Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. Nos. L-19864 and 19685
17, 1923

October

J. J. GO CHIOCO, plaintiff-appellant,
vs.
E. MARTINEZ, ET AL., defendantsappellees,
and
ORTIGA HERMANOS, plaintiffs-appellants,
vs.
J. J. GO CHIOCO, defendant-appellantappellee.
Gibbs, McDonough and Johnson for Ortiga as
appellant.
Araneta and Zaragoza for J. J. Go Chioco as
appellant-appellee.
Gibbs and McDonough for Ortiga Hermanos
as appellee.
Fisher, DeWitt, Perkins and Kincaid as amici
curiae.

VILLAMOR, J.:
It appears from the record that on June 2, 1919,
J. J. Go Chioco made a loan of P40,000 to
Ortiga Hermanos, and to that effect a

promissory note, Exhibit 2, was executed,

wherein Ortiga Hermanos, Chan Lin Cun, and
E. Martinez promised to pay, jointly and
severally, said sum within three months from
the above mentioned date. On the same day,
Ortiga Hermanos, together with Chan Lin Cun
and E. Martinez, signed another promissory
note for the amount of P1,800 payable within
three months from said date, and on the same
date Ortiga Hermanos, through their manager,
E. Martinez, delivered to J.J. Go Chioco check,
Exhibit 1, drawn against the Bank of the
Philippine Islands for the amount of P1,800,
which was cashed by said J. J. Go Chioco.
When the note became due and the makers
could not pay it, the same was cancelled and
another note, Exhibit 3, was executed in the
sum of P40,000 for the period of three months,
which was signed, as the former, by the
defendants, Ortiga Hermanos, Chan Lin Cun,
and E. Martinez. On the same date another note
was delivered by the same debtors in favor of J.
J. Go Chioco for the sum of P1,800 as well as a
check payable to order, Exhibits 2-B, drawn
against the Bank of the Philippine Islands and
signed by Ortiga Hermanos. Said check for the
sum of P1,800 was cashed by the plaintiff, J. J.
Go Chioco.
When the second note because due the makers
failed to pay it, and, for that reason, the note
was cancelled and Exhibit 4 executed and
signed by the same parties. On the same date,
that is, on December 2, 1919, Ortiga Hermanos
delivered to J. J. Go Chioco the note, Exhibit 4A, for the sum of P1,800 as well as the check

Exhibit 3-B, drawn against the Bank of the

Philippine Islands for the same amount which
was cashed by J. J. Go Chioco.
On March 2, 1920, when the last mentioned
note became due, the defendants also failed to
pay the same and for that reason the note was
again cancelled and another note executed and
signed by the same parties, making it appear
that it should be paid within one month and, for
that reason, the other note, signed by the
debtors, was for P600 only, as well as the
amount of the check given by Ortiga Hermanos,
on March 1, 1920, drawn against the Philippine
National Bank, which was cashed by J. J. Go
Chioco.
On April 2, 1920, the date upon which the last
mentioned note should have been paid, the
defendants also failed to satisfy it and for this
reason the note was again novated, stipulating
that the period would be for three months. On
the same date the three debtors delivered their
note, Exhibit 6-A, for the amount of P1,800.
The debtors also failed to satisfy his debt within
the period stipulated and, consequently, the note
was novated and on July the 2d, Exhibit 7 was
signed by Ortiga Hermanos, Chan Lin Cun and
E. Martinez, which is another note for a period
of three months. On the same date the same
parties delivered another note for the amount of
P1,800 to J. J. Go Chioco, payable within three
months and on the following day, July 3, 1920,
Ortiga Hermanos delivered to J. J. Go Chioco
Exhibit 6-A against the Bank of the Philippine
Islands for the same amount of P1,800.

Again, the note was not paid at maturity and for

that reason the same was novated on October 2,
1920, and signed by Ortiga Hermanos, Chan
Lin Cun and E. Martinez, and on the same date
Ortiga Hermanos delivered to J. J. Go Chioco
another promissory note for P1,800 and a check
against the China Bank Corporation for the
same amount. When the last mentioned
promissory note became due and debtors being
unable to meet it, a promissory note Exhibit A
was again executed ands signed by Ortiga
Hermanos, Chan Lin Cun and E, Martinez in
the sum of P40,000, in favor of J. J. Go Chioco
payable within three months from date.

total sum of P254,000. The refusal of Ortiga

Hermanos to pay said promissory note in full
gave rise to the complaint of J. J. Go Chioco,
filed on October 4, 1921, asking the court to
render judgment against the defendants for the
amount of P15,000 with legal interest and costs.

them that the evidence adduced in either case

will be considered in the other.

The defendants E. Martinez and Chan Lin Cun

filed a separate answer praying for the dismissal
of the complaint, with costs, the return of the
sum of P5,857, which represents the interest
paid on said promissory note of P40,000 at the
rate of 18 per cent per annum, and the payment
of P1,500 as attorney's fees.

(a) That the interest of 18 per cent per annum

stipulated by the contending parties in these two
cases is null and usurious;

The promissory note, Exhibit A, as inserted in

the complaint, is as follows:

The defendant Ortiga Hermanos answered the

complaint praying that the promissory note for
the amount of P40,000 be declared null and
void, for the reason that they had paid a
usurious rate of interest, namely, 18 per cent per
annum; that they be absolved from the
complaint and that judgment in their favor be
rendered for the amount of P1,500 as attorney's
fees, with costs, and that the plaintiff be ordered
to return the sum of P25,000 paid on account of
the principal.

By these presents, three months from date we

promise to pay to the order of Mr. J. J. Go
Chioco the sum of forty thousand pesos
(P40,000), Philippine currency, value received
in cash from said Go Chioco for commercial
transactions.
Manila, January 2, 1921.
(Sgd.)

"ORTIGA HERMANOS
"CHAN LIN CUN
MARTINEZ

"E.

Due April 2, 1921.

This promissory note was not novated at its
maturity as the former ones; but it appears that
on April 4, 1921, Ortigas Hermanos paid
P5,000 and on May 20, 1921, P20,000, that is, a

Thereafter, the defendant Ortiga Hermanos, on

November 9, 1921, filed another and separate
complaint against J. J. Go Chioco praying that a
judgment be rendered in their favor for P11,
850 which represents in interest paid at the rate
of 18 per cent per annum, plus P1,500 as
attorney's fees, with costs.
By agreement of parties, both cases were heard
together, it having been stipulated between

Honorable Judge Carlos Imperial, who heard

the case, in a decision dated June 24, 1922,
held:

(b) That in accordance with the provisions of

section 7 of Act No. 2655, the promissory note,
Exhibit A, executed by Ortiga Hermanos, Chan
Lin Cun and E. Martinez, in the sum of P40,000
payable within three months, and on which a
usurious rate of interest of 18 per cent per
annum had been paid, is null and void, and that,
as a result, the plaintiff J. J. Go Chioco has no
right to recover the balance of said promissory
note which amounts to P15,000 from either
Ortiga Hermanos or their sureties, Chan Lin
Cun and E. Martinez; and
(c) That J. J. Go Chioco should refund to Ortiga
Hermanos, their manager, or their duly
authorized representative, the total amount of
P11, 850 which represents the usurious interest
collected from December 2, 1919, to the date of
the filing of the complaint, together with legal
interest from November 9, 1921, when Ortiga
Hermanos filed their complaint, and said Go
Chioco should likewise pay Ortiga Hermanos,
Chan Lin Cun and E. Martinez the sum of
P3,000 as attorneys' fees of Messrs. A. D. Gibbs
and Thos D. Aitken, at the rate of P1,500 each,
together with costs of both instances.

From this decision parties appealed, and the

motion for new trial based on the ground that
the decision is contrary to the law and not
justified by the evidence having been denied,
both parties brought said case to the Supreme
Court by bill of exceptions.
The appellant J. J. Go Chioco assigned as errors
of the trial court the following: (1) In finding
that he usurious interest upon the said
promissory note of P40,000 has been paid from
December 2, 1920, at the rate of 18 per cent per
annum, that is, the amount of P11,850 and in
sentencing him to pay Ortiga Hermanos said
sum with legal interest thereon from the filing
of the complaint of Ortiga Hermanos; (2) in
sentencing J.J. Go Chioco to pay the sum of
P3,000 as attorney's fees of Messr. A.D. Gibbs
and Thos. D. Aitken at P1,500 each; (3) in not
sentencing Ortiga Hermanos to pay the amount
of P15,000, with legal interest thereon from the
filing of his complaint (Go Chioco's); and (4) in
sentencing J.J. Go Chioco to the payment of
costs.
On the other hand, the appellant Ortiga
Hermanos, alleges that the trial court committed
an error in overruling their counterclaim for the
amount of P25,000 paid on account of the
principal of a usurious promissory note, and in
not sentencing J.J. Go Chioco to pay said sum
of P25,000.
The facts, as found by the trial court, necessary
for a clear understanding of this case, briefly
stated, are as follows: (1) That the plaintiff
made a loan to the defendant. Ortiga Hermanos

of the sum of P40,000 and that interest at the

rate of 18 per cent per annum has been paid; (2)
that the defendant paid the plaintiff, as interest
on said amount, including the payments in April
and July, 1921, to wit, P2,253.50 (P3.50 for
stamps), from December 2, 1919, the total sum
of P11,850, which, together with the P1,500 as
attorney's fees, constitutes the prayer of the
defendants complaint. (3) that the defendant
Ortiga Hermanos paid the plaintiff, on two
different occasions on account of said loan of
P40,000, the amount of P25,000 which was set
out in his counterclaim; and (4) that according
to the complaint filed by J.J. Go Chioco of the
sum of P40,000 loaned there still remains a
balance of P15,000 to be paid.
In view of the facts just stated and from the
errors assigned by both parties, the questions to
be decided are: (1) Whether or not the
defendant has paid the plaintiff a usurious rate
of interest, namely, 18 per cent annum upon the
promissory note for the amount of P40,000; (2)
whether or not the debtor who has paid a
usurious rate of interest can recover the amount
paid on account of the principal as well as the
usurious interest paid, together with attorney's
fees and cost; and (3) whether or not the
usurious creditor has a right to recover his
capital loaned to and not paid by the debtor.
I. That J.J. Go Chioco has collected interest at
the rate of 18 per cent per annum upon the
amount of P40,000 which he loaned to Ortiga
Hermanos, may be inferred from the evidence
and was so found by the trial court.

J.J. Go Chioco himself admits having collected

the amount mentioned in the promissory notes
and checks signed by Ortiga Hermanos in the
amount of P1,800 each, but alleges that of that
amount, P400 was paid as penalty for failure to
pay the promissory notes at their maturity. That
is to say, of the amount of P1,800 which
represents the interest at 18 per cent per annum
on the capital of P40,000 he collected 4 per cent
as penalty and 14 per cent as interest.
The trial court, in analyzing the testimony of
the witness J.J. Go Chioco, states:
The explanations given by J.J. Go Chioco of
said operations is undoubtedly ingenious, but in
the opinion of this court, is far from being
satisfactory and acceptable. There is nothing in
the record to indicate, apart from his own
testimony, that the parties have stipulated any
penalty for failure to pay at maturity any of the
promissory notes executed, and the fact that all
interest was collected by the creditor in advance
and before the promissory notes became due,
shows conclusively that no penalty was agreed
upon by the parties. Indeed it would seem that
no such penal clause was necessary, since it was
clearly stipulated that the sum loaned would
earn a stipulated interest; furthermore, if such
an agreement had existed, there is no reason
why same should not have appeared in writing,
either in the promissory note itself or in any
other document disclosing such contractual
obligation. What appears clear and can be
inferred from all the documentary evidence
adduced and of record is that, J.J. Go Chioco
required and collected as interest upon the

amount of P40,000 he had loaned, profits

amounting to 18 per cent which is in violation
of section 3 of Act No. 2655 of the Philippine
Legislature, which enjoins and prohibits any
person from charging a rate of interest in excess
of 14 per cent per annum upon any loan not
guaranteed in the manner provided for in
section 2 of the said Act.
After examining the evidence before us, we are
unable to find anything which will warrant the
reversal or modification of the above
conclusion arrived at by the trial court.
From the record it appears that the first
promissory note should have become due
within three months, that is, on September 2,
1919. On the same date, June 2, 1919, Ortiga
Hermanos signed a promissory note for P1,800
which should likewise have become due on
September 2, 1919, and at the same time issued
a check for the amount of P1,800 which was
collected by J.J. go Chioco. This operation was
repeated several times every three months, with
the exception of the promissory note of March
2, 1920, for which a period of one month only
was fixed. So it clear that whenever the note for
P40,000 was novated, Ortiga Hermanos signed
a promissory note for P1,800, together with the
corresponding check, which was collected by
the creditor J.J. Go Chioco. It is therefore
evident that Ortiga Hermanos paid J.J. Go
Chioco in advance the interest at 18 per cent per
annum upon the loan of P40,000.
We hold that the contention of J.J. Go Chioco
that he has only charged 14 per cent upon the

loan P40,000 as interest and 4 per cent as

penalty for failure to pay the notes, is untenable.
The checks issued by Ortiga Hermanos and
cashed by J.J. Go Chioco are negotiable
instruments
and
they
represents
an
unconditional obligation to pay the amount
therein stated of P1,800 which, if we take into
consideration the value of the loan, represents
the interest at the rate of 18 per cent per annum.
In accordance with section 285 of the Code of
Civil Procedure, the agreement to pay interest,
reduced to writing in the promissory notes for
P1,800, is considered as containing all those
terms stipulated by the parties, and therefore
there can be, between the parties and their
representatives or successors in interest, no
evidence of the terms of the agreement other
than the contents of the writing, except in the
following cases:
(1) Where a mistake or imperfection of the
writing, or its failure to express the true intent
and agreement of the parties, is put in issue by
the pleadings;
(2) Where the validity of the agreement is the
fact in dispute.
As far as the record goes, said promissory notes
of P1,800 were not put in issue during the trial
nor is there any discussion as to their validity.
Said notes recite a specific obligation and its
language is not subject to ambiguity. J.J. Go
Chioco cannot, therefore, change, by his mere
testimony, the terms of said notes in the sense

that part of the amount therein stated was

collected as penalty.
Moreover, the fact that the interest in question
was collected quarterly and in advance, with the
exception of one case wherein the interest was
collected for one month, shows, in our opinion,
that the transaction was for the collection of
interest, since you cannot charge or collect
anything in advance as penalty for failure to
fulfill an obligation which was not yet
enforceable.
That the parties to a contract of loan may
validly agree upon a penalty in case the
obligation is not fulfilled, beside the interest not
prohibited by the Usury Law, is a proposition
generally admitted, but in the case at bar, the
alleged penalty, collected in advance before the
maturity of the obligation, far from fulfilling its
object to compel the debtor to duly pay his
obligation, is scheme to avert his compliance
with the Usury Law.
Supposing that the agreement, if there was any,
to pay a penalty in case the promissory note, at
its maturity is not paid, is in substance similar
to the agreement to pay attorney's fees, as the
attorney for J.J. Go Chioco alleges, such an
agreement is however, subject to the limitation
indicated in the case of Bachrach Garage and
Taxicab Company vs. Golingco (39 Phil., 912),
quoted by counsel for J.J. Go Chioco. In that
case the court said:
The stipulation that in case of noncompliance
the debtor shall pay a fixed amount for the fees

of the attorney who may be employed by the

creditor for the purpose of enforcing
compliance with the obligation is not deemed to
be an interest within the purview of Act No.
2655, and neither is the computation fixed by
said Act applicable thereto. It is not an
indemnity for gain which cannot be realized,
but an amount which the creditor spends and
which constitutes a loss really suffered by
reason of the noncompliance with the
obligation.
When the amount stipulated for the attorney's
fees is so exorbitant that it exceeds that which
should justly be paid for that purpose, the
excess shall be considered as indirect or
simulated interest, according to the spirit of the
law, and should therefore be subject to the
computation. In the case at bar, the 12 1/2 per
cent to which the trial court reduced the 25 per
cent stipulated represents, in our opinion, the
amount which the plaintiff was justly obliged to
pay for his attorney's fees, and should not be
considered as interest in the computation of the
latter.
But, in the case at bar, there is an
unsurmountable difficulty which prevents us
from considering as penalty 4 per cent of the
total 18 per cent paid by Ortiga Hermanos as
interest, and that difficulty lies in the lack of
evidence upon such alleged agreement as to the
penalty. In the case of Bachrach Garage and
Taxicab Company vs. Golingco, supra, it
appears from the promissory note itself, signed
by the defendant and his sureties, that in case
the services of an attorney will be necessary for

the collection of said note, the defendant

promised to pay to the holder of the same 25
per cent of the principal and interest upon said
note as attorney's fees; while in the case at bar
there is no such clause in the promissory note
signed by Ortiga Hermanos. In that case, the
plaintiff was compelled to sue in order to
collect his note, engaging the services of an
attorney; while in the case at bar, the plaintiff J.
J. Go Chioco was compelled only to file a
complaint on November, 1921, to recover from
Ortiga Hermanos the sum of P15,000, the
balance of the original capital of P40,000,
having collected, as it was already said, interest
in advance at the rate of 18 per cent from
December 2, 1919, to November 2, 1921. From
the foregoing, we are of the opinion and so hold
that Ortiga Hermanos paid J.J. Go Chioco upon
the loan of P40,000, interest at the rate of 18 per
cent per annum which is in violation of section
3 of Act No. 2655, that is, the Usury Law.
With this conclusion at which we arrive, it is
evident that Ortiga Hermanos, having paid to
J.J. Go Chioco that amount of P11,850 as
usurious interest from December 2, 1919, up to
the filing of his complaint, have, under section
6 of Act No. 2655, the right to recover said sum
of P11,850 together with P1,500 which the trial
court granted them as attorney's fees of Mr.
A.D. Gibbs and costs.
As to the attorney's fees, counsel for J.J. Go
Chioco assigned as error of the trial court in
granting P1,500 to attorney Thos. D. Aitken,
who represented the other defendants Chan Lin
Cun and E. Martinez. Counsel alleges that all of

the amount representing interest was paid by

Ortiga Hermanos, and the sureties Chan Lin
Cun and E. Martinez could not therefore
successfully maintain an action to recover any
interest nor attorney's fees. We agree with this
contention and it is our opinion that J.J. Go
Chioco is not bound to pay the attorney's fees of
the sureties Chan Lin Cun and E. Martinez.
Therefore, the judgment appealed from should
be modified in this respect, by deducting
P1,500 from the sum of 3,000 allowed by the
trial court.
II and III. The other questions raised in this
appeal refer to whether a debtor, who has paid
usurious interest, can recover the amount paid
by him on account of the principal and whether
the usurious creditor has right to recover the
principal loaned, and not paid by the debtor.
The resolution on these two questions depends
upon the interpretation of section 7 of Act No.
2655 which provides:
All conveyances, mortgages, bonds, bills, notes,
and other contracts or evidences of debt, and all
deposits of goods or other things, whereupon or
whereby there shall be reserved, secured, taken,
or received directly or indirectly, a higher rate
or greater sum or value for the loan or
forbearance of money, goods, or credits than is
hereinbefore allowed, shall be void: Provided,
however, That no merely clerical error in the
computation of interest, made without intent to
evade any of the provisions of this Act, shall
render a contract void: And provided further,
That nothing herein contained shall be
construed to prevent the purchase by an

innocent purchaser of negotiable mercantile

paper, usufurious or otherwise, valuable
consideration before maturity, when there has
been no intent on the part of said purchaser to
evade the provisions of this act and said
purchase was not a part of the original usurious
transaction. In any case, however, the maker of
said note shall have the right to recover from
said original holder the whole interest paid by
him thereon and, in case of litigation, also the
costs and such attorney's fees as may be
allowed by the court.
As may be seen, notwithstanding the provision
as to the nullity of the usurious note, in case the
same is endorsed to an innocent third person,
the innocent purchaser is entitled to collect the
amount, with interest, from the maker and the
maker is entitled to recover from the original
holder thereof only the interest by him, and, in
case of litigation, the costs and attorney's fees
as may be allowed by the court. Therefore, the
only effect of the nullity of the note is the
recovery of the interest paid by the debtor, not
the value of the note.
If, on account of the nullity of a usurious note,
the original holder thereof, or the payee, has no
right to recover any amount upon said note,
there is no reason why, in case the same is
transferred to a third person who acquires it in
good faith and for a consideration, the payee
should be benefited by the amount collected by
him from the transferee as payment of the note
endorsed and not repay the maker the value of
the same. Likewise, if by virtue of such a
nullity, nothing can be collected by the holder

of the note, there is no reason why the

reimbursement of the interest should be limited
to the amount collected during the two years
immediately preceding the date on which the
action for the recovery thereof was instituted,
and should not include all the interest collected
prior to said period. And it is because the law
limits the effect of the nullity to the
reimbursement of the interest paid during the
period of two years preceding the filing of the
complaint, which provision being of a penal
nature must be strictly construed so that it
should not include the reimbursement of the
principal paid and the unpaid principal which is
not provided in law.
That the legislator did not have in mind that the
usurious creditor should be lose the capital
loaned by him is further made apparent by the
provisions of section 8 of Act No. 2655 as
amended by Act No. 2992. Said section reads
thus:
All loans under which payment is to be made in
agricultural products or seed or in any other
kind of commodities shall also be null and void
unless they provide that such products or seed
or other commodities shall be appraised at the
time when the obligation falls due at the current
local market price:Provided, That unless
otherwise stated in a document written in a
language or dialect intelligible to the debtor and
subscribed in the presence of not less than two
witnesses, any contract advancing money to be
repaid later in agricultural products or seed or
any other kind of commodities shall be
understood to be a loan, and any person or

corporation having paid otherwise shall be

entitled in case action is brought within two
years after such payment or delivery to recover
all the products or seed delivered as interest, or
the value thereof, together with the costs and
attorney's fees in such sum as may be allowed
by the court. Nothing contained in this section
shall be construed to prevent the lender from
taking interest for the money lent. provided
such interest be not in excess of the rates herein
fixed.
Under this legal provision, in case of a usurious
contract, by virtue of which payments are to be
made on agricultural products, seeds or other
fruits, the debtor may recover from the usurious
creditor only what he might deliver as interest,
which shows, in our opinion, that what he might
have paid as principal is not recoverable. Now,
if it is held that in another kind of a usurious
contract, the debtor may recover not only the
interest paid but also the principal, how can it
be explained that by the mere fact of the debt
being payable in fruits, the debtor is not entitled
to recover the principal which he might have
paid? The conclusion is inevitable that the
nullity of a usurious loan provided in the law
means only that the lender cannot demand
payment of the stipulated usurious interest.
Moreover, section 10 of Act No. 2655 as
amended by Act No. 2992 provides:
Without prejudice to the proper civil action,
violations of this Act shall be subject to
criminal prosecution and the guilty person,
upon conviction, be sentenced to a fine of not

less than fifty pesos nor more than two hundred

pesos, or to imprisonment for not less than ten
days nor more that six months, or both, in the
discretion of the court, and to return the entire
sum received as interest from the party
aggrieved, and in case of nonpayment, to suffer
subsidiary imprisonment at the rate of one day
for every two pesos:Provided, That in case of
corporations,
associations,
societies
or
companies
the
manager,
administrator
orgerente or the person who was has charge of
the management or administration of the
business shall be criminally responsible for any
violation of this Act.
As may be seen, this legal provision requires
the restitution only of what might have been
received by the convicted usurer as interest. If
the intention of the legislator was to confiscate
the principal loaned, he would not have limited
himself to the statement that the interest
collected must be refunded.
In interpreting Act No. 2655, the fact must not
be lost sight of that in August, 1911, the
Philippine Commission enacted Act No. 2073,
which fixes and defines the legal rate of
interest, declares the effect of usury on
contracts, and provides for other purposes in the
Moro Province, Mountain Province, and in the
provinces of Agusan and Nueva Vizcaya.
Section 3 of this Act provides:
Sec. 3. All bonds, bills, notes, assurances,
conveyances, chattel mortgages, and all other
contracts and securities whatsoever, and all
deposits of goods, or anything whatever,

whereupon or whereby there shall be reserved,

secured, or taken any greater sum or value for
the loan or forbearance of any money, goods, or
things in action, than is above prescribed, shall
be void, except as to bona fide purchasers of
negotiable paper, as hereinafter provided, in
good faith, for a valuable consideration, before
maturity: Provided, That no merely clerical
error in the computation of interest, made with
no intent to avoid the provisions of this Act,
shall render the contract usurious: And provided
further, That the payment of interest in advance
for one year at a rate not to exceed fifteen per
centum per annum shall not be construed to
constitute usury:And provided further, That
nothing herein shall be construed to prevent the
purchase of negotiable mercantile paper,
usurious or otherwise, for a valuable
consideration, by an innocent purchaser, free
from all equities, at any price, before the
maturity of the same, when there has been no
intent to evade the provisions of this Act, or
where said purchaser has not been a part of the
original usurious transaction. In any case,
however, where the original holder of a
usurious note sells the same to an innocent
purchaser, the maker of said note or his
representative shall have the right to recover
back from the said original holder the amount
of principal and interest paid by him on said
note.
The phraseology of section 7 of Act No. 2655 is
so similar to the language of section 3 of Act
No. 2073 that it may well be said that Act No.
2655 was drafted after Act No. 2073 for the
whole Philippines, which Act (No. 2655) fixes

the rate of interest on loans, declares the effect

of receiving or collecting usurious interest and
provides for other purposes. A comparison of
the terms of the laws above quoted shows only
one essential difference, and that is, that while
section 3 of the former Act No. 2073 gives the
debtor the right to recover not only the usurious
interest but also the principal, section 7 of the
later Act, that is, Act No. 2655, authorizes the
debtor to recover only what he might have paid.
In view of this fact, there is no room for doubt
that the Philippines Legislature, in enacting Act
No. 2655, deemed the provision of section 3 of
Act No. 2073 to be unjust as to the confiscation
of the principal and so it provided in Act No.
2655 that the debtor may recover only the
interest paid, attorney's fees and costs.
In the case of Delgado vs. Alonso Duque
Valgona (44 Phil., 739), decided March 31,
1923, the decision in the case of Moncrief vs.
Palmer (114 Atl., 181; 17 A. L. R. 119, 120), is
quoted with approval wherein it was held that
"he who seeks equity must do equity" by
repaying the creditor the capital which he might
have received by virtue of the usurious contract.
In discussing the law applicable to the case, the
court, among other things, said:
"The provision of the Rhode Island statue with
reference to usury are drastic. Chapter 434,
Public Laws 1909, amended by chapter 838,
Public Laws 1912. The violation of the act is
punishable as a misdemeanor, every contract
made in violation of it is void, and the borrower
may recover in an action at law, not only the
interest, but any portion of the principal paid by

him upon such usurious contract. The

complaint's solicitor has presented to us a very
comprehensive and able argument in support of
his contention that equity should recognize the
view of public policy emphatically expressed in
the legislative act, and should cancel the
usurious and void contract. This argument
would have more persuasive force if the
question were a new one. The settled and nearly
universal practice of courts of equity is opposed
to the complainant's contention. The statutes of
different states have various provisions directed
towards the prevention of the extortion and
oppression of usury. Whatever may be the
method adopted by the legislature, however,
although the legislative provision may go to the
limit of our statute and declare the contract void
and unenforceable, nevertheless courts of
equity, in the absence of statute specifically
constraining them to act differently, have
insisted upon the equitable principle that he
"who seeks equity must do equity," and have
required the borrower, before he can be given
the relief of cancellation of the contract, to
perform the moral obligation resting upon him,
and pay or offer to pay the principal of the loan
with legal interest."
Commenting upon the former decision rendered
in the case of Delgado vs. Alonso Duque
Valgona, supra, Mr. Justice Street who wrote
the opinion of the court said:
The doctrine of that case we consider applicable
here; and without expressing any opinion upon
the broader question whether capital lent upon a
usurious contract can be recovered in an

aggressive action by the creditor, we are content

to hold that when the debtor in a usurious
contract see fit, or finds it necessary to apply to
the court for equitable relief, he will, as a
condition to the granting of such relief, be
required to restore what he received from the
other party. In the present case both parties are
before the court in the attitude of suppliants,
each asking for relief from the contract in
question; and in order to avoid the possibility of
further litigation, as well as to secure complete
justice, an order will be entered requiring the
plaintiff, as a condition of the satisfaction of the
judgment in his favor, to reconvey to the
defendant the same twelve parcels acquired by
the plaintiff from the defendant.
The essential facts in that case are: On the first
of February, 1918, Alonso Duque Valgona, the
defendant, sold certain lands to Luciano
Delgado, the plaintiff, and to secure the
payment of the purchase price, Delgado
executed, at the same time, a deed of mortgage
in favor of the defendant on the same lands and
also on two other large parcels, of which the
plaintiff was already the owner, situated in the
municipality of Tinambac, Province of
Camarines Sur. The conditions of this
mortgage, so far as essentially pertaining to this
case, are contained in clauses A to E, inclusive,
of paragraph 2, and which in substance are as
follows: (a) The mortgagor (Delgado) promised
to pay to the mortgagee (Alonso Duque
Valgona) the sum of P15,000 in one installment;
(b) to secure the payment of this amount the
debtor executed a mortgage in favor of the
creditor of fourteen parcels of land described in

paragraph one of said deed; (c) as long as the

debt subsists, the debtor binds himself to pay
interest in the sum of P2,250 in two semiannual installments of P1,175 each, which, as
may be observed, exceeds the other amount by
P100; (d) the creditor gives the debtor the
period of twelve years from the date of the deed
within which to pay the P5,000 above
mentioned. Lastly, in clause E, it is stipulated
that if the debtor fails to pay within the twelve
years, the creditor may, at the expiration of this
period, take possession of the lands mortgaged.
The mortgage in question having been held
usurious, because it was found that the
stipulated interest exceeded 15 per cent per
annum, the court rendered judgment in favor of
the plaintiff, the mortgagor, for the recovery of
the usurious interest paid by him, that is,
P2,625, with interest thereon, plus P1,000
attorney's fees; and reversed the judgment
appealed from in so far as the defendant was
adjudged entitled to recover the sum of
P15,000, which was the amount of the
mortgage deed, and ordered the plaintiff, the
usurious debtor, to return to the defendant
creditor the twelve parcels of land which were
the subject matter of the sale, the price of which
was secured by the mortgage, thus the result
being that if the creditor did not succeed in
recovering the P15,000 which he had paid to
the debtor in lieu thereof he recovered the
twelve parcels of land which were the
consideration of the mortgage.
In the case before us, we have J. J. Go Chioco
claiming from Ortiga Hermanos the payment of

P15,000, the unpaid balance of the capital,

loaned and Ortiga Hermanos in turn demanding
from J. J. Go Chioco the repayment of the
usurious interest paid by him, plus attorney's
fees and costs, besides the P25,000 paid on
account of the loan of P40,000.
In view of the fact that we are called upon to
pass upon the claim of the creditor J. J. Go
Chioco, we are now compelled to render our
opinion on the question whether or not a
creditor has direct action against the debtor for
the recovery of the capital loaned upon a
stipulation of usurious interest. As is well
known, usury is an act prohibited by law and to
determine the rights and action of the parties in
interest, it is necessary to take into account the
legal provisions applicable in each jurisdiction.
And, if we return our attention on the Acts
above cited, Nos. 2073 and 2655, it will be seen
that section 6 of the former Act provides:
Whenever its satisfactorily appears to a court
that any bond, bill, note, assurance, pledge,
conveyance, contract, security, or evidence of
debt has been taken or received in violation of
the provisions of this Act, the court shall
declare the same to be void, and enjoin any
proceeding thereon, and shall order the same to
be cancelled any given up.
This provision shows that under the law, it was
expressly prohibited to maintain any action on
usurious contracts. Then there is no doubt that
the creditor cannot institute any action for the
recovery of the capital or part of the capital

loaned. Undoubtedly, the legislator, in enacting

Act No. 2073, deemed it reasonable that the
creditor should lose the capital, because, aside
from the fact that in that Act no penalty was
provided for against usury other than the loss of
all the interest paid by the debtor in case the
usurious instrument was negotiated (section 3),
and of the interest paid in the two years
preceding the filing of the complaint in all other
cases (section 2); in said Act only one rate of
interest quite liberal was fixed; namely, 15 per
cent per annum according to section 1 and
building and loan associations as well as pawn
shops were exempted from every limitation
according to section 7.
But the Act now in force, No. 2655, as amended
by Act No. 2992, contains no such prohibitive
provisions as that of the former Act No. 2073
and the silence of Act No. 2655 in this respect,
in contra-distinction with the express
prohibition of Act No. 2073, shows that said
prohibition was intentionally omitted from the
law now in force, and that the Legislature, in
omitting such rule from the new law did, not
intend to bar the creditor from coming into
court for the recovery of his capital. And the
reason for such an omission is clear if it is taken
into account that Act No. 2655 made the
situation of the creditor quiet difficult in these
respects: (a) No creditor is exempt from the law
(section 2); (b) the maximum rates were fixed,
which were to be applicable to building and
loan associations and pawn shops (section 4);
(c) the general rate of interest was reduced to 12
per cent on loans with securities of real
properties and 14 per cent if there are no such

securities (sections 2 and 3); (d) in case of

litigation, the judge shall sentence the creditor
to pay attorney's fees to the debtor (sections 6
and 8); (e) usury was made a crime and is
punishable by a fine equal to the interest
stipulated, or subsidiary imprisonment in case
of insolvency (section 10). We believe that
these new penalties and restrictions were
inserted by the Legislature in lieu of the loss of
the capital provided by Act No. 2073.
And the foregoing conclusion is fully sustained
not only by the history of the Usury Law, but
also by the preamble of the law itself. By the
history, because the bill of the Commission No.
217 prepared by Commissioner Martin in 1914
in its section 1 contained a provision to the
effect that "any contract which directly or
indirectly provides for the payment of any
interest in excess of 12 per cent per annum shall
be null and void not only as to the interest but
as to the principal invested," which provision
was eliminated from the Usury Law as it was
finally passed by the Legislature. By the
preamble, because speaking of the necessity of
the intervention of the prosecuting attorney in
actions resulting from the violation of the Usury
Law, as well as the penal sanction, said
preamble gives the following reasoning: "We
believe it to be a sound proposition that the
fiscal should intervene in the actions arising
from the violation of the proposed provisions
set out in the original bill, because, among other
reasons, poor persons unable to employ an
attorney will be represented and thus the law
would not be a dead letter. But without the
penal clause, it seems that such intervention is

not proper. But, why not insert such clause? We

would not be the first and only nation which
would do such a thing. We are of the opinion
that a fine equivalent to four times the amount
in excess of the interest charged or subsidiary
imprisonment in case of insolvency, would be
sufficient and better than the forfeiture of the
principal." Therefore, there can be no room for
doubt that it was not the intention of the
Philippine Legislature to forfeit the principal in
condemning usury by means of a law.
Page on Contracts, vol. 1, pages 757 et seq., in
dealing with the effect of usurious executory
contracts, says:
A contract usurious in its nature will not be
enforced by the courts. Whether such contract is
illegal or merely void is a difficult question to
answer, as the exact effect of such contract
depends on the wording and construction of the
statute by which such excessive rate of interest
is forbidden. Such statutes in terms, varying in
different
jurisdictions,
provide
with
considerable exactness the effect of such
transactions; and the courts rarely feel
authorized to apply thereto the common law
principles of illegal or void contracts, in
addition to the express requirements of the
statute. This rests upon the familiar principal
that were a statute creates a new right or offense
and provides a specific remedy or punishment,
that remedy alone can apply. In some
jurisdictions, apart from the question of the
right to recover the principal, which is hereafter
discussed, it is held that the other provisions of
an inseverable usurious contract, such as a valid

provision for attorney's fees, are themselves

enforceable if no other objection than that of
usury exists thereto. Where this view obtains
such contracts are not illegal. Further, in some
jurisdictions, collateral securities are enforced
up to the amount lawfully due. Where this view
obtain such contracts cannot be classed as
illegal, in the sense in which the term is used at
common law. Under usury statutes the principal
loaned may be recovered. The effect of the
usury statutes is for the most part confined to
the interest paid or agreed to be paid. Under
many statutes an agreement for usury causes a
forfeiture of the entire interest, leaving only the
principal to be recovered.
Discussing, in another passage, the discharge of
collateral securities, the same author adds:
. . . The provisions of certain statutes, however,
make securities in contracts given on a usurious
consideration absolutely void, and require their
cancellation without conditions. Under such
statutes an offer to repay the amount borrowed
is not necessary in order to enable the debtor to
have such contracts or conveyances cancelled.
In a suit by the debtor for cancellation, he may
have the amount paid in by him as usurious
interest applied in payment of the principal,
even if he could not maintain a separate action
in equity to recover it. If the creditor is seeking
to enforce a usurious contract, equity may in a
proper case restrain him from enforcing it,
without requiring the previous payment of the
amount due. Thus in an action by the creditor to
enforce the usurious contract, the debtor may
interpose usury as a defense without paying or

tendering the amount of the debt. If the statute

prevents recovery of interest on a usurious
contract, the creditor can recover only the
amount actually loaned by him. (Carpenter vs.
Lewis, 60 S.C., 23; 38 S. E., 244.)
When the law provides that the penalty for
usury is the confiscation of all the interest was
stipulated, the lender may, in an action based
upon the contract, recover the amount actually
lent or paid without interest. (39 Cyc., 1007.)
In support of this proposition, the following
doctrines are cited:
If the rate of interest, stipulated in writing, was
higher than ten per cent, only the principal
could be recovered." (Alston vs. Brashears, 4
Ark., 422.)
Where it appears from the decree itself that a
portion of the amount reported to be due by the
master is "tainted with usury," the same being
admitted by complainants, it was error to allow
any sum whatever for interest, Chapter 4022
laws at Florida acts of 1891, providing that
"only the actual principal sum of such usurious
contracts can be enforced either at law or in
equity." (Lyle and Lyle vs. Winn and Winn, 45
Fla., 419.)
Under the statue providing that in case of usury
the defendant shall be entitled to costs, the
plaintiff, upon being allowed recovery for
principal, less penalties, is not entitled to
attorney's fee or costs. (Libert vs. Unfried, 47
Wash. [Rem.], 186.)

By the laws of Mississippi (Stat. 25 June,

1822), where an usurious rate of interest has
been stipulated, the lender can recover only the
principal. (Coxe vs. Rowley, 12 Robinson's
Rep., 237.)
Under the Usury Act of 18754, the penalty for
taking more than legal interest was a forfeiture
of the interest and the excess of interest. If it
had already been paid it could be recovered by
suit, or by way of set-off against a suit for the
principal, within the time allowed by that act,
but in either event whether payment had
been made or not only interest (both legal
and usurious) was forfeited, and the lender had
a right to recover the principal actually loaned.
(Lanier vs. Cox, 65 Ga., 265.)
We believe that the doctrines laid down in the
cases above cited are applicable in this
jurisdiction as, in fact, the Usury Law provides
for the loss in favor of the debtor of the
stipulated usurious interest which might have
been paid during the two years preceding the
claim of the debtor.
But counsel for Ortiga Hermanos argues in
support of his contention that they are entitled
to recover the P25,000 paid on account of the
principal, that the consideration of the note is
the payment of interest at 18 per cent, and the
contract being void on account of the illegality
of the consideration, application should be
made in this case of articles 1305 and 1306 of
the Civil Code.

The contention of counsel for Ortiga Hermanos

in this respect is untenable. "Every statute is
understood to contain, by implication, if not by
its express terms, all such provisions as may be
necessary to effectuate its object and purpose,
or to make effective the rights, powers,
privileges, or jurisdiction which it grants, and
also all such collateral and subsidiary
consequences as may be fairly and logically
from its terms." (Black on Interpretation of
Laws, page 62.) In our opinion, the Usury Act,
No. 2655, as amended by Act No. 2992,
contains all that is necessary for the application
of its provisions. Section 1 of the Act fixes the
interest of loans in default of agreement
between the parties; sections 2, 3, and 4 fix the
interest on certain loans and prohibit the
collection of interest in excess of the limitation
fixed; section 5 regulates the collection of
interest upon interest; sections 6, 7 and 8
determine the effects of the collection of a
usurious interest and of loans wherein said
interest was stipulated or paid; section 9
requires the making of an oath in answers to a
complaint for the recovery of usurious interest;
section 10 contains the repealing clause and
section 12 fixes the date on which the Act was
to take effect. The law, in declaring usurious
loans to be void, determines its effects and
makes them to consist in the reimbursement of
the interest paid during the two years preceding
the making of the claim, the payment of
attorney's fees and provides further for the
institution of criminal action for the imposition
of the penalty fixed by the law. And with
regards to the capital lent, we have said in
another part of this decision that the law did not

intend to close the courts to the creditor for

relief in the recovery of his principal. In view
thereof, we are of the opinion and so hold, that
articles 1305 and 1306 of the Civil Code are not
applicable to the case at bar.
Furthermore, "it has been said that the law of
usury is penal in its nature and therefore should
be strictly construed. Thus, while courts, under
a statute, avoiding the entire contract for usury,
will uphold the defense according to the letter
of the statute, they will grant affirmative relief,
not expressly given by such statute, only on
payment of the money actually loaned and legal
interest. And this is because, while it is the duty
of courts to give effect to the letter of statute
against oppression of the borrower, they will
not extend the letter of the statute to relief
oppresive of the lender." (R. C. L. vol. 27, page
207.) And in fact to uphold the contention of
Ortiga Hermanos would be to permit a debtor to
enrich himself with the money lent, to the
prejudice of the creditor; it would be to extend
the effects of usurious loans to other matters not
mentioned in the Law; it would be increase the
restrictions provided by the Legislature which is
beyond the jurisdiction of the courts.
Having thus resolved the question which we
have considered in this appeal, the errors
assigned by both appellants are consequently
disposed of.
Therefore, the judgment appealed from is
affirmed in so far as J. J. Go Chioco is
sentenced to return to Ortiga Hermanos the
usurious interest paid during the two years

preceding the claim; namely, P11,850, the legal

interest thereon, from November 9, 1921, the
date of the filing of the complaint, plus P1,500
as attorney's fees and the costs. And the same is
reversed in so far as the defendants Ortiga
Hermanos and their sureties, Chan Lin Cu and
E. Martinez are absolved from the payment of
the balance of the capital lent, which is
P15,000, and in so far as J. J. Go Chioco is
sentenced to pay P1,500 as fees of the attorney
for the defendant's sureties. And it is adjudged
that Ortiga Hermanos and their sureties should
pay jointly to J. J. Go Chioco the sum of
P15,000, the unpaid balance of the capital lent,
with legal interest thereon from October 4,
1921, when the complaint was filed. (Aguilar
vs. Rubiato and Gonzales Villa, 40 Phil.,
570.) 1awph!l.net
Without special pronouncement as to the costs
in this instance. So ordered.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-42050-66 November 20, 1978
THE PEOPLE OF THE
PHILIPPINES, petitioner,
vs.
HONORABLE JUDGE AMANTE P.
PURISIMA, COURT OF FIRST INSTANCE
OF MANILA, BRANCH VII, and
PORFIRIO CANDELOSAS, NESTOR
BAES, ELIAS L. GARCIA, SIMEON
BUNDALIAN, JR., JOSEPH C. MAISO,
EDUARDO A. LIBORDO, ROMEO L.
SUGAY, FEDERICO T. DIZON, GEORGE
M. ALBINO, MARIANO COTIA, JR.,
ARMANDO L. DIZON, ROGELIO B.
PARENO, RODRIGO V. ESTRADA,
ALFREDO A. REYES, JOSE A. BACARRA,
REYNALDO BOGTONG, and EDGARDO
M. MENDOZA, respondents.
G.R. No. L-46229-32 November 20, 1978
THE PEOPLE OF THE
PHILIPPINES, petitioner,
vs.
JUDGE MAXIMO A. MACEREN, COURT
OF FIRST INSTANCE OF MANILA,
BRANCH XVIII, and REYNALDO LAQUI
Y AQUINO, ELPIDIO ARPON, VICTOR

EUGENIO Y ROQUE and ALFREDO

VERSOZA, respondents.

Manuel F. de Jesus for all the respondents in L46229-32 and L-46313-16.

G.R. No. L-46313-16 November 20, 1978

Norberto L. Apostol for respondent Panchito

Refuncion.

THE PEOPLE OF THE

PHILIPPINES, petitioner,
vs.
JUDGE MAXIMO A. MACEREN, COURT
OF FIRST INSTANCE OF MANILA,
BRANCH XVIII, and JUANITO DE LA
CRUZ Y NUNEZ, SABINO BUENO Y
CACAL, TIRSO ISAGAN Y FRANCISCO
and BEN CASTILLO Y
UBALDO, respondents.
G.R. No. L-46997 November 20, 1978
THE PEOPLE OF THE
PHILIPPINES, petitioner,
vs.
THE HONORABLE WENCESLAO M.
POLO, Judge of the Court of First Instance
of Samar, and PANCHITO
REFUNCION, respondents.
Jose L. Gamboa, Fermin Martin, Jr. & Jose D.
Cajucom, Office of the City of Fiscal of Manila
and the Office of Provincial Fiscal of Samar for
petitioners.
Norberto Parto for respondents Candelosas,
Baes and Garcia.
Amado C. de la Marced for respondents Simeon
Bundalian Jr., et al.

Hon. Amante P. Purisima for and in his own

behalf.

MUOZ PALMA, J.:

These twenty-six (26) Petitions for Review filed
by the People of the Philippines represented,
respectively, by the Office of the City Fiscal of
Manila, the Office of the Provincial Fiscal of
Samar, and joined by the Solicitor General, are
consolidated in this one Decision as they
involve one basic question of law.
These Petitions or appeals involve three Courts
of First Instance, namely: the Court of First
Instance of Manila, Branch VII, presided by
Hon. Amante P. Purisima (17 Petitions), the
Court of First Instance of Manila, Branch
XVIII, presided by Hon. Maximo A. Maceren
(8 Petitions) and, the Court of First Instance of
Samar, with Hon. Wenceslao M. Polo,
presiding, (1 Petition).
Before those courts, Informations were filed
charging the respective accused with "illegal
possession of deadly weapon" in violation of
Presidential Decree No. 9. On a motion to
quash filed by the accused, the three Judges
mentioned above issued in the respective cases

filed before them the details of which will be

recounted below an Order quashing or
dismissing the Informations, on a common
ground, viz, that the Information did not allege
facts which constitute the offense penalized by
Presidential Decree No. 9 because it failed to
state one essential element of the crime.
Thus, are the Informations filed by the People
sufficient in form and substance to constitute
the offense of "illegal possession of deadly
weapon" penalized under Presidential Decree
(PD for short) No. 9? This is the central issue
which we shall resolve and dispose of, all other
corollary matters not being indispensable for
the moment.

paragraph 3, Presidential Decree No. 9 of

Proclamation 1081, committed as follows:

Executive dated April 1, 1975

That on or about the 14 th day of December,
1974, in the City of Manila, Philippines, the
said accused did then and there wilfully,
unlawfully, feloniously and knowingly have in
his possession and under his custody and
control one (1) carving knife with a blade of 6 inches and a wooden handle of 5-1/4 inches,
or an overall length of 11- inches, which the
said accused carried outside of his residence,
the said weapon not being used as a tool or
implement necessary to earn his livelihood nor
being used in connection therewith.
Contrary to law. (p. 32, rollo of L-42050-66)

A The Information filed by the People

1. In L-42050-66, one typical Information filed
with the Court presided by Judge Purisima
follows:

The other Informations are similarly worded

except for the name of the accused, the date and
place of the commission of the crime, and the
kind of weapon involved.

THE PEOPLE OF THE PHILIPPINES,

plaintiff, versus PORFIRIO CANDELOSAS Y
DURAN, accused.

2. In L-46229-32 and L-46313-16, the

Information filed with the Court presided by
Judge Maceren follows:

Crim. Case No. 19639

THE PEOPLE OF THE PHILIPPINES,

plaintiff, versus REYNALDO LAQUI Y
AQUINO, accused.

VIOLATION OF PAR. 3, PRES. DECREE No.

9 OF PROCLAMATION 1081

No. 266 of the Chief

CRIM. CASE NO. 29677

INFORMATION
The undersigned accuses REYNALDO LAQUI
Y AQUINO of a VIOLATION OF
PARAGRAPH 3, PRESIDENTIAL DECREE
NO. 9 in relation to Letter of Instruction No.
266 of the Chief Executive dated April 1, 1975,
committed as follows:
That on or about the 28 th day of January, 1977,
in the City of Manila, Philippines, the said
accused did then and there wilfully, unlawfully
and knowingly carry outside of his residence a
bladed and pointed weapon, to wit: an ice pick
with an overall length of about 8 inches, the
same not being used as a necessary tool or
implement to earn his livelihood nor being used
in connection therewith.
Contrary to law. (p. 14, rollo of L-46229-32)
The other Informations are likewise similarly
worded except for the name of the accused, the
date and place of the commission of the crime,
and the kind of weapon involved.
3. In L-46997, the Information before the Court
of First Instance of Samar is quoted hereunder:

INFORMATION
VIOL. OF PAR. 3,
The
undersigned
accuses
PORFIRIO
CANDELOSAS Y DURAN of a violation of

PD 9 IN REL. TO LOI

PEOPLE
OF
THE
PHILIPPINES,
complainant, versus PANCHITO REFUNCION,
accused.

CRIM. CASE NO. 933

B. The Orders of dismissal

For:

In dismissing or quashing the Informations the

trial courts concurred with the submittal of the
defense that one essential element of the offense
charged is missing from the Information, viz:
that the carrying outside of the accused's
residence of a bladed, pointed or blunt weapon
is in furtherance or on the occasion of,
connected with or related to subversion,
insurrection,
or
rebellion,
organized
lawlessness or public disorder.

ILLEGAL POSSESSION OF
DEADLY WEAPON
(VIOLATION OF PD NO. 9)
INFORMATION
The undersigned First Assistant Provincial
Fiscal of Samar, accuses PANCHITO
REFUNCION of the crime of ILLEGAL
POSSESSION OF DEADLY WEAPON or
VIOLATION OF PD NO. 9 issued by the
President of the Philippines on Oct. 2, 1972,
pursuant to Proclamation No. 1081 dated Sept.
21 and 23, 1972, committed as follows:
That on or about the 6th day of October, 1976,
in the evening at Barangay Barruz,
Municipality of Matuginao, Province of Samar
Philippines, and within the jurisdiction of this
Honorabe Court, the abovenamed accused,
knowingly, wilfully, unlawfully and feloniously
carried with him outside of his residence a
deadly weapon called socyatan, an instrument
which from its very nature is no such as could
be used as a necessary tool or instrument to
earn a livelihood, which act committed by the
accused is a Violation of Presidential Decree
No. 9.
CONTRARY TO LAW. (p. 8, rollo of L-46997)

1. Judge Purisima reasoned out, inter alia, in

this manner:
... the Court is of the opinion that in order that
possession of bladed weapon or the like outside
residence may be prosecuted and tried under
P.D. No. 9, the information must specifically
allege that the possession of bladed weapon
charged was for the purpose of abetting, or in
furtherance of the conditions of rampant
criminality, organized lawlessness, public
disorder, etc. as are contemplated and recited in
Proclamation No. 1081, as justification
therefor. Devoid of this specific allegation, not
necessarily in the same words, the information
is not complete, as it does not allege sufficient
facts to constitute the offense contemplated in
P.D. No. 9. The information in these cases
under consideration suffer from this defect.

murmurings of detained persons brought to

Court upon a charge of possession of bladed
weapons under P.D. No. 9, that more than ever
before, policemen - of course not all can be so
heartless now have in their hands P.D. No. 9
as a most convenient tool for extortion, what
with the terrifying risk of being sentenced to
imprisonment of five to ten years for a rusted
kitchen knife or a pair of scissors, which only
God knows where it came from. Whereas before
martial law an extortion-minded peace officer
had to have a stock of the cheapest paltik, and
even that could only convey the coercive
message of one year in jail, now anything that
has the semblance of a sharp edge or pointed
object, available even in trash cans, may
already serve the same purpose, and yet five to
ten times more incriminating than the infamous
paltik.
For sure, P.D. No. 9 was conceived with the
best of intentions and wisely applied, its
necessity can never be assailed. But it seems it
is back-firing, because it is too hot in the hands
of policemen who are inclined to backsliding.
The checkvalves against abuse of P.D. No. 9 are
to be found in the heart of the Fiscal and the
conscience of the Court, and hence this
resolution, let alone technical legal basis, is
prompted by the desire of this Court to apply
said checkvalves. (pp. 55-57, rollo of L-4205066)

xxx xxx xxx

And while there is no proof of it before the
Court, it is not difficult to believe the

2. Judge Maceren in turn gave his grounds for

dismissing the charges as follows:

xxx xxx xxx

As earlier noted the "desired result" sought to
be attained by Proclamation No. 1081 is the
maintenance of law and order throughout the
Philippines and the prevention and suppression
of all forms of lawless violence as well as any
act of insurrection or rebellion. It is therefore
reasonable to conclude from the foregoing
premises that the carrying of bladed, pointed or
blunt weapons outside of one's residence which
is made unlawful and punishable by said par. 3
of P.D. No. 9 is one thatabets subversion,
insurrection or rebellion, lawless violence,
criminality, chaos and public disorder or is
intended to bring about these conditions. This
conclusion is further strengthened by the fact
that all previously existing laws that also made
the carrying of similar weapons punishable
have not been repealed, whether expressly or
impliedly. It is noteworthy that Presidential
Decree No. 9 does not contain any repealing
clause or provisions.
xxx xxx xxx
The mere carrying outside of one's residence of
these deadly weapons if not concealed in one's
person and if not carried in any of the aforesaid
specified places, would appear to be not
unlawful and punishable by law.
With the promulgation of Presidential Decree
No. 9, however, the prosecution, through
Assistant Fiscal Hilario H. Laqui, contends in
his opposition to the motion to quash, that this
act is now made unlawful and punishable,

particularly by paragraph 3 thereof, regardless

of the intention of the person carrying such
weapon because the law makes it "mala
prohibita". If the contention of the prosecution
is correct, then if a person happens to be
caught while on his way home by law
enforcement officers carrying a kitchen knife
that said person had just bought from a store in
order that the same may be used by one's cook
for preparing the meals in one's home, such
person will be liable for punishment with such
a severe penalty as imprisonment from five to
ten years under the decree. Such person cannot
claim that said knife is going to be used by him
to earn a livelihood because he intended it
merely for use by his cook in preparing his
meals.
This possibility cannot be discounted if
Presidential Decree No. 9 were to be
interpreted and applied in the manner that that
the prosecution wants it to be done. The good
intentions of the President in promulgating this
decree may thus be perverted by some
unscrupulous law enforcement officers. It may
be used as a tool of oppression and tyranny or
of extortion.
xxx xxx xxx
It is therefore the considered and humble view
of this Court that the act which the President
intended to make unlawful and punishable by
Presidential Decree No. 9, particularly by
paragraph 3 thereof, is one that abets or is
intended to abet subversion, rebellion,
insurrection, lawless violence, criminality,

chaos and public disorder. (pp. 28-30, rollo of

L-46229-32)
3. Judge Polo of the Court of First Instance of
Samar expounded his order dismissing the
Information filed before him, thus:
... We believe that to constitute an offense under
the aforcited Presidential decree, the same
should be or there should be an allegation that
a felony was committed in connection or in
furtherance
of
subversion,
rebellion,
insurrection, lawless violence and public
disorder. Precisely Proclamation No. 1081
declaring a state of martial law throughout the
country was issued because of wanton
destruction to lives and properties widespread
lawlessness and anarchy. And in order to
restore the tranquility and stability of the
country and to secure the people from violence
anti loss of lives in the quickest possible
manner and time, carrying firearms, explosives
and deadly weapons without a permit unless the
same would fall under the exception is
prohibited. This conclusion becomes more
compelling when we consider the penalty
imposable, which is from five years to ten
years. A strict enforcement of the provision of
the said law would mean the imposition of the
Draconian penalty upon the accused.
xxx xxx xxx
It is public knowledge that in rural areas, even
before and during martial law, as a matter of
status symbol, carrying deadly weapons is very
common, not necessarily for committing a

crime nor as their farm implement but for selfpreservation or self-defense if necessity would
arise specially in going to and from their farm.
(pp. 18-19, rollo of L-46997)
In most if not all of the cases, the orders of
dismissal were given before arraignment of the
accused. In the criminal case before the Court
of (First Instance of Samar the accused was
arraigned but at the same time moved to quash
the Information. In all the cases where the
accused were under arrest, the three Judges
ordered their immediate release unless held on
other charges.
C. The law under which the Informations in
question were filed by the People.
As seen from the Informations quoted above,
the accused are charged with illegal possession
of deadly weapon in violation of Presidential
Decree No. 9, Paragraph 3.
We quote in full Presidential Decree No. 9, to
wit:
PRESIDENTIAL DECREE NO. 9
DECLARING VIOLATIONS OF GENERAL
ORDERS NO. 6 and NO. 7 DATED
SEPTEMBER 22, 1972, AND SEPTEMBER 23,
1972, RESPECTIVELY, TO BE UNLAWFUL
AND PROVIDING PENALTIES THEREFORE.
WHEREAS, pursuant to Proclamation No. 1081
dated September 21, 1972, the Philippines has
been placed under a state of martial law;

WHEREAS, by virtue of said Proclamation No.

1081, General Order No. 6 dated September
22, 1972 and General Order No. 7 dated
September 23, 1972, have been promulgated by
me;
WHEREAS, subversion, rebellion, insurrection,
lawless violence, criminality, chaos and public
disorder mentioned in the aforesaid
Proclamation No. 1081 are committed and
abetted by the use of firearms, explosives and
other deadly weapons;
NOW, THEREFORE, I, FERDINAND E.
MARCOS, Commander-in-Chief of all the
Armed Forces of the Philippines, in older to
attain the desired result of the aforesaid
Proclamation No. 1081 and General Orders
Nos. 6 and 7, do hereby order and decree that:
1. Any violation of the aforesaid General
Orders Nos. 6 and 7 is unlawful and the
violator shall, upon conviction suffer:
(a) The mandatory penalty of death by a firing
squad or electrocution as a Military,
Court/Tribunal/Commission may direct, it the
firearm involved in the violation is unlicensed
and is attended by assault upon, or resistance
to persons in authority or their agents in the
performance of their official functions resulting
in death to said persons in authority or their
agent; or if such unlicensed firearm is used in
the commission of crimes against persons,
property or chastity causing the death of the
victim used in violation of any other General
Orders and/or Letters of Instructions

promulgated under said Proclamation No.

1081:
(b) The penalty of imprisonment ranging from
twenty years to life imprisonment as a Military
Court/Tribunal/commission may direct, when
the violation is not attended by any of the
circumstances enumerated under the preceding
paragraph;
(c) The penalty provided for in the preceding
paragraphs shall be imposed upon the owner,
president, manager, members of the board of
directors or other responsible officers of any
public
or
private
firms,
companies,
corporations or entities who shall willfully or
knowingly allow any of the firearms owned by
such firm, company, corporation or entity
concerned to be used in violation of said
General Orders Nos. 6 and 7.
2. It is unlawful to posses deadly weapons,
including hand grenades, rifle grenades and
other explosives, including, but not limited to,
"pill box bombs," "molotov cocktail bombs,"
"fire bombs," or other incendiary device
consisting of any chemical, chemical
compound, or detonating agents containing
combustible units or other ingredients in such
proportion, quantity, packing, or bottling that
ignites by fire, by friction, by concussion, by
percussion, or by detonation of all or part of
the compound or mixture which may cause such
a sudden generation of highly heated gases that
the resultant gaseous pressures are capable of
producing destructive effects on continguous
objects or of causing injury or death of a

person; and any person convicted thereof shall

be punished by imprisonment ranging from ten
to
fifteen
years
as
a
Military
Court/Tribunal/Commission may direct.
3. It is unlawful to carry outside of residence
any bladed, pointed or blunt weapon such as
"fan knife," "spear," "dagger," "bolo,"
"balisong," "barong," "kris," or club, except
where such articles are being used as necessary
tools or implements to earn a livelihood and
while being used in connection therewith; and
any person found guilty thereof shall suffer the
penalty of imprisonment ranging from five to
ten
years
as
a
Military
Court/Tribunal/Commission may direct.
4. When the violation penalized in the
preceding paragraphs 2 and 3 is committed
during the commission of or for the purpose of
committing, any other crime, the penalty shall
be imposed upon the offender in its maximum
extent, in addition to the penalty provided for
the particular offenses committed or intended
to be committed.
Done in the City of Manila, this 2nd day of
October in the year of Our Lord, nineteen
hundred and seventy-two.

In the Comment filed in these cases by the

Solicitor General who as stated earlier joins
the City Fiscal of Manila and the Provincial
Fiscal of Samar in seeking the setting aside of
the questioned orders of dismissal, the main
argument advanced on the issue now under
consideration is that a perusal of paragraph 3
of P.D. 9 'shows that the prohibited acts need
not be related to subversive activities; that the
act proscribed is essentially a malum
prohibitum penalized for reasons of public
policy. 1
The City Fiscal of Manila in his brief adds
further that in statutory offenses the intention of
the accused who commits the act is immaterial;
that it is enough if the prohibited act is
voluntarily perpetuated; that P.D. 9 provides
and condemns not only the carrying of said
weapon in connection with the commission of
the crime of subversion or the like, but also that
of criminality in general, that is, to eradicate
lawless violence which characterized premartial law days. It is also argued that the real
nature of the criminal charge is determined not
from the caption or preamble of the information
nor from the specification of the provision of
law alleged to have been violated but by the
actual recital of facts in the complaint or
information. 2

(SGD) FERDINAND E. MARCOS

E. Our Ruling on the matter
President
Republic of the Philippines
D. The arguments of the People

1. It is a constitutional right of any person who

stands charged in a criminal prosecution to be
informed of the nature and cause of the
accusation against him. 3

Pursuant to the above, Section 5, Rule 110 of

the Rules of Court, expressly requires that for a
complaint or information to be sufficient it
must, inter alia state the designation of the
offense by the statute, and the acts or omissions
complained of as constituting the offense. This
is essential to avoid surprise on the accused
and to afford him the opportunity to prepare his
defense accordingly. 4
To comply with these fundamental requirements
of the Constitution and the Rules on Criminal
Procedure, it is imperative for the specific
statute violated to be designated or mentioned 4
in the charge. In fact, another compelling
reason exists why a specification of the statute
violated is essential in these cases. As stated in
the order of respondent Judge Maceren the
carrying of so-called "deadly weapons" is the
subject of another penal statute and a Manila
city ordinance. Thus, Section 26 of Act No.
1780 provides:
Section 26. It should be unlawful for any person
to carry concealed about his person any bowie
knife, dirk dagger, kris, or other deadly
weapon: ... Any person violating the provisions
of this section shall, upon conviction in a court
of competent jurisdiction, be punished by a fine
not exceeding five hundred pesos, or by
imprisonment for a period not exceeding six
months, or both such fine and imprisonment, in
the discretion of the court.
Ordinance No. 3820 of the City of Manila as
amended by Ordinance No. 3928 which took
effect on December 4, 1957, in turn penalizes

with a fine of not more than P200.00 or

imprisonment for not more than one months, or
both, at the discretion of the court, anyone who
shall carry concealed in his person in any
manner that would disguise its deadly
character any kind of firearm, bowie knife, or
other deadly weapon ... in any public
place.Consequently, it is necessary that the
particular law violated be specified as there
exists a substantial difference between the
statute and city ordinance on the one hand and
P.D. 9 (3) on the other regarding the
circumstances of the commission of the crime
and the penalty imposed for the offense.
We do not agree with petitioner that the abovementioned statute and the city ordinance are
deemed repealed by P.D. 9 (3). 5 P. D. 9(3) does
not contain any repealing clause or provision,
and repeal by implication is not favored. 6 This
principle holds true with greater force with
regards to penal statutes which as a rule are to
be construed strictly against the state and
liberally in favor of the accused. 7 In fact,
Article 7 of the New Civil Code provides that
laws are repealed only by subsequent ones and
their violation or non- observance shall not be
excused by disuse, or custom or practice to the
contrary.
Thus we are faced with the situation where a
particular act may be made to fall, at the
discretion of a police officer or a prosecuting
fiscal, under the statute, or the city ordinance,
or the presidential decree. That being the case,
the right becomes more compelling for an
accused to be confronted with the facts

constituting the essential elements of the

offense charged against him, if he is not to
become an easy pawn of oppression and
harassment, or of negligent or misguided
official action a fear understandably shared
by respondent Judges who by the nature of their
judicial functions are daily exposed to such
dangers.
2. In all the Informations filed by petitioner the
accused are charged in the caption as well as in
the body of the Information with a violation of
paragraph 3, P.D. 9. What then are the
elements of the offense treated in the
presidential decree in question?
We hold that the offense carries two elements:
first, the carrying outside one's residence of any
bladed, blunt, or pointed weapon, etc. not used
as a necessary tool or implement for a
livelihood; and second, that the act of carrying
the weapon was either in furtherance of, or to
abet, or in connection with subversion,
rebellion, insurrection, lawless violence,
criminality, chaos, or public disorder.
It is the second element which removes the act
of carrying a deadly weapon, if concealed,
outside of the scope of the statute or the city
ordinance mentioned above. In other words, a
simple act of carrying any of the weapons
described in the presidential decree is not a
criminal offense in itself. What makes the act
criminal or punishable under the decree is the
motivation behind it. Without that motivation,
the act falls within the purview of the city

ordinance or some statute

circumstances so warrant.

when

the

Respondent Judges correctly ruled that this can

be the only reasonably, logical, and valid
construction given to P.D. 9(3).
3. The position taken by petitioner that P.D.
9(3) covers one and all situations where a
person carries outside his residence any of the
weapons mentioned or described in the decree
irrespective of motivation, intent, or purpose,
converts these cases into one of "statutory
construction." That there is ambiguity in the
presidential decree is manifest from the
conflicting views which arise from its
implementation. When ambiguity exists, it
becomes a judicial task to construe and
interpret the true meaning and scope of the
measure, guided by the basic principle that
penal statutes are to be construed and applied
liberally in favor of the accused and strictly
against the state.
4. In the construction or interpretation of a
legislative measure a presidential decree in
these cases the primary rule is to search for
and determine the intent and spirit of the
law. Legislative intent is the controlling factor,
for in the words of this Court in Hidalgo v.
Hidalgo, per Mr. Justice Claudio Teehankee,
whatever is within the spirit of a statute is
within the statute, and this has to be so if strict
adherence to the letter would result in
absurdity, injustice and contradictions. 8

There are certain aids available to Us to

ascertain the intent or reason for P.D. 9(3).
First, the presence of events which led to or
precipitated the enactment of P.D. 9. These
events are clearly spelled out in the "Whereas"
clauses of the presidential decree, thus: (1) the
state of martial law in the country pursuant to
Proclamation 1081 dated September 21, 1972;
(2) the desired result of Proclamation 1081 as
well as General Orders Nos. 6 and 7 which are
particularly mentioned in P.D. 9; and (3) the
alleged fact that subversion, rebellion,
insurrection, lawless violence, criminality,
chaos, aid public disorder mentioned in
Proclamation 1081 are committed and abetted
by the use of firearms and explosives and other
deadly weapons.
The Solicitor General however contends that a
preamble of a statute usually introduced by the
word "whereas", is not an essential part of an
act and cannot enlarge or confer powers, or
cure inherent defects in the statute (p. 120, rollo
of L-42050-66); that the explanatory note or
enacting clause of the decree, if it indeed limits
the violation of the decree, cannot prevail over
the text itself inasmuch as such explanatory
note merely states or explains the reason which
prompted the issuance of the decree. (pp. 114115, rollo of 46997)
We disagree with these contentions. Because of
the problem of determining what acts fall
within the purview of P.D. 9, it becomes
necessary to inquire into the intent and spirit of
the decree and this can be found among others

in the preamble or, whereas" clauses which

enumerate the facts or events which justify the
promulgation of the decree and the stiff
sanctions stated therein.
A "preamble" is the key of the statute, to open
the minds of the makers as to the mischiefs
which are to be remedied, and objects which
are to be accomplished, by the provisions of the
statute." (West Norman Timber v. State, 224 P.
2d 635, 639, cited in Words and Phrases,
"Preamble"; emphasis supplied)
While the preamble of a statute is not strictly a
part thereof, it may, when the statute is in itself
ambiguous and difficult of interpretation, be
resorted to, but not to create a doubt or
uncertainty which otherwise does not exist."
(James v. Du Bois, 16 N.J.L. (1 Har.) 285, 294,
cited in Words and Phrases, "Preamble")
In Aboitiz Shipping Corporation, et al. v. The
City of Cebu, et al. this Court had occasion to
state that '(L)egislative intent must be
ascertained from a consideration of the statute
as a whole, and not of an isolated part or a
particular provision alone. This is a cardinal
rule of statutory construction. For taken in the
abstract, a word or phrase might easily convey
a meaning quite different from the one actually
intended and evident when the word or phrase
is considered with those with which it is
associated. Thus, an apparently general
provision may have a limited application if read
together with other provisions. 9

Second, the result or effects of the presidential

decree must be within its reason or intent.
In the paragraph immediately following the last
"Whereas" clause, the presidential decree
states:
NOW, THEREFORE, I , FERDINAND E.
MARCOS, Commander-in-Chief of an the
Armed Forces of the Philippines, in order to
attain the desired result of the aforesaid
Proclamation No. 1081 and General Orders
Nos. 6 and 7, do hereby order and decree that:
xxx xxx xxx
From the above it is clear that the acts
penalized in P.D. 9 are those related to
the desired result of Proclamation 1081 and
General Orders Nos. 6 and 7. General Orders
Nos. 6 and 7 refer to firearms and therefore
have no relevance to P.D. 9(3) which refers to
blunt or bladed weapons. With respect to
Proclamation 1081 some of the underlying
reasons for its issuance are quoted hereunder:
WHEREAS, these lawless elements having
taken up arms against our duly constituted
government and against our people, and having
committed and are still committing acts of
armed insurrection and rebellion consisting of
armed raids, forays, sorties, ambushes, wanton
acts of murders, spoilage, plunder, looting,
arsons, destruction of public and private
buildings, and attacks against innocent and
defenseless civilian lives and property, all of
which activities have seriously endangered and

continue to endanger public order and safety

and the security of the nation, ...
xxx xxx xxx
WHEREAS, it is evident that there is
throughout the land a state of anarchy and
lawlessness, chaos and disorder, turmoil and
destruction of a magnitude equivalent to an
actual war between the forces of our duly
constituted government and the New People's
Army and their satellite organizations because
of the unmitigated forays, raids, ambuscades,
assaults, violence, murders, assassinations, acts
of terror, deceits, coercions, threats,
intimidations, treachery, machinations, arsons,
plunders and depredations committed and
being committed by the aforesaid lawless
elements who have pledged to the whole nation
that they will not stop their dastardly effort and
scheme until and unless they have fully attained
their primary and ultimate purpose of forcibly
seizing political and state power in this country
by overthrowing our present duly constituted
government, ... (See Book I, Vital Documents on
the Declaration of Martial Law in the
Philippines by the Supreme Court of the
Philippines, pp. 13-39)
It follows that it is only that act of carrying a
blunt or bladed weapon with a motivation
connected with or related to the afore-quoted
desired result of Proclamation 1081 that is
within the intent of P.D. 9(3), and nothing else.
Statutes are to be construed in the light
of purposes to be achieved and the evils sought

to be remedied. (U.S. v. American Tracking

Association, 310 U.S. 534, cited in LVN
Pictures v. Philippine Musicians Guild, 110
Phil. 725, 731; emphasis supplied)
When construing a statute, the reason for its
enactment should be kept in mind, and the
statute should be construed with reference to its
intended scope and purpose. (Statutory
Construction by E.T. Crawford, pp. 604-605,
cited in Commissioner of Internal Revenue v.
Filipinas Compania de Seguros, 107 Phil.
1055, 1060; emphasis supplied)
5. In the construction of P.D. 9(3) it becomes
relevant to inquire into the consequences of the
measure if a strict adherence to the letter of the
paragraph is followed.
It is a salutary principle in statutory
construction that there exists a valid
presumption that undesirable consequences
were never intended by a legislative measure,
and that a construction of which the statute is
fairly susceptible is favored, which will avoid
all objectionable, mischievous, indefensible,
wrongful, evil, and injurious consequences. 9-a
It is to be presumed that when P.D. 9 was
promulgated by the President of the Republic
there was no intent to work a hardship or an
oppressive result, a possible abuse of authority
or act of oppression, arming one person with a
weapon to impose hardship on another, and so
on. 10

At this instance We quote from the order of

Judge Purisima the following:
And while there is no proof of it before the
Court, it is not difficult to believe the
murmurings of detained persons brought to
Court upon a charge of possession of bladed
weapons under P.D. No. 9, that more than ever
before, policemen - of course not all can be so
heartless now have in their hands P.D. No. 9
as a most convenient tool for extortion, what
with the terrifying risk of being sentenced to
imprisonment of five to ten years for a rusted
kitchen knife or a pair of scissors, which only
God knows where it came from. Whereas before
martial law an extortion-minded peace officer
had to have a stock of the cheapest paltik, and
even that could only convey the coercive
message of one year in jail, now anything that
has the semblance of a sharp edge or pointed
object, available even in trash cans, may
already serve the same purpose, and yet five to
ten times more incriminating than the infamous
paltik. (pp. 72-73, rollo L-42050-66)
And as respondent Judge Maceren points out,
the people's interpretation of P.D. 9(3) results
in absurdity at times. To his example We may
add a situation where a law-abiding citizen, a
lawyer by profession, after gardening in his
house remembers to return the bolo used by him
to his neighbor who lives about 30 meters or so
away and while crossing the street meets a
policeman. The latter upon seeing the bolo
being carried by that citizen places him under
arrest and books him for a violation of P.D.
9(3). Could the presidential decree have been

conceived
to
produce
such
unreasonable, and insensible results?

absurd,

6. Penal statutes are to be construed strictly

against the state and liberally in favor of an
accused.
American jurisprudence sets down the reason
for this rule to be "the tenderness of the law of
the rights of individuals; the object is to
establish a certain rule by conformity to which
mankind would be safe, and the discretion of
the court limited." 11 The purpose is not to
enable a guilty person to escape punishment
through a technicality but to provide a precise
definition of forbidden acts. 12
Our own decisions have set down the same
guidelines in this manner, viz:
Criminal statutes are to be construed strictly.
No person should be brought within their terms
who is not clearly within them, nor should any
act be pronounced criminal which is not made
clearly so by the statute. (U.S. v. Abad Santos,
36 Phil. 243, 246)
The rule that penal statutes are given a strict
construction is not the only factor controlling
the interpretation of such laws, instead, the rule
merely serves as an additional, single factor to
be considered as an aid in determining the
meaning of penal laws. (People v. Manantan, 5
SCRA 684, 692)
F. The Informations filed by petitioner are
fatally defective.

The two elements of the offense covered by P.D.

9(3) must be alleged in the Information in order
that the latter may constitute a sufficiently valid
charged. The sufficiency of an Information is
determined solely by the facts alleged
therein. 13 Where the facts are incomplete and
do not convey the elements of the crime, the
quashing of the accusation is in order.
Section 2(a), Rule 117 of the Rules of Court
provides that the defendant may move to quash
the complaint or information when the facts
charged do not constitute an offense.
In U.S.U. Gacutan, 1914, it was held that
where an accused is charged with knowingly
rendering an unjust judgment under Article 204
of the Revised Penal Code, failure to allege in
the Information that the judgment was rendered
knowing it to be unjust, is fatal. 14
In People v. Yadao, 1954, this Court through
then Justice Cesar Bengzon who later became
Chief Justice of the Court affirmed an order of
the trial court which quashed an Information
wherein the facts recited did not constitute a
public offense as defined in Section 1, Republic
Act 145. 15
G. The filing of these Petitions was unnecessary
because the People could have availed itself of
other available remedies below.
Pertinent provisions of the Rules of Court
follow:

Rule 117, Section 7. Effect of sustaining the

motion to quash. If the motion to quash is
sustained the court may order that another
information be filed. If such order is made the
defendant, if in custody, shall remain so unless
he shall be admitted to bail. If such order is not
made or if having been made another
information is not filed withuntime to be
specified in the order, or within such further
time as the court may allow for good cause
shown, the defendant, if in custody, shall be
discharged therefrom, unless he is in custody on
some other charge.
Rule 110, Section 13. Amendment. The
information or complaint may be amended, in
substance or form, without leave of court, at
any time before the defendant pleads; and
thereafter and during the trial as to all matters
of form, by leave and at the discretion of the
court, when the same can be done without
prejudice to the rights of the defendant.
xxx xxx xxx
Two courses of action were open to Petitioner
upon the quashing of the Informations in these
cases, viz:
First, if the evidence on hand so warranted, the
People could have filed an amended
Information to include the second element of
the offense as defined in the disputed orders of
respondent Judges. We have ruled that if the
facts alleged in the Information do not
constitute a punishable offense, the case should
not be dismissed but the prosecution should be

given an opportunity
Information. 16

to

amend

the

Second, if the facts so justified, the People

could have filed a complaint either under
Section 26 of Act No. 1780, quoted earlier, or
Manila City Ordinance No. 3820, as amended
by Ordinance No. 3928, especially since in
most if not all of the cases, the dismissal was
made prior to arraignment of the accused and
on a motion to quash.
Section 8. Rule 117 states that:
An order sustaining the motion to quash is not
a bar to another prosecution for the same
offense unless the motion was based on the
grounds specified in section 2, subsections (f)
and (h) of this rule.
Under the foregoing, the filing of another
complaint or Information is barred only when
the criminal action or liability had been
extinguished (Section 2[f]) or when the motion
to quash was granted for reasons of double
jeopardy. (ibid., [h])
As to whether or not a plea of double jeopardy
may be successfully invoked by the accused in
all these cases should new complaints be filed
against them, is a matter We need not resolve
for the present.
H. We conclude with high expectations that
police authorities and the prosecuting arm of
the government true to the oath of office they
have taken will exercise utmost circumspection

and good faith in evaluating the particular

circumstances of a case so as to reach a fair
and just conclusion if a situation falls within
the purview of P.D. 9(3) and the prosecution
under said decree is warranted and justified.
This obligation becomes a sacred duty in the
face of the severe penalty imposed for the
offense.
On this point, We commend the Chief State
Prosecutor Rodolfo A. Nocon on his letter to
the City Fiscal of Manila on October 15, 1975,
written for the Secretary, now Minister of
Justice, where he stated the following:

WHEREFORE, We DENY these 26 Petitions for

Review and We AFFIRM the Orders of
respondent Judges dismissing or quashing the
Information concerned, subject however to Our
observations made in the preceding pages 23 to
25 of this Decision regarding the right of the
State or Petitioner herein to file either an
amended Information under Presidential
Decree No. 9, paragraph 3, or a new one under
other existing statute or city ordinance as the
facts may warrant.
Without costs.
SO ORDERED.

In any case, please study well each and every

case of this nature so that persons accused of
carrying bladed weapons, specially those
whose purpose is not to subvert the duly
constituted authorities, may not be unduly
indicted for the serious offenses falling under
P.D. No. 9. 17
Yes, while it is not within the power of courts of
justice to inquire into the wisdom of a law, it is
however a judicial task and prerogative to
determine if official action is within the spirit
and letter of the law and if basic fundamental
rights of an individual guaranteed by the
Constitution are not violated in the process of
its implementation. We have to face the fact that
it is an unwise and unjust application of a law,
necessary and justified under prevailing
circumstances, which renders the measure an
instrument of oppression and evil and leads the
citizenry to lose their faith in their government.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-8848

November 21, 1913

THE UNITED STATES, plaintiff-appllee,

vs.
WILLIAM C. HART, C. J. MILLER, and
SERVILIANO NATIVIDAD, defendantsappellants.
Pedro Abad Santos, for appellants Hart and
Natividad.
W. H. Booram, for appellant Miller.
Office of the Solicitor-General Harvey, for
appellee.

TRENT, J.:
The appellants, Hart, Miller, and Natividad,
were arraigned in the Court of First Instance of
Pampanga on a charge of vagrancy under the
provisions of Act No. 519, found guilty, and
were each sentenced to six months'
imprisonment. Hart and Miller were further
sentenced to a fine of P200, and Natividad to a
fine of P100. All appealed.
The evidence of the prosecution as to the
defendant Hart shows that he pleaded guilty and
was convicted on a gambling charge about two

or three weeks before his arrest on the vagrancy

charge; that he had been conducting two
gambling games, one in his saloon and the other
in another house, for a considerable length of
time, the games running every night. The
defense showed that Hart and one Dunn
operated a hotel and saloon at Angeles which
did a business, according to the bookkeeper, of
P96,000 during the nineteen months preceding
the trial; that Hart was also the sole proprietor
of a saloon in the barrio of Tacondo; that he
raised imported hogs which he sold to the Army
garrison at Camp Stotsenberg, which business
netted him during the preceding year about
P4,000; that he was authorized to sell several
hundred hectares of land owned by one Carrillo
in Tacondo; that he administered, under power
of attorney, the same property; and that he
furnished a building for and paid the teacher of
the first public school in Tacondo, said school
being under Government supervision.

articles of partnership with one Burckerd,

Miller having contributed P1,000 to the
partnership; that the business netted each
partner about P300 per month; that Miller
attended to business in an efficient manner
every day; and that his work was first class.

The evidence of the prosecution as to Miller

was that he had the reputation of being a
gambler; that he pleaded guilty and was fined
for participating in a gambling game about two
weeks before his arrest on the present charge of
vagrancy; and that he was seen in houses of
prostitution and in a public dance hall in
Tacondo on various occasions. The defense
showed without contradiction that Miller had
been discharged from the Army about a year
previously; that during his term of enlistment he
had been made a sergeant; that he received
rating as "excellent" on being discharged; that
since his discharge he had been engaged in the
tailoring business near Camp Stotsenberg under

From this evidence it will be noted that each of

the defendants was earning a living at a lawful
trade or business, quite sufficient to support
himself in comfort, and that the evidence which
the prosecution must rely upon for a conviction
consists of their having spent their evenings in
regularly licensed saloons, participating in
gambling games which are expressly made
unlawful by the Gambling Act, No. 1757, and
that Miller frequented a dance hall and houses
of prostitution.

The evidence of the prosecution as to Natividad

was that he had gambled nearly every night for
a considerable time prior to his arrest on the
charge of vagrancy, in the saloon of one
Raymundo, as well as in Hart's saloon; that
Natividad sometimes acted as banker; and that
he had pleaded guilty to a charge of gambling
and had been sentenced to pay a fine therefor
about two weeks before his arrest on the
vagrancy charge. The defense showed that
Natividad was a tailor, married, and had a house
of his own; that he made good clothes, and
earned from P80 to P100 per month, which was
sufficient to support his family.

Section 1 of Act No. 519 is divided into seven

clauses, separated by semicolons. Each clause
enumerates a certain class of persons who,

within the meaning of this statute, are to be

considered as vagrants. For the purposes of this
discussion, we quote this section below, and
number each of these seven clauses.
(1) Every person having no apparent means of
subsistence, who has the physical ability to
work, and who neglects to apply himself or
herself to some lawful calling; (2) every person
found loitering about saloons or dram shops or
gambling houses, or tramping or straying
through the country without visible means of
support; (3) every person known to be a
pickpocket, thief, burglar, ladrone, either by his
own confession or by his having been convicted
of either of said offenses, and having no visible
or lawful means of support when found
loitering about any gambling house, cockpit, or
in any outlying barrio of a pueblo; (4) every
idle or dissolute person or associate of known
thieves or ladrones who wanders about the
country at unusual hours of the night; (5) every
idle peron who lodges in any barn, shed,
outhouse, vessel, or place other than such as is
kept for lodging purposes, without the
permission of the owner or person entitled to
the possession thereof; (6) every lewd or
dissolute person who lives in and about houses
of ill fame; (7) every common prostitute and
common drunkard, is a vagrant.
It is insisted by the Attorney-General that as
visible means of support would not be a bar to a
conviction under any one of the last four
clauses of this act, it was not the intention of the
Legislature to limit the crime of vagrancy to
those having no visible means of support.

Relying upon the second clause to sustain the

guilt of the defendants, the Attorney-General
then proceeds to argue that "visible means of
support" as used in that clause does not apply to
"every person found loitering about saloons or
dram shops or gambling houses," but is
confined entirely to "or tramping or straying
through the country." It is insisted that had it
been intended for "without visible means of
support" to qualify the first part of the clause,
either the comma after gambling houses would
have been ommitted, or else a comma
after country would have been inserted.
When the meaning of a legislative enactment is
in question, it is the duty of the courts to
ascertain, if possible, the true legislative
intention, and adopt that construction of the
statute which will give it effect. The
construction finally adopted should be based
upon something more substantial than the mere
punctuation found in the printed Act. If the
punctuation of the statute gives it a meaning
which is reasonable and in apparent accord with
the legislative will, it may be used as an
additional argument for adopting the literal
meaning of the words of the statute as thus
punctuated. But an argument based upon
punctuation alone is not conclusive, and the
courts will not hesitate to change the
punctuation when necessary, to give to the Act
the effect intended by the Legislature,
disregarding
superfluous
or
incorrect
punctuation marks, and inserting others where
necessary.

The Attorney-General has based his argument

upon the proposition that neither visible means
of support nor a lawful calling is a sufficient
defense under the last four paragraphs of the
section; hence, not being universally a defense
to a charge of vagrancy, they should not be
allowed except where the Legislature has so
provided. He then proceeds to show, by a "mere
grammatical criticism" of the second paragraph,
that the Legislature did not intend to allow
visible means of support or a lawful calling to
block a prosecution for vagrancy founded on
the charge that the defendant was found
loitering around saloons, dram shops, and
gambling houses.
A most important step in reasoning, necessary
to make it sound, is to ascertain the
consequences flowing from such a construction
of the law. What is loitering? The dictionaries
say it is idling or wasting one's time. The time
spent in saloons, dram shops, and gambling
houses is seldom anything but that. So that
under the proposed construction, practically all
who frequent such places commit a crime in so
doing, for which they are liable to punishment
under the Vagrancy Law. We cannot believe that
it was the intention of the Legislature to
penalize what, in the case of saloons and dram
shops, is under the law's protection. If it be
urged that what is true of saloons and dram
shops is not true of gambling houses in this
respect, we encounter the wording of the law,
which makes no distinction whatever between
loitering around saloons and dram shops, and
loitering around gambling houses.

The offense of vagrancy as defined in Act No.

519 is the Anglo-Saxon method of dealing with
the habitually idle and harmful parasites of
society. While the statutes of the various States
of the American Union differ greatly as to
the classification of such persons, their scope is
substantially the same. Of those statutes we
have had an opportunity to examine, but two or
three contain a provision similar to the second
paragraph of Act No. 519. (Mo. Ann. Stat., sec.
2228; N. D. Rev. Codes, sec. 8952; N. M.
Comp. Laws 1897, sec. 1314.) That the absence
of visible means of support or a lawful calling
is necessary under these statutes to a conviction
for loitering around saloons, dram shops, and
gambling houses is not even negatived by the
punctuation employed. In the State of
Tennessee, however, we find an exact
counterpart for paragraph 2 of section 1 of our
own Act (Code of Tenn., sec. 3023), with the
same punctuation:lawph!1.net
. . . or of any person to be found loitering about
saloons or dram shops, gambling houses, or
houses of ill fame, or tramping or strolling
through the country without any visible means
of support.
A further thought suggest itself in connection
with the punctuation of the paragraph in
question. The section, as stated above, is
divided into seven clauses, separated by
semicolons. To say that two classes of vagrants
are defined in paragraph 2, as to one of which
visible means of support or a lawful calling is
not a good defense, and as to the other of which
such a defense is sufficient, would imply a lack

of logical classification on the part of the

legislature of the various classes of vagrants.
This we are not inclined to do.
In the case at bar, all three of the defendants
were earning a living by legitimate methods in a
degree of comfort higher that the average. Their
sole offense was gambling, which the
legislature deemed advisable to make the
subject of a penal law. The games in which they
participated were apparently played openly, in a
licensed public saloon, where the officers of the
law could have entered as easily as did the
patrons. It is believed that Act No. 1775 is
adequate, if enforced, to supress the gambling
proclivities of any person making a good living
at a lawful trade or business.
For these reasons, the defendants are acquitted,
with the costs de oficio.

Republic of the Philippines

SUPREME COURT
Manila

II. That in May, 1926, the plaintiff herein

shipped at Pulupandan, Occidental Negros, on
the steamship Hannover 5,124,416 gross kilos
of centrifugal sugar consigned to the United
States.

EN BANC
G.R. No. L-27761 December 6, 1927
PHILIPPINE SUGAR CENTRALS
AGENCY, plaintiff-appellee,
vs.
THE INSULAR COLLECTOR OF
CUSTOMS, defendant-appellant.
Attorney-General Jaranilla for appellant.
Dionisio de Leon for appellee.
STATEMENT
This case had its origin in the Court of First
Instance of Manila where it was tried and
submitted upon the following stipulation of
facts:
Come now the parties, plaintiff and defendant,
in the above-entitled cause, by their
undersigned attorneys, and respectfully submit
to this Honorable Court the following statement
of facts, which the court may find as true and
enter judgment thereon:
I. That the plaintiff at all times and in all
transactions herein mentioned have always
acted as representative and attorney-in-fact of
the Ma-ao Sugar Central Co.

III. That said sugar was laden through a wharf

built, owned and maintained solely by the Maao Sugar Central Company, a domestic
corporation, on a foreshore public land at
Pulupandan, Occidental Negros, leased to it by
the Government of Philippine Islands.

I. The lower court erred in declaring that the

plaintiff was not bound to pay duty as a charge
for wharfage on the goods exported through
Pulupandan, a port of entry of the Philippine
Islands, since the wharf used by the plaintiff for
shipping said goods did not belong to the
Government.
II. The lower court erred in ordering the
defendant to return to the plaintiff the sum of
P10,248.84 in question instead of dismissing
the complaint with costs against the plaintiff.

IV. That the defendant herein through the

collector of customs of the collection district of
Iloilo, assessed and collected wharfage dues on
sugar mentioned in paragraph II hereof at P2
per thousand gross kilos or a total amount of
P10,248.84.

III. The lower court erred in not granting a new

trial.

V. That the plaintiff paid, under protest, the said

amount of P10,248.84 but its protest was
overruled by the defendant.

As tersely stated by the trial judge, the question

at issue is whether or not the Government of the
Philippine Islands can legally collect the duty of
$1 per gross ton of 1,000 kilos as a charge for
wharfage on goods, wares and merchandise
exported through a port of entry of the
Philippine Islands or shipped therefrom to the
United States, where it appears that the
Government does not own the wharf and that
the sugar in question was loaded from a wharf
which was the sole property of a private person.

VI. It is further agreed by the parties herein that

Pulupandan through which the sugar in question
was exported, was at the time of the shipment,
and is now, a port of entry of the Philippine
Islands, having been declared as such by Act
No. 3106.

JOHNS, J.:

In which judgment was rendered for the

plaintiff for P10,248.84, the amount of
plaintiff's claim, without costs.

Section 16 of the original Customs Tariff of

November 15, 1901, is as follows:

On appeal the defendant assigns the following

errors:

There shall be levied and collected upon goods

of all kinds exported through the ports of entry

of the Philippine Islands a duty of seventy-five

cents ($0.75) per gross ton of 1,000 kilos as a
charge for wharfage and for harbor dues
whatever be the port of destination or
nationality of the exporting vessel.
That law was enacted by the United States
Philippine Commission by the authority of the
President of the United States, and with the
approval of the Secretary of War. It was
reenacted in section 16 of an Act of Congress of
the United States of March 3, 1905, entitled
"An Act to revise and amend the Tariff laws of
the Philippine Islands and for other purposes,"
as amended by the Act of Congress of February
26, 1906, entitled "An Act to amend an Act
entitled "An Act to revise and amend the Tariff
laws of the Philippine Islands, and for other
purposes," approved March third, nineteen
hundred and five.
August 5, 1909, the Congress of the United
States passed what is known as the "Philippine
Tariff Act of 1909," entitled "An Act to raise
revenue for the Philippine Islands, and for other
purposes," section 14 of which, under the head
of "Wharfage," is as follows:
That there shall be levied and collected upon all
articles, goods, wares, or merchandise, except
coal, timber and cement, the product of the
Philippine Islands, exported through ports of
entry of the Philippine Islands, or shipped
therefrom to the United States or any of its
possessions, a duty of one dollar per gross ton
of one thousand kilos, as a charge for wharfage,
whatever be the port of destination or

nationality of the exporting vessel: Provided,

that articles, goods, wares, or merchandise
imported, exported, or shipped in transit for the
use of the Government of the United States, or
of that of that of the Philippine Islands, shall be
exempted from the charges prescribed in this
section.
By a comparison, it will be seen that the law of
1909 changes the duty of seventy-five cents
($0.75) per gross ton of 1,000 kilos to $1 per
gross ton, and that the words "as a charge for
wharfage and for harbor dues" now read "as a
charge for wharfage." That is to say, that the
words "and for harbor dues," found in the
Customs Tariff of 1901 and 1905, were omitted
from the Tariff Act of 1909.
The question now before the court is the
meaning of the words "as a charge for
wharfage," as those words are used in section
14 of the Tariff Act of 1909.
The law in question is an Act of Congress, and
it is a revenue law for the Philippine Islands.
In Words and Phrases, volume 8, page 7435, it
is said:
Wharfage is a charge or rent for the temporary
use of a wharf.
Wharfage is the fee paid for tying vessels to a
wharf, or for loading goods on a wharf of
shipping them therefrom.

Wharfage is money due or money actually paid

for the privilege of landing goods upon or
loading a vessel, while moored, from a wharf.
Wharfage or keyage is a toll or duty for the
pitching or lodging of goods upon a wharf, or
pay for taking goods into a boat and from
thence.
By the same author and in the same volume, on
page 6997, the word
"Tonnage" is defined to be the cubical contents
or burden of a ship in tons, or the amount of
weight which one or several ships will carry.
And on page 6998, it is said:
A "duty on tonnage" is a duty or tax or burden
imposed under the authority of the state, which
is, by the law imposing it, to be measured by
the capacity of the vessel, and is in its essence
contribution claimed for the privilege of
arriving and departing from a port of the United
States.
And on page 6999, it is said:
A "duty on tonnage" is a duty on a vessel for the
privilege of entering a port, and does not
prohibit wharfage.
A "duty of tonnage," within the constitutional
provision that no state shall, without the consent
of Congress, lay any "duty of tonnage," is a
charge, tax or duty on a vessel for the privilege
of entering a port; and though usually levied

according to tonnage, and so acquiring its

name, it is not confined to that method of rating
the charge. It does not include a charge for
wharfage.
In the syllabus to the case of Cincinnati,
Portsmouth, Big Sandy and Pomeroy Packet
Company vs. Board of Trustee of the Town of
Catlettsburg, Kentucky (26 Law, ed., 1169), the
Supreme Court of the United States laid down
this rule:
3. A city or town, situated on navigable waters,
may build and own a wharf suitable for vessels
to land at, and exact a reasonable compensation
for the facilities thus afforded to vessels by the
use of such wharves, and this is no infringement
of the constitutional provisions concerning
tonnage taxes and the regulation of commerce.

the amount of this compensation that it was

measured by the size of the vessel, and that this
size was, ascertained by the tonnage of each
vessel. It is idle, after the decisions we have
made, to call this a tax upon tonnage
(Cannon vs. New Orleans, 20 Wall., 577 [87 U.
S., XXII 417]; Packet Co. vs. St. Louis, 100 U.
S., 428 [XXV, 690]; Packet Co. vs. Keokuk, 95
U. S., 80 [XXIV, 377]; Guy vs. Baltimore, 100
U. S., 442 [XXV, 746].)

in regard to which no general rules, applicable

alike to all parts and landing places, can be
properly made. If a regulation of commerce at
all, it comes within that class in which the
States may prescribe rules until Congress
assumes to do so. (Cooleyvs. Board of Wardens,
12 How., 299; Gilman vs. Philadelphia, 3 Wall.,
727 [70 U. S., XVIII, 100]; Crandallvs. Nevada,
6 Wall., 42 [73 U.S., XVIII, 746];
Pound vs. Turck, 95 U. S., XXIV, 526].)

Still less ground exists for holding that the

penalties imposed for a refusal to obey the rules
for places of landing and the orders of the
wharfmaster on that subject, are taxes on
tonnage.

There is, probably, not a city or large town in

the United States, situated on a navigable water,
where ordinances, rules and regulations like
those of the Town of Catlettsburg are not made
and imposed by authority derived from state
legislation, and the long acquiescence in this
exercise of the power, and its absolute
necessity, are arguments almost conclusive in
favor of its rightful existence.

4. Appropriate regulations prescribing places

for the landing of vessels and placing the matter
under the control of a wharfmaster or other
officer, whose duty is to look after it, are valid
and constitutional, and the States may prescribe
them until Congress assumes to do so.

Nor is there any room to question the right of a

city or town situated on navigable waters to
build and own a wharf suitable for vessels to
land at, and exact a reasonable compensation
for the facilities thus afforded to vessels by the
use of such wharves, and that this is no
infringement of the constitutional provisions
concerning tonnage taxes and the regulation of
commerce, see cases above cited.

And on page 1170 of the opinion, it is said:

An on page 1171, it is said:

The effort of the pleader, undoubtedly, is to

bring the case with the constitutional
prohibition of a tax upon tonnage.

We are not aware that in any instance Congress

has attempted to exercise it. If it be a regulation
of Commerce under the power conferred on
Congress by the Constitution, that body has
signally failed to provide any such regulation. It
belongs, also, manifestly, to that class of rules
which, like pilotage and some others, can be
most wisely exercised by local authorities, and

If, however, the Trustees of the Town had a

right to compensation for the use of the
improved landing or wharf which they had
made, it is no objection to the ordinance fixing

In the syllabus to the case of Parkersburg an

Ohio River Transportation Company vs. City of
Parkersburg (27 Law, ed., 584), the Supreme
Court of the United States laid down this rule:
2. The ordinance in this case imposed certain
rates of wharfage on vessels "That may
discharge or receive freight, or land on or
anchor at or in front of any public landing or
wharf belonging to the city, for the purpose of
discharging or receiving freight;" held that the
ordinance only intended to charge for the use of
a wharf, and not for entering the port, or lying
at anchor in the river.

3. Wharfage is a charge for the use of wharf,

made by the owner therefor by way of rent, or
compensation; a duty of tonnage is a tax or duty
charged for the privilege of entering, or loading
or lying in, a port or harbor, and can only be
imposed by the government.
5. That, although wharves are related to
commerce and navigation as aids and
conveniences, yet being local in their nature,
and requiring special regulations for particular
places, in the absence of Congressional
legislation on the subject, the regulation thereof
properly belongs to the States in which they are
situated.
And on page 586 of the opinion, it is said:
But whether a charge imposed is a charge of
wharfage or a duty of tonnage must be
determined by the terms of the ordinance or
regulation which imposes it. They are not the
same thing; a duty of tonnage is a charge for the
privilege of entering or trading or lying in a port
or harbo; wharfage is a charge for the use of a
wharf. Exorbitant wharfage may have a similar
effect as a burden on commerce as a duty of
tonnage has; but it is exorbitant wharfage and
not a duty of tonnage; and the remedy for the
one is different from the remedy for the other.
The question whether it is the one or the other is
not one of intent, but one of fact and law; of
fact, as whether the charge is made for the use
of a wharf, or for entering the port; of law, as
whether, according as the fact is shown to exist,
it is wharfage or a duty of tonnage.

And on page 587, it is said:

When the Constitution declares that "No State
shall, without the consent of Congress, lay and
duty of tonnage;" and when Congress, in
section 4220 of the Revised Statutes, declares
that "No vessel belonging to any citizen of the
United States, trading from one port within the
United States to another port within the Unites
States, or employed in the bank, whale or other
fisheries, shall be subject to tonnage, tax or
duty, if such vessel be licensed, registered or
enrolled;" they mean by the phrases, "duty of
tonnage," and "tonnage tax or duty," a charge,
tax or duty on a vessel for the privilege of
entering a port; and although usually levied
according to tonnage, and so acquiring its
name, it is not confined to that method of rating
the charge. It has nothing to do with wharfage,
which is a charge against a vessel for using or
lying at a wharf or landing.
And on page 588, it is said:
Now wharves, levees and landing places are
essential to commerce by water, no less than a
navigable channel and a clear river. But they are
attached to the land; they are private property,
real estate; and they are primarily, at least,
subject to the local states loss. Congress has
never yet interposed to supervise their
administration; it has hitherto left this
exclusively to the States. There is little doubt,
however, that Congress, if it saw fit, in case of
prevailing abuses in the management of wharf
property, abuses materially interfering with the
prosecution of commerce, might interpose and

make regulations to prevent such abuses. When

it shall have done so, it will be time enough for
the courts to carry its regulations into effect by
judicial proceedings properly instituted. But
until Congress has acted, the courts of the
United States cannot assume control over the
subject as a matter of federal cognizance. It is
the Congress, and not the judicial department,
to which the Constitution has given the power
to regulate commerce with foreign Nations, and
among the several States. The courts can never
take the initiative on this subject.
That is to say, it is the law of the land that even
a municipality has the legal right to pass and
enforce an ordinance requiring a vessel to pay
wharfage tax for the use of a wharf on a
navigable stream within the city limits, and
such reasonable charge is not a duty or charge
on Untied States commerce. But in the instant
case, we have an Act of Congress which
specifically authorizes the levying of the duty in
question "as a charge for wharfage." In
construing the meaning of those words as used
in that law, we must take into consideration the
relative situation and the conditions existing at
the time the law was enacted. That is to say, it is
the law of the land that even a municipality on a
navigable river in a State of the United States
has the legal right to pass and enforce an
ordinance to require a vessel to pay wharfage
tax for the use of a wharf within the city limits,
and that a tax even by a city for such a purpose
does not interfere with, and is not a charge on,
United States commerce.

It is also the law of the land that the United

States Congress in its discretion has the power
to levy and collect a tonnage tax ever though it
would interfere with the United States
commerce. But in the instant case, we have an
Act of Congress which specifically authorizes
the Government of the Philippine Islands to
levy and collect the duty in question "as a
charge for wharfage."
It is vigorously contended that by reason of the
fact that the sugar in question was loaded from
a private wharf and not from a Government
wharf, that the Government has no legal right to
levy and collect the duty "as a charge for
wharfage." In construing the law now in
question, we should take into consideration its
history, relative situation and the conditions
existing at the time it was enacted.
As stated, the original Customs Tariff of 1901
was enacted by the Philippine Commission
under the authority from the President of the
United States. At the time of its enactment, it is
a matter of common knowledge that the
Government of the Philippine Islands did not
have, own or operate a pier or wharf anywhere
or at any place, a fact which must have been
known to the Commission which enacted the
law.
It is stated in the brief for the Attorney-General
and not denied in the brief for the appellee, that
the two oldest piers of the Insular Government,
Nos. 3 and 5, were first opened in the year
1910. That prior to that time, and because there
was no wharves or piers, export cargoes by

means of lights were brought to the sides of

vessels that were anchored in Manila Bay.

through a Government wharf. That case was

decided on April 7, 1924.

Notwithstanding that the fact the wharfage tax

in question has been continuously levied and
collected from 1901 up to the present time. That
is to say, in 1901 the Philippine Commission,
which enacted the law, knew or must have
known that there was not a single pier or wharf
in the Philippine Islands, and yet without such
wharves or piers, the Government has at all
times levied and collected the tax in question,
and it if fair to assume that from and out of the
money derived from such sources, it has since
erected and constructed piers and wharves in all
of the large cities of its principal ports of entries
at a cost of millions of pesos, and it is a matter
of common knowledge that pier 7 recently
constructed in the City of Manila cost about
P12,979,824.99, and that it is reputed to b e the
most modern, best and fines dock in the Orient.

The instant case is the first and only case in

which the question now under consideration
was ever presented. Hence, we have a law
which since 1901 has been construed by its
officials to mean that the Government of the
Philippine Islands is entitled to levy and collect
a duty of $1 per gross ton "as a charge for
wharfage" upon all articles, goods, wares and
merchandise exported through the ports of entry
of the Philippine Islands, and that construction
has been acquiesced in and accepted, and the
money paid without any protest or objection for
twenty-six years, for many years of which the
Government never even owned or operated a
wharf.

It further appears from out own records and

reports that during all of this time the tax in
question has been paid without any protest or
objection, and that the first time that the law
now in question was ever presented to this court
was in the case of Compaia General de
Tabacos vs. Collector of Customs (46 Phil., 8),
in which an attack was made on the
constitutionality of the law, and its validity was
sustained by this court. The question now
presented was not then decided because it did
not appear from the agreed statement of facts
that the articles upon which the defendant
collected the duty had or had not passed

It also appears that Pulupandan, the place from

which the sugar was shipped, was made a port
of entry of the Philippine Islands on March 17,
1923, and that on January 19, 1925, the
Legislature
appropriated
P750,000
for
improvements made and to be made in that
port, which were to consist not only of the
building of a wharf, but the construction of
breakwaters, sea walls and the dredging of the
harbor.
When we consider that the tax in question has
at all times for twenty-six years been levied and
collected by the Government both before it
owned or operated any wharf, and that is has
spent millions of pesos in the construction of
wharves in its principal ports of entries, and that
from the recent port of Pulupandan and for

sugar that was shipped from that port on the

steamship Hannover in the year 1926 only the
tax in question amount to P10,284.84, the
importance of the instant case and its far
reaching effect upon the finances of the
Government of the Philippine Islands stands out
in bold relief and becomes very apparent, and
this court is now called upon to overthrow that
long continued constructions, and in legal effect
to hold that, because the sugar was shipped
through a private owned wharf, the government
is not entitled to collect the money in question
"as a charge for wharfage." The long
acquiescence in its construction and the far
reaching effect of such a decision makes it
imperative for this court to sustain the law, if
there are any reasonable grounds upon which it
can be done.
This rule is well stated in Sutherland on
Statutory Construction, volume 2, page 889,
where it is said:
"The practical construction given to a doubtful
statute by the department or officers whose duty
it is to carry it into execution is entitled to great
weight and will not be disregarded or
overturned except for cogent reasons, and
unless it is clear that such construction is
erroneous." Citing numerous decisions.
In the case of Kelly vs. Multnomah County (18
Ore., 356, 359; 22 Pac., 1110), the Supreme
Court of Oregon said:
In all cases where those persons whose duty it
is to executed a law have uniformly given it a

particularly construction, and that construction

has been acquiesced in and acted upon for a
long time, it is a contemporary exposition of the
statute, which always commands the attention
of the courts, and will be followed unless it
clearly and manifestly appears to be wrong.
Following which, on page 890, Sutherland says:
The legislature is presumed to be cognizant of
such construction, and after long continuance,
without any legislation evincing its dissent,
court will consider themselves warranted in
adopting that construction.
The same author, on page 883, says:
Surrounding facts and conditions. Mischief
to be remedied. In order to ascertain the
purpose or intentions, if it is not clearly
expressed in a statute, or that such purpose or
intention may be carried into effect, the court
will take notice of the history of its terms when
it was enacted. It is needful in the construction
of all instruments to read them in view of the
surrounding facts. To understand their purport
and intended application, one should, as far as
possible, be placed in a situation to see the
subject from the maker's standpoints and study
his language with that outlook. Statutes are no
exception. The court may look to the
surrounding circumstances.
And on pages 885 and 886, he says:
The mischief intended to be removed or
suppressed or the cause of necessity of any kind

which induced the enactment of a law are

important factors to be considered in its
construction. "The purpose for which the law
was enacted is a matter of prime importance in
arriving at a correct interpretation of its terms."
In the case of Cameron vs. Chicago, Milwaukee
& St. Paul Ry. Co. (63 Minnesota, 384), on
page 387 of the opinion that court said:
This statute has been in force for nearly 20
years, and attorney's fees have been repeatedly
allowed to the plaintiff in actions brought under
it. Two such cases have been heard on appeal in
this court (see Colemanvs. St. Paul, M. & M. R.
Co., 38 Minn., 260; 36 N. W., 638;
Scott vs. Minneapolis, St. P. & Ste. M. R. Co.,
42 Minn., 179; 43 N. W., 966); and, so far as we
are advised, this is the first time any question as
to the constitutionality of the provisions of this
statute allowing reasonable attorney's fees has
ever been suggested. This acquiescence,
without question, of bench and bar, in the
validity of the statute, is significant; and it is
entitled to controlling weight if the question as
to the validity of the statute is doubtful.
The same principle is laid down in Molina vs.
Rafferty (38 Phil., 167), on page 169 in which
this court makes the following quotation from
Cooley on Taxation, volume 1, 3d ed., p. 450:
The underlying principle of all construction is
that the intent of the legislature should be
sought in the words employed to express it, and
that when found it should be made to govern, . .
. if the words of the law seem to be doubtful

import, it may then perhaps become necessary

to look beyond them in order to ascertain what
was in the legislative mind at the time the law
was enacted; what the circumstances were,
under which the action was taken; what evil, if
any, was meant to be redressed; . . . And where
the law has contemporaneously been put into
operation, and in doing so a construction has
necessarily been put upon it, this construction,
especially if followed for some considerable
period, is entitled to great respect, as being very
probably a true expression of the legislative
purpose, and is not lightly to be overruled,
although it is not conclusive.
And on page 173 of the opinion, it is said:
During the many years that the statute before us
has been in existence, since it first appeared,
substantially in its present form, in section 142
of Act No. 1189, passed in 1904, no attempt has
been made, until this case arose, to construe it
as not applying to fish grown in ponds, and
much weight should be given to this long
continued administrative interpretation.
See also In re Allen (2 Phil., 630), where it is
held that:
Courts will give weight to the contemporaneous
construction placed upon a statute by the
executive officers whose duty it is so enforce it,
and, unless such interpretation is clearly
erroneous, will ordinarily be controlled thereby.
The purpose of the law was to authorize the
Government of the Philippine Islands to levy a

duty of $1 per gross ton "as a charge for

wharfage." Being an Act of Congress, the law
would be valid if it did not specify the purpose
for which the duty was to be levied and
collected. Without such a provision it would
then be construed as a duty on tonnage, and
Congress would have a right to enact that kind
of a law. The omission from the Act of 1909 of
the words "and for harbor dues" in the previous
law is very significant and would clearly
indicate that it was not the intent of Congress
under the Act of 1909 that duty should be levied
on tonnage.
In view of the fact that in 1901 there were no
wharves or piers in the Philippine Islands, and
of the conditions then existing and the
enactment of the law in 1901 under the same
conditions, and its reenactment by Congress in
1905 under similar conditions, and of the
present law of 1909 and of the continuous
construction of the law placed upon it by the
Government officials, and the further fact that
the duty in question has been paid without any
protest or objection for twenty-six-years, during
which time the Government has expanded
millions of pesos in the construction of
wharves, and that it now owns and operates
large an extensive wharves in all of its principal
ports of entry and that Congress has never seen
fit to repeal the law of 1909, we are forced to
the conclusion that it was the purpose and intent
of the act in question to give the Government of
the Philippine Islands authority to levy and
collect such a duty of $1 per gross ton, and that
the money derived from such sources should be
used, deemed and treated as a trust fund, for the

purpose of acquiring and constructing wharves

by the Government of the Philippine Islands. In
truth and in fact, that is what has been done in
all of its principal ports of entry.
Pulupandan was made a port of entry of March
17, 1923. It further appears that in line with its
policy, the Legislature on January 19, 1925,
made an appropriation of P750,000 for
improvements made and to be made in that
port, which were to consist not only of the
building of a wharf, but the construction of
breakwaters, sea walls and the dredging of the
harbor.
Based on the conditions existing in 1901 and as
they exist now, we have a legal right to assume
that the money derived from such sources has
been appropriated and used by the Government
for the erection and construction of wharves
and the improvement of its harbors.
The construction for which plaintiff contends
would overthrow and destroy the whole system
of the Government, in and by which millions of
pesos have been levied and collected an
expanded in the construction of Government
wharves, and it would have defeated the
construction of the Government wharf at
Pulupandan. The law in question could have
been repealed or changed at any time by an Act
of Congress. In view of the long continuous
construction which has been placed upon it by
the government officials, and for which they
now contend, the very fact that Congress has
not seen fit to repeal or change the law is a very
potent argument in favor of sustaining that

construction. The language of the Act could

have been made more specific and certain, but
in view of its history, its long continuous
construction, and what has been done and
accomplished by and under it, we are clearly of
the opinion that the Government is entitled to
have and receive the money in question, even
though the sugar was shipped from a private
wharf.
The judgment of the lower court is reversed,
with costs. So ordered.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-29755

January 31, 1969

DOMINGO N. SARCOS, as Mayor of

Barobo, Surigao del Sur, petitioner,
vs.
HON. RECAREDO CASTILLO, as
Provincial Governor of Surigao del Sur, and
THE HON. PROVINCIAL BOARD OF
SURIGAO DEL SUR, respondents.
Sisenando Villaluz, Jr. for respondents.
Cristeto O. Cimagala for petitioner.

FERNANDO, J.:
Is the power of preventive suspension of a
municipal mayor against whom charges have
been filed still vested in the provincial
governor? That is the novel question presented
in this petition for certiorari and prohibition.
Such an authority he did possess under the
former law. 1 Then came the Decentralization
Act of 1967, which took effect on September 12
of that year. 2
What before could not be denied apparently no
longer holds true. The statutory provision now
controlling yields a contrary impression. The

question must thus be answered in the negative.

We hold that such a power has been withheld
from the provincial governor and may no longer
be exercised by him.
Petitioner Domingo N. Sarcos, the duly
elected Mayor of Barobo, Surigao del Sur,
running as an independent candidate but
winning, nonetheless, in the November 14,
1967 election, was charged with misconduct
and dishonesty in office by respondent
Recaredo Castillo, the Provincial Governor of
Surigao del Sur. 3 The act constituting the
alleged dishonesty and misconduct in office
consisted in petitioner allegedly "[conniving]
with certain private individuals to cut and fell
[timber] and [selling] the [timber] or logs so cut
or felled for their own use and benefit, within
the communal forest reserve of the Municipality
of Barobo, Province of Surigao del Sur, to the
damage and prejudice of the public and of the
government; ...." 4
In the answer of respondent Castillo as well as
the other respondent, the Provincial Board of
Surigao del Sur, there was an admission of the
fact that as set forth in the petition on October
4, 1968, such an administrative complaint for
such an alleged offense was indeed filed by
respondent
Governor
with
respondent
Provincial Board. What was sought to be
stressed in the answer, however, was that as
early as April 18, 1968, a charge under oath for
abuse of official power in consenting to and
authorizing the violations of forestry laws was
filed against petitioner by the Municipal
Council of Barobo, Surigao del Sur. He was

then given the opportunity to answer and

explain within 72 hours, in an order of
respondent Governor date May 21, 1968. The
explanation offered by petitioner contained the
following: "These logs which I caused to be
hauled sometime within the month of January,
1968, were the same logs cut and tumbled down
by the persons abovementioned within the
communal forests of Barobo, Surigao del Sur,
and which were seized by the patrolmen of the
undersigned. The said logs were sold in order to
raise funds for the purchase of the police
uniforms and arms." 5
It was on the basis of the above administrative
complaint that respondent Governor, according
to the petition, ordered the "immediate
suspension [ofpetitioner] from his position as
Mayor of Barobo, Surigao del Sur; the same
Administrative Order ... [containing] the
immediate designation of Vice-Mayor [Brigido
L. Mercader] of the same town as Acting
[Mayor]." 6
Such administrative order for the preventive
suspension of petitioner was admitted by
respondent Governor and sought to be justified
thus: "[Considering] that the acts charged
against and admitted by the petitioner 'affects
his official integrity,' as such Municipal Mayor,
by his having taken the law into his own
hands; ..., there was an urgent necessity to order
the immediate 'preventive suspension' of the
petitioner, in accordance with the provisions of
Section 5, of Republic Act No. 5185, otherwise
known as the 'Decentralization Act of 1967'." 7

The decisive issue therefore, as set forth at the

outset of this opinion, is whether or not
respondent Provincial Governor is vested with
power to order such preventive suspension
under the Decentralization Act of 1967, more
specifically Section 5 thereof. For if no such
authority exists, then whatever be the alleged
justification for preventive suspension cannot
validate the action taken by theGovernor. To
assert otherwise would be to negate the rule of
law.
What does Section 5 provide? It opens with
the categorical declaration: "Any provision of
law to the contrary notwithstanding, the
suspension and removal of elective local
officials shall be governed exclusively by the
provisions of this section."
After setting forth in the next paragraph the
grounds for suspension and removal of elective
local officials, namely, disloyalty to the
Republic of the Philippines, dishonesty,
oppression, and misconduct in office, it
continues: "Written subscribed and sworn
charges against any elective provincial and city
official shall be preferred before the President
of the Philippines; against any elective
municipal official before the provincial
governor or the secretary of the provincial
board concerned; and against any elective
barrio official before the municipal or city
mayor or the municipal or city secretary
concerned."
Then comes the portion specifically dealing
with preventive suspension. This paragraph

reads thus: "Within seven days after the charges

are preferred, the President, Governor, or
Mayor, as the case may be, or his duly
authorized representative, as provided in the
preceding paragraph, shall notify the respondent
of such charges. The President, Provincial
Board and City or Municipal Council, as the
case may be, shall hear and investigate the truth
or falsity of the charges within ten days after
receipt of such notice: Provided, That no
investigation shall commence or continue
within ninety days immediately prior to an
election. The preventive suspension of the
respondent officer shall not extend beyond sixty
days after the date of his suspension. At the
expiration of sixty days, the suspended officer,
shall be reinstated in office without prejudice to
the continuation of the proceedings against him
until their completion, unless the delay in the
decision of the case is due to the fault, neglect
or request of the suspended officer, in which
case, the time of delay shall not be counted in
computing the time of suspension: Provided,
however, That if the suspended officer shall
have been found guilty as charged before the
expiration of the thirty days, his suspension, in
the case of municipal and barrio officials, may
continue until the case is finally decided by the
Provincial Board."
Considering that Section 5 leaves no doubt as
to this particular paragraph governing
exclusively the suspension and removal of
elective local officials, it must be apparent why,
as previously stated, respondent Provincial
Governor lacks the authority to order the
preventive suspension of petitioner.

1. Under the former law then in force which

stands
repealed
by
virtue
of
the
8
Decentralization Act, the provincial governor,
if the charge against a municipal official was
one affecting his official integrity could order
his preventive suspension. 9 At present, the law
is anything but that. A reading of the pertinent
paragraph above quoted makes manifest that it
is the provincial board to which such a power
has been granted under conditions therein
specified. The statutory provision is worded
differently. The principle, that the deliberate
selection of language other than that used in an
earlier act is indicative that a change in the law
was intended, calls for application. 10
2. This conclusion has reinforcement from a
fundamental postulate of constitutional law.
Public officials possess powers, not rights.
There must be, therefore, a grant of authority
whether express or implied, to justify any action
taken by them. In the absence thereof, what
they do as public officials lacks validity and, if
challenged, must be set aside. To paraphrase a
leading American decision, 11 law is the only
supreme
power
under
constitutional
government, and every man who by accepting
office participates in its function is only the
more strongly bound to submit to that
supremacy, and to observe the limitations which
it imposes upon the exercise of the authority
which it gives.
Here, clearly, no such authority is vested in the
provincial governor. Instead, the statutory
scheme, complete on its face, would locate such
power in the provincial board. There would be

no support for the view, then, that the action

taken by the provincial governor in issuing the
order of preventive suspension in this case was
in accordance with law.
3. Moreover, any other view would be to betray
lack of fidelity to the purpose so manifest in the
controlling legal provision. It is fundamental
that once the policy or purpose of the law has
been ascertained, effect should be given to it by
the judiciary. From Ty Sue v. Hord, 12 decided in
1909, it has been our constant holding that the
choice between conflicting theories falls on that
which best accords with the letter of the law
and with its purpose. The next year, in an
equally leading decision, United States v.
Toribio, 13 there was a caveat against a
construction that would tend "to defeat the
purpose and object of the legislator." Then came
the admonition in Riera v. Palmaroli, 14 against
an application so narrow "as to defeat the
manifest purpose of the legislator." This was
repeated in the latest case, Commissioner of
Customs v. Caltex, 15 in almost identical
language.1awphil.t
So it is in the United States. 16 Thus, in an 1898
decision, the then Justice, later Chief Justice,
White minimized reliance on the subtle
signification of words and the niceties of verbal
distinction stressing the fundamental rule of
carrying out the purpose and objective of
legislation. 17 As succinctly put by the then
Justice, later Chief Justice, Stone: "All statutes
must be construed in the light of their
purpose." 18 The same thought has been phrased
differently. Thus: "The purpose of Congress is a

dominant
factor
in
determining
meaning." 19 For, to paraphrase Frankfurter,
legislative words are not inert but derive vitality
from the obvious purposes at which they are
aimed.20 The same jurist likewise had occasion
to state: "Regard for [its] purposes should
infuse the construction of the legislation if it is
to be treated as a working instrument of
government and not merely as a collection of
English words." 21 In the sixth annual Benjamin
Nathan Cardozo lecture delivered by him,
entitled "Some Reflections on the Reading of
Statutes", he developed the theme further: "The
generating consideration is that legislation is
more than composition. It is an active
instrument of government which, for purposes
of interpretation, means that laws have ends to
be achieved. It is in this connection that Holmes
said, 'words are flexible.' Again it was Holmes,
the last judge to give quarter to loose thinking
or vague yearning, who said that "the general
purpose is a more important aid to the meaning
than any rule which grammar or formal logic
may lay down." And it was Holmes who chided
courts for being 'apt to err by sticking too
closely to the words of a law where those words
import a policy that goes beyond them.' Note,
however, that he found the policy in 'those
words'." 22
It may be noted parenthetically that earlier, the
United States Supreme Court was partial more
to the term "objective" or "policy" rather than
"purpose." So it was in the first decision where
this fundamental principle of construction was
relied upon, the opinion coming from Chief
Justice Marshall. Thus: "The two subjects were

equally within the province of the legislature,

equally demanded their attention, and were
brought together to their view. If, then, the
words making provision for each, fairly admit
of an equally extensive interpretation,and of
one of which will effect the object that seems to
have been in contemplation, and which was
certainly desirable, they ought to receive that
interpretation." 23
So, too, with his successor, Chief Justice
Taney. Thus: "This construction cannot be
maintained. In expounding a statute, we must
not be guided by a single sentence or member
of a sentence, but look to the whole law, and to
its object and policy." 24 It should not escape
attention that the above excerpt was quoted
with approval by the present Chief Justice
Warren as late as 1957. 25
What is the purpose of the Decentralization
Act of 1967? It is set forth in its declaration of
policy. 26 It is "to transform local governments
gradually into effective instruments through
which the people can in a most genuine fashion,
govern themselves and work out their own
destinies." 27 In consonance with such policy, its
purpose is "to grant to local governments
greater freedom and ampler means to respond
to the needs of their people and promote their
prosperity and happiness and to effect a more
equitable and systematic distribution of
governmental powers and resources." 28
It is undeniable therefore that municipalities,
as much as cities and provinces, are by this act
invested with "greater freedom and ampler

means to respond to the needs of their people

and promote their prosperity and happiness." It
is implicit in our constitutional scheme that full
autonomy be accorded the inhabitants of the
local units to govern themselves. Their choice
as to who should be theirpublic officials must
be respected. Those elected must serve out their
term. If they have to be removed at all it should
be for cause in accordance with the procedure
prescribed and by the specific officials of higher
category entrusted with such responsibility.
It is easily understandable why as held in a
leading case, Lacson v. Roque, 29 "strict
construction of law relating to suspension and
removal is the universal rule." As was further
emphasized by Justice Tuason who penned the
opinion: "When dealing with elective posts, the
necessity for restricted construction is greater."
Deference to such a doctrine possessed of
intrinsic merit calls for due care lest by
inadvertence the power to suspend preventively
is given to officials other than those specifically
mentioned in the act. For any other view would
result in a dilution of the avowed purpose to
vest as great a degree of local autonomy as is
possible to municipal corporations. That would
be to defeat and frustrate rather than to foster
the policy of the act.1awphil.t
4. Lastly, the construction here reached, as to
the absence of power on the part of provincial
governors to suspend preventively a municipal
mayor is buttressed by the avoidance of
undesirable consequences flowing from a
different doctrine. Time and time again, it has
been stressed that while democracy presupposes

the right of the people to govern themselves in

elections that call for political parties
contending for supremacy, once the election is
over the equally pressing and urgent concern for
efficiency would necessitate that purely partisan
considerations be ignored, and if not entirely
possible, be restricted to a minimum.
The present litigation gives rise to the
suspicion that politics did intrude itself.
Petitioner Municipal Mayor, an independent
candidate, and thus of a different political
persuasion, appeared to have been placed at a
disadvantage. It would be a realistic assumption
that there is the ever present temptation on the
part of provincial governors, to utilize every
opportunity to favor those belonging to his
party. At times, it may even prove irresistible.
It is desirable therefore that such opportunity
be limited. The statutory provision then should
be given such a construction that would be
productive of such a result. That is what we do
in this case. To paraphrase Justice Tuason, we
test a doctrine by its consequences.
It could be said, of course, that to deny such a
power to a provincial governor but at the same
time to affirm the existence thereof insofar as
the provincial board is concerned would not
advance the cause of decentralization any. In
answer, it suffices to note that the
Decentralization Act having so recognized such
an authority in the provincial board, the
judiciary must perforce recognize its existence.
Until after the legislature decrees otherwise, the
courts have no alternative but to accord

deference to such declared congressional policy.

It may also be stated that the provincial board
being a collective body, the first, second and
third class provinces being composed of the
provincial governor, the vice-governor and
three other members elected at large by the
qualified electors of the province, and that in
the fourth, fifth, sixth and seventh class
provinces having in addition to the provincial
governor and the vice-governor two other
members likewise elected at large, 30 there is a
safeguard against the temptation to utilize this
power of preventive suspension for purely
partisan ends. What one person may feel free to
do, fully conscious as he is that the authority
belongs to him alone, may not even be
attempted when such an individual shares such
power with others who could possibly hold
dissenting views. At any rate, there is a brake,
which it is hoped would suffice on most if not
all occasions.
Such a restraining influence is indeed needed
for the undeniable facts of the contemporary
political scene bear witness to efforts, at times
disguised, at other times quite blatant, on the
part of local officials to make use of their
positions to gain partisan advantage.
Harassment of those belonging to opposing
factions or groups is not unknown.
Unfortunately, no stigma seems to attach to
what really amounts to a misuse of official
power. The truism that a public office is a
public trust, implicit in which is the recognition
that public advantage and not private benefit
should be the test of one's conduct, seems
tohave been ignored all too often. The

construction of any statute therefore, even

assuming that it is tainted by ambiguity, which
would reduce the opportunity of any public
official to make use of his position for partisan
ends, has much to recommend it.
5. We hold, therefore, that under Section 5 of
the Decentralization Act of 1967, the power of
preventive suspension is not lodged in the
provincial governor. To rule otherwise would be
at war with the plain purpose of the law and
likewise fraught with consequences far from
desirable. We close with this appropriate
excerpt from an opinion of Justice Holmes
rendered on circuit duty: "The Legislature has
the power to decide what the policy of the law
shall be, and if it has intimated its will, however
indirectly, that should be recognized and
obeyed. The major premise of the conclusion
expressed in a statute, the changeof policy that
induces the enactment, may not be set out in
terms, but it is not an adequate discharge of
duty for the courts to say: We see what you are
driving at but you have not said it, and
therefore, we shall go on as before." 31
WHEREFORE, the writs prayed for are
granted, the preventive suspension of petitioner
by respondent Castillo annulled and set aside
with the result that his immediate reinstatement
to his position as Municipal Mayor of Barobo,
Surigao del Sur, is ordered, without prejudice to
any further proceedings to be taken by
respondent Provincial Board in connection with
the charge of misconduct and dishonesty in
office against petitioner, respondent Provincial
Board being strictly enjoined in the disposition

of such administrative complaint to act strictly

in accordance with the applicable law. Without
costs.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-23196

October 31, 1967

LAUREANO OLIVA, plaintiff-appellant,

vs.
NICOLAS V. LAMADRID and ROSA L.
VILLALUZ, defendants-appellees.
Crispo B. Borja for plaintiff-appellant.
Edmundo A. Narra for defendants-appellees.
CONCEPCION, C.J.:
Appeal by the plaintiff from a decision of the
Court of First Instance of Camarines Norte
dismissing the complaint herein.
Plaintiff Laureano Oliva was the owner of a
parcel of land of about 3,5258 hectares, located
in the sitio of Pinagdamhan, barrio of
Lalawigan, municipality of Daet, province of
Camarines Norte. The property was covered by
Homestead Patent No. 18863 and Original
Certificate of Title No. 363 of the Office of the
Register of Deeds for said province, issued, in
his name, on May 8, 1932. On October 2, 1958,
he mortgaged the property to the Rural Bank of
Daet, Camarines Norte, as security for the
payment of a loan in the sum of P250.00. He
having subsequently defaulted in the payment
of this obligation, the mortgage was

extrajudicially foreclosed and the property sold,

by the provincial sheriff, at public auction, to
the Bank, as the sole bidder, on February 4,
1961, for the aggregate sum of P188.00,
representing P160.00, as unpaid balance of the
loan, plus P12.00 as interest, and P16.00 as
attorney's fees. The certificate of sale, issued by
the sheriff, on February 6, 1961, stated that the
property could be redeemed "within . . . two (2)
years from and after the date of the sale, or until
February 4, 1963."
No redemption having been made within said
period, the corresponding deed of sale was
executed in favor of the Bank, on February 27,
1963, on which date said Original Certificate of
Title No. 363 was cancelled and Transfer
Certificate of Title No. T-3968 issued in the
name of the Bank. On March 2, 1963, the latter
sold the property to Nicolas V. Lamadrid for the
sum of P350.00, and, accordingly, Transfer
Certificate of Title No. T-3968 was cancelled
and Transfer Certificate of Title No. 3978
issued to Lamadrid.
Prior to May 31, 1963, plaintiff offered to
repurchase the property for said sum of
P350.00, but the offer was turned down. Hence,
on said date, he instituted the present action
against Lamadrid and his wife, Rosa L.
Villaluz, to compel them to reconvey the
property to him, for said sum of P350.00, which
he deposited with the Clerk of Court, and to
recover damages, attorney's fees and costs. He
claimed that, as holder of a free patent and a
torrens title, he is entitled to redeem the
property within five (5) years from February 4,

1961, the date of the auction sale, pursuant to

Section 119 of Commonwealth Act No. 141.
Upon the other hand, defendants alleged in their
answer that the right of redemption expired on
February 4, 1963, under the provisions of
Section 6 of Republic Act No. 720, as amended
by Republic Act No. 2670, which, they
maintain, is controlling.
After appropriate proceedings, the lower court
rendered judgment for the defendants. Hence,
this appeal, taken by the plaintiff, directly to the
Supreme Court, on questions purely of law. The
main issue is whether the period of redemption
is governed by Section 119 of Commonwealth
Act No. 141, as asserted by the plaintiff, or by
Section 5 of Republic Act No. 720, as amended,
as contended by the defendants and held in the
decision appealed from, upon the theory that
Section 119 of Commonwealth Act No. 141
refers only to voluntary conveyances and that
the foreclosure sale had been made under
Republic Act No. 720.
As early as July 30, 19511 it has been settled,
however, that Section 119 of Commonwealth
Act No. 141 is applicable to foreclosure sales of
lands covered by a homestead or free patent.
Besides, on February 28, 1963,2this Court
explicitly rejected the theory that said provision
"refers exclusively to voluntary conveyances
and not to involuntary ones," upon the ground
that "the law does not distinguish between the
two kinds of conveyances."
Upon the other hand, Section 5, of Republic Act
No. 720, as amended provides:

Loans and advances extended by Rural Banks,

organized and operated under this Act, shall be
primarily for the purpose of meeting the normal
credit needs of any small farmer or farm family
owning or cultivating, in the aggregate, not
more than fifty hectares of land dedicated to
agricultural production, as well as the normal
credit needs of cooperatives and small
merchants. For the purposes of this Act, a small
merchant shall be one whose capital investment
does not exceed twenty-five thousand pesos. In
the granting of loans, the Rural Bank shall give
preference to the application of farmers whose
cash requirements are small.
Loans may be granted by rural banks on the
security of lands without torrens titles where the
owner of private property can show five years
or more of peaceful, continuous and
uninterrupted possession in the concept of an
owner or of homesteads or free patent lands
pending the issuance of titles but already
approved, the provisions of any law or
regulations
to
the
contrary
notwithstanding: Provided, That when the
corresponding titles are issued the same shall be
delivered to the register of deeds of the
province where such lands are situated for the
annotation of the encumbrance: Provided,
further, That in the case of landspending
homestead or free patent titles, copies of
notices for the presentation of the final proof
shall also be furnished the creditor rural bank
and, if the borrower applicants fail to present
the final proof within thirty (30) days from date
of notice, the creditor rural bank may do so for
them at their expense: And provided, finally,

That the applicant for homestead or free patent

has already made improvements on the land and
the loan applied for is to be used for further
development of the same for other productive
economic activities.
The foreclosure of mortgages covering loans
granted by rural banks shall be exempt from the
publication in newspapers now required by law
where the total amount of the loan, including
interests due and unpaid, does not exceed two
thousand pesos (P2,000.00). It shall be
sufficient publication in such cases if the
notices of foreclosure are posted in at least three
of the most conspicuous public places in the
municipality where the land mortgaged is
situated during the period of sixty days
immediately preceding the public auction. Proof
of publication as required herein shall be
accomplished by the foreclosure sale and shall
be attached with the records of the
case: Provided, That when a land not covered
by a Torrens Title, a homestead or free patent
land is foreclosed, the homesteader or free
patent holder, as well as their heirs, shall have
the right to redeem the same within two years
from the date of foreclosure: Provided, finally,
That in case of borrowers who are mere tenants
the produce corresponding to their share could
be accepted as security.
It should be noted that the period of two (2)
years granted for the redemption of property
foreclosed under Section 5 of Republic Act No.
720, as amended by Republic Act No. 2670,
refers to lands "not covered by a Torrens Title, a
homestead or free patent," or to owners of lands

"without torrens titles," who can "show five

years or more of peaceful, continuous and
uninterrupted possession thereof in the concept
of an owner, or of homesteads or free patent
lands pending the issuance of titles but already
approved," or "of lands pendinghomestead or
free patent titles." Plaintiff, however, had, on
the land in question, a free patent and a Torrens
title,which were issued over 26 years prior to
the mortgage constituted in favor of the Bank.
Accordingly, there is no conflict between
section 119 of Commonwealth Act No. 141 and
section 5 of Republic Act No. 720, as amended,
and the period of two (2) years prescribed in the
latter is not applicable to him.
Moreover, the legislative history of the
bills3 which later became said Republic Act No.
2670, amending Republic, Act No. 720, shows
that the original proposal was to give
homesteaders or free patent holders a period of
ten (10) years within which to redeem their
property foreclosed by rural banks; that this
proposal was eventually found to be unwise,
because its effect would have been to dissuade
rural banks from granting loans to homesteaders
or free patent holders which were sought to
be liberalized said period of redemption
being too long, from the viewpoint of said
banks; and that, consequently, the proposal was
given up, with the specific intent and
understanding that homesteaders or holders of
free patent would retain the right to redeem
within five (5) years from the conveyance of
their properties, as provided in the general law,
that is to say the Public Land Act, or
Commonwealth Act No. 141.4

It is, therefore, our considered view that

plaintiff herein has the right to repurchase the
property in question within five (5) years from
the date of the conveyance or foreclosure sale,
or up to February 4, 1966, and that having
exercised such right and tendered payment long
before the date last mentioned, defendants
herein are bound to reconvey said property to
him.
Although plaintiff had offered to redeem it for
the sum of P350.00 paid by Lamadrid and the
former has actually deposited this amount in the
lower court, as redemption price, plaintiff now
alleges that he is bound to pay no more than
P188.00, this being the sum for which the
property had been foreclosed by the Bank.
Independently of the amount due under section
119 of Commonwealth Act No. 141, we cannot
entertain this pretense entailing as it does a
substantial change of the theory under which
plaintiff had litigated in the lower court, which
is not permissible on appeal.5
WHEREFORE, the decision appealed from is
hereby reversed, and another one shall be
entered declaring that, upon the judicial
consignation of the sum of P350.00 by plaintiff
herein, the property in litigation had been
redeemed by him, and, accordingly, directing
the defendants to execute the corresponding
deed of reconveyance in his favor, and that,
thereafter said sum of P350.00 be turned over
by the Clerk of Court to the defendants, with
costs against the latter. Said deed of
reconveyance shall be executed by the Clerk of
the lower court, in the event of failure of the

defendants to comply with this decision, within

30 days from the date on which it shall have
become final and executory. It is so ordered.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-2044

August 26, 1949

J. ANTONIO ARANETA, petitioner,

vs.
RAFAEL DINGLASAN, Judge of First
Instance of Manila, and JOSE P.
BENGZON, Fiscal of City of
Manila,respondents.

x--------------------------------------------------------x
G.R. No. L-3055

LEON MA. GURRERO, petitioner,

vs.
THE COMMISSIONER OF CUSTOMS and
THE ADMINISTRATOR, SUGAR QUOTA
OFFICE, DEPARTMENT OF COMMERCE
AND INDUSTRY, respondents.
x--------------------------------------------------------x
G.R. No. L-3056

x--------------------------------------------------------x
G.R. No. L-2756

August 26, 1949

J. ANTONIO ARANETA and GREGORIO

VILLAMOR, petitioners,
vs.
EUGENIO ANGELES, Fiscal of City of
Manila, respondent.
x--------------------------------------------------------x
G.R. No. L-3054

August 26, 1949

EULOGIO RODRIGUEZ, Sr., por si y como

Presidente del Partido
Nacionalista, recurrente,
vs.
EL TESORERO DE FILIPINAS, recurrido.

August 26, 1949

August 26, 1949

ANTONIO BARREDO, in his own behalf

and on behalf of all taxpayers similarly
situated, petitioner,
vs.
THE COMMISSION ON ELECTIONS,
THE AUDITOR GENERAL and THE
INSULAR TREASURER OF THE
PHILIPPINES, respondents.
L-2044
Paredes, Diaz and Poblador, Jesus G. Barrera,
Vicente Hilado, and Araneta and Araneta for
petitioner.
Office of the Solicitor General Felix Bautista
Angelo, Assistant Solicitor General Ruperto
Kapunan, Jr., Solicitor Martiniano P. Vico and
Assistant City Fiscal Julio Villamor for
respondents.
Claro M. Recto and Padilla, Carlos and
Fernando as amici curiae.

L-2756
Araneta and Araneta and Jesus G. Barrera for
petitioners.
Assistant City Fiscal Luis B. Reyes for
respondent.
Claro M. Recto as amici curiae.
L-3054
Claro M. Recto, Ramon Diokno, Jose O. Vera,
Alejo Mabanag, Jose B. Laurel, Jr. and Antonio
Barredo for petitioner.
Office of the Solicitor General Felix Bautista
Angelo for respondent.
Vicente de Vera, Chairman, Commission on
Elections.
Alfonso Ponce Enrile, Alva J. Hill and Honorio
Poblador, Jr. and Emiliano R. Navarro as amici
curiae.
Jesus G. Barrera, Enrique M. Fernando,
Ramon Sunico, and Francisco A. Rodrigo also
as amici curiae.
L-3055
Claro M. Recto and Leon Ma. Guerrero for
petitioner.
Office of the Solicitor General Felix Bautista
Angelo for respondents.
V. G. Bunuan, Administrator, Sugar Quota
Office.
Jesus G. Barrera, Felixberto M. Serrano,
Enrique; Honorio Poblador, Jr. and Emiliano
R. Navarro as amici curiae.
L-3056
Claro M. Recto and Antonio Barredo for
petitioner.
Office of the Solicitor General Felix Bautista

Angelo for respondents.

Vicente de Vera, Chairman, Commission on
Elections.
Alfonso Ponce Enrile, Alva J. Hill, Jesus G.
Barrera, Enrique M. Fernando, Ramon Sunico
and Francisco A. Rodrigo; Honorio Poblador,
Jr. and Emiliano R. Navarro as amici curiae.
TUASON, J.:
Three of these cases were consolidated for
argument and the other two were argued
separately on other dates. Inasmuch as all of
them present the same fundamental question
which, in our view, is decisive, they will be
disposed of jointly. For the same reason we will
pass up the objection to the personality or
sufficiency of interest of the petitioners in case
G. R. No. L-3054 and case G. R. No. L-3056
and the question whether prohibition lies in
cases Nos. L-2044 and L-2756. No practical
benefit can be gained from a discussion of the
procedural matters since the decision in the
cases wherein the petitioners' cause of action or
the propriety of the procedure followed is not in
dispute, will be controlling authority on the
others. Above all, the transcendental importance
to the public of these cases demands that they
be settled promptly and definitely, brushing
aside, if we must, technicalities of procedure.
(Avelino vs. Cuenco, G. R. No. L-2821.) The
petitions challenge the validity of executive
orders of the President avowedly issued in
virtue of Commonwealth Act No. 671. Involved
in cases Nos. L-2044 and L-2756 is Executive
Order No. 62, which regulates rentals for
houses and lots for residential buildings. The

petitioner, J. Antonio Araneta, is under

prosecution in the Court of First Instance of
Manila for violation of the provisions of this
Executive Order, and prays for the issuance of
the writ of prohibition to the judge and the city
fiscal. Involved in case L-3055 is Executive
Order No. 192, which aims to control exports
from the Philippines. In this case, Leon Ma.
Guerrero seeks a writ of mandamus to compel
the Administrator of the Sugar Quota Office
and the Commissioner of Customs to permit the
exportation of shoes by the petitioner. Both
official refuse to issue the required export
license on the ground that the exportation of
shoes from the Philippines is forbidden by this
Executive Order. Case No. L-3054 relates to
Executive Order No. 225, which appropriates
funds for the operation of the Government of
the Republic of the Philippines during the
period from July 1, 1949 to June 30, 1950, and
for other purposes. The petitioner Eulogio
Rodriguez, Sr., as a tax-payer, an elector, and
president of the Nacionalista Party, applies for a
writ of prohibition to restrain the Treasurer of
the Philippines from disbursing this Executive
Order. Affected in case No. L-3056 is Executive
Order No. 226, which appropriates P6,000,000
to defray the expenses in connection with, and
incidental to, the hold lug of the national
elections to be held in November, 1949. The
petitioner, Antonio Barredo, as a citizen, taxpayer and voter, asks this Court to prevent "the
respondents from disbursing, spending or
otherwise disposing of that amount or any part
of it."

Notwithstanding allegations in the petitions

assailing the constitutionally of Act No. 671,
the petitioners do not press the point in their
oral argument and memorandum. They rest
their case chiefly on the proposition that the
Emergency Powers Act (Commonwealth Act
No. 671) has ceased to have any force and
effect. This is the basic question we have
referred to, and it is to this question that we will
presently address ourselves and devote greater
attention. For the purpose of this decision, only,
the constitutionality of Act No. 671 will be
taken for granted, and any dictum or statement
herein which may appear contrary to that
hypothesis should be understood as having been
made merely in furtherance of the main thesis.
Act No. 671 in full is as follows:
AN ACT DECLARING A STATE OF TOTAL
EMERGENCY AS A RESULT OF WAR
INVOLVING THE PHILIPPINES AND
AUTHORIZING THE PRESIDENT TO
PROMULGATE RULES AND
REGULATIONS TO MEET SUCH
EMERGENCY.
Be it enacted by the National Assembly of the
Philippines:
SECTION 1. The existence of war between the
United States and other countries of Europe and
Asia, which involves the Philippines, makes it
necessary to invest the President with
extraordinary powers in order to meet the
resulting emergency.

"SEC. 2. Pursuant to the provisions of Article

VI, section 26, of the Constitution, the President
is hereby authorized, during the existence of the
emergency, to promulgate such rules and
regulations as he may deem necessary to carry
out the national policy declared in section 1
hereof. Accordingly, he is, among other things,
empowered (a) to transfer the seat of the
Government or any of its subdivisions,
branches, departments, offices, agencies or
instrumentalities; (b) to reorganize the
Government of the Commonwealth including
the determination of the order of precedence of
the heads of the Executive Department; (c) to
create new subdivisions, branches, departments,
agencies or instrumentalities of government and
to abolish any of those already existing; (d) to
continue in force laws and appropriations which
would lapse or otherwise become inoperative,
and to modify or suspend the operation or
application of those of an administrative
character; (e) to impose new taxes or to
increase, reduce, suspend or abolish those in
existence; (f) to raise funds through the issuance
of bonds or otherwise, and to authorize the
expenditure of the proceeds thereof; (g) to
authorize the national, provincial, city or
municipal governments to incur in overdrafts
for purposes that he may approve; (h) to declare
the suspension of the collection of credits or the
payment of debts; and (i) to exercise such other
powers as he may deem to enable the
Government to fulfill its responsibities and to
maintain and enforce the authority.
SEC. 3. The President of the Philippines shall
as soon as practicable upon the convening of

the Congress of the Philippines report thereto

all the rules and regulations promulgated by
him under the powers herein granted.
SEC. 4. This Act shall take effect upon its
approval and the rules and regulations
promulgated hereunder shall be in force and
effect until the Congress of the Philippines shall
otherwise provide.
Section 26 of Article VI of the Constitution
provides:
In time of war or other national emergency, the
Congress may by law authorize the President,
for a limited period and subject to such
restrictions as it may prescribe, to promulgate
rules and regulations to carry out a declared
national policy.
Commonwealth Act No. 671 does not in term
fix the duration of its effectiveness. The
intention of the Act has to be sought for in its
nature, the object to be accomplish, the purpose
to be subserved, and its relation to the
Constitution. The consequences of the various
constructions offered will also be resorted to as
additional aid to interpretation. We test a rule by
its results.
Article VI of the Constitution provides that any
law passed by virtue thereof should be "for a
limited period." "Limited" has been defined to
mean "restricted; bounded; prescribed; confined
within positive bounds; restrictive in duration,
extent or scope." (Encyclopedia Law
Dictionary, 3rd ed., 669; Black's Law

Dictionary, 3rd ed., 1120.) The words "limited

period" as used in the Constitution are beyond
question intended to mean restrictive in
duration. Emergency, in order to justify the
delegation of emergency powers, "must be
temporary or it can not be said to be an
emergency." (First Trust Joint Stock Land Bank
of Chicago vs. Adolph P. Arp, et al., 120 A. L.
R., 937, 938.).
It is to be presumed that Commonwealth Act
No. 671 was approved with this limitation in
view. The opposite theory would make the law
repugnant to the Constitution, and is contrary to
the principle that the legislature is deemed to
have full knowledge of the constitutional scope
of its powers. The assertion that new legislation
is needed to repeal the act would not be in
harmony with the Constitution either. If a new
and different law were necessary to terminate
the delegation, the period for the delegation, it
has been correctly pointed out, would be
unlimited, indefinite, negative and uncertain;
"that which was intended to meet a temporary
emergency may become permanent law,"
(Peck vs. Fink, 2 Fed. [2d], 912); for Congress
might not enact the repeal, and even if it would,
the repeal might not meet the approval of the
President, and the Congress might not be able
to override the veto. Furthermore, this would
create the anomaly that, while Congress might
delegate its powers by simple majority, it might
not be able to recall them except by a two-third
vote. In other words, it would be easier for
Congress to delegate its powers than to take
them back. This is not right and is not, and

ought not to be, the law. Corwin, President:

Office and Powers, 1948 ed., p. 160, says:
It is generally agreed that the maxim that the
legislature may not delegate its powers signifies
at the very least that the legislature may not
abdicate its powers: Yet how, in view of the
scope that legislative delegations take
nowadays, is the line between delegation and
abdication to be maintained? Only, I urge, by
rendering the delegated powers recoverable
without the consent of the delegate; . . . .
Section 4 goes far to settle the legislative
intention of this phase of Act No. 671. Section 4
stipulates that "the rules and regulations
promulgated thereunder shall be in full force
and effect until the Congress of the Philippines
shall otherwise provide." The silence of the law
regarding the repeal of the authority itself, in
the face of the express provision for the repeal
of the rules and regulations issued in pursuance
of it, a clear manifestation of the belief held by
the National Assembly that there was no
necessity to provide for the former. It would be
strange if having no idea about the time the
Emergency Powers Act was to be effective the
National Assemble failed to make a provision
for this termination in the same way that it did
for the termination of the effects and incidents
of the delegation. There would be no point in
repealing or annulling the rules and regulations
promulgated under a law if the law itself was to
remain in force, since, in that case, the
President could not only make new rules and
regulations but he could restore the ones
already annulled by the legislature.

More anomalous than the exercise of legislative

function by the Executive when Congress is in
the unobstructed exercise of its authority is the
fact that there would be two legislative bodies
operating over the same field, legislating
concurrently and simultaneously, mutually
nullifying each other's actions. Even if the
emergency powers of the President, as
suggested, be suspended while Congress was in
session and be revived after each adjournment,
the anomaly would not be limited. Congress by
a two-third vote could repeal executive orders
promulgated by the President during
congressional recess, and the President in turn
could treat in the same manner, between
sessions of Congress, laws enacted by the latter.
This is not a fantastic apprehension; in two
instances it materialized. In entire good faith,
and inspired only by the best interests of the
country as they saw them, a former President
promulgated an executive order regulating
house rentals after he had vetoed a bill on the
subject enacted by Congress, and the present
Chief Executive issued an executive order on
export control after Congress had refused to
approve the measure.
Quiet apart from these anomalies, there is good
basis in the language of Act No. 671 for the
inference that the National Assembly restricted
the life of the emergency powers of the
President to the time the Legislature was
prevented from holding sessions due to enemy
action or other causes brought on by the war.
Section 3 provides:

The President of the Philippines shall as soon as

practicable upon the convening of the Congress
of the Philippines report thereto all the rules and
regulations promulgated by him under the
powers herein granted.
The clear tenor of this provision is that there
was to be only one meeting of Congress at
which the President was to give an account of
his trusteeship. The section did not say each
meeting, which it could very well have said if
that had been the intention. If the National
Assembly did not think that the report in section
3 was to be the first and last Congress Act No.
671 would lapsed, what reason could there be
for its failure to provide in appropriate and clear
terms for the filing of subsequent reports? Such
reports, if the President was expected to
continue making laws in the forms of rules,
regulations and executive orders, were as
important, of as unimportant, as the initial one.
As a contemporary construction, President
Quezon's statement regarding the duration of
Act No. 671 is enlightening and should carry
much weight, considering his part in the
passage and in the carrying out of the law. Mr.
Quezon, who called the National Assembly to a
special session, who recommended the
enactment of the Emergency Powers Act, if
indeed he was not its author, and who was the
very President to be entrusted with its
execution, stated in his autobiography, "The
Good Fight," that Act No. 671 was only "for a
certain period" and "would become invalid
unless reenacted." These phrases connote
automatical extinction of the law upon the

conclusion of a certain period. Together they

denote that a new legislation was necessary to
keep alive (not to repeal) the law after the
expiration of that period. They signify that the
same law, not a different one, had to be
repassed if the grant should be prolonged.
What then was the contemplated period?
President Quezon in the same paragraph of his
autobiography furnished part of the answer. He
said he issued the call for a special session of
the National Assembly "when it became evident
that we were completely helpless against air
attack, and that it was most unlikely the
Philippine Legislature would hold its next
regular session which was to open on January
1, 1942." (Emphasis ours.) It can easily be
discerned in this statement that the conferring
of enormous powers upon the President was
decided upon with specific view to the inability
of the National Assembly to meet. Indeed no
other factor than this inability could have
motivated the delegation of powers so vast as to
amount to an abdication by the National
Assembly of its authority. The enactment and
continuation of a law so destructive of the
foundations of democratic institutions could not
have been conceived under any circumstance
short of a complete disruption and dislocation
of the normal processes of government.
Anyway, if we are to uphold the
constitutionality of the act on the basis of its
duration, we must start with the premise that it
fixed a definite, limited period. As we have
indicated, the period that best comports with
constitutional requirements and limitations,
with the general context of the law and with

what we believe to be the main if not the

sole raison d'etre for its enactment, was a
period coextensive with the inability of
Congress to function, a period ending with the
conventing of that body.
It is our considered opinion, and we so hold,
that Commonwealth Act No. 671 became
inoperative when Congress met in regular
session on May 25, 1946, and that Executive
Orders Nos. 62, 192, 225 and 226 were issued
without authority of law. In setting the session
of Congress instead of the first special session
preceded it as the point of expiration of the Act,
we think giving effect to the purpose and
intention of the National Assembly. In a special
session, the Congress may "consider general
legislation or only such as he (President) may
designate." (Section 9, Article VI of the
Constitution.) In a regular session, the power
Congress to legislate is not circumscribed
except by the limitations imposed by the
organic law.
Having arrived at this conclusion, we are
relieved of the necessity of deciding the
question as to which department of government
is authorized to inquire whether the contingency
on which the law is predicated still exists. The
right of one or another department to declare
the emergency terminated is not in issue. As a
matter of fact, we have endeavored to find the
will of the National Assemblycall that will,
an exercise of the police power or the war
power and, once ascertained, to apply it. Of
course, the function of interpreting statutes in
proper cases, as in this, will not be denied the

courts as their constitutional prerogative and

duty. In so far as it is insinuated that the Chief
Executive has the exclusive authority to say that
war not ended, and may act on the strength of
his opinion and findings in contravention of the
law as the courts have construed it, no legal
principle can be found to support the
proposition. There is no pretense that the
President has independent or inherent power to
issue such executive orders as those under
review. we take it that the respondents, in
sustaining the validity of these executive orders
rely on Act No. 600, Act No. 620, or Act No.
671 of the former Commonwealth and on no
other source. To put it differently, the
President's authority in this connection is purely
statutory, in no sense political or directly
derived from the Constitution.
Act No. 671, as we have stressed, ended ex
proprio vigore with the opening of the regular
session of Congress on May 25, 1946. Acts
Nos. 600 and 620 contain stronger if not
conclusive indication that they were selfliquidating. By express provision the rules and
regulations to be eventually made in pursuance
of Acts Nos. 600 and 620, respectively
approved on August 19, 1940 and June 6, 1941,
were to be good only up to the corresponding
dates of adjournment of the following sessions
of the Legislature, "unless sooner amended or
repealed by the National Assembly." The logical
deduction to be drawn from this provision is
that in the mind of the lawmakers the idea was
fixed that the Acts themselves would lapse not
latter than the rules and regulations. The design
to provide for the automatic repeal of those

rules and regulations necessarily was predicated

on the consciousness of a prior or at best
simultaneous repeal of their source. Were not
this the case, there would arise the curious
spectacle, already painted, and easily foreseen,
of the Legislature amending or repealing rules
and regulations of the President while the latter
was empowered to keep or return them into
force and to issue new ones independently of
the National Assembly. For the rest, the
reasoning heretofore adduced against the
asserted indefinite continuance of the operation
of Act No. 671 equally applies to Acts Nos. 600
and 620.
The other corollary of the opinion we have
reached is that the question whether war, in law
or in fact, continues, is irrelevant. If we were to
that actual hostilities between the original
belligerents are still raging, the elusion would
not be altered. After the convening of Congress
new legislation had to be approved if the
continuation of the emergency powers, or some
of them, was desired. In the light of the
conditions surrounding the approval of the
Emergency Power Act, we are of the opinion
that the "state of total emergency as a result of
war" envisaged in the preamble referred to the
impending invasion and occupation of the
Philippines by the enemy and the consequent
total disorganization of the Government,
principally the impossibility for the National
Assembly to act. The state of affairs was one
which called for immediate action and with
which the National Assembly would would not
be able to cope. The war itself and its attendant
chaos and calamities could not have

necessitated the delegation had the National

Assembly been in a position to operate.
After all the criticism that have been made
against the efficiency of the system of the
separation of powers, the fact remains that the
Constitution has set up this form of
government, with all its defects and
shortcomings, in preference to the commingling
of powers in one man or group of men. The
Filipino people by adopting parliamentary
government have given notice that they share
the faith of other democracy-loving people in
this system, with all its faults, as the ideal. The
point is, under this framework of government,
legislation is preserved for Congress all the
time, not expecting periods of crisis no matter
how serious. Never in the history of the United
States, the basic features of whose Constitution
have been copied in ours, have the specific
functions of the legislative branch of enacting
laws been surrendered to another department
unless we regard as legislating the carrying out
of a legislative policy according to prescribed
standards; no, not even when that Republic was
fighting a total war, or when it was engaged in a
life-and-death struggle to preserve the Union.
The truth is that under our concept of
constitutional government, in times of extreme
perils more than in normal circumstances "the
various branches, executive, legislative, and
judicial," given the ability to act, are called
upon "to the duties and discharge the
responsibilities
committed
to
them
respectively."

These observations, though beyond the issue as

formulated in this decision, may, we trust, also
serve to answer the vehement plea that for the
good of the Nation, the President should retain
his extraordinary powers as long asturmoil and
other ills directly or indirectly traceable to the
late war harass the Philippines.
Upon the foregoing considerations, the petitions
will be granted. In order to avoid any possible
disruption and interruption in the normal
operation of the Government, we have deemed
it best to depart in these cases from the ordinary
rule to the period for the effectivity of
decisions, and to decree, as it is hereby decreed,
that this decision take effect fifteen days from
the date of the entry of final judgment provided
in section 8 of Rule 53 of the Rules of Court in
relation to section 2 of Rule 35. No costs will
be charged.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-8975

On defendant's motion, the lower court ordered

the complaint dismissed on the ground that it
did not state a cause of action in that Republic
Act No. 1081 did not have a retroactive effect,
From that order plaintiffs appealed directly to
this Court, the total amount claimed being more
than P50,000.

June 29, 1957

We find the appeal to be without merit.

PEDRO P. TAMAYO, ET AL., plaintiffsappellants,

vs.
MANILA HOTEL COMPANY, defendantappellee.
Gregorio E. Fajardo for appellants.
Maximo J. Sabelano and Simeon M. Gopengco
for appellee.
REYES, A., J.:
Two hundred sixty-five (265) employees of the
Manila Hotel Co., who had to be dismissed and
paid the value of their accumulated leave under
section 286 of the Administrative Code, as
amended by Republic Act No. 611, when the
hotel was leased to a private concern on June
30, 1954, brought the present action to recover
from the company an additional amount for
accrued leave alleged to be due them under the
same section of the Administrative Code, as
later amended by Republic Act No. 1081,
approved on June 15, 1954, that is to say,
fifteen days before they were separated from
the service.

As already stated, plaintiffs have already been

paid the value of their accrued leave under
section 286 of the Revised Administrative
Code, as amended by Republic Act No. 611,
which reads:
SEC. 286. When vacation leave and sick leave
may be taken. Vacation leave and sick leave
shall be cumulative and any part thereof which
may not be taken within the calendar year in
which earned may be carried over to the
succeeding years, but whenever any officer,
employee, or laborer of the Government of the
Philippines shall voluntarily resign or be
separated from the service through no fault of
his own, he shall be entitled to the commutation
of all accumulated vacation and/or sick leave to
his credit: Provided, that the total vacation
leave and sick leave that can accumulate to the
credit of any officer or employee shall, in no
cause, exceed five months: Provided, further,
That the proper Department Head may in his
discretion authorize the commutation of the
salary that would be received during the period
of vacation and sick leave of any appointed
officer or employee or teacher or laborer of the
Philippine Government and direct its payment

on or before the beginning of such leave from

the fund out of which the salary would have
been paid: Provided, furthermore, That no
person whose leave has been commuted
following his separation from the service shall
be reappointed or reemployed under the
Government of the Philippines before the
expiration of the leave commuted unless he first
refunds the money value of the unexpired
portion of the leave commuted.
Plaintiffs, however, claim that they were
entitled to ten months' accrued leave because
the
aforementioned
section
of
the
Administrative Code was, several days before
their dismissal, amended by Republic Act No.
1081, to read as follows:
SEC. 286. When vacation leave and sick leave
may be taken. Vacation leave and sick leave
shall be cumulative and any part thereof which
may not be taken within the calendar year in
which earned may be carried over to the
succeeding years, but whenever any officer,
employee, or laborer of the Government of the
Philippines shall voluntarily resign or be
separated from the service through no fault of
his own, he shall be entitled to the commutation
of all accumulated vacation and/or sick leave to
his credit: Provided, That the total vacation
leave and sick leave that can accumulate to the
credit of any officers or employee shall in no
case exceed ten months: Provided further, That
the proper Department Head may in his
discretion authorize the commutation of the
salary that would be received during the period
of vacation and sick leave of any appointed

officer or employee or teacher or laborer of the

Philippine Government and direct its payment
on or before the beginning of such leave from
the fund out of which the salary would have
been paid: Provided, furthermore, That no
person whose leave has been commuted
following his separation from the service shall
be reappointed or reemployed under the
Government of the Philippines before the
expiration of the leave commuted unless he
firsts refunds the money value of the unexpired
portion of the leave commuted. (Emphasis
supplied.)
The question to determine is whether this latter
amendment applies retroactively to employees
whose length of service prior to its approval
would give them an accumulated leave in
excess of five months, the limit fixed by law
before the last amendment.
Article 4 of the new Civil Code provides that
laws shall have no retroactive effect unless the
contrary is provided. As Republic Act No. 1081
does not provide that it is to have retroactive
effect, it can only be given effect from the date
of its approval.
As a matter of fact, this is the construction that
has been placed upon that Act by the
department of the Government charged with its
enforcement. Thus, when the Commissioner of
Civil Service, on August 10, 1954, passed upon
the claim of the present plaintiffs against the
Manila Hotel management, he ruled that "the
accumulation of the additional five months'
total vacation and sick leave (to the original five

months allowed under Republic Act No. 611)

should begin only from June 15, 1954."
Confirmatory of that ruling is the opinion
rendered by the Secretary of Justice, Hon.
Pedro Tuason, at the request of the Executive
Secretary, which reads:

November 27, 1954

The
EXECUTIVE
Malacaang, Manila

SECRETARY

Sir:
This with reference to your request for opinion
on whether or not Republic Act No. 1081,
which has increased the maximum accumulable
leave of a government officer or employee from
5 months to 10 months, applies retroactively to
those whose length of service prior to its
approval would have entitled them to an
accumulated leave in excess of five months.
Prior to the enactment of Republic Act No.
1081, section 286 of the Revised Administrative
Code provides as follows:
"SEC. 286. When vacation leave and sick leave
may be taken. Vacation leave and sick leave
shall be cumulative and any part thereof which
may not betaken within the calendar year in
which earned may be carried over to the
succeeding years, but whenever any officer,
employee, or laborer of the Government of the

Philippines shall voluntarily resign or be

separated from the service through no fault of
his own, he shall be entitled to the commutation
of all accumulated vacation and/or sick leave to
his credit: Provided, That the total vacation
leave and sick leave that can accumulate to the
credit of any officers or employee shall, in no
case, exceed five months. . . . (As amended by
Rep. Act No. 611.)
We are informed that the Bureau of Civil
Service had construed and enforced the abovequoted provision in the sense that after an
officer or employee had accumulated more than
five months' vacation and sick leave, any leave
accruing during the calendar year but not taken
within that year was automatically forfeited.
The Congress is deemed to have been aware of
this long-continued, contemporaneous and
practical interpretation of the statute by the
administrative officer charged with its
administration and enforcement, when Republic
Act. No. 1081 was enacted, and to have
sanctioned that interpretation as the legislative
intent. The result then is that upon the approval
of the amendatory law, no leave already earned
in excess of the five-month maximum stood to
the credit of any officer or employee. Totally
and absolutely lost and legally non-existent,
such excess could only be validated or restored
by an express or clear declaration by the lawmaker. There is nothing in Republic Act No.
1081 from which an intention of this sort can be
gathered.

I am, therefore, constrained to answer the query

in the negative.
Respectfully,
(Sgd.)
PEDRO
Secretary of Justice

TUASON

It is a rule of statutory construction that "courts

will and should respect the contemporaneous
construction placed upon a statute by the
executive officers whose duty it is to enforce it
and unless such interpretation is clearly
erroneous will ordinarily be controlled thereby.
(Molina vs. Rafferty Phil. 545; see also In re
Allen, 2 Phil. 630, Everett vs. Bautista, 69 Phil.
137.)
But it is not only the executive branch of the
Government that has construed Republic Act
No. 1081 as having only a prospective effect.
For Congress itself so construed that Act when
in 1955 it approved a bill (House Bill No. 3097)
to give the Act retroactive effect, for the reason
so it was explained that though its
proponent had intended it to have a retroactive
effect, it "has (in fact) prospective effect" in the
sense that "leave earned but not enjoyed prior to
its approval was not counted." The bill,
however, never became law because it was
vetoed for lack of funds.
Plaintiffs-appellants invoke the ruling of this
Court in the case of Manila Railroad Co. vs.
CIR et al., G.R. No. L-4616, July 31, 1952,
where the heirs of an employee of the Manila

Railroad Company who died in 1945 were

awarded the money equivalent of his unused
vacation and sick leave although the law then in
force provided for the forfeiture thereof upon
the employee's separation from the service, for
the reason, it is alleged, that Republic Act 611,
effective only on May 5, 1951, which
suppressed that part of the law relating to
forfeiture, was applied. But a careful reading of
the decision will show that the ruling was
specifically based on a circular issued by the
manager of the railroad company relative to the
"grant of monetary aid to former employees
and/or to the latter's dependents, who could not
be reinstated on account of illness or death" and
also on the "long-standing policy of the railroad
company to pay vacation and sick leave duly
acquired by its employees and laborers effective
upon separation from the service." Such portion
of the decision as mentions Republic Act No.
611 was mere dictum and cannot, therefore, be
taken as the ratio decidendi of the case.
Lastly, plaintiffs-appellants cite article 1702 of
the new Civil Code, which provides that in case
of doubt, labor legislation shall be construed in
favor of the laborer. As the article is expressly
intended to apply in case of doubt, it can have
no application where, as in the present case, no
doubt exists.
In view of the foregoing, the order of dismissal
is affirmed, with costs against the appellants.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 156087

May 8, 2009

KUWAIT AIRWAYS,
CORPORATION, Petitioner,
vs.
PHILIPPINE AIRLINES, INC., Respondent.
DECISION
TINGA, J.:
This petition for review1 filed by the duly
designated air carrier of the Kuwait
Government assails a decision2 dated 25
October 2002 of the Makati Regional Trial
Court (RTC), Branch 60, ordering Kuwait
Airways to pay respondent Philippine Airlines
the amount of US$1,092,690.00, plus interest,
attorneys fees, and cost of suit.3 The principal
liability represents the share to Philippine
Airlines in the revenues the foreign carrier had
earned for the uplift of passengers and cargo in
its flights to and from Kuwait and Manila which
the foreign carrier committed to remit as a
contractual obligation.
On 21 October 1981, Kuwait Airways and
Philippine Airlines entered into a Commercial
Agreement,4 annexed to which was a Joint
Services Agreement5 between the two airlines.

The Commercial Agreement covered a twice

weekly Kuwait Airways flight on the route
Kuwait-Bangkok-Manila and vice versa.6 The
agreement stipulated that "only 3rd and 4th
freedom traffic rights between Kuwait and
Manila and vice versa will be exercised. No 5th
freedom traffic rights will be exercised between
Manila on the one hand and Bangkok on the
other."7
The "freedom traffic rights" referred to in the
Agreement are the so-called "five freedoms"
contained in the International Air Transport
Agreement (IATA) signed in Chicago on 7
December 1944. Under the IATA, each
contracting State agreed to grant to the other
contracting states, five "freedoms of air."
Among these freedoms were "[t]he privilege to
put down passengers, mail and cargo taken on
in
the territory of the State whose nationality the
aircraft possesses" (Third Freedom); "[t]he
privilege to take on passengers, mail or cargo
destined for the territory of the State whose
nationality the aircraft possesses" (Fourth
Freedom); and the right to carry passengers
from one's own country to a second country,
and from that country to a third country (Fifth
Freedom). In essence, the Kuwait Airways
flight was authorized to board passengers in
Kuwait and deplane them in Manila, as well as
to board passengers in Manila and deplane them
in Kuwait. At the same time, with the limitation
in the exercise of Fifth Freedom traffic rights,
the flight was barred from boarding passengers
in Bangkok and deplaning them in Manila, or

boarding passengers in Manila and deplaning

them in Bangkok.
The Commercial Agreement likewise adverted
to the annexed Joint Services Agreement
covering the Kuwait-Manila (and vice versa)
route, which both airlines had entered into "[i]n
order to reflect the high level of friendly
relationships between [Kuwait Airways] and
[Philippine Airlines] and to assist each other to
develop traffic on the route."8 The Agreement
likewise stipulated that "[u]ntil such time as
[Philippine Airlines] commences its operations
to or via Kuwait, the Joint Services shall be
operated with the use of [Kuwait Airways]
aircraft and crew."9 By virtue of the Joint
Services Agreement, Philippine Airlines was
entitled to seat allocations on specified
Kuwait Airways sectors, special prorates for use
by Philippine Airlines to specified Kuwait
Airways sectors, joint advertising by both
carriers in each others timetables and other
general advertising, and mutual assistance to
each other with respect to the development of
traffic on the route.10
Most pertinently for our purposes, under Article
2.1 of the Commercial Agreement, Kuwait
Airways obligated itself to "share with
Philippine Airlines revenue earned from the
uplift of passengers between Kuwait and
Manila and vice versa."11 The succeeding
paragraphs of Article 2 stipulated the basis for
the shared revenue earned from the uplift of
passengers.

The Commercial Agreement and the annexed

Joint Services Agreement was subsequently
amended by the parties six times between 1981
and 1994. At one point, in 1988, the agreement
was amended to authorize Philippine Airlines to
operate provisional services, referred to as "ad
hoc joint services," on the Manila-Kuwait (and
vice versa) route for the period between April to
June 1988.12 In 1989, another amendment was
agreed to by the parties, subjecting the uplift of
cargo between Kuwait and Manila to the same
revenue sharing arrangement as the uplift of
passengers.13 From 1981 until when the present
incidents arose in 1995, there seems to have
been no serious disagreements relating to the
contract.
In April of 1995, delegations from the
Philippines and Kuwait (Philippine Panel and
Kuwait Panel) met in Kuwait. The talks
culminated in a Confidential Memorandum of
Understanding (CMU) entered into in Kuwait
on 12 April 1995. Among the members of the
Philippine Panel were officials of the Civil
Aeronautics Board (CAB), the Department of
Foreign Affairs (DFA), and four officials of
Philippine Airlines: namely its Vice-President
for Marketing, Director for International
Relations, Legal Counsel, and a Senior
International Relations Specialist. Dr. Victor S.
Linlingan, the Head of the Delegation and
Executive Director of the CAB, signed the
CMU in behalf of the Government of the
Republic of the Philippines.
The present controversy stems from the fourth
paragraph of the CMU, which read:

4. The two delegations agreed that the unilateral

operation and the exercise of third and fourth
freedom traffic rights shall not be subject to any
royalty payment or commercial arrangements,
as from the date of signing of this [CMU].
The aeronautical authorities of the two
Contracting Parties will bless and encourage
any cooperation between the two designated
airlines.
The designated airlines shall enter into
commercial arrangements for the unilateral
exercise of fifth freedom traffic rights. Such
arrangements will be subject to the approval of
the aeronautical authorities of both contracting
parties.14
On 15 May 1995, Philippine Airlines received a
letter from Dawoud M. Al-Dawoud, the Deputy
Marketing & Sales Director for International
Affairs of Kuwait Airways, addressed to Ms.
Socorro Gonzaga, the Director for International
Relations of Philippine Airlines.15 Both AlDawoud and Gonzaga were members of their
countrys respective delegations that had met in
Kuwait the previous month. The letter stated in
part:
Regarding the [Kuwait Airways/Philippine
Airlines] Commercial Agreement, pursuant to
item 4 of the new MOU[,] we will advise our
Finance Department that the Agreement
concerning royalty for 3rd/4th freedom traffic
will be terminated effective April 12, 1995.
Although the royalty agreement will no longer
be valid, we are very keen on seeing that

[Philippine Airlines] continues to enjoy direct

participation in the Kuwait/Philippines market
through the Block Space Agreement and to that
extent we would like to maintain the Jt. Venture
(Block Space) Agreement, although with some
minor modifications.16
To this, Gonzaga replied to Kuwait Airways in
behalf of Philippine Airlines in a letter dated 22
June 1995.17Philippine Airlines called attention
to Section 6.5 of the Commercial Agreement,
which read:
This agreement may be terminated by either
party by giving ninety (90) days notice in
writing to the other party. However, any
termination date must be the last day of any
traffic period, e.g.[,] 31st March or 31st
October.18
Pursuant to this clause, Philippine Airlines
acknowledged the 15 May 1995 letter as the
requisite notice of termination. However, it also
pointed out that the agreement could only be
effectively terminated on 31 October 1995, or
the last day of the then current traffic period.
Thus, Philippine Airlines insisted that the
provisions of the Commercial Agreement "shall
continue to be enforced until such date."19
Subsequently, Philippine Airlines insisted that
Kuwait Airways pay it the principal sum of
US$1,092,690.00 as revenue for the uplift of
passengers and cargo for the period 13 April
1995 until 28 October 1995.20 When Kuwait
Airways refused to pay, Philippine Airlines filed
a Complaint21 against the foreign airline with

the Regional Trial Court (RTC) of Makati City,

seeking the payment of the aforementioned sum
with interest, attorneys fees, and costs of suit.
In its Answer,22 Kuwait Airways invoked the
CMU and argued that its obligations under the
Commercial Agreement were terminated as of
the effectivity date of the CMU, or on 12 April
1995. Philippine Airlines countered in its Reply
that it was "not privy to the [CMU],"23 though it
would eventually concede the existence of the
CMU.24
An exhaustive trial on the merits was had. On
25 October 2002, the RTC rendered a Decision
in favor of Philippine Airlines. The RTC noted
that "the only issue to resolve in this case is a
legal one," particularly whether Philippine
Airlines is entitled to the sums claimed under
the terms of the Commercial Agreement. The
RTC also considered as a corollary issue
whether Kuwait Airways "validly terminated
the Commercial Agreement x x x, plaintiffs
contention being that [Kuwait Airways] had not
complied with the terms of termination
provided for in the Commercial Agreement."
The bulk of the RTCs discussion centered on
the Philippine Airlines claim that the execution
of the CMU could not prejudice its existing
rights under the Commercial Agreement, and
that the CMU could only be deemed effective
only after 31 October 1995, the purported
effectivity date of termination under the
Commercial Agreement. The rationale for this
position of Philippine Airlines was that the
execution of the CMU could not divest its

proprietary rights
Agreement.

under

the

Commercial

On this crucial point, the RTC agreed with

Philippine Airlines. It asserted the obligatory
force of contracts between contracting parties as
the source of vested rights which may not be
modified or impaired. After recasting Kuwait
Airways arguments on this point as being that
"the
Confidential
Memorandum
of
Understanding is superior to the Commercial
Agreement[,] the same having been supposedly
executed by virtue of the states sovereign
power," the RTC rejected the argument, holding
that "[t]he fact that the [CMU] may have been
executed by a Philippine Panel consisting of
representative [sic] of CAB, DFA, etc. does not
necessarily give rise to the conclusion that the
[CMU] is a superior contract[,] for the exercise
of the States sovereign power cannot be
arbitrarily and indiscriminately utilized
specifically to impair contractual vested
rights."25
Instead, the RTC held that "[t]he Commercial
Agreement and its specific provisions on
revenue sharing having been freely and
voluntarily agreed upon by the affected parties
x x x has the force of law between the parties
and they are bound to the fulfillment of what
has
been
expressly
stipulated
26
therein." Accordingly, "the provision of the
[CMU] must be applied in such a manner that it
does not impair the vested rights of the parties."
From this Decision, Kuwait Airways directly
filed with this Court the present Petition for

Review, raising pure questions of law. Kuwait

Airways poses three questions of law for
resolution: whether the designated air carrier of
the Republic of the Philippines can have better
rights than the government itself; whether the
bilateral agreement between the Republic of the
Philippines and the State of Kuwait is superior
to the Commercial Agreement; and whether the
enforcement of the CMU violates the nonimpairment clause of the Constitution.
Let us review the factual backdrop to appreciate
the underlying context behind the Commercial
Agreement and the CMU. The Commercial
Agreement was entered into in 1981 at a time
when Philippine Airlines had not provided a
route to Kuwait while Kuwait Airways had a
route to Manila. The Commercial Agreement
established a joint commercial arrangement
whereby Philippine Airlines and Kuwait
Airways were to jointly operate the ManilaKuwait (and vice versa) route, utilizing the
planes and services of Kuwait Airways. Based
on the preambular paragraphs of the Joint
Services Agreement, as of 1981, Kuwait
Airways was interested in establishing a
"second frequency" (or an increase of its Manila
flights to two) and that "as a result of cordial
and frank discussions the concept of a joint
service emerged as the most desirable
alternative option."27
As a result, the revenue-sharing agreement was
reached between the two airlines, an agreement
which stood as an alternative to both carriers
offering competing flights servicing the ManilaKuwait route. An apparent concession though

by Philippine Airlines was the preclusion of the

exercise of one of the fundamental air traffic
rights, the Fifth Freedom traffic rights with
respect to the Manila-Bangkok-Kuwait, thereby
precluding the deplaning of passengers from
Manila in Bangkok and the boarding in
Bangkok of passengers bound for Manila.
The CMU effectively sought to end the 1981
agreement between Philippine Airlines and
Kuwait Airways, by precluding any commercial
arrangements in the exercise of the Third and
Fourth freedom traffic rights. As a result, both
Kuwait and the Philippines had the respective
right to board passengers from their respective
countries and deplane them in the other country,
without having to share any revenue or enter
into any commercial arrangements to exercise
such rights. In exchange, the designated airline
or airlines of each country was entitled to
operate six frequencies per week in each
direction. In addition, the designated airlines
were allowed to enter into commercial
arrangements for the unilateral exercise of the
Fifth Freedom traffic rights.
Another notable point, one not touched upon by
the parties or the trial court. It is well known
that at the time of the execution of the 1981
agreements, Philippine Airlines was controlled
by the Philippine government, with the
Government Service Insurance System (GSIS)
holding the majority of shares. However, in
1992, Philippine Airlines was privatized, with a
private consortium acquiring 67% of the shares
of the carrier.28 Thus, at the time of the signing
of the CMU, Philippine Airlines was a private

corporation no longer controlled by the

Government. This fact is significant. Had
Philippine Airlines remained a government
owned or controlled corporation at the time the
CMU was executed in 1995, its status as such
would have bound Philippine Airlines to the
commitments made in the document by no less
than the Philippine government. However, since
Philippine Airlines had already become a
private corporation at that juncture, the question
of impairment of private rights may come into
consideration.
In this regard, we observe that the RTC appears
to have been under the impression that the
CMU was brought about by machinations of the
Philippine Panel and the Kuwait Panel of which
Philippine Airlines was not aware or in which it
had a part. This impression is not exactly borne
by the record since no less than four of the nine
members of the Philippine Panel were officials
of Philippine Airlines. It should be noted though
that one of these officials, Senior International
Relations Specialist Arnel Vibar, testified for
Philippine Airlines that the airline voiced its
opposition to the withdrawal of the commercial
agreements under the CMU even months before
the signing of the CMU, but the objections were
overruled.
Now, the arguments raised in the petition.
One line of argument raised by Kuwait Airways
can be dismissed outright. Kuwait Airways
points out that the third Whereas clause of the
1981 Commercial Agreement stated: "NOW, it
is hereby agreed, subject to and without

prejudice to any existing or future agreements

between the Government Authorities of the
Contracting Parties hereto " That clause, it is
argued, evinces acknowledgement that from the
beginning Philippine Airlines had known fully
well that its rights under the Commercial
Agreement would be limited by whatever
agreements the Philippine and Kuwait
governments may enter into later.
But can a perambulatory clause, which is what
the adverted "Whereas" clause is, impose a
binding obligation or limitation on the
contracting parties? In the case of statutes,
while a preamble manifests the reasons for the
passage of the statute and aids in the
interpretation of any ambiguities within the
statute to which it is prefixed, it nonetheless is
not an essential part of an act, and it neither
enlarges nor confers powers.29 Philippine
Airlines submits that the same holds true as to
the preambular whereas clauses of a contract.
What was the intention of the parties in forging
the "Whereas" clause and the contexts the
parties understood it in 1981? In order to judge
the intention of the contracting parties, their
contemporaneous and subsequent acts shall be
principally considered,30 and in doing so, the
courts may consider the relations existing
between the parties and the purpose of the
contract.31 In 1981, Philippine Airlines was still
owned by the Philippine government. In that
context, it is evident that the Philippine
government, as owner Philippine Airlines,
could enter into agreements with the Kuwait
government that would supersede the

Commercial Agreement entered into by one of

its GOCCs, a scenario that changed once
Philippine Airlines fell to private ownership.
Philippine Airlines argues before us that the
cited preambular stipulation is in fact
superfluous, and we can agree in the sense that
as of the time of the execution of the
Commercial Agreement, it was evident, without
need of stipulation, that the Philippine
government could enter into an agreement with
the Kuwait government that would prejudice
the terms of the commercial arrangements
between the two airlines. After all, Philippine
Airlines then would not have been in a position
to challenge the wishes of its then majority
stockholder the Philippine government.
Yet by the time ownership of Philippine
Airlines was transferred into private hands, the
controverted "Whereas" clause had taken on a
different complexion, for it was newly evident
that an act of the Philippine government
negating the commercial arrangement between
the two airlines would infringe the vested rights
of a private individual. The original intention of
the "Whereas" clause was to reflect what was
then a given fact relative to the nationalized
status of Philippine Airlines. With the change of
ownership of Philippine Airlines, the "Whereas"
clause had ceased to be reflective of the current
situation as it now stands as a seeming
invitation to the Philippine government to erode
private vested rights. We would have no
problem according the interpretation preferred
by Kuwait Airways of the "Whereas" clause had
it been still reflective of the original intent to
waive vested rights of private persons, rather

than the rights in favor of the government by a

GOCC. That is not the case, and we are not
inclined to give effect to the "Whereas" clause
in a manner that does not reflect the original
intention of the contracting parties.
Thusly, the proper focus of our deliberation
should be whether the execution of the CMU
between
the
Philippine
and
Kuwait
governments
could
have
automatically
terminated the Commercial Agreement, as well
as the Joint Services Agreement between
Philippine Airlines and Kuwait Airways.
Philippine Airlines is the grantee of a legislative
franchise authorizing it to provide domestic and
international air services.32 Its initial franchise
was granted in 1935 through Act No. 4271,
which underwent substantial amendments in
1959 through Republic Act No. 2360.33 It was
granted a new franchise in 1979 through
Presidential Decree No. 1590, wherein statutory
recognition was accorded to Philippine Airlines
as the "national flag carrier." P.D. No. 1590 also
recognized that the "ownership, control, and
management" of Philippine Airlines had been
reacquired by the Government. Section 19 of
P.D. No. 1590 authorized Philippine Airlines to
contract loans, credits and indebtedness from
foreign sources, including foreign governments,
with the unconditional guarantee of the
Republic of the Philippines.
At the same time, Section 8 of P.D. No. 1590
subjects Philippine Airlines "to the laws of the
Philippines now existing or hereafter enacted."
After pointing to this provision, Kuwait

Airways correlates it to Republic Act (R.A.)

No. 776, or the Civil Aeronautics Act of the
Philippines, which grants the Civil Aeronautics
Board (CAB) "the power to regulate the
economic aspect of air transportation, [its]
general supervision and regulation of, and
jurisdiction and control over, air carriers as well
as their property, property rights, equipment,
facilities, and franchise." R.A. No. 776 also
mandates that the CAB "shall take into
consideration the obligation assumed by the
Republic of the Philippines in any treaty,
convention or agreement with foreign countries
on matters affecting civil aviation."
There is no doubt that Philippine Airlines
forebears under several regulatory perspectives.
First, its authority to operate air services in the
Philippines derives from its legislative franchise
and is accordingly bound by whatever
limitations that are presently in place or may be
subsequently incorporated in its franchise.
Second, Philippine Airlines is subject to the
other laws of the Philippines, including R.A.
No. 776, which grants regulatory power to the
CAB over the economic aspect of air
transportation. Third, there is a very significant
public interest in state regulation of air travel in
view of considerations of public safety,
domestic and international commerce, as well
as the fact that air travel necessitates steady
traversal of international boundaries, the amity
between nations.
At the same time, especially since Philippine
Airlines was already under private ownership at
the time the CMU was entered into, we cannot

presume that any and all commitments made by

the Philippine government are unilaterally
binding on the carrier even if this comes at the
expense of diplomatic embarrassment. While it
may have been, prior to the privatization of
Philippine Airlines, that the Philippine
Government had the authority to bind the
airline in its capacity as owner of the airline,
under the post-privatization era, however,
whatever authority of the Philippine
Government to bind Philippine Airlines can
only come in its capacity as regulator.1awphi1
As with all regulatory subjects of the
government, infringement of property rights can
only avail with due process of law. Legislative
regulation of public utilities must not have the
effect of depriving an owner of his property
without due process of law, nor of confiscating
or appropriating private property without due
process of law, nor of confiscating or
appropriating private property without just
compensation, nor of limiting or prescribing
irrevocably vested rights or privileges lawfully
acquired under a charter or franchise. The
power to regulate is subject to these
constitutional limits.34
We can deem that the CAB has ample power
under its organizing charter, to compel
Philippine Airlines to terminate whatever
commercial agreements the carrier may have.
After all, Section 10 of R.A. No. 776 grants to
the CAB the "general supervision and
regulation of, and jurisdiction and control over,
air carriers as well as their property, property
rights, equipment, facilities and franchise," and

this power correlates to Section 4(c) of the same

law, which mandates that the Board consider in
the exercise of its functions "the regulation of
air transportation in such manner as to
recognize and preserve the inherent advantages
of, assure the highest degree of safety in, and
foster sound economic condition in, such
transportation, and to improve the relations
between, and coordinate transportation by air
carriers."
We do not doubt that the CAB, in the exercise
of its statutory mandate, has the power to
compel Philippine Airlines to immediately
terminate its Commercial Agreement with
Kuwait Airways pursuant to the CMU.
Considering that it is the Philippine government
that has the sole authority to charter air policy
and negotiate with foreign governments with
respect to air traffic rights, the government
through the CAB has the indispensable
authority to compel local air carriers to comply
with government determined policies, even at
the expense of economic rights. The airline
industry is a sector where government
abjuration is least desired.
However, this is not a case where the CAB had
duly exercised its regulatory authority over a
local airline in order to implement or further
government air policy. What happened instead
was an officer of the CAB, acting in behalf not
of the Board but of the Philippine government,
had committed to a foreign nation the
immediate abrogation of Philippine Airliness
commercial agreement with Kuwait Airways.
And while we do not question that ability of

that member of the CAB to represent the

Philippine government in signing the CMU, we
do question whether such member could have
bound Philippine Airlines in a manner that can
be accorded legal recognition by our courts.
Imagine if the President of the Philippines, or
one of his alter egos, acceded to the demands of
a foreign counterpart and agreed to shut down a
particular Filipino business or enterprise, going
as far as to co-sign a document averring that the
business "will be shut down immediately."
Granting that there is basis in Philippine law for
the closure of such business, could the mere
declaration of the President have the legal effect
of immediately rendering business operations
illegal? We, as magistrates in a functioning
democratic State with a fully fleshed Bill of
Rights and a Constitution that emphatically
rejects "letat cest moi" as the governing
philosophy, think not. There is nothing to
prevent the Philippine government from
utilizing all the proper channels under law to
enforce such closure, but unless and until due
process is observed, it does not have legal effect
in this jurisdiction. Even granting that the
"agreement" between the two governments or
their representatives creates a binding
obligation under international law, it remains
incumbent for each contracting party to adhere
to its own internal law in the process of
complying with its obligations.
The promises made by a Philippine president or
his alter egos to a foreign monarch are not
transubstantiated by divine right so as to ipso
facto render legal rights of private persons

obviated. Had Philippine Airlines remained a

government-owned or controlled corporation, it
would have been bound, as part of the executive
branch, to comply with the dictates of the
President or his alter egos since the President
has executive control and supervision over the
components of the executive branch. Yet
Philippine Airlines has become, by this time, a
private corporation one that may have labored
under the conditions of its legislative franchise
that allowed it to conduct air services, but
private in character nonetheless. The President
or his alter egos do not have the legal capacity
to dictate insuperable commands to private
persons. And that undesirable trait would be
refuted on the President had petitioners
position prevailed, since it is imbued with the
presumption that the commitment made to a
foreign government becomes operative without
complying with the internal processes for the
divestiture of private rights.
Herein, we do not see why the Philippine
government could not have observed due
process of law, should it have desired to see the
Commercial
Agreement
immediately
terminated in order to adhere to its apparent
commitment to the Kuwait government. The
CAB, with its ample regulatory power over the
economic affairs of local airliners, could have
been called upon to exercise its jurisdiction to
make it so. A remedy even exists in civil law
the judicial annulment or reformation of
contractswhich could have been availed of to
effect the immediate termination of the
Commercial Agreement. No such remedy was
attempted by the government.

Nor can we presume, simply because Dr.

Linlingan, Executive Director of the CAB had
signed the CMU in behalf of the Philippine
Panel, that he could have done so bearing the
authority of the Board, in the exercise of
regulatory jurisdiction over Philippine Airlines.
For one, the CAB is a collegial body composed
of five members,35 and no one membereven
the chairmancan act in behalf of the entire
Board. The Board is disabled from performing
as such without a quorum. For another, the
Executive Director of the CAB is not even a
member of the Board, per R.A. No. 776, as
amended.
Even granting that the police power of the
State, as given flesh in the various laws
governing the regulation of the airline industry
in the Philippines, may be exercised to impair
the vested rights of privately-owned airlines,
the deprivation of property still requires due
process of law. In order to validate petitioners
position, we will have to concede that the right
to due process may be extinguished by
executive command. While we sympathize with
petitioner, who reasonably could rely on the
commitment made to it by the Philippine
government, we still have to respect the
segregate identity of the government and that of
a private corporation and give due meaning to
that segregation, vital as it is to the very notion
of democracy.
WHEREFORE, the petition is DENIED. No
pronouncement as to costs.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Baguio City
EN BANC
G.R. No. 180050

April 12, 2011

RODOLFO G. NAVARRO, VICTOR F.

BERNAL,
and
RENE
O.
MEDINA, Petitioners,
vs.
EXECUTIVE SECRETARY EDUARDO
ERMITA, representing the President of the
Philippines; Senate of the Philippines,
represented by the SENATE PRESIDENT;
House of Representatives, represented by the
HOUSE
SPEAKER;
GOVERNOR
ROBERT ACE S. BARBERS, representing
the mother province of Surigao del Norte;
GOVERNOR
GERALDINE
ECLEO
VILLAROMAN, representing the new
Province of Dinagat Islands, Respondents,
CONGRESSMAN
FRANCISCO
T.
MATUGAS, HON. SOL T. MATUGAS,
HON. ARTURO CARLOS A. EGAY, JR.,
HON.
SIMEON
VICENTE
G.
CASTRENCE, HON. MAMERTO D.
GALANIDA, HON. MARGARITO M.
LONGOS,
and
HON.
CESAR
M.
BAGUNDOL, Intervenors.
RESOLUTION
NACHURA, J.:

For consideration of the Court is the Urgent

Motion to Recall Entry of Judgment dated
October 20, 2010 filed by MovantIntervenors1 dated and filed on October 29,
2010, praying that the Court (a) recall the entry
of judgment, and (b) resolve their motion for
reconsideration of the July 20, 2010 Resolution.
To provide a clear perspective of the instant
motion, we present hereunder a brief
background of the relevant antecedents
On October 2, 2006, the President of the
Republic approved into law Republic Act
(R.A.) No. 9355 (An Act Creating the Province
of Dinagat Islands).2 On December 3, 2006, the
Commission on Elections (COMELEC)
conducted the mandatory plebiscite for the
ratification of the creation of the province under
the Local Government Code (LGC).3 The
plebiscite yielded 69,943 affirmative votes and
63,502 negative votes.4 With the approval of the
people from both the mother province of
Surigao del

and prohibition (G.R. No. 175158) challenging

the constitutionality of R.A. No. 9355.6 The
Court dismissed the petition on technical
grounds. Their motion for reconsideration was
also denied.7
Undaunted, petitioners, as taxpayers and
residents of the Province of Surigao del Norte,
filed another petition for certiorari8 seeking to
nullify
R.A.
No.
9355
for
being
unconstitutional. They alleged that the creation
of Dinagat as a new province, if uncorrected,
would perpetuate an illegal act of Congress, and
would unjustly deprive the people of Surigao
del Norte of a large chunk of the provincial
territory, Internal Revenue Allocation (IRA),
and rich resources from the area. They pointed
out that when the law was passed, Dinagat had
a land area of 802.12 square kilometers only
and a population of only 106,951, failing to
comply with Section 10, Article X of the
Constitution and of Section 461 of the LGC, on
both counts, viz.
Constitution, Article X Local Government

Norte and the Province of Dinagat Islands

(Dinagat), the President appointed the interim
set of provincial officials who took their oath of
office on January 26, 2007. Later, during the
May 14, 2007 synchronized elections, the
Dinagatnons elected their new set of provincial
officials who assumed office on July 1, 2007.5
On November 10, 2006, petitioners Rodolfo G.
Navarro, Victor F. Bernal and Rene O. Medina,
former political leaders of Surigao del Norte,
filed before this Court a petition for certiorari

Section 10. No province, city, municipality, or

barangay may be created, divided, merged,
abolished, or its boundary substantially altered,
except in accordance with the criteria
established in the local government code and
subject to the approval by a majority of the
votes cast in a plebiscite in the political units
directly affected.
LGC, Title IV, Chapter I

Section 461. Requisites for Creation. (a) A

province may be created if it has an average
annual income, as certified by the Department
of Finance, of not less than Twenty million
pesos (P20,000,000.00) based on 1991 constant
prices and either of the following requisites:
(i) a continuous territory of at least two
thousand (2,000) square kilometers, as certified
by the Lands Management Bureau; or
(ii) a population of not less than two hundred
fifty thousand (250,000) inhabitants as certified
by the National Statistics Office:
Provided, That, the creation thereof shall not
reduce the land area, population, and income of
the original unit or units at the time of said
creation to less than the minimum requirements
prescribed herein.
(b) The territory need not be contiguous if it
comprises two (2) or more islands or is
separated by a chartered city or cities which do
not contribute to the income of the province.
(c) The average annual income shall include the
income accruing to the general fund, exclusive
of special funds, trust funds, transfers, and nonrecurring income. (Emphasis supplied.)
On February 10, 2010, the Court rendered its
Decision9 granting the petition.10 The Decision
declared R.A. No. 9355 unconstitutional for
failure to comply with the requirements on
population and land area in the creation of a
province under the LGC. Consequently, it

declared the proclamation of Dinagat and the

election of its officials as null and void. The
Decision likewise declared as null and void the
provision on Article 9(2) of the Rules and
Regulations Implementing the LGC (LGCIRR), stating that, "[t]he land area requirement
shall not apply where the proposed province is
composed of one (1) or more islands" for being
beyond the ambit of Article 461 of the LGC,
inasmuch as such exemption is not expressly
provided in the law.11
The Republic, represented by the Office of the
Solicitor General, and Dinagat filed their
respective motions for reconsideration of the
Decision. In its Resolution12 dated May 12,
2010,13 the Court denied the said motions.14
Unperturbed, the Republic and Dinagat both
filed their respective motions for leave of court
to admit their second motions for
reconsideration, accompanied by their second
motions for reconsideration. These motions
were eventually "noted without action" by this
Court in its June 29, 2010 Resolution.15
Meanwhile, the movants-intervenors filed on
June 18, 2010 a Motion for Leave to Intervene
and to File and to Admit Intervenors Motion
for Reconsideration of the Resolution dated
May 12, 2010. They alleged that the
COMELEC issued Resolution No. 8790,
relevant to this case, which provides
RESOLUTION NO. 8790

WHEREAS, Dinagat Islands, consisting of

seven (7) municipalities, were previously
components of the First Legislative District of
the Province of Surigao del Norte. In December
2006 pursuant to Republic Act No. 9355, the
Province of Dinagat Island[s] was created and
its creation was ratified on 02 December 2006
in the Plebiscite for this purpose;
WHEREAS, as a province, Dinagat Islands
was, for purposes of the May 10, 2010 National
and Local Elections, allocated one (1) seat for
Governor, one (1) seat for Vice Governor, one
(1) for congressional seat, and ten (10)
Sangguniang Panlalawigan seats pursuant to
Resolution No. 8670 dated 16 September 2009;
WHEREAS, the Supreme Court in G.R. No.
180050 entitled "Rodolfo Navarro, et al., vs.
Executive Secretary Eduardo Ermita, as
representative of the President of the
Philippines, et al." rendered a Decision, dated
10 February 2010, declaring Republic Act No.
9355 unconstitutional for failure to comply with
the criteria for the creation of a province
prescribed in Sec. 461 of the Local Government
Code in relation to Sec. 10, Art. X, of the 1987
Constitution;
WHEREAS, respondents intend to file
Motion[s] for Reconsideration on the above
decision of the Supreme Court;
WHEREAS, the electoral data relative to the:
(1) position for Member, House of
Representatives
representing
the
lone
congressional district of Dinagat Islands, (2)

names of the candidates for the aforementioned

position, (3) position for Governor, Dinagat
Islands, (4) names of the candidates for the said
position, (5) position of the Vice Governor, (6)
the names of the candidates for the said
position, (7) positions for the ten (10)
Sangguniang Panlalawigan Members and, [8]
all the names of the candidates for Sangguniang
Panlalawigan Members, have already been
configured into the system and can no longer be
revised within the remaining period before the
elections on May 10, 2010.
NOW, THEREFORE, with the current system
configuration, and depending on whether the
Decision of the Supreme Court in Navarro vs.
Ermita is reconsidered or not, the Commission
RESOLVED, as it hereby RESOLVES, to
declare that:
a. If the Decision is reversed, there will be no
problem since the current system configuration
is in line with the reconsidered Decision,
meaning that the Province of Dinagat Islands
and the Province of Surigao del Norte remain as
two (2) separate provinces;
b. If the Decision becomes final and executory
before the election, the Province of Dinagat
Islands will revert to its previous status as part
of the First Legislative District, Surigao del
Norte.
But because of the current system
configuration, the ballots for the Province of
Dinagat Islands will, for the positions of
Member, House of Representatives, Governor,

Vice Governor and Members, Sangguniang

Panlalawigan, bear only the names of the
candidates for the said positions.
Conversely, the ballots for the First Legislative
District of Surigao del Norte, will, for the
position of Governor, Vice Governor, Member,
House of Representatives, First District of
Surigao del Norte and Members, Sangguniang
Panlalawigan, show only candidates for the said
position. Likewise, the whole Province of
Surigao del Norte, will, for the position of
Governor and Vice Governor, bear only the
names of the candidates for the said position[s].
Consequently, the voters of the Province of
Dinagat Islands will not be able to vote for the
candidates
of
Members,
Sangguniang
Panlalawigan, and Member, House [of]
Representatives, First Legislative District,
Surigao del Norte, and candidates for Governor
and Vice Governor for Surigao del Norte.
Meanwhile, voters of the First Legislative
District of Surigao del Norte, will not be able to
vote for Members, Sangguniang Panlalawigan
and Member, House of Representatives,
Dinagat Islands. Also, the voters of the whole
Province of Surigao del Norte, will not be able
to vote for the Governor and Vice Governor,
Dinagat Islands. Given this situation, the
Commission will postpone the elections for
Governor, Vice Governor, Member, House of
Representatives, First Legislative District,
Surigao del Norte, and Members, Sangguniang
Panlalawigan, First Legislative District, Surigao
del Norte, because the election will result in [a]
failure to elect, since, in actuality, there are no

candidates for Governor, Vice Governor,

Members, Sangguniang Panlalawigan, First
Legislative District, and Member, House of
Representatives, First Legislative District (with
Dinagat Islands) of Surigao del Norte.
c. If the Decision becomes final and executory
after the election, the Province of Dinagat
Islands will revert to its previous status as part
of the First Legislative District of Surigao del
Norte. The result of the election will have to be
nullified for the same reasons given in Item "b"
above. A special election for Governor, Vice
Governor, Member, House of Representatives,
First Legislative District of Surigao del Norte,
and Members, Sangguniang Panlalawigan, First
District, Surigao del Norte (with Dinagat
Islands) will have to be conducted.
xxxx
SO ORDERED.
They further alleged that, because they are the
duly elected officials of Surigao del Norte
whose positions will be affected by the
nullification of the election results in the event
that the May 12, 2010 Resolution is not
reversed, they have a legal interest in the instant
case and would be directly affected by the
declaration of nullity of R.A. No. 9355. Simply
put, movants-intervenors election to their
respective offices would necessarily be annulled
since Dinagat Islands will revert to its previous
status as part of the First Legislative District of
Surigao del Norte and a special election will
have to be conducted for governor, vice

governor, and House of Representatives

member and Sangguniang Panlalawigan
member for the First Legislative District of
Surigao del Norte. Moreover, as residents of
Surigao del Norte and as public servants
representing the interests of their constituents,
they have a clear and strong interest in the
outcome of this case inasmuch as the reversion
of Dinagat as part of the First Legislative
District of Surigao del Norte will affect the
latter province such that: (1) the whole
administrative set-up of the province will have
to be restructured; (2) the services of many
employees will have to be terminated; (3)
contracts will have to be invalidated; and (4)
projects and other developments will have to be
discontinued. In addition, they claim that their
rights cannot be adequately pursued and
protected in any other proceeding since their
rights would be foreclosed if the May 12, 2010
Resolution would attain finality.
In their motion for reconsideration of the May
12, 2010 Resolution, movants-intervenors
raised three (3) main arguments to challenge the
above Resolution, namely: (1) that the passage
of R.A. No. 9355 operates as an act of Congress
amending Section 461 of the LGC; (2) that the
exemption from territorial contiguity, when the
intended province consists of two or more
islands, includes the exemption from the
application of the minimum land area
requirement; and (3) that the Operative Fact
Doctrine is applicable in the instant case.
In the Resolution dated July 20, 2010,16 the
Court denied the Motion for Leave to Intervene

and to File and to Admit Intervenors Motion

for Reconsideration of the Resolution dated
May 12, 2010 on the ground that the allowance
or disallowance of a motion to intervene is
addressed to the sound discretion of the Court,
and that the appropriate time to file the said
motion was before and not after the resolution
of this case.
On September 7, 2010, movants-intervenors
filed a Motion for Reconsideration of the July
20, 2010 Resolution, citing several rulings17 of
the Court, allowing intervention as an exception
to Section 2, Rule 19 of the Rules of Court that
it should be filed at any time before the
rendition of judgment. They alleged that, prior
to the May 10, 2010 elections, their legal
interest in this case was not yet existent. They
averred that prior to the May 10, 2010 elections,
they were unaware of the proceedings in this
case. Even for the sake of argument that they
had notice of the pendency of the case, they
pointed out that prior to the said elections, Sol
T. Matugas was a simple resident of Surigao del
Norte, Arturo Carlos A. Egay, Jr. was a member
of the Sangguniang Panlalawigan of the Second
District of Surigao del Norte, and Mamerto D.
Galanida was the Municipal Mayor of Socorro,
Surigao del Norte, and that, pursuant to
COMELEC Resolution No. 8790, it was only
after they were elected as Governor of Surigao
del Norte, Vice Governor of Surigao del Norte
and Sangguniang Panlalawigan Member of the
First District of Surigao del Norte, respectively,
that they became possessed with legal interest
in this controversy.

On October 5, 2010, the Court issued an order

for Entry of Judgment, stating that the decision
in this case had become final and executory on
May 18, 2010. Hence, the above motion.
At the outset, it must be clarified that this
Resolution delves solely on the instant Urgent
Motion to Recall Entry of Judgment of
movants-intervenors, not on the second motions
for reconsideration of the original parties, and
neither on Dinagats Urgent Omnibus Motion,
which our
esteemed colleague, Mr. Justice Arturo D. Brion
considers as Dinagats third motion for
reconsideration. Inasmuch as the motions for
leave to admit their respective motions for
reconsideration of the May 12, 2010 Resolution
and the aforesaid motions for reconsideration
were already noted without action by the Court,
there is no reason to treat Dinagats Urgent
Omnibus Motion differently. In relation to this,
the Urgent Motion to Recall Entry of Judgment
of movants-intervenors could not be considered
as a second motion for reconsideration to
warrant the application of Section 3, Rule 15 of
the Internal Rules of the Supreme Court. 18 It
should be noted that this motion prays for the
recall of the entry of judgment and for the
resolution of their motion for reconsideration of
the July 20, 2010 Resolution which remained
unresolved. The denial of their motion for leave
to intervene and to admit motion for
reconsideration of the May 12, 2010 Resolution
did not rule on the merits of the motion for
reconsideration of the May 12, 2010
Resolution, but only on the timeliness of the

intended intervention. Their motion for

reconsideration of this denial elaborated on
movants-intervenors interest in this case which
existed only after judgment had been rendered.
As such, their motion for intervention and their
motion for reconsideration of the May 12, 2010
Resolution merely stand as an initial
reconsideration of the said resolution.

importantly, if the intervention be not

entertained, the movants-intervenors would be
left with no other remedy as regards to the
impending nullification of their election to their
respective positions. Thus, to the Courts mind,
there is an imperative to grant the Urgent
Motion to Recall Entry of Judgment by
movants-intervenors.

With due deference to Mr. Justice Brion, there

appears nothing in the records to support the
claim that this was a ploy of respondents legal
tactician to reopen the case despite an entry of
judgment. To be sure, it is actually COMELEC
Resolution No. 8790 that set this controversy
into motion anew. To reiterate, the pertinent
portion of the Resolution reads:
c. If the Decision becomes final and executory
after the election, the Province of Dinagat
Islands will revert to its previous status as part
of the First Legislative District of Surigao del
Norte. The result of the election will have to be
nullified for the same reasons given in Item "b"
above. A special election for Governor, Vice
Governor, Member, House of Representatives,
First Legislative District of Surigao del Norte,
and Members, Sangguniang Panlalawigan, First
District, Surigao del Norte (with Dinagat
Islands) will have to be conducted. (Emphasis
supplied.)

It should be remembered that this case was

initiated upon the filing of the petition for
certiorari way back on October 30, 2007. At
that time, movants-intervenors had nothing at
stake in the outcome of this case. While it may
be argued that their interest in this case should
have commenced upon the issuance of
COMELEC Resolution No. 8790, it is obvious
that their interest in this case then was more
imaginary than real. This is because
COMELEC Resolution No. 8790 provides that
should the decision in this case attain finality
prior to the May 10, 2010 elections, the election
of the local government officials stated therein
would only have to be postponed. Given such a
scenario, movants-intervenors would not have
suffered any injury or adverse effect with
respect to the reversion of Dinagat as part of
Surigao del Norte since they would simply have
remained candidates for the respective positions
they have vied for and to which they have been
elected.

Indeed, COMELEC Resolution No. 8790

spawned the peculiar circumstance of proper
party interest for movants-intervenors only with
the specter of the decision in the main case
becoming final and executory. More

For a party to have locus standi, one must allege

"such a personal stake in the outcome of the
controversy as to assure that concrete
adverseness which sharpens the presentation of
issues upon which the court so largely depends

for illumination of difficult constitutional

questions." Because constitutional cases are
often public actions in which the relief sought is
likely to affect other persons, a preliminary
question frequently arises as to this interest in
the constitutional question raised.19
It cannot be denied that movants-intervenors
will suffer direct injury in the event their Urgent
Motion to Recall Entry of Judgment dated
October 29, 2010 is denied and their Motion for
Leave to Intervene and to File and to Admit
Intervenors Motion for Reconsideration of the
Resolution dated May 12, 2010 is denied with
finality. Indeed, they have sufficiently shown
that they have a personal and substantial
interest in the case, such that if the May 12,
2010 Resolution be not reconsidered, their
election to their respective positions during the
May 10, 2010 polls and its concomitant effects
would all be nullified and be put to naught.
Given their unique circumstances, movantsintervenors should not be left without any
remedy before this Court simply because their
interest in this case became manifest only after
the case had already been decided. The
consequences of such a decision would
definitely work to their disadvantage, nay, to
their utmost prejudice, without even them being
parties to the dispute. Such decision would also
violate their right to due process, a right that
cries out for protection. Thus, it is imperative
that the movants-intervenors be heard on the
merits of their cause. We are not only a court of
law, but also of justice and equity, such that our
position and the dire repercussions of this
controversy should be weighed on the scales of

justice, rather than dismissed on account of

mootness.
The "moot and academic" principle is not a
magical formula that can automatically
dissuade the courts from resolving a case.
Courts will decide cases, otherwise moot and
academic, if: (1) there is a grave violation of the
Constitution; (2) there is an exceptional
character of the situation and the paramount
public interest is involved; (3) the constitutional
issue raised requires formation of controlling
principles to guide the bench, the bar, and the
public; and (4) the case is capable of repetition
yet evading review.20 The second exception
attends this case.
This Court had taken a liberal attitude in the
case of David v. Macapagal-Arroyo,21 where
technicalities of procedure on locus standi were
brushed aside, because the constitutional issues
raised were of paramount public interest or of
transcendental importance deserving the
attention of the Court. Along parallel lines, the
motion for intervention should be given due
course since movants-intervenors have shown
their substantial legal interest in the outcome of
this case, even much more than petitioners
themselves, and because of the novelty, gravity,
and weight of the issues involved.
Undeniably, the motion for intervention and the
motion for reconsideration of the May 12, 2010
Resolution of movants-intervenors is akin to the
right to appeal the judgment of a case, which,
though merely a statutory right that must
comply with the requirements of the rules, is an

essential part of our judicial system, such that

courts should proceed with caution not to
deprive a party of the right to question the
judgment and its effects, and ensure that every
party-litigant, including those who would be
directly affected, would have the amplest
opportunity for the proper and just disposition
of their cause, freed from the constraints of
technicalities.22
Verily, the Court had, on several occasions,
sanctioned the recall entries of judgment in
light
of
attendant
extraordinary
23
circumstances. The power to suspend or even
disregard rules of procedure can be so pervasive
and compelling as to alter even that which this
Court itself had already declared final.24 In this
case, the compelling concern is not only to
afford the movants-intervenors the right to be
heard since they would be adversely affected by
the judgment in this case despite not being
original parties thereto, but also to arrive at the
correct interpretation of the provisions of the
LGC with respect to the creation of local
government units. In this manner, the thrust of
the Constitution with respect to local autonomy
and of the LGC with respect to decentralization
and the attainment of national goals, as
hereafter elucidated, will effectively be realized.

It must be borne in mind that the central policy

considerations in the creation of local
government units are economic viability,
efficient administration, and capability to
deliver basic services to their constituents. The
criteria prescribed by the LGC, i.e., income,
population and land area, are all designed to
accomplish these results. In this light, Congress,
in its collective wisdom, has debated on the
relative weight of each of these three criteria,
placing emphasis on which of them should
enjoy preferential consideration.
Without doubt, the primordial criterion in the
creation of local government units, particularly
of a province, is economic viability. This is the
clear intent of the framers of the LGC. In this
connection, the following excerpts from
congressional debates are quoted hereunder
HON. ALFELOR. Income is mandatory. We
can even have this doubled because we
thought
CHAIRMAN CUENCO. In other words, the
primordial consideration here is the economic
viability of the new local government unit, the
new province?
xxxx

On the merits of the motion for intervention,

after taking a long and intent look, the Court
finds that the first and second arguments raised
by movants-intervenors deserve affirmative
consideration.

HON. LAGUDA. The reason why we are

willing to increase the income, double than the
House version, because we also believe that
economic viability is really a minimum. Land
area and population are functions really of the
viability of the area, because you have an

income level which would be the trigger point

for economic development, population will
naturally increase because there will be an
immigration. However, if you disallow the
particular area from being converted into a
province because of the population problems in
the beginning, it will never be able to reach the
point where it could become a province simply
because it will never have the economic take off
for it to trigger off that economic development.
Now, were saying that maybe Fourteen Million
Pesos is a floor area where it could pay for
overhead and provide a minimum of basic
services to the population. Over and above that,
the provincial officials should be able to trigger
off economic development which will attract
immigration, which will attract new
investments from the private sector. This is now
the concern of the local officials. But if we are
going to tie the hands of the proponents, simply
by telling them, "Sorry, you are now at 150
thousand or 200 thousand," you will never be
able to become a province because nobody
wants to go to your place. Why? Because you
never have any reason for economic viability.
xxxx
CHAIRMAN PIMENTEL. Okay, what about
land area?
HON. LUMAUIG. 1,500 square kilometers
HON. ANGARA. Walang problema yon, in
fact thats not very critical, yong land area
because

CHAIRMAN PIMENTEL. Okay, ya, our, the

Senate version is 3.5, 3,500 square meters, ah,
square kilometers.
HON. LAGUDA. Ne, Ne. A province is
constituted for the purpose of administrative
efficiency and delivery of basic services.
CHAIRMAN PIMENTEL. Right.
HON. LAGUDA. Actually, when you come
down to it, when government was instituted,
there is only one central government and then
everybody falls under that. But it was later on
subdivided into provinces for purposes of
administrative efficiency.
CHAIRMAN PIMENTEL. Okay.
HON. LAGUDA. Now, what were seeing now
is that the administrative efficiency is no longer
there precisely because the land areas that we
are giving to our governors is so wide that no
one man can possibly administer all of the
complex machineries that are needed.
Secondly, when you say "delivery of basic
services," as pointed out by Cong. Alfelor, there
are sections of the province which have never
been visited by public officials, precisely
because they dont have the time nor the energy
anymore to do that because its so wide. Now,
by compressing the land area and by reducing
the population requirement, we are, in effect,
trying to follow the basic policy of why we are
creating provinces, which is to deliver basic

services and to make it more efficient in

administration.
CHAIRMAN PIMENTEL. Yeah, thats correct,
but on the assumption that the province is able
to do it without being a burden to the national
government. Thats the assumption.
HON. LAGUDA. Thats why were going into
the minimum income level. As we said, if we
go on a minimum income level, then we say,
"this is the trigger point at which this
administration can take place."25
Also worthy of note are the requisites in the
creation of a barangay, a municipality, a city,
and a province as provided both in the LGC and
the LGC-IRR, viz.
For a Barangay:
LGC: SEC. 386. Requisites for Creation. (a)
A barangay may be created out of a contiguous
territory which has a population of at least two
thousand (2,000) inhabitants as certified by the
National Statistics Office except in cities and
municipalities within Metro Manila and other
metropolitan political subdivisions or in highly
urbanized cities where such territory shall have
a certified population of at least five thousand
(5,000) inhabitants: Provided, That the creation
thereof shall not reduce the population of the
original barangay or barangays to less than the
minimum requirement prescribed herein.
To enhance the delivery of basic services in the
indigenous cultural communities, barangays

may be created in such communities by an Act

of Congress, notwithstanding the above
requirement.
(b) The territorial jurisdiction of the new
barangay shall be properly identified by metes
and bounds or by more or less permanent
natural boundaries. The territory need not be
contiguous if it comprises two (2) or more
islands.
(c) The governor or city mayor may prepare a
consolidation plan for barangays, based on the
criteria prescribed in this Section, within his
territorial jurisdiction. The plan shall be
submitted to the sangguniang panlalawigan or
sangguniang panlungsod concerned for
appropriate action. In the case of municipalities
within the Metropolitan Manila area and other
metropolitan political subdivisions, the
barangay consolidation plan can be prepared
and approved by the sangguniang bayan
concerned.
LGC-IRR: ARTICLE 14. Barangays. (a)
Creation of barangays by the sangguniang
panlalawigan
shall
require
prior
recommendation of the sangguniang bayan.
(b) New barangays in the municipalities within
MMA shall be created only by Act of Congress,
subject to the limitations and requirements
prescribed in this Article.
(c)
Notwithstanding
the
population
requirement, a barangay may be created in the
indigenous cultural communities by Act of

Congress upon recommendation of the LGU or

LGUs where the cultural community is located.

contiguous territory of at least fifty (50) square

kilometers as certified by the Lands

(d) A barangay shall not be created unless the

following requisites are present:

Management Bureau: Provided, That the

creation thereof shall not reduce the land area,
population or income of the original
municipality or municipalities at the time of
said creation to less than the minimum
requirements prescribed herein.

(1) Population which shall not be less than

two thousand (2,000) inhabitants, except in
municipalities and cities within MMA and other
metropolitan political subdivisions as may be
created by law, or in highly-urbanized cities
where such territory shall have a population of
at least five thousand (5,000) inhabitants, as
certified by the NSO. The creation of a
barangay shall not reduce the population of the
original barangay or barangays to less than the
prescribed minimum/
(2) Land Area which must be contiguous,
unless comprised by two (2) or more islands.
The territorial jurisdiction of a barangay sought
to be created shall be properly identified by
metes and bounds or by more or less permanent
natural boundaries.
Municipality:
LGC: SEC. 442. Requisites for Creation. (a)
A municipality may be created if it has an
average annual income, as certified by the
provincial treasurer, or at least Two million five
hundred thousand pesos (P2,500,000.00) for the
last two (2) consecutive years based on the
1991 constant prices; a population of at least
twenty-five thousand (25,000) inhabitants as
certified by the National Statistics Office; and a

(b) The territorial jurisdiction of a newlycreated municipality shall be properly identified

by metes and bounds. The requirement on land
area shall not apply where the municipality
proposed to be created is composed of one (1)
or more islands. The territory need not be
contiguous if it comprises two (2) or more
islands.
(c) The average annual income shall include the
income accruing to the general fund of the
municipality concerned, exclusive of special
funds, transfers and non-recurring income.
(d) Municipalities existing as of the date of
effectivity of this Code shall continue to exist
and operate as such. Existing municipal districts
organized pursuant to presidential issuances or
executive orders and which have their
respective set of elective municipal officials
holding office at the time of the effectivity of
this Code shall henceforth be considered regular
municipalities.
LGC-IRR: ARTICLE 13. Municipalities. (a)
Requisites for Creation A municipality shall

not be created unless the following requisites

are present:
(i) Income An average annual income of not
less than Two Million Five Hundred Thousand
Pesos (P2,500,000.00), for the immediately
preceding two (2) consecutive years based on
1991 constant prices, as certified by the
provincial treasurer. The average annual income
shall include the income accruing to the general
fund, exclusive of special funds, special
accounts, transfers, and nonrecurring income;
(ii) Population which shall not be less than
twenty five thousand (25,000) inhabitants, as
certified by NSO; and
(iii) Land area which must be contiguous with
an area of at least fifty (50) square kilometers,
as certified by LMB. The territory need not be
contiguous if it comprises two (2) or more
islands. The requirement on land area shall not
apply where the proposed municipality is
composed of one (1) or more islands. The
territorial jurisdiction of a municipality sought
to be created shall be properly identified by
metes and bounds.
The creation of a new municipality shall not
reduce the land area, population, and income of
the original LGU or LGUs at the time of said
creation to less than the prescribed minimum
requirements. All expenses incidental to the
creation shall be borne by the petitioners.
City:

LGC: SEC. 450. Requisites for Creation. (a)

A municipality or a cluster of barangays may be
converted into a component city if it has an
average annual income, as certified by the
Department of Finance, of at least Twenty
million pesos (P20,000,000.00) for the last two
(2) consecutive years based on 1991 constant
prices, and if it has either of the following
requisities:
(i) a contiguous territory of at least one hundred
(100) square kilometers, as certified by the
Lands Management Bureau; or,
(ii) a population of not less than one hundred
fifty thousand (150,000) inhabitants, as certified
by the National Statistics Office: Provided,
That, the creation thereof shall not reduce the
land area, population, and income of the
original unit or units at the time of said creation
to less than the minimum requirements
prescribed herein.
(b) The territorial jurisdiction of a newlycreated city shall be properly identified by
metes and bounds. The requirement on land
area shall not apply where the city proposed to
be created is composed of one (1) or more
islands. The territory need not be contiguous if
it comprises two (2) or more islands.
(c) The average annual income shall include the
income accruing to the general fund, exclusive
of special funds, transfers, and non-recurring
income.

LGC-IRR: ARTICLE 11. Cities. (a)

Requisites for creation A city shall not be
created unless the following requisites on
income and either population or land area are
present:
(1) Income An average annual income of not
less
than
Twenty
Million
Pesos
(P20,000,000.00),
for
the
immediately
preceding two (2) consecutive years based on
1991 constant prices, as certified by DOF. The
average annual income shall include the income
accruing to the general fund, exclusive of
special funds, special accounts, transfers, and
nonrecurring income; and
(2) Population or land area Population which
shall not be less than one hundred fifty
thousand (150,000) inhabitants, as certified by
the NSO; or land area which must be
contiguous with an area of at least one hundred
(100) square kilometers, as certified by LMB.
The territory need not be contiguous if it
comprises two (2) or more islands or is
separated by a chartered city or cities which do
not contribute to the income of the province.
The land area requirement shall not apply
where the proposed city is composed of one (1)
or more islands. The territorial jurisdiction of a
city sought to be created shall be properly
identified by metes and bounds.
The creation of a new city shall not reduce the
land area, population, and income of the
original LGU or LGUs at the time of said
creation to less than the prescribed minimum

requirements. All expenses incidental to the

creation shall be borne by the petitioners.
Provinces:
LGC: SEC. 461. Requisites for Creation. (a)
A province may be created if it has an average
annual income, as certified by the Department
of Finance, of not less than Twenty million
pesos (P20,000,000.00) based on 1991 prices
and either of the following requisites:
(i) a contiguous territory of at least two
thousand (2,000) square kilometers, as certified
by the Lands Management Bureau; or,
(ii) a population of not less than two hundred
fifty thousand (250,000) inhabitants as certified
by the National Statistics Office:
Provided, That the creation thereof shall not
reduce the land area, population, and income of
the original unit or units at the time of said
creation to less than the minimum requirements
prescribed herein.
(b) The territory need not be contiguous if it
comprises two (2) or more islands or is
separated by a chartered city or cities which do
not contribute to the income of the province.
(c) The average annual income shall include the
income accruing to the general fund, exclusive
of special funds, trust funds, transfers, and nonrecurring income.

LGC-IRR: ARTICLE 9. Provinces. (a)

Requisites for creation A province shall not be
created unless the following requisites on
income and either population or land area are
present:
(1) Income An average annual income of not
less
than
Twenty
Million
pesos
(P20,000,000.00) for the immediately preceding
two (2) consecutive years based on 1991
constant prices, as certified by DOF. The
average annual income shall include the income
accruing to the general fund, exclusive of
special funds, special accounts, transfers, and
non-recurring income; and
(2) Population or land area Population which
shall not be less than two hundred fifty
thousand (250,000) inhabitants, as certified by
NSO; or land area which must be contiguous
with an area of at least two thousand (2,000)
square kilometers, as certified by LMB. The
territory need not be contiguous if it comprises
two (2) or more islands or is separated by a
chartered city or cities which do not contribute
to the income of the province. The land area
requirement shall not apply where the proposed
province is composed of one (1) or more
islands. The territorial jurisdiction of a province
sought to be created shall be properly identified
by metes and bounds.
The creation of a new province shall not reduce
the land area, population, and income of the
original LGU or LGUs at the time of said
creation to less than the prescribed minimum
requirements. All expenses incidental to the

creation shall be borne by the petitioners.

(Emphasis supplied.)
It bears scrupulous notice that from the above
cited provisions, with respect to the creation of
barangays, land area is not a requisite indicator
of viability. However, with respect to the
creation of municipalities, component cities,
and provinces, the three (3) indicators of
viability and projected capacity to provide
services, i.e., income, population, and land area,
are provided for.
But it must be pointed out that when the local
government unit to be created consists of one
(1) or more islands, it is exempt from the land
area requirement as expressly provided in
Section 442 and Section 450 of the LGC if the
local government unit to be created is a
municipality or a component city, respectively.
This exemption is absent in the enumeration of
the requisites for the creation of a province
under Section 461 of the LGC, although it is
expressly stated under Article 9(2) of the LGCIRR.
There appears neither rhyme nor reason why
this exemption should apply to cities and
municipalities, but not to provinces. In fact,
considering the physical configuration of the
Philippine archipelago, there is a greater
likelihood that islands or group of islands
would form part of the land area of a newlycreated province than in most cities or
municipalities. It is, therefore, logical to infer
that the genuine legislative policy decision was
expressed in Section 442 (for municipalities)

and Section 450 (for component cities) of the

LGC, but was inadvertently omitted in Section
461 (for provinces). Thus, when the exemption
was expressly provided in Article 9(2) of the
LGC-IRR, the inclusion was intended to correct
the congressional oversight in Section 461 of
the LGC and to reflect the true legislative
intent. It would, then, be in order for the Court
to uphold the validity of Article 9(2) of the
LGC-IRR.
This interpretation finds merit when we
consider the basic policy considerations
underpinning the principle of local autonomy.
Section 2 of the LGC, of which paragraph (a) is
pertinent to this case, provides
Sec. 2. Declaration of Policy. (a) It is hereby
declared the policy of the State that the
territorial and political subdivisions of the State
shall enjoy genuine and meaningful local
autonomy to enable them to attain their fullest
development as self-reliant communities and
make them more effective partners in the
attainment of national goals. Toward this end,
the State shall provide for a more responsive
and accountable local government structure
instituted through a system of decentralization
whereby local government units shall be given
more powers, authority, responsibilities, and
resources. The process of decentralization shall
proceed from the national government to the
local government units.
This declaration of policy is echoed in Article
3(a) of the LGC-IRR26 and in the Whereas

clauses of Administrative
270,27 which read

Order

No.

WHEREAS, Section 25, Article II of the

Constitution mandates that the State shall
ensure the autonomy of local governments;
WHEREAS, pursuant to this declared policy,
Republic Act No. 7160, otherwise known as the
Local Government Code of 1991, affirms,
among others, that the territorial and political
subdivisions of the State shall enjoy genuine
and meaningful local autonomy to enable them
to attain their fullest development as self-reliant
communities and make them more effective
partners in the attainment of national goals;
WHEREAS, Section 533 of the Local
Government Code of 1991 requires the
President to convene an Oversight Committee
for the purpose of formulating and issuing the
appropriate rules and regulations necessary for
the efficient and effective implementation of all
the provisions of the said Code; and
WHEREAS, the Oversight Committee, after
due deliberations and consultations with all the
concerned sectors of society and consideration
of the operative principles of local autonomy as
provided in the Local Government Code of
1991, has completed the formulation of the
implementing rules and regulations; x x x
Consistent with the declared policy to provide
local government units genuine and meaningful
local autonomy, contiguity and minimum land
area requirements for prospective local

government units should be liberally construed

in order to achieve the desired results. The strict
interpretation adopted by the February 10, 2010
Decision could prove to be counter-productive,
if not outright absurd, awkward, and
impractical. Picture an intended province that
consists of several municipalities and
component cities which, in themselves, also
consist of islands. The component cities and
municipalities which consist of islands are
exempt from the minimum land area
requirement, pursuant to Sections 450 and 442,
respectively, of the LGC. Yet, the province
would be made to comply with the minimum
land area criterion of 2,000 square kilometers,
even if it consists of several islands. This would
mean that Congress has opted to assign a
distinctive preference to create a province with
contiguous land area over one composed of
islands and negate the greater imperative of
development of self-reliant communities, rural
progress, and the delivery of basic services to
the constituency. This preferential option would
prove more difficult and burdensome if the
2,000-square-kilometer territory of a province is
scattered because the islands are separated by
bodies of water, as compared to one with a
contiguous land mass.
Moreover, such a very restrictive construction
could trench on the equal protection clause, as it
actually defeats the purpose of local autonomy
and decentralization as enshrined in the
Constitution. Hence, the land area requirement
should be read together with territorial
contiguity.

Another look at the transcript of the

deliberations of Congress should prove
enlightening:
CHAIRMAN ALFELOR. Can we give time to
Congressman Chiongbian,28 with respect to
his
CHAIRMAN LINA. Okay.
HON. CHIONGBIAN. At the outset, Chairman
Lina, we would like to apprise the distinguished
Senator about the action taken by the House, on
House Bill No. 7166. This was passed about
two years ago and has been pending in the
Senate for consideration. This is a bill that I am
not the only one involved, including our
distinguished Chairman here. But then we did
want to sponsor the bill, being the Chairman
then of the Local Government.
So, I took the cudgels for the rest of the
Congressmen, who were more or less interested
in the creation of the new provinces, because of
the vastness of the areas that were involved.
At any rate, this bill was passed by the House
unanimously without any objection. And as I
have said a while ago, that this has been
pending in the Senate for the last two years.
And Sen. Pimentel himself was just in South
Cotabato and he delivered a speech that he will
support this bill, and he says, that he will
incorporate this in the Local Government Code,
which I have in writing from him. I showed you
the letter that he wrote, and naturally, we in the
House got hold of the Senate version. It

becomes an impossibility for the whole

Philippines to create a new province, and that is
quite the concern of the respective
Congressmen.
Now, insofar as the constitutional provision is
concerned, there is nothing to stop the mother
province from voting against the bill, if a
province is going to be created.
So, we are talking about devolution of powers
here. Why is the province not willing to create
another province, when it can be justified. Even
Speaker Mitra says, what will happen to
Palawan? We wont have one million people
there, and if you look at Palawan, there will be
about three or four provinces that will comprise
that island. So, the development will be
hampered.
Now, I would like to read into the record the
letter of Sen. Pimentel, dated November 2,
1989. This was practically about a year after
7166 was approved by the House, House Bill
7166.
On November 2, 1989, the Senator wrote me:
"Dear Congressman Chiongbian:
We are in receipt of your letter of 17 October.
Please be informed that your House No. 7166
was incorporated in the proposed Local
Government Code, Senate Bill No. 155, which
is pending for second reading.
Thank you and warm regards.

Very truly yours,"

That is the very context of the letter of the
Senator, and we are quite surprised that the
Senate has adopted another position.
So, we would like because this is a
unanimously approved bill in the House, thats
the only bill that is involving the present Local
Government Code that we are practically
considering; and this will be a slap on the
House, if we do not approve it, as approved by
the lower House. This can be [an] irritant in the
approval of the Conference Committee Report.
And I just want to manifest that insofar as the
creation of the province, not only in my
province, but the other provinces. That the
mother province will participate in the
plebiscite, they can defeat the province, lets
say, on the basis of the result, the province
cannot be created if they lose in the plebiscite,
and I dont see why, we should put this
stringent conditions to the private people of the
devolution that they are seeking.
So, Mr. Senator, I think we should consider the
situation seriously, because, this is an approved
version of the House, and I will not be the one
to raise up and question the Conference
Committee Report, but the rest of the House
that are interested in this bill. And they have
been approaching the Speaker about this. So,
the Speaker reminded me to make sure that it
takes the cudgel of the House approved version.
So, thats all what I can say, Mr. Senator, and I
dont believe that it is not, because its the wish

of the House, but because the mother province

will participate anyhow, you vote them down;
and that is provided for in the Constitution. As a
matter of fact, I have seen the amendment with
regards to the creation of the city to be
urbanized, subject to the plebiscite. And why
should we not allow that to happen in the
provinces! In other words, we dont want the
people who wants to create a new province, as
if they are left in the devolution of powers,
when they feel that they are far away from
civilization.
Now, I am not talking about other provinces,
because I am unaware, not aware of their
situation. But the province of South Cotabato
has a very unique geographical territorial
conglomerations. One side is in the other side
of the Bay, of Sarangani Bay. The capital town
is in the North; while these other municipalities
are in the East and in the West. And if they have
to travel from the last town in the eastern part of
the province, it is about one hundred forty
kilometers to the capital town. And from the
West side, it is the same distance. And from the
North side, it is about one hundred kilometers.
So that is the problem there. And besides, they
have enough resources and I feel that, not
because I am interested in the province, I am
after their welfare in the future. Who am I to
dictate on those people? I have no interest but
then I am looking at the future development of
these areas.
As a matter of fact, if I am in politics, its
incidental; I do not need to be there, but I can
foresee what the creation of a new province will

bring to these people. It will bring them

prosperity; it will bring them more income, and
it will encourage even foreign investors. Like
the PAP now, they are concentrating in South
Cotabato, especially in the City of

drawn over board and not even considered by

the Senate. And on top of that, we are
considering a bill that has not yet been passed.
So I hope the Senator will take that into
account.

General
Santos
and the neighboring
municipalities, and they are quite interested and
even the AID people are asking me, "What is
holding the creation of a new province when
practically you need it?" Its not 20 or 30
kilometers from the capital town; its about 140
kilometers. And imagine those people have to
travel that far and our road is not like
Metropolitan Manila. That is as far as from here
to Tarlac. And there are municipalities there that
are just one municipality is bigger than the
province of La Union. They have the income.
Of course, they dont have the population
because thats a part of the land of promise and
people from Luzon are migrating everyday
because they feel that there are more
opportunities here.

Thank you for giving me this time to explain.

So, by creating the new provinces, not only in

my case, in the other cases, it will enhance the
development of the Philippines, not because I
am interested in my province. Well, as far as I
am concerned, you know, I am in the twilight
years of my life to serve and I would like to
serve my people well. No personal or political
interest here. I hope the distinguished Chairman
of the Committee will appreciate the House Bill
7166, which the House has already approved
because we dont want them to throw the
Conference Committee Report after we have
worked that the house Bill has been, you know,

CHAIRMAN LINA. Thank you very much,

Congressman James. We will look into the
legislative history of the Senate version on this
matter of creation of provinces. I am sure there
was an amendment. As I said, Ill look into it.
Maybe the House version was incorporated in
toto, but maybe during the discussion, their
amendments were introduced and, therefore,
Senator Pimentel could not hold on to the
original version and as a result new criteria
were introduced.
But because of the manifestation that you just
made, we will definitely, when we reach a book,
Title IV, on the matter of provinces, we will
look at it sympathetically from your end so that
the objective that you want [to] achieve can be
realized. So we will look at it with sympathy.
We will review our position on the matter, how
we arrived at the Senate version and we will
adopt an open mind definitely when we come
into it.
CHAIRMAN ALFELOR. Kanino yan?
CHAIRMAN LINA. Book III.
CHAIRMAN ALFELOR. Title?

CHAIRMAN LINA. Title IV.

CHAIRMAN ALFELOR. I have been
pondering on the case of James, especially on
economic stimulation of a certain area. Like our
case, because I put myself on our province, our
province is quite very big. Its composed of four
(4) congressional districts and I feel it should be
five now. But during the Batasan time, four of
us talked and conversed proposing to divide the
province into two.
There are areas then, when since time
immemorial, very few governors ever tread on
those areas. That is, maybe youre acquainted
with the Bondoc Peninsula of Quezon, fronting
that is Ragay Gulf. From Ragay there is a long
stretch of coastal area. From Albay going to
Ragay, very few governors ever tread [there]
before, even today. That area now is infested
with NPA. That is the area of Congressman
Andaya.
Now, we thought that in order to stimulate
growth, maybe provincial aid can be extended
to these areas. With a big or a large area of a
province, a certain administrator or provincial
governor definitely will have no sufficient time.
For me, if we really would like to stimulate
growth, I believe that an area where there is
physical or geographical impossibilities, where
administrators can penetrate, I think we have to
create certain provisions in the law where
maybe we can treat it with special
considerations.

Now, we went over the graduate scale of the

Philipppine Local Government Data as far as
provinces are concerned. It is very surprising
that there are provinces here which only
composed of six municipalities, eight
municipalities, seven municipalities. Like in
Cagayan,
Tuguegarao,
there
are
six
municipalities. Ah, excuse me, Batanes.
CHAIRMAN LINA. Will you look at the case
of --- how many municipalities are there in
Batanes province?
CHAIRMAN ALFELOR. Batanes is only six.
CHAIRMAN LINA. Six town. Siquijor?
CHAIRMAN ALFELOR. Siquijor. It is region?
CHAIRMAN LINA. Seven.
CHAIRMAN ALFELOR.L Seven. Anim.
CHAIRMAN LINA. Six also.
CHAIRMAN ALFELOR. Six also.
CHAIRMAN LINA. It seems with a minimum
number of towns?
CHAIRMAN ALFELOR. The population of
Siquijor is only 70 thousand, not even one
congressional district. But tumaas in 1982.
Camiguin, that is Region 9. Wala dito.
Nagtataka nga ako ngayon.
CHAIRMAN LINA. Camiguin, Camiguin.

CHAIRMAN ALFELOR. That is region?

Camiguin has five municipalities, with a
population of 63 thousand. But we do not hold
it against the province because maybe thats one
stimulant where growth can grow, can start. The
land area for Camiguin is only 229 square
kilometers. So if we hard fast on requirements
of, we set a minimum for every province,
palagay ko we just leave it to legislation, eh.
Anyway, the Constitution is very clear that in
case we would like to divide, we submit it to a
plebiscite. Pabayaan natin ang tao. Kung
maglalagay tayo ng set ng minimum, tila yata
mahihirapan tayo, eh. Because what is really
the thrust of the Local Government Code?
Growth. To devolve powers in order for the
community to have its own idea how they will
stimulate growth in their respective areas.
So, in every geographical condition, mayroon
sariling id[i]osyncracies eh, we cannot make a
generalization.
CHAIRMAN LINA. Will the creation of a
province, carved out of the existing province
because of some geographical id[i]osyncracies,
as you called it, stimulate the economic growth
in the area or will substantial aid coming from
the national government to a particular area,
say, to a municipality, achieve the same
purpose?
CHAIRMAN ALFELOR. Ano tayo dito sa
budget. All right, here is a province. Usually,
tinitingnan lang yun, provision eh, hindi na
yung composition eh. You are entitled to, say,
20% of the area.

Theres a province of Camarines Sur which

have the same share with that of Camiguin and
Siquijor, but Camiguin is composed only of five
municipalities; in Siquijor, its composed of six,
but the share of Siquijor is the same share with
that of the province of Camarines Sur, having a
bigger area, very much bigger.
That is the budget in process.
CHAIRMAN LINA. Well, as I said, we are
going to consider this very seriously and even
with sympathy because of the explanation given
and we will study this very carefully.29
The matters raised during the said Bicameral
Conference Committee meeting clearly show
the manifest intention of Congress to promote
development in the previously underdeveloped
and uninhabited land areas by allowing them to
directly share in the allocation of funds under
the national budget. It should be remembered
that, under Sections 284 and 285
of the LGC, the IRA is given back to local
governments, and the sharing is based on land
area, population, and local revenue.30
Elementary is the principle that, if the literal
application of the law results in absurdity,
impossibility, or injustice, then courts may
resort to extrinsic aids of statutory construction,
such as the legislative history of the law,31 or
may consider the implementing rules and
regulations and pertinent executive issuances in
the nature of executive and/or legislative
construction. Pursuant to this principle, Article

9(2) of the LGC-IRR should be deemed

incorporated in the basic law, the LGC.
It is well to remember that the LGC-IRR was
formulated by the Oversight Committee
consisting of members of both the Executive
and Legislative departments, pursuant to
Section 53332 of the LGC. As Section 533
provides, the Oversight Committee shall
formulate and issue the appropriate rules and
regulations necessary for the efficient and
effective implementation of any and all
provisions of this Code, thereby ensuring
compliance with the principles of local
autonomy as defined under the Constitution. It
was also mandated by the Constitution that a
local government code shall be enacted by
Congress, to wit
Section 3. The Congress shall enact a local
government code which shall provide for a
more responsive and accountable local
government structure instituted through a
system of decentralization with effective
mechanisms of recall, initiative, and
referendum, allocate among the different local
government units their powers, responsibilities,
and resources, and provide for the
qualifications, election, appointment and
removal, term, salaries, powers and functions
and duties of local officials, and all other
matters relating to the organization and
operation of the local units. (Emphasis
supplied.)
These State policies are the very reason for the
enactment of the LGC, with the view to attain

decentralization and countryside development.

Congress saw that the old LGC, Batas
Pambansa Bilang 337, had to be replaced with a
new law, now the LGC of 1991, which is more
dynamic and cognizant of the needs of the
Philippines as an archipelagic country. This
accounts for the exemption from the land area
requirement of local government units
composed of one or more islands, as expressly
stated under Sections 442 and 450 of the LGC,
with respect to the creation of municipalities
and cities, but inadvertently omitted from
Section 461 with respect to the creation of
provinces. Hence, the void or missing detail
was filled in by the Oversight Committee in the
LGC-IRR.
With three (3) members each from both the
Senate and the House of Representatives,
particularly the chairpersons of their respective
Committees on Local Government, it cannot be
gainsaid that the inclusion by the Oversight
Committee of the exemption from the land area
requirement with respect to the creation of
provinces consisting of one (1) or more islands
was intended by Congress, but unfortunately
not expressly stated in Section 461 of the LGC,
and this intent was echoed through an express
provision in the LGC-IRR. To be sure, the
Oversight Committee did not just arbitrarily and
whimsically insert such an exemption in Article
9(2) of the LGC-IRR. The Oversight
Committee
evidently
conducted
due
deliberation and consultations with all the
concerned sectors of society and considered the
operative principles of local autonomy as
provided in the LGC when the IRR was

formulated.33 Undoubtedly, this amounts not

only to an executive construction, entitled to
great weight and respect from this Court, 34 but
to legislative construction as well, especially
with the inclusion of representatives from the
four leagues of local government units as
members of the Oversight Committee.
With the formulation of the LGC-IRR, which
amounted to both executive and legislative
construction of the LGC, the many details to
implement the LGC had already been put in
place, which Congress understood to be
impractical and not too urgent to immediately
translate into direct amendments to the LGC.
But Congress, recognizing the capacity and
viability of Dinagat to become a full-fledged
province, enacted R.A. No. 9355, following the
exemption from the land area requirement,
which, with respect to the creation of provinces,
can only be found as an express provision in the
LGC-IRR. In effect, pursuant to its plenary
legislative powers, Congress breathed flesh and
blood into that exemption in Article 9(2) of the
LGC-IRR and transformed it into law when it
enacted R.A. No. 9355 creating the Island
Province of Dinagat.
Further, the bill that eventually became R.A.
No. 9355 was filed and favorably voted upon in
both Chambers of Congress. Such acts of both
Chambers of Congress definitively show the
clear legislative intent to incorporate into the
LGC that exemption from the land area
requirement, with respect to the creation of a
province when it consists of one or more
islands, as expressly provided only in the LGC-

IRR. Thereby, and by necessity, the LGC was

amended by way of the enactment of R.A. No.
9355.
What is more, the land area, while considered
as an indicator of viability of a local
government unit, is not conclusive in showing
that Dinagat cannot become a province, taking
into account its average annual income
ofP82,696,433.23 at the time of its creation, as
certified by the Bureau of Local Government
Finance, which is four times more than the
minimum requirement of P20,000,000.00 for
the creation of a province. The delivery of basic
services to its constituents has been proven
possible and sustainable. Rather than looking at
the results of the plebiscite and the May 10,
2010 elections as mere fait accompli
circumstances which cannot operate in favor of
Dinagats existence as a province, they must be
seen from the perspective that Dinagat is ready
and capable of becoming a province. This Court
should not be instrumental in stunting such
capacity. As we have held in League of Cities of
the Philippines v. Commission on Elections35
Ratio legis est anima. The spirit rather than the
letter of the law. A statute must be read
according to its spirit or intent, for what is
within the spirit is within the statute although it
is not within its letter, and that which is within
the letter but not within the spirit is not within
the statute. Put a bit differently, that which is
within the intent of the lawmaker is as much
within the statute as if within the letter, and that
which is within the letter of the statute is not
within the statute unless within the intent of the

lawmakers. Withal, courts ought not to interpret

and should not accept an interpretation that
would defeat the intent of the law and its
legislators.
So as it is exhorted to pass on a challenge
against the validity of an act of Congress, a coequal branch of government, it behooves the
Court to have at once one principle in mind: the
presumption of constitutionality of statutes.
This presumption finds its roots in the tri-partite
system of government and the corollary
separation of powers, which enjoins the three
great departments of the government to accord
a becoming courtesy for each others acts, and
not to interfere inordinately with the exercise by
one of its official functions. Towards this end,
courts ought to reject assaults against the
validity of statutes, barring of course their clear
unconstitutionality. To doubt is to sustain, the
theory in context being that the law is the
product of earnest studies by Congress to
ensure that no constitutional prescription or
concept is infringed. Consequently, before a law
duly challenged is nullified, an unequivocal
breach of, or a clear conflict with, the
Constitution, not merely a doubtful or
argumentative one, must be demonstrated in
such a manner as to leave no doubt in the mind
of the Court.
WHEREFORE, the Court resolved to:
1. GRANT the Urgent Motion to Recall Entry
of Judgment by movants-intervenors, dated and
filed on October 29, 2010;

2. RECONSIDER and SET ASIDE the July 20,

2010 Resolution, and GRANT the Motion for
Leave to Intervene and to File and to Admit
Intervenors Motion for Reconsideration of the
Resolution dated July 20, 2010;
3. GRANT the Intervenors Motion for
Reconsideration of the Resolution dated May
12, 2010. The May 12, 2010 Resolution is
RECONSIDERED and SET ASIDE. The
provision in Article 9(2) of the Rules and
Regulations
Implementing
the
Local
Government Code of 1991 stating, "The land
area requirement shall not apply where the
proposed province is composed of one (1) or
more islands," is declared VALID. Accordingly,
Republic Act No. 9355 (An Act Creating the
Province of Dinagat Islands) is declared as
VALID and CONSTITUTIONAL, and the
proclamation of the Province of Dinagat Islands
and the election of the officials thereof are
declared VALID; and
4. The petition is DISMISSED.
No pronouncement as to costs.
SO ORDERED.