16 Phil., 534), this court, adhering to the
same principle announced in the case of Severino vs. Governor-General and Provincial Board of
Occidental Negros, supra, established the following doctrine:

In a government of separate and independent departments, executive, legislative, and

judicial, with separate and distinct functions, one department will not attempt to
interfere with the performance of the exclusive duties of another. To permit such an
interference would destroy the independence of the separate departments and would
make one subject to the control of the others. For the judiciary to interfere, for the
purpose of questioning the manner of exercising the legal and political duties of the
chief executive head of the Government or to control the action of the legislative
department, would, in effect, destroy the independence of the departments of the
Government and would make all departments subject to the ultimate control of the
judicial. Such a conclusion or condition was never contemplated by the organizers of the
Government.

In deciding the present petition, ordering that the respondent judge Fermin Mariano should be
ousted from the office of Judge of the Twenty-fourth District and that possession thereof should
be surrendered to the petitioner Andres Borromeo, has not this court judicially determined that
the appointment of the former to said district and that of the latter to the twenty-first, both
made by the Governor-General, with the advice and consent of the Philippine Senate, are not
well made and are contrary to the immovability of judges and should therefore be annulled by
this court? What does the decision of the majority mean but that it is a real intrusion in the
exercise of the powers conferred upon the executive and legislative departments of the
Government? And is this not openly contrary to the doctrines established in the decisions cited
of this Supreme Court itself, where the much-vaunted independence of the executive,
legislative, and judicial departments is proclaimed?

The petition is denied.

The motion for reconsideration should be granted.

FUNCTION OF A PROVISO (Zosa)

Andres BORROMEO vs Fermin MARIANO

G.R. No. L-16808, January 3, 1921

FACTS:

 Andres Borromeo was appointed and commissioned as Judge of the 24th Judicial
District, effective July 1, 1914.
 On February, 25, 1920, Borromeo was appointed Judge of the 21st Judicial District, and
Fermin Mariano was appointed Judge of the 24th Judicial District.
 Judge Borromeo has since the latter date consistently refused to accept appointment to
the 21st Judicial District.

RELEVANT LAWS:
  Administrative Code, Secs 65, 66, and 148
“Judges of First Instance are appointed by the Governor-General with the
consent of the Philippine Senate to serve until they reach the age of 65 years.”
 Administrative Code, Sec 155
“Judges of First Instance may only be detailed by the Secretary of Justice to
temporary duty in a district other than their own for the purpose of trying land
registration cases and for vacation duty.”
 Concluding portion of Sec 155
"but nothing herein shall be construed to prevent a judge of first instance of one
district from being appointed to be judge of another district."

 Administrative Code, Sec 173

“A Judge of First Instance can be removed from office by the Governor-General
only if in the judgment of the Supreme Court sufficient cause shall exist involving serious
misconduct or inefficiency in office.”

ISSUE:

 Whether or not Borromeo may refuse his appointment to the 21st Judicial District.

DECISION:

 Yes, he may. A Judge of First Instance may be made a judge of another district only with
his consent.

 Judges of First Instance are “appointed judges of the courts of first instance of the
respective judicial districts of the Philippines Islands.” They are not “appointed judges of
first instance of the Philippine Islands.” They hold these positions of judges of first
instance of definite districts until they resign, retire, or are removed through
impeachment proceedings. The intention of the law is to recognize separate and distinct
judicial offices.

 The law is emphatic in its specification that, save when judges of first instance are
detailed to try land registration cases or when assigned to vacation duty, "no judge of
first instance shall be required to do duty in any other district than that for which he is
commissioned."

 Cardinal Rules in Statutory Construction:

1. The court should effect to the general legislative intent if that can be
discovered within the four corners of the Act
- When the object intended to be accomplished by the statute is once clearly
ascertained, general words may be restrained to it and those of narrower import
may be expanded to embrace it, to effectuate the intent.
2. Such a construction is to be adopted, if it will give effect to all provision of the
statute

 Function of a Proviso
- The concluding portion of section 155 of the Administrative Code, although not
beginning with the usual introductory word, "provided," is nevertheless, in the nature
of a proviso, and should be construed as such.
-The office of a proviso is to limit the application of the law. It is contrary to the
nature of a proviso to enlarge the operation of the law.
-It should not be construed so as to repeal or destroy the main provisions of
the statute.
 -A proviso which is directly repugnant to the purview or body of an Act is
inoperative and void.

 The effect to be given to the word "appoint" is corroborated by the principles of the law
of public officers. Appointment and qualification to office are separate and distinct
things. - Appointment is the sole act of those vested with the power to make it.
Acceptance is the sole act of the appointee. Persons may be chosen for office at
pleasure; there is no power in these Islands which can compel a man to accept the
office.
- If, therefore, anyone could refuse appointment as a judge of first instance to a
particular district, when once appointment to this district is accepted, he has exactly the
same right to refuse an appointment to another district. No other person could be
placed in the position of this Judge of First Instance since another rule of public officers
is, that an appointment may not be made to an office which is not vacant.
- In our judgment, the language of the proviso to section 155 of the
Administrative Code, interpreted with reference to the law of public officers, does not
empower the Governor-General to force upon the judge of one district an appointment
to another district against his will, thereby removing him from his district.

 It is our holding that the plaintiff Andres Borromeo is lawfully entitled to the possession
of the office of Judge of the Court of First Instance of the Twenty-Fourth Judicial District.
It is our judgment that the defendant Fermin Mariano shall be ousted from the office of
Judge of the Twenty-fourth Judicial District, and the plaintiff placed in possession of the
same. The motion for reconsideration filed by the Attorney-General is denied. No costs
shall be allowed. Let this be entered as the order of the court. So ordered.
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 73123 September 2, 1991

IN RE: PETITION FOR DECLARATION OF INSOLVENCY OF [A] FILAND MANUFACTURING AND

ESTATE DEVELOPMENT COMPANY; [B] TOP CONSTRUCTION ENTERPRISES, INC. AND [C]
SPOUSES EMILIO CHING AND INAI TEH; EMILIO CHING, petitioner, LAND BANK OF THE
PHILIPPINES, oppositor. LAND BANK OF THE PHILIPPINES, petitioner,
vs.
HON. DIONISIO N. CAPISTRANO, JUDGE OF THE REGIONAL TRIAL COURT OF PASAY CITY,
EMILIO CHING AND FILAND MANUFACTURING AND ESTATE DEVELOPMENT CO.,
INC., respondents.

Lily K. Gruba and Florencio S. Jimenez for Land Bank of the Philippines.

FERNAN, C.J.:

Assailed in this petition for review on certiorari is the jurisdiction of the Regional Trial Court
(RTC) of Pasay City over a petition for declaration of insolvency of two (2) private corporations.

The antecedent facts are undisputed:

On September 19, 1980, private respondents Filand Manufacturing and Estate Development
Co., Inc. (hereafter, Filand Manufacturing) and Emilio Ching obtained from petitioner Land Bank
of the Philippines a loan in the amount of Ten Million Pesos (P10,000,000.00). Private
respondents having failed to pay the loan on its due date, petitioner instituted before the RTC of
Manila a complaint for recovery thereof, docketed as Civil Case No. 0184-P.

During the pendency of the collection suit on December 29, 1984, private respondents Filand
Manufacturing, Emilio Ching and his spouse Inai Teh and Top Construction Enterprises, Inc., thru
Emilio Ching, filed before the respondent RTC of Pasay City a petition docketed as Special
Proceedings No. 3232P for declaration of insolvency. Cited as ground therefor was their inability
to pay the various debts and liabilities incurred by them, either jointly or solidarily or
guaranteed by one for the other, in the course of their businesses, such inability being due to
business reserves brought about by the fire on January 2, 1984 which gutted the old Holiday
Plaza Building then owned and operated by Filand Manufacturing, as well as the economic crisis
which gripped the country following the assassination of former Senator Benigno S. Aquino in
1983.1

Acting on said petition, respondent court on January 29, 1985 issued an Order of Adjudication
declaring private respondents insolvent pursuant to Section 18 of the Insolvency Law (Act No.
1956). The Sheriff of Pasay City was "directed to take possession of, and safely keep, until the
appointment of a receiver or assignee, all the deeds, vouchers, books of account, papers, notes,
bonds, bills and securities of (therein) petitioners, and all the real and personal properties,
estates and effects of the same petitioners, except such as may, by law, be exempt from
execution." Respondent court set "March 25, 1985 at 9:00 A.M. in its premises ... as the date of
the meeting of the creditors of the petitioners for them to choose an assignee/assignees of the
estates of the petitioners."2

Petitioner bank moved for a reconsideration of the Order of Adjudication on two (2) grounds,
namely: (1) that the court has no jurisdiction over the subject matter of the petition insofar as
petitioning corporations are concerned; and (2) the petition is defective in form and
substance.3 After an exchange of pleadings between petitioner and private respondents,
respondent court issued on July 19, 1985 an Order upholding its jurisdiction over the petition
and appointing petitioner bank as the assignee for and in behalf of all the creditors without
bond, thus:

WHEREFORE, all motions seeking to have this Court make a declaration that it has no
jurisdiction over the above-entitled proceeding are hereby DENIED, and the Land Bank
of the Philippines is appointed as the assignee for and in behalf of all the creditors of the
petitioners, without bond, to which assignee the Clerk of Court, thru the Branch Sheriff,
shall deliver any and all real and personal properties, estates and effects, as well as the
pertinent papers and all deeds, vouchers, books of accounts, papers, notes, bonds, bills
and securities taken by him pursuant to the order of this Court of January 29, 1985.

The assignee is hereby ordered to comply with the time limit provided for in Sec. 43 of
Act 1956, and for this purpose, hereby sets his report for hearing on October 29, 1985,
at 9:00 A.M.

SO ORDERED.4

Petitioner bank declined the appointment and the City Treasurer of Pasay City, being the second
biggest creditor of private respondents, was appointed in its stead Petitioner bank then filed a
Notice of Appeal and a Record on Appeal on August 19, 1985, on the basis of which the
respondent court forwarded the records of the case directly to this Court.

By resolution dated September 23, 1985, the Court resolved to "REQUIRE the Branch Clerk of
Court of the (respondent court) to EXPLAIN why he forwarded to this Court the aforesaid
records when the mode of seeking review by this Court of a lower court's judgment under R.A.
5440 is by petition for review on certiorari; and the Presiding Judge of said trial court is also
directed to EXPLAIN why he accepted and approved the forwarding to this Court of the
aforesaid records, both within ten (10) days from notice hereof." Petitioner bank and/or counsel
were also "REQUIRED to EXPLAIN within ten (10) days from notice ..., since they failed to pay
timely the docket and legal research fund fees and to file timely a petition for review on
certiorari under R.A. 5440 why the judgment sought to be reviewed should not be now deemed
final and executory and the records returned for execution of judgment". 5 Upon submission of
the required explanations, the Court on December 4, 1985 resolved to require the petitioner
bank to file a petition for review on certiorari and to pay the docket and legal research fund
fees, both within a non-extendible period of ten (10) days from notice.6 This Order was
seasonably complied with.

After the private respondents had submitted their comment on the petition, petitioner bank
filed on March 24, 1986 a "Manifestation with motion for issuance of writ of preliminary
injunction" informing the Court that on March 3, 1986, the respondent court rendered a
decision in Special Proceedings No. 3232-P, providing in its dispositive portion as follows:

WHEREFORE, judgment is hereby rendered, as follows:

1. Petitioners Filand Manufacturing & Estate Development Co., Inc., and Top
Construction Enterprises, Inc., are declared by this Court as insolvent and, pursuant to
Sec. 52 of Act 1956, as amended, their properties and assets shall be distributed to the
creditors in the proceeding with respect to the appointment of the City Treasurer of
Pasay City as receiver of their estates and effects. However, they are not discharged from
their liabilities in accordance with Sec. 52 of Act 1956, as amended.

2. Petitioners spouses Emilio Ching and Inai Teh are likewise declared insolvent and their
application for discharge is hereby approved, and they are hereby ordered discharged
and released from all claims, debts, liabilities and demands, whether actual or
contingent, and whether personally or as guarantors or in a joint and solidary capacity,
with respect to the obligations set forth in the schedule and inventory of accounts due
and payable, Annex 'A' of the petition, as well as with respect to the obligations and
 creditors listed in the manifestation of April 29, 1985, and the supplemental
manifestation dated May 22, 1985, in the above-entitled proceedings.

The other aspect of the above-entitled proceedings as regards the receiver and all
incidents and matters in connection with his functions and duties are hereby considered
as mere interlocutory matters in the process of winding up this proceeding.

SO ORDERED.7

Acting on said manifestation and motion, the Court on April 14, 1986 issued a temporary
restraining order enjoining the respondent court from enforcing its decision of March 3,
1986.8 The temporary restraining order was however lifted insofar as private respondents
spouses Emilio Ching and Inai Teh were concerned, the latter being natural persons over whom
the jurisdiction of the respondent court is not being questioned.9

In its petition, given due course by the Court per resolution dated January 28, 1987, petitioner
bank advances the argument that it is the Securities and Exchange Commission (SEC), rather
than the Regional Trial Court (RTC) which has jurisdiction over the petition for declaration of
insolvency filed by private respondent corporations. This theory is allegedly anchored on
specific provisions of Presidential Decree No. 902-A, as amended, namely: Sections 3, 5(d) and
6(c) and (d), which petitioner bank construes as having repealed the Insolvency Law (Act 1956),
which confers jurisdiction over insolvency proceedings on the regular courts. Private
respondents maintain the opposite view, contending simply that a petition for declaration of
insolvency is not one of those cases enumerated under Section 5, P.D. No. 902-A, as amended,
over which the SEC has original and exclusive jurisdiction.

In view of the far reaching importance of the issue presented before the Court, both from a
legal and economic standpoint, we resolved to implead the SEC as a party to this case and to
require it to inform the Court of its practice regarding insolvency proceedings. 10 The SEC thru
the Solicitor General, filed its memorandum on December 13, 1989.

After deliberating on the SEC's memorandum, the Court resolved to set the case for hearing on
May 14, 1990 at 10:00 o'clock in the morning. A senior and knowledgeable officer of the SEC
was requested to "appear and inform the Court of the law and practice actually applied and
followed by the SEC in respect of suspension of payments by, and voluntary and involuntary
insolvencies of Philippine corporations . ..." Former SEC Chairman Julito Sulit, Jr. was
appointed amicus curiae and was requested to appear at the hearing in that capacity.11

Before addressing the principal issue in the instant petition, the Court notes with dismay that
the petitioner and the lower court appear to be still in the dark as to the proper mode of appeal
to this Court. Hence, for their elucidation as well as the others similarly misinformed, we deem
it proper to quote the following resolution dated March 1, 1990 of the Court en banc in UDK
9748, "Murillo v. Consul":

R.A. No. 5440 changed the mode of appeal from courts of first instance (now Regional
Trial Courts) to the Supreme Court in cases involving only questions of law, or the
constitutionality or validity of any treaty, law, ordinance, etc. or the legality of any tax,
impost, assessment or toll, etc., or the jurisdiction of any inferior court, from ordinary
appeal — i.e., by notice of appeal, record on appeal and appeal bond, under Rule 41—
to appeal by certiorari, under Rule 45.

xxx xxx xxx

At present then, except in criminal cases where the penalty imposed is life imprisonment
or reclusion perpetua, there is no way by which judgments of regional trial courts may
be appealed to this Court except by petition for review on certiorari in accordance with
Rule 45 of the Rules of Court, in relation to Section 17 of the Judiciary Act of 1948, as
amended. The proposition is clearly stated in the Interim Rules: 'Appeals to the Supreme
 Court shall be taken by petition for certiorari which shall be governed by Rule 45 of the
Rules of Court.

xxx xxx xxx

... To repeat, appeals to this Court cannot now be made by petition for review or by
notice of appeal (and, in certain instances, by record on appeal), but only by petition for
review on certiorari under Rule 45. As was stressed by this Court as early as 1980
in Buenbrazo v. Marave, 101 SCRA 848, all the members of the bench and bar are
charged with knowledge, not only that since the enactment of Republic Act No. 6031 in
1969,' 'the review of the decision of the Court of First Instance in a case exclusively
cognizable by the inferior court ... cannot be made in an ordinary appeal or by record on
appeal but also that 'appeal by record on appeal to the Supreme Court under Rule 42 of
the Rules of Court was abolished by Republic Act No. 5440 which, as already stated, took
effect on September 9, 1968.' Similarly, in Santos, Jr. v. C.A., 152 SCRA 378, this Court
declared that 'Republic Act No. 5440 had long superseded Rule 41 and Section 1, Rule
122 of the Rules of Court on direct appeals from the court of first instance to the
Supreme Court in civil and criminal cases,' ... and that 'direct appeals to this Court from
the trial court on questions of law had to be through the filing of a petition for review
on certiorari, wherein this Court could either give due course to the proposed appeal or
deny it outright to prevent the clogging of its docket with unmeritorious and dilatory
appeals.

Going now to the issue of jurisdiction raised in this petition and considering the arguments
proferred by the parties' respective counsel, the view spoused by the amicus curiae as well as
the submissions of the SEC thru the Office of the Solicitor General and its Assistant Executive
Director, we find for private respondents.

Under Act 1956, otherwise known as the Insolvency Law, jurisdiction over proceedings for
suspension of payments, voluntary and involuntary insolvency is exclusively vested in the
regular courts. However, P.D. No. 1758 issued in 1981 added to the exclusive and original
jurisdiction of the SEC defined and delineated in Section 5 of P.D. 902-A, 12 the following:

d) Petitions of corporations, partnerships or associations to be declared in the state of

suspension of payments in cases where the corporation, partnership or association
possesses sufficient property to cover all its debts but foresees the impossibility of
meeting them when they respectively fall due or in cases where the corporation,
partnership or association has no sufficient assets to cover its liabilities, but is under the
management of a Rehabilitation Receiver or Management Committee created pursuant
to this Decree.

It is petitioner's contention that said additional par. (d) effectively repealed the Insolvency Law
so as to transfer and confer upon the SEC jurisdiction theretofore enjoyed by the regular courts
over proceedings for suspension of payments and voluntary and involuntary insolvency. We do
not share such interpretation.

The SEC like any other administrative body, is a tribunal of limited jurisdiction and as such, could
wield only such powers as are specifically granted to it by its enabling statute.13 Its jurisdiction
should be interpreted in strictissimi juris.14

Section 5, par. (d) should be construed as vesting upon the SEC original and exclusive jurisdiction
only over petitions to be declared in a state of suspension of payments, which may either be: (a)
a simple petition for suspension of payments based on the provisions of the Insolvency Law, or
(b) a similar petition accompanied by a prayer for the creation/appointment of a management
committee and/or rehabilitation receiver based on the provisions of P.D. No. 902-A. Said
provision cannot be stretched to include petitions for insolvency. The reason is that under said
Section 5, par. (d) above-quoted, the jurisdiction of the SEC over cases where the corporation,
partnership or association has no sufficient assets to cover its liabilities, (and therefore
insolvent) is qualified by the conjunctive phrase "but is under the management of a
Rehabilitation Receiver or Management Committee created pursuant to this Decree." This
qualification effectively circumscribes the jurisdiction of the SEC over insolvent corporations,
partnerships and associations, and consequently, over proceedings for the declaration of
insolvency. It demonstrates beyond doubt that jurisdiction over insolvency proceedings pertains
neither in the first instance nor exclusively to the SEC but only in continuation of or as an
incident to the exercise of its jurisdiction over petitions to be declared in a state of suspension
of payments wherein the petitioning corporation, partnership or association had previously
been placed under a rehabilitation receiver or management committee by the SEC itself.

Viewed differently, where the petition filed is one for declaration of a state of suspension of
payments due to a recognition of the inability to pay one's debts and liabilities, and where the
petitioning corporation either: (a) has sufficient property to cover all its debts but foresees the
impossibility of meeting them when they fall due (solvent but illiquid or (b) has no sufficient
property (insolvent) but is under the management of a rehabilitation receiver or a management
committee, the applicable law is P.D. No. 902-A pursuant to Sec. 5 par. (d) thereof. However, if
the petitioning corporation has no sufficient assets to cover its liabilities and is not under a
rehabilitation receiver or a management committee created under P.D. No. 902-A and does not
seek merely to have the payments of its debts suspended, but seeks a declaration of insolvency,
as in this case, the applicable law is Act 1956 on voluntary insolvency, specifically section 14
thereof, which provides:

Sec. 14. — An insolvent debtor, owing debts exceeding in amount the sum of one
thousand pesos, may apply to be discharged from his debts and liabilities by petition to
the Court of First Instance of the province or city in which he has resided for six month
next preceding the filing of such petition. In his petition, he shall set forth his place of
residence, the period of his residence therein immediately prior to filing said petition,
his inability to pay all his debts in full, his willingness to surrender all his property, estate,
and effects not exempt from execution for the benefit of his creditors, and an application
to be adjudged an insolvent. He shall annex to his petition a schedule and inventory in
the form hereinafter provided. The filing of such petition shall be an act of insolvency.

Neither could the grant of additional powers to SEC under Section 6(c) and (d) of P.D. No. 902-
A, as amended, be construed as vesting upon it exclusive and original jurisdiction over
insolvency proceedings. The pertinent provisions read:

SEC. 6. In order to effectively exercise such jurisdiction, the Commission shall possess the
following powers:

xxx xxx xxx

c) To appoint one or more receivers of the property, real and personal, which is the
subject of the action pending before the Commission in accordance with the pertinent
provisions of the Rules of Court in such other cases whenever necessary to preserve the
rights of the parties-litigants to and/or protect the interest of the investing public and
creditors; Provided, however, that the Commission may, in appropriate cases, appoint a
rehabilitation receiver of corporations, partnerships or other associations not supervised
or regulated by other government agencies who shall have, in addition to the powers of
a regular receiver under the provisions of the Rules of Court, such functions and powers
as are provided for in the succeeding paragraph (d) hereof; Provided, further that the
Commission may appoint a rehabilitation receiver of corporations, partnerships or other
nations supervised or regulated by other government agencies, such as banks and
insurance companies, upon request of the government agency concerned; Provided,
finally that upon appointment of a management committee, rehabilitation receiver,
board or body pursuant to this Decree, all actions for claims against corporations,
partnerships or nations under management or receivership pending before any court,
tribunal, board or body shall be suspended accordingly.

d) To create and appoint a management committee, board, or body upon petition

or motu proprio to undertake the management of corporations, partnerships or other
 associations not supervised or regulated by other government agencies in appropriate
cases when there is imminent danger of dissipation, loss, wastage or destruction of
assets or other properties or paralization of business operations of such corporations or
entities which may be prejudicial to the interest of minority stockholders, parties-
litigants or the general public; Provided, further, that the Commission may create or
appoint a management committee, board or body to undertake the management of
corporations, partnerships or other associations supervised or regulated by other
government agencies, such as banks and insurance companies, upon request of the
government agency concerned.

The management committee or rehabilitation receiver, board or body shall have the
power to take custody of, and control over, all the existing assets and property of such
entities under management; to evaluate the existing assets and liabilities, earnings and
operations of such corporations, partnerships or other associations, to determine the
best way to wage and protect the interest of the investors and creditors; to study, review
and evaluate the feasibility of continuing operations and restructure and rehabilitate
such entities if determined to be feasible by the Commission. It shall report and be
responsible to the Commission until dissolved by order of the Commission: Provided,
however, that the Commission may, on the basis of the findings and recommendation of
the management committee, or rehabilitation receiver, board or body, or on its own
findings, determine that the continuance in business of such corporation or entity would
not be feasible or profitable nor work to the best interest of the stockholders, parties-
litigants, creditors, or the general public, order the dissolution of such corporation entity
and its remaining assets liquidated accordingly.

The management committee or rehabilitation receiver, board or body may overrule or

revoke the actions of the previous management and board of directors of the entity or
entities under management notwithstanding any provision of law, articles of
incorporation or by-laws to the contrary.

The management committee, or rehabilitation receiver, board or body shall not be

subject to any action, claim or demand for, or in connection with any act done or
omitted to be done by it in good faith in the exercise of its functions, or in connection
with the exercise of its powers herein conferred.

As declared by the law itself, these are merely ancillary powers to enable the SEC to effectively
exercise its jurisdiction. These additional ancillary powers can be exercised only in connection
with an action pending before the SEC and therefore had to be viewed in relation to Section 5
which defines the SEC's original and exclusive jurisdiction. Section 6 does not enlarge or add to
the exclusive and original jurisdiction of the SEC as particularly enumerated under Section 5 of
said Presidential Decree, as amended.

A well-recognized rule in statutory construction is that repeals by implication are not favored
and will not be so declared unless it be manifest that the legislature so intended. 15 When
statutes are in pari material they should be construed together. In construing them the old
statutes relating to the same subject matter should be compared with the new provisions and if
possible by reasonable construction, both should be so construed that effect may be given to
every provision of each.16

Construing P.D. 902-A, as amended, in relation to Act 1956, we rule that insofar as petitions for
declaration of insolvency of private corporations are concerned, it is the regular court that has
exclusive and original jurisdiction thereon. The SEC may entertain such petitions only as an
incident of and in continuation of its already acquired jurisdiction over petitions to be declared
in the state of suspension of payments in the two (2) cases provided in Section 5 (d) of P.D. 902-
A, as amended.

WHEREFORE, the instant petition for review on certiorari is DENIED. The temporary restraining
order issued on April 14, 1986 is LIFTED. No pronouncement as to costs.
SO ORDERED.

Gutierrez, Jr., Bidin and Davide, Jr., JJ., concur.

Feliciano, J., is on leave.

Footnotes

1 Annex "A", Petition, pp. 86-88, Rollo.

2 Annex 'B', Petition, p. 90, Rollo.

3 Annex "C", Petition, pp. 92-100, Rollo.

4 Annex "I", Petition, pp. 127-128, Rollo.

5 p. 52, Rollo.

6 p. 72, Rollo.

7 pp. 257-258, Rollo.

8 p. 259, Rollo.

9 Resolution dated September 5, 1986, p. 305, Rollo.

10 p. 316, Rollo.

11 Resolution of May 7, 1990, pp. 347-348, Rollo.

12 Section 5 of P.D. 902-A, before its amendment by P.D. 1758 read:

SEC. 5. In addition to the regulatory and adjudicative functions of the Securities and
Exchange Commission over corporations, partnerships and other forms of associations
registered with it as expressly granted under existing laws and decrees, it shall have
original and exclusive jurisdiction to hear and decide cases involving:

a) Devices or schemes employed by or any acts, of the board of directors, business

associates, its officers or partners, amounting to fraud and misrepresentation which may
be detrimental to the interest of the public and/or of the stockholder, partners,
members of associations of organizations registered with the Commission.
b) Controversies arising out of intracorporate or partnership relations, between and
among stockholders, members, or associates; between any or all of them and the
corporation, partnership or association of which they are stockholders, members or
associates, respectively; and between such corporation, partnership or association and
the state insofar as it concerns their individual franchise or right to exist as such entity;

c) Controversies in the election or appointments of directors, trustees, officers or

managers of such corporations, partnerships or associations.

13 Union Glass & Container Corporation v. Securities and Exchange Commission, 126
SCRA 31.

14 Devesa v. Montecillo, 27 SCRA 822.

15 Bocobo v. Estanislao, 72 SCRA 520; Gimenez Stock Brokerage & Co. v. SEC 133 SCRA
840.
16 City of Naga v. Agna, 71 SCRA 176; Lechoco v. Civil Aeronautics Board, 43 SCRA 671;
Valera v. Tuason, 80 Phil. 823.