G.R. No.

127116 April 8, 1997

ALEX L. DAVID, in his own behalf as Barangay Chairman of Barangay 77, Zone 7, Kalookan
City and as President of the LIGA NG MGA BARANGAY SA PILIPINAS, petitioner,
vs.
COMMISSION ON ELECTIONS, Department of Interior and Local Government, and THE
HONORABLE SECRETARY, Department of Budget and Management, respondents.

G.R. No. 128039 April 8, 1997

LIGA NG MGA BARANGAY QUEZON CITY CHAPTER, Represented by BONIFACIO M.

RILLON, petitioner,
vs.
COMMISSION ON ELECTIONS and DEPARTMENT OF BUDGET AND
MANAGEMENT, respondents.

PANGANIBAN, J.:

The two petitions before us raise a common question: How long is the term of office of barangay
chairmen and other barangay officials who were elected to their respective offices on the second
Monday of May 1994? Is it three years, as provided by RA 7160 (the Local Government Code) or
five years, as contained in RA 6679? Contending that their term is five years, petitioners ask this
Court to order the cancellation of the scheduled barangay election this coming May 12, 1997 and to
reset it to the second Monday of May, 1999.

The Antecedents

G.R. No. 127116

In his capacity as barangay chairman of Barangay 77, Zone 7, Kalookan City and as president of the
Liga ng mga Barangay sa Pilipinas, Petitioner Alex L. David filed on December 2, 1996 a petition for
prohibition docketed in this Court as G.R. No. 127116, under Rule 65 of the Rules of Court, to
prohibit the holding of the barangay election scheduled on the second Monday of May 1997. On
January 14, 1997, the Court resolved to require the respondents to comment on the petition within a
non-extendible period of fifteen days ending on January 29, 1997.

On January 29, 1997, the Solicitor General filed his four-page Comment siding with petitioner and
praying that "the election scheduled on May 12, 1997 be held in abeyance." Respondent
Commission on Elections filed a separate Comment, dated February 1, 1997 opposing the petition.
On February 11, 1997, the Court issued a Resolution giving due course to the petition and requiring
the parties to file simultaneous memoranda within a non-extendible period of twenty days from
notice. It also requested former Senator Aquilino Q. Pimentel, Jr.1 to act as amicus curiae and to file
a memorandum also within a non-extendible period of twenty days. It noted but did not grant
petitioner's Urgent Motion for Issuance of Temporary Restraining Order and/or Writ of Preliminary
Injunction dated January 31, 1997 (as well as his Urgent Ex-Parte Second Motion to the same effect,
dated March 6, 1997). Accordingly, the parties filed their respective memoranda. The Petition for
Leave to Intervene filed on March 17, 1997 by Punong Barangay Rodson F. Mayor was denied as it
would just unduly delay the resolution of the case, his interest like those of all other barangay
officials being already adequately represented by Petitioner David who filed this petition as
"president of the Liga ng mga Barangay sa Pilipinas."

G.R. No. 128039

On February 20, 1997, Petitioner Liga ng mga Barangay Quezon City Chapter represented by its
president Bonifacio M. Rillon filed a petition, docketed as G.R. No. 128039, "to seek a judicial review
by certiorari to declare as unconstitutional:

1. Section 43(c) of R.A. 7160 which reads as follows:

(c) The term of office of barangay officials and members of the sangguniang
kabataan shall be for three (3) years, which shall begin after the regular election of
barangay officials on the second Monday of May 1994.

2. COMELEC Resolution Nos. 2880 and 2887 fixing the date of the holding of the
barangay elections on May 12, 1997 and other activities related thereto;

3. The budgetary appropriation of P400 million contained in Republic Act No. 8250
otherwise known as the General Appropriations Act of 1997 intended to defray the
costs and expenses in holding the 1997 barangay elections:2

Comelec Resolution 2880,3 promulgated on December 27, 1996 and referred to above, adopted a
"Calendar of Activities and List and Periods of Certain Prohibited Acts for the May 12, 1997
Barangay Elections." On the other hand, Comelec Resolution 2887 promulgated on February 5,
1997 moved certain dates fixed in Resolution 2880.4

Acting on the petition, the Court on February 25, 1997 required respondents to submit their comment
thereon within a non-extendible period of ten days ending on March 7, 1997. The Court further
resolved to consolidate the two cases inasmuch as they raised basically the same issue.
Respondent Commission filed its Comment on March 6, 19975 and the Solicitor General, in
representation of the other respondent, filed his on March 6, 1997. Petitioner's Urgent Omnibus
Motion for oral argument and temporary restraining order was noted but not granted. The petition
was deemed submitted for resolution by the Court without need of memoranda.

The Issues

Both petitions though worded differently raise the same ultimate issue: How long is the term of office
of barangay officials?

Petitioners6 contend that under Sec. 2 of Republic Act No. 6653, approved on May 6, 1988, "(t)he
term of office of barangay officials shall be for five (5) years . . ." This is reiterated in Republic Act
No. 6679, approved on November 4, 1988, which reset the barangay elections from "the second
Monday of November 1988" to March 28, 1989 and provided in Sec. 1 thereof that such five-year
term shall begin on the "first day of May 1989 and ending on the thirty-first day of May 1994."
Petitioners further aver7 that although Sec. 43 of RA 7160 reduced the term of office of all local
elective officials to three years, such reduction does not apply to barangay officials because (1) RA
6679 is a special law applicable only to barangays while RA 7160 is a general law which applies to
all other local government units; (2) RA 7160 does not expressly or impliedly repeal RA 6679 insofar
as the term of barangay officials is concerned; (3) while Sec. 8 of Article X of the 1987 constitution
fixes the term of elective local officials at three years, the same provision states that the term of
barangay officials "shall be determined by law"; and (4) thus, it follows that the constitutional
intention is to grant barangay officials any term, except three years; otherwise, "there would be no
rhyme or reason for the framers of the Constitution to except barangay officials from the three year
term found in Sec. 8 (of) Article X of the Constitution." Petitioners conclude (1) that the Commission
on Elections committed grave abuse of discretion when it promulgated Resolution Nos. 2880 and
2887 because it "substituted its own will for that of the legislative and usurped the judicial function . .
. by interpreting the conflicting provisions of Sec. 1 of RA 6679 and Sec. 43 (c) of RA 7160; and (2)
that the appropriation of P400 million in the General Appropriation Act of 1997 (RA 8250) to be used
in the conduct of the barangay elections on May 12, 1997 is itself unconstitutional and a waste of
public funds.

The Solicitor General agrees with petitioners, arguing that RA 6679 was not repealed by RA 7160
and thus "he believes that the holding of the barangay elections (o)n the second Monday of May
1997 is without sufficient legal basis."

Respondent Commission on Elections, through Chairman Bernardo P. Pardo, defends its assailed
Resolutions and maintains that the repealing clause of RA 7160 includes "all laws, whether general
or special, inconsistent, with the provisions of the Local Government Code," citing this Court's dictum
in Paras vs. Comelec8 that "the next regular election involving the barangay office is barely seven (7)
months away, the same having been scheduled in May 1997." Furthermore, RA 8250 (the General
Appropriations Act for 1997) and RA 8189 (providing for a general registration of voters) both
"indicate that Congress considered that the barangay elections shall take place in May, 1997, as
provided for in RA 7160, Sec. 43 (c)."9 Besides, petitioners cannot claim a term of more than three
years since they were elected under the aegis of the Local Government Code of 1991 which
prescribes a term of only three years. Finally, Respondent Comelec denies the charge of grave
abuse of discretion stating that the "question presented . . . is a purely legal one involving no
exercise of an act without or in excess of jurisdiction or with grave abuse of discretion." 10

As amicus curiae, former Senator Aquilino Q. Pimentel, Jr. urges the Court to deny the petitions
because (1) the Local Autonomy Code repealed both RA 6679 and 6653 "not only by implication but
by design as well"; (2) the legislative intent is to shorten the term of barangay officials to three years;
(3) the barangay officials should not have a term longer than that of their administrative superiors,
the city and municipal mayors; and (4) barangay officials are estopped from contesting the
applicability of the three-year term provided by the Local Government Code as they were elected
under the provisions of said Code.

From the foregoing discussions of the parties, the Court believes that the issues can be condensed
into; three, as follows:

1. Which law governs the term of office of barangay official: RA 7160 or RA 6679?

2. Is RA 7160 insofar as it shortened such term to only three years constitutional?

3. Are petitioners estopped from claiming a term other than that provided under RA
7160?.

The Court's Ruling

The petitions are devoid of merit.

Brief Historical Background

of Barangay Elections

For a clear understanding of the issues, it is necessary to delve briefly into the history of barangay
elections.
An a unit of government, the barangay antedated the Spanish conquest of the Philippines The word
"barangay" is derived from the Malay "balangay," a boat which transported them (the Malays) to
these shores. 11 Quoting from Juan de Plasencia, a Franciscan missionary in 1577, Historian
Conrado Benitez 12 wrote that the barangay was ruled by a dato who exercised absolute powers of
government. While the Spaniards kept the barangay as the basic structure of government, they
stripped the dato or rajah, of his powers. 13 Instead, power was centralized nationally in the governor
general and locally in the encomiendero and later, in the alcalde mayor and the gobernadorcillo.
The dato or rajah was much later renamed cabeza de barangay, who was elected by the local
citizens possessing property. The position degenerated from a title of honor to that of a "mere
government employee. Only the poor who needed a salary, no matter how low, accepted the post." 14

After the Americans colonized the Philippines, the barangays became known as "barrios." 15 For
some time, the laws governing barrio governments were found in the Revised Administrative Code
of 1916 and later in the Revised Administrative Code of 1917. 16 Barrios were granted autonomy by
the original Barrio Charter, RA 2370, and formally recognized as quasi-municipal corporations 17 by
the Revised Barrio Charter, RA 3590. During the martial law regime, barrios were "declared" or
renamed "barangays" — a reversion really to their pre-Spanish names — by PD. No. 86 and PD No.
557. Their basic organization and functions under RA 3590, which was expressly "adopted as the
Barangay Charter, were retained. However, the titles of the officials were changed to "barangay
captain," "barangay councilman," "barangay secretary" and "barangay treasurer."

Pursuant to Sec. 6 of Batas Pambansa Big. 222, 18 "a Punong Barangay (Barangay Captain) and six
Kagawads ng Sangguniang Barangay (Barangay Councilmen), who shall constitute the presiding
officer and members of the Sangguniang Barangay (Barangay Council) respectively" were first
elected on May 17, 1982. They had a term of six years which began on June 7, 1982.

The Local Government Code of 1983 19 also fixed the term of office of local elective officials at six
years. 20 Under this Code, the chief officials of the barangay were the punong barangay, six elective
sangguniang barangay members, the kabataang barangay chairman, a barangay secretary and a
barangay treasurer. 21 B.P. Blg. 881, the Omnibus Election Code, 22 reiterated that barangay officials
"shall hold office, for six years," and stated that their election was to be held "on the second Monday
of May nineteen hundred and eighty eight and on the same day every six years thereafter." 23

This election scheduled by B.P. Blg. 881 on the second Monday of May 1988 was reset to "the
second Monday of November 1988 and every five years thereafter 24 by RA 6653. Under this law, the
term of office of the barangay officials was cut to five years 25 and the punong barangay was to be
chosen from among themselves by seven kagawads, who in turn were to be elected at large by the
barangay electorate. 26

But the election date set by RA 6653 on the second Monday of November 1988 was again
"postponed and reset to March 28, 1989" by RA 6679, 27 and the term of office of barangay officials
was to begin on May 1, 1989 and to end on May 31, 1994. RA 6679 further provided that "there shall
be held a regular election of barangay officials on the second Monday of May 1994 and on the same
day every five (5) years thereafter Their term shall be for five years . . . " 28 Significantly, the manner
of election of the punong barangay was changed. Sec. 5 of said law ordained that while the seven
kagawads were to be elected by the registered voters of the barangay, "(t)he candidate who obtains
the highest number of votes shall be the punong barangay and in the event of a tie, there shall be a
drawing of lots under the supervision of the Commission on Elections."

Under the Local Government Code of 1991, RA 7160, 29 several provisions concerning barangay
official were introduced:
 (1) The term of office was reduced to three years, as follows:

Sec. 43. Term of Office. —

xxx xxx xxx

(c) The term of office of barangay officials and members of the sangguniang
kabataan shall be for three (3) years, which shall begin after the regular election of
barangay officials on the second Monday of May, 1994 (Emphasis supplied.)

(2) The composition of the Sangguniang Barangay and the manner of electing its officials were
altered, inter alia, the barangay chairman was to be elected directly by the electorate, as follows:

Sec. 387. Chief Officials and Offices. — (a) There shall be in each barangay a
punong barangay, seven (7) sanggunian barangay members, the sanggunian
kabataan chairman, a barangay secretary and a barangay treasurer.

xxx xxx xxx

Sec. 390. Composition. — The Sangguniang barangay, the legislative body of the
barangay, shall be composed of the punong barangay as presiding officer, and the
seven (7) regular sangguniang barangay members elected at large and the
sangguniang kabataan chairman as members.

Sec. 41. Manner of Election. — (a) The . . . punong barangay shall be elected at
large . . . by the qualified voters in the barangay. (Emphasis supplied.)

Pursuant to the foregoing mandates of the Local Autonomy Code, the qualified barangay
voters actually voted for one punong barangay and seven (7) kagawads during the barangay
elections held on May 9, 1994. In other words, the punong barangay was elected directly and
separately by the electorate, and not by the seven (7) kagawads from among themselves.

The First Issue: Clear Legislative Intent

and Design to Limit Term to Three Years

In light of the foregoing brief historical background, the intent and design of the legislature to limit the
term of barangay officials to only three (3) years as provided under the Local Government Code
emerges as bright as the sunlight. The cardinal rule in the interpretation of all laws is to ascertain
and give effect to the intent of the law. 30And three years is the obvious intent.

First. RA 7160, the Local Government Code, was enacted later than RA 6679. It is basic that in case
of an irreconciliable conflict between two laws of different vintages, the later enactment
prevails. 31 Legis posteriores priores contrarias abrogant. The rationale is simple: a later law repeals
an earlier one because it is the later legislative will. It is to be presumed that the lawmakers knew the
older law and intended to change it. In enacting the older law, the legislators could not have known
the newer one and hence could not have intended to change what they did not know. Under the Civil
Code, laws are repealed only by subsequent ones 32 — and not the other way around.

Under Sec. 43-c of RA 7160, the term of office of barangay officials was fixed at "three (3) years
which shall begin after the regular election of barangay officials on the second Monday of May
1994." This provision is clearly inconsistent with and repugnant to Sec. 1 of RA 6679 which states
that such "term shall be for five years." Note that both laws refer to the same officials who were
elected "on the second Monday of May 1994."

Second. RA 6679 requires the barangay voters to elect seven kagawads and the candidate
obtaining the highest number of votes shall automatically be the punong barangay. RA 6653
empowers the seven elected barangay kagawads to select the punong barangay from among
themselves. On the other hand, the Local Autonomy Code mandates a direct vote on the barangay
chairman by the entire barangay electorate, separately from the seven kagawads. Hence, under the
Code, voters elect eight barangay officials, namely, the punong barangay plus the seven kagawads.
Under both RA 6679 and 6653, they vote for only seven kagawads, and not for the barangay
chairman.

Third. During the barangay elections held on May 9, 1994 (second Monday), the voters actually and
directly elected one punong barangay and seven kagawads. If we agree with the thesis of
petitioners, it follows that all the punong barangays were elected illegally and thus, Petitioner Alex
David cannot claim to be a validly elected barangay chairman, much less president of the national
league, of barangays which he purports to represent in this petition. It then necessarily follows also
that he is not the real party-in-interest and on that ground, his petition should be summarily
dismissed.

Fourth. In enacting the general appropriations act of 1997, 33 Congress appropriated the amount of
P400 million to cover expenses for the holding of barangay elections this year. Likewise, under Sec.
7 of RA 8189, Congress ordained that a general registration of voters shall be held "immediately
after the barangay elections in 1997." These are clear and express contemporaneous statements of
Congress that barangay officials shall be elected this May, in accordance with Sec. 43-c of RA 7160.

Fifth. In Paras vs. Comelec, 34 this Court said that "the next regular election involving the barangay
office concerned is barely seven (7) months away, the same having been scheduled in May, 1997."
This judicial decision, per Article 8 of the Civil Code, is now a "part of the legal system of the
Philippines."

Sixth. Petitioners pompously claim that RA 6679, being a special law, should prevail over RA 7160,
all alleged general law pursuant to the doctrine of generaila specialibus non derogant. Petitioners
are wrong. RA. 7160 is a codified set of laws that specifically applies to local government units. It
specifically and definitively provides in its Sec. 43-c that "the term of office of barangay officials . . .
shall be for three years." It is a special provision that applies only to the term of barangay officials
who were elected on the second Monday of May 1994. With such particularity, the provision cannot
be deemed a general law. Petitioner may be correct in alleging that RA 6679 is a special law, but
they are incorrect in stating (without however giving the reasons therefor) that RA 7160 is
necessarily a general law. 35 It is a special law insofar as it governs the term of office of barangay
officials. In its repealing clause, 36 RA 7160 states that "all general and special laws . . . which are
inconsistent with any of the provisions of this Code are hereby repealed or modified accordingly."
There being a clear repugnance and incompatibility between the two specific provisions, they cannot
stand together. The later law, RA 7160, should thus prevail in accordance with its repealing clause.
When a subsequent law encompasses entirely the subject matter of the former enactments, the
latter is deemed repealed. 37

The Second Issue: Three-Year Term

Not Repugnant, to Constitution

Sec. 8, Article X of the Constitution states:

 Sec. 8. The term of office of elective local officials, except barangay officials, which
shall be determined by law, shall be three years, and no such official shall serve for
more than three consecutive terms. Voluntary renunciation of the office for any length
of time shall not be considered as an interruption in the continuity of his service for
the full term for which he was elected.

Petetioner Liga ng mga Barangay Quezon City Chapter posits that by excepting barangay officials
whose "term shall be determined by law" from the general provision fixing the term of "elective local
officials" at three years, the Constitution thereby impliedly prohibits Congress from legislating a three
year term for such officers. We find this theory rather novel but nonetheless logically and legally
flawed.

Undoubtedly, the Constitution did not expressly prohibit Congress from fixing any term of office for
barangay officials. It merely left the determination of such term to the lawmaking body, without any
specific limitation or prohibition, thereby leaving to the lawmakers full discretion to fix such term in
accordance with the exigencies of public service. It must be remembered that every law has in its
favor the presumption of constitutionality. 38 For a law to be nullified, it must be shown that there is a
clear and unequivocal (not just implied) breach of the Constitution. 39To strike down a law as
unconstitutional, there must be a clear and unequivocal showing that what the fundamental law
prohibits, the statute permits. 40 The petitioners have miserably failed to discharge this burden and to
show clearly the unconstitutionality they aver.

There is absolutely no doubt in our mind that Sec. 43-c of RA 7160 is constitutional. Sec. 8, Article X
of the Constitution — limiting the term of all elective local officials to three years, except that of
barangay officials which "shall be determined by law" — was an amendment proposed by
Constitutional Commissioner (now Supreme Court Justice) Hilario G. Davide, Jr. According to Fr.
Joaquin G. Bernas, S.J., the amendment was "readily accepted without much discussion and
formally approved." Indeed, a search into the Record of the Constitutional Commission yielded only
a few pages 41 of actual deliberations, the portions pertinent to the Constitutional Commission's intent
being the following:

MR. NOLLEDO. One clarificatory question, Madam President. What will be the term
of the office of barangay officials as provided for?

MR. DAVIDE. As may be determined by law..

MR. NOLLEDO. As provided for in the Local Government Code?

MR. DAVIDE. Yes.

xxx xxx xxx

THE PRESIDENT. Is there any other comment? Is there any objection to this
proposed new section as submitted by Commissioner Davide and accepted by the
Committee?

MR. RODRIGO. Madam President, does this prohibition to serve for more than three
consecutive terms apply to barangay officials?

MR. DAVIDE. Madam President, the voting that we had on the terms of office did not
include the barangay officials because it was then the stand of the Chairman of the
 Committee on Local Governments that the term of barangay officials must be
determined by law. So it is now for the law to determine whether the restriction on the
number of reelections will be included in the Local Government Code.

MR. RODRIGO. So that is up to Congress to decide.

MR. DAVIDE. Yes.

MR. RODRIGO. I just wanted that clear in the record.

Although the discussions in the Constitutional Commission were very brief, they nonetheless provide
the exact answer to the main issue. To the question at issue here on how long the term of barangay
officials is, the answer of the Commission was simple, clear and quick: "As may be determined by
law"; more precisely, "(a)s provided for in the Local Autonomy Code." And the Local Autonomy
Code, in its Sec. 43-c, limits their term to three years.

The Third Issue: Petitioners Estopped From

Challenging Their Three-Year Terms

We have already shown that constitutionally, statutorily, logically, historically and commonsensically,
the petitions are completely devoid of merit. And we could have ended our Decision right here. But
there is one last point why petitioners have no moral ascendancy for their dubious claim to a longer
term of office: the equities of their own petition militate against them. As pointed out by Amicus
Curiae Pimentel, 42 petitioners are barred by estoppel from pursuing their petitions.

Respondent Commission on Elections submitted as Annex "A" of its memorandum, 43 a machine

copy of the certificate of candidacy of Petitioner Alex L. David in the May 9, 1994 barangay
elections, the authenticity of which was not denied by said petitioner. In said certificate of candidacy,
he expressly stated under oath that he was announcing his "candidacy for the office of punong
barangay for Barangay 77, Zone 7" of Kalookan City and that he was "eligible for said office." The
Comelec also submitted as Annex "B" 44 to its said memorandum, a certified statement of the votes
obtained by the candidates in said elections, thus:

BARANGAY 77
CERTIFIED LIST OF CANDIDATES
VOTES OBTAINED
May 9, 1994 BARANGAY ELECTIONS

PUNONG BARANGAY VOTES OBTAINED

1. DAVID, ALEX L. 112

KAGAWAD

1. Magalona, Ruben 150

2. Quinto, Nelson L. 130
3. Ramon, Dolores Z. 120
4. Dela Pena, Roberto T. 115
5. Castillo, Luciana 114
6. Lorico, Amy A. 107
7. Valencia, Arnold 102
 8. Ang, Jose 97
9. Dequilla, Teresita D. 58
10. Primavera, Marcelina 52

If, as claimed by petitioners, the applicable law is RA 6679, then (1) Petitioner David should not have
run and could not have been elected chairman of his barangay because under RA 6679, there was
to be no direct election for the punong barangay; the kagawad candidate who obtained the highest
number of votes was to be automatically elected barangay chairman; (2) thus, applying said law, the
punong barangay should have been Ruben Magalona, who obtained the highest number of votes
among the kagawads — 150, which was much more than David's 112; (3) the electorate should
have elected only seven kagawads and not one punong barangay plus seven kagawads.

In other words, following petitioners' own theory, the election of Petitioner David as well as all the
barangay chairmen of the two Liga petitioners was illegal.

The sum total of these absurdities in petitioners' theory is that barangay officials are estopped from
asking for any term other than that which they ran for and were elected to, under the law governing
thie very claim to such offices: namely, RA 7160, the Local Government Code. Petitioners' belated
claim of ignorance as to what law governed their election to office in 1994 is unacceptable because
under Art. 3 of the Civil Code, "(i)gnorance of the law excuses no one from compliance therewith."

Epilogue

It is obvious that these two petitions must fail. The Constitution and the laws do not support them.
Extant jurisprudence militates against them. Reason and common sense reject them. Equity and
morality abhor them. They are subtle but nonetheless self-serving propositions to lengthen
governance without a mandate from the governed. In a democracy, elected leaders can legally and
morally justify their reign only by obtaining the voluntary consent of the electorate. In this case
however, petitioners propose to extend their terms not by seeking the people's vote but by faulty
legal argumentation This Court cannot and will not grant its imprimatur to such untenable
proposition. If they want to continue serving, they must get a new mandate in the elections
scheduled on May 12, 1997.

WHEREFORE, the petitions are DENIED for being completely devoid of merit.

SO ORDERED.
G.R. No. 215705-07 February 22, 2017

COMMISSIONER OF INTERNAL REVENUE AND COMMISSIONER OF CUSTOMS, Petitioners

vs.
PHILIPPINE AIRLINES, INC., Respondent

DECISION

PERALTA, J.:

Before the Court is a petition for review on certiorari seeking the reversal and setting aside of the
Decision1 and Resolution2 of the Court of Tax Appeals (CTA) En Banc, dated April 30, 2014 and
December 16, 2014, respectively, in CTA EB Nos. 1029, 1031 and 1032. The assailed judgment
affirmed the January 17, 2013 Decision3 and June 4, 2013 Resolution4 of the CTA Special
2nd Division in CTA Case No. 8153.

The controversy in the instant case, which gave rise to the present petition for review
on certiorari, revolves around the interpretation of the provisions of Presidential Decree No.
1590 (PD 1590), otherwise known as "An Act Granting a New Franchise to Philippine Airlines, Inc. to
Establish, Operate, and Maintain Air Transport Services in the Philippines and Other Countries" vis-
a-vis Republic Act No. 9334 (RA 9334), otherwise known as "An Act Increasing the Excise Tax
Rates Imposed on Alcohol and Tobacco Products, Amending for the Purpose Sections 131, 141,
142, 145, and 228 of the National Internal Revenue Code of 1997." PD 1590 was enacted on June
11, 1978, while RA 9334 took effect on January 1, 2005.

Prior to the effectivity of RA 9334, Republic Act No. 8424 (RA 8424), otherwise known as the "Tax
Reform Act of 1997," was enacted and took effect on January 1, 1998, thereby amending the
National Internal Revenue Code (NIRC). Section 131 of the NIRC, as amended by RA 8424,
provides:

SEC. 131. Payment of Excise Taxes on Imported Articles. –

(A) Persons Liable. - Excise taxes on imported articles shall be paid by the owner or importer to the
Customs Officers, conformably with the regulations of the Department of Finance and before the
release of such articles from the customs house, or by the person who is found in possession of
articles which are exempt from excise taxes other than those legally entitled to exemption.

In the case of tax-free articles brought or imported into the Philippines by persons, entitles, or
agencies exempt from tax which are subsequently sold, transferred or exchanged in the Philippines
to non-exempt persons or entitles, the purchasers or recipients shall be considered the importers
thereof, and shall be liable for the duty and internal revenue tax due on such importation.

The provision of any special or general law to the contrary notwithstanding, the importation
of cigars and cigarettes, distilled spirits and wines into the Philippines, even if destined for
tax and duty free shops, shall be subject to all applicable taxes, duties, charges, including
excise taxes due thereon: Provided, however, That this shall not apply to cigars and
cigarettes, distilled spirits and wines brought directly into the duly chartered or legislated
freeports of the Subic Special Economic and Freeport Zone, crated under Republic Act No.
7227; the Cagayan Special Economic Zone and Freeport, created under Republic Act No.
7922; and the Zamboanga City Special Economic Zone, created under Republic Act No. 7903,
and are not transshipped to any other port in the Philippines: Provided, further, That
importations of cigars and cigarettes, distilled spirits and wines by a government-owned and
operated duty-free shop, like the DutyFree Philippines (DFP), shall be exempted from all
applicable taxes, duties, charges, including excise tax due thereon: Provided, still.further, That
if such articles directly imported by a government-owned and operated duty-free shop like the Duty-
Free Philippines, shall be labeled "tax and duty-free" and "not for resale": Provided, still further, That
is such articles brought into the duly chartered or legislated freeports under Republic Acts No. 7227,
7922 and 7903 are subsequently introduced into the Philippine customs territory, then such articles
shall, upon such introduction, be deemed imported into the Philippines and shall be subject to all
imposts and excise taxes provided herein and other statutes: Provided, finally, That the removal and
transfer of tax and duty-free goods, products, machinery, equipment and other similar articles, from
one freeport to another freeport, shall not be deemed an introduction into the Philippine customs
territory.

Articles confiscated shall be disposed of in accordance with the rules and regulations to be
promulgated by the Secretary of Finance, upon recommendation of the Commissioner of Customs
and Internal Revenue, upon consultation with the Secretary of Tourism and the General manager of
the Philippine Tourism Authority.

The tax due on any such goods, products, machinery, equipment or other similar articles shall
constitute a lien on the article itself, and such lien shall be superior to all other charges or liens,
irrespective of the possessor thereof.

(B) Rate and Basis of the Excise Tax on Imported Articles. - Unless otherwise specified imported
articles shall be subject to the same rates and basis of excise taxes applicable to locally
manufactured articles.5

On January 1, 2005, RA 9334 took effect, Section 6 of which amended the abovequoted Section 131
of the NIRC and, accordingly, reads as follows:

SEC. 131. Payment of Excise Taxes on Imported Articles. –

(A) Persons Liable. - Excise taxes on imported articles shall be paid by the owner or importer to the
Customs Officers, conformably with the regulations of the Department of Finance and before the
release of such articles from the customs house, or by the person who is found in possession of
articles which are exempt from excise taxes other than those legally entitled to exemption. "In the
case of tax-free articles brought or imported into the Philippines by persons, entities, or agencies
exempt from tax which are subsequently sold, transferred or exchanged in the Philippines to non-
exempt persons or entities, the purchasers or recipients shall be considered the importers thereof,
and shall be liable for the duty and internal revenue tax due on such importation.

"The provision of any special or general law to the contrary notwithstanding, the importation
of cigars and cigarettes, distilled spirits, fermented liquors and wines into the Philippines,
even if destined for tax and duty-free shops, shall be subject to all applicable taxes, duties,
charges, including excise taxes due thereon. This shall apply to cigars and cigarettes,
distilled spirits, fermented liquors and wines brought directly into the duly chartered or
legislated freeports of the Subic Special Economic and Freeport Zone, created under
Republic Act No. 7227; the Cagayan Special Economic Zone and Freeport, created under
Republic Act No. 7922; and the Zamboanga City Special Economic Zone, created under
Republic Act No. 7903, and such other freeports as may hereafter be established or created
by law: Provided, further, That importations of cigars and cigarettes, distilled spirits,
fermented liquors and wines made directly by a governmentowned and operated duty-free
shop, like the Duty-Free Philippines (DFP), shall be exempted from all applicable duties
only: Provided, still further, That such articles directly imported by a government-owned and
operated duty-free shop, like the DutyFree Philippines, shall be labeled 'duty-free' and 'not for
resale': Provided, finally, That the removal and transfer of tax and duty-free goods, products,
machinery, equipment and other similar articles other than cigars and cigarettes, distilled spirits,
fermented liquors and wines, from one freeport to another freeport, shall not be deemed an
introduction into the Philippine customs territory."

"Cigars and cigarettes, distilled spirits and wines within the premises of all duty-free shops which are
not labelled as hereinabove required, as well as tax and duty-free articles obtained from a duty-free
shop and subsequently found in a non-duty-free shop to be offered for resale shall be confiscated,
and the perpetrator of such non-labelling or re-selling shall be punishable under the applicable
provisions of this Code.

"Articles confiscated shall be disposed of in accordance with the rules and regulations to be
promulgated by the Secretary of Finance, upon recommendation of the Commissioners of Customs
and Internal Revenue, upon consultation with the Secretary of Tourism and the General Manager of
the Philippine Tourism Authority.

"The tax due on any such goods, products, machinery, equipment or other similar articles shall
constitute a lien on the article itself, and such lien shall be superior to all other charges or liens,
irrespective of the possessor thereof.

"(B) Rate and Basis of the Excise Tax on Imported Articles. - Unless otherwise specified, imported
articles shall be subject to the same rates and basis of excise taxes applicable to locally
manufactured articles."6

The amendment increased the rates of excise tax imposed on alcohol and tobacco products. It also
removed the exemption from taxes, duties and charges, including excise taxes, on importations of
cigars, cigarettes, distilled spirits, wines and fermented liquor into the Philippines.

Thereafter, PAL's importations of alcohol and tobacco products which were intended for use inits
commissary supplies during international flights, were subjected to excise taxes. For the said
imported articles, which arrived in Manila between October 3, 2007 and December 22, 2007, PAL
was assessed excise taxes amounting to a total of ₱6,329,735.21.

On September 5, 2008, PAL paid under protest. On March 5, 2009, PAL filed an administrative claim
for refund of the above excise taxes it paid with the Bureau of Internal Revenue (BIR) contending
that it is entitled to tax privileges under Section 13 of PD 1590, which provides as follows:

Section 13. In consideration of the franchise and rights hereby granted, the grantee shall pay
to the Philippine Government during the life of this franchise whichever of subsections (a)
and (b) hereunder will result in a lower tax:

(a) The basic corporate income tax based on the grantee's annual net taxable income
computed in accordance with the provisions of the National Internal Revenue Code; or

(b) A franchise tax of two per cent (2%) of the gross revenues derived by the grantee from all
sources, without distinction as to transport or nontransport operations; provided, that with
respect to international air-transport service, only the gross passenger, mail, and freight
revenues from its outgoing flights shall be subject to this tax.
The tax paid by the grantee under either of the above alternatives shall be in lieu of all other
taxes, duties, royalties, registration, license, and other fees and charges of any kind, nature,
or description, imposed, levied, established, assessed, or collected by any municipal, city,
provincial, or national authority or government agency, now or in the future, including but not
limited to the following:

1. All taxes, duties, charges, royalties, or fees due on local purchases by the grantee of aviation gas,
fuel, and oil, whether refined or in crude form, and whether such taxes, duties, charges, royalties, or
fees are directly due from or imposable upon the purchaser or the seller, producer, manufacturer, or
importer of said petroleum products but are billed or passed on the grantee either as part of the price
or cost thereof or by mutual agreement or other arrangement; provided, that all such purchases by,
sales or deliveries of aviation gas, fuel, and oil to the grantee shall be for exclusive use in its
transport and nontransport operations and other activities incidental thereto;

2. All taxes, including compensating taxes, duties, charges, royalties, or fees due on all
importations by the grantee of aircraft, engines, equipment, machinery, spare parts,
accessories, commissary and catering supplies, aviation gas, fuel, and oil, whether refined or
in crude form and other articles, supplies, or materials; provided, that such articles or
supplies or materials are imported for the use of the grantee in its transport and transport
operations and other activities incidental thereto and are not locally available in reasonable
quantity, quality, or price;

3. All taxes on lease rentals, interest, fees, and other charges payable to lessors, whether foreign or
domestic, of aircraft, engines, equipment, machinery, spare parts, and other property rented, leased,
or chartered by the grantee where the payment of such taxes is assumed by the grantee;

4. All taxes on interest, fees, and other charges on foreign loans obtained and other obligations
incurred by the grantee where the payment of such taxes is assumed by the grantee;

5. All taxes, fees, and other charges on the registration, licensing, acquisition, and transfer of
aircraft, equipment, motor vehicles, and all other personal and real property of the grantee; and

6. The corporate development tax under Presidential Decree No. 1158-A.

The grantee, shall, however, pay the tax on its real property in conformity with existing law.

For purposes of computing the basic corporate income tax as provided herein, the grantee is
authorized:

(a) To depreciate its assets to the extent of not more than twice as fast the normal rate of
depreciation; and

(b) To carry over as a deduction from taxable income any net loss incurred in any year up to
five years following the year of such loss.7

Considering that the two-year prescriptive period for filing a judicial claim for refund was about to
expire and the BIR was yet to act on its claims, PAL filed a judicial claim for refund, via a petition for
review, with the CTA on September 2, 2010. The case, docketed as CTA Case No. 8153, was
raffled-off to the Second Division of the tax court.
Respondent CIR filed his Answer, while respondent COC was declared in default for failure to file his
Answer and Pre-Trial Brief. Thereafter, trial ensued.

On January 17, 2013, the CTA Second Division issued a Decision8 partially granting PAL's claim for
refund. The dispositive portion of the said Decision reads:

WHEREFORE, the instant Petition for Review is hereby PARTIALLY GRANTED. Accordingly,
respondents are hereby ORDERED to REFUND to petitioner the amount of ₱2,094,985.21,
representing petitioner's erroneously-paid excise tax on September 5, 2008.

SO ORDERED.9

The CTA Second Division found that PAL was able to sufficiently prove its exemption from the
payment of excise taxes pertaining to its importation of alcoholic products and since it already paid
the disputed excise taxes on the subject importation, it is entitled to refund. However, the tax court
ruled that, with respect to its subject importation of tobacco products, PAL failed to discharge its
burden of proving that the said product were not locally available in reasonable quantity, quality or
price, in accordance with the requirements of the law. Thus, it is not entitled to refund for the excise
taxes paid on such importation.

The herein parties filed separate motions for reconsideration, but these were all denied by the CTA
Second Division in its Resolution dated June 4, 2013.

Consequently, the parties appealed to the CTA En Banc via separate petitions for review, docketed
as CTA EB Nos. 1029, 1031and1032, which were later consolidated.

On April 30, 2014, the CTA En Banc rendered a Decision dismissing the consolidated petitions and
affirming in toto the assailed Decision of the CTA Second Division.

The parties filed their respective motions for reconsideration, but the CTA En Banc denied them in
its Resolution dated December 16, 2014.

Hence, the instant petition for review on certiorari raising a sole issue, to wit:

Whether PAL's alcohol and tobacco importations for its commissary supplies are subject to excise
tax.10

In the present petition, petitioner argues that:

I.

Section 131 of the NIRC revoked PAL's tax privilege under Section 13 of P.D No. 1590 with respect
to excise tax on its alcohol and tobacco importation.

II

Assuming that it is still entitled to the tax privilege, PAL failed to adequately prove that the conditions
under Section 13 of P.D. No. 1590 were met in this case.11
The main question raised in the instant case is whether the tax privilege of PAL provided in Section
13 of PD 1590 has been revoked by Section 131 of the NIRC of 1997, as amended by Section 6 of
RA 9334.

The Court rules in the negative.

This issue is not novel. Thus, as in previous cases resolving the same question and involving
substantially similar factual backgrounds, the ruling will not change.

In the fairly recent case of Commissioner of Internal Revenue and Commissioner of Customs v.
Philippine Airlines, Inc.,12 the core issue raised was whether or not PAL's importations of alcohol and
tobacco products for its commissary supplies are subject to excise tax. This Court, ruling in favor of
PAL, held that:

It is a basic principle of statutory construction that a later law, general in terms and not expressly
repealing or amending a prior special law, will not ordinarily affect the special provisions of such
earlier statute. So it must be here.

Indeed, as things stand, PD 1590 has not been revoked by the NIRC of 1997, as amended. Or to be
more precise, the tax privilege of PAL provided in Sec. 13 of PD 1590 has not been revoked by Sec.
131 of the NIRC of 1997, as amended by Sec. 6 of RA 9334. We said as much in Commissioner of
Internal Revenue v. Philippine Air Lines, Inc [GR. No. 180066, July 7, 2009, 609 Phil. 695]:

That the Legislature chose not to amend or repeal [PD] 1590 even after PAL was privatized reveals
the intent of the Legislature to let PAL continue to enjoy, as a private corporation, the very same
rights and privileges under the terms and conditions stated in said charter. x x x

To be sure, the manner to effectively repeal or at least modify any specific provision of PAL's
franchise under PD 1590, as decreed in the aforequoted Sec. 24, has not been demonstrated. And
as aptly held by the CTA en banc, borrowing from the same Commissioner of Internal
Revenue case:

While it is true that Sec. 6 of RA 9334 as previously quoted states that "the provisions of any special
or general law to the contrary notwithstanding," such phrase left alone cannot be considered as an
express repeal of the exemptions granted under PAL's franchise because it fails to specifically
identify PD 1590 as one of the acts intended to be repealed. x x x

Noteworthy is the fact that PD 1590 is a special law, which governs the franchise of PAL. Between
the provisions under PD 1590 as against the provisions under the NIRC of 1997, as amended by
9334, which is a general law, the former necessary prevails. This is in accordance with the rule that
on a specific matter, the special law shall prevail over the general law, which shall be resorted only
to supply deficiencies in the former. In addition, where there are two statutes, the earlier special and
the later general - the terms of the general broad enough to include the matter provided for in the
special - the fact that one is special and other general creates a presumption that the special is
considered as remaining an exception tothe general, one as a general law of the land and the other
as the law of a particular case.

Any lingering doubt, however, as to the continued entitlement of PAL under Sec. 13 of its franchise
to excise tax exemption on otherwise taxable items contemplated therein, e.g., aviation gas, wine,
liquor or cigarettes, should once and for all be put to rest by the fairly recent pronouncement
in Philippine Airlines, Inc. v. Commissioner of Internal Revenue. In that case, the Court, on the
premise that the "propriety of a tax refund is hinged on the kind of exemption which forms its basis,"
declared in no uncertain terms that PAL has "sufficiently prove[d]" its entitlement to a tax refund of
the excise taxes and that PAL's payment of either the franchise tax or basic corporate income tax in
the amount fixed thereat shall be in lieu of all other taxes or duties, and inclusive of all taxes on all
importations of commissary and catering supplies, subject to the condition of their availability and
eventual use.x x x13

In the more recent consolidated cases of Republic of the Philippines v. Philippine Airlines, Inc.
(PAL)14 and Commissioner of Internal Revenue v. Philippine Airlines, Inc. (PAL),15 this Court, echoing
the ruling in the abovecited case of CIR v. PAL, held that:

In other words, the franchise of PAL remains the governing law on its exemption from taxes. Its
payment of either basic corporate income tax or franchise tax - whichever is lower - shall be in lieu of
all other taxes, duties, royalties, registrations, licenses, and other fees and charges, except only real
property tax. The phrase "in lieu of all other taxes" includes but is not limited to taxes, duties,
charges, royalties, or fees due on all importations by the grantee of the commissary and catering
supplies, provided that such articles or supplies or materials are imported for the use of the grantee
in its transport and nontransport operations and other activities incidental thereto and are not locally
available in reasonable quantity, quality, or price.16

On July 1, 2005, Republic Act No. 9337 (RA 9337) took effect thereby further amending certain
provisions of the NIRC. Section 22 of RA 9337 specifically provides as follows:
1âw phi 1

SEC. 22. Franchises of Domestic Airlines. - The provisions of P.D. No. 1590 on the franchise tax
of Philippine Airlines, Inc., R.A. No. 7151 on the franchise tax of Cebu Air, Inc., R.A. No. 7583 on
the franchise tax of Aboitiz Air Transport Corporation, R.A. No. 7909 on the franchise tax of Pacific
Airways Corporation, R.A. No. 8339 on the franchise tax of Air Philippines, or any other franchise
agreement or law pertaining to a domestic airline to the contrary notwithstanding:

(A) The franchise tax is abolished;

(B) The franchisee shall be liable to the corporate income tax;

(C) The franchisee shall register for value-added tax under Section 236, and to account under Title
IV of the National Internal Revenue Code of 1997, as amended, for value-added tax on its sale of
goods, property or services and its lease of property; and

(D) The franchisee shall otherwise remain exempt from any taxes, duties, royalties,
registration, license, and other fees and charges, as may be provided by their respective
franchise agreement.17

Thus, this Court held in the abovecited PAL consolidated cases:

However, upon the amendment of the 1997 NIRC, Section 22 of R.A. 9337 abolished the franchise
tax and subjected PAL and similar entities to corporate income tax and value-added tax (VAT). PAL
nevertheless remains exempt from taxes, duties, royalties, registrations, licenses, and other fees
and charges, provided it pays corporate income tax as granted in its franchise agreement.
Accordingly, PAL is left with no other option but to pay its basic corporate income tax, the payment
of which shall be in lieu of all other taxes, except VAT, and subject to certain conditions provided in
its charter.18
It bears to note that the repealing clause of RA 933 7 enumerated the laws or provisions of laws
which it repeals. However, there is nothing in the repealing clause, nor in any other provisions of the
said law, which makes specific mention of PD 1590 as one of the acts intended to be repealed.

Lastly, as in the abovecited cases, petitioners in the present petition again raise the issue regarding
PAL's alleged failure to comply with the conditions set by Section 13 of PD 1590 for its imported
tobacco and alcohol products to be exempt from excise tax. These conditions are: (1) such supplies
are imported for the use of the franchisee in its transport/nontransport operations and other
incidental activities; and (2) they are not locally available in reasonable quantity, quality and
price.19 However, as this Court has previously held, the matter as to PAL's supposed noncompliance
with the conditions set by Section 13 of P.D. 1590 for its imported supplies to be exempt from excise
tax, are factual determinations that are best left to the CTA, which found that PAL had, in fact,
complied with the above conditions.20 The CTA is a highly specialized body that reviews tax cases
and conducts trial de nova. Thus, without any showing that the findings of the CTA are unsupported
by substantial evidence, its findings are binding on this Court.21

WHEREFORE, the instant petition for review on certiorari is DENIED. The assailed Decision and
Resolution of the Court of Tax Appeals En Banc, dated April 30, 2014 and December 16, 2014,
respectively, in CTA EB Nos. 1029, 1031 and 1032 are AFFIRMED.

SO ORDERED.
G.R. No. L-41631 December 17, 1976

HON. RAMON D. BAGATSING, as Mayor of the City of Manila; ROMAN G. GARGANTIEL, as

Secretary to the Mayor; THE MARKET ADMINISTRATOR; and THE MUNICIPAL BOARD OF
MANILA, petitioners,
vs.
HON. PEDRO A. RAMIREZ, in his capacity as Presiding Judge of the Court of First Instance of
Manila, Branch XXX and the FEDERATION OF MANILA MARKET VENDORS, INC., respondents.

Santiago F. Alidio and Restituto R. Villanueva for petitioners.

Antonio H. Abad, Jr. for private respondent.

Federico A. Blay for petitioner for intervention.

MARTIN, J.:

The chief question to be decided in this case is what law shall govern the publication of a tax
ordinance enacted by the Municipal Board of Manila, the Revised City Charter (R.A. 409, as
amended), which requires publication of the ordinance before its enactment and after its approval, or
the Local Tax Code (P.D. No. 231), which only demands publication after approval.

On June 12, 1974, the Municipal Board of Manila enacted Ordinance No. 7522, "AN ORDINANCE
REGULATING THE OPERATION OF PUBLIC MARKETS AND PRESCRIBING FEES FOR THE
RENTALS OF STALLS AND PROVIDING PENALTIES FOR VIOLATION THEREOF AND FOR
OTHER PURPOSES." The petitioner City Mayor, Ramon D. Bagatsing, approved the ordinance on
June 15, 1974.

On February 17, 1975, respondent Federation of Manila Market Vendors, Inc. commenced Civil
Case 96787 before the Court of First Instance of Manila presided over by respondent Judge,
seeking the declaration of nullity of Ordinance No. 7522 for the reason that (a) the publication
requirement under the Revised Charter of the City of Manila has not been complied with; (b) the
Market Committee was not given any participation in the enactment of the ordinance, as envisioned
by Republic Act 6039; (c) Section 3 (e) of the Anti-Graft and Corrupt Practices Act has been violated;
and (d) the ordinance would violate Presidential Decree No. 7 of September 30, 1972 prescribing the
collection of fees and charges on livestock and animal products.

Resolving the accompanying prayer for the issuance of a writ of preliminary injunction, respondent
Judge issued an order on March 11, 1975, denying the plea for failure of the respondent Federation
of Manila Market Vendors, Inc. to exhaust the administrative remedies outlined in the Local Tax
Code.

After due hearing on the merits, respondent Judge rendered its decision on August 29, 1975,
declaring the nullity of Ordinance No. 7522 of the City of Manila on the primary ground of non-
compliance with the requirement of publication under the Revised City Charter. Respondent Judge
ruled:

There is, therefore, no question that the ordinance in question was not published at
all in two daily newspapers of general circulation in the City of Manila before its
enactment. Neither was it published in the same manner after approval, although it
was posted in the legislative hall and in all city public markets and city public
 libraries. There being no compliance with the mandatory requirement of publication
before and after approval, the ordinance in question is invalid and, therefore, null and
void.

Petitioners moved for reconsideration of the adverse decision, stressing that (a) only a post-
publication is required by the Local Tax Code; and (b) private respondent failed to exhaust all
administrative remedies before instituting an action in court.

On September 26, 1975, respondent Judge denied the motion.

Forthwith, petitioners brought the matter to Us through the present petition for review on certiorari.

We find the petition impressed with merits.

1. The nexus of the present controversy is the apparent conflict between the Revised Charter of the
City of Manila and the Local Tax Code on the manner of publishing a tax ordinance enacted by the
Municipal Board of Manila. For, while Section 17 of the Revised Charter provides:

Each proposed ordinance shall be published in two daily newspapers of general

circulation in the city, and shall not be discussed or enacted by the Board until after
the third day following such publication. * * * Each approved ordinance * * * shall be
published in two daily newspapers of general circulation in the city, within ten days
after its approval; and shall take effect and be in force on and after the twentieth day
following its publication, if no date is fixed in the ordinance.

Section 43 of the Local Tax Code directs:

Within ten days after their approval, certified true copies of all provincial, city,
municipal and barrio ordinances levying or imposing taxes, fees or other
charges shall be published for three consecutive days in a newspaper or publication
widely circulated within the jurisdiction of the local government, or posted in the local
legislative hall or premises and in two other conspicuous places within the territorial
jurisdiction of the local government. In either case, copies of all provincial, city,
municipal and barrio ordinances shall be furnished the treasurers of the respective
component and mother units of a local government for dissemination.

In other words, while the Revised Charter of the City of Manila requires publication before the
enactment of the ordinance and after the approval thereof in two daily newspapers of general
circulation in the city, the Local Tax Code only prescribes for publication after the approval of
"ordinances levying or imposing taxes, fees or other charges" either in a newspaper or publication
widely circulated within the jurisdiction of the local government or by posting the ordinance in the
local legislative hall or premises and in two other conspicuous places within the territorial jurisdiction
of the local government. Petitioners' compliance with the Local Tax Code rather than with the
Revised Charter of the City spawned this litigation.

There is no question that the Revised Charter of the City of Manila is a special act since it relates
only to the City of Manila, whereas the Local Tax Code is a general law because it applies
universally to all local governments. Blackstone defines general law as a universal rule affecting the
entire community and special law as one relating to particular persons or things of a class. 1 And the
rule commonly said is that a prior special law is not ordinarily repealed by a subsequent general law.
The fact that one is special and the other general creates a presumption that the special is to be
considered as remaining an exception of the general, one as a general law of the land, the other as
the law of a particular case. 2 However, the rule readily yields to a situation where the special statute
refers to a subject in general, which the general statute treats in particular. The exactly is the
circumstance obtaining in the case at bar. Section 17 of the Revised Charter of the City of Manila
speaks of "ordinance" in general, i.e., irrespective of the nature and scope thereof, whereas, Section
43 of the Local Tax Code relates to "ordinances levying or imposing taxes, fees or other charges" in
particular. In regard, therefore, to ordinances in general, the Revised Charter of the City of Manila is
doubtless dominant, but, that dominant force loses its continuity when it approaches the realm of
"ordinances levying or imposing taxes, fees or other charges" in particular. There, the Local Tax
Code controls. Here, as always, a general provision must give way to a particular provision. 3 Special
provision governs. 4 This is especially true where the law containing the particular provision was
enacted later than the one containing the general provision. The City Charter of Manila was
promulgated on June 18, 1949 as against the Local Tax Code which was decreed on June 1, 1973.
The law-making power cannot be said to have intended the establishment of conflicting and hostile
systems upon the same subject, or to leave in force provisions of a prior law by which the new will of
the legislating power may be thwarted and overthrown. Such a result would render legislation a
useless and Idle ceremony, and subject the law to the reproach of uncertainty and unintelligibility. 5

The case of City of Manila v. Teotico 6 is opposite. In that case, Teotico sued the City of Manila for
damages arising from the injuries he suffered when he fell inside an uncovered and unlighted
catchbasin or manhole on P. Burgos Avenue. The City of Manila denied liability on the basis of the
City Charter (R.A. 409) exempting the City of Manila from any liability for damages or injury to
persons or property arising from the failure of the city officers to enforce the provisions of the charter
or any other law or ordinance, or from negligence of the City Mayor, Municipal Board, or other
officers while enforcing or attempting to enforce the provisions of the charter or of any other law or
ordinance. Upon the other hand, Article 2189 of the Civil Code makes cities liable for damages for
the death of, or injury suffered by any persons by reason of the defective condition of roads, streets,
bridges, public buildings, and other public works under their control or supervision. On review, the
Court held the Civil Code controlling. It is true that, insofar as its territorial application is concerned,
the Revised City Charter is a special law and the subject matter of the two laws, the Revised City
Charter establishes a general rule of liability arising from negligence in general, regardless of the
object thereof, whereas the Civil Code constitutes a particular prescription for liability due to
defective streets in particular. In the same manner, the Revised Charter of the City prescribes a rule
for the publication of "ordinance" in general, while the Local Tax Code establishes a rule for the
publication of "ordinance levying or imposing taxes fees or other charges in particular.

In fact, there is no rule which prohibits the repeal even by implication of a special or specific act by a
general or broad one. 7 A charter provision may be impliedly modified or superseded by a later
statute, and where a statute is controlling, it must be read into the charter notwithstanding any
particular charter provision. 8 A subsequent general law similarly applicable to all cities prevails over
any conflicting charter provision, for the reason that a charter must not be inconsistent with the
general laws and public policy of the state. 9 A chartered city is not an independent sovereignty. The
state remains supreme in all matters not purely local. Otherwise stated, a charter must yield to the
constitution and general laws of the state, it is to have read into it that general law which governs the
municipal corporation and which the corporation cannot set aside but to which it must yield. When a
city adopts a charter, it in effect adopts as part of its charter general law of such character. 10

2. The principle of exhaustion of administrative remedies is strongly asserted by petitioners as

having been violated by private respondent in bringing a direct suit in court. This is because Section
47 of the Local Tax Code provides that any question or issue raised against the legality of any tax
ordinance, or portion thereof, shall be referred for opinion to the city fiscal in the case of tax
ordinance of a city. The opinion of the city fiscal is appealable to the Secretary of Justice, whose
decision shall be final and executory unless contested before a competent court within thirty (30)
days. But, the petition below plainly shows that the controversy between the parties is deeply rooted
in a pure question of law: whether it is the Revised Charter of the City of Manila or the Local Tax
Code that should govern the publication of the tax ordinance. In other words, the dispute is sharply
focused on the applicability of the Revised City Charter or the Local Tax Code on the point at issue,
and not on the legality of the imposition of the tax. Exhaustion of administrative remedies before
resort to judicial bodies is not an absolute rule. It admits of exceptions. Where the question litigated
upon is purely a legal one, the rule does not apply. 11 The principle may also be disregarded when it
does not provide a plain, speedy and adequate remedy. It may and should be relaxed when its
application may cause great and irreparable damage. 12

3. It is maintained by private respondent that the subject ordinance is not a "tax ordinance," because
the imposition of rentals, permit fees, tolls and other fees is not strictly a taxing power but a revenue-
raising function, so that the procedure for publication under the Local Tax Code finds no application.
The pretense bears its own marks of fallacy. Precisely, the raising of revenues is the principal object
of taxation. Under Section 5, Article XI of the New Constitution, "Each local government unit shall
have the power to create its own sources of revenue and to levy taxes, subject to such provisions as
may be provided by law." 13 And one of those sources of revenue is what the Local Tax Code points
to in particular: "Local governments may collect fees or rentals for the occupancy or use of public
markets and premises * * *." 14 They can provide for and regulate market stands, stalls and
privileges, and, also, the sale, lease or occupancy thereof. They can license, or permit the use of,
lease, sell or otherwise dispose of stands, stalls or marketing privileges. 15

It is a feeble attempt to argue that the ordinance violates Presidential Decree No. 7, dated
September 30, 1972, insofar as it affects livestock and animal products, because the said decree
prescribes the collection of other fees and charges thereon "with the exception of ante-mortem and
post-mortem inspection fees, as well as the delivery, stockyard and slaughter fees as may be
authorized by the Secretary of Agriculture and Natural Resources." 16Clearly, even the exception
clause of the decree itself permits the collection of the proper fees for livestock. And the Local Tax
Code (P.D. 231, July 1, 1973) authorizes in its Section 31: "Local governments may collect fees for
the slaughter of animals and the use of corrals * * * "

4. The non-participation of the Market Committee in the enactment of Ordinance No. 7522
supposedly in accordance with Republic Act No. 6039, an amendment to the City Charter of Manila,
providing that "the market committee shall formulate, recommend and adopt, subject to the
ratification of the municipal board, and approval of the mayor, policies and rules or regulation
repealing or maneding existing provisions of the market code" does not infect the ordinance with any
germ of invalidity. 17 The function of the committee is purely recommendatory as the underscored
phrase suggests, its recommendation is without binding effect on the Municipal Board and the City
Mayor. Its prior acquiescence of an intended or proposed city ordinance is not a condition sine qua
non before the Municipal Board could enact such ordinance. The native power of the Municipal
Board to legislate remains undisturbed even in the slightest degree. It can move in its own initiative
and the Market Committee cannot demur. At most, the Market Committee may serve as a legislative
aide of the Municipal Board in the enactment of city ordinances affecting the city markets or, in plain
words, in the gathering of the necessary data, studies and the collection of consensus for the
proposal of ordinances regarding city markets. Much less could it be said that Republic Act 6039
intended to delegate to the Market Committee the adoption of regulatory measures for the operation
and administration of the city markets. Potestas delegata non delegare potest.

5. Private respondent bewails that the market stall fees imposed in the disputed ordinance are
diverted to the exclusive private use of the Asiatic Integrated Corporation since the collection of said
fees had been let by the City of Manila to the said corporation in a "Management and Operating
Contract." The assumption is of course saddled on erroneous premise. The fees collected do not go
direct to the private coffers of the corporation. Ordinance No. 7522 was not made for the corporation
but for the purpose of raising revenues for the city. That is the object it serves. The entrusting of the
collection of the fees does not destroy the public purpose of the ordinance. So long as the purpose is
public, it does not matter whether the agency through which the money is dispensed is public or
private. The right to tax depends upon the ultimate use, purpose and object for which the fund is
raised. It is not dependent on the nature or character of the person or corporation whose
intermediate agency is to be used in applying it. The people may be taxed for a public purpose,
although it be under the direction of an individual or private corporation. 18

Nor can the ordinance be stricken down as violative of Section 3(e) of the Anti-Graft and Corrupt
Practices Act because the increased rates of market stall fees as levied by the ordinance will
necessarily inure to the unwarranted benefit and advantage of the corporation. 19 We are concerned
only with the issue whether the ordinance in question is intra vires. Once determined in the
affirmative, the measure may not be invalidated because of consequences that may arise from its
enforcement. 20

ACCORDINGLY, the decision of the court below is hereby reversed and set aside. Ordinance No.
7522 of the City of Manila, dated June 15, 1975, is hereby held to have been validly enacted. No.
costs.

SO ORDERED.
G.R. No. L-7899 June 23, 1955

ALFREDO MONTELIBANO, PASTOR MALLORCA, GONZALGO DE LA TORRE, and JOSE

ARTICULO, petitioners-appellants,
vs.
THE HONORABLE FELIX S. FERRER, as Judge of the Municipal Court of Bacolod, and JOSE
F. BENARES, respondents-appellees.

Arrieta and Nolan for appellants.

Parreño and Banzon for appellees.

CONCEPCION, J.:

The question involved in this case is one purely of law.

On June 13, 1953, respondent Jose F. Benares filed, with the Municipal Court of the City of Bacolod,
a criminal complaint, which was docketed as Case No. 2864 of said court, against petitioners herein,
Alfredo Montelibano, Pastor Mallorca, Gonzalgo de la Torre and Jose Articulo, charging them with
the crime of malicious mischief. It is alleged in said complaint:

That on or about the 5th, the 7th and the 8th of June, 1953, in the City of Bacolod,
Philippines, and within the jurisdiction of this court, Alfredo Montelibano, as author by
inducement, Pastor Mallorca, Gonzalo de la Torre and Jose Articulo, as authors by direct
participations, conspiring and confederating together and helping one another, did then and
there, willfully, unlawfully and deliberately cause damage to the sugarcane plantation
belonging to Jose F. Benares, the offended party herein, intentionally and using bulldozer
and destroying completely eighteen (18) hectares of sugarcanes obviously under the impulse
of hatred and a desire for revenge, as the accused, Alfredo Montelibano, failed in his attempt
to have the herein offended party punished for contempt of Court in Civil Case No. 1896 of
the Court of First Instance of Negros Occidental, thereby causing upon said Jose F. Benares
damage in the amount of more than P13,000.00.

Upon the filing of this complaint, due course was given thereto by the herein respondent, Hon. Felix
S. Ferrer, Municipal Judge of the City of Bacolod, who, likewise, issued the corresponding warrant of
arrest. On or about June 22, 1953, the aforementioned defendants (petitioners herein) filed a motion
to quash said warrant of arrest, as well as the complaint, upon several grounds, which may be
reduced to two, namely : (1) The only officer authorized by the Charter of the City of Bacolod to
initiate criminal cases in the courts thereof is its City Attorney, who is opposed to the institution of
said Case No. 2864; and (2) Said case involves a prejudicial question.

In this connection, petitioners alleged, and Benares has not denied, the following: Sometime in 1940,
the Capitol Subdivision Inc. (hereinafter referred to as the Subdivision), of which petitioner Alfredo
Montelibano is the president and general manager, leased Lot No. 1205-I-1 (which is the same
property involved in Case No. 2864) to Benares, for a period of five (5) crop years, ending in the
crop-year 1944-1945, with an option in favor of Benares, of another five (5) crop-years. On June 5,
1951, the Subdivision instituted against Benares, unlawful detainer case No. 1896 of the Municipal
Court of the City of Bacolod, which, in due course, subsequently, rendered a decision ordering his
ejectment from said lot. Benares appealed to the Court of First Instance of Negros Occidental (in
which it was docketed as Civil Case No. 1896). On motion of the Subdivision, this court issued a writ
of preliminary mandatory injunction, commanding Benares to turn over the aforementioned lot to the
Subdivision, which filed a bond undertaking to pay to Benares "all damages which he may sustain"
by reason of the issuance of said writ, "if the court should finally decide that the plaintiff was not
entitled thereto." Inasmuch as Benares continued planting on Lot No. 1205-L-1, instead of delivering
it to the Subdivision, the latter filed a petition praying that the former be declared in contempt of
court. This petition was denied, by an order dated April 30, 1953, which however, required Benares
to "immediately and promptly obey the order of preliminary mandatory injunction." On June 5, 1953
the provincial sheriff delivered the land in question to the Subdivision. Seemingly, acting upon
instructions of petitioner Montelibano, his co-petitioners thereupon cleared the land of the sugarcane
planted therein by Benares. Hence, the criminal complaint filed by the latter.

The Municipal Court denied the aforementioned motion to quash said complaint and the warrant of
arrest, as well as a subsequent motion for reconsideration, whereupon petitioners instituted the case
at bar, in the Court of First Instance of Negros Occidental, where it was docketed as Civil Case No.
2828, against said Municipal Judge, and complainant Benares, for the purpose of securing a writ
of certiorari and mandamus — "annulling and vacating all the proceedings so far taken by
respondent Judge in said Case no. 2864" and "holding that said Judge had no jurisdiction to take
cognizance of the same" and "dismissing said case" — with a writ of preliminary injunction, enjoining
respondent judge "to desist from further proceedings in the case." The writ of preliminary injunction
was issued by said court of first instance, which, in due course, eventually rendered a decision,
dismissing the petition for certiorari and mandamus, and dissolving the writ of preliminary injunction,
with costs against the petitioners. The case is now before us on appeal taken, from said decision, by
the aforementioned petitioners, the defendants in said criminal case.

It is not disputed that the complaint in question was filed by Benares directly with the municipal court
of Bacolod, and that the City Attorney had, not only no intervention whatsoever therein, but, also,
expressed, in open court, his opposition thereto. The issue boils down to whether said municipal
court may entertain said complaint. Petitioners contend that it may not, relying upon section 22 of
Commonwealth Act No. 326, otherwise known as the Charter of the City of Bacolod, the pertinent
part of which provides:

. . . The City attorney . . . shall also have charge of the prosecution of all crimes,
misdemeanors, and violations of city ordinances, in the Court of First Instance and the
Municipal Court of the city, and shall discharge all the duties in respect to criminal
prosecutions enjoined by law upon provincial fiscals.

The city attorney shall cause to be investigated all charges of crimes, misdemeanors, and
violation of ordinances, and have the necessary informations or complaints prepared or
made against the persons accused. . . ..

Upon the other hand, respondents argue that this provision is merely declaratory of the powers of
the City Attorney of Bacolod and does not preclude the application of Sec. 2 of Rule 106 of the Rules
of Court reading:

Complaint is a sworn written statement charging a person with an offense, subscribed by the
offended party, any peace officer or other employees of the government or governmental
institution in charge of the enforcement or execution of the law violated.

This was the very same provision invoked by the petitioner in the case of Espiritu vs. Dela Rosa (45
Off. Gaz. 196), in which this Court refused to issue a writ of mandamus to compel the Court of First
Instance of Manila to accept a complaint filed, directly with said court, by the offended party in a
given case, without the intervention of the City Fiscal of Manila. In his concurring opinion therein,
then Chief Justice Moran had the following to say:
 I concur upon the ground that Rule 108 section 4 does not apply in the City of Manila where
the only officer authorized by law to conduct preliminary investigation is the City Fiscal (sec.
2474, Adm. Code) and therefore, all criminal complaints should be filed with that officer who
in turn may, after investigation, file the corresponding information with the Court of First
Instance. The provisions of the Administrative Code on this matter have not been repealed
by the Rules of Court. (Hashim vs. Boncan, 40 Off. Gaz., p. 13.) (Emphasis supplied.)

As indicated in said decision, the same was based, partly, upon the rule laid down in
Hashim vs. Boncan (71 Phil. 216), which, in turn, was predicated upon earlier precedents (U.
S. vs. Wilson, 4 Phil. 317; U. S. vs. McGovern, 6 Phil. 621; U. S. vs. Ocampo, 18 Phil. 1; U.
S. vs. Grant and Kennedy, 18 Phil. 122; U. S. vs. Carlos, 21 Phil. 553).

In case of Sayo vs. Chief of Police (45 Off. Gaz. 4875) the language used by this Court was:

Under the law, a complaint charging a person with the commission of an offense cognizable
by the courts of Manila is not filed with the municipal court of First Instance of Manila,
because as above stated, the latter do not make or conduct a preliminary investigation
proper. The complaint must be made or filed with the city fiscal of Manila who, personally or
through one of his assistance, makes the investigation, not for the purpose of ordering the
arrest of the accused, but of filing with the proper court the necessary information against the
accused if the result of the investigation so warrants, and obtaining from the court a warrant
of arrest or commitment of the accused.

xxx xxx xxx

In the City of Manila, where complaints are not filed directly with the municipal court or the
Court of First Instance, the officer or person making the arrest without warrant shall
surrender or take the person arrested to the city fiscal, and the latter shall make the
investigation abovementioned and file, if proper, the corresponding information without the
time prescribed by section 125 of the Revised Penal Code, so that the court may issue a
warrant of commitment for the temporary detention of the accused. . . .. (Emphasis supplied.)

It is clear, therefore, that, in the City of Manila, criminal complaints may be filed only with the City
Fiscal, who is thereby given, by implication, the exclusive authority to institute criminal cases in the
different courts of said city, under the provisions of its Charter, originally found in Section 39 of Act
the pertinent part of which we quote:

. . . The prosecuting attorney of the city of Manila shall have charge of the prosecution of all
crimes, misdemeanors, and violations of city ordinances, in the Court of First Instance and
the municipal courts of the city of Manila. He shall investigate all charges of crimes,
misdemeanors, and violations of ordinances, and prepare the necessary informations or
make the necessary complaints against the persons accused, and discharge all other duties
in respect to criminal prosecutions enjoined upon provincial fiscals . . ..

This provision was mutatis mutandis reproduced, firstly, in section 2437 of the Old Administrative
Code (Act No. 2657), then in section 2465 of the Revised Administrative Code, and lastly in section
38 of Republic Act no. 409. We do not see, and respondents herein have not pointed out, any
reason why the above quoted provision of the Charter of the City of Bacolod, should be interpreted
differently from said sections of the Charter of the City of Manila, which are substantially identical
thereto. On the contrary, considering that said provisions of the Charter of the City of Manila had
been consistently construed in the manner above indicated, before being incorporated in the Charter
of the City of Bacolod, the conclusion is inevitable that the framers of the latter had reproduced the
former with intent of adopting, also its settled interpretation by the judicial department (In re Dick, 38
Phil. 41, 77).

In the interpretation of reenacted statutes the court will follow the construction which they
received when previously in force. The legislature will be presumed to know the effect which
such status originally had, and by reenactment to intend that they should again have the
same effect. . . . It is not necessary that a statute should be reenacted in identical words in
order that the rule may apply. It is sufficient if it is reenacted in substantially the same words.
. . . The rule has been held to apply to the reenactment of a statute which received a
practical construction on the part of those who are called upon to execute it. The Supreme
Court of Nebraska says : "Where the legislature in framing an act resorts to language similar
in its import to the language of other acts which have received a practical construction by the
executive departments and by the legislature itself, it is fair to presume that the language
was used in the later act with a view to the construction so given the earlier." . . . (Sutherland
Statutory Construction, Vol. II, 2d. ed., section 403

. . . two statutes with a parallel scope, purpose and terminology should, each in its own field,
have a like interpretation, unless in particular instances there is something peculiar in the
question under consideration, or dissimilar in the terms of the act relating thereto, requiring a
different conclusion. (50 Am. Jur. 343)

. . . Since it may be presumed that the legislature knew a construction, long acquieced in,
which had been given by the courts to a statute re-enacted by the legislature, there is a
presumption of an intention to adopt the construction as well as the language of the prior
enactment. It is accordingly a settled rule of statutory construction that when a statute or a
clause or provision thereof has been construed by a court of last resort, and the same is
substantially re-enacted, the legislature may be regarded as adopting such construction. (50
Am. Jur. 461)

In view of the foregoing, the decision appealed from must be, as it is hereby, reversed and another
one shall be entered annulling the warrant of arrest issued by respondent Judge and enjoining the
latter to refrain from entertaining the complaint aforementioned and to dismiss the same. With cost
against respondent Jose F. Benares. It is so ordered.
G.R. No. 82670 September 15, 1989

DOMETILA M. ANDRES, doing business under the name and style "IRENE'S WEARING
APPAREL," petitioner,
vs.
MANUFACTURERS HANOVER & TRUST CORPORATION and COURT OF
APPEALS, respondents.

Roque A. Tamayo for petitioner.

Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles for private respondent.

CORTES, J.:

Assailed in this petition for review on certiorari is the judgment of the Court of Appeals, which,
applying the doctrine of solutio indebiti, reversed the decision of the Regional Trial Court, Branch
CV, Quezon City by deciding in favor of private respondent.

Petitioner, using the business name "Irene's Wearing Apparel," was engaged in the manufacture of
ladies garments, children's wear, men's apparel and linens for local and foreign buyers. Among its
foreign buyers was Facets Funwear, Inc. (hereinafter referred to as FACETS) of the United States.

In the course of the business transaction between the two, FACETS from time to time remitted
certain amounts of money to petitioner in payment for the items it had purchased. Sometime in
August 1980, FACETS instructed the First National State Bank of New Jersey, Newark, New Jersey,
U.S.A. (hereinafter referred to as FNSB) to transfer $10,000.00 to petitioner via Philippine National
Bank, Sta. Cruz Branch, Manila (hereinafter referred to as PNB).

Acting on said instruction, FNSB instructed private respondent Manufacturers Hanover and Trust
Corporation to effect the above- mentioned transfer through its facilities and to charge the amount to
the account of FNSB with private respondent. Although private respondent was able to send a telex
to PNB to pay petitioner $10,000.00 through the Pilipinas Bank, where petitioner had an account, the
payment was not effected immediately because the payee designated in the telex was only "Wearing
Apparel." Upon query by PNB, private respondent sent PNB another telex dated August 27, 1980
stating that the payment was to be made to "Irene's Wearing Apparel." On August 28, 1980,
petitioner received the remittance of $10,000.00 through Demand Draft No. 225654 of the PNB.

Meanwhile, on August 25, 1980, after learning about the delay in the remittance of the money to
petitioner, FACETS informed FNSB about the situation. On September 8, 1980, unaware that
petitioner had already received the remittance, FACETS informed private respondent about the
delay and at the same time amended its instruction by asking it to effect the payment through the
Philippine Commercial and Industrial Bank (hereinafter referred to as PCIB) instead of PNB.

Accordingly, private respondent, which was also unaware that petitioner had already received the
remittance of $10,000.00 from PNB instructed the PCIB to pay $10,000.00 to petitioner. Hence, on
September 11, 1980, petitioner received a second $10,000.00 remittance.

Private respondent debited the account of FNSB for the second $10,000.00 remittance effected
through PCIB. However, when FNSB discovered that private respondent had made a duplication of
the remittance, it asked for a recredit of its account in the amount of $10,000.00. Private respondent
complied with the request.
Private respondent asked petitioner for the return of the second remittance of $10,000.00 but the
latter refused to pay. On May 12, 1982 a complaint was filed with the Regional Trial Court, Branch
CV, Quezon City which was decided in favor of petitioner as defendant. The trial court ruled that Art.
2154 of the New Civil Code is not applicable to the case because the second remittance was made
not by mistake but by negligence and petitioner was not unjustly enriched by virtue thereof [Record,
p. 234]. On appeal, the Court of Appeals held that Art. 2154 is applicable and reversed the RTC
decision. The dispositive portion of the Court of Appeals' decision reads as follows:

WHEREFORE, the appealed decision is hereby REVERSED and SET ASIDE and
another one entered in favor of plaintiff-appellant and against defendant-appellee
Domelita (sic) M. Andres, doing business under the name and style "Irene's Wearing
Apparel" to reimburse and/or return to plaintiff-appellant the amount of $10,000.00,
its equivalent in Philippine currency, with interests at the legal rate from the filing of
the complaint on May 12, 1982 until the whole amount is fully paid, plus twenty
percent (20%) of the amount due as attomey's fees; and to pay the costs.

With costs against defendant-appellee.

SO ORDERED. [Rollo, pp. 29-30.]

Thereafter, this petition was filed. The sole issue in this case is whether or not the private
respondent has the right to recover the second $10,000.00 remittance it had delivered to petitioner.
The resolution of this issue would hinge on the applicability of Art. 2154 of the New Civil Code which
provides that:

Art. 2154. If something received when there is no right to demand it, and it was
unduly delivered through mistake, the obligation to return it arises.

This provision is taken from Art. 1895 of the Spanish Civil Code which provided that:

Art. 1895. If a thing is received when there was no right to claim it and which, through
an error, has been unduly delivered, an obligation to restore it arises.

In Velez v. Balzarza, 73 Phil. 630 (1942), the Court, speaking through Mr. Justice Bocobo explained
the nature of this article thus:

Article 1895 [now Article 2154] of the Civil Code abovequoted, is therefore
applicable. This legal provision, which determines the quasi-contract of solution
indebiti, is one of the concrete manifestations of the ancient principle that no one
shall enrich himself unjustly at the expense of another. In the Roman Law Digest the
maxim was formulated thus: "Jure naturae acquum est, neminem cum alterius
detrimento et injuria fieri locupletiorem." And the Partidas declared: "Ninguno non
deue enriquecerse tortizeramente con dano de otro." Such axiom has grown through
the centuries in legislation, in the science of law and in court decisions. The
lawmaker has found it one of the helpful guides in framing statutes and codes. Thus,
it is unfolded in many articles scattered in the Spanish Civil Code. (See for example,
articles, 360, 361, 464, 647, 648, 797, 1158, 1163, 1295, 1303, 1304, 1893 and
1895, Civil Code.) This time-honored aphorism has also been adopted by jurists in
their study of the conflict of rights. It has been accepted by the courts, which have not
hesitated to apply it when the exigencies of right and equity demanded its assertion.
It is a part of that affluent reservoir of justice upon which judicial discretion draws
 whenever the statutory laws are inadequate because they do not speak or do so with
a confused voice. [at p. 632.]

For this article to apply the following requisites must concur: "(1) that he who paid was not under
obligation to do so; and, (2) that payment was made by reason of an essential mistake of fact" [City
of Cebu v. Piccio, 110 Phil. 558, 563 (1960)].

It is undisputed that private respondent delivered the second $10,000.00 remittance. However,
petitioner contends that the doctrine of solutio indebiti, does not apply because its requisites are
absent.

First, it is argued that petitioner had the right to demand and therefore to retain the second
$10,000.00 remittance. It is alleged that even after the two $10,000.00 remittances are credited to
petitioner's receivables from FACETS, the latter allegedly still had a balance of $49,324.00. Hence, it
is argued that the last $10,000.00 remittance being in payment of a pre-existing debt, petitioner was
not thereby unjustly enriched.

The contention is without merit.

The contract of petitioner, as regards the sale of garments and other textile products, was with
FACETS. It was the latter and not private respondent which was indebted to petitioner. On the other
hand, the contract for the transmittal of dollars from the United States to petitioner was entered into
by private respondent with FNSB. Petitioner, although named as the payee was not privy to the
contract of remittance of dollars. Neither was private respondent a party to the contract of sale
between petitioner and FACETS. There being no contractual relation between them, petitioner has
no right to apply the second $10,000.00 remittance delivered by mistake by private respondent to
the outstanding account of FACETS.

Petitioner next contends that the payment by respondent bank of the second $10,000.00 remittance
was not made by mistake but was the result of negligence of its employees. In connection with this
the Court of Appeals made the following finding of facts:

The fact that Facets sent only one remittance of $10,000.00 is not disputed. In the
written interrogatories sent to the First National State Bank of New Jersey through
the Consulate General of the Philippines in New York, Adelaide C. Schachel, the
investigation and reconciliation clerk in the said bank testified that a request to remit
a payment for Facet Funwear Inc. was made in August, 1980. The total amount
which the First National State Bank of New Jersey actually requested the plaintiff-
appellant Manufacturers Hanover & Trust Corporation to remit to Irene's Wearing
Apparel was US $10,000.00. Only one remittance was requested by First National
State Bank of New Jersey as per instruction of Facets Funwear (Exhibit "J", pp. 4-5).

That there was a mistake in the second remittance of US $10,000.00 is borne out by
the fact that both remittances have the same reference invoice number which is 263
80. (Exhibits "A-1- Deposition of Mr. Stanley Panasow" and "A-2-Deposition of Mr.
Stanley Panasow").

Plaintiff-appellant made the second remittance on the wrong assumption that

defendant-appellee did not receive the first remittance of US $10,000.00. [Rollo, pp.
26-27.]
It is evident that the claim of petitioner is anchored on the appreciation of the attendant facts which
petitioner would have this Court review. The Court holds that the finding by the Court of Appeals that
the second $10,000.00 remittance was made by mistake, being based on substantial evidence, is
final and conclusive. The rule regarding questions of fact being raised with this Court in a petition
for certiorari under Rule 45 of the Revised Rules of Court has been stated in Remalante v. Tibe,
G.R. No. 59514, February 25, 1988, 158 SCRA 138, thus:

The rule in this jurisdiction is that only questions of law may be raised in a petition for
certiorari under Rule 45 of the Revised Rules of Court. "The jurisdiction of the
Supreme Court in cases brought to it from the Court of Appeals is limited to
reviewing and revising the errors of law imputed to it, its findings of fact being
conclusive" [Chan v. Court of Appeals, G.R. No. L-27488, June 30, 1970, 33 SCRA
737, reiterating a long line of decisions]. This Court has emphatically declared that "it
is not the function of the Supreme Court to analyze or weigh such evidence all over
again, its jurisdiction being limited to reviewing errors of law that might have been
committed by the lower court" [Tiongco v. De la Merced, G.R. No. L-24426, July 25,
1974, 58 SCRA 89; Corona v. Court of Appeals, G.R. No. L-62482, April 28, 1983,
121 SCRA 865; Baniqued v. Court of Appeals, G. R. No. L-47531, February 20,
1984, 127 SCRA 596]. "Barring, therefore, a showing that the findings complained of
are totally devoid of support in the record, or that they are so glaringly erroneous as
to constitute serious abuse of discretion, such findings must stand, for this Court is
not expected or required to examine or contrast the oral and documentary evidence
submitted by the parties" [Santa Ana, Jr. v. Hernandez, G.R. No. L-16394, December
17, 1966, 18 SCRA 9731. [at pp. 144-145.]

Petitioner invokes the equitable principle that when one of two innocent persons must suffer by the
wrongful act of a third person, the loss must be borne by the one whose negligence was the
proximate cause of the loss.

The rule is that principles of equity cannot be applied if there is a provision of law specifically
applicable to a case [Phil. Rabbit Bus Lines, Inc. v. Arciaga, G.R. No. L-29701, March 16, 1987,148
SCRA 433; Zabat, Jr. v. Court of Appeals, G.R. No. L36958, July 10, 1986, 142 SCRA 587; Rural
Bank of Paranaque, Inc. v. Remolado, G.R. No. 62051, March 18, 1985, 135 SCRA 409; Cruz v.
Pahati, 98 Phil. 788 (1956)]. Hence, the Court in the case of De Garcia v. Court of Appeals, G.R. No.
L-20264, January 30, 1971, 37 SCRA 129, citing Aznar v. Yapdiangco, G.R. No. L-18536, March 31,
1965, 13 SCRA 486, held:

... The common law principle that where one of two innocent persons must suffer by
a fraud perpetrated by another, the law imposes the loss upon the party who, by his
misplaced confidence, has enabled the fraud to be committed, cannot be applied in a
case which is covered by an express provision of the new Civil Code, specifically
Article 559. Between a common law principle and a statutory provision, the latter
must prevail in this jurisdiction. [at p. 135.]

Having shown that Art. 2154 of the Civil Code, which embodies the doctrine of solutio indebiti,
applies in the case at bar, the Court must reject the common law principle invoked by petitioner.

Finally, in her attempt to defeat private respondent's claim, petitioner makes much of the fact that
from the time the second $10,000.00 remittance was made, five hundred and ten days had elapsed
before private respondent demanded the return thereof. Needless to say, private respondent
instituted the complaint for recovery of the second $10,000.00 remittance well within the six years
prescriptive period for actions based upon a quasi-contract [Art. 1145 of the New Civil Code].
WHEREFORE, the petition is DENIED and the decision of the Court of Appeals is hereby
AFFIRMED.

SO ORDERED.
G.R. No. 215847 January 12, 2016

GOV. EXEQUIEL B. JAVIER, Petitioner,

vs.
COMMISSION ON ELECTIONS, CORNELIO P. ALDON, and RAYMUNDO T.
ROQUERO, Respondents.

DECISION

BRION, J.:

This is a petition for certiorari under Rule 65 in relation to Rule 64 of the Rules of Court, filed to
challenge the January 12, 2015 per curiam order of the Commission on Elections (COMELEC/The
Commission) en banc in SPA No. 13-254 (DC).1 The Commission granted the petition to disqualify
the petitioner Exequiel Javier and to annul his proclamation as the duly elected governor of Antique.

THE ANTECEDENTS

On December 3, 1985, the Batasang Pambansa enacted the Omnibus Election Code (Election
Code).2 Section 261(d) and (e) of this Code prescribe the following elements of coercion as an
election offense:

Section 261. Prohibited Acts. - The following shall be guilty of an election offense: x x x

(d) Coercion of subordinates. -

(1) Any public officer, or any officer of any public or private corporation or association, or
any head, superior, or administrator of any religious organization, or any employer or
landowner who coerces or intimidates or compels, or in any manner influence, directly
or indirectly, any of his subordinates or members or parishioners or employees or house
helpers, tenants, overseers, farm helpers, tillers, or lease holders to aid, campaign or vote
for or against any candidate or any aspirant for the nomination or selection of candidates.

(2) Any public officer or any officer of any commercial, industrial, agricultural, economic or
social enterprise or public or private corporation or association, or any head, superior or
administrator of any religious organization, or any employer or landowner who dismisses or
threatens to dismiss, punishes or threatens to punish by reducing his salary, wage or
compensation, or by demotion, transfer, suspension, separation, excommunication,
ejectment, or causing him annoyance in the performance of his job or in his
membership, any subordinate member or affiliate, parishioner, employee or house helper,
tenant, overseer, farm helper, tiller, or lease holder, for disobeying or not complying with any
of the acts ordered by the former to aid, campaign or vote for or against any candidate,
or any aspirant for the nomination or selection of candidates.

(e) Threats, intimidation, terrorism, use of fraudulent device or other forms of coercion. - Any person
who, directly or indirectly, threatens, intimidates or actually causes, inflicts or produces any violence,
injury, punishment, damage, loss or disadvantage upon any person or persons or that of the
immediate members of his family, his honor or property, or uses any fraudulent device or scheme to
compel or induce the registration or refraining from registration of any voter, or the participation in a
campaign or refraining or desistance from any campaign, or the casting of any vote or omission to
vote, or any promise of such registration, campaign, vote, or omission therefrom. (emphases
supplied)

Coercion, as an election offense, is punishable by imprisonment of not less than one year but not
more than six years.3 Notably, Section 68 of the Election Code provides that the Commission may
administratively disqualify a candidate who violates Section 261(d) or (e).

On February 20, 1995, Congress enacted Republic Act No. 7890 amending the definition of Grave
Coercion under the Revised Penal Code.4 It increased the penalty for coercion committed in violation
of a person’s right to suffrage to prision mayor. Further, Section 3 of R.A. 7890 expressly repealed
Section 26, paragraphs (d)(1) and (2) of the Election Code.

On April 3, 2012, COMELEC issued Resolution No. 93855 fixing the calendar of activities for the
May 2013 elections. The resolution set the election period from January 13, 2013 until June 12,
2013.

On September 3, 2012, Valderrama Municipal Vice-Mayor Christopher B. Maguad filed an

administrative complaint for Gross Misconduct/Dereliction of Duty and Abuse of Authority against
Valderrama Mayor Mary Joyce U. Roquero (Mayor Roquero). This complaint was docketed as
Administrative Case No. 05-2012.

On November 9, 2012, the Sangguniang Panlalawigan (SP) issued Resolution No. 291-
2012 recommending to Antique Governor Exequiel Javier (Gov. Javier) the preventive suspension of
Mayor Roquero.

On November 21, 2012, Mayor Roquero filed a petition for certiorari and prohibition with prayer for
the issuance of a temporary restraining order (TRO) before the Regional Trial Court (RTC), Branch
12, Antique, against Gov. Javier and the members of the SP to restrain them from proceeding with
Administrative Case No. 05-2012. The petition was docketed as Special Civil Action No. 12-11-86.

The case was re-raffled to the RTC, Branch 11 which issued a writ of preliminary injunction.

Gov. Javier, Vice-Governor Dimamay, and the members of the SP filed a petition for certiorari with
urgent prayer for TRO and preliminary injunction before the CA, docketed as CA-G.R. SP-07307.

On December 18, 2012, COMELEC issued Resolution No. 95816 prohibiting any public official from
suspending any elective provincial, city, municipal, or barangay officer during the election period for
the May 13, 2013 elections. This resolution implements Section 261 (x)7 of the Election Code.

On January 15, 2013, the CA issued a TRO in CA-G.R. SP-07307.

On January 16, 2013, the RTC, Branch 11 promulgated its judgment granting certiorari and
prohibition. It ordered the SP to cease and desist from further proceeding with Administrative Case
No. 05-2012. It likewise ordered Gov. Javier to refrain from implementing SP Resolution No. 291-
2012 and from preventively suspending Mayor Roquero.

On January 23, 2013, Gov. Javier issued Executive Order No. 003, S. 2013, preventively
suspending Mayor Roquero for thirty (30) days.

On February 7, 2013, the SP of Antique issued a decision finding Mayor Roquero guilty of Grave
Misconduct in relation with Section 3(e) of R. A. 3019, the Anti-Graft and Corrupt Practices
Act, and Grave Abuse of Authority in relation with Section 5(e) of R.A. No. 6713. The SP
suspended her for four (4) months.

Mayor Roquero filed an Election Offense complaint against Gov. Javier for violating Section 261(x)
of the Election Code. The case was filed before the COMELEC Law Department and docketed
as Election Offense Case (EOC) No. 13-025.

Meanwhile (or on March 15, 2013), the CA granted the writ of preliminary injunction filed by Gov.
Javier, et al., in CA-G.R. SP-07307. It enjoined Judge Nery Duremdes of the RTC, Branch 11 from
conducting further proceedings in SPL Civil Action No. 12-11-86.

On March 22, 2013, private respondents Cornelio P. Aldon (Aldon) and Raymundo T.
Roquero (Roquero) also filed a petition for disqualification before the Commission against Gov.
Javier, Vice-Governor Rosie A. Dimamay, and the other members of the SP. The case was
docketed as COMELEC Special Action (SPA) No. 13-254 (DC.)

Aldon and Roquero sought to disqualify Gov. Javier and the other incumbent officials from running in
the 2013 elections on the ground that the latter committed the election offenses of Coercion of
Subordinates [Sec. 261(d)] and Threats, Intimidation, Terrorism x x x or Other Forms of
Coercion [Sec. 261(e)] by suspending Mayor Roquero. They alleged that the suspension was
political harassment calculated to intimidate the Roqueros into backing out of the 2013 elections.8

On April 29, 2013, the Clerk of the Commission conducted a conference hearing between the
parties.

On April 30, 2013, Gov. Javier (together with the SP Members) filed a motion to dismiss with
answer ex abundante ad cautelam.

After the May 13, 2013 Elections, only Gov. Javier and SP Members Tobias M. Javier, Edgar D.
Denosta, Teopisto C. Estaris, Jr., and Victor R. Condez were proclaimed winners. Hence, the
Commission considered the disqualification cases against the losing candidates moot.

On October 3, 2014, the COMELEC Second Division issued a resolution in SPA No. 13-254
(DC) disqualifying Gov. Javier and annulling his proclamation as the Governor of Antique. The
resolution was penned by Commissioner Elias R. Yusoph.

The COMELEC held that the preventive suspension of Mayor Roquero under Executive Order No.
003 violated the election period ban because it was not for the purpose of applying the Anti-Graft
and Corrupt Practices Act. It also considered the Commission’s findings in EOC No. 13-025 that
there was substantial evidence showing that Gov. Javier acted in bad faith when he suspended
Mayor Roquero as a form of punishment for opposing him.9

The COMELEC ruled that Gov. Javier’s act of preventively suspending Mayor Roquero during the
election period ban fell within the contemplation of Section 261(d) of the Election Code, which is a
ground for disqualification under Section 68. It held that while Section 261(d) of the Election Code
was repealed by Republic Act No. 7890, it did not remove coercion "as a ground per se for
disqualification under [Section] 68." In fact, R.A. 7890 made Coercion (an election offense) a felony
with a higher penalty.10 The COMELEC added that the general repealing clause of R.A. No. 7890
cannot impliedly repeal Section 68 because the latter was "not absolutely and irreconcilably
incompatible with Article 286."11
Commissioner Luie Tito F. Guia dissented from the resolution. Commissioner Guia reasoned that
the legal basis to dismiss Gov. Javier no longer exists because Section 3 of Republic Act No. 7890
had repealed Section 261(d) of the Election Code. Commissioner Arthur D. Lim took no part in the
vote because he did not participate in the deliberations.

With the votes tied at 1-1-1 (one voted to grant, one dissenting, and one not participating), the case
failed to obtain the necessary majority. Consequently on October 14, 2014, the COMELEC Second
Division issued an order elevating the case to the en banc for its disposition.12

The Commission en banc agreed, as a matter of internal arrangement, to submit their respective
opinions explaining their respective votes or their concurrence with either Commissioner Yusoph or
Commissioner Guia.

Three (3) Commissioners concurred with Commissioner Yusoph: Chairman Sixto Brillantes, Jr.,
Commissioner Lucenito Tagle, and Commissioner Arthur Lim. Commissioner Christian Robert Lim
joined Commissioner Guia’s dissent. Commissioner Al A. Parreño did not participate in the vote as
he was away on official business. Thus, the vote was 4-2-1 in favor of disqualification; in a per
curiam order promulgated on January 12, 2015, the Commission en banc disqualified Gov. Javier
and annulled his proclamation as the governor of Antique.

On January 20, 2015, Gov. Javier filed the present petition for certiorari under Rule 65 in relation
with Rule 64 of the Rules of Court.

THE PETITION

The petitioner argues that the Commission en banc committed grave abuse of discretion because:
(1) its January 12, 2015 order was arrived at on the basis of an "internal arrangement; and (2) the
order did not obtain a majority vote because Commissioner Arthur Lim should not have been allowed
to participate.

The petitioner also asserts that the Commission erred in ruling that R.A. 7890 did not remove
Section 261(d) of the Election Code as a ground for administrative disqualification. Finally, the
petitioner maintains that the Commission unconstitutionally set the Election Period for the May 13,
2013 elections in violation of Article IX-C, Section 9 of the Constitution, Sec. 62 (c) of the Local
Government Code, and Section 8 of Republic Act No. 7056.13

In its comment on the petition, COMELEC, through the Office of the Solicitor General (OSG),
counters that it did not abuse its discretion in issuing the January 12, 2015 order disqualifying Gov.
Javier. The Commission insists that the procedure observed during the proceedings was not infirm
and that there was no legal impediment for Commissioner Arthur Lim to participate in the en
banc vote.

On the alleged errors of law, the Commission insists that there was legal basis to disqualify Gov.
Javier under both Sections 261 (d) and (e) of the Election Code; the repeal of Section 261(d) by R.A.
7890 did not ipso facto remove coercion as a ground for disqualification under Section 68 of the
Election Code. It added that Section 261(e), on the other hand, has not been repealed, either
expressly or impliedly.

Finally, the Commission asserts that COMELEC Resolution No. 9581 fixing the date of the election
period is expressly authorized by Article IX, Section 9 of the Constitution and Section 8 of Republic
Act No. 7056.
Based on these submissions, the following issues now confront the Court:

I.

Whether the Commission gravely abused its discretion when it issued Resolution No. 9581 fixing the
2013 election period from January 13, 2013 until June 12, 2013, for the purpose of determining
administrative and criminal liability for election offenses.

II.

Whether the Commission erred in ruling that R.A. No. 7890 did not remove coercion as a ground for
disqualification under Section 68 of the Election Code.

III.

Whether the Commission en banc committed grave abuse of discretion in issuing its Order dated
January 12, 2015, disqualifying Gov. Javier and annulling his proclamation as the governor of
Antique.

OUR RULING:

After due consideration, we resolve to grant the petition.

The COMELEC is expressly authorized to fix a different date of the election period.

The petitioner contends that the election period for the reckoning of administrative and criminal
liabilities under election laws should always be the same-90 days before and 30 days after an
election-fixed in Article IX-C, Section 9 of the Constitution and Section 8 of Republic Act No.
7056.14 He argues that the Commission’s authority to fix the pre-election period refers only to the
period needed to properly administer and conduct orderly elections. The petitioner argues that by
extending the period for incurring criminal liability beyond the 90-day period, the Commission
encroached on the legislature’s prerogative to impute criminal and administrative liability on mala
prohibita acts. Therefore, COMELEC Resolution Nos. 9385 and 9581 were issued ultra vires.

We do not find this argument meritorious.

No less than the Constitution authorizes the Commission to fix the dates of the election period.
Article IX-C, Section 9 provides:

Section 9. Unless otherwise fixed by the Commission in special cases, the election period shall
commence ninety days before the day of election and shall end thirty days thereafter.15

Congress, through the Election Code, explicitly recognizes this authority:

Sec. 3. Election and campaign periods. – Unless otherwise fixed in special cases by the
Commission on Elections, which hereinafter shall be referred to as the Commission, the election
period shall commence ninety days before the day of the election and shall end thirty days
thereafter.16 (emphases supplied)

Evidently, the 120-day period is merely the default election period. The Commission is not precluded
from fixing the length and the starting date of the election period to ensure free, orderly, honest,
peaceful, and credible elections. This is not merely a statutory but a constitutionally granted power of
the Commission.

Contrary to the petitioner’s contention, the Commission’s act of fixing the election period does not
amount to an encroachment on legislative prerogative. The Commission did not prescribe or define
the elements of election offenses. Congress already defined them through the Omnibus Election
Code, the Fair Elections Act, and other pertinent election laws.

As defined by Congress, some election offenses and prohibited acts can only be committed during
the election period. An element of these offenses (i.e., that it be committed during the election
period) is variable, as election periods are not affixed to a specific and permanent date.
Nevertheless, the definition of the offense is already complete. By fixing the date of the election
period, the Commission did not change what the offense is or how it is committed. There is thus no
intrusion into the legislative sphere.

There is also no merit in the petitioner’s argument that the extended election period only applies to
pre-election activities other than the determination of administrative or criminal liability for violating
election laws. Neither the law nor the Constitution authorizes the use of two distinct election periods
for the same election. The law does not distinguish between election offenses and other pre-election
activities in terms of the applicable election period. Where the law does not distinguish, neither
should this Court.

The Alleged Lack of Due Process

We find the petitioner’s claim – that the Commission committed grave abuse of discretion since there
was no preliminary investigation as required under Section 265 of the Omnibus Election Code – to
be misplaced.17

SPA No. 13-254 was an administrative proceeding for disqualification and not a criminal prosecution
of an election offense. The due process requirements and the procedures for these are not the
same. Section 265 of the Election Code only applies to criminal prosecutions. Disqualification cases
are summary in nature and governed by Rule 25 of the COMELEC Rules of Procedure.

There is likewise no merit in the petitioner’s allegation that he was denied due process because the
Commission adjudicated the issue without conducting any subsequent hearings and without
requiring the submission of position papers or memoranda, notarized witness affidavits, or other
documentary evidence aside from the annexes included in the petition and the answer.

Administrative due process cannot be fully equated with due process in its strict judicial sense.18 A
formal hearing is not always necessary and the observance of technical rules of procedure is not
strictly applied in administrative proceedings.19 The essence of administrative due process is the right
to be heard and to be given an opportunity to explain one’s side.20 Where the Commission hears both
sides and considers their contentions, the requirements of administrative due process are complied
with.

As we held in Lanot v. Commission on Elections:21

The electoral aspect of a disqualification case determines whether the offender should be
disqualified from being a candidate or from holding office. Proceedings are summary in character
and require only clear preponderance of evidence. An erring candidate may be disqualified even
without prior determination of probable cause in a preliminary investigation. The electoral aspect
may proceed independently of the criminal aspect, and vice versa.
The criminal aspect of a disqualification case determines whether there is probable cause to charge
a candidate for an election offense. The prosecutor is the COMELEC, through its Law Department,
which determines whether probable cause exists. If there is probable cause, the COMELEC, through
its Law Department, files the criminal information before the proper court. Proceedings before the
proper court demand a full-blown hearing and require proof beyond reasonable doubt to convict. A
criminal conviction shall result in the disqualification of the offender, which may even include
disqualification from holding a future public office.

Commissioner Arthur Lim’s Participation in the En Banc Voting

The petitioner further argues that the Commission committed grave abuse of discretion by allowing
Commissioner Arthur D. Lim to participate in the proceedings before the Commission en banc. The
petitioner maintains that because Commissioner Arthur Lim took no part in the proceedings before
the COMELEC Second Division, then he should have inhibited from the en banc proceedings
pursuant to the ruling in Estrella v. COMELEC.22 If we disregard Commissioner Arthur Lim’s vote,
then the Commission would have failed to attain the necessary majority vote of all the members of
the Commission.

The petitioner’s reliance on Estrella is misplaced because the facts of this case are different from
those of the present case. Estrella involved two related election cases between the same parties: an
election protest and an action for certiorari. One party moved for Commissioner Lantion’s inhibition
which the Commission denied. However, Commissioner Lantion later inhibited himself from
the certiorari proceeding and was substituted by another Commissioner.23 The substitution order was
also adopted in the election protest case. When the election protest was elevated to the
COMELEC en banc, Commissioner Lantion participated in the deliberations and voted despite his
prior inhibition. This Court granted certiorari and held that Commissioner Lantion’s piecemeal
voluntary inhibition was illegal and unethical.

In the present case, Commissioner Arthur Lim did not inhibit from the proceedings. If the
Commissioner had inhibited, there would have been a need to replace him pursuant to Rule 3,
Section 6 of the COMELEC Rules of Procedure24 (as what happened in Estrella where there was an
issuance of an order designating Commissioner Borra as Commissioner Lantion’s substitute).
Commissioner Arthur Lim only abstained from voting; he did not participate in the deliberations.
When the Commission en banc, as a matter of internal arrangement, agreed among themselves to
submit their own opinion explaining their respective vote or merely their concurrence with either
Commissioner Elias R. Yusoph or Commissioner Luie Tito F. Guia’s position on the matter, no legal
or ethical impediment existed preventing him (Commissioner Arthur Lim) from subsequently
participating in the deliberations and from casting his vote.

COMELEC’s Internal Arrangement

The petitioner also maintains that the Commission gravely abused its discretion when it set aside its
own rules and resolved the case through an "internal arrangement." He submits that the Commission
should have waited for the assigned ponente to write an opinion before agreeing to vote based on
the positions of Commissioner Yusoph and Commissioner Guia. The petitioner also claims that the
assailed Order is a "midnight decision" and cites the absence of a promulgation date on the front
page and of a certification signed by the Chairman as procedural infirmities.

The petitioner clearly refers to Rule 18 of the COMELEC Rules of Procedure which states:

Part IV
Rule 18 – Decisions
Sec. 1 Procedure in Making Decisions. – The conclusions of the Commission in any case submitted
to it for decision en banc or in Division shall be reached in consultation before the case is
assigned by raffle to a Member for the writing of the opinion of the Commission or the Division and a
certification to this effect signed by the Chairman or the Presiding Commissioner, as the case may
be, shall be incorporated in the decision. Any member who took no part, dissented, or abstained
from a decision or resolution must state the reason therefor.

Every decision shall express therein clearly and distinctly the facts and the law on which it is
based. (emphasis supplied)

To our mind, the essence of this provision is: (1) that decisions of the Commission, whether in
Division or en banc, must be reached in consultation; and (2) that the decisions must state their
factual and legal bases. Moreover, Rule 18, Section 1 must be read together with the other
provisions of the COMELEC Rules of Procedure, particularly the following related portions:

Rule 1 – Introductory Provisions

Sec. 3. Construction – These rules shall be liberally construed in order to promote the effective
and efficient implementation of the objectives of ensuring the holding of free, orderly, honest,
peaceful and credible elections and to achieve just, expeditious and inexpensive determination and
disposition of every action and proceeding brought before the Commission.

Sec. 4. Suspension of the Rules – In the interest of justice and in order to obtain speedy
disposition of all matters pending before the Commission, these rules or any portion thereof may
be suspended by the Commission.

The COMELEC Rules specifically authorize the Commission to suspend the strict application of its
rules in the interest of justice and the speedy disposition of cases. In this case, the Commission
suspended Rule 18, Section 1. The Commission, as a body, dispensed with the preparation of
another ponencia and opted to vote on the legal positions of Commissioners Yusoph and Guia.
Nevertheless, the decision was evidently reached through consultation. Then Chairman Sixto
Brillantes, Jr., Commissioner Lucenito Tagle, and Commissioner Arthur Lim concurred with
Commissioner Yusoph. Commissioner Christian Robert Lim joined Commissioner Guia’s dissent.
Chairman Brillantes, Jr. and Commissioner Arthur Lim also wrote separate concurring opinions. The
Court does not see any arbitrariness or infirmity in this internal arrangement that would have
deprived the petitioner of due process.

Moreover, the Commission resorted to this arrangement because, as the petitioner pointed out,
three Commissioners were retiring soon. There was a need to resolve the cases because the
impending vacancies would have resulted in further delay. Contrary to the petitioner’s insinuations,
"midnight decisions" are not illegal. Judges and other quasi-judicial officers cannot sit back, relax,
and refuse to do their work just because they are nearing retirement or are near the end of their
term. As civil servants, they are expected to diligently carry out their duties until their separation from
service. Thus, the Commission’s suspension of its rules and use of an internal arrangement to
expedite its internal proceedings is not at all unusual in collegial bodies. We note that the vote was
divided and dissents were filed, thereby indicating the absence of any malicious departure from the
usual procedures in arriving at the Commission’s ruling on the case.

Absence of a Promulgated Date and Failure to Serve Advance Copy

With respect to the absence of a promulgation date on the first page of the assailed order, this Court
directs the petitioner’s attention to the last page stating that the Order was "Given this 12th day of
January 2015, Manila, Philippines.”25 Promulgation is the process by which a decision is published,
officially announced, made known to the public, or delivered to the clerk of court for filing, coupled
with notice to the parties or their counsel.26 The order was evidently promulgated on January 12,
2015.

The Commission does not deny that it failed to serve an advance copy of the order to the petitioner
as required under Rule 18, Section 527 of its Rules. But as we previously held in the cases of Lindo v.
COMELEC28 and Pimping v. COMELEC,29 this kind of procedural lapse does not affect the validity of
the order and is insufficient to warrant the grant of a writ of certiorari in the absence of any grave
abuse of discretion prejudicing the rights of the parties.

Repeal of Section 261 (d) of Batas Pambansa Blg. 881 by Republic Act No. 7890

No less than the Constitution empowers the Commission to decide all questions affecting elections
except those involving the right to vote.30 It is the sole arbiter of all issues involving elections. Hence,
unless tainted with grave abuse of discretion, simple errors of judgment committed by COMELEC
cannot be reviewed even by this Court.31

An error of judgment is one that the court may commit in the exercise of its jurisdiction; 32 they only
involve errors in the court or tribunal’s appreciation of the facts and the law.33 An error of jurisdiction
is one where the act complained of was issued by the court without or in excess of its jurisdiction, or
with grave abuse of discretion tantamount to lack or excess of jurisdiction.34

A review of the October 3, 2014 COMELEC Second Division resolution (penned by Commissioner
Yusoph), however, showed that the main thrust of this resolution ‒to which four Commissioners
concurred in when the case was elevated to the en banc – is faulty.35 It considered the repeal of
Section 261(d) by R.A. No.7890 to be an implied one, which is contrary to the wordings of R.A.
7890.

For clarity, we reproduce the pertinent provisions of R.A. No. 7890, thus:

SECTION 1. Article 286, Section Three, Chapter Two, Title Nine of Act No. 3815, as amended, is
hereby further amended to read as follows:

“ART. 286. Grave Coercions. – The penalty of prision correccional and a fine not exceeding Six
thousand pesos shall be imposed upon any person who, without any authority of law, shall, by
means of violence, threats or intimidation, prevent another from doing something not prohibited by
law, or compel him to do something against his will, whether it be right or wrong.

“If the coercion be committed in violation of the exercise of the right of suffrage, or for the purpose of
compelling another to perform any religious act, to prevent him from exercising such right or from so
doing such act, the penalty next higher in degree shall be imposed."

SEC. 2. Section 261, Paragraphs (d)(1) and (2), Article XXII of Batas Pambansa Blg. 881 is
hereby repealed.

SEC. 3. All other election laws, decrees, executive orders rules and regulations, or parts thereof
inconsistent with the provisions of this Act are hereby repealed.

xxxx
A repeal may be express or implied.36 An express repeal is one wherein a statute declares, usually in
its repealing clause, that a particular and specific law, identified by its number or title, is
repealed.37 An implied repeal, on the other hand, transpires when a substantial conflict exists
between the new and the prior laws. In the absence of an express repeal, a subsequent law cannot
be construed as repealing a prior law unless an irreconcilable inconsistency and repugnancy exist in
the terms of the new and the old laws.38

In the present case, it is clear that R.A. No. 7890 expressly repealed Section 261, paragraphs (d)(1)
and (2) of the Omnibus Election Code. The COMELEC Second Division’s October 3, 2014
resolution, however, treated this repeal as merely an implied one. Commissioner Yusoph reasoned
out as follows:

Moreover, the general repealing clause in Section 3 of RA 7890 cannot impliedly repeal Section 68
because the latter is not absolutely and irreconcilably incompatible with Article 286, as amended by
RA 7890. Meaning, a case for disqualification due to coercion under Section 68 can very well stand
apart from the criminal case for coercion under Article 286, as amended. This is so because Section
68 involves an administrative proceeding intended to disqualify a candidate whereas Article 286,
supra, involves a criminal proceeding intended to penalize coercion. Both laws, therefore, can be
given effect without nullifying the other, hence the inapplicability of implied repeal.

To firm up our stance against implied repeal of coercion as a ground for disqualification, the
following pronouncements of the Supreme Court are guiding:

“Implied repeal by irreconcilable inconsistency takes place when the two statutes cover the same
subject matter; they are so clearly inconsistent and incompatible with each other that they cannot be
reconciled or harmonized; and both cannot be given effect, that is, that one law cannot be enforced
without nullifying the other."

“Well-settled is the rule is statutory construction that implied repeals are disfavored. In order to
effect a repeal by implication, the latter statute must be so irreconcilably inconsistent and repugnant
with the existing law that they cannot be made to reconcile and stand together. The clearest case
possible must be made before the inference of implied repeal may be drawn, for inconsistency is
never presumed. x x x x"39

We point out that this resolution and the dissenting opinion of Commissioner Guia became the basis
of the internal arrangement reached upon by the Commission en banc whereby the commissioners
agreed to submit their respective opinions explaining their votes or their concurrence with either
Commissioner Yusoph or Guia.

As earlier stated, the vote was 4-2-1 in favor of disqualification; in a per curiam order promulgated on
January 12, 2015, the Commission en banc disqualified Gov. Javier and annulled his proclamation
as the governor of Antique. Chairman Brillantes and Commissioner Arthur Lim wrote their own
opinions concurring with the position of Commissioner Yusoph, while Commissioner Tagle submitted
his vote concurring with the opinions of Commissioner Yusoph and Chairman Brillantes.

In his Separate Opinion, Chairman Brillantes agreed with Commissioner Yusoph that the repeal of
Section 261(d) by R.A. No. 7890 was merely implied, and made the following disquisition:

xxxx

The Supreme Court, in a long line of cases, has constantly disfavored and struck down the use of
repeal by implication. Pursuant to jurisprudence, well entrenched is the rule that an implied repeal is
disfavored. The apparently conflicting provisions of a law or two laws should be harmonized as much
as possible, so that each shall be effective. For a law to operate to repeal another law, the two laws
must actually be inconsistent. The former must be so repugnant as to be irreconcilable with the latter
act. Stated plainly, a petition for disqualification on the ground of coercion shall be taken differently
and distinctly from coercion punishable under the RPC for the two can very well stand independently
from each other. x x x Therefore, unless proven that the two are inconsistent and would render futile
the application and enforcement of the other, only then that a repeal by implication will be preferred.
x x x x40

A law that has been expressly repealed ceases to exist and becomes inoperative from the moment
the repealing law becomes effective.41 The discussion on implied repeals by the Yusoph resolution,
(and the concurring opinion of Chairman Brillantes, Jr.), including the concomitant discussions on
the absence of irreconcilable provisions between the two laws, were thus misplaced. The
harmonization of laws can only be had when the repeal is implied, not when it is express, as in this
case.

The COMELEC’s reasoning that coercion remains to be a ground for disqualification under Section
68 of the Election Code despite the passage of R.A. No. 7890 is erroneous. To the point of our being
repetitive, R.A. No. 7890 expressly repealed Section 261 d(1) and (2) of Batas Pambansa Blg. 881,
rendering these provisions inoperative. The effect of this repeal is to remove Section 261(d) from
among those listed as ground for disqualification under Section 68 of the Omnibus Election Code.

In his Memorandum/Concurring Opinion, Commissioner Arthur Lim stated that the petition for
disqualification is anchored not only on violation of Section 261 (d), but also on the violation of
Section 261(e) in relation to Section 68 of the OEC. We point out, however, that the COMELEC
Second Division’s October 3, 2014 resolution in SPA No. 13-254 (disqualifying Gov. Javier and
annulling his proclamation as the Governor of Antique) was premised solely on violation of Section
261(d) of the OEC; it did not find that Gov. Javier – even by substantial evidence - violated the
provisions of Section 261(e). For clarity and accuracy, we quote the pertinent portions of the
COMELEC’s (Second Division) October 3, 2014 resolution:

Ineluctably, the act of Gov. Javier in preventively suspending Mayor Roquero during the Election
period ban falls within the contemplation of Section 261(d) of the Election Code which is a ground for
disqualification under Section 68, Election Code. That is, Gov. Javier issued Executive Order No.
003 suspending Mayor Roquero to coerce, intimidate, compel, or influence the latter to collaborate
with or campaign for the former, or to punish the latter for having manifested political opposition
against the former. For that, he must be disqualified.42

With the express repeal of Section 261(d), the basis for disqualifying Javier no longer existed. As we
held in Jalosjos, Jr. v. Commission on Elections,43 [t]he jurisdiction of the COMELEC to disqualify
candidates is limited to those enumerated in Section 68 of the Omnibus Election Code. All other
election offenses are beyond the ambit of COMELEC jurisdiction. They are criminal and not
administrative in nature.44 Pursuant to sections 265 and 268 of the Omnibus Election Code, the
power of the COMELEC is confined to the conduct of preliminary investigation on the alleged
election offenses for the purpose of prosecuting the alleged offenders before the regular courts of
justice.45

There is grave abuse of discretion justifying the issuance of the writ of certiorari when there is such
capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction,46 where power
is exercised arbitrarily or in a despotic manner by reason of passion, prejudice, or personal hostility
amounting to an evasion of positive duty, or to virtual refusal to perform the duty enjoined, or to act
at all in contemplation of law, as where the power is exercised in an arbitrary and despotic manner
by reason of passion and hostility.47

To our mind, the COMELEC gravely abused its discretion when it disqualified Gov. Javier based on
a provision of law that had already been expressly repealed. Its stubborn insistence that R.A. No.
7890 merely impliedly repealed Section 261 (d) despite the clear wordings of the law, amounted to
an arbitrary and whimsical exercise of judgment.

WHEREFORE, premises considered, we hereby GRANT the petition and SET ASIDE the January
12, 2015 per curiam order of the Commission on Elections en banc in SPA No. 13-254 (DC).

SO ORDERED.
G.R. No. 138810 September 29, 2004

BATANGAS CATV, INC., petitioner,

vs.
THE COURT OF APPEALS, THE BATANGAS CITY SANGGUNIANG PANLUNGSOD and
BATANGAS CITY MAYOR, respondents.

DECISION

SANDOVAL-GUTIERREZ, J.:

In the late 1940s, John Walson, an appliance dealer in Pennsylvania, suffered a decline in the sale
of television (tv) sets because of poor reception of signals in his community. Troubled, he built an
antenna on top of a nearby mountain. Using coaxial cable lines, he distributed the tv signals from the
antenna to the homes of his customers. Walson’s innovative idea improved his sales and at the
same time gave birth to a new telecommunication system -- the Community Antenna Television
(CATV) or Cable Television.1

This technological breakthrough found its way in our shores and, like in its country of origin, it
spawned legal controversies, especially in the field of regulation. The case at bar is just another
occasion to clarify a shady area. Here, we are tasked to resolve the inquiry -- may a local
government unit (LGU) regulate the subscriber rates charged by CATV operators within its territorial
jurisdiction?

This is a petition for review on certiorari filed by Batangas CATV, Inc. (petitioner herein) against
the Sangguniang Panlungsod and the Mayor of Batangas City (respondents herein) assailing the
Court of Appeals (1) Decision2 dated February 12, 1999 and (2) Resolution3 dated May 26, 1999, in
CA-G.R. CV No. 52361.4 The Appellate Court reversed and set aside the Judgment5 dated October
29, 1995 of the Regional Trial Court (RTC), Branch 7, Batangas City in Civil Case No. 4254,6 holding
that neither of the respondents has the power to fix the subscriber rates of CATV operators, such
being outside the scope of the LGU’s power.

The antecedent facts are as follows:

On July 28, 1986, respondent Sangguniang Panlungsod enacted Resolution No.

2107 granting petitioner a permit to construct, install, and operate a CATV system in
Batangas City. Section 8 of the Resolution provides that petitioner is authorized to charge its
subscribers the maximum rates specified therein, "provided, however, that any increase of
rates shall be subject to the approval of the Sangguniang Panlungsod."8

Sometime in November 1993, petitioner increased its subscriber rates from ₱88.00 to ₱180.00 per
month. As a result, respondent Mayor wrote petitioner a letter9 threatening to cancel its permit unless
it secures the approval of respondent Sangguniang Panlungsod, pursuant to Resolution No. 210.

Petitioner then filed with the RTC, Branch 7, Batangas City, a petition for injunction docketed as Civil
Case No. 4254. It alleged that respondent Sangguniang Panlungsod has no authority to regulate the
subscriber rates charged by CATV operators because under Executive Order No. 205, the National
Telecommunications Commission (NTC) has the sole authority to regulate the CATV operation in the
Philippines.

On October 29, 1995, the trial court decided in favor of petitioner, thus:
 "WHEREFORE, as prayed for, the defendants, their representatives, agents, deputies or
other persons acting on their behalf or under their instructions, are hereby enjoined from
canceling plaintiff’s permit to operate a Cable Antenna Television (CATV) system in
the City of Batangas or its environs or in any manner, from interfering with the
authority and power of the National Telecommunications Commission to grant
franchises to operate CATV systems to qualified applicants, and the right of plaintiff in
fixing its service rates which needs no prior approval of the Sangguniang
Panlungsod of Batangas City.

The counterclaim of the plaintiff is hereby dismissed. No pronouncement as to costs.

IT IS SO ORDERED."10

The trial court held that the enactment of Resolution No. 210 by respondent violates the State’s
deregulation policy as set forth by then NTC Commissioner Jose Luis A. Alcuaz in his Memorandum
dated August 25, 1989. Also, it pointed out that the sole agency of the government which can
regulate CATV operation is the NTC, and that the LGUs cannot exercise regulatory power over it
without appropriate legislation.

Unsatisfied, respondents elevated the case to the Court of Appeals, docketed as CA-G.R. CV No.
52361.

On February 12, 1999, the Appellate Court reversed and set aside the trial court’s Decision,
ratiocinating as follows:

"Although the Certificate of Authority to operate a Cable Antenna Television (CATV)

System is granted by the National Telecommunications Commission pursuant to
Executive Order No. 205, this does not preclude the Sangguniang Panlungsod from
regulating the operation of the CATV in their locality under the powers vested upon it
by Batas Pambansa Bilang 337, otherwise known as the Local Government Code of
1983. Section 177 (now Section 457 paragraph 3 (ii) of Republic Act 7160) provides:

‘Section 177. Powers and Duties – The Sangguniang Panlungsod shall:

a) Enact such ordinances as may be necessary to carry into effect and

discharge the responsibilities conferred upon it by law, and such as shall be
necessary and proper to provide for health and safety, comfort and
convenience, maintain peace and order, improve the morals, and promote
the prosperity and general welfare of the community and the inhabitants
thereof, and the protection of property therein;

xxx

d) Regulate, fix the license fee for, and tax any business or profession being
carried on and exercised within the territorial jurisdiction of the city, except
travel agencies, tourist guides, tourist transports, hotels, resorts, de luxe
restaurants, and tourist inns of international standards which shall remain
under the licensing and regulatory power of the Ministry of Tourism which
shall exercise such authority without infringement on the taxing and
regulatory powers of the city government;’
 Under cover of the General Welfare Clause as provided in this section, Local Government
Units can perform just about any power that will benefit their constituencies. Thus, local
government units can exercise powers that are: (1) expressly granted; (2) necessarily
implied from the power that is expressly granted; (3) necessary, appropriate or incidental for
its efficient and effective governance; and (4) essential to the promotion of the general
welfare of their inhabitants. (Pimentel, The Local Government Code of 1991, p. 46)

Verily, the regulation of businesses in the locality is expressly provided in the Local
Government Code. The fixing of service rates is lawful under the General Welfare
Clause.

Resolution No. 210 granting appellee a permit to construct, install and operate a community
antenna television (CATV) system in Batangas City as quoted earlier in this decision,
authorized the grantee to impose charges which cannot be increased except upon approval
of the Sangguniang Bayan. It further provided that in case of violation by the grantee of the
terms and conditions/requirements specifically provided therein, the City shall have the right
to withdraw the franchise.

Appellee increased the service rates from EIGHTY EIGHT PESOS (₱88.00) to ONE
HUNDRED EIGHTY PESOS (₱180.00) (Records, p. 25) without the approval of
appellant. Such act breached Resolution No. 210 which gives appellant the right to
withdraw the permit granted to appellee."11

Petitioner filed a motion for reconsideration but was denied.12

Hence, the instant petition for review on certiorari anchored on the following assignments of error:

"I

THE COURT OF APPEALS ERRED IN HOLDING THAT THE GENERAL WELFARE

CLAUSE of the LOCAL GOVERNMENT CODE AUTHORIZES RESPONDENT
SANGGUNIANG PANLUNGSOD TO EXERCISE THE REGULATORY FUNCTION
SOLELY LODGED WITH THE NATIONAL TELECOMMUNICATIONS COMMISSION
UNDER EXECUTIVE ORDER NO. 205, INCLUDING THE AUTHORITY TO FIX AND/OR
APPROVE THE SERVICE RATES OF CATV OPERATORS; AND

II

THE COURT OF APPEALS ERRED IN REVERSING THE DECISION APPEALED FROM

AND DISMISSING PETITIONER’S COMPLAINT."13

Petitioner contends that while Republic Act No. 7160, the Local Government Code of 1991, extends
to the LGUs the general power to perform any act that will benefit their constituents, nonetheless, it
does not authorize them to regulate the CATV operation. Pursuant to E.O. No. 205, only the NTC
has the authority to regulate the CATV operation, including the fixing of subscriber rates.

Respondents counter that the Appellate Court did not commit any reversible error in rendering the
assailed Decision. First, Resolution No. 210 was enacted pursuant to Section 177(c) and (d)
of Batas Pambansa Bilang 337, the Local Government Code of 1983, which authorizes LGUs to
regulate businesses. The term "businesses" necessarily includes the CATV industry. And second,
Resolution No. 210 is in the nature of a contract between petitioner and respondents, it being a grant
to the former of a franchise to operate a CATV system. To hold that E.O. No. 205 amended its terms
would violate the constitutional prohibition against impairment of contracts.14

The petition is impressed with merit.

Earlier, we posed the question -- may a local government unit (LGU) regulate the subscriber rates
charged by CATV operators within its territorial jurisdiction? A review of pertinent laws and
jurisprudence yields a negative answer.

President Ferdinand E. Marcos was the first one to place the CATV industry under the regulatory
power of the national government.15 On June 11, 1978, he issued Presidential Decree (P.D.) No.
151216 establishing a monopoly of the industry by granting Sining Makulay, Inc., an exclusive
franchise to operate CATV system in any place within the Philippines. Accordingly, it terminated all
franchises, permits or certificates for the operation of CATV system previously granted by local
governments or by any instrumentality or agency of the national government.17 Likewise, it
prescribed the subscriber rates to be charged by Sining Makulay, Inc. to its customers.18

On July 21, 1979, President Marcos issued Letter of Instruction (LOI) No. 894 vesting upon the
Chairman of the Board of Communications direct supervision over the operations of Sining Makulay,
Inc. Three days after, he issued E.O. No. 54619 integrating the Board of Communications20 and the
Telecommunications Control Bureau21 to form a single entity to be known as the "National
Telecommunications Commission." Two of its assigned functions are:

"a. Issue Certificate of Public Convenience for the operation of communications utilities and
services, radio communications systems, wire or wireless telephone or telegraph systems,
radio and television broadcasting system and other similar public utilities;

b. Establish, prescribe and regulate areas of operation of particular operators of public

service communications; and determine and prescribe charges or rates pertinent to the
operation of such public utility facilities and services except in cases where charges or rates
are established by international bodies or associations of which the Philippines is a
participating member or by bodies recognized by the Philippine Government as the proper
arbiter of such charges or rates;"

Although Sining Makulay Inc.’s exclusive franchise had a life term of 25 years, it was cut short by the
advent of the 1986 Revolution. Upon President Corazon C. Aquino’s assumption of power, she
issued E.O. No. 20522 opening the CATV industry to all citizens of the Philippines. It mandated the
NTC to grant Certificates of Authority to CATV operators and to issue the necessary
implementing rules and regulations.

On September 9, 1997, President Fidel V. Ramos issued E.O. No. 43623 prescribing policy
guidelines to govern CATV operation in the Philippines. Cast in more definitive terms, it restated the
NTC’s regulatory powers over CATV operations, thus:

"SECTION 2. The regulation and supervision of the cable television industry in the
Philippines shall remain vested solely with the National Telecommunications
Commission (NTC).

SECTION 3. Only persons, associations, partnerships, corporations or cooperatives, granted

a Provisional Authority or Certificate of Authority by the Commission may install, operate and
maintain a cable television system or render cable television service within a service area."
Clearly, it has been more than two decades now since our national government, through the NTC,
assumed regulatory power over the CATV industry. Changes in the political arena did not alter the
trend. Instead, subsequent presidential issuances further reinforced the NTC’s power. Significantly,
President Marcos and President Aquino, in the exercise of their legislative power, issued P.D. No.
1512, E.O. No. 546 and E.O. No. 205. Hence, they have the force and effect of statutes or laws
passed by Congress.24 That the regulatory power stays with the NTC is also clear from President
Ramos’ E.O. No. 436 mandating that the regulation and supervision of the CATV industry shall
remain vested "solely" in the NTC. Black’s Law Dictionary defines "sole" as "without another or
others."25 The logical conclusion, therefore, is that in light of the above laws and E.O. No. 436,
the NTC exercises regulatory power over CATV operators to the exclusion of other bodies.

But, lest we be misunderstood, nothing herein should be interpreted as to strip LGUs of their general
power to prescribe regulations under the general welfare clause of the Local Government Code. It
must be emphasized that when E.O. No. 436 decrees that the "regulatory power" shall be vested
"solely" in the NTC, it pertains to the "regulatory power" over those matters which are peculiarly
within the NTC’s competence, such as, the: (1) determination of rates, (2) issuance of "certificates of
authority, (3) establishment of areas of operation, (4) examination and assessment of the legal,
technical and financial qualifications of applicant operators, (5) granting of permits for the use of
frequencies, (6) regulation of ownership and operation, (7) adjudication of issues arising from its
functions, and (8) other similar matters.26 Within these areas, the NTC reigns supreme as it
possesses the exclusive power to regulate -- a power comprising varied acts, such as "to fix,
establish, or control; to adjust by rule, method or established mode; to direct by rule or restriction; or
to subject to governing principles or laws."27

Coincidentally, respondents justify their exercise of regulatory power over petitioner’s CATV
operation under the general welfare clause of the Local Government Code of 1983. The Court of
Appeals sustained their stance.

There is no dispute that respondent Sangguniang Panlungsod, like other local legislative bodies, has
been empowered to enact ordinances and approve resolutions under the general welfare clause of
B.P. Blg. 337, the Local Government Code of 1983. That it continues to posses such power is clear
under the new law, R.A. No. 7160 (the Local Government Code of 1991). Section 16 thereof
provides:

"SECTION 16. General Welfare. – Every local government unit shall exercise the powers
expressly granted, those necessarily implied therefrom, as well as powers necessary,
appropriate, or incidental for its efficient and effective governance, and those which are
essential to the promotion of the general welfare. Within their respective territorial
jurisdictions, local government units shall ensure and support, among others, the
preservation and enrichment of culture, promote health and safety, enhance the right of the
people to a balanced ecology, encourage and support the development of appropriate and
self-reliant, scientific and technological capabilities, improve public morals, enhance
economic prosperity and social justice, promote full employment among their residents,
maintain peace and order, and preserve the comfort and convenience of their inhabitants."

In addition, Section 458 of the same Code specifically mandates:

"SECTION 458. Powers, Duties, Functions and Compensation. — (a) The Sangguniang
Panlungsod, as the legislative body of the city, shall enact ordinances, approve resolutions
and appropriate funds for the general welfare of the city and its inhabitants pursuant to
Section 16 of this Code and in the proper exercise of the corporate powers of the city as
provided for under Section 22 of this Code, x x x:"
The general welfare clause is the delegation in statutory form of the police power of the State
to LGUs.28 Through this, LGUs may prescribe regulations to protect the lives, health, and property of
their constituents and maintain peace and order within their respective territorial jurisdictions.
Accordingly, we have upheld enactments providing, for instance, the regulation of gambling,29 the
occupation of rig drivers,30 the installation and operation of pinball machines,31 the maintenance and
operation of cockpits,32 the exhumation and transfer of corpses from public burial grounds,33 and the
operation of hotels, motels, and lodging houses34 as valid exercises by local legislatures of the police
power under the general welfare clause.

Like any other enterprise, CATV operation maybe regulated by LGUs under the general welfare
clause. This is primarily because the CATV system commits the indiscretion of crossing public
properties. (It uses public properties in order to reach subscribers.) The physical realities of
constructing CATV system – the use of public streets, rights of ways, the founding of structures, and
the parceling of large regions – allow an LGU a certain degree of regulation over CATV
operators.35 This is the same regulation that it exercises over all private enterprises within its
territory.

But, while we recognize the LGUs’ power under the general welfare clause, we cannot sustain
Resolution No. 210. We are convinced that respondents strayed from the well recognized limits of its
power. The flaws in Resolution No. 210 are: (1) it violates the mandate of existing laws and (2) it
violates the State’s deregulation policy over the CATV industry.

Resolution No. 210 is an enactment of an LGU acting only as agent of the national legislature.
Necessarily, its act must reflect and conform to the will of its principal. To test its validity, we must
apply the particular requisites of a valid ordinance as laid down by the accepted principles governing
municipal corporations.36

Speaking for the Court in the leading case of United States vs. Abendan,37 Justice Moreland said:
"An ordinance enacted by virtue of the general welfare clause is valid, unless it contravenes the
fundamental law of the Philippine Islands, or an Act of the Philippine Legislature, or unless it is
against public policy, or is unreasonable, oppressive, partial, discriminating, or in derogation of
common right." In De la Cruz vs. Paraz,38 we laid the general rule "that ordinances passed by virtue
of the implied power found in the general welfare clause must be reasonable, consonant with the
general powers and purposes of the corporation, and not inconsistent with the laws or policy of the
State."

The apparent defect in Resolution No. 210 is that it contravenes E.O. No. 205 and E.O. No. 436
insofar as it permits respondent Sangguniang Panlungsod to usurp a power exclusively vested in the
NTC, i.e., the power to fix the subscriber rates charged by CATV operators. As earlier discussed, the
fixing of subscriber rates is definitely one of the matters within the NTC’s exclusive domain.

In this regard, it is appropriate to stress that where the state legislature has made provision for the
regulation of conduct, it has manifested its intention that the subject matter shall be fully covered by
the statute, and that a municipality, under its general powers, cannot regulate the same
conduct.39 In Keller vs. State,40 it was held that: "Where there is no express power in the charter of a
municipality authorizing it to adopt ordinances regulating certain matters which are specifically
covered by a general statute, a municipal ordinance, insofar as it attempts to regulate the subject
which is completely covered by a general statute of the legislature, may be rendered invalid. x x x
Where the subject is of statewide concern, and the legislature has appropriated the field and
declared the rule, its declaration is binding throughout the State." A reason advanced for this view is
that such ordinances are in excess of the powers granted to the municipal corporation.41
Since E.O. No. 205, a general law, mandates that the regulation of CATV operations shall be
exercised by the NTC, an LGU cannot enact an ordinance or approve a resolution in violation of the
said law.

It is a fundamental principle that municipal ordinances are inferior in status and subordinate to the
laws of the state. An ordinance in conflict with a state law of general character and statewide
application is universally held to be invalid.42 The principle is frequently expressed in the declaration
that municipal authorities, under a general grant of power, cannot adopt ordinances which infringe
the spirit of a state law or repugnant to the general policy of the state.43 In every power to pass
ordinances given to a municipality, there is an implied restriction that the ordinances shall be
consistent with the general law.44 In the language of Justice Isagani Cruz (ret.), this Court,
in Magtajas vs. Pryce Properties Corp., Inc.,45 ruled that:

"The rationale of the requirement that the ordinances should not contravene a statute is
obvious. Municipal governments are only agents of the national government. Local councils
exercise only delegated legislative powers conferred on them by Congress as the national
lawmaking body. The delegate cannot be superior to the principal or exercise powers higher
than those of the latter. It is a heresy to suggest that the local government units can undo the
acts of Congress, from which they have derived their power in the first place, and negate by
mere ordinance the mandate of the statute.

‘Municipal corporations owe their origin to, and derive their powers and rights wholly
from the legislature. It breathes into them the breath of life, without which they cannot
exist. As it creates, so it may destroy. As it may destroy, it may abridge and control.
Unless there is some constitutional limitation on the right, the legislature might, by a
single act, and if we can suppose it capable of so great a folly and so great a wrong,
sweep from existence all of the municipal corporations in the State, and the
corporation could not prevent it. We know of no limitation on the right so far as to the
corporation themselves are concerned. They are, so to phrase it, the mere tenants at
will of the legislature.’

This basic relationship between the national legislature and the local government units has
not been enfeebled by the new provisions in the Constitution strengthening the policy of local
autonomy. Without meaning to detract from that policy, we here confirm that Congress
retains control of the local government units although in significantly reduced degree now
than under our previous Constitutions. The power to create still includes the power to
destroy. The power to grant still includes the power to withhold or recall. True, there are
certain notable innovations in the Constitution, like the direct conferment on the local
government units of the power to tax, which cannot now be withdrawn by mere statute. By
and large, however, the national legislature is still the principal of the local
government units, which cannot defy its will or modify or violate it."

Respondents have an ingenious retort against the above disquisition. Their theory is that the
regulatory power of the LGUs is granted by R.A. No. 7160 (the Local Government Code of 1991), a
handiwork of the national lawmaking authority. They contend that R.A. No. 7160 repealed E.O. No.
205 (issued by President Aquino). Respondents’ argument espouses a bad precedent. To say that
LGUs exercise the same regulatory power over matters which are peculiarly within the NTC’s
competence is to promote a scenario of LGUs and the NTC locked in constant clash over the
appropriate regulatory measure on the same subject matter. LGUs must recognize that technical
matters concerning CATV operation are within the exclusive regulatory power of the NTC.
At any rate, we find no basis to conclude that R.A. No. 7160 repealed E.O. No. 205, either expressly
or impliedly. It is noteworthy that R.A. No. 7160 repealing clause, which painstakingly mentions the
specific laws or the parts thereof which are repealed, does not include E.O. No. 205, thus:

"SECTION 534. Repealing Clause. — (a) Batas Pambansa Blg. 337, otherwise known as the
Local Government Code." Executive Order No. 112 (1987), and Executive Order No. 319
(1988) are hereby repealed.

(b) Presidential Decree Nos. 684, 1191, 1508 and such other decrees, orders, instructions,
memoranda and issuances related to or concerning the barangay are hereby repealed.

(c) The provisions of Sections 2, 3, and 4 of Republic Act No. 1939 regarding hospital fund;
Section 3, a (3) and b (2) of Republic Act. No. 5447 regarding the Special Education Fund;
Presidential Decree No. 144 as amended by Presidential Decree Nos. 559 and 1741;
Presidential Decree No. 231 as amended; Presidential Decree No. 436 as amended by
Presidential Decree No. 558; and Presidential Decree Nos. 381, 436, 464, 477, 526, 632,
752, and 1136 are hereby repealed and rendered of no force and effect.

(d) Presidential Decree No. 1594 is hereby repealed insofar as it governs locally-funded
projects.

(e) The following provisions are hereby repealed or amended insofar as they are inconsistent
with the provisions of this Code: Sections 2, 16, and 29 of Presidential Decree No. 704;
Section 12 of Presidential Decree No. 87, as amended; Sections 52, 53, 66, 67, 68, 69, 70,
71, 72, 73, and 74 of Presidential Decree No. 463, as amended; and Section 16 of
Presidential Decree No. 972, as amended, and

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

Neither is there an indication that E.O. No. 205 was impliedly repealed by R.A. No. 7160. It is a
settled rule that implied repeals are not lightly presumed in the absence of a clear and unmistakable
showing of such intentions. In Mecano vs. Commission on Audit,46 we ruled:

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

As previously stated, E.O. No. 436 (issued by President Ramos) vests upon the NTC the power to
regulate the CATV operation in this country. So also Memorandum Circular No. 8-9-95, the
Implementing Rules and Regulations of R.A. No. 7925 (the "Public Telecommunications Policy Act
of the Philippines"). This shows that the NTC’s regulatory power over CATV operation is
continuously recognized.

It is a canon of legal hermeneutics that instead of pitting one statute against another in an inevitably
destructive confrontation, courts must exert every effort to reconcile them, remembering that both
laws deserve a becoming respect as the handiwork of coordinate branches of the government.47 On
the assumption of a conflict between E.O. No. 205 and R.A. No. 7160, the proper action is not to
uphold one and annul the other but to give effect to both by harmonizing them if possible. This
recourse finds application here. Thus, we hold that the NTC, under E.O. No. 205, has exclusive
jurisdiction over matters affecting CATV operation, including specifically the fixing of subscriber
rates, but nothing herein precludes LGUs from exercising its general power, under R.A. No. 7160, to
prescribe regulations to promote the health, morals, peace, education, good order or safety and
general welfare of their constituents. In effect, both laws become equally effective and mutually
complementary.

The grant of regulatory power to the NTC is easily understandable. CATV system is not a mere local
concern. The complexities that characterize this new technology demand that it be regulated by a
specialized agency. This is particularly true in the area of rate-fixing. Rate fixing involves a series of
technical operations.48 Consequently, on the hands of the regulatory body lies the ample discretion in
the choice of such rational processes as might be appropriate to the solution of its highly
complicated and technical problems. Considering that the CATV industry is so technical a field, we
believe that the NTC, a specialized agency, is in a better position than the LGU, to regulate it.
Notably, in United States vs. Southwestern Cable Co.,49 the US Supreme Court affirmed the Federal
Communications Commission’s (FCC’s) jurisdiction over CATV operation. The Court held that the
FCC’s authority over cable systems assures the preservation of the local broadcast service and an
equitable distribution of broadcast services among the various regions of the country.

Resolution No. 210 violated the State’s deregulation policy.

Deregulation is the reduction of government regulation of business to permit freer markets and
competition.50 Oftentimes, the State, through its regulatory agencies, carries out a policy of
deregulation to attain certain objectives or to address certain problems. In the field of
telecommunications, it is recognized that many areas in the Philippines are still "unserved" or
"underserved." Thus, to encourage private sectors to venture in this field and be partners of the
government in stimulating the growth and development of telecommunications, the State promoted
the policy of deregulation.

In the United States, the country where CATV originated, the Congress observed, when it adopted
the Telecommunications Act of 1996, that there was a need to provide a pro-competitive,
deregulatory national policy framework designed to accelerate rapidly private sector deployment of
advanced telecommunications and information technologies and services to all Americans by
opening all telecommunications markets to competition. The FCC has adopted regulations to
implement the requirements of the 1996 Act and the intent of the Congress.

Our country follows the same policy. The fifth Whereas Clause of E.O. No. 436 states:

"WHEREAS, professionalism and self-regulation among existing operators, through a

nationally recognized cable television operator’s association, have enhanced the growth of
the cable television industry and must therefore be maintained along with minimal
reasonable government regulations;"

This policy reaffirms the NTC’s mandate set forth in the Memorandum dated August 25, 1989 of
Commissioner Jose Luis A. Alcuaz, to wit:

"In line with the purpose and objective of MC 4-08-88, Cable Television System or
Community Antenna Television (CATV) is made part of the broadcast media to promote the
orderly growth of the Cable Television Industry it being in its developing stage. Being part of
 the Broadcast Media, the service rates of CATV are likewise considered deregulated in
accordance with MC 06-2-81 dated 25 February 1981, the implementing guidelines for the
authorization and operation of Radio and Television Broadcasting stations/systems.

Further, the Commission will issue Provisional Authority to existing CATV operators to
authorize their operations for a period of ninety (90) days until such time that the
Commission can issue the regular Certificate of Authority."

When the State declared a policy of deregulation, the LGUs are bound to follow. To rule otherwise is
to render the State’s policy ineffective. Being mere creatures of the State, LGUs cannot defeat
national policies through enactments of contrary measures. Verily, in the case at bar, petitioner may
increase its subscriber rates without respondents’ approval.

At this juncture, it bears emphasizing that municipal corporations are bodies politic and corporate,
created not only as local units of local self-government, but as governmental agencies of the
state.51 The legislature, by establishing a municipal corporation, does not divest the State of any of
its sovereignty; absolve itself from its right and duty to administer the public affairs of the entire state;
or divest itself of any power over the inhabitants of the district which it possesses before the charter
was granted.52

Respondents likewise argue that E.O. No. 205 violates the constitutional prohibition against
impairment of contracts, Resolution No. 210 of Batangas City Sangguniang Panlungsod being a
grant of franchise to petitioner.

We are not convinced.

There is no law specifically authorizing the LGUs to grant franchises to operate CATV system.
Whatever authority the LGUs had before, the same had been withdrawn when President Marcos
issued P.D. No. 1512 "terminating all franchises, permits or certificates for the operation of CATV
system previously granted by local governments." Today, pursuant to Section 3 of E.O. No. 436,
"only persons, associations, partnerships, corporations or cooperatives granted a Provisional
Authority or Certificate of Authority by the NTC may install, operate and maintain a cable television
system or render cable television service within a service area." It is clear that in the absence of
constitutional or legislative authorization, municipalities have no power to grant
franchises.53 Consequently, the protection of the constitutional provision as to impairment of the
obligation of a contract does not extend to privileges, franchises and grants given by a municipality
in excess of its powers, or ultra vires.54

One last word. The devolution of powers to the LGUs, pursuant to the Constitutional mandate of
ensuring their autonomy, has bred jurisdictional tension between said LGUs and the State. LGUs
must be reminded that they merely form part of the whole. Thus, when the Drafters of the 1987
Constitution enunciated the policy of ensuring the autonomy of local governments,55 it was never
their intention to create an imperium in imperio and install an intra-sovereign political subdivision
independent of a single sovereign state.

WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals dated
February 12, 1999 as well as its Resolution dated May 26, 1999 in CA-G.R. CV No. 52461, are
hereby REVERSED. The RTC Decision in Civil Case No. 4254 is AFFIRMED.

No pronouncement as to costs.

SO ORDERED.
G.R. No. 100776 October 28, 1993

ALBINO S. CO, petitioner,

vs.
COURT OF APPEALS and PEOPLE OF THE PHILIPPINES, respondents.

Antonio P. Barredo for petitioner.

The Solicitor General for the people.

NARVASA, C.J.:

In connection with an agreement to salvage and refloat asunken vessel — and in payment of his
share of the expenses of the salvage operations therein stipulated — petitioner Albino Co delivered
to the salvaging firm on September 1, 1983 a check drawn against the Associated Citizens' Bank,
postdated November 30, 1983 in the sum of P361,528.00.1 The check was deposited on January 3,
1984. It was dishonored two days later, the tersely-stated reason given by the bank being: "CLOSED
ACCOUNT."

A criminal complaint for violation of Batas Pambansa Bilang 222 was filed by the salvage company
against Albino Co with the Regional Trial Court of Pasay City. The case eventuated in Co's
conviction of the crime charged, and his being sentenced to suffer a term of imprisonment of sixty
(60) days and to indemnify the salvage company in the sum of P361,528.00.

Co appealed to the Court of Appeals. There he sought exoneration upon the theory that it was
reversible error for the Regional Trial Court to have relied, as basis for its verdict of conviction, on
the ruling rendered on September 21, 1987 by this Court in Que v. People, 154 SCRA 160
(1987)3 — i.e., that a check issued merely to guarantee the performance of an obligation is
nevertheless covered by B.P. Blg. 22. This was because at the time of the issuance of the check
on September 1, 1983, some four (4) years prior to the promulgation of the judgment in Que
v. People on September 21, 1987, the delivery of a "rubber" or "bouncing" check as guarantee for an
obligation was not considered a punishable offense, an official pronouncement made in a Circular of
the Ministry of Justice. That Circular (No. 4), dated December 15, 1981, pertinently provided as
follows:

2.3.4. Where issuance of bouncing check is neither estafa nor violation of B.P. Blg.
22.

Where the check is issued as part of an arrangement to guarantee or secure the

payment of an obligation, whether pre-existing or not, the drawer is not criminally
liable for either estafa or violation of B.P. Blg. 22 (Res. No. 438, s. 1981, Virginia
Montano vs. Josefino Galvez, June 19, 1981; Res. No. 707, s. 1989; Alice Quizon vs.
Lydia Calingo, October 23, 1981, Res. No. 769, s. 1981, Alfredo Guido vs. Miguel A.
Mateo, et. al., November 17, 1981; Res. No. 589, s. 1981, Zenaida Lazaro vs. Maria
Aquino, August 7, 1981).

This administrative circular was subsequently reversed by another issued on August 8, 1984
(Ministry Circular No. 12) — almost one (1) year after Albino Co had delivered the "bouncing" check
to the complainant on September 1, 1983. Said Circular No. 12, after observing inter alia that
Circular No. 4 of December 15, 1981 appeared to have been based on "a misapplication of the
deliberation in the Batasang Pambansa, . . . (or) the explanatory note on the original bill, i.e. that the
intention was not to penalize the issuance of a check to secure or guarantee the payment of an
obligation," as follows:4

Henceforth, conforming with the rule that an administrative agency having

interpreting authority may reverse its administration interpretation of a statute, but
that its review interpretation applies only prospectively (Waterbury Savings Bank vs.
Danaher, 128 Conn., 476; 20 a2d 455 (1941), in all cases involving violation of Batas
Pambansa Blg. 22 where the check in question is issued after this date, the claim
that the check is issued as a guarantee or part of an arrangement to secure an
obligation collection will no longer be considered a valid defense.

Co's theory was rejected by the Court of Appeals which affirmed his conviction. Citing Senarillos
v. Hermosisima, 101 Phil. 561, the Appellate Court opined that the Que doctrine did not amount to
the passage of new law but was merely a construction or interpretation of a pre-existing one, i.e., BP
22, enacted on April 3, 1979.

From this adverse judgment of the Court of Appeals, Albino Co appealed to this Court
on certiorari under Rule 45 of the Rules of Court. By Resolution dated September 9, 1991, the Court
dismissed his appeal. Co moved for reconsideration under date of October 2, 1991. The Court
required comment thereon by the Office of the Solicitor General. The latter complied and, in its
comment dated December 13, 1991, extensively argued against the merits of Albino Co's theory on
appeal, which was substantially that proffered by him in the Court of Appeals. To this comment,
Albino Co filed a reply dated February 14, 1992. After deliberating on the parties' arguments and
contentions, the Court resolved, in the interests of justice, to reinstate Albino Co's appeal and
adjudicate the same on its merits.

Judicial decisions applying or interpreting the laws or the Constitution shall form a
part of the legal system of the Philippines," according to Article 8 of the Civil Code.
"Laws shall have no retroactive effect, unless the contrary is provided," declares
Article 4 of the same Code, a declaration that is echoed by Article 22 of the Revised
Penal Code: "Penal laws shall have, a retroactive effect insofar as they favor the
person guilty of a felony, who is not a habitual criminal . . .5

The principle of prospectivity of statutes, original or amendatory, has been applied in many cases.
These include: Buyco v. PNB, 961 2 SCRA 682 (June 30, 1961), holding that Republic Act No. 1576
which divested the Philippine National Bank of authority to accept back pay certificates in payment of
loans, does not apply to an offer of payment made before effectivity of the act; Largado
v. Masaganda, et al., 5 SCRA 522 (June 30, 1962), ruling that RA 2613, s amended by RA 3090 on
June, 1961, granting to inferior courts jurisdiction over guardianship cases, could not be given
retroactive effect, in the absence of a saving clause; Larga v. Ranada, Jr., 64 SCRA 18, to the effect
that Sections 9 and 10 of Executive Order No. 90, amending Section 4 of PD 1752, could have no
retroactive application; People v. Que Po Lay, 94 Phil. 640, holding that a person cannot be
convicted of violating Circular No. 20 of the Central, when the alleged violation occurred before
publication of the Circular in the Official Gazette; Baltazar v. C.A., 104 SCRA 619, denying
retroactive application to P.D. No. 27 decreeing the emancipation of tenants from the bondage of the
soil, and P.D. No. 316 prohibiting ejectment of tenants from rice and corn farmholdings, pending the
promulgation of rules and regulations implementing P.D. No. 27; Nilo v. Court of Appeals, 128 SCRA
519, adjudging that RA 6389 whichremoved "personal cultivation" as a ground for the ejectment of a
tenant cannot be given retroactive effect in the absence of a statutory statement for
retroactivity; Tac-An v. CA, 129 SCRA 319, ruling that the repeal of the old Administrative Code by
RA 4252 could not be accorded retroactive effect; Ballardo v. Borromeo, 161 SCRA 500, holding
that RA 6389 should have only prospective application; (see also Bonifacio v. Dizon, 177 SCRA 294
and Balatbat v. CA, 205 SCRA 419).

The prospectivity principle has also been made to apply to administrative rulings and circulars, to
wit: ABS-CBN Broadcasting Corporation v. CTA, Oct. 12, 1981, 108 SCRA 142, holding that a
circular or ruling of the Commissioner of Internal Revenue may not be given retroactive effect
adversely to a taxpayer: Sanchez v. COMELEC, 193 SCRA 317, ruling that Resolution No. 90-0590
of the Commission on Elections, which directed the holding of recall proceedings, had no retroactive
application; Romualdez v. CSC, 197 SCRA 168, where it was ruled that CSC Memorandum Circular
No. 29, s. 1989 cannot be given retrospective effect so as to entitle to permanent appointment an
employee whose temporary appointment had expired before the Circular was issued.

The principle of prospectivity has also been applied to judicial decisions which, "although in
themselves not laws, are nevertheless evidence of what the laws mean, . . . (this being) the reason
whyunder Article 8 of the New Civil Code, 'Judicial decisions applying or interpreting the laws or the
Constitution shall form a part of the legal system . . .'"

So did this Court hold, for example, in Peo. v. Jabinal, 55 SCRA 607, 611:

It will be noted that when appellant was appointed Secret Agent by the Provincial
Government in 1962, and Confidential Agent by the Provincial commander in 1964,
the prevailing doctrine on the matter was that laid down by Us in People
v. Macarandang (1959) and People v. Lucero (1958).6 Our decision in People
v. Mapa,7 reversing the aforesaid doctrine, came only in 1967. The sole question in
this appeal is: should appellant be acquitted on the basis of Our rulings
in Macarandang and Lucero, or should his conviction stand in view of the complete
reverse of the Macarandang and Lucero doctrine in Mapa? . . .

Decisions of this Court, although in themselves not laws, are nevertheless evidence
of what the laws mean, and this is the reason why under Article 8 of the New Civil
Code, "Judicial decisions applying or interpreting the laws or the Constitution shall
form a part of the legal system . . ."The interpretation upon a law by this Court
constitutes, in a way, a part of the law as of the date that law was originally passed,
since this Court's construction merely establishes the contemporaneous legislative
intent that the law thus construed intends to effectuate. The settled rule supported by
numerous authorities is a restatement of the legal maxim "legis interpretation legis
vim obtinet" — the interpretation placed upon the written law by a competent court
has the force of law. The doctrine laid down in Lucero and Macarandang was part of
the jurisprudence, hence, of the law, of the land, at the time appellant was found in
possession of the firearm in question and where he was arraigned by the trial court. It
is true that the doctrine was overruled in the Mapa case in 1967, but when a doctrine
of this Court is overruled and a different view is adopted, the new doctrine should be
applied prospectively, and should not apply to parties who had relied on, the old
doctrine and acted on the faith thereof. This is especially true in the construction and
application of criminal laws, where it is necessary that the punishment of an act be
reasonably foreseen for the guidance of society.

So, too, did the Court rule in Spouses Gauvain and Bernardita Benzonan v. Court of Appeals, et al.
(G.R. No. 97973) and Development Bank of the Philippines v. Court of Appeals, et al (G.R. No
97998), Jan. 27, 1992, 205 SCRA 515, 527-528:8
 We sustain the petitioners' position, It is undisputed that the subject lot was
mortgaged to DBP on February 24, 1970. It was acquired by DBP as the highest
bidder at a foreclosure sale on June 18, 1977, and then sold to the petitioners on
September 29, 1979.

At that time, the prevailing jurisprudence interpreting section 119 of R.A. 141 as
amended was that enunciated in Monge and Tupas cited above. The petitioners
Benzonan and respondent Pe and the DBP are bound by these decisions for
pursuant to Article 8 of the Civil Code "judicial decisions applying or interpreting the
laws or the Constitution shall form a part of the legal system of the Philippines." But
while our decisions form part of the law of the land, they are also subject to Article 4
of the Civil Code which provides that "laws shall have no retroactive effect unless the
contrary is provided." This is expressed in the familiar legal maxim lex prospicit, non
respicit, the law looks forward not backward. The rationale against retroactivity is
easy to perceive. The retroactive application of a law usually divests rights that have
already become vested or impairs the obligations of contract and hence, is
unconstitutional (Francisco vs. Certeza, 3 SCRA 565 [1061]).

The same consideration underlies our rulings giving only prospective effect to
decisions enunciating new doctrines. Thus, we emphasized in People v. Jabinal, 55
SCRA 607 [1974]" . . . when a doctrine of this Court is overruled and a different view
is adopted, the new doctrine should be applied prospectively and should not apply to
parties who had relied on the old doctrine and acted on the faith thereof.

A compelling rationalization of the prospectivity principle of judicial decisions is well set forth in the
oft-cited case of Chicot County Drainage Dist. v. Baxter States Bank, 308 US 371, 374 [1940]. The
Chicot doctrine advocates the imperative necessity to take account of the actual existence of a
statute prior to its nullification, as an operative fact negating acceptance of "a principle of absolute
retroactive invalidity.

Thus, in this Court's decision in Tañada v. Tuvera,9 promulgated on April 24, 1985 — which declared
"that presidential issuances of general application, which have not been published,shall have no
force and effect," and as regards which declaration some members of the Court appeared "quite
apprehensive about the possible unsettling effect . . . (the) decision might have on acts done in
reliance on the validity of these presidential decrees . . ." — the Court said:

. . . . The answer is all too familiar. In similar situation is in the past this Court, had
taken the pragmatic and realistic course set forth in Chicot County Drainage District
vs. Baxter Bank (308 U.S. 371, 374) to wit:

The courts below have proceeded on the theory that the Act of Congress, having
found to be unconstitutional, was not a law; that it was inoperative, conferring no
rights and imposing no duties, and hence affording no basis for the challenged
decree. Norton vs. Shelby County, 118 US 425, 442; Chicago, I. & L. Ry. Co. v.
Hackett, 228 U. S. 559, 566. It is quite clear, however, that such broad statements as
to the effect of a determination of unconstitutionality must be taken with
qualifications. The actual existence of a statute, prior to such a determination, is an
operative fact and may have consequences which cannot justly be ignored. The past
cannot always be erased by a new judicial declaration. The effect of the subsequent
ruling as to invalidity may have to be considered in various aspects — with respect to
particular conduct, private and official. Questions of rights claimed to have become
vested, of status, of prior determinations deemed to have finality and acted upon
 accordingly, of public policy in the light of the nature both of the statute and of its
previous application, demand examination. These questions are among the most
difficult of those who have engaged the attention of courts, state and federal, and it is
manifest from numerous decisions that an all-inclusive statement of a principle of
absolute retroactive invalidity cannot be justified.

Much earlier, in De Agbayani v. PNB, 38 SCRA 429 — concerning the effects of the invalidation of
"Republic Act No. 342, the moratorium legislation, which continued Executive Order No. 32, issued
by the then President Osmeña, suspending the enforcement of payment of all debts and other
monetary obligations payable by war sufferers," and which had been "explicitly held in Rutter v.
Esteban (93 Phil. 68 [1953] 10 . . . (to be) in 1953 'unreasonable and oppressive, and should not be
prolonged a minute longer . . ." — the Court made substantially the same observations, to wit:11

. . . . The decision now on appeal reflects the orthodox view that an unconstitutional
act, for that matter an executive order or a municipal ordinance likewise suffering
from that infirmity, cannot be the source of any legal rights or duties. Nor can it justify
any official act taken under it. Its repugnancy to the fundamental law once judicially
declared results in its being to all intents and purposes amere scrap of paper. . . . It is
understandable why it should be so, the Constitution being supreme and paramount.
Any legislative or executive act contrary to its terms cannot survive.

Such a view has support in logic and possesses the merit of simplicity. lt may not
however be sufficiently realistic. It does not admit of doubt that prior to the
declaration of nullity such challenged legislative or executive act must have been in
force and had to be compiled with. This is so as until after the judiciary, in an
appropriate case, declares its invalidity,, it is entitled to obedience and respect.
Parties may have acted under it and may have changed theirpositions, what could be
more fitting than that in a subsequent litigation regard be had to what has been done
while such legislative or executive act was in operation and presumed to be valid in
all respects. It is now accepted as a doctrine that prior to its being nullified, its
existence is a fact must be reckoned with. This is merely to reflect awareness that
precisely because the judiciary is the governmental organ which has the final say on
whether or not a legislative or executive measure is valid, a, period of time may have
elapsed before it can exercise the power of judicial review that may lead to a
declaration of nullity. It would be to deprive the law of its quality of fairness and
justice then, if there be no recognition of what had transpired prior to such
adjudication.

In the language of an American Supreme Court decision: 'The actual existence of a

statute, prior to such a determination [of unconstitutionality], is an operative fact and
may have consequences which cannot justly be ignored. The past cannot always be
erased by a new judicial declaration. The effect of the subsequent ruling as to
invalidity may have to be considered in various aspects, — with respect to particular
relations, individual and corporate, and particular conduct, private and official (Chicot
County Drainage Dist. v. Baxter States Bank, 308 US 371, 374 [1940]). This
language has been quoted with approval in a resolution in Araneta v. Hill (93 Phil.
1002 [1953]) and the decision in Manila Motor Co. Inc. v. Flores (99 Phil. 738 [1956]).
An even more recent instance is the opinion of Justice Zaldivar speaking for the
Court in Fernandez v. Cuerva and Co. (L-21114, Nov. 28, 1967, 21 SCRA 1095).

Again, treating of the effect that should be given to its decision in Olaguer v. Military Commission No
34, 12 — declaring invalid criminal proceedings conducted during the martial law regime against
civilians, which had resulted in the conviction and incarceration of numerous persons — this Court,
in Tan vs. Barrios, 190 SCRA 686, at p. 700, ruled as follows:

In the interest of justice and consistently, we hold that Olaguer should, in principle,
be applied prospectively only to future cases and cases still ongoing or not yet final
when that decision was promulgated. Hence, there should be no retroactive
nullification of final judgments, whether of conviction or acquittal, rendered by military
courts against civilians before the promulgation of the Olaguer decision. Such final
sentences should not be disturbed by the State. Only in particular cases where the
convicted person or the State shows that there was serious denial of constitutional
rights of the accused, should the nullity of the sentence be declared and a retrial be
ordered based on the violation of the constitutional rights of the accused and not on
the Olaguer doctrine. If a retrial is no longer possible, the accused should be
released since judgment against him is null on account of the violation of his
constitutional rights and denial of due process.

xxx xxx xxx

The trial of thousands of civilians for common crimes before the military tribunals and
commissions during the ten-year period of martial rule (1971-1981) which were
created under general orders issued by President Marcos in the exercise of his
legislative powers is an operative fact that may not just be ignored. The belated
declaration in 1987 of the unconstitutionality and invalidity of those proceedings did
not erase the reality of their consequences which occurred long before our decision
in Olaguer was promulgated and which now prevent us from carrying Olaguer to the
limit of its logic. Thus did this Court rule in Municipality of Malabang v. Benito, 27
SCRA 533, where the question arose as to whether the nullity of creation of a
municipality by executive order wiped out all the acts of the local government
abolished. 13

It would seem then, that the weight of authority is decidedly in favor of the proposition that the
Court's decision of September 21, 1987 in Que v. People, 154 SCRA 160 (1987) 14 that a check
issued merely to guarantee the performance of an obligation is nevertheless covered by B.P. Blg. 22
— should not be given retrospective effect to the prejudice of the petitioner and other persons
situated, who relied on the official opinion of the Minister of Justice that such a check did not fall
within the scope of B.P. Blg. 22.

Inveighing against this proposition, the Solicitor General invokes U.S. v. Go Chico, 14 Phil. 128,
applying the familiar doctrine that in crimes mala prohibita, the intent or motive of the offender is
inconsequential, the only relevant inquiry being, "has the law been violated?" The facts in Go
Chico are substantially different from those in the case at bar. In the former, there was no official
issuance by the Secretary of Justice or other government officer construing the special law
violated; 15 and it was there observed, among others, that "the defense . . . (of) an honest
misconstruction of the law under legal advice" 16 could not be appreciated as a valid defense. In the
present case on the other hand, the defense is that reliance was placed, not on the opinion of a
private lawyer but upon an official pronouncement of no less than the attorney of the Government,
the Secretary of Justice, whose opinions, though not law, are entitled to great weight and on which
reliance may be placed by private individuals is reflective of the correct interpretation of a
constitutional or statutory provision; this, particularly in the case of penal statutes, by the very nature
and scope of the authority that resides in as regards prosecutions for their violation.17 Senarillos
vs. Hermosisima, supra, relied upon by the respondent Court of Appeals, is crucially different in that
in said case, as in U.S. v. Go Chico, supra, no administrative interpretation antedated the contrary
construction placed by the Court on the law invoked.

This is after all a criminal action all doubts in which, pursuant to familiar, fundamental doctrine, must
be resolved in favor of the accused. Everything considered, the Court sees no compelling reason
why the doctrine of mala prohibita should override the principle of prospectivity, and its clear
implications as herein above set out and discussed, negating criminal liability.

WHEREFORE, the assailed decisions of the Court of Appeals and of the Regional Trial Court are
reversed and set aside, and the criminal prosecution against the accused-petitioner is DISMISSED,
with costs de oficio.

SO ORDERED.
G.R. No. 136368 January 16, 2002

JAIME TAN, JR., as Judicial Administrator of the Intestate Estate of Jaime C. Tan, petitioner,
vs.
HON. COURT OF APPEALS (Ninth Special Div.) and JOSE A. MAGDANGAL and ESTRELLA
MAGDANGAL, respondents.

PUNO, J.:

This is a petition for review of the Decision of the Court of Appeals dated July 15, 1998 1 and its
Resolution dated November 9, 19982 denying petitioner's motion for reconsideration in CA-G.R. SP-
41738.

The facts are as stated in the impugned Decision, viz:

"Involved in this case is a parcel of land, designated as Lot No. 645-C, with an area of
34,829 square meters, more or less, situated in Bunawan, Davao City. The lot was once
covered by TCT No. T-72067 of the Registry of Deeds of Davao City in the name of the late
Jaime C. Tan (Tan, for short) married to Praxedes V. Tan.

From the petition, the motion to dismiss petition, their respective annexes and other
pleadings, we gather the following factual antecedents:

On January 22, 1981, Tan, for a consideration of P59,200.00, executed a deed of absolute
sale over the property in question in favor of spouses Jose Magdangal and Estrella
Magdangal. Simultaneous with the execution of this deed, the same contracting parties
entered into another agreement whereunder Tan given one (1) year within which to redeem
or repurchase the property.

Albeit given several opportunities and/or extensions to exercise the option, Tan failed to
redeem the property until his death on January 4, 1988.

On May 2, 1988, Tan's heirs filed before the Regional Trial Court at Davao City a suit against
the Magdangals for reformation of instrument. Docketed as CIVIL CASE NO. 19049-88, the
complaint alleged that, while Tan and the Magdangals denominated their agreement as deed
of absolute sale, their real intention was to conclude an equitable mortgage.

Barely hours after the complaint was stamped 'received,' the Magdangals were able to have
Tan's title over the lot in question canceled and to secure in their names TCT No. T-134470.
This development prompted the heirs of Tan, who were to be later substituted by Jaime V.
Tan, Jr. (Tan, Jr.) as plaintiff, to file a supplemental complaint.

The intervening legal tussles are not essential to this narration. What is material is that on
June 4, 1991, Branch 11 of the Regional Trial Court of Davao City rendered judgment finding
for Tan, Jr., as plaintiff therein. The dispositive portion of the decision reads:.

'WHEREFORE, judgment is rendered:

1. The Deed of Absolute Sale (Exhibits B, B-1) is, in accordance with the true
intention of the parties, hereby declared and reformed an equitable mortgage;
 2. The plaintiff is ordered to pay the defendants within 120 days after the finality of
this decision P59,200 plus interest at the rate of 12% per annum from May 2, 1988,
the date the complaint was filed, until paid;

3. In order to avoid multiplicity of suits and to fully give effect to the true intention of
the parties, upon the payment of the aforesaid amount, TCT No. T-134470 in the
name of defendants Jose Magdangal and Estrella Magdangal (Exh. 13) and shall be
deemed canceled and null and void and TCT No. T-72067 in the name of Jaime C.
Tan and Praxedes Valles Tan (Exh. A) be reinstated).

No pronouncement as to costs.

SO ORDERED. (Annex 'B', Petition; Emphasis added).'

From the above, the Magdangals appealed to this Court in CA-G.R. CV No. 33657.

In a decision promulgated on September 28, 1995, this Court, thru its then Special Third
Division, affirmed in toto the appealed decision of the lower court. Copy of this affirmatory
judgment was each received by the Magdangals and Tan, Jr. on October 5, 1995.

On March 13, 1996, the Clerk of this Court entered in the Book of Entries of Judgment the
Decision in CA-G.R. CV No. 33657 and issued the corresponding Entry of Judgment which,
on its face, stated that the said Decision 'has on October 21, 1995 become final and
executory' (Annex 'L', Petition; Emphasis added).

On March 21, 1996, the Magdangals filed in the lower court a MOTION FOR
CONSOLIDATION AND WRIT OF POSSESSION, therein alleging that they did not appeal
from the aforesaid decision of this Court, adding '[T]hat the appealed judgment of the Court
of Appeals has become final and executory 15 days from October 5, 1995 or up to October
20, 1995, which the 120 days redemption period commences. And noting that the
redemption period has expired without Tan, Jr. exercising his option, the Magdangals thus
prayed that the title 'in the name of Jaime C. Tan and Praxedes Tan be consolidated and
confirmed in the name of the (Magdangals) x x x and pending such issuance, a writ of
possession be ordered issued (Annex "C", Petition). 1âwphi1.nêt

In opposition to this motion (Annex 'F', Petition), Tan, Jr. alleged, among other things, that
until an entry of judgment has been issued by the Court of Appeals and copy thereof
furnished the parties, the appealed decision of the court a quo in this case cannot be
considered final and executory. Pressing the point, Tan, Jr., citing Cueto vs. Collantes, infra.,
would then assert that the period of redemption on his part commenced to run from receipt of
entry of judgment in CA-G.R. CV No. 33657.

Meanwhile, Tan, Jr. via a motion for execution dated March 27, 1996, which he filed directly
with this court, prayed this court to direct the court a quo to issue the corresponding writ of
execution in Civil Case No. 19049-88. In a related move, Tan, Jr. filed on April 16, 1996, a
MANIFESTATION AND MOTION therein advising the court a quo of his intention to redeem
the property in question and of the fact that, on such date, he has deposited with its clerk of
court the repurchase price, plus interest, as required by its original decision. By way of relief,
Tan, Jr. prayed that the Magdangals be ordered to claim the amount thus deposited and the
Register of Deeds of Davao City, to reinstate the title of Jaime Tan and Praxedes Tan.
 Jointly acting on the aforementioned MOTON FOR CONSOLIDATION AND WRIT OF
POSSESION of the Magdangals (Annex 'C', Petition), MANIFESTATION AND MOTION of
Tan, Jr. (Annex 'I', Petition), the court a quo presided by the respondent judge, came out with
the first challenged order of June 10, 1996 (Annex 'N', Petition) dispositively reading, as
follows:

'WHEREFORE, x x x the Motion for Consolidation and a Writ of Possession is hereby

DENIED for lack of merit.

The deposit of the amount of P116,032.00 made by plaintiff with the Office of Court x
x x on April 17, 1996 is hereby considered full payment of the redemption price and
the Clerk of Court is hereby ordered to deliver said amount to herein defendants.

The Register of Deeds of Davao City x x x is hereby directed to cancel TCT No. T-
134470 in the name of Jose Magdangal and Estrella Magdangal and, thereafter, to
reinstate TCT No. 72067 in the name of Jaime C. Tan and Praxedes Valles Tan and
to submit her compliance thereto within ten (10) days from receipt of this Order.

SO ORDERED.'

Explaining her action, the respondent judge wrote in the same order:

'Following the ruling of the Supreme Court in Cueto vs. Collantes, et al., 97 Phil. 325,
the 120 days period for plaintiff to pay the amount of P59,200.00 plus interest x x x
should be reckoned from the date of Entry of Judgment x x x which was March 13,
1996. The plaintiff made a deposit on April 17, 1996 well within the 120-day period
mandated by the decision of this Court.'

In due time, the Magdangals moved for a reconsideration. However, in her next assailed
order of July 24, 1996 (Annex 'R', Petition), the respondent judge denied the motion for being
proforma and fatally defective."3

Petitioner assails the aforequoted Decision as follows:

"I. Petitioner's right to due process was violated when the Court of Appeals rendered a
judgment on the merits of private respondents' petition without granting to petitioner the
opportunity to controvert the same.

II. Appeal not certiorari was the appropriate remedy of private respondents as there was no
grave abuse of discretion as to amount to lack of or excess of jurisdiction on the part of the
trial judge. Neither is delay in resolving the main case a ground for giving due course to the
petition.

III. Cueto vs. Collantes, 97 Phil. 325, was disregarded by the Court of Appeals in resolving
the petition of private respondents. It is still good case law and was in effect made a part of
section 2 of Rule 68 of the 1997 Rules of Civil Procedure on Foreclosure of Mortgage.

IV. The St. Dominic vs. Intermediate Appellate Court, 138 SCRA 242 case is not applicable
to the case at bar; on the other hand the ruling in Gutierrez Hermanos vs. de La Riva, 46
Phil. 827, applies.
 V. Equity considerations justify giving due course to this petition."4 (emphasis ours)

We will immediately resolve the key issue of what rule should govern the finality of judgment
favorably obtained in the trial court by the petitioner.

The operative facts show that in its Decision of June 4, 1991, the trial court held that: (1) the contract
between the parties is not an absolute sale but an equitable mortgage; and (2) petitioner Tan should
pay to the respondents Magdangal "within 120 days after the finality of this decision P59,200.00 plus
interest at the rate of 12% per annum from May 2, 1988, the date the complaint was filed, until paid."5

On September 28, 1995 in CA-G.R. CV No. 33657, the Special Third Division of the Court of
Appeals affirmed the decision of the trial court in toto. Both parties received the decision of the
appellate court on October 5, 1995. On March 13, 1996, the clerk of court of the appellate court
entered in the Book of Entries of Judgement the decision in CA-G.R. CV No. 33657 and issued the
corresponding Entry of Judgment which, on its face, stated that the said decision "has on October
21, 1995 become final and executory."6

The respondents Magdangal filed in the trial court a Motion for Consolidation and Writ of
Possession.7 They alleged that the 120-day period of redemption of the petitioner has expired. They
reckoned that the said period began 15 days after October 5, 1995, the date when the finality of the
judgment of the trial court as affirmed by the appellate court commenced to run.

On the other hand, petitioner filed on March 27, 1996 a motion for execution in the appellate court
praying that it "direct the court a quo to issue the corresponding writ of execution in Civil Case No.
19049-88."8 On April 17, 1996, petitioner deposited with the clerk of court the repurchase price of the
lot plus interest as ordered by the decision.

On June 10, 1996, the trial court allowed the petitioner to redeem the lot in question. It ruled that the
120-day redemption period should be reckoned from the date of Entry of Judgment in the appellate
court or from March 13, 1996.9 The redemption price was deposited on April 17, 1996. As
aforestated, the Court of Appeals set aside the ruling of the trial court.

From 1991-1996, the years relevant to the case at bar, the rule that governs finality of judgment is
Rule 51 of the Revised Rules of Court. Its sections 10 and 11 provide:

"SEC. 10. Entry of judgments and final resolutions. - If no appeal or motion for new trial or
reconsideration is filed within the time provided in these Rules, the judgment or final
resolution shall forthwith be entered by the clerk in the book of entries of judgments. The
date when the judgment or final resolution becomes executory shall be deemed as the date
of its entry. The record shall contain the dispositive part of the judgment or final resolution
and shall be signed by the clerk, with a certificate that such judgment or final resolution has
become final and executory. (2a, R36)

SEC. 11. Execution of judgment. - Except where the judgment or final order or resolution, or
a portion thereof, is ordered to be immediately executory, the motion for its execution may
only be filed in the proper court after its entry.

In original actions in the Court of Appeals, its writ of execution shall be accompanied by a
certified true copy of the entry of judgment or final resolution and addressed to any
appropriate officer for its enforcement.
 In appealed cases, where the motion for execution pending appeal is filed in the Court of
Appeals at a time that it is in possession of the original record or the record on appeal, the
resolution granting such motion shall be transmitted to the lower court from which the case
originated, together with a certified true copy of the judgment or final order to be executed,
with a directive for such court of origin to issue the proper writ for its enforcement."

This rule has been interpreted by this Court in Cueto vs. Collantes as follows:10

"The only error assigned by appellants refer to the finding of the lower court that plaintiff can
still exercise his right of redemption notwithstanding the expiration of the 90-day period fixed
in the original decision and, therefore, defendants should execute the deed of reconveyance
required in said decision. Appellants contend that, the final judgment of the Court of Appeals
having been entered on July 8, 1953, the 90-day period for the exercise of the right of
redemption has long expired, it appearing that plaintiff deposited the redemption money with
the clerk of court only on October 17, 1953, or, after the expiration of 101 days. Appellee
brands this computation as erroneous, or one not in accordance with the procedure
prescribed by the rules of court.

Appellee's contention should be sustained. The original decision provides that appellee may
exercise his right of redemption within the period of 90 days from the date the judgment has
become final. It should be noted that appellee had appealed from this decision. This decision
was affirmed by the court of appeals and final judgment was entered on July 8, 1953. Does
this mean that the judgment became final on that date?

Let us make a little digression for purposes of clarification. Once a decision is rendered by
the Court of Appeals a party may appeal therefrom by certiorari by filing with the Supreme
Court a petition within 10 days from the date of entry of such decision (Section 1, Rule 46).
The entry of judgment is made after it has become final, i.e., upon the expiration of 15 days
after notice thereof to the parties (Section 8, Rule 53, as modified by a resolution of the
Supreme Court dated October 1, 1945). But, as Chief Justice Moran has said, 'such finality
*** is subject to the aggrieved party's right of filing a petition for certiorari under this section,'
which means that 'the Court of Appeals shall remand the case to the lower court for the
execution of its judgment, only after the expiration of ten (10) days from the date of such
judgment, if no petition for certiorari is filed within that period.' (1 Moran, Comments on the
Rules of Court, 1952 ed., p. 950) It would therefore appear that the date of entry of
judgment of the Court of Appeals is suspended when a petition for review is filed to await
the final entry of the resolution or decision of the Supreme Court.

Since in the present case appellee has filed a petition for review within the reglementary
period, which was dismissed by resolution of July 6, 1953, and for lack of a motion for
reconsideration the entry of final judgment was made on August 7, 1953, it follows that the
90-day period within which appellee may exercise his right of redemption should be counted
from said date, August 7, 1953. And appellee having exercised such right on October 17,
1953 by depositing the redemption money with the clerk of court, it is likewise clear that the
motion be filed for the exercise of such right is well taken and is within the purview of the
decision of the lower court."11

On April 18, 1994, this Court issued Circular No. 24-94, viz:

"TO: COURT OF APPEALS, SANDIGANBAYAN, COURT OF TAX APPEALS,

REGIONAL TRIAL COURTS, METROPOLITAN TRIAL COURTS, MUNICIPAL
 TRIAL COURTS, MUNICIPAL CIRCUIT TRIAL COURTS, AND ALL MEMBERS OF
THE INTEGRATED BAR OF THE PHILIPPINES

SUBJECT: RESOLUTION OF THE COURT EN BANC APPROVING AND

PROMULGATING THE REVISED PROVISION ON EXECUTION OF JUDGMENTS.
SPECIFICALLY IN APPEALED CASES, AND AMENDING SECTION 1, RULE 39
OF THE RULES OF COURT

It appears that in a number of instances, the execution of judgments in appealed cases

cannot be promptly enforced because of undue administrative delay in the remand of the
records to the court of origin, aggravated at times by misplacement or misdelivery of said
records. The Supreme Court Committee on the Revision of the Rules of Court has drafted
proposals including a provision which can remedy the procedural impasse created by said
contingencies.

Accordingly, pending approval by the Court of the revised rules on Civil Procedure, and to
provide a solution to the aforestated problems, the Court Resolved to approve and
promulgate the following section thereof on execution of judgments, amending Section 1,
Rule 39 of the Rules of Court:

Section 1. Execution upon judgments or final orders. - Execution shall issue as a matter of
right, on motion, upon a judgment or order that disposes of the action or proceeding upon
expiration of the period to appeal therefrom if no appeal has been duly perfected.

If the appeal has been duly perfected and finally resolved, such execution may forthwith be
applied for in the lower court from which the action originated, on motion of the judgment
obligee, submitting therewith certified true copies of the judgment or judgments or the final
order or orders sought to be enforced and of the entry thereof, with notice to the adverse
party.

The appellate court may, on motion in the same case, when the interest of justice so
requires, direct the court of origin to issue the writ of execution.

This resolution shall be published in two (2) newspapers of general circulation and shall take
effect on June 1, 1994.

April 18, 1994.

"(Sgd.) ANDRES R. NARVASA

Chief Justice"

The Circular took effect on June 1, 1994.

The 1997 Revised Rules of Civil Procedure, however, amended the rule on finality of judgment by
providing in section 1, Rule 39 as follows:

"Section 1. Execution upon judgments or final orders. - Execution shall issue as a matter of
right, on motion, upon a judgment or order that disposes of the action or proceeding upon the
expiration of the period to appeal therefrom if no appeal has been duly perfected. (1a)
 If the appeal has been duly perfected and finally resolved, the execution may forthwith be
applied for in the court of origin, on motion of the judgment obligee, submitting therewith
certified true copies of the judgment or judgments or final order or orders sought to be
enforced and of the entry thereof, with notice to the adverse party.

The appellate court may, on motion in the same case, when the interest of justice so
requires, direct the court of origin to issue the writ of execution."

The rationale of the new rule is explained by retired Justice F.D. Regalado as follows:12

"1. The term 'final order' is used in two senses depending on whether it is used on the issue
of appealability or on the issue of binding effect. For purposes of appeal, an order is "final" if
it disposes of the action, as distinguished from an interlocutory order which leaves something
to be done in the trial court with respect to the merits of the case (De la Cruz, et al. vs.
Paras, et al., L-41053, Feb. 27, 1976). For purposes of binding effect or whether it can be
subject of execution, an order is 'final' or executory after the lapse of the reglementary period
to appeal and no appeal has been perfected (see Perez, et al. vs. Zulueta, L-10374, Sept.
30, 1959; cf. Denso [Phil.], Inc. vs. IAC, et al., G.R. No. 75000, Feb. 27, 1987; Montilla vs.
CA, et al., L-47968, May 9, 1988).

2. On the aspect of appealability, these revised Rules use the adjective 'final' with respect to
orders and resolutions, since to terminate a case the trial courts issue orders while the
appellate courts and most of the quasi-judicial agencies issue resolutions. Judgment are not
so qualified since the use of the so-called interlocutory judgments is not favored in this
jurisdiction, while the categorization of an order or a resolution for purposes of denoting that
it is appealable is to distinguish them from interlocutory orders or resolutions. However, by
force of extended usage the phrase 'final and executory judgment' is sometimes used and
tolerated, although the use of 'executory' alone would suffice. These observations also apply
to the several and separate judgments contemplated in Rule 36, or partial judgments which
totally dispose of a particular claim or severable part of the case, subject to the power of the
court to suspend or defer action on an appeal from or further proceedings in such special
judgment, or as provided by Rule 35 on the matter of partial summary judgments which are
not considered as appealable (see Sec. 4, Rule 35 and the explanation therein).

The second paragraph of this section is an innovation in response to complaints over the
delay caused by the former procedure in obtaining a writ of execution of a judgment, which
has already been affirmed on appeal, with notice to the parties. As things then stood, after
the entry of judgment in the appellate court, the prevailing party had to wait for the records of
the case to be remanded to the court of origin when and where he could then move for the
issuance of a writ of execution. The intervening time could sometimes be substantial,
especially if the court a quo is in a remote province, and could also be availed of by the
losing party to delay or thwart actual execution.

On these considerations, the Supreme Court issued Circular No. 24-94, dated April 18, 1994,
approving and promulgating in advance this amended Section 1 of Rule 39 and declaring the
same effective as of June 1, 1994.

Under the present procedure, the prevailing party can secure certified true copies of the
judgment or final order of the appellate court and the entry thereof, and submit the same to
the court of origin with and to justify his motion for a writ of execution, without waiting for its
receipt of the records from the appellate court. That motion must be with notice to the
adverse party, with a hearing when the circumstances so require, to enable him to file any
 objection thereto or bring to the attention of said court matters which may have transpired
during the pendency of the appeal and which may have a bearing on the execution sought to
enforce the judgment.

The third paragraph of this section, likewise a new provision, is due to the experience of the
appellate courts wherein the trial court, for reasons of its own or other unjustifiable
circumstances, unduly delays or unreasonably refuses to act on the motion for execution or
issue the writ therefor. On motion in the same case while the records are still with the
appellate court, or even after the same have been remanded to the lower court, the appellate
court can direct the issuance of the writ of execution since such act is merely in the
enforcement of its judgment and which it has the power to require."

It is evident that if we apply the old rule on finality of judgment, petitioner redeemed the subject
property within the 120-day period of redemption reckoned from the appellate court's entry of
judgment. The appellate court, however, did not apply the old rule but the 1997 Revised Rules of
Civil Procedure. In fine, it applied the new rule retroactively and we hold that given the facts of the
case at bar this is an error.

There is no dispute that rules of procedure can be given retroactive effect. This general rule,
however, has well-delineated exceptions. We quote author Agpalo:13

"9.17. Procedural laws.

Procedural laws are adjective laws which prescribe rules and forms of procedure of enforcing
rights or obtaining redress for their invasion; they refer to rules of procedure by which courts
applying laws of all kinds can properly administer justice. They include rules of pleadings,
practice and evidence. As applied to criminal law, they provide or regulate the steps by which
one who commits a crime is to be punished.

The general rule that statutes are prospective and not retroactive does not ordinarily apply to
procedural laws. It has been held that "a retroactive law, in a legal sense, is one which takes
away or impairs vested rights acquired under laws, or creates a new obligation and imposes
a new duty, or attaches a new disability, in respect of transactions or considerations already
past. Hence, remedial statutes or statutes relating to remedies or modes of procedure, which
do not create new or take away vested rights, but only operate in furtherance of the remedy
or confirmation of rights already existing, do not come within the legal conception of a
retroactive law, or the general rule against the retroactive operation of statutes." The general
rule against giving statutes retroactive operation whose effect is to impair the obligations of
contract or to disturb vested rights does not prevent the application of statutes to
proceedings pending at the time of their enactment where they neither create new nor take
away vested rights. A new statute which deals with procedure only is presumptively
applicable to all actions - those which have accrued or are pending.

Statutes regulating the procedure of the courts will be construed as applicable to actions
pending and undetermined at the time of their passage. Procedural laws are retroactive in
that sense and to that extent. The fact that procedural statutes may somehow affect the
litigants' rights may not preclude their retroactive application to pending actions. The
retroactive application of procedural laws is not violative of any right of a person who may
feel that he is adversely affected. Nor is the retroactive application of procedural statutes
constitutionally objectionable. The reason is that as a general rule no vested right may attach
to, nor arise from, procedural laws. It has been held that "a person has no vested right in any
 particular remedy, and a litigant cannot insist on the application to the trial of his case,
whether civil or criminal, of any other than the existing rules of procedure."

Thus, the provision of Batas Bilang 129 in Section 39 thereof prescribing that "no record on
appeal shall be required to take an appeal" is procedural in nature and should therefore be
applied retroactively to pending actions. Hence, the question as to whether an appeal from
an adverse judgment should be dismissed for failure of appellant to file a record on appeal
within thirty days as required under the old rules, which question is pending resolution at the
time Batas Bilang 129 took effect, became academic upon the effectivity of said law because
the law no longer requires the filing of a record on appeal and its retroactive application
removed the legal obstacle to giving due course to the appeal. A statute which transfers the
jurisdiction to try certain cases from a court to a quasi-judicial tribunal is a remedial statute
that is applicable to claims that accrued before its enactment but formulated and filed after it
took effect, for it does not create new nor take away vested rights. The court that has
jurisdiction over a claim at the time it accrued cannot validly try the claim where at the time
the claim is formulated and filed the jurisdiction to try it has been transferred by law to a
quasi-judicial tribunal, for even actions pending in one court may be validly taken away and
transferred to another and no litigant can acquire a vested right to be heard by one particular
court.

9.18. Exceptions to the rule.

The rule that procedural laws are applicable to pending actions or proceedings admits
certain exceptions. The rule does not apply where the statute itself expressly or by
necessary implication provides that pending actions are excepted from its operation, or
where to apply it to pending proceedings would impair vested rights. Under appropriate
circumstances, courts may deny the retroactive application of procedural laws in the event
that to do so would not be feasible or would work injustice. Nor may procedural laws be
applied retroactively to pending actions if to do so would involve intricate problems of due
process or impair the independence of the courts."

We hold that section 1, Rule 39 of the 1997 Revised Rules of Procedure should not be given
retroactive effect in this case as it would result in great injustice to the petitioner. Undoubtedly,
petitioner has the right to redeem the subject lot and this right is a substantive right. Petitioner
followed the procedural rule then existing as well as the decisions of this Court governing the
reckoning date of the period of redemption when he redeemed the subject lot. Unfortunately for
petitioner, the rule was changed by the 1997 Revised Rules of Procedure which if applied
retroactively would result in his losing the right to redeem the subject lot. It is difficult to reconcile the
retroactive application of this procedural rule with the rule of fairness. Petitioner cannot be penalized
with the loss of the subject lot when he faithfully followed the laws and the rule on the period of
redemption when he made the redemption. The subject lot may only be 34,829 square meters but as
petitioner claims, "it is the only property left behind by their father, a private law practitioner who was
felled by an assassin's bullet."14

Petitioner fought to recover this lot from 1988. To lose it because of a change of procedure on the
date of reckoning of the period of redemption is inequitous. The manner of exercising the right
cannot be changed and the change applied retroactively if to do so will defeat the right of redemption
of the petitioner which is already vested.

IN VIEW WHEREOF, the decision of the Court of Appeals dated July 15, 1998 and its Resolution
dated November 9, 1998 in CA-G.R. SP-41738 are annulled and set aside. The Orders dated June
10, 1996 and July 24, 1996 of the RTC of Davao City, 11th Judicial Region, Branch 11, in Civil Case
No. 19049-88 are reinstated. No costs.

SO ORDERED.
G.R. No. 190809 February 13, 2017

DE LA SALLE ARANETA UNIVERSITY, Petitioner

vs.
JUANITO c. BERNARDO, Respondent

DECISION

LEONARDO-DE CASTRO, J.:

Before Us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court filed by De La
Salle-Araneta University (DLS-AU) seeking the annulment and reversal of the Decision1 dated June
29, 2009 and Resolution2 dated January 4, 2010 of the Court of Appeals in CA-G.R. SP No. 106399,
which affirmed in toto the Decision3 of the National Labor Relations Commission (NLRC) in NLRC
NCR CA No. 043416-05. The NLRC reversed and set aside the Labor Arbiter's Decision 4 dated
December 13, 2004 in NLRC NCR Case No. 00-02-02729-04 and found that respondent Juanito C.
Bernardo (Bernardo) was entitled to retirement benefits.

On February 26, 2004, Bernardo filed a complaint against DLS-AU and its owner/manager, Dr.
Oscar Bautista (Dr. Bautista), for the payment of retirement benefits. Bernardo alleged that he
started working as a part-time professional lecturer at DLS-AU (formerly known as the Araneta
University Foundation) on June 1, 1974 for an hourly rate of ₱20.00. Bernardo taught for two
semesters and the summer for the school year 1974-1975. Bernardo then took a leave of absence
from June 1, 197 5 to October 31, 1977 when he was assigned by the Philippine Government to
work in Papua New Guinea. When Bernardo came back in 1977, he resumed teaching at DLS-AU
until October '12, 2003, the end of the first semester for school year 2003-2004. Bernardo's teaching
contract was renewed at the start of every semester and summer. However, on November 8, 2003,
DLS-AU informed Bernardo through a telephone call that he could not teach at the school anymore
as the school was implementing the retirement age limit for its faculty members. As he was already
75 years old, Bernardo had no choice but to retire. At the time of his retirement, Bernardo was being
paid ₱246.50 per hour.5

Bernardo immediately sought advice from the Department of Labor and Employment (DOLE)
regarding his entitlement to retirement benefits after 27 years of employment. In letters dated
January 20, 20046 and February 3, 2004,7 the DOLE, through its Public Assistance Center and Legal
Service Office, opined that Bernardo was entitled to receive benefits under Republic Act No. 7641,
otherwise known as the "New Retirement Law," and its Implementing Rules and Regulations.

Yet, Dr. Bautista, in a letter8 dated February 12, 2004, stated that Bernardo was not entitled to any
kind of separation pay or benefits. Dr. Bautista explained to Bernardo that as mandated by the DLS-
AU's policy and Collective Bargaining Agreement (CBA), only full-time permanent faculty of DLS-AU
for at least five years immediately preceeding the termination of their employment could avail
themselves of the postemployment benefits. As part-time faculty member, Bernardo did not acquire
permanent employment under the Manual of Regulations for Private Schools, in relation to the Labor
Code, regardless of his length of service.

Aggrieved by the repeated denials of his claim for retirement benefits, Bernardo filed before the
NLRC, National Capital Region, a complaint for non-payment of retirement benefits and damages
against DLS-AU and Dr. Bautista.

DLS-AU and Dr. Bautista averred that DLS-AU is a non-stock, non-profit educational institution duly
organized under Philippine laws, and Dr. Bautista was then its Executive Vice-President. DLS-AU
and Dr. Bautista countered that Bernardo was hired as a part-time lecturer at the Graduate School of
DLS-AU to teach Recent Advances in Animal Nutrition for the first semester of school year 2003-
2004. As stated in the Contract for Part-Time Faculty Member Semestral, Bernardo bound himself to
teach "for the period of one semester beginning June 9, 2003 to October 12, 2003." The contract
also provided that "this Contract shall automatically expire unless expressly renewed in
writing."9 Prior contracts entered into between Bernardo and DLS-AU essentially contained the same
provisions. On November 8, 2003, DLS-AU informed Bernardo that his contract would no longer be
renewed. DLS-AU and Dr. Bautista were surprised when they received a letter from Bernardo on
February 18, 2004 claiming retirement benefits and Summons dated February 26, 2004 from the
NLRC in relation to Bernardo's complaint.10

DLS-AU and Dr. Bautista maintained that Bernardo, as a part-time employee, was not entitled to
retirement benefits. The contract between DLS-AU and Bernardo was for a fixed term, i.e., one
semester. Contracts of employment for a fixed term are not proscribed by law, provided that they
had been entered into by the parties without any force, duress, or improper pressure being brought
to bear upon the employee and absent any other circumstance vitiating consent. That DLS-AU no
longer renewed Bernardo's contract did not necessarily mean that Bernardo should be deemed
retired from service.

DLS-AU and Dr. Bautista also contended that Bernardo, as a part-time employee, was not entitled to
retirement benefits pursuant to any retirement plan, CBA, or employment contract. Neither was DLS-
AU mandated by law to pay Bernardo retirement benefits. The compulsory retirement age under
Article 302 [287] of the Labor Code, as amended, is 65 years old. When the employee reaches said
age, his/her employment is deemed terminated. The matter of extension of the employee's service is
addressed to the sound discretion of the employer; it is a privilege only the employer can grant. In
this case, Bernardo was effectively separated from the service upon reaching the age of 65 years
old. DLS-AU merely granted Bernardo the privilege to teach by engaging his services for several
more years after reaching the compulsory retirement age. Assuming arguendo that Bernardo was
entitled to retirement benefits, he should have claimed the same upon reaching the age of 65 years
old. Under Article 291 of the Labor Code, as amended, all money claims arising from employer-
employee relations shall be filed within three years from the time the cause of action accrues.

Still according to DLS-AU and Dr. Bautista, Bernardo had no cause of action against Dr. Bautista
because the latter was only acting on behalf of DLS-AU as its Executive Vice-President. It is a well-
settled rule that a corporation is a juridical entity with a legal personality separate and distinct from
the people comprising it and those acting for and on its behalf. There was no showing that Dr.
Bautista acted deliberately or maliciously in refusing to pay Bernardo his retirement benefits, so as to
make Dr. Bautista personally liable for any corporate obligations of DLS-AU to Bernardo.

Finally, DLS-AU asserted that Bernardo failed to establish the factual and legal bases for his claims
for actual, moral, and exemplary damages, and attorney's fees. There was no proof of the alleged
value of the profits or any other loss suffered by Bernardo because of the non-payment of his
retirement benefits. There was likewise no evidence of bad faith or fraud on the part of DLS-AU in
refusing to grant Bernardo retirement benefits.

On December 13, 2004, the Labor Arbiter rendered its Decision dismissing Bernardo's complaint on
the ground of prescription, thus:

[T]he age of sixty-five (65) is declared as the compulsory retirement age under Article 287 of the
Labor Code, as amended. When the compulsory retirement age is reached by an employee or
official, he is thereby effectively separated from the service (UST Faculty Union v. National Labor
Relations Commission, University of Santo Tomas, G.R. No. 89885, August 6, 1990). As mentioned
earlier, [Bernardo] is already seventy-five (75) years old, and is way past the compulsory retirement
age. If he were indeed entitled to receive his retirement pay/benefits, he should have claimed the
same ten (10) years ago upon reaching the age of sixty-five (65).

In this connection, it would be worthy to mention that the Labor Code contains a specific provision
that deals with money claims arising out of employer-employee relationships. Article 291 of the
Labor Code as amended clearly provides:

"ART 291. MONEY CLAIMS. - All money claims arising from employer-employee relations accruing
during the effectivity of this Code shall be filed within three (3) years from the time the cause of
action accrued; otherwise they shall forever be barred.

xxxx

The prescriptive period referred to in Article 291 of the Labor Code, as amended applies to all kinds
of money claims arising from employer-employee relations including claims for retirement benefits.

The ruling of the Supreme Court in De Guzman v. Court of Appeals, (G.R. No. 132257, October 12,
1998), squarely applies to the instant case:

"The language of Article 291 of the Labor Code does not limit its application only to "money claims
specifically recoverable under said Code, " but covers all money claims arising from employer-
employee relations. Since petitioners' demand for unpaid retirement/separation benefits is a money
claim arising from their employment by private respondent, Article 291 of the Labor Code is
applicable. Therefore, petitioners' claim should be filed within three years from the time their cause
of action accrued, or forever barred by prescription. "

It cannot be denied that the claim for retirement benefits/pay arose out of employer-employee
relations. In line with the decision of the Supreme Court in De Guzman, it should be treated as a
money claim that must be claimed within three years from the time the cause of action accrued.

Thus, upon reaching the compulsory retirement age of sixty-five (65), [Bernardo] was effectively
separated from the service. Clearly, such was the time when his cause of action accrued. He should
have sought the payment of such benefits/pay within three (3) years from such time. It cannot be
denied that [Bernardo] belatedly sought the payment of his retirement benefits/pay considering that
he filed the instant Complaint only ten (10) years after his cause of action accrued. For failure to
claim the retirement benefits/pay to which he claims to be entitled within three (3) years from the
time he reached the age of sixty-five (65), his claim should be forever barred.11

The Labor Arbiter decreed:

WHEREFORE, premises considered, judgment is hereby rendered DISMISSING the instant

Complaint on the ground that the claim for retirement benefits/pay is already barred by prescription.12

Bernardo appealed the foregoing Labor Arbiter's Decision to the NLRC, arguing that since he
continuously worked for DLS-AU and Dr. Bautista until October 12, 2003, he was considered retired
and the cause of action for his retirement benefits accrued only on said date. There was clearly an
agreement between Bernardo and DLS-AU that the former would continue teaching even after
reaching the compulsory retirement age of 65 years. In addition, under Republic Act No. 7641, part-
time workers are entitled to retirement pay of one-half month salary for every years of service,
provided that the following conditions are present: (a) there is no retirement plan between the
employer and employees; (b) the employee has reached the age of 60 years old for optional
retirement or 65 years old for compulsory retirement; and (c) the employee should have rendered at
least five years of service with the employer. Bernardo avowed that all these conditions were extant
in his case.

The NLRC, in its Decision dated June 30, 2008, reversed the Labor Arbiter's ruling and found that
Bernardo timely filed his complaint for retirement benefits. The NLRC pointed out that DLS-AU and
Dr. Bautista, knowing fully well that Bernardo already reached the compulsory age of retirement of
65 years old, still extended Bernardo's employment. Thus, Bernardo's cause of action for payment of
his retirement benefits accrued only on November 8, 2003, when he was informed by DLS-AU that
his contract would no longer be renewed and he was deemed separated from employment. The
principle of estoppel was also applicable against DLS-AU and Dr. Bautista who could not validly
claim prescription when they were the ones who permitted Bernardo to work beyond retirement age.
As to Bernardo's entitlement to retirement benefits, the NLRC held:

Equally untenable is the contention that [Bernardo], being a part time employee, is not entitled to
retirement benefits under Republic Act No. 7641. Indeed, a perusal of the retirement law does not
exclude a part time employee from enjoying retirement benefits. On this score, Republic Act No.
7641 explicitly provides as within its coverage "all employees in the private sector, regardless of their
position, designation, or status, and irrespective of the method by which their wages are paid"
(Section 1, Rules Implementing the New Retirement Law) (Underlined for emphasis). The only
exceptions are employees covered by the Civil Service Law; domestic helpers and persons in the
personal service of another; and employees in retail, service and agricultural establishments or
operations regularly employing not more than ten employees (ibid). Clearly, [Bernardo] does not fall
under any of the exceptions.

Lastly, it is axiomatic that retirement law should be construed liberally in favor of the employee, and
all doubts as to the intent of the laws should be resolved in favor of the retiree to achieve its
humanitarian purpose (Re: Gregorio G. Pineda, 187 SCRA 469, 1990). A contrary ruling would
inevitably defy such settled rule.13

In the end, the NLRC adjudged:

WHEREFORE, judgment is hereby rendered REVERSING and SETTING ASIDE the appealed
decision of the Labor Arbiter. Accordingly, a new one is issued finding [Bernardo] entitled to
retirement benefits under Republic Act No. 7641 and ordering [DLS-AU and Dr. Bautista] to pay
[Bernardo] his retirement benefits equivalent to at least one-half (1/2) month of his latest salary for
every year of his service. Other claims are hereby denied for lack of merit.14

In a Resolution dated September 15, 2008, the NLRC denied the Motion for Reconsideration of
DLS-AU and Dr. Bautista for lack of merit.

DLS-AU filed before the Court of Appeals a Petition for Certiorari and Prohibition, imputing grave
abuse of discretion on the part of the NLRC for (1) holding that Bernardo was entitled to retirement
benefits despite the fact that he was a mere part-time employee; and (2) not holding that Bernardo's
claim for retirement benefits was barred by prescription.

The Court of Appeals promulgated its Decision on June 29, 2009, affirming in toto the NLRC
judgment. The Court of Appeals ruled that the coverage of, as well as the exclusion from, Republic
Act No. 7641 are clearly delineated under Sections 1 and 2 of the Implementing Rules of Book VI,
Rule II of the Labor Code, as well as the Labor Advisory on Retirement Pay Law; and part-time
employees are not among those excluded from enjoying retirement benefits. Labor and social laws,
being remedial in character, should be liberally construed in order to further their purpose. The
appellate court also declared that the NLRC did not err in relying on the Implementing Rules of
Republic Act No. 7641 because administrative rules and regulations issued by a competent authority
remain valid unless shown to contravene the Constitution or used to enlarge the power of the
administrative agency beyond the scope intended.

The Court of Appeals additionally determined that Bernardo's cause of action accrued only upon his
separation from employment and the subsequent denial of his demand for retirement benefits. To
the appellate court, the NLRC was correct in applying the equitable doctrine of estoppel since the
continuous extension of Bernardo's employment, despite him being well over the statutory
compulsory age of retirement, prevented him from already claiming his retirement benefits for he
was under the impression that he could avail himself of the same eventually upon the termination of
his employment.

The dispositive portion of the Decision of the Court of Appeals reads:

WHEREFORE, the petition is DISMISSED for lack of merit. The assailed Decision of the National
Labor Relations Commission, dated 30 June 2008, is hereby AFFIRMED in toto. [Bernardo's]
application for the issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction is
accordingly DENIED.15

The Motion for Reconsideration of DLS-AU was denied by the Court of Appeals in its Resolution
dated January 4, 2010.

Hence, DLS-AU lodged the present petition before us, raising the following issues:

WHETHER OR NOT PART-TIME EMPLOYEES ARE EXCLUDED FROM THE COVERAGE OF

THOSE ENTITLED TO RETIREMENT BENEFITS UNDER REPUBLIC ACT NO. [7641].

II.

WHETHER OR NOT A CLAIM FOR RETIREMENT BENEFITS FILED BEYOND THE PERIOD
PROVIDED FOR UNDER ART. 291 OF THE LABOR CODE HAS PRESCRIBED.16

We find the instant petition bereft of merit.

Bernardo is not questioning the

termination of his employment, but
only asserting his right to retirement
benefits.

There is no dispute that Bernardo was a part-time lecturer at DLS-AU, with a fixed-term employment.
As a part-time lecturer, Bernardo did not attain permanent status. Section 93 of the 1992 Manual of
Regulations for Private Schools provided:

Sec. 93. Regular or Permanent Status. - Those who have served the probationary period shall be
made regular or permanent. Full-time teachers who have satisfactorily completed their probationary
period shall be considered regular or permanent.
Per Section 92 of the same Regulations, probationary period for academic personnel "shall not be
more than three (3) consecutive years of satisfactory service for those in the elementary and
secondary levels, six (6) consecutive regular semesters of satisfactory service for those in the
tertiary level, and nine (9) consecutive trimesters of satisfactory service for those in the tertiary level
where collegiate courses are offered on the trimester basis."

Thus, jurisprudence identified the requisites which should concur for a private school teacher to
acquire permanent status, viz.: (1) the teacher is a full-time teacher; (2) the teacher must have
rendered three consecutive years of service; and (3) such service must have been satisfactory.17

Considering the foregoing requirements, a part-time employee would not attain permanent status no
matter how long he had served the school.18 Bernardo did not become a permanent employee of
DLS-AU despite teaching there as a part-time lecturer for a total of 27 years.

Our jurisprudence had likewise settled the legitimacy of fixed-term employment. In the landmark
case of Brent School, Inc. v. Zamora,19 the Court pronounced:

From the premise - that the duties of an employee entail "activities which are usually necessary or
desirable in the usual business or trade of the employer" - the conclusion does not necessarily follow
that the employer and employee should be forbidden to stipulate any period of time for the
performance of those activities. There is nothing essentially contradictory between a definite period
of an employment contract and the nature of the employee's duties set down in that contract as
being "usually necessary or desirable in the usual business or trade of the employer." The concept of
the employee's duties as being "usually necessary or desirable in the usual business or trade of the
employer" is not synonymous with or identical to employment with a fixed term. Logically, the
decisive determinant in the term employment should not be the activities that the employee is called
upon to perform, but the day certain agreed upon by the parties for the commencement and
termination of their employment relationship, a day certain being understood to be "that which must
necessarily come, although it may not be known when." Seasonal employment, and employment for
a particular project are merely instances of employment in which a period, where not expressly set
down, is necessarily implied.

xxxx

Accordingly, and since the entire purpose behind the development of legislation culminating in the
present Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent
circumvention of the employee's right to be secure in his tenure, the clause in said article
indiscriminately and completely ruling out all written or oral agreements conflicting with the concept
of regular employment as defined therein should be construed to refer to the substantive evil that the
Code itself has singled out: agreements entered into precisely to circumvent security of tenure. It
should have no application to instances where a fixed period of employment was agreed upon
knowingly and voluntarily by the parties, without any force, duress or improper pressure being
brought to bear upon the employee and absent any other circumstances vitiating his consent, or
where it satisfactorily appears that the employer and employee dealt with each other on more or less
equal terms with no moral dominance whatever being exercised by the former over the latter. Unless
thus limited in its purview, the law would be made to apply to purposes other than those explicitly
stated by its framers; it thus becomes pointless and arbitrary, unjust in its effects and apt to lead to
absurd and unintended consequences.

Such interpretation puts the seal on [Bibiso v. Victorias Milling Co., Inc.]upon the effect of the expiry
of an agreed period of employment as still good rule - a rule reaffirmed in the recent case
of Escudero v. Office of the President (G.R. No. 57822, April 26, 1989) where, in the fairly analogous
case of a teacher being served by her school a notice of termination following the expiration of the
last of three successive fixedterm employment contracts, the Court held:

"Reyes' (the teacher's) argument is not persuasive. It loses sight of the fact that her employment was
probationary, contractual in nature, and one with a definitive period. At the expiration of the period
stipulated in the contract, her appointment was deemed terminated and the letter informing her of
the non-renewal of her contract is not a condition sine qua non before Reyes may be deemed to
have ceased in the employ of petitioner UST. The notice is a mere reminder that Reyes' contract of
employment was due to expire and that the contract would no longer be renewed. It is not a letter of
termination. The interpretation that the notice is only a reminder is consistent with the court's finding
in Labajo, supra. x xx."

Bernardo's employment with DLS-AU had always been for a fixed-term, i.e., for a semester or
summer. Absent allegation and proof to the contrary, Bernardo entered into such contracts of
employment with DLS-AU knowingly and voluntarily. Hence, Bernardo's contracts of employment
with DLS-AU for a fixed term were valid, legal, and binding. Bernardo's last contract of employment
with DLS-AU ended on October 12, 2003, upon the close of the first semester for school year 2003-
2004, without DLS-AU offering him another contract for the succeeding semester.

Nonetheless, that Bernardo was a part-time employee and his employment was for a fixed period
are immaterial in this case. Bernardo is not alleging illegal dismissal nor claiming separation pay.
Bernardo is asserting his right to retirement benefits given the termination of his employment with
DLS-AU when he was already 75 years old.

As a part-time employee with fixed-term

employment, Bernardo is
entitled to retirement benefits.

The Court declared in Aquino v. National Labor Relations Commission20 that retirement benefits are
intended to help the employee enjoy the remaining years of his life, lessening the burden of worrying
for his financial support, and are a form of reward for his loyalty and service to the employer.
Retirement benefits, where not mandated by law, may be granted by agreement of the employees
and their employer or as a voluntary act on the part of the employer.

In the present case, DLS-AU, through Dr. Bautista, denied Bernardo's claim for retirement benefits
because only full-time permanent faculty of DLS-AU are entitled to said benefits pursuant to
university policy and the CBA. Since Bernardo has not been granted retirement benefits under any
agreement with or by voluntary act of DLS-AU, the next question then is, can Bernardo claim
retirement benefits by mandate of any law?

We answer in the affirmative.

Republic Act No. 7641 is a curative social legislation. It precisely intends to give the minimum
retirement benefits to employees not entitled to the same under collective bargaining and other
agreements. It also applies to establishments with existing collective bargaining or other agreements
or voluntary retirement plans whose benefits are Jess than those prescribed in said law.21

Article 302 [287] of the Labor Code, as amended by Republic Act No. 7641, reads:

Art. 302 [287]. Retirement. -Any employee may be retired upon reaching the retirement
age established in the collective bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he may
have earned under existing Jaws and any collective bargaining agreement and other
agreements: Provided however, That an employee's retirement benefits under any collective
bargaining and other agreement shall not be less than those provided herein.

In the absence of retirement plan or agreement providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty
five (65) years which is hereby declared the compulsory retirement age, who has served at least five
(5) years in said establishment, may retire and shall be entitled to retirement pay equivalent to at
least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being
considered as one whole year.

Unless the parties provide for broader inclusions, the term one-half month salary shall mean fifteen
(15) days plus one twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five
(5) days of service incentive leaves.

xxxx

Retail, service and agricultural establishments or operations employing not more than ten
(10) employees or workers are exempted from the coverage of this provision.

Violation of this provision is hereby declared unlawful and subject to the penal provisions provided
under Article 288 of this Code. (Emphases ours.)

Book VI, Rule II of the Rules Implementing the Labor Code clearly describes the coverage of
Republic Act No. 7641 and specifically identifies the exemptions from the same, to wit:

Sec. 1. General Statement on Coverage. - This Rule shall apply to all employees in the private
sector, regardless of their position, designation or status and irrespective of the method by
which their wages are paid, except to those specifically exempted under Section 2 hereof. As
used herein, the term "Act" shall refer to Republic Act No. 7641, which took effect on January 7,
1993.

Section 2. Exemptions. - This Rule shall not apply to the following employees:

2.1 Employees of the National Government and its political subdivisions, including
Government-owned and/or controlled corporations, if they are covered by the Civil Service
Law and its regulations.

2.2 Domestic helpers and persons in the personal service of another. (Deleted by Department Order
No. 20 issued by Secretary Ma. Nieves R. Confessor on May 31, 1994.)

2.3. Employees of retail, service and agricultural establishments or operations regularly

employing not more than ten (10) employees. As used in this sub-section:

(a) "Retail establishment" is one principally engaged in the sale of goods to end-users for personal or
household use. It shall lose its retail character qualified for exemption if it is engaged in both retail
and wholesale of goods.

(b) "Service establishment" is one principally engaged in the sale of service to individuals for their
own or household use and is generally recognized as such.
(c) "Agricultural establishment/operation" refers to an employer which is engaged in agriculture. This
term refers to all farming activities in all its branches and includes, among others, the cultivation and
tillage of the soil, production, cultivation, growing and harvesting of any agricultural or horticultural
commodities, dairying, raising of livestock or poultry, the culture of fish and other aquatic products in
farms or ponds, and any activities performed by a farmer or on a farm as an incident to or in
conjunctions with such farming operations, but does not include the manufacture and/or processing
of sugar, coconut, abaca, tobacco, pineapple, aquatic or other farm products. (Emphases ours.)

Through a Labor Advisory dated October 24, 1996, then Secretary of Labor, and later Supreme
Court Justice, Leonardo A. Quisumbing (Secretary Quisumbing), provided Guidelines for the
Effective Implementation of Republic Act No. 7641, The Retirement Pay Law, addressed to all
employers in the private sector. Pertinent portions of said Labor Advisory are reproduced below:

A. COVERAGE

RA 7641 or the Retirement Pay Law shall apply to all employees in the private sector, regardless of
their position, designation or status and irrespective of the method by which their wages are
paid. They shall include part-time employees, employees of service and other job contractors
and domestic helpers or persons in the personal service of another.

The law does not cover employees of retail, service and agricultural establishments or operations
employing not more than [ten] (10) employees or workers and employees of the National
Government and its political subdivisions, including Government-owned and/or controlled
corporations, if they are covered by the Civil Service Law and its regulations.

xxxx

C. SUBSTITUTE RETIREMENT PLAN

Qualified workers shall be entitled to the retirement benefit under RA 7641 in the absence of any
individual or collective agreement, company policy or practice. x x x (Emphasis ours.)

Republic Act No. 7641 states that "any employee may be retired upon reaching the retirement age x
x x;" and "[i]n case of retirement, the employee shall be entitled to receive such retirement benefits
as he may have earned under existing laws and any collective bargaining agreement and other
agreements." The Implementing Rules provide that Republic Act No. 7641 applies to "all employees
in the private sector, regardless of their position, designation or status and irrespective of the method
by which their wages are paid, except to those specifically exempted x x x." And Secretary
Quisumbing' s Labor Advisory further clarifies that the employees covered by Republic Act No. 7641
shall "include part-time employees, employees of service and other job contractors and domestic
helpers or persons in the personal service of another."

The only exemptions specifically identified by Republic Act No. 7641 and its Implementing Rules are:
(1) employees of the National Government and its political subdivisions, including government-
owned and/or controlled corporations, if they are covered by the Civil Service Law and its
regulations; and (2) employees of retail, service and agricultural establishments or operations
regularly employing not more than 10 employees.

Based on Republic Act No. 7641, its Implementing Rules, and Secretary Quisumbing's Labor
Advisory, Bernardo, as a part-time employee of DLS-AU, is entitled to retirement benefits. The
general coverage of Republic Act No. 7641 is broad enough to encompass all private sector
employees, and part-time employees are not among those specifically exempted from the law. The
provisions of Republic Act No. 7641 and its Implementing Rules are plain, direct, unambiguous, and
need no further elucidation. Any doubt is dispelled by the unequivocal statement in Secretary
Quisumbing's Labor Advisory that Republic Act No. 7641 applies to even part-time employees.

Under the rule of statutory construction of expressio unius est exclusio alterius, Bernardo's claim for
retirement benefits cannot be denied on the ground that he was a part-time employee as part-time
employees are not among those specifically exempted under Republic Act No. 7641 or its
Implementing Rules. Said rule of statutory construction is explained thus:

It is a settled rule of statutory construction that the express mention of one person, thing, or
consequence implies the exclusion of all others. The rule is expressed in the familiar
maxim, expressio unius est exclusio alterius.

The rule of expressio unius est exclusio alterius is formulated in a number of ways. One variation of
the rule is the principle that what is expressed puts an end to that which is implied. Expressum facit
cessare taciturn. Thus, where a statute, by its terms, is expressly limited to certain matters, it may
not, by interpretation or construction, be extended to other matters.

xxxx

The rule of expressio unius est exclusio alterius and its variations are canons of restrictive
interpretation. They are based on the rules of logic and the natural workings of the human mind.
They are predicated upon one's own voluntary act and not upon that of others. They proceed from
the premise that the legislature would not have made specified enumeration in a statute had the
intention been not to restrict its meaning and confine its terms to those expressly mentioned.22

The NLRC and the Court of Appeals did not err in relying on the Implementing Rules of Republic Act
No. 7641 in their respective judgments which favored Bernardo.

Congress, through Article 5 of the Labor Code, delegated to the Department of Labor and
Employment (DOLE) and other government agencies charged with the administration and
enforcement of said Code the power to promulgate the necessary implementing rules and
regulations. It was pursuant to Article 5 of the Labor Code that then Secretary of Labor Ma. Nieves
R. Confesor issued on January 7, 1993 the Rules Implementing the New Retirement Law, which
became Rule II of Book VI of the Rules Implementing the Labor Code.

In ruling that Bernardo, as part-time employee, is entitled to retirement benefits, we do no less and
no more than apply Republic Act No. 7641 and its Implementing Rules issued by the DOLE under
the authority given to it by the Congress. Needless to stress, the Implementing Rules partake the
nature of a statute and are binding as if written in the law itself. They have the force and effect of law
and enjoy the presumption of constitutionality and legality until they are set aside with finality in an
appropriate case by a competent court.23

Moreover, as a matter of contemporaneous interpretation of law, Secretary Quisumbing's Labor

Advisory has persuasive effect. It is undisputed that in administrative law, contemporaneous and
practical interpretation of law by administrative officials charged with its administration and
enforcement carries great weight and should be respected, unless contrary to law or manifestly
erroneous.24

We further find that the Implementing Rules and Secretary Quisumbing' s Labor Advisory are
consistent with Article 4 of the Labor Code, which expressly mandates that "all doubts in the
implementation and interpretation of the provisions of this Code, including its implementing rules and
regulations, shall be resolved in favor of labor." There being no compelling argument herein to
convince us otherwise, we uphold the legality and validity of the Implementing Rules and Secretary
Quisumbing's Labor Advisory, and likewise apply the same to Bernardo's case.

For the availment of the retirement benefits under Article 302 [287] of the Labor Code, as amended
by Republic Act No. 7641, the following requisites must concur: (1) the employee has reached the
age of 60 years for optional retirement or 65 years for compulsory retirement; (2) the employee has
served at least five years in the establishment; and (3) there is no retirement plan or other applicable
agreement providing for retirement benefits of employees in the establishment. Bernardo - being 75
years old at the time of his retirement, having served DLS-AU for a total of 27 years, and not being
covered by the grant of retirement benefits in the CBA - is unquestionably qualified to avail himself of
retirement benefits under said statutory provision, i.e., equivalent to one-half month salary for every
year of service, a fraction of at least six months being considered as one whole year.25

Bernardo's employment was

extended beyond the compulsory
retirement age and the cause of
action for his retirement benefits
accrued only upon the termination of
his extended employment with DLS-AU.

Article 306 [291] of the Labor Code mandates:

Art. 306 [291]. Money claims. - All money claims arising from employer-employee relations accruing
during the effectivity of this Code shall be filed within three years from the time the cause of action
accrued; otherwise they shall be forever barred.

DLS-AU invokes UST Faculty Union v. National Labor Relations Commission,26 wherein it was held
that when an employee or official has reached the compulsory retirement age, he is thereby
effectively separated from the service. And so, DLS-AU maintains that Bernardo's cause of action for
his retirement benefits, which is patently a money claim, accrued when he reached the compulsory
retirement age of 65 years old, and had already prescribed when Bernardo filed his complaint only
10 years later, when he was already 75 years old.

We are not persuaded.

The case of UST Faculty Union is not in point as the issue involved therein was the right of a union
to intervene in the extension of the service of a retired employee. Professor Tranquilina J. Marilio
(Prof. Marilio) already reached the compulsory retirement age of 65 years old, but was granted by
the University of Sto. Tomas (UST) an extension of two years tenure. We ruled in said case that
UST no longer needed to consult the union before refusing to further extend Prof. Marilio' s tenure. 1âwphi1

A cause of action has three elements, to wit, (1) a right in favor of the plaintiff by whatever means
and under whatever law it arises or is created; (2) an obligation on the part of the named defendant
to respect or not to violate such right; and (3) an act or omission on the part of such defendant
violative of the right of the plaintiff or constituting a breach of the obligation of the defendant to the
plaintiff.27

Bernardo's right to retirement benefits and the obligation of DLS-AU to pay such benefits are already
established under Article 302 [287] of the Labor Code, as amended by Republic Act No. 7641.
However, there was a violation of Bernardo's right only after DLS-AU informed him on November 8,
2003 that the university no longer intended to offer him another contract of employment, and already
accepting his separation from service, Bernardo sought his retirement benefits, but was denied by
DLSAU. Therefore, the cause of action for Bernardo's retirement benefits only accrued after the
refusal of DLS-AU to pay him the same, clearly expressed in Dr. Bautista's letter dated February 12,
2004. Hence, Bernardo's complaint, filed with the NLRC on February 26, 2004, was filed within the
three-year prescriptive period provided under Article 291 of the Labor Code.

Even granting arguendo that Bernardo's cause of action already accrued when he reached 65 years
old, we cannot simply overlook the fact that DLS-AU had repeatedly extended Bernardo's
employment even when he already reached 65 years old. DLS-AU still knowingly offered Bernardo,
and Bernardo willingly accepted, contracts of employment to teach for semesters and summers in
the succeeding 10 years. Since DLS-AU was still continuously engaging his services even beyond
his retirement age, Bernardo deemed himself still employed and deferred his claim for retirement
benefits, under the impression that he could avail himself of the same upon the actual termination of
his employment. The equitable doctrine of estoppel is thus applicable against DLS-AU. In Planters
Development Bank v. Spouses Lopez,28 we expounded on the principle of estoppels as follows:

Section 2, Rule 131 of the Rules of Court provides that whenever a party has, by his own
declaration, act, or omission, intentionally and deliberately led another to believe that a particular
thing is true, and to act upon such belief, he cannot, in any litigation arising out of such declaration,
act or omission, be permitted to falsify it.

The concurrence of the following requisites is necessary for the principle of equitable estoppel to
apply: (a) conduct amounting to false representation or concealment of material facts or at least
calculated to convey the impression that the facts are otherwise than, and inconsistent with, those
which the party subsequently attempts to assert; (b) intent, or at least expectation that this conduct
shall be acted upon, or at least influenced by the other party; and (c) knowledge, actual or
constructive, of the actual facts.

Inaction or silence may under some circumstances amount to a misrepresentation, so as to raise an

equitable estoppel. When the silence is of such a character and under such circumstances that it
would become a fraud on the other party to permit the party who has kept silent to deny what his
silence has induced the other to believe and act on, it will operate as an estoppel. This doctrine rests
on the principle that if one maintains silence, when in conscience he ought to speak, equity will
debar him from speaking when in conscience he ought to remain silent.

DLS-AU, in this case, not only kept its silence that Bernardo had already reached the compulsory
retirement age of 65 years old, but even continuously offered him contracts of employment for the
next 10 years. It should not be allowed to escape its obligation to pay Bernardo's retirement benefits
by putting entirely the blame for the deferred claim on Bernardo's shoulders.

WHEREFORE, premises considered, the instant Petition 1s DISMISSED for lack of merit. The
Decision dated June 29, 2009 and Resolution dated January 4, 2010 of the Court of Appeals in CA-
G.R. SP No. 106399 are AFFIRMED.

SO ORDERED.
G.R. No. 192330 November 14, 2012

ARNOLD JAMES M. YSIDORO, Petitioner,

vs.
PEOPLE OF THE PHILIPPINES, Respondent.

DECISION

ABAD, J.:

This case is about a municipal mayor charged with illegal diversion of food intended for those
suffering from malnutrition to the beneficiaries of reconsideration projects affecting the homes of
victims of calamities.

The Facts and the Case

The Office of the Ombudsman for the Visayas accused Arnold James M. Ysidoro before the
Sandiganbayan in Criminal Case 28228 of violation of illegal use of public propertry (technical
malversation) under Article 220 of the Revised Penal Code.1

The facts show that the Municipal Social Welfare and Development Office (MSWDO) of Leyte,
Leyte, operated a Core Shelter Assistance Program (CSAP) that provided construction materials to
indigent calamity victims with which to rebuild their homes. The beneficiaries provided the labor
needed for construction.

On June 15, 2001 when construction for calamity victims in Sitio Luy-a, Barangay Tinugtogan, was
70% done, the beneficiaries stopped reporting for work for the reason that they had to find food for
their families. This worried Lolita Garcia (Garcia), the CSAP Officer-in-Charge, for such construction
stoppage could result in the loss of construction materials particularly the cement. Thus, she sought
the help of Cristina Polinio (Polinio), an officer of the MSWDO in charge of the municipality’s
Supplemental Feeding Program (SFP) that rationed food to malnourished children. Polinio told
Garcia that the SFP still had sacks of rice and boxes of sardines in its storeroom. And since she had
already distributed food to the mother volunteers, what remained could be given to the CSAP
beneficiaries.

Garcia and Polinio went to petitioner Arnold James M. Ysidoro, the Leyte Municipal Mayor, to seek
his approval. After explaining the situation to him, Ysidoro approved the release and signed the
withdrawal slip for four sacks of rice and two boxes of sardines worth P3,396.00 to CSAP.2 Mayor
Ysidoro instructed Garcia and Polinio, however, to consult the accounting department regarding the
matter. On being consulted, Eldelissa Elises, the supervising clerk of the Municipal Accountant’s
Office, signed the withdrawal slip based on her view that it was an emergency situation justifying the
release of the goods. Subsequently, CSAP delivered those goods to its beneficiaries. Afterwards,
Garcia reported the matter to the MSWDO and to the municipal auditor as per auditing rules.

On August 27, 2001 Alfredo Doller, former member of the Sangguniang Bayan of Leyte, filed the
present complaint against Ysidoro. Nierna Doller, Alfredo's wife and former MSWDO head, testified
that the subject SFP goods were intended for its target beneficiaries, Leyte’s malnourished children.
She also pointed out that the Supplemental Feeding Implementation Guidelines for Local
Government Units governed the distribution of SFP goods.3 Thus, Ysidoro committed technical
malversation when he approved the distribution of SFP goods to the CSAP beneficiaries.
In his defense, Ysidoro claims that the diversion of the subject goods to a project also meant for the
poor of the municipality was valid since they came from the savings of the SFP and the Calamity
Fund. Ysidoro also claims good faith, believing that the municipality’s poor CSAP beneficiaries were
also in urgent need of food. Furthermore, Ysidoro pointed out that the COA Municipal Auditor
conducted a comprehensive audit of their municipality in 2001 and found nothing irregular in its
transactions.

On February 8, 2010 the Sandiganbayan found Ysidoro guilty beyond reasonable doubt of technical
malversation. But, since his action caused no damage or embarrassment to public service, it only
fined him P1,698.00 or 50% of the sum misapplied. The Sandiganbayan held that Ysidoro applied
public property to a pubic purpose other than that for which it has been appropriated by law or
ordinance. On May 12, 2010 the Sandiganbayan denied Ysidoro’s motion for reconsideration. On
June 8, 2010 Ysidoro appealed the Sandiganbayan Decision to this Court.

The Questions Presented

In essence, Ysidoro questions the Sandiganbayan’s finding that he committed technical

malversation. He particularly raises the following questions:

1. Whether or not he approved the diversion of the subject goods to a public purpose
different from their originally intended purpose;

2. Whether or not the goods he approved for diversion were in the nature of savings that
could be used to augment the other authorized expenditures of the municipality;

3. Whether or not his failure to present the municipal auditor can be taken against him; and

4. Whether or not good faith is a valid defense for technical malversation.

The Court’s Rulings

One. The crime of technical malversation as penalized under Article 220 of the Revised Penal
Code4 has three elements: a) that the offender is an accountable public officer; b) that he applies
public funds or property under his administration to some public use; and c) that the public use for
which such funds or property were applied is different from the purpose for which they were
originally appropriated by law or ordinance.5 Ysidoro claims that he could not be held liable for the
offense under its third element because the four sacks of rice and two boxes of sardines he gave the
CSAP beneficiaries were not appropriated by law or ordinance for a specific purpose.

But the evidence shows that on November 8, 2000 the Sangguniang Bayan of Leyte enacted
Resolution 00-133 appropriating the annual general fund for 2001.6 This appropriation was based on
the executive budget7 which allocated P100,000.00 for the SFP and P113,957.64 for the
Comprehensive and Integrated Delivery of Social Services8 which covers the CSAP housing
projects.9 The creation of the two items shows the Sanggunian’s intention to appropriate separate
funds for SFP and the CSAP in the annual budget.

Since the municipality bought the subject goods using SFP funds, then those goods should be used
for SFP’s needs, observing the rules prescribed for identifying the qualified beneficiaries of its
feeding programs. The target clientele of the SFP according to its manual10 are: 1) the moderately
and severely underweight pre-school children aged 36 months to 72 months; and 2) the families of
six members whose total monthly income is P3,675.00 and below.11 This rule provides assurance that
the SFP would cater only to the malnourished among its people who are in urgent need of the
government’s limited resources.

Ysidoro disregarded the guidelines when he approved the distribution of the goods to those
providing free labor for the rebuilding of their own homes. This is technical malversation. If Ysidoro
could not legally distribute the construction materials appropriated for the CSAP housing
beneficiaries to the SFP malnourished clients neither could he distribute the food intended for the
latter to CSAP beneficiaries.

Two. Ysidoro claims that the subject goods already constituted savings of the SFP and that,
therefore, the same could already be diverted to the CSAP beneficiaries. He relies on Abdulla v.
People12 which states that funds classified as savings are not considered appropriated by law or
ordinance and can be used for other public purposes. The Court cannot accept Ysidoro’s argument.

The subject goods could not be regarded as savings. The SFP is a continuing program that ran
throughout the year. Consequently, no one could say in mid-June 2001 that SFP had already
finished its project, leaving funds or goods that it no longer needed. The fact that Polinio had already
distributed the food items needed by the SFP beneficiaries for the second quarter of 2001 does not
mean that the remaining food items in its storeroom constituted unneeded savings. Since the
requirements of hungry mouths are hard to predict to the last sack of rice or can of sardines, the
view that the subject goods were no longer needed for the remainder of the year was quite
premature.

In any case, the Local Government Code provides that an ordinance has to be enacted to validly
apply funds, already appropriated for a determined public purpose, to some other purpose. Thus:

SEC. 336. Use of Appropriated Funds and Savings. – Funds shall be available exclusively for the
specific purpose for which they have been appropriated. No ordinance shall be passed authorizing
any transfer of appropriations from one item to another. However, the local chief executive or the
presiding officer of the sanggunian concerned may, by ordinance, be authorized to augment any
item in the approved annual budget for their respective offices from savings in other items within the
same expense class of their respective appropriations.

The power of the purse is vested in the local legislative body. By requiring an ordinance, the law
gives the Sanggunian the power to determine whether savings have accrued and to authorize the
augmentation of other items on the budget with those savings.

Three. Ysidoro claims that, since the municipal auditor found nothing irregular in the diversion of the
subject goods, such finding should be respected. The SB ruled, however, that since Ysidoro failed to
present the municipal auditor at the trial, the presumption is that his testimony would have been
adverse if produced. Ysidoro argues that this goes against the rule on the presumption of innocence
and the presumption of regularity in the performance of official functions.

Ysidoro may be right in that there is no basis for assuming that had the municipal auditor testified,
his testimony would have been adverse to the mayor. The municipal auditor’s view regarding the
transaction is not conclusive to the case and will not necessarily negate the mayor’s liability if it
happened to be favorable to him. The Court will not, therefore, be drawn into speculations regarding
what the municipal auditor would have said had he appeared and testified.

Four. Ysidoro insists that he acted in good faith since, first, the idea of using the SFP goods for the
CSAP beneficiaries came, not from him, but from Garcia and Polinio; and, second, he consulted the
accounting department if the goods could be distributed to those beneficiaries. Having no criminal
intent, he argues that he cannot be convicted of the crime.
1âwphi1

But criminal intent is not an element of technical malversation. The law punishes the act of diverting
public property earmarked by law or ordinance for a particular public purpose to another public
purpose. The offense is mala prohibita, meaning that the prohibited act is not inherently immoral but
becomes a criminal offense because positive law forbids its commission based on considerations of
public policy, order, and convenience.13 It is the commission of an act as defined by the law, and not
the character or effect thereof, that determines whether or not the provision has been violated.
Hence, malice or criminal intent is completely irrelevant.14

Dura lex sed lex. Ysidoro’s act, no matter how noble or miniscule the amount diverted, constitutes
the crime of technical malversation. The law and this Court, however, recognize that his offense is
not grave, warranting a mere fine.

WHEREFORE, this Court AFFIRMS in its entirely the assailed Decision of the Sandiganbayan in
Criminal Case 28228 dated February 8, 2010.

SO ORDERED.
G.R. No. 225022 February 5, 2018

CAROLINA QUE VILLONGCO, ANA MARIA QUE TAN, ANGELICA QUE GONZALES, ELAINE
VICTORIA QUE TAN AND EDISON WILLIAMS QUE TAN, Petitioners
v.
CECILIA QUE YABUT, EUMIR CARLO QUE CAMARA AND MA. CORAZON QUE GARCIA,
Respondents

G.R. No. 225024 February 5, 2018

CECILIA QUE YABUT, EUMIR CARLO QUE CAMARA AND MA. CORAZON QUE GARCIA,
Petitioners
v.
CAROLINA QUE VILLONGCO, ANA MARIA QUE TAN, ANGELICA QUE GONZALES, ELAINE
VICTORIA QUE TAN AND EDISON WILLIAMS QUE TAN, Respondents.

DECISION

TIJAM, J.:

Before Us are separate Petitions for Review on Certiorari1 assailing the Decision2 dated September
4, 2015 and Amended Decision3 dated June 8, 2016 of the Court of Appeals (CA) in CA-G.R. SP
No. 134666 declaring the annual stockholder's meeting held by Cecilia Que Yabut, Eumir Carlo Que
and Ma. Corazon Que Garcia (Cecilia Que, et al.) on January 25, 2014 void for lack of quorum and
declared all acts performed by Cecilia Que, et al. as ultra vires acts as they were not legally clothed
with corporate authority to do so.

The pertinent facts of the case as found by the CA are as follows:

Phil-Ville Development and Housing Corporation (Phil-Ville) is a family corporation founded by

Geronima Gallego Que (Geronima) that is engaged in the real estate business. The authorized
capital stock of Phil-Ville is Twenty Million Pesos (P20,000,000) divided into Two Hundred Thousand
(200,000) shares with a par value of One Hundred Pesos (P100.00) per share. During her lifetime,
Geronima owned 3,140 shares of stock while the remaining 196,860 shares were equally distributed
among Geronima's six children, namely: Carolina Que Villongco, Ana Maria Que Tan, Angelica Que
Gonzales, Cecilia Que Yabut, Ma. Corazon Que Garcia, and Maria Luisa Que Camara, as follows:

(a) Carolina Que Villongco- 32,810 shares;

(b) Ana Maria Que Tan- out of her 32,810 shares, she retained 17,710 shares and transferred the
rest to her six children, thus: Edmund Williams Que Tan- 2,600 shares; Edward Williams Que Tan-
2,500 [shares]; Edison Williams Que Tan- 2,500 shares; Elaine Victoria Que Tan[-] 2,500 shares;
Eloisa Victoria- 2,500 shares; and Elinor Victoria- 2,500 shares;

(c) Angelica Que Gonzales- 32,810;

(d) Cecilia Que Yabut- out of her 32,810 shares, she retained 22,810 shares and transferred the rest
to her four children, thus: Geminiano Que Yabut III- 2,500 shares; Carlos Que Yabut- 2,500 shares;
Geronimo Que Yabut- 2,500 shares; and Jose Elston Que Yabut- 2,500 shares;
(e) Ma. Corazon Que Garcia- out of her 32,810 shares, she retained 21,460 shares and transferred
the rest to her four children, thus: Anthony Que Garcia- 2,500 shares; Geronima Que Garcia- 2,950
shares; Michelle Que Garcia- 2,950 shares; and Ma. Christina Que Garcia- 2,950 shares;

(f) Maria Luisa Que Camara- upon her death, her shares were divided among her children: Eumir
Que Camara- 10,936.67 shares; Pablo Que Camara- 10,936.67 shares; and Abimar Que Camara-
10,936.66 shares.

Geronima died on August 31, 2007. By virtue of the Sale of Shares of Stocks dated June 11, 2005
purportedly executed by Cecilia as the attorney-in-fact of Geronima, Cecilia allegedly effected an
inequitable distribution of the 3,140 shares that belonged to Geronima, to wit:

(a) Carolina's children were given a total of 523 shares distributed as follows: Francis Villongco- 131
shares; Carlo Villongco- 131 shares; Michael Villongco- 131 shares; and Marcelia Villongco- 130
shares;

(b) Ana Maria's daughter Elaine Victoria Que Tan was given 523 shares;

(c) Angelica- 523 shares;

(d) Cecilia's children were given a total of 524 shares distributed as follows: Geminiano Yabut- 131
shares; Carlos Yabut- 131 shares; Geronimo Yabut- 131 shares; and John Elston Yabut- 131
shares;

(e) Ma. Corazon's son Anthony Garcia was given 523 shares;

(f) Maria Luisa's children were given a total of 524 shares distributed as follows: Eumir Carlo
Camara- 174 shares; Paolo Camara- 175 shares; Abimar Camara-175 shares[.]

Accordingly, the distribution of Geronima's shares in accordance with the Sale of Shares of Stocks
was reflected in the General Information Sheets filed by Phil-Ville in 2010 and 2011, x x x

On January 18, 2013, Cecilia, Eumir Carlo Que Camara and Ma. Corazon [Cecilia Que, et. al.] wrote
a letter to Ana Maria, Corporate Secretary of Phil-Ville, to send out notices for the holding of the
annual stockholders' meeting. However, before Ana Maria could reply thereto, on January 21, 2013,
several letters were sent to Phil-Ville's stockholders containing a document captioned "Notice of
Annual Stockholders' Meeting" signed by Cecilia and Ma. Corazon as directors, x x x

xxxx

Thereafter, Carolina, Ana Maria, and Angelica, comprising the majority of the Board of Directors of
Phil-Ville held an emergency meeting and made a decision, by concensus, to postpone the annual
stockholders' meeting of Phil-Ville until the issue of the distribution of the 3,140 shares of stocks in
the name of certain stockholders is settled. All the stockholders were apprised of the decision to
postpone the meeting in a letter dated January 21, 2013. Ana Maria, in her capacity as Corporate
Secretary and Director of Phil-Ville likewise gave notice to the Securities and Exchange Commission
(SEC) with regard to the postponement of the meeting.

xxxx
Despite the postponement, however, [Cecilia Que, et al.] proceeded with the scheduled annual
stockholder's meeting participated only by a few stockholders. In the said meeting, they elected the
new members of the Board of Directors and officers of Phil-Ville namely: Cecilia, Ma. Corazon and
Eumir, Chairman/Vice President/Treasurer, President/General Manager, and Secretary,
respectively.

Meantime, two days prior to the stockholders' meeting, Carolina, Ana Maria, and Angelica, together
with several others, had already filed a Complaint for Annulment of Sale/Distribution or Settlement of
Shares of Stock/Injunction against Cecilia, Eumir Carlo and Ma. Corazon. They subsequently filed
an Amended and Supplemental Complaint for Annulment of Sale/Distribution or Settlement of
Shares of Stock/Annulment of Meeting/Injunction (with Prayer for the Issuance of Temporary
Restraining Order and Writ of Preliminary Prohibitory and Mandatory Injunction). x x x

xxxx

While Civil Case No. CV-940-MN was still pending, on January 15, 2014, Eumir Carlo sent a Notice
of Annual Stockholders' Meeting to all the stockholders of Phil-Ville, notifying them of the setting of
the annual stockholders' meeting on January 25, 2014 at 5:00 P.M. at Max's Restaurant, Gov.
Pascual comer M.H. Del Pilar Streets, Tugatog, Malabon City. During the meeting, Cecilia, Ma.
Corazon and Eumir Carlo were elected as directors and later elected themselves to the following
positions: Cecilia as Chairperson/Vice President/Treasurer; Ma. Corazon as Vice-
Chairperson/President/General Manager; and Eumir Carlo as Corporate Secretary/Secretary.

xxxx

Consequently, on February 10, 2014, Carolina, Ana Maria, Angelica, Elaine and Edison Williams
[Carolina, et al.] filed the instant election case against [Cecilia Que, et al.] before the RTC of
Malabon City docketed as SEC Case No. 14-001-MN. The Complaint prayed that the election of
Cecilia, Ma. Corazon and Eumir Carlo as directors be declared void considering the invalidity of the
holding of the meeting at Max's Restaurant for lack of quorum therein, the questionable manner by
which it was conducted, including the invalid inclusion in the voting of the shares of the late
Geronima, the questionable validation of proxies, the representation and exercise of voting rights by
the alleged proxies representing those who were not personally present at the said meeting, and the
invalidity of the proclamation of the winners. [Carolina, et al.] also questioned the election of Cecilia,
Ma. Corazon and Eumir Carlo as officers of the corporation. They likewise prayed that all the actions
taken by the petitioners in relation to their election as directors and officers of the corporation be
declared void, including but not limited to the filing of the General Information Sheet with the
Securities and Exchange Commission on January 27, 2014.4

Cecilia Que, et al., filed a Motion for Additional Time to file Answer on March 7, 2014 arguing that
the summons was not properly served on them. The RTC however denied said motion since it
should have been filed within ten (10) days or on March 2, 2014, in accordance with Section 5; Rule
65 of the Interim Rules of Procedure for Intra-Corporate Controversies.6

Thus, On March 14, 2014, the RTC rendered a Decision7 declaring the election of Cecilia Que, et al.
as void and of no effect considering the lack of quorum during the annual stockholders' meeting
conducted by the latter, thus:

WHEREFORE, judgment is hereby rendered:

a. On the First Cause of Action, declaring as null and void and of no effect whatsoever the election
of defendants Cecilia Que Yabut, Ma. Corazon Que Garcia and Eumir Que Camara as Directors of
Phil-Ville considering the lack of quorum during the alleged annual meeting of the stockholders on
25 January 2014 at Max's Restaurant, Gov. Pascual cor. M.H. Del Pilar, Tugatog, Malabon City at
5:00 o'clock in the afternoon;

b. On the Second Cause of Action, declaring as null and void and of no effect whatsoever the
election of defendants Cecilia Que Yabut, Ma. Corazon Que Garcia and Eumir Que Camara to the
positions of Chairperson, Vice Chairperson and Corporate Secretary, respectively in the Board of
Directors of Phil-Ville, as well as their election as Vice-President/Treasurer, President/General
Manager and Secretary, respective[ly], of PhilVille, considering the invalidity of the proclamation of
the winners in the election supposedly conducted on that date, the alleged "Annual Meeting of the
Board of Directors of Phil-Ville held at Max's Restaurant, Gov. Pascual cor. M.H. Del Pilar, Tugatog,
Malabon City on 25 January 2014 at 6:30 o'clock in the evening being null and void; and

c. On the Third Cause of Action, declaring as null and void and of no effect whatsoever any and all
actions taken by defendants Cecilia Que Yabut, Ma. Corazon Que Garcia and Eumir Que Camara in
relation to their alleged election as Directors, their alleged elecion to certain positions in the Board of
Directors, and their alleged election as officers of Phil-Ville including but not limited to the filing of the
General Information Sheet with the Securities and Exchange Commission on 27 January 2014.

SO ORDERED.8

On appeal to the CA, the latter in its Decision dated September 4, 2015, while it declared the RTC
decision void for violating Section 14, Article VIII of the Constitution9, the CA however declared the
annual stockholders meeting conducted by Cecilia Que, et al. void for lack of quorum. The
dispositive portion reads:

WHEREFORE, the instant Petition for Review is DENIED for lack of merit. The Decision dated
March 14, 2014 Decision[sic] of the Regional Trial Court of the City of Malabon, Branch 74, in SEC
Case No. SEC14-00l-MN is declared VOID for failure to comply with the constitutional requirement
of a valid judgment and a new one is ENTERED declaring as invalid for lack of quorum the Phil-Ville
Development and Housing Corporation's stockholders annual meeting conducted by petitioners
Cecilia Que Yabut, Eumir Carlo Que Camara and Ma. Corazon Que Garcia on January 14, 2014.
The election of the members of the board of directors and officers of Phil-Ville that emanated from
the said invalid meetings is likewise struck as void.

SO ORDERED.10

On the parties' separate Motions for Partial Reconsideration, the CA issued an Amended Decision
dated June 8, 2016 ruling as follows:

WHEREFORE, petitioner's Motion for Partial Reconsideration is DENIED for lack of merit while that
of respondents' is PARTLY GRANTED with respect to the ultra vires acts committed by petitioners
after the invalidation of the election conducted on January 25, 2014. The dispositive portion of the
assailed Decision dated September 4, 2015 is hereby amended to reflect the following modifications
and shall read as follows:

WHEREFORE, the instant Petition for Review is DENIED for lack of merit The Decision dated March
14, 2014 Decision[sic] of the Regional Trial Court of the City of Malabon, Branch 74, in SEC Case
No. SEC14-001-MN is declared VOID for failure to comply with the constitutional requirement of a
valid judgment and a new one is ENTERED declaring as invalid for lack of quorum the Phil-Ville
Development and Housing Corporation's stockholders annual meeting conducted by petitioners
Cecilia Que Yabut, Eumir Carlo Que Camara and Ma. Corazon Que Garcia on January 25, 2014.
The election of the members of the board of directors and officers of Phil-Ville that emanated from
the said invalid meetings is likewise struck as void. All acts performed by petitioners by reason of
said election, including but not limited to the filing of the General Information Sheet with the SEC on
January 27, 2014, were ultra vires as they were not legally clothed with corporate authority to do so.

SO ORDERED.

SO ORDERED.11

Both parties filed before Us their separate Petitions for Review on Certiorari.

Carolina, et al., raised in their petition the following assignment of errors:

I. The Honorable Court of Appeals committed manifest error in not upholding that the applicability of
Section 14, Article VIII of the Constitution ensconed in Section 1, Rule 36 of the Revised Rules of
Court was adhered to by the RTC-Malabon City, Branch 74 in the rendition of its decision as
warranted by the facts alleged in the complaint.

II. The Honorable Court of Appeals committed manifest error in not upholding the applicability of the
exception to the general rule in the determination of a quorum.12

While Cecilia Que, et al., raised the following in their petition, to wit:

I. The Court of Appeals gravely erred when it ruled that petitioners were barred from filing an
answer.

II. The Court of Appeals gravely erred in ruling on the merits, despite the finding that there was a
need to remand the case.

III. At any rate, the issues raised in the case are being litigated in another case, barring its resolution
on the merits here.13

Ultimately, the issues to be resolved are: 1) whether the CA was correct in holding that the RTC
decision violated Section 14, Article VIII of the Constitution; 2) whether the total undisputed shares of
stocks in Phil-Ville should be the basis in determining the presence of a quorum; and 3) whether
Cecilia et al., were barred from filing an answer.

Both petitions are unmeritorious.

The Procedural Aspect

The Motion for Extension of Time to file Answer is a voluntary appearance on the part of
Cecilia, et al.

Cecilia Que, et al., alleged the CA erred in holding that the Motion for Extension of Time to File
Answer filed by them was a voluntary appearance on their part.14 We do not agree.
It is well-settled that jurisdiction over the person of the defendant in a civil case is obtained through a
valid service of summons. When there is no service of summons upon the defendant, the court
acquires no jurisdiction over his person, and a judgment rendered against him is null and void.15

However, the invalidity of the service of summons is cured by the voluntary appearance of the
defendant in court and their submission to the court's authority. As held in the case of Carson Realty
& Management Corporation v. Red Robin Security Agency, et al.,16 this Court has repeatedly held
that the filing of a motion of time to file answer is considered voluntary appearance on the part of the
defendant, such that the trial court nevertheless acquired jurisdiction over his person despite the
defectiveness of the service of summons, to wit:

We have, time and again, held that the filing of a motion for additional time to file answer is
considered voluntary submission to the jurisdiction of the court. If the defendant knowingly does an
act inconsistent with the right to object to the lack of personal jurisdiction as to him, like voluntarily
appearing in the action, he is deemed to have submitted himself to the jurisdiction of the court.
Seeking an affirmative relief is inconsistent with the position that no voluntary appearance had been
made, and to ask for such relief, without the proper objection, necessitates submission to the Court's
jurisdiction.17 In the instant case, Cecilia Que, et al., filed a motion for extension to file an answer.
Thus, is deemed to be a voluntary submission to the authority of the trial court over their persons.

The Substantive Aspect

The RTC Decision dated March 14, 2014 is void for violating Section 14, Article VIII of the
Constitution.

Carolina, et al., alleged in their petition that the RTC Decision did not violate Section 14, Article VIII
of the Constitution since the decision clearly stated the facts and the law on which it was based.
They alleged that "the decision thoroughly passed upon all the allegations in the complaint, vis-a-vis
the Judicial affidavit of x x x Carolina x x x, which remams unrebutted."18 We are not persuaded.

The RTC decision is hereby quoted in toto:

Before the Court is the Election Contest filed by plaintiffs stockholders/board members/officers of
Phil-Ville Housing and Development Corporation questioning the validity of the election held by
defendants on January 25, 2014 at Max's Restaurant, Malabon City.

Having been served with Summons on February 20, 2014, and not having filed an Answer but
instead filed a Motion for Extension of Time to the Answer on March 7, 2014 by registered mail,
which was received by this Court only on March 13, 2014, the Court is duty bound to render
judgment motu proprio within ten (10) days from the lapse of the period to file an Answer, as may be
warranted by the allegations of the Complaint, as well as the affidavits, documentary and other
evidence on record, awarding relief, if any, only as prayed for.

After thoroughly passing upon all and[sic] the allegations in the Complaint, vis-a-vis the Judicial
Affidavit of plaintiff Carolina Que Villongco, which remains unrebutted, the Court finds that plaintiffs
have fully established that there was no quorum during the annual stockholder's meeting held on 25
January 2014 at Max's Restaurant, Malabon City. Only 98,428 voting shares out of the 200,000
outstanding shares were represented. Therefore, no valid election of board members/officers of Phil-
Ville could have taken place.

Necessarily, the organizational meeting supposedly conducted thereafter is likewise null and void
and could not possibly binding[sic] to the said corporation.
WHEREFORE, judgment is hereby rendered:

a. On the First Cause of Action, declaring as null and void and of no effect whatsoever the election
of defendants Cecilia Que Yabut, Ma. Corazon Que Garcia and Eumir Que Camara as Directors of
Phil-Ville considering the lack of quorum during the alleged annual meeting of the stockholders on
25 January 2014 at Max's Restaurant, Gov. Pascual cor. M.H. Del Pilar, Tugatog, Malabon City at
5:00 o'clock in the afternoon;

b. On the Second Cause of Action, declaring as null and void and of no effect whatsoever the
election of defendants Cecilia Que Yabut, Ma. Corazon Que Garcia and Eumir Que Camara to the
positions of Chairperson, Vice-Chairperson and Corporate Secretary, respectively in the Board of
Directors of Phil-Ville, as well as their election as Vice- President/Treasurer, President/General
Manager and Secretary, respectively, of Phil-Ville, considering the invalidity of the proclamation of
the winners in the election supposedly conducted on that date, the alleged "Annual Meeting of the
Board of Directors of Phil-Ville held at Max's Restaurant, Gov. Pascual cor. M.H. Del Pilar, Tugatog,
Malabon City on 25 January 2014 at 6:30 o'clock in the evening being null and void; and

c. On the Third Cause of Action, declaring as null and void and of no effect whatsoever any and all
actions taken by defendants Cecilia Que Yabut, Ma. Corazon Que Garcia and Eumir Que Camara in
relation to their alleged election as Directors, their alleged elecion to certain positions in the Board of
Directors, and their alleged election as officers of Phil-Ville including but not limited to the filing of the
General Information Sheet with the Securities and Exchange Commission on 27 January 2014.

SO ORDERED.19

In the case of De Leon v. People20 this Court held that:

Under Section 14, Article VIII of the Constitution, no decision shall be rendered by any court without
expressing therein clearly and distinctly the facts and the law on which it is based. Section 1 of Rule
36 of the Rules of Court provides that a judgment or final order determining the merits of the case
shall be in writing personally and directly prepared by the judge, stating clearly and distinctly the
facts and the law on which it is based, signed by him and filed with the clerk of the court.

Faithful adherence to the requirements of Section 14, Article VIII of the Constitution is indisputably a
paramount component of due process and fair play. A decision that does not clearly and distinctly
state the facts and the law on which it is based leaves the parties in the dark as to how it was
reached and is precisely prejudicial to the losing party, who is unable to pinpoint the possible errors
of the court for review by a higher tribunal. More than that, the requirement is an assurance to the
parties that, in arriving at a judgment, the judge did so through the processes of legal reasoning. It is,
thus, a safeguard against the impetuosity of the judge, preventing him from deciding ipse dixit.

The standard "expected of the judiciary" is that the decision rendered makes clear why either party
prevailed under the applicable law to the facts as established. Nor is there any rigid formula as to the
language to be employed to satisfy the requirement of clarity and distinctness. The discretion of the
particular judge in this respect, while not unlimited, is necessarily broad. There is no sacramental
form of words which he must use upon pain of being considered as having failed to abide by what
the Constitution directs.21

Thus, Section 14, Article VIII of the Constitution mandates Us to craft Our decisions stating clearly
and distinctly the facts and the law on which We based Our decisions. It should be emphasized that
the mere fact that the defendant was not able to file an answer does not automatically mean that the
trial court will render a judgment in favor of the plaintiff. The trial court must still determine whether
the plaintiff is entitled to the reliefs prayed for. Thus, it is incumbent upon the RTC to clearly and
distinctly state the facts and the legal basis on which it based its decision. This is sadly not followed
by the RTC in its Decision dated March 14, 2014. The RTC merely adopted the allegations of
Carolina et al. without any rhyme or reason. The decision merely stated that quorum was not
established during the annual stockholders meeting conducted by Cecilia Que, et al. and that only
98,428 shares were present during the said meeting without any explanation or justification as to
why the trial court ruled that way. Therefore, We agree with the CA that the RTC decision is null and
void for violating the constitutional provision.

Total outstanding capital stocks, without distinction as to disputed or undisputed shares of

stock, is the basis in determining the presence of quorum.

Carolina et. al., claimed that the basis for determining quorum should have been the total number of
undisputed shares of stocks of Phil-Ville due to the exceptional nature of the case since the 3,140
shares of the late Geronima and the fractional .67, .67, and .66 shares of Eumir Que Camara, Paolo
Que Camara and Abimar Que Camara are the subject of another dispute filed before the RTC. Thus,
excluding the 3,142 shares from the 200,000 outstanding capital stock, the proper basis of
determining the presence of quorum should be 196,858 shares of stocks.22 We do not agree.

Section 52 of the Corporation Code states that:

Section 52. Quorum in meetings. - Unless otherwise provided for in this Code or in the by-laws, a
quorum shall consist of the stockholders representing a majority of the outstanding capital stock or a
majority of the members in the case of non-stock corporations.

While Section 137 of the same Code defines "outstanding capital stock", thus:

Section 137. Outstanding capital stock defined. - The term "outstanding capital stock", as used in
this Code, means the total shares of stock issued under binding subscription agreements to
subscribers or stockholders, whether or not fully or partially paid, except treasury shares.

The right to vote is inherent in and incidental to the ownership of corporate stocks. It is settled that
unissued stocks may not be voted or considered in determining whether a quorum is present in a
stockholders' meeting. Only stocks actually issued and outstanding may be voted.23 Thus, for stock
corporations, the quorum is based on the number of outstanding voting stocks.24 The distinction of
undisputed or disputed shares of stocks is not provided for in the law or the jurisprudence. Ubi lex
non distinguit nec nos distinguere debemus — when the law does not distinguish we should not
distinguish. Thus, the 200,000 outstanding capital stocks of Phil-Ville should be the basis for
determining the presence of a quorum, without any distinction.

Therefore, to constitute a quorum, the presence of 100,001 shares of stocks in Phil-Ville is

necessary.

We agree with the CA when it held that only 98,430 shares of stocks. were present during the
January 25, 2014 stockholders meeting at Max's Restaurant, therefore, no quorum had been
established.

There is no evidence that the 3,140 shares which allegedly had been transferred to 1) Carolina's
children, namely: Francis Villongco, Carlo Villongco, Michael Villongco and Marcelia Villongco; 2)
Ana Maria's daughter, namely: Elaine Victoria Que Tan; 3) Angelica Que; 4) Cecilia's children,
namely: Geminiano, Carlos, Geronimo and John Elston; 5) Ma. Corazon's son, Anthony; and, 6)
Maria Luisa's children, namely: Eumir Carlo Camara, Paolo Camara, and Abimar Camara; where
transferred and recorded in the stocks and transfer book of Phil-Ville.

Section 6325 of the Corporation Code states that "No transfer, however, shall be valid, except as
between the parties, until the transfer is recorded in the books of the corporation showing the names
of the parties to the transaction, the date of the transfer, the number of the certificate or certificates
and the number of shares transferred. "

As held in the case of Interport Resources Corporation v. Securities Specialist, Inc.,26 held that:

A transfer of shares of stock not recorded in the stock and transfer book of the corporation is non-
existent as far as the corporation is concerned. As between the corporation on the one hand, and its
shareholders and third persons on the other, the corporation looks only to its books for the purpose
of determining who its shareholders are. It is only when the transfer has been recorded in the stock
and transfer book that a corporation may rightfully regard the transferee as one of its stockholders.
From this time, the consequent obligation on the part of the corporation to recognize such rights as it
is mandated by law to recognize arises.27

The contention of Cecilia Que, et al., that they should not be faulted for their failure to present the
stock and transfer book because the same is in the possession of the corporate secretary, Ana
Maria Que Tan, who has an interest adverse from them, is devoid of merit. It is basic that a
stockholder has the right to inspect the books of the corporation,28 and if the stockholder is refused
by an officer of the corporation to inspect or examine the books of the corporation, the stockholder is
not without any remedy. The Corporation Code grants the stockholder a remedy—to file a case in
accordance with Section 144.29

In this case, there is no evidence that the 3,140 shares of the late Geronima were recorded in the
stocks and transfer book of Phil-Ville. Thus, insofar as Phil-Ville is concerned, the 3,140 shares of
the late Geronima allegedly transferred to several persons is non-existent. Therefore, the
transferees of the said shares cannot exercise the rights granted unto stockholders of a corporation,
including the right to vote and to be voted upon.

WHEREFORE, premises considered, the instant Petitions for Review on Certiorari are DENIED. The
Decision dated September 4, 2015 and Amended Decision dated June 8, 2016 of the Court of
Appeals in CA-G.R. SP No. 134666 are hereby AFFIRMED in toto.

SO ORDERED.
G.R. No. 118127 April 12, 2005

CITY OF MANILA, HON. ALFREDO S. LIM as the Mayor of the City of Manila, HON. JOSELITO
L. ATIENZA, in his capacity as Vice-Mayor of the City of Manila and Presiding Officer of the
City Council of Manila, HON. ERNESTO A. NIEVA, HON. GONZALO P. GONZALES, HON.
AVELINO S. CAILIAN, HON. ROBERTO C. OCAMPO, HON. ALBERTO DOMINGO, HON.
HONORIO U. LOPEZ, HON. FRANCISCO G. VARONA, JR., HON. ROMUALDO S. MARANAN,
HON. NESTOR C. PONCE, JR., HON. HUMBERTO B. BASCO, HON. FLAVIANO F.
CONCEPCION, JR., HON. ROMEO G. RIVERA, HON. MANUEL M. ZARCAL, HON. PEDRO S. DE
JESUS, HON. BERNARDITO C. ANG, HON. MANUEL L. QUIN, HON. JHOSEP Y. LOPEZ, HON.
CHIKA G. GO, HON. VICTORIANO A. MELENDEZ, HON. ERNESTO V.P. MACEDA, JR., HON.
ROLANDO P. NIETO, HON. DANILO V. ROLEDA, HON. GERINO A. TOLENTINO, JR., HON. MA.
PAZ E. HERRERA, HON. JOEY D. HIZON, HON. FELIXBERTO D. ESPIRITU, HON. KARLO Q.
BUTIONG, HON. ROGELIO P. DELA PAZ, HON. BERNARDO D. RAGAZA, HON. MA. CORAZON
R. CABALLES, HON. CASIMIRO C. SISON, HON. BIENVINIDO M. ABANTE, JR., HON. MA.
LOURDES M. ISIP, HON. ALEXANDER S. RICAFORT, HON. ERNESTO F. RIVERA, HON.
LEONARDO L. ANGAT, and HON. JOCELYN B. DAWIS, in their capacity as councilors of the
City of Manila, Petitioner,
vs.
HON. PERFECTO A.S. LAGUIO, JR., as Presiding Judge, RTC, Manila and MALATE TOURIST
DEVELOPMENT CORPORATION, Respondents.

DECISION

TINGA, J.:

I know only that what is moral is what you feel good after and what is immoral is what you
feel bad after.

Ernest Hermingway
Death in the Afternoon, Ch. 1

It is a moral and political axiom that any dishonorable act, if performed by oneself, is less
immoral than if performed by someone else, who would be well-intentioned in his dishonesty.

J. Christopher Gerald
Bonaparte in Egypt, Ch. I

The Court's commitment to the protection of morals is secondary to its fealty to the fundamental law
of the land. It is foremost a guardian of the Constitution but not the conscience of individuals. And if it
need be, the Court will not hesitate to "make the hammer fall, and heavily" in the words of Justice
Laurel, and uphold the constitutional guarantees when faced with laws that, though not lacking in
zeal to promote morality, nevertheless fail to pass the test of constitutionality.

The pivotal issue in this Petition1 under Rule 45 (then Rule 42) of the Revised Rules on Civil
Procedure seeking the reversal of the Decision2 in Civil Case No. 93-66511 of the Regional Trial
Court (RTC) of Manila, Branch 18 (lower court),3 is the validity of Ordinance No. 7783
(the Ordinance) of the City of Manila.4

The antecedents are as follows:

Private respondent Malate Tourist Development Corporation (MTDC) is a corporation engaged in the
business of operating hotels, motels, hostels and lodging houses.5 It built and opened Victoria Court
in Malate which was licensed as a motel although duly accredited with the Department of Tourism as
a hotel.6 On 28 June 1993, MTDC filed a Petition for Declaratory Relief with Prayer for a Writ of
Preliminary Injunction and/or Temporary Restraining Order7 (RTC Petition) with the lower court
impleading as defendants, herein petitioners City of Manila, Hon. Alfredo S. Lim (Lim), Hon. Joselito
L. Atienza, and the members of the City Council of Manila (City Council). MTDC prayed that
the Ordinance, insofar as it includes motels and inns as among its prohibited establishments, be
declared invalid and unconstitutional.8

Enacted by the City Council9 on 9 March 1993 and approved by petitioner City Mayor on 30 March
1993, the said Ordinance is entitled–

AN ORDINANCE PROHIBITING THE ESTABLISHMENT OR OPERATION OF

BUSINESSES PROVIDING CERTAIN FORMS OF AMUSEMENT, ENTERTAINMENT,
SERVICES AND FACILITIES IN THE ERMITA-MALATE AREA, PRESCRIBING
PENALTIES FOR VIOLATION THEREOF, AND FOR OTHER PURPOSES.10

The Ordinance is reproduced in full, hereunder:

SECTION 1. Any provision of existing laws and ordinances to the contrary

notwithstanding, no person, partnership, corporation or entity shall, in the Ermita-
Malate area bounded by Teodoro M. Kalaw Sr. Street in the North, Taft Avenue in the East,
Vito Cruz Street in the South and Roxas Boulevard in the West, pursuant to P.D. 499 be
allowed or authorized to contract and engage in, any business providing certain forms
of amusement, entertainment, services and facilities where women are used as tools
in entertainment and which tend to disturb the community, annoy the inhabitants, and
adversely affect the social and moral welfare of the community, such as but not limited
to:

1. Sauna Parlors

2. Massage Parlors

3. Karaoke Bars

4. Beerhouses

5. Night Clubs

6. Day Clubs

7. Super Clubs

8. Discotheques

9. Cabarets

10. Dance Halls

11. Motels
 12. Inns

SEC. 2 The City Mayor, the City Treasurer or any person acting in behalf of the said
officials are prohibited from issuing permits, temporary or otherwise, or from granting
licenses and accepting payments for the operation of business enumerated in the
preceding section.

SEC. 3. Owners and/or operator of establishments engaged in, or devoted to, the
businesses enumerated in Section 1 hereof are hereby given three (3) months from the
date of approval of this ordinance within which to wind up business operations or to
transfer to any place outside of the Ermita-Malate area or convert said businesses to
other kinds of business allowable within the area, such as but not limited to:

1. Curio or antique shop

2. Souvenir Shops

3. Handicrafts display centers

4. Art galleries

5. Records and music shops

6. Restaurants

7. Coffee shops

8. Flower shops

9. Music lounge and sing-along restaurants, with well-defined activities for

wholesome family entertainment that cater to both local and foreign clientele.

10. Theaters engaged in the exhibition, not only of motion pictures but also of cultural
shows, stage and theatrical plays, art exhibitions, concerts and the like.

11. Businesses allowable within the law and medium intensity districts as provided
for in the zoning ordinances for Metropolitan Manila, except new warehouse or open-
storage depot, dock or yard, motor repair shop, gasoline service station, light industry
with any machinery, or funeral establishments.

SEC. 4. Any person violating any provisions of this ordinance, shall upon conviction,
be punished by imprisonment of one (1) year or fine of FIVE THOUSAND (P5,000.00)
PESOS, or both, at the discretion of the Court, PROVIDED, that in case of juridical person,
the President, the General Manager, or person-in-charge of operation shall be liable thereof;
PROVIDED FURTHER, that in case of subsequent violation and conviction, the
premises of the erring establishment shall be closed and padlocked permanently.

SEC. 5. This ordinance shall take effect upon approval.

Enacted by the City Council of Manila at its regular session today, March 9, 1993.
 Approved by His Honor, the Mayor on March 30, 1993. (Emphasis supplied)

In the RTC Petition, MTDC argued that the Ordinance erroneously and improperly included in its
enumeration of prohibited establishments, motels and inns such as MTDC's Victoria Court
considering that these were not establishments for "amusement" or "entertainment" and they were
not "services or facilities for entertainment," nor did they use women as "tools for entertainment," and
neither did they "disturb the community," "annoy the inhabitants" or "adversely affect the social and
moral welfare of the community."11

MTDC further advanced that the Ordinance was invalid and unconstitutional for the following
reasons: (1) The City Council has no power to prohibit the operation of motels as Section 458 (a) 4
(iv)12 of the Local Government Code of 1991 (the Code) grants to the City Council only the power to
regulate the establishment, operation and maintenance of hotels, motels, inns, pension houses,
lodging houses and other similar establishments; (2) The Ordinance is void as it is violative of
Presidential Decree (P.D.) No. 49913 which specifically declared portions of the Ermita-Malate area as
a commercial zone with certain restrictions; (3) The Ordinance does not constitute a proper exercise
of police power as the compulsory closure of the motel business has no reasonable relation to the
legitimate municipal interests sought to be protected; (4) The Ordinance constitutes an ex post
facto law by punishing the operation of Victoria Court which was a legitimate business prior to its
enactment; (5) The Ordinance violates MTDC's constitutional rights in that: (a) it is confiscatory and
constitutes an invasion of plaintiff's property rights; (b) the City Council has no power to find as a fact
that a particular thing is a nuisance per se nor does it have the power to extrajudicially destroy it; and
(6) The Ordinance constitutes a denial of equal protection under the law as no reasonable basis
exists for prohibiting the operation of motels and inns, but not pension houses, hotels, lodging
houses or other similar establishments, and for prohibiting said business in the Ermita-Malate area
but not outside of this area.14

In their Answer15 dated 23 July 1993, petitioners City of Manila and Lim maintained that the City
Council had the power to "prohibit certain forms of entertainment in order to protect the social and
moral welfare of the community" as provided for in Section 458 (a) 4 (vii) of the Local Government
Code,16 which reads, thus:

Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang
panlungsod, as the legislative body of the city, shall enact ordinances, approve resolutions
and appropriate funds for the general welfare of the city and its inhabitants pursuant to
Section 16 of this Code and in the proper exercise of the corporate powers of the city as
provided for under Section 22 of this Code, and shall:

....

(4) Regulate activities relative to the use of land, buildings and structures within the city in
order to promote the general welfare and for said purpose shall:

....

(vii) Regulate the establishment, operation, and maintenance of any entertainment or

amusement facilities, including theatrical performances, circuses, billiard pools,
public dancing schools, public dance halls, sauna baths, massage parlors, and other
places for entertainment or amusement; regulate such other events or activities for
amusement or entertainment, particularly those which tend to disturb the community
or annoy the inhabitants, or require the suspension or suppression of the same; or,
 prohibit certain forms of amusement or entertainment in order to protect the social
and moral welfare of the community.

Citing Kwong Sing v. City of Manila,17 petitioners insisted that the power of regulation spoken of in the
above-quoted provision included the power to control, to govern and to restrain places of exhibition
and amusement.18

Petitioners likewise asserted that the Ordinance was enacted by the City Council of Manila to protect
the social and moral welfare of the community in conjunction with its police power as found in Article
III, Section 18(kk) of Republic Act No. 409,19 otherwise known as the Revised Charter of the City of
Manila (Revised Charter of Manila)20 which reads, thus:

ARTICLE III

THE MUNICIPAL BOARD

. . .

Section 18. Legislative powers. – The Municipal Board shall have the following legislative
powers:

. . .

(kk) To enact all ordinances it may deem necessary and proper for the sanitation and safety,
the furtherance of the prosperity, and the promotion of the morality, peace, good order,
comfort, convenience, and general welfare of the city and its inhabitants, and such others as
may be necessary to carry into effect and discharge the powers and duties conferred by this
chapter; and to fix penalties for the violation of ordinances which shall not exceed two
hundred pesos fine or six months' imprisonment, or both such fine and imprisonment, for a
single offense.

Further, the petitioners noted, the Ordinance had the presumption of validity; hence, private
respondent had the burden to prove its illegality or unconstitutionality.21

Petitioners also maintained that there was no inconsistency between P.D. 499 and the Ordinance as
the latter simply disauthorized certain forms of businesses and allowed the Ermita-Malate area to
remain a commercial zone.22 The Ordinance, the petitioners likewise claimed, cannot be assailed
as ex post facto as it was prospective in operation.23 The Ordinance also did not infringe the equal
protection clause and cannot be denounced as class legislation as there existed substantial and real
differences between the Ermita-Malate area and other places in the City of Manila.24

On 28 June 1993, respondent Judge Perfecto A.S. Laguio, Jr. (Judge Laguio) issued an ex-parte
temporary restraining order against the enforcement of the Ordinance.25 And on 16 July 1993, again
in an intrepid gesture, he granted the writ of preliminary injunction prayed for by MTDC.26

After trial, on 25 November 1994, Judge Laguio rendered the assailed Decision, enjoining the
petitioners from implementing the Ordinance. The dispositive portion of said Decision reads:27

WHEREFORE, judgment is hereby rendered declaring Ordinance No. 778[3], Series of

1993, of the City of Manila null and void, and making permanent the writ of preliminary
injunction that had been issued by this Court against the defendant. No costs.
 SO ORDERED.28

Petitioners filed with the lower court a Notice of Appeal29 on 12 December 1994, manifesting that they
are elevating the case to this Court under then Rule 42 on pure questions of law.30

On 11 January 1995, petitioners filed the present Petition, alleging that the following errors were
committed by the lower court in its ruling: (1) It erred in concluding that the subject ordinance is ultra
vires, or otherwise, unfair, unreasonable and oppressive exercise of police power; (2) It erred in
holding that the questioned Ordinance contravenes P.D. 49931 which allows operators of all kinds of
commercial establishments, except those specified therein; and (3) It erred in declaring
the Ordinance void and unconstitutional.32

In the Petition and in its Memorandum,33 petitioners in essence repeat the assertions they made
before the lower court. They contend that the assailed Ordinance was enacted in the exercise of the
inherent and plenary power of the State and the general welfare clause exercised by local
government units provided for in Art. 3, Sec. 18 (kk) of the Revised Charter of Manila and
conjunctively, Section 458 (a) 4 (vii) of the Code.34 They allege that the Ordinance is a valid exercise
of police power; it does not contravene P.D. 499; and that it enjoys the presumption of validity.35

In its Memorandum36 dated 27 May 1996, private respondent maintains that the Ordinance is ultra
vires and that it is void for being repugnant to the general law. It reiterates that the
questioned Ordinance is not a valid exercise of police power; that it is violative of due process,
confiscatory and amounts to an arbitrary interference with its lawful business; that it is violative of the
equal protection clause; and that it confers on petitioner City Mayor or any officer unregulated
discretion in the execution of the Ordinance absent rules to guide and control his actions.

This is an opportune time to express the Court's deep sentiment and tenderness for the Ermita-
Malate area being its home for several decades. A long-time resident, the Court witnessed the area's
many turn of events. It relished its glory days and endured its days of infamy. Much as the Court
harks back to the resplendent era of the Old Manila and yearns to restore its lost grandeur, it
believes that the Ordinance is not the fitting means to that end. The Court is of the opinion, and so
holds, that the lower court did not err in declaring the Ordinance, as it did, ultra vires and therefore
null and void.

The Ordinance is so replete with constitutional infirmities that almost every sentence thereof violates
a constitutional provision. The prohibitions and sanctions therein transgress the cardinal rights of
persons enshrined by the Constitution. The Court is called upon to shelter these rights from attempts
at rendering them worthless.

The tests of a valid ordinance are well established. A long line of decisions has held that for an
ordinance to be valid, it must not only be within the corporate powers of the local government unit to
enact and must be passed according to the procedure prescribed by law, it must also conform to the
following substantive requirements: (1) must not contravene the Constitution or any statute; (2) must
not be unfair or oppressive; (3) must not be partial or discriminatory; (4) must not prohibit but may
regulate trade; (5) must be general and consistent with public policy; and (6) must not be
unreasonable.37

Anent the first criterion, ordinances shall only be valid when they are not contrary to the Constitution
and to the laws.38 The Ordinance must satisfy two requirements: it must pass muster under the test of
constitutionality and the test of consistency with the prevailing laws. That ordinances should be
constitutional uphold the principle of the supremacy of the Constitution. The requirement that the
enactment must not violate existing law gives stress to the precept that local government units are
able to legislate only by virtue of their derivative legislative power, a delegation of legislative power
from the national legislature. The delegate cannot be superior to the principal or exercise powers
higher than those of the latter.39

This relationship between the national legislature and the local government units has not been
enfeebled by the new provisions in the Constitution strengthening the policy of local autonomy. The
national legislature is still the principal of the local government units, which cannot defy its will or
modify or violate it.40

The Ordinance was passed by the City Council in the exercise of its police power, an enactment of
the City Council acting as agent of Congress. Local government units, as agencies of the State, are
endowed with police power in order to effectively accomplish and carry out the declared objects of
their creation.41 This delegated police power is found in Section 16 of the Code, known as the general
welfare clause, viz:

SECTION 16. General Welfare.Every local government unit shall exercise the powers
expressly granted, those necessarily implied therefrom, as well as powers necessary,
appropriate, or incidental for its efficient and effective governance, and those which are
essential to the promotion of the general welfare. Within their respective territorial
jurisdictions, local government units shall ensure and support, among other things, the
preservation and enrichment of culture, promote health and safety, enhance the right of the
people to a balanced ecology, encourage and support the development of appropriate and
self-reliant scientific and technological capabilities, improve public morals, enhance
economic prosperity and social justice, promote full employment among their residents,
maintain peace and order, and preserve the comfort and convenience of their inhabitants.

Local government units exercise police power through their respective legislative bodies; in this
case, the sangguniang panlungsod or the city council. The Code empowers the legislative bodies to
"enact ordinances, approve resolutions and appropriate funds for the general welfare of the
province/city/municipality and its inhabitants pursuant to Section 16 of the Code and in the proper
exercise of the corporate powers of the province/city/ municipality provided under the Code.42 The
inquiry in this Petition is concerned with the validity of the exercise of such delegated power.

The Ordinance contravenes

the Constitution

The police power of the City Council, however broad and far-reaching, is subordinate to the
constitutional limitations thereon; and is subject to the limitation that its exercise must be reasonable
and for the public good.43 In the case at bar, the enactment of the Ordinance was an invalid exercise
of delegated power as it is unconstitutional and repugnant to general laws.

The relevant constitutional provisions are the following:

SEC. 5. The maintenance of peace and order, the protection of life, liberty, and property, and
the promotion of the general welfare are essential for the enjoyment by all the people of the
blessings of democracy.44

SEC. 14. The State recognizes the role of women in nation-building, and shall ensure the
fundamental equality before the law of women and men.45

SEC. 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 laws.46
 Sec. 9. Private property shall not be taken for public use without just compensation.47

A. The Ordinance infringes

the Due Process Clause

The constitutional safeguard of due process is embodied in the fiat "(N)o person shall be deprived of
life, liberty or property without due process of law. . . ."48

There is no controlling and precise definition of due process. It furnishes though a standard to which
governmental action should conform in order that deprivation of life, liberty or property, in each
appropriate case, be valid. This standard is aptly described as a responsiveness to the supremacy
of reason, obedience to the dictates of justice,49 and as such it is a limitation upon the exercise of the
police power.50

The purpose of the guaranty is to prevent governmental encroachment against the life, liberty and
property of individuals; to secure the individual from the arbitrary exercise of the powers of the
government, unrestrained by the established principles of private rights and distributive justice; to
protect property from confiscation by legislative enactments, from seizure, forfeiture, and destruction
without a trial and conviction by the ordinary mode of judicial procedure; and to secure to all persons
equal and impartial justice and the benefit of the general law.51

The guaranty serves as a protection against arbitrary regulation, and private corporations and
partnerships are "persons" within the scope of the guaranty insofar as their property is concerned.52

This clause has been interpreted as imposing two separate limits on government, usually called
"procedural due process" and "substantive due process."

Procedural due process, as the phrase implies, refers to the procedures that the government must
follow before it deprives a person of life, liberty, or property. Classic procedural due process issues
are concerned with what kind of notice and what form of hearing the government must provide when
it takes a particular action.53

Substantive due process, as that phrase connotes, asks whether the government has an adequate
reason for taking away a person's life, liberty, or property. In other words, substantive due process
looks to whether there is a sufficient justification for the government's action.54 Case law in the United
States (U.S.) tells us that whether there is such a justification depends very much on the level of
scrutiny used.55 For example, if a law is in an area where only rational basis review is applied,
substantive due process is met so long as the law is rationally related to a legitimate government
purpose. But if it is an area where strict scrutiny is used, such as for protecting fundamental rights,
then the government will meet substantive due process only if it can prove that the law is necessary
to achieve a compelling government purpose.56

The police power granted to local government units must always be exercised with utmost
observance of the rights of the people to due process and equal protection of the law. Such power
cannot be exercised whimsically, arbitrarily or despotically57 as its exercise is subject to a
qualification, limitation or restriction demanded by the respect and regard due to the prescription of
the fundamental law, particularly those forming part of the Bill of Rights. Individual rights, it bears
emphasis, may be adversely affected only to the extent that may fairly be required by the legitimate
demands of public interest or public welfare.58 Due process requires the intrinsic validity of the law in
interfering with the rights of the person to his life, liberty and property.59
Requisites for the valid exercise
of Police Power are not met

To successfully invoke the exercise of police power as the rationale for the enactment of
the Ordinance, and to free it from the imputation of constitutional infirmity, not only must it appear
that the interests of the public generally, as distinguished from those of a particular class, require an
interference with private rights, but the means adopted must be reasonably necessary for the
accomplishment of the purpose and not unduly oppressive upon individuals.60 It must be evident that
no other alternative for the accomplishment of the purpose less intrusive of private rights can work.
A reasonable relation must exist between the purposes of the police measure and the means
employed for its accomplishment, for even under the guise of protecting the public interest, personal
rights and those pertaining to private property will not be permitted to be arbitrarily invaded.61

Lacking a concurrence of these two requisites, the police measure shall be struck down as an
arbitrary intrusion into private rights62 a violation of the due process clause.

The Ordinance was enacted to address and arrest the social ills purportedly spawned by the
establishments in the Ermita-Malate area which are allegedly operated under the deceptive veneer
of legitimate, licensed and tax-paying nightclubs, bars, karaoke bars, girlie houses, cocktail lounges,
hotels and motels. Petitioners insist that even the Court in the case of Ermita-Malate Hotel and
Motel Operators Association, Inc. v. City Mayor of Manila63 had already taken judicial notice of the
"alarming increase in the rate of prostitution, adultery and fornication in Manila traceable in great part
to existence of motels, which provide a necessary atmosphere for clandestine entry, presence and
exit and thus become the ideal haven for prostitutes and thrill-seekers."64

The object of the Ordinance was, accordingly, the promotion and protection of the social and moral
values of the community. Granting for the sake of argument that the objectives of the Ordinance are
within the scope of the City Council's police powers, the means employed for the accomplishment
thereof were unreasonable and unduly oppressive.

It is undoubtedly one of the fundamental duties of the City of Manila to make all reasonable
regulations looking to the promotion of the moral and social values of the community. However, the
worthy aim of fostering public morals and the eradication of the community's social ills can be
achieved through means less restrictive of private rights; it can be attained by reasonable restrictions
rather than by an absolute prohibition. The closing down and transfer of businesses or their
conversion into businesses "allowed" under the Ordinance have no reasonable relation to the
accomplishment of its purposes. Otherwise stated, the prohibition of the enumerated establishments
will not per se protect and promote the social and moral welfare of the community; it will not in itself
eradicate the alluded social ills of prostitution, adultery, fornication nor will it arrest the spread of
sexual disease in Manila.

Conceding for the nonce that the Ermita-Malate area teems with houses of ill-repute and
establishments of the like which the City Council may lawfully prohibit,65 it is baseless and
insupportable to bring within that classification sauna parlors, massage parlors, karaoke bars, night
clubs, day clubs, super clubs, discotheques, cabarets, dance halls, motels and inns. This is not
warranted under the accepted definitions of these terms. The enumerated establishments are lawful
pursuits which are not per se offensive to the moral welfare of the community.

That these are used as arenas to consummate illicit sexual affairs and as venues to further the
illegal prostitution is of no moment. We lay stress on the acrid truth that sexual immorality, being a
human frailty, may take place in the most innocent of places that it may even take place in the
substitute establishments enumerated under Section 3 of the Ordinance. If the flawed logic of
the Ordinance were to be followed, in the remote instance that an immoral sexual act transpires in a
church cloister or a court chamber, we would behold the spectacle of the City of Manila ordering the
closure of the church or court concerned. Every house, building, park, curb, street or even vehicles
for that matter will not be exempt from the prohibition. Simply because there are no "pure" places
where there are impure men. Indeed, even the Scripture and the Tradition of Christians churches
continually recall the presence and universality of sin in man's history.66

The problem, it needs to be pointed out, is not the establishment, which by its nature cannot be said
to be injurious to the health or comfort of the community and which in itself is amoral, but the
deplorable human activity that may occur within its premises. While a motel may be used as a venue
for immoral sexual activity, it cannot for that reason alone be punished. It cannot be classified as a
house of ill-repute or as a nuisance per se on a mere likelihood or a naked assumption. If that were
so and if that were allowed, then the Ermita-Malate area would not only be purged of its supposed
social ills, it would be extinguished of its soul as well as every human activity, reprehensible or not,
in its every nook and cranny would be laid bare to the estimation of the authorities.

The Ordinance seeks to legislate morality but fails to address the core issues of morality. Try as
the Ordinance may to shape morality, it should not foster the illusion that it can make a moral man
out of it because immorality is not a thing, a building or establishment; it is in the hearts of men. The
City Council instead should regulate human conduct that occurs inside the establishments, but not to
the detriment of liberty and privacy which are covenants, premiums and blessings of democracy.

While petitioners' earnestness at curbing clearly objectionable social ills is commendable, they
unwittingly punish even the proprietors and operators of "wholesome," "innocent" establishments. In
the instant case, there is a clear invasion of personal or property rights, personal in the case of those
individuals desirous of owning, operating and patronizing those motels and property in terms of the
investments made and the salaries to be paid to those therein employed. If the City of Manila so
desires to put an end to prostitution, fornication and other social ills, it can instead impose
reasonable regulations such as daily inspections of the establishments for any violation of the
conditions of their licenses or permits; it may exercise its authority to suspend or revoke their
licenses for these violations;67 and it may even impose increased license fees. In other words, there
are other means to reasonably accomplish the desired end.

Means employed are

constitutionally infirm

The Ordinance disallows the operation of sauna parlors, massage parlors, karaoke bars,
beerhouses, night clubs, day clubs, super clubs, discotheques, cabarets, dance halls, motels and
inns in the Ermita-Malate area. In Section 3 thereof, owners and/or operators of the enumerated
establishments are given three (3) months from the date of approval of the Ordinance within which
"to wind up business operations or to transfer to any place outside the Ermita-Malate area or convert
said businesses to other kinds of business allowable within the area." Further, it states in Section 4
that in cases of subsequent violations of the provisions of the Ordinance, the "premises of the erring
establishment shall be closed and padlocked permanently."

It is readily apparent that the means employed by the Ordinance for the achievement of its purposes,
the governmental interference itself, infringes on the constitutional guarantees of a person's
fundamental right to liberty and property.

Liberty as guaranteed by the Constitution was defined by Justice Malcolm to include "the right to
exist and the right to be free from arbitrary restraint or servitude. The term cannot be dwarfed into
mere freedom from physical restraint of the person of the citizen, but is deemed to embrace the right
of man to enjoy the facilities with which he has been endowed by his Creator, subject only to such
restraint as are necessary for the common welfare."68 In accordance with this case, the rights of the
citizen to be free to use his faculties in all lawful ways; to live and work where he will; to earn his
livelihood by any lawful calling; and to pursue any avocation are all deemed embraced in the
concept of liberty.69

The U.S. Supreme Court in the case of Roth v. Board of Regents,70 sought to clarify the meaning of
"liberty." It said:

While the Court has not attempted to define with exactness the liberty. . . guaranteed [by the
Fifth and Fourteenth Amendments], the term denotes not merely freedom from bodily
restraint but also the right of the individual to contract, to engage in any of the common
occupations of life, to acquire useful knowledge, to marry, establish a home and bring up
children, to worship God according to the dictates of his own conscience, and generally to
enjoy those privileges long recognized…as essential to the orderly pursuit of happiness by
free men. In a Constitution for a free people, there can be no doubt that the meaning of
"liberty" must be broad indeed.

In another case, it also confirmed that liberty protected by the due process clause includes personal
decisions relating to marriage, procreation, contraception, family relationships, child rearing, and
education. In explaining the respect the Constitution demands for the autonomy of the person in
making these choices, the U.S. Supreme Court explained:

These matters, involving the most intimate and personal choices a person may make in a
lifetime, choices central to personal dignity and autonomy, are central to the liberty protected
by the Fourteenth Amendment. At the heart of liberty is the right to define one's own concept
of existence, of meaning, of universe, and of the mystery of human life. Beliefs about these
matters could not define the attributes of personhood where they formed under compulsion
of the State.71

Persons desirous to own, operate and patronize the enumerated establishments under Section 1 of
the Ordinance may seek autonomy for these purposes.

Motel patrons who are single and unmarried may invoke this right to autonomy to consummate their
bonds in intimate sexual conduct within the motel's premisesbe it stressed that their consensual
sexual behavior does not contravene any fundamental state policy as contained in the
Constitution.72 Adults have a right to choose to forge such relationships with others in the confines of
their own private lives and still retain their dignity as free persons. The liberty protected by the
Constitution allows persons the right to make this choice.73 Their right to liberty under the due process
clause gives them the full right to engage in their conduct without intervention of the government, as
long as they do not run afoul of the law. Liberty should be the rule and restraint the exception.

Liberty in the constitutional sense not only means freedom from unlawful government restraint; it
must include privacy as well, if it is to be a repository of freedom. The right to be let alone is the
beginning of all freedomit is the most comprehensive of rights and the right most valued by
civilized men.74

The concept of liberty compels respect for the individual whose claim to privacy and interference
demands respect. As the case of Morfe v. Mutuc,75 borrowing the words of Laski, so very aptly stated:

Man is one among many, obstinately refusing reduction to unity. His separateness, his
isolation, are indefeasible; indeed, they are so fundamental that they are the basis on which
 his civic obligations are built. He cannot abandon the consequences of his isolation, which
are, broadly speaking, that his experience is private, and the will built out of that experience
personal to himself. If he surrenders his will to others, he surrenders himself. If his will is set
by the will of others, he ceases to be a master of himself. I cannot believe that a man no
longer a master of himself is in any real sense free.

Indeed, the right to privacy as a constitutional right was recognized in Morfe, the invasion of which
should be justified by a compelling state interest. Morfe accorded recognition to the right to privacy
independently of its identification with liberty; in itself it is fully deserving of constitutional protection.
Governmental powers should stop short of certain intrusions into the personal life of the citizen.76

There is a great temptation to have an extended discussion on these civil liberties but the Court
chooses to exercise restraint and restrict itself to the issues presented when it should. The previous
pronouncements of the Court are not to be interpreted as a license for adults to engage in criminal
conduct. The reprehensibility of such conduct is not diminished. The Court only reaffirms and
guarantees their right to make this choice. Should they be prosecuted for their illegal conduct, they
should suffer the consequences of the choice they have made. That, ultimately, is their choice.

Modality employed is
unlawful taking

In addition, the Ordinance is unreasonable and oppressive as it substantially divests the respondent
of the beneficial use of its property.77 The Ordinance in Section 1 thereof forbids the running of the
enumerated businesses in the Ermita-Malate area and in Section 3 instructs its owners/operators to
wind up business operations or to transfer outside the area or convert said businesses into allowed
businesses. An ordinance which permanently restricts the use of property that it can not be used for
any reasonable purpose goes beyond regulation and must be recognized as a taking of the property
without just compensation.78 It is intrusive and violative of the private property rights of individuals.

The Constitution expressly provides in Article III, Section 9, that "private property shall not be taken
for public use without just compensation." The provision is the most important protection of property
rights in the Constitution. This is a restriction on the general power of the government to take
property. The constitutional provision is about ensuring that the government does not confiscate the
property of some to give it to others. In part too, it is about loss spreading. If the government takes
away a person's property to benefit society, then society should pay. The principal purpose of the
guarantee is "to bar the Government from forcing some people alone to bear public burdens which,
in all fairness and justice, should be borne by the public as a whole.79

There are two different types of taking that can be identified. A "possessory" taking occurs when the
government confiscates or physically occupies property. A "regulatory" taking occurs when the
government's regulation leaves no reasonable economically viable use of the property.80

In the landmark case of Pennsylvania Coal v. Mahon,81 it was held that a taking also could be found if
government regulation of the use of property went "too far." When regulation reaches a certain
magnitude, in most if not in all cases there must be an exercise of eminent domain and
compensation to support the act. While property may be regulated to a certain extent, if regulation
goes too far it will be recognized as a taking.82

No formula or rule can be devised to answer the questions of what is too far and when regulation
becomes a taking. In Mahon, Justice Holmes recognized that it was "a question of degree and
therefore cannot be disposed of by general propositions." On many other occasions as well, the U.S.
Supreme Court has said that the issue of when regulation constitutes a taking is a matter of
considering the facts in each case. The Court asks whether justice and fairness require that the
economic loss caused by public action must be compensated by the government and thus borne by
the public as a whole, or whether the loss should remain concentrated on those few persons subject
to the public action.83

What is crucial in judicial consideration of regulatory takings is that government regulation is a taking
if it leaves no reasonable economically viable use of property in a manner that interferes with
reasonable expectations for use.84 A regulation that permanently denies all economically beneficial or
productive use of land is, from the owner's point of view, equivalent to a "taking" unless principles of
nuisance or property law that existed when the owner acquired the land make the use
prohibitable.85 When the owner of real property has been called upon to sacrifice all economically
beneficial uses in the name of the common good, that is, to leave his property economically idle, he
has suffered a taking.86

A regulation which denies all economically beneficial or productive use of land will require
compensation under the takings clause. Where a regulation places limitations on land that fall short
of eliminating all economically beneficial use, a taking nonetheless may have occurred, depending
on a complex of factors including the regulation's economic effect on the landowner, the extent to
which the regulation interferes with reasonable investment-backed expectations and the character of
government action. These inquiries are informed by the purpose of the takings clause which is to
prevent the government from forcing some people alone to bear public burdens which, in all fairness
and justice, should be borne by the public as a whole.87

A restriction on use of property may also constitute a "taking" if not reasonably necessary to the
effectuation of a substantial public purpose or if it has an unduly harsh impact on the distinct
investment-backed expectations of the owner.88

The Ordinance gives the owners and operators of the "prohibited" establishments three (3) months
from its approval within which to "wind up business operations or to transfer to any place outside of
the Ermita-Malate area or convert said businesses to other kinds of business allowable within the
area." The directive to "wind up business operations" amounts to a closure of the establishment, a
permanent deprivation of property, and is practically confiscatory. Unless the owner converts his
establishment to accommodate an "allowed" business, the structure which housed the previous
business will be left empty and gathering dust. Suppose he transfers it to another area, he will
likewise leave the entire establishment idle. Consideration must be given to the substantial amount
of money invested to build the edifices which the owner reasonably expects to be returned within a
period of time. It is apparent that the Ordinance leaves no reasonable economically viable use of
property in a manner that interferes with reasonable expectations for use.

The second and third options to transfer to any place outside of the Ermita-Malate area or to
convert into allowed businessesare confiscatory as well. The penalty of permanent closure in
cases of subsequent violations found in Section 4 of the Ordinance is also equivalent to a "taking" of
private property.

The second option instructs the owners to abandon their property and build another one outside the
Ermita-Malate area. In every sense, it qualifies as a taking without just compensation with an
additional burden imposed on the owner to build another establishment solely from his coffers. The
proffered solution does not put an end to the "problem," it merely relocates it. Not only is this
impractical, it is unreasonable, onerous and oppressive. The conversion into allowed enterprises is
just as ridiculous. How may the respondent convert a motel into a restaurant or a coffee shop, art
gallery or music lounge without essentially destroying its property? This is a taking of private
property without due process of law, nay, even without compensation.
The penalty of closure likewise constitutes unlawful taking that should be compensated by the
government. The burden on the owner to convert or transfer his business, otherwise it will be closed
permanently after a subsequent violation should be borne by the public as this end benefits them as
a whole.

Petitioners cannot take refuge in classifying the measure as a zoning ordinance. A zoning ordinance,
although a valid exercise of police power, which limits a "wholesome" property to a use which can
not reasonably be made of it constitutes the taking of such property without just compensation.
Private property which is not noxious nor intended for noxious purposes may not, by zoning, be
destroyed without compensation. Such principle finds no support in the principles of justice as we
know them. The police powers of local government units which have always received broad and
liberal interpretation cannot be stretched to cover this particular taking.

Distinction should be made between destruction from necessity and eminent domain. It needs
restating that the property taken in the exercise of police power is destroyed because it is noxious or
intended for a noxious purpose while the property taken under the power of eminent domain is
intended for a public use or purpose and is therefore "wholesome."89 If it be of public benefit that a
"wholesome" property remain unused or relegated to a particular purpose, then certainly the public
should bear the cost of reasonable compensation for the condemnation of private property for public
use.90

Further, the Ordinance fails to set up any standard to guide or limit the petitioners' actions. It in no
way controls or guides the discretion vested in them. It provides no definition of the establishments
covered by it and it fails to set forth the conditions when the establishments come within its ambit of
prohibition. The Ordinance confers upon the mayor arbitrary and unrestricted power to close down
establishments. Ordinances such as this, which make possible abuses in its execution, depending
upon no conditions or qualifications whatsoever other than the unregulated arbitrary will of the city
authorities as the touchstone by which its validity is to be tested, are unreasonable and invalid.
The Ordinance should have established a rule by which its impartial enforcement could be secured.91

Ordinances placing restrictions upon the lawful use of property must, in order to be valid and
constitutional, specify the rules and conditions to be observed and conduct to avoid; and must not
admit of the exercise, or of an opportunity for the exercise, of unbridled discretion by the law
enforcers in carrying out its provisions.92

Thus, in Coates v. City of Cincinnati,93 as cited in People v. Nazario,94 the U.S. Supreme Court
struck down an ordinance that had made it illegal for "three or more persons to assemble on any
sidewalk and there conduct themselves in a manner annoying to persons passing by." The
ordinance was nullified as it imposed no standard at all "because one may never know in advance
what 'annoys some people but does not annoy others.' "

Similarly, the Ordinance does not specify the standards to ascertain which establishments "tend to
disturb the community," "annoy the inhabitants," and "adversely affect the social and moral welfare
of the community." The cited case supports the nullification of the Ordinance for lack of
comprehensible standards to guide the law enforcers in carrying out its provisions.

Petitioners cannot therefore order the closure of the enumerated establishments without infringing
the due process clause. These lawful establishments may be regulated, but not prevented from
carrying on their business. This is a sweeping exercise of police power that is a result of a lack of
imagination on the part of the City Council and which amounts to an interference into personal and
private rights which the Court will not countenance. In this regard, we take a resolute stand to uphold
the constitutional guarantee of the right to liberty and property.
Worthy of note is an example derived from the U.S. of a reasonable regulation which is a far cry from
the ill-considered Ordinance enacted by the City Council.

In FW/PBS, INC. v. Dallas,95 the city of Dallas adopted a comprehensive ordinance regulating
"sexually oriented businesses," which are defined to include adult arcades, bookstores, video stores,
cabarets, motels, and theaters as well as escort agencies, nude model studio and sexual encounter
centers. Among other things, the ordinance required that such businesses be licensed. A group of
motel owners were among the three groups of businesses that filed separate suits challenging the
ordinance. The motel owners asserted that the city violated the due process clause by failing to
produce adequate support for its supposition that renting room for fewer than ten (10) hours resulted
in increased crime and other secondary effects. They likewise argued than the ten (10)-hour
limitation on the rental of motel rooms placed an unconstitutional burden on the right to freedom of
association. Anent the first contention, the U.S. Supreme Court held that the reasonableness of the
legislative judgment combined with a study which the city considered, was adequate to support the
city's determination that motels permitting room rentals for fewer than ten (10 ) hours should be
included within the licensing scheme. As regards the second point, the Court held that limiting motel
room rentals to ten (10) hours will have no discernible effect on personal bonds as those bonds that
are formed from the use of a motel room for fewer than ten (10) hours are not those that have played
a critical role in the culture and traditions of the nation by cultivating and transmitting shared ideals
and beliefs.

The ordinance challenged in the above-cited case merely regulated the targeted businesses. It
imposed reasonable restrictions; hence, its validity was upheld.

The case of Ermita Malate Hotel and Motel Operators Association, Inc. v. City Mayor of Manila,96 it
needs pointing out, is also different from this case in that what was involved therein was a measure
which regulated the mode in which motels may conduct business in order to put an end to practices
which could encourage vice and immorality. Necessarily, there was no valid objection on due
process or equal protection grounds as the ordinance did not prohibit motels. The Ordinance in this
case however is not a regulatory measure but is an exercise of an assumed power to prohibit.97

The foregoing premises show that the Ordinance is an unwarranted and unlawful curtailment of
property and personal rights of citizens. For being unreasonable and an undue restraint of trade, it
cannot, even under the guise of exercising police power, be upheld as valid.

B. The Ordinance violates Equal

Protection Clause

Equal protection requires that all persons or things similarly situated should be treated alike, both as
to rights conferred and responsibilities imposed. Similar subjects, in other words, should not be
treated differently, so as to give undue favor to some and unjustly discriminate against others.98 The
guarantee means that no person or class of persons shall be denied the same protection of laws
which is enjoyed by other persons or other classes in like circumstances.99 The "equal protection of
the laws is a pledge of the protection of equal laws."100 It limits governmental discrimination. The
equal protection clause extends to artificial persons but only insofar as their property is concerned.101

The Court has explained the scope of the equal protection clause in this wise:

… What does it signify? To quote from J.M. Tuason & Co. v. Land Tenure Administration:
"The ideal situation is for the law's benefits to be available to all, that none be placed outside
the sphere of its coverage. Only thus could chance and favor be excluded and the affairs of
men governed by that serene and impartial uniformity, which is of the very essence of the
 idea of law." There is recognition, however, in the opinion that what in fact exists "cannot
approximate the ideal. Nor is the law susceptible to the reproach that it does not take into
account the realities of the situation. The constitutional guarantee then is not to be given a
meaning that disregards what is, what does in fact exist. To assure that the general welfare
be promoted, which is the end of law, a regulatory measure may cut into the rights to liberty
and property. Those adversely affected may under such circumstances invoke the equal
protection clause only if they can show that the governmental act assailed, far from being
inspired by the attainment of the common weal was prompted by the spirit of hostility, or at
the very least, discrimination that finds no support in reason." Classification is thus not ruled
out, it being sufficient to quote from the Tuason decision anew "that the laws operate equally
and uniformly on all persons under similar circumstances or that all persons must be treated
in the same manner, the conditions not being different, both in the privileges conferred and
the liabilities imposed. Favoritism and undue preference cannot be allowed. For the principle
is that equal protection and security shall be given to every person under circumstances
which, if not identical, are analogous. If law be looked upon in terms of burden or charges,
those that fall within a class should be treated in the same fashion, whatever restrictions cast
on some in the group equally binding on the rest.102

Legislative bodies are allowed to classify the subjects of legislation. If the classification is
reasonable, the law may operate only on some and not all of the people without violating the equal
protection clause.103 The classification must, as an indispensable requisite, not be arbitrary. To be
valid, it must conform to the following requirements:

1) It must be based on substantial distinctions.

2) It must be germane to the purposes of the law.

3) It must not be limited to existing conditions only.

4) It must apply equally to all members of the class.104

In the Court's view, there are no substantial distinctions between motels, inns, pension houses,
hotels, lodging houses or other similar establishments. By definition, all are commercial
establishments providing lodging and usually meals and other services for the public. No reason
exists for prohibiting motels and inns but not pension houses, hotels, lodging houses or other similar
establishments. The classification in the instant case is invalid as similar subjects are not similarly
treated, both as to rights conferred and obligations imposed. It is arbitrary as it does not rest on
substantial distinctions bearing a just and fair relation to the purpose of the Ordinance.

The Court likewise cannot see the logic for prohibiting the business and operation of motels in the
Ermita-Malate area but not outside of this area. A noxious establishment does not become any less
noxious if located outside the area.

The standard "where women are used as tools for entertainment" is also discriminatory as
prostitutionone of the hinted ills the Ordinance aims to banishis not a profession exclusive to
women. Both men and women have an equal propensity to engage in prostitution. It is not any less
grave a sin when men engage in it. And why would the assumption that there is an ongoing immoral
activity apply only when women are employed and be inapposite when men are in harness? This
discrimination based on gender violates equal protection as it is not substantially related to important
government objectives.105 Thus, the discrimination is invalid.
Failing the test of constitutionality, the Ordinance likewise failed to pass the test of consistency with
prevailing laws.

C. The Ordinance is repugnant

to general laws; it is ultra vires

The Ordinance is in contravention of the Code as the latter merely empowers local government units
to regulate, and not prohibit, the establishments enumerated in Section 1 thereof.

The power of the City Council to regulate by ordinances the establishment, operation, and
maintenance of motels, hotels and other similar establishments is found in Section 458 (a) 4 (iv),
which provides that:

Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang
panlungsod, as the legislative body of the city, shall enact ordinances, approve resolutions
and appropriate funds for the general welfare of the city and its inhabitants pursuant to
Section 16 of this Code and in the proper exercise of the corporate powers of the city as
provided for under Section 22 of this Code, and shall:

. . .

(4) Regulate activities relative to the use of land, buildings and structures within the city in
order to promote the general welfare and for said purpose shall:

. . .

(iv) Regulate the establishment, operation and maintenance of cafes, restaurants,

beerhouses, hotels, motels, inns, pension houses, lodging houses, and other similar
establishments, including tourist guides and transports . . . .

While its power to regulate the establishment, operation and maintenance of any entertainment or
amusement facilities, and to prohibit certain forms of amusement or entertainment is provided under
Section 458 (a) 4 (vii) of the Code, which reads as follows:

Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang
panlungsod, as the legislative body of the city, shall enact ordinances, approve resolutions
and appropriate funds for the general welfare of the city and its inhabitants pursuant to
Section 16 of this Code and in the proper exercise of the corporate powers of the city as
provided for under Section 22 of this Code, and shall:

. . .

(4) Regulate activities relative to the use of land, buildings and structures within the city in
order to promote the general welfare and for said purpose shall:

. . .

(vii) Regulate the establishment, operation, and maintenance of any entertainment or

amusement facilities, including theatrical performances, circuses, billiard pools,
public dancing schools, public dance halls, sauna baths, massage parlors, and other
places for entertainment or amusement; regulate such other events or activities for
 amusement or entertainment, particularly those which tend to disturb the community
or annoy the inhabitants, or require the suspension or suppression of the same; or,
prohibit certain forms of amusement or entertainment in order to protect the social
and moral welfare of the community.

Clearly, with respect to cafes, restaurants, beerhouses, hotels, motels, inns, pension houses,
lodging houses, and other similar establishments, the only power of the City Council to legislate
relative thereto is to regulate them to promote the general welfare. The Code still withholds from
cities the power to suppress and prohibit altogether the establishment, operation and maintenance of
such establishments. It is well to recall the rulings of the Court in Kwong Sing v. City of Manila106 that:

The word "regulate," as used in subsection (l), section 2444 of the Administrative Code,
means and includes the power to control, to govern, and to restrain; but "regulate" should not
be construed as synonymous with "suppress" or "prohibit." Consequently, under the power to
regulate laundries, the municipal authorities could make proper police regulations as to the
mode in which the employment or business shall be exercised.107

And in People v. Esguerra,108 wherein the Court nullified an ordinance of the Municipality of Tacloban
which prohibited the selling, giving and dispensing of liquor ratiocinating that the municipality is
empowered only to regulate the same and not prohibit. The Court therein declared that:

(A)s a general rule when a municipal corporation is specifically given authority or power to
regulate or to license and regulate the liquor traffic, power to prohibit is impliedly withheld.109

These doctrines still hold contrary to petitioners' assertion110 that they were modified by the Code
vesting upon City Councils prohibitory powers.

Similarly, the City Council exercises regulatory powers over public dancing schools, public dance
halls, sauna baths, massage parlors, and other places for entertainment or amusement as found in
the first clause of Section 458 (a) 4 (vii). Its powers to regulate, suppress and suspend "such other
events or activities for amusement or entertainment, particularly those which tend to disturb the
community or annoy the inhabitants" and to "prohibit certain forms of amusement or entertainment in
order to protect the social and moral welfare of the community" are stated in the second and third
clauses, respectively of the same Section. The several powers of the City Council as provided in
Section 458 (a) 4 (vii) of the Code, it is pertinent to emphasize, are separated by semi-colons (;), the
use of which indicates that the clauses in which these powers are set forth are independent of each
other albeit closely related to justify being put together in a single enumeration or paragraph.111 These
powers, therefore, should not be confused, commingled or consolidated as to create a
conglomerated and unified power of regulation, suppression and prohibition.112

The Congress unequivocably specified the establishments and forms of amusement or

entertainment subject to regulation among which are beerhouses, hotels, motels, inns, pension
houses, lodging houses, and other similar establishments (Section 458 (a) 4 (iv)), public dancing
schools, public dance halls, sauna baths, massage parlors, and other places for entertainment or
amusement (Section 458 (a) 4 (vii)). This enumeration therefore cannot be included as among "other
events or activities for amusement or entertainment, particularly those which tend to disturb the
community or annoy the inhabitants" or "certain forms of amusement or entertainment" which the
City Council may suspend, suppress or prohibit.

The rule is that the City Council has only such powers as are expressly granted to it and those which
are necessarily implied or incidental to the exercise thereof. By reason of its limited powers and the
nature thereof, said powers are to be construed strictissimi juris and any doubt or ambiguity arising
out of the terms used in granting said powers must be construed against the City
Council.113 Moreover, it is a general rule in statutory construction that the express mention of one
person, thing, or consequence is tantamount to an express exclusion of all others. Expressio unius
est exclusio alterium. This maxim is based upon the rules of logic and the natural workings of human
mind. It is particularly applicable in the construction of such statutes as create new rights or
remedies, impose penalties or punishments, or otherwise come under the rule of strict
construction.114

The argument that the City Council is empowered to enact the Ordinance by virtue of the general
welfare clause of the Code and of Art. 3, Sec. 18 (kk) of the Revised Charter of Manila is likewise
without merit. On the first point, the ruling of the Court in People v. Esguerra,115 is instructive. It held
that:

The powers conferred upon a municipal council in the general welfare clause, or section
2238 of the Revised Administrative Code, refers to matters not covered by the other
provisions of the same Code, and therefore it can not be applied to intoxicating liquors, for
the power to regulate the selling, giving away and dispensing thereof is granted specifically
by section 2242 (g) to municipal councils. To hold that, under the general power granted by
section 2238, a municipal council may enact the ordinance in question, notwithstanding the
provision of section 2242 (g), would be to make the latter superfluous and nugatory, because
the power to prohibit, includes the power to regulate, the selling, giving away and dispensing
of intoxicating liquors.

On the second point, it suffices to say that the Code being a later expression of the legislative will
must necessarily prevail and override the earlier law, the Revised Charter of Manila. Legis
posteriores priores contrarias abrogant, or later statute repeals prior ones which are repugnant
thereto. As between two laws on the same subject matter, which are irreconcilably inconsistent, that
which is passed later prevails, since it is the latest expression of legislative will.116 If there is an
inconsistency or repugnance between two statutes, both relating to the same subject matter, which
cannot be removed by any fair and reasonable method of interpretation, it is the latest expression of
the legislative will which must prevail and override the earlier.117

Implied repeals are those which take place when a subsequently enacted law contains provisions
contrary to those of an existing law but no provisions expressly repealing them. Such repeals have
been divided into two general classes: those which occur where an act is so inconsistent or
irreconcilable with an existing prior act that only one of the two can remain in force and those which
occur when an act covers the whole subject of an earlier act and is intended to be a substitute
therefor. The validity of such a repeal is sustained on the ground that the latest expression of the
legislative will should prevail.118

In addition, Section 534(f) of the Code states that "All general and special laws, acts, city charters,
decrees, executive orders, proclamations and administrative regulations, or part or parts thereof
which are inconsistent with any of the provisions of this Code are hereby repealed or modified
accordingly." Thus, submitting to petitioners' interpretation that the Revised Charter of Manila
empowers the City Council to prohibit motels, that portion of the Charter stating such must be
considered repealed by the Code as it is at variance with the latter's provisions granting the City
Council mere regulatory powers.

It is well to point out that petitioners also cannot seek cover under the general welfare clause
authorizing the abatement of nuisances without judicial proceedings. That tenet applies to a
nuisance per se, or one which affects the immediate safety of persons and property and may be
summarily abated under the undefined law of necessity. It can not be said that motels are injurious
to the rights of property, health or comfort of the community. It is a legitimate business. If it be a
nuisance per accidens it may be so proven in a hearing conducted for that purpose. A motel is
not per se a nuisance warranting its summary abatement without judicial intervention.119

Notably, the City Council was conferred powers to prevent and prohibit certain activities and
establishments in another section of the Code which is reproduced as follows:

Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang
panlungsod, as the legislative body of the city, shall enact ordinances, approve resolutions
and appropriate funds for the general welfare of the city and its inhabitants pursuant to
Section 16 of this Code and in the proper exercise of the corporate powers of the city as
provided for under Section 22 of this Code, and shall:

(1) Approve ordinances and pass resolutions necessary for an efficient and effective city
government, and in this connection, shall:

. . .

(v) Enact ordinances intended to prevent, suppress and impose appropriate penalties for
habitual drunkenness in public places, vagrancy, mendicancy, prostitution, establishment
and maintenance of houses of ill repute, gambling and other prohibited games of chance,
fraudulent devices and ways to obtain money or property, drug addiction, maintenance of
drug dens, drug pushing, juvenile delinquency, the printing, distribution or exhibition of
obscene or pornographic materials or publications, and such other activities inimical to the
welfare and morals of the inhabitants of the city;

. . .

If it were the intention of Congress to confer upon the City Council the power to prohibit the
establishments enumerated in Section 1 of the Ordinance, it would have so declared in uncertain
terms by adding them to the list of the matters it may prohibit under the above-quoted Section.
The Ordinance now vainly attempts to lump these establishments with houses of ill-repute and
expand the City Council's powers in the second and third clauses of Section 458 (a) 4 (vii) of the
Code in an effort to overreach its prohibitory powers. It is evident that these establishments may only
be regulated in their establishment, operation and maintenance.

It is important to distinguish the punishable activities from the establishments themselves. That these
establishments are recognized legitimate enterprises can be gleaned from another Section of the
Code. Section 131 under the Title on Local Government Taxation expressly mentioned proprietors or
operators of massage clinics, sauna, Turkish and Swedish baths, hotels, motels and lodging houses
as among the "contractors" defined in paragraph (h) thereof. The same Section also defined
"amusement" as a "pleasurable diversion and entertainment," "synonymous to relaxation, avocation,
pastime or fun;" and "amusement places" to 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 performances." Thus, it can be inferred that the Code considers these establishments as
legitimate enterprises and activities. It is well to recall the maxim reddendo singula singulis which
means that words in different parts of a statute must be referred to their appropriate connection,
giving to each in its place, its proper force and effect, and, if possible, rendering none of them
useless or superfluous, even if strict grammatical construction demands otherwise. Likewise, where
words under consideration appear in different sections or are widely dispersed throughout an act the
same principle applies.120
Not only does the Ordinance contravene the Code, it likewise runs counter to the provisions of P.D.
499. As correctly argued by MTDC, the statute had already converted the residential Ermita-Malate
area into a commercial area. The decree allowed the establishment and operation of all kinds of
commercial establishments except warehouse or open storage depot, dump or yard, motor repair
shop, gasoline service station, light industry with any machinery or funeral establishment. The rule is
that for an ordinance to be valid and to have force and effect, it must not only be within the powers of
the council to enact but the same must not be in conflict with or repugnant to the general law. 121 As
succinctly illustrated in Solicitor General v. Metropolitan Manila Authority:122

The requirement that the enactment must not violate existing law explains itself. Local
political subdivisions are able to legislate only by virtue of a valid delegation of legislative
power from the national legislature (except only that the power to create their own sources of
revenue and to levy taxes is conferred by the Constitution itself). They are mere agents
vested with what is called the power of subordinate legislation. As delegates of the
Congress, the local government units cannot contravene but must obey at all times the will of
their principal. In the case before us, the enactment in question, which are merely local in
origin cannot prevail against the decree, which has the force and effect of a statute.123

Petitioners contend that the Ordinance enjoys the presumption of validity. While this may be the rule,
it has already been held that although the presumption is always in favor of the validity or
reasonableness of the ordinance, such presumption must nevertheless be set aside when the
invalidity or unreasonableness appears on the face of the ordinance itself or is established by proper
evidence. The exercise of police power by the local government is valid unless it contravenes the
fundamental law of the land, or an act of the legislature, or unless it is against public policy or is
unreasonable, oppressive, partial, discriminating or in derogation of a common right.124

Conclusion

All considered, the Ordinance invades fundamental personal and property rights and impairs
personal privileges. It is constitutionally infirm. The Ordinance contravenes statutes; it is
discriminatory and unreasonable in its operation; it is not sufficiently detailed and explicit that abuses
may attend the enforcement of its sanctions. And not to be forgotten, the City Council under the
Code had no power to enact the Ordinance and is therefore ultra vires, null and void.

Concededly, the challenged Ordinance was enacted with the best of motives and shares the
concern of the public for the cleansing of the Ermita-Malate area of its social sins. Police power
legislation of such character deserves the full endorsement of the judiciary we reiterate our
support for it. But inspite of its virtuous aims, the enactment of the Ordinance has no statutory or
constitutional authority to stand on. Local legislative bodies, in this case, the City Council, cannot
prohibit the operation of the enumerated establishments under Section 1 thereof or order their
transfer or conversion without infringing the constitutional guarantees of due process and equal
protection of laws not even under the guise of police power.

WHEREFORE, the Petition is hereby DENIED and the decision of the Regional Trial Court declaring
the Ordinance void is AFFIRMED. Costs against petitioners.

SO ORDERED.
G.R. No. 222838 September 4, 2018

PHILIPPINE HEALTH INSURANCE CORPORATION, Petitioner

vs.
COMMISSION ON AUDIT, CHAIRPERSON MICHAEL G. AGUINALDO, DIRECTOR JOSEPH B.
ANACAY, AND SUPERVISING AUDITOR ELENA L. AGUSTIN, Respondents

DECISION

JARDELEZA, J.:

This petition for review on certiorari1 under Rule 64,2 with prayer for issuance of a temporary
restraining order and/or writ of preliminary injunction, seeks to annul and set aside the Decision No.
2015-0933 dated April 1, 2015 and Resolution4 dated December 15, 2015, respectively, of the
Commission on Audit (COA). The COA affirmed the disallowance of the Institutional Meeting
Expenses (IME) for 2010 paid to members of the Board of Directors (BOD) of Philippine Health
Insurance Corporation (PhilHealth) in the total amount of ₱2,965,428.59.

In October 2007, the PhilHealth BOD passed Board Resolution No. 1055 approving the entitlement
of its members (or their authorized representatives) to the Board Extraordinary and Miscellaneous
Expense (BEME) in the reimbursable amount of ₱30,000.00 each per month effective October 4,
2007. These allowances were intended to cover the expenses of said BOD members in the
performance of their official functions, which they would otherwise personally
shoulder. 5 Correspondingly, a supplemental budget in the amount of ₱1,560,000.00 was also
appropriated for the purpose.6

In December 2007, the BOD amended Board Resolution No. 1055 through Board Resolution No.
1084. It allowed the unexpended balance of the monthly Extraordinary and Miscellaneous Expense
(EME) to be carried over and expended in the succeeding months within the same calendar year,
effective retroactively from October 5, 2007.7

In another Resolution8 dated February 12, 2009, the BOD resolved to allocate the amount of
₱4,320,000.00 from the 2009 Corporate Operating Budget (COB) of the Office of the Corporate
Secretary and every year thereafter for the reimbursement of expenses incurred by the members of
the BOD (or their authorized representatives) in the discharge of their official functions and duties
outside board meetings.

On May 24, 2011, the COA Supervising Auditor issued an Audit Observation Memorandum9 (AOM)
which showed that reimbursements of EME totaling ₱19.95 million in calendar year 2010 were
charged to the Representation Expenses account under the sub-accounts "Institutional Meeting
Expenses (865-10) and Committee Meeting Expenses (865-20)." The AOM noted that PhilHealth
had been using IME and Committee Meeting Expenses accounts to accommodate reimbursements
of EME since charges to the EME account already far exceeded the General Appropriations Act
(GAA) prescribed limitation for each official. The COA Supervising Auditor viewed the charging of
EME against other accounts to be irregular because the nature and purpose of these expenses fall
under the budgetary controls in the disbursement of EME as stated in the GAA and COA Circular
No. 2006-01. The charging of EME against other accounts likewise increased the amount of the
excess from the GAA-prescribed annual rate for EME. 10 The Supervising Auditor also observed that
₱5.63 million of the total amount was reimbursement of expenses made by members of the
PhilHealth BOD and personnel whose positions were not entitled to EME. 11
PhilHealth commented on the AOM, but its comment was found unsatisfactory. Consequently,
Notice of Disallowance (ND) No. HO 12-004 (10) was issued on July 18, 2012 disallowing the
payment for IME of the members of the PhilHealth BOD for the period January to December 2010 in
the amount of ₱2,965,428.59 for lack of legal basis. 12

PhilHealth filed an appeal before the COA-Corporate Government Sector (CGS), but the same was
denied. The COA-CGS affirmed the ruling of the Supervising Auditor that Section 18(d) of Republic
Act (RA) No. 7875 13 expressly provides that a per diem is precisely intended to be the compensation
for members of the PhilHealth BOD. Nowhere in RA No. 7875 can it be found that PhilHealth is
authorized to grant additional compensation, allowances or benefits to its BOD. Neither is the BOD
authorized to grant compensation beyond what RA No. 7875 provides. Although the BOD is
empowered to formulate the necessary rules and regulations pursuant to RA No. 7875, this power
must be exercised within the scope of the authority given by the legislature. Thus, the COA-CGS
found that the BOD exceeded its authority when it issued Board Resolution No. 1193 authorizing its
members to receive EME contrary to Section 18( d) of RA No. 7875 .14

The COA-CGS further ruled that PhilHealth cannot seek refuge on the previous rulings of the Court
with regard to the non-refund of the disallowed benefits. Citing the AOM, the COA-CGS pointed out
that the expenses in question were already disallowed in audit. As such, the BOD members already
knew, at the time they received the IME, that said benefits had no legal basis. 15

PhilHealth filed a petition for review before the COA Proper. In its assailed Decision, however, the
COA Proper dismissed the petition for being filed out of time, noting that the ND and the COA-CGS
Decision were appealed only after 181 and 42 days, respectively, had lapsed from the dates of their
receipt by PhilHealth. The COA Proper also found no compelling reason to relax its procedural rules
because PhilHealth did not offer any justification for the belated filing of its petition. PhilHealth
moved for reconsideration, but the same was also denied. 16

Hence, this petition which raises grave abuse of discretion on the part of COA for denying the appeal
on mere procedural grounds instead of deciding on the merits of the case in the interest of
substantial justice.

We deny the petition.

Firstly, PhilHealth maintains that the term "month" in the six-month reglementary period to file an
appeal under the 2009 Revised Rules of Procedure of COA should be understood to mean the 30-
day month and should, accordingly, not use the equivalent of 180 days. We are not persuaded.

Section 4, Rule V of the 2009 Revised Rules of Procedure of the COA provides that an appeal
before the Director of a Central Office Audit Cluster in the National, Local or Corporate Sector, or of
a Regional Office of the Commission, must be filed within six months after receipt of the decision
appealed from. The receipt by the Director of the appeal memorandum shall stop the running of the
period to appeal; the period shall resume to run upon receipt by the appellant of the Director's
decision. Section 3, Rule VII further provides that the appeal before the COA Proper shall be taken
within the time remaining of the six-month period, taking into account the suspension of the running
thereof. There is no dispute that PhilHealth received the ND on July 27, 2012 and filed an appeal
before the COA-CGS on January 24, 2013. In ruling that the reglementary period had already lapsed
by then, the COA employed 180 days as the equivalent of the six-month period, thereby making
January 23, 2013 as the last date for PhilHealth to file its appeal.

PhilHealth, on the other hand, takes its cue from our Decision in Commissioner of Internal Revenue
v. Primetown Property Group, Inc. 17 (Primetown), positing that the six-month reglementary period
should be determined as the entire period from July 28, 2012 to January 27, 2013. This conclusion
stemmed from our explanation in Primetown which included a definition of a calendar month as one
designated in the calendar without regard to the number of days it may contain. 18 Thus:

It is the "period of time running from the beginning of a certain numbered day up to, but not
including, the corresponding numbered day of the next month, and if there is not a sufficient number
of days in the next month, then up to and including the last day of that month." To illustrate, one
calendar month from December 31, 2007 will be from January 1, 2008 to January 31, 2008; one
calendar month from January 31, 2008 will be from February 1, 2008 until February 29,
2008. 19 (Citations omitted.)

Glaringly, however, the issue in Primetown was with respect to the two-year prescriptive period
within which to file for a tax refund or credit under the National Internal Revenue Code. In computing
this legal period, the Court held that there was a manifest incompatibility with regard to the manner
of computing legal periods, particularly as to what constitutes a year, under Article 13 of the Civil
Code and Section 31, Chapter VIII, Book I of the Administrative Code of 1987. Under the Civil Code,
a year is equivalent to 365 days, whether it be a regular year or a leap year. Under the
Administrative Code of 1987, however, a year is composed of 12 calendar months, with the number
of days being irrelevant. To address this incompatibility, the Court held that Section 31, Chapter VIII,
Book I of the Administrative Code of 1987, being the more recent law, governs the computation of
legal periods.20

What is at issue here, conversely, is the computation of the legal period for a "month." Unlike
in Primetown, there is no incompatibility with respect to the definition of a month under the Civil
Code and the Administrative Code. A month is understood under both laws to be 30 days. In
ascertaining the last day of the reglementary period to appeal, one month is to be treated as
equivalent to 30 days, such that six months is equal to 180 days. Thus, the period began to run on
July 27, 2012 upon receipt of the ND and ended on January 23, 2013.21 The COA was correct,
therefore, in denying the appeal on the ground that the six-month period within which to file an
appeal from the ND had already lapsed when PhilHealth filed its appeal to the COA-CGS on January
24, 2013.

II

Even if we were to relax the rules and entertain the appeal, we find that PhilHealth's case would still
fail on its merits. The COA correctly disallowed the IME on the ground that its grant was without legal
basis.

To begin with, we shall distinguish between the appointive and ex officio members of the BOD. The
composition of the BOD under RA No. 9241,22 which amended RA No. 7875 in 2004, is as follows:

Sec. 3. Section 18 of the Law shall be amended to read as follows:

"Sec. 18. The Board of Directors. -

a) Composition - The Corporation shall be governed by a Board of Directors hereinafter referred to

as the Board, composed of the following members:

The Secretary of Health;

The Secretary of Labor and Employment or his representative;

The Secretary of the Interior and Local Government or his representative;

The Secretary of Social Welfare and Development or his representative;

The President of the Corporation;

A representative of the labor sector;

A representative of employers;

The SSS Administrator or his representative;

The GSIS General Manager or his representative;

The Vice Chairperson for the basic sector of the National Anti-Poverty Commission or his
representative;

A representative of Filipino overseas workers;

A representative of the self-employed sector; and

A representative of health care providers to be endorsed by the national associations of health care
institutions and medical health professionals.

The Secretary of Health shall be the ex officio Chairperson while the President of the Corporation
shall be the Vice Chairperson of the Board.

As can be gleaned from above, there are members of the BOD who are appointed to the position,
and there are those who are designated to serve by virtue of their office (or in other words, in an ex
officio capacity). Appointment is the selection by the proper authority of an individual who is to
exercise the functions of an office. Designation, on the other hand, connotes merely the imposition of
additional duties, upon a person already in the public service by virtue of an earlier appointment or
election. 23

Section 18(d) of RA No. 7875, which allows the members of the BOD to receive per diems for every
meeting they actually attend, must be understood to refer only to the appointive members and not to
those who are designated in an ex officio capacity or by virtue of their title to a certain office. The ex
officio position being actually and in legal contemplation part of the principal office, it follows that the
official concerned has no right to receive any other form of additional compensation for his services
in the said position; otherwise, it would run counter with the constitutional prohibitions against
holding multiple positions in the government and receiving additional or double compensation. 24 We
explained:

The reason is that these services are already paid for and covered by the compensation attached to
his principal office. It should be obvious that if, say, the Secretary of Finance attends a meeting of
the Monetary Board as an ex-officio member thereof, he is actually and in legal contemplation
performing the primary function of his principal office in defining policy in monetary and banking
matters, which come under the jurisdiction of his department. For such attendance, therefore, he
is not entitled to collect any extra compensation, whether it be in the form of a per diem or an
honorarium or an allowance, or some other such euphemism. By whatever name it is
designated, such additional compensation is prohibited by the Constitution.25 (Emphasis supplied.)

Prescinding from above, the disallowance of the IME granted to the members of the BOD serving in
an ex officio capacity is clearly warranted.26 It would not be inaccurate to say that these members
were already receiving these allowances from their respective departments in the form of EME and
as appropriated in the GAA. As such, the additional allowances from PhilHealth were no longer
necessary.27

In the same vein, PhilHealth erroneously invokes Department of Budget and Management (DBM)-
National Budget Circular No. 2007-51028 which provides in the last sentence of its Section 5.4 that
department secretaries, department undersecretaries, and department assistant secretaries who are
ex officio members of governing boards of collegial bodies may receive reimbursement for actual
transportation and miscellaneous expenses incurred in attending board meetings. This provision
must be understood to mean that members of the BOD serving in an ex officio capacity may, indeed,
receive such allowances, but only as appropriated in the GAA of their own respective departments.

On the other hand, as far as the disallowance of the IME granted to the appointive members is
concerned, the same is also proper.

Contrary to the posturing of PhilHealth, its charter does not authorize the grant of additional
allowances to the BOD beyond per diems. For one, while Section 18(d) of RA No. 7875 is entitled
"allowances and per diems," its body significantly fails to mention any other allowances or benefits
besides per diems. It is a basic precept of statutory construction that the express mention of one
person, thing, act, or consequence excludes all others, as expressed in the oft-repeated
maxim expressio unius est exlusio alterius. Elsewise stated, expressium facit cessare taciturn-what
is expressed puts an end to what is implied.29 Casus omissus pro omisso habendus est. A person,
object or thing omitted must have been omitted intentionally.30 If the legislature intended to give
PhilHealth the authority to grant allowances to the BOD other than the per diems, it could have
facilely mentioned so. Our ruling in Bases Conversion and Development Authority v. COA31 (BCDA)
is instructive:

First, the BCDA claims that the Board can grant the yearend benefit to its members and full-time
consultants because, under Section 10 of RA No. 7227, the functions of the Board include the
adoption of a compensation and benefit scheme.

The Court is not impressed. The Board's power to adopt a compensation and benefit scheme is not
unlimited. Section 9 of RA No. 7227 states that Board members are entitled to a per diem:

"Members of the Board shall receive a per diem of not more than Five thousand pesos (₱
5,000) for every board meeting: Provided, however, That the per diem collected per month
does not exceed the equivalent of four (4) meetings: Provided, further, That the amount
of per diem for every board meeting may be increased by the President but such amount shall not
be increased within two (2) years after its last increase." xx x

Section 9 specifies that Board members shall receive a per diem for every board meeting; limits the
amount of per diem to not more than ₱5,000; and limits the total amount of per diem for one month
to not more than four meetings. In Magno v. Commission on Audit, Cabili v. Civil Service
Commission, De Jesus v. Civil Service Commission, Molen, Jr. v. Commission on Audit, and Baybay
Water District v. Commission on Audit, the Court held that the specification of compensation and
limitation of the amount of compensation in a statute indicate that Board members are
entitled only to the per diem authorized by law and no other. In Baybay Water District, the Court
held that:

"By specifying the compensation which a director is entitled to receive and by limiting the amount
he/she is allowed to receive in a month, x x x the law quite clearly indicates that directors xx x are
authorized to receive only the per diem authorized by law and no other compensation or allowance
in whatever form."

Fourth, the BCDA claims that the Board can grant the year-end benefit to its members and the full-
time consultants because RA No. 7227 does not expressly prohibit it from doing so.

The Court is not impressed. A careful reading of Section 9 of RA No. 7227 reveals that the Board is
prohibited from granting its members other benefits. x x x

x x xx

Section 9 specifies that Board members shall receive a per diem for every board meeting; limits the
amount of per diem to not more than ₱5,000; limits the total amount of per diem for one month to not
more than four meetings; and does not state that Board members may receive other benefits.
In Magno, Cabili, De Jesus, Molen, Jr., and Baybay Water District, the Court held that the
specification of compensation and limitation of the amount of compensation in a statute
indicate that Board members are entitled only to the per diem authorized by law and no other.

The specification that Board members shall receive a per diem of not more than ₱5,000 for every
meeting and the omission of a provision allowing Board members to receive other benefits lead the
Court to the inference that Congress intended to limit the compensation of Board members to the
per diem authorized by law and no other. Expressio unius est exclusio alterius. Had Congress
intended to allow the Board members to receive other benefits, it would have expressly
stated so. For example, Congress' intention to allow Board members to receive other benefits
besides the per diem authorized by law is expressly stated in Section 1 of RA No. 9286:

"SECTION 1. Section 13 of Presidential Decree No. 198, as amended, is hereby amended to read
as follows:

"SEC. 13. Compensation.-Each director shall receive per diem to be determined by the Board, for
each meeting of the Board actually attended by him, but no director shall receive per diems in any
given month in excess of the equivalent of the total per diem of four meetings in any given month.

Any per diem in excess of One hundred fifty pesos (₱150.00) shall be subject to the approval of the
Administration. In addition thereto, each director shall receive allowances and benefits as the
Board may prescribe subject to the approval of the Administration." x x x

The Court cannot, in the guise of interpretation, enlarge the scope of a statute or insert into a
statute what Congress omitted, whether intentionally or unintentionally.32 (Emphasis supplied;
citations omitted.)

Secondly, PhilHealth, cannot take refuge behind its assertion that it may grant additional benefits on
the strength of its fiscal autonomy under Section 16(n)33 of RA No. 7875, as tempered by the
limitations provided in Section 26(b).34 We have already ruled on this same argument in PhilHealth v.
COA, 35 where it was posited that it is the intent of the legislature to limit the determination and
approval of allowances to the PhilHealth BOD alone, subject only to the 12% to 13% limitation. We
have declared in that case that PhilHealth does not have unbridled discretion to issue any and all
kinds of allowances, limited only by the provisions of its charter:

As clearly expressed in PCSO v. COA, even if it is assumed that there is an explicit provision
exempting a GOCC from the rules of the then Office of Compensation and Position Classification
(OCPC) under the DBM, the power of its Board to fix the salaries and determine the reasonable
allowances, bonuses and other incentives was still subject to the standards laid down by applicable
laws: P.D. No. 985, its 1978 amendment, P.D. No. 1597, the SSL, and at present, R.A. 10149. To
sustain petitioners' claim that it is the PHIC, and PHIC alone, that will ensure that its
compensation system conforms with applicable law will result in an invalid delegation of
legislative power, granting the PHIC unlimited authority to unilaterally fix its compensation
structure. Certainly, such effect could not have been the intent of the legislature.36 (Emphasis
supplied; citations omitted.)

It may not be amiss to point out that even on the fair assumption that RA No. 7875 grants PhilHealth
the power to fix compensation, the same is limited to; as expressly worded in Section 16(n);
the personnel of PhilHealth. In BCDA37 the Court upheld DBM Circular Letter No. 2002-2 which
states that "[m]embers of the Board of Directors of agencies are not salaried officials of the
government. As non-salaried officials they are not entitled to PERA, ADCOM, YEB and retirement
benefits unless expressly provided by law."38 It appears that the consistent rule, therefore, is that the
organic law must expressly provide the allowances and benefits due the BOD; entitlement thereto
can never be implied.

Neither can PhilHealth find solace in the alleged approval or confirmation by former President Gloria
Macapagal-Arroyo of PhilHealth's fiscal autonomy through two executive communications relative to
its request to exercise fiscal authority in line with the PhilHealth Rationalization Plan. 39 We observe
that the alleged presidential approval was merely on the marginal note of the said communications
and was never reduced in any formal memorandum. 40 So, too, the Court has previously held
in BCDA that the presidential approval of a new compensation and benefit scheme which included
the grant of allowances found to be unauthorized by law shall not estop the State from correcting the
erroneous application of a statute.41

Equally important, we are reminded of our recent ruling in Social Security System (SSS) v.
COA,42 where similarly, issues on the grant of EME to the appointive members of the SSS and the
alleged fiscal autonomy of a government-owned and controlled corporation were put into fore. In
said case, the COA disallowed the EME on the ground that the Social Security Law (SS Law) only
mentions the grant of per diems and representation and transportation allowances. The SSS
countered that the SS Law, when taken as a whole, authorizes the SSS to grant additional
allowances to its members. The SSS believed, in particular, that it may grant additional benefits to its
members because the SS Law allegedly empowers it to adopt its own budget within the limits
provided by the said law. In ruling against the SSS, we took significant note of the nature of the
funds possessed by the SSS, citing our previous ruling that the funds of the SSS were merely held in
trust for the benefit of workers and employees in the private sector. As such, the provisions of the SS
Law empowering the Social Security Commission to allocate its funds to pay for the salaries and
benefits of its officials and employees are not absolute and unrestricted because the SSS is a mere
trustee of the said funds. In other words, the salaries and benefits to be endowed by the SSS must
always be reasonable so that the funds, which it holds in trust, will be devoted to its primary purpose
of servicing workers and employees from the private sector.43

This foregoing analysis is applicable in the instant case. RA No. 7875 was enacted pursuant to the
constitutional policy to create a National Health Insurance Program (Program) that would grant
discounted medical coverage to all citizens, with priority to the needs of the underprivileged, sick,
elderly, disabled, women and children, and free medical care to paupers.44 The Program is designed
to be compulsory, universal in coverage, affordable, acceptable, available, and accessible for all
citizens of the Philippines.45 In order to achieve this noble goal, RA No. 7875 created the National
Health Insurance Fund which consists of contributions from members; current balances of the Health
Insurance Funds of the SSS and Government Service Insurance System (GSIS) collected under the
Philippine Medical Care Act of 1969, as amended, including arrearages of the Government of the
Philippines with the GSIS for the said Fund; other appropriations earmarked by the national and
local governments purposely for the implementation of the Program; subsequent appropriations;
donations and grants-in-aid; and all accruals thereof.46 The National Health Insurance Fund is
managed by PhilHealth through its BOD, subject to certain limitations.47 In line with managing the
Program, RA No. 7875 speaks of ensuring fund viability, as well as carrying out a fiduciary
responsibility such that the Program shall provide effective stewardship, funds management, and
maintenance of reserves.48 In a lot of ways, therefore, it is also imperative for PhilHealth to utilize
funds for the salaries and allowances of its BOD members with as much circumspection and
restraint as the SSS. Like the latter, the funds under the PhilHealth's stewardship need to be
devoted primarily to providing universal and affordable health care to all Filipinos.

Having established that RA No. 7875 does not authorize the grant of additional allowances and
benefits to the BOD, it does not follow (as we have already mentioned) that such grants are strictly
and absolutely proscribed. The authority to grant EMEs may be derived from the GAA. The COA, in
its Circular No. 2006-001,49 recognizes this much, to wit:

III. Audit Guidelines

1. The amount of extraordinary and miscellaneous expenses, as authorized in the corporate charters
of GOCCs/GFIs, shall be the ceiling in the disbursement of these funds. Where no such authority
is granted in the corporate charter and the authority to grant extraordinary and miscellaneous
expenses is derived from the General Appropriations Act (GAA), the amounts fixed
thereunder shall be the ceiling in the disbursements;

2. Payment of these expenditures shall be strictly on a non-commutable or reimbursable basis;

3. The claim for reimbursement of such expenses shall be supported by receipts and/or other
documents evidencing disbursements; and

4. No portion of the amounts appropriated shall be used for salaries, wages, allowances, intelligence
and confidential expenses which are covered by separate appropriations. (Emphasis supplied.)

Indeed, in its AOM, the Supervising Auditor acknowledged the authority of PhilHealth to grant EMEs
derived from the GAA. Section 28 of RA No. 9970,50 the 2010 GAA, on the other hand, provides for a
ceiling of EMEs to be appropriated:

Sec. 28. Extraordinary and Miscellaneous Expenses. Appropriations authorized herein may be used
for extraordinary expenses of the following officials and those of equivalent rank as may be
determined by the DBM, not exceeding:

(a) P220,000 for each Department Secretary;

(b) P90,000 for each Department Undersecretary;

 (c) P50,000 for each Department Assistant Secretary;

(d) P38,000 for each head of bureau or organization of equivalent rank, and for each head of
a Department Regional Office;

(e) P22,000 for each head of a Bureau Regional Office or organization of equivalent rank;
and

(f) P16,000 for each Municipal Trial Court Judge, Municipal Circuit Trial Court Judge, and
Shari' a Circuit Court Judge.

In addition, miscellaneous expenses not exceeding Seventy-Two Thousand Pesos (P72,000) for
each of the offices under the above named officials are herein authorized.

xxxx

However, the Supervising Auditor observed that the EMEs granted were irregularly charged to other
accounts of PhilHealth in order to accommodate reimbursements of EMEs which have already far
exceeded the prescribed limitation set under the 2010 GAA. This act of charging was found to be
irregular because it was conducted in a manner that deviated from the set standards, which in this
case were the budgetary controls in the disbursement of the EME as stated in the GAA and COA
Circular No. 2006- 001. The irregular charging also resulted to an increase in the "excess from the
GAA prescribed annual rate for EME."51 There is no cogent reason to overturn these findings of the
Supervising Auditor, which PhilHealth failed to refute squarely in their comment to the AOM. 52

Finally, the defense of PhilHealth that its BOD members were reimbursed the IME in good faith and
must, therefore, be not required to refund the disallowed amount, does not lie. Insofar as ex
officio members are concerned, we reiterate our ruling in Tetangco that, by jurisprudence, patent
disregard of case law and COA directives amounts to gross negligence; hence, good faith on the
part of the the approving officers cannot be presumed: 53

As the records bear out, the petitioners who approve the EMEs failed to observe the following: first,
there is already a law, the GAA, that limits the grant of EMEs; second, COA Memorandum No. 97-
038 dated September 19, 1997 is a directive issued by the COA to its auditors to enforce the self-
executing prohibition imposed by Section 13, Article VII of the Constitution on the President and his
official family, their deputies and assistants, or their representatives from holding multiple offices and
receiving double compensation; and third, the irregularity of giving additional compensation or
allowances to ex officio members was already settled by jurisprudence, during the time that the
subject allowances were authorized by the BSP.

Indeed, the petitioners-approving officers' disregard of the aforementioned case laws, COA
issuances, and the Constitution, cannot be deemed as a mere lapse consistent with the presumption
of good faith.

In line with this, We cannot subscribe to petitioner Favila's insistence that he should not be liable in
the approving, processing and receiving of EMEs on the basis that he did not participate in the
adoption of the resolutions authorizing the payment of the EMEs.
As pointed out during the deliberation by Our learned colleague, Hon. Justice Lucas P. Bersamin,
the doctrine on the non-liability of recipients of disallowed benefits based on good faith did not
extend to petitioner Favila for the following reasons: first, there was precisely a law (the relevant
GAAs) that expressly limited the amounts of the EMEs to be received by the ex officio members;
and second, insofar as ND No. 10-004GF (2007-2008) is concerned, his liability arose from his
receipt of the subject allowances in 2008, when he was an ex officio member of the Board. Hence,
good faith did not favor him not only because he had failed to exercise the highest degree of
responsibility, but also because as a cabinet member he was aware of the extent of the benefits he
was entitled to.

Verily, petitioners Tetangco, Jr., Favila, Amatong, FavisVillafuerte, Antonio, and Bunye, who were
members of the Monetary Board were expected to keep abreast of the laws that may affect the
performance of their functions. The law, jurisprudence and COA issuances subject of this case are
of such clearness that the concerned officials could not have mistaken their meaning. It was
incumbent upon them to instruct Petitioners Ong, Prudencio, Reyes and Catarroja who participated
in the processing of the EMEs, to comply with these laws. Unfortunately, they did not. Thus, they
cannot find shelter in the defense of good faith. 54 (Citations omitted.)

Neither can good faith be appreciated with respect to the appointive members of the BOD. The
Court can understand that the BOD might have merely relied on, albeit erroneously: (1) PhilHealth's
power to fix the compensation of its personnel and for the BOD to exercise fiscal management; and
(2) the fact that RA No. 7875 does not expressly prohibit Board members from receiving benefits
other than the per diem authorized by law. 55 There are findings, however, from the COA-CGS that
the BOD members already knew at the time of their receipt of the IMEs that said benefits had no
legal basis. 56 This findings remain unrebutted by PhilHealth. As correctly held by the COA-CGS:

As can be read from AOM No. 2011-10(10) dated May 24, 2011 and issued by the Supervising
Auditor, PhilHealth:

"Claims for reimbursement of EME by the PhilHealth Board of Directors and those holding position
titles with SG+ were already disallowed in audit as these reimbursements were not in conformity with
the above stated provisions in the GAA that only positions of equivalent rank as may be determined
by the DBM are entitled to reimbursements of EME. 57 (Underscoring in the original.)

Good faith, in relation to the requirement of refund of disallowed benefits or allowances, is "that state
of mind denoting 'honesty of intention, and freedom from knowledge of circumstances which ought to
put the holder upon inquiry; an honest intention to abstain from taking any unconscientious
advantage of another, even though technicalities oflaw, together with absence of all information,
notice, or benefit or belief of facts which render transactions unconscientious."58 In this regard,
therefore, this Court finds that the PhilHealth BOD members failed to earn the presumption of good
faith.

WHEREFORE, the petition is DENIED. The Decision No. 2015-093 dated April 1, 2015 of the
Commission on Audit disallowing the Institutional Meeting Expenses for 2010 paid to members of
the Board of Directors of Philippine Health Insurance Corporation in the total amount of
₱2,965,428.59 is AFFIRMED.

SO ORDERED.
G.R. No. 220598 April 18, 2017

GLORIA MACAPAGAL ARROYO, Petitioner,

vs.
PEOPLE OF THE PHILIPPINES AND THE SANDIGANBAYAN, (First Division), Respondents

RESOLUTION

BERSAMIN,, J.:

On July 19, 2016, the Court promulgated its decision, disposing:

WHEREFORE, the Court GRANTS the petitions for certiorari; ANNULS and SETS ASIDE the
resolutions issued in Criminal Case No. SB-12-CRM-0174 by the Sandiganbayan on April 6, 2015
and September 10, 2015; GRANTS the petitioners' respective demurrers to evidence; DISMISSES
Criminal Case No. SB-12-CRM-0174 as to the petitioners GLORIAMACAPAGAL-
ARROYO and BENIGNOAGUAS for insufficiency of evidence; ORDERS the immediate release
from detention of said petitioners; and MAKES no pronouncements on costs of suit.

SO ORDERED. 1

On August 3, 2016, the State, through the Office of the Ombudsman, has moved for the
reconsideration of the decision, submitting that:

I. THIS HONORABLE COURT'S GIVING DUE COURSE TO A CERTIORARI ACTION ASSAILING

AN INTERLOCUTORY ORDER DENYING DEMURRER TO EVIDENCE VIOLA TES RULE 119,
SECTION 23 OF THE RULES OF COURT, WHICH PROVIDES THAT AN ORDER DENYING THE
DEMURRER TO EVIDENCE SHALL NOT BE REVIEWABLE BY APPEAL OR BY
CERTIORARI BEFORE JUDGMENT.

II. THE HONORABLE COURT COMMITTED GRAVE ERRORS WHICH AMOUNT TO A

VIOLATION OR DEPRIVATION OF THE STATE'S FUNDAMENTAL RIGHT TO DUE PROCESS
OF LAW.

A. THE DECISION REQUIRES ADDITIONAL ELEMENTS IN THE PROSECUTION OF

PLUNDER, VIZ. IDENTIFICATION OF THE MAIN PLUNDERER AND PERSONAL
BENEFIT TO HIM/HER, BOTH OF WHICH ARE NOT PROVIDED IN THE TEXT OF
REPUBLIC ACT (R.A.) NO. 7080.

B. THE EVIDENCE PRESENTED BY THE PROSECUTION WAS NOT FULLY TAKEN

INTO ACCOUNT, INCLUDING BUT NOT LIMITED TO THE IRREGULARITIES IN THE
CONFIDENTIAL/INTELLIGENCE FUND (CIF) DISBURSEMENT PROCESS,
QUESTIONABLE PRACTICE OF CO-MINGLING OF FUNDS AND AGUAS' REPORTS TO
THE COMMISSION ON AUDIT (COA) THAT BULK OF THE PHP365,997,915.00
WITHDRAWN FROM THE PHILIPPINE CHARITY SWEEPSTAKES OFFICE'S (PCSO) CIF
WERE DIVERTED TO THE ARROYO-HEADED OFFICE OF THE PRESIDENT.

C. ARROYO AND AGUAS, BY INDISPENSABLE COOPERATION, IN CONSPIRACY

WITH THEIR COACCUSED IN SB-12-CRM-0174, COMMITTED PLUNDER VIA· A
COMPLEX ILLEGAL SCHEME WHICH DEFRAUDED PCSO IN HUNDREDS OF
MILLIONS OF PESOS.
 D. EVEN ASSUMING THAT THE ELEMENTS OF PLUNDER WERE NOT PROVEN
BEYOND REASONABLE DOUBT, THE EVIDENCE PRESENTED BY THE PEOPLE
SHOWS, BEYOND REASONABLE DOUBT, THAT ARROYO, AGUAS AND THEIR
COACCUSED IN SB-12-CRM-0174 ARE GUILTY OF MALVERSATION.2

In contrast, the petitioners submit that the decision has effectively barred the consideration and
granting of the motion for reconsideration of the State because doing so would amount to the re-
prosecution or revival of the charge against them despite their acquittal, and would thereby violate
the constitutional proscription against double jeopardy.

Petitioner Gloria M. Macapagal-Arroyo (Arroyo) points out that the State miserably failed to prove
the corpus delicti of plunder; that the Court correctly required the identification of the main plunderer
as well as personal benefit on the part of the raider of the public treasury to enable the successful
prosecution of the crime of plunder; that the State did not prove the conspiracy that justified her
inclusion in the charge; that to sustain the case for malversation against her, in lieu of plunder, would
violate her right to be informed of the accusation against her because the information did not
necessarily include the crime of malversation; and that even if the information did so, the
constitutional prohibition against double jeopardy already barred the re-opening of the case for that
purpose.

Petitioner Benigno B. Aguas echoes the contentions of Arroyo in urging the Com1 to deny the
motion for reconsideration.

In reply, the State avers that the prohibition against double jeopardy does not apply because it was
denied its day in court, thereby rendering the decision void; that the Court should re-examine the
facts and pieces of evidence in order to find the petitioners guilty as charged; and that the
allegations of the information sufficiently included all that was necessary to fully inform the
petitioners of the accusations against them.

Ruling of the Court

The Court DENIES the motion for reconsideration for its lack of merit.

To start with, the State argues' that the consolidated petitions for certiorari were improper remedies
in light of Section 23, Rule 119 of the Rules of Court expressly prohibiting the review of the denial of
their demurrer prior to the judgment in the case either by appeal or by certiorari; that the Court has
thereby limited its own power, which should necessarily prevent the giving of due course to the
petitions for certiorari, as well as the undoing of the order denying the petitioners' demurrer to
evidence; that the proper remedy under the Rules of Court was for the petitioners to proceed to trial
and to present their evidence-in-chief thereat; and that even if there had been grave abuse of
discretion attending the denial, the Court's certiorari powers should be exercised only upon the
petitioners' compliance with the stringent requirements of Rule 65, particularly with the requirement
that there be no plain, speedy or adequate remedy in the ordinary course of law, which they did not
establish.

Section 23, Rule 119 of the Rules of Court, pertinently provides:

Section 23. Demurrer to evidence. – xxx

xxxx
The order denying the motion for leave of court to file demurrer to evidence or the demurrer
itself shall not be reviewable by appeal or by certiorari before judgment. (n)

The argument of the State, which is really a repetition of its earlier submission, was squarely
resolved in the decision, as follows:

The Court holds that it should take cognizance of the petitions for certiorari because
the Sandiganbayan, as shall shortly be demonstrated, gravely abused its discretion amounting to
lack or excess of jurisdiction.

The special civil action for certiorari is generally not proper to assail such an interlocutory order
issued by the trial court because of the availability of another remedy in the ordinary course of law.
Moreover, Section 23, Rule 119 of the Rules of Court expressly provides that "the order denying the
motion for leave of court to file demurrer to evidence or the demurrer itself shall not be reviewable by
appeal or by certiorari before judgment." It is not an insuperable obstacle to this action, however,
that the denial of the demurrers to evidence of the petitioners was an interlocutory order that did not
terminate the proceedings, and the proper recourse of the demurring accused was to go to trial, and
that in case of their conviction they may then appeal the conviction, and assign the denial as among
the errors to be reviewed. Indeed, it is doctrinal that the situations in which the writ of certiorari may
issue should not be limited, because to do so -

x x x would be to destroy its comprehensiveness and usefulness. So wide is the discretion of the
com1 that authority is not wanting to show that certiorari is more discretionary than either prohibition
or mandamus. In the exercise of oursuperintending control over other courts, we are to be
guided by all the circumstances of each particular case 'as the ends of justice may require.'
So it is that the writ will be granted where necessary to prevent a substantial wrong or to do
substantial justice.

The Constitution itself has imposed upon the Court and the other courts of justice the duty to correct
errors of jurisdiction as a result of capricious, arbitrary, whimsical and despotic exercise of discretion
by expressly incorporating in Section 1 of Article VIII the following provision:

Section 1. The judicial power shall be vested in one Supreme Court and in such lower courts as may
be established by law.

Judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine whether or
not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on
the part of any branch or instrumentality of the Government. The exercise of this power to
correct grave abuse of discretion amounting to lack or excess of jurisdiction on the part of
any branch or instrumentality of the Government cannot be thwarted by rules of procedure to
the contrary or for the sake of the convenience of one side. This is because the Court has the
bounden constitutional duty to strike down grave abuse of
discretion whenever and wherever it is committed. Thus, notwithstanding the interlocutory
character and effect of the denial of the demurrers to evidence, the petitioners as the accused
could avail themselves of the remedy of certiorari when the denial was tainted with grave
abuse of discretion. As we shall soon show, the Sandiganbayan as the trial court was guilty
of grave abuse of discretion when it capriciously denied the demurrers to evidence despite
the absence of competent and sufficient evidence to sustain the indictment for plunder, and
despite the absence of the factual bases to expect a guilty verdict.3
We reiterate the foregoing resolution, and stress that the prohibition contained in Section 23, Rule
119 of the Rules of Court is not an insuperable obstacle to the review by the Court of the denial of
the demurrer to evidence through certiorari. We have had many rulings to that effect in the past. For
instance, in Nicolas v. Sandiganbayan,4the Court expressly ruled that the petition for certiorari was
the proper remedy to assail the denial of the demurrer to evidence that was tainted with grave abuse
of discretion or excess of jurisdiction, or oppressive exercise of judicial authority.

Secondly, the State submits that its right to due process was violated because the decision imposed
additional elements for plunder that neither ' Republic Act No. 7080 nor jurisprudence had
theretofore required, i.e., the identification of the main plunderer, and personal benefit on the part of
the accused committing the predicate crime of raid on the public treasury. The State complains that
it was not given the opportunity to establish such additional elements; that the imposition of new
elements fu1iher amounted to judicial legislation in violation of the doctrine of separation of powers;
that the Court nitpicked on the different infirmities of the information despite the issue revolving only
around the sufficiency of the evidence; and that it established all the elements of plunder beyond
reasonable doubt.

The State cites the plain meaning rule to highlight that the crime of plunder did not require personal
benefit on the part of the raider of the public treasury. It insists that the definition of raids on the
public treasury, conformably with the plain meaning rule, is the taking of public money through
fraudulent or unlawful means, and such definition does not require enjoyment or personal benefit on
the part of plunderer or on the part of any of his co-conspirators for them to be convicted for plunder.

The submissions of the State are unfounded.

The requirements for the identification of the main plunderer and for personal benefit in the predicate
act of raids on the public treasury have been written in R.A. No. 7080 itself as well as embedded in
pertinent jurisprudence. This we made clear in the decision, as follows:

A perusal of the information suggests that what the Prosecution sought to show was an implied
conspiracy to commit plunder among all of the accused on the basis of their collective actions prior
to, during and after the implied agreement. It is notable that the Prosecution did not allege that the
conspiracy among all of the accused was by express agreement, or was a wheel conspiracy or a
chain conspiracy.

This was another fatal flaw of the Prosecution.

In its present version, under which the petitioners were charged, Section 2 of Republic Act No. 7080
(Plunder Law) states:

Section 2. Definition of the Crime of Plunder: Penalties. - Any public officer who, by himself or in
connivance with members of his family, relatives by affinity or consanguinity, business associates,
subordinates or other persons, amasses, accumulates or acquires ill-gotten wealth through a
combination or series of overt criminal acts as described in Section 1 (d) hereof in the aggregate
amount or total value of at least Fifty million pesos (₱50,000,000.00) shall be guilty of the crime of
plunder and shall be punished by reclusion perpetua to death. Any person who participated with the
said public officer in the commission of an offense contributing to the crime of plunder shall likewise
be punished for such offense. In the imposition of penalties, the degree of participation and the
attendance of mitigating and extenuating circumstances, as provided by the Revised Penal Code,
shall be considered by the court. The court shall declare any and all ill-gotten wealth and their
interests and other incomes and assets including the properties and shares of stocks derived from
the deposit or investment thereof forfeited in favor of the State. [As Amended by Section 12,
Republic Act No. 7659 (The Death Penalty Law)]

Section l(d) of Republic Act No. 7080 provides:

Section 1. Definition of terms. - As used in this Act, the term:

xxxx

d. "Ill-gotten wealth" means any asset, property, business enterprise or material possession of any
person within the purview of Section two (2) hereof, acquired by him directly or indirectly through
dummies, nominees, agents, subordinates and/or business associates by any combination or series
of the following means or similar schemes:

1. Through misappropriation, conversion, misuse, or malversation of public funds or raids on

the public treasury;

2. By receiving, directly or indirectly, any commission, gift, share, percentage, kickbacks or

any/or entity in connection with any government contract or project or by reason of the office
or position of the public officer concerned;

3. By the illegal or fraudulent conveyance or disposition of assets belonging to the National

Government or any of its subdivisions, agencies or instrumentalities or government-owned or
controlled corporations and their subsidiaries;

4. By obtaining, receiving or accepting directly or indirectly any shares of stock, equity or any
other form of interest or participation including the promise of future employment in any
business enterprise or undertaking;

5. By establishing agricultural, industrial or commercial monopolies or other combinations

and/or implementation of decrees and orders intended to benefit particular persons or
special interests; or

6. By taking undue advantage of official positi0n, authority, relationship, connection or

influence to unjustly enrich himself or themselves at the expense and to the damage and
prejudice

The law on plunder requires that a particular public officer must be identified as the one who
amassed, acquired or accumulated ill-gotten wealth because it plainly states that plunder is
committed by any public officer who, by himself or in connivance with members of his family,
relatives by affinity or consanguinity, business associates, subordinates or other persons,
amasses, accumulates or acquires ill-gotten wealth in the aggregate amount or total value of
at least ₱50,000,000.00 through a combination or series of overt criminal acts as described in
Section l(d) hereof. Surely, the law requires in the criminal charge for plunder against several
individuals that there must be a main plunderer and her co-conspirators, who may be
members of her family, relatives by affinity or consanguinity, business associates,
subordim1tes or other persons. In other words, the allegation of the wheel conspiracy or
express conspiracy in the information was appropriate because the main plunderer would
then be identified in either manner. Of course, implied conspiracy could also identify the
main plunderer, but that fact must be properly alleged and duly proven by the Prosecution.
This interpretation is supported by Estrada v. Sandiganbayan, where the Court explained the nature
of the conspiracy charge and the necessity for the main plunderer for whose benefit the amassment,
accumulation and acquisition was made, thus:

There is no denying the fact that the "plunder of an entire nation resulting in material damage to the
national economy" is made up of a complex and manifold network of crimes. In the crime of plunder,
therefore, different parties may be united by a common purpose. In the case at bar, the different
accused and their different criminal acts have a commonality - to help the former President amass,
accumulate or acquire ill-gotten wealth. Sub-paragraphs (a) to (d) in the Amended Information
alleged the different participation of each accused in the conspiracy. The gravamen of the
conspiracy charge, therefore, is not that each accused agreed to receive protection money from
illegal gambling, that each misappropriated a portion of the tobacco excise tax, that each accused
ordered the GSIS and SSS to purchase shares of Belle Corporation and receive commissions from
such sale, nor that each unjustly enriched himself from commissions, gifts and kickbacks; rather, it
is that each of them, by their individual acts, agreed to participate, directly or indirectly, in the
amassing, accumulation and acquisition of ill-gotten wealth of and/or for former President
Estrada. 5 [bold underscoring supplied for emphasis]

Indeed, because plunder is a crime that only a public official can commit by amassing, accumulating,
or acquiring ill-gotten wealth in the aggregate amount or total value of at least ₱50,000,000.00, the
identification in the information of such public official as the main plunderer among the several
individuals thus charged is logically necessary under the law itself. In particular reference to Criminal
Case No. SB-12-CRM-0174, the individuals charged therein - including the petitioners - were 10
public officials; hence, it was only proper to identify the main plunderer or plunderers among the 10
accused who herself or himself had amassed, accumulated, or acquired ill-gotten wealth with the
total value of at least ₱50,000,000.00.

The phrase raids on the public treasury as used in Section 1 (d) of R. A. No. 7080 is itself
ambiguous. In order to ascertain the objective meaning of the phrase, the act of raiding the public
treasury cannot be divided into parts. This is to differentiate the predicate act of raids on the public
treasury from other offenses involving property, like robbery, theft, or estafa. Considering that R.A.
No. 7080 does not expressly define this predicate act, the Court has necessarily resorted to statutory
construction. In so doing, the Court did not adopt the State's submission that personal benefit on the
part of the accused need not be alleged and shown because doing so would have defeated the clear
intent of the law itself,6 which was to punish the amassing, accumulating, or acquiring of ill-gotten
wealth in the aggregate amount or total value of at least ₱150,000,000.00 by any combination or
series of acts of misappropriation, conversion, misuse, or malversation of public funds or raids on
the public treasury.

As the decision has observed, the rules of statutory construction as well as the deliberations of
Congress indicated the intent of Congress to require personal benefit for the predicate act of raids
on the public treasury, viz.:

The phrase raids on the public treasury is found in Section 1 (d) of R.A. No. 7080, which provides:

Section l .Definition of Terms. – xxx

xxxx

d) Ill-gotten wealth means any asset, prope1iy, business enterprise or material possession of any
person within the purview of Section Two (2) hereof, acquired by him directly or indirectly through
dummies, nominees, agents, subordinates and/or business associates by any combination or series
of the following means or similar schemes:

1) Through misappropriation, conversion, misuse, or malversation of public funds or raids on the

public treasury;

xxxx

To discern the proper import of the phrase raids on the public treasury, the key is to look at
the accompanying words: misappropriation, conversion, misuse or malversation of public
funds. This process is conformable with the maxim of statutory construction noscitur a
sociis, by which the correct construction of a particular word or phrase that is ambiguous in
itself or is equally susceptible of various meanings may be made by considering the
company of the words in which the word or phrase is found or with which it is associated.
Verily, a word or phrase in a statute is always used in association with other words or
phrases, and its meaning may, therefore, be modified or restricted by the latter.

To convert connotes the act of using or disposing of another's property as if it were one's own; to
misappropriate means to own, to take something for one's own benefit; misuse means "a good,
substance, privilege, or right used improperly, unforcsccably, or not as intended;"
and malversation occurs when "any public officer who, by reason of the duties of his office, is
accountable for public funds or property, shall appropriate the same or shall take or misappropriate
or shall consent, through abandonment or negligence, shall permit any other person to take such
public funds, or property, wholly or partially." The common thread that binds all the four terms
together is that the public officer used the property taken. Considering that raids on the public
treasury is in the company of the four other terms that require the use of the property taken, the
phrase raids on the public treasury similarly requires such use of the property taken. Accordingly,
the Sandiganbayan gravely erred in contending that the mere accumulation and gathering
constituted the forbidden act of raids on the public treasury. Pursuant to the maxim of noscitur a
sociis, raids on the public treasury requires the raider to use the property taken impliedly for his
personal benefit.7

The Prosecution asserts that the Senate deliberations removed personal benefit as a requirement
for plunder. In not requiring personal benefit, the Sandiganbayan quoted the following exchanges
between Senator Enrile and Senator Tafiada, viz.:

Senator Enrile. The word here, Mr. President, "such public officer or person who conspired or
knowingly benefited". One does not have to conspire or rescheme. The only element needed is
that he "knowingly benefited". A candidate for the Senate for instance, who received a political
contribution from a plunderer, knowing that the contributor is a plunderer and therefore, he knowingly
benefited from the plunder, would he also suffer the penalty, Mr. President, for life imprisonment?

Senator Tafiada. In the committee amendments, Mr. President, we have deleted these lines 1 to 4
and part of line 5, on page 3. But, in a way, Mr. President, it is good that the Gentleman is bringing
out these questions, I believe that under the examples he has given, the Court will have to...

Senator Enrile. How about the wife, Mr. President, he may not agree with the plunderer to plunder
the country but because she is a dutiful wife or a faithful husband, she has to keep her or his vow of
fidelity to the spouse. And, of course, she enjoys the benefits out of the plunder. Would the
Gentleman now impute to her or him the crime of plunder simply because she or he knowingly
benefited out of the fruits of the plunder and, therefore, he must suffer or he must suffer the penalty
of life imprisonment?
The President. That was stricken out already in the Committee amendment.

Senator Tañada. Yes, Mr. President. Lines 1 to 4 and part of line 5 were stricken out in the
Committee amendment. But, as I said, the examples of the Minority Floor Leader are still worth
spreading the Record. And, I believe that in those examples, the Court will have just to take into
consideration all the other circumstances prevailing in the case and the evidence that will be
submitted.

The President. In any event, 'knowingly benefited' has already been stricken off."

The exchanges between Senator Enrile and Senator Tañada reveal, therefore, that what was
removed from the coverage of the bill and the final version that eventually became the law was a
person who was not the main plunderer or a co-conspirator, but one who personally benefited from
the plunderers' action. The requirement of personal benefit on the part of the main plunderer or his
co-conspirators by virtue of their plunder was not removed.

As a result, not only did the Prosecution fail to show where the money went but, more importantly,
that GMA and Aguas had personally benefited from the same. Hence, the Prosecution did not prove
the predicate act of raids on the public treasury beyond reasonable doubt. 8

Thirdly, the State contends that the Court did not appreciate the totality of its evidence, particularly
the different irregularities committed in the disbursement of the PCSO funds, i.e., the commingling of
funds, the non-compliance with LOI No. 1282, and the unilateral approval of the disbursements.
Such totality, coupled with the fact of the petitioners' indispensable cooperation in the pilfering of
public funds, showed the existence of the conspiracy to commit plunder among all of the accused.

The contention lacks basis.

As can be readily seen from the decision, the Court expressly granted the petitioners' respective
demurrers to evidence and dismissed the plunder case against them for insufficiency of evidence
because:

x x x the Sandiganbayan as the trial court was guilty of grave abuse of discretion when it capriciously
denied the demurrers to evidence despite the absence of competent and sufficient evidence to
sustain the indictment for plunder, and despite the absence of the factual bases to expect a
guilty verdict. 9

Such disposition of the Court fully took into consideration all the evidence adduced against the
petitioners. We need not rehash our review of the evidence thus adduced, for it is enough simply to
stress that the Prosecution failed to establish the corpus delicti of plunder - that any or all of the
accused public officials, particularly petitioner Arroyo, had amassed, accumulated, or acquired ill-
gotten wealth in the aggregate amount or total value of at least ₱50,000,000.00.

Fourthly, in accenting certain inadequacies of the allegations of the information, the Court did not
engage in purposeless nitpicking, and did not digress from the primary task of determining the
sufficiency of the evidence presented by the State against the petitioners. What the Court thereby
intended to achieve was to highlight what would have been relevant in the proper prosecution of
plunder and thus enable itself to discern and determine whether the evidence of guilt was sufficient
or not. In fact, the Court categorically clarified that in discussing the essential need for the
identification of the main plunderer it was not harping on the sufficiency of the information, but was
only enabling itself to search for and to find the relevant proof that unequivocally showed petitioner
Arroyo as the "mastermind" - which was how the Sandiganbayan had characterized her participation
- in the context of the implied conspiracy alleged in the information. But the search came to naught,
for the information contained nothing that averred her commission of the overt act necessary to
implicate her in the supposed conspiracy to commit the crime of plunder. Indeed, the Court
assiduously searched for but did not find the sufficient incriminatory evidence against the petitioners.
Hence, the Sandiganbayan capriciously and oppressively denied their demurrers to evidence.

Fifthly, the State posits that it established at least a case for malversation against the petitioners.

Malversation is defined and punished under Article 217 of the Revised Penal Code, which reads
thusly:

Article 217. Malversation of public funds or property; Presumption of malversation. - Any public
officer who, by reason of the duties of his office, is accountable for public funds or property, shall
appropriate the same or shall take or misappropriate or shall consent, through abandonment or
negligence, shall permit any other person to take such public funds, or property, wholly or partially,
or shall otherwise be guilty of the misappropriation or malversation of such funds or property, shall
suffer:

1. The penalty of prision correccional in its medium and maximum periods, if the amount
involved in the misappropriation or malversation does not exceed two hundred pesos.

2. The penalty of prision mayor in its minimum and medium periods, if the amount involved is
more than two hundred pesos but does not exceed six thousand pesos.

3. The penalty of prision mayor in its maximum period to reclusion temporal in its minimum
period, if the amount involved is more than six thousand pesos but is less than twelve
thousand pesos.

4. The penalty of reclusion temporal, in its medium and maximum periods, if the amount
involved is more than twelve thousand pesos but is less than twenty-two thousand pesos. If
the amount exceeds the latter, the penalty shall be reclusion temporal in its maximum period
to reclusion perpetua.

In all cases, persons guilty of malversation shall also suffer the penalty of perpetual special
disqualification and a fine equal to the amount of the funds malversed or equal to the total value of
the property embezzled.

The failure of a public officer to have duly forthcoming any public funds or property with which he is
chargeable, upon demand by any duly authorized officer, shall be prima facie evidence that he has
put such missing funds or property to personal use. (As amended by RA 1060).

The elements of malversation are that: (a) the offender is an accountable public officer; (b) he/she is
responsible for the misappropriation of public funds or property through intent or negligence; and (c)
he/she has custody of and received such funds and property by reason of his/her office. 10

The information in Criminal Case No. SB-12-CRM-017411 avers:

The undersigned Assistant Ombudsman and Graft Investigation and Prosecution Officer III, Office of
the Ombudsman, hereby accuse GLORIA MACAPAGAL-ARROYO, ROSARIO C. URIARTE,
SERGIO O. VALENCIA, MANUEL L. MORATO, JOSE R. TARUC V, RAYMUNDO T. ROQUERO,
MA. FATIMA AS. VALDES, BENIGNO B. AGUAS, REYNALDO A. VILLAR and NILDA B. PLARAS,
of the crime of PLUNDER, as defined by, and penalized under Section 2 of Republic Act (R.A.) No.
7080, as amended by R.A. No. 7659, committed, as follows:

That during the period from January 2008 to June 2010 or sometime prior or subsequent thereto, in
Quezon City, Philippines, and within the jurisdiction of this Honorable Court, accused GLORIA
MACAPAGAL-ARROYO, then the President of the Philippines, ROSARIO C. URIARTE, then
General Manager and Vice Chairman, SERGIO 0. VALENCIA, then Chairman of the Board of
Directors, MANUEL L. MORA TO, JOSE R. TARUC V, RAYMUNDO T. ROQUERO, MA. FATIMA
AS. VALDES, then members of the Board of Directors, BENIGNO B. AGUAS, then Budget and
Accounts Manager, all of the Philippine Charity Sweepstakes Office (PCSO), REYNALDO A.
VILLAR, then Chairman, and NILDA B. PLARAS, then Head of Intelligence/Confidential Fund Fraud
Audit Unit, both of the Commission on Audit, all public officers committing the offense in relation to
their respective offices and taking undue advantage of their respective official positions, authority,
relationships, connections or influence, conniving, conspiring and confederating with one another,
did then and there willfully, unlawfully and criminally 'amass,, accumulate and/or acquire directly or
indirectly, ill-gotten wealth in the aggregate amount or total value of THREE HUNDRED SIXTY FIVE
MILLION NINE HUNDRED NINETY SEVEN THOUSAND NINE HUNDRED FIFTEEN PESOS
(PHP365,997,915.00), more or less, through any or a combination or a series of overt or criminal
acts, or similar schemes or means, described as follows:

(a) diverting in several instances, funds from the operating budget of PCSO to its
Confidential/Intelligence Fund that could be accessed and withdrawn at any time with
minimal restrictions, and converting, misusing, and/or illegally conveying or transferring the
proceeds drawn from said fund in the aforementioned sum, also in several instances, to
themselves, in the guise of fictitious expenditures, for their personal gain and benefit;

(b) raiding the public treasury by withdrawing and receiving, in several instances, the above-
mentioned amount from the Confidential/Intelligence Fund from PCSO's accounts, and or
unlawfully transferring or conveying the same into their possession and control through
irregularly issued disbursement vouchers and fictitious expenditures; and

(c) taking advantage of their respective official positions, authority, relationships, connections
or influence, in several instances, to unjustly enrich themselves in the aforementioned sum,
at the expense of, and the damage and prejudice of the Filipino people and the Republic of
the Philippines.

CONTRARY TO LAW.

In thereby averring the predicate act of malversation, the State did not sufficiently allege the
aforementioned essential elements of malversation in the information. The omission from the
information of factual details descriptive of the aforementioned elements of malversation highlighted
the insufficiency of the allegations. Consequently, the State's position is entirely unfounded.

Lastly, the petitioners insist that the consideration and granting of the motion for reconsideration of
the State can amount to a violation of the constitutional prohibition against double jeopardy because
their acquittal under the decision was a prior jeopardy within the context of Section 21, Article III (Bill
of Rights) of the 1987 Constitution, to wit:

Section 21. No person shall be twice put in jeopardy of punishment for the same offense. If an act is
punished by a law and an ordinance, conviction or acquittal under either shall constitute a bar to
another prosecution for the same act.
The insistence of the petitioners is fully warranted. Indeed, the consideration and granting of the
motion for reconsideration of the State will amount to the violation of the constitutional guarantee
against double jeopardy.

The Court's consequential dismissal of Criminal Case No. SB-12- CRM-0174 as to the petitioners for
insufficiency of evidence amounted to their acquittal of the crime of plunder charged against them.
In People v. Tan, 12the Court shows why:

In People v. Sandiganbayan, this Com1 explained the general rule that the grant of a demurrer to
evidence operates as an acquittal and is, thus, final and unappealable, to wit:

The demurrer to evidence in criminal cases, such as the one at bar, is ''filed after tile
prosecution had rested its case," and when the same is granted, it calls "for an appreciation
of the evidence adduced by the prosecution and its sufficiency to warrant conviction beyond
reasonable doubt, resulting in a dismissal of the case on the merits, tantamount to an
acquittal of the accused." Such dismissal of a criminal case by the grant of demurrer to
evidence may not be appealed, for to do so would be to place the accused in double
jeopardy. The verdict being one of acquittal, the case ends there.

xxxx

The rule on double jeopardy, however, is not without exceptions. In People v. Laguio, Jr., this Court
stated that the only instance when double jeopardy will not attach is when the RTC acted with grave
abuse of discretion, thus:

... The only instance when double ,jeopardy will not attach is when the trial court acted with grave
abuse of discretion amounting to lack or excess of jurisdiction, such as where the prosecution was
denied the opportunity to present its case or where the trial was a sham. However,
while certiorari may be availed of to correct an erroneous acquittal, the petitioner in such an
extraordinary proceeding must clearly demonstrate that the trial court blatantly abused its authority
to a point so grave as to deprive it of its very power to dispense justice. 13

The constitutional prohibition against placing a person under double jeopardy for the same offense
bars not only a new and independent prosecution but also an appeal in the same action after
jeopardy had attached. 14 As such, every acquittal becomes final immediately upon promulgation and
cannot be recalled for correction or amendment. With the acquittal being immediately final, granting
the State's motion for reconsideration in this case would violate the Constitutional prohibition against
double jeopardy because it would effectively reopen the prosecution and subject the petitioners to a
second jeopardy despite their acquittal.

It is cogent to remind in this regard that the Constitutional prohibition against double jeopardy
provides to the accused three related protections, specifically: protection against a second
prosecution for the same offense after acquittal; protection against a second prosecution for the
same offense after conviction; and protection against multiple punishments for the same
offense. 15The rationale for the three protections is expounded in United States v. Wilson: 16

The interests underlying these three protections arc quite similar. When a defendant has
been once convicted and punished for a particular crime, principles of fairness and finality
require that he not be subjected to the possibility of further punishment by being again tried
or sentenced for the same offense. Ex pa rte Lange, 18 Wall 163 (1874); In re Nielsen, 131 U.S.
176 (1889). When a defendant has been acquitted of an offense, the Clause guarantees that
the State shall not be permitted to make repeated attempts to convict him,
"thereby subjecting him to embarrassment, expense and ordeal, and compelling him to live in
a continuing state of anxiety and insecurity, as well as enhancing the possibility that, even
though innocent, he may be found guilty."

Green v. United States, 355 U.S. 184, 187-188 (1957).

The policy of avoiding multiple trials has been regarded as so important that exceptions to
the principle have been only grudgingly allowed. Initially, a new trial was thought to be
unavailable after appeal, whether requested by the prosecution or the defendant. See United
States v. Gibert, 25 F. Cas. 1287 (No. 15,204) (CCD Mass. 1834) (Story, J.). It was not until 1896
that it was made clear that a defendant could seek a new trial after conviction, even though
the Government enjoyed no similar right. United States v. Ball, 163 U.S. 662. (Bold underscoring
supplied for emphasis)

WHEREFORE, the Court DENIES the motion for reconsideration for lack of merit.

SO ORDERED.
G.R. No. 183137 April 10, 2013

PELIZLOY REALTY CORPORATION, represented herein by its President, GREGORY K.

LOY, Petitioner,
vs.
THE PROVINCE OF BENGUET, Respondent.

DECISION

LEONEN, J.:

The principal issue in this case is the scope of authority of a province to impose an amusement tax.

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court praying that the
December 10, 2007 decision of the Regional Trial Court,- Branch 62, La Trinidad, Benguet in Civil
Case No. 06-CV-2232 be reversed and set aside and a new one issued in which: ( 1) respondent
Province of Benguet is declared as having no authority to levy amusement taxes on admission fees
for resorts, swimming pools, bath houses, hot springs, tourist spots, and other places for recreation;
(2) Section 59, Article X of the Benguet Provincial Revenue Code of 2005 is declared null and void;
and (3) the respondent Province of Benguet is permanently enjoined from enforcing Section 59,
Article X of the Benguet Provincial Revenue Code of 2005.

Petitioner Pelizloy Realty Corporation ("Pelizloy") owns Palm Grove Resort, which is designed for
recreation and which has facilities like swimming pools, a spa and function halls. It is located at Asin,
Angalisan, Municipality of Tuba, Province of Benguet.

On December 8, 2005, the Provincial Board of the Province of Benguet approved Provincial Tax
Ordinance No. 05-107, otherwise known as the Benguet Revenue Code of 2005 ("Tax Ordinance").
Section 59, Article X of the Tax Ordinance levied a ten percent (10%) amusement tax on gross
receipts from admissions to "resorts, swimming pools, bath houses, hot springs and tourist spots."
Specifically, it provides the following:

Article Ten: Amusement Tax on Admission

Section 59. Imposition of Tax. There is hereby levied a tax to be collected from the proprietors,
lessees, or operators of theaters, cinemas, concert halls, circuses, cockpits, dancing halls, dancing
schools, night or day clubs, and other places of amusement at the rate of thirty percent (30%) of the
gross receipts from admission fees; and

A tax of ten percent (10%) of gross receipts from admission fees for boxing, resorts, swimming
pools, bath houses, hot springs, and tourist spots is likewise levied. [Emphasis and underscoring
supplied]

Section 162 of the Tax Ordinance provided that the Tax Ordinance shall take effect on January 1,
2006.

It was Pelizloy's position that the Tax Ordinance's imposition of a 10% amusement tax on gross
receipts from admission fees for resorts, swimming pools, bath houses, hot springs, and tourist spots
is an ultra vires act on the part of the Province of Benguet. Thus, it filed an appeal/petition before the
Secretary of Justice on January 27, 2006.
The appeal/petition was filed within the thirty (30)-day period from the effectivity of a tax ordinance
allowed by Section 187 of Republic Act No. 7160, otherwise known as the Local Government Code
(LGC).1 The appeal/petition was docketed as MSO-OSJ Case No. 03-2006.

Under Section 187 of the LGC, the Secretary of Justice has sixty (60) days from receipt of the
appeal to render a decision. After the lapse of which, the aggrieved party may file appropriate
proceedings with a court of competent jurisdiction.

Treating the Secretary of Justice's failure to decide on its appeal/petition within the sixty (60) days
provided by Section 187 of the LGC as an implied denial of such appeal/petition, Pelizloy filed a
Petition for Declaratory Relief and Injunction before the Regional Trial Court, Branch 62, La Trinidad,
Benguet. The petition was docketed as Civil Case No. 06-CV-2232.

Pelizloy argued that Section 59, Article X of the Tax Ordinance imposed a percentage tax in violation
of the limitation on the taxing powers of local government units (LGUs) under Section 133 (i) of the
LGC. Thus, it was null and void ab initio. Section 133 (i) of the LGC provides:

Section 133. Common Limitations on the Taxing Powers of Local Government Units. - Unless
otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and
barangays shall not extend to the levy of the following:

xxx

(i) Percentage or value-added tax (VAT) on sales, barters or exchanges or similar transactions on
goods or services except as otherwise provided herein

The Province of Benguet assailed the Petition for Declaratory Relief and Injunction as an improper
remedy. It alleged that once a tax liability has attached, the only remedy of a taxpayer is to pay the
tax and to sue for recovery after exhausting administrative remedies.2

On substantive grounds, the Province of Benguet argued that the phrase ‘other places of
amusement’ in Section 140 (a) of the LGC3 encompasses resorts, swimming pools, bath houses, hot
springs, and tourist spots since "Article 220 (b) (sic)" of the LGC defines "amusement" as
"pleasurable diversion and entertainment x x x synonymous to relaxation, avocation, pastime, or
fun."4 However, the Province of Benguet erroneously cited Section 220 (b) of the LGC. Section 220
of the LGC refers to valuation of real property for real estate tax purposes. Section 131 (b) of the
LGC, the provision which actually defines "amusement", states:

Section 131. Definition of Terms. - When used in this Title, the term:

xxx

(b) "Amusement" is a pleasurable diversion and entertainment. It is synonymous to relaxation,

avocation, pastime, or fun On December 10, 2007, the RTC rendered the assailed Decision
dismissing the Petition for Declaratory Relief and Injunction for lack of merit.

Procedurally, the RTC ruled that Declaratory Relief was a proper remedy. On the validity of Section
59, Article X of the Tax Ordinance, the RTC noted that, while Section 59, Article X imposes a
percentage tax, Section 133 (i) of the LGC itself allowed for exceptions. It noted that what the LGC
prohibits is not the imposition by LGUs of percentage taxes in general but the "imposition and levy of
percentage tax on sales, barters, etc., on goods and services only."5 It further gave credence to the
Province of Benguet's assertion that resorts, swimming pools, bath houses, hot springs, and tourist
spots are encompassed by the phrase ‘other places of amusement’ in Section 140 of the LGC.

On May 21, 2008, the RTC denied Pelizloy’s Motion for Reconsideration.

Aggrieved, Pelizloy filed the present petition on June 10, 2008 on pure questions of law. It assailed
the legality of Section 59, Article X of the Tax Ordinance as being a (supposedly) prohibited
percentage tax per Section 133 (i) of the LGC.

In its Comment, the Province of Benguet, erroneously citing Section 40 of the LGC, argued that
Section 59, Article X of the Tax Ordinance does not levy a percentage tax "because the imposition is
not based on the total gross receipts of services of the petitioner but solely and actually limited on
the gross receipts of the admission fees collected."6 In addition, it argued that provinces can validly
impose amusement taxes on resorts, swimming pools, bath houses, hot springs, and tourist spots,
these being ‘amusement places’.

For resolution in this petition are the following issues:

1. Whether or not Section 59, Article X of Provincial Tax Ordinance No. 05-107, otherwise
known as the Benguet Revenue Code of 2005, levies a percentage tax.

2. Whether or not provinces are authorized to impose amusement taxes on admission fees
to resorts, swimming pools, bath houses, hot springs, and tourist spots for being
"amusement places" under the Local Government Code.

The power to tax "is an attribute of sovereignty,"7 and as such, inheres in the State. Such, however,
is not true for provinces, cities, municipalities and barangays as they are not the sovereign;8 rather,
they are mere "territorial and political subdivisions of the Republic of the Philippines".9

The rule governing the taxing power of provinces, cities, muncipalities and barangays is summarized
in Icard v. City Council of Baguio:10

It is settled that a municipal corporation unlike a sovereign state is clothed with no inherent power of
taxation. The charter or statute must plainly show an intent to confer that power or the municipality,
cannot assume it. And the power when granted is to be construed in strictissimi juris. Any doubt or
ambiguity arising out of the term used in granting that power must be resolved against the
municipality. Inferences, implications, deductions – all these – have no place in the interpretation of
the taxing power of a municipal corporation.11 [Underscoring supplied]

Therefore, the power of a province to tax is limited to the extent that such power is delegated to it
either by the Constitution or by statute. Section 5, Article X of the 1987 Constitution is clear on this
point:

Section 5. Each local government unit shall have the power to create its own sources of revenues
and to levy taxes, fees and charges subject to such guidelines and limitations as the Congress may
provide, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall
accrue exclusively to the local governments. [Underscoring supplied]

Per Section 5, Article X of the 1987 Constitution, "the power to tax is no longer vested exclusively on
Congress; local legislative bodies are now given direct authority to levy taxes, fees and other
charges."12 Nevertheless, such authority is "subject to such guidelines and limitations as the
Congress may provide".13

In conformity with Section 3, Article X of the 1987 Constitution,14 Congress enacted Republic Act No.
7160, otherwise known as the Local Government Code of 1991. Book II of the LGC governs local
taxation and fiscal matters.

Relevant provisions of Book II of the LGC establish the parameters of the taxing powers of LGUS
found below.

First, Section 130 provides for the following fundamental principles governing the taxing powers of
LGUs:

1. Taxation shall be uniform in each LGU.

2. Taxes, fees, charges and other impositions shall:

a. be equitable and based as far as practicable on the taxpayer's ability to pay;

b. be levied and collected only for public purposes;

c. not be unjust, excessive, oppressive, or confiscatory;

d. not be contrary to law, public policy, national economic policy, or in the restraint of
trade.

3. The collection of local taxes, fees, charges and other impositions shall in no case be let to
any private person.

4. The revenue collected pursuant to the provisions of the LGC shall inure solely to the
benefit of, and be subject to the disposition by, the LGU levying the tax, fee, charge or other
imposition unless otherwise specifically provided by the LGC.

5. Each LGU shall, as far as practicable, evolve a progressive system of taxation.

Second, Section 133 provides for the common limitations on the taxing powers of LGUs. Specifically,
Section 133 (i) prohibits the levy by LGUs of percentage or value-added tax (VAT) on sales, barters
or exchanges or similar transactions on goods or services except as otherwise provided by the LGC.

As it is Pelizloy’s contention that Section 59, Article X of the Tax Ordinance levies a prohibited
percentage tax, it is crucial to understand first the concept of a percentage tax.

In Commissioner of Internal Revenue v. Citytrust Investment Phils. Inc.,15 the Supreme Court defined
percentage tax as a "tax measured by a certain percentage of the gross selling price or gross value
in money of goods sold, bartered or imported; or of the gross receipts or earnings derived by any
person engaged in the sale of services." Also, Republic Act No. 8424, otherwise known as the
National Internal Revenue Code (NIRC), in Section 125, Title V,16 lists amusement taxes as among
the (other) percentage taxes which are levied regardless of whether or not a taxpayer is already
liable to pay value-added tax (VAT).
Amusement taxes are fixed at a certain percentage of the gross receipts incurred by certain
specified establishments.

Thus, applying the definition in CIR v. Citytrust and drawing from the treatment of amusement taxes
by the NIRC, amusement taxes are percentage taxes as correctly argued by Pelizloy.

However, provinces are not barred from levying amusement taxes even if amusement taxes are a
form of percentage taxes. Section 133 (i) of the LGC prohibits the levy of percentage taxes "except
as otherwise provided" by the LGC.

Section 140 of the LGC provides:

SECTION 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 of 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 herein 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.

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

Evidently, Section 140 of the LGC carves a clear exception to the general rule in Section 133 (i).
Section 140 expressly allows for the imposition by provinces of amusement taxes on "the
proprietors, lessees, or operators of theaters, cinemas, concert halls, circuses, boxing stadia, and
other places of amusement."

However, resorts, swimming pools, bath houses, hot springs, and tourist spots are not among those
places expressly mentioned by Section 140 of the LGC as being subject to amusement taxes. Thus,
the determination of whether amusement taxes may be levied on admissions to resorts, swimming
pools, bath houses, hot springs, and tourist spots hinges on whether the phrase ‘other places of
amusement’ encompasses resorts, swimming pools, bath houses, hot springs, and tourist spots.

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."17

The purpose and rationale of the principle was explained by the Court in National Power Corporation
v. Angas18 as follows:
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].19

In Philippine Basketball Association v. Court of Appeals,20 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
1âw phi 1

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:

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:

In 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.21 [Underscoring supplied]

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’:

Section 131. Definition of Terms. - When used in this Title, the term:

xxx

(c) "Amusement Places" 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
performances [Underscoring supplied]

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,22 ‘show’ means "a spectacle or display of
something, typically an impressive one";23 while ‘performance’ means "an act of staging or
presenting a play, a concert, or other form of entertainment."24 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.

At this juncture, it is helpful to recall this Court’s pronouncements in Icard:

The power to tax when granted to a province is to be construed in strictissimi juris. Any doubt or
ambiguity arising out of the term used in granting that power must be resolved against the province.
Inferences, implications, deductions – all these – have no place in the interpretation of the taxing
power of a province.25

In this case, the definition of' amusement places' in Section 131 (c) of the LGC is a clear basis for
determining what constitutes the 'other places of amusement' which may properly be subject to
amusement tax impositions by provinces. There is no reason for going beyond such basis. To do
otherwise would be to countenance an arbitrary interpretation/application of a tax law and to inflict an
injustice on unassuming taxpayers.

The previous pronouncements notwithstanding, it will be noted that it is only the second paragraph
of Section 59, Article X of the Tax Ordinance which imposes amusement taxes on "resorts,
swimming pools, bath houses, hot springs, and tourist spots". The first paragraph of Section 59,
Article X of the Tax Ordinance refers to "theaters, cinemas, concert halls, circuses, cockpits, dancing
halls, dancing schools, night or day clubs, and other places of amusement". In any case, the issues
1âwphi1

raised by Pelizloy are pertinent only with respect to the second paragraph of Section 59, Article X of
the Tax Ordinance. Thus, there is no reason to invalidate the first paragraph of Section 59, Article X
of the Tax Ordinance. Any declaration as to the Province of Benguet's lack of authority to levy
amusement taxes must be limited to admission fees to resorts, swimming pools, bath houses, hot
springs and tourist spots.

Moreover, the second paragraph of Section 59, Article X of the Tax Ordinance is not limited to
resorts, swimming pools, bath houses, hot springs, and tourist spots but also covers admission fees
for boxing. As Section 140 of the LGC allows for the imposition of amusement taxes on gross
receipts from admission fees to boxing stadia, Section 59, Article X of the Tax Ordinance must be
sustained with respect to admission fees from boxing stadia.

WHEREFORE, the petition for review on certiorari is GRANTED. The second paragraph of Section
59, Article X of the Benguet Provincial Revenue Code of 2005, in so far as it imposes amusement
taxes on admission fees to resorts, swimming pools, bath houses, hot springs and tourist spots, is
declared null and void. Respondent Province of Benguet is permanently enjoined from enforcing the
second paragraph of Section 59, Article X of the Benguet Provincial Revenue Code of 2005 with
respect to resorts, swimming pools, bath houses, hot springs and tourist spots.

SO ORDERED.