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G.R. No. L-44143 August 31, 1988

THE PEOPLE OF THE PHILIPPINES, plaiti!!,
"s.
E#SE$IO NA%ARIO, a&&us'(-app'llat.
T)' Soli&ito* G''*al !o* plaiti!!-app'll''.
T'o!ilo Rago(o !o* a&&us'(-app'llat.
SARMIENTO, J.:
The petitioner was charged with violation of certain !nicipal ordinances of the !nicipal co!ncil
of "ag#ilao, in $!e%on province. &' wa' of confession and avoidance, the petitioner wo!ld adit
having coitted the acts charged #!t wo!ld clai that the ordinances are !nconstit!tional, or,
ass!ing their constit!tionalit', that the' do not appl' to hi in an' event.
The facts are not disp!ted:
This defendant is charged of the crie of (iolation of M!nicipal Ordinance in an inforation filed
#' the provincial )iscal, dated Octo#er *, +*,-, as follows:
That in the 'ears +*,., +*,/ and +*,,, in the M!nicipalit' of "ag#ilao, "rovince of $!e%on,
"hilippines, and within the 0!risdiction of this 1onora#le 2o!rt, the a#ove3naed acc!sed, #eing
then the owner and operator of a fishpond sit!ated in the #arrio of "inag#a'anan, of said
!nicipalit', did then and there willf!ll', !nlawf!ll' and felonio!sl' ref!se and fail to pa' the
!nicipal ta4es in the total ao!nt of T1REE 15N6RE6 SI7T8 T9O "ESOS AN6 SI7T8 T9O
2ENTA(OS :";,<.,<=, re>!ired of hi as fishpond operator as provided for !nder Ordinance No.
., series of +*//, as aended, inspite of repeated deands ade !pon hi #' the M!nicipal
Treas!rer of "ag#ilao, $!e%on, to pa' the sae.
2ontrar' to law.
)or the prosec!tion the following witnesses testified in s!#stance as follows?
MI@5EA )RAN2IA, ;* 'ears of age, arried, farer and resident of Aope%, $!e%on B
In +*,< to +*,C, I resided at "inag#a'anan, "ag#ilao, $!e%on. I Dnow the acc!sed as I worDed in
his fishpond in +*,< to +*,.. The fishpond of Na%ario is at "inag#a'anan, "ag#ilao, $!e%on. I
worDed in the clearing of the fishpond, the constr!ction of the diDes and the catching of fish.
On cross3e4aination, this witness declared:
I worDed with the acc!sed !p to March +*,..
NI2OAAS MA2AROAA8, ,/ 'ears of age, arried, copra aDer and resident of "inag#a'anan,
"ag#ilao, $!e%on B
I resided at "inag#a'anan, "ag#ilao, $!e%on since +*/* !p to the present. I Dnow the acc!sed
since +*/* when he opened a fishpond at "inag#a'anan, "ag#ilao, $!e%on. 1e still operates the
fishpond !p to the present and I Dnow this fact as I a the #arrio captain of "inag#a'anan.
ree#er the onth in +*,< when the acc!sed ca!ght fish. On cross3e4aination, this witness
declared:
I cae to Dnow the acc!sed when he first operated his fishpond since +*/*.
On re3direct e4aination, this witness declared:
I was present d!ring the catching of fish in +*,C and the acc!sed was there.
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On re3cross e4aination, this witness declared:
I do not
RO6OA)O R. AA(AREE, ./ 'ears old, !nicipal treas!rer of "ag#ilao, $!e%on, arried B
As M!nicipal Treas!rer I a in charge of ta4 collection. I Dnow the acc!sed even #efore I was
M!nicipal Treas!rer of "ag#ilao. I have written the acc!sed a letter asDing hi to pa' his ta4es
:E4hi#it &=. Said letter was received #' the acc!sed as per registr' ret!rn receipt, E4hi#it &3+. The
letter deanded for pa'ent of ";,<.FF, ore or less, #' wa' of ta4es which he did not pa' !p to
the present. The forer Treas!rer, 2eferino 2aparros, also wrote a letter of deand to the
acc!sed :E4hi#it 2=. On J!ne <-, +*,C, I sent a letter to the )isher' 2oission :E4hi#it 6=,
re>!esting inforation if acc!sed paid ta4es with that office. The 2oission sent e a certificate
:E4hi#its 63+, 63< G 63;=. The acc!sed had a fishpond lease agreeent. The ta4es !npaid were
for the 'ears +*,., +*,/ and +*,,.
On cross3e4aination, this witness declared:
I have deanded the ta4es for ;-.+F hectares.
On >!estion of the co!rt, this witness declared:
9hat I was collecting fro the acc!sed is the fee on fishpond operation, not rental.
The prosec!tion presented as part of their evidence E4hi#its A, A3+, A3<, &, &3<, 2, 6, 63+, 63<, 63
;, E, ), )3+ and the sae were aditted #' the co!rt, e4cept E4hi#its 6, 63+, 63< and 63; which
were not aditted for #eing iaterial.
)or the defense the acc!sed E5SE&IO NAEARIO, .- 'ears of age, arried, owner and general
anager of the EI" Man!fact!ring Enterprises and resident of .-F+ Old Sta. Mesa, Sapaloc,
Manila, declared in s!#stance as follows:
I have lived in Sta. Mesa, Manila, since +*.*. I #!' ' Residence 2ertificates at Manila or at San
J!an. In +*,., +*,/ and +*,,, I was living in Manila and ' #!siness is in Manila and ' fail'
lives at Manila. I never resided at "ag#ilao, $!e%on. I do not own a ho!se at "ag#ilao. I a a
lessee of a fishpond located at "ag#ilao, $!e%on, and I have a lease agreeent to that effect with
the "hilippine )isheries 2oission arDed as E4hi#it +. In +*,., +*,/ and +*,,, the contract of
lease, E4hi#it +, was still e4isting and enforcea#le. The Ordinances Nos. ., +/ and +<, series of
+*//, +*,/ and +*,,, were translated into English #' the Instit!te of National Aang!age to #etter
!nderstand the ordinances. There were e4change of letters #etween e and the M!nicipal
Treas!rer of "ag#ilao regarding the pa'ent of the ta4es on ' leased fishpond sit!ated at
"ag#ilao. There was a letter of deand for the pa'ent of the ta4es #' the treas!rer :E4hi#it ;=
which I received #' ail at ' residence at Manila. I answered the letter of deand, E4hi#it ;,
with E4hi#it ;3A. I re>!ested an inspection of ' fishpond to deterine its condition as it was not
then in operation. The M!nicipal Treas!rer Alvare% went there once in +*,C and he fo!nd that it
was destro'ed #' the t'phoon and there were pict!res taDen arDed as E4hi#its ., .3A, .3& and
.2. I received another letter of deand, E4hi#it /, and I answered the sae :E4hi#it /3A=. I copied
' reference >!oted in E4hi#it /3A fro Adinistrative Order No. ,, E4hi#it ,. I received another
letter of deand fro Toas Ornedo, Acting M!nicipal Treas!rer of "ag#ilao, dated )e#r!ar' +,,
+*,,, E4hi#it C, and I answered the sae with the letter arDed as E4hi#it C3A, dated )e#r!ar'
<,, +*,,. I received another letter of deand fro Treas!rer Alvare% of "ag#ilao, E4hi#it -, and I
answered the sae :E4hi#it -3A=. In +*,., I went to Treas!rer 2aparros to asD for an application
for license ta4 and he said none and he told e 0!st to pa' ' ta4es. I did not pa' #eca!se !p to
now I do not Dnow whether I a covered #' the Ordinance or not. The letters of deand asDed e
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to pa' different ao!nts for ta4es for the fishpond. &eca!se !nder Sec. <;F* of the Revised
Adinistrative 2ode, !nicipal ta4es lapse if not paid and the' are collecting on a lapsed
ordinance. &eca!se !nder the Ta4 2ode, fisheren are e4epted fro percentage ta4 and
privilege ta4. There is no law epowering the !nicipalit' to pass ordinance ta4ing fishpond
operators.
The defense presented as part of their evidence E4hi#its +, <, ;, ;3A, ., .3&, .3&, .32, /, /3A, ,, ,3
A, ,3&, ,32, C, C3A, - and -3A and the sae were aditted #' the co!rt.
)ro their evidence the prosec!tion wo!ld want to show to the co!rt that the acc!sed, as lessee
or operator of a fishpond in the !nicipalit' of "ag#ilao, ref!sed, and still ref!ses, to pa' the
!nicipal ta4es for the 'ears +*,., +*,/ and +*,,, in violation of M!nicipal Ordinance No. .,
series of +*//, as aended #' M!nicipal Ordinance No. +/, series of +*,/, and finall' aended
#' M!nicipal Ordinance No. +<, series of +*,,.
On the other hand, the acc!sed, #' his evidence, tends to show to the co!rt that the ta4es so!ght
to #e collected have alread' lapsed and that there is no law epowering !nicipalities to pass
ordinances ta4ing fishpond operators. The defense, #' their evidence, tried to show f!rther that, as
lessee of a forest land to #e converted into a fishpond, he is not covered #' said !nicipal
ordinances? and finall' that the acc!sed sho!ld not #e ta4ed as fishpond operator #eca!se there is
no fishpond 'et #eing operated #' hi, considering that the s!pposed fishpond was !nder
constr!ction d!ring the period covered #' the ta4es so!ght to #e collected.
)inall', the defendant clais that the ordinance in >!estion is !ltra vires as it is o!tside of the
power of the !nicipal co!ncil of "ag#ilao, $!e%on, to enact? and that the defendant clais that
the ordinance in >!estion is a#ig!o!s and !ncertain.
There is no >!estion fro the evidences presented that the acc!sed is a lessee of a parcel of
forest land, with an area of <C.+**- hectares, for fishpond p!rposes, !nder )ishpond Aease
Agreeent No. +F,,, entered into #' the acc!sed and the governent, thro!gh the Secretar' of
Agric!lt!re and Nat!ral Reso!rces on A!g!st <+, +*/*.
There is no >!estion fro the evidences presented that the <C.+**- hectares of land leased #'
the defendant fro the governent for fishpond p!rposes was act!all' converted into fishpond
and !sed as s!ch, and therefore defendant is an operator of a fishpond within the p!rview of the
ordinance in >!estion. +
The trial 2o!rt < ret!rned a verdict of g!ilt' and disposed as follows:
(IE9E6 IN T1E AI@1T O) AAA T1E )ORE@OIN@, the 2o!rt finds the acc!sed g!ilt' #e'ond
reasona#le do!#t of the crie of violation of M!nicipal Ordinance No. ., series of +*//, as
aended #' Ordinance No. +/, series of +*,/ and f!rther aended #' Ordinance No. +<, series
of +*,,, of the M!nicipal 2o!ncil of "ag#ilao, $!e%on? and here#' sentences hi to pa' a fine of
"/F.FF, with s!#sidiar' iprisonent in case of insolvenc' at the rate of "-.FF a da', and to pa'
the costs of this proceeding.
SO OR6ERE6. ;
In this appeal, certified to this 2o!rt #' the 2o!rt of Appeals, the petitioner alleges that:
I. T1E AO9ER 2O5RT ERRE6 IN NOT 6E2AARIN@ T1AT OR6INAN2E NO. ., SERIES O)
+*//, AS AMEN6E6 &8 OR6INAN2E NO. +/, SERIES O) +*,/, AN6 AS )5RT1ER AMEN6E6
&8 OR6INAN2E NO. +<, SERIES O) +*,,, O) T1E M5NI2I"AAIT8 O) "A@&IAAO, $5EEON,
IS N5AA AN6 (OI6 )OR &EIN@ AM&I@5O5S AN6 5N2ERTAIN.
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II. T1E AO9ER 2O5RT ERRE6 IN NOT 1OA6IN@ T1AT T1E OR6INAN2E IN $5ESTION, AS
AMEN6E6, IS 5N2ONSTIT5TIONAA )OR &EIN@ E7 "OST )A2TO.
III. T1E AO9ER 2O5RT ERRE6 IN NOT 1OA6IN@ T1AT T1E OR6INAN2E IN $5ESTION
2O(ERS ONA8 O9NERS OR O(ERSEER O) )IS1"ON6S O) "RI(ATE O9NERS1I" AN6
NOT TO AESSEES O) "5&AI2 AAN6S.
I(. T1E AO9ER 2O5RT ERRE6 IN NOT )IN6IN@ T1AT T1E $5ESTIONE6 OR6INAN2E,
E(EN I) (AAI6, 2ANNOT &E EN)OR2E6 &E8ON6 T1E TERRITORIAA AIMITS O) "A@&IAAO
AN6 6OES NOT 2O(ER NON3
RESI6ENTS. .
The ordinances in >!estion are Ordinance No. ., series of +*//, Ordinance No. +/, series of
+*,/, and Ordinance No. +<, series of +*,,, of the M!nicipal 2o!ncil of "ag#ilao. Insofar as
pertinent to this appeal, the salient portions thereof are herein#elow >!oted:
Section +. An' owner or anager of fishponds in places within the territorial liits of "ag#ilao,
$!e%on, shall pa' a !nicipal ta4 in the ao!nt of ";.FF per hectare of fishpond on part thereof
per ann!. /
Sec. l :a=. )or the convenience of those who have or owners or anagers of fishponds within the
territorial liits of this !nicipalit', the date of pa'ent of !nicipal ta4 relative thereto, shall
#egin after the lapse of three :;= 'ears starting fro the date said fishpond is approved #' the
&!rea! of )isheries. ,
Section +. An' owner or anager of fishponds in places within the territorial liits of "ag#ilao shall
pa' a !nicipal ta4 in the ao!nt of ";.FF per hectare or an' fraction thereof per ann!
#eginning and taDing effect fro the 'ear +*,., if the fishpond started operating #efore the 'ear
+*,.. C
The first o#0ection refers to the ordinances #eing allegedl' Ha#ig!o!s and !ncertain.H - The
petitioner contends that #eing a ere lessee of the fishpond, he is not covered since the said
ordinances speaD of Howner or anager.H 1e liDewise aintains that the' are vag!e insofar as
the' recDon the date of pa'ent: 9hereas Ordinance No. . provides that parties shall coence
pa'ent Hafter the lapse of three :;= 'ears starting fro the date said fishpond is approved #' the
&!rea! of )isheries.H * Ordinance No. +< states that lia#ilit' for the ta4 accr!es H#eginning and
taDing effect fro the 'ear +*,. if the fishpond started operating #efore the 'ear +*,..H +F
As a r!le, a stat!te or act a' #e said to #e vag!e when it lacDs coprehensi#le standards that
en Hof coon intelligence !st necessaril' g!ess at its eaning and differ as to its
application.H ++ It is rep!gnant to the 2onstit!tion in two respects: :+= it violates d!e process for
fail!re to accord persons, especiall' the parties targetted #' it, fair notice of the cond!ct to avoid?
and :<= it leaves law enforcers !n#ridled discretion in carr'ing o!t its provisions and #ecoes an
ar#itrar' fle4ing of the @overnent !scle.
&!t the act !st #e !tterl' vag!e on its face, that is to sa', it cannot #e clarified #' either a saving
cla!se or #' constr!ction. Th!s, in 2oates v. 2it' of 2incinnati, +< the 5.S. S!pree 2o!rt str!cD
down an ordinance that had ade it illegal for Hthree or ore persons to asse#le on an'
sidewalD and there cond!ct theselves in a anner anno'ing to persons passing #'.H +; 2learl',
the ordinance iposed no standard at all H#eca!se one a' never Dnow in advance what Ianno's
soe people #!t does not anno' others.I H +.
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2oates highlights what has #een referred to as a Hperfectl' vag!eH +/ act whose o#sc!rit' is
evident on its face. It is to #e disting!ished, however, fro legislation co!ched in iprecise
lang!age B #!t which nonetheless specifies a standard tho!gh defectivel' phrased B in which
case, it a' #e HsavedH #' proper constr!ction.
It !st f!rther #e disting!ished fro stat!tes that are apparentl' a#ig!o!s 'et fairl' applica#le to
certain t'pes of activities. In that event, s!ch stat!tes a' not #e challenged whenever directed
against s!ch activities. In "arDer v. Aev', +, a prosec!tion originall' !nder the 5.S. 5nifor 2ode
of Militar' J!stice :prohi#iting, specificall', Hcond!ct !n#ecoing an officer and gentleanH=, the
defendant, an ar' officer who had !rged his en not to go to (ietna and called the Special
)orces trained to fight there thieves and !rderers, was not allowed to invoDe the void for
vag!eness doctrine on the preise that accepted ilitar' interpretation and practice had provided
eno!gh standards, and conse>!entl', a fair notice that his cond!ct was iperissi#le.
It is interesting that in @on%ales v. 2oission on Elections, +C a divided 2o!rt s!stained an act
of 2ongress :Rep!#lic Act No. .--F penali%ing Hthe too earl' noination of candidatesH +- liiting
the election capaign period, and prohi#iting Hpartisan political activitiesH=, aid challenges of
vag!eness and over#readth on the gro!nd that the law had incl!ded an Hen!eration of the acts
deeed incl!ded in the ters Ielection capaignI or Ipartisan political activit'H +* that wo!ld
s!ppl' the standards. HAs th!s liited, the o#0ection that a' #e raised as to vag!eness has #een
inii%ed, if not totall' set at rest.H <F In his opinion, however, J!stice Sanche% wo!ld stress that
the cond!ct so!ght to #e prohi#ited His not clearl' defined at all.H <+ HAs worded in R.A .--F,
prohi#ited disc!ssion co!ld cover the entire spectr! of e4pression relating to candidates and
political parties.H << 1e was !nipressed with the HrestrictionsH )ernandoIs opinion had relied on: H
ISiple e4pressions of opinions and tho!ghts concerning the electionI and e4pression of Iviews on
c!rrent political pro#les or iss!esI leave the reader con0ect!re, to g!essworD, !pon the e4tent of
protection offered, #e it as to the nat!re of the !tterance :Isiple e4pressions of opinion and
tho!ghtsI= or the s!#0ect of the !tterance :Ic!rrent political pro#les or iss!esI=.H <;
The 2o!rt liDewise had occasion to appl' the H#alancing3of3interestsH test, <. insofar as the
stat!teIs #an on earl' noination of candidates was concerned: HThe rational connection #etween
the prohi#ition of Section /F3A and its o#0ect, the indirect and odest scope of its restriction on the
rights of speech and asse#l', and the e#racing p!#lic interest which 2ongress has fo!nd in the
oderation of partisan political activit', lead !s to the concl!sion that the stat!te a' stand
consistentl' with and does not offend the 2onstit!tion.H </ In that case, 2astro wo!ld have the
#alance achieved in favor of State a!thorit' at the He4penseH of individ!al li#erties.
In the 5nited States, which had aple ipact on 2astroIs separate opinion, the #alancing test
finds a close Din, referred to as the Hless restrictive alternative H <, doctrine, !nder which the co!rt
searches for alternatives availa#le to the @overnent o!tside of stat!tor' liits, or for Hless drastic
eansH <C open to the State, that wo!ld render the stat!te !nnecessar'. In 5nited States v. Ro#el,
<- legislation was assailed, #anning e#ers of the :Aerican= 2o!nist "art' fro worDing in
an' defense facilit'. The 5.S. S!pree 2o!rt, in n!llif'ing the stat!te, held that it ipaired the right
of association, and that in an' case, a screening process was availa#le to the State that wo!ld
have ena#led it to Identif' dangero!s eleents holding defense positions. <* In that event, the
#alance wo!ld have #een str!cD in favor of individ!al li#erties.
It sho!ld #e noted that it is in free e4pression cases that the res!lt is !s!all' close. It is said,
however, that the choice of the co!rts is !s!all' narrowed where the controvers' involves sa',
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econoic rights, ;F or as in the Aev'case, ilitar' affairs, in which less precision in anal'sis is
re>!ired and in which the copetence of the legislat!re is pres!ed.
In no wa' a' the ordinances at #ar #e said to #e tainted with the vice of vag!eness. It is
!nistaDa#le fro their ver' provisions that the appellant falls within its coverage. As the act!al
operator of the fishponds, he coes within the ter H anager.H 1e does not den' the fact that he
financed the constr!ction of the fishponds, introd!ced fish fries into the fishponds, and had
eplo'ed la#orers to aintain the. ;+ 9hile it appears that it is the National @overnent which
owns the, ;< the @overnent never shared in the profits the' had generated. It is therefore onl'
logical that he sho!lders the #!rden of ta4 !nder the said ordinances.
9e agree with the trial co!rt that the ordinances are in the character of reven!e eas!res ;;
designed to assist the coffers of the !nicipalit' of "ag#ilao. And o#vio!sl', it cannot #e the
owner, the @overnent, on who lia#ilit' sho!ld attach, for one thing, !pon the ancient principle
that the @overnent is i!ne fro ta4es and for another, since it is not the @overnent that had
#een aDing one' fro the vent!re.
S!ffice it to sa' that as the act!al operator of the fishponds in >!estion, and as the recipient of
profits #ro!ght a#o!t #' the #!siness, the appellant is clearl' lia#le for the !nicipal ta4es in
>!estion. 1e cannot sa' that he did not have a fair notice of s!ch a lia#ilit' to aDe s!ch
ordinances vag!e.
Neither are the said ordinances vag!e as to dates of pa'ent. There is no erit to the clai that
Hthe iposition of ta4 has to depend !pon an !ncertain date 'et to #e deterined :three 'ears
after the Iapproval of the fishpondI #' the &!rea! of )isheries, and !pon an !ncertain event :if the
fishpond started operating #efore +*,.=, also to #e deterined #' an !ncertain individ!al or
individ!als.H ;. Ordinance No. +/, in aDing the ta4 pa'a#le Hafter the lapse of three :;= 'ears
starting fro the date said fishpond is approved #' the &!rea! of )isheries,H ;/ is !ne>!ivocal
a#o!t the date of pa'ent, and its aendent #' Ordinance No. +<, recDoning lia#ilit' there!nder
H#eginning and taDing effect fro the 'ear +*,. if the fishpond started operating #efore the 'ear
+*,. ,H ;, does not give rise to an' a#ig!it'. In either case, the dates of pa'ent have #een
definitel' esta#lished. The fact that the appellant has #een allegedl' !ncertain a#o!t the recDoning
dates B as far as his lia#ilit' for the 'ears +*,., +*,/, and +*,, is concerned B presents a ere
pro#le in cop!tation, #!t it does not aDe the ordinances vag!e. In addition, the sae wo!ld
have #een at ost a diffic!lt piece of legislation, which is not !nfailiar in this 0!risdiction, #!t
hardl' a vag!e law.
As it stands, then, lia#ilit' for the ta4 accr!es on Jan!ar' +, +*,. for fishponds in operation prior
thereto :Ordinance No. +<=, and for new fishponds, three 'ears after their approval #' the &!rea!
of )isheries :Ordinance No. +/=. This is so since the aendator' act :Ordinance No. +<= erel'
granted anest' !nto old, delin>!ent fishpond operators. It did not repeal its other ordinances
:Nos. . and +/=. 9ith respect to new operators, Ordinance No. +/ sho!ld still prevail.
To the 2o!rt, the ordinances in >!estion set forth eno!gh standards that clarif' iagined
a#ig!ities. 9hile s!ch standards are not apparent fro the face thereof, the' are visi#le fro the
intent of the said ordinances.
The ne4t in>!ir' is whether or not the' can #e said to #e e4 post facto eas!res. The appellant
arg!es that the' are: HAendent No. +< passed on Septe#er +*, +*,,, clearl' provides that
the pa'ent of the iposed ta4 shall H#eginning and taDing effect fro the 'ear +*,., if the
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fishpond started operating #efore the 'ear +*,..I In other words, it penali%es acts or events
occ!rring #efore its passage, that is to sa', +*,. and even prior thereto.H;C
The 2o!rt finds no erit in this contention. As the Solicitor @eneral notes, HM!nicipal Ordinance
No. . was passed on Ma' +., +*//. ;- 1ence, it cannot #e said that the aendent :!nder
Ordinance No. +<= is #eing ade to appl' retroactivel' :to +*,.= since the recDoning period is
+*// :date of enactent=. Essentiall', Ordinances Nos. +< and +/ are in the nat!re of c!rative
eas!res intended to facilitate and enhance the collection of reven!es the originall' act,
Ordinance No. ., had prescri#ed. ;* Moreover, the act :of non3pa'ent of the ta4=, had #een,
since +*//, ade p!nisha#le, and it cannot #e said that Ordinance No. +< iposes a retroactive
penalt'. As we have noted, it operates to grant anest' to operators who had #een delin>!ent
#etween +*// and +*,.. It does not ete o!t a penalt', !ch less, a retrospective one.
The appellant assails, finall', the power of the !nicipal co!ncil of "ag#ilao to ta4 Hp!#lic forest
land.H .F In @olden Ri##on A!#er 2o., Inc. v. 2it' of &!t!an .+ we held that local governentsI
ta4ing power does not e4tend to forest prod!cts or concessions !nder Rep!#lic Act No. <<,., the
Aocal A!tono' Act then in force. :Rep!#lic Act No. <<,. liDewise prohi#ited !nicipalities fro
iposing percentage ta4es on sales.=
)irst of all, the ta4 in >!estion is not a ta4 on propert', altho!gh the rate thereof is #ased on the
area of fishponds :H";.FF per hectareH .<=. Secondl', fishponds are not forest lands, altho!gh we
have held the to the agric!lt!ral lands. .;&' definition, HforestH is Ha large tract of land covered
with a nat!ral growth of trees and !nder#!sh? a large wood.H ..:Accordingl', even if the
challenged ta4es were directed on the fishponds, the' wo!ld not have #een ta4es on forest
prod!cts.=
The' are, ore acc!ratel', privilege ta4es on the #!siness of fishpond aintenance. The' are not
charged against sales, which wo!ld have offended the doctrine enshrined #' @olden Ri##on
A!#er, ./ #!t rather on occ!pation, which is allowed !nder Rep!#lic Act No. <<,.. ., The' are
what have #een classified as fi4ed ann!al ta4es and this is o#vio!s fro the ordinances
theselves.
There is, then, no erit in the last o#0ection.
91ERE)ORE, the appeal is 6ISMISSE6. 2osts against the appellant.
F'+*ua*, 1-, 194. G.R. No. L-33/
THE PEOPLE OF THE PHILIPPINES, plaiti!!-app'llat,
"s.
GERONI0A SIN1IONG 1E PASTOR a( SANTOS T. PASTOR, ('!'(ats-app'll''s.
Assistat Soli&ito* G''*al Gia2o a( Soli&ito* F'*ia !o* app'llat.
E*i3u' 0'(ia !o* app'll''s.
1IAA6O, J.: The >!estion presented here is whether or not, in view of the e4press repeal of
sections +./- and +./*, in relation with section <C<;, of the Revised Adinistrative 2ode, and of
Act No. ;<.;, #' section ;,* of 2oonwealth Act No. .,,, otherwise Dnown as the National
Internal Reven!e 2ode, and in view of the later enactent of 2oonwealth Act No. /F; :vide
section /=, violations of the provisions of the repealed acts, while the' were in force, co!ld #e
legall' prosec!ted after the repeal #!t also after the enactent of 2oonwealth Act No. /F;.
STATCON| 7
.
The acc!sed @eronia Sindiong de "astor and Santos T. "astor were, on J!ne ., +*.+, charged
#' the "rovincial )iscal of Oriental Negros in an inforation filed with the J!stice of the "eace
2o!rt of 6!ag!ete, capital of the province, with a violation of sections +./- and +./* of the
Revised Adinistrative 2ode, in relation with Act No. ;<.;, and section <C<; of the sae 2ode.
The acc!sed waived their right to a preliinar' investigation, where!pon the proper inforation
was lodged against the with the 2o!rt of )irst Instance of the province on J!l' ++, +*.+.
"ro#a#l' as a conse>!ence of the "acific war having s!pervened, no f!rther proceedings were
taDen !ntil Jan!ar' <C, +*.,, when the acc!sed filed a otion to >!ash. The otion was !pheld
#' the trial co!rt in its order dated )e#r!ar' +<, +*., :Appendi4 A of appellantIs #rief=.
The @overnent, not agreeing with s!ch order, interposed this appeal.
The #!siness of the acc!sed in connection with which the' are th!s #eing prosec!ted was that of
owners, anagers or adinistrators of the HMaga%ine 2enterH, an esta#lishent devoted to the
selling of newspapers, aga%ines and stationer', according to the inforation.
The inforation alleges that these defendants d!ring the period coprised #etween Jan!ar',
+*;,, and March ;+, +*;-, #eing s!ch owners, anagers and adinistrators of said HMaga%ine
2enterH, with the deli#erate p!rpose to evade the pa'ent of the percentage ta4 !pon their
receipts, vol!ntaril', illegall', and criinall' neglected to aDe a ret!rn of their sales within the
tie prescri#ed #' law.
2o!nsel for appellant aDes the following e4press adission in his #rief :p. ;=:
It is an aditted fact that the provisions of law !nder which the acc!sed are #eing prosec!ted,
nael', sections +./- and +./* in relation with section <C<;, of the Revised Adinistrative 2ode
and Act No. ;<.;, had #een e4pressl' repealed #' section ;,* of 2oonwealth Act No. .,,. It
is liDewise aditted that the a#ove3entioned provisions of the Revised Adinistrative 2ode were
no longer in force at the tie the present action was instit!ted.
The trial co!rt, in passing !pon the otion to >!ash, inter alia, said :trial co!rtIs order, appendi4 A,
appellantIs #rief=:
This Dind of #!siness not #eing now s!#0ect to the pa'ent of percentage ta4, and for that atter
not #eing re>!ired !nder the present law to file a >!arterl' ret!rn of their receipts and sales, is no
longer within the penal provisions of section <F* of the Internal Reven!e 2ode which s!persedes
the provisions of section <C</ of the Revised Adinistrative 2ode.
AppellantIs co!nsel sa's :#rief, pp. ,3C=:
9itho!t the enactent of aendator' Act No. /F;, the concl!sion reached #' the trial co!rt wo!ld
#e correct, #eca!se it wo!ld then #e clear that !nder 2oonwealth Act No. .,,, onl' the
an!fact!rer, prod!cer or iporter is lia#le for the pa'ent of the percentage ta4. &!t with the
enactent of the a#ove3entioned aendator' Act, the intention of the legislat!re to s!#0ect all
erchants to the pa'ent of the privilege ta4, in the sae wa' that the' were s!#0ect thereto
!nder the provisions of the Revised Adinistrative 2ode, #ecoes perfectl' clear.
It res!lts fro this that according to the @overnent itself, witho!t the enactent of
2oonwealth Act No. /F;, the present defendants wo!ld not have #een lia#le to prosec!tion
!nder the facts alleged in the inforation for the reason that !nder the National Internal Reven!e
2ode onl' the an!fact!rer, prod!cer or iporter is lia#le for the pa'ent of the privilege ta4. &!t
it is contended for the prosec!tion that in the enactent of said 2oonwealth Act No. /F; the
intention of the legislat!re was Hto s!#0ect all erchants to the pa'ent of the privilege ta4, in the
STATCON| 8
.
sae wa' that the' were s!#0ect thereto !nder the provisions of the Revised Adinistrative
2odeH. The section of 2oonwealth Act No. /F; partic!larl' relied !pon #' the prosec!tion is
the following:
SE2. /. As !sed in sections +-., +-/ and +-, of 2oonwealth Act N!#ered )o!r h!ndred
si4t'3si4, the phrase Horiginal sale, #arter, or e4changeH shall #e constr!ed to ean the first sale,
#arter, or e4change of article #' ever' an!fact!rer, prod!cer, or iporter: "rovided, however,
That where the ta4es prescri#ed in said sections have not #een collected on articles, the original
sales of which are s!#0ect to ta4, in the possession of an' erchant, the first sale, #arter, or
e4change of said articles on or after the approval of this Act shall #e considered as an original
sale, #arter, or e4change and shall #e s!#0ect to ta4 at the rates prescri#ed in said sections +-.,
+-/, and +-,. :Ephasis s!pplied.=
The !nderscored portion of the proviso of the afore>!oted section deterines what sale, #arter or
e4change of articles s!#0ect to the ta4es prescri#ed in sections +-., +-/ and +-, of
2oonwealth Act No. .,, shall #e considered as an original sale, #arter or e4change and shall
#e s!#0ect to the ta4, and it deterines the >!estion #' sa'ing that it shall #e the first sale, #arter
or e4change on or after the approval of said Act. 2oonwealth Act No. /F; was approved on
Octo#er +,, +*;*. Therefore, the sales ade #' the present defendants #etween Jan!ar', +*;,,
and March ;+, +*;-, were not covered #' the provisions of section / of said 2oonwealth Act
No. /F; which was not in e4istence when the' tooD place.
5nder sections +./- and +./* of the Revised Adinistrative 2ode and section + of Act No. ;<.;,
defendants were re>!ired to aDe a ret!rn of their sales and to pa' the percentage ta4 therein
provided for.
9ith respect to the newspapers, aga%ines and stationer' sold #' the, as HerchantsH !nder
the definition of section +./*, d!ring the period alleged in the inforation, the penalt' for their
fail!re to aDe the re>!ired ret!rn was fi4ed #' section <C<; of the sae 2ode at a fine not
e4ceeding "<,FFF or iprisonent for a ter not e4ceeding one 'ear, or #oth. Those provisions
were, however, e4pressl' repealed #' section ;,* of 2oonwealth Act No. .,,.
9hile it is tr!e that !nder section +-, of 2oonwealth Act No. .,, those newspapers,
aga%ines and stationer' wo!ld coe within the eaning of the ter HarticlesH !sed therein
:9e#sterIs International 6ictionar', p. +;+, definition No. , of HarticleH=, the fact is that #' the said
section the one ade lia#le to pa' the ta4 is the an!fact!rer, prod!cer or iporter and the ta4 is
therein e4pressl' ade collecti#le onl' once, i. e., on ever' original sale, #arter, e4change and
siilar transaction intended to transfer ownership of, or title to, the articles therein referred to. And,
as regards the newspapers and aga%ines, persons, liDe defendants, engaged in the #!siness of
selling the, #!t who were not the printers or p!#lishers thereof, co!ld not have ade the original
sale, #arter, e4change or siilar transaction within the eaning of the oft3repeated section +-,.
Moreover, even the printer or p!#lisher can hardl' #e considered as the Han!fact!rer or
prod!cerH thereof. And even if we direct attention to section +*+ of 2oonwealth Act No. .,,, in
so far as it relates to p!#lishers, we will find that the ta4 of +J per cent there#' iposed is onl'
!pon the p!#lishers who are not covered #' the e4ception therein ade, and not !pon the
erchant or #' the person who ac>!ires the newspapers, aga%ines, reviews or #!lletins therein
spoDen of fro the p!#lisher for p!rposes of resale. This eans that defendants herein wo!ld not
coe !nder the p!rview of said section +*+ either.
STATCON| 9
.
)ro the foregoing it res!lts that neither !nder section +-, nor !nder section +*+ of the National
Internal Reven!e 2ode B nor !nder an' other sections of said 2ode for that atter B wo!ld
defendants lia#le for the percentage ta4 therein created.
Radical changes fro the aforesaid and other provisions of the forer Internal Reven!e Aaw,
!pon the enactent of the National Internal Reven!e 2ode, are: :a= the increased rate fro +J per
cent !nder section +./* of the Revised Adinistrative 2ode and section + of Act No. ;<.; to ;J
per cent !nder section +-, of the National Internal Reven!e 2ode? :#= the change in the incidence
of the ta4, nael', its iposition onl' !pon the an!fact!rer, prod!cer or iporter on the original
sale, #arter, e4change, etc. effected #' hi, p!rs!ant to section +-, of the National Internal
Reven!e 2ode, instead of !pon ever' person aDing an' sale, #arter, e4change, etc., no atter
how an' ties these transactions were s!ccessivel' repeated, !nder sections +./- and +./* of
the Revised Adinistrative 2ode and section + of Act No. ;<.;? :c= the increase fro + per cent
!nder section +.,+ of the Revised Adinistrative 2ode to +J per cent !nder section +*+ of the
National Internal Reven!e 2ode in the ta4 or p!#lishers, lithographers and printers? etc.
2onse>!entl', we are of opinion that the provisions of sections +./- and +./* of the Revised
Adinistrative 2ode and section + of Act No. ;<.; were not reenacted, even s!#stantiall', in the
National Internal Reven!e 2ode.
&!t it is contended for the @overnent that the order appealed fro is erroneo!s #eca!se of the
enactent of 2oonwealth Act No. /F;, partic!larl' section / thereof, transcri#ed in appellantIs
#rief and also in an earlier part of this decision. 1owever, we !st not lose sight of the proviso of
said section / which is in the words and fig!res following:
"rovided, however, that where the ta4es descri#ed in said sections :sections +-., +-/, and +-, of
2oonwealth Act No. .,,= have not #een collected on articles, the original sales of which are
s!#0ect to the ta4, in the possession of an' erchant, the first sale, #arter, or e4change of said
articles on or after the approval of this Act shall #e considered as an original sale, #arter, or
e4change and shall #e s!#0ect to the ta4. . .
This proviso was evidentl' designed to cover the case of those articles on whose original sale,
#arter, or e4change the percentage ta4 wo!ld have #een collecti#le fro the an!fact!rer,
prod!cer or iporter if it had #een effected !pon or after the enactent of 2oonwealth Act No.
.,,, #!t which were so sold, #artered or e4changed #efore said enactent: and for s!ch a case it
was provided that the first sale, #arter, or e4change of said articles on or after the approval of the
Act :No. /F;= shall #e considered as the original sale, #arter or e4change thereof and shall #e
accordingl' ta4a#le. The sales ade #' the herein defendants, having taDen place #etween
Jan!ar', +*;,, and March ;+, +*;-, we effected ore than one 'ear #efore the enactent of
2oonwealth Act No. /F;, that is, Octo#er +,, +*;*.
It will, therefore, appear fro the foregoing considerations that !pon the enactent of the National
Internal Reven!e 2ode defendants herein ceased to #e #o!nd to aDe a ret!rn of their sales in
>!estion or to pa' the percentage ta4 !nder consideration. And not onl' this, #!t even after the
enactent of 2oonwealth Act No. /F;, s!ch o#ligation co!ld not in an' sense #e considered
as reviewed B h'potheticall' s!pposing that s!ch revival wo!ld have #een valid B since #' the
e4press ters of the proviso of section / of the last entioned act, the sales th!s ade #'
defendants wo!ld not, at an' rate, have #een considered as Hthe first sale, #arter, or e4changeH of
the aforesaid newspaper, aga%ines and stationar'. In other words, after the approval of the
National Internal Reven!e 2ode the contin!it' of the o#ligation, and therefore of the penal
sanction for its violation, was #roDen. In conse>!ence, the a!thorities cited #' the Solicitor @eneral
STATCON| 10
.
on page - of his #rief, predicated !pon the re3enactent, literal or s!#stantial, of the repealed
provision #' the repealing act, are not in point. In Ong 2hang 9ing and Kwong )oD vs. 5nited
States :.F "hil., +F.,? <+- 5.S., <C<? /. Aaw ed., +F.F, +F.+==, wherein the 5nited States
S!pree 2o!rt affired a 0!dgent of conviction #' this 2o!rt, the forer tri#!nal said:
It appears that the new Act No. +C/C, which tooD the place of the repealed act, article No. ;.; of
the "hilippine "enal 2ode, did not !ndertaDe to wipe o!t the offense of ga#ling, or Deeping a
ga#ling ho!se in the "hilippine Islands, #!t s!#stantiall' re3enacted the forer law with ore
ela#oration and detail in its provisions than were contained in the forer law. :Ephasis s!pplied.=
On the following page of the report, the sae tri#!nal had the following to sa' of the effect of the
decision of this 2o!rt:
. . . The effect of the decision of the "hilippine S!pree 2o!rt is to hold that !nder the law and
local stat!tes, the repealing act re3enacting s!#stantiall' the forer law, and not increasing the
p!nishent of the acc!sed, the right still e4ists to p!nish the acc!sed for an offense of which the'
were convicted and sentenced #efore the passage of the later act. . . . :Ephasis s!pplied.=
In the case of 5nited States vs. 2!na :+< "hil., <.+=, the earliest "hilippine case cited in the
Solicitor @eneralIs #rief, this 2o!rt declared :p. <./=:
. . . In other words, that the enactent of new penal laws, notwithstanding the fact that the'
contain general repealing cla!ses, does not deprive the co!rts of 0!risdiction to tr', convict, and
sentence persons charged with violations of the old law prior to the date when the repealing law
goes into effect, !nless the new law wholl' fails to penali%e the acts which constit!ted the offense
defined and penali%ed in the repealed law.
In accordance with this doctrine, where the repealing law wholl' fails to penali%e the acts which
constit!ted the offense defined and penali%ed in the repealed law, the repeal carries with it the
deprivation of the co!rts of 0!risdiction to tr', convict, and sentence persons charged with
violations of the old law prior to the repeal. This is o!r case, since, as alread' seen, the National
Internal Reven!e 2ode, and for that atter even 2oonwealth Act No. /F;, wholl' fails to
penali%e the acts ip!ted !pon the herein defendants.
9herefore, it is the 0!dgent of this 2o!rt that the order appealed fro #e, as it is here#', affired
with costs de officio. So ordered.
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLL
G.R. No. 38445 S'pt'6+'* -4, 193-
E#STA7#IO LAGRI0AS, petitioner,
vs.
THE 1IRE8TOR OF PRISONS, respondent.
The petitioner in his own behalf.
Attorney-General Jaranilla for respondent.
9ILLA0OR, J.:
The petitioner, who is detained in &ili#id, pra's that an order #e iss!ed directing that he #e set at
li#ert', invoDing article +.* of the Revised "enal 2ode, which prescri#es a lesser penalt' for the
crie penali%ed #' article </+ of the old "enal 2ode !nder which he was sentenced #' the 2o!rt
of )irst Instance of Saar to two 'ears, eleven onths, and eleven da's of prision
correccional and a fine of ;C/ pesetas.
STATCON| 11
.
The respondent opposes the petition aintaining that article +.- and not +.* of the Revised "enal
2ode is applica#le to the present case.
The record shown that the petitioner slapped and !sed offensive lang!age to Maerta Alca%ar, a
teacher in the p!#lic school of the town of Aaoang, Saar, while she was perforing her official
d!ties. The acc!sed was fo!nd g!ilt' of the crie of assa!lt !pon a p!#lic official as charged, and
sentenced according to article </+ of the old "enal 2ode, to the penalt' aforeentioned.
It a' #e noted that in the #rief filed against the petitioner in @. R. No. ;;/<*,
+
the Attorne'3
@eneral contended that the crie coitted was penali%ed #' article </F, No. ;, of the old "enal
2ode, with a penalt' ranging fro si4 'ears and one da' of prision correccional to eight 'ears
of prision mayor, and the co!rt said that this contention was technicall' correct. &!t in view of the
fact that the acc!sed was act!ated #' passion and o#f!scation, the co!rt affired the 0!dgent
appealed fro.
According to the old "enal 2ode, article <.*, the offense of assa!lt is coitted #': H+. . . .? <. An'
person who shall attacD, eplo' force against, or serio!sl' resist or intiidate, an' person in
a!thorit', or the agents of s!ch person, while engaged in the perforance of official d!ties, or #'
reason of s!ch perforance.H
The penalties for s!ch assa!lts are given in articles </F and </+ of the 2ode.
Siilarl', the Revised "enal 2ode penali%es two Dinds of assa!lt, direct and indirect, in articles
+.- and +.*.
)or a #etter !nderstanding of the atter, we dee it wise to place the old and the new provision
side #' side:
Old "enal 2ode Revised "enal 2ode
ART. </F. The penalt' for assa!lts falling
within the ne4t preceding article shall
#e prision correccional in its edi!
degree to prision mayor in its edi!
degree and a fine of not less than si4
h!ndred and twent'3five and not ore than
si4 tho!sand two h!ndred and fift' pesetas,
when the offense is coitted !nder an' of
the following circ!stances:
+. 9hen the person coitting the assa!lt
displa's a weapon.
<. 9hen the person coitting the assa!lt
is a governent eplo'ee.
;. 9hen the offenders la' hands !pon an'
person in a!thorit'.
.. 9hen, in conse>!ence of coercion, the
person in a!thorit' has acceded to the
deands of the offenders.
If no one of these circ!stances #e
present, the penalt' shall #e prision
correccional in its ini! and edi!
degrees and a fine of not less than three
h!ndred and sevent'3five and not ore
ART. +.-. Direct assaults. B An' person or persons who, witho!t a p!#lic
!prising, shall eplo' force or intiidation for the attainent of an' of the
p!rposes en!erated in defining the cries of re#ellion and sedition, or shall
attacD, eplo' force or serio!sl' intiidated or resist an' person in a!thorit' or
an' of his agents, while engaged in the perforance of official d!ties, or on
occasion of s!ch perforance, shall s!ffer the penalt' of
its edi! and a4i! periods and a fine not e4ceeding +,FFF pesos, when
the assa!lt is coitted with a weapon or when the offender is a p!#lic officer
or eplo'ee, or when the offender la's hands !pon a person in a!thorit'. If
none of these circ!stances #e present the penalt' of
its ini! period and a fine not e4ceeding /FF pesos shall #e iposed.
STATCON| 12
.
than three tho!sand seven h!ndred and
fift'pesetas.
ART. </+. Offenders who shall have ade
!se of force or intiidation, as referred to in
paragraph one of article two h!ndred and
fort'3nine, for the p!rposes therein
entioned, shall s!ffer the a4i!
degree of the penalt' prescri#ed #' the last
paragraph of the ne4t preceding article, if
the' shall have laid hands !pon an' person
or persons who shall have coe to the aid
of the a!thorities or !pon their of the
agents, or !pon an' p!#lic officer.
ART. +.*. Indirect assaults. B The penalt' of prision
correccional in its ini! and edi! periods and a
fine not e4ceeding /FF pesos shall #e iposed !pon
an' person who shall aDe !se of force or intiidation
!pon an' person coing to the aid of the a!thorities or
their agents on occasion of the coission of an'
cries defined in the ne4t preceding article.
A coparative reading of the provisions a#ove >!oted will show that articles </F and +.- refer to
assa!lts !pon a person in a!thorit' or his agents, and #oth articles are concerned with two cases.
The circ!stances deterining the first case are the sae, with the e4ception of No. ., article
</F, which is not reprod!ced in article +.-. These articles differ with respect to the penalties in the
first and the second case. The first case conteplated in article </F is penali%ed with prision
correccional in the edi! degree to prision mayor in the ini! degree in addition to the fine
prescri#ed #' the law? whereas the first case of article +.- is onl' penali%ed with prision
correccional in the edi! and a4i! degrees, and a fine. These two articles also differ in
regard to the second case, for, while article </F iposes the penalt' of prision correccional in the
ini! and edi! degrees, and a fine, article +.- onl' provides prision correccional in the
ini! degree and a fine.
As for articles </+ and +.* it a' #e stated that the' refer to those g!ilt' of la'ing hands !pon an'
person coing to the aid of the a!thorities, with the difference that article </+ also penali%es those
who la' hands !pon agents of the a!thorities or !pon p!#lic officials, and article +.* does not.
These two articles also differ with reference to the penalt', for while article </+ iposes the
a4i! of the penalt' ranging fro the ini! to the edi! degree of prision correccional,
and a fine, article +.* onl' iposes prision correccional in the ini! and edi! degrees, and
a fine.
As stated a#ove, co!nsel for the respondent contends that the law applica#le to the case is article
+.- and not +.* of the Revised "enal 2ode, averring in his answer that the petitioner was
charged with the crie of assa!lt !pon a person in a!thorit', and sentenced to two 'ears, eleven
onths and eleven da's, and a fine of ;C/pesetas, which is the ini! of the a4i! degree
of the penalt' prescri#ed in No. < of article </F of the old "enal 2ode.
It is noted, however, that the sentence of the trial co!rt, affired #' this co!rt, e4pressl' held that
the crie charged is that penali%ed #' article </+ of the "enal 2ode, to wit, la'ing hands !pon
persons coing to the aid of the a!thorities or their agents or !pon p!#lic officials, an offense
p!nished with the penalt' fi4ed #' No. < of article </F, in the a4i! degree, that is two 'ears,
eleven onths, and eleven da's of prision correccional and a fine of ;C/ pesetas, e>!ivalent to
"C/. And as heretofore stated, article </+ is concordant to article +.*, with the difference that the
latter contains no penal sanction for the offense of la'ing hands !pon agents of the a!thorities or
!pon p!#lic officials.
This concl!sion relieves !s of the necessit' of disc!ssing in this case whether a p!#lic3school
teacher, liDe Alca%ar who the acc!sed assa!lted, is or is not an agent of the a!thorities or a
p!#lic official? and the reaining >!estion is whether the petitioner, who was sentenced #' virt!e
of a provision of the forer "enal 2ode, a' #e set at li#ert' on the gro!nd that the Revised
"enal 2ode provides no penalt' for the crie coitted !nder the forer 2ode.
STATCON| 13
.
Article ;,, of the Revised "enal 2ode provides: H9itho!t pre0!dice to the provisions contained in
article << of this 2ode, felonies and isdeeanors, coitted prior to the date of effectiveness of
this 2ode shall #e p!nished in accordance with the 2ode or Acts in force at the tie of their
coission.H 9e !nderstand that the intention of the Aegislat!re in e#od'ing this provision in
the Revised "enal 2ode was to ins!re that the eliination fro this 2ode of certain cries
penali%ed #' forer acts #efore the enforceent of this 2ode sho!ld not have the effect of
pardoning g!ilt' persons who were serving their sentences for the coission of s!ch cries. &'
virt!e of this provision, we are clearl' of the opinion that the petitioner !st serve o!t the penalt'
iposed !pon hi, !nless he #e pardoned #' the E4ec!tive "ower.
"etition denied, with costs de officio. So ordered.
Street, Malcolm, strand, Abad Santos, !ull, "ic#ers, Imperial and $utte, JJ., conc!r.
S'pa*at' Opiios
A9AN8E:A, C.J., dissenting:
I dissent, and aintain that the reed' sho!ld #e granted.
The petitioner was sentenced for a crie penali%ed #' the old penal 2ode, #!t not #' the Revised
"enal 2ode. In pra'ing that he #e ordered set at li#ert', the petitioner invoDes article << of the
Revised "enal 2ode, which provides:
ART. <<. %etroacti&e effect of penal laws. B "enal laws shall have a retroactive effect in so
far as the' favor the person g!ilt' of a felon', who is not ha#it!al criinal, as this ter is
defined in r!le / of article ,< of this 2ode, altho!gh at the tie of the p!#lication of s!ch
laws a final sentence has #een prono!nced and the convict is serving the sae.
The a0orit' denies the petition rel'ing !pon article ;,, of the Revised "enal 2ode, which reads
as follows:
ART. ;,,. Application of laws enacted prior to this 'ode. B 9itho!t pre0!dice to the
provisions contained in article << of this 2ode, felonies and isdeeanors, coitted prior
to the date of effectiveness of this 2ode shall #e p!nished in accordance with the 2ode or
Acts in force at the tie of their coission.
The a0orit' hold that the intention of the Aegislat!re in incl!ding this provision in the Revised
"enal 2ode, was to ins!re that the eliination fro this 2ode of certain cries penali%ed #'
forer laws sho!ld not have the effect of pardoning g!ilt' persons who were serving their
sentences for the coission of s!ch cries.
I disagree with this doctrine.
Article ;,, of the Revised "enal 2ode, in providing that offenses coitted prior to its
enforceent shall #e p!nished in accordance with the laws in force at the tie of the coission
thereof, without pre(udice to the pro&isions contained in article )) of said code, did nothing ore
than reaffir the retroactivit' of its provisions when favora#le, as provided in the latter article.
9hen the Revised "enal 2ode has red!ced the penalt' for a crie coitted !nder the old code,
it is #eca!se it considers s!ch cries to #e less serio!s than it was forerl' considered. In this
sense the new 2ode is favora#le. )!rtherore, when it has eliinated entirel' the penalt' for an
act which was forerl' p!nisha#le, it is #eca!se it no longer considers s!ch act a crie. In this
sense it is even ore favora#le. 9hen a convict serving sentence !nder the old "enal 2ode has
e4ting!ished a portion thereof e>!al to or greater than that provided in the Revised "enal 2ode,
he is entitled to #e set at li#ert' #' virt!e of article <<. In fact, we are setting convicts at li#ert'
!nder these conditions? #eca!se the present law, considering the crie coitted to #e less
serio!s than forerl', prescri#es a lighter penalt' therefor. In spite of this, the petitioner in the
present case, who is serving sentence for an act which is now considered not onl' as a less
serio!s offense, #!t, on the contrar', as an innocent act which is no longer penali%ed, is denied his
STATCON| 14
.
li#ert'. If article << is applica#le when the Revised "enal 2ode is to soe e4tent favora#le to the
acc!sed, I see no reason wh' it sho!ld not #e applica#le when the new code is decidedl', na',
entirel', favora#le to hi.
9hen a later law itigates the penalt' prescri#ed for a crie #' a forer, deeing it !n0!st,
e4cessive, and not coens!rate with the offense coitted, its p!rpose is to correct an in0!stice
in legislation. In order not to liit the #enefits of this correction to those who have not 'et #een
sentenced for reasons which perhaps render the less deserving of those #enefits :e. g.,
#ecoing f!gitives fro 0!stice=, the' are e4tended to those who have alread' #een sentenced,
#eca!se the' s!#itted to the action of the co!rts, and are still serving their sentences. The
p!rpose of the provision of the law relating to its retroactivit' is to aDe aends for in0!stice to the
f!llest e4tent possi#le. If this #e so with regard to a penalt' deeed e4cessive, it sho!ld #e
considered so with greater reason when one is deeed not to have coitted a criinal act at all,
and hence not lia#le to an' penalt'.
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G.R. No. 14558/ 1'&'6+'* -, 1994
SI0PLI8IO A. PALAN8A, petitioner,
vs.
8O#RT OF APPEALS ;SPE8IAL FOR0ER ELE9ENTH 1I9ISION<, a( E1GAR1O S.
SANI8AS, *'p*'s't'( +, )is Atto*',-i-Fa&t, =OSE S. SANI8AS, respondents.
$en(amin '. Santos and *strella, %emitio + Associates for petitioner.
%odolfo ". Gumban for pri&ate respondent.

7#IASON, J.:
This is a petition for review on certiorari !nder R!le ./ of the Revised R!les of 2o!rt to set aside
the 6ecision of the 2o!rt of Appeals in 2A3@.R. 2( No. <F<./ and its Resol!tion dated A!g!st
+<, +**< den'ing the otion for reconsideration of said decision.
9e den' the petition.
I
On Jan!ar' <<, +*CC, petitioner, as vendor, and Jose S. Sanicas, as vendee, entered into a
2ontract to Sell on Installent of a parcel of land covered #' T2T No. T3,CC+C,,. 5nder the ters
of the contract, private respondent agreed to pa' petitioner the ao!nt of "*,-/+.FF as
downpa'ent and the #alance of "--,,/*.FF in +<F onthl' installents with +.M interest per
annum on the o!tstanding #alance. Jose S. Sanicas f!rther agreed to pa' the ann!al real propert'
ta4es, and that sho!ld he fail to pa' the said ta4es, he wo!ld have to pa' a 'earl' s!rcharge or
penalt' of /FM of the ta4es d!e pl!s +<M copo!nded interest per annum.
Respondent Edgardo S. Sanicas later ass!ed the acco!nt of his #rother Jose and he designated
the latter as his a!thori%ed representative in dealing with petitioner.
"aragraph ++ of the contract contained the following provision:
That it is f!rther agreed and !nderstood #' the (EN6EE that in the event of onetar'
fl!ct!ation, the !npaid #alance acco!nt of the herein (EN6EE on the aforecited s!#division
lot shall #e increased proportionatel' on the #asis of the present val!e of ",.C< to N+.FF 5S
dollar :%ollo, p. <=.
)ollowing deands fro petitioner for the !pdating of the acco!nt, private respondent re>!ested a
detailed stateent. 9hen petitioner failed to f!rnish hi with the stateent, private respondent
hired an acco!ntant to cop!te his o#ligations !nder the contract. Thereafter, he tendered the
ao!nt of "..,*//.-C in cash !pon petitioner, which ao!nt incl!ded interest at +<M per annum.
STATCON| 15
.
"etitioner, however, ref!sed to receive the ao!nt tendered, propting private respondent to
aDe a 0!dicial consignent of the ao!nt on Ma' <*, +*-C.
"rivate respondent then filed with the trial co!rt a coplaint for reconve'ance with preliinar'
in0!nction, pra'ing that petitioner #e restrained fro cancelling private respondentIs rights !nder
the contract and fro e0ecting hi fro the propert'. "rivate respondent f!rther pra'ed that the
trial co!rt order petitioner to accept the ao!nt earlier consigned, and s!#se>!entl', to declare as
f!ll' paid the p!rchase price of the parcel of land.
"etitioner 0!stified his ref!sal to accept the ao!nt of "..,*//.-C #' asserting that private
respondentIs act!al lia#ilit' was "+//,,;F..F, rel'ing on the escalator cla!se in paragraph ++ of
the contract.
Appl'ing Article +</F of the New 2ivil 2ode, the trial co!rt r!led that for an agreeent providing
for the ad0!stent of the p!rchase price in case of a diin!tion of the val!e of the peso to coe
into effect, there sho!ld #e an He4traordinar' inflation or deflation.H It was the position of the trial
co!rt that inas!ch as there was no e4traordinar' inflation or deflation, paragraph ++ of the
contract sho!ld not #e taDen into acco!nt in the cop!tation of the ao!nt pa'a#le !nder the
contract :%ollo, pp. ./3.,=.
)!rtherore, the trial co!rt r!led that it was !nconsciona#le to peg the !npaid #alance in the event
of onetar' fl!ct!ation at +FF.;*-M aside fro the agreed interest rate of +.M :%ollo, p. .-=.
Accordingl', the trial co!rt, in its 6ecision dated J!ne +C, +*--, disposed as follows:
91ERE)ORE, 0!dgent is here#' rendered ordering the defendant to e4ec!te a deed of
conve'ance in favor of plaintiff covering Aot No. -, &lD. +, T2T No. T3CC+C, considering the
pa'ent ade #' plaintiff of the #alance of the p!rchase price in the s! of )ort' )o!r
Tho!sand Nine 1!ndred Sevent' Nine "esos and Eight' Seven 2entavos :"..,*C*.-C= thr!
0!dicial consignation effected on Ma' <*, +*-C per Official Receipt No. .F+,<<- iss!ed #' the
"rovincial Treas!rer of Negros Occidental.
9itho!t prono!nceent as to attorne'Is fees and costs :%ollo,
p. .-=.
"etitioner appealed to the 2o!rt of Appeals.
The 2o!rt of Appeals odified the 0!dgent of the trial co!rt. &ased on the trial co!rtIs record, the
appellate co!rt r!led that the ao!nt pa'a#le #' private respondent was "CF,,--.+C, #roDen
down as follows:
"./,+-,.F. &alance on the principal?
"<<,,F..,; Interest thereon fro Jan!ar' <.,
+*-; to April <, +*-C pl!s, #alance
on interest? and
"<,-*C.FF Aand ta4es fro +*CC to +*-,
:%ollo, p. ;-=.
The 2o!rt of Appeals conc!rred with the trial co!rtIs r!ling that paragraph ++ of the contract
cannot coe into effect a#sent an act!al e4traordinar' inflation or deflation.
II. Not pleased with the 0!dgent of the appellate co!rt, petitioner coes to this 2o!rt raising the
sole iss!e of Hwhether or not petitioner is entitled to a proportionate increase in pa'ent on the
#alance of the p!rchase price for a piece of real propert' #o!ght on installent, p!rs!ant to
paragraph ++ of the s!#0ect 2ontract To Sell on InstallentH :%ollo, p. <=.
III. 9e cannot grant the petition #!t not on the gro!nds relied !pon #' the trial co!rt and the 2o!rt
of Appeals that there sho!ld #e an He4traordinar' inflationH #efore a stip!lation for an !pward
ad0!stent of the p!rchase price can #e enforced.
STATCON| 16
.
The specific provision of law applied #' the two lower co!rts is Article +</F of the 2ivil 2ode of the
"hilippines, which provides:
In case e4traordinar' inflation or deflation of the c!rrenc' stip!lated sho!ld s!pervene, the
val!e of the c!rrenc' at the tie of the esta#lishent of the o#ligation shall #e the #asis of
pa'ent, !nless there is an agreeent to the contrar'.
In the case at #ench, the clear !nderstanding of the parties is that there sho!ld #e an !pward
ad0!stent of the p!rchase price the oent there is a deterioration of the "hilippine peso &is-a-
&is the 5.S. dollar. This is the Honetar' fl!ct!ationH conteplated #' the as wo!ld 0!stif' the
ad0!stent. 5nder this scenario, it is an idle tasD to deterine whether the contract has #een
visited #' an He4traordinar' inflationH as to trigger the operation of Article +</F.
9hile the contract a' contain an Hescalator cla!seH providing that in the occ!rrence of certain
events, the contract price shall #e increased to a fi4ed percentage of the #ase price :HEscalatorH
price ad0!stent cla!ses, ,; AAR <d +;;C O+*/*P, still the a!tono' of the parties to provide s!ch
escalator cla!ses a' #e liited #' law.
The petition sho!ld #e disissed on the gro!nd that the stip!lation of the parties is in violation of
R.A. No. /<*, as aended, entitled HAn Act to Ass!re 5nifor (al!e To "hilippine 2oin and
2!rrenc',H otherwise as the 2!enco Aaw.
Section + of R.A. No. /<*, as aended, provides in pertinent part:
Ever' provision contained in, or ade with respect to, an' doestic o#ligation, to wit, an'
o#ligation contracted in the "hilippines which provisions p!rport to give the o#ligee the right to
re>!ire pa'ent in gold or in a partic!lar Dind of coin or c!rrenc' other than "hilippine
c!rrenc' or in an amount of money of the ,hilippines measured thereby, #e as it is here#'
declared against p!#lic polic', and n!ll, void and of no effect, and no s!ch provision shall #e
contained in, or ade with respect to, an' o#ligation hereafter inc!rred. . . . :Ephasis
s!pplied=
Often lost sight of is the fact that the said law prohi#its two things in all doestic contracts: :+=
giving the o#ligee the right to re>!ire pa'ent in a specified c!rrenc' other than "hilippine
c!rrenc'? and :<= giving the o#ligee the right to re>!ire pa'ent Hin an ao!nt of one' of the
"hilippines eas!red there#'.H
9hen the parties stip!lated that H. . . in the event of onetar' fl!ct!ation :eaning an' change in
the rate of e4change of the "hilippine peso to the 5.S. dollar=, the !npaid #alance acco!nt of the
herein vendee on the aforesaid s!#division lot shall #e increased proportionatel' on the #asis of
the present val!e of ",.C< to 5SN +.FF,H the o#ligee was given the right to deand pa'ent of the
#alance of the p!rchase price Hin an ao!nt of one' of the "hilippines eas!redH #' a foreign
coin or c!rrenc'.
Rep!#lic Act No. /<* andates that the one' of o#ligation or pa'ent to #e stip!lated in all
contracts entered into in the "hilippines shall #e in "hilippine c!rrenc'. The a!thorit' to legislate
on the one' of o#ligation or pa'ent in all transactions entered into in the "hilippines is #e'ond
disp!te.
The whereas cla!se of R.A. No. /<* reads as follows:
91EREAS, the val!e of "hilippine coin and c!rrenc' affects p!#lic interest and is s!#0ect to
reg!lation #' the 2ongress of the "hilippines?
91EREAS, it has #een disclosed that the provisions of certain o#ligations contracted in the
"hilippines p!rport to give the o#ligee the right to re>!ire pa'ent in gold or in a partic!lar Dind
of coin or c!rrenc' or in an ao!nt in one' of the "hilippines eas!red there#', th!s
o#str!cting the power of the 2ongress to reg!late the val!e of the one' of the "hilippines
and contravening the polic' of the 2ongress, here declared, to aintain at all ties the e>!al
and sta#le power of ever' peso coined or iss!ed #' the "hilippines, in the arDets and in the
pa'ent of de#ts.
STATCON| 17
.
2ongress passed Rep!#lic Act No. /<*, having in ind the preservation of the val!e of the
"hilippine peso. A c!rrenc' has val!e #eca!se people are willing to accept it in e4change for
goods and services and in pa'ent for de#ts. Th!s, despite the fact that one' has no val!e as a
coodit', it has val!e to those willing to !se it as a edi! of e4change :2argill, Mone', The
)inancial S'ste and Monetar' "olic' +- O<nd ed., +*-;P? @r!#el, The International Monetar'
S'ste +-/ O;rd ed.P=. If goods and services are availa#le in ret!rn for a definite edi! of
e4change, the val!e of all goods and services necessaril' will #e eas!red in ters of that
edi!. &!t these f!nctions of one' are not capa#le of perforance if there is no confidence in
the c!rrenc' :N!s#a!, Mone' in the Aaw ;3. O+*;* ed.P=. It instead of the "hilippine c!rrenc', the
people wo!ld !se a foreign c!rrenc' as the ode of pa'ent or as #asis for eas!ring the
ao!nt of one' to #e paid in "hilippine c!rrenc', s!ch !sage wo!ld adversel' affect the
confidence of the p!#lic on the "hilippine onetar' s'ste.
The contract in >!estion is a sale of a parcel of land in the "hilippines pa'a#le in "hilippine pesos.
9hile the #alance of the p!rchase price is pa'a#le in "hilippine c!rrenc' eas!red #' a foreign
c!rrenc', no foreign c!rrenc' was directl' involved in the transaction. The o#ligation sho!ld
therefore #e paid in the sae ao!nts of "hilippine c!rrenc' as stip!lated in the contract witho!t
an' ad0!stent #ased on the prevailing e4change rate of the 5.S. dollar to the "hilippine peso.
The transaction does not involve a loan in a foreign c!rrenc' stip!lated to #e pa'a#le in "hilippine
c!rrenc' #!t eas!red #' a foreign c!rrenc', in which case the rate of e4change prevailing at the
stip!lated date of pa'ent shall prevail :Ail' San &!enavent!ra v. 2o!rt of Appeals, +-+ S2RA
+*C O+**FP=.
The li#erali%ation of the foreign e4change reg!lations on receipts and dis#!rseents of residents
arising fro #oth non3trade and trade transactions :Resol!tion of the Monetar' &oard dated
A!g!st C, +**<? 2entral &anD 2irc!lars No. +;/;, Series of +**<? No. +;+- dated Jan!ar' ;,
+**<? No. +;;- dated April <-, +**<? No. +;.- dated J!l' <-, +**<= did not repeal or in an' wa'
aend R.A. No. /<*. In essence, the said 2irc!lars of the 2entral &anD erel' allowed the free
sale and p!rchase of foreign e4change o!tside the #anDing s'ste and other transactions
involving foreign c!rrenc' previo!sl' s!#0ect to 2entral &anD control.
9hile foreign e4change controls are tools in the aintenance of the val!e of the "hilippine
c!rrenc', s!ch controls are not the onl' eans of aintaining that val!e. The re>!ireents in R.A.
No. /<* that the one' of o#ligation or pa'ent in all doestic transactions !st #e in "hilippine
c!rrenc' are also eas!res to aintain s!ch val!e.
&esides, a 2entral &anD 2irc!lar cannot repeal a law. Onl' a law can repeal another law. Article C
of the 2ivil 2ode of the "hilippines provides:
Aaws are repealed onl' #' s!#se>!ent ones and their violation or non3o#servance shall not #e
e4c!sed #' dis!se, or c!sto or practice to the contrar'.
91ERE)ORE, the petition is 6ENIE6.
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G.R. No. 14398- 1'&'6+'* 11, 199-
ANTONIO A. 0E8ANO, p'titio'*,
"s.
8O00ISSION ON A#1IT, *'spo('t.
8A0POS, =R., =.>
Antonio A. Mecano, thro!gh a petition for certiorari, seeDs to n!llif' the decision of the 2oission
on A!dit :2OA, for #revit'= e#odied in its Cth Indorseent, dated Jan!ar' +,, +**<, den'ing his
clai for rei#!rseent !nder Section ,** of the Revised Adinistrative 2ode :RA2=, as
aended, in the total ao!nt of ".F,-;+.FF.
STATCON| 18
.
"etitioner is a 6irector II of the National &!rea! of Investigation :N&I=. 1e was hospitali%ed for
cholec'stitis fro March <,, +**F to April C, +**F, on acco!nt of which he inc!rred edical and
hospitali%ation e4penses, the total ao!nt of which he is claiing fro the 2OA.
On Ma' ++, +**F, in a eorand! to the N&I 6irector, Alfredo S. Ai :6irector Ai, for #revit'=,
he re>!ested rei#!rseent for his e4penses on the gro!nd that he is entitled to the #enefits
!nder Section ,** + of the RA2, the pertinent provisions of which read:
Sec. ,**.Allowances in case of in0!r', death, or sicDness inc!rred in perforance of d!t'. B 9hen
a person in the service of the national governent of a province, cit', !nicipalit' or !nicipal
district is so in0!red in the perforance of d!t' as there#' to receive soe act!al ph'sical h!rt or
wo!nd, the proper 1ead of 6epartent a' direct that a#sence d!ring an' period of disa#ilit'
there#' occasioned shall #e on f!ll pa', tho!gh not ore than si4 onths, and in s!ch case he
a' in his discretion also a!thori%e the pa'ent of the edical attendance, necessar'
transportation, s!#sistence and hospital fees of the in0!red person. A#sence in the case
conteplated shall #e charged first against vacation leave, if an' there #e.
444 444 444
In case of sicDness ca!sed #' or connected directl' with the perforance of soe act in the line of
d!t', the 6epartent head a' in his discretion a!thori%e the pa'ent of the necessar' hospital
fees.
6irector Ai then forwarded petitionerIs clai, in a +st Indorseent dated J!ne <<, +**F, to the
Secretar' of J!stice, along with the coent, #earing the sae date, of @erarda @alang, 2hief,
AE6 of the N&I, Hrecoending favora#le action thereofH. )inding petitionerIs illness to #e service3
connected, the 2oittee on "h'sical E4aination of the 6epartent of J!stice favora#l'
recoended the pa'ent of petitionerIs clai.
1owever, then 5ndersecretar' of J!stice Silvestre 1. &ello III, in a .th Indorseent dated
Nove#er <+, +**F, ret!rned petitionerIs clai to 6irector Ai, having considered the stateents
of the 2hairan of the 2OA in its /th Indorseent dated +* Septe#er +**F, to the effect that the
RA2 #eing relied !pon was repealed #' the Adinistrative 2ode of +*-C.
"etitioner then re3s!#itted his clai to 6irector Ai, with a cop' of Opinion No. C;, S. +**+ <
dated April <,, +**+ of then Secretar' of J!stice )ranDlin M. 6rilon :Secretar' 6rilon, for #revit'=
stating that Hthe iss!ance of the Adinistrative 2ode did not operate to repeal or a#regate in its
entiret' the Revised Adinistrative 2ode, incl!ding the partic!lar Section ,** of the latterH.
On Ma' +F, +**+, 6irector Ai, !nder a /th Indorseent transitted anew MecanoIs clai to then
5ndersecretar' &ello for favora#le consideration. 5nder a ,th Indorseent, dated J!l' <, +**+,
Secretar' 6rilon forwarded petitionerIs clai to the 2OA 2hairan, recoending pa'ent of the
sae. 2OA 2hairan E!feio 2. 6oingo, in his Cth Indorseent of Jan!ar' +,, +**<, however,
denied petitionerIs clai on the gro!nd that Section ,** of the RA2 had #een repealed #' the
Adinistrative 2ode of +*-C, solel' for the reason that the sae section was not restated nor re3
enacted in the Adinistrative 2ode of +*-C. 1e coented, however, that the clai a' #e filed
with the Eplo'eesI 2opensation 2oission, considering that the illness of 6irector Mecano
occ!rred after the effectivit' of the Adinistrative 2ode of +*-C.
STATCON| 19
.
Event!all', petitionerIs clai was ret!rned #' 5ndersecretar' of J!stice Ed!ardo Montenegro to
6irector Ai !nder a *th Indorseent dated )e#r!ar' C, +**<, with the advice that petitioner
Helevate the atter to the S!pree 2o!rt if he so desiresH.
On the sole iss!e of whether or not the Adinistrative 2ode of +*-C repealed or a#rogated
Section ,** of the RA2, this petition was #ro!ght for the consideration of this 2o!rt.
"etitioner anchors his clai on Section ,** of the RA2, as aended, and on the aforeentioned
Opinion No. C;, S. +**+ of Secretar' 6rilon. 1e f!rther aintains that in the event that a clai is
filed with the Eplo'eesI 2opensation 2oission, as s!ggested #' respondent, he wo!ld still
not #e #arred fro filing a clai !nder the s!#0ect section. Th!s, the resol!tion of whether or not
there was a repeal of the Revised Adinistrative 2ode of +*+C wo!ld decide the fate of
petitionerIs clai for rei#!rseent.
The 2OA, on the other hand, strongl' aintains that the enactent of the Adinistrative 2ode of
+*-C :E4ec. Order No. <*<= operated to revoDe or s!pplant in its entiret' the Revised
Adinistrative 2ode of +*+C. The 2OA clais that fro the HwhereasH cla!ses of the new
Adinistrative 2ode, it can #e gleaned that it was the intent of the legislat!re to repeal the old
2ode. Moreover, the 2OA >!estions the applica#ilit' of the aforesaid opinion of the Secretar' of
J!stice in deciding the atter. Aastl', the 2OA contends that eplo'ent3related sicDness, in0!r'
or death is ade>!atel' covered #' the Eplo'eesI 2opensation "rogra !nder ".6. ,<,, s!ch
that to allow si!ltaneo!s recover' of #enefits !nder #oth laws on acco!nt of the sae
contingenc' wo!ld #e !nfair and !n0!st to the @overnent.
The >!estion of whether a partic!lar law has #een repealed or not #' a s!#se>!ent law is a atter
of legislative intent. The lawaDers a' e4pressl' repeal a law #' incorporating therein a
repealing provision which e4pressl' and specificall' cites the partic!lar law or laws, and portions
thereof, that are intended to #e repealed. ; A declaration in a stat!te, !s!all' in its repealing
cla!se, that a partic!lar and specific law, identified #' its n!#er or title, is repealed is an e4press
repeal? all others are iplied repeals. .
In the case of the two Adinistrative 2odes in >!estion, the ascertainent of whether or not it was
the intent of the legislat!re to s!pplant the old 2ode with the new 2ode partl' depends on the
scr!tin' of the repealing cla!se of the new 2ode. This provision is fo!nd in Section <C, &ooD (II
:)inal "rovisions= of the Adinistrative 2ode of +*-C which reads:
Sec. <C. Repealing 2la!se. B All laws, decrees, orders, r!les and reg!lations, or portions
thereof, inconsistent with this 2ode are here#' repealed or odified accordingl'.
The >!estion that sho!ld #e asDed is: 9hat is the nat!re of this repealing cla!seJ It is certainl' not
an e4press repealing cla!se #eca!se it fails to identif' or designate the act or acts that are
intended to #e repealed. / Rather, it is an e4aple of a general repealing provision, as stated in
Opinion No. C;, S. +**+. It is a cla!se which predicates the intended repeal !nder the condition
that s!#stantial conflict !st #e fo!nd in e4isting and prior acts. The fail!re to add a specific
repealing cla!se indicates that the intent was not to repeal an' e4isting law, !nless an
irreconcila#le inconcistenc' and rep!gnanc' e4ist in the ters of the new and old laws. , This
latter sit!ation falls !nder the categor' of an iplied repeal.
Repeal #' iplication proceeds on the preise that where a stat!te of later date clearl' reveals an
intention on the part of the legislat!re to a#rogate a prior act on the s!#0ect, that intention !st #e
given effect. C 1ence, #efore there can #e a repeal, there !st #e a clear showing on the part of
the lawaDer that the intent in enacting the new law was to a#rogate the old one. The intention to
STATCON| 20
.
repeal !st #e clear and anifest? - otherwise, at least, as a general r!le, the later act is to #e
constr!ed as a contin!ation of, and not a s!#stit!te for, the first act and will contin!e so far as the
two acts are the sae fro the tie of the first enactent. *
There are two categories of repeal #' iplication. The first is where provisions in the two acts on
the sae s!#0ect atter are in an irreconcila#le conflict, the later act to the e4tent of the conflict
constit!tes an iplied repeal of the earlier one. The second is if the later act covers the whole
s!#0ect of the earlier one and is clearl' intended as a s!#stit!te, it will operate to repeal the earlier
law. +F
Iplied repeal #' irreconcila#le inconsistenc' taDes place when the two stat!tes cover the sae
s!#0ect atter? the' are so clearl' inconsistent and incopati#le with each other that the' cannot
#e reconciled or haroni%ed? and #oth cannot #e given effect, that is, hat one law cannot #e
enforced witho!t n!llif'ing the other. ++
2oparing the two 2odes, it is apparent that the new 2ode does not cover nor attept to cover
the entire s!#0ect atter of the old 2ode. There are several atters treated in the old 2ode which
are not fo!nd in the new 2ode, s!ch as the provisions on notaries p!#lic, the leave law, the p!#lic
#onding law, ilitar' reservations, clais for sicDness #enefits !nder Section ,**, and still others.
Moreover, the 2OA failed to deonstrate that the provisions of the two 2odes on the atter of the
s!#0ect clai are in an irreconcila#le conflict. In fact, there can #e no s!ch conflict #eca!se the
provision on sicDness #enefits of the nat!re #eing claied #' petitioner has not #een restated in
the Adinistrative 2ode of +*-C. 1owever, the 2OA wo!ld have 5s consider that the fact that
Section ,** was not restated in the Adinistrative 2ode of +*-C eant that the sae section had
#een repealed. It f!rther aintained that to allow the partic!lar provisions not restated in the new
2ode to contin!e in force arg!es against the 2ode itself. The 2OA anchored this arg!ent on the
whereas cla!se of the +*-C 2ode, which states:
91EREAS, the effectiveness of the @overnent will #e enhanced #' a new Adinistrative 2ode
which incorporate in a !nified doc!ent the a0or str!ct!ral, f!nctional and proced!ral principles
and r!les of governance? and
444 444 444
It arg!es, in effect, that what is conteplated is onl' one 2ode B the Adinistrative 2ode of +*-C.
This contention is !ntena#le.
The fact that a later enactent a' relate to the sae s!#0ect atter as that of an earlier stat!te
is not of itself s!fficient to ca!se an iplied repeal of the prior act, since the new stat!te a'
erel' #e c!!lative or a contin!ation of the old one. +< 9hat is necessar' is a anifest
indication of legislative p!rpose to repeal. +;
9e coe now to the second categor' of repeal B the enactent of a stat!te revising or codif'ing
the forer laws on the whole s!#0ect atter. This is onl' possi#le if the revised stat!te or code
was intended to cover the whole s!#0ect to #e a coplete and perfect s'ste in itself. It is the r!le
that a s!#se>!ent stat!te is deeed to repeal a prior law if the forer revises the whole s!#0ect
atter of the forer stat!te. +. 9hen #oth intent and scope clearl' evidence the idea of a repeal,
then all parts and provisions of the prior act that are oitted fro the revised act are deeed
repealed. +/ )!rtherore, #efore there can #e an iplied repeal !nder this categor', it !st #e
the clear intent of the legislat!re that the later act #e the s!#stit!te to the prior act. +,
STATCON| 21
.
According to Opinion No. C;, S. +**+ of the Secretar' of J!stice, what appears clear is the intent
to cover onl' those aspects of governent that pertain to adinistration, organi%ation and
proced!re, !nderstanda#l' #eca!se of the an' changes that transpired in the governent
str!ct!re since the enactent of the RA2 decades of 'ears ago. The 2OA challenges the weight
that this opinion carries in the deterination of this controvers' inas!ch as the #od' which had
#een entr!sted with the ipleentation of this partic!lar provision has alread' rendered its
decision. The 2OA relied on the r!le in adinistrative law en!nciated in the case of Sison vs.
"angra!'en +C that in the a#sence of palpa#le error or grave a#!se of discretion, the 2o!rt
wo!ld #e loathe to s!#stit!te its own 0!dgent for that of the adinistrative agenc' entr!sted with
the enforceent and ipleentation of the law. This will not hold water. This principle is s!#0ect to
liitations. Adinistrative decisions a' #e reviewed #' the co!rts !pon a showing that the
decision is vitiated #' fra!d, iposition or istaDe. +- It has #een held that Opinions of the
Secretar' and 5ndersecretar' of J!stice are aterial in the constr!ction of stat!tes in pari ateria.
+*
Aastl', it is a well3settled r!le of stat!tor' constr!ction that repeals of stat!tes #' iplication are
not favored. <F The pres!ption is against inconsistenc' and rep!gnanc' for the legislat!re is
pres!ed to Dnow the e4isting laws on the s!#0ect and not to have enacted inconsistent or
conflicting stat!tes. <+
This 2o!rt, in a case, e4plains the principle in detail as follows: HRepeals #' iplication are not
favored, and will not #e decreed !nless it is anifest that the legislat!re so intended. As laws are
pres!ed to #e passed with deli#eration with f!ll Dnowledge of all e4isting ones on the s!#0ect, it
is #!t reasona#le to concl!de that in passing a stat!te it was not intended to interfere with or
a#rogate an' forer law relating to soe atter, !nless the rep!gnanc' #etween the two is not
onl' irreconcila#le, #!t also clear and convincing, and flowing necessaril' fro the lang!age !sed,
!nless the later act f!ll' e#races the s!#0ect atter of the earlier, or !nless the reason for the
earlier act is #e'ond peradvent!re renewed. 1ence, ever' effort !st #e !sed to aDe all acts
stand and if, #' an' reasona#le constr!ction, the' can #e reconciled, the later act will not operate
as a repeal of the earlier. <<
Regarding respondentIs contention that recover' !nder this s!#0ect section shall #ar the recover'
of #enefits !nder the Eplo'eesI 2opensation "rogra, the sae cannot #e !pheld. The
second sentence of Article +C;, 2hapter II, Title II :dealing on Eplo'eesI 2opensation and
State Ins!rance )!nd=, &ooD I( of the Aa#or 2ode, as aended #' ".6. +*<+, e4pressl' provides
that Hthe pa'ent of copensation !nder this Title shall not #ar the recover' of #enefits as
provided for in Section ,** of the Revised Adinistrative 2ode . . . whose #enefits are
adinistered #' the s'ste :eaning SSS or @SIS= or #' other agencies of the governent.H
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
G.R. No. 11149. =ul, -4, 1994
0A?OR PA$LO P. 0AGTA=AS @ THE 8IT? OF 8AGA?AN 1E ORO, p'titio'*s,
"s.
PR?8E PROPERTIES 8ORPORATION, IN8. @ PHILIPPINE A0#SE0ENT AN1 GA0ING
8ORPORATION, *'spo('ts.
A>!ilino @. "ientel, Jr. and Associates for petitioners.
R.R. Torral#a G Associates for private respondent.
STATCON| 22
.
2R5E, J.:
There was instant opposition when "A@2OR anno!nced the opening of a casino in 2aga'an de
Oro 2it'. 2ivic organi%ations angril' deno!nced the pro0ect. The religio!s eleents echoed the
o#0ection and so did the woenIs gro!ps and the 'o!th. 6eonstrations were led #' the a'or
and the cit' legislators. The edia tr!peted the protest, descri#ing the casino as an affront to the
welfare of the cit'.
The tro!#le arose when in +**<, fl!sh with its treendo!s s!ccess in several cities, "A@2OR
decided to e4pand its operations to 2aga'an de Oro 2it'. To this end, it leased a portion of a
#!ilding #elonging to "r'ce "roperties 2orporation, Inc., one of the herein private respondents,
renovated and e>!ipped the sae, and prepared to ina!g!rate its casino there d!ring the
2hristas season.
The reaction of the Sangg!niang "anl!ngsod of 2aga'an de Oro 2it' was swift and hostile. On
6ece#er C, +**<, it enacted Ordinance No. ;;/; reading as follows:
OR6INAN2E NO. ;;/;
AN OR6INAN2E "RO1I&ITIN@ T1E ISS5AN2E O) &5SINESS "ERMIT AN6 2AN2EAAIN@
E7ISTIN@ &5SINESS "ERMIT TO AN8 ESTA&AIS1MENT )OR T1E 5SIN@ AN6 AAAO9IN@
TO &E 5SE6 ITS "REMISES OR "ORTION T1EREO) )OR T1E O"ERATION O) 2ASINO.
&E IT OR6AINE6 #' the Sangg!niang "anl!ngsod of the 2it' of 2aga'an de Oro, in session
asse#led that:
Sec. +. B That p!rs!ant to the polic' of the cit' #anning the operation of casino within its
territorial 0!risdiction, no #!siness perit shall #e iss!ed to an' person, partnership or corporation
for the operation of casino within the cit' liits.
Sec. <. B That it shall #e a violation of e4isting #!siness perit #' an' persons, partnership
or corporation to !se its #!siness esta#lishent or portion thereof, or allow the !se thereof #'
others for casino operation and other ga#ling activities.
Sec. ;. B "ENAATIES. B An' violation of s!ch e4isting #!siness perit as defined in the
preceding section shall s!ffer the following penalties, to wit:
a= S!spension of the #!siness perit for si4t' :,F= da's for the first offense and a fine of
"+,FFF.FFQda'
#= S!spension of the #!siness perit for Si4 :,= onths for the second offense, and a fine of
";,FFF.FFQda'
c= "eranent revocation of the #!siness perit and iprisonent of One :+= 'ear, for the
third and s!#se>!ent offenses.
Sec. .. B This Ordinance shall taDe effect ten :+F= da's fro p!#lication thereof.
Nor was this all. On Jan!ar' ., +**;, it adopted a sterner Ordinance No. ;;C/3*; reading as
follows:
OR6INAN2E NO. ;;C/3*;
AN OR6INAN2E "RO1I&ITIN@ T1E O"ERATION O) 2ASINO AN6 "RO(I6IN@ "ENAAT8
)OR (IOAATION T1ERE)OR.
91EREAS, the 2it' 2o!ncil esta#lished a polic' as earl' as +**F against 2ASINO !nder its
Resol!tion No. <<*/?
STATCON| 23
.
91EREAS, on Octo#er +., +**<, the 2it' 2o!ncil passed another Resol!tion No. <,C;,
reiterating its polic' against the esta#lishent of 2ASINO?
91EREAS, s!#se>!entl', thereafter, it liDewise passed Ordinance No. ;;/;, prohi#iting the
iss!ance of &!siness "erit and to cancel e4isting &!siness "erit to an' esta#lishent for the
!sing and allowing to #e !sed its preises or portion thereof for the operation of 2ASINO?
91EREAS, !nder Art. ;, section ./-, No. :.=, s!# paragraph (I of the Aocal @overnent 2ode of
+**+ :Rep. Act C+,F= and !nder Art. **, No. :.=, "aragraph (I of the ipleenting r!les of the
Aocal @overnent 2ode, the 2it' 2o!ncil as the Aegislative &od' shall enact eas!re to
s!ppress an' activit' iniical to p!#lic orals and general welfare of the people andQor reg!late or
prohi#it s!ch activit' pertaining to a!seent or entertainent in order to protect social and oral
welfare of the co!nit'?
NO9 T1ERE)ORE,
&E IT OR6AINE6 #' the 2it' 2o!ncil in session d!l' asse#led that:
Sec. +. B The operation of ga#ling 2ASINO in the 2it' of 2aga'an de Oro is here#'
prohi#ited.
Sec. <. B An' violation of this Ordinance shall #e s!#0ect to the following penalties:
a= Adinistrative fine of "/,FFF.FF shall #e iposed against the proprietor, partnership or
corporation !ndertaDing the operation, cond!ct, aintenance of ga#ling 2ASINO in the 2it' and
clos!re thereof?
#= Iprisonent of not less than si4 :,= onths nor ore than one :+= 'ear or a fine in the
ao!nt of "/,FFF.FF or #oth at the discretion of the co!rt against the anager, s!pervisor, andQor
an' person responsi#le in the esta#lishent, cond!ct and aintenance of ga#ling 2ASINO.
Sec. ;. B This Ordinance shall taDe effect ten :+F= da's after its p!#lication in a local
newspaper of general circ!lation.
"r'ce assailed the ordinances #efore the 2o!rt of Appeals, where it was 0oined #' "A@2OR as
intervenor and s!ppleental petitioner. Their challenge s!cceeded. On March ;+, +**;, the 2o!rt
of Appeals declared the ordinances invalid and iss!ed the writ pra'ed for to prohi#it their
enforceent. + Reconsideration of this decision was denied on J!l' +;, +**;. <
2aga'an de Oro 2it' and its a'or are now #efore !s in this petition for review !nder R!le ./ of
the R!les of 2o!rt. ; The' aver that the respondent 2o!rt of Appeals erred in holding that:
+. 5nder e4isting laws, the Sangg!niang "anl!ngsod of the 2it' of 2aga'an de Oro does not
have the power and a!thorit' to prohi#it the esta#lishent and operation of a "A@2OR ga#ling
casino within the 2it'Is territorial liits.
<. The phrase Hga#ling and other prohi#ited gaes of chanceH fo!nd in Sec. ./-, par. :a=,
s!#3par. :+= B :v= of R.A. C+,F co!ld onl' ean Hillegal ga#ling.H
;. The >!estioned Ordinances in effect ann!l ".6. +-,* and are therefore invalid on that point.
.. The >!estioned Ordinances are discriinator' to casino and partial to cocDfighting and are
therefore invalid on that point.
/. The >!estioned Ordinances are not reasona#le, not consonant with the general powers and
p!rposes of the instr!entalit' concerned and inconsistent with the laws or polic' of the State.
STATCON| 24
.
,. It had no option #!t to follow the r!ling in the case of &asco, et al. v. "A@2OR, @.R. No.
*+,.*, Ma' +., +**+, +*C S2RA /; in disposing of the iss!es presented in this present case.
"A@2OR is a corporation created directl' #' ".6. +-,* to help centrali%e and reg!late all gaes
of chance, incl!ding casinos on land and sea within the territorial 0!risdiction of the "hilippines. In
&asco v. "hilippine A!seents and @aing 2orporation, . this 2o!rt s!stained the
constit!tionalit' of the decree and even cited the #enefits of the entit' to the national econo' as
the third highest reven!e3earner in the governent, ne4t onl' to the &IR and the &!rea! of
2!stos.
2aga'an de Oro 2it', liDe other local political s!#divisions, is epowered to enact ordinances for
the p!rposes indicated in the Aocal @overnent 2ode. It is e4pressl' vested with the police power
!nder what is Dnown as the @eneral 9elfare 2la!se now e#odied in Section +, as follows:
Sec. +,. B @eneral 9elfare. B Ever' local governent !nit shall e4ercise the powers
e4pressl' granted, those necessaril' iplied therefro, as well as powers necessar', appropriate,
or incidental for its efficient and effective governance, and those which are essential to the
prootion of the general welfare. 9ithin their respective territorial 0!risdictions, local governent
!nits shall ens!re and s!pport, aong other things, the preservation and enrichent of c!lt!re,
proote health and safet', enhance the right of the people to a #alanced ecolog', enco!rage and
s!pport the developent of appropriate and self3reliant scientific and technological capa#ilities,
iprove p!#lic orals, enhance econoic prosperit' and social 0!stice, proote f!ll eplo'ent
aong their residents, aintain peace and order, and preserve the cofort and convenience of
their inha#itants.
In addition, Section ./- of the said 2ode specificall' declares that:
Sec. ./-. B "owers, 6!ties, )!nctions and 2opensation. B :a= The Sangg!niang
"anl!ngsod, as the legislative #od' of the cit', shall enact ordinances, approve resol!tions and
appropriate f!nds for the general welfare of the cit' and its inha#itants p!rs!ant to Section +, of
this 2ode and in the proper e4ercise of the corporate powers of the cit' as provided for !nder
Section << of this 2ode, and shall:
:+= Approve ordinances and pass resol!tions necessar' for an efficient and effective cit'
governent, and in this connection, shall:
444 444 444
:v= Enact ordinances intended to prevent, s!ppress and ipose appropriate penalties for
ha#it!al dr!nDenness in p!#lic places, vagranc', endicanc', prostit!tion, esta#lishent and
aintenance of ho!ses of ill rep!te, ga#ling and other prohi#ited gaes of chance, fra!d!lent
devices and wa's to o#tain one' or propert', dr!g addiction, aintenance of dr!g dens, dr!g
p!shing, 0!venile delin>!enc', the printing, distri#!tion or e4hi#ition of o#scene or pornographic
aterials or p!#lications, and s!ch other activities iniical to the welfare and orals of the
inha#itants of the cit'?
This section also a!thori%es the local governent !nits to reg!late properties and #!sinesses
within their territorial liits in the interest of the general welfare. /
The petitioners arg!e that #' virt!e of these provisions, the Sangg!niang "anl!ngsod a' prohi#it
the operation of casinos #eca!se the' involve gaes of chance, which are detriental to the
people. @a#ling is not allowed #' general law and even #' the 2onstit!tion itself. The legislative
power conferred !pon local governent !nits a' #e e4ercised over all Dinds of ga#ling and not
STATCON| 25
.
onl' over Hillegal ga#lingH as the respondents erroneo!sl' arg!e. Even if the operation of casinos
a' have #een peritted !nder ".6. +-,*, the governent of 2aga'an de Oro 2it' has the
a!thorit' to prohi#it the within its territor' p!rs!ant to the a!thorit' entr!sted to it #' the Aocal
@overnent 2ode.
It is s!#itted that this interpretation is consonant with the polic' of local a!tono' as andated
in Article II, Section </, and Article 7 of the 2onstit!tion, as well as vario!s other provisions therein
seeDing to strengthen the character of the nation. In giving the local governent !nits the power to
prevent or s!ppress ga#ling and other social pro#les, the Aocal @overnent 2ode has
recogni%ed the copetence of s!ch co!nities to deterine and adopt the eas!res #est
e4pected to proote the general welfare of their inha#itants in line with the policies of the State.
The petitioners also stress that when the 2ode e4pressl' a!thori%ed the local governent !nits to
prevent and s!ppress ga#ling and other prohi#ited gaes of chance, liDe craps, #accarat,
#lacD0acD and ro!lette, it eant all fors of ga#ling witho!t distinction. 5#i le4 non disting!it, nec
nos disting!ere de#eos. , Otherwise, it wo!ld have e4pressl' e4cl!ded fro the scope of their
power casinos and other fors of ga#ling a!thori%ed #' special law, as it co!ld have easil'
done. The fact that it did not do so sipl' eans that the local governent !nits are peritted to
prohi#it all Dinds of ga#ling within their territories, incl!ding the operation of casinos.
The adoption of the Aocal @overnent 2ode, it is pointed o!t, had the effect of odif'ing the
charter of the "A@2OR. The 2ode is not onl' a later enactent than ".6. +-,* and so is deeed
to prevail in case of inconsistencies #etween the. More than this, the powers of the "A@2OR
!nder the decree are e4pressl' discontin!ed #' the 2ode insofar as the' do not confor to its
philosoph' and provisions, p!rs!ant to "ar. :f= of its repealing cla!se reading as follows:
:f= All general and special laws, acts, cit' charters, decrees, e4ec!tive orders, proclaations
and adinistrative reg!lations, or part or parts thereof which are inconsistent with an' of the
provisions of this 2ode are here#' repealed or odified accordingl'.
It is also aintained that ass!ing there is do!#t regarding the effect of the Aocal @overnent
2ode on ".6. +-,*, the do!#t !st #e resolved in favor of the petitioners, in accordance with the
direction in the 2ode calling for its li#eral interpretation in favor of the local governent !nits.
Section / of the 2ode specificall' provides:
Sec. /. R!les of Interpretation. B In the interpretation of the provisions of this 2ode, the
following r!les shall appl':
:a= An' provision on a power of a local governent !nit shall #e li#erall' interpreted in its favor,
and in case of do!#t, an' >!estion thereon shall #e resolved in favor of devol!tion of powers and
of the lower local governent !nit. An' fair and reasona#le do!#t as to the e4istence of the power
shall #e interpreted in favor of the local governent !nit concerned?
444 444 444
:c= The general welfare provisions in this 2ode shall #e li#erall' interpreted to give ore
powers to local governent !nits in accelerating econoic developent and !pgrading the >!alit'
of life for the people in the co!nit'? . . . :Ephasis s!pplied.=
)inall', the petitioners also attacD ga#ling as intrinsicall' harf!l and cite vario!s provisions of
the 2onstit!tion and several decisions of this 2o!rt e4pressive of the general and official
disappro#ation of the vice. The' invoDe the State policies on the fail' and the proper !p#ringing
STATCON| 26
.
of the 'o!th and, as ight #e e4pected, call attention to the old case of 5.S. v. Salaveria, C which
s!stained a !nicipal ordinance prohi#iting the pla'ing of pang!ing!e. The petitioners decr' the
ioralit' of ga#ling. The' also ip!gn the wisdo of ".6. +-,* :which the' descri#e as Ha
artial law instr!entH= in creating "A@2OR and a!thori%ing it to operate casinos Hon land and
sea within the territorial 0!risdiction of the "hilippines.H
This is the opport!ne tie to stress an iportant point.
The oralit' of ga#ling is not a 0!sticia#le iss!e. @a#ling is not illegal per se. 9hile it is
generall' considered iniical to the interests of the people, there is nothing in the 2onstit!tion
categoricall' proscri#ing or penali%ing ga#ling or, for that atter, even entioning it at all. It is
left to 2ongress to deal with the activit' as it sees fit. In the e4ercise of its own discretion, the
legislat!re a' prohi#it ga#ling altogether or allow it witho!t liitation or it a' prohi#it soe
fors of ga#ling and allow others for whatever reasons it a' consider s!fficient. Th!s, it has
prohi#ited 0!eteng and onte #!t perits lotteries, cocDfighting and horse3racing. In aDing s!ch
choices, 2ongress has cons!lted its own wisdo, which this 2o!rt has no a!thorit' to review,
!ch less reverse. 9ell has it #een said that co!rts do not sit to resolve the erits of conflicting
theories. - That is the prerogative of the political departents. It is settled that >!estions regarding
the wisdo, oralit', or practici#ilit' of stat!tes are not addressed to the 0!diciar' #!t a' #e
resolved onl' #' the legislative and e4ec!tive departents, to which the f!nction #elongs in o!r
schee of governent. That f!nction is e4cl!sive. 9hichever wa' these #ranches decide, the'
are answera#le onl' to their own conscience and the constit!ents who will !ltiatel' 0!dge their
acts, and not to the co!rts of 0!stice.
The onl' >!estion we can and shall resolve in this petition is the validit' of Ordinance No. ;;//
and Ordinance No. ;;C/3*; as enacted #' the Sangg!niang "anl!ngsod of 2aga'an de Oro 2it'.
And we shall do so onl' #' the criteria laid down #' law and not #' o!r own convictions on the
propriet' of ga#ling.
The tests of a valid ordinance are well esta#lished. A long line of decisions * has held that to #e
valid, an ordinance !st confor to the following s!#stantive re>!ireents:
+= It !st not contravene the constit!tion or an' stat!te.
<= It !st not #e !nfair or oppressive.
;= It !st not #e partial or discriinator'.
.= It !st not prohi#it #!t a' reg!late trade.
/= It !st #e general and consistent with p!#lic polic'.
,= It !st not #e !nreasona#le.
9e #egin #' o#serving that !nder Sec. ./- of the Aocal @overnent 2ode, local governent
!nits are a!thori%ed to prevent or s!ppress, aong others, Hga#ling and other prohi#ited gaes
of chance.H O#vio!sl', this provision e4cl!des gaes of chance which are not prohi#ited #!t are in
fact peritted #' law. The petitioners are less than acc!rate in claiing that the 2ode co!ld have
e4cl!ded s!ch gaes of chance #!t did not. In fact it does. The lang!age of the section is clear
and !nistaDa#le. 5nder the r!le of noscit!r a sociis, a word or phrase sho!ld #e interpreted in
relation to, or given the sae eaning of, words with which it is associated. Accordingl', we
concl!de that since the word Hga#lingH is associated with Hand other prohi#ited gaes of
chance,H the word sho!ld #e read as referring to onl' illegal ga#ling which, liDe the other
prohi#ited gaes of chance, !st #e prevented or s!ppressed.
STATCON| 27
.
9e co!ld stop here as this interpretation sho!ld settle the pro#le >!ite concl!sivel'. &!t we will
not. The vigoro!s efforts of the petitioners on #ehalf of the inha#itants of 2aga'an de Oro 2it', and
the earnestness of their advocac', deserve ore than short shrift fro this 2o!rt.
The apparent flaw in the ordinances in >!estion is that the' contravene ".6. +-,* and the p!#lic
polic' e#odied therein insofar as the' prevent "A@2OR fro e4ercising the power conferred on
it to operate a casino in 2aga'an de Oro 2it'. The petitioners have an ingenio!s answer to this
isgiving. The' den' that it is the ordinances that have changed ".6. +-,* for an ordinance
adittedl' cannot prevail against a stat!te. Their theor' is that the change has #een ade #' the
Aocal @overnent 2ode itself, which was also enacted #' the national lawaDing a!thorit'. In
their view, the decree has #een, not reall' repealed #' the 2ode, #!t erel' Hodified pro tantoH in
the sense that "A@2OR cannot now operate a casino over the o#0ection of the local governent
!nit concerned. This odification of ".6. +-,* #' the Aocal @overnent 2ode is perissi#le
#eca!se one law can change or repeal another law.
It sees to !s that the petitioners are pla'ing with words. 9hile insisting that the decree has onl'
#een Hodified pro tanto,H the' are act!all' arg!ing that it is alread' dead, repealed and !seless
for all intents and p!rposes #eca!se the 2ode has shorn "A@2OR of all power to centrali%e and
reg!late casinos. Strictl' speaDing, its operations a' now #e not onl' prohi#ited #' the local
governent !nit? in fact, the prohi#ition is not onl' discretionar' #!t andated #' Section ./- of
the 2ode if the word HshallH as !sed therein is to #e given its accepted eaning. Aocal governent
!nits have now no choice #!t to prevent and s!ppress ga#ling, which in the petitionersI view
incl!des #oth legal and illegal ga#ling. 5nder this constr!ction, "A@2OR will have no ore
gaes of chance to reg!late or centrali%e as the' !st all #e prohi#ited #' the local governent
!nits p!rs!ant to the andator' d!t' iposed !pon the #' the 2ode. In this sit!ation, "A@2OR
cannot contin!e to e4ist e4cept onl' as a toothless tiger or a white elephant and will no longer #e
a#le to e4ercise its powers as a prie so!rce of governent reven!e thro!gh the operation of
casinos.
It is noteworth' that the petitioners have cited onl' "ar. :f= of the repealing cla!se, convenientl'
discarding the rest of the provision which painstaDingl' entions the specific laws or the parts
thereof which are repealed :or odified= #' the 2ode. Significantl', ".6. +-,* is not one of the. A
reading of the entire repealing cla!se, which is reprod!ced #elow, will disclose the oission:
Sec. /;.. Repealing 2la!se. B :a= &atas "a#ansa &lg. ;;C, otherwise Dnown as the HAocal
@overnent 2ode,H E4ec!tive Order No. ++< :+*-C=, and E4ec!tive Order No. ;+* :+*--= are
here#' repealed.
:#= "residential 6ecree Nos. ,-., ++*+, +/F- and s!ch other decrees, orders, instr!ctions,
eoranda and iss!ances related to or concerning the #aranga' are here#' repealed.
:c= The provisions of Sections <, ;, and . of Rep!#lic Act No. +*;* regarding hospital f!nd?
Section ;, a :;= and # :<= of Rep!#lic Act. No. /..C regarding the Special Ed!cation )!nd?
"residential 6ecree No. +.. as aended #' "residential 6ecree Nos. //* and +C.+? "residential
6ecree No. <;+ as aended? "residential 6ecree No. .;, as aended #' "residential 6ecree
No. //-? and "residential 6ecree Nos. ;-+, .;,, .,., .CC, /<,, ,;<, C/<, and ++;, are here#'
repealed and rendered of no force and effect.
:d= "residential 6ecree No. +/*. is here#' repealed insofar as it governs locall'3f!nded
pro0ects.
STATCON| 28
.
:e= The following provisions are here#' repealed or aended insofar as the' are inconsistent
with the provisions of this 2ode: Sections <, +,, and <* of "residential 6ecree No. CF.? Sections
+< of "residential 6ecree No. -C, as aended? Sections /<, /;, ,,, ,C, ,-, ,*, CF, C+, C<, C;, and
C. of "residential 6ecree No. .,;, as aended? and Section +, of "residential 6ecree No. *C<,
as aended, and
:f= All general and special laws, acts, cit' charters, decrees, e4ec!tive orders, proclaations
and adinistrative reg!lations, or part or parts thereof which are inconsistent with an' of the
provisions of this 2ode are here#' repealed or odified accordingl'.
)!rtherore, it is a failiar r!le that iplied repeals are not lightl' pres!ed in the a#sence of a
clear and !nistaDa#le showing of s!ch intention. In Aicha!co G 2o. v. Apostol, +F this 2o!rt
e4plained:
The cases relating to the s!#0ect of repeal #' iplication all proceed on the ass!ption that if the
act of later date clearl' reveals an intention on the part of the lawaDing power to a#rogate the
prior law, this intention !st #e given effect? #!t there !st alwa's #e a s!fficient revelation of this
intention, and it has #ecoe an !n#ending r!le of stat!tor' constr!ction that the intention to repeal
a forer law will not #e ip!ted to the Aegislat!re when it appears that the two stat!tes, or
provisions, with reference to which the >!estion arises #ear to each other the relation of general to
special.
There is no s!fficient indication of an iplied repeal of ".6. +-,*. On the contrar', as the private
respondent points o!t, "A@2OR is entioned as the so!rce of f!nding in two later enactents of
2ongress, to wit, R.A. C;F*, creating a &oard of 2lais !nder the 6epartent of J!stice for the
#enefit of victis of !n0!st p!nishent or detention or of violent cries, and R.A. C,.-, providing
for eas!res for the sol!tion of the power crisis. "A@2OR reven!es are tapped #' these two
stat!tes. This wo!ld show that the "A@2OR charter has not #een repealed #' the Aocal
@overnent 2ode #!t has in fact #een iproved as it were to aDe the entit' ore responsive to
the fiscal pro#les of the governent.
It is a canon of legal herene!tics that instead of pitting one stat!te against another in an
inevita#l' destr!ctive confrontation, co!rts !st e4ert ever' effort to reconcile the, ree#ering
that #oth laws deserve a #ecoing respect as the handiworD of a coordinate #ranch of the
governent. On the ass!ption of a conflict #etween ".6. +-,* and the 2ode, the proper action is
not to !phold one and ann!l the other #!t to give effect to #oth #' haroni%ing the if possi#le.
This is possi#le in the case #efore !s. The proper resol!tion of the pro#le at hand is to hold that
!nder the Aocal @overnent 2ode, local governent !nits a' :and indeed !st= prevent and
s!ppress all Dinds of ga#ling within their territories e4cept onl' those allowed #' stat!tes liDe
".6. +-,*. The e4ception reserved in s!ch laws !st #e read into the 2ode, to aDe #oth the
2ode and s!ch laws e>!all' effective and !t!all' copleentar'.
This approach wo!ld also affir that there are indeed two Dinds of ga#ling, to wit, the illegal and
those a!thori%ed #' law. Aegali%ed ga#ling is not a odern concept? it is pro#a#l' as old as
illegal ga#ling, if not indeed ore so. The petitionersI s!ggestion that the 2ode a!thori%es the
to prohi#it all Dinds of ga#ling wo!ld erase the distinction #etween these two fors of ga#ling
witho!t a clear indication that this is the will of the legislat!re. "la!si#l', following this theor', the
2it' of Manila co!ld, #' ere ordinance, prohi#it the "hilippine 2harit' SweepstaDes Office fro
cond!cting a lotter' as a!thori%ed #' R.A. ++,* and &.". .< or stop the races at the San Aa%aro
1ippodroe as a!thori%ed #' R.A. ;F* and R.A. *-;.
STATCON| 29
.
In light of all the a#ove considerations, we see no wa' of arriving at the concl!sion !rged on !s #'
the petitioners that the ordinances in >!estion are valid. On the contrar', we find that the
ordinances violate ".6. +-,*, which has the character and force of a stat!te, as well as the p!#lic
polic' e4pressed in the decree allowing the pla'ing of certain gaes of chance despite the
prohi#ition of ga#ling in general.
The rationale of the re>!ireent that the ordinances sho!ld not contravene a stat!te is o#vio!s.
M!nicipal governents are onl' agents of the national governent. Aocal co!ncils e4ercise onl'
delegated legislative powers conferred on the #' 2ongress as the national lawaDing #od'. The
delegate cannot #e s!perior to the principal or e4ercise powers higher than those of the latter. It is
a heres' to s!ggest that the local governent !nits can !ndo the acts of 2ongress, fro which
the' have derived their power in the first place, and negate #' ere ordinance the andate of the
stat!te.
M!nicipal corporations owe their origin to, and derive their powers and rights wholl' fro the
legislat!re. It #reathes into the the #reath of life, witho!t which the' cannot e4ist. As it creates,
so it a' destro'. As it a' destro', it a' a#ridge and control. 5nless there is soe
constit!tional liitation on the right, the legislat!re ight, #' a single act, and if we can s!ppose it
capa#le of so great a foll' and so great a wrong, sweep fro e4istence all of the !nicipal
corporations in the State, and the corporation co!ld not prevent it. 9e Dnow of no liitation on the
right so far as to the corporation theselves are concerned. The' are, so to phrase it, the ere
tenants at will of the legislat!re. ++
This #asic relationship #etween the national legislat!re and the local governent !nits has not
#een enfee#led #' the new provisions in the 2onstit!tion strengthening the polic' of local
a!tono'. 9itho!t eaning to detract fro that polic', we here confir that 2ongress retains
control of the local governent !nits altho!gh in significantl' red!ced degree now than !nder o!r
previo!s 2onstit!tions. The power to create still incl!des the power to destro'. The power to grant
still incl!des the power to withhold or recall. Tr!e, there are certain nota#le innovations in the
2onstit!tion, liDe the direct conferent on the local governent !nits of the power to ta4, +< which
cannot now #e withdrawn #' ere stat!te. &' and large, however, the national legislat!re is still
the principal of the local governent !nits, which cannot def' its will or odif' or violate it.
The 2o!rt !nderstands and adires the concern of the petitioners for the welfare of their
constit!ents and their apprehensions that the welfare of 2aga'an de Oro 2it' will #e endangered
#' the opening of the casino. 9e share the view that Hthe hope of large or eas' gain, o#tained
witho!t special effort, t!rns the head of the worDanH +; and that Hha#it!al ga#ling is a ca!se of
la%iness and r!in.H +. In "eople v. @orosti%a, +/ we declared: HThe social sco!rge of ga#ling
!st #e staped o!t. The laws against ga#ling !st #e enforced to the liit.H @eorge
9ashington called ga#ling Hthe child of avarice, the #rother of ini>!it' and the father of ischief.H
Nevertheless, we !st recogni%e the power of the legislat!re to decide, in its own wisdo, to
legali%e certain fors of ga#ling, as was done in ".6. +-,* and ipliedl' affired in the Aocal
@overnent 2ode. That decision can #e revoDed #' this 2o!rt onl' if it contravenes the
2onstit!tion as the to!chstone of all official acts. 9e do not find s!ch contravention here.
9e hold that the power of "A@2OR to centrali%e and reg!late all gaes of chance, incl!ding
casinos on land and sea within the territorial 0!risdiction of the "hilippines, reains !nipaired.
".6. +-,* has not #een odified #' the Aocal @overnent 2ode, which epowers the local
governent !nits to prevent or s!ppress onl' those fors of ga#ling prohi#ited #' law.
STATCON| 30
.
2asino ga#ling is a!thori%ed #' ".6. +-,*. This decree has the stat!s of a stat!te that cannot #e
aended or n!llified #' a ere ordinance. 1ence, it was not copetent for the Sangg!niang
"anl!ngsod of 2aga'an de Oro 2it' to enact Ordinance No. ;;/; prohi#iting the !se of #!ildings
for the operation of a casino and Ordinance No. ;;C/3*; prohi#iting the operation of casinos. )or
all their praiseworth' otives, these ordinances are contrar' to ".6. +-,* and the p!#lic polic'
anno!nced therein and are therefore !ltra vires and void.
91ERE)ORE, the petition is 6ENIE6 and the challenged decision of the respondent 2o!rt of
Appeals is A))IRME6, with costs against the petitioners. It is so ordered.
Narvasa, 2.J., )eliciano, &idin, Regalado, Roero, &ellosillo, Melo, $!iason, "!no, (it!g,
Kap!nan and Mendo%a, JJ., conc!r.
Separate Opinions
"A6IAAA, J., conc!rring:
I conc!r with the a0orit' holding that the cit' ordinances in >!estion cannot odif' !ch less
repeal "A@2ORIs general a!thorit' to esta#lish and aintain ga#ling casinos an'where in the
"hilippines !nder "residential 6ecree No. +-,*.
In &asco v. "hilippine A!seent and @aing 2orporation :"A@2OR=, +*C S2RA /<, I stated in
a separate opinion that:
. . . I agree with the decision insofar as it holds that the prohi#ition, control, and reg!lation of the
entire activit' Dnown as ga#ling properl' pertain to Hstate polic'H. It is, therefore, the political
departents of governent, nael', the legislative and the e4ec!tive that sho!ld decide on what
governent sho!ld do in the entire area of ga#ling, and ass!e f!ll responsi#ilit' to the people
for s!ch polic'.H :Ephasis s!pplied=
1owever, despite the legalit' of the opening and operation of a casino in 2aga'an de Oro 2it' #'
respondent "A@2OR, I wish to reiterate ' view that ga#ling in an' for r!ns co!nter to the
governentIs own efforts to re3esta#lish and res!rrect the )ilipino oral character which is
generall' perceived to #e in a state of contin!ing erosion.
It is in the light of this alaring perspective that I call !pon governent to caref!ll' weigh the
advantages and disadvantages of setting !p ore ga#ling facilities in the co!ntr'.
That the "A@2OR contri#!tes greatl' to the coffers of the governent is not eno!gh reason for
setting !p ore ga#ling casinos #eca!se, !ndo!#tedl', this will not help iprove, #!t will ca!se
a f!rther deterioration in the )ilipino oral character.
It is worth ree#ering in this regard that, += what is legal is not alwa's oral and <= the ends do
not alwa's 0!stif' the eans.
As in &asco, I can easil' vis!ali%e prostit!tion at par with ga#ling. And 'et, legali%ation of the
forer will not render it an' less reprehensi#le even if s!#stantial reven!e for the governent can
#e reali%ed fro it. The sae is tr!e of ga#ling.
In the present case, it is ' considered view that the national governent :thro!gh "A@2OR=
sho!ld re3e4aine and re3eval!ate its decision of iposing the ga#ling casino on the residents
of 2aga'an de Oro 2it'? for it is a#!ndantl' clear that p!#lic opinion in the cit' is ver' !ch
against it, and again the >!estion !st #e serio!sl' deli#erated: will the prospects of reven!e to
#e reali%ed fro the casino o!tweigh the f!rther destr!ction of the )ilipino sense of val!esJ
6A(I6E, JR., J., conc!rring:
STATCON| 31
.
9hile I conc!r in part with the a0orit', I wish, however, to e4press ' views on certain aspects of
this case.
I.It !st at once #e noted that private respondent "r'ce "roperties 2orporation :"R82E= directl'
filed with the 2o!rt of Appeals its so3called petition for prohi#ition, there#' invoDing the said co!rtIs
original 0!risdiction to iss!e writs of prohi#ition !nder Section *:+= of &.". &lg. +<*. As I see it,
however, the principal ca!se of action therein is one for declarator' relief: to declare n!ll and
!nconstit!tional B for, inter alia, having #een enacted witho!t or in e4cess of 0!risdiction, for
ipairing the o#ligation of contracts, and for #eing inconsistent with p!#lic polic' B the challenged
ordinances enacted #' the Sangg!niang "angl!ngsod of the 2it' of 2aga'an de Oro. The
intervention therein of p!#lic respondent "hilippine A!seent and @aing 2orporation
:"A@2OR= f!rther !nderscores the Hdeclarator' reliefH nat!re of the action. "A@2OR assails the
ordinances for #eing contrar' to the non3ipairent and e>!al protection cla!ses of the
2onstit!tion, violative of the Aocal @overnent 2ode, and against the StateIs national polic'
declared in ".6. No. +-,*. Accordingl', the 2o!rt of Appeals does not have 0!risdiction over the
nat!re of the action. Even ass!ing arg!endo that the case is one for prohi#ition, then, !nder this
2o!rtIs esta#lished polic' relative to the hierarch' of co!rts, the petition sho!ld have #een filed
with the Regional Trial 2o!rt of 2aga'an de Oro 2it'. I find no special or copelling reason wh' it
was not filed with the said co!rt. I do not wish to entertain the tho!ght that "R82E do!#ted a
favora#le verdict therefro, in which case the filing of the petition with the 2o!rt of Appeals a'
have #een ipelled #' tactical considerations. A disissal of the petition #' the 2o!rt of Appeals
wo!ld have #een in order p!rs!ant to o!r decisions in "eople vs. 2!aresa :+C< S2RA .+/,
O+*-*P= and 6efensor3Santiago vs. (as>!e% :<+C S2RA ,;; O+**;P=. In 2!aresa, this 2o!rt
stated:
A last word. This co!rtIs original 0!risdiction to iss!e writs of certiorari :as well as prohi#ition,
anda!s, >!o warranto, ha#eas corp!s and in0!nction= is not e4cl!sive. It is shared #' this
2o!rt with Regional Trial 2o!rts :forerl' 2o!rts of )irst Instance=, which a' iss!e the writ,
enforcea#le in an' part of their respective regions. It is also shared #' this co!rt, and #' the
Regional Trial 2o!rt, with the 2o!rt of Appeals :forerl', Interediate Appellate 2o!rt=, altho!gh
prior to the effectivit' of &atas "a#ansa &ilang +<* on A!g!st +., +*-+, the latterIs copetence
to iss!e the e4traordinar' writs was restricted #' those Hin aid of its appellate 0!risdiction.H This
conc!rrence of 0!risdiction is not, however, to #e taDen as according to parties seeDing an' of the
writs an a#sol!te, !nrestrained freedo of choice of the co!rt to which application therefor will #e
directed. There is after all a hierarch' of co!rts. That hierarch' is deterinative of the reven!e of
appeals, and sho!ld also serve as a general deterinant of the appropriate for! for petitions for
the e4traordinar' writs. A #ecoing regard for that 0!dicial hierarch' ost certainl' indicates that
petitions for the iss!ance of e4traordinar' writs against first level :HinferiorH= co!rts sho!ld #e filed
with the Regional Trial 2o!rt, and those against the latter, with the 2o!rt of Appeals. A direct
invocation of the S!pree 2o!rtIs original 0!risdiction to iss!e these writs sho!ld #e allowed onl'
when there are special and iportant reasons therefor, clearl' and specificall' set o!t in the
petition. This is esta#lished polic'. It is a polic' that is necessar' to prevent inordinate deands
!pon the 2o!rtIs tie and attention which are #etter devoted to those atters within its e4cl!sive
0!risdiction, and to prevent f!rther over3crowding of the 2o!rtIs docDet. Indeed, the reoval of the
restriction of the 0!risdiction of the 2o!rt of Appeals in this regard, s!pra B res!lting fro the
deletion of the >!alif'ing phrase, Hin aid of its appellate 0!risdictionH B was evidentl' intended
precisel' to relieve this 2o!rt pro tanto of the #!rden of dealing with applications for e4traordinar'
STATCON| 32
.
writs which, #!t for the e4pansion of the Appellate 2o!rtIs corresponding 0!risdiction, wo!ld have
had to #e filed with it. :citations oitted=
And in (as>!e%, this 2o!rt said:
One final o#servation. 9e discern in the proceedings in this case a propensit' on the part of
petitioner, and, for that atter, the sae a' #e said of a n!#er of litigants who initiate
reco!rses #efore !s, to disregard the hierarch' of co!rts in o!r 0!dicial s'ste #' seeDing relief
directl' fro this 2o!rt despite the fact that the sae is availa#le in the lower co!rts in the
e4ercise of their original or conc!rrent 0!risdiction, or is even andated #' law to #e so!ght
therein. This practice !st #e stopped, not onl' #eca!se of the iposition !pon the previo!s tie
of this 2o!rt #!t also #eca!se of the inevita#le and res!ltant dela', intended or otherwise, in the
ad0!dication of the case which often has to #e reanded or referred to the lower co!rt as the
proper for! !nder the r!les of proced!re, or as #etter e>!ipped to resolve the iss!es since this
2o!rt is not a trier of facts. 9e, therefore, reiterate the 0!dicial polic' that this 2o!rt will not
entertain direct resort to it !nless the redress desired cannot #e o#tained in the appropriate co!rts
or where e4ceptional and copelling circ!stances 0!stif' availent of a reed' within and
calling for the e4ercise of o!r priar' 0!risdiction.
II.The challenged ordinances are :a= Ordinance No. ;;/; entitled, HAn Ordinance "rohi#iting the
Iss!ance of &!siness "erit and 2anceling E4isting &!siness "erit To An' Esta#lishent for the
5sing and Allowing to #e 5sed Its "reises or "ortion Thereof for the Operation of 2asino,H and
:#= Ordinance No. ;;C/3*; entitled, HAn Ordinance "rohi#iting the Operation of 2asino and
"roviding "enalt' for (iolation Therefor.H The' were enacted to ipleent Resol!tion No. <<*/
entitled, HResol!tion 6eclaring As a Matter of "olic' to "rohi#it andQor Not to Allow the
Esta#lishent of the @a#ling 2asino in the 2it' of 2aga'an de Oro,H which was pro!lgated on
+* Nove#er +**F B nearl' two 'ears #efore "R82E and "A@2OR entered into a contract of
lease !nder which the latter leased a portion of the forerIs "r'ce "la%a 1otel for the operation of
a ga#ling casino B which resol!tion was vigoro!sl' reiterated in Resol!tion No. <,C; of +*
Octo#er +**<.
The challenged ordinances were enacted p!rs!ant to the Sangg!niang "angl!ngsodIs e4press
powers conferred #' Section ./-, paragraph :a=, s!#paragraphs :+=3:v=, :;=3:ii=, and :.=3:i=, :iv=,
and :vii=, Aocal @overnent 2ode, and p!rs!ant to its iplied power !nder Section +, thereof :the
general welfare cla!se= which reads:
Sec. +,. @eneral 9elfare. B Ever' local governent !nit shall e4ercise the powers e4pressl'
granted, those necessaril' iplied therefro, as well as powers necessar', appropriate, or
incidental for its efficient and effective governance, and those which are essential to the prootion
of the general welfare. 9ithin their respective territorial 0!risdictions, local governent !nits shall
ens!re and s!pport, aong other things, the preservation and enrichent of c!lt!re, proote
health and safet', enhance the right of the people to a #alanced ecolog', enco!rage and s!pport
the developent of appropriate and self3reliant scientific and technological capa#ilities, iprove
p!#lic orals, enhance econoic prosperit' and social 0!stice, proote f!ll eplo'ent aong
their residents, aintain peace and order, and preserve the cofort and convenience of their
inha#itants.
The iss!e that necessaril' arises is whether in granting local governents :s!ch as the 2it' of
2aga'an de Oro= the a#ove powers and f!nctions, the Aocal @overnent 2ode has, pro tanto,
repealed ".6. No. +-,* insofar as "A@2ORIs general a!thorit' to esta#lish and aintain ga#ling
casinos an'where in the "hilippines is concerned.
STATCON| 33
.
I 0oin the a0orit' in holding that the ordinances cannot repeal ".6. No. +-,*.
III. The n!llification #' the 2o!rt of Appeals of the challenged ordinances as !nconstit!tional
priaril' #eca!se it is in contravention to ".6. No. +-,* is !nwarranted. A contravention of a law is
not necessaril' a contravention of the constit!tion. In an' case, the ordinances can still stand even
if the' #e conceded as offending ".6. No. +-,*. The' can #e reconciled, which is not ipossi#le to
do. So reconciled, the ordinances sho!ld #e constr!ed as not appl'ing to "A@2OR.
I(. )ro the pleadings, it is o#vio!s that the governent and the people of 2aga'an de Oro 2it'
are, for o#vio!s reasons, strongl' against the opening of the ga#ling casino in their cit'.
@a#ling, even if legali%ed, wo!ld #e iniical to the general welfare of the inha#itants of the 2it',
or of an' place for that atter. The "A@2OR, as a governent3owned corporation, !st consider
the valid concerns of the people of the 2it' of 2aga'an de Oro and sho!ld not ipose its will !pon
the in an ar#itrar', if not despotic, anner.
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
G.R. No. L--45.4 1'&'6+'* 14, 19.9
ORTIGAS @ 8O., LI0ITE1 PARTNERSHIP, plaiti!!-app'llat,
"s.
FEATI $ANA AN1 TR#ST 8O., ('!'(at-app'll''.
Raire% G Ortigas for appellant.
TaRada, TeehanDee G 2arreon for appellee.
SANTOS, J.:
An appeal interposed on J!ne <;, +*,/ #' plaintiff3appellant, Ortigas G 2o., Aiited "artnership,
fro the decision of the 2o!rt of )irst Instance of Ri%al, &ranch (I, at "asig, 1on. Andres Re'es
presiding, which disissed its coplaint in 2ivil 2ase No. CCF,, entitled, HOrtigas G 2opan',
Aiited "artnership, plaintiff, v. )eati &anD and Tr!st 2opan', defendant,H for lacD of erit.
The following facts B a reprod!ction of the lower co!rtIs findings, which, in t!rn, are #ased on a
stip!lation of facts entered into #' the parties are not disp!ted. "laintiff :forerl' Dnown as
HOrtigas, Madrigal ' 2iaH= is a liited partnership and defendant )eati &anD and Tr!st 2o., is a
corporation d!l' organi%ed and e4isting in accordance with the laws of the "hilippines. "laintiff is
engaged in real estate #!siness, developing and selling lots to the p!#lic, partic!larl' the 1ighwa'
1ills S!#division along Epifanio de los Santos Aven!e, Mandal!'ong, Ri%al. +
On March ., +*/<, plaintiff, as vendor, and A!g!sto "adilla ' Angeles and Natividad Angeles, as
vendees, entered into separate agreeents of sale on installents over two parcels of land,
Dnown as Aots Nos. / and ,, &locD ;+, of the 1ighwa' 1ills S!#division, sit!ated at Mandal!'ong,
Ri%al. On J!l' +*, +*,<, the said vendees transferred their rights and interests over the aforesaid
lots in favor of one Ea 2have%. 5pon copletion of pa'ent of the p!rchase price, the plaintiff
e4ec!ted the corresponding deeds of sale in favor of Ea 2have%. &oth the agreeents :of sale
on installent= and the deeds of sale contained the stip!lations or restrictions that:
+. The parcel of land s!#0ect of this deed of sale shall #e !sed the &!'er e4cl!sivel' for residential
p!rposes, and she shall not #e entitled to taDe or reove soil, stones or gravel fro it or an' other
lots #elonging to the Seller.
STATCON| 34
.
<. All #!ildings and other iproveents :e4cept the fence= which a' #e constr!cted at an' tie
in said lot !st #e, :a= of strong aterials and properl' painted, :#= provided with odern sanitar'
installations connected either to the p!#lic sewer or to an approved septic tanD, and :c= shall not
#e at a distance of less than two :<= eters fro its #o!ndar' lines. <
The a#ove restrictions were later annotated in T2T Nos. +F+/F* and +F+/++ of the Register of
6eeds of Ri%al, covering the said lots and iss!ed in the nae of Ea 2have%. ;
Event!all', defendant3appellee ac>!ired Aots Nos. / and ,, with T2T Nos. +F+,+; and +F,F*<
iss!ed in its nae, respectivel' and the #!ilding restrictions were also annotated therein. .
6efendant3appellee #o!ght Aot No. / directl' fro Ea 2have%, Hfree fro all liens and
enc!#rances as stated in Anne4 I6I, / while Aot No. , was ac>!ired fro Rep!#lic )lo!r Mills
thro!gh a H6eed of E4change,H Anne4 HEH. , T2T No. +F+C+* in the nae of Rep!#lic )lo!r Mills
liDewise contained the sae restrictions, altho!gh defendant3appellee clais that Rep!#lic )lo!r
Mills p!rchased the said Aot No. , Hin good faith. free fro all liens and enc!#rances,H as stated
in the 6eed of Sale, Anne4 H)H C #etween it and Ea 2have%.
"laintiff3appellant clais that the restrictions annotated on T2T Nos. +F+/F*, +F+/++, +F+C+*,
+F+,+;, and +F,F*< were iposed as part of its general #!ilding schee designed for the
#ea!tification and developent of the 1ighwa' 1ills S!#division which fors part of the #ig landed
estate of plaintiff3appellant where coercial and ind!strial sites are also designated or
esta#lished. -
6efendant3appellee, !pon the other hand, aintains that the area along the western part of
Epifanio de los Santos Aven!e :E6SA= fro Shaw &o!levard to "asig River, has #een declared a
coercial and ind!strial %one, per Resol!tion No. <C, dated )e#r!ar' ., +*,F of the M!nicipal
2o!ncil of Mandal!'ong, Ri%al. * It alleges that plaintiff3appellant Icopletel' sold and transferred
to third persons all lots in said s!#division facing Epifanio de los Santos Aven!eH +F and the
s!#0ect lots there!nder were ac>!ired #' it Honl' on J!l' <;, +*,< or ore than two :<= 'ears after
the area ... had #een declared a coercial and ind!strial %one ... ++
On or a#o!t Ma' /, +*,;, defendant3appellee #egan la'ing the fo!ndation and coenced the
constr!ction of a #!ilding on Aots Nos. / and ,, to #e devoted to #anDing p!rposes, #!t which
defendant3appellee clais co!ld also #e devoted to, and !sed e4cl!sivel' for, residential
p!rposes. The following da', plaintiff3appellant deanded in writing that defendant3appellee stop
the constr!ction of the coerical #!ilding on the said lots. The latter ref!sed to copl' with the
deand, contending that the #!ilding was #eing constr!cted in accordance with the %oning
reg!lations, defendant3appellee having filed #!ilding and planning perit applications with the
M!nicipalit' of Mandal!'ong, and it had accordingl' o#tained #!ilding and planning perits to
proceed with the constr!ction. +<
On the #asis of the foregoing facts, 2ivil 2ase No. CCF,, s!pra, was s!#itted in the lower co!rt
for decision. The coplaint so!ght, aong other things, the iss!ance of Ha writ of preliinar'
in0!nction ... restraining and en0oining defendant, its agents, assigns, and those acting on its or
their #ehalf fro contin!ing or copleting the constr!ction of a coercial #anD #!ilding in the
preises ... involved, with the view to coanding the defendant to o#serve and copl' with the
#!ilding restrictions annotated in the defendantIs transfer certificate of title.H
In deciding the said case, the trial co!rt considered, as the f!ndaental iss!e, whether or not the
resol!tion of the M!nicipal 2o!ncil of Mandal!'ong declaring Aots Nos. / and ,, aong others, as
STATCON| 35
.
part of the coercial and ind!strial %one of the !nicipalit', prevailed over the #!ilding
restrictions iposed #' plaintiff3appellant on the lots in >!estion. +; The records do not show that
a writ of preliinar' in0!nction was iss!ed.
The trial co!rt !pheld the defendant3appellee and disissed the coplaint, holding that the
s!#0ect restrictions were s!#ordinate to M!nicipal Resol!tion No. <C, s!pra. It predicated its
concl!sion on the e4ercise of police power of the said !nicipalit', and stressed that private
interest sho!ld H#ow down to general interest and welfare. H In short, it !pheld the classification #'
the M!nicipal 2o!ncil of the area along Epifanio de los Santos Aven!e as a coercial and
ind!strial %one, and held that the sae rendered Hineffective and !nenforcea#leH the restrictions in
>!estion as against defendant3appellee. +. The trial co!rt decision f!rther ephasi%ed that it
Hass!es said resol!tion to #e valid, considering that there is no iss!e raised #' either of the
parties as to whether the sae is n!ll and void. +/
On March <, +*,/, plaintiff3appellant filed a otion for reconsideration of the a#ove decision, +,
which otion was opposed #' defendant3appellee on March +C, +*,/. +C It averred, aong
others, in the otion for reconsideration that defendant3 appellee Hwas d!t' #o!nd to copl' with
the conditions of the contract of sale in its favor, which conditions were d!l' annotated in the
Transfer 2ertificates of Title iss!ed in her :Ea 2have%= favor.H It also invited the trial co!rtIs
attention to its clai that the M!nicipal 2o!ncil had :no= power to n!llif' the contract!al o#ligations
ass!ed #' the defendant corporation.H +-
The trial co!rt denied the otion for reconsideration in its order of March <,, +*,/. +*
On April <, +*,/ plaintiff3appellant filed its notice of appeal fro the decision disissing the
coplaint and fro the order of March <,, +*,/ den'ing the otion for reconsideration, its record
on appeal, and a cash appeal #ond.H <F On April +., the appeal was given d!e co!rse <+ and the
records of the case were elevated directl' to this 2o!rt, since onl' >!estions of law are raised. <<
"laintiff3appellant alleges in its #rief that the trial co!rt erred B
I. 9hen it s!stained the view that Resol!tion No. <C, series of +*,F of the M!nicipal 2o!ncil
of Mandal!'ong, Ri%al declaring Aots Nos. / and ,, aong others, as part of the coercial and
ind!strial %one, is valid #eca!se it did so in the e4ercise of its police power? and
II. 9hen it failed to consider whether or not the M!nicipal 2o!ncil had the power to n!llif' the
contract!al o#ligations ass!ed #' defendant3appellee and when it did not aDe a finding that the
#!ilding was erected along the propert' line, when it sho!ld have #een erected two eters awa'
fro said propert' line. <;
The defendant3appellee s!#itted its co!nter3assignent of errors. In this connection, 9e alread'
had occasion to hold in Relativo v. 2astro <. that H:I=t is not inc!#ent on the appellee, who
occ!pies a p!rel' defensive position, and is seeDing no affirative relief, to aDe assignents of
error, H
The onl' iss!es to #e resolved, therefore, are: :+= whether Resol!tion No. <C s3+*,F is a valid
e4ercise of police power? and :<= whether the said Resol!tion can n!llif' or s!persede the
contract!al o#ligations ass!ed #' defendant3appellee.
+. The contention that the trial co!rt erred in s!staining the validit' of Resol!tion No. <C as an
e4ercise of police power is witho!t erit. In the first place, the validit' of the said resol!tion was
never >!estioned #efore it. The r!le is that the >!estion of law or of fact which a' #e incl!ded in
STATCON| 36
.
the appellantIs assignent of errors !st #e those which have #een raised in the co!rt #elow, and
are within the iss!es fraed #' the parties. </ The o#0ect of re>!iring the parties to present all
>!estions and iss!es to the lower co!rt #efore the' can #e presented to the appellate co!rt is to
ena#le the lower co!rt to pass thereon, so that the appellate co!rt !pon appeal a' deterine
whether or not s!ch r!ling was erroneo!s. The re>!ireent is in f!rtherance of 0!stice in that the
other part' a' not #e taDen #' s!rprise. <, The r!le against the practice of #lowing Hhot and
coldH #' ass!ing one position in the trial co!rt and another on appeal will, in the words of Elliot,
prevent deception. <C )or it is well3settled that iss!es or defenses not raised <- or properl'
litigated <* or pleaded ;F in the 2o!rt #elow cannot #e raised or entertained on appeal.
In this partic!lar case, the validit' of the resol!tion was aditted at least ipliedl', in the
stip!lation of facts #elow. when plaintiff3appellant did not disp!te the sae. The onl' controvers'
then as stated #' the trial co!rt was whether or not the resol!tion of the M!nicipal 2o!ncil of
Mandal!'ong ... which declared lots Nos. . and / aong others, as a part of the coercial and
ind!strial %one of the !nicipalit', prevails over the restrictions constit!ting as enc!#rances on
the lots in >!estion. ;+ 1aving aditted the validit' of the s!#0ect resol!tion #elow, even if
ipliedl', plaintiff3appellant cannot now change its position on appeal.
&!t, ass!ing arg!endo that it is not 'et too late in the da' for plaintiff3appellant to raise the iss!e
of the invalidit' of the !nicipal resol!tion in >!estion, 9e are of the opinion that its post!re is
!ns!staina#le. Section ; of R.A. No. <<,., otherwise Dnown as the Aocal A!tono' Act,H ;<
epowers a M!nicipal 2o!ncil Hto adopt %oning and s!#division ordinances or reg!lationsH? ;; for
the !nicipalit'. 2learl', the law does not restrict the e4ercise of the power thro!gh an ordinance.
Therefore, granting that Resol!tion No. <C is not an ordinance, it certainl' is a reg!lator' eas!re
within the intendent or a#it of the word Hreg!lationH !nder the provision. As a atter of fact the
sae section declares that the power e4ists H:A=n' provision of law to the contrar' notwithstanding
... H
An e4aination of Section +< of the sae law ;. which prescri#es the r!les for its interpretation
liDewise reveals that the iplied power of a !nicipalit' sho!ld #e Hli#erall' constr!ed in its favorH
and that H:A=n' fair and reasona#le do!#t as to the e4istence of the power sho!ld #e interpreted in
favor of the local governent and it shall #e pres!ed to e4ist.H The sae section f!rther
andates that the general welfare cla!se #e li#erall' interpreted in case of do!#t, so as to give
ore power to local governents in prooting the econoic conditions, social welfare and
aterial progress of the people in the co!nit'. The onl' e4ceptions !nder Section +< are
e4isting vested rights arising o!t of a contract #etween Ha province, cit' or !nicipalit' on one
hand and a third part' on the other,H in which case the original ters and provisions of the contract
sho!ld govern. The e4ceptions, clearl', do not appl' in the case at #ar.
<. 9ith regard to the contention that said resol!tion cannot n!llif' the contract!al o#ligations
ass!ed #' the defendant3appellee S referring to the restrictions incorporated in the deeds of sale
and later in the corresponding Transfer 2ertificates of Title iss!ed to defendant3appellee S it
sho!ld #e stressed, that while non3ipairent of contracts is constit!tionall' g!aranteed, the r!le
is not a#sol!te, since it has to #e reconciled with the legitiate e4ercise of police power, i.e., Hthe
power to prescri#e reg!lations to proote the health, orals, peace, ed!cation, good order or
safet' and general welfare of the people. ;/ Invaria#l' descri#ed as Hthe ost essential, insistent,
and illiita#le of powersH ;, and Hin a sense, the greatest and ost powerf!l attri#!te of
governent, ;C the e4ercise of the power a' #e 0!diciall' in>!ired into and corrected onl' if it is
capricio!s, Iwhisical, !n0!st or !nreasona#le, there having #een a denial of d!e process or a
STATCON| 37
.
violation of an' other applica#le constit!tional g!arantee. ;- As this 2o!rt held thro!gh J!stice
Jose ". &eng%on in "hilippine Aong 6istance 2opan' vs. 2it' of 6avao, et al. ;* police power His
elastic and !st #e responsive to vario!s social conditions? it is not, confined within narrow
circ!scriptions of precedents resting on past conditions? it !st follow the legal progress of a
deocratic wa' of life.H 9e were even ore ephatic in (da. de @en!ino vs. The 2o!rt of
Agrarian Relations, et al., .F when 9e declared: H9e do not see wh' p!#lic welfare when clashing
with the individ!al right to propert' sho!ld not #e ade to prevail thro!gh the stateIs e4ercise of its
police power.
Resol!tion No. <C, s3+*,F declaring the western part of highwa' /., now E. de los Santos Aven!e
:E6SA, for short= fro Shaw &o!levard to the "asig River as an ind!strial and coercial %one,
was o#vio!sl' passed #' the M!nicipal 2o!ncil of Mandal!'ong, Ri%al in the e4ercise of police
power to safeg!ard or proote the health, safet', peace, good order and general welfare of the
people in the localit', J!dicial notice a' #e taDen of the conditions prevailing in the area,
especiall' where lots Nos. / and , are located. The lots theselves not onl' front the highwa'?
ind!strial and coercial cople4es have flo!rished a#o!t the place. E6SA, a ain traffic arter'
which r!ns thro!gh several cities and !nicipalities in the Metro Manila area, s!pports an endless
strea of traffic and the res!lting activit', noise and poll!tion are hardl' cond!cive to the health,
safet' or welfare of the residents in its ro!te. 1aving #een e4pressl' granted the power to adopt
%oning and s!#division ordinances or reg!lations, the !nicipalit' of Mandal!'ong, thro!gh its
M!nicipal Ico!ncil, was reasona#l', if not perfectl', 0!stified !nder the circ!stances, in passing
the s!#0ect resol!tion.
The scope of police power Deeps e4panding as civili%ation advances, stressed this 2o!rt,
speaDing thr! J!stice Aa!rel in the leading case of 2alalang v. 9illias et al., .+ Th!s3
As was said in the case of 6o##ins v. Aos Angeles :+*/ 5S <<;, <;- .* A. ed. +,*=, Ithe right to
e4ercise the police power is a contin!ing one, and a #!siness lawf!l toda' a' in the f!t!re,
#eca!se of changed sit!ation, the growth of pop!lation or other ca!ses, #ecoe a enace to the
p!#lic health and welfare, and #e re>!ired to 'ield to the p!#lic good.I And in "eople v. "oar :.,
"hil. ..F=, it was o#served that Iadvancing civili%ation is #ringing within the scope of police power
of the state toda' things which were not tho!ght of as #eing with in s!ch power 'esterda'. The
developent of civili%ation=, the rapidl' increasing pop!lation, the growth of p!#lic opinion, with an
increasing desire on the part of the asses and of the governent to looD after and care for the
interests of the individ!als of the state, have #ro!ght within the police power an' >!estions for
reg!lation which forerl' were not so considered. .< :Ephasis, s!pplied.=
Th!s, the state, in order to proote the general welfare, a' interfere with personal li#ert', with
propert', and with #!siness and occ!pations. "ersons a' #e s!#0ected to all Dinds of restraints
and #!rdens, in order to sec!re the general cofort health and prosperit' of the state .; and to
this f!ndaental ai of o!r @overnent, the rights of the individ!al are s!#ordinated. ..
The need for reconciling the non3ipairent cla!se of the 2onstit!tion and the valid e4ercise of
police power a' also #e gleaned fro 1elvering v. 6avis ./ wherein Mr. J!stice 2ardo%o,
speaDing for the 2o!rt, resolved the conflict H#etween one welfare and another, #etween partic!lar
and general, th!s B
Nor is the concept of the general welfare static. Needs that were narrow or parochial a cent!r' ago
a' #e interwoven in o!r da' with the well3#eing of the nation 9hat is critical or !rgent changes
with the ties. .,
STATCON| 38
.
The otives #ehind the passage of the >!estioned resol!tion #eing reasona#le, and it #eing a H
legitiate response to a felt p!#lic need,H .C not whisical or oppressive, the non3ipairent of
contracts cla!se of the 2onstit!tion will not #ar the !nicipalit'Is proper e4ercise of the power.
Now 2hief J!stice )ernando p!ts it aptl' when he declared: H"olice power legislation then is not
liDel' to s!cc!# to the challenge that there#' contract!al rights are rendered n!gator'.H .-
)!rtherore, 9e restated in "hilippine Aerican Aife Ins. 2o. v. A!ditor @eneral .* that laws and
reservation of essential attri#!tes of sovereign power are read into contracts agreed !pon #' the
parties. Th!s B
Not onl' are e4isting laws read into contracts in order to fi4 o#ligations as #etween the parties, #!t
the reservation of essential attri#!tes of sovereign power is also read into contracts as a post!late
of the legal order. The polic' of protecting contracts against ipairents pres!pposes the
aintenance of a governent #' virt!e of which contract!al relations are worthwhile S a
governent which retains ade>!ate a!thorit' to sec!re the peace and good order of societ'.
Again, 9e held in Ai#eration Steaship 2o., Inc. v. 2o!rt of Ind!strial Relations, /F thro!gh
J!stice J.&.A. Re'es, that ... the law fors part of, and is read into, ever' contract, !nless clearl'
e4cl!ded therefro in those cases where s!ch e4cl!sion is allowed.H The decision in Maritie
2opan' of the "hilippines v. Reparations 2oission, /+ written for the 2o!rt #' J!stice
)ernando, now 2hief J!stice, restates the r!le.
One last o#servation. Appellant has placed !n>!alified reliance on Aerican 0!rispr!dence and
a!thorities /< to #olster its theor' that the !nicipal resol!tion in >!estion cannot n!llif' or
s!persede the agreeent of the parties e#odied in the sales contract, as that, it clais, wo!ld
ipair the o#ligation of contracts in violation of the 2onstit!tion. S!ch reliance is isplaced.
In the first place, the views set forth in Aerican decisions and a!thorities are not per se
controlling in the "hilippines, the laws of which !st necessaril' #e constr!ed in accordance with
the intention of its own lawaDers and s!ch intent a' #e ded!ced fro the lang!age of each law
and the conte4t of other local legislation related thereto. /; and &!rgess, et al v. Magarian, et al.,
// two Of the cases cited #' plaintiff3appellant, lend s!pport to the concl!sion reached #' the trial
co!rt, i.e. that the !nicipal resol!tion s!persedesQs!pervenes over the contract!al !ndertaDing
#etween the parties. 6olan v. &rown, states that HE>!it' will not, as a r!le, enforce a restriction
!pon the !se of propert' #' in0!nction where the propert' has so changed in character and
environent as to aDe it !nfit or !nprofita#le for !se sho!ld the restriction #e enforced, #!t will,
in s!ch a case, leave the coplainant to whatever reed' he a' have at law. /, :Ephasis
s!pplied.= 1ence, the reed' of in0!nction in 6olan vs. &rown was denied on the specific holding
that HA grantor a' lawf!ll' insert in his deed conditions or restrictions which are not against p!#lic
polic' and do not ateriall' ipair the #eneficial en0o'ent of the estate. /C Appl'ing the principle
0!st stated to the present controvers', 9e can sa' that since it is now !nprofita#le, na' a ha%ard to
the health and cofort, to !se Aots Nos. / and , for strictl' residential p!rposes, defendants3
appellees sho!ld #e peritted, on the strength of the resol!tion pro!lgated !nder the police
power of the !nicipalit', to !se the sae for coercial p!rposes. In &!rgess v. Magarian et al.
it was, held that Hrestrictive covenants r!nning with the land are #inding on all s!#se>!ent
p!rchasers ... H 1owever, Section <; of the %oning ordinance involved therein contained a proviso
e4pressl' declaring that the ordinance was not intended Hto interfere with or a#rogate or ann!l an'
easeents, covenants or other agreeent #etween parties.H /- In the case at #ar, no s!ch
proviso is fo!nd in the s!#0ect resol!tion.
STATCON| 39
.
It is, therefore, clear that even if the s!#0ect #!ilding restrictions were ass!ed #' the defendant3
appellee as vendee of Aots Nos. / and ,, in the corresponding deeds of sale, and later, in Transfer
2ertificates of Title Nos. +F+,+; and +F,F*<, the contract!al o#ligations so ass!ed cannot
prevail over Resol!tion No. <C, of the M!nicipalit' of Mandal!'ong, which has validl' e4ercised its
police power thro!gh the said resol!tion. Accordingl', the #!ilding restrictions, which declare Aots
Nos. / and , as residential, cannot #e enforced.
IN (IE9 O) T1E )ORE@OIN@, the decision appealed fro, disissing the coplaint, is here#'
A))IRME6. Hwitho!t prono!nceent as to costs.
SO OR6ERE6.
Separate Opinions
&ARRE6O, J., conc!rring:
I hold it is a atter of p!#lic Dnowledge that the place in >!estion is coercial. It wo!ld #e worse
if the sae were to #e left as residential and all aro!nd are alread' coercial.
)ERNAN6O, 2.J., conc!rring:
The e4ha!stive and l!cid opinion of the 2o!rt penned #' J!stice @!illero S. Santos coends
itself for approval. I feel no hesitanc', therefore, in 'ielding conc!rrence, The o#servation,
however, in the dissent of J!stice (icente A#ad Santos relative to restrictive covenants calls, to '
ind, for f!rther reflection as to the respect to which the' are entitled whenever police power
legislation, whether on the national or local level, is assailed. &efore doing so, however, it a' not
#e aiss to consider f!rther the effect of s!ch all3e#racing attri#!te on e4isting contracts.
+. Reference was ade in the opinion of the 2o!rt to "hilippine Aerican Aife Ins!rance
2opan' v. A!ditor @eneral. + The ponente in that case was J!stice Sanche%. A conc!rrence
cae fro e. It contained this >!alification: HIt cannot #e said, witho!t rendering n!gator' the
constit!tional g!arantee of non3ipairent, and for that atter #oth the e>!al protection and d!e
process cla!ses which e>!all' serve to protect propert' rights, that at the ere invocation of the
police power, the o#0ection on non3ipairent gro!nds a!toaticall' loses force. 1ere, as in other
cases where governental a!thorit' a' trench !pon propert' rights, the process of #alancing,
ad0!stent or haroni%ation is called for. < After referring to three leading 5nited States S!pree
2o!rt decisions, 1oe &!ilding and Aoan Association v. &laisdell, ; Ne##ia v. New 8orD, . and
Noran v. &altiore and Ohio Railroad 2o., / I stated: HAll of the a#ove decisions reflect the view
that an enactent of a police power eas!re does not per se call for the overr!ling of o#0ections
#ased on either d!e process or non3ipairent #ased on either d!e process or non3ipairent
gro!nds. There !st #e that #alancing, or ad0!stent, or haroni%ation of the conflicting clais
posed #' an e4ercise of state reg!lator' power on the one hand and assertion of rights to
propert', whether of nat!ral or of 0!ridical persons, on the other. IThat is the onl' wa' #' which the
constit!tional g!arantees a' serve the high ends that call for their incl!sion in the 2onstit!tion
and th!s effectivel' precl!de all' a#!sive e4ercise of governental a!thorit'.H , Nor did '
conc!rrence stop there: HIn the opinion of the &laisdell case, penned #' the then 2hief J!stice
1!ghes, there was this !nderstanda#le stress on #alancing or haroni%ing, which is called for in
litigations of this character: IThe polic' of protecting contracts against ipairent pres!pposes the
aintenance of a governent #' virt!e of which contract!al relations are worthwhile a governent
which retains ade>!ate a!thorit' to sec!re the peace and good order of societ'. This principle of
haroni%ing the constit!tional prohi#ition with the necessar' resid!! of state power has had
progressive recognition in the decisions of this 2o!rt.I Also to the sae effect: I5ndo!#tedl',
STATCON| 40
.
whatever is reserved of state power !st #e consistent with the fair intent of the constit!tional
liitation of that power. The reserve power cannot #e constr!ed so as to destro' the liitation, nor
is the liitation to #e constr!ed to destro' the reserved power in its essential aspects. IThe' !st
#e constr!ed in haron' with each other. This principle precl!des a constr!ction which wo!ld
perit the State to adopt as its polic' the rep!diation of de#ts or the destr!ction of contracts or the
denial of eans to enforce the. &!t it does not follow that conditions a' not arise in which a
teporar' restraint of enforceent a' #e consistent with the spirit and p!rpose of the
constit!tional provision and th!s #e fo!nd to #e within the range of the reserved power of the State
to protect the vital interests of the co!nit'.I )!rther on, 2hief J!stice 1!ghes liDewise stated: IIt
is anifest fro this review of o!r decisions that there has #een a growing appreciation of p!#lic
needs and of the necessit' of finding gro!nd for a rational coproise #etween individ!al rights
and p!#lic welfare. H C This is the concl!ding paragraph of ' conc!rrence in the "hilippine
Aerican Aife Ins!rance 2o. case: HIf ephasis #e therefore laid, as this conc!rring opinion does,
on the pressing and inescapa#le need for s!ch an approach whenever a possi#le collision
#etween state a!thorit' and an assertion of constit!tional right to propert' a' e4ist, it is not to
depart fro what so!nd constit!tional orthodo4' dictates. It is rather to a#ide #' what is copels.
In litigations of this character then, perhaps !ch ore so than in other disp!tes, where there is a
reliance on a constit!tional provision, the 0!diciar' cannot escape what 1oles fitl' referred to as
the sovereign prerogative of choice, the e4ercise of which ight possi#l' #e ip!gned if there #e
no attept, however slight, at s!ch an effort of ad0!sting or reconciling the respective clais of
state reg!lator' power and constit!tionall' protected rights.H -
I adhere to s!ch a view. This is not to sa' that there is a depart!re therefro in the a#le and
scholarl' opinion of J!stice Santos. It is erel' to stress what to ' ind is a f!ndaental
post!late of o!r 2onstit!tion. The onl' point I wo!ld wish to add is that in the process of s!ch
#alancing and ad0!stent, the present 2onstit!tion, the "hilippine Aerican Aife Ins!rance 2o.
decision having #een pro!lgated !nder the +*;/ 2harter, leaves no do!#t that the clai to
propert' rights #ased on the non3ipairent cla!se has a lesser weight. )or as e4plicitl' provided
#' o!r present f!ndaental law: HThe State shall proote social J!stice to ens!re the dignit',
welfare, and sec!rit' of all the people. Towards this end, the
State shall reg!late the ac>!isition, ownership, !se, en0o'ent, and disposition of private propert',
and e>!ita#l' diff!se propert' ownership and profits. *
<. Now as to restrictive convenants, acc!ratel' incl!ded #' 1art and SacDs !nder the
categor' of Hprivate directive arrangeents. H +F Thro!gh the people are ena#le to agree on how
to order their affairs. The' co!ld #e !tili%ed to govern their affairs. The' co!ld #e !tili%ed to govern
their f!t!re cond!ct. It is a well3Dnown fact that the coon law relies to a great e4tent on s!ch
private directive arrangeents to attain a desira#le social condition. More specificall', s!ch
covenants are an iportant eans of ordering one aspect of propert' relationships. Thro!gh
the, there co!ld #e deliitation of land !se rights. It is >!ite !nderstanda#le wh' the law sho!ld
ordinaril' accord the deference, It does so, it has #een said, #oth on gro!nds of oralit' and
!tilit'. Nonetheless, there are liits to the literal enforceent of their ters. To the e4tent that the'
ignore technological or econoic progress, the' are not a!toaticall' entitled to 0!dicial
protection. 2learl', the' !st HspeaD fro one point of tie to another.H ++ The parties, liDe all
ortal, do not have the power of predicting the f!t!re with !nfailing certaint'. In cases therefore
where societal welfare calls for police power legislation, the parties adversel' affected sho!ld
reali%e that arrangeents dealing with propert' rights are not ipressed with sanctit'. That
STATCON| 41
.
approach, in ' view, was the g!iding principle of the opinion of the 2o!rt. f fence ' f!ll and
entire conc!rrence.
A&A6 SANTOS, J:, dissenting:
Altho!gh Resol!tion No. <C, series of +*,F, of the M!nicipal 2o!ncil of Mandal!'ong, Ri%al, is
valid !ntil otherwise declared, I do not #elieve that its enactent was #' virt!e of the police power
of that !nicipalit'. I do not here disp!te the concept of police power as stated in "riicias vs.
)!goso, -F "hil. CC :+*.-= for as a atter of fact I accept it. And I agree also that it is elastic and
!st #e responsive to vario!s social conditions, etc. as r!led in "A6T vs. 2it' of 6avao, A3<;F-F,
Oct. <,, +*,/, +/ S2RA <... &!t Resol!tion No. <C, cannot #e descri#ed as prootive of the
health, orals, peace, ed!cation, good order or safet' and general welfare of the people of
Mandal!'ong. On the contrar', its effect is the opposite. )or the serenit', peace and >!ite of a
residential section wo!ld #' the resol!tion #e replaced #' the chaos, t!roil and fren%' of
coerce and ind!str'. 9here there wo!ld #e no ind!strial and noise poll!tion these #ane of so3
called progress wo!ld now pervade and s!ffocate the environent to the detrient of the ecolog'.
To characteri%e the ordinance as an e4ercise of police power wo!ld #e retrogressive. It will set
#acD all the efforts of the Ministr' of 1!an Settleents to iprove the >!alit' of life especiall' in
Metro Manila. It will aDe Metro Manila, not the cit' of an as envisioned #' its @overnor #!t a
cit' of coerce and ind!str'.
2onsidering, therefore, that Resol!tion No, <3+ was not enacted in the legitiate e4ercise of police
power, it cannot ipair the restrictive covenants which go with the lands that were sold #' the
plaintiff3appellant. I vote for the reversal of the appealed decision.
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLL
G.R. No. L--83-9 August 1., 19./
8O00ISSIONER OF 8#STO0S, p'titio'*,
"s.
ESSO STAN1AR1 EASTERN, IN8., ;Fo*6'*l,> Sta(a*(-9a&uu6 R'!iig 8o*p. ;P)il.<,
*'spo('t.
Office of the Solicitor @eneral Antonio ". &arredo, Assistant Solicitor @eneral Antonio A. Torres and
Solicitor Antonio M. Martine% for petitioner.
2arlos J. (alde% G Associates for respondent.
ES@5ERRA, J.:
Appeal fro the decision of the 2o!rt of Ta4 Appeals reversing the 2oissioner of 2!stosI
decision holding respondent ESSO Standard Eastern, Inc., :forerl' the Standard3(ac!!
Refining 2orporation :"hil.= and hereinafter referred to as ESSO= lia#le in the total s! of "CC/.,<
as special iport ta4 on certain articles iported #' the latter !nder Rep!#lic Act No. ;-C,
otherwise Dnown as the "etrole! Act of +*.*.
Respondent ESSO is the holder of Refining 2oncession No. <, iss!ed #' the Secretar' of
Agric!lt!re and Nat!ral Reso!rces on 6ece#er *, +*/C, and operates a petrole! refining plant
in Aia' &ataan. 5nder Article +F; of Rep!#lic Act No. ;-C which provides: H6!ring the five 'ears
following the granting of an' concession, the concessionaire a' iport free of c!stos d!t', all
e>!ipent, achiner', aterial, instr!ents, s!pplies and accessories,H respondent iported and
STATCON| 42
.
was assessed the special iport ta4 :which it paid !nder protest= on the following separate
iportations:
+= One carton, scientific instr!ents with 2 G ) val!e of assessed a special iport ta4 in the
ao!nt of ";+.*- :Airport "rotest No. +F=?
<= One carton of recorder parts with 2 G ) val!e of N<<+./,? assessed special iport ta4 in
the ao!nt of ".;.-< :Airport "rotest No. ++=?
;= One carton of valves with 2 G ) val!e of N;+F./-? assessed special iport ta4 in the
ao!nt of ",F.C< :Airport "rotest No. +<=?
.= One #o4 of parts for 2onversion #oilers and A!4iliar' E>!ipent with 2 G ) val!e of
N<,;-*.,*? assessed special iport ta4 in the ao!nt of ".,C.FF :Airport "rotest No. +/=?
/= One carton of 73ra' fils with 2 G ) val!e of N+;<.-F? assessed special iport ta4 in the
ao!nt of "<,.FF :Airport "rotest No. +,=? and
,= One carton of recorder parts with 2 G ) val!e of NC/F.;*? assessed special iport ta4 in
the ao!nt of "+.C.FF :Airport "rotest No. +C=. +
The 2ollector of 2!stos on )e#r!ar' +,, +*,<, held that respondent ESSO was s!#0ect to the
pa'ent of the special iport ta4 provided in Rep!#lic Act No. +;*., as aended #' R.A. No.
<;/<, and disissed the protest. <
On March +, +*,<, respondent appealed the r!ling of the 2ollector of 2!stos to the
2oissioner of 2!stos who, on March +*, +*,/, affired the decision of said 2ollector of
2!stos. ;
On J!l' <, +*,/, respondent ESSO filed a petition with the 2o!rt of Ta4 Appeals for review of the
decision of the 2oissioner of 2!stos.
The 2o!rt of Ta4 Appeals, on Septe#er ;F, +*,C, reversed the decision of herein petitioner
2oissioner of 2!stos and ordered ref!nd of the ao!nt of "CC/.,< to respondent ESSO
which the latter had paid !nder protest. .
This decision of the 2o!rt of Ta4 Appeals is now #efore this 2o!rt for review.
"etitioner contends that the special iport ta4 !nder Rep!#lic Act No. +;*. is separate and
distinct fro the c!stos d!t' prescri#ed #' the Tariff and 2!stos 2ode, and that the e4eption
en0o'ed #' respondent ESSO fro the pa'ent of c!stos d!ties !nder the "etrole! net of
+*.* does not incl!de e4eption fro the pa'ent of the special iport ta4 provided in R.A. No.
+;*.. /
)or its stand petitioner p!ts forward this rationale:
A per!sal of the provisions of R.A. No. +;*. will show that the legislat!re considered the special
iport ta4 as a ta4 distinct fro c!stos d!ties as witness the fact that Section <:a= of the said law
ade separate ention of c!stos d!ties and special iport ta4 when it provided that ... if as a
res!lt of the application of the sched!le therein, the total reven!e derived fro the c!stos d!ties
and fro the special iport ta4 on goods, ... iported fro the 5nited States is less in an'
calendar 'ear than the proceeds fro the e4change ta4 iposed !nder Rep!#lic Act N!#ered
Si4 1!ndred and One, as aended, on s!ch goods, articles or prod!cts d!ring the calendar 'ear
+*//, the "resident a', #' proclaation, s!spend the red!ction of the special iport ta4 for the
ne4t s!cceeding calendar 'ear ....
STATCON| 43
.
If it were the intention of 2ongress to e4ept the holders of petrole! refiner' concessions liDe
the protestant :respondent herein=, s!ch e4eption sho!ld have #een clearl' stated in the stat!te.
E4eptions are never pres!ed. The' !st #e e4pressed in the clearest and ost !na#ig!o!s
lang!age and not left to ere iplication. ,
Specificall', petitioner in his #rief s!#itted two assignent of errors allegedl' coitted #' the
2o!rt of Ta4 Appeals in the controverted decision, to wit:
+st assignent of error:
T1E 2O5RT O) TA7 A""EAAS ERRE6 IN 1OA6IN@ T1AT T1E TERM H25STOMS 65T8H IN
ARTI2AE +F; O) RE"5&AI2 A2T NO. ;-C IN2A56ES T1E S"E2IAA IM"ORT TA7 IM"OSE6
&8 RE"5&AI2 A2T NO. +;*.?
<nd assignent of error:
T1E 2O5RT O) TA7 A""EAAS ERRE6 IN 1OA6IN@ T1AT E7EM"TION )ROM "A8MENT O)
25STOMS 65TIES 5N6ER RE"5&AI2 A2T NO. ;-C IN2A56ES E7EM"TION )ROM
"A8MENT O) T1E S"E2IAA IM"ORT TA7.
On the other hand, the 2o!rt of Ta4 Appeals rationali%ed the gro!nd for its r!ling th!s:
If we are to adhere, as we sho!ld, to the plain and o#vio!s eaning of words in consonance with
settled r!les of interpretation, it sees clear that the special iport ta4 is an ipost or a charge on
the iportation or #ringing into the "hilippines of all goods, articles or prod!cts s!#0ect thereto, for
the phrase Hiport ta4 on all goods, articles or prod!cts iported or #ro!ght into the "hilippinesH in
e4plicit and !na#ig!o!s ters sipl' eans c!stos d!ties. It is hardl' necessar' to add that
Hc!stos d!tiesH are sipl' ta4es assessed on erchandise iported fro, or e4ported to a
foreign co!ntr'.
And #eing a charge !pon iportation, the special iport ta4 is essentiall' a c!stos d!t', or at
least partaDes of the character thereof.
2iting n!#ero!s Aerican decisions and definitions of ters Hc!stos d!ties,H Hd!ties,H
Hiposts,H Hlevies,H Hta4,H and Htolls,H and their distinctions, incl!ding soe prono!nceents of this
2o!rt on the s!#0ect, the 2o!rt of Ta4 Appeals in its decision, went to great lengths to show that
the ter Hspecial iport ta4H as !sed in R.A. No. +;*. incl!des c!stos d!ties. It sees the special
iport ta4 as nothing #!t an ipost or a charge on the iportation or #ringing into the "hilippines
of goods, articles or prod!cts. C
To clinch its theor' the 2o!rt of Ta4 Appeals cited the siilarit' in the #asis of cop!tation of the
c!stos d!t' as well as the siilarit' in the phraseolog' of Section ; of Rep!#lic Act No. +;*.
:which esta#lished the special iport ta4= and Section *3F+ of the Tariff G 2!stos code :the #asic
law providing for and reg!lating the iposition of c!stos d!ties and iposts on iportations=. -
)or its part, private respondent, ESSO, in its answer to the petition, leaned heavil' on the sae
arg!ents as those given #' the Ta4 2o!rt, the #!rden of which is that the special iport ta4 law
is a c!stos law. *
It is clear that the onl' iss!e involved in this case is whether or not the e4eption en0o'ed #'
herein private respondent ESSO Standard Eastern, Inc. fro c!stos d!ties granted #' Rep!#lic
Act No. ;-C, or the "etrole! Act of +*.*, sho!ld e#race or incl!de the special iport ta4
iposed #' R.A. No. +;*., or the Special Iport Ta4 Aaw.
STATCON| 44
.
9e have e4ained the records of this case thoro!ghl' and caref!ll' considered the arg!ents
presented #' #oth parties and 9e are convinced that the onl' thing left to this 2o!rt to do is to
deterine the intention of the legislat!re thro!gh interpretation of the two stat!tes involved, i.e.,
Rep!#lic Act No. +;*. and Rep!#lic Act No. ;-C.
It is a well accepted principle that where a stat!te is a#ig!o!s, as Rep!#lic Act No. +;*.
appears to #e, co!rts a' e4aine #oth the printed pages of the p!#lished Act as well as those
e4trinsic atters that a' aid in constr!ing the eaning of the stat!te, s!ch as the histor' of its
enactent, the reasons for the passage of the #ill and p!rposes to #e accoplished #' the
eas!re. +F
"etitioner in the first assignent of error tooD e4ception to the finding of the 2o!rt of Ta4 Appeals
that HThe lang!age of Rep!#lic Act No. +;*. sees to leave no roo for do!#t that the law
intends that the phrase ISpecial iport ta4I is taDen to incl!de c!stos d!tiesH and co!ntered with
the arg!ent that HAn e4aination of the provisions of Rep!#lic Act No. +;*. will ind!#ita#l'
reveal that 2ongress considered the special iport ta4 as a ta4 different fro c!stos d!ties, as
a' #e seen fro the fact that Section <:a= of said law ade separate ention of c!stos d!ties
and special iport ta4 ...H Th!s:
... if as a res!lt of the application of the sched!le therein the total reven!e derived fro the
c!stos d!ties and fro the special iport ta4 on goods, ... iported fro the 5nited States is
less in an' calendar 'ear than the proceeds fro the e4change ta4 iposed !nder Rep!#lic Act
N!#ered Si4 1!ndred and One, as aended, on s!ch goods, articles or prod!cts d!ring the
calendar 'ear +*//, the "resident a', #' proclaation, s!spend the red!ction of the special
iport ta4 for the ne4t s!cceeding calendar 'ear ...
"etitioner f!rther arg!es:
2!stos d!ties are prescri#ed #' the Tariff and 2!stos 2ode, while the special iport ta4 is
provided for #' Rep!#lic Act No. +;*.. If o!r legislat!re had intended to classif' the special iport
ta4 as c!stos d!t', the said Art wo!ld not have e4pressl' e4epted fro pa'ent of the special
Iport ta4 iportations of achiner', e>!ipent, accessories, and spare parts for !se of
ind!stries, witho!t disting!ishing whether the ind!stries referred to are the ind!stries e4ept fro
the pa'ent of 2!stos d!ties or the non3e4ept ones :Sec. ,=. It is s!fficient that the iported
achiner', etc., is for the !se of an' ind!str'. ++
A st!d' of petitionerIs two assignents of errors shows that one is anchored on practicall' the
sae gro!nd as the other: #oth involve the interpretation of R.A. No. ;-C :The "etrole! Act of
+*.*= in relation with R.A. No. +;*. :The Special Iport Ta4 Aaw=.
9hile the petitioner harps on partic!lar cla!ses and phrases fo!nd in the two cited laws, which in a
wa' was liDewise resorted to #' the respondent ESSO, it wo!ld do 5s well to restate the
f!ndaental r!le in the constr!ction of a stat!te.
In order to deterine the tr!e intent of the legislat!re, the partic!lar cla!ses and phrases of the
stat!te sho!ld not #e taDen as detached and isolated e4pressions, #!t the whole and ever' part
thereof !st #e considered in fi4ing the eaning of an' of its parts. In fact ever' stat!te sho!ld
receive s!ch constr!ction as will aDe it haroni%e with the pre3e4isting #od' of laws. Antagonis
#etween the Act to #e interpreted and e4isting or previo!s laws is to #e avoided, !nless it was
clearl' the intention of the legislat!re that s!ch antagonis sho!ld arise and one aends or
repeals the other, either e4pressl' or #' iplication.
STATCON| 45
.
Another r!le applied #' this 2o!rt is that the co!rts a' taDe 0!dicial notice of the origin and
histor' of the stat!tes which the' are called !pon to constr!e and adinister, and of facts which
affect their derivation, validit' and operation. +<
Appl'ing the a#ove stated r!les and principles, let !s consider the histor', the p!rpose and
o#0ectives of Rep!#lic Act No. ;-C as it relates to Rep!#lic Act No. +;*. and other laws passed #'
the 2ongress of the "hilippines insofar as the' relate to each other.
Rep!#lic Act No. ;-C, the "etrole! Act of +*.*, has this for its title, to wit:
AN A2T TO "ROMOTE T1E E7"AORATION, 6E(EAO"MENT, E7"AOITATION, AN6
5TIAIEATION O) T1E "ETROAE5M RESO5R2ES O) T1E "1IAI""INES? TO EN2O5RA@E
T1E 2ONSER(ATION O) S521 "ETROAE5M RESO5R2ES? TO A5T1ORIEE T1E
SE2RETAR8 O) A@RI25AT5RE AN6 NAT5RAA RESO5R2ES TO 2REATE AN
A6MINISTRATION 5NIT AN6 A TE21NI2AA &OAR6 IN T1E &5REA5 O) MINES? TO
A""RO"RIATE )5N6S T1ERE)ORE? AN6 )OR OT1ER "5R"OSES.
Art. +F; of said Act reads:
ART. +F;. 2!stos d!ties. B 6!ring the five 'ears following the granting of an' concessions,
the concessionaire a' iport free of c!stos d!t', all e>!ipent, achiner', aterial,
instr!ents, s!pplies and accessories.
Art. +F< of the Sae law insofar as pertinent, provides:
ART. +F<. 9orD o#ligations, ta4es, ro'alties not to #e charged. B ...? nor shall an' other special
ta4es or levies #e applied to s!ch concessions, nor shall concessionaires !nder this Act #e
s!#0ected to an' provincial, !nicipal, or other local ta4es or levies? nor shall an' sales ta4 #e
charged on an' petrole! prod!ced fro the concession or portion thereof, an!fact!red #' the
concessionaire and !sed in the worDing of his concession. ....
Art. +F., still of the sae Act, reads:
ART. +F.. No e4port to #e iposed. B No e4port ta4 shall #e levied !pon petrole! prod!ced
fro concessions granted !nder this Act.
The title of Rep!#lic Act No. ;-C and the provisions of its three articles 0!st cited give a cl!e to the
intent of the "hilippine legislat!re, which is to enco!rage the e4ploitation and developent of the
petrole! reso!rces of the co!ntr'. Thro!gh the instr!entalit' of said law, it declared in no
!ncertain ters that the intensification of the e4ploration for petrole! !st #e carried on
!nflinchingl' even if, for the tie #eing, no ta4es, #oth national and local, a' #e collected fro
the ind!str'. This is the !ne>!ivocal intention of the "hilippine 2ongress when the lang!age of the
"etrole! Act is e4ained. 5ntil this law or an' s!#stantial portion thereof is clearl' aended or
repealed #' s!#se>!ent stat!tes, the intention of the legislat!re !st #e !pheld.
Against this !na#ig!o!s lang!age of R.A. No. ;-C, there is the s!#se>!ent legislation, R.A. No.
+;*., the Special Iport Ta4 Aaw, which, according to the herein petitioner, shows that the
legislat!re considered the special iport ta4 as a ta4 distinct fro c!stos d!ties.
Rep!#lic Act No. +;*., otherwise Dnown as the Special Iport Ta4 Aaw, is entitled as follows:
AN A2T TO IM"OSE A S"E2IAA IM"ORT TA7 ON AAA @OO6S, ARTI2AES OR "RO652TS
IM"ORTE6 OR &RO5@1T INTO T1E "1IAI""INES, AN6 TO RE"EAA RE"5&AI2 A2TS
N5M&ERE6 SI7 15N6RE6 AN6 ONE, EI@1T 15N6RE6 AN6 )O5RTEEN, EI@1T 15N6RE6
STATCON| 46
.
AN6 SE(ENT83ONE, EAE(EN 15N6RE6 AN6 SE(ENT83)I(E. EAE(EN 15N6RE6 AN6
NINET83SE(EN AN6 T1IRTEEN 15N6RE6 AN6 SE(ENT8 )I(E.
The title indicates !nistaDa#l' that it is repealing si4 prior stat!tes. As will #e seen later, all these
laws dealt with the iposition of a special e4cise ta4 on foreign e4change or other for of lev' on
iportation of goods into the co!ntr'.
Section I of Rep!#lic Act No. +;*. reads as follows:
SE2TION +. E4cept as herein otherwise provided, there shall #e levied, collected and paid as
special iport ta4 on all goods, articles or prod!cts iported or #ro!ght into the "hilippines,
irrespective of so!rce, d!ring the period and in accordance with the rates provided for in the
following sched!le:
It wo!ld appear that #' the provision of Section + of this Act, the pertinent provision of the
"etrole! Aaw, for which there appears to #e no proviso to the contrar' has #een odified or
altered.
Section , of Rep!#lic Act No. +;*. declares that the ta4 provided for in its Section I shall not #e
iposed against iportation into the "hilippines of achiner' andQor raw aterials to #e !sed #'
new and necessar' ind!stries as deterined in accordance with R A. No. *F+ and a long list of
other goods, articles, achiner', e>!ipent, accessories and others.
9e shall now e4aine the si4 stat!tes repealed #' R.A. No. +;*., nael':
R.A. No. ,F+ is an Act iposing a special e4cise ta4 of +CM on foreign e4change sold #' the
2entral &anD or its agents. This is Dnown as the E4change Ta4 Aaw?
R.A. No. -+. aended Sections one, two and five and repealed Sections three and fo!r of R.A.
No. ,F+?
R.A. No. -C+ aended Sections one and two of R.A. No. ,F+, as aended earlier #' R.A. No.
-+.?
R.A. No. ++C/ aended f!rther Sections one and two of R.A. No. ,F+, as aended?
R.A. No. ++*C aended f!rtherore R.A. No. ,F+ as aended previo!sl' #' R.A. No. ++C/?
R.A. No. +;C/ aended Sections one and two of R.A. No. ,F+ as aended #' R.A. Nos. ++C/
and ++*C.
As can #e seen fro the foregoing, in one fell swoop, Rep!#lic Act No. +;*. repealed and
revoDed si4 earlier stat!tes which had soething to do with the iposition of special levies andQor
e4eption of certain iportations fro the #!rden of the special iport ta4es or levies. On the
other hand, it is apparent that R.A. No. ;-C, the "etrole! Act, had #een spared fro the pr!ning
Dnife of 2ongress, altho!gh this latter law had granted ore concessions and ta4 e4eption
privileges than an' of the stat!tes that were aended, repealed or revoDed #' R.A. No. +;*.. The
answer !st #e that the 2ongress of the "hilippine saw fit to preserve the privileges granted
!nder the "etrole! Aaw of +*.* in order to Deep the door open to the e4ploitation and
developent of the petrole! reso!rces of the co!ntr' with s!ch incentives as are given !nder
that law.
This ascertained will and intention of the legislat!re finds a parallelis in a case #ro!ght earlier
#efore this 2o!rt.
A fishpond owner was slapped with ta4es as a HerchantH #' the 2ollector of Internal Reven!e.
1e paid !nder protest and filed an action to recover the ta4es paid, claiing that he was an
agric!lt!rist and not a erchant. 9hen this 2o!rt was called !pon to interpret the provisions of the
STATCON| 47
.
Internal Reven!e Aaw on whether fish is an agric!lt!ral prod!ct which falls !nder the e4eption
provisions of said law, it in>!ired into the p!rpose of the legislat!re in esta#lishing the e4eption
for agric!lt!ral prod!cts. 9e held:
The first in>!ir', therefore, !st relate to the p!rpose the legislat!re had in ind in esta#lishing
the e4eption contained in the cla!se now !nder consideration. It sees reasona#le to ass!e
that it was d!e to the #elief on the part of the law3aDing #od' that #' e4epting agric!lt!ral
prod!cts fro this ta4 the faring ind!str' wo!ld #e favored and the developent of the reso!rces
of the co!ntr' enco!raged. .... +;
1aving this in ind, partic!larl' the anner in which e4trinsic aids the histor' of the enactent of
the stat!te and p!rpose of the legislat!re in eplo'ing a cla!se or provision in the law had #een
applied in deterining the tr!e intent of the lawaDing #od', 9e are convinced that R.A. No. ;-C,
The "etrole! Act of +*.*, was intended to enco!rage the e4ploitation, e4ploration and
developent of the petrole! reso!rces of the co!ntr' #' giving it the necessar' incentive in the
for of ta4 e4eptions. This is the raison d etre for the genero!s grant of ta4 e4eptions to those
who wo!ld invest their financial reso!rces towards the achieveent of this national econoic goal.
On the contention of herein petitioner that the e4eptions en0o'ed #' respondent ESSO !nder
R.A. No. ;-C have #een a#rogated #' R.A. No. +;*., 9e hold that repeal #' iplication is not
favored !nless it is anifest that the legislat!re so intended. As laws are pres!ed to #e passed
with deli#eration and with f!ll Dnowledge of all e4isting ones on the s!#0ect, it is logical to concl!de
that in passing a stat!te it was not intended to interfere with or a#rogate an' forer law relating to
the sae atter, !nless the rep!gnanc' #etween the two is not onl' irreconcila#le #!t also clear
and convincing as a res!lt of the lang!age !sed, or !nless the latter act f!ll' e#races the s!#0ect
atter of the earlier. +.
As o#served earlier, 2ongress lined !p for revocation #' Rep!#lic Act No. +;*. si4 stat!tes
dealing with the iposition of special iposts or levies or the granting of e4eptions fro special
iport ta4es. 8et, considering the treendo!s ao!nt of reven!es it was losing !nder the
"etrole! Aaw of +*.*, it failed to incl!de the latter stat!te aong those it chose to #!r' #' the
Special Iport Taw Aaw. The reason for this is ver' clear: The legislat!re wanted to contin!e the
incentives for the contin!ing developent of the petrole! ind!str'.
It is not aiss to ention herein passing that contrar' to the theor' of the herein petitioner, R.A.
No. ;-C had not #een repealed #' R.A. No. <;/< which e4pressl' a#rogated Section , of R.A. No.
+;*. #!t did not repeal an' part of R.A. No. ;-C. Therefore, the e4eption granted #' Rep!#lic
Act No. ;-C still stands.
91ERE)ORE, taDing into consideration the weight given #' this 2o!rt to the findings and
concl!sions of the 2o!rt of Ta4 Appeals on a atter it is well3e>!ipped to handle, which findings
and concl!sions 9e find no reason to overt!rn, the petition of the 2oissioner of 2!stos to
reverse the decision of the 2o!rt of Ta4 Appeals sho!ld #e, as it is here#', denied.
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLLL
G.R. No. 14385. August --, -441
PHILIPPINE LONG 1ISTAN8E TELEPHONE 8O0PAN?, IN8., petitioner,
vs.
STATCON| 48
.
8IT? OF 1A9AO a( A1ELAI1A $. $AR8ELONA, i )'* &apa&it, as t)' 8it, T*'asu*'* o!
1a"ao,respondents.
0EN1O%A, J.>
This is a petition for review on certiorari !nder R!le ./ of the +**C R!les of 2ivil "roced!re of the
resol!tion, + dated J!ne <;, <FFF, of the Regional Trial 2o!rt, &ranch +;, 6avao 2it', affiring the
ta4 assessent of petitioner and the denial of its clai for ta4 ref!nd #' the 2it' Treas!rer of
6avao.
The facts are as follows:
On Jan!ar' +***, petitioner "hilippine Aong 6istance Telephone 2o., Inc. :"A6T= applied for a
Ma'orIs "erit to operate its 6avao Metro E4change. Respondent 2it' of 6avao withheld action
on the application pending pa'ent #' petitioner of the local franchise ta4 in the ao!nt of
";,,-+,*-/.C< for the first to the fo!rth >!arter of +***. < In a letter dated Ma' ;+, +***, ;
petitioner protested the assessent of the local franchise ta4 and re>!ested a ref!nd of the
franchise ta4 paid #' it for the 'ear +**C and the first to the third >!arters of +**-. "etitioner
contended that it was e4ept fro the pa'ent of franchise ta4 #ased on an opinion of the
&!rea! of Aocal @overnent )inance :&A@)=, dated J!ne <, +**-, which reads as follows:
"A6T: Section +< of RA CF-< provides as follows:
HSE2TION +<. The grantee, its s!ccessors or assigns shall #e lia#le to pa' the sae ta4es on
their real estate, #!ildings, and personal propert', e4cl!sive of this franchise, as other persons
or corporations are now or hereafter a' #e re>!ired #' law to pa'. In addition thereto, the
grantee, its s!ccessors or assigns shall pa' a franchise ta4 e>!ivalent to three percent :;M= of
all gross receipts of the telephone or other teleco!nications #!sinesses transacted !nder
this franchise #' the grantee, its s!ccessors or assigns, and the said percentage shall #e in
lie! of all ta4es on this franchise or earnings thereof . . .H
It appears that RA CF-< f!rther aending Act No. ;.;, which granted to "A6T a franchise to
install, operate and aintain a telephone s'ste thro!gho!t the "hilippine Islands was approved
on A!g!st ;, +**+. Section +< of said franchise, liDewise, contains the Hin lie! of all ta4esH proviso.
In this connection, Section <; of RA C*</, >!oted here!nder, which was approved on March +,
+**/, provides for the e>!alit' of treatent in the teleco!nications ind!str':
HSE2TION <;. *-uality of Treatment in the Telecommunications Industry. B An' advantage,
favor, privilege, e4eption, or i!nit' granted !nder e4isting franchises, or a' hereafter #e
granted, shall ipso facto become part of pre&iously .ranted telecommunications franchise and
shall #e accorded iediatel' and !nconditionall' to the grantees of s!ch
franchises: ,ro&ided, howe&er, That the foregoing shall neither appl' to nor affect provisions of
teleco!nications franchises concerning territor' covered #' the franchise, the life span of
the franchise, or the t'pe of service a!thori%ed #' the franchise.H :Italics s!pplied.=
On the #asis of the afore>!oted Section <; of RA C*</, "A6T as a teleco!nications franchise
holder #ecoes a!toaticall' covered #' the ta4 e4eption provisions of RA C*</, which tooD
effect on March +,, +**/.
Accordingl', "A6T shall #e e4ept fro the pa'ent of franchise and #!siness ta4es iposa#le
#' A@5s !nder Sections +;C and +.; :sic=, respectivel', of the A@2, !pon the effectivit' of RA
C*</ on March +,, +**/. 1owever, "A6T shall #e lia#le to pa' the franchise and #!siness ta4es
on its gross receipts reali%ed fro Jan!ar' +, +**< !p to March +/, +**/, d!ring which period
"A6T was not en0o'ing the Host favored cla!seH proviso of RA CF</ :sic=.
.
In a letter dated Septe#er <C, +***, respondent Adelaida &. &arcelona, 2it' Treas!rer of 6avao,
denied the protest and clai for ta4 ref!nd of petitioner,
/
citing the legal opinion of the 2it' Aegal
Officer of 6avao and Art. +F, T+ of Ordinance No. <;F, Series of +**+, as aended #' Ordinance
No. /+*, Series of +**<, which provides:
STATCON| 49
.
Notwithstanding an' e4eption granted #' an' law or other special law, there is here#'
iposed a ta4 on #!sinesses en0o'ing a franchise, at a rate of Sevent'3five percent :C/M= of
one percent :+M= of the gross ann!al receipts for the preceding calendar 'ear #ased on the
incoe or receipts reali%ed within the territorial 0!risdiction of 6avao 2it'.
,
"etitioner received respondent 2it' Treas!rerIs order of denial on Octo#er +, +***. On Nove#er
;, +***, it filed a petition in the Regional Trial 2o!rt of 6avao seeDing a reversal of respondent
2it' Treas!rerIs denial of petitionerIs protest and the ref!nd of the franchise ta4 paid #' it for the
'ear +**- in the ao!nt of "<,/-F,-<*.<;. The petition was filed p!rs!ant to TT+*/ and +*, of
the Aocal @overnent 2ode :R.A. No. C+,F=. No clai for ref!nd of franchise ta4es paid in +**C
was ade as the sae had alread' prescri#ed !nder T+*, of the A@2, which provides that clais
for the ref!nd of ta4es paid !nder it !st #e ade within two :<= 'ears fro the date of pa'ent of
s!ch ta4es.
C
The trial co!rt denied petitionerIs appeal and affired the 2it' Treas!rerIs decision. It r!led that
the A@2 withdrew all ta4 e4eptions previo!sl' en0o'ed #' all persons and a!thori%ed local
governent !nits to ipose a ta4 on #!sinesses en0o'ing a franchise notwithstanding the grant of
ta4 e4eption to the. The trial co!rt liDewise denied petitionerIs clai for e4eption !nder R.A.
No. C*</ for the following reasons: :+= it is clear fro the wording of T+*; of the Aocal
@overnent 2ode that 2ongress did not intend to e4ept an' franchise holder fro the pa'ent
of local franchise and #!siness ta4es? :<= the opinion of the E4ec!tive 6irector of the &!rea! of
Aocal @overnent )inance to the contrar' is not #inding on respondents? and :;= petitioner failed
to present an' proof that @lo#e and Sart were en0o'ing local franchise and #!siness ta4
e4eptions.
1ence, this petition for review #ased on the following gro!nds:
I. T1E AO9ER 2O5RT ERRE6 IN A""A8IN@ SE2TION +;C O) T1E AO2AA
@O(ERNMENT 2O6E, 91I21 AAAO9S A 2IT8 TO IM"OSE A )RAN21ISE TA7, AN6
SE2TION +*; T1EREO), 91I21 "RO(I6ES )OR 9IT16RA9AA O) TA7 E7EM"TION
"RI(IAE@ES.
II. T1E AO9ER 2O5RT ERRE6 IN NOT 1OA6IN@ T1AT 5N6ER "ETITIONERIS
)RAN21ISE, AS IM"AI2ITA8 AMEN6E6 AN6 E7"AN6E6 &8 SE2TION <; O) RE"5&AI2
A2T NO. C*</ :"5&AI2 TEAE2OMM5NI2ATIONS "OAI28 A2T=, TAKIN@ INTO A22O5NT
T1E )RAN21ISES O) @AO&E TEAE2OM, IN2. AN6 SMART 2OMM5NI2ATIONS, IN2.,
91I21 9ERE ENA2TE6 S5&SE$5ENT TO T1E AO2AA @O(ERNMENT 2O6E, NO
)RAN21ISE AN6 &5SINESS TA7ES MA8 &E IM"OSE6 ON "ETITIONER &8
RES"ON6ENT 2IT8.
III. T1E AO9ER 2O5RT ERRE6 IN NOT @I(IN@ 9EI@1T TO T1E R5AIN@ O) T1E
&5REA5 O) AO2AA @O(ERNMENT )INAN2E T1AT "ETITIONER IS E7EM"T )ROM T1E
"A8MENT O) )RAN21ISE AN6 &5SINESS TA7ES, AMON@ OT1ERS, IM"OSA&AE &8
AO2AA @O(ERNMENT 5NITS 5N6ER T1E AO2AA @O(ERNMENT 2O6E.
/irst. The A@2, which tooD effect on Jan!ar' +, +**<, provides:
SE2TION +;C. /ranchise Ta0. B Notwithstanding an' e4eption granted #' an' law or other
special law, the province a' ipose a ta4 on #!sinesses en0o'ing a franchise, at a rate not
e4ceeding fift' percent :/FM= of one percent :+M= of the gross ann!al receipts for the
preceding calendar 'ear #ased on the incoing receipt, or reali%ed, within its territorial
0!risdiction.
In the case of a newl' started #!siness, the ta4 shall not e4ceed one3twentieth :+Q<F= of one
percent :+M= of the capital investent. In the s!cceeding calendar 'ear, regardless of when
the #!siness started to operate, the ta4 shall #e #ased on the gross receipts for the preceding
calendar 'ear, or an' fraction thereof, as provided herein.
-
STATCON| 50
.
SE2TION +*;. 1ithdrawal of Ta0 *0emption ,ri&ile.es. B 5nless otherwise provided in this
2ode, ta4 e4eptions or incentives granted to, or presentl' en0o'ed #' all persons, whether
nat!ral or 0!ridical, incl!ding governent3owned or 3controlled corporations, e4cept local water
districts, cooperatives d!l' registered !nder R.A. ,*;-, non3stocD and non3profit hospitals and
ed!cational instit!tions, are here#' withdrawn !pon the effectivit' of this 2ode.
The trial co!rt held that, !nder these provisions, all e4eptions granted to all persons, whether
nat!ral and 0!ridical, incl!ding those which in the f!t!re ight #e granted, are withdrawn !nless
the law granting the e4eption e4pressl' states that the e4eption also applies to local ta4es. 9e
disagree. Sec. +;C does not state that it covers f!t!re e4eptions. In ,hilippine Airlines, Inc. &.
*du,
*
where a provision of the Ta4 2ode enacted on J!ne <C, +*,- :R.A. /.;+= withdrew the
e4eption en0o'ed #' "AA, it was held that a s!#se>!ent aendent of "AAIs franchise,
e4epting it fro all other ta4es e4cept that iposed #' its franchise, again entitled "AA to
e4eption fro the date of the enactent of s!ch aendent. The Ta4 2ode provision
withdrawing the ta4 e4eption was not constr!ed as prohi#iting f!t!re grants of e4eptions fro
all ta4es.
Indeed, the grant of ta4ing powers to local governent !nits !nder the 2onstit!tion and the A@2
does not affect the power of 2ongress to grant e4eptions to certain persons, p!rs!ant to a
declared national polic'. The legal effect of the constit!tional grant to local governents sipl'
eans that in interpreting stat!tor' provisions on !nicipal ta4ing powers, do!#ts !st #e
resolved in favor of !nicipal corporations.
+F
The >!estion, therefore, is whether, after the withdrawal of its e4eption #' virt!e of T+;C of the
A@2, petitioner has again #ecoe entitled to e4eption fro local franchise ta4. "etitioner
answers in the affirative and points to T<; of R.A. No. C*</, in relation to the franchises of @lo#e
Teleco :@lo#e= and Sart 2o!nications, Inc. :Sart=, which allegedl' grant the latter
e4eption fro local franchise ta4es.
To #egin with, ta4 e4eptions are highl' disfavored. The reason for this was e4plained #' this
2o!rt in Asiatic ,etroleum 'o. &. 2lanes,
++
in which it was held:
. . . E4eptions fro ta4ation are highl' disfavored, so !ch so that the' a' alost #e said to
#e odio!s to the law. 1e who clais an e4eption !st #e a#le to point to soe positive
provision of law creating the right. . . As was said #' the S!pree 2o!rt of Tennessee in
Mephis vs. 5. G ". &anD :*+ Tenn., /.,, //F=, HThe right of ta4ation is inherent in the State. It
is a prerogative essential to the perpet!it' of the governent? and he who clais an e4eption
fro the coon #!rden !st 0!stif' his clai #' the clearest grant of organic or stat!te law.H
Other !tterances e>!all' or ore ephatic coe readil' to hand fro the highest a!thorit'. In
Ohio Aife Ins. and Tr!st 2o. vs. 6e#olt :+, 1oward, .+,=, it was said #' 2hief J!stice Tane',
that the right of ta4ation will not #e held to have #een s!rrendered, H!nless the intention to
s!rrender is anifested #' words too plain to #e istaDen.H In the case of the 6elaware
Railroad Ta4 :+- 9allace, <F,, <<,=, the S!pree 2o!rt of the 5nited States said that the
s!rrender, when claied, !st #e shown #' clear, !na#ig!o!s lang!age, which will adit of
no reasona#le constr!ction consistent with the reservation of the power. If a do!#t arises as to
the intent of the legislat!re, that do!#t !st #e solved in favor of the State. In Erie Railwa'
2opan' vs. 2oonwealth of "enns'lvania :<+ 9allace, .*<, .**=, Mr. J!stice 1!nt,
speaDing of e4eptions, o#served that a State cannot strip itself of the ost essential power of
ta4ation #' do!#tf!l words. HIt cannot, #' a#ig!o!s lang!age, #e deprived of this highest
attri#!te of sovereignt'.H In Tennessee vs. 9hitworth :++C 5.S., +<*, +;,=, it was said: HIn all
cases of this Dind the >!estion is as to the intent of the legislat!re, the pres!ption alwa's
#eing against an' s!rrender of the ta4ing power.H In )arrington vs. Tennessee and 2o!nt' of
Shel#' :*/ 5.S., ,C*, ,-,=, Mr. J!stice Swa'ne said: H. . . 9hen e4eption is claied, it !st
#e shown ind!#ita#l' to e4ist. At the o!tset, ever' pres!ption is against it. A well3fo!nded
do!#t is fatal to the clai. It is onl' when the ters of the concession are too e4plicit to adit
fairl' of an' other constr!ction that the proposition can #e s!pported.H
STATCON| 51
.
The ta4 e4eption !st #e e4pressed in the stat!te in clear lang!age that leaves no do!#t of the
intention of the legislat!re to grant s!ch e4eption. And, even if it is granted, the e4eption !st
#e interpreted in strictissimi (urisagainst the ta4pa'er and li#erall' in favor of the ta4ing a!thorit'.
+<
In the present case, petitioner 0!stifies its clai of ta4 e4eption #' strained inferences. )irst, it
cites R.A. No. C*</, otherwise Dnown as the "!#lic Teleco!nications "olic' Act of the
"hilippines, T<; of which reads:
SE2TION <;. *-uality of Treatment in the Telecommunications Industry. B An' advantage,
favor, privilege, e4eption, or i!nit' granted !nder e4isting franchises, or a' hereafter #e
granted, shall ipso facto #ecoe part of previo!sl' granted teleco!nications franchises and
shall #e accorded iediatel' and !nconditionall' to the grantees of s!ch
franchises: ,ro&ided, howe&er, That the foregoing shall neither appl' to nor affect provisions of
teleco!nications franchises concerning territor' covered #' the franchise, the life span of
the franchise, or the t'pe of service a!thori%ed #' the franchise.
"etitioner then clais that Sart and @lo#e en0o' e4eption fro the pa'ent of the franchise
ta4 #' virt!e of their legislative franchises per opinion of the &!rea! of Aocal @overnent )inance
of the 6epartent of )inance. )inall', it arg!es that #eca!se Sart and @lo#e are e4ept fro
the franchise ta4, it follows that it !st liDewise #e e4ept fro the ta4 #eing collected #' the 2it'
of 6avao #eca!se the grant of ta4 e4eption to Sart and @lo#e ipso facto e4tended the sae
e4eption to it.
The acceptance of petitionerIs theor' wo!ld res!lt in a#s!rd conse>!ences. To ill!strate: In its
franchise, @lo#e is re>!ired to pa' a franchise ta4 of onl' one and one3half percent! :+UM= of
all gross receipts fro its transactions while Sart is re>!ired to pa' a ta4 of three percent :;M=
on all gross receipts fro #!siness transacted. "etitionerIs theor' wo!ld re>!ire that, to level the
pla'ing field, an' Hadvantage, favor, privilege, e4eption, or i!nit'H granted to @lo#e !st #e
e4tended to all teleco!nications copanies, incl!ding Sart. If, later, 2ongress again grants a
franchise to another teleco!nications copan' iposing, sa', one percent :+M= franchise ta4,
then all other teleco!nications franchises will have to #e ad0!sted to Hlevel the pla'ing fieldH so
to speaD. This co!ld not have #een the intent of 2ongress in enacting T<; of Rep. Act C*</.
"etitionerIs theor' will leave the @overnent with the #!rden of having to Deep tracD of all granted
teleco!nications franchises, lest soe copanies #e treated !ne>!all'. It is different if
2ongress enacts a law specificall' granting !nifor advantages, favor, privilege, e4eption, or
i!nit' to all teleco!nications entities.
The fact is that the ter He4eptionH in T<; is too general. A cardinal r!le in stat!tor' constr!ction
is that legislative intent !st #e ascertained fro a consideration of the stat!te as a whole and not
erel' of a partic!lar provision. )or, taDen in the a#stract, a word or phrase ight easil' conve' a
eaning which is different fro the one act!all' intended. A general provision a' act!all' have a
liited application if read together with other provisions.
+;
1ence, a consideration of the law itself
in its entiret' and the proceedings of #oth 1o!ses of 2ongress is in order.
+.
Art. I of Rep. Act No. C*</ contains the general provisions, stating that the Act shall #e Dnown as
the "!#lic Teleco!nications "olic' Act of the "hilippines, and a definition of ters.
+/
Art. II
provides for its policies and o#0ectives, which is to foster the iproveent and e4pansion of
teleco!nications services in the co!ntr' thro!gh: :+= the constr!ction of teleco!nications
infrastr!ct!re and interconnection facilities, having in ind the efficient !se of the radio fre>!enc'
spectr! and e4tension of #asic services to areas not 'et served? :<= fair, 0!st, and reasona#le
rates and tariff charges? :;= sta#le, transparent, and fair adinistrative processes? :.= reliance on
private enterprise for direct provision of teleco!nications services? :/= dispersal of ownership of
teleco!nications entities in copliance with the constit!tional andate to deocrati%e the
ownership of p!#lic !tilities? :,= enco!rageent of the esta#lishent of interconnection with other
co!ntries to provide access to international co!nications highwa's and developent of a
copetitive e4port3oriented doestic teleco!nications an!fact!ring ind!str'? and :C=
STATCON| 52
.
developent of h!an reso!rces sDills and capa#ilities to s!stain the growth and developent of
teleco!nications.
+,
Art. III provides for its adinistration. The operational and adinistrative f!nctions are delegated
to the National Teleco!nications 2oission :NT2=, while polic'3aDing, research, and
negotiations in international teleco!nications atters are left with the 6epartent of
Transportation and 2o!nications.
+C
Art. I( classifies the categories of teleco!nications entities as: Aocal E4change Operator, Inter3
E4change 2arrier, International 2arrier, (al!e3Added Service "rovider, Mo#ile Radio Services,
and Radio "aging Services.
+-
Art. ( provides for the !se of other services and facilities, s!ch as
c!stoer preises e>!ipent, which a' #e !sed within the preises of teleco!nications
s!#scri#ers s!#0ect onl' to the re>!ireent that it is t'pe3approved #' the NT2, and radio
fre>!enc' spectr!, the assignent of which shall #e s!#0ect to periodic review.
+*
Art. (I, entitled )ranchise, Rates and Reven!e 6eterination, provides for the re>!ireent to
o#tain a franchise fro 2ongress and a 2ertificate of "!#lic 2onvenience and Necessit' fro the
NT2 #efore a teleco!nications entit' can #egin its operations. It also provides for the NT2Is
resid!al power to reg!late the rates or tariffs when r!ino!s copetition res!lts or when a
onopol' or a cartel or co#ination in restraint of free copetition e4ists and the rates or tariffs
are distorted or !na#le to f!nction freel' and the p!#lic is adversel' affected. There is also a
provision relating to reven!e sharing arrangeents #etween inter3connecting carriers.
<F
Art. (II provides for the rights of teleco!nications !sers.
<+
Art. (III, entitled Teleco!nications 6evelopent, where T<; is fo!nd, provides for p!#lic
ownership of teleco!nications entities, privati%ation of e4isting facilities, and the e>!alit' of
treatent provision.
<<
Art. I7 contains the )inal "rovisions.
<;
R.A. No. C*</ is th!s a legislative enactent designed to set the national polic' on
teleco!nications and provide the str!ct!res to ipleent it to Deep !p with the technological
advances in the ind!str' and the needs of the p!#lic. The thr!st of the law is to proote grad!all'
the dereg!lation of the entr', pricing, and operations of all p!#lic teleco!nications entities and
th!s proote a level pla'ing field in the teleco!nications ind!str'.
<.
There is nothing in the
lang!age of T<; nor in the proceedings of #oth the 1o!se of Representatives and the Senate in
enacting R.A. No. C*</ which shows that it conteplates the grant of ta4 e4eptions to all
teleco!nications entities, incl!ding those whose e4eptions had #een withdrawn #' the A@2.
9hat this 2o!rt said in Asiatic ,etroleum 'o. &. 2lanes
</
applies mutatis mutandis to this case:
H9hen e4eption is claied, it !st #e shown ind!#ita#l' to e4ist. At the o!tset, ever'
pres!ption is against it. A well3fo!nded do!#t is fatal to the clai. It is onl' when the ters of the
concession are too e4plicit to adit fairl' of an' other constr!ction that the proposition can #e
s!pported.H In this case, the word He4eptionH in T<; of R.A. No. C*</ co!ld conteplate
e4eption fro certain reg!lator' or reporting re>!ireents, #earing in ind the polic' of the law.
It is noteworth' that, in holding Sart and @lo#e e4ept fro local ta4es, the &A@) did not #ase
its opinion on T<; #!t on the fact that the franchises granted to the after the effectivit' of the
A@2 e4epted the fro the pa'ent of local franchise and #!siness ta4es.
Second. In the case of petitioner, the &A@) opined that T<; of R.A. No. C*</ aended the
franchise of petitioner and in effect restored its e4eptions fro local ta4es. "etitioner contends
that co!rts sho!ld not set aside concl!sions reached #' the &A@) #eca!se its f!nction is precisel'
the st!d' of local ta4 pro#les and it has necessaril' developed an e4pertise on the s!#0ect.
To #e s!re, the &A@) is not an adinistrative agenc' whose findings on >!estions of fact are
given weight and deference in the co!rts. The a!thorities cited #' petitioner pertain to the 2o!rt of
Ta4 Appeals,
<,
a highl' speciali%ed co!rt which perfors 0!dicial f!nctions as it was created for the
review of ta4 cases.
<C
In contrast, the &A@) was created erel' to provide cons!ltative services
STATCON| 53
.
and technical assistance to local governents and the general p!#lic on local ta4ation, real
propert' assessent, and other related atters, aong others.
<-
The >!estion raised #' petitioner
is a legal >!estion, to wit, the interpretation of T<; of R.A. No. C*</. There is, therefore, no #asis
for claiing e4pertise for the &A@) that adinistrative agencies are said to possess in their
respective fields.
"etitioner liDewise arg!es that the &A@) en0o's the pres!ption of reg!larit' in the perforance
of its d!t'. It does en0o' this pres!ption, #!t this has nothing to do with the >!estion in this case.
This case does not concern the reg!larit' of perforance of the &A@) in the e4ercise of its d!ties,
#!t the correctness of its interpretation of a provision of law.
In s!, it does not appear that, in approving T<; of R.A. No. C*</, 2ongress intended it to
operate as a #lanDet ta4 e4eption to all teleco!nications entities. Appl'ing the r!le of strict
constr!ction of laws granting ta4 e4eptions and the r!le that do!#ts sho!ld #e resolved in favor
of !nicipal corporations in interpreting stat!tor' provisions on !nicipal ta4ing powers, we hold
that T<; of R.A. No. C*</ cannot #e considered as having aended petitionerIs franchise so as to
entitle it to e4eption fro the iposition of local franchise ta4es. 2onse>!entl', we hold that
petitioner is lia#le to pa' local franchise ta4es in the ao!nt of ";,,-+,*-/.C< for the period
covering the first to the fo!rth >!arter of +*** and that it is not entitled to a ref!nd of ta4es paid #'
it for the period covering the first to the third >!arter of +**-.
91ERE)ORE, the petition for review on certiorari is 6ENIE6 and the decision of the Regional
Trial 2o!rt, &ranch +;, 6avao 2it' is A))IRME6.
LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
LLLLLLLLLLLLLLLLLLLL
BG.R. No. 143/95. 1'&'6+'* 11, -443C
=#1GE TO0AS 8. LE?NES, p'titio'*, "s. THE 8O00ISSION ON A#1IT ;8OA<, HON.
GREGORIA S. ONG, 1IRE8TOR, 8O00ISSION ON A#1IT a( HON. SAL9A8ION 1ALISA?,
PRO9IN8IAL A#1ITOR, *'spo('ts.
6 E 2 I S I O N
2ORONA, J.:
&efore !s is a petition for certiorari !nder R!le ,/ in relation to Section <, R!le ,. of the R!les of
2o!rt, seeDing to reverse and set aside the decisionO+P dated Septe#er +., +*** of the
2oission on A!dit :2OA=, affiring the resol!tion of 2OA Regional 6irector @regoria S. Ong
dated March <*, +**. which in t!rn affired the opinion dated Octo#er +*, +**; of the "rovincial
A!ditor of Oriental Mindoro, Salvacion M. 6alisa'. All three denied the grant of "+,,FF onthl'
allowance to petitioner J!dge Toas 2. Ae'nes #' the M!nicipalit' of Na!0an, Oriental Mindoro.
)A2T5AA ANTE2E6ENTS
"etitioner J!dge Toas 2. Ae'nes who, at present, is the presiding 0!dge of the Regional Trial
2o!rt of 2alapan 2it', Oriental Mindoro, &ranch .F was forerl' assigned to the M!nicipalit' of
Na!0an, Oriental Mindoro as the sole presiding 0!dge of the M!nicipal Trial 2o!rt thereof. As s!ch,
his salar' and representation and transportation allowance :RATA= were drawn fro the #!dget of
the S!pree 2o!rt. In addition, petitioner received a onthl' allowance of "*.. fro the local
f!ndsO<P of the M!nicipalit' of Na!0an starting +*-..O;P
On March +/, +**;, the Sangg!niang &a'an of Na!0an, thro!gh Resol!tion No. F/C, so!ght the
opinion of the "rovincial A!ditor and the "rovincial &!dget Officer regarding an' #!dgetar'
liitation on the grant of a onthl' allowance #' the !nicipalit' to petitioner 0!dge. On Ma' C,
+**;, the Sangg!niang &a'an !nanio!sl' approved Resol!tion No. +F+ increasing petitioner
STATCON| 54
.
0!dgeVs onthl' allowance fro "*.. to "+,,FF :an increase of ",/,= starting Ma' +**;.O.P &'
virt!e of said resol!tion, the !nicipal governent :the M!nicipal Ma'or and the Sangg!niang
&a'an= approved a s!ppleental #!dget which was liDewise approved #' the Sangg!niang
"anlalawigan and the Office of "rovincial &!dget and Manageent of Oriental Mindoro. In +**.,
the M!nicipal @overnent of Na!0an again provided for petitioner 0!dgeVs "+,,FF onthl'
allowance in its ann!al #!dget which was again approved #' the Sangg!niang "anlalawigan and
the Office of "rovincial &!dget and Manageent of Oriental Mindoro.
On )e#r!ar' +C, +**., "rovincial A!ditor Salvacion M. 6alisa' sent a letter to the M!nicipal Ma'or
and the Sangg!niang &a'an of Na!0an directing the to stop the pa'ent of the "+,,FF
onthl' allowance or RATA to petitioner 0!dge and to re>!ire the iediate ref!nd of the ao!nts
previo!sl' paid to the latter. She opined that the M!nicipalit' of Na!0an co!ld not grant RATA to
petitioner 0!dge in addition to the RATA the latter was alread' receiving fro the S!pree 2o!rt.
1er directive was #ased on the following:
Section ;,, RA No. C,./, @eneral Appropriations Act of +**;
Representation and Transportation Allowances. The following officials and those of e>!ivalent ranD
as a' #e deterined #' the 6epartent of &!dget and Manageent :6&M= while in the act!al
perforance of their respective f!nctions are here#' granted onthl' co!ta#le representation
and transportation allowances pa'a#le fro the prograed appropriations provided for their
respective offices, not e4ceeding the rates indicated #elow . . .
National 2opensation 2irc!lar No. ,C dated Jan!ar' +, +**<, of the 6epartent of &!dget and
Manageent
S!#0ect: Representation and Transportation Allowances of National @overnent Officials and
Eplo'ees
.. )!nding So!rce: In all cases, co!ta#le and rei#!rsa#le RATA shall #e paid fro the
ao!nt appropriated for the p!rpose and other personal services savings of the agenc' or pro0ect
fro where the officials and eplo'ees covered !nder this 2irc!lar draw their salaries. No one
shall #e allowed to collect RATA fro ore than one so!rce.O,P :ephasis s!pplied=
"etitioner 0!dge appealed to 2OA Regional 6irector @regoria S. Ong who, however, !pheld the
opinion of "rovincial A!ditor 6alisa' and who added that Resol!tion No. +F+, Series of +**; of the
Sangg!niang &a'an of Na!0an failed to copl' with Section ; of Aocal &!dget 2irc!lar No. /;
dated Septe#er +, +**; o!tlining the conditions for the grant of allowances to 0!dges and other
national officials or eplo'ees #' the local governent !nits :A@5s=. Section ; of the said #!dget
circ!lar provides that:
Sec. ; Allowances. W A@5s a' grant allowancesQadditional copensation to the national
governent officialsQeplo'ees assigned to their localit' at rates a!thori%ed #' law, r!les and
reg!lations and s!#0ect to the following preconditions:
a. That the ann!al incoe or finances of the !nicipalit', cit' or province as certified #' the
Acco!ntant concerned will allow the grant of the allowancesQadditional copensation witho!t
e4ceeding the general liitations for personal services !nder Section ;</ of RA C+,F?
#. That the #!dgetar' re>!ireents !nder Section ;<. of RA C+,F incl!ding the f!ll
re>!ireent of RA ,C/- have #een satisfied and provided f!ll' in the #!dget as certified #' the
&!dget Officer and 2OA representative in the A@5 concerned?
STATCON| 55
.
c. That the A@5 has f!ll' ipleented the devol!tion of personnelQf!nctions in accordance
with the provisions of RA C+,F?
d. That the A@5 has alread' created andator' positions prescri#ed in RA C+,F? and
e. That siilar allowancesQadditional copensation are not granted #' the national
governent to the officialsQeplo'ees assigned to the A@5.OCP
"etitioner 0!dge appealed the !nfavora#le resol!tion of the Regional 6irector to the 2oission
on A!dit. In the eantie, a disallowance of the pa'ent of the "+,,FF onthl' allowance to
petitioner was iss!ed. Th!s he received his "+,,FF onthl' allowance fro the M!nicipalit' of
Na!0an onl' for the period Ma' +**; to Jan!ar' +**..
On Septe#er +., +***, the 2OA iss!ed its decision affiring the resol!tion of Regional 6irector
@regoria S. Ong:
The ain iss!e . . . is whether or not the M!nicipalit' of Na!0an, Oriental Mindoro can validl'
provide RATA to its M!nicipal J!dge, in addition to that provided #' the S!pree 2o!rt.
@enerall', the grant of :RATA= OsicP to >!alified national governent officials and eplo'ees
p!rs!ant to Section ;, of R.A. C,./ O@eneral Appropriations Act of +**;P and N22 No. ,C dated
F+ Jan!ar' +**< is s!#0ect to the following conditions to wit:
+. "a'a#le fro the prograed Qappropriated ao!nt and others fro personal services
savings of the respective offices where the officials or eplo'ees draw their salaries?
<. Not e4ceeding the rates prescri#ed #' the Ann!al @eneral Appropriations Act?
;. Officials Qeplo'ees on detail with other offices or assigned to serve other offices or
agencies shall #e paid fro their parent agencies?
.. No one shall #e allowed to collect RATA fro ore than one so!rce.
On the other hand, the !nicipal governent a' provide additional allowances and other
#enefits to 0!dges and other national governent officials or eplo'ees assigned or stationed in
the !nicipalit', provided, that the finances of the !nicipalit' allow the grant thereof p!rs!ant to
Section ..C, "ar. + :4i=, R.A. C+,F, and provided f!rther, that siilar allowanceQadditional
copensation are not granted #' the national governent to the officialQeplo'ee assigned to the
local governent !nit as provided !nder Section ;:e= of Aocal &!dget 2irc!lar No. /;, dated F+
Septe#er +**;.
The conflicting provisions of Section ..C, "ar. :+= :4i= of the Aocal @overnent 2ode of +**+ and
Section ;, of the @eneral Appropriations Act of +**; ORA C,./P have #een haroni%ed #' the
Aocal &!dget 2irc!lar No. /; dated F+ Septe#er +**;, iss!ed #' the 6epartent of &!dget and
Manageent p!rs!ant to its powers !nder Section </ and Section ;<C of the Aocal @overnent
2ode. The said circ!lar !st #e adhered to #' the local governent !nits partic!larl' Section ;
thereof which provides the ipleenting g!idelines of Section ..C, "ar. :+= :4i= of the Aocal
@overnent 2ode of +**+ in the grant of allowances to national governent officialsQeplo'ees
assigned or stationed in their respective local governent !nits.
2onse>!entl', the s!#0ect S& Resol!tion No. +F+ dated ++ Ma' +**; of the Sangg!niang &a'an
of Na!0an, Oriental Mindoro, having failed to copl' with the inherent precondition as defined in
Section ; :e=. . . is n!ll and void. )!rtherore, the 1onora#le J!dge Toas 2. Ae'nes, #eing a
national governent official is prohi#ited to receive additional RATA fro the local governent
STATCON| 56
.
f!nd p!rs!ant to Section ;, of the @eneral Appropriations Act :R.A. C,./ for +**;= and National
2opensation 2irc!lar No. ,C dated + Jan!ar' +**<.O-P :ephasis o!rs=
ASSI@NMENTS O) ERROR
"etitioner 0!dge filed a otion for reconsideration of the a#ove decision #!t it was denied #' the
2oission in a resol!tion dated Ma' ;F, <FFF. Aggrieved, petitioner filed the instant petition,
raising the following assignents of error for o!r consideration:
I. 91ET1ER OR NOT RESOA5TION NO. +O+, SERIES O) +**; O) NA5JAN, ORIENTAA
MIN6ORO, 91I21 @RANTE6 A66ITIONAA AAAO9AN2E TO T1E M5NI2I"AA TRIAA J56@E
O) NA5JAN, ORIENTAA MIN6ORO AN6 IN2REASIN@ 1IS 25RRENT RE"RESENTATION
AN6 TRA(EAAIN@ AAAO9AN2E :RATA= TO AN AMO5NT E$5I(AAENT TO T1AT RE2EI(E6
MONT1A8 &8 SAN@@5NIAN@ MEM&ERS IN "ESOS: ONE T1O5SAN6 SI7 15N6RE6
:"+,,FF.FF= E))E2TI(E +**;, IS (AAI6.
II. 91ET1ER OR NOT T1E "O9ER O) M5NI2I"AA @O(ERNMENTS TO @RANT
A66ITIONAA AAAO9AN2ES AN6 OT1ER &ENE)ITS TO NATIONAA @O(ERNMENT
EM"AO8EES STATIONE6 IN T1EIR M5NI2I"AAIT8 IS (ER8 E7"AI2IT AN6 5NE$5I(O2AA
5N6ER T1E AO2AA @O(ERNMENT 2O6E O) +**+ "ARTI25AARA8 SE2TION ..C IN
REAATION TO SE2TIONS +C AN6 << T1EREO).
III. 91ET1ER OR NOT T1E 6E"ARTMENT O) &56@ET AN6 MANA@EMENT :6&M= 2AN, &8
T1E ISS5AN2E O) &56@ET 2IR25AARS, RESTRI2T A M5NI2I"AA @O(ERNMENT )ROM
E7ER2ISIN@ ITS @I(EN AE@ISAATI(E "O9ERS O) "RO(I6IN@ A66ITIONAA AAAO9AN2ES
AN6 OT1ER &ENE)ITS TO NATIONAA EM"AO8EES STATIONE6 OR ASSI@NE6 TO T1EIR
M5NI2I"AAIT8 )OR AS AON@ AS T1EIR )INAN2ES SO AAAO9.
I(. 91ET1ER OR NOT T1E AO2AA @O(ERNMENT 2O6E O) +**+ "ARTI25AARA8
SE2TION ..C :a= :+= :4i= 9AS E7"RESSA8 OR IM"AIE6A8 RE"EAAE6 OR MO6I)IE6 &8
RE"5&AI2 A2T C,./ AN6 T1E @ENERAA A""RO"RIATIONS A2T O) +**;.
(. 91ET1ER OR NOT "ETITIONER 9AS ENTITAE6 TO RE2EI(E T1E A66ITIONAA
AAAO9AN2ES @RANTE6 TO 1IM &8 T1E M5NI2I"AAIT8 O) NA5JAN, ORIENTAA MIN6ORO
&8 (IRT5E O) ITS RESOA5TION NO. +F+, SERIES O) +**;.
"OSITION O) 2OA
Respondent 2oission on A!dit opposes the grant #' the M!nicipalit' of Na!0an of the "+,,FF
onthl' allowance to petitioner J!dge Ae'nes for the reason that the !nicipalit' co!ld not grant
RATA to 0!dges in addition to the RATA alread' received fro the S!pree 2o!rt.O*P Respondent
#ases its contention on the following:
+. National 2opensation 2irc!lar No. ,C :hereafter N22 No. ,C= dated Jan!ar' +, +**< of the
6epartent of &!dget and Manageent :6&M= which provides that :a= the RATA of national
officials and eplo'ees shall #e pa'a#le fro the prograed appropriations or personal
services savings of the agenc' where s!ch officials or eplo'ees draw their salar' and :#= no one
shall #e allowed to collect RATA fro ore than one so!rce?
<. the @eneral Appropriations Act of +**; :RA C,./= which provided that the RATA of national
officials shall #e pa'a#le fro the prograed appropriations of their respective offices and
;. Aocal &!dget 2irc!lar No. /; :hereafter A&2 No. /;= dated Septe#er +, +**; of the 6&M
which prohi#its local governent !nits fro granting allowances to national governent officials or
STATCON| 57
.
eplo'ees stationed in their localities when s!ch allowances are also granted #' the national
governent or are siilar to the allowances granted #' the national governent to s!ch officials
or eplo'ees.O+FP
"OSITION O) "ETITIONER
"etitioner 0!dge, on the other hand, asserts that the !nicipalit' is e4pressl' and !ne>!ivocall'
epowered #' RA C+,F :the Aocal @overnent 2ode of +**+= to enact appropriation ordinances
granting allowances and other #enefits to 0!dges stationed in its territor'. Section ..C:a=:+=:4i= of
the Aocal @overnent 2ode of +**+ iposes onl' one condition, that is, Xwhen the finances of the
!nicipal governent allow.Y The 2ode does not ipose an' other restrictions in the e4ercise of
s!ch power #' the !nicipalit'. "etitioner also asserts that the 6&M cannot aend or odif' a
s!#stantive law liDe the Aocal @overnent 2ode of +**+ thro!gh ere #!dget circ!lars. "etitioner
ephasi%es that #!dget circ!lars !st confor to, not odif' or aend, the provisions of the law
it seeDs to ipleent.O++P
1ISTOR8 O) @RANT O) AAAO9AN2ES TO J56@ES
The power of local governent !nits :A@5s= to grant allowances to 0!dges stationed in their
respective territories was originall' provided #' Aetter of Instr!ction No. +.+- dated J!l' +-, +*-.
:hereafter AOI No. +.+-=:
91EREAS, the State is cogni%ant of the need to aintain the independence of the J!diciar'?
91EREAS, the #!dgetar' allotent of the J!diciar' constit!tes onl' a sall percentage of the
national #!dget?
91EREAS, present econoic conditions adversel' affected the livelihood of the e#ers of the
J!diciar'?
91EREAS, soe local governent !nits are read', willing and a#le to pa' additional allowances
to J!dges of vario!s co!rts within their respective territorial 0!risdiction?
NO9, T1ERE)ORE, I, )ER6INAN6 E. MAR2OS, "resident of the Rep!#lic of the "hilippines, do
here#' direct:
+. Section ; of Aetter of Ipleentation No. *, is here#' aended to read as follows:
X;. The allowances provided in this letter shall #e #orne e4cl!sivel' #' the National
@overnent. 1owever, provincial, cit' and !nicipal governents a' pa' additional allowances
to the e#ers and personnel of the J!diciar' assigned in their respective areas o!t of availa#le
local f!nds #!t not to e4ceed "+,/FF.FF? "rovided, that in Metropolitan Manila, the cit' and
!nicipal governents therein a' pa' additional allowances not e4ceeding ";,FFF.FF.
:ephasis o!rs=YO+<P
On J!ne </, +**+, the 6&M iss!ed 2irc!lar No. *+3C o!tlining the g!idelines for the contin!ed
receipt of allowances #' 0!dges fro A@5s:
2onsistent with the constit!tional provision on the fiscal a!tono' of the 0!diciar' and the polic' of
the National @overnent of allowing greater a!tono' to local governent !nits, 0!dges of the
J!diciar' are here#' allowed to contin!e to receive allowances at the sae rates which the' have
#een receiving fro the Aocal @overnent 5nits as of J!ne ;F, +*-*, s!#0ect to the following
g!idelines:
+. That the contin!ance of pa'ent of s!#0ect allowance to the recipient 0!dge shall #e entirel'
vol!ntar' and non3cop!lsor' on the part of the Aocal @overnent 5nits?
STATCON| 58
.
<. That pa'ent of the a#ove shall alwa's #e s!#0ect to the availa#ilit' of local f!nds?
;. That it shall #e ade onl' in copliance with the polic' of non3diin!tion of copensation
received #' the recipient 0!dge #efore the ipleentation of the salar' standardi%ation?
.. That the s!#0ect allowance shall #e given onl' to 0!dges who were receiving the sae as of
J!ne ;F, +*-* and shall #e co3terino!s with the inc!#ent 0!dges? and
/. That the s!#0ect allowance shall a!toaticall' terinate !pon transfer of a 0!dge fro one
local governent !nit to another local governent !nit. :ephasis o!rs=
On Octo#er +F, +**+, 2ongress enacted RA C+,F, otherwise Dnown as the Aocal @overnent
2ode of +**+.O+;P The power of the A@5s to grant allowances and other #enefits to 0!dges and
other national officials stationed in their respective territories was e4pressl' provided in Sections
..C:a=:+=:4i=, ./-:a=:+=:4i= and .,-:a=:+=:4i= of the 2ode.
On March +/, +**., the 6&M iss!ed Aocal &!dget 2irc!lar No. // :hereafter A&2 No. //= setting
o!t the a4i! ao!nt of allowances that A@5s a' grant to 0!dges. )or provinces and cities,
the ao!nt sho!ld not e4ceed "+,FFF and for !nicipalities, "CFF.
On 6ece#er ;, <FF<, we str!cD down the a#ove circ!lar in 6adole, et al. vs. 2OA.O+.P 9e r!led
there that the Aocal @overnent 2ode of +**+ clearl' provided that A@5s co!ld grant allowances
to 0!dges, s!#0ect onl' to the condition that the finances of the A@5s allowed it. 9e held that
Xsetting a !nifor ao!nt for the grant of allowances :was= an inappropriate wa' of enforcing said
criterion.Y Accordingl', we declared that the 6&M e4ceeded its power of s!pervision over A@5s #'
iposing a prohi#ition that did not 0i#e with the Aocal @overnent 2ode of +**+.O+/P
ESTA&AIS1E6 "RIN2I"AES IN(OA(E6
)ro the foregoing histor' of the power of A@5s to grant allowances to 0!dges, the following
principles sho!ld #e noted:
+. the power of A@5s to grant allowances to 0!dges has long #een recogni%ed :since +*-. #'
virt!e of AOI No. +.+-= and, at present, it is e4pressl' and !ne>!ivocall' provided in Sections ..C,
./- and .,- of the Aocal @overnent 2ode of +**+?
<. the iss!ance of 6&M 2irc!lar No. *+3C dated J!ne </, +**+ and A&2 No. // dated March
+/, +**. indicates that the national governent recogni%es the power of A@5s to grant s!ch
allowances to 0!dges?
;. in 2irc!lar No. *+3C, the national governent erel' provides the g!idelines for the
contin!ed receipt of allowances #' 0!dges fro A@5s while in A&2 No. //, the national
governent erel' tries to liit the ao!nt of allowances A@5s a' grant to 0!dges and
.. in the recent case of 6adole, et al. vs. 2OA, the 2o!rt !pheld the constit!tionall' enshrined
a!tono' of A@5s to grant allowances to 0!dges in an' ao!nt deeed appropriate, depending
on availa#ilit' of f!nds, in accordance with the Aocal @overnent 2ode of +**+.
O5R R5AIN@
9e r!le in favor of petitioner 0!dge. Respondent 2OA erred in opposing the grant of the "+,,FF
onthl' allowance #' the M!nicipalit' of Na!0an to petitioner J!dge Ae'nes.
6IS25SSION O) O5R R5AIN@
Section ..C:a=:+=:4i= of RA C+,F, the Aocal @overnent 2ode of +**+, provides:
STATCON| 59
.
:a= The sangg!niang #a'an, as the legislative #od' of the !nicipalit', shall enact ordinances,
approve resol!tions and appropriate f!nds for the general welfare of the !nicipalit' and its
inha#itants . . ., and shall:
:+= Approve ordinances and pass resol!tions necessar' for an efficient and effective
!nicipal governent, and in this connection shall:
:4i= 9hen the finances of the !nicipal governent allow, provide for additional allowances and
other #enefits to 0!dges, prosec!tors, p!#lic eleentar' and high school teachers, and other
national governent officials stationed in or assigned to the !nicipalit'? :ephasis o!rs=
Respondent 2OA, however, contends that the a#ove section has #een repealed, odified or
aended #' N22 No. ,C dated Jan!ar' +, +**<, RA C,./ :the @eneral Appropriations Act of
+**;= and A&2 No. /; dated Septe#er +, +**;.O+,P
It is eleentar' in stat!tor' constr!ction that an adinistrative circ!lar cannot s!persede,
a#rogate, odif' or n!llif' a stat!te. A stat!te is s!perior to an adinistrative circ!lar, th!s the
latter cannot repeal or aend it.O+CP In the present case, N22 No. ,C, #eing a ere adinistrative
circ!lar, cannot repeal a s!#stantive law liDe RA C+,F.
It is also an eleentar' principle in stat!tor' constr!ction that repeal of stat!tes #' iplication is
not favored, !nless it is anifest that the legislat!re so intended. The legislat!re is ass!ed to
Dnow the e4isting laws on the s!#0ect and cannot #e pres!ed to have enacted inconsistent or
conflicting stat!tes.O+-P Respondent 2OA alleges that Section ;, of RA C,./ :the @AA of +**;=
repealed Section ..C:a=:l=:4i= of RA C+,F :the A@2 of +**+=. A review of the two laws, however,
shows that this was not so. Section ;, of RA C,./ erel' provided for the different rates of RATA
pa'a#le to national governent officials or eplo'ees, depending on their position, and stated that
these ao!nts were pa'a#le fro the prograed appropriations of the parent agencies to which
the concerned national officials or eplo'ees #elonged. )!rtherore, there was no other provision
in RA C,./ fro which a repeal of Section ..C:a= :l=:4i= of RA C+,F co!ld #e iplied. In the
a#sence, therefore, of an' clear repeal of Section ..C:a=:l=:4i= of RA C+,F, we cannot pres!e
s!ch intention on the part of the legislat!re.
Moreover, the pres!ption against iplied repeal #ecoes stronger when, as in this case, one
law is special and the other is general.O+*P The principle is e4pressed in the a4i generalia
speciali#!s non derogant, a general law does not n!llif' a specific or special law. The reason for
this is that the legislat!re, in passing a law of special character, considers and aDes special
provisions for the partic!lar circ!stances dealt with #' the special law. This #eing so, the
legislat!re, #' adopting a general law containing provisions rep!gnant to those of the special law
and witho!t aDing an' ention of its intention to aend or odif' s!ch special law, cannot #e
deeed to have intended an aendent, repeal or odification of the latter.O<FP
In this case, RA C+,F :the A@2 of +**+= is a special lawO<+P which e4cl!sivel' deals with local
governent !nits :A@5s=, o!tlining their powers and f!nctions in consonance with the
constit!tionall' andated polic' of local a!tono'. RA C,./ :the @AA of +**;=, on the other
hand, was a general lawO<<P which o!tlined the share in the national f!nd of all #ranches of the
national governent. RA C,./ therefore, #eing a general law, co!ld not have, #' ere iplication,
repealed RA C+,F. Rather, RA C+,F sho!ld #e taDen as the e4ception to RA C,./ in the a#sence
of circ!stances warranting a contrar' concl!sion.O<;P
The controvers' act!all' centers on the seeingl' sweeping provision in N22 No. ,C which states
that Xno one shall #e allowed to collect RATA fro ore than one so!rce.Y 6oes this ean that
STATCON| 60
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0!dges cannot receive allowances fro A@5s in addition to the RATA fro the S!pree 2o!rtJ
)or reasons that will hereinafter #e disc!ssed, we answer in the negative.
The pertinent provisions of N22 No. ,C read:
;. R!les and Reg!lations:
;.+.+ "a'ent of RATA, whether co!ta#le or rei#!rsa#le, shall #e in accordance with the
rates prescri#ed for each of the following officials and eplo'ees and those of e>!ivalent ranDs,
and the conditions en!erated !nder the pertinent sections of the @eneral "rovisions of the
ann!al @eneral Appropriations Act :@AA=:
.. )!nding So!rce:
In all cases, co!ta#le and rei#!rsa#le RATA shall #e paid fro the ao!nt appropriated for
the p!rpose and other personal services savings of the agenc' or pro0ect fro where the officials
and eplo'ees covered !nder this 2irc!lar draw their salaries. No one shall #e allowed to collect
RATA fro ore than one so!rce. :ephasis o!rs=
In constr!ing N22 No. ,C, we appl' the principle in stat!tor' constr!ction that force and effect
sho!ld not #e narrowl' given to isolated and dis0oined cla!ses of the law #!t to its spirit, #roadl'
taDing all its provisions together in one rational view.O<.P &eca!se a stat!te is enacted as a whole
and not in parts or sections, that is, one part is as iportant as the others, the stat!te sho!ld #e
constr!ed and given effect as a whole. A provision or section which is !nclear #' itself a' #e
clarified #' reading and constr!ing it in relation to the whole stat!te.O</P
TaDing N22 No. ,C as a whole then, what it seeDs to prevent is the d!al collection of RATA #' a
national official fro the #!dgets of Xore than one national agenc'.Y 9e ephasi%e that the other
so!rce referred to in the prohi#ition is another national agenc'. This can #e gleaned fro the fact
that the sentence Xno one shall #e allowed to collect RATA fro ore than one so!rceY :the
controversial prohi#ition= iediatel' follows the sentence that RATA shall #e paid fro the
#!dget of the national agenc' where the concerned national officials and eplo'ees draw their
salaries. The fact that the other so!rce is another national agenc' is s!pported #' RA C,./ :the
@AA of +**;= invoDed #' respondent 2OA itself and, in fact, #' all s!#se>!ent @AAs for that
atter, #eca!se the @AAs all essentiall' provide that :+= the RATA of national officials shall #e
pa'a#le fro the #!dgets of their respective national agencies and :<= those officials on detail with
other national agencies shall #e paid their RATA onl' fro the #!dget of their parent national
agenc':
Section ;,, RA C,./, @eneral Appropriations Act of +**;:
Representation and Transportation Allowances. The following officials and those of e>!ivalent ranD
as a' #e deterined #' the 6epartent of &!dget and Manageent :6&M= while in the act!al
perforance of their respective f!nctions are here#' granted onthl' co!ta#le representation
and transportation allowances pa'a#le fro the prograed appropriations provided for their
respective offices, not e4ceeding the rates indicated #elow, which shall appl' to each t'pe of
allowance:
Officials on detail with other offices, incl!ding officials of the 2oission of A!dit assigned to
serve other offices or agencies, shall #e paid the allowance herein a!thori%ed fro the
appropriations of their parent agencies. :ephasis o!rs=
2learl' therefore, the prohi#ition in N22 No. ,C is onl' against the d!al or !ltiple collection of
RATA #' a national official fro the #!dgets of two or ore national agencies. Stated otherwise,
STATCON| 61
.
when a national official is on detail with another national agenc', he sho!ld get his RATA onl' fro
his parent national agenc' and not fro the other national agenc' he is detailed to.
Since the other so!rce referred in the controversial prohi#ition is another national agenc', said
prohi#ition clearl' does not appl' to A@5s liDe the M!nicipalit' of Na!0an. National agenc' of
co!rse refers to the different offices, #!rea!s and departents coprising the national
governent. The #!dgets of these departents or offices are fi4ed ann!all' #' 2ongress in the
@eneral Appropriations Act.O<,P An A@5 is o#vio!sl' not a national agenc'. Its ann!al #!dget is
fi4ed #' its own legislative co!ncil :Sangg!niang &a'an, "anl!ngsod or "anlalawigan=, not #'
2ongress. 9itho!t do!#t, N22 No. ,C does not appl' to A@5s.
The prohi#ition in N22 No. ,C is in fact an adinistrative tool of the 6&M to prevent the !ch3
a#!sed practice of !ltiple allowances, th!s standardi%ing the grant of RATA #' national agencies.
Th!s, the p!rpose cla!se of N22 No. ,C reads:
This 2irc!lar is #eing iss!ed to ens!re !niforit' and consistenc' of actions on clais for
representation and transportation allowance :RATA= which is priaril' granted #' law to national
governent officials and eplo'ees to cover e4penses inc!rred in the discharge or perforance
of their d!ties and responsi#ilities.
&' no stretch of the iagination can N22 No. ,C #e constr!ed as n!llif'ing the power of A@5s to
grant allowances to 0!dges !nder the Aocal @overnent 2ode of +**+. It was iss!ed priaril' to
aDe the grant of RATA to national officials !nder the national #!dget !nifor. In other words, it
applies onl' to the national f!nds adinistered #' the 6&M, not the local f!nds of A@5s.
To r!le against the power of A@5s to grant allowances to 0!dges as what respondent 2OA wo!ld
liDe !s to do will s!#vert the principle of local a!tono' %ealo!sl' g!aranteed #' the 2onstit!tion.
O<CP The Aocal @overnent 2ode of +**+ was speciall' pro!lgated #' 2ongress to ens!re the
a!tono' of local governents as andated #' the 2onstit!tion. &' !pholding, in the present
case, the power of A@5s to grant allowances to 0!dges and leaving to their discretion the ao!nt
of allowances the' a' want to grant, depending on the availa#ilit' of local f!nds, we ens!re the
gen!ine and eaningf!l local a!tono' of A@5s.
9e now disc!ss the ne4t contention of respondent 2OA: that the resol!tion of the Sangg!niang
&a'an of Na!0an granting the "+,,FF onthl' allowance to petitioner 0!dge was n!ll and void
#eca!se it failed to copl' with A&2 No. /; dated Septe#er +, +**;:
Sec. ; Allowances. W A@5s a' grant allowancesQadditional copensation to the national
governent officialsQeplo'ees assigned to their localit' at rates a!thori%ed #' law, r!les and
reg!lations and s!#0ect to the following preconditions:
a. That the ann!al incoe or finances of the !nicipalit', cit' or province as certified #' the
Acco!ntant concerned will allow the grant of the allowancesQadditional copensation witho!t
e4ceeding the general liitations for personal services !nder Section ;</ of RA C+,F?
#. That the #!dgetar' re>!ireents !nder Section ;<. of RA C+,F incl!ding the f!ll
re>!ireent of RA ,C/- have #een satisfied and provided f!ll' in the #!dget as certified #' the
&!dget Officer and 2OA representative in the A@5 concerned?
c. That the A@5 has f!ll' ipleented the devol!tion of personnelQf!nctions in accordance
with the provisions of RA C+,F?
d. That the A@5 has alread' created andator' positions prescri#ed in RA C+,F.
STATCON| 62
.
e. That siilar allowancesQadditional copensation are not granted #' the national
governent to the officialsQeplo'ees assigned to the A@5.
Tho!gh A&2 No. /; of the 6&M a' #e considered within the a#it of the "residentIs power of
general s!pervision over A@5s,O<-P we r!le that Section ;, paragraph :e= thereof is invalid. RA
C+,F, the Aocal @overnent 2ode of +**+, clearl' provides that provincial, cit' and !nicipal
governents a' grant allowances to 0!dges as long as their finances allow. Section ;,
paragraph :e= of A&2 No. /;, #' o!trightl' prohi#iting A@5s fro granting allowances to 0!dges
whenever s!ch allowances are :+= also granted #' the national governent or :<= siilar to the
allowances granted #' the national governent, violates Section ..C:a=:l=:4i= of the Aocal
@overnent 2ode of +**+.O<*P As alread' stated, a circ!lar !st confor to the law it seeDs to
ipleent and sho!ld not odif' or aend it.O;FP
Moreover, #' prohi#iting A@5s fro granting allowances siilar to the allowances granted #' the
national governent, Section ; :e= of A&2 No. /; practicall' prohi#its A@5s fro granting
allowances to 0!dges and, in effect, totall' n!llifies their stat!tor' power to do so. &eing !nd!l'
restrictive therefore of the stat!tor' power of A@5s to grant allowances to 0!dges and #eing
violative of their a!tono' g!aranteed #' the 2onstit!tion, Section ;, paragraph :e= of A&2 No. /;
is here#' declared n!ll and void.
"aragraphs :a= to :d= of said circ!lar, however, are valid as the' are in accordance with Sections
;<.O;+P and ;</O;<P of the Aocal @overnent 2ode of +**+? these respectivel' provide for the
#!dgetar' re>!ireents and general liitations on the !se of provincial, cit' and !nicipal f!nds.
"aragraphs :a= to :d= are proper g!idelines for the condition provided in Sections ..C, ./- and
.,- of the Aocal @overnent 2ode of +**+ that A@5s a' grant allowances to 0!dges if their
f!nds allow.O;;P
Respondent 2OA also arg!es that Resol!tion No. +F+ of the Sangg!niang &a'an of Na!0an
failed to copl' with paragraphs :a= to :d= of A&2 No. /;, th!s it was n!ll and void.
The arg!ent is isplaced.
@!idelines :a= to :d= were et when the Sangg!niang "anlalawigan of Oriental Mindoro approved
Resol!tion No. +F+ of the Sangg!niang &a'an of Na!0an granting the "+,,FF onthl' allowance
to petitioner 0!dge as well as the corresponding #!dgets of the !nicipalit' providing for the said
onthl' allowance to petitioner 0!dge. 5nder Section ;<C of the Aocal @overnent 2ode of +**+,
the Sangg!niang "anlalawigan was specificall' tasDed to review the appropriation ordinances of
its coponent !nicipalities to ens!re copliance with Sections ;<. and ;</ of the 2ode.
2onsidering said d!t' of the Sangg!niang "anlalawigan, we will ass!e, in the a#sence of proof
to the contrar', that the Sangg!niang "anlalawigan of Oriental Mindoro perfored what the law
re>!ired it to do, that is, review the resol!tion and the corresponding #!dgets of the M!nicipalit' of
Na!0an to aDe s!re that the' coplied with Sections ;<. and ;</ of the 2ode.O;.P 9e pres!e
the reg!larit' of the Sangg!niang "anlalawiganVs official act.
Moreover, it is well3settled that an ordinance !st #e pres!ed valid in the a#sence of evidence
showing that it is not in accordance with the law.O;/P Respondent 2OA had the #!rden of proving
that Resol!tion No. +F+ of the Sangg!niang &a'an of Na!0an did not copl' with the condition
provided in Section ..C of the 2ode, the #!dgetar' re>!ireents and general liitations on the
!se of !nicipal f!nds provided in Sections ;<. and ;</ of the 2ode and the ipleenting
g!idelines iss!ed #' the 6&M, i.e., paragraphs :a= to :d=, Section ; of A&2 No. /;. Respondent
2OA also had the #!rden of showing that the Sangg!niang "anlalawigan of Oriental Mindoro
STATCON| 63
.
erroneo!sl' approved said resol!tion despite its non3copliance with the re>!ireents of the law.
It failed to discharge s!ch #!rden. On the contrar', we find that the resol!tion of the M!nicipalit'
of Na!0an granting the "+,,FF onthl' allowance to petitioner 0!dge f!ll' coplied with the law.
Th!s, we !phold its validit'.
In s!, we here#' affir the power of the M!nicipalit' of Na!0an to grant the >!estioned
allowance to petitioner J!dge Ae'nes in accordance with the constit!tionall' andated polic' of
local a!tono' and the provisions of the Aocal @overnent 2ode of +**+. 9e also s!stain the
validit' of Resol!tion No. +F+, Series of +**;, of the Sangg!niang &a'an of Na!0an for #eing in
accordance with the law.
91ERE)ORE, the petition is here#' @RANTE6. The assailed decision dated Septe#er +.,
+*** of the 2oission of A!dit is here#' SET ASI6E and Section ;, paragraph :e= of A&2 No.
/; is here#' declared N5AA and (OI6.
STATCON| 64