CASE NO.

G.R. No. 90501 August 5, 1991 ARIS (PHIL.) INC., petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION, LABOR ARBITER FELIPE GARDUQUE III, LEODEGARIO DE GUZMAN, LILIA PEREZ,
ROBERTO BESTAMONTE, AIDA OPENA, REYNALDO TORIADO, APOLINARIO GAGAHINA, RUFINO DE
CASTRO, FLORDELIZA RAYOS DEL SOL, STEVE SANCHO, ESTER CAIRO, MARIETA MAGALAD, and
MARY B. NADALA, respondents.

DAVIDE, JR., J.:

Petitioner assails the constitutionality of the amendment introduced by Section 12 of Republic Act No. 6715 to
Article 223 of the Labor Code of the Philippines (PD No. 442, as amended) allowing execution pending appeal of
the reinstatement aspect of a decision of a labor arbiter reinstating a dismissed or separated employee and of
Section 2 of the NLRC Interim Rules on Appeals under R.A. No. 6715 implementing the same. It also questions
the validity of the Transitory Provision (Section 17) of the said Interim Rules.

The challenged portion of Section 12 of Republic Act No. 6715, which took effect on 21 March 1989, reads as
follows:

SEC 12. Article 223 of the same code is amended to read as follows:

ART. 223. Appeal.

In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, in so far as the
reinstatement aspect is concerned, shall immediately be executory, even pending appeal. The employee shall
either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation
or, at the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not
stay the execution for reinstatement provided therein.

This is a new paragraph ingrafted into the Article.

Sections 2 and 17 of the "NLRC Interim Rules On Appeals Under R.A. No. 6715, Amending the Labor Code",
which the National Labor Relations Commission (NLRC) promulgated on 8 August 1989, provide as follows:

Section 2. Order of Reinstatement and Effect of Bond. — In so far as the reinstatement aspect is concerned, the
decision of the Labor Arbiter reinstating a dismissed or separated employee shall immediately be executory even
pending appeal. The employee shall either be admitted back to work under the same terms and conditions
prevailing prior to his dismissal or separation, or, at the option of the employer, merely be reinstated in the payroll.

The posting of a bond by the employer shall not stay the execution for reinstatement.

Section 17. Transitory provision. — Appeals filed on or after March 21, 1989, but prior to the effectivity of these
Interim Rules must conform to the requirements as herein set forth or as may be directed by the Commission.

The antecedent facts and proceedings which gave rise to this petition are not disputed:

On 11 April 1988, private respondents, who were employees of petitioner, aggrieved by management's failure to
attend to their complaints concerning their working surroundings which had become detrimental and hazardous,
requested for a grievance conference. As none was arranged, and believing that their appeal would be fruitless,
they grouped together after the end of their work that day with other employees and marched directly to the
management's office to protest its long silence and inaction on their complaints.

On 12 April 1988, the management issued a memorandum to each of the private respondents, who were identified
by the petitioner's supervisors as the most active participants in the rally requiring them to explain why they should
not be terminated from the service for their conduct. Despite their explanation, private respondents were dismissed
for violation of company rules and regulations, more specifically of the provisions on security and public order and
on inciting or participating in illegal strikes or concerted actions.

Private respondents lost no time in filing a complaint for illegal dismissal against petitioner and Mr. Gavino Bayan
with the regional office of the NLRC at the National Capital Region, Manila, which was docketed therein as NLRC-
NCR-00-0401630-88.
After due trial, Labor Arbiter Felipe Garduque III handed down on 22 June 1989 a decision' the dispositive portion
of which reads:

ACCORDINGLY, respondent Aris (Phils.), Inc. is hereby ordered to reinstate within ten (10) days from receipt
hereof, herein complainants Leodegario de Guzman, Rufino de Castro, Lilia M. Perez, Marieta Magalad, Flordeliza
Rayos del Sol, Reynaldo Toriado, Roberto Besmonte, Apolinario Gagahina, Aidam (sic) Opena, Steve C. Sancho
Ester Cairo, and Mary B. Nadala to their former respective positions or any substantial equivalent positions if
already filled up, without loss of seniority right and privileges but with limited backwages of six (6) months except
complainant Leodegario de Guzman.

All other claims and prayers are hereby denied for lack of merit.

SO ORDERED.

On 19 July 1989, complainants (herein private respondents) filed a Motion For Issuance of a Writ of Execution2
pursuant to the above-quoted Section 12 of R.A. No. 6715.

On 21 July 1989, petitioner filed its Appeal.3

On 26 July 1989, the complainants, except Flor Rayos del Sol, filed a Partial Appeal.4

On 10 August 1989, complainant Flor Rayos del Sol filed a Partial Appeal.5

On 29 August 1989, petitioner filed an Opposition6 to the motion for execution alleging that Section 12 of R.A. No.
6715 on execution pending appeal cannot be applied retroactively to cases pending at the time of its effectivity
because it does not expressly provide that it shall be given retroactive effect7 and to give retroactive effect to
Section 12 thereof to pending cases would not only result in the imposition of an additional obligation on petitioner
but would also dilute its right to appeal since it would be burdened with the consequences of reinstatement without
the benefit of a final judgment. In their Reply8 filed on 1 September 1989, complainants argued that R.A. No. 6715
is not sought to be given retroactive effect in this case since the decision to be executed pursuant to it was rendered
after the effectivity of the Act. The said law took effect on 21 March 1989, while the decision was rendered on 22
June 1989.

Petitioner submitted a Rejoinder to the Reply on 5 September 1989.9

On 5 October 1989, the Labor Arbiter issued an Order granting the motion for execution and the issuance of a
partial writ of execution10 as far as reinstatement of herein complainants is concerned in consonance with the
provision of Section 2 of the rules particularly the last sentence thereof.

In this Order, the Labor Arbiter also made reference to Section 17 of the NLRC Interim Rules in this wise:

Since Section 17 of the said rules made mention of appeals filed on or after March 21, 1989, but prior to the
effectivity of these interim rules which must conform with the requirements as therein set forth (Section 9) or as
may be directed by the Commission, it obviously treats of decisions of Labor Arbiters before March 21,1989. With
more reason these interim rules be made to apply to the instant case since the decision hereof (sic) was rendered
thereafter.11

Unable to accept the above Order, petitioner filed the instant petition on 26 October 1989 12 raising the issues
adverted to in the introductory portion of this decision under the following assignment of errors:

A. THE LABOR ARBITER A QUO AND THE NLRC, IN ORDERING THE REINSTATEMENT OF THE PRIVATE
RESPONDENTS PENDING APPEAL AND IN PROVIDING FOR SECTION 2 OF THE INTERIM RULES,
RESPECTIVELY, ACTED WITHOUT AND IN EXCESS OF JURISDICTION SINCE THE BASIS FOR SAID
ORDER AND INTERIM RULE, i.e., SECTION 12 OF R.A. 6715 IS VIOLATIVE OF THE CONSTITUTIONAL
GUARANTY OF DUE PROCESS IT BEING OPPRESSIVE AND UNREASONABLE.

B. GRANTING ARGUENDO THAT THE PROVISION IN(SIC) REINSTATEMENT PENDING APPEAL IS VALID,
NONETHELESS, THE LABOR ARBITER A QUO AND THE NLRC STILL ACTED IN EXCESS AND WITHOUT
JURISDICTION IN RETROACTIVELY APPLYING SAID PROVISION TO PENDING LABOR CASES.

In Our resolution of 7 March 1989, We required the respondents to comment on the petition.
Respondent NLRC, through the Office of the Solicitor General, filed its Comment on 20 November 1989.13 Meeting
squarely the issues raised by petitioner, it submits that the provision concerning the mandatory and automatic
reinstatement of an employee whose dismissal is found unjustified by the labor arbiter is a valid exercise of the
police power of the state and the contested provision "is then a police legislation."

As regards the retroactive application thereof, it maintains that being merely procedural in nature, it can apply to
cases pending at the time of its effectivity on the theory that no one can claim a vested right in a rule of procedure.
Moreover, such a law is compatible with the constitutional provision on protection to labor.

On 11 December 1989, private respondents filed a Manifestation14 informing the Court that they are adopting the
Comment filed by the Solicitor General and stressing that petitioner failed to comply with the requisites for a valid
petition for certiorari under Rule 65 of the Rules of Court.

On 20 December 1989, petitioner filed a Rejoinder15 to the Comment of the Solicitor General.

In the resolution of 11 January 1990,16 We considered the Comments as respondents' Answers, gave due course
to the petition, and directed that the case be calendared for deliberation.

In urging Us to declare as unconstitutional that portion of Section 223 of the Labor Code introduced by Section 12
of R.A. No. 6715, as well as the implementing provision covered by Section 2 of the NLRC Interim Rules, allowing
immediate execution, even pending appeal, of the reinstatement aspect of a decision of a labor arbiter reinstating
a dismissed or separated employee, petitioner submits that said portion violates the due process clause of the
Constitution in that it is oppressive and unreasonable. It argues that a reinstatement pending appeal negates the
right of the employer to self-protection for it has been ruled that an employer cannot be compelled to continue in
employment an employee guilty of acts inimical to the interest of the employer; the right of an employer to dismiss
is consistent with the legal truism that the law, in protecting the rights of the laborer, authorizes neither the
oppression nor the destruction of the employer. For, social justice should be implemented not through mistaken
sympathy for or misplaced antipathy against any group, but even-handedly and fairly.17

To clinch its case, petitioner tries to demonstrate the oppressiveness of reinstatement pending appeal by
portraying the following consequences: (a) the employer would be compelled to hire additional employees or adjust
the duties of other employees simply to have someone watch over the reinstated employee to prevent the
commission of further acts prejudicial to the employer, (b) reinstatement of an undeserving, if not undesirable,
employee may demoralize the rank and file, and (c) it may encourage and embolden not only the reinstated
employees but also other employees to commit similar, if not graver infractions.

These rationalizations and portrayals are misplaced and are purely conjectural which, unfortunately, proceed from
a misunderstanding of the nature and scope of the relief of execution pending appeal.

Execution pending appeal is interlinked with the right to appeal. One cannot be divorced from the other. The latter
may be availed of by the losing party or a party who is not satisfied with a judgment, while the former may be
applied for by the prevailing party during the pendency of the appeal. The right to appeal, however, is not a
constitutional, natural or inherent right. It is a statutory privilege of statutory origin18 and, therefore, available only
if granted or provided by statute. The law may then validly provide limitations or qualifications thereto or relief to
the prevailing party in the event an appeal is interposed by the losing party. Execution pending appeal is one such
relief long recognized in this jurisdiction. The Revised Rules of Court allows execution pending appeal and the
grant thereof is left to the discretion of the court upon good reasons to be stated in a special order.19

Before its amendment by Section 12 of R.A. No. 6715, Article 223 of the Labor Code already allowed execution
of decisions of the NLRC pending their appeal to the Secretary of Labor and Employment.

In authorizing execution pending appeal of the reinstatement aspect of a decision of the Labor Arbiter reinstating
a dismissed or separated employee, the law itself has laid down a compassionate policy which, once more, vivifies
and enhances the provisions of the 1987 Constitution on labor and the working-man.

These provisions are the quintessence of the aspirations of the workingman for recognition of his role in the social
and economic life of the nation, for the protection of his rights, and the promotion of his welfare. Thus, in the Article
on Social Justice and Human Rights of the Constitution,20 which principally directs Congress to give highest priority
to the enactment of measures that protect and enhance the right of all people to human dignity, reduce social,
economic, and political inequalities, and remove cultural inequities by equitably diffusing wealth and political power
for the common good, the State is mandated to afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities for all; to guarantee the rights
of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities,
including the right to strike in accordance with law, security of tenure, human conditions of work, and a living wage,
to participate in policy and decision-making processes affecting their rights and benefits as may be provided by
law; and to promote the principle of shared responsibility between workers and employers and the preferential use
of voluntary modes in settling disputes. Incidentally, a study of the Constitutions of various nations readily reveals
that it is only our Constitution which devotes a separate article on Social Justice and Human Rights. Thus, by no
less than its fundamental law, the Philippines has laid down the strong foundations of a truly just and humane
society. This Article addresses itself to specified areas of concern labor, agrarian and natural resources reform,
urban land reform and housing, health, working women, and people's organizations and reaches out to the
underprivileged sector of society, for which reason the President of the Constitutional Commission of 1986, former
Associate Justice of this Court Cecilia Muñoz-Palma, aptly describes this Article as the "heart of the new Charter."21

These duties and responsibilities of the State are imposed not so much to express sympathy for the workingman
as to forcefully and meaningfully underscore labor as a primary social and economic force, which the Constitution
also expressly affirms With equal intensity.22 Labor is an indispensable partner for the nation's progress and
stability.

If in ordinary civil actions execution of judgment pending appeal is authorized for reasons the determination of
which is merely left to the discretion of the judge, We find no plausible reason to withhold it in cases of decisions
reinstating dismissed or separated employees. In such cases, the poor employees had been deprived of their only
source of livelihood, their only means of support for their family their very lifeblood. To Us, this special circumstance
is far better than any other which a judge, in his sound discretion, may determine. In short, with respect to decisions
reinstating employees, the law itself has determined a sufficiently overwhelming reason for its execution pending
appeal.

The validity of the questioned law is not only supported and sustained by the foregoing considerations. As
contended by the Solicitor General, it is a valid exercise of the police power of the State. Certainly, if the right of
an employer to freely discharge his employees is subject to regulation by the State, basically in the exercise of its
permanent police power on the theory that the preservation of the lives of the citizens is a basic duty of the State,
that is more vital than the preservation of corporate profits.23 Then, by and pursuant to the same power, the State
may authorize an immediate implementation, pending appeal, of a decision reinstating a dismissed or separated
employee since that saving act is designed to stop, although temporarily since the appeal may be decided in favor
of the appellant, a continuing threat or danger to the survival or even the life of the dismissed or separated
employee and its family.

The charge then that the challenged law as well as the implementing rule are unconstitutional is absolutely
baseless. Laws are presumed constitutional.24 To justify nullification of a law, there must be a clear and
1âw phi 1

unequivocal breach of the Constitution, not a doubtful and argumentative implication; a law shall not be declared
invalid unless the conflict with the constitution is clear beyond reasonable doubt.25 In Parades, et al. vs. Executive
Secretary26 We stated:

2. For one thing, it is in accordance with the settled doctrine that between two possible constructions, one avoiding
a finding of unconstitutionality and the other yielding such a result, the former is to be preferred. That which will
save, not that which will destroy, commends itself for acceptance. After all, the basic presumption all these years
is one of validity. The onerous task of proving otherwise is on the party seeking to nullify a statute. It must be
proved by clear and convincing evidence that there is an infringement of a constitutional provision, save in those
cases where the challenged act is void on its face. Absent such a showing, there can be no finding of
unconstitutionality. A doubt, even if well-founded, does not suffice. Justice Malcolm's aphorism is apropos: To
doubt is to sustain.27

The reason for this:

... can be traced to the doctrine of separation of powers which enjoins on each department a proper respect for
the acts of the other departments. ... The theory is that, as the joint act of the legislative and executive authorities,
a law is supposed to have been carefully studied and determined to be constitution before it was finally enacted.
Hence, as long as there is some other basis that can be used by the courts for its decision, the constitutionality of
the challenged law will not be touched upon and the case will be decided on other available grounds.28

The issue concerning Section 17 of the NLRC Interim Rules does not deserve a measure of attention. The
reference to it in the Order of the Labor Arbiter of 5 October 1989 was unnecessary since the procedure of the
appeal proper is not involved in this case. Moreover, the questioned interim rules of the NLRC, promulgated on 8
August 1989, can validly be given retroactive effect. They are procedural or remedial in character, promulgated
pursuant to the authority vested upon it under Article 218(a) of the Labor Code of the Philippines, as amended.
Settled is the rule that procedural laws may be given retroactive effect.29 There are no vested rights in rules of
procedure.30 A remedial statute may be made applicable to cases pending at the time of its enactment.31

WHEREFORE, the petition is hereby DISMISSED for lack of merit. Costs against petitioner.

SO ORDERED.

CASE NO. 2

G.R. No. 94723 August 21, 1997 KAREN E. SALVACION, minor, thru Federico N. Salvacion, Jr., father and
Natural Guardian, and Spouses FEDERICO N. SALVACION, JR., and EVELINA E. SALVACION, petitioners,
vs. CENTRAL BANK OF THE PHILIPPINES, CHINA BANKING CORPORATION and GREG BARTELLI y
NORTHCOTT, respondents.

TORRES, JR., J.:

In our predisposition to discover the "original intent" of a statute, courts become the unfeeling pillars of the status
quo. Ligle do we realize that statutes or even constitutions are bundles of compromises thrown our way by their
framers. Unless we exercise vigilance, the statute may already be out of tune and irrelevant to our day.

The petition is for declaratory relief. It prays for the following reliefs:

a.) Immediately upon the filing of this petition, an Order be issued restraining the respondents from applying and
enforcing Section 113 of Central Bank Circular No. 960;

b.) After hearing, judgment be rendered:

1.) Declaring the respective rights and duties of petitioners and respondents;

2.) Adjudging Section 113 of Central Bank Circular No. 960 as contrary to the provisions of the Constitution, hence
void; because its provision that "Foreign currency deposits shall be exempt from attachment, garnishment, or any
other order or process of any court, legislative body, government agency or any administrative body whatsoever

i.) has taken away the right of petitioners to have the bank deposit of defendant Greg Bartelli y Northcott garnished
to satisfy the judgment rendered in petitioners' favor in violation of substantive due process guaranteed by the
Constitution;

ii.) has given foreign currency depositors an undue favor or a class privilege in violation of the equal protection
clause of the Constitution;

iii.) has provided a safe haven for criminals like the herein respondent Greg Bartelli y Northcott since criminals
could escape civil liability for their wrongful acts by merely converting their money to a foreign currency and
depositing it in a foreign currency deposit account with an authorized bank.

The antecedent facts:

On February 4, 1989, Greg Bartelli y Northcott, an American tourist, coaxed and lured petitioner Karen Salvacion,
then 12 years old to go with him to his apartment. Therein, Greg Bartelli detained Karen Salvacion for four days,
or up to February 7, 1989 and was able to rape the child once on February 4, and three times each day on February
5, 6, and 7, 1989. On February 7, 1989, after policemen and people living nearby, rescued Karen, Greg Bartelli
was arrested and detained at the Makati Municipal Jail. The policemen recovered from Bartelli the following items:
1.) Dollar Check No. 368, Control No. 021000678-1166111303, US 3,903.20; 2.) COCOBANK Bank Book No.
104-108758-8 (Peso Acct.); 3.) Dollar Account — China Banking Corp., US$/A#54105028-2; 4.) ID-122-30-8877;
5.) Philippine Money (P234.00) cash; 6.) Door Keys 6 pieces; 7.) Stuffed Doll (Teddy Bear) used in seducing the
complainant.

On February 16, 1989, Makati Investigating Fiscal Edwin G. Condaya filed against Greg Bartelli, Criminal Case
No. 801 for Serious Illegal Detention and Criminal Cases Nos. 802, 803, 804, and 805 for four (4) counts of Rape.
On the same day, petitioners filed with the Regional Trial Court of Makati Civil Case No. 89-3214 for damages
with preliminary attachment against Greg Bartelli. On February 24, 1989, the day there was a scheduled hearing
for Bartelli's petition for bail the latter escaped from jail.

On February 28, 1989, the court granted the fiscal's Urgent Ex-Parte Motion for the Issuance of Warrant of Arrest
and Hold Departure Order. Pending the arrest of the accused Greg Bartelli y Northcott, the criminal cases were
archived in an Order dated February 28, 1989.

Meanwhile, in Civil Case No. 89-3214, the Judge issued an Order dated February 22, 1989 granting the application
of herein petitioners, for the issuance of the writ of preliminary attachment. After petitioners gave Bond No. JCL
(4) 1981 by FGU Insurance Corporation in the amount of P100,000.00, a Writ of Preliminary Attachment was
issued by the trial court on February 28, 1989.

On March 1, 1989, the Deputy Sheriff of Makati served a Notice of Garnishment on China Banking Corporation.
In a letter dated March 13, 1989 to the Deputy Sheriff of Makati, China Banking Corporation invoked Republic Act
No. 1405 as its answer to the notice of garnishment served on it. On March 15, 1989, Deputy Sheriff of Makati
Armando de Guzman sent his reply to China Banking Corporation saying that the garnishment did not violate the
secrecy of bank deposits since the disclosure is merely incidental to a garnishment properly and legally made by
virtue of a court order which has placed the subject deposits in custodia legis. In answer to this letter of the Deputy
Sheriff of Makati, China Banking Corporation, in a letter dated March 20, 1989, invoked Section 113 of Central
Bank Circular No. 960 to the effect that the dollar deposits or defendant Greg Bartelli are exempt from attachment,
garnishment, or any other order or process of any court, legislative body, government agency or any administrative
body, whatsoever.

This prompted the counsel for petitioners to make an inquiry with the Central Bank in a letter dated April 25, 1989
on whether Section 113 of CB Circular No. 960 has any exception or whether said section has been repealed or
amended since said section has rendered nugatory the substantive right of the plaintiff to have the claim sought
to be enforced by the civil action secured by way of the writ of preliminary attachment as granted to the plaintiff
under Rule 57 of the Revised Rules of Court. The Central Bank responded as follows:

May 26, 1989

Ms. Erlinda S. Carolino 12 Pres. Osmena Avenue South Admiral Village Paranaque, Metro Manila

Dear Ms. Carolino:

This is in reply to your letter dated April 25, 1989 regarding your inquiry on Section 113, CB Circular No. 960
(1983).

The cited provision is absolute in application. It does not admit of any exception, nor has the same been repealed
nor amended.

The purpose of the law is to encourage dollar accounts within the country's banking system which would help in
the development of the economy. There is no intention to render futile the basic rights of a person as was
suggested in your subject letter. The law may be harsh as some perceive it, but it is still the law. Compliance is,
therefore, enjoined.

Very truly yours,

(SGD) AGAPITO S. FAJARDO Director1

Meanwhile, on April 10, 1989, the trial court granted petitioners' motion for leave to serve summons by publication
in the Civil Case No. 89-3214 entitled "Karen Salvacion, et al. vs. Greg Bartelli y Northcott." Summons with the
complaint was a published in the Manila Times once a week for three consecutive weeks. Greg Bartelli failed to
file his answer to the complaint and was declared in default on August 7, 1989. After hearing the case ex-parte,
the court rendered judgment in favor of petitioners on March 29, 1990, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against defendant, ordering the latter:

1. To pay plaintiff Karen E. Salvacion the amount of P500,000.00 as moral damages;

2. To pay her parents, plaintiffs spouses Federico N. Salvacion, Jr., and Evelina E. Salvacion the amount of
P150,000.00 each or a total of P300,000.00 for both of them;

3. To pay plaintiffs exemplary damages of P100,000.00; and

4. To pay attorney's fees in an amount equivalent to 25% of the total amount of damages herein awarded;

5. To pay litigation expenses of P10,000.00; plus

6. Costs of the suit.

SO ORDERED.

The heinous acts of respondent Greg Bartelli which gave rise to the award were related in graphic detail by the
trial court in its decision as follows:

The defendant in this case was originally detained in the municipal jail of Makati but was able to escape therefrom
on February 24, 1989 as per report of the Jail Warden of Makati to the Presiding Judge, Honorable Manuel M.
Cosico of the Regional Trial Court of Makati, Branch 136, where he was charged with four counts of Rape and
Serious Illegal Detention (Crim. Cases Nos. 802 to 805). Accordingly, upon motion of plaintiffs, through counsel,
summons was served upon defendant by publication in the Manila Times, a newspaper of general circulation as
attested by the Advertising Manager of the Metro Media Times, Inc., the publisher of the said newspaper.
Defendant, however, failed to file his answer to the complaint despite the lapse of the period of sixty (60) days
from the last publication; hence, upon motion of the plaintiffs, through counsel, defendant was declared in default
and plaintiffs were authorized to present their evidence ex parte.

In support of the complaint, plaintiffs presented as witnesses the minor Karen E. Salvacion, her father, Federico
N. Salvacion, Jr., a certain Joseph Aguilar and a certain Liberato Madulio, who gave the following testimony:

Karen took her first year high school in St. Mary's Academy in Pasay City but has recently transferred to Arellano
University for her second year.

In the afternoon of February 4, 1989, Karen was at the Plaza Fair Makati Cinema Square, with her friend Edna
Tangile whiling away her free time. At about 3:30 p.m. while she was finishing her snack on a concrete bench in
front of Plaza Fair, an American approached her. She was then alone because Edna Tangile had already left, and
she was about to go home. (TSN, Aug. 15, 1989, pp. 2 to 5)

The American asked her name and introduced himself as Greg Bartelli. He sat beside her when he talked to her.
He said he was a Math teacher and told her that he has a sister who is a nurse in New York. His sister allegedly
has a daughter who is about Karen's age and who was with him in his house along Kalayaan Avenue. (TSN, Aug.
15, 1989, pp. 4-5)

The American asked Karen what was her favorite subject and she told him it's Pilipino. He then invited her to go
with him to his house where she could teach Pilipino to his niece. He even gave her a stuffed toy to persuade her
to teach his niece. (Id., pp. 5-6)

They walked from Plaza Fair along Pasong Tamo, turning right to reach the defendant's house along Kalayaan
Avenue. (Id., p. 6)

When they reached the apartment house, Karen noticed that defendant's alleged niece was not outside the house
but defendant told her maybe his niece was inside. When Karen did not see the alleged niece inside the house,
defendant told her maybe his niece was upstairs, and invited Karen to go upstairs. (Id., p. 7)

Upon entering the bedroom defendant suddenly locked the door. Karen became nervous because his niece was
not there. Defendant got a piece of cotton cord and tied Karen's hands with it, and then he undressed her. Karen
cried for help but defendant strangled her. He took a packing tape and he covered her mouth with it and he circled
it around her head. (Id., p. 7)

Then, defendant suddenly pushed Karen towards the bed which was just near the door. He tied her feet and hands
spread apart to the bed posts. He knelt in front of her and inserted his finger in her sex organ. She felt severe pain.
She tried to shout but no sound could come out because there were tapes on her mouth. When defendant withdrew
his finger it was full of blood and Karen felt more pain after the withdrawal of the finger. (Id., p. 8)

He then got a Johnson's Baby Oil and he applied it to his sex organ as well as to her sex organ. After that he
forced his sex organ into her but he was not able to do so. While he was doing it, Karen found it difficult to breathe
and she perspired a lot while feeling severe pain. She merely presumed that he was able to insert his sex organ
a little, because she could not see. Karen could not recall how long the defendant was in that position. (Id. pp. 8-
9)

After that, he stood up and went to the bathroom to wash. He also told Karen to take a shower and he untied her
hands. Karen could only hear the sound of the water while the defendant, she presumed, was in the bathroom
washing his sex organ. When she took a shower more blood came out from her. In the meantime, defendant
changed the mattress because it was full of blood. After the shower, Karen was allowed by defendant to sleep.
She fell asleep because she got tired crying. The incident happened at about 4:00 p.m. Karen had no way of
determining the exact time because defendant removed her watch. Defendant did not care to give her food before
she went to sleep. Karen woke up at about 8:00 o'clock the following morning. (Id., pp. 9-10)

The following day, February 5, 1989, a Sunday, after a breakfast of biscuit and coke at about 8:30 to 9:00 a.m.
defendant raped Karen while she was still bleeding. For lunch, they also took biscuit and coke. She was raped for
the second time at about 12:00 to 2:00 p.m. In the evening, they had rice for dinner which defendant had stored
downstairs; it was he who cooked the rice that is why it looks like "lugaw". For the third time, Karen was raped
again during the night. During those three times defendant succeeded in inserting his sex organ but she could not
say whether the organ was inserted wholly.

Karen did not see any firearm or any bladed weapon. The defendant did not tie her hands and feet nor put a tape
on her mouth anymore but she did not cry for help for fear that she might be killed; besides, all the windows and
doors were closed. And even if she shouted for help, nobody would hear her. She was so afraid that if somebody
would hear her and would be able to call the police, it was still possible that as she was still inside the house,
defendant might kill her. Besides, the defendant did not leave that Sunday, ruling out her chance to call for help.
At nighttime he slept with her again. (TSN, Aug. 15, 1989, pp. 12-14)

On February 6, 1989, Monday, Karen was raped three times, once in the morning for thirty minutes after a
breakfast of biscuits; again in the afternoon; and again in the evening. At first, Karen did not know that there was
a window because everything was covered by a carpet, until defendant opened the window for around fifteen
minutes or less to let some air in, and she found that the window was covered by styrofoam and plywood. After
that, he again closed the window with a hammer and he put the styrofoam, plywood, and carpet back. (Id., pp. 14-
15)

That Monday evening, Karen had a chance to call for help, although defendant left but kept the door closed. She
went to the bathroom and saw a small window covered by styrofoam and she also spotted a small hole. She
stepped on the bowl and she cried for help through the hole. She cried: "Maawa no po kayo so akin. Tulungan
n'yo akong makalabas dito. Kinidnap ako!" Somebody heard her. It was a woman, probably a neighbor, but she
got angry and said she was "istorbo". Karen pleaded for help and the woman told her to sleep and she will call the
police. She finally fell asleep but no policeman came. (TSN, Aug. 15, 1989, pp. 15-16)

She woke up at 6:00 o'clock the following morning, and she saw defendant in bed, this time sleeping. She waited
for him to wake up. When he woke up, he again got some food but he always kept the door locked. As usual, she
was merely fed with biscuit and coke. On that day, February 7, 1989, she was again raped three times. The first
at about 6:30 to 7:00 a.m., the second at about 8:30 — 9:00, and the third was after lunch at 12:00 noon. After he
had raped her for the second time he left but only for a short while. Upon his return, he caught her shouting for
help but he did not understand what she was shouting about. After she was raped the third time, he left the house.
(TSN, Aug. 15, 1989, pp. 16-17) She again went to the bathroom and shouted for help. After shouting for about
five minutes, she heard many voices. The voices were asking for her name and she gave her name as Karen
Salvacion. After a while, she heard a voice of a woman saying they will just call the police. They were also telling
her to change her clothes. She went from the bathroom to the room but she did not change her clothes being
afraid that should the neighbors call for the police and the defendant see her in different clothes, he might kill her.
At that time she was wearing a T-shirt of the American because the latter washed her dress. (Id., p. 16)

Afterwards, defendant arrived and he opened the door. He asked her if she had asked for help because there
were many policemen outside and she denied it. He told her to change her clothes, and she did change to the one
she was wearing on Saturday. He instructed her to tell the police that she left home and willingly; then he went
downstairs but he locked the door. She could hear people conversing but she could not understand what they
were saying. (Id., p. 19)

When she heard the voices of many people who were conversing downstairs, she knocked repeatedly at the door
as hard as she could. She heard somebody going upstairs and when the door was opened, she saw a policeman.
The policeman asked her name and the reason why she was there. She told him she was kidnapped. Downstairs,
he saw about five policemen in uniform and the defendant was talking to them. "Nakikipag-areglo po sa mga pulis,"
Karen added. "The policeman told him to just explain at the precinct. (Id., p. 20)

They went out of the house and she saw some of her neighbors in front of the house. They rode the car of a certain
person she called Kuya Boy together with defendant, the policeman, and two of her neighbors whom she called
Kuya Bong Lacson and one Ate Nita. They were brought to Sub-Station I and there she was investigated by a
policeman. At about 2:00 a.m., her father arrived, followed by her mother together with some of their neighbors.
Then they were brought to the second floor of the police headquarters. (Id., p. 21)

At the headquarters, she was asked several questions by the investigator. The written statement she gave to the
police was marked as Exhibit A. Then they proceeded to the National Bureau of Investigation together with the
investigator and her parents. At the NBI, a doctor, a medico-legal officer, examined her private parts. It was already
3:00 in the early morning of the following day when they reached the NBI. (TSN, Aug. 15, 1989, p. 22) The findings
of the medico-legal officer has been marked as Exhibit B.

She was studying at the St. Mary's Academy in Pasay City at the time of the incident but she subsequently
transferred to Apolinario Mabini, Arellano University, situated along Taft Avenue, because she was ashamed to
be the subject of conversation in the school. She first applied for transfer to Jose Abad Santos, Arellano University
along Taft Avenue near the Light Rail Transit Station but she was denied admission after she told the school the
true reason for her transfer. The reason for their denial was that they might be implicated in the case. (TSN, Aug.
15, 1989, p. 46)

After the incident, Karen has changed a lot. She does not play with her brother and sister anymore, and she is
always in a state of shock; she has been absent-minded and is ashamed even to go out of the house. (TSN, Sept.
12, 1989, p. 10) She appears to be restless or sad, (Id., p. 11) The father prays for P500,000.00 moral damages
for Karen for this shocking experience which probably, she would always recall until she reaches old age, and he
is not sure if she could ever recover from this experience. (TSN, Sept. 24, 1989, pp. 10-11)

Pursuant to an Order granting leave to publish notice of decision, said notice was published in the Manila Bulletin
once a week for three consecutive weeks. After the lapse of fifteen (15) days from the date of the last publication
of the notice of judgment and the decision of the trial court had become final, petitioners tried to execute on
Bartelli's dollar deposit with China Banking Corporation. Likewise, the bank invoked Section 113 of Central Bank
Circular No. 960.

Thus, petitioners decided to seek relief from this Court.

The issues raised and the arguments articulated by the parties boil down to two:

May this Court entertain the instant petition despite the fact that original jurisdiction in petitions for declaratory
relief rests with the lower court? Should Section 113 of Central Bank Circular No. 960 and Section 8 of R.A. 6426,
as amended by P.D. 1246, otherwise known as the Foreign Currency Deposit Act be made applicable to a foreign
transient?

Petitioners aver as heretofore stated that Section 113 of Central Bank Circular No. 960 providing that "Foreign
currency deposits shall be exempt from attachment, garnishment, or any other order or process of any court,
legislative body, government agency or any administrative body whatsoever." should be adjudged as
unconstitutional on the grounds that: 1.) it has taken away the right of petitioners to have the bank deposit of
defendant Greg Bartelli y Northcott garnished to satisfy the judgment rendered in petitioners' favor in violation of
substantive due process guaranteed by the Constitution; 2.) it has given foreign currency depositors an undue
favor or a class privilege in violation of the equal protection clause of the Constitution; 3.) it has provided a safe
haven for criminals like the herein respondent Greg Bartelli y Northcott since criminals could escape civil liability
for their wrongful acts by merely converting their money to a foreign currency and depositing it in a foreign currency
deposit account with an authorized bank; and 4.) The Monetary Board, in issuing Section 113 of Central Bank
Circular No. 960 has exceeded its delegated quasi-legislative power when it took away: a.) the plaintiffs
substantive right to have the claim sought to be enforced by the civil action secured by way of the writ of preliminary
attachment as granted by Rule 57 of the Revised Rules of Court; b.) the plaintiffs substantive right to have the
judgment credit satisfied by way of the writ of execution out of the bank deposit of the judgment debtor as granted
to the judgment creditor by Rule 39 of the Revised Rules of Court, which is beyond its power to do so.

On the other hand, respondent Central Bank, in its Comment alleges that the Monetary Board in issuing Section
113 of CB Circular No. 960 did not exceed its power or authority because the subject Section is copied verbatim
from a portion of R.A. No. 6426 as amended by P.D. 1246. Hence, it was not the Monetary Board that grants
exemption from attachment or garnishment to foreign currency deposits, but the law (R.A. 6426 as amended)
itself; that it does not violate the substantive due process guaranteed by the Constitution because a.) it was based
on a law; b.) the law seems to be reasonable; c.) it is enforced according to regular methods of procedure; and d.)
it applies to all members of a class.

Expanding, the Central Bank said; that one reason for exempting the foreign currency deposits from attachment,
garnishment or any other order or process of any court, is to assure the development and speedy growth of the
Foreign Currency Deposit System and the Offshore Banking System in the Philippines; that another reason is to
encourage the inflow of foreign currency deposits into the banking institutions thereby placing such institutions
more in a position to properly channel the same to loans and investments in the Philippines, thus directly
contributing to the economic development of the country; that the subject section is being enforced according to
the regular methods of procedure; and that it applies to all foreign currency deposits made by any person and
therefore does not violate the equal protection clause of the Constitution.

Respondent Central Bank further avers that the questioned provision is needed to promote the public interest and
the general welfare; that the State cannot just stand idly by while a considerable segment of the society suffers
from economic distress; that the State had to take some measures to encourage economic development; and that
in so doing persons and property may be subjected to some kinds of restraints or burdens to secure the general
welfare or public interest. Respondent Central Bank also alleges that Rule 39 and Rule 57 of the Revised Rules
of Court provide that some properties are exempted from execution/attachment especially provided by law and
R.A. No. 6426 as amended is such a law, in that it specifically provides, among others, that foreign currency
deposits shall be exempted from attachment, garnishment, or any other order or process of any court, legislative
body, government agency or any administrative body whatsoever.

For its part, respondent China Banking Corporation, aside from giving reasons similar to that of respondent Central
Bank, also stated that respondent China Bank is not unmindful of the inhuman sufferings experienced by the minor
Karen E. Salvacion from the beastly hands of Greg Bartelli; that it is only too willing to release the dollar deposit
of Bartelli which may perhaps partly mitigate the sufferings petitioner has undergone; but it is restrained from doing
so in view of R.A. No. 6426 and Section 113 of Central Bank Circular No. 960; and that despite the harsh effect of
these laws on petitioners, CBC has no other alternative but to follow the same.

This Court finds the petition to be partly meritorious.

Petitioner deserves to receive the damages awarded to her by the court. But this petition for declaratory relief can
only be entertained and treated as a petition for mandamus to require respondents to honor and comply with the
writ of execution in Civil Case No. 89-3214.

This Court has no original and exclusive jurisdiction over a petition for declaratory relief.2 However, exceptions to
this rule have been recognized. Thus, where the petition has far-reaching implications and raises questions that
should be resolved, it may be treated as one for mandamus.3

Here is a child, a 12-year old girl, who in her belief that all Americans are good and in her gesture of kindness by
teaching his alleged niece the Filipino language as requested by the American, trustingly went with said stranger
to his apartment, and there she was raped by said American tourist Greg Bartelli. Not once, but ten times. She
was detained therein for four (4) days. This American tourist was able to escape from the jail and avoid punishment.
On the other hand, the child, having received a favorable judgment in the Civil Case for damages in the amount
of more than P1,000,000.00, which amount could alleviate the humiliation, anxiety, and besmirched reputation she
had suffered and may continue to suffer for a long, long time; and knowing that this person who had wronged her
has the money, could not, however get the award of damages because of this unreasonable law. This questioned
law, therefore makes futile the favorable judgment and award of damages that she and her parents fully deserve.
As stated by the trial court in its decision,

Indeed, after hearing the testimony of Karen, the Court believes that it was undoubtedly a shocking and traumatic
experience she had undergone which could haunt her mind for a long, long time, the mere recall of which could
make her feel so humiliated, as in fact she had been actually humiliated once when she was refused admission at
the Abad Santos High School, Arellano University, where she sought to transfer from another school, simply
because the school authorities of the said High School learned about what happened to her and allegedly feared
that they might be implicated in the case.

The reason for imposing exemplary or corrective damages is due to the wanton and bestial manner defendant
had committed the acts of rape during a period of serious illegal detention of his hapless victim, the minor Karen
Salvacion whose only fault was in her being so naive and credulous to believe easily that defendant, an American
national, could not have such a bestial desire on her nor capable of committing such a heinous crime. Being only
12 years old when that unfortunate incident happened, she has never heard of an old Filipino adage that in every
forest there is a
snake, . . . .4

If Karen's sad fate had happened to anybody's own kin, it would be difficult for him to fathom how the incentive for
foreign currency deposit could be more important than his child's rights to said award of damages; in this case,
the victim's claim for damages from this alien who had the gall to wrong a child of tender years of a country where
he is a mere visitor. This further illustrates the flaw in the questioned provisions.

It is worth mentioning that R.A. No. 6426 was enacted in 1983 or at a time when the country's economy was in a
shambles; when foreign investments were minimal and presumably, this was the reason why said statute was
enacted. But the realities of the present times show that the country has recovered economically; and even if not,
the questioned law still denies those entitled to due process of law for being unreasonable and oppressive. The
intention of the questioned law may be good when enacted. The law failed to anticipate the iniquitous effects
producing outright injustice and inequality such as the case before us.

It has thus been said that —

But I also know,5 that laws and institutions must go hand in hand with the progress of the human mind. As that
becomes more developed, more enlightened, as new discoveries are made, new truths are disclosed and manners
and opinions change with the change of circumstances, institutions must advance also, and keep pace with the
times. . . We might as well require a man to wear still the coat which fitted him when a boy, as civilized society to
remain ever under the regimen of their barbarous ancestors.

In his Comment, the Solicitor General correctly opined, thus:

The present petition has far-reaching implications on the right of a national to obtain redress for a wrong committed
by an alien who takes refuge under a law and regulation promulgated for a purpose which does not contemplate
the application thereof envisaged by the alien. More specifically, the petition raises the question whether the
protection against attachment, garnishment or other court process accorded to foreign currency deposits by PD
No. 1246 and CB Circular No. 960 applies when the deposit does not come from a lender or investor but from a
mere transient or tourist who is not expected to maintain the deposit in the bank for long.

The resolution of this question is important for the protection of nationals who are victimized in the forum by
foreigners who are merely passing through.

Respondents China Banking Corporation and Central Bank of the Philippines refused to honor the writ of execution
issued in Civil Case No. 89-3214 on the strength of the following provision of Central Bank Circular No. 960:

Sec. 113. Exemption from attachment. — Foreign currency deposits shall be exempt from attachment,
garnishment, or any other order or process of any court, legislative body, government agency or any administrative
body whatsoever.

Central Bank Circular No. 960 was issued pursuant to Section 7 of Republic Act No. 6426:

Sec. 7. Rules and Regulations. The Monetary Board of the Central Bank shall promulgate such rules and
regulations as may be necessary to carry out the provisions of this Act which shall take effect after the publication
of such rules and regulations in the Official Gazette and in a newspaper of national circulation for at least once a
week for three consecutive weeks. In case the Central Bank promulgates new rules and regulations decreasing
the rights of depositors, the rules and regulations at the time the deposit was made shall govern.

The aforecited Section 113 was copied from Section 8 of Republic Act NO. 6426, as amended by P.D. 1246, thus:
Sec. 8. Secrecy of Foreign Currency Deposits. — All foreign currency deposits authorized under this Act, as
amended by Presidential Decree No. 1035, as well as foreign currency deposits authorized under Presidential

Decree No. 1034, are hereby declared as and considered of an absolutely confidential nature and, except upon
the written permission of the depositor, in no instance shall such foreign currency deposits be examined, inquired
or looked into by any person, government official, bureau or office whether judicial or administrative or legislative
or any other entity whether public or private: Provided, however, that said foreign currency deposits shall be
exempt from attachment, garnishment, or any other order or process of any court, legislative body, government
agency or any administrative body whatsoever.

The purpose of PD 1246 in according protection against attachment, garnishment and other court process to
foreign currency deposits is stated in its whereases, viz.:

WHEREAS, under Republic Act No. 6426, as amended by Presidential Decree No. 1035, certain Philippine
banking institutions and branches of foreign banks are authorized to accept deposits in foreign currency;

WHEREAS, under the provisions of Presidential Decree No. 1034 authorizing the establishment of an offshore
banking system in the Philippines, offshore banking units are also authorized to receive foreign currency deposits
in certain cases;

WHEREAS, in order to assure the development and speedy growth of the Foreign Currency Deposit System and
the Offshore Banking System in the Philippines, certain incentives were provided for under the two Systems such
as confidentiality of deposits subject to certain exceptions and tax exemptions on the interest income of depositors
who are nonresidents and are not engaged in trade or business in the Philippines;

WHEREAS, making absolute the protective cloak of confidentiality over such foreign currency deposits, exempting
such deposits from tax, and guaranteeing the vested rights of depositors would better encourage the inflow of
foreign currency deposits into the banking institutions authorized to accept such deposits in the Philippines thereby
placing such institutions more in a position to properly channel the same to loans and investments in the
Philippines, thus directly contributing to the economic development of the country;

Thus, one of the principal purposes of the protection accorded to foreign currency deposits is "to assure the
development and speedy growth of the Foreign Currency Deposit system and the Offshore Banking in the
Philippines" (3rd Whereas).

The Offshore Banking System was established by PD No. 1034. In turn, the purposes of PD No. 1034 are as
follows:

WHEREAS, conditions conducive to the establishment of an offshore banking system, such as political stability, a
growing economy and adequate communication facilities, among others, exist in the Philippines;

WHEREAS, it is in the interest of developing countries to have as wide access as possible to the sources of capital
funds for economic development;

WHEREAS, an offshore banking system based in the Philippines will be advantageous and beneficial to the
country by increasing our links with foreign lenders, facilitating the flow of desired investments into the Philippines,
creating employment opportunities and expertise in international finance, and contributing to the national
development effort.

WHEREAS, the geographical location, physical and human resources, and other positive factors provide the
Philippines with the clear potential to develop as another financial center in Asia;

On the other hand, the Foreign Currency Deposit system was created by PD. No. 1035. Its purposes are as follows:

WHEREAS, the establishment of an offshore banking system in the Philippines has been authorized under a
separate decree;

WHEREAS, a number of local commercial banks, as depository bank under the Foreign Currency Deposit Act (RA
No. 6426), have the resources and managerial competence to more actively engage in foreign exchange
transactions and participate in the grant of foreign currency loans to resident corporations and firms;
WHEREAS, it is timely to expand the foreign currency lending authority of the said depository banks under RA
6426 and apply to their transactions the same taxes as would be applicable to transaction of the proposed offshore
banking units;

It is evident from the above [Whereas clauses] that the Offshore Banking System and the Foreign Currency
Deposit System were designed to draw deposits from foreign lenders and investors (Vide second Whereas of PD
No. 1034; third Whereas of PD No. 1035). It is these deposits that are induced by the two laws and given protection
and incentives by them.

Obviously, the foreign currency deposit made by a transient or a tourist is not the kind of deposit encouraged by
PD Nos. 1034 and 1035 and given incentives and protection by said laws because such depositor stays only for
a few days in the country and, therefore, will maintain his deposit in the bank only for a short time.

Respondent Greg Bartelli, as stated, is just a tourist or a transient. He deposited his dollars with respondent China
Banking Corporation only for safekeeping during his temporary stay in the Philippines.

For the reasons stated above, the Solicitor General thus submits that the dollar deposit of respondent Greg Bartelli
is not entitled to the protection of Section 113 of Central Bank Circular No. 960 and PD No. 1246 against
attachment, garnishment or other court processes.6

In fine, the application of the law depends on the extent of its justice. Eventually, if we rule that the questioned
Section 113 of Central Bank Circular No. 960 which exempts from attachment, garnishment, or any other order or
process of any court, legislative body, government agency or any administrative body whatsoever, is applicable
to a foreign transient, injustice would result especially to a citizen aggrieved by a foreign guest like accused Greg
Bartelli. This would negate Article 10 of the New Civil Code which provides that "in case of doubt in the
interpretation or application of laws, it is presumed that the lawmaking body intended right and justice to prevail.
"Ninguno non deue enriquecerse tortizeramente con dano de otro." Simply stated, when the statute is silent or
ambiguous, this is one of those fundamental solutions that would respond to the vehement urge of conscience.
(Padilla vs. Padilla, 74 Phil. 377).

It would be unthinkable, that the questioned Section 113 of Central Bank No. 960 would be used as a device by
accused Greg Bartelli for wrongdoing, and in so doing, acquitting the guilty at the expense of the innocent.

Call it what it may — but is there no conflict of legal policy here? Dollar against Peso? Upholding the final and
executory judgment of the lower court against the Central Bank Circular protecting the foreign depositor? Shielding
or protecting the dollar deposit of a transient alien depositor against injustice to a national and victim of a crime?
This situation calls for fairness against legal tyranny.

We definitely cannot have both ways and rest in the belief that we have served the ends of justice.

IN VIEW WHEREOF, the provisions of Section 113 of CB Circular No. 960 and PD No. 1246, insofar as it amends
Section 8 of R.A. No. 6426 are hereby held to be INAPPLICABLE to this case because of its peculiar
circumstances. Respondents are hereby REQUIRED to COMPLY with the writ of execution issued in Civil Case
No. 89-3214, "Karen Salvacion, et al. vs. Greg Bartelli y Northcott, by Branch CXLIV, RTC Makati and to RELEASE
to petitioners the dollar deposit of respondent Greg Bartelli y Northcott in such amount as would satisfy the
judgment.

SO ORDERED.

CASE NO. 4

G.R. No. 112099 February 21, 1995 ACHILLES C. BERCES, SR., petitioner,
vs. HON. EXECUTIVE SECRETARY TEOFISTO T. GUINGONA, JR., CHIEF PRESIDENTIAL LEGAL
COUNSEL ANTONIO CARPIO and MAYOR NAOMI C. CORRAL OF TIWI, ALBAY, respondents.

QUIASON, J.:

This is a petition for certiorari and prohibition under Rule 65 of the Revised Rules of Court with prayer for mandatory
preliminary injunction, assailing the Orders of the Office of the President as having been issued with grave abuses
of discretion. Said Orders directed the stay of execution of the decision of the Sangguniang Panlalawigan
suspending the Mayor of Tiwi, Albay from office.
I

Petitioner filed two administrative cases against respondent Naomi C. Corral, the incumbent Mayor of Tiwi, Albay
with the Sangguniang Panlalawigan of Albay, to wit:

(1) Administrative Case No. 02-92 for abuse of authority and/or oppression for non-payment of accrued leave
benefits due the petitioner amounting to P36,779.02.

(2) Administrative Case No. 05-92 for dishonesty and abuse of authority for installing a water pipeline which is
being operated, maintained and paid for by the municipality to service respondent's private residence and medical
clinic.

On July 1, 1993, the Sangguniang Panlalawigan disposed the two Administrative cases in the following manner:

(1) Administrative Case No. 02-92

ACCORDINGLY, respondent Mayor Naomi C. Corral of Tiwi, Albay, is hereby ordered to pay Achilles Costo
Berces, Sr. the sum of THIRTY-SIX THOUSAND AND SEVEN HUNDRED SEVENTY-NINE PESOS and TWO
CENTAVOS (P36,779.02) per Voucher No. 352, plus legal interest due thereon from the time it was approved in
audit up to final payment, it being legally due the Complainant representing the money value of his leave credits
accruing for services rendered in the municipality from 1988 to 1992 as a duly elected Municipal Councilor. IN
ADDITION, respondent Mayor NAOMI C. CORRAL is hereby ordered SUSPENDED from office as Municipal
Mayor of Tiwi, Albay, for a period of two (2) months, effective upon receipt hereof for her blatant abuse of authority
coupled with oppression as a public example to deter others similarly inclined from using public office as a tool for
personal vengeance, vindictiveness and oppression at the expense of the Taxpayer (Rollo, p. 14).

(2) Administrative Case No. 05-92

WHEREFORE, premises considered, respondent Mayor NAOMI C. CORRAL of Tiwi, Albay, is hereby sentenced
to suffer the penalty of SUSPENSION from office as Municipal Mayor thereof for a period of THREE (3) MONTHS
beginning after her service of the first penalty of suspension ordered in Administrative Case No. 02-92. She is
likewise ordered to reimburse the Municipality of Tiwi One-half of the amount the latter have paid for electric and
water bills from July to December 1992, inclusive (Rollo, p. 16).

Consequently, respondent Mayor appealed to the Office of the President questioning the decision and at the same
time prayed for the stay of execution thereof in accordance with Section 67(b) of the Local Government Code,
which provides:

Administrative Appeals. — Decision in administrative cases may, within thirty (30) days from receipt thereof, be
appealed to the following:

(b) The Office of the President, in the case of decisions of the sangguniang panlalawigan and the sangguniang
panglungsod of highly urbanized cities and independent component cities.

Acting on the prayer to stay execution during the pendency of the appeal, the Office of the President issued an
Order on July 28, 1993, the pertinent portions of which read as follows:

The stay of the execution is governed by Section 68 of R.A. No. 7160 and Section 6 of Administrative Order No.
18 dated 12 February 1987, quoted below:

Sec. 68. Execution Pending Appeal. — An appeal shall not prevent a decision from becoming final or executory.
The respondent shall be considered as having been placed under preventive suspension during the pendency of
an appeal in the events he wins such appeal. In the event the appeal results in an exoneration, he shall be paid
his salary and such other emoluments during the pendency of the appeal (R.A. No. 7160).

Sec. 6 Except as otherwise provided by special laws, the execution of the decision/resolution/order appealed from
is stayed upon filing of the appeal within the period prescribed herein. However, in all cases, at any time during
the pendency of the appeal, the Office of the President may direct or stay the execution of the
decision/resolution/order appealed from upon such terms and conditions as it may deem just and reasonable
(Adm. Order No. 18).
After due consideration, and in the light of the Petition for Review filed before this Office, we find that a stay of
execution pending appeal would be just and reasonable to prevent undue prejudice to public interest.

WHEREFORE, premises considered, this Office hereby orders the suspension/stay of execution of:

a) the Decision of the Sangguniang Panlalawigan of Albay in Administrative Case No. 02-92 dated 1 July 1993
suspending Mayor Naomi C. Corral from office for a period of two (2) months, and

b) the Resolution of the Sangguniang Panlalawigan of Albay in Administrative Case. No. 05-92 dated 5 July 1993
suspending Mayor Naomi C. Corral from office for a period of three (3) months (Rollo, pp. 55-56).

Petitioner then filed a Motion for Reconsideration questioning the aforesaid Order of the Office of the President.

On September 13, 1990, the Motion for Reconsideration was denied.

Hence, this petition.

II

Petitioner claims that the governing law in the instant case is R.A. No. 7160, which contains a mandatory provision
that an appeal "shall not prevent a decision from becoming final and executory." He argues that administrative
Order No. 18 dated February 12, 1987, (entitle "Prescribing the Rules and Regulations Governing Appeals to
Office the President") authorizing the President to stay the execution of the appealed decision at any time during
the pendency of the appeal, was repealed by R.A. No. 7160, which took effect on January 1, 1991 (Rollo, pp. 5-
6).

The petition is devoid of merit.

Petitioner invokes the repealing clause of Section 530 (f), R.A. No. 7160, which provides:

All general and special laws, acts, city charters, decrees, executive orders, administrative regulations, part or parts
thereof, which are incosistent with any of the provisions of this Code, are hereby repealed or modified accordingly.

The aforementioned clause is not an express repeal of Section 6 of Administrative Order No. 18 because it failed
to identify or designate the laws or executive orders that are intended to be repealed (cf. I Sutherland, Statutory
Construction 467 [1943]).

If there is any repeal of Administrative Order No. 18 by R.A. No. 7160, it is through implication though such kind
of repeal is not favored (The Philippine American Management Co., Inc. v. The Philippine American Management
Employees Association, 49 SCRA 194 [1973]). There is even a presumption against implied repeal.

An implied repeal predicates the intended repeal upon the condition that a substantial conflict must be found
between the new and prior laws. In the absence of an express repeal, a subsequent law cannot be construed as
repealing a prior law unless an irreconcible inconsistency and repugnancy exists in the terms of the new and old
laws (Iloilo Palay and Corn Planters Association, Inc. v. Feliciano, 13 SCRA 377 [1965]). The two laws must be
absolutely incompatible (Compania General de Tabacos v. Collector of Customs, 46 Phil. 8 [1924]). There must
be such a repugnancy between the laws that they cannot be made to stand together (Crawford, Construction of
Statutes 631 [1940]).

We find that the provisions of Section 68 of R.A. No. 7160 and Section 6 of Administrative Order No. 18 are not
irreconcillably inconsistent and repugnant and the two laws must in fact be read together.

The first sentence of Section 68 merely provides that an "appeal shall not prevent a decision from becoming final
or executory." As worded, there is room to construe said provision as giving discretion to the reviewing officials to
stay the execution of the appealed decision. There is nothing to infer therefrom that the reviewing officials are
deprived of the authority to order a stay of the appealed order. If the intention of Congress was to repeal Section
6 of Administrative Order No. 18, it could have used more direct language expressive of such intention.

The execution of decisions pending appeal is procedural and in the absence of a clear legislative intent to remove
from the reviewing officials the authority to order a stay of execution, such authority can provided in the rules and
regulations governing the appeals of elective officials in administrative cases.
The term "shall" may be read either as mandatory or directory depending upon a consideration of the entire
provisions in which it is found, its object and the consequences that would follow from construing it one way or the
other (cf. De Mesa v. Mencias, 18 SCRA 533 [1966]). In the case at bench, there is no basis to justify the
construction of the word as mandatory.

The Office of the President made a finding that the execution of the decision of the Sagguniang Panlalawigan
suspending respondent Mayor from office might be prejudicial to the public interest. Thus, in order not to disrupt
the rendition of service by the mayor to the public, a stay of the execution of the decision is in order.

WHEREFORE, the petition is DISMISSED.

SO ORDERED.

CASE NO. 4

G.R. No. 103982 December 11, 1992ANTONIO A. MECANO, petitioner, vs. COMMISSION ON AUDIT,
respondent.

CAMPOS, JR., J.:

Antonio A. Mecano, through a petition for certiorari, seeks to nullify the decision of the Commission on Audit (COA,
for brevity) embodied in its 7th Indorsement, dated January 16, 1992, denying his claim for reimbursement under
Section 699 of the Revised Administrative Code (RAC), as amended, in the total amount of P40,831.00.

Petitioner is a Director II of the National Bureau of Investigation (NBI). He was hospitalized for cholecystitis from
March 26, 1990 to April 7, 1990, on account of which he incurred medical and hospitalization expenses, the total
amount of which he is claiming from the COA.

On May 11, 1990, in a memorandum to the NBI Director, Alfredo S. Lim (Director Lim, for brevity), he requested
reimbursement for his expenses on the ground that he is entitled to the benefits under Section 699 1 of the RAC,
the pertinent provisions of which read:

Sec. 699. Allowances in case of injury, death, or sickness incurred in performance of duty. — When a person in
the service of the national government of a province, city, municipality or municipal district is so injured in the
performance of duty as thereby to receive some actual physical hurt or wound, the proper Head of Department
may direct that absence during any period of disability thereby occasioned shall be on full pay, though not more
than six months, and in such case he may in his discretion also authorize the payment of the medical attendance,
necessary transportation, subsistence and hospital fees of the injured person. Absence in the case contemplated
shall be charged first against vacation leave, if any there be.

In case of sickness caused by or connected directly with the performance of some act in the line of duty, the
Department head may in his discretion authorize the payment of the necessary hospital fees.

Director Lim then forwarded petitioner's claim, in a 1st Indorsement dated June 22, 1990, to the Secretary of
Justice, along with the comment, bearing the same date, of Gerarda Galang, Chief, LED of the NBI,
"recommending favorable action thereof". Finding petitioner's illness to be service-connected, the Committee on
Physical Examination of the Department of Justice favorably recommended the payment of petitioner's claim.

However, then Undersecretary of Justice Silvestre H. Bello III, in a 4th Indorsement dated November 21, 1990,
returned petitioner's claim to Director Lim, having considered the statements of the Chairman of the COA in its 5th
Indorsement dated 19 September 1990, to the effect that the RAC being relied upon was repealed by the
Administrative Code of 1987.

Petitioner then re-submitted his claim to Director Lim, with a copy of Opinion No. 73, S. 19912 dated April 26, 1991
of then Secretary of Justice Franklin M. Drilon (Secretary Drilon, for brevity) stating that "the issuance of the
Administrative Code did not operate to repeal or abregate in its entirety the Revised Administrative Code, including
the particular Section 699 of the latter".

On May 10, 1991, Director Lim, under a 5th Indorsement transmitted anew Mecano's claim to then Undersecretary
Bello for favorable consideration. Under a 6th Indorsement, dated July 2, 1991, Secretary Drilon forwarded
petitioner's claim to the COA Chairman, recommending payment of the same. COA Chairman Eufemio C.
Domingo, in his 7th Indorsement of January 16, 1992, however, denied petitioner's claim on the ground that
Section 699 of the RAC had been repealed by the Administrative Code of 1987, solely for the reason that the
same section was not restated nor re-enacted in the Administrative Code of 1987. He commented, however, that
the claim may be filed with the Employees' Compensation Commission, considering that the illness of Director
Mecano occurred after the effectivity of the Administrative Code of 1987.

Eventually, petitioner's claim was returned by Undersecretary of Justice Eduardo Montenegro to Director Lim
under a 9th Indorsement dated February 7, 1992, with the advice that petitioner "elevate the matter to the Supreme
Court if he so desires".

On the sole issue of whether or not the Administrative Code of 1987 repealed or abrogated Section 699 of the
RAC, this petition was brought for the consideration of this Court.

Petitioner anchors his claim on Section 699 of the RAC, as amended, and on the aforementioned Opinion No. 73,
S. 1991 of Secretary Drilon. He further maintains that in the event that a claim is filed with the Employees'
Compensation Commission, as suggested by respondent, he would still not be barred from filing a claim under the
subject section. Thus, the resolution of whether or not there was a repeal of the Revised Administrative Code of
1917 would decide the fate of petitioner's claim for reimbursement.

The COA, on the other hand, strongly maintains that the enactment of the Administrative Code of 1987 (Exec.
Order No. 292) operated to revoke or supplant in its entirety the Revised Administrative Code of 1917. The COA
claims that from the "whereas" clauses of the new Administrative Code, it can be gleaned that it was the intent of
the legislature to repeal the old Code. Moreover, the COA questions the applicability of the aforesaid opinion of
the Secretary of Justice in deciding the matter. Lastly, the COA contends that employment-related sickness, injury
or death is adequately covered by the Employees' Compensation Program under P.D. 626, such that to allow
simultaneous recovery of benefits under both laws on account of the same contingency would be unfair and unjust
to the Government.

The question of whether a particular law has been repealed or not by a subsequent law is a matter of legislative
intent. The lawmakers may expressly repeal a law by incorporating therein a repealing provision which expressly
and specifically cites the particular law or laws, and portions thereof, that are intended to be repealed. 3 A
declaration in a statute, usually in its repealing clause, that a particular and specific law, identified by its number
or title, is repealed is an express repeal; all others are implied repeals.4

In the case of the two Administrative Codes in question, the ascertainment of whether or not it was the intent of
the legislature to supplant the old Code with the new Code partly depends on the scrutiny of the repealing clause
of the new Code. This provision is found in Section 27, Book VII (Final Provisions) of the Administrative Code of
1987 which reads:

Sec. 27. Repealing Clause. — All laws, decrees, orders, rules and regulations, or portions thereof, inconsistent
with this Code are hereby repealed or modified accordingly.

The question that should be asked is: What is the nature of this repealing clause? It is certainly not an express
repealing clause because it fails to identify or designate the act or acts that are intended to be repealed. 5 Rather,
it is an example of a general repealing provision, as stated in Opinion No. 73, S. 1991. It is a clause which
predicates the intended repeal under the condition that substantial conflict must be found in existing and prior acts.
The failure to add a specific repealing clause indicates that the intent was not to repeal any existing law, unless
an irreconcilable inconcistency and repugnancy exist in the terms of the new and old laws.6 This latter situation
falls under the category of an implied repeal.

Repeal by implication proceeds on the premise that where a statute of later date clearly reveals an intention on
the part of the legislature to abrogate a prior act on the subject, that intention must be given effect.7 Hence, before
there can be a repeal, there must be a clear showing on the part of the lawmaker that the intent in enacting the
new law was to abrogate the old one. The intention to repeal must be clear and manifest; 8 otherwise, at least, as
a general rule, the later act is to be construed as a continuation of, and not a substitute for, the first act and will
continue so far as the two acts are the same from the time of the first enactment.9

There are two categories of repeal by implication. The first is where provisions in the two acts on the same subject
matter are in an irreconcilable conflict, the later act to the extent of the conflict constitutes an implied repeal of the
earlier one. The second is if the later act covers the whole subject of the earlier one and is clearly intended as a
substitute, it will operate to repeal the earlier law.10
Implied repeal by irreconcilable inconsistency takes place when the two statutes cover the same subject matter;
they are so clearly inconsistent and incompatible with each other that they cannot be reconciled or harmonized;
and both cannot be given effect, that is, that one law cannot be enforced without nullifying the other.11

Comparing the two Codes, it is apparent that the new Code does not cover nor attempt to cover the entire subject
matter of the old Code. There are several matters treated in the old Code which are not found in the new Code,
such as the provisions on notaries public, the leave law, the public bonding law, military reservations, claims for
sickness benefits under Section 699, and still others.

Moreover, the COA failed to demonstrate that the provisions of the two Codes on the matter of the subject claim
are in an irreconcilable conflict. In fact, there can be no such conflict because the provision on sickness benefits
of the nature being claimed by petitioner has not been restated in the Administrative Code of 1987. However, the
COA would have Us consider that the fact that Section 699 was not restated in the Administrative Code of 1987
meant that the same section had been repealed. It further maintained that to allow the particular provisions not
restated in the new Code to continue in force argues against the Code itself. The COA anchored this argument on
the whereas clause of the 1987 Code, which states:

WHEREAS, the effectiveness of the Government will be enhanced by a new Administrative Code which
incorporate in a unified document the major structural, functional and procedural principles and rules of
governance; and

It argues, in effect, that what is contemplated is only one Code — the Administrative Code of 1987. This contention
is untenable.

The fact that a later enactment may relate to the same subject matter as that of an earlier statute is not of itself
sufficient to cause an implied repeal of the prior act, since the new statute may merely be cumulative or a
continuation of the old one. 12 What is necessary is a manifest indication of legislative purpose to repeal.13

We come now to the second category of repeal — the enactment of a statute revising or codifying the former laws
on the whole subject matter. This is only possible if the revised statute or code was intended to cover the whole
subject to be a complete and perfect system in itself. It is the rule that a subsequent statute is deemed to repeal a
prior law if the former revises the whole subject matter of the former statute.14 When both intent and scope clearly
evidence the idea of a repeal, then all parts and provisions of the prior act that are omitted from the revised act
are deemed repealed.15 Furthermore, before there can be an implied repeal under this category, it must be the
clear intent of the legislature that the later act be the substitute to the prior act.16

According to Opinion No. 73, S. 1991 of the Secretary of Justice, what appears clear is the intent to cover only
those aspects of government that pertain to administration, organization and procedure, understandably because
of the many changes that transpired in the government structure since the enactment of the RAC decades of years
ago. The COA challenges the weight that this opinion carries in the determination of this controversy inasmuch as
the body which had been entrusted with the implementation of this particular provision has already rendered its
decision. The COA relied on the rule in administrative law enunciated in the case of Sison vs. Pangramuyen17 that
in the absence of palpable error or grave abuse of discretion, the Court would be loathe to substitute its own
judgment for that of the administrative agency entrusted with the enforcement and implementation of the law. This
will not hold water. This principle is subject to limitations. Administrative decisions may be reviewed by the courts
upon a showing that the decision is vitiated by fraud, imposition or mistake.18 It has been held that Opinions of the
Secretary and Undersecretary of Justice are material in the construction of statutes in pari materia.19

Lastly, it is a well-settled rule of statutory construction that repeals of statutes by implication are not favored.20 The
presumption is against inconsistency and repugnancy for the legislature is presumed to know the existing laws on
the subject and not to have enacted inconsistent or conflicting statutes.21

This Court, in a case, explains the principle in detail as follows: "Repeals by implication are not favored, and will
not be decreed unless it is manifest that the legislature so intended. As laws are presumed to be passed with
deliberation with full knowledge of all existing ones on the subject, it is but reasonable to conclude that in passing
a statute it was not intended to interfere with or abrogate any former law relating to some matter, unless the
repugnancy between the two is not only irreconcilable, but also clear and convincing, and flowing necessarily from
the language used, unless the later act fully embraces the subject matter of the earlier, or unless the reason for
the earlier act is beyond peradventure renewed. Hence, every effort must be used to make all acts stand and if,
by any reasonable construction, they can be reconciled, the later act will not operate as a repeal of the earlier.22
Regarding respondent's contention that recovery under this subject section shall bar the recovery of benefits under
the Employees' Compensation Program, the same cannot be upheld. The second sentence of Article 173, Chapter
II, Title II (dealing on Employees' Compensation and State Insurance Fund), Book IV of the Labor Code, as
amended by P.D. 1921, expressly provides that "the payment of compensation under this Title shall not bar the
recovery of benefits as provided for in Section 699 of the Revised Administrative Code . . . whose benefits are
administered by the system (meaning SSS or GSIS) or by other agencies of the government."

WHEREFORE, premises considered, the Court resolves to GRANT the petition; respondent is hereby ordered to
give due course to petitioner's claim for benefits. No costs.

SO ORDERED.

CASE NO. 5

G.R. No. 123169 November 4, 1996 DANILO E. PARAS, petitioner, vs. COMMISSION ON ELECTIONS,
respondent.

FRANCISCO, J.:

Petitioner Danilo E. Paras is the incumbent Punong Barangay of Pula, Cabanatuan City who won during the last
regular barangay election in 1994. A petition for his recall as Punong Barangay was filed by the registered voters
of the barangay. Acting on the petition for recall, public respondent Commission on Elections (COMELEC) resolved
to approve the petition, scheduled the petition signing on October 14, 1995, and set the recall election on
November 13,
1995.1 At least 29.30% of the registered voters signed the petition, well above the 25% requirement provided by
law. The COMELEC, however, deferred the recall election in view of petitioner's opposition. On December 6, 1995,
the COMELEC set anew the recall election, this time on December 16, 1995. To prevent the holding of the recall
election, petitioner filed before the Regional Trial Court of Cabanatuan City a petition for injunction, docketed as
SP Civil Action No. 2254-AF, with the trial court issuing a temporary restraining order. After conducting a summary
hearing, the trial court lifted the restraining order, dismissed the petition and required petitioner and his counsel to
explain why they should not be cited for contempt for misrepresenting that the barangay recall election was without
COMELEC approval.2

In a resolution dated January 5, 1996, the COMELEC, for the third time, re-scheduled the recall election an January
13, 1996; hence, the instant petition for certiorari with urgent prayer for injunction. On January 12, 1996, the Court
issued a temporary restraining order and required the Office of the Solicitor General, in behalf of public respondent,
to comment on the petition. In view of the Office of the Solicitor General's manifestation maintaining an opinion
adverse to that of the COMELEC, the latter through its law department filed the required comment. Petitioner
thereafter filed a reply.3

Petitioner's argument is simple and to the point. Citing Section 74 (b) of Republic Act No. 7160, otherwise known
as the Local Government Code, which states that "no recall shall take place within one (1) year from the date of
the official's assumption to office or one (1) year immediately preceding a regular local election", petitioner insists
that the scheduled January 13, 1996 recall election is now barred as the Sangguniang Kabataan (SK) election
was set by Republic Act No. 7808 on the first Monday of May 1996, and every three years thereafter. In support
thereof, petitioner cites Associated Labor Union v. Letrondo-Montejo, 237 SCRA 621, where the Court considered
the SK election as a regular local election. Petitioner maintains that as the SK election is a regular local election,
hence no recall election can be had for barely four months separate the SK election from the recall election. We
do not agree.

The subject provision of the Local Government Code provides:

Sec. 74. Limitations on Recall. — (a) Any elective local official may be the subject of a
recall election only once during his term of office for loss of confidence.

(b) No recall shall take place within one (1) year from the date of the official's assumption
to office or one (1) year immediately preceding a regular local election.

[Emphasis added]
It is a rule in statutory construction that every part of the statute must be interpreted with reference to the context,
i.e., that every part of the statute must be considered together with the other parts, and kept subservient to the
general intent of the whole enactment.4 The evident intent of Section 74 is to subject an elective local official to
recall election once during his term of office. Paragraph (b) construed together with paragraph (a) merely
designates the period when such elective local official may be subject of a recall election, that is, during the second
year of his term of office. Thus, subscribing to petitioner's interpretation of the phrase regular local election to
include the SK election will unduly circumscribe the novel provision of the Local Government Code on recall, a
mode of removal of public officers by initiation of the people before the end of his term. And if the SK election
which is set by R.A No. 7808 to be held every three years from May 1996 were to be deemed within the purview
of the phrase "regular local election", as erroneously insisted by petitioner, then no recall election can be conducted
rendering inutile the recall provision of the Local Government Code.

In the interpretation of a statute, the Court should start with the assumption that the legislature intended to enact
an effective law, and the legislature is not presumed to have done a vain thing in the enactment of a statute. 5 An
interpretation should, if possible, be avoided under which a statute or provision being construed is defeated, or as
otherwise expressed, nullified, destroyed, emasculated, repealed, explained away, or rendered insignificant,
meaningless, inoperative or nugatory.6

It is likewise a basic precept in statutory construction that a statute should be interpreted in harmony with the
Constitution.7 Thus, the interpretation of Section 74 of the Local Government Code, specifically paragraph (b)
thereof, should not be in conflict with the Constitutional mandate of Section 3 of Article X of the Constitution to
"enact a local government code which shall provide for a more responsive and accountable local government
structure instituted through a system of decentralization with effective mechanism of recall, initiative, and
referendum . . . ."

Moreover, petitioner's too literal interpretation of the law leads to absurdity which we cannot countenance. Thus,
in a case, the Court made the following admonition:

We admonish against a too-literal reading of the law as this is apt to constrict rather than
fulfill its purpose and defeat the intention of its authors. That intention is usually found not
in "the letter that killeth but in the spirit that vivifieth". . .8

The spirit, rather than the letter of a law determines its construction; hence, a statute, as in this
case, must be read according to its spirit and intent.

Finally, recall election is potentially disruptive of the normal working of the local government unit necessitating
additional expenses, hence the prohibition against the conduct of recall election one year immediately preceding
the regular local election. The proscription is due to the proximity of the next regular election for the office of the
local elective official concerned. The electorate could choose the official's replacement in the said election who
certainly has a longer tenure in office than a successor elected through a recall election. It would, therefore, be
more in keeping with the intent of the recall provision of the Code to construe regular local election as one referring
to an election where the office held by the local elective official sought to be recalled will be contested and be filled
by the electorate.

Nevertheless, recall at this time is no longer possible because of the limitation stated under Section 74 (b) of the
Code considering that the next regular election involving the barangay office concerned is barely seven (7) months
away, the same having been scheduled on May 1997. 9

ACCORDINGLY, the petition is hereby dismissed for having become moot and academic. The temporary
restraining order issued by the Court on January 12, 1996, enjoining the recall election should be as it is hereby
made permanent.

SO ORDERED.

CASE NO. 6

G.R. Nos. L-28502-03 April 18, 1989 COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. ESSO
STANDARD EASTERN, INC. and THE COURT OF TAX APPEALS, respondents.
NARVASA, J.:

In two (2) cases appealed to it 1 by the private respondent, hereafter simply referred to as ESSO, the Court of Tax Appeals rendered judgment 2
sustaining the decisions of the Commissioner of Internal Revenue excepted to, save "the refund-claim .. in the amount of P39,787.94 as overpaid interest which
it ordered refunded to ESSO

Reversal of this decision is sought by the Commissioner by a petition for review on certiorari filed with this Court.
He ascribes to the Tax Court one sole error: "of applying the tax credit for overpayment of the 1959 income tax of
.. ESSO, granted by the petitioner (Commissioner), to .. (ESSO's) basic 1960 deficiency income tax liability x x
and imposing the 1-1/2% monthly interests 3 only on the remaining balance thereof in the sum of P146,961.00" 4 (instead of the full amount
of the 1960 deficiency liability in the amount of P367,994.00). Reversal of the same judgment of the Court of Tax Appeals is also sought by ESSO in its own
appeal (docketed as G.R. Nos. L28508-09); but in the brief filed by it in this case, it indicates that it will not press its appeal in the event that "the instant petition
for review be denied and that judgment be rendered affirming the decision of the Court of Tax Appeals."

The facts are simple enough and are quite quickly recounted. ESSO overpaid its 1959 income tax by P221,033.00.
It was accordingly granted a tax credit in this amount by the Comissioner on August 5,1964. However, ESSOs
payment of its income tax for 1960 was found to be short by P367,994.00. So, on July 10, 1964, the Commissioner
wrote to ESSO demanding payment of the deficiency tax, together with interest thereon for the period from April
18,1961 to April 18,1964. On August 10, 1964, ESSO paid under protest the amount alleged to be due, including
the interest as reckoned by the Commissioner. It protested the computation of interest, contending it was more
than that properly due. It claimed that it should not have been required to pay interest on the total amount of the
deficiency tax, P367,994.00, but only on the amount of P146,961.00—representing the difference between said
deficiency, P367,994.00, and ESSOs earlier overpayment of P221,033.00 (for which it had been granted a tax
credit). ESSO thus asked for a refund.

The Internal Revenue Commissioner denied the claim for refund. ESSO appealed to the Court of Tax Appeals. As
aforestated. that Court ordered payment to ESSO of its "refund-claim x x in the amount of P39,787.94 as overpaid
interest. Hence, this appeal by the Commissioner. The CTA justified its award of the refund as follows:

... In the letter of August 5, 1964, .. (the Commissioner) admitted that .. ESSO had overpaid its 1959 income tax
by P221,033.00. Accordingly .. (the Commissioner) granted to .. ESSO a tax credit of P221,033.00. In short, the
said sum of P221,033.00 of ESSO's money was in the Government's hands at the latest on July 15, 1960 when it
ESSO paid in full its second installment of income tax for 1959. On July 10, 1964 .. (the Commissioner) claimed
that for 1960, .. ESSO underpaid its income tax by P367,994.00. However, instead of deducting from P367,994.00
the tax credit of P221,033.00 which .. (the Commissioner) had already admitted was due .. ESSO .. (the
Commissioner) still insists in collecting the interest on the full amount of P367,994.00 for the period April 18, 1961
to April 18,1964 when the Government had already in its hands the sum of P221,033.00 of .. ESSOs money even
before the latter's income tax for 1960 was due and payable. If the imposition of interest does not amount to a
penalty but merely a just compensation to the State for the delay in paying the tax, and for the concomitant use
by the taxpayer of funds that rightfully should be in the Government's hand (Castro v. Collector, G.R. No. L-1274,
Dec. 28, 1962), the collection of the interest on the full amount of P367,994.00 without deducting first the tax credit
of P221,033.00, which has long been in the hands of the Government, becomes erroneous, illegal and arbitrary.

.. (ESSO) could hardly be charged of delinquency in paying P221,033.00 out of the deficiency income tax of
P367,994.00, for which the State should be compensated by the payment of interest, because the said amount of
P221,033.00 was already in the coffers of the Government. Neither could .. ESSO be charged for the concomitant
use of funds that rightfully belong to the Government because as early as July 15, 1960, it was the Government
that was using .. ESSOs funds of P221,033.00. In the circumstances, we find it unfair and unjust for .. (the
Commissioner) to exact the interest on the said sum of P221,033.00 which, after all, was paid to and received by
the Government even before the incidence of the deficiency income tax of P367,994.00. (Itogon-Suyoc Mines, Inc.
v. Commissioner, C.T.A. Case No. 1327, Sept. 30,1965). On the contrary, the Government should be the first to
blaze the trail and set the example of fairness and honest dealing in the administration of tax laws.

Accordingly, we hold that the tax credit of P221,033.00 for 1959 should first be deducted from the basic deficiency
tax of P367,994.00 for 1960 and the resulting difference of P146,961.00 would be subject to the 18% interest
prescribed by Section 51 (d) of the Revenue Code. According to the prayer of ..(ESSO) .. (the Commissioner) is
hereby ordered to refund to .. (ESSO) the amount of P39,787.94 as overpaid interest in the settlement of its 1960
income tax liability. However, as the collection of the tax was not attended with arbitrariness because .. (ESSO)
itself followed x x (the Commissioner's) manner of computing the tax in paying the sum of P213,189.93 on August
10, 1964, the prayer of .. (ESSO) that it be granted the legal rate of interest on its overpayment of P39,787.94
from August 10, 1964 to the time it is actually refunded is denied. (See Collector of Internal Revenue v. Binalbagan
Estate, Inc., G.R. No. 1,12752, Jan. 30, 1965).
The Commissioner's position is that income taxes are determined and paid on an annual basis, and that such
determination and payment of annual taxes are separate and independent transactions; and that a tax credit could
not be so considered until it has been finally approved and the taxpayer duly notified thereof. Since in this case,
he argues, the tax credit of P221,033.00 was approved only on August 5, 1964, it could not be availed of in
reduction of ESSOs earlier tax deficiency for the year 1960; as of that year, 1960, there was as yet no tax credit
to speak of, which would reduce the deficiency tax liability for 1960. In support of his position, the Commissioner
invokes the provisions of Section 51 of the Tax Code pertinently reading as follows:

(c) Definition of deficiency. As used in this Chapter in respect of tax imposed by this Title, the term 'deficiency'
means:

(1) The amount by which the tax imposed by this Title exceeds the amount shown as the tax by the taxpayer upon
his return; but the amount so shown on the return shall first be increased by the amounts previously assessed (or
collected without assessment) as a deficiency, and decreased by the amount previously abated credited, returned,
or otherwise in respect of such tax; ..

(d) Interest on deficiency. — Interest upon the amount determined as deficiency shall be assessed at the same
time as the deficiency and shall be paid upon notice and demand from the Commissioner of Internal Revenue;
and shall be collected as a part of the tax, at the rate of six per centum per annum from the date prescribed for
the payment of the tax (or, if the tax is paid in installments, from the date prescribed for the payment of the first
installment) to the date the deficiency is assessed; Provided, That the amount that may be collected as interest
on deficiency shall in no case exceed the amount corresponding to a period of three years, the present provision
regarding prescription to the contrary notwithstanding.

The fact is that, as respondent Court of Tax Appeals has stressed, as early as July 15, 1960, the Government
already had in its hands the sum of P221,033.00 representing excess payment. Having been paid and received
by mistake, as petitioner Commissioner subsequently acknowledged, that sum unquestionably belonged to ESSO,
and the Government had the obligation to return it to ESSO That acknowledgment of the erroneous payment came
some four (4) years afterwards in nowise negates or detracts from its actuality. The obligation to return money
mistakenly paid arises from the moment that payment is made, and not from the time that the payee admits the
obligation to reimburse. The obligation of the payee to reimburse an amount paid to him results from the mistake,
not from the payee's confession of the mistake or recognition of the obligation to reimburse. In other words, since
the amount of P221,033.00 belonging to ESSO was already in the hands of the Government as of July, 1960,
although the latter had no right whatever to the amount and indeed was bound to return it to ESSO, it was neither
legally nor logically possible for ESSO thereafter to be considered a debtor of the Government in that amount of
P221,033.00; and whatever other obligation ESSO might subsequently incur in favor of the Government would
have to be reduced by that sum, in respect of which no interest could be charged. To interpret the words of the
statute in such a manner as to subvert these truisms simply can not and should not be countenanced. "Nothing is
better settled than that courts are not to give words a meaning which would lead to absurd or unreasonable
consequences. That is a principle that goes back to In re Allen (2 Phil. 630) decided on October 29, 1903, where
it was held that a literal interpretation is to be rejected if it would be unjust or lead to absurd results." 6 "Statutes should
receive a sensible construction, such as will give effect to the legislative intention and so as to avoid an unjust or absurd conclusion." 7

WHEREFORE, the petition for review is DENIED, and the Decision of the Court of Tax Appeals dated October 28, 1967 subject of the petition is AFFIRMED,
without pronouncement as to costs.

CASE NO. 7

Miriam Defensor Santiago, et al v. Comelec, et al, G.R. No. 127325, 3/19/1997

FACTS:

On 6 December 1996, Atty. Jesus Delfin (President of the People’s Initiative for Reforms, Modernization and
Action or PIRMA) filed with COMELEC a Petition to Amend the Constitution, to Lift Term Limits of Elective
Officials (Delfin Petition) through Peoples’ Initiative based on Article XVII, Section 2 of the 1987
Constitution, where Delfin asked the COMELEC for an order:

 fixing the time and dates for signature gathering all over the country;
 causing the necessary publications of the said Order in newspapers of general and local circulation; and
 instructing Municipal Election Registrars in all regions to assist petitioners and volunteers in
establishing signing stations at the time and dates designated for the purpose.
The COMELEC through its Chairman issued an Order directing Delfin to cause the publication of the petition;
and setting the case for hearing.

At the hearing, the petitioner-intervenors appeared and on the same day, Senator Roco filed a Motion to
Dismiss the Delfin Petition on the ground that it is not the initiatory petition properly cognizable by the
COMELEC.

Petitioner filed the special civil action for prohibition raising the following arguments:

 The constitutional provision on people’s initiatives to amend the Constitution can only be implemented
by a law to be passed by Congress.
 RA No. 6735 provides for 3 systems of initiative (Constitution, statutes, local legislation) but it failed
to provide any subtitle on initiative on the Constitution.
 RA 6735 only covers laws and not constitutional amendments.
 COMELEC Resolution No. 2300 (1991) to govern the conduct of initiative is ultra vires (beyond legal
capacity) because only Congress is authorized by the Constitution to pass implementing law.
 People’s initiative is limited to amendments to the Constitution and not revision.
 Congress has not yet appropriated funds for people’s initiatives.

ISSUES/HELD:

1. Whether RA No. 6735 was intended to cover initiative on amendments to the Constitution – NO.
2. Whether that portion of COMELEC Resolution No. 2300 regarding the conduct of initiative on
amendments to the Constitution is valid – NO.
3. Whether the COMELEC has jurisdiction over a petition solely intended to obtain an order – NO.
4. Whether the lifting of term limits as proposed in the Delfin Petition would constitute a revision or an
amendment to the Constitution – MOOT AND ACADEMIC.
5. Whether it is proper for the Supreme Court to take cognizance of the petition when there is a pending
case before the COMELEC – YES.

RATIO:

1. Article XVII, Section 2 of the 1987 Constitution is not self-executor and RA 6735 cannot be the
implementing legislation.

Article XVII, Section 2 of the 1987 Constitution is not self-executory. The details for carrying out the
provision are left to the legislature. The interpellations which ensued on the modified amendment to Section
2 clearly showed that it was a legislative act which must implement the exercise of the right. Furthermore, the
modified amendment confines initiative to amendments to and not revision of the Constitution. However, RA
6735 does not provide for the contents of a petition for initiative on the Constitution because there was no
subtitle provided for it. Hence, RA 6735 is not sufficient to be the implementing legislation for Article XVII,
Section 2 of the Constitution.

2. The COMELEC Resolution is not valid.

Empowering the COMELEC, an administrative body, to promulgate rules and regulations is a form of
delegation of legislative authority under the rule that what has been delegated cannot be delegated. It will only
be valid if the law a) is complete in itself; and b) fixes a standard. However, these requirements were not met.

3. COMELEC has no jurisdiction over a petition solely intended to obtain an order.

COMELEC acquires jurisdiction over a petition for initiative only after its filing and thus, becomes the
initiatory pleading. The Delfin petition is not an initiatory pleading since it does not contain signatures of the
required number of voters (under Sec 2 of Article XVII), COMELEC has no jurisdiction before its filing.

4. There is no need to discuss whether the petition presents an amendment or revision of the
Constitution.

The discussion on the issue of whether it is an amendment or a revision is unnecessary if not academic since
COMELEC has no jurisdiction.

5. The Supreme Court can take cognizance of the present petition for prohibition.

COMELEC has no jurisdiction so it must be stopped from proceeding further. Moreover, petition for
prohibition is the proper remedy. In this case, the writ is necessary in view of the highly divisive consequences
on the body politic of the questioned Order. This political instability and legal confusion climate begs for
judicial statesmanship because only the SC can save the nation in peril and uphold the majesty of the
Constitution when the system of constitutional law is threatened.

CASE NO. 8

Florencio Eugenio v. Executive Secretary Franklin M. Drilon, HLURB and Prospero Palmino, G.R. No.
109404, 1/22/1996

Did the failure to develop a subdivision constitute legal justification for the non-payment of amortizations by a
buyer on installment under land purchase agreements entered into prior to the enactment of P.D. 957, "The
Subdivision and Condominium Buyers' Protective Decree"? This is the major question raised in the instant Petition
seeking to set aside the Decision of the respondent Executive Secretary dated March 10, 1992 in O.P. Case No.
3761, which affirmed the order of the respondent HLURB dated September 1, 1987.

On May 10, 1972, private respondent purchased on installment basis from petitioner and his co-owner/developer
Fermin Salazar, two lots in the E & S Delta Village in Quezon City.

Acting on complaints for non-development docketed as NHA Cases Nos. 2619 and 2620 filed by the Delta Village
Homeowners' Association, Inc., the National Housing Authority rendered a resolution on January 17, 1979 inter
alia ordering petitioner to cease and desist from making further sales of lots in said village or in any project owned
by him.

While NHA Cases Nos. 2619 and 2620 were still pending, private respondent filed with the Office of Appeals,
Adjudication and Legal Affairs (OAALA) of the Human Settlements Regulatory Commission (HSRC), a complaint
(Case No. 80-589) against petitioner and spouses Rodolfo and Adelina Relevo alleging that, in view of the above
NHA resolution, he suspended payment of his amortizations, but that petitioner resold one of the two lots to the
said spouses Relevo, in whose favor title to the said property was registered. Private respondent further alleged
that he suspended his payments because of petitioner's failure to develop the village.

Private respondent prayed for the annulment of the sale to the Relevo spouses and for reconveyance of the lot to
him.

On October 11, 1983, the OAALA rendered a decision upholding the right of petitioner to cancel the contract with
private respondent and dismissed private respondent's complaint.

On appeal, the Commission Proper of the HSRC reversed the OAALA and, applying P.D. 957, ordered petitioner
to complete the subdivision development and to reinstate private respondent's purchase contract over one lot, and
as to the other, "it appearing that Transfer Certificate of Title No. 269546 has been issued to . . . spouses Rodolfo
and Ad(e)lina Relevo . . . , the management of E & S Delta Village is hereby ordered to immediately refund to the
complainant-appellant (herein private respondent) all payments made thereon, plus interests computed at legal
rates from date of receipt hereof until fully paid."
The respondent Executive Secretary, on appeal, affirmed the decision of the HSRC and denied the subsequent
Motion for Reconsideration for lack of merit and for having been filed out of time. Petitioner has now filed this
Petition for review before the Supreme Court.

Under Revised Administrative Circular No. 1-95, "appeals from judgments or final orders of the . . . Office of the
President . . . may be taken to the Court of Appeals . . . " However, in order to hasten the resolution of this case,
which was deemed submitted for decision one and a half years ago, the Court resolved to make an exception to
the said Circular in the interest of speedy justice.

In his Petition before this Court, petitioner avers that the Executive Secretary erred in applying P.D. 957 and in
concluding that the non-development of the E & S Delta Village justified private respondent's non-payment of his
amortizations. Petitioner avers that inasmuch as the land purchase agreements were entered into in 1972, prior
to the effectivity of P.D. 957 in 1976, said law cannot govern the transaction.

We hold otherwise, and herewith rule that respondent Executive Secretary did not abuse his discretion, and that
P.D. 957 is to be given retroactive effect so as to cover even those contracts executed prior to its enactment in
1976.

P.D. 957 did not expressly provide for retroactivity in its entirety, but such can be plainly inferred from the
unmistakable intent of the law.

The intent of the law, as culled from its preamble and from the situation, circumstances and conditions it sought
to remedy, must be enforced. On this point, a leading authority on statutory construction stressed:

The intent of a statute is the law. . . . The intent is the vital part, the essence of the law, and the primary rule of
construction is to ascertain and give effect to the intent. The intention of the legislature in enacting a law is the law
itself, and must be enforced when ascertained, although it may not be consistent with the strict letter of the statute.
Courts will not follow the letter of a statute when it leads away from the true intent and purpose of the legislature
and to conclusions inconsistent with the general purpose of the act. . . . In construing statutes the proper course
is to start out and follow the trite intent of the legislature and to adopt that sense which harmonizes best with the
context and promotes in the fullest manner the apparent policy and objects of the legislature.1 (emphasis supplied.)

It goes without saying that, as an instrument of social justice, the law must favor the weak and the disadvantaged,
including, in this instance, small lot buyers and aspiring homeowners. P.D. 957 was enacted with no other end in
view than to provide a protective mantle over helpless citizens who may fall prey to the manipulations and
machinations of "unscrupulous subdivision and condominium sellers", and such intent is nowhere expressed more
clearly than in its preamble, pertinent portions of which read as follows:

WHEREAS, it is the policy of the State to afford its inhabitants the requirements of decent human settlement and
to provide them with ample opportunities for improving their quality of life;

WHEREAS, numerous reports reveal that many real estate subdivision owners, developers, operators, and/or
sellers have reneged on their representations and obligations to provide and maintain properly subdivision roads,
drainage, sewerage, water systems, lighting systems, and other similar basic requirements, thus endangering the
health and safety of home and lot buyers;

WHEREAS, reports of alarming magnitude also show cases of swindling and fraudulent manipulations perpetrated
by unscrupulous subdivision and condominium sellers and operators, such as failure to deliver titles to the buyers
or titles free from liens and encumbrances, and to pay real estate taxes, and fraudulent sales of the same
subdivision lots to different innocent purchasers for value;2 (emphasis supplied.)

From a dedicated reading of the preamble, it is manifest and unarguable that the legislative intent must have been
to remedy the alarming situation by having P.D. 957 operate retrospectively even upon contracts already in
existence at the time of its enactment. Indeed, a strictly prospective application of the statute will effectively
emasculate it, for then the State will not be able to exercise its regulatory functions and curb fraudulent schemes
and practices perpetrated under or in connection with those contracts and transactions which happen to have
been entered into prior to P.D. 957, despite obvious prejudice to the very subdivision lot buyers sought to be
protected by said law. It is hardly conceivable that the legislative authority intended to permit such a loophole to
remain and continue to be a source of misery for subdivision lot buyers well into the future.
Adding force to the arguments for the retroactivity of P.D. 957 as a whole are certain of its provisions, viz., Sections
20, 21 and 23 thereof, which by their very terms have retroactive effect and will impact upon even those contracts
and transactions entered into prior to P.D. 957's enactment:

Sec. 20. Time of Completion. — Every owner or developer shall construct and provide the facilities, improvements,
infrastructures and other forms of development, including water supply and lighting facilities, which are offered
and indicated in the approved subdivision or condominium plans, brochures, prospectus, printed matters, letters
or in any form of advertisement, within one year from the date of the issuance of the license for the subdivision or
condominium project or such other period of time as may be fixed by the Authority.

Sec. 21. Sales Prior to Decree. — In cases of subdivision lots or condominium units sold or disposed of prior to
the effectivity of this Decree, it shall be incumbent upon the owner or developer of the subdivision or condominium
project to complete compliance with his or its obligations as provided in the preceding section within two years
from the date of this Decree unless otherwise extended by the Authority or unless an adequate performance bond
is filed in accordance with Section 6 hereof.

Failure of the owner or, developer to comply with the obligations under this and the preceding provisions shall
constitute a violation punishable under Section 38 and 39 of this Decree.

Sec. 23. Non-Forfeiture of Payments. — No installment payment made by a buyer in a subdivision or condominium
project for the lot or unit he contracted to buy shall be forfeited in favor of the owner or developer, when the buyer,
after due notice to the owner or developer, desists from further payment due to the failure of the owner or developer
to develop the subdivision or condominium project according to the approved plans and within the time limit for
complying with the same. Such buyer may, at his option, be reimbursed the total amount paid including
amortization interests but excluding delinquency interests, with interest thereon at the legal rate. (emphasis
supplied)

On the other hand, as argued by the respondent Executive Secretary, the application of P.D. 957 to the contracts
in question will be consistent with paragraph 4 of the contracts themselves, which expressly provides:

(4) The party of the First Part hereby binds himself to subdivide, develop and improve the entire area covered by
Transfer Certificate of Title No. 168119 of which the parcels of lands subject of this contract is a part in accordance
with the provisions of Quezon City Ordinance No. 6561, S-66 and the Party of the First Part further binds himself
to comply with and abide by all laws, rules and regulations respecting the subdivision and development of lots for
residential purposes as may be presently in force or may hereafter be required by laws passed by the Congress
of the Philippines or required by regulations of the Bureau of Lands, the General Registration Office and other
government agencies. (emphasis supplied)

Moreover, as P.D. 957 is undeniably applicable to the contracts in question, it follows that Section 23 thereof had
been properly invoked by private respondent when he desisted from making further payment to petitioner due to
petitioner's failure to develop the subdivision project according to the approved plans and within the time limit for
complying with the same. (Such incomplete development of the subdivision and non-performance of specific
contractual and statutory obligations on the part of the subdivision-owner had been established in the findings of
the HLURB which in turn were confirmed by the respondent Executive Secretary in his assailed Decision.)
Furthermore, respondent Executive Secretary also gave due weight to the following matters: although private
respondent started to default on amortization payments beginning May 1975, so that by the end of July 1975 he
had already incurred three consecutive arrearages in payments, nevertheless, the petitioner, who had the
cancellation option available to him under the contract, did not exercise or utilize the same in timely fashion but
delayed until May 1979 when he finally made up his mind to cancel the contracts. But by that time the land
purchase agreements had already been overtaken by the provisions of P.D. 957, promulgated on July 12, 1976.
(In any event, as pointed out by respondent HLURB and seconded by the Solicitor General, the defaults in
amortization payments incurred by private respondent had been effectively condoned by the petitioner, by reason
of the latter's tolerance of the defaults for a long period of time.)

Likewise, there is no merit in petitioner's contention that respondent Secretary exceeded his jurisdiction in ordering
the refund of private respondent's payments on Lot 12 although (according to petitioner) only Lot 13 was the
subject of the complaint. Respondent Secretary duly noted that the supporting documents submitted substantiating
the claim of non-development justified such order inasmuch as such claim was also the basis for non-payment of
amortizations on said Lot 12.

Finally, since petitioner's motion for reconsideration of the (Executive Secretary's) Decision dated March 10, 1992
was filed only on the 21st day from receipt thereof, said decision had become final and executory, pursuant to
Section 7 of Administrative Order No. 18 dated February 12, 1987, which provides that "(d)ecisions/
resolutions/orders of the Office of the President shall, except as otherwise provided for by special laws, become
final after the lapse of fifteen (15) days from receipt of a copy thereof . . . , unless a motion for reconsideration
thereof is filed within such period."

WHEREFORE, there being no showing of grave abuse of discretion, the petition is DENIED due course and is
hereby DISMISSED. No costs.

SO ORDERED.

CASE NO. 9

[G.R. No. L-29078. January 9, 1976.] COMMISSIONER OF CUSTOMS, Petitioner, v. ESSO STANDARD
EASTERN, INC., (Formerly Standard-Vacuum Oil Company) and HONORABLE COURT OF TAX APPEALS,
Respondents.

SYNOPSIS

The Esso Standard Eastern, Inc., ESSO for short, invoking the Petroleum Act of 1949 (Rep. Act No. 387), imported
machineries, equipment and other items for use in its oil development concession. The Collector of Customs of
Manila Assessed as special import tax under Rep. Act 1394. ESSO paid the special import levy under protest and
later lost the protest in a ruling handed down by the Collector of Customs. It appealed the Collector’s ruling to the
Commissioner of Customs who sustained the judgment of his subordinate. On appeal, the Court of Tax Appeals
reversed the decision of the Commissioner.

The Supreme Court, after finding that the case, in all its essential ingredients, is identical with another one between
the same parties earlier brought before it and decided on August 7, 1975, applied the rationale and decision in the
earlier case and affirmed the decision of the Court of Tax Appeals.
SYLLABUS
1. TAXATION; SPECIAL IMPORT TAX: IMPORTATIONS TO BE USED IN PETROLEUM EXPLORATION
CONCESSIONS FREE THEREFROM. — The Petroleum Act of 1949 (Rep. Act No. 387) grants any oil exploration
and development concessionaire the privilege of importing, free of customs duty, all equipment, machinery,
materials, instruments, supplies and accessories for its own use. Thus, a petroleum refining plant operator holding
a refining concession issued by the Secretary of Agriculture and Natural Resources is exempt from the payment
of the special import tax levied under R.A. No. 1394 on importations of equipment, materials and supplies to be
used in its petroleum exploration concession.

2. JUDGMENTS; STARE DECISIS; DECISION IN EARLIER CASE APPLIED TO LATER ONE. — Where the
essential ingredients of a case, namely the parties involved, the facts and circumstances, the issues raised and
litigated and even the legal argument presented by the principal protagonists are identical with another one earlier
brought before and decided by the Supreme Court, the rationale and decision in the earlier case may as well be
applied to the later one.
DECISION
ESGUERRA, J.:

This is an appeal by the herein petitioner from the decision of the Court of Tax Appeals holding herein private
respondent ESSO Standard Eastern, Inc. (formerly Standard-Vacuum Oil Company, and ESSO for short) exempt
from the payment of the special import tax levied under Republic Act No. 1394 on importations of equipment,
materials and supplies made by private respondent and used by it in its petroleum exploration concessions. These
importations were made in accordance with certain privileges granted by Republic Act No. 387, otherwise known
as the Petroleum Act of 1949.

The judgment of respondent Court of Tax Appeals, aside from declaring that the term "customs duty" under Article
103 of Republic Act No. 387 includes the special import tax, ordered that petitioner refund to private respondent
the amount of P7,072.00 representing the total amount the latter paid under protest as special import taxes.

Respondent ESSO is holder of Refining Concessions No. 2, issued by the Secretary of Agriculture and Natural
Resources on December 9, 1957, and operates a petroleum refining plant in Limay, Bataan. Under the Petroleum
Act of 1949 (Republic Act No. 387) which grants to any oil exploration and development concessionaire the
privilege of importing, free of customs duty, all equipment, machinery, materials, instruments, supplies and
accessories for its own use, herein private respondent imported and was assessed, but paid under protest, the
special import tax on the following:

1) 4,000 bags of Bentanite, covered by Bill of Lading No. YM-2 dated June 30, 1959 and by Entry No. 052207,
series of 1959; paid under Protest No. 400, the special import tax in the amount of P1,250.00;
2) 8 drums of drilling mud additives; paid the special import tax in the sum of P86.00 under Protest No. 401;
3) 1 box of pump parts covered by Entry No. 057678; under Protest No. 402 paid the special import tax in the
amount of P133.00;
4) Under Protests Nos. 403 and 403-A, covered by Entry No. 051858, involving the payment of the sums of
P857.00 and P1,722.00 respectively, as special import taxes, on shipment of 3 boxes of oil well drilling equipment
and a shipment of 1 box of oil well drilling machinery parts, respectively;
5) 100 bags of Lignex, covered by Entry No. 064343, and under Protest No. 404 paid as special import tax the
amount of P194.00;
6) 1 box of oil well drilling machinery, covered by Entry No. 060599, and under Protest No. 405 paid as special
import tax the amount of P1,505.00;
7) 1 box oil well supplies, covered by Entry No. 065488 and under Protest No. 406 paid as special import tax the
amount of P132.00;
8) 1,000 bags of drilling mud additives, covered by Entry No. 046741 and under Protest No. 407 paid as special
import tax the amount of P1,393.00.
After hearing, the Collector of Customs of the Port of Manila overruled the protests and denied private respondent’s
petition for refund of the protested special import tax payments. This ruling was appealed to the Commissioner of
Customs who, in a decision rendered on December 14, 1965, and received by herein respondent on December
27, 1965, affirmed the Manila Port Collector’s ruling. This decision of the Commissioner of Customs was elevated
by private respondent ESSO to the Court of Tax Appeals on January 25, 1966, and in a decision dated May 6,
1968, the Court of Tax Appeals reversed the judgment of herein petitioner and ordered the refund to ESSO of the
amount of P7,072.00 representing the total sum paid under protest as special import tax. 2

This case, in all its essential ingredients, is identical with another one between the same parties earlier brought
before this Tribunal for resolution and decided on August 7, 1975. 3 Except for the kind of articles imported, the
two cases are completely the same: The parties involved, the facts and the circumstances, the issues raised and
litigated and even the legal arguments presented by the principal protagonists are
identical.chanroblesvirtualawlibrary

The Esso Standard Eastern, Inc., ESSO for short, in the earlier case (L-28329), as in the present case, invoking
the Petroleum Act of 1949 (Republic Act No. 387), imported machineries, equipment and other items for use in its
oil development concession, and the Collector of Customs of Manila assessed and imposed on the importations
certain amounts as special import tax, under R.A. No. 1394. ESSO, as it did in the present case, paid the special
import levy under protest, and, as in the case at bar, lost the protest in a ruling handed down by the Collector of
Customs. Again, as in the present one, the herein private respondent appealed the ruling of the Collector to the
Commissioner of Customs who sustained the judgment of his subordinate. This adverse decision was elevated to
the Court of Tax Appeals which in turn reversed the decision of the Commissioner of Customs. Hence, as in the
case at bar, the latter appealed the said decision of the herein respondent Court of Tax Appeals to this Court and
the decision was affirmed by Us.chanrobles.com.ph : virtual law library

We repeat, the two cases being identical in all their essential aspects, this Court feels that the rationale and
decision in G.R. No. L-28329 may as well be applied to the present case. Wherefore, the present petition of the
Commissioner of Customs to review and reverse the decision of the Court of Tax Appeals should be, as it is
hereby, dismissed.
No costs.

CASE NO. 10

G.R. No. 118910 November 16, 1995 KILOSBAYAN, INCORPORATED, JOVITO R. SALONGA, CIRILO A.
RIGOS, ERME CAMBA, EMILIO C. CAPULONG, JR., JOSE T. APOLO, EPHRAIM TENDERO, FERNANDO
SANTIAGO, JOSE ABCEDE, CHRISTINE TAN, RAFAEL G. FERNANDO, RAOUL V. VICTORINO, JOSE
CUNANAN, QUINTIN S. DOROMAL, SEN. FREDDIE WEBB, SEN. WIGBERTO TAÑADA, REP. JOKER P.
ARROYO, petitioners, vs. MANUEL L. MORATO, in his capacity as Chairman of the Philippine Charity
Sweepstakes Office, and the PHILIPPINE GAMING MANAGEMENT CORPORATION, respondents.

MENDOZA, J.:
Petitioners seek reconsideration of our decision in this case. They insist that the decision in the first case has
already settled (1) whether petitioner Kilosbayan, Inc. has a standing to sue and (2) whether under its charter (R.A.
No. 1169, as amended) the Philippine Charity Sweepstakes Office can enter into any form of association or
collaboration with any party in operating an on-line lottery. Consequently, petitioners contend, these questions can
no longer be reopened.

Because two members of the Court did not consider themselves bound by the decision in the first case, petitioners
suggest that the two, in joining the dissenters in the first case in reexamining the questions in the present case,
acted otherwise than according to law. They cite the following statement in the opinion of the Court:

The voting on petitioners' standing in the previous case was a narrow one, with seven (7) members sustaining
petitioners' standing and six (6) denying petitioners' right to bring the suit. The majority was thus a tenuous one
that is not likely to be maintained in any subsequent litigation. In addition, there have been changes in the
membership of the Court, with the retirement of Justices Cruz and Bidin and the appointment of the writer of this
opinion and Justice Francisco. Given this fact it is hardly tenable to insist on the maintenance of the ruling as to
petitioners' standing.

Petitioners claim that this statement "conveys a none too subtle suggestion, perhaps a Freudian slip, that the two
new appointees, regardless of the merit of the Decision in the first Kilosbayan case against the lotto (Kilosbayan,
et al. v. Guingona, 232 SCRA 110 (1994)) must of necessity align themselves with all the Ramos appointees who
were dissenters in the first case and constitute the new majority in the second lotto case." And petitioners ask,
"why should it be so?"

Petitioners ask a question to which they have made up an answer. Their attempt at psychoanalysis, detecting a
Freudian slip where none exists, may be more revealing of their own unexpressed wish to find motives where
there are none which they can impute to some members of the Court.

For the truth is that the statement is no more than an effort to explain — rather than to justify — the majority's
decision to overrule the ruling in the previous case. It is simply meant to explain that because the five members of
the Court who dissented in the first case (Melo, Quiason, Puno, Vitug and Kapunan, JJ.) and the two new members
(Mendoza and Francisco, JJ.) thought the previous ruling to be erroneous and its reexamination not to be barred
by stare decisis, res judicata or conclusiveness of judgment, or law of the case, it was hardly tenable for petitioners
to insist on the first ruling.

Consequently to petitioners' question "What is the glue that holds them together," implying some ulterior motives
on the part of the new majority in reexamining the two questions, the answer is: None, except a conviction on the
part of the five, who had been members of the Court at the time they dissented in the first case, and the two new
members that the previous ruling was erroneous. The eighth Justice (Padilla, J.) on the other hand agrees with
the seven Justices that the ELA is in a real sense a lease agreement and therefore does not violate R.A. No. 1169.

The decision in the first case was a split decision: 7-6. With the retirement of one of the original majority (Cruz, J.)
and one of the dissenters (Bidin, J.) it was not surprising that the first decision in the first case was later reversed.

It is argued that, in any case, a reexamination of the two questions is barred because the PCSO and the Philippine
Gaming Management Corporation made a " formal commitment not to ask for a reconsideration of the Decision in
the first lotto case and instead submit a new agreement that would be in conformity with the PCSO Charter (R.A.
No. 1169, as amended) and with the Decision of the Supreme Court in the first Kilosbayan case against on-line,
hi-tech lotto."

To be sure, a new contract was entered into which the majority of the Court finds has been purged of the features
which made the first contract objectionable. Moreover, what the PCSO said in its manifestation in the first case
was the following:

1. They are no longer filing a motion for reconsideration of the Decision of this Honorable Court dated May 5,
1994, a copy of which was received on May 6, 1994.

2. Respondents PCSO and PGMC are presently negotiating a new lease agreement consistent with the authority
of PCSO under its charter (R.A. No. 1169, as amended by B.P. Blg. 42) and conformable with the pronouncements
of this Honorable Court in its Decision of May 5, 1995.

The PGMC made substantially the same manifestation as the PCSO.

There was thus no "formal commitment" — but only a manifestation — that the parties were not filing a motion for
reconsideration. Even if the parties made a "formal commitment," the six (6) dissenting Justices certainly could
not be bound thereby not to insist on their contrary view on the question of standing. Much less were the two new
members bound by any "formal commitment" made by the parties. They believed that the ruling in the first case
was erroneous. Since in their view reexamination was not barred by the doctrine of stare decisis, res judicata or
conclusiveness of judgment or law of the case, they voted the way they did with the remaining five (5) dissenters
in the first case to form a new majority of eight.

Petitioners ask, "Why should this be so?" Because, as explained in the decision, the first decision was erroneous
and no legal doctrine stood in the way of its reexamination. It can, therefore, be asked "with equal candor": "Why
should this not be so?"

Nor is this the first time a split decision was tested, if not reversed, in a subsequent case because of change in
the membership of a court. In 1957, this Court, voting 6-5, held in Feliciano v. Aquinas, G.R. No. L-10201, Sept.
23, 1957 that the phrase "at the time of the election" in §2174 of the Revised Administrative Code of 1917 meant
that a candidate for municipal elective position must be at least 23 years of age on the date of the election. On the
other hand, the dissenters argued that it was enough if he attained that age on the day he assumed office.

Less than three years later, the same question was before the Court again, as a candidate for municipal councilor
stated under oath in her certificate of candidacy that she was eligible for that position although she attained the
requisite age (23 years) only when she assumed office. The question was whether she could be prosecuted for
falsification. In People v. Yang, 107 Phi. 888 (1960), the Court ruled she could not. Justice, later Chief Justice,
Benison, who dissented in the first case, Feliciano v. Aquinas, supra, wrote the opinion of the Court, holding that
while the statement that the accused was eligible was "inexact or erroneous, according to the majority in the
Feliciano case," the accused could not be held liable for falsification, because the question [whether the law really
required candidates to have the required age on the day of the election or whether it was sufficient that they
attained it at the beginning of the term of office] has not been discussed anew, despite the presence of new
members; we simply assume for the purpose of this decision that the doctrine stands.

Thus because in the meantime there had been a change in the membership of the Court with the retirement of
two members (Recess and Flex, JJ.) who had taken part in the decision in the first case and their replacement by
new members (Barrera and Gutierrez-David, JJ.) and the fact that the vote in the first case was a narrow one (6
to 5), the Court allowed that the continuing validity of its ruling in the first case might well be doubted. For this
reason it gave the accused the benefit of the doubt that she had acted in the good faith belief that it was sufficient
that she was 23 years of age when she assumed office.

In that case, the change in the membership of the Court and the possibility of change in the ruling were noted
without anyone — much less would-be psychoanalysts — finding in the statement of the Court any Freudian slip.
The possibility of change in the rule as a result of change in membership was accepted as a sufficient reason for
finding good faith and lack of criminal intent on the part of the accused.

Indeed, a change in the composition of the Court could prove the means of undoing an erroneous decision. This
was the lesson of Knox v. Lee, 12 Wall. 457 (1871). The Legal Tender Acts, which were passed during the Civil
War, made U.S. notes (greenbacks) legal tender for the payment of debts, public or private, with certain
exceptions. The validity of the acts, as applied to preexisting debts, was challenged in Hepburn v. Griswold, 8
Wall. 603 (1869). The Court was then composed of only eight (8) Justices because of Congressional effort to limit
the appointing power of President Johnson. Voting 5-3, the Court declared the acts void. Chief Justice Chase
wrote the opinion of the Court in which four others, including Justice Grier, concurred. Justices Miller, Swayne and
Davis dissented. A private memorandum left by the dissenting Justices described how an effort was made "to
convince an aged and infirm member of the court [Justice Grier] that he had not understood the question on which
he voted," with the result that what was originally a 4-4 vote was converted into a majority (5-3) for holding the
acts invalid.

On the day the decision was announced, President Grant nominated to the Court William Strong and Joseph P.
Bradley to fill the vacancy caused by the resignation of Justice Grier and to restore the membership of the Court
to nine. In 1871, Hepburn v. Griswold was overruled in the Legal Tender Cases, as Knox v. Lee came to be known,
in an opinion by Justice Strong, with a dissenting opinion by Chief Justice Chase and the three other surviving
members of the former majority. There were allegations that the new Justices were appointed for their known
views on the validity of the Legal Tender Acts, just as there were others who defended the character and
independence of the new Justices. History has vindicated the overruling of the Hepburn case by the new majority.
The Legal Tender Cases proved to be the Court's means of salvation from what Chief Justice Hughes later
described as one of the Court's "self-inflicted wounds."1
We now consider the specific grounds for petitioners' motion for reconsideration.

I. We have held that because there are no genuine issues of constitutionality in this case, the rule concerning real
party in interest, applicable to private litigation rather than the more liberal rule on standing, applies to petitioners.
Two objections are made against that ruling: (1) that the constitutional policies and principles invoked by
petitioners, while not supplying the basis for affirmative relief from the courts, may nonetheless be resorted to for
striking down laws or official actions which are inconsistent with them and (2) that the Constitution, by guaranteeing
to independent people's organizations "effective and reasonable participation at all levels of social, political and
economic decision-making" (Art. XIII, §16), grants them standing to sue on constitutional grounds.

The policies and principles of the Constitution invoked by petitioner read:

Art. II, §5. The maintenance of peace and order, the protection life, liberty, and property, and the promotion of the
general welfare are essential for the enjoyment by all the people of the blessings of democracy.

Id., §12. The natural and primary right and duty of parents in the rearing of the youth for civic efficiency and the
development of moral character shall receive the support of the Government.

Id., §13. The State recognizes the vital role of the youth in nation-building and shall promote and protect their
physical, moral, spiritual, intellectual, and social well-being. It shall inculcate in the youth patriotism and
nationalism, and encourage their involvement in public and civic affairs.

Id., §17. The State shall give priority to education, science and technology, arts, culture, and sports to foster
patriotism and nationalism, accelerate social progress, and promote total human liberation and development.

As already stated, however, these provisions are not self-executing. They do not confer rights which can be
enforced in the courts but only provide guidelines for legislative or executive action. By authorizing the holding of
lottery for charity, Congress has in effect determined that consistently with these policies and principles of the
Constitution, the PCSO may be given this authority. That is why we said with respect to the opening by the
PAGCOR of a casino in Cagayan de Oro, "the morality of gambling is not a justiciable issue. Gambling is not illegal
per se. . . . It is left to Congress to deal with the activity as it sees fit." (Magtajas v. Pryce Properties Corp., Inc.,
234 SCRA 255, 268 [1994]).

It is noteworthy that petitioners do not question the validity of the law allowing lotteries. It is the contract entered
into by the PCSO and the PGMC which they are assailing. This case, therefore, does not raise issues of
constitutionality but only of contract law, which petitioners, not being privies to the agreement, cannot raise.

Nor does Kilosbayan's status as a people's organization give it the requisite personality to question the validity of
the contract in this case. The Constitution provides that "the State shall respect the role of independent people's
organizations to enable the people to pursue and protect, within the democratic framework, their legitimate and
collective interests and aspirations through peaceful and lawful means," that their right to "effective and reasonable
participation at all levels of social, political, and economic decision-making shall not be abridged." (Art. XIII, §§ 15-
16)

These provisions have not changed the traditional rule that only real parties in interest or those with standing, as
the case may be, may invoke the judicial power. The jurisdiction of this Court, even in cases involving constitutional
questions, is limited by the "case and controversy" requirement of Art. VIII, §5. This requirement lies at the very
heart of the judicial function. It is what differentiates decision-making in the courts from decision-making in the
political departments of the government and bars the bringing of suits by just any party.

Petitioners quote extensively from the speech of Commissioner Garcia before the Constitutional Commission,
explaining the provisions on independent people's organizations. There is nothing in the speech, however, which
supports their claim of standing. On the contrary, the speech points the way to the legislative and executive
branches of the government, rather than to the courts, as the appropriate fora for the advocacy of petitioners'
views.2 Indeed, the provisions on independent people's organizations may most usefully be read in connection
with the provision on initiative and referendum as a means whereby the people may propose or enact laws or
reject any of those passed by Congress. For the fact is that petitioners' opposition to the contract in question is
nothing more than an opposition to the government policy on lotteries.

It is nevertheless insisted that this Court has in the past accorded standing to taxpayers and concerned citizens in
cases involving "paramount public interest." Taxpayers, voters, concerned citizens and legislators have indeed
been allowed to sue but then only (1) in cases involving constitutional issues and
(2) under certain conditions. Petitioners do not meet these requirements on standing.

Taxpayers are allowed to sue, for example, where there is a claim of illegal disbursement of public funds. (Pascual
v. Secretary of Public Works, 110 Phi. 331 (1960); Sanidad v. Comelec, 73 SCRA 333 (1976); Bugnay Const. &
Dev. v. Laron, 176 SCRA 240 (1989); City Council of Cebu v. Cuizon, 47 SCRA 325 [1972]) or where a tax
measure is assailed as unconstitutional. (VAT Cases [Tolentino v. Secretary of Finance], 235 SCRA 630 [1994])
Voters are allowed to question the validity of election laws because of their obvious interest in the validity of such
laws. (Gonzales v. Comelec, 21 SCRA 774 [1967]) Concerned citizens can bring suits if the constitutional question
they raise is of "transcendental importance" which must be settled early. (Emergency Powers Cases [Araneta v.
Dinglasan], 84 Phi. 368 (1949); Iloilo Palay and Corn Planters Ass'n v. Feliciano, 121 Phi. 358 (1965); Philconsa
v. Gimenez, 122 Phi. 894 (1965); CLU v. Executive Secretary, 194 SCRA 317 [1991]) Legislators are allowed to
sue to question the validity of any official action which they claim infringes their prerogatives qua legislators.
(Philconsa v. Enriquez, 235 506 (1994); Guingona v. PCGG, 207 SCRA 659 (1992); Gonzales v. Macaraig, 191
SCRA 452 (1990); Tolentino v. Comelec, 41 SCRA 702 (1971); Tatad v. Garcia, G.R. No. 114222, April 16, 1995
(Mendoza, J., concurring))

Petitioners do not have the same kind of interest that these various litigants have. Petitioners assert an interest as
taxpayers, but they do not meet the standing requirement for bringing taxpayer's suits as set forth in Dumlao v.
Comelec, 95 SCRA 392, 403 (1980), to wit:

While, concededly, the elections to be held involve the expenditure of public moneys, nowhere in their Petition do
said petitioners allege that their tax money is "being extracted and spent in violation of specific constitutional
protections against abuses of legislative power" (Flast v. Cohen, 392 U.S., 83 [1960]), or that there is a
misapplication of such funds by respondent COMELEC (see Pascual vs. Secretary of Public Works, 110 Phil. 331
[1960]), or that public money is being deflected to any improper purpose. Neither do petitioners seek to restrain
respondent from wasting public funds through the enforcement of an invalid or unconstitutional law. (Philippine
Constitution Association vs. Mathay, 18 SCRA 300 [1966]), citing Philippine Constitution Association vs. Gimenez,
15 SCRA 479 [1965]). Besides, the institution of a taxpayer's suit, per se, is no assurance of judicial review. As
held by this Court in Tan vs. Macapagal (43 SCRA 677 [1972]), speaking through our present Chief Justice, this
Court is vested with discretion as to whether or not a taxpayer's suit should be entertained. (Emphasis added)

Petitioners' suit does not fall under any of these categories of taxpayers' suits.

Neither do the other cases cited by petitioners support their contention that taxpayers have standing to question
government contracts regardless of whether public funds are involved or not. In Gonzales v. National Housing,
Corp., 94 SCRA 786 (1979), petitioner filed a taxpayer's suit seeking the annulment of a contract between the
NHC and a foreign corporation. The case was dismissed by the trial court. The dismissal was affirmed by this
Court on the grounds of res judicata and pendency of a prejudicial question, thus avoiding the question of
petitioner's standing.

On the other hand, in Gonzales v. Raquiza, 180 SCRA 254 (1989), petitioner sought the annulment of a contract
made by the government with a foreign corporation for the purchase of road construction equipment. The question
of standing was not discussed, but even if it was, petitioner's standing could be sustained because he was a
minority stockholder of the Philippine National Bank, which was one of the defendants in the case.

In the other case cited by petitioners, City Council of Cebu v. Cuizon, 47 SCRA 325 (1972), members of the city
council were allowed to sue to question the validity of a contract entered into by the city government for the
purchase of road construction equipment because their contention was that the contract had been made without
their authority. In addition, as taxpayers they had an interest in seeing to it that public funds were spent pursuant
to an appropriation made by law.

But, in the case at bar, there is an allegation that public funds are being misapplied or misappropriated. The
controlling doctrine is that of Gonzales v. Marcos, 65 SCRA 624 (1975) where it was held that funds raised from
contributions for the benefit of the Cultural Center of the Philippines were not public funds and petitioner had no
standing to bring a taxpayer's suit to question their disbursement by the President of the Philippines.

Thus, petitioners' right to sue as taxpayers cannot be sustained. Nor as concerned citizens can they bring this suit
because no specific injury suffered by them is alleged. As for the petitioners, who are members of Congress, their
right to sue as legislators cannot be invoked because they do not complain of any infringement of their rights as
legislators.
Finally, in Valmonte v. PCSO, G.R. No. 78716, September 22, 1987, we threw out a petition questioning another
form of lottery conducted by the PCSO on the ground that petitioner, who claimed to be a "citizen, lawyer, taxpayer
and father of three minor children," had no direct and personal interest in the lottery. We said: "He must be able
to show, not only that the law is invalid, but also that he has sustained or is in immediate danger of sustaining
some direct injury as a result of its enforcement, and not merely that he suffers thereby in some indefinite way. It
must appear that the person complaining has been or is about to be denied some right or privilege to which he is
lawfully entitled or that he is about to be subjected to some burdens or penalties by reason of the statute
complained of." In the case at bar, petitioners have not shown why, unlike petitioner in the Valmonte case, they
should be accorded standing to bring this suit.

The case of Oposa v. Factoran, Jr. 224 SCRA 792 (1993) is different. Citizens' standing to bring a suit seeking
the cancellation of timber licenses was sustained in that case because the Court considered Art. II, §16 a right-
conferring provision which can be enforced in the courts. That provision states:

The State shall protect and advance the right of the people to a balanced and healthful ecology in accord with the
rhythm and harmony of nature. (Emphasis)

In contrast, the policies and principles invoked by petitioners in this case do not permit of such categorization.

Indeed, as already stated, petitioners' opposition is not really to the validity of the ELA but to lotteries which they
regard to be immoral. This is not, however, a legal issue, but a policy matter for Congress to decide and Congress
has permitted lotteries for charity.

Nevertheless, although we have concluded that petitioners do not have standing, we have not stopped there and
dismissed their case. For in the view we take, whether a party has a cause of action and, therefore, is a real party
in interest or one with standing to raise a constitutional question must turn on whether he has a right which has
been violated. For this reason the Court has not ducked the substantive issues raised by petitioners.

II. R.A. No. 1169, as amended by B.P No . 42, states:

§1. The Philippine Charity Sweepstakes Office. — The Philippine Charity Sweepstakes Office, hereinafter
designated the Office, shall be the principal government agency for raising and providing for funds for health
programs, medical assistance and services and charities of national character, and as such shall have the general
powers conferred in section thirteen of Act Numbered One Thousand Four Hundred Fifty-Nine, as amended, and
shall have the authority:

A. To hold and conduct charity sweepstakes races, lotteries and other similar activities, in such frequency and
manner, as shall be determined, and subject to such rules and regulations as shall be promulgated by the Board
of Directors.

B. Subject to the approval of the Minister of Human Settlements, to engage in health and welfare-related
investments, programs, projects and activities which may be profit-oriented, by itself or in collaboration, association
or joint venture with any person, association, company or entity, whether domestic or foreign, except for the
activities mentioned in the preceding paragraph (A), for the purpose of providing for permanent and continuing
sources of funds for health programs, including the expansion of existing ones, medical assistance and services,
and/or charitable grants: Provided, That such investments will not compete with the private sector in areas where
investments are adequate as may be determined by the National Economic and Development Authority.

Petitioners insist on the ruling in the previous case that the PCSO cannot hold and conduct charity sweepstakes,
lotteries and other similar activities in collaboration, association or joint venture with any other party because of
the clause "except for the activities mentioned in the preceding paragraph (A)" in paragraph (B) of §1. Petitioners
contend that the ruling is the law of this case because the parties are the same and the case involves the same
issue, i.e., the meaning of this statutory provision.

The "law of the case" doctrine is inapplicable, because this case is not a continuation of the first one. Petitioners
also say that inquiry into the same question as to the meaning of the statutory provision is barred by the doctrine
of res judicata. The general rule on the "conclusiveness of judgment," however, is subject to the exception that a
question may be reopened if it is a legal question and the two actions involve substantially different claims. This
is generally accepted in American law from which our Rules of Court was adopted. (Montana v. United States,
440 U.S. 59 L.Ed.2d 147, 210 (1979); RESTATEMENT OF THE LAW 2d, ON JUDGMENTS, §28; P. BATOR, D.
MELTZER, P. MISHKIN AND D. SHAPIRO, THE FEDERAL COURTS AND THE FEDERAL SYSTEM 1058, n.2
[3rd Ed., 1988]) There is nothing in the record of this case to suggest that this exception is inapplicable in this
jurisdiction.

Indeed, the questions raised in this case are legal questions and the claims involved are substantially different
from those involved in the prior case between the parties. As already stated, the ELA is substantially different from
the Contract of Lease declared void in the first case.

Borrowing from the dissenting opinion of Justice Feliciano, petitioners argue that the phrase "by itself or in
collaboration, association or joint venture with any other party" qualifies not only §1 (B) but also §1 (A), because
the exception clause ("except for the activities mentioned in the preceding paragraph [A]") "operates, as it were,
as a renvoi clause which refers back to Section 1(A) and in this manner avoids the necessity of simultaneously
amending the text of Section 1(A)."

This interpretation, however, fails to take into account not only the location of the phrase in paragraph (B), when
it should be in paragraph (A) had that been the intention of the lawmaking authority, but also the phrase "by itself."
In other words, under paragraph (B), the PCSO is prohibited from "engag[ing] in . . . investments, programs,
projects and activities" if these involve sweepstakes races, lotteries and other similar activities not only "in
collaboration, association or joint venture" with any other party but also "by itself." Obviously, this prohibition cannot
apply when the PCSO conducts these activities itself. Otherwise, what paragraph (A) authorizes the PCSO to do,
paragraph (B) would prohibit.

The fact is that the phrase in question does not qualify the authority of the PCSO under paragraph (A), but rather
the authority granted to it by paragraph (B). The amendment of paragraph (B) by B.P. Blg. 42 was intended to
enable the PCSO to engage in certain investments, programs, projects and activities for the purpose of raising
funds for health programs and charity. That is why the law provides that such investments by the PCSO should
"not compete with the private sector in areas where investments are adequate as may be determined by the
National Economic and Development Authority." Justice Davide, then an Assemblyman, made a proposal which
was accepted, reflecting the understanding that the bill they were discussing concerned the authority of the PCSO
to invest in the business of others. The following excerpt from the Record of the Batasan Pambansa shows this to
be the subject of the discussion:

MR. DAVIDE. May I introduce an amendment after "adequate". The intention of the amendment is not to leave the
determination of whether it is adequate or not to anybody. And my amendment is to add after "adequate" the words
AS MAY BE DETERMINED BY THE NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY. As a mater of
fact, it will strengthen the authority to invest in these areas, provided that the determination of whether the private
sector's activity is already adequate must be determined by the National Economic and Development Authority.

Mr. ZAMORA. Mr. Speaker, the committee accepts the proposed amendment.

MR. DAVIDE. Thank you, Mr. Speaker.

(2 RECORD OF THE BATASAN PAMBANSA, Sept. 6, 1979,

p. 1007)

Thus what the PCSO is prohibited from doing is from investing in a business engaged in sweepstakes races,
lotteries and other similar activities. It is prohibited from doing so whether "in collaboration, association or joint
venture" with others or "by itself." This seems to be the only possible interpretation of §1 (A) and (B) in light of its
text and its legislative history. That there is today no other entity engaged in sweepstakes races, lotteries and the
like does not detract from the validity of this interpretation.

III. The Court noted in its decision that the provisions of the first contract, which were considered to be features of
a joint venture agreement, had been removed in the new contract. For instance, §5 of the ELA provides that in the
operation of the on-line lottery, the PCSO must employ "its own competent and qualified personnel." Petitioners
claim, however, that the "contemporaneous interpretation" of PGMC officials of this provision is otherwise. They
cite the testimony of Glen Barroga of the PGMC before a Senate committee to the effect that under the ELA the
PGMC would be operating the lottery system "side by side" with PCSO personnel as part of the transfer of
technology.

Whether the transfer of technology would result in a violation of PCSO's franchise should be determined by facts
and not by what some officials of the PGMC state by way of opinion. In the absence of proof to the contrary, it
must be presumed that §5 reflects the true intention of the parties. Thus, Art. 1370 of the Civil Code says that "If
the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning
of its stipulations shall control." The intention of the parties must be ascertained from their "contemporaneous and
subsequent acts." (Art. 1371; Atlantic Gulf Co. v. Insular Government, 10 Phil. 166 [1908]) It cannot simply be
judged from what one of them says. On the other hand, the claim of third parties, like petitioners, that the clause
on upgrading of equipment would enable the parties after a while to change the contract and enter into something
else in violation of the law is mere speculation and cannot be a basis for judging the validity of the contract.

IV. It is contended that §1 of E.O. No. 301 covers all types of "contract[s] for public services or for furnishing of
supplies, materials and equipment to the government or to any of its branches, agencies or instrumentalities" and
not only contracts of purchase and sale. Consequently, a lease of equipment, like the ELA, must be submitted to
public bidding in order to be valid. This contention is based on two premises: (1) that §1 of E.O. No. 301 applies
to any contract whereby the government acquires title to or the use of the equipment and (2) that the words
"supplies," "materials," and "equipment" are distinct from each other so that when an exception in §1 speaks of
"supplies," it cannot be construed to mean "equipment."

Petitioners' contention will not bear analysis. For example, the term "supplies" is used in paragraph (a), which
provides that a contract for the furnishing of "supplies" in order to meet an emergency is exempt from public
bidding. Unless "supplies" is construed to include "equipment," however, the lease of heavy equipment needed
for rescue operations in case of a calamity will have to be submitted to public bidding before it can be entered into
by the government.

In dissent Justice Feliciano says that in such a situation the government can simply resort to expropriation, paying
compensation afterward. This is just like purchasing the equipment through negotiation when the question is
whether the purchase should be by public bidding, not to mention the fact that the power to expropriate may not
be exercised when the government can very well negotiate with private owners.

Indeed, there are fundamental difficulties in simultaneously contending (1) that E.O. No. 301, §1 covers both
contracts of sale and lease agreements and (2) that the words "supplies," "materials" and "equipment" can not be
interchanged. Thus, under paragraph (b) of §1, public bidding is not required "whenever the supplies are to be
used in connection with a project or activity which cannot be delayed without causing detriment to the public
service." Following petitioners' theory, there should be a public bidding before the government can enter into a
contract for the lease of bulldozers and dredging equipment even if these are urgently needed in areas ravaged
by lahar because, first, lease contracts are covered by the general rule and, second, the exception to public bidding
in paragraph (b) covers only "supplies" but not equipment.

To take still another example. Paragraph (d), which does away with the requirement of public bidding "whenever
the supplies under procurement have been unsuccessfully placed on bid for at least two consecutive times, either
due to lack of bidders or the offers received in each instance were exorbitant or nonconforming to specifications."
Again, following the theory of the petitioners, a contract for the lease of equipment cannot be entered into even if
there are no bids because, first, lease contracts are governed by the general rule on public bidding and, second,
the exception to public bidding in paragraph (d) applies only to contracts for the furnishing of "supplies."

Other examples can be given to show the absurdity of interpreting §1 as applicable to any contract for the
furnishing of supplies, materials and equipment and of considering the words "supplies," "materials" and
"equipment" to be not interchangeable. Our ruling that §1 of E.O. No. 301 does not cover the lease of equipment
avoids these fundamental difficulties and is supported by the text of §1, which is entitled "Guidelines for Negotiated
Contracts" and by the fact that the only provisions of E.O. No. 301 on leases, namely, §§6 and 7, concern the
lease of buildings by or to the government. Thus the text of §1 reads:

§1. Guidelines for Negotiated Contracts. — Any provision of law, decree, executive order or other issuances to
the contrary notwithstanding, no contract for public services or for furnishing supplies, materials and equipment to
the government or any of its branches, agencies or instrumentalities shall be renewed or entered into without
public bidding, except under any of the following situations:

a. Whenever the supplies are urgently needed to meet an emergency which may involve the loss of, or danger to,
life and/or property;

b. Whenever the supplies are to be used in connection with a project or activity which cannot be delayed without
causing detriment to the public service;

c. Whenever the materials are sold by an exclusive distributor or manufacturer who does not have subdealers
selling at lower prices and for which no suitable substitute can be obtained elsewhere at more advantageous terms
to the government;
d. Whenever the supplies under procurement have been unsuccessfully placed on bid for at least two consecutive
times, either due to lack of bidders or the offers received in each instance were exhorbitant or non-conforming to
specifications;

e. In cases where it is apparent that the requisition of the needed supplies through negotiated purchase is most
advantageous to the government to be determined by the Department Head concerned; and

f. Whenever the purchase is made from an agency of the government.

Indeed, the purpose for promulgating E.O. No. 301 was merely to decentralize the system of reviewing negotiated
contracts of purchase for the furnishing of supplies, materials and equipment as well as lease contracts of
buildings. Theretofore, E.O. No. 298, promulgated on August 12, 1940, required consultation with the Secretary
of Justice and the Department Head concerned and the approval of the President of the Philippines before
contracts for the furnishing of supplies, materials and equipment could be made on a negotiated basis, without
public bidding. E.O. No. 301 changed this by providing as follows:

§2. Jurisdiction over Negotiated Contracts. — In line with the principles of decentralization and accountability,
negotiated contracts for public services or for furnishing supplies, materials or equipment may be entered into by
the department or agency head or the governing board of the government-owned or controlled corporation
concerned, without need of prior approval by higher authorities, subject to availability of funds, compliance with
the standards or guidelines prescribed in Section 1 hereof, and to the audit jurisdiction of the commission on Audit
in accordance with existing rules and regulations.

Negotiated contracts involving P2,000,000 up to P10,000,000 shall be signed by the Secretary and two other
Undersecretaries.

§7. Jurisdiction Over Lease Contracts. — The heads of agency intending to rent privately-owned buildings or
spaces for their use, or to lease out government-owned buildings or spaces for private use, shall have authority to
determine the reasonableness of the terms of the lease and the rental rates thereof, and to enter into such lease
contracts without need of prior approval by higher authorities, subject to compliance with the uniform standards or
guidelines established pursuant to Section 6 hereof by the DPWH and to the audit jurisdiction of COA or its duly
authorized representative in accordance with existing rules and regulations.

In sum, E.O. No. 301 applies only to contracts for the purchase of supplies, materials and equipment, and it was
merely to change the system of administrative review of emergency purchases, as theretofore prescribed by E.O.
No. 298, that E.O. No. 301 was issued on July 26, 1987. Part B of this Executive Order applies to leases of
buildings, not of equipment, and therefore does not govern the lease contract in this case. Even if it applies, it
does not require public bidding for entering into it.

Our holding that E.O. No. 301, §1 applies only to contracts of purchase and sale is conformable to P.D. No. 526,
promulgated on August 2, 1974, which is in pari materia. P.D. No. 526 requires local governments to hold public
bidding in the "procurement of supplies." By specifying "procurement of supplies" and excepting from the general
rule "purchases" when made under certain circumstances, P.D. No. 526, §12 indicates quite clearly that it applies
only to contracts of purchase and sale. This provision reads:

§12. Procurement without public bidding. — Procurement of supplies may be made without the benefit of public
bidding in the following modes:

(1) Personal canvass of responsible merchants;

(2) Emergency purchases;

(3) Direct purchases from manufacturers or exclusive distributors;

(4) Thru the Bureau of Supply Coordination; and

(5) Purchase from other government entities or foreign governments.

Sec. 3 broadly defines the term "supplies" as including —

everything except real estate, which may be needed in the transaction of public business, or in the pursuit of any
undertaking, project, or activity, whether of the nature of equipment, furniture, stationery, materials for construction,
or personal property of any sort, including non-personal or contractual services such as the repair and
maintenance of equipment and furniture, as well as trucking, hauling, janitorial, security, and related or analogous
services.

Thus, the texts of both E.O. No. 301, §1 and of P.D. No. 526, §§1 and 12, make it clear that only contracts for the
purchase and sale of supplies, materials and equipment are contemplated by the rule concerning public biddings.

Finally, it is contended that equipment leases are attractive and commonly used in place of contracts of purchase
and sale because of "multifarious credit and tax constraints" and therefore could not have been left out from the
requirement of public bidding. Obviously these credit and tax constraints can have no attraction to the government
when considering the advantages of sale over lease of equipment. The fact that lease contracts are in common
use is not a reason for implying that the rule on public bidding applies not only to government purchases but also
to lease contracts. For the fact also is that the government leases equipment, such as copying machines, personal
computers and the like, without going through public bidding.

FOR THE FOREGOING REASONS, the motion for reconsideration of petitioners is DENIED with finality.

SO ORDERED.