Raul F. Carrera, Jr.

JD 1
Case Digests – Statutory Construction

H. Villarica Pawnshop Inc. vs. Social Security Commission

G.R. No. 228087, January 24, 2018
Gesmundo, J.

Facts:
- The petitioners are private corporations engaged in pawnshop business and are
compulsory registered with the Social Security System (SSS).
- In 2009, the petitioners paid their delinquent contributions and accrued penalties
with the different branches of the SSS.
- The Congress enacted RA 9903, or Social Security Condonation Law of 2009 that took
effect on February 1, 2010. The law granted delinquent employers to settle without
penalty, their accountabilities, or overdue contributions within 6 months from the
date of its effectivity.
- Consequently, the petitioner thru its president and General Manager, Atty. Henry P.
Villarica sent separate letters to different branches dated July 26, 2010 seeking
reimbursements of the accrued penalties paid on 2009, invoking Section 4 of RA 9903
and Sec. 2(f) of the SSC Circular No. 2010-004, claimed that the benefits of the
condonation program extend to all employers who have settled their arrears or
unpaid contributions even prior to the effectivity of the law.
- The SSS Del Monte Branch denied the request of Villarica because there is no provision
in RA 9903 that allows reimbursements of penalties paid prior to its effectivity, and it
does not cover accountabilities settled prior to its effectivity.
- The petitioners filed their respective petitions before the SSC seeking reimbursement
of penalties paid in 2009.
- SSS prayed for dismissal of the petitions for utter lack of merit under RA 9903 because
they were not considered delinquent at the time the law took effect in 2010.
- The SSC denied all the petitions for lack of merit under RA 9903, petitioners are not
entitled to the benefit of condonation program. The petitioners appealed before the
Court of Appeals.
- The CA dismissed the instant petition, held that the intent of the legislature was
remission of the penalty imposed upon delinquent contributions of employers as a
necessary consequence of late payment or non-remittance of SSS contributions. The
CA found that IRR of RA 9903 used the word “unpaid” to emphasize accrued penalty
that may be waived. It highlighted that lawmakers did not include within the sphere
of the law whose penalties have already been paid prior to its effectivity. The CA
added that it would be absurd for obligations that have already been extinguished to
be subjected to condonation.
- The petitioners moved for reconsideration but was denied by CA.
Issues:
- Whether or not the CA erred in ruling that RA 9903 does not include petitioners in its
coverage considering that Section 4 of RA 9903 expressly includes employers who
settled arrears In contributions before the effectivity of the law and thus entitled to
reimbursement.

Ruling
- The Supreme Court denied the petition.
- Accordingly, RA 9903 covers those employers who (1) have existing delinquent
contributions and/or (2) have accrued penalties at the time of its effectivity. Once an
employer pays all his delinquent contributions and accrued penalties before the
effectivity of the law, it cannot avail of the condonation program because there is no
existing obligation anymore.

- Verba legis interpretation of RA 9903, the statute is clear, plain and free from
ambiguity. The word “condoned”, “waived” and “accrued” are unambiguous enough
to be understood and directly applied without any resulting confusion.

- Prospective application of RA 9903, statutes generally were applied prospectively

unless they expressly allow retroactive application. RA 9903 does not provide
retrospective application, thus penalties already paid are deemed condoned or
waived.

- Interpretation in favor of social justice. Social justice in the case of the laborers
means compassionate justice or an implementation of the policy that those who
have less in life should have more in law. And since it is the State’s policy to “pro
mote social justice and provide meaningful protection to SSS members and their
beneficiaries against the hazards of disability, sickness, maternity, old age, death,
and other contingencies resulting in loss of income or financial burden,” Court
should adopt a rule of statutory interpretation which ensures the financial viability
of the SSS.

- Delinquent contributions and penalties may be paid separately. There is no existing

statutory or regulatory provision which requires the simultaneous or joint payment
of corresponding penalties along with the payment of delinquent contributions.
Consequently, it is possible that a class of employers who have settled their
delinquent contributions but have not paid the corresponding penalties before the
effectivity of RA 9903, may exist.
 Automotive Parts & Equipment Company, Inc. vs. Lingad
G.R. No. L-26406, October 31, 1969
Fernando, J.

Facts
- In the petition for declaratory relief, the then Secretary of Labor, Jose B. Lingad and
the then Director of the Bureau of Labor Standards, Ruben F. Santos being named as
respondents, appellant Automotive Parts & Equipment Company, Incorporated
alleged that it was duly incorporated on January 5, 1961 and that from the start of
its operation, its employees were paid on a daily and monthly basis.
- April 21, 1965 the aforesaid amendatory act took effect and that respondents
construed its provision "in such a way as to require the petitioner to increase the
salaries of all the monthly paid employees of the petitioner to a minimum of
P180.00 (not P152.00) which according to them is the applicable minimum wage
rate for the monthly paid employees.
- Petitioner sought to justify its refusal to abide by the interpretative bulletin of
respondents requiring the increase to a minimum of P180.00 a month for employees
paid on a monthly basis in this wise: The petitioner believes that Sec. 19 of R.A. No.
602 particularly that portion prohibiting the reduction of wages paid to employees in
excess of the minimum wage established in the Act only refers and applies to
employers in business prior to and at the time of enactment Act and that the
prohibition thereof against reduction of supplements as envisioned in Sec 19 should
not be applied prospectively to employers coming into existence subsequent to the
effective date of said Act.
- The lower court rejected such contention. Thus: "Sec. 2 of R.A. No. 4180 provides
that 'Any provision of law previously enacted on the subject matter of this Act that is
inconsistent with any provision of this Act is hereby repealed.' Sec. 19 of R.A. No.
602 not being inconsistent with R.A. No. 4180 has not been repealed; on the other
hand, the provisions of Section 19 of R.A. No. 602 not being inconsistent with R.A.
No. 4180 were deemed and impliedly re-enacted.

Issue
- Whether or not the lower court decided the matter correctly.

Ruling
- The Supreme court affirmed the decision of the lower court.

- It is undeniable that every statute, much more so one arising from a legislative
implementation of a constitutional mandate, must be so construed that no question
as to its conformity with what the fundamental law requires need arise. Apparently,
appellant is unaware of such a basic postulate, or, if aware, is not inclined to accord
it deference. It cannot expect approbation from any court.
- Yes, the lower court decided the matter correctly. Even if the plain legislative
purpose so evident on the face of the statute is not to vitalize and implement what
the Constitution enjoins, still there is no escape from an equally authoritative
principle of statutory construction that bars acceptance on what appellant would
foist upon the judiciary as an acceptable interpretation. "It is fundamental that once
the policy or purpose of the law has been ascertained, effect should be given to it by
the judiciary. From Ty Sue v. Hord, decided in 1909, it has been our constant holding
that the choice between conflicting theories falls on that which best accords with
the letter of the law and with its purpose. The next year, in an equally leading
decision, United States v. Toribio, there was a caveat against a construction that
would tend 'to defeat the purpose and object of the legislator.'

- If the interpretation offered by appellant would be considered acceptable, then

there would be a negation of the above purpose of the amendatory act increasing
the minimum wage law. That would be to defeat and frustrate rather than to foster
its policy. It must be rejected.

- It is of the essence of judicial duty to construe statutes so as to avoid such deplorable

result. A literal reading of a legislative act which could thus characterized is to be
avoided if the language thereof can be given a reasonable application consistent with
the legislative purpose. In the apt language of Frankfurter: “A decent respect for the
policy of Congress must save us from imputing to it a self-defeating, if not
disingenuous purpose.” The court must reject a construction that at best amounts to
a manifestation of verbal ingenuity but hardly satisfies the test of rationality on which
law must be based.
 Basco vs. PagCor
G.R. No. 91649, May 14, 1991
Paras, J.

Facts
- The PH Amusement and Gaming Corp. was created by PD 1067-A and granted a
franchise under PD 1067-B on January 1, 1977.
- Subsequently, on July 11, 1983, under PD 1869, enabled the Government to regulate
and centralize all games of chance authorized by existing franchise or permitted by
law, under declared policy.
- But the petitioners think otherwise, that is why, they filed the instant petition
seeking to annul the PAGCOR Charter contrary to morals, public policy and order.

Issues
- Whether or not it constitutes a waiver of right prejudicial to a third person with a
right recognized by law.

- Whether or not the law has intruded into the local government’s right to impose
local taxes and license fees.

- Whether or not it violates the avowed trend of the Cory government away from
monopolistic and crony economy, and toward free enterprise and privatization.

- Whether or not it violates equal protection clause of the constitution in that it

legalizes PAGCOR – conducted gambling while most of other forms of gambling are
outlawed.

Ruling
- Gambling in all its forms, unless allowed by law, os generally prohibited. But the
prohibition of gambling does not mean that the government cannot regulate it in the
exercise of its police power. The concept of police power is well-established in this
jurisdiction. It has been defined as the state authority to enact legislation that may
interfere with personal liberty or property in order to promote the general welfare. As
defined, it consists of (1) an imposition or restraint upon liberty or property, (2) in
order to foster the common good. It is not capable of an exact definition but has been,
purposely, veiled in general terms to underscore its all-comprehensive embrace.

- Marshall, to whom the expression has been credited, refers to it succinctly as the
plenary power of the state “to govern its citizens”. The police power of the State is a
power co-extensive with self-protection and is most aptly termed the “law of
overwhelming necessity.’ It is “the most essential, insistent, and illimitable of
powers.” It is a dynamic force that enables the state to meet the agencies of the winds
of change.
- The petition is dismissed for lack of merit.

- No. The fact that PAGCOR, under its charter, is exempt from paying tax of any kind is
not violative of the principle of local autonomy. LGUs' have no inherent right to
impose taxes. LGUs' power to tax must always yield to a legislative act which is
superior having been passed by the state itself which has the inherent power to tax.
The charter of LGUs is subject to control by Congress as they are mere creatures of
Congress. Congress, therefore, has the power of control over LGUs. And if Congress
can grant the City of Manila the power to tax certain matters, it can also provide for
exemptions or even take back the power.

- No. LGUs' right to impose license fees on "gambling", has long been revoked. As early
as 1975, the power of local governments to regulate gambling thru the grant of
"franchise, licenses or permits" was withdrawn by P.D. No. 771 and was vested
exclusively on the National Government. Furthermore, LGUs' have no power to tax
instrumentalities of the gov't such as PAGCOR which exercises governmental
functions of regulating gambling activities.

- No. The judiciary does not settle policy issues. The Court can only declare what the
law is and not what the law should be. Under our system of government, policy issues
are within the domain of the political branches of government and of the people
themselves as the repository of all state power. On the issue of monopoly, the same
is not necessarily prohibited by the Constitution. The state must still decide whether
public interest demands that monopolies be "regulated" or prohibited. Again, this is
a matter of policy for the Legislature to decide. The judiciary can only intervene when
there are violations of the statutes passed by Congress regulating or prohibiting
monopolies.

- No. The clause does not preclude classification of individuals who may be accorded
different treatment under the law as long as the classification is not unreasonable or
arbitrary. A law does not have to operate in equal force on all persons or things to be
conformable to Article III, Section 1 of the Constitution. The Constitution does not
require situations which are different in fact or opinion to be treated in law as though
they were the same.