Exam Cases

V.
1. General Words Construed Generally
[G.R. No. 93833. September 28, 1995.]

SOCORRO D. RAMIREZ, Petitioner, v. HONORABLE COURT OF APPEALS, and ESTER S. GARCIA, Respondent.
E. Voltaire Garcia for Petitioner.
Cesar V . Chavez for Private Respondent.
SYLLABUS
1. STATUTORY CONSTRUCTION; WHERE THE LANGUAGE OF A STATUTE IS CLEAR AND UNAMBIGUOUS; RULE. —
Legislative intent is determined principally from the language of a statute. Where the language of a statute is clear
and unambiguous, the law is applied according to its express terms, and interpretation would be resorted to only
where a literal interpretation would be either impossible or absurd or would lead to an injustice.
2. CRIMINAL LAW; ANTI-WIRE TAPPING LAW (R.A. 4200); MAKES NO DISTINCTION AS TO WHETHER THE PARTY
SOUGHT TO BE PENALIZED OUGHT TO BE A PARTY OTHER THAN OR DIFFERENT FROM THOSE INVOLVED IN THE
PRIVATE COMMUNICATION. — Section 1 of R.A. 4200 entitled, "An Act to Prohibit and Penalize Wire Tapping and
Other Related Violations of Private Communication and Other Purposes," clearly and unequivocally makes it illegal
for any person not authorized by all the parties to any private communication to secretly record such
communication by means of a tape recorder. The law makes no distinction as to whether the party sought to be
penalized by the statute ought to be a party other than or different from those involved in the private
communication. The statute’s intent to penalize all persons unauthorized to make such recording is underscored by
the use of the qualifier "any." Consequently, as respondent Court of Appeals correctly concluded, "even a (person)
privy to a communication who records his private conversation with another without the knowledge of the latter
(will) qualify as a violator" under this provision of R.A. 4200.
3. ID.; ID.; NATURE OF CONVERSATION, IM-MATERIAL TO A VIOLATION THEREOF. — The nature of the conversation
is immaterial to a violation of the statute. The substance of the same need not be specifically alleged in the
information. What R.A. 4200 penalizes are the acts of secretly overhearing, intercepting or recording, private
communications by means of the devices enumerated therein. The mere allegation that an individual made a secret
recording of a private communication by means of a tape recorder would suffice to constitute an offense under
Section 1 of R.A. 4200. As the Solicitor General pointed out in his COMMENT before the respondent court: "Nowhere
(in the said law) is it required that before one can be regarded as a violator, the nature of the conversation, as well
as its communication to a third person should be professed."cralaw virtua1aw library
4. ID.; ID.; "PRIVATE COMMUNICATION" ; SCOPE. — Petitioner’s contention that the phrase "private communication"
in Section 1 of R.A. 4200 does not include "private conversations" narrows the ordinary meaning of the word
"communication" to a point of absurdity. The word communicate comes from the Latin word communicare, meaning
"to share or to impart." In its ordinary signification, communication connotes the act of sharing or imparting, as in a
conversation, or signifies the "process by which meaning or thoughts are shared between individuals through a
common system of symbols (as language signs or gestures)." These definitions are broad enough to include verbal or
non-verbal, written or expressive communications of "meanings or thoughts" which are likely to include the
emotionally-charged exchange, on February 22, 1988, between petitioner and private respondent, in the privacy of
the latter’s office. Any doubts about the legislative body’s meaning of the phrase "private communication" are,
furthermore, put to rest by the fact that the terms "conversation" and "communication" were interchangeably used
by Senator Tañada in his Explanatory Note to the bill, quoted below: "It has been said that innocent people have
nothing to fear from their conversations being overheard. But this statement ignores the usual nature of
conversations as well as the undeniable fact that most if not all, civilized people have some aspects of their lives they
do not wish to expose. Free conversations are often characterized by exaggerations, obscenity, agreeable
falsehoods, and the expression of anti-social desires of views not intended to be taken seriously. The right to the
privacy of communication, among others, has expressly been assured by our Constitution. Needless to state here,
the framers of our Constitution must have recognized the nature of conversations between individuals and the
significance of man’s spiritual nature, of his feelings and of his intellect. They must have known that part of the
pleasures and satisfactions of life are to be found in the unaudited, and free exchange of communication between
individuals — free from every unjustifiable intrusion by whatever means.
DECISION
KAPUNAN, J.:
A civil case for damages was filed by petitioner Socorro D. Ramirez in the Regional Trial Court of Quezon City alleging
that the p[rivate respondent, Ester S. Garcia, in a confrontation in the latter’s office, allegedly vexed, insulted and
humiliated her in a "hostile and furious mood" and in a manner offensive to petitioner’s dignity and personality,"
contrary to morals, good customs and public policy."
In support of her claim, petitioner produced a verbatim transcript of the event and sought moral damages,
attorney’s fees and other expenses of litigation in the amount of P610,000.00, in addition to costs, interests and
other reliefs awardable at the trial court’s discretion. The transcript on which the civil case was based was culled
from a tape recording of the confrontation made by petitioner. 2 The transcript reads as follows:chanrob1es virtual
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Plaintiff Soccoro D. Ramirez. (Chuchi)
Good afternoon Ma’am.
Defendant Ester S. Garcia (ESG) — Ano ba ang nangyari sa ‘yo, nakalimot ka na kung paano ka napunta rito, porke
member ka na, magsumbong ka kung ano ang gagawin ko sa iyo.
CHUCHI
Kasi, naka duty ako noon
ESG
Tapos iniwan no. (Sic)
CHUCHI
Hindi ma’am, pero ilan beses na nila akong binalikan, sabing ganoon —
ESG
Ito and (sic) masasabi ko sa ‘yo, ayaw kung (sic) mag explain ka, kasi hanggang, 10:00 p.m., kinabukasan hindi ka na
pumasok. Ngayon ako ang babalik sa ‘yo nag-aaply ka sa States, nag-aapply, ka sa review mo, kung kakailanganin ang
certification mo, kalimutan mo na kasi hindi ka sa akin makakahingi.
CHUCHI
Hindi Ma’am. kasi ang, ano ko talaga noon i-cocontinue ko up to 10:00 p.m.
ESG
Bastos ka, nakalimutan mo na kung paano ka pumasok dito sa hotel. Magsumbong ka sa Union kung gusto mo.
Nakalimutan mo na kung paano ka nakapasok dito "Do you think that on your own makakapasok ka kung hindi ako.
Panunumbyoyan na kita (Sinusumbatan na kita).
CHUCHI
Itutuloy ko na Ma’am sana ang duty ko.
ESG
Kaso ilang beses na akong binabalikan doon ng mga no (sic) ko.
ESG
Nakalimutan mo na ba kung paano ka pumasok sa hotel, kung on your own merit alam ko naman kung gaano ka "ka
bobo" mo. Marami ang nag-aaply alam kong hindi ka papasa.
CHUCHI
Kukuha kami ng exam noon.
ESG
Oo, pero hindi ka papasa.
CHUCHI
Eh, bakit ako ang nakuha ni Dr. Tamayo.
ESG
Kukunin ka kasi ako.
CHUCHI
Eh, di sana —
ESG
Huwag mong ipagmalaki na may utak ka kasi wala kang utak. Akala mo ba makukuha ka dito kung hindi ako.
CHUCHI
Mag-eexplain ako.
ESG
Huwag na, hindi ako mag-papa-explain sa ‘yo, makaalala ka kung paano ka puma-rito. "Putang ina" sasabi-sabihin mo
kamag-anak ng nanay at tatay mo ang mga magulang ko.
ESG
Wala na akong pakialam, dahil nandito ka sa loob, nasa labas ka puwede ka ng hindi pumasok, okey yan nasaloob ka
umalis ka doon.
CHUCHI
Kasi M’am, binabalikan ako ng mga taga Union.
ESG
Nandiyan na rin ako, pero huwag mong kalimutan na hindi ka makakapasok kung hindi ako. Kung hindi mo kinikilala
yan okey lang sa akin, dahil tapos ka na.
CHUCHI
Ina-ano ko ma’am na utang na loob.
ESG
Huwag na lang hindi mo utang na loob, kasi kung baga sa no, nilapastanganan mo ako.
CHUCHI
Paano kita nilapastanganan?
ESG
Mabuti pa lumabas ka na. Hindi na ako makikipagusap sa ‘yo. Lumabas ka na. Magsumbong ka. 3
As a result of petitioner’s recording, of the event and alleging that the said act of secretly taping the confrontation
was illegal, private respondent filed a criminal case before Regional Trial Court of Pasay City for violation of Republic
Act 4200, entitled "An Act to prohibit and penalize wire tapping and other related violations of private
communication, and other purposes." An information charging petitioner of violation of the said Act, dated October
6, 1988 is quoted herewith:chanrob1es virtual 1aw library
INFORMATION
The Undersigned Assistant City Fiscal Accuses Socorro D. Ramirez or Violation of Republic Act No. 4200 committed as
follows:chanrob1es virtual 1aw library
That on or about the 22nd day of February, 1988, in Pasay City Metro Manila, Philippines, and within the jurisdiction
of this honorable court., the above-named accused. Socorro D. Ramirez not being authorized by Ester S. Garcia to
record the latter’s conversation with said accused, did then and there wilfully, unlawfully and feloniously, with the
use of a tape recorder secretly record the said conversation and thereafter communicate in writing the contents of
the said recording to other person.
Contrary to Law.
Pasay City, Metro Manila, September 16, 1988.
MARIANO M. CUNETA
Asst. City Fiscal
Upon arraignment, in lieu of a plea, petitioner filed a Motion to Quash the Information on the ground that the facts
charged do not constitute an offense, particularly a violation of R A. 4200. In an order dated May 3, 1989, the trial
court granted the Motion to Quash, agreeing with petitioner that 1) the facts charged do not constitute an offense
under R A. 4200; and that 2) the violation punished by R.A. 4200 refers to a the taping of a communication by a
person other than a participant to the communication. 4
From the trial court’s Order, the private respondent filed a Petition for Review on Certiorari with this Court, which
forthwith referred the case to the Court of Appeals in a Resolution (by the First Division) of June 19, 1989.
On February 9, 1990, respondent Court of Appeals promulgated its assailed Decision declaring the trial court’s order
of May 3, 1989 null and void, and holding that:jgc:chanrobles.com.ph
" [T]he allegations sufficiently Constitute an offense punishable under Section 1 of R.A. 4200. In thus quashing the
information based on the ground that the facts alleged do not constitute an offense, the respondent judge;acted in
grave abuse of discretion correctible be certiorari." 5
Consequently, on February 21, 1990, petitioner filed a Motion for Reconsideration which respondent Court of
Appeals denied in its Resolution 6 dated June 19, 1990. Hence, the instant petition.
Petitioner vigorously argues, as her "main and principal issue" 7 that the applicable provision of Republic Act 4200
does not apply to the taping of a private conversation by one of the parties to the conversation. She contends that
the provision merely refers to the unauthorized taping of a private conversation by a party other than those involved
in the communication. 8 In relation to this, petitioner avers that the substance or content of the conversation must
be alleged in the Information, otherwise the facts charged would not constitute a violation of R.A 4200. 9 Finally,
petitioner argues that R.A 4200 penalizes the taping of a "private communication," not a "private conversation" and
that consequently, her act of secretly taping her conversation with private respondent was not illegal under the said
act. 10
We disagree.
First, legislative intent is determined principally from the language of a statute. Where the language of a statute is
clear and unambiguous, the law is applied according to its express terms, and interpretation would be resorted to
only where a literal interpretation would be either impossible 11 or absurd or would lead to an injustice. 12
Section 1 of R.A 4200 entitled, "An Act to Prohibit and Penalize Wire Tapping and Other Related Violations of Private
Communication and Other Purposes," provides:chanrob1es virtual 1aw library
SECTION 1. It shall be unlawful for any person, not being authorized by all the parties to any private communication
or spoken word, to tap any wire or cable, or by using, any other device or arrangement, to secretly overhear,
intercept, or record such communication or spoken word by using a device commonly known as a dictaphone or
dictagraph or detectaphone or walkie-talkie or tape recorder, or however otherwise described.
The aforestated provision clearly and unequivocally makes it illegal for any person, not authorized by all the parties
to any private communication to secretly record such communication by means of a tape recorder. The law makes
no distinction as to whether the party sought to be penalized by the statute ought to be a party other than or
different from those involved in the private communication. The statute’s intent to penalize all persons unauthorized
to make such recording is underscored by the use of the qualifier "any." Consequently, as respondent Court of
Appeals correctly concluded, "even a (person) privy to a communication who records his private conversation with
another without the knowledge of the latter (will) qualify as a violator" 13 under this provision of R.A. 4200.
A perusal of the Senate Congressional Records, moreover, supports the respondent court’ conclusion that in
enacting R.A. 4200 our lawmakers indeed contemplated to make illegal unauthorized tape recording of private
conversations or communications taken either by the parties themselves or by third persons. Thus:chanrob1es
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x x x
Senator Tañada:chanrob1es virtual 1aw library
The qualified only ‘overhear’.
Senator Padilla:chanrob1es virtual 1aw library
So that when it is intercepted or recorded; the element of secrecy would not appear to be material. Now, suppose,
Your Honor, the recording is not made by all the parties but some parties and involved not criminal cases that would
be mentioned under section 3 but would cover, for example civil cases or special proceedings whereby a recording is
made not necessarily by all the parties but perhaps by some in an effort to show the intent of the parties because
the actuation of the parties prior, simultaneous even subsequent to the contract or the act may be indicative of their
intention. Suppose there is such a recording, would you say, Your Honor, that the intention is to cover it within the
purview of this bill or outside?’
That is covered by the purview of this bill, Your Honor.
Even if the record should be used not in the prosecution of offense but as evidence to be used in Civil Cases or
special proceedings?
That is right. This is a complete ban on tape recorded conversations taken without the authorization of all the
parties.
Now, would that be reasonable. Your Honor?
I believe it is reasonable because it is not sporting to record the observation of one without his knowing it and then
using it against him. It is not fair, it is not sportsmanlike. If the purpose; Your honor, is to record the intention of the
parties. I believe that all the parties should know that the observations are being recorded.
This might reduce the utility of records.
Well no. For example, I was to say that in meetings of the board of directors where a tape recording is taken, there is
no objection to this if all the parties know. It is but fair that the people whose remarks and observations are being
made should know that these are being recorded.
Now, I can understand.
That is why when we take statements of persons, we say: "Please be informed that whatever you say here may be
used against you." That is fairness and that is what we demand. Now, in spite of that warning, he makes damaging
statements against his own interest, well, he cannot complain any more. But if you are going to take a recording of
the observations and remarks of a person without him knowing that it is being taped or recorded, without him
knowing that what is being recorded may be used against him, I think it is unfair.
(Congressional Record, Vol. III, No. 31. p. 584, March 12, 1964)
Senator Diokno: Do you understand. Mr. Senator, that under Section 1 of the bill as now worded, if a party secretly
records a public speech, he would be penalized under Section l? Because the speech is public, but the recording is
done secretly.
Well, that particular aspect is not contemplated by the bill. It is the communication between one person and another
person — not between a speaker and a public.
(Congressional Record, Vol. III. No. 33, p. 626 March 12, 1964).
The unambiguity of the express words of the provision, taken together with the above-quoted deliberations from
the Congressional Record, therefore plainly supports the view held by the respondent court that the provision seeks
to penalize even those privy to the private communications. Where the law makes no distinctions, one does not
distinguish.
Second, the nature of the conversation is immaterial to a violation of the statute. The substance of the same need
not be specifically alleged in the information. What R.A. 4200 penalizes are the acts of secretly overhearing,
intercepting or recording private communications by means of the devices enumerated therein. The mere allegation
that an individual made a secret recording of a private communication by means of a tape recorder would suffice to
constitute an offense under Section 1 of R.A 4200. As the Solicitor General pointed out in his COMMENT before the
respondent court: "Nowhere (in the said law) is it required that before one can be regarded as a violator, the nature
of the conversation, as well as its communication to a third person should be professed." 14
Finally petitioner’s contention that the phrase "private communication" in Section 1 of R.A 4200 does not include
"private conversations" narrows the ordinary meaning of the word "communication" to a point of absurdity. The
word communicate comes from the latin word communicare, meaning "to share or to impart." In its ordinary
signification, communication connotes the act of sharing or imparting, as in a conversation, 15 or signifies the
"process by which meanings or thoughts are shared between individuals through a common system of symbols (as
language signs or gestures)" 16 These definitions are broad enough to include verbal or non-verbal, written or
expressive communications of "meanings or thoughts" which are likely to include the emotionally — charged
exchange, on February 22, 1988, between petitioner and private respondent, in the privacy of the latter’s office. Any
doubts about the legislative body’s meaning of the phrase "private communication" are, furthermore, put to rest by
the fact that the terms "conversation" and "communication" were interchangeably used by Senator Tanada in his
Explanatory Note to the bill, quoted below:
"It has been said that innocent people have nothing to fear from their conversations being overhead. But this
statement ignores the usual nature of conversations as well as the undeniable fact that most, if not all, civilized
people have some aspects of their lives they do not wish to expose. Free conversations are often characterized by
exaggerations, obscenity, agreeable falsehoods, and the expression of anti-social desires of views not intended to be
taken seriously. The right to the privacy of communication, among others, has expressly been assured by our
Constitution. Needless to state here, the framers of our Constitution must have recognized the nature of
conversations between individuals and the significance of man’s spiritual nature, of his feelings and of his intellect.
They must have known that part of the pleasures and satisfactions of life are to be found in the unaudited, and free
exchange of communication between individuals — free from every unjustifiable intrusion by whatever means." 17
In Gaanan v. Intermediate Appellate Court, 18 a case which dealt with the issue of telephone wiretapping, we held
that the use of a telephone extension for the purpose of overhearing a private conversation without authorization
did not violate R.A. 4200 because a telephone extension devise was neither among those devises enumerated in
Section 1 of the law nor was it similar to those "device(s) or arrangement(s)" enumerated therein," 19 following the
principle that "penal statutes must be construed strictly in favor of the accused." 20 The instant case turns on a
different note, because the applicable facts and circumstances pointing to a violation of R.A 4200 suffer from no
ambiguity, and the statute itself explicitly mentions the unauthorized "recording" of private communications with
the use of tape-recorders as among the acts punishable.
WHEREFORE, because the law, as applied to the case at bench is clear and unambiguous and leaves us with no
discretion, the instant petition is hereby DENIED. The decision appealed from is AFFIRMED. Costs against petitioner.
SO ORDERED
G.R. No. 193960 January 7, 2013
KARLO ANGELO DABALOS y SAN DIEGO, Petitioner,
vs.
REGIONAL TRIAL COURT, BRANCH 59, ANGELES CITY (PAMPANGA),
The Court will not read into Republic Act (RA) No. 9262 a provision that would render it toothless in the pursuit of
the declared policy of the State to protect women and children from violence and threats to their personal safety
and security. Before the Court is a petition for certiorari and prohibition assailing the Orders dated September 13,
20102 and October 5, 20103 of the Regional Trial Court (RTC) of Angeles City, Branch 59 in Criminal Case No. 09-
5210 which denied petitioner’s Motion for Judicial Determination of Probable Cause with Motion to Quash the
Information.
The Facts
Petitioner was charged with violation of Section 5(a) of RA 9262 before the RTC of Angeles City, Branch 59, in an
Information which states:
That on or about the 13th day of July, 2009, in the City of Angeles, Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused, being then the boyfriend of the complainant, x x x did then and there
willfully, unlawfully and feloniously use personal violence on the complainant, by pulling her hair, punching
complainant’s back, shoulder and left eye, thereby demeaning and degrading the complainant’s intrinsic worth and
dignity as a human being, in violation of Section 5(a) of the Republic Act 9262.
After examining the supporting evidence, the RTC found probable cause and consequently, issued a warrant of arrest
against petitioner on November 19, 2009. The latter posted a cash bond for his provisional liberty and on August 12,
2010, filed a Motion for Judicial Determination of Probable Cause with Motion to Quash the Information. Petitioner
averred that at the time of the alleged incident on July 13, 2009, he was no longer in a dating relationship with
private respondent; hence, RA 9262 was inapplicable.
In her affidavit, private respondent admitted that her relationship with petitioner had ended prior to the subject
incident. She narrated that on July 13, 2009, she sought payment of the money she had lent to petitioner but the
latter could not pay. She then inquired from petitioner if he was responsible for spreading rumors about her which
he admitted. Thereupon, private respondent slapped petitioner causing the latter to inflict on her the physical
injuries alleged in the Information.
The RTC Ruling

The RTC denied petitioner’s motion. It did not consider material the fact that the parties’ dating relationship had
ceased prior to the incident, ratiocinating that since the parties had admitted a prior dating relationship, the
infliction of slight physical injuries constituted an act of violence against women and their children as defined in Sec.
3(a) of RA 9262.
Issues
Hence, the instant petition raising the following issues: 1) whether the RTC has jurisdiction over the offense; 2)
whether RA 9262 should be construed in a manner that will favor the accused; and 3) whether the Information
alleging a fact contrary to what has been admitted should be quashed.
The Court’s Ruling

The petition has no merit. Petitioner insists that the act which resulted in physical injuries to private respondent is
not covered by RA 9262 because its proximate cause was not their dating relationship. Instead, he claims that the
offense committed was only slight physical injuries under the Revised Penal Code which falls under the jurisdiction of
the Municipal Trial Court. The Court is not persuaded.
Sec. 3(a) of RA 9262 reads:
SEC. 3. Definition of Terms.- As used in this Act, (a) "Violence against women and their children" refers to any act or a
series of acts committed by any person against a woman who is his wife, former wife, or against a woman with
whom the person has or had a sexual or dating relationship, or with whom he has a common child, or against her
child whether legitimate or illegitimate, within or without the family abode, which result in or is likely to result in
physical, sexual, psychological harm or suffering, or economic abuse including threats of such acts, battery, assault,
coercion, harassment or arbitrary deprivation of liberty. x x x.
The law is broad in scope but specifies two limiting qualifications for any act or series of acts to be considered as a
crime of violence against women through physical harm, namely: 1) it is committed against a woman or her child and
the woman is the offender’s wife, former wife, or with whom he has or had sexual or dating relationship or with
whom he has a common child; and 2) it results in or is likely to result in physical harm or suffering.
In Ang v. Court of Appeals,5 the Court enumerated the elements of the crime of violence against women through
harassment, to wit:
1. The offender has or had a sexual or dating relationship with the offended woman;
2. The offender, by himself or through another, commits an act or series of acts of harassment against the woman;
and
3. The harassment alarms or causes substantial emotional or psychological distress to her.6
Notably, while it is required that the offender has or had a sexual or dating relationship with the offended woman,
for RA 9262 to be applicable, it is not indispensable that the act of violence be a consequence of such relationship.
Nowhere in the law can such limitation be inferred. Hence, applying the rule on statutory construction that when the
law does not distinguish, neither should the courts, then, clearly, the punishable acts refer to all acts of violence
against women with whom the offender has or had a sexual or dating relationship. As correctly ruled by the RTC, it is
immaterial whether the relationship had ceased for as long as there is sufficient evidence showing the past or
present existence of such relationship between the offender and the victim when the physical harm was committed.
Consequently, the Court cannot depart from the parallelism in Ang and give credence to petitioner's assertion that
the act of violence should be due to the sexual or dating relationship.
Neither can the Court construe the statute in favor of petitioner using the rule of lenity7 because there is no
ambiguity in RA 9262 that would necessitate any construction. While the degree of physical harm under RA 9262 and
Article 2668 of the Revised Penal Code are the same, there is sufficient justification for prescribing a higher penalty
for the former. Clearly, the legislative intent is to purposely impose a more severe sanction on the offenders whose
violent act/s physically harm women with whom they have or had a sexual or dating relationship, and/or their
children with the end in view of promoting the protection of women and children. Accordingly, the Information
having sufficiently alleged the necessary elements of the crime, such as: a dating relationship between the petitioner
and the private respondent; the act of violence committed by the petitioner; and the resulting physical harm to
private respondent, the offense is covered by RA 9262 which falls under the jurisdiction of the RTC in accordance
with Sec. 7 of the said law which reads:
SEC. 7. Venue – The Regional Trial Court designated as a Family Court shall have original and exclusive jurisdiction
over cases of violence against women and their children under this law. In the absence of such court in the place
where the offense was committed, the case shall be filed in the Regional Trial Court where the crime or any of its
elements was committed at the option of the complainant.
Finally, the Court finds the Order9 of the RTC, giving the prosecutor a period of two (2) days to amend the
Information to reflect the cessation of the dating relationship between the petitioner and the offended party, to be
in accord with Sec. 4 of Rule 117 of the Rules of Court, to wit:
SEC. 4. Amendment of complaint or information.- If the motion to quash is based on an alleged defect of the
complaint or information which can be cured by amendment, the court shall order that an amendment be
made.1âwphi1
Furthermore, Sec. 14 of Rule 110 of the Rules of Court provides that an information may be amended, in form or in
substance, without leave of court, at any time before the accused enters his plea. In the present case, the accused
petitioner has not yet been arraigned, hence, the RTC was correct in directing the amendment of the Information
and in denying the motion to quash the same.
WHEREFORE, the petition is DISMISSED. The Orders dated September 13, 2010 and October 5, 2010 of the Regional
Trial Court ( RTC) of Angeles City, Branch 59 in Criminal Case No. 09-5210 are AF.FI RM ED. The Temporary
Restraining Order issued by the Court is LIFTED and the RTC is directed to continue with the proceedings in Criminal
Case No. 09-5210. SO ORDERED.
G.R. No. 155282 January 17, 2005
MOVIE AND TELEVISION REVIEW AND CLASSIFICATION BOARD (MTRCB), petitioner,

vs.
ABS-CBN BROADCASTING CORPORATION and LOREN LEGARDA, respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:
For our resolution is the petition for review on certiorari under Rule 45 of the 1997 Rules of Court, as amended, filed
by petitioner Movie and Television Review and Classification Board (MTRCB) against ABS-CBN Broadcasting
Corporation (ABS-CBN) and former Senator Loren Legarda, respondents, assailing the (a) Decision dated November
18, 1997,1 and (b) Order dated August 26, 20022 of the Regional Trial Court, Branch 77, Quezon City, in Civil Case
No. Q-93-16052.
The facts are undisputed.
On October 15, 1991, at 10:45 in the evening, respondent ABS-CBN aired "Prosti-tuition," an episode of the
television (TV) program "The Inside Story" produced and hosted by respondent Legarda. It depicted female students
moonlighting as prostitutes to enable them to pay for their tuition fees. In the course of the program, student
prostitutes, pimps, customers, and some faculty members were interviewed. The Philippine Women’s University
(PWU) was named as the school of some of the students involved and the facade of PWU Building at Taft Avenue,
Manila conspicuously served as the background of the episode.
The showing of "The Inside Story" caused uproar in the PWU community. Dr. Leticia P. de Guzman, Chancellor and
Trustee of the PWU, and the PWU Parents and Teachers Association filed letter-complaints3 with petitioner MTRCB.
Both complainants alleged that the episode besmirched the name of the PWU and resulted in the harassment of
some of its female students.
Acting on the letter-complaints, the MTRCB Legal Counsel initiated a formal complaint with the MTRCB Investigating
Committee, alleging among others, that respondents (1) did not submit "The Inside Story" to petitioner for its review
and (2) exhibited the same without its permission, thus, violating Section 74 of Presidential Decree (P.D.) No. 19865
and Section 3,6 Chapter III and Section 7,7 Chapter IV of the MTRCB Rules and Regulations.8
In their answer,9 respondents explained that the "The Inside Story" is a "public affairs program, news documentary
and socio-political editorial," the airing of which is protected by the constitutional provision on freedom of
expression and of the press. Accordingly, petitioner has no power, authority and jurisdiction to impose any form of
prior restraint upon respondents.
On February 5, 1993, after hearing and submission of the parties’ memoranda, the MTRCB Investigating Committee
rendered a Decision, the decretal portion of which reads:
"WHEREFORE, the aforementioned premises, the respondents are ordered to pay the sum of TWENTY THOUSAND
PESOS (₱20,000.00) for non-submission of the program, subject of this case for review and approval of the MTRCB.
Heretofore, all subsequent programs of the ‘The Inside Story’ and all other programs of the ABS-CBN Channel 2 of
the same category shall be submitted to the Board of Review and Approval before showing; otherwise the Board will
act accordingly."101awphi1.nét
On appeal, the Office of Atty. Henrietta S. Mendez, Chairman of the MTRCB, issued a Decision dated March 12, 1993
affirming the above ruling of its Investigating Committee.11 Respondents filed a motion for reconsideration but was
denied in a Resolution dated April 14, 1993.12
Respondents then filed a special civil action for certiorari with the Regional Trial Court (RTC), Branch 77, Quezon City.
It seeks to: (1) declare as unconstitutional Sections 3(b),13 3(c),14 3(d),15 4,16 7,17 and 1118 of P. D. No. 1986 and
Sections 3,19 7,20 and 2821 (a) of the MTRCB Rules and Regulations;22 (2) (in the alternative) exclude the "The
Inside Story" from the coverage of the above cited provisions; and (3) annul and set aside the MTRCB Decision dated
March 12, 1993 and Resolution dated April 14, 1993. Respondents averred that the above-cited provisions constitute
"prior restraint" on respondents’ exercise of freedom of expression and of the press, and, therefore,
unconstitutional. Furthermore, the above cited provisions do not apply to the "The Inside Story" because it falls
under the category of "public affairs program, news documentary, or socio-political editorials" governed by
standards similar to those governing newspapers.
On November 18, 1997, the RTC rendered a Decision23 in favor of respondents, the dispositive portion of which
reads:
"WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered:
1. ANNULLING AND SETTING ASIDE the assailed Decision and Resolution of MTRCB dated March 12, 1993;
2. DECLARING AND DECREEING that Sections 3 (b), (c), and (d), 4, 7, and 11 of P.D. No. 1986 and Sections 3, 7, 28 (a)
of its Implementing Rules do not cover the TV Program "The Inside Story" and other similar programs, they being
public affairs programs which can be equated to newspapers; and
3. MAKING PERMANENT the Injunction against Respondents or all persons acting in their behalf.
SO ORDERED."
Petitioner filed a motion for reconsideration but was denied.24
Hence, this petition for review on certiorari.
Petitioner MTRCB through the Solicitor General, contends inter alia: first, all television programs, including "public
affairs programs, news documentaries, or socio-political editorials," are subject to petitioner’s power of review
under Section 3 (b) of P.D. No. 1986 and pursuant to this Court’s ruling in Iglesia ni Cristo vs. Court of Appeals ;25
second, television programs are more accessible to the public than newspapers, thus, the liberal regulation of the
latter cannot apply to the former; third, petitioner’s power to review television programs under Section 3(b) of P. D.
No. 1986 does not amount to "prior restraint;" and fourth, Section 3(b) of P. D. No. 1986 does not violate
respondents’ constitutional freedom of expression and of the press.
Respondents take the opposite stance.
The issue for our resolution is whether the MTRCB has the power or authority to review the "The Inside Story" prior
to its exhibition or broadcast by television.
The petition is impressed with merit.
The present controversy brings into focus the provisions of Section 3 of P. D. No. 1986, partly reproduced as follows:
"SEC. 3. Powers and Functions. – The BOARD shall have the following functions, powers and duties:
xxxxxx
b) To screen, review and examine all motion pictures as herein defined, television programs, including publicity
materials such as advertisements, trailers and stills, whether such motion pictures and publicity materials be for
theatrical or non-theatrical distribution, for television broadcast or for general viewing, imported or produced in the
Philippines, and in the latter case, whether they be for local viewing or for export.1a\^/phi1.net
c) To approve or disapprove, delete objectionable portions from and/or prohibit the importation, exportation,
production, copying, distribution, sale, lease exhibition and/or television broadcast of the motion pictures, television
programs and publicity materials subject of the preceding paragraph, which, in the judgment of the BOARD applying
contemporary Filipino cultural values as standard, are objectionable for being immoral, indecent, contrary to law
and/or good customs, injurious to the prestige of the Republic of the Philippines or its people, or with a dangerous
tendency to encourage the commission of violence or of a wrong or crime, such as but not limited to:
xxx
d) To supervise, regulate, and grant, deny or cancel, permits for the importation, exportation, production, copying,
distribution, sale, lease, exhibition, and/or television broadcast of all motion pictures, television programs and
publicity materials, to the end and that no such pictures, programs and materials as are determined by the BOARD to
be objectionable in accordance with paragraph (c) hereof shall be imported, exported, produced, copied,
reproduced, distributed, sold, leased, exhibited and/or broadcast by television;
x x x x x x."
Vis-a-vis the foregoing provisions, our task is to decide whether or not petitioner has the power to review the
television program "The Inside Story." The task is not Herculean because it merely resurrects this Court En Banc’s
ruling in Iglesia ni Cristo vs. Court of Appeals.26 There, the Iglesia ni Cristo sought exception from petitioner’s review
power contending that the term "television programs" under Sec. 3 (b) does not include "religious programs" which
are protected under Section 5, Article III of the Constitution.27 This Court, through Justice Reynato Puno,
categorically ruled that P.D. No. 1986 gives petitioner "the power to screen, review and examine "all television
programs," emphasizing the phrase "all television programs," thus:
"The law gives the Board the power to screen, review and examine all ‘television programs.’ By the clear terms of the
law, the Board has the power to ‘approve, delete x x x and/or prohibit the x x x exhibition and/or television
broadcast of x x x television programs x x x.’ The law also directs the Board to apply ‘contemporary Filipino cultural
values as standard’ to determine those which are objectionable for being ‘immoral, indecent, contrary to law and/or
good customs, injurious to the prestige of the Republic of the Philippines and its people, or with a dangerous
tendency to encourage the commission of violence or of a wrong or crime.’"
Settled is the rule in statutory construction that where the law does not make any exception, courts may not except
something therefrom, unless there is compelling reason apparent in the law to justify it.28 Ubi lex non distinguit nec
distinguere debemos. Thus, when the law says "all television programs," the word "all" covers all television
programs, whether religious, public affairs, news documentary, etc.29 The principle assumes that the legislative
body made no qualification in the use of general word or expression.30
It then follows that since "The Inside Story" is a television program, it is within the jurisdiction of the MTRCB over
which it has power of review.
Here, respondents sought exemption from the coverage of the term "television programs" on the ground that the
"The Inside Story" is a "public affairs program, news documentary and socio-political editorial" protected under
Section 4,31 Article III of the Constitution. Albeit, respondent’s basis is not freedom of religion, as in Iglesia ni
Cristo,32 but freedom of expression and of the press, the ruling in Iglesia ni Cristo applies squarely to the instant
issue. It is significant to note that in Iglesia ni Cristo, this Court declared that freedom of religion has been accorded a
preferred status by the framers of our fundamental laws, past and present, "designed to protect the broadest
possible liberty of conscience, to allow each man to believe as his conscience directs x x x." Yet despite the fact that
freedom of religion has been accorded a preferred status, still this Court, did not exempt the Iglesia ni Cristo’s
religious program from petitioner’s review power.
Respondents claim that the showing of "The Inside Story" is protected by the constitutional provision on freedom of
speech and of the press. However, there has been no declaration at all by the framers of the Constitution that
freedom of expression and of the press has a preferred status.
If this Court, in Iglesia ni Cristo, did not exempt religious programs from the jurisdiction and review power of
petitioner MTRCB, with more reason, there is no justification to exempt therefrom "The Inside Story" which,
according to respondents, is protected by the constitutional provision on freedom of expression and of the press, a
freedom bearing no preferred status.
The only exceptions from the MTRCB’s power of review are those expressly mentioned in Section 7 of P. D. No. 1986,
such as (1) television programs imprinted or exhibited by the Philippine Government and/or its departments and
agencies, and (2) newsreels. Thus:
"SEC. 7. Unauthorized showing or exhibition. – It shall be unlawful for any person or entity to exhibit or cause to be
exhibited in any moviehouse, theatre, or public place or by television within the Philippines any motion picture,
television program or publicity material, including trailers, and stills for lobby displays in connection with motion
pictures, not duly authorized by the owner or his assignee and passed by the BOARD; or to print or cause to be
printed on any motion picture to be exhibited in any theater or public place or by television a label or notice showing
the same to have been officially passed by the BOARD when the same has not been previously authorized, except
motion pictures, television programs or publicity material imprinted or exhibited by the Philippine Government
and/or its departments and agencies, and newsreels."
Still in a desperate attempt to be exempted, respondents contend that the "The Inside Story" falls under the
category of newsreels.
Their contention is unpersuasive.
P. D. No. 1986 does not define "newsreels." Webster’s dictionary defines newsreels as short motion picture films
portraying or dealing with current events.33 A glance at actual samples of newsreels shows that they are mostly
reenactments of events that had already happened. Some concrete examples are those of Dziga Vertov’s Russian
Kino-Pravda newsreel series (Kino-Pravda means literally "film-truth," a term that was later translated literally into
the French cinema verite) and Frank Capra’s Why We Fight series.34 Apparently, newsreels are straight presentation
of events. They are depiction of "actualities." Correspondingly, the MTRCB Rules and Regulations35 implementing P.
D. No. 1986 define newsreels as "straight news reporting, as distinguished from news analyses, commentaries and
opinions. Talk shows on a given issue are not considered newsreels."36 Clearly, the "The Inside Story" cannot be
considered a newsreel. It is more of a public affairs program which is described as a variety of news treatment; a
cross between pure television news and news-related commentaries, analysis and/or exchange of opinions.37
Certainly, such kind of program is within petitioner’s review power.
It bears stressing that the sole issue here is whether petitioner MTRCB has authority to review "The Inside Story."
Clearly, we are not called upon to determine whether petitioner violated Section 4, Article III (Bill of Rights) of the
Constitution providing that no law shall be passed abridging the freedom of speech, of oppression or the press.
Petitioner did not disapprove or ban the showing of the program. Neither did it cancel respondents’ permit.
Respondents were merely penalized for their failure to submit to petitioner "The Inside Story" for its review and
approval. Therefore, we need not resolve whether certain provisions of P. D. No. 1986 and the MTRCB Rules and
Regulations specified by respondents contravene the Constitution.
Consequently, we cannot sustain the RTC’s ruling that Sections 3 (c) (d), 4, 7 and 11 of P. D. No. 1986 and Sections 3,
7 and 28 (a) of the MTRCB Rules and Regulations are unconstitutional. It is settled that no question involving the
constitutionality or validity of a law or governmental act may be heard and decided by the court unless there is
compliance with the legal requisites for judicial inquiry, namely: (1) that the question must be raised by the proper
party; (2) that there must be an actual case or controversy; (3) that the question must be raised at the earliest
possible opportunity; and, (4) that the decision on the constitutional or legal question must be necessary to the
determination of the case itself.38
WHEREFORE, the instant petition is GRANTED. The assailed RTC Decision dated November 18, 1997 and Order dated
August 26, 2002 are hereby REVERSED. The Decision dated March 12, 1993 of petitioner MTRCB is AFFIRMED. Costs
against respondents.
SO ORDERED.
2. Provisos
G.R. No. 106090 February 28, 1994
RICARDO FERNANDEZ, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and D. M. CONSUNJI, INC., respondents.
Gaston V. Taquio for petitioner.
Marcos S. Pagaspas for private respondent.
NOCON, J.:
Forming the crux of the matter in this petition for certiorari is the question of whether or not the National Labor
Relations Commission acted with grave abuse of discretion in reversing the Labor Arbiter's decision by dismissing the
complaints for illegal dismissal, one of which is petitioner's, on the finding that they were project employees.
Petitioner was hired as a laborer at the D.M. Consunji, Inc., a construction firm, on November 5, 1974. He became a
skilled welder and worked for private respondent until March 23, 1986 when his employment was terminated on the
ground that the project petitioner had been assigned to was already completed and there was no more work for him
to do.
Skeptic of private respondent's reason, petitioner brought his plight before the Labor Arbiter who consolidated the
same with three (3) other separate complaints for illegal dismissal and various money claims against private
respondent. After filing their respective position papers and other documents pertinent to their causes/defenses, the
parties agreed to submit the case for decision based on record.
On May 12, 1988, Labor Arbiter Fernando V. Cinco rendered a decision, finding that complainants worked
continuously in various projects ranging from five (5) to twenty (20) years and belonged to a work pool, the
dispositive portion of which states as follows:
WHEREFORE, premises considered, the terminations by respondent of herein complainants are hereby declared
illegal. Consequently, respondent is ordered to reinstate the complainants, who have not yet reached the retirement
age, to their former positions plus backwages of one (1) year.
Anent complainants who have already reach the retirement age of sixty (60) years as of the date of this decision,
respondent is thereby ordered to pay said complainants their retirement/separation benefits equivalent to one half
(1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one (1) whole
year.
Moreover, respondent is ordered to pay all complainants their service incentive leave for the past three (3) years;
and to pay complainants Ricardo Fernandez, Gaudencio Merhan and Rolando Serona their 13th month pay likewise
for the past three (3) years.
The complaints of Amador Borromeo, Jesus Espiritu and Ramon Celestial are hereby dismissed in view of their
receipt of Separation pay and their execution of quitclaims in favor of herein respondent.
The other claims are likewise dismissed for lack of merit.
SO ORDERED.
Metro Manila, Philippines. 12 May 1988.1
Private respondent questioned on appeal the aforesaid decision of the Labor Arbiter on the ground that the
complainants were all project employees who were hired on a project-to-project basis, depending on the availability
of projects that the former was able to close with its clients. Respondent pointed to the gaps in complainants'
respective employment histories to show that they were indeed hired on an "off-and-on" basis.
In view of the lack of evidence on record to prove the continuous employment of complainants-appellees, and that
on the contrary, what was proven was the intermittent nature of their work as shown by the different project
contracts, the respondent Commission concluded that complainants-appellees were project employees. The
dispositive portion of the decision dated September 29, 1989 of respondent Commission reads:
WHEREFORE, the decision of the Labor Arbiter is hereby set aside and a new one entered dismissing the complaints
filed by complainants-appellees for lack of merit.2
From said decision, the complainants-appellees interposed a motion for reconsideration which was denied for lack of
merit on July 19, 1991. Respondent Commission affirmed its finding that complainants-appellees were project
employees. As such, the nature of their employment did not change by the number of projects in which they have
rendered service. Respondent Commission also noted that the motion for reconsideration was filed only on January
29, 1990 which was beyond the ten-day reglementary period from date of receipt of the decision on November 13,
1989.
Without any mention of the denial of said motion for reconsideration, petitioner alone comes before this Court on a
petition filed on July 21, 1992 and assails the decision dated September 29, 1989 of respondent Commission
contending that it is more in keeping with the intent and spirit of the law to consider him and the thirteen (13) other
complainants in the consolidated cases as regular employees.
At the outset, it is obvious that the petition was not filed within a reasonable time from receipt of the questioned
decision on November 13, 1989 as the petition was filed only on July 21, 1992. Neither does the filing of the petition
appear to be reasonable from the date of receipt of the denial of the motion for reconsideration on August 2, 1991.
Reckoned from this later date, petitioner waited for almost one year before he availed of this extraordinary remedy
of certiorari. We have consistently stated that "the yardstick to measure the timeliness of a petition for certiorari is
the reasonableness of the duration of time that had expired from the commission of the acts complained of up to
the institution of the proceedings to annul the same."3 Without doubt, petitioner's negligence or indifference for
such a long period of time has in the meantime rendered the questioned decision final and no longer assailable.
Even if we were to dispense with the requirement that the petition should be filed within a reasonable time, the
petition would still have to be dismissed on the merits. Private respondent presented material documents showing
that petitioner was hired as a project employee with the specific dates of hiring, the duration of hiring, the dates of
his lay-offs, including the lay-off reports and the termination reports submitted to the then Ministry of Labor and
Employment. Such data covered the period from November 5, 1974 to March 23, 1986.
Inasmuch as the documentary evidence clearly showed gaps of a month or months between the hiring of petitioner
in the numerous projects wherein he was assigned, the ineluctable conclusion is that petitioner has not continuously
worked with private respondent but only intermittently as he was hired solely for specific projects. As such, he is
governed by Policy Instruction No. 20, the pertinent portions of which read as follows:
Generally, there are two types of employees in the construction industry, namely 1) Project Employees and 2) Non-
project Employees.
Project employees are those employed in connection with a particular construction project. Non-project employees
are those employed by a construction company without reference to a particular project.
Project employees are not entitled to termination pay if they are terminated as a result of the completion of the
project or any phase thereof in which they are employed, regardless of the number of projects in which they have
been employed by a particular construction company.
Petitioner cites Article 280 of the Labor Code as legal basis for the decision of the Labor Arbiter in his favor. The text
of Article 280 states as follows:
Art. 280. Regular and Casual Employment. — The provisions of written agreement to the contrary notwithstanding
and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the
employee has been engaged to perform activities which are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the engagement of the employee or where
the work or services to be performed is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any
employee who has rendered at least one year of service whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in which he is employed and his employment shall
continue while such actually exists.
Petitioner claims that the above-quoted proviso in Article 280 of the Labor Code supports his claim that he should be
regarded as a regular employee.
We disagree. The proviso in the second paragraph of Article 280 of the Labor Code has recently been explained in
Mercado v. NLRC,4 where it was held that said proviso deems as regular employees only those "casual" employees
who have rendered at least one year of service regardless of the fact that such service may be continuous or broken.
It is not applicable to "project" employees, who are specifically excepted therefrom. Thus, the Court therein said:
The general rule is that the office of a proviso is to qualify or modify only the phrase immediately preceding it or
restrain or limit the generality of the clause that it immediately follows. (Statutory Construction by Ruben Agpalo,
1986 ed., p. 173). Thus, it has been held that a proviso is to be construed with reference to the immediately
preceding part of the provision to which it is attached, and not to the statute itself or to other sections thereof.
(Chinese Flour Importers Association v. Price Stabilization Board, 89 Phil. 469 (1951); Arenas v. City of San Carlos,
G.R. No. 24024, April 5, 1978, 82 SCRA 318 (1978). The only exception to the rule is where the clear legislative intent
is to restrain or qualify not only the phrase immediately preceding it (the proviso) but also earlier provisions of the
statute or even the statute itself as a whole. (Commissioner of Internal Revenue v. Filipinas Compania de Seguros,
107 Phil. 1055 (1960)
Indeed, a careful reading of the proviso readily discloses that the same relates to employment where the employee
is engaged to perform activities that are usually necessary or desirable in the usual business or trade of the employer
but hastens to qualify that project employment is specifically exempted therefrom.
Finally, petitioner relies on Policy Instruction No. 20 which was issued by then Secretary Blas F. Ople to stabilize
employer-employee relations in the construction industry to support his contention that workers in the construction
industry may now be considered regular employees after their long years of service with private respondent. The
pertinent provision of Policy Instruction No. 20 reads:
Members of a work pool from which a construction company draws its project employees, if considered employees
of the construction company while in the work pool, are non-project employees or employees for an indefinite
period. If they are employed in a particular project, the completion of the project or of any phase thereof will not
mean severance of employer-employee relationship.
Respondent Commission correctly observed in its decision that complainants, one of whom petitioner, failed to
consider the requirement in Policy Instruction No. 20 that to qualify as member of a work pool, the worker must still
be considered an employee of the construction company while in the work pool. In other words, there must be proof
to the effect that petitioner was under an obligation to be always available on call of private respondent and that he
was not free to offer his services to other employees. Unfortunately, petitioner miserably failed to introduce any
evidence of such nature during the times when there were no project.
Noteworthy in this case is the fact that herein private respondent's lay-off reports and the termination reports were
duly submitted to the then Ministry of Labor and Employment everytime a project was completed in accordance
with Policy Instruction No. 20, which provides:
Project employees are not entitled to termination pay if they are terminated as a result of the completion of the
project or any phase thereof in which they are employed, regardless of the number of projects in which they have
been employed by a particular construction company. Moreover, the company is not required to obtain a clearance
from the Secretary of Labor in connection with such termination. What is required of the company is a report to the
nearest Public Employment Office for statistical purposes.
The presence of this factor makes this case different from the cases decided by the Court where the employees were
deemed regular employees. The cases of Ochoco v. National Labor Relations Commission,5 Philippine National
Construction Corporation v. National Labor Relations Commission,6 Magante v. National Labor Relations
Commission,7 and Philippine National Construction Corporation v. National Labor Relations, et al.,8 uniformly held
that the failure of the employer to report to the nearest employment office the termination of workers everytime a
project is completed proves that the employees are not project employees. Contrariwise, the faithful and regular
effort of private respondent in reporting every completion of its project and submitting the lay-off list of its
employees proves the nature of employment of the workers involved therein as project employees. Given this added
circumstance behind petitioner's employment, it is clear that he does not belong to the work pool from which the
private respondent would draw workers for assignment to other projects at its discretion.
WHEREFORE, the instant petition for certiorari is hereby DISMISSED in view of the foregoing reasons.
SO ORDERED.
G.R. No. L-34024 April 5, 1978
ISIDRO G. ARENAS, petitioner,

vs.
CITY OF SAN CARLOS (PANGASINAN), CITY COUNCIL OF SAN CARLOS CITY, JUAN C. LOMIBAO, BENJAMIN POSADAS,
DOUGLAS D. SORIANO, BASILIO BULATAO, CATALINA B. CAGAMPAN, EUGENIO RAMOS, FRANCISCO CANCINO,
ALFREDO VINLUAN, MARCELO LAPEÑA, LEOPOLDO C. TULAGAN and TORIBIO PAULINO, in their official capacities as
City Mayor, City Vice Mayor, City Councilors and City Treasurer, respectively, and Honorable Presiding Judge, COURT
OF FIRST INSTANCE OF SAN CARLOS CITY (PANGASINAN), BRANCH X, respondents.
Daniel C. Macaraeg and Alfredo P. Arenas for petitioner.
Abelardo P. Fermin & Antonio Ruiz for respondents.
FERNANDEZ, J.:
This is a petition for certiorari to review the decision of the Court of First Instance of Pangasinan at San Carlos City,
Branch X, dismissing the petition for mandamus in Civil Case No. SCC-182. 1
In January 1971, Isidro G. Arenas, a City Judge of San Carlos City (Pangasinan), instituted against the City of San
Carlos (Pangasinan), City Council of San Carlos City and the Mayor, Vice-Mayor, City Councilors and City Treasurer of
San Carlos City, a petition for mandamus in the Court of First Instance of Pangasinan.
The petition alleged that the petitioner, Isidro G. Arenas, is the incumbent City Judge of San Carlos City (Pangasinan,
that the respondent City of San Carlos, from the time of its creation in 1966 up to the present, has been classified as
a third class city; that Republic Act No. 5967 which became effective on June 21, 1969 provides that the basic salaries
of city judges of second and third class cities shall be P18,000.00 per annum; that the petitioner was then actually
receiving a monthly salary of P1,000.00 of which P350.00 was the share of the national government and P650.00 is
the share of the city government, which salary was P500.00 below the basic monthly salary of a City Judge of a third
class city; that under Republic Act No. 5967, the difference between the salary actually being received by a City
Judge and the basic salary established in said act shall be paid by the city government; that from June 21, 1969 up to
the filing of the petition on January 21, 1971, the petitioner was entitled to a salary differential of P9,500.00 with the
respondent City of San Carlos (Pangasinan); that the petitioner had repeatedly requested the respondents to enact
the necessary budget and to pay him the said differential but the respondents, without any justification, whatsoever,
refused and still refuse to do the same; that it is the clear duty of the respondent to enact the necessary budget
providing for the payment of the salary of the petitioner as provided for in Republic Act No. 5967; that petitioner has
no other plain, adequate and speedy remedy except the present action for mandamus; and that because of the
refusal of the respondent to comply with their obligation as provided in Republic Act No. 5967, the petitioner was
forced to engage the services of a lawyer to file this action for which he was to pay the sum of P2,000.00 as
attorney's
fees. 2
In their answer dated February 10, 1971, the respondents admitted and denied the allegations in the petition and
alleged that Republic Act No. 5967 further provides, among other things, that the salary of the city judge shall at
least be one hundred pesos per month less than that of a city mayor; that the city judge receives an annual salary of
P12,000.00 which is P100.00 per month less than the salary being received by the city mayor which is P13,200.00
yearly; that assuming the existence of a salary difference, in view of the provision of Republic Act No. 5967, that the
payment of the salary difference shall be subject to the implementation of the respective city government, which is
discretionary on the part of the city government as to whether it would or would not implement the payment of the
salary difference, and in view of the financial difficulties of the city which has a big overdraft, the payment of the
salary difference of the city judge cannot be made; and that the petitioner should pay his lawyer and should not
charge the attorney's fees to the respondents who have not violated any rights of the petitioner. 3
The Court of First Instance of San Carlos City (Pangasinan), Branch X, rendered its decision dated May 31, 1971
dismissing the petition, without pronouncement as to costs.
The pertinent portion of Section 7, Republic Act No. 5967 reads:
Sec. 7. Unless the City Charter or any special law provides higher salary, the city judge in chartered cities shall receive
a basic salary which shall not be lower than the sums as provided thereinbelow:
xxx xxx xxx
(c) For second and third class cities, eighteen thousand pesos per annum;
xxx xxx xxx
For the cities of Baguio, Quezon, Pasay and other first class cities, the city judge shall receive one thousand pesos
less than that fixed for the district judge, and for second and third class cities, the city judge shall receive one
thousand five hundred pesos less than that fixed for the district judge, and for other cities, the city judge shall
receive two thousand pesos less than that fixed for the district judge: Provided, however, That the salary of a city
judge shall be at least one hundred pesos per month less than that of the city mayor.
The petitioner contends that "... if the last proviso of said Section 7 of Republic Act No. 5967 would be interpreted as
the controlling measure for fixing the salary of the city judges, then the principal provision of Section 7 fixing the
salaries of City Judges at rate very much higher than that of a City Mayor (particularly in the case of second and third
class cities) would be rendered totally useless." The petitioner submitted "that since the principal intention of the
legislature in enacting Section 7 of Republic Act 5967 is to increase the salary of the city judges, then the last proviso
of said Section 7 should give way to the provisions of said section preceding said proviso."
The record shows that when Republic Act No. 5967 took effect on June 21, 1969, San Carlos City (Pangasinan) was a
third class city; that the petitioner as city judge received an annual salary of P12,000.00; and that the city mayor of
San Carlos City received an annual salary of P13,200.00 which was exactly P100.00 a month more than the salary of
the city judge.
During the deliberation in the Senate on House Bill No. 17046, which became Republic Act No. 5967, the following
discussion took place:
SENATOR GANZON — Because with the bill as drafted, I recall that there will be some cities where the city judges will
receive salaries higher than those of the mayors. And in all charters, Your Honor, the city judge is considered a
department head — theoretically, at least, under the mayor. It would not be fair for the purposes of public
administration that a city department head should receive a salary higher than that of the chief executive of the city.
SENATOR LAUREL. That point is very well taken, and I would like to congratulate Your Honor.
SENATOR LAUREL. No. Mr. President, I understand the concern of the distinguished gentleman from Davao. But in
this particular amendment prepared by the distinguished lady from La Union, this will not require the council to pay
it at P100.00 exactly less than the salary of the mayor. It is just the limit — the maximum — but they may fix it at
much less than that. That is why the words "at least" were suggested by the Committee. It need not be exactly just
P100.00 less. It may be P500.00 less.
SENATOR ALMENDRAS. Your Honor, take for example the cities of Iloilo, Cebu, Bacolod or Manila for that matter.
The Mayors are receiving at least P1,500 a month. Now, under the amendment of the lady from La Union, Nueva
Ecija and
Davao — which has already been accepted by the sponsor — does it mean that if the salary of the city mayor is
P1,500, the city judges will receive P1,400?
xxx xxx xxx
SENATOR ANTONINO — I would like to call his attention to lines 13 to 20. We presented this amendment because it
says here: "For the cities of Baguio, Quezon, Pasay and other first class cities, the city judge shall receive one
thousand pesos less than that fixed for the district judge". So it will happen, and my attention was called by the
gentlemen from Iloilo — that the city judge win be receiving more salary than the city mayor. Hence the
amendment, Mr. President.
xxx xxx xxx
I conferred with the gentlemen from Iloilo and Batangas, and this was their objection. We have proposed this
amendment to at least solve this problem, so that no city judge will be receiving more than the city mayor. So they
will be receiving less than what is proposed in this Bill. (Vol. IV, No. 61, Senate Congressional Records, pages 2773-
2787. (Emphasis supplied .) 4
It is clear from the deliberation of the Senate that the intention of Congress in enacting Republic Act No. 5967 was
that the salary of a city judge should not be higher than the salary of the city mayor. The saving clause "Provided,
however, That the salary of a city judge shall be at least P100.00 per month less than that of the city mayor" qualifies
the earlier provision which fixes the salary of city judges for second and third class cities at P18,000.00 per annum.
The primary purpose of a proviso is to limit the general language of a statute. When there is irreconcilable
repugnancy between the proviso and the body of the statute the former is given precedence over the latter on the
ground that it is the latest expression of the intent of the legislature.
Inasmuch as the city mayor of San Carlos City (Pangasinan) was receiving an annual salary of P13,200.00, the
respondents cannot be compelled to provide for an annual salary of P18,000.00 for the petitioner as city judge of the
said city.
WHEREFORE, the petition for review is hereby dismissed and the decision appealed from is affirmed, without
pronouncement as to cost.
SO ORDERED.
3. Ordinary Words understood in Ordinary Sense’ Technical Words in Technical Sense
G.R. No. L-8238 May 25, 1955
CESAR M. CARANDANG, petitioner,

vs.
VICENTE SANTIAGO, in his capacity as Judge of the Court of First Instance of Manila and TOMAS VALENTON, Sr. and
TOMAS VALENTON, Jr., respondents.
S. Mejia-Panganiban for petitioner.

Evangelista and Valenton for respondents.
LABRADOR, J.:
This is a petition for certiorari against Honorable Vicente Santiago, Judge of the Court of First Instance of Manila, to
annul his order in Civil Case No. 21173, entitled Cesar M. Carandang vs. Tomas Valenton, Sr. et al., suspending the
trial of said civil case to await the result of the criminal Case No. 534, Court of First Instance of Batangas. In this
criminal case, Tomas Valenton, Jr. was found guilty of the crime of frustrated homicide committed against the
person of Cesar Carandang, petitioner herein. Tomas Valenton, Jr. appealed the decision to the Court of Appeals
where the case is now pending.
The decision of the Court of First Instance of Batangas in the criminal case was rendered on September 1, 1953 and
petitioner herein filed a complaint in the Court of First Instance of Manila to recover from the defendant Tomas
Valenton, Jr. and his parents, damages, both actual and moral, for the bodily injuries received by him on occasion of
the commission of the crime of frustrated homicide by said accused Tomas Valenton Jr. After the defendants
submitted their answer, they presented a motion to suspend the trial of the civil case, pending the termination of
the criminal case against Tomas Valenton, Jr. in the Court of Appeals. The judge ruled that the trial of the civil action
must await the result of the criminal case on appeal. A motion for reconsideration was submitted, but the court
denied the same; hence this petition for certiorari.
Petitioner invokes Article 33 of the new Civil Code, which is as follows:
In cases of defamation, fraud and physical injuries, a civil action for damages, entirely separate and distinct from the
criminal action, may be brought by the injured party. Such civil action shall proceed independently of the criminal
prosecution, and shall require only a preponderance of evidence.
The Code Commission itself states that the civil action allowed (under Article 33) is similar to the action in tort for
libel or slander and assault and battery under American law (Reports of the Code Commission, pp. 46-47). But
respondents argue that the term "physical injuries" is used to designate a specific crime defined in the Revised Penal
Code, and therefore said term should be understood in its peculiar and technical sense, in accordance with the rules
statutory construction (Sec. 578, 59 C. J. 979).
In the case at bar, the accused was charged with and convicted of the crime of frustrated homicide, and while it was
found in the criminal case that a wound was inflicted by the defendant on the body of the petitioner herein Cesar
Carandang, which wound is bodily injury, the crime committed is not physical injuries but frustrated homicide, for
the reason that the infliction of the wound is attended by the intent to kill. So the question arises whether the term
"physical injuries" used in Article 33 means physical injuries in the Revised Penal Code only, or any physical injury or
bodily injury, whether inflicted with intent to kill or not.
The Article in question uses the words "defamation", "fraud" and "physical injuries." Defamation and fraud are used
in their ordinary sense because there are no specific provisions in the Revised Penal Code using these terms as
means of offenses defined therein, so that these two terms defamation and fraud must have been used not to
impart to them any technical meaning in the laws of the Philippines, but in their generic sense. With this apparent
circumstance in mind, it is evident that the term "physical injuries" could not have been used in its specific sense as a
crime defined in the Revised Penal Code, for it is difficult to believe that the Code Commission would have used
terms in the same article — some in their general and another in its technical sense. In other words, the term
"physical injuries" should be understood to mean bodily injury, not the crime of physical injuries, because the terms
used with the latter are general terms. In any case the Code Commission recommended that the civil for assault and
battery in American Law, and this recommendation must have been accepted by the Legislature when it approved
the article intact as recommended. If the intent has been to establish a civil action for the bodily harm received by
the complainant similar to the civil action for assault and battery, as the Code Commission states, the civil action
should lie whether the offense committed is that of physical injuries, or frustrated homicide, or attempted homicide,
or even death.
A parallel case arose in that of Bixby vs Sioux City, 164 N. W. 641, 643. In that case, the appellant sought to take his
case from the scope of the statute by pointing out that inasmuch as notice is required where the cause of action is
founded on injury to the person, it has no application when the damages sought are for the death of the person. The
court ruled that a claim to recover for death resulting from personal injury is as certainly "founded on injury to the
person" as would be a claim to recover damages for a non-fatal injury resulting in a crippled body.
For the foregoing considerations, we find that the respondent judge committed an error in suspending the trial of
the civil case, and his order to that affect is hereby revoked, and he is hereby ordered to proceed with the trial of
said civil case without awaiting the result of the pending criminal case. With costs against the defendant-appellees.
[G.R. No. 93054. December 4, 1990.]
Cordillera Regional Assembly Member ALEXANDER P. ORDILLO, (Banaue), Ifugao Provincial Board Member CORAZON
MONTINIG, (Mayoyao), Former Vice-Mayor MARTIN UDAN (Banaue), Municipal Councilors MARTIN GANO, (Lagawe),
and TEODORO HEWE, (Hingyon), Barangay Councilman PEDRO W. DULAG (Lamut); Aguinaldo residents SANDY B.
CHANGIWAN, and DONATO TIMAGO; Lamut resident REY ANTONIO; Kiangan residents ORLANDO PUGUON, and
REYNAND DULDULAO; Lagawe residents TOMAS KIMAYONG, GREGORIO DANGO, GEORGE B. BAYWONG, and
VICENTE LUNAG; Hingyon residents PABLO M. DULNUAN and CONSTANCIO GANO; Mayoyao residents PEDRO M.
BAOANG, LEONARDO IGADNA, and MAXIMO IGADNA; and Banaue residents PUMA-A CULHI, LATAYON BUTTIG,
MIGUEL PUMELBAN, ANDRES ORDILLO, FEDERICO MARIANO, SANDY BINOMNGA, GABRIEL LIMMANG, ROMEO
TONGALI, RUBEN BAHATAN, MHOMDY GABRIEL, and NADRES GHAMANG, Petitioners, v. THE COMMISSION ON
ELECTIONS; The Honorable FRANKLIN M. DRILON, Secretary of Justice; Hon. CATALINO MACARAIG, Executive
Secretary; The Cabinet Officer for Regional Development; Hon. GUILLERMO CARAGUE, Secretary of Budget and
Management; and Hon. ROSALINA S. CAJUCOM, OIC, National Treasurer, Respondents.
Ledesma, Saludo & Associates for petitioners.
DECISION
GUTIERREZ, JR., J.:
The question raised in this petition is whether or not the province of Ifugao, being the only province which voted
favorably for the creation of the Cordillera Autonomous Region can, alone, legally and validly constitute such Region.
The antecedent facts that gave rise to this petition are as follows:chanrob1es virtual 1aw library
On January 30, 1990, the people of the provinces of Benguet, Mountain Province, Ifugao, Abra and Kalinga-Apayao
and the city of Baguio cast their votes in a plebiscite held pursuant to Republic Act No. 6766 entitled "An Act
Providing for an Organic Act for the Cordillera Autonomous Region."cralaw virtua1aw library
The official Commission on Elections (COMELEC) results of the plebiscite showed that the creation of the Region was
approved by a majority of 5,889 votes in only the Ifugao Province and was overwhelmingly rejected by 148,676 votes
in the rest of the provinces and city above-mentioned.
Consequently, the COMELEC, on February 14, 1990, issued Resolution No. 2259 stating that the Organic Act for the
Region has been approved and/or ratified by majority of the votes cast only in the province of Ifugao. On the same
date, the Secretary of Justice issued a memorandum for the President reiterating the COMELEC resolution and
provided:jgc:chanrobles.com.ph
". . . [A]nd considering the proviso in Sec. 13(A) that only the provinces and city voting favorably shall be included in
the CAR, the province of Ifugao being the only province which voted favorably — then, alone, legally and validly
constitutes the CAR." (Rollo, p. 7)
As a result of this, on March 8, 1990, Congress enacted Republic Act No. 6861 setting the elections in the Cordillera
Autonomous Region of Ifugao on the first Monday of March 1991.chanroblesvirtualawlibrary
Even before the issuance of the COMELEC resolution, the Executive Secretary on February 5, 1990 issued a
Memorandum granting authority to wind up the affairs of the Cordillera Executive Board and the Cordillera Regional
Assembly created under Executive Order No. 220.
On March 9, 1990, the petitioner filed a petition with COMELEC to declare the non-ratification of the Organic Act for
the Region. The COMELEC merely noted said petition.
On March 30, 1990, the President issued Administrative Order No. 160 declaring among others that the Cordillera
Executive Board and Cordillera Regional Assembly and all the offices created under Executive Order No. 220 were
abolished in view of the ratification of the Organic Act.chanroblesvirtuallawlibrary:red
The petitioners maintain that there can be no valid Cordillera Autonomous Region in only one province as the
Constitution and Republic Act No. 6766 require that the said Region be composed of more than one constituent unit.
The petitioners, then, pray that the Court: (1) declare null and void COMELEC resolution No. 2259, the memorandum
of the Secretary of Justice, the memorandum of the Executive Secretary, Administrative Order No. 160, and Republic
Act No. 6861 and prohibit and restrain the respondents from implementing the same and spending public funds for
the purpose and (2) declare Executive Order No. 220 constituting the Cordillera Executive Board and the Cordillera
Regional Assembly and other offices to be still in force and effect until another organic law for the Autonomous
Region shall have been enacted by Congress and the same is duly ratified by the voters in the constituent units. We
treat the Comments of the respondents as an answer and decide the case.
This petition is meritorious.
The sole province of Ifugao cannot validly constitute the Cordillera Autonomous Region.
It is explicit in Article X, Section 15 of the 1987 Constitution that:jgc:chanrobles.com.ph
"Section 15. There shall be created autonomous regions in Muslim Mindanao and in the Cordillera consisting of
provinces, cities, municipalities and geographical areas sharing common and distinctive historical and cultural
heritage, economic and social structures, and other relevant characteristics within the framework of this
Constitution and the national sovereignty as well as territorial integrity of the Republic of the Philippines." (Emphasis
Supplied)
The keywords — provinces, cities, municipalities and geographical areas connote that "region" is to be made up of
more than one constituent unit. The term "region" used in its ordinary sense means two or more provinces. This is
supported by the fact that the thirteen (13) regions into which the Philippines is divided for administrative purposes
are groupings of contiguous provinces. (Integrated Reorganization Plan (1972), which was made as part of the law of
the land by P.D. No. 1; P.D. No. 742) Ifugao is a province by itself. To become part of a region, it must join other
provinces, cities, municipalities, and geographical areas. It joins other units because of their common and distinctive
historical and cultural heritage, economic and social structures and other relevant characteristics. The Constitutional
requirements are not present in this case.chanrobles lawlibrary : rednad
The well-established rule in statutory construction that the language of the Constitution, as much as possible should
be understood in the sense it has in common use and that the words used in constitutional provisions are to be given
their ordinary meaning except where technical terms are employed, must then, be applied in this case. (See Baranda
v. Gustilo, 165 SCRA 757, 770, [1988]; J.M. Tuason & Co., Inc. v. Land Tenure Administration, 31 SCRA 413, 422-423
[1970]).
Aside from the 1987 Constitution, a reading of the provisions of Republic Act No. 6766 strengthens the petitioner’s
position that the Region cannot be constituted from only one province.
Article III, Sections 1 and 2 of the Statute provide that the Cordillera Autonomous Region is to be administered by
the Cordillera government consisting of the Regional Government and local government units. It further provides
that:jgc:chanrobles.com.ph
"SECTION 2. The Regional Government shall exercise powers and functions necessary for the proper governance and
development of all provinces, cities, municipalities, and barangay or ili within the Autonomous Region . . ."cralaw
virtua1aw library
From these sections, it can be gleaned that Congress never intended that a single province may constitute the
autonomous region. Otherwise, we would be faced with the absurd situation of having two sets of officials, a set of
provincial officials and another set of regional officials exercising their executive and legislative powers over exactly
the same small area.
Article V, Sections 1 and 4 of Republic Act 6766 vest the legislative power in the Cordillera Assembly whose members
shall be elected from regional assembly districts apportioned among provinces and the cities composing the
Autonomous Region.chanrobles.com:cralaw:red
If we follow the respondent’s position, the members of such Cordillera Assembly shall then be elected only from the
province of Ifugao creating an awkward predicament of having two legislative bodies — the Cordillera Assembly and
the Sangguniang Panlalawigan — exercising their legislative powers over the province of Ifugao. And since Ifugao is
one of the smallest provinces in the Philippines, population-wise, it would have too many government officials for so
few people.chanrobles virtual lawlibrary
Article XII, Section 10 of the law creates a Regional Planning and Development Board composed of the Cordillera
Governor, all the provincial governors and city mayors or their representatives, two members of the Cordillera
Assembly, and members representing the private sector. The Board has a counterpart in the provincial level called
the Provincial Planning and Development Coordinator. The Board’s functions (Article XII, Section 10, par. 2, Republic
Act No. 6766) are almost similar to those of the Provincial Coordinator’s (Title Four, Chapter 3, Article 10, Section
220 (4), Batas Pambansa Blg. 337 — Local Government Code). If it takes only one person in the provincial level to
perform such functions while on the other hand it takes an entire Board to perform almost the same tasks in the
regional level, it could only mean that a larger area must be covered at the regional level. The respondent’s theory of
the Autonomous Region being made up of a single province must, therefore, fail.
Article XXI, Section 13 (B) (c) alloting the huge amount of Ten Million Pesos (P10,000,000.00) to the Regional
Government for its initial organizational requirements can not be construed as funding only a lone and small
province.
These sections of Republic Act No. 6766 show that a one province Cordillera Autonomous Region was never
contemplated by the law creating it.
The province of Ifugao makes up only 11% of the total population of the areas enumerated in Article I, Section 2 (b)
of Republic Act No. 6766 which include Benguet, Mountain Province, Abra, Kalinga-Apayao and Baguio City. It has
the second smallest number of inhabitants from among the provinces and city above mentioned. The Cordillera
population is distributed in round figures as follows: Abra, 185,000; Benguet, 486,000; Ifugao, 149,000; Kalinga-
Apayao, 214,000; Mountain Province, 116,000; and Baguio City, 183,000; Total population of these five provinces
and one city; 1,332,000 according to the 1990 Census (Manila Standard, September 30, 1990, p. 14).
There are other provisions of Republic Act No. 6766 which are either violated or which cannot be complied with.
Section 16 of Article V calls for a Regional Commission on Appointments with the Speaker as Chairman and are (6)
members coming from different provinces and cities in the Region. Under the respondents’ view, the Commission
would have a Chairman and only one member. It would never have a quorum. Section 3 of Article VI calls for cabinet
members, as far as practicable, to come from various provinces and cities of the Region. Section 1 of Article VII
creates a system of tribal courts for the various indigenous cultural communities of the Region. Section 9 of Article
XV requires the development of a common regional language based upon the various languages and dialects in the
region which regional language in turn is expected to enrich the national language.
The entirety of Republic Act No. 6766 creating the Cordillera Autonomous Region is infused with provisions which
rule against the sole province of Ifugao constituting the Region.chanrobles.com.ph : virtual law library
To contemplate the situation envisioned by the respondent would not only violate the letter and intent of the
Constitution and Republic Act No. 6766 but would also be impractical and illogical.
Our decision in Abbas, Et. Al. v. COMELEC, (G.R. No. 89651, November 10, 1969), is not applicable in the case at bar
contrary to the view of the Secretary of Justice.
The Abbas case laid down the rate on the meaning of majority in the phrase "by majority of the votes cast by the
constituent units called for the purpose" found in the Constitution, Article X, Section 18. It stated:chanrob1es virtual
1aw library
x x x
". . . [I]t is thus clear that what is required by the Constitution is simple majority of votes approving the Organic Act in
individual constituent units and not a double majority of the votes in all constituent units put together, as well as in
the individual constituent units."cralaw virtua1aw library
This was the pronouncement applied by the Secretary of Justice in arriving at his conclusion stated in his
Memorandum for the President that:chanrob1es virtual 1aw library
x x x
". . . [i]t is believed that the creation of the Cordillera Autonomous Region (CAR) as mandated by R.A. No. 6766
became effective upon its approval by the majority of the votes cast in the province of Ifugao. And considering the
proviso in Section 13 (a) that only the provinces and city voting favorably shall be included in the CAR, the province
of Ifugao being the only province which voted favorably — can, alone, legally and validly constitute the CAR." (Rollo.
p. 40).
The plebiscites mandated by the Constitution and Republic Act No. 6766 for the Cordillera and Republic Act No. 6734
for the Autonomous Region in Muslim Mindanao determine — (1) whether there shall be an autonomous region in
the Cordillera and in Muslim Mindanao and (2) which provinces and cities, among those enumerated in the two
Republic Acts, shall comprise said Autonomous Regions. (See III, Record of the Constitutional Commission, 487-492
[1986]).
The Abbas case established the rule to follow on which provinces and cities shall comprise the autonomous region in
Muslim Mindanao which is, consequently, the same rule to follow with regard to the autonomous region in the
Cordillera. However, there is nothing in the Abbas decision which deals with the issue on whether an autonomous
region, in either Muslim Mindanao or Cordillera could exist despite the fact that only one province or one city is to
constitute it.chanrobles.com:cralaw:red
Stated in another way, the issue in this case is whether the sole province of Ifugao can validly and legally constitute
the Cordillera Autonomous Region. The issue is not whether the province of Ifugao is to be included in the Cordillera
Autonomous Region. It is the first issue which the Court answers in the instant case.
WHEREFORE, the petition is hereby GRANTED. Resolution No. 2259 of the Commission on Elections, insofar as it
upholds the creation of an autonomous region, the February 14, 1990 memorandum of the Secretary of Justice, the
February 5, 1990 memorandum of the Executive Secretary, Administrative Order No. 160, and Republic Act No. 6861
are declared null and void while Executive Order No. 220 is declared to be still in force and effect until properly
repealed or amended.
SO ORDERED.
G.R. No. 94374 August 27, 1992
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, petitioner,

vs.
EASTERN TELECOMMUNICATIONS PHILIPPINES, INC. (ETPI) and NATIONAL TELECOMMUNICATIONS COMMISSION
(NTC), respondents.
Meer, Meer, & Meer Law Office and Alampay & Manhit Law Offices for petitioner.
Arthur D. Lim Law Office for private respondent ETPI.
GUTIERREZ, JR., J.:
The petition seeks to set aside and annul the decision of the National Telecommunications Commission (NTC) signed
by former NTC Commissioner Jose Luis Alcuaz dated November 14, 1989 as well as the order dated July 16, 1990 of
the NTC En Banc.
On July, 16, 1987, Eastern Telecommunications Philippines, Inc. (Eastern) filed with the NTC an application (docketed
as NTC Case No. 8758) for a Certificate of Public Convenience and Necessity (CPCN) to construct, maintain and
operate an International Digital Gateway Facility (IDGF). In its application, Eastern alleged that it is a domestic
corporation and that it has the "franchise to land, construct, maintain and operate telecommunications systems by
cable, or any other means now known to science or which in the future may be developed for the reception and
transmission of messages to and between any point in the Philippines to point exterior thereto . . . (R.A. 5002)
On July 22, 1987, NTC issued a notice of hearing, requiring publication of Eastern's application and submission of
financial and technical requirements and setting the case for initial hearing on May 31, 1988.
On June 23, 1988, petitioner Philippine Long Distance Telephone Company (PLDT) filed an "Opposition to Main
Application and to Prayer for Provisional Authority" dated June 20, 1988 based primarily on the following grounds:
1. Since PLDT already operates and maintains three (3) international gateway switching facilities or exchanges and
will construct and operate by the year 1989 a new large-capacity international digital exchange in Metro Manila,
ETPI's proposed international digital gateway constitutes a needless and wasteful duplication of facilities and an
improvident expenditure of dollars, contrary to public policy and detrimental to the public interest;
2. ETPI is basically an international data or record carrier and an such it has no local telephone exchanges or much
less a telephone network of its own in the Philippines;
3. ETPI's proposal to operate its own international gateway is a device, scheme or strategem to exploit PLDT's
domestic telephone network and expand its inordinately lucrative business as a telephone correspondent;
4. ETPI's proposed international gateway will only enable ETPI to relegate to lesser importance its primary obligation
to operate as a record carrier, obtain at the expense of PLDT an increasing but undeserved share in revenue from
international telephone traffic, for ETPI will ride piggy-back on PLDT's own for nationwide telephone network, and
undermine the viability of PLDT's programmed new large-capacity international digital gateway;
5. There will be substantial diminution and stunted growth of PLDT's revenue from its international toll services vis-
a-vis its huge investments for its ongoing development projects; and
6. The establishment of ETPI's' proposed international gateway is contrary to the international practice to have one
or more gateways of single ownership. (Rollo, pp. 224 to 225)
On July 8, 1988, PLDT served on Eastern a "Request for Admission and Interrogatories" which was answered by
Eastern on August 9, 1988.
On August 31, 1988, NTC issued an order defining the issues for trial on the basis of the respective formulations of
issues by Eastern and PLDT.
At the scheduled hearing on September 14, 1988, PLDT filed a Motion to Dismiss Eastern's Application, questioning
the jurisdiction of the NTC to hear and decide the application upon the ground that Eastern was disqualified by its
franchise from acquiring the CPCN applied for. After protracted debate between the parties, the NTC denied the
Motion to Dismiss and the trial proceeded.
On various hearing dates, Eastern and PLDT presented their respective documentary and testimonial evidence.
Thereafter, both applicant Eastern and oppositor PLDT filed extensive memoranda in support of their respective
positions.
On July 10, 1989, NTC motu proprio ordered that hearing be conducted for the purpose of propounding clarificatory
questions to Eastern and PLDT. Afterwhich, per order dated November 3, 1989, the case was considered submitted
for final resolution.
On November 10, 1989, the NTC through Commissioner Jose Luis A. Alcuaz rendered a decision granting Eastern's
application. The dispositive portion reads as follows:
WHEREFORE, in the interest of public service, the Commission hereby issues a Certificate of Public Convenience and
Necessity (CPCN) to applicant EASTERN TELECOMMUNICATIONS PHILIPPINES, INC. (ETPI) for the authority to install,
operate and maintain an International Digital Gateway Facility in Metro Manila, subject to the following
CONDITIONS:
1. Applicant shall within fifteen (15) days from receipt of this Decision, file with this Commission its acceptance of the
terms and conditions herein prescribed.
2. Within sixty (60) days from receipt by this Commission of applicant's acceptance of the terms and conditions of
this decision, applicant shall submit to this Commission a detailed schedule of activities together with a detailed
listing of all equipments required to carry out this authorization from the start up to the completion of the
installation and commencement of operations.
3. That the applicant shall install and establish the proposed international digital gateway including all equipments
necessary to put up the system in accordance with the plans and specifications submitted and approved in this case,
to wit:
3.1 Exhibit D-1

3.2 Exhibit D-2
3.3 Exhibit D-2-b
3.4 Exhibit D-3-a
3.5 Exhibit D-3
4. Within Ninety (90) days from the date of acceptance of the terms and conditions herein prescribed, applicant ETPI
and PLDT shall enter into an interconnection agreement for the provision of adequate interconnection facilities
between applicant's gateway switch and PLDT's telephone network and shall jointly submit such interconnection
agreement to the Commission for approval. Such interconnection agreement shall include among others the
following:
4.1 General Statement of agreement to interconnect and abide with all the terms and conditions included in the
interconnection agreement;
4.2 Technical standards of interconnection. inclusive of the agreed interconnection criteria and quality or grade of
interconnection facilities;
4.3 Terms and conditions regarding the provision and operation and maintenance of any and all interconnection
facilities between network;
4.4 Terms and conditions as well as the manner of traffic revenue sharing and account settlement therefor for all
types of service as may be agreed upon by PLDT and applicant ETPI;
4.5 Provisions regarding amendments to the interconnection of ETPI and PLDT insofar as the maintenance, operation
and monitoring are concerned and insofar as maintaining a reliable grade of service is concerned; liabilities of
anyone or both of the parties for any loss or damages or interruption of service resulting from various causes;
4.6 Any and all terms and conditions necessary to insure an efficient interconnection of the network facilities of both
parties;
4.7 Effectivity of the agreement.
5. That applicant shall complete the installation of the system including full interconnection with the Public Switched
Telephone Network (PSTN) and commence providing the service within the period three hundred sixty (360) days
from the date of this decision and inform the Commission in writing at least fifteen (15) days before the date of
commencement of actual service to allow the Technical Staff of this Commission to conduct an ocular inspection and
field test of the entire international digital gateway of applicant including its interconnection with the PSTN.
6. Within thirty (30) days from the completion of the installation of the system but before the commencement of
actual operations, applicant shall submit to this Commission, a detailed listings of all equipment actually installed to
establish the system, together with their specifications and corresponding costs.
7. That applicant, ETPI shall file before the Commission within One Hundred Eighty (180) days from the approval
hereof petition for the approval of the corresponding rates to be charged for its international telephone service.
8. That the applicant shall allow interconnection of its international digital gateway switch with other authorized
telecommunications network desiring interconnect in accordance with cost efficient interconnection.
9. Applicant shall submit to this Commission on or before March lst of each year, an Annual Report of finances and
operations for the previous year ending December 31st as required in Section 7(h) of Commonwealth Act No. 146, as
amended, the said report to be prepared in the Annual Report Form prescribed by this Commission.
10. That applicant shall pay to this Commission on or before September 30th of each year, supervision and
regulation fees as required under Section 40 of Commonwealth Act 146, as amended.
11. That applicant shall not suspend operation of the herein authorized service without prior authority from this
Commission except in cases of emergency or interruption of service, in which case applicant shall inform the
Commission in writing at least (2) days from the occurrence of such service interruption with detailed explanation as
to the nature, cause and duration of interruption as well as details of immediate measures being undertaken or to
restore service in the shortest possible time.
12. The technical staff of this Commission may at any time inspect the facilities of applicant to determine compliance
with the requirements of this Commission.
13. That applicant shall not alter, modify, revise any of the approved technical specifications authorized without
prior authority from this Commission.
14. That applicant shall comply with all laws, rules and regulations as are now existing and shall be promulgated by
the National Telecommunications Commission. (NTC decision dated Oct. 13, 1989, pp. 12 -15; NTC Case No. 87-149;
Annex "A")
Commissioner Alcuaz signed the decision on November 10, 1989 and released the same to the NTC Secretariat on
November 14, 1989. Thus, the decision was entered into the NTC docket on November 14, 1989. Also on the same
day, Eastern was served with a copy of the decision by Commissioner Alcuaz in his NTC office. The next day, Eastern
submitted its "acceptance" of the terms and conditions specified in the decision.
A day later, on November 15, 1989, the NTC received a latter dated November 13, 1989 from the Office of the
President addressed to Commissioner Alcuaz stating that he had been replaced as head of NTC. President Aquino
stated, that she was designating Undersecretary of Transportation Josefina T. Lichauco as acting Commissioner of
the NTC.
On January 3, 1990, the NTC En Banc issued an order directing its board Secretary formally to release copies of the
NTC decision dated November 14, 1989 to the parties.
PLDT then filed a "Motion To Declare So-Called Alcuaz Decision Void/Inexistent" as well as a motion for
reconsideration of that decision. After further pleadings and counter pleadings, the NTC by an order dated July 16,
1990 En Banc denied the PLDT motions assailing the validity of the said decision and confirmed the November 14,
1989 decision signed by Commissioner Alcuaz.
Hence, the present petition for certiorari filed by PLDT premised on the following grounds:
THE NTC LACKED OR EXCEEDED ITS JURISDICTION, AND/OR GRAVELY ABUSED ITS DISCRETION IN EXERCISING THE
SAME, WHEN IT AUTHORIZED ETPI TO INSTALL AND OPERATE AN EQUIPMENT INHERENT TO OR ESSENTIAL ONLY
FOR A TELEPHONE SYSTEM WHICH THE LATTER (ETPI), UNDER ITS LEGISLATIVE FRANCHISE, WAS PROHIBITED OR
UNAUTHORIZED TO ENGAGE IN.
II
THE NTC LACKED OR EXCEEDED ITS JURISDICTION, AND/OR GRAVELY ABUSED ITS DISCRETION IN EXERCISING THE
SAME, WHEN IT COMPELLED PLDT TO ALLOW THE LINKAGE WITH ITS TELEPHONE SYSTEM, IN THE GUISE OF
"INTERCONNECTION," ETPI'S PROPOSED IGS EQUIPMENT, SINCE (A) INTERCONNECTION IS AUTHENTIC AND PROPER
ONLY BETWEEN TWO EXISTING TELECOMMUNICATIONS/TELEPHONE SYSTEMS AND AN IGS IS NOT SYSTEM BUT A
MERE EQUIPMENT AND (B) SUCH LINKAGE OF ETPI'S PROPOSED IGS WITH PLDT'S TELEPHONE SYSTEM WAS
DIRECTED NOT TO MEET OR SATISFY A PUBLIC NEED FOR IT BUT RATHER AND EXCLUSIVELY TO ALLOW ETPI TO
EXPLOIT PLDT's PRESENT TELEPHONE SUBSCRIBERS.
III
RESPONDENT NTC LACKED OR EXCEEDED ITS JURISDICTION, AND/OR GRAVELY ABUSED ITS DISCRETION IN
EXERCISING THE SAME, WHEN IT DECIDED ETPI'S SUBJECT APPLICATION WITHOUT RECITING THE FACTS AND THE
LAW UPON WHICH IT BASED ITS SAID JUDGMENT BUT INSTEAD MERELY ADOPTED WORD FOR WORD VIRTUALLY EN
TOTO ITS EARLIER DECISION IN A SIMILAR APPLICATION OF AN ENTIRELY DIFFERENT APPLICANT.
IV
THE NTC LACKED OR EXCEEDED ITS JURISDICTION AND/OR GRAVELY ABUSED ITS DISCRETION IN THE EXERCISE
THEREOF WHEN IT COMPELLED PLDT IN ITS SUBJECT DECISION AND ORDER TO INTERCONNECT ITS TELEPHONE
SYSTEM WITH ETPI'S PROPOSED IGS ALL TO THE END THAT THE LATTER MIGHT THEREBY ENGAGE ITSELF IN
TELEPHONE SERVICES BY TAKING UNDUE ADVANTAGE OF PLDT'S PRESENT TELEPHONE SYSTEM AND OPERATION.
(Petition, pp. 13-14)
The basic issue is whether or not the rendition of the assailed NTC decision and order was attended by grave abuse
of discretion amounting to lack of jurisdiction on the part of the NTC.
There is merit in the petition.

1. Eastern filed its application for a CPCN to operate an IGF with the NTC on the basis of its franchise granted by law
under R.A. 5002. It is undisputed that the proposed IGF is nothing else but an international telephone exchange.
(OSG Comment, p. 13) It is an equipment that is a component or constitutive element of a voice or telephone system
rather than a non-voice or data service. Since an IGF is useful only for a telephone system, NTC cannot validly grant
Eastern the CPCN it seeks because of franchise limitations.
The specific rights and privileges granted to Eastern are recited in Section 1 of R.A. 5002 which reads in full:
Sec. 1. There is hereby granted to "The Eastern Extension Australasia and China Telegraph Company, Ltd." its
successors and assigns, hereinafter referred to as the "Grantee" a franchise to land, construct, maintain and operate
telecommunication systems by cable, or any other means now known to science or which in the future may be
developed for the reception and transmission of messages between any point in the Philippines to points exterior
thereto, including airplanes, airships or vessels even though such airplanes airships or vessels may be located within
territorial limits of the Philippines. (Emphasis supplied)
It is clear from the foregoing that the privilege so granted by the legislature was for the construction, operation and
maintenance of communications systems for the transmission of messages by cables or means other than
telephone. This is a significant distinction from the legislative franchise in PLDT v. National Telecommunications, et
al. (190 SCRA 717 [1990]) where the franchise of Express Telecommunications Co. specifically used the word
"radiotelephony."
The respondents contend that the law does not make any distinction between voice and non-voice transmission of
messages. Since a "message" is any written or oral communication or other transmitted information sent by
messenger or by some other means (as by signals) and "gateway" is the point of entry and exit for inbound and
outbound international messages (data as well as voice) the respondents argue that there is no question that
Eastern is qualified to own and operate its own international gateway facility or telephone exchange for receiving
had transmitting messages between any point in the Philippines to any exterior part thereto or abroad (OSG
Comment, p. 14)
In the absence of any qualification or intention to the contrary, the technical, not the general or ordinary meaning of
a word used in a statute should be adopted in the construction of the statute. (Agpalo, Statutory Construction 1986,
p. 138) This is particularly true in this case. The word "message," as used in the franchise and in the
telecommunication industry has a peculiar meaning when used with reference to communication systems. The literal
or common meaning can not be applied to key words in a franchise for highly technical and scientifically advanced
services so as to broaden a legislative grant beyond its plain and intended meaning.
We agree with PLDT's contention that no one "transmits" on the telephone his or her "message." Telephone
technology precisely eliminates the intermediary role of a messenger (human or mechanical) by allowing the calling
and the called parties, respectively, to directly communicate with one another. A party need not "transmit" any
"message" through cable to be received and given to the other party. This procedure of sending data (the
"message") by cable transmission is characteristic of a telegraph but not of a telephone system. Thus, when RA 5002
speaks of a "telecommunication (system) by cable . . . for the reception and transmission of message," it can only be
referring to a record or data service such as a telegraph system.
It is not the product, effect or end result, nor the act of receiving and transmitting messages which is given a
franchise. It is the system used, the facility established, and the entire network whose costs run into hundreds of
millions of pesos which is given legislative approval. A radio-television company, a computer-network, a cable
system, a postal system, a package and message delivery firm, and many other schemes for broadcasting and
communicating messages, information, and entertainment are all engaged in the reception and transmission of
messages. But to say that their franchises can be interpreted to include a telephone exchange system is to strain
interpretation into incredulous limits.
Franchises are always interpreted strictly against the franchise holder, never liberally and certainly not in a strained
and exaggerated manner. (Philippine Long Distance Telephone Co. v. National Telecommunications Commission, 190
SCRA 717 [1990]).
The legislative history of the law granting Eastern's franchise is most instructive and belies the arguments of Eastern.
Eastern is actually not the original grantee of the franchise under RA 5002. It acquired its franchise from Eastern
Extension Australasia and China Telegraph Co., Ltd., a foreign corporation organized and existing under the laws of
Great Britain which was engaged in international telecommunications in Manila since Spanish times. This company
was given a concession for the construction, operation and maintenance of a submarine telegraph cable from
Hongkong to Manila. On June 21, 1952, when the concession expired, RA 808 was approved granting a legislative
franchise "to land, construct, maintain and operate at Manila in the Philippines a submarine telegraph cable
connecting Manila with Hongkong."
On May 2, 1967, R.A. 808 was amended by R.A. 5002 by enlarging the scope of the franchise granting Eastern
Extension Australasia a franchise to land, construct, maintain and operate telecommunications by cable or other
means known to science or which in the future may be developed for the transmission of messages between any
point in the Philippines to points exterior thereto.
On July 24, 1974, P.D. 484 was issued by President Ferdinand E. Marcos authorizing Eastern Extension Australasia to
transfer and assign the franchise granted to it under R.A. 808, as amended by R.A. 5002 to the Eastern
Telecommunications Philippines, Inc. (Commissioner of Internal Revenue v. Court of Tax Appeals, 195 SCRA 444
[1991])
The original legislative grant was a franchise for a submarine telegraph (not telephone) cable. The grantee upon
whom Congress vested the franchise was a telegraph and not a telephone company. From 1952 until the franchise
was assigned to Eastern and, in fact since Spanish times, it's predecessor never operated any telephone service. The
assignment of the franchise contemplated only what the transfer could convey which is a telegraph system. And
even from the time of the transfer in 1974, Eastern never operated a telephone service. Eastern has always been
aware of the limits of its franchise and the exact nature of its operations.
The clear intention of the law granting the franchise cannot be disputed. If Congress had contemplated the use of
telephone, the law would have stated so. Undeniably, telephone technology was already existing in 1952 when R.A.
808 was enacted. To construe the phrased "telecommunication system by cable or any other means now known to
science or which in the future may be developed for the reception and transmission of messages" so as to include
telephones is well-nigh preposterous. Indeed, telephones did not have to be discovered or developed. They were
not for the future. They were already existing at that time. As held in De los Santos v. Mallare (87 Phil. 289 [1950]),
the history of the times and state of things when the act was framed must be followed. Conditions of the things at
the time of enactment of the law should be considered to determine the legislative intent. (Gomez Garcia v. Hipolito,
et al., 2 Phil. 732 [1903]; United States v. De Guzman, 30 Phil. 416 [1915])
Eastern's franchise was intended from the beginning and has been interpreted to cover only record or data
telecommunications services. This is bolstered by the fact that at present, Eastern is the holder of various CPCN's
from the NTC to operate only non-voice telecommunications services.
2. The only opportunity when Eastern had anything to do with voice communications was in 1977 when President
Marcos authorized it to be a correspondent of telephone administrations in Singapore, Taiwan and Hongkong.
Eastern wrote Malacañang for approval and the President placed a marginal note on the letter telling Eastern to go
ahead. Notwithstanding this authority given by President Marcos, the act of the President did not amend the
legislative franchise and is of doubtful validity. The marginal note is certainly not in the exercise of the President's
legislative power. It was never published and could not have amended or enlarged an act of Congress.
Eastern, meanwhile, capitalizes on this marginal note on its letter to show that it is also engaged in voice
communication. It, therefore, asserts that PLDT is now estopped to question the franchise limitation of Eastern since
PLDT entered into an agreement with Eastern involving international telephone service in 1978 (Letter-Agreement
dated September 29, 1978, Exhibit "O," ETPI Comment, pp. 8-9)
This argument is specious.
The alleged assent of PLDT to Eastern's operation as a "voice correspondent" is contained in an agreement extracted
from PLDT at a time when it could not have resisted such a Presidential imposition. PLDT never intended to
voluntarily recognize the validity of Eastern's voice correspondentship. This is shown by the fact that after the former
President had been removed from office, PLDT refused to implement the agreement. PLDT can not therefore be
deemed in estoppel under these circumstances.
The fact that Eastern agreed "to limit itself to correspondent relationship for voice traffic" can not be taken to mean
that Eastern may operate a telephone service now. Its franchise does not authorize it to do so. NTC Circular No. 3-
06-88 dated March 16, 1988 provides that "no Certificate of Public Convenience (CPC) can be granted by this
Commission to a person or entity who does not hold any valid franchise."
3. Significantly, in its July 29, 1988 answer to a request for admission and interrogatories in NTC Case No. 87-50,
Eastern admitted that it does not and has never operated any telephone exchange or network in the Philippines and
has no decision or order from any regulatory commission granting it a certificate of public convenience to operate a
telephone exchange or network in this country.
This alone shows that Eastern was then fully aware of its franchise limitation that it can not operate a domestic
telephone or telecommunications system.
Eastern, however, asserts that it is not asking for authority to install and operate a domestic telephone or
telecommunications system. The international gateway facility it proposes to undertake is understood as a system
which would mediate between the domestic telephone system of PLDT and the transmitting and carrying facilities of
Eastern. The gateway facility will permit messages originating from a person using PLDT's domestic telephone system
to enter the transmitting and carrying facilities of Eastern, as well as messages incoming from abroad through
Eastern's carrying facilities to enter PLDT's domestic system.
Thus, there is a need to interconnect with PLDT's domestic telephone network as ordered by the NTC. Eastern's
expounded services would be useless if it cannot mainly use the existing PLDT grid. Interconnection as the term
denotes, contemplates or relates to the linkage of two existing telephone companies with one another in order to
allow the subscribers of one system to access or reach the subscribers of the other operator.
Interconnection is proper only between two legitimate companies with valid legislative franchises and not between
an international message transmission company and a legitimate telephone firm as in the case at bar. Eastern's
franchise can not be strained or distorted to enable it to become a carrier's carrier. Certainly, an interconnection
system requires a specific franchise.
While PLDT has franchises for both domestic and international telephone services, Eastern has none. The pretense
that it does not need any to tap into an existing domestic telephone network is misleading. Unless it utilizes PLDT's
domestic network, the gateway facility or telephone exchange of Eastern would be completely useless. This is the
meaning of interconnection whether termed "interfacing" or some other name.
In the absence of legislative authority to operate a telephone system, it was therefore grave abuse of discretion for
NTC to order Eastern to interconnect with PLDT.
4. Eastern had no use for a "gateway facility" in its many decades of operations in the Philippines. Only when it
decided to go into the telephone business as an expansion of its "message transmission" business because of various
hi-tech developments did it suddenly need a gateway facility and read into its franchise something which was never
there .The use of gibberish and esoteric jargon and such high sounding technical terms as analog or digital levels,
interfacing with broadband transmission, switching maintenance, traffic operations, network maintenance
management, transmission center, etc. can not disguise the fact that a gateway facility is part of a telephone system
and that Eastern wants to engage in combined international and substantially extensive domestic telephone services
without any legislative authority.
The proposed gateway facility by interconnecting with PLDT's domestic telecommunications network will enable
local subscribers to talk directly with users of telephones abroad. It is in effect a long distance telephone exchange
system. Eastern will charge long distance telephone rates and collect from local subscribers who use its services. This
is a far cry from its franchised business of being an international carrier of messages to and from its terminals or
landing stations. It will be engaged in domestic services from the gateway or exchange to the local telephone user
and international services from the gateway to the foreign country.
Eastern has no telephone system in the Philippines or anywhere else in the world. It does not have a single
telephone subscriber. Yet, it has been authorized by NTC to open a telephone exchange connecting PLDT subscribers
with telephone systems around the world.
5. In Commissioner of Internal Revenue v. Court of Tax Appeals, (supra), this Court accepted the submissions of
Eastern that it is engaged exclusively in international communications and international commerce. We ruled that its
legislative franchise was granted on the premise that its operations are international and what it has in the
Philippines is a terminal or station only. Eastern argued and this Court agreed in a case involving domestic tax
assessments that the company operates only a cable station or a terminal in the Philippines and does not fall under
the citizenship requirements of the Constitution. We ruled that the Court "is not prepared to punish the respondent
corporation which remained firm in not violating its franchise."
Eastern was firm in not violating its franchise when domestic tax assessments were in issue. Not so when it comes to
expanding its business into an entirely different and fast-growing profitable field. It is now adopting an entirely new
position. In big advertisements in all major newspapers around May 15, 1992, Eastern advertised as its first line of
business, direct dial and cellular international telephone services. We see no reason why the Court should suddenly
fall for specious and deceptive arguments and come out with findings and conclusions diametrically opposed to its
earlier decision.
6. The main reason for our decision is legal. Eastern has no franchise. It must first go to Congress. An additional
point, however, is that there is no urgent public need for the establishment of another IGF.
PLDT puts forth the argument that at present it has five (5) existing gateway facilities to meet the needs of the
people but NTC nevertheless approved Eastern's application in the event that PLDT's operations might be suspended
i.e. labor dispute, fortuitous event, technical causes etc.
In its order of July 16, 1990, the NTC states that:
. . . [W]ith PLDT's cut-cover of its Makati gateway facility it will have a total of 4575 international switch termination.
The combined capacity of the new international gateway operators, namely Philcom and ETPI will only amount to
33% of PLDT's capacity. It is the Commission's position that in the event, therefore, that any of PLDT's gateway
facilities become inoperative, relief can be provided by the gateway facilities of Philcom and the applicant. The
possibility that any two of the gateway operator's facilities would fail at the same time is very remote. . . . (Emphasis
supplied, page 12, Order — Annex "B" of petition)
xxx xxx xxx
. . . The Commission is also convinced of the economic viability of another gateway operator and that authorizing
applicant is not unnecessary and wasteful duplication. The grant to another operator of another international
gateway would provide for excess capacity which will take care of any abnormal increase in the international traffic
which can be expected with the trend in the economic activities in the country. . . . (Emphasis supplied; p. 13; Order,
Annex "B" of petition).
The proposed combined facilities of applicants Eastern (NTC Case No. 87-149) which will be thirty-three percent
(33%) of PLDT's capacity are intended to provide relief" in the event any of PLDT's gateway facilities become
inoperative and to provide excess capacity to "take care of any abnormal increase in international traffic."
NTC's fear is more illusory than real. In PLDT's 63 years of existence, it could only point to one outage of
consequence at the PLDT gateway which took place in November 1987. But this did not even totally disrupt PLTD's
international operations.
We do not see how the common good may be served when there are other remedies available which are less costly
and more expedient than constructing and maintaining a sixth gateway in a stand-by capacity which would function
only in the extreme case that the other five (5) gateways may shutdown.
7. Finally, NTC's reliance on free competition in the industry is to allow a private purpose for gain to masquerade
behind a noble policy against which nobody can dissent.
Citing the recent case of Philippine Long Distance Telephone Co. v. National Telecommunications, supra, that
"neither PLDT nor any other public utility has a constitutional right to a monopoly position," PLDT has never claimed
as a right the power to exclusively operate IGF's in the Philippines. In fact, Philippine Global Communications
(PHILCOM) was granted a CPCN to operate another IGF in NTC Case No. 87-149 under Philcom's legislative franchise,
R.A. 4167. (See Urgent Motion Reiterating Prayer for a Temporary Restraining Order, p. 2) But the indubitable fact is
that PLDT has invested billions of pesos over decades of operating, maintaining and improving the country's
telephone system.
Eastern had been in the Philippines long before petitioner PLDT was incorporated and commenced business. Eastern
and PLDT existed peacefully together for decades because they had separate franchises for different and specific
purposes. Only when Eastern tried to muscle into PLDT's turf did litigation arise. What Eastern is trying to accomplish
is to ride piggy back on the existing infrastructure built and developed by PLDT. It is competing with PLDT's gateway
facilities but in order to compete, it must interconnect with PLDT's domestic network. It will become what is known
in the business as a carrier's carrier. This is even worse than what Justice Isagani A. Cruz characterized in Philippine
Long Distance Telephone Co. v. National Telecommunications Commission (supra) through his story of the little red
hen who found some rice but none of the barnyard animals would help her plant, water, harvest, and finally cook it.
PLDT has existing gateway facilities which are used by its own domestic telephone subscribers. The records do not
show any urgency for another company, especially a non-franchised one, to operate a similar facility for exactly the
same people without having spent a single centavo to build up the domestic system. The proposed international
gateway will not add a single telephone unit to existing phones in the country. We fail to see how a non-franchised
telephone system will improve telephone services in the Philippines through the proposed scheme. There will be a
diversion of profits to Eastern, but no additional telephone anywhere and no improvement of services. Unless, like
the proverbial camel in the desert poking its head into a tent, Eastern proposes to later expand into other profitable
areas of the telephone business and starts installing its own phones. Eastern should first go to Congress, get its own
franchise, and prove that it can really contribute to more efficient telephone services instead of merely riding piggy
back on the most profitable aspect of another company's operations.
WHEREFORE, the petition is hereby GRANTED. The decision of the National Telecommunications Commission dated
November 14, 1989 as well as the order dated July 16, 1990 are ANNULLED and SET ASIDE.
SO ORDERED.
4. Generic words and Progressive Construction
G.R. No. L-33500 August 30, 1971
ROLANDO E. GEOTINA, in his capacity as COMMISSIONER OF CUSTOMS, petitioner,

vs.
THE COURT OF TAX APPEALS and UNITRADE, INC., respondents.
Office of the Solicitor General Felix Q. Antonio, First Assistant Solicitor General Antonio A. Torres, Solicitors Bernardo
P. Pardo and Guillermo C. Nakar, Jr., for petitioner.
De Santos, Balgos and Perez for respondents.
TEEHANKEE, J.:
Petitioner commissioner of customs has filed the instant petition either as an original action for certiorari or as an
appeal via certiorari by way of challenging the validity of the decision of the Court of Tax Appeals dated April 23,
1971 and of its resolution of May 3, 1971 granting the private respondent's petition in the case below1 and ordering
petitioner commissioner to release on P550,000.00 bond an alleged no-dollar shipment of 37,042 cartons of fresh
apples without the corresponding Central Bank release certificate.
The Court accepted the petition as an original action, requiring an answer thereto which was filed in due course, and
issued, as prayed for, the order restraining until further orders the enforcement and execution of the tax court's
question decision and resolution.
The material facts are undisputed, having been stipulated and documented in the proceedings below. The tax court
thus restated the facts in its decision (referring to herein respondent importer as petitioner before it and to herein
petitioner commissioner as respondent before it): "(P)etitioner is a domestic corporation duly organized and existing
under and by virtue of the laws of the Philippines. On December 22, 1970, the vessel M/V "Mindanao Sea" arrived at
the Port of Manila carrying 37,042 cartons fresh apples consigned to herein petitioner. After payment of the taxes
and duties on the portion of the shipment consisting of 10,000 cartons of fresh apples covered by Bills of Lading Nos.
PM-1, PM-2, PM-3 and PM-4, the necessary transfer permits were issued by the Collector of Customs of Manila.
While this portion of the importation was being unloaded from the carrying vessel and transported to the designated
cold storage house, the Collector of Customs, on December 22, 1970, issued warrants of seizure and detention (S.I.
Nos. 11993 to 11996) ordering the seizure of a portion of the goods already unloaded and their detention for
allegedly having been imported in violation of Central Bank Circulars Nos. 289, 294 and 295, in relation to Section
2530 (f) of the Tariff and Customs Code "pending termination of the seizure proceedings thereof and/or until further
orders." Before the entire shipment could be unloaded, the Collector of Customs apparently changed his mind and
ordered that the goods already unloaded be returned to the vessel.
"On December 23, 1970, petitioner, through its broker, requested the discharge of said articles from the carrying
vessel and their delivery to it under bond. This was denied by the Collector of Customs on the same day on the
ground that "the matter is under advisement by the proper government authorities, and therefore, this Office
regrets that for the moment, it can not grant (its) request." On appeal from this decision of the Collector, the
Commissioner, in his letter dated January 20, 1971, refused to render a decision until the Collector shall have
rendered a "definite ruling on the matter."
"On January 22, 1971, petitioner again requested the Collector of Customs to have the goods discharged from the
vessel and their delivery to it under bond. In his letter of January 26, 1971, the Collector denied the request on the
ground that the importation of said goods is prohibited under Circulars Nos. 289, 294 and 295 of the Central Bank
and are, therefore, articles of prohibited importation under Section 102(k) of the Tariff and Customs Code. For
convenience, the pertinent portions of the said decision of the Collector are reproduced below.
The subject shipment, undoubtedly, belongs to a commodity classification of merchandise the importation of which
is prohibited under Central Bank Circular Nos. 289, 294 and 295. Since CB circulars form part of the Tariff and
Customs Law (Sec. 3514, R.A. 1937, as amended), the aforementioned importation may be considered prohibited
under Section 102(k) of the Tariff and Customs Code.
"In this connection, the pertinent provision of the Tariff and Customs Code on the matter is quoted hereunder:
"SEC. 1207. Jurisdiction of Collector Over Articles of Prohibited Importation. — Where articles are of prohibited
importation or subject to importation only upon conditions prescribed by law, it shall be the duty of the Collector to
exercise such jurisdiction in respect thereto as will prevent importation or otherwise secure compliance with all legal
requirements." (Emphasis supplied.)
Under this particular section, it is obvious, that where the importation is prohibited, or subject to the conditions
prescribed by law, the Collector is duty bound to exercise two options — either to prevent the importation of the
cargo or require compliance with all the requirements. It appearing that the latter alternative is not feasible under
the circumstances now prevailing, this Office is constrained to enforce the former by not allowing the discharge of
the shipment in question.
"In view of the foregoing, and in pursuance of the strict policy of the Central Bank of the Philippines relative to the
importation of commodities of this nature, the request of your client regarding the discharge of the cargo from the
vessel "Mindanao Sea" is hereby denied, thus, rendering the request for an authority to release the same under
bond premature."
Respondent Commissioner of Customs, on appeal from said decision of the Collector of Customs, sustained the
decision of the latter in an order dated January 29, 1971. Hence, this appeal.
"It will be noted that the principal issue raised in this appeal is the decision of the Collector, sustained by
respondent, to the effect that the goods in question are articles of prohibited importation under Section 102(k) of
the Tariff and Customs Code. Since importation of such articles is prohibited, delivery thereof to the importer can
not be authorized. For this reason, the Collector took the necessary steps to prevent their entry or importation by
authority of section 1207 of the Tariff and Customs Code by ordering the portion of the goods previous unloaded
returned to the carrying vessel. The effect of this order is the abandonment of the seizure proceedings which were
started previously by the issuance of warrants of seizure and detention." (pp. 46-50 CTA record.)
Upon respondent's filing on February 2, 1971 of its appeal with the lower court from the customs commissioner's
decision affirming that of the Manila customs collector denying said respondent's request for the discharge of the
shipment of 37,042 cartons of fresh applies * with a stated value of U.S. $66,675.60 from the vessel "Mindanao Sea"
and their release to respondent under bond, it renewed its move, through motion for a preliminary injunction, for
immediate discharge from the carrying vessel and release under bond of the said shipment. The tax court, per its
resolution of February 16, 1971, correctly denied respondent's motion, "for to do so would be to prejudge the main
issue raised in this appeal."
Respondent's motion for reconsideration of the denial order was denied anew by the tax court per its resolution of
February 26, 1971, wherein expounding on its first resolution abjuring a prejudgment of the main issue, it ruled that
"(S)ince articles of prohibited importation are not subject to the right of redemption by the claimant or owner,2 it is
obvious that the motion of [respondent company] to have said goods delivered to it pending final determination of
its appeal is without merit, for to do so would in effect be a declaration that the goods are not articles of prohibited
importation."
On another urgent motion of respondent alleging malfunctioning of the reefer machinery of the carrying vessel,
however, the tax court per its order of March 4, 1971, allowed the immediate discharge of the fruits and their
deposit in a customs bonded warehouse "under conditions as to prevent or arrest spoilage or deterioration pending
final determination of the case on the merits." The fruits were thus deposited since March 19, 19713 at the
refrigerated storage compartments of the Ice & Cold Storage Corporation at Plaza Lawton, Manila.
After the parties' submittal of their stipulation of facts and respective memoranda, the tax court rendered its
decision, wherein after upholding its challenged jurisdiction over the case, it, ruled that:
We are, therefore, of the opinion that the fresh apples in question are not absolutely prohibited to be imported into
the Philippines under the aforesaid Circulars of the Central Bank, in relation to Section 102 of the Tariff and Customs
Code. However, while said goods are not articles of prohibited importation, they may be held liable for forfeiture for
failure of petitioner to secure a release certificate from the Central Bank, which liability may be determined in an
appropriate seizure proceeding to be conducted by the Collector of Customs, pursuant to Sections 2301, et seq. of
the Tariff and Customs Code. In the meantime, considering the perishable nature of said goods, and in the interest
both of petitioner and the Government, the goods should be released to petitioner under bond to secure payment of
the appraised value thereof in case they are finally declared forfeited in favor of the Government.
and rendered judgment as follows:
WHEREFORE, respondent is hereby ordered to release to petitioner the 37,042 cartons of fresh apples in question,
now deposited with the Ice & Cold Storage Corporation at Plaza Lawton, Manila, after petitioner shall have filed a
sufficient bond to guarantee payment of the appraised value thereof.
The tax court thereafter issued its resolution of May 3, 1971 for the immediate release of the apples, on the basis of
respondent's surety bond for P550,000.00 "to guarantee payment of the appraised value of said goods in case the
same are finally declared forfeited in favor of the Government." As already stated, such release was enjoined by the
Court's restraining order. Pursuant to the hearing held on May 21, 1971, the parties filed on May 27, 1971 their joint
manifestation to the effect that some of the apples had been found totally rotten and the rest in various stages of
deterioration. In respondent's last urgent motion of July 20, 1971, it prayed for resolution of the case at bar "for the
reason that the fresh fruits ... are already in grave danger of totally deteriorating."
I. The preliminary issue of jurisdiction raised by petitioner may readily be disposed of. The tax court correctly
overruled petitioner commissioner's contention that his ruling denying release under bond of the fresh apples
partook of the nature of an interlocutory order "pending seizure proceedings against said importation" which was
not appealable to and could not be taken cognizance of by the tax court, in this wise: "(T)his is not correct. What is
being appealed is the decision declaring the articles question as "articles of prohibited importation" and the order
prohibiting entry thereof. This is a final decision and is in no sense an interlocutory order because it was not issued in
connection with a pending case. As stated heretofore, and as shown by the records of the case, the seizure
proceeding which was at first started by the Collector of Customs of Manila was discontinued, the Collector having
elected to prevent importation of said articles under Section 1207 of the Tariff and Customs Code."
The tax court properly maintained its jurisdiction over the case which, as it pointed out, "precisely involves seizure,
detention or release of property belonging to [respondent company] consisting of fresh apples imported from
abroad, which property is under detention by [the commissioner] who refuses to release the same to [respondent]."
As reaffirmed by the Court in the latest case of Seneres vs. Frias, L-32921-40, June 10, 1971, in customs cases, "(T)he
collector's decision may be appealed to the commissioner of customs, whose decision, inter alia, in cases involving
seizure, detention or release of property affected, may in turn be reviewed only by the Court of Tax Appeals under
the exclusive appellate jurisdiction conferred on said Court under section 7 of Republic Act 1125."
II. We thus come to grips with the linchpin issue: did the tax court act within its authority and in accordance with the
applicable law and jurisprudence in ordering the release under bond of the questioned shipment of fresh apples —
admittedly imported on a "no dollar" basis — notwithstanding the lack of the required Central Bank release
certificate?
Petitioner commissioner submits that since the importation of fresh apples and other goods similarly classified by
the Central Bank as non-essential consumer (NEC) products is prohibited under Central Bank Circulars Nos. 289, 294
and 295, the questioned importation is considered a prohibited importation under Section 102 (k) of the Tariff and
Customs Code,4 and he was but complying with his mandate under section 1207 of the same Code, quoted supra,
page 3, "to exercise such jurisdiction in respect thereto as will prevent importation" by refusing to allow the
discharge of the said shipment.
Respondent importer in turn contends quite naturally that the tax court "committed no error when it found that the
imported fresh apples are not absolutely prohibited importation and therefore may be released to the (importer)
under bond."
The issue reduces itself quite simply and essentially to whether or not the fresh apples in question are "articles of
prohibited importation." If so, as the Court holds, then the tax court acted in excess of its jurisdiction in overturning
the customs authorities' proper exercise of their jurisdiction under section 1207 of the Customs Code, in preventing
importation and refusing to allow the discharge of the shipment of apples, which admittedly is not covered by the
required Central Bank permit or release certificate. By the same token, since the importation of said apples is
banned under the cited Central Bank circulars which have the force and effect of law, the tax court acted without
authority of law in ordering the commissioner to release the apples to the importer under bond, for under the very
section 2301 of the customs code invoked by it, "articles the importation of which is prohibited by law shall not be
released under bond."
1. The huge shipment of 37,042 cartons of fresh apples with a stated value of $66,675.60 and a total weight of about
671,942 kilos,5 is concededly one of fruits classified as NEC goods, the importation of which is barred under Central
Bank Circular No. 289 dated February 21, 1970.6 As for "no-dollar" imports, Central Bank Circular No. 247 dated July
21, 1967, after referring to previous circulars which required release certificates from the Central Bank for certain
"no-dollar" importations, expressly enumerates the items which are exempt from the requirement of such release
certificates, e.g. personal effects in reasonable quantities, gifts sent from abroad not exceeding $100.00 unless there
is evidence of abuse in the use of the privilege, etc. Central Bank Circular No. 295, amending circular No. 294,
promulgated on March 20 and 10, 1970, respectively,7 reiterates the exemption of the "no dollar" imports covered
by Circular No. 247 from the release certificate requirements, but imposes an express ban on all other "no-dollar"
imports, as follows:
No-dollar imports not covered by Circular No. 247 shall not be issued any release certificates and shall be referred to
the Central Bank for official transmittal to the Bureau of Customs for appropriate seizure proceedings.
xxx xxx xxx
Section 2 of said Circular No. 295, however, provides certain conditions for the issuance of release certificates for
"no-dollar imports which arrived on or before February 21, 1970", the date that the floating rate system and foreign
exchange restrictions were instituted under Circular No. 289 of the same date.
The customs authorities clearly acted then within authority and mandate under section 1207 of the customs code,
quoted supra,8 in "preventing importation" and entry of the shipment of apples by not allowing its discharge from
the carrying vessel. As noted by the Court in the recent case of Seneres, supra, "When the goods are challenged as
being of prohibited importation and the collector questions the legality of the importation ... the law expressly
imposes upon the collector the obligation "to exercise such jurisdiction in respect thereto as will prevent
importation."" The second alternative granted by the cited section to the port collector of "securing compliance with
all legal requirements" with respect to "articles subject to importation only upon conditions prescribed by law" was
patently not available, for under the categorical terms of Circular No. 295 above quoted, no release certificate could
be issued for the apples in question and the questioned import could only be "referred to the Central Bank for
official transmittal to the Bureau of Customs for appropriate seizure proceedings."
2. The pertinent and applicable provisions of the tariff and customs code quite indubitably prohibit the importation
of the apples in question as "prohibited importations" since their importation is "prohibited by law" under section
102, while section 1207, quoted, supra,9 expressly enjoins the port collector "to exercise such jurisdiction in respect
thereto as will prevent importation." Section 2301 et seq. make the apples liable to seizure and detention; they may
not be released under bond since they are "articles the importation of which is prohibited by law", but they may be
subjected to forfeiture in the specific appropriate cases provided in section 2530:
SEC. 102. Prohibited, Importations. — The importation into the Philippines of the following articles is prohibited:
xxx xxx xxx
All other articles the importation of which is prohibited by law.
. 2301. Warrant for Detention of Property — Bond. — Upon making any seizure, the Collector shall issue a warrant
for the detention of the property; and if the owner or importer desires to secure the release of the property for
legitimate use, the Collector may surrender it upon the filing of a sufficient bond, in an amount to be fixed by him,
conditioned for the payment of the appraised value of the article and/or any fine, expenses and costs which may be
adjudged in the case: Provided, That articles the importation of which is prohibited by law shall not be released
under bond.
SEC. 2307. Settlement of Case by Payment of Fine or Redemption of Forfeited Property. — ...
xxx xxx xxx
Redemption of forfeited property shall not be allowed in any case where the importation is absolutely prohibited or
where the surrender of the property to the person offering to redeem the same would be contrary to law.
SEC. 2530. Property Subject to Forfeiture Under Tariff and Customs Laws. — Any vessel or aircraft, cargo, articles and
other objects shall, under the following conditions, be subject to forfeiture:
xxx xxx xxx
f. Any article of prohibited importation or exportation, the importation or exportation of which is effected or
attempted contrary to law, and all other articles which, in the opinion of the Collector, have been used, are or were
intended to be used as instrument in the importation or exportation of the former.
xxx xxx xxx
m. Any article sought to be imported or exported:
(1) Without going through a customhouse, whether the act was consummated, frustrated or attempted;
(2) By failure to mention to a customs official, articles found in the baggage of a person arriving from abroad.
(3) On the strength of a false declaration or affidavit executed by the owner, importer, exporter or consignee
concerning the importation or exportation of such article.
(4) On the strength of a false invoice or other document executed by the owner, importer, exporter or consignee
concerning the importation or exportation of such article.
(5) Through any other fraudulent practice or device by means of which such article was entered through a
customhouse to the prejudice of the government.
Section 3514, defining the words and phrases used in the code, further expressly declares that " "tariff and customs
law" includes not only the provisions of this Code and regulations pursuant thereto but all other laws and regulations
which are subject to enforcement by the Bureau of Customs or otherwise within its jurisdiction."
Accordingly, for the administrative information and guidance of all customs personnel, Customs Administrative
Order No. 19-70 dated October 20, 1970 was issued by the then acting commissioner of customs and duly approved
by the Secretary of Finance, as follows:
Pursuant to Section 608 of the Tariff and Customs Code in relation to Section 2307 of the same Code and in order to
give force and effect to Central Bank Circular No. 289, all importations seized and forfeited for violation of Central
Bank Circulars shall not be allowed to be released under bond, either surety or cash, nor allowed to be redeemed.
All previous orders inconsistent with or contrary to the foregoing are hereby superseded and/or revoked.
This Order shall take effect upon approval by the Secretary of Finance.
(Sgd.) ALFREDO PIO DE RODA, JR.

Acting Commissioner of Customs
APPROVED:
(Sgd.) CESAR VIRATA

Secretary of Finance".
3. The tax court, however, erroneously justified its decision overruling the commissioner's denial of importation of
the apples and instead ordering their release under bond in this wise:
... respondent seeks to prevent importation of the goods in question and the delivery thereof to petitioner on the
ground that said goods, having been imported in violation of Central Bank Circulars Nos. 289, 294 and 295, are
considered "articles of prohibited importation" which may be banned under Section 1207, in relation to Section 102,
of the Tariff and Customs Code. We have examined said Circulars, and we find nothing therein which declares that
fresh apples are articles which are prohibited to be imported into the Philippines. It is true that the Circulars provide
that no release certificate may be issued for such goods coming from abroad, yet the Central Bank may issue such
release certificate under the exceptional circumstances, the prohibition not being absolute. In fact, the Collector of
Customs authorized the release and delivery to the importer of a shipment of fresh apples on December 1, 1970,
after the effectivity of said Circulars. It may be added that by Executive Order of the President (Executive Order No.
282, dated January 4, 1971) the tariff duty on apples was increased.
xxx xxx xxx

Executive Order No. 282 is proof enough that it has never been the intention to classify fresh apples as articles of
prohibited importation.
We are, therefore, of the opinion that the fresh apples in question are not absolutely prohibited to be imported into
the Philippines under the aforesaid Circulars of the Central Bank, in relation to Section 102 of the Tariff and Customs
Code.
(a) The tax court's first stated ground that the importation of fresh apples was "not absolutely prohibited" under the
Central Bank circulars and that therefore the apples could not be deemed "articles of prohibited importation" as
envisaged by section 102 of the tariff and customs code has been long rejected by the settled doctrine and
jurisprudence of the Court. The contention that to be deemed articles of prohibited importation, the questioned
articles must partake of the same nature as those specifically declared prohibited in said section 102 (formerly
section 3 of the Philippine Tariff Act of 1909) such as explosives, etc. was discarded by the Court in the 1959 case of
Tong Tek vs. Commissioner of Customs: 10
Petitioners alleged that the term "merchandise of prohibited exportation" used in Section 1363-(f) of the Revised
Administrative Code (now Section 2530-f of the tariff and customs code) has its own fixed and definite meaning; that
it refers exclusively to those articles specifically declared prohibited by Section 3 of the Philippine Tariff Act of 1909,
such as firearms and explosives, obscene and subversive articles, gambling outfits, falsely marked gold and silver
articles, adulterated foods, lottery tickets, opium and opium pipes and as gold bars do not fall under any of the
enumeration, they conclude that the aforementioned petitioned codal provision can not be invoked in ordering the
forfeiture of the articles in question. We entertain a different view.
It must be remembered that the Revised Administrative Code is a general legislation. As such, it must have been
intended to meet not only the peculiar conditions obtaining at the time of its enactment but also designed to
comprehend those that may normally arise after its approval. To our mind the term "merchandise of prohibited
exportation" used in the code is broad enough to embrace not only those already declared prohibited at the time of
its adoption but also goods, commodities or articles that may be the subject of activities undertaken in violation of
subsequent laws. Considering that the Central Bank circulars, issued for the implementation of the law authorizing
their issuance although by themselves are not statutes, have the force and effect of law (People vs. Que Po Lay, 94
Phil. 640; 50 Off. Gaz., No. 10, p. 4850), the carrying out of transactions or undertakings without complying with the
requirements of Circular Nos. 20, 21 and 42 makes these undertakings illegal. And as a natural consequence thereof,
the articles involved in such unauthorized ventures become prohibited and, therefore, subject to forfeiture under
Section 1363-(f) of the Revised Administrative Code.
(b) In another 1959 case of Pascual vs. Commissioner of Customs, 11 the Court, in upholding the penalty of forfeiture
for such importations made without the required Central Bank release certificates, stressed that "since the
importations in question were made without the necessary import license issued by the Monetary Board pursuant to
Circular No. 45 and the release certificates issued by the Central Bank or its authorized agent bank in the prescribed
form pursuant to Circular No. 44, they fall within the class of "merchandise of prohibited importation" or
merchandise "the importation ... of which is effected ... contrary to law" that the Commissioner of Customs may
seize and order forfeited. To sustain the appellant theory of the case would render nugatory the aim and purpose of
the law when it authorizes the Central Bank to temporarily suspend or restrict the sale of foreign exchange and
subject all transactions in gold and foreign exchange to licensing during an exchange crisis in order to protect the
international reserve and to give the Monetary Board and the Government time in which to take constructive
measures to combat such a crisis." The Court emphasized therein that "every import of goods or merchandise
requires an immediate or future demand for foreign exchange" and that the Central Bank circulars in question
requiring its permit and release certificates for so-called "no-dollar" imports were "measures taken to check the
unregulated flow of foreign exchange from the country and are within the powers of the Monetary Board."
(c) Numerous cases thereafter have elevated the Court's initial 1959 rulings to settled doctrine. Thus, ten years later,
in the 1969 case of Sare vs. Commissioner of Customs, 12 the Court, through the Chief Justice, declared that "it is
now well settled that goods imported without the release certificates required in Circulars Nos. 44 and 45 are
"merchandise of prohibited importation" as this expression is used in said section No. 1363 (f)." 13 Similarly, in
another 1969 case of Sare Enterprises vs. Commissioner of Customs, 14 the Court, per Mr. Justice Castro, in
reiterating the same doctrine, noted that "the ruling in Capulong 15 has been reiterated and reaffirmed in numerous
decisions of this Court 16 and it is now too late in the day to suggest that it should be reexamined which of course
the petitioner does not do."
4. The tax court thus failed to take note that articles of prohibited importation under section 102 of the code are of
two categories, viz, those which are absolutely prohibited or more commonly known as contraband, such as
explosives or prohibited drugs, and other articles which are considered qualifiedly prohibited referring to those
which may be imported subject to certain restrictions or limitations. But as has been observed, the legal effects of an
authorized importation of qualifiedly prohibited articles are the same as those of an importation of contraband: "an
article imported or attempted to be imported in violation of regulations of the Central Bank is considered an article
of prohibited importation and is subject to forfeiture in like manner as an article the importation of which is
absolutely prohibited under Section 102 of the Tariff & Customs Code." 17
None of the above-cited pertinent provisions of the tariff and customs code requires that the questioned
importation be of articles of absolutely prohibited importation for the customs authorities to prevent their entry or
importation or enforce their seizure and forfeiture.
Indeed, it will be noted that even as to articles of absolutely prohibited importation under section 102 of the code,
e.g. explosives or prohibited drugs, their limited importation is nevertheless permitted "when authorized by law" in
the case of dynamite and other explosives, and by duly authorized persons "for medicinal purposes only" in the case
of prohibited drugs. The granting of limited importation of such absolutely prohibited articles in the "exceptional
circumstances" authorized by law (to use the tax court's own phrase) no more nullifies the standing prohibition
against their importation than the release on December 1, 1970, cited by the tax court, of a small shipment of 100
cartons of fresh apples with a dollar value of $897.50 and a total weight of 2,087 kilos) 18 to the Savoy Philippines
Hotel would serve to annul the Central Bank subsisting ban against such so-called "no-dollar" imports; neither may it
be used as a lever to allow the release under bond of the present enormous shipment of 37,042 cartons of apples.
5. The President's Executive Order No. 282, dated January 4, 1971, increasing the tariff duty on apples, as cited in the
tax court's decision, does not serve in law to bring down the barrier against the importation of fresh apples as "no-
dollar" imports under Circular No. 295. It is obvious that the increased tariff duty thereby imposed on fresh apples
would be applicable and collectible only on lawful and valid importations thereof duly made in accordance with law,
more specifically, after full compliance with Central Bank requirements. In this regard, the Court has taken note that
it is stated in the pertinent Central Bank circulars that "no-dollar imports not covered by Circular No. 247, shall not
be issued, any release certificates" (per Circular No. 295, quoted supra. 19) Yet, respondent takes the Central Bank to
task for having in some instances disregarded its own circulars by granting "prior specific approval" for banned "no-
dollar imports" or by issuing release certificates therefor as exceptions for "favored parties", as in the Savoy Hotel
importation of fresh apples. The clearance granted Savoy Hotel for the small shipment of fresh apples may be readily
justifiable as one having been given to a tourist hotel as a dollar earner catering to the country's tourists industry.
But it might perhaps be desirable that the Central Bank spell out exceptions and the cases where it will grant "prior
specific approvals" as against the standing prohibition for the guidance of all concerned, so that it may not be
charged with acting arbitrarily and without any definite set of rules and guidelines that assures equal treatment and
equal application of its circulars to all.
Respondent importer in its answer at bar contends that since its contract with the Hongkong supplier for the
importation of fresh apples was entered into since March 26, 1969, when Central Bank Circulars 289, 294 and 295
had not yet been issued (the earliest thereof instituting the floating rate system having been issued and taken effect
on February 21, 1970), that the alleged shipment thereof which arrived at Manila one year and seven months later
on December 22, 1970 should not be deemed covered by the Central Bank ban. The tax court gave no credit to this
contention, since the contract presented covering assorted goods and foodstuffs with a total value of US
$2,288,977.00 called by its own terms for payment "by letters of credit from the Philippines or from other countries"
and provided a "life or term of contract" of "six months period after signing of this agreement" on May 22, 1969,
within which the importer had to order the commodities and the supplier had to have the goods ordered available.
20 Clearly, the term of the alleged contract of May 26, 1969 had expired seven months thereafter by the end of the
year 1969.
7. The tax court in fact rejected the importer's contention and ruled that while the apples "are not articles of
prohibited importation, they may be held liable for forfeiture for failure of petitioner to secure a release certificate
from the Central Bank, which liability may be determined in an appropriate seizure proceeding", ordering in the
meantime the release of the fruits to the importer under bond in view of their "perishable nature."
The tax court, however, incurred itself in contradiction in that under our settled doctrine and jurisprudence, supra,
goods imported without the corresponding release certificates required by Central Bank circulars are "articles of
prohibited importation" as the term is used in section 2530-f of the Customs Code (formerly section 1363-f of the
Revised Administrative Code), which subjects them to forfeiture. No Central Bank permit or release certificate could
be issued for the apples by virtue of the express ban against them in Circular 295. 21 Hence, they fell under the
explicit prohibition in the proviso of the very section cited by the tax court, viz, Section 2301, "that articles the
importation of which is prohibited by law shall not be released under bond." 22
8. The tax court had noted at the beginning of its decision that the customs authorities had opted to act under the
authority of section 1207 and prevent the entry or importation of the shipment of apples by refusing to allow its
discharge from the carrying vessel, thus abandoning in effect the seizure proceedings started previously by the
issuance of warrants of seizure and detention. 23 Respondent importer however did not take advantage thereof and
instead insisted on effecting entry and importation and on the unloading, storage and release under bond of the
fruits pending these proceedings. If the apples have deteriorated in storage, the importer has only itself to fault for
its wrongful insistence on the entry and release of the shipment, notwithstanding its being prohibited and contrary
to law.
9. The case at bar presents a timely occasion for the Court to clear certain past misconceptions and fallacies in regard
to the release under bond of seizure or detained properties, "conditioned for the payment of the appraised value of
the article and/or any fine, expenses and cots * which may be adjudged in the case", as provided in section 2301 of
the code. 24
The first two functions of the customs bureau are "a. the assessment and collection of the lawful revenues from
imported articles and all other dues, fees, charges, fines and penalties accruing under the tariff and customs laws"
and "b. the prevention and suppression of smuggling and other frauds upon the customs." 25
The lawful revenue are to be assessed and collected upon articles properly and lawfully imported into the
Philippines. "Where articles are of prohibited importation", section 1207 of the code imposes the primary duty upon
the collector "to exercise such jurisdiction in respect thereto as will prevent importation." Articles of prohibited
importation, which cover not only contraband or absolutely articles but also qualifiedly prohibited articles which are
sought to be imported, more precisely smuggled, in violation of Central Bank circulars, supra, are expressly made
subject to seizure and forfeiture under section 2530-f and section 2301 expressly enjoins that "articles the
importation of which is prohibited by law shall not be released under bond."
It is utterly fallacious, therefore, when such banned goods are nevertheless sought to be imported in violation of law,
to assume that it is to the interest of the Government, where the goods are perishable to release them to the
importer under bond to secure payment of the appraised value thereof in case they are finally declared forfeited in
favor of the Government.
For the code expressly prohibits the release under bond of such articles of prohibited importation. The Government
expects no revenue from such banned articles, since they are not allowed to be imported. Otherwise, the law's
prohibition would be rendered totally nugatory, since such banned articles, which are mostly luxury items, are in
great demand and command sky-high prices assuring great profit to the smuggler. The smuggler would have the
greatest profit motive to wreak havoc upon our currency by purchasing dollars at the highest black market rates to
purchase and bring in these high-profit luxury items. Should he succeed in smuggling them in, his venture is a
complete success. If he is caught, then all he has to do is put up a bond for the release of the goods "to secure
payment of the appraised value thereof" to the Government, and he can still realize a substantial profit from the sale
of the banned goods thus released to him. All the measures designed by the Central Bank to strengthen and stabilize
our peso and to check the unregulated flow of foreign exchange from the country with the ultimate end of setting
aright the country's economy and financial position would thereby be set at naught.
10. The Government's finance secretary and customs authorities appear to have realized the deleterious
consequences of the hitherto ambivalent attitude of customs officials in permitting release under bond of banned
article to the express prohibition of section 2301, when they issued Customs Administrative Order No. 19-70 dated
October 20, 1970, supra, declaring that "all importations seized and forfeited for violation of Central Bank circulars
shall not be allowed to be released under bond, either surety or cash, nor allowed to be redeemed." Such an
outright ban on release of seized goods in accordance with the law's mandate further removes occasion and
opportunity for corruption of customs officials in seeking the exercise of their "discretion" and authorizing release of
banned articles to favored parties.
Respondent importer's petition before the tax court was filed to seek judgment "sustaining [the importer's] right to
the discharge of its importation from the carrying vessel and its release under bond to it and declaring Customs
Administrative Order No. 19-70 null and void" as an alleged unauthorized and arbitrary modification or amendment
of the provisions of section 2301 of the tariff and customs code. As already shown above, the said administrative
reiteration of the express prohibition of the cited section against the release under bond of prohibited articles seized
and held for forfeiture by the customs authorities. The tax court of course made no pronouncement of alleged nullity
of the said administrative order, the validity of which cannot be gainsaid, under the ruling of Romualdez vs. Arca, 26
wherein in upholding the memorandum therein issued by the finance secretary to guide customs appraisers in
appraising the value of imported remnants, the Court held that: "since the memorandum is neither a law (statute),
nor an implementation of a law authorizing its issuance, and does not prescribe any penalty for its violation,
publication thereof is not necessary."
ACCORDINGLY, judgment is hereby rendered annulling and setting aside the decision dated April 23, 1971 and the
resolution dated May 3, 1971 of the court of tax appeals. The decision of petitioner commissioner of customs
appealed from by private respondent is instead affirmed and the petition of said respondent in the lower court is
dismissed, with costs in both instances against said respondent.
[G.R. No. 48176. July 21, 1944.]
MARTIN DIUQUINO, Plaintiff-Appellant, v. J. ANTONIO ARANETA, Defendant-Appellee.
Isabelo Ramos for Appellant.
Araneta, Zaragoza, Araneta & Bautista for Appellee.
SYLLABUS
1. NEGLIGENCE; ARTICLES 1902 and 1903, CIVIL CODE; OWNER’S RESPONSIBILITY FOR NEGLIGENCE OF DRIVER OF
AUTOMOBILE FOR PRIVATE USE. — It is needless to say that article 1902 is not applicable against the present
defendant — even assuming as true the allegation that he failed to exercise all the diligence of a good father of a
family in the selection of his chauffeur — because such failure on his part was not the proximate cause of the
damage complained of. He did not by such act or omission cause the damage in question. Said article would be
applicable against the defendant’s chauffeur alone, who himself was guilty of the negligent acts by which the
damage was caused. (Johnson v. David, 5 Phil., 663, 666-667.) It is, however, insisted for the appellant that the
appellee should be held responsible for the acts of his chauffeur under article 1903. But said article specifies the
persons who are held responsible for the acts and omissions of another; and, as found by this Court in the cases of
Johnson v. David, supra, and Chapman v. Underwood, 27 Phil., 374, "the driver does not fall within the list of persons
in Article 1903 of the Civil Code for whose acts the defendant would be responsible." It is not alleged that the
appellee is the owner or director of an establishment or business and that he was employing his chauffeur in such
business at the time the latter is alleged to have caused the damage.
2. ID.; ID.; ID. — We are not persuaded that the interpretation of the codal provisions in question heretofore made
by this Court in the cases above cited is wrong. Indeed, we feel that for the Court to so interpret said provisions as to
include persons other than those therein specified as liable for the acts and omissions of another would be an
invasion of the powers and prerogatives of the legislature. The later of the two cases above cited (Chapman v.
Underwood) was decided by this Court on March 28, 1914, and for nearly three decades the legislature has not seen
fit to change the law as interpreted by this Court.
DECISION
OZAETA, J.:
This is an appeal from a judgment of the Court of First Instance of Manila dismissing plaintiff’s complaint on the
ground that it states no cause of action against the defendant.
The complaint alleges that the defendant employed one Pedro Estrada as a chauffeur, who operated defendant’s car
in Baguio on April 6, 1940; that on said date the said chauffeur, in driving the defendant’s automobile No. 1-9940,
thru negligence, carelessness, and imprudence, caused the said automobile to bump and hit the plaintiff while the
latter was pouring water into the tank of the automobile belonging to his employer, Mr. Manuel Aguas, which was
then parked in front of Villa Carmelita in Baguio; that the plaintiff suffered physical injuries, his kneeball having been
broken, and was confined in the hospital from April 6 to May 4, 1940; that before the accident he was earning a
salary of P35 a month, but that as a result of the accident he became permanently disabled to perform his ordinary
work. The plaintiff claims damages from the defendant in the sum of P10,000, upon the allegation that the
defendant did not use and exercise all the diligence of a good father of a family in the selection of his said chauffeur.
The action is predicated upon article 1903, in relation to article 1902, of the Civil Code. These two articles read as
follows:jgc:chanrobles.com.ph
"Art. 1902. — Any person who by an act or omission causes damage to another by his fault or negligence shall be
liable for the damage so done.
"Art. 1903. — The obligation imposed by the next preceding article is enforcible, not only for personal acts and
omissions, but also for those of persons for whom another is responsible.
"The father, or in case of his death, or incapacity, the mother, is liable for any damages caused by the minor children
who live with them.
"Owners or directors of any establishment or business are, in the same way, liable for any damages caused by their
employees while engaged in the branch of the service in which employed, or on occasion of the performance of their
duties.
"The State is subject to the same liability when it acts through a special agent, but not if the damage shall have been
caused by the official upon whom properly devolved the duty of doing the act performed, in which case the
provisions of the next preceding article shall be applicable.
"Finally, teachers or directors of arts and trades are liable for any damages caused by their pupils or apprentices
while they are under their custody.
"The liability imposed by this article shall cease in case the persons subject thereto prove that they exercised all the
diligence of a good father of a family to prevent the damage."cralaw virtua1aw library
It is needless to say that article 1902 is not applicable against the present defendant — even assuming as true the
allegation that he failed to exercise all the diligence of a good father of a family in the selection of his chauffeur —
because such failure on his part was not the proximate cause of the damage complained of. He did not by such act or
omission cause the damage in question. Said article would be applicable against the defendant’s chauffeur alone,
who himself was guilty of the negligent acts by which the damage was caused. (Johnson v. David, 5 Phil., 663, 666-
667.) It is, however, insisted for the appellant that the appellee should be held responsible for the acts of his
chauffeur under article 1903. But said article specifies the persons who are held responsible for the acts and
omissions of another; and, as found by this Court in the cases of Johnson v. David, supra, and Chapman v.
Underwood, 27 Phil., 374, "the driver does not fall within the list of persons in Article 1903 of the Civil Code for
whose acts the defendant would be responsible." It is not alleged that the appellee is the owner or director of an
establishment or business and that he was employing his chauffeur in such business at the time the latter is alleged
to have caused the damage.
We are not persuaded that the interpretation of the codal provisions in question heretofore made by this Court in
the cases above cited is wrong. Indeed, we feel that for the Court to so interpret said provisions as to include
persons other than those therein specified as liable for the acts and omissions of another would be an invasion of
the powers and prerogatives of the legislature. The later of the two cases above cited (Chapman v. Underwood) was
decided by this Court on March 28, 1914, and for nearly three decades the legislature has not seen fit to change the
law as interpreted by this Court.
The judgment appealed from is affirmed, but no finding is made as to costs because the appellant has been allowed
to litigate as a pauper.
5. Punctuation Marks
G.R. No. L-24806 February 13, 1926
JULIO AGCAOILI, plaintiff-appellant,

vs.
ALBERTO SUGUITAN, defendant-appellee.
The appellant in his own behalf.

The appellee in his own behalf.
JOHNSON, J.:
This action was commenced in the Court of First Instance of the Province of Ilocos Norte. Its purpose was to obtain
the extraordinary legal writ of quo warranto. The petition was denied by the trial court and the plaintiff appealed.
The question presented by the appeal are:
(a) Is the provision of Act No. 3107, in so far as it provides that "justices of the peace shall be appointed to serve until
they have reached the age of 65 years," valid and constitutional, when applied to justices of the peace appointed
under Act No. 2041, section 1, to serve "during good behavior?" And,
(b) Is the present action barred by the statutes of limitations?
The facts involved in the decision of those questions are as follows:
(a) That the said Julio Agcaoili was appointed as justice of the peace of the municipality of Laoag, of the Province of
Ilocos Norte, by His Excellency, Francis Burton Harrison, on the 25th day of March, 1916, with authority "to have and
to hold the said office with all the powers, privileges, and emoluments thereunto of right appertaining unto him,
subject to the conditions prescribed by law.
The conditions prescribed by law" to which the appointee was "subject" at the time of his appointment, are found in
section 1 of Act No. 2041 (vol. 8 Public Laws, 153). Said section is amendment to section 67 of Act No. 136, and
provides among other things for the "appointment and term of the justices of the peace." It provides that one justice
of the peace and one auxiliary justice shall be appointed by the Governor-General, etc., for each municipality
organized according to the Municipal Code. Said section further provides that "All justices of the peace and auxiliary
justices shall hold office during good behavior . . . ." Said Act No. 2041 was adopted, the Philippine Legislature was
composed of the United States Commission and the House of Representatives.
(b) That on the 17th day of March, 1923, the Philippine Legislature, composed of the Senate and House of
Representatives, adopted Act No. 3107, which was "an Act to amend and repeal certain provisions of the
Administrative Code relative to the judiciary in order to reorganize the latter; increasing the number of judges for
certain judicial districts; increasing the salaries of judges of Courts of First Instance; vesting the Secretary of Justice
with authority to detail a district judge temporarily to a district or province other than his own; regulating the
salaries of justices of the peace; abolishing the municipal court and justice of the peace court of the City of Manila
and creating in lieu thereof a municipal court with three branches; regulating the salaries of clerks of court and other
subordinate employees of Courts of First Instance, and for other purposes.
Notwithstanding the fact that the title of said Act No. (3107), so far as the same relates to justice of the peace,
provides only for "regulating the salaries of justices of the peace," said Act in section 203 provides for "the
appointment and distribution of justices of the peace" with the proviso in said section ". . . That justices and auxiliary
justices of the peace shall be appointed to serve until they have reached the age of sixty-five years." Attention is here
called to the fact again that there is nothing in the title of the Act, which, in the slightest degree, indicates that said
Act contains provisions for "appointment of justices of the of the peace" nor as to the period during which they may
serve after appointment. Attention is also invited to the fact that the same section (203) contains provisions for the
jurisdiction of justices of the peace while section 207 contains provisions defining the "qualifications for justices of
the peace." Section 210 of said Act provides for the "filling of vacancies in the office of justices of the peace." There is
nothing in the title of the Act which in any way indicates that the Act contains said provisions. Attention is here
called to the provision of the Act of Congress of the 29th day of August, 1916, and to section 3 thereof, which
provides "That no bill which may be enacted into law shall embrace more than one subject, and that the subject shall
be expressed in the title of the bill." The effect of a violation of said provision of said Act of Congress will be
discussed later.
(c) That on the 9th day of April, 1923, the Undersecretary of Justice sent the following letter to the said Julio Agcaoili,
through the Judge of the Court of First Instance of the Third Judicial District, of the Province of Ilocos Sur. Said letter
is in the words and figures following:
MANILA, April 9, 1923
SIR: In view of the provision of section 203 of the Administrative Code as amended by section 1 of Act No. 3107,
which, in part, provides that justices and auxiliary justices of the peace shall be appointed to serve until they have
reached the age of sixty-five years, and in view of the fact that the record shows that you are over sixty-five years of
age already, I have the honor to hereby advise you that, upon receipt hereof, you cease to be a justice of the peace
by operation of said amendment of the Administrative Code.
Respectfully,
(Sgd.) LUIS P. TORRES

Undersecretary of Justice
Said letter was received by Julio Agcaoili, the justice of the peace, on the 26th day of April, 1923. It was handed to
him by the clerk of the Court of First Instance of the Province of Ilocos Norte.
(d) It will be noted that in the letter of April 9, 1923, the Secretary of Justice directed or ordered Julio Agcaoili, then
justice of the peace, "upon receipt of said letter, to cease to be a justice of the peace." Against the order contained
in said letter of April 9th, Julio Agcaoili entered a protest dated April 28, 1923, in the following language:
JUSTICE OF THE PEACE OF COURT OF LAOAG, ILOCOS NORTE

P. I.
April 28, 1923
The Hon. LUIS TORRES

Undersecretary of Justice of
the Philippine Islands
SIR: The undersigned, Julio Agcaoili, justice of the peace of Laoag, capital of the Province of Ilocos Norte, has the
honor to state that on April 26, 1923, he received, through the clerk of the Court of First Instance of Ilocos Norte,
your communication of April 9, 1923, informing the undersigned that, having attained the age of 65 years, he ceased
to be justice of the peace of Laoag under the provisions of section 1 of Act No. 3107, amending section 203 of the
Administrative Code, which is Act No. 2711 enacted in the year 1919, and which section 1 of said Act No. 3107
provides in part that the justices of the peace and auxiliary justices of the peace shall be appointed to serve until
they attain the age of 65 years.
With all due respect, the undersigned has the honor to state that he believes that the aforecited part of the
provision of section 1 of Act No. 3107 does not include those justices of the peace who had already been appointed
justices of the peace, like the undersigned, before the passage and enactment of said Act No. 3107 and the amended
Administrative Code, nor can this be the intention of the legislator, for if it were so, it should have so stated in order
that the justices of the peace already appointed, who were discharging the functions of the office and who had
attained the age of 65 years when said Act was passed and enacted, should cease from their office.
The undersigned was appointed of the peace of Laoag on March 25, 1916, and therefore under Act No. 2041,
enacted February 3, 1911. Section 1 of this Act, which amended section 67 of Act No. 136, was not amended by any
subsequent Act and provides: All justices if the peace and auxiliary justices shall hold office during good behavior and
those now in office who have not the qualifications required by this Act shall continue in office until their successors
are appointed.
Has section 203 of the Administrative Code amended or repealed section 1 of Act No. 2041? The undersigned
believes that it has not, judging from the context of both laws, nor was it repealed because if this were the case the
Governor- General would have renewed the appointments of all the justices of the peace and auxiliary justices of the
peace under said section 203 of the Administrative Code.
The undersigned was appointed justice of the peace of Laoag on March 25, 1916, under the said Act No. 2041 and
continues in the discharge of the duties of the office up to the present time, without the Governor-General having
renewed his appointment under said section 203 of the Administrative Code.
Then Act No. 3107 came, section 1 of which amends section 203 of the Administrative Code.
Has this amendment retroactive effect? In the first place the legislature could not give or have given this Act such a
character, and if it had intended to do so, it would have so stated; and in the second place, because not only is such
express declaration lacking in the law but Act No. 3107 very clearly provides that the justices of the peace and
auxiliary justices of the peace to be appointed shall hold office until they attain the age of 65 years.
Very respectfully,
(Sgd.) JULIO AGCAOILI

Justice of the Peace of Laoag, Ilocos Norte
A further protest against the said order of the Secretary of Justice was made by Julio Agcaoili on the 7th day of July,
1923, and is couched in the following language:
I, Julio Agcaoili, Justice of the Peace of the Municipality of Laoag, Ilocos Norte, do hereby state that on this day, July
7, 1923, Mr. Buenaventura Ocampo, Provincial Fiscal of Ilocos Norte, appeared at my office and thereupon showed
me the telegram of Undersecretary of Justice Torres, addressed to said provincial fiscal. After reading said telegram I
asked the provincial fiscal to furnish me a copy thereof and he furnished me a copy of the telegram.
Said telegram of the Undersecretary of Justice in substance orders the provincial fiscal; to cause me to deliver the
office and all the documents and records thereof to the auxiliary justice of the peace, because according to said
Undersecretary of Justice I must cease from the office under Act No. 3107, and that I be prosecuted for violation of
article 370 of the Penal Code should I fail to comply with the telegram sent to me on the 2d instant by the same
Undersecretary of Justice.
I do also state that I have never had any malicious intention to disobey the orders of the Undersecretary of Justice,
Hon. Torres, one given telegram and the other by letter. I only desired to study the spirit of the law and this is the
reason why I did not leave the office until the present time, because I was from the office of the justice of the peace
under the provision of Act No. 2041 under which I was appointed justice of the peace of the capital, and which Act
was not repealed by any subsequent one, nor by Act No. 3107, which Act No. 2041 provides that the justices of the
peace to be appointed under it, should hold office during good behavior. This Act does not say anything as to
limitation of age, and therefore I believe myself entitled to continue in, and retain the office.
I do also state that lest the Undersecretary of Justice should think that I do not duly respect the constituted
authorities, I now deliver under protest the office of the justice of the peace of Laoag and all its documents and
records, as well as the furniture therein contained, to Mr. Alberto Suguitan, auxiliary justice of the peace, in the
presence of the provincial fiscal, in compliance with the telegram of the Undersecretary of Justice, Hon. Torres,
received by me through the provincial fiscal of Ilocos Norte. I make under protest the delivery of the office and its
documents and records because I think, as I have stated, that I must not cease from the office of justice of the peace,
and in order that my right may be defined, I shall institute an action in the proper court of justice to decide the case.
(Sgd.) JULIO AGCAOILI
I received the things of the office.
(Sgd.) ALBERTO SUGUITAN
In the presence of:
(Sgd.) BUENA V. OCAMPO Provincial Fiscal
Julio Agcaoili patiently waited in vain for a resolution by the Secretary of Justice of the protest which he presented
on the 28th day of April and on the 7th day of July, 1923; and not having received any reply to his protest, filed a
petition for a writ of quo warranto in the Court of First Instance of the Province of Ilocos Norte on the 23d day of
April, 1925, which petition was amended by the filing of another petition in the same court on the 8th day of
September, 1925.
A careful reading of the two protests (April 28, 1923, and July 7, 1923) shows that they contain arguments in support
thereof which, in all equity and justice, demanded a reply, but no reply was forthcoming. The arguments in support
of his protests find a counterpart and are fully supported in the decision of this court in the case of Segovia vs. Noel,
of March 4, 1925 (47 Phil., 543), wherein the Supreme Court held that the Act No. 3107 could not be applied to and
enforced against justices of the peace who had been appointed prior to the 17th day of March, 1923. Had the
Secretary of Justice answered said protests, the great injustice which has been done to Julio Agcaoili perhaps might
have been avoided.
(e) That Julio Agcaoili being threatened with a criminal prosecution unless he turned his office over to the auxiliary
justice of the peace, and to avoid scandal, disgrace and humiliation which might come to him by virtue of said
prosecution, on the 7th day of July, 1923, still protesting, delivered the possession of his office, as justice of the
peace, to the auxiliary justice of the peace of the municipality of Laoag. It is a matter of common knowledge that
Julio Agcaoili had been entrusted with the highest office in his province which the people could confer upon him.
The petitions presented by Julio Agcaoili in the Court of First Instance, the first on the 23d day of July, 1925, and the
second on the 8th day of September, 1925, contain, in resume, the foregoing facts. To the petition the respondent
Alberto Suguitan answered and set up the defense of prescription. Upon the issue thus presented, the Honorable
Fermin Mariano, judge, sustained the defense of prescription and denied the petition for the extraordinary legal
remedy of quo warranto. From that judgment Julio Agcaoili appealed, and now contends in a vigorous and logical
argument that his remedy has not prescribed.
Considering the first question suggested above, attention is again called to one of the provisions of section 3 of the
Jones Law (Act of Congress, August 29, 1916, vol. 12, Public Laws of the Philippine Islands). The "Jones Law" is the
constitution of the Philippine Islands providing a government therefor. Subparagraph 16 of section 3 of the Jones law
provides "That no bill which may be enacted into law shall embrace more than one subject, and that subject shall be
expressed in the title of the bill." Under said provision, may the legislature adopt a law which contains in the title of
the Act? The effect of violating said provision of the Jones Law has been brought before the courts many times. The
effect of violating said provision has already been passed upon by this court. (Central Capiz vs. Ramirez, 40 Phil., 883,
889.)
In the case of Central Capiz vs. Ramirez, supra, it was decided that said provision of the Jones Law was mandatory
and not directory and its violation was fatal to any provision of the law to which no reference was made in the title.
In the decision of this court in the case of Central Capiz vs. Ramirez, the decisions of the courts of many of the states
of the Union were followed. Many of the constitutions of the States of the Union contain similar provision to that
quoted above from the Jones Law. Among such states may be mentioned Alabama, California, Georgia, Idaho,
Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Missouri, Montana, Nebraska,
Nevada, New Jersey, New York, Ohio, Oregon, Pennsylvania, South Carolina, Texas, Tennessee, Virginia, West
Virginia, Wisconsin and Wyoming.
Mr. Justice Sutherland, now an Associate Justice of the Supreme Court of the United States, in his valuable work on
"Statutory Construction," vol. 1, 2nd ed.) at section 111, states the reason and the purpose of such a constitutional
provision. He says:
In the construction and application of this constitutional restriction the courts have kept steadily in view the
correction of the mischief against which it was aimed. The object is to prevent the practice, which was common in all
legislative bodies where no such restriction existed, of embracing in the same bill incongruous matters having no
relation to each other, or to the subject specified in the title, by which measures were often adopted without
attracting attention. Such distinct subjects represented diverse interests, and were combined in order to unite the
members of the legislature who favor either in support of all. These combinations were corruptive of the legislature
and dangerous to the state. Such omnibus bills sometimes included more than a hundred sections on as many
different subjects, with a title appropriate to the first section, and for other purposes.
The failure to indicate in the title of the bill the object intended to be accomplished by the legislation often resulted
in members voting ignorantly for measures which they would not knowingly have approved. And not only were
legislators thus misled, but the public also; so that legislative provisions were stealthily pushed through in the closing
hours of a session, which, having no merit to commend them, would have been made odious by popular discussion
and remonstrance if their pendency had been seasonably announced. The constitutional clause under discussion is
intended to correct these evils; to prevent such corrupting aggregations of incongruous measures, by confining each
act to one subject; to prevent surprise and inadvertence by requiring that subject or object to be expressed in the
title.
The Supreme court of the State of Alabama, in discussing the effect of the violation of a similar provision of the
constitution of that state in the cases of Walker vs. State (49 Ala., 329) and Lindsay vs. United States Savings and
Loan Association (120 Ala., 156), had the following to say, quoting with approval, what Mr. Justice Cooley in his
Constitutional Limitations, at page 143, had said upon that question:
The object sought to be accomplished, and the mischief proposed to be remedied by this provision, are well known. .
. . Legislative assemblies for the dispatch of business often pass bills by their titles only, without requiring them to be
read. A specious title sometimes covered a legislation which, if its real character had been disclosed, would not have
commanded assent. To prevent surprise and fraud on the legislature is one of the purposes this provision was
intended to accomplish. Before the adoption of this provision, the title of a statute was often no indication of its
subject or contents. . . .
An evil this constitutional requirement was intended to correct was the blending in one and the same statute of such
things as were diverse in their nature, and were connected only to combine in favor of all the advocates of each,
thus often securing the passage of several measures, no one of which could have succeeded on its own merits. Mr.
Cooley thus sums up his review of the authorities, defining the objects of this provision: It may, therefore, be
assumed as settled, that the purpose of these provisions was: First, to prevent hodge-podge, or log-rolling
legislation; second, to prevent surprise or fraud upon the legislature, by means of provisions in bills of which the
titles gave no information, and which might therefore be overlooked and carelessly and unintentionally adopted;
and, third, to fairly apprise the people, through such publication of legislative proceedings as is usually made, of the
subjects of legislation that are being considered, in order that they may have opportunity of being heard thereon, by
petition or otherwise if they shall so desire. (49 Ala., 330, 331.)
The purposes of constitutional requirement must be borne steadily in mind, when it becomes necessary to
determine whether there has been legislative observance of it. The exposition of these purposes by Judge Cooley is
accepted, we believe, in all the states in which a like limitation prevails. . . . (120 Ala., 172.)
In the case of People vs. Parks (58 Cal., 624) the Supreme Court of the State of California had occasion to discuss the
question now before us and said:
At the least, then two heterogeneous subjects are embraced in the act, one of which is not expressed in the title,
and they cannot be segregated. The title does not express the objects of legislation embodied in the provisions of
the act. It is, therefore, narrower than the body of the act, and fails to impart that notice of the measures enacted,
which the Constitution requires. To prohibit such legislation was the sole end and aim of the constitutional
requirement. The practice, says the Supreme Court of Missouri, of comprising in one bill subjects of a diverse and
antagonistic nature, in order to combine in its support members who were in favor of particular measures, but
neither of which could command the requisite majority on its own merits, was found to be not a corruptive influence
in the Legislature itself, but destructive of the best interests of the State. But this was not more detrimental than
that other pernicious practice, by which, through dexterous and unscrupulous management, designing men inserted
clauses in the bodies of bills, of the true meaning of which the titles gave no indication, and by skillful maneuvering
urged them on to their passage. These things led to fraud and injury, and it was found necessary to apply a
corrective in the shape of a constitutional provision. (City of St. Louis vs. Tiefel, 42 Mo., 590.) The provision has been
framed in the constitutions of many of the States of the Union; and the courts, whenever it has come before them,
have liberally construed it as the will of the people in the interests of honest legislation.
Decisions to the same effect are found in the following cases: City of St. Louis vs. Tiefel (42 Mo., 578); Cannon vs.
Mathes (8 Heisk [Tenn.], 504); Ryerson vs. Utley (16 Mich., 269); Board of Public Education for the City of Americus
vs. Barlow (49 Ga., 232); Spier vs. Baker (120 Cal., 370).
Mr. Justice Sutherland, in a further discussion of the question, at section 112 of his work on Statutory Construction,
said:
The efficiency of this constitutional remedy to cure the evil and mischief which has been pointed out depends on
judicial enforcement; on this constitutional injunction being regarded as mandatory, and compliance with it essential
to the validity of legislation. The mischief existed notwithstanding the sworn official obligation of legislators; it might
be expected to continue notwithstanding that the obligation is formulated and emphasized in this constitutional
injunction, if it be construed as addressed exclusively to them, and only directory. It would, in a general sense, be a
dangerous doctrine to announce that any of the provisions of the constitution may be obeyed or disregarded at the
mere will or pleasure of the legislature, unless it is clear beyond all question that such was intention of the framers
of that instrument. It would seem to be a lowering of the proper dignity of the fundamental law to say that it
descends to prescribing rules of order in unessential matters which may be followed or disregarded at pleasure. The
fact is this: That whatever constitutional provision can be looked upon as directory merely is very likely to be treated
by the legislature as if it was devoid of moral obligation, and to be therefore habitually disregarded.
In the case of Cannon vs. Mathes, supra, Mr. Chief Justice Nicholson, in discussing the effect of the violation of a
constitutional provision like the one before us, said:
* * * This is a direct, positive, and imperative limitation upon the power of the Legislature. It matters not that a bill
has passed through three readings in each house, on three different days, and has received the approval of the
Governor; still it is not a law of the State if it embraces more than one subject. . . .
The Supreme Court of Alabama, in the case of Walker vs. State, supra, said:
It is settled law of this court, founded on reasoning which seems to us unanswerable, that this provision of the
Constitution is not a mere rule of legislative procedure, directory to the general assembly, but that it is mandatory,
and it is the duty of courts to declare void any statute not conforming to it. . . .
Mr. Justice Cooley in his valuable work on Constitutional Limitations (pp. 179. 180) states that our courts have held,
without exception, that such constitutional provision is mandatory.
Considering that the great weight of authority is to the effect that the provision like the one above quoted from the
Jones Law is mandatory; and considering that there is nothing in the title of Act No. 3107 which indicates in the
slightest degree that said Act contains a provision "that justices and auxiliary justices of the peace shall be appointed
to serve until they have reached the age of sixty-five years," we are forced to the conclusions that, that provision is
illegal, void and contrary to the mandatory provision of the Jones Law, and that said law (3107) cannot be applied to
justices and auxiliary justices of the peace who were appointed prior to the 17th day of March, 1923; and that when
Julio Agcaoili was forcibly, by means of threats and intimidation, ordered to leave his office as justice of the peace,
he was forced to do so illegally, without just cause, and should therefore be restored to his position as justice of the
peace of the municipality of Laoag, without delay.
With reference to the second question above suggested, in re prescription or limitation of the action, it may be said
that originally there was no limitation or prescription of action in an action for quo warranto, neither could there be,
for the reason that it was an action by the Government and prescription could not be plead as a defense to an action
by the Government. The ancient writ of quo warranto was a high prerogative writ in the nature of a writ of right by
the King against any one who usurped or claimed any office, franchise or liberty of the crown, to inquire by what
authority the usurper supported his claim, in order to determine the right. Even at the present time in many of the
civilized countries of the world the action is still regarded as a prerogative writ and no limitation or prescription is
permitted to bar the action. As a general principle it may be stated that ordinary statutes of limitation, civil or penal,
have no application to quo warranto proceeding brought to enforce a public right. (McPhail vs. People ex rel.
Lambert, 160 Ill., 77; 52 Am. St. Rep., 306; People ex rel. Moloney vs. Pullman's Palace Car Co., 175 Ill., 125; 64 L. R.
A., 366.)
In all public matters a writ of quo warranto is a writ of right at the suit of the state, and issues as a matter of course
upon demand of the proper officer (State ex rel. Washington County vs. Stone, 25 Mo., 555; Commonwealth vs.
Allen, 128 Mass., 308), and the court has no authority to withhold leave to file a petition therefor.
If the statute of limitation or prescription cannot run against the state, it is difficult to understand how in the same
action they may be used as a defense against a public officer who has been forcibly, with threats and intimidation,
ousted from a public office by the Government itself as was done in the present case. The principle that acts of
limitation do not bind the King (the State) or the people, applies to proceeding by quo warranto, the rule being that
the representative of the state may file an information on behalf of the people at any time; and the lapse of time
constitutes no bar to the proceeding, in conformity with the maxim Nullum tempus occurrit regi. (Catlett vs. People
ex rel. States's Attorney, 151 Ill., 16.) For the state to claim that the statutes of limitation do not apply to it and yet
insist that it may plead such statutes to bar the action of quo warranto brought by one of its public officials whom it
itself has ousted from office, appears to us to be unjust, unfair, unreasonable, and not within the contemplation of
sound jurisprudence.
So much of the general rule concerning limitation of action in quo warranto proceedings. Is there a statute in the
Philippine Islands of limitation, limiting the action of a public official of the Government who has been duly
appointed and qualified, and who has, by force and intimidation, been ousted from such office, to defeat his action
of quo warranto?
On the 7th day of August, 1901, the United States Philippine Commission adopted Act No. 190 which had been
considered privately and publicly for several months theretofore. Its provisions were published throughout the
Philippine Islands long prior to its adoption. While said Act was adopted on the 7th day of August, 1901, it did not
take effect, even though it had been published, until the 1st day of October, 1901. (Act No. 212.) An examination of
said Act (190) shows that it provides remedies for the usurpation of office or franchise, etc. (secs. 197-216). Said Act
No. 190 was published in both English and Spanish. Section 216, in English, provided that "Nothing herein contained
shall authorize an action against a corporation for forfeiture of charter, unless the same be commenced within five
years after the act complained of was done or committed; nor shall an action be brought against an officer to be
ousted from his office unless within one year after the cause of such ouster, or the right to hold the office, arose."
The same section (216), as published in Spanish, reads as follows: "Ninguna de estas disposiciones facultara la
iniciacion de un juicio contra una corporacion por la perdida de sus derechos de concesion, a menos que el juicio se
lleve a efecto dento de los cinco años siguente a la comision u omision del hecho objeto de la accion. Tampocose
podra iniciar un juicio la persona que ejerza un cargo en una corporaciuon para desposeerla, a menos que se lleve a
efecto dentro del año siguente a la fecha de la comision del hecho que dio motivo a su privacion, o que se puso en
duda su derecho para ocupar el cargo."
Said section (216), as published in Spanish and translated into English, reads as follows: "Nothing herein contained
shall authorize an action against a corporation for forfeiture of its corporate rights, unless the same be commenced
within five years after the commission or omission complained of took place. Neither may an action be brought
against an officer to oust him from office, unless the same is commenced within one year after the commission of
the act which caused the deprivation thereof, or after the right to hold the office arose."
Said section 216, as above quoted in Spanish, was published in vol. 1 of the Public Laws of the Philippine Islands and
distributed to the public officers throughout the Philippine Islands. It is a fact of general information that even now,
in 1926, the Spanish copy of the Public Laws are consulted by the people in remote parts of the Philippine Islands for
the purpose of knowing what the law is. It is not strange, therefore, that the appellant did not believe that said
section 216 applied to public officers; that it only applied to officers of corporations as it appeared in the Spanish
translation. Is it just and fair and reasonable for the Government of the Philippine Islands to oust one of its officers
from an office to which he had been legally appointed, by force and intimidation and without just cause, and then to
defeat his action in quo warranto by invoking the provisions of a public statute, different from the one which the
Government itself had furnished its public officers? The appellant is familiar with the Spanish but not with the
English language. He naturally relied upon the Spanish version of the law for his information as to what the law really
was. Not only had the appellant the right to rely upon the provisions of section 216 as they appeared in Spanish in
the Public Laws of the Philippine Islands, but the reading of the three or four sections immediately preceding section
216 will show that they refer specifically to corporations only. The appellant, therefore, was justified in believing that
said section 216 as it appeared in Spanish was correct. At least the Government should give him credit with having in
good faith.
But, even granting that the appellant is bound by the provisions of section 216 as it appears in English, is the same
applicable to the appellant? By reference to said section above quoted in English, it will be seen that after the word
"committed" there is a semicolon. Does that which follows the semicolon have reference to the same subject matter
which precedes it? A semicolon is a mark of grammatical punctuation, in the English language, to indicate a
separation in the relation of the thought, a degree greater than that expressed by a comma, and what follows that
semicolon must have relation to the same matter which precedes it. A semicolon is not used for the purpose of
introducing a new idea. A semicolon is used for the purpose of continuing the expression of a thought, a degree
greater than that expressed by a mere comma. It is never used for the purpose of introducing a new idea. The
comma and semicolon are both used for the same purpose, namely, to divide sentences and parts of the sentences,
the only difference being that the semicolon makes the division a little more pronounced than the comma. The
punctuation used in a law may always be referred to for the purpose of ascertaining the true meaning of a doubtful
statute. It follows therefore that, inasmuch as all of the provisions of said section 216 which precede the semicolon
refer to corporations only, that which follows the semicolon has reference to the same subject matter, or to officers
of a corporation.
But even granting, for the sake of the argument, that the word "officer" as used in the latter part of said section
applies to public officers who have been ousted from their position, and not only to officers of corporations, then we
have the question presented: Had the one year mentioned in said section expired on the 23d day of April, 1925,
when the first complaint, was filed in the present action? When did the year begin to run if said section is applicable
to the appellant?
It will be remembered that on the 7th day of July, 1923, the appellant was ousted from his office as justice of the
peace of the municipality of Laoag. Not only did he surrender his office on that date under protest, but also on the
28th day of April, 1923, when he was notified by the Secretary of Justice that he cease to be a justice of the peace of
his municipality, he then protested and gave a long and lucid argument in support of his protest. In all justice to him,
did he not have a right, without any legal action to protect his right, to await the solution of his protest of the 28th
day of April, 1923? He had a right to believe that the grounds upon which his protest was based would be convincing
to the Secretary of Justice and that he would not be removed. Until this very hour the record contains no reply from
the Secretary of Justice and no answer whatever to the legal grounds presented by the appellant upon his right to
continue as justice of the peace and not to be ousted.
In our opinion even granting that section 216 is applicable to the appellant, the period of prescription had not begun
and run at the time of the commencement of the present action. He was justified in delaying the commencement of
his action until an answer to his protest had been made. He had right to await the answer to his protest, in the
confident belief that it would be resolved in his favor and that action would unnecessary.
It is contended, however, that the question before us was answered and resolved against the contention of the
appellant in the case of Bautista vs. Fajardo (38 Phil., 624). In that case no question was raised nor was it even
suggested that said section 216 did not apply to a public officer. That question was not discussed nor referred to by
any of the parties interested in that case. It has been frequently decided that the fact that a statute has been
accepted as valid, and invoked and applied for many years in cases where its validity was not raised or passed on,
does not prevent a court from later passing on its validity, where the question is squarely and properly raised and
presented, Where a question passes the court sub silentio, the case in which the question was so passed is not
binding on the Court (McGirr vs. Hamilton and Abreu, 30 Phil., 563), nor should it be considered as a precedent. (U.
S. vs. Noriega and Tobias, 31 Phil., 310; Chicote vs. Acasio, 31 Phil., 401; U. S. vs. More, 3 Cranch [U. S.], 159, 172; U.
S. vs. Sanges, 144 U. S., 310, 319; Cross vs. Burke, 146 U. S., 82.) For the reasons given in the case of McGirr vs.
Hamilton and Abreu, supra, the decision in the case of Bautista vs. Fajardo, supra, can have no binding force in the
interpretation of the question presented here.
The present case is anomalous under American sovereignty. An officer was appointed in accordance with the law to
the judiciary to serve "during good behavior." After he had faithfully and honestly served the Government for a
number of years the legislature adopted a new law which arbitrarily, without giving any reason therefore, provided
that said officer cease to be such when he should reach the age of 65 years. Said law contained no express provision
or method for its enforcement. The Executive Department, through its Undersecretary of Justice, without any
authority given in said law, notified the said officer that he was no longer an officer in the judicial department of the
Government and must vacate his office and turn the same over to another, who was designated by said
Undersecretary. When the officer protested against such arbitrary action, giving reasons therefor, and without
answering said protest, he was threatened with a criminal prosecution if he did not immediately vacate his office.
The history of this case reads more like a story of the Arabian Nights than like a procedure under a well-organized
Government. It seems impossible to believe, and we could not believe it, were the facts not actually supported by
the record.
Why the Undersecretary of Justice did not follow the orderly procedure marked out by Act No. 190 is not explained.
The appellant was given no hearing. Even his protest, couched in most humble and respectful language, fell upon
deaf ears. Absolute indifference was shown to the respectful protest and the able argument given in support
thereof. The only answer to his protest was a threat of a criminal prosecution if he did not vacate his office. His
humility was met with austereness. His humble petition was met with a threat. His patient waiting for a reply to his
protest was ended by a demand that he be prosecuted for refusing to comply with an order by one who was not
willing to follow the well-defined and well-beaten road of "due process of law" by preferring charges and giving the
appellant an opportunity to be heard and to defend his right. Nothing of that character took place. The whole
procedure, from beginning to end, in ousting the appellant from an office to which he had been legally appointed
and against whom no complaint has been made, is anomalous in the jurisprudence under the American flag.
Believing as I do, that the success of free institutions depends upon a rigid adherence to the fundamentals of the
law, I have never yielded, and I hope that I may never yield, to considerations of expediency in expounding it. There
is also some plausible reason for the latitudinarian constructions which are resorted to for the purpose of acquiring
power — some evil to be avoided, or some good to be attained by pushing the powers of the Government beyond
their legitimate boundary. It is by yielding to such influences that the courts and legislatures are gradually
undermining and finally overthrowing constitutions. It is by yielding to such influences that constitutions are
gradually undermined and finally overthrown. It has been, and is my purpose, so far as it is possible for me, to follow
the fundamental law does not work well the people or the legislature may amend it. If, however, the legislature or
the courts undertake to cure defects in the law by forced and unnatural constructions, they inflict a would upon the
constitution of the state which nothing can cure. One step taken by the legislature or the judiciary in enlarging the
powers of the Government, opens the door for another which will be sure to follow; and so the process goes on until
all respect for the fundamental law is lost and the powers of the Government are just what those in authority are
pleased to call them. (Oakley vs. Aspinwall, 3 Comstock [N. Y.], 547, 568.) I cannot give my consent to a rule or
doctrine which will permit a Government to throw an honest and efficient official out of office without reason and
without authority of law, refuse to consider a protest, and then permit the application of a law to prevent a recovery
of that which he has lost illegally and without reason.
The judgment appealed from should be revoked, and a judgment should be entered ordering the restoration of the
appellant to the office from which he was illegally rejected. We should follow the effect of the doctrine announced
solemnly by this court in the case of Segovia vs. Noel (47 Phil., 543). So ordered.
G.R. No. L-8848 November 21, 1913
THE UNITED STATES, plaintiff-appllee,

vs.
WILLIAM C. HART, C. J. MILLER, and SERVILIANO NATIVIDAD, defendants-appellants.
Pedro Abad Santos, for appellants Hart and Natividad.

W. H. Booram, for appellant Miller.
Office of the Solicitor-General Harvey, for appellee.
TRENT, J.:
The appellants, Hart, Miller, and Natividad, were arraigned in the Court of First Instance of Pampanga on a charge of
vagrancy under the provisions of Act No. 519, found guilty, and were each sentenced to six months' imprisonment.
Hart and Miller were further sentenced to a fine of P200, and Natividad to a fine of P100. All appealed.
The evidence of the prosecution as to the defendant Hart shows that he pleaded guilty and was convicted on a
gambling charge about two or three weeks before his arrest on the vagrancy charge; that he had been conducting
two gambling games, one in his saloon and the other in another house, for a considerable length of time, the games
running every night. The defense showed that Hart and one Dunn operated a hotel and saloon at Angeles which did
a business, according to the bookkeeper, of P96,000 during the nineteen months preceding the trial; that Hart was
also the sole proprietor of a saloon in the barrio of Tacondo; that he raised imported hogs which he sold to the Army
garrison at Camp Stotsenberg, which business netted him during the preceding year about P4,000; that he was
authorized to sell several hundred hectares of land owned by one Carrillo in Tacondo; that he administered, under
power of attorney, the same property; and that he furnished a building for and paid the teacher of the first public
school in Tacondo, said school being under Government supervision.
The evidence of the prosecution as to Miller was that he had the reputation of being a gambler; that he pleaded
guilty and was fined for participating in a gambling game about two weeks before his arrest on the present charge of
vagrancy; and that he was seen in houses of prostitution and in a public dance hall in Tacondo on various occasions.
The defense showed without contradiction that Miller had been discharged from the Army about a year previously;
that during his term of enlistment he had been made a sergeant; that he received rating as "excellent" on being
discharged; that since his discharge he had been engaged in the tailoring business near Camp Stotsenberg under
articles of partnership with one Burckerd, Miller having contributed P1,000 to the partnership; that the business
netted each partner about P300 per month; that Miller attended to business in an efficient manner every day; and
that his work was first class.
The evidence of the prosecution as to Natividad was that he had gambled nearly every night for a considerable time
prior to his arrest on the charge of vagrancy, in the saloon of one Raymundo, as well as in Hart's saloon; that
Natividad sometimes acted as banker; and that he had pleaded guilty to a charge of gambling and had been
sentenced to pay a fine therefor about two weeks before his arrest on the vagrancy charge. The defense showed
that Natividad was a tailor, married, and had a house of his own; that he made good clothes, and earned from P80 to
P100 per month, which was sufficient to support his family.
From this evidence it will be noted that each of the defendants was earning a living at a lawful trade or business,
quite sufficient to support himself in comfort, and that the evidence which the prosecution must rely upon for a
conviction consists of their having spent their evenings in regularly licensed saloons, participating in gambling games
which are expressly made unlawful by the Gambling Act, No. 1757, and that Miller frequented a dance hall and
houses of prostitution.
Section 1 of Act No. 519 is divided into seven clauses, separated by semicolons. Each clause enumerates a certain
class of persons who, within the meaning of this statute, are to be considered as vagrants. For the purposes of this
discussion, we quote this section below, and number each of these seven clauses.
(1) Every person having no apparent means of subsistence, who has the physical ability to work, and who neglects to
apply himself or herself to some lawful calling; (2) every person found loitering about saloons or dram shops or
gambling houses, or tramping or straying through the country without visible means of support; (3) every person
known to be a pickpocket, thief, burglar, ladrone, either by his own confession or by his having been convicted of
either of said offenses, and having no visible or lawful means of support when found loitering about any gambling
house, cockpit, or in any outlying barrio of a pueblo; (4) every idle or dissolute person or associate of known thieves
or ladrones who wanders about the country at unusual hours of the night; (5) every idle peron who lodges in any
barn, shed, outhouse, vessel, or place other than such as is kept for lodging purposes, without the permission of the
owner or person entitled to the possession thereof; (6) every lewd or dissolute person who lives in and about houses
of ill fame; (7) every common prostitute and common drunkard, is a vagrant.
It is insisted by the Attorney-General that as visible means of support would not be a bar to a conviction under any
one of the last four clauses of this act, it was not the intention of the Legislature to limit the crime of vagrancy to
those having no visible means of support. Relying upon the second clause to sustain the guilt of the defendants, the
Attorney-General then proceeds to argue that "visible means of support" as used in that clause does not apply to
"every person found loitering about saloons or dram shops or gambling houses," but is confined entirely to "or
tramping or straying through the country." It is insisted that had it been intended for "without visible means of
support" to qualify the first part of the clause, either the comma after gambling houses would have been ommitted,
or else a comma after country would have been inserted.
When the meaning of a legislative enactment is in question, it is the duty of the courts to ascertain, if possible, the
true legislative intention, and adopt that construction of the statute which will give it effect. The construction finally
adopted should be based upon something more substantial than the mere punctuation found in the printed Act. If
the punctuation of the statute gives it a meaning which is reasonable and in apparent accord with the legislative will,
it may be used as an additional argument for adopting the literal meaning of the words of the statute as thus
punctuated. But an argument based upon punctuation alone is not conclusive, and the courts will not hesitate to
change the punctuation when necessary, to give to the Act the effect intended by the Legislature, disregarding
superfluous or incorrect punctuation marks, and inserting others where necessary.
The Attorney-General has based his argument upon the proposition that neither visible means of support nor a
lawful calling is a sufficient defense under the last four paragraphs of the section; hence, not being universally a
defense to a charge of vagrancy, they should not be allowed except where the Legislature has so provided. He then
proceeds to show, by a "mere grammatical criticism" of the second paragraph, that the Legislature did not intend to
allow visible means of support or a lawful calling to block a prosecution for vagrancy founded on the charge that the
defendant was found loitering around saloons, dram shops, and gambling houses.
A most important step in reasoning, necessary to make it sound, is to ascertain the consequences flowing from such
a construction of the law. What is loitering? The dictionaries say it is idling or wasting one's time. The time spent in
saloons, dram shops, and gambling houses is seldom anything but that. So that under the proposed construction,
practically all who frequent such places commit a crime in so doing, for which they are liable to punishment under
the Vagrancy Law. We cannot believe that it was the intention of the Legislature to penalize what, in the case of
saloons and dram shops, is under the law's protection. If it be urged that what is true of saloons and dram shops is
not true of gambling houses in this respect, we encounter the wording of the law, which makes no distinction
whatever between loitering around saloons and dram shops, and loitering around gambling houses.
The offense of vagrancy as defined in Act No. 519 is the Anglo-Saxon method of dealing with the habitually idle and
harmful parasites of society. While the statutes of the various States of the American Union differ greatly as to the
classification of such persons, their scope is substantially the same. Of those statutes we have had an opportunity to
examine, but two or three contain a provision similar to the second paragraph of Act No. 519. (Mo. Ann. Stat., sec.
2228; N. D. Rev. Codes, sec. 8952; N. M. Comp. Laws 1897, sec. 1314.) That the absence of visible means of support
or a lawful calling is necessary under these statutes to a conviction for loitering around saloons, dram shops, and
gambling houses is not even negatived by the punctuation employed. In the State of Tennessee, however, we find an
exact counterpart for paragraph 2 of section 1 of our own Act (Code of Tenn., sec. 3023), with the same
punctuation:lawph!1.net
. . . or of any person to be found loitering about saloons or dram shops, gambling houses, or houses of ill fame, or
tramping or strolling through the country without any visible means of support.
A further thought suggest itself in connection with the punctuation of the paragraph in question. The section, as
stated above, is divided into seven clauses, separated by semicolons. To say that two classes of vagrants are defined
in paragraph 2, as to one of which visible means of support or a lawful calling is not a good defense, and as to the
other of which such a defense is sufficient, would imply a lack of logical classification on the part of the legislature of
the various classes of vagrants. This we are not inclined to do.
In the case at bar, all three of the defendants were earning a living by legitimate methods in a degree of comfort
higher that the average. Their sole offense was gambling, which the legislature deemed advisable to make the
subject of a penal law. The games in which they participated were apparently played openly, in a licensed public
saloon, where the officers of the law could have entered as easily as did the patrons. It is believed that Act No. 1775
is adequate, if enforced, to supress the gambling proclivities of any person making a good living at a lawful trade or
business.
For these reasons, the defendants are acquitted, with the costs de oficio.
6. A. Use of Specific Words

a. use of the words AND / OR
G.R. No. 166391, October 21, 2015
MICROSOFT CORPORATION, Petitioner, v. ROLANDO D. MANANSALA AND/OR MEL MANANSALA, DOING

BUSINESS AS DATAMAN TRADING COMPANY AND/OR COMIC ALLEY, Respondent.
DECISION
BERSAMIN, J.:
This appeal seeks to overturn the decision promulgated on February 27, 2004,1 whereby the Court of Appeals (CA)
dismissed the petition for certiorari filed by petitioner to annul the orders of the Department of Justice (DOJ) dated
March 20, 2000,2 May 15, 2001,3 and January 27, 20034 dismissing the criminal charge of violation of Section 29 of
Presidential Decree No. 49 (Decree on Intellectual Property) it had instituted against the respondents; and the
resolution promulgated on December 6, 2004 denying its motion for reconsideration.5
Antecedents
The CA summarized the factual and procedural antecedents thusly:

Petitioner (Microsoft Corporation) is the copyright and trademark owner of all rights relating to all versions and
editions of Microsoft software (computer programs) such as, but not limited to, MS-DOS (disk operating system),
Microsoft Encarta, Microsoft Windows, Microsoft Word, Microsoft Excel, Microsoft Access, Microsoft Works,
Microsoft Powerpoint, Microsoft Office, Microsoft Flight Simulator and Microsoft FoxPro, among others, and their
user's guide/manuals.
Private Respondent-Rolando Manansala is doing business under the name of DATAMAN TRADING COMPANY and/or
COMIC ALLEY with business address at 3rd Floor, University Mall Building, Tail Avc, Manila.
Private Respondent Manansala, without authority from petitioner, was engaged in distributing and selling Microsoft
computer software programs.
On November 3, 1997, Mr. John Benedict A. Sacriz, a private investigator accompanied by an agent from the
National Bureau of Investigation (NBI) was able to purchase six (6) CD-ROMs containing various computer programs
belonging to petitioner.
As a result of the test-purchase, the agent from the NBI applied for a search warrant to search the premises of the
private respondent.
On November 17, 1997, a Search Warrant was issued against the premises of the private respondent.
On November 19, 1997, the search warrant was served on the private respondent's premises and yielded several
illegal copies of Microsoft programs.
Subsequently, petitioner, through Atty. Teodoro Kalaw IV tiled an Affidavit-Complaint in the DOJ based on the results
of the search and seizure operation conducted on private respondent's premises.
However, in a Resolution dated March 20, 2000, public respondent State Prosecutor dismissed the charge against
private respondent for violation of Section 29 P.D. 49 in this wise, to quote:
'The evidence is extant in the records to show that respondent is selling Microsoft computer software programs
bearing the copyrights and trademarks owned by Microsoft Corporation. There is, however, no proof that
respondent was the one who really printed or copied the products of complainant for sale in his store.
WHEREFORE, it is hereby, recommended that respondent be charged for violation of Article 189 of the Revised Penal
Code. The charge for violation of Section 29 of PD No. 49 is recommended dismissed for lack of evidence.'
Petitioner filed a Motion for Partial Reconsideration arguing that printing or copying is not essential in the crime of
copyright infringement under Section 29 of PD No. 49.
On May 15, 2001, the public respondent issued a Resolution denying the Motion for Partial Reconsideration.
Thereafter, petitioner filed a Petition for Review with the DOJ, which denied the petition for
review.6ChanRoblesVirtualawlibrary
Dissatisfied with the outcome of its appeal, the petitioner filed its petition for certiorari in the CA to annul the DOJ's
dismissal of its petition for review on the ground of grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of the DOJ.
On February 27, 2004, the CA rendered the assailed decision affirming the dismissal by the DOJ,7 disposing as
follows:
WHEREFORE, premises considered, the instant petition is DENIED. Consequently, the Orders dated March 20, 2000,
May 15, 2001 and January 27, 2003 respectively are hereby AFFIRMED.
SO ORDERED.8ChanRoblesVirtualawlibrary
Issue
The petitioner insists that printing or copying was not essential in the commission of the crime of copyright
infringement under Section 29 of Presidential Decree No. 49; hence, contrary to the holding of the DOJ, as upheld by
the CA, the mere selling of pirated computer software constituted copyright infringement.9
Ruling of the Court
The appeal is meritorious.
Although the general rule is that the determination of the existence of probable cause by the public prosecutor is
not to be judicially scrutinized because it is an executive function, an exception exists when the determination is
tainted with grave abuse of discretion.10 Bearing this in mind, we hold that the DOJ committed grave abuse of
discretion in sustaining the public prosecutor's dismissal of the charge of copyright infringement under Section 29 of
Presidential Decree No. 49 on the ground of lack of evidence because the public prosecutor thereby flagrantly
disregarded the existence of acts sufficient to engender the well-founded belief that the crime of copyright
infringement had been committed, and that the respondent was probably guilty thereof.11
Section 5 of Presidential Decree No. 49 specifically defined copyright as an exclusive right in the following manner:
Section 5. Copyright shall consist in the exclusive right;
(A) To print, reprint, publish, copy, distribute, multiply, sell, and make photographs, photo-engravings, and pictorial
illustrations of the works;
(B) To make any translation or other version or extracts or arrangements or adaptations thereof; to dramatize it if it
be a non-dramatic work; to convert it into a non-dramatic work if it be a drama; to complete or execute if it be a
model or design;
(C) To exhibit, perform, represent, produce, or reproduce, the work in any manner or by any method whatever for
profit or otherwise; it not reproduced in copies for sale, to sell any manuscript or any record whatsoever thereof;
(D) To make any other use or disposition of the work consistent with the laws of the land.
Accordingly, the commission of any of the acts mentioned in Section 5 of Presidential Decree No. 49 without the
copyright owner's consent constituted actionable copyright infringement. In Columbia Pictures, Inc. v. Court of
Appeals,12 the Court has emphatically declared:
Infringement of a copyright is a trespass on a private domain owned and occupied by the owner of the copyright,
and, therefore, protected by law, and infringement of copyright, or piracy, which is a synonymous term in this
connection, consists in the doing by any person, without the consent of the owner of the copyright, of anything the
sole right to do which is conferred by statute on the owner of the copyright.
The "gravamen of copyright infringement," according to NBI-Microsoft Corporation v. Hwang:13
is not merely the unauthorized manufacturing of intellectual works but rather the unauthorized performance of any
of the acts covered by Section 5. Hence, any person who performs any of the acts under Section 5 without obtaining
the copyright owners prior consent renders himself civilly and criminally liable for copyright
infringement.14ChanRoblesVirtualawlibrary
The CA stated in the assailed decision as follows:
A reading of Section 5 (a) of the Copyright Law shows that the acts enumerated therein are punctuated by commas
and the last phrase is conjoined by the words 'and'. Clearly, the same should be interpreted to mean as 'relating to
one another' because it is basic in legal hermeneutics that the word 'and' is not meant to separate words but is a
conjunction used to denote a 'joinder' or 'union'.
In the book of Noli C. Diaz entitled as STATUTORY CONSTRUCTION, the word 'and' was defined as a 'conjunction
connecting words or phrases expressing the idea that the latter is to be added to or taken along with the first'. Stated
differently, the word 'and' is a conjunction pertinently defined as meaning 'together with', 'joined with', 'along or
together with', 'added to or linked to' used to conjoin 'word with word', 'phrase with phrase', 'clause with clause'.
The word 'and' does not mean 'or', it is a conjunction used to denote a joinder or union, 'binding together', relating
the one to the other.
Hence the key to interpret and understand Section 5 (a) of P.D. 49 is the word 'and'. From the foregoing definitions
of the word 'and' it is unmistakable that to hold a person liable under the said provision of law, all the acts
enumerated therein must be present and proven. As such, it is not correct to construe the acts enumerated therein
as being separate or independent from one another.
In the case at bar, petitioner failed to allege and adduce evidence showing that the private respondent is the one
who copied, replicated or reproduced the software programs of the petitioner. In other words, 'sale' alone of pirated
copies of Microsoft software programs does not constitute copyright infringement punishable under P.D.
49.15ChanRoblesVirtualawlibrary
The CA erred in its reading and interpretation of Section 5 of Presidential Decree No. 49. Under the rules on syntax,
the conjunctive word "and" denotes a "joinder or union" of words, phrases, or clause;16 it is different from the
disjunctive word "or" that signals disassociation or independence.17 However, a more important rule of statutory
construction dictates that laws should be construed in a manner that avoids absurdity or unreasonableness.18 As
the Court pointed out in Automotive Parts & Equipment Company, Inc. v. Lingad:19
Nothing is better settled then that courts are not to give words a meaning which would lead to absurd or
unreasonable consequence. That is a principle that goes back to In re Allen decided on October 29, 1903, where it
was held that a literal interpretation is to be rejected if it would be unjust or lead to absurd results. That is a strong
argument against its adoption. The words of Justice Laurel are particularly apt. Thus: 'The fact that the construction
placed upon the statute by the appellants would lead to an absurdity is another argument for rejecting it x x x.'
It is of the essence of judicial duty to construe statutes so as to avoid such a deplorable result. That has long been a
judicial function. A literal reading of a legislative act which could be 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. Certainly, we 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.20ChanRoblesVirtualawlibrary
The conjunctive "and" should not be taken in its ordinary acceptation, but should be construed like the disjunctive
"or" if the literal interpretation of the law would pervert or obscure the legislative intent.21 To accept the CA's
reading and interpretation is to accept absurd results because the violations listed in Section 5(a) of Presidential
Decree No. 49 - "To print, reprint, publish, copy, distribute, multiply, sell, and make photographs, photo-engravings,
and pictorial illustrations of the works" ï¿½ cannot be carried out on all of the classes of works enumerated in
Section 2 of Presidential Decree No. 49, viz.:
Section 2. - The Rights granted by this Decree shall, from the moment of creation, subsist with respect to any of the
following classes of works:chanRoblesvirtualLawlibrary
(A) Books, including composite and encyclopedic works, manuscripts, directories, and gazetteers;
(B) Periodicals, including pamphlets and newspapers;
(C) Lectures, sermons, addresses, dissertations prepared for oral delivery;
(D) Letters;
(E) Dramatic or dramatico-musical compositions; choreographic works and entertainments in dumb shows, the
acting form of which is fixed in writing or otherwise;
(F) Musical compositions, with or without words;
(G) Works of drawing, painting, architecture, sculpture, engraving, lithography, and other works of art; models or
designs for works of art;
(H) Reproductions of a work of art;
(I) Original ornamental designs or models for articles of manufacture, whether or not patentable, and other works of
applied art;
(J) Maps, plans, sketches, and charts;
(K) Drawings, or plastic works of a scientific or technical character;
(L) Photographic works and works produced by a process analogous to photography; lantern slides;
(M) Cinematographic works and works produced by a process analogous to cinematography or any process for
making audio-visual recordings;
(N) Computer programs;
(O) Prints, pictorial, illustration, advertising copies, labels, tags, and box wraps;
(P) Dramatization, translations, adaptations, abridgements, arrangements and other alterations of literary, musical
or artistic works or of works of the Philippine Government as herein defined, which shall be protected as provided in
Section 8 of this Decree.
(Q) Collection of literary, scholarly, or artistic works or of works referred to in Section 9 of this Decree which by
reason of the selection and arrangement of their contents constitute intellectual creations, the same to be protected
as such in accordance with Section 8 of this Decree.
(R) Other literary, scholarly, scientific and artistic works.
Presidential Decree No. 49 thereby already acknowledged the existence of computer programs as works or creations
protected by copyright.22 To hold, as the CA incorrectly did, that the legislative intent was to require that the
computer programs be first photographed, photo-engraved, or pictorially illustrated as a condition for the
commission of copyright infringement invites ridicule. Such interpretation of Section 5(a) of Presidential Decree No.
49 defied logic and common sense because it focused on terms like "copy," "multiply," and "sell," but blatantly
ignored terms like "photographs," "photo-engravings," and "pictorial illustrations." Had the CA taken the latter
words into proper account, it would have quickly seen the absurdity of its interpretation.
The mere sale of the illicit copies of the software programs was enough by itself to show the existence of probable
cause for copyright infringement. There was no need for the petitioner to still prove who copied, replicated or
reproduced the software programs. Indeed, the public prosecutor and the DOJ gravely abused their discretion in
dismissing the petitioner's charge for copyright infringement against the respondents for lack of evidence. There was
grave abuse of discretion because the public prosecutor and the DOJ acted whimsically or arbitrarily in disregarding
the settled jurisprudential rules on finding the existence of probable cause to charge the offender in court.
Accordingly, the CA erred in upholding the dismissal by the DOJ of the petitioner's petition for review. We reverse.
WHEREFORE, the Court GRANTS the petition for review on certiorari; REVERSES and SETS ASIDE the decision
promulgated on February 27, 2004 in C.A.-G.R. SP No. 76402; DIRECTS the Department of Justice to render the
proper resolution to charge respondent ROLANDO D. MANANSALA and/or MEL MANANSALA, doing business as
DATAMAN TRADING COMPANY and/or COMIC ALLEY in accordance with this decision; and ORDERS the respondents
to pay the costs of suit.
SO ORDERED.
G.R. No. 131082 June 19, 2000
ROMULO, MABANTA, BUENAVENTURA, SAYOC & DE LOS ANGELES, petitioner,

vs.
HOME DEVELOPMENT MUTUAL FUND, respondent.
DAVIDE, JR., C.J.:
Once again, this Court is confronted with the issue of the validity of the Amendments to the Rules and Regulations
Implementing Republic Act No. 7742, which require the existence of a plan providing for both provident/retirement
and housing benefits for exemption from the Pag-IBIG Fund coverage under Presidential Decree No. 1752, as
amended.
Pursuant to Section 19 1 of P.D. No. 1752, as amended by R.A. No. 7742, petitioner Romulo, Mabanta,
Buenaventura, Sayoc and De Los Angeles (hereafter PETITIONER), a law firm, was exempted for the period 1 January
to 31 December 1995 from the Pag-IBIG Fund coverage by respondent Home Development Mutual Fund (hereafter
HDMF) because of a superior retirement plan. 2
On 1 September 1995, the HDMF Board of Trustees, pursuant to Section 5 of Republic Act No. 7742, issued Board
Resolution No. 1011, Series of 1995, amending and modifying the Rules and Regulations Implementing R.A. No.
7742. As amended, Section 1 of Rule VII provides that for a company to be entitled to a waiver or suspension of Fund
coverage, 3 it must have a plan providing for both provident/retirement and housing benefits superior to those
provided under the Pag-IBIG Fund.
On 16 November 1995, PETITIONER filed with the respondent an application for Waiver or Suspension of Fund
Coverage because of its superior retirement plan. 4 In support of said application, PETITIONER submitted to the
HDMF a letter explaining that the 1995 Amendments to the Rules are invalid. 5
In a letter dated 18 March 1996, the President and Chief Executive Officer of HDMF disapproved PETITIONER's
application on the ground that the requirement that there should be both a provident retirement fund and a housing
plan is clear in the use of the phrase "and/or," and that the Rules Implementing R.A. No. 7742 did not amend nor
repeal Section 19 of P.D. No. 1752 but merely implement the law. 6
PETITIONER's appeal 7 with the HDMF Board of Trustees was denied for having been rendered moot and academic
by Board Resolution No. 1208, Series of 1996, removing the availment of waiver of the mandatory coverage of the
Pag-IBIG Fund, except for distressed employers. 8
On 31 March 1997, PETITIONER filed a petition for review 9 before the Court of Appeals. On motion by HDMF, the
Court of Appeals dismissed 10 the petition on the ground that the coverage of employers and employees under the
Home Development Mutual Fund is mandatory in character as clearly worded in Section 4 of P.D. No. 1752, as
amended by R.A. No. 7742. There is no allegation that petitioner is a distressed employer to warrant its exemption
from the Fund coverage. As to the amendments to the Rules and Regulations Implementing R.A. No. 7742, the same
are valid. Under P.D. No. 1752 and R.A. No. 7742 the Board of Trustees of the HDMF is authorized to promulgate
rules and regulations, as well as amendments thereto, concerning the extension, waiver or suspension of coverage
under the Pag-IBIG Fund. And the publication requirement was amply met, since the questioned amendments were
published in the 21 October 1995 issue of the Philippine Star, which is a newspaper of general circulation.
PETITIONER's motion for reconsideration 11 was denied. 12 Hence, on 6 November 1997, PETITIONER filed a petition
before this Court assailing the 1995 and the 1996 Amendments to the Rules and Regulations Implementing Republic
Act No. 7742 for being contrary to law. In support thereof, PETITIONER contends that the subject 1995 Amendments
issued by HDMF are inconsistent with the enabling law, P.D. No. 1752, as amended by R.A. No. 7742, which merely
requires as a pre-condition for exemption from coverage the existence of either a superior provident/retirement
plan or a superior housing plan, and not the concurrence of both plans. Hence, considering that PETITIONER has a
provident plan superior to that offered by the HDMF, it is entitled to exemption from the coverage in accordance
with Section 19 of P.D. No. 1752. The 1996 Amendment are also void insofar as they abolished the exemption
granted by Section 19 of P.D. 1752, as amended. The repeal of such exemption involves the exercise of legislative
power, which cannot be delegated to HMDF.
PETITIONER also cites Section 9 (1), Chapter 2, Book VII of the Administrative Code of 1987, which provides:
Sec. 9. Public Participation — (1) If not otherwise required by law, an agency shall, as far as practicable, publish or
circulate notices of proposed rules and afford interested parties the opportunity to submit their views prior to the
adoption of any rule.
Since the Amendments to the Rules and Regulations Implementing Republic Act No. 7742 involve an imposition of an
additional burden, a public hearing should have first been conducted to give chance to the employers, like
PETITIONER, to be heard before the HDMF adopted the said Amendments. Absent such public hearing, the
amendments should be voided.
Finally, PETITIONER contends that HDMF did not comply with Section 3, Chapter 2, Book VII of the Administrative
Code of 1987, which provides that "[e]very agency shall file with the University of the Philippines Law Center three
(3) certified copies of every rule adopted by it."
On the other hand, the HDMF contends that in promulgating the amendments to the rules and regulations which
require the existence of a plan providing for both provident and housing benefits for exemption from the Fund
Coverage, the respondent Board was merely exercising its rule-making power under Section 13 of P.D. No. 1752. It
had the option to use "and" only instead of "or" in the rules on waiver in order to effectively implement the Pag-IBIG
Fund Law. By choosing "and," the Board has clarified the confusion brought about by the use of "and/or" in Section
19 of P.D. No. 1752, as amended.
As to the public hearing, HDMF maintains that as can be clearly deduced from Section 9(1), Chapter 2, Book VII of
the Revised Administrative Code of 1987, public hearing is required only when the law so provides, and if not, only if
the same is practicable. It follows that public hearing is only optional or discretionary on the part of the agency
concerned, except when the same is required by law. P.D. No. 1752 does not require that pubic hearing be first
conducted before the rules and regulations implementing it would become valid and effective. What it requires is
the publication of said rules and regulations at least once in a newspaper of general circulation. Having published
said 1995 and 1996 Amendments through the Philippine Star on 21 October 1995 1 and 15 November 1996, 14
respectively, HDMF has complied with the publication requirement.
Finally, HDMF claims that as early as 18 October 1996, it had already filed certified true copies of the Amendments
to the Rules and Regulations with the University of the Philippines Law Center. This fact is evidenced by certified true
copies of the Certification from the Office of the National Administrative Register of the U.P. Law Center. 15
We find for the PETITIONER.
The issue of the validity of the 1995 Amendments to the Rules and Regulations Implementing R.A. No. 7742,
specifically Section I, Rule VII on Waiver and Suspension, has been squarely resolved in the relatively recent case of
China Banking Corp. v. The Members of the Board of Trustees of the HDMF. 16 We held in that case that Section 1 of
Rule VII of the Amendments to the Rules and Regulations Implementing R.A. No. 7742, and HDMF Circular No. 124-B
prescribing the Revised Guidelines and Procedure for Filing Application for Waiver or Suspension of Fund Coverage
under P.D. No. 1752, as amended by R.A. No. 7742, are null and void insofar as they require that an employer should
have both a provident/retirement plan and a housing plan superior to the benefits offered by the Fund in order to
qualify for waiver or suspension of the Fund coverage. In arriving at said conclusion, we ruled:
The controversy lies in the legal signification of the words "and/or."
In the instant case, the legal meaning of the words "and/or" should be taken in its ordinary signification, i.e., "either
and or; e.g. butter and/or eggs means butter and eggs or butter or eggs.
The term "and/or" means that the effect shall be given to both the conjunctive "and" and the disjunctive "or"; or
that one word or the other may be taken accordingly as one or the other will best effectuate the purpose intended
by the legislature as gathered from the whole statute. The term is used to avoid a construction which by the use of
the disjunctive "or" alone will exclude the combination of several of the alternatives or by the use of the conjunctive
"and" will exclude the efficacy of any one of the alternatives standing alone.1avvphi1
It is accordingly ordinarily held that the intention of the legislature in using the term "and/or" is that the word "and"
and the word "or" are to be used interchangeably.
It . . . seems to us clear from the language of the enabling law that Section 19 of P.D. No. 1752 intended that an
employer with a provident plan or an employee housing plan superior to that of the fund may obtain exemption
from coverage. If the law had intended that the employee [sic] should have both a superior provident plan and a
housing plan in order to qualify for exemption, it would have used the words "and" instead of "and/or." Notably,
paragraph (a) of Section 19 requires for annual certification of waiver or suspension, that the features of the plan or
plans are superior to the fund or continue to be so. The law obviously contemplates that the existence of either plan
is considered as sufficient basis for the grant of an exemption; needless to state, the concurrence of both plans is
more than sufficient. To require the existence of both plans would radically impose a more stringent condition for
waiver which was not clearly envisioned by the basic law. By removing the disjunctive word "or" in the implementing
rules the respondent Board has exceeded its authority.
It is without doubt that the HDMF Board has rule-making power as provided in Section 51 17 of R.A. No. 7742 and
Section 13 18 of P.D. No. 1752. However, it is well-settled that rules and regulations, which are the product of a
delegated power to create new and additional legal provisions that have the effect of law, should be within the
scope of the statutory authority granted by the legislature to the administrative agency. 19 It is required that the
regulation be germane to the objects and purposes of the law, and be not in contradiction to, but in conformity with,
the standards prescribed by law. 20
In the present case, when the Board of Trustees of the HDMF required in Section 1, Rule VII of the 1995
Amendments to the Rules and Regulations Implementing R.A. No. 7742 that employers should have both
provident/retirement and housing benefits for all its employees in order to qualify for exemption from the Fund, it
effectively amended Section 19 of P.D. No. 1752. And when the Board subsequently abolished that exemption
through the 1996 Amendments, it repealed Section 19 of P.D. No. 1752. Such amendment and subsequent repeal of
Section 19 are both invalid, as they are not within the delegated power of the Board. The HDMF cannot, in the
exercise of its rule-making power, issue a regulation not consistent with the law it seeks to apply. Indeed,
administrative issuances must not override, supplant or modify the law, but must remain consistent with the law
they intend to carry out. 21 Only Congress can repeal or amend the law.
While it may be conceded that the requirement of having both plans to qualify for an exemption, as well as the
abolition of the exemption, would enhance the interest of the working group and further strengthen the Home
Development Mutual Fund in its pursuit of promoting public welfare through ample social services as mandated by
the Constitution, we are of the opinion that the basic law should prevail. A department zeal may not be permitted to
outrun the authority conferred by the statute. 22
Considering the foregoing conclusions, it is unnecessary to dwell on the other issues raised.
WHEREFORE, the petition is GRANTED. The assailed decision of 31 July 1997 of the Court of Appeals in CA-G.R. No.
SP-43668 and its Resolution of 15 October 1997 are hereby REVERSED and SET ASIDE. The disapproval by the Home
Development Mutual Fund of the application of the petitioner for waiver or suspension of Fund coverage is SET
ASIDE, and the Home Development Mutual Fund is hereby directed to refund to petitioner all sums of money it
collected from the latter.
SO ORDERED.
b. mandatory and permissive words: SHALL/MAY
G.R. No. 102858 July 28, 1997
THE DIRECTOR OF LANDS, petitioner,

vs.
COURT OF APPEALS and TEODORO ABISTADO, substituted by MARGARITA, MARISSA, MARIBEL, ARNOLD and
MARY ANN, all surnamed ABISTO, respondents.
PANGANIBAN, J.:
Is newspaper publication of the notice of initial hearing in an original land registration case mandatory or directory?
Statement of the Case
The Court of Appeals ruled that it was merely procedural and that the failure to cause such publication did not
deprive the trial court of its authority to grant the application. But the Solicitor General disagreed and thus filed this
petition to set aside the Decision1 promulgated on July 3, 1991 and the subsequent Resolution2 promulgated on
November 19, 1991 by Respondent Court of Appeals3 in CA-G.R. CV No. 23719. The dispositive portion of the
challenged Decision reads:4
WHEREFORE, premises considered, the judgment of dismissal appealed from is hereby set aside, and a new one
entered confirming the registration and title of applicant, Teodoro Abistado, Filipino, a resident of Barangay 7,
Poblacion Mamburao, Occidental Mindoro, now deceased and substituted by Margarita, Marissa, Maribel, Arnold
and Mary Ann, all surnamed Abistado, represented by their aunt, Miss Josefa Abistado, Filipinos, residents of
Poblacion Mamburao, Occidental Mindoro, to the parcel of land covered under MSI (IV-A-8) 315-D located in
Poblacion Mamburao, Occidental Mindoro.
The oppositions filed by the Republic of the Philippines and private oppositor are hereby dismissed for want of
evidence.
Upon the finality of this decision and payment of the corresponding taxes due on this land, let an order for the
issuance of a decree be issued.
The Facts
On December 8, 1986, Private Respondent Teodoro Abistado filed a petition for original registration of his title over
648 square meters of land under Presidential Decree (PD) No. 1529.5 The application was docketed as Land
Registration Case (LRC) No. 86 and assigned to Branch 44 of the Regional Trial Court of Mamburao, Occidental
Mindoro.6 However, during the pendency of his petition, applicant died. Hence, his heirs — Margarita, Marissa,
Maribel, Arnold and Mary Ann, all surnamed Abistado — represented by their aunt Josefa Abistado, who was
appointed their guardian ad litem, were substituted as applicants.
The land registration court in its decision dated June 13, 1989 dismissed the petition "for want of jurisdiction."
However, it found that the applicants through their predecessors-in-interest had been in open, continuous, exclusive
and peaceful possession of the subject land since 1938.
In dismissing the petition, the trial court reasoned:7
. . . However, the Court noted that applicants failed to comply with the provisions of Section 23 (1) of PD 1529,
requiring the Applicants to publish the notice of Initial Hearing (Exh. "E") in a newspaper of general circulation in the
Philippines. Exhibit "E" was only published in the Official Gazette (Exhibits "F" and "G"). Consequently, the Court is of
the well considered view that it has not legally acquired jurisdiction over the instant application for want of
compliance with the mandatory provision requiring publication of the notice of initial hearing in a newspaper of
general circulation.
The trial court also cited Ministry of Justice Opinion No. 48, Series of 1982, which in its pertinent portion provides:8
It bears emphasis that the publication requirement under Section 23 [of PD 1529] has a two-fold purpose; the first,
which is mentioned in the provision of the aforequoted provision refers to publication in the Official Gazette, and is
jurisdictional; while the second, which is mentioned in the opening clause of the same paragraph, refers to
publication not only in the Official Gazette but also in a newspaper of general circulation, and is procedural. Neither
one nor the other is dispensable. As to the first, publication in the Official Gazette is indispensably necessary because
without it, the court would be powerless to assume jurisdiction over a particular land registration case. As to the
second, publication of the notice of initial hearing also in a newspaper of general circulation is indispensably
necessary as a requirement of procedural due process; otherwise, any decision that the court may promulgate in the
case would be legally infirm.
Unsatisfied, private respondents appealed to Respondent Court of Appeals which, as earlier explained, set aside the
decision of the trial court and ordered the registration of the title in the name of Teodoro Abistado.
The subsequent motion for reconsideration was denied in the challenged CA Resolution dared November 19, 1991.
The Director of Lands represented by the Solicitor General thus elevated this recourse to us. This Court notes that
the petitioner's counsel anchored his petition on Rule 65. This is an error. His remedy should be based on Rule 45
because he is appealing a final disposition of the Court of Appeals. Hence, we shall treat his petition as one for
review under Rule 45, and not for certiorari under Rule 65.9
The Issue
Petitioner alleges that Respondent Court of Appeals committed "grave abuse of discretion"10 in holding —
. . . that publication of the petition for registration of title in LRC Case No. 86 need not be published in a newspaper
of general circulation, and in not dismissing LRC Case No. 86 for want of such publication.
Petitioner points out that under Section 23 of PD 1529, the notice of initial hearing shall be "published both in the
Official Gazette and in a newspaper of general circulation." According to petitioner, publication in the Official Gazette
is "necessary to confer jurisdiction upon the trial court, and . . . in . . . a newspaper of general circulation to comply
with the notice requirement of due process."11
Private respondents, on the other hand, contend that failure to comply with the requirement of publication in a
newspaper of general circulation is a mere "procedural defect." They add that publication in the Official Gazette is
sufficient to confer jurisdiction.12
In reversing the decision of the trial court, Respondent Court of Appeals ruled:13
. . . although the requirement of publication in the Official Gazette and in a newspaper of general circulation is
couched in mandatory terms, it cannot be gainsaid that the law also mandates with equal force that publication in
the Official Gazette shall be sufficient to confer jurisdiction upon the court.
Further, Respondent Court found that the oppositors were afforded the opportunity "to explain matters fully and
present their side." Thus, it justified its disposition in this wise:14
. . . We do not see how the lack of compliance with the required procedure prejudiced them in any way. Moreover,
the other requirements of: publication in the Official Gazette, personal notice by mailing, and posting at the site and
other conspicuous places, were complied with and these are sufficient to notify any party who is minded to make
any objection of the application for registration.
The Court's Ruling
We find for petitioner.
Newspaper Publication Mandatory
The pertinent part of Section 23 of Presidential Decree No. 1529 requiring publication of the notice of initial hearing
reads as follows:
Sec. 23. Notice of initial hearing, publication, etc. — The court shall, within five days from filing of the application,
issue an order setting the date and hour of the initial hearing which shall not be earlier than forty-five days nor later
than ninety days from the date of the order.
The public shall be given notice of initial hearing of the application for land registration by means of (1) publication;
(2) mailing; and (3) posting.
1. By publication. —
Upon receipt of the order of the court setting the time for initial hearing, the Commissioner of Land Registration shall
cause a notice of initial hearing to be published once in the Official Gazette and once in a newspaper of general
circulation in the Philippines: Provided, however, that the publication in the Official Gazette shall be sufficient to
confer jurisdiction upon the court. Said notice shall be addressed to all persons appearing to have an interest in the
land involved including the adjoining owners so far as known, and "to all whom it may concern." Said notice shall
also require all persons concerned to appear in court at a certain date and time to show cause why the prayer of said
application shall not be granted.
xxx xxx xxx
Admittedly, the above provision provides in clear and categorical terms that publication in the Official Gazette
suffices to confer jurisdiction upon the land registration court. However, the question boils down to whether, absent
any publication in a newspaper of general circulation, the land registration court can validly confirm and register the
title of private respondents.
We answer this query in the negative. This answer is impelled by the demands of statutory construction and the due
process rationale behind the publication requirement.
The law used the term "shall" in prescribing the work to be done by the Commissioner of Land Registration upon the
latter's receipt of the court order setting the time for initial hearing. The said word denotes an imperative and thus
indicates the mandatory character of a statute.15 While concededly such literal mandate is not an absolute rule in
statutory construction, as its import ultimately depends upon its context in the entire provision, we hold that in the
present case the term must be understood in its normal mandatory meaning. In Republic vs. Marasigan,16 the Court
through Mr. Justice Hilario G. Davide, Jr. held that Section 23 of PD 1529 requires notice of the initial hearing by
means of (1) publication, (2) mailing and (3) posting, all of which must be complied with. "If the intention of the law
were otherwise, said section would not have stressed in detail the requirements of mailing of notices to all persons
named in the petition who, per Section 15 of the Decree, include owners of adjoining properties, and occupants of
the land." Indeed, if mailing of notices is essential, then by parity of reasoning, publication in a newspaper of general
circulation is likewise imperative since the law included such requirement in its detailed provision.
It should be noted further that land registration is a proceeding in rem. 17 Being in rem, such proceeding requires
constructive seizure of the land as against all persons, including the state, who have rights to or interests in the
property. An in rem proceeding is validated essentially through publication. This being so, the process must strictly
be complied with. Otherwise, persons who may be interested or whose rights may be adversely affected would be
barred from contesting an application which they had no knowledge of. As has been ruled, a party as an owner
seeking the inscription of realty in the land registration court must prove by satisfactory and conclusive evidence not
only his ownership thereof but the identity of the same, for he is in the same situation as one who institutes an
action for recovery of realty.18 He must prove his title against the whole world. This task, which rests upon the
applicant, can best be achieved when all persons concerned — nay, "the whole world" — who have rights to or
interests in the subject property are notified and effectively invited to come to court and show cause why the
application should not be granted. The elementary norms of due process require that before the claimed property is
taken from concerned parties and registered in the name of the applicant, said parties must be given notice and
opportunity to oppose.
It may be asked why publication in a newspaper of general circulation should be deemed mandatory when the law
already requires notice by publication in the Official Gazette as well as by mailing and posting, all of which have
already been complied with in the case at hand. The reason is due process and the reality that the Official Gazette is
not as widely read and circulated as newspapers and is oftentimes delayed in its circulation, such that the notices
published therein may not reach the interested parties on time, if at all. Additionally, such parties may not be owners
of neighboring properties, and may in fact not own any other real estate. In sum, the all-encompassing in rem nature
of land registration cases, the consequences of default orders issued against the whole world and the objective of
disseminating the notice in as wide a manner as possible demand a mandatory construction of the requirements for
publication, mailing and posting.
Admittedly, there was failure to comply with the explicit publication requirement of the law. Private respondents did
not proffer any excuse; even if they had, it would not have mattered because the statute itself allows no excuses.
Ineludibly, this Court has no authority to dispense with such mandatory requirement. The law is unambiguous and its
rationale clear. Time and again, this Court has declared that where the law speaks in clear and categorical language,
there is no room for interpretation, vacillation or equivocation; there is room only for application.19 There is no
alternative. Thus, the application for land registration filed by private respondents must be dismissed without
prejudice to reapplication in the future, after all the legal requisites shall have been duly complied with.
WHEREFORE, the petition is GRANTED and the assailed Decision and Resolution are REVERSED and SET ASIDE. The
application of private respondent for land registration is DISMISSED without prejudice. No costs.
SO ORDERED.
G.R. No. 96914 July 23, 1992
CECILIA U. LEDESMA, petitioner,

vs.
THE HON. COURT OF APPEALS, and JOSE T. DIZON, respondents.
NOCON, J.:
Petitioner Cecilia U. Ledesma prays before this Court for the reversal of the Decision of the respondent Court of
Appeals of August 30, 1990 1 ordering the dismissal of her ejectment complaint before the Manila Metropolitan Trial
Court for lack of cause of action due to non-compliance with Sections 6 and 9 of P.D. 1508 (Katarungang
Pambarangay Law) as well as the Resolution of January 7, 1991 2 denying petitioner's Motion for Reconsideration of
said Decision.
The facts of this case as summarized by the petitioner in her Memorandum are as follows:
Petitioner is the owner-lessor of an apartment building located at 800-802 Remedios Street, Malate, Manila. Two (2)
units of said apartment building were leased (now being unlawfully occupied) to private respondent at monthly rates
of P3,450.00 for the unit/apartment located at 800 Remedios Street, Malate, Manila and P2,300.00 for the
unit/apartment located at 802 Remedios Street, Malate, Manila, respectively. . . .
Said lease was originally covered by written contracts of lease both dated December 10, 1984 and except for the
rates and duration, the terms and conditions of said contracts were impliedly renewed on a "month-to-month" basis
pursuant to Article 1670 of the Civil Code.
One of the terms and conditions of the said Contract of Lease, that of monthly rental payments, was violated by
private respondent and that as of October 31, 1988, said private respondent has incurred arrears for both units in
the total sum of P14,039.00 for which letters of demand were sent to, and received by, private respondent.
Upon failure of private respondent to honor the demand letters, petitioner referred the matter to the Barangay for
conciliation which eventually issued a certification to file action. Petitioner was assisted by her son, Raymond U.
Ledesma, (who is not a lawyer) during the barangay proceeding as she was suffering from recurring psychological
and emotional ailment as can be seen from the receipts and prescriptions issued by her psychiatrist, copies of which
are attached as Annexes "E-E10" of the said Petition.
Due to the stubborn refusal of the private respondent to vacate the premises, petitioner was constrained to retain
the services of counsel to initiate this ejectment proceeding. 3
The Metropolitan Trial Court, Branch 10, Manila, rendered a decision on June 21, 1989 ordering private respondent
to vacate the premises, to pay rentals falling due after May 1989 and to pay attorney's fees in the amount of
P2,500.00. 4 The Regional Trial Court of Manila, Branch IX, on appeal, affirmed the MTC ruling except for the award
of attorney's fees which it reduced to P1,000.00. 5
Private respondent, however, found favor with the respondent Court of Appeals when he elevated the case in a
Petition for Review, when it ruled, thus:
IN VIEW WHEREOF, the Decision dated October 13, 1989 of the RTC of Manila, Br. IX in Civil Case No. 89-49672 is
reversed and set aside and the Complaint for Ejectment against petitioner is dismissed for lack of cause of action. No
costs. 6
Thus, this appeal, raising several assignments of error, namely, that the Court of Appeals erred —
1. In holding that private respondent raised the issue of non-compliance with Sections 6 and 9 of P.D. 1508 in the
lower court when in fact and in truth his answer and position paper failed to do so, contrary to evidence on record;
2. In failing to consider that private respondent had waived his right to question the lack of cause of action of the
complaint, if there is any, contrary to law, established jurisprudence, and evidence on record;
3. In giving undue weight and credence to the self-serving allegations of the private respondent that summons was
not served him, contrary to law, established jurisprudence and evidence on record.
4. In disregarding the well-known principle of law that barangay authorities are presumed to have performed their
official duties and to have acted regularly in issuing the certificate to file action and grossly and manifestly erred in
making an opposite conclusion to this effect, contrary to law, established jurisprudence and evidence on record.
5. In not holding that the settlement was repudiated, contrary to law and evidence on record.
6. In not affirming the judgment rendered by the Metropolitan Trial Court and Regional Trial Court below.
Petitioner assails private respondent for raising the issue of non-compliance with Sections 6 and 9 of P.D. 1508 only
in his petition for review with the appellate court and which mislead the court to erroneously dismiss her complaint
for ejectment.
Section 6 of P.D. 1508 states:
Sec. 6. Conciliation pre-condition to filing of complaint. — No complaint, petition, action or proceeding involving any
matter within the authority of the Lupon as provided in Section 2 hereof shall be filed or instituted in court or any
other government office for adjudication unless there has been a confrontation of the parties before the Lupon
Chairman or the Pangkat and no conciliation or settlement has been reached as certified by the Lupon Secretary or
the Pangkat Secretary, attested by the Lupon or Pangkat Chairman, or unless the settlement has been
repudiated. . . .
xxx xxx xxx
while Section 9 states that:
Sec. 9. Appearance of parties in person. — In all proceedings provided for herein, the parties must appear in person
without the assistance of counsel/representative, with the exception of minors and incompetents who may be
assisted by their next of kin who are not lawyers.
Petitioner submits that said issue, not having been raised by private respondent in the court below, cannot be raised
for the first time on appeal, specially in the Court of Appeals, citing Saludes vs. Pajarillo. 7 Private respondent had
waived said objection, following the line of reasoning in Royales vs. Intermediate Appelate Court. 8
Private respondent denies having waived the defenses of non-compliance with Sections 6 and 9 of P.D. 1508. His
Answer before the Metropolitan Trial Court, specifically paragraphs 4, 7, & 8, substantially raised the fact of non-
compliance by petitioner with Sections 6 and 9 of P.D. 1508 and consequently, subjected petitioner's complaint to
dismissal for lack of cause of action, to wit:
xxx xxx xxx
4. Answering defendant denies the allegations of paragraph 8, the truth of the matter being that he was not duly
summoned nor subpoenaed by the Barangay Chairman, who issued the alluded certification, to appear for hearing. 9
xxx xxx xxx
7. Plaintiff has no cause of action against answering defendant.
8. The certification to file action (annex D of the complaint) was improperly or irregularly issued as the defendant
was never summoned nor subpoenaed by the Barangay Chairman to appear for hearing in connection with the
alleged complaint of the plaintiff. In effect the mandatory provision of P.D. 1508 was not complied with warranting
the dismissal of the instant complaint.
xxx xxx xxx 10
We do not agree with petitioner that the issue of non-compliance with Sections 6 and 9 of P.D. 1508 was raised only
for the first time in the Court of Appeals. When private respondent stated that he was never summoned or
subpoenaed by the Barangay Chairman, he, in effect, was stating that since he was never summoned, he could not
appear in person for the needed confrontation of the parties before the Lupon Chairman for conciliation and/or
amicable settlement. Without the mandatory personal confrontation, no complaint could be filed with the MTC.
Private respondent's allegation in paragraph 4 of his Answer that he was never summoned or subpoenaed by the
Barangay Chairman; that plaintiff has no cause of action against him as alleged in paragraph 7 of the Answer; and
that the certification to file action was improperly issued in view of the foregoing allegations thereby resulting in
non-compliance with the mandatory requirements of P.D. No. 1508, as stated in paragraph 8 of the Answer are in
substantial compliance with the raising of said issues and/or objections in the court below.
Petitioner would like to make it appear to this Court that she appeared before the Lupon Chairman to confront
private respondent. She stated in her Petition 11 and her Memorandum 12 that:
Upon failure of private respondent to honor the demand letters, petitioner referred the matter to the barangay for
conciliation which eventually issued a certification to file action. Petitioner was assisted by her son, Raymond U.
Ledesma, (who is not a lawyer) during the barangay proceeding as she was suffering from recurring psychological
and emotional ailment as can be seen from the receipt and prescriptions issued by her psychiatrist copies of which
are attached herewith as Annexes
"E-E10."
However, as found out by the respondent court:
We agree with the petitioner that private respondent Cecile Ledesma failed to comply with section 6 of P.D. 1508.
The record of the case is barren showing compliance by the private respondent. Indeed, the documentary evidence
of the private respondent herself attached to the complaint buttresses this conclusion. They show that it is not the
private respondent but her son. Raymund U. Ledesma, and her lawyer, Atty. Epifania Navarro who dealt with the
petitioner regarding their dispute. Thus, the demand letter dated October 18, 1988 sent to the petitioner for
payment of rentals in the sum of P14,039.00 was signed by Raymund Ledesma. On the other hand, the demand
letter dated November 14, 1988 was signed by Atty. Epifania Navarro. More telling is the Certification to File Action
signed by Barangay Chairman, Alberto A. Solis where it appears that the complainant is Raymund U. Ledesma and
not the private respondent. 13
As stated earlier, Section 9 of P.D. 1508 mandates personal confrontation of the parties because:
. . . a personal confrontation between the parties without the intervention of a counsel or representative would
generate spontaneity and a favorable disposition to amicable settlement on the part of the disputants. In other
words, the said procedure is deemed conducive to the successful resolution of the dispute at the barangay level. 14
Petitioner tries to show that her failure to personally appear before the barangay Chairman was because of her
recurring psychological ailments. But for the entire year of 1988 15 — specifically September to December 6 — there
is no indication at all that petitioner went to see her psychiatrist for consultation. The only conclusion is that 1988
was a lucid interval for petitioner. There was, therefore, no excuse then for her non-appearance at the Lupon
Chairman's office.
Petitioner, not having shown that she is incompetent, cannot be represented by counsel or even by attorney-in-fact
who is next of kin. 16
As explained by the Minister of Justice with whom We agree:
To ensure compliance with the requirement of personal confrontation between the parties, and thereby, the
effectiveness of the barangay conciliation proceedings as a mode of dispute resolution, the above-quoted provision
is couched in mandatory language. Moreover, pursuant to the familiar maxim in statutory construction dictating that
"expressio unius est exclusio alterius", the express exceptions made regarding minors and incompetents must be
construed as exclusive of all others not mentioned. 17
Petitioner's non-compliance with Secs. 6 and 9 of P.D. 1508 legally barred her from pursuing the ejectment case in
the MTC of Manila.18 Having arrived at this conclusion, there is no need for Us to discuss the other issues involved.
WHEREFORE, the questioned decision and resolution of the respondent Court are affirmed in toto with treble costs
against petitioner.
SO ORDERED.
G.R. No. L-42428 March 18, 1983

BERNARDINO MARCELINO, petitioner,
vs.
THE HON. FERNANDO CRUZ, JR., as Presiding Judge of Branch XII of the Court of First Instance of Rizal, PEOPLE OF
THE PHILIPPINES, and THE PROVINCIAL WARDEN OF THE PROVINCIAL JAIL OF RIZAL, respondents.
ESCOLIN, J.:
A petition for prohibition and writ of habeas corpus to enjoin respondent Judge Fernando Cruz, Jr. from
promulgating his decision in Criminal Case No. C-5910, entitled People of the Philippines versus Bernardino
Marcelino, and for release from detention of petitioner, the accused in said case, on the ground of loss of jurisdiction
of respondent trial court over the case for failure to decide the same within the period of ninety [90] days from
submission thereof.
Petitioner was charged with the crime of rape before the Court of First Instance of Rizal, Branch XII. Trial was
conducted and the same was concluded when the accused rested his case on August 4, 1975. On the same date,
however, the attorneys for both parties moved for time within which to submit their respective memoranda. The
trial court granted the motion as follows:
Upon joint motion, the parties are given thirty [30] days to submit their respective memoranda, simultaneously, and
thereafter the case shall be deemed submitted for decision of the Court.
Counsel for petitioner submitted his memorandum in due time, but no memorandum was filed by the People.
On November 28, 1975, respondent judge filed with the Deputy Clerk of Court his decision in said case for
promulgation. The decision was also dated November 28, 1975. 1
A certification dated January 26, 1976 was executed by Postmaster Jesse A. Santos of the Grace Park Post Office 2 to
the effect that registered letters Nos. 011980 and 011981, addressed to Marietta Ferrer of 9-E Mango Road, Portero,
Malabon, Rizal, the complaining witness, and Atty, Angel P. Purisima of 414 Shurdut Bldg., Intramuros, Manila,
counsel for the accused, respectively, were posted in said office on December 4, 1975. These notices were received
by the respective addressees on December 8 and 9, 1975. 3
Similar notices were sent to the Provincial Fiscal of Pasig and to the Provincial Warden of Pasig, Rizal, who both
received them on December 2,1975, 4
On the date set for promulgation of the decision, counsel for accused moved for postponement, raising for the first
time the alleged loss of jurisdiction of the trial court for failure to decide the case within 90 days from submission
thereof for decision. Acceding to counsel's request that he be given time to consider the proper remedial measure to
take, the respondent judge reset the promulgation of the decision to January 19, 1976 at 8:30 A. M.
On January 19, 1976, counsel for petitioner moved anew for the resetting of the promulgation of decision. Granting
the motion, respondent judge rescheduled the promulgation to January 26, 1976.
Meanwhile, on January 12, 1976, counsel for the accused filed before Us the present petition. On January 16, 1976,
this Court issued an Order temporarily restraining respondent judge from promulgating the decision in Criminal Case
No, C-5910.
Petitioner espouses the thesis that the three-month period prescribed by Section 11[l] of Article X of the 1973
Constitution, being a constitutional directive, is mandatory in character and that non-observance thereof results in
the loss of jurisdiction of the court over the unresolved case.
We disagree. Undisputed is the fact that on November 28, 1975, or eighty- five [851 days from September 4, 1975
the date the case was deemed submitted for decision, respondent judge filed with the deputy clerk of court the
decision in Criminal Case No. 5910. He had thus veritably rendered his decision on said case within the three-month
period prescribed by the Constitution.
In Comia v. Nicolas, 5 Ago v. Court of Appeals 6 and Balquidra v. Court of First Instance 7 this Court ruled that the
rendition of the judgment in trial courts refers to the filing of the signed decision with the clerk of court. There is no
doubt that the constitutional provision cited by petitioner refers to the rendition of judgment and not to the
promulgation thereof. Thus, it is this date that should be considered in determining whether or not respondent
judge had resolved the case within the allotted period. Indeed, the date of promulgation of a decision could not
serve as the reckoning date because the same necessarily comes at at a later date, considering that notices have to
be sent to the accused as well as to the other parties involved, an event which is beyond the control of the judge. As
pointed out in People v. Court of Appeals 8, the promulgation of a judgment in the trial court does not necessarily
coincide with the date of its delivery by the judge of the clerk of court.
Section 11 [1], Article X of the New Constitution provides in full, to wit:
SEC. 11 [1]. Upon the effectivity of this Constitution, the maximum period within which a case or matter shall be
decided or resolved from the date of its submission, shall be eighteen months for the Supreme court, and, unless
reduced by the Supreme Court, twelve months for all inferior collegiate courts, and three months for all other
inferior courts.
To date, no authoritative interpretation of the above-quoted provision has been rendered by this Court. Thus, in
approaching this novel question, We now tread upon what Mr. Cooley characterizes as "very dangerous ground
when they [referring to the courts] venture to apply rules which distinguish directory and mandatory statutes to the
provisions of a constitution." 9
The established rule is that "constitutional provisions are to be construed as mandatory, unless by express provision
or by necessary implication, a different intention is manifest." 10 "The difference between a mandatory and a
directory provision is often determined on grounds of expediency, the reason being that less injury results to the
general public by disregarding than by enforcing the letter of the law." 11
In Trapp v. McCormick, 12 a case calling for the interpretation of a statute containing a limitation of thirty [30] days
within which a decree may be entered without the consent of counsel, it was held that "the statutory provisions
which may be thus departed from with impunity, without affecting the validity of statutory proceedings, are usually
those which relate to the mode or time of doing that which is essential to effect the aim and purpose of the
Legislature or some incident of the essential act. " Thus, in said case, the statute under examination was construed
merely to be directory.
On this view, authorities are one in saying that:
Statutes requiring the rendition of judgment forthwith or immediately after the trial or verdict have been held by
some courts to be merely directory so that non-compliance with them does not invalidate the judgment, on the
theory that if the statute had intended such result it would clearly have indicated it." [American Tupe Founders Co. v.
Justice's Court, 133 Cal. 819, 65 Pac. 742; Heillen v. Phillips, 88 Cal. 557, 26 Pac. 366; Drake v. Bagley, 69 Mo. App. 39,
State v. Davis, 194 Mo. 585, 5 Ann. Cas. 1000, 4 L.R.A. (N.S.) 1023, 92 S.W. 484; Wissman v. Meagher, 115 Mo. App.
82, 91 S.W. 448; Pohle v. Dickmann, 67 Mo. App. 381; Herwick v. Koken Barber Supply Co., 61 Mo. App. 454].
Such construction applies equally to the constitutional provision under consideration. In Mikell v. School Dis. of
Philadelphia, 13 it was ruled that "the legal distinction between directory and mandatory laws is applicable to
fundamental as it is to statutory laws."
To Our mind, the phraseology of the provision in question indicates that it falls within the exception rather than the
general rule. By the phrase "unless reduced by the Supreme Court," it is evident that the period prescribed therein is
subject to modification by this Court in accordance with its prerogative under Section 5[5] of Article X of the New
Constitution to "promulgate rules concerning pleading, practice and procedure in all courts ... " And there can be no
doubt that said provision, having been incorporated for reasons of expediency, relates merely to matters of
procedure. Albermarle Oil & Gas Co. v. Morris, 14 declares that constitutional provisions are directory, and not
mandatory, where they refer to matters merely procedural.
In practice, We have assumed a liberal stand with respect to this provision. This Court had at various times, upon
proper application and for meritorious reasons, allowed judges of inferior courts additional time beyond the three-
month period within which to decide cases submitted to them. The reason is that a departure from said provision
would result in less injury to the general public than would its strict application. To hold that non-compliance by the
courts with the aforesaid provision would result in loss of jurisdiction, would make the courts, through which
conflicts are resolved, the very instruments to foster unresolved causes by reason merely of having failed to render a
decision within the alloted term. Such an absurd situation could not have been intended by the framers of our
fundamental law.
As foreseen by Mr. Henry Campbell Black in his Construction and Interpretation of the Laws, 15 the constitutional
provision in question should be held merely as directory. "Thus, where the contrary construction) would lead to
absurd, impossible or mischievous consequences, it should not be followed. "
One last point, Notwithstanding Our conclusion that courts are not divested of their jurisdiction for failure to decide
a case within the ninety-day period, We here emphasize the rule, for the guidance of the judges manning our courts,
that cases pending before their salas must be decided within the aforementioned period. Failure to observe said rule
constitutes a ground for administrative sanction against the defaulting judge. In fact a certificate to this certificate is
required before judges are allowed Lo draw their salaries.
WHEREFORE, the petition is hereby dismissed; and the Restraining Order dated January 16, 1976 issued by this Court
is lifted. Since respondent Judge Fernando Cruz, Jr. is already deceased, his successor is hereby ordered to decide
Criminal Case No. C-5910 on the basis of the record thereof within ninety [90] days from the time the case is raffled
to him.
SO ORDERED.
G.R. No. 237428
REPUBLIC of the PHILIPPINES, represented by SOLICITOR GENERAL JOSE C. CALIDA, Petitioner

vs.
MARIA LOURDES P.A. SERENO, Respondent
RESOLUTION
TIJAM, J.:
This resolution treats of the following motions:
1. Maria Lourdes P. A. Sereno’s (respondent) Ad Cautelam Motion for Reconsideration of this Court's Decision 1
dated May 11, 2018, the dispositive portion of which states:
WHEREFORE, the Petition for Quo Warranto is GRANTED. Respondent Maria Lourdes P. A. Sereno is found
DISQUALIFIED from and is here y adjudged GUILTY of UNLAWFULLY HOLDING and EXERCISING the OFFICE OF THE
CHIEF JUSTICE. Accordingly, Respondent Maria Lourdes P.A. Sereno is OUSTED and EXCLUDED therefrom.
The position of the Chief Justice of the Supreme Court is declared vacant and the Judicial and Bar Council is directed
to commence the application and nomination process.
This Decision is immediately executory without need of further action from the Court.
Respondent Maria Lourdes P.A. Sereno is ordered to SHOW CAUSE within ten (10) days from receipt hereof why she
should not be sanctioned for violating the Code of Professional Responsibility and the Code of Judicial Conduct for
transgressing the subjudice rule and for casting aspersions and ill motives to the Members of the Supreme Court.
SO ORDERED.2
2. Respondent’s Ad Cautelam Motion for Extension of Time to File Reply (to the Show Cause Order dated 11 May
2018).
We first dispose of respondent's Motion for Reconsideration.
Respondent claims denial of due process because her case was allegedly not heard by an impartial tribunal. She
reiterates that the six (6) Justices ought to have inhibited themselves on the grounds of actual bias, of having
personal knowledge of disputed evidentiary facts, and of having acted as a material witness in the matter in
controversy. Respondent also argues denial of due process when the Court supposedly took notice of extraneous
matters as corroborative evidence and when the Court based its main Decision on facts without observing the
mandatory procedure for reception of evidence.
She reiterates her arguments that the Court is without jurisdiction to oust an impeachable officer through quo
warranto; that the official acts of the Judicial and Bar Council (JBC) and the President involves political questions that
cannot be annulled absent any allegation of grave abuse of discretion; that the petition for quo warranto is time-
barred; and that respondent was and is a person of proven integrity.
By way of Comment, the Republic of the Philippines (Republic), through the Office of the Solicitor General (OSG),
seeks a denial of respondent's motion for reconsideration for being proforma. In any case, the OSG argues that
respondent's motion lacks merit as there was no denial of due process and that quo warranto is the appropriate
remedy to oust an ineligible impeachable officer. The OSG adds that the issue of whether respondent is a person of
proven integrity is justiciable considering that the decision-making powers of the JBC are limited by judicially
discoverable standards. Undeviating from its position, the OSG maintains that the petition is not time-barred as
Section 11, Rule 66 of the Rules of Court does not apply to the State and that the peculiar circumstances of the
instant case preclude the strict application of the prescriptive period.
Disputing respondent's claims, the OSG reiterates that respondent's repeated failure to file her Statement of Assets,
Liabilities and Net Worth (SALN) and her non-submission thereof to the JBC which the latter required to prove the
integrity of an applicant affect respondent's integrity. The OSG concludes that respondent, not having possessed of
proven integrity, failed to meet the constitutional requirement for appointment to the Judiciary.
Carefully weighing the arguments advanced by both parties, this Court finds no reason to reverse its earlier Decision.
Respondent is seriously in error for claiming denial of due process. Respondent refuses to recognize the Court's
jurisdiction over the subject matter and over her person on the ground that respondent, as a purported impeachable
official, can only be removed exclusively by impeachment. Reiterating this argument, respondent filed her Comment
to the Petition, moved that her case be heard on Oral Argument, filed her Memorandum, filed her
Reply/Supplement to the OSG's Memorandum and now, presently moves for reconsideration. All these
representations were made ad cautelam which, stripped of its legal parlance, simply means that she asks to be heard
by the Court which jurisdiction she does not acknowledge. She asked relief from the Court and was in fact heard by
the Court, and yet she claims to have been denied of due process. She repeatedly discussed the supposed merits of
her opposition to the present quo warranto petition in various social and traditional media, and yet she claims denial
of due process. The preposterousness of her claim deserves scant consideration.
Respondent also harps on the alleged bias on the part of the six (6) Justices and that supposedly, their failure to
inhibit themselves from deciding the instant petition amounts to a denial of due process.
Respondent's contentions were merely a rehash of the issues already taken into consideration and properly resolved
by the Court. To reiterate, mere imputation of bias or partiality is not enough ground for inhibition, especially when
the charge is without basis. Acts or conduct clearly indicative of arbitrariness or prejudice has to be shown.3 Verily,
for bias and prejudice to be considered sufficient justification for the inhibition of a Member of this Court, mere
suspicion is not enough.
Moreover, as discussed in the main Decision, respondent's allegations on the grounds for inhibition were merely
based on speculations, or on distortions of the language, context and meaning of the answers given by the
concerned Justices as resource persons in the proceedings of the Committee on Justice of the House of
Representatives. These matters were squarely resolved by the Court in its main Decision, as well as in the respective
separate opinions of the Justices involved.
Indeed, the Members of the Court's right to inhibit are weighed against their duty to adjudicate the case without
fear of repression. Respondent's motion to require the inhibition of Justices Teresita J. Leonardo-De Castro, Lucas P.
Bersamin, Diosdado M. Peralta, Francis H. Jardeleza, Samuel R. Martires, and Noel Gimenez Tijam, who all concurred
to the main Decision, would open the floodgates to the worst kind of forum shopping, and on its face, would allow
respondent to shop for a Member of the Court who she perceives to be more compassionate and friendly to her
cause, and is clearly antithetical to the fair administration of justice.
Bordering on the absurd, respondent alleges prejudice based on the footnotes of the main Decision which show that
the draft thereof was being prepared as early as March 15, 2018 when respondent has yet to file her Comment.
Respondent forgets to mention that the Petition itself was filed on March 5, 2018 where the propriety of the remedy
of quo warranto was specifically raised. Certainly, there is nothing irregular nor suspicious for the Member-in-
Charge, nor for any of the Justices for that matter, to have made a requisite initial determination on the matter of
jurisdiction. In professing such argument, respondent imputes fault on the part of the Justices for having been
diligent in the performance of their work.
Respondent also considers as irregular the query made by the Member-in-Charge with the JBC Office of the
Executive Officer (OEO) headed by Atty. Annaliza S. Ty-Capacite (Atty. Capacite ). Respondent points out that the
same is not allowed and shows prejudice on the part of the Court.
For respondent's information, the data were gathered pursuant to the Court En Bane’s Resolution dated March 20,
2018 wherein the Clerk of Court En Banc and the JBC, as custodian and repositories of the documents submitted by
respondent, were directed to provide the Court with documents pertinent to respondent's application and
appointment as an Associate Justice in 2010 and as Chief Justice of the Court in 2012 for the purpose of arriving at a
judicious, complete, and efficient resolution of the instant case. In the same manner, the "corroborative evidence"
referred to by respondent simply refers to respondent's acts and representations ascertainable through an
examination of the documentary evidence appended by both parties to their respective pleadings as well as their
representations during the Oral Argument. Reference to respondent's subsequent acts committed during her
incumbency as Chief Justice, on the other hand, are plainly matters of public record and already determined by the
House of Representatives as constituting probable cause for impeachment.
II
The Court reaffirms its authority to decide the instant quo warranto action. This authority is expressly conferred on
the Supreme Court by the Constitution under Section 5, Article VIII which states that:
Sec. 5. The Supreme Court shall have the following powers:
1. Exercise original jurisdiction over cases affecting ambassadors, other public ministers and consuls, and over
petitions for certiorari, prohibition, mandamus, quo warranto, and habeas corpus.
x x x x (Emphasis ours)
Section 5 of Article VIII does not limit the Court's quo warranto jurisdiction only to certain public officials or that
excludes impeachable officials therefrom. In Sarmiento v. Mison, 4 the Court ruled:
The task of the Court is rendered lighter by the existence of relatively clear provisions in the Constitution. In cases
like this, we follow what the Court, speaking through Mr. Justice (later, Chief Justice) Jose Abad Santos stated in Gold
Creek Mining Corp. v. Rodriguez, that:
The fundamental principle of constitutional construction is to give effect to the intent of the framers of the organic
law and of the people adopting it. The intention to which force is to be given is that which is embodied and
expressed in the constitutional provisions themselves.5 (Emphasis ours)
The Constitution defines judicial power as a "duty" to be performed by the courts of justice.6 Thus, for the Court to
repudiate its own jurisdiction over this case would be to abdicate a constitutionally imposed responsibility.
As the Court pointed out in its Decision, this is not the first time the Court took cognizance of a quo warranto
petition against an impeachable officer. In the consolidated cases of Estrada v. Macapagal-Arroyo7 and Estrada v.
Desierto, 8 the Court assumed jurisdiction over a quo warranto petition that challenged Gloria Macapagal-Arroyo's
title to the presidency.
Arguing that the aforesaid cases cannot serve as precedent for the Court to take cognizance of this case, respondent
makes it appear that they involved a totally different issue, one that concerned Joseph E. Estrada's immunity from
suit, specifically: "Whether conviction in the impeachment proceedings is a condition precedent for the criminal
prosecution of petitioner Estrada. In the negative and on the assumption that petitioner is still President, whether he
is immune from criminal prosecution."9
Respondent's allegation is utterly false and misleading. A cursory reading of the cases will reveal that Estrada's
immunity from suit was just one of the issues raised therein. Estrada in fact sought a quo warranto inquiry into
Macapagal-Arroyo's right to assume the presidency, claiming he was simply a President on leave.
Respondent also asserts that Estrada cannot serve as precedent for the Court to decide this case because it was
dismissed, and unlike the instant petition, it was filed within the prescribed one (1)-year period under Section 11,
Rule 66 of the Rules of Court. 10
The argument fails to persuade. Estrada was dismissed not because the Court had no jurisdiction over the quo
warranto petition but because Estrada's challenge to Macapagal-Arroyo's presidency had no merit. In ruling upon
the merits of Estrada's quo warranto petition, the Court has undeniably exercised its jurisdiction under Section 5(1)
of Article VIII. Thus, Estrada clearly demonstrates that the Court's quo warranto jurisdiction extends to impeachable
officers.
Furthermore, as will be discussed elsewhere in this Resolution, the filing of the instant petition was not time-barred.
The issue of prescription must be addressed in light of the public interest that quo warranto is meant to protect.
Accordingly, the Court could, as it did in Estrada, assume jurisdiction over the instant quo warranto petition against
an impeachable officer.
Quo warranto and impeachment are two distinct proceedings, although both may result in the ouster of a public
officer. Strictly speaking, quo warranto grants the relief of "ouster", while impeachment affords "removal."
A quo warranto proceeding is the proper legal remedy to determine a person's right or title to a public office and to
oust the holder from its enjoyment. 11 It is the proper action to inquire into a public officer's eligibility12 or the
validity of his appointment. 13 Under Rule 66 of the Rules of Court, a quo warranto proceeding involves a judicial
determination of the right to the use or exercise of the office.
Impeachment, on the other hand, is a political process undertaken by the legislature to determine whether the
public officer committed any of the impeachable offenses, namely, culpable violation of the Constitution, treason,
bribery, graft and corruption, other high crimes, or betrayal of public trust. 14 It does not ascertain the officer's
eligibility for appointment or election, or challenge the legality of his assumption of office. Conviction for any of the
impeachable offenses shall result in the removal of the impeachable official from office. 15
The OSG 's quo warranto petition challenged respondent's right and title to the position of Chief Justice. He averred
that in failing to regularly disclose her assets, liabilities and net worth as a member of the career service prior to her
appointment as an Associate Justice of the Court, respondent could not be said to possess the requirement of
proven integrity demanded of every aspiring member of the Judiciary. The OSG thus prayed that respondent's
appointment as Chief Justice be declared void.
Clearly, the OSG questioned the respondent's eligibility for appointment as Chief Justice and sought to invalidate
such appointment. The OSG's petition, therefore, is one for quo warranto over which the Court exercises original
jurisdiction.
As the Court previously held, "where the dispute is on the eligibility to perform the duties by the person sought to be
ousted or disqualified a quo warranto is the proper action." 16
Respondent harps on the supposed intent of the framers of the Constitution for impeachable officers to be removed
only through impeachment. 17 However, a circumspect examination of the deliberations of the 1986 Constitutional
Commission will reveal that the framers presumed that the impeachable officers had duly qualified for the position.
Indeed, the deliberations which respondent herself cited 18 showed that the framers did not contemplate a
situation where the impeachable officer was unqualified for appointment or election.
Accordingly, respondent's continued reliance on the Court's pronouncement in Mayor Lecaroz v. Sandiganbayan, 19
Cuenca v. Hon. Fernan,20 Jn Re Gonzales,21 Jarque v. Desierto22 and Marcoleta v. Borra23 (Lecaroz etc.) is
misplaced. Not one of these cases concerned the validity of an impeachable officer's appointment. To repeat,
Lecaroz involved a criminal charge against a mayor before the Sandiganbayan, while the rest were disbarment cases
filed against impeachable officers principally for acts done during their tenure in public office. The officers' eligibility
or the validity of their appointment was not raised before the Court. The principle laid down in said cases is to the
effect that during their incumbency, impeachable officers cannot be criminally prosecuted for an offense that carries
with it the penalty of removal, and if they are required to be members of the Philippine Bar to qualify for their
positions, they cannot be charged with disbarment. The proscription does not extend to actions assailing the public
officer's title or right to the office he or she occupies. The ruling therefore cannot serve as authority to hold that a
quo warranto action can never be filed against an impeachable officer.
The Court's quo warranto jurisdiction over impeachable officers also finds basis in paragraph 7, Section 4, Article VII
of the Constitution which designates it as the sole judge of the qualifications of the President and Vice-President,
both of whom are impeachable officers. With this authority, the remedy of quo warranto was provided in the rules
of the Court sitting as the Presidential Electoral Tribunal (PET).
Respondent, however, argues that quo warranto petitions may be filed against the President and Vice-President
under the PET Rules "only because the Constitution specifically permits" them under Section 4, Article VII. According
to respondent, no counterpart provision exists in the Constitution giving the same authority to the Court over the
Chief Justice, the members of the Constitutional Commissions and the Ombudsman. Respondent, thus, asserts that
the Constitution made a distinction between elected and appointive impeachable officials, and limited quo warranto
to elected impeachable officials. For these reasons, respondent concludes that by constitutional design, the Court is
denied power to remove any of its members.24
The Court is not convinced. The argument, to begin with, acknowledges that the Constitution in fact allows quo
warranto actions against impeachable officers, albeit respondent limits them to the President and Vice-President.
This admission refutes the very position taken by respondent that all impeachable officials cannot be sued through
quo warranto because they belong to a "privileged class" of officers who can be removed only through
impeachment.25 To be sure, Lecaroz, etc. did not distinguish between elected and appointed impeachable officers.
Furthermore, that the Constitution does not show a counterpart provision to paragraph 7 of Section 4, Article VII for
members of this Court or the Constitutional Commissions does not mean that quo warranto cannot extend to non-
elected impeachable officers. The authority to hear quo warranto petitions against appointive impeachable officers
emanates from Section 5(1) of Article VIII which grants quo warranto jurisdiction to this Court without qualification
as to the class of public officers over whom the same may be exercised.
Respondent argues that Section 5(1) of Article VIII is not a blanket authority, otherwise paragraph 7 of Section 4,
Article VII would be "superfluous." Superfluity, however, is not the same as inconsistency. Section 4, Article VII is not
repugnant to, and clearly confirms, the Court's quo warranto jurisdiction under Section 5(1) of Article VIII.
Respondent herself has not alleged any irreconcilability in these provisions.
Indeed, contrary to respondent's claim, Section 4 of Article VII is not meant to limit the Court's quo warranto
jurisdiction under Article VIII of the Constitution. In fact, We held that "[t]he power wielded by PET is "a derivative of
the plenary judicial power allocated to the courts of law, expressly provided in the Constitution."26 Thus, the
authority under Section 4 of Article VII to hear quo warranto petitions assailing the qualifications of the President
and Vice-President is simply a component of the Court's quo warranto jurisdiction under Article VIII. This finds
support in the nature of quo warranto as a remedy to determine a person's right or title to a public office, 27 which
is not confined to claims of ineligibility but extends to other instances or claims of usurpation or unlawful holding of
public office as in the cases of Lota v. CA and Sangalang,28 Moro v. Del Castillo, Jr.,29 Mendoza v. Allas,30 Sen.
Defensor Santiago v. Sen. Guingona, Jr. 31 and Estrada. It will be recalled that in Estrada, the Court took cognizance
of, and ruled upon, a quo warranto challenge to a vice-president's assumption of the presidency; the challenge was
based, not on ineligibility, but on therein petitioner's claim that he had not resigned and was simply a president on
leave. To sustain respondent's argument, therefore, is to unduly curtail the Court's judicial power and to dilute the
efficacy of quo warranto as a remedy against the "unauthorized arbitrary assumption and exercise of power by one
without color of title or who is not entitled by law thereto."32 It bears to reiterate that:
While an appointment is an essentially discretionary executive power, it is subject to the limitation that the
appointee should possess none of the disqualifications but all the qualifications required by law. Where the law
prescribes certain qualifications for a given office or position, courts may determine whether the appointee has the
requisite qualifications, absent which, his right or title thereto may be declared void. 33 (Citations omitted and
emphasis ours)
This Court has the constitutional mandate to exercise jurisdiction over quo warranto petitions. And as Estrada and
the PET Rules show, impeachable officers are not immune to quo warranto actions. Thus, a refusal by the Court to
take cognizance of this case would not only be a breach of its duty under the Constitution, it would also accord
respondent an exemption not given to other impeachable officers. Such privilege finds no justification either in law,
as impeachable officers are treated without distinction under the impeachment provisions34 of the Constitution, or
in reason, as the qualifications of the Chief Justice are no less important than the President's or the Vice-President's.
Respondent's insistence that she could not be removed from office except through impeachment is predicated on
Section 2, Article XI of the Constitution. It reads:
Sec. 2. The President, the Vice-President, the Members of the Supreme Court, the Members of the Constitutional
Commissions, and the Ombudsman may be removed from office on impeachment for, and conviction of, culpable
violation of the Constitution, treason, bribery, graft and corruption, other high crimes, or betrayal of public trust. All
other public officers and employees may be removed from office as provided by law, but not by impeachment.
(Emphasis ours)
By its plain language, however, Section 2 of Article XI does not preclude a quo warranto action questioning an
impeachable officer's qualifications to assume office. These qualifications include age, citizenship and professional
experience - matters which are manifestly outside the purview of impeachment under the above-cited provision.
Furthermore, Section 2 of Article XI cannot be read in isolation from Section 5(1) of Article VIII of the Constitution
which gives this Court its quo warranto jurisdiction, or from Section 4, paragraph 7 of Article VII of the Constitution
which designates the Court as the sole judge of the qualifications of the President and Vice-President.
In Civil Liberties Union v. The Executive Secretary, 35 the Court held:
It is a well-established rule in constitutional construction that no one provision of the Constitution is to be separated
from all the others, to be considered alone, but that all the provisions bearing upon a particular subject are to be
brought into view and to be so interpreted as to effectuate the great purposes of the instrument. Sections bearing
on a particular subject should be considered and interpreted together as to effectuate the whole purpose of the
Constitution and one section is not to be allowed to defeat another, if by any reasonable construction, the two can
be made to stand together.
In other words, the court must harmonize them, if practicable, and must lean in favor of a construction which will
render every word operative, rather than one which may make the words idle and nugatory. 36 (Citations omitted)
Section 2 of Article XI provides that the impeachable officers may be removed from office on impeachment for and
conviction of culpable violation of the Constitution, treason, bribery, graft and corruption, other high crimes, or
betrayal of public trust. Lack of qualifications for appointment or election is evidently not among the stated grounds
for impeachment. It is, however, a ground for a quo warranto action over which this Court was given original
jurisdiction under Section 5(1) of Article VIII. The grant of jurisdiction was not confined to unimpeachable officers. In
fact, under Section 4, paragraph 7 of Article VII, this Court was expressly authorized to pass upon the qualifications
of the President and Vice-President. Thus, the proscription against the removal of public officers other than by
impeachment does not apply to quo warranto actions assailing the impeachable officer's eligibility for appointment
or election.
This construction allows all three provisions to stand together and to give effect to the clear intent of the
Constitution to address not only the impeachable offenses but also the issue of qualifications of public officers,
including impeachable officers.
As this Court intoned in its Decision, to take appointments of impeachable officers beyond the reach of judicial
review is to cleanse them of any possible defect pertaining to the constitutionally prescribed qualifications which
cannot otherwise be raised in an impeachment proceeding.
To illustrate this, the Court cited the requirement that the impeachable officer must be a natural-born citizen of the
Philippines. We explained that if it turns out that the impeachable officer is in fact of foreign nationality,
respondent's argument will prevent this Court from inquiring into this important qualification that directly affects
the officer's ability to protect the interests of the State. Unless convicted of an impeachable offense, the officer will
continue in office despite being clearly disqualified from holding it. We stressed that this could not have been the
intent of the framers of the Constitution.
Respondent, however, contends that the above-cited defect will actually constitute a ground for impeachment
because the appointee's continued exercise of public functions despite knowledge of his foreign nationality amounts
to a culpable violation of the Constitution.
The argument is untenable. Citizenship is a qualification issue which this Court has the authority to resolve. Thus, in
Kilosbayan Foundation v. Exec. Sec. Ermita,37 where the appointment of Sandiganbayan Justice Gregory S. Ong
(Ong) to this Court was sought to be annulled for the latter's supposed failure to comply with the citizenship
requirement under the Constitution, We stated that:
Third, as to the proper forum for litigating the issue of respondent Ong's qualification for membership of this Court.
This case is a matter of primordial importance involving compliance with a Constitutional mandate. As the body
tasked with the determination of the merits of conflicting claims under the Constitution, the Court is the proper
forum for resolving the issue, even as the JBC has the initial competence to do so.38 (Citation omitted and emphasis
ours)
In the subsequent case of Topacio v. Assoc. Justice Gregory Santos Ong, et al.,39 Ong's citizenship was raised anew,
this time to prevent him from further exercising the office of a Sandiganbayan Associate Justice. The Court held that
the challenge was one against Ong's title to the office which must be raised in a quo warranto proceeding, thus:
While denominated as a petition for certiorari and prohibition, the petition partakes of the nature of a quo warranto
proceeding with respect to Ong, for it effectively seeks to declare null and void his appointment as an Associate
Justice of the Sandiganbayan for being unconstitutional. While the petition professes to be one for certiorari and
prohibition, petitioner even adverts to a quo warranto aspect of the petition.
Being a collateral attack on a public officer's title, the present petition for certiorari and prohibition must be
dismissed.
The title to a public office may not be contested except directly, by quo warranto proceedings; and it cannot be
assailed collaterally, even through mandamus or a motion to annul or set aside order. In Nacionalista Party v. De
Vera, the Court ruled that prohibition does not lie to inquire into the validity of the appointment of a public officer.
x x x [T]he writ of prohibition, even when directed against persons acting as judges or other judicial officers, cannot
be treated as a substitute for quo warranto or be rightfully called upon to perform any of the functions of the writ. If
there is a court, judge or officer de facto, the title to the office and the right to act cannot be questioned by
prohibition. If an intruder takes possession of a judicial office, the person dispossessed cannot obtain relief through a
writ of prohibition commanding the alleged intruder to cease from performing judicial acts, since in its very nature
prohibition is an improper remedy by which to determine the title to an office.40 (Citations omitted and emphasis
ours)
Determining title to the office on the basis of a public officer's qualifications is the function of quo warranto. For this
reason, impeachment cannot be treated as a substitute for quo warranto.
Furthermore, impeachment was designed as a mechanism "to check abuse of power."41 The grounds for
impeachment, including culpable violation of the Constitution, have been described as referring to "serious crimes or
misconduct"42 of the "vicious and malevolent" kind.43 Citizenship issues are hardly within the ambit of this
constitutional standard.
The Constitution must be construed in light of the object sought to be accomplished and the evils sought to be
prevented or remedied.44 An interpretation that would cause absurdity is not favored.45
It thus bears to reiterate that even the PET Rules expressly provide for the remedy of election protest. Following
respondent's theory that an impeachable officer can be removed only through impeachment means that a President
or Vice-President against whom an election protest has been filed can demand for the dismissal of the protest on the
ground that it can potentially cause his/her removal from office through a mode other than by impeachment. To
sustain respondent's position is to render election protests under the PET Rules nugatory. The Constitution could not
have intended such absurdity since fraud and irregularities in elections cannot be countenanced, and the will of the
people as reflected in their votes must be determined and respected.
The preposterousness of allowing unqualified public officials to continue occupying their positions by making
impeachment the sole mode of removing them was likewise aptly discussed by Our esteemed colleague Justice
Estela M. Perlas-Bernabe when she stated that qualification should precede authority, viz:
Owing to both the "political" and "offense-based" nature of these grounds, I am thus inclined to believe that
impeachment is not the sole mode of "removing" impeachable officials as it be clearly absurd for any of them to
remain in office despite their failure to meet the minimum eligibility requirements, which failure does not constitute
a ground for impeachment. Sensibly, there should be a remedy to oust all our public officials, no matter how high-
ranking they are or criticial their functions may be, upon a determination that they have not actually qualified for
election or appointment. While I do recognize the wisdom of insulating impeachable officials from suits that may
impede the performance of vital public functions, ultimately, this concern cannot override the basic qualification
requirements of public office. There is no doubt that qualification should precede authority. Every public office is
created and conferred by law.xx x. 46 (Emphasis in the original)
Underlying all constitutional provisions on government service is the principle that public office is a public trust.47
The people, therefore, have the right to have only qualified individuals appointed to public office. To construe
Section 2, Article XI of the Constitution as proscribing a quo warranto petition is to deprive the State of a remedy to
correct a public wrong arising from defective or void appointments. Equity, however, will not suffer a wrong to be
without remedy.48 It stands to reason, therefore, that quo warranto should be available to question the validity of
appointments especially of impeachable officers since they occupy the upper echelons of government and are
capable of wielding vast power and influence on matters of law and policy.
III
Much noise and hysteria have been made that a sitting Chief Justice can only be removed by impeachment and that
quo warranto is an improper remedy not sanctioned by the Constitution. The wind of disinformation was further
fanned by respondent who claimed that her ouster was orchestrated by the President. This campaign of
misinformation attempted to conceal and obfuscate the fact that the main issue in the petition which the Court is
tasked to resolve is the qualification of respondent.
In the instant motion, respondent made mention of Senate Resolution No. 738,49 which urges this Court to review
Our May 11, 2018 Decision as it sets a "dangerous precedent that transgresses the exclusive powers of the legislative
branch to initiate, try and decide all cases of impeachment." This Resolution was supposedly aimed to express "the
sense of the Senate to uphold the Constitution on the matter of removing a Chief Justice from office." We have to
remind the respondent, however, that while a majority of the Senators - 14 out of the 23 members - signed the said
Resolution, the same has not yet been adopted by the Senate to date. In fact, the Court takes judicial notice that on
May 31, 2018, the Senate adjourned its interpellation without any conclusion as to whether the Resolution is
adopted. 50 Without such approval, the Senate Resolution amounts to nothing but a mere scrap of paper at present.
The Senate Resolution also appears to have been drafted, signed by some Senators, and interpellated on while
respondent's motion for reconsideration is still pending consideration by the Court. While the concerned Members
of the Senate insist on non-encroachment of powers, the Senate Resolution itself tends to influence, if not exert
undue pressure on, the Court on how it should resolve the pending motion for reconsideration. The importance and
high regard for the institution that is the Senate is undisputed. But the Court, in the discharge of its Constitutional
duty, is also entitled to the same degree of respect and deference.
At any rate, and with due regard to the Members of the Senate, We emphasize that the judicial determination of
actual controversies presented before the courts is within the exclusive domain of the Judiciary. "The separation of
powers doctrine is the backbone of our tripartite system of government. It is implicit in the manner that our
Constitution lays out in separate and distinct Articles the powers and prerogatives of each co-equal branch of
government."51 Thus, the act of some of the Senators questioning the Court's judicial action is clearly an
unwarranted intrusion to the Court's powers and mandate.
To disabuse wandering minds, there is nothing violative or intrusive of the Senate's power to remove impeachable
officials in the main Decision. In fact, in the said assailed Decision, We recognized that the Senate has the sole power
to try and decide all cases of impeachment. We have extensively discussed therein that the Court merely exercised
its Constitutional duty to resolve a legal question referring to respondent's qualification as a Chief Justice of the
Supreme Court. We also emphasized that this Court's action never intends to deprive the Congress of its mandate to
make a determination on impeachable officials' culpability for acts committed while in office. We even explained
that impeachment and quo warranto may proceed independently and simultaneously, albeit a ruling of removal or
ouster of the respondent in one case will preclude the same ruling in the other due to legal impossibility and
mootness.
Quo warranto is not a figment of imagination or invention of this Court. It is a mandate boldly enshrined in the
Constitution52 where the judiciary is conferred original jurisdiction to the exclusion of the other branches of the
government. Quo warranto, not impeachment, is the constitutional remedy prescribed to adjudicate and resolve
questions relating to qualifications, eligibility and entitlement to public office. Those who chose to ignore this fact
are Constitutionally blind. US Supreme Court Justice Scalia once said: "If it is in the Constitution, it is there. If it is not
in the Constitution, it is not there." 53 There is nothing in Our Constitution that says that impeachable officers are
immuned, exempted, or excluded from quo warranto proceedings when the very issue to be determined therein is
the status of an officer as such. No amount of public indignation can rewrite or deface the Constitution.
IV
The plain issue in the instant case is whether respondent is eligible to occupy the position of Chief Justice. To
determine whether or not respondent is eligible, the primordial consideration is whether respondent met the
requisite Constitutional requirements for the position. Questions on eligibility therefore present a justiciable issue,
which can be resolved by juxtaposing the facts with the Constitution, as well as pertinent laws and jurisprudence. In
Kilosbayan Foundation,54 the Court affirmed its jurisdiction to resolve the issue on the qualification for membership
of this Court as the body tasked with the determination of the merits of conflicting claims under the Constitution,
even when the JBC has the initial competence to do so. 55
True enough, constitutionally committed to the JBC is the principal function of recommending appointees to the
Judiciary. The function to recommend appointees carries with it the concomitant duty to screen applicants therefor.
The JBC's exercise of its recommendatory function must nevertheless conform with the basic premise that the
appointee possesses the non-negotiable qualifications prescribed by the Constitution. While the JBC enjoys a certain
leeway in screening aspiring magistrates, such remains to be tightly circumscribed by the Constitutional
qualifications for aspiring members of the Judiciary. 56 These Constitutional prerequisites are therefore deemed
written into the rules and standards which the JBC may prescribe in the discharge of its primary function. The JBC
cannot go beyond or less than what the Constitution prescribes.
The surrender to the JBC of the details as to how these qualifications are to be determined is rendered necessary
and in keeping with its recommendatory function which is nevertheless made expressly subject to the Court's
exercise of supervision.
As an incident of its power of supervision over the JBC, the Court has the authority to insure that the JBC performs
its duties under the Constitution and complies with its own rules and standards. Indeed, supervision is an active
power and implies the authority to inquire into facts and conditions that renders the power of supervision real and
effective. 57 Under its power of supervision, the Court has ample authority to look into the processes leading to
respondent's nomination for the position of Chief Justice on the face of the Republic's contention that respondent
was ineligible to be a candidate to the position to begin with.
Arguments were raised against the Court's assumption over the quo warranto petition on the premise that the
determination of the integrity requirement lies solely on the JBC's discretion and thus, a prior nullification of the
JBC's act on the ground of grave abuse of discretion through a certiorari petition is the proper legal route.
The question of whether or not a nominee possesses the reqms1te qualifications is determined based on facts and
as such, generates no exercise of discretion on the part of the nominating body. Thus, whether a nominee is of the
requisite age, is a natural-born citizen, has met the years of law practice, and is of proven competence, integrity,
probity, and independence are to be determined based on facts and cannot be made dependent on inference or
discretion, much less concessions, which the recommending authority may make or extend. To say that the
determination of whether a nominee is of "proven integrity" is a task absolutely contingent upon the discretion of
the JBC is to place the integrity requirement on a plateau different from the rest of the Constitutional requirements,
when no such distinction is assigned by the Constitution. As well, to treat as discretionary on the part of the JBC the
question of whether a nominee is of "proven integrity" is to render the Court impotent to nullify an otherwise
unconstitutional nomination unless the Court's jurisdiction is invoked on the ground of grave abuse of discretion.
Such severely limiting course of action would effectively diminish the Court's collegial power of supervision over the
JBC.
To re-align the issue in this petition, the Republic charges respondent of unlawfully holding or exercising the position
of Chief Justice of the Supreme Court. The contents of the petition pose an attack to respondent's authority to hold
or exercise the position. Unmoving is the rule that title to a public office may not be contested except directly, by
quo warranto proceedings. 58 As it cannot be assailed collaterally, certiorari is an infirm remedy for this purpose. It is
for this reason that the Court previously denied a certiorari and prohibition petition which sought to annul
appointment to the Judiciary of an alleged naturalized citizen. 59
Aguinaldo, et al. v. Aquino, et al., 60 settles that when it is the qualification for the position that is in issue, the
proper remedy is quo warranto pursuant to Topacio. 61 But when it is the act of the appointing power that is placed
under scrutiny and not any disqualification on the part of the appointee, a petition for certiorari challenging the
appointment for being unconstitutional or for having been done in grave abuse of discretion is the apt legal course.
In Aguinaldo, the Court elucidated:
The Court recognized in Jardeleza v. Sereno that a petition for certiorari is a proper remedy to question the act of
any branch or instrumentality of the government on the ground of grave abuse of discretion amounting to lack or
excess of jurisdiction by any branch or instrumentality of the government, even if the latter does not exercise
judicial, quasi-judicial or ministerial functions.
In opposing the instant Petition for Certiorari and Prohibition, the OSG cites Topacio in which the Court declares that
title to a public office may not be contested except directly, by quo warranto proceedings; and it cannot be assailed
collaterally, such as by certiorari and prohibition.
However, Topacio is not on all fours with the instant case. In Topacio, the writs of certiorari and prohibition were
sought against Sandiganbayan Associate Justice Gregory S. Ong on the ground that he lacked the qualification of
Filipino citizenship for said position. In contrast, the present Petition for Certiorari and Prohibition puts under
scrutiny, not any disqualification on the part of respondents Musngi and Econg, but the act of President Aquino in
appointing respondents Musngi and Econg as Sandiganbayan Associate Justices without regard for the clustering of
nominees into six separate shortlists by the JBC, which allegedly violated the Constitution and constituted grave
abuse of discretion amounting to lack or excess of jurisdiction. This would not be the first time that the Court, in the
exercise of its expanded power of judicial review, takes cognizance of a petition for certiorari that challenges a
presidential appointment for being unconstitutional or for having been done in grave abuse of discretion.xx x.62
(Italics and citations omitted.)
A certiorari petition also lacks the safeguards installed in a quo warranto action specifically designed to promote
stability in public office and remove perpetual uncertainty in the title of the person holding the office. For one, a
certiorari petition thrives on allegation and proof of grave abuse of discretion. In a quo warranto action, it is
imperative to demonstrate that the respondent have usurped, intruded into or unlawfully held or exercised a public
office, position or franchise.
For another, certiorari may be filed by any person alleging to have been aggrieved by an act done with grave abuse
of discretion. In a quo warranto action, it is the Solicitor General or a public prosecutor, when directed by the
President or when upon complaint or when he has good reason to believe that the grounds for quo warranto can be
established by proof, who must commence the action. The only instance when an individual is allowed to commence
such action is when he or she claims to be entitled to a public office or position usurped or unlawfully held or
exercised by another. In such case, it is incumbent upon the private person to present proof of a clear and
indubitable right to the office. If certiorari is accepted as the proper legal vehicle to assail eligibility to public office
then any person, although unable to demonstrate clear and indubitable right to the office, and merely upon claim of
grave abuse of discretion, can place title to public office in uncertainty.
Tellingly also, the rules on quo warranto do not require that the recommending or appointing authority be
impleaded as a necessary party, much less makes the nullification of the act of the recommending authority a
condition precedent before the remedy of quo warranto can be availed of. The JBC itself did not bother to intervene
in the instant petition.
Under Section 6, Rule 66 of the Rules of Court, when the action is against a person for usurping a public office,
position or franchise, it is only required that, if there be a person who claims to be entitled thereto, his or her name
should be set forth in the petition with an averment of his or her right to the office, position or franchise and that the
respondent is unlawfully in possession thereof. All persons claiming to be entitled to the public office, position or
franchise may be made parties and their respective rights may be determined in the same quo warranto action. The
appointing authority, or in this case the recommending authority which is the JBC, is therefore not a necessary party
in a quo warranto action.
Peculiar also to the instant petition is the surrounding circumstance that an administrative matter directly pertaining
to the nomination of respondent is pending before the Court. While the administrative matter aims to determine
whether there is culpability or lapses on the part of the JBC members, the factual narrative offered by the latter are
all extant on record which the Court can take judicial notice of. Thus, considerations regarding the lack of due
process on the part of the JBC present only a superficial resistance to the Court's assumption of jurisdiction over the
instant quo warranto petition.
In any case, the rules on quo warranto vests upon the Court ancillary jurisdiction to render such further judgment as
"justice requires."63 Indeed, the doctrine of ancillary jurisdiction implies the grant of necessary and usual incidental
powers essential to effectuate its jurisdiction and subject to existing laws and constitutional provisions, every
regularly constituted court has power to do all things that are reasonably necessary for the administration of justice
within the scope of its jurisdiction and for the enforcement of its judgments and mandates. 64 Accordingly,
"demands, matters or questions ancillary or incidental to, or growing out of, the main action, and coming within the
above principles, may be taken cognizance of by the court and determined, since such jurisdiction is in aid of its
authority over the principal matter, even though the court may thus be called on to consider and decide matters
which, as original causes of action, would not be within its cognizance."65
This Court had likewise amply laid down the legal and factual bases for its ruling against the dismissal of the instant
petition on the ground of prescription. Our ruling on this matter is anchored upon the very purpose of such
prescriptive period as consistently held by this Court for decades and also upon consideration of the unique
underlying circumstances in this case which cannot be ignored.
In addition to the catena of cases cited in the assailed Decision, the Court, in Madrigal v. Prov. Gov. Lecaroz, 66
exhaustively explained the rationale behind the prescriptive period:
The unbending jurisprudence in this jurisdiction is to the effect that a petition for quo warranto and mandamus
affecting titles to public office must be filed within one (1) year from the date the petitioner is ousted from his
position. xx x The reason behind this being was expounded in the case of Unabia v. City Mayor, etc., x x x where We
said:
"x x x[W]e note that in actions of quo warranto involving right to an office, the action must be instituted within the
period of one year. This has been the law in the island since 1901, the period having been originally fixed in Section
216 of the Code of Civil Procedure (Act No. 190). We find this provision to be an expression of policy on the part of
the State that persons claiming a right to an office of which they are illegally dispossessed should immediately take
steps to recover said office and that if they do not do so within a period of one year, they shall be considered as
having lost their right thereto by abandonment. There are weighty reasons of public policy and convenience that
demand the adoption of a similar period for persons claiming rights to positions in the civil service. There must be
stability in the service so that public business may [not] be unduly retarded; delays in the statement of the right to
positions in the service must be discouraged. The following considerations as to public officers, by Mr. Justice
Bengzon, may well be applicable to employees in the civil service:
'Furthermore, constitutional rights may certainly be waived, and the inaction of the officer for one year could be
validly considered as waiver, i.e., a renunciation which no principle of justice may prevent, he being at liberty to
resign his position anytime he pleases.
And there is good justification for the limitation period; it is not proper that the title to public office should be
subjected to continued uncertain[t]y, and the peoples' interest require that such right should be determined as
speedily as practicable.'
"Further, the Government must be immediately informed or advised if any person claims to be entitled to an office
or a position in the civil service as against another actually holding it, so that the Government may not be faced with
the predicament of having to pay the salaries, one, for the person actually holding the office, although illegally, and
another, for one not actually rendering service although entitled to do so.xx x."67 (Citations omitted and emphasis
ours)
The long line of cases decided by this Court since the l 900's, which specifically explained the spirit behind the rule
providing a prescriptive period for the filing of an action for quo warranto, reveals that such limitation can be applied
only against private individuals claiming rights to a public office, not against the State.
Indeed, there is no proprietary right over a public office. Hence, a claimed right over a public office may be waived.
In fact, even Constitutionally-protected rights may be waived. Thus, We have consistently held that the inaction of a
person claiming right over a public office to assert the same within the prescriptive period provided by the rules, may
be considered a waiver of such right. This is where the difference between a quo warranto filed by a private
individual as opposed to one filed by the State through the Solicitor General lies. There is no claim of right over a
public office where it is the State itself, through the Solicitor General, which files a petition for quo warranto to
question the eligibility of the person holding the public office. As We have emphasized in the assailed Decision,
unlike Constitutionally-protected rights, Constitutionally-required qualifications for a public office can never be
waived either deliberately or by mere passage of time. While a private individual may, in proper instances, be
deemed to have waived his or her right over title to public office and/or to have acquiesced or consented to the loss
of such right, no organized society would allow, much more a prudent court would consider, the State to have
waived by mere lapse of time, its right to uphold and ensure compliance with the requirements for such office, fixed
by no less than the Constitution, the fundamental law upon which the foundations of a State stand, especially so
when the government cannot be faulted for such lapse.
On another point, the one-year prescriptive period was necessary for the government to be immediately informed if
any person claims title to an office so that the government may not be faced with the predicament of having to pay
two salaries, one for the person actually holding it albeit illegally, and another to the person not rendering service
although entitled to do so. It would thus be absurd to require the filing of a petition for quo warranto within the one-
year period for such purpose when it is the State itself which files the same not for the purpose of determining who
among two private individuals are entitled to the office. Stated in a different manner, the purpose of the instant
petition is not to inform the government that it is facing a predicament of having to pay two salaries; rather, the
government, having learned of the predicament that it might be paying an unqualified person, is acting upon it head-
on.
Most importantly, urgency to resolve the controversy on the title to a public office to prevent a hiatus or disruption
in the delivery of public service is the ultimate consideration in prescribing a limitation on when an action for quo
warranto may be instituted. However, it is this very same concern that precludes the application of the prescriptive
period when it is the State which questions the eligibility of the person holding a public office and not merely the
personal interest of a private individual claiming title thereto. Again, as We have stated in the assailed Decision,
when the government is the real party in interest and asserts its rights, there can be no defense on the ground of
laches or limitation, 68 otherwise, it would be injurious to public interest if this Court will not act upon the case
presented before it by the Republic and merely allow the uncertainty and controversy surrounding the Chief Justice
position to continue.
Worthy to mention is the fact that this is not the first time that this Court precluded the application of the
prescriptive period in filing a petition for quo warranto. In Cristobal v. Melchor,69 the Court considered certain
exceptional circumstances attending the case, which took it out of the rule on the one-year prescriptive period. Also,
in Agcaoili v. Suguitan, 70 the Court considered, among others, therein petitioner's good faith and the injustice that
he suffered due to his forcible ouster from office in ruling that he is not bound by the provision on the prescriptive
period in filing his action for quo warranto to assert his right to the public office. When the Court in several cases
exercised liberality in the application of the statute of limitations in favor of private individuals so as not to defeat
their personal interests on a public position, is it not but proper, just, reasonable, and more in accord with the spirit
of the rule for this Court to decide against the application of the prescriptive period considering the public interest
involved? Certainly, it is every citizen's interest to have qualified individuals to hold public office, especially which of
the highest position in the Judiciary.
From the foregoing disquisition, it is clear that this Court's ruling on the issue of prescription is not grounded upon
provisions of the Civil Code, specifically Article 1108(4)71 thereof. Instead, the mention thereof was intended merely
to convey that if the principle that "prescription does not lie against the State" can be applied with regard to
property disputes, what more if the underlying consideration is public interest.
To be clear, this Court is not abolishing the limitation set by the rules in instituting a petition for quo warranto. The
one-year prescriptive period under Section 11, Rule 66 of the Rules of Court still stands. However, for reasons
explained above and in the main Decision, this Court made distinctions as to when such prescriptive period applies,
to wit: (1) when filed by the State at its own instance, through the Solicitor General, 72 prescription shall not apply.
This, of course, does not equate to a blanket authority given to the Solicitor General to indiscriminately file baseless
quo warranto actions in disregard of the constitutionally-protected rights of individuals; (2) when filed by the
Solicitor General or public prosecutor at the request and upon relation of another person, with leave of court, 73
prescription shall apply except when established jurisprudential exceptions 74 are present; and (3) when filed by an
individual in his or her own name, 75 prescription shall apply, except when established jurisprudential exceptions are
present. In fine, Our pronouncement in the assailed Decision as to this matter explained that certain circumstances
preclude the absolute and strict application of the prescriptive period provided under the rules in filing a petition for
quo warranto.
Thus, this Court finds no reason to reverse its ruling that an action for quo warranto is imprescriptible if brought by
the State at its own instance, as in the instant case.
In any case, and as aptly discussed in the main Decision, the peculiarities of the instant case preclude strict
application of the one-year prescriptive period against the State. As observed by Justice Perlas-Bernabe in her
Separate Opinion, "x x x if there is one thing that is glaringly apparent from these proceedings, it is actually the lack
of respondent's candor and forthrightness in the submission of her SALNs."76 Respondent's actions prevented the
State from discovering her disqualification within the prescriptive period. Most certainly, thus the instant case is one
of those proper cases where the one-year prescriptive period set under Section 11, Rule 66 of the Rules of Court
should not apply.
VI
Respondent reiterates her argument that her case should be treated similarly as in Concerned Taxpayer v. Doblada
Jr. 77
As extensively discussed in the main Decision, respondent, unlike Doblada, did not present contrary proof to rebut
the Certifications from U.P. HRDO that respondent's SALNs for 1986, 1987, 1988, 1992, 1999, 2000, 2001, 2003,
2004, 2005 and 2006 are not in its possession and from the Ombudsman that based on its records, there is no SALN
filed by respondent except that for 1998. Being uncontroverted, these documents suffice to support this Court's
conclusion that respondent failed to file her SALNs in accordance with law.
In Doblada, the contrary proof was in the form of the letter of the head of the personnel of Branch 155 that the SALN
for 2000 exists and was duly transmitted and received by the Office of the Court Administrator as the repository
agency. In respondent's case, other than her bare allegations attacking the credibility of the aforesaid certifications
from U.P. HR.DO and the Ombudsman, no supporting proof was presented. It bears to note that these certifications
from the aforesaid public agencies enjoy a presumption that official duty has been regularly performed. These
certifications suffice as proof of respondent's failure to file her SALN until contradicted or overcome by sufficient
evidence. Consequently, absent a countervailing evidence, such disputable presumption becomes conclusive. 78
As what this Court has stated in its May 11, 2018 Decision, while government employees cannot be required to keep
their SALNs for more than 10 years based from the provisions of Section 8, paragraph C(4) of Republic Act No.
6713,79 the same cannot substitute for respondent's manifest ineligibility at the time of her application. Verily, even
her more recent SALNs, such as those in the years of 2002 to 2006, which in the ordinary course of things would
have been easier to retrieve, were not presented nor accounted for by respondent.
Respondent attempts to strike a parallelism with Doblada by claiming that she, too, religiously filed her SALNs. The
similarity however, ends there. Unlike in Doblada, respondent failed to present contrary proof to rebut the evidence
of non-filing. If, indeed, she never missed filing her SALNs and the same were merely lost, or missing in the records of
the repository agency, this Court sees nothing that would prevent respondent from securing a Certification which
would provide a valid or legal reason for the copies' non-production.
VII
Respondent insists that the filing of SALNs bears no relation to the Constitutional qualification of integrity.1âwphi1
For her, the measure of integrity should be as what the JBC sets it to be and that in any case, the SALN laws, being
malum prohibitum, do not concern adherence to moral and ethical principles.
Respondent's argument, however, dangerously disregards that the filing of SALN is not only a requirement under the
law, but a positive duty required from every public officer or employee, first and foremost by the Constitution. 80
The SALN laws were passed in aid of the enforcement of the Constitutional duty to submit a declaration under oath
of one's assets, liabilities, and net worth. This positive Constitutional duty of filing one's SALN is so sensitive and
important that it even shares the same category as the Constitutional duty imposed upon public officers and
employees to owe allegiance to the State and the Constitution. 81 As such, offenses against the SALN laws are not
ordinary offenses but violations of a duty which every public officer and employee owes to the State and the
Constitution. In other words, the violation of SALN laws, by itself, defeats any claim of integrity as it is inherently
immoral to violate the will of the legislature and to violate the Constitution.
Integrity, as what this Court has defined in the assailed Decision, in relation to a judge's qualifications, should not be
viewed separately from the institution he or she represents. Integrity contemplates both adherence to the highest
moral standards and obedience to laws and legislations. Integrity, at its minimum, entails compliance with the law.
In sum, respondent has not presented any convincing ground that would merit a modification or reversal of Our May
11, 2018 Decision. Respondent, at the time of her application, lacked proven integrity on account of her failure to file
a substantial number of SALNs and also, her failure to submit the required SALNs to the JBC during her application
for the position. Although deviating from the majority opinion as to the proper remedy, Justice Antonio T. Carpio
shares the same finding:
Since respondent took her oath and assumed her posit10n as Associate Justice of the Supreme Court on 16 August
2010, she was required to file under oath her SALN within thirty (30) days after assumption of office, or until 15
September 2010, and the statements must be reckoned as of her first day of service, pursuant to the relevant
provisions on SALN filing.
However, respondent failed to file a SALN containing sworn statements reckoned as of her first day of service within
thirty (30) days after assuming office. While she allegedly submitted an "entry SALN" on 16 September 2010, it was
unsubscribed and the statements of her assets, liabilities and net worth were reckoned as of 31 December 2009, and
not as of her first day of service, or as of 16 August 2010. x x x
xxxx
The Constitution, law, and rules clearly require that the sworn entry SALN "must be reckoned as of his/her first day
of service" and must be filed "within thirty (30) days after assumption of office." Evidently, respondent failed to file
under oath a SALN reckoned as of her first day of service, or as of 16 August 2010, within the prescribed period of
thirty (30) days after her assumption of office. In other words, respondent failed to file the required SALN upon her
assumption of office, which is a clear violation of Section 17, Article XI of the Constitution. In light of her previous
failure to file her SALNs for several years while she was a UP College of Law Professor, her failure to file her SALN
upon assuming office in 2010 as Associate Justice of this Court constitutes culpable violation of the Constitution, a
violation committed while she was already serving as an impeachable office.82 (Citation omitted and emphasis ours)
Having settled respondent's ineligibility and ouster from the position, the Court reiterates its directive to the JBC to
immediately commence the application, nomination and recommendation process for the position of Chief Justice of
the Supreme Court.
WHEREFORE, respondent Maria Lourdes P. A. Sereno's Ad Cautelam Motion for Reconsideration is DENIED with
FINALITY for lack of merit. No further pleadings shall be entertained. Let entry of judgment be made immediately.
The Court REITERATES its order to the Judicial and Bar Council to commence the application and nomination process
for the position of the Chief Justice without delay. The ninety-day (90) period83 for filling the vacancy shall be
reckoned from the date of the promulgation of this Resolution.
SO ORDERED.
C. INCLUDING/INVOLVING
G.R. No. 171427 March 30, 2011
STERLING SELECTIONS CORPORATION, Petitioner,

vs.
LAGUNA LAKE DEVELOPMENT AUTHORITY (LLDA) and JOAQUIN G. MENDOZA, in his capacity as General Manager of
LLDA, Respondents.
DECISION
NACHURA, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court. Petitioner Sterling
Selections Corporation (petitioner) is assailing the Decision1 dated May 30, 2005 and the Resolution2 dated January
31, 2006 of the Court of Appeals (CA) in CA-G.R. SP No. 79889.
Petitioner is a company engaged in the fabrication of sterling silver jewelry. Its products are manufactured in the
home of its principal stockholders, Asuncion Maria and Juan Luis Faustmann (Faustmanns), located in Barangay
(Brgy.) Mariana, New Manila, Quezon City.3
Sometime in 1992, one of petitioner’s neighbors in Brgy. Mariana filed a complaint with the Office of the Chairman
of Brgy. Mariana against petitioner for "creating loud unceasing noise and emitting toxic fumes," coming from the
manufacturing plant of the latter’s predecessor, Unson, Faustmann and Company, Inc.4 During conciliation
proceedings, petitioner’s management undertook to relocate its operations within a month. The parties signed an
Agreement to that effect.5 However, petitioner failed to abide by the undertaking and continued to manufacture its
products in its Brgy. Mariana workshop.
On January 16, 1998, Alicia P. Maceda (Maceda), another neighbor of petitioner, wrote a letter to the Brgy. Chairman
to complain about the loud noise and offensive toxic fumes coming from petitioner’s manufacturing plant.6 She also
filed a formal complaint with the Department of Environment and Natural Resources (DENR)-National Capital Region
office. The complaint was endorsed by the DENR to one of the agencies under it, respondent Laguna Lake
Development Authority (LLDA), which had territorial and functional jurisdiction over the matter.7
Subsequently, the Monitoring and Enforcement Section-Pollution Control Division of LLDA conducted an inspection
of petitioner’s premises. According to the LLDA, it was observed that the wastewater generated by petitioner’s
operations was drained directly to the sewer canal. However, since the wastewater was not yet for disposal, no
sample could be collected during the inspection.
On November 19, 1998, a Notice of Violation and a Cease and Desist Order (CDO) were served on petitioner after it
was found that it was operating without an LLDA Clearance and Permit, as required by Republic Act (R.A.) No. 4850.8
Meanwhile, Maceda’s complaint was endorsed by the LLDA to the Office of the Mayor of Quezon City. After hearing
and investigation, the Office of the Mayor issued a Closure Order against petitioner after finding that it was
operating without the requisite business permit, since it was running a jewelry manufacturing plant with an "Office
Only" permit, and for violation of Zoning and Environmental Laws.9
Petitioner then filed a petition for mandamus before the Regional Trial Court (RTC), Branch 167, Pasig City.
Contending that, as a cottage industry, its jewelry business is exempt from the requirement to secure a permit from
the LLDA, petitioner asked the court to order the latter to issue a certificate of exemption in its favor. The RTC denied
the petition, ruling that mandamus does not lie to compel the performance of a discretionary duty. Nonetheless, the
RTC allowed petitioner to file an amended petition for certiorari and mandamus.10
In its amended petition, petitioner averred that its business was classified as a cottage industry. It argued that under
R.A. No. 6977, the law prevailing at the time of its registration with the Securities and Exchange Commission (SEC) in
December 1996, cottage industry was defined as one with assets worth ₱50,001.00 to ₱500,000.00.11 Since, based
on its Articles of Incorporation and Certified Public Accountant (CPA)’s Balance Sheet, its total assets when it was
incorporated amounted only to ₱312,500.00, it qualified as a cottage industry.
Intervenors Maceda, Ma. Corazon G. Logarta (Logarta), and Rosario "Charito" Planas (Planas) filed a motion for
intervention. Their Answer-in-Intervention was subsequently admitted by the RTC.
On April 1, 2002, the RTC promulgated a decision12 denying the petition. In rejecting petitioner’s claim that it was a
cottage industry, the RTC said:
While it is true that plaintiff [petitioner]’s economic activity is carried on in a home, which incidentally gained the ire
of the neighbors that culminated in a complaint against the plaintiff, it was manned not with the members of the
family but by at least two hundred employees who were strangers and not known to the community. Moreso, being
an accredited exporter recognized by the Bureau of Export Trade Promotion, Department of Trade and Industry,
seemed a deviation from the connotation of "small scale."
Worthy to note is the observation of respondent-intervenors that to be considered a cottage industry, plaintiff
should have been registered under the [National Cottage Industries Development Authority (NACIDA)], Section 12 of
R.A. [No.] 3470 substantially provides; (sic) that the plaintiff corporation who desires to avail of the benefits and
assistance of the law should have registered with the board. In the absence of any indication that affirm the status of
the plaintiff corporation as a cottage industry, proof to the contrary may be reasonably accepted, for he who alleged
the affirmative of the issue has the burden of proof and in this aspect plaintiff miserably failed.
On the contention that LLDA Resolution No. 41, series of 1997, exempt the plaintiff corporation from the
requirements imposed by the LLDA, the interpretation given by [the] government agency itself should be given
greater probative value. As a regulatory and quasi-judicial body, the LLDA is mandated to pass upon, approve or
disapprove all plans, programs and project[s] proposed by local government offices/agencies, public corporations
and private [corporations]. It is in the position to construe its own rules and regulation. By implication, plaintiff
corporation arrogates unto itself the privilege bestowed upon a cottage industry. However, there is nothing in the
Resolution that includes jewelry making as included in the term cottage industry.13
Thus, the RTC held that petitioner must subscribe to the rules and regulations of the LLDA governing clearance.14
Petitioner filed a motion for reconsideration of the RTC decision. The same was denied in an Order dated May 17,
2002. Hence, it filed a Notice of Appeal. Subsequently, it filed its appeal with the CA.
In a Decision15 dated May 30, 2005, the CA dismissed the appeal. The CA brushed aside the issue of whether
petitioner qualified as a cottage industry. It said that even if petitioner belonged to that category, it still needed to
prove that its business was exempted by law from the coverage of LLDA Resolution No. 41, Series of 1997.
Specifically, the CA cited Section 2(30) of said resolution, to wit:
Section 2. Exemptions. The following activities, projects, and installations are exempt from the above subject
requirements:
xxxx
30. Cottage Industries, including
- stuffed toys manufacturing
- handicrafts, and
- rattan/furniture manufacturing.16
The CA held that, following the principle of ejusdem generis, the enumeration in the foregoing provision must be
taken to include businesses of the same kind, which were, as averred by the LLDA, not as environmentally critical as
those enumerated.17 Thus, the CA declared that the LLDA did not contemplate the inclusion of the manufacture of
jewelry in the exemptions.18 Additionally, the CA held that the opinions and rulings of officials of the government
called upon to execute or implement administrative laws command respect and weight.19 The CA further held that
since petitioner was claiming to be within the exemption, it had the duty to prove that the law intended to include it,
or that it is within the contemplation of the law, to be exempted.20
Petitioner moved for the reconsideration of the Decision, but the CA denied the same in a Resolution dated January
31, 2006. Hence, petitioner filed this petition for review.
Petitioner argues that the CA committed the following errors:
1. The appellate court erred when it failed or refused to make a definitive pronouncement as to whether petitioner
qualifies as a cottage industry. This, even after the appellate court (on page 7 of the assailed Decision) scored the
trial court for having "failed to consider the fact that the predicament of Sterling rests primarily on the
determination of its status," i.e., whether petitioner is a cottage industry or not.
2. The appellate court erred when it deliberately ignored the provisions of various statutes and regulations
pertaining to cottage industries, which if the same had been taken into account and accorded due consideration,
would have led the appellate court to correctly conclude that petitioner is indeed a cottage industry.
3. The appellate court erred when it declared, after misapplying the rules of statutory construction, that No. 30 of
Sec. 2 of LLDA Resolution No. 41, Series of 1997, does not serve to exempt petitioner from the clearance
requirement.21
Petitioner also argues that Section 2(30) of LLDA Resolution No. 41, Series of 1997, contains no restriction limiting
the exemptions to only certain kinds of cottage industries.22 It contends that the word "including" connotes a sense
of "containing" or "comprising," and not a sense of exclusivity or exclusion. The provision, petitioner points out, is
devoid of any restrictive or limiting words; thus, the LLDA should avoid limiting the kinds or classes of cottage
industries exempted from the clearance requirement.23
Next, petitioner avers that the CA erred when it refused to rule on whether it qualified as a cottage industry. It claims
that the CA deliberately ignored the provisions in various statutes and regulations pertaining to cottage industries,
which would have led to the conclusion that petitioner was such, and thus would fall within the exemption.24
Petitioner argues that its total assets were worth only ₱312,500.00 during its incorporation, which, under R.A. No.
6977, would qualify it as a cottage industry. Further, petitioner argues that, even with the enactment of R.A. No.
8502, the Jewelry Industry Development Act of 1998, jewelry-making remains a cottage industry.25
Finally, petitioner puts in question the factual basis for the issuance of the CDO by the LLDA.
By way of comment, intervenors Maceda, Logarta, and Planas allege that petitioner has been operating illegally,
violating ordinances and laws, operating without the required permits and clearances, and continuing its operations
despite LLDA’s issuance of a CDO.26 They further allege that petitioner’s business is located in an area classified as
"R-1" or low density residential zone under Quezon City Ordinance SP-918, Series of 2000, and preceding zoning
ordinances. Despite having only an "Office Only" permit, petitioner deliberately uses the premises to manufacture
jewelry.27
Intervenors also refute petitioner’s claim that it is exempted from obtaining the required LLDA clearance because it
is a cottage industry. First, intervenors allege that petitioner is not registered with the National Cottage Industries
Development Authority (NACIDA). Next, intervenors point out that, as admitted by petitioner itself, it employs at
least 229 employees who are strangers to the family, and its operations yield annual sales of at least ₱25 million.28
Intervenors also aver that, in R.A. No. 8502, there is no provision categorizing jewelry-making as a cottage industry.
Going by the classification of jewelry-making companies in the Implementing Rules and Regulations of R.A. No.
850229 and petitioner’s financial statements filed with the SEC, which state that petitioner had assets amounting to
₱2,454,459.01 in 1999 and ₱4,628,900.80 in 1998,30 it cannot be characterized as a micro jewelry enterprise.
Next, intervenors insist that the LLDA has jurisdiction over petitioner. They argue that LLDA Resolution No. 41, Series
of 1997, does not in any manner waive the LLDA jurisdiction even over those exempted in the list of activities,
projects, and installations. Jurisdiction is provided for by law and cannot be diminished by an act of the agency
concerned. In fact, there is no provision of waiver of jurisdiction contained in the said regulation. Exemption from
securing prior clearance before implementing an activity does not carry with it a waiver of jurisdiction.31
Intevernors also point out that cottage industry, as contemplated under LLDA Resolution No. 41, Series of 1997,
includes only the activities enumerated therein, namely, stuffed toys manufacturing, handicrafts, and
rattan/furniture manufacturing. Further, intervenors aver that, under existing laws, the term cottage industry no
longer exists and has been deleted. Jewelry-making is now classified as an independent and separate industry under
R.A. No. 8502, apart from the general term cottage industry. Therefore, petitioner’s activity cannot be included as
among those exempted from obtaining a clearance from the LLDA because jewelry-making is not at all mentioned as
an exception to the general rule, intervenors claim.32
On the other hand, the LLDA and its former General Manager Joaquin G. Mendoza (respondents) also filed their
Comment. Respondents narrated that in 1998, petitioner was found to be operating its business without clearance
and permit from the LLDA. Accordingly, a Notice of Violation was issued against petitioner. Subsequently, the LLDA
conducted a public hearing, which was attended by petitioner, its company physician, and legal counsels. During the
hearing, petitioner committed to relocate its facilities. Meanwhile, the same would remain padlocked to erase all
doubts of its continued operation despite the Closure Order from the Quezon City Mayor’s Office.33 After the public
hearing, the LLDA issued the assailed CDO against petitioner. Thereafter, proceedings before the RTC, then the CA,
ensued, resulting in the now-assailed decision and resolution.
In their Comment, respondents posit that petitioner is not a cottage industry within the contemplation of the law.
They argue that to qualify as such, the conditions in the laws must be complied with. Thus, while metalcraft activities
are considered as cottage industry, asset requirements and NACIDA registration requirements must also be complied
with.34
Respondents contend that petitioner cannot be considered a cottage industry considering that it has assets way
above the threshold fixed in the law. Respondents aver that what petitioner claims as its assets amounting to
₱312,500.00 refer only to the minimum paid-up capital stock required by law for purposes of incorporation and
registration with the SEC. Respondents argue that petitioner would have other properties contributed and owned for
purposes of starting the enterprise, such as furniture, fixtures, machinery, and equipment. Likewise, respondents
point out that petitioner actually has a capitalization of ₱5 million, of which ₱1.25 million had been subscribed. The
amount subscribed minus the paid-up capital is a subscription receivable from the incorporators and is an asset.35
Next, respondents argue that the CA did not err in ruling that petitioner is not exempted from securing a clearance
from the LLDA. The respondents posit that, under LLDA Resolution No. 41, Series of 1997, the cottage industries
exempted are those of the same nature and category as those enumerated therein, following the principle of
ejusdem generis.36 The activities enumerated, respondents claim, are those whose operations are basically dry and
whose environmental impact is not so significant.37 Likewise, respondents argue that, following the principle
expressio unius est exclusio alterius, the express mention of the three activities excluded all other cottage industries.
If the LLDA had intended to exempt all types of cottage industries, it would not have made an enumeration of those
exempt activities, respondents posit.38
In its Reply, petitioner claims that intervenors are illegally suppressing petitioner’s legitimate business because it is
competing with the jewelry business of intervenor Logarta’s cousin.39 Petitioner claims that Logarta’s cousin also
operates his business within the same area as its facilities. It further claims that there is a total of 34 other
businesses, including a manufacturer of garments, a wholesaler of cement, and a manufacturer of leather bags,
operating in the same supposedly-residential zone where its office is located.40 Petitioner also accuses intervenors
Maceda and Planas of going to court with "unclean hands," considering that they also run businesses in the same
area.41
Petitioner also denies that Mrs. Faustmann, then operating Unson, Faustmann and Company, Inc., reneged on a
promise, made in 1992, to relocate the company’s operations. Petitioner claims that Mrs. Faustmann was pressured
into signing the Agreement before the Lupon, through threats and intimidation. As to the later complaint, petitioner
claims that intervenors succeeded in pressing residents to sign the complaint, but those who signed were in fact
from other streets, further away from its office.42
Petitioner also claims that there was no public hearing conducted before the Quezon City Mayor’s Office issued and
enforced the CDO.
Petitioner likewise insists that its business qualifies as a cottage industry.43 It maintains that pertinent laws have
identified jewelry-making as a cottage industry. The Cottage Industry Technology Center (CITC) designates jewelry-
making as one of the industries it actively assists. Petitioner also maintains that its paid-up capital qualifies its
business as a cottage industry.44
The petition is unmeritorious; hence, the same is denied.
The main issue to be resolved is whether petitioner is exempted from complying with the requirement to obtain a
clearance from the LLDA to operate its business.
Petitioner insists that it is exempted from complying with the clearance requirements because it is a cottage
industry. In order to resolve this issue, a review of the laws pertinent to cottage industries is in order.
Section 11 of R.A. No. 3470, approved on June 16, 1962, defined cottage industry as an "economic activity in a small
scale which is carried on mainly in the homes or in other places for profit and which is mainly done with the help of
the members of the family." Among the activities considered as a cottage industry is "metalcraft such as making of
jewelries, knives, boloes (sic), scissors, razors, silverwares and brassworks (sic)."45
The same law required persons, corporations, partnerships, or associations that wished to avail of the benefits of the
law to register with the NACIDA.46
In 1968, R.A. No. 5326 amended certain sections of R.A. No. 3470. In particular, Section 11 was amended to read:
SEC. 11. Definition. – The term ‘cottage industry’ as used in this Act shall mean an economic activity in a small scale
carried on mainly in the homes or in other places for profit and mainly done with the help of the members of the
family with capitalization not exceeding fifteen thousand pesos. The term shall also include economic activities
carried on by students of public and private schools, within school premises, as a cooperative effort, under
supervision of a teacher or other person approved by and acting under the supervision and control of school
authorities, either as part of or in addition to ordinary vocational training, provided all profits shall accrue to the
students working therein. it shall include the following: x x x (5) metal craft such as making of jewelries, knives,
boloes (sic), scissors, razors, silverwares and brassworks (sic); x x x All cottage industries shall be owned and
operated by Filipino citizens, or by a corporation, partnership or cooperative, at least seventy-five per cent of the
capital or investment of which is owned by Filipino citizens. All members of its Board of Directors shall be Filipino
citizens.
The word capitalization as used in this section shall mean the total current assets and fixed assets, excluding the
value of the land and building leased, rented and/or used at least six months of each year. For purpose of this Act,
any and all branches, agencies, outlets or divisions of a licensed cottage industry shall be collated to determine the
capitalization thereof.
R.A. No. 3470 was further amended on October 22, 1975, by Presidential Decree (P.D.) No. 817. The first sentence of
Section 11 was amended, to read:
The term "cottage industry" as used in this Act shall mean an economic activity carried on in the homes or in other
places for profit, with a capitalization of not exceeding ₱100,000 at the time of registration.
In 1981, then President Ferdinand Marcos issued P.D. No. 1788, the Cottage Industries Development Decree of 1981,
amending and consolidating R.A. Nos. 3470 and 5326, P.D. No. 817, and other related Laws, Decrees, Executive
Orders, Letters of Instructions, and Acts concerning the NACIDA. Section 10 of P.D. No. 1788 states:
Section 10. Cottage Industry – The term "cottage industry" shall mean a modest economic activity for profit using
primarily indigenous raw materials in the production of various articles of the country. Provided, however, that all
cottage industries shall be owned and operated by Filipino citizens, or by corporations, partnerships, or cooperatives
at least seventy-five percent (75%) of the capital investment of which shall be owned by Filipino citizens. Provided,
further, that the total assets of which shall not exceed one hundred thousand pesos (₱100,000.00) at the time of
registration with the NACIDA. Provided, finally that the maximum total assets allowable for cottage industries for
purposes of registration may be modified and/or increased accordingly by the NACIDA Board subject to the approval
of the President of the Republic of the Philippines.
For facility of implementation, coordination and statistical gathering, cottage industries shall be classified as follows:
xxxx
a) Metalcraft Industry – That sector using metals or its alloys as principal raw material component in producing
articles such as brasswares, cutlery items, fabricated tools, implements and equipment and other items requiring a
certain degree of craftsmanship in the making thereof including the making of jewelry items involving the use metals
and/or its alloys in combination with semiprecious or artificial stones.
Executive Order (E.O.) No. 917, issued on October 15, 1983, amended the definition of cottage industry by increasing
the capitalization requirement to a maximum of ₱250,000.00, which amount may be modified or increased
accordingly, subject to the approval of the President.47
In 1986, the National Economic Development Authority (NEDA) redefined cottage, small and medium scale
industries. Considered as cottage industries were enterprises, excluding agriculture, with total assets after financing
of over ₱500,000.00 but less than ₱5 million.48
When Corazon Aquino became President, she issued E.O. No. 133, reorganizing the Department of Trade and
Industry (DTI). Section 18 thereof provided that the NACIDA was reorganized into the CITC, and its functions, other
than technology development and training, were transferred to the Bureau of Small and Medium Business
Development and relevant line operating units of the DTI.
In 1990, Congress enacted R.A. No. 6977, the Magna Carta for Small Enterprises. The capitalization for a cottage
enterprise was changed, viz.:
SEC. 3. Small and Medium Enterprises as Beneficiaries. – "Small and medium enterprise" shall be defined as any
business activity or enterprise engaged in industry, agribusiness and/or services, whether single proprietorship,
cooperative, partnership or corporation whose total assets, inclusive of those arising from loans but exclusive of the
land on which the particular business entity’s office, plant, and equipment are situated, must have value falling
under the following categories:
micro : less than ₱50,000
cottage : ₱50,001 – ₱500,000
small : ₱500,001 – ₱5,000,000
medium: ₱5,000,001 – ₱20,000,000
In a generic sense, all enterprises with total assets of Five million pesos (₱5,000,000) and below shall be called small
enterprises.
R.A. No. 6977 was amended by R.A. No. 8289 in 1998. Amending Section 1 of R.A. No. 6977, the term cottage
industry or cottage enterprise was completely eliminated:
SEC. 3. Small and Medium Enterprise as Beneficiaries. – "Small and Medium Enterprise" shall be defined as any
micro : less than ₱1,500,001
small : ₱1,500,001 – ₱15,000,000
medium: ₱15,000,001 – ₱60,000,00
The above definitions shall be subject to review and adjustment by the said Council motu proprio or upon
recommendation of sectoral organization(s) taking into account inflation and other economic indicators. The Council
may use as variables the number of employees, equity capital and asset size.
Finally, in 1998, Congress enacted R.A. No. 8502, the Jewelry Industry Development Act of 1998, a law to support,
promote, and encourage the growth and development of the predominantly small and medium scale jewelry
industries. R.A. No. 8502 did not use the term cottage industry; instead, it characterized businesses engaged in
jewelry-making as:
a) micro jewelry enterprise less than ₱1,500,001
b) small scale jewelry enterprise ₱1,500,001 – ₱15,000,000
c) medium jewelry enterprise ₱15,000,001 – ₱60,000,000
d) large scale jewelry enterprise more than ₱60,000,000.49

On the other hand, the LLDA was created by R.A. No. 4850 to carry out the development of the Laguna Lake region
with due regard and adequate provisions for environmental management and control, preservation of the quality of
human life and ecological systems, and prevention of undue ecological disturbances, deterioration, and pollution.50
The LLDA was granted the power to pass upon and approve or disapprove all plans, programs, and projects proposed
by the local government offices/agencies within their regions, by public corporations, and by private persons or
enterprises, where such plans, programs and/or projects are related to those of the Authority for the development
of the region, as well as to issue the necessary clearance for the approved plans, programs and/or projects.51
Thus, in LLDA Resolution No. 41, Series of 1997, the LLDA specified the development activities, projects, and
installations required to secure a clearance from the LLDA before these can be constructed, operated, maintained,
expanded, modified, or implemented by any government office/agency or government corporation or private person
or enterprise.52 Section 2 of the LLDA Resolution then set out the activities exempted from complying with the
clearance requirement, to wit:
Section 2. Exemptions. The following activities, projects, [or] installations are exempted from the above subject
requirements:
xxxx
30. Cottage industries including
- stuffed toys manufacturing
- handicrafts and
- rattan/furniture manufacturing.
Contrary to the CA’s pronouncement and to respondents’ claim, the provision did not restrict the exemption to the
three activities therein mentioned.
The word include means "to take in or comprise as a part of a whole."53
Thus, this Court has previously held that it necessarily conveys the very idea of non-exclusivity of the
enumeration.54 The principle of expressio unius est exclusio alterius does not apply where other circumstances
indicate that the enumeration was not intended to be exclusive, or where the enumeration is by way of example
only.55 The maxim expressio unius est exclusio alterius does not apply when words are mentioned by way of
example.56 Said legal maxim should be applied only as a means of discovering legislative intent which is not
otherwise manifest.57
In another case, the Court said:
[T]he word "involving," when understood in the sense of "including," as in including technical or financial assistance,
necessarily implies that there are activities other than those that are being included. In other words, if an agreement
includes technical or financial assistance, there is [–] apart from such assistance – something else already in[,] and
covered or may be covered by, the said agreement.58
As the regulation stands, therefore, all cottage industries including, but not limited to, those enumerated therein are
exempted from securing prior clearance from the LLDA. Hence, the CA erred in ruling that only the three activities
enumerated therein are exempted.
Next, the Court must determine if petitioner is in fact a cottage industry entitled to claim the exemption under LLDA
Resolution No. 41, Series of 1997.
That jewelry-making is one of the activities considered as a cottage industry is undeniable. The laws bear this out.
However, based on these same laws, the nature of the activity is only one of several factors to be considered in
determining whether the same is a cottage industry.
In view of the emphasis in law after law on the capitalization or asset requirements, it is crystal clear that the same is
a defining element in determining if an enterprise is a cottage industry.
Petitioner argues that its assets amount to only ₱312,500.00, representing its paid-up capital at the time of its SEC
registration. The law then in force was R.A. No. 6977, which, to recapitulate, states:
SEC. 3. Small and Medium Enterprises as Beneficiaries. – "Small and medium enterprise" shall be defined as any
micro : less than ₱50,000
cottage: ₱50,001 – ₱500,000
small : ₱500,001 – ₱5,000,000
medium: ₱5,000,001 – ₱20,000,000
In a generic sense, all enterprises with total assets of Five million pesos (₱5,000,000) and below shall be called small
enterprises.
Accordingly, it should be considered as a cottage industry, petitioner insists.
However, petitioner’s contention that its total assets amounts only to ₱312,500.00 is misleading.
The ₱312,500.00 represents the total amount of the capital stock already subscribed and paid up by the company’s
stockholders. It does not, however, represent the totality of its assets, even at the time of its registration. By the
expert opinion of petitioner’s own consultant, independent CPA Maximiano P. Sorongon, Jr., it does not mean that
the paid-up capital is the only source of funds of the corporation for it to support its recurring operational
requirements, as well as its increased financial requirements later on, as and when the business grows and
expands.59
In other words, its paid-up capital is not the only asset of the company. Under R.A. No. 6977, the term total assets
was understood to mean "inclusive of those arising from loans but exclusive of the land on which the particular
business entity’s office, plant, and equipment are situated."
Assets consist of property of all kinds, real and personal, tangible and intangible, including, inter alia, for certain
purposes, patents and causes of action which belong to any person, including a corporation and the estate of a
decedent.1avvphi1 It is the entire property of a person, association, corporation, or estate that is applicable or
subject to the payment of his, her, or its debts.60
Consider these details as found by the Board of Investments and set forth in a Memorandum dated June 8, 1999
addressed to the undersecretary of the DENR, listing the basic information of petitioner as follows:
Name : Sterling Selections Corporation
Address : 55-A, 11th St., New Manila, Quezon City
Business Activity : Producer of gift items made of silver

Chairman & Managing Director: Asuncion Maria S. de Faustmann
SEC Registration : A 1996-10845 dated December 2, 1996
BOI Accreditation : 98-003 dated August 13, 1998 under R.A. 8502
BETP Accreditation : 98-0010 dated July 17, 1998 under R.A. 7844
No. of Employees : 189 (Direct Labor; Salaries & Allowances -
₱16,064,000)
Value of Export Sales : ₱19,732,692.00
Total Sales : ₱37,160,340.00 (based on 1998 ITR)61
The same figures are reflected in petitioner’s own income statement.62 Petitioner cannot insist on using merely its
paid-up capital as basis to determine its assets. The law speaks of total assets. Petitioner’s own evidence, i.e.,
balance sheets prepared by CPAs it commissioned itself, shows that it has assets other than its paid-up capital.
According to the Consolidated Balance Sheet presented by petitioner, it had assets amounting to ₱4,628,900.80 by
the end of 1998, and ₱1,746,328.17 by the end of 1997.63 Obviously, these amounts are over the maximum
prescribed by law for cottage industries.
Thus, the conclusion is that petitioner is not a cottage industry and, hence, is not exempted from the requirement to
secure an LLDA clearance.
Further militating against petitioner’s claim is the RTC’s astute observation that being an accredited exporter
recognized by the Bureau of Export Trade Promotion (BETP) of the DTI seemed like a deviation from the connotation
of "small scale."64
The Court notes that, to be accredited by the BETP as an exporter, there are strict standards that the enterprise must
meet. Under R.A. No. 7844, the Export Development Act of 1994, an exporter is any person, natural or juridical,
licensed to do business in the Philippines, engaged directly or indirectly in the production, manufacture or trade of
products or services, which earns at least fifty percent (50%) of its normal operating revenues from the sale of its
products or services abroad for foreign currency.65
The same law provides for tax incentives to exporters, with the qualification that the incentives shall be granted only
upon presentation of their BETP certification of the exporter’s eligibility.66 Qualified exporters applying for BETP
certification must present a report of their export revenue/sales for the immediately preceding year.67
DTI Administrative Order No. 3, Series of 1995, provides for the mechanisms of accreditation for exporters vis-à-vis
the tax incentives granted under R.A. No. 7844. Under Procedure for Accreditation of Exporters, the following
schedule of application fees was set forth:
Export Value Per Year Application Fee

$1M – 5M Max. ₱1,000.00
Above $1M – 5M Max. 2,000.00
Above $5M – 10M Max.3,000.00
Above $10M – 15M Max. 4,000.00
Above $15M 5,000.00 68
Consequently, an exporter must be able to generate and export enough products, with an export value of $1 million
per year, in order to be accredited by the BETP for tax incentives. Petitioner’s accreditation shows that it complied
with this requirement.
Based on the foregoing, it is clear that petitioner cannot be considered a cottage industry. Therefore, it is not
exempted from complying with the clearance requirement of the LLDA.
It is a doctrine of long-standing that factual findings of administrative bodies on technical matters within their area of
expertise should be accorded not only respect but even finality if they are supported by substantial evidence even if
they are not overwhelming or preponderant.69 Courts will not interfere in matters which are addressed to the sound
discretion of the government agency entrusted with regulation of activities coming under the special and technical
training and knowledge of such agency. The exercise of administrative discretion is a policy decision and a matter
that is best discharged by the government agency concerned and not by the courts.70
The motives of the intervenors for filing the complaint are no longer relevant. Regardless of what these motives may
have been, the fact remains that the LLDA found petitioner to have violated the pertinent environmental and
regulatory laws.1ihpvva1
The Court recognizes the right of petitioner to engage in business and to profit from its industry. However, the
exercise of the right must conform to the laws and regulations laid down by the competent authorities.
WHEREFORE, the foregoing premises considered, the Petition is DENIED. The Decision dated May 30, 2005 and the
Resolution dated January 31, 2006 of the Court of Appeals in CA-G.R. SP No. 79889 are AFFIRMED.
SO ORDERED.
d. AFFIRMATIVE AND PROHIBITORY WORDS
[G.R. No. L-5387. April 29, 1954.]
In the matter of the Adoption of the minors MARIA LUALHATI MAGPAYO and AMADA MAGPAYO. CLYDE E. MCGEE,
Petitioner-Appellee, v. REPUBLIC OF THE PHILIPPINES, Appellant.
Quijano, Alidio and Azores for Appellee.
Assistant Solicitor General Guillermo E. Torres and Solicitor Estrella Abad Santos for Appellant.
SYLLABUS
1. ADOPTION; PURPOSE OF. — The purpose of adoption is to establish a relationship of paternity and filiation where
none existed before. Where therefore the relationship of parent and child already exists whether by blood or by
affinity as in the case of illegitimates and step-children, it would be unnecessary and superfluous to establish and
superimpose another relationship of parent and child through adoption.
2. ID.; STATUTORY CONSTRUCTION; NEGATIVE WORDS PREVAIL OVER AFFIRMATIVE WORDS. — Under the rule of
statutory construction, negative words and phrases are to be regarded as mandatory while those in the affirmative
are merely directory.
3. ID.; PERSONS WHO CANNOT ADOPT. — Pursuant to the provisions of article 335, paragraph 1 of the new Civil
Code, a step-father who already has a child may not adopt a step-child regardless of the provisions of article 338,
paragraph 3 of the same Code, the latter provisions being confined and applicable to those step-fathers and step-
mothers who have no children of their own.
DECISION
MONTEMAYOR, J.:
Appellee Clyde E. McGee, an American citizen is married to Leonarda S. Crisostomo by whom he has one child. The
minors Maria and Amada, both surnamed Magpayo are Leonarda’s children by her first husband Ernesto Magpayo
who was killed by the Japanese during the occupation. McGee filed a petition in the Court of First Instance of Manila
to adopt his two minor step-children Maria and Amada.
At the hearing, the Government filed its opposition to the petition on the ground that petitioner has a legitimate
child and consequently, is disqualified to adopt under article 335, paragraph 1, of the new Civil Code which
provides:jgc:chanrobles.com.ph
"ART. 335. The following cannot adopt:chanrob1es virtual 1aw library
(1) Those who have legitimate, legitimated, acknowledged natural children, or natural children by legal fiction;"
The trial court overruled the opposition and granted the petition, applying the provisions of article 338 of the same
Civil Code, particularly paragraph 3 thereof, which reads:.
ART. 338. The following may be adopted:chanrob1es virtual 1aw library
x x x.
(3) A step-child, by the step-father or step-mother."cralaw virtua1aw library
The Government is appealing from that decision. Only recently (December 21, 1953), and during the pendency of the
present appeal, we have had occasion to decide a similar case wherein the same question was involved, 1 namely,
whether a husband having a legitimate child may adopt a step-child. Applying the provisions of article 335, we held
that it cannot be done for the reason that although article 338 of the new Civil Code permits the adoption of a step-
child by the step-father or the step-mother, nevertheless, because of the negative provisions of article 335, said
permission is confined to those step- fathers and step-mothers who have no children of their own.
With the doctrine laid down in the Ball v. Republic case, we could stop right here and sustain the appeal of the
Government in the present case. However, it may not be unprofitable to further elaborate on the relation between
the two articles — 335 and 338, new Civil Code. The strongest argument of the trial court and of the appellee in
support of the decision granting the adoption is that to hold that a step-father having a legitimate child may not
adopt a step-child would be to render article 338, paragraph 3, meaningless and a surplusage inasmuch as without
said article 338, a husband without a legitimate child may adopt a step-child anyway; or worse, article 338
contradicts article 335. At first blush, that is a formidable argument because the Legislature in enacting a law is
supposed and presumed not to insert any section or provision which is unnecessary and a mere surplusage; that all
provisions contained in a law should be given effect, and that contradictions are to be avoided. Furthermore, it is
contended by appellee that article 335 prohibiting adoption by a parent who already has a child of his own should
not be considered exclusively but rather in relation with article 338 so as to regard the latter as an exception to an
exception. To meet and dispose of this argument we have to go into the philosophy of adoption.
The purpose of adoption is to establish a relationship of paternity and filiation where none existed before. Where
therefore the relationship of parent and child already exists whether by blood or by affinity as in the case of
illegitimate and step-children, it would be unnecessary and superfluous to establish and superimpose another
relationship of parent and child through adoption. Consequently, an express authorization of law like article 338 is
necessary, if not to render it proper and legal, at least, to remove any and all doubt on the subject-matter. Under
this view, article 338 may not be regarded as a surplusage. That may have been the reason why in the old Code of
Civil Procedure, particularly its provisions regarding adoption. authority to adopt a step-child by a step-father was
provided in section 766 notwithstanding the general authorization in section 765 extended to any inhabitant of the
Philippines to adopt a minor child. The same argument of surplusage could plausibly have been advanced as regards
section 766, that is to say, section 766 was unnecessary and superfluous because without it a step-father could
adopt a minor step-child anyway. However, the insertion of section 766 was not entirely without reason. The Code
of Civil Procedure was of common law origin. It seems to be an established principle in American jurisprudence that
a person may not adopt his own relative, the reason being that it is unnecessary to establish a relationship where
such already exists (the same philosophy underlying our codal provisions on adoption). So, some states have special
laws authorizing the adoption of relatives such as a grandfather adopting a grandchild and a father adopting his
illegitimate or natural child.
Another possible reason for the insertion of section 766 in the Code of Civil Procedure and article 338, paragraph 3,
in the new Civil Code, authorizing the adoption of a step-child by the step-father or step-mother is that without said
express legal sanction, there might be some doubt as to the propriety and advisability of said adoption due to the
possibility, if not probability, of pressure brought to bear upon the adopting step-father or mother by the legitimate
and natural parent.
One additional reason for holding that article 338 of the new Civil Code should be subordinated and made subject to
the provisions of article 335 so as to limit the permission to adopt granted in article 338, to parents who have no
children of their own, is that the terms of article 335 are phrased in a negative manner - the following cannot be
adopted, while the phraseology of article 338 is only affirmative - the following may be adopted. Under the rule of
statutory construction, negative words and phrases are to be regarded as mandatory while those in the affirmative
are merely directory.
". . . negative (prohibitory and exclusive words or terms are indicative of the legislative intent that the statute is to be
mandatory, . . ." (Crawford, Statutory Construction, sec. 263, p. 523.)
"Ordinarily . . . the word ’may’ is directory, . . . (Crawford, op. cit., sec. 262, p. 519.)
"Prohibitive or negative words can rarely, if ever, be directory, or, as it has been aptly stated, there is but one way to
obey the command ’thou shalt not’, and that is to completely refrain from doing the forbidden act. And this is so,
even though the statute provides no penalty for disobedience." (Crawford, op. cit., sec. 263, p. 523.)
The principal reason behind article 335, paragraph 1 denying adoption to those who already have children is that
adoption would not only create conflicts within the family but it would also materially affect or diminish the
successional rights of the child already had. This objection may not appear as formidable and real when the child had
by the adopting parent is by the very spouse whose child is to be adopted, because in that case, the legitimate chi]d
and the adopted one would be half-brothers or half-sisters, would not be total strangers to each other, and the
blood relationship though half may soften and absorb the loss of successional rights and the possible diminution of
the attention and affection previously enjoyed. But as not infrequently happens, the step-father or step-mother
adopting a child of his or her second wife or husband already may have a child of his or her own by a previous
marriage, in which case, said child and the adopted one would be complete strangers to each other, with no family
ties whatsoever to bind them, in which event, there would be nothing to soften and reconcile the objection and
resentment, natural to the legitimate child.
In conclusion, we hold that pursuant to the provisions of article 335, paragraph 1, a step-father who already has a
child may not adopt a step-child regardless of the provisions of article 338, paragraph 3 of the same Code, the latter
provisions being confined and applicable to those step-fathers and step-mothers who have no children of their own.
The decision appealed from is hereby reversed, and the petition for adoption is denied. No pronouncement as to
costs.
G.R. No. 164679 July 27, 2011
OFFICE OF THE OMBUDSMAN, Petitioner,

vs.
ULDARICO P. ANDUTAN, JR., Respondent.
DECISION
BRION, J.:
Through a petition for review on certiorari,1 the petitioner Office of the Ombudsman (Ombudsman) seeks the
reversal of the decision2 of the Court of Appeals (CA), dated July 28, 2004, in "Uldarico P. Andutan, Jr. v. Office of the
Ombudsman and Fact Finding and Intelligence Bureau (FFIB), etc.," docketed as CA-G.R. SP No. 68893. The assailed
decision annulled and set aside the decision of the Ombudsman dated July 30, 2001,3 finding Uldarico P. Andutan, Jr.
guilty of Gross Neglect of Duty.
THE FACTUAL ANTECEDENTS
Andutan was formerly the Deputy Director of the One-Stop Shop Tax Credit and Duty Drawback Center of the
Department of Finance (DOF). On June 30, 1998, then Executive Secretary Ronaldo Zamora issued a Memorandum
directing all non-career officials or those occupying political positions to vacate their positions effective July 1, 1998.4
On July 1, 1998, pursuant to the Memorandum, Andutan resigned from the DOF.5
On September 1, 1999, Andutan, together with Antonio P. Belicena, former Undersecretary, DOF; Rowena P.
Malonzo, Tax Specialist I, DOF; Benjamin O. Yao, Chairman and Executive Officer, Steel Asia Manufacturing
Corporation (Steel Asia); Augustus S. Lapid, Vice-President, Steel Asia; Antonio M. Lorenzana, President and Chief
Operating Officer, Steel Asia; and Eulogio L. Reyes, General Manager, Devmark Textiles Ind. Inc., was criminally
charged by the Fact Finding and Intelligence Bureau (FFIB) of the Ombudsman with Estafa through Falsification of
Public Documents, and violations of Section 3(a), (e) and (j) of Republic Act No. (R.A.) 3019, otherwise known as the
Anti-Graft and Corrupt Practices Act.6 As government employees, Andutan, Belicena and Malonzo were likewise
administratively charged of Grave Misconduct, Dishonesty, Falsification of Official Documents and Conduct
Prejudicial to the Best Interest of the Service.7
The criminal and administrative charges arose from anomalies in the illegal transfer of Tax Credit Certificates (TCCs)
to Steel Asia, among others.8
During the investigation, the FFIB found that Steel Asia fraudulently obtained TCCs worth Two Hundred Forty-Two
Million, Four Hundred Thirty-Three Thousand, Five Hundred Thirty-Four Pesos (₱242,433,534.00).9 The FFIB
concluded that Belicena, Malonzo and Andutan – in their respective capacities – irregularly approved the "issuance
of the TCCs to several garment/textile companies and allowing their subsequent illegal transfer" to Steel Asia.10
On November 11, 1999, the Ombudsman ordered the respondents therein (respondents) to submit their counter-
affidavits. Only Malonzo complied with the order, prompting the Ombudsman to set a Preliminary Conference on
March 13, 2000.
Upon the respondents’ failure to appear at the March 20, 2000 hearing, the Ombudsman deemed the case
submitted for resolution.
On July 30, 2001, the Ombudsman found the respondents guilty of Gross Neglect of Duty.11 Having been separated
from the service, Andutan was imposed the penalty of forfeiture of all leaves, retirement and other benefits and
privileges, and perpetual disqualification from reinstatement and/or reemployment in any branch or instrumentality
of the government, including government owned and controlled agencies or corporations.12
After failing to obtain a reconsideration of the decision,13 Andutan filed a petition for review on certiorari before the
CA.
On July 28, 2004,14 the CA annulled and set aside the decision of the Ombudsman, ruling that the latter "should not
have considered the administrative complaints" because: first, Section 20 of R.A. 6770 provides that the
Ombudsman "may not conduct the necessary investigation of any administrative act or omission complained of if it
believes that x x x [t]he complaint was filed after one year from the occurrence of the act or omission complained
of";15 and second, the administrative case was filed after Andutan’s forced resignation.16
THE PETITIONER’S ARGUMENTS
In this petition for review on certiorari, the Ombudsman asks the Court to overturn the decision of the CA. It
submits, first, that contrary to the CA’s findings, administrative offenses do not prescribe after one year from their
commission,17 and second, that in cases of "capital" administrative offenses, resignation or optional retirement
cannot render administrative proceedings moot and academic, since accessory penalties such as perpetual
disqualification and the forfeiture of retirement benefits may still be imposed.18
The Ombudsman argues that Section 20 of R.A. 6770 is not mandatory. Consistent with existing jurisprudence, the
use of the word "may" indicates that Section 20 is merely directory or permissive.19 Thus, it is not ministerial upon it
to dismiss the administrative complaint, as long as any of the circumstances under Section 20 is present.20 In any
case, the Ombudsman urges the Court to examine its mandate under Section 13, Article XI of the 1987 Constitution,
and hold that an imposition of a one (1) year prescriptive period on the filing of cases unconstitutionally restricts its
mandate.21
Further, the Ombudsman submits that Andutan’s resignation from office does not render moot the administrative
proceedings lodged against him, even after his resignation. Relying on Section VI(1) of Civil Service Commission (CSC)
Memorandum Circular No. 38,22 the Ombudsman argues that "[a]s long as the breach of conduct was committed
while the public official or employee was still in the service x x x a public servant’s resignation is not a bar to his
administrative investigation, prosecution and adjudication."23 It is irrelevant that Andutan had already resigned
from office when the administrative case was filed since he was charged for "acts performed in office which are
inimical to the service and prejudicial to the interests of litigants and the general public."24 Furthermore, even if
Andutan had already resigned, there is a need to "determine whether or not there remains penalties capable of
imposition, like bar from reentering the (sic) public service and forfeiture of benefits."25 Finally, the Ombudsman
reiterates that its findings against Andutan are supported by substantial evidence.
THE RESPONDENT’S ARGUMENTS
Andutan raises three (3) counterarguments to the Ombudsman’s petition.
First, Andutan submits that the CA did not consider Section 20(5) of R.A. 6770 as a prescriptive period; rather, the CA
merely held that the Ombudsman should not have considered the administrative complaint. According to Andutan,
Section 20(5) "does not purport to impose a prescriptive period x x x but simply prohibits the Office of the
Ombudsman from conducting an investigation where the complaint [was] filed more than one (1) year from the
occurrence of the act or omission complained of."26 Andutan believes that the Ombudsman should have referred
the complaint to another government agency.27 Further, Andutan disagrees with the Ombudsman’s interpretation
of Section 20(5). Andutan suggests that the phrase "may not conduct the necessary investigation" means that the
Ombudsman is prohibited to act on cases that fall under those enumerated in Section 20(5).28
Second, Andutan reiterates that the administrative case against him was moot because he was no longer in the
public service at the time the case was commenced.29 According to Andutan, Atty. Perez v. Judge Abiera30 and
similar cases cited by the Ombudsman do not apply since the administrative investigations against the respondents
in those cases were commenced prior to their resignation. Here, Andutan urges the Court to rule otherwise since
unlike the cases cited, he had already resigned before the administrative case was initiated. He further notes that his
resignation from office cannot be characterized as "preemptive, i.e. made under an atmosphere of fear for the
imminence of formal charges"31 because it was done pursuant to the Memorandum issued by then Executive
Secretary Ronaldo Zamora.
Having established the propriety of his resignation, Andutan asks the Court to uphold the mootness of the
administrative case against him since the cardinal issue in administrative cases is the "officer’s fitness to remain in
office, the principal penalty imposable being either suspension or removal."32 The Ombudsman’s opinion - that
accessory penalties may still be imposed - is untenable since it is a fundamental legal principle that "accessory
follows the principal, and the former cannot exist independently of the latter."33
Third, the Ombudsman’s findings were void because procedural and substantive due process were not observed.
Likewise, Andutan submits that the Ombudsman’s findings lacked legal and factual bases.
ISSUES
Based on the submissions made, we see the following as the issues for our resolution:
I. Does Section 20(5) of R.A. 6770 prohibit the Ombudsman from conducting an administrative investigation a year
after the act was committed?
II. Does Andutan’s resignation render moot the administrative case filed against him?
III. Assuming that the administrative case is not moot, are the Ombudsman’s findings supported by substantial
evidence?
THE COURT’S RULING
We rule to deny the petition.
The provisions of Section 20(5) are merely directory; the Ombudsman is not prohibited from conducting an
investigation a year after the supposed act was committed.
The issue of whether Section 20(5) of R.A. 6770 is mandatory or discretionary has been settled by jurisprudence.34
In Office of the Ombudsman v. De Sahagun,35 the Court, speaking through Justice Austria-Martinez, held:
[W]ell-entrenched is the rule that administrative offenses do not prescribe [Concerned Taxpayer v. Doblada, Jr., A.M.
No. P-99-1342, September 20, 2005, 470 SCRA 218; Melchor v. Gironella, G.R. No. 151138, February 16, 2005, 451
SCRA 476; Heck v. Judge Santos, 467 Phil. 798, 824 (2004); Floria v. Sunga, 420 Phil. 637, 648-649 (2001)].
Administrative offenses by their very nature pertain to the character of public officers and employees. In disciplining
public officers and employees, the object sought is not the punishment of the officer or employee but the
improvement of the public service and the preservation of the public’s faith and confidence in our government
[Melchor v. Gironella, G.R. No. 151138, February 16, 2005, 451 SCRA 476, 481; Remolona v. Civil Service
Commission, 414 Phil. 590, 601 (2001)].
Respondents insist that Section 20 (5) of R.A. No. 6770, to wit:
SEC. 20. Exceptions. – The Office of the Ombudsman may not conduct the necessary investigation of any
administrative act or omission complained of if it believes that:
xxxx
(5) The complaint was filed after one year from the occurrence of the act or omission complained of. (Emphasis
supplied)
proscribes the investigation of any administrative act or omission if the complaint was filed after one year from the
occurrence of the complained act or omission.
In Melchor v. Gironella [G.R. No. 151138, February 16, 2005, 451 SCRA 476], the Court held that the period stated in
Section 20(5) of R.A. No. 6770 does not refer to the prescription of the offense but to the discretion given to the
Ombudsman on whether it would investigate a particular administrative offense. The use of the word "may" in the
provision is construed as permissive and operating to confer discretion [Melchor v. Gironella, G.R. No. 151138,
February 16, 2005, 451 SCRA 476, 481; Jaramilla v. Comelec, 460 Phil. 507, 514 (2003)]. Where the words of a statute
are clear, plain and free from ambiguity, they must be given their literal meaning and applied without attempted
interpretation [Melchor v. Gironella, G.R. No. 151138, February 16, 2005, 451 SCRA 476, 481; National Federation of
Labor v. National Labor Relations Commission, 383 Phil. 910, 918 (2000)].
In Filipino v. Macabuhay [G.R. No. 158960, November 24, 2006, 508 SCRA 50], the Court interpreted Section 20 (5) of
R.A. No. 6770 in this manner:
Petitioner argues that based on the abovementioned provision [Section 20(5) of RA 6770)], respondent's complaint
is barred by prescription considering that it was filed more than one year after the alleged commission of the acts
complained of.
Petitioner's argument is without merit.
The use of the word "may" clearly shows that it is directory in nature and not mandatory as petitioner contends.
When used in a statute, it is permissive only and operates to confer discretion; while the word "shall" is imperative,
operating to impose a duty which may be enforced. Applying Section 20(5), therefore, it is discretionary upon the
Ombudsman whether or not to conduct an investigation on a complaint even if it was filed after one year from the
occurrence of the act or omission complained of. In fine, the complaint is not barred by prescription. (Emphasis
supplied)
The declaration of the CA in its assailed decision that while as a general rule the word "may" is directory, the
negative phrase "may not" is mandatory in tenor; that a directory word, when qualified by the word "not," becomes
prohibitory and therefore becomes mandatory in character, is not plausible. It is not supported by jurisprudence on
statutory construction. [emphases and underscoring supplied]
Clearly, Section 20 of R.A. 6770 does not prohibit the Ombudsman from conducting an administrative investigation
after the lapse of one year, reckoned from the time the alleged act was committed. Without doubt, even if the
administrative case was filed beyond the one (1) year period stated in Section 20(5), the Ombudsman was well
within its discretion to conduct the administrative investigation.
However, the crux of the present controversy is not on the issue of prescription, but on the issue of the
Ombudsman’s authority to institute an administrative complaint against a government employee who had already
resigned. On this issue, we rule in Andutan’s favor.
Andutan’s resignation divests the Ombudsman of its right to institute an administrative complaint against him.
Although the Ombudsman is not precluded by Section 20(5) of R.A. 6770 from conducting the investigation, the
Ombudsman can no longer institute an administrative case against Andutan because the latter was not a public
servant at the time the case was filed.
The Ombudsman argued – in both the present petition and in the petition it filed with the CA – that Andutan’s
retirement from office does not render moot any administrative case, as long as he is charged with an offense he
committed while in office. It is irrelevant, according to the Ombudsman, that Andutan had already resigned prior to
the filing of the administrative case since the operative fact that determines its jurisdiction is the commission of an
offense while in the public service.
The Ombudsman relies on Section VI(1) of Civil Service Commission Memorandum Circular No. 38 for this
proposition, viz.:
Section VI.
1. x x x
An officer or employee under administrative investigation may be allowed to resign pending decision of his case but
it shall be without prejudice to the continuation of the proceeding against him. It shall also be without prejudice to
the filing of any administrative, criminal case against him for any act committed while still in the service. (emphasis
and underscoring supplied)
The CA refused to give credence to this argument, holding that the provision "refers to cases where the officers or
employees were already charged before they were allowed to resign or were separated from service."36 In this case,
the CA noted that "the administrative cases were filed only after Andutan was retired, hence the Ombudsman was
already divested of jurisdiction and could no longer prosecute the cases."37
Challenging the CA’s interpretation, the Ombudsman argues that the CA "limited the scope of the cited Civil Service
Memorandum Circular to the first sentence."38 Further, according to the Ombudsman, "the court a quo ignored the
second statement in the said circular that contemplates a situation where previous to the institution of the
administrative investigation or charge, the public official or employee subject of the investigation has resigned."39
To recall, we have held in the past that a public official’s resignation does not render moot an administrative case
that was filed prior to the official’s resignation. In Pagano v. Nazarro, Jr.,40 we held that:
In Office of the Court Administrator v. Juan [A.M. No. P-03-1726, 22 July 2004, 434 SCRA 654, 658], this Court
categorically ruled that the precipitate resignation of a government employee charged with an offense punishable by
dismissal from the service does not render moot the administrative case against him. Resignation is not a way out to
evade administrative liability when facing administrative sanction. The resignation of a public servant does not
preclude the finding of any administrative liability to which he or she shall still be answerable [Baquerfo v. Sanchez,
A.M. No. P-05-1974, 6 April 2005, 455 SCRA 13, 19-20]. [emphasis and underscoring supplied]
Likewise, in Baquerfo v. Sanchez,41 we held:
Cessation from office of respondent by resignation [Reyes v. Cristi, A.M. No. P-04-1801, 2 April 2004, 427 SCRA 8] or
retirement [Re: Complaint Filed by Atty. Francis Allan A. Rubio on the Alleged Falsification of Public Documents and
Malversation of Public Funds, A.M. No. 2004-17-SC, 27 September 2004; Caja v. Nanquil, A.M. No. P-04-1885, 13
September 2004] neither warrants the dismissal of the administrative complaint filed against him while he was still
in the service [Tuliao v. Ramos, A.M. No. MTJ-95-1065, 348 Phil. 404, 416 (1998), citing Perez v. Abiera, A.C. No. 223-
J, 11 June 1975, 64 SCRA 302; Secretary of Justice v. Marcos, A.C. No. 207-J, 22 April 1977, 76 SCRA 301] nor does it
render said administrative case moot and academic [Sy Bang v. Mendez, 350 Phil. 524, 533 (1998)]. The jurisdiction
that was this Court’s at the time of the filing of the administrative complaint was not lost by the mere fact that the
respondent public official had ceased in office during the pendency of his case [Flores v. Sumaljag, 353 Phil. 10, 21
(1998)]. Respondent’s resignation does not preclude the finding of any administrative liability to which he shall still
be answerable [OCA v. Fernandez, A.M. No. MTJ-03-1511, 20 August 2004]. [emphases and underscoring supplied)
However, the facts of those cases are not entirely applicable to the present case. In the above-cited cases, the Court
found that the public officials – subject of the administrative cases – resigned, either to prevent the continuation of a
case already filed42 or to pre-empt the imminent filing of one.43 Here, neither situation obtains.
The Ombudsman’s general assertion that Andutan pre-empted the filing of a case against him by resigning, since he
"knew for certain that the investigative and disciplinary arms of the State would eventually reach him"44 is
unfounded. First, Andutan’s resignation was neither his choice nor of his own doing; he was forced to resign. Second,
Andutan resigned from his DOF post on July 1, 1998, while the administrative case was filed on September 1, 1999,
exactly one (1) year and two (2) months after his resignation. The Court struggles to find reason in the Ombudsman’s
sweeping assertions in light of these facts.
What is clear from the records is that Andutan was forced to resign more than a year before the Ombudsman filed
the administrative case against him. Additionally, even if we were to accept the Ombudsman’s position that Andutan
foresaw the filing of the case against him, his forced resignation negates the claim that he tried to prevent the filing
of the administrative case.
Having established the inapplicability of prevailing jurisprudence, we turn our attention to the provisions of Section
VI of CSC Memorandum Circular No. 38. We disagree with the Ombudsman’s interpretation that "[a]s long as the
breach of conduct was committed while the public official or employee was still in the service x x x a public servant’s
resignation is not a bar to his administrative investigation, prosecution and adjudication."45 If we agree with this
interpretation, any official – even if he has been separated from the service for a long time – may still be subject to
the disciplinary authority of his superiors, ad infinitum. We believe that this interpretation is inconsistent with the
principal motivation of the law – which is to improve public service and to preserve the public’s faith and confidence
in the government, and not the punishment of the public official concerned.46 Likewise, if the act committed by the
public official is indeed inimical to the interests of the State, other legal mechanisms are available to redress the
same.
The possibility of imposing

accessory penalties does not
negate the Ombudsman’s lack
of jurisdiction.
The Ombudsman suggests that although the issue of Andutan’s removal from the service is moot, there is an
"irresistible justification" to "determine whether or not there remains penalties capable of imposition, like bar from
re-entering the public service and forfeiture of benefits."47 Otherwise stated, since accessory penalties may still be
imposed against Andutan, the administrative case itself is not moot and may proceed despite the inapplicability of
the principal penalty of removal from office.
We find several reasons that militate against this position.

First, although we have held that the resignation of an official does not render an administrative case moot and
academic because accessory penalties may still be imposed, this holding must be read in its proper context. In
Pagano v. Nazarro, Jr.,48 indeed, we held:
A case becomes moot and academic only when there is no more actual controversy between the parties or no useful
purpose can be served in passing upon the merits of the case [Tantoy, Sr. v. Abrogar, G.R. No. 156128, 9 May 2005,
458 SCRA 301, 305]. The instant case is not moot and academic, despite the petitioner’s separation from
government service. Even if the most severe of administrative sanctions - that of separation from service - may no
longer be imposed on the petitioner, there are other penalties which may be imposed on her if she is later found
guilty of administrative offenses charged against her, namely, the disqualification to hold any government office and
the forfeiture of benefits. [emphasis and underscoring supplied]
Reading the quoted passage in a vacuum, one could be led to the conclusion that the mere availability of accessory
penalties justifies the continuation of an administrative case. This is a misplaced reading of the case and its ruling.
Esther S. Pagano – who was serving as Cashier IV at the Office of the Provincial Treasurer of Benguet – filed her
certificate of candidacy for councilor four days after the Provincial Treasurer directed her to explain why no
administrative case should be filed against her. The directive arose from allegations that her accountabilities
included a cash shortage of ₱1,424,289.99. She filed her certificate of candidacy under the pretext that since she was
deemed ipso facto resigned from office, she was no longer under the administrative jurisdiction of her superiors.
Thus, according to Pagano, the administrative complaint had become moot.
We rejected Pagano’s position on the principal ground "that the precipitate resignation of a government employee
charged with an offense punishable by dismissal from the service does not render moot the administrative case
against him. Resignation is not a way out to evade administrative liability when facing administrative sanction."49
Our position that accessory penalties are still imposable – thereby negating the mootness of the administrative
complaint – merely flows from the fact that Pagano pre-empted the filing of the administrative case against her. It
was neither intended to be a stand-alone argument nor would it have justified the continuation of the administrative
complaint if Pagano’s filing of candidacy/resignation did not reek of irregularities. Our factual findings in Pagano
confirm this, viz.:
At the time petitioner filed her certificate of candidacy, petitioner was already notified by the Provincial Treasurer
that she needed to explain why no administrative charge should be filed against her, after it discovered the cash
shortage of ₱1,424,289.99 in her accountabilities. Moreover, she had already filed her answer. To all intents and
purposes, the administrative proceedings had already been commenced at the time she was considered separated
from service through her precipitate filing of her certificate of candidacy. Petitioner’s bad faith was manifest when
she filed it, fully knowing that administrative proceedings were being instituted against her as part of the procedural
due process in laying the foundation for an administrative case.50 (emphasis and underscoring supplied)1avvphil
Plainly, our justification for the continuation of the administrative case – notwithstanding Pagano’s resignation – was
her "bad faith" in filing the certificate of candidacy, and not the availability of accessory penalties.
Second, we agree with the Ombudsman that "fitness to serve in public office x x x is a question of transcendental
[importance]51" and that "preserving the inviolability of public office" compels the state to prevent the "re-entry
[to] public service of persons who have x x x demonstrated their absolute lack of fitness to hold public office."52
However, the State must perform this task within the limits set by law, particularly, the limits of jurisdiction. As
earlier stated, under the Ombudsman’s theory, the administrative authorities may exercise administrative
jurisdiction over subordinates ad infinitum; thus, a public official who has validly severed his ties with the civil service
may still be the subject of an administrative complaint up to his deathbed. This is contrary to the law and the public
policy behind it.
Lastly, the State is not without remedy against Andutan or any public official who committed violations while in
office, but had already resigned or retired therefrom. Under the "threefold liability rule," the wrongful acts or
omissions of a public officer may give rise to civil, criminal and administrative liability.53 Even if the Ombudsman
may no longer file an administrative case against a public official who has already resigned or retired, the
Ombudsman may still file criminal and civil cases to vindicate Andutan’s alleged transgressions. In fact, here, the
Ombudsman – through the FFIB – filed a criminal case for Estafa and violations of Section 3(a), (e) and (j) of the Anti-
Graft and Corrupt Practices Act against Andutan. If found guilty, Andutan will not only be meted out the penalty of
imprisonment, but also the penalties of perpetual disqualification from office, and confiscation or forfeiture of any
prohibited interest.54
Conclusion
Public office is a public trust. No precept of administrative law is more basic than this statement of what assumption
of public office involves. The stability of our public institutions relies on the ability of our civil servants to serve their
constituencies well.
While we commend the Ombudsman’s resolve in pursuing the present case for violations allegedly committed by
Andutan, the Court is compelled to uphold the law and dismiss the petition. Consistent with our holding that
Andutan is no longer the proper subject of an administrative complaint, we find no reason to delve on the
Ombudsman’s factual findings.
WHEREFORE, we DENY the Office of the Ombudsman’s petition for review on certiorari, and AFFIRM the decision of
the Court of Appeals in CA-G.R. SP No. 68893, promulgated on July 28, 2004, which annulled and set aside the July
30, 2001 decision of the Office of the Ombudsman, finding Uldarico P. Andutan, Jr. guilty of Gross Neglect of Duty.
No pronouncement as to costs.
SO ORDERED.
e. EXCEPTIONS
G.R. Nos. 179431-32 June 22, 2010
LUIS K. LOKIN, JR., as the second nominee of CITIZENS BATTLE AGAINST CORRUPTION (CIBAC), Petitioner,
vs.
COMMISSION ON ELECTIONS and the HOUSE OF REPRESENTATIVES, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 180443
LUIS K. LOKIN, JR., Petitioner,

vs.
COMMISSION ON ELECTIONS (COMELEC), EMMANUEL JOEL J. VILLANUEVA, CINCHONA C. GONZALES and ARMI JANE
R. BORJE, Respondents.
DECISION
BERSAMIN, J.:
The principal question posed in these consolidated special civil actions for certiorari and mandamus is whether the
Commission on Elections (COMELEC) can issue implementing rules and regulations (IRRs) that provide a ground for
the substitution of a party-list nominee not written in Republic Act (R.A.) No. 7941,1 otherwise known as the Party-
List System Act, the law that the COMELEC thereby implements.
Common Antecedents
The Citizens’ Battle Against Corruption (CIBAC) was one of the organized groups duly registered under the party-list
system of representation that manifested their intent to participate in the May 14, 2007 synchronized national and
local elections. Together with its manifestation of intent to participate,2 CIBAC, through its president, Emmanuel Joel
J. Villanueva, submitted a list of five nominees from which its representatives would be chosen should CIBAC obtain
the required number of qualifying votes. The nominees, in the order that their names appeared in the certificate of
nomination dated March 29, 2007,3 were: (1) Emmanuel Joel J. Villanueva; (2) herein petitioner Luis K. Lokin, Jr.; (3)
Cinchona C. Cruz-Gonzales; (4) Sherwin Tugna; and (5) Emil L. Galang. The nominees’ certificates of acceptance were
attached to the certificate of nomination filed by CIBAC. The list of nominees was later published in two newspapers
of general circulation, The Philippine Star News4 (sic) and The Philippine Daily Inquirer.5
Prior to the elections, however, CIBAC, still through Villanueva, filed a certificate of nomination, substitution and
amendment of the list of nominees dated May 7, 2007,6 whereby it withdrew the nominations of Lokin, Tugna and
Galang and substituted Armi Jane R. Borje as one of the nominees. The amended list of nominees of CIBAC thus
included: (1) Villanueva, (2) Cruz-Gonzales, and (3) Borje.
Following the close of the polls, or on June 20, 2007, Villanueva sent a letter to COMELEC Chairperson Benjamin
Abalos,7 transmitting therewith the signed petitions of more than 81% of the CIBAC members, in order to confirm
the withdrawal of the nomination of Lokin, Tugna and Galang and the substitution of Borje. In their petitions, the
members of CIBAC averred that Lokin and Tugna were not among the nominees presented and proclaimed by CIBAC
in its proclamation rally held in May 2007; and that Galang had signified his desire to focus on his family life.
On June 26, 2007, CIBAC, supposedly through its counsel, filed with the COMELEC en banc sitting as the National
Board of Canvassers a motion seeking the proclamation of Lokin as its second nominee.8 The right of CIBAC to a
second seat as well as the right of Lokin to be thus proclaimed were purportedly based on Party-List Canvass Report
No. 26, which showed CIBAC to have garnered a grand total of 744,674 votes. Using all relevant formulas, the motion
asserted that CIBAC was clearly entitled to a second seat and Lokin to a proclamation.
The motion was opposed by Villanueva and Cruz-Gonzales.
Notwithstanding Villanueva’s filing of the certificate of nomination, substitution and amendment of the list of
nominees and the petitions of more than 81% of CIBAC members, the COMELEC failed to act on the matter,
prompting Villanueva to file a petition to confirm the certificate of nomination, substitution and amendment of the
list of nominees of CIBAC on June 28, 2007.9
On July 6, 2007, the COMELEC issued Resolution No. 8219,10 whereby it resolved to set the matter pertaining to the
validity of the withdrawal of the nominations of Lokin, Tugna and Galang and the substitution of Borje for proper
disposition and hearing. The case was docketed as E.M. No. 07-054.
In the meantime, the COMELEC en banc, sitting as the National Board of Canvassers, issued National Board of
Canvassers (NBC) Resolution No. 07-60 dated July 9, 200711 to partially proclaim the following parties, organizations
and coalitions participating under the Party-List System as having won in the May 14, 2007 elections, namely: Buhay
Hayaan Yumabong, Bayan Muna, CIBAC, Gabriela Women's Party, Association of Philippine Electric Cooperatives,
Advocacy for Teacher Empowerment Through Action, Cooperation and Harmony Towards Educational Reforms, Inc.,
Akbayan! Citizen's Action Party, Alagad, Luzon Farmers Party, Cooperative-Natco Network Party, Anak Pawis,
Alliance of Rural Concerns and Abono; and to defer the proclamation of the nominees of the parties, organizations
and coalitions with pending disputes until final resolution of their respective cases.
The COMELEC en banc issued another resolution, NBC Resolution No. 07-72 dated July 18, 2007,12 proclaiming
Buhay Hayaan Yumabong as entitled to 2 additional seats and Bayan Muna, CIBAC, Gabriela Women's Party, and
Association of Philippine Electric Cooperatives to an additional seat each; and holding in abeyance the proclamation
of the nominees of said parties, organizations and coalitions with pending disputes until the final resolution of their
respective cases.
With the formal declaration that CIBAC was entitled to an additional seat, Ricardo de los Santos, purportedly as
secretary general of CIBAC, informed Roberto P. Nazareno, Secretary General of the House of Representatives, of the
promulgation of NBC Resolution No. 07-72 and requested that Lokin be formally sworn in by Speaker Jose de
Venecia, Jr. to enable him to assume office. Nazareno replied, however, that the request of Delos Santos could not
be granted because COMELEC Law Director Alioden D. Dalaig had notified him of the pendency of E.M. 07-054.
On September 14, 2007, the COMELEC en banc resolved E.M. No. 07-05413 thuswise:
WHEREFORE, considering the above discussion, the Commission hereby approves the withdrawal of the nomination
of Atty. Luis K. Lokin, Sherwin N. Tugna and Emil Galang as second, third and fourth nominees respectively and the
substitution thereby with Atty. Cinchona C. Cruz-Gonzales as second nominee and Atty. Armi Jane R. Borje as third
nominee for the party list CIBAC. The new order of CIBAC's nominees therefore shall be:
1. Emmanuel Joel J. Villanueva
2. Cinchona C. Cruz-Gonzales
3. Armi Jane R. Borje
SO ORDERED.
The COMELEC en banc explained that the actions of Villanueva in his capacity as the president of CIBAC were
presumed to be within the scope of his authority as such; that the president was charged by Section 1 of Article IV of
the CIBAC By-Laws to oversee and direct the corporate activities, which included the act of submitting the party's
manifestation of intent to participate in the May 14, 2007 elections as well as its certificate of nominees; that from
all indications, Villanueva as the president of CIBAC had always been provided the leeway to act as the party's
representative and that his actions had always been considered as valid; that the act of withdrawal, although done
without any written Board approval, was accomplished with the Board’s acquiescence or at least understanding; and
that the intent of the party should be given paramount consideration in the selection of the nominees.
As a result, the COMELEC en banc proclaimed Cruz-Gonzales as the official second nominee of CIBAC.14 Cruz-
Gonzales took her oath of office
as a Party-List Representative of CIBAC on September 17, 2007.15
Precís of the Consolidated Cases
In G.R. No. 179431 and G.R. No. 179432, Lokin seeks through mandamus to compel respondent COMELEC to
proclaim him as the official second nominee of CIBAC.
In G.R. No. 180443, Lokin assails Section 13 of Resolution No. 7804 promulgated on January 12, 2007;16 and the
resolution dated September 14, 2007 issued in E.M. No. 07-054 (approving CIBAC’s withdrawal of the nominations of
Lokin, Tugna and Galang as CIBAC’s second, third and fourth nominees, respectively, and the substitution by Cruz-
Gonzales and Borje in their stead, based on the right of CIBAC to change its nominees under Section 13 of Resolution
No. 7804).17 He alleges that Section 13 of Resolution No. 7804 expanded Section 8 of R.A. No. 7941.18 the law that
the COMELEC seeks to thereby implement.
In its comment, the COMELEC asserts that a petition for certiorari is an inappropriate recourse in law due to the
proclamation of Cruz-Gonzales as Representative and her assumption of that office; that Lokin’s proper recourse was
an electoral protest filed in the House of Representatives Electoral Tribunal (HRET); and that, therefore, the Court
has no jurisdiction over the matter being raised by Lokin.
For its part, CIBAC posits that Lokin is guilty of forum shopping for filing a petition for mandamus and a petition for
certiorari, considering that both petitions ultimately seek to have him proclaimed as the second nominee of CIBAC.
Issues
The issues are the following:
(a) Whether or not the Court has jurisdiction over the controversy;
(b) Whether or not Lokin is guilty of forum shopping;
(c) Whether or not Section 13 of Resolution No. 7804 is unconstitutional and violates the Party-List System Act; and
(d) Whether or not the COMELEC committed grave abuse of discretion amounting to lack or excess of jurisdiction in
approving the withdrawal of the nominees of CIBAC and allowing the amendment of the list of nominees of CIBAC
without any basis in fact or law and after the close of the polls, and in ruling on matters that were intra-corporate in
nature.
Ruling
The petitions are granted.
A
The Court has jurisdiction over the case
The COMELEC posits that once the proclamation of the winning party-list organization has been done and its
nominee has assumed office, any question relating to the election, returns and qualifications of the candidates to the
House of Representatives falls under the jurisdiction of the HRET pursuant to Section 17, Article VI of the 1987
Constitution. Thus, Lokin should raise the question he poses herein either in an election protest or in a special civil
action for quo warranto in the HRET, not in a special civil action for certiorari in this Court.
We do not agree.
An election protest proposes to oust the winning candidate from office. It is strictly a contest between the defeated
and the winning candidates, based on the grounds of electoral frauds and irregularities, to determine who between
them has actually obtained the majority of the legal votes cast and is entitled to hold the office. It can only be filed
by a candidate who has duly filed a certificate of candidacy and has been voted for in the preceding elections.
A special civil action for quo warranto refers to questions of disloyalty to the State, or of ineligibility of the winning
candidate. The objective of the action is to unseat the ineligible person from the office, but not to install the
petitioner in his place. Any voter may initiate the action, which is, strictly speaking, not a contest where the parties
strive for supremacy because the petitioner will not be seated even if the respondent may be unseated.
The controversy involving Lokin is neither an election protest nor an action for quo warranto, for it concerns a very
peculiar situation in which Lokin is seeking to be seated as the second nominee of CIBAC. Although an election
protest may properly be available to one party-list organization seeking to unseat another party-list organization to
determine which between the defeated and the winning party-list organizations actually obtained the majority of
the legal votes, Lokin’s case is not one in which a nominee of a particular party-list organization thereby wants to
unseat another nominee of the same party-list organization. Neither does an action for quo warranto lie, considering
that the case does not involve the ineligibility and disloyalty of Cruz-Gonzales to the Republic of the Philippines, or
some other cause of disqualification for her.
Lokin has correctly brought this special civil action for certiorari against the COMELEC to seek the review of the
September 14, 2007 resolution of the COMELEC in accordance with Section 7 of Article IX-A of the 1987 Constitution,
notwithstanding the oath and assumption of office by Cruz-Gonzales. The constitutional mandate is now
implemented by Rule 64 of the 1997 Rules of Civil Procedure, which provides for the review of the judgments, final
orders or resolutions of the COMELEC and the Commission on Audit. As Rule 64 states, the mode of review is by a
petition for certiorari in accordance with Rule 65 to be filed in the Supreme Court within a limited period of 30 days.
Undoubtedly, the Court has original and exclusive jurisdiction over Lokin’s petitions for certiorari and for mandamus
against the COMELEC.
B
Petitioner is not guilty of forum shopping
Forum shopping consists of the filing of multiple suits involving the same parties for the same cause of action, either
simultaneously or successively, for the purpose of obtaining a favorable judgment. Thus, forum shopping may arise:
(a) whenever as a result of an adverse decision in one forum, a party seeks a favorable decision (other than by
appeal or certiorari) in another; or (b) if, after having filed a petition in the Supreme Court, a party files another
petition in the Court of Appeals, because he thereby deliberately splits appeals "in the hope that even as one case in
which a particular remedy is sought is dismissed, another case (offering a similar remedy) would still be open"; or (c)
where a party attempts to obtain a writ of preliminary injunction from a court after failing to obtain the writ from
another court.19
What is truly important to consider in determining whether forum shopping exists or not is the vexation caused to
the courts and the litigants by a party who accesses different courts and administrative agencies to rule on the same
or related causes or to grant the same or substantially the same reliefs, in the process creating the possibility of
conflicting decisions being rendered by the different fora upon the same issue.20
The filing of identical petitions in different courts is prohibited, because such act constitutes forum shopping, a
malpractice that is proscribed and condemned as trifling with the courts and as abusing their processes. Forum
shopping is an improper conduct that degrades the administration of justice.21
Nonetheless, the mere filing of several cases based on the same incident does not necessarily constitute forum
shopping. The test is whether the several actions filed involve the same transactions and the same essential facts
and circumstances.22 The actions must also raise identical causes of action, subject matter, and issues.23 Elsewise
stated, forum shopping exists where the elements of litis pendentia are present, or where a final judgment in one
case will amount to res judicata in the other.24
Lokin has filed the petition for mandamus to compel the COMELEC to proclaim him as the second nominee of CIBAC
upon the issuance of NBC Resolution No. 07-72 (announcing CIBAC’s entitlement to an additional seat in the House
of Representatives), and to strike down the provision in NBC Resolution No. 07-60 and NBC Resolution No. 07-72
holding in abeyance "all proclamation of the nominees of concerned parties, organizations and coalitions with
pending disputes shall likewise be held in abeyance until final resolution of their respective cases." He has insisted
that the COMELEC had the ministerial duty to proclaim him due to his being CIBAC’s second nominee; and that the
COMELEC had no authority to exercise discretion and to suspend or defer the proclamation of winning party-list
organizations with pending disputes.
On the other hand, Lokin has resorted to the petition for certiorari to assail the September 14, 2007 resolution of the
COMELEC (approving the withdrawal of the nomination of Lokin, Tugna and Galang and the substitution by Cruz-
Gonzales as the second nominee and Borje as the third nominee); and to challenge the validity of Section 13 of
Resolution No. 7804, the COMELEC’s basis for allowing CIBAC’s withdrawal of Lokin’s nomination.
Applying the test for forum shopping, the consecutive filing of the action for certiorari and the action for mandamus
did not violate the rule against forum shopping even if the actions involved the same parties, because they were
based on different causes of action and the reliefs they sought were different.
C
Invalidity of Section 13 of Resolution No. 7804
The legislative power of the Government is vested exclusively in the Legislature in accordance with the doctrine of
separation of powers. As a general rule, the Legislature cannot surrender or abdicate its legislative power, for doing
so will be unconstitutional. Although the power to make laws cannot be delegated by the Legislature to any other
authority, a power that is not legislative in character may be delegated.25
Under certain circumstances, the Legislature can delegate to executive officers and administrative boards the
authority to adopt and promulgate IRRs. To render such delegation lawful, the Legislature must declare the policy of
the law and fix the legal principles that are to control in given cases. The Legislature should set a definite or primary
standard to guide those empowered to execute the law. For as long as the policy is laid down and a proper standard
is established by statute, there can be no unconstitutional delegation of legislative power when the Legislature
leaves to selected instrumentalities the duty of making subordinate rules within the prescribed limits, although there
is conferred upon the executive officer or administrative board a large measure of discretion. There is a distinction
between the delegation of power to make a law and the conferment of an authority or a discretion to be exercised
under and in pursuance of the law, for the power to make laws necessarily involves a discretion as to what it shall
be.26
The authority to make IRRs in order to carry out an express legislative purpose, or to effect the operation and
enforcement of a law is not a power exclusively legislative in character, but is rather administrative in nature. The
rules and regulations adopted and promulgated must not, however, subvert or be contrary to existing statutes. The
function of promulgating IRRs may be legitimately exercised only for the purpose of carrying out the provisions of a
law. The power of administrative agencies is confined to implementing the law or putting it into effect. Corollary to
this is that administrative regulation cannot extend the law and amend a legislative enactment. It is axiomatic that
the clear letter of the law is controlling and cannot be amended by a mere administrative rule issued for its
implementation. Indeed, administrative or executive acts shall be valid only when they are not contrary to the laws
or the Constitution.27
To be valid, therefore, the administrative IRRs must comply with the following requisites to be valid:28
1. Its promulgation must be authorized by the Legislature;
2. It must be within the scope of the authority given by the Legislature;
3. It must be promulgated in accordance with the prescribed procedure; and
4. It must be reasonable.
The COMELEC is constitutionally mandated to enforce and administer all laws and regulations relative to the conduct
of an election, a plebiscite, an initiative, a referendum, and a recall.29 In addition to the powers and functions
conferred upon it by the Constitution, the COMELEC is also charged to promulgate IRRs implementing the provisions
of the Omnibus Election Code or other laws that the COMELEC enforces and administers.30
The COMELEC issued Resolution No. 7804 pursuant to its powers under the Constitution, Batas Pambansa Blg. 881,
and the Party-List System Act.31 Hence, the COMELEC met the first requisite.
The COMELEC also met the third requisite. There is no question that Resolution No. 7804 underwent the procedural
necessities of publication and dissemination in accordance with the procedure prescribed in the resolution itself.
Whether Section 13 of Resolution No. 7804 was valid or not is thus to be tested on the basis of whether the second
and fourth requisites were met. It is in this respect that the challenge of Lokin against Section 13 succeeds.
As earlier said, the delegated authority must be properly exercised. This simply means that the resulting IRRs must
not be ultra vires as to be issued beyond the limits of the authority conferred. It is basic that an administrative
agency cannot amend an act of Congress,32 for administrative IRRs are solely intended to carry out, not to supplant
or to modify, the law. The administrative agency issuing the IRRs may not enlarge, alter, or restrict the provisions of
the law it administers and enforces, and cannot engraft additional non-contradictory requirements not
contemplated by the Legislature.33
Section 8 of R.A. No. 7941 reads:
Section 8. Nomination of Party-List Representatives.-Each registered party, organization or coalition shall submit to
the COMELEC not later that forty-five (45) days before the election a list of names, not less than five (5), from which
party-list representatives shall be chosen in case it obtains the required number of votes.
A person may be nominated in one (1) list only. Only persons who have given their consent in writing may be named
in the list. The list shall not include any candidate of any elective office or a person who has lost his bid for an
elective office in the immediately preceding election. No change of names or alteration of the order of nominees
shall be allowed after the same shall have been submitted to the COMELEC except in cases where the nominee dies,
or withdraws in writing his nomination, becomes incapacitated in which case the name of the substitute nominee
shall be placed last in the list. Incumbent sectoral representatives in the House of Representatives who are
nominated in the party-list system shall not be considered resigned.
The provision is daylight clear. The Legislature thereby deprived the party-list organization of the right to change its
nominees or to alter the order of nominees once the list is submitted to the COMELEC, except when: (a) the
nominee dies; (b) the nominee withdraws in writing his nomination; or (c) the nominee becomes incapacitated. The
provision must be read literally because its language is plain and free from ambiguity, and expresses a single,
definite, and sensible meaning. Such meaning is conclusively presumed to be the meaning that the Legislature has
intended to convey. Even where the courts should be convinced that the Legislature really intended some other
meaning, and even where the literal interpretation should defeat the very purposes of the enactment, the explicit
declaration of the Legislature is still the law, from which the courts must not depart.34 When the law speaks in clear
and categorical language, there is no reason for interpretation or construction, but only for application.35
Accordingly, an administrative agency tasked to implement a statute may not construe it by expanding its meaning
where its provisions are clear and unambiguous.36
The legislative intent to deprive the party-list organization of the right to change the nominees or to alter the order
of the nominees was also expressed during the deliberations of the Congress, viz:
MR. LAGMAN: And again on Section 5, on the nomination of party list representatives, I do not see any provision
here which prohibits or for that matter allows the nominating party to change the nominees or to alter the order of
prioritization of names of nominees. Is the implication correct that at any time after submission the names could still
be changed or the listing altered?
MR. ABUEG: Mr. Speaker, that is a good issue brought out by the distinguished Gentleman from Albay and perhaps a
perfecting amendment may be introduced therein. The sponsoring committee will gladly consider the same.
MR. LAGMAN: In other words, what I would like to see is that after the list is submitted to the COMELEC officially, no
more changes should be made in the names or in the order of listing.
MR. ABUEG: Mr. Speaker, there may be a situation wherein the name of a particular nominee has been submitted to
the Commission on Elections but before election day the nominee changed his political party affiliation. The nominee
is therefore no longer qualified to be included in the party list and the political party has a perfect right to change the
name of that nominee who changed his political party affiliation.
MR. LAGMAN: Yes of course. In that particular case, the change can be effected but will be the exception rather than
the rule. Another exception most probably is the nominee dies, then there has to be a change but any change for
that matter should always be at the last part of the list so that the prioritization made by the party will not be
adversely affected.37
The usage of "No" in Section 8 – "No change of names or alteration of the order of nominees shall be allowed after
the same shall have been submitted to the COMELEC except in cases where the nominee dies, or withdraws in
writing his nomination, or becomes incapacitated, in which case the name of the substitute nominee shall be placed
last in the list" – renders Section 8 a negative law, and is indicative of the legislative intent to make the statute
mandatory. Prohibitive or negative words can rarely, if ever, be directory, for there is but one way to obey the
command "thou shall not," and that is to completely refrain from doing the forbidden act,38 subject to certain
exceptions stated in the law itself, like in this case.
Section 8 does not unduly deprive the party-list organization of its right to choose its nominees, but merely divests it
of the right to change its nominees or to alter the order in the list of its nominees’ names after submission of the list
to the COMELEC.
The prohibition is not arbitrary or capricious; neither is it without reason on the part of lawmakers. The COMELEC
can rightly presume from the submission of the list that the list reflects the true will of the party-list organization.
The COMELEC will not concern itself with whether or not the list contains the real intended nominees of the party-
list organization, but will only determine whether the nominees pass all the requirements prescribed by the law and
whether or not the nominees possess all the qualifications and none of the disqualifications. Thereafter, the names
of the nominees will be published in newspapers of general circulation. Although the people vote for the party-list
organization itself in a party-list system of election, not for the individual nominees, they still have the right to know
who the nominees of any particular party-list organization are. The publication of the list of the party-list nominees
in newspapers of general circulation serves that right of the people, enabling the voters to make intelligent and
informed choices. In contrast, allowing the party-list organization to change its nominees through withdrawal of
their nominations, or to alter the order of the nominations after the submission of the list of nominees circumvents
the voters’ demand for transparency. The lawmakers’ exclusion of such arbitrary withdrawal has eliminated the
possibility of such circumvention.
D
Exceptions in Section 8 of R.A. 7941 are exclusive
Section 8 of R.A. No. 7941 enumerates only three instances in which the party-list organization can substitute
another person in place of the nominee whose name has been submitted to the COMELEC, namely: (a) when the
nominee dies; (b) when the nominee withdraws in writing his nomination; and (c) when the nominee becomes
incapacitated.
The enumeration is exclusive, for, necessarily, the general rule applies to all cases not falling under any of the three
exceptions.
When the statute itself enumerates the exceptions to the application of the general rule, the exceptions are strictly
but reasonably construed. The exceptions extend only as far as their language fairly warrants, and all doubts should
be resolved in favor of the general provision rather than the exceptions. Where the general rule is established by a
statute with exceptions, none but the enacting authority can curtail the former. Not even the courts may add to the
latter by implication, and it is a rule that an express exception excludes all others, although it is always proper in
determining the applicability of the rule to inquire whether, in a particular case, it accords with reason and
justice.391avvphi1
The appropriate and natural office of the exception is to exempt something from the scope of the general words of a
statute, which is otherwise within the scope and meaning of such general words. Consequently, the existence of an
exception in a statute clarifies the intent that the statute shall apply to all cases not excepted. Exceptions are subject
to the rule of strict construction; hence, any doubt will be resolved in favor of the general provision and against the
exception. Indeed, the liberal construction of a statute will seem to require in many circumstances that the
exception, by which the operation of the statute is limited or abridged, should receive a restricted construction.
E
Section 13 of Resolution No. 7804 expanded
the exceptions under Section 8 of R.A. No. 7941
Section 13 of Resolution No. 7804 states:
Section 13. Substitution of nominees. – A party-list nominee may be substituted only when he dies, or his
nomination is withdrawn by the party, or he becomes incapacitated to continue as such, or he withdraws his
acceptance to a nomination. In any of these cases, the name of the substitute nominee shall be placed last in the list
of nominees.
No substitution shall be allowed by reason of withdrawal after the polls.
Unlike Section 8 of R.A. No. 7941, the foregoing regulation provides four instances, the fourth being when the
"nomination is withdrawn by the party."
Lokin insists that the COMELEC gravely abused its discretion in expanding to four the three statutory grounds for
substituting a nominee.
We agree with Lokin.
The COMELEC, despite its role as the implementing arm of the Government in the enforcement and administration
of all laws and regulations relative to the conduct of an election,40 has neither the authority nor the license to
expand, extend, or add anything to the law it seeks to implement thereby. The IRRs the COMELEC issues for that
purpose should always accord with the law to be implemented, and should not override, supplant, or modify the
law. It is basic that the IRRs should remain consistent with the law they intend to carry out.41
Indeed, administrative IRRs adopted by a particular department of the Government under legislative authority must
be in harmony with the provisions of the law, and should be for the sole purpose of carrying the law’s general
provisions into effect. The law itself cannot be expanded by such IRRs, because an administrative agency cannot
amend an act of Congress.42
The COMELEC explains that Section 13 of Resolution No. 7804 has added nothing to Section 8 of R.A. No. 7941,43
because it has merely reworded and rephrased the statutory provision’s phraseology.
The explanation does not persuade.
To reword means to alter the wording of or to restate in other words; to rephrase is to phrase anew or in a new
form.44 Both terms signify that the meaning of the original word or phrase is not altered.
However, the COMELEC did not merely reword or rephrase the text of Section 8 of R.A. No. 7941, because it
established an entirely new ground not found in the text of the provision. The new ground granted to the party-list
organization the unilateral right to withdraw its nomination already submitted to the COMELEC, which Section 8 of
R.A. No. 7941 did not allow to be done. Neither was the grant of the unilateral right contemplated by the drafters of
the law, who precisely denied the right to withdraw the nomination (as the quoted record of the deliberations of the
House of Representatives has indicated). The grant thus conflicted with the statutory intent to save the nominee
from falling under the whim of the party-list organization once his name has been submitted to the COMELEC, and to
spare the electorate from the capriciousness of the party-list organizations.
We further note that the new ground would not secure the object of R.A. No. 7941 of developing and guaranteeing a
full, free and open party-list electoral system. The success of the system could only be ensured by avoiding any
arbitrariness on the part of the party-list organizations, by seeing to the transparency of the system, and by
guaranteeing that the electorate would be afforded the chance of making intelligent and informed choices of their
party-list representatives.
The insertion of the new ground was invalid. An axiom in administrative law postulates that administrative
authorities should not act arbitrarily and capriciously in the issuance of their IRRs, but must ensure that their IRRs
are reasonable and fairly adapted to secure the end in view. If the IRRs are shown to bear no reasonable relation to
the purposes for which they were authorized to be issued, they must be held to be invalid and should be struck
down.45
F
Effect of partial nullity of Section 13 of Resolution No. 7804
An IRR adopted pursuant to the law is itself law.46 In case of conflict between the law and the IRR, the law prevails.
There can be no question that an IRR or any of its parts not adopted pursuant to the law is no law at all and has
neither the force nor the effect of law.47 The invalid rule, regulation, or part thereof cannot be a valid source of any
right, obligation, or power.
Considering that Section 13 of Resolution No. 7804 – to the extent that it allows the party-list organization to
withdraw its nomination already submitted to the COMELEC – was invalid, CIBAC’s withdrawal of its nomination of
Lokin and the others and its substitution of them with new nominees were also invalid and ineffectual. It is clear
enough that any substitution of Lokin and the others could only be for any of the grounds expressly stated in Section
8 of R.A. No. 7941. Resultantly, the COMELEC’s approval of CIBAC’s petition of withdrawal of the nominations and its
recognition of CIBAC’s substitution, both through its assailed September 14, 2007 resolution, should be struck down
for lack of legal basis. Thereby, the COMELEC acted without jurisdiction, having relied on the invalidly issued Section
13 of Resolution No. 7804 to support its action.
WHEREFORE, we grant the petitions for certiorari and mandamus.
We declare Section 13 of Resolution No. 7804 invalid and of no effect to the extent that it authorizes a party-list
organization to withdraw its nomination of a nominee once it has submitted the nomination to the Commission on
Elections.
Accordingly, we annul and set aside:

(a) The resolution dated September 14, 2007 issued in E. M. No. 07-054 approving Citizens’ Battle Against
Corruption’s withdrawal of the nominations of Luis K. Lokin, Jr., Sherwin N. Tugna, and Emil Galang as its second,
third, and fourth nominees, respectively, and ordering their substitution by Cinchona C. Cruz-Gonzales as second
nominee and Armi Jane R. Borje as third nominee; and
(b) The proclamation by the Commission on Elections of Cinchona C. Cruz-Gonzales as a Party-List Representative
representing Citizens’ Battle Against Corruption in the House of Representatives.
We order the Commission on Elections to forthwith proclaim petitioner Luis K. Lokin, Jr. as a Party-List
Representative representing Citizens’ Battle Against Corruption in the House of Representatives.
We make no pronouncements on costs of suit.
SO ORDERED.
f. PERIODS
G.R. No. L-29131 August 27, 1969
NATIONAL MARKETING CORPORATION, plaintiff-appellant,

vs.
MIGUEL D. TECSON, ET AL., defendants,
MIGUEL D. TECSON, defendant-appellee,
THE INSURANCE COMMISSIONER, petitioner.
Government Corporate Counsel Leopoldo M. Abellera and Trial Atty. Antonio M. Brillantes for plaintiff-appellant.
Antonio T. Lacdan for defendant-appellee.
Office of the Solicitor General for petitioner.
CONCEPCION, C.J.:
This appeal has been certified to us by the Court of Appeals only one question of law being involved therein.
On November 14, 1955, the Court of First Instance of Manila rendered judgment, in Civil Case No. 20520 thereof,
entitled "Price Stabilization Corporation vs. Miguel D. Tecson and Alto Surety and Insurance Co., Inc.," the dispositive
part of which reads as follows:
For the foregoing consideration, the Court decides this case:
(a) Ordering the defendants Miguel D. Tecson and Alto Surety Insurance Co., Inc. to pay jointly and severally plaintiff
PRATRA the sum of P7,200.00 plus 7% interest from May 25, 1960 until the amount is fully paid, plus P500.00 for
attorney's fees, and plus costs;
(b) ordering defendant Miguel D. Tecson to indemnify his co-defendant Alto Surety & Insurance Co., Inc. on the
cross-claim for all the amounts it would be made to pay in this decision, in case defendant Alto Surety & Insurance
Co., Inc. pay the amount adjudged to plaintiff in this decision. From the date of such payment defendant Miguel D.
Tecson would pay the Alto Surety & Insurance Co., Inc., interest at 12% per annum until Miguel D. Tecson has fully
reimbursed plaintiff of the said amount.
Copy of this decision was, on November 21, 1955, served upon the defendants in said case. On December 21, 1965,
the National Marketing Corporation, as successor to all the properties, assets, rights, and choses in action of the
Price Stabilization Corporation, as plaintiff in that case and judgment creditor therein, filed, with the same court, a
complaint, docketed as Civil Case No. 63701 thereof, against the same defendants, for the revival of the judgment
rendered in said Case No. 20520. Defendant Miguel D. Tecson moved to dismiss said complaint, upon the ground of
lack of jurisdiction over the subject matter thereof and prescription of action. Acting upon the motion and plaintiff's
opposition thereto, said Court issued, on February 14, 1966, an order reading:
Defendant Miguel Tecson seeks the dismissal of the complaint on the ground of lack of jurisdiction and prescription.
As for lack of jurisdiction, as the amount involved is less than P10,000 as actually these proceedings are a revival of a
decision issued by this same court, the matter of jurisdiction must be admitted. But as for prescription. Plaintiffs
admit the decision of this Court became final on December 21, 1955. This case was filed exactly on December 21,
1965 — but more than ten years have passed a year is a period of 365 days (Art. 13, CCP). Plaintiff forgot that 1960,
1964 were both leap years so that when this present case was filed it was filed two days too late.
The complaint insofar as Miguel Tecson is concerned is, therefore, dismissed as having prescribed.1äwphï1.ñët
The National Marketing Corporation appealed from such order to the Court of Appeals, which, on March 20, 1969t
certified the case to this Court, upon the ground that the only question therein raised is one of law, namely, whether
or not the present action for the revival of a judgment is barred by the statute of limitations.
Pursuant to Art. 1144(3) of our Civil Code, an action upon a judgment "must be brought within ten years from the
time the right of action accrues," which, in the language of Art. 1152 of the same Code, "commences from the time
the judgment sought to be revived has become final." This, in turn, took place on December 21, 1955, or thirty (30)
days from notice of the judgment — which was received by the defendants herein on November 21, 1955 — no
appeal having been taken therefrom. 1 The issue is thus confined to the date on which ten (10) years from December
21, 1955 expired.
Plaintiff-appellant alleges that it was December 21, 1965, but appellee Tecson maintains otherwise, because "when
the laws speak of years ... it shall be understood that years are of three hundred sixty-five days each" — according to
Art. 13 of our Civil Code — and, 1960 and 1964 being leap years, the month of February in both had 29 days, so that
ten (10) years of 365 days each, or an aggregate of 3,650 days, from December 21, 1955, expired on December 19,
1965. The lower court accepted this view in its appealed order of dismissal.
Plaintiff-appellant insists that the same "is erroneous, because a year means a calendar year (Statutory Construction,
Interpretation of Laws, by Crawford, p. 383) and since what is being computed here is the number of years, a
calendar year should be used as the basis of computation. There is no question that when it is not a leap year,
December 21 to December 21 of the following year is one year. If the extra day in a leap year is not a day of the year,
because it is the 366th day, then to what year does it belong? Certainly, it must belong to the year where it falls and,
therefore, that the 366 days constitute one year." 2
The very conclusion thus reached by appellant shows that its theory contravenes the explicit provision of Art. 13 of
the Civil Code of the Philippines, limiting the connotation of each "year" — as the term is used in our laws — to 365
days. Indeed, prior to the approval of the Civil Code of Spain, the Supreme Court thereof had held, on March 30,
1887, that, when the law spoke of months, it meant a "natural" month or "solar" month, in the absence of express
provision to the contrary. Such provision was incorporated into the Civil Code of Spain, subsequently promulgated.
Hence, the same Supreme Court declared 3 that, pursuant to Art. 7 of said Code, "whenever months ... are referred
to in the law, it shall be understood that the months are of 30 days," not the "natural," or "solar" or "calendar"
months, unless they are "designated by name," in which case "they shall be computed by the actual number of days
they have. This concept was later, modified in the Philippines, by Section 13 of the Revised Administrative Code,
Pursuant to which, "month shall be understood to refer to a calendar month." 4 In the language of this Court, in
People vs. Del Rosario, 5 with the approval of the Civil Code of the Philippines (Republic Act 386) ... we have reverted
to the provisions of the Spanish Civil Code in accordance with which a month is to be considered as the regular 30-
day month ... and not the solar or civil month," with the particularity that, whereas the Spanish Code merely
mentioned "months, days or nights," ours has added thereto the term "years" and explicitly ordains that "it shall be
understood that years are of three hundred sixty-five days."
Although some members of the Court are inclined to think that this legislation is not realistic, for failure to conform
with ordinary experience or practice, the theory of plaintiff-appellant herein cannot be upheld without ignoring, if
not nullifying, Art. 13 of our Civil Code, and reviving Section 13 of the Revised Administrative Code, thereby engaging
in judicial legislation, and, in effect, repealing an act of Congress. If public interest demands a reversion to the policy
embodied in the Revised Administrative Code, this may be done through legislative process, not by judicial decree.
WHEREFORE, the order appealed from should be as it is hereby affirmed, without costs. It is so ordered.
g. PLURAL WORDS; SINGULAR WORDS
G.R. No. L-19281 June 30, 1965
IN THE MATTER OF THE INTESTATE ESTATE OF PEDRO SANTILLON, CLARO SANTILLON, petitioner-appellant,
vs.
PERFECTA MIRANDA, BENITO U. MIRANDA and ROSARIO CORRALES, oppositors-appellees.
Clodualdo P. Surio and Claro Santillon (in his own behalf) for petitioner-appellant.
Patricio M. Patajo for oppositors-appellees.
BENGZON, C.J.:
This is an appeal from the order of the Court of First Instance of Pangasinan, specifying the respective shares of the
principal parties herein in the intestate estate of Pedro Santillon.
On November 21, 1953, Santillon died without testament in Tayug, Pangasinan, his residence, leaving one son, Claro,
and his wife, Perfecta Miranda. During his marriage, Pedro acquired several parcels of land located in that province.
About four years after his death, Claro Santillon filed a petition for letters of administration. Opposition to said
petition was entered by the widow Perfecta Miranda and the spouses Benito U. Miranda and Rosario Corrales on the
following grounds: (a) that the properties enumerated in the petition were all conjugal, except three parcels which
Perfecta Miranda claimed to be her exclusive properties; (b) that Perfecta Miranda by virtue of two documents had
conveyed 3/4 of her undivided share in most of the properties enumerated in the petition to said spouses Benito and
Rosario; (c) that administration of the estate was not necessary, there being a case for partition pending; and (d) that
if administration was necessary at all, the oppositor Perfecta Miranda and not the petitioner was better qualified for
the post. It appears that subsequently, oppositor Perfecta Miranda was appointed administratrix of the estate.
On March 22, 1961, the court appointed commissioners to draft within sixty days, a project of partition and
distribution of all the properties of the deceased Pedro Santillon.
On April 25, 1961, Claro filed a "Motion to Declare Share of Heirs" and to resolve the conflicting claims of the parties
with respect to their respective rights in the estate. Invoking Art. 892 of the New Civil Code, he insisted that after
deducting 1/2 from the conjugal properties is the conjugal share of Perfecta, the remaining 1/2 must be divided as
follows: 1/4 for her and 3/4 for him. Oppositor Perfecta, on the other hand, claimed that besides her conjugal half,
she was entitled under Art. 996 of the New Civil Code to another 1/2 of the remaining half. In other words, Claro
claimed 3/4 of Pedro's inheritance, while Perfecta claimed 1/2.
After due notice and hearing, the court, on June 28, 1961, issued an order, the dispositive portion of which reads:
IN VIEW OF THE FOREGOING CONSIDERATIONS it is hereby ruled and ordered that in the intestate succession of the
deceased Pedro Santillon, the surviving spouse Perfecta Miranda shall inherit ONE-HALF (1/2) share and the
remaining ONE-HALF (1/2) share for the only son, Atty. Claro Santillon. This is after deducting the share of the widow
as co-owner of the conjugal properties. ... .
From this order, petitioner Claro Santillon has appealed to this Court. Two questions of law are involved. The first,
raised in Perfecta's Motion to Dismiss Appeal, is whether the order of the lower court is appealable. And the second,
raised in appellant's lone assignment of error, is: How shall the estate of a person who dies intestate be divided
when the only survivors are the spouse and one legitimate child?
The First Issue: — It is clear that the order of the lower court is final and, therefore, appealable to this Court.
Under Rule 109, sec. 1, a person may appeal in special proceedings from an order of the Court of First Instance
where such order "determines ... the distributive share of the estate to which such person is entitled."
The Second Issue: — Petitioner rests his claim to 3/4 of his father's estate on Art. 892 of the New Civil Code which
provides that:
If only the legitimate child or descendant of the deceased survives the widow or widower shall be entitled to one-
fourth of the hereditary estate. ... .
As she gets one-fourth, therefore, I get 3/4, says Claro. Perfecta, on the other hand, cites Art. 996 which provides:
If a widow or widower and legitimate children or descendants are left, the surviving spouse has in the succession the
same share as that of each of the children.
Replying to Perfecta's claim, Claro says the article is unjust and unequitable to the extent that it grants the widow
the same share as that of the children in intestate succession, whereas in testate, she is given 1/4 and the only child
1/2.
Oppositor Perfecta Miranda, on the other hand, contends that Art. 996 should control, regardless of its alleged
inequity, being as it is, a provision on intestate succession involving a surviving spouse and a legitimate child,
inasmuch as in statutory construction, the plural word "children" includes the singular "child."
Art. 892 of the New Civil Code falls under the chapter on Testamentary Succession; whereas Art. 996 comes under
the chapter on Legal or Intestate Succession. Such being the case, it is obvious that Claro cannot rely on Art. 892 to
support his claim to 3/4 of his father's estate. Art 892 merely fixes the legitime of the surviving spouse and Art. 888
thereof, the legitime of children in testate succession. While it may indicate the intent of the law with respect to the
ideal shares that a child and a spouse should get when they concur with each other, it does not fix the amount of
shares that such child and spouse are entitled to when intestacy occurs. Because if the latter happens, the pertinent
provision on intestate succession shall apply, i.e., Art. 996.
Some commentators of our New Civil Code seem to support Claro's contention; at least, his objection to fifty-fifty
sharing. But others confirm the half and half idea of the Pangasinan court.
This is, remember, intestate proceedings. In the New Civil Code's chapter on legal or intestate succession, the only
article applicable is Art. 996. Our colleague, Mr. Justice J.B.L. Reyes, professor of Civil Law, is quoted as having
expressed the opinion that under this article, when the widow survives with only one legitimate child, they share the
estate in equal parts. 1 Senator Tolentino in his commentaries writes as follows:
One child Surviving. — If there is only one legitimate child surviving with the spouse, since they share equally, one-
half of the estate goes to the child and the other half goes to the surviving spouse. Although the law refers to
"children or descendants," the rule in statutory construction that the plural can be understood to include the
singular is applicable in this case. (Tolentino, Civil Code of the Philippines, Vol. III, p. 436.)
The theory of those holding otherwise seems to be premised on these propositions: (a) Art. 996 speaks of "Children,"
therefore it does not apply when there is only one "child"; consequently Art. 892 (and Art. 888) should be applied,
thru a process of judicial construction and analogy; (b) Art. 996 is unjust or unfair because, whereas in testate
succession, the widow is assigned one-fourth only (Art. 892), she would get 1/2 in intestate.
A. Children. — It is a maxim of statutory construction that words in plural include the singular. 2 So Art. 996 could or
should be read (and so applied) : "If the widow or widower and a legitimate child are left, the surviving spouse has
the same share as that of the child." Indeed, if we refuse to apply the article to this case on the ground that "child" is
not included in "children," the consequences would be tremendous, because "children" will not include "child" in the
following articles:
ART. 887. — The following are compulsory heirs: (1) legitimate children and descendants ... .
ART. 888. — The legitime of legitimate children and descendants consists of one-half of the hereditary estate ... .
ART. 896. — Illegitimate children who may survive ... are entitled to one-fourth of the hereditary estate ... . (See also
Art. 901).
In fact, those who say "children" in Art. 996 does not include "child" seem to be inconsistent when they argue from
the premise that "in testate succession the only legitimate child gets one-half and the widow, one-fourth." The
inconsistency is clear, because the only legitimate child gets one-half under Art. 888, which speaks of "children," not
"child." So if "children" in Art. 888 includes "child," the same meaning should be given to Art. 996.
B. Unfairness of Art. 996. — Such position, more clearly stated, is this: In testate succession, where there is only one
child of the marriage, the child gets one-half, and the widow or widower one-fourth. But in intestate , if Art. 996 is
applied now, the child gets one-half, and the widow or widower one-half. Unfair or inequitable, they insist.
On this point, it is not correct to assume that in testate succession the widow or widower "gets only one-fourth." She
or he may get one-half — if the testator so wishes. So, the law virtually leaves it to each of the spouses to decide (by
testament, whether his or her only child shall get more than his or her survivor).
Our conclusion (equal shares) seems a logical inference from the circumstance that whereas Article 834 of the
Spanish Civil Code, from which Art. 996 was taken, contained two paragraphs governing two contingencies, the first,
where the widow or widower survives with legitimate children (general rule), and the second, where the widow or
widower survives with only one child (exception), Art. 996 omitted to provide for the second situation, thereby
indicating the legislator's desire to promulgate just one general rule applicable to both situations.
The resultant division may be unfair as some writers explain — and this we are not called upon to discuss — but it is
the clear mandate of the statute, which we are bound to enforce.
The appealed decision is affirmed. No costs in this instance.
B. ASSOCIATION AND RELATIONSHIP OF WORDS, PHRASES, AND PROVISIONS

1. NOSCITUR A SOCIIS
[G.R. No. L-5a 1 . November 16, 1945. ]
CO KIM CHAM (alias CO CHAM), Petitioner, v. EUSEBIO VALDEZ TAN KEH and ARSENIO P. DIZON, Judge of First
Instance of Manila, Respondents.
Marcelino Lontok for Petitioner.
Revilla & Palma for respondent Valdez Tan Keh.
Respondent Judge Dizon in his own behalf.
SYLLABUS
1. INTERNATIONAL LAW; "DE FACTO" GOVERNMENT; PRESENCE OF GUERRILLA BANDS. — The presence of guerrilla
bands in barrios and mountains, and even in towns of the Philippines whenever these towns left by Japanese
garrisons or by the detachments of troops sent on patrol to these places, was not sufficient to make the military
occupation ineffective, nor did it cause that occupation to cease, or prevent the constitution or establishment of a de
facto government in the Islands. The belligerent occupation of the Philippines by the Japanese invaders became an
accomplished fact from the time General Wainwright, Commander of the American and Filipino forces in Luzon, and
General Sharp, Commander of the forces in Visayas and Mindanao, surrendered and ordered the surrender of their
forces to the Japanese invaders, and the Commonwealth Government had become incapable of publicity exercising
its authority, and the invader had substituted his own authority for that of the legitimate government in Luzon,
Visayas and Mindanao.
2. ID.; ID.; HAGUE CONVENTIONS; DUTY OF BELLIGERENT OCCUPANT TO CONTINUE COURTS AND MUNICIPAL LAWS
IN FORCE, FOR BENEFIT OF INHABITANTS OF OCCUPIED TERRITORY. — The provisions of the Hague Conventions
which impose upon in belligerent occupant the duty to continue the courts as well as the municipal laws in force in
the country unless absolutely prevented, in order to reestablish and insure :Pordre et al vie publice," that is, the
public order and safety, and the entire social and commercial life of the country, were inserted, not for the benefit of
the invader, but for the protection and benefit of the people or inhabitants of the occupied territory and of those
not in the military service, in order that the ordinary pursuits and business of society may not be unnecessarily
deranged.
3. STATUTORY CONSTRUCTION; MEANING OF "PROCESSES" USED IN PROCLAMATION OF GENERAL DOUGLAS

MACARTHUR OF OCTOBER 23, 1944; MAXIM OF "NOSCITUR A SOCIIS." — The word "processes," as used in the
proclamation of General Douglas MacArthur of October 23, 1944, cannot be interpreted to mean judicial processes;
that term should be construed to mean legislative and constitutional processes, by virtue of the maxim "noscitur a
sociis." According to this maxim, where a particular word or phrase is ambiguous in itself or is equally susceptible of
various meanings, its meaning may be made clear and specific by considering the company in which it is found.
(Black on Interpretation of Laws, 2d., pp. 194-196.) Since the proclamation provides that "all laws, regulations and
processes of any other government in the Philippines than that of the said Commonwealth are null and void," the
word "processes" must be interpreted or construed to refer to the Executive Orders of the Chairman of the
Philippine Executive Commission, ordinances promulgated by the President of the so-called Republic of the
Philippines, and the Constitution itself of said Republic, and others that are of the same class as the laws and
regulations with which the word "processes" is a associated.
DECISION
FERIA, J.:
This is a motion for reconsideration of our decision rendered in this case filed by the Respondent. Two attorneys at
law, who were allowed to appear as amici curiae, have also presented memoranda to discuss certain points on which
the dissenting opinion rely.
(1) It is contended that the military occupation of the Philippine Islands by the Japanese was not actual and effective
because of the existence of guerrilla bands in barrios and mountains and even towns and villages; and consequently,
no government de facto could have been validly established by the Japanese military forces in the Philippines under
the precepts of the Hague Conventions and the law of nations.
The presence of guerrilla bands in barrios and mountains, and even in towns of the Philippines whenever these
towns were left by Japanese garrisons or by the detachments of troops sent on patrol to these places, was not
sufficient to make the military occupation ineffective nor did it cause that occupation to cease, or prevent the
constitution or establishment of a de facto government in the Islands. The belligerent occupation of the Philippines
by the Japanese invaders became as accomplished fact from the time General Wainwright, Commander of the
American and Filipino forces in Luzon, and General Sharp, Commander of the forces in Visayas and Mindanao,
surrendered and ordered the surrender of their forces to the Japanese invaders, and the Commonwealth
Government had become incapable of publicly exercising its authority, and the invader had substituted his own
authority for that of the legitimate government in Luzon, Visayas and Mindanao.
"According to the rules of Land Welfare of the United States Army, belligerent or so-called military occupation is a
question of fact. It presupposes a hostile invasion as a result of which has rendered the invaded government
incapable of publicly exercising its authority, and that the invader is in position to substitute and has substituted his
own authority for that of the legitimate government of the territory invaded." (International Law Chiefly as
Interpreted and Applied by the United States, by Hyde, Vol. II, pp. 361, 362.) "Belligerent occupation must be both
actual and effective. Organized resistance must be overcome and the forces in possession must have taken measures
to establish law and order. It doubtless suffices if the occupying army can, within a reasonable time, send
detachments of troops to make its authority felt within the occupied district." (Id., p. 364.) "Occupation once
acquired must be maintained . . . . It does not cease, however, . . . . Nor does the existence of a rebellion or the
operations of guerrilla bands cause it to cease, unless the legitimate government is reestablished and the occupant
fails promptly to suppress such rebellion or guerrilla operations." (Id., p. 365.) .
But supposing arguendo that there were provinces or district in these Islands not actually and effectively occupied by
the invader, or in which the latter, consequently, had not substituted his own authority for that of the invaded
government, and the Commonwealth Government had continued publicly exercising its authority, there is no
question as to the validity of the judicial acts and proceedings of the court functioning in said territory, under the
municipal law, just as there can be no question as to the validity of the judgments and proceedings of the courts
continued in the territory occupied by the belligerent occupant, under the law of nations.
(2) It is submitted that the renunciation in our Constitution and in the Kellog-Briand Pact of war as an instrument of
national policy, rendered inapplicable the rules of international law authorizing the belligerent Japanese army of
occupation to set up a provisional or de facto government in the Philippines, because Japan started was
treacherously and emphasized war as an instrument of national policy; and that to give validity to the judicial acts of
court sponsored by the Japanese would be tantamount to giving validity to the acts of these invaders, and would be
nothing short of legalizing the Japanese invasion of the Philippines.
In reply to this contention, suffice it to say that the provisions of the Hague Conventions which imposes upon a
belligerent occupant the duty to continue the courts as well as the municipal laws in force in the country unless
absolutely prevented, in order to reestablish and insure "I’ordre et la vie publice," that is, the public order and
safety, and the entire social and commercial life of the country, were inserted, not for the benefit of the invader, but
for the protection and benefit of the people or inhabitants of the occupied territory and of those not in the military
service, in order that the ordinary pursuits and business of society may not be unnecessarily deranged.
This is the opinion of all writers on international law up to date, among them Wheaton (Vol. II, p. 236) and
Oppenheim (Vol. II, p. 338) in their recently revised Treatises on International Law, edited in the year 1944, and the
interpretation of the Supreme Court of the United States in many cases, specially in the case of Dow v. Johnson (106
U. S., 158), in which that Court said: "As a necessary consequence of such occupation and domination, the political
relations of its people to their former government are, for the time being, severed. But for their protection and
benefit, and the protection and benefit of others not in the ordinary pursuits and business of society may not be
unnecessarily deranged, the municipal laws, that is, such as affect private rights of persons and property and provide
for the punishment of crime, are generally allowed to continue in force, and to be administered by the ordinary
tribunals as they were administered before the occupation. They are considered as continuing, unless suspended or
superseded by the occupying belligerent." (Dow v. Johnson, 100 U. S., 158; 25 U. S. [Law, ed. ], 632).
The fact that the belligerent occupant is a treacherous aggressor, as Japan was, does not, therefore, exempt him
from complying with said precepts of the Hague Conventions, nor does it make null and void the judicial acts of the
courts continued by the occupant in the territory occupied. To deny validity to such judicial acts would benefit the
invader or aggressor, who is presumed to be intent upon causing as much harm as possible to the inhabitants or
nationals of the enemy’s territory, and prejudice the latter; it would cause more suffering to the conquered and
assist the conqueror or invader in realizing his nefarious design; in fine, it would result in penalizing the nationals of
the occupied territory, and rewarding the invader or occupant for his acts of treachery and aggression.
(3) We held in our decision that the world "processes," as used in the proclamation of General Douglas MacArthur of
October 23, 1944, cannot be interpreted to mean judicial processes; and because of the cogent reasons therein set
forth, we did not deem it necessary to specify the processes to which said proclamation should be construed to
refer. As some doubt still lingers in the minds of person interested in sustaining a contrary interpretation or
construction, we are now constrained to say that the term as used in the proclamation should be construed to mean
legislative and constitutional processes, by virtue of the maxim "noscitur a sociis." According to this maxim, where a
particular word or phrase is ambiguous in itself or is equally susceptible of various meaning, its meaning may be
made clear and specific by considering the company in which it is found. (Black on Interpretation of Laws, 2d ed., pp.
194-196.) Since the proclamation provides that "all laws, regulations and processes of any other government in the
Philippines than that of the said Commonwealth are null and void," the word "processes" must be interpreted or
construed to refer to the Executive Commission, Ordinances promulgated by the President of the so-called Republic
of the Philippines, and the Constitution itself of said Republic, and others that are of the same class as the laws and
regulations with which the world "processes" is associated.
To illustrate, "an English act required licenses for ’houses, rooms, shops, or buildings, kept open for public
refreshment, resort, and entertainment.’ It was adjudged that the word ’entertainment,’ in this connection, did not
necessarily mean a concert, dramatic performance, or other divertisement, nor did it necessarily imply the furnishing
of food or drink, but that, judged from its associations, it meant the reception and accommodation of the public. So
where a policy of marine insurance is specified to protect the assured against ’arrests, restraints, and detainments of
all kinds, princes, and people,’ the word ’people’ means the ruling or governing power of the country, this
signification being impressed upon it by its association with the words ’kings’ and ’princes.’ Again, in a statute
relating to imprisonment for debt, which speaks of debtors who shall be charged with ’fraud, or undue preference to
one creditor to the prejudice of another,’ the word ’undue’ means fraudulent. A statute of bankruptcy, declaring
that any fraudulent ’gift, transfer or delivery’ of property shall constitute an act of bankruptcy, applies only to such
deliveries as ore in the nature of a gift — such as change the ownership of the property, to the prejudice of creditors;
it does not include a delivery to a bailee for safekeeping." (Black on Interpretation of Laws, supra.)
(4) The statement of Wheaton (International Law, 7th ed., p. 245) that "when it is said that an occupier’s acts are
valid, it must be remembered that no crucial instances exist to show that if his acts should all be reversed (by the
restored government or its representatives) no international wrong would be committed," evidently does not mean
that the restored government or its representatives may reverse the judicial acts and proceedings of the courts
during the belligerent occupation without violation of the law of nations does not always and necessarily cause an
international wrong. As the said judicial acts which apply the municipal laws, that is, such as affect private rights or
persons and property and provide for the punishment of crimes, are good and valid even after occupation has
ceased, although it is true that no crucial instances exist to show that, were they reversed or invalidated by the
restored or legitimate government, international wrong would be committed, it is nonetheless true and evident that
by such abrogation national wrong would be caused to the inhabitants or citizens of the legitimate government.
According to the law of nations and Wheaton himself, said judicial acts are legal and valid before and after the
occupation has ceased and the legitimate government has been restored. As there are vested rights which have
been acquired by the parties by virtue of such judgments, the restored government or its representative cannot
reverse or abrogate them without causing wrong or injury to the interested parties, because such reversal would
deprive them of their properties without due process of law.
In this connection, it may not be amiss to refer to the decision of the Supreme Court of the United States in the case
of Raymond v. Thomas (91 U. S., 712), quoted in our decision as applicable by analogy. In said case, the Commander
in Chief of the United States forces in South Carolina, after the end of the Civil War and while the territory was still
under Military Government, issued a special order annulling a decree rendered by a court of chancery in a case
within its jurisdiction, on the wrong assumption that he had authority to do so under the acts of Congress approved
March 2, and July 19, 1867, which defined his powers and duties. That Supreme Court declared void the said special
order on the ground "that it was an arbitrary stretch of authority needful to no good end that can be imagined.
Whether Congress could have conferred power to do such an act is a question we are not called upon to consider. It
is an unbending rule of law that the exercise of military power where the rights of the citizens are concerned, shall
never be pushed beyond what the exigency requires."cralaw virtua1aw library
(5) It is argued with insistence that the courts of the Commonwealth continued in the Philippines by the belligerent
occupant became also courts of Japan, and their judgments and proceedings being acts of foreign courts cannot now
be considered valid and continued by the courts of the Commonwealth Government after the restoration of the
latter. As we have already stated in our decision the fundamental reasons why said courts, functioning during the
Japanese regime, could not be considered as courts of Japan, it is sufficient now to invite attention to the decision of
the Supreme Court of the United States in the case of the Admittance, Jecker v. Montgomery (13 How., 498; 14 Law.
ed., 240), which we did not deem necessary to quote in our decision, in which it was held that "the courts,
established or sanctioned in Mexico during the war by the commanders of the American forces, were nothing more
than the agents of the military power, to assist it in preserving order in the conquered territory, and to protect the
inhabitants in their persons and property while it was occupied by the American arms. They were subject to the
military power, and their decision under its control, whenever the commanding officer though proper to interfere.
They were not courts of the United States, and had no right to adjudicate upon a question of prize or no prize." (The
Admittance, Jecker v. Montgomery, 13 How., 498; 14 Law. ed., 240.)
(6) The petition for mandamus in the present case is the plain, speedy and adequate remedy. The mandamus applied
for is not to compel the respondent judge to order the reconstitution of the record of the case, because the record
had already been reconstituted by order of the court. It is sought to compel the respondent judge to continue the
proceedings in said case. As the judge refused to act on the ground that he had no power or jurisdiction to continue
taking cognizance of the case, mandamus and not appeal is the plain, speedy and adequate remedy. For it is well
established rule that "if a court has erroneously decided some question of law or of practice, presented as a
preliminary objection, and upon such erroneous construction has refused to go into the merits of the case,
mandamus will lie to compel it to proceed." (High on Extraordinary Legal Remedies, section 151; Castro Revilla v.
Garduño, 53 Phil., 934.)
In view of the foregoing, the motion for reconsideration filed by the respondents is denied. The petition for oral
argument on said motions for reconsideration, based on the resolution of division of this Court dated July 3, 2945,
amendatory of section 2, Rule 54, of the Rules of Court, is also denied, since said resolution has not yet been
adopted by this Court in banc, and the respondents and amici curiae were allowed to file, and they filed, their
arguments in writing.
G.R. No. 106719 September 21, 1993
DRA. BRIGIDA S. BUENASEDA, Lt. Col. ISABELO BANEZ, JR., ENGR. CONRADO REY MATIAS, Ms. CORA S. SOLIS and Ms.
ENYA N. LOPEZ, petitioners,
vs.
SECRETARY JUAN FLAVIER, Ombudsman CONRADO M. VASQUEZ, and NCMH NURSES ASSOCIATION, represented by
RAOULITO GAYUTIN, respondents.
Renato J. Dilag and Benjamin C. Santos for petitioners.
Danilo C. Cunanan for respondent Ombudsman.
Crispin T. Reyes and Florencio T. Domingo for private respondent.
QUIASON, J.:
This is a Petition for Certiorari, Prohibition and Mandamus, with Prayer for Preliminary Injunction or Temporary
Restraining Order, under Rule 65 of the Revised Rules of Court.
Principally, the petition seeks to nullify the Order of the Ombudsman dated January 7, 1992, directing the preventive
suspension of petitioners,
Dr. Brigida S. Buenaseda, Chief of Hospital III; Isabelo C. Banez, Jr., Administrative Officer III; Conrado Rey Matias,
Technical Assistant to the Chief of Hospital; Cora C. Solis, Accountant III; and Enya N. Lopez, Supply Officer III, all of
the National Center for Mental Health. The petition also asks for an order directing the Ombudsman to disqualify
Director Raul Arnaw and Investigator Amy de Villa-Rosero, of the Office of the Ombudsman, from participation in the
preliminary investigation of the charges against petitioner (Rollo, pp. 2-17; Annexes to Petition, Rollo, pp. 19-21).
The questioned order was issued in connection with the administrative complaint filed with the Ombudsman (OBM-
ADM-0-91-0151) by the private respondents against the petitioners for violation of the Anti-Graft and Corrupt
Practices Act.
According to the petition, the said order was issued upon the recommendation of Director Raul Arnaw and
Investigator Amy de Villa-Rosero, without affording petitioners the opportunity to controvert the charges filed
against them. Petitioners had sought to disqualify Director Arnaw and Investigator Villa-Rosero for manifest partiality
and bias (Rollo, pp. 4-15).
On September 10, 1992, this Court required respondents' Comment on the petition.
On September 14 and September 22, 1992, petitioners filed a "Supplemental Petition (Rollo, pp. 124-130); Annexes
to Supplemental Petition; Rollo pp. 140-163) and an "Urgent Supplemental Manifestation" (Rollo,
pp. 164-172; Annexes to Urgent Supplemental Manifestation; Rollo, pp. 173-176), respectively, averring
developments that transpired after the filing of the petition and stressing the urgency for the issuance of the writ of
preliminary injunction or temporary restraining order.
On September 22, 1992, this Court ". . . Resolved to REQUIRE the respondents to MAINTAIN in the meantime, the
STATUS QUO pending filing of comments by said respondents on the original supplemental manifestation" (Rollo, p.
177).
On September 29, 1992, petitioners filed a motion to direct respondent Secretary of Health to comply with the
Resolution dated September 22, 1992 (Rollo, pp. 182-192, Annexes, pp. 192-203). In a Resolution dated October 1,
1992, this Court required respondent Secretary of Health to comment on the said motion.
On September 29, 1992, in a pleading entitled "Omnibus Submission," respondent NCMH Nurses Association
submitted its Comment to the Petition, Supplemental Petition and Urgent Supplemental Manifestation. Included in
said pleadings were the motions to hold the lawyers of petitioners in contempt and to disbar them (Rollo, pp. 210-
267). Attached to the "Omnibus Submission" as annexes were the orders and pleadings filed in Administrative Case
No. OBM-ADM-0-91-1051 against petitioners (Rollo, pp. 268-480).
The Motion for Disbarment charges the lawyers of petitioners with:

(1) unlawfully advising or otherwise causing or inducing their clients — petitioners Buenaseda, et al., to openly defy,
ignore, disregard, disobey or otherwise violate, maliciously evade their preventive suspension by Order of July 7,
1992 of the Ombudsman . . ."; (2) "unlawfully interfering with and obstructing the implementation of the said order
(Omnibus Submission, pp. 50-52; Rollo, pp. 259-260); and (3) violation of the Canons of the Code of Professional
Responsibility and of unprofessional and unethical conduct "by foisting blatant lies, malicious falsehood and
outrageous deception" and by committing subornation of perjury, falsification and fabrication in their pleadings
(Omnibus Submission, pp. 52-54; Rollo, pp. 261-263).
On November 11, 1992, petitioners filed a "Manifestation and Supplement to 'Motion to Direct Respondent
Secretary of Health to Comply with 22 September 1992 Resolution'" (Manifestation attached to Rollo without
pagination between pp. 613 and 614 thereof).
On November 13, 1992, the Solicitor General submitted its Comment dated November 10, 1992, alleging that: (a)
"despite the issuance of the September 22, 1992 Resolution directing respondents to maintain the status quo,
respondent Secretary refuses to hold in abeyance the implementation of petitioners' preventive suspension; (b) the
clear intent and spirit of the Resolution dated September 22, 1992 is to hold in abeyance the implementation of
petitioners' preventive suspension, the status quo obtaining the time of the filing of the instant petition; (c)
respondent Secretary's acts in refusing to hold in abeyance implementation of petitioners' preventive suspension
and in tolerating and approving the acts of Dr. Abueva, the OIC appointed to replace petitioner Buenaseda, are in
violation of the Resolution dated September 22, 1992; and
(d) therefore, respondent Secretary should be directed to comply with the Resolution dated September 22, 1992
immediately, by restoring the status quo ante contemplated by the aforesaid resolution" (Comment attached to
Rollo without paginations between pp. 613-614 thereof).
In the Resolution dated November 25, 1992, this Court required respondent Secretary to comply with the
aforestated status quo order, stating inter alia, that:
It appearing that the status quo ante litem motam, or the last peaceable uncontested status which preceded the
present controversy was the situation obtaining at the time of the filing of the petition at bar on September 7, 1992
wherein petitioners were then actually occupying their respective positions, the Court hereby ORDERS that
petitioners be allowed to perform the duties of their respective positions and to receive such salaries and benefits as
they may be lawfully entitled to, and that respondents and/or any and all persons acting under their authority desist
and refrain from performing any act in violation of the aforementioned Resolution of September 22, 1992 until
further orders from the Court (Attached to Rollo after p. 615 thereof).
On December 9, 1992, the Solicitor General, commenting on the Petition, Supplemental Petition and Supplemental
Manifestation, stated that (a) "The authority of the Ombudsman is only to recommend suspension and he has no
direct power to suspend;" and (b) "Assuming the Ombudsman has the power to directly suspend a government
official or employee, there are conditions required by law for the exercise of such powers; [and] said conditions have
not been met in the instant case" (Attached to Rollo without pagination).
In the pleading filed on January 25, 1993, petitioners adopted the position of the Solicitor General that the
Ombudsman can only suspend government officials or employees connected with his office. Petitioners also refuted
private respondents' motion to disbar petitioners' counsel and to cite them for contempt (Attached to Rollo without
pagination).
The crucial issue to resolve is whether the Ombudsman has the power to suspend government officials and
employees working in offices other than the Office of the Ombudsman, pending the investigation of the
administrative complaints filed against said officials and employees.
In upholding the power of the Ombudsman to preventively suspend petitioners, respondents (Urgent Motion to Lift
Status Quo, etc, dated January 11, 1993, pp. 10-11), invoke Section 24 of R.A. No. 6770, which provides:
Sec. 24. Preventive Suspension. — The Ombudsman or his Deputy may preventively suspend any officer or employee
under his authority pending an investigation, if in his judgment the evidence of guilt is strong, and (a) the charge
against such officer or employee involves dishonesty, oppression or grave misconduct or neglect in the performance
of duty; (b) the charge would warrant removal from the service; or (c) the respondent's continued stay in office may
prejudice the case filed against him.
The preventive suspension shall continue until the case is terminated by the Office of Ombudsman but not more
than six months, without pay, except when the delay in the disposition of the case by the Office of the Ombudsman
is due to the fault, negligence or petition of the respondent, in which case the period of such delay shall not be
counted in computing the period of suspension herein provided.
Respondents argue that the power of preventive suspension given the Ombudsman under Section 24 of R.A. No.
6770 was contemplated by Section 13 (8) of Article XI of the 1987 Constitution, which provides that the Ombudsman
shall exercise such other power or perform such functions or duties as may be provided by law."
On the other hand, the Solicitor General and the petitioners claim that under the 1987 Constitution, the
Ombudsman can only recommend to the heads of the departments and other agencies the preventive suspension of
officials and employees facing administrative investigation conducted by his office. Hence, he cannot order the
preventive suspension himself.
They invoke Section 13(3) of the 1987 Constitution which provides that the Office of the Ombudsman shall have inter
alia the power, function, and duty to:
Direct the officer concerned to take appropriate action against a public official or employee at fault, and recommend
his removal, suspension, demotion, fine, censure or prosecution, and ensure compliance therewith.
The Solicitor General argues that under said provision of the Constitutions, the Ombudsman has three distinct
powers, namely: (1) direct the officer concerned to take appropriate action against public officials or employees at
fault; (2) recommend their removal, suspension, demotion fine, censure, or prosecution; and (3) compel compliance
with the recommendation (Comment dated December 3, 1992, pp. 9-10).
The line of argument of the Solicitor General is a siren call that can easily mislead, unless one bears in mind that
what the Ombudsman imposed on petitioners was not a punitive but only a preventive suspension.
When the constitution vested on the Ombudsman the power "to recommend the suspension" of a public official or
employees (Sec. 13 [3]), it referred to "suspension," as a punitive measure. All the words associated with the word
"suspension" in said provision referred to penalties in administrative cases, e.g. removal, demotion, fine, censure.
Under the rule of Noscitor a sociis, the word "suspension" should be given the same sense as the other words with
which it is associated. Where a particular word is equally susceptible of various meanings, its correct construction
may be made specific by considering the company of terms in which it is found or with which it is associated (Co Kim
Chan v. Valdez Tan Keh, 75 Phil. 371 [1945]; Caltex (Phils.) Inc. v. Palomar, 18 SCRA 247 [1966]).
Section 24 of R.A. No. 6770, which grants the Ombudsman the power to preventively suspend public officials and
employees facing administrative charges before him, is a procedural, not a penal statute. The preventive suspension
is imposed after compliance with the requisites therein set forth, as an aid in the investigation of the administrative
charges.
Under the Constitution, the Ombudsman is expressly authorized to recommend to the appropriate official the
discipline or prosecution of erring public officials or employees. In order to make an intelligent determination
whether to recommend such actions, the Ombudsman has to conduct an investigation. In turn, in order for him to
conduct such investigation in an expeditious and efficient manner, he may need to suspend the respondent.
The need for the preventive suspension may arise from several causes, among them, the danger of tampering or
destruction of evidence in the possession of respondent; the intimidation of witnesses, etc. The Ombudsman should
be given the discretion to decide when the persons facing administrative charges should be preventively suspended.
Penal statutes are strictly construed while procedural statutes are liberally construed (Crawford, Statutory
Construction, Interpretation of Laws, pp. 460-461; Lacson v. Romero, 92 Phil. 456 [1953]). The test in determining if a
statute is penal is whether a penalty is imposed for the punishment of a wrong to the public or for the redress of an
injury to an individual (59 Corpuz Juris, Sec. 658; Crawford, Statutory Construction, pp. 496-497). A Code prescribing
the procedure in criminal cases is not a penal statute and is to be interpreted liberally (People v. Adler, 140 N.Y. 331;
35 N.E. 644).
The purpose of R.A. No. 6770 is to give the Ombudsman such powers as he may need to perform efficiently the task
committed to him by the Constitution. Such being the case, said statute, particularly its provisions dealing with
procedure, should be given such interpretation that will effectuate the purposes and objectives of the Constitution.
Any interpretation that will hamper the work of the Ombudsman should be avoided.
A statute granting powers to an agency created by the Constitution should be liberally construed for the
advancement of the purposes and objectives for which it was created (Cf. Department of Public Utilities v. Arkansas
Louisiana Gas. Co., 200 Ark. 983, 142 S.W. (2d) 213 [1940]; Wallace v. Feehan, 206 Ind. 522, 190 N.E., 438 [1934]).
In Nera v. Garcia, 106 Phil. 1031 [1960], this Court, holding that a preventive suspension is not a penalty, said:
Suspension is a preliminary step in an administrative investigation. If after such investigation, the charges are
established and the person investigated is found guilty of acts warranting his removal, then he is removed or
dismissed. This is the penalty.
To support his theory that the Ombudsman can only preventively suspend respondents in administrative cases who
are employed in his office, the Solicitor General leans heavily on the phrase "suspend any officer or employee under
his authority" in Section 24 of R.A. No. 6770.
The origin of the phrase can be traced to Section 694 of the Revised Administrative Code, which dealt with
preventive suspension and which authorized the chief of a bureau or office to "suspend any subordinate or
employee in his bureau or under his authority pending an investigation . . . ."
Section 34 of the Civil Service Act of 1959 (R.A. No. 2266), which superseded Section 694 of the Revised
Administrative Code also authorized the chief of a bureau or office to "suspend any subordinate officer or
employees, in his bureau or under his authority."
However, when the power to discipline government officials and employees was extended to the Civil Service
Commission by the Civil Service Law of 1975 (P.D. No. 805), concurrently with the President, the Department
Secretaries and the heads of bureaus and offices, the phrase "subordinate officer and employee in his bureau" was
deleted, appropriately leaving the phrase "under his authority." Therefore, Section 41 of said law only mentions that
the proper disciplining authority may preventively suspend "any subordinate officer or employee under his authority
pending an investigation . . ." (Sec. 41).
The Administrative Code of 1987 also empowered the proper disciplining authority to "preventively suspend any
subordinate officer or employee under his authority pending an investigation" (Sec. 51).
The Ombudsman Law advisedly deleted the words "subordinate" and "in his bureau," leaving the phrase to read
"suspend any officer or employee under his authority pending an investigation . . . ." The conclusion that can be
deduced from the deletion of the word "subordinate" before and the words "in his bureau" after "officer or
employee" is that the Congress intended to empower the Ombudsman to preventively suspend all officials and
employees under investigation by his office, irrespective of whether they are employed "in his office" or in other
offices of the government. The moment a criminal or administrative complaint is filed with the Ombudsman, the
respondent therein is deemed to be "in his authority" and he can proceed to determine whether said respondent
should be placed under preventive suspension.
In their petition, petitioners also claim that the Ombudsman committed grave abuse of discretion amounting to lack
of jurisdiction when he issued the suspension order without affording petitioners the opportunity to confront the
charges against them during the preliminary conference and even after petitioners had asked for the disqualification
of Director Arnaw and Atty. Villa-Rosero (Rollo, pp. 6-13). Joining petitioners, the Solicitor General contends that
assuming arguendo that the Ombudsman has the power to preventively suspend erring public officials and
employees who are working in other departments and offices, the questioned order remains null and void for his
failure to comply with the requisites in Section 24 of the Ombudsman Law (Comment dated December 3, 1992, pp.
11-19).
Being a mere order for preventive suspension, the questioned order of the Ombudsman was validly issued even
without a full-blown hearing and the formal presentation of evidence by the parties. In Nera, supra, petitioner
therein also claimed that the Secretary of Health could not preventively suspend him before he could file his answer
to the administrative complaint. The contention of petitioners herein can be dismissed perfunctorily by holding that
the suspension meted out was merely preventive and therefore, as held in Nera, there was "nothing improper in
suspending an officer pending his investigation and before tho charges against him are heard . . . (Nera v. Garcia.,
supra).
There is no question that under Section 24 of R.A. No. 6770, the Ombudsman cannot order the preventive
suspension of a respondent unless the evidence of guilt is strong and (1) the charts against such officer or employee
involves dishonesty, oppression or grave misconduct or neglect in the performance of duty; (2) the charge would
warrant removal from the service; or (3) the respondent's continued stay in office may prejudice the case filed
against him.
The same conditions for the exercise of the power to preventively suspend officials or employees under investigation
were found in Section 34 of R.A. No. 2260.
The import of the Nera decision is that the disciplining authority is given the discretion to decide when the evidence
of guilt is strong. This fact is bolstered by Section 24 of R.A. No. 6770, which expressly left such determination of guilt
to the "judgment" of the Ombudsman on the basis of the administrative complaint. In the case at bench, the
Ombudsman issued the order of preventive suspension only after: (a) petitioners had filed their answer to the
administrative complaint and the "Motion for the Preventive Suspension" of petitioners, which incorporated the
charges in the criminal complaint against them (Annex 3, Omnibus Submission, Rollo, pp. 288-289; Annex 4, Rollo,
pp. 290-296); (b) private respondent had filed a reply to the answer of petitioners, specifying 23 cases of harassment
by petitioners of the members of the private respondent (Annex 6, Omnibus Submission, Rollo, pp. 309-333); and (c)
a preliminary conference wherein the complainant and the respondents in the administrative case agreed to submit
their list of witnesses and documentary evidence.
Petitioners herein submitted on November 7, 1991 their list of exhibits (Annex 8 of Omnibus Submission, Rollo, pp.
336-337) while private respondents submitted their list of exhibits (Annex 9 of Omnibus Submission, Rollo, pp. 338-
348).
Under these circumstances, it can not be said that Director Raul Arnaw and Investigator Amy de Villa-Rosero acted
with manifest partiality and bias in recommending the suspension of petitioners. Neither can it be said that the
Ombudsman had acted with grave abuse of discretion in acting favorably on their recommendation.
The Motion for Contempt, which charges the lawyers of petitioners with unlawfully causing or otherwise inducing
their clients to openly defy and disobey the preventive suspension as ordered by the Ombudsman and the Secretary
of Health can not prosper (Rollo, pp. 259-261). The Motion should be filed, as in fact such a motion was filed, with
the Ombudsman. At any rate, we find that the acts alleged to constitute indirect contempt were legitimate measures
taken by said lawyers to question the validity and propriety of the preventive suspension of their clients.
On the other hand, we take cognizance of the intemperate language used by counsel for private respondents hurled
against petitioners and their counsel (Consolidated: (1) Comment on Private Respondent" "Urgent Motions, etc.;
(2) Adoption of OSG's Comment; and (3) Reply to Private Respondent's Comment and Supplemental Comment, pp.
4-5).
A lawyer should not be carried away in espousing his client's cause. The language of a lawyer, both oral or written,
must be respectful and restrained in keeping with the dignity of the legal profession and with his behavioral attitude
toward his brethren in the profession (Lubiano v. Gordolla, 115 SCRA 459 [1982]). The use of abusive language by
counsel against the opposing counsel constitutes at the same time a disrespect to the dignity of the court of justice.
Besides, the use of impassioned language in pleadings, more often than not, creates more heat than light.
The Motion for Disbarment (Rollo, p. 261) has no place in the instant special civil action, which is confined to
questions of jurisdiction or abuse of discretion for the purpose of relieving persons from the arbitrary acts of judges
and quasi-judicial officers. There is a set of procedure for the discipline of members of the bar separate and apart
from the present special civil action.
WHEREFORE, the petition is DISMISSED and the Status quo ordered to be maintained in the Resolution dated
September 22, 1992 is LIFTED and SET ASIDE.
SO ORDERED.
G.R. No. L-19650 September 29, 1966
CALTEX (PHILIPPINES), INC., petitioner-appellee,

vs.
ENRICO PALOMAR, in his capacity as THE POSTMASTER GENERAL, respondent-appellant.
Office of the Solicitor General for respondent and appellant.

Ross, Selph and Carrascoso for petitioner and appellee.
CASTRO, J.:
In the year 1960 the Caltex (Philippines) Inc. (hereinafter referred to as Caltex) conceived and laid the groundwork
for a promotional scheme calculated to drum up patronage for its oil products. Denominated "Caltex Hooded Pump
Contest", it calls for participants therein to estimate the actual number of liters a hooded gas pump at each Caltex
station will dispense during a specified period. Employees of the Caltex (Philippines) Inc., its dealers and its
advertising agency, and their immediate families excepted, participation is to be open indiscriminately to all "motor
vehicle owners and/or licensed drivers". For the privilege to participate, no fee or consideration is required to be
paid, no purchase of Caltex products required to be made. Entry forms are to be made available upon request at
each Caltex station where a sealed can will be provided for the deposit of accomplished entry stubs.
A three-staged winner selection system is envisioned. At the station level, called "Dealer Contest", the contestant
whose estimate is closest to the actual number of liters dispensed by the hooded pump thereat is to be awarded the
first prize; the next closest, the second; and the next, the third. Prizes at this level consist of a 3-burner kerosene
stove for first; a thermos bottle and a Ray-O-Vac hunter lantern for second; and an Everready Magnet-lite flashlight
with batteries and a screwdriver set for third. The first-prize winner in each station will then be qualified to join in
the "Regional Contest" in seven different regions. The winning stubs of the qualified contestants in each region will
be deposited in a sealed can from which the first-prize, second-prize and third-prize winners of that region will be
drawn. The regional first-prize winners will be entitled to make a three-day all-expenses-paid round trip to Manila,
accompanied by their respective Caltex dealers, in order to take part in the "National Contest". The regional second-
prize and third-prize winners will receive cash prizes of P500 and P300, respectively. At the national level, the stubs
of the seven regional first-prize winners will be placed inside a sealed can from which the drawing for the final first-
prize, second-prize and third-prize winners will be made. Cash prizes in store for winners at this final stage are:
P3,000 for first; P2,000 for second; Pl,500 for third; and P650 as consolation prize for each of the remaining four
participants.
Foreseeing the extensive use of the mails not only as amongst the media for publicizing the contest but also for the
transmission of communications relative thereto, representations were made by Caltex with the postal authorities
for the contest to be cleared in advance for mailing, having in view sections 1954(a), 1982 and 1983 of the Revised
Administrative Code, the pertinent provisions of which read as follows:
SECTION 1954. Absolutely non-mailable matter. — No matter belonging to any of the following classes, whether
sealed as first-class matter or not, shall be imported into the Philippines through the mails, or to be deposited in or
carried by the mails of the Philippines, or be delivered to its addressee by any officer or employee of the Bureau of
Posts:
Written or printed matter in any form advertising, describing, or in any manner pertaining to, or conveying or
purporting to convey any information concerning any lottery, gift enterprise, or similar scheme depending in whole
or in part upon lot or chance, or any scheme, device, or enterprise for obtaining any money or property of any kind
by means of false or fraudulent pretenses, representations, or promises.
"SECTION 1982. Fraud orders.—Upon satisfactory evidence that any person or company is engaged in conducting
any lottery, gift enterprise, or scheme for the distribution of money, or of any real or personal property by lot,
chance, or drawing of any kind, or that any person or company is conducting any scheme, device, or enterprise for
obtaining money or property of any kind through the mails by means of false or fraudulent pretenses,
representations, or promises, the Director of Posts may instruct any postmaster or other officer or employee of the
Bureau to return to the person, depositing the same in the mails, with the word "fraudulent" plainly written or
stamped upon the outside cover thereof, any mail matter of whatever class mailed by or addressed to such person
or company or the representative or agent of such person or company.
SECTION 1983. Deprivation of use of money order system and telegraphic transfer service.—The Director of Posts
may, upon evidence satisfactory to him that any person or company is engaged in conducting any lottery, gift
enterprise or scheme for the distribution of money, or of any real or personal property by lot, chance, or drawing of
any kind, or that any person or company is conducting any scheme, device, or enterprise for obtaining money or
property of any kind through the mails by means of false or fraudulent pretenses, representations, or promise,
forbid the issue or payment by any postmaster of any postal money order or telegraphic transfer to said person or
company or to the agent of any such person or company, whether such agent is acting as an individual or as a firm,
bank, corporation, or association of any kind, and may provide by regulation for the return to the remitters of the
sums named in money orders or telegraphic transfers drawn in favor of such person or company or its agent.
The overtures were later formalized in a letter to the Postmaster General, dated October 31, 1960, in which the
Caltex, thru counsel, enclosed a copy of the contest rules and endeavored to justify its position that the contest does
not violate the anti-lottery provisions of the Postal Law. Unimpressed, the then Acting Postmaster General opined
that the scheme falls within the purview of the provisions aforesaid and declined to grant the requested clearance.
In its counsel's letter of December 7, 1960, Caltex sought a reconsideration of the foregoing stand, stressing that
there being involved no consideration in the part of any contestant, the contest was not, under controlling
authorities, condemnable as a lottery. Relying, however, on an opinion rendered by the Secretary of Justice on an
unrelated case seven years before (Opinion 217, Series of 1953), the Postmaster General maintained his view that
the contest involves consideration, or that, if it does not, it is nevertheless a "gift enterprise" which is equally banned
by the Postal Law, and in his letter of December 10, 1960 not only denied the use of the mails for purposes of the
proposed contest but as well threatened that if the contest was conducted, "a fraud order will have to be issued
against it (Caltex) and all its representatives".
Caltex thereupon invoked judicial intervention by filing the present petition for declaratory relief against Postmaster
General Enrico Palomar, praying "that judgment be rendered declaring its 'Caltex Hooded Pump Contest' not to be
violative of the Postal Law, and ordering respondent to allow petitioner the use of the mails to bring the contest to
the attention of the public". After issues were joined and upon the respective memoranda of the parties, the trial
court rendered judgment as follows:
In view of the foregoing considerations, the Court holds that the proposed 'Caltex Hooded Pump Contest' announced
to be conducted by the petitioner under the rules marked as Annex B of the petitioner does not violate the Postal
Law and the respondent has no right to bar the public distribution of said rules by the mails.
The respondent appealed.
The parties are now before us, arrayed against each other upon two basic issues: first, whether the petition states a
sufficient cause of action for declaratory relief; and second, whether the proposed "Caltex Hooded Pump Contest"
violates the Postal Law. We shall take these up in seriatim.
1. By express mandate of section 1 of Rule 66 of the old Rules of Court, which was the applicable legal basis for the
remedy at the time it was invoked, declaratory relief is available to any person "whose rights are affected by a
statute . . . to determine any question of construction or validity arising under the . . . statute and for a declaration of
his rights thereunder" (now section 1, Rule 64, Revised Rules of Court). In amplification, this Court, conformably to
established jurisprudence on the matter, laid down certain conditions sine qua non therefor, to wit: (1) there must
be a justiciable controversy; (2) the controversy must be between persons whose interests are adverse; (3) the party
seeking declaratory relief must have a legal interest in the controversy; and (4) the issue involved must be ripe for
judicial determination (Tolentino vs. The Board of Accountancy, et al., G.R. No. L-3062, September 28, 1951;
Delumen, et al. vs. Republic of the Philippines, 50 O.G., No. 2, pp. 576, 578-579; Edades vs. Edades, et al., G.R. No. L-
8964, July 31, 1956). The gravamen of the appellant's stand being that the petition herein states no sufficient cause
of action for declaratory relief, our duty is to assay the factual bases thereof upon the foregoing crucible.
As we look in retrospect at the incidents that generated the present controversy, a number of significant points
stand out in bold relief. The appellee (Caltex), as a business enterprise of some consequence, concededly has the
unquestioned right to exploit every legitimate means, and to avail of all appropriate media to advertise and
stimulate increased patronage for its products. In contrast, the appellant, as the authority charged with the
enforcement of the Postal Law, admittedly has the power and the duty to suppress transgressions thereof —
particularly thru the issuance of fraud orders, under Sections 1982 and 1983 of the Revised Administrative Code,
against legally non-mailable schemes. Obviously pursuing its right aforesaid, the appellee laid out plans for the sales
promotion scheme hereinbefore detailed. To forestall possible difficulties in the dissemination of information
thereon thru the mails, amongst other media, it was found expedient to request the appellant for an advance
clearance therefor. However, likewise by virtue of his jurisdiction in the premises and construing the pertinent
provisions of the Postal Law, the appellant saw a violation thereof in the proposed scheme and accordingly declined
the request. A point of difference as to the correct construction to be given to the applicable statute was thus
reached. Communications in which the parties expounded on their respective theories were exchanged. The
confidence with which the appellee insisted upon its position was matched only by the obstinacy with which the
appellant stood his ground. And this impasse was climaxed by the appellant's open warning to the appellee that if
the proposed contest was "conducted, a fraud order will have to be issued against it and all its representatives."
Against this backdrop, the stage was indeed set for the remedy prayed for. The appellee's insistent assertion of its
claim to the use of the mails for its proposed contest, and the challenge thereto and consequent denial by the
appellant of the privilege demanded, undoubtedly spawned a live controversy. The justiciability of the dispute
cannot be gainsaid. There is an active antagonistic assertion of a legal right on one side and a denial thereof on the
other, concerning a real — not a mere theoretical — question or issue. The contenders are as real as their interests
are substantial. To the appellee, the uncertainty occasioned by the divergence of views on the issue of construction
hampers or disturbs its freedom to enhance its business. To the appellant, the suppression of the appellee's
proposed contest believed to transgress a law he has sworn to uphold and enforce is an unavoidable duty. With the
appellee's bent to hold the contest and the appellant's threat to issue a fraud order therefor if carried out, the
contenders are confronted by the ominous shadow of an imminent and inevitable litigation unless their differences
are settled and stabilized by a tranquilizing declaration (Pablo y Sen, et al. vs. Republic of the Philippines, G.R. No. L-
6868, April 30, 1955). And, contrary to the insinuation of the appellant, the time is long past when it can rightly be
said that merely the appellee's "desires are thwarted by its own doubts, or by the fears of others" — which
admittedly does not confer a cause of action. Doubt, if any there was, has ripened into a justiciable controversy
when, as in the case at bar, it was translated into a positive claim of right which is actually contested (III Moran,
Comments on the Rules of Court, 1963 ed., pp. 132-133, citing: Woodward vs. Fox West Coast Theaters, 36 Ariz.,
251, 284 Pac. 350).
We cannot hospitably entertain the appellant's pretense that there is here no question of construction because the
said appellant "simply applied the clear provisions of the law to a given set of facts as embodied in the rules of the
contest", hence, there is no room for declaratory relief. The infirmity of this pose lies in the fact that it proceeds
from the assumption that, if the circumstances here presented, the construction of the legal provisions can be
divorced from the matter of their application to the appellee's contest. This is not feasible. Construction, verily, is the
art or process of discovering and expounding the meaning and intention of the authors of the law with respect to its
application to a given case, where that intention is rendered doubtful, amongst others, by reason of the fact that the
given case is not explicitly provided for in the law (Black, Interpretation of Laws, p. 1). This is precisely the case here.
Whether or not the scheme proposed by the appellee is within the coverage of the prohibitive provisions of the
Postal Law inescapably requires an inquiry into the intended meaning of the words used therein. To our mind, this is
as much a question of construction or interpretation as any other.
Nor is it accurate to say, as the appellant intimates, that a pronouncement on the matter at hand can amount to
nothing more than an advisory opinion the handing down of which is anathema to a declaratory relief action. Of
course, no breach of the Postal Law has as yet been committed. Yet, the disagreement over the construction thereof
is no longer nebulous or contingent. It has taken a fixed and final shape, presenting clearly defined legal issues
susceptible of immediate resolution. With the battle lines drawn, in a manner of speaking, the propriety — nay, the
necessity — of setting the dispute at rest before it accumulates the asperity distemper, animosity, passion and
violence of a full-blown battle which looms ahead (III Moran, Comments on the Rules of Court, 1963 ed., p. 132 and
cases cited), cannot but be conceded. Paraphrasing the language in Zeitlin vs. Arnebergh 59 Cal., 2d., 901, 31 Cal.
Rptr., 800, 383 P. 2d., 152, cited in 22 Am. Jur., 2d., p. 869, to deny declaratory relief to the appellee in the situation
into which it has been cast, would be to force it to choose between undesirable alternatives. If it cannot obtain a
final and definitive pronouncement as to whether the anti-lottery provisions of the Postal Law apply to its proposed
contest, it would be faced with these choices: If it launches the contest and uses the mails for purposes thereof, it
not only incurs the risk, but is also actually threatened with the certain imposition, of a fraud order with its
concomitant stigma which may attach even if the appellee will eventually be vindicated; if it abandons the contest, it
becomes a self-appointed censor, or permits the appellant to put into effect a virtual fiat of previous censorship
which is constitutionally unwarranted. As we weigh these considerations in one equation and in the spirit of liberality
with which the Rules of Court are to be interpreted in order to promote their object (section 1, Rule 1, Revised Rules
of Court) — which, in the instant case, is to settle, and afford relief from uncertainty and insecurity with respect to,
rights and duties under a law — we can see in the present case any imposition upon our jurisdiction or any futility or
prematurity in our intervention.
The appellant, we apprehend, underrates the force and binding effect of the ruling we hand down in this case if he
believes that it will not have the final and pacifying function that a declaratory judgment is calculated to subserve. At
the very least, the appellant will be bound. But more than this, he obviously overlooks that in this jurisdiction,
"Judicial decisions applying or interpreting the law shall form a part of the legal system" (Article 8, Civil Code of the
Philippines). In effect, judicial decisions assume the same authority as the statute itself and, until authoritatively
abandoned, necessarily become, to the extent that they are applicable, the criteria which must control the
actuations not only of those called upon to abide thereby but also of those in duty bound to enforce obedience
thereto. Accordingly, we entertain no misgivings that our resolution of this case will terminate the controversy at
hand.
It is not amiss to point out at this juncture that the conclusion we have herein just reached is not without precedent.
In Liberty Calendar Co. vs. Cohen, 19 N.J., 399, 117 A. 2d., 487, where a corporation engaged in promotional
advertising was advised by the county prosecutor that its proposed sales promotion plan had the characteristics of a
lottery, and that if such sales promotion were conducted, the corporation would be subject to criminal prosecution,
it was held that the corporation was entitled to maintain a declaratory relief action against the county prosecutor to
determine the legality of its sales promotion plan. In pari materia, see also: Bunis vs. Conway, 17 App. Div. 2d., 207,
234 N.Y.S. 2d., 435; Zeitlin vs. Arnebergh, supra; Thrillo, Inc. vs. Scott, 15 N.J. Super. 124, 82 A. 2d., 903.
In fine, we hold that the appellee has made out a case for declaratory relief.
2. The Postal Law, chapter 52 of the Revised Administrative Code, using almost identical terminology in sections
1954(a), 1982 and 1983 thereof, supra, condemns as absolutely non-mailable, and empowers the Postmaster
General to issue fraud orders against, or otherwise deny the use of the facilities of the postal service to, any
information concerning "any lottery, gift enterprise, or scheme for the distribution of money, or of any real or
personal property by lot, chance, or drawing of any kind". Upon these words hinges the resolution of the second
issue posed in this appeal.
Happily, this is not an altogether untrodden judicial path. As early as in 1922, in "El Debate", Inc. vs. Topacio, 44 Phil.,
278, 283-284, which significantly dwelt on the power of the postal authorities under the abovementioned provisions
of the Postal Law, this Court declared that —
While countless definitions of lottery have been attempted, the authoritative one for this jurisdiction is that of the
United States Supreme Court, in analogous cases having to do with the power of the United States Postmaster
General, viz.: The term "lottery" extends to all schemes for the distribution of prizes by chance, such as policy
playing, gift exhibitions, prize concerts, raffles at fairs, etc., and various forms of gambling. The three essential
elements of a lottery are: First, consideration; second, prize; and third, chance. (Horner vs. States [1892], 147 U.S.
449; Public Clearing House vs. Coyne [1903], 194 U.S., 497; U.S. vs. Filart and Singson [1915], 30 Phil., 80; U.S. vs.
Olsen and Marker [1917], 36 Phil., 395; U.S. vs. Baguio [1919], 39 Phil., 962; Valhalla Hotel Construction Company vs.
Carmona, p. 233, ante.)
Unanimity there is in all quarters, and we agree, that the elements of prize and chance are too obvious in the
disputed scheme to be the subject of contention. Consequently as the appellant himself concedes, the field of
inquiry is narrowed down to the existence of the element of consideration therein. Respecting this matter, our task
is considerably lightened inasmuch as in the same case just cited, this Court has laid down a definitive yard-stick in
the following terms —
In respect to the last element of consideration, the law does not condemn the gratuitous distribution of property by
chance, if no consideration is derived directly or indirectly from the party receiving the chance, but does condemn as
criminal schemes in which a valuable consideration of some kind is paid directly or indirectly for the chance to draw
a prize.
Reverting to the rules of the proposed contest, we are struck by the clarity of the language in which the invitation to
participate therein is couched. Thus —
No puzzles, no rhymes? You don't need wrappers, labels or boxtops? You don't have to buy anything? Simply
estimate the actual number of liter the Caltex gas pump with the hood at your favorite Caltex dealer will dispense
from — to —, and win valuable prizes . . . ." .
Nowhere in the said rules is any requirement that any fee be paid, any merchandise be bought, any service be
rendered, or any value whatsoever be given for the privilege to participate. A prospective contestant has but to go to
a Caltex station, request for the entry form which is available on demand, and accomplish and submit the same for
the drawing of the winner. Viewed from all angles or turned inside out, the contest fails to exhibit any discernible
consideration which would brand it as a lottery. Indeed, even as we head the stern injunction, "look beyond the fair
exterior, to the substance, in order to unmask the real element and pernicious tendencies which the law is seeking
to prevent" ("El Debate", Inc. vs. Topacio, supra, p. 291), we find none. In our appraisal, the scheme does not only
appear to be, but actually is, a gratuitous distribution of property by chance.
There is no point to the appellant's insistence that non-Caltex customers who may buy Caltex products simply to win
a prize would actually be indirectly paying a consideration for the privilege to join the contest. Perhaps this would be
tenable if the purchase of any Caltex product or the use of any Caltex service were a pre-requisite to participation.
But it is not. A contestant, it hardly needs reiterating, does not have to buy anything or to give anything of
value.1awphîl.nèt
Off-tangent, too, is the suggestion that the scheme, being admittedly for sales promotion, would naturally benefit
the sponsor in the way of increased patronage by those who will be encouraged to prefer Caltex products "if only to
get the chance to draw a prize by securing entry blanks". The required element of consideration does not consist of
the benefit derived by the proponent of the contest. The true test, as laid down in People vs. Cardas, 28 P. 2d., 99,
137 Cal. App. (Supp.) 788, is whether the participant pays a valuable consideration for the chance, and not whether
those conducting the enterprise receive something of value in return for the distribution of the prize. Perspective
properly oriented, the standpoint of the contestant is all that matters, not that of the sponsor. The following, culled
from Corpus Juris Secundum, should set the matter at rest:
The fact that the holder of the drawing expects thereby to receive, or in fact does receive, some benefit in the way of
patronage or otherwise, as a result of the drawing; does not supply the element of consideration. Griffith
Amusement Co. vs. Morgan, Tex. Civ. App., 98 S.W., 2d., 844" (54 C.J.S., p. 849).
Thus enlightened, we join the trial court in declaring that the "Caltex Hooded Pump Contest" proposed by the
appellee is not a lottery that may be administratively and adversely dealt with under the Postal Law.
But it may be asked: Is it not at least a "gift enterprise, or scheme for the distribution of money, or of any real or
personal property by lot, chance, or drawing of any kind", which is equally prescribed? Incidentally, while the
appellant's brief appears to have concentrated on the issue of consideration, this aspect of the case cannot be
avoided if the remedy here invoked is to achieve its tranquilizing effect as an instrument of both curative and
preventive justice. Recalling that the appellant's action was predicated, amongst other bases, upon Opinion 217,
Series 1953, of the Secretary of Justice, which opined in effect that a scheme, though not a lottery for want of
consideration, may nevertheless be a gift enterprise in which that element is not essential, the determination of
whether or not the proposed contest — wanting in consideration as we have found it to be — is a prohibited gift
enterprise, cannot be passed over sub silencio.
While an all-embracing concept of the term "gift enterprise" is yet to be spelled out in explicit words, there appears
to be a consensus among lexicographers and standard authorities that the term is commonly applied to a sporting
artifice of under which goods are sold for their market value but by way of inducement each purchaser is given a
chance to win a prize (54 C.J.S., 850; 34 Am. Jur., 654; Black, Law Dictionary, 4th ed., p. 817; Ballantine, Law
Dictionary with Pronunciations, 2nd ed., p. 55; Retail Section of Chamber of Commerce of Plattsmouth vs. Kieck, 257
N.W., 493, 128 Neb. 13; Barker vs. State, 193 S.E., 605, 56 Ga. App., 705; Bell vs. State, 37 Tenn. 507, 509, 5 Sneed,
507, 509). As thus conceived, the term clearly cannot embrace the scheme at bar. As already noted, there is no sale
of anything to which the chance offered is attached as an inducement to the purchaser. The contest is open to all
qualified contestants irrespective of whether or not they buy the appellee's products.
Going a step farther, however, and assuming that the appellee's contest can be encompassed within the broadest
sweep that the term "gift enterprise" is capable of being extended, we think that the appellant's pose will gain no
added comfort. As stated in the opinion relied upon, rulings there are indeed holding that a gift enterprise involving
an award by chance, even in default of the element of consideration necessary to constitute a lottery, is prohibited
(E.g.: Crimes vs. States, 235 Ala 192, 178 So. 73; Russell vs. Equitable Loan & Sec. Co., 129 Ga. 154, 58 S.E., 88; State
ex rel. Stafford vs. Fox-Great Falls Theater Corporation, 132 P. 2d., 689, 694, 698, 114 Mont. 52). But this is only one
side of the coin. Equally impressive authorities declare that, like a lottery, a gift enterprise comes within the
prohibitive statutes only if it exhibits the tripartite elements of prize, chance and consideration (E.g.: Bills vs. People,
157 P. 2d., 139, 142, 113 Colo., 326; D'Orio vs. Jacobs, 275 P. 563, 565, 151 Wash., 297; People vs. Psallis, 12 N.Y.S.,
2d., 796; City and County of Denver vs. Frueauff, 88 P., 389, 394, 39 Colo., 20, 7 L.R.A., N.S., 1131, 12 Ann. Cas., 521;
54 C.J.S., 851, citing: Barker vs. State, 193 S.E., 605, 607, 56 Ga. App., 705; 18 Words and Phrases, perm. ed., pp. 590-
594). The apparent conflict of opinions is explained by the fact that the specific statutory provisions relied upon are
not identical. In some cases, as pointed out in 54 C.J.S., 851, the terms "lottery" and "gift enterprise" are used
interchangeably (Bills vs. People, supra); in others, the necessity for the element of consideration or chance has been
specifically eliminated by statute. (54 C.J.S., 351-352, citing Barker vs. State, supra; State ex rel. Stafford vs. Fox-Great
Falls Theater Corporation, supra). The lesson that we derive from this state of the pertinent jurisprudence is,
therefore, that every case must be resolved upon the particular phraseology of the applicable statutory provision.
Taking this cue, we note that in the Postal Law, the term in question is used in association with the word "lottery".
With the meaning of lottery settled, and consonant to the well-known principle of legal hermeneutics noscitur a
sociis — which Opinion 217 aforesaid also relied upon although only insofar as the element of chance is concerned
— it is only logical that the term under a construction should be accorded no other meaning than that which is
consistent with the nature of the word associated therewith. Hence, if lottery is prohibited only if it involves a
consideration, so also must the term "gift enterprise" be so construed. Significantly, there is not in the law the
slightest indicium of any intent to eliminate that element of consideration from the "gift enterprise" therein
included.
This conclusion firms up in the light of the mischief sought to be remedied by the law, resort to the determination
thereof being an accepted extrinsic aid in statutory construction. Mail fraud orders, it is axiomatic, are designed to
prevent the use of the mails as a medium for disseminating printed matters which on grounds of public policy are
declared non-mailable. As applied to lotteries, gift enterprises and similar schemes, justification lies in the recognized
necessity to suppress their tendency to inflame the gambling spirit and to corrupt public morals (Com. vs. Lund, 15 A.
2d., 839, 143 Pa. Super. 208). Since in gambling it is inherent that something of value be hazarded for a chance to
gain a larger amount, it follows ineluctably that where no consideration is paid by the contestant to participate, the
reason behind the law can hardly be said to obtain. If, as it has been held —
Gratuitous distribution of property by lot or chance does not constitute "lottery", if it is not resorted to as a device to
evade the law and no consideration is derived, directly or indirectly, from the party receiving the chance, gambling
spirit not being cultivated or stimulated thereby. City of Roswell vs. Jones, 67 P. 2d., 286, 41 N.M., 258." (25 Words
and Phrases, perm. ed., p. 695, emphasis supplied).
we find no obstacle in saying the same respecting a gift enterprise. In the end, we are persuaded to hold that, under
the prohibitive provisions of the Postal Law which we have heretofore examined, gift enterprises and similar
schemes therein contemplated are condemnable only if, like lotteries, they involve the element of consideration.
Finding none in the contest here in question, we rule that the appellee may not be denied the use of the mails for
purposes thereof.
Recapitulating, we hold that the petition herein states a sufficient cause of action for declaratory relief, and that the
"Caltex Hooded Pump Contest" as described in the rules submitted by the appellee does not transgress the
provisions of the Postal Law.
ACCORDINGLY, the judgment appealed from is affirmed. No costs.
G.R. No. 169143 February 2, 2007

[Formerly G.R. No. 138328]
PEOPLE OF THE PHLIPPINES, Appellee

vs.
SIMPLICIO DELANTAR, Appellant.
DECISION
TINGA, J.:
The forfeiture of the right to live free in society is the due requital for peddling a child to sexual servitude.
We begin with the antecedents.
On 27 August 1996, an information for violation of Section 5, Article III of Republic Act (R.A.) No. 76101 was filed
against appellant Simplicio Delantar y Redondo. Docketed as Criminal Case No. 96-91752 of the Regional Trial Court
(RTC) of Pasay City, the information was amended on 3 September 1996.3 The accusatory portion of the Amended
Information reads:
That sometime and during the period from 1994 to August 1996, in Pasay City, Metro Manila, Philippines and within
the jurisdiction of this Honorable Court, the above-named accused, SIMPLICIO DELANTAR Y REDONDO, through
coercion and influence, did then and there wilfully, unlawfully and feloniously promote, facilitate and induce [AAA],4
a female child below 12 years of age, to indulge in sexual intercourse and lascivious conduct for money, profit and
other consideration.1awphi1.net
Contrary to [l]aw.5
On 4 September 1996, appellant, assisted by counsel de parte, entered a plea of not guilty and informed the court
that he did not want a pre-trial.6 An attempt to quash the information was made but the same proved futile.7
Thereafter, trial proceeded in due course.
The prosecution presented the following as witnesses: (1) AAA,8 the complainant; (2) Dr. Emmanuel Aranas9 of the
PNP Crime Laboratory; and (3) Carolina Buan10 of the Philippine Long Distance Telephone Co. On 31 January 1997,
the prosecution submitted its Formal Offer of Evidence.11
Trial thereafter continued with the defense presenting the following as witnesses: (1) Simplicio Delantar;12 (2)
Angelito Entruzo;13 and (3) Eduardo Juarez, Jr.14 On 20 August 1998, the defense rested its case.
On 25 February 1999, the RTC-Pasay City, Branch 109, rendered a Decision,15 finding appellant guilty beyond
reasonable doubt of two counts of violation of Section 5(a), paragraphs 1, 4 and 5 of Article III of R.A. No. 7610. The
trial court arrived at the following principal findings and conclusions, thus:
From all the foregoing, the Court opines that the prosecution has proven the guilt of the accused Simplicio Delantar y
Redondo beyond reasonable doubt when he delivered his daughter [AAA] to an Arab national by the name of Mr.
Hammond from their house at 2165-A P. Burgos St., Pasay City sometime in 1994 selling her in prostitution to the
said [A]rab who committed acts of lasciviousness on her person by kissing her on her lips, her breast, her private
parts and even rubbing his penis against her private parts which is a clear violation of Section 5(a), paragraph 1, 4,
and 5 [of] Article III of R.A. [No.] 7610 and hereby sentences him of Reclusion Perpetua and to pay civil liability to the
victim in the amount of ₱60,000.00.
Likewise, the Court finds accused guilty beyond reasonable doubt for violation of Section 5(a) paragraph 1, 4, and 5
of Article III of R.A. [No.] 7610 when the accused Simplicio Delantar pimped and delivered the complainant, an
eleven (11) year old minor to Congressman Romeo Jalosjos of the First District of Zamboanga del Norte at the Ritz
Tower in Makati where the said Congressman for eight (8) times committed acts of lasciviousness on her person
when he kissed her on her lips, private organ and even raped her. That all these times, the accused brought his child
from their residence at 2165-A P. Burgos St., Pasay City and [the Court] hereby sentences him to Reclusion Perpetua
and to pay the victim civil liability in the amount of ₱60,000.00.
SO ORDERED.16
Appellant interposed an appeal with this Court. After submission of the parties’ briefs, on 20 September 2004, this
Court through the Second Division then transferred the appeal to the Court of Appeals for appropriate action and
disposition.17 On 31 May 2005, the Court of Appeals rendered a Decision18 affirming with modification the trial
court’s Decision. The appellate court ruled in the dispositive portion, thus:
WHEREFORE, the appealed decision, finding appellant Simplicio Delantar guilty beyond reasonable doubt of
Violation of Section 5(a), paragraph[s] 1, 4 and 5, Article III of R.A. No. 7610, for one count only, is AFFIRMED with
the MODIFICATION that he is also sentenced to pay complainant [AAA] the amount of ₱50,000.00 as civil indemnity,
₱50,000.00 as moral damages and ₱25,000.00 as exemplary damages.
Costs against appellant.
SO ORDERED.19
On 23 June 2005, appellant, through counsel, filed a Notice of Appeal from the Decision of the Court of Appeals to
this Court.20 On 21 July 2005, the Court of Appeals gave due course to the Notice of Appeal and elevated the
records of the case to this Court for purposes of the appeal.21
In his Brief,22 appellant assigns the following errors committed by the trial court:
THE TRIAL COURT ERRED IN CONVICTING [APPELLANT] OF THE CRIME CHARGED DESPITE THE FAILURE OF THE
PROSECUTION TO PROVE HIS GUILT BEYOND REASONABLE DOUBT.
II
THE TRIAL COURT ERRED IN CONVICTING [APPELLANT] OF TWO (2) VIOLATIONS OF SECTION 5, ARTICLE III, R.A. [NO.]
7610 DESPITE THE FACT THAT ONLY A SINGLE INFORMATION WAS FILED BY THE 2nd ASSISTANT CITY PROSECUTOR
OF PASAY CITY.
III
THE TRIAL COURT ERRED IN IMPOSING THE PENALTY FOR THE CRIME CHARGED IN ITS MAXIMUM PERIOD
(RECLUSION PERPETUA) WHEN THERE IS NO SHOWING IN ITS DECISION [OF] THE ATTENDANCE OF A QUALIFYING
CIRCUMSTANCE WHICH WOULD WARRANT THE IMPOSITION OF THE MAXIMUM PENALTY.23
Of the issues raised by appellant in his brief, we only have to resolve the first and the third issues since the Court of
Appeals has already upheld the second contention which is that he should only be convicted of one violation24 and
also since a reversal of the ruling would constitute double jeopardy. In any event, we fully agree with the appellate
court’s adjudication.25
Appellant stands charged of violating Section 5, Article III of R.A. No. 7610, which provides:
ARTICLE III.
CHILD PROSTITUTION AND OTHER SEXUAL ABUSE
SEC. 5. Child Prostitution and Other Sexual Abuse.—Children, whether male or female, who for money, profit, or any
other consideration or due to the coercion or influence of any adult, syndicate or group, indulge in sexual
intercourse or lascivious conduct, are deemed to be children exploited in prostitution and other sexual abuse.
The penalty of reclusion temporal in its medium period to reclusion perpetua shall be imposed upon the following:
(a) Those who engage in or promote, facilitate or induce child prostitution which include, but are not limited to, the
following:
(1) Acting as a procurer of a child prostitute;
(2) Inducing a person to be a client of a child prostitute by means of written or oral advertisements or other similar
means;
(3) Taking advantage of influence or relationship to procure a child as a prostitute;
(4) Threatening or using violence towards a child to engage him as a prostitute; or
(5) Giving monetary consideration, goods or other pecuniary benefit to a child with the intent to engage such child in
prostitution.
(b) Those who commit the act of sexual intercourse or lascivious conduct with a child exploited in prostitution or
subjected to other sexual abuse: Provided, That when the victim is under twelve (12) years of age, the perpetrators
shall be prosecuted under Article 335, paragraph 3, for rape and Article 336 of Act No. 3815, as amended, the
Revised Penal Code, for rape or lascivious conduct, as the case may be: Provided, That the penalty for lascivious
conduct when the victim is under twelve (12) years of age shall be reclusion temporal in its medium period; and
(c) Those who derive profit or advantage therefrom, whether as manager or owner of the establishment where the
prostitution takes place or of the sauna, disco, bar, resort, place of entertainment or establishment serving as a
cover or which engages in prostitution in addition to the activity for which the license has been issued to said
establishment.
In a criminal case, the accused is entitled to an acquittal, unless his guilt is shown beyond reasonable doubt. Proof
beyond reasonable doubt does not mean such a degree of proof as, excluding possibility of error, produces absolute
certainty. Moral certainty only is required, or that degree of proof which produces conviction in an unprejudiced
mind.26
There is no doubt, drawing from the evidence, that AAA was a child who was exploited in prostitution as defined in
Section 5, Article III quoted above. The law punishes not only the person who commits the acts of sexual intercourse
or lascivious conduct with the child but also those who engage in or promote, facilitate or induce child prostitution.
Appellant is one such person.
The testimony of AAA shows that appellant procured her as a child prostitute for at least two clients: the first, an
Arab national named Mr. Hammond and the second, then Congressman Romeo Jalosjos.
AAA testified that she was brought to the first client at least eleven (11) times between the period 1994 to June
1996.27 On each of these occasions, appellant and AAA would go to Ralph Anthony Suites in Manila where the client
stayed. Appellant would tell AAA that they had to go to the client because they needed to pay some obligations,28
they
had to settle something,29 they had to pay the electric bill,30 or they had to ask for money for AAA’s tuition fees.31
Upon their arrival at Ralph Anthony Suites, appellant would talk to the client for a few minutes and then leave AAA
alone with the client. Money was usually given by the client to appellant who would leave on the pretext of buying
something from Robinsons, a nearby mall. When he returned, usually after two (2) to four (4) hours, appellant would
have something for AAA such as food and clothes.
Once left alone with AAA, the client would perform lascivious acts on AAA. With the sordid details spread all over the
transcript of AAA’s testimony as she gave it before the trial court, the recurrent salient points of her harrowing
experience revolved around the client’s kissing her, touching her breasts, embracing her, and inserting his finger in
her private parts. 32
On one occasion, the client even tried to insert his penis inside AAA’s vagina but the latter pleaded for him not to.
The client thereafter rubbed his penis on AAA’s vagina. On the same occasion, the client made AAA sit on him near
his groin while his penis was fully erect. The client then made pumping motions while his organ was touching AAA’s
vagina until "his penis got wet."33
After their first visit to the client, AAA told appellant that she did not want to go back because the client was
"bastos." Appellant promised her that they would no longer go back but the promise was broken as they went back a
few more times.34 AAA continued to complain to appellant about the acts committed on her by the first client but
appellant would dismiss the same saying that if the client’s private part is not inserted in AAA’s private part, there is
nothing wrong about it,35 or that since there was no penetration, there was nothing wrong about it.36
Sometime in June 1996, AAA told appellant that she did not want to go to the client anymore. On that day, AAA and
appellant went to Harrison Plaza where appellant instructed AAA to call the client and tell the latter that if he would
not give them ₱5000, they would not go there anymore. AAA complied and told the client exactly what appellant
had told her. The client responded by saying that he would only give them ₱5,000.00 if AAA would have sexual
intercourse with him. They did not go to this client anymore.37
Appellant thereafter started to bring AAA to the second client. As with the first client, appellant would tell AAA that
they had to go to the second client because they had obligations to pay such as the telephone bill, electric bill, rent,
and tuition fees.38 During each of these visits, the
client would give AAA money ranging from ₱2,000.00 to ₱10,000.00.39 The details of what transpired when AAA was
left alone with the second client were vividly recounted in People v. Jalosjos,40 where the second client was
convicted of two (2) counts of rape and six (6) counts of acts of lasciviousness, all committed against AAA on various
dates. In the case, the Court found that it was appellant who brought AAA to said client. The Court in that case even
referred to appellant as the second client’s "suking bugaw."41
From her testimony, it could easily be gleaned that AAA did not consent to the acts of lasciviousness and the sexual
intercourse. After their initial visit to the first client, AAA pointedly told appellant that she did not want to go back
because the client was "bastos" but appellant did not mind this and continued to bring AAA to the first client still.42
AAA persisted in complaining but appellant would dismiss the remonstration, saying that if the client’s private parts
are not inserted in AAA’s private parts, there is nothing wrong about it,43 or that since there was no penetration,
there was nothing wrong about it.44
Appellant succeeded in infusing AAA with intense fear and awe of him. She was afraid that appellant might send her
away if she did not obey him.45 She was scared of him also because when he got angry, he would pull her and her
brother’s hair, whip them very hard, slap them, hit them on the upper arm with a hanger, box them on the arms,
bite them or even make them kneel on salt with outstretched hands.46 Appellant even hit AAA with the telephone
apparatus a number of times, the last time was on 15 August 1996, the day before she ran away to escape, and only
because she had forgotten to call the second client.47 It was this dread of appellant that pushed AAA to still go with
him to the clients even if she did not want what was being done to her by whoever was the client once she was left
alone with him.
Further, appellant instilled the feeling of guilt and helplessness in AAA by constantly saying that they had to pay
some obligations,48 they had to settle something,49 they had to pay the electric bill,50 or they had to ask for money
for AAA’s tuition fees.51
Verily, it was against AAA’s will and consent to see the two clients. But even if AAA had in fact consented, appellant
may still be prosecuted for child prostitution under Section 5, Article III of R.A. No. 7610 because the child’s consent
or lack of it is not an element of the offense.
As held by this Court in People v. Larin,52 a child is deemed exploited in prostitution or subjected to other sexual
abuse, when the child indulges in sexual intercourse or lascivious conduct (a) for money, profit, or any other
consideration; or (b) under the coercion or influence of any adult, syndicate or group.53 If AAA was not coerced into
child prostitution under (b) above, she definitely was influenced by appellant to enter into said activity. As the
person who had raised and taken care of AAA, appellant had moral ascendancy over AAA. This moral ascendancy
coupled with AAA’s fear and awe of appellant and her exposure to the world of prostitution at the early age of five
had exerted a dominating influence on her being.
Further, AAA was doing it so that they could have money to meet their several needs, including her own tuition fees.
This engendered in AAA sufficient "consideration" under (a) above to engage or agree to be exploited in prostitution
because after every encounter with the clients, AAA would receive either money (ranging from ₱2,000.00 to
₱10,000.00) or food and clothing.
Aside from the testimony of AAA, the record is replete with evidence of appellant’s liability beyond reasonable
doubt. The testimony of Dr. Emmanuel L. Aranas, Medico Legal Officer of the PNP Crime Laboratory, who conducted
a medical examination on AAA on 23 August 1996, as well as the Medico Legal Report54 that he prepared showed
that, at the time of physical examination, AAA was in a non-virgin state physically and that her hymen had a shallow
healed laceration at 3 o’clock position and a deep healed laceration at 8 o’clock position. Dr. Aranas testified that the
lacerations could be caused by the entry either of a finger or an erect male organ a week or more prior to the date of
the examination.55 This testimony proves that AAA was subjected either to lascivious conduct or sexual intercourse
before the medical examination.
Witness Carolina Buan, for her part, testified that several calls were made from appellant’s phone to the second
client.56 Exhibits I to I-15-A and J to J-20, as well as appellant’s own admission that he was the subscriber of
telephone number 831-242357 and that he is the "S. Delantar" indicated in the telephone bill,58 establish a
connection between appellant and the second client. This connection in turn forged the regularity which
characterized the communication between the two, indeed the situation that normally obtains between a regular
client and a "suking bugaw."
Appellant, in his brief, does not deny that he brought AAA to the clients.59 He, however, attempts to exculpate
himself by stating that he did not coerce or influence AAA to go to the two clients to be exploited in prostitution. 60
Appellant further claims that there is no showing that he made promises to AAA either by assuring her that he would
give her money or anything to convince her to go with him to the clients. He even seeks to discredit AAA for not
attempting to object to be brought to the first client despite her previous experience in several encounters with him.
This absence of any objection on the part of AAA, so appellant insists, is proof that she was brought to the client of
her own free will, and at the same time militates against any finding that appellant had coerced or influenced AAA to
go to the client.61 Also, according to appellant, AAA herself admitted she had already known, by their second visit,
that she was being pimped to the first client.62 Appellant likewise dismisses AAA’s fear that he would send her away
should she refuse to go to the clients as a mere conclusion or presumption from AAA’s end because at no time did
appellant actually tell her to go away.63 In the same vein, AAA’s fear that appellant would get angry if she refused to
go with him to the clients is merely imaginary or conjectural.64 Appellant even cites excerpts from AAA’s testimony
to the effect that he only laid hands on AAA only for the purpose of disciplining her.65
Appellant’s testimony itself contains an admission that he had indeed brought AAA to the two clients. He admitted
that even in his presence, questions about AAA’s pretty legs and breast size were propounded.66 Certainly, he
cannot deny knowledge that the persons who propounded the questions had lewd designs on AAA. These are
questions laced with lecherousness and drenched in perversity especially when asked of a child. Worse, after such
questions were propounded, appellant left AAA alone with the clients who in the first place had inquired about
AAA’s legs and breasts. Appellant even admitted that in one instance the person who shot the questions to him even
placed his hands on the breasts of AAA.67
Appellant claims that he was promoting AAA’s prospective career as an actress. Appellant’s clear intention to pimp
or promote AAA as a child prostitute to the second client cannot be concealed in the guise of a move to help AAA to
realize her ambition to become an actress. AAA’s acting skills may not be measured or determined by a picture of
her in a bikini.68 There is no profound connection between acting skills and nudity.
Appellant’s recourse to the testimony of the other two witnesses is likewise vain and futile. Angelito Entruzo testified
that after appellant had adopted AAA, he took good care of her by providing for her needs such as food, clothing,
shelter and education.69 This testimony, while making appellant look benevolent, has actually worked to his
detriment because it further shows his dark side as a person on whom a child had depended but who abused the
situation of dependency. Ed Juares, Jr., on the other hand, merely testified that appellant had brought AAA to him to
make her an actress. The claim does not rule out the finding that appellant had engaged in child prostitution.
We reject appellant’s avowals of innocence. We affirm the verdict of guilt.
Doubtlessly, appellant had repeatedly pandered AAA to two clients for sexual gratification. He procured paying
customers for her sexual services. The acts done on AAA by the two clients ranged from "lascivious conduct" defined
under the Implementing Rules and Regulation of R.A. No. 7610, as "the intentional touching, either directly or
through clothing, of the genitalia, anus, groin, breast, inner thigh, or buttocks, or the introduction of any object into
the genitalia, anus or mouth, of any person, whether of the same or opposite sex, with an intent to abuse, humiliate,
harass, degrade, or arouse or gratify the sexual desire of any person, bestiality, masturbation, lascivious exhibition of
the genitals or pubic area of a person," and statutory rape, under Art. 335, paragraph 3 of the Revised Penal Code, as
amended by R.A. No. 7659.
Appellant’s violation of Sec. 5, Art. III of R.A. No. 7610 is as clear as day. The provision penalizes anyone who engages
in or promotes, facilitates or induces child prostitution either by: (1) acting as a procurer of a child prostitute; or (2)
inducing a person to be a client of a child prostitute by means of written or oral advertisements or other similar
means; or (3) by taking advantage of influence or relationship to procure a child as a prostitute; or (4) threatening or
using violence towards a child to engage him as a prostitute; or (5) giving monetary consideration, goods or other
pecuniary benefits to the child with the intent to engage such child in prostitution.
The purpose of the law is to provide special protection to children from all forms of abuse, neglect, cruelty,
exploitation and discrimination, and other conditions prejudicial to their development.70 A child exploited in
prostitution may seem to "consent" to what is being done to her or him and may appear not to complain. However,
we have held that a child who is "a person below eighteen years of age or those unable to fully take care of
themselves or protect themselves from abuse, neglect, cruelty, exploitation or discrimination because of their age or
mental disability or condition" is incapable of giving rational consent71 to any lascivious act or sexual intercourse. In
fact, the absence of free consent is conclusively presumed when the woman is below the age of twelve.72
Appellant, whom AAA had looked up to as her father, had the duty to care for and bring her up. Far from looking
after her moral character, mental state and physical well-being, he had actually facilitated her debasement by
introducing her to clients and inducing her to engage in prostitution. Abusing the moral ascendancy he had over her,
he exposed her to prostitution at a very tender age, made her feel it was her obligation to earn money for their
family, in a detestable manner at that, and callously impressed upon her that there was nothing wrong with what
the clients had been doing to her. At day’s end, he raked in the money that his corruption of the child had brought
in.
The penalty prescribed by Section 5 of R.A. No. 7610 is reclusion temporal in its medium period to reclusion
perpetua. However, it was not proven that appellant is the parent or guardian of AAA.
The establishment of either relationship would have justified the imposition of the penalty provided in the law in its
maximum. Thus, there being neither mitigating nor aggravating circumstance, the penalty which could properly be
imposed is reclusion temporal in its maximum period, the medium of the penalty prescribed by the law. After
applying the Indeterminate Sentence Law, the proper imposable penalty is an indeterminate sentence the maximum
term of which shall be that which could properly be imposed (reclusion temporal in its maximum period), and the
minimum of which shall not be less than the minimum term prescribed by the law (reclusion temporal in its medium
period).73
Section 31(c), Article XII of R.A. No. 7610 states:
xxxx
(c) The penalty provided herein shall be imposed in its maximum period when the perpetrator is an ascendant,
parent, guardian, stepparent or collateral relative within the second degree of consanguinity or affinity, or a
manager or owner of an establishment which has no license to operate or its license has expired or has been
revoked. (Emphasis supplied.)
Under R.A. No. 7610, Sec. 31(c), relationship is not a qualifying circumstance but only an ordinary generic
aggravating circumstance. Thus, although it was not alleged in the information it can nevertheless be taken into
account in fixing the penalty for the crime because it was proven.74 A generic aggravating circumstance provides for
the imposition of the prescribed penalty in its maximum period, while a qualifying circumstance changes the nature
of the crime.75
In the case at bar, the only evidence presented to establish AAA’s alleged relationship to appellant is her birth
certificate76 which mentions appellant as the father. However, said document does not bear appellant’s signature.
In fact, appellant, in his testimony, denied that he is AAA’s father.77 He claimed that, sometime in 1983, AAA was
brought to him by a certain Salvacion Buela, AAA’s real mother, who could not support her.78 Salvacion Buela told
appellant that AAA was born on 11 May 1983 and that her natural father was a Japanese national.79 As prepared,
the birth certificate indicates that AAA was born on "11 May 1985" to "Librada A. Telin" (mother) and "Simplicio R.
Delantar" (father) who were married on "14 February 1977" in "Manila." The legible signature which reads "Librada
T. Delantar" appears below the printed item "INFORMANT" and above the typewritten name "Librada T. Delantar"
and word "Mother." However, nowhere on the face of the birth certificate can the signature of appellant be found.
According to appellant, Librada A. Telin is his sister and they did not get married to each other on the date indicated
in the birth certificate, or impliedly at least, not ever.
While under the Family Code, filiation can be established by, among others, the record of birth appearing in the civil
register,80 yet the rule is where the birth certificate presented was not signed by the father against whom filiation is
asserted, such may not be accepted as evidence of the alleged filiation. In Angeles v. Maglaya,81 we held:
x x x Such certificate, albeit considered a public record of a private document is, under Section 23, Rule 132 of the
Rules of Court, evidence only of the fact which gave rise to its execution: the fact of birth of a child. Jurisprudence
teaches that a birth certificate, to be considered as validating proof of paternity and as an instrument of recognition,
must be signed by the father and mother jointly, or by the mother alone if the father refuses. x x x82
In Angeles v. Maglaya, we refused to give evidentiary weight to the birth certificate as proof of filiation in a case for
settlement of estate to support a claim of legitimacy because the same was unsigned by the alleged father. With
more reason we should not accord value to the birth certificate in this case considering that its effect would be to
increase the penalty to be imposed on the appellant. This is a criminal case wherein an interpretation unfavorable to
the accused is generally unacceptable.
The Solicitor General cites this Court’s pronouncement in Heirs of Cabais v. Court of Appeals,83 that "[a] birth
certificate, being a public document, offers prima facie evidence of filiation and a high degree of proof is needed to
overthrow the presumption of truth contained in such public document."84 The pronouncement is not applicable to
this case. It was made merely as an elucidation of the limited evidentiary value of a baptismal certificate in this
jurisdiction vis-à-vis a birth certificate. In that case, presented was the baptismal certificate of the person whose
filiation was sought to be established. The birth certificate itself was not presented. In the case at bar, the birth
certificate of AAA was presented.
We thus hold that the birth certificate of AAA is prima facie evidence only of the fact of her birth and not of her
relation to appellant. After all, it is undisputed that appellant is not AAA’s biological father.
At best, appellant is AAA’s de facto guardian. Now, would this circumstance justify the imposition of the higher
penalty on him? We think not. We apply, by analogy, the ruling of this Court in People v. Garcia,85 where we held
that the restrictive concept of guardian, legal or judicial, is required by Sec. 11 of R.A. No. 7659. Said provision, by
way of amending Art. 335 of the Revised Penal Code, ordains that where the victim of the crime of rape is under
eighteen years of age and the offender is, inter alia, a guardian of the victim, the death penalty shall be imposed. We
ruled:
The law requires a legal or judicial guardian since it is the consanguineous relation or the solemnity of judicial
appointment which impresses upon the guardian the lofty purpose of his office and normally deters him from
violating its objectives. Such considerations do not obtain in appellant’s case or, for that matter, any person similarly
circumstanced as a mere custodian of a ward
or another’s property. The fiduciary powers granted to a real guardian warrant the exacting sanctions should he
betray the trust.86
Further, according to the maxim noscitur a sociis, the correct construction of a word or phrase susceptible of various
meanings may be made clear and specific by considering the company of words in which it is found or with which it
is associated.87 Section 31(c) of R.A. No. 7610 contains a listing of the circumstances of relationship between the
perpetrator and the victim which will justify the imposition of the maximum penalty, namely when the perpetrator is
an "ascendant, parent, guardian, stepparent or collateral relative within the second degree of consanguinity or
affinity." It should be noted that the words with which "guardian" is associated in the provision all denote a legal
relationship. From this description we may safely deduce that the guardian envisioned by law is a person who has a
legal relationship with a ward. This relationship may be established either by being the ward’s biological parent
(natural guardian) or by adoption (legal guardian). Appellant is neither AAA’s biological parent nor is he AAA’s
adoptive father. Clearly, appellant is not the "guardian" contemplated by law.
On the award of indemnity and damages, we delete the Court of Appeals’ award of civil indemnity because appellant
was not the one who committed the lascivious acts and perpetrated the rape of AAA. Instead, we impose a fine
which shall be administered as a cash fund by the Department of Social Welfare and Development and disbursed for
the rehabilitation of AAA, pursuant to Section 31 (f), Article XII, R.A. No. 7610. Likewise, the award of exemplary
damages is improper considering that appellant is not AAA’s biological father.
WHEREFORE, premises considered, the 31 May 2005 Decision of the Court of Appeals in CA-G.R. CR H.C. No. 00977 is
hereby AFFIRMED WITH MODIFICATION. Appellant SIMPLICIO DELANTAR y REDONDO is found guilty of one count of
violation of Section 5(a), R.A. No. 7610. He is sentenced to suffer the indeterminate sentence of fourteen (14) years,
eight (8) months and one (1) day of reclusion temporal, as minimum, to seventeen (17) years, four (4) months and
one (1) day of reclusion temporal, as maximum, and to pay a fine in the sum of ₱20,000.00 to be administered as a
cash fund by the Department of Social Welfare and Development and disbursed for the rehabilitation of AAA,88 and
₱50,000.00 as moral damages.
SO ORDERED.
2. EJUSDEM GENERIS
G.R. No. L-32717 November 26, 1970

AMELITO R. MUTUC, petitioner,
vs.
COMMISSION ON ELECTIONS, respondent.
Amelito R. Mutuc in his own behalf.
Romulo C. Felizmena for respondent.
FERNANDO, J.:
The invocation of his right to free speech by petitioner Amelito Mutuc, then a candidate for delegate to the
Constitutional Convention, in this special civil action for prohibition to assail the validity of a ruling of respondent
Commission on Elections enjoining the use of a taped jingle for campaign purposes, was not in vain. Nor could it be
considering the conceded absence of any express power granted to respondent by the Constitutional Convention Act
to so require and the bar to any such implication arising from any provision found therein, if deference be paid to
the principle that a statute is to be construed consistently with the fundamental law, which accords the utmost
priority to freedom of expression, much more so when utilized for electoral purposes. On November 3, 1970, the
very same day the case was orally argued, five days after its filing, with the election barely a week away, we issued a
minute resolution granting the writ of prohibition prayed for. This opinion is intended to explain more fully our
decision.
In this special civil action for prohibition filed on October 29, 1970, petitioner, after setting forth his being a resident
of Arayat, Pampanga, and his candidacy for the position of delegate to the Constitutional Convention, alleged that
respondent Commission on Elections, by a telegram sent to him five days previously, informed him that his
certificate of candidacy was given due course but prohibited him from using jingles in his mobile units equipped with
sound systems and loud speakers, an order which, according to him, is "violative of [his] constitutional right ... to
freedom of speech."1 There being no plain, speedy and adequate remedy, according to petitioner, he would seek a
writ of prohibition, at the same time praying for a preliminary injunction. On the very next day, this Court adopted a
resolution requiring respondent Commission on Elections to file an answer not later than November 2, 1970, at the
same time setting the case for hearing for Tuesday November 3, 1970. No preliminary injunction was issued. There
was no denial in the answer filed by respondent on November 2, 1970, of the factual allegations set forth in the
petition, but the justification for the prohibition was premised on a provision of the Constitutional Convention
Act,2which made it unlawful for candidates "to purchase, produce, request or distribute sample ballots, or electoral
propaganda gadgets such as pens, lighters, fans (of whatever nature), flashlights, athletic goods or materials, wallets,
bandanas, shirts, hats, matches, cigarettes, and the like, whether of domestic or foreign origin."3 It was its
contention that the jingle proposed to be used by petitioner is the recorded or taped voice of a singer and therefore
a tangible propaganda material, under the above statute subject to confiscation. It prayed that the petition be
denied for lack of merit. The case was argued, on November 3, 1970, with petitioner appearing in his behalf and
Attorney Romulo C. Felizmena arguing in behalf of respondent.
This Court, after deliberation and taking into account the need for urgency, the election being barely a week away,
issued on the afternoon of the same day, a minute resolution granting the writ of prohibition, setting forth the
absence of statutory authority on the part of respondent to impose such a ban in the light of the doctrine of ejusdem
generis as well as the principle that the construction placed on the statute by respondent Commission on Elections
would raise serious doubts about its validity, considering the infringement of the right of free speech of petitioner.
Its concluding portion was worded thus: "Accordingly, as prayed for, respondent Commission on Elections is
permanently restrained and prohibited from enforcing or implementing or demanding compliance with its aforesaid
order banning the use of political jingles by candidates. This resolution is immediately executory."4
1. As made clear in our resolution of November 3, 1970, the question before us was one of power. Respondent
Commission on Elections was called upon to justify such a prohibition imposed on petitioner. To repeat, no such
authority was granted by the Constitutional Convention Act. It did contend, however, that one of its provisions
referred to above makes unlawful the distribution of electoral propaganda gadgets, mention being made of pens,
lighters, fans, flashlights, athletic goods or materials, wallets, bandanas, shirts, hats, matches, and cigarettes, and
concluding with the words "and the like."5 For respondent Commission, the last three words sufficed to justify such
an order. We view the matter differently. What was done cannot merit our approval under the well-known principle
of ejusdem generis, the general words following any enumeration being applicable only to things of the same kind or
class as those specifically referred to.6 It is quite apparent that what was contemplated in the Act was the
distribution of gadgets of the kind referred to as a means of inducement to obtain a favorable vote for the candidate
responsible for its distribution.
The more serious objection, however, to the ruling of respondent Commission was its failure to manifest fealty to a
cardinal principle of construction that a statute should be interpreted to assure its being in consonance with, rather
than repugnant to, any constitutional command or prescription.7 Thus, certain Administrative Code provisions were
given a "construction which should be more in harmony with the tenets of the fundamental law."8 The desirability of
removing in that fashion the taint of constitutional infirmity from legislative enactments has always commended
itself. The judiciary may even strain the ordinary meaning of words to avert any collision between what a statute
provides and what the Constitution requires. The objective is to reach an interpretation rendering it free from
constitutional defects. To paraphrase Justice Cardozo, if at all possible, the conclusion reached must avoid not only
that it is unconstitutional, but also grave doubts upon that score.9
2. Petitioner's submission of his side of the controversy, then, has in its favor obeisance to such a cardinal precept.
The view advanced by him that if the above provision of the Constitutional Convention Act were to lend itself to the
view that the use of the taped jingle could be prohibited, then the challenge of unconstitutionality would be difficult
to meet. For, in unequivocal language, the Constitution prohibits an abridgment of free speech or a free press. It has
been our constant holding that this preferred freedom calls all the more for the utmost respect when what may be
curtailed is the dissemination of information to make more meaningful the equally vital right of suffrage. What
respondent Commission did, in effect, was to impose censorship on petitioner, an evil against which this
constitutional right is directed. Nor could respondent Commission justify its action by the assertion that petitioner, if
he would not resort to taped jingle, would be free, either by himself or through others, to use his mobile
loudspeakers. Precisely, the constitutional guarantee is not to be emasculated by confining it to a speaker having his
say, but not perpetuating what is uttered by him through tape or other mechanical contrivances. If this Court were
to sustain respondent Commission, then the effect would hardly be distinguishable from a previous restraint. That
cannot be validly done. It would negate indirectly what the Constitution in express terms assures. 10
3. Nor is this all. The concept of the Constitution as the fundamental law, setting forth the criterion for the validity of
any public act whether proceeding from the highest official or the lowest functionary, is a postulate of our system of
government. That is to manifest fealty to the rule of law, with priority accorded to that which occupies the topmost
rung in the legal hierarchy. The three departments of government in the discharge of the functions with which it is
entrusted have no choice but to yield obedience to its commands. Whatever limits it imposes must be observed.
Congress in the enactment of statutes must ever be on guard lest the restrictions on its authority, whether
substantive or formal, be transcended. The Presidency in the execution of the laws cannot ignore or disregard what
it ordains. In its task of applying the law to the facts as found in deciding cases, the judiciary is called upon to
maintain inviolate what is decreed by the fundamental law. Even its power of judicial review to pass upon the
validity of the acts of the coordinate branches in the course of adjudication is a logical corollary of this basic principle
that the Constitution is paramount. It overrides any governmental measure that fails to live up to its mandates.
Thereby there is a recognition of its being the supreme law.
To be more specific, the competence entrusted to respondent Commission was aptly summed up by the present
Chief Justice thus: "Lastly, as the branch of the executive department — although independent of the President — to
which the Constitution has given the 'exclusive charge' of the 'enforcement and administration of all laws relative to
the conduct of elections,' the power of decision of the Commission is limited to purely 'administrative questions.'" 11
It has been the constant holding of this Court, as it could not have been otherwise, that respondent Commission
cannot exercise any authority in conflict with or outside of the law, and there is no higher law than the Constitution.
12 Our decisions which liberally construe its powers are precisely inspired by the thought that only thus may its
responsibility under the Constitution to insure free, orderly and honest elections be adequately fulfilled. 13 There
could be no justification then for lending approval to any ruling or order issuing from respondent Commission, the
effect of which would be to nullify so vital a constitutional right as free speech. Petitioner's case, as was obvious from
the time of its filing, stood on solid footing.
WHEREFORE, as set forth in our resolution of November 3, 1970, respondent Commission is permanently restrained
and prohibited from enforcing or implementing or demanding compliance with its aforesaid order banning the use of
political taped jingles. Without pronouncement as to costs.
G.R. No. 189755 July 4, 2012
EMETERIA LIWAG, Petitioner,

vs.
HAPPY GLEN LOOP HOMEOWNERS ASSOCIATION, INC., Respondent.
DECISION
SERENO, J.:
This Rule 45 Petition assails the Decision1 and Resolution2 of the Court of Appeals (CA) in CA-GR SP No. 100454. The
CA affirmed with modification the Decision3 and Order4 of the Office of the President (O.P.) in OP Case No. 05-G-
224, which had set aside the Decision5 of the Board of Commissioners of the Housing and Land Use Regulatory
Board (HLURB) in HLURB Case No. REM-A-041210-0261 and affirmed the Decision6 of the Housing and Land Use
Arbiter in HLURB Case No. REM-030904-12609.
The controversy stems from a water facility in Happy Glen Loop Subdivision (the Subdivision), which is situated in
Deparo, Caloocan City.
Sometime in 1978, F.G.R. Sales, the original developer of Happy Glen Loop, obtained a loan from Ernesto Marcelo
(Marcelo), the owner of T.P. Marcelo Realty Corporation. To settle its debt after failing to pay its obligation, F.G.R.
Sales assigned to Marcelo all its rights over several parcels of land in the Subdivision, as well as receivables from the
lots already sold.7
As the successor-in-interest of the original developer, Marcelo represented to subdivision lot buyers, the National
Housing Authority (NHA) and the Human Settlement Regulatory Commission (HSRC) that a water facility was
available in the Subdivision.8
For almost 30 years, the residents of the Subdivision relied on this facility as their only source of water.9 This fact
was acknowledged by Marcelo and Hermogenes Liwag (Hermogenes), petitioner’s late husband who was then the
president of respondent Happy Glen Loop Homeowners Association (Association).10
Sometime in September 1995, Marcelo sold Lot 11, Block No. 5 to Hermogenes. As a result, Transfer Certificate of
Title (TCT) No. C-350099
was issued to him. When Hermogenes died in 2003, petitioner Emeteria P. Liwag subsequently wrote a letter to
respondent Association, demanding the removal of the overhead water tank from the subject parcel of land.11
Refusing to comply with petitioner’s demand, respondent Association filed before the HLURB an action for specific
performance; confirmation, maintenance and donation of water facilities; annulment of sale; and cancellation of TCT
No. 350099 against T.P. Marcelo Realty Corporation (the owner and developer of the Subdivision), petitioner
Emeteria, and the other surviving heirs of Hermogenes.
After the parties submitted their respective position papers, Housing and Land Use Arbiter Joselito Melchor (Arbiter
Melchor) ruled in favor of the Association. He invalidated the transfer of the parcel of land in favor of Hermogenes in
a Decision dated 5 October 2004, the dispositive portion of which reads:12
WHEREFORE, premises considered, judgment is hereby rendered as follows:
1. Confirming the existence of an easement for water system/facility or open space on Lot 11, Block 5 of TCT No. C-
350099 wherein the deep well and overhead tank are situated,
2. Making the Temporary Restraining Order dated 01 April 2004 permanent so as to allow the continuous use and
maintenance of the said water facility, i.e., deep well and over head water tank, on the subject lot, by the
complainant’s members and residents of the subject project, and restraining all the respondents from committing
the acts complained of and as described in the complaint,
3. Declaring as void ab initio the deed of sale dated 26 February 2001, involving Lot 11, Block 5 in favor of spouses
Liwag, and TCT No. C-350099 in the name of same respondents without prejudice to complainant’s right to institute
a criminal action in coordination with the prosecuting arms of the government against respondents Marcelo and
Liwag, and furthermore, with recourse by Liwag against T.P. and/or Marcelo to ask for replacement for controverted
lot with a new one within the subject project; and
4. Ordering respondents, jointly and severally, to pay complainant the amount of ₱ 10,000.00 as attorney’s fees and
the amount of ₱ 20,000.00 as damages in favor of the complainant’s members.
SO ORDERED.
On appeal before the HLURB Board of Commissioners, the Board found that Lot 11, Block 5 was not an open space.
Moreover, it ruled that Marcelo had complied with the requirements of Presidential Decree No. (P.D.) 1216 with the
donation of 9,047 square meters of open space and road lots. It further stated that there was no proof that Marcelo
or the original subdivision owner or developer had at any time represented that Lot 11, Block 5 was an open space. It
therefore concluded that the use of the lot as site of the water tank was merely tolerated.13
Respondent Association interposed an appeal to the OP, which set aside the Decision of the HLURB Board of
Commissioners and affirmed that of the Housing and Land Use Arbiter.14
The OP ruled that Lot 11, Block 5 was an open space, because it was the site of the water installation of the
Subdivision, per Marcelo’s official representation on file with the HLURB National Capital Region Field Office. The OP
further ruled that the open space required under P.D. 957 excluded road lots; and, thus, the Subdivision’s open
space was still short of that required by law. Finally, it ruled that petitioner Liwag was aware of the representations
made by Marcelo and his predecessors-in-interest, because he had acknowledged the existence of a water
installation system as per his Affidavit of 10 August 1982.15
Petitioner Liwag unsuccessfully moved for reconsideration,16 then filed a Rule 43 Petition for Review before the
CA.17
The CA affirmed that the HLURB possessed jurisdiction to invalidate the sale of the subject parcel of land to
Hermogenes and to invalidate the issuance of TCT No. C-350099 pursuant thereto.18 The appellate court agreed
with the OP that an easement for water facility existed on the subject parcel of land and formed part of the open
space required to be reserved by the subdivision developer under P.D. 957.19 However, it ruled that Arbiter Melchor
should not have recommended the filing of a criminal action against petitioner, as she was not involved in the
development of the Subdivision or the sale of its lots to buyers.20 The CA likewise deleted the award of attorney’s
fees and damages in favor of respondent.21
Aggrieved, petitioner filed the instant Petition before this Court.
The Court’s Ruling
We affirm the ruling of the appellate court.
The HLURB has exclusive jurisdiction

over the case at bar
The jurisdiction of the HLURB is outlined in P.D. 1344, "Empowering the National Housing Authority to Issue Writ of
Execution in the Enforcement of its Decision under Presidential Decree No. 957," viz:
Sec. 1. In the exercise of its functions to regulate real estate trade and business and in addition to its powers
provided for in Presidential Decree No. 957, the National Housing Authority shall have the exclusive jurisdiction to
hear and decide cases of the following nature.
A. Unsound real estate business practices;
B. Claims involving refund and any other claims filed by subdivision lot or condominium unit buyer against the
project owner, developer, dealer, broker or salesman; and
C. Cases involving specific performance of contractual and statutory obligations filed by buyers of subdivision lots or
condominium units against the owner, developer, broker or salesman.
When respondent Association filed its Complaint before the HLURB, it alleged that Marcelo’s sale of Lot 11, Block 5
to Hermogenes was done in violation of P.D. 957 in the following manner:
12. Through fraudulent acts and connivance of [T.P. and Ernesto Marcelo] and the late Liwag and without the
knowledge and consent of the complainants all in violation of P.D. 957 and its implementing regulations,
respondents T.P. and Ernesto Marcelo transferred the same lot where the deep well is located which is covered by
TCT No. C-41785 in favor of spouses Hermogenes Liwag and Emeteria Liwag to the great damage and prejudice of
complainants x x x.22 (Empasis in the original)
We find that this statement sufficiently alleges that the subdivision owner and developer fraudulently sold to
Hermogenes the lot where the water facility was located. Subdivisions are mandated to maintain and provide
adequate water facilities for their communities.23 Without a provision for an alternative water source, the
subdivision developer’s alleged sale of the lot where the community’s sole water source was located constituted a
violation of this obligation. Thus, this allegation makes out a case for an unsound real estate business practice of the
subdivision owner and developer. Clearly, the case at bar falls within the exclusive jurisdiction of the HLURB.
It is worthy to note that the HLURB has exclusive jurisdiction over complaints arising from contracts between the
subdivision developer and the lot buyer, or those aimed at compelling the subdivision developer to comply with its
contractual and statutory obligations to make the Subdivision a better place to live in.24 This interpretation is in line
with one of P.D. 957’s "Whereas clauses," which provides:
WHEREAS, numerous reports reveal that many real estate subdivision owners, developers, operators, and/or sellers
have reneged on their representations and obligations to provide and maintain properly subdivision roads, drainage,
sewerage, water systems, lighting systems, and other similar basic requirements, thus endangering the health and
safety of home and lot buyers. x x x.
P.D. 957 was promulgated to closely regulate real estate subdivision and condominium businesses.25 Its provisions
were intended to encompass all questions regarding subdivisions and condominiums.26 The decree aimed to
provide for an appropriate government agency, the HLURB, to which aggrieved parties in transactions involving
subdivisions and condominiums may take recourse.27
II
An easement for water facility exists on Lot 11, Block 5 of Happy Glen Loop Subdivision
Easements or servitudes are encumbrances imposed upon an immovable for the benefit of another immovable
belonging to a different owner,28 for the benefit of a community, 29 or for the benefit of one or more persons to
whom the encumbered estate does not belong.30
The law provides that easements may be continuous or discontinuous and apparent or non-apparent. The pertinent
provisions of the Civil Code are quoted below:
Art. 615. Easements may be continuous or discontinuous, apparent or non-apparent.

Continuous easements are those the use of which is or may be incessant, without the intervention of any act of man.
Discontinuous easements are those which are used at intervals and depend upon the acts of man.
Apparent easements are those which are made known and are continually kept in view by external signs that reveal
the use and enjoyment of the same.
Non-apparent easements are those which show no external indication of their existence.
In this case, the water facility is an encumbrance on Lot 11, Block 5 of the Subdivision for the benefit of the
community. It is continuous and apparent, because it is used incessantly without human intervention, and because it
is continually kept in view by the overhead water tank, which reveals its use to the public.
Contrary to petitioner’s contention that the existence of the water tank on Lot 11, Block 5 is merely tolerated, we
find that the easement of water facility has been voluntarily established either by Marcelo, the Subdivision owner
and developer; or by F.G.R. Sales, his predecessor-in-interest and the original developer of the Subdivision. For more
than 30 years, the facility was continuously used as the residents’ sole source of water.31 The Civil Code provides
that continuous and apparent easements are acquired either by virtue of a title or by prescription of 10 years.32 It is
therefore clear that an easement of water facility has already been acquired through prescription.
III
Lot 11, Block 5 of Happy Glen Loop Subdivision forms part of its open space
The term "open space" is defined in P.D. 1216 as "an area reserved exclusively for parks, playgrounds, recreational
uses, schools, roads, places of worship, hospitals, health centers, barangay centers and other similar facilities and
amenities.33
The decree makes no specific mention of areas reserved for water facilities. Therefore, we resort to statutory
construction to determine whether these areas fall under "other similar facilities and amenities."
The basic statutory construction principle of ejusdem generis states that where a general word or phrase follows an
enumeration of particular and specific words of the same class, the general word or phrase is to be construed to
include – or to be restricted to – things akin to or resembling, or of the same kind or class as, those specifically
mentioned.34
Applying this principle to the afore-quoted Section 1 of P.D. 1216, we find that the enumeration refers to areas
reserved for the common welfare of the community. Thus, the phrase "other similar facilities and amenities" should
be interpreted in like manner.
Here, the water facility was undoubtedly established for the benefit of the community. Water is a basic need in
human settlements,35 without which the community would not survive. We therefore rule that, based on the
principle of ejusdem generis and taking into consideration the intention of the law to create and maintain a healthy
environment in human settlements,36 the location of the water facility in the Subdivision must form part of the area
reserved for open space.
IV
The subject parcel of land is beyond the commerce of man and its sale is prohibited under the law
The law expressly provides that open spaces in subdivisions are reserved for public use and are beyond the
commerce of man.37 As such, these open spaces are not susceptible of private ownership and appropriation. We
therefore rule that the sale of the subject parcel of land by the subdivision owner or developer to petitioner’s late
husband was contrary to law. Hence, we find no reversible error in the appellate court’s Decision upholding the
HLURB Arbiter’s annulment of the Deed of Sale.
Petitioner attempts to argue in favor of the validity of the sale of the subject parcel of land by invoking the principle
of indefeasibility of title and by arguing that this action constitutes a collateral attack against her title, an act
proscribed by the Property Registration Decree.
Petitioner is mistaken on both counts.
First, the rule that a collateral attack against a Torrens title is prohibited by law38 finds no application to this case.
There is an attack on the title when the object of an action is to nullify a Torrens title, thus challenging the judgment
or proceeding pursuant to which the title was decreed.39 In the present case, this action is not an attack against the
validity of the Torrens title, because it does not question the judgment or proceeding that led to the issuance of the
title. Rather, this action questions the validity of the transfer of land from Marcelo to petitioner’s husband. As there
is no attack – direct or collateral – against the title, petitioner’s argument holds no water.
Second, the principle of indefeasibility of title is not absolute, and there are well-defined exceptions to this rule.40 In
Aqualab Philippines, Inc. v. Heirs of Pagobo,41 we ruled that this defense does not extend to a transferee who takes
the title with knowledge of a defect in that of the transferee’s predecessor-in-interest.
In this case, Spouses Liwag were aware of the existence of the easement of water facility when Marcelo sold Lot 11,
Block 5 to them.1âwphi1 Hermogenes even executed an Affidavit dated 10 August 1982 attesting to the sufficiency
of the water supply coming from an electrically operated water pump in the Subdivision.42 It is undisputed that the
water facility in question was their only water source during that time. As residents of the Subdivision, they had even
benefited for almost 30 years from its existence. Therefore, petitioner cannot be shielded by the principle of
indefeasibility and conclusiveness of title, as she was not an innocent purchaser in good faith and for value.
From the discussion above, we therefore conclude that the appellate court committed no reversible error in the
assailed Decision and accordingly affirm it in toto.
WHEREFORE, premises considered, the instant Petition for Review is DENIED, and the assailed Decision and
Resolution of the Court of Appeals in CA-GR SP No. 100454 are hereby AFFIRMED.
SO ORDERED.
3. EXPRESS MENTION and IMPLIED EXCLUSION
G.R. No. 146943 October 4, 2002
SARIO MALINIAS, petitioner,

vs.
THE COMMISSION ON ELECTIONS, TEOFILO CORPUZ, ANACLETO TANGILAG and VICTOR DOMINGUEZ, respondents.
DECISION
CARPIO, J.:
The Case
Before us is a petition for review on certiorari1 of the Resolutions of the Commission on Elections ("COMELEC" for
brevity) en banc2 dated June 10, 1999 and October 26, 2000. The assailed Resolutions dismissed the complaint3 filed
by petitioner Sario Malinias ("Malinias" for brevity) and Roy S. Pilando ("Pilando" for brevity) for insufficiency of
evidence to establish probable cause for violation of Section 25 of Republic Act No. 66464 and Sections 232 and 261
(i) of Batas Pambansa Blg. 881.5
The Facts
Petitioner Malinias was a candidate for governor whereas Pilando was a candidate for congressional representative
of Mountain Province in the May 11, 1998 elections.6
The Provincial Board of Canvassers held the canvassing of election returns at the second floor of the Provincial
Capitol Building in Bontoc, Mountain Province from May 11, 1998 to May 15, 1998.7
On July 31, 1998, Malinias and Pilando filed a complaint with the COMELEC's Law Department for violation of Section
25 of R.A. No. 6646, and Sections 232 and 261 (i) of B.P. Blg. 881, against Victor Dominguez, Teofilo Corpuz, Anacleto
Tangilag, Thomas Bayugan, Jose Bagwan who was then Provincial Election Supervisor, and the members of the
Provincial Board of Canvassers. Victor Dominguez ("Dominguez" for brevity) was then the incumbent Congressman
of Poblacion, Sabangan, Mountain Province. Teofilo Corpuz ("Corpuz" for brevity) was then the Provincial Director of
the Philippine National Police in Mountain Province while Anacleto Tangilag ("Tangilag" for brevity) was then the
Chief of Police of the Municipality of Bontoc, Mountain Province.
Malinias and Pilando alleged that on May 15, 1998 a police checkpoint at Nacagang, Sabangan, Mountain Province
blocked their supporters who were on their way to Bontoc, and prevented them from proceeding to the Provincial
Capitol Building. Malinias and Pilando further alleged that policemen, upon orders of private respondents, prevented
their supporters, who nevertheless eventually reached the Provincial Capitol Building, from entering the capitol
grounds.
In their complaint, Malinias and Pilando requested the COMELEC and its Law Department to investigate and
prosecute private respondents for the following alleged unlawful acts.
"3. That on May 15, 1998 at the site of the canvassing of election returns for congressional and provincial returns
located at the second floor of the Provincial Capitol Building the public and particularly the designated
representatives/watchers of both affiants were prevented from attending the canvassing.
xxx
4. That the aforementioned "Mass-affidavits" support our allegations in this affidavit-complaint that we and our
supporters were prevented from attending the provincial canvassing because of the illegal checkpoint/blockade set-
up by policemen in Nakagang, Tambingan, Sabangan, Mt. Province and as an evidence to these allegations,
Certification of the Police Station is hereto attached as Annex "D" and affidavits of supporters hereto attached as
Annex "E", both made an integral part of this affidavit-complaint; and that said "mass-affidavits" show that the
Provincial canvassing were not made public or (sic) candidates and their representatives/watchers prevented
because of barricade, closure of canvassing rooms, blockade by armed policemen that coerce or threaten the
people, the candidates or their representatives from attending the canvassing;8
In support of the complaint, several supporters of Malinias and Pilando executed so-called "mass affidavits"
uniformly asserting that private respondents, among others, (1) prevented them from attending the provincial
canvassing, (2) padlocked the canvassing area, and (3) threatened the people who wanted to enter the canvassing
room. They likewise alleged that the Provincial Board of Canvassers never allowed the canvassing to be made public
and consented to the exclusion of the public or representatives of other candidates except those of Dominguez.9
Consequently, the COMELEC's Law Department conducted a preliminary investigation during which only Corpuz and
Tangilag submitted their joint Counter-Affidavit.
In their Counter-Affidavit, Corpuz and Tangilag admitted ordering the setting up of a checkpoint at Nacagang,
Sabangan, Mountain Province and securing the vicinity of the Provincial Capitol Building, to wit:
"3. We admit having ordered the setting up of check points in Nakagang, Tambingan, Sabangan, Mountain Province;
as in fact, this is not the only checkpoint set up in the province. There are other checkpoints established in other
parts of the province, to enforce the COMELEC gun ban and other pertinent rules issued by the Commission on
Election during the election period.
4. Policemen were posted within the vicinity of the capitol grounds in response to earlier information that some
groups were out to disrupt the canvass proceedings which were being conducted in the second floor of the
Provincial Capitol Building. This is not remote considering that this had happened in the past elections. In fact, during
the canvass proceeding on May 15, 1998 a large group of individuals identified with no less than affiants-
complainants Roy S. Pilando and Sario Malinias was conducting a rally just in front of the capitol, shouting invectives
at certain candidates and their leaders. This group likewise were holding placards and posted some in front of the
capitol building.
x x x"10
After the investigation, in a study dated May 26, 1999, the COMELEC's Law Department recommended to the
COMELEC en banc the dismissal of the complaint for lack of probable cause.11
In a Resolution dated June 10, 1999, the COMELEC en banc dismissed the complaint of Malinias and Pilando for
insufficiency of evidence to establish probable cause against private respondents. On October 26, 2000, the
COMELEC dismissed Malinias' Motion for Reconsideration.
Hence, Malinias filed the instant petition.
The Comelec's Ruling
In dismissing the complaint against private respondents, the COMELEC ruled as follows:
"As appearing in the Minutes of Provincial Canvass, complainant Roy Pilando was present during the May 15, 1998
Provincial Canvass. He even participated actively in a discussion with the members of the Board and the counsel of
Congressman Dominguez. The minutes also disclosed that the lawyers of LAMMP, the watchers, supporters of other
candidates and representatives of the Integrated Bar of the Philippines were present at one time or another during
the canvass proceedings. The minutes does not indicate any charges of irregularities inside and within the vicinity of
the canvassing room.
Pursuant to Comelec Res. No. 2968 promulgated on January 7, 1998, checkpoints were established in the entire
country to effectively implement the firearms ban during the election period from January 11, 1998 to June 10, 1998.
In Mountain Province, there were fourteen (14) checkpoints established by the Philippine National Police way before
the start of the campaign period for the May 11, 1998 elections including the subject checkpoint at Nacagang,
Tambingan, Sabangan, Mountain Province. Thus, the checkpoint at Sabangan, Mountain Province was not
established as alleged only upon request of Congressman Dominguez on May 15, 1998 but way before the
commencement of the campaign period. Granting arguendo that the Congressman did make a request for a
checkpoint at Sitio Nacagang, it would be a mere surplusage as the same was already existing.
Furthermore, an alleged text of a radio message requesting advice from the PNP Provincial Director at Bontoc, Mt.
Province was attached to complainants' affidavit-complaint. However, said person by the name of Mr. Palicos was
never presented to affirm the truth of the contents and the signature appearing therein."12
Finding that Malinias failed to adduce new evidence, the COMELEC dismissed Malinias' Motion for
Reconsideration.13
The Court's Ruling
The sole issue for resolution is whether the COMELEC gravely abused its discretion in dismissing Malinias and
Pilando's complaint for insufficiency of evidence to establish probable cause for alleged violation of Section 25 of
R.A. No. 6646 and Sections 232 and 261 (i) of B.P. 881.
We rule that the COMELEC did not commit grave abuse of discretion.
For this Court to issue the extraordinary writ of certiorari, the tribunal or administrative body must have issued the
assailed decision, order or resolution in a capricious and despotic manner.
"There is grave abuse of discretion justifying the issuance of the writ of certiorari when there is a capricious and
whimsical exercise of judgment as is equivalent to lack of jurisdiction; where the power is exercised in an arbitrary or
despotic manner by reason of passion, prejudice, or personal hostility, amounting to an evasion of positive duty or to
a virtual refusal to perform the duty enjoined, or to act at all in contemplation of law."14
Such is not the situation in the instant case. The COMELEC dismissed properly the complaint of Malinias and Pilando
for insufficient evidence, and committed no grave abuse of discretion amounting to lack or excess of jurisdiction.
First, Malinias charged private respondents with alleged violation of Section 25 of Republic Act No. 6646, quoted, as
follows:
"Sec. 25. Right to be Present and to Counsel During the Canvass. – Any registered political party, coalition of parties,
through their representatives, and any candidate has the right to be present and to counsel during the canvass of
the election returns; Provided, That only one counsel may argue for each political party or candidate. They shall have
the right to examine the returns being canvassed without touching them, make their observations thereon, and file
their challenge in accordance with the rules and regulations of the Commission. No dilatory action shall be allowed
by the board of canvassers."
In the present case, Malinias miserably failed to substantiate his claim that private respondents denied him his right
to be present during the canvassing. There was even no showing that Malinias was within the vicinity of the
Provincial Capitol Building or that private respondents prevented him from entering the canvassing room.
As found by the COMELEC and admitted by Malinias, Pilando was present and even participated actively in the
canvassing.15 Malinias failed to show that his rights as a gubernatorial candidate were prejudiced by the alleged
failure of his supporters to attend the canvassing. Malinias claimed that even though Pilando was present during the
canvassing, the latter was only able to enter the room after eluding the policemen and passing through the rear
entrance of the Provincial Capitol Building.16 This allegation, however, is not supported by any clear and convincing
evidence. Pilando himself, who was purportedly prevented by policemen from entering the canvassing room, failed
to attest to the veracity of this statement rendering the same self-serving and baseless.
In an analogous case where a political candidate's watcher failed to attend the canvass proceedings, this Court held:
"Another matter which militates against the cause of petitioner is that he has not shown that he suffered prejudice
because of the failure of his watcher to attend the canvassing. Had the watcher been present, what substantive
issues would he have raised? Petitioner does not disclose. Could it be that even if the watcher was present, the
result of the canvassing would have been the same?"
There is therefore no merit in petitioner's claim that respondent Commission on Elections gravely abused its
discretion in issuing its questioned decision. And, as emphatically stated in Sidro v. Comelec, 102 SCRA 853, this
Court has invariably followed the principle that "in the absence of any jurisdictional infirmity or an error of law of the
utmost gravity, the conclusion reached by the respondent Commission on a matter that falls within its competence is
entitled to the utmost respect, xxx." There is justification in this case to reiterate this principle."17
Assuming that Pilando in fact entered the canvassing room only after successfully evading the policemen
surrounding the Provincial Capitol grounds, Pilando could have easily complained of this alleged unlawful act during
the canvass proceedings. He could have immediately reported the matter to the Provincial Board of Canvassers as a
violation of Section 25 of R.A. No. 6646. However, Pilando opted simply to raise questions on alleged irregularities in
the municipal canvassing.18 While he had the opportunity to protest the alleged intimidation committed by
policemen against his person, it is quite surprising that he never mentioned anything about it to the Provincial Board
of Canvassers.
Surprisingly, the COMELEC and private respondents apparently overlooked that R.A. No. 6646 does not punish a
violation of Section 25 of the law as a criminal election offense. Section 25 merely highlights one of the recognized
rights of a political party or candidate during elections, aimed at providing an effective safeguard against fraud or
irregularities in the canvassing of election returns. Section 2719 of R.A. No. 6646, which specifies the election
offenses punishable under this law, does not include Section 25.
Malinias further claims that, in violation of this right, his supporters were blocked by a checkpoint set-up at
Nacagang, Sabangan, Mountain Province. This allegation is devoid of any basis to merit a reversal of the COMELEC's
ruling. Malinias' supporters who were purportedly blocked by the checkpoint did not confirm or corroborate this
allegation of Malinias.
Moreover, the police established checkpoints in the entire country to implement the firearms ban during the
election period. Clearly, this is in consonance with the constitutionally ordained power of the COMELEC to deputize
government agencies and instrumentalities of the Government for the exclusive purpose of ensuring free, orderly,
honest, peaceful and credible elections.20
Second, Malinias maintains that Corpuz and Tangilag entered the canvassing room in blatant violation of Section 232
of B.P. Blg. 881. His sole basis for this allegation is the affidavit of his supporters who expressly stated that they saw
Dominguez and Corpuz (only) enter the canvassing room.21 Malinias likewise contends that "Corpuz and Tangilag
impliedly admitted that they were inside or at least within the fifty (50) meter radius of the canvassing room as they
were able to mention the names of the persons who were inside the canvassing room in their Counter-Affidavit."22
The provision of law which Corpuz and Tangilag allegedly violated is quoted as follows:
"Sec. 232. Persons not allowed inside the canvassing room. – It shall be unlawful for any officer or member of the
Armed Forces of the Philippines, including the Philippine Constabulary, or the Integrated National Police or any
peace officer or any armed or unarmed persons belonging to an extra-legal police agency, special forces, reaction
forces, strike forces, home defense forces, barangay self-defense units, barangay tanod, or of any member of the
security or police organizations or government ministries, commissions, councils, bureaus, offices, instrumentalities,
or government-owned or controlled corporation or their subsidiaries or of any member of a privately owned or
operated security, investigative, protective or intelligence agency performing identical or similar functions to enter
the room where the canvassing of the election returns are held by the board of canvassers and within a radius of
fifty meters from such room: Provided, however, That the board of canvassers by a majority vote, if it deems
necessary, may make a call in writing for the detail of policemen or any peace officers for their protection or for the
protection of the election documents and paraphernalia in the possession of the board, or for the maintenance of
peace and order, in which case said policemen or peace officers, who shall be in proper uniform, shall stay outside
the room within a radius of thirty meters near enough to be easily called by the board of canvassers at any time."
Again, the COMELEC and private respondents overlooked that Section 232 of B.P. Blg. 881 is not one of the election
offenses explicitly enumerated in Sections 261 and 262 of B.P. Blg. 881. While Section 232 categorically states that it
is unlawful for the persons referred therein to enter the canvassing room, this act is not one of the election offenses
criminally punishable under Sections 261 and 262 of B.P. Blg. 881. Thus, the act involved in Section 232 of B.P. Blg.
881 is not punishable as a criminal election offense. Section 264 of B.P. Blg. 881 provides that the penalty for an
election offense under Sections 261 and 262 is imprisonment of not less than one year but not more than six years.
Under the rule of statutory construction of expressio unius est exclusio alterius, there is no ground to order the
COMELEC to prosecute private respondents for alleged violation of Section 232 of B.P. Blg. 881 precisely because this
is a non-criminal act.
"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. Expressium facit cessare tacitum. 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.
xxx
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."23
Also, since private respondents are being charged with a criminal offense, a strict interpretation in favor of private
respondents is required in determining whether the acts mentioned in Section 232 are criminally punishable under
Sections 26124 and 26225 of B.P. Blg. 881. Since Sections 261 and 262, which lists the election offenses punishable
as crimes, do not include Section 232, a strict interpretation means that private respondents cannot be held
criminally liable for violation of Section 232.
This is not to say that a violation of Section 232 of B.P. Blg. 881 is without any sanction. Though not a criminal
election offense, a violation of Section 232 certainly warrants, after proper hearing, the imposition of administrative
penalties. Under Section 2, Article IX-C of the Constitution, the COMELEC may recommend to the President the
imposition of disciplinary action on any officer or employee the COMELEC has deputized for violation of its directive,
order or decision.26 Also, under the Revised Administrative Code,27 the COMELEC may recommend to the proper
authority the suspension or removal of any government official or employee found guilty of violation of election laws
or failure to comply with COMELEC orders or rulings.
In addition, a careful examination of the evidence presented by Malinias shows that the same are insufficient to
justify a finding of grave abuse of discretion on the part of the COMELEC. Obviously, the evidence relied upon by
Malinias to support his charges consisted mainly of affidavits prepared by his own supporters. The affidavits of
Malinias' own supporters, being self-serving, cannot be accepted at face value under the circumstances. As this
Court has often stated, "reliance should not be placed on mere affidavits."28
Besides, if Corpuz really entered the canvassing room, then why did Pilando and the representatives of other
candidates, who were inside the room, fail to question this alleged wrongful act during the canvassing? Malinias'
contention that Corpuz and Tangilag impliedly admitted they were inside the canvassing room because they
mentioned the names of the persons present during the canvassing deserves scant consideration as the same is not
supported by any evidence.
Finally, Malinias asserts that private respondents should be held liable for allegedly violating Section 261 (i) of B. P.
Blg. 881 because the latter engaged in partisan political activity. This provision states:
"Sec. 261 (i) Intervention of public officers and employees. – Any officer or employee in the civil service, except those
holding political offices; any officer, employee, or member of the Armed Forces of the Philippines, or any police
force, special forces, home defense forces, barangay self-defense units and all other para-military units that now
exist or which may hereafter be organized who, directly or indirectly, intervenes in any election campaign or engages
in any partisan political activity, except to vote or to preserve public order, if he is a peace officer."
Section 79, Article X of B.P. Blg. 881 defines the term "partisan political activity" as an act designed to promote the
election or defeat of a particular candidate or candidates to a public office."29 Malinias asserts that, in setting up a
checkpoint at Nacagang, Tambingan, Sabangan, Mountain Province and in closing the canvassing room, Corpuz and
Tangilag unduly interfered with his right to be present and to counsel during the canvassing. This interference
allegedly favored the other candidate.
While Corpuz and Tangilag admitted ordering the setting up of the checkpoint, they did so to enforce the COMELEC's
firearms ban, pursuant to COMELEC Resolution No. 2968, among others.30 There was no clear indication that these
police officers, in ordering the setting up of checkpoint, intended to favor the other candidates. Neither was there
proof to show that Corpuz and Tangilag unreasonably exceeded their authority in implementing the COMELEC rules.
Further, there is no basis to rule that private respondents arbitrarily deprived Malinias of his right to be present and
to counsel during the canvassing.
The act of Corpuz and Tangilag in setting up the checkpoint was plainly in accordance with their avowed duty to
maintain effectively peace and order within the vicinity of the canvassing site. Thus, the act is untainted with any
color of political activity. There was also no showing that the alleged closure of the provincial capitol grounds
favored the election of the other candidates.
In summary, we find that there is no proof that the COMELEC issued the assailed resolutions with grave abuse of
discretion. We add that this Court has limited power to review findings of fact made by the COMELEC pursuant to its
constitutional authority to investigate and prosecute actions for election offenses.31 Thus, where there is no proof
of grave abuse of discretion, arbitrariness, fraud or error of law, this Court may not review the factual findings of the
COMELEC, nor substitute its own findings on the sufficiency of evidence.32
WHEREFORE, the instant Petition is DISMISSED. The assailed Resolutions of public respondent COMELEC are
AFFIRMED. Costs against petitioner.
SO ORDERED.
G.R. No. 149110 April 9, 2003
NATIONAL POWER CORPORATION, petitioner,

vs.
CITY OF CABANATUAN, respondent.
PUNO, J.:
This is a petition for review1 of the Decision2 and the Resolution3 of the Court of Appeals dated March 12, 2001 and
July 10, 2001, respectively, finding petitioner National Power Corporation (NPC) liable to pay franchise tax to
respondent City of Cabanatuan.
Petitioner is a government-owned and controlled corporation created under Commonwealth Act No. 120, as
amended.4 It is tasked to undertake the "development of hydroelectric generations of power and the production of
electricity from nuclear, geothermal and other sources, as well as, the transmission of electric power on a
nationwide basis."5 Concomitant to its mandated duty, petitioner has, among others, the power to construct,
operate and maintain power plants, auxiliary plants, power stations and substations for the purpose of developing
hydraulic power and supplying such power to the inhabitants.6
For many years now, petitioner sells electric power to the residents of Cabanatuan City, posting a gross income of
P107,814,187.96 in 1992.7 Pursuant to section 37 of Ordinance No. 165-92,8 the respondent assessed the petitioner
a franchise tax amounting to P808,606.41, representing 75% of 1% of the latter's gross receipts for the preceding
year.9
Petitioner, whose capital stock was subscribed and paid wholly by the Philippine Government,10 refused to pay the
tax assessment. It argued that the respondent has no authority to impose tax on government entities. Petitioner also
contended that as a non-profit organization, it is exempted from the payment of all forms of taxes, charges, duties or
fees11 in accordance with sec. 13 of Rep. Act No. 6395, as amended, viz:
"Sec.13. Non-profit Character of the Corporation; Exemption from all Taxes, Duties, Fees, Imposts and Other Charges
by Government and Governmental Instrumentalities.- The Corporation shall be non-profit and shall devote all its
return from its capital investment, as well as excess revenues from its operation, for expansion. To enable the
Corporation to pay its indebtedness and obligations and in furtherance and effective implementation of the policy
enunciated in Section one of this Act, the Corporation is hereby exempt:
(a) From the payment of all taxes, duties, fees, imposts, charges, costs and service fees in any court or administrative
proceedings in which it may be a party, restrictions and duties to the Republic of the Philippines, its provinces, cities,
municipalities and other government agencies and instrumentalities;
(b) From all income taxes, franchise taxes and realty taxes to be paid to the National Government, its provinces,
cities, municipalities and other government agencies and instrumentalities;
(c) From all import duties, compensating taxes and advanced sales tax, and wharfage fees on import of foreign goods
required for its operations and projects; and
(d) From all taxes, duties, fees, imposts, and all other charges imposed by the Republic of the Philippines, its
provinces, cities, municipalities and other government agencies and instrumentalities, on all petroleum products
used by the Corporation in the generation, transmission, utilization, and sale of electric power."12
The respondent filed a collection suit in the Regional Trial Court of Cabanatuan City, demanding that petitioner pay
the assessed tax due, plus a surcharge equivalent to 25% of the amount of tax, and 2% monthly interest.13
Respondent alleged that petitioner's exemption from local taxes has been repealed by section 193 of Rep. Act No.
7160,14 which reads as follows:
"Sec. 193. Withdrawal of Tax Exemption Privileges.- Unless otherwise provided in this Code, tax exemptions or
incentives granted to, or presently enjoyed by all persons, whether natural or juridical, including government owned
or controlled corporations, except local water districts, cooperatives duly registered under R.A. No. 6938, non-stock
and non-profit hospitals and educational institutions, are hereby withdrawn upon the effectivity of this Code."
On January 25, 1996, the trial court issued an Order15 dismissing the case. It ruled that the tax exemption privileges
granted to petitioner subsist despite the passage of Rep. Act No. 7160 for the following reasons: (1) Rep. Act No.
6395 is a particular law and it may not be repealed by Rep. Act No. 7160 which is a general law; (2) section 193 of
Rep. Act No. 7160 is in the nature of an implied repeal which is not favored; and (3) local governments have no
power to tax instrumentalities of the national government. Pertinent portion of the Order reads:
"The question of whether a particular law has been repealed or not by a subsequent law is a matter of legislative
intent. The lawmakers may expressly repeal a law by incorporating therein repealing provisions which expressly and
specifically cite(s) the particular law or laws, and portions thereof, that are intended to be repealed. A declaration in
a statute, usually in its repealing clause, that a particular and specific law, identified by its number or title is repealed
is an express repeal; all others are implied repeal. Sec. 193 of R.A. No. 7160 is an implied repealing clause because it
fails to identify the act or acts that are intended to be repealed. It is a well-settled rule of statutory construction that
repeals of statutes by implication are not favored. The presumption is against inconsistency and repugnancy for the
legislative is presumed to know the existing laws on the subject and not to have enacted inconsistent or conflicting
statutes. It is also a well-settled rule that, generally, general law does not repeal a special law unless it clearly
appears that the legislative has intended by the latter general act to modify or repeal the earlier special law. Thus,
despite the passage of R.A. No. 7160 from which the questioned Ordinance No. 165-92 was based, the tax
exemption privileges of defendant NPC remain.
Another point going against plaintiff in this case is the ruling of the Supreme Court in the case of Basco vs. Philippine
Amusement and Gaming Corporation, 197 SCRA 52, where it was held that:
'Local governments have no power to tax instrumentalities of the National Government. PAGCOR is a government
owned or controlled corporation with an original charter, PD 1869. All of its shares of stocks are owned by the
National Government. xxx Being an instrumentality of the government, PAGCOR should be and actually is exempt
from local taxes. Otherwise, its operation might be burdened, impeded or subjected to control by mere local
government.'
Like PAGCOR, NPC, being a government owned and controlled corporation with an original charter and its shares of
stocks owned by the National Government, is beyond the taxing power of the Local Government. Corollary to this, it
should be noted here that in the NPC Charter's declaration of Policy, Congress declared that: 'xxx (2) the total
electrification of the Philippines through the development of power from all services to meet the needs of industrial
development and dispersal and needs of rural electrification are primary objectives of the nations which shall be
pursued coordinately and supported by all instrumentalities and agencies of the government, including its financial
institutions.' (underscoring supplied). To allow plaintiff to subject defendant to its tax-ordinance would be to impede
the avowed goal of this government instrumentality.
Unlike the State, a city or municipality has no inherent power of taxation. Its taxing power is limited to that which is
provided for in its charter or other statute. Any grant of taxing power is to be construed strictly, with doubts
resolved against its existence.
From the existing law and the rulings of the Supreme Court itself, it is very clear that the plaintiff could not impose
the subject tax on the defendant."16
On appeal, the Court of Appeals reversed the trial court's Order17 on the ground that section 193, in relation to
sections 137 and 151 of the LGC, expressly withdrew the exemptions granted to the petitioner.18 It ordered the
petitioner to pay the respondent city government the following: (a) the sum of P808,606.41 representing the
franchise tax due based on gross receipts for the year 1992, (b) the tax due every year thereafter based in the gross
receipts earned by NPC, (c) in all cases, to pay a surcharge of 25% of the tax due and unpaid, and (d) the sum of P
10,000.00 as litigation expense.19
On April 4, 2001, the petitioner filed a Motion for Reconsideration on the Court of Appeal's Decision. This was denied
by the appellate court, viz:
"The Court finds no merit in NPC's motion for reconsideration. Its arguments reiterated therein that the taxing
power of the province under Art. 137 (sic) of the Local Government Code refers merely to private persons or
corporations in which category it (NPC) does not belong, and that the LGC (RA 7160) which is a general law may not
impliedly repeal the NPC Charter which is a special law—finds the answer in Section 193 of the LGC to the effect that
'tax exemptions or incentives granted to, or presently enjoyed by all persons, whether natural or juridical, including
government-owned or controlled corporations except local water districts xxx are hereby withdrawn.' The repeal is
direct and unequivocal, not implied.
IN VIEW WHEREOF, the motion for reconsideration is hereby DENIED.
SO ORDERED."20
In this petition for review, petitioner raises the following issues:
"A. THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT NPC, A PUBLIC NON-PROFIT CORPORATION, IS
LIABLE TO PAY A FRANCHISE TAX AS IT FAILED TO CONSIDER THAT SECTION 137 OF THE LOCAL GOVERNMENT CODE
IN RELATION TO SECTION 131 APPLIES ONLY TO PRIVATE PERSONS OR CORPORATIONS ENJOYING A FRANCHISE.
B. THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT NPC'S EXEMPTION FROM ALL FORMS OF TAXES HAS
BEEN REPEALED BY THE PROVISION OF THE LOCAL GOVERNMENT CODE AS THE ENACTMENT OF A LATER
LEGISLATION, WHICH IS A GENERAL LAW, CANNOT BE CONSTRUED TO HAVE REPEALED A SPECIAL LAW.
C. THE COURT OF APPEALS GRAVELY ERRED IN NOT CONSIDERING THAT AN EXERCISE OF POLICE POWER THROUGH
TAX EXEMPTION SHOULD PREVAIL OVER THE LOCAL GOVERNMENT CODE."21
It is beyond dispute that the respondent city government has the authority to issue Ordinance No. 165-92 and
impose an annual tax on "businesses enjoying a franchise," pursuant to section 151 in relation to section 137 of the
LGC, viz:
"Sec. 137. Franchise Tax. - Notwithstanding any exemption granted by any law or other special law, the province may
impose a tax on businesses enjoying a franchise, at a rate not exceeding fifty percent (50%) of one percent (1%) of
the gross annual receipts for the preceding calendar year based on the incoming receipt, or realized, within its
territorial jurisdiction.
In the case of a newly started business, the tax shall not exceed one-twentieth (1/20) of one percent (1%) of the
capital investment. In the succeeding calendar year, regardless of when the business started to operate, the tax shall
be based on the gross receipts for the preceding calendar year, or any fraction thereof, as provided herein."
(emphasis supplied)
x x x
Sec. 151. Scope of Taxing Powers.- Except as otherwise provided in this Code, the city, may levy the taxes, fees, and
charges which the province or municipality may impose: Provided, however, That the taxes, fees and charges levied
and collected by highly urbanized and independent component cities shall accrue to them and distributed in
accordance with the provisions of this Code.
The rates of taxes that the city may levy may exceed the maximum rates allowed for the province or municipality by
not more than fifty percent (50%) except the rates of professional and amusement taxes."
Petitioner, however, submits that it is not liable to pay an annual franchise tax to the respondent city government. It
contends that sections 137 and 151 of the LGC in relation to section 131, limit the taxing power of the respondent
city government to private entities that are engaged in trade or occupation for profit.22
Section 131 (m) of the LGC defines a "franchise" as "a right or privilege, affected with public interest which is
conferred upon private persons or corporations, under such terms and conditions as the government and its political
subdivisions may impose in the interest of the public welfare, security and safety." From the phraseology of this
provision, the petitioner claims that the word "private" modifies the terms "persons" and "corporations." Hence,
when the LGC uses the term "franchise," petitioner submits that it should refer specifically to franchises granted to
private natural persons and to private corporations.23 Ergo, its charter should not be considered a "franchise" for
the purpose of imposing the franchise tax in question.
On the other hand, section 131 (d) of the LGC defines "business" as "trade or commercial activity regularly engaged
in as means of livelihood or with a view to profit." Petitioner claims that it is not engaged in an activity for profit, in
as much as its charter specifically provides that it is a "non-profit organization." In any case, petitioner argues that
the accumulation of profit is merely incidental to its operation; all these profits are required by law to be channeled
for expansion and improvement of its facilities and services.24
Petitioner also alleges that it is an instrumentality of the National Government,25 and as such, may not be taxed by
the respondent city government. It cites the doctrine in Basco vs. Philippine Amusement and Gaming Corporation26
where this Court held that local governments have no power to tax instrumentalities of the National Government,
viz:
"Local governments have no power to tax instrumentalities of the National Government.
PAGCOR has a dual role, to operate and regulate gambling casinos. The latter role is governmental, which places it in
the category of an agency or instrumentality of the Government. Being an instrumentality of the Government,
PAGCOR should be and actually is exempt from local taxes. Otherwise, its operation might be burdened, impeded or
subjected to control by a mere local government.
'The states have no power by taxation or otherwise, to retard, impede, burden or in any manner control the
operation of constitutional laws enacted by Congress to carry into execution the powers vested in the federal
government. (MC Culloch v. Maryland, 4 Wheat 316, 4 L Ed. 579)'
This doctrine emanates from the 'supremacy' of the National Government over local governments.
'Justice Holmes, speaking for the Supreme Court, made reference to the entire absence of power on the part of the
States to touch, in that way (taxation) at least, the instrumentalities of the United States (Johnson v. Maryland, 254
US 51) and it can be agreed that no state or political subdivision can regulate a federal instrumentality in such a way
as to prevent it from consummating its federal responsibilities, or even seriously burden it from accomplishment of
them.' (Antieau, Modern Constitutional Law, Vol. 2, p. 140, italics supplied)
Otherwise, mere creatures of the State can defeat National policies thru extermination of what local authorities may
perceive to be undesirable activities or enterprise using the power to tax as ' a tool regulation' (U.S. v. Sanchez, 340
US 42).
The power to tax which was called by Justice Marshall as the 'power to destroy' (Mc Culloch v. Maryland, supra)
cannot be allowed to defeat an instrumentality or creation of the very entity which has the inherent power to wield
it."27
Petitioner contends that section 193 of Rep. Act No. 7160, withdrawing the tax privileges of government-owned or
controlled corporations, is in the nature of an implied repeal. A special law, its charter cannot be amended or
modified impliedly by the local government code which is a general law. Consequently, petitioner claims that its
exemption from all taxes, fees or charges under its charter subsists despite the passage of the LGC, viz:
"It is a well-settled rule of statutory construction that repeals of statutes by implication are not favored and as much
as possible, effect must be given to all enactments of the legislature. Moreover, it has to be conceded that the
charter of the NPC constitutes a special law. Republic Act No. 7160, is a general law. It is a basic rule in statutory
construction that the enactment of a later legislation which is a general law cannot be construed to have repealed a
special law. Where there is a conflict between a general law and a special statute, the special statute should prevail
since it evinces the legislative intent more clearly than the general statute."28
Finally, petitioner submits that the charter of the NPC, being a valid exercise of police power, should prevail over the
LGC. It alleges that the power of the local government to impose franchise tax is subordinate to petitioner's
exemption from taxation; "police power being the most pervasive, the least limitable and most demanding of all
powers, including the power of taxation."29
The petition is without merit.
Taxes are the lifeblood of the government,30 for without taxes, the government can neither exist nor endure. A
principal attribute of sovereignty,31 the exercise of taxing power derives its source from the very existence of the
state whose social contract with its citizens obliges it to promote public interest and common good. The theory
behind the exercise of the power to tax emanates from necessity;32 without taxes, government cannot fulfill its
mandate of promoting the general welfare and well-being of the people.
In recent years, the increasing social challenges of the times expanded the scope of state activity, and taxation has
become a tool to realize social justice and the equitable distribution of wealth, economic progress and the
protection of local industries as well as public welfare and similar objectives.33 Taxation assumes even greater
significance with the ratification of the 1987 Constitution. Thenceforth, 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
charges34 pursuant to Article X, section 5 of the 1987 Constitution, viz:
"Section 5.- Each Local Government unit shall have the power to create its own sources of revenue, 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."
This paradigm shift results from the realization that genuine development can be achieved only by strengthening
local autonomy and promoting decentralization of governance. For a long time, the country's highly centralized
government structure has bred a culture of dependence among local government leaders upon the national
leadership. It has also "dampened the spirit of initiative, innovation and imaginative resilience in matters of local
development on the part of local government leaders."35 The only way to shatter this culture of dependence is to
give the LGUs a wider role in the delivery of basic services, and confer them sufficient powers to generate their own
sources for the purpose. To achieve this goal, section 3 of Article X of the 1987 Constitution mandates Congress to
enact a local government code that will, consistent with the basic policy of local autonomy, set the guidelines and
limitations to this grant of taxing powers, viz:
"Section 3. The Congress shall enact a local government code which shall provide for a more responsive and
accountable local government structure instituted through a system of decentralization with effective mechanisms
of recall, initiative, and referendum, allocate among the different local government units their powers,
responsibilities, and resources, and provide for the qualifications, election, appointment and removal, term, salaries,
powers and functions and duties of local officials, and all other matters relating to the organization and operation of
the local units."
To recall, prior to the enactment of the Rep. Act No. 7160,36 also known as the Local Government Code of 1991
(LGC), various measures have been enacted to promote local autonomy. These include the Barrio Charter of 1959,37
the Local Autonomy Act of 1959,38 the Decentralization Act of 196739 and the Local Government Code of 1983.40
Despite these initiatives, however, the shackles of dependence on the national government remained. Local
government units were faced with the same problems that hamper their capabilities to participate effectively in the
national development efforts, among which are: (a) inadequate tax base, (b) lack of fiscal control over external
sources of income, (c) limited authority to prioritize and approve development projects, (d) heavy dependence on
external sources of income, and (e) limited supervisory control over personnel of national line agencies.41
Considered as the most revolutionary piece of legislation on local autonomy,42 the LGC effectively deals with the
fiscal constraints faced by LGUs. It widens the tax base of LGUs to include taxes which were prohibited by previous
laws such as the imposition of taxes on forest products, forest concessionaires, mineral products, mining operations,
and the like. The LGC likewise provides enough flexibility to impose tax rates in accordance with their needs and
capabilities. It does not prescribe graduated fixed rates but merely specifies the minimum and maximum tax rates
and leaves the determination of the actual rates to the respective sanggunian.43
One of the most significant provisions of the LGC is the removal of the blanket exclusion of instrumentalities and
agencies of the national government from the coverage of local taxation. Although as a general rule, LGUs cannot
impose taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities, this rule
now admits an exception, i.e., when specific provisions of the LGC authorize the LGUs to impose taxes, fees or
charges on the aforementioned entities, viz:
"Section 133. Common Limitations on the Taxing Powers of the 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:
x x x
(o) Taxes, fees, or charges of any kind on the National Government, its agencies and instrumentalities, and local
government units." (emphasis supplied)
In view of the afore-quoted provision of the LGC, the doctrine in Basco vs. Philippine Amusement and Gaming
Corporation44 relied upon by the petitioner to support its claim no longer applies. To emphasize, the Basco case was
decided prior to the effectivity of the LGC, when no law empowering the local government units to tax
instrumentalities of the National Government was in effect. However, as this Court ruled in the case of Mactan Cebu
International Airport Authority (MCIAA) vs. Marcos,45 nothing prevents Congress from decreeing that even
instrumentalities or agencies of the government performing governmental functions may be subject to tax.46 In
enacting the LGC, Congress exercised its prerogative to tax instrumentalities and agencies of government as it sees
fit. Thus, after reviewing the specific provisions of the LGC, this Court held that MCIAA, although an instrumentality
of the national government, was subject to real property tax, viz:
"Thus, reading together sections 133, 232, and 234 of the LGC, we conclude that as a general rule, as laid down in
section 133, the taxing power of local governments cannot extend to the levy of inter alia, 'taxes, fees and charges of
any kind on the national government, its agencies and instrumentalities, and local government units'; however,
pursuant to section 232, provinces, cities and municipalities in the Metropolitan Manila Area may impose the real
property tax except on, inter alia, 'real property owned by the Republic of the Philippines or any of its political
subdivisions except when the beneficial use thereof has been granted for consideration or otherwise, to a taxable
person as provided in the item (a) of the first paragraph of section 12.'"47
In the case at bar, section 151 in relation to section 137 of the LGC clearly authorizes the respondent city
government to impose on the petitioner the franchise tax in question.
In its general signification, a franchise is a privilege conferred by government authority, which does not belong to
citizens of the country generally as a matter of common right.48 In its specific sense, a franchise may refer to a
general or primary franchise, or to a special or secondary franchise. The former relates to the right to exist as a
corporation, by virtue of duly approved articles of incorporation, or a charter pursuant to a special law creating the
corporation.49 The right under a primary or general franchise is vested in the individuals who compose the
corporation and not in the corporation itself.50 On the other hand, the latter refers to the right or privileges
conferred upon an existing corporation such as the right to use the streets of a municipality to lay pipes of tracks,
erect poles or string wires.51 The rights under a secondary or special franchise are vested in the corporation and
may ordinarily be conveyed or mortgaged under a general power granted to a corporation to dispose of its property,
except such special or secondary franchises as are charged with a public use.52
In section 131 (m) of the LGC, Congress unmistakably defined a franchise in the sense of a secondary or special
franchise. This is to avoid any confusion when the word franchise is used in the context of taxation. As commonly
used, a franchise tax is "a tax on the privilege of transacting business in the state and exercising corporate franchises
granted by the state."53 It is not levied on the corporation simply for existing as a corporation, upon its property54
or its income,55 but on its exercise of the rights or privileges granted to it by the government. Hence, a corporation
need not pay franchise tax from the time it ceased to do business and exercise its franchise.56 It is within this
context that the phrase "tax on businesses enjoying a franchise" in section 137 of the LGC should be interpreted and
understood. Verily, to determine whether the petitioner is covered by the franchise tax in question, the following
requisites should concur: (1) that petitioner has a "franchise" in the sense of a secondary or special franchise; and (2)
that it is exercising its rights or privileges under this franchise within the territory of the respondent city government.
Petitioner fulfills the first requisite. Commonwealth Act No. 120, as amended by Rep. Act No. 7395, constitutes
petitioner's primary and secondary franchises. It serves as the petitioner's charter, defining its composition,
capitalization, the appointment and the specific duties of its corporate officers, and its corporate life span.57 As its
secondary franchise, Commonwealth Act No. 120, as amended, vests the petitioner the following powers which are
not available to ordinary corporations, viz:
"x x x
(e) To conduct investigations and surveys for the development of water power in any part of the Philippines;
(f) To take water from any public stream, river, creek, lake, spring or waterfall in the Philippines, for the purposes
specified in this Act; to intercept and divert the flow of waters from lands of riparian owners and from persons
owning or interested in waters which are or may be necessary for said purposes, upon payment of just
compensation therefor; to alter, straighten, obstruct or increase the flow of water in streams or water channels
intersecting or connecting therewith or contiguous to its works or any part thereof: Provided, That just
compensation shall be paid to any person or persons whose property is, directly or indirectly, adversely affected or
damaged thereby;
(g) To construct, operate and maintain power plants, auxiliary plants, dams, reservoirs, pipes, mains, transmission
lines, power stations and substations, and other works for the purpose of developing hydraulic power from any river,
creek, lake, spring and waterfall in the Philippines and supplying such power to the inhabitants thereof; to acquire,
construct, install, maintain, operate, and improve gas, oil, or steam engines, and/or other prime movers, generators
and machinery in plants and/or auxiliary plants for the production of electric power; to establish, develop, operate,
maintain and administer power and lighting systems for the transmission and utilization of its power generation; to
sell electric power in bulk to (1) industrial enterprises, (2) city, municipal or provincial systems and other government
institutions, (3) electric cooperatives, (4) franchise holders, and (5) real estate subdivisions x x x;
(h) To acquire, promote, hold, transfer, sell, lease, rent, mortgage, encumber and otherwise dispose of property
incident to, or necessary, convenient or proper to carry out the purposes for which the Corporation was created:
Provided, That in case a right of way is necessary for its transmission lines, easement of right of way shall only be
sought: Provided, however, That in case the property itself shall be acquired by purchase, the cost thereof shall be
the fair market value at the time of the taking of such property;
(i) To construct works across, or otherwise, any stream, watercourse, canal, ditch, flume, street, avenue, highway or
railway of private and public ownership, as the location of said works may require xxx;
(j) To exercise the right of eminent domain for the purpose of this Act in the manner provided by law for instituting
condemnation proceedings by the national, provincial and municipal governments;
x x x
(m) To cooperate with, and to coordinate its operations with those of the National Electrification Administration and
public service entities;
(n) To exercise complete jurisdiction and control over watersheds surrounding the reservoirs of plants and/or
projects constructed or proposed to be constructed by the Corporation. Upon determination by the Corporation of
the areas required for watersheds for a specific project, the Bureau of Forestry, the Reforestation Administration and
the Bureau of Lands shall, upon written advice by the Corporation, forthwith surrender jurisdiction to the
Corporation of all areas embraced within the watersheds, subject to existing private rights, the needs of waterworks
systems, and the requirements of domestic water supply;
(o) In the prosecution and maintenance of its projects, the Corporation shall adopt measures to prevent
environmental pollution and promote the conservation, development and maximum utilization of natural resources
xxx "58
With these powers, petitioner eventually had the monopoly in the generation and distribution of electricity. This
monopoly was strengthened with the issuance of Pres. Decree No. 40,59 nationalizing the electric power industry.
Although Exec. Order No. 21560 thereafter allowed private sector participation in the generation of electricity, the
transmission of electricity remains the monopoly of the petitioner.
Petitioner also fulfills the second requisite. It is operating within the respondent city government's territorial
jurisdiction pursuant to the powers granted to it by Commonwealth Act No. 120, as amended. From its operations in
the City of Cabanatuan, petitioner realized a gross income of P107,814,187.96 in 1992. Fulfilling both requisites,
petitioner is, and ought to be, subject of the franchise tax in question.
Petitioner, however, insists that it is excluded from the coverage of the franchise tax simply because its stocks are
wholly owned by the National Government, and its charter characterized it as a "non-profit" organization.
These contentions must necessarily fail.
To stress, a franchise tax is imposed based not on the ownership but on the exercise by the corporation of a privilege
to do business. The taxable entity is the corporation which exercises the franchise, and not the individual
stockholders. By virtue of its charter, petitioner was created as a separate and distinct entity from the National
Government. It can sue and be sued under its own name,61 and can exercise all the powers of a corporation under
the Corporation Code.62
To be sure, the ownership by the National Government of its entire capital stock does not necessarily imply that
petitioner is not engaged in business. Section 2 of Pres. Decree No. 202963 classifies government-owned or
controlled corporations (GOCCs) into those performing governmental functions and those performing proprietary
functions, viz:
"A government-owned or controlled corporation is a stock or a non-stock corporation, whether performing

governmental or proprietary functions, which is directly chartered by special law or if organized under the general
corporation law is owned or controlled by the government directly, or indirectly through a parent corporation or
subsidiary corporation, to the extent of at least a majority of its outstanding voting capital stock x x x." (emphases
supplied)
Governmental functions are those pertaining to the administration of government, and as such, are treated as
absolute obligation on the part of the state to perform while proprietary functions are those that are undertaken
only by way of advancing the general interest of society, and are merely optional on the government.64 Included in
the class of GOCCs performing proprietary functions are "business-like" entities such as the National Steel
Corporation (NSC), the National Development Corporation (NDC), the Social Security System (SSS), the Government
Service Insurance System (GSIS), and the National Water Sewerage Authority (NAWASA),65 among others.
Petitioner was created to "undertake the development of hydroelectric generation of power and the production of
electricity from nuclear, geothermal and other sources, as well as the transmission of electric power on a nationwide
basis."66 Pursuant to this mandate, petitioner generates power and sells electricity in bulk. Certainly, these activities
do not partake of the sovereign functions of the government. They are purely private and commercial undertakings,
albeit imbued with public interest. The public interest involved in its activities, however, does not distract from the
true nature of the petitioner as a commercial enterprise, in the same league with similar public utilities like
telephone and telegraph companies, railroad companies, water supply and irrigation companies, gas, coal or light
companies, power plants, ice plant among others; all of which are declared by this Court as ministrant or proprietary
functions of government aimed at advancing the general interest of society.67
A closer reading of its charter reveals that even the legislature treats the character of the petitioner's enterprise as a
"business," although it limits petitioner's profits to twelve percent (12%), viz:68
"(n) When essential to the proper administration of its corporate affairs or necessary for the proper transaction of its
business or to carry out the purposes for which it was organized, to contract indebtedness and issue bonds subject
to approval of the President upon recommendation of the Secretary of Finance;
(o) To exercise such powers and do such things as may be reasonably necessary to carry out the business and
purposes for which it was organized, or which, from time to time, may be declared by the Board to be necessary,
useful, incidental or auxiliary to accomplish the said purpose xxx."(emphases supplied)
It is worthy to note that all other private franchise holders receiving at least sixty percent (60%) of its electricity
requirement from the petitioner are likewise imposed the cap of twelve percent (12%) on profits.69 The main
difference is that the petitioner is mandated to devote "all its returns from its capital investment, as well as excess
revenues from its operation, for expansion"70 while other franchise holders have the option to distribute their
profits to its stockholders by declaring dividends. We do not see why this fact can be a source of difference in tax
treatment. In both instances, the taxable entity is the corporation, which exercises the franchise, and not the
individual stockholders.
We also do not find merit in the petitioner's contention that its tax exemptions under its charter subsist despite the
passage of the LGC.
As a rule, tax exemptions are construed strongly against the claimant. Exemptions must be shown to exist clearly and
categorically, and supported by clear legal provisions.71 In the case at bar, the petitioner's sole refuge is section 13
of Rep. Act No. 6395 exempting from, among others, "all income taxes, franchise taxes and realty taxes to be paid to
the National Government, its provinces, cities, municipalities and other government agencies and instrumentalities."
However, section 193 of the LGC withdrew, subject to limited exceptions, the sweeping tax privileges previously
enjoyed by private and public corporations. Contrary to the contention of petitioner, section 193 of the LGC is an
express, albeit general, repeal of all statutes granting tax exemptions from local taxes.72 It reads:
"Sec. 193. Withdrawal of Tax Exemption Privileges.- Unless otherwise provided in this Code, tax exemptions or
incentives granted to, or presently enjoyed by all persons, whether natural or juridical, including government-owned
or controlled corporations, except local water districts, cooperatives duly registered under R.A. No. 6938, non-stock
and non-profit hospitals and educational institutions, are hereby withdrawn upon the effectivity of this Code."
(emphases supplied)
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 familiar maxim expressio unius est exclusio alterius.73 Not being a local water
district, a cooperative registered under R.A. No. 6938, or a non-stock and non-profit hospital or educational
institution, petitioner clearly does not belong to the exception. It is therefore incumbent upon the petitioner to point
to some provisions of the LGC that expressly grant it exemption from local taxes.
But this would be an exercise in futility. Section 137 of the LGC clearly states that the LGUs can impose franchise tax
"notwithstanding any exemption granted by any law or other special law." This particular provision of the LGC does
not admit any exception. In City Government of San Pablo, Laguna v. Reyes,74 MERALCO's exemption from the
payment of franchise taxes was brought as an issue before this Court. The same issue was involved in the
subsequent case of Manila Electric Company v. Province of Laguna.75 Ruling in favor of the local government in both
instances, we ruled that the franchise tax in question is imposable despite any exemption enjoyed by MERALCO
under special laws, viz:
"It is our view that petitioners correctly rely on provisions of Sections 137 and 193 of the LGC to support their
position that MERALCO's tax exemption has been withdrawn. The explicit language of section 137 which authorizes
the province to impose franchise tax 'notwithstanding any exemption granted by any law or other special law' is all-
encompassing and clear. The franchise tax is imposable despite any exemption enjoyed under special laws.
Section 193 buttresses the withdrawal of extant tax exemption privileges. By stating that unless otherwise provided
in this Code, tax exemptions or incentives granted to or presently enjoyed by all persons, whether natural or
juridical, including government-owned or controlled corporations except (1) local water districts, (2) cooperatives
duly registered under R.A. 6938, (3) non-stock and non-profit hospitals and educational institutions, are withdrawn
upon the effectivity of this code, the obvious import is to limit the exemptions to the three enumerated entities. 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 familiar maxim expressio unius est exclusio alterius. In the absence of any
provision of the Code to the contrary, and we find no other provision in point, any existing tax exemption or
incentive enjoyed by MERALCO under existing law was clearly intended to be withdrawn.
Reading together sections 137 and 193 of the LGC, we conclude that under the LGC the local government unit may
now impose a local tax at a rate not exceeding 50% of 1% of the gross annual receipts for the preceding calendar
based on the incoming receipts realized within its territorial jurisdiction. The legislative purpose to withdraw tax
privileges enjoyed under existing law or charter is clearly manifested by the language used on (sic) Sections 137 and
193 categorically withdrawing such exemption subject only to the exceptions enumerated. Since it would be not only
tedious and impractical to attempt to enumerate all the existing statutes providing for special tax exemptions or
privileges, the LGC provided for an express, albeit general, withdrawal of such exemptions or privileges. No more
unequivocal language could have been used."76 (emphases supplied).
It is worth mentioning that section 192 of the LGC empowers the LGUs, through ordinances duly approved, to grant
tax exemptions, initiatives or reliefs.77 But in enacting section 37 of Ordinance No. 165-92 which imposes an annual
franchise tax "notwithstanding any exemption granted by law or other special law," the respondent city government
clearly did not intend to exempt the petitioner from the coverage thereof.
Doubtless, the power to tax is the most effective instrument to raise needed revenues to finance and support myriad
activities of the local government units for the delivery of basic services essential to the promotion of the general
welfare and the enhancement of peace, progress, and prosperity of the people. As this Court observed in the Mactan
case, "the original reasons for the withdrawal of tax exemption privileges granted to government-owned or
controlled corporations and all other units of government were that such privilege resulted in serious tax base
erosion and distortions in the tax treatment of similarly situated enterprises."78 With the added burden of
devolution, it is even more imperative for government entities to share in the requirements of development, fiscal or
otherwise, by paying taxes or other charges due from them.
IN VIEW WHEREOF, the instant petition is DENIED and the assailed Decision and Resolution of the Court of Appeals
dated March 12, 2001 and July 10, 2001, respectively, are hereby AFFIRMED.
SO ORDERED.
4. NECESSARY IMPLICATION
G.R. No. 191618 June 7, 2011
ATTY. ROMULO B. MACALINTAL, Petitioner,

vs.
PRESIDENTIAL ELECTORAL TRIBUNAL, Respondent.
RESOLUTION
NACHURA, J.:
Before us is a Motion for Reconsideration filed by petitioner Atty. Romulo B. Macalintal of our Decision1 in G.R. No.
191618 dated November 23, 2010, dismissing his petition and declaring the establishment of respondent
Presidential Electoral Tribunal (PET) as constitutional.
Petitioner reiterates his arguments on the alleged unconstitutional creation of the PET:
1. He has standing to file the petition as a taxpayer and a concerned citizen.

2. He is not estopped from assailing the constitution of the PET simply by virtue of his appearance as counsel of
former president Gloria Macapagal-Arroyo before respondent tribunal.
3. Section 4, Article VII of the Constitution does not provide for the creation of the PET.
4. The PET violates Section 12, Article VIII of the Constitution.
To bolster his arguments that the PET is an illegal and unauthorized progeny of Section 4, Article VII of the
Constitution, petitioner invokes our ruling on the constitutionality of the Philippine Truth Commission (PTC).2
Petitioner cites the concurring opinion of Justice Teresita J. Leonardo-de Castro that the PTC is a public office which
cannot be created by the President, the power to do so being lodged exclusively with Congress. Thus, petitioner
submits that if the President, as head of the Executive Department, cannot create the PTC, the Supreme Court,
likewise, cannot create the PET in the absence of an act of legislature.
On the other hand, in its Comment to the Motion for Reconsideration, the Office of the Solicitor General maintains
that:
1. Petitioner is without standing to file the petition.
2. Petitioner is estopped from assailing the jurisdiction of the PET.
3. The constitution of the PET is "on firm footing on the basis of the grant of authority to the [Supreme] Court to be
the sole judge of all election contests for the President or Vice-President under paragraph 7, Section 4, Article VII of
the 1987 Constitution."
Except for the invocation of our decision in Louis ‟Barok" C. Biraogo v. The Philippine Truth Commission of 2010,3
petitioner does not allege new arguments to warrant reconsideration of our Decision.
We cannot agree with his insistence that the creation of the PET is unconstitutional. We reiterate that the
abstraction of the Supreme Court acting as a Presidential Electoral Tribunal from the unequivocal grant of
jurisdiction in the last paragraph of Section 4, Article VII of the Constitution is sound and tenable. The provision
reads:
Sec. 4. x x x.
The Supreme Court, sitting en banc, shall be the sole judge of all contests relating to the election, returns, and
qualifications of the President or Vice-President, and may promulgate its rules for the purpose.
We mapped out the discussions of the Constitutional Commission on the foregoing provision and concluded
therefrom that:
The mirabile dictu of the grant of jurisdiction to this Court, albeit found in the Article on the executive branch of
government, and the constitution of the PET, is evident in the discussions of the Constitutional Commission. On the
exercise of this Court’s judicial power as sole judge of presidential and vice-presidential election contests, and to
promulgate its rules for this purpose, we find the proceedings in the Constitutional Commission most instructive:
MR. DAVIDE. On line 25, after the words "Vice-President," I propose to add AND MAY PROMULGATE ITS RULES FOR
THE PURPOSE. This refers to the Supreme Court sitting en banc. This is also to confer on the Supreme Court exclusive
authority to enact the necessary rules while acting as sole judge of all contests relating to the election, returns and
qualifications of the President or Vice-President.
MR. REGALADO. My personal position is that the rule-making power of the Supreme Court with respect to its
internal procedure is already implicit under the Article on the Judiciary; considering, however, that according to the
Commissioner, the purpose of this is to indicate the sole power of the Supreme Court without intervention by the
legislature in the promulgation of its rules on this particular point, I think I will personally recommend its acceptance
to the Committee.
xxxx
MR. NOLLEDO x x x.
With respect to Sections 10 and 11 on page 8, I understand that the Committee has also created an Electoral
Tribunal in the Senate and a Commission on Appointments which may cover membership from both Houses. But my
question is: It seems to me that the committee report does not indicate which body should promulgate the rules
that shall govern the Electoral Tribunal and the Commission on Appointments. Who shall then promulgate the rules
of these bodies?
MR. DAVIDE. The Electoral Tribunal itself will establish and promulgate its rules because it is a body distinct and
independent already from the House, and so with the Commission on Appointments also. It will have the authority
to promulgate its own rules.
On another point of discussion relative to the grant of judicial power, but equally cogent, we listen to former Chief
Justice Roberto Concepcion:
MR. SUAREZ. Thank you.
Would the Commissioner not consider that violative of the doctrine of separation of powers?
MR. CONCEPCION. I think Commissioner Bernas explained that this is a contest between two parties. This is a judicial
power.
MR. SUAREZ. We know, but practically the Committee is giving to the judiciary the right to declare who will be the
President of our country, which to me is a political action.
MR. CONCEPCION. There are legal rights which are enforceable under the law, and these are essentially justiciable
questions.
MR. SUAREZ. If the election contest proved to be long, burdensome and tedious, practically all the time of the
Supreme Court sitting en banc would be occupied with it considering that they will be going over millions and
millions of ballots or election returns, Madam President.
Echoing the same sentiment and affirming the grant of judicial power to the Supreme Court, Justice Florenz D.
Regalado and Fr. Joaquin Bernas both opined:
MR. VILLACORTA. Thank you very much, Madam President.
I am not sure whether Commissioner Suarez has expressed his point. On page 2, the fourth paragraph of Section 4
provides:
The Supreme Court, sitting en banc, shall be the sole judge of all contests relating to the election, returns and
qualifications of the President or Vice-President.
May I seek clarification as to whether or not the matter of determining the outcome of the contests relating to the
election returns and qualifications of the President or Vice-President is purely a political matter and, therefore,
should not be left entirely to the judiciary. Will the above-quoted provision not impinge on the doctrine of
separation of powers between the executive and the judicial departments of the government?
MR. REGALADO. No, I really do not feel that would be a problem. This is a new provision incidentally. It was not in
the 1935 Constitution nor in the 1973 Constitution.
MR. VILLACORTA. That is right.
MR. REGALADO. We feel that it will not be an intrusion into the separation of powers guaranteed to the judiciary
because this is strictly an adversarial and judicial proceeding.
MR. VILLACORTA. May I know the rationale of the Committee because this supersedes Republic Act 7950 which
provides for the Presidential Electoral Tribunal?
FR. BERNAS. Precisely, this is necessary. Election contests are, by their nature, judicial. Therefore, they are cognizable
only by courts. If, for instance, we did not have a constitutional provision on an electoral tribunal for the Senate or
an electoral tribunal for the House, normally, as composed, that cannot be given jurisdiction over contests.
So, the background of this is really the case of Roxas v. Lopez. The Gentleman will remember that in that election,
Lopez was declared winner. He filed a protest before the Supreme Court because there was a republic act which
created the Supreme Court as the Presidential Electoral Tribunal. The question in this case was whether new powers
could be given the Supreme Court by law. In effect, the conflict was actually whether there was an attempt to create
two Supreme Courts and the answer of the Supreme Court was: "No, this did not involve the creation of two
Supreme Courts, but precisely we are giving new jurisdiction to the Supreme Court, as it is allowed by the
Constitution. Congress may allocate various jurisdictions."
Before the passage of that republic act, in case there was any contest between two presidential candidates or two
vice-presidential candidates, no one had jurisdiction over it. So, it became necessary to create a Presidential
Electoral Tribunal. What we have done is to constitutionalize what was statutory but it is not an infringement on the
separation of powers because the power being given to the Supreme Court is a judicial power.
Unmistakable from the foregoing is that the exercise of our power to judge presidential and vice-presidential
election contests, as well as the rule-making power adjunct thereto, is plenary; it is not as restrictive as petitioner
would interpret it. In fact, former Chief Justice Hilario G. Davide, Jr., who proposed the insertion of the phrase,
intended the Supreme Court to exercise exclusive authority to promulgate its rules of procedure for that purpose. To
this, Justice Regalado forthwith assented and then emphasized that the sole power ought to be without intervention
by the legislative department. Evidently, even the legislature cannot limit the judicial power to resolve presidential
and vice-presidential election contests and our rule-making power connected thereto.
To foreclose all arguments of petitioner, we reiterate that the establishment of the PET simply constitutionalized
what was statutory before the 1987 Constitution. The experiential context of the PET in our country cannot be
denied.4
Stubbornly, despite the explicit reference of the Members of the Constitutional Commission to a Presidential
Electoral Tribunal, with Fr. Joaquin Bernas categorically declaring that in crafting the last paragraph of Section 4,
Article VII of the Constitution, they "constitutionalize[d] what was statutory," petitioner continues to insist that the
last paragraph of Section 4, Article VII of the Constitution does not provide for the creation of the PET. Petitioner is
adamant that "the fact that [the provision] does not expressly prohibit [the] creation [of the PET] is not an authority
for the Supreme Court to create the same."
Petitioner is going to town under the misplaced assumption that the text of the provision itself was the only basis for
this Court to sustain the PET’s constitutionality.
We reiterate that the PET is authorized by the last paragraph of Section 4, Article VII of the Constitution and as
supported by the discussions of the Members of the Constitutional Commission, which drafted the present
Constitution.
The explicit reference by the framers of our Constitution to constitutionalizing what was merely statutory before is
not diluted by the absence of a phrase, line or word, mandating the Supreme Court to create a Presidential Electoral
Tribunal.
Suffice it to state that the Constitution, verbose as it already is, cannot contain the specific wording required by
petitioner in order for him to accept the constitutionality of the PET.
In our Decision, we clarified the structure of the PET:

Be that as it may, we hasten to clarify the structure of the PET as a legitimate progeny of Section 4, Article VII of the
Constitution, composed of members of the Supreme Court, sitting en banc. The following exchange in the 1986
Constitutional Commission should provide enlightenment:
MR. SUAREZ. Thank you. Let me proceed to line 23, page 2, wherein it is provided, and I quote:
The Supreme Court, sitting en banc[,] shall be the sole judge of all contests relating to the election, returns and
qualifications of the President or Vice-President.1avvphi1
Are we not giving enormous work to the Supreme Court especially when it is directed to sit en banc as the sole judge
of all presidential and vice-presidential election contests?
MR. SUMULONG. That question will be referred to Commissioner Concepcion.
MR. CONCEPCION. This function was discharged by the Supreme Court twice and the Supreme Court was able to
dispose of each case in a period of one year as provided by law. Of course, that was probably during the late 1960s
and early 1970s. I do not know how the present Supreme Court would react to such circumstances, but there is also
the question of who else would hear the election protests.
MR. SUAREZ. We are asking this question because between lines 23 to 25, there are no rules provided for the
hearings and there is not time limit or duration for the election contest to be decided by the Supreme Court. Also,
we will have to consider the historical background that when R.A. 1793, which organized the Presidential Electoral
Tribunal, was promulgated on June 21, 1957, at least three famous election contests were presented and two of
them ended up in withdrawal by the protestants out of sheer frustration because of the delay in the resolution of
the cases. I am referring to the electoral protest that was lodged by former President Carlos P. Garcia against our
"kabalen" former President Diosdado Macapagal in 1961 and the vice-presidential election contest filed by the late
Senator Gerardo Roxas against Vice-President Fernando Lopez in 1965.
MR. CONCEPCION. I cannot answer for what the protestants had in mind. But when that protest of Senator Roxas
was withdrawn, the results were already available. Senator Roxas did not want to have a decision adverse to him.
The votes were being counted already, and he did not get what he expected so rather than have a decision adverse
to his protest, he withdrew the case.
xxxx
MR. SUAREZ. I see. So the Commission would not have any objection to vesting in the Supreme Court this matter of
resolving presidential and vice-presidential contests?
MR. CONCEPCION. Personally, I would not have any objection.
MR. SUAREZ. Thank you.
Would the Commissioner not consider that violative of the doctrine of separation of powers?
MR. CONCEPCION. I think Commissioner Bernas explained that this is a contest between two parties. This is a judicial
power.
MR. SUAREZ. We know, but practically the Committee is giving to the judiciary the right to declare who will be the
President of our country, which to me is a political action.
MR. CONCEPCION. There are legal rights which are enforceable under the law, and these are essentially justiciable
questions.
MR. SUAREZ. If the election contest proved to be long, burdensome and tedious, practically all the time of the
Supreme Court sitting en banc would be occupied with it considering that they will be going over millions and
millions of ballots or election returns, Madam President.
MR. CONCEPCION. The time consumed or to be consumed in this contest for President is dependent upon they key
number of teams of revisors. I have no experience insofar as contests in other offices are concerned.
MR. SUAREZ. Although there is a requirement here that the Supreme Court is mandated to sit en banc?
MR. CONCEPCION. Yes.
MR. SUAREZ. I see.
MR. CONCEPCION. The steps involved in this contest are: First, the ballot boxes are opened before teams of three,
generally, a representative each of the court, of the protestant and of the "protestee." It is all a questions of how
many teams are organized. Of course, that can be expensive, but it would be expensive whatever court one would
choose. There were times that the Supreme Court, with sometimes 50 teams at the same time working, would
classify the objections, the kind of problems, and the court would only go over the objected votes on which the
parties could not agree. So it is not as awesome as it would appear insofar as the Court is concerned. What is
awesome is the cost of the revision of the ballots because each party would have to appoint one representative for
every team, and that may take quite a big amount.
MR. SUAREZ. If we draw from the Commissioner's experience which he is sharing with us, what would be the
reasonable period for the election contest to be decided?
MR. CONCEPCION. Insofar as the Supreme Court is concerned, the Supreme Court always manages to dispose of the
case in one year.
MR. SUAREZ. In one year. Thank you for the clarification.5
Judicial power granted to the Supreme Court by the same Constitution is plenary. And under the doctrine of
necessary implication, the additional jurisdiction bestowed by the last paragraph of Section 4, Article VII of the
Constitution to decide presidential and vice-presidential elections contests includes the means necessary to carry it
into effect. Thus:
Obvious from the foregoing is the intent to bestow independence to the Supreme Court as the PET, to undertake the
Herculean task of deciding election protests involving presidential and vice-presidential candidates in accordance
with the process outlined by former Chief Justice Roberto Concepcion. It was made in response to the concern aired
by delegate Jose E. Suarez that the additional duty may prove too burdensome for the Supreme Court. This explicit
grant of independence and of the plenary powers needed to discharge this burden justifies the budget allocation of
the PET.
The conferment of additional jurisdiction to the Supreme Court, with the duty characterized as an "awesome" task,
includes the means necessary to carry it into effect under the doctrine of necessary implication. We cannot
overemphasize that the abstraction of the PET from the explicit grant of power to the Supreme Court, given our
abundant experience, is not unwarranted.
A plain reading of Article VII, Section 4, paragraph 7, readily reveals a grant of authority to the Supreme Court sitting
en banc. In the same vein, although the method by which the Supreme Court exercises this authority is not specified
in the provision, the grant of power does not contain any limitation on the Supreme Court's exercise thereof. The
Supreme Court's method of deciding presidential and vice-presidential election contests, through the PET, is actually
a derivative of the exercise of the prerogative conferred by the aforequoted constitutional provision. Thus, the
subsequent directive in the provision for the Supreme Court to "promulgate its rules for the purpose."
The conferment of full authority to the Supreme Court, as a PET, is equivalent to the full authority conferred upon
the electoral tribunals of the Senate and the House of Representatives, i.e., the Senate Electoral Tribunal (SET) and
the House of Representatives Electoral Tribunal (HRET), which we have affirmed on numerous occasions.6
Next, petitioner still claims that the PET exercises quasi-judicial power and, thus, its members violate the
proscription in Section 12, Article VIII of the Constitution, which reads:
SEC. 12. The Members of the Supreme Court and of other courts established by law shall not be designated to any
agency performing quasi-judicial or administrative functions.
We dispose of this argument as we have done in our Decision, viz.:
The traditional grant of judicial power is found in Section 1, Article VIII of the Constitution which provides that the
power "shall be vested in one Supreme Court and in such lower courts as may be established by law." Consistent
with our presidential system of government, the function of "dealing with the settlement of disputes, controversies
or conflicts involving rights, duties or prerogatives that are legally demandable and enforceable" is apportioned to
courts of justice. With the advent of the 1987 Constitution, judicial power was expanded to include "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 power was expanded, but it remained absolute.
The set up embodied in the Constitution and statutes characterizes the resolution of electoral contests as essentially
an exercise of judicial power.
At the barangay and municipal levels, original and exclusive jurisdiction over election contests is vested in the
municipal or metropolitan trial courts and the regional trial courts, respectively.
At the higher levels - city, provincial, and regional, as well as congressional and senatorial - exclusive and original
jurisdiction is lodged in the COMELEC and in the House of Representatives and Senate Electoral Tribunals, which are
not, strictly and literally speaking, courts of law. Although not courts of law, they are, nonetheless, empowered to
resolve election contests which involve, in essence, an exercise of judicial power, because of the explicit
constitutional empowerment found in Section 2(2), Article IX-C (for the COMELEC) and Section 17, Article VI (for the
Senate and House Electoral Tribunals) of the Constitution. Besides, when the COMELEC, the HRET, and the SET
decide election contests, their decisions are still subject to judicial review - via a petition for certiorari filed by the
proper party - if there is a showing that the decision was rendered with grave abuse of discretion tantamount to lack
or excess of jurisdiction.
It is also beyond cavil that when the Supreme Court, as PET, resolves a presidential or vice-presidential election
contest, it performs what is essentially a judicial power. In the landmark case of Angara v. Electoral Commission,
Justice Jose P. Laurel enucleated that "it would be inconceivable if the Constitution had not provided for a
mechanism by which to direct the course of government along constitutional channels." In fact, Angara pointed out
that "[t]he Constitution is a definition of the powers of government." And yet, at that time, the 1935 Constitution did
not contain the expanded definition of judicial power found in Article VIII, Section 1, paragraph 2 of the present
Constitution.
With the explicit provision, the present Constitution has allocated to the Supreme Court, in conjunction with latter's
exercise of judicial power inherent in all courts, the task of deciding presidential and vice-presidential election
contests, with full authority in the exercise thereof. The power wielded by PET is a derivative of the plenary judicial
power allocated to courts of law, expressly provided in the Constitution. On the whole, the Constitution draws a thin,
but, nevertheless, distinct line between the PET and the Supreme Court.
If the logic of petitioner is to be followed, all Members of the Court, sitting in the Senate and House Electoral
Tribunals would violate the constitutional proscription found in Section 12, Article VIII. Surely, the petitioner will be
among the first to acknowledge that this is not so. The Constitution which, in Section 17, Article VI, explicitly provides
that three Supreme Court Justices shall sit in the Senate and House Electoral Tribunals, respectively, effectively
exempts the Justices-Members thereof from the prohibition in Section 12, Article VIII. In the same vein, it is the
Constitution itself, in Section 4, Article VII, which exempts the Members of the Court, constituting the PET, from the
same prohibition.
We have previously declared that the PET is not simply an agency to which Members of the Court were designated.
Once again, the PET, as intended by the framers of the Constitution, is to be an institution independent, but not
separate, from the judicial department, i.e., the Supreme Court. McCulloch v. State of Maryland proclaimed that "[a]
power without the means to use it, is a nullity." The vehicle for the exercise of this power, as intended by the
Constitution and specifically mentioned by the Constitutional Commissioners during the discussions on the grant of
power to this Court, is the PET. Thus, a microscopic view, like the petitioner's, should not constrict an absolute and
constitutional grant of judicial power.7
Finally, petitioner’s application of our decision in Biraogo v. Philippine Truth Commission8 to the present case is an
unmitigated quantum leap.
The decision therein held that the PTC "finds justification under Section 17, Article VII of the Constitution." A plain
reading of the constitutional provisions, i.e., last paragraph of Section 4 and Section 17, both of Article VII on the
Executive Branch, reveals that the two are differently worded and deal with separate powers of the Executive and
the Judicial Branches of government. And as previously adverted to, the basis for the constitution of the PET was, in
fact, mentioned in the deliberations of the Members of the Constitutional Commission during the drafting of the
present Constitution.
WHEREFORE, the Motion for Reconsideration is DENIED. Our Decision in G.R. No. 191618 STANDS.
SO ORDERED.
G.R. No. 116194 February 2, 2000
SUGBUANON RURAL BANK, INC., petitioner,

vs.
HON. UNDERSECRETARY BIENVENIDO E. LAGUESMA, DEPARTMENT OF LABOR AND EMPLOYMENT, MED-ARBITER
ACHILLES MANIT, DEPARTMENT OF LABOR AND EMPLOYMENT, REGIONAL OFFICE NO. 7, CEBU CITY, AND
SUGBUANON RURAL BANK, INC. — ASSOCIATION OF PROFESSIONAL, SUPERVISORY, OFFICE, AND TECHNICAL
EMPLOYEES UNION-TRADE UNIONS CONGRESS OF THE PHILIPPINES, respondents.
QUISUMBING, J.:
In this special civil action for certiorari and prohibition, petitioner seeks the annulment of the April 27, 1994
Resolution of the Department of Labor and Employment, affirming the order of the Med-Arbiter, dated December 9,
1993, which denied petitioner's motion to dismiss respondent union's petition for certification election.
Petitioner Sugbuanon Rural Bank, Inc., (SRBI, for brevity) is a duly-registered banking institution with principal office
in Cebu City and a branch in Mandaue City. Private respondent SRBI Association of Professional, Supervisory, Office,
and Technical Employees Union (APSOTEU) is a legitimate labor organization affiliated with the Trade Unions
Congress of the Philippines (TUCP).1âwphi1.nêt
On October 8, 1993, the DOLE Regional Office in Cebu City granted Certificate of Registration No. R0700-9310-UR-
0064 to APSOTEU-TUCP, hereafter referred to as the union.
On October 26, 1993, the union filed a petition for certification election of the supervisory employees of SRBI. It
alleged, among others, that: (1) APSOTEU-TUCP was a labor organization duly-registered with the Labor Department;
(2) SRBI employed 5 or more supervisory employees; (3) a majority of these employees supported the petition: (4)
there was no existing collective bargaining agreement (CBA) between any union and SRBI; and (5) no certification
election had been held in SRBI during the past 12 months prior to the petition.
On October 28, 1993, the Med-Arbiter gave due course to the petition. The pre-certification election conference
between SRBI and APSOTEU-TUCP was set for November 15, 1993.
On November 12, 1993, SRBI filed a motion to dismiss the union's petition. It sought to prevent the holding of a
certification election on two grounds. First, that the members of APSOTEU-TUCP were in fact managerial or
confidential employees. Thus, following the doctrine in Philips Industrial Development Corporation v. National Labor
Relations Commission,1 they were disqualified from forming, joining, or assisting any labor organization. Petitioner
attached the job descriptions of the employees concerned to its motion. Second, the Association of Labor Unions-
Trade Unions Congress of the Philippines or ALU-TUCP was representing the union. Since ALU-TUCP also sought to
represent the rank-and-file employees of SRBI, there was a violation of the principle of separation of unions
enunciated in Atlas Lithographic Services, Inc. v. Laguesma.2
The union filed its opposition to the motion to dismiss on December 1, 1993. It argued that its members were not
managerial employees but merely supervisory employees. The members attached their affidavits describing the
nature of their respective duties. The union pointed out that Article 245 of the Labor Code expressly allowed
supervisory employees to form, join, or assist their own unions.
On December 9, 1993, the Med-Arbiter denied petitioner's motion to dismiss. He scheduled the inclusion-exclusion
proceedings in preparation for the certification election on December 16, 1993.
SRBI appealed the Med-Arbiter's decision to the Secretary of Labor and Employment. The appeal was denied for lack
of merit. The certification election was ordered.
On June 16, 1994, the Med-Arbiter scheduled the holding of the certification election for June 29, 1994. His order
identified the following SRBI personnel as the voting supervisory employees in the election: the Cashier of the Main
Office, the Cashier of the Mandaue Branch, the Accountant of the Mandaue Branch, and the Acting Chief of the
Loans Department.
On June 17, 1994, SRBI filed with the Med-Arbiter an urgent motion to suspend proceedings. The Med-Arbiter
denied the same on June 21, 1994. SRBI then filed a motion for reconsideration. Two days later, the Med-Arbiter
cancelled the certification election scheduled for June 29, 1994 in order to address the motion for reconsideration.
The Med-Arbiter later denied petitioner's motion for reconsideration, SRBI appealed the order of denial to the DOLE
Secretary on December 16, 1993..
On December 22, 1993, petitioner proceeded to file a petition with the DOLE Regional Office seeking the cancellation
of the respondent union's registration. It averred that the APSOTEU-TUCP members were actually managerial
employees who were prohibited by law from joining or organizing unions.
On April 22, 1994, respondent DOLE Undersecretary denied SRBI's appeal for lack of merit. He ruled that APSOTEU-
TUCP was a legitimate labor organization. As such, it was fully entitled to all the rights and privileges granted by law
to a legitimate labor organization, including the right to file a petition for certification election. He also held that until
and unless a final order is issued cancelling APSOTEU-TUCP's registration certificate, it had the legal right to
represent its members for collective bargaining purposes. Furthermore, the question of whether the APSOTEU-TUCP
members should be considered as managerial or confidential employees should not be addressed in the proceedings
involving a petition for certification election but best threshed out in other appropriate proceedings.
On May 25, 1994, SRBI moved for reconsideration of the Undersecretary's decision which was denied on July 7,
1994. The Med-Arbiter scheduled the holding of certification elections on August 12, 1994.
Hence the instant petition grounded on the following assignments of error:
RESPONDENT UNDERSECRETARY LAGUESMA ACTED WITH GRAVE ABUSE OF DISCRETION AND PALPABLY ERRED:
A: IN HOLDING THAT ART. 257 OF THE LABOR CODE REQUIRES THE MED-ARBITER TO CONDUCT A CERTIFICATION
ELECTION IN ANY UNORGANIZED ESTABLISHMENT EVEN WHEN THE PETITIONING UNION DOES NOT POSSESS THE
QUALIFICATION FOR AN APPROPRIATE BARGAINING AGENT; AND
B. IN REFUSING TO ASSUME JURISDICTION OVER THE PETITIONER'S APPEAL AND TO DISMISS THE RESPONDENT
UNION'S PETITION FOR CERTIFICATION ELECTION.
II
RESPONDENT UNDERSECRETARY LAGUESMA ACTED WITH GRAVE ABUSE OF DISCRETION AND PALPABLY ERRED IN
DENYING THE PETITIONER'S APPEAL DESPITE THE FACT THAT:
A. THE ALLEGED MEMBERS OF RESPONDENT UNION ARE MANAGERIAL EMPLOYEES WHO ARE LEGALLY
DISQUALIFIED FROM JOINING ANY LABOR ORGANIZATION.
B. AT THE VERY LEAST, THE ALLEGED MEMBERS OF RESPONDENT UNION ARE OCCUPYING HIGHLY CONFIDENTIAL
POSITIONS IN PETITIONER AND, THUS, THE LEGAL DISQUALIFICATION OF MANAGERIAL EMPLOYEES EQUALLY APPLY
TO THEM.
III
IN ANY EVENT, THE CONCLUSIONS REACHED IN THE SUBJECT RESOLUTIONS ARE CONTRARY TO LAW AND ARE
DIAMETRICALLY OPPOSED TO RESPONDENT UNION'S RECORDED ADMISSIONS AND REPRESENTATIONS.
Considering petitioner's assigned errors, we find two core issues for immediate resolution:
(1) Whether or not the members of the respondent union are managerial employees and/or highly-placed
confidential employees, hence prohibited by law from joining labor organizations and engaging in union activities?
(2) Whether or not the Med-Arbiter may validly order the holding of a certification election upon the filing of a
petition for certification election by a registered union, despite the petitioner's appeal pending before the DOLE
Secretary against the issuance of the union's registration?
The other issues based on the assigned errors could be resolved easily after the core issues are settled.
Respecting the first issue, Article 212 (m) of the Labor Code defines the terms "managerial employee" and
"supervisory employees" as follows:
Art. 212. Definitions —
(m) "Managerial employee" is one who is vested with powers or prerogatives to lay down and execute management
policies and/or hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. Supervisory
employees are those who, in the interest of the employer, effectively recommend such managerial actions if the
exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment.
All employees not falling within any of the above definitions are considered rank-and-file employees for purposes of
this Book (Emphasis supplied).
Petitioner submitted detailed job descriptions to support its contention that the union members are managerial
employees and/or confidential employees proscribed from engaging in labor activities.3 Petitioner vehemently
argues that the functions and responsibilities of the employees involved constitute the "very core of the bank's
business, lending of money to clients and borrowers, evaluating their capacity to pay, approving the loan and its
amount, scheduling the terms of repayment, and endorsing delinquent accounts to counsel for collection."4 Hence,
they must be deemed managerial employees. Petitioner cites Tabacalera Insurance Co. v. National Labor Relations
Commission,5 and Panday v. National Labor Relations Commission,6 to sustain its submission. In Tabacalera, we
sustained the classification of a credit and collection supervisor by management as a managerial/supervisory
personnel. But in that case, the credit and collection supervisor "had the power to recommend the hiring and
appointment of his subordinates, as well as the power to recommend any promotion and/or increase."7 For this
reason he was deemed to be a managerial employee. In the present case, however, petitioner failed to show that
the employees in question were vested with similar powers. At best they only had recommendatory powers subject
to evaluation, review, and final decision by the bank's management. The job description forms submitted by
petitioner clearly show that the union members in question may not transfer, suspend, lay-off, recall, discharge,
assign, or discipline employees. Moreover, the forms also do not show that the Cashiers, Accountants, and Acting
Chiefs of the Loans Department formulate and execute management policies which are normally expected of
management officers.
Petitioner's reliance on Panday is equally misplaced. There, we held that a branch accountant is a managerial
employee because the said employee had managerial powers, similar to the supervisor in Tabaculera. Their powers
included recommending the hiring and appointment of his subordinates, as well as the power to recommend any
promotion and/or increase.8
Here, we find that the Cashiers, Accountant, and Acting Chief of the Loans Department of the petitioner did not
possess managerial powers and duties. We are, therefore, constrained to conclude that they are not managerial
employees.
Now may the said bank personnel be deemed confidential employees? Confidential employees are those who (1)
assist or act in a confidential capacity, in regard (2) to persons who formulate, determine, and effectuate
management policies [specifically in the field of labor relations].9 The two criteria are cumulative, and both must be
met if an employee is to be considered a confidential employee — that is, the confidential relationship must exist
between the employee and his superior officer; and that officer must handle the prescribed responsibilities relating
to labor relations.10
Art. 245 of the Labor Code11 does not directly prohibit confidential employees from engaging in union activities.
However, under the doctrine of necessary implication, the disqualification of managerial employees equally applies
to confidential employees.12 The confidential-employee rule justifies exclusion of confidential employees because in
the normal course of their duties they become aware of management policies relating to labor relations.13 It must
be stressed, however, that when the employee does not have access to confidential labor relations information,
there is no legal prohibition against confidential employees from forming, assisting, or joining a union.14
Petitioner contends that it has only 5 officers running its day-to-day affairs. They assist in confidential capacities and
have complete access to the bank's confidential data. They form the core of the bank's management team.
Petitioner explains that:
. . . Specifically: (1) the Head of the Loans Department initially approves the loan applications before they are passed
on to the Board for confirmation. As such, no loan application is even considered by the Board and approved by
petitioner without his stamp of approval based upon his interview of the applicant and determination of his
(applicant's) credit standing and financial capacity. The same holds true with respect to renewals or restructuring of
loan accounts. He himself determines what account should be collected, whether extrajudicially or judicially, and
settles the problems or complaints of borrowers regarding their accounts;
(2) the Cashier is one of the approving officers and authorized signatories of petitioner. He approves the opening of
accounts, withdrawals and encashment, and acceptance of check deposits. He deals with other banks and, in the
absence of the regular Manager, manages the entire office or branch and approves disbursements of funds for
expenses; and
(3) the Accountant, who heads the Accounting Department, is also one of the authorized signatories of petitioner
and, in the absence of the Manager or Cashier, acts as substitute approving officer and assumes the management of
the entire office. She handles the financial reports and reviews the debit/credit tickets submitted by the other
departments.15
Petitioner's explanation, however, does not state who among the employees has access to information specifically
relating to its labor to relations policies. Even Cashier Patricia Maluya, who serves as the secretary of the bank's
Board of Directors may not be so classified. True, the board of directors is responsible for corporate policies, the
exercise of corporate powers, and the general management of the business and affairs of the corporation. As
secretary of the bank's governing body. Patricia Maluya serves the bank's management, but could not be deemed to
have access to confidential information specifically relating to SRBI's labor relations policies, absent a clear showing
on this matter. Thus, while petitioner's explanation confirms the regular duties of the concerned employees, it shows
nothing about any duties specifically connected to labor relations.
As to the second issue. One of the rights of a legitimate labor organization under Article 242(b) of the Labor Code is
the right to be certified as the exclusive representative of all employees in an appropriate bargaining unit for
purposes of collective bargaining. Having complied with the requirements of Art. 234, it is our view that respondent
union is a legitimate labor union. Article 257 of the Labor Code mandates that a certification election shall
automatically be conducted by the Med-Arbiter upon the filing of a petition by a legitimate labor organization.16
Nothing is said therein that prohibits such automatic conduct of the certification election if the management appeals
on the issue of the validity of the union's registration. On this score, petitioner's appeal was correctly dismissed.
Petitioner argues that giving due course to respondent union's petition for certification election would violate the
separation of unions doctrine.17 Note that the petition was filed by APSOTEU-TUCP, a legitimate labor organization.
It was not filed by ALU. Nor was it filed by TUCP, which is a national labor federation of with which respondent union
is affiliated. Petitioner says that respondent union is a mere alter ego of ALU. The records show nothing to this
effect. What the records instead reveal is that respondent union was initially assisted by ALU during its preliminary
stages of organization. A local union maintains its separate personality despite affiliation with a larger national
federation.18 Petitioner alleges that ALU seeks to represent both respondent union and the rank-and-file union.
Again, we find nothing in the records to support this bare assertion.
The law frowns on a union where the membership is composed of both supervisors and rank-and-file employees, for
fear that conflicts of interest may arise in the areas of discipline, collective bargaining, and strikes.19 However, in the
present case, none of the members of the respondent union came from the rank-and-file employees of the bank.
Taking into account the circumstances in this case, it is our view that respondent Undersecretary committed no
reversible error nor grave abuse of discretion when he found the order of the Med-Arbiter scheduling a certification
election in order. The list of employees eligible to vote in said certification election was also found in order, for none
was specifically disqualified from union membership.
WHEREFORE, the instant petition is hereby DISMISSED. No pronouncement as to costs.
SO ORDERED.
5. CASSUS OMISSUS
G.R. No. 166735 September 5, 2006
SPOUSES NEREO and NIEVA DELFINO, petitioners,

vs.
ST. JAMES HOSPITAL, INC. and HON. RONALDO B. ZAMORA, EXECUTIVE SECRETARY, OFFICE OF THE PRESIDENT,
respondents.
DECISION
CHICO-NAZARIO, J.:
Before Us is a Petition for Review on Certiorari under Rule 45 of the Rules of Civil Procedure, assailing the Decision1
of the Court of Appeals in CA-G.R. SP No. 60495, dated 20 January 2003, which affirmed the Decision2 of the Office
of the President, dated 26 March 1999, and the Resolution3 dated 11 August 2000, reinstating the grant to
respondent St. James Hospital, Inc. of a Locational Clearance and a Certificate of Locational Viability (CLV) for its
expansion as a four-storey, forty-bed capacity hospital.
St. James Hospital was established in 1990 as a two-storey, ten-bed capacity hospital in Mariquita Pueblo Subdivision
in Santa Rosa, Laguna. In 1994, it applied for a permit with the Housing and Land Use Regulatory Board (HLURB) to
expand its hospital into a four-storey, forty-bed capacity medical institution. Thus, on 23 November 1994, Reynaldo
Pambid, HLURB Deputized Zoning Administrator for Santa Rosa, Laguna, issued a "temporary" clearance for the
expansion of said hospital. Said issuance was challenged by herein petitioners spouses Nereo and Nieva Delfino,
residents of Mariquita Pueblo Subdivision, on the ground that the proposed expansion is in violation of the
provisions of the 1981 Santa Rosa Municipal Zoning Ordinance. Thereafter, Mr. Pambid referred the matter for
evaluation by his superiors.
On 19 April 1995, HLURB Regional Office No. IV Director Alfredo M. Tan II issued a letter explaining that the issuance
of a "temporary" clearance is not allowed under existing laws for it may be erroneously construed as a permit to
start construction. Director Tan, however, opined that under existing HLURB guidelines, CLVs may be issued to
certain projects for purposes of securing an Environment Compliance Certification (ECC) from the Department of
Environment and Natural Resources (DENR).
On the strength of said opinion, Mr. Pambid revoked the temporary clearance issued to St. James Hospital and
declared the expansion as not viable. The municipal engineer of Santa Rosa, Laguna, also suspended the hospital's
building permit, while DENR Regional Executive Director Antonio Principe issued a cease and desist order on 16
August 1995. Nevertheless, upon written representation of the hospital's operator, Dr. Jose P. Santiago, that the St.
James Hospital will retain the same number of beds maintained in the hospital, Mr. Pambid issued a CLV dated 29
October 1995 for the hospital's expansion project. Upon protest from the petitioners, Mr. Pambid thereafter
suspended the issued CLV.
In the interim, the Sangguniang Panlalawigan of Laguna passed on 11 December 1995 Resolution No. 811, approving
the 1991 Comprehensive Land Use Plan (CLUP) or the Comprehensive Zoning new Zoning Ordinance, hospitals are
now excluded from the list of viable institutions within the residential zone of Santa Rosa, Laguna.
Oblivious of the approval of the 1991 Zoning Ordinance, Mr. Pambid issued on 1 February 1996 a Certificate of
Zoning Compliance or Locational Clearance for the two-storey, ten-bed St. James Hospital citing as basis the
provisions of the 1981 Santa Rosa Municipal Zoning Ordinance. On 14 March 1996, Mr. Pambid likewise issued a CLV
for a four-storey, forty-bed hospital expansion project in favor of St. James Hospital.
These issuances of Mr. Pambid were, however, invalidated by HLURB Director Ordinance of the Municipality of Santa
Rosa, Laguna. Under the Tan on 25 April 1996, as it violated, according to Director Tan, the provisions of the 1991
Zoning Ordinance. As a result thereof, Mr. Pambid suspended the locational clearance issued to St. James Hospital
and elevated the matter to the HLURB for disposition. According to Mr. Pambid, he received a copy of the new
Zoning Ordinance only on 14 February 1996, two weeks after issuing the locational clearance.
On 16 May 1996, petitioners filed before the HLURB Regional Office No. IV a letter-complaint against Mr. Pambid for
issuing the CLV in violation of both the 1981 and 1991 Zoning Ordinances, and against Dr. Santiago for continuing
with the expansion project despite the invalidation of the CLV issued by Mr. Pambid.
In reply to petitioners' complaint, St. James Hospital maintained that there is a need to expand the existing hospital
to address the acute deficiency of medical facilities in the municipality, and that the project is permissible under the
new Zoning Ordinance. Furthermore, it pointed out that the project has been favorably endorsed not only by the
residents of Mariquita Pueblo Subdivision, but also by the residents of other neighboring communities. St. James
Hospital also argued that it has already incurred millions of pesos in losses for every day of delay in the construction.
Pursuant to HLURB Rules, the case was elevated to the HLURB Legal Services Group (LSG), and was assigned to
Arbiter Erwin T. Daga. During the course of the proceedings, Arbiter Daga issued the following Orders:
1. Order dated December 6, 1996 (temporary restraining order) enjoining St. James [Hospital] from continuing with
its expansion project;
2. Order dated December 11, 1996 ordering St. James [Hospital] to cease and desist from proceeding with its
expansion project;
3. Order dated December 12, 1996 denying St. James [Hospital's] motion to lift the temporary restraining order; and
4. Order dated December 14, 1996 ordering St. James [Hospital] to again cease and desist from further work and
construction of the hospital's expansion building pending the resolution of the case.4
On 4 March 1997, Dr. Santiago filed before the HLURB Board of Commissioners a Motion seeking the inhibition of
Arbiter Daga for partiality, which was subsequently denied.
On 16 July 1997, after the parties have submitted their respective position papers and draft decisions, Arbiter Daga
rendered a Decision in favor of petitioners, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered, to wit:
1. The Locational Clearance dated February 1, 1996 issued by public respondent Reynaldo Pambid to the expansion
hospital building of private respondent St. James Hospital, Inc. is hereby revoked and set aside;
2. Ordering private respondent to demolish its two-storey hospital expansion building within ONE MONTH at its cost
and upon failure to comply within the period given, pay complainants P10,000.00 per day of delay;
3. Ordering private respondent to relocate its existing ten-bed capacity hospital within ONE YEAR and thereafter to
permanently cease and desist from operating a hospital/clinic within a residential zone, particularly in Mariquita
Pueblo Subdivision, Dita, Sta. Rosa, Laguna and failure to comply within the reglementary period given, pay
complainants the amount of P10,000.00 per day of delay;
4. Ordering private respondent to pay this Board administrative fine of P20,000.00, aside from the other fines
previously imposed;
5. Ordering private respondent to pay this Board P5,000.00 per day beginning February 4, 1997 until the day that it
ceased or finished the construction of its expansion building as determined by the Board's Regional Office No. IV;
6. Ordering private respondent to pay complainants FIVE HUNDRED THOUSAND PESOS as moral damages, TWO
MILLION PESOS exemplary damages, TWO HUNDRED THOUSAND PESOS as attorney's fees, and FIFTY THOUSAND
PESOS cost of litigation;
The motion of private respondent dated 24 June 1997 is hereby DENIED and its Counterclaim is hereby dismissed for
lack of merit.
Without prejudice to the filing of criminal action that may be filed with the proper court.5
Aggrieved by the aforecited Decision, St. James Hospital appealed to the HLURB Board of Commissioners asserting
that the proposed expansion of the hospital conforms to the 1991 Zoning Ordinance. Resolving said appeal, the
HLURB effectively modified Arbiter Daga's Decision, ruling that the existing hospital, with its original two-storey, ten-
bed capacity, is allowable under the old 1981 Zoning Ordinance and may be allowed to continue as a medical
institution within the Mariquita Pueblo Subdivision even after the effectivity of the 1991 Zoning Ordinance. However,
the HLURB opined that the new construction of commercial buildings within the said residential zone, such as the
forty-bed capacity expansion building of St. James Hospital, is repugnant to Section 2, Article VI of the 1991 Santa
Rosa Municipal Zoning Ordinance and, hence, should be disallowed. Thus, on 13 January 1998, the HLURB Special
Division rendered a Decision, to wit:
WHEREFORE, the decision of the LSG dated July 16, 1997, is hereby SET ASIDE and a new decision entered:
1. Declaring the original two-storey, ten-bed capacity St. James Hospital, as allowable in the Mariquita Pueblo
Subdivision, Sta. Rosa, Laguna;
2. Ordering respondent St. James to set-up an efficient hospital waste disposal system in conformity with the rules
and regulations and standards of the Department of Health, the Department of Environment and Natural Resources
and all other concerned government agencies; and present a certification of compliance to the Board from said
agencies within ninety (90) days from finality hereof; and
3. Revoking the Locational Clerance dated February 01, 1996 issued by respondent Pambid for the expansion
Hospital building of respondent St. James.6
The separate Motions for Reconsideration of both parties having been denied by the HLURB, the parties elevated the
case to the Office of the President, which rendered a decision on 26 March 1999 in favor of St. James Hospital.
According to the Office of the President:
Without doubt, the establishment of a ten-bed capacity hospital, like the existing St. James Hospital, is allowed
within a residential zone. This is expressly provided under Section 2, paragraph 1(d), Article VI of the 1981 Sta. Rosa
Municipal Zoning Ordinance, the law existing at the time of the founding of the said hospital. The term "hospital"
was, however, deleted from the list of conforming establishments within a residential zone in the recently approved
1991 CLUP or the Comprehensive Zoning Ordinance of the Municipality of Sta. Rosa, Laguna. The question now is
whether or not the proposed expansion of St. James Hospital, which will transform it into a four-storey, 40-bed
capacity hospital, is allowable under the 1991 zoning ordinance. Stated differently, does the term "institutional", as
used in the said ordinance, include hospitals and other medical establishments.
In construing words or phrases used in a law, the general rule is that, in the absence of legislative intent to the
contrary, they should be given their plain, ordinary, and common usage meaning (Amadora vs. Court of Appeals, 160
SCRA 315). For, words are presumed to have been employed by the lawmaker in their ordinary and common use and
acceptation (People vs. Kottinger, 45 Phil. 352).
Under Section 2, Article VI of the 1991 Zoning Ordinance, certain activities that are commercial and institutional in
character are allowed within the residential zone. St. James maintained the term "institutional" includes hospitals
and other medical establishments.
We agree. The word "institutional" used as it is in said ordinance without qualification should be understood in its
plain and ordinary meaning. In law, the word "institution" is understood to mean an establishment or place,
especially one of public character or one affecting a community (Black's Law Dictionary, Revised 4th edition, 1968, p.
940). It may be private in character, designed for profit to those composing the organization, or public and charitable
in its purposes.
From the above definition, it is clear that hospitals fall within the pale of the term "institution", a hospital being a
public establishment and that the nature of its business is for profit. The fact that hospitals are not categorized as
dwelling unit does not inevitably mean that it is already a non-conforming establishment within a residential zone.
As provided under aforecited provision of the 1991 Zoning Ordinance, settlement activities that are "institutional in
character" are allowed within the residential zone. Even the HLURB recognized St. James as a medical institution
within the residential zone of the Municipality of Sta. Rosa, Laguna. Be that as it may, St. James Hospital may be
allowed to continue its business within the Mariquita Pueblo Subdivision. To limit the term "institutional" to
activities conducted within the dwelling units of the residents would be unrealistic and would contemplate undue
restrictions to existing and lawful establishments, like the St. James Hospital.
As a conforming establishment within the residential zone, St. James Hospital may also be allowed to expand its
present structure. It is not disputed that the new zoning ordinance does not expressly prohibit expansion of existing
buildings within the residential zone. As correctly observed by St. James, it would be an absurd requirement if such
establishment, like hospitals, would have the appearance of residential units or that its use be incidental and
subordinate to its residential purposes. The parameters mentioned in the said ordinance should only be applied to
residential units.
Foregoing considered, the locational clearance and the complementary certificate of locational viability may now be
issued in favor of St. James Hospital.
WHEREFORE, the grant to St. James Hospital, Inc., of a Locational Clearance and a Certificate of Locational Viability
(CLV) relative to its expansion as a 4-storey, 40-bed capacity hospital dated February 1, 1996, is hereby REINSTATED.
In all other respects, the Decision of the Housing and Land Use Regulatory Board dated January 13, 1998 is
AFFIRMED in toto.7
The Motion for Reconsideration of herein petitioners having been denied in a Resolution dated 11 August 2000,
petitioners appealed to the Court of Appeals. In the assailed Decision dated 20 January 2003, the appellate court
affirmed the Decision of the Office of the President, adopting the latter's conclusion that the
establishment/expansion of the St. James Hospital is not a proscribed land use in the designated residential zone
known as Mariquita Pueblo Subdivision.
Petitioners' Motion for Reconsideration was subsequently denied in a Resolution dated 14 January 2005. Hence, the
instant Petition.
From the facts of the case, it is undisputed that the Mariquita Pueblo Subdivision located at Barangay Dita, Santa
Rosa, Laguna, is located within an area classified as a residential zone under both the 1981 and 1991 Zoning
Ordinances. There is also no question that a two-storey, ten-bed capacity hospital, such as St. James Hospital, was
allowed to be constructed within a residential zone under the 1981 Zoning Ordinance. Likewise, it is apparent that
under the 1981 Zoning Ordinance, the proposed expansion of the St. James Hospital into a four-storey, forty-bed
capacity hospital would be disallowed as it violates the restriction set by said Zoning Ordinance regarding permissible
activities within a residential zone, which specifically limits any medical institution built within a residential zone to a
two-storey, ten-bed capacity structure.
Nonetheless, with the passage of the 1991 Zoning Ordinance, the proposed expansion of the St. James Hospital must
now be decided in light of the provisions of the new Zoning Ordinance. Hence, the pivotal issue now to be resolved
in this Petition is whether or not the proposed expansion of St. James Hospital into a four-storey, forty-bed capacity
medical institution may be permitted under the 1991 Zoning Ordinance. However, in order to settle the present
controversy, it is essential that we determine the effect of the enactment of the 1991 Zoning Ordinance with respect
to the proposed expansion of the St. James Hospital in view of the deletion therein of the phrase "hospitals with not
more than ten capacity" from those enumerated as allowable uses in a residential zone as contained in Section 2,
Article VI of the 1981 Zoning Ordinance.
Section 2, Article VI of the 1981 Zoning Ordinance states:
SECTION 2. REGULATIONS FOR URBAN CORE ZONE. – This zone shall be devoted to various settlement activities that
are residential and commercial, or institutional in character, subject to the following terms and conditions:
1. In the Residential Sector, only the following uses shall be allowed:
a) All types of dwelling units (one-family detached, two-family detached, one-family semi-detached, two-family
semi-detached and multi-family of not more than 5 doors)
b) Home occupation, or the practice of one's profession or occupation, such as tailoring, dressmaking, banking, and
like provided that:
b.1. Not more than five (5) outside assistants or helpers shall be employed;
b.2. The use of the dwelling unit for the home occupation shall be clearly incidental and subordinate to its use for
residential purpose by its occupants;
b.3. As much as possible there shall be no change in the outside appearance of the building or premises;
b.4. No equipment or process shall be used in such home occupation which creates noise, vibration, glare, fumes,
odors, or electrical interference or outside the dwelling unit if conducted in a place other than a single-family
residence. In the case of electrical interference, no equipment or process shall be used which creates visual or
audible interference in any radio or television receiver or causes fluctuation in line voltage off the premises.
a) Elementary schools
b) High Schools and vocational schools
c) Chapels, churches, and other place of worship
d) Clinics, hospitals with not more than ten (10) capacity
e) Drugstores
f) Backyard gardens and raising of pigs, poultry and other animals and fowls provided:
1. That they are only for family consumption
2. No undue noise shall be created
3. No foul smell shall be emitted
4. Other sanitary requirements enforced in the municipality
g) Boarding House
h) Parks and playground
i) Barangay tanod stations
j) Neighborhood assembly hall
k) Recreation centers8
On the other hand, Section 2, Article VI of the 1991 Zoning Ordinance reads:
SECTION 2. REGULATIONS FOR RESIDENTIAL ZONE. – This zone shall be devoted to various settlements, activities that
are residential, commercial, and institutional in character and other spaces designed for recreational pursuit and
maintenance of ecological balance of the municipality, subject to the following terms and conditions:
The following uses shall be allowed:
1. Single detached family dwellings
2. Semi-detached family dwelling
3. Two detached family dwelling
4. Two semi-detached family dwelling
5. Multi-family dwelling with not more than five (5) families residing
6. Residential Subdivision Projects
7. Home occupation for the practice of one's profession or for engaging an in-house business such as dressmaking,
tailoring, baking, running a sari-sari store and the like, provided that:
7.1. Only members of the family residing within the premises shall be engaged in such home occupation;
7.2. Maximum of five (5) outside helpers or assistants shall be employed;
7.3. The use of the dwelling unit for home occupation shall be clearly incidental and subordinate to its use for
residential purpose by its occupants and for the conduct of the home occupation, not more than twenty-five (25%)
percent of the floor area of the dwelling unit shall be used;
7.4. As much as possible there shall be no change in the outside appearance of the building premises;
7.5. No home occupation shall be conducted in any accessory building;
7.6. No traffic shall be generated by such home occupation in greater volume than would normally be expected in a
residential neighborhood and any need for parking generated by the conduct of such home occupation shall be met
off the street and in a place other than in a required front yard;
7.7. No equipment or process shall be used in such home occupation which created noise, vibration, glare, fumes,
odors, or electrical interference detectable to the normal sense off the lot, if the occupation is conducted in a single
family residence or outside the dwelling unit if conducted in a place other than a single-family-residence. In the case
of electrical interference, no equipment or process shall be used which created visual or audible interference in any
radio or television receiver or causes fluctuation in line voltage off the premises.
8. Backyard gardens and raising of pigs, poultry and other animals and fowls provided:
8.1. That they are only for family consumption;
8.2. No undue noise shall be created;
8.3. No foul smell shall be emitted; and
8.4. Other sanitary requirements enforced in the municipality are complied with.
9. Barangay Tanod Stations.
10. Police outposts.9
The enactment of the 1991 Zoning Ordinance effectively repealed the 1981 Zoning Ordinance. This intent to repeal is
manifested in the very wordings of the 1991 Zoning Ordinance. The complete title of said Ordinance, "An Ordinance
Adopting a Comprehensive Zoning Regulation for the Municipality of Santa Rosa, Laguna and Providing for the
Administration, Enforcement and Amendment Thereof. And for the Repeal of all Ordinances in Conflict Therewith,"
as well as the Repealing Clause10 of the same Ordinance which states that "all other ordinances, rules or regulations
that are in conflict with the provisions of this ordinance are hereby repealed,"11 clearly express the intent of the
Sangguniang Bayan of Santa Rosa, Laguna, to repeal any enactment that is inconsistent with the new Ordinance. The
inclusion of this general repealing provision in the Ordinance predicated the intended repeal under the condition
that a substantial conflict must be found in existing and prior acts.
This is what is known as an implied repeal. Repeal by implication proceeds on the premise that where a statute of
later date clearly reveals an intention on the part of the legislature to abrogate a prior act on the subject, that
intention must be given effect.12 There are two categories of implied repeal. The first is where the provisions in the
two acts on the same subject matter are in an irreconcilable conflict, the latter act to the extent of the conflict
constitutes an implied repeal of the earlier one.13 The second is if the later act covers the whole subject of the
earlier one and is clearly intended as a substitute, it will operate to repeal the earlier law.14 The second category of
repeal is only possible if the revised statute was intended to cover the whole subject matter and as a complete and
perfect system in itself. It is the rule that a subsequent statute is deemed to repeal a prior law if the former revises
the whole subject matter of the former statute.15
In the case at bar, there is no doubt that the 1991 Zoning Ordinance not only covers the same, but embraces the
whole subject matter contained in the 1981 Zoning Ordinance, and was enacted to substitute the latter. A perusal of
the two pieces of legislation will reveal that both Ordinances were enacted to guide, control, and regulate the future
growth and development of the Municipality of Santa Rosa, Laguna, in accordance with the municipality's
development plan, as well as to promote the general welfare of the residents of the community by regulating the
location and use of all buildings and land within the municipality. However, unlike the 1981 Zoning Ordinance, the
1991 Zoning Ordinance clearly identifies the development plan to which it is patterned after, specifically the
development plan adopted by the Sangguniang Bayan through Kapasiyahan Blg. 20-91, dated 20 February 1991.
Considering that the 1981 Zoning Ordinance was not in furtherance of the later development plan, consequently,
there was the necessity to adopt a new statute to effect the changes contained therein, hence, the adoption of the
1991 Zoning Ordinance.
Since it is presumed that the Sangguniang Bayan knew of the existence of the older Ordinance, by enacting the later
law embracing the complete subject matter of the 1981 Zoning Ordinance, it must be concluded that the legislative
body had intended to repeal the former Ordinance. With respect to the omission of the phrase "hospitals with not
more than ten capacity" from the 1991 Zoning Ordinance, we conclude that the Sangguniang Bayan did intend to
remove such building use from those allowed within a residential zone. As ruled by this Court, when both intent and
scope clearly evince the idea of a repeal, then all parts and provisions of the prior act that are omitted from the
revised act are deemed repealed.16
Likewise, it must be stressed at this juncture that a comprehensive scrutiny of both Ordinances will disclose that the
uses formerly allowed within a residential zone under the 1981 Zoning Ordinance such as schools, religious facilities
and places of worship, and clinics and hospitals have now been transferred to the institutional zone under the 1991
Zoning Ordinance.17 This clearly demonstrates the intention of the Sangguniang Bayan to delimit the allowable uses
in the residential zone only to those expressly enumerated under Section 2, Article VI of the 1991 Zoning Ordinance,
which no longer includes hospitals.
It is lamentable that both the Office of the President and the Court of Appeals gave undue emphasis to the word
"institutional" as mentioned in Section 2, Article VI of the 1991 Zoning Ordinance and even went through great
lengths to define said term in order to include hospitals under the ambit of said provision. However, they neglected
the fact that under Section 4, Article VI of said Ordinance18, there is now another zone, separate and distinct from a
residential zone, which is classified as "institutional", wherein health facilities, such as hospitals, are expressly
enumerated among those structures allowed within said zone.
Moreover, both the Office of the President and the appellate court failed to consider that any meaning or
interpretation to be given to the term "institutional" as used in Section 2, Article VI must be correspondingly limited
by the explicit enumeration of allowable uses contained in the same section. Whatever meaning the legislative body
had intended in employing the word "institutional" must be discerned in light of the restrictive enumeration in the
said article. Under the legal maxim expressio unius est exclusio alterius, the express mention of one thing in a law,
means the exclusion of others not expressly mentioned.19 Thus, in interpreting the whole of Section 2, Article VI, it
must be understood that in expressly enumerating the allowable uses within a residential zone, those not included in
the enumeration are deemed excluded. Hence, since hospitals, among other things, are not among those
enumerated as allowable uses within the residential zone, the only inference to be deduced from said exclusion is
that said hospitals have been deliberately eliminated from those structures permitted to be constructed within a
residential area in Santa Rosa, Laguna.
Furthermore, according to the rule of casus omissus in statutory construction, a thing omitted must be considered to
have been omitted intentionally. Therefore, with the omission of the phrase "hospital with not more than ten
capacity" in the new Zoning Ordinance, and the corresponding transfer of said allowable usage to another zone
classification, the only logical conclusion is that the legislative body had intended that said use be removed from
those allowed within a residential zone. Thus, the construction of medical institutions, such as St. James Hospital,
within a residential zone is now prohibited under the 1991 Zoning Ordinance.
Be that as it may, even if the St. James Hospital is now considered a non-conforming structure under the 1991
Zoning Ordinance as it is located in a residential zone where such use is no longer allowed, said structure cannot now
be considered illegal. This is because the St. James Hospital was constructed during the effectivity of the 1981 Zoning
Ordinance, and, as earlier stated, under the said Ordinance, the construction of a two-storey, ten-bed capacity
hospital within a residential zone is explicitly allowed.
Having concluded that the St. James Hospital is now considered a non-conforming structure under the 1991 Zoning
Ordinance, we now come to the issue of the legality of the proposed expansion of said hospital into a four-storey,
forty-bed medical institution. We shall decide this said issue in accordance with the provisions of the 1991 Zoning
Ordinance relating to non-conforming buildings, the applicable law at the time of the proposal. As stated in Section 1
of Article X of the 1991 Zoning Ordinance:
Section 1. EXISTING NON-CONFORMING USES AND BUILDINGS. The lawful uses of any building, structure or land at
the point of adoption or amendment of this Ordinance may be continued, although such does not conform with the
provisions of this Ordinance.
1. That no non-conforming use shall [be] enlarge[d] or increased or exten[ded] to occupy a greater area or land that
has already been occupied by such use at the time of the adoption of this Ordinance, or moved in whole or in part to
any other portion of the lot parcel of land where such [non]-conforming use exist at the time of the adoption of this
Ordinance.20 (Emphasis ours.)
It is clear from the abovequoted provision of the 1991 Zoning Ordinance that the expansion of a non-conforming
building is prohibited. Hence, we accordingly resolve that the expansion of the St. James Hospital into a four-storey,
forty-bed capacity medical institution within the Mariquita Pueblo Subdivision is prohibited under the provisions of
the 1991 Zoning Ordinance.
WHEREFORE, premises considered, the instant Petition is hereby GRANTED. The Decision of the Court of Appeals in
CA-G.R. SP No. 60495, dated 20 January 2003, is hereby REVERSED and SET ASIDE and a new Decision entered:
1. Sustaining that the original two-storey, ten-bed capacity St. James Hospital is allowable within the Mariquita
Pueblo Subdivision, Sta. Rosa, Laguna as long as it shall comply with the provisions on existing non-conforming
buildings under the 1991 Zoning Ordinance, as well as the rules and regulations and standards of the Department of
Health, Department of Environment and Natural Resources and all other concerned government agencies; and
2. Prohibiting the proposed expansion of the St. James Hospital into a four-storey, forty-bed capacity hospital, the
proposed expansion being illegal under the 1991 Zoning Ordinance.
SO ORDERED.
G.R. No. 14129 July 31, 1962
PEOPLE OF THE PHILIPPINES, plaintiff-appellant,

vs.
GUILLERMO MANANTAN, defendant-appellee.
Office of the Solicitor General for plaintiff-appellant.

Padilla Law Office for defendant-appellee.
REGALA, J.:
This is an appeal of the Solicitor General from the order of the Court of First Instance of Pangasinan dismissing the
information against the defendant.
The records show that the statement of the case and the facts, as recited in the brief of plaintiff-appellant, is
complete and accurate. The same is, consequently, here adopted, to wit:
In an information filed by the Provincial Fiscal of Pangasinan in the Court of First Instance of that Province, defendant
Guillermo Manantan was charged with a violation Section 54 of the Revised Election Code. A preliminary
investigation conducted by said court resulted in the finding a probable cause that the crime charged as committed
by defendant. Thereafter, the trial started upon defendant's plea of not guilty, the defense moved to dismiss the
information on the ground that as justice of the peace the defendant is one of the officers enumerated in Section 54
of the Revised Election Code. The lower court denied the motion to dismiss holding that a justice of the peace is
within the purview Section 54. A second motion was filed by defense counsel who cited in support thereof the
decision of the Court of Appeals in People vs. Macaraeg, (CA-G.R. No. 15613-R, 54 Off. Gaz., pp. 1873-76) where it
was held that a justice of the peace is excluded from the prohibition of Section 54 of the Revised Election Code.
Acting on this second motion to dismiss, the answer of the prosecution, the reply of the defense, and the opposition
of the prosecution, the lower court dismissed the information against the accused upon the authority of the ruling in
the case cited by the defense.
Both parties are submitting this case upon the determination of this single question of law: Is a justice the peace
included in the prohibition of Section 54 of the Revised Election Code?
Section 54 of the said Code reads:
No justice, judge, fiscal, treasurer, or assessor of any province, no officer or employee of the Army, no member of
the national, provincial, city, municipal or rural police force and no classified civil service officer or employee shall aid
any candidate, or exert any influence in any manner in a election or take part therein, except to vote, if entitled
thereto, or to preserve public peace, if he is a peace officer.
Defendant-appellee argues that a justice of the peace is not comprehended among the officers enumerated in
Section 54 of the Revised Election Code. He submits the aforecited section was taken from Section 449 of the
Revised Administrative Code, which provided the following:
SEC. 449. Persons prohibited from influencing elections. — No judge of the First Instance, justice of the peace, or
treasurer, fiscal or assessor of any province and no officer or employee of the Philippine Constabulary, or any Bureau
or employee of the classified civil service, shall aid any candidate or exert influence in any manner in any election or
take part therein otherwise than exercising the right to vote.
When, therefore, section 54 of the Revised Election Code omitted the words "justice of the peace," the omission
revealed the intention of the Legislature to exclude justices of the peace from its operation.
The above argument overlooks one fundamental fact. It is to be noted that under Section 449 of the Revised
Administrative Code, the word "judge" was modified or qualified by the phrase "of First instance", while under
Section 54 of the Revised Election Code, no such modification exists. In other words, justices of the peace were
expressly included in Section 449 of the Revised Administrative Code because the kinds of judges therein were
specified, i.e., judge of the First Instance and justice of the peace. In Section 54, however, there was no necessity
therefore to include justices of the peace in the enumeration because the legislature had availed itself of the more
generic and broader term, "judge." It was a term not modified by any word or phrase and was intended to
comprehend all kinds of judges, like judges of the courts of First Instance, Judges of the courts of Agrarian Relations,
judges of the courts of Industrial Relations, and justices of the peace.
It is a well known fact that a justice of the peace is sometimes addressed as "judge" in this jurisdiction. It is because a
justice of the peace is indeed a judge. A "judge" is a public officer, who, by virtue of his office, is clothed with judicial
authority (U.S. v. Clark, 25 Fed. Cas. 441, 422). According to Bouvier Law Dictionary, "a judge is a public officer
lawfully appointed to decide litigated questions according to law. In its most extensive sense the term includes all
officers appointed to decide litigated questions while acting in that capacity, including justices of the peace, and
even jurors, it is said, who are judges of facts."
A review of the history of the Revised Election Code will help to justify and clarify the above conclusion.
The first election law in the Philippines was Act 1582 enacted by the Philippine Commission in 1907, and which was
later amended by Act. Nos. 1669, 1709, 1726 and 1768. (Of these 4 amendments, however, only Act No. 1709 has a
relation to the discussion of the instant case as shall be shown later.) Act No. 1582, with its subsequent 4
amendments were later on incorporated Chapter 18 of the Administrative Code. Under the Philippine Legislature,
several amendments were made through the passage of Acts Nos. 2310, 3336 and 3387. (Again, of these last 3
amendments, only Act No. 3587 has pertinent to the case at bar as shall be seen later.) During the time of the
Commonwealth, the National Assembly passed Commonwealth Act No. 23 and later on enacted Commonwealth Act
No. 357, which was the law enforced until June 1947, when the Revised Election Code was approved. Included as its
basic provisions are the provisions of Commonwealth Acts Nos. 233, 357, 605, 666, 657. The present Code was
further amended by Republic Acts Nos. 599, 867, 2242 and again, during the session of Congress in 1960, amended
by Rep. Acts Nos. 3036 and 3038. In the history of our election law, the following should be noted:
Under Act 1582, Section 29, it was provided:
No public officer shall offer himself as a candidate for elections, nor shall he be eligible during the time that he holds
said public office to election at any municipal, provincial or Assembly election, except for reelection to the position
which he may be holding, and no judge of the First Instance, justice of the peace, provincial fiscal, or officer or
employee of the Philippine Constabulary or of the Bureau of Education shall aid any candidate or influence in any
manner or take part in any municipal, provincial, or Assembly election under the penalty of being deprived of his
office and being disqualified to hold any public office whatsoever for a term of 5 year: Provide, however, That the
foregoing provisions shall not be construe to deprive any person otherwise qualified of the right to vote it any
election." (Enacted January 9, 1907; Took effect on January 15, 1907.)
Then, in Act 1709, Sec. 6, it was likewise provided:
. . . No judge of the First Instance, Justice of the peace provincial fiscal or officer or employee of the Bureau of
Constabulary or of the Bureau of Education shall aid any candidate or influence in any manner to take part in any
municipal provincial or Assembly election. Any person violating the provisions of this section shall be deprived of his
office or employment and shall be disqualified to hold any public office or employment whatever for a term of 5
years, Provided, however, that the foregoing provisions shall not be construed to deprive any person otherwise
qualified of the right to vote at any election. (Enacted on August 31, 1907; Took effect on September 15, 1907.)
Again, when the existing election laws were incorporated in the Administrative Code on March 10, 1917, the
provisions in question read:
SEC. 449. Persons prohibited from influencing elections. — No judge of the First Instance, justice of the peace, or
treasurer, fiscal or assessor of any province and no officer or employee of the Philippine Constabulary or any Bureau
or employee of the classified civil service, shall aid any candidate or exert influence in any manner in any election or
take part therein otherwise than exercising the right to vote. (Emphasis supplied)
After the Administrative Code, the next pertinent legislation was Act No. 3387. This Act reads:
SEC. 2636. Officers and employees meddling with the election. — Any judge of the First Instance, justice of the
peace, treasurer, fiscal or assessor of any province, any officer or employee of the Philippine Constabulary or of the
police of any municipality, or any officer or employee of any Bureau of the classified civil service, who aids any
candidate or violated in any manner the provisions of this section or takes part in any election otherwise by
exercising the right to vote, shall be punished by a fine of not less than P100.00 nor more than P2,000.00, or by
imprisonment for not less than 2 months nor more than 2 years, and in all cases by disqualification from public office
and deprivation of the right of suffrage for a period of 5 years. (Approved December 3, 1927.) (Emphasis supplied.)
Subsequently, however, Commonwealth Act No. 357 was enacted on August 22, 1938. This law provided in Section
48:
SEC. 48. Active Interventation of Public Officers and Employees. — No justice, judge, fiscal, treasurer or assessor of
any province, no officer or employee of the Army, the Constabulary of the national, provincial, municipal or rural
police, and no classified civil service officer or employee shall aid any candidate, nor exert influence in any manner in
any election nor take part therein, except to vote, if entitled thereto, or to preserve public peace, if he is a peace
officer.
This last law was the legislation from which Section 54 of the Revised Election Code was taken.
It will thus be observed from the foregoing narration of the legislative development or history of Section 54 of the
Revised Election Code that the first omission of the word "justice of the peace" was effected in Section 48 of
Commonwealth Act No. 357 and not in the present code as averred by defendant-appellee. Note carefully, however,
that in the two instances when the words "justice of the peace" were omitted (in Com. Act No. 357 and Rep. Act No.
180), the word "judge" which preceded in the enumeration did not carry the qualification "of the First Instance." In
other words, whenever the word "judge" was qualified by the phrase "of the First Instance", the words "justice of
the peace" would follow; however, if the law simply said "judge," the words "justice of the peace" were omitted.
The above-mentioned pattern of congressional phraseology would seem to justify the conclusion that when the
legislature omitted the words "justice of the peace" in Rep. Act No. 180, it did not intend to exempt the said officer
from its operation. Rather, it had considered the said officer as already comprehended in the broader term "judge".
It is unfortunate and regrettable that the last World War had destroyed congressional records which might have
offered some explanation of the discussion of Com. Act No. 357 which legislation, as indicated above, has eliminated
for the first time the words "justice of the peace." Having been completely destroyed, all efforts to seek deeper and
additional clarifications from these records proved futile. Nevertheless, the conclusions drawn from the historical
background of Rep. Act No. 180 is sufficiently borne out by reason hid equity.
Defendant further argues that he cannot possibly be among the officers enumerated in Section 54 inasmuch as
under that said section, the word "judge" is modified or qualified by the phrase "of any province." The last
mentioned phrase, defendant submits, cannot then refer to a justice of the peace since the latter is not an officer of
a province but of a municipality.
Defendant's argument in that respect is too strained. If it is true that the phrase "of any province" necessarily
removes justices of the peace from the enumeration for the reason that they are municipal and not provincial
officials, then the same thing may be said of the Justices of the Supreme Court and of the Court of Appeals. They are
national officials. Yet, can there be any doubt that Justices of the Supreme Court and of the Court of Appeals are not
included in the prohibition? The more sensible and logical interpretation of the said phrase is that it qualifies fiscals,
treasurers and assessors who are generally known as provincial officers.
The rule of "casus omisus pro omisso habendus est" is likewise invoked by the defendant-appellee. Under the said
rule, a person, object or thing omitted from an enumeration must be held to have been omitted intentionally. If that
rule is applicable to the present, then indeed, justices of the peace must be held to have been intentionally and
deliberately exempted from the operation of Section 54 of the Revised Election Code.
The rule has no applicability to the case at bar. The maxim "casus omisus" can operate and apply only if and when
the omission has been clearly established. In the case under consideration, it has already been shown that the
legislature did not exclude or omit justices of the peace from the enumeration of officers precluded from engaging in
partisan political activities. Rather, they were merely called by another term. In the new law, or Section 54 of the
Revised Election Code, justices of the peace were just called "judges."
In insisting on the application of the rule of "casus omisus" to this case, defendant-appellee cites authorities to the
effect that the said rule, being restrictive in nature, has more particular application to statutes that should be strictly
construed. It is pointed out that Section 54 must be strictly construed against the government since proceedings
under it are criminal in nature and the jurisprudence is settled that penal statutes should be strictly interpreted
against the state.
Amplifying on the above argument regarding strict interpretation of penal statutes, defendant asserts that the spirit
of fair play and due process demand such strict construction in order to give "fair warning of what the law intends to
do, if a certain line is passed, in language that the common world will understand." (Justice Holmes, in McBoyle v.
U.S., 283 U.S. 25, L. Ed. 816).
The application of the rule of "casus omisus" does not proceed from the mere fact that a case is criminal in nature,
but rather from a reasonable certainty that a particular person, object or thing has been omitted from a legislative
enumeration. In the present case, and for reasons already mentioned, there has been no such omission. There has
only been a substitution of terms.
The rule that penal statutes are given a strict construction is not the only factor controlling the interpretation of such
laws; instead, the rule merely serves as an additional, single factor to be considered as an aid in determining the
meaning of penal laws. This has been recognized time and again by decisions of various courts. (3 Sutherland,
Statutory Construction, p. 56.) Thus, cases will frequently be found enunciating the principle that the intent of the
legislature will govern (U.S. vs. Corbet, 215 U.S. 233). It is to be noted that a strict construction should not be
permitted to defeat the policy and purposes of the statute (Ash Sheep Co. v. U.S., 252 U.S. 159). The court may
consider the spirit and reason of a statute, as in this particular instance, where a literal meaning would lead to
absurdity, contradiction, injustice, or would defeat the clear purpose of the law makers (Crawford, Interpretation of
Laws, Sec. 78, p. 294). A Federal District court in the U.S. has well said:
The strict construction of a criminal statute does not mean such construction of it as to deprive it of the meaning
intended. Penal statutes must be construed in the sense which best harmonizes with their intent and purpose. (U.S.
v. Betteridge 43 F. Supp. 53, 56, cited in 3 Sutherland Statutory Construction 56.)
As well stated by the Supreme Court of the United States, the language of criminal statutes, frequently, has been
narrowed where the letter includes situations inconsistent with the legislative plan (U.S. v. Katz, 271 U.S. 354; See
also Ernest Brunchen, Interpretation of the Written Law (1915) 25 Yale L.J. 129.)
Another reason in support of the conclusion reached herein is the fact that the purpose of the statute is to enlarge
the officers within its purview. Justices of the Supreme Court, the Court of Appeals, and various judges, such as the
judges of the Court of Industrial Relations, judges of the Court of Agrarian Relations, etc., who were not included in
the prohibition under the old statute, are now within its encompass. If such were the evident purpose, can the
legislature intend to eliminate the justice of the peace within its orbit? Certainly not. This point is fully explained in
the brief of the Solicitor General, to wit:
On the other hand, when the legislature eliminated the phrases "Judge of First Instance" and justice of the peace",
found in Section 449 of the Revised Administrative Code, and used "judge" in lieu thereof, the obvious intention was
to include in the scope of the term not just one class of judges but all judges, whether of first Instance justices of the
peace or special courts, such as judges of the Court of Industrial Relations. . . . .
The weakest link in our judicial system is the justice of the peace court, and to so construe the law as to allow a
judge thereof to engage in partisan political activities would weaken rather than strengthen the judiciary. On the
other hand, there are cogent reasons found in the Revised Election Code itself why justices of the peace should be
prohibited from electioneering. Along with Justices of the appellate courts and judges of the Court of First Instance,
they are given authority and jurisdiction over certain election cases (See Secs. 103, 104, 117-123). Justices of the
peace are authorized to hear and decided inclusion and exclusion cases, and if they are permitted to campaign for
candidates for an elective office the impartiality of their decisions in election cases would be open to serious doubt.
We do not believe that the legislature had, in Section 54 of the Revised Election Code, intended to create such an
unfortunate situation. (pp. 708, Appellant's Brief.)
Another factor which fortifies the conclusion reached herein is the fact that the administrative or executive
department has regarded justices of the peace within the purview of Section 54 of the Revised Election Code.
In Tranquilino O. Calo, Jr. v. The Executive Secretary, the Secretary of Justice, etc. (G.R. No. L-12601), this Court did
not give due course to the petition for certiorari and prohibition with preliminary injunction against the respondents,
for not setting aside, among others, Administrative Order No. 237, dated March 31, 1957, of the President of the
Philippines, dismissing the petitioner as justice of the peace of Carmen, Agusan. It is worthy of note that one of the
causes of the separation of the petitioner was the fact that he was found guilty in engaging in electioneering,
contrary to the provisions of the Election Code.
Defendant-appellee calls the attention of this Court to House Bill No. 2676, which was filed on January 25, 1955. In
that proposed legislation, under Section 56, justices of the peace are already expressly included among the officers
enjoined from active political participation. The argument is that with the filing of the said House Bill, Congress
impliedly acknowledged that existing laws do not prohibit justices of the peace from partisan political activities.
The argument is unacceptable. To begin with, House Bill No. 2676 was a proposed amendment to Rep. Act No. 180
as a whole and not merely to section 54 of said Rep. Act No. 180. In other words, House Bill No. 2676 was a proposed
re-codification of the existing election laws at the time that it was filed. Besides, the proposed amendment, until it
has become a law, cannot be considered to contain or manifest any legislative intent. If the motives, opinions, and
the reasons expressed by the individual members of the legislature even in debates, cannot be properly taken into
consideration in ascertaining the meaning of a statute (Crawford, Statutory Construction, Sec. 213, pp. 375-376), a
fortiori what weight can We give to a mere draft of a bill.
On law reason and public policy, defendant-appellee's contention that justices of the peace are not covered by the
injunction of Section 54 must be rejected. To accept it is to render ineffective a policy so clearly and emphatically laid
down by the legislature.
Our law-making body has consistently prohibited justices of the peace from participating in partisan politics. They
were prohibited under the old Election Law since 1907 (Act No. 1582 and Act No. 1709). Likewise, they were so
enjoined by the Revised Administrative Code. Another which expressed the prohibition to them was Act No. 3387,
and later, Com. Act No. 357.
Lastly, it is observed that both the Court of Appeals and the trial court applied the rule of "expressio unius, est
exclusion alterius" in arriving at the conclusion that justices of the peace are not covered by Section 54. Said the
Court of Appeals: "Anyway, guided by the rule of exclusion, otherwise known as expressio unius est exclusion
alterius, it would not be beyond reason to infer that there was an intention of omitting the term "justice of the peace
from Section 54 of the Revised Election Code. . . ."
The rule has no application. If the legislature had intended to exclude a justice of the peace from the purview of
Section 54, neither the trial court nor the Court of Appeals has given the reason for the exclusion. Indeed, there
appears no reason for the alleged change. Hence, the rule of expressio unius est exclusion alterius has been
erroneously applied. (Appellant's Brief, p. 6.)
Where a statute appears on its face to limit the operation of its provisions to particular persons or things by
enumerating them, but no reason exists why other persons or things not so enumerated should not have been
included, and manifest injustice will follow by not so including them, the maxim expressio unius est exclusion
alterius, should not be invoked. (Blevins v. Mullally 135 p. 307, 22 Cal. App. 519.) .
FOR THE ABOVE REASONS, the order of dismissal entered by the trial court should be set aside and this case is
remanded for trial on the merits.
6. EACH TO EACH
G.R. No. 131457 August 19, 1999
HON. CARLOS O. FORTICH, PROVINCIAL GOVERNOR OF BUKIDNON, HON. REY B. BAULA, MUNICIPAL MAYOR OF
SUMILAO, BUKIDNON, NQSR MANAGEMENT AND DEVELOPMENT CORPORATION, petitioners,
vs.
HON. RENATO C. CORONA, DEPUTY EXECUTIVE SECRETARY, HON. ERNESTO D. GARILAO, SECRETARY OF THE
DEPARTMENT OF AGRARIAN REFORM, respondents.
RESOLUTION
YNARES-SANTIAGO, J.:
This resolves the pending incidents before us, namely, respondents' and intervenors' separate motions for
reconsideration of our Resolution dated November 17, 1998, as well as their motions to refer this case to this Court
En banc.
Respondents and intervenors jointly argue, in fine, that our Resolution dated November 17, 1998, wherein we voted
two-two on the separate motions for reconsideration of our earlier Decision or April 24, 1998, as a result of which
the Decision was deemed affirmed, did not effectively resolve the said motions for reconsideration inasmuch as the
matter should have been referred to the Court sitting en banc, pursuant to Article VIII, Section 4(3) of the
Constitution. Respondents and intervenors also assail our Resolution dated January 27, 1999, wherein we noted
without action the intervenors' "Motion For Reconsideration With Motion To Refer The Matter To The Court En
Banc" filed on December 3, 1998, on the following considerations, to wit:
the movants have no legal personality to further seek redress before the Court after their motion for leave to
intervene in this case was denied in the April 24, 1998 Decision. Their subsequent motion for reconsideration of the
said decision, with a prayer to resolve the motion to the Court En Banc, was also denied in the November 17, 1998
Resolution of the Court. Besides, their aforesaid motion of December 3, 1998 is in the nature of a second motion for
reconsideration which is a forbidden motion (Section 2, Rule 52 in relation to Section 4, Rule 56 of the 1997 Rules of
Civil Procedure). The impropriety of movants' December 3, 1998 motion becomes all the more glaring considering
that all the respondents in this case did not anymore join them (movants) ill seeking a reconsideration of the
November 17, 1998 Resolution.1
Subsequently, respondents, through the Office of the Solicitor General, filed their "Motion For Reconsideration Of
The Resolution Dated November 17, 1998 And For Referral Of The Case To This Honorable Court En Banc (With
Urgent Prayer For Issuance Of A Restraining Order)" on December 3, 1998, accompanied by a "Manifestation and
Motion"2 and a copy of the Registered Mail Bill3 evidencing filing of the said motion for reconsideration to this Court
by registered mail.1âwphi1.nêt
In their respective motions for reconsideration, both respondents and intervenors pray that this case be referred to
this Court en banc. They contend that inasmuch as their earlier motions for reconsideration (of the Decision dated
April 24, 1998) were resolved by a vote of two-two, the required number to carry a decision, i.e., three, was not met.
Consequently, the case should be referred to and be decided by this Court en banc, relying on the following
constitutional provision:
Cases or matters heard by a division shall be decided or resolved with the concurrence of a majority of the Members
who actually took part in the deliberations on the issues in the case and voted thereon, and in no case without the
concurrence of at least three of such Members. When the required number is not obtained, the case shall be
decided en banc: Provided, that no doctrine or principle of law laid down by the Court in a decision rendered en
banc or in division may be modified or reversed except by the Court sitting en banc.4
A careful reading of the above constitutional provision, however, reveals the intention of the framers to draw a
distinction between cases, on the one hand, and matters, on the other hand, such that cases are "decided" while
matters, which include motions, are "resolved". Otherwise put, the word "decided" must refer to "cases"; while the
word "resolved" must refer to "matters", applying the rule of reddendo singula singulis. This is true not only in the
interpretation of the above-quoted Article VIII, Section 4(3), but also of the other provisions of the Constitution
where these words appear.5
With the aforesaid rule of construction in mind, it is clear that only cases are referred to the Court en banc for
decision whenever the required number of votes is not obtained. Conversely, the rule does not apply where, as in
this case, the required three votes is not obtained in the resolution of a motion for reconsideration. Hence, the
second sentence of the aforequoted provision speaks only of "case" and not "matter". The reason is simple. The
above-quoted Article VIII, Section 4(3) pertains to the disposition of cases by a division. If there is a tie in the voting,
there is no decision. The only way to dispose of the case then is to refer it to the Court en banc. On the other hand, if
a case has already been decided by the division and the losing party files a motion for reconsideration, the failure of
the division to resolve the motion because of a tie in the voting does not leave the case undecided. There is still the
decision which must stand in view of the failure of the members of the division to muster the necessary vote for its
reconsideration. Quite plainly, if the voting results in a tie, the motion for reconsideration is lost. The assailed
decision is not reconsidered and must therefore be deemed affirmed. Such was the ruling of this Court in the
Resolution of November 17, 1998.
It is the movants' further contention in support of their plea for the referral of this case to the Court en banc that the
issues submitted in their separate motions are of first impression. In the opinion penned by Mr. Justice Antonio M.
Martinez during the resolution of the motions for reconsideration on November 17, 1998, the following was
expressed:
Regrettably, the issues presented before us by the movants are matters of no extraordinary import to merit the
attention of the Court En Banc. Specifically, the issue of whether or not the power of the local government units to
reclassify lands is subject to the approval of the DAR is no longer novel, this having been decided by this Court in the
case of Province of Camarines Sur, et al. vs. Court of Appeals wherein we held that local government units need not
obtain the approval of the DAR to convert or reclassify lands from agricultural to non-agricultural use. The dispositive
portion of the Decision in the aforecited case states:
WHEREFORE, the petition is GRANTED and the questioned decision of the Court of Appeals is set aside insofar as it
(a) nullifies the trial court's order allowing the Province of Camarines Sur to take possession of private respondent's
property (b) orders the trial court to suspended the exportation proceedings; and (c) requires the Province of
Camarines Sur to obtain the approval of the Department of Agrarian Reform to convert or reclassify private
respondents' property from agricultural to non-agricultural use.
xxx xxx x x x(Emphasis supplied)
Moreover, the Decision sought to be reconsidered was arrived at by a unanimous vote of all five (5) members of the
Second Division of this Court, Stated otherwise, this Second Division is of the opinion that the matters raised by
movants are nothing new and do not deserve the consideration of the Court en banc. Thus, the participation of the
full Court in the resolution of movants' motions for reconsideration would be inappropriate.6
The contention, therefore, that our Resolution of November 17, 1998 did not dispose of the earlier motions for
reconsideration of the Decision dated April 24, 1998 is flawed. Consequently, the present motions for
reconsideration necessarily partake of the nature of a second motion for reconsideration which, according to the
clear and unambiguous language of Rule 56, Section 4, in relation to Rule 52, Section 2, of the 1997 Rules of Civil
Procedure, is prohibited.
True, there are exceptional cases when this Court may entertain a second motion for reconsideration, such as where
there are extraordinarily persuasive reasons. Even then, we have ruled that such second motions for reconsideration
must be filed with express leave of court first obtained.7 In this case, not only did movants fail to ask for prior leave
of court, but more importantly, they have been unable to show that there are exceptional reasons for us to give due
course to their second motions for reconsideration. Stripped of the arguments for referral of this incident to the
Court en banc, the motions subject of this resolution are nothing more but rehashes of the motions for
reconsideration which have been denied in the Resolution of November 17, 1998. To be sure, the allegations
contained therein have already been raised before and passed upon by this Court in the said Resolution.
The crux of the controversy is the validity of the "Win-Win" Resolution dated November 7, 1997. We maintain that
the same is void and of no legal effect considering that the March 29, 1996 decision of the Office of the President
had already become final and executory even prior to the filing of the motion for reconsideration which became the
basis of the said "Win-Win" Resolution. This ruling, quite understandably, sparked a litany of protestations on the
part of respondents and intervenors including entreaties for a liberal interpretation of the rules. The sentiment was
that notwithstanding its importance and far-reaching effects, the case was disposed of on a technicality. The
situation, however, is not as simple as what the movants purport it to be. While it may be true that on its face the
nullification of the "Win-Win" Resolution was grounded on a procedural rule pertaining to the reglementary period
to appeal or move for reconsideration, the underlying consideration therefor was the protection of the substantive
rights of petitioners. The succinct words of Mr. Justice Artemio V. Panganiban are quoted in the November 17, 1998
opinion of Mr. Justice Martinez, viz.: "Just as a losing party has the right to file an appeal within the prescribed
period, the winning party also has the correlative right to enjoy the finality of the resolution of his/her case."8
In other words, the finality of the March 29, 1996 OP Decision accordingly vested appurtenant rights to the land in
dispute on petitioners as well as on the people of Bukidnon and other parts of the country who stand to be
benefited by the development of the property. The issue in this case, therefore, is not a question of technicality but
of substance and merit.9
Before finally disposing of these pending matters, we feel it necessary to rule once and for all on the legal standing of
intervenors in this case. In their present motions, intervenors insist that they are real parties in interest inasmuch as
they have already been issued certificates of land ownership award, or CLOAs, and that while they are seasonal
farmworkers at the plantation, they have been identified by the DAR as qualified beneficiaries of the property. These
arguments are, however, nothing new as in fact they have already been raised in intervenors' earlier motion for
reconsideration of our April 24, 1998 Decision. Again as expressed in the opinion of Mr. Justice Martinez,
intervenors, who are admittedly not regular but seasonal farmworkers, have no legal or actual and substantive
interest over the subject land inasmuch as they have no right to own the land. Rather, their right is limited only to a
just share of the fruits of the land.10 Moreover, the "Win-Win" Resolution itself states that the qualified
beneficiaries have yet to be carefully and meticulously determined by the Department of Agrarian Reform.11 Absent
any definitive finding of the Department of Agrarian Reform, intervenors cannot as yet be deemed vested with
sufficient interest in the controversy as to be qualified to intervene in this case. Likewise, the issuance of the CLOA's
to them does not grant them the requisite standing in view of the nullity of the "Win-Win" Resolution. No legal rights
can emanate from a resolution that is null and void.
WHEREFORE, based on the foregoing, the following incidents, namely: intervenors' "Motion For Reconsideration
With Motion To Refer The Matter To The Court En Banc," dated December 3, 1998; respondents' "Motion For
Reconsideration Of The Resolution Dated November 17, 1998 And For Referral Of The Case To This Honorable Court
En Banc (With Urgent Prayer For Issuance Of A Restraining Order)," dated December 2, 1998; and intervenors'
"Urgent Omnibus Motion For The Supreme Court Sitting En Banc To Annul The Second Division's Resolution Dated 27
January 1999 And Immediately Resolve The 28 May 1998 Motion For Reconsideration Filed By The Intervenors,"
dated March 2, 1999; are all DENIED with FINALITY. No further motion, pleading, or paper will be entertained in this
case.
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:
. . .
. . .
(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:
. . .
. . .
(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:
(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. L-47745 April 15, 1988
JOSE S. AMADORA, LORETA A. AMADORA, JOSE A. AMADORA JR., NORMA A. YLAYA PANTALEON A. AMADORA, JOSE
A. AMADORA III, LUCY A. AMADORA, ROSALINDA A. AMADORA, PERFECTO A. AMADORA, SERREC A. AMADORA,
VICENTE A. AMADORA and MARIA TISCALINA A. AMADORA, petitioners
vs.
HONORABLE COURT OF APPEALS, COLEGIO DE SAN JOSE-RECOLETOS, VICTOR LLUCH SERGIO P. DLMASO JR.,
CELESTINO DICON, ANIANO ABELLANA, PABLITO DAFFON thru his parents and natural guardians, MR. and MRS.
NICANOR GUMBAN, and ROLANDO VALENCIA, thru his guardian, A. FRANCISCO ALONSO, respondents.
Jose S. Amadora & Associates for petitioners.
Padilla Law Office for respondents.
CRUZ, J.:
Like any prospective graduate, Alfredo Amadora was looking forward to the commencement exercises where he
would ascend the stage and in the presence of his relatives and friends receive his high school diploma. These
ceremonies were scheduled on April 16, 1972. As it turned out, though, fate would intervene and deny him that
awaited experience. On April 13, 1972, while they were in the auditorium of their school, the Colegio de San Jose-
Recoletos, a classmate, Pablito Damon, fired a gun that mortally hit Alfredo, ending all his expectations and his life as
well. The victim was only seventeen years old. 1
Daffon was convicted of homicide thru reckless imprudence . 2 Additionally, the herein petitioners, as the victim's
parents, filed a civil action for damages under Article 2180 of the Civil Code against the Colegio de San Jose-
Recoletos, its rector the high school principal, the dean of boys, and the physics teacher, together with Daffon and
two other students, through their respective parents. The complaint against the students was later dropped. After
trial, the Court of First Instance of Cebu held the remaining defendants liable to the plaintiffs in the sum of
P294,984.00, representing death compensation, loss of earning capacity, costs of litigation, funeral expenses, moral
damages, exemplary damages, and attorney's fees .3 On appeal to the respondent court, however, the decision was
reversed and all the defendants were completely absolved .4
In its decision, which is now the subject of this petition for certiorari under Rule 45 of the Rules of Court, the
respondent court found that Article 2180 was not applicable as the Colegio de San Jose-Recoletos was not a school
of arts and trades but an academic institution of learning. It also held that the students were not in the custody of
the school at the time of the incident as the semester had already ended, that there was no clear identification of
the fatal gun and that in any event the defendant, had exercised the necessary diligence in preventing the injury. 5
The basic undisputed facts are that Alfredo Amadora went to the San Jose-Recoletos on April 13, 1972, and while in
its auditorium was shot to death by Pablito Daffon, a classmate. On the implications and consequences of these
facts, the parties sharply disagree.
The petitioners contend that their son was in the school to show his physics experiment as a prerequisite to his
graduation; hence, he was then under the custody of the private respondents. The private respondents submit that
Alfredo Amadora had gone to the school only for the purpose of submitting his physics report and that he was no
longer in their custody because the semester had already ended.
There is also the question of the identity of the gun used which the petitioners consider important because of an
earlier incident which they claim underscores the negligence of the school and at least one of the private
respondents. It is not denied by the respondents that on April 7, 1972, Sergio Damaso, Jr., the dean of boys,
confiscated from Jose Gumban an unlicensed pistol but later returned it to him without making a report to the
principal or taking any further action .6 As Gumban was one of the companions of Daffon when the latter fired the
gun that killed Alfredo, the petitioners contend that this was the same pistol that had been confiscated from
Gumban and that their son would not have been killed if it had not been returned by Damaso. The respondents say,
however, that there is no proof that the gun was the same firearm that killed Alfredo.
Resolution of all these disagreements will depend on the interpretation of Article 2180 which, as it happens, is
invoked by both parties in support of their conflicting positions. The pertinent part of this article reads as follows:
Lastly, teachers or heads of establishments of arts and trades shall be liable for damages caused by their pupils and
students or apprentices so long as they remain in their custody.
Three cases have so far been decided by the Court in connection with the above-quoted provision, to wit: Exconde v.
Capuno 7 Mercado v. Court of Appeals, 8 and Palisoc v. Brillantes. 9 These will be briefly reviewed in this opinion for
a better resolution of the case at bar.
In the Exconde Case, Dante Capuno, a student of the Balintawak Elementary School and a Boy Scout, attended a Rizal
Day parade on instructions of the city school supervisor. After the parade, the boy boarded a jeep, took over its
wheel and drove it so recklessly that it turned turtle, resulting in the death of two of its passengers. Dante was found
guilty of double homicide with reckless imprudence. In the separate civil action flied against them, his father was
held solidarily liable with him in damages under Article 1903 (now Article 2180) of the Civil Code for the tort
committed by the 15-year old boy.
This decision, which was penned by Justice Bautista Angelo on June 29,1957, exculpated the school in an obiter
dictum (as it was not a party to the case) on the ground that it was riot a school of arts and trades. Justice J.B.L.
Reyes, with whom Justices Sabino Padilla and Alex Reyes concurred, dissented, arguing that it was the school
authorities who should be held liable Liability under this rule, he said, was imposed on (1) teachers in general; and
(2) heads of schools of arts and trades in particular. The modifying clause "of establishments of arts and trades"
should apply only to "heads" and not "teachers."
Exconde was reiterated in the Mercado Case, and with an elaboration. A student cut a classmate with a razor blade
during recess time at the Lourdes Catholic School in Quezon City, and the parents of the victim sued the culprits
parents for damages. Through Justice Labrador, the Court declared in another obiter (as the school itself had also not
been sued that the school was not liable because it was not an establishment of arts and trades. Moreover, the
custody requirement had not been proved as this "contemplates a situation where the student lives and boards with
the teacher, such that the control, direction and influences on the pupil supersede those of the parents." Justice
J.B.L. Reyes did not take part but the other members of the court concurred in this decision promulgated on May 30,
1960.
In Palisoc vs. Brillantes, decided on October 4, 1971, a 16-year old student was killed by a classmate with fist blows in
the laboratory of the Manila Technical Institute. Although the wrongdoer — who was already of age — was not
boarding in the school, the head thereof and the teacher in charge were held solidarily liable with him. The Court
declared through Justice Teehankee:
The phrase used in the cited article — "so long as (the students) remain in their custody" — means the protective
and supervisory custody that the school and its heads and teachers exercise over the pupils and students for as long
as they are at attendance in the school, including recess time. There is nothing in the law that requires that for such
liability to attach, the pupil or student who commits the tortious act must live and board in the school, as
erroneously held by the lower court, and the dicta in Mercado (as well as in Exconde) on which it relied, must now
be deemed to have been set aside by the present decision.
This decision was concurred in by five other members, 10 including Justice J.B.L. Reyes, who stressed, in answer to
the dissenting opinion, that even students already of age were covered by the provision since they were equally in
the custody of the school and subject to its discipline. Dissenting with three others,11 Justice Makalintal was for
retaining the custody interpretation in Mercado and submitted that the rule should apply only to torts committed by
students not yet of age as the school would be acting only in loco parentis.
In a footnote, Justice Teehankee said he agreed with Justice Reyes' dissent in the Exconde Case but added that "since
the school involved at bar is a non-academic school, the question as to the applicability of the cited codal provision
to academic institutions will have to await another case wherein it may properly be raised."
This is the case.
Unlike in Exconde and Mercado, the Colegio de San Jose-Recoletos has been directly impleaded and is sought to be
held liable under Article 2180; and unlike in Palisoc, it is not a school of arts and trades but an academic institution of
learning. The parties herein have also directly raised the question of whether or not Article 2180 covers even
establishments which are technically not schools of arts and trades, and, if so, when the offending student is
supposed to be "in its custody."
After an exhaustive examination of the problem, the Court has come to the conclusion that the provision in question
should apply to all schools, academic as well as non-academic. Where the school is academic rather than technical or
vocational in nature, responsibility for the tort committed by the student will attach to the teacher in charge of such
student, following the first part of the provision. This is the general rule. In the case of establishments of arts and
trades, it is the head thereof, and only he, who shall be held liable as an exception to the general rule. In other
words, teachers in general shall be liable for the acts of their students except where the school is technical in nature,
in which case it is the head thereof who shall be answerable. Following the canon of reddendo singula singulis
"teachers" should apply to the words "pupils and students" and "heads of establishments of arts and trades" to the
word "apprentices."
The Court thus conforms to the dissenting opinion expressed by Justice J.B.L. Reyes in Exconde where he said in part:
I can see no sound reason for limiting Art. 1903 of the Old Civil Code to teachers of arts and trades and not to
academic ones. What substantial difference is there between them insofar as concerns the proper supervision and
vice over their pupils? It cannot be seriously contended that an academic teacher is exempt from the duty of
watching that his pupils do not commit a tort to the detriment of third Persons, so long as they are in a position to
exercise authority and Supervision over the pupil. In my opinion, in the phrase "teachers or heads of establishments
of arts and trades" used in Art. 1903 of the old Civil Code, the words "arts and trades" does not qualify "teachers"
but only "heads of establishments." The phrase is only an updated version of the equivalent terms "preceptores y
artesanos" used in the Italian and French Civil Codes.
If, as conceded by all commentators, the basis of the presumption of negligence of Art. 1903 in some culpa in
vigilando that the parents, teachers, etc. are supposed to have incurred in the exercise of their authority, it would
seem clear that where the parent places the child under the effective authority of the teacher, the latter, and not the
parent, should be the one answerable for the torts committed while under his custody, for the very reason/that the
parent is not supposed to interfere with the discipline of the school nor with the authority and supervision of the
teacher while the child is under instruction. And if there is no authority, there can be no responsibility.
There is really no substantial distinction between the academic and the non-academic schools insofar as torts
committed by their students are concerned. The same vigilance is expected from the teacher over the students
under his control and supervision, whatever the nature of the school where he is teaching. The suggestion in the
Exconde and Mercado Cases is that the provision would make the teacher or even the head of the school of arts and
trades liable for an injury caused by any student in its custody but if that same tort were committed in an academic
school, no liability would attach to the teacher or the school head. All other circumstances being the same, the
teacher or the head of the academic school would be absolved whereas the teacher and the head of the non-
academic school would be held liable, and simply because the latter is a school of arts and trades.
The Court cannot see why different degrees of vigilance should be exercised by the school authorities on the basis
only of the nature of their respective schools. There does not seem to be any plausible reason for relaxing that
vigilance simply because the school is academic in nature and for increasing such vigilance where the school is non-
academic. Notably, the injury subject of liability is caused by the student and not by the school itself nor is it a result
of the operations of the school or its equipment. The injury contemplated may be caused by any student regardless
of the school where he is registered. The teacher certainly should not be able to excuse himself by simply showing
that he is teaching in an academic school where, on the other hand, the head would be held liable if the school were
non-academic.
These questions, though, may be asked: If the teacher of the academic school is to be held answerable for the torts
committed by his students, why is it the head of the school only who is held liable where the injury is caused in a
school of arts and trades? And in the case of the academic or non- technical school, why not apply the rule also to
the head thereof instead of imposing the liability only on the teacher?
The reason for the disparity can be traced to the fact that historically the head of the school of arts and trades
exercised a closer tutelage over his pupils than the head of the academic school. The old schools of arts and trades
were engaged in the training of artisans apprenticed to their master who personally and directly instructed them on
the technique and secrets of their craft. The head of the school of arts and trades was such a master and so was
personally involved in the task of teaching his students, who usually even boarded with him and so came under his
constant control, supervision and influence. By contrast, the head of the academic school was not as involved with
his students and exercised only administrative duties over the teachers who were the persons directly dealing with
the students. The head of the academic school had then (as now) only a vicarious relationship with the students.
Consequently, while he could not be directly faulted for the acts of the students, the head of the school of arts and
trades, because of his closer ties with them, could be so blamed.
It is conceded that the distinction no longer obtains at present in view of the expansion of the schools of arts and
trades, the consequent increase in their enrollment, and the corresponding diminution of the direct and personal
contract of their heads with the students. Article 2180, however, remains unchanged. In its present state, the
provision must be interpreted by the Court according to its clear and original mandate until the legislature, taking
into account the charges in the situation subject to be regulated, sees fit to enact the necessary amendment.
The other matter to be resolved is the duration of the responsibility of the teacher or the head of the school of arts
and trades over the students. Is such responsibility co-extensive with the period when the student is actually
undergoing studies during the school term, as contended by the respondents and impliedly admitted by the
petitioners themselves?
From a reading of the provision under examination, it is clear that while the custody requirement, to repeat Palisoc
v. Brillantes, does not mean that the student must be boarding with the school authorities, it does signify that the
student should be within the control and under the influence of the school authorities at the time of the occurrence
of the injury. This does not necessarily mean that such, custody be co-terminous with the semester, beginning with
the start of classes and ending upon the close thereof, and excluding the time before or after such period, such as
the period of registration, and in the case of graduating students, the period before the commencement exercises. In
the view of the Court, the student is in the custody of the school authorities as long as he is under the control and
influence of the school and within its premises, whether the semester has not yet begun or has already ended.
It is too tenuous to argue that the student comes under the discipline of the school only upon the start of classes
notwithstanding that before that day he has already registered and thus placed himself under its rules. Neither
should such discipline be deemed ended upon the last day of classes notwithstanding that there may still be certain
requisites to be satisfied for completion of the course, such as submission of reports, term papers, clearances and
the like. During such periods, the student is still subject to the disciplinary authority of the school and cannot
consider himself released altogether from observance of its rules.
As long as it can be shown that the student is in the school premises in pursuance of a legitimate student objective,
in the exercise of a legitimate student right, and even in the enjoyment of a legitimate student right, and even in the
enjoyment of a legitimate student privilege, the responsibility of the school authorities over the student continues.
Indeed, even if the student should be doing nothing more than relaxing in the campus in the company of his
classmates and friends and enjoying the ambience and atmosphere of the school, he is still within the custody and
subject to the discipline of the school authorities under the provisions of Article 2180.
During all these occasions, it is obviously the teacher-in-charge who must answer for his students' torts, in practically
the same way that the parents are responsible for the child when he is in their custody. The teacher-in-charge is the
one designated by the dean, principal, or other administrative superior to exercise supervision over the pupils in the
specific classes or sections to which they are assigned. It is not necessary that at the time of the injury, the teacher
be physically present and in a position to prevent it. Custody does not connote immediate and actual physical
control but refers more to the influence exerted on the child and the discipline instilled in him as a result of such
influence. Thus, for the injuries caused by the student, the teacher and not the parent shag be held responsible if the
tort was committed within the premises of the school at any time when its authority could be validly exercised over
him.
In any event, it should be noted that the liability imposed by this article is supposed to fall directly on the teacher or
the head of the school of arts and trades and not on the school itself. If at all, the school, whatever its nature, may
be held to answer for the acts of its teachers or even of the head thereof under the general principle of respondeat
superior, but then it may exculpate itself from liability by proof that it had exercised the diligence of a bonus
paterfamilias.
Such defense is, of course, also available to the teacher or the head of the school of arts and trades directly held to
answer for the tort committed by the student. As long as the defendant can show that he had taken the necessary
precautions to prevent the injury complained of, he can exonerate himself from the liability imposed by Article 2180,
which also states that:
The responsibility treated of in this article shall cease when the Persons herein mentioned prove that they observed
all the diligence of a good father of a family to prevent damages.
In this connection, it should be observed that the teacher will be held liable not only when he is acting in loco
parentis for the law does not require that the offending student be of minority age. Unlike the parent, who wig be
liable only if his child is still a minor, the teacher is held answerable by the law for the act of the student under him
regardless of the student's age. Thus, in the Palisoc Case, liability attached to the teacher and the head of the
technical school although the wrongdoer was already of age. In this sense, Article 2180 treats the parent more
favorably than the teacher.
The Court is not unmindful of the apprehensions expressed by Justice Makalintal in his dissenting opinion in Palisoc
that the school may be unduly exposed to liability under this article in view of the increasing activism among the
students that is likely to cause violence and resulting injuries in the school premises. That is a valid fear, to be sure.
Nevertheless, it should be repeated that, under the present ruling, it is not the school that will be held directly liable.
Moreover, the defense of due diligence is available to it in case it is sought to be held answerable as principal for the
acts or omission of its head or the teacher in its employ.
The school can show that it exercised proper measures in selecting the head or its teachers and the appropriate
supervision over them in the custody and instruction of the pupils pursuant to its rules and regulations for the
maintenance of discipline among them. In almost all cases now, in fact, these measures are effected through the
assistance of an adequate security force to help the teacher physically enforce those rules upon the students. Ms
should bolster the claim of the school that it has taken adequate steps to prevent any injury that may be committed
by its students.
A fortiori, the teacher himself may invoke this defense as it would otherwise be unfair to hold him directly
answerable for the damage caused by his students as long as they are in the school premises and presumably under
his influence. In this respect, the Court is disposed not to expect from the teacher the same measure of responsibility
imposed on the parent for their influence over the child is not equal in degree. Obviously, the parent can expect
more obedience from the child because the latter's dependence on him is greater than on the teacher. It need not
be stressed that such dependence includes the child's support and sustenance whereas submission to the teacher's
influence, besides being coterminous with the period of custody is usually enforced only because of the students'
desire to pass the course. The parent can instill more las discipline on the child than the teacher and so should be
held to a greater accountability than the teacher for the tort committed by the child.
And if it is also considered that under the article in question, the teacher or the head of the school of arts and trades
is responsible for the damage caused by the student or apprentice even if he is already of age — and therefore less
tractable than the minor — then there should all the more be justification to require from the school authorities less
accountability as long as they can prove reasonable diligence in preventing the injury. After all, if the parent himself
is no longer liable for the student's acts because he has reached majority age and so is no longer under the former's
control, there is then all the more reason for leniency in assessing the teacher's responsibility for the acts of the
student.
Applying the foregoing considerations, the Court has arrived at the following conclusions:
1. At the time Alfredo Amadora was fatally shot, he was still in the custody of the authorities of Colegio de San Jose-
Recoletos notwithstanding that the fourth year classes had formally ended. It was immaterial if he was in the school
auditorium to finish his physics experiment or merely to submit his physics report for what is important is that he
was there for a legitimate purpose. As previously observed, even the mere savoring of the company of his friends in
the premises of the school is a legitimate purpose that would have also brought him in the custody of the school
authorities.
2. The rector, the high school principal and the dean of boys cannot be held liable because none of them was the
teacher-in-charge as previously defined. Each of them was exercising only a general authority over the student body
and not the direct control and influence exerted by the teacher placed in charge of particular classes or sections and
thus immediately involved in its discipline. The evidence of the parties does not disclose who the teacher-in-charge
of the offending student was. The mere fact that Alfredo Amadora had gone to school that day in connection with
his physics report did not necessarily make the physics teacher, respondent Celestino Dicon, the teacher-in-charge of
Alfredo's killer.
3. At any rate, assuming that he was the teacher-in-charge, there is no showing that Dicon was negligent in enforcing
discipline upon Daffon or that he had waived observance of the rules and regulations of the school or condoned their
non-observance. His absence when the tragedy happened cannot be considered against him because he was not
supposed or required to report to school on that day. And while it is true that the offending student was still in the
custody of the teacher-in-charge even if the latter was physically absent when the tort was committed, it has not
been established that it was caused by his laxness in enforcing discipline upon the student. On the contrary, the
private respondents have proved that they had exercised due diligence, through the enforcement of the school
regulations, in maintaining that discipline.
4. In the absence of a teacher-in-charge, it is probably the dean of boys who should be held liable especially in view
of the unrefuted evidence that he had earlier confiscated an unlicensed gun from one of the students and returned
the same later to him without taking disciplinary action or reporting the matter to higher authorities. While this was
clearly negligence on his part, for which he deserves sanctions from the school, it does not necessarily link him to the
shooting of Amador as it has not been shown that he confiscated and returned pistol was the gun that killed the
petitioners' son.
5. Finally, as previously observed, the Colegio de San Jose-Recoletos cannot be held directly liable under the article
because only the teacher or the head of the school of arts and trades is made responsible for the damage caused by
the student or apprentice. Neither can it be held to answer for the tort committed by any of the other private
respondents for none of them has been found to have been charged with the custody of the offending student or
has been remiss in the discharge of his duties in connection with such custody.
In sum, the Court finds under the facts as disclosed by the record and in the light of the principles herein announced
that none of the respondents is liable for the injury inflicted by Pablito Damon on Alfredo Amadora that resulted in
the latter's death at the auditorium of the Colegio de San Jose-Recoletos on April 13, 1972. While we deeply
sympathize with the petitioners over the loss of their son under the tragic circumstances here related, we
nevertheless are unable to extend them the material relief they seek, as a balm to their grief, under the law they
have invoked.
WHEREFORE, the petition is DENIED, without any pronouncement as to costs. It is so ordered.
7. Qualifying Terms; Last Antecedent

G.R. No. L-8782 April 28, 1956
MARCELINO B. FLORENTINO and LOURDES T. ZANDUETA, petitioners-appellants,

vs.
PHILIPPINE NATIONAL BANK, respondent-appellee.
Marcelino B. Florentino for appellants.

Ramon de los Reyes for appellee.
JUGO, J.:
The petitioners and appellants filed with the Court of First Instance of La Union a petition for mandamus against
respondent and appellee, Philippine National Bank, to compel it to accept the backpay certificate of petitioner
Marcelino B. Florentino issued to him by the Republic of the Philippines, to pay an indebtedness to the Philippine
National Bank in the sum of P6,800 secured by real estate mortgage on certain properties.
The case was submitted on an agreed statement of facts, which reads as follows:
Parties herein represented by counsel, have agreed on the following facts:
1. That the petitioners are indebted to the respondent bank in the amount of P6,800 plus interest, the same having
been incurred on January 2, 1953, which is due on January 2, 1954;.
2. That the said loan is secured by a mortgage of real properties;.
3. That the petitioner Marcelino B. Florentino is a holder of Backpay Acknowledgment No. 1721 dated October 6,
1954, in the amount of P22,896.33 by virtue of Republic Act No. 897 approved on June 20, 1953; and.
4. That on December 27, 1953, petitioners offered to pay their loan with the respondent bank with their backpay
certificate, but the respondent bank, on December 29, 1953, refused to accept petitioner's offer to pay the said
indebtedness with the latter's backpay certificate;
The legal provision involved is section 2 of Republic Act No. 879, which provides:
SEC. 2. Section two of the said Act (Republic Act 304) as amended by Republic Act Numbered Eight hundred, is
further amended to read:
SEC. 2. The Treasurer of the Philippines shall, upon application of all persons specified in section one hereof and
within one year from the approval of this Act, and under such rules and regulations as may be promulgated by the
Secretary of Finance, acknowledge and file requests for the recognition of the right of the salaries or wages as
provided in section one hereof, and notice of such acknowledgment shall be issued to the applicant which shall state
the total amount of such salaries or wages due the applicant, and certify that it shall be redeemed by the
Government of the Philippines within ten years from the date of their issuance without interest: Provided, That upon
application and subject to such rules and regulations as may be approved by the Secretary of Finance a certificate of
indebtedness may be issued by the Treasurer of the Philippines covering the whole or a part of the total salaries or
wages the right to which has been duly acknowledged and recognized, provided that the face value of such
certificate of indebtedness shall not exceed the amount that the applicant may need for the payment of (1)
obligations subsisting at the time of the approval of this amendatory Act for which the applicant may directly be
liable to the Government or to any of its branches or instrumentalities, or the corporations owned or control by the
Government, or to any citizen of the Philippines, or to any association or corporation organized under the laws of the
Philippines, who may be willing to accept the same for such settlement.
The question raised is whether the clause "who may be willing to accept the same for settlement" refers to all
antecedents "the Government, any of its branches or instrumentalities, the corporations owned or controlled by the
Government, etc.," or only the last antecedent "any citizen of the Philippines, or any association or corporation
organized under the laws of the Philippines.
The contention of the respondent-appellee, Philippine National Bank is that said qualifying clause refers to all the
antecedents, whereas the appellant's contention is that it refers only to the last antecedent.
Incidentally, it may be stated that one of the purposes of Republic Act No. 879 was to include veterans of the
Philippine Army and their wives or orphans among the beneficiaries of the Backpay Law, Republic Act No. 304, in
recognition of their great sacrifices in the resistance movement. as shown by the following quotation from the
Congressional Record:
. . . This particular bill, House Bill No. 1228, has been filed by this public servant for three objectives: First, to serve as
a source of financial aid to needy veterans, like crippled or disabled veterans, and to their wives or orphans.
Secondly, to give recognition to the sacrifices of those who joined the last war, and particularly to those who have
given their all for the cause of the last war. And thirdly, to eliminate the discrimination that has been committed
either through oversight, or on purpose, against the members of the Philippine Army, the Philippine Scouts, and
guerrillas or the so-called civilian volunteers, who joined the resistance movement. (Congressional Record No. 61,
2nd Congress, 4th Regular Session, May 6, 1953, page 74; quoted in Appellant's brief, pages 13-14.).
Grammatically, the qualifying clause refers only to the last antecedent; that is, "any citizen of the Philippines or any
association or corporation organized under the laws of the Philippines." It should be noted that there is a comma
before the words "or to any citizen, etc.," which separates said phrase from the preceding ones.
But even disregarding the grammatical construction, as done by the appellee, still there are cogent and powerful
reasons why the qualifying clause should be limited to the last antecedent. In the first place, to make the acceptance
of the backpay certificates obligatory upon any citizen, association, or corporation, which are not government
entities or owned or controlled by the government, would render section 2 of Republic Act No. 897 unconstitutional,
for it would amount to an impairment of the obligation of contracts by compelling private creditors to accept a sort
of promissory note payable within ten years with interest at a rate very much lower than the current or even the
legal one.
The other reason is found in the Congressional Record, which says:
Mr. TIBLE: On page 4, lines 17, between the words "this" and "act", insert the word "amendatory".
Mr. ZOSA: What is the purpose of the amendment?.
Mr. TIBLE: The purpose of the amendment is to clarify the provision of section 2. I believe, gentleman from Cebu,
that section 2, as amended in this amendatory bill permits the use of backpay certificates as payment for obligations
and indebtedness in favor of the government. (Congressional Record No. 64, 2nd Congress, 4th Regular Session May
11, 1953 page 41; quoted in Appellants brief, p. 15.).
As there would have been no need to permit by law the use of backpay certificates in payment of debts to private
persons, if they are willing to accept them, the permission necessarily refers to the Government of the Philippines,
its agencies or other instrumentalities, etc.
Another reason is that it is matter of general knowledge that many officials and employees of the Philippine
Government, who had served during the Japanese Occupation, have already received their backpay certificates and
used them for the payment of the obligations to the Government and its entities for debts incurred before the
approval of Republic Act No. 304.
The case of Diokno vs. Rehabilitation Finance Corporation, 91 Phil., 608 (July 11, 1952), is different from the present
one. In the Diokno case, his debt to the Rehabilitation Finance Corporation was incurred on January 27, 1950. He
brought the action on November 10, 1950, under the provisions of Republic Act No. 304 (section 2), which was
approved on June 18, 1948; that is, one year and almost eight months before Diokno could not avail himself of the
provisions of section 2 of Act No. 304, because said section provides that the application for recognition of backpay
must have been filed within one year after the approval of said Act No. 304, and the debt must be subsisting at the
time of said approval, Diokno having incurred the debt on January 27, 1950, and brought action on November 10,
1950. It was, therefore, discretionary in the Diokno case for the Rehabilitation Finance Corporation to accept or not
his backpay certificate in payment.
The Secretary of Justice, in his Opinion No. 226, series of 1948, held that the phrase "who may be willing to accept
the same for such settlement" qualifies only its immediate antecedent and does not apply to the Government or its
agencies.
The appellee asserts in his brief that the Secretary of Justice, in his letter of June 19, 1953, remarked that the clause
"who may be willing to accept such settlement" refers to all antecedents, including the Government and its agencies.
We are not impressed with this observation of the Secretary, for we believe that his Opinion No. 226, series of 1948,
correct for the reasons we have stated above.
In the present case, Marcelino B. Florentino incurred his debt to the Philippine National Bank on January 2, 1953;
hence, the obligation was subsisting when the Amendatory Act No. 897 was approved. Consequently, the present
case falls squarely under the provisions of section 2 of the Amendatory Act No. 897.
In view of the foregoing, the decision appealed from is reversed, and the appellee is ordered to accept the backpay
certificate above mentioned of the appellant, Marcelino B. Florentino, in payment of his above cited debt to the
appellee, without interest from December 27, 1953, the date when he offered said backpay certificate in payment.
Without pronouncement as to costs. It is ordered.
G.R. No. 78585 July 5, 1989
JOSE ANTONIO MAPA, petitioner,

vs.
HON. JOKER ARROYO, in his Capacity as Executive Secretary, and LABRADOR DEVELOPMENT CORPORATION,
respondents.
Francisco T. Mamaug for petitioner.
Emiliano S. Samson for private respondent.
REGALADO, J.:
We are called upon once again, in this special civil action for certiorari, for a pronouncement as to whether or not
there has been grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the executive
branch of Government, particularly in the adjudication of a controversy originally commenced in one of its
regulatory agencies.
Petitioner herein seeks the reversal of the decision of the Office of the President, rendered by the Deputy Executive
Secretary on April 24,1987, 1 which dismissed his appeal from the resolution of the Commission Proper, Human
Settlements Regulatory Commission (HSRC, for short), promulgated on January 10, 1986 and affirming the decision
of July 3, 1985 of the Office of Adjudication and Legal Affairs (OAALA, for brevity) of HSRC. Petitioner avers that
public respondent "gravely transcended the sphere of his discretion" in finding that Presidential Decree No. 957 is
inapplicable to the contracts to sell involved in this case and in consequently dismissing the same. 2
The established facts on which the assailed decision is based are set out therein as follows:
Records disclose that, on September 18, 1975, appellant Jose Antonio Mapa and appellee Labrador Development
Corporation (Labrador, for short), owner/developer of the Barangay Hills Subdivision in Antipolo, Rizal, entered into
two contracts to sell over lots 12 and 13 of said subdivision. On different months in 1976, they again entered into
two similar contracts involving lots 15 and 16 in the same subdivision. Under said contracts, Mapa undertook to
make a total monthly installment of P2,137.54 over a period of ten (10) years. Mapa, however, defaulted in the
payment thereof starting December 1976, prompting Labrador to send to the former a demand letter, dated May 5,
1977, giving him until May 18, 1977, within which to settle his unpaid installments for the 4 lots amounting to
P15,411.66, with a warning that non-payment thereof will result in the cancellation of the four (4) contracts. Despite
receipt of said letter on May 6,1977, Mapa failed to take any action thereon. Labrador subsequently wrote Mapa
another letter, dated June 15, 1982, which the latter received on June 21, 1982, reminding him of his total arrears
amounting to P180,065.27 and demanding payment within 5 days from receipt thereof, but which letter Mapa
likewise ignored. Thus, on August 16, 1982, Labrador sent Mapa a notarial cancellation of the four (4) contracts to
sell, which Mapa received on August 20, 1982. On September 10, 1982, however, Mapa's counsel sent Labrador a
letter calling Labrador's attention to, and demanding its compliance with, Clause 20 of the four (4) contracts to sell
which relates to Labrador's obligation to provide, among others, lighting/water facilities to subdivision lot buyers.
On September 10, 1982, Labrador issued a certification holding the implementation of the letter dated August 16,
1982 (re notarial cancellation) pending the complete development of road lot cul de sac within the properties of
Mapa at Barangay Hills Subdivision.' Thereafter on October 25,1982, Labrador sent Mapa a letter informing him 'that
the construction of road, sidewalk, curbs and gutters adjacent to Block 11 Barangay Hills Subdivision are already
completed' and further requesting Mapa to 'come to our office within five (5) days upon receipt of this letter to
settle your account.'
On December 10, 1982, Mapa tendered payment by means of a check in the amount of P 2,137.54, but Labrador
refused to accept payment for the reason that it was agreed 'that after the development of the cul de sac, he
(complainant) will pay in full the total amount due,' which Labrador computed at P 260,138.61. On December 14,
1982, Mapa wrote Labrador claiming that 'you have not complied with the requirements for water and light facilities
in lots 12, 13, 15 & 16 Block 2 of Barangay Hills Subdivision.' The following day, Mapa filed a complaint against
Labrador for the latter's neglect to put 1) a water system that meets the minimum standard as specified by HSRC,
and 2) electrical power supply. By way of relief, Mapa requested the HSRC to direct Labrador to provide the facilities
aforementioned, and to issue a cease and desist order enjoining Labrador from cancelling the contracts to sell.
After due hearing/investigation, which included an on-site inspection of the subdivision, OAALA, issued its decision
of July 3, 1985, dismissing the complaint and declaring that after the lapse of 5 years from complainant's default
respondent had every right to rescind the contract pursuant to Clause 7 thereof. . .
Per its resolution of January 10, 1986, the Commission Proper, HSRC, affirmed the aforesaid OAALA decision.3
It was petitioner's adamant submission in the administrative proceedings that the provisions of Presidential Decree
No. 957 4 and implementing rules form part of the contracts to sell executed by him and respondent corporation,
hence the obligations imposed therein had to be complied with by Labrador within the period provided. Since,
according to petitioner, Labrador failed to perform the aforementioned obligations, it is precluded from rescinding
the subject contracts to sell since petitioner consequently did not incur in delay on his part.
Such intransigent position of petitioner has not changed in the petition at bar and unyielding reliance is placed on
the provisions of Presidential Decree No. 957 and its implementing rules. The specific provisions of the Decree which
are persistently relied upon read:
SEC. 20. Time of Completion. — Every owner or developer shall construct and provide the facilities, improvements,
infrastructures and other forms of development, including water supply and lighting facilities, which are offered and
indicated in the approved subdivision or condominium plans, brochures, prospectus, printed matters letters or in any
form of advertisements, within one year from the date of the issuance of the license for the subdivision or
condominium project or such other period of time as may be fixed by the Authority.
SEC. 21. Sales Prior to Decree. — In cases of subdivision lots or condominium units sold or disposed of prior to the
effectivity of this Decree, it shall be incumbent upon the owner or developer of the subdivision or condominium
project to complete compliance with his or its obligations as provided in the preceding section within two years from
the date of this Decree unless otherwise extended by the Authority or unless an adequate performance bond is filed
in accordance with Section 6 hereof.
Failure of the owner or developer to comply with the obligations under this and the preceding provisions shall
constitute a violation punishable under Sections 38 and 39 of this Decree.
Rule V of the implementing rules, on the other hand, requires two (2) sources of electric power, two (2) deep-well
and pump sets with a specified capacity and two standard fire hose flows with a capacity of 175 gallons per minute.
5
The provision, in said contracts to sell which, according to petitioner, includes and incorporates the aforequoted
statutory provisions, is Clause 20 of said contracts which provides:
Clause 20. SUBDIVISION DEVELOPMENT — To insure the physical development of the subdivision, the SELLER hereby
obliges itself to provide the individual lot buyer with the following:
a) PAVED ROADS
b) UNDERGROUND DRAINAGE
c) CONCRETE CURBS AND GUTTERS
d) WATER SYSTEM
e) PARK AND OPEN SPACE
These improvements shall apply only to the portions of the subdivision which are for sale or have been sold. All
improvements except those requiring the services of a public utility company or the government shall be completed
within a period of three (3) years from date of this contract. Failure by the SELLER to reasonably comply with the
above schedule shall permit the BUYER/ S to suspend his monthly installments without any penalties or interest
charges until such time that these improvements shall have been made as scheduled.6
As recently reiterated, it is jurisprudentially settled that absent a clear, manifest and grave abuse of discretion
amounting to want of jurisdiction, the findings of the administrative agency on matters falling within its competence
will not be disturbed by the courts. 7 Specifically with respect to factual findings, they are accorded respect, if not
finality, because of the special knowledge and expertise gained by these tribunals from handling the specific matters
falling under their jurisdiction. Such factual findings may be disregarded only if they "are not supported by evidence;
where the findings are vitiated by fraud, imposition or collusion; where the procedure which led to the factual
findings is irregular; when palpable errors are committed; or when grave abuse of discretion, arbitrariness or
capriciousness is manifest." 8
A careful scrutiny of the records of the instant case reveals that the circumstances thereof do not fag under the
aforesaid excepted cases, with the findings duly supported by the evidence.
Petitioner's insistence on the applicability of Presidential Decree No. 957 must be rejected. Said decree was issued
on July 12, 1976 long after the execution of the contracts involved. Obviously and necessarily, what subsequently
were statutorily provided therein as obligations of the owner or developer could not have been intended by the
parties to be a part of their contracts. No intention to give restrospective application to the provisions of said decree
can be gathered from the language thereof. Section 20, in relation to Section 21, of the decree merely requires the
owner or developer to construct the facilities, improvements, infrastructures and other forms of development but
only such as are offered and indicated in the approved subdivision or condominium plans, brochures, prospectus,
printed matters, letters or in any form of advertisements. Other than what are provided in Clause 20 of the contract,
no further written commitment was made by the developer in this respect. To read into the contract the matters
desired by petitioner would have the law impose additional obligations on the parties to a contract executed before
that very law existed or was contemplated.
We further reject petitioner's strained and tenuous application of the so-called doctrine of last antecedent in the
interpretation of Section 20 and, correlatively, of Section 21. He would thereby have the enumeration of "facilities,
improvements, infrastructures and other forms of development" interpreted to mean that the demonstrative phrase
"which are offered and indicated in the approved subdivision plans, etc." refer only to "other forms of development"
and not to "facilities, improvements and infrastructures." While this subserves his purpose, such bifurcation whereby
the supposed adjectival phrase is set apart from the antecedent words, is illogical and erroneous. The complete and
applicable rule is ad proximum antecedens fiat relatio nisi impediatur sentencia. 9 Relative words refer to the
nearest antecedent, unless it be prevented by the context. In the present case, the employment of the word "and"
between "facilities, improvements, infrastructures" and "other forms of development," far from supporting
petitioner's theory, enervates it instead since it is basic in legal hermeneutics that "and" is not meant to separate
words but is a conjunction used to denote a joinder or union.
Thus, if ever there is any valid ground to suspend the monthly installments due from petitioner, it would only be
based on non-performance of the obligations provided in Clause 20 of the contract, particularly the alleged non-
construction of the cul-de-sac. But, even this is unavailing and is obviously being used only to justify petitioner's
default. The on-site inspection of the subdivision conducted by the OAALA and its subsequent report reveal that
Labrador substantially complied with its obligation. 10
Furthermore, the initial non-construction of the cul-de-sac, as private respondent Labrador explained, was because
petitioner Mapa requested the suspension of its construction since his intention was to purchase the adjoining lots
and thereafter enclose the same. 11 If these were not true, petitioner would have invoked that supposed default in
the first instance. As the OAALA noted, petitioner "stopped payments of his monthly obligations as early as
December, 1976, which is a mere five months after the effectivity of P.D. No. 957 or about a year after the execution
of the contracts. This means that respondent still has 1 and 1/2 years to comply with its legal obligation to develop
the subdivision under said P.D. and two years to do so under the agreement, hence, it was improper for complainant
to have suspended payments in December, 1976 on the ground of non-development since the period allowed for
respondent's obligation to undertake such development has not yet expired." 12
ON THE FOREGOING CONSIDERATIONS, the petition should be, as it is hereby DISMISSED.
SO ORDERED.
8. Context and Related Clauses
G.R. No. 123169 November 4, 1996
DANILO E. PARAS, petitioner,

vs.
COMMISSION ON ELECTIONS, respondent.
RESOLUTION
FRANCISCO, J.:
Petitioner Danilo E. Paras is the incumbent Punong Barangay of Pula, Cabanatuan City who won during the last
regular barangay election in 1994. A petition for his recall as Punong Barangay was filed by the registered voters of
the barangay. Acting on the petition for recall, public respondent Commission on Elections (COMELEC) resolved to
approve the petition, scheduled the petition signing on October 14, 1995, and set the recall election on November
13,
1995.1 At least 29.30% of the registered voters signed the petition, well above the 25% requirement provided by
law. The COMELEC, however, deferred the recall election in view of petitioner's opposition. On December 6, 1995,
the COMELEC set anew the recall election, this time on December 16, 1995. To prevent the holding of the recall
election, petitioner filed before the Regional Trial Court of Cabanatuan City a petition for injunction, docketed as SP
Civil Action No. 2254-AF, with the trial court issuing a temporary restraining order. After conducting a summary
hearing, the trial court lifted the restraining order, dismissed the petition and required petitioner and his counsel to
explain why they should not be cited for contempt for misrepresenting that the barangay recall election was without
COMELEC approval.2
In a resolution dated January 5, 1996, the COMELEC, for the third time, re-scheduled the recall election an January
13, 1996; hence, the instant petition for certiorari with urgent prayer for injunction. On January 12, 1996, the Court
issued a temporary restraining order and required the Office of the Solicitor General, in behalf of public respondent,
to comment on the petition. In view of the Office of the Solicitor General's manifestation maintaining an opinion
adverse to that of the COMELEC, the latter through its law department filed the required comment. Petitioner
thereafter filed a reply.3
Petitioner's argument is simple and to the point. Citing Section 74 (b) of Republic Act No. 7160, otherwise known as
the Local Government Code, which states that "no recall shall take place within one (1) year from the date of the
official's assumption to office or one (1) year immediately preceding a regular local election", petitioner insists that
the scheduled January 13, 1996 recall election is now barred as the Sangguniang Kabataan (SK) election was set by
Republic Act No. 7808 on the first Monday of May 1996, and every three years thereafter. In support thereof,
petitioner cites Associated Labor Union v. Letrondo-Montejo, 237 SCRA 621, where the Court considered the SK
election as a regular local election. Petitioner maintains that as the SK election is a regular local election, hence no
recall election can be had for barely four months separate the SK election from the recall election. We do not agree.
The subject provision of the Local Government Code provides:
Sec. 74. Limitations on Recall. — (a) Any elective local official may be the subject of a recall election only once during
his term of office for loss of confidence.
(b) No recall shall take place within one (1) year from the date of the official's assumption to office or one (1) year
immediately preceding a regular local election.
[Emphasis added]
It is a rule in statutory construction that every part of the statute must be interpreted with reference to the context,
i.e., that every part of the statute must be considered together with the other parts, and kept subservient to the
general intent of the whole enactment.4 The evident intent of Section 74 is to subject an elective local official to
recall election once during his term of office. Paragraph (b) construed together with paragraph (a) merely designates
the period when such elective local official may be subject of a recall election, that is, during the second year of his
term of office. Thus, subscribing to petitioner's interpretation of the phrase regular local election to include the SK
election will unduly circumscribe the novel provision of the Local Government Code on recall, a mode of removal of
public officers by initiation of the people before the end of his term. And if the SK election which is set by R.A No.
7808 to be held every three years from May 1996 were to be deemed within the purview of the phrase "regular local
election", as erroneously insisted by petitioner, then no recall election can be conducted rendering inutile the recall
provision of the Local Government Code.
In the interpretation of a statute, the Court should start with the assumption that the legislature intended to enact
an effective law, and the legislature is not presumed to have done a vain thing in the enactment of a statute.5 An
interpretation should, if possible, be avoided under which a statute or provision being construed is defeated, or as
otherwise expressed, nullified, destroyed, emasculated, repealed, explained away, or rendered insignificant,
meaningless, inoperative or nugatory.6
It is likewise a basic precept in statutory construction that a statute should be interpreted in harmony with the
Constitution.7 Thus, the interpretation of Section 74 of the Local Government Code, specifically paragraph (b)
thereof, should not be in conflict with the Constitutional mandate of Section 3 of Article X of the Constitution to
"enact a local government code which shall provide for a more responsive and accountable local government
structure instituted through a system of decentralization with effective mechanism of recall, initiative, and
referendum . . . ."
Moreover, petitioner's too literal interpretation of the law leads to absurdity which we cannot countenance. Thus, in
a case, the Court made the following admonition:
We admonish against a too-literal reading of the law as this is apt to constrict rather than fulfill its purpose and
defeat the intention of its authors. That intention is usually found not in "the letter that killeth but in the spirit that
vivifieth". . .8
The spirit, rather than the letter of a law determines its construction; hence, a statute, as in this case, must be read
according to its spirit and intent.
Finally, recall election is potentially disruptive of the normal working of the local government unit necessitating
additional expenses, hence the prohibition against the conduct of recall election one year immediately preceding the
regular local election. The proscription is due to the proximity of the next regular election for the office of the local
elective official concerned. The electorate could choose the official's replacement in the said election who certainly
has a longer tenure in office than a successor elected through a recall election. It would, therefore, be more in
keeping with the intent of the recall provision of the Code to construe regular local election as one referring to an
election where the office held by the local elective official sought to be recalled will be contested and be filled by the
electorate.
Nevertheless, recall at this time is no longer possible because of the limitation stated under Section 74 (b) of the
Code considering that the next regular election involving the barangay office concerned is barely seven (7) months
away, the same having been scheduled on May 1997. 9
ACCORDINGLY, the petition is hereby dismissed for having become moot and academic. The temporary restraining
order issued by the Court on January 12, 1996, enjoining the recall election should be as it is hereby made
permanent.
SO ORDERED.
CHAPTER VI: EXTRINSIC AIDS OF CONSTRUCTION

1. Legislative Deliberations
G.R. No. L-34964 January 31, 1973
CHINA BANKING CORPORATION and TAN KIM LIONG, petitioners-appellants,

vs.
HON. WENCESLAO ORTEGA, as Presiding Judge of the Court of First Instance of Manila, Branch VIII, and VICENTE G.
ACABAN, respondents-appellees.
Sy Santos, Del Rosario and Associates for petitioners-appellants.
Tagalo, Gozar and Associates for respondents-appellees.
MAKALINTAL, J.:
The only issue in this petition for certiorari to review the orders dated March 4, 1972 and March 27, 1972,
respectively, of the Court of First Instance of Manila in its Civil Case No. 75138, is whether or not a banking
institution may validly refuse to comply with a court process garnishing the bank deposit of a judgment debtor, by
invoking the provisions of Republic Act No. 1405. *
On December 17, 1968 Vicente Acaban filed a complaint in the court a quo against Bautista Logging Co., Inc., B & B
Forest Development Corporation and Marino Bautista for the collection of a sum of money. Upon motion of the
plaintiff the trial court declared the defendants in default for failure to answer within the reglementary period, and
authorized the Branch Clerk of Court and/or Deputy Clerk to receive the plaintiff's evidence. On January 20, 1970
judgment by default was rendered against the defendants.
To satisfy the judgment, the plaintiff sought the garnishment of the bank deposit of the defendant B & B Forest
Development Corporation with the China Banking Corporation. Accordingly, a notice of garnishment was issued by
the Deputy Sheriff of the trial court and served on said bank through its cashier, Tan Kim Liong. In reply, the bank'
cashier invited the attention of the Deputy Sheriff to the provisions of Republic Act No. 1405 which, it was alleged,
prohibit the disclosure of any information relative to bank deposits. Thereupon the plaintiff filed a motion to cite Tan
Kim Liong for contempt of court.
In an order dated March 4, 1972 the trial court denied the plaintiff's motion. However, Tan Kim Liong was ordered
"to inform the Court within five days from receipt of this order whether or not there is a deposit in the China Banking
Corporation of defendant B & B Forest Development Corporation, and if there is any deposit, to hold the same intact
and not allow any withdrawal until further order from this Court." Tan Kim Liong moved to reconsider but was
turned down by order of March 27, 1972. In the same order he was directed "to comply with the order of this Court
dated March 4, 1972 within ten (10) days from the receipt of copy of this order, otherwise his arrest and
confinement will be ordered by the Court." Resisting the two orders, the China Banking Corporation and Tan Kim
Liong instituted the instant petition.
The pertinent provisions of Republic Act No. 1405 relied upon by the petitioners reads:
Sec. 2. All deposits of whatever nature with banks or banking institutions in the Philippines including investments in
bonds issued by the Government of the Philippines, its political subdivisions and its instrumentalities, are hereby
considered as of absolutely confidential nature and may not be examined, inquired or looked into by any person,
government official, bureau or office, except upon written permission of the depositor, or in cases of impeachment,
or upon order of a competent court in cases of bribery or dereliction of duty of public officials, or in cases where the
money deposited or invested is the subject matter of the litigation.
Sec 3. It shall be unlawful for any official or employee of a banking institution to disclose to any person other than
those mentioned in Section two hereof any information concerning said deposits.
Sec. 5. Any violation of this law will subject offender upon conviction, to an imprisonment of not more than five
years or a fine of not more than twenty thousand pesos or both, in the discretion of the court.
The petitioners argue that the disclosure of the information required by the court does not fall within any of the four
(4) exceptions enumerated in Section 2, and that if the questioned orders are complied with Tan Kim Liong may be
criminally liable under Section 5 and the bank exposed to a possible damage suit by B & B Forest Development
Corporation. Specifically referring to this case, the position of the petitioners is that the bank deposit of judgment
debtor B & B Forest Development Corporation cannot be subject to garnishment to satisfy a final judgment against it
in view of the aforequoted provisions of law.
We do not view the situation in that light. The lower court did not order an examination of or inquiry into the
deposit of B & B Forest Development Corporation, as contemplated in the law. It merely required Tan Kim Liong to
inform the court whether or not the defendant B & B Forest Development Corporation had a deposit in the China
Banking Corporation only for purposes of the garnishment issued by it, so that the bank would hold the same intact
and not allow any withdrawal until further order. It will be noted from the discussion of the conference committee
report on Senate Bill No. 351 and House Bill No. 3977, which later became Republic Act 1405, that it was not the
intention of the lawmakers to place bank deposits beyond the reach of execution to satisfy a final judgment. Thus:
Mr. MARCOS. Now, for purposes of the record, I should like the Chairman of the Committee on Ways and Means to
clarify this further. Suppose an individual has a tax case. He is being held liable by the Bureau of Internal Revenue
for, say, P1,000.00 worth of tax liability, and because of this the deposit of this individual is attached by the Bureau
of Internal Revenue.
Mr. RAMOS. The attachment will only apply after the court has pronounced sentence declaring the liability of such
person. But where the primary aim is to determine whether he has a bank deposit in order to bring about a proper
assessment by the Bureau of Internal Revenue, such inquiry is not authorized by this proposed law.
Mr. MARCOS. But under our rules of procedure and under the Civil Code, the attachment or garnishment of money
deposited is allowed. Let us assume, for instance, that there is a preliminary attachment which is for garnishment or
for holding liable all moneys deposited belonging to a certain individual, but such attachment or garnishment will
bring out into the open the value of such deposit. Is that prohibited by this amendment or by this law?
Mr. RAMOS. It is only prohibited to the extent that the inquiry is limited, or rather, the inquiry is made only for the
purpose of satisfying a tax liability already declared for the protection of the right in favor of the government; but
when the object is merely to inquire whether he has a deposit or not for purposes of taxation, then this is fully
covered by the law.
Mr. MARCOS. And it protects the depositor, does it not?
Mr. RAMOS. Yes, it protects the depositor.
Mr. MARCOS. The law prohibits a mere investigation into the existence and the amount of the deposit.
Mr. RAMOS. Into the very nature of such deposit.
Mr. MARCOS. So I come to my original question. Therefore, preliminary garnishment or attachment of the deposit is
not allowed?
Mr. RAMOS. No, without judicial authorization.
Mr. MARCOS. I am glad that is clarified. So that the established rule of procedure as well as the substantive law on
the matter is amended?
Mr. RAMOS. Yes. That is the effect.
Mr. MARCOS. I see. Suppose there has been a decision, definitely establishing the liability of an individual for
taxation purposes and this judgment is sought to be executed ... in the execution of that judgment, does this bill, or
this proposed law, if approved, allow the investigation or scrutiny of the bank deposit in order to execute the
judgment?
Mr. RAMOS. To satisfy a judgment which has become executory.
Mr. MARCOS. Yes, but, as I said before, suppose the tax liability is P1,000,000 and the deposit is half a million, will
this bill allow scrutiny into the deposit in order that the judgment may be executed?
Mr. RAMOS. Merely to determine the amount of such money to satisfy that obligation to the Government, but not to
determine whether a deposit has been made in evasion of taxes.
xxx xxx xxx
Mr. MACAPAGAL. But let us suppose that in an ordinary civil action for the recovery of a sum of money the plaintiff
wishes to attach the properties of the defendant to insure the satisfaction of the judgment. Once the judgment is
rendered, does the gentleman mean that the plaintiff cannot attach the bank deposit of the defendant?
Mr. RAMOS. That was the question raised by the gentleman from Pangasinan to which I replied that outside the very
purpose of this law it could be reached by attachment.
Mr. MACAPAGAL. Therefore, in such ordinary civil cases it can be attached?
Mr. RAMOS. That is so.

(Vol. II, Congressional Record, House of Representatives, No. 12, pp. 3839-3840, July 27, 1955).
It is sufficiently clear from the foregoing discussion of the conference committee report of the two houses of
Congress that the prohibition against examination of or inquiry into a bank deposit under Republic Act 1405 does not
preclude its being garnished to insure satisfaction of a judgment. Indeed there is no real inquiry in such a case, and if
the existence of the deposit is disclosed the disclosure is purely incidental to the execution process. It is hard to
conceive that it was ever within the intention of Congress to enable debtors to evade payment of their just debts,
even if ordered by the Court, through the expedient of converting their assets into cash and depositing the same in a
bank.
WHEREFORE, the orders of the lower court dated March 4 and 27, 1972, respectively, are hereby affirmed, with
costs against the petitioners-appellants.
G.R. No. 176951 February 15, 2011
LEAGUE OF CITIES OF THE PHILIPPINES (LCP), Represented by LCP National President Jerry P. Treñas; City of
Calbayog, represented by Mayor Mel Senen S. Sarmiento; and Jerry P. Treñas, in his personal capacity as Taxpayer,
Petitioners,
vs.
COMMISSION ON ELECTIONS; Municipality of Baybay, Province of Leyte; Municipality of Bogo, Province of Cebu;
Municipality of Catbalogan, Province of Western Samar; Municipality of Tandag, Province of Surigao del Sur;
Municipality of Borongan, Province of Eastern Samar; and Municipality of Tayabas, Province of Quezon,
Respondents.
x – – – – – – – – – – – – – – – – – – – – – – -x
G.R. No. 177499
Petitioners,
vs.
COMMISSION ON ELECTIONS; Municipality of Lamitan, Province of Basilan; Municipality of Tabuk, Province of
Kalinga; Municipality of Bayugan, Province of Agusan del Sur; Municipality of Batac, Province of Ilocos Norte;
Municipality of Mati, Province of Davao Oriental; and Municipality of Guihulngan, Province of Negros Oriental,
Respondents.
x – – – – – – – – – – – – – – – – – – – – – – -x
G.R. No. 178056
Petitioners,
vs.
COMMISSION ON ELECTIONS; Municipality of Cabadbaran, Province of Agusan del Norte; Municipality of Carcar,
Province of Cebu; Municipality of El Salvador, Province of Misamis Oriental; Municipality of Naga, Cebu; and
Department of Budget and Management, Respondents.
RESOLUTION
BERSAMIN, J.:
For consideration of this Court are the following pleadings:
1. Motion for Reconsideration of the “Resolution” dated August 24, 2010 dated and filed on September 14, 2010 by
respondents Municipality of Baybay, et al.; and
2. Opposition [To the “Motion for Reconsideration of the ‘Resolution’ dated August 24, 2010”].
Meanwhile, respondents also filed on September 20, 2010 a Motion to Set “Motion for Reconsideration of the
‘Resolution’ dated August 24, 2010” for Hearing. This motion was, however, already denied by the Court En Banc.
A brief background—
These cases were initiated by the consolidated petitions for prohibition filed by the League of Cities of the
Philippines (LCP), City of Iloilo, City of Calbayog, and Jerry P. Treñas, assailing the constitutionality of the sixteen (16)
laws,1 each converting the municipality covered thereby into a component city (Cityhood Laws), and seeking to
enjoin the Commission on Elections (COMELEC) from conducting plebiscites pursuant to the subject laws.
In the Decision dated November 18, 2008, the Court En Banc, by a 6-5 vote,2 granted the petitions and struck down
the Cityhood Laws as unconstitutional for violating Sections 10 and 6, Article X, and the equal protection clause.
In the Resolution dated March 31, 2009, the Court En Banc, by a 7-5 vote,3 denied the first motion for
reconsideration.
On April 28, 2009, the Court En Banc issued a Resolution, with a vote of 6-6,4 which denied the second motion for
reconsideration for being a prohibited pleading.
In its June 2, 2009 Resolution, the Court En Banc clarified its April 28, 2009 Resolution in this wise—
As a rule, a second motion for reconsideration is a prohibited pleading pursuant to Section 2, Rule 52 of the Rules of
Civil Procedure which provides that: “No second motion for reconsideration of a judgment or final resolution by the
same party shall be entertained.” Thus, a decision becomes final and executory after 15 days from receipt of the
denial of the first motion for reconsideration.
However, when a motion for leave to file and admit a second motion for reconsideration is granted by the Court, the
Court therefore allows the filing of the second motion for reconsideration. In such a case, the second motion for
reconsideration is no longer a prohibited pleading.
In the present case, the Court voted on the second motion for reconsideration filed by respondent cities. In effect,
the Court allowed the filing of the second motion for reconsideration. Thus, the second motion for reconsideration
was no longer a prohibited pleading. However, for lack of the required number of votes to overturn the 18
November 2008 Decision and 31 March 2009 Resolution, the Court denied the second motion for reconsideration in
its 28 April 2009 Resolution.5
Then, in another Decision dated December 21, 2009, the Court En Banc, by a vote of 6-4,6 declared the Cityhood
Laws as constitutional.
On August 24, 2010, the Court En Banc, through a Resolution, by a vote of 7-6,7 resolved the Ad Cautelam Motion
for Reconsideration and Motion to Annul the Decision of December 21, 2009, both filed by petitioners, and the Ad
Cautelam Motion for Reconsideration filed by petitioners-in-intervention Batangas City, Santiago City, Legazpi City,
Iriga City, Cadiz City, and Oroquieta City, reinstating the November 18, 2008 Decision. Hence, the aforementioned
pleadings.
Considering these circumstances where the Court En Banc has twice changed its position on the constitutionality of
the 16 Cityhood Laws, and especially taking note of the novelty of the issues involved in these cases, the Motion for
Reconsideration of the “Resolution” dated August 24, 2010 deserves favorable action by this Court on the basis of
the following cogent points:
1.
The 16 Cityhood Bills do not violate Article X, Section 10 of the Constitution.
Article X, Section 10 provides—
Section 10. No province, city, municipality, or barangay may be created, divided, merged, abolished, or its boundary
substantially altered, except in accordance with the criteria established in the local government code and subject to
approval by a majority of the votes cast in a plebiscite in the political units directly affected.
The tenor of the ponencias of the November 18, 2008 Decision and the August 24, 2010 Resolution is that the
exemption clauses in the 16 Cityhood Laws are unconstitutional because they are not written in the Local
Government Code of 1991 (LGC), particularly Section 450 thereof, as amended by Republic Act (R.A.) No. 9009,
which took effect on June 30, 2001, viz.—
Section 450. Requisites for Creation. –a) A municipality or a cluster of barangays may be converted into a component
city if it has a locally generated annual income, as certified by the Department of Finance, of at least One Hundred
Million Pesos (P100,000,000.00) for at least two (2) consecutive years based on 2000 constant prices, and if it has
either of the following requisites:
xxxx
(c) The average annual income shall include the income accruing to the general fund, exclusive of special funds,
transfers, and non-recurring income. (Emphasis supplied)
Prior to the amendment, Section 450 of the LGC required only an average annual income, as certified by the
Department of Finance, of at least P20,000,000.00 for the last two (2) consecutive years, based on 1991 constant
prices.
Before Senate Bill No. 2157, now R.A. No. 9009, was introduced by Senator Aquilino Pimentel, there were 57 bills
filed for conversion of 57 municipalities into component cities. During the 11th Congress (June 1998-June 2001), 33
of these bills were enacted into law, while 24 remained as pending bills. Among these 24 were the 16 municipalities
that were converted into component cities through the Cityhood Laws.
The rationale for the enactment of R.A. No. 9009 can be gleaned from the sponsorship speech of Senator Pimentel
on Senate Bill No. 2157, to wit—
Senator Pimentel. Mr. President, I would have wanted this bill to be included in the whole set of proposed
amendments that we have introduced to precisely amend the Local Government Code. However, it is a fact that
there is a mad rush of municipalities wanting to be converted into cities. Whereas in 1991, when the Local
Government was approved, there were only 60 cities, today the number has increased to 85 cities, with 41 more
municipalities applying for conversion to the same status. At the rate we are going, I am apprehensive that before
long this nation will be a nation of all cities and no municipalities.
It is for that reason, Mr. President, that we are proposing among other things, that the financial requirement, which,
under the Local Government Code, is fixed at P20 million, be raised to P100 million to enable a municipality to have
the right to be converted into a city, and the P100 million should be sourced from locally generated funds.
What has been happening, Mr. President, is, the municipalities aspiring to become cities say that they qualify in
terms of financial requirements by incorporating the Internal Revenue share of the taxes of the nation on to their
regularly generated revenue. Under that requirement, it looks clear to me that practically all municipalities in this
country would qualify to become cities.
It is precisely for that reason, therefore, that we are seeking the approval of this Chamber to amend, particularly
Section 450 of Republic Act No. 7160, the requisite for the average annual income of a municipality to be converted
into a city or cluster of barangays which seek to be converted into a city, raising that revenue requirement from P20
million to P100 million for the last two consecutive years based on 2000 constant prices.8
While R.A. No. 9009 was being deliberated upon, Congress was well aware of the pendency of conversion bills of
several municipalities, including those covered by the Cityhood Laws, desiring to become component cities which
qualified under the P20 million income requirement of the old Section 450 of the LGC. The interpellation of Senate
President Franklin Drilon of Senator Pimentel is revealing, thus—
THE PRESIDENT. The Chair would like to ask for some clarificatory point.
SENATOR PIMENTEL. Yes, Mr. President.
THE PRESIDENT. This is just on the point of the pending bills in the Senate which propose the conversion of a number
of municipalities into cities and which qualify under the present standard.
We would like to know the view of the sponsor: Assuming that this bill becomes a law, will the Chamber apply the
standard as proposed in this bill to those bills which are pending for consideration?
SENATOR PIMENTEL. Mr. President, it might not be fair to make this bill, on the assumption that it is approved,
retroact to the bills that are pending in the Senate conversion from municipalities to cities.
THE PRESIDENT. Will there be an appropriate language crafted to reflect that view? Or does it not become a policy of
the Chamber, assuming that this bill becomes a law tomorrow, that it will apply to those bills which are already
approved by the House under the old version of the Local Government Code and are now pending in the Senate?
The Chair does not know if we can craft a language which will limit the application to those which are not yet in the
Senate. Or is that a policy that the Chamber will adopt?
SENATOR PIMENTEL. Mr. President, personally, I do not think it is necessary to put that provision because what we
are saying here will form part of the interpretation of this bill. Besides, if there is no retroactivity clause, I do not
think that the bill would have any retroactive effect.
THE PRESIDENT. So the understanding is that those bills which are already pending in the Chamber will not be
affected.
SENATOR PIMENTEL. These will not be affected, Mr. President.
THE PRESIDENT. Thank you Mr. Chairman.9
Clearly, based on the above exchange, Congress intended that those with pending cityhood bills during the 11th
Congress would not be covered by the new and higher income requirement of P100 million imposed by R.A. No.
9009. When the LGC was amended by R.A. No. 9009, the amendment carried with it both the letter and the intent of
the law, and such were incorporated in the LGC by which the compliance of the Cityhood Laws was gauged.
Notwithstanding that both the 11th and 12th Congress failed to act upon the pending cityhood bills, both the letter
and intent of Section 450 of the LGC, as amended by R.A. No. 9009, were carried on until the 13th Congress, when
the Cityhood Laws were enacted. The exemption clauses found in the individual Cityhood Laws are the express
articulation of that intent to exempt respondent municipalities from the coverage of R.A. No. 9009.
Even if we were to ignore the above quoted exchange between then Senate President Drilon and Senator Pimentel,
it cannot be denied that Congress saw the wisdom of exempting respondent municipalities from complying with the
higher income requirement imposed by the amendatory R.A. No. 9009. Indeed, these municipalities have proven
themselves viable and capable to become component cities of their respective provinces. It is also acknowledged
that they were centers of trade and commerce, points of convergence of transportation, rich havens of agricultural,
mineral, and other natural resources, and flourishing tourism spots. In this regard, it is worthy to mention the
distinctive traits of each respondent municipality, viz—
Batac, Ilocos Norte – It is the biggest municipality of the 2nd District of Ilocos Norte, 2nd largest and most
progressive town in the province of Ilocos Norte and the natural convergence point for the neighboring towns to
transact their commercial ventures and other daily activities. A growing metropolis, Batac is equipped with amenities
of modern living like banking institutions, satellite cable systems, telecommunications systems. Adequate roads,
markets, hospitals, public transport systems, sports, and entertainment facilities. [Explanatory Note of House Bill No.
5941, introduced by Rep. Imee R. Marcos.]
El Salvador, Misamis Oriental – It is located at the center of the Cagayan-Iligan Industrial Corridor and home to a
number of industrial companies and corporations. Investment and financial affluence of El Salvador is aptly credited
to its industrious and preserving people. Thus, it has become the growing investment choice even besting nearby
cities and municipalities. It is home to Asia Brewery as distribution port of their product in Mindanao. The
Gokongwei Group of Companies is also doing business in the area. So, the conversion is primarily envisioned to spur
economic and financial prosperity to this coastal place in North-Western Misamis Oriental. [Explanatory Note of
House Bill No. 6003, introduced by Rep. Augusto H. Bacullo.]
Cabadbaran, Agusan del Norte – It is the largest of the eleven (11) municipalities in the province of Agusan del Norte.
It plays strategic importance to the administrative and socio-economic life and development of Agusan del Norte. It
is the foremost in terms of trade, commerce, and industry. Hence, the municipality was declared as the new seat and
capital of the provincial government of Agusan del Norte pursuant to Republic Act No. 8811 enacted into law on
August 16, 2000. Its conversion will certainly promote, invigorate, and reinforce the economic potential of the
province in establishing itself as an agro-industrial center in the Caraga region and accelerate the development of
the area. [Explanatory Note of House Bill No. 3094, introduced by Rep. Ma. Angelica Rosedell M. Amante.]
Borongan, Eastern Samar – It is the capital town of Eastern Samar and the development of Eastern Samar will
depend to a certain degree of its urbanization. It will serve as a catalyst for the modernization and progress of
adjacent towns considering the frequent interactions between the populace. [Explanatory Note of House Bill No.
2640, introduced by Rep. Marcelino C. Libanan.]
Lamitan, Basilan – Before Basilan City was converted into a separate province, Lamitan was the most progressive
part of the city. It has been for centuries the center of commerce and the seat of the Sultanate of the Yakan people
of Basilan. The source of its income is agro-industrial and others notably copra, rubber, coffee and host of income
generating ventures. As the most progressive town in Basilan, Lamitan continues to be the center of commerce
catering to the municipalities of Tuburan, Tipo-Tipo and Sumisip. [Explanatory Note of House Bill No. 5786,
introduced by Rep. Gerry A. Salapuddin.]
Catbalogan, Samar – It has always been the socio-economic-political capital of the Island of Samar even during the
Spanish era. It is the seat of government of the two congressional districts of Samar. Ideally located at the crossroad
between Northern and Eastern Samar, Catbalogan also hosts trade and commerce activates among the more
prosperous cities of the Visayas like Tacloban City, Cebu City and the cities of Bicol region. The numerous banks and
telecommunication facilities showcases the healthy economic environment of the municipality. The preeminent and
sustainable economic situation of Catbalogan has further boosted the call of residents for a more vigorous
involvement of governance of the municipal government that is inherent in a city government. [Explanatory Note of
House Bill No. 2088, introduced by Rep. Catalino V. Figueroa.]
Bogo, Cebu – Bogo is very qualified for a city in terms of income, population and area among others. It has been
elevated to the Hall of Fame being a five-time winner nationwide in the clean and green program. [Explanatory Note
of House Bill No. 3042, introduced by Rep. Clavel A. Martinez.]
Tandag, Surigao del Sur – This over 350 year old capital town the province has long sought its conversion into a city
that will pave the way not only for its own growth and advancement but also help in the development of its
neighboring municipalities and the province as a whole. Furthermore, it can enhance its role as the province’s trade,
financial and government center. [Explanatory Note of House Bill No. 5940, introduced by Rep. Prospero A. Pichay,
Jr.]
Bayugan, Agusan del Sur – It is a first class municipality and the biggest in terms of population in the entire province.
It has the most progressive and thickly populated area among the 14 municipalities that comprise the province.
Thus, it has become the center for trade and commerce in Agusan del Sur. It has a more developed infrastructure
and facilities than other municipalities in the province. [Explanatory Note of House Bill No. 1899, introduced by Rep.
Rodolfo “Ompong” G. Plaza.]
Carcar, Cebu – Through the years, Carcar metamorphosed from rural to urban and now boast of its manufacturing
industry, agricultural farming, fishing and prawn industry and its thousands of large and small commercial
establishments contributing to the bulk of economic activities in the municipality. Based on consultation with multi-
sectoral groups, political and non-government agencies, residents and common folk in Carcar, they expressed their
desire for the conversion of the municipality into a component city. [Explanatory Note of House Bill No. 3990,
introduced by Rep. Eduardo R. Gullas.]
Guihulngan, Negros Oriental – Its population is second highest in the province, next only to the provincial capital and
higher than Canlaon City and Bais City. Agriculture contributes heavily to its economy. There are very good prospects
in agricultural production brought about by its favorable climate. It has also the Tanon Strait that provides a good
fishing ground for its numerous fishermen. Its potential to grow commercially is certain. Its strategic location
brought about by its existing linkage networks and the major transportation corridors traversing the municipality has
established Guihulngan as the center of commerce and trade in this part of Negros Oriental with the first
congressional district as its immediate area of influence. Moreover, it has beautiful tourist spots that are being
availed of by local and foreign tourists. [Explanatory Note of House Bill No. 3628, introduced by Rep. Jacinto V.
Paras.]
Tayabas, Quezon – It flourished and expanded into an important politico-cultural center in [the] Tagalog region. For
131 years (1179-1910), it served as the cabecera of the province which originally carried the cabecera’s own name,
Tayabas. The locality is rich in culture, heritage and trade. It was at the outset one of the more active centers of
coordination and delivery of basic, regular and diverse goods and services within the first district of Quezon
Province. [Explanatory Note of House Bill No. 3348, introduced by Rep. Rafael P. Nantes.]
Tabuk, Kalinga – It not only serves as the main hub of commerce and trade, but also the cultural center of the rich
customs and traditions of the different municipalities in the province. For the past several years, the income of
Tabuk has been steadily increasing, which is an indication that its economy is likewise progressively growing.
[Explanatory Note of House Bill No. 3068, introduced by Rep. Laurence P. Wacnang.]
Available information on Baybay, Leyte; Mati, Davao Oriental; and Naga, Cebu shows their economic viability, thus:
Covering an area of 46,050 hectares, Baybay [Leyte] is composed of 92 barangays, 23 of which are in the poblacion.
The remaining 69 are rural barangays. Baybay City is classified as a first class city. It is situated on the western coast
of the province of Leyte. It has a Type 4 climate, which is generally wet. Its topography is generally mountainous in
the eastern portion as it slopes down west towards the shore line. Generally an agricultural city, the common means
of livelihood are farming and fishing. Some are engaged in hunting and in forestall activities. The most common
crops grown are rice, corn, root crops, fruits, and vegetables. Industries operating include the Specialty Products
Manufacturing, Inc. and the Visayan Oil Mill. Various cottage industries can also be found in the city such as bamboo
and rattan craft, ceramics, dress-making, fiber craft, food preservation, mat weaving, metal craft, fine Philippine
furniture manufacturing and other related activities. Baybay has great potential as a tourist destination, especially
for tennis players. It is not only rich in biodiversity and history, but it also houses the campus of the Visayas State
University (formerly the Leyte State University/Visayas State College of Agriculture/Visayas Agricultural
College/Baybay National Agricultural School/Baybay Agricultural High School and the Jungle Valley Park.) Likewise, it
has river systems fit for river cruising, numerous caves for spelunking, forests, beaches, and marine treasures. This
richness, coupled with the friendly Baybayanos, will be an element of a successful tourism program. Considering the
role of tourism in development, Baybay City intends to harness its tourism potential.
(<http://en.wikipedia.org/wiki/Baybay City> visited September 19, 2008)
Mati [Davao Oriental] is located on the eastern part of the island of Mindanao. It is one hundred sixty-five (165)
kilometers away from Davao City, a one and a half-hour drive from Tagum City. Visitors can travel from Davao City
through the Madaum diversion road, which is shorter than taking the Davao-Tagum highway. Travels by air and sea
are possible, with the existence of an airport and seaport. Mati boasts of being the coconut capital of Mindanao if
not the whole country. A large portion of its fertile land is planted to coconuts, and a significant number of its
population is largely dependent on it. Other agricultural crops such as mango, banana, corn, coffee and cacao are
also being cultivated, as well as the famous Menzi pomelo and Valencia oranges. Mati has a long stretch of shoreline
and one can find beaches of pure, powder-like white sand. A number of resorts have been developed and are now
open to serve both local and international tourists. Some of these resorts are situated along the coast of Pujada Bay
and the Pacific Ocean. Along the western coast of the bay lies Mt. Hamiguitan, the home of the pygmy forest, where
bonsai plants and trees grow, some of which are believed to be a hundred years old or more. On its peak is a lake,
called “Tinagong Dagat,” or hidden sea, so covered by dense vegetation a climber has to hike trails for hours to reach
it. The mountain is also host to rare species of flora and fauna, thus becoming a wildlife sanctuary for these life
forms. (<http://mati.wetpain.com/?t=anon> accessed on September 19, 2008.)
Mati is abundant with nickel, chromite, and copper. Louie Rabat, Chamber President of the Davao Oriental Eastern
Chamber of Commerce and Industry, emphasized the big potential of the mining industry in the province of Davao
Oriental. As such, he strongly recommends Mati as the mining hub in the Region.
(<http://www.pia.gov.ph/default.asp?m=12&sec=reader&rp=1&fi=p080115.htm&no.=9&date, accessed on
September 19, 2008)
Naga [Cebu]: Historical Background—In the early times, the place now known as Naga was full of huge trees locally
called as “Narra.” The first settlers referred to this place as Narra, derived from the huge trees, which later simply
became Naga. Considered as one of the oldest settlements in the Province of Cebu, Naga became a municipality on
June 12, 1829. The municipality has gone through a series of classifications as its economic development has
undergone changes and growth. The tranquil farming and fishing villages of the natives were agitated as the
Spaniards came and discovered coal in the uplands. Coal was the first export of the municipality, as the Spaniards
mined and sent it to Spain. The mining industry triggered the industrial development of Naga. As the years
progressed, manufacturing and other industries followed, making Naga one of the industrialized municipalities in the
Province of Cebu.
Class of Municipality 1st class
Province Cebu
Distance from Cebu City 22 kms.
Number of Barangays 28
No. of Registered Voters 44,643 as of May 14, 2007
Total No. of Precincts 237 (as of May 14, 2007)
Ann. Income (as of Dec. 31, 2006) Php112,219,718.35 Agricultural, Industrial, Agro-Industrial, Mining Product
(<http://www.nagacebu.com/index.php?option=com.content&view=article id=53:naga-facts-and-
figures&catid=51:naga-facts-and-figures&Itemid=75> visited September 19, 2008)
The enactment of the Cityhood Laws is an exercise by Congress of its legislative power. Legislative power is the
authority, under the Constitution, to make laws, and to alter and repeal them.10 The Constitution, as the expression
of the will of the people in their original, sovereign, and unlimited capacity, has vested this power in the Congress of
the Philippines. The grant of legislative power to Congress is broad, general, and comprehensive. The legislative body
possesses plenary powers for all purposes of civil government. Any power, deemed to be legislative by usage and
tradition, is necessarily possessed by Congress, unless the Constitution has lodged it elsewhere. In fine, except as
limited by the Constitution, either expressly or impliedly, legislative power embraces all subjects, and extends to
matters of general concern or common interest.11
Without doubt, the LGC is a creation of Congress through its law-making powers. Congress has the power to alter or
modify it as it did when it enacted R.A. No. 9009. Such power of amendment of laws was again exercised when
Congress enacted the Cityhood Laws. When Congress enacted the LGC in 1991, it provided for quantifiable indicators
of economic viability for the creation of local government units—income, population, and land area. Congress
deemed it fit to modify the income requirement with respect to the conversion of municipalities into component
cities when it enacted R.A. No. 9009, imposing an amount of P100 million, computed only from locally-generated
sources. However, Congress deemed it wiser to exempt respondent municipalities from such a belatedly imposed
modified income requirement in order to uphold its higher calling of putting flesh and blood to the very intent and
thrust of the LGC, which is countryside development and autonomy, especially accounting for these municipalities as
engines for economic growth in their respective provinces.
Undeniably, R.A. No. 9009 amended the LGC. But it is also true that, in effect, the Cityhood Laws amended R.A. No.
9009 through the exemption clauses found therein. Since the Cityhood Laws explicitly exempted the concerned
municipalities from the amendatory R.A. No. 9009, such Cityhood Laws are, therefore, also amendments to the LGC
itself. For this reason, we reverse the November 18, 2008 Decision and the August 24, 2010 Resolution on their
strained and stringent view that the Cityhood Laws, particularly their exemption clauses, are not found in the LGC.
2.
The Cityhood Laws do not violate Section 6, Article X and the equal protection clause of the Constitution.
Both the November 18, 2008 Decision and the August 24, 2010 Resolution impress that the Cityhood Laws violate
the equal protection clause enshrined in the Constitution. Further, it was also ruled that Section 6, Article X was
violated because the Cityhood Laws infringed on the “just share” that petitioner and petitioners-in-intervention shall
receive from the national taxes (IRA) to be automatically released to them.
Upon more profound reflection and deliberation, we declare that there was valid classification, and the Cityhood
Laws do not violate the equal protection clause.
As this Court has ruled, the equal protection clause of the 1987 Constitution permits a valid classification, provided
that it: (1) rests on substantial distinctions; (2) is germane to the purpose of the law; (3) is not limited to existing
conditions only; and (4) applies equally to all members of the same class.12
The petitioners argue that there is no substantial distinction between municipalities with pending cityhood bills in
the 11th Congress and municipalities that did not have pending bills, such that the mere pendency of a cityhood bill
in the 11th Congress is not a material difference to distinguish one municipality from another for the purpose of the
income requirement. This contention misses the point.
It should be recalled from the above quoted portions of the interpellation by Senate President Drilon of Senator
Pimentel that the purpose of the enactment of R.A. No 9009 was merely to stop the “mad rush of municipalities
wanting to be converted into cities” and the apprehension that before long the country will be a country of cities and
without municipalities. It should be pointed out that the imposition of the P100 million average annual income
requirement for the creation of component cities was arbitrarily made. To be sure, there was no evidence or
empirical data, such as inflation rates, to support the choice of this amount. The imposition of a very high income
requirement of P100 million, increased from P20 million, was simply to make it extremely difficult for municipalities
to become component cities. And to highlight such arbitrariness and the absurdity of the situation created thereby,
R.A. No. 9009 has, in effect, placed component cities at a higher standing than highly urbanized cities under Section
452 of the LGC, to wit—
Section 452. Highly Urbanized Cities. – (a) Cities with a minimum population of two hundred thousand (200,000)
inhabitants, as certified by the National Statistics Office, and with the latest annual income of at least Fifty Million
Pesos (P50,000,000.00) based on 1991 constant prices, as certified by the city treasurer, shall be classified as highly
urbanized cities.
(b) Cities which do not meet above requirements shall be considered component cities of the province in which they
are geographically located. (Emphasis supplied)
The P100 million income requirement imposed by R.A. No. 9009, being an arbitrary amount, cannot be conclusively
said to be the only amount “sufficient, based on acceptable standards, to provide for all essential government
facilities and services and special functions commensurate with the size of its population,” per Section 713 of the
LGC. It was imposed merely because it is difficult to comply with. While it could be argued that P100 million, being
more than P20 million, could, of course, provide the essential government facilities, services, and special functions
vis-à-vis the population of a municipality wanting to become a component city, it cannot be said that the minimum
amount of P20 million would be insufficient. This is evident from the existing cities whose income, up to now, do not
comply with the P100 million income requirement, some of which have lower than the P20 million average annual
income. Consider the list14 below—
CITY
AVERAGE ANNUAL INCOME
1. Marawi City 5,291,522.10

2. Palayan City 6,714,651.77
3. Sipalay City 9,713,120.00
4. Canlaon City 13,552,493.79
5. Himamaylan City 15,808,530.00
6. Isabela City 16,811,246.79
7. Munoz City 19,693,358.61
8. Dapitan City 20,529,181.08
9. Tangub City 20,943,810.04
10. Bayawan City 22,943,810.04
11. Island Garden City of Samal 23,034,731.83
12. Tanjay City 23,723,612.44
13. Tabaco City 24,152,853.71
14. Oroquieta City 24,279,966.51
15. Ligao City 28,326,745.86
16. Sorsogon City 30,403,324.59
17. Maasin City 30,572,113.65
18. Escalante City 32,113,970.00
19. Iriga City 32,757,871.44
20. Gapan City 34,254,986.47
21. Candon City 36,327,705.86
22. Gingoog City 37,327,705.86
23. Masbate City 39,454,508.28
24. Passi City 40,314,620.00
25. Calbayog City 40,943,128.73
26. Calapan City41,870,239.21
27. Cadiz City 43,827,060.00
28. Alaminos City 44,352,501.00
29. Bais City 44, 646,826.48
30. San Carlos City 46,306,129.13
31. Silay City 47,351,730.00
32. Bislig City 47,360,716.24
33. Tacurong City 49,026,281.56
34. Talisay City (Negros Occidental) 52,609,790.00
35. Kabankalan City 53,560,580.00
36. Malaybalay City 54,423,408.55
37. La Carlota City 54,760,290.00
38. Vigan City 56,831,797.19
39. Balanga City61,556,700.49
40. Sagay City 64,266,350.00
41. Cavite City 64,566,079.05
42. Koronadal City 66,231,717.19
43. Cotabato City 66,302,114.52
44. Toledo City 70,157,331.12
45. San Jose City 70,309,233.43
46. Danao City 72,621,955.30
47. Bago City 74,305,000.00
48. Valencia City 74,557,298.92
49. Victorias City 75,757,298.92
50. Cauayan City 82,949,135.46
51. Santiago City 83,816,025.89
52. Roxas City 85,397,830.00
53. Dipolog City 85,503,262.85
54. Trece Martires City 87,413,786.64
55. Talisay City (Cebu) 87,964,972.97
56. Ozamis city 89,054,056.12
57. Surigao City 89,960,971.33
58. Panabo City 91,425,301.39
59. Digos City 92,647,699.13
The undeniable fact that these cities remain viable as component cities of their respective provinces emphasizes the
arbitrariness of the amount of P100 million as the new income requirement for the conversion of municipalities into
component cities. This arbitrariness can also be clearly gleaned from the respective distinctive traits and level of
economic development of the individual respondent municipalities as above submitted.
Verily, the determination of the existence of substantial distinction with respect to respondent municipalities does
not simply lie on the mere pendency of their cityhood bills during the 11th Congress. This Court sees the bigger
picture. The existence of substantial distinction with respect to respondent municipalities covered by the Cityhood
Laws is measured by the purpose of the law, not by R.A. No. 9009, but by the very purpose of the LGC, as provided in
its Section 2 (a), thus—
SECTION 2. Declaration of Policy.—(a) It is hereby declared the policy of the State that the territorial and political
subdivisions of the State shall enjoy genuine and meaningful local autonomy to enable them to attain their fullest
development as self-reliant communities and make them more effective partners in the attainment of national goals.
Toward this end, the State shall provide for a more responsive and accountable local government structure
instituted through a system of decentralization whereby local government units shall be given more powers,
authority, responsibilities and resources. The process of decentralization shall proceed from the National
Government to the local government units.
Indeed, substantial distinction lies in the capacity and viability of respondent municipalities to become component
cities of their respective provinces. Congress, by enacting the Cityhood Laws, recognized this capacity and viability of
respondent municipalities to become the State’s partners in accelerating economic growth and development in the
provincial regions, which is the very thrust of the LGC, manifested by the pendency of their cityhood bills during the
11th Congress and their relentless pursuit for cityhood up to the present. Truly, the urgent need to become a
component city arose way back in the 11th Congress, and such condition continues to exist.
Petitioners in these cases complain about the purported reduction of their “just share” in the IRA. To be sure,
petitioners are entitled to a “just share,” not a specific amount. But the feared reduction proved to be false when,
after the implementation of the Cityhood Laws, their respective shares increased, not decreased. Consider the
table15 below—
CITY
CY 2006 IRA
(Before Implementation of Sixteen [16] Cityhood Laws)
CY 2008 IRA
(Actual Release After Implementation of Sixteen [16] Cityhood Laws)
Bais 219,338,056.00 242,193,156.00

Batangas 334,371,984.00 388,871,770.00
Bayawan 353,150,158.00 388,840,062.00
Cadiz 329,491,285.00 361,019,211.00
Calapan227,772,199.00 252,587,779.00
Calbayog 438,603,378.00 485,653,769.00
Cauayan 250,477,157.00 277,120,828.00
Gen. Santos 518,388,557.00 631,864,977.00
Gingoog 314,425,637.00 347,207,725.00
Himamaylan 248,154,381.00 277,532,458.00
Iloilo 358,394,268.00 412,506,278.00
Iriga 183,132,036.00 203,072,932.00
Legaspi 235,314,016.00 266,537,785.00
Ligao 215,608,112.00 239,696,441.00
Oroquieta 191,803,213.00 211,449,720.00
Pagadian 292,788,255.00 327,401,672.00
San Carlos 239,524,249.00 260,515,711.00
San Fernando 182,320,356.00 204,140,940.00
Santiago 508,326,072.00 563,679,572.00
Silay 216,372,314.00 241,363,845.00
Surigao 233,968,119.00 260,708,071.00
Tacurong 179,795,271.00 197,880,665.00
Tagaytay 130,159,136.00 152,445,295.00
Tarlac 348,186,756.00 405,611,581.00
Tangub 162,248,610.00 180,640,621.00
Urdaneta 187,721,031.00 207,129,386.00
Victorias 176,367,959.00 194,162,687.00
Zamboanga 918,013,016.00 1,009,972,704.00
What these petitioner cities were stating as a reduction of their respective IRA shares was based on a computation of
what they would receive if respondent municipalities were not to become component cities at all. Of course, that
would mean a bigger amount to which they have staked their claim. After considering these, it all boils down to
money and how much more they would receive if respondent municipalities remain as municipalities and not share
in the 23% fixed IRA from the national government for cities.
Moreover, the debates in the Senate on R.A. No. 9009, should prove enlightening:
SENATOR SOTTO. Mr. President, we just want to be enlightened again on the previous qualification and the present
one being proposed. Before there were three…
SENATOR PIMENTEL. There are three requisites for a municipality to become a city. Let us start with the finance.
SENATOR SOTTO. Will the distinguished sponsor please refresh us? I used to be the chairman of the Committee on
Local Government, but the new job that was given to me by the Senate has erased completely my memory as far as
the Local Government Code is concerned.
SENATOR PIMENTEL. Yes, Mr. President, with pleasure. There are three requirements. One is financial.
SENATOR SOTTO. All right. It used to be P20 million.
SENATOR PIMENTEL. It is P20 million. Now we are raising it to P100 million of locally generated funds.
SENATOR SOTTO. In other words, the P20 million before includes the IRA.
SENATOR PIMENTEL. No, Mr. President.
SENATOR SOTTO. It should not have been included?
SENATOR PIMENTEL. The internal revenue share should never have been included. That was not the intention when
we first crafted the Local Government Code. The financial capacity was supposed to be demonstrated by the
municipality wishing to become a city by its own effort, meaning to say, it should not rely on the internal revenue
share that comes from the government. Unfortunately, I think what happened in past conversions of municipalities
into cities was, the Department of Budget and Management, along with the Department of Finance, had included
the internal revenue share as a part of the municipality, demonstration that they are now financially capable and can
measure up to the requirement of the Local Government Code of having a revenue of at least P20 million.
SENATOR SOTTO. I am glad that the sponsor, Mr. President, has spread that into the Record because otherwise, if he
did not mention the Department of Finance and the Department of Budget and Management, then I would have
been blamed for the misinterpretation. But anyway, the gentleman is correct. That was the interpretation given to
us during the hearings.
So now, from P20 million, we make it P100 million from locally generated income as far as population is concerned.
SENATOR PIMENTEL. As far as population is concerned, there will be no change, Mr. President. Still 150,000.
SENATOR SOTTO. Still 150,000?
SENATOR PIMENTEL. Yes.
SENATOR SOTTO. And then the land area?
SENATOR PIMENTEL. As to the land area, there is no change; it is still 100 square kilometers.
SENATOR SOTTO. But before it was “either/or”?
SENATOR PIMENTEL. That is correct. As long as it has one of the three requirements, basically, as long as it meets the
financial requirement, then it may meet the territorial requirement or the population requirement.
SENATOR SOTTO. So, it remains “or”?
SENATOR PIMENTEL. We are now changing it into AND.
SENATOR SOTTO. AND?
SENATOR PIMENTEL. Yes.
SENATOR SOTTO. I see.
SENATOR PIMENTEL. That is the proposal, Mr. President. In other words…
SENATOR SOTTO. Does the gentleman not think there will no longer be any municipality that will qualify, Mr.
President?
SENATOR PIMENTEL. There may still be municipalities which can qualify, but it will take a little time. They will have to
produce more babies. I do not know—expand their territories, whatever, by reclamation or otherwise. But the whole
proposal is geared towards making it difficult for municipalities to convert into cities.
On the other hand, I would like to advert to the fact that in the amendments that we are proposing for the entire
Local Government Code, we are also raising the internal revenue share of the municipalities.
SENATOR SOTTO. I see.
SENATOR PIMENTEL. So that, more or less, hindi naman sila dehado in this particular instance.
SENATOR SOTTO. Well, then, because of that information, Mr. President, I throw my full support behind the
measure.
Thank you, Mr. President.
SENATOR PIMENTEL. Thank you very much, Mr. President. (Emphasis supplied)16
From the foregoing, the justness in the act of Congress in enacting the Cityhood Laws becomes obvious, especially
considering that 33 municipalities were converted into component cities almost immediately prior to the enactment
of R.A. No. 9009. In the enactment of the Cityhood Laws, Congress merely took the 16 municipalities covered
thereby from the disadvantaged position brought about by the abrupt increase in the income requirement of R.A.
No. 9009, acknowledging the “privilege” that they have already given to those newly-converted component cities,
which prior to the enactment of R.A. No. 9009, were undeniably in the same footing or “class” as the respondent
municipalities. Congress merely recognized the capacity and readiness of respondent municipalities to become
component cities of their respective provinces.
Petitioners complain of the projects that they would not be able to pursue and the expenditures that they would not
be able to meet, but totally ignored the respondent municipalities’ obligations arising from the contracts they have
already entered into, the employees that they have already hired, and the projects that they have already initiated
and completed as component cities. Petitioners have completely overlooked the need of respondent municipalities
to become effective vehicles intending to accelerate economic growth in the countryside. It is like the elder siblings
wanting to kill the newly-borns so that their inheritance would not be diminished.
Apropos is the following parable:
There was a landowner who went out at dawn to hire workmen for his vineyard. After reaching an agreement with
them for the usual daily wage, he sent them out to his vineyard. He came out about midmorning and saw other men
standing around the marketplace without work, so he said to them, “You too go along to my vineyard and I will pay
you whatever is fair.” They went. He came out again around noon and mid-afternoon and did the same. Finally,
going out in late afternoon he found still others standing around. To these he said, “Why have you been standing
here idle all day?” “No one has hired us,” they told him. He said, “You go to the vineyard too.” When evening came,
the owner of the vineyard said to his foreman, “Call the workmen and give them their pay, but begin with the last
group and end with the first.” When those hired late in the afternoon came up they received a full day’s pay, and
when the first group appeared they thought they would get more, yet they received the same daily wage. Thereupon
they complained to the owner, “This last group did only an hour’s work, but you have paid them on the same basis
as us who have worked a full day in the scorching heat.” “My friend,” he said to one in reply, “I do you no injustice.
You agreed on the usual wage, did you not? Take your pay and go home. I intend to give this man who was hired last
the same pay as you. I am free to do as I please with my money, am I not? Or are you envious because I am
generous?”17
Congress, who holds the power of the purse, in enacting the Cityhood Laws, only sought the well-being of
respondent municipalities, having seen their respective capacities to become component cities of their provinces,
temporarily stunted by the enactment of R.A. No. 9009. By allowing respondent municipalities to convert into
component cities, Congress desired only to uphold the very purpose of the LGC, i.e., to make the local government
units “enjoy genuine and meaningful local autonomy to enable them to attain their fullest development as self-
reliant communities and make them more effective partners in the attainment of national goals,” which is the very
mandate of the Constitution.
Finally, we should not be restricted by technical rules of procedure at the expense of the transcendental interest of
justice and equity. While it is true that litigation must end, even at the expense of errors in judgment, it is nobler
rather for this Court of last resort, as vanguard of truth, to toil in order to dispel apprehensions and doubt, as the
following pronouncement of this Court instructs:
The right and power of judicial tribunals to declare whether enactments of the legislature exceed the constitutional
limitations and are invalid has always been considered a grave responsibility, as well as a solemn duty. The courts
invariably give the most careful consideration to questions involving the interpretation and application of the
Constitution, and approach constitutional questions with great deliberation, exercising their power in this respect
with the greatest possible caution and even reluctance; and they should never declare a statute void, unless its
invalidity is, in their judgment, beyond reasonable doubt. To justify a court in pronouncing a legislative act
unconstitutional, or a provision of a state constitution to be in contravention of the Constitution x x x, the case must
be so clear to be free from doubt, and the conflict of the statute with the constitution must be irreconcilable,
because it is but a decent respect to the wisdom, the integrity, and the patriotism of the legislative body by which
any law is passed to presume in favor of its validity until the contrary is shown beyond reasonable doubt. Therefore,
in no doubtful case will the judiciary pronounce a legislative act to be contrary to the constitution. To doubt the
constitutionality of a law is to resolve the doubt in favor of its validity.18
WHEREFORE, the Motion for Reconsideration of the “Resolution” dated August 24, 2010, dated and filed on
September 14, 2010 by respondents Municipality of Baybay, et al. is GRANTED. The Resolution dated August 24,
2010 is REVERSED and SET ASIDE. The Cityhood Laws—Republic Acts Nos. 9389, 9390, 9391, 9392, 9393, 9394, 9398,
9404, 9405, 9407, 9408, 9409, 9434, 9435, 9436, and 9491—are declared CONSTITUTIONAL.
SO ORDERED.
2. Legislative History
[G.R. No. L-28329. August 7, 1975.]
COMMISSIONER OF CUSTOMS, Petitioner, v. ESSO STANDARD EASTERN, INC., (Formerly: Standard-Vacuum Refining
Corp. (Phil.), Respondent.
Solicitor General Antonio P. Barredo, Assistant Solicitor General Antonio A. Torres and Solicitor Antonio M. Martinez
for Petitioner.
Carlos J . Valdez & Associates for Respondent.
SYNOPSIS
The respondent was held liable by the Commissioner of Custom for the payment of the amount of P775.62
representing special import tax on certain articles imported by it under R.A.. 387, otherwise known as the Petroleum
Act of 1949. A petition for review was filed with the Court of Tax Appeals. The Commissioner’s ruling was reversed
and refund of the amount paid by the respondent under protest was ordered. Hence this recourse by the petitioner,
contending that the special import tax under R.A.. 1394 is separate and distinct from the custom duty prescribed by
the Tariff and Custom Code, and that the exemption enjoyed by the respondent from the payment of customs duties
under the Petroleum Act of 1949 does not include exemption from the payment of the special import tax provided in
R.A.. 1394.
The Supreme Court, taking into consideration the rules of statutory construction and other extrinsic aids in
interpreting the ambiguous language of statutes, held that the exemption granted by R.A.. 387 embraces special
import tax imposed by R.A. 1394 for it is very clear that the legislature wanted to continue the incentive of tax
exemption for the continuing development of the petroleum industry.
Petition to reverse decision of the Court of Tax Appeals denied.
SYLLABUS
1. STATUTES; INTERPRETATION OF AMBIGUOUS STATUTES. — Where a statutes is ambiguous courts may examine
both the printed pages of the published Act as well as those extrinsic matters that may aid in construing the meaning
of the status, of all bill and purposes to be accomplished by the measure.
2. ID.; ID.; FUNDAMENTALS RULES. — In order to determine the true intent of the legislature, the particular clauses
and phrases of the statute should not be taken as detached and isolated expression, but the whole and every part
thereof must be considered in fixing the meaning of any of its parts. In fact every statute should receive such
construction as will make it harmonize with the pre-existing body of law. Antagonism between the Act to be
interpreted and existing or previous laws is to be avoided, unless it was clearly the intention of the legislature that
such antagonism should arise and one amends or appeals the other either expressly or by application. In addition the
courts may take judicial notice of the origin and history of the statutes which they are called upon to construct and
administer, and facts which effect their derivation, validity and operation.
3. ID.; ID.; R.A. 387 ENACTED TO INTENSIFY PETROLEUM EXPLORATION. — The title of Republic Act 387 and the
provisions of its articles (Art. 103-104) give a clue to the intent of the Philippine Congress, which is to encourage the
exploration and development of the petroleum resources of the country. Through the instrumentality of said law, it
declared in no uncertain terms that the intensification of the exploration for petroleum be carried on unflinchingly
even if, for the time being, no taxes, both national and local, may be collected from the industry. This is the
unequivocal intention of the Philippine Congress when the language of the Petroleum Act is examined. Until this law
or any substantial portion thereof is clearly amended or repealed by subsequent statutes, the intention of the
legislature must be upheld.
4. ID.; ID.; R.A. 387 IN RELATION TO R.A. 1394; EXEMPTION FROM CUSTOMS DUTIES GRANTED BY R.A.. 387
EMBRACES SPECIAL IMPORT TAX IMPOSED BY R.A. 1394. — Republic Act 1394, known as the Special Import Tax Law
repealed and revoked six earlier statutes which had something to do with the imposition of special levies and/or
exemption of certain importation’s from the burden of the special import taxes or levies. On the other hand, it is
apparent that Republic Act 387, the Petroleum Act, had been spared from the pruning Knife of Congress, although
this latter law had granted more concessions and tax-exemption privileges than any of the statutes that were
amended, repealed or revoked by Republic Act 1394. The answer must be that the Congress of the Philippines saw
fit to preserve the privileges granted the Petroleum Law of 1949 in order to keep the door open to the exploitation
and development of the petroleum resources of the country with such incentives as are given under the law.
5. ID.; ID.; ID.; ID.; REPEAL BY IMPLICATION NOT FAVORED. — Republic Act 387 was intended to encourage the
exploitation, exploration and development of the petroleum resources of the country by giving it the necessary
incentive in the form of tax exemptions. This is the raison d’ etre for the generous grant of tax exemption to those
who would invest their financial resources towards the achievement of this national economic goal. On the
contention that the exemption enjoyed under Republic Act 387 have been abrogated by R.A. 1394 the Court holds
that repeal by implication is not favored unless it is manifest that the legislature so intended. As laws are presumed
to be passed with deliberation and with full knowledge of all existing ones on the subject, it is logical to conclude
that in passing a statute it was not intended to interfere with abrogate any former law relating to the same matter,
unless the repugnancy between the two is not only irreconcilable but also clear and convincing as a result of the
language used, or unless the latter act fully embraces the subject matter of the earlier.
DECISION
ESGUERRA, J.:
Appeal from the decision of the Court of Tax Appeals reversing the Commissioner of Customs’ decision holding
respondent ESSO Standard Eastern, Inc., (formerly the Standard-Vacuum Refining Corporation (Phil.) and hereinafter
referred to as ESSO) liable in the total sum of P775.62 as special import tax on certain articles imported by the latter
under Republic Act No. 387, otherwise known as the Petroleum Act of 1949.
Respondent ESSO is the holder of Refining Concession No. 2, issued by the Secretary of Agriculture and Natural
Resources on December 9, 1957, and operates a petroleum refining plant in Limay, Bataan. Under Article 103 of
Republic Act No. 387 which provides: "During the five years following the granting of any concession, the
concessionaire may import free of customs duty, all equipment, machinery, material, instruments, supplies and
accessories," respondent imported and was assessed the special import tax (which it paid under protest) on the
following separate importations:chanrob1es virtual 1aw library
1) One carton, scientific instruments with C & F value of $163.59; assessed a special import tax in the amount of
P31.98 Airport Protest No. 10);
2) One carton of recorder parts with C & F value of $221.56; assessed special import tax in the amount of P43.82
(Airport Protest No. 11);
3) One carton of valves with C & F value of $310.58; assessed special import tax in the amount of P60.72 (Airport
Protest No. 12);
4) One box of parts for Conversion boilers and Auxiliary Equipment with C & F value of $2,389.69; assessed special
import tax in the amount of P467.00 (Airport Protest No. 15);
5) One carton of X-ray films with C & F value of $132.80; assessed special import tax in the amount of P26.00 (Airport
Protest No. 16); and
6) One carton of recorder parts with C & F value of $750.39; assessed special import tax in the amount of P147.00
(Airport Protest No. 17). 1
The Collector of Customs on February 16, 1962, held that respondent ESSO was subject to the payment of the special
import tax provided in Republic Act No. 1394, as amended by R.A. No. 2352, and dismissed the protests. 2
On March 1, 1962, respondent appealed the ruling of the Collector of Customs to the Commissioner of Customs
who, on March 19, 1965, affirmed the decision of said Collector of Customs. 3
On July 2, 1965, respondent ESSO filed a petition with the Court of Tax Appeals for review of the decision of the
Commissioner of Customs.chanroblesvirtuallawlibrary
The Court of Tax Appeals, on September 30, 1967, reversed the decision of herein petitioner Commissioner of
Customs and ordered refund of the amount of P775.62 to respondent ESSO which the latter had paid under protest.
4
This decision of the Court of Tax Appeals is now before this Court for review.
Petitioner contends that the special import tax under Republic Act No. 1394 is separate and distinct from the
customs duty prescribed by the Tariff and Customs Code, and that the exemption enjoyed by respondent ESSO from
the payment of customs duties under the Petroleum Act of 1949 does not include exemption from the payment of
the special import tax provided in R.A. No. 1394. 5
For its stand petitioner puts forward this rationale:jgc:chanrobles.com.ph
"A perusal of the provisions of R.A. No. 1394 will show that the legislature considered the special import tax as a tax
distinct from customs duties as witness the fact that Section 2(a) of the said law made separate mention of customs
duties and special import tax when it provided that . . . if as a result of the application of the schedule therein, the
total revenue derived from the customs duties and from the special import tax on goods, . . . imported from the
United States is less in any calendar year than the proceeds from the exchange tax imposed under Republic Act
Numbered Six Hundred and One, as amended, on such goods, articles or products during the calendar year 1955, the
President may, by proclamation, suspend the reduction of the special import tax for the next succeeding calendar
year . . .
"If it were the intention of Congress to exempt the holders of petroleum refinery concessions like the protestant
(respondent herein), such exemption should have been clearly stated in the statute. Exemptions are never
presumed. They must be expressed in the clearest and most unambiguous language and not left to mere
implication." 6
Specifically, petitioner in his brief submitted two assignment of errors allegedly committed by the Court of Tax
Appeals in the controverted decision, to wit:chanrob1es virtual 1aw library
1st assignment of error:chanrob1es virtual 1aw library
THE COURT OF TAX APPEALS ERRED IN HOLDING THAT THE TERM "CUSTOMS DUTY" IN ARTICLE 103 OF REPUBLIC
ACT NO. 387 INCLUDES THE SPECIAL IMPORT TAX IMPOSED BY REPUBLIC ACT NO. 1394;
2nd assignment of error:chanrob1es virtual 1aw library

THE COURT OF TAX APPEALS ERRED IN HOLDING THAT EXEMPTION FROM PAYMENT OF CUSTOMS DUTIES UNDER
REPUBLIC ACT NO. 387 INCLUDES EXEMPTION FROM PAYMENT OF THE SPECIAL IMPORT TAX.
On the other hand, the Court of Tax Appeals rationalized the ground for its ruling thus:jgc:chanrobles.com.ph
"If we are to adhere, as we should, to the plain and obvious meaning of words in consonance with settled rules of
interpretation, it seems clear that the special import tax is an impost or a charge on the importation or bringing into
the Philippines of all goods, articles or products subject thereto, for the phrase "import tax on all goods, articles or
products imported or brought into the Philippines" in explicit and unambiguous terms simply means customs duties.
It is hardly necessary to add that "customs duties" are simply taxes assessed on merchandise imported from, or
exported to a foreign country.
"And being a charge upon importation, the special import tax is essentially a customs duty, or at least partakes of the
character thereof."cralaw virtua1aw library
Citing numberous American decisions and definitions of terms "customs duties," "duties," "imposts," "levies," "tax,"
and "tolls," and their distinctions, including some pronouncements of this Court on the subject, the Court of Tax
Appeals in its decision, went to great lengths to show that the term "special import tax" as used in R.A. No. 1394
includes customs duties. It sees the special import tax as nothing but an impost or a charge on the importation or
bringing into the Philippines of goods, articles or products. 7
To clinch its theory the Court of Tax Appeals cited the similarity in the basis of computation of the customs duty as
well as the similarity in the phraseology of Section 3 of Republic Act No. 1394 (which establishes the special import
tax) and Section 201 of the Tariff & Customs Code (the basic law providing for and regulating the imposition of
customs duties and imposts on importations). 8
For its part, private respondent, ESSO, in its answer to the petition, leaned heavily on the same arguments as those
given by the Tax Court, the burden of which is that the special import tax law is a customs law. 9
It is clear that the only issue involved in this case is whether or not the exemption enjoyed by herein private
respondent ESSO Standard Eastern, Inc. from customs duties granted by Republic Act No. 387, or the Petroleum Act
of 1949, should embrace or include the special import tax imposed by R.A. No. 1394, or the Special Import Tax Law.
We have examined the records of this case thoroughly and carefully considered the arguments presented by both
parties and We are convinced that the only thing left to this Court to do is to determine the intention of the
legislature through interpretation of the two statutes involved, i.e., Republic Act No. 1394 and Republic Act No.
387.chanroblesvirtual|awlibrary
It is a well accepted principle that where a statute is ambiguous, as Republic Act No. 1394 appears to be, courts may
examine both the printed pages of the published Act as well as those extrinsic matters that may aid in construing the
meaning of the statute, such as the history of its enactment, the reasons for the passage of the bill and purposes to
be accomplished by the measure. 10
Petitioner in the first assignment of error took exception to the finding of the Court of Tax Appeals that "The
language of Republic Act No. 1394 seems to leave no room for doubt that the law intends that the phrase ’Special
import tax’ is taken to include customs duties" and countered with the argument that "An examination of the
provisions of Republic Act No. 1394 will indubitably reveal that Congress considered the special import tax as a tax
different from customs duties, as may be seen from the fact that Section 2(a) of said law made separate mention of
customs duties and special import tax . . ." Thus:jgc:chanrobles.com.ph
". . . if as a result of the application of the schedule therein the total revenue derived from the customs duties and
from the special import tax on goods, . . . imported from the United States is less in any calendar year than the
proceeds from the exchange tax imposed under Republic Act Numbered Six Hundred and One, as amended, on such
goods, articles or products during the calendar year 1955, the President may, by Proclamation, suspend the
reduction of the special import tax for the next succeeding calendar year . . ."cralaw virtua1aw library
Petitioner further argues:jgc:chanrobles.com.ph

"Customs duties are prescribed by the Tariff and Customs Code, while the special import tax is provided for by
Republic Act No. 1394. If our legislature had intended to classify the special import tax as customs duty, the said Act
would not have expressly exempted from payment of the special import tax importations of machinery, equipment,
accessories, and spare parts for use of industries, without distinguishing whether the industries referred to are the
industries exempt from the payment of customs duties or the non-exempt ones (Sec. 6). It is sufficient that the
imported machinery, etc., is for the use of any industry." 11
A study of petitioner’s two assignments of errors shows that one is anchored on practically the same ground as the
other: both involve the interpretation of R.A. No. 387 (The Petroleum Act of 1949) in relation with R.A. No. 1394 (The
Special Import Tax Law).
While the petitioner harps on particular clauses and phrases found in the two cited laws, which in a way was likewise
resorted to by the respondent ESSO, it would do Us well to restate the fundamental rule in the construction of a
statute.
In order to determine the true intent of the legislature, the particular clauses and phrases of the statute should not
be taken as detached and isolated expressions, but the whole and every part thereof must be considered in fixing
the meaning of any of its parts. In fact every statute should receive such construction as will make it harmonize with
the pre-existing body of laws. Antagonism between the Act to be interpreted and existing or previous laws is to be
avoided, unless it was clearly the intention of the legislature that such antagonism should arise and one amends or
repeals the other, either expressly or by implication.
Another rule applied by this Court is that the courts may take judicial notice of the origin and history of the statutes
which they are called upon to construe and administer, and of facts which affect their derivation, validity and
operation. 12
Applying the above stated rules and principles, let us consider the history, the purpose and objectives of Republic
Act No. 387 as it relates to Republic Act No. 1394 and other laws passed by the Congress of the Philippines insofar as
they relate to each other.
Republic Act No. 387, the Petroleum Act of 1949, has this for its title, to wit:chanrob1es virtual 1aw library
AN ACT TO PROMOTE THE EXPLORATION, DEVELOPMENT, EXPLOITATION, AND UTILIZATION OF THE PETROLEUM
RESOURCES OF THE PHILIPPINES; TO ENCOURAGE THE CONSERVATION OF SUCH PETROLEUM RESOURCES; TO
AUTHORIZE THE SECRETARY OF AGRICULTURE AND NATURAL RESOURCES TO CREATE AN ADMINISTRATION UNIT
AND A TECHNICAL BOARD IN THE BUREAU OF MINES; TO APPROPRIATE FUNDS THEREFOR; AND FOR OTHER
PURPOSES.
Art. 103 of said Act reads;
"ART. 103. Customs duties. — During the five years following the granting of any concessions, the concessionaire
may import free of customs duty, all equipment, machinery, material, instruments, supplies and accessories.
x x x
Art. 102 of the Same law insofar as pertinent, provides:jgc:chanrobles.com.ph
"ART. 102. Work obligations, taxes, royalties not to be charged. — . . .; nor shall any other special taxes or levies be
applied to such concessions, nor shall concessionaires under this Act be subjected to any provincial, municipal, or
other local taxes or levies nor shall any sales tax be charged on any petroleum produced from the concession or
portion thereof, manufactured by the concessionaire and used in the working of his concession. . . . ."cralaw
virtua1aw library
Art. 104, still of the same Act, reads:chanrob1es virtual 1aw library
ART. 104. No export tax to be imposed. — No export tax shall be levied upon petroleum produced from concessions
granted under this Act."cralaw virtua1aw library
The title of Republic Act No. 387 and the provisions of its three articles just cited give a clue to the intent of the
Philippine legislature, which is to encourage the exploitation and development of the petroleum resources of the
country. Through the instrumentality of said law, it declared in no uncertain terms that the intensification of the
exploration for petroleum must be carried on unflinchingly even if, for the time being, no taxes, both national and
local, may be collected from the industry. This is the unequivocal intention of the Philippine Congress when the
language of the Petroleum Act is examined. Until this law or any substantial portion thereof is clearly amended or
repealed by subsequent statutes, the intention of the legislature must be upheld.
Against this unambiguous language of R.A. No. 387, there is the subsequent legislation. R.A. No. 1394, the Special
Import Tax Law, which, according to the herein petitioner, shows that the legislature considered the special import
tax as a tax distinct from customs duties.
Republic Act No. 1394, otherwise known as the Special Import Tax Law, is entitled as follows:chanrob1es virtual 1aw
library
AN ACT TO IMPOSE A SPECIAL IMPORT TAX ON ALL GOODS, ARTICLES OR PRODUCTS IMPORTED OR BROUGHT INTO
THE PHILIPPINES, AND TO REPEAL REPUBLIC ACTS NUMBERED SIX HUNDRED AND ONE, EIGHT HUNDRED AND
FOURTEEN, EIGHT HUNDRED AND SEVENTY-ONE, ELEVEN HUNDRED AND SEVENTY-FIVE, ELEVEN HUNDRED AND
NINETY-SEVEN AND THIRTEEN HUNDRED AND SEVENTY-FIVE.
The title indicates unmistakably that it is repealing six prior statutes. As will be seen later, all these laws dealt with
the imposition of a special excise tax on foreign exchange or other form of levy on importation of goods into the
country.
Section 1 of Republic Act No. 1394 reads as follows:jgc:chanrobles.com.ph
"SECTION 1. Except as herein otherwise provided, there shall be levied, collected and paid as special import tax on all
goods, articles or products imported or brought into the Philippines, irrespective of source, during the period and in
accordance with the rates provided for in the following schedule:chanrob1es virtual 1aw library
x x x"
It would appear that by the provision of Section 1 of this Act, the pertinent provision of the Petroleum Law, for which
there appears to be no proviso to the contrary, has been modified or altered.
Section 6 of Republic Act No. 1394 declares that the tax provided for in its Section 1 shall not be imposed against
importation into the Philippines of machinery and/or raw materials to be used by new and necessary industries as
determined in accordance with R.A. No. 901 and a long list of other goods, articles, machinery, equipment,
accessories and others.
We shall now examine the six statutes repealed by R.A. No. 1394, namely:chanrob1es virtual 1aw library
R.A. No. 601 is an Act imposing a special excise tax of 17% on foreign exchange sold by the Central Bank or its agents.
This is known as the Exchange Tax Law;
R.A. No. 814 amended Sections one, two and five and repealed Sections three and four of R.A. No. 601;
R.A. No. 871 amended Sections one and two of R.A. No. 601, as amended earlier by R.A. No. 814;
R.A. No. 1175 amended further Sections one and two of R.A. No. 601, as amended;
R.A. No. 1197 amended furthermore R.A. No. 601 as amended previously by R.A. No. 1175;
R.A. No. 1375 amended Sections one and two of R.A. No. 601 as amended by R.A. Nos. 1175 and 1197.
As can be seen from the foregoing, in one fell swoop, Republic Act No. 1394 repealed and revoked six earlier statutes
which had something to do with the imposition of special levies and/or exemption of certain importations from the
burden of the special import taxes or levies. On the other hand, it is apparent that R.A. No. 387, the Petroleum Act,
had been spared from the pruning knife of Congress, although this latter law had granted more concessions and tax-
exemption privileges than any of the statutes that were amended, repealed or revoked by R.A. No. 1394. The answer
must be that the Congress of the Philippine saw fit to preserve the privileges granted under the Petroleum Law of
1949 in order to keep the door open to the exploitation and development of the petroleum resources of the country
with such incentives as are given under that law.
This ascertained will and intention of the legislature finds a parallelism in a case brought earlier before this Court.
A fishpond owner was slapped with taxes as a "merchant" by the Collector of Internal Revenue. He paid under
protest and filed an action to recover the taxes paid, claiming that he was an agriculturist and not a merchant. When
this Court was called upon to interpret the provisions of the Internal Revenue Law on whether fish is an agricultural
product which falls under the exemption provisions of said law, it inquired into the purpose of the legislature in
establishing the exemption for agricultural products. We held:chanroblesvirtualawlibrary:red
"The first inquiry, therefore, must relate to the purpose the legislature had in mind in establishing the exemption
contained in the clause now under consideration. It seems reasonable to assume that it was due to the belief on the
part of the law-making body that by exempting agricultural products from this tax the farming industry would be
favored and the development of the resources of the country encouraged . . ." 13
Having this in mind, particularly the manner in which extrinsic aids, the history of the enactment of the statute and
purpose of the legislature in employing a clause or provision in the law had been applied in determining the true
intent of the lawmaking body, We are convinced that R.A. No. 387, The Petroleum Act of 1949, was intended to
encourage the exploitation, exploration and development of the petroleum resources of the country by giving it the
necessary incentive in the form of tax exemptions. This is the raison d etre for the generous grant of tax exemptions
to those who would invest their financial resources towards the achievement of this national economic goal.
On the contention of herein petitioner that the exemptions enjoyed by respondent ESSO under R.A. No. 387 have
been abrogated by R.A. No. 1394, We hold that repeal by implication is not favored unless it is manifest that the
legislature so intended. As laws are presumed to be passed with deliberation and with full knowledge of all existing
ones on the subject, it is logical to conclude that in passing a statute it was not intended to interfere with or
abrogate any former law relating to the same matter, unless the repugnancy between the two is not only
irreconcilable but also clear and convincing as a result of the language used, or unless the latter act fully embraces
the subject matter of the earlier. 14
As observed earlier, Congress lined up for revocation by Republic Act No. 1394 six statutes dealing with the
imposition of special imposts or levies or the granting of exemptions from special import taxes. Yet, considering the
tremendous amount of revenues it was losing under the Petroleum Law of 1949, it failed to include the latter statute
among those it chose to bury by the Special Import Tax Law. The reason for this is very clear: The legislature wanted
to continue the incentives for the continuing development of the petroleum industry.
It is not amiss to mention herein passing that contrary to the theory of the herein petitioner, R.A. No. 387 had not
been repealed by R.A. No. 2352 which expressly abrogated Section 6 of R.A. No. 1394 but did not repeal any part of
R.A. No. 387. Therefore, the exemption granted by Republic Act No. 387 still stands.
WHEREFORE, taking into consideration the weight given by this Court to the findings and conclusions of the Court of
Tax Appeals on a matter it is well-equipped to handle, which findings and conclusions. We find no reason to
overturn, the petition of the Commissioner of Customs to reverse the decision of the Court of Tax Appeals should be,
as it is hereby, denied.
No costs.
SO ORDERED.
G.R. No. L-21258 October 31, 1967
FILIPINAS LIFE ASSURANCE COMPANY, petitioner,

vs.
THE COURT OF TAX APPEALS and THE COMMISSIONER OF INTERNAL REVENUE, respondents.
Josue H. Gustilo and Associates for petitioner.

Office of the Solicitor General for respondents.
CASTRO, J.:
The issue posed in this appeal is whether domestic and resident foreign life insurance companies are entitled to
return only 25 per cent of their income from dividends under the 1957 amendment of section 24 of the National
Internal Revenue Code, the pertinent provisions of which read as follows:
Sec. 24. Rate of Tax on Corporations. — (A) In general there shall be levied, assessed, collected, and paid annually
upon the total net income received in the preceding taxable year from all sources by every corporation organized in,
or existing under the laws of the Philippines, no matter how created or organized, but not including duly registered
general copartnerships (companias colectivas), domestic life insurance companies and foreign life insurance
companies doing business in the Philippines, a tax upon such income equal to the sum of the following:
Twenty per centum upon the amount by which such total net income does not exceed one hundred thousand pesos;
and
Twenty-eight per centum upon the amount by which such total net income exceeds one hundred thousand pesos;
and a like tax shall be levied, assessed, collected and paid annually upon the total net income received in the
preceding taxable year from all sources within the Philippines by every corporation organized, authorized or existing
under the laws of any foreign country: . . . And provided, further, That in the case of dividends received by a
domestic or resident foreign corporation from a domestic corporation liable to tax under this Chapter or from a
domestic corporation engaged in a new and necessary industry, as defined under Republic Act Numbered Nine
hundred and one, only twenty-five per centum thereof shall be returnable for purposes of the tax imposed by this
section.
(B) Rate of Tax on Life Insurance Companies. — There shall be levied, assessed, collected and paid annually from
every insurance company organized in or existing under the laws of the Philippines, or foreign life insurance
company authorized to carry on business in the Philippines, but not including purely cooperative companies or
associations as defined in section two hundred and fifty-five of this Code, on the total investment income received
by such company during the preceding taxable year from interest, dividends and rents from all sources whether from
or within the Philippines, a tax of six and one-half per centum upon such income: Provided, however, That foreign
life insurance companies not doing business in the Philippines shall, on any investment income received by them
from the Philippines, be subject to tax as any other foreign corporation. . . .
The Court of Tax Appeals ruled that life insurance companies should report in full their income from dividends
because, while they are treated in subsection (B), the proviso regarding dividend exclusion is found in subsection (A)
which treats of corporations in general. The petitioner appealed to this Court, contending, on the basis of the history
of the proviso, that the benefits of dividend exclusion are available to all domestic and resident foreign corporations
regardless of the business in which they may be engaged.
We agree with the petitioner.
The petitioner is a domestic life insurance company. On March 18, 1959, it filed an income tax return for 1958
showing the following data:
GROSS INCOME
From interest
P 5,186.44
From dividends
57,105.29
TOTAL GROSS INCOME
P62,202.36
TOTAL DEDUCTIONS
10,317.47
Net income
P51,974.89
Tax assessable:
Life Insurance Companies
P 3,378.00
TOTAL TAX DUE
P 3,378.00
Later, however, it filed an amended return, as follows:
GROSS INCOME
From interest
P 5,186.44
From dividends
15,242.55
TOTAL GROSS INCOME
P20,186.44
TOTAL DEDUCTIONS
10,317.47
Net income
P10,111.52
Tax assessable:
Life Insurance Companies

P657.00
TOTAL TAX DUE
P657.00
This was accompanied with a claim for the refund of P2,721 representing the difference between P3,378, which the
petitioner had paid as income tax under its original return, and P657, which it now averred was the correct amount
due from it. The difference is due to the fact that, whereas in its original income tax return the petitioner reported in
full its income from dividends amounting to P57,105.29,1 in its amended return it reported only 25 per cent, or
P15,242.55,2 of the dividends from domestic corporations.
The claim for refund was filed with the respondent Commissioner of Internal Revenue but, as he had not been heard
from, the petitioner, to avoid prescription of its action, took the matter to the Court of Tax Appeals. The Tax Court,
with two members voting and another one reserving his vote, upheld the propriety of the action against the claim of
the respondent that it was filed prematurely. It however denied the claim of the petitioner for refund on the ground
that the proviso allowing the return of only 25 per cent of the income from dividends is found in subsection (A) of
section 24 of the National Internal Revenue Code, while life insurance companies are dealt with in another
subsection, although of the same section. The Tax Court's ratio decidendi reads:
As a general rule of statutory construction a proviso is deemed to apply only to the immediately preceding clause or
provision. Where, as in the case at bar, there is no clear legislative intention to apply it to the subse-clause or
provision (Section 24[B]), we are constrained to interpret the proviso as affecting only the preceding clause or
provision. (See Collector, et al. vs. Servando de los Angeles, et al. G.R. No. L-9899, August 13, 1957). Consequently,
we are of the opinion that the proviso relative to the returnability of only 25% of such dividends applies only to
corporations organized in or existing under the laws of the Philippines . . ., but not including duly registered
copartnerships (companias colectivas), domestic life insurance companies and foreign life insurance companies
doing business in the Philippines.
But a purely syntactical approach is hardly a safe guide to the meaning of a statute. The position of a proviso, for
instance, although possessed of considerable influence, is not necessarily controlling. The proviso may apply to
sections or portions thereof which follow it or even to the entire statute.3 Position, after all, cannot override
intention, in the ascertainment of which the legislative history of a statute is extremely more important.4
A resort to legislative history should prove particularly helpful in the case of section 24 of the Code as this section
has gone through a miscellany of amendments, with the result that its basic outlines are now only vaguely
discernible. From a one-paragraph section it has grown into a multi-paragraph one, with lengthy sentences qualified
at every turn by exceptions and provisos. The readability expert,5 who once complained of a provision of the U.S.
Internal Revenue Code as a "nightmare" of a writing, would be at a loss for words to describe section 24 of our Code.
The following table shows the changes which section 24 has undergone at each of the eight different stages of its
amendment.
CORPORATE INCOME TAX: A COMPARATIVE TABLE OF AMENDMENTS6
(1) As originally enacted on June 15, 1939:
Sec. 24. Rate of tax on corporations. — There shall be levied, assessed, collected, and paid annually upon the total
net income received in the preceding taxable year from all sources by every corporation organized in, or existing
under the laws of, the Philippines, no matter how created or organized, but not including duly registered general
copartnerships (compañias colectivas), a tax of eight per centum upon such income; and a like tax shall be levied,
assessed, collected, and paid annually upon the total net income received in the preceding taxable year from all
sources within the Philippines by every corporation organized, authorized, or existing under the laws of any foreign
country: Provided, however, That in the case of dividends received by a domestic or resident foreign corporation
from a domestic corporation liable to tax under this Chapter, only twenty-five per centum thereof shall be
returnable for purposes of the tax imposed by this section.
(2) As amended by Republic Act 82, 1 Laws & Res. 250 (1946):
Sec. 24. Rate of tax on corporation. — There shall be levied, assessed, collected, and paid annually upon the total net
income received in the preceding taxable year from all sources by every corporation organized in, or existing under
the laws of the Philippines, no matter how created or organized, but not including duly registered general
copartnerships (compañias colectivas), a tax of TWELVE per centum upon such income; and a like tax shall be levied,
assessed, collected, and paid annually upon the total net income received in the preceding taxable year from all
sources within the Philippines by every corporation organized, authorized, or existing under the laws of any foreign
country: Provided, however, THAT BUILDING AND LOAN ASSOCIATIONS OPERATING AS SUCH IN ACCORDANCE WITH
SECTIONS ONE HUNDRED SEVENTY-ONE TO ONE HUNDRED NINETY OF THE CORPORATION LAW, AS AMENDED,
SHALL PAY A TAX OF SIX PER CENTUM ON THEIR TOTAL NET INCOME: AND PROVIDED, FURTHER, That in the case of
dividends received by a domestic or resident foreign corporation from a domestic corporation liable to tax under this
Chapter, only twenty-five per centum thereof shall be returnable for purposes of the tax imposed by this section.
under the laws of the Philippines, no matter how created or organized, but not including duly registered general
copartnerships (compañias colectivas), a tax [of] SIXTEEN per centum upon such income; and a like tax shall be
levied, assessed, collected, and paid annually upon the total net income received in the preceding taxable year from
all sources within the Philippines by every corporation organized, authorized, or existing under the laws of any
foreign country; Provided, however, That Building and Loan Associations operating as such in accordance with
sections one hundred and seventy-one to one hundred and ninety of the Corporation Law, as amended, shall pay a
tax of NINE per centum on their total net income: And provided, further, That in the case of dividends received by a
domestic or resident foreign corporation from a domestic corporation liable to tax under this Chapter, only twenty-
five per centum thereof shall be returnable for purposes of the tax imposed by this section.
Sec. 24. Rate of tax on corporations.7 — There shall be levied, assessed, collected, and paid annually upon the total
copartnerships (compañias colectivas), a tax UPON SUCH INCOME EQUAL TO THE SUM OF THE FOLLOWING:
TWENTY PER CENTUM UPON THE AMOUNT BY WHICH SUCH TOTAL NET INCOME DOES NOT EXCEED ONE HUNDRED
THOUSAND PESOS; AND
TWENTY-EIGHT PER CENTUM UPON THE AMOUNT BY WHICH SUCH TOTAL NET INCOME EXCEEDS ONE HUNDRED
THOUSAND PESOS; and a like tax shall be levied, assessed, collected, and paid annually upon the total net income
received in the preceding taxable year from all sources within the Philippines by every corporation organized,
authorized, or existing under the laws of any foreign country: Provided, however, That Building and Loan
Associations operating as such in accordance with sections one hundred and seventy-one to one hundred and ninety
of the Corporation Law, AS WELL AS PRIVATE EDUCATIONAL INSTITUTIONS, shall pay a tax of TWELVE per centum
AND TEN PER CENTUM, RESPECTIVELY, on their total net income: And provided, further, That in the case of
dividends received by a domestic or resident foreign corporation from a domestic corporation liable to tax under this
Chapter, only twenty-five per centum thereof shall be returnable for purposes of the tax imposed by this section.
copartnerships (compañias colectivas), a tax upon such income equal to the sum of the following:
and
and a like tax shall be levied, assessed, collected, and paid annually upon the total net income received in the
under the laws of any foreign country: Provided, That Building and Loan Associations operating as such in
accordance with sections one hundred and seventy-one to one hundred and ninety of the Corporation Law, as
amended, as well as private educational institutions, shall pay a tax of twelve per centum and ten per centum
respectively, on their total net income: And provided, further, That in the case of dividends received by a domestic or
resident foreign corporation from a domestic corporation liable to tax under this Chapter or FROM A DOMESTIC
CORPORARION ENGAGED IN NEW AND NECESSARY INDUSTRY AS DEFINED UNDER REPUBLIC ACT NUMBERED NINE
HUNDRED AND ONE, only twenty-five per centum thereof shall be returnable for purposes of the tax imposed by this
section.
Sec. 24. Rate of tax on Corporations. — (A)8 IN GENERAL there shall be levied, [assessed,] collected, and paid
annually upon the total net income received in the preceding taxable year from all sources by every corporation
organized in, or existing under the laws of the Philippines, no matter how created or organized, but not including
duly registered general copartnerships (compañias colectivas), DOMESTIC LIFE INSURANCE COMPANIES AND
FOREIGN LIFE INSURANCE COMPANIES DOING BUSINESS IN THE PHILIPPINES, a tax upon such income equal to the
sum of the following:
and
and a like tax shall be levied, [assessed,] collected and paid annually upon the total net income received in the
under the laws of any foreign country: Provided, however, That Building and Loan Associations operating as such in
accordance with sections one hundred and seventy-one to one hundred and ninety of the Corporation Law, as
amended, as well as private educational institutions, shall pay a tax of twelve per centum and ten per centum,
respectively, on their total net income: And provided, further, That in the case of dividends received by a domestic or
resident foreign corporation from a domestic corporation liable to tax under this Chapter or from a domestic
corporation engaged in a new and necessary industry, as defined under Republic Act Numbered Nine hundred and
one, only twenty-five per centum thereof shall be returnable for purposes of the tax imposed by this section.9
(B) RATE OF TAX ON LIFE INSURANCE COMPANIES. — THERE SHALL BE LEVIED, ASSESSED, COLLECTED AND PAID
ANNUALLY FROM EVERY INSURANCE COMPANY ORGANIZED IN OR EXISTING UNDER THE LAWS OF THE PHILIPPINES,
OR FOREIGN LIFE INSURANCE COMPANY AUTHORIZED TO CARRY ON BUSINESS IN THE PHILIPPINES, BUT NOT
INCLUDING PURELY COOPERATIVE COMPANIES OR ASSOCIATIONS AS DEFINED IN SECTION TWO HUNDRED FIFTY-
FIVE OF THIS CODE, ON THE TOTAL INVESTMENT INCOME RECEIVED BY SUCH COMPANY DURING THE PRECEDING
TAXABLE YEAR FROM INTEREST, DIVIDENDS AND RENTS FROM ALL SOURCES WHETHER FROM OR WITHOUT THE
PHILIPPINES, A TAX OF SIX AND ONE-HALF PER CENTUM UPON SUCH INCOME: PROVIDED, HOWEVER, THAT
FOREIGN LIFE INSURANCE COMPANIES NOT DOING BUSINESS IN THE PHILIPPINES SHALL, ON ANY INVESTMENT
INCOME RECEIVED BY THEM FROM THE PHILIPPINES, BE SUBJECT TO TAX AS ANY OTHER FOREIGN CORPORATION.
THE TOTAL NET INVESTMENT INCOME OF DOMESTIC LIFE INSURANCE COMPANIES IS THE GROSS INVESTMENT
INCOME RECEIVED DURING THE TAXABLE YEAR FROM RENTS, DIVIDENDS, AND INTEREST LESS DEDUCTIONS FOR
REAL ESTATE EXPENSES, DEPRECIATION, INTEREST PAID WITHIN THE TAXABLE YEAR ON ITS INDEBTEDNESS, EXCEPT
ON INDEBTEDNESS INCURRED TO PURCHASE OR CARRY OBLIGATION THE INTEREST UPON WHICH IS WHOLLY
EXEMPT FROM TAXATION UNDER EXISTING LAWS, AND SUCH INVESTMENT EXPENSES PAID DURING THE TAXABLE
YEAR AS ARE ORDINARY AND NECESSARY IN THE CONDUCT OF THE INVESTMENTS: AND THE TOTAL NET
INVESTMENT INCOME OF FOREIGN LIFE INSURANCE COMPANIES DOING BUSINESS IN THE PHILIPPINES IS THAT
PORTION OF THEIR CROSS WORLD INVESTMENT INCOME WHICH BEARS THE SAME RATIO TO SUCH EXPENSES AS
THEIR TOTAL PHILIPPINE RESERVE BEARS TO THEIR TOTAL WORLD RESERVE LESS THAT PORTION OF THEIR TOTAL
WORLD INVESTMENT EXPENSES WHICH BEARS THE SAME RATIO TO SUCH EXPENSES AS THEIR TOTAL PHILIPPINE
INVESTMENT INCOME BEARS TO THEIR TOTAL WORLD INVESTMENT INCOME.
(7) As amended by Republic Act 2343, 14 Laws & Res. 423 (1959);
Sec. 24. Rate of tax on corporations. — (a) TAX ON DOMESTIC CORPORATIONS. — In general there shall be levied,
collected, and paid annually upon the total net income received in the preceding taxable year from all sources by
every corporation organized in, or existing under the laws of the Philippines, no matter how created or organized,
but not including duly registered general copartnerships (compañias colectivas), domestic life insurance companies
and foreign life insurance companies doing business in the Philippines, a tax upon such income equal to the sum of
the following:
TWENTY-TWO per centum upon the amount by which such total net income does not exceed one hundred thousand
pesos; and
THIRTY per centum upon the amount by which such total net income exceeds one hundred thousand pesos; and a
like tax shall be levied, collected, and paid annually upon the total net income received in the preceding taxable year
from all sources within the Philippines by every corporation organized, authorized, or existing under the laws of any
foreign country: Provided, however, That building and loan associations operating as such in accordance with
sections one hundred and seventy-one to one hundred and ninety of the Corporation law, as amended, as well as
private educational institutions, shall pay a tax of twelve per centum and ten per centum, respectively, on their total
net income: And provided, further, That in the case of dividends received by a domestic or resident foreign
corporation from a domestic corporation liable to tax under this Chapter or from a domestic corporation engaged in
a new and necessary industry, as defined under Republic Act Numbered Nine hundred and one, only twenty-five per
centum thereof, shall be returnable for purposes of the tax imposed by this section.
(b) TAX ON FOREIGN CORPORATIONS. — (1) NON-RESIDENT CORPORATIONS. — THERE SHALL BE LEVIED, COLLECTED
AND PAID FOR EACH TAXABLE YEAR, IN LIEU OF THE TAX IMPOSED BY THE PRECEDING PARAGRAPH, UPON THE
AMOUNT RECEIVED BY EVERY FOREIGN CORPORATION NOT ENGAGED IN TRADE OR BUSINESS WITHIN THE
PHILIPPINES, FROM ALL SOURCES WITHIN THE PHILIPPINES, AS INTEREST, DIVIDENDS, RENTS, SALARIES, WAGES,
PREMIUMS, ANNUITIES, COMPENSATIONS, REMUNERATIONS, EMOLUMENTS, OR, OTHER FIXED OR DETERMINABLE
ANNUAL OR PERIODICAL GAINS, PROFITS, AND INCOME, A TAX EQUAL TO THIRTY PER CENTUM OF SUCH AMOUNT.
(2) RESIDENT CORPORATIONS. — A FOREIGN CORPORATION ENGAGED IN TRADE OR BUSINESS WITHIN THE
PHILIPPINES (EXCEPT FOREIGN LIFE INSURANCE COMPANIES) SHALL BE TAXABLE AS PROVIDED IN SECTION (a) OF
THIS SECTION.
(c) Rate of tax on life insurance companies. — There shall be levied, assessed,10 collected and paid annually from
every life insurance company organized in or existing under the laws of the Philippines, or foreign life insurance
company authorized to carry on business in the Philippines but not including purely cooperative companies or
associations as defined in section two hundred fifty-five of this Code, on the total investment income received by
such company during the preceding taxable year from interest, dividends, and rents from all sources, whether from
or without the Philippines, a tax of six and one-half per centum upon such income: Provided, however, That foreign
from the Philippines, be subject to tax as any other foreign corporation.
The total net investment income of domestic life insurance companies is the gross investment income received
during the taxable year from rents, dividends, and interest less deductions for real estate expenses, depreciation,
interest paid within the taxable year on its indebtedness, except on indebtedness incurred to purchase or carry
obligation the interest upon which is wholly exempt from taxation under existing laws, and such investment
expenses paid during the taxable year as are ordinary and necessary in the conduct of the investments; and the total
net investment income of foreign life insurance companies doing business in the Philippines is that portion of their
gross world investment income which bears the same ratio to such income as their total Philippine reserve bears to
their total world reserve less that portion of their total world investment expenses which bear the same ratio to such
expenses as their total Philippine investment income bears to their total world investment income.
(8) As amended by Republic Act 3825, 60 O.G. 780 (1963):

Sec. 24. Rate of tax on corporations. — (a) Tax on domestic corporations. — In general there shall be levied,
but not including duly registered general copartnerships (compañias colectivas), domestic life insurance companies
and foreign life insurance companies doing business in the Philippines, a tax upon such income equal to the sum of
the following:
Twenty-two per centum upon the amount by which such total net income does not exceed one hundred thousand
pesos; and
Thirty per centum upon the amount by which such total net income exceeds one hundred thousand pesos; and a like
tax shall be levied, collected, and paid annually upon the total net income received in the preceding taxable year
from all sources within the Philippines by every corporation organized, authorized, or existing under the laws of any
sections one hundred and seventy-one to one hundred and ninety of the Corporation Law, as amended, as well as
private educational institutions, shall pay a tax of twelve per centum and ten per centum respectively, on their total
net income: And provided, further, That in the case of dividends received by a domestic or resident foreign
corporation from a domestic corporation liable to tax under this Charter or from a domestic corporation engaged in
a new and necessary industry, as defined under Republic Act Numbered Nine hundred and one, only twenty-five per
centum thereof shall be returnable for purposes of the tax imposed by this section.
(b) Tax on foreign corporations. — (1) Non-resident corporations. There shall be levied, collected, and paid for each
taxable year, in lieu of the tax imposed by the preceding paragraph, upon the amount received by every foreign
corporation not engaged in trade or business within the Philippines from all sources within the Philippines, as
interest, dividends, rents, salaries, wages, premiums, annuities, compensating, remunerations, emoluments, or other
fixed or determinable annual or periodical gains, profits, and income, a tax equal to thirty per centum of such
amount: PROVIDED, HOWEVER, THAT PREMIUMS SHALL NOT INCLUDE REINSURANCE PREMIUMS.
(2) Resident corporations. — A foreign corporation engaged in trade or business within the Philippines (except
foreign life insurance companies) shall be taxable as provided in subsection (a) of this section.
(c) Rate of tax on life insurance companies. — There shall be levied, assessed,11 collected and paid annually from
every life insurance company organized or existing under the laws of the Philippines, or foreign life insurance
company authorized to carry on business in the Philippines but not including purely cooperative companies or
associations as defined in section two hundred fifty-five of this Code, on the total investment income received by
such company during the preceding taxable year from interest, dividends, and rents from all sources, whether from
or without the Philippines, a tax of six and one-half per centum upon such income: Provided, however, That foreign
from the Philippines, but subject to tax as any other foreign corporation.
interest paid within the taxable year on its indebtedness, except on indebtedness incurred to purchase or carry
(9) As amended by Republic Act 3841, 60 O.G. 1095 (1963):
Sec. 24. Rate of tax on corporations. — (a) Tax on domestic corporations. — In general there shall be levied,
but not including duly registered general copartnership (compañias colectivas), domestic life insurance companies
and foreign life insurance compaties doing business in the Philippines, a tax upon such income equal to the sum of
the following:
Twenty-two per centum upon the amount by which such total net income does not exceed one hundred thousand
pesos; and
Thirty per centum upon the amount by which such total net income exceeds one hundred thousand pesos; and a like
tax shall be levied, collected, and paid annually upon the total net income received in the preceding taxable year
from all sources within the Philippines by every corporation organized, authorized or existing under the laws of any
sections one hundred and seventy-one to one hundred and ninety of the Corporation Law, as amended, as well as
private educational institutions, shall pay a tax of twelve per centum and ten per centum, respectively, on their total
net income: And, provided, further, That in the case of dividends received by a domestic or resident foreign
corporation from domestic corporation liable to tax under this Chapter or from a domestic corporation engaged in a
new and necessary industry, as defined under Republic Act Numbered Nine hundred and one,12 only twenty-five per
centum thereof shall be returnable for purposes of the tax imposed by this section.
(b) Tax on foreign corporations. — (1) Non-resident corporations. — There shall be levied, collected and paid for
each taxable year, in lieu of the tax imposed by the preceding paragraph, upon the amount received by every foreign
corporation not engaged in trade or business within the Philippines, from all sources within the Philippines as
interest, dividends, rents, salaries, wages, premiums, annuities, compensatinig, remunerations, emoluments, or
other fixed or determinable annual or periodical OR CASUAL gains, profits and income, AND CAPITAL GAINS, a tax
equal to thirty per centum of such amount: Provided, however, That premiums shall not include reinsurance
premiums.13
(2) Resident corporations. — A foreign corporation engaged in trade or business within the Philippines (except
foreign life insurance companies) shall be taxable as provided in sub-section (a) of this section.
(c) Rate of tax on life insurance companies. — There shall be levied, assessed, collected and paid annually from every
life insurance company organized in or existing under the laws of the Philippines, or foreign life insurance company
authorized to carry on business in the Philippines but not including purely cooperative companies or associations as
defined in section two hundred fifty-five of this Code, on the total investment income received by such company
during the preceding taxable year from interest, dividends, and rents from all sources whether from or without the
Philippines, a tax of six and one-half per centum upon such income: Provided, however, That foreign life insurance
companies not doing business in the Philippines shall, on any investment income received by them from the
Philippines, be subject to tax as any other foreign corporation.
interest, paid within the taxable year on its indebtedness, except on indebtedness incurred to purchase or carry
It will thus be seen that dividend exclusion has always been a dominant feature of corporate income tax. It is a
device for reducing extra or double taxation of distributed earnings. Since a corporation cannot deduct from its gross
income the amount of dividends distributed to its corporation-shareholders during the taxable year, any distributed
earnings are necessarily taxed twice; initially at the corporate level when they are included in the corporation's
taxable income, and again, at the corporation-shareholder level when they are received as dividend. Thus, without
exclusion the successive taxation of the dividend as it passes from corporation to corporation would result in
repeated taxation of the same income and would leave very little for the ultimate individual shareholder. At the
same time the decision to tax a part (e.g., 25 per cent of such dividends reflects the policy of discouraging
complicated corporate structures as well as corporate divisions in the form of parent-subsidiary arrangements
adopted to achieve a lower effective corporate income tax rate.14
Until 1957 there had been no question that the proviso on dividend exclusion applied to all domestic and resident
foreign life insurance companies. The question arose when, by virtue of Republic Act 1855 (1957), the original
provisions of section 24, with slight modifications, were made sub-section (A) while a new sub-section (B), entitled
"Rate of Tax on Life Insurance Companies," was added. The result is that the proviso on dividend exclusion now
appears to qualify only a part of section 24, making it doubtful whether after 1957 the income from dividends of
domestic and resident foreign life insurance companies still enjoys exemption, although, as noted in passing,15 the
proviso continues to speak of "the tax imposed by this section" (not sub-section).
However, a review of the circumstances, which prompted the amendment of section 24 in 1957 shows no intention
to withdraw from life insurance companies the exemption which theretofore had been enjoyed by them along with
non-life insurance companies. To be sure, the 1957 amendment was intended for a two-fold purpose: first, to
change the tax base from premium income to investment income and, second, to lower the tax on life insurance
companies, in order to encourage their growth as well as their investment in the development of the national
economy.
Prior to 1957, life insurance companies were required, for income tax purposes, to include premium, receipts in
gross income. It became generally recognized, however, that the inclusion of premium receipts in the gross taxable
income of life insurance companies was unsound because premium receipts do not constitute income in the sense of
gain or profit. They are really savings deposits of the individual policyholders, a large portion of which goes directly
to reserve funds required by law for the payment of their claims for death benefits, cash surrender values and
maturity values. Therefore, to tax an insurance company on account of these "deposits" or "savings" is actually to tax
the policyholder for being provident. What constitutes true income for a life insurance company is rather its
investment income from interest, dividends and rents.16
Besides, the premiums which a life insurance company receives are already subject to a tax of 3 per cent under
section 255 of the Code. To require their inclusion in gross income for purposes of section 24 is to subject them to
double taxation.17
The rate of tax was lowered in recognition of the fact that a life insurance company derives profit from its
investment income only to the extent that such income exceeds the rate of interest at which the reserve must be
maintained.18
In sum, as the then Congressman Ferdinand Marcos described the bill which became Republic Act 1855, "It is a bill
which places [life] insurance companies in the same class as other companies. And the rate is lower than in ordinary
companies because it is six and one half per cent."19
If the purpose of the 1957 amendment was to place life insurance companies at par with other companies by taking
them on their true income, then the legislature could not have intended to withdraw from them a privilege which
they had then been enjoying in common with non-life insurance companies. Indeed, by no rule of logic can the
decision to exclude premium receipts from gross income be considered a decision to include all of dividend income
in gross income.
Nor could it have been the intention of the legislature to discriminate against domestic life insurance companies in
favor of resident foreign corporations engaged in other business. And yet this is just the implication of the
interpretation urged on us by the respondents. For, indeed, to require life insurance companies to report in full their
income from dividends would be not only to treat them differently from other companies, contrary to the first aim of
the amendment, but also to impose on them a tax burden heavier than that imposed on resident foreign companies
not engaged in life insurance. Thus, following the interpretation of the respondents, a resident foreign corporation
with an income of P100,000 from dividends would be required to return only 25 per cent of it, or P25,000 the tax on
which would be P5,000 (20% under Republic Act 1855). In contrast, a domestic life insurance company, required to
report all its income from dividends, would have to pay a tax of P6,500 (6-1/2%), or P1,500 more, despite the fact
that the rate of tax on it is much lower. It seems rather clear that these discriminatory and lopsided results could not
have been intended by Congress.
That Congress intended to accord preferential tax treatment to domestic and resident foreign life insurance
companies is abundantly clear not only from the history of the 1957 amendment but also from the Comparative
Table (supra) which shows that while the rate of tax on corporations in general has been raised, that on domestic
and resident foreign life insurance companies has remained at 6-1/2 per cent — the lowest among those imposed on
various types of corporations.
The truth is that section 24 has undergone amendments through a process which, in Cardozo's phrase,20 is no more
intellectual than the use of paste pot and scissors. Consequently, reliance cannot be placed on its grammatical
construction in order to arrive at its meaning. As the Comparative Table shows, after the amendment of section 24 in
1957, sub-section (A) thereof did not have a title, compared to sub-section (B), entitled "Rate of Tax on Life
Insurance Companies" which was added. It took another amendment in 1959 to correct the deficiency, only to
commit another error. Thus while the word "assessed" was deleted from sub-section (a) in consequence of the
adoption of the "pay-as-you-file" system, the same word has remained in sub-section (c) even to this date. Again,
within the same year, 1963, Section 24 was amended twice but in the process more errors were committed. For
while Republic Act 3841 was passed ostensibly to add certain words overlooked in the amendment of the section by
Republic Act 3825, the proviso on reinsurance premium (which was the reason for the enactment of Republic Act
3825) was inadvertently omitted in the text of section 24 (b) (1).
The reference to domestic and resident foreign life insurance companies in the excepting clause of sub-section (a) is
even more awkward because the exception relates to the coverage of the entire section 24 and not simply to a sub-
section thereof. Thus, registered general copartnerships are excepted from the coverage of section 24 because they
are not subject to tax as an entity. By express provision of section 26 of the Code persons doing business as a general
copartnership duly registered in the mercantile registry are subject to income tax "only in their individual capacity."
On the other hand, by including domestic and resident foreign life insurance companies in the excepting clause it
was never the intention to exempt them from the payment of corporate income tax, which is the subject of section
24 as a whole. Furthermore, the exclusion of registered general copartnerships from the coverage of section 24 is
justified because by statutory definition they are not anyway considered "corporations." On the other hand, life
insurance companies are deemed "corporations" for purposes of the Code.21
Thus, the haphazard amendment of section 24 by several legislative acts — as a result of which the proviso on
dividend exclusion is now found in sub-section (a) — makes reliance on its grammatical construction highly unsafe
and unsound in arriving at its meaning.22 Since nothing in the history of the 1957 amendment or in the rationale of
dividend exclusion indicates the contrary, we hold that domestic and resident foreign life insurance companies are
entitled to the benefits of dividend exclusion, the position of the proviso allowing it notwithstanding.
ACCORDINGLY, the decision appealed from is reversed, and the respondent Commissioner of Internal Revenue is
ordered to refund to the petitioner company the amount of P2,721 as excess income tax for 1958. No
pronouncement as to costs.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Angeles and Fernando, JJ., concur.
3. Contemporaneous Circumstances
G.R. No. L-12727 February 29, 1960
MANILA JOCKEY CLUB, INC., petitioner-appellant,

vs.
GAMES AND AMUSEMENTS BOARD, ET AL., respondents-appellees.
PHILIPPINE RACING CLUB, INC., petitioner-intervenor-appellant.
Lichauco, Picazo and Agcaoili for appellant.

First Assistant Government Corporate Counsel Simeon M. Gopengco and Attorney Pedro L. Bautista for appellee
PCSO.
Assistant Solicitor General Jose P. Alejandro and Solicitor Pacifico P. de Castro for the other appellees.
Cesar S. de Guzman for appellant.
BARRERA, J.:
This is a petition for declaratory relief filed by petitioner Manila Jockey Club, Inc., in the Court of First Instance
Manila (Civil Case No. 31274), in which the Philippine Racing Club, Inc., intervened as party in interest with leave of
court, praying that judgment be rendered against respondents Games and Amusements Board (GAB), Philippine
Charity Sweepstakes Office (PCSO), and Executive Secretary Fortunato de Leon:
(a) Interpreting Republic Acts Nos. 309 and 1502 in such a manner that the 30 Sundays unreserved for charitable
institutions and therefore belonging to the private racing clubs under Section 4 of Republic Act No. 309 continue to
pertain to said private entities, and that the 6 additional sweepstakes races authorized under Republic Act No. 1502
should be held on 6 of the 12 Saturdays not reserved for any private entity or particular charitable institution under
Section 4 of Republic Act No. 309, or on any other day of the week besides Sunday, Saturday and legal holiday;
(b) Holding that respondent PCSO does not have the right or power to appropriate or use the race tracks and
equipment of petitioner without its consent, nor can respondents compel petitioner to so allow such use of its race
tracks and equipment under pain of having its license revoked.
Respondents duly filed their respective answers to said petition and the case was heard. After hearing, the court, on
July 5, 1957, rendered a decision which, in part, reads:
The court does not deem it necessary to rule on the deprivation of property of the petitioner and the intervenor
without due process of law, as feared by them, because as they have stated, the Philippine Charity Sweepstakes
Office is using their premises and equipment under separate contracts of lease voluntarily and willingly entered into
by the parties upon payment of a corresponding rental. There is therefore no deprivation of property without due
process of law.
Wherefore, the court is of the opinion and so holds that once a month on a Sunday not reserved for the Anti-
Tuberculosis Society, the White Cross and other charitable institutions by Section 4 of Republic Act No. 309, the
Philippine Charity Sweepstakes Office is authorized to hold one regular sweepstakes draw and races, pursuant to
Section 9 of Republic Act No. 1502, thus reducing the number of Sundays which may be alloted to private entities by
the Games and Amusements Board. . . .
From this judgment, petitioner and intervenor interposed the present appeal.
The issue is the proper placement of the six (6) additional racing days given to the Philippine Charity Sweepstakes
Office, in virtue of Republic Act No. 1502, approved on June 16, 1956.
The authorized racing days specifically designated and distributed in Section 4 of Republic Act No. 309, the basic law
on horse racing in the Philippines, as later amended by Republic Act No. 983, are as follows:
A. Sundays:
(1) For the Philippine Anti-Tuberculosis Society ..................
12 Sundays
(2) For the Philippine Charity Sweepstakes Office (PCSO) .
6 Sundays
(3) For the White Cross, Inc. .............................................
4 Sundays
(4) For the Grand Derby Race of the Philippine Anti-Tuberculosis Society ........................................................
1 Sunday
Total ................................................................
23 Sundays
(5) For private individuals and entities duly licensed by the GAB, other Sundays not reserved under this Act, as may
be determined by the GAB ...........................................
29 Sundays
or 30 for Leap years

Total for the year ....................
52 Sundays
or 53 for leap years.
B. Saturdays:
(1) For the Philippine Anti-Tuberculosis Society .....
12 Saturdays
(2) For the White Cross, Inc. .......................................
4 Saturdays
(3) For private Individuals and entities duly licensed by GAB and as may be determined by it ..................................
24 Saturdays
(4) For races authorized by the President for charitable, relief, or civic purposes other than the particular charitable
institutions named above, all other Saturdays not reserved for the latter ....................
12 Saturdays
Total ................................................................
52 Saturdays
C. Legal Holidays: All, except Thursday and Friday of the Holy Week, July 4th and December 30th, have been
reserved for private individuals and entities duly licensed by the GAB.
As stated, Republic Act No. 1502 increased the sweepstakes draw and races of the PCSO to twelve, but without
specifying the days on which they are to be run. To accommodate these additional races, the GAB resolved to reduce
the number of Sundays assigned to private individuals and entities by six. Appellants protested, contending that the
said increased should be taken from the 12 Saturdays reserved to the President, for charitable, relief, or civic
purposes, or should be assigned to any other day of the week besides Sunday, Saturday, and legal holiday.
Appellants' contention cannot be sustained. Section 4 Republic Act No. 309, as amended by Republic Act No. 983, by
express terms, specifically reserved 23 Sundays and 16 Saturdays for the Philippine Anti-Tuberculosis Society, the
White Cross, Inc. and the PCSO, and 12 Saturdays to the President for other charitable, relief, or civic purposes.
These days can not be disposed of by the GAB without authority of law. As to the remaining racing days, the law
provides:
SEC. 4. Racing days.—Private individuals and entities duly licensed by the Commission on Races (now GAB) may hold
horse races on Sundays not reserved under this Act, on twenty-four Saturdays as may be determined by the said
Commission (GAB), and on legal holidays, except Thursday and Friday of Holy Week, July fourth, commonly known as
Independence Day, and December thirtieth, commonly known as Rizal Day.
It is clear from the above-quoted provision that appellants have no vested right to the unreserved Sundays, or even
to the 24 Saturdays (except, perhaps, on the holidays), because their holding of races on these days is merely
permissive, subject to the licensing and determination by the GAB. When, therefore, Republic Act No. 1502 was
enacted increasing by six (6) the sweepstakes draw and races, but without specifying the days for holding them, the
GAB had no alternative except to make room for the additional races, as it did, form among the only available racing
days unreserved by any law — the Sundays on which the private individuals and entities have been permitted to hold
their races, subject to licensing and determination by the GAB.
It is suggested that the GAB should have chosen any week days or Saturday afternoons. In the first place, week days
are out of the question. The law does not authorize the holding of horse races with betting on week days (See Article
198 of the Revised Penal Code). Secondly, sweepstakes races have always been held on Sundays. Besides, it is not
possible to hold them on Saturday afternoons as, it is claimed, a whole day is necessary for the mixing of the
sweepstakes balls, the drawing of winning sweepstakes numbers, and the running of the sweepstakes races. Be that
as it may, since the law has given certain amount of discretion to the GAB in determining and allocating racing days
not specifically reserved, and since the court does not find that a grave abuse of this discretion has been committed,
there seems to be no reason, legal or otherwise, to set aside the resolution of the GAB.
Furthermore, appellants contend that even granting that the six (6) additional sweepstakes races should be run on
Sundays, yet if they are held on a club race day, the GAB should only insert them in the club races and not given the
whole day to the PCSO, to the exclusion of appellants. In support of this contention, the following quotation from
the debate in the House of Representatives before voting on House Bill No. 5732, which became Republic Act No.
1502, is cited:
Mr. ABELEDA. If there are no more amendments, I move that we vote on the measure.
Mr. MARCOS. Mr. Speaker, before we proceed to vote on this bill, I want to make it of record that it is the clear
intention of the House to increase by two the ten regular and special Sweepstakes races making it all in all, twelve,
and that in cases where a sweepstakes race falls in a club race days the Sweepstakes races should be inserted in the
club race.
Mr. ABELEDA. The gentleman from Ilocos Norte is correct. . . . (t.s.n., Proceedings in House of Representatives,
Congress, May 17, 1956; emphasis supplied.)
Appellants cite in their briefs a number of authorities sustaining the view that in the interpretation of statutes
susceptible of widely differing constructions, legislative debates and explanatory statements by members of the
legislature may be resorted to, to throw light on the meaning of the words used in the statutes. Upon the other
hand, the appellees, likewise, quote in their briefs other authorities to the effect that statements made by the
individual members of the legislature as to the meaning of provisions in the bill subsequently enacted into law, made
during the general debate on the bill on the floor of each legislative house, following its presentation by a standing
committee, are generally held to be in admissable as an aid in construing the statute. Legislative debates are
expressive of the views and motives of individual members and are not safe guides and, hence, may not be resorted
to in ascertaining the meaning and purpose of the lawmaking body. It is impossible to determine with certainty what
construction was put upon an act by the members of the legislative body that passed the bill, by resorting to the
speeches of the members thereof. Those who did not speak, may not have agreed with those who did; and those
who spoke, might differ from each other.1
In view of these conflicting authorities, no appreciable reliance can safely be placed on any of them. It is to be noted
in the specific case before us, that while Congressmen Marcos and Abeleda were, admittedly, of the view that the
additional sweepstakes races may be inserted in the club races, still there is nothing in Republic Act No. 1502, as it
was finally enacted, which would indicate that such an understanding on the part of these two members of the
Lower House of Congress were received the sanction or conformity of their colleagues, for the law is absolutely
devoid of any such indication. This is, therefore, not a case where a doubtful wording is sought to be interpreted;
rather, if we adopt appellants' theory, we would be supplying something that does not appear in the statute. It is
pertinent to observe here that, as pointed out by one of appellants' own cited authorities,2 in the interpretation of a
legal document, especially a statute, unlike in the interpretation of an ordinary written document, it is not enough to
obtain information to the intention or meaning of the author or authors, but also to see whether the intention or
meaning has been expressed in such a way as to give it legal effect and validity. In short, the purpose of the inquiry,
is not only to know what the author meant by the language he used, but also to see that the language used
sufficiently expresses that meaning. The legal act, so to speak, is made up of two elements — an internal and an
external one; it originates in intention and is perfected by expression. Failure of the latter may defeat the former.
The following, taken from 59 Corpus Juris 1017, is in the line with this theory:
The intention of the legislature to which effect must be given is that expressed in the statute and the courts will not
inquire into the motives which influence the legislature, or individual members, in voting for its passage; nor indeed
as to the intention of the draftsman, or the legislature, so far as it has been expressed in the act. So, in ascertaining
the meaning of a statute the court will not be governed or influenced by the views or opinions of any or all members
of the legislature or its legislative committees or any other persons.
Upon the other hand, at the time of the enactment of Republic Act No. 1502 in June, 1956, the long, continuous, and
uniform practice was that all sweepstakes draws and races were held on Sundays and during the whole day. With
this background, when Congress chose not to specify in express terms how the additional sweepstakes draws and
races would be held, it is safe to conclude that it did not intend to disturb the then prevailing situation and practice.
"On the principle of contemporaneous exposition, common usage and practice under the statute, or a course of
conduct indicating a particular undertaking of it, will frequently be of great value in determining its real meaning,
especially where the usage has been acquired in by all parties concerned and has extended over a long period of
time; . . . (59 C. J. 1023).
Likewise, the language of Republic Act No. 1502 in authorizing the increase, clearly speaks of regular sweepstakes
draws and races. If the intention of Congress were to authorize additional sweepstakes draws only which could,
admittedly, be inserted in the club races, the law would not have included regular races; and since regular
sweepstakes races were specifically authorized, and it would be confusing, inconvenient, if not impossible to mix
these sweepstakes races with the regular club races all on the same day (and it has never been done before), the
conclusion seems inevitable that the additional sweepstakes draws and races were intended to be held on a whole
day, separate and apart from the club races.
Appellants' contention that to compel them to permit the PCSO to use their premises and equipment against their
will would constitute deprivation of property without due process of law, deserves no serious consideration. As the
lower court has found, every time the PCSO uses appellants' premises and equipment, they are paid rentals in
accordance with the terms of separate contracts of lease existing between them and the PCSO.
The decision appealed from, being in consonance with the above findings and considerations of this Court, the same
is hereby affirmed, with costs against the appellants. So ordered.
G.R. No. 231658, G.R. No. 231658, G.R. No. 231771, G.R. No. 231774
REPRESENTATIVES EDCEL C. LAGMAN, TOMASITO S. VILLARIN, GARY C. ALEJANO, EMMANUEL A. BILLONES, AND
TEDDY BRAWNER BAGUILAT, JR., Petitioners,
vs.
HON. SALVADOR C. MEDIALDEA, EXECUTIVE SECRETARY; HON. DELFIN N. LORENZANA, SECRETARY OF THE
DEPARTMENT OF NATIONAL DEFENSE AND MARTIAL LAW ADMINISTRATOR; AND GEN. EDUARDO ANO, CHIEF OF
STAFF OF THE ARMED FORCES OF THE PHILIPPINES AND MARTIAL LAW IMPLEMENTOR, , Respondents.
RESOLUTION
DEL CASTILLO, J.:

On July 4, 2017, the Court rendered its Decision finding sufficient factual bases for the issuance of Proclamation No.
216 and declaring it as constitutional. Petitioners timely filed separate Motions for Reconsideration. The Office of the
Solicitor General (OSG) also filed its Comment.
After a careful review of the arguments raised by the parties, we find no reason to reverse our July 4, 2017 Decision.
All three Motions for Reconsideration question two aspects of the July 4, 2017 Decision, i.e., the sufficiency of the
factual bases of Proclamation No. 216 and the parameters used in determining the sufficiency of the factual bases.
Petitioners, however, failed to present any substantial argument to convince us to reconsider our July 4, 2017
Decision.
Sufficiency of the Factual Bases of

Proclamation No. 216 has been
rendered moot by tile expiration of the
said Proclamation.
Section 18, Article VII of the Constitution provides that ''the President x x x may, for a period not exceeding sixty
days, suspend the privilege of the writ of habeas corpus or place the Philippines or any part thereof under martial
law. x x x Upon the initiative of the President, the Congress may, in the same manner, extend such proclamation or
suspension for a period to be determined by the Congress, if the invasion or rebellion shall persist and public safety
requires it."
From the foregoing, it is clear that the President's declaration of martial law and/or suspension of the privilege of the
writ of habeas corpus is effective for 60 days. As aptly described by Commissioner Monsod, "this declaration has a
time fuse. It is only good for a maximum of 60 days. At the end of 60 days, it automatically terminates."1 Any
extension thereof should be determined by Congress. The act of declaring martial law and/or suspending the
privilege of the writ of habeas corpus by the President, however, is separate from the approval of the extension of
the declaration and/or suspension by Congress. The initial declaration of martial law and/or suspension of the writ of
habeas corpus is determined solely by the President, while the extension of the declaration and/or suspension,
although initiated by the President, is approved by Congress,
In this case, Proclamation No. 216 issued on 1vfay 23, 2017 expired on July 23, 2017. Consequently, the issue of
whether there were sufficient factual bases for the issuance of the said Proclamation has been rendered moot by its
expiration. We have consistently ruled that a case becomes moot and academic when it "ceases to present a
justiciable controversy by virtue of supervening events, so that a declaration thereon would be of no practical
value."2 As correctly pointed out by the OSG, "the martial law and suspension of the privilege of the writ of habeas
corpus now in effect in Mindanao no longer finds basis in Proclamation No. 216"3 but in Resolution of Both Houses
No. 11 (RBH No. 11) adopted on July 22, 2017. RBH No. 11 is totally different and distinct from Proclamation No. 216.
The former is a joint executive-legislative act while the latter is purely executive in nature.
The decision of the Congress to extend the same is of no moment. The approval of the extension is a distinct and
separate incident, over which we have no jurisdiction to review as the instant Petition only pertains to the
President's issuance of Proclamation No. 216.
Thus, considering the expiration of Proclamation No. 216 and considering further the approval of the extension of
the declaration of martial law and the suspension of the privilege of the writ of habeas corpus by Congress, we find
no reason to disturb our finding that there were sufficient factual bases for the President's issuance of Proclamation
No. 216.
However, although the Motions for Reconsideration are dismissible on the ground of mootness, we deem it prudent
to emphasize our discussion on the parameters for determining the sufficiency of factual basis for the declaration of
martial law and/or the suspension of the privilege of the writ of habeas corpus.
The Constitution requires sufficiency of

factual basis, not accuracy.
Petitioners, in essence, posit that the Court is required to determine the accuracy of the factual basis of the
President for the declaration of martial law and/or the suspension of the privilege of the writ of habeas corpus. To
recall, we held that "the parameters for determining the sufficiency of factual basis are as follows: 1) actual rebellion
or invasion; 2) public safety requires it; the first two requirements must concur; and 3) there is probable cause for
the President to believe that there is actual rebellion or invasion."4 Moreover, we stated in the assailed Decision
that "the phrase 'sufficiency of factual basis' in Section 18, Article VII of the Constitution should be understood as the
only test for judicial review of the President's power to declare martial law and suspend the privilege of the writ of
habeas corpus."5 Requiring the Court to determine the accuracy of the tactual basis of the President contravenes
the Constitution as Section 18, Article VII only requires the Court to determine the sufficiency of the factual basis.
Accuracy is not the same as sufficiency as the former requires a higher degree of standard. As we have explained in
our July 4, 2017 Decision:
In determining the sufficiency of the factual basis of the declaration and/or the suspension, the Court should look
into the full complement or totality of the factual basis, and not piecemeal or individually. Neither should the Court
expect absolute correctness of the facts stated in the proclamation and in the written Report as the President could
not be expected to verify the accuracy and veracity of all facts reported to him due to the urgency of the situation.
To require precision in the President's appreciation of facts would unduly burden him and therefore impede the
process of his decision-making. Such a requirement will practically necessitate the President to be on the ground to
confirm the correctness of the reports submitted to him within a period that only the circumstances obtaining would
be able to dictate. Such a scenario, of course, would not only place the President in peril but would also defeat the
very purpose of the grant of emergency powers upon him, that is, to borrow the words of Justice Antonio T. Carpio
in Fortun, to 'immediately put an end to the root cause of the emergency'. Possibly, by the time the President is
satisfied with the correctness of the facts in his possession, it would be too late in the day as the invasion or rebellion
could have already escalated to a level that is hard, if not impossible, to curtail.
Besides, the framers of the 1987 Constitution considered intelligence reports of military officers as credible evidence
that the President can appraise and to which he can anchor his judgment, as appears to be the case here.
At this point, it is wise to quote the pertinent portions of the Dissenting Opinion of Justice Presbitero J. Velasco, Jr. in
Fortun:
President Arroyo cannot be blamed for relying upon the information given to her by the Armed Forces of the
Philippines and the Philippine National Police, considering that the matter of the supposed armed uprising was
within their realm of competence, and that a state of emergency has also been declared in Central Mindanao to
prevent lawless violence similar to the 'Maguindanao massacre,' which may be an indication that there is a threat to
the public safety warranting a declaration of martial law or suspension of the writ.
Certainly, the President cannot be expected to risk being too late before declaring martial law or suspending the writ
of habeas corpus. The Constitution, as couched, does not require precision in establishing the fact of rebellion. The
President is called to act as public safety requires.
Corollary, as the President is expected to decide quickly on whether there is a need to proclaim martial law even
only on the basis of intelligence reports, it is irrelevant, for purposes of the Court's review, if subsequent events
prove that the situation had not been accurately reported to him. After all, the Court's review is confined to the
sufficiency, not accuracy, of the information at hand during the declaration or suspension; subsequent events do not
have any bearing insofar as the Court's review is concerned. x x x
Hence, the maxim falsus in uno,falsus in omnibus finds no application in this case. Falsities of and/or inaccuracies in
some of the facts stated in the proclamation and -written report are not enough reasons for the Court to invalidate
the declaration and/or suspension as long as there are other facts in the proclamation and the written Report that
support the conclusion that there is an actual invasion or rebellion and that public safety requires the declaration
and/or suspension.
In sum, the Court's power to review is limited to the determination of whether the President in declaring martial law
and suspending the privilege of the writ of habeas corpus had sufficient factual basis. Thus, our review would be
limited to an examination on whether the President acted within the bounds set by the Constitution, i.e., whether
the facts in his possession prior to and at the time of the declaration or suspension are sufficient for him to declare
martial law or suspend the privilege of the writ of habeas corpus. 6 (Emphasis supplied)
This is consistent with our ruling that "the President only needs to convince himself that there is probable cause or
evidence showing that more likely than not a rebellion was committed or is being committed."7 The standard of
proof of probable cause does not require absolute truth. Since "martial law is a matter of urgency x x x the President
x x x is not expected to completely validate all the information he received before declaring martial law or
suspending the privilege of the writ of habeas corpus."8
Notably, out of the several facts advanced by the President as basis for Proclamation No. 216, only five of them were
being questioned by the petitioners. However, they were not even successful in their refutation since their "counter-
evidence were derived solely from unverified news articles on the internet, with neither the authors nor the sources
shown to have affirmed the contents thereof. It was not even shown that efforts were made to secure such
affirmation albeit the circumstances proved futile."9 Even granting that the petitioners were successful in their
attempt to refute the aforesaid five incidents, there are other facts sufficient to serve as factual basis for the
declaration of martial law and suspension of the privilege of the writ of habeas corpus.
There is absolutely no basis to petitioners' claim that the Court abdicated its power to review. To be sure, our
findings that there was sufficient factual basis for the issuance of Proclamation No. 216 and that there was probable
cause, that is, that more likely than not, rebellion exists and that public safety requires the declaration of martial law
and suspension of the privilege of the writ of habeas corpus, were reached after due consideration of the facts,
events, and information enumerated in the proclamation and report to Congress. The Court did not content itself
with the examination only of the pleadings/documents submitted by the parties. In addition, it conducted a closed-
door session where it tried to ferret additional information, confirmation and clarification from the resource
persons, particularly Secretary of National Defense Delfin Lorenzana and Armed Forces of the Philippines Chief of
Staff Eduardo Año. At this juncture, it must be stated that the Court is not even obliged to summon witnesses as long
as it satisfies itself with the sufficiency of the factual basis; it is purely discretionary on its part whether to call
additional witnesses. In any event, reliance on so-called intelligence reports, even without presentation of its author,
is proper and allowed by law.
The Court's acknowledgment of the President's superior data gathering apparatus, and the fact that it has given the
Executive much leeway and flexibility, should never be understood as a prelude to surrendering the judicial power to
review. The Court never intended to concede its power to verify the sufficiency of factual basis for the declaration of
martial law and suspension of the privilege of the writ of habeas corpus. The leeway and flexibility accorded to the
Executive must be construed in the context of the present set up wherein the declaration of martial law and
suspension of the privilege of the writ of habeas corpus are grounded on actual invasion or rebellion, not on
imminent threat or danger thereof; as such, time is of the essence for the President to act quickly to protect the
country. It is also a recognition of the unassailable fact that as Commander-in Chief, the President has access to
confidential information. In fact, Fr. Joaquin Bernas even opined that the Court might have to rely on the fact-finding
capabilities of the Executive; in turn, the Executive should share its findings with the Court if it wants to convince the
latter of the propriety of its action.10 Moreover, it is based on the understanding that martial law is a flexible
concept; that "the precise extent or range of the rebellion [cannot] be measured by exact metes and bounds;"11
that public safety requirement cannot be quantified or measured by metes and bounds; that the Constitution does
not provide that the territorial scope or coverage of martial law should be confined only to those areas where the
armed public uprising actually transpired; that it will be impractical to expand the territorial application of martial
law each time the coverage of actual rebellion expands and in direct proportion therewith; and, that there is always
a possibility that the rebellion and other accompanying hostilities will spill over.
As regards the other arguments raised by petitioners, the same are a mere rehash which have already been
considered and found to have no merit.
WHEREFORE, petitioners' Motions for Reconsideration are hereby DENIED WITH FINALITY for mootness and lack of
merit.
No further pleadings shall be entertained.
Let entry of judgment be made in immediately.

SO ORDERED.
4. Legislative Practice; Reference to Other Statutes
G.R. Nos. L-16696 and L-16702 January 31, 1962
LUCIANO ESCOSURA, DIONISIO ASIS, PRIMITIVO BINALBER, PROCOPIO CIPRIANO,

FEDERICO HIPOLITO, CESAR VILLAREAL, and PABLO R. CRUZ, petitioners-appellees,
vs.
SAN MIGUEL BREWERY, INC., respondent-appellant.
Juan V. Reyes and Esrael Bocobo for petitioners-appellees.

Ponce Enrile, Siguion Reyna, Montecillo and Belo for respondent-appellant.
BARRERA, J.:
From the Resolution of the Social Security Commission (in SSC Cases Nos. 33, 37, 38, 39, 40, 41 and 42) directing the
San Miguel Brewery, Inc. to pay the claims for sickness benefit allowances of Dionisio Asis, Primitivo Binalber,
Procopio Cipriano, Florencio Hipolito, Cesar Villareal, Luciano Escosura, and Pablo R. Cruz, said company appealed to
this Court under the provisions of Section 5 (c) of Republic Act 1161, as amended, there being no question of fact
involved.
The facts of these cases, as found by the Commission and admitted by the parties, are as follows:1äwphï1.ñët
Petitioners-appellees are all employees of herein respondent-appellant San Miguel Brewery, Inc. who became
compulsorily covered under the Social Security System (now Commission) in September, 1957. At various times
during their employment, they fell ill and were confined in the hospital for treatment. For the duration of their
confinement, they were given by the employer sick leave pay to the extent of 50% of their wages for the first 3 days
and 75% of such pay thereafter, pursuant to its Health, Welfare and Retirement Plan. Such receipt of sick leave pay
notwithstanding, the employees claimed for sickness benefit allowances under the Social Security Act for the
respective period of their confinement, thus: .
Name of Employee Amount

of
Claim Period of Confinement.
1. Luciano Escosura P November 27, 1958 to June 1, 1959 or 187 days.
2. Dionisio Asis 19.24 March 20, 1959 to April 12, 1959 or 23 days
3. Primitivo Binalber 15.05 February 2, 1959 to March 2, 1959 or 29 days
4. Procopio Cipriano 25.30 November 16, 1958 to December 28, 1958 or 43 days
5. Federico Hipolito 48.26 January 1, 1959 to February 8. 1959 or 39 days
6. Cesar Villareal 3.70 April 3, 1959 to April 12, 1959 or 10 days
7. Pablo R. Cruz January 24, 1959 to March 1, 1959 of 36 days
They contend that under Section 14(a) of Republic Act 1161, their receipt of sick leave pay less than the full wage
does not preclude them from claiming for the allowances provided in the law. The company, for its part, countered
that having already received sick leave pay (although not full pay from their employer, the petitioners can not for the
same period claim entitlement to the benefits under the Social Security Act as these are exclusive to those not
receiving any leave privileges at all from the employer.
Sustaining petitioning employees' contention that the phrase "all leaves of absence with pay" used in the law means
leaves of absence with "full" pay, the Commission ordered the employer to advance the sickness allowances
demanded by the employees and thereafter to file a claim for reimbursement to the extent of 70% thereof from the
System, pursuant to Section 14(b) of the law. The ruling was based on the grounds that (1) when a law or an
agreement gives the employee the right of leave of absence with pay, without any modification or specification of
the amount, it could mean nothing but that the law or agreement contemplates of the full compensation receivable
by the employee for services rendered; if intended otherwise, some language to that effect must appear; (2) that the
use by the legislature of the unqualified word "pay" is indicative of its intention to adopt a uniform basis or amount
applicable to all; (3) that as commonly understood, the word "pay" refers to the full compensation for services
rendered by the employee; (4) that it could not have referred to the sick leave pay agreed upon by the parties,
because as used in the law, the term pay refers to all leaves of absence and not confined to sick leaves alone; (5) that
the Social Security Act, having been enacted for the welfare of the employees, could not be given an interpretation
that would defeat such purpose; and (6) even supposing that hypothetically a sick employee, under the petitioners'
theory, could actually receive more benefits than an able-bodied worker — which is not true in these cases — that
fact does not make the provision in controversy unreasonable, because changes, adjustments, modifications,
eliminations or improvements in the benefits under the remaining private plan may be agreed upon pursuant to
Section 9 of the Act.
The issue as thus presented is the interpretation of the phrase "with pay" used in connection with leaves of absence
granted to employees.
Section 14(a) of the Social Security Act, applicable to the cases at bar and invoked by both parties, reads:
SEC. 14. Sickness benefit. — (a) Under such rules and conditions as the Commission may prescribe, any covered
employee under this Act who, after one year at least from the date of his coverage, on account of sickness or bodily
injury is confined in a hospital, or elsewhere with the Commission's approval, shall, for each day of such
confinement, be paid by his employer, or by the System if such person is a voluntary member, an allowance
equivalent to twenty per centum of his daily rate of compensation, plus five per centum thereof for every dependent
if he has any, but in no case shall the total amount of such daily allowance exceed six pesos, or sixty per centum of
his daily rate of compensation, whichever is the smaller amount, nor paid for a period longer than ninety days in one
calendar year: Provided, That he has paid the required premiums for at least six months immediately prior to his
confinement: Provided, further, That the payment of such allowance shall begin only after the first seven days of
confinement, except when such confinement is due to injury or to any acute disease; but in no case shall such
payment begin before all leaves of absence with pay, 1 if any, to the credit of the employee shall have been
exhausted: Provided, further, That any contribution which may become due and payable by the covered employee
to the System during his sickness shall be deducted in installments from such allowances, issuing to him the
corresponding official receipt upon complete payment of such contribution: Provided, finally, That the total amount
of the daily allowances paid to the covered employee under this section shall be deducted from the death or
disability benefit provided in section thirteen if he dies or becomes totally or permanently disabled within five years
from the date on which the last of such allowances became due and payable. (Emphasis supplied.) .
As stated, the contention of respondent-appellant San Miguel Brewery, Inc. is that the clause "before all leaves of
absence with pay shall have been exhausted" precludes the employees from invoking the benefits of the law, since
they have been paid their sick leave although not in full, arguing that if the intention of the law was to require full
compensation, it would have used the word "full" to modify "pay". We do not think this to be tenable. On the
contrary, the legislative practice seems to be that when the intention is to distinguish between full and partial
payment, the appropriate modifying term is used, as it appears in Commonwealth Act 647, governing maternity
leave of married women in the service of the Government or any of its instrumentalities, where the law granted
"maternity leave with full pay" to permanent and regular female employees who have rendered two or more
continuous years of service; "half pay" in case of permanent under regular employees who have rendered less than
two years of continuous service, and "maternity leave without pay" to temporary employees.
On the other hand, Republic Act 679 regulating the employment of women and children in commercial or industrial
establishments or other place of labor, provides in its Section 8 that "the employer shall grant to any woman
employed by him who may be pregnant vacation leave with pay for six weeks prior to the expected date of delivery
and for another eight weeks after normal delivery or miscarriage at the rate of not less than 60% of her regular or
average weekly wages".
Again, in Republic Act 843, Section 98(a), granting vacation and sick leaves to judges of municipal courts and justices
of the peace, the law simply said that they "shall be entitled annually to 15 days vacation and 15 days sick leave with
pay".
Finally, in Article 1695 of the new Civil Code, it is provided that "househelpers shall not be required to work more
than 10 hours a day. Every househelper shall be allowed four days vacation each month with pay". In all these laws,
it is not disputed that the phrase "leave with pay" used without any qualifying adjective, meant that the employee
was entitled to full compensation during the period of his leave of absence.
Moreover, let it be noted that the present cases arose2 before the Social Security Act was amended by Republic Act
2658, whereby the phrase "before all leaves of absence with pay" was changed to "before all sick leaves of absence
with pay". It is not denied that with respect to vacation leaves with pay, full payment is meant. It is only with respect
to sick leaves that the employer gives compensation less than full. Inasmuch as the law applicable to the present
case did not distinguish between vacation and sick leaves, it can not be successfully claimed that the law before the
amendment, meant full pay for vacation leave and less than full pay with regard to sick leaves.
To uphold the theory of respondent-appellant that as long as the employee receives any amount as sick leave pay by
virtue of a private benefit plan, the employee can not avail of the privileges under the Social Security Act, would be
to enable the employer to defeat the purposes of the law. As pointed out by the Social Security Commission: .
An employer, by his unilateral act, could credit the employee with some sickness benefits and the employee's
consent as to the amount thereof would be immaterial. If we were to follow the argument of counsel for
respondent, an employer could give his employees an infinitesimally small amount of sick leave pay for an indefinite
period and thus perpetually deny said employees sickness benefits under the Social Security Act. It is thus seen that
without the required standards which would serve as a guide, an employer could forever frustrate the salutary
purpose of the law. Thus, an employer may grant his employee sickness benefit of one centavo a day for as long as
he may be ill and, under the interpretation of counsel for petitioner (should be respondent) this would constitute a
bar to the employee's enjoyment of sickness benefits under the Social Security Act. We do not think that Congress
intended to give such power to the employer as to make him capable of rendering a provision of the Act impotent
and inoperative.
It is also contended for the respondent-employer that if the phrase in question be interpreted to mean full pay, an
employee could receive more benefits when sick than when he is well and renders service, thereby imposing upon
the employer an additional burden. Under the facts of the cases at bar, and the provisions of the law applicable
thereto, the respondent Company would not be required to pay more than the employee's full wage. Under its
private benefit plan, the most that it gives to a sick employee is 75% of the latter's full compensation. What it would
be required to pay under Section 14(a) of the Social Security Act would be merely 30% of a maximum of 60% of the
daily rate of compensation, or 18% of the daily wage. This is so, because under paragraph (b) of Section 14, the
employer is entitled to the reimbursement by the System of 70% per centum of the daily benefits granted the
employee under the law. Add this to the 75% payable under the private plan and it would give a total of only 93% of
the daily rate of wage of the employee.
Besides, the employer is not without any remedy. Section 9 of the Social Security Act gives the employer and
employee the right to agree on "any changes, adjustments, modifications, eliminations or improvements in the
benefits to be available under the remaining private plan, which may be necessary to adopt by reason of the reduced
contribution thereto as a result of the integration" of the benefits under the Act and those under the private benefit
plan enforced by the Company.
Finding no reason to disturb the resolution of the Social Security Commission appealed from, the same is hereby
affirmed, with costs against the appellant. So ordered.
5. Statutes Borrowed from Foreign Jurisdictions
G.R. No. L-9144 March 27, 1915
THE UNITED STATES, plaintiff-appellee,

vs.
VENANCIO DE GUZMAN (alias CACALASAN), defendant-appellant.
Bernabe de Guzman for appellant.
Office of the Solicitor-General Harvey for appellee.
CARSON, J.:
Venancio de Guzman, the defendant and appellant in this case, was convicted in the court below of the crime of
asesinato (murder) and sentenced to life imprisonment.
The evidence of record leaves no room for doubt that, on the day and at place mentioned in the information, De
Guzman, who was walking through a field with Pedro and Serapio Macarling and Rufino Garin, deceased, struck the
latter on the head, knocked him down and held him on the ground while Pedro Macarling stabbed him to death.
There is and there can be no question as to his guilt of the crime of which he was convicted in the court below, the
only question raised on this appeal being his right to exemption from prosecution for the crime thus committed, on
the ground that a former information, charging the same offense, had been dismissed as to him in order that he
might testify as a witness for the prosecution.
It appears that some time prior to the trial of the case at bar an information was duly filed charging De Guzman,
jointly with the two Macarlings, with the murder of Guzman entered into an agreement with the fiscal under the
terms of which he promised to appear and testify as a witness for the Government at the trial of his coaccused, and
to tell the truth as to all that occurred, provided the information was dismissed as to him and he himself was not
brought to trial. With the consent of the court, and in pursuance of this agreement, he was not arraigned nor
brought to trial, and the information was dismissed as to him. One of his coaccused pleaded guilty and the other not
guilty, and thereafter the case came on for trial. after several witnesses had been called, De Guzman was placed on
the witness stand, and denied all knowledge of the murder. He denied that he had ever said anything implicating his
coaccused, and swore that a statement made by him before a justice of the peace was false, and that it had been
made through fear of certain police officer. Question by the court developed that he had made still another
statement to one Natnat, implication his coaccused, but he swore that statement had also been made through fear;
and repudiating all former statements made by him, he declared that they were false, and had been procured by the
prosecuting officials of the Government by the use of improper and illegal methods.
The Solicitor-General, relying on the provisions of sections 34, 35 and 365 of General orders No. 58, recommends the
discharge of the appellant, and that he be set at liberty forthwith, adding in the concluding paragraph of his brief
that, although such action would result "in a palpable misdismissal and expressly bars a future prosecution" for the
crime charged in the information which was dismissed as to him. We do not think so, and hold that, it conclusively
appearing that appellant failed to carry out his agreement with the fiscal, and had knowingly and falsely testified at
the trial of his coaccused, and that he fraudulently secured the dismissal of the former information, the state was
wholly within its rights in bringing him to trial, and convicting and sentencing him for the crime with which he was
charged in the former information.
Section 34, 35, and 36 of General orders No. 58, upon which counsel for defense and the Solicitor-General rely, are
as follows:
SEC. 34. When two or more persons shall be included in the same charge, the court, at any time before the
defendants have entered upon their defense or upon the application of the counsel of the Government, may direct
any defendant to be discharged, that he may be a witness for the United States.
SEC. 35. When tow or more persons shall be included in the same charge, and the court shall be of opinion in respect
to a particular defendant that there is not sufficient evidence to put him on his defense, it must order him to be
discharged before the evidence is closed, that he may be a witness for his codefendant.
SEC. 36. The order indicated in sections thirty-four and thirty-five shall amount to an acquittal of the defendant
discharged, and shall be a bar to future prosecution for the same offense.
These sections constitute a part of the notably short, compact and concise military order issued April 23, 1900, which
prescribed, in very summary terms, the procedure to be followed in criminal cases in the various courts of the
Islands authorized to administer justice under American Sovereignty, and which continues in force, with a few
amendments, to the present day. We have frequently held that, for the proper construction and application of the
terms and provisions of legislative enactment's which have been borrowed from or of times essential to review the
legislative history of such enactments and to find an authoritative guide for their interpretation and application in
the decision of American and English courts of last resort construing and applying similar legislation in those
countries. (Kepner vs. U.S., 195 U.S., 100; 11 Phil. Rep., 669; Serra vs. Mortiga, 204 U.S., 470; 11 Phil. Rep., 762; Alzua
vs. Johnson, 21 Phil. Rep., 308.) Indeed it is a general rule of statutory construction that courts may take judicial
notice of the original and history of the statutes which they are called upon to construe and administer, and of the
facts which affect their derivation, validity and operation (2 Lewis Sutherland on Statutory Construction, sec. 309).
This author in section 456, citing numerous cases in support of the doctrine, says also that:
Where the meaning of a statute or any statutory provision is not plain, a court is warranted in availing itself of all
legitimate aids to ascertain the true intention; and among them are some extraneous facts. The object sought to be
accomplished exercises a potent influence in determining the meaning of not only the principal but also the minor
provisions of a statute. To ascertain it fully the court will be greatly assisted by knowing, and it is permitted to
consider, the mischief intended to be removed or suppressed, or the necessity of any kind which induced the
enactment. If the statute has been in force for a long period it may be useful to know what was the contemporary
construction; its practical construction; the sense of the legal profession in regard to it; the course and usages of
business which it will affect.
The dismissal of complaints or informations as to one of several persons charged with the commission of an offense
in order that he may used as witness against his coaccused, and the making of agreements whereby quickly persons
are sometimes assured of exemption from criminal prosecution on condition that they testify against their
coparticipants in the commission of a crime, would appear to have been authorized under the provisions of General
Orders No. 58, as a necessary incident to the supplanting of the old system of criminal procedure with a system
borrowed, in large part, from English and American precedents. This, doubtless, as a result of the emphasis placed by
the new system on the presumption of innocence in favor of an accused persons, on the requirement that the
Government must establish its case beyond a reasonable doubt before the accused is called upon to defend himself,
on the prohibitions against compelling an accused persons to be a witness against himself, and against the drawing
of inferences of guilt from the silence of the accused. Experience, under English and American procedural methods,
has shown that without the aid of informers testifying against their coparticipants in crime, many guilty parties
would escape, where the facts which would sustain a conviction are known only to the guilty persons themselves.
Indeed, we do not doubt that the making of such agreements as the one under consideration would be held to have
authorized under the new system of criminal procedure upon the authority of American and English precedents,
even had it not been expressly recognized and provided for in General orders No. 58.
In the Whiskey Cases (9 Otto, 594; 25 L. ed., 399), we find an interesting history of the original and growth of the
practice under consideration. It there appears that aciently, under the common law of England, the criminal could
not interpose such an agreement with the state as a plea in bar to the prosecution for the offense with which he was
charged, but that the faithful performance of the agreement entitled him to an equitable rights to a
recommendation to executive clemency. In more recent times, however, the practice has been quite generally
recognized by statutory enactment in many jurisdiction, and under the statutes the faithful performance of the
agreement is held to be a complete bar to a subsequent prosecution of the criminal. A search of the year books
shows but few cases in which a defendant, after making an agreement with the prosecution to testify what he knows
about the commission of the crime, failed go comply with his promise. In the discussion of the general subject,
however, there is much dicta to the effect that the criminal must act in good faith and testify fully and fairly as to
what he knows concerning the crime, in order to claim immunity. (The Whiskey Cases, supra; Rex vs. Rudd, Crowp.,
331, as quoted in 41 N.J.L., 17; 4 Blackstone's Com., 330.)
The question arose in Texas under a statute providing that: "The attorney representing the State may at any time
under the rules provided in article 37 dismiss a prosecution as to one or more defendants indicated with others, and
the person so discharged may be introduced as a witness by either party." (Texas Code crim. Proc., art 709.)
Article 37 provides that when a district attorney desires to dismiss a case he shall file a written statement, setting not
occur without the permission of the presiding judge, who shall be satisfied that the reasons so stated are good and
sufficient to allow such dismissal. These statutory provisions, as will be seen, are not widely dissimilar from our own,
though we have no provision requiring a written statement of the reasons for dismissal to accompany motions of
this nature, a feature nevertheless which might well be adopted by the trial courts without the necessity for
statutory enactment. In Ex parte Greenhaw (41 Tex. Crim. R., 278), the court touched upon the question of the
obligation of the accused to keep faith with the State under such an agreement and said: "I can find no case in which
the question has been directly presented as to the terms of this character of contract; I think, however, it may be
fairly deduced from the authorities that the state or Sovereign can contract with the accomplice upon the following
terms only: In consideration that he shall testify fully and fairly as to all he knows in regard to the guilt of his
associates in the particular case in which the contract is made, that he will receive immunity from punishment as to
such case. . . . Again, it is agreed that there must be a compliance with the terms of the contract on the part of the
accomplice before he can claim immunity. . . . so it follows, if the accomplice testifies corruptly or falsely he cannot
claim immunity."
In the later case of Goodwin vs. State (158 S. W., 274), the supreme court of Texas had the question of good faith on
the part of the informer directly presented to it. The defendant had been jointly indicted with one Butler for
adultery. She agreed with the prosecuting officer that if he would dismiss the case against her she would testify fully
on the trial of her codefendant. The case was thereupon dismissed as to her, but when her codefendant was tried
she refused to testify against him fully. She contended that the State was bound by its agreement, and that she
could not thereafter be prosecuted. The supreme court, in sustaining the court's refusal to consider her discharge as
a plea in abatement, said: "If she had carried out her agreement with the State and testified fully as she agreed on
the trial of Butler then the States would have been bound by said agreement, and could not thereafter have
prosecuted her. But certainly the State was not found by its agreement unless she carried out her agreement with it.
As shown above she refused to do so."
The Texas statute is silent, as is our own, as to the consequence of bad faith on the part of the accused, and yet, as
we have seen, the Texas court held that a discharge of this kind, secured in bad faith, did not exempt the informer
from prosecution unless he keeps faith with the Government.
The more common form of the statutory declaration of this practice appears to be at permit any person accused of
crime to testify concerning it at the request of the prosecuting officer, with the understanding that when a person
has so testified he shall done in connection with such crime. This is the method adopted in various immunity clauses
in Acts of Congress (see Act of Feb. 25, 1903, 32 Star., 854, 903, 904, c. 775), with a proviso that persons committing
perjury, when so called upon to testify, may be punished therefor. (For a discussion of his history and an
enumeration of these laws, see U.S. vs. Swift, 186 Fed., 1002.)
The constitution of Oklahoma, however, contains the following provision which, like our own statute, has no proviso
authorizing a prosecution: "Any person having acknowledge or possession of facts that tend to establish the guilt of
any other person or corporation charged with an offense against the laws of the State shall not be excused from
giving testimony or producing evidence, when legally called upon so to do, on the ground that it may tend to
incriminate him under the laws of the State; but no person shall be prosecuted or subjected to any penalty or
forfeiture for on account of any transaction, matter, or thing concerning which he may so testify or produce
evidence."
In discussing the effect of the failure of a defendant to keep faith with the Government when called upon to testify
against his codefendants under this constitutional provision, the supreme court of that State recently said: "In this
respect our immunity clause differs from the statute of Wisconsin, which reserves the right of prosecution for
perjury committed in the giving of such testimony. Touching this reservation the supreme court of Wisconsin, in the
case of State vs. Murphy (128 Wis., 201), in discussing the question as to whether or not under this statute a witness
could only secure immunity when he had testified to the truth, said: 'The statute itself, however, refutes any such
meaning, for it expressly reserves the right to prosecute for perjury "in giving such testimony."'
The same reservation is contained in the Acts of Congress granting immunity. See United States Comp. St. 1901, p.
3173 (Act Feb. 11, 1893, c. 83 27 Stat., 443). If Congress had thought that a person who testified falsely in answer to
question of an incriminating character would be subject to prosecution for perjury, why the necessity for this
reservation? We have no such reservation in our constitutional provision; and, as before said, if we should follow the
precedents, when the witness does not speak the truth, the State would be left without redress, although the
witness had violated the purpose and spirit of the constitution. We cannot believe that it was the purpose of the
intelligent and just-loving of Oklahoma, when they voted for the adoption of the constitution, to grant immunity to
any man, based upon a lie, or, in other words, that they intended that the commission of perjury should atone for an
offense already committed. It is a familiar rule of common law, common sense, and common justice that a legal right
cannot be based upon fraud. We therefore hold that the witness who claims immunity on account of self-
incriminatory testimony which he had been compelled to give must act in good faith with the State, and must make
truthful replies to the question which are propounded to him, and which he had been compelled to answer, and that
any material concealment or suppression of the truth on his part will deprive him of the immunity provided by the
constitution; and the witness must testify to something which, if true, would tend to criminate him. This immunity is
only granted to those who earn it by testifying in good faith. In our judgment any other construction would be an
insult to and a libel upon the intelligence of the people of Oklahoma, an outrage on law, and a prostitution of justice.
(Scribner vs. State, 132 Pac., 933, 940.)
From a review of the history and development of the practice under consideration, and reasoning along the line of
the above cited, we are all agreed that the failure of the accused in the case at bar, faithfully and honestly to carry
out his undertaking to appear as a witness and to tell the truth at the trial of his coaccused, deprived him of the right
to plead his former dismissal as a bar to his prosecution in the case now before us.
We have found considerable difficulty however in coming to an agreement as to the precise scope of the rule thus
adopted. All are agreed that in the absence of the above cited provisions of section 36 of General Orders No. 58,
which provides that an order discharging one of two or more accused persons that he may be a witness for the
prosecution "shall amount to an acquittal of the defendant thus discharged and shall be a bar to further prosecution
for the same offense," a corrupt and fraudulent agreement, or an agreement not faithfully with by the accused
would be no bar to further prosecution. Some of the members of the court are of opinion that notwithstanding this
provision, such agreements are always vitiated by the failure of the accused to testify honestly and faithfully, it
matters not whether the accused is discharged at or before the trial, other members of the court, of whom the
writer of this opinion is one, are inclined to believe that while the general rule as held by the majority is applicable in
all cases where the agreement is made and the order of discharge is entered before the trial actually begins, it is
limited and restricted by the provisions of section 36, and that in any case wherein an accused person is thus
discharged after he has entered on trial, the discharge amounts to an acquittal and bar a further prosecution. This on
the assumption (questioned by various members of the court) that sections 34, 35 and 36 purport only to deal with,
and do in fact deal only with incidents of "the trial," and declare merely what the procedure shall being cases of such
discharges after the trial has begun.
But however this may be, we are all agreed that in the case at bar, in which the order discharging defendant was
made before the trial began, appellant was not entitled to have the order of discharge held to amount to an
acquittal or a bar to further prosecution.
We find no errors in the proceedings prejudicial to the substantial rights of the accused, and the judgment convicting
and sentencing him should therefore be affirmed, with the costs of this instance against him. So ordered.
CHAPTER VII: CONSTRUCTION OF CONFLICTING PROVISIONS

1. Statutes in Pari Materia
G.R. No. L-36049 May 31, 1976
CITY OF NAGA, VICENTE P. SIBULO, as Mayor, and JOAQUIN C. CLEOPE, as Treasurer of the City of Naga, petitioners,
vs.
CATALINO AGNA, FELIPE AGNA and SALUD VELASCO, respondents.
Ernesto A. Miguel for petitioners.
Bonot, Cledera & Associates for respondents.

MARTIN, J.:
Petition for review on certiorari, which We treat as special civil action, of the decision of the Court of First Instance of
Camarines Sur in Civil Case No. 7084, entitled Agna, et al. versus City of Naga, et al., declaring Ordinance No. 360 of
the City of Naga enforceable in 1971 the year following its approval and requiring petitioners to pay to private
respondents the amounts sought for in their complaint plus attorney's fees and costs. Included in the present
controversy as proper parties are Vicente P. Sibulo and Joaquin C. Cleope, the City Mayor and City Treasurer of the
City of Naga, respectively.
On June 15, 1970, the City of Naga enacted Ordinance No. 360 changing and amending the graduated tax on
quarterly gross sales of merchants prescribed in Section 3 of Ordinance No. 4 of the City of Naga to percentage tax
on gross sales provided for in Section 2 thereof. Pursuant to said ordinance, private respondents paid to the City of
Naga the following taxes on their gross sales for the quarter from July 1, 1970 to September 30, 1970, as follows:
Catalino Agna paid P1,805.17 as per Official Receipt No. 1826591;
Felipe Agna paid P625.00 as per Official Receipt No. 1826594; and
Salud Velasco paid P129.81 as per Official Receipt No. 1820339.
On February 13, 1971, private respondents filed with the City Treasurer of the City of Naga a claim for refund of the
following amounts, together with interests thereon from the date of payments: To Catalino Agna, P1,555.17; to
Felipe Agna, P560.00; and to Salud Velasco, P127.81, representing the difference between the amounts they paid
under Section 3, Ordinance No. 4 of the City of Naga, i.e., P250.00; P65.00 and P12.00 respectively. They alleged that
under existing law, Ordinance No. 360, which amended Section 3, Ordinance No. 4 of the City of Naga, did not take
effect in 1970, the year it was approved but in the next succeeding year after the year of its approval, or in 1971, and
that therefore, the taxes they paid in 1970 on their gross sales for the quarter from July 1, 1970 to September 30,
1970 were illegal and should be refunded to them by the petitioners.
The City Treasurer denied the claim for refund of the amounts in question. So private respondents filed a complaint
with the Court of First Instance of Naga (Civil Case No. 7084), seeking to have Ordinance No. 360 declared effective
only in the year following the year of its approval, that is, in 1971; to have Sections 4, 6 and 8 of Ordinance No. 360
declared unjust, oppressive and arbitrary, and therefore, null and void; and to require petitioners to refund the sums
being claimed with interests thereon from the date the taxes complained of were paid and to pay all legal costs and
attorney's fees in the sum of P1,000.00. Private respondents further prayed that the petitioners be enjoined from
enforcing Ordinance No. 360.
In their answer, the petitioners among other things, claimed that private respondents were not "compelled" but
voluntarily made the payments of their taxes under Ordinance No. 360; that the said ordinance was published in
accordance with law; that in accordance with Republic Act No. 305 (Charter of the City of Naga) an ordinance takes
effect after the tenth day following its passage unless otherwise stated in said ordinance; that under existing law the
City of Naga is authorized to impose certain conditions to secure and accomplish the collection of sales taxes in the
most effective manner. As special and affirmative defenses, the petitioners allege that the private respondents have
no cause of action against them; that granting that the collection of taxes can be enjoined. the complaint does not
allege facts sufficient to justify the issuance of a writ of preliminary injunction; that the refund prayed for by the
private respondents is untenable; that petitioners Vicente P. Sibulo and Joaquin C. Cleope, the City Mayor and
Treasurer of the City of Naga, respectively are not proper parties in interest; that the private respondents are
estopped from questioning the validity and/or constitutionality of the provisions of Ordinance No. 360. Petitioners
counterclaimed for P20,000.00 as exemplary damages, for the alleged unlawful and malicious filing of the claim
against them, in such amount as the court may determine.
During the hearing of the petition for the issuance of a writ of preliminary injunction and at the pre-trial conference
as well as at the trial on the merits of the case, the parties agreed on the following stipulation of facts: That on June
15, 1970, the City Board of the City of Naga enacted Ordinance No. 360 entitled "An ordinance repealing Ordinance
No. 4, as amended, imposing a sales tax on the quarterly sales or receipts on all businesses in the City of Naga,"
which ordinance was transmitted to the City Mayor for approval or veto on June 25, 1970; that the ordinance was
duly posted in the designated places by the Secretary of the Municipal Board; that private respondents voluntarily
paid the gross sales tax, pursuant to Ordinance No. 360, but that on February 15, 1971, they filed a claim for refund
with the City Treasurer who denied the same.
On October 9, 1971, the respondent Judge rendered judgment holding that Ordinance No. 360, series of 1970 of the
City of Naga was enforceable in the year following the date of its approval, that is, in 1971 and required the
petitioners to reimburse the following sums, from the date they paid their taxes to the City of Naga: to Catalino
Agna, the sum of P1,555.17; to Felipe Agna, P560.00; and to Salud Velasco, P127.81 and the corresponding interests
from the filing of the complaint up to the reimbursement of the amounts plus the sum of P500.00 as attorney's fees
and the costs of the proceedings.
Petitioners' submit that Ordinance No. 360, series of 1970 of the City of Naga, took effect in the quarter of the year
of its approval, that is in July 1970, invoking Section 14 of Republic Act No. 305, 1 as amended, otherwise known as
the Charter of the City of Naga, which, among others, provides that "Each approved ordinance ... shall take effect
and be enforced on and after the 10th day following its passage unless otherwise stated in said ordinance ... ". They
contend that Ordinance No. 360 was enacted by the Municipal Board of the City of Naga on June 15, 1970 2 and was
transmitted to the City Mayor for his approval or veto on June 25, 1970 3 but it was not acted upon by the City
Mayor until August 4, 1970. Ordinarily, pursuant to Section 14 of Republic Act No. 305, said ordinance should have
taken effect after the 10th day following its passage on June 15, 1970, or on June 25, 1970. But because the
ordinance itself provides that it shall take effect upon its approval, it becomes necessary to determine when
Ordinance No. 360 was deemed approved. According to the same Section 14 of Republic Act No. 305, "if within 10
days after receipt of the ordinance the Mayor does not return it with his veto or approval 4 the ordinance is deemed
approved." Since the ordinance in question was not returned by the City Mayor with his veto or approval within 10
days after he received it on June 25, 1970, the same was deemed approved after the lapse of ten (10) days from June
25, 1970 or on July 6, 1970. On this date, the petitioners claim that Ordinance No. 360 became effective. They
further contend that even under Section 2, of Republic Act No. 2264 (Local Autonomy Acts) 5 which expressly
provides: "A tax ordinance shall go into effect on the fifteenth day after its passage unless the ordinance shall
provide otherwise', Ordinance No. 360 could have taken effect on June 30, 1970, which is the fifteenth day after its
passage by the Municipal Board of the City of Naga on June 15, 1970, or as earlier explained, it could have taken
effect on July 6, 1970, the date the ordinance was deemed approved because the ordinance itself provides that it
shall take effect upon its approval. Of the two provisions invoked by petitioners to support their stand that the
ordinance in question took effect in the year of its approval, it is Section 2 of Republic Act No. 2264 (Local Autonomy
Act) that is more relevant because it is the provision that specifically refers to effectivity of a tax ordinance and being
a provision of much later law it is deemed to have superseded Section 14 of Republic Act No. 305 (Charter of the City
of Naga) in so far as effectivity of a tax ordinance is concerned.
On the other hand, private respondents contend that Ordinance No. 360 became effective and enforceable in 1971,
the year following the year of its approval, invoking Section 2309 of the Revised Administrative Code which provides:
Section 2309. Imposition of tax and duration of license.—A municipal license tax already in existence shall be subject
to change only by ordinance enacted prior to the 15th day of December of any year after the next succeeding year,
but an entirely new tax may be created by any ordinance enacted during the quarter year effective at the beginning
of any subsequent quarter.
They submit that since Ordinance No. 360, series of 1970 of the City of Naga, is one which changes the existing
graduated sales tax on gross sales or receipts of dealers of merchandise and sari-sari merchants provided for in
Ordinance No. 4 of the City of Naga to a percentage tax on their gross sales prescribed in the questioned ordinance,
the same should take effect in the next succeeding year after the year of its approval or in 1971.
Evidently, the divergence of opinion as to when Ordinance No. 360 took effect and became enforceable is mainly
due to the seemingly apparent conflict between Section 2309 of the Revised Administrative Code and Section 2 of
Republic Act No. 2264 (Local Autonomy Act). Is there really such a conflict in the above-mentioned provisions? It will
be easily noted that Section 2309 of the Revised Administrative Code contemplates of two types of municipal
ordinances, namely: (1) a municipal ordinance which changes a municipal license tax already in existence and (2) an
ordinance which creates an entirely new tax. Under the first type, a municipal license tax already in existence shall
be subject to change only by an ordinance enacted prior to the 15th day of December of any year after the next
succeeding year. This means that the ordinance enacted prior to the 15th day of December changing or repealing a
municipal license tax already in existence will have to take effect in next succeeding year. The evident purpose of the
provision is to enable the taxpayers to adjust themselves to the new charge or burden brought about by the new
ordinance. This is different from the second type of a municipal ordinance where an entirely new tax may be created
by any ordinance enacted during the quarter year to be effective at the beginning of any subsequent quarter. We do
not find any such distinction between an ordinance which changes a municipal license tax already in existence and
an ordinance creating an entirely new tax in Section 2 of Republic Act No. 2264 (Local Autonomy Act) which merely
refers to a "tax ordinance" without any qualification whatsoever.
Now to the meat of the problem in this petition. Is not Section 2309 of the Revised Administrative Code deemed
repealed or abrogated by Section 2 of Republic Act No. 2264 (Local Autonomy Act) in so far as effectivity of a tax
ordinance is concerned? An examination of Republic Act No. 2264 (Local Autonomy Act) fails to show any provision
expressly repealing Section 2309 of the Revised Administrative Code. All that is mentioned therein is Section 9 which
reads:
Section 9 — All acts, executive orders, administrative orders, proclamations or parts thereof, inconsistent with any of
the provisions of this Act are hereby repealed and modified accordingly.
The foregoing provision does not amount to an express repeal of Section 2309 of the Revised Administrative Code. It
is a well established principle in statutory construction that a statute will not be construed as repealing prior acts on
the same subject in the absence of words to that effect unless there is an irreconcilable repugnancy between them,
or unless the new law is evidently intended to supersede all prior acts on the matter in hand and to comprise itself
the sole and complete system of legislation on that subject. Every new statute should be construed in connection
with those already existing in relation to the same subject matter and all should be made to harmonize and stand
together, if they can be done by any fair and reasonable interpretation ... . 6 It will also be noted that Section 2309 of
the Revised Administrative Code and Section 2 of Republic Act No. 2264 (Local Autonomy Act) refer to the same
subject matter-enactment and effectivity of a tax ordinance. In this respect they can be considered in pari materia.
Statutes are said to be in pari materia when they relate to the same person or thing, or to the same class of persons
or things, or have the same purpose or object. 7 When statutes are in pari materia, the rule of statutory construction
dictates that they should be construed together. This is because enactments of the same legislature on the same
subject matter are supposed to form part of one uniform system; that later statutes are supplementary or
complimentary to the earlier enactments and in the passage of its acts the legislature is supposed to have in mind
the existing legislation on the same subject and to have enacted its new act with reference thereto. 8 Having thus in
mind the previous statutes relating to the same subject matter, whenever the legislature enacts a new law, it is
deemed to have enacted the new provision in accordance with the legislative policy embodied in those prior statutes
unless there is an express repeal of the old and they all should be construed together. 9 In construing them the old
statutes relating to the same subject matter should be compared with the new provisions and if possible by
reasonable construction, both should be so construed that effect may be given to every provision of each. However,
when the new provision and the old relating to the same subject cannot be reconciled the former shall prevail as it is
the latter expression of the legislative will. 10 Actually we do not see any conflict between Section 2309 of the
Revised Administrative Code and Section 2 of the Republic Act No. 2264 (Local Autonomy Act). The conflict, if any, is
more apparent than real. It is one that is not incapable of reconciliation. And the two provisions can be reconciled by
applying the first clause of Section 2309 of the Revised Administrative Code when the problem refers to the
effectivity of an ordinance changing or repealing a municipal license tax already in existence. But where the problem
refers to effectivity of an ordinance creating an entirely new tax, let Section 2 of Republic Act No. 2264 (Local
Autonomy Act) govern.
In the case before Us, the ordinance in question is one which changes the graduated sales tax on gross sales or
receipts of dealers of merchandise and sari-sari merchants prescribed in Section 3 of Ordinance No. 4 of the City of
Naga to percentage tax on their gross sale-an ordinance which definitely falls within the clause of Section 2309 of the
Revised Administrative Code. Accordingly it should be effective and enforceable in the next succeeding year after the
year of its approval or in 1971 and private respondents should be refunded of the taxes they have paid to the
petitioners on their gross sales for the quarter from July 1, 1970 to September 30, 1970 plus the corresponding
interests from the filing of the complaint until reimbursement of the amount.
IN VIEW OF THE FOREGOING, the instant petition is hereby dismissed.
SO ORDERED.
2. Rules in Resolving Statutes in Pari Materia
a. Special Law vs General Law
G.R. Nos. 120865-71 December 7, 1995
LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,

vs.
COURT OF APPEALS; HON. JUDGE HERCULANO TECH, PRESIDING JUDGE, BRANCH 70, REGIONAL TRIAL COURT OF
BINANGONAN RIZAL; FLEET DEVELOPMENT, INC. and CARLITO ARROYO; THE MUNICIPALITY OF BINANGONAN
and/or MAYOR ISIDRO B. PACIS, respondents.

vs.
COURT OF APPEALS; HON. JUDGE AURELIO C. TRAMPE, PRESIDING JUDGE, BRANCH 163, REGIONAL TRIAL COURT OF
PASIG; MANILA MARINE LIFE BUSINESS RESOURCES, INC. represented by, MR. TOBIAS REYNALD M. TIANGCO;
MUNICIPALITY OF TAGUIG, METRO MANILA and/or MAYOR RICARDO D. PAPA, JR., respondents.

vs.
COURT OF APPEALS; HON. JUDGE ALEJANDRO A. MARQUEZ, PRESIDING JUDGE, BRANCH 79, REGIONAL TRIAL COURT
OF MORONG, RIZAL; GREENFIELD VENTURES INDUSTRIAL DEVELOPMENT CORPORATION and R. J. ORION
DEVELOPMENT CORPORATION; MUNICIPALITY OF JALA-JALA and/or MAYOR WALFREDO M. DE LA VEGA,
respondents.

vs.
COURT OF APPEALS; HON. JUDGE MANUEL S. PADOLINA, PRESIDING JUDGE, BRANCH 162, REGIONAL TRIAL COURT
OF PASIG, METRO MANILA; IRMA FISHING & TRADING CORP.; ARTM FISHING CORP.; BDR CORPORATION, MIRT
CORPORATION and TRIM CORPORATION; MUNICIPALITY OF BINANGONAN and/or MAYOR ISIDRO B. PACIS,
respondents.

vs.
COURT OF APPEALS; HON. JUDGE ARTURO A. MARAVE, PRESIDING JUDGE, BRANCH 78, REGIONAL TRIAL COURT OF
MORONG, RIZAL; BLUE LAGOON FISHING CORP. and ALCRIS CHICKEN GROWERS, INC.; MUNICIPALITY OF JALA-JALA
and/or MAYOR WALFREDO M. DE LA VEGA, respondents.

vs.
COURT OF APPEALS; HON. JUDGE ARTURO A. MARAVE, PRESIDING JUDGE, BRANCH 78, REGIONAL TRIAL COURT OF
MORONG, RIZAL; AGP FISH VENTURES, INC., represented by its PRESIDENT ALFONSO PUYAT; MUNICIPALITY OF JALA-
JALA and/or MAYOR WALFREDO M. DE LA VEGA, respondents.

vs.
COURT OF APPEALS; HON. JUDGE EUGENIO S. LABITORIA, PRESIDING JUDGE, BRANCH 161, REGIONAL TRIAL COURT
OF PASIG, METRO MANILA; SEA MAR TRADING CO. INC.; EASTERN LAGOON FISHING CORP.; MINAMAR FISHING
CORP.; MUNICIPALITY OF BINANGONAN and/or MAYOR ISIDRO B. PACIS, respondents.
HERMOSISIMA, JR., J.:
It is difficult for a man, scavenging on the garbage dump created by affluence and profligate consumption and
extravagance of the rich or fishing in the murky waters of the Pasig River and the Laguna Lake or making a clearing in
the forest so that he can produce food for his family, to understand why protecting birds, fish, and trees is more
important than protecting him and keeping his family alive.
How do we strike a balance between environmental protection, on the one hand, and the individual personal
interests of people, on the other?
Towards environmental protection and ecology, navigational safety, and sustainable development, Republic Act No.
4850 created the "Laguna Lake Development Authority." This Government Agency is supposed to carry out and
effectuate the aforesaid declared policy, so as to accelerate the development and balanced growth of the Laguna
Lake area and the surrounding provinces, cities and towns, in the act clearly named, within the context of the
national and regional plans and policies for social and economic development.
Presidential Decree No. 813 of former President Ferdinand E. Marcos amended certain sections of Republic Act No.
4850 because of the concern for the rapid expansion of Metropolitan Manila, the suburbs and the lakeshore towns
of Laguna de Bay, combined with current and prospective uses of the lake for municipal-industrial water supply,
irrigation, fisheries, and the like. Concern on the part of the Government and the general public over: — the
environment impact of development on the water quality and ecology of the lake and its related river systems; the
inflow of polluted water from the Pasig River, industrial, domestic and agricultural wastes from developed areas
around the lake; the increasing urbanization which induced the deterioration of the lake, since water quality studies
have shown that the lake will deteriorate further if steps are not taken to check the same; and the floods in
Metropolitan Manila area and the lakeshore towns which will influence the hydraulic system of Laguna de Bay, since
any scheme of controlling the floods will necessarily involve the lake and its river systems, — likewise gave impetus
to the creation of the Authority.
Section 1 of Republic Act No. 4850 was amended to read as follows:
Sec. 1. Declaration of Policy. It is hereby declared to be the national policy to promote, and accelerate the
development and balanced growth of the Laguna Lake area and the surrounding provinces, cities and towns
hereinafter referred to as the region, within the context of the national and regional plans and policies for social and
economic development and to carry out the development of the Laguna Lake region with due regard and adequate
provisions for environmental management and control, preservation of the quality of human life and ecological
systems, and the prevention of undue ecological disturbances, deterioration and pollution.1
Special powers of the Authority, pertinent to the issues in this case, include:
Sec. 3. Section 4 of the same Act is hereby further amended by adding thereto seven new paragraphs to be known as
paragraphs (j), (k), (l), (m), (n), (o), and (p) which shall read as follows:
xxx xxx xxx
(j) The provisions of existing laws to the contrary notwithstanding, to engage in fish production and other aqua-
culture projects in Laguna de Bay and other bodies of water within its jurisdiction and in pursuance thereof to
conduct studies and make experiments, whenever necessary, with the collaboration and assistance of the Bureau of
Fisheries and Aquatic Resources, with the end in view of improving present techniques and practices. Provided, that
until modified, altered or amended by the procedure provided in the following sub-paragraph, the present laws,
rules and permits or authorizations remain in force;
(k) For the purpose of effectively regulating and monitoring activities in Laguna de Bay, the Authority shall have
exclusive jurisdiction to issue new permit for the use of the lake waters for any projects or activities in or affecting
the said lake including navigation, construction, and operation of fishpens, fish enclosures, fish corrals and the like,
and to impose necessary safeguards for lake quality control and management and to collect necessary fees for said
activities and projects: Provided, That the fees collected for fisheries may be shared between the Authority and
other government agencies and political sub-divisions in such proportion as may be determined by the President of
the Philippines upon recommendation of the Authority's Board: Provided, further, That the Authority's Board may
determine new areas of fishery development or activities which it may place under the supervision of the Bureau of
Fisheries and Aquatic Resources taking into account the overall development plans and programs for Laguna de Bay
and related bodies of water: Provided, finally, That the Authority shall subject to the approval of the President of the
Philippines promulgate such rules and regulations which shall govern fisheries development activities in Laguna de
Bay which shall take into consideration among others the following: socio-economic amelioration of bonafide
resident fishermen whether individually or collectively in the form of cooperatives, lakeshore town development, a
master plan for fishpen construction and operation, communal fishing ground for lake shore town residents, and
preference to lake shore town residents in hiring laborer for fishery projects;
(l) To require the cities and municipalities embraced within the region to pass appropriate zoning ordinances and
other regulatory measures necessary to carry out the objectives of the Authority and enforce the same with the
assistance of the Authority;
(m) The provisions of existing laws to the contrary notwithstanding, to exercise water rights over public waters
within the Laguna de Bay region whenever necessary to carry out the Authority's projects;
(n) To act in coordination with existing governmental agencies in establishing water quality standards for industrial,
agricultural and municipal waste discharges into the lake and to cooperate with said existing agencies of the
government of the Philippines in enforcing such standards, or to separately pursue enforcement and penalty actions
as provided for in Section 4 (d) and Section 39-A of this Act: Provided, That in case of conflict on the appropriate
water quality standard to be enforced such conflict shall be resolved thru the NEDA Board.2
To more effectively perform the role of the Authority under Republic Act No. 4850, as though Presidential Decree
No. 813 were not thought to be completely effective, the Chief Executive, feeling that the land and waters of the
Laguna Lake Region are limited natural resources requiring judicious management to their optimal utilization to
insure renewability and to preserve the ecological balance, the competing options for the use of such resources and
conflicting jurisdictions over such uses having created undue constraints on the institutional capabilities of the
Authority in the light of the limited powers vested in it by its charter, Executive Order No. 927 further defined and
enlarged the functions and powers of the Authority and named and enumerated the towns, cities and provinces
encompassed by the term "Laguna de Bay Region".
Also, pertinent to the issues in this case are the following provisions of Executive Order No. 927 which include in
particular the sharing of fees:
Sec 2. Water Rights Over Laguna de Bay and Other Bodies of Water within the Lake Region: To effectively regulate
and monitor activities in the Laguna de Bay region, the Authority shall have exclusive jurisdiction to issue permit for
the use of all surface water for any projects or activities in or affecting the said region including navigation,
construction, and operation of fishpens, fish enclosures, fish corrals and the like.
For the purpose of this Executive Order, the term "Laguna de Bay Region" shall refer to the Provinces of Rizal and
Laguna; the Cities of San Pablo, Pasay, Caloocan, Quezon, Manila and Tagaytay; the towns of Tanauan, Sto. Tomas
and Malvar in Batangas Province; the towns of Silang and Carmona in Cavite Province; the town of Lucban in Quezon
Province; and the towns of Marikina, Pasig, Taguig, Muntinlupa, and Pateros in Metro Manila.
Sec 3. Collection of Fees. The Authority is hereby empowered to collect fees for the use of the lake water and its
tributaries for all beneficial purposes including but not limited to fisheries, recreation, municipal, industrial,
agricultural, navigation, irrigation, and waste disposal purpose; Provided, that the rates of the fees to be collected,
and the sharing with other government agencies and political subdivisions, if necessary, shall be subject to the
approval of the President of the Philippines upon recommendation of the Authority's Board, except fishpen fee,
which will be shared in the following manner; 20 percent of the fee shall go to the lakeshore local governments, 5
percent shall go to the Project Development Fund which shall be administered by a Council and the remaining 75
percent shall constitute the share of LLDA. However, after the implementation within the three-year period of the
Laguna Lake Fishery Zoning and Management Plan, the sharing will be modified as follows: 35 percent of the fishpen
fee goes to the lakeshore local governments, 5 percent goes to the Project Development Fund and the remaining 60
percent shall be retained by LLDA; Provided, however, that the share of LLDA shall form part of its corporate funds
and shall not be remitted to the National Treasury as an exception to the provisions of Presidential Decree No. 1234.
(Emphasis supplied)
It is important to note that Section 29 of Presidential Decree No. 813 defined the term "Laguna Lake" in this manner:
Sec 41. Definition of Terms.
(11) Laguna Lake or Lake. Whenever Laguna Lake or lake is used in this Act, the same shall refer to Laguna de Bay
which is that area covered by the lake water when it is at the average annual maximum lake level of elevation 12.50
meters, as referred to a datum 10.00 meters below mean lower low water (M.L.L.W). Lands located at and below
such elevation are public lands which form part of the bed of said lake.
Then came Republic Act No. 7160, the Local Government Code of 1991. The municipalities in the Laguna Lake Region
interpreted the provisions of this law to mean that the newly passed law gave municipal governments the exclusive
jurisdiction to issue fishing privileges within their municipal waters because R.A. 7160 provides:
Sec. 149. Fishery Rentals, Fees and Charges.
(a) Municipalities shall have the exclusive authority to grant fishery privileges in the municipal waters and impose
rental fees or charges therefor in accordance with the provisions of this Section.
(b) The Sangguniang Bayan may:
(1) Grant fishing privileges to erect fish corrals, oyster, mussel or other aquatic beds or bangus fry areas, within a
definite zone of the municipal waters, as determined by it; . . . .
(2) Grant privilege to gather, take or catch bangus fry, prawn fry or kawag-kawag or fry of other species and fish from
the municipal waters by nets, traps or other fishing gears to marginal fishermen free from any rental fee, charges or
any other imposition whatsoever.
xxx xxx xxx
Sec. 447. Power, Duties, Functions and Compensation. . . . .
xxx xxx xxx
(XI) Subject to the provisions of Book II of this Code, grant exclusive privileges of constructing fish corrals or fishpens,
or the taking or catching of bangus fry, prawn fry or kawag-kawag or fry of any species or fish within the municipal
waters.
xxx xxx xxx
Municipal governments thereupon assumed the authority to issue fishing privileges and fishpen permits. Big fishpen
operators took advantage of the occasion to establish fishpens and fishcages to the consternation of the Authority.
Unregulated fishpens and fishcages, as of July, 1995, occupied almost one-third of the entire lake water surface area,
increasing the occupation drastically from 7,000 hectares in 1990 to almost 21,000 hectares in 1995. The Mayor's
permit to construct fishpens and fishcages were all undertaken in violation of the policies adopted by the Authority
on fishpen zoning and the Laguna Lake carrying capacity.
To be sure, the implementation by the lakeshore municipalities of separate independent policies in the operation of
fishpens and fishcages within their claimed territorial municipal waters in the lake and their indiscriminate grant of
fishpen permits have already saturated the lake area with fishpens, thereby aggravating the current environmental
problems and ecological stress of Laguna Lake.
In view of the foregoing circumstances, the Authority served notice to the general public that:
In compliance with the instructions of His Excellency PRESIDENT FIDEL V. RAMOS given on June 23, 1993 at Pila,
Laguna pursuant to Republic Act 4850 as amended by Presidential Decree 813 and Executive Order 927 series of
1983 and in line with the policies and programs of the Presidential Task Force on Illegal Fishpens and Illegal Fishing,
the general public is hereby notified that:
1. All fishpens, fishcages and other aqua-culture structures in the Laguna de Bay Region, which were not registered
or to which no application for registration and/or permit has been filed with Laguna Lake Development Authority as
of March 31, 1993 are hereby declared outrightly as illegal.
2. All fishpens, fishcages and other aqua-culture structures so declared as illegal shall be subject to demolition which
shall be undertaken by the Presidential Task Force for Illegal Fishpen and Illegal Fishing.
3. Owners of fishpens, fishcages and other aqua-culture structures declared as illegal shall, without prejudice to
demolition of their structures be criminally charged in accordance with Section 39-A of Republic Act 4850 as
amended by P.D. 813 for violation of the same laws. Violations of these laws carries a penalty of imprisonment of
not exceeding 3 years or a fine not exceeding Five Thousand Pesos or both at the discretion of the court.
All operators of fishpens, fishcages and other aqua-culture structures declared as illegal in accordance with the
foregoing Notice shall have one (1) month on or before 27 October 1993 to show cause before the LLDA why their
said fishpens, fishcages and other aqua-culture structures should not be demolished/dismantled.
One month, thereafter, the Authority sent notices to the concerned owners of the illegally constructed fishpens,
fishcages and other aqua-culture structures advising them to dismantle their respective structures within 10 days
from receipt thereof, otherwise, demolition shall be effected.
Reacting thereto, the affected fishpen owners filed injunction cases against the Authority before various regional
trial courts, to wit: (a) Civil Case No. 759-B, for Prohibition, Injunction and Damages, Regional Trial Court, Branch 70,
Binangonan, Rizal, filed by Fleet Development, Inc. and Carlito Arroyo; (b) Civil Case No. 64049, for Injunction,
Regional Trial Court, Branch 162, Pasig, filed by IRMA Fishing and Trading Corp., ARTM Fishing Corp., BDR Corp.,
MIRT Corp. and TRIM Corp.; (c) Civil Case No. 566, for Declaratory Relief and Injunction, Regional Trial Court, Branch
163, Pasig, filed by Manila Marine Life Business Resources, Inc. and Tobias Reynaldo M. Tianco; (d) Civil Case No.
556-M, for Prohibition, Injunction and Damages, Regional Trial Court, Branch 78, Morong, Rizal, filed by AGP Fishing
Ventures, Inc.; (e) Civil Case No. 522-M, for Prohibition, Injunction and Damages, Regional Trial Court, Branch 78,
Morong, Rizal, filed by Blue Lagoon and Alcris Chicken Growers, Inc.; (f) Civil Case No. 554-, for Certiorari and
Prohibition, Regional Trial Court, Branch 79, Morong, Rizal, filed by Greenfields Ventures Industrial Corp. and R.J.
Orion Development Corp.; and (g) Civil Case No. 64124, for Injunction, Regional Trial Court, Branch 15, Pasig, filed by
SEA-MAR Trading Co., Inc. and Eastern Lagoon Fishing Corp. and Minamar Fishing Corporation.
The Authority filed motions to dismiss the cases against it on jurisdictional grounds. The motions to dismiss were
invariably denied. Meanwhile, temporary restraining order/writs of preliminary mandatory injunction were issued in
Civil Cases Nos. 64124, 759 and 566 enjoining the Authority from demolishing the fishpens and similar structures in
question.
Hence, the herein petition for certiorari, prohibition and injunction, G.R. Nos. 120865-71, were filed by the Authority
with this court. Impleaded as parties-respondents are concerned regional trial courts and respective private parties,
and the municipalities and/or respective Mayors of Binangonan, Taguig and Jala-jala, who issued permits for the
construction and operation of fishpens in Laguna de Bay. The Authority sought the following reliefs, viz.:
(A) Nullification of the temporary restraining order/writs of preliminary injunction issued in Civil Cases Nos. 64125,
759 and 566;
(B) Permanent prohibition against the regional trial courts from exercising jurisdiction over cases involving the
Authority which is a co-equal body;
(C) Judicial pronouncement that R.A. 7610 (Local Government Code of 1991) did not repeal, alter or modify the
provisions of R.A. 4850, as amended, empowering the Authority to issue permits for fishpens, fishcages and other
aqua-culture structures in Laguna de Bay and that, the Authority the government agency vested with exclusive
authority to issue said permits.
By this Court's resolution of May 2, 1994, the Authority's consolidated petitions were referred to the Court of
Appeals.
In a Decision, dated June 29, 1995, the Court of Appeals dismissed the Authority's consolidated petitions, the Court
of Appeals holding that: (A) LLDA is not among those quasi-judicial agencies of government whose decision or order
are appealable only to the Court of Appeals; (B) the LLDA charter does vest LLDA with quasi-judicial functions insofar
as fishpens are concerned; (C) the provisions of the LLDA charter insofar as fishing privileges in Laguna de Bay are
concerned had been repealed by the Local Government Code of 1991; (D) in view of the aforesaid repeal, the power
to grant permits devolved to and is now vested with their respective local government units concerned.
Not satisfied with the Court of Appeals decision, the Authority has returned to this Court charging the following
errors:
1. THE HONORABLE COURT OF APPEALS PROBABLY COMMITTED AN ERROR WHEN IT RULED THAT THE LAGUNA
LAKE DEVELOPMENT AUTHORITY IS NOT A QUASI-JUDICIAL AGENCY.
2. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR WHEN IT RULED THAT R.A. 4850 AS AMENDED
BY P.D. 813 AND E.O. 927 SERIES OF 1983 HAS BEEN REPEALED BY REPUBLIC ACT 7160. THE SAID RULING IS
CONTRARY TO ESTABLISHED PRINCIPLES AND JURISPRUDENCE OF STATUTORY CONSTRUCTION.
3. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR WHEN IT RULED THAT THE POWER TO ISSUE
FISHPEN PERMITS IN LAGUNA DE BAY HAS BEEN DEVOLVED TO CONCERNED (LAKESHORE) LOCAL GOVERNMENT
UNITS.
We take a simplistic view of the controversy. Actually, the main and only issue posed is: Which agency of the
Government — the Laguna Lake Development Authority or the towns and municipalities comprising the region —
should exercise jurisdiction over the Laguna Lake and its environs insofar as the issuance of permits for fishery
privileges is concerned?
Section 4 (k) of the charter of the Laguna Lake Development Authority, Republic Act No. 4850, the provisions of
Presidential Decree No. 813, and Section 2 of Executive Order No. 927, cited above, specifically provide that the
Laguna Lake Development Authority shall have exclusive jurisdiction to issue permits for the use of all surface water
for any projects or activities in or affecting the said region, including navigation, construction, and operation of
fishpens, fish enclosures, fish corrals and the like. On the other hand, Republic Act No. 7160, the Local Government
Code of 1991, has granted to the municipalities the exclusive authority to grant fishery privileges in municipal
waters. The Sangguniang Bayan may grant fishery privileges to erect fish corrals, oyster, mussels or other aquatic
beds or bangus fry area within a definite zone of the municipal waters.
We hold that the provisions of Republic Act No. 7160 do not necessarily repeal the aforementioned laws creating the
Laguna Lake Development Authority and granting the latter water rights authority over Laguna de Bay and the lake
region.
The Local Government Code of 1991 does not contain any express provision which categorically expressly repeal the
charter of the Authority. It has to be conceded that there was no intent on the part of the legislature to repeal
Republic Act No. 4850 and its amendments. The repeal of laws should be made clear and expressed.
It has to be conceded that the charter of the Laguna Lake Development Authority constitutes a special law. Republic
Act No. 7160, the Local Government Code of 1991, is a general law. It is basic in statutory construction that the
enactment of a later legislation which is a general law cannot be construed to have repealed a special law. It is a
well-settled rule in this jurisdiction that "a special statute, provided for a particular case or class of cases, is not
repealed by a subsequent statute, general in its terms, provisions and application, unless the intent to repeal or alter
is manifest, although the terms of the general law are broad enough to include the cases embraced in the special
law."3
Where there is a conflict between a general law and a special statute, the special statute should prevail since it
evinces the legislative intent more clearly than the general statute. The special law is to be taken as an exception to
the general law in the absence of special circumstances forcing a contrary conclusion. This is because implied repeals
are not favored and as much as possible, effect must be given to all enactments of the legislature. A special law
cannot be repealed, amended or altered by a subsequent general law by mere implication.4
Thus, it has to be concluded that the charter of the Authority should prevail over the Local Government Code of
1991.
Considering the reasons behind the establishment of the Authority, which are environmental protection,
navigational safety, and sustainable development, there is every indication that the legislative intent is for the
Authority to proceed with its mission.
We are on all fours with the manifestation of petitioner Laguna Lake Development Authority that "Laguna de Bay,
like any other single body of water has its own unique natural ecosystem. The 900 km² lake surface water, the eight
(8) major river tributaries and several other smaller rivers that drain into the lake, the 2,920 km² basin or watershed
transcending the boundaries of Laguna and Rizal provinces, greater portion of Metro Manila, parts of Cavite,
Batangas, and Quezon provinces, constitute one integrated delicate natural ecosystem that needs to be protected
with uniform set of policies; if we are to be serious in our aims of attaining sustainable development. This is an
exhaustible natural resource — a very limited one — which requires judicious management and optimal utilization to
ensure renewability and preserve its ecological integrity and balance."
"Managing the lake resources would mean the implementation of a national policy geared towards the protection,
conservation, balanced growth and sustainable development of the region with due regard to the inter-generational
use of its resources by the inhabitants in this part of the earth. The authors of Republic Act 4850 have foreseen this
need when they passed this LLDA law — the special law designed to govern the management of our Laguna de Bay
lake resources."
"Laguna de Bay therefore cannot be subjected to fragmented concepts of management policies where lakeshore
local government units exercise exclusive dominion over specific portions of the lake water. The garbage thrown or
sewage discharged into the lake, abstraction of water therefrom or construction of fishpens by enclosing its certain
area, affect not only that specific portion but the entire 900 km² of lake water. The implementation of a cohesive and
integrated lake water resource management policy, therefore, is necessary to conserve, protect and sustainably
develop Laguna de Bay."5
The power of the local government units to issue fishing privileges was clearly granted for revenue purposes. This is
evident from the fact that Section 149 of the New Local Government Code empowering local governments to issue
fishing permits is embodied in Chapter 2, Book II, of Republic Act No. 7160 under the heading, "Specific Provisions
On The Taxing And Other Revenue Raising Power Of Local Government Units."
On the other hand, the power of the Authority to grant permits for fishpens, fishcages and other aqua-culture
structures is for the purpose of effectively regulating and monitoring activities in the Laguna de Bay region (Section
2, Executive Order No. 927) and for lake quality control and management.6 It does partake of the nature of police
power which is the most pervasive, the least limitable and the most demanding of all State powers including the
power of taxation. Accordingly, the charter of the Authority which embodies a valid exercise of police power should
prevail over the Local Government Code of 1991 on matters affecting Laguna de Bay.
There should be no quarrel over permit fees for fishpens, fishcages and other aqua-culture structures in the Laguna
de Bay area. Section 3 of Executive Order No. 927 provides for the proper sharing of fees collected.
In respect to the question as to whether the Authority is a quasi-judicial agency or not, it is our holding that,
considering the provisions of Section 4 of Republic Act No. 4850 and Section 4 of Executive Order No. 927, series of
1983, and the ruling of this Court in Laguna Lake Development Authority vs. Court of Appeals, 231 SCRA 304, 306,
which we quote:
xxx xxx xxx
As a general rule, the adjudication of pollution cases generally pertains to the Pollution Adjudication Board (PAB),
except in cases where the special law provides for another forum. It must be recognized in this regard that the LLDA,
as a specialized administrative agency, is specifically mandated under Republic Act No. 4850 and its amendatory laws
to carry out and make effective the declared national policy of promoting and accelerating the development and
balanced growth of the Laguna Lake area and the surrounding provinces of Rizal and Laguna and the cities of San
Pablo, Manila, Pasay, Quezon and Caloocan with due regard and adequate provisions for environmental
management and control, preservation of the quality of human life and ecological systems, and the prevention of
undue ecological disturbances, deterioration and pollution. Under such a broad grant of power and authority, the
LLDA, by virtue of its special charter, obviously has the responsibility to protect the inhabitants of the Laguna Lake
region from the deleterious effects of pollutants emanating from the discharge of wastes from the surrounding
areas. In carrying out the aforementioned declared policy, the LLDA is mandated, among others, to pass upon and
approve or disapprove all plans, programs, and projects proposed by local government offices/agencies within the
region, public corporations, and private persons or enterprises where such plans, programs and/or projects are
related to those of the LLDA for the development of the region.
xxx xxx xxx
. . . . While it is a fundamental rule that an administrative agency has only such powers as are expressly granted to it
by law, it is likewise a settled rule that an administrative agency has also such powers as are necessarily implied in
the exercise of its express powers. In the exercise, therefore, of its express powers under its charter, as a regulatory
and quasi-judicial body with respect to pollution cases in the Laguna Lake region, the authority of the LLDA to issue a
"cease and desist order" is, perforce, implied. Otherwise, it may well be reduced to a "toothless" paper agency.
there is no question that the Authority has express powers as a regulatory and quasi-judicial body in respect to
pollution cases with authority to issue a "cease and desist order" and on matters affecting the construction of illegal
fishpens, fishcages and other aqua-culture structures in Laguna de Bay. The Authority's pretense, however, that it is
co-equal to the Regional Trial Courts such that all actions against it may only be instituted before the Court of
Appeals cannot be sustained. On actions necessitating the resolution of legal questions affecting the powers of the
Authority as provided for in its charter, the Regional Trial Courts have jurisdiction.
In view of the foregoing, this Court holds that Section 149 of Republic Act No. 7160, otherwise known as the Local
Government Code of 1991, has not repealed the provisions of the charter of the Laguna Lake Development
Authority, Republic Act No. 4850, as amended. Thus, the Authority has the exclusive jurisdiction to issue permits for
the enjoyment of fishery privileges in Laguna de Bay to the exclusion of municipalities situated therein and the
authority to exercise such powers as are by its charter vested on it.
Removal from the Authority of the aforesaid licensing authority will render nugatory its avowed purpose of
protecting and developing the Laguna Lake Region. Otherwise stated, the abrogation of this power would render
useless its reason for being and will in effect denigrate, if not abolish, the Laguna Lake Development Authority. This,
the Local Government Code of 1991 had never intended to do.
WHEREFORE, the petitions for prohibition, certiorari and injunction are hereby granted, insofar as they relate to the
authority of the Laguna Lake Development Authority to grant fishing privileges within the Laguna Lake Region.
The restraining orders and/or writs of injunction issued by Judge Arturo Marave, RTC, Branch 78, Morong, Rizal;
Judge Herculano Tech, RTC, Branch 70, Binangonan, Rizal; and Judge Aurelio Trampe, RTC, Branch 163, Pasig, Metro
Manila, are hereby declared null and void and ordered set aside for having been issued with grave abuse of
discretion.
The Municipal Mayors of the Laguna Lake Region are hereby prohibited from issuing permits to construct and
operate fishpens, fishcages and other aqua-culture structures within the Laguna Lake Region, their previous
issuances being declared null and void. Thus, the fishing permits issued by Mayors Isidro B. Pacis, Municipality of
Binangonan; Ricardo D. Papa, Municipality of Taguig; and Walfredo M. de la Vega, Municipality of Jala-jala,
specifically, are likewise declared null and void and ordered cancelled.
The fishpens, fishcages and other aqua-culture structures put up by operators by virtue of permits issued by
Municipal Mayors within the Laguna Lake Region, specifically, permits issued to Fleet Development, Inc. and Carlito
Arroyo; Manila Marine Life Business Resources, Inc., represented by, Mr. Tobias Reynald M. Tiangco; Greenfield
Ventures Industrial Development Corporation and R.J. Orion Development Corporation; IRMA Fishing And Trading
Corporation, ARTM Fishing Corporation, BDR Corporation, Mirt Corporation and Trim Corporation; Blue Lagoon
Fishing Corporation and ALCRIS Chicken Growers, Inc.; AGP Fish Ventures, Inc., represented by its President Alfonso
Puyat; SEA MAR Trading Co., Inc., Eastern Lagoon Fishing Corporation, and MINAMAR Fishing Corporation, are
hereby declared illegal structures subject to demolition by the Laguna Lake Development Authority.
SO ORDERED.
G.R. No. 87119 April 16, 1991
HON. GEMILIANO C. LOPEZ, JR., in his capacity as City Mayor of Manila, petitioner,
vs.
THE CIVIL SERVICE COMMISSION, HON. DANILO R. LACUNA, in his capacity as Vice-Mayor and Presiding Officer of the
City Council of Manila, and THE CITY COUNCIL OF MANILA, respondents.
The City Legal Officer for petitioner.

Lacuna, Bello & Associates Law Offices for Danilo B. Lacuna.
SARMIENTO, J.:
The only question in this petition, denominated as a "direct appeal under Article VIII, Section 5 (2) (e), of the
Constitution and Section 9(3), of Batas Blg. 129," is whether the City Council of Manila still has the power to appoint
Council officers and employees under Republic Act No. 409, otherwise known as the Charter of the City of Manila, or
whether the power is now vested with the City Mayor pursuant to Republic Act No. 5185, the Decentralization Law,
and Batas Blg. 337, the Local Government Code. The facts are as follows:
On September 13, 1988, the Vice-Mayor of Manila and Presiding Officer of the City Council of Manila, the Hon.
Danilo R. Lacuna, submitted to the Civil Service Commission, through the Regional Director of the National Capital
Region, the appointments of nineteen officers and employees in the Executive Staff of the Office of the Presiding
Officer, City Council of Manila, pursuant to the provisions of Section 15, of said Republic Act No. 409, as amended,
which reads:
Sec. 15. . . . .
xxx xxx xxx
. . . The Board shall appoint and the Vice Mayor shall sign all appointments of the other employees of the Board.1
The City Budget Officer of Manila later sought from the Personnel Bureau of the Mayor's office "comment and/or
recommendation" on whether the payroll of the newly appointed employees of the City Council may be paid on the
basis of appointments signed by the Vice-Mayor.2 The Personnel Bureau then forwarded the query to the City Legal
Officer who, in a 3rd endorsement dated September 19, 1988,3 rendered an opinion that the proper appointing
officer is the City Mayor and not the City Council. This opinion was transmitted by the Secretary to the City Mayor to
the Commission.
On February 1, 1989, the Commission promulgated Resolution No. 89-075, and held that contrary to the opinion of
the City Legal Officer, it is the City Council to which the appointing power is vested. The dispositive portion thereof is
as follows:
WHEREFORE, foregoing premises considered, the Commission resolved to rule, as it hereby rules that the proper
appointing authority of the officers and employees of the City Council of Manila is the City Council and the signatory
of individual appointments thus issued is the City Vice-Mayor of Manila.4
As we stated at the outset, the issue is whether or not Section 15, supra, of the Charter of the City of Manila has
been repealed, and as a result, the City Council can no longer tender appointments to Council positions.
As we also mentioned at the outset, this petition has been brought by way of a "direct appeal" from the resolution of
the Civil Service Commission pursuant supposedly to the Constitution and Batas Blg. 129. In this connection, we have
held that no appeal lies from the decisions of the Civil Service Commission, and that parties aggrieved thereby may
proceed to this Court alone on certiorari under Rule 65 of the Rules of Court, within thirty days from receipt of a
copy thereof, pursuant to Section 7, Article IX, of the Constitution. We quote:
Sec. 7. Unless otherwise provided by this Constitution or by law, any decision, order, or ruling of each Commission
may be brought to the Supreme Court on certiorari by the aggrieved party within thirty days from receipt of a copy
thereof.5
As we held, the Civil Service Commission, under the Constitution, is the single arbiter of all contests relating to the
civil service and as such, its judgments are unappealable and subject only to this Court's certiorari jurisdiction.6
The petitioner's omission notwithstanding, we are nevertheless accepting the petition and because of the important
public interest it involves, we are considering it as a petition for certiorari under Rule 65, considering further that it
was filed within the thirty-day period.7
As the petitioner contends, Section 15 of Republic Act No. 409 as amended has supposedly been repealed by
Republic Act No. 5185, specifically, Section 4 thereof, which we quote, in part:
xxx xxx xxx
The City Assessor, City Agriculturist, City Chief of Police and City Chief of Fire Department and other heads of offices
entirely paid out of city funds and their respective assistants or deputies shall, subject to civil service law, rules and
regulations, be appointed by the City Mayor: Provided, however, That this section shall not apply to Judges, Auditors,
Fiscals, City Superintendents of Schools, Supervisors, Principals, City Treasurers, City Health Officers and City
Engineers.
xxx xxx xxx
All other employees, except teachers, paid out of provincial, city or municipal general funds, road and bridge funds,
school funds, and other local funds, shall, subject to civil service law, rules and regulations, be appointed by the
Provincial Governor, City or Municipal Mayor upon recommendation of the office head concerned. . . .8
and by Batas Blg. 337, we likewise quote:
Sec. 171. Chief Executive; Compensation, Powers, and Duties. —
xxx xxx xxx
(2) The city mayor shall:
xxx xxx xxx
(h) Appoint, in accordance with civil service law, rules and regulations, all officers and employees of the city, whose
appointments are not otherwise provided in this Code;9
There is no doubt that Republic Act No. 409, which provides specifically for the organization of the Government of
the City of Manila, is a special law, and whereas Republic Act No. 5185 and Batas Blg. 337, which apply to municipal
governments in general, are general laws. As the Solicitor General points out, and we agree with him, it is a canon of
statutory construction that a special law prevails over a general law — regardless of their dates of passage — and the
special is to be considered as remaining an exception to the general.10
So also, every effort must be exerted to avoid a conflict between statutes. If reasonable construction is possible, the
laws must be reconciled in that manner.
Repeals of laws by implication moreover are not favored, and the mere repugnancy between two statutes should be
very clear to warrant the court in holding that the later in time repeals the other.11
Why a special law prevails over a general law has been put by the Court as follows:
xxx xxx xxx
. . . The Legislature consider and make provision for all the circumstances of the particular case.1âwphi1 The
Legislature having specially considered all of the facts and circumstances in the particular case in granting a special
charter, it will not be considered that the Legislature, by adopting a general law containing provisions repugnant to
the provisions of the charter, and without making any mention of its intention to amend or modify the charter,
intended to amend, repeal, or modify the special act. (Lewis vs. Cook County, 74 I11. App., 151; Philippine Railway
Co. vs. Nolting 34 Phil., 401.)12
In one case, we held that Republic Act No. 5185 did not divest the Mayor of Manila of his power under the Charter of
the City of Manila to approve the city budget.13
We also agree with the Civil Service Commission that the provisions of Republic Act No. 5185, giving mayors the
power to appoint all officials "entirely paid out by city funds14 and those of Batas Blg. 337, empowering local
executives with the authority to appoint "all officers and employees of the city,"15 were meant not to vest the city
mayors per se with comprehensive powers but rather, to underscore the transfer of the power of appointment over
local officials and employees from the President to the local governments and to highlight the autonomy of local
governments. They were not meant, however, to deprive the City Council of Manila for instance, its appointing
power granted by existing statute, and after all, that arrangement is sufficient to accomplish the objectives of both
the Decentralization Act and the Local Government Code, that is, to provide teeth to local autonomy.
In the light of an the foregoing, we do not find any grave abuse of discretion committed by the respondent
Commission.
WHEREFORE, the petition is DISMISSED. No costs.
SO ORDERED.
JOSE L. LAXAMANA, petitioner,

vs.
JOSE T. BALTAZAR, respondent.
Gerardo S. Limlingan and Jose L. Baltazar for petitioner.

Macapagal, Punzalan and Yabut for respondent.
Ramon Duterte and Pedro Lopez as amici curiae.
BENGZON, J.:
When in July 1952 the mayor of Sexmoan, Pampanga, was suspended, the vice-mayor Jose T. Salazar, assumed office
as mayor by virtue of section 2195 of the Revised Administrative Code. However, the provincial governor, acting
under section 21 (a) of the Revised Election Code (R.A. 180), with the consent of the provincial board appointed Jose
L. Laxamana, as mayor of Sexmoan, who immediately took the corresponding official oath.
Result: this quo warranto proceeding, based solely on the petitioner's proposition that the section first mentioned
has been repealed by the subsequent provision of the Revised Election Code.
If there was such repeal, this petition should be granted, and Laxamana declared the lawful mayor of Sexmoan.
Otherwise it must be denied.1
The two statutory provisions read as follows:

SEC. 2195. — Temporary disability of the mayor. Upon the occasion of the absence, suspension, or other temporary
disability of the Mayor, his duties shall be discharged by the Vice-Mayor, or if there be no Vice-Mayor, by the
councilor who at the last general election received the highest number of votes.
SEC. 21 (a). Vacancy in elective provincial, city or municipal office. — Whenever a temporary vacancy in any elective
local office occurs, the same shall be filled by appointment by the President if it is a provincial or city office, and by
the provincial governor, with the consent of the Provincial Board, if it is a municipal office. (R.A. 180, the Revised
Election Code.
SEC. 21 (a) — The portion relating to municipal offices — was taken from section 2180 of the Revised Administrative
Code, which partly provided:
SEC. 2180. Vacancies in municipal office. — (a) In case of a temporary vacancy in any municipal office, the same shall
be filled by appointment by the provincial governor, with the consent of the provincial board.
(b) In case of a permanent vacancy in any municipal office, the same shall be filled by appointment by the provincial
board, except in case of a municipal president, in which the permanent vacancy shall be filled by the municipal vice-
president. . . .
It will be seen that under this section, when the office of municipal president (now mayor) become permanently
vacant the vice-president stepped into the office. The section omitted reference to temporary vacancy of such office
because section 2195 governed that contingency. In this regard sections 2180 and 2195 supplemented each other.
Paragraph (a) of section 2180 applied to municipal offices in general, other than that of the municipal president.
Under the Revised Administrative Code, — specially the two sections indicated — there was no doubt in
Government circles that when the municipal president was suspended from office, the vice-president took his place.
Temporary vacancy in office of municipal president. — Paragraph (a) of this section (2180) should be construed to
cover only municipal offices other than the office of president. Section 2195 of the Administrative Code should be
applied in case of the absence, suspension, or other temporary disability of the municipal president. (Op. Atty. Gen.
Sept. 21, 1917; Ins. Aud. Oct. 23, 1927.) (Araneta, Administrative Code Vol. IV p. 2838)
Municipal president cannot designate acting president. — There is no provision of law expressly or implied
authorizing the municipal president to designate any person to act in his stead during his temporary absence or
disability. From the provision of section 2195 of the code, it is clear that the vice-president or, if there be no vice-
president, the councilor who at the last general election received the highest number of votes, should automatically
(without any formal designation) discharge the duties of the president. (Op. Ins. Aud. March 2, 1926) (Araneta
Administrative Code Vol. IV, p. 2839)
Now it is reasonable to assume that the incorporation of the above section 2180 into the Revised Election Law as
section 21 (a) did not have the effect of enlarging its scope,2 to supersede or repeal section 2195, what with the
presumption against implied repeals.3 "Where a statute has received a contemporaneous and practical
interpretation and the statute as interpreted is re-enacted, the practical interpretation is accorded greater weight
than it ordinarily receives, and is regarded as presumptively the correct interpretation of the law. The rule here is
based upon the theory that the legislature is acquainted with the contemporaneous interpretation of a statute,
especially when made by an administrative body or executive officers charged with the duty of administering or
enforcing the law, and therefore impliedly adopts the interpretation upon re-enactment." (Sutherland Statutory
Construction, sec. 5109.)
Indeed, even disregarding their origin, the allegedly conflicting sections, could be interpreted in the light of the
principle of statutory construction that when a general and a particular provision are inconsistent the latter is
paramount to the former (sec. 288, Act 190). In other words, section 2195 referring particularly to vacancy in the
office of mayor, must prevail over the general terms of section 21 (a) as to vacancies of municipal (local) offices.
Otherwise stated, section 2195 may be deemed an exception to or qualification of the latter.4 "Where one statute
deals with a subject in general terms, and another deals with a part of the same subject in a more detailed way, the
two should be harmonized if possible; but if there is any conflict, the latter will prevail, regardless of whether it was
passed prior to the general statute." (Sutherland Statutory Construction, sec. 5204)
In a recent decision,5 we had occasion to pass on a similar situation — repeal by subsequent general provision of a
prior special provision — and we said,:
It is well-settled that a special and local statute, providing for a particular case or class of cases, is not repealed by a
subsequent statute, general in its terms, provisions and application, unless the intent to repeal or alter is manifest,
although the terms of the general act are broad enough to include the cases embraced in the special law. . . . It is a
canon of statutory construction that a later statute, general in its terms and not expressly repealing a prior special
statute, will ordinarily not affect the special provisions, of such earlier statute. (Steamboat Company vs. Collector, 18
Wall. (U.S.), 478; Cass County vs. Gillett, 100 U.S. 585; Minnesota vs. Hitchcock, 185 U.S. 373, 396.)
Where there are two statutes, the earlier special and the later general — the terms of the general brood enough to
include the matter provided for in the special — the fact that one is special and the other is general creates a
presumption that the special is to be considered as remaining an exception to the general, one as a general law of
the land, the other as the law of a particular case. (State vs. Stoll, 17 Wall. (U.S.) 425)
In fact even after the Revised Election Code was enacted, the Department of the Interior and the office of executive
Secretary who are charged with the supervision of provincial and municipal governments have "consistently held
that in case of the suspension or other temporary disability of the mayor, the vice-mayor shall, by operation of law,
assume the office of the mayor, and if the vice-mayor is not available, the said office shall be discharged by the first
councilor." (Annex 5 of the answer.)
Needless to say, the contemporaneous construction placed upon the statute by the executive officers charged with
its execution deserves great weight in the courts.6
Consequently it is our ruling that when the mayor of a municipality is suspended, absent or temporarily unable, his
duties should be discharged by the vice-mayor in accordance with sec. 2195 of the Revised Administrative Code.
This quo warranto petition is dismissed with costs. 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." 16
Clearly, 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-23052 January 29, 1968
CITY OF MANILA, petitioner,

vs.
GENARO N. TEOTICO and COURT OF APPEALS, respondents.
City Fiscal Manuel T. Reyes for petitioner.

Sevilla, Daza and Associates for respondents.
CONCEPCION, C.J.:
Appeal by certiorari from a decision of the Court of Appeals.
On January 27, 1958, at about 8:00 p.m., Genaro N. Teotico was at the corner of the Old Luneta and P. Burgos
Avenue, Manila, within a "loading and unloading" zone, waiting for a jeepney to take him down town. After waiting
for about five minutes, he managed to hail a jeepney that came along to a stop. As he stepped down from the curb
to board the jeepney, and took a few steps, he fell inside an uncovered and unlighted catch basin or manhole on P.
Burgos Avenue. Due to the fall, his head hit the rim of the manhole breaking his eyeglasses and causing broken
pieces thereof to pierce his left eyelid. As blood flowed therefrom, impairing his vision, several persons came to his
assistance and pulled him out of the manhole. One of them brought Teotico to the Philippine General Hospital,
where his injuries were treated, after which he was taken home. In addition to the lacerated wound in his left upper
eyelid, Teotico suffered contusions on the left thigh, the left upper arm, the right leg and the upper lip apart from an
abrasion on the right infra-patella region. These injuries and the allergic eruption caused by anti-tetanus injections
administered to him in the hospital, required further medical treatment by a private practitioner who charged
therefor P1,400.00.
As a consequence of the foregoing occurrence, Teotico filed, with the Court of First Instance of Manila, a complaint
— which was, subsequently, amended — for damages against the City of Manila, its mayor, city engineer, city health
officer, city treasurer and chief of police. As stated in the decision of the trial court, and quoted with approval by the
Court of Appeals,
At the time of the incident, plaintiff was a practicing public accountant, a businessman and a professor at the
University of the East. He held responsible positions in various business firms like the Philippine Merchandising Co.,
the A.U. Valencia and Co., the Silver Swan Manufacturing Company and the Sincere Packing Corporation. He was also
associated with several civic organizations such as the Wack Wack Golf Club, the Chamber of Commerce of the
Philippines, Y's Men Club of Manila and the Knights of Rizal. As a result of the incident, plaintiff was prevented from
engaging in his customary occupation for twenty days. Plaintiff has lost a daily income of about P50.00 during his
incapacity to work. Because of the incident, he was subjected to humiliation and ridicule by his business associates
and friends. During the period of his treatment, plaintiff was under constant fear and anxiety for the welfare of his
minor children since he was their only support. Due to the filing of this case, plaintiff has obligated himself to pay his
counsel the sum of P2,000.00.
On the other hand, the defense presented evidence, oral and documentary, to prove that the Storm Drain Section,
Office of the City Engineer of Manila, received a report of the uncovered condition of a catchbasin at the corner of P.
Burgos and Old Luneta Streets, Manila, on January 24, 1958, but the same was covered on the same day (Exhibit 4);
that again the iron cover of the same catch basin was reported missing on January 30, 1958, but the said cover was
replaced the next day (Exhibit 5); that the Office of the City Engineer never received any report to the effect that the
catchbasin in question was not covered between January 25 and 29, 1968; that it has always been a policy of the said
office, which is charged with the duty of installation, repair and care of storm drains in the City of Manila, that
whenever a report is received from whatever source of the loss of a catchbasin cover, the matter is immediately
attended to, either by immediately replacing the missing cover or covering the catchbasin with steel matting that
because of the lucrative scrap iron business then prevailing, stealing of iron catchbasin covers was rampant; that the
Office of the City Engineer has filed complaints in court resulting from theft of said iron covers; that in order to
prevent such thefts, the city government has changed the position and layout of catchbasins in the City by
constructing them under the sidewalks with concrete cement covers and openings on the side of the gutter; and that
these changes had been undertaken by the city from time to time whenever funds were available.
After appropriate proceedings the Court of First Instance of Manila rendered the aforementioned decision sustaining
the theory of the defendants and dismissing the amended complaint, without costs.
On appeal taken by plaintiff, this decision was affirmed by the Court of Appeals, except insofar as the City of Manila
is concerned, which was sentenced to pay damages in the aggregate sum of P6,750.00. 1 Hence, this appeal by the
City of Manila.
The first issue raised by the latter is whether the present case is governed by Section 4 of Republic Act No. 409
(Charter of the City of Manila) reading:
The city shall not be liable or held for damages or injuries to persons or property arising from the failure of the
Mayor, the Municipal Board, or any other city officer, to enforce the provisions of this chapter, or any other law or
ordinance, or from negligence of said Mayor, Municipal Board, or other officers while enforcing or attempting to
enforce said provisions.
or by Article 2189 of the Civil Code of the Philippines which provides:
Provinces, cities and municipalities shall be liable for damages for the death of, or injuries suffered by, any person by
reason of defective conditions of road, streets, bridges, public buildings, and other public works under their control
or supervision.
Manila maintains that the former provision should prevail over the latter, because Republic Act 409, is a special law,
intended exclusively for the City of Manila, whereas the Civil Code is a general law, applicable to the entire
Philippines.
The Court of Appeals, however, applied the Civil Code, and, we think, correctly. It is true that, insofar as its territorial
application is concerned, Republic Act No. 409 is a special law and the Civil Code a general legislation; but, as regards
the subject-matter of the provisions above quoted, Section 4 of Republic Act 409 establishes a general rule
regulating the liability of the City of Manila for: "damages or injury to persons or property arising from the failure of"
city officers "to enforce the provisions of" said Act "or any other law or ordinance, or from negligence" of the city
"Mayor, Municipal Board, or other officers while enforcing or attempting to enforce said provisions." Upon the other
hand, Article 2189 of the Civil Code constitutes a particular prescription making "provinces, cities and municipalities .
. . liable for damages for the death of, or injury suffered by any person by reason" — specifically — "of the defective
condition of roads, streets, bridges, public buildings, and other-public works under their control or supervision." In
other words, said section 4 refers to liability arising from negligence, in general, regardless of the object thereof,
whereas Article 2189 governs liability due to "defective streets," in particular. Since the present action is based upon
the alleged defective condition of a road, said Article 2189 is decisive thereon.
It is urged that the City of Manila cannot be held liable to Teotico for damages: 1) because the accident involving him
took place in a national highway; and 2) because the City of Manila has not been negligent in connection therewith.
As regards the first issue, we note that it is based upon an allegation of fact not made in the answer of the City.
Moreover, Teotico alleged in his complaint, as well as in his amended complaint, that his injuries were due to the
defective condition of a street which is "under the supervision and control" of the City. In its answer to the amended
complaint, the City, in turn, alleged that "the streets aforementioned were and have been constantly kept in good
condition and regularly inspected and the storm drains and manholes thereof covered by the defendant City and the
officers concerned" who "have been ever vigilant and zealous in the performance of their respective functions and
duties as imposed upon them by law." Thus, the City had, in effect, admitted that P. Burgos Avenue was and is under
its control and supervision.
Moreover, the assertion to the effect that said Avenue is a national highway was made, for the first time, in its
motion for reconsideration of the decision of the Court of Appeals. Such assertion raised, therefore, a question of
fact, which had not been put in issue in the trial court, and cannot be set up, for the first time, on appeal, much less
after the rendition of the decision of the appellate court, in a motion for the reconsideration thereof.
At any rate, under Article 2189 of the Civil Code, it is not necessary for the liability therein established to attach that
the defective roads or streets belong to the province, city or municipality from which responsibility is exacted. What
said article requires is that the province, city or municipality have either "control or supervision" over said street or
road. Even if P. Burgos Avenue were, therefore, a national highway, this circumstance would not necessarily detract
from its "control or supervision" by the City of Manila, under Republic Act 409. In fact Section 18(x) thereof provides:
Sec. 18. Legislative powers. — The Municipal Board shall have the following legislative powers:
xxx xxx xxx
(x) Subject to the provisions of existing law to provide for the laying out, construction and improvement, and to
regulate the use of streets, avenues, alleys, sidewalks, wharves, piers, parks, cemeteries, and other public places; to
provide for lighting, cleaning, and sprinkling of streets and public places; . . . to provide for the inspection of, fix the
license fees for and regulate the openings in the same for the laying of gas, water, sewer and other pipes, the
building and repair of tunnels, sewers, and drains, and all structures in and under the same and the erecting of poles
and the stringing of wires therein; to provide for and regulate cross-works, curbs, and gutters therein, . . . to regulate
traffic and sales upon the streets and other public places; to provide for the abatement of nuisances in the same and
punish the authors or owners thereof; to provide for the construction and maintenance, and regulate the use, of
bridges, viaducts and culverts; to prohibit and regulate ball playing, kite-flying, hoop rolling, and other amusements
which may annoy persons using the streets and public places, or frighten horses or other animals; to regulate the
speed of horses and other animals, motor and other vehicles, cars, and locomotives within the limits of the city; to
regulate the lights used on all vehicles, cars, and locomotives; . . . to provide for and change the location, grade, and
crossing of railroads, and compel any such railroad to raise or lower its tracks to conform to such provisions or
changes; and to require railroad companies to fence their property, or any part thereof, to provide suitable
protection against injury to persons or property, and to construct and repair ditches, drains, sewers, and culverts
along and under their tracks, so that the natural drainage of the streets and adjacent property shall not be
obstructed.
This authority has been neither withdrawn nor restricted by Republic Act No. 917 and Executive Order No. 113,
dated May 2, 1955, upon which the City relies. Said Act governs the disposition or appropriation of the highway
funds and the giving of aid to provinces, chartered cities and municipalities in the construction of roads and streets
within their respective boundaries, and Executive Order No. 113 merely implements the provisions of said Republic
Act No. 917, concerning the disposition and appropriation of the highway funds. Moreover, it provides that "the
construction, maintenance and improvement of national primary, national secondary and national aid provincial and
city roads shall be accomplished by the Highway District Engineers and Highway City Engineers under the supervision
of the Commissioner of Public Highways and shall be financed from such appropriations as may be authorized by the
Republic of the Philippines in annual or special appropriation Acts."
Then, again, the determination of whether or not P. Burgos Avenue is under the control or supervision of the City of
Manila and whether the latter is guilty of negligence, in connection with the maintenance of said road, which were
decided by the Court of Appeals in the affirmative, is one of fact, and the findings of said Court thereon are not
subject to our review.
WHEREFORE, the decision appealed from should be as it is hereby affirmed, with costs against the City of Manila. It is
so ordered.
CHAPTER VIII: PROSPECTIVITY AND RETROACTIVITY
A. Prospectivity of Laws
G.R. No. L-21013 August 17, 1967
UNIVERSAL CORN PRODUCTS, INC., ET AL., petitioners-appellants,

vs.
RICE AND CORN BOARD, ET AL., respondents appellees.
Paredes, Poblador, Cruz, Nazareno and Associates for petitioners-appellants.

Office of the Solicitor General for respondents-appellees.
FERNANDO, J.:
Appeal from a judgment of Judge Guillermo Torres of Pasig, Rizal dated August 6, 1962, dismissing an amended
petition for declaratory relief seeking a judicial declaration of illegality of the construction placed by respondent Rice
and Corn Board of its Resolution No.10 in connection with Section 2-A of Commonwealth Act No. 108. What was
sought, without success, was a ruling that petitioner Universal Corn Products, Inc. could retain its co-petitioners, all
aliens, in its employ, contending that a dismissal from employment on the strength of the aforesaid construction by
respondents would be to give it a retroactive, and under the circumstances, an unconstitutional effect.1äwphï1.ñët
The amended petition of February 8, 1961 after the averments as to the petitioners and respondents alleged that
pursuant to the power vested in respondent Rice and Corn Board by Section 6 of Republic Act No. 3018, Resolution
No.10 was promulgated dated November 21, 1960, a particular regulation of which specifically provides: "No person
who is not a citizen of the Philippines shall be employed in any capacity in any Filipino-owned establishment engaged
in any of the lines of activity in the rice and/or corn industry except technical personnel whose employment may be
authorized by the President of the Philippines upon recommendation of the Rice and Corn Board."1 Then came a
paragraph that petitioner Universal Corn Products, Inc. "is a corporation the capital stock of which is wholly owned
by citizens of the Philippines and is engaged in certain lines of activity covered by Republic Act No. 3018 and
Resolution No.10 of the Rice and Corn Board."2 It was then stated that all its employees numbering over 200 are
Filipinos, with the exception of co-petitioners, then holding the positions of executive vice-president, comptroller,
sales manager, chief warehouseman, assistant plant superintendent, cashier, and sales supervisor,3 and that such
alien employees "have been with the Universal Corn Products, Inc. long before the enactment into law of Republic
Act No. 3018 and the promulgation of Resolution No.10 of the Rice and Corn Board."4 The next two paragraphs
would impugn the construction placed on Resolution No.10 for its retroactivity insofar as it would be made to apply
to the alien petitioners with the result that their dismissal would be called for and for its unconstitutionality insofar
as such individuals and other persons similarly situated would be deprived of their means of livelihood without due
process of law and would be denied the equal protection of the law. The amended petition next stressed the
propriety of a judicial declaration as to the interpretation that must be placed on the aforesaid Resolution No.10 and
Section 2-A of Commonwealth Act No. 108 to avoid the taint of retroactivity and unconstitutionality.5
Respondents, the National Rice and Corn Board and its chairman as well as members, in their answer of March 9,
1961, in effect admitted the allegations of the petition but denied the legal conclusion asserted by petitioners to flow
therefrom.6 More specifically, they disputed the alleged retroactive character of the construction, the truth
according to them being that regardless of the date of employment, "upon the passage of Republic Act No. 3018 and
the regulation in question," which is a mere reproduction of Section 2-A of Commonwealth Act No. 108 as amended
by Republic Act No. 134 "employment of aliens in the regulated industry has become unlawful and contracts of
employment entered prior to the passage of Republic Act No. 3018 have become legally impossible of
performance . . . "Respondents likewise denied the allegation of unconstitutionality on due process and equal
protection grounds, the statute being a valid measure under the police power of the state . . .7 There were likewise
allegations as to the impropriety of the action for declaratory relief and the absence of a cause of action.8 After
invoking special defenses centered mainly on the validity under American constitutional law doctrines of the action
taken by respondents, respondents prayed for the dismissal of the petition, with costs, which, as above pointed out,
was granted by the lower court in the decision, now the subject of this appeal.
The decision must be affirmed. There is no valid ground for reversal. The contention that the interpretation by
respondents of Resolution No.10 and Section 2-A of Commonwealth Act No. 108 suffers from the vice of retroactivity
or afflicted with the taint of unconstitutionality is far from persuasive.
On the question of the retroactivity of the construction placed by respondent Rice and Corn Board on its Resolution
No. 10 in connection with Section 2-A of Commonwealth Act No. 108, it is undeniable of course that if such be the
case petitioners could successfully impugn the appealed decision. For as early as 1913, this Court with Justice
Moreland as ponente announced: "It is a rule of statutory construction that all statutes are to be construed as having
only a prospective operation unless the purpose and intention of the Legislature to give them a retrospective effect
is expressly declared or is necessarily implied from the language used. In every case of doubt, the doubt must be
resolved against the retrospective effect. The cases supporting this rule are almost without number."9 Subsequently
in 1925, this Court through Justice Malcolm reiterated the doctrine. Thus: "A sound canon of statutory construction
is that a statute operates prospectively only and never retroactively, unless the legislative intent to the contrary is
made manifest either by the express terms of the statute or by necessary implication. Following the lead of the
United States Supreme Court and putting the rule more strongly, a statute ought not to receive a construction
making it act retroactively, unless the words are so clear, strong, and imperative that no other meaning can be
annexed to them, or unless the intention of the legislature cannot be otherwise satisfied. No court will hold a statute
to be retroactive when the legislature has not said so." 10 That is still the rule; it has stood the test of time. 11
It suffices to refer to the pertinent provision of Republic Act No. 3018 to show that the imputation of retroactivity
lacks support in law. The act was approved on August 2, 1960 and made to take effect on January 1, 1961, except as
to certain provisions specifically designated. More precisely, with reference to rules and regulations, it is provided
that they could be issued by the Rice and Corn Board within thirty (30) days from the date of approval, namely,
August 2, 1960; such rules and regulations which may be necessary to carry out its provision shall take effect fifteen
(15) days after their publication in a newspaper of general circulation printed in Manila. 12 Barely two months ago,
where it was shown that the collection of interest on a deficiency income tax assessment dated only from the
effectivity of the applicable Republic Act, such deficiency income taxes in question having been assessed and unpaid
before such a date, this Court, speaking through Justice J.B.L. Reyes, sustained the Court of Tax Appeals in its holding
"that said Section 51 (d), as amended, is not being applied retroactively as contended by petitioner herein." 13 To
the same effect is this citation from Salcedo and Ignacio v. Carpio: 14 "We are sorry to say that this contention is not
correct. To apply the provision of Republic Act No. 546 to the petitioners is not to apply it retrospectively, because to
do so is to make said Act merely effective, not before, but after the date it was approved or became effective, and it
will affect their continuance in office, not before, but after the approval of Republic Act No. 546. The fact that they
have been appointed prior thereto does not make said Act of retroactive effect."
Two recent decisions speak similarly, People v. Yu Bao 15 and People v. Ong Tin. 16 According to the former: "Lastly,
appellant would have us declare the penal provisions of Republic Act No. 1180 in the nature of an ex post facto law
and, therefore, unconstitutional, if applied to his case, upon the argument that although he was not yet engaged in
the retail business on May 15, 1954, he was issued a license to engage therein and had entered the retail business
on May 22, 1954, prior to the approval of the Act on June 19, 1954; and yet his having so engaged, although legal at
its inception has been penalized and made criminal by the law. We also find this argument unattainable. An ex post
facto law is one that "makes an act done before the passage of a law, innocent when done, criminal and punish(es)
such act . . . " (Mekin v. Wolfe, 2 Phil. 74). Applied to appellant's case, Republic Act No. 1180 does not penalize this
alien appellant for having engaged in the retail business prior to its approval; what the law penalizes is his having
done so thereafter." According to the latter: "The next issue raised by defense counsel refers to the proposition that
even assuming that Republic Act No. 1180 is constitutional, yet the same does not apply to the accused inasmuch as
he has obtained his permit and license to engage in the retail trade before said law was approved and before it
became effective. We find no merit in this contention because the acts constituting the crime for which appellant
has been convicted in the case at bar were all executed after the effectivity of Republic Act No. 1180, and by no
means can We consider appellant's conviction as the result of the application to him of an ex post facto law."
Petitioners are vocal in their fears that to construe Resolution No.10 in connection with Section 2-A of
Commonwealth Act No. 108 as to require the dismissal of alien personnel would be to run the risk of an
unconstitutional interpretation. Such doubts and misgivings are unjustified. A recent decision of this Court, King v.
Hernaez, 17 of far-reaching significance, ought to have stilled such misplaced apprehension. Thus: "It is hard to see
how the nationalization of employment in the Philippines can run counter to any provision of our Constitution
considering that its aim is not exactly to deprive a citizen of a right that he may exercise under it but rather to
promote, enhance and protect those that are expressly accorded to a citizen such as the right to life, liberty and
pursuit of happiness. The nationalization of an economic measure when founded on grounds of public policy cannot
be branded as unjust, arbitrary or oppressive or contrary to the Constitution because its aim is merely to further the
material progress and welfare of the citizens of the country. This is what we expressed in no uncertain terms in the
Ichong case when we declared constitutional the nationalization of the retail trade. Indeed, we said there that it is a
law 'clearly in the interest of the public, nay of the national security itself, and indisputably falls within the scope of
police power, through which and by which the State insures its existence and security and the supreme welfare of its
citizens.' True, this fundamental policy was expressed in a decision the subject of which concerns the
constitutionality of the Retail Trade Act, but since the Anti-Dummy Law is but a mere complement of the former in
the sense that it is designed to make effective its aims and purposes and both tend to accomplish the same objective
either by excluding aliens from owning any retail trade or by banning their employment if the trade is owned by
Filipinos, and the target of both is 'the removal and eradication of the shackles of foreign economic control and
domination' thru the nationalization of the retail trade both in ownership and employment, the pronouncement
made in one regarding its constitutionality applies equally if not with greater reason to the other both being
complementary one to the other. Indeed, in nationalizing employment in retail trade the right of choice of an
employer is not impaired but its sphere is merely limited to the citizens to the exclusion of those of other
nationalities."
Wherefore, the judgment appealed from is affirmed. With costs against petitioners.
G.R. No. L-34586 April 2, 1984
HOSPICIO NILO, petitioner,

vs.
HONORABLE COURT OF APPEALS and ALMARIO GATCHALIAN, respondents.
G.R. No. L-36625 April 2, 1984
FORTUNATO CASTRO, petitioner,

vs.
JUAN CASTRO, respondent.
Lavides Law Office for petitioner.
The Solicitor General for respondents.
GUTIERREZ, JR., J.:ñé+.£ªwph!1
Under Section 36 (1) of Republic Act No. 3844, the Agricultural Land Reform Code, a landowner may eject an
agricultural lessee or tenant on the ground that the owner shall personally cultivate the land himself. On September
10, 1971, Republic Act No. 6389, in amending Republic Act No. 3844, eliminated personal cultivation as a ground for
the ejectment of the tenant or leaseholder. The issue in these cases is whether or not the amendment in R.A. 6389
should be given retroactive effect to cover cases that were filed during the effectivity of the repealed provision.
G.R. NO. L-34586 — This is a petition for review on certiorari of the Court of Appeals' decision ruling that Republic
Act No. 6389 has no retroactive effect.
Respondent Almario Gatchalian is the owner of a parcel of riceland at Barrio San Roque, San Rafael, Bulacan with an
area of two (2) hectares covered by Transfer Certificate of Title No. T-76791 of the Registry of Deeds of Bulacan.
Petitioner Hospicio Nilo has been the agricultural share-tenant of Gatchalian since agricultural year 1964-65.
On February 22, 1967, petitioner filed a petition in C.A.R. Case No. 1676 with the Court of Agrarian Relations electing
the leasehold system. On March 7, 1968, Gatchalian flied an ejectment suit against petitioner on the ground of
personal cultivation under Sec. 36 (1) of Republic Act No. 3844 which provides:têñ.£îhqwâ£
SEC. 36. Possession of Landholding, Exceptions. — Notwithstanding any agreement as to the period or future
surrender of the land, an agricultural lessee shall continue in the enjoyment and possession of his landholding except
when his dispossession has been authorized by the Court in a judgment that is final and executory if after due
hearing it is shown that:
(1) The agricultural lessor-owner or a member of the immediate family will personally cultivate the landholding or
will convert the landholding, if suitably located, into residential factory, hospital or school site or other useful non-
agricultural purposes ...
Nilo alleged by way of affirmative defense that the ejectment suit was but an act of reprisal and retaliation because
he elected the leasehold system,
The two cases were heard jointly since they involved Identical landholding and parties. The Court of Agrarian
Relations found that there was a bona fide intention to cultivate the land personally. The petitioner appealed to the
respondent Court of Appeals which affirmed the decision of the Court of Agrarian Relations. The Court found no
justification to unduly interfere with the desire of Gatchalian to personally cultivate his own land.
The petitioner filed a motion for reconsideration contending that "personal cultivation as a ground for ejectment of
an agricultural lessee has been eliminated under Republic Act No. 6389". The latter law which took effect on
September 10, 1971 now provides:têñ.£îhqwâ£
(1) The landholding is declared by the department head upon recommendation of the National Planning Commission
to be suited for residential commercial, industrial or some other urban purposes ....
The respondent Court of Appeals denied the motion resolving that Republic Act No. 6389 has no retroactive
application.
G.R. NO. L-36625 — This is an appeal raised by petitioner Fortunato Castro to the Court of Appeals from the decision
of the Court of Agrarian Relations dismissing his complaint for the ejectment of his tenant, respondent Juan Castro,
on the ground of personal cultivation. The landowner wants to personally cultivate the land owned by him located in
Pulilan, Bulacan with an area of 6,941 square meters. Petitioner Fortunato Castro questioned the constitutionality of
Section 7 of Republic Act No. 6389 which amended Section 36(l) of Republic Act No. 3844. The Court of Appeals
certified the appeal to this Court on the ground that the issue of the constitutionality of Republic Act No. 6389 fails
squarely within the exclusive jurisdiction of the Supreme Court.
The complaint in this case was filed by the petitioner with the Court of Agrarian Relations. The petitioner asked for
the ejectment of his tenant Juan Castro. The latter in his answer alleged that the petitioner was not the owner of the
landholding in question and that assuming the petitioner was the owner, he is nevertheless not qualified and fit to
personally cultivate said landholding as he spends most of his time in mahjong sessions and in cockpits.
After the enactment of Republic Act No. 6389 on September 10, 1971, the respondent moved for the dismissal of
petitioner's complaint on the ground that the new law eliminated personal cultivation by the landowmer as a ground
for the ejectment of an agricultural tenant. The Court of Agrarian Relations dismissed the complaint. A motion for
reconsideration was denied. The petitioner appealed to the Court of Appeals alleging that: (1) the trial court erred in
considering that Sec. 7 of Republic Act No. 6389 which amended Sec. 36 (1) of Republic Act No. 3844 has a
retroactive effect on an cases for ejectment of an agricultural lessee 'from his landholding on the ground of personal
cultivation even if the said cases were filed long before the approval of the said Act; and (2) the trial court erred in
not considering that Sec. 7 of Republic Act No. 6389 is unconstitutional which point was raised by appellant in his
opposition to appellee's motion to dismiss the complaint and his motion for reconsideration of the order dated
December 17, 1971.
Since both cases involve the same issue of retroactivity, we shall resolve them together.
The issue of whether or not Section 7 of Republic Act No. 6389 which amended Section 36 (1) of Republic Act No.
3844, repealing as a consequence "personal cultivation" as a cause for dispossession, should be given retroactive
effect has spawned controversy. In Arambulo v. Conicon (CA-G.R. No. 46727-R, January 6, 1972) and Palpalatoc v.
Pescador (CA-G.R. No. SP-00089-R, February 22, 1972), the Court of Appeals held that the deletion of personal
cultivation as a cause for ejectment has retroactive application affecting even those cases pending in courts. The
Arambulo case was elevated to the Supreme Court on certiorari but was denied in a minute resolution "for lack of
merit" (G.R. No. L-34816, March 14, 1972).
In other cases, however, the Court of Appeals held that Republic Act No. 6389 has no retroactive effect. In Lorenzo v.
Lorenzo (CA-G.R. No. 46842-R, September 4, 1971), the Court made a categorical statement that Republic Act No.
6389 has no retroactive effect. There are other cases where the appellate court split into two camps.
In resolving the controversy, we first apply established rules of statutory construction.
Article 3 of the old Civil Code (now Article 4 of the New Civil Code) provides that: "Laws shall not have a retroactive
effect unless therein otherwise provided." According to this provision of law, in order that a law may have
retroactive effect it is necessary that an express provision to this effect be made in the law, otherwise nothing should
be understood which is not embodied in the law. Furthermore, it must be borne in mind that a law is a rule
established to guide our actions with no binding effect until it is enacted, wherefore, it has no application to past
times but only to future time, and that is why it is said that the law looks to the future only and has no retroactive
effect unless the legislator may have formally given that effect to some legal provisions (Lopez and Lopez v. Crow, 40
Phil. 997).
As early as 1913, this Court with Justice Moreland as ponente announced:têñ.£îhqwâ£
The Act contains, as is seen, no express words giving it a retrospective or retroactive effect, nor is there anything
found therein which indicates an intention to give it such an effect. Its effect is, rather, by clear intendment,
prospective.
It is a rule of statutory construction that all statutes are to be construed as having only a prospective operation
unless the purpose and intention of the Legislature to give them a retrospective effect is expressly declared or is
necessarily implied from the language used. In every case of doubt, the doubt must be solved against the
retrospective effect. The cases supporting this rule are almost without number.
In the case of Reynold v. M'Arthur (2 Pet., 416, 434), it was said that —
It is a principle which has always been held sacred in the United States, that laws by which human action is to be
regulated, look forward not backward; and are never to be construed retrospectively, unless the language of the Act
shall render such construction indispensable.
In the case of Leate v. St. Louis State Bank (115 Mo., 184), it was held that —
In construing statutes in regard to whether their action is to be prospective or retrospective, all the adjudicated
cases and all the text-writers with unbroken uniformity unite in declaring 'that they are to operate prospectively and
not otherwise unless the intent that they are to operate in such an unusual way, to wit, retrospectively, is
manifested on the face of the statute in a manner altogether free from ambiguity.
The case of Berdan v. Van Riper (16 N.J.L., 7) holds that where a statute is susceptible of construction as both
prospective and retrospective, the former construction will be adopted, but especially if the retrospective operation
will work injustice to anyone. ... (de Montilla v. La Corporacion de PP. Agustinos; Ancajas v. Jakosalem, 24 Phil. 220).
The doctrine of non-retroactivity was reiterated in the case of Segovia v. Noel (47 Phil. 543). Thus — têñ.£îhqwâ£
A sound canon of statutory construction is that a statute operates prospectively only and never retroactively, unless
the legislative intent to the contrary is made manifest either by the express terms of the statute or by necessary
implication. Following the lead of the United States Supreme Court and putting the rule more strongly, a statute
ought not to receive a construction making it act retroactively, unless the words used are so clear, strong, and
imperative that no other meaning can be annexed to them, or unless the intention of the legislature cannot be
otherwise satisfied. No court will hold a statute to be retroactive when the legislature has not said so. ... (Farrel v.
Pingree (1888), 5 Utah, 443; 16 Pac., 843; Greer v. City of Asheville [1894], 114 N. C., 495; United States Fidelity &
Guaranty Co. v. Struthers Wells Co. [1907], 209 U.S., 306;)
An earlier opinion to the same effect is In re Will of Riosa (39 Phil. 23). This is still the rule and it has stood the test of
time (Asiatic Petroleum Co. v. Llanes, 49 Phil. 466; De Mesa v. Collector of Internal Revenue, 53 Phil. 342; Hosana v.
Diomano, 56 Phil. 741; China Insurance & Surety Co. v. Judge of lst Inst. of Manila, 63 Phil. 320; La Paz Ice Plant &
Cold Storage Co., Inc. v. Bordman and Iloilo Commercial & Ice Co., 65 Phil. 401; The Manila Trading & Supply Co. v.
Santos, 66 Phil. 237; La Previsora Filipina v. Ledda, 66 Phil. 573; Tolentino v. Alzate, 98 Phil. 781; Tolentino v. Angeles,
99 Phil. 309; Tamayo v. Manila Hotel Co., 101 Phil. 810; Valencia v. Hon. Jose T. Surtida, 2 SCRA 622; Buyco v. PNB, 2
SCRA 682; Billiones v. Court of Industrial Relations and Villardo v. Court of Industrial Relations, 14 SCRA 676; Lazaro
v. Commissioner of Customs, 17 SCRA 36; Universal Corn Products, Inc. v. Rice and Corn Board, 20 SCRA 1048; Cebu
Portland Cement Co. v. Collector of Internal Revenue, 25 SCRA 789).
A restatement of the doctrine was made in the case of Espiritu v. Cipriano (55 SCRA 533.) Thus — têñ.£îhqwâ£
xxx xxx xxx
... Well-settled is the principle that while the Legislature has the power to pass retroactive laws which do not impair
the obligation of contracts, or affect injuriously vested rights, it is equally true that statutes are not to be construed
as intended to have a retroactive effect so as to affect pending proceedings, unless such intent is expressly declared
or clearly and necessary implied from the language of the enactment. ... (Jones v. Summers, 105 Cal. App. 51, 286
Pac. 1093; U.S. v. Whyel 28 F (2d) 30.)
The general rule therefore, is that statutes have no retroactive effect unless otherwise provided therein (Philippine
Virginia Tobacco Administration v. Gonzales, 92 SCRA 172). To exemplify this doctrine, in Salcedo v. Court of Appeals
(81 SCRA 408), we held that Republic Act No. 2260 or the Civil Service Act of 1959 has no retroactive effect. In
Padasas v. Court of Appeals (82 SCRA 250), we held that the Agricultural Land Reform Code or Republic Act No. 3844
must be enforced prospectively and not retroactively and therefore, the rights created, granted, or recognized
therein such as the right of redemption accrued upon the enactment of said legislation and may be exercised
thereafter in appropriate cases. In Jacinto v. Court of Appeals (87 SCRA 263) reiterated in Castro v. Court of Appeals
(99 SCRA 722) and in Baltazar v. Court of Appeals (104 SCRA 619), we held that Presidential Decrees Nos. 27, 316,
and 946 cannot be applied retroactively.
More important than resort to statutory construction in determining the issue of retroactivity is the ascertainment
of the objectives sought to be realized by the Code of Agrarian Reforms.
In the declaration of policy in Republic Act No. 6389, the applicable objectives are:têñ.£îhqwâ£
xxx xxx xxx
(2) To achieve a dignified existence for the sman farmers free from pernicious institutional restraints and practices;
xxx xxx xxx
(6) To make the small farmers more independent, self-reliant and responsible citizens and a source of genuine
strength in our democratic society.
It is the legislature which determines the policy objectives of reform legislation.
This Court would be thwarting and not promoting the objectives of Congress if we rule against the small landowners
in this case. The national goal of having independent and self reliant farmers tilling their own small landholdings
would not be achieved if persons who own only two hectares or 6,941 square meters of land as in the instant cases
cannot be allowed to work their land themselves but must be compelled to perpetuate a lessor-lessee relationship.
The desire of Congress to achieve a "dignified existence for the small farmers" is not served if two families — one
landowner and one tenant — must share the measly produce from 6,941 square meters of land. Land reform and
agrarian reform were intended to equalize opportunities for land ownership, to enable a diffusion and sharing of
wealth and not a sharing of poverty or a fragmentation of tenanted farms into non-economic sizes.
We are aware of the deliberations and debates in Congress on Republic Act No. 6389. We stated in Aisporna v. Court
of Appeals (108 SCRA 481).têñ.£îhqwâ£
That it was the intention of the legislature in amending paragraph (1), sec. 36 of R.A. 3844 to deprive the landowner
of the right to eject his tenant on the ground that the former would personally cultivate the land and also to abate
cases brought by the landowner to eject the tenant on the same grounds which were still pending at the time of the
passage of the amendatory act, is clear and evident from the deliberations and debate of Congress when Republic
Act 6389 was being deliberated, as published in the Senate Journal ....
This Aisporna case is, however, notably distinct from the two cases now before us. In Aisporna, the court ordered
the petitioner tenant ejected on the ground of personal cultivation by the landowner. The court order became final
and executory. One year after his ejectment, Aisporna availed himself of his remedies under the law and filed a case
for reinstatement with damages alleging that the owner failed to cultivate the land himself. The trial court ruled in
favor of Aisporna. However, on appeal, the Court of Appeals reversed the decision stating that during the pendency
of the action for reinstatement, the law was amended and personal cultivation as a ground to eject a tenant was
removed. The appellate court opined that with the abolition of personal cultivation as a basis for ejectment, the
corollary proviso on reinstatement:têñ.£îhqwâ£
... Provided, further, That should the landholder not cultivate the land himself for three years or fail to substantially
carry out such conversion within one year after the dispossession of the tenant, it shall be presumed that he acted in
bad faith and the tenant shall have the right to demand possession of the land and recover damages for any loss
incurred by him because of said dispossession.
was also eliminated.
The issue in Aisporna was the right of the tenant to recover his status vis-a-vis the landholding from whence he was
ejected. To sustain the appellate decision would have resulted in a plain case of injustice to the tenant and a
condonation of bad faith. Our pronouncements on retroactivity dealt with this issue alone and to the extent that the
Aisporna decision may be interpreted as covering factual situations similar to the two cases now before us, to that
extent we make it clear that it does not do so.
It is true that during the debates on the bill which was later enacted into Republic Act No. 3844, there were
statements on the floor that "the owner will lose the right to eject after the enactment of this measure" even in
cases where the owner has not really succeeded yet in ejecting the tenants (Senate Journal, Nos. 43 and 44, March
30 and 31, 1971, 2nd Regular Session — 7th Congress). Nonetheless and inspite of these remarks, Congress failed to
express an intention to make Republic Act No. 6389 retroactive and to cover ejectment cases on the ground of
personal cultivation then pending adjudication by the courts.têñ.£îhqwâ£
... In the interpretation of a legal document, especially a statute, unlike in the interpretation of an ordinary written
document, it is not enough to obtain information as to the intention or meaning of the author or authors, but also to
see whether the intention or meaning has been expressed in such a way as to give it legal effect and validity. In
short, the purpose of the inquiry, is not only to know what the author meant by the language he used, but also to
see that the language used sufficiently expresses that meaning. The legal act, so to speak, is made up of two
elements-an internal and an external one; it originates in intention and is perfected by expression. Failure of the
latter may defeat the former. (59 C.J.S. 1017; Manila Jockey Club, Inc. v. Games and Amusement Board, 107 Phil.
151).
In the case of Manila Jockey Club, Inc. v. Games and Amusements Board, supra, we held that legislative debates are
expressive of the views and motives of individual members and are not always safe guides and, hence, may not be
resorted to, in ascertaining the meaning and purpose of the lawmaking body. It is impossible to determine with
certainty what construction was put upon an act by the members of the legislative body that passed the bill, by
resorting to the speeches of the members thereof. Those who did not speak, may not have agreed with those who
did; and those who spoke, might differ from each other (Sutherland on Statutory Construction, 499-501; Ramos vs.
Alverez, 97 Phil. 844).
There have been cases in the past where we adhered to this doctrine. Thus, we held that individual statements made
by Senators on the floor of the Senate do not necessarily reflect the view of the Senate. Much less do they indicate
the intent of the House of Representatives (Casco Phil. Chem. Co., Inc. v. Gimenez, 7 SCRA 347; Resins, Inc. v. Auditor
General, 25 SCRA 754). Accordingly, they are not controlling in the interpretation of the law in question (Phil. Assn.
of Government Retirees, Inc. v. GSIS, 14 SCRA 610). Some statements may be deemed to be a mere personal opinion
of the legislator (Mayon Motors, Inc. vs. Acting Com. of Internal Revenue, 1 SCRA 918).
The interpretation of statutes is for the courts. And the courts are not necessarily bound by one legislator's opinion,
expressed in Congressional debates, concerning the apPlication of existing laws (Song Kiat Chocolate Factory vs.
Central Bank of the Phils., 102 Phil. 477).
The petitioner-tenant in G.R. No. L-34586 contends that since Republic Act No. 6389 is a social legislation and passed
under the police power of the State, it should be liberally interpreted in favor of the tenants.
We agree with the petitioner-tenant that the law in question is social legislation. But social justice is not for tenants
alone. The disputed land in L-36625 is only 6,941 square meters. The area of the land in L-34586 is slightly bigger,
about two (2) hectares. A person with only one or two hectares of land to his name is equally deserving of social
justice.
A majority of the landowners affected by the appeal of personal cultivation" as a ground for the ejectment of a
tenant own small landholdings. The records of Senate Bill No. 478 which eventually became Republic Act No. 6389
reveal that the repeal has affected an estimated 75% of landowners in the country who own tenanted lands of less
than 3 hectares, 40% of those who own 5 hectares or less and 96% of landowners who own an area of less than 10
hectares each.
Many of these landowners who filed actions for ejectment on this ground are retirees who have opted to leave the
stresses and strains of city life and to return to their home towns to personally cultivate their small landholdings.
They are teachers, clerks, nurses, and other hardworking and frugal people who in a lifetime of sacrifice gathered
their pitiful little savings and purchased small farms to supplement the inadequate pensions from the Government
Service Insurance System or the Social Security System. The owners of the lots in these cases had the bona fide
intention to personally cultivate their lands as proven and found by the trial courts. To hold that they can no longer
eject their tenants because of Republic Act No. 6389 would deprive them of their right to enjoy their property which
they had already asserted before the statute was passed. Precisely, the legislators, in providing "personal cultivation"
as a ground to eject tenants intended to encourage and attract the landowners to go to their respective provinces
and till their own lands. Unfortunately, the ground of "personal cultivation" was abused and used as a pretext to
eject the tenant and this led to the amendatory law.
This unfortunate consequence should not work an injustice upon those small landowners proven to have the bona
fide intention to personally cultivate their lands. In Gonzales v. GSIS (107 SCRA 492), we held that:têñ.£îhqwâ£
It should also be borne in mind that Republic Act No. 3844, then known as the Agricultural land Reform Code, is a
social legislation whose implementation has been made more imperative by Section 6, Article 11 of the 1973
Constitution. It is designed to promote economic and social Stability. It must be interpreted liberally to give full force
and effect to its clear intent. This liberality in interpretation, however, should not accrue solely in favor of actual
tillers of the land, the tenant-farmers, but should extend to landowners as well, especially those owning ,"small
landholdings", by which is meant landholdings of 24 hectares and less than 24 hectares. These landowners
constitute part of the economic Middle class which the Government is trying to build. They deserve as much
consideration as the tenants themselves in order not to create an economic dislocation, were tenants solely favored
but this particular group of landowners impoverished. (See "Whereas", clauses of LOI No. 143).
In Cabatan v. Court of Appeals (95 SCRA 323), we similarly held that:têñ.£îhqwâ£
... the reliance by the tenants-lessees on"social justice"as a reason to support the continuance of an unjust and
inequitable rental rate is not only improper but would countenance and perpetuate an injustice against the
landholder-lessor. This, the constitutional precept of "social justice" was never meant to do.
xxx xxx xxx
Social justice as thus defined and in its true meaning is not meant to countenance, much less perpetuate, an injustice
against any group-not even as against landholders. For the landholders as a component unit or element in our agro-
industrial society are entitled to 'equal justice under law' which our courts are, above everything else, under
mandate of the Constitution to dispense fairly, without fear nor favor.
xxx xxx xxx
... A cursory study of the long line of decisions on social justice will readily reveal, however, that the concept has
been fleshed out-the principle, conceptualized — as Justice Laurel enjoined in the celebrated case of Calalang vs.
Williams — not thru mistaken sympathy for or misplaced antipathy against any group — whether labor or capital,
landlord or tenant — but evenhandedly and fairly, thru the observance of the principle of "equal justice under law,"
for all and each and every element of the body politic." (Eg. Calalang vs. Williams, 70 Phil. 726 (1940) cited, supra;
Guido vs. Rural Progress Administration, 47 O.G. 1848, (1949) 84 Phil. 847, a reconciliation between conflicting
claims of social justice and protection to property and rights; Militona Estate Inc. vs. De Guzman, et al., No. L-11912
(1959), 105 Phil. 1296 (unreported).
In Dequito v. Llamas, (66 SCRA 504) we ruled that the petitioner-tenant ought to know that if he has rights to
protection as a tenant, the landowner has also rights under the law. The protective mantle of social justice cannot be
utilized as an instrument to hoodwink courts of justice and undermine the rights of landowners on the plea of
helplessness and heartless exploitation of the tenant by the landowner.
Our decision to deny retroactive effect to the amendatory provision gains added strength from later developments.
Under the 1973 Constitution, it is even more emphasized that property ownership is impressed with a social
function. This means that the owner has the obligation to use his property not only to benefit himself but society as
well. Hence, the Constitution provides under Section 6 of Article II that in the promotion of social justice, the State
"shall regulate the acquisition, ownership, use, enjoyment, and disposition of private property, and equitably diffuse
property ownership and profits." The Constitution also ensures that the worker shall have a just and living wage
which should assure for himself and his family an existence worthy of human dignity and give him opportunities for a
better life (Sections 7 and 9, Article II) (Alfanta vs, Noe, 53 SCRA 76; Almeda vs. Court of Appeals, 78 SCRA 194).
In line with the above mandates, this Court upheld the constitutionality of Presidential Decree No. 27, which decrees
the emancipation of tenants from the bondage of the soil and transferred to them the ownership of the land they
till, in Gonzales v. Estrella (91 SCRA 294). We noted the imperative need for such a decree in Chavez v. Zobel (55
SCRA 26). We held in the latter case that "on this vital policy question, one of the utmost concern, the need for what
for some is a radical solution in its pristine sense, one that goes at the root, was apparent. Presidential Decree No. 27
was thus conceived. ... There is no doubt then, as set forth expressly therein, that the goal is emancipation. What is
more, the decree is now part and parcel of the law of the land according to the present Constitution."
Significantly, P.D. No. 27, which decrees the emancipation of the tenant from the bondage of the soil, transfers to
him the ownership of the land he tills, and provides instruments and mechanisms therefor, has recognized personal
cultivation as a ground for retention and, therefore, exemption from the land transfer decree. Personal cultivation
cannot be effected unless the tenant gives up the land to the owner.
Presidential Decree No. 27 provides:têñ.£îhqwâ£
In all cases, the landowner may retain an area of not more than seven (7) hectares if such landowner is cultivating
such area or will now cultivate it.
The redistribution of land, restructuring of property ownership, democratization of political power, and
implementation of social justice do not require that a landowner should be deprived of everything he owns and that
even small parcels as in these two cases now before us may not be worked by the owner himself. The evil sought to
be remedied by agrarian reform is the ancient anachronism where one person owns the land while another works on
it. The evil is not present in cases of personal cultivation by the owner.
Taking over by the landowner is subject to strict requirements. In addition to proof of ownership and the required
notices to the tenant, the bona-fide intention to cultivate must be proved to the satisfaction of the court. And as
earlier stated, the tenant is Protected in case the owner fails to cultivate the land within one year or to work the land
himself for three years.
The seven hectares retention under P.D. No. 27 is applicable only to landowners who do not own other agricultural
lands containing an aggregate of more than seven hectares or lands used for residential commercial industry or
other urban purposes where they derive adequate income to support themselves and their families. (Letter of
Instruction No. 472 dated October 21, 1976).
To Support his petition, Fortunate Castro in L-36625 asserts that Section 7 of Republic Act No. 6389 is
unconstitutional
The amended provision reads:têñ.£îhqwâ£
xxx xxx xxx
(1) The landholding is declared by the department head upon rommendation of the National Planning Commission
to be suited for residential commercial industrial or some other urban purposes: Provided, That the agricultural
lessee shag be entitled to disturbance compensation equivalent to five times the average of the gross harvests on his
landholding during the last five preceding calendar years.
. There appears to be nothing unconstitutional in the above provision. If Mr. Castro is challenging agrarian reform
itself, then his challenge is puerile if not hopeless. We ruled in Vda, de Genuino v. Court of Agrarian Relations (22
SCRA 792) that the Agricultural Land Reform Code is valid and justified. In Paulo v. Court of Appeals (54 SCRA 253)
we ruled:têñ.£îhqwâ£
... Land Reform which is now transforming the rural existence of the farmers, has become more imperative in view of
the provisions of the New Constitution. Thus Section 6, Article II thereof directs that 'the State shag promote social
justice to insure the dignity, welfare and security of all the people,' and for the attainment of this end, directs that
'the State shall regulate the acquisition, ownership, use, enjoyment, and diffuse of private property, and equitably
diffuse ownership and profits.' Section 6, Article XVII of the Transitory Provisions provides that the implementation
of declared agrarian reforms' shall be given priority. There is no question that the massive overhaul of the system of
land ownership by the transfer to the tenants of the ownership of the land they till and the grant to them of the
instruments and mechanisms to increase their land's productivity will decisively improve the people's livelihood and
promote political and social stability.
And, of course, Section 12 of Article XIV specifically mandates that "the State shad formulate and implement an
agrarian reform program aimed at emancipating the tenant from the bondage of the soil and achieving the goals
enunciated in this Constitution." At any rate, there is no need to pass upon the constitutional issue for the purpose
of resolving the narrow question of retroactivity of the questioned provision.
WHEREFORE, the petition in G.R. No. L-34586 is denied for lack of merit and the questioned decision of the Court of
Appeals is aimed. In G.R. No. L-36625, the questioned order of the lower court is set aside and the case is remanded
to the Regional Trial Court of Bulacan for trial on the merits.
SO ORDERED.
B. Retroactivity of Statutes
1. Procedural Rules
2. Police Power
G.R. No. 126102 December 4, 2000
ORTIGAS & CO. LTD., petitioner,

vs.
THE COURT OF APPEALS and ISMAEL G. MATHAY III, respondents.
DECISION
QUISUMBING, J.:
This petition seeks to reverse the decision of the Court of Appeals, dated March 25, 1996, in CA-G.R. SP No. 39193,
which nullified the writ of preliminary injunction issued by the Regional Trial Court of Pasig City, Branch 261, in Civil
Case No. 64931. It also assails the resolution of the appellate court, dated August 13, 1996, denying petitioner’s
motion for reconsideration.
The facts of this case, as culled from the records, are as follows:
On August 25, 1976, petitioner Ortigas & Company sold to Emilia Hermoso, a parcel of land known as Lot 1, Block 21,
Psd-66759, with an area of 1,508 square meters, located in Greenhills Subdivision IV, San Juan, Metro Manila, and
covered by Transfer Certificate of Title No. 0737. The contract of sale provided that the lot:
1. …(1) be used exclusively…for residential purposes only, and not more than one single-family residential building
will be constructed thereon,…
xxx
6. The BUYER shall not erect…any sign or billboard on the roof…for advertising purposes…
xxx
11. No single-family residential building shall be erected…until the building plans, specification…have been approved
by the SELLER…
xxx
14....restrictions shall run with the land and shall be construed as real covenants until December 31, 2025 when they
shall cease and terminate…1
These and the other conditions were duly annotated on the certificate of title issued to Emilia.
In 1981, the Metropolitan Manila Commission (now Metropolitan Manila Development Authority) enacted MMC
Ordinance No. 81-01, also known as the Comprehensive Zoning Area for the National Capital Region. The ordinance
reclassified as a commercial area a portion of Ortigas Avenue from Madison to Roosevelt Streets of Greenhills
Subdivision where the lot is located.
On June 8, 1984, private respondent Ismael Mathay III leased the lot from Emilia Hermoso and J.P. Hermoso Realty
Corp.. The lease contract did not specify the purposes of the lease. Thereupon, private respondent constructed a
single story commercial building for Greenhills Autohaus, Inc., a car sales company.
On January 18, 1995, petitioner filed a complaint against Emilia Hermoso with the Regional Trial Court of Pasig,
Branch 261. Docketed as Civil Case No. 64931, the complaint sought the demolition of the said commercial structure
for having violated the terms and conditions of the Deed of Sale. Complainant prayed for the issuance of a
temporary restraining order and a writ of preliminary injunction to prohibit petitioner from constructing the
commercial building and/or engaging in commercial activity on the lot. The complaint was later amended to implead
Ismael G. Mathay III and J.P. Hermoso Realty Corp., which has a ten percent (10%) interest in the lot.
In his answer, Mathay III denied any knowledge of the restrictions on the use of the lot and filed a cross-claim
against the Hermosos.
On June 16, 1995, the trial court issued the writ of preliminary injunction. On June 29, 1995, Mathay III moved to set
aside the injunctive order, but the trial court denied the motion.
Mathay III then filed with the Court of Appeals a special civil action for certiorari, docketed as CA-G.R. SP No. 39193,
ascribing to the trial court grave abuse of discretion in issuing the writ of preliminary injunction. He claimed that
MMC Ordinance No. 81-01 classified the area where the lot was located as commercial area and said ordinance must
be read into the August 25, 1976 Deed of Sale as a concrete exercise of police power.
Ortigas and Company averred that inasmuch as the restrictions on the use of the lot were duly annotated on the title
it issued to Emilia Hermoso, said restrictions must prevail over the ordinance, specially since these restrictions were
agreed upon before the passage of MMC Ordinance No. 81-01.
On March 25, 1996, the appellate court disposed of the case as follows:
WHEREFORE, in light of the foregoing, the petition is hereby GRANTED. The assailed orders are hereby nullified and
set aside.
SO ORDERED.2
In finding for Mathay III, the Court of Appeals held that the MMC Ordinance No. 81-01 effectively nullified the
restrictions allowing only residential use of the property in question.
Ortigas seasonably moved for reconsideration, but the appellate court denied it on August 13, 1996.
Hence, the instant petition.
In its Memorandum, petitioner now submits that the "principal issue in this case is whether respondent Court of
Appeals correctly set aside the Order dated June 16, 1995 of the trial court which issued the writ of preliminary
injunction on the sole ground that MMC Ordinance No. 81-01 nullified the building restriction imposing exclusive
residential use on the property in question."3 It also asserts that "Mathay III lacks legal capacity to question the
validity of conditions of the deed of sale; and he is barred by estoppel or waiver to raise the same question like his
principals, the owners."4 Lastly, it avers that the appellate court "unaccountably failed to address" several questions
of fact.
Principally, we must resolve the issue of whether the Court of Appeals erred in holding that the trial court committed
grave abuse of discretion when it refused to apply MMC Ordinance No.81-01 to Civil Case No. 64931.
But first, we must address petitioner’s allegation that the Court of Appeals "unaccountably failed to address"
questions of fact. For basic is the rule that factual issues may not be raised before this Court in a petition for review
and this Court is not duty-bound to consider said questions.5 CA-G.R. SP No. 39193 was a special civil action for
certiorari, and the appellate court only had to determine if the trial court committed grave abuse of discretion
amounting to want or excess of jurisdiction in issuing the writ of preliminary injunction. Thus, unless vital to our
determination of the issue at hand, we shall refrain from further consideration of factual questions.
Petitioner contends that the appellate court erred in limiting its decision to the cited zoning ordinance. It avers that a
contractual right is not automatically discarded once a claim is made that it conflicts with police power. Petitioner
submits that the restrictive clauses in the questioned contract is not in conflict with the zoning ordinance. For one,
according to petitioner, the MMC Ordinance No. 81-01 did not prohibit the construction of residential buildings.
Petitioner argues that even with the zoning ordinance, the seller and buyer of the re-classified lot can voluntarily
agree to an exclusive residential use thereof. Hence, petitioner concludes that the Court of Appeals erred in holding
that the condition imposing exclusive residential use was effectively nullified by the zoning ordinance.
In its turn, private respondent argues that the appellate court correctly ruled that the trial court had acted with
grave abuse of discretion in refusing to subject the contract to the MMC Ordinance No. 81-01. He avers that the
appellate court properly held the police power superior to the non-impairment of contract clause in the
Constitution. He concludes that the appellate court did not err in dissolving the writ of preliminary injunction issued
by the trial court in excess of its jurisdiction.
We note that in issuing the disputed writ of preliminary injunction, the trial court observed that the contract of sale
was entered into in August 1976, while the zoning ordinance was enacted only in March 1981. The trial court
reasoned that since private respondent had failed to show that MMC Ordinance No. 81-01 had retroactive effect,
said ordinance should be given prospective application only,6 citing Co vs. Intermediate Appellate Court, 162 SCRA
390 (1988).
In general, we agree that laws are to be construed as having only prospective operation. Lex prospicit, non respicit.
Equally settled, only laws existing at the time of the execution of a contract are applicable thereto and not later
statutes, unless the latter are specifically intended to have retroactive effect.7 A later law which enlarges, abridges,
or in any manner changes the intent of the parties to the contract necessarily impairs the contract itself8 and cannot
be given retroactive effect without violating the constitutional prohibition against impairment of contracts.9
But, the foregoing principles do admit of certain exceptions. One involves police power. A law enacted in the
exercise of police power to regulate or govern certain activities or transactions could be given retroactive effect and
may reasonably impair vested rights or contracts. Police power legislation is applicable not only to future contracts,
but equally to those already in existence.10 Nonimpairment of contracts or vested rights clauses will have to yield to
the superior and legitimate exercise by the State of police power to promote the health, morals, peace, education,
good order, safety, and general welfare of the people.11 Moreover, statutes in exercise of valid police power must
be read into every contract.12 Noteworthy, in Sangalang vs. Intermediate Appellate Court,13 we already upheld
MMC Ordinance No. 81-01 as a legitimate police power measure.
The trial court’s reliance on the Co vs. IAC,14 is misplaced. In Co, the disputed area was agricultural and Ordinance
No. 81-01 did not specifically provide that "it shall have retroactive effect so as to discontinue all rights previously
acquired over lands located within the zone which are neither residential nor light industrial in nature,"15 and stated
with respect to agricultural areas covered that "the zoning ordinance should be given prospective operation only."16
The area in this case involves not agricultural but urban residential land. Ordinance No. 81-01 retroactively affected
the operation of the zoning ordinance in Greenhills by reclassifying certain locations therein as commercial.
Following our ruling in Ortigas & Co., Ltd. vs. Feati Bank & Trust Co., 94 SCRA 533 (1979), the contractual stipulations
annotated on the Torrens Title, on which Ortigas relies, must yield to the ordinance. When that stretch of Ortigas
Avenue from Roosevelt Street to Madison Street was reclassified as a commercial zone by the Metropolitan Manila
Commission in March 1981, the restrictions in the contract of sale between Ortigas and Hermoso, limiting all
construction on the disputed lot to single-family residential buildings, were deemed extinguished by the retroactive
operation of the zoning ordinance and could no longer be enforced. While our legal system upholds the sanctity of
contract so that a contract is deemed law between the contracting parties,17 nonetheless, stipulations in a contract
cannot contravene "law, morals, good customs, public order, or public policy."18 Otherwise such stipulations would
be deemed null and void. Respondent court correctly found that the trial court committed in this case a grave abuse
of discretion amounting to want of or excess of jurisdiction in refusing to treat Ordinance No. 81-01 as applicable to
Civil Case No. 64931. In resolving matters in litigation, judges are not only duty-bound to ascertain the facts and the
applicable laws,19 they are also bound by their oath of office to apply the applicable law.20
As a secondary issue, petitioner contends that respondent Mathay III, as a mere lessee of the lot in question, is a
total stranger to the deed of sale and is thus barred from questioning the conditions of said deed. Petitioner points
out that the owners of the lot voluntarily agreed to the restrictions on the use of the lot and do not question the
validity of these restrictions. Petitioner argues that Mathay III as a lessee is merely an agent of the owners, and could
not override and rise above the status of his principals. Petitioner submits that he could not have a higher interest
than those of the owners, the Hermosos, and thus had no locus standi to file CA-G.R. SP No. 39193 to dissolve the
injunctive writ issued by the RTC of Pasig City.
For his part, private respondent argues that as the lessee who built the commercial structure, it is he and he alone
who stands to be either benefited or injured by the results of the judgment in Civil Case No. 64931. He avers he is
the party with real interest in the subject matter of the action, as it would be his business, not the Hermosos’, which
would suffer had not the respondent court dissolved the writ of preliminary injunction.
A real party in interest is defined as "the party who stands to be benefited or injured by the judgment or the party
entitled to the avails of the suit." "Interest" within the meaning of the rule means material interest, an interest in
issue and to be affected by the decree, as distinguished from mere interest in the question involved, or a mere
incidental interest.21 By real interest is meant a present substantial interest, as distinguished from a mere
expectancy or a future, contingent, subordinate, or consequential interest.22
Tested by the foregoing definition, private respondent in this case is clearly a real party in interest.1âwphi1 It is not
disputed that he is in possession of the lot pursuant to a valid lease. He is a possessor in the concept of a "holder of
the thing" under Article 525 of the Civil Code.23 He was impleaded as a defendant in the amended complaint in Civil
Case No. 64931. Further, what petitioner seeks to enjoin is the building by respondent of a commercial structure on
the lot. Clearly, it is private respondent’s acts which are in issue, and his interest in said issue cannot be a mere
incidental interest. In its amended complaint, petitioner prayed for, among others, judgment "ordering the
demolition of all improvements illegally built on the lot in question."24 These show that it is petitioner Mathay III,
doing business as "Greenhills Autohaus, Inc.," and not only the Hermosos, who will be adversely affected by the
court’s decree.
Petitioner also cites the rule that a stranger to a contract has no rights or obligations under it,25 and thus has no
standing to challenge its validity.26 But in seeking to enforce the stipulations in the deed of sale, petitioner
impleaded private respondent as a defendant. Thus petitioner must recognize that where a plaintiff has impleaded a
party as a defendant, he cannot subsequently question the latter’s standing in court.27
WHEREFORE, the instant petition is DENIED. The challenged decision of the Court of Appeals dated March 25, 1996,
as well as the assailed resolution of August 13, 1996, in CA-G.R. SP No. 39193 is AFFIRMED. Costs against petitioner.
SO ORDERED.
3. Curative Laws
G.R. No. 178306 December 18, 2008
FRANCISCO R. NUNGA, JR. and VICTOR D. NUNGA, petitioners,

vs.
FRANCISCO N. NUNGA III, respondent.
DECISION
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the Decision1
dated 31 January 2007 and Resolution2 dated 4 June 2007 of the Court of Appeals in CA-G.R. CV No. 78424. The
appellate court, in its assailed decision, reversed the Decision3 dated 25 October 2002 of the Regional Trial Court
(RTC) of the City of San Fernando, Pampanga, Branch 42, in Commercial Case No. 018, which ordered the registration
of the transfer of ownership of the disputed shares of stock in the Rural Bank of Apalit, Inc. (RBA) in favor of
petitioners; and in its resolution, denied the Motion for Reconsideration of the aforementioned decision.
Presented hereunder are the factual antecedents of the case.
On 30 January 1996, the RBA conducted its Annual Stockholders’ Meeting at its principal office in San Vicente, Apalit,
Pampanga. Attending the said meeting were stockholders representing 28,150 out of the 35,956 total outstanding
shares of stock of RBA.4 Petitioner Francisco R. Nunga, Jr. (Francisco Jr.), his son petitioner Victor D. Nunga (Victor),
and his nephew respondent Francisco N. Nunga III (Francisco III) were among the stockholders of RBA. However,
petitioner Francisco Jr. was not present at the meeting, as he was then in the United States of America where he is a
naturalized citizen.
Quorum having been established at the meeting, the stockholders proceeded with the election of the RBA Board of
Directors to serve for the fiscal year 1996. Francisco III was voted the Chairman of the Board; with Ma. Elena Rueda,
Ma. Rosario Elena Nacario, Cecilia Viray and Dwight Nunga, the Members. In the same meeting, stockholder Jesus
Gonzalez (Gonzalez) made known his intention to sell his shareholdings.
Victor, thereafter, informed his father, Francisco Jr., of Gonzalez’s intention to sell his shares. Francisco Jr. then
instructed Victor to inquire from Gonzalez the terms of the sale. After a series of negotiations, Gonzalez ultimately
agreed to sell his shares of stock to Francisco Jr.
On 19 February 1996, Gonzalez executed a Contract to Sell5 in favor of Francisco Jr., which pertinently provided:
CONTRACT TO SELL
KNOW ALL MEN BY THESE PRESENTS:
This CONTRACT TO SELL, executed this 19th day of February, 1996, at Quezon City, by:
JESUS J. GONZALE[Z], of legal age, Filipino citizen, married to Cristina D. Gonzale[z], residing at No. 10 2nd Ave.,
Crame, Quezon City, hereinafter referred to as the VENDOR;
in favor of
FRANCISCO D. (sic) NUNGA, JR., of legal age, single, residing at Poblacion, Masantol, Pampanga[,] hereinafter
referred to as the "PURCHASER";
WITNESSETH:
That the VENDOR is the absolute registered owner of several shares of stocks of the RURAL BANK OF APALIT, INC.
located at Apalit, Pampanga, more particularly described as follows:
Stock Cert. No.
No. of Shares Represented
Date of Issue
Journal Folio No.
250
May, 1978
36
122
Jan., 1991
105
264
Feb., 1991
5
152
487
Nov., 1993
166
Feb., 1994
181
525
July, 1994
213
336
That the VENDOR has offered to sell the abovestated (sic) shares of stocks and the PURCHASER has agreed to
purchase the same for a total consideration of P200,000;
That it is hereby agreed that out of the total consideration or contract price, the purchaser will pay the amount of
FIFTY THOUSAND PESOS (P50,000.00), receipt of which is herein acknowledged by the purchaser, at the date and
place below stated and the remaining balance of P150,000 will be paid in full on February, (sic) 28, 1996;
That it is further agreed that the VENDOR will execute an authorization in favor of the herein purchaser or his
representative, Victor D. Nunga[,] to retrieve all the corresponding Stocks (sic) Certificates as above indicated from
the Apalit Rural Bank, Inc.
WHEREFORE, for and in consideration of the total amount of P200,000 (sic) receipt in part of which is herein
acknowledged in the amount of P50,000.00, the vendor hereby agrees to sell, cede and transfer all the above stated
shares of stocks to the PURCHASER, his heirs[,] successors, and assigns, absolutely free from any encumbrance and
lien whatsoever.
IN WITNESS WHEREOF, I have hereunto set my signature this 19th day of FEBRUARY, (sic) 1996, at Quezon City,
Philippines.
(signed)
JESUS J. GONZALES
Vendor
On even date, Victor gave the initial payment of P50,000.00 to Gonzalez, who duly acknowledged the same.6 In
exchange, Gonzalez handed Victor RBA Stock Certificates No. 105, No. 152 and No. 166. As to the four other
certificates that were in the possession of the RBA, Gonzalez issued a letter7 addressed to Isabel Firme (Firme), the
RBA Corporate Secretary, which instructed the latter to turn over to Victor the remaining stock certificates in
Gonzalez’s name. Upon being presented with Gonzalez’s letter, Firme gave Victor Stock Certificate No. 181, but
alleged that Stock Certificates No. 5 and No. 36 could no longer be located in the files of RBA. Firme advised Victor to
merely reconstitute the missing stock certificates.8 A reading of the said Contract to Sell would reveal, however, that
the same was only notarized on 28 February 1996.
Before Francisco Jr. and Victor could pay the balance of the contract price for Gonzalez’s RBA shares of stock,
Gonzalez entered into another contract involving the very same shares. It would appear that on 27 February 1996,
Gonzalez executed a Deed of Assignment9 of his RBA shares of stock in favor of Francisco III, the relevant terms of
which recite:
DEED OF ASSIGNMENT
For value (sic) consideration received, the undersigned ASSIGNOR JESUS GONZALE[Z], of legal age, Filipino and
resident of #10 2ND AVENUE, CUBAO, QUEZON CITY, METRO MANILA hereby sells, assigns and transfers unto
FRANCISCO N. NUNGA III (AS ASSIGNEE), Filipino, of legal age and with postal address at 1122 Alhambra St., Ermita
1000 Metro Manila, his assigns and successors, all their rights, titles and interests to the following shares of stocks
owned by the ASSIGNOR in Apalit Rural Bank, Inc., with par value of one hundred pesos only (P100.00) per share,
free from all liens and encumbrances.
Date
SC. No.
No. of Shares
Amount
May 24, 1969
4 (sic)
250
P 25,000.00
January 02, 1975
36
122
12,200.00
February 19, 1991
105
264
26,400.00
November 10, 1993
152
487
48,700.00
February 22, 1994
166
800.00
July 25, 1994
181
525
52,500.00
February 2, 1996
213
336
33,600.00
IN WITNESS WHEREOF, the ASSIGNOR have (sic) cause (sic) these presents to be signed at Quezon City, this 27 day of
February, 1996.
(signed)
JESUS J. GONZALE[Z]
Assignor
At the same time the afore-quoted Deed was executed, Francisco III paid in full the agreed purchase price of
P300,000.00 using a BPI (Bank of the Philippine Islands) Family Bank Check No. 0347505 issued in favor of Gonzalez.
An acknowledgment receipt signed by Gonzalez and witnessed by his wife Cristina D. Gonzalez evidenced the
payment.10 Since the stock certificates covering the shares were already in Victor’s possession, Gonzalez
immediately wrote Victor a letter,11 demanding that Victor hand over the said stock certificates to Francisco III, the
supposed new owner of the shares.
The next day, on 28 February 1996, Francisco Jr. arrived from the United States of America. He and Victor then
promptly proceeded to the residence of Gonzalez in order to pay the balance of P150,000.00 of the purchase price
stated in their Contract to Sell with Gonzalez. Gonzalez, however, informed them that he already sold his shares of
stock to Francisco III.12 After discussing the matter, Gonzalez was somehow convinced to accept the balance of the
purchase price and sign his name at the dorsal portion of the stock certificates to endorse the same to Francisco Jr.
Gonzalez also executed a Deed of Absolute Sale13 in favor of Francisco Jr., which states:
DEED OF ABSOLUTE SALE
This DEED OF ABSOLUTE SALE, executed this 28th day of February, 1996, at SAN JUAN, M.M. by:
JESUS J. GONZALE[Z], of legal age, Filipino citizen, married to Cristina D. Gonzale[z], residing at No. 10 2nd Ave.,
Crame, Quezon City, hereinafter referred to as the VENDOR;
in favor of
FRANCISCO R. NUNGA, JR., of legal age, married, residing at Poblacion, Masantol, Pampanga[,] hereinafter referred
to as the "PURCHASER"[;]
WITNESSETH:
That the VENDOR is the absolute registered owner of several shares of stocks of the RURAL BANK OF APALIT, INC.
located at Apalit, Pampanga, more particularly described as follows:
Stock Cert. No.
No. of Shares
Represented
Date of Issue
Journal Folio No.
250
May, 1978
36
122
Jan., 1991
105
264
Feb., 1991
152
487
Nov., 1993
166
8
Feb., 1994
7
181
525
July, 1994
213
336
That Stock Certificate Nos. 5 and 36 respectively representing 250 and 122 shares of the Rural Bank of Apalit[,] Inc.
were lost and is (sic) currently in the process of reconstitution;
That the VENDOR has offered to sell the abovestated (sic) shares of stocks and the PURCHASER has agreed to
purchase the same.
WHEREFORE, for and in consideration of the total amount of TWO HUNDRED THOUSAND PESOS (P 200,000.00),
receipt of which in full is herein acknowledged, the VENDOR hereby sells, cedes and transfers all the above stated
shares of stocks to the PURCHASER, his heirs, successors, and assigns, absolutely free from any encumbrance and
lien whatsoever.
IN WITNESS WHEREOF, I have hereunto set my signature this 28 day of FEB (sic), 1996, at SAN JUAN, MM,
Philippines.
(signed)
JESUS J. GONZALE[Z]
Vendor
Incidentally, on that same day, Francisco III delivered to Firme the Deed of Assignment which Gonzalez executed in
his favor, and a copy of Gonzalez’s letter to Victor dated 27 February 1996 demanding the latter to surrender the
stock certificates in his possession to Francisco III. Accordingly, on 1 March 1996, Firme wrote Victor a letter14
requesting that the latter immediately comply with the enclosed 27 February 1996 letter of Gonzalez.
Victor refused to comply with Firme’s request and instead demanded that the sale of shares of stock by Gonzalez in
favor of Francisco Jr. on 28 February 1996 be entered into the Corporate Book of Transfer of RBA. Firme, in turn,
rejected Victor’s demand, alleging that Francisco III already bought Gonzalez’s shares.15
Consequently, on 14 March 1996, Victor filed a Petition16 with the Securities and Exchange Commission (SEC)
against Francisco III and Firme, which was docketed as SEC Case No. 03-96-5288. Victor prayed that the SEC declare
null and void the Stockholders’ Meeting held on 30 January 1996 for lack of the required majority quorum; as well as
the votes cast for the shares of the deceased stockholders, namely, Teodorico R. Nunga, Carmencita N. Nunga and
Jesus Enrico N. Nunga. Victor additionally requested that the transfer of Gonzalez’s RBA shareholdings to Francisco
Jr. be annotated on the RBA Corporate Transfer Book and new stock certificates be issued in favor of Francisco Jr.
Victor finally pleaded that Francisco III and Firme be ordered to jointly pay him P50,000.00 as attorney’s fees,
damages and litigation expenses.
On the same date, Francisco III likewise filed a Complaint17 against Gonzalez, Francisco Jr., and Victor before the
SEC, which was docketed as SEC Case No. 03-96-5292. Francisco III sought the issuance of a Temporary Restraining
Order (TRO) against Francisco Jr. and Victor, who were allegedly conspiring to oust him and the other members of
the RBA Board of Directors. Francisco III also prayed, inter alia, for judgment ordering (a) Victor to surrender
Gonzalez’s stock certificates in order that the same may be transferred to Francisco III’s name; and (b) Francisco Jr.
and Victor to desist from attempting to register the purported sale by Gonzales of his RBA shares of stock to
Francisco Jr., who had already become a naturalized American citizen and was, thus, disqualified from owning shares
in RBA.
Francisco III and Firme filed their joint Answer18 in SEC Case No. 03-96-5288, while Francisco Jr. and Victor filed their
Answer19 in SEC Case No. 03-96-5292. Gonzalez, however, was considered in default in both SEC cases for failure to
file his answers despite notice.
Eventually, Francisco Jr.20 and Victor filed a Motion for Consolidation21 of the two cases pending before the SEC,
alleging that they involved common questions of fact and law, which required the presentation of similar evidence.
Said Motion was granted in an Order22 dated 30 September 1996. Thereafter, SEC Cases No. 03-96-5288 and No. 03-
96-5292 were jointly heard.
After the parties submitted their respective Offers of Evidence, but before the SEC could rule on the same, the cases
were eventually turned over to the RTC pursuant to Administrative Circular AM No. 00-11-0323 of the Supreme
Court dated 21 November 2000.24
In the RTC, SEC Cases No. 03-96-5288 and No. 03-96-5292 were docketed as Commercial Cases No. 001 and No. 018,
respectively.
Francisco Jr. and Victor subsequently filed a Motion to Resolve their Formal Offer of Exhibits, which the SEC was not
able to act upon. In an Order25 dated 30 April 2002, the RTC admitted the formal offers of evidence in both cases.
On 25 October 2002,26 the RTC promulgated its Decision. With respect to Commercial Case No. 001, Victor’s
Petition, the RTC ruled:
The Court, after a careful study on the evidences on record finds that [herein petitioner Victor] failed to substantiate
the allegation in the petition. [Victor] failed to controvert the documentary evidences presented by [herein
respondent Francisco III] to wit: Minutes of the Stockholders Meeting, showing the number of shares present in
person or in proxy[;] written Proxy in favor of Dwight N. Nunga in (sic) behalf of deceased Teodorico R. Nunga by
virtue of the Extrajudicial Settlement of estate in (sic) behalf of Carmencita Noel Nunga proxy executed by Ma. Del
Carmen N. Leveriza in her capacity as the Judicial Administratrix duly appointed by the RTC Branch 60, Makati[,]
Metro Manila in Special Proceedings No. M-146127; Affidavit of respondent Isabel C. Firme stating thereat the fact
that the certificate of stock delivered for registration in the Corporate Transfer Book were mere xerox copies thus,
the refusal. Thus further, proved [Victor’s] lack of cause of action against [Francisco III] and as a result of which
damages on the part of [Francisco III] and Isabel C. Firme who were constrained to hire the services of their counsel
to protect their right (sic). (Emphasis ours.)
As regards Commercial Case No. 018,28 Francisco III’s Complaint, the RTC decreed:
The Court[,] after a careful study on the aforementioned evidences (sic) on record[,] finds and holds that [herein
petitioner Francisco Jr.] has a better right over the subject shares considering that the Contract to Sell was executed
prior to the Deed of Assignment presented by the [herein respondent Francisco III]. The Court gleaned also from the
evidences (sic) that the Deed of Assignment was executed in bad faith as [Francisco III] is aware of the transaction
between [herein petitioner Victor] in (sic) behalf of his father and [Gonzalez], thus, the conclusion that the Deed of
Assignment was executed with malice. The Contract to Sell may not be a public instrument29 but being a consensual
contract it is, therefore, valid there being a meeting of the mind (sic) between the parties. Further, there being no
contention on (sic) the contrary, on the validity of the Deed of Absolute Sale interposed by [Gonzalez] coupled with
the proof of full payment and the endorsement of the Stock Certificate at the back by the owner[,] which is the only
operative act of valid transfer of shares of stock certificate provided for by law and jurisprudence, clearly convinced
the Court that the latter honored the transaction between him and [Victor] in (sic) behalf of his father [Francisco Jr.]
and[,] to bind third parties, the fact of transfer should be registered with the transfer book of the corporation.
xxxx
Further, with respect to the issue on the citizenship of [Francisco Jr.], not being qualified to own such share (sic), the
Court is inclined to give credence on (sic) the contention of the latter[,] it being supported by R.A. 8179[,] known as
"An Act to Further Liberalize Foreign Investment,["] to wit:
"SEC. 9. Investment Rights of Former Natural-born Filipinos. – For purposes of this Act, former natural born citizens
of the Philippines shall have the same investment rights of a Filipino citizen in Cooperatives under Republic Act No.
6938, Rural Banks under Republic Act No. 7353, Thrift Banks and Private Development Banks under Republic Act No.
7906, and Financing Companies under Republic Act No. 5980."
Furthermore, insofar as (sic) [Gonzalez], the same was (sic) considered as in default for failure to appear and
participate despite notice. (Emphasis ours.)
In the end, the RTC disposed of the two cases in this wise:
WHEREFORE, in view of the foregoing, judgment is hereby rendered in Commercial Case No. 001 ordering the
dismissal of the Petition filed by [herein petitioner Victor] against [herein respondent Francisco III] and Isabel C.
Firme.
Insofar as Commercial Case No. 018[,] judgment is hereby rendered in favor of the [herein petitioners Victor and
Francisco Jr.] and against [Francisco III] ordering the following:
1) Ordering the Corporate Secretary of the Rural Bank of Apalit, Inc, (sic) to register the fact of the transfer of
ownership in favor of [Francisco Jr.] and to cancel Stock certificate (sic) in the name of Jesus [Gonzalez] and to issue a
new one (sic) in the name of [Francisco Jr.] upon presentation of Stock Certificate Nos. 105, 152, 166, 181, 213, 5 and
36 duly endorsed by Jesus [Gonzalez];
2) The [respondent Francisco III] to pay the [petitioners Victor and Francisco Jr.] the amount of P100,000.00 [for]
moral damages[;]
3) The amount of P100,000.00 [for] exemplary damages[;]
4) The amount of P50,000.00 [for] attorneys (sic) fees and the cost of suit.30
Francisco III filed a Motion for Partial Reconsideration31 of the afore-quoted Decision, but it was denied by the RTC
in an Order32 dated 31 January 2003. Thus, Francisco III filed with the RTC a Notice of Appeal.33 His appeal before
the Court of Appeals was docketed as CA-G.R. CV No. 78424.
Before the Court of Appeals, Francisco III argued that the RTC erred in: (1) ruling that Francisco Jr. had a better right
over the disputed shares of stock, considering that the prior contract which he had entered into with Gonzalez was a
mere contract to sell; (2) finding that the Deed of Assignment in Francisco III’s favor was executed in bad faith,
inasmuch as it was not supported by any of the evidence presented by all the parties; and (3) giving retroactive
effect to Republic Act No. 8179,34 which grants former natural born citizens (such as Francisco Jr.) equal investment
rights in rural banks of the Philippines as Philippine citizens. In relation to his third assignment of error, Francisco III
pointed out that Republic Act No. 8179 took effect only on 16 April 1996, after Francisco Jr. entered into the
questionable contracts with Gonzalez; hence, the said statute cannot benefit Francisco Jr.
On 31 January 2007, the Court of Appeals rendered its assailed Decision favoring Francisco III. It held that Francisco
Jr. cannot invoke the provisions of Republic Act No. 8179 based on the following ratiocination:
In the instant case, there is nothing in Republic Act No. 8179 [An Act to Further Liberalize Foreign Investment] which
provides that it should retroact to the date of effectivity of Republic Act No. 7353 [The Rural Banks Act of 1992].
Neither is it necessarily implied from Republic Act No. 8179 that it or any of its provisions should be given a
retroactive effect. On the contrary, there is an express provision in Republic Act No. 8179 that it "shall take effect
fifteen (15) days after publication in two (2) newspapers of general circulation in the Philippines." Being crystal clear
on its prospective application, it must be given its literal meaning and applied without further interpretation (BPI
Leasing Corporation vs. Court of Appeals, 416 SCRA 4, 13 [2003]). Republic Act No. 8179 was published on March 31,
1996 at the Manila Times and Malaya; hence, it took effect on April 15, 1996. x x x.
Republic Act No. 7353 specifically states that "the capital stock of any rural bank shall be fully owned and held
directly or indirectly by citizens of the Philippines xxx." It bears stressing that the use of the word "shall" alone,
applying the rule on statutory construction, already underscores the mandatory nature of the law, and hence; (sic)
requires adherence thereto. xxx Therefore, it is Our considered view that the sale and the subsequent transfer on
February 28, 1996 of the shares of stock of JESUS [Gonzalez] to FRANCISCO, JR., a naturalized American citizen, were
made in patent violation of Republic Act No. 7353. Considering that Republic Act No. 7353 did not contain any
provision authorizing the validity of the sale and transfer of the shares of stock to a foreigner, specifically to a former
natural-born citizen of the Philippines, the same should be deemed null and void pursuant to Article 5 of the Civil
Code of the Philippines, which reads:
"ART. 5. Acts executed against the provisions of mandatory or prohibitory laws shall be void, except when the law
itself authorizes their validity."
x x x The fact that Republic Act No. 8179 expressly granted to former natural-born citizens of the Philippines
investment rights similar to those of citizens of the Philippines bolsters the view that Republic Act No. 7353 indeed
prohibited foreign nationals from owning shares of stock in rural banks. Had it been necessarily implied from the
provisions of Republic Act No. 7353 that foreign nationals could own shares of stock in rural banks, the legislature
would not have wasted time and effort in inserting a new provision granting to former natural-born citizens of the
Philippines equal investment rights in Republic Act No. 8179.
Furthermore, there is no merit in the assertion of FRANCISCO JR. and VICTOR that Republic Act No. 8179 should be
given a retroactive effect in accordance with the following rule:
"The principle that a new law shall not have retroactive effect only governs rights arising from acts done under the
rule of the former law; but if a right be declared for the first time by a new law it shall take effect from the time of
such declaration, even though it has arisen from acts subject to the former laws, provided that it does not prejudice
another acquired right of the same origin." x x x.
Republic Act No. 8179 cannot be applied retroactively insofar as the instant case is concerned, as its application
would prejudice the (sic) FRANCISCO III who had acquired vested right over the shares of stock prior to the effectivity
of the said law. Such right was vested to him when the Deed of Assignment was executed by Jesus in his favor on
February 27, 1996. Undoubtedly, FRANCISCO III had a better right over the shares of stock of JESUS inasmuch as the
validity of the Deed of Assignment was not affected despite the prior execution of the Contract to Sell in favor of
FRANCISCO JR. on February 19, 1996. As previously adverted to, the said Contract, as well as the Deed of Absolute
Sale and the subsequent transfer of the shares of stock to FRANCISCO JR., was null and void for violating a
mandatory provision of Republic Act No. 7353. x x x.35
The Court of Appeals, however, decided to award Francisco III only attorney’s fees and cost of suit, but not moral
and exemplary damages:
We hold that FRANCISCO III is not entitled to moral damages. FRANCISCO III made no mention in his Complaint and
during the hearing that he sustained mental anguish, serious anxiety, wounded feelings and other emotional and
mental sufferings by reason of the double sale. x x x.
Likewise, FRANCISCO III is not entitled to exemplary damages. x x x In the instant case, FRANCISCO III failed to
sufficiently prove his entitlement to moral, temperate or compensatory damages. Hence, his claim for exemplary
damages must similarly fail.
However, as to his claim for attorney’s fees and cost of suit, We find it to be tenable as the records of the case clearly
reveal that FRANCISCO III was compelled to litigate or to incur expenses to protect his interest because of the double
sale. x x x. Under the circumstances obtaining in the instant case, We deem that the award of P20,000.00 as
attorney’s fees is reasonable.36
The fallo of the Court of Appeals Decision thus reads:

WHEREFORE, the foregoing premises considered, the Decision dated October 25, 2002 of Branch 42 of the Regional
Trial Court of San Fernando, Pampanga with respect to Commercial Case No. 018 is hereby REVERSED and SET ASIDE.
A new one is hereby rendered ORDERING the following:
1) Victor Nunga to surrender the stock certificates of Jesus Gonzalez to the Corporate Secretary of Rural Bank of
Apalit, Inc.;
2) [T]he Corporate Secretary of Rural Bank of Apalit, Inc. to register the assignment of shares of stock in favor of
Francisco Nunga III, to cancel the stock certificates of Jesus Gonzale[z], and to issue new ones in the name of
Francisco Nunga III; and,
3) Jesus Gonzale[z], Francisco Nunga, Jr., and Victor Nunga to pay, jointly and severally, the sum of P20,000.00 as
attorney’s fees, plus the cost of suit.37
Francisco Jr. and Victor, together with Gonzalez, filed a Motion for Reconsideration38 of the foregoing Decision.
Their Motion, however, was denied by the Court of Appeals in its assailed Resolution dated 4 June 2007.
Refusing to concede, Francisco Jr. and Victor filed the instant Petition,39 which they anchor on the following
assignment of errors:
I.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN DECLARING THE SALE OF THE SHARES OF STOCK OF
GONZALE[Z] TO FRANCISCO JR., NULL AND VOID AB INITIO ON THE BASIS OF THE ALLEGED DISQUALIFICATION OF
FRANCISCO JR. UNDER REPUBLIC ACT NO. 7353?
II.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT FRANCISCO III HAS A VESTED RIGHT
TO THE SHARES OF STOCK OF GONZALE[Z], WHICH WOULD BE IMPAIRED BY THE RETROACTIVE APPLICATION OF
REPUBLIC ACT NO. 8179?
III.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED [IN] AWARDING DAMAGES TO FRANCISCO III AND
WITHDRAWING THE AWARD OF NOMINAL DAMAGES TO PETITIONERS BY THE TRIAL COURT?
Essentially, the fundamental issue that this Court is called upon to resolve is who among the parties to this case has a
better right to the disputed RBA shares of stock.
Francisco Jr. and Victor contend that the consummated sale of the RBA shares of stock by Gonzalez to Francisco Jr.
gives the latter a superior right over the same, since the transaction complied with all the elements of a valid sale.
Contrary to the ruling of the Court of Appeals, Francisco Jr. and Victor claim that there was no provision in Republic
Act No. 7353, prior to its amendment, which explicitly prohibited any transfer of shares to individuals who were not
Philippine citizens, or which declared such a transfer void. Hence, there was an implied recognition by the legislature
that to declare the nullity of such acts would be more disadvantageous and harmful to the purposes of the law.
Moreover, Francisco Jr. and Victor contend that the passage of Republic Act No. 8179, An Act to Further Liberalize
Foreign Investment, cured whatever legal infirmity there may have been in the purchase by Francisco Jr. of the RBA
shares of stock from Gonzalez. As Republic Act No. 8179 expressly creates and declares for the first time a
substantive right, then it may be given retroactive effect. The Deed of Assignment between Francisco III and
Gonzalez did not confer upon Francisco III a vested interest that could be impaired by the retroactive application of
Republic Act No. 8179. The Deed was not only executed later in time, but the check issued for its payment was also
never encashed. There was, therefore, a total absence of consideration, making the said contract between Francisco
III and Gonzalez inexistent.
The Court finds the Petition devoid of merit.

As the Court of Appeals declared, Francisco Jr. was disqualified from acquiring Gonzalez’s shares of stock in RBA. The
argument of Francisco Jr. and Victor that there was no specific provision in Republic Act No. 7353 which prohibited
the transfer of rural bank shares to individuals who were not Philippine citizens or declared such transfer void, is
both erroneous and unfounded.
Section 4 of Republic Act No. 7353 explicitly provides:
Section 4. x x x With exception of shareholdings of corporations organized primarily to hold equities in rural banks as
provided for under Section 12-C of Republic Act 337, as amended, and of Filipino-controlled domestic banks, the
capital stock of any rural bank shall be fully owned and held directly or indirectly by citizens of the Philippines or
corporations, associations or cooperatives qualified under Philippine laws to own and hold such capital stock: x x x.
(Emphasis ours.)
Otherwise stated, the afore-quoted provision categorically provides that only citizens of the Philippines can own and
hold, directly or indirectly, the capital stock of a rural bank, subject only to the exception also clearly stated in the
same provision. This was the very interpretation of Section 4 of Republic Act No. 7353 made by this Court in Bulos,
Jr. v. Yasuma,40 on the basis of which the Court disqualified therein respondent Yasuma, a foreigner, from owning
capital stock in the Rural Bank of Parañaque. In the instant case, it is undisputed that when Gonzalez executed the
Contract to Sell and the Deed of Absolute Sale covering his RBA shares of stock in favor of Francisco Jr., the latter was
already a naturalized citizen of the United States of America. Consequently, the acquisition by Francisco Jr. of the
disputed RBA shares by virtue of the foregoing contracts is a violation of the clear and mandatory dictum of Republic
Act No. 7353, which the Court cannot countenance.
Even the subsequent enactment of Republic Act No. 8179 cannot benefit Francisco Jr. It is true that under the Civil
Code of the Philippines, laws shall have no retroactive effect, unless the contrary is provided.41 But there are settled
exceptions to this general rule, such as when the statute is CURATIVE or REMEDIAL in nature, or when it CREATES
NEW RIGHTS.42 Francisco Jr. and Victor assert that, as an exception to the cardinal rule of prospective application of
laws, Republic Act No. 8179 may be retroactively applied, since it creates for the first time a substantive right in favor
of natural-born citizens of the Philippines. Francisco Jr. and Victor, however, overlooked the vital exception to the
exception. While it is true that a law creating new rights may be given retroactive effect, the same can only be made
possible if the new right does not prejudice or impair any vested right.43
The Court upholds the finding of the Court of Appeals that Republic Act No. 8179 cannot be applied retroactively to
the present case, as to do so would prejudice the vested rights of Francisco III to the disputed RBA shares of stock.
Francisco III, who is undeniably a citizen of the Philippines, and who is fully qualified to own shares of stock in a
Philippine rural bank, had acquired vested rights to the disputed RBA shares of stock by virtue of the Deed of
Assignment executed in his favor by Gonzalez.
It would not matter that Gonzalez executed the Contract to Sell in favor of Francisco Jr. prior to the Deed of
Assignment in favor of Francisco III. As established in the previous discussion, the Contract to Sell between Gonzalez
and Francisco Jr. was void and without force and effect for being contrary to law. It intended to effect a transfer,
which was prohibited by Republic Act No. 7353. It is even irrelevant that the terms of said Contract to Sell had been
fully complied with and performed by the parties thereto, and that a Deed of Absolute Sale was already executed by
Gonzalez in favor of Francisco Jr. A void agreement will not be rendered operative by the parties' alleged
performance (partial or full) of their respective prestations. A contract that violates the law is null and void ab initio
and vests no rights and creates no obligations. It produces no legal effect at all.44
With respect to the award of damages, the Court agrees in the findings of the Court of Appeals that Francisco III
failed to establish his entitlement to moral damages in view of the absence of proof that he endured physical
suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social
humiliation, or any similar injury.45 As regards the grant of exemplary damages, we likewise uphold the ruling of the
appellate court that the same was not warranted under the circumstances, as FRANCISCO III was not able to prove
that he was entitled to moral, temperate or compensatory damages. Exemplary damages are imposed by way of
example or correction for the public good, in addition to moral, temperate, liquidated or compensatory damages.46
In contracts and quasi-contracts, exemplary damages may be awarded if the defendant acted in a wanton,
fraudulent, reckless, oppressive or malevolent manner.47 It cannot, however, be considered as a matter of right; the
court has to decide whether or not such damages should be adjudicated.48 Before the court may consider an award
for exemplary damages, the plaintiff must first show that he is entitled to moral, temperate or compensatory
damages; but it is not necessary that he prove the monetary value thereof.49
As to the contention that the Court of Appeals erred in withdrawing the award of nominal damages to the
petitioners by the RTC, the Court finds the same to be utterly misleading. The appellate court did not decree any
such withdrawal, as the RTC had not awarded any nominal damages in favor of the petitioners in the first place.
However, as Francisco III was indeed compelled to litigate and incur expenses to protect his interests,50 the Court
sustains the award by the Court of Appeals of P20,000.00 as attorney’s fees, plus costs of suit.
WHEREFORE, premises considered, the Petition for Review under Rule 45 of the Rules of Court is hereby DENIED.
The assailed Decision dated 31 January 2007 and Resolution dated 4 June 2007 of the Court of Appeals in CA-G.R. CV
No. 78424 are hereby AFFIRMED in toto. No costs.
SO ORDERED.
4. Penal Laws
G.R. No. 151085 August 20, 2008
JOEMAR ORTEGA, petitioner,

vs.
PEOPLE OF THE PHILIPPINES, respondent.
DECISION
NACHURA, J.:
Before this Court is a Petition1 for Review on Certiorari under Rule 45 of the Rules of Civil Procedure seeking the
reversal of the Court of Appeals (CA) Decision2 dated October 26, 2000 which affirmed in toto the Decision3 of the
Regional Trial Court (RTC) of Bacolod City, Branch 50, dated May 13, 1999, convicting petitioner Joemar Ortega4
(petitioner) of the crime of Rape.
The Facts
Petitioner, then about 14 years old,5 was charged with the crime of Rape in two separate informations both dated
April 20, 1998, for allegedly raping AAA,6 then about eight (8) years of age. The accusatory portions thereof
respectively state:
Criminal Case No. 98-19083
That sometime in August, 1996, in the Municipality of XXX, Province of YYY, Philippines, and within the jurisdiction of
this Honorable Court, the above-named accused, by means of force, violence and intimidation, did then and there,
(sic) willfully, unlawfully and feloniously (sic) had carnal knowledge of and/or sexual intercourse with the said AAA, a
minor, then about 6 years old, against her will.
CONTRARY TO LAW.7
Criminal Case No. 98-19084
That on or about the 1st day of December, 1996, in the Municipality of XXX, Province of YYY, Philippines, and within
the jurisdiction of this Honorable Court, the above-named accused, by means of force, violence and intimidation, did
then and there, (sic) willfully, unlawfully and feloniously (sic) had carnal knowledge of and/or sexual intercourse with
the said AAA, a minor, then about 6 years old, against her will.
CONTRARY TO LAW.8
Upon arraignment on September 10, 1998, petitioner pleaded not guilty to the offense charged.9 Thus, trial on the
merits ensued. In the course of the trial, two varying versions arose.
Version of the Prosecution
On February 27, 1990, AAA was born to spouses FFF and MMM.10 Among her siblings CCC, BBB, DDD, EEE and GGG,
AAA is the only girl in the family. Before these disturbing events, AAA's family members were close friends of
petitioner's family, aside from the fact that they were good neighbors. However, BBB caught petitioner raping his
younger sister AAA inside their own home. BBB then informed their mother MMM who in turn asked AAA.11 There,
AAA confessed that petitioner raped her three (3) times on three (3) different occasions.
The first occasion happened sometime in August 1996. MMM left her daughter AAA, then 6 years old and son BBB,
then 10 years old, in the care of Luzviminda Ortega12 (Luzviminda), mother of petitioner, for two (2) nights because
MMM had to stay in a hospital to attend to her other son who was sick.13 During the first night at petitioner's
residence, petitioner entered the room where AAA slept together with Luzviminda and her daughter. Petitioner
woke AAA up and led her to the sala. There petitioner raped AAA. The second occasion occurred the following day,
again at the petitioner's residence. Observing that nobody was around, petitioner brought AAA to their comfort
room and raped her there. AAA testified that petitioner inserted his penis into her vagina and she felt pain. In all of
these instances, petitioner warned AAA not to tell her parents, otherwise, he would spank her.14 AAA did not tell
her parents about her ordeal.
The third and last occasion happened in the evening of December 1, 1996. Petitioner went to the house of AAA and
joined her and her siblings in watching a battery-powered television. At that time, Luzviminda was conversing with
MMM. While AAA's siblings were busy watching, petitioner called AAA to come to the room of CCC and BBB. AAA
obeyed. While inside the said room which was lighted by a kerosene lamp, petitioner pulled AAA behind the door,
removed his pants and brief, removed AAA's shorts and panty, and in a standing position inserted his penis into the
vagina of AAA.15 AAA described petitioner's penis as about five (5) inches long and the size of two (2) ballpens. She,
likewise, narrated that she saw pubic hair on the base of his penis.16
This last incident was corroborated by BBB in his testimony. When BBB was about to drink water in their kitchen, as
he was passing by his room, BBB was shocked to see petitioner and AAA both naked from their waist down in the act
of sexual intercourse. BBB saw petitioner holding AAA and making a pumping motion. Immediately, BBB told
petitioner to stop; the latter, in turn, hurriedly left. Thereafter, BBB reported the incident to his mother, MMM.17
MMM testified that when she asked AAA about what BBB saw, AAA told her that petitioner inserted his fingers and
his penis into her vagina. MMM learned that this was not the only incident that petitioner molested AAA as there
were two previous occasions. MMM also learned that AAA did not report her ordeal to them out of fear that
petitioner would spank her. MMM testified that when BBB reported the matter to her, petitioner and Luzviminda
already left her house. After waiting for AAA's brothers to go to sleep, MMM, with a heavy heart, examined AAA's
vagina and she noticed that the same was reddish and a whitish fluid was coming out from it. Spouses FFF and MMM
were not able to sleep that night. The following morning, at about four o'clock, MMM called Luzviminda and
petitioner to come to their house. MMM confronted Luzviminda about what petitioner did to her daughter, and
consequently, she demanded that AAA should be brought to a doctor for examination.18
MMM, together with Luzviminda, brought AAA to Dr. Lucifree Katalbas19 (Dr. Katalbas), the Rural Health Officer of
the locality who examined AAA and found no indication that she was molested.20 Refusing to accept such findings,
on December 12, 1996, MMM went to Dr. Joy Ann Jocson (Dr. Jocson), Medical Officer IV of the Bacolod City Health
Office. Dr. Jocson made an unofficial written report21 showing that there were "abrasions on both right and left of
the labia minora and a small laceration at the posterior fourchette." She also found that the minor injuries she saw
on AAA's genitals were relatively fresh; and that such abrasions were superficial and could disappear after a period
of 3 to 4 days. Dr. Jocson, however, indicated in her certification that her findings required the confirmation of the
Municipal Health Officer of the locality.
Subsequently, an amicable settlement22 was reached between the two families through the DAWN Foundation, an
organization that helps abused women and children. Part of the settlement required petitioner to depart from their
house to avoid contact with AAA.23 As such, petitioner stayed with a certain priest in the locality. However, a few
months later, petitioner went home for brief visits and in order to bring his dirty clothes for laundry. At the sight of
petitioner, AAA's father FFF was infuriated and confrontations occurred. At this instance, AAA's parents went to the
National Bureau of Investigation (NBI) which assisted them in filing the three (3) counts of rape. However, the
prosecutor's office only filed the two (2) instant cases.
Version of the Defense
Petitioner was born on August 8, 1983 to spouses Loreto (Loreto) and Luzviminda Ortega.24 He is the second child of
three siblings ― an elder brother and a younger sister. Petitioner denied the accusations made against him. He
testified that: his parents and AAA's parents were good friends; when MMM left AAA and her brothers to the care of
his mother, petitioner slept in a separate room together with BBB and CCC while AAA slept together with Luzviminda
and his younger sister; he never touched or raped AAA or showed his private parts to her; petitioner did not
threaten AAA in any instance; he did not rape AAA in the former's comfort room, but he merely accompanied and
helped AAA clean up as she defecated and feared the toilet bowl; in the process of washing, he may have
accidentally touched AAA's anus; on December 1, 1996, petitioner together with his parents, went to AAA's house;25
they were dancing and playing together with all the other children at the time; while they were dancing, petitioner
hugged and lifted AAA up in a playful act, at the instance of which BBB ran and reported the matter to MMM, who at
the time was with Luzviminda, saying that petitioner and AAA were having sexual intercourse;26 petitioner explained
to MMM that they were only playing, and that he could not have done to AAA what he was accused of doing, as they
were together with her brothers, and he treated AAA like a younger sister;27 BBB was lying; AAA's parents and his
parents did not get angry at him nor did they quarrel with each other; petitioner and his parents peacefully left
AAA's house at about nine o'clock in the evening; however, at about four o'clock in the morning, petitioner and his
parents were summoned by MMM to go to the latter's house; upon arriving there they saw BBB being maltreated by
his father as AAA pointed to BBB as the one who molested her; and MMM and Luzviminda agreed to bring AAA to a
doctor for examination.28
Luzviminda corroborated the testimony of her son. She testified that: her son was a minor at the time of the
incident; CCC and BBB were the children of MMM in her first marriage, while AAA and the rest of her siblings were of
the second marriage; CCC and BBB are half-brothers of AAA; when MMM entrusted AAA and her brothers to her
sometime in August of 1996, she slept with AAA and her youngest daughter in a separate room from petitioner; on
December 1, 1996, she was at AAA's house watching television and conversing with MMM, while FFF and Loreto
were having a drinking spree in the kitchen; from where they were seated, she could clearly see all the children,
including petitioner and AAA, playing and dancing in the dining area; she did not hear any unusual cry or noise at the
time; while they were conversing, BBB came to MMM saying that petitioner and AAA were having sexual
intercourse; upon hearing such statement, Luzviminda and MMM immediately stood up and looked for them, but
both mothers did not find anything unusual as all the children were playing and dancing in the dining area;
Luzviminda and MMM just laughed at BBB's statement; the parents of AAA, at that time, did not examine her in
order to verify BBB's statement nor did they get angry at petitioner or at them; and they peacefully left AAA's house.
However, the following day, MMM woke Luzviminda up, saying that FFF was spanking BBB with a belt as AAA was
pointing to BBB nor to petitioner as the one who molested her. At this instance, Luzviminda intervened, telling FFF
not to spank BBB but instead, to bring AAA to a doctor for examination. Luzviminda accompanied MMM to Dr.
Katalbas who found no indication that AAA was molested. She also accompanied her to Dr. Jocson. After getting the
results of the examination conducted by Dr. Jocson, they went to the police and at this instance only did Luzviminda
learn that MMM accused petitioner of raping AAA. Petitioner vehemently denied to Luzviminda that he raped AAA.
Thereafter, MMM and Luzviminda went to their employer who recommended that they should seek advice from the
Women's Center. At the said Center, both agreed on an amicable settlement wherein petitioner would stay away
from AAA. Thus, petitioner stayed with a certain priest in the locality for almost two (2) years. But almost every
Saturday, petitioner would come home to visit his parents and to bring his dirty clothes for laundry. Every time
petitioner came home, FFF bad-mouthed petitioner, calling him a rapist. Confrontations occurred until an altercation
erupted wherein FFF allegedly slapped Luzviminda. Subsequently, AAA's parents filed the instant cases.29
The RTC's Ruling

On May 13, 1999, the RTC held that petitioner's defenses of denial cannot prevail over the positive identification of
petitioner as the perpetrator of the crime by AAA and BBB, who testified with honesty and credibility. Moreover, the
RTC opined that it could not perceive any motive for AAA's family to impute a serious crime of Rape to petitioner,
considering the close relations of both families. Thus, the RTC disposed of this case in this wise:
FOR ALL THE FOREGOING, the Court finds the accused Joemar Ortega Y Felisario GUILTY beyond reasonable doubt as
Principal by Direct Participation of the crime of RAPE as charged in Criminal Cases Nos. 98-19083 and 98-19084 and
there being no aggravating or mitigating circumstance, he is sentenced to suffer the penalty of Two (2) Reclusion
Temporal in its medium period. Applying the Indeterminate Sentence Law, the accused shall be imprisoned for each
case for a period of Six (6) years and One (1) day of Prision Mayor, as minimum, to Fifteen (15) years of Reclusion
Temporal, as maximum. The accused is condemned to pay the offended party AAA, the sum of P100,000.00 as
indemnification for the two (2) rapes (sic).
Aggrieved, petitioner appealed the RTC Decision to the CA.30
Taking into consideration the age of petitioner and upon posting of the corresponding bail bond for his provisional
liberty in the amount of P40,000.00, the RTC ordered the petitioner's release pending appeal.31
The CA's Ruling
On October 26, 2000, the CA affirmed in toto the ruling of the RTC, holding that the petitioner's defense of denial
could not prevail over the positive identification of the petitioner by the victim AAA and her brother BBB, which were
categorical, consistent and without any showing of ill motive. The CA also held that the respective medical
examinations conducted by the two doctors were irrelevant, as it is established that the slightest penetration of the
lips of the female organ consummates rape; thus, hymenal laceration is not an element of rape. Moreover, the CA
opined that petitioner acted with discernment as shown by his covert acts. Finally, the CA accorded great weight and
respect to the factual findings of the RTC, particularly in the evaluation of the testimonies of witnesses.
Petitioner filed his Motion for Reconsideration32 of the assailed Decision which the CA denied in its Resolution33
dated November 7, 2001.
Hence, this Petition based on the following grounds:
I.
THE HONORABLE COURT OF APPEALS HAS OVERLOOKED CERTAIN FACTS OF SUBSTANCE AND VALUE WHICH IF
CONSIDERED MIGHT AFFECT THE RESULT OF THE CASE.
II.
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ERROR WHEN IT FAILED TO APPRECIATE THE MEDICAL
FINDINGS OF DR. LUCIFREE KATALBAS.
III.
THE FINDINGS OF THE LOWER COURT, AFFIRMED BY THE APPELLATE COURT, THAT PETITIONER-APPELLANT IN FACT
COMMITTED AND IS CAPABLE OF COMMITTING THE ALLEGED RAPE WITHIN THE RESIDENCE OF THE VICTIM WHERE
SEVERAL OF THE ALLEGED VICTIM'S FAMILY MEMBERS AND THEIR RESPECTIVE MOTHERS WERE PRESENT IS
IMPROBABLE AND CONTRARY TO HUMAN EXPERIENCE.
IV.
THE HONORABLE APPELLATE COURT ERRED IN UPHOLDING THE FACTS SET FORTH BY THE ALLEGED VICTIM
REGARDING THE CIRCUMSTANCES ATTENDING THE COMMISSION OF RAPE SOMETIME IN AUGUST 1996.34
Petitioner argues that, while it is true that the factual findings of the CA are conclusive on this Court, we are not
prevented from overturning such findings if the CA had manifestly overlooked certain facts of substance and value
which if considered might affect the result of the case. Petitioner stresses that from the testimonies of AAA and BBB,
it can be deduced that penetration was achieved; thus, AAA felt pain. Petitioner contends that assuming the
allegations of AAA are true that petitioner inserted his fingers and his penis into her vagina, certainly such acts would
leave certain abrasions, wounds and/or lacerations on the genitalia of AAA, taking into consideration her age at the
time and the alleged size of petitioner's penis. However, such allegation is completely belied by the medical report of
Dr. Katalbas who, one day after the alleged rape, conducted a medical examination on AAA and found that there
were no signs or indications that AAA was raped or molested. Petitioner submits that the CA committed a grave
error when it disregarded such medical report since it disproves the allegation of the existence of rape and,
consequently, the prosecution failed to prove its case; thus, the presumption of innocence in favor of the petitioner
subsists. Moreover, petitioner opines that like AAA, petitioner is also a child of the barrio who is innocent,
unsophisticated and lacks sexual experience. As such, it is incredible and contrary to human reason that a 13- year-
old boy would commit such act in the very dwelling of AAA, whose reaction to pain, at the age of six, could not be
controlled or subdued. Petitioner claims that poverty was MMM's motive in filing the instant case, as she wanted to
extort money from the parents of the petitioner. Petitioner points out that the medical report of Dr. Jocson indicated
that the abrasions that were inflicted on the genitalia of AAA were relatively fresh and the same could disappear
within a period of 3 to 4 days. Considering that Dr. Jocson conducted the medical examination on December 12,
1996, or after the lapse of eleven (11) days after the alleged incident of rape, and that AAA's parents only filed the
instant case after almost a year, in order to deter Luzviminda from filing a case of slander by deed against FFF, it is
not inconceivable that MMM inflicted said abrasions on AAA to prove their case and to depart from the initial
confession of AAA that it was actually BBB who raped her. Finally, petitioner submits that AAA and BBB were merely
coached by MMM to fabricate these stories.35
On the other hand, respondent People of the Philippines through the Office of the Solicitor General (OSG) contends
that: the arguments raised by the petitioner are mere reiterations of his disquisitions before the CA; the RTC, as
affirmed by the CA, did not rely on the testimonies of both doctors since despite the absence of abrasions, rape is
consummated even with the slightest penetration of the lips of the female organ; what is relevant in this case is the
reliable testimony of AAA that petitioner raped her in August and December of 1996; even in the absence of force,
rape was committed considering AAA's age at that time; as such, AAA did not have any ill motive in accusing
petitioner; and it is established that the crime of rape could be committed even in the presence of other people
nearby. Moreover, the OSG relies on the doctrine that the evaluation made by a trial court is accorded the highest
respect as it had the opportunity to observe directly the demeanor of a witness and to determine whether said
witness was telling the truth or not. Lastly, the OSG claims that petitioner acted with discernment when he
committed the said crime, as manifested in his covert acts.36
However, Republic Act (R.A.) No. 9344,37 or the Juvenile Justice and Welfare Act of 2006, was enacted into law on
April 28, 2006 and it took effect on May 20, 2006.38 The law establishes a comprehensive system to manage
children in conflict with the law39 (CICL) and children at risk40 with child-appropriate procedures and
comprehensive programs and services such as prevention, intervention, diversion, rehabilitation, re-integration and
after-care programs geared towards their development. In order to ensure its implementation, the law, particularly
Section 841 thereof, has created the Juvenile Justice and Welfare Council (JJWC) and vested it with certain duties
and functions42 such as the formulation of policies and strategies to prevent juvenile delinquency and to enhance
the administration of juvenile justice as well as the treatment and rehabilitation of the CICL. The law also
provides for the immediate dismissal of cases of CICL, specifically Sections 64, 65, 66, 67 and 68 of R.A. No. 9344's
Transitory Provisions.43
The said Transitory Provisions expressly provide:
Title VIII
Transitory Provisions
SECTION 64. Children in Conflict with the Law Fifteen (15) Years Old and Below. — Upon effectivity of this Act, cases
of children fifteen (15) years old and below at the time of the commission of the crime shall immediately be
dismissed and the child shall be referred to the appropriate local social welfare and development officer. Such
officer, upon thorough assessment of the child, shall determine whether to release the child to the custody of
his/her parents, or refer the child to prevention programs, as provided under this Act. Those with suspended
sentences and undergoing rehabilitation at the youth rehabilitation center shall likewise be released, unless it is
contrary to the best interest of the child.
SECTION 65. Children Detained Pending Trial. — If the child is detained pending trial, the Family Court shall also
determine whether or not continued detention is necessary and, if not, determine appropriate alternatives for
detention. If detention is necessary and he/she is detained with adults, the court shall immediately order the
transfer of the child to a youth detention home.
SECTION 66. Inventory of "Locked-up" and Detained Children in Conflict with the Law. — The PNP, the BJMP and the
BUCOR are hereby directed to submit to the JJWC, within ninety (90) days from the effectivity of this Act, an
inventory of all children in conflict with the law under their custody.
SECTION 67. Children Who Reach the Age of Eighteen (18) Years Pending Diversion and Court Proceedings. — If a
child reaches the age of eighteen (18) years pending diversion and court proceedings, the appropriate diversion
authority in consultation with the local social welfare and development officer or the Family Court in consultation
with the Social Services and Counseling Division (SSCD) of the Supreme Court, as the case may be, shall determine
the appropriate disposition. In case the appropriate court executes the judgment of conviction, and unless the child
in conflict with the law has already availed of probation under Presidential Decree No. 603 or other similar laws, the
child may apply for probation if qualified under the provisions of the Probation Law.
SECTION 68. Children Who Have Been Convicted and are Serving Sentences. — Persons who have been convicted
and are serving sentence at the time of the effectivity of this Act, and who were below the age of eighteen (18) years
at the time of the commission of the offense for which they were convicted and are serving sentence, shall likewise
benefit from the retroactive application of this Act. They shall be entitled to appropriate dispositions provided under
this Act and their sentences shall be adjusted accordingly. They shall be immediately released if they are so qualified
under this Act or other applicable laws.
Ostensibly, the only issue that requires resolution in this case is whether or not petitioner is guilty beyond
reasonable doubt of the crime of rape as found by both the RTC and the CA. However, with the advent of R.A. No.
9344 while petitioner's case is pending before this Court, a new issue arises, namely, whether the pertinent
provisions of R.A. No. 9344 apply to petitioner's case, considering that at the time he committed the alleged rape, he
was merely 13 years old.
In sum, we are convinced that petitioner committed the crime of rape against AAA. In a prosecution for rape, the
complainant's candor is the single most important factor. If the complainant's testimony meets the test of credibility,
the accused can be convicted solely on that basis.44 The RTC, as affirmed by the CA, did not doubt AAA's credibility,
and found no ill motive for her to charge petitioner of the heinous crime of rape and to positively identify him as the
malefactor. Both courts also accorded respect to BBB's testimony that he saw petitioner having sexual intercourse
with his younger sister. While petitioner asserts that AAA's poverty is enough motive for the imputation of the crime,
we discard such assertion for no mother or father like MMM and FFF would stoop so low as to subject their daughter
to the tribulations and the embarrassment of a public trial knowing that such a traumatic experience would damage
their daughter's psyche and mar her life if the charge is not true.45 We find petitioner's claim that MMM inflicted
the abrasions found by Dr. Jocson in the genitalia of AAA, in order to extort money from petitioner’s parents, highly
incredible. Lastly, it must be noted that in most cases of rape committed against young girls like AAA who was only 6
years old then, total penetration of the victim's organ is improbable due to the small vaginal opening. Thus, it has
been held that actual penetration of the victim's organ or rupture of the hymen is not required.46 Therefore, it is not
necessary for conviction that the petitioner succeeded in having full penetration, because the slightest touching of
the lips of the female organ or of the labia of the pudendum constitutes rape.47
However, for one who acts by virtue of any of the exempting circumstances, although he commits a crime, by the
complete absence of any of the conditions which constitute free will or voluntariness of the act, no criminal liability
arises.48 Therefore, while there is a crime committed, no criminal liability attaches. Thus, in Guevarra v.
Almodovar,49 we held:
[I]t is worthy to note the basic reason behind the enactment of the exempting circumstances embodied in Article 12
of the RPC; the complete absence of intelligence, freedom of action, or intent, or on the absence of negligence on
the part of the accused. In expounding on intelligence as the second element of dolus, Albert has stated:
"The second element of dolus is intelligence; without this power, necessary to determine the morality of human acts
to distinguish a licit from an illicit act, no crime can exist, and because . . . the infant (has) no intelligence, the law
exempts (him) from criminal liability."
It is for this reason, therefore, why minors nine years of age and below are not capable of performing a criminal act.
In its Comment50 dated April 24, 2008, the OSG posited that petitioner is no longer covered by the provisions of
Section 64 of R.A. No. 9344 since as early as 1999, petitioner was convicted by the RTC and the conviction was
affirmed by the CA in 2001. R.A. No. 9344 was passed into law in 2006, and with the petitioner now approximately
25 years old, he no longer qualifies as a child as defined by R.A. No. 9344. Moreover, the OSG claimed that the
retroactive effect of Section 64 of R.A. No. 9344 is applicable only if the child-accused is still below 18 years old as
explained under Sections 67 and 68 thereof. The OSG also asserted that petitioner may avail himself of the
provisions of Section 3851 of R.A. No. 9344 providing for automatic suspension of sentence if finally found guilty.
Lastly, the OSG argued that while it is a recognized principle that laws favorable to the accused may be given
retroactive application, such principle does not apply if the law itself provides for conditions for its application.
We are not persuaded.
Section 6 of R.A. No. 9344 clearly and explicitly provides:
SECTION 6. Minimum Age of Criminal Responsibility. — A child fifteen (15) years of age or under at the time of the
commission of the offense shall be exempt from criminal liability. However, the child shall be subjected to an
intervention program pursuant to Section 20 of this Act.
A child above fifteen (15) years but below eighteen (18) years of age shall likewise be exempt from criminal liability
and be subjected to an intervention program, unless he/she has acted with discernment, in which case, such child
shall be subjected to the appropriate proceedings in accordance with this Act.
The exemption from criminal liability herein established does not include exemption from civil liability, which shall
be enforced in accordance with existing laws.
Likewise, Section 64 of the law categorically provides that cases of children 15 years old and below, at the time of
the commission of the crime, shall immediately be dismissed and the child shall be referred to the appropriate local
social welfare and development officer (LSWDO). What is controlling, therefore, with respect to the exemption from
criminal liability of the CICL, is not the CICL's age at the time of the promulgation of judgment but the CICL's age at
the time of the commission of the offense. In short, by virtue of R.A. No. 9344, the age of criminal irresponsibility has
been raised from 9 to 15 years old.52
Given this precise statutory declaration, it is imperative that this Court accord retroactive application to the
aforequoted provisions of R.A. No. 9344 pursuant to the well-entrenched principle in criminal law - favorabilia sunt
amplianda adiosa restrigenda. Penal laws which are favorable to the accused are given retroactive effect.53 This
principle is embodied in Article 22 of the Revised Penal Code, which provides:
Art. 22. Retroactive effect of penal laws. — Penal laws shall have a retroactive effect insofar as they favor the
persons guilty of a felony, who is not a habitual criminal, as this term is defined in Rule 5 of Article 62 of this Code,
although at the time of the publication of such laws, a final sentence has been pronounced and the convict is serving
the same.
We also have extant jurisprudence that the principle has been given expanded application in certain instances
involving special laws.54 R.A. No. 9344 should be no exception.
In fact, the legislative intent for R.A. No. 9344's retroactivity is even patent from the deliberations on the bill in the
Senate, quoted as follows:
Sections 67-69 On Transitory Provisions

Senator Santiago. In Sections 67 to 69 on Transitory Provisions, pages 34 to 35, may I humbly propose that we should
insert, after Sections 67 to 69, the following provision:
ALL CHILDREN WHO DO NOT HAVE CRIMINAL LIABILITY UNDER THIS LAW PENDING THE CREATION OF THE OFFICE
OF JUVENILE WELFARE AND RESTORATION (OJWR) AND THE LOCAL COUNCIL FOR THE PROTECTION OF CHILDREN
(LCPC) WITHIN A YEAR, SHALL BE IMMEDIATELY TRANSFERRED TO DSWD INSTITUTIONS, AND DSWD SHALL
UNDERTAKE DIVERSION PROGRAMS FOR THEM, PRIORITIZING THE YOUNGER CHILDREN BELOW 15 YEARS OF AGE
AND THE LIGHTER OFFENSES.
The only question will be: Will the DSWD have enough facilities for these adult offenders?
Senator Pangilinan, Mr. President, according to the CWC, the DSWD does not have the capability at the moment. It
will take time to develop the capacity.
Senator Santiago. Well, we can say that they shall be transferred whenever the facilities are ready.
Senator Pangilinan. Yes. Mr. President, just a clarification. When we speak here of children who do not have criminal
liability under this law, we are referring here to those who currently have criminal liability, but because of the
retroactive effect of this measure, will now be exempt. It is quite confusing.
Senator Santiago. That is correct.
Senator Pangilinan. In other words, they should be released either to their parents or through a diversion program,
Mr. President. That is my understanding.
Senator Santiago. Yes, that is correct. But there will have to be a process of sifting before that. That is why I was
proposing that they should be given to the DSWD, which will conduct the sifting process, except that apparently, the
DSWD does not have the physical facilities.
Senator Pangilinan. Mr. President, conceptually, we have no argument. We will now have to just craft it to ensure
that the input raised earlier by the good Senator is included and the capacity of the DSWD to be able to absorb these
individuals. Likewise, the issue should also be incorporated in the amendment.
The President. Just a question from the Chair. The moment this law becomes effective, all those children in conflict
with the law, who were convicted in the present Penal Code, for example, who will now not be subject to
incarceration under this law, will be immediately released. Is that the understanding?
Senator Pangilinan. Yes, Mr. President.
Senator Santiago. They would immediately fall under . . . .
Senator Pangilinan. The diversion requirements, Mr. President.
Senator Santiago. Yes.
The President. But since the facilities are not yet available, what will happen to them?
Senator Santiago. Well, depending on their age, which has not yet been settled . . . . . provides, for example, for
conferencing family mediation, negotiation, apologies, censure, et cetera. These methodologies will apply. They do
not necessarily have to remain in detention.
Senator Pangilinan. Yes, that is correct, Mr. President. But it will still require some sort of infrastructure, meaning,
manpower. The personnel from the DSWD will have to address the counseling. So, there must be a transition in
terms of building the capacity and absorbing those who will benefit from this measure.
The President. Therefore, that should be specifically provided for as an amendment.

Senator Pangilinan. That is correct, Mr. President.
The President. All right. Is there any objection? [Silence] There being none, the Santiago amendment is accepted.55
xxxx
PIMENTEL AMENDMENTS
xxxx
Senator Pimentel.
xxxx
Now, considering that laws are normally prospective, Mr. President, in their application, I would like to suggest to
the Sponsor if he could incorporate some kind of a transitory provision that would make this law apply also to those
who might already have been convicted but are awaiting, let us say, execution of their penalties as adults when, in
fact, they are juveniles.
Senator Pangilinan. Yes, Mr. President. We do have a provision under the Transitory Provisions wherein we address
the issue raised by the good Senator, specifically, Section 67. For example, "Upon effectivity of this Act, cases of
children fifteen (15) years old and below at the time of the commission of the crime shall immediately be dismissed
and the child shall be referred to the appropriate local social welfare and development officer." So that would be
giving retroactive effect.
Senator Pimentel. Of cases that are still to be prosecuted.
Senator Pangilinan. Yes.
Senator Pimentel. What about those that have already been prosecuted? I was trying to cite the instance of juvenile
offenders erroneously convicted as adults awaiting execution.
Senator Pangilinan. Mr. President, we are willing to include that as an additional amendment, subject to style.
Senator Pimentel. I would certainly appreciate that because that is a reality that we have to address, otherwise
injustice will really be . . .
Senator Pangilinan. Yes, Mr. President, we would also include that as a separate provision.
The President. In other words, even after final conviction if, in fact, the offender is able to prove that at the time of
the commission of the offense he is a minor under this law, he should be given the benefit of the law.
Senator Pimentel. Yes, Mr. President. That is correct.
Senator Pangilinan. Yes, Mr. President. We accept that proposed amendment.56
The Court is bound to enforce this legislative intent, which is the dominant factor in interpreting a statute.
Significantly, this Court has declared in a number of cases, that intent is the soul of the law, viz.:
The intent of a statute is the law. If a statute is valid it is to have effect according to the purpose and intent of the
lawmaker. The intent is the vital part, the essence of the law, and the primary rule of construction is to ascertain and
give effect to the intent. The intention of the legislature in enacting a law is the law itself, and must be enforced
when ascertained, although it may not be consistent with the strict letter of the statute. Courts will not follow the
letter of a statute when it leads away from the true intent and purpose of the legislature and to conclusions
inconsistent with the general purpose of the act. Intent is the spirit which gives life to
a legislative enactment. In construing statutes the proper course is to start out and follow the true intent of the
legislature and to adopt that sense which harmonizes best with the context and promotes in the fullest manner the
apparent policy and objects of the legislature.57
Moreover, penal laws are construed liberally in favor of the accused.58 In this case, the plain meaning of R.A. No.
9344's unambiguous language, coupled with clear lawmakers' intent, is most favorable to herein petitioner. No other
interpretation is justified, for the simple language of the new law itself demonstrates the legislative intent to favor
the CICL.
It bears stressing that the petitioner was only 13 years old at the time of the commission of the alleged rape. This
was duly proven by the certificate of live birth, by petitioner's own testimony, and by the testimony of his mother.
Furthermore, petitioner’s age was never assailed in any of the proceedings before the RTC and the CA. Indubitably,
petitioner, at the time of the commission of the crime, was below 15 years of age. Under R.A. No. 9344, he is
exempted from criminal liability.
However, while the law exempts petitioner from criminal liability for the two (2) counts of rape committed against
AAA, Section 6 thereof expressly provides that there is no concomitant exemption from civil liability. Accordingly,
this Court sustains the ruling of the RTC, duly affirmed by the CA, that petitioner and/or his parents are liable to pay
AAA P100,000.00 as civil indemnity. This award is in the nature of actual or compensatory damages, and is
mandatory upon a conviction for rape.
The RTC, however, erred in not separately awarding moral damages, distinct from the civil indemnity awarded to the
rape victim. AAA is entitled to moral damages in the amount of P50,000.00 for each count of rape, pursuant to
Article 2219 of the Civil Code, without the necessity of additional pleading or proof other than the fact of rape. Moral
damages are granted in recognition of the victim's injury necessarily resulting from the odious crime of rape.59
A final note. While we regret the delay, we take consolation in the fact that a law intended to protect our children
from the harshness of life and to alleviate, if not cure, the ills of the growing number of CICL and children at risk in
our country, has been enacted by Congress. However, it has not escaped us that major concerns have been raised on
the effects of the law. It is worth mentioning that in the Rationale for the Proposed Rule on Children Charged under
R.A. No. 9165, or the Comprehensive Dangerous Drugs Act of 2002, it was found that:
The passage of Republic Act No. 9344 or the Juvenile Justice and Welfare Act of 2006 raising the age of criminal
irresponsibility from 9 years old to 15 years old has compounded the problem of employment of children in the drug
trade several times over. Law enforcement authorities, Barangay Kagawads and the police, most particularly,
complain that drug syndicates have become more aggressive in using children 15 years old or below as couriers or
foot soldiers in the drug trade. They claim that Republic Act No. 9344 has rendered them ineffective in the faithful
discharge of their duties in that they are proscribed from taking into custody children 15 years old or below who
openly flaunt possession, use and delivery or distribution of illicit drugs, simply because their age exempts them
from criminal liability under the new law. 60
The Court is fully cognizant that our decision in the instant case effectively exonerates petitioner of rape, a heinous
crime committed against AAA who was only a child at the tender age of six (6) when she was raped by the petitioner,
and one who deserves the law’s greater protection. However, this consequence is inevitable because of the language
of R.A. No. 9344, the wisdom of which is not subject to review by this Court.61 Any perception that the result
reached herein appears unjust or unwise should be addressed to Congress. Indeed, the Court has no discretion to
give statutes a meaning detached from the manifest intendment and language of the law. Our task is constitutionally
confined only to applying the law and jurisprudence to the proven facts, and we have done so in this case.62
WHEREFORE, in view of the foregoing, Criminal Case Nos. 98-19083 and 98-19084 filed against petitioner Joemar F.
Ortega are hereby DISMISSED. Petitioner is hereby referred to the local social welfare and development officer of
the locality for the appropriate intervention program. Nevertheless, the petitioner is hereby ordered to pay private
complainant AAA, civil indemnity in the amount of One Hundred Thousand Pesos (P100,000.00) and moral damages
in the amount of One Hundred Thousand Pesos (P100,000.00). No costs.
Let a copy of this Decision be furnished the two Houses of Congress and the Juvenile Justice and Welfare Council
(JJWC).
SO ORDERED.
C. Prospectivity and Retroactivity of Judicial Decisions
G.R. No. L-30061 February 27, 1974
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellees,

vs.
JOSE JABINAL Y CARMEN, defendant-appellant.
Office of the Solicitor General Felix V. Makasiar and Solicitor Antonio M. Martinez for plaintiff-appellee.
Pedro Panganiban y Tolentino for defendant-appellant.
ANTONIO, J.:p
Appeal from the judgment of the Municipal Court of Batangas (provincial capital), Batangas, in Criminal Case No.
889, finding the accused guilty of the crime of Illegal Possession of Firearm and Ammunition and sentencing him to
suffer an indeterminate penalty ranging from one (1) year and one (1) day to two (2) years imprisonment, with the
accessories provided by law, which raises in issue the validity of his conviction based on a retroactive application of
Our ruling in People v. Mapa.1
The complaint filed against the accused reads:
That on or about 9:00 o'clock, p.m., the 5th day of September, 1964, in the poblacion, Municipality of Batangas,
Province of Batangas, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, a
person not authorized by law, did then and there wilfully, unlawfully and feloniously keep in his possession, custody
and direct control a revolver Cal. .22, RG8 German Made with one (1) live ammunition and four (4) empty shells
without first securing the necessary permit or license to possess the same.
At the arraignment on September 11, 1964, the accused entered a plea of not guilty, after which trial was
accordingly held.
The accused admitted that on September 5, 1964, he was in possession of the revolver and the ammunition
described in the complaint, without the requisite license or permit. He, however, claimed to be entitled to
exoneration because, although he had no license or permit, he had an appointment as Secret Agent from the
Provincial Governor of Batangas and an appointment as Confidential Agent from the PC Provincial Commander, and
the said appointments expressly carried with them the authority to possess and carry the firearm in question.
Indeed, the accused had appointments from the above-mentioned officials as claimed by him. His appointment from
Governor Feliciano Leviste, dated December 10, 1962, reads:
Reposing special trust and confidence in your civic spirit, and trusting that you will be an effective agent in the
detection of crimes and in the preservation of peace and order in the province of Batangas, especially with respect
to the suppression of trafficking in explosives, jueteng, illegal cockfighting, cattle rustling, robbery and the detection
of unlicensed firearms, you are hereby appointed a SECRET AGENT of the undersigned, the appointment to take
effect immediately, or as soon as you have qualified for the position. As such Secret Agent, your duties shall be those
generally of a peace officer and particularly to help in the preservation of peace and order in this province and to
make reports thereon to me once or twice a month. It should be clearly understood that any abuse of authority on
your part shall be considered sufficient ground for the automatic cancellation of your appointment and immediate
separation from the service. In accordance with the decision of the Supreme Court in G.R. No. L-12088 dated
December 23, 1959, you will have the right to bear a firearm, particularly described below, for use in connection
with the performance of your duties.
By virtue hereof, you may qualify and enter upon the performance of your duties by taking your oath of office and
filing the original thereof with us.
Very truly yours,
(Sgd.) FELICIANO LEVISTE

Provincial Governor
FIREARM AUTHORIZED TO CARRY:
Kind: — ROHM-Revolver
Make: — German
SN: — 64
Cal:— .22
On March 15, 1964, the accused was also appointed by the PC Provincial Commander of Batangas as Confidential
Agent with duties to furnish information regarding smuggling activities, wanted persons, loose firearms, subversives
and other similar subjects that might affect the peace and order condition in Batangas province, and in connection
with these duties he was temporarily authorized to possess a ROHM revolver, Cal. .22 RG-8 SN-64, for his personal
protection while in the performance of his duties.
The accused contended before the court a quo that in view of his above-mentioned appointments as Secret Agent
and Confidential Agent, with authority to possess the firearm subject matter of the prosecution, he was entitled to
acquittal on the basis of the Supreme Court's decision in People vs. Macarandang2 and People vs. Lucero.3 The trial
court, while conceding on the basis of the evidence of record the accused had really been appointed Secret Agent
and Confidential Agent by the Provincial Governor and the PC Provincial Commander of Batangas, respectively, with
authority to possess and carry the firearm described in the complaint, nevertheless held the accused in its decision
dated December 27, 1968, criminally liable for illegal possession of a firearm and ammunition on the ground that the
rulings of the Supreme Court in the cases of Macarandang and Lucero were reversed and abandoned in People vs.
Mapa, supra. The court considered as mitigating circumstances the appointments of the accused as Secret Agent and
Confidential Agent.
Let us advert to Our decisions in People v. Macarandang, supra, People v. Lucero, supra, and People v. Mapa, supra.
In Macarandang, We reversed the trial court's judgment of conviction against the accused because it was shown that
at the time he was found to possess a certain firearm and ammunition without license or permit, he had an
appointment from the Provincial Governor as Secret Agent to assist in the maintenance of peace and order and in
the detection of crimes, with authority to hold and carry the said firearm and ammunition. We therefore held that
while it is true that the Governor has no authority to issue any firearm license or permit, nevertheless, section 879 of
the Revised Administrative Code provides that "peace officers" are exempted from the requirements relating to the
issuance of license to possess firearms; and Macarandang's appointment as Secret Agent to assist in the
maintenance of peace and order and detection of crimes, sufficiently placed him in the category of a "peace officer"
equivalent even to a member of the municipal police who under section 879 of the Revised Administrative Code are
exempted from the requirements relating to the issuance of license to possess firearms. In Lucero, We held that
under the circumstances of the case, the granting of the temporary use of the firearm to the accused was a
necessary means to carry out the lawful purpose of the batallion commander to effect the capture of a Huk leader.
In Mapa, expressly abandoning the doctrine in Macarandang, and by implication, that in Lucero, We sustained the
judgment of conviction on the following ground:
The law is explicit that except as thereafter specifically allowed, "it shall be unlawful for any person to ... possess any
firearm, detached parts of firearms or ammunition therefor, or any instrument or implement used or intended to be
used in the manufacture of firearms, parts of firearms, or ammunition." (Sec. 878, as amended by Republic Act No. 4,
Revised Administrative Code.) The next section provides that "firearms and ammunition regularly and lawfully issued
to officers, soldiers, sailors, or marines [of the Armed Forces of the Philippines], the Philippine Constabulary, guards
in the employment of the Bureau of Prisons, municipal police, provincial governors, lieutenant governors, provincial
treasurers, municipal treasurers, municipal mayors, and guards of provincial prisoners and jails," are not covered
"when such firearms are in possession of such officials and public servants for use in the performance of their official
duties." (Sec. 879, Revised Administrative Code.)
The law cannot be any clearer. No provision is made for a secret agent. As such he is not exempt. ... .
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). Our decision in People v. Mapa 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 reversal of the
Macarandang and Lucero doctrine in Mapa? The Solicitor General is of the first view, and he accordingly
recommends reversal of the appealed judgment.
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 originally passed, since this Court's construction merely establishes the
contemporaneous legislative intent that law thus construed intends to effectuate. The settled rule supported by
numerous authorities is a restatement of legal maxim "legis interpretatio 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 when he 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 punishability of an act be reasonably foreseen for the guidance of society.
It follows, therefore, that considering that appellant conferred his appointments as Secret Agent and Confidential
Agent and authorized to possess a firearm pursuant to the prevailing doctrine enunciated in Macarandang and
Lucero, under which no criminal liability would attach to his possession of said firearm in spite of the absence of a
license and permit therefor, appellant must be absolved. Certainly, appellant may not be punished for an act which
at the time it was done was held not to be punishable.
WHEREFORE, the judgment appealed from is hereby reversed, and appellant is acquitted, with costs de oficio.
G.R. No. 110318 August 28, 1996
COLUMBIA PICTURES, INC., ORION PICTURES CORPORATION, PARAMOUNT PICTURES CORPORATION, TWENTIETH
CENTURY FOX FILM CORPORATION, UNITED ARTISTS CORPORATION, UNIVERSAL CITY STUDIOS, INC., THE WALT
DISNEY COMPANY, and WARNER BROTHERS, INC., petitioners,
vs.
COURT OF APPEALS, SUNSHINE HOME VIDEO, INC. and DANILO A. PELINDARIO, respondents.
REGALADO, J.:p
Before us is a petition for review on certiorari of the decision of the Court of Appeals1 promulgated on July 22, 1992
and its resolution2 of May 10, 1993 denying petitioners' motion for reconsideration, both of which sustained the
order3 of the Regional Trial Court, Branch 133, Makati, Metro Manila, dated November 22, 1988 for the quashal of
Search Warrant No. 87-053 earlier issued per its own order4 on September 5, 1988 for violation of Section 56 of
Presidential Decree No. 49, as amended, otherwise known as the "Decree on the Protection of Intellectual Property."
The material facts found by respondent appellate court are as follows:
Complainants thru counsel lodged a formal complaint with the National Bureau of Investigation for violation of PD
No. 49, as amended, and sought its assistance in their anti-film piracy drive. Agents of the NBI and private
researchers made discreet surveillance on various video establishments in Metro Manila including Sunshine Home
Video Inc. (Sunshine for brevity), owned and operated by Danilo A. Pelindario with address at No. 6 Mayfair Center,
Magallanes, Makati, Metro Manila.
On November 14, 1987, NBI Senior Agent Lauro C. Reyes applied for a search warrant with the court a quo against
Sunshine seeking the seizure, among others, of pirated video tapes of copyrighted films all of which were
enumerated in a list attached to the application; and, television sets, video cassettes and/or laser disc recordings
equipment and other machines and paraphernalia used or intended to be used in the unlawful exhibition, showing,
reproduction, sale, lease or disposition of videograms tapes in the premises above described. In the hearing of the
application, NBI Senior Agent Lauro C. Reyes, upon questions by the court a quo, reiterated in substance his
averments in his affidavit. His testimony was corroborated by another witness, Mr. Rene C. Baltazar. Atty. Rico V.
Domingo's deposition was also taken. On the basis of the affidavits and depositions of NBI Senior Agent Lauro C.
Reyes, Rene C. Baltazar and Atty. Rico V. Domingo, Search Warrant No. 87-053 for violation of Section 56 of PD No.
49, as amended, was issued by the court a quo.
The search warrant was served at about 1:45 p.m. on December 14, 1987 to Sunshine and/or their representatives.
In the course of the search of the premises indicated in the search warrant, the NBI Agents found and seized various
video tapes of duly copyrighted motion pictures/films owned or exclusively distributed by private complainants, and
machines, equipment, television sets, paraphernalia, materials, accessories all of which were included in the receipt
for properties accomplished by the raiding team. Copy of the receipt was furnished and/or tendered to Mr. Danilo A.
Pelindario, registered owner-proprietor of Sunshine Home Video.
On December 16, 1987, a "Return of Search Warrant" was filed with the Court.
A "Motion To Lift the Order of Search Warrant" was filed but was later denied for lack of merit (p. 280, Records).
A Motion for reconsideration of the Order of denial was filed. The court a quo granted the said motion for
reconsideration and justified it in this manner:
It is undisputed that the master tapes of the copyrighted films from which the pirated films were allegedly copies
(sic), were never presented in the proceedings for the issuance of the search warrants in question. The orders of the
Court granting the search warrants and denying the urgent motion to lift order of search warrants were, therefore,
issued in error. Consequently, they must be set aside. (p. 13, Appellant's Brief)5
Petitioners thereafter appealed the order of the trial court granting private respondents' motion for reconsideration,
thus lifting the search warrant which it had theretofore issued, to the Court of Appeals. As stated at the outset, said
appeal was dismissed and the motion for reconsideration thereof was denied. Hence, this petition was brought to
this Court particularly challenging the validity of respondent court's retroactive application of the ruling in 20th
Century Fox Film Corporation vs. Court of Appeals, et al.,6 in dismissing petitioners' appeal and upholding the
quashal of the search warrant by the trial court.
Inceptively, we shall settle the procedural considerations on the matter of and the challenge to petitioners' legal
standing in our courts, they being foreign corporations not licensed to do business in the Philippines.
Private respondents aver that being foreign corporations, petitioners should have such license to be able to maintain
an action in Philippine courts. In so challenging petitioners' personality to sue, private respondents point to the fact
that petitioners are the copyright owners or owners of exclusive rights of distribution in the Philippines of
copyrighted motion pictures or films, and also to the appointment of Atty. Rico V. Domingo as their attorney-in-fact,
as being constitutive of "doing business in the Philippines" under Section 1 (f)(1) and (2), Rule 1 of the Rules of the
Board of Investments. As foreign corporations doing business in the Philippines, Section 133 of Batas Pambansa Blg.
68, or the Corporation Code of the Philippines, denies them the right to maintain a suit in Philippine courts in the
absence of a license to do business. Consequently, they have no right to ask for the issuance of a search warrant.7
In refutation, petitioners flatly deny that they are doing business in the Philippines,8 and contend that private
respondents have not adduced evidence to prove that petitioners are doing such business here, as would require
them to be licensed by the Securities and Exchange Commission, other than averments in the quoted portions of
petitioners' "Opposition to Urgent Motion to Lift Order of Search Warrant" dated April 28, 1988 and Atty. Rico V.
Domingo's affidavit of December 14, 1987. Moreover, an exclusive right to distribute a product or the ownership of
such exclusive right does not conclusively prove the act of doing business nor establish the presumption of doing
business.9
The Corporation Code provides:
Sec. 133. Doing business without a license. — No foreign corporation transacting business in the Philippines without
a license, or its successors or assigns, shall be permitted to maintain or intervene in any action, suit or proceeding in
any court or administrative agency of the Philippines; but such corporation may be sued or proceeded against before
Philippine courts or administrative tribunals on any valid cause of action recognized under Philippine laws.
The obtainment of a license prescribed by Section 125 of the Corporation Code is not a condition precedent to the
maintenance of any kind of action in Philippine courts by a foreign corporation. However, under the aforequoted
provision, no foreign corporation shall be permitted to transact business in the Philippines, as this phrase is
understood under the Corporation Code, unless it shall have the license required by law, and until it complies with
the law intransacting business here, it shall not be permitted to maintain any suit in local courts.10 As thus
interpreted, any foreign corporation not doing business in the Philippines may maintain an action in our courts upon
any cause of action, provided that the subject matter and the defendant are within the jurisdiction of the court. It is
not the absence of the prescribed license but "doing business" in the Philippines without such license which debars
the foreign corporation from access to our courts. In other words, although a foreign corporation is without license
to transact business in the Philippines, it does not follow that it has no capacity to bring an action. Such license is not
necessary if it is not engaged in business in the Philippines.11
Statutory provisions in many jurisdictions are determinative of what constitutes "doing business" or "transacting
business" within that forum, in which case said provisions are controlling there. In others where no such definition or
qualification is laid down regarding acts or transactions failing within its purview, the question rests primarily on
facts and intent. It is thus held that all the combined acts of a foreign corporation in the State must be considered,
and every circumstance is material which indicates a purpose on the part of the corporation to engage in some part
of its regular business in the State.12
No general rule or governing principles can be laid down as to what constitutes "doing" or "engaging in" or
"transacting" business. Each case must be judged in the light of its own peculiar environmental circumstances.13 The
true tests, however, seem to be whether the foreign corporation is continuing the body or substance of the business
or enterprise for which it was organized or whether it has substantially retired from it and turned it over to
another.14
As a general proposition upon which many authorities agree in principle, subject to such modifications as may be
necessary in view of the particular issue or of the terms of the statute involved, it is recognized that a foreign
corporation is "doing," "transacting," "engaging in," or "carrying on" business in the State when, and ordinarily only
when, it has entered the State by its agents and is there engaged in carrying on and transacting through them some
substantial part of its ordinary or customary business, usually continuous in the sense that it may be distinguished
from merely casual, sporadic, or occasional transactions and isolated acts.15
The Corporation Code does not itself define or categorize what acts constitute doing or transacting business in the
Philippines. Jurisprudence has, however, held that the term implies a continuity of commercial dealings and
arrangements, and contemplates, to that extent, the performance of acts or works or the exercise of some of the
functions normally incident to or in progressive prosecution of the purpose and subject of its organization.16
This traditional case law definition has evolved into a statutory definition, having been adopted with some
qualifications in various pieces of legislation in our jurisdiction.
For instance, Republic Act No. 5455 17 provides:
Sec. 1. Definitions and scope of this Act. — (1) . . . ; and the phrase "doing business" shall include soliciting orders,
purchases, service contracts, opening offices, whether called "liaison" offices or branches; appointing
representatives or distributors who are domiciled in the Philippines or who in any calendar year stay in the
Philippines for a period or periods totalling one hundred eighty days or more; participating in the management,
supervision or control of any domestic business firm, entity or corporation in the Philippines; and any other act or
acts that imply a continuity of commercial dealings or arrangements, and contemplate to that extent the
performance of acts or works, or the exercise of some of the functions normally incident to, and in progressive
prosecution of, commercial gain or of the purpose and object of the business organization.
Presidential Decree No. 1789,18 in Article 65 thereof, defines "doing business" to include soliciting orders,
purchases, service contracts, opening offices, whether called "liaison" offices or branches; appointing
representatives or distributors who are domiciled in the Philippines or who in any calendar year stay in the
Philippines for a period or periods totalling one hundred eighty days or more; participating in the management,
supervision or control of any domestic business firm, entity or corporation in the Philippines, and any other act or
acts that imply a continuity of commercial dealings or arrangements and contemplate to that extent the
performance of acts or works, or the exercise of some of the functions normally incident to, and in progressive
prosecution of, commercial gain or of the purpose and object of the business organization.
The implementing rules and regulations of said presidential decree conclude the enumeration of acts constituting
"doing business" with a catch-all definition, thus:
Sec. 1(g). "Doing Business" shall be any act or combination of acts enumerated in Article 65 of the Code. In particular
"doing business" includes:
xxx xxx xxx
(10) Any other act or acts which imply a continuity of commercial dealings or arrangements, and contemplate to that
extent the performance of acts or works, or the exercise of some of the functions normally incident to, or in the
progressive prosecution of, commercial gain or of the purpose and object of the business organization.
Finally, Republic Act No. 704219 embodies such concept in this wise:
Sec. 3. Definitions. — As used in this Act:
xxx xxx xxx
(d) the phrase "doing business shall include soliciting orders, service contracts, opening offices, whether called
"liaison" offices or branches; appointing representatives or distributors domiciled in the Philippines or who in any
calendar year stay in the country for a period or periods totalling one hundred eight(y) (180) days or more;
participating in the management, supervision or control of any domestic business, firm, entity or corporation in the
Philippines; and any other act or acts that imply a continuity of commercial dealings or arrangements, and
contemplate to that extent the performance of acts or works, or the exercise of some of the functions normally
incident to, and in progressive prosecution of, commercial gain or of the purpose and object of the business
organization: Provided, however, That the phrase "doing business" shall not be deemed to include mere investment
as a shareholder by a foreign entity in domestic corporations duly registered to do business, and/or the exercise of
rights as such investor; nor having a nominee director or officer to represent its interests in such corporation; nor
appointing a representative or distributor domiciled in the Philippines which transacts business in its own name and
for its own account.
Based on Article 133 of the Corporation Code and gauged by such statutory standards, petitioners are not barred
from maintaining the present action. There is no showing that, under our statutory or case law, petitioners are
doing, transacting, engaging in or carrying on business in the Philippines as would require obtention of a license
before they can seek redress from our courts. No evidence has been offered to show that petitioners have
performed any of the enumerated acts or any other specific act indicative of an intention to conduct or transact
business in the Philippines.
Accordingly, the certification issued by the Securities and Exchange Commission20 stating that its records do not
show the registration of petitioner film companies either as corporations or partnerships or that they have been
licensed to transact business in the Philippines, while undeniably true, is of no consequence to petitioners' right to
bring action in the Philippines. Verily, no record of such registration by petitioners can be expected to be found for,
as aforestated, said foreign film corporations do not transact or do business in the Philippines and, therefore, do not
need to be licensed in order to take recourse to our courts.
Although Section 1(g) of the Implementing Rules and Regulations of the Omnibus Investments Code lists, among
others —
(1) Soliciting orders, purchases (sales) or service contracts. Concrete and specific solicitations by a foreign firm, or by
an agent of such foreign firm, not acting independently of the foreign firm amounting to negotiations or fixing of the
terms and conditions of sales or service contracts, regardless of where the contracts are actually reduced to writing,
shall constitute doing business even if the enterprise has no office or fixed place of business in the Philippines. The
arrangements agreed upon as to manner, time and terms of delivery of the goods or the transfer of title thereto is
immaterial. A foreign firm which does business through the middlemen acting in their own names, such as indentors,
commercial brokers or commission merchants, shall not be deemed doing business in the Philippines. But such
indentors, commercial brokers or commission merchants shall be the ones deemed to be doing business in the
Philippines.
(2) Appointing a representative or distributor who is domiciled in the Philippines, unless said representative or
distributor has an independent status, i.e., it transacts business in its name and for its own account, and not in the
name or for the account of a principal. Thus, where a foreign firm is represented in the Philippines by a person or
local company which does not act in its name but in the name of the foreign firm, the latter is doing business in the
Philippines.
as acts constitutive of "doing business," the fact that petitioners are admittedly copyright owners or owners of
exclusive distribution rights in the Philippines of motion pictures or films does not convert such ownership into an
indicium of doing business which would require them to obtain a license before they can sue upon a cause of action
in local courts.
Neither is the appointment of Atty. Rico V. Domingo as attorney-in-fact of petitioners, with express authority
pursuant to a special power of attorney, inter alia —
To lay criminal complaints with the appropriate authorities and to provide evidence in support of both civil and
criminal proceedings against any person or persons involved in the criminal infringement of copyright or concerning
the unauthorized importation, duplication, exhibition or distribution of any cinematographic work(s) — films or
video cassettes — of which . . . is the owner of copyright or the owner of exclusive rights of distribution in the
Philippines pursuant to any agreement(s) between . . . and the respective owners of copyright in such
cinematographic work(s), to initiate and prosecute on behalf of . . . criminal or civil actions in the Philippines against
any person or persons unlawfully distributing, exhibiting, selling or offering for sale any films or video cassettes of
which . . . is the owner of copyright or the owner of exclusive rights of distribution in the Philippines pursuant to any
agreement(s) between . . . and the respective owners of copyright in such works.21
tantamount to doing business in the Philippines. We fail to see how exercising one's legal and property rights and
taking steps for the vigilant protection of said rights, particularly the appointment of an attorney-in-fact, can be
deemed by and of themselves to be doing business here.
As a general rule, a foreign corporation will not be regarded as doing business in the State simply because it enters
into contracts with residents of the State, where such contracts are consummated outside the State.22 In fact, a
view is taken that a foreign corporation is not doing business in the State merely because sales of its product are
made there or other business furthering its interests is transacted there by an alleged agent, whether a corporation
or a natural person, where such activities are not under the direction and control of the foreign corporation but are
engaged in by the alleged agent as an independent business.23
It is generally held that sales made to customers in the State by an independent dealer who has purchased and
obtained title from the corporation to the products sold are not a doing of business by the corporation.24 Likewise, a
foreign corporation which sells its products to persons styled "distributing agents" in the State, for distribution by
them, is not doing business in the State so as to render it subject to service of process therein, where the contract
with these purchasers is that they shall buy exclusively from the foreign corporation such goods as it manufactures
and shall sell them at trade prices established by it.25
It has moreover been held that the act of a foreign corporation in engaging an attorney to represent it in a Federal
court sitting in a particular State is not doing business within the scope of the minimum contact test. 26 With much
more reason should this doctrine apply to the mere retainer of Atty. Domingo for legal protection against contingent
acts of intellectual piracy.
In accordance with the rule that "doing business" imports only acts in furtherance of the purposes for which a
foreign corporation was organized, it is held that the mere institution and prosecution or defense of a suit,
particularly if the transaction which is the basis of the suit took place out of the State, do not amount to the doing of
business in the State. The institution of a suit or the removal thereof is neither the making of a contract nor the
doing of business within a constitutional provision placing foreign corporations licensed to do business in the State
under the same regulations, limitations and liabilities with respect to such acts as domestic corporations. Merely
engaging in litigation has been considered as not a sufficient minimum contact to warrant the exercise of jurisdiction
over a foreign corporation.27
As a consideration aside, we have perforce to comment on private respondents' basis for arguing that petitioners are
barred from maintaining suit in the Philippines. For allegedly being foreign corporations doing business in the
Philippines without a license, private respondents repeatedly maintain in all their pleadings that petitioners have
thereby no legal personality to bring an action before Philippine Courts.28
Among the grounds for a motion to dismiss under the Rules of Court
are lack of legal capacity to sue29 and that the complaint states no cause of action. 30 Lack of legal capacity to sue
means that the plaintiff is not in the exercise of his civil rights, or does not have the necessary qualification to appear
in the case, or does not have the character or representation he claims.31 On the other hand, a case is dismissible
for lack of personality to sue upon proof that the plaintiff is not the real party in interest, hence grounded on failure
to state a cause of action.32 The term "lack of capacity to sue" should not be confused with the term "lack of
personality to sue." While the former refers to a plaintiff's general disability to sue, such as on account of minority,
insanity, incompetence, lack of juridical personality or any other general disqualifications of a party, the latter refers
to the fact that the plaintiff is not the real party in interest. Correspondingly, the first can be a ground for a motion to
dismiss based on the ground of lack of legal capacity to sue;33 whereas the second can be used as a ground for a
motion to dismiss based on the fact that the complaint, on the face thereof, evidently states no cause of action.34
Applying the above discussion to the instant petition, the ground available for barring recourse to our courts by an
unlicensed foreign corporation doing or transacting business in the Philippines should properly be "lack of capacity
to sue," not "lack of personality to sue." Certainly, a corporation whose legal rights have been violated is undeniably
such, if not the only, real party in interest to bring suit thereon although, for failure to comply with the licensing
requirement, it is not capacitated to maintain any suit before our courts.
Lastly, on this point, we reiterate this Court's rejection of the common procedural tactics of erring local companies
which, when sued by unlicensed foreign corporations not engaged in business in the Philippines, invoke the latter's
supposed lack of capacity to sue. The doctrine of lack of capacity to sue based on failure to first acquire a local
license is based on considerations of public policy. It was never intended to favor nor insulate from suit unscrupulous
establishments or nationals in case of breach of valid obligations or violation of legal rights of unsuspecting foreign
firms or entities simply because they are not licensed to do business in the country.35
II
We now proceed to the main issue of the retroactive application to the present controversy of the ruling in 20th
Century Fox Film Corporation vs. Court of Appeals, et al., promulgated on August 19, 1988,36 that for the
determination of probable cause to support the issuance of a search warrant in copyright infringement cases
involving videograms, the production of the master tape for comparison with the allegedly pirate copies is necessary.
Petitioners assert that the issuance of a search warrant is addressed to the discretion of the court subject to the
determination of probable cause in accordance with the procedure prescribed therefore under Sections 3 and 4 of
Rule 126. As of the time of the application for the search warrant in question, the controlling criterion for the finding
of probable cause was that enunciated in Burgos vs. Chief of Staff 3 7 stating that:
Probable cause for a search warrant is defined as such facts and circumstances which would lead a reasonably
discreet and prudent man to believe that an offense has been committed and that the objects sought in connection
with the offense are in the place sought to be searched.
According to petitioners, after complying with what the law then required, the lower court determined that there
was probable cause for the issuance of a search warrant, and which determination in fact led to the issuance and
service on December 14, 1987 of Search Warrant No. 87-053. It is further argued that any search warrant so issued
in accordance with all applicable legal requirements is valid, for the lower court could not possibly have been
expected to apply, as the basis for a finding of probable cause for the issuance of a search warrant in copyright
infringement cases involving videograms, a pronouncement which was not existent at the time of such
determination, on December 14, 1987, that is, the doctrine in the 20th Century Fox case that was promulgated only
on August 19, 1988, or over eight months later.
Private respondents predictably argue in support of the ruling of the Court of Appeals sustaining the quashal of the
search warrant by the lower court on the strength of that 20th Century Fox ruling which, they claim, goes into the
very essence of probable cause. At the time of the issuance of the search warrant involved here, although the 20th
Century Fox case had not yet been decided, Section 2, Article III of the Constitution and Section 3, Rule 126 of the
1985 Rules on Criminal Procedure embodied the prevailing and governing law on the matter. The ruling in 20th
Century Fox was merely an application of the law on probable cause. Hence, they posit that there was no law that
was retrospectively applied, since the law had been there all along. To refrain from applying the 20th Century Fox
ruling, which had supervened as a doctrine promulgated at the time of the resolution of private respondents' motion
for reconsideration seeking the quashal of the search warrant for failure of the trial court to require presentation of
the master tapes prior to the issuance of the search warrant, would have constituted grave abuse of discretion.38
Respondent court upheld the retroactive application of the 20th Century Fox ruling by the trial court in resolving
petitioners' motion for reconsideration in favor of the quashal of the search warrant, on this renovated thesis:
And whether this doctrine should apply retroactively, it must be noted that in the 20th Century Fox case, the lower
court quashed the earlier search warrant it issued. On certiorari, the Supreme Court affirmed the quashal on the
ground among others that the master tapes or copyrighted films were not presented for comparison with the
purchased evidence of the video tapes to determine whether the latter is an unauthorized reproduction of the
former.
If the lower court in the Century Fox case did not quash the warrant, it is Our view that the Supreme Court would
have invalidated the warrant just the same considering the very strict requirement set by the Supreme Court for the
determination of "probable cause" in copyright infringement cases as enunciated in this 20th Century Fox case. This
is so because, as was stated by the Supreme Court in the said case, the master tapes and the pirated tapes must be
presented for comparison to satisfy the requirement of "probable cause." So it goes back to the very existence of
probable
cause. . . .39
Mindful as we are of the ramifications of the doctrine of stare decisis and the rudiments of fair play, it is our
considered view that the 20th Century Fox ruling cannot be retroactively applied to the instant case to justify the
quashal of Search Warrant No. 87-053. Herein petitioners' consistent position that the order of the lower court of
September 5, 1988 denying therein defendants' motion to lift the order of search warrant was properly issued, there
having been satisfactory compliance with the then prevailing standards under the law for determination of probable
cause, is indeed well taken. The lower court could not possibly have expected more evidence from petitioners in
their application for a search warrant other than what the law and jurisprudence, then existing and judicially
accepted, required with respect to the finding of probable cause.
Article 4 of the Civil Code provides that "(l)aws shall have no retroactive effect, unless the contrary is provided.
Correlatively, Article 8 of the same Code declares that "(j)udicial decisions applying the laws or the Constitution shall
form part of the legal system of the Philippines."
Jurisprudence, in our system of government, cannot be considered as an independent source of law; it cannot create
law.40 While it is true that judicial decisions which apply or interpret the Constitution or the laws are part of the
legal system of the Philippines, still they are not laws. Judicial decisions, though not laws, are nonetheless evidence
of what the laws mean, and it is for this reason that they are part of the legal system of the Philippines.41 Judicial
decisions of the Supreme Court assume the same authority as the statute
itself.42
Interpreting the aforequoted correlated provisions of the Civil Code and in light of the above disquisition, this Court
emphatically declared in Co vs. Court of Appeals, et al.43 that the principle of prospectivity applies not only to
original or amendatory statutes and administrative rulings and circulars, but also, and properly so, to judicial
decisions. Our holding in the earlier case of People vs. Jabinal44 echoes the rationale for this judicial declaration, viz.:
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 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 the 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 interpretatio legis vim obtinet" — the
interpretation placed upon the written law by a competent court has the force of law. . . . , 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 . . . . (Emphasis supplied).
This was forcefully reiterated in Spouses Benzonan vs. Court of Appeals, et al.,45 where the Court expounded:
. . . . 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 v. Certeza, 3 SCRA 565 [1961]). The same
consideration underlies our rulings giving only prospective effect to decisions enunciating new doctrines. . . . .
The reasoning behind Senarillos vs. Hermosisima46 that judicial interpretation of a statute constitutes part of the
law as of the date it was originally passed, since the Court's construction merely establishes the contemporaneous
legislative intent that the interpreted law carried into effect, is all too familiar. Such judicial doctrine does not
amount to the passage of a new law but consists merely of a construction or interpretation of a pre-existing one, and
that is precisely the situation obtaining in this case.
It is consequently clear that a judicial interpretation becomes a part of the law as of the date that law was originally
passed, subject only to the qualification that when a doctrine of this Court is overruled and a different view is
adopted, and more so when there is a reversal thereof, the new doctrine should be applied prospectively and should
not apply to parties who relied on the old doctrine and acted in good faith.4 7 To hold otherwise would be to deprive
the law of its quality of fairness and justice then, if there is no recognition of what had transpired prior to such
adjudication.48
There is merit in petitioners' impassioned and well-founded argumentation:
The case of 20th Century Fox Film Corporation vs. Court of Appeals, et al., 164 SCRA 655 (August 19, 1988)
(hereinafter 20th Century Fox) was inexistent in December of 1987 when Search Warrant 87-053 was issued by the
lower court. Hence, it boggles the imagination how the lower court could be expected to apply the formulation of
20th Century Fox in finding probable cause when the formulation was yet non-existent.
xxx xxx xxx
In short, the lower court was convinced at that time after conducting searching examination questions of the
applicant and his witnesses that "an offense had been committed and that the objects sought in connection with the
offense (were) in the place sought to be searched" (Burgos v. Chief of Staff, et al., 133 SCRA 800). It is indisputable,
therefore, that at the time of the application, or on December 14, 1987, the lower court did not commit any error
nor did it fail to comply with any legal requirement for the valid issuance of search warrant.
. . . (W)e believe that the lower court should be considered as having followed the requirements of the law in issuing
Search Warrant No. 87-053. The search warrant is therefore valid and binding. It must be noted that nowhere is it
found in the allegations of the Respondents that the lower court failed to apply the law as then interpreted in 1987.
Hence, we find it absurd that it is (sic) should be seen otherwise, because it is simply impossible to have required the
lower court to apply a formulation which will only be defined six months later.
Furthermore, it is unjust and unfair to require compliance with legal and/or doctrinal requirements which are
inexistent at the time they were supposed to have been complied with.
xxx xxx xxx
. . . If the lower court's reversal will be sustained, what encouragement can be given to courts and litigants to respect
the law and rules if they can expect with reasonable certainty that upon the passage of a new rule, their conduct can
still be open to question? This certainly breeds instability in our system of dispensing justice. For Petitioners who
took special effort to redress their grievances and to protect their property rights by resorting to the remedies
provided by the law, it is most unfair that fealty to the rules and procedures then obtaining would bear but fruits of
injustice.49
Withal, even the proposition that the prospectivity of judicial decisions imports application thereof not only to future
cases but also to cases still ongoing or not yet final when the decision was promulgated, should not be countenanced
in the jural sphere on account of its inevitably unsettling repercussions. More to the point, it is felt that the
reasonableness of the added requirement in 20th Century Fox calling for the production of the master tapes of the
copyrighted films for determination of probable cause in copyright infringement cases needs revisiting and
clarification.
It will be recalled that the 20th Century Fox case arose from search warrant proceedings in anticipation of the filing
of a case for the unauthorized sale or renting out of copyrighted films in videotape format in violation of Presidential
Decree No. 49. It revolved around the meaning of probable cause within the context of the constitutional provision
against illegal searches and seizures, as applied to copyright infringement cases involving videotapes.
Therein it was ruled that —
The presentation of master tapes of the copyrighted films from which the pirated films were allegedly copied, was
necessary for the validity of search warrants against those who have in their possession the pirated films. The
petitioner's argument to the effect that the presentation of the master tapes at the time of application may not be
necessary as these would be merely evidentiary in nature and not determinative of whether or not a probable cause
exists to justify the issuance of the search warrants is not meritorious. The court cannot presume that duplicate or
copied tapes were necessarily reproduced from master tapes that it owns.
The application for search warrants was directed against video tape outlets which allegedly were engaged in the
unauthorized sale and renting out of copyrighted films belonging to the petitioner pursuant to P.D. 49.
The essence of a copyright infringement is the similarity or at least substantial similarity of the purported pirated
works to the copyrighted work. Hence, the applicant must present to the court the copyrighted films to compare
them with the purchased evidence of the video tapes allegedly pirated to determine whether the latter is an
unauthorized reproduction of the former. This linkage of the copyrighted films to the pirated films must be
established to satisfy the requirements of probable cause. Mere allegations as to the existence of the copyrighted
films cannot serve as basis for the issuance of a search warrant.
For a closer and more perspicuous appreciation of the factual antecedents of 20th Century Fox, the pertinent
portions of the decision therein are quoted hereunder, to wit:
In the instant case, the lower court lifted the three questioned search warrants against the private respondents on
the ground that it acted on the application for the issuance of the said search warrants and granted it on the
misrepresentations of applicant NBI and its witnesses that infringement of copyright or a piracy of a particular film
have been committed. Thus the lower court stated in its questioned order dated January 2, 1986:
According to the movant, all three witnesses during the proceedings in the application for the three search warrants
testified of their own personal knowledge. Yet, Atty. Albino Reyes of the NBI stated that the counsel or
representative of the Twentieth Century Fox Corporation will testify on the video cassettes that were pirated, so that
he did not have personal knowledge of the alleged piracy. The witness Bacani also said that the video cassettes were
pirated without stating the manner it was pirated and that it was Atty. Domingo that has knowledge of that fact.
On the part of Atty. Domingo, he said that the re-taping of the allegedly pirated tapes was from master tapes
allegedly belonging to the Twentieth Century Fox, because, according to him it is of his personal knowledge.
At the hearing of the Motion for Reconsideration, Senior NBI Agent Atty. Albino Reyes testified that when the
complaint for infringement was brought to the NBI, the master tapes of the allegedly pirated tapes were shown to
him and he made comparisons of the tapes with those purchased by their man Bacani. Why the master tapes or at
least the film reels of the allegedly pirated tapes were not shown to the Court during the application gives some
misgivings as to the truth of that bare statement of the NBI agent on the witness stand.
Again as the application and search proceedings is a prelude to the filing of criminal cases under PD 49, the copyright
infringement law, and although what is required for the issuance thereof is merely the presence of probable cause,
that probable cause must be satisfactory to the Court, for it is a time-honored precept that proceedings to put a man
to task as an offender under our laws should be interpreted in strictissimi juris against the government and liberally
in favor of the alleged offender.
xxx xxx xxx
This doctrine has never been overturned, and as a matter of fact it had been enshrined in the Bill of Rights in our
1973 Constitution.
So that lacking in persuasive effect, the allegation that master tapes were viewed by the NBI and were compared to
the purchased and seized video tapes from the respondents' establishments, it should be dismissed as not supported
by competent evidence and for that matter the probable cause hovers in that grey debatable twilight zone between
black and white resolvable in favor of respondents herein.
But the glaring fact is that "Cocoon," the first video tape mentioned in the search warrant, was not even duly
registered or copyrighted in the Philippines. (Annex C of Opposition p. 152 record.) So, that lacking in the requisite
presentation to the Court of an alleged master tape for purposes of comparison with the purchased evidence of the
video tapes allegedly pirated and those seized from respondents, there was no way to determine whether there
really was piracy, or copying of the film of the complainant Twentieth Century Fox.
xxx xxx xxx
The lower court, therefore, lifted the three (3) questioned search warrants in the absence of probable cause that the
private respondents violated P.D. 49. As found out by the court, the NBI agents who acted as witnesses did not have
personal knowledge of the subject matter of their testimony which was the alleged commission of the offense by the
private respondents. Only the petitioner's counsel who was also a witness during the application for the issuance of
the search warrants stated that he had personal knowledge that the confiscated tapes owned by the private
respondents were pirated tapes taken from master tapes belonging to the petitioner. However, the lower court did
not give much credence to his testimony in view of the fact that the master tapes of the allegedly pirated tapes were
not shown to the court during the application (Emphasis ours).
The italicized passages readily expose the reason why the trial court therein required the presentation of the master
tapes of the allegedly pirated films in order to convince itself of the existence of probable cause under the factual
milieu peculiar to that case. In the case at bar, respondent appellate court itself observed:
We feel that the rationale behind the aforequoted doctrine is that the pirated copies as well as the master tapes,
unlike the other types of personal properties which may be seized, were available for presentation to the court at
the time of the application for a search warrant to determine the existence of the linkage of the copyrighted films
with the pirated ones. Thus, there is no reason not the present them (Emphasis supplied ).50
In fine, the supposed pronunciamento in said case regarding the necessity for the presentation of the master tapes
of the copyrighted films for the validity of search warrants should at most be understood to merely serve as a
guidepost in determining the existence of probable cause in copyright infringement cases where there is doubt as to
the true nexus between the master tape and the pirated copies. An objective and careful reading of the decision in
said case could lead to no other conclusion than that said directive was hardly intended to be a sweeping and
inflexible requirement in all or similar copyright infringement cases. Judicial dicta should always be construed within
the factual matrix of their parturition, otherwise a careless interpretation thereof could unfairly fault the writer with
the vice of overstatement and the reader with the fallacy of undue generalization.
In the case at bar, NBI Senior Agent Lauro C. Reyes who filed the application for search warrant with the lower court
following a formal complaint lodged by petitioners, judging from his affidavit51 and his deposition,52 did testify on
matters within his personal knowledge based on said complaint of petitioners as well as his own investigation and
surveillance of the private respondents' video rental shop. Likewise, Atty. Rico V. Domingo, in his capacity as
attorney-in-fact, stated in his affidavit53 and further expounded in his deposition54 that he personally knew of the
fact that private respondents had never been authorized by his clients to reproduce, lease and possess for the
purpose of selling any of the copyrighted films.
Both testimonies of Agent Reyes and Atty. Domingo were corroborated by Rene C. Baltazar, a private researcher
retained by Motion Pictures Association of America, Inc. (MPAA, Inc.), who was likewise presented as a witness
during the search warrant proceedings.55 The records clearly reflect that the testimonies of the abovenamed
witnesses were straightforward and stemmed from matters within their personal knowledge. They displayed none of
the ambivalence and uncertainty that the witnesses in the 20th Century Fox case exhibited. This categorical
forthrightness in their statements, among others, was what initially and correctly convinced the trial court to make a
finding of the existence of probable cause.
There is no originality in the argument of private respondents against the validity of the search warrant, obviously
borrowed from 20th Century Fox, that petitioners' witnesses — NBI Agent Lauro C. Reyes, Atty. Rico V. Domingo and
Rene C. Baltazar — did not have personal knowledge of the subject matter of their respective testimonies and that
said witnesses' claim that the video tapes were pirated, without stating the manner by which these were pirated, is a
conclusion of fact without basis.56 The difference, it must be pointed out, is that the records in the present case
reveal that (1) there is no allegation of misrepresentation, much less a finding thereof by the lower court, on the part
of petitioners' witnesses; (2) there is no denial on the part of private respondents that the tapes seized were
illegitimate copies of the copyrighted ones not have they shown that they were given any authority by petitioners to
copy, sell, lease, distribute or circulate, or at least, to offer for sale, lease, distribution or circulation the said video
tapes; and (3) a discreet but extensive surveillance of the suspected area was undertaken by petitioners' witnesses
sufficient to enable them to execute trustworthy affidavits and depositions regarding matters discovered in the
course thereof and of which they have personal knowledge.
It is evidently incorrect to suggest, as the ruling in 20th Century Fox may appear to do, that in copyright infringement
cases, the presentation of master tapes of the copyrighted films is always necessary to meet the requirement of
probable cause and that, in the absence thereof, there can be no finding of probable cause for the issuance of a
search warrant. It is true that such master tapes are object evidence, with the merit that in this class of evidence the
ascertainment of the controverted fact is made through demonstrations involving the direct use of the senses of the
presiding magistrate.57 Such auxiliary procedure, however, does not rule out the use of testimonial or documentary
evidence, depositions, admissions or other classes of evidence tending to prove the factum probandum,58 especially
where the production in court of object evidence would result in delay, inconvenience or expenses out of proportion
to its evidentiary value.59
Of course, as a general rule, constitutional and statutory provisions relating to search warrants prohibit their
issuance except on a showing of probable cause, supported by oath or affirmation. These provisions prevent the
issuance of warrants on loose, vague, or doubtful bases of fact, and emphasize the purpose to protect against all
general searches.60 Indeed, Article III of our Constitution mandates in Sec. 2 thereof that no search warrant shall
issue except upon probable cause to be determined personally by the judge after examination under oath or
affirmation of the complainant and the witnesses he may produce, and particularly describing the place to be
searched and the things to be seized; and Sec. 3 thereof provides that any evidence obtained in violation of the
preceding section shall be inadmissible for any purpose in any proceeding.
These constitutional strictures are implemented by the following provisions of Rule 126 of the Rules of Court:
Sec. 3. Requisites for issuing search warrant. — A search warrant shall not issue but upon probable cause in
connection with one specific offense to be determined personally by the judge after examination under oath or
affirmation of the complainant and the witnesses he may produce, and particularly describing the place to be
searched and the things to be seized.
Sec. 4. Examination of complainant; record. — The judge must, before issuing the warrant, personally examine in the
form of searching questions and answers, in writing and under oath the complainant and any witnesses he may
produce on facts personally known to them and attach to the record their sworn statements together with any
affidavits submitted.
Sec. 5. Issuance and form of search warrant. — If the judge is thereupon satisfied of the existence of facts upon
which the application is based, or that there is probable cause to believe that they exist, he must issue the warrant,
which must be substantially in the form prescribed by these Rules.
The constitutional and statutory provisions of various jurisdictions requiring a showing of probable cause before a
search warrant can be issued are mandatory and must be complied with, and such a showing has been held to be an
unqualified condition precedent to the issuance of a warrant. A search warrant not based on probable cause is a
nullity, or is void, and the issuance thereof is, in legal contemplation, arbitrary.61 It behooves us, then, to review the
concept of probable cause, firstly, from representative holdings in the American jurisdiction from which we
patterned our doctrines on the matter.
Although the term "probable cause" has been said to have a well-defined meaning in the law, the term is
exceedingly difficult to define, in this case, with any degree of precision; indeed, no definition of it which would
justify the issuance of a search warrant can be formulated which would cover every state of facts which might arise,
and no formula or standard, or hard and fast rule, may be laid down which may be applied to the facts of every
situation.62 As to what acts constitute probable cause seem incapable of definition.63 There is, of necessity, no
exact test.64
At best, the term "probable cause" has been understood to mean a reasonable ground of suspicion, supported by
circumstances sufficiently strong in themselves to warrant a cautious man in the belief that the person accused is
guilty of the offense with which he is charged;65 or the existence of such facts and circumstances as would excite an
honest belief in a reasonable mind acting on all the facts and circumstances within the knowledge of the magistrate
that the charge made by the applicant for the warrant is true.66
Probable cause does not mean actual and positive cause, nor does it import absolute certainty. The determination of
the existence of probable cause is not concerned with the question of whether the offense charged has been or is
being committed in fact, or whether the accused is guilty or innocent, but only whether the affiant has reasonable
grounds for his belief.67 The requirement is less than certainty or proof , but more than suspicion or possibility.68
In Philippine jurisprudence, probable cause has been uniformly defined as such facts and circumstances which would
lead a reasonable, discreet and prudent man to believe that an offense has been committed, and that the objects
sought in connection with the offense are in the place sought to be searched.69 It being the duty of the issuing
officer to issue, or refuse to issue, the warrant as soon as practicable after the application therefor is filed,70 the
facts warranting the conclusion of probable cause must be assessed at the time of such judicial determination by
necessarily using legal standards then set forth in law and jurisprudence, and not those that have yet to be crafted
thereafter.
As already stated, the definition of probable cause enunciated in Burgos, Sr. vs. Chief of Staff, et al., supra, vis-a-vis
the provisions of Sections 3 and 4 of Rule 126, were the prevailing and controlling legal standards, as they continue
to be, by which a finding of probable cause is tested. Since the propriety of the issuance of a search warrant is to be
determined at the time of the application therefor, which in turn must not be too remote in time from the
occurrence of the offense alleged to have been committed, the issuing judge, in determining the existence of
probable cause, can and should logically look to the touchstones in the laws theretofore enacted and the decisions
already promulgated at the time, and not to those which had not yet even been conceived or formulated.
It is worth noting that neither the Constitution nor the Rules of Court attempt to define probable cause, obviously
for the purpose of leaving such matter to the court's discretion within the particular facts of each case. Although the
Constitution prohibits the issuance of a search warrant in the absence of probable cause, such constitutional
inhibition does not command the legislature to establish a definition or formula for determining what shall
constitute probable cause.71 Thus, Congress, despite its broad authority to fashion standards of reasonableness for
searches and seizures,72 does not venture to make such a definition or standard formulation of probable cause, nor
categorize what facts and circumstances make up the same, much less limit the determination thereof to and within
the circumscription of a particular class of evidence, all in deference to judicial discretion and probity.73
Accordingly, to restrict the exercise of discretion by a judge by adding a particular requirement (the presentation of
master tapes, as intimated by 20th Century Fox) not provided nor implied in the law for a finding of probable cause is
beyond the realm of judicial competence or statesmanship. It serves no purpose but to stultify and constrict the
judicious exercise of a court's prerogatives and to denigrate the judicial duty of determining the existence of
probable cause to a mere ministerial or mechanical function. There is, to repeat, no law or rule which requires that
the existence of probable cause is or should be determined solely by a specific kind of evidence. Surely, this could
not have been contemplated by the framers of the Constitution, and we do not believe that the Court intended the
statement in 20th Century Fox regarding master tapes as the dictum for all seasons and reasons in infringement
cases.
Turning now to the case at bar, it can be gleaned from the records that the lower court followed the prescribed
procedure for the issuance of a search warrant: (1) the examination under oath or affirmation of the complainant
and his witnesses, with them particularly describing the place to be searched and the things to be seized; (2) an
examination personally conducted by the judge in the form of searching questions and answers, in writing and under
oath of the complainant and witnesses on facts personally known to them; and, (3) the taking of sworn statements,
together with the affidavits submitted, which were duly attached to the records.
Thereafter, the court a quo made the following factual findings leading to the issuance of the search warrant now
subject of this controversy:
In the instant case, the following facts have been established: (1) copyrighted video tapes bearing titles enumerated
in Search Warrant No. 87-053 were being sold, leased, distributed or circulated, or offered for sale, lease,
distribution, or transferred or caused to be transferred by defendants at their video outlets, without the written
consent of the private complainants or their assignee; (2) recovered or confiscated from defendants' possession
were video tapes containing copyrighted motion picture films without the authority of the complainant; (3) the
video tapes originated from spurious or unauthorized persons; and (4) said video tapes were exact reproductions of
the films listed in the search warrant whose copyrights or distribution rights were owned by complainants.
The basis of these facts are the affidavits and depositions of NBI Senior Agent Lauro C. Reyes, Atty. Rico V. Domingo,
and Rene C. Baltazar. Motion Pictures Association of America, Inc. (MPAA) thru their counsel, Atty. Rico V. Domingo,
filed a complaint with the National Bureau of Investigation against certain video establishments one of which is
defendant, for violation of PD No. 49 as amended by PD No. 1988. Atty. Lauro C. Reyes led a team to conduct
discreet surveillance operations on said video establishments. Per information earlier gathered by Atty. Domingo,
defendants were engaged in the illegal sale, rental, distribution, circulation or public exhibition of copyrighted films
of MPAA without its written authority or its members. Knowing that defendant Sunshine Home Video and its
proprietor, Mr. Danilo Pelindario, were not authorized by MPAA to reproduce, lease, and possess for the purpose of
selling any of its copyrighted motion pictures, instructed his researcher, Mr. Rene Baltazar to rent two video
cassettes from said defendants on October 21, 1987. Rene C. Baltazar proceeded to Sunshine Home Video and
rented tapes containing Little Shop of Horror. He was issued rental slip No. 26362 dated October 21, 1987 for P10.00
with a deposit of P100.00. Again, on December 11, 1987, the returned to Sunshine Home Video and rented Robocop
with rental slip No. 25271 also for P10.00: On the basis of the complaint of MPAA thru counsel, Atty. Lauro C. Reyes
personally went to Sunshine Home Video at No. 6 Mayfair Center, Magallanes Commercial Center, Makati. His last
visit was on December 7, 1987. There, he found the video outlet renting, leasing, distributing video cassette tapes
whose titles were copyrighted and without the authority of MPAA.
Given these facts, a probable cause exists. . . .74
The lower court subsequently executed a volte-face, despite its prior detailed and substantiated findings, by stating
in its order of November 22, 1988 denying petitioners' motion for reconsideration and quashing the search warrant
that —
. . . The two (2) cases have a common factual milieu; both involve alleged pirated copyrighted films of private
complainants which were found in the possession or control of the defendants. Hence, the necessity of the
presentation of the master tapes from which the pirated films were allegedly copied is necessary in the instant case,
to establish the existence of probable cause.75
Being based solely on an unjustifiable and improper retroactive application of the master tape requirement
generated by 20th Century Fox upon a factual situation completely different from that in the case at bar, and
without anything more, this later order clearly defies elemental fair play and is a gross reversible error. In fact, this
observation of the Court in La Chemise Lacoste, S.A. vs. Fernandez, et al., supra, may just as easily apply to the
present case:
A review of the grounds invoked . . . in his motion to quash the search warrants reveals the fact that they are not
appropriate for quashing a warrant. They are matters of defense which should be ventilated during the trial on the
merits of the case. . . .
As correctly pointed out by petitioners, a blind espousal of the requisite of presentation of the master tapes in
copyright infringement cases, as the prime determinant of probable cause, is too exacting and impracticable a
requirement to be complied with in a search warrant application which, it must not be overlooked, is only an
ancillary proceeding. Further, on realistic considerations, a strict application of said requirement militates against the
elements of secrecy and speed which underlie covert investigative and surveillance operations in police enforcement
campaigns against all forms of criminality, considering that the master tapes of a motion picture required to be
presented before the court consists of several reels contained in circular steel casings which, because of their bulk,
will definitely draw attention, unlike diminutive objects like video tapes which can be easily concealed.76 With
hundreds of titles being pirated, this onerous and tedious imposition would be multiplied a hundredfold by judicial
fiat, discouraging and preventing legal recourses in foreign jurisdictions.
Given the present international awareness and furor over violations in large scale of intellectual property rights,
calling for transnational sanctions, it bears calling to mind the Court's admonition also in La Chemise Lacoste, supra,
that —
. . . . Judges all over the country are well advised to remember that court processes should not be used as
instruments to, unwittingly or otherwise, aid counterfeiters and intellectual pirates, tie the hands of the law as it
seeks to protect the Filipino consuming public and frustrate executive and administrative implementation of solemn
commitments pursuant to international conventions and treaties.
III
The amendment to Section 56 of Presidential Decree No. 49 by Presidential Decree No. 1987,77 which should here
be publicized judicially, brought about the revision of its penalty structure and enumerated additional acts
considered violative of said decree on intellectual property, namely, (1) directly or indirectly transferring or causing
to be transferred any sound recording or motion picture or other audio-visual works so recorded with intent to sell,
lease, publicly exhibit or cause to be sold, leased or publicly exhibited, or to use or cause to be used for profit such
articles on which sounds, motion pictures, or other audio-visual works are so transferred without the written
consent of the owner or his assignee; (2) selling, leasing, distributing, circulating, publicly exhibiting, or offering for
sale, lease, distribution, or possessing for the purpose of sale, lease, distribution, circulation or public exhibition any
of the abovementioned articles, without the written consent of the owner or his assignee; and, (3) directly or
indirectly offering or making available for a fee, rental, or any other form of compensation any equipment,
machinery, paraphernalia or any material with the knowledge that such equipment, machinery, paraphernalia or
material will be used by another to reproduce, without the consent of the owner, any phonograph record, disc, wire,
tape, film or other article on which sounds, motion pictures or other audio-visual recordings may be transferred, and
which provide distinct bases for criminal prosecution, being crimes independently punishable under Presidential
Decree No. 49, as amended, aside from the act of infringing or aiding or abetting such infringement under Section
29.
The trial court's finding that private respondents committed acts in blatant transgression of Presidential Decree No.
49 all the more bolsters its findings of probable cause, which determination can be reached even in the absence of
master tapes by the judge in the exercise of sound discretion. The executive concern and resolve expressed in the
foregoing amendments to the decree for the protection of intellectual property rights should be matched by
corresponding judicial vigilance and activism, instead of the apathy of submitting to technicalities in the face of
ample evidence of guilt.
The essence of intellectual piracy should be essayed in conceptual terms in order to underscore its gravity by an
appropriate understanding thereof. Infringement of a copyright is a trespass on a private domain owned and
occupied by the owner of the copyright, and, therefore, protected by law, and infringement of copyright, or piracy,
which is a synonymous term in this connection, consists in the doing by any person, without the consent of the
owner of the copyright, of anything the sole right to do which is conferred by statute on the owner of the
copyright.78
A copy of a piracy is an infringement of the original, and it is no defense that the pirate, in such cases, did not know
what works he was indirectly copying, or did not know whether or not he was infringing any copyright; he at least
knew that what he was copying was not his, and he copied at his peril. In determining the question of infringement,
the amount of matter copied from the copyrighted work is an important consideration. To constitute infringement, it
is not necessary that the whole or even a large portion of the work shall have been copied. If so much is taken that
the value of the original is sensibly diminished, or the labors of the original author are substantially and to an
injurious extent appropriated by another, that is sufficient in point of law to constitute a
piracy.79 The question of whether there has been an actionable infringement of a literary, musical, or artistic work in
motion pictures, radio or television being one of fact,80 it should properly be determined during the trial. That is the
stage calling for conclusive or preponderating evidence, and not the summary proceeding for the issuance of a
search warrant wherein both lower courts erroneously require the master tapes.
In disregarding private respondent's argument that Search Warrant No. 87-053 is a general warrant, the lower court
observed that "it was worded in a manner that the enumerated seizable items bear direct relation to the offense of
violation of Sec. 56 of PD 49 as amended. It authorized only the seizur(e) of articles used or intended to be used in
the unlawful sale, lease and other unconcerted acts in violation of PD 49 as amended. . . .81
On this point, Bache and Co., (Phil.), Inc., et al. vs. Ruiz, et al.,82 instructs and enlightens:
A search warrant may be said to particularly describe the things to be seized when the description therein is as
specific as the circumstances will ordinarily allow (People vs. Rubio, 57 Phil. 384); or when the description expresses
a conclusion of fact — not of law — by which the warrant officer may be guided in making the search and seizure
(idem., dissent of Abad Santos, J.,); or when the things described are limited to those which bear direct relation to
the offense for which the warrant is being issued (Sec 2, Rule 126, Revised Rules of Court). . . . If the articles desired
to be seized have any direct relation to an offense committed, the applicant must necessarily have some evidence,
other than those articles, to prove the said offense; and the articles subject of search and seizure should come in
handy merely to strengthen such evidence. . . .
On private respondents' averment that the search warrant was made applicable to more than one specific offense
on the ground that there are as many offenses of infringement as there are rights protected and, therefore, to issue
one search warrant for all the movie titles allegedly pirated violates the rule that a search warrant must be issued
only in connection with one specific offense, the lower court said:
. . . . As the face of the search warrant itself indicates, it was issued for violation of Section 56, PD 49 as amended
only. The specifications therein (in Annex A) merely refer to the titles of the copyrighted motion pictures/films
belonging to private complainants which defendants were in control/possession for sale, lease, distribution or public
exhibition in contravention of Sec. 56, PD 49 as amended.83
That there were several counts of the offense of copyright infringement and the search warrant uncovered several
contraband items in the form of pirated video tapes is not to be confused with the number of offenses charged. The
search warrant herein issued does not violate the one-specific-offense rule.
It is pointless for private respondents to insist on compliance with the registration and deposit requirements under
Presidential Decree No. 49 as prerequisites for invoking the court's protective mantle in copyright infringement
cases. As explained by the court below:
Defendants-movants contend that PD 49 as amended covers only producers who have complied with the
requirements of deposit and notice (in other words registration) under Sections 49 and 50 thereof. Absent such
registration, as in this case, there was no right created, hence, no infringement under PD 49 as amended. This is not
well-taken.
As correctly pointed out by private complainants-oppositors, the Department of Justice has resolved this legal
question as far back as December 12, 1978 in its Opinion No. 191 of the then Secretary of Justice Vicente Abad
Santos which stated that Sections 26 and 50 do not apply to cinematographic works and PD No. 49 "had done away
with the registration and deposit of cinematographic works" and that "even without prior registration and deposit of
a work which may be entitled to protection under the Decree, the creator can file action for infringement of its
rights". He cannot demand, however, payment of damages arising from infringement. The same opinion stressed
that "the requirements of registration and deposit are thus retained under the Decree, not as conditions for the
acquisition of copyright and other rights, but as prerequisites to a suit for damages". The statutory interpretation of
the Executive Branch being correct, is entitled (to) weight and respect.
xxx xxx xxx
Defendants-movants maintain that complainant and his witnesses led the Court to believe that a crime existed when
in fact there was none. This is wrong. As earlier discussed, PD 49 as amended, does not require registration and
deposit for a creator to be able to file an action for infringement of his rights. These conditions are merely pre-
requisites to an action for damages. So, as long as the proscribed acts are shown to exist, an action for infringement
may be initiated.84
Accordingly, the certifications85 from the Copyright Section of the National Library, presented as evidence by private
respondents to show non-registration of some of the films of petitioners, assume no evidentiary weight or
significance whatsoever.
Furthermore, a closer review of Presidential Decree No. 49 reveals that even with respect to works which are
required under Section 26 thereof to be registered and with copies to deposited with the National Library, such as
books, including composite and cyclopedic works, manuscripts, directories and gazetteers; and periodicals, including
pamphlets and newspapers; lectures, sermons, addresses, dissertations prepared for oral delivery; and letters, the
failure to comply with said requirements does not deprive the copyright owner of the right to sue for infringement.
Such non-compliance merely limits the remedies available to him and subjects him to the corresponding sanction.
The reason for this is expressed in Section 2 of the decree which prefaces its enumeration of copyrightable works
with the explicit statement that "the rights granted under this Decree shall, from the moment of creation, subsist
with respect to any of the following classes of works." This means that under the present state of the law, the
copyright for a work is acquired by an intellectual creator from the moment of creation even in the absence of
registration and deposit. As has been authoritatively clarified:
The registration and deposit of two complete copies or reproductions of the work with the National Library within
three weeks after the first public dissemination or performance of the work, as provided for in Section 26 (P.D. No.
49, as amended), is not for the purpose of securing a copyright of the work, but rather to avoid the penalty for non-
compliance of the deposit of said two copies and in order to recover damages in an infringement suit.86
One distressing observation. This case has been fought on the basis of, and its resolution long delayed by resort to,
technicalities to a virtually abusive extent by private respondents, without so much as an attempt to adduce any
credible evidence showing that they conduct their business legitimately and fairly. The fact that private respondents
could not show proof of their authority or that there was consent from the copyright owners for them to sell, lease,
distribute or circulate petitioners' copyrighted films immeasurably bolsters the lower court's initial finding of
probable cause. That private respondents are licensed by the Videogram Regulatory Board does not insulate them
from criminal and civil liability for their unlawful business practices. What is more deplorable is that the
reprehensible acts of some unscrupulous characters have stigmatized the Philippines with an unsavory reputation as
a hub for intellectual piracy in this part of the globe, formerly in the records of the General Agreement on Tariffs and
Trade and, now, of the World Trade Organization. Such acts must not be glossed over but should be denounced and
repressed lest the Philippines become an international pariah in the global intellectual community.
WHEREFORE, the assailed judgment and resolution of respondent Court of Appeals, and necessarily inclusive of the
order of the lower court dated November 22, 1988, are hereby REVERSED and SET ASIDE. The order of the court a
quo of September 5, 1988 upholding the validity of Search Warrant No. 87-053 is hereby REINSTATED, and said court
is DIRECTED to take and expeditiously proceed with such appropriate proceedings as may be called for in this case.
Treble costs are further assessed against private respondents.
SO ORDERED.
CHAPTER IX: INTERPRETATION OF CONTRACTS
[G.R. Nos. L-47859 & L-57132. July 10, 1981.]
SAN MAURICIO MINING COMPANY, MARSMAN AND COMPANY, INC., and PEDRO L. MOYA, Petitioners-Appellants, v.
HONORABLE CONSTANTE A. ANCHETA, as Presiding Judge of Branch III, Court of First Instance of Camarines Norte,
PHILIPPINE SMELTERS CORPORATION, NATIONAL SHIPYARDS AND STEEL CORPORATION, DIRECTOR OF LANDS,
COMMISSIONER OF LAND REGISTRATION and REGISTER OF DEEDS OF CAMARINES NORTE, Respondents-Appellees.
Arturo A. Alafriz, for Petitioners.
Benjamin H. Aquino for Private Respondents.
SYNOPSIS
In a Deed of Transfer dated November 19, 1957, SAN MAURICIO sold "all of its rights, participation, equities and
interests in and to those twenty (20) mining claims" located on certain parcels of land as well as all improvements
thereon to NASSCO. On December 23, 1968, President Marcos issued Proclamation 500 withdrawing the subject
property from sale or settlement and placing it under the administration of NASSCO. On November 23, 1973, despite
Proclamation 500, NASSCO reconveyed to SAN MAURICIO (and MARSMAN) the "surface rights" over the subject
parcels of land. On December 6, 1975, Presidential Decree 837 gave NASSCO the authority to sell the subject parcels
of land and their improvements pursuant to which NASSCO sold the same to SMELTERS. Consequently, on August
16, 1976, MARSMAN (successor in interest of SAN MAURICIO) and SAN MAURICIO caused to be annotated first, on
the original title of NASSCO, then, on the first title of SMELTERS, annotation of adverse claim, which was
subsequently carried over in SMELTERS’ subsequent titles. SMELTERS thus filed a complaint for "Removal of Cloud
over (its) Torrens Certificate of Title, (and) Declaration of Nullity of Adverse Claim and (for) Damages" against
defendants SAN MAURICIO and MARSMAN. On September 22, 1977, the trial court issued a partial judgment
declaring plaintiff SMELTERS as the lawful owner of Lot 761-C (the subject property) as against the defendants and
issued a writ of execution pending appeal. Later, it rendered its final judgment ordering cancellation of the
annotation of adverse claim appearing on certain titles in the name of SMELTERS, declaring SMELTERS the true and
absolute owner of the land and improvements covered by the said Transfer Certificate of Title, and entitled to
possession thereof and to all surface rights therein. On petition for review to the Supreme Court, SAN MAURICIO and
MARSMAN claim that since what SAN MAURICIO sold to NASSCO on November 19, 1957 was only "surface rights"
over the disputed parcels of land and not the mining claims and the mineral rights thereon, P.D. 837 and
Proclamation 500 had deprived SAN MAURICIO of a vested right over the same.
The Supreme Court held that it is clear that by the Deed of Transfer dated November 19, 1957, NASSCO acquired
from SAN MAURICIO not only "surface rights" but actually its mining claims and mineral rights so that neither P.D.
837 nor Proclamation 500 deprived either MARSMAN OR SAN MAURICIO of any vested rights in the land in dispute;
and consequently, sale of the property of NASSCO to SMELTERS is legal and valid.
SYLLABUS
1. CIVIL LAW; CONTRACTS; CONSTRUCTION AND INTERPRETATION THEREOF; UNAMBIGUOUS LANGUAGE OF

DOCUMENT IN CASE AT BAR LEAVES NO ROOM FOR INTERPRETATION. — The primary and elementary rule of
construction of documents is that when the words or language thereof is clear and plain or readily understandable
by any ordinary reader thereof, there is absolutely no room for interpretation or construction anymore. In the case
at bar, We cannot close Our eyes to the unambiguous tenor of document of sale executed by San Mauricio in favor
of NASSCO. Indeed, We have no basis to discuss "surface rights" at all, for those words do not even appear in the
document. Two other paragraphs thereof make explicit reference also to mining claims, not "surface rights."
2. ID.; ID.; ID.; ID.; PROPOSITION THAT INTENTION OF PARTIES MAY BE SHOWN BY CONTEMPORANEOUS AND
SUBSEQUENT ACTS, NOT APPLICABLE IN CASE AT BAR. — Appellants would want Us to devalue said document by
maintaining that "contemporaneous and subsequent acts of the vendor (SAN MAURICIO) and the vendee (NASSCO)
in relation therewith, covering a period of over 16 years, clearly show that they treated the instrument of sale to the
exclusion of the 20 mining claims, since NASSCO under its charter was not authorized to engage in mining." And the
case of Nielson & Co., Inc. v. Lepanto Consolidated Mining Co., 18 SCRA 1050-1051 and the earlier one of Canuto v.
Mariano, 37 Phil. 840 are cited to support the proposition that in the construction of contracts the intention of the
parties may be proven by subsequent acts. The Court does not see how the cases cited can be controlling in the case
at bar. What the case of Nielson had in contemplation was a contract the language of which evinced doubt as to the
intention of the parties, hence the ruling that once the intention is determined it becomes part of it as if "originally
expressed therein in unequivocal terms." As far as the Mariano case is concerned, it referred to agreements
subsequent to the questioned contract and the issue was whether or not parol evidence could be admitted to prove
the later agreement, and, naturally, this Court rightly held that such subsequent agreement was not covered by the
parol evidence rule, since the said rule covers only prior and contemporaneous agreements which are deemed to be
integrated into the written contract.
3. ID.; ID.; ID.; ID.; ID.; REBUTTED IN CASE AT BAR. — More importantly, however, appellants’ attempt to
demonstrate the so-called "contemporaneous and subsequent acts of vendor and vendee" is successfully rebutted in
appellees’ rejoinder brief. Two points: (1) that SAN MAURICIO filed affidavits of assessments from/after 1957 is
pointedly belied by Annex "A" of the said rejoinder brief, a certificate of Leopoldo L. de Jesus, Register of Deeds &
Mining Recorder of the Bureau of Mines at Daet, Camarines Norte that it is true that SAN MAURICIO owned 120
claims at Luklukan, Jose Panganiban, Camarines Norte, but that during the year 1958, the San Mauricio Mining
Company appears to have filed affidavits for only one hundred(100) claims, not including the twenty (20) claims
which appear to be the very claims subject of the conveyances and reconveyances of November 19, 1957 and
November 23, 1973. No rejoinder brief or any subsequent pleading having been filed by appellants, We take it that
such official certification can be considered as correct, if only because of the presumption of regularity that is
stamped on it as an official document, even if its original is not with Us, although We believe it can be presented
anytime; (2) as to the authority of NASSCO to engage in mining, suffice it to point out that under Executive Order No.
399, the Uniform Charter for Government Corporations, Section 3 thereof, and under No. 10 of the Annex A therein
referred to, it may be implied that the purchase in question was along the line of NASSCO’s ultimate functions. In any
event, the lack of authority or right to operate is not necessarily exclusive of the right to own. It is not difficult to
conceive the inconvenience and complications that can result from the ownership of surface rights separately from
that of the mineral claims underneath in the situation of NASSCO under the provisions aforequoted. Moreover, if
NASSCO needed only the surface rights and SAN MAURICIO really wanted to retain its mining claims, with each of
the parties having at their back and call, what with their respective resources, lawyers of nationally well recognized
talent and ability, why did they execute a document that anyone can only read otherwise?
4. ID.; ID.; ID.; ID.; NO ABROGATION OF VESTED RIGHT’S IN CASE AT BAR. — The incontrovertible fact that appears
clear and indisputable is that by the Deed of Transfer of November 19, 1957, NASSCO acquired from SAN MAURICIO
not only surface rights as claimed by petitioner, over the latter’s land in question but actually its mining claims and
mineral rights explicitly specified in said document. We hold, consequently, that neither Proclamation 500 which
withdrew the subject property from "sale or settlement" and placing it under the administration of NASSCO nor
Presidential Decree 837, later which gave NASSCO the authority to sell the said property and its improvements,
deprived either SAN MAURICIO or MARSMAN of any vested rights in the lands here in dispute.
5. ADMINISTRATIVE LAW; PUBLIC OFFICERS; MISTAKES THEREOF DO NOT LEGALLY BIND THE STATE; CASE AT BAR. —
We have carefully read the documents alluded to by appellants, beginning with the resale deed of November 23,
1973 thru the deed of assignment in favor of MARSMAN dated June 26, 1975, and, of course, all the other papers
which are subsidiary thereto, complimentary thereof or have evidently flowed therefrom, and truth to tell, they do
refer to "surface rights." But We cannot go against the hard fact We have found indubitably demonstrated by
appellees that the original transaction of November 19, 1957 definitely referred to mining claims. No plausible
explanation has been shown of the apparent discrepancy, and the only inference We can make out of it is that the
public officials who took part in the preparation thereof were either unaware of the exact import of the documents
or the situation they were dealing with, or, were induced by factors which cannot be revealed. In any event, the
public interest involved in the matter cannot be made to suffer, as We have already explained, by their strange or
unusual actuations.
6. CIVIL LAW; CONTRACTS; SALE; VALIDITY THEREOF IN CASE AT BAR. — What totally and definitely consolidated in
NASSCO the full ownership of the properties herein involved-mining claims, surface rights and improvements and all-
and made its authority to dispose of and transfer the same to appellees all the more unquestionable and, therefore,
the sale impugned here indisputably valid and legal, was the legislative recognition, even if, in the juridical sense, this
was practically superfluous, of NASSCO’s ownership of said properties with the right, power and authority to sell and
dispose of the same, by Presidential Decree 837 of December 6, 1975.
DECISION
BARREDO, J.:
Petition for review by way of appeal under Republic Act 5440 of the partial judgment rendered by respondent Court
of First Instance of Camarines Norte, Branch III and dated September 22, 1957 in its Civil Case No. 2882, an action for
annulment of contract and specific performance entitled Philippine Smelters Corporation v. San Mauricio Mining
Company, Et Al., which subsequently was overtaken and consolidated with the appeal of the final judgment of the
same case by the same judge rendered on August 21, 1979, which although first appealed to the Court of Appeals,
by motion of the appellees, to which appellants expressly manifested they had no objection, was ordered by Us to
be forwarded to this Court in our resolution of March 12, 1980. At that time, the briefs of appellants San Mauricio
Mining and Marsman & Co., and Pedro Moya, who came later as an intervenor, as well as that of Philippine Smelters
Corporation, as appellee, had already been filed with the Court of Appeals, (but sent to this Court with the record of
the other case.) and so, only the reply brief of appellants was filed directly with this Court followed in due time by
the Rejoinder to Appellant’s Brief filed by appellee dated July 18, 1980. No further pleading appears in the record to
have been filed by appellants.chanrobles.com : virtual law library
For reasons that would be obvious later in this decision, and considering the view We are taking of the appeal of the
final judgment of the trial court of August 21, 1979, We will first dispose of the said later appeal. Our decision of the
latter will make the petition for review of the partial judgment virtually moot and academic.
The subject matter of these cases refer to a parcel of land located at Panganiban, Camarines Norte, with an area
appearing to be a little over 200 hectares. It was titled in the name of herein respondent-appellee Philippine
Smelters Corporation, hereinafter to be referred to as SMELTERS, in Transfer Certificate of Title No. 13060 of the
Office of the Register of Deeds of Camarines Norte by virtue of deed of sale in its favor executed on December 29,
1975 by the National Shipyards and Steel Corporation, hereinafter to be referred to as NASSCO, the then holder of
Torrens Title OCT 0440 over the same. Later on, however, SMELTERS subdivided the property into several lots and
obtained in consequence Transfer Certificates of Title Nos. 13502 to 13521, inclusive.
The controversy over said property started on February 28, 1977, because prior to that date, or, to be more exact,
on August 16, 1976, herein petitioners 1 San Mauricio Mining Company, hereinafter to be referred to as SAN
MAURICIO, and Marsman & Company, Inc., hereinafter to be referred to as MARSMAN, caused, thru their co-
petitioner 1 Pedro L. Moya, to be annotated first on the original title of NASSCO, then on the first title of SMELTERS,
an annotation of adverse claim, which was subsequently carried over in its later titles. In brief, the thrust of the said
annotation was the claim of SAN MAURICIO and MARSMAN that, inter alia, (1) on November 23, 1973, a contract of
sale and assignment of rights over the same property was executed by NASSCO in favor of SAN MAURICIO; (2) on
June 26, 1975, NASSCO also executed a deed of assignment of rights over part thereof in favor of MARSMAN; and (3)
by virtue of a sheriff’s certificate of sale, MARSMAN acquired the mining rights, claims, and improvements over the
entire area which were previously foreclosed by MARSMAN, hence, the owner thereof became MARSMAN and
NASSCO had no right at all to transfer it to SMELTERS. (See pp. 2-3 of Appellants’ Brief.)
And so, on said date, February 28, 1977, SMELTERS filed the herein subject complaint with the trial court, as Civil
Case No. 2882, asking for "Removal of Cloud over (its) Torrens Certificates of Title, (and) Declaration of Nullity of
Adverse Claim and (for) Damages."
In their answer, SAN MAURICIO and MARSMAN alleged that on November 19, 1957 SAN MAURICIO executed in
favor of NASSCO a deed of absolute sale of the "surface rights" over 144.62 hectares of land covering its twenty
mineral claims in Jose Panganiban, Camarines Norte (meaning part of the land in question) "subject to a collateral
understanding between them to the effect that when NASSCO stops operation of the smelting plant thereon, or
abandons the site, SAN MAURICIO would have the first option to reacquire the ‘surface rights over its said mineral
claims and all the improvements thereon’, and that pursuant to said collateral agreement, on November 23, 1973
NASSCO reconveyed to it for a consideration of P200,000.00 the so-called ‘surface rights, etc.’ and (further), that on
June 26, 1975, NASSCO further reconveyed to MARSMAN, as successor-in-interest of SAN MAURICIO, all the ‘surface
rights’ over the mineral claims of the latter . . . embracing an (additional) area of 32.595 hectares." (Emphasis
supplied)
And most important of all, defendants claimed that "long prior to the sale executed by SAN MAURICIO — in favor of
NASSCO dated November 19, 1957, the first had valid and subsisting load claims staked by it within the area in
dispute herein, under and pursuant to the provisions of the Act of Congress of July 1, 1902, a list of which together
with the particulars of each claim appearing in Annex A-6 of the complaint, that MARSMAN - having succeeded to all
the rights and interests of SAN MAURICIO over the said claims duly applied for recognition of its mining rights
pursuant to Section 101 of Presidential Decree No. 463 and by order of the Director of Mines of September 23, 1976,
(?) duly recognized the mining rights of the defendant MARSMAN —" (Italics supplied) Thus, defendants and herein
appellants SAN MAURICIO and MARSMAN, posit in conclusion that the sale made by NASSCO in favor of plaintiff,
(herein appellee) dated December 29, 1975, — covering the properties embraced by the mineral claims of the (said)
defendants — is null and void —"
Evidently to reenforce their position in their answer, on May 17, 1977, SAN MAURICIO and MARSMAN filed a third-
party complaint against NASSCO, the Director of Lands, the Commissioner of Land Registration and the Register of
Deeds of Camarines Norte, alleging inter alia (and in a more detailed manner) that SAN MAURICIO, for and in
consideration of the sum of P200,000.00 executed in favor of NASSCO a Deed of Absolute Sale "of the surface rights
over 144.62 hectares of land covering 20 of its alleged patentable lode claims situated in Jose Panganiban,
Camarines Norte, allegedly located by its predecessors-in-interest under and pursuant to the provisions of the Act of
Congress of July 1, 1902, together with all the improvements thereon, to enable the government to implement the
decision of the then National Economic council, pursuant to the provisions of the Republic Act No. 1396, choosing
Jose Panganiban, Camarines Norte to be the site of the first pig iron smelting plant in the Philippines; that there was
a collateral agreement in said Deed of Absolute Sale between SAN MAURICIO and NASSCO to the effect that when
NASSCO stops the operation of the smelting plant or abandon the site, or whenever in the judgment of NASSCO the
area as acquired from SAN MAURICIO is in excess of its actual needs, SAN MAURICIO would have the option to
reacquire from NASSCO the surface rights over its mineral lode claims and all improvements thereon.
"It is further alleged that in November, 1973, NASSCO, for economic and technological reason stopped the operation
of smelting plant, and in the meantime, SAN MAURICIO decided to develop its mineral lode claims in the area in view
of which SAN MAURICIO applied with NASSCO for the repurchase of the surface rights and improvements
transferred by it under the Deed of Absolute Sale of November 19, 1957, subject to retention by NASSCO of such
surface rights as it may still need for its actual requirements. Pursuant to said request of SAN MAURICIO, NASSCO
supposedly reconveyed to SAN MAURICIO on November 23, 1973, all its rights and interests over the surface rights
covering the 12 mineral lode claims of SAN MAURICIO as listed in the said deed for P200,000.00 and a Contract of
Sale and Assignment of Rights was executed in favor of SAN MAURICIO. The Contract of Sale and Assignment of
Rights was supposed to have been approved by the Office of the President on January 15, 1974 under the first
endorsement of the same date of the Assistant Executive Secretary, Mr. Rolando B. Zamora. On October 21, 1974
MARSMAN acquired all the rights, title and interests of SAN MAURICIO in and to all the patentable mining claims of
the latter in Jose Panganiban including all the surface rights and improvements acquired by NASSCO from SAN
MAURICIO under the Deed of Sale of November 19, 1957, as the highest bidder for the sum of P3,961,935.75 at the
public auction thereof, conducted by the Provincial Sheriff of Camarines Norte; that on April 30, 1975 and May 29,
1975, MARSMAN sent to NASSCO a communication whereby MARSMAN offered to repurchase from NASSCO all such
rights and improvements thereon which are in excess of the actual needs of NASSCO, MARSMAN having decided to
continue and pursue the development of the mineral lode claims acquired by it and NASSCO, in consideration of the
fact that its smelting plant only needed about 10 hectares out of the area facing the Mambulao Bay, agreed by a
Deed of Assignment of Rights dated June 26, 1975 to assign to MARSMAN the surface rights over the mineral lode
claims described, registered in the name of SAN MAURICIO covering 32.575 hectares, together with all
improvements thereon for and in consideration of the sum of P32,595.50. The aforesaid Deed of Assignment of
Rights executed by NASSCO in favor of MARSMAN was approved allegedly by authority of the President on July 1,
1975.
"The Third-party complaint also states that on June 23, 1975, MARSMAN paid the sum of P45,000.00 by way of
compensation or amicable settlement in connection with Civil Case No. 1613, entitled ‘Victor delos Santos and
Amparo P. delos Santos v. San Mauricio Mining Company and National Shipyards and Steel Corporation,’ before the
Court of First Instance of Camarines Norte, and acquired from plaintiff therein (Amparo P. delos Santos) that certain
parcel of land together with the improvements thereon of her private ownership, having an aggregate area of
13.5244 (sic) hectares; that on July 4, 1975, SAN MAURICIO and MARSMAN, for and in consideration of P40,000.00
paid by them by way of compromise or settlement in Civil Case No. 1452, entitled ‘Gregorio Bamba, Sr. v. San
Mauricio Mining Company and National Shipyards and Steel Corporation’, for certain parcels of land acquired by
Gregorio Bamba from his predecessors with an aggregate area of 22 hectares; that within the area covered by the
aforementioned deeds, MARSMAN and SAN MAURICIO had located, staked, registered, occupied, explored and
exploited pursuant to the Act of Congress of the United States of July 1, 1902, patentable mineral lode claims more
particularly described therein, which lode claims were applied for by MARSMAN for recognition of mining rights
pursuant to Section 101 of PD 463.
"MARSMAN and SAN MAURICIO alleged further that on December 29, 1975, NASSCO, claiming title and ownership
over a parcel of land consisting of 170.2890 hectares situated in Jose Panganiban under and by authority of PD 837
transferred and conveyed ownership thereto in favor of SMELTERS for and in consideration of P85,144.50 under a
Deed of Sale executed by NASSCO in favor of SMELTERS, together with a certain area of about 50 hectares, which
embraces all the mineral lode claims, surface rights and improvements belonging to MARSMAN and SAN MAURICIO;
that under the provisions of PD 843 (this should be 837), the Bureau of Lands was directed to re-survey the property
where it was found that the area was 170.2890 hectares only but actually it was made to appear that the area of
202.1945 hectares or 32 hectares in excess of that legally authorized under PD 837; that pursuant to said PD, the
Commissioner of Land Registration issued the corresponding decree which served as the basis for the issuance by
the Register of Deeds of Camarines Norte covering transfer Certificate of Title No. 0440 on August 6, 1976, in the
name of NASSCO which was cancelled by Transfer Certificate of Title No. T-13060 in the name of SMELTERS, which
covers not only 170.2890 hectares as authorized by PD 837 not 202.1945 hectares as shown in Plan Pad-252381 but
actually 202.3 hectares, subdivided into 21 lots or 50 hectares in excess of the area delimited in PD 837; that the
Deed of Sale dated December 29, 1975 between NASSCO and SMELTERS, as well as Original Certificate of Title No.
0440, including but not limited to Transfer Certificate of Title Nos. 13060 and 13502 to 13521 are null and void in
that:jgc:chanrobles.com.ph
"(a) They all cover mineral lode claims located, registered, occupied, explored and exploited by MARSMAN and its
predecessors in interest, pursuant to and in accordance with the Act of Congress of July 1, 1902, the validity of its
mining rights thereunto having been recognized and approved by Order of the Director of Mines of September 23,
1976, Annex 9, pursuant to the provisions of Section 101 of Presidential Decree No. 463, which rights are still
subsisting and in full force and effect, with all dues, assessments and taxes due to the government fully paid up to
this date by MARSMAN and by law and established jurisprudence are no longer subject to disposition under the
Public Land Act (Mc Daniel v. Apacible and Cuista, 43 Phil. 749; Gold Greek Mining Co. v. Rodriguez, 66 Phil. 259, 265-
266; Salacot Mining v. Rodriguez, 67 Phil. 97)
"(b) NASSCO, by a Contract of Sale and Assignment of Rights of November 23, 1973 duly approved by the Office of
the President, Annex 2, previously sold and assigned in favor of SAN MAURICIO, for the sum of P200,000.00, 93.518
hectares of surface rights, including all improvements thereon, over 12 mineral claims as therein listed, which are all
embraced by the aforesaid sale made by NASSCO in favor of the plaintiff on December 29, 1975, Annex 11;
"(c) NASSCO, by a Deed of Assignment and Quitclaim of June 26, 1975, duly approved by the Office of the President,
Annex 4, had previously sold and assigned in favor of SAN MAURICIO, for the sum of P32,595.50, 32.575 hectares of
surface rights, including all improvements thereon, over five (5) mineral claims as therein listed, also all embraced by
the aforestated sale made by NASSCO in favor of the plaintiff on December 29, 1975, Annex 11;
"(d) NASSCO, as a party defendant in Civil Case No. 1613; entitled ‘Victor delos Santos and Amparo delos Santos v.
San Mauricio Mining Company and National Shipyards and Steel Corporation, before the court of First Instance of
Camarines Norte, is bound by the compromise settlement therein reached whereby Amparo P. delos Santos sold to
MARSMAN for the sum of P45,000.00, 13.52 hectares of per private ownership under a Deed of Assignment dated
June 23, 1975, Annex 5, which is also within the area object of the subsequent sale, Annex 11, made by NASSCO in
favor of the plaintiff on December 29, 1975;
"(e) NASSCO, as a party defendant in Civil Case No. 1452, entitled Gregorio Bamba, Sr., v. San Mauricio Mining
Company and National Shipyards and Steel Corporation, before the Court of First Instance of Camarines Norte, is
likewise bound by the compromise settlement therein reached whereby the Heirs of Gregorio Bamba, Sr., sold to
SAN MAURICIO and MARSMAN for the sum of P40,000.00, 22 ha., on July 4, 1975, Annex 6, which is also within the
area object of the subsequent sale, Annex 11, made by NASSCO in favor of the plaintiff on December 29, 1975;
"(f) NASSCO is bound by its collateral agreement with SAN MAURICIO, acknowledge by it (NASSCO) in its Contract of
Sale in favor of SAN MAURICIO of November 23, 1973, Annex 2, and its Deed of Assignment in favor of SAN
MAURICIO of June 26, 1975, Annex 4, granting SAN MAURICIO, for valuable consideration, the first right of option to
reacquire from NASSCO all the surface rights over its mineral claims and all improvements thereon if and when
NASSCO ceases operating its smelting plant, which right of option was never waived or otherwise abrogated; 2
"(g) NASSCO’s act in selling as it did herein, the same property twice to different entities and for valuable
consideration received from both is, a clear and palpable violation of law and the constitutional precept of
inviolability of Contracts;
"(h) NASSCO’s act purportedly under P.D. 813 (sic) in selling to the plaintiff the properties in question, the ownership
of which have previously become vested in MARSMAN and its predecessors in interest pursuant to the provisions of
the Constitution and the law, constitutes an unlawful divestment of property rights without due process of law; and
"(i) NASSCO’s act in selling the properties in question to the plaintiff under the Deed of Sale, Annex 11, was not
expressly authorized by the Office of the President, unlike the previous Deeds of Sale and Assignment in favor of SAN
MAURICIO, Annexes 2 and 4, which were expressly approved by authority of the President.
"In the same Third-party complaint, defendants SAN MAURICIO and MARSMAN stated that on May 2, 1975, long
before NASSCO executed the Deed of Sale of the properties in favor of SMELTERS, said defendants entered into an
operating agreement with METALS EXPLORATION ASIA, INC., for the development and exploitation of, among others,
the mineral lode claims referred to in the Third-party complaint." 2
On June 29, 1977 this third-party complaint was admitted by the court.
Answering the third-party complaint, NASSCO alleged as affirmative defenses that:jgc:chanrobles.com.ph
"11. It incorporates by reference all the material allegations contained in the foregoing paragraphs of this Answer;
"12. The parcel of land, sold by NASSCO to the plaintiff was part of the public domain the ownership and title to
which was transferred and invested upon it by Presidential Decree No. 837 issued on December 6, 1975;
"13. NASSCO could not have sold twice to different entities the parcel of land referred to in paragraph immediately
preceding specially considering that it was only on December 6, 1975, that NASSCO became the owner of said land;
"14. NASSCO merely allowed the Third party defendant to repurchase surface rights over the mineral lode claims, as
the land was part of the public domain the ownership of which did not belong to NASSCO;
"15. The Deed of Assignment of Rights dated June 26, 1975, executed by NASSCO in favor of MARSMAN was
approved with the condition that the government has reserved the right to withdraw any time, the use of the
surface rights by the assignee;
"16. The sale of the parcel of land by NASSCO in favor of the plaintiff is authorized under Section 3 of Presidential
Decree No. 837 which modified and/or repealed Proclamation No. 500;
"17. The sale of the subject parcel of land by NASSCO to the plaintiff was approved by the President on January 6,
1976;
"18. The corporate existence of NASSCO expired on January 6, 1976 and therefore it has lost its juridical personality
to be sued;
"19. Being strangers to the contract of said between Third-party defendant NASSCO and the plaintiff herein, third
party plaintiffs have no personality to impugn the validity of the contract;
"20. As NASSCO was already legally inexistent at the time of the filing of the Third-party complaint, the Court has not
acquired jurisdiction over the case (Domingo v. Yatco, L-11874, June 27, 1958);
"21. Third party plaintiffs are not entitled to the relief prayed for under the facts of the case.
"22. The acts of Third party defendant NASSCO have all been in accordance and in compliance with clear mandate of
the laws;" (Pp. 730-731, Record)
But as alleged in the petition in G.R. No. L-47859 which We note apparently concedes hypothetically as valid certain
alleged actions of the President which by evidence were later proven to be inaccurately alleged by third-party
plaintiff as well as MARSMAN and SAN MAURICIO:jgc:chanrobles.com.ph
"(c) That under date of April 11, 1977, petitioner (appellant herein) Moya adopted as his own the Answer with
Special Defenses filed by petitioners (his co-appellants) SAN MAURICIO and MARSMAN:jgc:chanrobles.com.ph
"(d) That under date of April 14, 1977, respondent (appellee herein) SMELTERS filed its Reply to the above Answer
with Special Defenses and Counterclaim filed by the petitioners, contending that the deeds of sale executed by
NASSCO in favor of SAN MAURICIO and MARSMAN, dated November 23, 1973 and June 21, 1975, respectively, were
notwithstanding the approval thereof by the President of the Philippines, subject to the reservation that the surface
rights object thereof may be withdrawn at any time as public interest may so require, and that by Presidential
Decree 837, issued on December 6, 1975 those same surface rights previously sold by NASSCO to SAN MAURICIO
and MARSMAN, respectively, were withdrawn from the latter and vested instead upon NASSCO with authority to sell
the same to any qualified entity." (Pp. 37-38, Record)
x x x
"(g) That on August 10, 1977, respondent SMELTERS filed a ‘Motion for Summary Judgment Affecting Lot 261-C of
Plan marked Exhibit 10 with Supporting Affidavit’, the pertinent allegation therein made in support thereof, being as
follows, to wit:chanrob1es virtual 1aw library
‘7. That per Exhibit 10 (Plan) it is very clear that defendants had admitted the surface rights of NASSCO in Parcel IV,
particularly Lot 261-C (except the alleged properties of Bamba which is situated in Lot 261-F and 261-K), therefore,
insofar as Lot 261-C which is a portion of Parcel IV of plan admitted by the defendants and marked as their Exhibit 10
(pre-trial) is without any issue for litigation as between the plaintiff and the defendants and that on the basis,
therefore, of the provisions of Rule 34, Sec. 4, that since Lot 261-C does not have any substantial controversy save
for the extent of damages which plaintiff has suffered as a result of the litigation therefore, summary judgment may
be obtained by the plaintiff hereof; and that judgment may be rendered by the Honorable Court on the portion of
the total parcels of land in controversy.
on the basis of which SMELTERS prayed the Court a quo ‘that a summary judgment be rendered, particularly on Lot
261-C which is a portion of Parcel IV of Exhibit 10.’ A copy of the said Motion for Summary Judgment is attached
hereto as Annex III-K, and the Plan, Exhibit 10 as Annex III-F-10 hereof;
"(h) That under date of August 24, 1977, the petitioners (appellants) filed their Reply and Opposition to Motion for
Summary Judgment above rendered to, contending:chanrob1es virtual 1aw library
‘(1) That the complaint as well as the Answer made no specific reference whatsoever with respect to Lot 261-C,
except that it is indicated as covered by Parcel IV in the plan, marked as Annex 10/Exhibit 10 (Annex III-F-10 hereof);
‘(2) That the area denominated as Parcel IV in the Plan Annex 10 Exhibit 10, is definitely claimed by them (now
petitioners herein) and, as a matter of fact, under their Third Party Complaint against NASSCO, they seek
reconveyance to them of the surface rights and all improvements thereon in accordance with their previous
agreement with NASSCO; and
‘(3) That important issues of fact and law raised in paragraphs XXVIII, XXIX, XXX, XXXI and XXXII of their Answer dated
March 30, 1977 (Annex III-E hereof) as restated in paragraph (e), subpars. (1) to (9) above, affect not only Lot 261-C
but the entire area involved in the case at bar.
and, stating that ‘our Supreme Court has precisely ruled that where the facts pleaded by the parties are disputed, or
contested, proceedings for a summary judgment cannot take the place of a trial’, citing the case of Singleton v.
Philippine Trust Company, 99 Phil. 97. A copy of their Reply and Opposition is attached hereto as Annex III-M.
"(i) That on September 22, 1977, the Honorable respondent Presiding Judge conducted a summary hearing on
SMELTERS’ Motion for Summary Judgment, (See Order, marked as Annex III-R) and on the same day, September 22,
1977, rendered with lightning speed, PARTIAL JUDGMENT on the case, notwithstanding the aforestated opposition
of the petitioners and the fact, firstly, that NASSCO had not even filed as yet its answer to the Third Party Complaint
filed by petitioners (Annex III-F-I) and Secondly, that trial of the case proper had not even started. The dispositive
portion of the PARTIAL JUDGMENT states as follows:chanrob1es virtual 1aw library
‘WHEREFORE, finding the Plaintiff’s Motion for Summary Judgment to be well-taken, accordingly, this Court enters
and promulgates a partial judgment on Lot No. 261-C declaring Plaintiff as the lawful owner thereof as against
defendants herein and that Register of Deeds of Camarines Norte is hereby directed to cancel adverse claim in so far
as Lot No. 261-C is concerned.
‘SO ORDERED.’
"A certified true copy of the PARTIAL JUDGMENT rendered by the respondent Honorable Presiding Judge now sought
to be declared as null and void, is attached hereto as Annex I hereof;
"(j) That under date of October 20, 1977, respondent SMELTERS filed a Motion for Issuance of a Writ of Execution
Pending Appeal, a copy of which is hereto attached as Annex IV-U hereof;
"(k) That under date of October 28, 1977, petitioners filed their Opposition to the said Motion for the Issuance of a
Writ of Execution Pending Appeal, a copy of which is hereto attached as Annex IV-V hereof;
"(l) That under date of November 3, 1977, respondent SMELTERS filed its Reply to petitioners’ Opposition a copy of
which is hereto attached as Annex IV-W;
"(m) That, meanwhile, under date of November 7, 1977, petitioner MOYA, as defendant in the aforestated case, filed
in his personal capacity and as a taxpayer of the Republic of the Philippines, his Counterclaim therein, marked as
Annex V hereof, assailing as illegal, null and void, if not immoral, the sale made by NASSCO of its entire property
object of the said main case, (which perforce, includes Lot 261-C), valued at approximately P45,000,000.00, for only
the measly sum of P85,144.50, of which only the initial payment of P8,414.45 has so far been paid by SMELTERS to
NASSCO, as evidenced by their Contract of Sale, Annex III-A-B hereof . The respondent Honorable Presiding Judge
having struck off from the record said MOYA’S Counterclaim, the matter is now the object of Certiorari proceedings
before the Court of Appeals, docketed therein as CA-G.R. No. SP-97582;
"(n) That on November 8, 1977, an Order was issued by the respondent Honorable Presiding Judge granting
respondent SMELTERS’ motion for the issuance of a writ of execution pending appeal, a certified true copy of which
is hereto attached as Annex II hereof; and, accordingly, on November 15, 1977, such writ of execution pending
appeal, was issued." (Pp. 41-44, Record)
The "summary" or partial judgment referred to, dated September 22, 1971 and the order of immediate execution of
November 8, 1977 are precisely the subjects of the petition in G.R. No. L-47859, which We have said We would
touch on, if still necessary, after We have resolved the appeal from the final decision now under discussion.
Now, "after the rendition of the Partial Judgment, and termination of the Pre-trial, or on November 7, 1977 to be
exact, defendant Moya, as taxpayer, sought the admission of a counterclaim filed on November 28, 1977 the salient
features of which read:jgc:chanrobles.com.ph
"1. That he adopts and begs to incorporate herein by reference each and all of the allegations made by his co-
defendants San Mauricio Mining Company and Marsman & Co., Inc., under date of March 10, 1977, and those
alleged by them in their Third-Party Complaint against the National Shipyards and Steel Corporation (NASSCO), Et Al.,
as Third party defendants, under date of May 17, 1977, duly admitted in the order of this Court on June 29, 1977;
"2. That in addition to those alleged by defendants and third-party plaintiffs San Mauricio Mining Company and
Marsman & Co., Inc., defendant respectfully alleges in his capacity as a taxpayer of this
Republic:jgc:chanrobles.com.ph
"(a) That the property in question herein covering an area of approximately 220 hectares, includes not only the
improvements thereon worth roughly Forty-Five Million Pesos (P45,000,000) but also the mineral lode claims
embraced thereby, worth several million pesos, now presently under the Operating Agreement dated May 2, 1975,
by and between Metals Exploration Asia, Inc., and San Mauricio Mining Company and Marsman & Co., Inc., marked
as exhibit in this case:jgc:chanrobles.com.ph
"(b) That the sale dated December 29, 1975, made by NASSCO in favor of the plaintiff Philippine Smelters
Corporation, marked as Annex B of the Complaint and covering all the properties referred to in par. (a) above, is
illegal, null and void, if not immoral, considering the fact that the NASSCO sold all of the said properties for the sum
of only P85,144.50, of which only the sum of P8,514.45 has been paid to date, the balance of P76,630.00 being
payable within ten years from January 1976 (see Annex F) when it is a fact alleged by the plaintiff that NASSCO’s
corporate existence terminated since January 1976.
"SMELTERS presented a Motion to Strike Out Moya’s counterclaim for reasons stated in the Motion dated December
1, 1977. The Court sustained SMELTERS and the defendant went to the Court of Appeals on a petition for certiorari
in CA-G.R. NO. SP-07502 entitled ‘Pedro L. Moya, Et Al., petitioners v. Honorable Constante A. Ancheta, Et Al.,
Respondent. By virtue of a Resolution of the intermediate Court promulgated on January 17, 1978, this Court was
restrained from proceeding with the trial of this case scheduled on February 20, and 21, 1978 pending further orders
from said Court. After a lapse of almost one (1) year, SMELTERS filed with the Court of Appeals a Manifestation
dated August 24, 1978 stating that without waiving any of the defenses that may be available to private respondent
(Philippine Smelters Corporation) as plaintiff in the Court below, against the counterclaim of petitioner Pedro L.
Moya, it was withdrawing its opposition to the admission of the counterclaim. The Court of Appeals in its Resolution
of November 29, 1978 dismissed the petition subject to the admission by the Court below of Moya’s counterclaim
but allowing SMELTERS to interpose its defenses thereto. The counterclaim was subsequently admitted.
"The case was reset for continuation of the hearing on various dates.
"At the hearings conducted only plaintiff adduced testimonial evidence, that of Assemblyman Pacificador, Mr.
Cantiller, Diego Gutierrez - an NBI Agent, and Mr. Jose T. Marcelo, Jr., President of the plaintiff company. Plaintiff
likewise availed of the deposition of Assemblyman Zamora, after counsel for the defendants were unable to appear
on the date scheduled for the giving of his testimony in Court. The defendants only presented documentary evidence
and elected to take depositions of the witnesses which were submitted as evidence.
"After the parties had formally submitted their documentary evidence and awaiting ruling on their admissibility,
plaintiff presented on July 13, 1979 a Motion to Admit Amended Complaint, attaching thereto the Amended
Complaint itself. The amendment was presented pursuant to Sec. 5, Rule 10 of the Revised Rules of Court to have
the allegations in the complaint and pleading conform with the evidence. The amendment consisted in rewording
paragraph VIII of the complaint which originally read:jgc:chanrobles.com.ph
"‘That, even at that time of the sale, the mineral lands assigned or sold to SAN MAURICIO was not even alienable as
the same was withdrawn from sale per Proclamation No. 500 and that despite the 1st Indorsement of the Executive
Secretary, providing that the contract shown in Annex A was approved and therefore, may be given force and effect,
the same approval was centered and based on the agreement of the parties thereto that all rights are subject to the
provisions of Proclamation 500. The Executive Secretary’s approval, dated January 15, 1974, did not in any manner
establish any right for San Mauricio except that the basic agreement to the contract may only be given force and
effect, visibly in accordance with its tenor and nothing more’"
"As reworded in the Amended Complaint, it states:jgc:chanrobles.com.ph
"That at the time of the alleged sale, the mineral lands assigned to SAN MAURICIO were not even alienable, as they
were withdrawn from sale by Presidential Proclamation No. 500 and inspite of the purporfed first indorsement of
the Assistant Executive Secretary supposedly approving the contract, the alleged approval is subordinated to the
provision of Presidential Proclamation No. 500 and all rights of the parties thereto are subject to said Proclamation.
The apparent approval of the Assistant Executive Secretary, Rolando B. Zamora (which should be Ronaldo B. Zamora)
dated January 15, 1974 has subsequently been found and discovered by Smelters to be a forgery and the Assistant
Executive Secretary had not approved said contract for and by authority of the President nor affixed his signature to
the first indorsement herein mentioned.
"Defendants opposed the admission of the Amended Complaint, claiming that they have objected to the
presentation of any evidence tending to vary the allegations as proof thereof of that which amendment is sought;
that if the admission of the amendment be allowed it would greatly prejudice defendants, its defenses altered and
may require the presentation of additional evidence.
"The parties cited provisions of the rules and jurisprudence in support of their respective assertions.
"In the Order of July 25, 1979, the Court opted to resolve, whether to admit or not the Amended complaint when it
writes this decision. Before going further, we deem it proper to resolve the issue.
"The Court finds ample authority and provisions of law to admit the Amended Complaint. While it is true that at first
there was serious objection to evidence tending to show that the signature of then Secretary now Assemblyman
Ronaldo Zamora on the indorsement supposedly approving the sale from NASSCO to MARSMAN (Exh. H) was a
forgery, the objection is deemed to have been waived when the defendants adduced evidence tending to show or
showing that said signature is genuine (see Exhs. 26-A to 26-J, 27, 28, 30-35, 38-48). Obviously, therefore, the issue
of genuineness of the signature of Assemblyman Zamora on Exhibit H and whether or not the Deed of Sale, etc. of
November 23, 1973 between NASSCO and the defendants (Exh. C-2) was approved by the Office of the President has
been tried by express or implied consent of the parties, so that the amendment to conform with the evidence is
proper. We share the view sponsored by counsel for the plaintiff in his Motion to Admit Amended Complaint when
he said:jgc:chanrobles.com.ph
"Parenthetically, it is significant that defendants did not even move for the suspension of the trial when this incident
took place; on the contrary, defendants proceeded on the hearing and thereafter submitted evidence, as
aforestated, to establish the genuineness of the signature of Mr. Zamora on the disputed first indorsement of June
15, 1974, EXHIBIT H, to show the alleged approval of the President of the said contract, Defendants are now
estopped from claiming that they were deprived of substantial opportunity to contradict the plaintiff.
"The claim that defendants’ defenses are to be altered and/or additional evidence may be required is to our mind
not well taken. The Court cannot surmise what other defense or additional evidence may be adduced by defendants
to meet the evidence on the allegation sought to be amended. If at all, it would only be to show that the signature of
Mr. Zamora is genuine, an aspect of the case which they have very exhaustively done with the presentation of the
exhibits already mentioned above which consists among others of the testimony of the Senior Document Examiner
of the PC Crime Laboratory and former NASSCO employee no less than the then Records Officer" (Exhs. 39 and 46
respectively.) (Pp. 31-34, Record)
Then His Honor proceeded to make its final resolution of the case thus:jgc:chanrobles.com.ph
"After a careful review of the records, the Court believed that the great preponderance of evidence is in favor of
SMELTERS for the following reasons and/or factors:jgc:chanrobles.com.ph
"1. In the first place, the inscription of the adverse claim at the initiative of defendants, first on the Original
Certificate of Title No. 0440 of NASSCO, which later was subsequently carried over to Transfer Certificate of Title No.
13060 of SMELTERS was premature and precipitate, to say the least. While the Contract of Sale and Assignment of
Rights dated November 23, 1973 (Exh. C-2) executed by NASSCO in favor of SAN MAURICIO was presented as a part
of the documents that were the bases of the notice of adverse claim, nevertheless, the approval of the Office of the
President of the said contract, was lacking. The relevance and importance of the approval by the Office of the
President of said contract cannot be ignored. Not only because the contract by its nature should be approved by the
Chief Executive but also because of the express provision of the contract itself stating that the effectivity thereof is
conditioned upon the approval of said Office. Section 6 of the contract (Exh. C-2) provides:chanrob1es virtual 1aw
library
‘6. Effectivity — Notwithstanding the signing of this contract it shall only be effective upon its approval by the Office
of the President.’
No other meaning and/or interpretation of the above quoted provision of the contract can be given or made. For its
effectivity, approval by the Office of the President is a condition sine qua non so to speak.
"The failure of defendants to present with other papers the required presidential approval necessary for the
effectivity of the contract is of very great significance as will be shown in the discussions to
follow:jgc:chanrobles.com.ph
"2. The signature of the Assistant Executive Secretary, Rolando B. Zamora is undoubtedly a forgery. This conclusion
was reached after the Court has carefully reviewed the evidence. For ready reference and a better understanding of
the matter we quote Assemblyman Ronaldo B. Zamora himself of what he said in his deposition (Exh. V).
‘Q Assemblyman Zamora, could you please explain why you say that the signature appearing over the typewritten
name Roland B. Zamora in Exhibit H as well as J-7 and now on Exhibit U-1 is not your signature?
‘A First, my name is Ronaldo, and I certainly would not sign any document which bears a different name as Rolando
B. Zamora. To make sure that there are no possible errors about this, may be I should recall that possibly eight or
maybe ten individuals would have a chance to see my name typewritten in the ordinary course of passing upon
papers. First, there would be the Records Office which would receive this document. From the records Office, in the
Office of the President, it would then go to the legal office, and presumably the typist there. . . . No, I’m sorry. Can I. .
. . yes, it would first go to the Records Office and then it would be assigned to an action attorney who would prepare
a draft or who would dictate a draft. This draft would be typed by one of our typists in the Legal Office. And I
presume that the typist, having typed my name many number of times, possibly could not have typed the incorrect
name, this would then go to the action attorney and he would be the second person to see the wrong name. This
action attorney would then submit to his group head, and that individual would be the third person to see my name.
It would then go the Head of the Legal Office and that would be the fourth individual to see my name typewritten
wrongly. It would then be transferred to my office, keeping in my mind that my office is physically separate from the
Legal Office. It would then go to the Records Office in my personal office and then clerk in charge would be the sixth
individual to see the wrong name and then one of my assistants would take a look and he would be the seventh
person to see the error. Well, finally, it would go to me and quite naturally I would be very, very particular about
signing my signature over a wrong name. Finally, it would go back to my records clerk for release from my office and
he again would have a chance to see the wrong name, and so that is the eight individual; and it would go back to the
Records Office in the Legal Office and that would be the ninth person to see the wrong name. Finally, it would be
released to the Central Records Office in the Office of the President in Malacañang for release and the persons there
would be the tenth individual to see my wrong name. So it is pretty obvious that I would not sign over a wrong name
so that the presumption is that I did not or I would not have signed this particular indorsement. The fact is, there are
many small nuances that may not be appreciated by the general public in the preparation of papers in my office. For
one thing we never returned an indorsement to a particular office or corporation or an agency. As in this case, it
says, ‘Respectfully returned to the National Shipyard and Steel Corporation (NASSCO) . . .’ We are very particular in
returning an indorsement to a particular individual for a very good reason. We think indorsement should be
addressed to an individual because that individual would be responsible for actions on that indorsement, we always
put the precise location of the office. In this instance, we would have put the General Manager, National Shipyard
and Steel Corporation (NASSCO), Manila. We have many good reasons for that. Many government offices have
different physical locations in Metro Manila and in the province. If we were to return it not to an individual but just
to NASSCO, and NASSCO probably has a number of offices thru-out the Philippines, one could just imagine the
confusion as to where this kind of indorsement should be referred. Also, we do not simply say that a contract is
approved. We are very particular in stating that, something is hereby approved. Because it is not anything else but
that particular indorsement is addressed the authority to effect what is to be effected. Nothing else but that
particular indorsement. Therefore, the hereby there is not just a surplusage. It is very important. It is what gives
authority to a particular official to do an official act. Also, we never include redundancies like, and I quote from the
1st indorsement — ‘. . . and therefore may be given force and effect.’ This is something we feel should be removed
from indorsements because they are mere redundancies. If a contract is approved, it should be given force and
effect and any statement that says it gives it force and effect does not add one iota of authority to that particular
indorsement. Also, there are a number of signs and countersigns that the office, through years of practice, has laid
down. For instance, although again this is only a xerox copy, I do not see any mark of initial, keeping in mind that all
indorsements prepared by the Legal Office goes through several lines of authority. Some initials should appear here.
Also, there is a number or figure, there are some sort of routing numbers, and these routing numbers are assigned to
the offices in the Office of the President. In the case of the Legal Office, the routing number is 1277. If this were
prepared in the Legal Office, that number 1277 would appear not only in the duplicates, in the copies, but would
appear even on the original. It is not present in this xerox copy being shown to me. If it were prepared in my
personal office then it would bear another number, from 1 to 4, and two numbers correspond to the typist and to
the action attorney within my office. It is for these reasons that I feel that this is a forgery. I also take note that the
particular letterhead that we use in the Legal Office. If I remember right, what we have been using is ‘Tanggapan ng
Pangulo ng Pilipinas’, not ‘Office of the President of the Philippines’, especially for local communications. The
letterhead shown in this exhibit is for . . . is the letterhead that we use for outside, meaning outside the Philippines,
communications where it may be difficult for them to understand, although of course under this ‘Tanggapan of
Pangulo of Pilipinas’ there is a small translation here, Office of the President of the Philippines. Ordinarily, as I said,
for local official communications, we use ‘Tanggapan ng Pangulo ng Pilipinas.’
Now, showing to you another document hereto marked as Exhibit C-2, a contract of sale with assignment of rights.
Would you please go over this document and tell the Honorable Court if you have come across a similar or the same
or an original of the same document sometime in 1974 or 1975;
‘A No. I have not.
‘Q Would you be able to recall if in fact this contract had passed through you and you had approved it?
‘A Yes, I think I could. And in my case, if my memory were faulty, because every individual has lapses of memory, at
the Office of the President, we have adopted certain safeguards against lapses of memory. For one thing, if that
contract were sent to the Office of the President, then our Records Office would retain one copy. This is the Central
Records Office. Likewise, the Legal Office would retain another copy which is why we have required offices to submit
contracts, to submit not just the original contract but also duplicates, triplicates and quadruplicates. Also, this seems
to be a disposal of a government property. Then certainly the instructions to be given to me would be given by the
President of the Philippines personally. Not that the President would sign approvals, because ordinarily he would
not, and it is for the Executive Secretary or the Assistant Executive Secretary who would approve it for his behalf.
Nevertheless, it would have to be shown to the President personally and the President personally would probably
have indicated in the ordinary course of events his approval of the contract itself. And you would see there a short
approval. It would indicate Approved then with an initial or the full signature of the President of the Philippines.
None of these appears in the contract. I would say that if I would not remember correctly, then these safeguards
would help me remember. But in the course of the investigation of the NBI, they also showed me a copy of a
certification from our Records Office that there was no such document in our files. Perhaps I should mention that
early in my time as Assistant Executive Secretary, I was made Chairman of the Presidential Records Management, let
me get the exact words, Presidential Records Management Committee, especially since all of these records are, not
all but say 70% or 75%, are important legal records of the Office of the President, and they come and go to the Legal
Office. And since I was Chairman, we built precisely these safeguards; again, as I said, to foretall lapses of memory. If
there is no copy in the Records Office, then I would assume that the original was not sent to the Records Office. It
might have been possibly brought directly to the President, an extremely rare case. When this happens, then the
Records Office would not have the copy of the contract as it goes directly to Malacañang. This is the instance where
the President would call you directly and give you instructions, in which case, there would not be any record going
into the Central Records Office. But regardless of whether it is the President himself or it goes through the ordinary
course of procedure the outgoing communications must pass through the Records Office. And I understand from the
certification from Director Melquiades de la Cruz that neither the outgoing communication was recorded in his
Office.’ (pp. 33-48)
"Manifestly and unmistakably, even the first name of the Assistant Executive Secretary appearing on the questioned
document, where the approval of the Office of the President appears, is wrong.
"We see no reason to doubt the credibility of Mr. Zamora. Mr. Zamora has nothing to gain from disowning his
signature if that is (sic) true. But more than that, Mr. Zamora categorically stated that the papers on the sale of the
property in question (Exh. C-2) had never been submitted to him and that he had not approved the same.
"As against the testimony of Mr. Zamora, defendants tried to overcome it but miserably failed in their attempt even
with the expert opinion of Mr. Francisco Cruz, Jr., Chief of Questioned Document Division of the PC Crime Laboratory
(Exh. 39 deposition of Cruz). Mr. Cruz was presented by defendants. But his testimony, far from destroying the
statement of Mr. Zamora or even from creating doubt as to the truth of said testimony, confirms and fortifies the
same. Suffice it to say that by the testimony of Mr. Cruz, defendants were not able to negate the affirmative
assertions of Mr. Zamora in his deposition that the signature which reads ‘Rolando B. Zamora is not his signature and
that he had not approved the Deed of Sale with Assignment of Rights supposedly executed by NASSCO in favor of
SAN MAURICIO. The same could be said of Exhibit 40, the deposition of Francisco D. Celorico who was the Chief of
the Records Section of NASSCO from 1972 to 1975. He could not even say with certainty if he saw the original of the
indorsement of Assemblyman Zamora although in his certification (Exhs. 27 & 28) admittedly given when he was no
longer connected with NASSCO, he said that xerox copy is a faithful reproduction of the original (PP. 77-78, Exh. 40).
We are not ready to give credence to this witness.
"Finally, the documents that were presented for inscription of adverse claim were all xerox copies of their alleged
originals. Clearly, it is not good practice, if not dangerous, for the Register of Deeds to accept for registration even as
a notice of adverse claim unauthenticated xerox copies of documents the original of which had not been shown to
the Register of Deeds. If the original could not be presented for one reason or another, at least certified copies
thereof should be available for registration. The stability of property rights will be seriously impaired if not
jeopardized if any party could present for purposes of lis pendens or adverse claim or any third-party claim for this
matter were xerox copies of alleged original documents as what had happened in the present case. If the Register of
Deeds were only a little more careful or prudent, he should have required the original documents to be presented or
certified true copies thereof by the proper office. This case then could have been avoided. The Register of Deeds
should take warning that similar incidents should not be repeated in the future.
"3. With the foregoing factual conclusion it follows that defendants SAN MAURICIO and MARSMAN had not acquired
a valid and legal title to the property in litigation under the aforesaid Deed of Sale with Assignment of Rights (Exh. C-
2)
"4. NASSCO had no authority to set or assign its rights much less execute the document of June 26, 1975. The Deed
of Assignment of Rights executed by NASSCO in favor of defendants SAN MAURICIO and MARSMAN dated June 26,
1975 (Exh. C-7) is inofficious to say the least. This is so because at the time the property subject matter thereof
belonged to the public domain by virtue of Proclamation No. 500 which reserved the property for pier, warehouse
and smelting plant site purposes for NASSCO under the administration of NASSCO. NASSCO was not then the owner
of the property. As administrator of the property, NASSCO was without authority to sell, encumber, convey or
otherwise alienate any part of the public domain. MARSMAN and SAN MAURICIO should have known this matter, or
they ought to have known it.
"While among the documents presented with the notice of adverse claims is a true copy of the first endorsement of
July 1, 1975 purportedly signed by authority of the President by Mr. Roberto B. Reyes, Deputy Executive Secretary,
the document is not even authenticated and no evidence was presented to establish the existence of said document.
It is worth mentioning that when Mr. Melquiades dela Cruz, Presidential Staff Director of Malacañang, testified no
mention whatsoever with reference to the document was made. On the contrary SMELTERS presented a certification
issued by the same officer. Mr. dela Cruz, stating that the supposed endorsement of the Deputy Executive Secretary,
Mr. Roberto B. Reyes of July 5, 1975 is not on file in the Office of the President (Exh. R). The above circumstance has
created serious doubt in the mind of the Court as to the authenticity of said document. It is settled rule that the
Party who makes an affirmative allegation in his pleadings has the burden of proof to prove it. It is incumbent upon
MARSMAN or SAN MAURICIO to present credible evidence of its existence. In this particular instance they failed to
do so.
"Moreover, on the hypothesis that the first endorsement on July 1, 1975 exists and the Assignment of Rights of June
26, 1975 made by NASSCO in favor of MARSMAN was approved by the Office of the President, the approval thereof
as it appears on the face of said endorsement is subject to two (2) conditions:chanrob1es virtual 1aw library
‘1. That the government reserved the right to withdraw anytime the use of the surface right from the assignee as
public interest may so require as may be determined by the President pursuant to the context of Proclamation No.
500, Series of 1968.
‘2. That the assignee shall not obstruct in any way the free movements of personnel and equipment of the Armed
Forces of the Philippines and their continuous use of NASSCO facilities thereat as previously authorized by the
President.
"The first condition imposed with the approval of the contract of June 26, 1975 (Exh. C-8) is the right of the
government to withdraw at anytime the use of the surface rights from the assignee, that was MARSMAN, if the
public interest requires it in accordance with the context of Presidential Proclamation No. 500, Series of 1968.
Precisely, under said Proclamation the land therein reserved was withdrawn from sale or settlement. If the right to
use surface rights under the Assignment of Rights in favor of MARSMAN (Exh. C-8) is to be construed, it should be in
harmony with the provisions of said Proclamation No. 500 and with P.D. 837, a later law, issued on December 6,
1975. Under said Presidential Decree, title to and ownership of the land now in litigation was vested in favor of
NASSCO (when originally was only under the administration of NASSCO under Proclamation 500) and the decree
further granted NASSCO the authority to sell or dispose of the land as the interest of the government warrants either
by bidding or negotiation. Thus, with the issuance of P.D. 837, the right of MARSMAN as assignee to use the surface
rights should be deemed terminated with the sale of the land to SMELTERS on December 29, 1975 when SMELTERS
acquired full and complete ownership of the property without any lien or encumbrance whatsoever.
"5. MARSMAN and SAN MAURICIO contend that Proclamation 500, and for that matter P.D. 837, should be
construed to respect existing private rights claiming that MARSMAN by a series of transactions had acquired existing
mining rights under the Philippine Bill of 1902. We consider the evidence presented in support of the claim as not
competent because it does not sufficiently show how MARSMAN or SAN MAURICIO acquired said rights. In fact,
there is no proof as to who was in possession of the property upon the passage of the Philippine Bill of 1902 and the
successional rights thereto from 1902 to the present. But assuming, however, that SAN MAURICIO, as predecessor-
in-interest of MARSMAN had some interest in the land prior to 1957, that interest was conveyed or sold by SAN
MAURICIO to NASSCO by the Contract of Sale and Assignment of Rights of 1957.’ While it may be true that in 1973,
NASSCO resold the same property or right to SAN MAURICIO and the latter was succeeded thereto by MARSMAN, it
is equally true that at the time of the sale on November 23, 1973, NASSCO was merely an administrator of the
property under Proclamation No. 500, Series of 1968 and it had no authority to sell or dispose of the land or any
interest therein. Defendants cannot disclaim knowledge of the effects of Proclamation No. 500 and/or its provisions.
They should know or ought to have known that on November 23, 1973 said Proclamation was still in effect, not
having been repealed and/or recalled. The effectivity of Proclamation on said date is an indisputable proof that the
Office of the President could not have approved the supposed sale (Exh. C-2) for the simple reason that a Deed of
Sale or Assignment of Rights cannot repeal and/or adversely affect a Proclamation.
"6. There seems to be no question that under P.D. 837, NASSCO was the owner of the property, later covered by
Original Certificate of Title No. 0440. This is unmistakable, for it is clearly stated therein. The government had
transferred ownership of the land therein described, formerly as part of the public domain, in favor of NASSCO, even
before a title thereto was issued. There should also be no debate that under the same decree NASSCO was given
authority to transfer absolute ownership of said parcel of land or any portion thereof and convey the same to
persons or corporations qualified to acquire land under the Constitution.
"The above is what happened in this case. After the Bureau of Land had resurveyed the property, determined each
area and boundaries, completed the plan and technical descriptions, the Register of Deeds issued in favor of NASSCO
Original Certificate of Title No. 0440 which became the absolute owner of the land. Then NASSCO sold by negotiation
the same land in favor of SMELTERS. The acts of NASSCO are exactly what the Presidential Decree authorized to be
done.
"7. It is now claimed by defendants that the price of P85,144.50 is immoral, illegal and unconscionable. Obviously,
defendants overlooked the environmental circumstances that prompted NASSCO to dispose of the property. As
testified to by Assemblyman Arturo F. Pacificador, then Chairman of NASSCO, there is a basic national policy involved
in the transaction.
"It is indubitable that the government as a matter of national policy was committed in allowing the private sector to
take over the enterprises pioneered by the government when the private sector is capable already and ready to
improve a particular government endeavor. It is also clear that the government wanted to discontinue the operation
of NASSCO, particularly with reference to the Jose Panganiban Smelting Plant and to facilitate the disposition of the
assets of NASSCO, including the plant the government considered it necessary to transfer ownership of said parcel of
land to NASSCO so that NASSCO may ultimately transfer absolute ownership of said parcel of land or any portion
thereof and convey the same to persons or corporations qualified to acquire land under the Constitution, either
through public bidding or negotiation as the interest of the government warrants. To the Court, it is unmistakable
that in pursuance of the policy of the national government established in P.D. 837, the property of NASSCO at Jose
Panganiban had to be sold to the private sector who shall take over the enterprises pioneered by the government. It
was precisely what had happened with the sale of the smelting plant and the land at Jose Panganiban by NASSCO to
SMELTERS.
"In fact, the Deed of Sale itself of December 29, 1975 (Exh. D) recites the fundamental considerations that motivated
the transaction. It states:chanrob1es virtual 1aw library
‘WHEREAS, the Government of the Republic of the Philippines considers the establishment, development and
operation of an integrated steel industry in the Philippines as of primary importance in the economic development
of the country;
‘WHEREAS, for the successful implementation of the aforementioned objective, the Government of the Republic of
the Philippines deemed it proper and necessary to provide appropriate incentives to adequately motivate the private
sector to invest in the integrated steel industry, which investment involves a long-term risk exposure;
‘WHEREAS, the Government of the Republic of the Philippines considers the assurance or grant to the capable
segments of the sector of a permanent tenure over the land where the integrated steel industry facilitates are or
may be established as one of the appropriate and necessary incentives to motivate the private sector in undertaking
this investment with a long-term exposures.
‘WHEREAS, NASSCO is the sole and absolute owner of a certain parcel of land known as Jose Panganiban Smelting
Plant area, at Jose Panganiban, Camarines Norte, its title hereto being vested under Presidential Decree No. 837
dated December 6, 1975;
‘WHEREAS, on the 27th day of November 1975, at Makati, Rizal and registered as Doc. No. 877; Page No. 77; Book
No. II; and Series of 1975, of the Notarial Register of the aforementioned Notary Public, NASSCO and PHILIPPINE
SMELTERS CORPORATION entered into a Contract of Purchase and Sale covering all the equipment and facilities
including structures, buildings, shops, quarters, houses and plant located at Jose Panganiban Smelting Plant at Jose
Panganiban, Camarines Norte;
‘WHEREAS, PHILIPPINE SMELTERS CORPORATION has signified its intention to cooperate in the fulfillment of the
desired goals of the government of the Republic of the Philippines by making substantial investments in the
integrated steel industry;
‘WHEREAS, PHILIPPINE SMELTERS CORPORATIONS has applied with NASSCO to purchase the Jose Panganiban area
where the Smelting Plant is located at Jose Panganiban, Camarines Norte;
‘WHEREAS, Section 3 of Presidential Decree No. 837 promulgated on December 6, 1975, authorized NASSCO to
transfer ownership of the Jose Panganiban area or any portion thereof and convey the same to persons or
corporation qualified to acquire land under the Constitution, either through public bidding or through negotiations
as the interest of the Government warrants, any provisions of law, proclamation, ordinance, rules and regulations to
the contrary notwithstanding;
‘WHEREAS, PHILIPPINE SMELTERS CORPORATION is qualified to acquire land under the Constitution and in
pursuance of the policy of the Government of the Republic of the Philippines to encourage and promote the
establishment, development, operation of an integrated steel industry in the Philippines, the sale of Jose Panganiban
area to PHILIPPINE SMELTERS CORPORATION will redound to the interest of the country and the government;’
"In truth, the reasons that compelled NASSCO to dispose of the property was not so much the financial returns from
the sale but more on the basis of the national policy involved as stated in P.D. 837:chanrob1es virtual 1aw library
‘WHEREAS, in pursuance of the national policy of allowing the private sector to take over enterprises pioneered by
the government when the private sector is ready and capable to continue and improve a particular government
endeavor and in the interest of the National Government, various government performance evaluation and/or study
groups have recommended the disposition of all NASSCO properties and units, including the Jose Panganiban
Smelting Plant at Jose Panganiban, Camarines Norte.
‘WHEREAS, under Proclamation No. 500 dated December 23, 1968, a parcel of land situated in the Municipality of
Jose Panganiban, Province of Camarines Norte, island of Luzon, bounded on the W., along lines 1-2-3-4-5-6-7-8-9-10-
11-12-13-14-15-16, by Mambulao Bay; on the N., along lines 16-17-18-19-20-21, by Forest Reserve; and on the E and
S, along lines 21-22-23-24-25-26-27-1 by project No. 2, Block VI (Alien & Disp.) LC-403, containing an area of
approximately 170.2890 hectares, more or less, has been withdrawn from sale and settlement and reserved for pier,
warehouse and smelting plant site purposes under the administration of the NASSCO;
‘WHEREAS, as mandated under Republic Act 1396, NASSCO constructed, established and operated in said site a pig
iron smelting plant with pier and other plant facilities known as the Jose Panganiban smelting Plant;’
"If we are to delve deeper, the Court may well say that the amount of consideration, in terms of money, is only
secondary to the over-riding policy of the national government to provide impetuous to the private sector that it
may take the lead in the total economic development of the country under competent leadership. It will be to the
national interest if the government could be relieved of the burden and shift it to the private sector enabling the
government to attend to the greater problems that it confronts in nation building.
"Besides, the Deed of Sale between NASSCO and SMELTERS contains restrictions on the right of SMELTERS on the
use of the property.
‘Section. 3.1. Use of Property. —

‘It is a special consideration and condition of this Contract that the PROPERTY shall, for as long as PHILIPPINE
SMELTERS CORPORATION remains the owner thereof, be used primarily for the establishment, operation and
maintenance of an integrated steel industry and complementary facilities and other industries, consistent with its
declared intention to make substantial investment in the integrated steel industry in pursuance of the policy of the
National Government to encourage, promote and accelerate the growth of said industry in this country.’
"NASSCO is also allowed participation in the affairs of SMELTERS in case of default.
"The objection of defendants, therefore, as to the inadequacy of the price is not well taken. Importantly, NASSCO
does not plead that the price for which it had sold the properties to SMELTERS is unconscionable or disproportionate
with its true value. We hasten to conclude that the question of the price is between NASSCO as seller and SMELTERS
as buyer. And in this particular transaction, it belongs to the Executive Department of the government to determine
what is the reasonable price of the land NASSCO was selling, taking into account primarily the announced national
policy. It is not for defendants to raise this question. The contract having been approved by the President of the
Philippines, it becomes a matter of conscience for the Executive Department to evaluate as to the reasonableness of
its price. The Court may not just intrude into the prerogatives of the Chief Executive.
"Defendants argue also that under the Contract of 1957 between SAN MAURICIO and NASSCO, SAN MAURICIO was
granted preferential right to reacquire the property in case NASSCO had no more need for it. Going over the
voluminous records of this case, the Court does not find that defendants had introduced in evidence the aforesaid
contract of 1957 to substantiate its claim. However, Assemblyman Arturo F. Pacificador, testifying on this point,
claimed that he had advised, Mr. Emilio Vito of MARSMAN of the projected sale of the property before the Contract
of December 29, 1975 between NASSCO and SMELTERS was finalized, MARSMAN did not show any interest to
reacquire said property so that NASSCO proceeded with the sale to SMELTERS. It is noteworthy that Mr. Vito, who
gave his deposition twice, first in Civil Case No. 3025, which he re-affirmed in the case at bar, did not on any occasion
even attempt to contradict Assemblyman Pacificador. Besides, the Deed of Sale of 1957 does not appear to have
been recorded in the Registry of Property of Camarines Norte, at least it was not shown to have been so recorded. It
may not, therefore, bind any third party who had subsequently acquired the property in good faith and for value. It
is not enough that in the subsequent contracts of 1973 and 1975 between NASSCO and SAN MAURICIO and NASSCO
and MARSMAN, respectively, the preferential right of defendants is mentioned, because the Court, not to say a
third-party is left guessing as to what is the nature of that right allegedly granted by NASSCO to the defendants.
Since the contract is between NASSCO and the defendants and defendants should have a copy of that contract, the
Court feels that it must be the defendants who should present that contract to prove its affirmative allegation that it
has in fact a preferential right to the property under the contract of 1957. Defendants failed to do so. Under the
above circumstances the Court cannot very well consider the right claimed by the defendants.
"Having disposed of the arguments of defendants against the validity of the sale in favor of SMELTERS the next issue
would be the claim of SMELTERS for damages. SMELTERS claim that it had contracted the services of at least five (5)
foreign technicians, namely: Lloyd Thomas, Leonard Kitchener, Donald Tully, Alec McKensey, and Stanley, who came
to the Philippines to assist and give technical advice in the operation, development and enhancement of the
smelting plant for which it had spent the amount of P500,000.00 for their travelling expenses and per diems aside
from their salaries as testified to by Jose Marcelo, Jr., President of SMELTERS. SMELTERS attributes the non-full
development of its smelting plant and its inability to produce the pig iron because of the impediments created by the
notice of adverse claim. The Court is not ready to award in full the amount as claimed by Mr. Marcelo because
SMELTERS could still avail of their counsel and services even if belatedly. It was shown, however, that SMELTERS had
suffered damages for it was not able to proceed immediately with the installation, establishment and operation the
smelting plant and production of pig iron. The Court would, therefore, grant in the exercise of its discretion
P150,000.00 for said claim.
"SMELTERS claimed further that it suffered damages represented by the difference of the costs of materials and
other machineries in 1976 when it should have acquired said items and started operation in comparison with the
costs of materials in 1978 and 1979 when it had paid for said machineries. The delay in the commencement of the
operation of the smelting plant was the inability of SMELTERS to obtain the necessary fundings, a circumstance it
attributes to the defendants. The Court shares the view of plaintiff for it’s supported by the evidence. The loan
application of SMELTERS could not be granted by the Development Bank of the Philippines (DBP for short) and other
financial institutions because of the annotations of adverse claim on its titles on the properties bought from NASSCO.
Obviously, the DBP would not grant the loan which SMELTERS tried to obtain on the security of parcels of land
burdened with a notice of adverse claim. The same could be said of the other private banking institutions. To be able
to finally obtain loan from Development Bank of the Philippines after a protracted delay, SMELTERS was required to
post a bond of P7.5 million for which it paid premium in the amount of P46,000.00 which defendants should be
made answerable as an item of actual damages.
"Plaintiff has shown by testimony (Marcelo and Cantiller) and by documentary evidence that because of the delay in
the operation of the plant occasioned by the acts of the defendants, procurement of necessary equipment and
machineries had gone up as can be gleaned from the following:jgc:chanrobles.com.ph
"A. QUOTATIONS OF PRICES OF EQUIPMENT IN 1976.
"NAME OF TYPE OF TOTAL COST TOTAL COST
SUPPLIER EQUIPMENT (Foreign Phil. Peso)
Currency)
ENGINEERING EQUIPMENT INC.
1) VAHLE
KAMEN
INSULATOR Insulator DM 6,854.95 P27,675.15
2) E.A. ARIZO Truck Scale $10,456.00 P78,420.00
3) ENGINEERING Compressor 11,500.00 86,250.00
EQUIPMENT (Sullair)
4) F.E. ZUELLIG,
INC. Transformer 7,800.00 58,500.00
5) ASEA (Philippines), Lightning
Inc. Arrester Skr.5,840,00 10,060.86
(M-1) ————
P260,906.01
"ACTUAL PURCHASE PRICE OF EQUIPMENT AND MACHINERIES IN 1978.
"NAME OF TYPE OF TOTAL COST TOTAL COST
SUPPLIER EQUIPMENT (Foreign Phil. Peso)
Currency)
1) VAHLE
KAMEN
INSULATOR Insulator DM 7,577.43 P30,591.98

2) HOWE
RICHARDSON
SCALE CO. Truck Scale $15,464.00 115,980.00
3) SULLAIR Compressor
CORP (Sullair) $13,225.00 99, 187.50
4) CHEOUNG
HWA INDUSTRIAL
CO. LTD. Transformer $8,925.00 66,937.50
5) ASEA (Philip- Lightning
pines) Inc. Arrester Skr. 12,801.05 22,053.01
(M-2) —————
P334,749.99
=========
Price Difference P73,843.98
"Conversion:chanrob1es virtual 1aw library
DM x .5383 — US $ x 7.5 = P
SKR x -2297 — US $ x 7.5 = P
"The table of prices above-quoted shows the differences in the prices of said equipment and machineries in 1976 as
against the year 1978. Defendant should be liable for the difference because by their direct act, SMELTERS was
unable to obtain the loan in 1976 and was forced to buy the machineries in question at a much higher price in 1978.
If SMELTERS was able to buy the equipment and machineries in 1976, it would have not paid higher prices when the
purchase of said equipment and machineries was finally made in 1978, then SMELTERS would have been able to
start operation in 1976. The gain that SMELTERS would have realized in 1976, 1977 and 1978 was estimated to be
P7,168,000.00, which amount is reflected in the Project Study (Exh. L) and testified to by Ernesto Cantiller, General
Manager of plaintiff. Defendants were not able to show that the projected gain for the year 1976 to 1977 are not
correct or could not have been realized. Although Atty. Alafriz reserved his right to cross-examine Cantiller on the
Project Study, at the scheduled hearing for that purpose, Atty. Laviña, corroborating counsel to Atty. Alafriz, waived
the cross-examination. It cannot be disputed that expected gains or profits can be the subject of damages and in this
particular case, we find defendants liable for the same. It has been provided that damages shall comprehend not
only the value of the loss suffered, but also that of the profits which could have been obtained (Art. 2200, New Civil
Code). Profits or gains (Lucro cesante) could have been earned by plaintiff had there been no delay in the operation
of the plant which delay, as we had already stated and found, is attributable to defendants’ acts in annotating
‘adverse Claims’ on plaintiff’s titles.
"With respect to SMELTERS’ claim for attorney’s fees, the Court finds that there were several lawyers who
represented SMELTERS in this proceedings. There was Atty. Jules A. Mejia who signed and filed the complaint and
who handled the case until after the partial judgment was rendered herein. Then there is Atty. Augusto Schneider
who was the resident counsel of Daet and Jose Panganiban, Camarines Norte for SMELTERS. And then, there is Atty.
Benjamin H. Aquino who substituted for Atty. Mejia. The Court may not also overlook the circumstances that out of
this case, several incidents were brought either directly to the Supreme Court or to the Court of Appeals.
"There is some justification in the claim of SMELTERS for attorney’s fees. There is no question that the action of
SMELTERS was precipitated by the annotation of adverse claim at the instance of the defendants. There is also no
serious controversy that said adverse claim was uncalled for; it lacks both legal and factual basis and it forces
SMELTERS to litigate. Although in the complaint SMELTERS asked only P50,000.00 for attorney’s fees, but the
services rendered by the lawyers for the plaintiff who had to come several times to his Court travelling hundreds of
kilometers back and forth, and the importance of the questions involved, the Court believes that an award of
P150,000.00 for counsel fees in favor of SMELTERS is reasonable. It should be stated in this connection that when
the complaint was filed in February 1977 the plaintiff did not have in mind that certain incidents of the case will
reach the appellate Courts (SC & CA). When Jose Marcelo, Jr., President of plaintiff, testified on March 30, 1979 he
informed the Court that he has to pay his lawyers P150,000.00 each. Plaintiff has therefore proven that it had to
disburse more than what was originally stated in the complaint which under existing jurisprudence the Court may
award in excess of what is prayed for provided the award is reasonable.
"Defendants’ counterclaim against SMELTERS should be, as they are hereby denied, in view of our findings and
conclusions heretofore stated.
"Coming to the third-party complaint filed by defendants against NASSCO, the Court believes that said third-party
complaint should be dismissed, after the Court has arrived on the conclusion above-indicated. Moreover the two
contracts between NASSCO and SAN MAURICIO, and NASSCO and MARSMAN does not contain any warranty, so that
defendants corporation bought the lands or any right therein at their risk. The absence of a warranty clause in the
aforesaid contract is significant. Unlike ordinary contracts of sale and assignment or rights, the omission of the
warranty clause in the aforesaid contracts would only mean that NASSCO could not be held liable for damages if,
later on, there would arise some controversy about the transaction on the title of the land sold by NASSCO. The act
of NASSCO in selling the property in litigation to SMELTERS is duly authorized by law, that is by P.D. 837 and
unquestionably approved by the President of the Philippines. This matter was fully established with the testimony of
Assemblyman Pacificador, former Acting Chairman of NASSCO, who in no uncertain words said that the approval of
the sale to SMELTERS by the President was done in his presence. Documentary evidence proving the same has also
been submitted by the plaintiff (Exhs. E, E-1 & E-2). NASSCO, therefore, could not be held accountable for the sale of
said property to SMELTERS.
"Moreover, the corporate life of NASSCO expired on January 6, 1976, and although under Section 77 of the
Corporation Law, it has three (3) years to continue as a corporate body for the purpose of prosecuting and defending
suits by or against it and of enabling it to gradually settle and close its affairs, to dispose of and convey its property
and divide its equital stock. Said three year period has already expired on January 6, 1979. The Court seriously
doubts whether an action against NASSCO could still be maintained after the period provided for in Section 77 of the
Corporation Law has lapsed. The Court believes that after the expiration of the three-year period after the charter of
NASSCO has expired, the present third-party complaint by defendants against NASSCO should be dismissed.
"WHEREFORE, Judgment is rendered:jgc:chanrobles.com.ph
"1. Ordering the Register of Deeds of Camarines Norte to cancel the annotation of adverse claim appearing on
Transfer Certificates of Titles Nos., 13503, 13504, 13505, 13506, 13507, 13508, 13509, 13510, 13511, 13512, 13513,
13514, 13515, 13516, 13517, 13518, 13519, 13520, and 13521 in the name of Philippine Smelters Corporation
inscribed on August 16, 1976 at the initiative of the defendants.
"2. Declaring plaintiff Philippine Smelters Corporation the true and absolute owner of the lands and improvements
existing thereon covered by said Transfer Certificates of Titles and entitled to possession thereof and to all surface
rights therein.
"3. Directing the defendants, except the Register of Deeds, to pay jointly and severally the plaintiff Philippine
Smelters Corporation the amount of P7,587,843.98 itemized as follows:jgc:chanrobles.com.ph
"A) Expenses per diems and fees of five (5) foreign

technicians. P150,000.00
"B) Premium paid by SMELTERS on the bond to
secure the loan of P7.5 million from DBP. 46,000.00
"C) Difference in acquisition of equipment and
machineries in 1976 as compared with actual
acquisition price in 1978 and 1979. 73,843.98
"D) Unearned profits for 1977 and 1978. 7,168.000.00
"E) Attorney’s fees & expenses of litigation. 150,000.00
—————
TOTAL P7,587,843.98
=========
"4. Declaring the Sheriff’s Certificate of Final Sale null and void, the property sold at that time being part of the public
domain.
"5. Dismissing defendants’ counterclaim and the Third-Party Complaint of Marsmam and San Mauricio Mining
Company against the third-party defendant both for lack of merits.
"6. Plaintiff shall recover cost of suit against defendants except defendant Register of Deeds.
"SO ORDERED." (Pp. 735-751, Record.)
SAN MAURICIO and MARSMAN, joined by Moya, vigoriously assail the foregoing judgment in their eleven
assignments of error, to with:chanrob1es virtual 1aw library
"THE TRIAL COURT ERRED IN NOT HOLDING AND DECLARING THE DEED OF SALE EXECUTED BY NASSCO, IN FAVOR OF
SMELTERS, DATED DECEMBER 29, 1975, COVERING APPROXIMATELY 220 HECTARES OF LAND IN J. PANGANIBAN,
CAMARINES NORTE, (EXHIBIT II), AS NULL AND VOID, AB INITIO, BECAUSE:chanrob1es virtual 1aw library
‘(a) SAN MAURICIO and MARSMAN have vested legal right over the entire area by virtue of their ownership of all the
patentable mining claims covered thereby which have been located, explored and exploited under and by virtue of
the Act of Congress of July 1, 1902, their rights thereto having been duly recognized by the Philippine Government,
through the Bureau of Mines, pursuant to the provisions of Section 101 of Presidential Decree No. 463;
‘(b) NASSCO had no right or title whatsoever to the fifty (50) hectares included in the area sold by it to SMELTERS,
the same being foreshore land which belongs to the national patrimony and which, by law, is outside the commerce
of man and not even subject to sale by the State (Public Land Act, CA-No. 141, Secs. 59 and 61); and, as a matter of
fact, as borne out by the context of the Deed of Sale itself and the type used (Exhibit 11, page 4, photocopy of
pertinent portion reproduced, see back sheet), the same appears to have been illegally intercalated as in addition to,
the 170.2890 hectares vested upon and authorized to be sold by, NASSCO to competent persons, under P.D. No.
837;
‘(c) NASSCO having, by a Contract of Sale and Assignment of Rights dated November 23, 1973, Exhibit 2, PREVIOUSLY
sold and assigned to SAN MAURICIO, for the sum of P200,000.00, 93.518 hectares, including all improvements
thereon, out of the area in question, it may not sell, as it did sell, for the second time, the same property, to
SMELTERS, in flagrant violation of law and the constitutional provision on inviolability of contracts;
‘(d) NASSCO having, by a Deed of Assignment and Quitclaim dated June 26, 1975 (Exhibit 4), likewise PREVIOUSLY
sold and assigned to Marsmam, for the sum of P32,595.50, 32.575 hectares, including all improvements thereon, out
of the area in question, it may not sell, as it did sell, for the second time, the same property, to SMELTERS, in clear
violation of law and the constitutional provision on inviolability of contracts;
‘(e) Approximately 13.7497 hectares of the area sold by NASSCO to SMELTERS was, at the time of the sale, and up to
this date, of the private ownership of Marsman, previously acquired by it from Amparo P. de los Santos, for the sum
of P45,000.00, under a Deed of Sale, dated June 23, 1975 (Exhibit 5), incident to a compromise agreement in Civil
Case No. 1613 of the Court of first Instance of Camarines Norte, wherein NASSCO was one of the parties defendants;
‘(f) Approximately 22 hectares of the area sold by NASSCO to SMELTERS was, at the time of the sale, and up to this
date, of the private ownership of SAN MAURICIO and MARSMAN, previously acquired by them from the heirs of
Gregorio Bamba, Sr., for the sum of P40,000.00 under a Deed of Sale dated July 4, 1975 (Exhibit 6), incident to a
compromise settlement in Civil Case No. 1452 of the Court of First Instance of Camarines Norte, wherein NASSCO
was likewise one of the parties defendants;
‘(g) Even assuming that NASSCO, a government owned corporation, had been vested with legal title to the property
in dispute, the sale made by it in favor of SMELTERS, a privately owned corporation, is in any case null and void, as
clearly violative of public interest and wanting in valid consideration therefor, considering that the Government had
invested approximately Fifty Million Pesos (P50,000,000.00) as appropriated by it under Republic Act No. 1306, for
the pig iron smelting plant therein established, with NASSCO subsequently selling the same to SMELTERS for the
immoral and measly sum of P8,514.45 down, and the stipulated balance of P76,630.00 in easy installments payable
up to July 1986 (See Deed of Sale, Exhibit 11);’
"II
"THE TRIAL COURT ERRED IN NOT DECLARING AND HOLDING THAT PRESIDENTIAL DECREE NO. 837 UNDER WHICH
NASSCO CLAIMED TITLE TO THE 170.2890 HECTARES OF LAND SOLD BY IT TO SMELTERS, IS NULL AND VOID, AS
VIOLATIVE OF THE RIGHTS, TITLE AND INTERESTS OF SAN MAURICIO AND MARSMAN IN AND TO THE PROPERTY IN
DISPUTE, CONSTITUTING, AS IT DOES, UNDUE DIVESTMENT OF EXISTING VESTED LEGAL RIGHTS, WITHOUT DUE
PROCESS OF LAW.
"III
"THE TRIAL COURT ERRED IN HOLDING AND DECLARING THAT BOTH PROCLAMATION NO. 500, DATED DECEMBER
23, 1968, AND PRESIDENTIAL DECREE NO. 837, DATED DECEMBER 6, 1975, HAVE ABROGATED BOTH SAN
MAURICIO’S AND MARSMAN’S EXISTING PRIVATE RIGHTS WHICH THEY HAVE ACQUIRED UNDER AND BY VIRTUE OF
THE PROVISIONS OF THE ACT OF CONGRESS OF JULY 1, 1902.
"IV
"THE TRIAL COURT ERRED IN NOT VOIDING AND NULLIFYING TRANSFER CERTIFICATES OF TITLE NOS. 13060, 13502
UP TO 13521 REGISTERED IN THE NAME OF SMELTERS AND IN HOLDING THAT SMELTERS IS THE ABSOLUTE OWNER
OF THE LANDS AND IMPROVEMENTS THEREON AND TO ALL SURFACE RIGHTS THEREIN.
"V
"THE TRIAL COURT ERRED IN HOLDING AND DECLARING THAT THE CONTRACT OF SALE AND ASSIGNMENT OF
RIGHTS, DATED NOVEMBER 23, 1973, EXECUTED BY NASSCO IN FAVOR OF SAN MAURICIO (EXHIBIT 2) LACKS
APPROVAL OF THE OFFICE OF THE PRESIDENT IN THAT THE SIGNATURE OF ASST. EXECUTIVE SECRETARY ZAMORA
APPROVING THE SAME (EXH. H), IS FORGERY, AND THAT THE DEED OF ASSIGNMENT OF RIGHTS, DATED JUNE 26,
1975, LIKEWISE EXECUTED BY NASSCO IN FAVOR OF MARSMAN (EXHIBIT 4) IS INOFFICIOUS; AND AS SUCH, BOTH
SAN MAURICIO AND MARSMAN DID NOT ACQUIRE VALID TITLE TO THE PROPERTIES COVERED THEREBY.
"VI
"THE TRIAL COURT ERRED IN HOLDING AND DECLARING THAT THE SHERIFF’S CERTIFICATE OF FINAL DEED (EXH. 3) IS
NULL AND VOID ON THE GROUND THAT THE PROPERTY SOLD AND COVERED THEREBY IS PART OF THE PUBLIC
DOMAIN.
"VII
"THE TRIAL COURT ERRED IN DISMISSING THE THIRD PARTY COMPLAINT FILED BY SAN MAURICIO AND MARSMAN
AGAINST NASSCO AND IN DECLARING THAT SUIT AGAINST NASSCO MAY NO LONGER BE MAINTAINED AFTER THREE
YEARS FROM THE DATE OF TERMINATION OF ITS CORPORATE EXISTENCE ON JANUARY 6, 1976.
"VIII
"THE TRIAL COURT ERRED IN NOT HOLDING AND DECLARING THAT SAN MAURICIO AND MARSMAN HAVE THE RIGHT
TO REPURCHASE FROM NASSCO THE REMAINING AREA (CONSISTING OF 18 HECTARES TOGETHER WITH ALL ITS
IMPROVEMENTS SHOWN IN THE PLAN, EXHIBIT 10, AS LOT 261-C) NOW IN THE POSSESSION OF SMELTERS, WHICH
NASSCO PREVIOUSLY ACQUIRED PROM SAN MAURICIO SUBJECT TO SUCH RIGHT OF REPURCHASE DULY AND
EXPRESSLY ACKNOWLEDGED BY NASSCO IN THE DEEDS OF SALE AND ASSIGNMENT, EXHIBITS 2 AND 4;
"IX
"THE TRIAL COURT ERRED IN DECLARING BY WAY OF OBITER DICTUM THAT SAN MAURICIO CONVEYED TO NASSCO
SOME 20 MINERAL CLAIMS WITHIN THE AREA IN DISPUTE.
"X
"THE TRIAL COURT ERRED IN CONDEMNING MARSMAN AND SAN MAURICIO, JOINTLY AND SEVERALLY, TO PAY
SMELTERS THE AGGREGATE SUM OF P7,587,843.98 BY WAY OF DAMAGES IN THE FORM OF ALLEGED UNEARNED
PROFITS, EXPENSES AND ATTORNEY’S FEES, INCIDENT TO, AND AS A RESULT OF, THE ANNOTATION BY SAN
MAURICIO AND MARSMAN OF THEIR ADVERSE CLAIM ON THE PROPERTIES COVERED BY NASSCO’S CERTIFICATE OF
TITLE AND THOSE OF SMELTERS WHICH WERE DERIVED THEREFROM.
"XI
"THE TRIAL COURT ERRED IN NOT DISMISSING THE COMPLAINT FILED BY SMELTERS AGAINST SAN MAURICIO,
MARSMAN AND MOYA." (Pp. 35-42, Brief of Defendants-Appellants.)
And so, according to appellants, the following are the "salient" issues in the cases at bar:jgc:chanrobles.com.ph
"1. Whether or not the vested legal rights of SAN MAURICIO AND MARSMAN in and to their mining claims, surface
rights and existing improvements, within the area in dispute, which were located and acquired by them and their
predecessors in interest under the provisions of the Act of Congress of July 1, 1902, and other law, continue to be
valid, effective and subsisting, notwithstanding the issuance of Presidential Decree No. 837, vesting title unto
NASSCO of 170.2890 hectares of land within the said mineral claims.
"2. Whether or not the reconveyances made by NASSCO firstly, to SAN MAURICIO under the Contract of Sale and
Assignment of Rights, dated November 23, 1973, covering 93.518 hectares of surface rights, for and in consideration
of the sum of P200,000.00 (Exhibit 2, R.A. 52-68), and, secondly, to MARSMAN under the Deed of Assignment and
Quitclaim, dated June 26, 1975, covering 32.575 hectares of surface rights, for and in consideration of the sum of
P32,595.50 (Exhibit 4, R.A. 77-88), are valid and effective;
"3. Whether or not NASSCO after having sold and reconveyed to SAN MAURICIO and MARSMAN, respectively, for
the aggregate sum of P232,595.50, the totality of 125.093 hectares of surface rights above referred to, may sell for
the second time, to SMELTERS, the identical properties (Exh. 11, R.A. 102-118) without infringing upon the law and
the constitutional provision on inviolability of contracts;
"4. Whether or not the Deed of Sale executed by NASSCO in favor of SMELTERS, dated December 29, 1975,
conveying government property worth millions of pesos, (Exhibit 11, R.A. 102-118) is valid and effective,
notwithstanding the fact that it is clearly violative of public interest and absolutely wanting of valid consideration,
apart from the fact that it has not been duly approved by the President of the Philippines;
"5. Whether or not, in view of the foregoing, SAN MAURICIO and MARSMAN had the legal right to have annotated
their adverse claim on the properties covered by the title issued to NASSCO under Presidential Decree No. 837, and
those derived therefrom issued thereafter to SMELTERS;
"6. Whether or not the Sheriff’s Certificate of Final Deed dated November 4, 1975, in favor of MARSMAN (Exh. 3,
R.A. 88-102) in consequence of the mortgage foreclosure of the mining claims, mining rights, improvements and
other properties of SAN MAURICIO therein described, for and in consideration of the sum of P3,961,973.75, is valid
and effective;
"7. Whether or not SMELTERS is entitled to an award for damages in the aggregate sum of P7,587,843.98 (Decision,
R.A. 1042-1116) by reason of the said annotation of adverse claim made by SAN MAURICIO and MARSMAN." (Pp. 33-
35, id.)
We have carefully read the very lucid discussion of these assignments of error, and it must be admitted that
appellants have made a creditable and forceful presentation of their cause. Taken alone, one could readily be
convinced by appellants’ brief that indeed the trial court erred as pointed out by them.
But it is most important to note that beyond the issues so well presented and discoursed by appellants lies the sole
point of fact that is to Our mind decisive in these cases. All the vehement and ingenious arguments and counter-
arguments regarding the validity of the documents of sale or resale of November 23, 1973 by NASSCO to SAN
MAURICIO, of June 26, 1975 also by NASSCO in favor of MARSMAN and other documents related may be deemed as
merely peripheral and tangential, if not immaterial, as long as it is not determined definitely what was conveyed by
SAN MAURICIO to NASSCO on November 19, 1957. If what was transferred then included the mining claims and
mineral rights of SAN MAURICIO, We would have no alternative than to make Our decision on that basis, pursuing to
their logical conclusion the legal effects of Proclamation 500 of December 23, 1968 and Presidential Decree 837 of
December 6, 1975 upon whatever transactions might have transpired among the parties hereto.
We say that the question of what was sold by SAN MAURICIO to NASSCO on November 19, 1957 is the pivotal point
to be determined here because it cannot be denied that from the constitutional point of view and in the light of the
vested rights principle, if the mineral rights and mining claims of SAN MAURICIO were perfected before that date,
and it sold to NASSCO only the "surface rights" in their 170 hectares of land, then neither Proclamation 500 nor
Presidential Decree 837 could deprive it of those mineral rights and mining claims.
In connection with this vital issue, SMELTER’s brief posits that the very document of transfer itself, copy of which is
annexed to it as Appendix "A" is the indubitable proof that what were conveyed were not only the surface rights but
the mining claims themselves. Thus, the pertinent portion of the said document states clearly and
unequivocally:jgc:chanrobles.com.ph
"That for and in consideration of the amount of TWO HUNDRED THOUSAND PESOS (P200,000.00), Philippine
Currency, to be paid by the NATIONAL SHIPYARDS AND STEEL CORPORATION, a corporation organized and existing
under and by virtue of the laws of the Philippines, with office at Engineer Island, Port Area, Manila, the SAN
MAURICIO MINING COMPANY, convey unto the NATIONAL SHIPYARDS AND STEEL CORPORATION, any and all of its
rights, participations, equities and interests in and to those twenty (20) mining claims located on the parcels of land
itemized and described in Annex ‘A’ at this instrument, as well as to all those improvements erected and existing
thereon more specifically itemized and described in Annex ‘B’ hereof." (Emphasis supplied) (Pp. 78-79, Brief for
Plaintiff-Appellee.)
We cannot close Our eyes to the unambiguous tenor of this quoted paragraph. Indeed, We have no basis to discuss
"surface rights" at all, for those words do not even appear in the document. Two other paragraphs thereof make
explicit reference also to mining claims, not "surface rights", We quote:jgc:chanrobles.com.ph
"It is further a condition of this instrument that upon the payment to the REHABILITATION FINANCE CORPORATION
of the amount of TWO HUNDRED THOUSAND PESOS (P200,000.00), the REHABILITATION FINANCE CORPORATION
will release the mining claims located on those parcels of land described in Annex ‘A ‘ as well as the improvements
erected and existing thereon itemized and described in Annex ‘B’ hereof, from the mortgage liability.
"The SAN MAURICIO MINING COMPANY shall forthwith, after such payment by the NATIONAL SHIPYARDS AND STEEL
CORPORATION and release by the REHABILITATION FINANCE CORPORATION, waive unto and in favor of the
NATIONAL SHIPYARDS AND STEEL CORPORATION any and all of its rights, title and interests in and to those Twenty
(20) mining claims located on the parcels of land described in Annex ‘A’ as well as those buildings and improvements
recited in Annex ‘B’ hereof" (Emphasis supplied) (Idem).
Not without some degree of strictly technical plausibility, appellants contend that SMELTERS’ production of the
abovequoted instrument of transfer of November 19, 1957 is out of place in this Court, the same not having been
introduced or presented as evidence at the trial.
To begin with, with rare commendable candidness in advocacy, and induced evidently by the undeniable accuracy of
said Appendix "A", 2 instead of standing pat on their technical procedural objection, appellants would want Us to
devalue said document by maintaining that "contemporaneous and subsequent acts of the vendor (SAN MAURICIO)
and the vendee (NASSCO) in relation therewith, covering a period of over 16 years, clearly show that they treated
the instrument of sale to the exclusion of the 20 mining claims, since NASSCO under its charter was not authorized to
engage in mining." (p. 5, Appellants’ Reply Brief) And the case of Nielson & Co., Inc. v. Lepanto Consolidated Mining
Co., 18 SCRA 1050-1051 and the earlier one of Canuto v. Mariano, 37 Phil. 840 are cited to support the proposition
that in the construction of contracts the intention of the parties may be proven by subsequent acts.
The Court does not see how the cases cited can be controlling in the cases at bar. The primary and elementary rule
of construction of documents is that when the words or language thereof is clear and plain or readily understandable
by any ordinary reader thereof, there is absolutely no room for interpretation or construction anymore. What the
case of Nielson had in contemplation was a contract the language of which evinced doubt as to the intention of the
parties, hence the ruling that once the intention is determined it becomes part of it as if "originally expressed therein
in unequivocal terms." As far as the Mariano case is concerned, it referred to agreements subsequent to the
questioned contract and the issue was whether or not parol evidence could be admitted to prove the later
agreement, and, naturally, this Court rightly held that such subsequent agreement was not covered by the parol
evidence rule, since the said rule covers only prior and contemporaneous agreements which are deemed to be
integrated into the written contract.
More importantly, however, appellants’ attempt to demonstrate the so-called "contemporaneous and subsequent
acts of vendor and vendee" is successfully rebutted in appellees’ rejoinder brief. Two points (I) that SAN MAURICIO
filed affidavits of assessments from/after 1957 is pointedly belied by Annex "A" of the said rejoinder brief, a
certificate of Leopoldo L. de Jesus, Register of Deeds & Mining Recorder of the Bureau of Mines at Daet, Camarines
Norte that it is true that SAN MAURICIO owned 120 claims at Luklukan, Jose Panganiban, Camarines Norte, but that
during the year 1958, the San Mauricio Mining Company appears to have filed affidavits for only one hundred (100)
claims, not including the following twenty (20) claims listed:jgc:chanrobles.com.ph
"1. Pat Fr. 11. Washington No. 1
2. Atlantic Fr. 12. Washington

3. Mambulao Fr. 13. Brooklyn
4. Jonny No. 2 14. Seattle No. 1 Fr.
5. Pacific No. 2 15. California
6. Seattle No. 6 16. Honey Fr.
7. Pittsburg 17. Seattle No. 2
8. Pacific 18. Seattle Fr.
9. Seatle No. 4 19. Tacoma
10. Tacoma No. 4 20. Jonny Fr. 2"
(Page 27, Rejoinderpellants’ Brief.).
which appear to be the very claims subject of the conveyances and reconveyances of November 19, 1957 and
November 23, 1973. No rejoinder brief or any subsequent pleading having been filed by appellants, We take it that
such official certification can be considered as correct, if only because of the presumption of regularity that is
stamped on it as an official document, even if its original is not with Us, although We believe it can be presented
anytime.
(2) As to the authority of NASSCO to engage in mining, suffice it to point out that under Executive Order No. 399, the
Uniform Charter for Government Corporations, Section 3 thereof provides:jgc:chanrobles.com.ph
"SEC. 3. Purposes and Specific Powers. — The purposes and specific powers of existing corporations that are subject
to this Charter are those enumerated in Annex A hereof."cralaw virtua1aw library
and under No. 10 of the Annex A therein referred to, it is provided thus:jgc:chanrobles.com.ph
"10. National Shipyards and Steel Corporation
(NASSCO)
"Authorized capital —
"Purposes:jgc:chanrobles.com.ph
"(a) To engage in the building and/or repair of ships, vessels, launches, tugs, barges, dredges, fernes, scows, lighters
and other floating or marine craft and equipment;
"(b) To purchase and/or otherwise acquire, own, control, operate, maintain, build and/or repair slipways, floating
and dry docks;
"(c) To undertake the fabrication, manufacture and/or repair of light and heavy machinery, equipment, structures,
implements, tools, hardware and other articles;
"(d) To acquire, construct and operate iron and steel mills, ferrous and non-ferrous foundries, furnaces, smelters and
other mills and plants for light and heavy industries;
"(e) To acquire the right-of-way to locate, construct and maintain works and/or appurtenances over and throughout
the lands and waters owned by the Republic of the Philippines, or any of its branches or political subdivisions; and to
exercise the right of eminent domain for the purposes of this Order in the manner provided by law for instituting
condemnation proceedings."cralaw virtua1aw library
under which it may be implied that the purchase in question was along the line of NASSCO’s ultimate functions. In
any event, the lack of authority or right to operate is not necessarily exclusive of the right to own. It is not difficult to
conceive the inconvenience and complications that can result from the ownership of surface rights separately from
that of the mineral claims underneath in the situation of NASSCO under the provisions aforequoted. Moreover, if
NASSCO needed only the surface rights and SAN MAURICIO really wanted to retain its mining claims, with each of
the parties having at their beck and call, what with their respective resources, lawyers of nationally well recognized
talent and ability, why did they execute a document that anyone can only read otherwise?
Under these circumstances, We are convinced that, all technical ratiocinations notwithstanding, the incontrovertible
fact that appears clear and indisputable is that by the Deed of Transfer of November 19, 1957, NASSCO acquired
from SAN MAURICIO not only surface rights over the latter’s land in question but actually its mining claims and
mineral rights explicitly specified in said document. We hold, consequently, that neither Proclamation 500 nor
Presidential Decree 837 deprived either SAN MAURICIO or MARSMAN of any vested rights in the lands here in
dispute.
Having arrived at this conclusion, it should be readily understandable, as it would be inevitable, how the rest of the
remaining issues in this controversy have to be resolved.
The main prop of appellants’ posture is obviously the resale or retransfer document from NASSCO to SAN MAURICIO
of November 23, 1973, particularly because, for reasons not satisfactorily shown even by appellants themselves, it
refers to the "Deed of Absolute Sale" of November 19, 1957 as one "of the surface rights over 144.62 hectares of
land covering twenty mining claims of SAN MAURICIO - to be the site of the Jose Panganiban Smelting Plant of
NASSCO." Perhaps, if all that We had to consider were the face of the document thus relied upon by appellants, We
could probably recognize the validity of their defenses and counterclaims herein.chanroblesvirtualawlibrary
But looking deeper into the relevant circumstances, We cannot but realize certain insurmountable obstacles that to
Our mind completely bar the prayers of appellants. We have already remarked that even the luminous and
comprehensive pleadings and briefs of appellants do not give Us a glimpse of the inscrutable factors that led to the
preparation and signing or execution of the resale document in question in its extant tenor. If fault therefor could be
attributed to a failure of the public officials who took part therein, We can only say that as a matter of law rooted in
the protection of public interest, and also as a general policy to protect the government and the people against
misbehavior or mischief of its personnel, their errors in the performance of their duties should never deprive the
people of the right to rectify such error and recover what might be lost or be bartered away in any actuation, deal or
transaction concerned. It must be borne in mind vis-a-vis the instant cases at bar that NASSCO together with other
government owned or controlled corporations was placed under the Uniform Charter of Government Corporations
thus partaking of the nature of a regular government or official public entity. Correspondingly, therefore, the
mistakes of its officials could not legally bind the state, without prejudice in appropriate cases where connivance or
corruption is absent, to the other party being duly reimbursed any payment it has made.
We have carefully read the documents alluded to by appellants, beginning with the resale deed of November 23,
1973 thru the deed of assignment in favor of MARSMAN dated June 26, 1975, and, of course, all the other papers
which are subsidiary thereto, complimentary thereof or have evidently flowed therefrom, and truth to tell, they do
refer to "surface rights." But We cannot go against the hard fact We have found indubitably demonstrated by
appellees that the original transaction of November 19, 1957 definitely referred to mining claims. No plausible
explanation has been shown of the apparent discrepancy, and the only inference We can make out of it is that the
public officials who took part in the preparation thereof were either unaware of the exact import of the documents
or the situation they were dealing with, or, were induced by factors which cannot be revealed. In any event, the
public interest involved in the matter cannot be made to suffer, as We have already explained, by their strange or
unusual actuations.
What compounds the unexplained and inexplicable tenor of the deeds and documents relied upon by appellants is
that after the issuance by His Excellency, President Ferdinand E. Marcos of Proclamation No. 500 on December 23,
1968, that is, while the deed of transfer of November 19, 1957 was still the basis of the government’s ownership of
the land in question, including the mineral or mining claims in question, the said property was withdrawn "from sale
or settlement" and placed "under the administration (only and no more) of the National Shipyards and Steel
Corporation." Upon these premises, it is indubitable that NASSCO had no legal authority whatsoever to dispose of
what was placed under its administration only, and any official of NASSCO who acted in excess of the powers defined
by the proclamation performed nothing more, nothing less than ultra vires acts entirely devoid of any effect or force
in law.
With what We have just discussed and held it would hardly be necessary for Us to delve deep into the factual issue
of whether or not the Deed of Transfer dated November 23, 1973, Exhibit C-2, was approved by the Office of the
President. The lengthy and well rationalized discourse of the trial court leading to the conclusion that the signature
of former Assistant Executive Secretary, now Assemblyman, Hon. Ronaldo Zamora had been forged, a conclusion
based mainly on the testimony of Assemblyman Zamora himself, not only denying the authenticity of the signature
over the name reading Rolando Zamora (instead of Ronaldo, his real name) but explaining the badges therein
showing lack of regularity thereof thus revealing its falseness, satisfies Us, and We do not hesitate to give Our assent
thereto. Specially having in view the lack of legal authority of the NASSCO officials concerned to act on the matter in
the light of Proclamation 500, We also find and hold that the supposed transaction with MARSMAN of June 26, 1975
has not been sufficiently shown to have been approved by then Assistant Executive Secretary Roberto Reyes. Indeed,
how could those alleged transactions have been approved when they appeared on their faces to be violative of
Proclamation 500 which had not been neither repealed nor even amended in any manner which would make
disposal by NASSCO of the property in question permissible? Why would NASSCO retransfer or reconvey surface
rights when it acquired mining claims?
Withal, looking at this particular point in dispute from another angle, the unavoidable conclusion would still favor
appellee SMELTERS, for assuming that NASSCO did retransfer to appellants the "surface rights" referred to in the
pertinent deeds, not only would the result be that the mining claims were intentionally excluded from the retransfer
but also that NASSCO reserved the right to withdraw "anytime the use of the surface rights from (Marsman, in
particular) as public interest may so require as may be determined by the President pursuant to the context of
Proclamation No. 500, series of 1968." (See p. 126, Record) 3
And what totally and definitely consolidated in NASSCO the full ownership of the properties herein involved-mining
claims, surface rights and improvements and all-and made its authority to dispose of and transfer the same to
appellees all the more unquestionable and, therefore, the sale impugned here indisputably valid and legal was the
legislative recognition, even if, in the juridical sense, this was practically superfluous, of NASSCO’s ownership of said
properties with right, power and authority to sell and dispose of the same, by Presidential Decree 837 of December
6, 1975. It provides:jgc:chanrobles.com.ph
"PRESIDENTIAL DECREE NO. 837
"AN ACT TRANSFERRING OWNERSHIP OF A CERTAIN PARCEL OF LAND OF THE PUBLIC DOMAIN SITUATED IN THE
MUNICIPALITY OF JOSE PANGANIBAN, PROVINCE OF CAMARINES NORTE, ISLAND OF LUZON TO THE NATIONAL
SHIPYARDS AND STEEL CORPORATION (NASSCO) AND AUTHORIZING THE DISPOSITION THEREOF."cralaw virtua1aw
library
"WHEREAS, in pursuance of the national policy of allowing the private sector to take over enterprises pioneered by
the government when the private sector is ready and capable to continue and improve a particular government
endeavor and in the interest of the National government, various government performance evaluation and/or study
groups have recommended the disposition of all NASSCO properties and units, including the Jose Panganiban
Smelting Plant at Jose Panganiban, Camarines Norte.
"WHEREAS, under Proclamation No. 500 dated December 23, 1968, a parcel of land situated in the Municipality of
Jose Panganiban, Province of Camarines Norte, Island of Luzon Bounded on the W., along lines 1-2-3-4-5-6-7-8-9-10-
11-12-13-14-15-16, by Mambulao Bay; on the N., along lines 16-17-18-19-20-21, by Forest Reserve; and on the E and
S, along lines 21-22-23-24-25-26-27-1 by project No. 2, Block VI (Alien & Disp.) LC-403, containing an area of
approximately 170.2890 hectares, more or less, has been withdrawn from sale and settlement and reserved for pier,
warehouse and smelting plant site purposes under the administration of the NASSCO.
"WHEREAS, as mandated under Republic Act 1396, NASSCO constructed, established and operated in said site a big
iron smelting plant with pier and other plant facilities known as the Jose Panganiban Smelting Plant;
"WHEREAS, in order to facilitate the disposition of all assets of NASSCO including the Jose Panganiban Smelting
Plant, there is a need to transfer ownership of said parcel of land to the NASSCO;
"NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by
the Constitution of the Philippines, hereby decree as follows:jgc:chanrobles.com.ph
"SECTION 1. The title to and ownership of that certain parcel of land, situated in the Municipality of Jose Panganiban,
Province of Camarines Norte, Island of Luzon, bounded on the W., along lines 1-2-3-4-5-6-7-8-9-10-11-12-13-14-15-
16, by Mambulao Bay; on the N., along lines 16-17-18-19-20-21, by Forest Reserve; and on the E and S, along lines
21-22-23-24-25-26-27-1; by project No. 2, Block VI (Alien & Disp.) LC-403, containing an area of approximately
170.2890 hectares, is hereby transferred to and vested in the NASSCO.
"SEC. 2 The said parcel of land herein conveyed shall be resurveyed by the Bureau of Lands within fifteen (15) days
from the promulgation of this Decree to ascertain its actual location and boundaries. Thereafter, the proper Register
of Deeds shall register the same and issue the corresponding certificate of title to the NASSCO.
"SEC. 3. Any provision of law, proclamation ordinance, rules and regulations to the contrary notwithstanding, the
NASSCO may transfer absolute ownership of said parcel of land or any portion thereof and convey the same to
persons or corporations qualified to acquire land under the Constitution, either through public bidding or through
negotiations, as the interest of the government warrants.
"SEC. 4. All laws, executive orders, proclamation, rules and regulations or part thereof inconsistent with this Decree
are hereby repealed and/or modified accordingly.
"SEC. 5. This Decree shall take effect immediately.
Done in the City of Manila this 6th day of December, in the year of Our Lord, nineteen hundred and seventy
five."cralaw virtua1aw library
Coming now to the two supposedly private lands of Amparo de los Santos and the Bambas, comprising thirteen (13)
and twenty-two (22) hectares, respectively, We note that although NASSCO was a party to the two compromised
civil cases involving the same, as defendant, together with SAN MAURICIO and MARSMAN, NASSCO does not appear
to be a party to "Deed of Assignment and Quitclaim Rights to Real Property" dated June 23, 1975, Annex 5 of SAN
MAURICIO’s and MARSMAN’s third party-complaint nor to the Deed of Sale by the Bambas of July 4, 1975, Annex 6,
id. More, it is expressly stipulated in Annex 5, just referred to, that" (T)his sale or assignment and quitclaim made in
favor of the Second Party (Marsman) is deemed subject to whatever rights that the National Shipyards and Steel
Corporation (Nassco), party defendant in Civil Case No. 1613 aforementioned, may still have, if any in the area",
thereby indicating that NASSCO had not compromised its own claim.
Nonetheless, We find Ourselves in no position in the instant cases at bar to make any final ruling regarding the said
properties. Those lands of Amparo de los Santos and the Bambas were involved in Civil Cases Nos. 1613 and 1452 of
the Court of First Instance of Camarines Norte. They appear to be private agricultural lands. But the records of those
cases, are not before Us in the instant proceedings, neither the papers of the amicable settlement thereof. We
consider Ourselves unable to make any definite ruling as to them, considering particularly, that the trial court made
no particular finding regarding them in its rather extensive decision. Under these circumstances, We have no
alternative but to decide the present cases only insofar as they affect the deeds of November 23, 1973 and June 26,
1975 in relation to the acquisition of NASSCO of the mining claim of SAN MAURICIO on November 19, 1957, as above
discussed, without prejudice to the appellee taking the corresponding legal steps to make clearer its rights over the
38 hectares just mentioned. In other words, We hold and declare that the sale by NASSCO on December 29, 1975 to
appellee SMELTERS of the lands covered by the deed of SAN MAURICIO in favor of NASSCO of November 19, 1957,
bearing as it does the President’s approval on January 6, 1976 (See Annex 1 of Comment of defunct NASSCO dated
February 12, 1979) is legal and valid, the alleged inadequacy, or even "immorality" of the considerations therein
stated notwithstanding, the justification of the stipulated consideration being sufficiently discussed in the decision of
the trial court, with which We find no cogent reason to disagree. As His Honor well pointed out, the price alleged by
appellants is in truth even inaccurate, for the amount of money actually paid by SMELTERS, as stipulated in the deed
is much more, in addition to obligations undertaken by the buyer to rehabilitate and develop the property and
smelting plant which will require a considerable sum, justly adequate for which it bought what is practically a long
abandoned junk that had lost its original purchase price. We have read the deed itself and take judicial notice of the
relevant circumstances surrounding its execution as such are indicated in the appealed decision and hereby confirm
His Honor’s conclusion.
As regards the damages assessed by the trial court against appellants, We consider the amount awarded by the trial
court as supported by the evidence of record and the law. However, the prayer for additional damages of appellee
ought to be submitted for evaluation by the trial court in a subsequent hearing for the purpose.
WHEREFORE, judgment is hereby rendered affirming the decision of the trial court dated August 21, 1979, subject to
the qualifications stated in the above opinion as to the de los Santos’ and the Bambas’ properties and the additional
damages asked by appellees. With this decision, the petition in G.R. No. L-47859 involving the partial summary
judgment of September 22, 1975 is now virtually moot and academic, since the partial judgment and immediate
execution therein involved are in line with the foregoing opinion.
Costs against appellants.
G.R. No. L-53955 January 13, 1989
THE MANILA BANKING CORPORATION, plaintiff-appellee,

vs.
ANASTACIO TEODORO, JR. and GRACE ANNA TEODORO, defendants-appellants.
Formoso & Quimbo Law Office for plaintiff-appellee.
Serafin P. Rivera for defendants-appellants.
BIDIN, J.:
This is an appeal from the decision* of the Court of First Instance of Manila, Branch XVII in Civil Case No. 78178 for
collection of sum of money based on promissory notes executed by the defendants-appellants in favor of plaintiff-
appellee bank. The dispositive portion of the appealed decision (Record on Appeal, p. 33) reads as follows:
WHEREFORE judgment is hereby rendered (a) sentencing defendants, Anastacio Teodoro, Jr. and Grace Anna
Teodoro jointly and severally, to pay plaintiff the sum of P15,037.11 plus 12% interest per annum from September
30, 1969 until fully paid, in payment of Promissory Notes No. 11487, plus the sum of P1,000.00 as attorney's fees;
and (b) sentencing defendant Anastacio Teodoro, Jr. to pay plaintiff the sum of P8,934.74, plus interest at 12% per
annum from September 30, 1969 until fully paid, in payment of Promissory Notes Nos. 11515 and 11699, plus the
sum of P500.00 an attorney's fees.
With Costs against defendants.
The facts of the case as found by the trial court are as follows:
On April 25, 1966, defendants, together with Anastacio Teodoro, Sr., jointly and severally, executed in favor of
plaintiff a Promissory Note (No. 11487) for the sum of P10,420.00 payable in 120 days, or on August 25, 1966, at 12%
interest per annum. Defendants failed to pay the said amount inspire of repeated demands and the obligation as of
September 30, 1969 stood at P 15,137.11 including accrued interest and service charge.
On May 3, 1966 and June 20, 1966, defendants Anastacio Teodoro, Sr. (Father) and Anastacio Teodoro, Jr. (Son)
executed in favor of plaintiff two Promissory Notes (Nos. 11515 and 11699) for P8,000.00 and P1,000.00
respectively, payable in 120 days at 12% interest per annum. Father and Son made a partial payment on the May 3,
1966 promissory Note but none on the June 20, 1966 Promissory Note, leaving still an unpaid balance of P8,934.74
as of September 30, 1969 including accrued interest and service charge.
The three Promissory Notes stipulated that any interest due if not paid at the end of every month shall be added to
the total amount then due, the whole amount to bear interest at the rate of 12% per annum until fully paid; and in
case of collection through an attorney-at-law, the makers shall, jointly and severally, pay 10% of the amount over-
due as attorney's fees, which in no case shall be leas than P200.00.
It appears that on January 24, 1964, the Son executed in favor of plaintiff a Deed of Assignment of Receivables from
the Emergency Employment Administration in the sum of P44,635.00. The Deed of Assignment provided that it was
for and in consideration of certain credits, loans, overdrafts and other credit accommodations extended to
defendants as security for the payment of said sum and the interest thereon, and that defendants do hereby remise,
release and quitclaim all its rights, title, and interest in and to the accounts receivables. Further.
(1) The title and right of possession to said accounts receivable is to remain in the assignee, and it shall have the right
to collect the same from the debtor, and whatsoever the Assignor does in connection with the collection of said
accounts, it agrees to do as agent and representative of the Assignee and in trust for said Assignee ;
xxx xxx xxx
(6) The Assignor guarantees the existence and legality of said accounts receivable, and the due and punctual
payment thereof unto the assignee, ... on demand, ... and further, that Assignor warrants the solvency and credit
worthiness of each and every account.
(7) The Assignor does hereby guarantee the payment when due on all sums payable under the contracts giving rise
to the accounts receivable ... including reasonable attorney's fees in enforcing any rights against the debtors of the
assigned accounts receivable and will pay upon demand, the entire unpaid balance of said contract in the event of
non-payment by the said debtors of any monthly sum at its due date or of any other default by said debtors;
xxx xxx xxx
(9) ... This Assignment shall also stand as a continuing guarantee for any and all whatsoever there is or in the future
there will be justly owing from the Assignor to the Assignee ...
In their stipulations of Fact, it is admitted by the parties that plaintiff extended loans to defendants on the basis and
by reason of certain contracts entered into by the defunct Emergency Employment Administration (EEA) with
defendants for the fabrication of fishing boats, and that the Philippine Fisheries Commission succeeded the EEA after
its abolition; that non-payment of the notes was due to the failure of the Commission to pay defendants after the
latter had complied with their contractual obligations; and that the President of plaintiff Bank took steps to collect
from the Commission, but no collection was effected.
For failure of defendants to pay the sums due on the Promissory Note, this action was instituted on November 13,
1969, originally against the Father, Son, and the latter's wife. Because the Father died, however, during the
pendency of the suit, the case as against him was dismiss under the provisions of Section 21, Rule 3 of the Rules of
Court. The action, then is against defendants Son and his wife for the collection of the sum of P 15,037.11 on
Promissory Note No. 14487; and against defendant Son for the recovery of P 8,394.7.4 on Promissory Notes Nos.
11515 and 11699, plus interest on both amounts at 12% per annum from September 30, 1969 until fully paid, and
10% of the amounts due as attorney's fees.
Neither of the parties presented any testimonial evidence and submitted the case for decision based on their
Stipulations of Fact and on then, documentary evidence.
The issues, as defined by the parties are: (1) whether or not plaintiff claim is already considered paid by the Deed of
Assign. judgment of Receivables by the Son; and (2) whether or not it is plaintiff who should directly sue the
Philippine Fisheries Commission for collection.' (Record on Appeal, p. 29- 32).
On April 17, 1972, the trial court rendered its judgment adverse to defendants. On June 8, 1972, defendants filed a
motion for reconsideration (Record on Appeal, p. 33) which was denied by the trial court in its order of June 14, 1972
(Record on Appeal, p. 37). On June 23, 1972, defendants filed with the lower court their notice of appeal together
with the appeal bond (Record on Appeal, p. 38). The record of appeal was forwarded to the Court of Appeals on
August 22, 1972 (Record on Appeal, p. 42).
In their appeal (Brief for the Appellants, Rollo, p. 12), appellants raised a single assignment of error, that is —
THAT THE DECISION IN QUESTION AMOUNTS TO A JUDICIAL REMAKING OF THE CONTRACT BETWEEN THE PARTIES,
IN VIOLATION OF LAW; HENCE, TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION.
As the appeal involves a pure question of law, the Court of Appeals, in its resolution promulgated on March 6, 1980,
certified the case to this Court (Rollo, p. 24). The record on Appeal was forwarded to this Court on March 31, 1980
(Rollo, p. 1).
In the resolution of May 30, 1980, the First Division of this Court ordered that the case be docketed and declared
submitted for decision (Rollo, p. 33).
On March 7, 1988, considering the length of time that the case has been pending with the Court and to determine
whether supervening events may have rendered the case moot and academic, the Court resolved (1) to require the
parties to MOVE IN THE PREMISES within thirty days from notice, and in case they fail to make the proper
manifestation within the required period, (2) to consider the case terminated and closed with the entry of judgment
accordingly made thereon (Rollo, p. 40).
On April 27, 1988, appellee moved for a resolution of the appeal review interposed by defendants-appellants (Rollo,
p. 41).
The major issues raised in this case are as follows: (1) whether or not the assignment of receivables has the effect of
payment of all the loans contracted by appellants from appellee bank; and (2) whether or not appellee bank must
first exhaust all legal remedies against the Philippine Fisheries Commission before it can proceed against appellants
for collections of loan under the promissory notes which are plaintiffs bases in the action for collection in Civil Case
No. 78178.
Assignment of credit is an agreement by virtue of which the owner of a credit, known as the assignor, by a legal
cause, such as sale, dation in payment, exchange or donation, and without the need of the consent of the debtor,
transfers his credit and its accessory rights to another, known as the assignee, who acquires the power to enforce it
to the same extent as the assignor could have enforced it against the debtor. ... It may be in the form of a sale, but at
times it may constitute a dation in payment, such as when a debtor, in order to obtain a release from his debt,
assigns to his creditor a credit he has against a third person, or it may constitute a donation as when it is by
gratuitous title; or it may even be merely by way of guaranty, as when the creditor gives as a collateral, to secure his
own debt in favor of the assignee, without transmitting ownership. The character that it may assume determines its
requisites and effects. its regulation, and the capacity of the parties to execute it; and in every case, the obligations
between assignor and assignee will depend upon the judicial relation which is the basis of the assignment:
(Tolentino, Commentaries and Jurisprudence on the Civil Code of the Philippines, Vol. 5, pp. 165-166).
There is no question as to the validity of the assignment of receivables executed by appellants in favor of appellee
bank.
The issue is with regard to its legal effects.
It is evident that the assignment of receivables executed by appellants on January 24, 1964 did not transfer the
ownership of the receivables to appellee bank and release appellants from their loans with the bank incurred under
promissory notes Nos. 11487,11515 and 11699.
The Deed of Assignment provided that it was for and in consideration of certain credits, loans, overdrafts, and their
credit accommodations in the sum of P10,000.00 extended to appellants by appellee bank, and as security for the
payment of said sum and the interest thereon; that appellants as assignors, remise, release, and quitclaim to
assignee bank all their rights, title and interest in and to the accounts receivable assigned (lst paragraph). It was
further stipulated that the assignment will also stand as a continuing guaranty for future loans of appellants to
appellee bank and correspondingly the assignment shall also extend to all the accounts receivable; appellants shall
also obtain in the future, until the consideration on the loans secured by appellants from appellee bank shall have
been fully paid by them (No. 9).
The position of appellants, however, is that the deed of assignment is a quitclaim in consideration of their
indebtedness to appellee bank, not mere guaranty, in view of the following provisions of the deed of assignment:
... the Assignor do hereby remise, release and quit-claim unto said assignee all its rights, title and interest in the
accounts receivable described hereunder. (Emphasis supplied by appellants, first par., Deed of Assignment).
... that the title and right of possession to said account receivable is to remain in said assignee and it shall have the
right to collect directly from the debtor, and whatever the Assignor does in connection with the collection of said
accounts, it agrees to do so as agent and representative of the Assignee and it trust for said Assignee ...(Ibid. par. 2 of
Deed of Assignment).' (Record on Appeal, p. 27)
The character of the transactions between the parties is not, however, determined by the language used in the
document but by their intention. Thus, the Court, quoting from the American Jurisprudence (68 2d, Secured
Transaction, Section 50) said:
The characters of the transaction between the parties is to be determined by their intention, regardless of what
language was used or what the form of the transfer was. If it was intended to secure the payment of money, it must
be construed as a pledge. However, even though a transfer, if regarded by itself, appellate to have been absolute, its
object and character might still be qualified and explained by a contemporaneous writing declaring it to have been a
deposit of the property as collateral security. It has been Id that a transfer of property by the debtor to a creditor,
even if sufficient on its farm to make an absolute conveyance, should be treated as a pledge if the debt continues in
existence and is not discharged by the transfer, and that accordingly, the use of the terms ordinarily exporting
conveyance, of absolute ownership will not be given that effect in such a transaction if they are also commonly used
in pledges and mortgages and therefore do not unqualifiedly indicate a transfer of absolute ownership, in the
absence of clear and ambiguous language or other circumstances excluding an intent to pledge. (Lopez v. Court of
Appeals, 114 SCRA 671 [1982]).
Definitely, the assignment of the receivables did not result from a sale transaction. It cannot be said to have been
constituted by virtue of a dation in payment for appellants' loans with the bank evidenced by promissory note Nos.
11487, 11515 and 11699 which are the subject of the suit for collection in Civil Case No. 78178. At the time the deed
of assignment was executed, said loans were non-existent yet. The deed of assignment was executed on January 24,
1964 (Exh. "G"), while promissory note No. 11487 is dated April 25, 1966 (Exh. 'A), promissory note 11515, dated
May 3, 1966 (Exh. 'B'), promissory note 11699, on June 20, 1966 (Exh. "C"). At most, it was a dation in payment for
P10,000.00, the amount of credit from appellee bank indicated in the deed of assignment. At the time the
assignment was executed, there was no obligation to be extinguished except the amount of P10,000.00. Moreover,
in order that an obligation may be extinguished by another which substitutes the same, it is imperative that it be so
declared in unequivocal terms, or that the old and the new obligations be on every point incompatible with each
other (Article 1292, New Civil Code).
Obviously, the deed of assignment was intended as collateral security for the bank loans of appellants, as a
continuing guaranty for whatever sums would be owing by defendants to plaintiff, as stated in stipulation No. 9 of
the deed.
In case of doubt as to whether a transaction is a pledge or a dation in payment, the presumption is in favor of
pledge, the latter being the lesser transmission of rights and interests (Lopez v. Court of Appeals, supra).
In one case, the assignments of rights, title and interest of the defendant in the contracts of lease of two buildings as
well as her rights, title and interest in the land on which the buildings were constructed to secure an overdraft from
a bank amounting to P110,000.00 which was increased to P150,000.00, then to P165,000.00 was considered by the
Court to be documents of mortgage contracts inasmuch as they were executed to guarantee the principal
obligations of the defendant consisting of the overdrafts or the indebtedness resulting therefrom. The Court ruled
that an assignment to guarantee an obligation is in effect a mortgage and not an absolute conveyance of title which
confers ownership on the assignee (People's Bank & Trust Co. v. Odom, 64 Phil. 126 [1937]).
II
As to whether or not appellee bank must have to exhaust all legal remedies against the Philippine Fisheries
Commission before it can proceed against appellants for collection of loans under their promissory notes, must also
be answered in the negative.
The obligation of appellants under the promissory notes not having been released by the assignment of receivables,
appellants remain as the principal debtors of appellee bank rather than mere guarantors. The deed of assignment
merely guarantees said obligations. That the guarantor cannot be compelled to pay the creditor unless the latter has
exhausted all the property of the debtor, and has resorted to all the legal remedies against the debtor, under Article
2058 of the New Civil Code does not therefore apply to them. It is of course of the essence of a contract of pledge or
mortgage that when the principal obligation becomes due, the things in which the pledge or mortgage consists may
be alienated for the payment to the creditor (Article 2087, New Civil Code). In the instant case, appellants are both
the principal debtors and the pledgors or mortgagors. Resort to one is, therefore, resort to the other.
Appellee bank did try to collect on the pledged receivables. As the Emergency Employment Agency (EEA) which
issued the receivables had been abolished, the collection had to be coursed through the Office of the President
which disapproved the same (Record on Appeal, p. 16). The receivable became virtually worthless leaving appellants'
loans from appellee bank unsecured. It is but proper that after their repeated demands made on appellants for the
settlement of their obligations, appellee bank should proceed against appellants. It would be an exercise in futility to
proceed against a defunct office for the collection of the receivables pledged.
WHEREFORE, the appeal is Dismissed for lack of merit and the appealed decision of the trial court is affirmed in toto.
SO ORDERED.
G.R. No. L-38268 May 31, 1979
EMPIRE INSURANCE COMPANY, plaintiff-petitioner,

vs.
REMEDIOS S. RUFINO, MERCEDES RUFINO ROXAS, MARIA PAZ RUFINO LAUREL, MARIA AUXILIO RUFINO PRIETO,
MARIA SOCORRO RUFINO CARPO, MACARIO S. RUFINO, CARLOS S. RUFINO and SUNVAR INC., defendants-
respondents.
Ferrer & Ranada for petitioner.
Perfecto S. Reyes and M.M. Roxas for respondents.
MELENCIO HERRERA, J.:
This is a Petition for Review on Certiorari of the Order of the Court of First Instance of Rizal (Branch XXI, Pasig) in Civil
Case No. 17660, dated October 26, 1973, ordering the dismissal of the case and the cancellation of the notice of lis
pendens annotated on Transfer Certificates of Title Nos. 348739, 348742, 348738, 397876, 397877 and 397878 of
the Registry of the Province of Rizal.
The factual background to this controversy is as follows:
On April 20, 1970, Vicente A. Rufino died intestate, survived by herein respondents, namely: his widow, Remedios S.
Rufino, and children Mercedes Rufino Roxas, Maria Paz Rufino Laurel, Maria Auxilio Rufino Prieto, Maria Socorro
Rufino Carpo, Macario S. Rufino and Carlos S. Rufino. On May 29, 1970, respondents instituted Special Proceedings
No. 59-M (5934), entitled "Intestate Estate of the late Vicente A. Rufino," before the Court of First Instance of Rizal
(Branch XV, Makati). A period of six months, counted from September 18, 1970, date of the first publication of notice
to creditors, was fixed within which creditors of the deceased could file their claims against the estate. The six month
period expired without any creditor having filed any claim against the estate.
On April 12, 1971, respondents executed a Partition Agreement, to which was attached an Inventory of Properties
and Estate Liabilities and/or Obligations, the pertinent provisions of which read:
4. That although no claim against the decedent's estate have been formally filed in these proceedings, the
undersigned heirs are fully aware that the decedent left obligations and liabilities which are mentioned in the
Inventory, the payment of which is assumed by the decedent's heirs in the manner hereinafter stated.
5. That pursuant to pertinent provisions of the Civil Code, the decedent's legal heirs have agreed, and do hereby
agree, that the entire estate left by the decedent be distributed among, and adjudicated to, his above-named legal
heirs on the following bases:
xxx xxx xxx
(c) All the liabilities or obligations of the decedent, which were incurred during his marriage and redounded to the
benefit of the family, shall be borne and paid by the said heirs in proportion to their shares in the conjugal
partnership properties.
xxx xxx xxx
7. That in accordance with the bases of distribution set forth in paragraph 5 hereof, the properties left by the
decedent, and listed in the Inventory, Annex 'A', are hereby adjudicated and distributed as follows:
xxx xxx xxx
(d) All the outstanding liabilities or obligations of the decedent, except the one assumed by the heirs Macario S.
Rufino and Carlos S. Rufino are hereby assumed by all the legal heirs of the decedent in the proportion of their
shares in the conjugal partnership properties established in sub-paragraph (b) hereof.
The Inventory of Estate Liabilities and/or Obligations attached to the Partition Agreement listed the following
CLAIMS AGAINST THE ESTATE
Security Bank & Trust Company,
P1,563,485.29
Merchants Banking Corporation,
100,000.00
Investments Marketing Associates, Inc.,
220,000.00
Sunvar, Incorporated,
485,880.00
Heirs of M. Rufino, Inc.,
360,000.00
Luzon Theatres, Inc.,

7,500.00
Mrs. Mercedez R. Roxas,
300,000.00
Dr. Panfilo Castro,
33,000.00
Lincoln National Life Insurance Co.
($17,000.00 at P6.20).
105,400.00
Philippine Banking Corporation,
2,300,000.00
TOTAL CLAIMS AGAINST THE ESTATE,
APRIL 29,1970,
P5,475,265.29 1
The Partition Agreement was approved by the trial Court in Order dated April 19, 1971.
On May 14, 1971, respondents filed a Petition to Declare Proceedings Terminated alleging that the estate and
inheritance taxes had already been fully paid and that they had received their respective shares in the estate of the
late Vicente A. Rufino in accordance with the Partition Agreement. In an Order issued on the same date, the trial
Court declared the proceedings closed and terminated.
On April 17, 1973, petitioner filed Civil Case No. 17660 against respondents based allegedly on the latter's
undertaking in the Partition Agreement to assume and pay all the outstanding liabilities and obligations of the late
Vicente A. Rufino. Petitioner claimed that sometime in January, 1965, Commercial Metals, Inc., a domestic
corporation of which the late Vicente A. Rufino was a director, imported machinery for a "one way system hot dip
tinning plant;" that it (petitioner) issued a surety bond on June 28, 1965, on behalf of Commercial Metals, Inc. in the
sum of P505,816.50 in favor of the Republic of the Philippines; that it issued the surety bond on the strength of an
indemnity agreement signed by the late Vicente A. Rufino, jointly and severally with Arsenio Laurel; that Commercial
Metals, Inc. then withdrew its imported machinery from the Bureau of Customs under said surety bond without
payment of taxes, duties and fees pending action by the Board of Industries on the corporation's application for tax
exemption and privilege under Republic Act No. 3127; that on March 7, 1973, it received formal notice from the
Bureau of Customs that the petition of Commercial Metals, Inc. for tax exemption was denied and demanding
payment of the full face amount of the surety bond; and that it wrote Commercial Metals, Inc. and the estate of the
late Vicente A. Rufino concerning the demand against its surety bond. Respondent Sunvar, Inc. was impleaded as
party defendant in said case allegedly because some of the properties received by respondents from the estate of
the late Vicente A. Rufino had been transferred to said corporation. Petitioner then prayed for the payment by
respondents, to the full extent of their respective shares in the estate of the late Vicente A. Rufino, of the sums of
P505,816.50 representing the demand of the Government against its surety bond with interest thereon at 12% per
annum from March 9, 1973; P21,803.61 as accrued or accumulated premiums and stamps on the surety bond plus
further accruing premiums and stamps of P3,127.83 annually from June 28, 1973; and P100,000.00 as and for
attorney's fees.
In their Answer to the Complaint, respondents raised the affirmative defenses that the trial Court had no jurisdiction
on the ground that petitioner's claim should have been submitted and prosecuted in the intestate proceedings of the
late Vicente A. Rufino, and that petitioner had no cause of action against them as whatever claim it had was against
the estate of the decedent. Respondents likewise sought the cancellation of the notice of lis pendens caused to be
annotated by petitioner on the certificates of title covering the properties received by them from the estate of the
late Vicente A. Rufino.
On October 26, 1973, the trial Court issued an Order dismissing the case on the grounds that the Court that took
cognizance of the settlement of the estate of the late Vicente A. Rufino was the one that had jurisdiction over the
case and that petitioner's claim was barred, pursuant to Section 5, Rule 86 of the Rules of Court, not having been
filed within the time limited in the notice to creditors in the intestate proceedings. The trial Court likewise ordered
the cancellation of the notice of lis pendens annotated on Transfer Certificates of Title Nos. 348739, 348742, 348738,
397876, 397877 and 397878 of the Registry of the Province of Rizal.
Its Motion for Reconsideration of the above Order having been denied, petitioner filed the instant Petition, which
was given due course in a Resolution dated May 5, 1974,
Petitioner argues that the trial Court erred in concluding that its claim is purely a money claim against the estate of
the late Vicente A. Rufino, which should have been presented in the intestate proceedings. It urges that its cause of
action is to hold respondents to their undertaking in the Partition Agreement to assume and pay for all the
obligations and liabilities of the late Vicente A. Rufino, which may be prosecuted in an ordinary suit.
On this point, we agree with petitioner that its cause of action is not a money claim against the estate of the late
Vicente A. Rufino. It is clear from the allegations of the Complaint that petitioner's cause of action is based on what it
believed was respondents' undertaking in the Partition Agreement to assume and pay for all the outstanding
liabilities and obligations of the decedent, whether listed in the Inventory of Estate Liabilities or not, in proportion to
their respective shares in the estate. In other words, petitioner's claim is not against the estate of the late Vicente A.
Rufino but against respondents themselves in their personal capacity. In which case, it was properly prosecuted in an
ordinary action and was within the jurisdiction of the Court a quo.
The next issue to resolve is whether the indemnity agreement executed in favor of petitioner by the late Vicente A.
Rufino, jointly and severally with his son-in-law, Arsenio Laurel, who predeceased him, is one of those obligations
and liabilities of the decedent assumed by respondents under their Partition Agreement.
Admittedly, petitioner's claim is not listed in the Inventory of Properties and Estate Liabilities and Obligations of the
late Vicente A. Rufino, attached to the Partition Agreement, as one of the obligations acknowledged by respondents
to have been left by the decedent and the payment of which had been assumed by them. However, petitioner
argues that inasmuch as paragraphs 5(c) and 7(d) of the Partition Agreement, hereinabove quoted, providing for the
assumption by respondents of all liabilities or obligations of the late Vicente A. Rufino, omitted any reference to the
Inventory in paragraph 4 thereof, those paragraphs were meant to include all other liabilities and obligations of the
decedent although not so listed in said Inventory. Respondents, on the other hand, counter that the liabilities and
obligations mentioned in paragraphs 5(c) and 7(d) of the Partition Agreement should be restricted only to those
liabilities or obligations of the decedent listed in the Inventory, as adverted to in paragraph 4 of said Agreement, and
that said paragraphs 5(c) and 7(d) merely define the extent and proportion by which they assumed the decedent's
obligations.
Section 10, Rule 130 of the Rules of Court provides as follows:
Interpretation according to intention; general and particular provisions — In the construction of an instrument, the
intention of the parties is to be pursued; and when a general and a particular provision are inconsistent, the latter is
paramount to the former. So a particular intent will control a general one that is inconsistent with it.
Likewise, Article 1372 of the Civil Code stipulates that however general the terms of a contract may be, they shall not
be understood to comprehend things that are distinct and cases that are different from those upon which the parties
intended to agree. " Similarly, Article 1374 of the same Code provides that "the various stipulations of a contract
shall be interpreted together, attributing to the doubtful ones that sense which may result from all of them taken
jointly."
There is no dispute that no claims were filed in the intestate proceedings of the late Vicente A. Rufino within the
period fixed in the notice of creditors. Petitioner failed to file its claim even as a contingent claim in consonance with
Section 9, Rule 86 of the Rules of Court. Legally speaking, therefore, all creditors of the late Vicente A. Rufino are
forever barred from prosecuting any claim against the estate of the decedent, pursuant to Section 5, Rule 86 of the
Rules of Court. Nevertheless, respondents, aware that the decedent did leave obligations and liabilities, the
existence of which they acknowledged and enumerated in the Inventory attached to the Partition Agreement,
personally assumed payment of the same in proportion to their shares in the estate of the decedent. It is thus clear
that respondents intended to assume only those obligations of the late Vicente A. Rufino which they acknowledged
and enumerated in the Inventory. Thus, they specified:
4. That although no claim against the decedent's estate have been formally filed in these proceedings, the
undersigned heirs are fully aware that the decedent left obligations and liabilities which are mentioned in the
Inventory, the payment of which is assumed by the decedent's heirs in the manner hereinafter stated.
Consequently, the phrase "all liabilities or obligations of the decedent" used in paragraphs 5(c) and 7(d) should be
then restricted only to those listed in the Inventory and should not be construed as to comprehend all other
obligations of the decedent. The rule that "particularization followed by a general expression will ordinarily be
restricted to the former" is based on the fact in human experience that usually the minds of parties are addressed
specially to the particularization, and that the generalities, though broad enough to comprehend other fields if they
stood alone , are used in contemplation of that upon which the minds of the parties are centered. 2
In other words, the enumeration in the Inventory of the liabilities or obligations of the late Vicente A. Rufino,
expressly acknowledged by respondents and the payment of which had been assumed by them, implied the
exclusion of all others. Expressio unius est exclusion alterius.
Under the maxim' expressio unius est exclusion alterius which, although more frequently applied in the construction
of statutes, ... is also applicable in the construction of contracts, the expression in a contract of one or more things of
a class implies the exclusion of all not expressed, even though all would have been implied had none been
expressed. 3
Moreover, considering that the respondents themselves had assumed the obligation of answering to creditors for
the debts and obligations of the late Vicente A. Rufino, it is but just that they should be bound only by the exact
terms of their premise.
It is evident that in no contract may a contracting party be obligated to more than what he has really bound himself
and that the contract should not be construed as including things and cases different from those with respect to
which the persons interested intended to contract. (Art 1. 1283, now Art. 1372, Civil Code) 4
Petitioner's claim not having been expressly included among the obligations of the late Vicente A. Rufino expressly
assumed by respondents, as listed in the Inventory, it may not, therefore, hold respondents personally liable on their
undertaking in the Partition Agreement.
WHEREFORE. the instant Petition is hereby dismissed for lack of merit.
Costs against petitioner.
SO ORDERED.
JOSE MATIENZO, plaintiff-appellant,

vs.
MARTIN SERVIDAD, defendant-appellee.
MELENCIO-HERRERA, J.:
Under review is the Judgment of the Court of Agrarian Relations, Branch I, Naga City, in CAR Case No. 920-CS-64,
entitled "Jose Matienzo vs. Martin Servidad", dismissing plaintiff's action for Reinstatement, Reliquidation and
Damages. This case was certified to us by the Court of Appeals on September 20, 1967, the principal issue being one
of law, particularly, the interpretation of the contracts between the parties.
The controversy stemmed from the following uncontroverted facts:
Defendant Martin Servidad is the owner of a sixteen hectare agricultural land situated at Barrio Binahian Sipocot,
Camarines Sur. On April 16, 1961, he and plaintiff Jose Matienzo executed a private instrument 1 handwritten in the
dialect of the locality by Feliza Servidad, wife of defendant Martin Servidad, 2 and translated into English as follows:
I, Jose Matienzo, Elenita Robles, we husband wife were instituted head-overseer in the land of Martin and Feliza de
Servidad who will take care of their plants. Whoever resides in our land will have to obey the head-overseer as we
have then authorized to supervise the landholding. Like borrowing loans needed if there is no letter from the Head
overseer to us we will not accommodate. So that whatever need you have you must inform the Head- overseer as
the latter is the one to inform us.
The conditions for clearing the land are these: With respect to all your plants we will share no percentage for the
land. But you will have to plant coconut in our land. We will not pay as this is our conditions. You are free to clear
and plant the land as long as you wish. We must help one another for our betterment. Let us not do anything
prejudicial to others. Let's do the best as it is better.
To show our conformity to the terms given by Martin and Feliza de Servidad, we signed in the presence of two
witnesses this date. (Emphasis supplied)
Witnesses:
1. Jose Matienzo
2. Paulino Ponayo
3. S. Ralles
The area entrusted to plaintiff was seven hectares, on a portion of which he constructed his house.
On January 1, 1963, the parties entered into another agreement concerning the conditions of copra making and
upland planting for the year 1963. 3 This was again handwritten in the local dialect by Feliza Servidad. 4 The English
translation of the agrrement reads:
Condition in Copra Making and Upland
Planting This Year 1963
Binahian Sipocot, Camarines Sur
I, JOSE MATIENZO and ELENITA ROBLES, husband and wife an hereby made caretakers of the land of Martin Servidad
and Few de Servidad, and when we arrived on their land all plants are productive.
The condition given to us in copra making is one third, but before we begin copra , we are to clean the plantation
and everytime we make copra we separate nuts for seedling. We are given one male carabao (castrated). The
condition for upland planting is this: all those that we are to plant no share will be taken for the land, but we are also
to plant coconut, coffee, abaca, and the owner shall not pay the same. Before I signed this I have read the same. In
truth we agree to the condition given to me, and I signed this lst day of January, 1963 before two witnesses. In the
year 1964 new agreement will be made. (Emphasis supplied)
SGD. Jose Matienzo Elenita Robles
Sgd. Pedro Moreno - Vice Barrio Leiut
Sgd. Jose Bacho
Jose Matienzo Elenita Robles
Plaintiff planted bananas, bancocan coffee, coconuts, breadfruits abaca and some auxiliary crops. He also looked
after the coffee and abaca plants of defendant, as well as the latter's goats entrusted to his care. For clearing the
coconut plantation, he was paid per coconut tree he cleared. For his labor in making copra, he was paid 1/3 of the
copra he made. Other persons who made copra therein were also correspondingly paid.
On January 30, 1964, defendant wrote plaintiff telling him not to "interfere with the plants" as they had no
agreement yet for that year, and that being the land-owner, he should be the one to decide in accordance with the
"tenancy law". 5 On March 4, 1964, defendant sent another letter to plaintiff prohibiting him from planting and
clearing the land for the same reason. 6 Plaintiff sought the assistance of the Office of the Agrarian Counsel in Naga
City. Efforts to settle the case amicably failed, as a consequence of which, plaintiff brought an action against
defendant in the Court of Agrarian Relations of Naga City praying that defendant be held guilty of illegal ejectment;
that in view of the strained relationship with defendant, he was waiving his right to reinstatement provided he be
paid reasonable compensation for his improvements; and that defendant be ordered to pay him actual and moral
damages.
The case was heard by Judge Valeriano A. del Valle, then by Judge Agustin Frivaldo and terminated by Commissioner
Benjamin G. Fernandez, who was appointed by the Court to hear the case on January 20, 1966, with the consent of
the parties. 7 Based on the Commissioner's Report, which was adopted in toto by the Court, a judgment was
rendered on May 17, 1966 dismissing the suit for lack of merit. Plaintiff moved for reconsideration, but this was
denied. In its judgment, the Court a quo specifically made a finding that plaintiff had expressly waived his right to
reinstatement "on account of his strained relationship with defendant."
Plaintiff appealed to the Court of Appeals, which Court, however, as hereinabove stated, certified the case to us on
the theory that "where the issue is the construction or interpretation of contracts, or where an the facts are stated
in the judgment and the issue is the conclusion drawn therefrom the question is one of law reviewable by the
Supreme Court". 8
Plaintiff has assigned the following errors:
The lower Court erred in holding that appellant is merely an overseer of appellee over the landholding in question.
II
The Court a quo committed a grave error in considering exhibits "2", "C" & "C-l" as contracts that established merely
an overseer relationship between the appellant and appellee; in this regard the Court a quo deviated from the
established procedures in determining the nature of a contract.
III
The Court a quo committed a grave error in authorizing the ejectment of appellant.
IV
The Court failed to observe the requirements of Sections 10 & 1 1, Rule 33 of the New Rules of Court.
The sole issue for determination is whether under the parties' agreements, plaintiff was instituted as an overseer or
as a tenant by defendant.
To start with, a few basic principles on the interpretation of contracts should be reiterated. When there is no doubt
as to the intention of the contracting parties, its literal meaning shall control. 9 Article 1372 of the New Civil Code
further provides that however general the terms of a contract may be, they shag not be understood to comprehend
things that are distinct and cases that are different from those upon which the parties intended to agree. 10
Therefore, a meaning other than that expressed or an interpretation which would alter its strict and literal
significance should not be given to it. 11 Moreover, the entirety of the contract must be taken into consideration to
ascertain the meaning of its provisions.12
It is clear from Exhibit C that plaintiff was made an overseer of defendant, not a tenant. lt was likewise expressly
stipulated therein that "the conditions for clearing the land are these: With respect to all your plants we will share
no percentage for the land." And again, "all those (coconuts) that we are to plant no share will be taken for the land.
13 The basic element of sharing in agricultural tenancy, therefore, is absent. The one-third share plaintiff received
from copra-making constituted payments for the processing of copra. These are evidenced by receipts 14. Plaintiff
also got paid for clearing the coconuts as shown by Exhibits 7 and 7-A 15.
A tenant is defined under section 5(a) of Republic Act No. 1199 as a person who, himself, and with the aid available
from within his immediate household, cultivates the land belonging to or possessed by another, with the latter's
consent for purposes of production, sharing the produce with the landholder under the share tenancy system, or
paying to the landholder a price certain or ascertainable in produce or in money or both, under the leasehold
tenancy system. From the above definition of a tenant, it is clear that absent a sharing arrangement, no tenancy
relationship had ever existed between the parties. What transpired was that plaintiff was made overseer over a 7-
hectare land area; he was to supervise applications for loans from those residing therein; he was allowed to build his
house thereon and to plant specified plants without being compensated he was free to clear and plant the land as
long as he wished; he had no sharing arrangement between him and defendant; and he was not obligated to pay any
price certain to, nor share the produce with, the latter.
Although Exhibit 6 states that plaintiff and his wife were made "caretakers" of the land, there is a definite provision
in both Exhibits C and 6 that defendant would not share in the produce of plaintiff's plants. Because of this aspect,
the ruling in Latag vs. Banog, 16 SCRA 88 (1966), which holds that a I caretaker of an agricultural land is also
considered cultivator of the land", finds no applicability.
Besides, even if we were to rule that plaintiff is a tenant, the whole exercise would become academic since he has
waived his right to reinstatement.
With respect to the fourth assignment of error, plaintiff asserts, for the first time, that the trial Court committed
grave error in failing to notify the parties of the filing of the Commissioner's Report, and in not giving them ten days
to object thereto pursuant to Section 10, Rule 33 of the Rules of Court. He also claims that the Court failed to set the
Report for hearing in accordance with Section 1 1 of the same Rule. Be that as it may, well established is the rule that
issues not raised in the trial Court can not be raised for the first time on appeal.
WHEREFORE, the Petition is hereby dismissed.
SO ORDERED.
G.R. No. 121158 December 5, 1996
CHINA BANKING CORPORATION, ATTYS. REYNALDO M. CABUSORA and RENATO C. TAGUIAM, petitioners,
vs.
COURT OF APPEALS, HON. PEDRO T. SANTIAGO, SPS. SO CHING and CRISTINA SO, and NATIVE WEST INTERNATIONAL
TRADING CORP., respondents.
FRANCISCO, J.:p
China Banking Corporation (China Bank) extended several loans to Native West International Trading Corporation
(Native West) and to So Ching, Native West's president. Native West in turn executed promissory notes 1 in favor of
China Bank. So Ching, with the marital consent of his wife, Cristina So, additionally executed two mortgages over
their properties, viz., a real estate mortgage executed on July 27, 1989 covering a parcel of land situated in Cubao,
Quezon City, under TCT No. 277797 2, and another executed on August 10, 1989 covering a parcel of land located in
Mandaluyong, under TCT No. 5363. 3 The promissory notes matured and despite due demands by China Bank
neither private respondents Native West nor So Ching paid. Pursuant to a provision embodied in the two mortgage
contracts, China Bank filed petitions for the extra-judicial foreclosure of the mortgaged properties before Notary
Public Atty. Renato E. Taguiam for TCT No. 277797, 4 and Notary Public Atty. Reynaldo M. Cabusora for TCT No.
5363, 5 copies of which were given to the spouses So Ching and Cristina So. After due notice and publication, the
notaries public scheduled the foreclosure sale of the spouses' real estate properties on April 13, 1993. Eight days
before the foreclosure sale, however, private respondents filed a complaint 6 with the Regional Trial Court 7 for
accounting with damages and with temporary restraining order against petitioners alleging the following causes of
action:
A. Defendants failed to comply with the mandates of Administrative Order No. 3 of the Supreme Court dated
October 19, 1984.
B. Defendants failed to comply with the mandates of Section 2 Presidential Decree No. 1079 dated January 28, 1977.
C. MORTGAGORS liability limited to P6,500,000.00 and P3,500,000.00 respectively in the Mortgages Annexes A and B
respectively, but the same are not included in the notice of foreclosure.
D. Violation of Truth in Lending Act (RP Act No. 3765).
E. In all the loans granted by DEFENDANT-BANK to plaintiffs and Borrowers, the Bank charged interests in excess of
the rate allowed by the Central Bank.
F. Violation of Article 1308 of the Civil Code. 8
On April 7, 1993, the trial court issued a temporary restraining order to enjoin the foreclosure sale. Thereafter
counsels for the respective parties agreed to file their pleadings and to submit the case, without further hearing, for
resolution. On April 28, 1993, the trial court, without passing upon the material averments of the complaint, issued
an Order granting the private respondents' prayer for the issuance of preliminary injunction with the following
proffered justification:
From the foregoing, it is quite apparent that a question of accounting poses a thorny issue as between the litigants.
Variance in the amounts involved relating to the loan agreements must be judiciously passed upon by the Court and
this is only possible if a trial on the merits could be had as the matters appurtenant thereto are evidentiary in nature.
Under the premises, the accounting issue being evidentiary in character calls for an issuance of a writ of preliminary
injunction pending the adjudication of the case. The issuance thereof at this particular stage of the case is merely a
preventive remedy designed to protect from irreparable injury to property or other rights plaintiff may suffer, which
a court of equity may take cognizance of by commanding acts to be done or prohibiting their commission, as in the
instant suit, to restrain notaries public Cabusora and Taguiam as well as defendant China Banking Corporation from
continuing with the auction sale of the subject properties, until further orders from this Court.
Wherefore, premises considered, finding that the circumstances warrant the issuance of a preliminary injunction,
plaintiff's prayer is hereby GRANTED. Consequent thereto, plaintiffs are hereby ordered to post a bond amounting to
P1 (ONE) Million to answer for whatever damages defendant may suffer as a consequence of the writ. 9
Petitioners moved for reconsideration, but it was denied in an Order dated September 23, 1993. To annul the trial
court's Orders of April 28, 1993 and September 23, 1993, petitioners elevated the case through certiorari and
prohibition 10 before public respondent Court of Appeals. 11 In a decision dated January 17, 1995, respondent Court
of Appeals held that Administrative Circular No. 3 is the governing rule in extra-judicial foreclosure of mortgage,
which circular petitioners however failed to follow, and with respect to the publication of the notice of the auction
sale, the provisions of P.D. No. 1079 is the applicable statute, 12 which decree petitioners similarly failed to obey.
Respondent Court of Appeals did not pass upon the other issues and confined its additional lengthy discussion on
the validity of the trial court's issuance of the preliminary injunction, finding the same neither capricious nor
whimsical exercise of judgment that could amount to grave abuse of discretion. 13 The Court of Appeals accordingly
dismissed the petition, as well as petitioners' subsequent motion for reconsideration. 14 Hence, the instant petition
under Rule 45 of the Rules of Court reiterating the grounds raised before respondent court, to wit:
I. PETITIONER CBC'S PETITIONS TO EXTRAJUDICIALLY FORECLOSE THE REAL ESTATE MORTGAGES OF JULY 27, 1989
AND AUGUST 10, 1989 THRU PETITIONERS-NOTARIES PUBLIC, AND THE SCHEDULED FORECLOSURE SALE ARE VALID
AND LAWFUL;
II. PRIVATE RESPONDENTS AND PETITIONER CBC HAD EXPRESSLY AGREED TO CONSIDER THE SAME MORTGAGES AS
VALID SECURITIES FOR PROMPT AND FULL PAYMENT OF ALL AND ANY OBLIGATIONS OF THE FORMER FROM THE
LATTER;
III. THE SUPPOSED VARIANCE IN THE TOTAL AMOUNT OF UNPAID LOANS IS NOT A VALID BASIS TO ENJOIN THE
FORECLOSURE OF THE QUESTIONED MORTGAGES. THE MERE FAILURE TO PAY THE LOAN SECURED BY SAID
MORTGAGES IS THE ONLY, SINGLE REASON FOR THEIR LAWFUL FORECLOSURE;.
IV. PETITIONER BANK HAD FURNISHED PRIVATE RESPONDENTS WITH COPIES OF DISCLOSURE STATEMENTS IN
COMPLIANCE WITH THE TRUTH IN LENDING ACT, AND CHARGED THEM INTERESTS IN ACCORDANCE WITH LAW AND
PURSUANT TO ITS EXPRESS AGREEMENT WITH THE LATTER;
V. THE P1.0 MILLION INJUNCTION BOND REQUIRED BY THE HONORABLE COURT A QUO ON PRIVATE RESPONDENTS
IS GROSSLY AND PATENTLY INADEQUATE. 15
At the outset, the Court's attention is drawn to the fact that since the filing of this suit before the trial court, none of
the substantial issues have been resolved. To avoid and gloss over the issues raised by the parties, as what the trial
court and respondent Court of Appeals did, would unduly prolong this litigation involving a rather simple case of
foreclosure of mortgage. Undoubtedly, this will run counter to the avowed purpose of the rules, i.e., to assist the
parties in obtaining just, speedy and inexpensive determination of every action or proceeding. 16 The Court,
therefore, feels that the central issues of the case, albeit unresolved by the courts below, should now be settled
specially as they involved pure questions of law. Furthermore, the pleadings of the respective parties on file have
amply ventilated their various positions and arguments on the matter necessitating prompt adjudication.
Now to the core issues.
As the Court sees it, the crucial issues are: (1) whether or not the loans in excess of the amounts expressly stated in
the mortgage contracts can be included as part of the loans secured by the real estate mortgages, (2) whether or not
petitioners can extra-judicially foreclose the properties subject of the mortgages, (3) whether or not Administrative
Order No. 3 should govern the extra-judicial foreclosure of the properties, and (4) whether or not the writ of
preliminary injunction issued by the trial court is valid.
Petitioners aver that the additional loans extended in favor of private respondents in excess of P6,500,000.00 and
P3,500,000.00 — amounts respectively stipulated in the July 27, 1989 and August 10, 1989 mortgage contracts —
are also secured by the same collaterals or real estate properties, citing as bases the introductory paragraph
("whereas clause") of the mortgage contracts, as well as the stipulations stated therein under the first and second
paragraphs. Private respondents for their part argue that the additional loans are clean loans, relying on some
isolated parts of the same introductory paragraph and first paragraph of the contracts, and also of the third
paragraph.
As both parties offered a conflicting interpretation of the contract, then judicial determination of the parties'
intention is thus, inevitable. 17 Hereunder are the pertinent identical introductory paragraphs and paragraphs 1 to 3
of the July 27, 1989 and August 10, 1989 mortgage contracts:
WHEREAS, the MORTGAGEE has granted, and may from time to time hereafter grant to the MORTGAGOR(S)/either
of them/and/or NATIVE WEST INTERNATIONAL TRADING CORP. — hereinafter called the DEBTOR(S) credit facilities
not exceeding SIX MILLION FIVE HUNDRED THOUSAND PESOS ONLY (P6,500,000.00)* Philippine currency, and the
MORTGAGEE had required the MORTGAGOR(S) to give collateral security for the payment of any and all obligations
heretofore contracted/incurred and which may thereafter be contracted/incurred by the MORTGAGOR(S) and/or
DEBTOR(S), or any one of them, in favor of the MORTGAGEE;
NOW, THEREFORE, as collateral security for the payment of the principal and interest of the
indebtedness/obligations herein referred to and the faithful performance by the MORTGAGOR(S) of his (her, its)
obligations hereunder, the MORTGAGOR(S) hereby execute(s) a FIRST MORTGAGE, in favor of the MORTGAGEE, free
from all liens and encumbrances of any kind, that (those) certain parcel(s) of land, together with all the
buildings/machineries/equipment improvements now existing thereon, and which may hereafter be placed thereon,
described in the Schedule of mortgaged properties described hereunder and/or which is hereto attached, marked
Exhibit "A" and made a part thereof.
1. It is agreed that this mortgage shall respond for all the obligations contracted/incurred by the MORTGAGOR(S)
and/or DEBTOR(S) or any one of them, in favor of the MORTGAGEE up to the said sum of SIX MILLION FIVE
HUNDRED THOUSAND PESOS ONLY (P6,500,000.00)* regardless of the manner in which the said obligations may
have been contracted/incurred by the MORTGAGOR(S) and/or DEBTOR(S) — whether by advances or loans made to
him (her, it) by the MORTGAGEE, by the negotiation of mercantile documents, including trust receipts, by the
execution by the MORTGAGOR(S) and/or DEBTOR(S) of money market instruments/commercial papers,
undertakings of guaranty of suretyship, or by endorsement of negotiable instruments, or otherwise, the idea being
to make this deed a comprehensive and all embracing security that it is.
2. Payments on account of the principal and interest of the credit granted by the MORTGAGEE to the
MORTGAGOR(S) and/or DEBTOR(S) may be made from time to time, and as often as the MORTGAGOR(S) may elect;
provided, however, that in the event of such payments being so made that the indebtedness to the MORTGAGEE
may from time to time be reduced the MORTGAGEE may make further advances and all sums whatsoever advanced
by the MORTGAGEE shall be secured by this mortgage, and partial payments of said indebtedness from time to time
shall not thereby be taken to reduce by the amount of such payments the credit hereby secured. The said credit shall
extend to any account which shall, within the said limit of P6,500,000.00* exclusive of interest, be fluctuating and
subject to increase or decrease from time to time as the MORTGAGEE may approve, and this mortgage shall stand as
security for all indebtedness of the MORTGAGOR(S) and/or DEBTOR(S), or any one of them, at any and all times
outstanding, regardless of partial or full payments at any time or times made by the MORTGAGOR(S) and/or
DEBTOR(S).
3. It is hereby agreed that the MORTGAGEE may from time to time grant the MORTGAGOR(S)/DEBTOR(S) credit
facilities exceeding the amount secured by this mortgage, without affecting the liability of the MORTGAGOR(S) under
this mortgage up to the amount stipulated. 18
An important task in contract interpretation is the ascertainment of the intention of the contracting parties which is
accomplished by looking at the words they used to project that intention in their contract, i.e., all the words, not just
a particular word or two, and words in context, not words standing alone. 19 Indeed, Article 1374 of the Civil Code,
states that "the various stipulations of a contract shall be interpreted together, attributing to the doubtful ones that
sense which may result from all of them taken jointly." Applying the rule, we find that the parties intent is to
constitute the real estate properties as continuing securities liable for future obligations beyond the amounts of P6.5
million and P3.5 million respectively stipulated in the July 27, 1989 and August 10, 1989 mortgage contracts. Thus,
while the "whereas" clause initially provides that "the mortgagee has granted, and may from time to time hereafter
grant to the mortgagors . . . credit facilities not exceeding six million five hundred thousand pesos only
(P6,500,000.00)**" yet in the same clause it provides that "the mortgagee had required the mortgagor(s) to give
collateral security for the payment of any and all obligations heretofore contracted/incurred and which may
thereafter be contracted/incurred by the mortgagor(s) and/or debtor(s), or any one of them, in favor of the
mortgagee" which qualifies the initial part and shows that the collaterals or real estate properties serve as securities
for future obligations. The first paragraph which ends with the clause, "the idea being to make this deed a
comprehensive and all embracing security that it is" supports this qualification.
Similarly, the second paragraph provides that "the mortgagee may take further advances and all sums whatsoever
advanced by the mortgagee shall be secured by this mortgagee . . ." And although it was stated that "[t]he said credit
shall extend to any account which shall, within the said limit of P6,500,000.00 exclusive of interest", this part of the
second sentence is again qualified by its succeeding portion which provides that "this mortgage shall stand as
security for all indebtedness of the mortgagor(s) and/or debtor(s), or any one of them, at any and all times
outstanding . . ." Again, under the third paragraph, it is provided that "the mortgagee may from time to time grant
the mortgagor(s)/debtor(s) credit facilities exceeding the amount secured by this mortgage . . ." The fourth
paragraph, 20 in addition, states that ". . . all such withdrawals, and payments, whether evidenced by promissory
notes or otherwise, shall be secured by this mortgage" which manifestly shows that the parties principally intended
to constitute the real estate properties as continuing securities for additional advancements which the mortgagee
may, upon application, extend. It is well settled that mortgages given to secure future advancements or loans are
valid and legal contracts, and that the amounts named as consideration in said contracts do not limit the amount for
which the mortgage may stand as security if from the four corners of the instrument the intent to secure future and
other indebtedness can be gathered. 21
Anent the second issue, we find that petitioners are entitled to foreclose the mortgages. In their complaint for
accounting with damages pending with the trial court, private respondents averred that:
8. Up to and until February, 1993, PLAINTIFF-CORPORATION had paid to the DEFENDANT-BANK, the amount of
THREE HUNDRED FIFTY THOUSAND (P350,000.00) Pesos, Philippine Currency, and was willing to pay the balance in
installments of FOUR HUNDRED THOUSAND (P400,000.00) Pesos, Philippine Currency, every month, in the
meantime, but the DEFENDANT-BANK refused to accept, demanding instead SEVEN HUNDRED MILLION
(P700,000,000.00) Pesos, Philippine Currency, a month.
9. Inspite of the expressed willingness and commitment of plaintiffs to pay their obligation in a manner which they
could afford, on March 11, 1993, MORTGAGORS and DEFENDANT-CORPORATION, each received a Letter of Demand
from DEFENDANT-BANK, for the payment of P28,775,615.14 exclusive of interest and penalty evidenced by 11
promissory notes enclosed therein . . . .
10. Upon receipt of the letter, PLAINTIFF-CORPORATION through its President pleaded with the Chairman of the
Board of the DEFENDANT-BANK, through whom Defendant-Corporation was transacting business with, to accept its
offer of payment of FOUR HUNDRED THOUSAND (P400,000.00) Pesos, Philippine Currency, a month, in the
meantime, which was again refused by the said Chairman. 22
which allegations are a clear admission that they were unable to settle to the fullest their obligation. Foreclosure is
valid where the debtors, as in this case, are in default in the payment of their obligation. 23 The essence of a
contract of mortgage indebtedness is that a property has been identified or set apart from the mass of the property
of the debtor-mortgagor as security for the payment of money or the fulfillment of an obligation to answer the
amount of indebtedness, in case of default of payment. 24 It is a settled rule that in a real estate mortgage when the
obligation is not paid when due, the mortgagee has the right to foreclose the mortgage and to have the property
seized and sold in view of applying the proceeds to the payment of the obligation. 25 In fact, aside from the
mortgage contracts, the promissory notes executed to evidence the loans also authorize the mortgagee to foreclose
on the mortgages. Thus:
. . . CHINA BANKING CORPORATION is hereby authorized to sell at public or private sales such securities or things of
value for the purpose of applying their proceeds to such payments. 26
And while private respondents aver that they have already paid ten million pesos, an allegation which has still to be
settled before the trial court, the same cannot be utilized as a shield to enjoin the foreclosure sale. A mortgage given
to secure advancements, we repeat, is a continuing security and is not discharged by repayment of the amount
named in the mortgage, until the full amount of the advancements are paid. 27
With respect to the third issue, we find private respondents' contention that Administrative Order No. 3 is the
governing rule in foreclosure of mortgages misplaced. The parties, we note, have stipulated that the provisions of
Act No. 3135 is the controlling law in case of foreclosure. Thus:
17. The MORTGAGOR(S) hereby grant(s) unto the MORTGAGEE full and irrevocable power of attorney coupled with
interest, in the event of breach of any of the conditions of this mortgage, to sell, in its discretion, the mortgaged
properties at public auction, for cash and to the highest bidder, in the Province or City where the mortgaged
properties are located, before the Sheriff, or a Notary Public, without court proceedings, after posting notices of sale
for a period of twenty days in three public places in said place; and after publication of such notice in a newspaper of
general circulation in the said place once a week, for three consecutive weeks, and the MORTGAGEE is hereby
authorized to execute the deed of sale and all such other documents as may be necessary in the premises all in
accordance with the provisions of Act No. 3135 of the Philippine Legislature, as amended, and Section 78 of Republic
Act No. 337: . . . 28 (Emphasis supplied.)
By invoking the said Act, there is no doubt that it must "govern the manner in which the sale and redemption shall
be effected." 29 Clearly, the fundamental principle that contracts are respected as the law between the contracting
parties finds application in the present case, 30 specially where they are not contrary to law, morals, good customs
and public policy.
Moreover, Administrative Order No. 3 is a directive for executive judges and clerks of courts which, under its
preliminary paragraph, is "[i]n line with the responsibility of an Executive Judge, under Administrative Order No. 6,
dated June 30, 1975, for the management of courts within his administrative area, included in which is the task of
supervising directly the work of the Clerk of Court, who is also the Ex-Oficio Sheriff, and his staff, . . . ." Surely, a
petition for foreclosure with the notary public is not within the contemplation of the aforesaid directive as the same
is not filed with the court. At any rate, Administrative Order No. 3 cannot prevail over Act No. 3135, as amended. It is
an elementary principle in statutory construction that a statute is superior to an administrative directive and the
former cannot be repealed or amended by the latter.
On the last issue, we find that the issuance of the writ of injunction by the trial court unjustified. A writ of
preliminary injunction, as an ancillary or preventive remedy, may only be resorted to by a litigant to protect or
preserve his rights or interests and for no other purpose during the pendency of the principal action. 31 But before a
writ of preliminary injunction may be issued, there must be a clear showing by the complaint that there exists a right
to be protected and that the acts against which the writ is to be directed are violative of the said right. 32 In the case
at bench, we fail to see any reason why the foreclosure of the mortgages should be enjoined. On the face of the
clear admission by private respondents that they were unable to settle their obligations which were secured by the
mortgages, petitioners have a clear right to foreclose the mortgages which is a remedy provided by law. Thus, in
Caltex Philippines, Inc. v. Intermediate Appellate Court, 33 we reiterated the rule that:
. . . where a debt is secured by a mortgage and there is a default in payment on the part of the mortgagor, the
mortgagee has a choice of one (1) or two (2) remedies, but he cannot have both. The mortgagee may:
1) foreclosure the mortgage; or
2) file an ordinary action to collect the debt.
When the mortgagee chooses the foreclosure of the mortgage as a remedy, he enforces his lien by the sale on
foreclosure of the mortgaged property. The proceeds of the sale will be applied to the satisfaction of the debt. With
this remedy, he has a prior lien on the property. In case of a deficiency, the mortgagee has the right to claim for the
deficiency resulting from the price obtained in the sale of the real property at public auction and the outstanding
obligation at the time of the foreclosure proceedings (Soriano v. Enriquez, 24 Phil 584; Banco de Islas Filipinas v.
Concepcion Hijos, 53 Phil 86; Banco Nacional v. Barreto, 53 Phil 101).
On the other hand, if the mortgagee resorts to an action to collect the debt, he thereby waives his mortgage lien. He
will have no more priority over the mortgaged property. If the judgment in the action to collect is favorable to him,
and it becomes final and executory, he can enforce said judgment by execution. He can even levy execution on the
same mortgaged property, but he will not have priority over the latter and there may be other creditors who have
better lien on the properties of the mortgagor. 34
WHEREFORE, the instant petition is hereby GRANTED. The assailed Decision, as well as the Resolution, of the Court
of Appeals dated January 17, 1995 and July 7, 1995, respectively, are hereby REVERSED and SET ASIDE. The
preliminary writ of injunction issued by the trial court is hereby NULLIFIED. This case is REMANDED to the court of
origin for further proceedings in conformity with this decision.
SO ORDERED.
[G.R. No. 71557. November 29, 1988.]
PABLO S. CRUZ, Petitioner, v. COMMISSION ON AUDIT, Respondent.
Epifanio P. Arias for Petitioner.
The Solicitor General for Respondent.
SYLLABUS
1. CIVIL LAW; CIVIL CODE; INTERPRETATION OF CONTRACTS; INTENTION OF THE PARTIES MUST BE SOUGHT. — Since
in the "Contract of Service" the scope of "total construction cost: is not defined with precision recourse may be had
to the well-settled principle that, in the construction and interpretation of a contract, the intention of the parties
must be sought.
2. REMEDIAL LAW; EVIDENCE; PAROL EVIDENCE RULE. — It is basic that when the provisions of a written contract are
ambiguous and there is sufficient evidence showing the existence of other agreements collateral thereto, parol
evidence is admissible to prove the real agreement of the parties.
3. STATUTORY CONSTRUCTION AND INTERPRETATION; CONTRACTS; VAGUENESS IN CONTRACTS IS REMEDIED BY

APPLYING THE GENERAL USAGE OF THE PHRASE; "TOTAL CONSTRUCTION COST" IN THE ARCHITECTURAL
PROFESSION, CONSTRUED. — Even assuming arguendo that the contract’s ambiguity by reason of the vagueness of
the term "total construction cost" is unremedied by any clear evidence of the intention of the contracting parties, we
are still left with the option of applying the general usage of the phrase in question in the standard practice of the
architectural profession. Again, the view of no other than the Chairman of the Board of Architecture, earlier
mentioned, lends support to the stand of the petitioner that cost of built-in equipment in buildings designed by
architects should be considered part of the construction for purposes of determining construction cost and, hence,
architect’s fees.
DECISION
PADILLA, J.:
In this petition for review on certiorari, petitioner seeks to annul and set aside Commission on Audit Decision No.
358, 1 dated 20 May 1985, which denied his request to include in the computation of additional architect’s fees the
cost of some equipments, specifically, "Items "F", "G" and "H" of Group I — Built-in equipment of Phase "C" in the
construction of the GSIS hospital building.chanrobles virtual lawlibrary
The controversy arose from the following antecedents:chanrob1es virtual 1aw library
On 27 September 1960, Pablo S. Cruz (herein petitioner), a duly licensed architect, entered into a "Contract of
Services" 2 with the Government Service Insurance System (hereinafter, GSIS) for the construction of the GSIS
Hospital (also known as Hospital ng Bagong Lipunan). Under such contract, petitioner agreed to perform preliminary,
contract documents and supervision services, for which GSIS agreed to pay "3.65% (3.50% for preliminary and
contract documents services and .15% for supervision services) of Ten Million Pesos (P10,000,000.00)." 3 The
contract further provided that should there be an increase or decrease in the cost of the construction, the architect’s
fees would be adjusted accordingly. 4
After the delivery of services has been commenced by petitioner, the total project cost was finally agreed upon by
the parties and approved by GSIS at Fifteen Million Pesos (P15,000,000.00), allocated at Thirteen Million Pesos
(P13,000,000.00) for building and Two Million Pesos (P2,000,000.00) for equipment. Based on such increased cost of
construction, petitioner made a claim for the corresponding increase in his architect’s fees. The amount of
P232,091.96 was requested corresponding to all equipment Items in Group I of Phase "C", specifically Items "A" to
"H." When the voucher for the claim of petitioner was presented to the office of the Auditor, GSIS, Manila, for pre-
audit, the aforesaid amount was reduced to only P140,737.49 corresponding to the cost of Items "A" to "E" of Phase
"C." The disapproved difference of P91,354.47 corresponds to the cost of Items "F", "G" and "H" of Phase "C." The
disallowance was based on the ruling 5 of the Honorable, the Chairman of the Commission on Audit (hereinafter,
COA or Commission) that,." . . the claim of Mr. Pablo Cruz for payment of additional architect’s fees may be given
due course provided however that the amounts under Items "F", "G" and "H" of the Group I — Built-in equipment
covered by Phase "C" should be deducted from the total cost of equipment in the computation of the percentage fee
. . ." 6 The said decision of COA was based mainly on the principle that equipments are not part of construction
materials and therefore cost of equipment is not considered part of construction cost.
Petitioner filed a motion to reconsider COA Decision No. 155. The motion was denied in COA Decision No. 358, dated
20 May 1985, subject of the present petition for review.
It is COA’s position that cost of Item "F" (laundry equipment), Item "G" (x-ray equipment) and Item "H" (stills,
sterilizers and special lighting equipment) is not part of the construction cost for purposes of computing architect’s
fees, on the premise that their inclusion in the construction did not entail exercise of architect’s skill or expertise and
that these equipments are not really integral parts of the building. The Commission further states that architect’s
fees should be dependent on the nature of equipment installed and since Item "F", "G" and "H" are merely
additional features, they should not be deemed part of the construction cost, following the dictum laid down in the
U.S. case of Alabama Great Southern Railroad Company v. Davenport and Co. 7 that "equipment is distinct from and
does not include construction."cralaw virtua1aw library
Upon the other hand, petitioner insists that the items in controversy are integral parts of the hospital building. In his
letter of 19 December 1983 to the GSIS, he quotes a portion of the opinion of the Board of Examiners for Architects
dated 2 October 1972 as follows: 8
"NOT PART OF THE CONSTRUCTION
ITEM F — (LAUNDRY EQUIPMENT)
IF SOLD TO THE OWNER AS A PACKAGE TYPE
WHEREIN THE ARCHITECT DOES NOT HAVE TO
DETERMINE ITS CAPACITY, SIZE, ETC., THEN IT
SHOULD NOT BE PART OF THE BUILDING.
ITEM G —(X-RAY EQUIPMENT) SAME AS ITEM "F"
ITEM H — SAME AS ITEM "F."
In short, Items "F", "G" and "H" are, according to petitioner, considered not parts of the construction cost if they
were sold to the owner as package type units, where the architect did not have to determine the capacity, size, etc.
of the equipment in relation to plans and specifications prepared by him; otherwise, they should be considered part
of the construction cost of the building for purposes of determining architect’s fees. The petitioner argues in this
connection, that the aforesaid items, not having been sold to the GSIS as package units but subjected to public
bidding, in accordance with specifications determined by him (architect), should be considered part of the
construction cost along with Items "A", "B", "C", "D" and "E" of Phase "C" of the Contract, which are specifically the
following:chanrob1es virtual 1aw library
Item "A" — Emergency Power Plant.
Item "B" — Signal and Communication Unit.
Item "C" — Elevator and Dumb Waiters.
Item "D" — Boilers.
Item "E" — Pumps and Fire Fighting Equipments. 9
Petitioner’s contention in this regard is supported by the Chairman of the Board of Architecture in his clarificatory
letter dated 8 November 1983. 10
Furthermore, the petitioner points to the inapplicability of the Alabama case upon which the respondent
Commission appears to have relied heavily in denying petitioner’s claim. The cited case, according to petitioner,
involved railroad construction costs merely as an incident in a situation where the defendant railroad company was
sued for damages to plaintiffs storeroom caused by sparks emitting from defendant’s locomotive engine. Judgment
had been rendered for the railroad company, but plaintiff moved for new trial and this was affirmed on
appeal.chanrobles law library
The petitioner refers also to Republic Act No. 545, particularly Section 14, paragraph (c) which provides: "General
Practice of Architecture — The practice of architecture is hereby defined to be the act of planning, architectural
designing, specifying, supervising and direction to the erection . . ., which enter into the production of a complete
building or structures performed thru the medium of unbiased preliminary studies of plans, consultations,
specifications . . . contract documents . . . ." The term "complete building" connotes, according to petitioner, the
inclusion of equipments as integral parts of the building since, without such equipments, the building can not
function in accordance with the purpose for which it was intended.
We rule for petitioner. The respondent Commission’s argument that, while it may be assumed that cost of
equipment forms part of construction cost, yet, such cost should not be considered in computing additional
architect’s fees, cannot be sustained.
To begin with, COA itself admitted that the computation of architect’s fees is consequent or dependent upon the
nature of some equipment, i.e., like those "of a fixed nature, more or less so that they are very necessary to put the
building into operation" and that "these equipments (other than Items "F", "G" and "H") demanded the use of
architect’s technical skills . . ." 11 What respondent COA failed to recognize is the fact that Items "F", "G" and "H" fall
also under this type of equipment to warrant their inclusion in the construction cost, and to form part of the basis
for computing petitioner’s professional fees.
In the case of Item "F" (laundry equipment), the architect had to estimate the linen loads in order to determine the
number of units of laundry equipment required, their capacities, sizes and other characteristics, in relation to the
fact that it is not unusual for a hospital to have laundry service. It is also inconceivable for the GSIS Hospital with a
capacity of 800 beds to function as a Medical Center without x-ray equipments, stills, sterilizers and special lighting
fixtures; their integration into the plans, as prepared by the architect, was necessary to put the building into
operation as a hospital building. Items "F", "G" and "H" which were subjected to public bidding were, as even the
COA itself admitted in its earlier Decision No. 155, dated 6 January 1977, 12 in Group I — Built-in equipment covered
by Phase "C." It would, therefore, be unfair and unreasonable to claim that said items are not an integral part of the
hospital building.chanrobles.com.ph : virtual law library
Moreover, in determining the meaning of actual construction cost, distinction should be made between hospital and
residential or office buildings. A hospital building requires specialized equipment and facilities for its occupancy and
use because of its nature and purpose which are obviously different from those of a residence or office building. It is
also because of these differences that the U.S. Public Health Service expressly recognizes initial equipment as part of
the construction cost. 13 This likewise explains why the Alabama case dictum, previously referred to, is not relevant
because, the statement that "equipment is different from construction," may refer particularly to a railroad
construction.
In deciding this controversy, it is necessary that we refer to the written agreement between GSIS and petitioner.
Unfortunately, in the "Contract of Services" the scope of "total construction cost" is not defined with precision and
so recourse may be had to the well-settled principle that, in the construction and interpretation of a contract, the
intention of the parties must be sought. In the case at bar, of note is the fact that two (2) affidavits were executed,
one by Mr. Archimedes Villanueva, former Chairman of the GSIS Hospital Committee 14 and the other by Mr. Mauro
Almazar, former GSIS Hospital Committee member 15 to show that the architect’s fees that had been agreed upon
and approved by the GSIS are based on total cost of construction which includes cost of fixed or built-in equipment.
This leads to the conclusion that, when petitioner submitted the schedule of Group I — Built-in equipment, 16 the
intention of the parties was to include such equipment and thus settle whatever ambiguity there may have been as
to the scope of the professional services, subject to architect’s fees. It is basic that when the provisions of a written
contract are ambiguous and there is sufficient evidence showing the existence of other agreements collateral
thereto, parol evidence is admissible to prove the real agreement of the parties. 17
But, even assuming arguendo that the contract’s ambiguity by reason of the vagueness of the term "total
construction cost" is unremedied by any clear evidence of the intention of the contracting parties, we are still left
with the option of applying the general usage of the phrase in question in the standard practice of the architectural
profession. Again, the view of no other than the Chairman of the Board of Architecture, earlier mentioned, lends
support to the stand of the petitioner that cost of built-in equipment in buildings designed by architects should be
considered part of the construction for purposes of determining construction cost and, hence, architect’s
fees.chanrobles.com:cralaw:red
WHEREFORE, COA Decision No. 358, dated 20 May 1985, is SET ASIDE and the claim of petitioner in the total amount
of P91,354.47 representing the balance of his architect’s fees, for Items "F", "G" and "H", Phase "C", in the
construction of the GSIS hospital, is given due course.
SO ORDERED.

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V.

1. General Words Construed Generally

[G.R. No. 93833. September 28, 1995.]

Plaintiff Soccoro D. Ramirez. (Chuchi)

Good afternoon Ma’am.

Kasi, naka duty ako noon

Tapos iniwan no. (Sic)

Itutuloy ko na Ma’am sana ang duty ko.

Kaso ilang beses na akong binabalikan doon ng mga no (sic) ko.

Kukuha kami ng exam noon.

Oo, pero hindi ka papasa.

Eh, bakit ako ang nakuha ni Dr. Tamayo.

Kukunin ka kasi ako.

Kasi M’am, binabalikan ako ng mga taga Union.

Ina-ano ko ma’am na utang na loob.

Paano kita nilapastanganan?

Pasay City, Metro Manila, September 16, 1988.

Asst. City Fiscal

Senator Tañada:chanrob1es virtual 1aw library

The qualified only ‘overhear’.

Senator Padilla:chanrob1es virtual 1aw library

Senator Tañada:chanrob1es virtual 1aw library

That is covered by the purview of this bill, Your Honor.

Senator Padilla:chanrob1es virtual 1aw library

Senator Padilla:chanrob1es virtual 1aw library

Now, would that be reasonable. Your Honor?

Senator Tañada:chanrob1es virtual 1aw library

Senator Padilla:chanrob1es virtual 1aw library

This might reduce the utility of records.

Senator Tañada:chanrob1es virtual 1aw library

Senator Padilla:chanrob1es virtual 1aw library

Now, I can understand.

Senator Tañada:chanrob1es virtual 1aw library

Senator Tañada:chanrob1es virtual 1aw library

The RTC Ruling

The Court’s Ruling

Sec. 3(a) of RA 9262 reads:

G.R. No. 155282 January 17, 2005

MOVIE AND TELEVISION REVIEW AND CLASSIFICATION BOARD (MTRCB), petitioner,

The facts are undisputed.

"WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered:

Petitioner filed a motion for reconsideration but was denied.24

Hence, this petition for review on certiorari.

Respondents take the opposite stance.

The petition is impressed with merit.

Their contention is unpersuasive.

G.R. No. 106090 February 28, 1994

RICARDO FERNANDEZ, petitioner,

Gaston V. Taquio for petitioner.

Marcos S. Pagaspas for private respondent.

Metro Manila, Philippines. 12 May 1988.1

G.R. No. L-34024 April 5, 1978

ISIDRO G. ARENAS, petitioner,

Daniel C. Macaraeg and Alfredo P. Arenas for petitioner.

Abelardo P. Fermin & Antonio Ruiz for respondents.

The pertinent portion of Section 7, Republic Act No. 5967 reads:

xxx xxx xxx