STAT CON: third batch of 14 cases (pp.

107-151)
The People of the Philippines vs. Hon. Vicente B. Echavez, Jr.
January 28, 1980 NO FULL TEXT
FIRST DIVISION
G.R. No. 180235, January 20, 2016
ALTA VISTA GOLF AND COUNTRY CLUB, Petitioner, v. THE CITY OF CEBU, HON. MAYOR
TOMAS R. OSMEÑA, IN HIS CAPACITY AS MAYOR OF CEBU, AND TERESITA C.
CAMARILLO, IN HER CAPACITY AS THE CITY TREASURER, Respondents.
DECISION
LEONARDO-DE CASTRO, J.:
Before the Court is a Petition for Review on Certiorari of the Resolution1 dated March 14, 2007
and the Order2 dated October 3, 2007 of the Regional Trial Court (RTC), Cebu City, Branch 9 in
Civil Case No. CEB-31988, dismissing the Petition for Injunction, Prohibition, Mandamus,
Declaration of Nullity of Closure Order, Declaration of Nullity of Assessment, and Declaration of
Nullity of Section 42 of Cebu City Tax Ordinance, with Prayer for Temporary Restraining Order
and Writ of Preliminary Injunction3 filed by petitioner Alta Vista Golf and Country Club against
respondents City of Cebu (Cebu City), then Cebu City Mayor Tomas R. Osmeña (Osmeña), and
then Cebu City Treasurer Teresita Camarillo (Camarillo).

Petitioner is a non-stock and non-profit corporation operating a golf course in Cebu City.

On June 21, 1993, the Sangguniang Panlungsod of Cebu City enacted City Tax Ordinance No.
LXIX, otherwise known as the "Revised Omnibus Tax Ordinance of the City of Cebu" (Revised
Omnibus Tax Ordinance).

Section 42 of the said tax ordinance on amusement tax was amended by City Tax Ordinance
Nos. LXXXII4and LXXXIV5 (which were enacted by the Sangguniang Panlungsod of Cebu City
on December 2, 1996 and April 20, 1998, respectively6) to read as follows:
Section 42. Rate of Tax. - There shall be paid to the Office of the City Treasurer by
the proprietors, lessees or operators of theaters, cinemas, concert halls, circuses and other
similar places of entertainment, an amusement tax at the rate of thirty percent (30%), golf
courses and polo grounds at the rate of twenty percent (20%), of their gross receipts on
entrance, playing green, and/or admission fees; PROVIDED, HOWEVER, That in case of
movie premieres or gala shows for the benefit of a charitable institution/foundation or any
government institution where higher admission fees are charged, the aforementioned rate of
thirty percent (30%) shall be levied against the gross receipts based on the regular admission
fees, subject to the approval of the Sangguniang Panlungsod; PROVIDED FURTHER, That in
case payment of the amusement tax is made promptly on or before the date hereinbelow
prescribed, a rebate of five percent (5%) on the aforementioned gross receipts shall be given to
the proprietors, lessees or operators of theaters; PROVIDED FURTHERMORE, that as an
incentive to theater operators who own the real property and/or building where the theater is
located, an additional one percent (1%) rebate shall be given to said operator/real property
owner concerned for as long as their theater/movie houses are then (10) years old or older or
the theater or movie house is located at the city's redevelopment area bounded on the north by
Gen. Maxilom Street up to the port area; on the south by V. Rama Avenue up to San Nicolas
area; and on the west by B. Rodriguez St. and General Maxilom Avenue; PROVIDED FINALLY,
that the proceeds of this additional one percent (1%) rebate shall be used by the
building/property owner-theater operator to modernize their theater facilities. (Emphases
supplied.)

In an Assessment Sheet7 dated August 6, 1998, prepared by Cebu City Assessor Sandra I. Po,
petitioner was originally assessed deficiency business taxes, fees, and other charges for the
year 1998, in the total amount of P3,820,095.68, which included amusement tax on its golf
course amounting to P2,612,961.24 based on gross receipts of
P13,064,806.20.8chanroblesvirtuallawlibrary

Through the succeeding years, respondent Cebu City repeatedly attempted to collect from
petitioner its deficiency business taxes, fees, and charges for 1998, a substantial portion of
which consisted of the amusement tax on the golf course. Petitioner steadfastly refused to pay
the amusement tax arguing that the imposition of said tax by Section 42 of the Revised
Omnibus Tax Ordinance, as amended, was irregular, improper, and illegal.

Petitioner reasoned that under the Local Government Code, amusement tax can only be
imposed on operators of theaters, cinemas, concert halls, or places where one seeks to
entertain himself by seeing or viewing a show or performance. Petitioner further cited the ruling
in Philippine Basketball Association (PBA) v. Court of Appeals9 that under Presidential Decree
No. 231, otherwise known as the Local Tax Code of 1973, the province could only impose
amusement tax on admission from the proprietors, lessees, or operators of theaters,
cinematographs, concert halls, circuses, and other places of amusement, but not professional
basketball games. Professional basketball games did not fall under the same category as
theaters, cinematographs, concert halls, and circuses as the latter basically belong to artistic
forms of entertainment while the former catered to sports and gaming.

Through a letter dated October 11, 2005, respondent Camarillo sought to collect once more
from petitioner deficiency business taxes, fees, and charges for the year 1998, totaling
P2,981,441.52, computed as follows:

Restaurant - P4,021,830.65 P 40,950.00

Permit Fee 2,000.00

Liquor-P1,940,283.80 20,160.00

Permit Fee 2,000.00

Commission/Other Income 14,950.00

 P1,262,764.28

Permit Fee 1,874.00

Retail Cigarettes - P42,076.11 - Permit 84.15

Non-Securing of Permit 979.33

Sub-Total P 82,997.98

Less: Payment based on computer assessment 74,858.61

Short payment P 12,723.18

25% surcharge 3,180.80

72% interest 11,450.00

Penalty for understatement 500.00

Amount Due P 27,854.85

Add: Amusement Tax on golf course P 1,373,761.24

25% surcharge (P6,868,806.20 x 20%) 343,440.31

72% Interest 1,236,385.12 2,953,586.67

GRAND TOTAL P2,981,441.5210

(Emphasis supplied.)

Petitioner, through counsel, wrote respondent Camarillo a letter11 dated October 17, 2005 still
disputing the amusement tax assessment on its golf course for 1998 for being illegal. Petitioner,
in a subsequent letter dated November 30, 2005, proposed that:
While the question of the legality of the amusement tax on golf courses is still unresolved, may
we propose that Alta Vista Golf and Country Club settle first the other assessments contained in
your Assessment Sheet issued on October 11, 2005.

At this early stage, we also request that pending resolution of the legality of the amusement tax
imposition on golf courses in [the Revised Omnibus Tax Ordinance, as amended], Alta Vista
Golf and Country Club be issued the required Mayor's and/or Business Permit.12chanrobleslaw
Respondent Camarillo treated the letter dated October 17, 2005 of petitioner as a Protest of
Assessment and rendered on December 5, 2005 her ruling denying said Protest on the
following grounds: (a) a more thorough and comprehensive reading of the PBA case would
reveal that the Court actually ruled therein that PBA was liable to pay amusement tax, but to the
national government, not the local government; (b) Section 42 of the Revised Omnibus Tax
Ordinance, as amended, enjoyed the presumption of constitutionality and petitioner failed to
avail itself of the remedy under Section 187 of the Local Government Code to challenge the
legality or validity of Section 42 of the Revised Omnibus Tax Ordinance, as amended, by filing
an appeal with the Secretary of Justice within 30 days from effectivity of said ordinance; and (c)
the Office of the City Attorney issued a letter dated July 9, 2004 affirming respondent
Camarillo's position that petitioner was liable to pay amusement tax on its golf
course.13Ultimately, respondent Camarillo held:
WHEREFORE, upon consideration of the legal grounds as above-mentioned, we reiterate our
previous stand on the validity of the ASSESSMENT SHEET pertaining to the Tax Deficiencies
for CY 1998 and this ruling serve as the FINAL DEMAND for immediate settlement and
payment of your amusement tax liabilities and/or delinquencies otherwise we will constrained
(sic) the non-issuance of a Mayor's Business Permit for nonpayment of the said deficiency on
amusement tax and/or other tax liabilities as well as to file the appropriate filing of administrative
and judicial remedies for the collection of the said tax liability and the letter treated as a Protest
of Assessment that was duly submitted before this office is hereby DENIED.14chanrobleslaw

Shortly after, on January 12, 2006, petitioner was served with a Closure Order15 dated
December 28, 2005 issued by respondent City Mayor Osmefia. According to the Closure Order,
petitioner committed blatant violations of the laws and Cebu City Ordinances, to wit:
1. Operating a business without a business permit for five (5) years, from year 2001-
2005, in relation to Chapters I and II and the penalty clauses under Sections 4, 6, 8, 66
(f) and 114 of the City Tax Ordinance No. 69, otherwise known as the REVISED CITY
TAX ORDINANCE OF THE CITY OF CEBU, as amended by CO. 75;
2. Nonpayment of deficiency on Business Taxes and Fees amounting to Seventeen
Thousand Four Hundred Ninety-Nine Pesos and Sixty-Four Centavos
(Php17,499.64), as adjusted, despite repeated demands in violation [of] Sections 4 and
8 of City Tax Ordinance No. 69, as amended;
3. Nonpayment of deficiency on Amusement Tax and the penalties relative therewith
totaling Two Million Nine Hundred Fifty-Three Thousand Five Hundred Eighty-Six
Pesos and Eighty-Six Centavos (Php2,953,586.86) in violation of Sections 4 and 8 in
relation to Section 42 of City Tax Ordinance No. 69, as amended, business permit-
violation of the Article 172, Revised Penal Code of the Philippines. (Emphases supplied.)

The Closure Order established respondent Mayor Osmeña's authority for issuance of the same
and contained the following directive:
As the chief executive of the City, the Mayor has the power and duty to: Enforce all laws and
ordinances relative to the governance of the city x x x and, in addition to the foregoing, shall x x
x Issue such executive orders for the faithful and appropriate enforcement and execution of laws
and ordinances x x x. These are undeniable in the LOCAL GOVERNMENT CODE, Section 455,
par. (2) and par. (2)(iii).

Not only that, these powers can be exercised under the general welfare clause of the Code,
particularly Section 16 thereof, where it is irrefutable that "every government unit shall exercise
the powers expressly granted, those necessarily implied therefrom, as well as powers
necessary, appropriate, or incidental of its efficient and effective governance, and those which
are essential to the promotion of the general welfare."

This CLOSURE ORDER precisely satisfies these legal precedents. Hence now, in view
whereof, your business establishment is hereby declared closed in direct contravention of the
above-specified laws and city ordinances. Please cease and desist from further operating your
business immediately upon receipt of this order.

This closure order is without prejudice to the constitutional/statutory right of the City to file
criminal cases against corporate officers, who act for and its behalf, for violations of Section 114
of the REVISED CITY TAX ORDINANCE OF THE CITY OF CEBU and Section 516 of the
LOCAL GOVERNMENT CODE, with penalties of imprisonment and/or fine.

FOR STRICT AND IMMEDIATE COMPLIANCE.16chanrobleslaw

The foregoing developments prompted petitioner to file with the RTC on January 13, 2006 a
Petition for Injunction, Prohibition, Mandamus, Declaration of Nullity of Closure Order,
Declaration of Nullity of Assessment, and Declaration of Nullity of Section 42 of Cebu City Tax
Ordinance, with Prayer for Temporary Restraining Order and Writ of Preliminary Injunction,
against respondents, which was docketed as Civil Case No. CEB-31988.17 Petitioner eventually
filed an Amended Petition on January 19, 2006.18Petitioner argued that the Closure Order is
unconstitutional as it had been summarily issued in violation of its right to due process; a city
mayor has no power under the Local Government Code to deny the issuance of a business
permit and order the closure of a business for nonpayment of taxes; Section 42 of the Revised
Omnibus Tax Ordinance, as amended, is null and void for being ultra vires or beyond the taxing
authority of respondent Cebu City, and consequently, the assessment against petitioner for
amusement tax for 1998 based on said Section 42 is illegal and unconstitutional; and
assuming arguendothat respondent Cebu City has the power to impose amusement tax on
petitioner, such tax for 1998 already prescribed and could no longer be enforced.

Respondents filed a Motion to Dismiss based on the grounds of (a) lack of jurisdiction of the
RTC over the subject matter; (b) non-exhaustion of administrative remedies; (c) noncompliance
with Section 187 of the Local Government Code, which provides the procedure and prescriptive
periods for challenging the validity of a local tax ordinance; (d) noncompliance with Section 252
of the Local Government Code and Section 75 of Republic Act No. 3857, otherwise known as
the Revised Charter of the City of Cebu, requiring payment under protest of the tax assessed;
and (e) failure to establish the authority of Ma. Theresa Ozoa (Ozoa) to institute the case on
behalf of petitioner.19chanroblesvirtuallawlibrary
In its Opposition to the Motion to Dismiss, petitioner countered that the RTC, a court of general
jurisdiction, could take cognizance of its Petition in Civil Case No. CEB-31988, which not only
involved the issue of legality or illegality of a tax ordinance, but also sought the declaration of
nullity of the Closure Order and the issuance of writs of injunction and prohibition. Petitioner
likewise asserted that Section 195 of the Local Government Code on the protest of assessment
does, not require payment under protest. Section 252 of the same Code invoked by
respondents applies only to real property taxes. In addition, petitioner maintained that its
Petition in Civil Case No. CEB-31988 could not be barred by prescription. There is nothing in
the Local Government Code that could deprive the courts of the power to determine the
constitutionality or validity of a tax ordinance due to prescription. It is the constitutional duty of
the courts to pass upon the validity of a tax ordinance and such duty cannot be limited or
restricted. Petitioner further contended that there is no need for exhaustion of administrative
remedies given that the issues involved are purely legal; the notice of closure is patently illegal
for having been issued without due process; and there is an urgent need for judicial intervention.
Lastly, petitioner pointed out that there were sufficient allegations in the Petition that its filing
was duly authorized by petitioner. At any rate, petitioner already attached to its Opposition its
Board Resolution No. 104 authorizing Ozoa to file a case to nullify the Closure Order. Thus,
petitioner prayed for the denial of the Motion to Dismiss.20chanroblesvirtuallawlibrary

Respondents, in their Rejoinder to Petitioner's Opposition to the Motion to Dismiss,21 asserted

that the Closure Order was just a necessary consequence of the nonpayment by petitioner of
the amusement tax assessed against it. The Revised Omnibus Tax Ordinance of respondent
Cebu City directs that no permit shall be issued to a business enterprise which made no proper
payment of tax and, correspondingly, no business enterprise may be allowed to operate or
continue to operate without a business permit. The fundamental issue in the case was still the
nonpayment by petitioner of amusement tax. Respondents relied on Reyes v. Court of
Appeals,22 in which the Court categorically ruled that the prescriptive periods fixed in Section
187 of the Local Government Code are mandatory and prerequisites before seeking redress
from a competent court. Section 42 of the Revised Omnibus Tax Ordinance, as amended, was
passed on April 20, 1998, so the institution by petitioner of Civil Case No. CEB-31988 before the
RTC on January 13, 2006 - without payment under protest of the assessed amusement tax and
filing of an appeal before the Secretary of Justice within 30 days from the effectivity of the
Ordinance - was long barred by prescription.

After filing by the parties of their respective Memorandum, the RTC issued an Order23 dated
March 16, 2006 denying the prayer of petitioner for issuance of a Temporary Restraining Order
(TRO). The RTC found that when the business permit of petitioner expired and it was operating
without a business permit, it ceased to have a legal right to do business. The RTC affirmed
respondent Mayor Osmeña's authority to issue or grant business licenses and permits pursuant
to the police power inherent in his office; and such authority to issue or grant business licenses
and permits necessarily included the authority to suspend or revoke or even refuse the issuance
of the said business licenses and permits in case of violation of the conditions for the issuance
of the same. The RTC went on to hold that:
[Petitioner] was given opportunities to be heard when it filed a protest [of] the assessment which
was subsequently denied. To the mind of this court, this already constitutes the observance of
due process and that [petitioner] had already been given the opportunity to be heard. Due
process and opportunity to be heard does not necessarily mean winning the argument in one's
favor but to be given the fair chance to explain one's side or views with regards [to] the matter in
issue, which in this case is the legality of the tax assessment.

It is therefore clear that when this case was filed, [petitioner] had no more legal right in its favor
for the courts to protect. It would have been a different story altogether had [petitioner] paid the
tax assessment for the green fees even under protest and despite payment and [respondent]
Mayor refused the issuance of the business permit because all the requisites for the issuance of
the said permit are all complied with.24chanroblesvirtuallawlibrary

On March 20, 2006, petitioner paid under protest to respondent Cebu City, through respondent
Camarillo, the assessed amusement tax, plus penalties, interest, and surcharges, in the total
amount of P2,750,249.17.25cralawred

Since the parties agreed that the issues raised in Civil Case No. CEB-31988 were all legal in
nature, the RTC already considered the case submitted for resolution after the parties filed their
respective Memorandum.26chanroblesvirtuallawlibrary

On March 14, 2007, the RTC issued a Resolution granting the Motion to Dismiss of
respondents. Quoting from Reyes and Hagonoy Market Vendor Association v. Municipality of
Hagonoy, Bulacan,27 the RTC sustained the position of respondents that Section 187 of the
Local Government Code is mandatory. Thus, the RTC adjudged:
From the above cited cases, it can be gleaned that the period in the filing of the protests is
important. In other words, it is the considered opinion of this court [that] when a taxpayer
questions the validity of a tax ordinance passed by a local government legislative body, a
different procedure directed in Section 187 is to be followed. The reason for this could be
because the tax ordinance is clearly different from a law passed by Congress. The local
government code has set several limitations on the taxing power of the local government
legislative bodies including the issue of what should be taxed.

In this case, since the Petitioner failed to comply with the procedure outlined in Section 187 of
the Local Government Code and the fact that this case was filed way beyond the period to file a
case in court, then this court believes that the action must fail.

Because of the procedural infirmity in bringing about this case to the court, then the substantial
issue of the propriety of imposing amusement taxes on the green fees could no longer be
determined.

WHEREFORE, in view of the aforegoing, this case is hereby DISMISSED.28chanrobleslaw

The RTC denied the Motion for Reconsideration of petitioner in an Order dated October 3, 2007.

Petitioner is presently before the Court on pure questions of law, viz.:

 I. WHETHER OR NOT THE POWER OF JUDICIAL REVIEW OVER THE VALIDITY OF A
LOCAL TAX ORDINANCE HAS BEEN RESTRICTED BY SECTION 187 OF THE
LOCAL GOVERNMENT CODE.
II. WHETHER OR NOT THE CITY OF CEBU OR ANY LOCAL GOVERNMENT CAN
VALIDLY IMPOSE AMUSEMENT TAX TO THE ACT OF PLAYING GOLF.29

There is merit in the instant Petition.

The RTC judgment on pure

questions of law may be directly
appealed to this Court via a petition
for review on certiorari.

Even before the RTC, the parties already acknowledged that the case between them involved
only questions of law; hence, they no longer presented evidence and agreed to submit the case
for resolution upon submission of their respective memorandum.

It is incontestable that petitioner may directly appeal to this Court from the judgment of the RTC
on pure questions of law via its Petition for Review on Certiorari. Rule 41, Section 2(c) of the
Rules of Court provides that "[i]n all cases where only questions of law are raised or involved,
the appeal shall be to the Supreme Court by petition for review on certiorari in accordance with
Rule 45." As the Court declared in Bonifacio v. Regional Trial Court of Makati, Branch 14930:
The established policy of strict observance of the judicial hierarchy of courts, as a rule, requires
that recourse must first be made to the lower-ranked court exercising concurrent jurisdiction with
a higher court. A regard for judicial hierarchy clearly indicates that petitions for the issuance of
extraordinary writs against first level courts should be filed in the RTC and those against the
latter should be filed in the Court of Appeals. The rule is not iron-clad, however, as it admits of
certain exceptions.

Thus, a strict application of the rule is unnecessary when cases brought before the appellate
courts do not involve factual but purely legal questions. (Citations omitted.)

"A question of law exists when the doubt or controversy concerns the correct application of law
or jurisprudence to a certain set of facts; or when the issue does not call for an examination of
the probative value of the evidence presented, the truth or falsehood of facts being admitted[;]"
and it may be brought directly before this Court, the undisputed final arbiter of all questions of
law.31chanroblesvirtuallawlibrary

The present case is an exception

to Section 187 of the Local Government
Code and the doctrine of exhaustion of
administrative remedies.

Section 187 of the Local Government Code reads:

Sec. 187. Procedure for Approval and Effectivity of Tax Ordinances and Revenue Measures;
Mandatory Public Hearings. - The procedure for approval of local tax ordinances and revenue
measures shall be in accordance with the provisions of this Code: Provided, That public
hearings shall be conducted for the purpose prior to the enactment thereof: Provided,
further, That any question on the constitutionality or legality of tax ordinances or revenue
measures may be raised on appeal within thirty (30) days from the effectivity thereof to the
Secretary of Justice who shall render a decision within sixty (60) days from the date of receipt of
the appeal: Provided, however, That such appeal shall not have the effect of suspending the
effectivity of the ordinance and the accrual and payment of the tax, fee, or charge levied
therein: Provided, finally, That within thirty (30) days after receipt of the decision or the lapse of
the sixty-day period without the Secretary of Justice acting upon the appeal, the aggrieved party
may file appropriate proceedings with a court of competent jurisdiction.

Indeed, the Court established in Reyes that the aforequoted provision is a significant procedural
requisite and, therefore, mandatory:
Clearly, the law requires that the dissatisfied taxpayer who questions the validity or legality of a
tax ordinance must file his appeal to the Secretary of Justice, within 30 days from effectivity
thereof. In case the Secretary decides the appeal, a period also of 30 days is allowed for an
aggrieved party to go to court. But if the Secretary does not act thereon, after the lapse of 60
days, a party could already proceed to seek relief in court. These three separate periods are
clearly given for compliance as a prerequisite before seeking redress in a competent court.
Such statutory periods are set to prevent delays as well as enhance the orderly and speedy
discharge of judicial functions. For this reason the courts construe these provisions of statutes
as mandatory.

A municipal tax ordinance empowers a local government unit to impose taxes. The power to tax
is the most effective instrument to raise needed revenues to finance and support the myriad
activities of local government units for the delivery of basic services essential to the promotion
of the general welfare and enhancement of peace, progress, and prosperity of the people.
Consequently, any delay in implementing tax measures would be to the detriment of the public.
It is for this reason that protests over tax ordinances are required to be done within certain time
frames. In the instant case, it is our view that the failure of petitioners to appeal to the Secretary
of Justice within 30 days as required by Sec. 187 of R.A. 7160 is fatal to their cause.32 (Citations
omitted.)

The Court further affirmed in Hagonoy that:

At this point, it is apropos to state that the timeframe fixed by law for parties to avail of their legal
remedies before competent courts is not a "mere technicality" that can be easily brushed
aside. The periods stated in Section 187 of the Local Government Code are
mandatory. Ordinance No. 28 is a revenue measure adopted by the municipality of Hagonoy to
fix and collect public market stall rentals. Being its lifeblood, collection of revenues by the
government is of paramount importance. The funds for the operation of its agencies and
provision of basic services to its inhabitants are largely derived from its revenues and
collections. Thus, it is essential that the validity of revenue measures is not left uncertain for a
considerable length of time. Hence, the law provided a time limit for an aggrieved party to assail
the legality of revenue measures and tax ordinances.33 (Citations omitted.)

Nevertheless, in later cases, the Court recognized exceptional circumstances that justify
noncompliance by a taxpayer with Section 187 of the Local Government Code.

The Court ratiocinated in Ongsuco v. Malones,34 thus:

It is true that the general rule is that before a party is allowed to seek the intervention of the
court, he or she should have availed himself or herself of all the means of administrative
processes afforded him or her. Hence, if resort to a remedy within the administrative machinery
can still be made by giving the administrative officer concerned every opportunity to decide on a
matter that comes within his or her jurisdiction, then such remedy should be exhausted first
before the court's judicial power can be sought. The premature invocation of the intervention of
the court is fatal to one's cause of action. The doctrine of exhaustion of administrative remedies
is based on practical and legal reasons. The availment of administrative remedy entails lesser
expenses and provides for a speedier disposition of controversies. Furthermore, the courts of
justice, for reasons of comity and convenience, will shy away from a dispute until the system of
administrative redress has been completed and complied with, so as to give the administrative
agency concerned every opportunity to correct its error and dispose of the case. However, there
are several exceptions to this rule.

The rule on the exhaustion of administrative remedies is intended to preclude a court from
arrogating unto itself the authority to resolve a controversy, the jurisdiction over which is initially
lodged with an administrative body of special competence. Thus, a case where the issue
raised is a purely legal question, well within the competence; and the jurisdiction of the
court and not the administrative agency, would clearly constitute an exception.
Resolving questions of law, which involve the interpretation and application of laws,
constitutes essentially an exercise of judicial power that is exclusively allocated to the
Supreme Court and such lower courts the Legislature may establish.

In this case, the parties are not disputing any factual matter on which they still need to
present evidence. The sole issue petitioners raised before the RTC in Civil Case No. 25843
was whether Municipal Ordinance No. 98-01 was valid and enforceable despite the absence,
prior to its enactment, of a public hearing held in accordance with Article 276 of the
Implementing Rules and Regulations of the Local Government Code. This is undoubtedly a
pure question of law, within the competence and jurisdiction of the RTC to resolve.

Paragraph 2(a) of Section 5, Article VIII of the Constitution, expressly establishes the appellate
jurisdiction of this Court, and impliedly recognizes the original jurisdiction of lower courts over
cases involving the constitutionality or validity of an ordinance:ChanRoblesVirtualawlibrary
Section 5. The Supreme Court shall have the following powers:

xxxx

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

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

In J.M. Tuason and Co., Inc. v. Court of Appeals, Ynot v. Intermediate Appellate Court, and
Commissioner of Internal Revenue v. Santos, the Court has affirmed the jurisdiction of the RTC
to resolve questions of constitutionality and validity of laws (deemed to include local ordinances)
in the first instance, without deciding questions which pertain to legislative policy. (Emphases
supplied, citations omitted.)

In Cagayan Electric Power and Light Co., Inc. (CEPALCO) v. City of Cagayan De Oro,35 the
Court initially conceded that as in Reyes, the failure of taxpayer CEPALCO to appeal to the
Secretary of Justice within the statutory period of 30 days from the effectivity of the ordinance
should have been fatal to its cause. However, the Court purposefully relaxed the application of
the rules in view of the more substantive matters.

Similar to Ongsuco and CEPALCO, the case at bar constitutes an exception to the general rule.
Not only does the instant Petition raise pure questions of law, but it also involves substantive
matters imperative for the Court to resolve.

Section 42 of the Revised Omnibus

Tax Ordinance, as amended, imposing
amusement tax on golf courses is null
and void as it is beyond the authority of
respondent Cebu City to enact under the
Local Government Code.

The Local Government Code authorizes the imposition by local government units of amusement
tax under Section 140, which provides:
Sec. 140. Amusement Tax. - (a) The province may levy an amusement tax to be collected from
the proprietors, lessees, or operators of theaters, cinemas, concert halls, circuses,
boxing stadia, and other places of amusement at a rate of not more than thirty percent (30%)
of the gross receipts from admission fees.

(b) In the case of theaters or cinemas, the tax shall first be deducted and withheld by their
proprietors, lessees, or operators and paid to the provincial treasurer before the gross receipts
are divided between said proprietors, lessees, or operators and the distributors of the
cinematographic films.

(c) The holding of operas, concerts, dramas, recitals, painting, and art exhibitions, flower shows,
musical programs, literary and oratorical presentations, except pop, rock, or similar concerts
shall be exempt from the payment of the tax hereon imposed.
(d) The sangguniang panlalawigan may prescribe the time, manner, terms and conditions for
the payment of tax. In case of fraud or failure to pay the tax, the sangguniang panlalawigan may
impose such surcharges, interests and penalties as it may deem appropriate.

(e) The proceeds from the amusement tax shall be shared equally by the province and the
municipality where such amusement places are located. (Emphasis supplied.)

"Amusement places," as defined in Section 131 (c) of the Local Government Code, "include
theaters, cinemas, concert halls, circuses and other places of amusement where one seeks
admission to entertain oneself by seeing or viewing the show or performance."

The pronouncements of the Court in Pelizloy Realty Corporation v. The Province of

Benguet36 are of particular significance to this case. The Court, in Pelizloy Realty, declared null
and void the second paragraph of Article X, Section 59 of the Benguet Provincial Code, in so far
as it imposes amusement taxes on admission fees to resorts, swimming pools, bath houses, hot
springs, and tourist spots. Applying the principle of ejusdem generis, as well as the ruling in
the PBA case, the Court expounded on the authority of local government units to impose
amusement tax under Section 140, in relation to Section 131(c), of the Local Government Code,
as follows:
Under the principle of ejusdem generis, "where a general word or phrase follows an
enumeration of particular and specific words of the same class or where the latter follow the
former, the general word or phrase is to be construed to include, or to be restricted to persons,
things or cases akin to, resembling, or of the same kind or class as those specifically
mentioned."

The purpose and rationale of the principle was explained by the Court in National Power
Corporation v. Angas as follows:ChanRoblesVirtualawlibrary
The purpose of the rule on ejusdem generis is to give effect to both the particular and general
words, by treating the particular words as indicating the class and the general words as
including all that is embraced in said class, although not specifically named by the particular
words. This is justified on the ground that if the lawmaking body intended the general terms to
be used in their unrestricted sense, it would have not made an enumeration of particular
subjects but would have used only general terms. [2 Sutherland, Statutory Construction, 3rd ed.,
pp. 395-400].
In Philippine Basketball Association v. Court of Appeals, the Supreme Court had an opportunity
to interpret a starkly similar provision or the counterpart provision of Section 140 of the LGC in
the Local Tax Code then in effect. Petitioner Philippine Basketball Association (PBA) contended
that it was subject to the imposition by LGUs of amusement taxes (as opposed to amusement
taxes imposed by the national government). In support of its contentions, it cited Section 13 of
Presidential Decree No. 231, otherwise known as the Local Tax Code of 1973, (which is
analogous to Section 140 of the LGC) providing the following:ChanRoblesVirtualawlibrary
Section 13. Amusement tax on admission. — The province shall impose a tax on admission to
be collected from the proprietors, lessees, or operators of theaters, cinematographs, concert
halls, circuses and other places of amusement xxx.
Applying the principle of ejusdem generis, the Supreme Court rejected PBA's assertions and
noted that:ChanRoblesVirtualawlibrary
[I]n determining the meaning of the phrase 'other places of amusement', one must refer to the
prior enumeration of theaters, cinematographs, concert halls and circuses with artistic
expression as their common characteristic. Professional basketball games do not fall under the
same category as theaters, cinematographs, concert halls and circuses as the latter basically
belong to artistic forms of entertainment while the former caters to sports and gaming.
However, even as the phrase 'other places of amusement' was already clarified in Philippine
Basketball Association, Section 140 of the LGC adds to the enumeration of 'places of
amusement' which may properly be subject to amusement tax. Section 140 specifically
mentions 'boxing stadia' in addition to "theaters, cinematographs, concert halls [and] circuses"
which were already mentioned in PD No. 231. Also, 'artistic expression' as a characteristic does
not pertain to 'boxing stadia'.

In the present case, the Court need not embark on a laborious effort at statutory construction.
Section 131 (c) of the LGC already provides a clear definition of 'amusement places':

xxxx

Indeed, theaters, cinemas, concert halls, circuses, and boxing stadia are bound by a
common typifying characteristic in that they are all venues primarily for the staging of
spectacles or the holding of public shows, exhibitions, performances, and other events
meant to be viewed by an audience. Accordingly, 'other places of amusement' must be
interpreted in light of the typifying characteristic of being venues "where one seeks
admission to entertain oneself by seeing or viewing the show or performances" or being
venues primarily used to stage spectacles or hold public shows, exhibitions,
performances, and other events meant to be viewed by an audience.

As defined in The New Oxford American Dictionary, 'show' means "a spectacle or display of
something, typically an impressive one"; while 'performance' means "an act of staging or
presenting a play, a conceit, or other form of entertainment." As such, the ordinary definitions
of the words 'show' and 'performance' denote not only visual engagement (i.e., the
seeing or viewing of things) but also active doing (e.g., displaying, staging or presenting)
such that actions are manifested to, and (correspondingly) perceived by an audience.

Considering these, it is clear that resorts, swimming pools, bath houses, hot springs and tourist
spots cannot be considered venues primarily "where one seeks admission to entertain oneself
by seeing or viewing the show or performances". While it is true that they may be venues where
people are visually engaged, they are not primarily venues for their proprietors or operators to
actively display, stage or present shows and/or performances.

Thus, resorts, swimming pools, bath houses, hot springs and tourist spots do not belong to the
same category or class as theaters, cinemas, concert halls, circuses, and boxing stadia. It
follows that they cannot be considered as among the 'other places of amusement' contemplated
by Section 140 of the LGC and which may properly be subject to amusement
taxes.37 (Emphases supplied, citations omitted.)
In light of Pelizloy Realty, a golf course cannot be considered a place of amusement. As
petitioner asserted, people do not enter a golf course to see or view a show or performance.
Petitioner also, as proprietor or operator of the golf course, does not actively display, stage, or
present a show or performance. People go to a golf course to engage themselves in a physical
sport activity, i.e., to play golf; the same reason why people go to a gym or court to play
badminton or tennis or to a shooting range for target practice, yet there is no showing herein
that such gym, court, or shooting range is similarly considered an amusement place subject to
amusement tax. There is no basis for singling out golf courses for amusement tax purposes
from other places where people go to play sports. This is in contravention of one of the
fundamental principles of local taxation: that the "[taxation shall be uniform in each local
government unit."38 Uniformity of taxation, like the kindred concept of equal protection, requires
that all subjects or objects of taxation, similarly situated, are to be treated alike both in privileges
and liabilities.39chanroblesvirtuallawlibrary

Not lost on the Court is its declaration in Manila Electric Co. v. Province of Laguna40 that under
the 1987 Constitution, "where there is neither a grant nor a prohibition by statute, the tax power
[of local government units] must be deemed to exist although Congress may provide statutory
limitations and guidelines." Section 186 of the Local Government Code also expressly grants
local government units the following residual power to tax:
Sec. 186. Power to Levy Other Taxes, Fees, or Charges. - Local government units may
exercise the power to levy taxes, fees, or charges on any base or subject not otherwise
specifically enumerated herein or taxed under the provisions of the National Internal
Revenue Code, as amended, or other applicable laws: Provided,that the taxes, fees, or
charges shall not be unjust, excessive, oppressive, confiscatory or contrary to declared national
policy: Provided, further, That the ordinance levying such taxes, fees or charges shall not be
enacted without any prior public hearing conducted for the purpose. (Emphasis supplied.)

Respondents, however, cannot claim that Section 42 of the Revised Omnibus Tax Ordinance,
as amended, imposing amusement tax on golf courses, was enacted pursuant to the residual
power to tax of respondent Cebu City. A local government unit may exercise its residual power
to tax when there is neither a grant nor a prohibition by statute; or when such taxes, fees, or
charges are not otherwise specifically enumerated in the Local Government Code, National
Internal Revenue Code, as amended, or other applicable laws. In the present case, Section
140, in relation to Section 131(c), of the Local Government Code already explicitly and clearly
cover amusement tax and respondent Cebu City must exercise its authority to impose
amusement tax within the limitations and guidelines as set forth in said statutory provisions.

WHEREFORE, in view of all the foregoing, the Court GRANTS the instant Petition,
and REVERSES and SETS ASIDE the Resolution dated March 14, 2007 and the Order dated
October 3, 2007 of the Regional Trial Court, Cebu City, Branch 9 in Civil Case No. CEB-31988.
The Court DECLARES NULL and VOID the following: (a) Section 42 of the Revised Omnibus
Tax Ordinance of the City of Cebu, as amended by City Tax Ordinance Nos. LXXXII and
LXXXIV, insofar as it imposes amusement tax of 20% on the gross receipts on entrance, playing
green, and/or admission fees of golf courses; (b) the tax assessment against petitioner for
amusement tax on its golf course for the year 1998 in the amount of Pl,373,761.24, plus
surcharges and interest pertaining to said amount, issued by the Office of the City Treasurer,
City of Cebu; and (c) the Closure Order dated December 28, 2005 issued against Alta Vista Golf
and Country Club by the Office of the Mayor, City of Cebu. The Court also ORDERS the City of
Cebu to refund to Alta Vista Golf and Country Club the amusement tax, penalties, surcharge,
and interest paid under protest by the latter in the total amount of P2,750,249.17 or to apply the
same amount as tax credit against existing or future tax liability of said Club.

SO ORDERED

Sereno, C.J., (Chairperson), Bersamin, Perlas-Bernabe, and Jardeleza, JJ., concur.

G.R. No. 169435 February 27, 2008
MUNICIPALITY OF NUEVA ERA, ILOCOS NORTE, represented by its Municipal Mayor,
CAROLINE ARZADON-GARVIDA, petitioner,
vs.
MUNICIPALITY OF MARCOS, ILOCOS NORTE, represented by its Municipal Mayor,
SALVADOR PILLOS, and the HONORABLE COURT OF APPEALS, respondents.
DECISION
REYES, R.T., J.:
AS the law creating a municipality fixes its boundaries, settlement of boundary disputes
between municipalities is facilitated by carrying into effect the law that created them.
Any alteration of boundaries that is not in accordance with the law creating a municipality is not
the carrying into effect of that law but its amendment, which only the Congress can do.1
For Our review on certiorari is the Decision2 of the Court of Appeals (CA) reversing to a certain
extent that3 of the Regional Trial Court (RTC), Branch 12, Laoag City, Ilocos Norte, in a case
that originated from the Sangguniang Panlalawigan (SP) of Ilocos Norte about the boundary
dispute between the Municipalities of Marcos and Nueva Era in Ilocos Norte.
The CA declared that Marcos is entitled to have its eastern boundary extended up "to the
boundary line between the province of Ilocos Norte and Kalinga-Apayao."4 By this extension of
Marcos' eastern boundary, the CA allocated to Marcos a portion of Nueva Era's territory.
The Facts
The Municipality of Nueva Era was created from the settlements of Bugayong, Cabittaoran,
Garnaden, Padpadon, Padsan, Paorpatoc, Tibangran, and Uguis which were previously
organized as rancherias, each of which was under the independent control of a chief. Governor
General Francis Burton Harrison, acting on a resolution passed by the provincial government of
Ilocos Norte, united these rancherias and created the township of Nueva Era by virtue of
Executive Order (E.O.) No. 66 5 dated September 30, 1916.
The Municipality of Marcos, on the other hand, was created on June 22, 1963 pursuant to
Republic Act (R.A.) No. 3753 entitled "An Act Creating the Municipality of Marcos in the
Province of Ilocos Norte." Section 1 of R.A. No. 3753 provides:
SECTION 1. The barrios of Capariaan, Biding, Escoda, Culao, Alabaan, Ragas and Agunit in
the Municipality of Dingras, Province of Ilocos Norte, are hereby separated from the said
municipality and constituted into a new and separate municipality to be known as the
Municipality of Marcos, with the following boundaries:
On the Northwest, by the barrios Biding-Rangay boundary going down to the barrios Capariaan-
Gabon boundary consisting of foot path and feeder road; on the Northeast, by the Burnay River
which is the common boundary of barrios Agunit and Naglayaan; on the East, by the Ilocos
Norte-Mt. Province boundary; on the South, by the Padsan River which is at the same time the
boundary between the municipalities of Banna and Dingras; on the West and Southwest, by the
boundary between the municipalities of Batac and Dingras.
The Municipality of Marcos shall have its seat of government in the barrio of Biding.
Based on the first paragraph of the said Section 1 of R.A. No. 3753, it is clear that Marcos shall
be derived from the listed barangays of Dingras, namely: Capariaan, Biding, Escoda, Culao,
Alabaan, Ragas and Agunit. The Municipality of Nueva Era or any of its barangays was not
mentioned. Hence, if based only on said paragraph, it is clear that Nueva Era may not be
considered as a source of territory of Marcos.
There is no issue insofar as the first paragraph is concerned which named only Dingras as the
mother municipality of Marcos. The problem, however, lies in the description of Marcos'
boundaries as stated in the second paragraph, particularly in the phrase: "on the East, by the
Ilocos Norte-Mt. Province boundary."
It must be noted that the term "Mt. Province" stated in the above phrase refers to the present
adjoining provinces of Benguet, Mountain Province, Ifugao, Kalinga and Apayao, which were
then a single province.
Mt. Province was divided into the four provinces of Benguet, Mountain Province, Ifugao, and
Kalinga-Apayao by virtue of R.A. No. 4695 which was enacted on June 18, 1966. On February
14, 1995, the province of Kalinga-Apayao, which comprises the sub-provinces of Kalinga and
Apayao, was further converted into the regular provinces of Kalinga and Apayao pursuant to
R.A. No. 7878.
The part of then Mt. Province which was at the east of Marcos is now the province of Apayao.
Hence, the eastern boundary referred to by the second paragraph of Section 1 of R.A. No. 3753
is the present Ilocos Norte-Apayao boundary.
On the basis of the said phrase, which described Marcos' eastern boundary, Marcos claimed
that the middle portion of Nueva Era, which adjoins its eastern side, formed part of its territory.
Its reasoning was founded upon the fact that Nueva Era was between Marcos and the Ilocos
Norte-Apayao boundary such that if Marcos was to be bounded on the east by the Ilocos Norte-
Apayao boundary, part of Nueva Era would consequently be obtained by it.6
Marcos did not claim any part of Nueva Era as its own territory until after almost 30 years,7 or
only on March 8, 1993, when its Sangguniang Bayan passed Resolution No. 93-015.8 Said
resolution was entitled: "Resolution Claiming an Area which is an Original Part of Nueva Era,
But Now Separated Due to the Creation of Marcos Town in the Province of Ilocos Norte."
Marcos submitted its claim to the SP of Ilocos Norte for its consideration and approval. The SP,
on the other hand, required Marcos to submit its position paper.9
In its position paper, Marcos alleged that since its northeastern and eastern boundaries under
R.A. No. 3753 were the Burnay River and the Ilocos Norte-Mountain Province boundary,
respectively, its eastern boundary should not be limited to the former Dingras-Nueva Era
boundary, which was coterminous and aligned with the eastern boundary of Dingras. According
to Marcos, its eastern boundary should extend further to the east or up to the Ilocos-Norte-Mt.
Province boundary pursuant to the description of its eastern boundary under R.A. No. 3753.10
In view of its claim over the middle portion of Nueva Era, Marcos posited that Nueva Era was
cut into two parts. And since the law required that the land area of a municipality must be
compact and contiguous, Nueva Era's northern isolated portion could no longer be considered
as its territory but that of Marcos'. Thus, Marcos claimed that it was entitled not only to the
middle portion11 of Nueva Era but also to Nueva Era's isolated northern portion. These areas
claimed by Marcos were within Barangay Sto. Niño, Nueva Era.
Nueva Era reacted to the claim of Marcos through its Resolution No. 1, Series of 1993. It
alleged that since time immemorial, its entire land area was an ancestral domain of
the "tinguians," an indigenous cultural community. It argued to the effect that since the land
being claimed by Marcos must be protected for the tinguians, it must be preserved as part of
Nueva Era.12
According to Nueva Era, Marcos was created out of the territory of Dingras only. And since R.A.
No. 3753 specifically mentioned seven (7) barrios of Dingras to become Marcos, the area which
should comprise Marcos should not go beyond the territory of said barrios.13
From the time Marcos was created in 1963, its eastern boundary had been considered to be
aligned and coterminous with the eastern boundary of the adjacent municipality of Dingras.
However, based on a re-survey in 1992, supposedly done to conform to the second paragraph
of Section 1 of R.A. No. 3753, an area of 15,400 hectares of Nueva Era was alleged to form part
of Marcos.14 This was the area of Barangay Sto. Niño, Nueva Era that Marcos claimed in its
position paper.
On March 29, 2000, the SP of Ilocos Norte ruled in favor of Nueva Era. The fallo of its
decision15 reads:
WHEREFORE, in view of all the foregoing, this Body has no alternative but to dismiss, as it
hereby DISMISSES said petition for lack of merit. The disputed area consisting of 15,400
hectares, more or less, is hereby declared as part and portion of the territorial jurisdiction of
respondent Nueva Era.16
R.A. No. 3753 expressly named the barangays that would comprise Marcos, but none of Nueva
Era's barangayswere mentioned. The SP thus construed, applying the rule of expressio unius
est exclusio alterius, that no part of Nueva Era was included by R.A. No. 3753 in creating
Marcos.17
The SP ratiocinated that if Marcos was to be bounded by Mt. Province, it would encroach upon
a portion, not only of Nueva Era but also of Abra. Thus:
x x x Even granting, for the sake of argument, that the eastern boundary of Marcos is indeed
Mountain Province, Marcos will then be claiming a portion of Abra because the province,
specifically Barangay Sto. Niño, Nueva Era, is actually bounded on the East by the Province of
Abra. Abra is situated between and separates the Provinces of Ilocos Norte and Mountain
Province.
This is precisely what this body would like to avoid. Statutes should be construed in the light of
the object to be achieved and the evil or mischief to be suppressed, and they should be given
such construction as will advance the object, suppress the mischief and secure the benefits
intended.18 (Citations omitted)
The SP further explained:
Invariably, it is not the letter, but the spirit of the law and the intent of the legislature that is
important. When the interpretation of the statute according to the exact and literal import of its
words would lead to absurdity, it should be construed according to the spirit and reason,
disregarding if necessary the letters of the law. It is believed that congress did not intend to
have this absurd situation to be created when it created the Municipality of Marcos. This body,
by the mandate given to it by the RA 7160 otherwise known Local Government Code, so
believes that respondent Nueva Era or any portion thereof has been excluded from the ambit of
RA 3753. Under the principle of "espressio (sic) unios (sic) est exclusio alterius," by expressly
naming the barangays that will comprise the town of Marcos, those not mentioned are deemed
excluded. In Republic Act 4354, where Section 2 thereof enumerated the barrios comprising the
City of Davao excluding the petitioner Barrio Central as part of the said City, the court held that
there arose a prima facie conclusion that the said law abolished Barrio Central as part of Davao
City.
Historically, the hinterlands of Nueva Era have been known to be the home of our brothers and
sisters belonging to peculiar groups of non-(C)hristian inhabitants with their own rich customs
and traditions and this body takes judicial notice that the inhabitants of Nueva Era have proudly
claimed to be a part of this rich culture. With this common ancestral heritage which unfortunately
is absent with Marcos, let it not be disturbed.19 (Emphasis ours and citations omitted)
RTC Decision
On appeal by Marcos, the RTC affirmed the decision of the SP in its decision20 of March 19,
2001. The dispositive part of the RTC decision reads:
WHEREFORE, the instant appeal is hereby DISMISSED. The questioned decision of
the Sangguniang Panlalawigan of Ilocos Norte is hereby AFFIRMED.
No costs.
SO ORDERED.21
The RTC reasoned out in this wise:
The position of the Municipality of Marcos is that the provision of R.A. 3753 as regards its
boundary on the East which is the "Ilocos Norte-Mt. Province" should prevail.
On the other hand, the Municipality of Nueva Era posits the theory that only the barrios of the
Municipality of Dingras as stated in R.A. 3753 should be included in the territorial jurisdiction of
the Municipality of Marcos. The Sangguniang Panlalawigan agreed with the position of Nueva
Era.
xxxx
An examination of the Congressional Records during the deliberations of the R.A. 3753 (House
Bill No. 3721) shows the Explanatory Note of Congressman Simeon M. Valdez, 2nd District,
Ilocos Norte, to wit:
EXPLANATORY NOTE
This bill seeks to create in the Province of Ilocos Norte a new municipality to be known as the
Municipality of Marcos, to be comprised by the present barrios of Capariaan, Biding Escoda,
Culao, Alabaan, Ragas and Agunit, all in the Municipality of Dingras of the same province. The
seat of government will be in the sitio of San Magro in the present barrio of Ragas.
xxxx
On the other hand, the Municipality of Dingras will not be adversely affected too much because
its finances will still be sound and stable. Its capacity to comply with its obligations, especially to
its employees and personnel, will not be diminished nor its operations paralyzed. On the
contrary, economic development in both the mother and the proposed municipalities will be
accelerated.
In view of the foregoing, approval of this bill is earnestly requested.
(Sgd.) SIMEON M. VALDEZ
Congressman, 2nd District
Ilocos Norte22
Parenthetically, the legislative intent was for the creation of the Municipality of Marcos, Ilocos
Norte from the barrios (barangays) of the Municipality of Dingras, Ilocos Norte only. Hence, the
Municipality of Marcos cannot add any area beyond the territorial jurisdiction of the Municipality
of Dingras, Ilocos Norte. This conclusion might have been different only if the area being
claimed by the Municipality of Marcos is within the territorial jurisdiction of the Municipality of
Dingras and not the Municipality of Nueva Era. In such case, the two conflicting provisions may
be harmonized by including such area within the territorial jurisdiction of the Municipality of
Dingras as within the territorial jurisdiction of the Municipality of Marcos.23 (Emphasis ours)
CA Disposition
Still determined to have a more extensive eastern boundary, Marcos filed a petition for
review24 of the RTC decision before the CA. The issues raised by Marcos before the CA were:
1. Whether or not the site of Hercules Minerals and Oil, Inc. which is within a Government
Forest Reservation in Barangay Sto. Niño, formerly of Nueva Era, is a part of the newly created
Municipality of Marcos, Ilocos Norte.
2. Whether or not the portion of Barangay Sto. Niño on the East which is separated from Nueva
Era as a result of the full implementation of the boundaries of the new Municipality of Marcos
belongs also to Marcos or to Nueva Era.25
The twin issues involved two portions of Nueva Era, viz.: (1) middle portion, where Hercules
Minerals and Oil, Inc. is located; and (2) northern portion of Nueva Era, which, according to
Marcos, was isolated from Nueva Era in view of the integration to Marcos of said middle portion.
Marcos prayed before the CA that the above two portions of Nueva Era be declared as part of
its own territory. It alleged that it was entitled to the middle portion of Nueva Era in view of the
description of Marcos' eastern boundary under R.A. No. 3753. Marcos likewise contended that it
was entitled to the northern portion of Nueva Era which was allegedly isolated from Nueva Era
when Marcos was created. It posited that such isolation of territory was contrary to law because
the law required that a municipality must have a compact and contiguous territory.26
In a Decision27 dated June 6, 2005, the CA partly reversed the RTC decision with the following
disposition:
WHEREFORE, we partially GRANT the petition treated as one for certiorari. The Decisions of
both the Sangguniang Panlalawigan and Regional Trial Court of Ilocos
Norte are REVERSED and SET ASIDEinsofar as they made the eastern boundary of the
municipality of Marcos co-terminous with the eastern boundary of Dingras town, and another is
rendered extending the said boundary of Marcos to the boundary line between the province of
Ilocos Norte and Kalinga-Apayao, but the same Decisions are AFFIRMED with respect to the
denial of the claim of Marcos to the detached northern portion of barangay Sto. Niño which
should, as it is hereby ordered to, remain with the municipality of Nueva Era. No costs.
SO ORDERED.28
In concluding that the eastern boundary of Marcos was the boundary line between Ilocos Norte
and Kalinga-Apayao, the CA gave the following explanation:
Clearly then, both the SP and the RTC erred when they ruled that the eastern boundary of
Marcos is only coterminous with the eastern boundary of the adjacent municipality of Dingras
and refused to extend it up to the boundary line between the provinces of Ilocos Norte and
Mountain Province (Kalinga-Apayao). R.A. No. 3753, the law creating Marcos, is very explicit
and leaves no room for equivocation that the boundaries of Marcos town are:
"On the Northwest by the barrios Biding-Rangay boundary going down to the barrios Capariaan-
Gabon boundary consisting of foot path and feeder road; on the Northeast, by the Burnay River
which is the common boundary of barrios Agunit and Naglayaan; on the East, by the Ilocos
Norte-Mt. Province boundary; on the South by the Padsan River, which is at the same time
the boundary between the municipalities of Banna and Dingras; on the West and Southwest by
the boundary between the municipalities of Batac and Dingras."
To stop short at the eastern boundary of Dingras as the eastern boundary also of Marcos and
refusing to go farther to the boundary line between Ilocos Norte and Mountain Province
(Kalinga-Apayao) is tantamount to amending the law which Congress alone can do. Both the SP
and RTC have no competence to undo a valid act of Congress.
It is not correct to say that Congress did not intend to take away any part of Nueva Era and
merge it with Marcos for it is chargeable with conclusive knowledge that when it provided that
the eastern boundary of Marcos is the boundary line between Ilocos Norte and Mountain
Province, (by the time of both the SB and RTC Decision was already Kalinga-Apayao), it would
be cutting through a portion of Nueva Era. As the law is written so must it be applied. Dura lex
sed lex!29
The CA likewise held that the province Abra was not located between Marcos and Kalinga-
Apayao; and that Marcos would not encroach upon a portion of Abra for it to be bounded by
Kalinga-Apayao, to wit:
Nueva Era's contention that to lay out the eastern jurisdiction of Marcos to the boundary line
between Ilocos Norte and Mountain Province (Kalinga-Apayao) would mean annexing part of
the municipality of Itnig, province of Abra to Marcos as Abra is between Ilocos Norte and
Mountain Province is geographically erroneous. From Nueva Era's own map of Region 1, which
also depicts the locations of Kalinga-Apayao, Abra, Mountain Province, Benguet and Nueva
Vizcaya after the partition of the old Mountain Province into the provinces of Kalinga-Apayao,
Ifugao, Mountain Province and Benguet, the province of Abra is situated far to the south of
Kalinga Apayao and is between the latter and the present Mountain Province, which is farther
south of Abra. Abra is part of the eastern boundary of Ilocos Sur while Kalinga-Apayao is the
eastern boundary of Ilocos Norte. Hence, in no way will the eastern boundary of the municipality
of Marcos encroach upon a portion of Abra.30
However, Marcos' claim over the alleged isolated northern portion of Nueva Era was denied.
The CA ruled:
Going now to the other area involved, i.e., the portion of Sto. Niño that is separated from its
mother town Nueva Era and now lies east of the municipalities of Solsona and Dingras and
north of Marcos, it bears stressing that it is not included within the area of Marcos as defined by
law. But since it is already detached from Sto. Niño, Marcos is laying claim to it to be integrated
into its territory by the SP because it is contiguous to a portion of said municipality.
We hold that the SP has no jurisdiction or authority to act on the claim, for it will necessarily
substantially alter the north eastern and southern boundaries of Marcos from that defined by law
and unduly enlarge its area. Only Congress can do that. True, the SP may substantially alter the
boundary of a barangay within its jurisdiction. But this means the alteration of the boundary of
a barangay in relation to another barangay within the same municipality for as long as that will
not result in any change in the boundary of that municipality. The area in dispute therefore
remains to be a part of Sto. Niño, a barangay of Nueva Era although separated by the newly
created Marcos town pursuant to Section 7(c) of the 1991 Local Government Code which
states:
SEC. 7. Creation and Conversion. - As a general rule, the creation of a local government unit or
its conversion from one level to another shall be based on verifiable indicators of viability and
projected capacity to provide services, to wit:
xxxx
(c) Land Area. - It must be contiguous, unless it comprises two or more islands or is separated
by a local government unit independent of the others; properly identified by metes and
bounds with technical descriptions; and sufficient to provide for such basic services and facilities
to meet the requirements of its populace.31
The CA also expressed the view that Marcos adopted the wrong mode of appeal in bringing the
case to it. The case, according to the CA, was appealable only to the RTC. Nonetheless,
despite its pronouncement that the case was dismissible, the CA took cognizance of the same
by treating it as one for certiorari, to wit:
A final word. At the outset, we agonized over the dilemma of choosing between dismissing
outright the petition at bar or entertaining it. This is for the simple reason that a petition for
review is a mode of appeal and is not appropriate as the Local Government Code provides for
the remedy of appeal in boundary disputes only to the Regional Trial Court but not any further
appeal to this Court. Appeal is a purely statutory right. It cannot be exercised unless it is
expressly granted by law. This is too basic to require the citation of supporting authority.
xxxx
By the same token, since the Local Government Code does not explicitly grant the right of
further appeal from decisions of the RTCs in boundary disputes between or among local
government units, Marcos town cannot exercise that right from the adverse decision of the RTC
of Ilocos Norte. Nonetheless, because of the transcendental legal and jurisdictional issues
involved, we solved our inceptive dilemma by treating the petition at bar as a special civil action
for certiorari.32
Nueva Era was not pleased with the decision of the CA. Hence, this petition for review on
certiorari under Rule 45.
Issues
Nueva Era now raises the following issues:
a) Whether or not, the Court of Appeals has jurisdiction on the Petition for Review on Appeal,
since Sec. 119 of the Local Government Code, which provides that "An appeal to the Decision
of the Sangguniang Panlalawigan is exclusively vested to the Regional Trial Court, without
further Appeal to the Court of Appeals";
b) Whether or not, the Court of Appeals gravely abused its discretion, in treating the Petition for
Review On Appeal, filed under Rule 45, Revised Rules of Court, as a Petition
for Certiorari, under Rule 65 of the Revised Rules of Court;
c) Whether or not, the Court of Appeals erred in its appreciation of facts, in declaring that
MARCOS East is not coterminous with the Eastern boundary of its mother town-Dingras. That it
has no factual and legal basis to extend MARCOS territory beyond Brgys. Agunit (Ferdinand)
and Culao (Elizabeth) of Marcos, and to go further East, by traversing and
disintegrating Brgy. Sto. Niño, and drawing parallel lines from Sto. Niño, there lies Abra, not Mt.
Province or Kalinga-Apayao.33
Basically, there are two (2) issues to resolve here: (1) whether or not the mode of appeal
adopted by Marcos in bringing the case to the CA is proper; and (2) whether or not the eastern
boundary of Marcos extends over and covers a portion of Nueva Era.
Our Ruling
Marcos correctly appealed the RTC judgment via petition for review under Rule 42.
Under Section 118(b) of the Local Government Code, "(b)oundary disputes involving two (2) or
more municipalities within the same province shall be referred for settlement to the sangguniang
panlalawigan concerned." The dispute shall be formally tried by the said sanggunian in case the
disputing municipalities fail to effect an amicable settlement.34
The SP of Ilocos validly took cognizance of the dispute between the parties. The appeal of the
SP judgment to the RTC was likewise properly filed by Marcos before the RTC. The problem,
however, lies in whether the RTC judgment may still be further appealed to the CA.
The CA pronounced that the RTC decision on the boundary dispute was not appealable to it. It
ruled that no further appeal of the RTC decision may be made pursuant to Section 119 of the
Local Government Code35 which provides:
SECTION 119. Appeal. - Within the time and manner prescribed by the Rules of Court, any
party may elevate the decision of the sanggunian concerned to the proper Regional Trial Court
having jurisdiction over the area in dispute. The Regional Trial Court shall decide the appeal
within one (1) year from the filing thereof. Pending final resolution of the disputed area prior to
the dispute shall be maintained and continued for all legal purposes.
The CA concluded that since only the RTC was mentioned as appellate court, the case may no
longer be further appealed to it. The CA stated that "(a)ppeal is a purely statutory right. It cannot
be exercised unless it is expressly granted by law. This is too basic to require the citation of
supporting authority."36
The CA, however, justified its taking cognizance of the case by declaring that: "because of the
transcendental legal and jurisdictional issues involved, we solved our inceptive dilemma by
treating the petition at bar as a special civil action for certiorari."37
The CA erred in declaring that only the RTC has appellate jurisdiction over the judgment of the
SP.
True, appeal is a purely statutory right and it cannot be exercised unless it is expressly granted
by law. Nevertheless, the CA can pass upon the petition for review precisely because the law
allows it.
Batas Pambansa (B.P.) Blg. 129 or the Judiciary Reorganization Act of 1980, as amended by
R.A. No. 7902,38vests in the CA the appellate jurisdiction over all final judgments, decisions,
resolutions, orders or awards of Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards or commissions, among others.39 B.P. Blg. 129 has been further
supplemented by the 1997 Rules of Civil Procedure, as amended, which provides for the
remedy of appeal via petition for review under Rule 42 to the CA in cases decided by the RTC in
the exercise of its appellate jurisdiction.
Thus, the CA need not treat the appeal via petition for review filed by Marcos as a petition
for certiorari to be able to pass upon the same. B.P. Blg. 129, as amended, which is
supplemented by Rule 42 of the Rules of Civil Procedure, gives the CA the authority to entertain
appeals of such judgments and final orders rendered by the RTC in the exercise of its appellate
jurisdiction.
At the time of creation of Marcos, approval in a plebiscite of the creation of a local
government unit is not required.
Section 10, Article X of the 1987 Constitution provides that:
No province, city, municipality, or barangay may be created, divided, merged, abolished, or its
boundary substantially altered, except in accordance with the criteria established in the local
government code and subject to approval by a majority of the votes cast in a plebiscite in the
political units directly affected.40
The purpose of the above constitutional provision was acknowledged by the Court through
Justice Reynato S. Puno in Miranda v. Aguirre,41 where it was held that:
The 1987 Constitution, more than any of our previous Constitutions, gave more reality to the
sovereignty of our people for it was borne out of the people power in the 1986 EDSA revolution.
Its Section 10, Article X addressed the undesirable practice in the past whereby local
government units were created, abolished, merged or divided on the basis of the vagaries of
politics and not of the welfare of the people. Thus, the consent of the people of the local
government unit directly affected was required to serve as a checking mechanism to any
exercise of legislative power creating, dividing, abolishing, merging or altering the boundaries of
local government units. It is one instance where the people in their sovereign capacity decide on
a matter that affects them - direct democracy of the people as opposed to democracy thru
people's representatives. This plebiscite requirement is also in accord with the philosophy of the
Constitution granting more autonomy to local government units.42
Nueva Era contends that the constitutional and statutory43 plebiscite requirement for the
creation of a local government unit is applicable to this case. It posits that the claim of Marcos to
its territory should be denied due to lack of the required plebiscite.
We agree with Nueva Era's contention that Marcos' claim over parts of its territory is not
tenable. However, the reason is not the lack of the required plebiscite under the 1987 and 1973
constitutions and the Local Government Code of 1991 but other reasons as will be discussed
below.
At the time Marcos was created, a plebiscite was not required by law to create a local
government unit. Hence, Marcos was validly created without conducting a plebiscite. As a
matter of fact, no plebiscite was conducted in Dingras, where it was derived.
Lex prospicit, non respicit. The law looks forward, not backward.44 It is the basic norm that
provisions of the fundamental law should be given prospective application only, unless
legislative intent for its retroactive application is so provided.45
In the comparable case of Ceniza v. Commission on Elections46 involving the City of Mandaue,
the Court has this to say:
Petitioners assail the charter of the City of Mandaue as unconstitutional for not having been
ratified by the residents of the city in a plebiscite. This contention is untenable. The
Constitutional requirement that the creation, division, merger, abolition, or alteration of the
boundary of a province, city, municipality, or barrio should be subject to the approval by the
majority of the votes cast in a plebiscite in the governmental unit or units affected is a new
requirement that came into being only with the 1973 Constitution. It is prospective in
character and therefore cannot affect the creation of the City of Mandaue which came into
existence on June 21, 1969.47 (Citations omitted and underlining supplied).
Moreover, by deciding this case, We are not creating Marcos but merely interpreting the law that
created it. Its creation was already a fait accompli. Therefore, there is no reason for Us to further
require a plebiscite.
As pointed out by Justice Isagani Cruz, to wit:
Finally, it should be observed that the provisions of the Constitution should be given only a
prospective application unless the contrary is clearly intended. Were the rule otherwise, rights
already acquired or vested might be unduly disturbed or withdrawn even in the absence of an
unmistakable intention to place them within the scope of the Constitution.48
No part of Nueva Era's territory was taken for the creation of Marcos under R.A. No. 3753.
Only the barrios (now barangays) of Dingras from which Marcos obtained its territory are named
in R.A. No. 3753. To wit:
SECTION 1. The barrios of Capariaan, Biding, Escoda, Culao, Alabaan, Ragas and Agunit in
the Municipality of Dingras, Province of Ilocos Norte, are hereby separated from the said
municipality and constituted into a new and separate municipality to be known as the
Municipality of Marcos, with the following boundaries:
Since only the barangays of Dingras are enumerated as Marcos' source of territory, Nueva Era's
territory is, therefore, excluded.
Under the maxim expressio unius est exclusio alterius, the mention of one thing implies the
exclusion of another thing not mentioned. If a statute enumerates the things upon which it is to
operate, everything else must necessarily and by implication be excluded from its operation and
effect.49 This rule, as a guide to probable legislative intent, is based upon the rules of logic and
natural workings of the human mind.50
Had the legislature intended other barangays from Nueva Era to become part of Marcos, it
could have easily done so by clear and concise language. Where the terms are expressly
limited to certain matters, it may not by interpretation or construction be extended to other
matters.51 The rule proceeds from the premise that the legislature would not have made
specified enumerations in a statute had the intention been not to restrict its meaning and to
confine its terms to those expressly mentioned.52
Moreover, since the barangays of Nueva Era were not mentioned in the enumeration
of barangays out of which the territory of Marcos shall be set, their omission must be held to
have been done intentionally. This conclusion finds support in the rule of casus omissus pro
omisso habendus est, which states that a person, object or thing omitted from an enumeration
must be held to have been omitted intentionally.53
Furthermore, this conclusion on the intention of the legislature is bolstered by the explanatory
note of the bill which paved the way for the creation of Marcos. Said explanatory note
mentioned only Dingras as the mother municipality of Marcos.
Where there is ambiguity in a statute, as in this case, courts may resort to the explanatory note
to clarify the ambiguity and ascertain the purpose and intent of the statute.54
Despite the omission of Nueva Era as a mother territory in the law creating Marcos, the latter
still contends that said law included Nueva Era. It alleges that based on the description of its
boundaries, a portion of Nueva Era is within its territory.
The boundaries of Marcos under R.A. No. 3753 read:
On the Northwest, by the barrios Biding-Rangay boundary going down to the barrios Capariaan-
Gabon boundary consisting of foot path and feeder road; on the Northeast, by the Burnay River
which is the common boundary of barrios Agunit and Naglayaan; on the East, by the Ilocos
Norte-Mt. Province boundary; on the South, by the Padsan River which is at the same time the
boundary between the municipalities of Banna and Dingras; on the West and Southwest, by the
boundary between the municipalities of Batac and Dingras.
Marcos contends that since it is "bounded on the East, by the Ilocos Norte-Mt. Province
boundary," a portion of Nueva Era formed part of its territory because, according to it, Nueva
Era is between the Marcos and Ilocos Norte-Mt. Province boundary. Marcos posits that in order
for its eastern side to reach the Ilocos Norte-Mt. Province boundary, it will necessarily traverse
the middle portion of Nueva Era.
Marcos further claims that it is entitled not only to the middle portion of Nueva Era but also to its
northern portion which, as a consequence, was isolated from the major part of Nueva Era.
We cannot accept the contentions of Marcos.
Only Dingras is specifically named by law as source territory of Marcos. Hence, the said
description of boundaries of Marcos is descriptive only of the listed barangays of Dingras as a
compact and contiguous territory.
Considering that the description of the eastern boundary of Marcos under R.A. No. 3753 is
ambiguous, the same must be interpreted in light of the legislative intent.
The law must be given a reasonable interpretation, to preclude absurdity in its application.55 We
thus uphold the legislative intent to create Marcos out of the territory of Dingras only.
Courts must give effect to the general legislative intent that can be discovered from or is
unraveled by the four corners of the statute, and in order to discover said intent, the whole
statute, and not only a particular provision thereof, should be considered.56 Every section,
provision or clause of the statute must be expounded by reference to each other in order to
arrive at the effect contemplated by the legislature. The intention of the legislator must be
ascertained from the whole text of the law, and every part of the act is to be taken into view.57
It is axiomatic that laws should be given a reasonable interpretation, not one which defeats the
very purpose for which they were passed. This Court has in many cases involving the
construction of statutes always cautioned against narrowly interpreting a statute as to defeat the
purpose of the legislature and stressed that it is of the essence of judicial duty to construe
statutes so as to avoid such a deplorable result (of injustice or absurdity) and that therefore "a
literal interpretation is to be rejected if it would be unjust or lead to absurd results."58
Statutes are to be construed in the light of the purposes to be achieved and the evils sought to
be remedied. Thus, in construing a statute, the reason for its enactment should be kept in mind
and the statute should be construed with reference to the intended scope and purpose. The
court may consider the spirit and reason of the statute, where a literal meaning would lead to
absurdity, contradiction, injustice, or would defeat the clear purpose of the lawmakers.59
WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals is
partly REVERSED. The Decision of the Regional Trial Court in Ilocos Norte is Reinstated.
SO ORDERED.
RUBEN T. REYES
Associate Justice

WE CONCUR:

REYNATO S. PUNO
Chief Justice

*LEONARDO A. QUISUMBING **CONSUELO YNARES-SANTIAGO

Associate Justice Associate Justice

ANGELINA SANDOVAL-GUTIERREZ ANTONIO T. CARPIO

Associate Justice Associate Justice

MA. ALICIA M. AUSTRIA-MARTINEZ RENATO C. CORONA

Associate Justice Associate Justice

CONCHITA CARPIO MORALES ADOLFO S. AZCUNA

Associate Justice Associate Justice

DANTE O. TINGA MINITA V. CHICO-NAZARIO

Associate Justice Associate Justice

PRESBITERO J. VELASCO, JR. ANTONIO EDUARDO B. NACHURA

Associate Justice Associate Justice

TERESITA J. LEONARDO-DE CASTRO

Associate Justice

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above
Decision had been reached in consultation before the case was assigned to the writer of the
opinion of the Court.
REYNATO S. PUNO
Chief Justice
 [G.R. No. 106719. September 21, 1993.]

DRA. BRIGIDA S. BUENASEDA, Lt. Col. ISABELO BANEZ, JR. ENGR. CONRADO REY
MATIAS, Ms. CORA S. SOLIS and Ms. ENYA N. LOPEZ, Petitioners, v. SECRETARY JUAN
FLAVIER, Ombudsman CONRADO M. VASQUEZ and NCMH NURSES ASSOCIATION,
represented by RAOULITO GAYUTIN, Respondents.

Renato J. Dilag and Benjamin C. Santos, for Petitioners.

Danilo C. Cunanan for respondent Ombudsman.

Crispin T. Reyes and Florencio T. Domingo for Private Respondent.

DECISION
QUIASON, J.:
This is a Petition for Certiorari, Prohibition and Mandamus, with Prayer for Preliminary Injunction
or Temporary Restraining Order, under Rule 65 of the Revised Rules of Court.chanrobles law
library

Principally, the petition seeks to nullify the Order of the Ombudsman dated January 7, 1992,
directing the preventive suspension of petitioners, Dr. Brigida S. Buenaseda, Chief of Hospital
III; Isabelo C. Bañez, Jr., Administrative Officer III; Conrado Rey Matias, Technical Assistant to
the Chief of Hospital; Cora C. Solis, Accountant III; and Enya N. Lopez, Supply Officer III, all of
the National Center for Mental Health. The petition also asks for an order directing the
Ombudsman to disqualify Director Raul Arnaw and Investigator Amy de Villa-Rosero, of the
Office of the Ombudsman, from participation in the preliminary investigation of the charges
against petitioner (Rollo, pp. 2-17; Annexes to Petition, Rollo, pp. 19-21).

The questioned order was issued in connection with the administrative complaint filed with the
Ombudsman (OBM-ADM-0-91-0151) by the private respondents against the petitioners for
violation of the Anti-Graft and Corrupt Practices Act.

According to the petition, the said order was issued upon the recommendation of Director Raul
Arnaw and Investigator Amy de Villa-Rosero, without affording petitioners the opportunity to
controvert the charges filed against them. Petitioners had sought to disqualify Director Arnaw
and Investigator Villa-Rosero for manifest partiality and bias (Rollo, pp. 4-15).

On September 10, 1992, this Court required respondents’ Comment on the petition.

On September 14 and September 22, 1992, petitioners filed a "Supplemental Petition (Rollo, pp.
124-130; Annexes to Supplemental Petition; Rollo, pp. 140-163) and an "Urgent Supplemental
Manifestation" (Rollo, pp. 164-172; Annexes To Urgent Supplemental Manifestation; Rollo, pp.
173-176), respectively, averring developments that transpired after the filing of the petition and
stressing the urgency for the issuance of the writ of preliminary injunction or temporary
restraining order.
On September 22, 1992, this Court." . . Resolved to REQUIRE the respondents to MAINTAIN in
the meantime, the STATUS QUO pending filing of comments by said respondents on the
original supplemental manifestation" (Rollo, p. 177).

On September 29, 1992, petitioners filed a motion to direct respondent Secretary of Health to
comply with the Resolution dated September 22, 1992 (Rollo, pp. 182-192, Annexes, pp. 192-
203). In a Resolution dated October 1, 1992, this Court required respondent Secretary of Health
to comment on the said motion.

On September 29, 1992, in a pleading entitled "Omnibus Submission," respondent NCMH

Nurses Association submitted its Comment to the Petition, Supplemental Petition and Urgent
Supplemental Manifestation. Included in said pleadings were the motions to hold the lawyers of
petitioners in contempt and to disbar them (Rollo, pp. 210-267). Attached to the "Omnibus
Submission" as annexes were the orders and pleadings filed in Administrative Case No. OBM-
ADM-0-91-0151 against petitioners (Rollo, pp. 268-480).

The Motion for Disbarment charges the lawyers of petitioners with: (1) "unlawfully advising or
otherwise causing or inducing their clients — petitioners Buenaseda, Et Al., to openly defy,
ignore, disregard, disobey or otherwise violate, maliciously evade their preventive suspension
by Order of July 7, 1992 of the Ombudsman . . ." ; (2) "unlawfully interfering with and obstructing
the implementation of the said order (Omnibus Submission, pp. 50-52; Rollo, pp. 259-260); and
(3) violation of the Canons of the Code of Professional Responsibility and of unprofessional and
unethical conduct "by foisting blatant lies, malicious falsehood and outrageous deception" and
by committing subornation of perjury, falsification and fabrication in their pleadings (Omnibus
Submission, pp. 52-54; Rollo, pp. 261-263).chanroblesvirtualawlibrary

On November 11, 1992, petitioners filed a "Manifestation and Supplement to ‘Motion to Direct
Respondent Secretary of Health to Comply with 22 September 1992 Resolution’" (Manifestation
attached to Rollo without pagination between pp. 613 and 614 thereof).

On November 13, 1992, the Solicitor General submitted its Comment dated November 10,
1992, alleging that: (a) "despite the issuance of the September 22, 1992 Resolution directing
respondents to maintain the status quo, respondent Secretary refuses to hold in abeyance the
implementation of petitioners’ preventive suspension; (b) the clear intent and spirit of the
Resolution dated September 22, 1992 is to hold in abeyance the implementation of petitioners’
preventive suspension, the status quo obtaining the time of the filing of the instant petition; (c)
respondent Secretary’s acts in refusing to hold in abeyance implementation of petitioners’
preventive suspension and in tolerating and approving the acts of Dr. Abueva, the OIC
appointed to replace petitioner Buenaseda, are in violation of the Resolution dated September
22, 1992; and (d) therefore, respondent Secretary should be directed to comply with the
Resolution dated September 22, 1992 immediately, by restoring the status quo ante
contemplated by the aforesaid resolution" (Comment attached to Rollo without paginations
between pp. 613-614 thereof).

In the Resolution dated November 26, 1992, this Court required respondent Secretary to comply
with the aforestated status quo order, stating inter alia, that:jgc:chanrobles.com.ph
"It appearing that the status quo ante litem motan, or the last peaceable uncontested status
which preceded the present controversy was the situation obtaining at the time of the filing of
the petition at bar on September 7, 1992 wherein petitioners were then actually occupying their
respective positions, the Court hereby ORDERS that petitioners be allowed to perform the
duties of their respective positions and to receive such salaries and benefits as they may be
lawfully entitled to, and that respondents and/or any and all persons acting under their authority
desist and refrain from performing any act in violation of the aforementioned Resolution of
September 22, 1992 until further orders from the Court" (Attached to Rollo after p. 615 thereof).

On December 9, 1992, the Solicitor General, commenting on the Petition, Supplemental Petition
and Supplemental Manifestation, stated that: (a) "The authority of the Ombudsman is only to
recommend suspension and he has no direct power to suspend;" and (b) "Assuming the
Ombudsman has the power to directly suspend a government official or employee, there are
conditions required by law for the exercise of such powers; [and] said conditions have not been
met in the instant case" (Attached to Rollo without pagination).

In the pleading filed on January 25, 1993, petitioners adopted the position of the Solicitor
General that the Ombudsman can only suspend government officials or employees connected
wit his office. Petitioners also refuted private respondents’ motion to disbar petitioners’ counsel
and to cite them for contempt (Attached to Rollo without pagination).

The crucial issue to resolve is whether the Ombudsman has the power to suspend government
officials and employees working in offices other than the Office of the Ombudsman, pending the
investigation of the administrative complaints filed against said officials and employees.

In upholding the power of the Ombudsman to preventively suspend petitioners, respondents

(Urgent Motion to Lift Status Quo, etc, dated January 11, 1993, pp. 10-11), invoke Section 24 of
R.A. No. 6770, which provides:jgc:chanrobles.com.ph

"Sec. 24. Preventive Suspension. — The Ombudsman or his Deputy may preventively suspend
any officer or employee under his authority pending an investigation, if in his judgment the
evidence of guilt is strong, and (a) the charge against such officer or employee involves
dishonesty, oppression or grave misconduct or neglect in the performance of duty; (b) the
charge would warrant removal from the service; or (c) the respondent’s continued stay in office
may prejudice the case filed against him.

The preventive suspension shall continue until the case is terminated by the Office of
Ombudsman but not more than six months, without pay, except when the delay in the
disposition of the case by the Office of the Ombudsman is due to the fault, negligence or petition
of the respondent, in which case the period of such delay shall not be counted in computing the
period of suspension herein provided."cralaw virtua1aw library

Respondents argue that the power of preventive suspension given the Ombudsman under
Section 24 of R.A. No. 6770 was contemplated by Section 13 (8) of Article XI of the 1987
Constitution, which provides that the Ombudsman shall "exercise such other power or perform
such functions or duties as may be provided by law."cralaw virtua1aw library
On the other hand, the Solicitor General and the petitioners claim that under the 1987
Constitution, the Ombudsman can only recommend to the heads of the departments and other
agencies the preventive suspension of officials and employees facing administrative
investigation conducted by his office. Hence, he cannot order the preventive suspension
himself.

They invoke Section 13(3) of the 1987 Constitution which provides that the Office of the
Ombudsman shall have inter alia the power, function, and duty to:jgc:chanrobles.com.ph

"Direct the officer concerned to take appropriate action against a public official or employee at
fault, and recommend his removal, suspension, demotion, fine, censure or prosecution, and
ensure compliance therewith."cralaw virtua1aw library

The Solicitor General argues that under said provision of the Constitution, the Ombudsman has
three distinct powers, namely: (1) direct the officer concerned to take appropriate action against
public officials or employees at fault; (2) recommend their removal, suspension, demotion fine,
censure, or prosecution; and (3) compel compliance with the recommendation (Comment dated
December 3, 1992, pp. 9-10).chanrobles virtual lawlibrary

The line of argument of the Solicitor General is a siren call that can easily mislead, unless one
bears in mind that what the Ombudsman imposed on petitioners was not a punitive but only a
preventive suspension.

When the Constitution vested on the Ombudsman the power "to recommend the suspension" of
a public official or employees (Sec. 13 [3]), it referred to "suspension," as a punitive measure.
All the words associated with the word "suspension" in said provision referred to penalties in
administrative cases, e.g. removal, demotion, fine, censure. Under the rule of Noscitor a sociis,
the word "suspension" should be given the same sense as the other words with which it is
associated. Where a particular word is equally susceptible of various meanings, its correct
construction may be made specific by considering the company of terms in which it is found or
with which it is associated (Co Kim Chan v. Valdez Tan Keh, 75 Phil. 371 [1945]; Caltex (Phils.)
Inc. v. Palomar, 18 SCRA 247 [1966]).

Section 24 of R.A. No. 6770, which grants the Ombudsman the power to preventively suspend
public officials and employees facing administrative charges before him, is a procedural, not a
penal statute. The preventive suspension is imposed after compliance with the requisites therein
set forth, as an aid in the investigation of the administrative charges.

Under the Constitution, the Ombudsman is expressly authorized to recommend to the

appropriate official the discipline or prosecution of erring public officials or employees. In order
to make an intelligent determination whether to recommend such actions, the Ombudsman has
to conduct an investigation. In turn, in order for him to conduct such investigation in an
expeditious and efficient manner, he may need to suspend the Respondent.

The need for the preventive suspension may arise from several causes, among them, the
danger of tampering or destruction of evidence in the possession of respondent; the intimidation
of witnesses, etc. The Ombudsman should be given the discretion to decide when the persons
facing administrative charges should be preventively suspended.

Penal statutes are strictly construed while procedural statutes are liberally construed (Crawford,
Statutory Construction, Interpretation of Laws, pp. 460-461; Lacson v. Romero, 92 Phil. 456
[1953]). The test in determining if a statute is penal is whether a penalty is imposed for the
punishment of a wrong to the public or for the redress of an injury to an individual (59 Corpuz
Juris, Sec. 658; Crawford, Statutory Constructive, pp. 496-497). A Code prescribing the
procedure in criminal cases is not a penal statute and is to be interpreted liberally (People v.
Adler, 140 N.Y. 331; 35 N.E. 644).

The purpose of R.A. No. 6770 is to give the Ombudsman such powers as he may need to
perform efficiently the task committed to him by the Constitution. Such being the case, said
statute, particularly its provisions dealing with procedure, should be given such interpretation
that will effectuate the purposes and objectives of the Constitution. Any interpretation that will
hamper the work of the Ombudsman should be avoided.

A statute granting powers to an agency created by the Constitution should be liberally construed
for the advancement of the purposes and objectives for which it was created (Cf. Department of
Public Utilities v. Arkansas Louisiana Gas. Co., 200 Ark. 983, 142 S.W. (2d) 213 [1940];
Wallace v. Feehan, 206 Ind. 522, 190 N.E., 438 [1934]).

In Nera v. Garcia, 106 Phil. 1031 [1960], this Court, holding that a preventive suspension is not
a penalty, said:jgc:chanrobles.com.ph

"Suspension is a preliminary step in an administrative investigation. If after such investigation,

the charges are established and the person investigated is found guilty of acts warranting his
removal, then he is removed or dismissed. This is the penalty."cralaw virtua1aw library

To support his theory that the Ombudsman can only preventively suspend respondents in
administrative cases who are employed in his office, the Solicitor General leans heavily on the
phrase "suspend any officer or employee under his authority" in Section 24 of R.A. No. 6770.

The origin of the phrase can be traced to Section 694 of the Revised Administrative Code,
which dealt with preventive suspension and which authorized the chief of a bureau or office to
"suspend any subordinate or employee in his bureau or under his authority pending an
investigation . . ."cralaw virtua1aw library

Section 34 of the Civil Service Act of 1959 (R.A. No. 2266), which superseded Section 694 of
the Revised Administrative Code also authorized the chief of a bureau or office to "suspend any
subordinate officer or employees, in his bureau or under his authority."cralaw virtua1aw library

However, when the power to discipline government officials and employees was extended to the
Civil Service Commission by the Civil Service Law of 1975 (P.D. No. 805), concurrently with the
President, the Department Secretaries and the heads of bureaus and offices, the phrase
"subordinate officer and employee in his bureau" was deleted, appropriately leaving the phrase
"under his authority." Therefore, Section 41 of said law only mentions that the proper disciplining
authority may preventively suspend "any subordinate officer or employee under his authority
pending an investigation . . ." (Sec. 41).

The Administrative Code of 1987 also empowered the proper disciplining authority to
"preventively suspend any subordinate officer or employee under his authority pending an
investigation" (Sec. 51).

The Ombudsman Law advisedly deleted the words "subordinate" and "in his bureau," leaving
the phrase to read "suspend any officer or employee under his authority pending an
investigation . . ." The conclusion that can be deduced from the deletion of the word
"subordinate" before and the words "in his bureau" after "officer or employee" is that the
Congress intended to empower the Ombudsman to preventively suspend all officials and
employees under investigation by his office, irrespective of whether they are employed "in his
office" or in other offices of the government. The moment a criminal or administrative complaint
is filed with the Ombudsman, the respondent therein is deemed to be "in his authority" and he
can proceed to determine whether said respondent should be placed under preventive
suspension.

In their petition, petitioners also claim that the Ombudsman committed grave abuse of discretion
amounting to lack of jurisdiction when he issued the suspension order without affording
petitioners the opportunity to confront the charges against them during the preliminary
conference and even after petitioners had asked for the disqualification of Director Arnaw and
Atty. Villa-Rosero (Rollo, pp. 6-13). Joining petitioners, the Solicitor General contends that
assuming arguendo that the Ombudsman has the power to preventively suspend erring public
officials and employees who are working in other departments and offices, the questioned order
remains null and void for his failure to comply with the requisites in Section 24 of the
Ombudsman Law (Comment dated December 3, 1992, pp. 11-19).

Being a mere order for preventive suspension, the questioned order of the Ombudsman was
validly issued even without a full- blown hearing and the formal presentation of evidence by the
parties. In Nera, supra, petitioner therein also claimed that the Secretary of Health could not
preventively suspend him before he could file his answer to the administrative complaint. The
contention of petitioners herein can be dismissed perfunctorily by holding that the suspension
meted out was merely preventive and therefore, as held in Nera, there was "nothing improper in
suspending an officer pending his investigation and before the charges against him are heard . .
. (Nera v. Garcia, supra).

There is no question that under Section 24 of R.A. No. 6770, the Ombudsman cannot order the
preventive suspension of a respondent unless the evidence of guilt is strong and (1) the charge
against such officer or employee involves dishonesty, oppression or grave misconduct or
neglect in the performance of duty; (2) the charge would warrant removal from the service; or
(3) the respondent’s continued stay in office may prejudice the case filed against him.

The same conditions for the exercise of the power to preventively suspend officials or
employees under investigation were found in Section 34 of R.A. No. 2260.

The import of the Nera decision is that the disciplining authority is given the discretion to decide
when the evidence of guilt is strong. This fact is bolstered by Section 24 of R.A. No. 6770, which
expressly left such determination of guilt to the "judgment" of the Ombudsman on the basis of
the administrative complaint. In the case at bench, the Ombudsman issued the order of
preventive suspension only after: (a) petitioners had filed their answer to the administrative
complaint and the "Motion for the Preventive Suspension" of petitioners, which incorporated the
charges in the criminal complaint against them (Annex 3, Omnibus Submission, Rollo, pp. 288-
289; Annex 4, Rollo, pp. 290-296); (b) private respondent had filed a reply to the answer of
petitioners, specifying 23 cases of harassment by petitioners of the members of private
respondent (Annex 6, Omnibus Submission, Rollo, pp. 309-333); and (c) a preliminary
conference wherein the complainant and the respondents in the administrative case agreed to
submit their list of witnesses and documentary evidence.

Petitioners herein submitted on November 7, 1991 their list of exhibits (Annex 8 of Omnibus
Submission, Rollo, pp. 336-337) while private respondents submitted their list of exhibits (Annex
9 of Omnibus Submission, Rollo, pp. 338-348).

Under these circumstances, it can not be said that Director Raul Arnaw and Investigator Amy de
Villa-Rosero acted with manifest partiality and bias in recommending the suspension of
petitioners. Neither can it be said that the Ombudsman had acted with grave abuse of discretion
in acting favorably on their recommendation.chanrobles virtual lawlibrary

The Motion for Contempt, which charges the lawyers of petitioners with unlawfully causing or
otherwise inducing their clients to openly defy and disobey the preventive suspension as
ordered by the Ombudsman and the Secretary of Health can not prosper (Rollo, pp. 259-261).
The Motion should be filed, as in fact such a motion was filed, with the Ombudsman. At any
rate, we find that the acts alleged to constitute indirect contempt were legitimate measures
taken by said lawyers to question the validity and propriety of the preventive suspension of their
clients.

On the other hand, we take cognizance of the intemperate language used by counsel for private
respondents hurled against petitioners and their counsel (Consolidated: (1) Comment on Private
Respondent" "Urgent Motions, etc.,; (2) Adoption of OSG’s Comment; and (3) Reply to Private
Respondent’s Comment and Supplemental Comment, pp. 4-5).

A lawyer should not be carried away in espousing his client’s cause. The language of a lawyer,
both oral or written, must be respectful and restrained in keeping with the dignity of the legal
profession and with his behavioral attitude toward his brethren in the profession (Lubiano v.
Gordolla, 115 SCRA 459 [1982]). The use of abusive language by counsel against the opposing
counsel constitutes at the same time a disrespect to the dignity of the court of justice. Besides,
the use of impassioned language in pleadings, more often than not, creates more heat than
light.

The Motion for Disbarment (Rollo, p. 261) has no place in the instant special civil action, which
is confined to questions of jurisdiction or abuse of discretion for the purpose of relieving persons
from the arbitrary acts of judges and quasi-judicial officers. There is a set of procedure for the
discipline of members of the bar separate and apart from the present special civil action.

WHEREFORE, the petition is DISMISSED and the status quo ordered to be maintained in the
Resolution dated September 22, 1992 is LIFTED and SET ASIDE.

SO ORDERED.

Narvasa, C.J., Cruz, Padilla, Bidin, Griño-Aquino, Regalado, Davide, Jr., Romero, Nocon, Melo,
Puno and Vitug, JJ., concur.

Feliciano, J., is on leave.

Separate Opinions

BELLOSILLO, J., concurring:chanrob1es virtual 1aw library

I agree that the Ombudsman has the authority, under Sec. 24 of R.A. No. 6770, to preventively
suspend any government official or employee administratively charged before him pending the
investigation of the complaint, the reason being that respondent’s continued stay in office may
prejudice the prosecution of the case.

However, in the case before us, I am afraid that the facts thus far presented may not provide
adequate basis to reasonably place petitioners under preventive suspension. For, it is not
enough to rule that the Ombudsman has authority to suspend petitioners preventively while the
case is in progress before him. Equally important is the determination whether it is necessary to
issue the preventive suspension under the circumstances. Regretfully, I cannot see any
sufficient basis to justify the preventive suspension. That is why, I go for granting oral argument
to the parties so that we can truthfully determine whether the preventive suspension of
respondents are warranted by the facts. We may be suspending key government officials and
employees on the basis merely of speculations which may not serve the ends of justice but
which, on the other hand, deprive them of their right to due process. The simultaneous
preventive suspension of top officials and employees of the National Center for Mental Health
may just disrupt the hospital’s normal operations, much to the detriment of public service. We
may safely assume that it is not easy to replace them in their respective functions as those
substituting them may be taking over for the first time. The proper care of mental patients may
thus be unduly jeopardized and their lives and limbs imperilled.

I would be amenable to holding oral argument to hear the parties if only to have enough factual
and legal bases to justify the preventive suspension of petitioners.

G.R. No. 79094 June 22, 1988

MANOLO P. FULE, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, respondent.
Balagtas P. Ilagan for petitioner.
The Solicitor General for respondent.
MELENCIO-HERRERA, J.:
This is a Petition for Review on certiorari of the Decision of respondent Appellate Court, which
affirmed the judgment of the Regional Trial Court, Lucena City, Branch LIV, convicting petitioner
(the accused-appellant) of Violation of Batas Pambansa Blg. 22 (The Bouncing Checks Law) on
the basis of the Stipulation of Facts entered into between the prosecution and the defense
during the pre-trial conference in the Trial Court. The facts stipulated upon read:
a) That this Court has jurisdiction over the person and subject matter of this case;
b) That the accused was an agent of the Towers Assurance Corporation on or before January
21, 1981;
c) That on January 21, 1981, the accused issued and made out check No. 26741, dated
January 24, 1981 in the sum of P2,541.05;
d) That the said check was drawn in favor of the complaining witness, Roy Nadera;
e) That the check was drawn in favor of the complaining witness in remittance of collection;
f) That the said check was presented for payment on January 24, 1981 but the same was
dishonored for the reason that the said checking account was already closed;
g) That the accused Manolo Fule has been properly Identified as the accused party in this case.
At the hearing of August 23, 1985, only the prosecution presented its evidence consisting of
Exhibits "A," "B" and "C." At the subsequent hearing on September 17, 1985, petitioner-
appellant waived the right to present evidence and, in lieu thereof, submitted a Memorandum
confirming the Stipulation of Facts. The Trial Court convicted petitioner-appellant.
On appeal, respondent Appellate Court upheld the Stipulation of Facts and affirmed the
judgment of conviction. 1
Hence, this recourse, with petitioner-appellant contending that:
The Honorable Respondent Court of Appeals erred in the decision of the Regional Trial Court
convicting the petitioner of the offense charged, despite the cold fact that the basis of the
conviction was based solely on the stipulation of facts made during the pre-trial on August 8,
1985, which was not signed by the petitioner, nor by his counsel.
Finding the petition meritorious, we resolved to give due course.
The 1985 Rules on Criminal Procedure, which became effective on January 1, 1985, applicable
to this case since the pre-trial was held on August 8, 1985, provides:
SEC. 4. Pre-trial agreements must be signed. — No agreement or admission made or entered
during the pre-trial conference shall be used in evidence against the accused unless reduced to
writing and signed by him and his counsel. (Rule 118) [Emphasis supplied]
By its very language, the Rule is mandatory. Under the rule of statutory construction, negative
words and phrases are to be regarded as mandatory while those in the affirmative are merely
directory (McGee vs. Republic, 94 Phil. 820 [1954]). The use of the term "shall" further
emphasizes its mandatory character and means that it is imperative, operating to impose a duty
which may be enforced (Bersabal vs. Salvador, No. L-35910, July 21, 1978, 84 SCRA 176). And
more importantly, penal statutes whether substantive and remedial or procedural are, by
consecrated rule, to be strictly applied against the government and liberally in favor of the
accused (People vs. Terrado No. L-23625, November 25, 1983, 125 SCRA 648).
The conclusion is inevitable, therefore, that the omission of the signature of the accused and his
counsel, as mandatorily required by the Rules, renders the Stipulation of Facts inadmissible in
evidence. The fact that the lawyer of the accused, in his memorandum, confirmed the
Stipulation of Facts does not cure the defect because Rule 118 requires both the accused and
his counsel to sign the Stipulation of Facts. What the prosecution should have done, upon
discovering that the accused did not sign the Stipulation of Facts, as required by Rule 118, was
to submit evidence to establish the elements of the crime, instead of relying solely on the
supposed admission of the accused in the Stipulation of Facts. Without said evidence
independent of the admission, the guilt of the accused cannot be deemed established beyond
reasonable doubt.
Consequently, under the circumstances obtaining in this case, the ends of justice require that
evidence be presented to determine the culpability of the accused. When a judgment has been
entered by consent of an attorney without special authority, it will sometimes be set aside or
reopened (Natividad vs. Natividad, 51 Phil. 613 [1928]).
WHEREFORE, the judgment of respondent Appellate Court is REVERSED and this case is
hereby ordered RE-OPENED and REMANDED to the appropriate Branch of the Regional Trial
Court of Lucena City, for further reception of evidence.
SO ORDERED.
Yap, C.J., Fernan, Narvasa, Cruz, Feliciano, Gancayco, Padilla, Bidin, Sarmiento, Cortes,
Griño-Aquino and Medialdea, JJ., concur.
Paras, J., took no part.
Gutierrez, Jr., J., is on leave.
G.R. No. L-35910 July 21, 1978
PURITA BERSABAL, petitioner,
vs.
HONORABLE JUDGE SERAFIN SALVADOR, as Judge of the Court of First Instance of
Caloocan City, Branch XIV, TAN THAT and ONG PIN TEE, respondents.

MAKASIAR, J.:
On March 23, 1972, petitioner Purita Bersabal seeks to annul the orders of respondent Judge of
August 4, 1971, October 30, 1971 and March 15, 1972 and to compel said respondent Judge to
decide petitioner's perfected appeal on the basis of the evidence and records of the case
submitted by the City Court of Caloocan City plus the memorandum already submitted by the
petitioner and respondents.
Since only questions of law were raised therein, the Court of Appeals, on October 13, 1972,
issued a resolution certifying said case to this Court pursuant to Section 17, paragraph (4) of the
Judiciary Act of 1948, as amended.
As found by the Court of Appeals, the facts of this case are as follows:
It appears that private respondents Tan That and Ong Pin Tee filed an ejectment suit, docketed
as Civil Case No. 6926 in the City Court of Caloocan City, against the petitioner. A decision was
rendered by said Court on November 25, 1970, which decision was appealed by the petitioner
to the respondent Court and docketed therein as Civil Case No. C-2036.
During the pendency of the appeal the respondent court issued on March 23, 1971 an order
which reads:
Pursuant to the provisions of Rep. Act No. 6031, the Clerk of Court of Caloocan City, is hereby
directed to transmit to this Court within fifteen (15) days from receipt hereof the transcripts of
stenographic notes taken down during the hearing of this case before the City Court of
Caloocan City, and likewise, counsels for both parties are given thirty (30) days from receipt of
this order within which to file their respective memoranda, and thereafter, this case shall be
deemed submitted for decision by this Court.
which order was apparently received by petitioner on April 17, 1971.
The transcript of stenographic notes not having yet been forwarded to the respondent court,
petitioner filed on May 5, 1971 a 'MOTION EX-PARTE TO SUBMIT MEMORANDUM WITHIN
30 DAYS FROM RECEIPT OF NOTICE OF SUBMISSION OF THE TRANSCRIPT OF
STENOGRAPHIC NOTES TAKEN DURING THE HEARING OF THE CASE BEFORE THE
CITY COURT OF CALOOCAN CITY' which was granted by respondent court on May 7, 1971.
However, before the petitioner could receive any such notice from the respondent court, the
respondent Judge issued an order on August 4, 1971 which says:
For failure of the defendant-appellant to prosecute her appeal the same is hereby ordered
DISMISSED with costs against her.
Petitioner filed a motion for reconsideration of the order on September 28, 1971, citing as a
ground the granting of his ex-parte motion to submit memorandum within 30 days from notice of
the submission of the stenographic notes taken before the City Court. Private respondents filed
their opposition to the motion on September 30,1971. In the meantime, on October 20,1971,
petitioner filed her memorandum dated October 18, 1971. On October 30, 1971 the respondent
Court denied the motion for reconsideration. Then on January 25, 1972, petitioner filed a motion
for leave to file second motion for reconsideration which was likewise denied by the respondent
court on March 15, 1972. Hence this petition.
The sole inquiry in the case at bar can be stated thus: Whether, in the light of the provisions of
the second paragraph of Section 45 of Republic Act No. 296, as amended by R.A. No. 6031, the
mere failure of an appellant to submit on nine the memorandum mentioned in the same
paragraph would empower the Court of First Instance to dismiss the appeal on the ground of
failure to Prosecute; or, whether it is mandatory upon said Court to proceed to decide the
appealed case on the basis of the evidence and records transmitted to it, the failure of the
appellant to submit a memorandum on time notwithstanding.
The second paragraph of Section 45 of R.A. No. 296, otherwise known as the Philippine
Judiciary Act of 1948, as amended by R.A. No. 6031 provides, in part, as follows:
Courts of First Instance shall decide such appealed cases on the basis of the evidence and
records transmitted from the city or municipal courts: Provided, That the parties may
submit memoranda and/or brief with oral argument if so requested ... . (Emphasis supplied).
The foregoing provision is clear and leaves no room for doubt. It cannot be interpreted
otherwise than that the submission of memoranda is optional on the part of the parties. Being
optional on the part of the parties, the latter may so choose to waive submission of the
memoranda. And as a logical concomitant of the choice given to the Parties, the Court cannot
dismiss the appeal of the party waiving the submission of said memorandum the appellant so
chooses not to submit the memorandum, the Court of First Instance is left with no alternative but
to decide the case on the basis of the evidence and records transmitted from the city or
municipal courts. In other words, the Court is not empowered by law to dismiss the appeal on
the mere failure of an appellant to submit his memorandum, but rather it is the Court's
mandatory duty to decide the case on the basis of the available evidence and records
transmitted to it.
As a general rule, the word "may" when used in a statute is permissive only and operates to
confer discretion; while the word "shall" is imperative, operating to impose a duty which may be
enforced (Dizon vs. Encarnacion, L-18615, Dec. 24, 1963, 9 SCRA 714, 716-717). The
implication is that the Court is left with no choice but to decide the appealed case either on the
basis of the evidence and records transmitted to it, or on the basis of the latter plus memoranda
and/or brief with oral argument duly submitted and/or made on request.
Moreover, memoranda, briefs and oral arguments are not essential requirements. They may be
submitted and/or made only if so requested.
Finally, a contrary interpretation would be unjust and dangerous as it may defeat the litigant's
right to appeal granted to him by law. In the case of Republic vs. Rodriguez
(L-26056, May 29, 1969, 28 SCRA 378) this Court underscored "the need of proceeding with
caution so that a party may not be deprived of its right to appeal except for weighty reasons."
Courts should heed the rule in Municipality of Tiwi, Albay vs. Cirujales
(L-37520, Dec. 26, 1973, 54 SCRA 390, 395), thus:
The appellate court's summary dismissal of the appeal even before receipt of the records of the
appealed case as ordered by it in a prior mandamus case must be set aside as having been
issued precipitously and without an opportunity to consider and appreciate unavoidable
circumstances of record not attributable to petitioners that caused the delay in the elevation of
the records of the case on appeal.
In the instant case, no notice was received by petitioner about the submission of the transcript
of the stenographic notes, so that his 30-day period to submit his memorandum would
commence to run. Only after the expiration of such period can the respondent Judge act on the
case by deciding it on the merits, not by dismissing the appeal of petitioner.
WHEREFORE, THE CHALLENGED ORDERS OF RESPONDENT JUDGE DATED AUGUST 4,
1971, OCTOBER 30, 1971 AND MARCH 15, 1971 ARE HEREBY SET ASIDE AS NULL AND
VOID AND THE RESPONDENT COURT IS HEREBY DIRECTED TO DECIDE CIVIL CASE
NO. C-2036 ON THE MERITS. NO COSTS.
Muñoz Palma, Fernandez and Guerrero, JJ., concur.

Separate Opinions

TEEHANKEE, J, concurring:
I concur with the setting aside of the questioned dismissal of petitioner's appeal on the ground
that the record shows quite clearly that there was no failure on part of petitioner-appellant to
prosecute her appeal in respondent judge's court. Petitioner had been granted in respondent
judge's Order of May 7, 1971, 30 days from notice of submission of the transcripts within which
to file her memorandum on appeal, yet her appeal was dismissed per his Order of August 4,
1971 for alleged failure to prosecute (by failure to file the memorandum) even before she had
received any such notice. Upon receipt of the dismissal order, petitioner had promptly moved for
reconsideration and filed her memorandum on appeal.
I am not prepared at this stage to concur with the ratio decidendi of the decision penned by Mr.
Justice Makasiar that the Court is not empowered by law to dismiss the appeal on the mere
failure of an appellant to submit his memorandum, but rather it is the Court's mandatory duty to
decide the case on the basis of the available evidence and records transmitted to it." I entertain
serious doubts about such pronouncement, once when the court of first instance "requests" the
party-appellant to submit a memorandum or brief on appeal under the provisions of Republic
Act No. 6031 amending section 45 of Republic Act No. 296, such "request" is tantamount to a
requirement for the proper prosecution of the appeal; thus, when the appellant willfuly fails to file
such memorandum or brief, the judge should be empowered to dismiss the appeal, applying
suppletorily the analogous provisions of Rule 50, section 1 for dismissal of appeal by the higher
appellate courts and taking into account that Rule 40, section 9 of the Rules of Court now
expressly authorizes the court of first instance to dismiss an appeal before it "for failure to
prosecute."

Separate Opinions
TEEHANKEE, J, Concurring:
I concur with the setting aside of the questioned dismissal of petitioner's appeal on the ground
that the record shows quite clearly that there was no failure on part of petitioner-appellant to
prosecute her appeal in respondent judge's court. Petitioner had been granted in respondent
judge's Order of May 7, 1971, 30 days from notice of submission of the transcripts within which
to file her memorandum on appeal, yet her appeal was dismissed per his Order of August 4,
1971 for alleged failure to prosecute (by failure to file the memorandum) even before she had
received any such notice. Upon receipt of the dismissal order, petitioner had promptly moved for
reconsideration and filed her memorandum on appeal.
I am not prepared at this stage to concur with the ratio decidendi of the decision penned by Mr.
Justice Makasiar that the Court is not empowered by law to dismiss the appeal on the mere
failure of an appellant to submit his memorandum, but rather it is the Court's mandatory duty to
decide the case on the basis of the available evidence and records transmitted to it." I entertain
serious doubts about such pronouncement, once when the court of first instance "requests" the
party-appellant to submit a memorandum or brief on appeal under the provisions of Republic
Act No. 6031 amending section 45 of Republic Act No. 296, such "request" is tantamount to a
requirement for the proper prosecution of the appeal; thus, when the appellant willfuly fails to file
such memorandum or brief, the judge should be empowered to dismiss the appeal, applying
suppletorily the analogous provisions of Rule 50, section 1 for dismissal of appeal by the higher
appellate courts and taking into account that Rule 40, section 9 of the Rules of Court now
expressly authorizes the court of first instance to dismiss an appeal before it "for failure to
prosecute."
G.R. No. 167982 August 13, 2008
OFFICE OF THE OMBUDSMAN, petitioner,
vs.
MERCEDITAS DE SAHAGUN, MANUELA T. WAQUIZ and RAIDIS J. BASSIG, respondent.*
DECISION
AUSTRIA-MARTINEZ, J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court
assailing the Decision1 dated April 28, 2005 of the Court of Appeals (CA) in CA-G.R. SP No.
78008 which set aside the Orders dated March 10, 2003 and June 24, 2003 of the petitioner
Office of the Ombudsman in OMB-ADM-0-00-0721.
The material antecedents are as follows:
On November 13, 1992, respondent Raidis J. Bassig, Chief of the Research and Publications
Division of the Intramuros Administration, submitted a Memorandum to then Intramuros
Administrator Edda V. Henson (Henson) recommending that Brand Asia, Ltd. be commissioned
to produce a video documentary for a television program, as well implement a media plan and
marketing support services for Intramuros.
On November 17, 1992, the Bids and Awards Committee (BAC) of the Intramuros
Administration, composed of respondent Merceditas de Sahagun, as Chairman, with
respondent Manuela T. Waquiz and Dominador C. Ferrer, Jr. (Ferrer), as members, submitted a
recommendation to Henson for the approval of the award of said contract to Brand Asia, Ltd. On
the same day, Henson approved the recommendation and issued a Notice of Award to Brand
Asia, Ltd.
On November 23, 1992, a contract of service to produce a video documentary on Intramuros for
TV program airing was executed between Henson and Brand Asia, Ltd. On December 1, 1992,
a Notice to Proceed was issued to Brand Asia, Ltd.
On June 2, 1993, the BAC, with Augusto P. Rustia (Rustia) as additional member,
recommended to Henson the approval of the award of contract for print collaterals to Brand
Asia, Ltd. On the same day, Henson approved the recommendation and issued a Notice of
Award/Notice to Proceed to Brand Asia, Ltd.
On June 22, 1993, a contract of services to produce print collaterals was entered between
Henson and Brand Asia, Ltd.
On March 7, 1995, an anonymous complaint was filed with the Presidential Commission Against
Graft and Corruption (PGAC) against Henson in relation to the contracts entered into with Brand
Asia, Ltd.
On November 30, 1995, Henson was dismissed from the service by the Office of the President
upon recommendation of the PGAC which found that the contracts were entered into without the
required public bidding and in violation of Section 3 (a) and (e) of Republic Act (R.A.) No. 3019,
or the Anti-Graft and Corrupt Practices Act.
On August 8, 1996, an anonymous complaint was filed with the Ombudsman against the BAC in
relation to the latter’s participation in the contracts with Brand Asia, Ltd. for which Henson was
dismissed from service.
On September 5, 2000, Fact-Finding Intelligence Bureau (FFIB) filed criminal and administrative
charges against respondents, along with Ferrer and Rustia, for violation of Section 3 (a) and (c)
of R.A. No. 3019 in relation to Section 1 of Executive Order No. 302 and grave misconduct,
conduct grossly prejudicial to the best interest of the service and gross violation of Rules and
Regulations pursuant to the Administrative Code of 1987, docketed as OMB-0-00-1411 and
OMB-ADM-0-00-0721, respectively.2 OMB-0-00-1411 was dismissed on February 27, 2002 for
lack of probable cause.3
In his proposed Decision4 dated June 19, 2002, Graft Investigation Officer II Joselito P. Fangon
recommended the dismissal of OMB-ADM-0-00-0721.
However, then Ombudsman Simeon V. Marcelo disapproved the recommendation. In an
Order5 dated March 10, 2003, he held that there was substantial evidence to hold respondents
administratively liable since the contracts awarded to Brand Asia, Ltd. failed to go through the
required procedure for public bidding under Executive Order No. 301 dated July 26, 1987.
Respondents and Ferrer were found guilty of grave misconduct and dismissed from service.
Rustia was found guilty of simple misconduct and suspended for six months without pay.
On March 17, 2003, respondents, along with Rustia, filed a Motion for Reconsideration.6
On June 24, 2003, Ombudsman Marcelo issued an Order7 partially granting the motion for
reconsideration. Respondents and Ferrer were found guilty of the lesser offense of simple
misconduct and suspended for six months without pay. Rustia's suspension was reduced to
three months.
Dissatisfied, respondents filed a Petition for Review8 with the CA assailing the Orders dated
March 10, 2003 and June 24, 2003 of the Ombudsman.
On April 28, 2005, the CA rendered a Decision9 setting aside the Orders dated March 10, 2003
and June 24, 2003 of the Ombudsman. The CA held that respondents may no longer be
prosecuted since the complaint was filed more than seven years after the imputed acts were
committed which was beyond the one year period provided for by Section 20 (5) of Republic Act
(R.A.) No. 6770, otherwise known as "The Ombudsman Act of 1989"; and that the nature of the
function of the Ombudsman was purely recommendatory and it did not have the power to
penalize erring government officials and employees. The CA relied on the following statement
made by the Court in Tapiador v. Office of the Ombudsman,10 to wit:
x x x Besides, assuming arguendo, that petitioner [Tapiador] was administratively liable, the
Ombudsman has no authority to directly dismiss the petitioner from the government
service, more particularly from his position in the BID. Under Section 13, subparagraph 3, of
Article XI of the 1987 Constitution, the Ombudsman can only "recommend" the removal of
the public official or employee found to be at fault, to the public official
concerned.11 (Emphasis supplied)
Hence, the present petition raising the following issues (1) whether Section 20 (5) of R.A. No.
6770 prohibits administrative investigations in cases filed more than one year after commission,
and (2) whether the Ombudsman only has recommendatory, not punitive, powers against erring
government officials and employees.
The Court rules in favor of the petitioner.
The issues in the present case are settled by precedents.
On the first issue, well-entrenched is the rule that administrative offenses do not
prescribe.12 Administrative offenses by their very nature pertain to the character of public
officers and employees. In disciplining public officers and employees, the object sought is not
the punishment of the officer or employee but the improvement of the public service and the
preservation of the public’s faith and confidence in our government.13
Respondents insist that Section 20 (5) of R.A. No. 6770, to wit:
SEC. 20. Exceptions. – The Office of the Ombudsman may not conduct the necessary
investigation of any administrative act or omission complained of if it believes that:
xxx
(5) The complaint was filed after one year from the occurrence of the act or omission
complained of. (Emphasis supplied)
proscribes the investigation of any administrative act or omission if the complaint was filed after
one year from the occurrence of the complained act or omission.
In Melchor v. Gironella,14 the Court held that the period stated in Section 20(5) of R.A. No. 6770
does not refer to the prescription of the offense but to the discretion given to
the Ombudsman on whether it would investigate a particular administrative offense. The use of
the word "may" in the provision is construed as permissive and operating to confer
discretion.15 Where the words of a statute are clear, plain and free from ambiguity, they must be
given their literal meaning and applied without attempted interpretation.16
In Filipino v. Macabuhay,17 the Court interpreted Section 20 (5) of R.A. No. 6770 in this manner:
Petitioner argues that based on the abovementioned provision [Section 20(5) of RA 6770)],
respondent's complaint is barred by prescription considering that it was filed more than one year
after the alleged commission of the acts complained of.
Petitioner's argument is without merit.
The use of the word "may" clearly shows that it is directory in nature and not mandatory as
petitioner contends. When used in a statute, it is permissive only and operates to confer
discretion; while the word "shall" is imperative, operating to impose a duty which may be
enforced. Applying Section 20(5), therefore, it is discretionary upon the Ombudsman
whether or not to conduct an investigation on a complaint even if it was filed after one
year from the occurrence of the act or omission complained of. In fine, the complaint is
not barred by prescription.18(Emphasis supplied)
The declaration of the CA in its assailed decision that while as a general rule the word "may" is
directory, the negative phrase "may not" is mandatory in tenor; that a directory word, when
qualified by the word "not," becomes prohibitory and therefore becomes mandatory in character,
is not plausible. It is not supported by jurisprudence on statutory construction.
As the Court recently held in Office of the Ombudsman v. Court of Appeals,19 Section 20 of R.A.
No. 6770 has been clarified by Administrative Order No. 17,20 which amended Administrative
Order No. 07, otherwise known as the Rules of Procedure of the Office of the Ombudsman.
Section 4, Rule III21 of the amended Rules of Procedure of the Office of the Ombudsmanreads:
Section 4. Evaluation. - Upon receipt of the complaint, the same shall be evaluated to
determine whether the same may be:
a) dismissed outright for any grounds stated under Section 20 of Republic Act No. 6770,
provided, however, that the dismissal thereof is not mandatory and shall be discretionary
on the part of the Ombudsman or the Deputy Ombudsman concerned;
b) treated as a grievance/request for assistance which may be referred to the Public Assistance
Bureau, this Office, for appropriate action under Section 2, Rule IV of this Rules;
c) referred to other disciplinary authorities under paragraph 2, Section 23, R.A. 6770 for the
taking of appropriate administrative proceedings;
d) referred to the appropriate office/agency or official for the conduct of further fact-finding
investigation; or
e) docketed as an administrative case for the purpose of administrative adjudication by the
Office of the Ombudsman. (Emphasis supplied)
It is, therefore, discretionary upon the Ombudsman whether or not to conduct an investigation of
a complaint even if it was filed after one year from the occurrence of the act or omission
complained of.
Thus, while the complaint herein was filed only on September 5, 2000, or more than seven
years after the commission of the acts imputed against respondents in November 1992 and
June 1993, it was within the authority of the Ombudsman to conduct the investigation of the
subject complaint.
On the second issue, the authority of the Ombudsman to determine the administrative liability of
a public official or employee, and to direct and compel the head of the office or agency
concerned to implement the penalty imposed is likewise settled.
In Ledesma v. Court of Appeals,22 the Court has ruled that the statement in Tapiador that made
reference to the power of the Ombudsman to impose an administrative penalty was merely
an obiter dictum and could not be cited as a doctrinal declaration of this Court, thus:
x x x [A] cursory reading of Tapiador reveals that the main point of the case was the failure of
the complainant therein to present substantial evidence to prove the charges of the
administrative case. The statement that made reference to the power of the Ombudsman
is, at best, merely an obiter dictum and, as it is unsupported by sufficient explanation, is
susceptible to varying interpretations, as what precisely is before us in this case. Hence, it
cannot be cited as a doctrinal declaration of this Court nor is it safe from judicial
examination.23 (Emphasis supplied)
In Estarija v. Ranada,24 the Court reiterated its pronouncements in Ledesma and categorically
stated:
x x x [T]he Constitution does not restrict the powers of the Ombudsman in Section 13, Article XI
of the 1987 Constitution, but allows the Legislature to enact a law that would spell out the
powers of the Ombudsman. Through the enactment of Rep. Act No. 6770, specifically Section
15, par. 3, the lawmakers gave the Ombudsman such powers to sanction erring officials and
employees, except members of Congress, and the Judiciary. To conclude, we hold that
Sections 15, 21, 22 and 25 of Republic Act No. 6770 are constitutionally sound. The powers of
the Ombudsman are not merely recommendatory. His office was given teeth to render this
constitutional body not merely functional but also effective. Thus, we hold that under Republic
Act No. 6770 and the 1987 Constitution, the Ombudsman has the constitutional power to
directly remove from government service an erring public official other than a member of
Congress and the Judiciary.25 (Emphasis supplied)
The power of the Ombudsman to directly impose administrative sanctions has been repeatedly
reiterated in the subsequent cases of Barillo v. Gervasio,26 Office of the Ombudsman v.
Madriaga,27 Office of the Ombudsman v. Court of Appeals,28Balbastro v. Junio,29 Commission
on Audit, Regional Office No. 13, Butuan City v. Hinampas,30 Office of the Ombudsman v.
Santiago,31 Office of the Ombudsman v. Lisondra,32 and most recently in Deputy Ombudsman
for the Visayas v. Abugan33and continues to be the controlling doctrine.
In fine, it is already well-settled that the Ombudsman's power as regards the administrative
penalty to be imposed on an erring public officer or employee is not merely recommendatory.
The Ombudsman has the power to directly impose the penalty of removal, suspension,
demotion, fine, censure, or prosecution of a public officer or employee, other than a member of
Congress and the Judiciary, found to be at fault, within the exercise of its administrative
disciplinary authority as provided in the Constitution, R.A. No. 6770, as well as jurisprudence.
This power gives the said constitutional office teeth to render it not merely functional, but also
effective.34
Thus, the CA committed a reversible error in holding that the case had already prescribed and
that the Ombudsman does not have the power to penalize erring government officials and
employees.
WHEREFORE, the petition is GRANTED. The Decision dated April 28, 2005 of the Court of
Appeals in CA-G.R. SP No. 78008 is REVERSED and SET ASIDE. The Order dated June 24,
2003 of the Office of the Ombudsman is REINSTATED.
SO ORDERED.
MA. ALICIA AUSTRIA-MARTINEZ
Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson

MINITA V. CHICO-NAZARIO ANTONIO EDUARDO B. NACHURA

Associate Justice Associate Justice

RUBEN T. REYES
Associate Justice

ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson’s
Attestation, I certify that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice
G.R. No. 117188 August 7, 1997
LOYOLA GRAND VILLAS HOMEOWNERS (SOUTH) ASSOCIATION, INC., petitioner,
vs.
HON. COURT OF APPEALS, HOME INSURANCE AND GUARANTY CORPORATION,
EMDEN ENCARNACION and HORATIO AYCARDO, respondents.

ROMERO, J.:
May the failure of a corporation to file its by-laws within one month from the date of its
incorporation, as mandated by Section 46 of the Corporation Code, result in its automatic
dissolution?
This is the issue raised in this petition for review on certiorari of the Decision1 of the Court of
Appeals affirming the decision of the Home Insurance and Guaranty Corporation (HIGC). This
quasi-judicial body recognized Loyola Grand Villas Homeowners Association (LGVHA) as the
sole homeowners' association in Loyola Grand Villas, a duly registered subdivision in Quezon
City and Marikina City that was owned and developed by Solid Homes, Inc. It revoked the
certificates of registration issued to Loyola Grand Villas homeowners (North) Association
Incorporated (the North Association for brevity) and Loyola Grand Villas Homeowners (South)
Association Incorporated (the South Association).
LGVHAI was organized on February 8, 1983 as the association of homeowners and residents of
the Loyola Grand Villas. It was registered with the Home Financing Corporation, the
predecessor of herein respondent HIGC, as the sole homeowners' organization in the said
subdivision under Certificate of Registration No. 04-197. It was organized by the developer of
the subdivision and its first president was Victorio V. Soliven, himself the owner of the
developer. For unknown reasons, however, LGVHAI did not file its corporate by-laws.
Sometime in 1988, the officers of the LGVHAI tried to register its by-laws. They failed to do
so. 2 To the officers' consternation, they discovered that there were two other organizations
within the subdivision — the North Association and the South Association. According to private
respondents, a non-resident and Soliven himself, respectively headed these associations. They
also discovered that these associations had five (5) registered homeowners each who were also
the incorporators, directors and officers thereof. None of the members of the LGVHAI was listed
as member of the North Association while three (3) members of LGVHAI were listed as
members of the South Association.3 The North Association was registered with the HIGC on
February 13, 1989 under Certificate of Registration No. 04-1160 covering Phases West II, East
III, West III and East IV. It submitted its by-laws on December 20, 1988.
In July, 1989, when Soliven inquired about the status of LGVHAI, Atty. Joaquin A. Bautista, the
head of the legal department of the HIGC, informed him that LGVHAI had been automatically
dissolved for two reasons. First, it did not submit its by-laws within the period required by the
Corporation Code and, second, there was non-user of corporate charter because HIGC had not
received any report on the association's activities. Apparently, this information resulted in the
registration of the South Association with the HIGC on July 27, 1989 covering Phases West I,
East I and East II. It filed its by-laws on July 26, 1989.
These developments prompted the officers of the LGVHAI to lodge a complaint with the HIGC.
They questioned the revocation of LGVHAI's certificate of registration without due notice and
hearing and concomitantly prayed for the cancellation of the certificates of registration of the
North and South Associations by reason of the earlier issuance of a certificate of registration in
favor of LGVHAI.
On January 26, 1993, after due notice and hearing, private respondents obtained a favorable
ruling from HIGC Hearing Officer Danilo C. Javier who disposed of HIGC Case No. RRM-5-89
as follows:
WHEREFORE, judgment is hereby rendered recognizing the Loyola Grand Villas Homeowners
Association, Inc., under Certificate of Registration No. 04-197 as the duly registered and
existing homeowners association for Loyola Grand Villas homeowners, and declaring the
Certificates of Registration of Loyola Grand Villas Homeowners (North) Association, Inc. and
Loyola Grand Villas Homeowners (South) Association, Inc. as hereby revoked or cancelled; that
the receivership be terminated and the Receiver is hereby ordered to render an accounting and
turn-over to Loyola Grand Villas Homeowners Association, Inc., all assets and records of the
Association now under his custody and possession.
The South Association appealed to the Appeals Board of the HIGC. In its Resolution of
September 8, 1993, the Board 4 dismissed the appeal for lack of merit.
Rebuffed, the South Association in turn appealed to the Court of Appeals, raising two
issues. First, whether or not LGVHAI's failure to file its by-laws within the period prescribed by
Section 46 of the Corporation Code resulted in the automatic dissolution of LGVHAI. Second,
whether or not two homeowners' associations may be authorized by the HIGC in one "sprawling
subdivision." However, in the Decision of August 23, 1994 being assailed here, the Court of
Appeals affirmed the Resolution of the HIGC Appeals Board.
In resolving the first issue, the Court of Appeals held that under the Corporation Code, a private
corporation commences to have corporate existence and juridical personality from the date the
Securities and Exchange Commission (SEC) issues a certificate of incorporation under its
official seal. The requirement for the filing of by-laws under Section 46 of the Corporation Code
within one month from official notice of the issuance of the certificate of incorporation
presupposes that it is already incorporated, although it may file its by-laws with its articles of
incorporation. Elucidating on the effect of a delayed filing of by-laws, the Court of Appeals said:
We also find nothing in the provisions cited by the petitioner, i.e., Section 46 and 22,
Corporation Code, or in any other provision of the Code and other laws which provide or at least
imply that failure to file the by-laws results in an automatic dissolution of the corporation. While
Section 46, in prescribing that by-laws must be adopted within the period prescribed therein,
may be interpreted as a mandatory provision, particularly because of the use of the word
"must," its meaning cannot be stretched to support the argument that automatic dissolution
results from non-compliance.
We realize that Section 46 or other provisions of the Corporation Code are silent on the result of
the failure to adopt and file the by-laws within the required period. Thus, Section 46 and other
related provisions of the Corporation Code are to be construed with Section 6 (1) of P.D. 902-A.
This section empowers the SEC to suspend or revoke certificates of registration on the grounds
listed therein. Among the grounds stated is the failure to file by-laws (see also II Campos: The
Corporation Code, 1990 ed., pp. 124-125). Such suspension or revocation, the same section
provides, should be made upon proper notice and hearing. Although P.D. 902-A refers to the
SEC, the same principles and procedures apply to the public respondent HIGC as it exercises
its power to revoke or suspend the certificates of registration or homeowners association.
(Section 2 [a], E.O. 535, series 1979, transferred the powers and authorities of the SEC over
homeowners associations to the HIGC.)
We also do not agree with the petitioner's interpretation that Section 46, Corporation Code
prevails over Section 6, P.D. 902-A and that the latter is invalid because it contravenes the
former. There is no basis for such interpretation considering that these two provisions are not
inconsistent with each other. They are, in fact, complementary to each other so that one cannot
be considered as invalidating the other.
The Court of Appeals added that, as there was no showing that the registration of LGVHAI had
been validly revoked, it continued to be the duly registered homeowners' association in the
Loyola Grand Villas. More importantly, the South Association did not dispute the fact that
LGVHAI had been organized and that, thereafter, it transacted business within the period
prescribed by law.
On the second issue, the Court of Appeals reiterated its previous ruling 5 that the HIGC has the
authority to order the holding of a referendum to determine which of two contending
associations should represent the entire community, village or subdivision.
Undaunted, the South Association filed the instant petition for review on certiorari. It elevates as
sole issue for resolution the first issue it had raised before the Court of Appeals, i.e., whether or
not the LGVHAI's failure to file its by-laws within the period prescribed by Section 46 of the
Corporation Code had the effect of automatically dissolving the said corporation.
Petitioner contends that, since Section 46 uses the word "must" with respect to the filing of by-
laws, noncompliance therewith would result in "self-extinction" either due to non-occurrence of a
suspensive condition or the occurrence of a resolutory condition "under the hypothesis that (by)
the issuance of the certificate of registration alone the corporate personality is deemed already
formed." It asserts that the Corporation Code provides for a "gradation of violations of
requirements." Hence, Section 22 mandates that the corporation must be formally organized
and should commence transaction within two years from date of incorporation. Otherwise, the
corporation would be deemed dissolved. On the other hand, if the corporation commences
operations but becomes continuously inoperative for five years, then it may be suspended or its
corporate franchise revoked.
Petitioner concedes that Section 46 and the other provisions of the Corporation Code do not
provide for sanctions for non-filing of the by-laws. However, it insists that no sanction need be
provided "because the mandatory nature of the provision is so clear that there can be no doubt
about its being an essential attribute of corporate birth." To petitioner, its submission is
buttressed by the facts that the period for compliance is "spelled out distinctly;" that the
certification of the SEC/HIGC must show that the by-laws are not inconsistent with the Code,
and that a copy of the by-laws "has to be attached to the articles of incorporation." Moreover, no
sanction is provided for because "in the first place, no corporate identity has been completed."
Petitioner asserts that "non-provision for remedy or sanction is itself the tacit proclamation that
non-compliance is fatal and no corporate existence had yet evolved," and therefore, there was
"no need to proclaim its demise." 6 In a bid to convince the Court of its arguments, petitioner
stresses that:
. . . the word MUST is used in Sec. 46 in its universal literal meaning and corollary human
implication — its compulsion is integrated in its very essence — MUST is always enforceable by
the inevitable consequence — that is, "OR ELSE". The use of the word MUST in Sec. 46 is no
exception — it means file the by-laws within one month after notice of issuance of certificate of
registration OR ELSE. The OR ELSE, though not specified, is inextricably a part of MUST . Do
this or if you do not you are "Kaput". The importance of the by-laws to corporate existence
compels such meaning for as decreed the by-laws is "the government" of the corporation.
Indeed, how can the corporation do any lawful act as such without by-laws. Surely, no law is
indeed to create chaos. 7
Petitioner asserts that P.D. No. 902-A cannot exceed the scope and power of the Corporation
Code which itself does not provide sanctions for non-filing of by-laws. For the petitioner, it is "not
proper to assess the true meaning of Sec. 46 . . . on an unauthorized provision on such matter
contained in the said decree."
In their comment on the petition, private respondents counter that the requirement of adoption of
by-laws is not mandatory. They point to P.D. No. 902-A as having resolved the issue of whether
said requirement is mandatory or merely directory. Citing Chung Ka Bio v. Intermediate
Appellate Court, 8 private respondents contend that Section 6(I) of that decree provides that
non-filing of by-laws is only a ground for suspension or revocation of the certificate of
registration of corporations and, therefore, it may not result in automatic dissolution of the
corporation. Moreover, the adoption and filing of by-laws is a condition subsequent which does
not affect the corporate personality of a corporation like the LGVHAI. This is so because Section
9 of the Corporation Code provides that the corporate existence and juridical personality of a
corporation begins from the date the SEC issues a certificate of incorporation under its official
seal. Consequently, even if the by-laws have not yet been filed, a corporation may be
considered a de facto corporation. To emphasize the fact the LGVHAI was registered as the
sole homeowners' association in the Loyola Grand Villas, private respondents point out that
membership in the LGVHAI was an "unconditional restriction in the deeds of sale signed by lot
buyers."
In its reply to private respondents' comment on the petition, petitioner reiterates its argument
that the word " must" in Section 46 of the Corporation Code is mandatory. It adds that, before
the ruling in Chung Ka Bio v. Intermediate Appellate Court could be applied to this case, this
Court must first resolve the issue of whether or not the provisions of P.D. No. 902-A prescribing
the rules and regulations to implement the Corporation Code can "rise above and change" the
substantive provisions of the Code.
The pertinent provision of the Corporation Code that is the focal point of controversy in this case
states:
Sec. 46. Adoption of by-laws. — Every corporation formed under this Code, must within one (1)
month after receipt of official notice of the issuance of its certificate of incorporation by the
Securities and Exchange Commission, adopt a code of by-laws for its government not
inconsistent with this Code. For the adoption of by-laws by the corporation, the affirmative vote
of the stockholders representing at least a majority of the outstanding capital stock, or of at least
a majority of the members, in the case of non-stock corporations, shall be necessary. The by-
laws shall be signed by the stockholders or members voting for them and shall be kept in the
principal office of the corporation, subject to the stockholders or members voting for them and
shall be kept in the principal office of the corporation, subject to inspection of the stockholders or
members during office hours; and a copy thereof, shall be filed with the Securities and
Exchange Commission which shall be attached to the original articles of incorporation.
Notwithstanding the provisions of the preceding paragraph, by-laws may be adopted and filed
prior to incorporation; in such case, such by-laws shall be approved and signed by all the
incorporators and submitted to the Securities and Exchange Commission, together with the
articles of incorporation.
In all cases, by-laws shall be effective only upon the issuance by the Securities and Exchange
Commission of a certification that the by-laws are not inconsistent with this Code.
The Securities and Exchange Commission shall not accept for filing the by-laws or any
amendment thereto of any bank, banking institution, building and loan association, trust
company, insurance company, public utility, educational institution or other special corporations
governed by special laws, unless accompanied by a certificate of the appropriate government
agency to the effect that such by-laws or amendments are in accordance with law.
As correctly postulated by the petitioner, interpretation of this provision of law begins with the
determination of the meaning and import of the word "must" in this section Ordinarily, the word
"must" connotes an imperative act or operates to impose a duty which may be enforced. 9 It is
synonymous with "ought" which connotes compulsion or mandatoriness. 10 However, the word
"must" in a statute, like "shall," is not always imperative. It may be consistent with an exercise of
discretion. In this jurisdiction, the tendency has been to interpret "shall" as the context or a
reasonable construction of the statute in which it is used demands or requires. 11 This is equally
true as regards the word "must." Thus, if the languages of a statute considered as a whole and
with due regard to its nature and object reveals that the legislature intended to use the words
"shall" and "must" to be directory, they should be given that meaning.12
In this respect, the following portions of the deliberations of the Batasang Pambansa No. 68 are
illuminating:
MR. FUENTEBELLA. Thank you, Mr. Speaker.
On page 34, referring to the adoption of by-laws, are we made to understand here, Mr. Speaker,
that by-laws must immediately be filed within one month after the issuance? In other words,
would this be mandatory or directory in character?
MR. MENDOZA. This is mandatory.
MR. FUENTEBELLA. It being mandatory, Mr. Speaker, what would be the effect of the failure of
the corporation to file these by-laws within one month?
MR. MENDOZA. There is a provision in the latter part of the Code which identifies and
describes the consequences of violations of any provision of this Code. One such
consequences is the dissolution of the corporation for its inability, or perhaps, incurring certain
penalties.
MR. FUENTEBELLA. But it will not automatically amount to a dissolution of the corporation by
merely failing to file the by-laws within one month. Supposing the corporation was late, say, five
days, what would be the mandatory penalty?
MR. MENDOZA. I do not think it will necessarily result in the automatic or ipso facto dissolution
of the corporation. Perhaps, as in the case, as you suggested, in the case of El Hogar Filipino
where a quo warrantoaction is brought, one takes into account the gravity of the violation
committed. If the by-laws were late — the filing of the by-laws were late by, perhaps, a day or
two, I would suppose that might be a tolerable delay, but if they are delayed over a period of
months — as is happening now — because of the absence of a clear requirement that by-laws
must be completed within a specified period of time, the corporation must suffer certain
consequences. 13
This exchange of views demonstrates clearly that automatic corporate dissolution for failure to
file the by-laws on time was never the intention of the legislature. Moreover, even without
resorting to the records of deliberations of the Batasang Pambansa, the law itself provides the
answer to the issue propounded by petitioner.
Taken as a whole and under the principle that the best interpreter of a statute is the statute itself
(optima statuli interpretatix est ipsum statutum), 14 Section 46 aforequoted reveals the legislative
intent to attach a directory, and not mandatory, meaning for the word "must" in the first sentence
thereof. Note should be taken of the second paragraph of the law which allows the filing of the
by-laws even prior to incorporation. This provision in the same section of the Code rules out
mandatory compliance with the requirement of filing the by-laws "within one (1) month after
receipt of official notice of the issuance of its certificate of incorporation by the Securities and
Exchange Commission." It necessarily follows that failure to file the by-laws within that period
does not imply the "demise" of the corporation. By-laws may be necessary for the "government"
of the corporation but these are subordinate to the articles of incorporation as well as to the
Corporation Code and related statutes.15 There are in fact cases where by-laws are
unnecessary to corporate existence or to the valid exercise of corporate powers, thus:
In the absence of charter or statutory provisions to the contrary, by-laws are not necessary
either to the existence of a corporation or to the valid exercise of the powers conferred upon it,
certainly in all cases where the charter sufficiently provides for the government of the body; and
even where the governing statute in express terms confers upon the corporation the power to
adopt by-laws, the failure to exercise the power will be ascribed to mere nonaction which will not
render void any acts of the corporation which would otherwise be valid. 16 (Emphasis supplied.)
As Fletcher aptly puts it:
It has been said that the by-laws of a corporation are the rule of its life, and that until by-laws
have been adopted the corporation may not be able to act for the purposes of its creation, and
that the first and most important duty of the members is to adopt them. This would seem to
follow as a matter of principle from the office and functions of by-laws. Viewed in this light, the
adoption of by-laws is a matter of practical, if not one of legal, necessity. Moreover, the peculiar
circumstances attending the formation of a corporation may impose the obligation to adopt
certain by-laws, as in the case of a close corporation organized for specific purposes. And the
statute or general laws from which the corporation derives its corporate existence may
expressly require it to make and adopt by-laws and specify to some extent what they shall
contain and the manner of their adoption. The mere fact, however, of the existence of power in
the corporation to adopt by-laws does not ordinarily and of necessity make the exercise of such
power essential to its corporate life, or to the validity of any of its acts. 17
Although the Corporation Code requires the filing of by-laws, it does not expressly provide for
the consequences of the non-filing of the same within the period provided for in Section 46.
However, such omission has been rectified by Presidential Decree No. 902-A, the pertinent
provisions on the jurisdiction of the SEC of which state:
Sec. 6. In order to effectively exercise such jurisdiction, the Commission shall possess the
following powers:
xxx xxx xxx
(1) To suspend, or revoke, after proper notice and hearing, the franchise or certificate of
registration of corporations, partnerships or associations, upon any of the grounds provided by
law, including the following:
xxx xxx xxx
5. Failure to file by-laws within the required period;
xxx xxx xxx
In the exercise of the foregoing authority and jurisdiction of the Commission or by a
Commissioner or by such other bodies, boards, committees and/or any officer as may be
created or designated by the Commission for the purpose. The decision, ruling or order of any
such Commissioner, bodies, boards, committees and/or officer may be appealed to the
Commission sitting en banc within thirty (30) days after receipt by the appellant of notice of such
decision, ruling or order. The Commission shall promulgate rules of procedures to govern the
proceedings, hearings and appeals of cases falling with its jurisdiction.
The aggrieved party may appeal the order, decision or ruling of the Commission sitting en
banc to the Supreme Court by petition for review in accordance with the pertinent provisions of
the Rules of Court.
Even under the foregoing express grant of power and authority, there can be no automatic
corporate dissolutionsimply because the incorporators failed to abide by the required filing of by-
laws embodied in Section 46 of the Corporation Code. There is no outright "demise" of
corporate existence. Proper notice and hearing are cardinal components of due process in any
democratic institution, agency or society. In other words, the incorporators must be given the
chance to explain their neglect or omission and remedy the same.
That the failure to file by-laws is not provided for by the Corporation Code but in another law is
of no moment. P.D. No. 902-A, which took effect immediately after its promulgation on March
11, 1976, is very much apposite to the Code. Accordingly, the provisions abovequoted supply
the law governing the situation in the case at bar, inasmuch as the Corporation Code and P.D.
No. 902-A are statutes in pari materia. Interpretare et concordare legibus est optimus
interpretandi. Every statute must be so construed and harmonized with other statutes as to form
a uniform system of jurisprudence. 18
As the "rules and regulations or private laws enacted by the corporation to regulate, govern and
control its own actions, affairs and concerns and its stockholders or members and directors and
officers with relation thereto and among themselves in their relation to it," 19 by-laws are
indispensable to corporations in this jurisdiction. These may not be essential to corporate birth
but certainly, these are required by law for an orderly governance and management of
corporations. Nonetheless, failure to file them within the period required by law by no means
tolls the automatic dissolution of a corporation.
In this regard, private respondents are correct in relying on the pronouncements of this Court
in Chung Ka Bio v.Intermediate Appellate Court, 20 as follows:
. . . . Moreover, failure to file the by-laws does not automatically operate to dissolve a
corporation but is now considered only a ground for such dissolution.
Section 19 of the Corporation Law, part of which is now Section 22 of the Corporation Code,
provided that the powers of the corporation would cease if it did not formally organize and
commence the transaction of its business or the continuation of its works within two years from
date of its incorporation. Section 20, which has been reproduced with some modifications in
Section 46 of the Corporation Code, expressly declared that "every corporation formed under
this Act, must within one month after the filing of the articles of incorporation with the Securities
and Exchange Commission, adopt a code of by-laws." Whether this provision should be given
mandatory or only directory effect remained a controversial question until it became academic
with the adoption of PD 902-A. Under this decree, it is now clear that the failure to file by-laws
within the required period is only a ground for suspension or revocation of the certificate of
registration of corporations.
Non-filing of the by-laws will not result in automatic dissolution of the corporation. Under Section
6(I) of PD 902-A, the SEC is empowered to "suspend or revoke, after proper notice and hearing,
the franchise or certificate of registration of a corporation" on the ground inter alia of "failure to
file by-laws within the required period." It is clear from this provision that there must first of all be
a hearing to determine the existence of the ground, and secondly, assuming such finding, the
penalty is not necessarily revocation but may be only suspension of the charter. In fact, under
the rules and regulations of the SEC, failure to file the by-laws on time may be penalized merely
with the imposition of an administrative fine without affecting the corporate existence of the
erring firm.
It should be stressed in this connection that substantial compliance with conditions subsequent
will suffice to perfect corporate personality. Organization and commencement of transaction of
corporate business are but conditions subsequent and not prerequisites for acquisition of
corporate personality. The adoption and filing of by-laws is also a condition subsequent. Under
Section 19 of the Corporation Code, a Corporation commences its corporate existence and
juridical personality and is deemed incorporated from the date the Securities and Exchange
Commission issues certificate of incorporation under its official seal. This may be done even
before the filing of the by-laws, which under Section 46 of the Corporation Code, must be
adopted "within one month after receipt of official notice of the issuance of its certificate of
incorporation." 21
That the corporation involved herein is under the supervision of the HIGC does not alter the
result of this case. The HIGC has taken over the specialized functions of the former Home
Financing Corporation by virtue of Executive Order No. 90 dated December 17, 1989. 22 With
respect to homeowners associations, the HIGC shall "exercise all the powers, authorities and
responsibilities that are vested on the Securities and Exchange Commission . . . , the provision
of Act 1459, as amended by P.D. 902-A, to the contrary notwithstanding." 23
WHEREFORE, the instant petition for review on certiorari is hereby DENIED and the questioned
Decision of the Court of Appeals AFFIRMED. This Decision is immediately executory. Costs
against petitioner.
SO ORDERED.
Regalado, Puno and Mendoza, JJ., concur.
Torres, Jr., J., is on leave.
 G.R. No. 172409 February 4, 2008
ROOS INDUSTRIAL CONSTRUCTION, INC. and OSCAR TOCMO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and JOSE MARTILLOS, respondents.
DECISION
TINGA, J.:
In this Petition for Review on Certiorari1 under Rule 45 of the 1997 Rules of Civil Procedure,
petitioners Roos Industrial Construction, Inc. and Oscar Tocmo assail the Court of
Appeals’2 Decision dated 12 January 2006 in C.A. G.R. SP No. 87572 and its Resolution3 dated
10 April 2006 denying their Motion for Reconsideration.4
The following are the antecedents.
On 9 April 2002, private respondent Jose Martillos (respondent) filed a complaint against
petitioners for illegal dismissal and money claims such as the payment of separation pay in lieu
of reinstatement plus full backwages, service incentive leave, 13th month pay, litigation
expenses, underpayment of holiday pay and other equitable reliefs before the National Capital
Arbitration Branch of the National Labor Relations Commission (NLRC), docketed as NLRC
NCR South Sector Case No. 30-04-01856-02.
Respondent alleged that he had been hired as a driver-mechanic sometime in 1988 but was not
made to sign any employment contract by petitioners. As driver mechanic, respondent was
assigned to work at Carmona, Cavite and he worked daily from 7:00 a.m. to 10:00 p.m. at the
rate of P200.00 a day. He was also required to work during legal holidays but was only paid an
additional 30% holiday pay. He likewise claimed that he had not been paid service incentive
leave and 13th month pay during the entire course of his employment. On 16 March 2002, his
employment was allegedly terminated without due process.5
Petitioners denied respondent’s allegations. They contended that respondent had been hired on
several occasions as a project employee and that his employment was coterminous with the
duration of the projects. They also maintained that respondent was fully aware of this
arrangement. Considering that respondent’s employment had been validly terminated after the
completion of the projects, petitioners concluded that he is not entitled to separation pay and
other monetary claims, even attorney’s fees.6
The Labor Arbiter ruled that respondent had been illegally dismissed after finding that he had
acquired the status of a regular employee as he was hired as a driver with little interruption from
one project to another, a task which is necessary to the usual trade of his employer.7 The Labor
Arbiter pertinently stated as follows:
x x x If it were true that complainant was hired as project employee, then there should have
been project employment contracts specifying the project for which complainant’s services were
hired, as well as the duration of the project as required in Art. 280 of the Labor Code. As there
were four (4) projects where complainant was allegedly assigned, there should have been the
equal number of project employment contracts executed by the complainant. Further, for every
project termination, there should have been the equal number of termination report submitted to
the Department of Labor and Employment. However, the record shows that there is only one
termination [report] submitted to DOLE pertaining to the last project assignment of complainant
in Carmona, Cavite.
In the absence of said project employment contracts and the corresponding Termination Report
to DOLE at every project termination, the inevitable conclusion is that the complainant was a
regular employee of the respondents.
In the case of Maraguinot, Jr. v. NLRC, 284 SCRA 539, 556 [1998], citing capital Industrial
Construction Group v. NLRC, 221 SCRA 469, 473-474 [1993], it was ruled therein that a project
employee may acquire the status of a regular employee when the following concurs: (1) there is
a continuous rehiring of project employees even after the cessation of a project; and (2) the
tasks performed by the alleged "project employee" are vital, necessary and indispensable to the
usual business or trade of the employer. Both factors are present in the instant case. Thus,
even granting that complainant was hired as a project employee, he eventually became a
regular employee as there was a continuous rehiring of this services.
xxx
In the instant case, apart from the fact that complainant was not made to sign any project
employment contract x x x he was successively transferred from one project after another, and
he was made to perform the same kind of work as driver.8
The Labor Arbiter ordered petitioners to pay respondent the aggregate sum of P224,647.17
representing backwages, separation pay, salary differential, holiday pay, service incentive leave
pay and 13th month pay.9
Petitioners received a copy of the Labor Arbiter’s decision on 17 December 2003. On 29
December 2003, the last day of the reglementary period for perfecting an appeal, petitioners
filed a Memorandum of Appeal10 before the NLRC and paid the appeal fee. However, instead of
posting the required cash or surety bond within the reglementary period, petitioners filed a
Motion for Extension of Time to Submit/Post Surety Bond.11 Petitioners stated that they could
not post and submit the required surety bond as the signatories to the bond were on leave
during the holiday season, and made a commitment to post and submit the surety bond on or
before 6 January 2004. The NLRC did not act on the motion. Thereafter, on 6 January 2004,
petitioners filed a surety bond equivalent to the award of the Labor Arbiter.12
In a Resolution13 dated July 29, 2004, the Second Division of the NLRC dismissed petitioners’
appeal for lack of jurisdiction. The NLRC stressed that the bond is an indispensable requisite for
the perfection of an appeal by the employer and that the perfection of an appeal within the
reglementary period and in the manner prescribed by law is mandatory and jurisdictional. In
addition, the NLRC restated that its Rules of Procedure proscribes the filing of any motion for
extension of the period within which to perfect an appeal. The NLRC summed up that
considering that petitioners’ appeal had not been perfected, it had no jurisdiction to act on said
appeal and the assailed decision, as a consequence, has become final and executory.14 The
NLRC likewise denied petitioners’ Motion for Reconsideration15 for lack of merit in another
Resolution.16 On 11 November 2004, the NLRC issued an entry of judgment declaring its
resolution final and executory as of 9 October 2004. On respondent’s motion, the Labor Arbiter
ordered that the writ of execution be issued to enforce the award. On 26 January 2005, a writ of
execution was issued.17
Petitioners elevated the dismissal of their appeal to the Court of Appeals by way of a special
civil action of certiorari. They argued that the filing of the appeal bond evinced their willingness
to comply and was in fact substantial compliance with the Rules. They likewise maintained that
the NLRC gravely abused its discretion in failing to consider the meritorious grounds for their
motion for extension of time to file the appeal bond. Lastly, petitioners contended that the NLRC
gravely erred in issuing an entry of judgment as the assailed resolution is still open for
review.18 On 12 January 2006, the Court of Appeals affirmed the challenged resolution of the
NLRC. Hence, the instant petition.
Before this Court, petitioners reiterate their previous assertions. They insist on the application
of Star Angel Handicraft v. National Labor Relations Commission, et al.19where it was held that
a motion for reduction of bond may be filed in lieu of the bond during the period for appeal. They
aver that Borja Estate v. Ballad,20which underscored the importance of the filing of a cash or
surety bond in the perfection of appeals in labor cases, had not been promulgated yet in 2003
when they filed their appeal. As such, the doctrine in Borja could not be given retroactive effect
for to do so would prejudice and impair petitioners’ right to appeal. Moreover, they point out that
judicial decisions have no retroactive effect.21
The Court denies the petition.
The Court reiterates the settled rule that an appeal from the decision of the Labor Arbiter
involving a monetary award is only deemed perfected upon the posting of a cash or surety bond
within ten (10) days from such decision.22 Article 223 of the Labor Code states:
ART. 223. Appeal.—Decisions, awards or orders of the Labor Arbiter are final and executory
unless appealed to the Commission by any or both parties within ten (10) calendar days from
receipt of such decisions, awards, or orders. …
In case of a judgment involving a monetary award, an appeal by the employer may be perfected
only upon the posting of a cash or surety bond issued by a reputable bonding company duly
accredited by the Commission in the amount equivalent to the monetary award in the judgment
appealed from.
xxx
Contrary to petitioners’ assertion, the appeal bond is not merely procedural but jurisdictional.
Without said bond, the NLRC does not acquire jurisdiction over the appeal.23 Indeed, non-
compliance with such legal requirements is fatal and has the effect of rendering the judgment
final and executory.24 It must be stressed that there is no inherent right to an appeal in a labor
case, as it arises solely from the grant of statute.25
Evidently, the NLRC did not acquire jurisdiction over petitioners’ appeal within the ten (10)-day
reglementary period to perfect the appeal as the appeal bond was filed eight (8) days after the
last day thereof. Thus, the Court cannot ascribe grave abuse of discretion to the NLRC or error
to the Court of Appeals in refusing to take cognizance of petitioners’ belated appeal.
While indeed the Court has relaxed the application of this requirement in cases where the failure
to comply with the requirement was justified or where there was substantial compliance with the
rules,26 the overpowering legislative intent of Article 223 remains to be for a strict application of
the appeal bond requirement as a requisite for the perfection of an appeal and as a burden
imposed on the employer.27 As the Court held in the case of Borja Estate v. Ballad:28
The intention of the lawmakers to make the bond an indispensable requisite for the perfection of
an appeal by the employer is underscored by the provision that an appeal may be perfected
"only upon the posting of a cash or surety bond." The word "only" makes it perfectly clear that
the LAWMAKERS intended the posting of a cash or surety bond by the employer to be
the exclusive means by which an employer’s appeal may be considered completed. The law
however does not require its outright payment, but only the posting of a bond to ensure that the
award will be eventually paid should the appeal fail. What petitioners have to pay is a moderate
and reasonable sum for the premium of such bond.29
Moreover, no exceptional circumstances obtain in the case at bar which would warrant a
relaxation of the bond requirement as a condition for perfecting the appeal. It is only in highly
meritorious cases that this Court opts not to strictly apply the rules and thus prevent a grave
injustice from being done30 and this is not one of those cases.
In addition, petitioners cannot take refuge behind the Court’s ruling in Star Angel. Pertinently,
the Court stated in Computer Innovations Center v. National Labor Relations Commission:31
Moreover, the reference in Star Angel to the distinction between the period to file the appeal and
to perfect the appeal has been pointedly made only once by this Court in Gensoli v. NLRC thus,
it has not acquired the sheen of venerability reserved for repeatedly-cited cases. The distinction,
if any, is not particularly evident or material in the Labor Code; hence, the reluctance of the
Court to adopt such doctrine. Moreover, the present provision in the NLRC Rules of Procedure,
that "the filing of a motion to reduce bond shall not stop the running of the period to perfect
appeal" flatly contradicts the notion expressed in Star Angel that there is a distinction between
filing an appeal and perfecting an appeal.
Ultimately, the disposition of Star Angel was premised on the ruling that a motion for reduction
of the appeal bond necessarily stays the period for perfecting the appeal, and that the employer
cannot be expected to perfect the appeal by posting the proper bond until such time the said
motion for reduction is resolved. The unduly stretched-out distinction between the period to file
an appeal and to perfect an appeal was not material to the resolution of Star Angel, and thus
could properly be considered as obiter dictum.32
Lastly, the Court does not agree that the Borja doctrine should only be applied prospectively. In
the first place, Borjais not a ground-breaking precedent as it is a reiteration, emphatic though, of
long standing jurisprudence.33 It is well to recall too our pronouncement in Senarillos v.
Hermosisima, et al.34 that the judicial interpretation of a statute constitutes part of the law as of
the date it was originally passed, since the Court’s construction merely establishes the
contemporaneous legislative intent that the interpreted law carried into effect. Such judicial
doctrine does not amount to the passage of a new law but consists merely of a construction or
interpretation of a pre-existing one, as is the situation in this case.35
At all events, the decision of the Labor Arbiter appears to be well-founded and petitioners’ ill-
starred appeal untenable.
WHEREFORE, the Petition is DENIED. Costs against petitioners.
SO ORDERED.
Quisumbing,Chairperson Carpio, Carpio-Morales, Velasco, Jr., JJ., concur.
 G.R. No. 98382 May 17, 1993
PHILIPPINE NATIONAL BANK, petitioner,
vs.
THE COURT OF APPEALS and EPIFANIO DE LA CRUZ, respondents.
Santiago, Jr., Vidad, Corpus & Associates for petitioner.
Pedro R. Lazo for spouses-intervenors.
Rosendo G. Tansinsin, Jr. for private respondent.

MELO, J.:
The notices of sale under Section 3 of Act No. 3135, as amended by Act No. 4118, on extra-
judicial foreclosure of real estate mortgage are required to be posted for not less than twenty
days in at least three public places of the municipality or city where the property is situated, and
if such property is worth more than four hundred pesos, such notices shall also be published
once a week for at least three consecutive weeks in a newspaper of general circulation in the
municipality or city.
Respondent court, through Justice Filemon Mendoza with whom Justices Campos, Jr. and
Aldecoa, Jr. concurred, construed the publication of the notices on March 28, April 11 and l2,
1969 as a fatal announcement and reversed the judgment appealed from by declaring
void, inter alia, the auction sale of the foreclosed pieces of realty, the final deed of sale, and the
consolidation of ownership (p. 27, Rollo).
Hence, the petition at bar, premised on the following backdrop lifted from the text of the
challenged decision:
The facts of the case as related by the trial court are, as follows:
This is a verified complaint brought by the plaintiff for the reconveyance to him (and resultant
damages) of two (2) parcels of land mortgaged by him to the defendant Philippine National
Bank (Manila), which the defendant allegedly unlawfully foreclosed. The defendant then
consolidated ownership unto itself, and subsequently sold the parcels to third parties. The
amended Answer of the defendant states on the other hand that the extrajudicial foreclosure,
consolidation of ownership, and subsequent sale to the third parties were all valid, the bank
therefore counterclaims for damages and other equitable remedies.
xxx xxx xxx
From the evidence and exhibits presented by both parties, the Court is of the opinion that the
following facts have been proved: Two lots, located at Bunlo, Bocaue, Bulacan (the first covered
by Torrens Certificate No. 16743 and possessed of an area of approximately 3,109 square
meters: the second covered by Torrens Certificate No. 5787, possessed of an area of around
610 square meters, and upon which stood a residential-commercial building were mortgaged to
the defendant Philippine National Bank. The lots were under the common names of the plaintiff
(Epifanio dela Cruz), his brother (Delfin) and his sister (Maria). The mortgage was made
possible because of the grant by the latter two to the former of a special power of attorney to
mortgage the lots to the defendant. The lots were mortgaged to guarantee the following
promissory notes:
(1) a promissory note for Pl2,000.00, dated September 2, 1958, and payable within 69 days
(date of maturity — Nov. l0, 1958);
(2) a promissory note for P4,000.00, dated September 22, 1958, and payable within 49 days
(date of maturity — Nov. 10, 1958);
(3) a promissory note for P4,000.00, dated June 30, 1.9581 and payable within 120 days (date
of maturity — Nov. 10, 1958) See also Annex C of the complaint itself).
[1 This date of June 30, 1958 is disputed by the plaintiff who claims that the correct date is June
30, 1961, which is the date actually mentioned in the promissory note. It is however difficult to
believe the plaintiff's contention since if it were true and correct, this would mean that nearly
three (3) years elapsed between the second and the third promissory note; that at the time the
third note was executed, the first two had not yet been paid by the plaintiff despite the fact that
the first two were supposed to be payable within 69 and 49 days respectively. This state of
affairs would have necessitated the renewal of said two promissory notes. No such renewal was
proved, nor was the renewal ever alleged. Finally, and this is very significant: the third
mentioned promissory note states that the maturity date is Nov. 10, 1958. Now then, how could
the loan have been contracted on June 30, 1961? It will be observed that in the bank records,
the third mentioned promissory note was really executed on June 30, 1958 (See Exhs. 9 and 9-
A). The Court is therefore inclined to believe that the date "June 30, 1961" was a mere clerical
error and hat the true and correct date is June 1958. However, even assuming that the true and
correct date is June 30, 1961, the fact still remains that the first two promissory notes had been
guaranteed by the mortgage of the two lots, and therefore, it was legal and proper to foreclose
on the lots for failure to pay said two promissory notes.
On September 6, 1961, Atty. Ramon de los Reyes of the bank (PNB) presented under Act No.
3135 a foreclosure petition of the two mortgaged lots before the Sheriff's Office at Malolos,
Bulacan; accordingly, the two lots were sold or auctioned off on October 20, 1961 with the
defendant PNB as the highest bidder for P28,908.46. On March 7, 1963, Sheriff Leopoldo Palad
executed a Final Deed of Sale, in response to a letter-request by the Manager of the PNB
(Malolos Branch). On January 15, 1963 a Certificate of Sale in favor of the defendant was
executed by Sheriff Palad. The final Deed of Sale was registered in the Bulacan Registry of
Property on March 19, 1963. Inasmuch as the plaintiff did not volunteer to buy back from the
PNB the two lots, the PNB sold on June 4, 1970 the same to spouses Conrado de Vera and
Marina de Vera in a "Deed of Conditional Sale". (Decision, pp.3-5; Amended Record on Appeal,
pp. 96-98).
After due consideration of the evidence, the CFI on January 22, 1978 rendered its Decision, the
dispositive portion of which reads:
WHEREFORE, PREMISES CONSIDERED, the instant complaint against the defendant
Philippine National Bank is hereby ordered DISMISSED, with costs against the plaintiff. The
Counterclaim against the plaintiff is likewise DISMISSED, for the Court does not believe that the
complaint had been made in bad faith.
SO ORDERED. (Decision, p. B.; Amended Record on Appeal, p. 100)
Not satisfied with the judgment, plaintiff interposed the present appeal assigning as errors the
following:
I.
THE LOWER COURT ERRED IN HOLDING IN FOOTNOTE I OF ITS DECISION THAT IT IS
THEREFORE INCLINED TO BELIEVE THAT THE DATE "JUNE 30, 1962" WAS A MERE
CLERICAL ERROR AND THAT THE TRUE AND CORRECT DATE IS JUNE 30, 1958. IT
ALSO ERRED IN HOLDING IN THE SAME FOOTNOTE I THAT "HOWEVER, EVEN
ASSUMING THAT THE TRUE AND CORRECT DATE IS JUNE 30, 1961, THE FACT STILL
REMAINS THAT THE FIRST TWO PROMISSORY NOTES HAD BEEN GUARANTEED BY
THE MORTGAGE OF THE TWO LOTS, AND THEREFORE, IT WAS LEGAL AND PROPER
TO FORECLOSE ON THE LOTS FOR FAILURE TO PAY SAID TWO PROMISSORY NOTES".
(page 115, Amended Record on Appeal)
II.
THE LOWER COURT ERRED IN NOT HOLDING THAT THE PETITION FOR
EXTRAJUDICIAL FORECLOSURE WAS PREMATURELY FILED AND IS A MERE SCRAP OF
PAPER BECAUSE IT MERELY FORECLOSED THE ORIGINAL AND NOT THE AMENDED
MORTGAGE.
III.
THE LOWER COURT ERRED IN HOLDING THAT "IT IS CLEAR THAT THE AUCTION SALE
WAS NOT PREMATURE". (page 117, Amended Record on Appeal)
IV.
THE LOWER COURT ERRED IN HOLDING THAT "SUFFICE IT TO STATE THAT ACTUALLY
THE POWER OF ATTORNEY GIVEN TO THE PNB WAS EMBODIED IN THE REAL ESTATE
MORTGAGE (EXB. 10) WHICH WAS REGISTERED IN THE REGISTRY OF PROPERTY OF
BULACAN AND WAS ANNOTATED ON THE TWO TORRENS CERTIFICATES INVOLVED"
(page 118, Amended Record on Appeal).
V.
THE LOWER COURT ERRED IN HOLDING THAT "THE NOTICES REQUIRED UNDER SEC.
3 OF ACT NO. 3135 WERE ALL COMPLIED WITH" AND "THAT THE DAILY RECORD . . . IS
A NEWSPAPER OF GENERAL CIRCULATION (pages 117-118, Amended Record on Appeal).
VI.
THE LOWER COURT ERRED IN NOT DECLARING THE CERTIFICATE OF SALE, FINAL
DEED OF SALE AND AFFIDAVIT OF CONSOLIDATION, NULL AND VOID.
VII.
THE LOWER COURT ERRED IN NOT ORDERING DEFENDANT TO RECONVEY TO
PLAINTIFF THE PARCELS OF LAND COVERED BY T.C.T. NOS. 40712 AND 40713 OF
BULACAN (page 8, Amended Record on Appeal)
VIII.
THE LOWER COURT ERRED IN NOT ORDERING DEFENDANT TO PAY TO PLAINTIFF
REASONABLE AMOUNTS OF MORAL AND EXEMPLARY DAMAGES AND ATTORNEY'S
FEES (page 8. Amended Record on Appeal).
IX.
THE LOWER COURT ERRED IN DISMISSING THE INSTANT COMPLAINT AGAINST THE
PHILIPPINE NATIONAL BANK WITH COSTS AGAINST THE PLAINTIFF. (page 118, Amended
Record on Appeal)." (Brief for Plaintiff-Appellant, pp. 1-4) (pp. 17-21, Rollo)
With reference to the pertinent issue at hand, respondent court opined:
The Notices of Sale of appellant's foreclosed properties were published on March 228, April 11
and April 12, 1969 issues of the newspaper "Daily Record" (Amended Record on Appeal, p.
108). The date March 28, 1969 falls on a Friday while the dates April 11 and 12, 1969 are on a
Friday and Saturday, respectively. Section 3 of Act No. 3135 requires that the notice of auction
sale shall be "published once a week for at least three consecutive weeks". Evidently,
defendant-appellee bank failed to comly with this legal requirement. The Supreme Court has
held that:
The rule is that statutory provisions governing publication of notice of mortgage foreclosure
sales must be strictly complied with, and that even slight deviations therefrom will invalidate the
notice and render the sale at least voidable (Jalandoni vs. Ledesma, 64 Phil. l058. G.R. No.
42589, August 1937 and October 29, 1937). Interpreting Sec. 457 of the Code of Civil
Procedure (reproduced in Sec. 18(c) of Rule 39, Rules of Court and in Sec. 3 of Act No. 3135)
in Campomanes vs. Bartolome and German & Co. (38 Phil. 808, G.R. No. 1309, October 18,
1918), this Court held that if a sheriff sells without notice prescribed by the Code of Civil
Procedure induced thereto by the judgment creditor, and the purchaser at the sale is the
judgment creditor, the sale is absolutely void and no title passes. This is regarded as the settled
doctrine in this jurisdiction whatever the rule may be elsewhere (Boria vs. Addison, 14 Phil. 895,
G.R. No. 18010, June 21, 1922).
. . . It has been held that failure to advertise a mortgage foreclosure sale in compliance with
statutory requirements constitutes a jurisdictional defect invalidating the sale and that a
substantial error or omission in a notice of sale will render the notice insufticient and vitiate the
sale (59 C.J.S. 1314). (Tambunting vs. Court of Appeals, L-48278, November 8, 1988; 167
SCRA 16, 23-24).
In view of the admission of defendant-appellee in its pleading showing that there was no
compliance of the notice prescribed in Section 3 of Act No. 3135, as amended by Act 4118, with
respect to the notice of sale of the foreclosed real properties in this case, we have no choice but
to declare the auction sale as absolutely void in view of the fact that the highest bidder and
purchaser in said auction sale was defendant-appellee bank. Consequently, the Certificate of
Sale, the Final Deed of Sale and Affidavit of Consolidation are likewise of no legal efffect. (pp.
24-25, Rollo)
Before we focus our attention on the subject of whether or not there was valid compliance in
regard to the required publication, we shall briefly discuss the other observations of respondent
court vis-a-vis herein private respondent's ascriptions raised with the appellate court when his
suit for reconveyance was dismissed by the court of origin even as private respondent does not
impugn the remarks of respondent court along this line.
Although respondent court acknowledged that there was an ambiguity on the date of execution
of the third promissory note (June 30, 1961) and the date of maturity thereof (October 28, 1958),
it was nonetheless established that the bank introduced sufficient proof to show that the
discrepancy was a mere clerical error pursuant to Section 7, Rule l30 of the Rules of Court.
Anent the second disputation aired by private respondent, the appellate court observed that
inasmuch as the original as well as the subsequent mortgage were foreclosed only after private
respondent's default, the procedure pursued by herein petitioner in foreclosing the collaterals
was thus appropriate albeit the petition therefor contained only a copy of the original mortgage.
It was only on the aspect of publication of the notices of sale under Act No. 3135, as amended,
and attorney's fees where herein private respondent scored points which eliminated in the
reversal of the trial court's decision. Respondent court was of the impression that herein
petitioner failed to comply with the legal requirement and the sale effected thereafter must be
adjudged invalid following the ruling of this Court in Tambunting vs. Court of Appeals (167
SCRA 16 [1988]); p. 8, Decision, p. 24, Rollo). In view of petitioner's so-called indifference to the
rules set forth under Act No. 3135, as amended, respondent court expressly authorized private
respondent to recover attorney's fees because he was compelled to incur expenses to protect
his interest.
Immediately upon the submission of a supplemental petition, the spouses Conrado and Marina
De Vera filed a petition in intervention claiming that the two parcels of land involved herein were
sold to them on June 4, 1970 by petitioner for which transfer certificates of title were issued in
their favor (p. 40, Rollo). On the other hand, private respondent pressed the idea that the
alleged intervenors have no more interest in the disputed lots in view of the sale effected by
them to Teresa Castillo, Aquilino and Antonio dela Cruz in 1990 (pp. 105-106, Rollo).
On March 9, 1992, the Court resolved to give due course to the petition and required the parties
to submit their respective memoranda (p. 110, Rollo).
Now, in support of the theory on adherence to the conditions spelled in the preliminary portion of
this discourse, the pronouncement of this Court in Bonnevie vs. Court of Appeals (125 SCRA
[1983]; p. 135, Rollo) is sought to be utilized to press the point that the notice need not be
published for three full weeks. According to petitioner, there is no breach of the proviso since
after the first publication on March 28, 1969, the second notice was published on April 11, 1969
(the last day of the second week), while the third publication on April 12, 1969 was announced
on the first day of the third week. Petitioner thus concludes that there was no violation from the
mere happenstance that the third publication was made only a day after the second publication
since it is enough that the second publication be made on any day within the second week and
the third publication, on any day within the third week. Moreover, in its bid to rectify its
admission in judicio, petitioner asseverates that said admission alluded to refers only to the
dates of publications, not that there was non-compliance with the publication requirement.
Private respondent, on the other hand, views the legal question from a different perspective. He
believes that the period between each publication must never be less than seven consecutive
days (p. 4, Memorandum; p. 124, Rollo).
We are not convinced by petitioner's submissions because the disquisition in support thereof
rests on the erroneous impression that the day on which the first publication was made, or on
March 28, 1969, should be excluded pursuant to the third paragraph of Article 17 of the New
Civil Code.
It must be conceded that Article 17 is completely silent as to the definition of what is a "week".
In Concepcion vs. Zandueta (36 O.G. 3139 [1938]; Moreno, Philippine Law Dictionary, Second
Ed., 1972, p. 660), this term was interpreted to mean as a period of time consisting of seven
consecutive days — a definition which dovetails with the ruling in E.M. Derby and Co. vs. City of
Modesto, et al. (38 Pac. Rep. 900 [1984]; 1 Paras, Civil Code of the Philippines Annotated,
Twelfth Ed., 1989, p. 88; 1 Tolentino, Commentaries and Jurisprudence on th Civil Code, 1990,
p. 46). Following the interpretation in Derby as to the publication of an ordinance for "at least
two weeks" in some newspaper that:
. . . here there is no date or event suggesting the exclusion of the first day's publication from the
computation, and the cases above cited take this case out of the rule stated in Section 12, Code
Civ. Proc. which excludes the first day and includes the last;
the publication effected on April 11, 1969 cannot be construed as sufficient advertisement for
the second week because the period for the first week should be reckoned from March 28, 1969
until April 3, 1969 while the second week should be counted from April 4, 1969 until April 10,
1969. It is clear that the announcement on April 11, 1969 was both theoretically and physically
accomplished during the first day of the third week and cannot thus be equated with compliance
in law. Indeed, where the word is used simply as a measure of duration of time and without
reference to the calendar, it means a period of seven consecutive days without regard to the
day of the week on which it begins (1 Tolentino, supra at p. 467 citing Derby).
Certainly, it would have been absurd to exclude March 28, 1969 as reckoning point in line with
the third paragraph of Article 13 of the New Civil Code, for the purpose of counting the first week
of publication as to the last day thereof fall on April 4, 1969 because this will have the effect of
extending the first week by another day. This incongruous repercussion could not have been the
unwritten intention of the lawmakers when Act No. 3135 was enacted. Verily, inclusion of the
first day of publication is in keeping with the computation in Bonnevie vs. Court of Appeals (125
SCRA 122 [1983]) where this Court had occasion to pronounce, through Justice Guerrero, that
the publication of notice on June 30, July 7 and July 14, 1968 satisfied the publication
requirement under Act No. 3135. Respondent court cannot, therefore, be faulted for holding that
there was no compliance with the strict requirements of publication independently of the so-
called admission in judicio.
WHEREFORE, the petitions for certiorari and intervention are hereby dismissed and the
decision of the Court of Appeals dated April 17, 1991 is hereby affirmed in toto.
SO ORDERED.
Feliciano, Bidin, Davide and Romero, JJ., concur.
 G.R. No. 109902 August 2, 1994
ALU-TUCP, Representing Members: ALAN BARINQUE, with 13 others, namely: ENGR.
ALAN G. BARINQUE, ENGR. DARRELL LEE ELTAGONDE, EDUARD H. FOOKSON, JR.,
ROMEO R. SARONA, RUSSELL GACUS, JERRY BONTILAO, EUSEBIO MARIN, JR.,
LEONIDO ECHAVEZ, BONIFACIO MEJOS, EDGAR S. BONTUYAN, JOSE G. GARGUENA,
JR., OSIAS B. DANDASAN, and GERRY I. FETALVERO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and NATIONAL STEEL CORPORATION
(NSC), respondents.
Leonard U. Sawal for petitioners.
Saturnino Mejorada for private respondent.

FELICIANO, J.:
In this Petition for Certiorari, petitioners assail the Resolution of the National Labor Relations
Commission ("NLRC") dated 8 January 1993 which declared petitioners to be project
employees of private respondent National Steel Corporation ("NSC"), and the NLRC's
subsequent Resolution of 15 February 1993, denying petitioners' motion for reconsideration.
Petitioners plead that they had been employed by respondent NSC in connection with its Five
Year Expansion Program (FAYEP I & II) 1 for varying lengths of time when they were separated
from NSC's service:
Employee Date Nature of Separated
Employed Employment
1. Alan Barinque 5-14-82 Engineer 1 8-31-91
2. Jerry Bontilao 8-05-85 Engineer 2 6-30-92
3. Edgar Bontuyan 11-03-82 Chairman to present
4. Osias Dandasan 9-21-82 Utilityman 1991
5. Leonido Echavez 6-16-82 Eng. Assistant 6-30-92
6. Darrell Eltagonde 5-20-85 Engineer 1 8-31-91
7. Gerry Fetalvero 4-08-85 Mat. Expediter regularized
8. Eduard Fookson 9-20-84 Eng. Assistant 8-31-91
9. Russell Gacus 1-30-85 Engineer 1 6-30-92
10. Jose Garguena 3-02-81 Warehouseman to present
11. Eusebio Mejos 11-17-82 Survey Aide 8-31-91
12. Bonifacio Mejos 11-17-82 Surv. Party Head 1992
13. Romeo Sarona 2-26-83 Machine Operator 8-31-912
On 5 July 1990, petitioners filed separate complaints for unfair labor practice, regularization and
monetary benefits with the NLRC, Sub-Regional Arbitration Branch XII, Iligan City.
The complaints were consolidated and after hearing, the Labor Arbiter in a Decision dated 7
June 1991, declared petitioners "regular project employees who shall continue their
employment as such for as long as such [project] activity exists," but entitled to the salary of
a regular employee pursuant to the provisions in the collective bargaining agreement. It also
ordered payment of salary differentials. 3
Both parties appealed to the NLRC from that decision. Petitioners argued that they were
regular, not project, employees. Private respondent, on the other hand, claimed that petitioners
are project employees as they were employed to undertake a specific project — NSC's Five
Year Expansion Program (FAYEP I & II).
The NLRC in its questioned resolutions modified the Labor Arbiter's decision. It affirmed the
Labor Arbiter's holding that petitioners were project employees since they were hired to perform
work in a specific undertaking — the Five Years Expansion Program, the completion of which
had been determined at the time of their engagement and which operation was not directly
related to the business of steel manufacturing. The NLRC, however, set aside the award to
petitioners of the same benefits enjoyed by regular employees for lack of legal and factual
basis.
Deliberating on the present Petition for Certiorari, the Court considers that petitioners have
failed to show any grave abuse of discretion or any act without or in excess of jurisdiction on the
part of the NLRC in rendering its questioned resolutions of 8 January 1993 and 15 February
1993.
The law on the matter is Article 280 of the Labor Code which reads in full:
Art. 280. Regular and Casual Employment — The provisions of the written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, and employment
shall be deemed to be regular where the employee has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer, except
where the employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee or
where the work or services to be performed is seasonal in nature and the employment is for the
duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph:
Provided, That, any employee who has rendered at least one year service, whether such
service is continuous or broken, shall be considered a regular employee with respect to the
activity in which he is employed and his employment shall continue while such actually exists.
(Emphasis supplied)
Petitioners argue that they are "regular" employees of NSC because: (i) their jobs are
"necessary, desirable and work-related to private respondent's main business, steel-making";
and (ii) they have rendered service for six (6) or more years to private respondent NSC. 4
The basic issue is thus whether or not petitioners are properly characterized as "project
employees" rather than "regular employees" of NSC. This issue relates, of course, to an
important consequence: the services of project employees are co-terminous with the project and
may be terminated upon the end or completion of the project for which they were
hired. 5 Regular employees, in contract, are legally entitled to remain in the service of their
employer until that service is terminated by one or another of the recognized modes of
termination of service under the Labor Code. 6
It is evidently important to become clear about the meaning and scope of the term "project" in
the present context. The "project" for the carrying out of which "project employees" are hired
would ordinarily have some relationship to the usual business of the employer. Exceptionally,
the "project" undertaking might not have an ordinary or normal relationship to the usual
business of the employer. In this latter case, the determination of the scope and parameeters of
the "project" becomes fairly easy. It is unusual (but still conceivable) for a company to undertake
a project which has absolutely no relationship to the usual business of the company; thus, for
instance, it would be an unusual steel-making company which would undertake the breeding
and production of fish or the cultivation of vegetables. From the viewpoint, however, of the legal
characterization problem here presented to the Court, there should be no difficulty in
designating the employees who are retained or hired for the purpose of undertaking fish culture
or the production of vegetables as "project employees," as distinguished from ordinary or
"regular employees," so long as the duration and scope of the project were determined or
specified at the time of engagement of the "project employees." 7 For, as is evident from the
provisions of Article 280 of the Labor Code, quoted earlier, the principal test for determining
whether particular employees are properly characterized as "project employees" as
distinguished from "regular employees," is whether or not the "project employees" were
assigned to carry out a "specific project or undertaking," the duration (and scope) of which were
specified at the time the employees were engaged for that project.
In the realm of business and industry, we note that "project" could refer to one or the other of at
least two (2) distinguishable types of activities. Firstly, a project could refer to a particular job or
undertaking that is within the regular or usual business of the employer company, but which is
distinct and separate, and identifiable as such, from the other undertakings of the company.
Such job or undertaking begins and ends at determined or determinable times. The typical
example of this first type of project is a particular construction job or project of a construction
company. A construction company ordinarily carries out two or more discrete identifiable
construction projects: e.g., a twenty-five- storey hotel in Makati; a residential condominium
building in Baguio City; and a domestic air terminal in Iloilo City. Employees who are hired for
the carrying out of one of these separate projects, the scope and duration of which has been
determined and made known to the employees at the time of employment, are properly treated
as "project employees," and their services may be lawfully terminated at completion of the
project.
The term "project" could also refer to, secondly, a particular job or undertaking that is not within
the regular business of the corporation. Such a job or undertaking must also be identifiably
separate and distinct from the ordinary or regular business operations of the employer. The job
or undertaking also begins and ends at determined or determinable times. The case at bar
presents what appears to our mind as a typical example of this kind of "project."
NSC undertook the ambitious Five Year Expansion Program I and II with the ultimate end in
view of expanding the volume and increasing the kinds of products that it may offer for sale to
the public. The Five Year Expansion Program had a number of component projects: e.g., (a) the
setting up of a "Cold Rolling Mill Expansion Project"; (b) the establishment of a "Billet Steel-
Making Plant" (BSP); (c) the acquisition and installation of a "Five Stand TDM"; and (d) the
"Cold Mill Peripherals Project." 8 Instead of contracting out to an outside or independent
contractor the tasks of constructing the buildings with related civil and electrical works that
would house the new machinery and equipment, the installation of the newly acquired mill or
plant machinery and equipment and the commissioning of such machinery and equipment, NSC
opted to execute and carry out its Five Yeear Expansion Projects "in house," as it were, by
administration. The carrying out of the Five Year Expansion Program (or more precisely, each of
its component projects) constitutes a distinct undertaking identifiable from the ordinary business
and activity of NSC. Each component project, of course, begins and ends at specified times,
which had already been determined by the time petitioners were engaged. We also note that
NSC did the work here involved — the construction of buildings and civil and electrical works,
installation of machinery and equipment and the commissioning of such machinery — only for
itself. Private respondent NSC was not in the business of constructing buildings and installing
plant machinery for the general business community, i.e., for unrelated, third party, corporations.
NSC did not hold itself out to the public as a construction company or as an engineering
corporation.
Which ever type of project employment is found in a particular case, a common basic requisite
is that the designation of named employees as "project employees" and their assignment to a
specific project, are effected and implemented in good faith, and not merely as a means of
evading otherwise applicable requirements of labor laws.
Thus, the particular component projects embraced in the Five Year Expansion Program, to
which petitioners were assigned, were distinguishable from the regular or ordinary business of
NSC which, of course, is the production or making and marketing of steel products. During the
time petitioners rendered services to NSC, their work was limited to one or another of the
specific component projects which made up the FAYEP I and II. There is nothing in the record
to show that petitioners were hired for, or in fact assigned to, other purposes, e.g., for operating
or maintaining the old, or previously installed and commissioned, steel-making machinery and
equipment, or for selling the finished steel products.
We, therefore, agree with the basic finding of the NLRC (and the Labor Arbiter) that the
petitioners were indeed "project employees:"
It is well established by the facts and evidence on record that herein 13 complainants were hired
and engaged for specific activities or undertaking the period of which has been determined at
time of hiring or engagement. It is of public knowledge and which this Commission can safely
take judicial notice that the expansion program (FAYEP) of respondent NSC consist of various
phases [of] project components which are being executed or implemented independently or
simultaneously from each other . . .
In other words, the employment of each "project worker" is dependent and co-terminous with
the completion or termination of the specific activity or undertaking [for which] he was hired
which has been pre-determined at the time of engagement. Since, there is no showing that they
(13 complainants) were engaged to perform work-related activities to the business of
respondent which is steel-making, there is no logical and legal sense of applying to them the
proviso under the second paragraph of Article 280 of the Labor Code, as amended.
xxx xxx xxx
The present case therefore strictly falls under the definition of "project employees" on paragraph
one of Article 280 of the Labor Code, as amended. Moreover, it has been held that the length of
service of a project employee is not the controlling test of employment tenure but whether or not
"the employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee".
(See Hilario Rada v. NLRC, G.R. No. 96078, January 9, 1992; and Sandoval Shipping, Inc. v.
NLRC, 136 SCRA 674 (1985). 9
Petitioners next claim that their service to NSC of more than six (6) years should qualify them as
regular employees. We believe this claim is without legal basis. The simple fact that the
employment of petitioners as project employees had gone beyond one (1) year, does not
detract from, or legally dissolve, their status as project employees. 10 The second paragraph of
Article 280 of the Labor Code, quoted above, providing that an employee who has served for at
least one (1) year, shall be considered a regular employee, relates to casual employees, not to
project employees.
In the case of Mercado, Sr. vs. National Labor Relations Commission, 11 this Court ruled that the
proviso in the second paragraph of Article 280 relates only to casual employees and is not
applicable to those who fall within the definition of said Article's first paragraph, i.e., project
employees. The familiar grammatical rule is that a proviso is to be construed with reference to
the immediately preceding part of the provision to which it is attached, and not to other sections
thereof, unless the clear legislative intent is to restrict or qualify not only the phrase immediately
preceding the proviso but also earlier provisions of the statute or even the statute itself as a
whole. No such intent is observable in Article 280 of the Labor Code, which has been quoted
earlier.
ACCORDINGLY, in view of the foregoing, the Petition for Certiorari is hereby DISMISSED for
lack of merit. The Resolutions of the NLRC dated 8 January 1993 and 15 February 1993 are
hereby AFFIRMED. No pronouncement as to costs.
SO ORDERED.
Narvasa, C.J., Cruz, Padilla, Bidin, Regalado, Davide, Jr., Romero, Melo, Quiason, Puno, Vitug,
Kapunan and Mendoza, JJ., concur.
Bellosillo, J., is on leave.

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.
Cesar C. Cruz & Partners for petitioner.
Zosimo Morillo for respondent Rayos del Sol.
Banzuela, Flores, Miralles, Raneses, Sy & Associates for private 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.
xxx xxx xxx
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.
xxx xxx xxx
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 Execution2pursuant 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
198912 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.1âwphi1 Laws are presumed constitutional.24 To justify nullification of a law,
there must be a clear and 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.
Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco,
Padilla, Bidin, Sarmiento, Griño-Aquino, Medialdea and Regalado, JJ., concur.

Lim vs. Pacquing [G.R. No. 115044. January 27, 1995] NO FULL TEXT
G.R. No. 149276. September 27, 2002
JOVENCIO LIM and TERESITA LIM, Petitioners, v. THE PEOPLE OF THE PHILIPPINES,
THE REGIONAL TRIAL COURT OF QUEZON CITY, BRANCH 217, THE CITY PROSECUTOR
OF QUEZON CITY, AND WILSON CHAM, Respondents.
DECISION
CORONA, J.:
The constitutionality of PD 818, a decree which amended Article 315 of the Revised Penal Code
by increasing the penalties for estafa committed by means of bouncing checks, is being
challenged in this petition for certiorari, for being violative of the due process clause, the right to
bail and the provision against cruel, degrading or inhuman punishment enshrined under the
Constitution.
The antecedents of this case, as gathered from the parties pleadings and documentary proofs,
follow.
In December 1991, petitioner spouses issued to private respondent two postdated checks,
namely, Metrobank check no. 464728 dated January 15, 1992 in the amount of P365,750 and
Metrobank check no. 464743 dated January 22, 1992 in the amount of P429,000. Check no.
464728 was dishonored upon presentment for having been drawn against insufficient funds
while check no. 464743 was not presented for payment upon request of petitioners who
promised to replace the dishonored check.
When petitioners reneged on their promise to cover the amount of check no. 464728, the private
respondent filed a complaint-affidavit before the Office of the City Prosecutor of Quezon City
charging petitioner spouses with the crime of estafa under Article 315, par. 2 (d) of the Revised
Penal Code, as amended by PD 818.
On February 16, 2001, the City Prosecutor issued a resolution finding probable cause against
petitioners and recommending the filing of an information for estafa with no bail recommended.
On the same day, an information for the crime of estafa was filed with Branch 217 of the
Regional Trial Court of Quezon City against petitioners. The case was docketed as Criminal
Case No. Q-01-101574. Thereafter, the trial court issued a warrant for the arrest of herein
petitioners, thus:
It appearing on the face of the information and from supporting affidavit of the complaining
witness and its annexes that probable cause exists, that the crime charged was committed and
accused is probably guilty thereof, let a warrant for the arrest of the accused be issued.
No Bail Recommended.
SO ORDERED.1cräläwvirtualibräry
On July 18, 2001, petitioners filed an Urgent Motion to Quash Information and Warrant of Arrest
which was denied by the trial court. Likewise, petitioners motion for bail filed on July 24, 2001
was denied by the trial court on the same day. Petitioner Jovencio Lim was arrested by virtue of
the warrant of arrest issued by the trial court and was detained at the Quezon City Jail.
However, petitioner Teresita Lim remained at large.
On August 22, 2001, petitioners filed the instant petition for certiorari imputing grave abuse of
discretion on the part of the lower court and the Office of the City Prosecutor of Quezon City,
arguing that PD 818 violates the constitutional provisions on due process, bail and imposition of
cruel, degrading or inhuman punishment.
In a resolution dated February 26, 2002, this Court granted the petition of Jovencio Lim to post
bail pursuant to Department of Justice Circular No. 74 dated November 6, 2001 which amended
the 2000 Bail Bond Guide involving estafa under Article 315, par. 2 (d), and qualified theft. Said
Circular specifically provides as follows:
xxx xxx xxx
3) Where the amount of fraud is P32,000.00 or over in which the imposable penalty is reclusion
temporal to reclusion perpetua, bail shall be based on reclusion temporal maximum, pursuant to
Par. 2 (a) of the 2000 Bail Bond Guide, multiplied by P2,000.00, plus an additional of P2,000.00
for every P10,000.00 in excess of P22,000.00; Provided, however, that the total amount of bail
shall not exceed P60,000.00.
In view of the aforementioned resolution, the matter concerning bail shall no longer be
discussed. Thus, this decision will focus on whether or not PD 818 violates Sections 1 and 19 of
Article III of the Constitution, which respectively provide:
Section 1. No person shall be deprived of life, liberty or property without due process of law, nor
shall any person be denied the equal protection of the laws.
xxx
Section 19 (1) Excessive fines shall not be imposed, nor cruel, degrading or inhuman
punishment inflicted. x x x.
We shall deal first with the issue of whether PD 818 was enacted in contravention of Section 19
of Article III of the Constitution. In this regard, the impugned provision of PD 818 reads as
follows:
SECTION 1. Any person who shall defraud another by means of false pretenses or fraudulent
acts as defined in paragraph 2(d) of Article 315 of the Revised Penal Code, as amended by
Republic Act No. 4885, shall be punished by:
1st. The penalty of reclusion temporal if the amount of the fraud is over 12,000 pesos but does
not exceed 22,000 pesos, and if such amount exceeds the later sum, the penalty provided in
this paragraph shall be imposed in its maximum period, adding one year for each additional
10,000 pesos but the total penalty which may be imposed shall in no case exceed thirty years.
In such cases, and in connection with the accessory penalties which may be imposed under the
Revised Penal Code, the penalty shall be termed reclusion perpetua;
2nd. The penalty of prision mayor in its maximum period, if the amount of the fraud is over 6,000
pesos but does not exceed 12,000 pesos.
3rd. The penalty of prision mayor in its medium period, if such amount is over 200 pesos but
does not exceed 6,000 pesos; and
4th. By prision mayor in its minimum period, if such amount does not exceed 200 pesos.
Petitioners contend that, inasmuch as the amount of the subject check is P365,750, they can be
penalized with reclusion perpetua or 30 years of imprisonment. This penalty, according to
petitioners, is too severe and disproportionate to the crime they committed and infringes on the
express mandate of Article III, Section 19 of the Constitution which prohibits the infliction of
cruel, degrading and inhuman punishment.
Settled is the rule that a punishment authorized by statute is not cruel, degrading or
disproportionate to the nature of the offense unless it is flagrantly and plainly oppressive and
wholly disproportionate to the nature of the offense as to shock the moral sense of the
community. It takes more than merely being harsh, excessive, out of proportion or severe for a
penalty to be obnoxious to the Constitution.2 Based on this principle, the Court has consistently
overruled contentions of the defense that the penalty of fine or imprisonment authorized by the
statute involved is cruel and degrading.
In People vs. Tongko,3 this Court held that the prohibition against cruel and unusual punishment
is generally aimed at the form or character of the punishment rather than its severity in respect
of its duration or amount, and applies to punishments which never existed in America or which
public sentiment regards as cruel or obsolete. This refers, for instance, to those inflicted at the
whipping post or in the pillory, to burning at the stake, breaking on the wheel, disemboweling
and the like. The fact that the penalty is severe provides insufficient basis to declare a law
unconstitutional and does not, by that circumstance alone, make it cruel and inhuman.
Petitioners also argue that while PD 818 increased the imposable penalties for estafa committed
under Article 315, par. 2 (d) of the Revised Penal Code, it did not increase the amounts
corresponding to the said new penalties. Thus, the original amounts provided for in the Revised
Penal Code have remained the same notwithstanding that they have become negligible and
insignificant compared to the present value of the peso.
This argument is without merit. The primary purpose of PD 818 is emphatically and categorically
stated in the following:
WHEREAS, reports received of late indicate an upsurge of estafa (swindling) cases committed
by means of bouncing checks;
WHEREAS, if not checked at once, these criminal acts would erode the peoples confidence in
the use of negotiable instruments as a medium of commercial transaction and consequently
result in the retardation of trade and commerce and the undermining of the banking system of
the country;
WHEREAS, it is vitally necessary to arrest and curb the rise in this kind of estafa cases by
increasing the existing penalties provided therefor.
Clearly, the increase in the penalty, far from being cruel and degrading, was motivated by a
laudable purpose, namely, to effectuate the repression of an evil that undermines the countrys
commercial and economic growth, and to serve as a necessary precaution to deter people from
issuing bouncing checks. The fact that PD 818 did not increase the amounts corresponding to
the new penalties only proves that the amount is immaterial and inconsequential. What the law
sought to avert was the proliferation of estafa cases committed by means of bouncing checks.
Taking into account the salutary purpose for which said law was decreed, we conclude that PD
818 does not violate Section 19 of Article III of the Constitution.
Moreover, when a law is questioned before the Court, the presumption is in favor of its
constitutionality. To justify its nullification, there must be a clear and unmistakable breach of the
Constitution, not a doubtful and argumentative one.4 The burden of proving the invalidity of a
law rests on those who challenge it. In this case, petitioners failed to present clear and
convincing proof to defeat the presumption of constitutionality of PD 818.
With respect to the issue of whether PD 818 infringes on Section 1 of Article III of the
Constitution, petitioners claim that PD 818 is violative of the due process clause of the
Constitution as it was not published in the Official Gazette. This claim is incorrect and must be
rejected. Publication, being an indispensable part of due process, is imperative to the validity of
laws, presidential decrees and executive orders.5 PD 818 was published in the Official Gazette
on December 1, 1975.6cräläwvirtualibräry
With the foregoing considerations in mind, this Court upholds the constitutionality of PD 818.
WHEREFORE, the petition is hereby DISMISSED.
SO ORDERED.
Davide, Jr., C.J., Bellosillo, Vitug, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-
Gutierrez, Carpio, Austria-Martinez, Morales, and Callejo, Sr., JJ., concur.
Puno, J., no part due to relation to counsel.
Mendoza, J., on leave.