DIVISION monthly COLA claiming that the daily COLA rate of
[ GR No. 74156, Jun 29, 1988 ] P3.00 should be multiplied by 30 days to arrive at the
GLOBE MACKAY CABLE v. NLRC
DECISION
246 Phil. 73
MELENCIO-HERRERA, J.:
A special civil action for Certiorari with a prayer for a
Temporary Restraining Order to enjoin respondents from
enforcing the Decision of 10 March 1986 of the National
Labor Relations Commission (NLRC), in NCR Case No.
1-168-85 entitled "FFW-Globe Mackay Employees
Union, et al., vs. Globe Mackay Cable & Radio
Corporation, et al." the dispositive portion of which
reads:
WHEREFORE, premises considered, the appealed
Decision is as it is hereby SET ASIDE and another one
issued:
1. Declaring respondents-appellees (petitioners herein)
guilty of illegal deductions of cost-of-living allowance;
2. Ordering respondents-appellees to pay complainants-
appellants their back allowances reckoned from the time
of illegal deduction; and
3. Ordering respondents-appellees from further illegally
deducting the allowances of complainants-appellants.
SO ORDERED."
Presiding Commissioner of the NLRC, Diego P. Atienza,
concurred in the result, while Commissioner Cleto T.
Villaltuya dissented and voted to affirm in toto the Labor
Arbiter's Decision.
On 19 May 1986, we issued the Temporary Restraining
Order enjoining respondents from enforcing the assailed
Decision. On 2 September 1987, we gave due course to
the petition and required the submittal of memoranda, by
the parties, which has been complied with.
FACTS
Wage Order No. 6, which took effect on 30 October 1984,
increased the cost-of-living allowance of non-agricultural
workers in the private sector. Petitioner corporation
complied with the said Wage Order by paying its
monthly-paid employees the mandated P3.00 per day
COLA. However, in computing said COLA, Petitioner
Corporation multiplied the P3.00 daily COLA by 22 days,
which is the number of working days in the company.
Respondent Union disagreed with the computation of the
monthly COLA rate. The Union alleged furthermore that
prior to the effectivity of Wage Order No. 6, Petitioner
Corporation had been computing and paying the monthly
COLA on the basis of thirty (30) days per month and that
this constituted an employer practice, which should not be
unilaterally withdrawn.
After several grievance proceedings proved futile, the
Union filed a complaint against Petitioner Corporation, its
President, F. White, and Vice-President, J. Santiago, for
illegal deduction, underpayment, unpaid allowances, and
violation of Wage Order No. 6. Petitioners White and
Santiago were sought to be held personally liable for the
money claims thus demanded.
Labor Arbiter Adelaido F. Martinez sustained the position
of Petitioner Corporation by holding that since the
individual petitioners acted in their corporate capacity
they should not have been impleaded; and that the
monthly COLA should be computed on the basis of
twenty-two (22) days, since the evidence showed that
there are only 22 paid days in a month for monthly-paid
employees in the company. His reasoning, inter alia, was
as follows:
"To compel the respondent company to use 30 days in a
month to compute the allowance and retain 22 days for
vacation and sick leave, overtime pay and other benefits
is inconsistent and palpably unjust. If 30 days is used as
divisor, then it must be used for the computation of all
benefits, not just the allowance. But this is not fair to
complainants, not to mention that it will contravene the
provision of the parties' CBA."
On appeal, the NLRC reversed the Labor Arbiter, as
heretofore stated, and held that Petitioner Corporation
was guilty of illegal deductions, upon the following
considerations: (1) that the P3.00 daily COLA under
Wage Order No. 6 should be paid and computed on the
basis of thirty (30) days instead of twenty-two (22) days
since workers paid on a monthly basis are entitled to
COLA on Saturdays, Sundays and legal holidays "even if
unworked;" (2) that the full allowance enjoyed by
Petitioner Corporation's monthly-paid employees before
the CBA executed between the parties in 1982 constituted
voluntary employer practice, which cannot be unilaterally
withdrawn; and (3) that petitioners White and Santiago
were properly impleaded as respondents in the case
below.
Hence, this Petition, anchored on the charge of
grave abuse of discretion by the NLRC.
We are constrained to reverse the reversal.

Section 5 of the Rules Implementing Wage
Orders Nos. 2, 3, 5 and 6 uniformly read as
follows:
"Section 5. Allowance for Unworked Days.
"All covered employees shall be entitled to their daily
living allowance during the days that they are paid their
basic wage, even if unworked." (Italics supplied)
The primordial consideration, therefore, for entitlement to
COLA is that basic wage is being paid. In other words,
the payment of COLA is mandated only for the days that
the employees are paid their basic wage, even if said days
are unworked. So that, on the days that employees are not
paid their basic wage, the payment of COLA is not
mandated. As held in University of Pangasinan Faculty
Union vs. University of Pangasinan, 63122, February 20,
1984, 127 SCRA 691):
It is evident that the intention of the law is to grant
ECOLA upon the payment of basic wages. Hence, we
have the principle of No Pay, No ECOLA."
Applied to monthly-paid employees if their monthly
salary covers all the days in a month, they are deemed paid
their basic wages for all those days and they should be
entitled to their COLA on those days "even if unworked,"
as the NLRC had opined. Peculiar to this case, however,
is the circumstance that pursuant to the Collective
Bargaining Agreement (CBA) between Petitioner
Corporation and Respondent Union, the monthly basic
pay is computed on the basis of five (5) days a week, or
twenty-two (22) days a month. Thus, the pertinent
provisions of that Agreement read:
"Art. XV (a) Eight net working hours shall
constitute the regular work day for five days."
"Art. XV (b) Forty net hours of work, 5
working days, shall constitute the regular
work week."
"Art. XVI, Sec. 1 (b) All overtime worked in
excess of eight net hours daily or in excess of 5
days weekly shall be computed on hourly basis
at the rate of time and one half."
The Labor Arbiter also found that in determining
the hourly rate of monthly paid employees for purposes of
computing overtime pay, the monthly wage is divided by
the number of actual work days in a month and then, by
eight (8) working hours.
If a monthly-paid employee renders overtime
work, he is paid his basic salary rate plus one-half thereof.
For example, after examining the specimen payroll of
employee Jesus L. Santos, the Labor Arbiter found:
"the employee Jesus L. Santos, who worked on Saturday
and Sunday was paid base pay plus 50% premium. This is
over and above his monthly basic pay as supported by the
fact that base pay was paid. If the 6th and 7th days of the
week are deemed paid even if unworked and included in
the monthly salary, Santos should not have been paid his
base pay for Saturday and Sunday but should have
received only the 50% overtime premium."
Similarly, the specimen payrolls of employees, Dennis
Dungon and Rene Sanvictores, showed that in computing
the vacation and sick leaves of the employees. Petitioner
Corporation consistently used twenty-two (22) days.
Under the peculiar circumstances obtaining, therefore,
where the company observes a 5-day work week, it will
have to be held that the COLA should be computed on the
basis of twenty-two (22) days, which is the period during
which the monthly-paid employees of Petitioner
Corporation receive their basic wage. The CBA is the law
between the parties and, if not acceptable, can be the
subject of future re-negotiation.
2) Payment in full by Petitioner Corporation of the COLA
before the execution of the CBA in 1982 and in
compliance with Wage Orders Nos. 1 (26 March 1981) to
5 (11 June 1984), should not be construed as constitutive
of voluntary employer practice, which cannot now be
unilaterally withdrawn by petitioner. To be considered as
such, it should have been practiced over a long period of
time, and must be shown to have been consistent and
deliberate. Adequate proof is wanting in this respect. The
test of long practice has been enunciated thus:
"x x x Respondent Company agreed to continue giving
holiday pay knowing fully well that said employees are
not covered by the law requiring payment of holiday pay."
(Oceanic Pharmacal Employees Union [FFW] vs.
Inciong, 50568, November 7, 1979, 94 SCRA 270).
(Italics ours)
Moreover, before Wage Order No. 4, there was lack of
administrative guidelines for the implementation of the
Wage Orders. It was only when the Rules Implementing
Wage Order No. 4 were issued on 21 May 1984 that a
formula for the conversion of the daily allowance to its
monthly equivalent was laid down, thus:
Section 3. Application of Section 2
(a) Monthly rates for non-agricultural workers covered
under PDs 1614, 1634, 1678 and 1713:
(3) For workers who do not work and are not
considered paid on Saturdays and Sundays:
P60 + P90 + P60 + (P2.00 x 262) divided by 12 = DIVISION
P253.70" (Italics ours) [ GR No.109005, Jan.10,1994]
JUAN VICTORIA VS. COMELEC
As the Labor Arbiter had analyzed said formula: DECISION

"Under the aforecited formula/guideline, issued for the QUIASON, J.:

first time, when applied to a company like respondent This is a petition for certiorari, under Rule 65 of the
which observes a 5-day work week (or where 2 days in a Revised Rules of Court in relation to Section 2, Article IX
week, not necessarily Saturday and Sunday, are not of the Constitution, to set aside (a) the Resolution of the
considered paid), the monthly equivalent of a daily Commission on Elections (COMELEC) dated January 22,
allowance is arrived at by multiplying the daily allowance 1993, which certified respondent James Calisin as the
by 262 divided by 12. This formula results in the highest ranking member of the Sangguniang
equivalent of 21.8 days in a month." Panlalawigan of the Province of Albay and (b) its
Absent clear administrative guidelines, Petitioner Resolution dated February 22, 1993, which denied the
Corporation cannot be faulted for erroneous application motion for reconsideration of petitioner.
of the law. Payment may be said to have been made by
reason of a mistake in the construction or application of a The issue in the case at bench is the ranking of the
"doubtful or difficult question of law." (Article 2155 in members of the Sangguniang Panlalawigan of the
relation to Article 2154[2] of the Civil Code). Since it is a Province of Albay for purposes of succession.
past error that is being corrected, no vested right may be
said to have arisen nor any diminution of benefit under In the May 11, 1992 Elections, the following candidates
Article 100 of the Labor Code[3] may be said to have from the first, second and third districts of the Province of
resulted by virtue of the correction. Albay were elected and proclaimed as members of the
Sangguniang Panlalawigan, to wit:
With the conclusions thus reached, there is no further need
to discuss the liability of the officers of Petitioner FIRST DISTRICT
Corporation.
Number of
WHEREFORE, Certiorari is granted, the Decision of Name Votes
the National Labor Relations Commission, dated 10 Garnered
March 1986, is SET ASIDE, and the Decision of the
Labor Arbiter, dated 9 May 1985, is hereby Jesus
REINSTATED. The Temporary Restraining Order James 28,335
1.
heretofore issued is hereby made permanent. SO Calisin votes
ORDERED.
Vicente
17,937
Yap, C. J., Padilla, and Sarmiento, JJ., concur. 2. Go, Sr.
votes
Paras, J., took no part in the deliberation.
Clenio 16,705
[1] 3.
ART. 2155. Payment by reason of a mistake in the Cabredo votes
construction or application of a doubtful or difficult
question of law may come within the scope of the SECOND DISTRICT
preceding article.
Juan.
[2] 32,918
ART. 2154. If something is received when there is 1. Victoria
votes
no right to demand it, and it was unduly delivered
through mistake, the obligation to return it arises. Jesus
26,030
2. Marcellana
[3] votes
ART. 100. Prohibition against elimination or
diminution of benefits. Nothing in this Book shall be Lorenzo 23,887
3.
construed to eliminate or in any way diminish Reyeg votes
supplements, or other employee benefits being enjoyed
at the time of promulgation of this Code. THIRD
DISTRICT
 Ramon 107,216 (actually voted) x 28,335 (votes obtained) =
19,315
1. Fernandez, 23.40%
votes
Jr. 129,793 (registered voters)
Masikap 19,241
2.
Fontanilla votes (Rollo, pp. 24,25 and 30)
Arturo 17,778
3.
Osia votes 2. for petitioner
Nemesio 17,545
4.
Baclao votes 121,423 (actually voted) x 32,918 (votes obtained) =
25.84%
Due to the suspension of Governor Romeo Salalima of the 154,665 (registered voters)
Province of Albay, Vice-Governor Danilo Azana
automatically assumed the powers and functions of the (Rollo, p. 9)
governor, leaving vacant his post as vice-governor. Under
the law, Azana's position as vice-governor should be We are not pursuaded.
occupied by the highest ranking Sanggunian member, a
post being contested by petitioner and private respondent. The Local Government Code provides:
SEC. 44 - Permanent Vacancies in the Office of the
In answer to private respondent's petition for his Governor, Vice-Governor, Mayor, and Vice-Mayor. - (a)
declaration as senior Sanggunian member for the If a permanent vacancy occurs in the office of the
Province of Albay, the COMELEC issued a resolution governor or mayor, the vice-governor or vice mayor
dated January 22, 1993, certifying him as first in the order concerned shall become the governor or mayor. If a
of ranking with petitioner herein as second ranking permanent vacancy occurs in the offices of the governor,
member. The COMELEC based its certification on the vice governor, mayor, or vice-mayor, the highest ranking
number of votes obtained by the Sanggunian members in sanggunian member or, in case of his permanent inability,
relation to the number of registered voters in the district. the second highest ranking sanggunian member, shall
become the governor, vice-governor, mayor or vice-
Thus, on February 15, 1993, Secretary Rafael M. Alunan mayor, as the case may be. Subsequent vacancies in the
III of the Department of Interior and Local Government said office shall be filled automatically by the other
designated private respondent as acting Vice-Governor of sanggunian members according to their ranking as
the province. defined herein.

filed a motion for reconsideration of the COMELEC "For purposes of succession as provided in this Chapter,
resolution which was denied on February 22, 1993. ranking in the sanggunian shall be determined on the basis
of the proportion of votes obtained by each winning
Hence, this petition. candidate to the total number of registered voters in each
district in the immediately preceding local election"
Petitioner claims that the ranking of the Sanggunian (Underlining ours).
members should not only be based on the number of votes
obtained in relation to the total number of registered The COMELEC came up with the following
voters, but also on the number of voters in the district who ranking of the top three Sanggunian members:
actually voted therein. He further argues that a district
may have a large number of registered voters but only a NAME of Votes
Distric Registere Percen Ran
few actually voted, in which case the winning candidate Elected Obtaine
t d Voters t Dist'n k
would register a low percentage of the number of votes Candidates d
obtained. Conversely, a district may have a smaller
number of registered voters but may have a big voter’s ALBAY
turn-out, in which case the winning candidate would get a
higher percentage of the votes. Applying his formula, CALISIN,
petitioner would come out to be the highest ranking JESUS JAMES1st 130,085 28,335 21.78 1st
Sanggunian member. B.

Petitioner gives the following illustration: VICTORIA,

2nd 155.318 32,918 21.19 2nd
JUAN D.
1. for private respondent MARCELLAN
2nd 155.318 26,030 16.76 3rd
A JESUS, M.
The law is clear that the ranking in the Sanggunian shall
be determined on the basis of the proportion of the votes
obtained by each winning candidate to the total number of
registered voters of each district. It does not mention
anything about factoring the number of voters who
actually voted. In such a case, the Court has no recourse
but to merely apply the law. The courts may not speculate
as to the probable intent of the legislature apart from the
words (Pascual v. Pascual-Bautista, 207 SCRA 561
[1992]).
In the case of Globe-Mackay Cable and Radio
Corporation v. National Labor Relations Commission,
206 SCRA 701 (1992), we held that:
"Under the principles of statutory construction, if a
statute is clear, plain and free from ambiguity, it must
be given its literal meaning and applied without
attempted interpretation. This plain-meaning rule
or verba legis derived from the maxim, index animi
sermo est (speech is the index of intention) rests on the
valid presumption that the words employed by the
legislature in a statute correctly express its intent or
will and preclude the court from construing it
differently. The legislature is presumed to know the
meaning of the words, to have used words advisedly,
and to have expressed its intent by the use of such
words as are found in the statute. Verba legis non est
recedendum, or from the words of a statute there
should be no departure."
Petitioner's contention is therefore untenable considering
the clear mandate of the law, which leaves no room for
other interpretation. We are not unmindful of the
practicality of petitioner's interpretation but it must very
well be addressed to the legislative branch and not to this
Court which has no power to change the law.
Considering the foregoing, we find no grave abuse of
discretion on the part of the COMELEC in issuing the
Resolution dated January 22, 1993.
WHEREFORE, the petition is DISMISSED. SO
ORDERED.
EN BANC
G.R. No. 216691 July 21, 2015
MARIA ANGELA S. GARCIA, Petitioner,
vs.
COMMISSION ON ELECTIONS and JOSE
ALEJANDRE P. PAYUMO III, Respondents.
DECISION
VELASCO, JR., J.:
Nature of the Case
Before us is a petition for certiorari under Rule 65 in
conjunction with Rule 64 of the Rules of Court, praying
for the annulment of the September 10, 20141 and January
29, 20152 Resolutions of public respondent Commission
on Elections (Comelec), acting through its First Division
and En Banc, respectively, in Case No. EAC [AEL] 11-
2014. The assailed rulings reinstated the election protest
of private respondent Jose Alejandre Payumo III
(Payumo) and effectively reversed the trial court’s ruling
that it was filed out of time.
The Facts
Petitioner Maria Angela S. Garcia (Garcia) and
Payumo were candidates for the mayoralty race of
Dinalupihan, Bataan during the May 13, 2013 national
and local elections. In the poll’s conclusion, Garcia was
proclaimed winner for having garnered 31,138 votes as
against Payumo’s 13,292. The Office of the Election of
Dinalupihan then released to Payumo a certified copy of
the printed Certificate of Canvass of Votes and
Proclamation (printed COCP), bearing May 15, 2013 as
the date of proclamation of the winning mayoralty
candidate. As per the records, the printed COCP reflected
the signatures and thumbprints of the members of the
Municipal Board of Canvassers (MBOC).3
On May 27, 2013, Payumo lodged an election
4
protest with the Regional Trial Court, Branch 5 in
Balanga, Bataan (RTC), docketed as Election Protest No.
DH-001-13, citing the alleged prevalence of fraud and
irregularities in all the clustered precincts of Dinalupihan,
heightened by the Precinct Count Optical Scan (PCOS)
machines’ unreliability, casting doubt on the results of the
counting and canvassing of votes.5 Anent the timeliness
of the recourse, Payumo claimed that from May 15, 2013,
the proclamation date appearing on the printed COCP, he
had ten (10) days, or until May 25, 2013, within which to
challenge the election results. He added that since May
25, 2913 falls on a Saturday, he filed his protest on the
immediately succeeding working day, Monday, May 27,
2013.6
In answer,7 Garcia belied the allegations of fraud
and urgently moved for the dismissal of Payumo’s protest.
She claimed that she was proclaimed mayor on May 14,
not May 15, 2013, as indicated in the manual Certificate
of Canvass of Votes and Proclamation (manual
COCP)8 issued by Dinalupihan’s MBOC. She, thus,
argued that the election protest was filed beyond the
mandatory ten-day (10-day) reglementary period for
filing an election protest, which, as she claimed in this
case, lasted only until May 24, 2013, a Friday. On the
ground of belated filing, Garcia urged the RTC to dismiss
the election protest outright.9
 On July 1, 2013, the RTC heard the motion for
preliminary determination of the affirmative defense of
prescription. Members of the MBOC of Dinalupihan took
the witness stand and testified that Garcia was proclaimed
on May 14, 2013 at around 5:00PM.
Ruling of the Regional Trial Court
Giving credence to petitioner’s assertion, the RTC,
through its Order10 dated February 18, 2014, dismissed
Payumo’s protest for being barred by the statute of
limitations. The fallo of the Order reads.11
IN VIEW OF THE FOREGOING, the election protest
filed by protestant Jose Alejandre P. Payumo III on May
27, 2013 is hereby DISMISSED for having been filed one
day beyond the non-extendible period provided under
Rule 2, Section 7, in relation to Rule 2, Section 12 (c), of
A.M. No. 10-4-1-SC, the 2010 Rules of Procedure in
Election Contests before the Courts Involving Elective
Municipal Officials.
SO ORDERED.
In disposing the case, the trial court cited and relied on the
individual declarations of the Chairman and the two
members of the MBOC of Dinalupihan, Bataan, as well
as on the manual COCP, as sufficient proof that Garcia’s
proclamation took place on May 14, 2013.12
Undaunted, Payumo appealed the dismissal with the
Comelec, docketed as EAC (EAL) No. 11-2014, alleging
that he cannot be faulted for relying on the May 15, 2013
date indicated in the printed COCP since it was the official
Comelec document signed by all the members of
Dinalupihan’s MBOC; that the manual COCP was only
received by Garcia, and no one else; and that he had no
representative when Garcia was allegedly proclaimed the
winner.
Rulings of the COMELEC
The Comelec First Division, by its September 10, 2014
Resolution, granted Payumo’s appeal thusly:13
WHEREFORE, premises considered, the Appeal is
GRANTED. The Order dated February 17, 2014 is
REVERSED and SET ASIDE. Accordingly, the Regional
Trial Court of Balanga, Bataan, Branch 5 is hereby
ordered to proceed with the adjudication of RTC-EP Case
No. DH-001-13 and resolve the same with dispatch.
SO ORDERED.
Ratiocinating in the following wise:
Evidently, appellant could not be faulted for not relying
on the COCP dated May 15, 2013 because that was the
only document officially furnished him. He was unaware
of the alleged Manual COCP dated May 14, 2013. The
election officer himself admitted to the trial court that he
could not remember if he had posted a copy of the May
14, 2013 Manual COCP on the bulletin board of the
Sangguniang Bayan as required by Comelec Resolution
No. 9648. Neither did he furnish a copy thereof to the
secretary of the Sangguniang Bayan and the Municipal
Treasurer.
Additionally, the Comele First Division relied on the case
of Federico v. Comelec15 (Federico) and held that the 10-
day reglementary period ought to be reckoned from the
time a party became in good faith of the issuance of the
COCP, which in this case, according to public respondent,
is May 15, 2013, as indicated in the printed COCP
Payumo received.16
On reconsideration, the Comelec En Banc, by its assailed
Resolution dated January 29, 2015, affirmed the holding
of the First Division and disposed Garcia’s motion in the
following wise.17
WHEREFORE, premises considered, the Commission En
Ban RESOLVES to DENY the Motion for
Reconsideration filed by Protestee-Appellee Maria
Angela S. Garcia for failing to show any reversible error
on the part of the First Division UPHOLD its Resolution
dated 10 September 2014 granting Protestant-Appellant
Payumo’s Appeal.
SO ORDERED.
As held by the En Banc:
It would be tantamount to injustice should the 10-day
period to file the Election Protest in this case be reckoned
or counted from May 14, 2013, the date indicated in the
Manual COCVP as Protestee-Appelle Garcia’s
proclamation as winner since its copy was not even
furnished to Protestant-Appellant Payumo. Clearly,
Protestant-Appellant Payumo’s only source of
information as to the date of the proclamation of
Protestess-Appelle Garcia was the printed COCVP. It
indicated 15 May 2013 as the date of Protestee-Appellee
Garcia’s proclamation as winner. Thus, his reliance on 15
May 2013, as the reckoning date of the 10-day period to
file his Election Protest was in good faith.18
Hence, the instant recourse.
The Issue
Succinctly put, the issue in extant case boils down to
whether or not Payumo’s election protest was filed out of
time. On the main, Garcia contends that the reckoning
date of the 10-day reglementary period is from the actual
date of proclamation, which is May 14, 2013. Meanwhile,
Payumo counters that Garcia was proclaimed on May 15,
2013, and assuming arguendo that it was done on May 14,
2013, as Garcia insists the proclamation date to be, he
cannot be faulted for relying on the date appearing on the
printed COCP he received.
Respondent Comelec’s Consolidated Comment, filed by
the Office of the Solicitor General, echoes the sentiment
of Payumo that the latter could not have known that
Garcia was proclaimed on May 14, 2015 because the
printed COCP, which was furnished him, stated
otherwise. The Comelec likewise alleged that Garcia
failed to establish that Payumo had a representative
present at the exact moment Garcia was proclaimed
winner and, thus, assuming that it was true, he could not
have known that Garcia was already declared winner on
May 14, 2015.
The Court's Ruling
We grant the petition.
Garcia’s Proclamation Date
Pivotal in resolving whether or not Payumo’s election
protest is barred by the statute of limitations is
ascertaining when the MBOC proclaimed Garcia as the
winning mayoralty candidate.
The significance of verifying this proclamation date is
underscored by Rule 2, Section 12 (c), in relation to Sec.
7 of the same rule, A.M. No. 10-4-1 SC,19 otherwise
known as the 2010 Rules of Procedure in Election
Contests before the Courts Involving Elective Municipal
Officials, which provisions pertinently state:
Section 12. Summary dismissal of election contest. –
the court shall summarily dismiss, motu proprio, an
election protest, counter-protest or petition for quo
warranto on any of the following grounds:
(a) The court has no jurisdiction over the
subject matter;
(b) The petition is insufficient in form and
content as required under Section 10;
(c) The petition is filed beyond the period
prescribed in these Rules;
(d) The filling fee is not paid within the period
for filling the election protest or petition for quo
warranto; and
(e) In a protest case where cash deposit is
required, the deposit is not paid within five (5) days
from the filling of the protest.
Section 7. Period to file protest or petition; non-
extendible. – The election protest or petition for quo
warranto shall be filed within a non-extendible period of
ten (10) days counted from the date of proclamation.
Jurisprudence teaches that the rule prescribing the 10-day
reglementary period is mandatory and jurisdictional, and
that the filing of an election protest beyond the period
deprives the court of jurisdiction over the protest.
Violation of this rule should neither be taken lightly nor
brushed aside as a mere procedural lapse that can be
overlooked. The rule is not a mere technicality but an
essential requirement, the non-compliance of which
would oust the court of jurisdiction over the case.20
Aware of the repercussions that befall an election protest
belatedly filed, the private parties herein advance two
conflicting dates whence the reglementary period should
reckon. But between the two proposed reckoning date,
May 14, 2013, as claimed by petitioner, appears to be the
correct date of proclamation.
As can be recalled, the RTC, on July 1, 2013, conducted
a motion hearing to determine the timeliness of the
election protest. Records reveal that during the said
proceeding, the members of the MBOC testified in the
following manner:21
Court:
Please take your seats. So, Election Officer Leonilo
Miguel, Municipal Treasurer Lani Penaflor. Ms. Socorro
Sacdalan, the resolution of the Motion to Resolve
Affirmative Defense on the ground that the protest was
filed out of time will be resolved base on the answers that
you will give this afternoon. So, the first question of the
Court is that, when did you officially proclaim the
winning candidate, the protestee, Maria Angela S.
Garcia? You give your answers one by one. So, for
Election Officer Mr. Miguel, what is your answer?
Leonilo Miguel:
Sir, we proclaimed Maria Angela Garcia on May 14.
Court:
What time?
Leonilo Miguel:
At almost 5:00 o’clock, sir.
Court:
So, take your seat first. And then Municipal Treasurer
Lani Penaflor, as part of the members of the [MBOC] of
Dinalupihan, when did you officially proclaim Maria
Angela Garcia as the winning mayor of Dinalupihan,
Bataan?
Lani Penaflor:
Can I give my statement, sir?
Court:
Please give up (sic).
Lani Penaflor:
I, Lani Penaflor, vice-chairman of the [MBOC], do hereby
certify that our functions based on general instructions
and minutes on the consolidation, canvass and
transmission of votes cannot proceed on the second step
due to the problem occurred on the memory card of
precinct No. 15 of Brgy. Bangal, we resulted to only
98.75% of votes canvass as of May 14, 2013. Due to this
situation, the legal counsel of candidate Herminia Roman
and Renato Matawaran cited Resolution 9700 and used it
as basis to proclaim the winner since votes cast on
precinct no. 15, Brgy, Bangal, will not affect the result
and raking of local candidates. The members who waited
for the instructions of Atty. Rafael Olano, Regional
Election Director who will proceed to the process of
Resolution 9700 and request threshold that this group
canvass to be used for the preparation of Manual
Certificate of Canvass of Votes and Proclamation of the
winning candidate. I do also certify the I signed last May
14, 2013 the Manual Certificate of Canvass and
Proclamation of the winning candidates pursuant to
Comelec Resolution No. 9700. On May 15, 2013 the
password has been received and the CCS will then
proceed to the second step of the general instruction and
steps presented on the CCS laptop. Afterwhich the CCS
then automatically proceed on the generation and printing
of CEF No. 29, COCP and other documents related
thereto. I again certify that last May 15, 2013, signed the
generated reports by the CCS, one of which is CEF No.
29, Certificate of Cancass and Proclamation of winning
candidates in compliance with the general instruction.
Then we proceed on electronically transmitting the result
after signing all the documents as prescribed by the GI
and generated by the CCS. I assumed that our Election
Officer strictly follows the rule on the investigation of
Comelec election forms and reports set forth by the
Commission on Elections. Thank you.
Court:
Okay, thank you. Ms. Socorro Sacdalan, again, as a
member of the [MBOC], Dinalupihan, Bataan, when did
you proclaim Maria Angela Garcia as the winning mayor
for Dinalupihan, Bataan?
Socorro Sacdalan:
We proclaimed the winning candidate, Maria Angela S.
Garcia, on May 14, 2013. Sir.
Court:
What time, if you recall?
Socorro Sacdalan:
At around 5:oo o’clock p.m., sir.
As the members of the MBOC individually declared,
Garcia was proclaimed winner of the mayoralty race on
May 14, 2013, not on May 15, 2013 as what erroneously
appears on the printed COCP.
What is more, the testimony of municipal treasurer Lani
Penaflor (Penaflor), vice-chairperson of the MBOC,
conveys an explanation for the discrepancy between the
dates appearing on the manual and printed COCP’s- that
on May 14, 2013, at around 5:00 o’clock in the afternoon,
Garcia was proclaimed the winner after 98.75% of votes
were already canvassed; that the proclamation was done
in light of the fact that the number of voters in the
unaccounted clustered precinct could no longer affect the
result of the recently concluded polls; that the lowering of
the threshold was approved by the Regional Election
Director; and that the manual COCP was prepared
reflecting the result of the elections.
The procedure followed by the MBOC, as outlined by
Penaflor, is consistent with Comelec Resolution No.
9700,22 wherein the Commission resolved, among others,
that:
1. The Municipal, City. Provincial, District, and
Regional Boards of Canvassers shall proclaim the
winning candidates on the basis of the last "Group
Canvass Report" generated by the CCS. By manually
preparing a Certificate of Canvass and Proclamation of
Winning Candidates. supported by a copy of the last
generated "Grouped Canvass Report", even if not all
results are received by their respective CCS: Provided,
That, the standing of the candidates will not be affected
by the results not yet transmitted to, and received by, the
CCS, without prejudice to the ranking of the winning
candidates. For this purpose, attached as Annex "A" is the
format of the Certificate of Canvass and Proclamation to
be manually prepared by the boards of canvassers;
2. The Regional Election Directors are approve
requests of boards of canvassers in their respective
regions to lower the canvassing threshold to enable said
boards to generate the certificate of canvass for
transmission to the next level of canvassing, For this
purpose, the National Support Center shall provide all
Regional Election Directors with the "ADMIN
USERNAME" and corresponding "PASSWORD" needed
to lower canvassing threshold, and the appropriate
instructions on how to set the lowered coming from the
said board.
Apparently, contrary to Payumo’s assertion, the manual
COCP is the official Comelec document in cases wherein
the canvassing threshold is lowered, In fact, clear from the
language of the Resolution is that the winners, in such
instances, are proclaimed "by manually preparing a
Certificate of Canvass and Proclamation of Winning
Candidate," the format for which is appended to Comelec
Resolution No. 9700. It is incorrect to state, therefore, that
only the printed COCP can serve as basis for ascertaining
the date of Garcia’s proclamation. As in this case, it is the
manual COCP which contains the true and exact date of
Garcia’s proclamation – May 14, 2013, not the printed
COCP.
Payumo’s reliance on the date appearing on the printed
COCP is misplaced. To be sure, Comelec Resolution No.
9700 is explicit that the printed COCP becomes necessary
only for purposes of transmitting the results to the next
level canvassing, and not for proclaiming the winning
candidates, insofar as local government units whose
canvassing thresholds have been lowered are concerned.
The manual COCP, in such cases, are more controlling.
Furthermore, it appears that May 15, 2013 is the date the
printed COCP was generated, which, as the members of
the MBOC claimed, the Comelec-issued laptop does not
allow to be modified.23 And as justified by the MBOC,
they were only able to produce the printed COCP on May
15, 2013, the day after the actual proclamation, because
that was only when they were able to retrieve from the
Regional Election Director the username and password
for generation the document, denominated as CEF 29.24
As aptly concluded by the RTC.25
The declaration made by the individual members of the
MBOC that the proclamation of protestee [herein private
respondent] was done on May 14, 2013, coupled with the
issuance of the manual certificate of canvass and
proclamation on the same date, is sufficient proof that
protestee’s proclamation was in fact done on May 14,
2013 and not on May 15, 2013. The printed certificate of
canvass and proclamation already on May 15, 2013 was
not meant to supersede the proclamation already been
done on May 14, 2013, but only to comply with the
"official format" of the COMELEC, according to
Municipal Election Officer Miguel. The printed document
merely affirmed what had already been accomplished
with the manually written document.
Having established that Garcia was proclaimed the
winning mayoralty candidate on May 14, 2013, it is then
plain to see that Payumo’s election protest, dated May 27,
2013, was filed beyond the 10-day reglementary period
and ought to be dismissed outright.
The ruling Federico v. Comelec is not a precedent to the
instant case
Payumo next seeks refuge under the case of Federico, in
which the Court indeed nullified the proclamation of
therein petitioner Renato Federico (Federico) as mayor of
Santo Tomas, Batangas even though private respondent
Osmundo Maligaya (Maligaya) filed the election protest
more than ten (10) days after such fact. There, the Court
reckoned the 10-ady prescriptive period not from the date
of proclamation but from the date of proclamation but
from the date Maligaya received notice of the event,
rendering the actual date of proclamation immaterial. It is
this holding in Federico that Payumo adamantly urges that
We apply.
The argument is specious.
Guilty of reiteration, Rule 2, Sec. 7 of A.M. No. 10-4-1
SC provides:
Section 7. Period to file protest or petition; non-
extendible. – The election protest or petition for quo
warranto shall be filed within a non-extendible period of
ten (10) days counted from the date of proclamation.
The above provision is the procedural equivalent of Sec.
251 of Batas Pambansa Blg. 881, otherwise known as the
Omnibus Election Code, which states:
Sec. 251. Election contests for municipal offices. – A
sworn petition contesting the election of a municipal
officer shall be filed with the proper regional trial court by
any candidate who has duly filed a certificate of
candidacy and has been voted for the same office, within
ten days after proclamation of the results of the election.
As can be gleaned, Sec. 251 of the Omnibus Election
Code provides that the 10-day period ought to be
reckoned from the date of proclamation and not from the
date of notice. As the elementary rule in statutory
construction goes, when the words and phrases of a statute
are clear and unequivocal, their meaning must be
determined from the language employed and the statute
must be taken to mean exactly what is says.26
This is known as the plain-meaning or verbal egis rule,
expressed in the Latin maxim "verba legis non est
recedendum," or "from the words of a statute there
should be no departure."27 Since the afore-quoted
provision, as couched, us clear and free from
ambiguity, its literal meaning must be applied without
attempted interpretation.28
The rationale behind the non-extendible 10-day
prescriptive period is not difficult to deduce – every
candidate interested in the outcome of the election is
expected to be vigilant enough in protecting his or her
votes and would, therefore, enlist the aid of volunteer pool
watchers in every clustered precinct to guard against or
document possible irregularities, or that the candidate
would personally be present at or, at the very least, would
send representatives to the to the canvassing areas to
ensure the proper tallying of votes and to monitor the real-
time results of the elections as they are electronically
transmitted. Consequently, they are expected to know of
the exact moment the winning candidate is proclaimed by
the board of canvassers concerned.
True, Federico appears to have deviated from the wording
of Sec. 251 of the Omnibus Election Code but that is only
due to the peculiarities of the said case. It must be stressed
that Our ruling in Federico was based on considerations
not in all fours with the case at bar.
Recapitulating Federico, the MBOC of Santo Tomas,
Bantangas, on May 11, 2010, printed a COCP showing
"SANCHEZ Edna P." (Edna) as the winning mayoralty
Candidate. The prompted Maligaya to file a Petition to
Annul Proclamation against Edna Sanchez on May 20,
2010. However, the petition was later withdrawn, as
agreed upon by the parties, leading to the case’s dismissal.
Unknown to Maligaya, a second print-out of the COCP
was then issued by the MBOC, bearing the same date
"May 11, 2010," crediting the same number of votes
garnered by Edna to Federico after the latter allegedly
substituted Edna as mayoralty candidate. Federico,
through the second print-out, was then declared the
winning mayoralty candidate. Claiming that Maligaya
only found out this fact on May 27, 2010, he filed an
election protest against Federico on June 1, 2010.
Affirming the Comelec’s ruling that the election protest
against Federico was timely filed, the Court ratiocinated
thusly:29
It has been argued that there is no evidence that Maligaya
became aware of the issuance of the second COCVP in
favor of Federico only on May 27, 2010. In this regard,
the Court believes that the actions taken by Maligaya after
the elections and the separate proclamations of Edna and
Federico strongly indicate that he was telling the truth.
Indeed, there is no rhyme or reason why he should file a
petition questioning the proclamation of Edna if he had
knowledge of the subsequent proclamation of Federico.
The Court adopts with approbation his reasoning on the
matter. Thus:
5.35. Private respondent pursued and prosecuted
this case with the knowledge that it was Edna Sanchez
who was proclaimed, until he came to know of the alleged
proclamation of respondent Federico on May 27, 2010.
Consequently, he filed another petition on June 1, 2010,
this time against Federico, to annul his proclamation. The
June 1, 2010 petition was filed within ten days from the
knowledge of the alleged proclamation of Federico.
5.36. The filing of SPC NO. 10-022 demonstrates
that private respondent Maligaya believed in good faith
that it was Edna Sanchez that was proclaimed and that he
did not initially know that there was a COCVP in the
name of Federico. SPC No. 10-022 is also a proof that
petitioner did not dilly daily in protecting his rights. There
simply is no reason and it runs counter to human conduct
for Maligaya to file a petition for annulment of
proclamation of Edna Sanchez if he knew all along that it
was Federico who was proclaimed.
5.37. In the same manner, the filing of the present
petition against Federico shows that the proclamation of
Federico was fraudulent or at least made
surreptitiously.1âwphi1 Had Maligaya known of the
proclamation of Federico, he should have outrightly filed
the petition for annulment of proclamation against
Federico. But because it was made without any notice to
the herein private respondent, he only knew of it on May
27, 2010, thus, the petition on June 1, 2010. Private
respondent did not certainly sleep on his rights as he filed
the proper petition within the prescribed period. He could
not be penalized for belated filing when, as shown above,
the COCVP of Federico was surreptitiously
accomplished. Thus, the Comelec En Banc did not
commit grave abuse of discretion in upholding the interest
of herein private respondent Maligaya.
To begin with, we have considered in Federico the fact
that petitioner Federico therein could not have validly
substituted Edna as mayoralty candidate in Santo Tomas,
Batangas, and that as a non-candidate in the mayoralty
race, he cannot legally be declared and proclaimed the
winner. Thus, the nullity of the substitution consequently
led to the nullity of the proclamation.30 Here lies the
difference.
More importantly, the circumstances in Federico that (1)
there were actually two different proclamations made by
the MBOC, and (2) that the second proclamation was
surreptitiously made were essential in Our ruling therein.
This is in stark contrast with the case at bench where there
was only one proclamation, which was, by no means,
clandestinely made. Here, there is no dispute that there
was only one mayoralty candidate proclaimed winner.
Thus, the only issues pertain to when such proclamation
was done, and which document accurately reported the
same. In addition, there was no allegation whatsoever of
a surreptitious proclamation for Garcia’s proclamation
was, in fact, publicly announced. As culled from the
records, the members of the MBOC testified that Garcia
was proclaimed on May 14, 2013 in a well-attended
ceremony.31
Atty. Pomer:
When you said you raised the hand of the winning
candidate, protestee, Maria Angela Garcia, at 5:00
o’clock in the afternoon of May 14, 2013, were there
persons present?
Leonilo Miguel:
Yes, sir/
Atty. Pomer:
Would you know if among those who were present there
was a representative from the protestant, Payumo?
Socorro Sacdalan:
I am not aware if there are representatives of the protestant
because there were many persons, people inside the
center.
Court:
Question from the Court. Which exact place you said you
proclaimed Maria Angela Garcia at 5:00p.m. on May 14?
Leonilo Miguel:
At the session hall of the Sangguniang Bayan of
Dinalupihan, Bataan.
Court:
So, Atty. Pomer, do you have any other questions?
Atty. Pomer:
Yes, Your Honor. Were there other winning candidates
that you proclaimed on that occasion aside from the
protestee?
Leonilo Miguel:
Yes, sir. We proclaimed the vice-mayor and the eight (8)
councilors.
Court:
Same, May 14, 5:00 o’clock?
Leonilo Miguel:
Yes, sir.
Atty. Pomer:
So, the proclamation tool placed (sic) in the session hall.
Was that in the same place the canvassing took placed
(sic)?
Leonilo Miguel:
Yes, sir.
Atty. Pomer:
And that during the canvassing, there were watchers and
lawyers of the candidates present, is it not?
Leonilo Miguel:
Yes, sir.
Indeed, there is a substantial distinction between the
extant case and Federico which, in the latter, prevented
Maligaya, through no fault of his own, from filing an
election protest within the period prescribed.
Petitioner Payumo cannot be deemed to have acted in
good faith
Further constrasting the case at bar with Federico, herein
petitioner Payumo’s claim of good faith in relyin on the
printed COCP fails to persuade.
"Good faith" is an intangible and abstract quality with no
techinal meaning or statutory definition, and it
encompasses, among other things, an honest belief, the
absence of malice and the absence of design to defraud or
to seek an unconscionable advantage. It implies honesty
of intention, and freedom from knowledge of
circumstances which ought to put the holder upon
inquiry.32
Here, knowledge of Garcia’s May 14, 2013 proclamation
is attributable to Payumo since he was represented by one
Fernando Manalili (Manalili) during the canvassing
proceeding, as per the minutes prepared by the
MBOC.33 Hornbook doctrine is that notice to the agent is
notice to the principal.34 And as appearing in the minutes,
several representatives were fielded by the Liberal Party,
the political banner under which Payumo filed his
candidacy, to monitor the results real-time.35
May 13-14, 2013
1.Atty. Mary Kristine Reyes Chu NUP/Ma. Angela
Garcia – Albert Garcia
2. Atty. Lowell John J. Fetizanan Nationalist Peoples
Coalition Party
3. Atty. Norby Caparas Herminia B. Roman
4. Atty. Honey Lynco Liberal Party
5. Fernando P. Manalili Liberal Party (Jojo Payumo)
6. Ramon Alfonso T. Munez Liberal Party
7. Bohjee Bobby A. Yap Liberal Party
8. Bro. Roy Quiambao PPCRV
9. Reymond Fontailla Paralegal
10. Janette Oftana Watcher
11. Harold Cacacho Watcher
12. Carlos Caringal Lawyer
Noteworthy is that apart from Manilili, Payumo had other
representatives present during the canvassing on May 13-
14, 2013. Thus, even if we entertain Payumo’s postulation
that Manilili did not stay long enough to witness the
canvassing proceedings from start to finish, and that he
was allegedly not present at least during Garcia’s
proclamation, we, nevertheless, still cannot give credence
to petitioner’s claim of good faith. Payumo cannot
plausibly feign ignorance of Garcia’s proclamation since
knowledge of such fact is attributable to him not only
through Manalili, but also through the other party
representatives. Consequently, Payumo is then barred
from otherwise claiming that Garcia was proclaimed
mayor on May 14, 2013.
Moreover, the fact that Payumo only received a copy of
the printed, and not the manual COCP, is of no moment.
For as the losing candidate, he is not, under the Comelec
rules, even entitled to be furnished a copy of the COCP.
Section 30 of Comelec Resolution No. 964836 provides
that insofar as the electoral candidates are concerned, only
the winners are entitled to a copy of the COCP, viz:
Sec. 30. Distribution of COCP and SOVs. – The Board
shall generate and print sufficient copies of the COCP and
one (1) copy of the SOV to be distributed as follows:
a. MBOC/CBOC
1. To the Election Records and Statistics
Department (ERSD) of the commission;
2. To be posted on the bulletin board of the
municipal hall, supported by SOVP;
3. To the Chairman, MBOC/CBOC;
4. To the Secretary, Sangguniang
Bayan/Panlungsod;
5. To the Municipal Treasurer;
6. To a winning Candidate for Mayor; Winning
Candidate for Vice- Mayor; and
7. To each winning Candidate for members of the
Sangguniang Bayan/Panlungsod.
The wording of the afore-quoted rule is pregnant with
meaning. First, its literal interpretation is that only the
winning candidates have the demandable right to be
furnished a copy of the COCP. Second, it amplifies the
general rule that the prescriptive period ought to be
reckoned from the actual date of proclamation, not from
notice through service of a COCP, since the losing
candidates are not even required to be served a copy of
the COCP in the first place. Lastly, it warns the candidates
to be more vigilant in monitoring the results of the
elections for them to be conscious of the deadline for
filing an election protest, should they opt to contest the
results.
In sum, the Court maintains the general rule that the
reglementary period for instituting an election period
should be reckoned from the actual date of proclamation,
not from the date of notice. Absent any circumstances
analogous to the factual milieu of Federico, a relaxation
of the rules will not be warranted.
Finally, as regards the MBOC’s alleged disregard of the
requirement under Comelec Resolution No. 9648 to post
copies of the COCP in the designated areas, and to serve
them to the other winning candidates, needless to say that
they do not and could not invalidate Garcia’s
proclamation. Neither do they toll the 10-day period to file
an election protest in this case since Payumo is still
deemed aware of the results by way of notice to his agent
or agents. Instead, these alleged omissions merely expose
the members of the MBOC to possible liability should it
be proven that they deviated from procedure, which issue
is not yet ripe for Us to decide.
WHEREFORE, in view of the foregoing, the petition is
hereby GRANTED. The assailed September 10, 2014 and
January 29, 2015 Resolutions of the Commission on
Elections in Case No. EAC [AEL] 11-2014 are hereby
REVERSED and SET ASIDE. Accordingly, the February
17, 2014 Order of the Regional Trial Court, Branch 5 in
Balanga, Bataan, dismissing Petitioner Jose Alejandre
Payumo III’s election protest for being barred by the
statute of limitations is hereby REINSTATED.
SO ORDERED.
29
Federico v. Commission on Elections, G.R. No. 166912,
January 22, 2013, 689 SCRA 134, 154-156.
30
"when Batangas Governor Armando Sanchez died on
April 27, 2010, Edna withdrew her candidacy as mayor
and substituted her late husband as gubernatorial
candidate for the province on April 29, 2010. The party
actually had the option to substitute another candidate for
Governor aside from Edna. By fielding Edna as their
substitute candidate for Governor, the party knew that she
had to withdraw her candidacy for Mayor. Considering
that the deadline for substitution in case of withdrawal had
already lapsed. No person could substitute her as
mayoralty candidate. The sudden death of then Governor
Armando Sanchez and the substitution by his widow in
the gubernatorial race could not justify a belated
substitution in the mayoralty race."
EN BANC
[G.R. No. L-12088. December 23, 1959.]
THE PEOPLE OF THE PHILIPPINES, Plaintiff-
Appellee, v. MORO SUMAGUINA
MACARANDANG, Defendant-Appellant.
Valerio V. Rovira for Appellant.
Assistant Solicitor General Guillermo E. Torres and
Assistant Solicitor General Florencio Villamor
for Appellee.
SYLLABUS
1. CRIMINAL LAW; ILLEGAL POSSESSION OF
FIREARMS; SECRET AGENTS; EXEMPTION
FROM FIREARM LICENSE OR PERMIT. —
Section 879 of the Revised Administrative Code
provides, as shown at least by the subject matter
thereof, that "peace officers" are exempted from the
requirements relating to the issuance of license to
possess firearms. The appointment of the accused as
secret agent to assist in the maintenance of peace and
order campaigns and detection of crimes, sufficiently
put him within the category of a "peace officer"
equivalent even to a member of the municipal police
expressly covered by section 879.
DECISION
PARAS, C.J. :
Moro Sumaguina Macarandang was accused and, after
trial, convicted of the crime of illegal possession of
firearms in the Court of First Instance of Lanao under the
following information:
"That on or about June 8, 1954, in the Municipality of
Marantao, Province of Lanao, Republic of the Philippines
and within the jurisdiction of this Honorable Court, the
above-named accused, did then and there, willfully,
unlawfully and feloniously keep and have in his custody
and control one Riot Gun, Winchester, 12 GA. SN-
942131 and (8) rounds of ammunitions, without first
having obtained the proper license or permit therefor from
competent authority."cralaw virtua1aw library
In the present appeal the accused, admitting the ownership
and possession of the firearm and ammunitions in
question, invokes as his legal excuse or authority therefor,
the appointment issued him by Governor Dimakuta as
secret agent on October 1, 1953, which reads as follows:
"TO WHOM IT MAY CONCERN:
"For having shown good faith by previously surrendering
to this Office a firearm, Datu Sumaguina Macarandang of
Kamalig, Marantao, Lanao, has been appointed SECRET
AGENT of this Office without compensation, to assist in
the maintenance of peace and order campaigns and
detection of crimes. Accordingly, he is hereby authorized
to hold and carry in his possession one (1) Riot
Winchester Shotgun, 12 GA. Serial No. 942131 with
twenty (20) rounds of ammunitions for the successful
execution of his hazardous missions.
"Datu Sumaguina Macarandang shall personally report to
me from time to time all activities and whereabouts of
lawless and wanted elements roaming in the Municipal
District of Marantao, as well as all matters affecting
tranquility therein existing."cralaw virtua1aw library
It may be true that, as held by the trial court, the Governor
has no authority to issue any firearm license or permit; but
section 879 of the Revised Administrative Code provides,
as shown at least by the subject matter thereof, that "peace
officers" are exempted from the requirements relating to
the issuance of license to possess firearms. The
appointment of the accused as secret agent to assist in the
maintenance of peace and order campaigns and detection
of crimes, sufficiently put him within the category of a
"peace officer" equivalent even to a member of the
municipal police expressly covered by section 879.
Wherefore, the decision appealed from is reversed and the
accused acquitted, with costs de oficio. So ordered.
Bengzon, Padilla, Montemayor, Bautista Angelo,
Labrador and Gutierrez David, JJ., concur.
EN BANC
[G.R. No. L-22301. August 30, 1967.]
THE PEOPLE OF THE PHILIPPINES, Plaintiff-
Appellee, v. MARIO MAPA Y
MAPULONG, Defendant-Appellant.
Francisco P. Cabigao for defendant and Appellant.
Solicitor General Arturo A. Alafriz, Asst. Solicitor
General F .R. Rosete and Solicitor O. C . Hernandez
for plaintiff and appellee.
SYLLABUS
1. STATUTORY CONSTRUCTION; DUTY OF
COURTS TO APPLY THE LAW; WHEN A LAW
SHOULD BE CONSTRUED AND INTERPRETED.
— The first and fundamental duty of courts is to apply the
law. Construction and interpretation come only after it has
been demonstrated that application is impossible or
inadequate without them.
2. ILLEGAL POSSESSION OF FIREARMS;
LICENSE REQUIREMENT; SECRET AGENT NOT
EXEMPT; CASE AT BAR. — As secret agent is not
included in the enumeration in Section 897 of the Revised
Administrative Code of persons who are not prohibited in
Section 878, Revised Administrative Code, as amended
by Republic Act No. 4, from possessing "any firearm,
detached parts of firearms or ammunition therefor, or any
instrument or implement used or intended to be used in
the manufacture of firearms, parts of firearms, or
ammunition," appellant is not exempt from the
requirement of license.
3. DOCTRINE IN PEOPLE V. MACARANDANG
OVERRULED. — Reliance of the accused in the case at
bar on People v. Macarandang, 106 Phil. 713, where a
secret agent was acquitted on appeal on the assumption
that the appointment "of the accused as a secret agent to
assist in the maintenance of peace and order campaigns
and detection of crimes, sufficiently put him within the
category of a `peace officer’ equivalent even to a member
of the municipal police expressly covered by section 897,"
is misplaced. It is not within the power of the Supreme
Court to set aside the clear and explicit mandate of a
statutory provision.
DECISION
FERNANDO, J.:
The sole question in this appeal from a judgment of
conviction by the lower court is whether or not the
appointment to and the holding of the position of a secret
agent to the provincial governor would constitute a
sufficient defense to a prosecution for the crime of illegal
possession of firearm and ammunition. We hold that it
does not.
The accused in this case was indicted for the above
offense in an information dated August 14, 1962 reading
as follows: "The undersigned accuses MARIO MAPA Y
MAPULONG of a violation of Section 878 in connection
with Section 2692 of the Revised Administrative Code, as
amended by Commonwealth Act No. 56 and as further
amended by Republic Act No. 4, committed as follows:
That on or about the 13th day of August, 1962, in the City
of Manila, Philippines, the said accused did then and there
wilfully and unlawfully have in his possession and under
his custody and control one home-made revolver (Paltik),
Cal. 22, without serial number, with six (6) rounds of
ammunition, without first having secured the necessary
license or permit therefor from the corresponding
authorities. Contrary to law."cralaw virtua1aw library
When the case was called for hearing on September 3,
1963, the lower court at the outset asked the counsel for
the accused: "May counsel stipulate that the accused was
found in possession of the gun involved in this case, that
he has neither a permit or license to possess the same and
that we can submit the same on a question of law whether
or not an agent of the governor can hold a firearm without
a permit issued by the Philippine Constabulary." After
counsel sought from the fiscal an assurance that he would
not question the authenticity of his exhibits, the
understanding being that only a question of law would be
submitted for decision, he explicitly specified such
question to be "whether or not a secret agent is not
required to get a license for his firearm."cralaw virtua1aw
library
Upon the lower court stating that the fiscal should
examine the documents so that he could pass on their
authenticity, the fiscal asked the following question:
"Does the accused admit that this pistol cal. 22 revolver
with six rounds of ammunition mentioned in the
information was found in his possession on August 13,
1962, in the City of Manila without first having secured
the necessary license or permit thereof from the
correspondent authority?" The accused now the appellant,
answered categorically: "Yes, Your Honor." Upon which,
the lower court made a statement: "The accused admits,
Yes, and his counsel Atty. Cabigao also affirms that the
accused admits."cralaw virtua1aw library
Forthwith, the fiscal announced that he was "willing to
submit the same for decision." Counsel for the accused on
his part presented four (4) exhibits consisting of his
appointment ‘as secret agent of the Hon. Feliciano
Leviste, then Governor of Batangas, dated June 2, 1962;
1 another document likewise issued by Gov.
Leviste also addressed to the accused directing him to
proceed to Manila, Pasay and Quezon City on a
confidential mission;
2 the oath of office of the accused as such secret
agent;
3 a certificate dated March 11, 1963, to the effect
that the accused "is a secret agent" of Gov. Leviste.
4 Counsel for the accused then stated that with the
presentation of the above exhibits he was "willing to
submit the case on the question of whether or not a secret
agent duly appointed and qualified as such of the
provincial governor is exempt from the requirement of
having a license of firearm." The exhibits were admitted
and the parties were given time to file their respective
memoranda.
Thereafter on November 27, 1963, the lower court
rendered a decision convicting the accused "of the crime
of illegal possession of firearms and sentenced to an
indeterminate penalty of from one year and one day to two
years and to pay the costs. The firearm and ammunition
confiscated from him are forfeited in favor of the
Government."cralaw virtua1aw library
The only question being one of law, the appeal was taken
to this Court. The decision must be affirmed.
The law is explicit that except as thereafter specially
allowed, "it shall be unlawful for any person to . . . possess
any firearm, detached parts of firearms or ammunition
therefor, or any instrument or implement used or intended
to be used in the manufacture of firearms, parts of
firearms, or ammunition." 5 The next section provides
that "firearms and ammunition regularly and lawfully
issued to officers, soldiers, sailors, or marines [of the
Armed Forces of the Philippines, the Philippine
Constabulary, guards in the employment of the Bureau of
Prisons, municipal police, provincial governors,
lieutenant governors, provincial treasurers, municipal
treasurers, municipal mayors, and guards of provincial
prisoners and jails," are not covered" when such firearms
are in possession of such officials and public servants for
use in the performance of their official duties." 6
The law cannot be any clearer. No provision is made for
a secret agent. As such he is not exempt. Our task is
equally clear. The first and fundamental duty of courts is
to apply the law. "Construction and interpretation come
only after it has been demonstrated that application is
impossible or inadequate without them." 7 The conviction
of the accused must stand. It cannot be set aside. Accused
however would rely on People v. Macarandang, 8 where
a secret agent was acquitted on appeal on the assumption
that the appointment "of the accused as a secret agent to
assist in the maintenance of peace and order campaigns
and detection of crimes, sufficiently put him within the
category of a ‘peace officer’ equivalent even to a member
of the municipal police expressly covered by section 879."
Such reliance is misplaced. It is not within the power of
this Court to set aside the clear and explicit mandate of a
statutory provision. To the extent therefore that this
decision conflicts with what was held in People v.
Macarandang, it no longer speaks with authority.
Wherefore, the judgment appealed from is affirmed.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-22291 November 15, 1976
PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
JESUS SANTAYANA Y ESCUDERO, defendant-
appellant.
CONCEPCION, JR., J:
Accused, Jesus Santayana y Escudero, was found guilty
of the crime of illegal possesion of firearms and sentenced
to an indeterminate penalty of from one (1) year and one
(1) day to two (2) years and to pay the costs.
The essential facts are not in dispute.
On February 19, 1962, accused Jesus Santayana, was
appointed as "Special Agent" 1 by then Colonel Jose C.
Maristela, Chief of the CIS. On March 9, 1962, a
Memorandum Receipt 2 for equipment was issued in the
name of the accused regarding one pistol Melior SN-
122137 with one (1) mag and stock. Col. Maristela
likewise issued an undated certification 3 to the effect that
the accused was an accredited member of the CIS and the
pistol described in the said Memorandum Receipt was
given to him by virtue of his appointment as special agent
and that he was authorized to carry and possess the same
in the performance of his official duty and for his personal
protection. On October 29, 1962, the accused was found
in Plaza Miranda in possession of the above-described
pistol with four rounds of ammunition, cal. 25, without a
license to possess them. An investigation was conducted
and thereupon, a corresponding complaint was filed
against the accused. The case underwent trial after which
the accused was convicted of the crime charged with its
corresponding penalty. Hence, the case was appealed to
US and the accused assigned three errors allegedly
committed by the trial court in disposing of this case.
Of these assigned errors, the two main issued posed are
whether or not the present subject matter falls within the
exclusive jurisdiction of the municipal court pursuant to
Republic Act No. 2613; and whether or not the
appointment of the appellant as special agent of the CIS
which apparently authorizes him to carry and possess
firearms exempts him from securing a license or permit
corresponding thereto.
Resolving the issue of jurisdiction, there is no doubt that
under Section 87 of Republic Act No. 286, as amended by
Republic Act No. 2613, the justice over cases of illegal
possession of firearms. But equally the Court of First
Instance of Manila, which took cognizance of this case
had jurisdiction over the offense charged because under
Section 44 of Republic Act No. 296, Court of First
Instance have original jurisdiction "in all criminal cases in
which the penalty provided by law is imprisonment for
more than six (6) months, or a fine of more than two
hundred pesos (P200.00)"; and the offense charged in the
information is punishable by imprisonment for a period of
not less than one (1) year and one (1) day nor more than
five (5) years, or both such imprisonment and a fine of not
less than one thousand pesos (P1,000.00) or more than
five thousand pesos (P5,000.00).
From the foregoing, it is evident that the jurisdiction of
the Municipal Courts over Criminal Cases in which the
penalty provided by law is imprisonment for not more
than six (6) months or fine of not more than two hundred
(P200.00) pesos or both such imprisonment and fine is
exclusive and original to said courts. But considering that
the offense of illegal possession of firearms with which
the appellant was charged is penalized by imprisonment
for a period of not less than one (1) year and one (1) day
or more than five (5) years, or both such imprisonment
and a fine of not less than one thousand (P1,000.00) pesos
or more than five thousand (P5,000.00) pesos (Republic
Act No. 4), the offense, therefore, does not fall within the
exclusive original jurisdiction of the Municipal Court.
The Court of First Instance has concurrent jurisdiction
over the same.
As to the second issue to be resolved, there is no question
that appellant was appointed as CIS secret agent with the
authority to carry and possess firearms. 4 Indeed,
appellant was issued a firearm in the performance of his
official duties and for his personal protection. 5 It also
appears that appellant was informed by Col. Maristela that
it was not necessary for him to apply for a license or to
register the said firearm because it was government
property and therefore could not legally be registered or
licensed in appellant's name. 6 Capt. Adolfo M. Bringas
from whom appellant received the firearm also informed
the latter that no permit to carry the pistol was necessary
"because you are already appointed as CIS agent."
At the time of appellant's apprehension, the doctrine then
prevailing is enunciated in the case of People vs.
Macarandang 7 wherein We held that the appointment of
a civilian as "secret agent to assist in the maintenace of
peace and order campaigns and detection of crimes
sufficiently puts him within the category of a 'peace
officer' equivalent even to a member of the municipal
police expressly covered by Section 879." The case
of People vs. Mapa 8 revoked the doctrine in the
Macarandang case only on August 30, 1967. Under the
Macarandang rule therefore obtaining at the time of
appellant's appointment as secret agent, he incurred no
criminal liability for possession of the pistol in question.
Wherefore, and conformably with the
recommendation of the Solicitor General, the decision
appealed from is hereby reversed and appellant Jesus
Santayana y Escudero is hereby acquitted. The bond
for his provisional release is cancelled. Costs de oficio.
SO ORDERED.
You are hereby accredited as Special Agent without
regular compensation. This designation does not confer
upon you police powers and authority to make
investigations provided by Section 848 of the Revised
Administrative Code nor does it entitled you to (possess
and carry firearms or) take free rides in any public
conveyances. ..." (The parentheses are ours and the words
within were crossed out and initialed by Col. Jose C.
Maristela, Chief, CIS, who signed appellant's
appointment.)
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 123169 November 4, 1996
DANILO E. PARAS, petitioner,
vs.
COMMISSION ON ELECTIONS, respondent.
RESOLUTION
FRANCISCO, J.:
Petitioner Danilo E. Paras is the incumbent Punong
Barangay of Pula, Cabanatuan City who won during the
last regular barangay election in 1994.
A petition for his recall as Punong Barangay was filed by
the registered voters of the barangay. Acting on the
petition for recall, public respondent Commission on
Elections (COMELEC) resolved to approve the petition,
scheduled the petition signing on October 14, 1995, and
set the recall election on November 13, 1995.1 At least
29.30% of the registered voters signed the petition, well
above the 25% requirement provided by law.
The COMELEC, however, deferred the recall election in
view of petitioner's opposition. On December 6, 1995, the
COMELEC set anew the recall election, this time on
December 16, 1995. To prevent the holding of the recall
election, petitioner filed before the Regional Trial Court
of Cabanatuan City a petition for injunction, docketed as
SP Civil Action No. 2254-AF, with the trial court issuing
a temporary restraining order. After conducting a
summary hearing, the trial court lifted the restraining
order, dismissed the petition and required petitioner and
his counsel to explain why they should not be cited for
contempt for misrepresenting that the barangay recall
election was without COMELEC approval.2
In a resolution dated January 5, 1996, the COMELEC, for
the third time, re-scheduled the recall election an January
13, 1996; hence, the instant petition for certiorari with
urgent prayer for injunction. On January 12, 1996, the
Court issued a temporary restraining order and required
the Office of the Solicitor General, in behalf of public
respondent, to comment on the petition. In view of the
Office of the Solicitor General's manifestation
maintaining an opinion averse to that of the COMELEC,
the latter through its law department filed the required
comment. Petitioner thereafter filed a reply.3
Petitioner's argument is simple and to the point. Citing
Section 74 (b) of Republic Act No. 7160, otherwise
known as the Local Government Code, which states that
"no recall shall take place within one (1) year from the
date of the official's assumption to office or one (1) year
immediately preceding a regular local election",
petitioner insists that the scheduled January 13, 1996
recall election is now barred as the Sangguniang Kabataan
(SK) election was set by Republic Act No. 7808 on the
first Monday of May 1996, and every three years
thereafter. In support thereof, petitioner cites Associated
Labor Union v. Letrondo-Montejo, 237 SCRA 621, where
the Court considered the SK election as a regular local
election. Petitioner maintains that as the SK election is a
regular local election, hence no recall election can be had
for barely four months separate the SK election from the
recall election. We do not agree.
The subject provision of the Local Government Code
provides:
Sec. 74. Limitations on Recall. — (a) Any elective local
official may be the subject of a recall election only once
during his term of office for loss of confidence.
(b) No recall shall take place within one (1) year from the
date of the official's assumption to office or one (1) year
immediately preceding a regular local election.
[Emphasis added]
It is a rule in statutory construction that every part of
the statute must be interpreted with reference to the
context, i.e., that every part of the statute must be
considered together with the other parts, and kept
subservient to the general intent of the whole
enactment.4 The evident intent of Section 74 is to
subject an elective local official to recall election once
during his term of office. Paragraph (b) construed
together with paragraph (a) merely designates the period
when such elective local official may be subject of a recall
election, that is, during the second year of his term of
office. Thus, subscribing to petitioner's interpretation of
the phrase regular local election to include the SK
election will unduly circumscribe the novel provision of
the Local Government Code on recall, a mode of removal
of public officers by initiation of the people before the end
of his term. And if the SK election which is set by R.A
No. 7808 to be held every three years from May 1996
were to be deemed within the purview of the phrase
"regular local election", as erroneously insisted by
petitioner, then no recall election can be conducted
rendering inutile the recall provision of the Local
Government Code.
In the interpretation of a statute, the Court should
start with the assumption that the legislature intended
to enact an effective law, and the legislature is not
presumed to have done a vain thing in the enactment
of a statute.5 An interpretation should, if possible, be
avoided under which a statute or provision being
construed is defeated, or as otherwise expressed,
nullified, destroyed, emasculated, repealed, explained
away, or rendered insignificant, meaningless,
inoperative or nugatory.6
It is likewise a basic precept in statutory construction
that a statute should be interpreted in harmony with
the Constitution.7 Thus, the interpretation of Section
74 of the Local Government Code, specifically
paragraph (b) thereof, should not be in conflict with
the Constitutional mandate of Section 3 of Article X of
the Constitution to "enact a local government code
which shall provide for a more responsive and
accountable local government structure instituted
through a system of decentralization with effective
mechanism of recall, initiative, and referendum."
Moreover, petitioner's too literal interpretation of the law
leads to absurdity which we cannot countenance. Thus, in
a case, the Court made the following admonition:
We admonish against a too-literal reading of the law as
this is apt to constrict rather than fulfill its purpose and
defeat the intention of its authors. That intention is usually
found not in "the letter that killeth but in the spirit that
vivifieth". . .8
The spirit, rather than the letter of a law determines its
construction; hence, a statute, as in this case, must be read
according to its spirit and intent.
Finally, recall election is potentially disruptive of the
normal working of the local government unit
necessitating additional expenses, hence the prohibition
against the conduct of recall election one year
immediately preceding the regular local election. The
proscription is due to the proximity of the next regular
election for the office of the local elective official
concerned. The electorate could choose the official's
replacement in the said election who certainly has a longer
tenure in office than a successor elected through a recall
election. It would, therefore, be more in keeping with the
intent of the recall provision of the Code to
construe regular local election as one referring to an
election where the office held by the local elective official
sought to be recalled will be contested and be filled by the
electorate.
Nevertheless, recall at this time is no longer possible
because of the limitation stated under Section 74 (b) of the
Code considering that the next regular election involving
the barangay office concerned is barely seven (7) months
away, the same having been scheduled on May 1997. 9
ACCORDINGLY, the petition is hereby dismissed for
having become moot and academic. The temporary
restraining order issued by the Court on January 12, 1996,
enjoining the recall election should be as it is hereby made
permanent. SO ORDERED.
.
Separate Opinions
DAVIDE, JR., J., concurring:
I concur with Mr. Justice Ricardo J. Francisco in
his ponencia.
However, I wish to add another reason as to why the SK
election cannot be considered a "regular local election"
for purposes of recall under Section 74 of the Local
Government Code of 1991.
The term "regular local election" must be confined to
the regular election of elective local officials, as
distinguished from the regular election of national
officials. The elective national officials are the President,
Vice-President, Senators and Congressmen. The elective
local officials are Provincial Governors, Vice-Governors
of provinces, Mayors and Vice-Mayors of cities and
municipalities, Members of the Sanggunians of
provinces, cities and municipalities, punong
barangays and members of the sangguniang barangays,
and the elective regional officials of the Autonomous
Region of Muslim Mindanao. These are the only local
elective officials deemed recognized by
Section 2(2) of Article IX-C of the Constitution, which
provides:
Sec. 2. The Commission on Elections shall exercise the
following powers and functions:
(2) Exercise exclusive original jurisdiction over all
contests relating to the elections, returns, and
qualifications of all elective regional, provincial, and city
officials, and appellate jurisdiction over all contests
involving elective municipal officials decided by trial
courts of general jurisdiction, or involving elective
barangay officials decided by trial courts of limited
jurisdiction.
A regular election, whether national or local, can only
refer to an election participated in by those who possess
the right of suffrage, are not otherwise disqualified by
law, and who are registered voters. One of the
requirements for the exercise of suffrage under Section 1,
Article V of the Constitution is that the person must be at
least 18 years of age, and one requisite before he can vote
is that he be a registered voter pursuant to the rules on
registration prescribed in the Omnibus Election Code
(Section 113-118).
Under the law, the SK includes the youth with ages
ranging from 15 to 21 (Sec. 424, Local Government Code
of 1991). Accordingly, they include many who are not
qualified to vote in a regular election, viz., those from ages
15 to less than 18. In no manner then may SK elections be
considered a regular election (whether national or local).
Indeed, the Sangguniang Kabataan is nothing more than
a youth organization, and although fully recognized in the
Local Government Code and vested with certain powers
and functions, its elective officials have not attained the
status of local elective officials. So, in Mercado vs. Board
of Election Supervisors (243 SCRA 422 [1995]), this
Court ruled that although the SK Chairman is an ex-
officio member of the sangguniang barangay — an
elective body — that fact does not make him "an
elective barangay official," since the law specifically
provides who comprise the elective officials of
the sangguniang barangay, viz., the punong
barangay and the seven (7) regular sangguniang
barangay members elected at large by those qualified to
exercise the right of suffrage under Article V of the
Constitution, who are likewise registered voters of
the barangay. This shows further that the SK election is
not a regular local election for purposes of recall under
Section 74 of the Local Government Code.
EN BANC
[G.R. No. L-28771. March 31, 1971.]
CORNELIA MATABUENA, Plaintiff-Appellant, v.
PETRONILA CERVANTES, Defendant-Appellee.
Alegre, Roces, Salazar & Sañez, for Plaintiff-
Appellant. Fernando Gerona, Jr., for Defendant-
Appellee.
SYLLABUS
1. CIVIL LAW; PROPERTY RELATIONS BETWEEN
HUSBAND AND WIFE; DONATIONS BY REASON
OF MARRIAGE; PROHIBITION AGAINST
DONATION BETWEEN SPOUSES DURING
MARRIAGE; APPLICABLE TO COMMON LAW
RELATIONSHIP. — While Art. 133 of the Civil Code
considers as void a "donation between the spouses during
the marriage", policy considerations of the most exigent
character as well as the dictates of morality require that
the same prohibition should apply to a common-law
relationship. A 1954 Court of Appeals decision
Buenaventura v. Bautista, (50 O.G. 3679) interpreting a
similar provision of the old Civil Code speaks
unequivocally. If the policy of the law is, in the language
of the opinion of the then Justice J.B.L. Reyes of that
Court, "to prohibit donations in favor of the other consort
and his descendants because of fear of undue and
improper pressure and influence upon the donor, a
prejudice deeply rooted in our ancient law; ‘porque no se
engañen despojandose el uno al otro por amor que han de
consuno,’ [according to] the Partidas (Part. IV, Tit. Xl,
LAW IV), reiterating the rationale ‘Ne mutuato amore
invicem spoliarentur’ of the Pandects (Bk 24, Tit. I, De
donat, inter virum et uxorem); then there is every reason
to apply the same prohibitive policy to persons living
together as husband and wife without benefit of nuptials.
For it is not to be doubted that assent to such irregular
connection for thirty years bespeaks greater influence of
one party over the other, so that the danger that the law
seeks to avoid is correspondingly increased. Moreover, as
already pointed out by Ulpian (in his lib. 32 ad Sabinum,
fr. 1), it would not be just that such donations should
subsist lest the condition of those who incurred guilt
should turn out to be better. So long as marriage remains
the cornerstone of our family law, reason and morality
alike demand that the disabilities attached to marriage
should likewise attach to concubinage.
2. ID.; SUCCESSION; INTESTATE SUCCESSION;
SURVIVING SPOUSE; RULE WHERE A SISTER
SURVIVES WITH THE WIDOW. — The lack of
validity of the donation made b~ the deceased to
defendant Petronila Cervantes does not necessarily result
in plaintiff having exclusive right to the disputed property.
Prior to the death of Felix Matabuena, the relationship
between him and the defendant was legitimated by their
marriage on March 28. 1962. She is therefore his widow.
As provided in the Civil Code, she is entitled to one-half
of the inheritance and the plaintiff, as the surviving sister
to the other half.
DECISION
FERNANDO, J.:
A question of first impression is before this Court in this
litigation. We are called upon to decide whether the ban
on a donation between the spouses during a marriage
applies to a common-law relationship. 1 The plaintiff,
now appellant Cornelia Matabuena, a sister to the
deceased Felix Matabuena, maintains that a donation
made while he was living maritally without benefit of
marriage to defendant, now appellee Petronila Cervantes,
was void. Defendant would uphold its validity. The lower
court, after noting that it was made at a time before
defendant was married to the donor, sustained the latter’s
stand. Hence this appeal. The question, as noted, is novel
in character, this Court not having had as yet the
opportunity of ruling on it. A 1954 decision of the Court
of Appeals, Buenaventura v. Bautista, 2 by the then
Justice J. B. L. Reyes, who was appointed to this Court
later that year, is indicative of the appropriate response
that should be given. The conclusion reached therein is
that a donation between common-law spouses falls within
the prohibition and is "null and void as contrary to public
policy." 3 Such a view merits fully the acceptance of this
Court. The decision must be reversed.
In the decision of November 23, 1965, the lower court,
after stating that in plaintiff’s complaint alleging absolute
ownership of the parcel of land in question, she
specifically raised the question that the donation made by
Felix Matabuena to defendant Petronila Cervantes was
null and void under the aforesaid article of the Civil Code
and that defendant on the other hand did assert ownership
precisely because such a donation was made in 1956 and
her marriage to the deceased did not take place until 1962,
noted that when the case was called for trial on November
19, 1965, there was stipulation of facts which it quoted. 4
Thus:
"The plaintiff and the defendant assisted by their
respective counsels, jointly agree and stipulate:
(1) That the deceased Felix Matabuena owned the
property in question;
(2) That said Felix Matabuena executed a Deed of
Donation inter vivos in favor of Defendant, Petronila
Cervantes over the parcel of land in question on February
20, 1956, which same donation was accepted by
defendant;
(3) That the donation of the land to the defendant
which took effect immediately was made during the
common law relationship as husband and wife between
the defendant-done and the now deceased donor and later
said donor and done were married on March 28, 1962;
(4) That the deceased Felix Matabuena died
intestate on September 13, 1962;
(5) That the plaintiff claims the property by reason of
being the only sister and nearest collateral relative of the
deceased by virtue of an affidavit of self-adjudication
executed by her in 1962 and had the land declared in her
name and paid the estate and inheritance taxes thereon’"
The judgment of the lower court on the above facts was
adverse to plaintiff. It reasoned out thus: "A donation
under the terms of Article 133 of the Civil Code is void if
made between the spouses during the marriage. When the
donation was made by Felix Matabuena in favor of the
defendant on February 20, 1956, Petronila Cervantes and
Felix Matabuena were not yet married. At that time, they
were not spouses.
They became spouses only when they married on March
28, 1962, six years after the deed of donation had been
executed."
We reach a different conclusion. While Art. 133 of the
Civil Code considers as void a "donation between the
spouses during the marriage," policy considerations of the
most exigent character as well as the dictates of morality
require that the same prohibition should apply to a
common-law relationship. We reverse.
1. As announced at the outset of this opinion, a 1954 Court
of Appeals decision, Buenaventura v. Bautista, 7
interpreting a similar provision of the old Civil Code 8
speaks unequivocally.
If the policy of the law is, in the language of the
opinion of the then Justice J.B.L. Reyes of that Court, "to
prohibit donations in favor of the other consort and his
descendants because of fear of undue and improper
pressure and influence upon the donor, a prejudice deeply
rooted in our ancient law; ‘porque no se engañen
despojandose el uno al otro por amor que han de consuno
[according to] the Partidas (Part IV, Tit. XI, LAW IV),
reiterating the rationale ‘Ne mutuato amore invicem
spoliarentur’ of the Pandects (Bk. 24, Tit. 1, De donat,
inter virum et uxorem); then there is every reason to apply
the same prohibitive policy to persons living together as
husband and wife without the benefit of nuptials. For it is
not to be doubted that assent to such irregular connection
for thirty years bespeaks greater influence of one party
over the other, so that the danger that the law seeks to
avoid is correspondingly increased. Moreover, as already
pointed out by Ulpian (in his lib. 32 ad Sabinum, fr. 1),
‘it would not be just that such donations should subsist,
lest the condition of those who incurred guilt should turn
out to be better.’ So long as marriage remains the
cornerstone of our family law, reason and morality alike
demand that the disabilities attached to marriage should
likewise attach to concubinage."
2. It is hardly necessary to add that even in the absence of
the above pronouncement, any other conclusion cannot
stand the test of scrutiny. It would be to indict the framers
of the Civil Code for a failure to apply a laudable rule to
a situation which in its essentials cannot be distinguished.
Moreover, if it is at all to be differentiated, the policy of
the law which embodies a deeply-rooted notion of what is
just and what is right would be nullified if such irregular
relationship instead of being visited with disabilities
would be attended with benefits. Certainly a legal norm
should not be susceptible to such a reproach. If there is
ever any occasion where the principle of statutory
construction that what is within the spirit of the law is as
much a part of it as what is written, this is it. Otherwise
the basic purpose discernible in such codal provision
would not be attained. Whatever omission may be
apparent in an interpretation purely literal of the language
used must be remedied by an adherence to its avowed
objective. In the language of Justice Pablo: "El espiritu
que informa la ley debe ser la luz que ha de guiar a los
tribunales en la aplicación de sus disposiciones.’’
3. The lack of validity of the donation made by the
deceased to defendant Petronila Cervantes does not
necessarily result in plaintiff having exclusive right to the
disputed property. Prior to the death of Felix Matabuena,
the relationship between him and the defendant was
legitimated by their marriage on March 28, 1962. She is
therefore his widow. As provided for in the Civil Code,
she is entitled to one-half of the inheritance and the
plaintiff, as the surviving sister, to the other half. 11
WHEREFORE, the lower court decision of November
23, 1965 dismissing the complaint with costs is reversed.
The questioned donation is declared void, with the rights
of plaintiff and defendant as pro indiviso heirs to the
property in question recognized. The case is remanded to
the lower court for its appropriate disposition in
accordance with the above opinion. Without
pronouncement as to costs.
Teehankee, J, took no part.
Endnotes
1. Art 133 of the Civil Code provides: "Every donation
between the spouses during the marriage shall be void.
This prohibition does not apply when the donation takes
effect after the death of the donor. Neither does this
prohibition apply to moderate gifts which the spouses
may give each other on the occasion of any family
rejoicing."cralaw virtua1aw library
8. Art. 1334 of the former Civil Code was similarly
worded: "All donations between the spouses made during
the marriage shall be void."cralaw virtua1aw library
9. Buenaventura v. Bautista, 50 O.G. 3679, 3686 (1954).
10. The excerpt from Yellow Taxi and Pasay Trans.
Workers Union v. Manila Yellow Taxicab Co., 80 Phil.
833, 838 (1948) reads in full: "Esta interpretación de la
ley es insostenible. El espiritu que informa la ley debe ser
la luz que ha de guiar a los tribunales en la aplicación de
sus dispociones. No deben atenerse a la letra de la ley
cuando la interpretación literal se separa de la intención
de la legislatura especialmente cuando lleva a
conclusiones incompatibles con objeto manifesto de la
ley. Cuando hay conflicto entre la interpretación literal y
la interpretación fundada en el proposito de la ley, la
última debe prevalecer." Cf. Tañada v. Cuenco, 103 Phil,
1051 (1957); Hidalgo v. Hidalgo, L-25326-27, May 29,
1970, 33 SCRA 105; Casela v. Court of Appeals, L-
26754, Oct. 16, 1970, 35 SCRA 279.
11. According to Art. 1001 of the Civil Code: "Should
brothers and sisters or their children survive with the
widow or widower, the latter shall be entitled to one-half
of the inheritance and the brothers and sisters or their
children the other half. (953, 837a)."
FIRST DIVISION
[G.R. No. L-8639. March 23, 1956.]
In the Matter of the Adoption of the Minors Pablo
Vasquez Ernesto Vasquez, Maria Lourdes Vasquez
and Elizabeth Prasnik. LEOPOLDO
PRASNIK, Petitioner-Appellee, vs. REPUBLIC OF
THE PHILIPPINES, Oppositor-Appellant.
DECISION
BAUTISTA ANGELO, J.:
Leopoldo Prasnik filed before the Court of First Instance
of Rizal a petition seeking to adopt Pablo Vasquez,
Ernesto Vasquez, Maria Lourdes Vasquez and Elizabeth
Prasnik who are the minor children of Paz Vasquez. He
claims that they are also his children but without the
benefit of marriage and he desires to adopt them to
promote their best interest and well-being. Since at the
hearing of the petition Petitioner acknowledged that they
are his natural children, the Solicitor General opposed the
petition on the plea that he could not legally adopt them
for the reason that Article 338 of the new Civil Code
which allows a natural child to be adopted by his natural
father refers only to a child who has not been
acknowledged as natural child. At first the court upheld
the opposition but, on a motion for reconsideration, the
court reconsidered its decision and granted the petition.
Hence this appeal.
Leopoldo Prasnik was formerly married to one Catherine
Prasnik but their marriage was dissolved by virtue of a
decree of divorce issued on December 12, 1947 by the
Circuit Court of Miami, Dade Country, Florida, U.S.A.
Thereafter, he and Paz Vasquez lived together as husband
and wife without the benefit of marriage and out of this
relation four children were born who are the minors he is
now seeking to adopt. He claims that it is his intention to
marry Paz Vasquez as soon as he is granted Philippine
citizenship for which he has already applied and in the
meantime he wants to adopt them in order that no one of
his relatives abroad could share in his inheritance. He
averred that he had no child with his former wife and
acknowledged said minors as his natural children.
Article 338 of the new Civil Code provides that a
natural child may be adopted by his natural father or
mother. The Solicitor General interprets this provision in
the sense that in order that a natural child may be adopted
by his natural father or mother there should not mediate
between them an acknowledgment of the status of natural
child by the father or mother as otherwise the adoption
would be repugnant to Article 335 of the same Code
which denies adoption to one who has an acknowledged
natural child. And since Petitioner has expressly admitted
in open court that the minors subject of this proceeding
are his natural children, he is therefore disqualified to
adopt under the law.
We do not agree to this interpretation. Apparently, Article
338 above adverted to merely refers to the adoption of a
natural child and not to one who has already been
recognized, but there is nothing therein which would
prohibit the adoption of an acknowledged natural child
even if the law does not expressly say so. The reason for
the silence of the law is obvious. That law evidently
intends to allow adoption whether the child be recognized
or not. If the intention were to allow adoption only to
unrecognized children, as contended, then the provision
of Article 338 would be of no useful purpose because such
children could have been validly adopted even without it.
And we say so because a natural child not recognized has
no right whatever 1 and being considered legally a total
stranger to his parents, he may be adopted under Article
337. The same cannot be said with regard to an
acknowledged natural child because, his filiation having
already been established, his adoption cannot be made
under the general principles governing adoption (2
Manresa 5th ed., 80). There is therefore need of an express
provision allowing the adoption of an acknowledged
natural child as an exception to the rule and that is what is
contemplated in the article we are considering.
The Solicitor General, in his opposition to the petition,
invokes Article 335 of the new Civil Code which provides
that a person who has an acknowledged natural child
cannot adopt and considering that Petitioner has
acknowledged the minors in question as his children, he
contends that he is disqualified from adopting them under
that article. We believe that the Solicitor General has not
made a correct interpretation of that article for he is
confusing the children of the person adopting with the
minors to be adopted. A cursory reading of said article
would reveal that the prohibition merely refers to the
adoption of a minor by a person who has already an
acknowledged natural child and it does not refer to the
adoption of his own children even if he has acknowledged
them as his natural children.
It may be contended that the adoption of an acknowledged
natural child is unnecessary because there already exists
between the father and the child the relation of paternity
and filiation which is precisely the purpose which
adoption seeks to accomplish through legal fiction. But it
should be borne in mind that the rights of an
acknowledged natural child are much less than those of a
legitimate child and it is indeed to the great advantage of
the latter if he be given, even though legal fiction, a
legitimate status. And this view is in keeping with the
modern trend of adoption statutes which have been
adopted precisely to encourage adoption (In re
Havagord’s Estate, 34 S. D. 131, 147 N. W. 378). Under
this modern trend, adoption is deemed not merely an act
to establish the relation of paternity and filiation but one
which may give the child a legitimate status. It is in this
sense that adoption is now defined as “a juridical act
which creates between two persons a relationship similar
to that which results from legitimate paternity and
filiation” (4 Valverde, 473).
The cases cited by the Solicitor General are not in point.
2 In said cases the Petitioners had legitimate children of
their own and so their petitions were denied. They are
indeed disqualified from adopting under the law. In the
present case however, Petitioner does not have any
legitimate children and his main desire is to give a
legitimate status to his four natural children. This attitude,
far from being opposed, should be encouraged. This is in
keeping with the modern trend of the law concerning
adoption (In re Havagord’s Estate, supra).
The decision appealed from is affirmed, without
pronouncement as to costs.
Paras, C.J., Bengzon, Padilla, Reyes, A., Labrador,
Concepcion, Reyes, J. B. L. and Endencia, JJ., concur.
EN BANC
[G.R. No. 2122. September 13, 1905. ]
PEDRO T. ACOSTA, Plaintiff-Appellant, v. DAVID
FLOR, Defendant-Appellee.
W .A. Kincaid, for Appellant.

Hartigan, Marple, Solignac & Gutierrez,
for Appellee.
SYLLABUS
1. ACTION TO REMOVE A PUBLIC OFFICER. — A
private person can not maintain an action for the removal
of a public officer unless he alleges that he is entitled to
the same office. (Secs. 197 to 216, Code of Civil
Procedure.)
2. ID — When such an allegation is made but not proven,
the court is justified in dismissing the case without
inquiring into the right of the defendant to retain the
office.
DECISION
MAPA, J. :
It is alleged in the complaint that at the municipal
elections held on the 1st day of December, 1903, in the
town of Laoag, Province of Ilocos Norte, the plaintiff and
the defendant were candidates for the office of municipal
president of the said town; that as a result of the said
election the plaintiff was elected to the said office by a
majority of 100 votes, and that notwithstanding this fact
the defendant has usurped said office and unlawfully held
the same since the plaintiff was the person entitled to the
exercise of said office.
The complaint further sets out other acts in regard to
illigalities alleged to have been committed during the
election. The prayer of the complaint is to the effect that
judgment be entered against the defendant, excluding him
from the exercise of such office and that the plaintiff be
declared to be entitled to the same and that he be given
possession thereof, and for such other and further relief as
the facts in the case would warrant in favor of the plaintiff.
The case having proceeded to trial, the plaintiff
introduced various witnesses, all and each of whom
testified to facts which, if true, would more or less gravely
affect the legality of the election.
Not a single witness, however, confirmed the allegations
contained in the complaint, to the effect that the plaintiff
had obtained a majority of 100 votes at the said election,
nor can it be inferred from the evidence introduced by the
plaintiff that he, as a result of the said election, or for any
other reason, was entitled to the office of municipal
president of Laoag, now held by the defendant.
In view of the evidence introduced at the trial by the
plaintiff, and before the defendant had presented his, the
court, on the latter’s motion, acquitted the defendant,
imposing the costs upon the plaintiff. The court based its
action upon the following grounds:
(1) That the plaintiff could not maintain the action
brought by him because he had failed to establish his
alleged right to the exercise of the office in question; and
(2) that there was no necessity to inquire into the
right of the defendant to hold the said office for the reason
that this question had already been determined by the
provincial board after a consideration of the various
protests presented to it in regard to irregularities
committed during the last election held at Laoag for the
office of municipal president and other municipal
officials, and for the further reason that the presumption
is that a person holding a public office was duly appointed
or elected thereto.
The plaintiff excepted to this ruling of the court, moved
for a new trial, and thereafter brought the case to this court
for review. An examination of the evidence of record
supports the finding of the court below to the effect that
the plaintiff has failed to prove in any way, shape, or form
that he was entitled to the office in question, as alleged by
him in his complaint. There is no dispute upon this
question. The appellant, himself, when the motion of the
defendant to dismiss was argued, and from the decision of
which he appealed to this court, clearly admitted that he
had failed to establish his right to the exercise of the office
in question. (Page 17 of the bill of exceptions.) And on
page 52 of his brief, he also assumes that he had been
unable to establish his alleged right to the office in
question.
The question that we have to decide, therefore, is whether,
notwithstanding what has already been said, and
notwithstanding the fact that the plaintiff has failed to
show that he had any right to the office of municipal
president of Laoag, he can maintain an action such as this
for the purpose of excluding the defendant from the
exercise of said office on account of illegalities alleged to
have been committed in the elections.
The right to maintain such an action is especially and
expressly governed by the provisions of sections 197 to
216 of the Code of Civil Procedure.
The code, after enumerating in sections 197 and 198 the
cases in which such an action may be brought and the
persons against whom they may be brought, goes on to
determine with careful distinction those who have the
right to maintain such action.
Section 199 provides that "the Attorney-General of the
Islands, or the fiscal of any province, when directed by the
Chief Executive of the Islands, must commence any such
action; and when upon complaint or otherwise he has
good reason to believe that any case specified in the two
preceding sections can be established by proof, he must
commence such action."
Section 200 provides that "the Attorney-General of the
Islands or the fiscal for a province, may, at his own
instance, bring such an action, or he may, on leave of the
court in which the action is to be commenced, or a judge
thereof in vacation, bring the action upon the relation of
and at the request of another person; but, if the action is
brought at the request of and upon the relation of another
person, the officer bringing it may require an indemnity
for expenses and costs of the action, to be given to him by
the party at whose request and upon whose relation the
same is brought, before commencing it."
Finally, section 201, under the heading "An individual
may commence such action," provides as follows: "A
person claiming to be entitled to a public office,
unlawfully held and exercised by another, may bring an
action therefor."cralaw virtua1aw library
If the legislator had intended to give to all citizens alike
the right to maintain an action for usurpation of public
office, he would have plainly said so in order to avoid
doubt on a subject of such far-reaching importance.
A simple provision would have sufficed for this purpose.
Far from it, the legislator has on the contrary especially
and specifically provided in sections 199, 200, and 201
who must and who may bring such actions; and it is very
clear that it was his intention to give such right to those
expressly mentioned in the above-cited sections and to no
other, following the well- known rule of law "inclusio
unius est exclusio alterius." It has been noticed that the
above referred to three sections only mention the
Attorney- General, the provincial fiscal, and the
individual claiming to be entitled to the office unlawfully
held and exercised by another. It is to be inferred from this
last provision that the individual who does not claim to
have such a right cannot bring an action for usurpation of
public office.
This inference is supported by the provisions of section
202 which says that when the action is against a person
for usurping an office, the complaint shall set fort the
name of the person who claims to be entitled thereto, with
an averment of his right to the same. Why should this be
required as an essential requisite if it were not necessary
that the individual bringing the action should claim the
right to exercise the office in question?
Our opinion is that the law has reserved to the Attorney-
General and to the provincial fiscals, as the case may be,
the right to bring such action, and in but one case does the
law authorize an individual to bring such an action, to wit,
when that person claims to have the right to the exercise
of the office unlawfully held and exercised by another.
Aside from this case an individual cannot maintain such
action. The law, in our opinion, does not allow of any
other construction.
If an individual, whether or not he has the right to the
office alleged to have been usurped by another were to be
permitted to maintain such an action, it would serve no
purpose and section 201 would be evidently superfluous.
It would be a useless and redundant provision of the code.
As a consequence of what has been said no individual can
bring a civil action relating to the usurpation of a public
office without averring that he has a right to the same; and
at any stage of the proceedings, if it be shown that such
individual has no such right, the action may be dismissed
because there is no legal ground upon which it may
proceed when the fundamental basis of such action is
destroyed as is the case here. This is what actually
happened in this case.
After all of the evidence presented by the plaintiff had
been introduced, it was found, and he himself so admitted
that he had failed to establish in any way, shape, or form
that he had any right to the office of municipal president
of the town of Laoag as he had alleged in his complaint
without foundation for such allegation. Consequently the
judge very properly acquitted the defendant of the
complaint.
The appellant contends that the court below should have
first inquired into the right of the defendant to the office
in question and that no other question can be raised or
investigated until this point has been determined, and
alleges that the question of the right of the plaintiff to the
said office does not arise until it has been determined that
the defendant is not entitled to the exercise of such office.
In support of his contention he relies upon the provisions
of section 202 of the Code of Civil Procedure.
This section provides as follows:
When the action is against a person for usurping
an office, the complaint shall set forth the name of the
person who claims to be entitled thereto, with an averment
of his right to the same; and that the defendant is
unlawfully in possession of the same; and judgment may
be rendered upon the right of the defendant, and also upon
the right of the person so averred to be entitled, or only
upon the right of the defendant, as justice requires."
From the words above italicized the appellant infers that
the court below should have first passed upon the right of
the defendant and afterwards upon the right of the
plaintiff. In our opinion this should be done at the same
time and in the same judgment. It is immaterial what
method the court may follow in the statement and
determination of the questions in the rendition of his
judgment because even though the court may pass upon
the right of the plaintiff first, and the right of the defendant
afterwards, or vice versa, this procedure would not vitiate
the judgment, provided the court does not fail to state
therein what the rights of the contending parties to the
office are. But all of this, of course, presupposes that the
action has been properly brought and duly prosecuted to
a judgment. This, at the same time, presupposes that the
plaintiff had a right to maintain his action upon the
evidence submitted by him at the trial. It is impossible to
prosecute a suit without a cause of action.
Therefore, whenever before judgment it is conclusively
proven that the plaintiff has no right to maintain the action
since he has not the essential conditions required by law
in order to bring and maintain such action, his complaint
should be dismissed and it becomes unnecessary to pass
upon the right of the defendant who has a perfect right to
the undisturbed possession of his office, unless the action
is brought by a person having a right to maintain the same
under the law.
It may be said that under section 202 the court may only
pass upon the right of the defendant when the justice of
the case so demands. This is true, but this only refers to
cases where the action is brought by the Attorney-
General o* by the provincial fiscal, as the case may be. In
such cases it is not necessary that there be a person
claiming to be entitled to the office alleged to have been
usurped, because although be no such person, as in the
case of a vacant office, for instance, the fiscal could and
even should bring such action against the person usurping
the office in accordance with the provisions of sections
200 and 199, respectively, as the case may be. The manner
in which judgment should be rendered according to
section 202 perfectly meets the various cases provided for
in the three preceding sections; and it becomes the duty of
the court to pass upon the rights of the defendant only
whenever it is not an essential requisite for the due
prosecution of the action that there be a person claiming
to be entitled to the office thus usurped, something which
only happens where the Attorney-General or the fiscal of
any province brings the action against the usurper.
As a result of the foregoing, we cannot here pass upon the
validity or nullity of the election of the defendant, for the
reason, among others which it is not necessary to state
here, that the defendant has no right to maintain such an
action as this.
The order of the court below appealed from, is hereby
affirmed. After the expiration of twenty days let judgment
be entered in accordance herewith and let the case be
remanded to the court from whence it came for further
proceedings in accordance with the law. So ordered.
Arellano, C.J., Torres, Johnson, and Carson, JJ., concur.
Willard, J., did not sit in this case.
SECOND DIVISION
G.R. No. 205090, October 17, 2016
GREENSTAR EXPRESS, INC. AND FRUTO L.
SAYSON, JR., Petitioners, v. UNIVERSAL ROBINA
CORPORATION AND NISSIN UNIVERSAL
ROBINA CORPORATION, Respondent.
DECISION
DEL CASTILLO, J.:
This Petition for Review on Certiorari1 seeks to set aside;
a) the September 26, 2012 Decision2 of the Court of
Appeals (CA) in CA-G.R. CV No, 96961 affirming the
April 4, 2011 Decision3 of the Regional Trial Court
(RTC) of San Pedro, Laguna, Branch 31 in Civil Case No.
SPL-0969; and b) the CA's December 28, 2012
Resolution4 denying herein petitioners' Motion for
Reconsideration.5chanrobleslaw
Factual Antecedents
Petitioner Greenstar Express, Inc. (Grepistar) is a
domestic corporation engaged in the business of public
transportation, while petitioner Fruto L. Sayson, Jr.
(Sayson) is one of its bus drivers,
Respondents Universal Robina Corporation (URC) and
Nissin Universal Robina Corporation (NURC) are
domestic corporations engaged in the food business.
NURC is a subsidiary of URC.
URC is the registered owner of a Mitsubishi L-300 van
with plate number WRN 403 (URC van).6chanrobleslaw
At about 6:50 a.m. on February 25, 2003, which was then
a declared national holiday,7 petitioner's bus, which was
then being driven toward the direction of Manila by
Sayson, collided head-on with the URC van, which was
then being driven Quezon province-bound by NURC's
Operations Manager, Renante Bicomong (Bicomong).
The incident occurred along Km. 76, Maharlika Highway,
Brgy. San Agustin, Alaminos, Laguna. Bicomong died on
the spot, while the colliding vehicles sustained
considerable damage.
On September 23, 2003, petitioners filed a
Complaint8 against NURC to recover damages sustained
during the collision, premised on negligence. The case
was docketed as Civil Case No. SPL-0969 and assigned
to Branch 31 of the RTC of San Pedro, Laguna, An
Amended Complaint9 was later filed, wherein URC was
impleaded as additional defendant.

URC and NURC filed their respective Answers,10 where
they particularly alleged and claimed lack of negligence
on their part and on the part of Bicomong.
After the issues were joined, trial proceeded. During trial,
only Sayson was presented by petitioners as eyewitness to
the collision.
Riding of the Regional Trial Court
On April 4, 2011, the RTC issued its Decision, which
decreed thus:
During the trial on the merits, plaintiffs11 presented five
witnesses namely Josephine Gadiaza, Miguel Galvan,
SPO3 Ernesto Marfori, Fruto Sayson and Lilia Morales.
Plaintiff Fruto Sayson testified that on that fateful day, he
was driving the plaintiff passenger bus from Lucena City
going to Manila at a speed of more or less 60 kilometers
per hour when he met a vehicular accident at Barangay
San Agustin, Alaminos, Laguna. He saw from afar an L-
300 UV coming from the shoulder going on the opposite
direction to Lucena City. Said vehicle was already near
his bus when it (UV) managed to return to ifs proper lane,
then hit and swerved his vehicle.- "He tried to prevent the
collision by swerving to the right but it was too late. As a
result, the left front portion of the bus was damaged while
the front portion of the L-300 UV was totally wrecked-
He and his conductor, one.Mendoza, managed to get but
of the bug by forcibly opening the automatic door which
was also damaged due to the impact After getting out of
the bus, he looked for the driver of the L300 UV but he
was informed by a bystander that he was thrown in a canal
arid already dead. For fear of possible reprisals from
bystanders as experienced by most drivers involved in an
accident, he boarded smother bug owned by bis employer.
Before he left, he indorsed the matter to hip conductor and
line inspector. Thereafter, he reported to their office at
San Pedro, Laguna. He executed a statement on the same
day x x x and submitted the same to their operations
department. He likewise testified that before the incident,
he was earning P700.00 to P900,00 a day on commission
basis and he drives 25 days in a month. However, after the
incident, he was not able to drive for almost two months.
On cross-examination, it was established that the incident
happened along the Maharlika Highway along Kilometer
72. There were no structures near the site of the incident,
The highway ha§ two lanes which can accommodate the
size of the bus about 3 meters wide and a. light vehicle.
He was bound for Manila and had about ten passengers.
He saw the L-300 UV on the shoulder of the opposite lane
about 250 meters away from, his bus while he was driving
[at] a speed of 60 kilometers per hour. He did not sense
any danger when he saw the vehicle from afar. He cannot
drive fast as there were five vehicles ahead of his bus.
When the L-300 UV managed to return to it? proper lane
coming from the shoulder, it was heading directly towards
his direction, at a distance of more or less five, meters
away from his bus, He noticed that the L-300 UV was
running at full speed as he saw dust clouds. "The point of
impact happened on his lane. He tried to swerve his bus
to prevent the impact but lie admitted that at his speed, it
was difficult for him to maneuver his vehicle
Investigator SPO3 Ernesto Marfori of the Alaminos
Police Station testified that at about 7:00 in the morning,
he received a report from the Barangay Chairman of a
vehicular accident that occurred at Brgy. §an Agustin,
Alaminos, Laguna. He proceeded to the site with SPO2
Rolando Alias. Upon arrival at the scene of the accident,
he attended to the victim, but found him dead inside the
L- 300 UV. He came to know later that he was Renante
Bicomong. He immediately called up his office and
requested that funeral services for the dead man. be
arranged. Thereafter, he photographed the damaged
vehicles (Exhibits "F" and sub-markings) and interviewed
some witnesses. He made a sketch depicting the damages
suffered by both vehicles (Exhibit "D-2"), the L-300 IV at
the front portion (Exhibit "D-4") while the bus at the left
side of its front portion (Exhibit "D-3"). Based on the
sketch he prepared, the impact happened almost at the
right lane which was the bus lane (Exhibit "D-6"). He
likewise noticed some debris also found at the bus lane.
He was able to interview the bus conductor and a fruit
store owner in [sic] the names of Apolinar Devilla and
Virgilio Adao, He did not see the driver of the bus at the
scene of the accident and he was told that he had left the
place. Based on, his investigation, the possible cause of
the accident was the swerving to the left lane [by] the
driver of the L-300 UV which resulted in me encroaching
of the bus' lane. He reduced bis findings into writing in a
Report dated February 28, 2003 (Exhibits "D" and sub-
markings).
On cross-examination, the witness admitted that he was
not present when the vehicles collided. The entries he
made in the blotter report were mainly based on the
accounts of the witnesses he was able to interview who
however did not give their written statements. When he
arrived at the scene of the accident, the L-300 UV was
already on the shoulder of the road and it was totally
wrecked. According to reports, the van spun around when
it was bit causing the metal scar found on the road.
On the other hand, the defendants12 presented three
witnesses: its employees Alexander Caoleng and John
Legaspi and deceased Renante Bicomong's widow, Gloria
Bicomgng, These witnesses were presented to prove that
deceased Bicomong was acting in his personal capacity
when the mishap happened on February 25, 2003 as that
day had been declared an official holiday and the L-300
UV he was driving had not been issued to him, among
others.
Alexander Caoleng, HR. Manager of defendant NURC,
testified that deceased Bicomong worked as the
Operations Manager of defendant NURC until his death
as evidenced by a Certificate of Employment dated
December 9, 2008 (Exhibit "I"), His last assignment was
in First Cavite Industrial Estate (FCEB). He died in a
vehicular accident in Alaminos, Laguna on February 25,
2003 which was declared a holiday by virtue of
Proclamation No. 331 (Exhibit "2"). Despite having been
issued his own service vehicle (Exhibits "3", "4" and "5"),
he used the L-300 UV which was not officially issued to
him but in the name of Florante Soro-Soro, defendant
NURC's Logistics Manager at that time (Exhibits "7" and
"B"). The said vehicle was used mainly to transport items
coming from their office at Pasig to Cavite and vice versa
(Exhibit "9").
John Legaspi, Project Manager of defendant NURC,
testified that he was first assigned in its Cavite Plant in
1999 with deceased Bicomaog as his immediate
supervisor being the Production Manager then. He last
saw him in the afternoon of February 24, 2003 at about
6:00 pm when they had a short chat He (Bicomong) was
then transferring his things from his executive vehicle
which was a Toyota Corolla to the L-300 UY which was
a company vehicle. He (Bicomong) shared that he would
go home to Quezon Province the following day (February
25) to give money to his daughter. He knew that his trip
to Quezon was not work-related as February 25, 2003 was
declared a holiday. Besides, there exists no plant owned
by defendant NURC in the provinces of Quezon, Laguna
or Bicol as attested to by the General Manager of
defendant NURC in a Certification to that effect (Exhibit
"11").
On cross-examination, he distinguished the use of an
executive vehicle assigned to an executive officer for his
personal use and the company vehicle which was
supposed to be for official use only.
Finally, Gloria Bicomong, widow of deceased Reynante
Bicomong testified that she knew that her husband was
going home to Calendaria (sic), Quezon on February 25,
2003 because he informed their daughter. He was on his
way home when he met a vehicular-accident in Alaminos.
Laguna which claimed his life. She was informed about
the accident involving her husband by a high school friend
who was also traveling to Quezon at that time, She filed a
criminal complaint at Alaminos, Laguna but it was
dismissed for reasons unknown to her. She likewise filed
a civil complaint for damages before the Regional Trial
Court of Lucena City docketed as Civil Case No. 2.103-
135.
On cross-examination, she narrated that aside from the
Toyota Corolla service of her husband, he would use the
L-300 UV whenever he had to bring bulky things home.
As far as she can recall, he used the L-300 UV about 5
times.
After an evaluation of the foregoing testimonies and
documentary evidence of the parties, the court had [sic]
arrived at the following findings and conclusions:
Plaintiff has no cause of action and cannot recover from
the defendants even assuming that the direct and
proximate cause of the accident was the negligence of the
defendant's employee Renato Bicomong.
Pursuant to Article 2184 of the New Civil Code, the
owner of a motor vehicle is solidarily liable with his driver
if at the time of the mishap, the owner was in the vehicle
and by the use of due diligence could have presented (sic)
the misfortune; if the owner is not in the motor vehicle,
the provision of Article 2180 is applicable. The
defendants being juridical persons, the first paragraph of
Article 2184 is obviously not applicable.
Under Article 2180, "employers shall be liable for the
damages caused by their employees and household
helpers acting within the scope of their assigned tasks,
even though the former are not engaged in any business
or industry. "In other words, for the employer to be liable
for the damages caused by his employee, the latter must
have caused the damage in the course of doing his
assigned tasks or in the-performance of his duties"
(Yambao vs. Zuñiga, G.R. No: 146173, December 11,
2003)
In this case, it is beyond cavil that the deceased Renante
Bicong [sic] was not in the performance of his duty on
that fateful day of February 25, 2003. In the first place that
day was a holiday; there was no work and it was not
shown that he was working as indeed his work assignment
is operations manager of the company's plant m, Cavite
while the accident happened while he was in Alaminos,
Laguna on his way home to Candelaria, Quezon.
Secondly, as an operations manager, he was issued an
executive car for. Ms own use, a Toyota Corolla vehicle
and he merely preferred to use the L-300 UV when going
home to his family in Quezon. Even assuming that the
company allowed or tolerated this, by itself, the tolerance
did not make, the employer liable in the absence of
showing that he was using the vehicle in the performance
of a duty or within the scope of his assigned tasks. But as
clearly relayed by defendant's witnesses, defendants have
no business or plant in Quezen.
The L-300 vehicle was for the hauling of items between
their Pasig and Cavite offices and was merely borrowed
by Bicomong in going to Candelaria, Quezon on that day.
The accident having occurred outside Remnte
Bicomong's assigned tasks, defendant employers cannot
be held liable to the plaintiffs, even assuming that it is the
fault of defendants' employee that was the direct and
proximate cause of their damages.
However, the question of whose fault or negligence was
the direct and proximate cause of the mishap is material
to the resolution of defendants' counterclaim.
The rule is that the burden of proof lies on him who claims
a fact (Federico Ledesina vs. NLRC, G.R. No. 175585,
October 19,2007). Therefore, to be able to recover in their
counterclaim, the defendants must prove by
preponderance of evidence that the direct and proximate
cause of their losses was the fault of the plaintiff-driver.
Defendants were not able to present any witness as to how
the mishap occurred Their witnesses were limited to
proving that Renante Bicomong was not in the
performance of his assigned task when the incident
happened.
A reading of their answer would reveal, that their
attribution of fault to the plaintiff-driver is based only on
the point of impact of the two vehicles. Thus:
'4.3 Based on the damage sustained by the passenger bus,
plaintiffs' claim that Renante Bicomong swerved on the
left lane and encroached on the path of the said bus
moments before the accident could not have been true.
Such claim would have resulted to a head-on collision
between the vehicle driven by Mr. Bicomong and the bus;
the latter would have sustained damage on its front side.
However, based on Annexes "B" and "C" of the
Complaint, the. said bus sustained damage on its left side.
Clearly, it was the passenger bus that swerved on the left
lane, which was being traversed by Renante Bicomong,
and while returning to the right lane, said bus hit the
vehicle being driven by Mr. Bicomong. Thus, explaining
the damage sustained by the said bus on its left side just
below the driver's seat.'
The foregoing however is a mere interpretation or
speculation and not supported by any account, either by
an eyewitness [or by] a explanation tracing the relative
positions of the two vehicles in relation to the road at the
time of impact and the movements of the two vehicles
after the impact. For this reason, it will be unfair to make
an interpretation of the events based alone on the point of
impact [on] the vehicles. The points of impact by
themselves cannot explain the positions of the vehicles on
the road.
Defendants Memorandum attributed the cause of the
mishap to the excessive speed of the bus. In their
Memorandum, the defendants content [sic] that if the
driver had seen the L-3G0 UV meters away in front of him
running along the shoulder and negotiating back to its
lane, the bus driver would have watched out and
slackened his speed. Considering the damage to both the
vehicles and the fact that the L-300,UV span [sic] and
w,as thrown 40 feet away from the point of impact and its
driver was thrown 14 feet away from his vehicle,
defendant argued that the bus could not be running at 60
kilometers only. But assuming the bus indeed was running
at high speed that alone does not mean that the negligence
of the driver was the direct and proximate cause, If it is
true that the L-300 UV ran from the right shoulder,
climbed up to the right lane but overshoot [sic] it and
occupied the bus' lane, the speed of the bus cannot be
considered the proximate and direct cause of the collision;
But as stated earlier, this were [sic] merely conjectures
and surmises of the defendants and not proven by
competent evidence.
All told, defendants were not able to prove by their own
evidence that the direct and proximate cause of the
collision was the fault of plaintiffs driver. Hence, they
cannot hold plaintiffs liable for the logs of their L-300
UV. As both parties failed to prove by their respective
evidence where the fault that occasioned their losses lie,
they must bear their respective losses.
Anent defendants' counterclaim for attorney's fees and
exemplary damages, there is no evidence to show that the
filing, of this suit was motivated [by] malice. It cannot be
denied that plaintiffs suffered damages. The court mainly,
dismissed the complaint for lack of cause of action as
Renante Bicomong was not performing his assigned tasks
at the time of the incident. Besides, to hold them liable to
defendants for attorney's fees and exemplary damages
simply because they failed to come up with sufficient
evidence will be tantamount to putting a price on one's
right to sue.
WHEREFORE, judgment is hereby rendered dismissing
the complaint as well as the counterclaim. No costs. SO
ORDERED.13
Ruling of the Court of Appeals
Petitioners filed an appeal before the CA, docketed as CA-
G.R. CV No. 96961. They argued that Bicomong's
negligence was the proximate cause of the collision, as the
van he was 4rjvmg swerved to the opposite lane and hit
the bus which was then traveling along its proper lane;
that Bicomong's act of occupying the bus's lane was
illegal and thus constituted a traffic violation; that
respondents are liable for damages as the registered owner
of the van and failing to exercise due diligence in the
selection and supervision of its employee, Bicomong,
Respondents, countered that the bus driven by Sayson was
running at high speed when the, collision occurred, thus
indicating that Sayson was in violation of traffic rules; and
that Say-son had the last clear chance to avert collision
but he failed to take the necessary precaution under the
circumstances, by reducing his speed and applying the
brakes on time to avoid collision.
On September 26, 2012, the CA rendered the assailed
Decision containing the following pronouncement:
The present case involving an action for damages based
on quasi-delict is governed by Articles 2176 and 2180 of
the New Civil Code, pertinent provisions of which read:
ART. 2176, Whoever by act or omission causes
damage to another, there being fault or negligence, is
obliged to pay for the damage done. Such fault or
negligence, if there is no pre-existing contractual
relation between the parties, is called a quasi-delict
and is governed by the provisions of this Chapter.
ART. 2180. The obligation imposed by Article 2176 is
demandable not only for one's own acts or omission
also for those of persons for whom one is responsible.
Employers shall be liable for the damages caused by their
employees and household helpers acting within the scope
of their assigned tasks even though the former are not
engaged in any business or industry.'
Under Article 2180 of the New Civil Code, employers
shall be held primarily and solidarily liable for damages
caused by their employees acting within the scope of their
assigned tasks. To hold the employer liable under this
provision, it must be shown that an employer-employee
relationship exists, and that the employee was acting
within the scope of his assigned task when the act
complained of was committed.
Records bear that the vehicular collision occurred on
February 25, 2003 which was declared by former
Executive Secretary Alberto G. Romulo, by order of
former President Gloria Macapagal-Arroyo, as a special
national holiday, per Proclamation No. 331 dated
February 19, 2003. Renante Bicomong had no work on
that day and at the time the accident occurred, he was on
his way home to Candelaria, Quezon. There was no
showing that on that day, Renante Bicomong was given
by defendants-appellees14 an assigned task, much less
instructed to go to Quezon. As testified to by Renante
Bicomong's widow Gloria Bicomong, Renante Bicomong
was on the road that day because he was going home to
Candelaria, Quezon. Thus, he was then carrying out a
personal purpose and not performing work for
defendants-appellees.
Apropos is Castilex Industrial Corp. vs. Vicente Vasquez,
Jr.,15 wherein the Supreme Court held that the mere fact
that an employee was using a service vehicle at the time
of the injurious incident is not of itself sufficient to charge
his employer with liability for the operation of said
vehicle unless it appeared that he was operating the
vehicle within the course or scope of bis employment.
Thus:ChanRoblesVirtualawlibrary
xxxx
'The court a quo and the Court of Appeals were one in
holding that the driving by a messenger of a company-
issued vehicle is within the scope of his assigned tasks
regardless of the time and circumstances.
We do not agree.
The mere fact that ABAD was using a service vehicle at
the time of the injurious incident is not of itself sufficient
to charge petitioner with liability for the negligent
operation of said vehicle unless it appears mat he was
operating the vehicle within the course or scope of his
employment.
The following are principles in American Jurisprudence
on the employer's liability for the injuries inflicted by the
negligence of an employee in the use of an employer's
motor vehicle.
III. Use of Employer's Vehicle Outside Regular Working
Hours
An employer who loans his motor vehicle to an employee
for the latter's personal use outside of regular working
hours is generally not liable for the employees negligent
operation of the vehicle during the period of permissive
use, even where the employer contemplates that a
regularly assigned motor vehicle will be used by the
employee for personal as well as business purposes and
there is some incidental benefit to the employer. Even
where the employee's personal purpose in using the
vehicle has been accomplished and he has started the
return trip to his house where the vehicle is normally kept,
it has been held that he has not resumed his employment,
and the employer is not liable for the employees negligent
operation of the vehicle during the return trip.
The foregoing principles and jurisprudence are applicable
in our jurisdiction albeit based on the doctrine
of respondent superior, not on the principle of bonus
pater familias as in ours. Whether the fault or negligence
of the employee is conclusive on his employer as in
American law or jurisprudence, or merely gives rise to the
presumption juris tantum of negligence on the part of the
employer as in ours, it is indispensable that the employee
was acting in his employer's business or within the scope
of his assigned task.
In the case at bar, it is undisputed that ABAD did some
overtime work at Hie petitioner's office, which was
located in Cabangcalan, Mandaue City. Thereafter, he
went to Goldie's Restaurant in Fuente Osmefia, Cebu
City, which is about seven kilometers away from
petitioner's place of business. A witness for the private
respondents, a sidewalk vendor, testified that Fuente
Osmeña is a lively place even at dawn because Goldie's
Restaurant and Back Street were still open and people
were drinking thereat Moreover, prostitutes, pimps, and
drug addicts littered the place.
To the mind of this Court, ABAD was engaged in affairs
of his own or was carrying out a personal purpose not in
line with his duties at the time he figured in a vehicular
accident. It was then about 2:00 a.m. of 28 August 1988,
way beyond the normal working hours. ABAD's working
day had ended; his overtime work had already been
completed. His being at a place which, as petitioner put it,
was known as a haven for prostitutes, pimps, and drug
pushers and addicts, had no connection to petitioner's
business; neither had it any relation to his duties as a
manager. Rather, using his service vehicle even for
personal purposes was a form of a fringe benefit or one of
the perks attached to his position.
Since there is paucity of evidence that ABAD was acting
within the scope of the functions entrusted to him,
petitioner CASTILEX had no duty to show that it
exercised the diligence of a good father of a family in
providing ABAD with a service vehicle. Thus, justice and
equity require that petitioner be relieved of vicarious
liability for the consequences of the negligence of ABAD
in driving its vehicle.
Accordingly, in the absence of showing that
Renante Bicomong was acting within the scope of his
assigned task at the time of the vehicular collision,
defendants-appellees had no duty to show that they
exercised the diligence of a good father of a family in
providing Renante Bicomong with a service vehicle.
Thus, the trial court did not err in holding that:
'Under Article 2180, 'employers shall be liable for the
damages caused by their employees and household
helpers acting within the scope of their assigned tasks,
even though the former are not engaged in any
business or industry. 'In other words, for the employer
to be liable for the damages caused by his employee,
the latter must have caused the damage in the course
of doing his assigned tasks or. in the performance of
his duties.' (Yambao vs. Zuñiga, G.R. No. 146173,
December 11, 2003.)
In this case, it is.beyond cavil that the deceased Renante
Bicong [sic] was not in the performance of his duty on
that fateful day of February 25, 2003. In the first place that
day was a holiday; there was no work and it was not
shown that he was working as indeed his work assignment
[was as] operations manager of the company's plant in
Cavite while the accident happened while he was in
Alaminos, Laguna on his way home to Candelaria,
Quezon. Secondly, as an operations manager, he was
issued an executive car for his own use, a Toyota Corolla
vehicle and. he merely preferred to use the L-300 UV
when going home to his family in Quezon. Even assuming
that the company allowed or tolerated this, by itself, the
tolerance did not make the employer liable in the absence
of showing that he was using the vehicle in the
performance of a duty or within the scope of his assigned
tasks. But as clearly relayed by defendant's witnesses,
defendants have no business or plant in Quezon. The L-
300 vehicle was for the hauling of items between their
Pasig and Cavite offices and was merely borrowed by
Bicomong in going to Candelaria, Quezon on that day.
The accident having occurred outside Renante
Bicomong's assigned tasks, defendant employers cannot
be held liable to the plaintiffs, even assuming that it is the
fault of defendants' employee that was the direct and
proximate cause of their damages.'
In sum, squarely applicable in this case is the well-
entrenched doctrine that the assessment of the trial judge
as to the issue of credibility binds the appellate court
because he is in a better position to decide the issue,
having heard the witnesses and observed their deportment
and manner of testifying during the trial, except when the
trial court has plainly overlooked certain facts of
substance and value, that, if considered, might affect the
result of the case, or where the assessment is clearly
shown to be arbitrary. Plaintiffs-appellants have not
shown this case to fall under the exception.
WHEREFORE, the trial court's Decision dated April 4,
2011 is affirmed.SO ORDERED.
Petitioners filed a Motion for Reconsideration, which the
CA denied in its subsequent December 28, 2012
Resolution. Hence, the present Petition.
Issues
In a July 14, 2014 Resolution,17 this Court resolved to
give due course to the Petition, which contains the
following assignment of errors:
I.

THE HONORABLE COURT OF APPEALS ERRED IN
ISSUING THE ASSAILED DECISION AND
RESOLUTION THAT RESPONDENTS ARE NOT
LIABLE TO PETITIONERS FOR THE DAMAGES
THEY SUSTAINED CONSIDERING THAT THE
ACCIDENT WAS ATTRIBUTED TO THE
NEGLIGENCE OF RENANTE BICOMONG.
II.
THE HONORABLE COURT OF APPEALS ERRED IN
ADMITTING DEFENSES NOT PLEADED IN THE
MOTION TO DISMISS OR IN RESPONDENTS'
ANSWER.
Petitioners' Arguments
Petitioners insist that respondents should be held liable for
Bicomong's negligence under Articles 2176, 2180, and
2185 of the Civil Code;19 that Bicomong's negligence was
the direct and proximate eause of the accident, in that he
unduly occupied the opposite lane which the bus was
lawfully traversing, thus resulting in the collision with
Greenstar's bus; that Bicomong's driving on the opposite
lane constituted a traffic violation, therefore giving rise to
the presumption of negligence on his part; that in view of
this presumption, it became incumbent upon respondents
to rebut the same by proving that they exercised care and
diligence in the selection and supervision of their
employees; that in their respective answers and motion to
dismiss, respondents did not allege the defense, which
they tackled only during trial, that since February 25,
2003 was a declared national holiday, then Bicomong was
not acting within the scope of his assigned tasks at the
time of the collision; that for failure to plead this defense
or allegation in their respective answers and pleadings, it
is deemed waived pursuant to Section 1, Rule 9 of the
1997 Rules of Civil Procedure20 (1997 Rules); that just
the same, respondents failed to prove that Bicomong was
not in the official performance of his duties or that the
URC van was not officially issued to him at the time of
the accident - and for this reason, the presumption of
negligence was not overturned; and that URC should be
held liable as the registered owner of the van.
In their Reply,21 petitioners add that while some of the
issues raised in the Petition are factual in nature, this
Court must review the case as the CA gravely erred in its
appreciation of the evidence and in concluding that
respondents are not liable. Finally, they argue that URC
should be held liable for allowing "a non-employee to use
for his personal use the vehicle owned" by it.
Respondents' Arguments
Pleading affirmance, respondents argue in their
Comment22 that the issues raised in the Petition are factual
in nature; that the collision occurred on a holiday and
while Bicomong was. using the URC van for a purely
personal purpose, it should be. sufficient to absolve
respondents of liability as evidently, Bicomong was not
performing his official duties on that day; that the totality
of the evidence indicates that it was Sayson who was
negligent in the operation of Greenstar's bus when the
collision occurred; that Bicomong was not negligent in
driving the URC van; that petitioners' objection -
pertaining to their defense that the collision occurred on a
holiday, when Bicomong was not considered to be at work
- was belatedly raised; and that in any case, under Section
5, Rule 10 of the 1997 Rules,23 their pleadings should be
deemed amended to conform to the evidence presented at
the trial, which includes proof that the accident occurred
on a holiday and while Bicomong was not in the
performance of his official tasks and instead going home
to his family in Quezon province.
Our Ruling
The Court denies the Petition.
In Caravan Travel and Tours International, Inc. v.
Abejar,24 the Court made the following relevant
pronouncement:
chanRoblesvirtualLawlibrary
The resolution of this case must consider two (2) rules.
First, Article 2180's specification that '[e]mployers
shall be liable for the damages caused by their
employees ... acting within the scope of their assigned
tasks [.]' Second, the operation of the registered-owner
rule that registered owners are liable for death or
injuries caused by the operation of their Vehicles.
These rules appear to be in conflict when it comes to cases
in which the employer is also the registered owner of a
vehicle. Article 2180 requires proof of two things: first,
an employment relationship between the driver and the
owner; and second, that the driver acted within the scope
of his or her assigned tasks. On the other hand, applying
the registered-owner rule only requires the plaintiff to
prove that the defendant-employer is the registered owner
of the vehicle.
The registered-owner rule was articulated as early as 1957
in Erezo, et al. v. Jepte,25cralawred where this court
explained that the registration of motor vehicles, as
required by Section 5(a) of Republic Act No. 41365
the and Transportation and Traffic Code, was necessary
'not to make said registration the operative act by which
ownership in vehicles is transferred, ... but to permit the
use and operation of the vehicle upon any public
highway[.]' Its 'main aim ... is to identify the owner so that
if any accident happens, or that any damage or injury is
caused by the vehicle on the public highways,
responsibility therefor can be fixed on a definite
individual, the registered owner.'
Aguilar, Sr. v. Commercial Savings Bank26 recognized the
seeming conflict between Article 2180 and the registered-
owner rule and applied the latter.
Preference for the registered-owner rule became more
pronounced in Del Carmen, Jr. v. Bacoy:27chanrobleslaw
Filcar Transport Services v. Espinas28 stated that the
registered owner of a vehicle can no longer use the
defenses found in Article 2180:
chanRoblesvirtualLawlibraryx x x x The registration of the vehicle, on the other hand, is
Mendoza v. Spouses Gomez29 reiterated this doctrine.
However, Aguilar, Sr., Del Carmen,
Filcar, and Mendoza should not be taken to mean that
Article 2180 of the Civil Code should be completely
discarded in cases where the registered-owner rule finds
application.
As acknowledged in Filcar, there is no categorical
statutory pronouncement in the Land Transportation and
Traffic Code stipulating the liability of a registered owner.
The source of a registered owner's liability is not a distinct
statutory provision, but remains to be Articles 2176 and
2180 of the Civil Code:
chanRoblesvirtualLawlibrary
While Republic Act No. 4136 or the Land Transportation
and Traffic Code does not contain any provision on the
liability of registered owners in case of motor vehicle
mishaps, Article 2176, in relation with Article 2180, of
the Civil Code imposes an obligation upon Filcar, as
registered owner, to answer for the damages caused to
Espinas' car.
Thus, it is imperative to apply the registered-owner rule
in a manner that harmonizes it with Articles 2176 and
2180 of the Civil Code. Rules must be construed in a
manner that will harmonize them with other rules so as to
form a uniform and consistent system of jurisprudence. In
light of this, the words used in Del Carmen are
particularly notable. There, this court stated that Article
2180 'should defer to' the registered-owner rule. It never
stated that Article 2180 should be totally abandoned.
Therefore, the appropriate approach is that in cases
where both the registered-owner rule and Article 2180
apply, the plaintiff must first establish that the
employer is the registered owner of the vehicle in
question. Once the plaintiff successfully proves
ownership, there arises a disputable presumption that
the requirements of Article 2180 have been proven. As
a consequence, the burden of proof shifts to the
defendant to show that no liability under Article 2180
has arisen.
This disputable presumption, insofar as the registered
owner of the vehicle in relation to the actual driver is
concerned, recognizes that between the owner and the
victim, it is the former that should carry the costs of
moving forward with the evidence. The victim is, in many
cases, a hapless pedestrian or motorist with hardly any
means to uncover the employment relationship of the
owner and the driver, or any act that the owner may have
done in relation to that employment.
accessible to the public.
Here, respondent presented a copy of the Certificate of
Registration of the van that hit Reyes. The Certificate
attests to petitioner's ownership of the van. Petitioner
itself did not dispute its ownership of the van. Consistent
with the rule we have just stated, a presumption that the
requirements of Article 2180 have been satisfied arises. It
is now up to petitioner to establish that it incurred no
liability under Article 2180. This it can do by presenting
proof of any of the following: first, that it had no
employment relationship with Bautista; second, that
Bautista acted outside the scope of his assigned tasks;
or third, that it exercised the diligence of a good father
of a family in the selection and supervision of
Bautista. (Emphasis supplied)
In the present case, it has been established that on the day
of the collision -or on February 25, 2003 - URC was the
registered owner of the URC van, although it appears that
it was designated for use by NURC, as it was officially
assigned to the latter's Logistics Manager, Florante Soro-
Soro (Soro-Soro); that Bicomong was the Operations
Manager of NURC and assigned to the First Cavite
Industrial Estate; that there was no work as the day was
declared a national holiday; that Bicomong was on his
way home to his family in Quezon province; that the URC
van was not assigned to Bicompng as well, but solely for
Soro-Soro's official use; that the company service vehicle
officially assigned to Bicomong was a Toyota Corolla,
which he left at the Cavite plant and instead, he used the
URC van; and that other than the Cavite plant, there is no
other NURC plant in the provinces of Quezon, Laguna or
Bicol.
Applying the above pronouncement in the Caravan
Travel and Tours case, it must be said that when by
evidence the ownership of the van and Bicomong's
employment were proved, the presumption of negligence
on respondents' part attached, as the registered owner of
the van. and as Bicomong's employer. Hie burden of proof
then shifted to respondents to show that no liability under
Article 2180 arose. This may be done by proof of any of
the following:
chanRoblesvirtualLawlibrary
1. That they had no employment relationship with
Bicomong; or
2. That Bicomong acted outside the scope of his assigned
tasks; or
3. That they exercised the diligence of a good father of a
family in the selection and supervision of Bicomong.
In denying liability, respondents claimed in their
respective answers the defense of absence of negligence
on their part. During trial, they presented evidence to the
effect that on the day of the collision, which was a
declared national non-working holiday, Bicomong was
not perforating Ms work, but was on his way home to
Quezon on a personal undertaking, that is, to give money
to his daughter and spend the holiday with his family; and
that the vehicle he was driving was not an NURC vehicle,
nor was it assigned to him, but was registered to URC and
assigned to its Logistics Manager, Soro-Soro, Petitioners
object to this, claiming that this defense was not alleged
in the respondents' respective answers. The Court
disagrees, The failure to allege these facts in the answers
does not preclude, respondents from proving them during
trial; these facts are precisely illustrative of their defense
of absence of negligence. Just the same, petitioners'
failure to object to the respondents' presentation of such
evidence below is tantamount to a waiver; Section 5, Rule
10 of the 1997 Rules - on amendments to conform to or
authorize presentation of evidence - will have to apply,
but the failure to amend the pleadings does not affect the
result of the trial of these issues.
The failure of a party to amend a pleading to conform to
the evidence adduced during trial does not preclude an
adjudication by the court on the basis of such evidence
which may embody new issues not raised in the pleadings,
or serve as a basis for a higher award of damages.
Although the pleading may not have been amended to
conform to the evidence submitted during trial, judgment
may nonetheless be rendered, not simply on the basis of
the issues alleged but also on the basis of issues discussed
and the assertions of fact proved in the course of trial. The
court may treat the pleading as if it had been amended to
conform to the evidence, although it had not been actually
so amended,30
Respondents succeeded in overcoming the presumption
of negligence, having shown that when the collision took
place, Bicomong was not in the performance of his work;
that he was in possession of a service vehicle that did not
belong to his employer NURC, but to URC, and which
vehicle was not officially assigned to him, but to another
employee; that his use of the URC van was unauthorized
- even if he had used the same vehicle in furtherance of a
personal undertaking in the past,31 this does not amount to
implied permission; that the accident occurred on a
holiday and while Bicomong was on his way home to his
family in Quezon province; and that Bicomong had no
official business whatsoever in his hometown in Quezon,
or in Laguna where the collision occurred, his area of
operations being limited to the Cavite area.
On the other hand, the evidence suggests that the collision
could have been avoided if Sayson exercised care and
prudence, given the circumstances and information that
he had immediately prior to the accident. From the trial
court's findings and evidence on record, it would appear
that immediately prior to the collision, which took place
very early in the morning - or at around 6:50 a.m., Sayson
saw that the URC van was traveling fast Quezon-bound
on the shoulder of the opposite lane about 250 meters
away from him; that at this point, Sayson was driving the
Greenstar bus Manila-bound at 60 kilometers per hour;
that Sayson knew that the URC van was traveling fast as
it was creating dust clouds from traversing the shoulder of
the opposite lane; that Sayson saw the URC van get back
into its proper lane but directly toward him; that despite
being apprised of the foregoing information, Sayson,
instead of slowing down, maintained his speed and tried
to swerve the Greenstar bus, but found it difficult to do so
at his speed; that the collision or point of impact occurred
right in the middle of the road;32 and that Sayson
absconded from the scene immediately after the collision.
From the foregoing facts, one might think that from the
way he was driving immediately before the collision took
place, Bicomong could have fallen asleep or ill at the
wheel, which led him to gradually steer the URC van
toward the shoulder of the highway; and to get back to the
road after realizing his mistake, Bicomong must have
overreacted, thus overcompensating or oversteering to the
left, or toward the opposite lane and right into Sayson's
bus. Given the premise of dozing off or falling ill, this
explanation is not far-fetched. The collision occurred very
early in the morning in Alaminos, Laguna. Sayson
himself testified that he found Bicomong driving on the
service road or shoulder of the highway 250 meters away,
which must have been unpaved, as it caused dust clouds
to rise on the heels of the URC van. And these dust clouds
stole Sayson's attention, leading him to conclude that the
van was running at high speed. At any rate, the evidence
places the point of impact very near the middle of the road
or just within Sayson's lane. In other words, the collision
took place with Bicomong barely encroaching on
Sayson's lane. This means that prior to and at the time of
collision, Sayson did not take any defensive maneuver to
prevent the accident and minimize the impending damage
to life and property, which resulted in the collision in the
middle of the highway, where a vehicle would normally
be traversing. If Sayson took defensive measures, the
point of impact should have occurred further inside his
lane or not at the front of the bus - but at its side, which
should have shown that Sayson either slowed down or
swerved to the right to avoid a collision.
Despite having seen Bicomong drive the URC van in a
precarious manner while the same was still a good 250
meters away from his bus, Sayson did not take the
necessary precautions, as by reducing speed and adopting
a defensive stance to avert any untoward incident that may
occur from Bicomong's manner of driving. This is
precisely his testimony during trial. When the van began
to swerve toward his bus, he did not reduce speed nor
swerve his bus to avoid collision. Instead, he maintained
his current speed and course, and for this reason., the
inevitable took place: An experienced driver who is.
presented with the same facts would have adopted an
attitude consistent with a desire to preserve life and
property; for common carriers, the diligence demanded is
of the highest degree.
The law exacts from common carriers (i.e., those persons,
corporations, firms, or associations engaged in the
business of carrying or transporting passengers or goods
or both, by land, water, or air, for compensation, offering
their services to the public) the highest degree of diligence
(i.e., extraordinary diligence) in ensuring the safety of its
passengers. Articles 1733 and 1755 of the Civil Code
state:
Art. 1733. Common carriers, from the nature of their
business and for reasons of public policy, are bound to
observe extraordinary, diligence in the vigilance over
the goods and for the safety of the passengers
transported by them, according to all the
circumstances of each case.
Art. 1755. A common carrier is bound to carry the
passengers safely as far as human care arid foresight
can provide, using the utmost diligence of very
cautious persons, with a due regard for all the
circumstances.
In this relation, Article 1756 of the Civil Code provides
that '[i]n case of death of or injuries to passengers,
common carriers are presumed to have been at fault or to
have acted negligently, unless they prove that they
observed extraordinary diligence as prescribed in Articles
1733 and 1755. xxx'33chanroblesvirtuallawlibrary
However, Sayson took no defensive maneuver
whatsoever in spite of the fact that he saw Bicomong drive
his van in a precarious manner, as far as 250 meters away
- or at a point in time and space where Sayson had all the
opportunity to prepare and avert a possible collision. The
collision was certainly foreseen and avoidable but Sayson
took no measures to avoid it. Rather than exhibit concern
for the welfare of his passengers and the driver of the
oncoming vehicle, who might have fallen asleep or
suddenly fallen ill at the wheel, Sayson coldly and
uncaringly stood his ground^ closed his eyes, and left
everything to fate, without due regard for the
consequences. Such a suicidal mindset cannot be
tolerated, for the grave danger it poses to the public and
passengers availing of petitioners' services. To add insult
to injury, Sayson hastily fled the scene of the collision
instead of rendering assistance to the victims - thus
exhibiting a selfish, cold-blooded attitude and utter lack
of concern motivated by the self-centered desire to escape
liability, inconvenience, and possible detention by the
authorities, rather than secure the well-being of the
victims of his own negligent act.
x x x The doctrine of last clear chance provides that where
both parties are negligent but the negligent act of one is
appreciably later in point of time than that of the other, or
where it is impossible to determine whose fault or
negligence brought about the occurrence of the incident,
the one who had the last clear opportunity to avoid the
impending harm but failed to do so, is chargeable with the
consequences arising therefrom. Stated differently, the
rule is that the antecedent negligence of a person does not
preclude recovery of damages caused by the supervening
negligence of the latter, who had the last fair chance to
prevent the impending harm by the exercise of due
diligence, x x x34
Petitioners might object to the treatment of their case in
the foregoing manner, what with the additional finding
that Sayson was negligent under the circumstances. But
their Petition, "once accepted by this Court, throws the
entire case open to review, and xxx this Court has the
authority to review matters not specifically raised or
assigned as error by the parties, if their consideration is
necessary in arriving at a just resolution of the
case."35chanrobleslaw
WHEREFORE, the Petition is DENIED. The
September 26, 2012 Decision and December 28, 2012
Resolution of the Court of Appeals in CA-G.R. CV No.
96961 are AFFIRMED in toto. SO ORDERED.
Art. 2176: Whoever by act or omission causes damage to
another, there being fault or negligence, is obliged to pay
for the damage done. Such fault or negligence, if there is
no pre-existing contractual relation between the parties, is
called a quasi-delict and is governed by the provisions of
this Chapter.
Art. 2180. The obligation imposed by Article 2176 is
demandable not only for one's own acts or omissions, but
also for those of persons for whom one is responsible.
Employers shall be liable for the damages caused by their
employees and household helpers acting within the scope
of their assigned tasks, even though the former are not
engaged in any business or industry, Art. 2185. Unless
there is proof to the contrary, it is presumed that a person
driving a motor vehicle has been negligent if at the tinie
of the mishap, he was violating any traffic regulation.
20
Rule 9, Effect of Failure to Plead
Section 1. Defenses and objections not pleaded. -
Defenses and objections not pleaded either in a motion to
dismiss or in the answer are deemed waived. However,
when it appears from the pleadings or the evidence on
record that the court has no jurisdiction over the subject
matter, mat there is another action pending between the
same parties for the same cause, or that the action is barred
by a prior judgment or by statute of limitations, the court
shall dismiss the claim.
23
Rule 10, Amended and Supplemental Pleadings
Sec. 5. Amendment to conform to or authorize
presentation of evidence. - When issues not raised by the
pleadings are tried with the express or implied consent of
the parties, they shall be treated in all respects as if they
had been raised in the pleadings. Such amendment of the
pleadings as may be necessary to cause them to conform
to the evidence and to raise these issues may be made
upon motion of any parry at any time, even after
judgment; but failure to amend does not affect the result
of the trial of these issues. If evidence is objected to at the
trial on the ground that it is not within the issues made by
the pleadings, the court may allow the pleadings to be
amended and shall do so with liberality if the presentation
of the merits of the action and the ends of substantial
justice will be subserved thereby. The court may grant a
continuance to enable the amendment to be made.
SECOND DIVISION
G.R. No. 208731, January 27, 2016
PHILIPPINE AMUSEMENT AND GAMING
CORPORATION, Petitioner, v. BUREAU OF
INTERNAL REVENUE, COMMISSIONER OF
INTERNAL REVENUE, AND REGIONAL
DIRECTOR, REVENUE REGION NO.
6, Respondents.
DECISION
CARPIO, J.:
The Case
G.R. No. 208731 is a petition for review1 assailing the
Decision2 promulgated on 18 February 2013 as well as the
Resolution3 promulgated on 23 July 2013 by the Court of
Tax Appeals En Banc (CTA En Banc) in CTA EB No.
844. The CTA EB affirmed the Decision dated 6 July
20114 and Resolution5 dated 13 October 2011 of the
Court of Tax Appeals' First Division (CTA 1st Division)
in CTA Case No. 7880.
In its 6 July 2011 Decision, the CTA 1st Division ruled in
favor of the Bureau of Internal Revenue (BIR),
Commissioner of Internal Revenue (CIR), and the
Regional Director of Revenue Region No. 6 (collectively,
respondents) and against petitioner Philippine
Amusement and Gaming Corporation (PAGCOR). The
CTA 1st Division dismissed PAGCOR's petition for
review seeking the cancellation of the Final Assessment
Notice (FAN) dated 14 January 2008 which respondents
issued for alleged deficiency fringe benefits tax in 2004.
The CTA 1st Division ruled that PAGCOR's petition was
filed out of time.
The Facts
The CTA 1st Division recited the facts as [PAGCOR]
claims that it is a duly organized government-owned and
controlled corporation existing under and by virtue of
Presidential Decree No. 1869, as amended, with business
address at the 6th Floor, Hyatt Hotel and Casino, Pedro Gil
corner M.H. Del Pilar Streets, Malate, Manila. It was
created to regulate, establish and operate clubs and
casinos for amusement and recreation, including sports
gaming pools, and such other forms of amusement and
recreation.
Respondent [CIR], on the other hand, is the Head of the
[BIR] with authority, among others, to resolve protests on
assessments issued by her office or her authorized
representatives. She holds office at the BIR National
Office Building, Agham Road, Diliman, Quezon City.
[PAGCOR] provides a car plan program to its qualified
officers under which sixty percent (60%) of the car plan
availment is shouldered by PAGCOR and the remaining
forty percent (40%) for the account of the officer, payable
in five (5) years.
On October 10, 2007, [PAGCOR] received a Post
Reporting Notice dated September 28, 2007 from BIR
Regional Director Alfredo Misajon [RD Misajon] of
Revenue Region 6, Revenue District No. 33, for an
informal conference to discuss the result of its
investigation on [PAGCOR's] internal revenue taxes in
2004. The Post Reporting Notice shows that [PAGCOR]
has deficiencies on Value Added Tax (VAT),
Withholding Tax on VAT (WTV), Expanded
Withholding Tax (EWT), and Fringe Benefits Tax (FBT).
Subsequently, the BIR abandoned the claim for
deficiency assessments on VAT, WTV and EWT in the
Letter to [PAGCOR] dated November 23, 2007 in view
of the principles laid down in Commissioner of Internal
Revenue vs. Acesite Hotel Corporation [G.R. No.
147295] exempting [PAGCOR] and its contractors from
VAT. However, the assessment on deficiency FBT
subsists and remains due to date.
On January 17, 2008, [PAGCOR] received a Final
Assessment Notice [FAN] dated January 14, 2008, with
demand for payment of deficiency FBT for taxable year
2004 in the amount of P48,589,507.65.
On January 24, 2008, [PAGCOR] filed a protest to the
FAN addressed to [RD Misajon] of Revenue Region No.
6 of the BIR.
On August 14, 2008, [PAGCOR] elevated its protest to
respondent CIR in a Letter dated August 13, 2008, there
being no action taken thereon as of that date.
In a Letter dated September 23, 2008 received on
September 25, 2008, [PAGCOR] was informed that the
Legal Division of Revenue Region No. 6 sustained
Revenue Officer Ma. Elena Llantada on the imposition of
FBT against it based on the provisions of Revenue
Regulations (RR) No. 3-98 and that its protest was
forwarded to the Assessment Division for further action.
On November 19, 2008, [PAGCOR] received a letter
from the OIC-Regional Director, Revenue Region No. 6
(Manila), stating that its letter protest was referred to
Revenue District Office No. 33 for appropriate action.
On March 11, 2009, [PAGCOR] filed the instant Petition
for Review alleging respondents' inaction in its protest on
the disputed deficiency FBT.
The CTA 1st Division's Ruling
The CTA 1st Division issued the assailed decision dated 6
July 2011 and ruled in favor of respondents. The CTA
1st Division ruled that RD Misajon's issuance of the FAN
was a valid delegation of authority, and PAGCOR's
administrative protest was validly and seasonably filed on
24 January 2008. The petition for review filed with the
CTA 1st Division, however, was filed out of time. The
CTA 1st Division stated: As earlier stated, [PAGCOR]
timely filed its administrative protest on January 24, 2008.
In accordance with Section 228 of the Tax Code,
respondent CIR or her duly authorized representative had
180 days or until July 22, 2008 to act on the protest. After
the expiration of the 180-day period without action on the
protest, as in the instant case, the taxpayer, specifically
[PAGCOR], had 30 days or until August 21, 2008 to assail
the non-determination of its protest.
Clearly, the conclusion that the instant Petition for
Review was filed beyond the reglementary period for
appeal on March 11, 2009, effectively depriving the Court
of jurisdiction over the petition, is inescapable.
And as provided in Section 228 of the NIRC, the failure
of [PAGCOR] to appeal from an assessment on time
rendered the same final, executory and demandable.
Consequently, [PAGCOR] is already precluded from
disputing the correctness of the assessment. The failure to
comply with the 30-day statutory period would bar the
appeal and deprive the Court of Tax Appeals of its
jurisdiction to entertain and determine the correctness of
the assessment.
Even assuming in gratia argumenti that the [CTA] has
jurisdiction over the case as claimed by [PAGCOR], the
petition must still fail on the ground that [PAGCOR] is
not exempt from payment of the assessed FBT under its
charter.
Since the car plan provided by [PAGCOR] partakes of the
nature of a personal expense attributable to its employees,
it shall be treated as taxable fringe benefit of its
employees, whether or not the same is duly receipted in
the name of the employer. Therefore, [PAGCOR's]
obligation as an agent of the government to withhold and
remit the final tax on the fringe benefit received by its
employees is personal and direct. The government's cause
of action against [PAGCOR] is not for the collection of
income tax, for which [PAGCOR] is exempted, but for
the enforcement of the withholding provision of the 1997
NIRC, compliance of which is imposed on [PAGCOR] as
the withholding agent, and not upon its employees.
Consequently, [PAGCOR's] non-compliance with said
obligation to withhold makes it personally liable for the
tax arising from the breach of its legal
duty.7cralawlawlibrary
PAGCOR filed a motion for reconsideration, dated 26
July 2011, of the 6 July 2011 Decision of the CTA
1st Division. The CIR filed a comment,8 and asked that
PAGCOR be ordered to pay P48,589,507.65 representing
deficiency fringe benefits tax for taxable year 2004 plus
25% surcharge and 20% delinquency interest from late
payment beyond 15 February 2008 until fully paid,
pursuant to Sections 248 and 249 of the National Internal
Revenue Code (NIRC) of 1997.
In the meantime, the CIR sent PAGCOR a letter dated 18
July 2011.9 The letter stated that PAGCOR should be
subjected to the issuance of a Warrant of Distraint and/or
Levy and a Warrant of Garnishment because of its failure
to pay its outstanding delinquent account in the amount of
P46,589,507.65, which included surcharge and interest.
Settlement of the tax liability is necessary to obviate the
issuance of a Warrant of Distraint and/or Levy and a
Warrant of Garnishment.
Subsequently, PAGCOR filed a reply dated 28 September
2011 to ask that an order be issued directing respondents
to hold in abeyance the execution of the Warrant of
Distraint and/or Levy and the Warrant of Garnishment, as
well as to suspend the collection of tax insofar as the 2004
assessment is concerned. PAGCOR also asked for
exemption from filing a bond or depositing the amount
claimed by respondents.10
PAGCOR filed a petition for review with urgent motion
to suspend tax collection11 with the CTA En Banc on 23
November 2011.
The CTA En Banc's Ruling
The CTA En Bane dismissed PAGCOR's petition for
review and affirmed the CTA 1st Division's Decision and
Resolution. The CTA En Bane ruled that the protest filed
before the RD is a valid protest; hence, it was superfluous
for PAGCOR to raise the protest before the CIR. When
PAGCOR filed its administrative protest on 24 January
2008, the CIR or her duly authorized representative had
180 days or until 22 July 2008 to act on the protest. After
the expiration of the 180 days, PAGCOR had 30 days or
until 21 August 2008 to assail before the CTA the non-
determination of its protest.
Moreover, Section 223 of the NIRC merely suspends the
period within which the BIR can make assessments on a
certain taxpayer. A taxpayer's request for reinvestigation
only happens upon the BIR's issuance of an assessment
within the three-year prescriptive period. The
reinvestigation of the assessment suspends the
prescriptive period for either a revised assessment or a
retained assessment.
PAGCOR filed its Motion for Reconsideration on 22
March 2013, while respondents filed their
Comment/Opposition on 3 June 2013.
The CTA En Banc denied PAGCOR's motion in a
Resolution12 dated 23 July 2013.
PAGCOR filed the present petition for review on 14
October 2013. Respondents filed their comment through
the Office of the Solicitor General on 20 March 2014. On
23 April 2014, this Court required PAGCOR to file a
reply to the comment within 10 days from notice. This
period expired on 26 June 2014. On 15 September 2014,
this Court issued another resolution denying PAGCOR's
petition for failure to comply with its lawful order without
any valid cause. On 31 October 2014, PAGCOR filed a
motion for reconsideration of the Court's 15 September
2014 Resolution. We granted PAGCOR's motion in a
Resolution dated 10 December 2014.
The Issues
PAGCOR presented the following issues in its
1. Whether or not the CTA En Bane gravely erred in
affirming the CTA 1st Division's Decision
dismissing the Petition for Review for having
been filed out of time.
2. Whether or not the CTA En Bane seriously erred
when it affirmed the CTA 1st Division's failure to
decide the case on substantive matters, i.e., the
full import of PAGCOR's tax exemption under its
charter which necessarily includes its exemption
from the fringe benefits tax (FBT).
2.1 Assuming that PAGCOR is not exempt from
the FBT, whether or not the car plan extended to
its officers inured to its benefit and it is required
or necessary in the conduct of its business.
2.2 Assuming that PAGCOR is subject to the
alleged deficiency FBT, whether or not it is only
liable for the basic tax, i.e., excluding surcharge
and interest.13
In their Comment,14 respondents argue that the CTA
properly dismissed PAGCOR's petition because it was
filed beyond the periods provided by law.
The Court's Ruling
The petition has no merit. The CTA En Bane and
1st Division were correct in dismissing PAGCOR's
petition. However, as we shall explain below, the
dismissal should be on the ground of premature, rather
than late, filing.
Timeliness of PAGCOR's Petition before the CTA
The CTA 1st Division and CTA En Bane both established
that PAGCOR received a FAN on 17 January 2008, filed
its protest to the FAN addressed to RD Misajon on 24
January 2008, filed yet another protest addressed to the
CIR on 14 August 2008, and then filed a petition before
the CTA on 11 March 2009. There was no action on
PAGCOR's protests filed on 24 January 2008 and 14
August 2008. PAGCOR would like this Court to rule that
its protest before the CIR starts a new period from which
to determine the last day to file its petition before the
CTA.
The CIR, on the other hand, denied PAGCOR's claims of
exemption with the issuance of its 18 July 2011 letter. The
letter asked PAGCOR to settle its obligation of
P46,589,507.65, which consisted of tax, surcharge and
interest. PAGCOR's failure to settle its obligation would
result in the issuance of a Warrant of Distraint and/or
Levy and a Warrant of Garnishment.
The relevant portions of Section 228 of the NIRC of 1997
provide:chanRoblesvirtualLawlibrary
SEC. 228. Protesting of Assessment. - When the
Commissioner or his duly authorized representative finds
that proper taxes should be assessed, he shall first notify
the taxpayer of his findings: x x x.
x x x x
Within a period to be prescribed by implementing rules
and regulations, the taxpayer shall be required to respond
to said notice. If the taxpayer fails to respond, the
Commissioner or his duly authorized representative shall
issue an assessment based on his findings.
Such assessment may be protested administratively by
filing a request for reconsideration or reinvestigation
within thirty (30) days from receipt of the assessment in
such form and manner as may be prescribed by
implementing rules and regulations.
Within sixty (60) days from filing of the protest, all
relevant supporting documents shall have been submitted;
otherwise, the assessment shall become final.
If the protest is denied in whole or in part, or is not acted
upon within one hundred eighty (180) days from
submission of documents, the taxpayer adversely affected
by the decision or inaction may appeal to the Court of Tax
Appeals within thirty (30) days from receipt of the said
decision, or from the lapse of one hundred eighty (180)-
day period; otherwise, the decision shall become final,
executory and demandable.
cralawlawlibrary
Section 3.1.5 of Revenue Regulations No. 12-99,
implementing Section 228 above, provides:
3.1.5. Disputed Assessment. - The taxpayer or his duly
authorized representative may protest administratively
against the aforesaid formal letter of demand and
assessment notice within thirty (30) days from date of
receipt thereof. If the taxpayer fails to file a valid protest
against the formal letter of demand and assessment notice
within thirty (30) days from date of receipt thereof, the
assessment shall become final, executory and
demandable.
If the protest is denied, in whole or in part, by the
Commissioner, the taxpayer may appeal to the Court of
Tax Appeals within thirty (30) days from the date of
receipt of the said decision, otherwise, the assessment
shall become final, executory and demandable.
In general, if the protest is denied, in whole or in part, by
the Commissioner or his duly authorized representative,
the taxpayer may appeal to the Court of Tax Appeals
within thirty (30) days from date of receipt of the said
decision, otherwise, the assessment shall become final
executory and demandable: Provided, however, that if the
taxpayer elevates his protest to the Commissioner within
thirty (30) days from date of receipt of the final decision
of the Commissioner's duly authorized representative, the
latter's decision shall not be considered final, executory
and demandable, in which case, the protest shall be
decided by the Commissioner.
If the Commissioner or his duly authorized representative
fails to act on the taxpayer's protest within one hundred
eighty (180) days from date of submission, by the
taxpayer, of the required documents in support of his
protest, the taxpayer may appeal to the Court of Tax
Appeals within thirty (30) days from the lapse of the said
180-day period, otherwise the assessment shall become
final, executory and demandable.cralawlawlibrary
Following the verba legis doctrine, the law must be
applied exactly as worded since it is clear, plain, and
unequivocal. A textual reading of Section 3.1.5 gives a
protesting taxpayer like PAGCOR only three options:
1. If the protest is wholly or partially denied by the
CIR or his authorized representative, then the taxpayer
may appeal to the CTA within 30 days from receipt of the
whole or partial denial of the protest.
2. If the protest is wholly or partially denied by the CIR's
authorized representative, then the taxpayer may appeal
to the CIR within 30 days from receipt of the whole or
partial denial of the protest.
3. If the CIR or his authorized representative failed to act
upon the protest within 180 days from submission of the
required supporting documents, then the taxpayer may
appeal to the CTA within 30 days from the lapse of the
180-day period.
To further clarify the three options: A whole or partial
denial by the CIR's authorized representative may be
appealed to the CIR or the CTA. A whole or partial denial
by the CIR may be appealed to the CTA. The CIR or the
CIR's authorized representative's failure to act may be
appealed to the CTA. There is no mention of an appeal to
the CIR from the failure to act by the CIR's authorized
representative.
PAGCOR did not wait for the RD or the CIR's decision
on its protest. PAGCOR made separate and successive
filings before the RD and the CIR before it filed its
petition with the CTA. We shall illustrate below how
PAGCOR failed to follow the clear directive of Section
228 and Section 3.1.5.
PAGCOR's protest to the RD on 24 January 2008 was
filed within the 30-day period prescribed in Section 228
and Section 3.1.5. The RD did not release any decision on
PAGCOR's protest; thus, PAGCOR was unable to make
use of the first option as described above to justify an
appeal to the CTA. The effect of the lack of decision from
the RD is the same, whether we consider PAGCOR's
April 2008 submission of documents16 or not.
Under the third option described above, even if we grant
leeway to PAGCOR and consider its unspecified April
2008 submission, PAGCOR still should have waited for
the RD's decision until 27 October 2008, or 180 days from
30 April 2008. PAGCOR then had 30 days from 27
October 2008, or until 26 November 2008, to file its
petition before the CTA. PAGCOR, however, did not
make use of the third option. PAGCOR did not file a
petition before the CTA on or before 26 November 2008.
Under the second option, PAGCOR ought to have waited
for the RD's whole or partial denial of its protest before it
filed an appeal before the CIR. PAGCOR rendered the
second option moot when it formulated its own rule and
chose to ignore the clear text of Section 3.1.5. PAGCOR
"elevated an appeal" to the CIR on 13 August
2008 without any decision from the RD, then filed a
petition before the CTA on 11 March 2009. A textual
reading of Section 228 and Section 3.1.5 will readily show
that neither Section 228 nor Section 3.1.5 provides for the
remedy of an appeal to the CIR in case of the RD's failure
to act. The third option states that the remedy for failure
to act by the CIR or his authorized representative is to file
an appeal to the CTA within 30 days after the lapse of 180
days from the submission of the required supporting
documents. PAGCOR clearly failed to do this.
If we consider, for the sake of argument, PAGCOR's
submission before the CIR as a separate protest and not as
an appeal, then such protest should be denied for having
been filed out of time. PAGCOR only had 30 days from
17 January 2008 within which to file its protest. This
period ended on 16 February 2008. PAGCOR filed its
submission before the CIR on 13 August 2008.
When PAGCOR filed its petition before the CTA, it is
clear that PAGCOR failed to make use of any of the three
options described above. A petition before the CTA
may only be made after a whole or partial denial of the
protest by the CIR or the CIR's authorized
representative. When PAGCOR filed its petition before
the CTA on 11 March 2009, there was still no denial of
PAGCOR's protest by either the RD or the CIR.
Therefore, under the first option, PAGCOR's petition
before the CTA had no cause of action because it was
prematurely filed. The CIR made an unequivocal denial
of PAGCOR's protest only on 18 July 2011, when the CIR
sought to collect from PAGCOR the amount of
P46,589,507.65. The CIR's denial further puts PAGCOR
in a bind, because it can no longer amend its petition
before the CTA.17chanroblesvirtuallawlibrary
It thus follows that a complaint whose cause of action has
not yet accrued cannot be cured or remedied by an
amended or supplemental pleading alleging the existence
or accrual of a cause of action while the case is pending.
Such an action is prematurely brought and is, therefore, a
groundless suit, which should be dismissed by the court
upon proper motion seasonably filed by the defendant.
The underlying reason for this rule is that a person should
not be summoned before the public tribunals to answer for
complaints which are [premature].
As this Court eloquently said in Surigao Mine
Exploration Co., Inc. v. Harris:
It is a rule of law to which there is, perhaps, no exception,
either at law or in equity, that to recover at all there must
be some cause of action at the commencement of the suit.
As observed by counsel for appellees, there are reasons of
public policy why there should be no needless haste in
bringing up litigation, and why people who are in no
default and against whom there is yet no cause of action
should not be summoned before the public tribunals to
answer complaints which are groundless. We say
groundless because if the action is [premature], it should
not be entertained, and an action prematurely brought is a
groundless suit.
It is true that an amended complaint and the answer
thereto take the place of the originals which are thereby
regarded as abandoned (Reynes vs. Compania General de
Tabacos [1912], 21 Phil. 416; Ruyman and Farris vs.
Director of Lands [1916], 34 Phil. 428) and that "the
complaint and answer having been superseded by the
amended complaint and answer thereto, and the answer to
the original complaint not having been presented in
evidence as an exhibit, the trial court was not authorized
to take it into account." (Bastida vs. Menzi & Co. [1933],
58 Phil. 188.) But in none of these cases or in any other
case have we held that if a right of action did not exist
when the original complaint was filed, one could be
created by filing an amended complaint. In some
jurisdictions in the United States what was termed an
"imperfect cause of action" could be perfected by suitable
amendment (Brown vs. Galena Mining & Smelting
Co., 32 Kan., 528; Hooper vs. City of Atlanta, 26 Ga.
App., 221) and this is virtually permitted in Banzon and
Rosauro vs. Sellner ([1933], 58 Phil. 453); Asiatic
Potroleum [sic] Co. vs. Veloso ([1935], 62 Phil. 683); and
recently in Ramos vs. Gibbon (38 Off. Gaz. 241). That,
however, which is no cause of action whatsoever cannot
by amendment or supplemental pleading be converted
into a cause of action: Nihil de re accrescit ei qui nihil in
re quandojus accresceret habet.
We are therefore of the opinion, and so hold, that unless
the plaintiff has a valid and subsisting cause of action at
the time his action is commenced, the defect cannot be
cured or remedied by the acquisition or accrual of one
while the action is pending, and a supplemental complaint
or an amendment setting up such after-accrued cause of
action is not permissible. (Italics
18
ours) ChanRoblesVirtualawlibrary
cralawlawlibrary
PAGCOR has clearly failed to comply with the requisites
in disputing an assessment as provided by Section 228 and
Section 3.1.5. Indeed, PAGCOR's lapses in procedure
have made the BIR's assessment final, executory and
demandable, thus obviating the need to further discuss the
issue of the propriety of imposition of fringe benefits tax.
WHEREFORE, we DENY the petition. The Decision
promulgated on 18 February 2013 and the Resolution
promulgated on 23 July 2013 by the Court of Tax Appeals
- En Bane in CTA EB No. 844 are AFFIRMED with
the MODIFICATION that the denial of Philippine
Amusement and Gaming Corporation's petition is due to
lack of jurisdiction because of premature filing.
We REMAND the case to the Court of Tax Appeals for
the determination of the final amount to be paid by
PAGCOR after the imposition of surcharge and
delinquency interest. SO ORDERED.
16
See Commissioner of Internal Revenue v. First Express
Pawnshop Co., Inc., 607 Phil. 227, 248-249 (2009), where
we stated that: "Section 228 of the Tax Code provides the
remedy to dispute a tax assessment within a certain period
of time. It states that an assessment may be protested by
filing a request for reconsideration or reinvestigation
within 30 days from receipt of the assessment by the
taxpayer. Within 60 days from filing of the protest, all
relevant supporting documents shall have been submitted;
otherwise, the assessment shall become final."
FIRST DIVISION
G.R. No. L-31271 April 29, 1974
ROMEO MARTINEZ and LEONOR
SUAREZ, spouses, petitioners-appellants,
vs.
HON. COURT OF APPEALS, SECRETARY and
UNDERSECRETARY OF PUBLIC WORKS &
COMMUNICATIONS, respondents-appellees.
Flores Macapagal, Ocampo and Balbastro for
petitioners-appellants.
Office of the Solicitor General Felix Q. Antonio, Acting
Assistant Solicitor General Dominador L. Quiroz and
Solicitor Concepcion T. Agapinan for respondents-
appellees.
ESGUERRA, J.:p
Petition for review by certiorari of the judgment of the
Court of Appeals dated November 17, 1969 in its CA-
G.R. 27655-R which reverses the judgment of the Court
of First Instance of Pampanga in favor of petitioners-
appellants against the Secretary and Undersecretary of
Public Works & Communications in the case instituted to
annul the order of November 25, 1958 of respondent
Secretary of Public Works & Communications directing
the removal by the petitioners of the dikes they had
constructed on Lot No. 15856 of the Register of Deeds of
Pampanga, which order was issued pursuant to the
provisions of Republic Act No. 2056. The dispositive
portion of the judgment of reversal of the Court of
Appeals reads as follows:
IN VIEW OF THE FOREGOING CONSIDERATIONS,
the judgment appealed from is hereby reversed, and
another entered: [1] upholding the validity of the decision
reached by the respondent officials in the administrative
case; [2] dissolving the injunction issued by the Court
below; and [3] cancelling the registration of Lot No. 2, the
disputed area, and ordering its reconveyance to the public
domain. No costs in this instance.
The background facts are stated by the Court of Appeals
as follows:
The spouses Romeo Martinez and Leonor Suarez, now
petitioners-appellees, are the registered owners of two (2)
parcels of land located in Lubao, Pampanga, covered by
transfer certificate of title No. 15856 of the Register of
Deeds of the said province. Both parcels of land are
fishponds. The property involved in the instant case is the
second parcel mentioned in the above-named transfer
certificate of title.
The disputed property was originally owned by one
Paulino Montemayor, who secured a "titulo real" over it
way back in 1883. After the death of Paulino Montemayor
the said property passed to his successors-in-interest,
Maria Montemayor and Donata Montemayor, who in
turn, sold it, as well as the first parcel, to a certain
Potenciano Garcia.
Because Potenciano Garcia was prevented by the then
municipal president of Lubao, Pedro Beltran, from
restoring the dikes constructed on the contested property,
the former, on June 22, 1914, filed Civil Case No. 1407
with the Court of First Instance against the said Pedro
Beltran to restrain the latter in his official capacity from
molesting him in the possession of said second parcel, and
on even date, applied for a writ of preliminary injunction,
which was issued against said municipal president. The
Court, by decision promulgated June 12, 1916, declared
permanent the preliminary injunction, which, decision, on
appeal, was affirmed by the Supreme Court on August 21,
1918. From June 22, 1914, the dikes around the property
in question remained closed until a portion thereof was
again opened just before the outbreak of the Pacific War.
On April 17, 1925. Potenciano Garcia applied for the
registration of both parcels of land in his name, and the
Court of First Instance of Pampanga, sitting as land
registration court, granted the registration over and
against the opposition of the Attorney-General and the
Director of Forestry. Pursuant to the Court's decision,
original certificate of title No. 14318, covering said
parcels 1 and 2 was issued to the spouses Potenciano
Garcia and Lorenza Sioson.
These parcels of land were subsequently bought by
Emilio Cruz de Dios in whose name transfer certificate of
title No. 1421 was first issued on November 9, 1925.
Thereafter, the ownership of these properties changed
hands until eventually they were acquired by the herein
appellee spouses who hold them by virtue of transfer
certificate of title No. 15856.
To avoid any untoward incident, the disputants agreed to
refer the matter to the Committee on Rivers and Streams,
by then composed of the Honorable Pedro Tuason, at that
time Secretary of Justice, as chairman, and the Honorable
Salvador Araneta and Vicente Orosa, Secretary of
Agriculture and National Resources and Secretary of
Public Works and Communications, respectively, as
members. This committee thereafter appointed a Sub-
Committee to investigate the case and to conduct an
ocular inspection of the contested property, and on March
11, 1954, said Sub-Committee submitted its report to the
Committee on Rivers and Streams to the effect that Parcel
No. 2 of transfer certificate of title No. 15856 was not a
public river but a private fishpond owned by the herein
spouses.
On July 7, 1954, the Committee on Rivers and Streams
rendered its decision the dispositive part of which reads:
"In view of the foregoing considerations, the spouses
Romeo Martinez and Leonor Suarez should be restored to
the exclusive possession, use and enjoyment of the creek
in question which forms part of their registered property
and the decision of the courts on the matter be given full
force and effect."
The municipal officials of Lubao, led by Acting Mayor
Mariano Zagad, apparently refused to recognize the above
decision, because on September 1, 1954, the spouses
Romeo Martinez and Leonor Suarez instituted Civil Case
No. 751 before the Court of First Instance of Pampanga
against said Mayor Zagad, praying that the latter be
enjoined from molesting them in their possession of their
property and in the construction of the dikes therein. The
writ of preliminary injunction applied for was issued
against the respondent municipal Mayor, who
immediately elevated the injunction suit for review to the
Supreme Court, which dismissed Mayor Zagad's petition
on September 7, 1953. With this dismissal order herein
appellee spouses proceeded to construct the dikes in the
disputed parcel of land.
Some four (4) years later, and while Civil Case No. 751
was still pending the Honorable Florencio Moreno, then
Secretary of Public Works and Communications, ordered
another investigation of the said parcel of land, directing
the appellees herein to remove the dikes they had
constructed, on the strength of the authority vested in him
by Republic Act No. 2056, approved on June 13, 1958,
entitled "An Act To Prohibit, Remove and/or Demolish
the Construction of Dams. Dikes, Or Any Other Walls In
Public Navigable Waters, Or Waterways and In
Communal Fishing Grounds, To Regulate Works in Such
Waters or Waterways And In Communal Fishing
Grounds, And To Provide Penalties For Its Violation, And
For Other Purposes. 1 The said order which gave rise to
the instant proceedings, embodied a threat that the dikes
would be demolished should the herein appellees fail to
comply therewith within thirty (30) days.
The spouses Martinez replied to the order by commencing
on January 2, 1959 the present case, which was decided
in their favor by the lower Court in a decision dated
August 10, 1959, the dispositive part of which reads:
"WHEREFORE, in view of the foregoing
considerations, the Court hereby declares the decision,
Exhibit S, rendered by the Undersecretary of Public
Works and Communications null and void; declares the
preliminary injunction, hereto for issued, permanent, and
forever enjoining both respondents from molesting the
spouses Romeo Martinez and Leonor Suarez in their
possession, use and enjoyment of their property described
in Plan Psu-9992 and referred to in their petition."
"Without pronouncement as to costs."SO ORDERED."
As against this judgment respondent officials of the
Department of Public Works and Communications took
the instant appeal, contending that the lower Court erred:
1. In holding that then Senator Rogelio de la
Rosa, complainant in the administrative case, is not an
interested party and his letter-complaint dated August 15,
1958 did not confer jurisdiction upon the respondent
Undersecretary of Public Works and Communications to
investigate the said administrative case;
2. In holding that the duty to investigate
encroachments upon public rivers conferred upon the
respondent Secretary under Republic Act No. 7056
cannot be lawfully delegated by him to his subordinates;
3. In holding that the investigation ordered by the
respondent Secretary in this case is illegal on the ground
that the said respondent Secretary has arrogated unto
himself the power, which he does not possess, of
reversing, making nugatory, and setting aside the two
lawful decisions of the Court Exhibits K and I, and even
annulling thereby, the one rendered by the highest
Tribunal of the land;
4. In not sustaining respondent's claim that
petitioners have no cause of action because the property
in dispute is a public river and in holding that the said
claim has no basis in fact and in law;
5. In not passing upon and disposing of
respondent's counterclaim;
6. In not sustaining respondent's claim that the
petition should not have been entertained on the ground
that the petitioners have not exhausted administrative
remedies; and
7. In holding that the decision of the respondents
is illegal on the ground that it violates the principles that
laws shall have no retroactive effect unless the contrary is
provided and in holding that the said Republic Act No.
2056 is unconstitutional on the ground that respondents'
threat of prosecuting petitioners under Section 3 thereof
for acts done four years before its enactment renders the
said law ex post facto.
The Court of Appeals sustained the above-mentioned
assignment of errors committed by the Court of First
Instance of Pampanga and, as previously stated, reversed
the judgment of the latter court. From this reversal this
appeal by certiorari was taken, and before this Court,
petitioners-appellants assigned the following errors
allegedly committed by the Court of Appeals:
1. THE COURT OF APPEALS ERRED IN
DECLARING IN THE INSTANT CASE THAT
PARCEL NO. 2 OF TRANSFER CERTIFICATE OF
TITLE NO. 15856 IS A PUBLIC RIVER AND
ORDERING THE CANCELLATION OF ITS
REGISTRATION BECAUSE THIS CONSTITUTES A
COLLATERAL ATTACK ON A TORRENS TITLE IN
VIOLATION OF THE LAW AND THE WELL-
SETTLED JURISPRUDENCE ON THE MATTER.
2. THE COURT OF APPEALS ERRED IN
REOPENING AND RE-LITIGATING THE ISSUE AS
TO WHETHER OR NOT LOT NO. 2 OF TRANSFER
CERTIFICATE OF TITLE NO. 15856 REGISTER OF
DEEDS OF PAMPANGA, IS A PUBLIC RIVER
NOTWITHSTANDING THE FACT THAT THIS ISSUE
HAS BEEN LONG RESOLVED AND SETTLED BY
THE LAND REGISTRATION COURT OF
PAMPANGA IN LAND REGISTRATION
PROCEEDING NO. 692 AND IS NOW RES
JUDICATA.
3. THE COURT OF APPEALS ERRED IN ORDERING
THE CANCELLATION OF THE REGISTRATION OF
LOT NO. 2 OF TRANSFER CERTIFICATE OF TITLE
NO. 15856 NOTWITHSTANDING THE FACT THAT
THE TORRENS TITLE COVERING IT HAS BEEN
VESTED IN THE PETITIONERS WHO ARE THE
SEVENTH OF THE SUCCESSIVE INNOCENT
PURCHASERS THEREOF AND WHO IN
PURCHASING THE SAME RELIED ON THE
PRINCIPLE THAT THE PERSONS DEALING WITH
REGISTERED LAND NEED NOT GO BEHIND THE
REGISTER TO DETERMINE THE CONDITION OF
THE PROPERTY.
The 1st and 2nd assignment of errors, being closely
related, will be taken up together.
The ruling of the Court of Appeals that Lot No. 2 covered
by Transfer Certificate of Title No. 15856 of the
petitioners-appellants is a public stream and that said title
should be cancelled and the river covered reverted to
public domain, is assailed by the petitioners-appellants as
being a collateral attack on the indefeasibility of the
torrens title originally issued in 1925 in favor of the
petitioners-appellants' predecessor-in-interest,
Potenciano Garcia, which is violative of the rule of res
judicata. It is argued that as the decree of registration
issued by the Land Registration Court was not re-opened
through a petition for review filed within one (1) year
from the entry of the decree of title, the certificate of title
issued pursuant thereto in favor of the appellants for the
land covered thereby is no longer open to attack under
Section 38 of the Land Registration Act (Act 496) and the
jurisprudence on the matter established by this Tribunal.
Section 38 of the Land Registration Act cited by
appellants expressly makes a decree of registration, which
ordinarily makes the title absolute and indefeasible,
subject to the exemption stated in Section 39 of the said
Act among which are: "liens, claims or rights arising or
existing under the laws or Constitution of the United
States or of the Philippine Islands which the statute of the
Philippine Islands cannot require to appear of record in
the registry."
At the time of the enactment of Section 496, one right
recognized or existing under the law is that provided for
in Article 339 of the old Civil Code which reads as
follows:
Property of public ownership is:
1. That destined to the public use, such as roads, canals,
rivers, torrents, ports, and bridges constructed by the
State, and banks shores, roadsteads, and that of a similar
character. (Par. 1)
The above-mentioned properties are parts of the public
domain intended for public use, are outside the commerce
of men and, therefore, not subject to private appropriation.
( 3 Manresa, 6th ed. 101-104.)
In Ledesma v. Municipality of Iloilo, 49 Phil. 769, this
Court held:
A simple possession of a certificate of title under the
Torrens system does not necessarily make the possessor a
true owner of all the property described therein. If a
person obtains title under the Torrens system which
includes by mistake or oversight, lands which cannot be
registered under the Torrens system, he does not by virtue
of said certificate alone become the owner of the land
illegally included.
In Mercado v. Municipal President of Macabebe, 59 Phil.
592, it was also said:
It is useless for the appellant now to allege that she has
obtained certificate of title No. 329 in her favor because
the said certificate does not confer upon her any right to
the creek in question, inasmuch as the said creek, being of
the public domain, is included among the various
exceptions enumerated in Section 39 of Act 496 to which
the said certificate is subject by express provision of the
law.
The same ruling was laid down in Director of Lands v.
Roman Catholic Bishop of Zamboanga, 61 Phil. 644, as
regards public plaza.
In Dizon, et al. v. Rodriguez, et al., G.R. No. L-20300-01
and G.R. No. L-20355-56, April 30, 1965, 20 SCRA 704,
it was held that the incontestable and indefeasible
character of a Torrens certificate of title does not operate
when the land covered thereby is not capable of
registration.
It is, therefore, clear that the authorities cited by the
appellants as to the conclusiveness and incontestability of
a Torrens certificate of title do not apply here. The Land
Registration Court has no jurisdiction over non-
registerable properties, such as public navigable rivers
which are parts of the public domain, and cannot validly
adjudge the registration of title in favor of a private
applicant. Hence, the judgment of the Court of First
Instance of Pampanga as regards the Lot No. 2 of
Certificate of Title No. 15856 in the name of petitioners-
appellants may be attacked at any time, either directly or
collaterally, by the State which is not bound by any
prescriptive period provided for by the Statute of
Limitations (Article 1108, par. 4, new Civil Code). The
right of reversion or reconveyance to the State of the
public properties fraudulently registered and which are
not capable of private appropriation or private acquisition
does not prescribe. (Republic v. Ramona Ruiz, et al., G.R.
No. L-23712, April 29, 1968, 23 SCRA 348; Republic v.
Ramos, G.R. No.
L-15484, January 31, 1963, 7 SCRA 47.)
When it comes to registered properties, the jurisdiction of
the Secretary of Public Works & Communications under
Republic Act 2056 to order the removal or obstruction to
navigation along a public and navigable creek or river
included therein, has been definitely settled and is no
longer open to question (Lovina v. Moreno, G.R. No L-
17821, November 29, 1963, 9 SCRA 557; Taleon v.
Secretary of Public Works & Communications G.R. No.
L-24281, May 16, 1961, 20 SCRA 69, 74).
The evidence submitted before the trial court which was
passed upon by the respondent Court of Appeals shows
that Lot No. 2 (Plan Psu 992) of Transfer Certificate of
Title No. 15856, is a river of the public domain. The
technical description of both Lots Nos. 1 and 2 appearing
in Original Certificate of Title No. 14318 of the Register
of Deeds of Pampanga, from which the present Transfer
Certificate of Title No. 15856 was derived, confirms the
fact that Lot No. 2 embraced in said title is bounded
practically on all sides by rivers. As held by the Court of
First Instance of Pampanga in Civil Case No. 1247 for
injunction filed by the petitioners' predecessors-in-
interest against the Municipal Mayor of Lubao and
decided in 1916 (Exh. "L"), Lot No. 2 is a branch of the
main river that has been covered with water since time
immemorial and, therefore, part of the public domain.
This finding having been affirmed by the Supreme Court,
there is no longer any doubt that Lot No. 2 of Transfer
Certificate of Title No. 15856 of petitioners is a river
which is not capable of private appropriation or
acquisition by prescription. (Palanca v. Com. of the
Philippines, 69 Phil. 449; Meneses v. Com. of the
Philippines, 69 Phil. 647). Consequently, appellants' title
does not include said river.
II
As regards the 3rd assignment of error, there is no weight
in the appellants' argument that, being a purchaser for
value and in good faith of Lot No. 2, the nullification of
its registration would be contrary to the law and to the
applicable decisions of the Supreme Court as it would
destroy the stability of the title which is the core of the
system of registration. Appellants cannot be deemed
purchasers for value and in good faith as in the deed of
absolute conveyance executed in their favor, the
following appears:
6. Que la segunda parcela arriba descrita y mencionada
esta actualmente abierta, sin malecones y excluida de la
primera parcela en virtud de la Orden Administrative No.
103, tal como fue enmendada, del pasado regimen o
Gobierno.
7. Que los citados compradores Romeo Martinez y
Leonor Suarez se encargan de gestionar de las autoridades
correspondientes para que la citada segunda parcela pueda
ser convertida de nuevo en pesqueria, corriendo a cuenta
y cargo de los mismos todos los gastos.
8. Que en el caso de que dichos compradores no pudiesen
conseguir sus propositos de convertir de nuevo en
pesquera la citada segunda parcela, los aqui vendedores
no devolveran ninguna cantidad de dinero a los referidos
compradores; este es, no se disminuiriat el precio de esta
venta. (Exh. 13-a, p. 52, respondents record of exhibits)
These stipulations were accepted by the petitioners-
appellants in the same conveyance in the following terms:
Romeo Martinez y Leonor Suarez, mayores de edad,
filipinos y residentes en al Barrio de Julo Municipio de
Malabon, Provincia de Rizal, por la presente, declaran que
estan enterados del contenido de este documento y lo
aceptan en los precisos terminos en que arriba uedan
consignados. (Exh. 13-a, ibid)
Before purchasing a parcel of land, it cannot be contended
that the appellants who were the vendees did not know
exactly the condition of the land that they were buying
and the obstacles or restrictions thereon that may be put
up by the government in connection with their project of
converting Lot No. 2 in question into a fishpond.
Nevertheless, they willfully and voluntarily assumed the
risks attendant to the sale of said lot. One who buys
something with knowledge of defect or lack of title in his
vendor cannot claim that he acquired it in good faith
(Leung Lee v. Strong Machinery Co., et al., 37 Phil. 664).
The ruling that a purchaser of a registered property cannot
go beyond the record to make inquiries as to the legality
of the title of the registered owner, but may rely on the
registry to determine if there is no lien or encumbrances
over the same, cannot be availed of as against the law and
the accepted principle that rivers are parts of the public
domain for public use and not capable of private
appropriation or acquisition by prescription.
FOR ALL THE FOREGOING, the judgment of the Court
of Appeals appealed from is in accordance with law, and
the same is hereby affirmed with costs against the
petitioners-appellants.
Makalintal, C.J., Castro, Teehankee and Muñoz Palma,
JJ., concur. Makasiar, J., is on leave.
EN BANC
[ GR No. 169435, Feb 27, 2008 ]
MUNICIPALITY OF NUEVA ERA v.
MUNICIPALITY OF MARCOS +
DECISION 570 Phil. 395
REYES, R.T., J.:
AS the law creating a municipality fixes its boundaries,
settlement of boundary disputes between municipalities is
facilitated by carrying into effect the law that created
them.
Any alteration of boundaries that is not in accordance with
the law creating a municipality is not the carrying into
effect of that law but its amendment, which only the
Congress can do.[1]
For Our review on certiorari is the Decision[2] of the
Court of Appeals (CA) reversing to a certain extent
that[3] of the Regional Trial Court (RTC), Branch 12,
Laoag City, Ilocos Norte, in a case that originated from
the Sangguniang Panlalawigan (SP) of Ilocos Norte about
the boundary dispute between the Municipalities of
Marcos and Nueva Era in Ilocos Norte.
The CA declared that Marcos is entitled to have its eastern
boundary extended up "to the boundary line between the
province of Ilocos Norte and Kalinga-Apayao."[4] By this
extension of Marcos' eastern boundary, the CA allocated
to Marcos a portion of Nueva Era's territory.
The Facts
The Municipality of Nueva Era was created from the
settlements of Bugayong, Cabittaoran, Garnaden,
Padpadon, Padsan, Paorpatoc, Tibangran, and Uguis
which were previously organized as rancherias, each of
which was under the independent control of a chief.
Governor General Francis Burton Harrison, acting on a
resolution passed by the provincial government of Ilocos
Norte, united these rancherias and created the township
of Nueva Era by virtue of Executive Order (E.O.) No.
66 [5] dated September 30, 1916.
The Municipality of Marcos, on the other hand, was
created on June 22, 1963 pursuant to Republic Act (R.A.)
No. 3753 entitled "An Act Creating the Municipality of
Marcos in the Province of Ilocos Norte." Section 1 of R.A.
No. 3753 provides:
SECTION 1. The barrios of Capariaan, Biding, Escoda,
Culao, Alabaan, Ragas and Agunit in the Municipality of
Dingras, Province of Ilocos Norte, are hereby separated
from the said municipality and constituted into a new and
separate municipality to be known as the Municipality of
Marcos, with the following boundaries:
On the Northwest, by the barrios Biding-Rangay
boundary going down to the barrios Capariaan-Gabon
boundary consisting of foot path and feeder road; on the
Northeast, by the Burnay River which is the common
boundary of barrios Agunit and Naglayaan; on the East,
by the Ilocos Norte-Mt. Province boundary; on the South,
by the Padsan River which is at the same time the
boundary between the municipalities of Banna and
Dingras; on the West and Southwest, by the boundary
between the municipalities of Batac and Dingras.
The Municipality of Marcos shall have its seat of
government in the barrio of Biding.
Based on the first paragraph of the said Section 1 of R.A.
No. 3753, it is clear that Marcos shall be derived from the
listed barangays of Dingras, namely: Capariaan, Biding,
Escoda, Culao, Alabaan, Ragas and Agunit. The
Municipality of Nueva Era or any of its barangays was
not mentioned. Hence, if based only on said paragraph, it
is clear that Nueva Era may not be considered as a source
of territory of Marcos.
There is no issue insofar as the first paragraph is
concerned which named only Dingras as the mother
municipality of Marcos. The problem, however, lies in the
description of Marcos' boundaries as stated in the second
paragraph, particularly in the phrase: "on the East, by the
Ilocos Norte-Mt. Province boundary."
It must be noted that the term "Mt. Province" stated in the
above phrase refers to the present adjoining provinces of
Benguet, Mountain Province, Ifugao, Kalinga and
Apayao, which were then a single province.
Mt. Province was divided into the four provinces of
Benguet, Mountain Province, Ifugao, and Kalinga-
Apayao by virtue of R.A. No. 4695 which was enacted on
June 18, 1966. On February 14, 1995, the province of
Kalinga-Apayao, which comprises the sub-provinces of
Kalinga and Apayao, was further converted into the
regular provinces of Kalinga and Apayao pursuant to R.A.
No. 7878.
The part of then Mt. Province which was at the east of
Marcos is now the province of Apayao. Hence, the eastern
boundary referred to by the second paragraph of Section
1 of R.A. No. 3753 is the present Ilocos Norte-Apayao
boundary.
On the basis of the said phrase, which described Marcos'
eastern boundary, Marcos claimed that the middle portion
of Nueva Era, which adjoins its eastern side, formed part
of its territory. Its reasoning was founded upon the fact
that Nueva Era was between Marcos and the Ilocos Norte-
Apayao boundary such that if Marcos was to be bounded
on the east by the Ilocos Norte-Apayao boundary, part of
Nueva Era would consequently be obtained by it.[6]
Marcos did not claim any part of Nueva Era as its own
territory until after almost 30 years,[7] or only on March 8,
1993, when its Sangguniang Bayan passed Resolution No.
93-015.[8] Said resolution was entitled: "Resolution
Claiming an Area which is an Original Part of Nueva Era,
But Now Separated Due to the Creation of Marcos Town
in the Province of Ilocos Norte."
Marcos submitted its claim to the SP of Ilocos Norte for
its consideration and approval. The SP, on the other hand,
required Marcos to submit its position paper.[9]
In its position paper, Marcos alleged that since its
northeastern and eastern boundaries under R.A. No. 3753
were the Burnay River and the Ilocos Norte-Mountain
Province boundary, respectively, its eastern boundary
should not be limited to the former Dingras-Nueva Era
boundary, which was coterminous and aligned with the
eastern boundary of Dingras. According to Marcos, its
eastern boundary should extend further to the east or up
to the Ilocos-Norte-Mt. Province boundary pursuant to the
description of its eastern boundary under R.A. No.
3753.[10]
In view of its claim over the middle portion of Nueva Era,
Marcos posited that Nueva Era was cut into two parts.
And since the law required that the land area of a
municipality must be compact and contiguous, Nueva
Era's northern isolated portion could no longer be
considered as its territory but that of Marcos'. Thus,
Marcos claimed that it was entitled not only to the middle
portion[11] of Nueva Era but also to Nueva Era's isolated
northern portion. These areas claimed by Marcos were
within Barangay Sto. Niño, Nueva Era.
Nueva Era reacted to the claim of Marcos through its
Resolution No. 1, Series of 1993. It alleged that since time
immemorial, its entire land area was an ancestral domain
of the "tinguians," an indigenous cultural community. It
argued to the effect that since the land being claimed by
Marcos must be protected for the tinguians, it must be
preserved as part of Nueva Era.[12]
According to Nueva Era, Marcos was created out of the
territory of Dingras only. And since R.A. No. 3753
specifically mentioned seven (7) barrios of Dingras to
become Marcos, the area which should comprise Marcos
should not go beyond the territory of said barrios.[13]
From the time Marcos was created in 1963, its eastern
boundary had been considered to be aligned and
coterminous with the eastern boundary of the adjacent
municipality of Dingras. However, based on a re-survey
in 1992, supposedly done to conform to the second
paragraph of Section 1 of R.A. No. 3753, an area of
15,400 hectares of Nueva Era was alleged to form part of
Marcos.[14] This was the area of Barangay Sto. Niño,
Nueva Era that Marcos claimed in its position paper.
On March 29, 2000, the SP of Ilocos Norte ruled in favor
of Nueva Era. The fallo of its decision[15] reads:
WHEREFORE, in view of all the foregoing, this Body has
no alternative but to dismiss, as it hereby DISMISSES
said petition for lack of merit. The disputed area
consisting of 15,400 hectares, more or less, is hereby
declared as part and portion of the territorial jurisdiction
of respondent Nueva Era.[16]
R.A. No. 3753 expressly named the barangays that would
comprise Marcos, but none of Nueva Era's barangays
were mentioned. The SP thus construed, applying the rule
of expressio unius est exclusio alterius, that no part of
Nueva Era was included by R.A. No. 3753 in creating
Marcos.[17]
The SP ratiocinated that if Marcos was to be bounded by
Mt. Province, it would encroach upon a portion, not only
of Nueva Era but also of Abra. Thus:
x x x Even granting, for the sake of argument, that the
eastern boundary of Marcos is indeed Mountain Province,
Marcos will then be claiming a portion of Abra because
the province, specifically Barangay Sto. Niño, Nueva Era,
is actually bounded on the East by the Province of Abra.
Abra is situated between and separates the Provinces of
Ilocos Norte and Mountain Province.
This is precisely what this body would like to avoid.
Statutes should be construed in the light of the object to
be achieved and the evil or mischief to be suppressed, and
they should be given such construction as will advance
the object, suppress the mischief and secure the benefits
intended.[18] (Citations omitted)
The SP further explained:
Invariably, it is not the letter, but the spirit of the law and
the intent of the legislature that is important. When the
interpretation of the statute according to the exact and
literal import of its words would lead to absurdity, it
should be construed according to the spirit and reason,
disregarding if necessary the letters of the law. It is
believed that congress did not intend to have this absurd
situation to be created when it created the Municipality of
Marcos. This body, by the mandate given to it by the RA
7160 otherwise known Local Government Code, so
believes that respondent Nueva Era or any portion thereof
has been excluded from the ambit of RA 3753. Under the
principle of "espressio (sic) unios (sic) est exclusio
alterius," by expressly naming the barangays that will
comprise the town of Marcos, those not mentioned are
deemed excluded. In Republic Act 4354, where Section 2
thereof enumerated the barrios comprising the City of
Davao excluding the petitioner Barrio Central as part of
the said City, the court held that there arose a prima facie
conclusion that the said law abolished Barrio Central as
part of Davao City.
Historically, the hinterlands of Nueva Era have been
known to be the home of our brothers and sisters
belonging to peculiar groups of non-(C)hristian
inhabitants with their own rich customs and traditions and
this body takes judicial notice that the inhabitants of
Nueva Era have proudly claimed to be a part of this rich
culture. With this common ancestral heritage which
unfortunately is absent with Marcos, let it not be
disturbed.[19] (Emphasis ours and citations omitted)
RTC Decision
On appeal by Marcos, the RTC affirmed the decision of
the SP in its decision[20] of March 19, 2001. The
dispositive part of the RTC decision reads:
WHEREFORE, the instant appeal is hereby DISMISSED.
The questioned decision of the Sangguniang
Panlalawigan of Ilocos Norte is hereby AFFIRMED.
No costs.
SO ORDERED.[21]
The RTC reasoned out in this wise:
The position of the Municipality of Marcos is that the
provision of R.A. 3753 as regards its boundary on the East
which is the "Ilocos Norte-Mt. Province" should prevail.
On the other hand, the Municipality of Nueva Era posits
the theory that only the barrios of the Municipality of
Dingras as stated in R.A. 3753 should be included in the
territorial jurisdiction of the Municipality of Marcos. The
Sangguniang Panlalawigan agreed with the position of
Nueva Era.
xxxx
An examination of the Congressional Records during the
deliberations of the R.A. 3753 (House Bill No. 3721)
shows the Explanatory Note of Congressman Simeon M.
Valdez, 2nd District, Ilocos Norte, to wit:
EXPLANATORY NOTE
This bill seeks to create in the Province of Ilocos Norte a
new municipality to be known as the Municipality of
Marcos, to be comprised by the present barrios of
Capariaan, Biding Escoda, Culao, Alabaan, Ragas and
Agunit, all in the Municipality of Dingras of the same
province. The seat of government will be in the sitio of
San Magro in the present barrio of Ragas.
xxxx
On the other hand, the Municipality of Dingras will not be
adversely affected too much because its finances will still
be sound and stable. Its capacity to comply with its
obligations, especially to its employees and personnel,
will not be diminished nor its operations paralyzed. On
the contrary, economic development in both the mother
and the proposed municipalities will be accelerated.
In view of the foregoing, approval of this bill is earnestly
requested.
(Sgd.) SIMEON M. VALDEZ
Congressman, 2nd District
Ilocos Norte[22]
Parenthetically, the legislative intent was for the creation
of the Municipality of Marcos, Ilocos Norte from the
barrios (barangays) of the Municipality of Dingras, Ilocos
Norte only. Hence, the Municipality of Marcos cannot
add any area beyond the territorial jurisdiction of the
Municipality of Dingras, Ilocos Norte. This conclusion
might have been different only if the area being claimed
by the Municipality of Marcos is within the territorial
jurisdiction of the Municipality of Dingras and not the
Municipality of Nueva Era. In such case, the two
conflicting provisions may be harmonized by including
such area within the territorial jurisdiction of the
Municipality of Dingras as within the territorial
jurisdiction of the Municipality of Marcos.[23] (Emphasis
ours)
CA Disposition
Still determined to have a more extensive eastern
boundary, Marcos filed a petition for review[24] of the
RTC decision before the CA. The issues raised by Marcos
before the CA were:
1.
Whether or not the site of Hercules Minerals and
Oil, Inc. which is within a Government Forest
Reservation in Barangay Sto. Niño, formerly of
Nueva Era, is a part of the newly created
Municipality of Marcos, Ilocos Norte.
2.
Whether or not the portion of Barangay Sto. Niño
on the East which is separated from Nueva Era as
a result of the full implementation of the
boundaries of the new Municipality of Marcos
belongs also to Marcos or to Nueva Era.[25]
The twin issues involved two portions of Nueva Era, viz.:
(1) middle portion, where Hercules Minerals and Oil, Inc.
is located; and (2) northern portion of Nueva Era, which,
according to Marcos, was isolated from Nueva Era in
view of the integration to Marcos of said middle portion.
Marcos prayed before the CA that the above two portions
of Nueva Era be declared as part of its own territory. It
alleged that it was entitled to the middle portion of Nueva
Era in view of the description of Marcos' eastern boundary
under R.A. No. 3753. Marcos likewise contended that it
was entitled to the northern portion of Nueva Era which
was allegedly isolated from Nueva Era when Marcos was
created. It posited that such isolation of territory was
contrary to law because the law required that a
municipality must have a compact and contiguous
territory.[26]
In a Decision[27] dated June 6, 2005, the CA partly
reversed the RTC decision with the following disposition:
WHEREFORE, we partially GRANT the petition treated
as one for certiorari. The Decisions of both the
Sangguniang Panlalawigan and Regional Trial Court
of Ilocos Norte are REVERSED and SET
ASIDE insofar as they made the eastern boundary of the
municipality of Marcos co-terminous with the eastern
boundary of Dingras town, and another is rendered
extending the said boundary of Marcos to the boundary
line between the province of Ilocos Norte and Kalinga-
Apayao, but the same Decisions are AFFIRMED with
respect to the denial of the claim of Marcos to the
detached northern portion of barangay Sto. Niño which
should, as it is hereby ordered to, remain with the
municipality of Nueva Era. No costs.
SO ORDERED.[28]
In concluding that the eastern boundary of Marcos was the
boundary line between Ilocos Norte and Kalinga-Apayao,
the CA gave the following explanation:
Clearly then, both the SP and the RTC erred when they
ruled that the eastern boundary of Marcos is only
coterminous with the eastern boundary of the adjacent
municipality of Dingras and refused to extend it up to the
boundary line between the provinces of Ilocos Norte and
Mountain Province (Kalinga-Apayao). R.A. No. 3753, the
law creating Marcos, is very explicit and leaves no room
for equivocation that the boundaries of Marcos town are:
"On the Northwest by the barrios Biding-Rangay
boundary going down to the barrios Capariaan-Gabon
boundary consisting of foot path and feeder road; on the
Northeast, by the Burnay River which is the common
boundary of barrios Agunit and Naglayaan; on the East,
by the Ilocos Norte-Mt. Province boundary; on the
South by the Padsan River, which is at the same time the
boundary between the municipalities of Banna and
Dingras; on the West and Southwest by the boundary
between the municipalities of Batac and Dingras."
To stop short at the eastern boundary of Dingras as the
eastern boundary also of Marcos and refusing to go farther
to the boundary line between Ilocos Norte and Mountain
Province (Kalinga-Apayao) is tantamount to amending
the law which Congress alone can do. Both the SP and
RTC have no competence to undo a valid act of Congress.
It is not correct to say that Congress did not intend to take
away any part of Nueva Era and merge it with Marcos for
it is chargeable with conclusive knowledge that when it
provided that the eastern boundary of Marcos is the
boundary line between Ilocos Norte and Mountain
Province, (by the time of both the SB and RTC Decision
was already Kalinga-Apayao), it would be cutting through
a portion of Nueva Era. As the law is written so must it be
applied. Dura lex sed lex![29]
The CA likewise held that the province Abra was not
located between Marcos and Kalinga-Apayao; and that
Marcos would not encroach upon a portion of Abra for it
to be bounded by Kalinga-Apayao, to wit:
Nueva Era's contention that to lay out the eastern
jurisdiction of Marcos to the boundary line between
Ilocos Norte and Mountain Province (Kalinga-Apayao)
would mean annexing part of the municipality of Itnig,
province of Abra to Marcos as Abra is between Ilocos
Norte and Mountain Province is geographically
erroneous. From Nueva Era's own map of Region 1,
which also depicts the locations of Kalinga-Apayao,
Abra, Mountain Province, Benguet and Nueva Vizcaya
after the partition of the old Mountain Province into the
provinces of Kalinga-Apayao, Ifugao, Mountain Province
and Benguet, the province of Abra is situated far to the
south of Kalinga Apayao and is between the latter and the
present Mountain Province, which is farther south of
Abra. Abra is part of the eastern boundary of Ilocos Sur
while Kalinga-Apayao is the eastern boundary of Ilocos
Norte. Hence, in no way will the eastern boundary of the
municipality of Marcos encroach upon a portion of
Abra.[30]
However, Marcos' claim over the alleged isolated
northern portion of Nueva Era was denied. The CA ruled:
Going now to the other area involved, i.e., the portion of
Sto. Niño that is separated from its mother town Nueva
Era and now lies east of the municipalities of Solsona and
Dingras and north of Marcos, it bears stressing that it is
not included within the area of Marcos as defined by law.
But since it is already detached from Sto. Niño, Marcos is
laying claim to it to be integrated into its territory by the
SP because it is contiguous to a portion of said
municipality.
We hold that the SP has no jurisdiction or authority to act
on the claim, for it will necessarily substantially alter the
north eastern and southern boundaries of Marcos from
that defined by law and unduly enlarge its area. Only
Congress can do that. True, the SP may substantially alter
the boundary of a barangay within its jurisdiction. But
this means the alteration of the boundary of a barangay in
relation to another barangay within the same
municipality for as long as that will not result in any
change in the boundary of that municipality. The area in
dispute therefore remains to be a part of Sto. Niño, a
barangay of Nueva Era although separated by the newly
created Marcos town pursuant to Section 7(c) of the 1991
Local Government Code which states:
SEC. 7. Creation and Conversion. As a general rule, the
creation of a local government unit or its conversion from
one level to another shall be based on verifiable indicators
of viability and projected capacity to provide services, to
wit:
(c) Land Area. It must be contiguous, unless it comprises
two or more islands or is separated by a local
government unit independent of the others; properly
identified by metes and bounds with technical
descriptions; and sufficient to provide for such basic
services and facilities to meet the requirements of its
populace.[31]
The CA also expressed the view that Marcos adopted the
wrong mode of appeal in bringing the case to it. The case,
according to the CA, was appealable only to the RTC.
Nonetheless, despite its pronouncement that the case was
dismissible, the CA took cognizance of the same by
treating it as one for certiorari, to wit:
A final word. At the outset, we agonized over the dilemma
of choosing between dismissing outright the petition at
bar or entertaining it. This is for the simple reason that a
petition for review is a mode of appeal and is not
appropriate as the Local Government Code provides for
the remedy of appeal in boundary disputes only to the
Regional Trial Court but not any further appeal to this
Court. Appeal is a purely statutory right. It cannot be
exercised unless it is expressly granted by law. This is too
basic to require the citation of supporting authority.
By the same token, since the Local Government Code
does not explicitly grant the right of further appeal from
decisions of the RTCs in boundary disputes between or
among local government units, Marcos town cannot
exercise that right from the adverse decision of the RTC
of Ilocos Norte. Nonetheless, because of the
transcendental legal and jurisdictional issues involved, we
solved our inceptive dilemma by treating the petition at
bar as a special civil action for certiorari.[32]
Nueva Era was not pleased with the decision of the CA.
Hence, this petition for review on certiorari under Rule
45.
Issues
Nueva Era now raises the following issues:
a) Whether or not, the Court of Appeals has jurisdiction
on the Petition for Review on Appeal, since Sec. 119 of
the Local Government Code, which provides that "An
appeal to the Decision of the Sangguniang Panlalawigan
is exclusively vested to the Regional Trial Court, without
further Appeal to the Court of Appeals";
b) Whether or not, the Court of Appeals gravely abused
its discretion, in treating the Petition for Review On
Appeal, filed under Rule 45, Revised Rules of Court, as a
Petition for Certiorari, under Rule 65 of the Revised
Rules of Court;
c) Whether or not, the Court of Appeals erred in its
appreciation of facts, in declaring that MARCOS East is
not coterminous with the Eastern boundary of its mother
town-Dingras. That it has no factual and legal basis to
extend MARCOS territory beyond Brgys. Agunit
(Ferdinand) and Culao (Elizabeth) of Marcos, and to go
further East, by traversing and disintegrating Brgy. Sto.
Niño, and drawing parallel lines from Sto. Niño, there lies
Abra, not Mt. Province or Kalinga-Apayao.[33]
Basically, there are two (2) issues to resolve here: (1)
whether or not the mode of appeal adopted by Marcos in
bringing the case to the CA is proper; and (2) whether or
not the eastern boundary of Marcos extends over and
covers a portion of Nueva Era.
Our Ruling
Marcos correctly appealed the RTC judgment via
petition for review under Rule 42.
Under Section 118(b) of the Local Government Code,
"(b)oundary disputes involving two (2) or more
municipalities within the same province shall be referred
for settlement to the sangguniang panlalawigan
concerned." The dispute shall be formally tried by the
said sanggunian in case the disputing municipalities fail
to effect an amicable settlement.[34]
The SP of Ilocos validly took cognizance of the dispute
between the parties. The appeal of the SP judgment to the
RTC was likewise properly filed by Marcos before the
RTC. The problem, however, lies in whether the RTC
judgment may still be further appealed to the CA.
The CA pronounced that the RTC decision on the
boundary dispute was not appealable to it. It ruled that no
further appeal of the RTC decision may be made pursuant
to Section 119 of the Local Government Code[35] which
provides:
SECTION 119. Appeal. Within the time and manner
prescribed by the Rules of Court, any party may elevate
the decision of the sanggunian concerned to the proper
Regional Trial Court having jurisdiction over the area in
dispute. The Regional Trial Court shall decide the appeal
within one (1) year from the filing thereof. Pending final
resolution of the disputed area prior to the dispute shall be
maintained and continued for all legal purposes.
The CA concluded that since only the RTC was
mentioned as appellate court, the case may no longer be
further appealed to it. The CA stated that "(a)ppeal is a
purely statutory right. It cannot be exercised unless it is
expressly granted by law. This is too basic to require the
citation of supporting authority."[36]
The CA, however, justified its taking cognizance of the
case by declaring that: "because of the transcendental
legal and jurisdictional issues involved, we solved our
inceptive dilemma by treating the petition at bar as a
special civil action for certiorari."[37]
The CA erred in declaring that only the RTC has appellate
jurisdiction over the judgment of the SP.
True, appeal is a purely statutory right and it cannot be
exercised unless it is expressly granted by law.
Nevertheless, the CA can pass upon the petition for
review precisely because the law allows it.
Batas Pambansa (B.P.) Blg. 129 or the Judiciary
Reorganization Act of 1980, as amended by R.A. No.
7902,[38] vests in the CA the appellate jurisdiction over all
final judgments, decisions, resolutions, orders or awards
of Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards or commissions, among
others.[39] B.P. Blg. 129 has been further supplemented by
the 1997 Rules of Civil Procedure, as amended, which
provides for the remedy of appeal via petition for review
under Rule 42 to the CA in cases decided by the RTC in
the exercise of its appellate jurisdiction.
Thus, the CA need not treat the appeal via petition for
review filed by Marcos as a petition for certiorari to be
able to pass upon the same. B.P. Blg. 129, as amended,
which is supplemented by Rule 42 of the Rules of Civil
Procedure, gives the CA the authority to entertain appeals
of such judgments and final orders rendered by the RTC
in the exercise of its appellate jurisdiction.
At the time of creation of Marcos, approval in a
plebiscite of the creation of a local government unit is
not required.
Section 10, Article X of the 1987 Constitution provides
that:
No province, city, municipality, or barangay may be
created, divided, merged, abolished, or its boundary
substantially altered, except in accordance with the
criteria established in the local government code and
subject to approval by a majority of the votes cast in a
plebiscite in the political units directly affected.[40]
The purpose of the above constitutional provision was
acknowledged by the Court through Justice Reynato S.
Puno in Miranda v. Aguirre,[41] where it was held that:
The 1987 Constitution, more than any of our previous
Constitutions, gave more reality to the sovereignty of our
people for it was borne out of the people power in the
1986 EDSA revolution. Its Section 10, Article X
addressed the undesirable practice in the past whereby
local government units were created, abolished, merged
or divided on the basis of the vagaries of politics and not
of the welfare of the people. Thus, the consent of the
people of the local government unit directly affected was
required to serve as a checking mechanism to any exercise
of legislative power creating, dividing, abolishing,
merging or altering the boundaries of local government
units. It is one instance where the people in their sovereign
capacity decide on a matter that affects them direct
democracy of the people as opposed to democracy thru
people's representatives. This plebiscite requirement is
also in accord with the philosophy of the Constitution
granting more autonomy to local government units.[42]
Nueva Era contends that the constitutional and
statutory[43] plebiscite requirement for the creation of a
local government unit is applicable to this case. It posits
that the claim of Marcos to its territory should be denied
due to lack of the required plebiscite.
We agree with Nueva Era's contention that Marcos' claim
over parts of its territory is not tenable. However, the
reason is not the lack of the required plebiscite under the
1987 and 1973 constitutions and the Local Government
Code of 1991 but other reasons as will be discussed
below.
At the time Marcos was created, a plebiscite was not
required by law to create a local government unit. Hence,
Marcos was validly created without conducting a
plebiscite. As a matter of fact, no plebiscite was
conducted in Dingras, where it was derived.
Lex prospicit, non respicit. The law looks forward, not
backward.[44] It is the basic norm that provisions of the
fundamental law should be given prospective application
only, unless legislative intent for its retroactive
application is so provided.[45]
In the comparable case of Ceniza v. Commission on
Elections[46] involving the City of Mandaue, the Court has
this to say:
Petitioners assail the charter of the City of Mandaue as
unconstitutional for not having been ratified by the
residents of the city in a plebiscite. This contention is
untenable. The Constitutional requirement that the
creation, division, merger, abolition, or alteration of the
boundary of a province, city, municipality, or barrio
should be subject to the approval by the majority of the
votes cast in a plebiscite in the governmental unit or units
affected is a new requirement that came into being only
with the 1973 Constitution. It is prospective in
character and therefore cannot affect the creation of the
City of Mandaue which came into existence on June 21,
1969.[47] (Citations omitted and underlining supplied).
Moreover, by deciding this case, We are not creating
Marcos but merely interpreting the law that created it. Its
creation was already a fait accompli. Therefore, there is
no reason for Us to further require a plebiscite.
As pointed out by Justice Isagani Cruz, to wit:
Finally, it should be observed that the provisions of the
Constitution should be given only a prospective
application unless the contrary is clearly intended. Were
the rule otherwise, rights already acquired or vested might
be unduly disturbed or withdrawn even in the absence of
an unmistakable intention to place them within the scope
of the Constitution.[48]
No part of Nueva Era's territory was taken for the creation
of Marcos under R.A. No. 3753.
Only the barrios (now barangays) of Dingras from which
Marcos obtained its territory are named in R.A. No. 3753.
To wit:
SECTION 1. The barrios of Capariaan, Biding, Escoda,
Culao, Alabaan, Ragas and Agunit in the Municipality of
Dingras, Province of Ilocos Norte, are hereby separated
from the said municipality and constituted into a new and
separate municipality to be known as the Municipality of
Marcos, with the following boundaries:
Since only the barangays of Dingras are enumerated as
Marcos' source of territory, Nueva Era's territory is,
therefore, excluded.
Under the maxim expressio unius est exclusio alterius, the
mention of one thing implies the exclusion of another
thing not mentioned. If a statute enumerates the things
upon which it is to operate, everything else must
necessarily and by implication be excluded from its
operation and effect.[49] This rule, as a guide to probable
legislative intent, is based upon the rules of logic and
natural workings of the human mind.[50]
Had the legislature intended other barangays from Nueva
Era to become part of Marcos, it could have easily done
so by clear and concise language. Where the terms are
expressly limited to certain matters, it may not by
interpretation or construction be extended to other
matters.[51] The rule proceeds from the premise that the
legislature would not have made specified enumerations
in a statute had the intention been not to restrict its
meaning and to confine its terms to those expressly
mentioned.[52]
Moreover, since the barangays of Nueva Era were not
mentioned in the enumeration of barangays out of which
the territory of Marcos shall be set, their omission must be
held to have been done intentionally. This conclusion
finds support in the rule of casus omissus pro omisso
habendus est, which states that a person, object or thing
omitted from an enumeration must be held to have been
omitted intentionally.[53]
Furthermore, this conclusion on the intention of the
legislature is bolstered by the explanatory note of the bill
which paved the way for the creation of Marcos. Said
explanatory note mentioned only Dingras as the mother
municipality of Marcos.
Where there is ambiguity in a statute, as in this case,
courts may resort to the explanatory note to clarify the
ambiguity and ascertain the purpose and intent of the
statute.[54]
Despite the omission of Nueva Era as a mother territory
in the law creating Marcos, the latter still contends that
said law included Nueva Era. It alleges that based on the
description of its boundaries, a portion of Nueva Era is
within its territory.
The boundaries of Marcos under R.A. No. 3753 read:
On the Northwest, by the barrios Biding-Rangay
boundary going down to the barrios Capariaan-Gabon
boundary consisting of foot path and feeder road; on the
Northeast, by the Burnay River which is the common
boundary of barrios Agunit and Naglayaan; on the East,
by the Ilocos Norte-Mt. Province boundary; on the South,
by the Padsan River which is at the same time the
boundary between the municipalities of Banna and
Dingras; on the West and Southwest, by the boundary
between the municipalities of Batac and Dingras.
Marcos contends that since it is "bounded on the East, by
the Ilocos Norte-Mt. Province boundary," a portion of
Nueva Era formed part of its territory because, according
to it, Nueva Era is between the Marcos and Ilocos Norte-
Mt. Province boundary. Marcos posits that in order for its
eastern side to reach the Ilocos Norte-Mt. Province
boundary, it will necessarily traverse the middle portion
of Nueva Era.
Marcos further claims that it is entitled not only to the
middle portion of Nueva Era but also to its northern
portion which, as a consequence, was isolated from the
major part of Nueva Era.
We cannot accept the contentions of Marcos.
Only Dingras is specifically named by law as source
territory of Marcos. Hence, the said description of
boundaries of Marcos is descriptive only of the
listed barangays of Dingras as a compact and contiguous
territory.
Considering that the description of the eastern boundary
of Marcos under R.A. No. 3753 is ambiguous, the same
must be interpreted in light of the legislative intent.
The law must be given a reasonable interpretation, to
preclude absurdity in its application.[55] We thus uphold
the legislative intent to create Marcos out of the territory
of Dingras only.
Courts must give effect to the general legislative intent
that can be discovered from or is unraveled by the four
corners of the statute, and in order to discover said intent,
the whole statute, and not only a particular provision
thereof, should be considered.[56] Every section, provision
or clause of the statute must be expounded by reference to
each other in order to arrive at the effect contemplated by
the legislature. The intention of the legislator must be
ascertained from the whole text of the law, and every part
of the act is to be taken into view.[57]
It is axiomatic that laws should be given a reasonable
interpretation, not one which defeats the very purpose for
which they were passed. This Court has in many cases
involving the construction of statutes always cautioned
against narrowly interpreting a statute as to defeat the
purpose of the legislature and stressed that it is of the
essence of judicial duty to construe statutes so as to avoid
such a deplorable result (of injustice or absurdity) and that
therefore "a literal interpretation is to be rejected if it
would be unjust or lead to absurd results."[58]
Statutes are to be construed in the light of the purposes to
be achieved and the evils sought to be remedied. Thus, in
construing a statute, the reason for its enactment should
be kept in mind and the statute should be construed with
reference to the intended scope and purpose. The court
may consider the spirit and reason of the statute, where a
literal meaning would lead to absurdity, contradiction,
injustice, or would defeat the clear purpose of the
lawmakers.[59]
WHEREFORE, the petition is GRANTED. The
Decision of the Court of Appeals is partly REVERSED.
The Decision of the Regional Trial Court in Ilocos Norte
is REINSTATED. SO ORDERED.
leave.
EN BANC
G.R. No. L-28517 February 21, 1968
AMELITO R. MUTUC, GINES SORIANO with TV
SCREEN NAME NESTOR DE VILLA, JOSE
ALARILLA, TOMAS A. BALUYUT, OSCAR
CALVENTO, RAFAEL GAITE, MICHAEL
JOSEPH, AMADO DE VERA, JR. and FILOMENA
VILLAMOR Petitioners, vs. THE COMMISSION
ON ELECTIONS, MAXIMO ESTRELLA,
TEOTIMO GEALOGO, JOSE LUCIANO,
JUSTINO VENTURA, JOHNNY WILSON, PEDRO
ISON, BERNARDO NONATO, IGNACIO BABASA,
JUAN TENGCO and CESAR ALZONA respondents.
CASTRO, J.:
The petitioners were the candidates of the Nacionalista
Party, for the offices of mayor, vice mayor and councilors
in the municipality of Makati, Rizal in the general
elections held on November 14, 1967. The private
respondents were the rival candidates of the Liberal
Party.chanroblesvirtualawlibrarychanrobles virtual law
library
Originally brought here as an appeal from two resolutions
of the Commission on Elections (Comelec), this case, in
our resolution of January 17, 1968, was considered,
alternatively, as a special civil action for certiorari. In
essence, it poses the novel question of whether the
Comelec has the power to order a canvass of the returns,
disregarding the return from one precinct which is blank
or incomplete in the sense that it does not have any entry
of the votes cast for any candidates, upon its finding that
the votes from that precinct are not likely to alter the
results of the election In counting the votes from the
various precincts in Makati, the municipal board of
canvassers was confronted with an election return which,
while listing the names of the candidates, contained no
entry at all of the votes cast for them. This was the return
from precinct 124. A recourse to the provincial treasurer's
copy of the same return yielded no result as it was
likewise blank or incomplete. So was the Comelec's copy,
except that this showed the total number (263, according
to the parties) of the votes cast in the precinct. As a result,
counting had to be
stopped.chanroblesvirtualawlibrarychanrobles virtual law
library
On November 20, the board of canvassers filed a petition
with the Court of First Instance of Rizal, alleging that
because of discrepancies in the returns from certain
precincts in Makati, among them precinct 124, the board
could not proclaim the winning candidates, and, for this
reason, praying for the opening of the ballot boxes in the
precincts in
question.chanroblesvirtualawlibrarychanrobles virtual
law library
The board did not, however, press its petition. Instead, it
asked the Comelec on November 24 to be allowed to
proceed with the proclamation of the winning candidates,
disregarding for this purpose the return from precinct 124,
on the claim that as the Comelec's copy of the return
showed that there was a total of only 263 votes cast in that
precinct, the results of that election would not materially
be changed by their inclusion.c virtual law library
The Comelec granted the request on the same day and set
the proclamation of the winners for the following day,
November 25. Accordingly, the board of canvassers
reconvened and proclaimed the respondents elected to the
various elective offices in Makati on the basis of the
canvass it had so far made, minus the return from precinct
124. It subsequently withdrew the petition it had
previously filed in court for the opening of the ballot
boxes. The petitioners asked the Comelec to reconsider its
resolution of November 24 and to annul the proclamation
of the respondents, but their motion was denied in another
resolution dated December 22. virtual law library
Hence the present petition. It is now a settled doctrine that
an incomplete canvass of votes is illegal and cannot be the
basis of a subsequent proclamation. 1 Indeed, it is the
ministerial duty of a municipal canvassing body to count
the votes cast "in the same manner as hereinbefore
provided for the provincial board [of
canvassers]," 2 which means to say to count all the votes
cast. Thus, section 160 of the Election Code enjoins
provincial boards of canvassers as follows:
As soon as all the statements are before it but not later
than fifteen days next following the date of the election,
the provincial board of canvassers shall proceed to make
a canvass of all the votes in province for national,
provincial and city candidates, and upon the completion
of the canvass, shall make, as the case may be, separate
statements of all the votes received by each candidate.
A municipal board of canvassers must therefore
count all the votes cast in the election and, for this
purpose, must consider all returns presented to it by the
municipal treasurer. If material defects there are in the
form of the returns, it must send them back to the
corresponding boards of inspectors for correction. 4 If
certain precincts have not sent in their returns, the board
must send for them and the fiscal should forthwith
institute criminal proceedings against those who may be
criminally responsible for the delay. 5 If there is a
discrepancy between two authentic copies of an election
return and the difference affects the result of the election,
the board may ask the proper court of first instance to
order a recount of the ballots. 6 chanrobles virtual law
library
All these serve to underscore the need to count all the
votes cast in an election. Only when the returns are
palpably irregular or obviously manufactured may they be
rejected 7 but even then the board must exercise "extreme
caution." 8 And where a return is falsified, the board may
apply to the Comelec for authority to use another copy
which is genuine and authentic. 9 Why must all the votes
be counted when there is a need to finish the canvass on
time so that proclamation can be made before the
beginning of the term of office? Because to disregard
returns is in effect to disfranchise the voters. 10 chanrobles
virtual law library
The Comelec was, under the circumstances, bereft of
power to order the board of canvassers of Makati to
disregard the return from precinct 124, even if it noted
from its copy (which was likewise blank or incomplete)
that the number of votes cast in the precinct (263) was too
small to be of any significance to any candidate. This,
because the Comelec has no power to decide questions
involving the right to vote, 11 as to disregard a return is in
effect to deny the voters their votes. As it is, the Comelec's
judgment that the results of the election in Makati would
not be materially changed by the inclusion of the votes in
precinct 124 is seriously disputed by the petitioners, and
indeed it is admitted by the respondents that between the
respondent Cesar Alzona, who garnered 18,190 votes to
place eighth among the councilors, and the petitioner
Michael Joseph, who polled 17,969 to land on the ninth
spot, there is a difference of only 221 votes. Conceivably,
the 263 votes in precinct 124 could upset the balance.
What the Comelec should have done is to take the
logically obvious and simple step of ordering the opening
of the ballot box to find out if the copy of the return
deposited therein was properly accomplished and, if it
was, to order that it be used in the canvassing of the votes.
This it had the power to do in the fulfillment of its
constitutional duty of insuring "free, orderly, and honest
elections." And this it was unimpeded and had ample time
to do, considering that from November 24 when it ordered
the proclamation, there were still 37 days to go to the
statutory date of assumption of office by the elected
candidates (January 1) As this Court said in Cauton v.
Commission on Elections: 12
If it is shown that the copies in the hands of the
Commission on Elections and of the municipal treasurer
are similarly tampered [with] as the copies in the hands of
the provincial treasurer, then it becomes evident that all
the three copies of the election returns outside the ballot
box do not constitute a reliable basis for a canvass. The
only copies left to be checked . . . are the ones inside the
ballot boxes. Certainly, the Commission on Elections, in
the exercise of its power to administer and enforce the
laws relative to the conduct of elections may order the
opening of the ballot boxes to ascertain whether the copy
inside each ballot box is also tampered [with] like the
three copies outside the ballot box, corresponding to each
precinct.
This is the reason why in two other cases 13 we upheld the
power of the Comelec to direct canvassing boards to use
returns other than those specified by law if the latter are
found to have been virtual law library
It is, however, contended that this Court lacks jurisdiction
over this case because the respondents have been
proclaimed and have subsequently assumed office, and
that as a matter of fact some of the petitioners, more
specifically the petitioner Michael Joseph, have pending
election protests in the Court of First Instance of Rizal
against some of the respondents. It is indeed true that after
proclamation the usual remedy of any party aggrieved in
an election is to be found in an election protest. But that
is only on the assumption that there has been a valid
proclamation. Where as in the case at bar the proclamation
itself is illegal, the assumption of office cannot in any way
affect the basic issues. 14 chanrobles virtual law library
In view of the conclusion we have thus reached, the
Comelec should direct the opening of the ballot box
corresponding to precinct 124 for the purpose of
retrieving the copy of the election return deposited therein
so that it may be used in canvassing anew the votes cast
for the local officials of Makati, and, should it be found
that the ballot box copy is likewise blank or incomplete,
the Commission should order a count of the ballots, giving
notice, for this purpose, to all the candidates. This is the
procedure that best recommends itself, what with the lack
of specific procedure for dealing with a situation such as
this. Judicial recount of the ballots under section 163 of
the Code 15 cannot be the remedy because there is no
discrepancy between one, authentic copy and another
authentic copy of the same return. As we have earlier
stated the copies of the election return in this case contain
no entries as to the number of votes received by each
candidate. So there really is no discrepancy, but only a
failure to accomplish the form of the return properly.
Indeed what has been submitted is no return at all.
In deciding this case in the way we now do, we are by no
means to be understood as formulating a rule to control
future cases which, although factually and substantially
similar to the present case, may require an altogether
different qualitative approach. And we recognize that
situations may - and do - arise where it becomes advisable
and wholly justified not to await all returns before
proceeding with the proclamation of the winning
candidates. The solution we have here adopted has been
impelled by, and is predicated solely upon, the peculiar
and unusual circumstances here obtaining, relative to
which the Comelec acted with inordinate haste.
ACCORDINGLY, the resolutions of the Commission on
Elections of November 24, and December 22, 1967 are set
aside, and the proclamation of all the private respondents
made on November 25, 1967 is annulled. The
Commission on Elections is hereby directed (1) to order
the board of inspectors of precinct 124 of Makati, after
due notice to all the candidates, to open the ballot box
corresponding to the said precinct for the purpose of
retrieving therefrom the copy of the election return for use
in the new canvass to be held by the municipal board of
canvassers, if said copy has been properly accomplished,
or, in the event that the said copy is blank or incomplete,
to count all the votes cast in the said precinct and then
properly accomplish a return based on such count; and (2)
thereafter to order the municipal board of canvassers of
Makati, without delay and after due notice to all the
candidates, to hold a new canvass of all the votes cast in
that municipality, and to proclaim the winning candidates
in accordance with the results thereof. No pronouncement
as to costs.
Separate Opinions
FERNANDO, J., concurring:
While agreeing fully as I do with the conclusion reached,
expounded with clarity and vigor in the opinion of Justice
Castro, I feel that there are implications of weight and of
significance that call for the expression of my views.
Hence this concurring
opinion.chanroblesvirtualawlibrarychanrobles virtual law
library
Less than a month ago, in Reyes v. Reyes,1 Acain v. Board
of Canvassers 2 was not only cited with approval but was
referred to as speaking "with undiminished authority." It
was the Acain doctrine that from the filing of a petition
for quo warranto or an election protest, the proper court
of first instance acquires exclusive authority to inquire
into and pass upon the validity of proclamation made by
the municipal board of canvassers concerned. That would
therefore preclude the Commission on Elections from
acting further on the
matter.chanroblesvirtualawlibrarychanrobles virtual law
library
The above doctrine seems to be qualified by this except
from the opinion of Justice Castro: "It is indeed true that
after proclamation the usual remedy of any party
aggrieved in an election is to be found in an election
contest. But that is so only on the assumption that there
has been a valid proclamation. Where as in the case at bar
the proclamation itself is illegal, the assumption of office
cannot in any way affect the basic issues."chanrobles
virtual law library
It is my understanding then that if it be apparent on the
face of the pleadings before this Court that the
proclamation was illegal, the Commission could still act,
notwithstanding the filing of an election protest or a quo
warranto proceeding in the meanwhile. To that extent, the
Acain doctrine has been modified. To my mind, there has
been, to paraphrase Cardozo, no seismic innovation, this
particular mansion of the law stands, its symmetry not
marred, its features far from being rendered
unrecognizable, still For it could be said with reason that
a patently illegal proclamation may be looked upon as
devoid of any legal force or effect and therefore
considered as not having taken place at all. In which case,
the constitutional duty cast on the Commission on
Elections to have exclusive charge of the enforcement and
administration of all laws relative to the conduct of
elections leaves it no alternative but to require that the
proper canvass be made, preparatory to a valid
proclamation.
Even if realistically viewed, the law on this point is other
than what it was before and the Acain ruling no longer
speaks with undiminished authority, still the result
reached in this case is unavoidable, if the constitutional
intent of insuring free, orderly, and honest elections were
to be realized, considering the circumstances disclosed by
this litigation. Moreover, it affords more leeway for this
Tribunal in the exercise of its appellate jurisdiction over
the actuations of the respondent Commission, if
depending on the facts of each case, it could retain full
and ample discretion to determine when it shall consider
a matter still proper for the cognizance of the
Commission, notwithstanding the filing of an election
protest or a quo warranto proceeding in the meanwhile.
On principle, there can be no valid objection to such an
amplitude of authority assumed by this Court for only thus
could it assure full adherence to the constitutional intent
that the right to vote for everybody becomes truly
meaningful. One other point. There are those who may
cavil at the absence of any specific statutory provision
which spells out what has been ordained by this Court
today. They may in mock dismay cry out against the evils
of judicial legislation. By way of answer, was it not
Holmes, who pointed out that judges "do and must
legislate, [only] they can do so . . . interstitially; they are
confined from molar to molecular motions." 3 They can
fill in the gaps, clear up the ambiguities, and make
statutory rules truly responsive to the objective sought to
be attained. For thereby there is not merely submission to
the dictates of justice but fealty to the overriding concern
that prompted the enactment of the statute. As was so
aptly expressed: "To follow the dictates of justice, when
in harmony with the law, must be a pleasure, but to follow
the rules of law, in their true spirit, to whatever
consequences they may lead is a duty." 4
EN BANC
[G. R. No. 4912. March 25, 1909.]
THE UNITED STATES, Plaintiff-Appellee, vs.
EMILIA GUY-SAYCO, Defendant-Appellant.
DECISION
TORRES, J.:
Long before the commission of the crime herein
prosecuted, Gelasio Galupitan, the husband of the
accused, entered into unlawful relations with the deceased
Lorenza Estrada; all were residents of the town of Santa
Cruz, the capital of the Province of La Laguna.
The accused, Emilia Guy-Sayco, duly became aware of
this relation. As her husband had stayed away from home
for more than two weeks, remaining in the barrio of Dujat,
distant about two and one-half hours’ walk from the said
town under the pretext that he was engaged in field work,
on the 20th of March, 1907, at about 2 p. m., she decided
to go to said barrio and join him. To this end she hired a
carromata, and after getting some clothes and other things
necessary for herself and husband, started out with her
infant child and a servant girl; but before reaching the
barrio and the camarin where her husband ought to be,
night came on, and at about 7 o’clock she alighted and
dismissed the vehicle after paying the driver. They had
yet to travel some distance, and for fear of being attacked
she disguised herself, using her husband’s clothes and a
hat given to her by her companion, and dressed in this
manner they continued on their way. On seeing her
husband’s horse tied in front of a house she suspected that
he was inside; thereupon she went to the steps leading to
the house, which was a low one, and then saw her husband
sitting down with his back toward the steps. She
immediately entered the house and encountered her
husband, the deceased, and the owners of the house taking
supper together. Overcome and blinded by jealousy she
rushed at Lorenza Estrada, attacked her with a penknife
that she carried, and inflicted five wounds upon her in
consequence of which Lorenza fell to the ground covered
with blood and died a few moments afterwards. The
accused left the house immediately after the aggression,
and went to that of Modesto Ramos where she changed
her clothes.
From an examination of the body made on the following
day by Dr. Gertrudo Reyes, it appeared that five wounds
had been inflicted by a cutting and pointed weapon, one
of which was on the left side of the breast and penetrated
the left ventricle of the heart; this wound was of necessity
mortal, the others being more or less serious.
A complaint was thereupon filed by the provincial fiscal
on May 31, 1907, and the corresponding proceedings
were instituted. The court below entered judgment on
June 29 1908 sentencing the accused, Emilia Guy-Sayco,
to the penalty of twelve years and one day of reclusion
temporal, to suffer the accessory penalties, to indemnify
the heirs of the deceased in the sum of P1,000, and to pay
the costs. From said judgment she has appealed.
The above-stated facts, which have been fully proven in
this case, constitute the crime of homicide defined and
punished by article 404 of the Penal Code, for the reason
that in the violent death of Lorenza Estrada, occasioned
by the infliction of several wounds, one of which was
mortal, none of the circumstances were present that
qualify the crime of assassination and call for a heavier
penalty as imposed by the previous article 403 of the code.
The reality and certitude of the crime at bar cannot be
denied. It has been proven by the testimony of several
witnesses, to wit, Roberto Villaran, Susana de Mesa, the
owners of the house, and Maria Ramos, all of whom
witnessed the aggression; they saw the decreased die as
the result of five wounds inflicted upon her, one of which
was, of necessity mortal; it was also proven by the
testimony of the surgeon who examined the body, which
was seen by the said witnesses and by others who went to
the place of the occurrence.
The accused pleaded not guilty, and in exculpation she
alleged that, when Lorenza Estrada saw her and heard her
remonstrate with her husband, she being then upstairs,
Lorenza at once asked what had brought her there and
manifested her intention to attack her with a knife that she
carried in her hand, whereupon the accused caught the
deceased by the right hand, in which she held the weapon,
and immediately grappled with her, and in the struggle
that ensued she managed to get hold of a penknife that she
saw on the floor close by; she could not say whether she
struck the deceased with it as she could not account for
what followed.
From this allegation of the accused, her counsel, with a amount of indemnity for damages under said civil
view to asking that she be absolved, claims that in liability, upon the same terms as prescribed for the
wounding the deceased she acted in proper self-defense. reparation of damage in article 121 of the code, and a
It has been proven beyond a reasonable doubt that as soon finding on the matter should be contained in the judgment.
as the accused entered the house where she found her For the reasons above set forth it is our opinion that the
husband, without saying a word, she attacked the judgment appealed from should be affirmed, as we do
deceased with a penknife and inflicted wounds that caused hereby affirm it in all its parts with costs against
the immediate death of the latter. Such an allegation the Appellant. SO ORDERED.
cannot therefore be admitted, been though corroborated
by the husband and the servant of the accused, inasmuch Separate Opinions
as the testimony of the latter is entirely contradicted and
destroyed by the testimony of the witnesses for the WILLARD, J., dissenting: chanrobles virtualawlibrary
prosecution, who were present at the aggression, and who I think that the aggravating circumstance of disguise
deny that the servant was present; it is not true that a should be applied, and I do not agree with that part of the
penknife was found on the floor of the house; its is decision which treats of the matter of aggression
probable that the instrument with which the crime was ilegitima.
committed was carried by the accused when she went to
said house; and even though it were true that when the THIRD DIVISION
accused, Emilia, made her appearance, the deceased G.R. No. 119122 August 8, 2000
Lorenza arose with a knife in her hand and in a threatening PHILIPPINE BASKETBALL
manner asked the accused what had brought her there, ASSOCIATION, petitioner,
such attitude, under the provisions of article 8, No. 4 of vs.
the Penal Code, does not constitute that unlawful COURT OF APPEALS, COURT OF TAX
aggression, which, among others, is the first indispensable APPEALS, AND COMMISSIONER OF INTERNAL
requisite upon which exemption by reason of self-defense REVENUE, respondents.
may be sustained.
In order to consider that an unlawful aggression was PURISIMA, J.:
actually committed, it is necessary that an attack or At bar is a petition for review on certiorari under Rule 45
material aggression, an offensive act positively of the Rules of Court seeking a review of the decision1 of
determining the intent of the aggressor to cause an injury the Court of Appeals in CA-G.R. SP No. 34095 which
shall have been make; a mere threatening or intimidating affirmed the decision of the Court of Tax Appeals in
attitude is not sufficient to justify the commission of an C.T.A. Case No. 4419.
act which is punishable per se, and allow a claim of
exemption from liability on the ground that it was The facts that matter are as follows:
committed in self-defense. It has always been so On June 21, 1989, the petitioner received an assessment
recognized in the decisions of the courts, in accordance letter from the Commissioner of Internal Revenue
with the provisions of the Penal Code. (respondent Commissioner) for the payment of deficiency
In the commission of the crime the presence of mitigating amusement tax computed thus:
circumstance No. 7 of article 9 of the code should be Deficiency Amusement Tax
considered, without any aggravating circumstance to
neutralize its effects, for the reason that it has been proven Total gross receipts 1987 P19,970,928.00
that the accused, at the time when the crime was
committed, acted upon the impulse of passion and under ===========
great jealous excitement at the sight of her husband taking
supper in the company of his mistress, after he had been 15% tax due thereon 2,995,639.20
absent from the conjugal dwelling for several days.
As to the penalty of indemnity contained in the judgment Less: Tax paid 602,063.35
appealed from and impugned by the defense, article 17 of
the code reads: chanrobles virtualawlibrary “Every Deficiency amusement tax P2,393,575.85
person criminally liable for a crime or misdemeanor is Add: 75% surcharge 1,795,181.89
also civilly liable,” and according to the established rule
of the courts, in order that an accused person may be 20% interest (2 years) 1,675,503.10
declared to have incurred civil liability, it is sufficient that
said liability shall proceed from, or be the consequence P5,864,260.84
of the criminal liability, and in addition thereto, article
122 of said code provides that the courts shall regulate the Total Amount Due & Collectible ===========
On July 18, 1989, petitioner contested the assessment by
filing a protest with respondent Commissioner who
denied the same on November 6, 1989.
On January 8, 1990, petitioner filed a petition for
review2 with the Court of Tax Appeals (respondent CTA)
questioning the denial by respondent Commissioner of its
tax protest.
On December 24, 1993, respondent CTA dismissed
petitioner's petition, holding:
"WHEREFORE, in all the foregoing, herein petition for
review is hereby DISMISSED for lack of merit and the
Petitioner is hereby ORDERED to PAY to the
Respondent the amount of P5,864,260.84 as deficiency
amusement tax for the year 1987 plus 20% annual
delinquency interest from July 22, 1989 which is the due
date appearing on the notice and demand of the
Commissioner (i.e. 30 days from receipt of the
assessment) until fully paid pursuant to the provisions of
Sections 248 and 249 (c) (3) of the Tax Code, as
amended."3
Petitioner presented a motion for reconsideration4 of the
said decision but the same was denied by respondent CTA
in a resolution5 ALF dated April 8, 1994. Thereafter and
within the reglementary period for interposing appeals,
petitioner appealed the CTA decision to the Court of
Appeals.
On November 21, 1994, the Court of Appeals rendered its
questioned Decision,6 affirming the decision of the CTA
and dismissing petitioner's appeal. Petitioner filed a
Motion for Reconsideration of said decision but to no
avail. The same was denied by the Court of Appeals in a
Resolution7 dated January 31, 1995. Hence, this petition.
Undaunted, petitioner found its way to this Court via the
present petition, contending that:
"1. Respondent Court of Appeals erred in holding that the
jurisdiction to collect amusement taxes of PBA games is
vested in the national government to the exclusion of the
local governments.
"2. Respondent Court of Appeals erred in holding that
Section 13 of the Local Tax Code of 1973 limits local
government units to theaters, cinematographs, concert
halls, circuses and other places of amusement in the
collection of the amusement tax.
"3. Respondent Court of Appeals erred in holding that
Revenue Regulations No. 8-88 dated February 19, 1988
is an erroneous interpretation of law.
"4. Respondent Court of Appeals erred in giving
retroactive effect to the revocation of Revenue
Regulations 8-88.
"5. Respondent Court of Appeals erred when it failed to
consider the provisions of P.D. 851 the franchise of
Petitioner, Section 8 of which provides that amusement
tax on admission receipts of Petitioner is 5%.
"6. Respondent Court of Appeals erred in holding that the
cession of advertising and streamer spaces in the venue to
a third person is subject to amusement taxes.
"7. Respondent Court of Appeals erred in holding that the
cession of advertising and streamer spaces inside the
venue is embraced within the term 'gross receipts' as
defined in Section 123 (6) of the Tax Code.
"8. Respondent Court of Appeals erred in holding that the
amusement tax liability of Petitioner is subject to a 75%
surcharge."
The issues for resolution in this case may be simplified as
follows:
1. Is the amusement tax on admission tickets to PBA
games a national or local tax? Otherwise put, who
between the national government and local government
should petitioner pay amusement taxes?
2. Is the cession of advertising and streamer spaces to
Vintage Enterprises, Inc. (VEI) subject to the payment of
amusement tax?
3. If ever petitioner is liable for the payment of deficiency
amusement tax, is it liable to pay a seventy-five percent
(75%) surcharge on the deficiency amount due?
Petitioner contends that PD 231, otherwise known as the
Local Tax Code of 1973, transferred the power and
authority to levy and collect amusement taxes from the
sale of admission tickets to places of amusement from the
national government to the local governments. Petitioner
cited BIR Memorandum Circular No. 49-73 providing
that the power to levy and collect amusement tax on
admission tickets was transferred to the local
governments by virtue of the Local Tax Code; and BIR
Ruling No. 231-86 which held that "the jurisdiction to
levy amusement tax on gross receipts from admission
tickets to places of amusement was transferred to local
governments under P.D. No. 231, as amended."8 Further,
petitioner opined that even assuming arguendo that
respondent Commissioner revoked BIR Ruling No. 231-
86, the reversal, modification or revocation cannot be
given retroactive effect since even as late as 1988 (BIR
Memorandum Circular No. 8-88), respondent
Commissioner still recognized the jurisdiction of local
governments to collect amusement taxes.
The Court is not persuaded by petitioner's asseverations.
The laws on the matter are succinct and clear and need no
elaborate disquisition.
Section 13 of the Local Tax Code provides:
"SECTION 13. Amusement tax on admission. — The
province shall impose a tax on admission to be collected
from the proprietors, lessees, or operators of theaters,
cinematographs, concert halls, circuses and other places
of amusement . . ."
The foregoing provision of law in point indicates that the
province can only impose a tax on admission from the
proprietors, lessees, or operators of theaters,
cinematographs, concert halls, circuses and other places
of amusement. The authority to tax professional
basketball games is not therein included, as the same is
expressly embraced in PD 1959, which amended PD 1456
thus:
"SECTION 44. Section 268 of this Code, as amended, is
hereby further amended to read as follows:
'Sec. 268. Amusement taxes. — There shall be collected
from the proprietor, lessee or operator of cockpits,
cabarets, night or day clubs, boxing
exhibitions, professional basketball games, Jai-Alai, race
tracks and bowling alleys, a tax equivalent to:
'1. Eighteen per centum in the case of cockpits;
'2. Eighteen per centum in the case of cabarets, night or
day clubs;
'3. Fifteen per centum in the case of boxing exhibitions;
'4. Fifteen per centum in the case of professional
basketball games as envisioned in Presidential Decree
No. 871. Provided, however. That the tax herein shall be
in lieu of all other percentage taxes of whatever nature
and description;
'5. Thirty per centum in the case of Jai-Alai and race
tracks; and
'6. Fifteen per centum in the case of bowling alleys of
their gross receipts, irrespective of whether or not any
amount is charged or paid for admission. For the purpose
of the amusement tax, the term gross receipts' embraces
all the receipts of the proprietor, lessee or operator of the
amusement place. Said gross receipts also include income
from television, radio and motion picture rights, if any. (A
person or entity or association conducting any activity
subject to the tax herein imposed shall be similarly liable
for said tax with respect to such portion of the receipts
derived by him or it.)
'The taxes imposed herein shall be payable at the end of
each quarter and it shall be the duty of the proprietor,
lessee, or operator concerned, as well as any party liable,
within twenty days after the end of each quarter, to make
a true and complete return of the amount of the gross
receipts derived during the preceding quarter and pay the
tax due thereon. If the tax is not paid within the time
prescribed above, the amount of the tax shall be
increased by twenty-five per centum, the increment to be
part of the tax.
'In case of willful neglect to file the return within the
period prescribed herein, or in case a false or fraudulent
return is willfully made, there shall be added to the tax or
to the deficiency tax, in case any payment has been made
on the basis of the return before the discovery of the
falsity or fraud, a surcharge of fifty per centum of its
amount. The amount so added to any tax shall be collected
at the same time and in the same manner and as part of the
tax unless the tax has been paid before the discovery of
the falsity or fraud, in which case, the amount so assessed
shall be collected in the same manner as the tax."
(emphasis ours)
From the foregoing it is clear that the "proprietor, lessee
or operator of . . . professional basketball games" is
required to pay an amusement tax equivalent to fifteen per
centum (15%) of their gross receipts to the Bureau of
Internal Revenue, which payment is a national tax. The
said payment of amusement tax is in lieu of all other
percentage taxes of whatever nature and description.
While Section 13 of the Local Tax Code mentions "other
places of amusement", professional basketball games are
definitely not within its scope. Under the principle
of ejusdem generis, where general words follow an
enumeration of persons or things, by words of a particular
and specific meaning, such general words are not to be
construed in their widest extent, but are to be held as
applying only to persons or things of the same kind or
class as those specifically mentioned.9 Thus, in
determining the meaning of the phrase "other places of
amusement", one must refer to the prior enumeration of
theaters, cinematographs, concert halls and circuses with
artistic expression as their common characteristic.
Professional basketball games do not fall under the same
category as theaters, cinematographs, concert halls and
circuses as the latter basically belong to artistic forms of
entertainment while the former caters to sports and
gaming.
A historical analysis of pertinent laws does reveal the
legislative intent to place professional basketball games
within the ambit of a national tax. The Local Tax Code,
which became effective on June 28, 1973, allowed the
province to collect a tax on admission from the
proprietors, lessees, or operators of theaters,
cinematographs, concert halls, circuses and other places
of amusement. On January 6, 1976, the operation of
petitioner was placed under the supervision and regulation
of the Games and Amusement Board by virtue of PD 871,
with the proviso (Section 8) that ". . . all professional
basketball games conducted by the Philippine Basketball
Association shall only be subject to amusement tax of five
per cent of the gross receipts from the sale of admission
tickets." Then, on June 11, 1978, PD 1456 came into
effect, increasing the amusement tax to ten per cent, with
a categorical referral to PD 871, to wit, "[t]en per centum
in the case of professional basketball games as envisioned
in Presidential Decree No. 871 . . ." Later in 1984, PD
1959 increased the rate of amusement tax to fifteen
percent by making reference also to PD 871. With the
reference to PD 871 by PD 1456 and PD 1959, there is a
recognition under the laws of this country that the
amusement tax on professional basketball games is a
national, and not a local, tax. Even up to the present, the
category of amusement taxes on professional basketball
games as a national tax remains the same. This is so
provided under Section 12510 of the 1997 National
Internal Revenue Code. Section 14011 of the Local
Government Code of 1992 (Republic Act 7160),
meanwhile, retained the areas (theaters, cinematographs,
concert halls, circuses and other places of amusement)
where the province may levy an amusement tax without
including therein professional basketball games.
Likewise erroneous is the stance of petitioner that
respondent Commissioner's issuance of BIR Ruling No.
231-8612 and BIR Revenue Memorandum Circular No. 8-
8813 — both upholding the authority of the local
government to collect amusement taxes — should bind
the government or that, if there is any revocation or
modification of said rule, the same should operate
prospectively.
It bears stressing that the government can never be in
estoppel, particularly in matters involving taxes. It is a
well-known rule that erroneous application and
enforcement of the law by public officers do not preclude
subsequent correct application of the statute, and that the
Government is never estopped by mistake or error on the
part of its agents.14
Untenable is the contention that income from the cession
of streamer and advertising spaces to VEI is not subject to
amusement tax. The questioned proviso may be found in
Section 1 of PD 1456 which states:
"SECTION 1. Section 268 of the National Internal
Revenue Code of 1977, as amended, is hereby further
amended to read as follows:
'Sec. 268. Amusement taxes. — There shall be collected
from the proprietor, lessee or operator of cockpits,
cabarets, night or day clubs, boxing exhibitions,
professional basketball games, Jai-Alai, race tracks and
bowling alleys, a tax equivalent to:
xxx xxx xxx
of their gross receipts, irrespective of whether or not any
amount is charged or paid for admission. For the purpose
of the amusement tax, the term gross receipts' embraces
all the receipts of the proprietor, lessee or operator of the
amusement place. Said gross receipts also include income
from television, radio and motion picture rights, if any. (A
person, or entity or association conducting any activity
subject to the tax herein imposed shall be similarly liable
for said tax with respect to such portion of the receipts
derived by him or it.)" (emphasis ours)
The foregoing definition of gross receipts is broad enough
to embrace the cession of advertising and streamer spaces
as the same embraces all the receipts of the proprietor,
lessee or operator of the amusement place. The law being
clear, there is no need for an extended interpretation.15
The last issue for resolution concerns the liability of
petitioner for the payment of surcharge and interest on the
deficiency amount due. Petitioner contends that it is not
liable, as it acted in good faith, having relied upon the
issuances of the respondent Commissioner. This issue
must necessarily fail as the same has never been posed as
an issue before the respondent court. Issues not raised in
the court a quo cannot be raised for the first time on
appeal.16
All things studiedly considered, the Court rules that the
petitioner is liable to pay amusement tax to the national
government, and not to the local government, in
accordance with the rates prescribed by PD 1959.
WHEREFORE, the Petition is DENIED, and the
Decisions of the Court of Appeals and Court of Tax
Appeals dated November 21, 1994 and December 24,
1993, respectively AFFIRMED. No pronouncement as to
costs. SO ORDERED.
FOOTNOTES
10
SEC. 125. Amusement taxes. — There shall be
collected from the proprietor, lessee or operator of
cockpits, cabarets, night or day clubs, boxing exhibitions,
professional basketball games, Jai-Alai and race tracks, a
tax equivalent to:
a) Eighteen percent (18%) in the case of cockpits;
b) Eighteen percent (18%) in the case of cabarets, night or
day clubs;
c) Ten percent (10%) in the case of boxing exhibitions,
provided, however, that boxing exhibitions wherein
World or Oriental Championships in any division is at
stake shall be exempt from amusement tax; provided,
further, that at least one of the contenders for World or
Oriental Championship is a citizen of the Philippines and
said exhibitions are promoted by a citizen/s of the
Philippines or by a corporation or association at least sixty
percent (60%) of the capital of which is owned by such
citizens;
d) Fifteen percent (15%) in the case of professional
basketball games as envisioned in Presidential Decree No.
871; provided, however, that the tax herein shall be in lieu
of all other percentage taxes of whatever nature and
description; and
e) Thirty percent (30%) in the case of Jai-Alai and race
tracks of their gross receipts, irrespective of whether or
not any amount is charged for admission.
For the purpose of the amusement tax, the term "gross
receipts" embraces all the receipts of the proprietor, lessee
or operator of the amusement place. Said gross receipts
also include income from television, radio and motion
picture rights, if any. A person or entity or association
conducting any activity subject to the tax herein imposed
shall be similarly liable for said tax with respect to such
portion of the receipts derived by him or it.
The taxes imposed herein shall be payable at the end of
each quarter or month and it shall be the duty of the
proprietor, lessee or operator concerned, as well as any
party liable, within twenty (20) days after the end of each
quarter, to make a true and complete return of the amount
of the gross receipts derived during the preceding quarter
and pay the tax due thereon. (Effective January 1, 1998)
11
SEC. 140. Amusement Tax. —
(a) The province may levy an amusement tax to be
collected from the proprietors, lessees, or operators of
theaters, cinemas, concert halls, circuses, boxing stadia,
and other places of amusement at a rate of not more than
thirty percent (30%) of the gross receipts from admission
fees.
(b) In the case of theaters or cinemas, the tax shall first be
deducted and withheld by their proprietors, lessees, or
operators and the distributors of the cinematographic
films.
(c) The holding of operas, concerts, dramas, recitals,
painting and art exhibitions, flower shows, musical
programs, literary and oratorical presentations, except
pop, rock, or similar concerts shall be exempt from the
payment of the tax herein imposed.
(d) The sangguniang panlalawigan may prescribe the
time, manner, terms and conditions for the payment of tax.
In case of fraud or failure to pay the tax, the sangguniang
panlalawigan may impose such surcharges, interests and
penalties as it may deem appropriate.
(e) The proceeds from the amusement tax shall be shared
equally by the province and the municipality where such
amusement places are located.
12
". . .
. . . this Office is of the opinion and hereby holds that the
jurisdiction to levy amusement tax on gross receipts from
admission tickets to places of amusement was indeed
transferred to local government under P.D. No. 231, as
amended. . ."
13
". . . the sole jurisdiction for collection of amusement
tax on admission receipts in places of admission rests
exclusively on the local government to the exclusion of
the national government."
14
E. Rodriguez, Inc. vs. Collector of Internal Revenue, 28
SCRA 1119; United Christian Missionary Society vs.
Social Security Commission, 30 SCRA 982.
15
Domingo vs. Commission on Audit, 297 SCRA
163; Republic vs. Court of Appeals, 299 SCRA 199.
16
Ruby Industrial Corporation vs. Court of Appeals, 284
SCRA 445; Salao vs. Court of Appeals, 284 SCRA
493; Heirs of Pascasio Uriarte vs. Court of Appeals, 284
SCRA 511.
SECOND DIVISION
[G.R. NO. 148408 : July 14, 2006]
CONCEPCION PARAYNO, Petitioner, v. JOSE
JOVELLANOS and the MUNICIPALITY OF
CALASIAO, PANGASINAN,* Respondents.
DECISION
CORONA, J.:
This is a Petition for Review on Certiorari under Rule 45
of the 1997 Rules of Court questioning the resolution of
the Court of Appeals (CA) which dismissed the petition
for certiorari, mandamus and prohibition, with prayer for
issuance of a preliminary and mandatory injunction, filed
by petitioner Concepcion Parayno against respondents
Jose Jovellanos and the Municipality of Calasiao,
Pangasinan.
Petitioner was the owner of a gasoline filling station in
Calasiao, Pangasinan. In 1989, some residents of Calasiao
petitioned the Sangguniang Bayan (SB) of said
municipality for the closure or transfer of the station to
another location. The matter was referred to the Municipal
Engineer, Chief of Police, Municipal Health Officer and
the Bureau of Fire Protection for investigation. Upon their
advise, the Sangguniang Bayan recommended to the
Mayor the closure or transfer of location of petitioner's
gasoline station. In Resolution No. 50, it declared:
a) xxx the existing gasoline station is a blatant violation
and disregard of existing law to wit:
The Official Zoning Code of Calasiao, Art. 6, Section
44,1 the nearest school building which is San Miguel
Elementary School and church, the distances are less than
100 meters. No neighbors were called as witnesses when
actual measurements were done by HLURB Staff, Baguio
City dated 22 June 1989.
b) The gasoline station remains in thickly populated area
with commercial/residential buildings, houses closed (sic)
to each other which still endangers the lives and safety of
the people in case of fire. Moreover, additional selling and
storing of several LPG tanks in the station (sic).
c) The residents of our barangay always complain of the
irritating smell of gasoline most of the time especially
during gas filling which tend to expose residents
especially children to frequent colds, asthma, cough and
the like nowadays.
d) xxx the gasoline station violated Building and Fire
Safety Codes because the station has 2nd floor storey
building used for business rental offices, with iron grilled
windows, no firewalls. It also endangers the lives of
people upstairs.
e) It hampers the flow of traffic, the gasoline station is too
small and narrow, the entrance and exit are closed to the
street property lines. It couldn't cope situation (sic) on
traffic because the place is a congested area.2
Petitioner moved for the reconsideration of the SB
resolution but it was denied. Hence, she filed a special
civil action for prohibition and mandamus with the
Regional Trial Court (RTC) of Dagupan City, Branch 44
against respondents. The case, docketed as SP Civil Case
No. 99-03010-D, was raffled to the sala of Judge Crispin
Laron.
Petitioner claimed that her gasoline station was not
covered by Section 44 of the Official Zoning Code since
it was not a "gasoline service station" but a "gasoline
filling station" governed by Section 21 thereof. She added
that the decision of the Housing and Land Use Regulatory
Board (HLURB),3 in a previous case filed by the same
respondent Jovellanos against her predecessor (Dennis
Parayno), barred the grounds invoked by respondent
municipality in Resolution No. 50. In the HLURB case,
respondent Jovellanos opposed the establishment of the
gas station on the grounds that: (1) it was within the 100-
meter prohibited radius under Section 44 and (2) it posed
a pernicious effect on the health and safety of the people
in Calasiao.
After the hearing on the propriety of issuing a writ of
preliminary prohibitory and mandatory injunction, the
trial court ruled:
There is no basis for the court to issue a writ of
preliminary prohibitory and mandatory injunction.
Albeit, Section 44 of the Official Zoning Code of
respondent municipality does not mention a gasoline
filling station, [but] following the principle of ejusdem
generis, a gasoline filling station falls within the ambit
of Section 44.
The gasoline filling station of the petitioner is located
under the establishment belonging to the petitioner and is
very near several buildings occupied by several
persons. Justice dictates that the same should not be
allowed to continue operating its business on that
particular place. Further, the gasoline filling station
endangers the lives and safety of people because once
there is fire, the establishment and houses nearby will
be razed to the ground.4 (emphasis supplied)
Petitioner moved for reconsideration of the decision but it
was denied by the trial court.
Petitioner elevated the case to the CA via a petition
for certiorari, prohibition and mandamus, 5 with a prayer
for injunctive relief. She ascribed grave abuse of
discretion, amounting to lack or excess of jurisdiction, on
the part of Judge Laron who dismissed her case.
After the CA dismissed the petition, petitioner filed a
motion for reconsideration but the same was denied.
Hence, this appeal.
Before us, petitioner insists that
(1) the legal maxim of ejusdem generis did not apply to
her case;
(2) the closure/transfer of her gasoline filling station by
respondent municipality was an invalid exercise of the
latter's police powers and
(3) it was the principle of res judicata that applied in this
case.6
We find merit in the petition.
The Principle of Ejusdem Generis
We hold that the zoning ordinance of respondent
municipality made a clear distinction between "gasoline
service station" and "gasoline filling station." The
pertinent provisions read:
Section 21. Filling Station. A retail station servicing
automobiles and other motor vehicles with gasoline and
oil only.7
Section 42. Service Station. A building and its premises
where gasoline oil, grease, batteries, tires and car
accessories may be supplied and dispensed at retail and
where, in addition, the following services may be
rendered and sales and no other.
A. Sale and servicing of spark plugs, batteries, and
distributor parts;
b. Tire servicing and repair, but not recapping or
regrooving;
c. Replacement of mufflers and tail pipes, water hose, fan
belts, brake fluids, light bulbs, fuses, floor mats, seat
covers, windshield wipers and wiper blades, grease
retainers, wheel, bearing, mirrors and the like;
d. Radiator cleaning and flushing;
e. Washing and polishing, and sale of automobile washing
and polishing materials;
f. Grease and lubricating;
g. Emergency wiring repairs;
h. Minor servicing of carburators;
i. Adjusting and repairing brakes;
j. Minor motor adjustments not involving removal of the
head or crankcase, or raising the motor.8
It is evident from the foregoing that the ordinance
intended these two terms to be separate and distinct from
each other. Even respondent municipality's counsel
admitted this dissimilarity during the hearing on the
application for the issuance of a writ of preliminary
prohibitory and mandatory injunction. Counsel in fact
admitted:
1. That there exist[ed] an official zoning code of Calasiao,
Pangasinan which [was] not yet amended;
2. That under Article III of said official zoning code
there [were] certain distinctions made by said
municipality about the designation of the gasoline
filling station and that of the gasoline service station as
appearing in Article III, Nos. 21 and 42, [respectively];
3. That the business of the petitioner [was] one of a
gasoline filling station as defined in Article III, Section
21 of the zoning code and not as a service station as
differently defined under Article 42 of the said official
zoning code;
4. That under Section 44 of the official zoning code of
Calasiao, the term filling station as clearly defined
under Article III, Section 21, [did] not appear in the
wordings thereof;9 (emphasis supplied)cralawlibrary
The foregoing were judicial admissions which were
conclusive on the municipality, the party making
them.10 Respondent municipality thus could not find
solace in the legal maxim of ejusdem generis11 which
means "of the same kind, class or nature." Under this
maxim, where general words follow the enumeration of
particular classes of persons or things, the general words
will apply only to persons or things of the same general
nature or class as those enumerated.12 Instead, what
applied in this case was the legal maxim expressio unius
est exclusio alterius which means that the express
mention of one thing implies the exclusion of
others.13 Hence, because of the distinct and definite
meanings alluded to the two terms by the zoning
ordinance, respondents could not insist that "gasoline
service station" under Section 44 necessarily included
"gasoline filling station" under Section 21. Indeed, the
activities undertaken in a "gas service station" did not
automatically embrace those in a "gas filling station."
The Exercise of Police Powers
Respondent municipality invalidly used its police powers
in ordering the closure/transfer of petitioner's gasoline
station. While it had, under RA 7160,14 the power to take
actions and enact measures to promote the health and
general welfare of its constituents, it should have given
due deference to the law and the rights of petitioner.
A local government is considered to have properly
exercised its police powers only when the following
requisites are met: (1) the interests of the public generally,
as distinguished from those of a particular class, require
the interference of the State and (2) the means employed
are reasonably necessary for the attainment of the object
sought to be accomplished and not unduly
oppressive.15 The first requirement refers to the equal
protection clause and the second, to the due process clause
of the Constitution.16
Respondent municipality failed to comply with the due
process clause when it passed Resolution No. 50. While it
maintained that the gasoline filling station of petitioner
was less than 100 meters from the nearest public school
and church, the records do not show that it even attempted
to measure the distance, notwithstanding that such
distance was crucial in determining whether there was an
actual violation of Section 44. The different local offices
that respondent municipality tapped to conduct an
investigation never conducted such measurement either.
Moreover, petitioner's business could not be considered a
nuisance which respondent municipality could summarily
abate in the guise of exercising its police powers. The
abatement of a nuisance without judicial proceedings is
possible only if it is a nuisance per se. A gas station is not
a nuisance per se or one affecting the immediate safety of
persons and property,17 hence, it cannot be closed down
or transferred summarily to another location.
As a rule, this Court does not pass upon evidence
submitted by the parties in the lower courts.18 We deem it
necessary, however, to recall the findings of the HLURB
which petitioner submitted as evidence during the
proceedings before the trial court, if only to underscore
petitioner's compliance with the requirements of law
before she put up her gasoline station.
Another factor that should not be left unnoticed is the
diligence exercised by [petitioner] in complying with the
requirements of the several laws prior to the actual
implementation of the project as can be attested by the fact
that [petitioner] has secured the necessary building permit
and approval of [her] application for authority to relocate
as per the letter of the Energy Regulatory Board xxx.19
On the alleged hazardous effects of the gasoline station to
the lives and properties of the people of Calasiao, we
again note:
Relative to the allegations that the project (gasoline
station) is hazardous to life and property, the Board takes
cognizance of the respondent's contention that the project
"is not a fire hazard since petroleum products shall be
safely stored in underground tanks and that the
installation and construction of the underground tanks
shall be in accordance with the Caltex Engineering
Procedures which is true to all gasoline stations in the
country. xxx
Hence, the Board is inclined to believe that the project
being hazardous to life and property is more perceived
than factual. For, after all, even the Fire Station
Commander, after studying the plans and specifications of
the subject proposed construction, recommended on 20
January 1989, "to build such buildings after conform (sic)
all the requirements of PP 1185." It is further alleged by
the complainants that the proposed location is "in the
heart of the thickly populated residential area of
Calasiao." Again, findings of the [HLURB] staff
negate the allegations as the same is within a
designated Business/Commercial Zone per the Zoning
Ordinance. xxx20 (emphasis supplied)
The findings of fact of the HLURB are binding as they are
already final and conclusive vis - Ã -vis the evidence
submitted by respondents.
The Principle of Res Judicata
Petitioner points out that the HLURB decision in the
previous case filed against her predecessor (Dennis
Parayno) by respondent Jovellanos had effectively barred
the issues in Resolution No. 50 based on the principle
of res judicata. We agree.
Res judicata refers to the rule that a final judgment or
decree on the merits by a court of competent
jurisdiction is conclusive of the rights of the parties or
their privies in all later suits on all points and matters
determined in the former suit.21 For res judicata to
apply, the following elements must be present:
(1) the judgment or order must be final;
(2) the judgment must be on the merits;
(3) it must have been rendered by a court having
jurisdiction over the subject matter and the parties and
(4) there must be, between the first and second actions,
identity of parties, of subject matter and of cause of
action.22
Respondent municipality does not contest the first, second
and third requisites. However, it claims that it was not a
party to the HLURB case but only its co-respondent
Jovellanos, hence, the fourth requisite was not met. The
argument is untenable.
The absolute identity of parties is not required for the
principle of res judicata to apply.23 A shared identity of
interests is sufficient to invoke the application of this
principle.24 The proscription may not be evaded by the
mere expedient of including an additional party.25 Res
judicata may lie as long as there is a community of
interests between a party in the first case and a party in the
second case although the latter may not have been
impleaded in the first.26
In the assailed resolution of respondent municipality, it
raised the same grounds invoked by its co-respondent in
the HLURB: (1) that the resolution aimed to close down
or transfer the gasoline station to another location due to
the alleged violation of Section 44 of the zoning ordinance
and (2) that the hazards of said gasoline station threatened
the health and safety of the public. The HLURB had
already settled these concerns and its adjudication had
long attained finality. It is to the interest of the public that
there should be an end to litigation by the parties over a
subject matter already fully and fairly adjudged.
Furthermore, an individual should not be vexed twice for
the same cause.27
WHEREFORE, the petition is hereby GRANTED. The
assailed resolution of the Court of the Appeals
is REVERSED and SET ASIDE. Respondent
Municipality of Calasiao is hereby directed to cease and
desist from enforcing Resolution No. 50 against petitioner
insofar as it seeks to close down or transfer her gasoline
station to another location.
No costs.
SO ORDERED.
Puno, Chairperson, Sandoval-Gutierrez, Azcuna,
Garcia, JJ., concur.
Endnotes:
*
Hon. Crispin C. Laron, of the Regional Trial Court of
Dagupan City, Branch 44, was impleaded as respondent.
Under Section 4, Rule 45 of the 1997 Rules of Court,
lower courts or judges thereof need not be impleaded
either as petitioners or respondents.
1
Section 44. Gasoline Service Stations:
In business or industrial zones, no gasoline service
station, commercial gasoline bus station or public parking
lot shall be allowed within one hundred (100) meters
away from any public or private school, public library,
playground, church, and hospital based on the straight line
method measured from the nearest side of the building
nearest the lot if there are no intervening buildings to the
nearest pump of the gasoline station; records, pp. 69-70.
(italics supplied)
14
The Local Government Code of 1991; Section 16.
General Welfare.― Every local government unit shall
exercise the powers expressly granted, those necessarily
implied therefrom, as well as powers necessary,
appropriate, or incidental for its efficient and effective
governance, and those which are essential to the
promotion of the general welfare within their respective
territorial jurisdictions. Local government units shall
ensure and support, among other things, the preservation
and enrichment of culture, promote health and
safety, enhance the right of the people to a balanced
ecology, encourage and support the development of
appropriate and self-reliant scientific technological
capabilities, improve public morals, enhance economic
prosperity and social justice, promote full employment
among their residents xxx. crvll
18
Factual issues are not within the province of the
Supreme Court, as it is not a trier of facts and it is not
required to examine or contrast the oral and documentary
evidence de novo. Nevertheless, the Court has the
authority to review, even reverse, the factual findings of
lower courts in exceptional instances. (Lagon v. Hooven
Comalco Industries, Inc., G.R. No. 135657, 17 January
2001, 349 SCRA 363.)
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 14129 July 31, 1962
PEOPLE OF THE PHILIPPINES, plaintiff-appellant,
vs.
GUILLERMO MANANTAN, defendant-appellee.
Office of the Solicitor General for plaintiff-appellant.
Padilla Law Office for defendant-appellee.
REGALA, J.:
This is an appeal of the Solicitor General from the order
of the Court of First Instance of Pangasinan dismissing
the information against the defendant.
The records show that the statement of the case and the
facts, as recited in the brief of plaintiff-appellant, is
complete and accurate. The same is, consequently, here
adopted, to wit:
In an information filed by the Provincial Fiscal of
Pangasinan in the Court of First Instance of that Province,
defendant Guillermo Manantan was charged with a
violation Section 54 of the Revised Election Code. A
preliminary investigation conducted by said court resulted
in the finding a probable cause that the crime charged as
committed by defendant. Thereafter, the trial started upon
defendant's plea of not guilty, the defense moved to
dismiss the information on the ground that as justice of
the peace the defendant is one of the officers enumerated
in Section 54 of the Revised Election Code. The lower
court denied the motion to dismiss holding that a justice
of the peace is within the purview Section 54. A second
motion was filed by defense counsel who cited in support
thereof the decision of the Court of Appeals in People vs.
Macaraeg, (CA-G.R. No. 15613-R, 54 Off. Gaz., pp.
1873-76) where it was held that a justice of the peace is
excluded from the prohibition of Section 54 of the
Revised Election Code. Acting on this second motion to
dismiss, the answer of the prosecution, the reply of the
defense, and the opposition of the prosecution, the lower
court dismissed the information against the accused upon
the authority of the ruling in the case cited by the defense.
Both parties are submitting this case upon the
determination of this single question of law: Is a justice
the peace included in the prohibition of Section 54 of the
Revised Election Code?
Section 54 of the said Code reads:
No justice, judge, fiscal, treasurer, or assessor of any
province, no officer or employee of the Army, no member
of the national, provincial, city, municipal or rural police
force and no classified civil service officer or employee
shall aid any candidate, or exert any influence in any
manner in a election or take part therein, except to vote, if
entitled thereto, or to preserve public peace, if he is a
peace officer.
Defendant-appellee argues that a justice of the peace is
not comprehended among the officers enumerated in
Section 54 of the Revised Election Code. He submits the
aforecited section was taken from Section 449 of the
Revised Administrative Code, which provided the
following:
SEC. 449. Persons prohibited from influencing elections.
— No judge of the First Instance, justice of the peace, or
treasurer, fiscal or assessor of any province and no officer
or employee of the Philippine Constabulary, or any
Bureau or employee of the classified civil service, shall
aid any candidate or exert influence in any manner in any
election or take part therein otherwise than exercising the
right to vote.
When, therefore, section 54 of the Revised Election Code
omitted the words "justice of the peace," the omission
revealed the intention of the Legislature to exclude
justices of the peace from its operation.
The above argument overlooks one fundamental fact. It is
to be noted that under Section 449 of the Revised
Administrative Code, the word "judge" was modified or
qualified by the phrase "of First instance", while under
Section 54 of the Revised Election Code, no such
modification exists. In other words, justices of the peace
were expressly included in Section 449 of the Revised
Administrative Code because the kinds of judges therein
were specified, i.e., judge of the First Instance and justice
of the peace. In Section 54, however, there was no
necessity therefore to include justices of the peace in the
enumeration because the legislature had availed itself of
the more generic and broader term, "judge." It was a term
not modified by any word or phrase and was intended to
comprehend all kinds of judges, like judges of the courts
of First Instance, Judges of the courts of Agrarian
Relations, judges of the courts of Industrial Relations, and
justices of the peace.
It is a well known fact that a justice of the peace is
sometimes addressed as "judge" in this jurisdiction. It is
because a justice of the peace is indeed a judge. A "judge"
is a public officer, who, by virtue of his office, is clothed
with judicial authority (U.S. v. Clark, 25 Fed. Cas. 441,
422). According to Bouvier Law Dictionary, "a judge is a
public officer lawfully appointed to decide litigated
questions according to law. In its most extensive sense the
term includes all officers appointed to decide litigated
questions while acting in that capacity, including justices
of the peace, and even jurors, it is said, who are judges of
facts."
A review of the history of the Revised Election Code will
help to justify and clarify the above conclusion.
The first election law in the Philippines was Act 1582
enacted by the Philippine Commission in 1907, and which
was later amended by Act. Nos. 1669, 1709, 1726 and
1768. (Of these 4 amendments, however, only Act No.
1709 has a relation to the discussion of the instant case as
shall be shown later.) Act No. 1582, with its subsequent 4
amendments were later on incorporated Chapter 18 of the
Administrative Code. Under the Philippine Legislature,
several amendments were made through the passage of
Acts Nos. 2310, 3336 and 3387. (Again, of these last 3
amendments, only Act No. 3587 has pertinent to the case
at bar as shall be seen later.) During the time of the
Commonwealth, the National Assembly passed
Commonwealth Act No. 23 and later on enacted
Commonwealth Act No. 357, which was the law enforced
until June 1947, when the Revised Election Code was
approved. Included as its basic provisions are the
provisions of Commonwealth Acts Nos. 233, 357, 605,
666, 657. The present Code was further amended by
Republic Acts Nos. 599, 867, 2242 and again, during the
session of Congress in 1960, amended by Rep. Acts Nos.
3036 and 3038. In the history of our election law, the
following should be noted:
Under Act 1582, Section 29, it was provided:
No public officer shall offer himself as a candidate for
elections, nor shall he be eligible during the time that he
holds said public office to election at any municipal,
provincial or Assembly election, except for reelection to
the position which he may be holding, and no judge of the
First Instance, justice of the peace, provincial fiscal, or
officer or employee of the Philippine Constabulary or of
the Bureau of Education shall aid any candidate or
influence in any manner or take part in any municipal,
provincial, or Assembly election under the penalty of
being deprived of his office and being disqualified to hold
any public office whatsoever for a term of 5
year: Provide, however, That the foregoing provisions
shall not be construe to deprive any person otherwise
qualified of the right to vote it any election." (Enacted
January 9, 1907; Took effect on January 15, 1907.)
Then, in Act 1709, Sec. 6, it was likewise provided:
. . . No judge of the First Instance, Justice of the peace
provincial fiscal or officer or employee of the Bureau of
Constabulary or of the Bureau of Education shall aid any
candidate or influence in any manner to take part in any
municipal provincial or Assembly election. Any person
violating the provisions of this section shall be deprived
of his office or employment and shall be disqualified to
hold any public office or employment whatever for a term
of 5 years, Provided, however, that the foregoing
provisions shall not be construed to deprive any person
otherwise qualified of the right to vote at any election.
(Enacted on August 31, 1907; Took effect on September
15, 1907.)
Again, when the existing election laws were incorporated
in the Administrative Code on March 10, 1917, the
provisions in question read:
SEC. 449. Persons prohibited from influencing elections.
— No judge of the First Instance, justice of the peace, or
treasurer, fiscal or assessor of any province and no officer
or employee of the Philippine Constabulary or any Bureau
or employee of the classified civil service, shall aid any
candidate or exert influence in any manner in any election
or take part therein otherwise than exercising the right to
vote. (Emphasis supplied)
After the Administrative Code, the next pertinent
legislation was Act No. 3387. This Act reads:
SEC. 2636. Officers and employees meddling with the
election. — Any judge of the First Instance, justice of the
peace, treasurer, fiscal or assessor of any province, any
officer or employee of the Philippine Constabulary or of
the police of any municipality, or any officer or employee
of any Bureau of the classified civil service, who aids any
candidate or violated in any manner the provisions of this
section or takes part in any election otherwise by
exercising the right to vote, shall be punished by a fine of
not less than P100.00 nor more than P2,000.00, or by
imprisonment for not less than 2 months nor more than 2
years, and in all cases by disqualification from public
office and deprivation of the right of suffrage for a period
of 5 years. (Approved December 3, 1927.) (Emphasis
supplied.)
Subsequently, however, Commonwealth Act No. 357 was
enacted on August 22, 1938. This law provided in Section
48:
SEC. 48. Active Interventation of Public Officers and
Employees. — No justice, judge, fiscal, treasurer or
assessor of any province, no officer or employee of the
Army, the Constabulary of the national, provincial,
municipal or rural police, and no classified civil service
officer or employee shall aid any candidate, nor exert
influence in any manner in any election nor take part
therein, except to vote, if entitled thereto, or to preserve
public peace, if he is a peace officer.
This last law was the legislation from which Section 54 of
the Revised Election Code was taken.
It will thus be observed from the foregoing narration of
the legislative development or history of Section 54 of the
Revised Election Code that the first omission of the word
"justice of the peace" was effected in Section 48 of
Commonwealth Act No. 357 and not in the present code
as averred by defendant-appellee. Note carefully,
however, that in the two instances when the words "justice
of the peace" were omitted (in Com. Act No. 357 and Rep.
Act No. 180), the word "judge" which preceded in the
enumeration did not carry the qualification "of the First
Instance." In other words, whenever the word "judge" was
qualified by the phrase "of the First Instance", the words
"justice of the peace" would follow; however, if the law
simply said "judge," the words "justice of the peace" were
omitted.
The above-mentioned pattern of congressional
phraseology would seem to justify the conclusion that
when the legislature omitted the words "justice of the
peace" in Rep. Act No. 180, it did not intend to exempt
the said officer from its operation. Rather, it had
considered the said officer as already comprehended in
the broader term "judge".
It is unfortunate and regrettable that the last World War
had destroyed congressional records which might have
offered some explanation of the discussion of Com. Act
No. 357 which legislation, as indicated above, has
eliminated for the first time the words "justice of the
peace." Having been completely destroyed, all efforts to
seek deeper and additional clarifications from these
records proved futile. Nevertheless, the conclusions
drawn from the historical background of Rep. Act No. 180
is sufficiently borne out by reason hid equity.
Defendant further argues that he cannot possibly be
among the officers enumerated in Section 54 inasmuch as
under that said section, the word "judge" is modified or
qualified by the phrase "of any province." The last
mentioned phrase, defendant submits, cannot then refer to
a justice of the peace since the latter is not an officer of a
province but of a municipality.
Defendant's argument in that respect is too strained. If it
is true that the phrase "of any province" necessarily
removes justices of the peace from the enumeration for
the reason that they are municipal and not provincial
officials, then the same thing may be said of the Justices
of the Supreme Court and of the Court of Appeals. They
are national officials. Yet, can there be any doubt that
Justices of the Supreme Court and of the Court of Appeals
are not included in the prohibition? The more sensible and
logical interpretation of the said phrase is that it qualifies
fiscals, treasurers and assessors who are generally known
as provincial officers.
The rule of "casus omisus pro omisso habendus est" is
likewise invoked by the defendant-appellee. Under the
said rule, a person, object or thing omitted from an
enumeration must be held to have been omitted
intentionally. If that rule is applicable to the present, then
indeed, justices of the peace must be held to have been
intentionally and deliberately exempted from the
operation of Section 54 of the Revised Election Code.
The rule has no applicability to the case at bar. The maxim
"casus omisus" can operate and apply only if and when
the omission has been clearly established. In the case
under consideration, it has already been shown that the
legislature did not exclude or omit justices of the peace
from the enumeration of officers precluded from engaging
in partisan political activities. Rather, they were merely
called by another term. In the new law, or Section 54 of
the Revised Election Code, justices of the peace were just
called "judges."
In insisting on the application of the rule of "casus
omisus" to this case, defendant-appellee cites authorities
to the effect that the said rule, being restrictive in nature,
has more particular application to statutes that should be
strictly construed. It is pointed out that Section 54 must be
strictly construed against the government since
proceedings under it are criminal in nature and the
jurisprudence is settled that penal statutes should be
strictly interpreted against the state.
Amplifying on the above argument regarding strict
interpretation of penal statutes, defendant asserts that the
spirit of fair play and due process demand such strict
construction in order to give "fair warning of what the law
intends to do, if a certain line is passed, in language that
the common world will understand." (Justice Holmes, in
McBoyle v. U.S., 283 U.S. 25, L. Ed. 816).
The application of the rule of "casus omisus" does not
proceed from the mere fact that a case is criminal in
nature, but rather from a reasonable certainty that a
particular person, object or thing has been omitted
from a legislative enumeration. In the present case,
and for reasons already mentioned, there has been no
such omission. There has only been a substitution of
terms.
The rule that penal statutes are given a strict construction
is not the only factor controlling the interpretation of such
laws; instead, the rule merely serves as an additional,
single factor to be considered as an aid in determining the
meaning of penal laws. This has been recognized time and
again by decisions of various courts. (3 Sutherland,
Statutory Construction, p. 56.) Thus, cases will frequently
be found enunciating the principle that the intent of the
legislature will govern (U.S. vs. Corbet, 215 U.S. 233). It
is to be noted that a strict construction should not be
permitted to defeat the policy and purposes of the statute
(Ash Sheep Co. v. U.S., 252 U.S. 159). The court may
consider the spirit and reason of a statute, as in this
particular instance, where a literal meaning would lead to
absurdity, contradiction, injustice, or would defeat the
clear purpose of the law makers (Crawford, Interpretation
of Laws, Sec. 78, p. 294). A Federal District court in the
U.S. has well said:
The strict construction of a criminal statute does not mean
such construction of it as to deprive it of the meaning
intended. Penal statutes must be construed in the sense
which best harmonizes with their intent and purpose.
(U.S. v. Betteridge 43 F. Supp. 53, 56, cited in 3
Sutherland Statutory Construction 56.)
As well stated by the Supreme Court of the United States,
the language of criminal statutes, frequently, has been
narrowed where the letter includes situations inconsistent
with the legislative plan (U.S. v. Katz, 271 U.S. 354; See
also Ernest Brunchen, Interpretation of the Written Law
(1915) 25 Yale L.J. 129.)
Another reason in support of the conclusion reached
herein is the fact that the purpose of the statute is to
enlarge the officers within its purview. Justices of the
Supreme Court, the Court of Appeals, and various judges,
such as the judges of the Court of Industrial Relations,
judges of the Court of Agrarian Relations, etc., who were
not included in the prohibition under the old statute, are
now within its encompass. If such were the evident
purpose, can the legislature intend to eliminate the justice
of the peace within its orbit? Certainly not. This point is
fully explained in the brief of the Solicitor General, to wit:
On the other hand, when the legislature eliminated the
phrases "Judge of First Instance" and justice of the peace",
found in Section 449 of the Revised Administrative Code,
and used "judge" in lieu thereof, the obvious intention was
to include in the scope of the term not just one class of
judges but all judges, whether of first Instance justices of
the peace or special courts, such as judges of the Court of
Industrial Relations. . . . .
The weakest link in our judicial system is the justice of
the peace court, and to so construe the law as to allow a
judge thereof to engage in partisan political activities
would weaken rather than strengthen the judiciary. On the
other hand, there are cogent reasons found in the Revised
Election Code itself why justices of the peace should be
prohibited from electioneering. Along with Justices of the
appellate courts and judges of the Court of First Instance,
they are given authority and jurisdiction over certain
election cases (See Secs. 103, 104, 117-123). Justices of
the peace are authorized to hear and decided inclusion and
exclusion cases, and if they are permitted to campaign for
candidates for an elective office the impartiality of their
decisions in election cases would be open to serious
doubt. We do not believe that the legislature had, in
Section 54 of the Revised Election Code, intended to
create such an unfortunate situation. (pp. 708, Appellant's
Brief.)
Another factor which fortifies the conclusion reached
herein is the fact that the administrative or executive
department has regarded justices of the peace within the
purview of Section 54 of the Revised Election Code.
In Tranquilino O. Calo, Jr. v. The Executive Secretary,
the Secretary of Justice, etc. (G.R. No. L-12601), this
Court did not give due course to the petition for certiorari
and prohibition with preliminary injunction against the
respondents, for not setting aside, among others,
Administrative Order No. 237, dated March 31, 1957, of
the President of the Philippines, dismissing the petitioner
as justice of the peace of Carmen, Agusan. It is worthy of
note that one of the causes of the separation of the
petitioner was the fact that he was found guilty in
engaging in electioneering, contrary to the provisions of
the Election Code.
Defendant-appellee calls the attention of this Court to
House Bill No. 2676, which was filed on January 25,
1955. In that proposed legislation, under Section 56,
justices of the peace are already expressly included among
the officers enjoined from active political participation.
The argument is that with the filing of the said House Bill,
Congress impliedly acknowledged that existing laws do
not prohibit justices of the peace from partisan political
activities.
The argument is unacceptable. To begin with, House Bill
No. 2676 was a proposed amendment to Rep. Act No. 180
as a whole and not merely to section 54 of said Rep. Act
No. 180. In other words, House Bill No. 2676 was a
proposed re-codification of the existing election laws at
the time that it was filed. Besides, the proposed
amendment, until it has become a law, cannot be
considered to contain or manifest any legislative intent. If
the motives, opinions, and the reasons expressed by the
individual members of the legislature even in debates,
cannot be properly taken into consideration in
ascertaining the meaning of a statute (Crawford, Statutory
Construction, Sec. 213, pp. 375-376), a fortiori what
weight can We give to a mere draft of a bill.
On law reason and public policy, defendant-appellee's
contention that justices of the peace are not covered by the
injunction of Section 54 must be rejected. To accept it is
to render ineffective a policy so clearly and emphatically
laid down by the legislature.
Our law-making body has consistently prohibited justices
of the peace from participating in partisan politics. They
were prohibited under the old Election Law since 1907
(Act No. 1582 and Act No. 1709). Likewise, they were so
enjoined by the Revised Administrative Code. Another
which expressed the prohibition to them was Act No.
3387, and later, Com. Act No. 357.
Lastly, it is observed that both the Court of Appeals and
the trial court applied the rule of "expressio unius, est
exclusion alterius" in arriving at the conclusion that
justices of the peace are not covered by Section 54. Said
the Court of Appeals: "Anyway, guided by the rule of
exclusion, otherwise known as expressio unius est
exclusion alterius, it would not be beyond reason to infer
that there was an intention of omitting the term "justice of
the peace from Section 54 of the Revised Election Code.
. . ."
The rule has no application. If the legislature had intended
to exclude a justice of the peace from the purview of
Section 54, neither the trial court nor the Court of Appeals
has given the reason for the exclusion. Indeed, there
appears no reason for the alleged change. Hence, the rule
of expressio unius est exclusion alterius has been
erroneously applied. (Appellant's Brief, p. 6.)
Where a statute appears on its face to limit the operation
of its provisions to particular persons or things by
enumerating them, but no reason exists why other persons
or things not so enumerated should not have been
included, and manifest injustice will follow by not so
including them, the maxim expressio unius est exclusion
alterius, should not be invoked. (Blevins v. Mullally 135
p. 307, 22 Cal. App. 519.) .
FOR THE ABOVE REASONS, the order of dismissal
entered by the trial court should be set aside and this case
is remanded for trial on the merits.
Bengzon, C.J., Bautista Angelo, Labrador, Concepcion,
Barrera and Makalintal, JJ., concur.
Padilla and Dizon, JJ., took no part.
Reyes, J.B.L., J., is on leave.
EN BANC
G.R. No. 202242 April 16, 2013
FRANCISCO I. CHAVEZ, Petitioner,
vs.
JUDICIALAND BAR COUNCIL, SEN. FRANCIS
JOSEPH G. ESCUDERO and REP. NIEL C.
TUPAS, JR., Respondents.
RESOLUTION
MENDOZA, J.:
This resolves the Motion for Reconsideration1 filed by the
Office of the Solicitor General (OSG) on behalf of the
respondents, Senator Francis Joseph G. Escudero and
Congressman Niel C. Tupas, Jr. (respondents), duly
opposed2 by the petitioner, former Solicitor General
Francisco I. Chavez (petitioner).
By way of recapitulation, the present action stemmed
from the unexpected departure of former Chief Justice
Renato C. Corona on May 29, 2012, and the nomination
of petitioner, as his potential successor. In his initiatory
pleading, petitioner asked the Court to determine 1]
whether the first paragraph of Section 8, Article VIII of
the 1987 Constitution allows more than one (1) member
of Congress to sit in the JBC; and 2] if the practice of
having two (2) representatives from each House of
Congress with one (1) vote each is sanctioned by the
Constitution.
On July 17, 2012, the Court handed down the assailed
subject decision, disposing the same in the following
manner:
WHEREFORE, the petition is GRANTED. The current
numerical composition of the Judicial and Bar Council is
declared UNCONSTITUTIONAL. The Judicial and Bar
Council is hereby enjoined to reconstitute itself so that
only one (1) member of Congress will sit as a
representative in its proceedings, in accordance with
Section 8(1), Article VIII of the 1987 Constitution.
This disposition is immediately executory.
SO ORDERED.
On July 31, 2012, following respondents’ motion for
reconsideration and with due regard to Senate Resolution
Nos. 111,3 112,4 113,5 and 114,6 the Court set the subject
motion for oral arguments on August 2, 2012.7 On August
3, 2012, the Court discussed the merits of the arguments
and agreed, in the meantime, to suspend the effects of the
second paragraph of the dispositive portion of the July 17,
2012 Decision which decreed that it was immediately
executory. The decretal portion of the August 3, 2012
Resolution8 reads:
WHEREFORE, the parties are hereby directed to submit
their respective MEMORANDA within ten (10) days
from notice. Until further orders, the Court hereby
SUSPENDS the effect of the second paragraph of the
dispositive portion of the Court’s July 17, 2012 Decision,
which reads: "This disposition is immediately
executory."9
Pursuant to the same resolution, petitioner and
respondents filed their respective memoranda.10
Brief Statement of the Antecedents
In this disposition, it bears reiterating that from the birth
of the Philippine Republic, the exercise of appointing
members of the Judiciary has always been the exclusive
prerogative of the executive and legislative branches of
the government. Like their progenitor of American
origins, both the Malolos Constitution11 and the 1935
Constitution12 vested the power to appoint the members
of the Judiciary in the President, subject to confirmation
by the Commission on Appointments. It was during these
times that the country became witness to the deplorable
practice of aspirants seeking confirmation of their
appointment in the Judiciary to ingratiate themselves with
the members of the legislative body.13
Then, under the 1973 Constitution,14 with the fusion of
the executive and legislative powers in one body, the
appointment of judges and justices ceased to be subject of
scrutiny by another body. The power became exclusive
and absolute to the Executive, subject only to the
condition that the appointees must have all the
qualifications and none of the disqualifications.
Prompted by the clamor to rid the process of appointments
to the Judiciary of the evils of political pressure and
partisan activities,15 the members of the Constitutional
Commission saw it wise to create a separate, competent
and independent body to recommend nominees to the
President.
Thus, it conceived of a body, representative of all the
stakeholders in the judicial appointment process, and
called it the Judicial and Bar Council (JBC). The Framers
carefully worded Section 8, Article VIII of the 1987
Constitution in this wise:
Section 8. (1) A Judicial and Bar Council is hereby
created under the supervision of the Supreme Court
composed of the Chief Justice as ex officio Chairman, the
Secretary of Justice, and a representative of the Congress
as ex officio Members, a representative of the Integrated
Bar, a professor of law, a retired Member of the Supreme
Court, and a representative of the private sector.
From the moment of the creation of the JBC, Congress
designated one (1) representative to sit in the JBC to act
as one of the ex-officio members.16 Pursuant to the
constitutional provision that Congress is entitled to one
(1) representative, each House sent a representative to the
JBC, not together, but alternately or by rotation.
In 1994, the seven-member composition of the JBC was
substantially altered.1âwphi1 An eighth member was
added to the JBC as the two (2) representatives from
Congress began sitting simultaneously in the JBC, with
each having one-half (1/2) of a vote.17
In 2001, the JBC En Banc decided to allow the
representatives from the Senate and the House of
Representatives one full vote each.18 It has been the
situation since then.
Grounds relied upon by Respondents
Through the subject motion, respondents pray that the
Court reconsider its decision and dismiss the petition on
the following grounds: 1] that allowing only one
representative from Congress in the JBC would lead to
absurdity considering its bicameral nature; 2] that the
failure of the Framers to make the proper adjustment
when there was a shift from unilateralism to bicameralism
was a plain oversight; 3] that two representatives from
Congress would not subvert the intention of the Framers
to insulate the JBC from political partisanship; and 4] that
the rationale of the Court in declaring a seven-member
composition would provide a solution should there be a
stalemate is not exactly correct.
While the Court may find some sense in the reasoning in
amplification of the third and fourth grounds listed by
respondents, still, it finds itself unable to reverse the
assailed decision on the principal issues covered by the
first and second grounds for lack of merit. Significantly,
the conclusion arrived at, with respect to the first and
second grounds, carries greater bearing in the final
resolution of this case.
As these two issues are interrelated, the Court shall
discuss them jointly.
Ruling of the Court
The Constitution evinces the direct action of the Filipino
people by which the fundamental powers of government
are established, limited and defined and by which those
powers are distributed among the several departments for
their safe and useful exercise for the benefit of the body
politic.19 The Framers reposed their wisdom and vision on
one suprema lex to be the ultimate expression of the
principles and the framework upon which government
and society were to operate. Thus, in the interpretation of
the constitutional provisions, the Court firmly relies on
the basic postulate that the Framers mean what they say.
The language used in the Constitution must be taken to
have been deliberately chosen for a definite purpose.
Every word employed in the Constitution must be
interpreted to exude its deliberate intent which must be
maintained inviolate against disobedience and defiance.
What the Constitution clearly says, according to its text,
compels acceptance and bars modification even by the
branch tasked to interpret it.
For this reason, the Court cannot accede to the argument
of plain oversight in order to justify constitutional
construction. As stated in the July 17, 2012 Decision, in
opting to use the singular letter "a" to describe
"representative of Congress," the Filipino people through
the Framers intended that Congress be entitled to only one
(1) seat in the JBC. Had the intention been otherwise, the
Constitution could have, in no uncertain terms, so
provided, as can be read in its other provisions.
A reading of the 1987 Constitution would reveal that
several provisions were indeed adjusted as to be in tune
with the shift to bicameralism. One example is Section 4,
Article VII, which provides that a tie in the presidential
election shall be broken "by a majority of all the Members
of both Houses of the Congress, voting
separately."20 Another is Section 8 thereof which requires
the nominee to replace the Vice-President to be confirmed
"by a majority of all the Members of both Houses of the
Congress, voting separately."21 Similarly, under Section
18, the proclamation of martial law or the suspension of
the privilege of the writ of habeas corpus may be revoked
or continued by the Congress, voting separately, by a vote
of at least a majority of all its Members."22 In all these
provisions, the bicameral nature of Congress was
recognized and, clearly, the corresponding adjustments
were made as to how a matter would be handled and voted
upon by its two Houses.
Thus, to say that the Framers simply failed to adjust
Section 8, Article VIII, by sheer inadvertence, to their
decision to shift to a bicameral form of the legislature, is
not persuasive enough. Respondents cannot just lean on
plain oversight to justify a conclusion favorable to them.
It is very clear that the Framers were not keen on adjusting
the provision on congressional representation in the JBC
because it was not in the exercise of its primary function
– to legislate. JBC was created to support the executive
power to appoint, and Congress, as one whole body, was
merely assigned a contributory non-legislative function.
The underlying reason for such a limited participation can
easily be discerned. Congress has two (2) Houses. The
need to recognize the existence and the role of each House
is essential considering that the Constitution employs
precise language in laying down the functions which
particular House plays, regardless of whether the two
Houses consummate an official act by voting jointly or
separately. Whether in the exercise of its legislative23 or
its non-legislative functions such as inter alia, the power
of appropriation,24 the declaration of an existence of a
state of war,25 canvassing of electoral returns for the
President and Vice-President,26 and impeachment,27 the
dichotomy of each House must be acknowledged and
recognized considering the interplay between these two
Houses. In all these instances, each House is
constitutionally granted with powers and functions
peculiar to its nature and with keen consideration to 1) its
relationship with the other chamber; and 2) in consonance
with the principle of checks and balances, as to the other
branches of government.
In checkered contrast, there is essentially no interaction
between the two Houses in their participation in the JBC.
No mechanism is required between the Senate and the
House of Representatives in the screening and nomination
of judicial officers. Rather, in the creation of the JBC, the
Framers arrived at a unique system by adding to the four
(4) regular members, three (3) representatives from the
major branches of government - the Chief Justice as ex-
officio Chairman (representing the Judicial Department),
the Secretary of Justice (representing the Executive
Department), and a representative of the Congress
(representing the Legislative Department). The total is
seven (7), not eight. In so providing, the Framers simply
gave recognition to the Legislature, not because it was in
the interest of a certain constituency, but in reverence to
it as a major branch of government.
On this score, a Member of Congress, Hon. Simeon A.
Datumanong, from the Second District of Maguindanao,
submitted his well-considered position28 to then Chief
Justice Reynato S. Puno:
I humbly reiterate my position that there should be only
one representative of Congress in the JBC in accordance
with Article VIII, Section 8 (1) of the 1987 Constitution
The aforesaid provision is clear and unambiguous and
does not need any further interpretation. Perhaps, it is
apt to mention that the oft-repeated doctrine that
"construction and interpretation come only after it
has been demonstrated that application is impossible
or inadequate without them."
Further, to allow Congress to have two representatives in
the Council, with one vote each, is to negate the principle
of equality among the three branches of government
which is enshrined in the Constitution.
In view of the foregoing, I vote for the proposition that the
Council should adopt the rule of single representation of
Congress in the JBC in order to respect and give the right
meaning to the above-quoted provision of the
Constitution. (Emphases and underscoring supplied)
On March 14, 2007, then Associate Justice Leonardo A.
Quisumbing, also a JBC Consultant, submitted to the
Chief Justice and ex-officio JBC Chairman his
opinion,29 which reads:
8. Two things can be gleaned from the excerpts and
citations above: the creation of the JBC is intended to
curtail the influence of politics in Congress in the
appointment of judges, and the understanding is that
seven (7) persons will compose the JBC. As such, the
interpretation of two votes for Congress runs counter to
the intendment of the framers. Such interpretation
actually gives Congress more influence in the
appointment of judges. Also, two votes for Congress
would increase the number of JBC members to eight,
which could lead to voting deadlock by reason of even-
numbered membership, and a clear violation of 7
enumerated members in the Constitution. (Emphases and
underscoring supplied)
In an undated position paper,30 then Secretary of Justice
Agnes VST Devanadera opined:
As can be gleaned from the above constitutional
provision, the JBC is composed of seven (7)
representatives coming from different sectors. From the
enumeration it is patent that each category of members
pertained to a single individual only. Thus, while we do
not lose sight of the bicameral nature of our legislative
department, it is beyond dispute that Art. VIII, Section 8
(1) of the 1987 Constitution is explicit and specific that
"Congress" shall have only "xxx a representative." Thus,
two (2) representatives from Congress would increase the
number of JBC members to eight (8), a number beyond
what the Constitution has contemplated. (Emphases and
underscoring supplied)
In this regard, the scholarly dissection on the matter by
retired Justice Consuelo Ynares-Santiago, a former JBC
consultant, is worth reiterating.31 Thus:
A perusal of the records of the Constitutional Commission
reveals that the composition of the JBC reflects the
Commission’s desire "to have in the Council a
representation for the major elements of the community."
xxx The ex-officio members of the Council consist of
representatives from the three main branches of
government while the regular members are composed of
various stakeholders in the judiciary. The unmistakeable
tenor of Article VIII, Section 8(1) was to treat each ex-
officio member as representing one co-equal branch of
government. xxx Thus, the JBC was designed to have
seven voting members with the three ex-officio members
having equal say in the choice of judicial nominees.
xxx
No parallelism can be drawn between the representative
of Congress in the JBC and the exercise by Congress of
its legislative powers under Article VI and constituent
powers under Article XVII of the Constitution. Congress,
in relation to the executive and judicial branches of
government, is constitutionally treated as another co-
equal branch in the matter of its representative in the JBC.
On the other hand, the exercise of legislative and
constituent powers requires the Senate and the House of
Representatives to coordinate and act as distinct bodies in
furtherance of Congress’ role under our constitutional
scheme. While the latter justifies and, in fact, necessitates
the separateness of the two Houses of Congress as they
relate inter se, no such dichotomy need be made when
Congress interacts with the other two co-equal branches
of government.
It is more in keeping with the co-equal nature of the three
governmental branches to assign the same weight to
considerations that any of its representatives may have
regarding aspiring nominees to the judiciary. The
representatives of the Senate and the House of
Representatives act as such for one branch and should not
have any more quantitative influence as the other
branches in the exercise of prerogatives evenly bestowed
upon the three. Sound reason and principle of equality
among the three branches support this conclusion.
[Emphases and underscoring supplied]
The argument that a senator cannot represent a member of
the House of Representatives in the JBC and vice-versa
is, thus, misplaced. In the JBC, any member of Congress,
whether from the Senate or the House of Representatives,
is constitutionally empowered to represent the entire
Congress. It may be a constricted constitutional authority,
but it is not an absurdity.
From this score stems the conclusion that the lone
representative of Congress is entitled to one full vote. This
pronouncement effectively disallows the scheme of
splitting the said vote into half (1/2), between two
representatives of Congress. Not only can this
unsanctioned practice cause disorder in the voting
process, it is clearly against the essence of what the
Constitution authorized. After all, basic and reasonable is
the rule that what cannot be legally done directly cannot
be done indirectly. To permit or tolerate the splitting of
one vote into two or more is clearly a constitutional
circumvention that cannot be countenanced by the Court.
Succinctly put, when the Constitution envisioned one
member of Congress sitting in the JBC, it is sensible to
presume that this representation carries with him one full
vote.
It is also an error for respondents to argue that the
President, in effect, has more influence over the JBC
simply because all of the regular members of the JBC are
his appointees. The principle of checks and balances is
still safeguarded because the appointment of all the
regular members of the JBC is subject to a stringent
process of confirmation by the Commission on
Appointments, which is composed of members of
Congress.
Respondents’ contention that the current irregular
composition of the JBC should be accepted, simply
because it was only questioned for the first time through
the present action, deserves scant consideration. Well-
settled is the rule that acts done in violation of the
Constitution no matter how frequent, usual or notorious
cannot develop or gain acceptance under the doctrine of
estoppel or laches, because once an act is considered as an
infringement of the Constitution it is void from the very
beginning and cannot be the source of any power or
authority.
It would not be amiss to point out, however, that as a
general rule, an unconstitutional act is not a law; it confers
no rights; it imposes no duties; it affords no protection; it
creates no office; it is inoperative as if it has not been
passed at all. This rule, however, is not absolute. Under
the doctrine of operative facts, actions previous to the
declaration of unconstitutionality are legally recognized.
They are not nullified. This is essential in the interest of
fair play. To reiterate the doctrine enunciated in Planters
Products, Inc. v. Fertiphil Corporation:32
The doctrine of operative fact, as an exception to the
general rule, only applies as a matter of equity and fair
play. It nullifies the effects of an unconstitutional law by
recognizing that the existence of a statute prior to a
determination of unconstitutionality is an operative fact
and may have consequences which cannot always be
ignored. The past cannot always be erased by a new
judicial declaration. The doctrine is applicable when a
declaration of unconstitutionality will impose an undue
burden on those who have relied on the invalid law. Thus,
it was applied to a criminal case when a declaration of
unconstitutionality would put the accused in double
jeopardy or would put in limbo the acts done by a
municipality in reliance upon a law creating it.33
Under the circumstances, the Court finds the exception
applicable in this case and holds that notwithstanding its
finding of unconstitutionality in the current composition
of the JBC, all its prior official actions are nonetheless
valid.
Considering that the Court is duty bound to protect the
Constitution which was ratified by the direct action of the
Filipino people, it cannot correct what respondents
perceive as a mistake in its mandate. Neither can the
Court, in the exercise of its power to interpret the spirit of
the Constitution, read into the law something that is
contrary to its express provisions and justify the same as
correcting a perceived inadvertence. To do so would
otherwise sanction the Court action of making
amendment to the Constitution through a judicial
pronouncement.
In other words, the Court cannot supply the legislative
omission. According to the rule of casus omissus "a case
omitted is to be held as intentionally omitted."34 "The
principle proceeds from a reasonable certainty that a
particular person, object or thing has been omitted from a
legislative enumeration."35 Pursuant to this, "the Court
cannot under its power of interpretation supply the
omission even though the omission may have resulted
from inadvertence or because the case in question was not
foreseen or contemplated."36 "The Court cannot supply
what it thinks the legislature would have supplied had its
attention been called to the omission, as that would be
judicial legislation."37
Stated differently, the Court has no power to add another
member by judicial construction.
The call for judicial activism fails to stir the sensibilities
of the Court tasked to guard the Constitution against
usurpation. The Court remains steadfast in confining its
powers in the sphere granted by the Constitution itself.
Judicial activism should never be allowed to become
judicial exuberance.38 In cases like this, no amount of
practical logic or convenience can convince the Court to
perform either an excision or an insertion that will change
the manifest intent of the Framers. To broaden the scope
of congressional representation in the JBC is tantamount
to the inclusion of a subject matter which was not included
in the provision as enacted. True to its constitutional
mandate, the Court cannot craft and tailor constitutional
provisions in order to accommodate all of situations no
matter how ideal or reasonable the proposed solution may
sound. To the exercise of this intrusion, the Court
declines.
WHEREFORE, the Motion for Reconsideration filed by
respondents is hereby DENIED.
The suspension of the effects of the second paragraph of
the dispositive portion of the July 17, 2012 Decision of
the Court, which reads, "This disposition is immediately
executory," is hereby LIFTED.
SO ORDERED.
JOSE CATRAL MENDOZA
Associate Justice
WE CONCUR:
3
Entitled "Resolution expressing the sense of the Senate
that the Judicial and Bar Council (JBC) defer the
consideration of all nominees and the preparation of the
short list to be submitted to the President for the position
of Chief Justice of the Supreme Court;" id. at 303-304.
4
Entitled "Resolution expressing anew the sense of the
Senate that the Senate and House of Representatives
should have one (1) representative each in the Judicial and
Bar Council (JBC) and that each representative is entitled
to a full vote;" id. at 305-307.
5
Entitled "Resolution to file an urgent motion with the
Supreme Court to set for oral argument the motion for
reconsideration filed by the representatives of Congress to
the Judicial and Bar Council (JBC) in the case of
Francisco Chavez v. Judicial and Bar Council, Sen.
Francis Joseph G.. Escudero and Rep. Niel Tupas Jr., G.R.
No. 2022242 considering the primordial importance of
the constitutional issues involved;" id. at 308-310.
6
Entitled "Resolution authorizing Senator Joker P.
Arroyo to argue, together with the Counsel-of-record, the
motion for reconsideration filed by the representative of
the Senate to the Judicial and Bar Council in the case of
Francisco Chavez v. Judicial and Bar Council, Sen.
Francis Joseph G. Escudero and Rep. Niel Tupas, Jr.;" id.
at 311-312.
10
Petitioner’s Memorandum, id. at 326-380;
Respondents’ Memorandum, id. at 381-424.
11
Malolos Constitution Article 80 Title X. – The Chief
Justice of the Supreme Court and the Solicitor-General
shall be chosen by the National Assembly in concurrence
with the President of the Republic and the Secretaries of
the Government, and shall be absolutely independent of
the Legislative and Executive Powers."
12
1935 Constitution Article VIII, Section 5. – The
Members of the Supreme Court and all judges of inferior
courts shall be appointed by the President with the consent
of the Commission on Appointments."
13
1 Records of the Constitutional Commission
Proceedings and Debates, 437.
14
Section 4 Article X of the 1973 Constitution provides:
"The Members of the Supreme Court and judges of
inferior courts shall be appointed by the President."
15
1 Records, Constitutional Commission, Proceedings
and Debates, p. 487.
16
List of JBC Chairpersons, Ex-Officio and Regular
Members, Ex Officio Secretaries and Consultants, issued
by the Office of the Executive Officer, Judicial and Bar
Council, rollo, pp. 62-63.
17
Id.
18
Id. at 80, citing Minutes of the 1st En Banc Executive
Meeting, January 12, 2000 and Minutes of the 12th En
Banc Meeting, May 30, 2001.
19
Malcolm, The Constitutional Law of the Philippine
Islands (2nd ed. 1926), p. 26.
20
1987 Constitution, Article VII, Section 4. – The
President and the Vice-President shall be elected by direct
vote of the people for a term of six years which shall begin
at noon on the thirtieth day of June next following the day
of the election and shall end at noon of the same date, six
years thereafter. The President shall not be eligible for any
re-election. No person who has succeeded as President
and has served as such for more than four years shall be
qualified for election to the same office at any time.
xxx
The person having the highest number of votes shall be
proclaimed elected, but in case two or more shall have an
equal and highest number of votes, one of them shall
forthwith be chosen by the vote of a majority of all the
Members of both Houses of the Congress, voting
separately. (Emphasis supplied)
x x x.
21
1987 Constitution, Article VII, Section 9. – Whenever
there is a vacancy in the Office of the Vice-President
during the term for which he was elected, the President
shall nominate a Vice-President from among the
Members of the Senate and the House of Representatives
who shall assume office upon confirmation by a majority
vote of all the Members of both Houses of the Congress,
voting separately. (Emphasis supplied)
22
1987 Constitution, Article VII, Section 18. – The
President shall be the Commander-in-Chief of all armed
forces of the Philippines and whenever it becomes
necessary, he may call out such armed forces to prevent
or suppress lawless violence, invasion or rebellion. In
case of invasion or rebellion, when the public safety
requires it, he may, for a period not exceeding sixty days,
suspend the privilege of the writ of habeas corpus or place
the Philippines or any part thereof under martial law.
Within forty-eight hours from the proclamation of martial
law or the suspension of the privilege of the writ of habeas
corpus, the President shall submit a report in person or in
writing to the Congress. The Congress, voting jointly, by
a vote of at least a majority of all its Members in regular
or special session, may revoke such proclamation or
suspension, which revocation shall not be set aside by the
President. Upon the initiative of the President, the
Congress may, in the same manner, extend such
proclamation or suspension for a period to be determined
by the Congress, if the invasion or rebellion shall persist
and public safety requires it. (Emphasis supplied)
23
1987 Constitution, Article VI Section 27(1). – Every
bill passed by the Congress shall, before it becomes a law,
be presented to the President. If he approves the same, he
shall sign it; otherwise, he shall veto it and return the same
with his objections to the House where it originated,
which shall enter the objections at large in its Journal and
proceed to reconsider it. If, after such reconsideration,
two-thirds of all the Members of such House shall agree
to pass the bill, it shall be sent, together with the
objections, to the other House by which it shall likewise
be reconsidered, and if approved by two-thirds of all the
Members of that House, it shall become a law. In all such
cases, the votes of each House shall be determined by yeas
or nays, and the names of the Members voting for or
against shall be entered in its Journal. The President shall
communicate his veto of any bill to the House where it
originated within thirty days after the date of receipt
thereof; otherwise, it shall become a law as if he had
signed it.
24
1987 Constitution, Article VI Section 24. – All
appropriation, revenue or tariff bills, bills authorizing
increase of public debt, bills of local application, and
private bills shall originate exclusively in the House of
Representatives, but the Senate may propose or concur
with amendments.
25
1987 Constitution, Article VI Section 23 (1). – The
Congress, by a vote of two-thirds of both Houses in joint
session assembled, voting separately, shall have the sole
power to declare the existence of a state of war.
26
1987 Constitution, Article VII Section 4. – The returns
of every election for President and Vice-President, duly
certified by the board of canvassers of each province or
city, shall be transmitted to the Congress, directed to the
President of the Senate. Upon receipt of the certificates of
canvass, the President of the Senate shall, not later than
thirty days after the day of the election, open all
certificates in the presence of the Senate and the House of
Representatives in joint public session, and the Congress,
upon determination of the authenticity and due execution
thereof in the manner provided by law, canvass the votes.
The person having the highest number of votes shall be
proclaimed elected, but in case two or more shall have an
equal and highest number of votes, one of them shall
forthwith be chosen by the vote of a majority of all the
Members of both Houses of the Congress, voting
separately.
27
1987 Constitution, Article XI Section 3 (1). – The
House of Representatives shall have the exclusive power
to initiate all cases of impeachment.
xxx
(6) The Senate shall have the sole power to try and decide
all cases of impeachment. When sitting for that purpose,
the Senators shall be on oath or affirmation. When the
President of the Philippines is on trial, the Chief Justice of
the Supreme Court shall preside, but shall not vote. No
person shall be convicted without the concurrence of two-
thirds of all the Members of the Senate.
28
Dated March 27, 2007; Annex "D," rollo, p. 104.
29
Annex C, id. at 95. Quoting the interpretation of Article
VIII, Section (1) of the Constitution by Fr. Joaquin Bernas
in page 984 of his book, The 1987 Constitution of the
Republic of the Philippines, A Commentary. He quoted
another author, Hector de Leon, and portions of the
decisions of this Court in Flores v. Drilon, and Escalante
v. Santos, before extensively quoting the Record of the
Constitutional Commission of 1986 (pages 444 to 491).
30
Annex "E," id. at 1205.
31
Rollo, pp. 91-93.
32
G.R. No. 166006, March 14, 2008, 548 SCRA 485.
33
Id. at 516-517. (Citations omitted.)
34
Black’s Law Dictionary, Fifth ed., p. 198.
35
Agpalo, Statutory Construction, 2009 ed., p. 231.
36
Id., citing Cartwrite v. Cartwrite, 40 A2d 30, 155 ALR
1088 (1944).
37
Id., Agpalo, p. 232
38
Dissenting Opinion, Chief Justice Panganiban, Central
Bank (Now Bangko Sentral Ng Pilipinas) Employees
Association, Inc. v. Bangko Sentral ng Pilipinas, G.R. No.
148208, December 15, 2004, 446 SCRA 299, citing
Peralta v. COMELEC. No. L-47771, March 11, 1978, 82
SCRA 30, 77, citing concurring and dissenting opinion of
former Chief Justice Fernando, citing Malcolm.
DISSENTING OPINION
ABAD, J.:
On July 17, 2012, the Court rendered a Decision1 granting
the petition for declaration of unconstitutionality,
prohibition, and injunction filed by petitioner Francisco I.
Chavez, and declaring that the current numerical
composition of the Judicial and Bar Council (JBC) is
unconstitutional. The Court also enjoined the JBC to
reconstitute itself so that only one member of Congress
will sit as a representative in its proceedings, in
accordance with Section 8(1), Article VIII of the 1987
Constitution.
On July 24, 2012, respondents Senator Francis Joseph G.
Escudero and Congressman Niel C. Tupas, Jr. moved for
reconsideration.2 The Court then conducted and heard the
parties in oral arguments on the following Issues:
1. Whether or not the current practice of the JBC to
perform its functions with eight members, two of whom
are members of Congress, runs counter to the letter and
spirit of Section 8(1), Article VIII of the 1987
Constitution.
A. Whether or not the JBC should be composed of seven
members only.
B. Whether or not Congress is entitled to more than one
seat in the JBC.
C. Assuming Congress is entitled to more than one seat,
whether or not each representative of Congress should be
entitled to exercise one whole vote.
I maintain my dissent to the majority opinion now being
reconsidered.
To reiterate, the vital question that needs to be resolved is:
whether or not the Senate and the House of
Representatives are entitled to one representative each in
the JBC, both with the right to cast one full vote in its
deliberations.
At the core of the present controversy is Section 8(1),
Article VIII of the 1987 Constitution, which provides that:
Section 8. (1) A Judicial and Bar Council is hereby
created under the supervision of the Supreme Court
composed of the Chief Justice as ex officio Chairman, the
Secretary of Justice, and a representative of the Congress
as ex officio Members, a representative of the Integrated
Bar, a professor of law, a retired Member of the Supreme
Court, and a representative of the private sector.
(Emphasis supplied)
In interpreting Section 8(1) above, the majority opinion
reiterated that in opting to use the singular letter "a" to
describe "representative of the Congress," the Filipino
people through the framers of the 1987 Constitution
intended Congress to just have one representative in the
JBC. The majority opinion added that there could not have
been any plain oversight in the wordings of the provision
since the other provisions of the 1987 Constitution were
amended accordingly with the shift to a bicameral
legislative body.
The mere fact, however, that adjustments were made in
some provisions should not mislead the Court into
concluding that all provisions have been amended to
recognize the bicameral nature of Congress. As I have
previously noted in my dissenting opinion, Fr. Joaquin G.
Bernas, a member of the Constitutional Commission
himself, admitted that the committee charged with
making adjustments in the previously passed provisions
covering the JBC, failed to consider the impact of the
changed character of the Legislature on the inclusion of
"a representative of the Congress" in the membership of
the JBC.3
Indeed, to insist that only one member of Congress from
either the Senate or the House of Representatives should
sit at any time in the JBC, is to ignore the fact that they
are still separate and distinct from each other although
they are both involved in law-making. Both legislators are
elected differently, maintain separate administrative
organizations, and deliberate on laws independently. In
fact, neither the Senate nor the House of Representatives
can by itself claim to represent the Congress.
Again, that the framers of the 1987 Constitution did not
intend to limit the term "Congress" to just either of the
two Houses can be seen from the words that they used in
crafting Section 8(1 ). While the provision provides for
just "a representative of the Congress," it also provides
that such representation is "ex officio" or "by virtue of
one's office, or position."4
Under the Senate rules, the Chairperson of its Justice
Committee is automatically the Senate representative to
the JBC. In the same way, under the House of
Representatives rules, the Chairperson of its Justice
Committee is the House representative to the JBC.
Consequently, there are actually two persons in Congress
who hold separate offices or positions with the attached
function of sitting in the JBC. If the Court adheres to a
literal translation of Section 8(1 ), no representative from
Congress will qualify as "ex officio" member of the JBC.
This would deny Congress the representation that the
framers of the 1987 Constitution intended it to have.
Having said that the Senate and the House of
Representatives should have one representative each in
the JBC, it is logical to conclude that each should also
have the right to cast one full vote in its deliberations. To
split the vote between the two legislators would be an
absurdity since it would diminish their standing and make
them second class members of the JBC, something that
the Constitution clearly does not contemplate. Indeed, the
JBC abandoned the half-a-vote practice on January 12,
2000 and recognized the right of both legislators to cast
one full vote each. Only by recognizing this right can the
true spirit and reason of Section 8(1) be attained.
For the above reasons, I vote to GRANT the motion for
reconsideration.
ROBERTO A. ABAD
Associate Justice
Footnotes
1
Rollo, pp. 226-250.
2
Id. at 257-284.
3
http://opinion.inquirer.net/31813/jbc-odds-and-ends
(last accessed February 15, 2013).
4
Webster's New World College Dictionary, 3rd Edition,
p. 477.
The Lawphil Project - Arellano Law Foundation
DISSENTING OPINION
LEONEN, J.:
I dissent.
Both the Senate and the House of Representatives must be
represented in the Judicial and Bar Council. This is the
Constitution's mandate read as a whole and in the light of
the ordinary and contemporary understanding of our
people of the structure of our government. Any other
interpretation diminishes Congress and negates the
effectivity of its representation in the Judicial and Bar
Council.
It is a Constitution we are interpreting. More than
privileging a textual preposition, our duty is to ensure that
the constitutional project ratified by our people is given
full effect.
At issue in this case is the interpretation of Article VIII,
Section 8 of the Constitution which provides the
following:
Section 8. (1) A Judicial and Bar Council is hereby
created under the supervision of the Supreme Court
composed of the Chief Justice as ex officio Chairman, the
Secretary of
Justice, and a representative of the Congress as ex officio
Members, a representative of the Integrated Bar, a
professor of law, a retired Member of the Supreme Court,
and a representative of the private sector. (Emphasis
provided)
Mainly deploying verba legis as its interpretative
modality, the main opinion chooses to focus on the article
"a." As correctly pointed out in the original dissent of
Justice Robert A bad, the entire phrase includes the words
"representative of Congress" and "ex officio Members."
In the context of the constitutional plan involving a
bicameral Congress, these words create ambiguity.
A Bicameral Congress
Our Constitution creates a Congress consisting of two
chambers. Thus, in Article VI, Section 1, the Constitution
provides the following:
The legislative power shall be vested in the Congress of
the Philippines which shall consist of a Senate and a
House of Representatives x x x. (Emphasis provided)
Senators are "elected at large by the qualified voters of the
Philippines".1 Members of the House of Representatives,
on the other hand, are elected by legislative districts2 or
through the party list system.3 The term of a Senator4 is
different from that of a Member of the House of
Representatives.5 Therefore, the Senate and the House of
Representatives while component parts of the Congress
are not the same in terms of their representation. The very
rationale of a bicameral system is to have the Senators
represent a national constituency. Representatives of the
House of Representatives, on the other hand, are
dominantly from legislative districts except for one fifth
which are from the party list system.
Each chamber is organized separately.6 The Senate and
the House each promulgates their own rules of
procedure.7 Each chamber maintains separate
Journals.8 They each have separate Records of their
proceedings.9 The Senate and the House of
Representatives discipline their own respective
members.10
To belabor the point: There is no presiding officer for the
Congress of the Philippines, but there is a Senate
President and a Speaker of the House of Representatives.
There is no single journal for the Congress of the
Philippines, but there is a journal for the Senate and a
journal for the House of Representatives. There is no
record of proceedings for the entire Congress of the
Philippines, but there is a Record of proceedings for the
Senate and a Record of proceedings for the House of
Representatives. The Congress of the Philippines does not
discipline its members. It is the Senate that promulgates
its own rules and disciplines its members. Likewise, it is
the House that promulgates its own rules and disciplines
its members.
No Senator reports to the Congress of the Philippines.
Rather, he or she reports to the Senate. No Member of the
House of Representatives reports to the Congress of the
Philippines. Rather, he or she reports to the House of
Representatives.
Congress, therefore, is the Senate and the House of
Representatives. Congress does not exist separate from
the Senate and the House of Representatives.
Any Senator acting ex officio or as a representative of the
Senate must get directions from the Senate. By
constitutional design, he or she cannot get instructions
from the House of Representatives. If a Senator represents
the Congress rather than simply the Senate, then he or she
must be open to amend or modify the instructions given
to him or her by the Senate if the House of
Representatives’ instructions are different. Yet, the
Constitution vests disciplinary power only on the Senate
for any Senator.
The same argument applies to a Member of the House of
Representatives.
No Senator may carry instructions from the House of
Representatives. No Member of the House of
Representatives may carry instructions from the Senate.
Neither Senator nor Member of the House of
Representatives may therefore represent Congress as a
whole.
The difference between the Senate and the House of
Representative was a subject of discussion in the
Constitutional Commission. In the July 21, 1986 Records
of the Constitutional Commission, Commissioner Jose F.
S. Bengzon presented the following argument during the
discussion on bicameralism, on the distinction between
Congressmen and Senators, and the role of the Filipino
people in making these officials accountable:
I grant the proposition that the Members of the House of
Representatives are closer to the people that they
represent. I grant the proposition that the Members of the
House of Representatives campaign on a one-to-one basis
with the people in the barrios and their constituencies. I
also grant the proposition that the candidates for Senator
do not have as much time to mingle around with their
constituencies in their respective home bases as the
candidates for the House. I also grant the proposition that
the candidates for the Senate go around the country in
their efforts to win the votes of all the members of the
electorate at a lesser time than that given to the candidates
for the House of Representatives. But then the lesson of
the last 14 years has made us mature in our political
thinking and has given us political will and self-
determination. We really cannot disassociate the fact that
the Congressman, the Member of the House of
Representatives, no matter how national he would like to
think, is very much strongly drawn into the problems of
his local constituents in his own district.
Due to the maturity of the Filipinos for the last 14 years
and because of the emergence of people power, I believe
that this so-called people power can be used to monitor
not only the Members of the House of Representatives but
also the Members of the Senate. As I said we may have
probably adopted the American formula in the beginning
but over these years, I think we have developed that kind
of a system and adopted it to our own needs. So at this
point in time, with people power working, it is not only
the Members of the House who can be subjected to people
power but also the Members of the Senate because they
can also be picketed and criticized through written articles
and talk shows. And even the people not only from their
constituencies in their respective regions and districts but
from the whole country can exercise people power against
the Members of the Senate because they are supposed to
represent the entire country. So while the Members of
Congress become unconsciously parochial in their desire
to help their constituencies, the Members of the Senate are
there to take a look at all of these parochial proposals and
coordinate them with the national problems. They may be
detached in that sense but they are not detached from the
people because they themselves know and realize that
they owe their position not only to the people from their
respective provinces but also to the people from the whole
country. So, I say that people power now will be able to
monitor the activities of the Members of the House of
Representatives and that very same people power can be
also used to monitor the activities of the Members of the
Senate.11
Commissioner Bengzon provided an illustration of the
fundamental distinction between the House of
Representatives and the Senate, particularly regarding
their respective constituencies and electorate. These
differences, however, only illustrate that the work of the
Senate and the House of Representatives taken together
results in a Congress functioning as one branch of
government. Article VI, Section 1, as approved by the
Commission, spoke of one Congress whose powers are
vested in both the House of Representatives and the
Senate.
Thus, when the Constitution provides that a
"representative of Congress" should participate in the
Judicial and Bar Council, it cannot mean a Senator
carrying out the instructions of the House or a Member of
the House of Representative carrying out instructions
from the Senate. It is not the kind of a single Congress
contemplated by our Constitution. The opinion therefore
that a Senator or a Member of the House of Representative
may represent the Congress as a whole is contrary to the
intent of the Constitution. It is unworkable.
One mechanism used in the past to work out the
consequence of the majority’s opinion is to allow a
Senator and a Member of the House of Representative to
sit in the Judicial and Bar Council but to each allow them
only half a vote.
Within the Judicial and Bar Council, the Chief Justice is
entitled to one vote. The Secretary of Justice is also
entitled to one whole vote and so are the Integrated Bar of
the Philippines, the private sector, legal academia, and
retired justices. Each of these sectors are given equal
importance and rewarded with one whole vote. However,
in this view, the Senate is only worth fifty percent of the
wisdom of these sectors. Likewise, the wisdom of the
House of Representatives is only worth fifty percent of
these institutions.
This is constitutionally abominable. It is inconceivable
that our people, in ratifying the Constitution granting
awesome powers to Congress, intended to diminish its
component parts. After all, they are institutions composed
of people who have submitted themselves to the
electorate. In creating shortlists of possible candidates to
the judiciary, we can safely suppose that their input is not
less than the input of the professor of law or the member
of the Integrated Bar of the Philippines or the member
from the private sector.
The other solution done in the past was to alternate the
seat between a Senator and a Member of the House of
Representatives.
To alternate the seat given to Congress between the
Senate and the House of Representatives would mean not
giving a seat to the Congress at all. Again, when a Senator
is seated, he or she represents the Senate and not Congress
as a whole. When a Member of the House of
Representative is seated, he or she can only represent
Congress as a whole. Thus, alternating the seat not only
diminishes congressional representation; it negates it.
Constitutional Interpretation
The argument that swayed the majority in this case’s
original decision was that if those who crafted our
Constitution intended that there be two representatives
from Congress, it would not have used the preposition "a"
in Article VIII, Section 8 (1). However, beyond the
number of representatives, the Constitution intends that in
the Judicial and Bar Council, there will be representation
from Congress and that it will be "ex officio", i.e., by
virtue of their positions or offices. We note that the
provision did not provide for a number of members to the
Judicial and Bar Council. This is unlike the provisions
creating many other bodies in the Constitution.12
In other words, we could privilege or start our
interpretation only from the preposition "a" and from
there provide a meaning that ensures a difficult and
unworkable result -- one which undermines the concept of
a bicameral congress implied in all the other 114 other
places in the Constitution that uses the word "Congress".
Or, we could give the provision a reasonable
interpretation that is within the expectations of the people
who ratified the Constitution by also seeing and reading
the words "representative of Congress" and "ex officio."
This proposed interpretation does not violate the basic
tenet regarding the authoritativeness of the text of the
Constitution. It does not detract from the text. It follows
the canonical requirement of verba legis. But in doing so,
we encounter an ambiguity.
In Macalintal v. Presidential Electoral Tribunal,13 we
said:
As the Constitution is not primarily a lawyer’s document,
it being essential for the rule of law to obtain that it should
ever be present in the people’s consciousness, its language
as much as possible should be understood in the sense
they have in common use. What it says according to the
text of the provision to be construed compels acceptance
and negates the power of the courts to alter it, based on
the postulate that the framers and the people mean what
they say. Thus these are cases where the need for
construction is reduced to a minimum.
However, where there is ambiguity or doubt, the words of
the Constitution should be interpreted in accordance with
the intent of its framers or ratio legis et anima. A doubtful
provision must be examined in light of the history of the
times, and the condition and circumstances surrounding
the framing of the Constitution. In following this
guideline, courts should bear in mind the object sought to
be accomplished in adopting a doubtful constitutional
provision, and the evils sought to be prevented or
remedied. Consequently, the intent of the framers and the
people ratifying the constitution, and not the panderings
of self-indulgent men, should be given effect.
Last, ut magis valeat quam pereat – the Constitution is to
be interpreted as a whole. We intoned thus in the
landmark case of Civil Liberties Union v. Executive
Secretary:
It is a well-established rule in constitutional construction
that no one provision of the Constitution is to be separated
from all the others, to be considered alone, but that all the
provisions bearing upon a particular subject are to be
brought into view and to be so interpreted as to effectuate
the great purposes of the instrument. Sections bearing on
a particular subject should be considered and interpreted
together as to effectuate the whole purpose of the
Constitution and one section is not to be allowed to defeat
another, if by any reasonable construction, the two can be
made to stand together.
In other words, the court must harmonize them, if
practicable, and must lean in favor of a construction
which will render every word operative, rather than one
which may make the words idle and nugatory. (Emphasis
provided)
And in Civil Liberties Union v. Executive Secretary,13 we
said:
A foolproof yardstick in constitutional construction is the
intention underlying the provision under consideration.
Thus, it has been held that the Court in construing a
Constitution should bear in mind the object sought to be
accomplished by its adoption, and the evils, if any, sought
to be prevented or remedied. A doubtful provision will be
examined in the light of the history of the times, and the
condition and circumstances under which the Constitution
was framed. The object is to ascertain the reason which
induced the framers of the Constitution to enact the
particular provision and the purpose sought to be
accomplished thereby, in order to construe the whole as
to make the words consonant to that reason and calculated
to effect that purpose.
The authoritativeness of text is no excuse to provide an
unworkable result or one which undermines the intended
structure of government provided in the Constitution. Text
is authoritative, but it is not exhaustive of the entire
universe of meaning.
There is no compelling reason why we should blind
ourselves as to the meaning of "representative of
Congress" and "ex officio." There is no compelling reason
why there should only be one representative of a
bicameral Congress.
Proposed Reasons for Only One Representative of
Congress
The first reason to support the need for only one
representative of Congress is the belief that there needs to
be an odd number in the Judicial and Bar Council.
This is true only if the decision of the constitutional organ
in question is a dichotomous one, i.e., a yes or a no. It is
in this sense that a tie-breaker will be necessary.
However, the Judicial and Bar Council is not that sort of
a constitutional organ. Its duty is to provide the President
with a shortlist of candidates to every judicial position.
We take judicial notice that for vacancies, each member
of the Judicial and Bar Council is asked to list at least
three (3) names. All these votes are tallied and those who
garner a specific plurality are thus put on the list and
transmitted to the President. There had been no occasion
when the Judicial and Bar Council ever needed to break a
tie. The Judicial and Bar Council’s functions proceed
regardless of whether they have seven or eight members.
The second reason that the main opinion accepted as
persuasive was the opinion that Congress does not
discharge its function to check and balance the power of
both the Judiciary and the Executive in the Judicial and
Bar Council. From this premise, it then proceeds to argue
that the Representative of Congress, who is ex officio,
does not need to consult with Congress as a whole.
This is very perplexing and difficult to accept.
By virtue of the fundamental premise of separation of
powers, the appointing power in the judiciary should be
done by the Supreme Court. However, for judicial
positions, this is vested in the Executive. Furthermore,
because of the importance of these appointments, the
President’s discretion is limited to a shortlist submitted to
him by the Judicial and Bar Council which is under the
supervision of the Supreme Court but composed of
several components.
The Judicial and Bar Council represents the constituents
affected by judicial appointments and by extension,
judicial decisions. It provides for those who have some
function vis a vis the law that should be applied and
interpreted by our courts. Hence, represented are
practicing lawyers (Integrated Bar of the Philippines),
prosecutors (Secretary of the Department of Justice), legal
academia (professor of law), and judges or justices
(retired justice and the Chief Justice). Also represented in
some way are those that will be affected by the
interpretation directly (private sector representative).
Congress is represented for many reasons.
One, it crafts statutes and to that extent may want to
ensure that those who are appointed to the judiciary are
familiar with these statutes and will have the competence,
integrity, and independence to read its meaning.
Two, the power of judicial review vests our courts with
the ability to nullify their acts. Congress, therefore, has an
interest in the judicial philosophy of those considered for
appointment into our judiciary.
Three, Congress is a political organ. As such, it is familiar
with the biases of our political leaders including that of
the President. Thus, it will have greater sensitivity to the
necessity for political accommodations if there be any.
Keeping in mind the independence required of our judges
and justices, the Members of Congress may be able to
appreciate the kind of balance that will be necessary -- the
same balance that the President might be able to likewise
appreciate -- when putting a person in the shortlist of
judicial candidates. Not only do they appreciate this
balance, they embody it. Senators and Members of the
House of Representatives (unlike any of the other
members of the Judicial and Bar Council), periodically
submit themselves to the electorate.
It is for these reasons that the Congressional
representatives in the Judicial and Bar Council may be
instructed by their respective chambers to consider some
principles and directions. Through resolutions or actions
by the Congressional Committees they represent, the JBC
Congressional representatives’ choices may be
constrained. Therefore, they do not sit there just to
represent themselves. Again, they are "representatives of
Congress" "ex officio".
The third reason to support only one representative of
Congress is the belief that there is the "unmistakable
tenor" in the provision in question that one co-equal
branch should be represented only by one
Representative.14 It may be true that the Secretary of
Justice is the political alter ego of the President or the
Executive. However, Congress as a whole does not have
a political alter ego. In other words, while the Executive
may be represented by a single individual, Congress
cannot be represented by an individual. Congress, as
stated earlier, operates through the Senate and the House
of Representatives. Unlike the Executive, the Legislative
branch cannot be represented by only one individual.
A Note on the Work of the Constitutional Commission
Time and again, we have clarified the interpretative value
to Us of the deliberations of the Constitutional
Commission. Thus in Civil Liberties Union v. Executive
Secretary, we emphasized:
While it is permissible in this jurisdiction to consult the
debates and proceedings of the constitutional convention
in order to arrive at the reason and purpose of the resulting
Constitution, resort thereto may be had only when other
guides fail as said proceedings are powerless to vary the
terms of the Constitution when the meaning is clear.
Debates in the constitutional convention ‘are of value as
showing the views of the individual members, and as
indicating the reason for their votes, but they give Us no
light as to the views of the large majority who did not talk,
much less of the mass or our fellow citizens whose votes
at the polls gave that instrument the force of fundamental
law. We think it safer to construe the constitution from
what appears upon its face.’The proper interpretation
therefore depends more on how it was understood by the
people adopting it than in the framers’ understanding
thereof.15 (Emphasis provided)
Also worth Our recall is the celebrated comment of
Charles P. Curtis, Jr. on the role of history in
constitutional exegesis:16
The intention of the framers of the Constitution, even
assuming we could discover what it was, when it is not
adequately expressed in the Constitution, that is to say,
what they meant when they did not say it, surely that has
no binding force upon us. If we look behind or beyond
what they set down in the document, prying into what
else they wrote and what they said, anything we may find
is only advisory. They may sit in at our councils. There
is no reason why we should eavesdrop on
theirs.17 (Emphasis provided)
In addition to the interpretative value of the discussion in
the Constitutional Commission, we should always be
careful when we quote from their records without
understanding their context.
The Committees of the Constitutional Commission were
all tasked to finish their reports not later than July 7,
1986.18 The Second and Third Readings were scheduled
to finish not later than August 15, 1986.19 The members
of the Sponsorship and Style Committee were tasked to
finish their work of formulating and polishing the style of
the final draft of the new Constitution scheduled for
submission to the entire membership of the Commission
not later than August 25, 1986.20
The Rules of the Constitutional Commission also
provided for a process of approving resolutions and
amendments.
Constitutional proposals were embodied in resolutions
signed by the author.21 If they emanated from a
committee, the resolution was signed by its
chairman.22 Resolutions were filed with the Secretary-
General.23 The First Reading took place when the titles of
the resolutions were read and referred to the appropriate
committee.24
The Committees then submitted a Report on each
resolution.25 The Steering Committee took charge of
including the committee report in the Calendar for Second
Reading.26 The Second Reading took place on the day set
for the consideration of a resolution.27 The provisions
were read in full with the amendments proposed by the
committee, if there were any.28
A motion to close debate took place after three speeches
for and two against, or if only one speech has been raised
and none against it.29 The President of the Constitutional
Commission had the prerogative to allow debates among
those who had indicated that they intended to be heard on
certain matters.30 After the close of the debate, the
Constitutional Commission proceeded to consider the
Committee amendments.31
After a resolution was approved on Second Reading, it
was included in the Calendar for Third Reading.32 Neither
further debate nor amendment shall be made on the
resolution on its Third Reading.33 All constitutional
proposals approved by the Commission after Third
Reading were referred to the Committees on Sponsorship
and Style for collation, organization, and consolidation
into a complete and final draft of the Constitution.34 The
final draft was submitted to the Commission for the sole
purpose of determining whether it reflects faithfully and
accurately the proposals as approved on Second
Reading.35
With respect to the provision which is now Article VIII,
Section 8 (1), the timetable was as follows:
On July 10, 1986, the Committee on the Judiciary
presented its Report to the Commission.36 Deliberations
then took place on the same day; on July 11, 1986; and on
July 14, 1986. It was on July 10 that Commissioner
Rodrigo raised points regarding the Judicial and Bar
Council.37 The discussion spoke of the Judicial and Bar
Council having seven members.
Numerous mentions of the Judicial and Bar Council being
comprised of seven members were also made by
Commissioners on July 14, 1986. On the same day, the
amended article was approved by unanimous voting.38
On July 19, 1986, the vote on Third Reading on the
Article on the Judiciary took place.39 The vote was 43 and
none against.40
Committee Report No. 22 proposing an article on a
National Assembly was reported out by July 21, 1986.41 It
provided for a unicameral assembly. Commissioner
Hilario Davide, Jr., made the presentation and stated that
they had a very difficult decision to make regarding
bicameralism and unicameralism.42 The debate occupied
the Commission for the whole day.
Then, a vote on the structure of Congress took
place.43 Forty four (44) commissioners cast their votes
during the roll call.44 The vote was 23 to 22.45
On October 8, 1986, the Article on the Judiciary was
reopened for purposes of introducing amendments to the
proposed Sections 3, 7, 10, 11, 13, and 14.46
On October 9, 1986, the entire Article on the Legislature
was approved on Third Reading.47
By October 10, 1986, changes in style on the Article on
the Legislature were introduced.48
On October 15, 1986, Commissioner Guingona presented
the 1986 Constitution to the President of the
Constitutional Commission, Cecilia Munoz-Palma.49
It is apparent that the Constitutional Commission either
through the Style and Sponsorship Committee or the
Committees on the Legislature and the Judiciary was not
able to amend the provision concerning the Judicial and
Bar Council after the Commission had decided to propose
a bicameral Congress. We can take judicial notice of the
chronology of events during the deliberations of the
Constitutional Commission. The chronology should be
taken as much as the substance of discussions exchanged
between the Commissioners.
The quotations from the Commissioners mentioned in the
main opinion and in the proposed resolution of the present
Motion for Reconsideration should thus be appreciated in
its proper context.
The interpellation involving Commissioners Rodrigo and
Concepcion took place on July 10, 1986 and on July 14,
1986.50 These discussions were about Committee Report
No. 18 on the Judiciary. Thus:
MR. RODRIGO: Let me go to another point then.
On page 2, Section 5, there is a novel provision about
appointments of members of the Supreme Court and of
judges of lower courts. At present it is the President who
appoints them. If there is a Commission on Appointments,
then it is the President with the confirmation of the
Commission on Appointments. In this proposal, we would
like to establish a new office, a sort of a board composed
of seven members, called the Judicial and Bar Council.
And while the President will still appoint the members of
the judiciary, he will be limited to the recommendees of
this Council.
xxxx
MR. RODRIGO: Of the seven members of the Judicial
and Bar Council, the President appoints four of them who
are the regular members.
xxxx
MR. CONCEPCION: The only purpose of the Committee
is to eliminate partisan politics.51
xxxx
It must also be noted that during the same day and in the
same discussion, both Commissioners Rodrigo and
Concepcion later on referred to a ‘National Assembly’
and not a ‘Congress,’ as can be seen here:
MR. RODRIGO: Another point. Under our present
Constitution, the National Assembly may enact rules of
court, is that right? On page 4, the proviso on lines 17 to
19 of the Article on the Judiciary provides:
The National Assembly may repeal, alter, or supplement
the said rules with the advice and concurrence of the
Supreme Court.
MR. CONCEPCION: Yes.
MR. RODRIGO: So, two things are required of the
National Assembly before it can repeal, alter or
supplement the rules concerning the protection and
enforcement of constitutional rights, pleading, etc. — it
must have the advice and concurrence of the Supreme
Court.
MR. CONCEPCION: That is correct.52
On July 14, 1986, the Commission proceeded with the
Period of Amendments. This was when the exchange
noted in the main opinion took place. Thus:
MR. RODRIGO: If my amendment is approved, then the
provision will be exactly the same as the provision in the
1935 Constitution, Article VIII, Section 5.
xxxx
If we do not remove the proposed amendment on the
creation of the Judicial and Bar Council, this will be a
diminution of the appointing power of the highest
magistrate of the land, of the President of the Philippines
elected by all the Filipino people. The appointing power
will be limited by a group of seven people who are not
elected by the people but only appointed.
Mr. Presiding Officer, if this Council is created, there will
be no uniformity in our constitutional provisions on
appointments. The members of the Judiciary will be
segregated from the rest of the government. Even a
municipal judge cannot be appointed by the President
except upon recommendation or nomination of three
names by this committee of seven people, commissioners
of the Commission on Elections, the COA and
Commission on Civil Service x x x even ambassadors,
generals of the Army will not come under this restriction.
Why are we going to segregate the Judiciary from the rest
of our government in the appointment of the high-ranking
officials?
Another reason is that this Council will be ineffective. It
will just besmirch the honor of our President without
being effective at all because this Council will be under
the influence of the President. Four out of seven are
appointees of the President, and they can be reappointed
when their term ends. Therefore, they would kowtow to
the President. A fifth member is the Minister of Justice,
an alter ego of the President. Another member represents
the legislature. In all probability, the controlling party in
the legislature belongs to the President and, therefore, this
representative from the National Assembly is also under
the influence of the President. And may I say, Mr.
Presiding Officer, that even the Chief Justice of the
Supreme Court is an appointee of the President. So, it is
futile; he will be influenced anyway by the President.53
It must again be noted that during this day and period of
amendments after the quoted passage in the Decision, the
Commission later on made use of the term ‘National
Assembly’ and not ‘Congress’ again:
MR. MAAMBONG: Presiding Officer and members of
the Committee, I propose to delete the last sentence on
Section 16, lines 28 to 30 which reads: "The Chief Justice
shall address the National Assembly at the opening of
each regular session."
May I explain that I have gone over the operations of other
deliberative assemblies in some parts of the world, and I
noticed that it is only the Chief Executive or head of state
who addresses the National Assembly at its opening.
When we say "opening," we are referring to the first
convening of any national assembly. Hence, when the
Chief Executive or head of state addresses the National
Assembly on that occasion, no other speaker is allowed to
address the body.
So I move for the deletion of this last sentence.54
Based on the chronology of events, the discussions cited
by the main ponencia took place when the commissioners
were still contemplating a unicameral legislature in the
course of this discussion. Necessarily, only one
Representative would be needed to fully effect the
participation of a unicameral legislature. Therefore, any
mention of the composition of the JBC having seven
members in the records of the Constitutional
Commission, particularly during the dates cited, was
obviously within the context that the Commission had not
yet voted and agreed upon a bicameral legislature.
The composition of the Congress as a bilateral legislature
became final only after the JBC discussions as a seven-
member Council indicated in the Records of the
Constitutional Commission took place. This puts into the
proper context the recognition by Commissioner
Christian Monsod on July 30, 1986, which runs as
follows:
Last week, we voted for a bicameral legislature. Perhaps
it is symptomatic of what the thinking of this group is, that
all the provisions that were being drafted up to that time
assumed a unicameral government.55
The repeated mentions of the JBC having seven members
as indicated in the Records of the Constitutional
Commission do not justify the points raised by petitioner.
This is a situation where the records of the Constitutional
Commission do not serve even as persuasive means to
ascertain intent at least in so far as the intended numbers
for the Judicial and Bar Council. Certainly they are not
relevant even to advise us on how Congress is to be
represented in that constitutional organ.
We should never forget that when we interpret the
Constitution, we do so with full appreciation of every part
of the text within an entire document understood by the
people as they ratified it and with all its contemporary
consequences. As an eminent author in constitutional
theory has observed while going through the various
interpretative modes presented in jurisprudence: "x x x all
of the methodologies that will be discussed, properly
understood, figure in constitutional analysis as
opportunities: as starting points, constituent parts of
complex arguments, or concluding evocations." 56
Discerning that there should be a Senator and a Member
of the House of Representatives that sit in the Judicial and
Bar Council so that Congress can be fully represented ex
officio is not judicial activism. It is in keeping with the
constitutional project of a bicameral Congress that is
effective whenever and wherever it is represented. It is in
tune with how our people understand Congress as
described in the fundamental law. It is consistent with our
duty to read the authoritative text of the Constitution so
that ordinary people who seek to understand this most
basic law through Our decisions would understand that
beyond a single isolated text -- even beyond a
prepos1t10n in Article VIII, Section 8 (1 ), our primordial
values and principles are framed, congealed and will be
given full effect.
In a sense, we do not just read words in a legal document;
we give meaning to a Constitution.
For these reasons, I vote to grant the Motion for
Reconsideration and deny the Petition for lack of merit.
MARVIC MARIO VICTOR F. LEONEN
Associate Justice
12
CONSTITUTION, Art. VI, Sec. 2: The Senate shall be
composed of twenty-four Senators who shall be elected at
large by the qualified voters of the Philippines, as may be
provided by law.;
Art. VI, Sec. 5: The House of Representatives shall be
composed of not more than two hundred and fifty
members, unless otherwise fixed by law...;
Art. VI, Sec. 17: The Senate and the House of
Representatives shall each have an Electoral Tribunal
which shall be the sole judge of all contests relating to the
election, returns, and qualifications of their respective
Members. Each Electoral Tribunal shall be composed of
nine Members, three of whom shall be Justices of the
Supreme Court to be designated by the Chief Justice, and
the remaining six shall be Members of the Senate or the
House of Representatives, as the case may be…;
Art. VI, Sec. 18: There shall be a Commission on
Appointments consisting of the President of the Senate, as
ex officio Chairman, twelve Senators, and twelve
Members of the House of Representatives, elected by
each House on the basis of proportional representation
from the political parties and parties or organizations
registered under the party-list system represented therein.;
Art. VIII, Sec. 4.1: The Supreme Court shall be composed
of a Chief Justice and fourteen
Associate Justices. It may sit en banc or in its discretion,
in division of three, five, or seven Members...;
Art. IX (B), Sec. 1: The civil service shall be administered
by the Civil Service Commission composed of a
Chairman and two Commissioners...;
Art. IX (C), Sec. 1: There shall be a Commission on
Elections composed of a Chairman and six
Commissioners...;
Art. IX (D), Sec. 1: There shall be a Commission on Audit
composed of a Chairman and two Commissioners...;
Art. XI, Sec. 11: There is hereby created the independent
Office of the Ombudsman, composed of the Ombudsman

to be known as Tanodbayan, one overall Deputy and at
least one Deputy each for Luzon, Visayas, and Mindanao.
A separate Deputy for the military establishment may
likewise be appointed.;
Art. XII, Sec. 17 (2): The Commission [on Human Rights]
shall be composed of a Chairman and four Members who
must be natural-born citizens of the Philippines and a
majority of whom shall be members of the Bar.
13
Atty. Romulo A. Macalintal v. Presidential Electoral
Tribunal, G.R. No. 191618, November 23, 2010, 635
SCRA 783, 797-799.
13
Civil Liberties Union v. Executive Secretary, G.R. No.
83896, February 22, 1981, 194 SCRA 317, 325.
14
Francisco I. Chavez v. Judicial and Bar Council, Sen.
Francis Joseph G. Escudero and Rep. Neil C. Tupas, Jr.,
G.R. No. 202242, July 17, 2012, p. 18.
15
Civil Liberties Union v. Executive Secretary, supra at
337.
16
Charles P. Curtis. LIONS UNDER THE THRONE 2,
Houghton Mifflin, 1947.
17
Ang Bagong Bayani-OFW Labor Party v. Commission
on Elections, 412 Phil. 308, 363 (2001).
18
I RECORD, CONSTITUTIONAL COMMISSION
Appendix 2, p. 1900, (July 10, 1986), PROPOSED
RESOLUTION NO. 50, RESOLUTION PROVIDING
FOR THE RULES OF THE CONSTITUTIONAL
COMMISSION (PROPOSED RESOLUTION NO. 50),
Rule II, Sec. 9.
19
Proposed Resolution No. 50, Rule II, Sec. 9.
20
Proposed Resolution No. 50, Rule II, Sec. 9.
21
Proposed Resolution No. 50, Rule IV, Sec. 20.
22
Proposed Resolution No. 50, Rule IV, Sec. 20.
23
Proposed Resolution No. 50, Rule IV, Sec. 20.
24
Proposed Resolution No. 50, Rule IV, Sec. 21.
25
Proposed Resolution No. 50, Rule IV, Sec. 22.
26
Proposed Resolution No. 50, Rule IV, Sec. 22.
27
Proposed Resolution No. 50, Rule IV, Sec. 23.
28
Proposed Resolution No. 50, Rule IV, Sec. 23.
29
Proposed Resolution No. 50, Rule IV, Sec. 24.
30
Proposed Resolution No. 50, Rule IV, Sec. 25.
31
Proposed Resolution No. 50, Rule IV, Sec. 26.
32
Proposed Resolution No. 50, Rule IV, Sec. 27.
33
Proposed Resolution No. 50, Rule IV, Sec. 27.
34
Proposed Resolution No. 50, Rule IV, Sec. 29.
35
Proposed Resolution No. 50, Rule IV, Sec. 29.
36
I RECORD, CONSTITUTIONAL COMMISSION,
JOURNAL NO. 27 (Thursday, July 10, 1986).
37
I RECORD, CONSTITUTIONAL COMMISSION,
RECORD NO. 27 (Thursday, July 10, 1986).
38
I RECORD, CONSTITUTIONAL COMMISSION,
JOURNAL NO. 27 (Thursday, July 10, 1986).
39
I RECORD, CONSTITUTIONAL COMMISSION,
JOURNAL NO. 34 (Saturday, July 19, 1986).
40
I RECORD, CONSTITUTIONAL COMMISSION,
JOURNAL NO. 34 (Saturday, July 19, 1986).
41
I RECORD, CONSTITUTIONAL COMMISSION,
JOURNAL NO. 34 (Saturday, July 19, 1986), which
reads:
RECONSIDERATION AND APPROVAL, ON THIRD
READING, OF THE ARTICLE ON THE JUDICIARY.
On motion of Mr. Bengzon, there being no objection, the
Body reconsidered the approval, on Third Reading, of the
Article on the Judiciary, to afford the other Members
opportunity to cast their votes. Thereupon, upon direction
of the Chair, the Secretary-General called the Roll for
nominal voting and the following Members cast an
affirmative vote:
Abubakar
Alonto
Azcuna
Natividad
Tadeo
With 5 additional affirmative votes, making a total of 43
Members voting in favor and none against, the Chair
declared the Article on the Judiciary approved on Third
Reading.
42
I RECORD, CONSTITUTIONAL COMMISSION,
NO. 35 (Monday, July 21, 1986), which reads in part:
MR. DAVIDE:
xxx
A Unicameral Structure of the National Assembly. — In
the records of the 1935 and 1971 Constitutional
Conventions, and now the 1986 Constitutional
Commission, advocates of unicameralism and
bicameralism have eloquently discoursed on the matter.
The draft proposal of the 1986 UP Law Constitution
Project analyzes exhaustively the best features and the
disadvantages of each. Our people, having experienced
both systems, are faced with a difficult decision to make.
Madam President and my dear colleagues, even in our
own Committee, I had to break the tie in favor of
unicameralism. Commissioner Sarmiento, in his
Resolution No. 396, aptly stated that the Philippines needs
a unicameral legislative assembly which is truly
representative of the people, responsive to their needs and
welfare, economical to maintain and efficient and
effective in the exercise of its powers, functions and duties
in the discharge of its responsibilities. Commissioner
Tingson, however, said that despite its simplicity of
organization, resulting in economy and efficiency, and
achieving a closer relationship between the legislative and
executive, it also resulted in the authoritarian
manipulation by the Chief Executive, depriving in the
process the people from expressing their true sentiments
through their chosen representatives. Thus, under
Resolution No. 321, Commissioner Tingson calls for the
restoration of the bicameral form of legislature to
maximize the participation of people in decision-making.
43
I, RECORD, CONSTITUTIONAL COMMISSION,
JOURNAL NO. 35, (Monday July 21, 1986).
44
I, RECORD, CONSTITUTIONAL COMMISSION,
JOURNAL NO. 35, (Monday July 21, 1986), which reads
in part:
xxx
With 22 Members voting for a unicameral system and 23
Members voting for bicameralism, the Body approved the
proposal for a bicameral legislature.
45
Bernas, Joaquin, THE INTENT OF THE 1986
CONSTITUTION WRITERS, 1995, pp. 310-311.
46
III, RECORD, CONSTITUTIONAL COMMISSION,
JOURNAL NO. 102 (Tuesday and Wednesday, October
7 and 8, 1987).
47
III, RECORD, CONSTITUTIONAL COMMISSION,
JOURNAL NO. 103 (Thursday, October 9, 1986), which
reads in part:
xxx
With 29 Members voting in favor, none against and 7
abstentions, the Body approved, on Third Reading, the
Article on the Legislative.
48
III, RECORD, CONSTITUTIONAL COMMISSION,
JOURNAL NO. 104 (Friday, October 10, 1986).
49
V, RECORD, CONSTITUTIONAL COMMISSION,
JOURNAL NO. 109 (Wednesday, October 15, 1986),
which reads in part:
xxx
MR. GUINGONA: Madam President, I have the honor on
behalf of the Sponsorship Committee to officially
announce that on October 12, the 1986 Constitutional
Commission had completed under the able, firm and
dedicated leadership of our President, the Honorable
Cecilia Muñoz Palma, the task of drafting a Constitution
for our people, a Constitution reflective of the spirit of the
time — a spirit of nationalism, a spirit of dedication to the
democratic way of life, a spirit of liberation and rising
expectations, a spirit of confidence in the Filipino. On that
day, Madam President, the Members of this
Constitutional Commission had approved on Third
Reading the draft Constitution of the Republic of the
Philippines — a practical instrument suited to the
circumstances of our time but which is broad enough to
allow future generations to respond to challenges which
we of this generation could not foretell, a Charter which
would seek to establish in this fair land a community
characterized by social progress, political stability,
economic prosperity, peace, justice and freedom for all…
50
I RECORD, CONSTITUTIONAL COMMISSION 445
(July 10, 1986) AND I RECORD, CONSTITUTIONAL
COMMISSION 486-487 (July 14, 1986).
51
I RECORD, CONSTITUTIONAL COMMISSION 445
(July 10, 1986).
52
I RECORD, CONSTITUTIONAL COMMISSION 445
(July 10, 1986).
53
I RECORD, CONSTITUTIONAL COMMISSION
486-487 (July 14, 1986).
54
I RECORD, CONSTITUTIONAL COMMISSION 510
(July 14, 1986).
55
II RECORD, CONSTITUTIONAL COMMISSION
434 (July 30, 1986).
56
Lawrence Tribe, as cited in It is a Constitution We Are
Expounding, p. 21 (2009), previously published in
AMERICAN CONSTITUTIONAL LAW, Chapter 1:
Approaches to Constitutional Analysis (3rd ed.2000).
FIRST DIVISION
G.R. No. L-47533 October 27, 1981
FORTUNATO AISPORNA, Petitioner, vs. COURT
OF APPEALS, AVELINO DE LA CRUZ and
BENIGNO DE LA CRUZ, Respondents.chanrobles
virtual law library
GUERRERO, J.:
In CAR Case No. 420-Gpn-NE'70, entitled "Fortunato
Aisporna vs. Avelino De la Cruz", an action for
reinstatement with damages, instituted before the Court of
Agrarian Relations at Gapan, Nueva Ecija, where the
complaint was later amended to include respondent
Benigno de la Cruz, herein petitioner Fortunato Aisporna
obtained judgment for reinstatement to the possession of
a farm land as leasehold tenant by virtue of Section 36-1
of R.A. 3844, otherwise known as the Agricultural Land
Reform Code of 1963. On appeal by respondents, the
aforesaid judgment was set aside by the Court of
Appeals 1 fundamentally on the ground that the remedy
for the reinstatement of an ejected tenant secured under
the above provision had been abolished or repealed by
R.A. 6389 which amended R.A. 3844. Hence, this petition
for review on certiorari of the latter
judgment.chanroblesvirtualawlibrary chanrobles virtual
law library
The factual antecedents of this case are not disputed. The
property involved is a farm land measuring approximately
23,756 square meters situated in Sto. Cristo, Gapan,
Nueva Ecija, planted to palay. Private respondent Avelino
de la Cruz acquired the land sometime in 1966. In a verbal
contract of leasehold tenancy, he transferred possession of
the land to petitioner Fortunato Aisporna as
tenant, chanrobles virtual law library
Shortly thereafter, in 1967, private respondent Avelino de
la Cruz filed a complaint (CAR Case No. 4318) with the
Court of Agrarian Relations for the ejectment of petitioner
tenant on the ground that he (de la Cruz) will personally
cultivate the farm. The agrarian court on July 7, 1967
rendered a decision which authorized the owner Avelino
de la Cruz to dispossess his tenant. The decision was
affirmed by the Court of Appeals on October 1, 1968, and
after said judgment became final and executory,
Fortunato Aisporna was ejected from the landholding and
the owner, Avelino de la Cruz, assumed actual physical
possession of the farmland on May 13,
1969.chanroblesvirtualawlibrary chanrobles virtual law
library
Subsequently, on April 11, 1970, Fortunato Aisporna
filed CAR Case No. 420-Gpn-NE'70 for reinstatement
with damages on the ground that the owner had failed to
personally cultivate the landholding. He claimed that after
his ejectment, the owner instituted co-respondent Benigno
de la Cruz as tenant to work and cultivate the farm during
the two successive crop years from 1969 to 1971, and that
respondent owner allegedly had not performed any phase
of farmwork but visited the landholding only during
harvesting or threshing seasons. On the other hand, owner
Avelino de la Cruz answered and asserted that he
personally cultivated the farm, sometimes with the use of
farm machinery, including the preparation of seedbed,
broadcasting the seeds, plowing, harrowing and
transplanting the seedlings. Trial was held on the issue of
personal cultivation and upon the conflicting assertions,
appearing in the testimonial evidence of the parties, the
agrarian court found for the tenant Aisporna and rendered
the following judgment on August 12, 1976,
thus: chanrobles virtual law library
FOR ALL THE FOREGOING CONSIDERATIONS,
judgment is hereby rendered in favor of Fortunato
Aisporna and against Avelino de la Cruz, in the tenor and
disposition herein below provided to wit: chanrobles
virtual law library
1. Declaring that defendant Avelino de la Cruz has not
personally and by himself undertaken the work and
cultivate the landholding in question with an area of
23,756 square meters, situated at Sto. Cristo, Gapan,
Nueva Ecija, since he has disposed plaintiff Fortunato
Aisporna therefrom on May 12, 1969; chanrobles virtual
law library
2. Ordering defendant Avelino de la Cruz to reinstate
plaintiff immediately to the aforesaid
landholding, chanrobles virtual law library
3. Denying plaintiff's claim for payment of actual or
compensatory damages, as wen as exemplary or moral
damages for insufficiency of evidence; chanrobles virtual
law library
4. Ordering said defendant Avelino de la Cruz to pay
plaintiff the amount of Two Thousand Pesos (P2,000.00)
in the form of litigation expenses; and chanrobles virtual
law library
5. Dismissing the complaint with respect to defendant
Benigno de la Cruz.
Defendant Avelino de la Cruz appealed to the Court of
Appeals. In reversing the decision of the agrarian court,
the Court of Appeals relied on the amendment to the first
paragraph of section 36 introduced by Republic Act No.
6389 during the pendency of the action for reinstatement,
the amendment abolishing personal cultivation as ground
for ejecting an agricultural lessee. The appealed decision
held that with the abolition of personal cultivation, with it
was eliminated the corollary proviso on reinstatement of
the ejected tenant. It further ruled that since the amending
law is silent as regards those cases for ejectment and/or
reinstatement authorized and filed in court under
paragraph I of section 36, R.A. No. 3844, which are
pending at the time of the amendment, the cause of action
for reinstatement and the right to bring an action and
pursue the remedy, albeit already started, are abated
pursuant to the general rule that the repeal of a law defeats
all actions and proceedings under the repealed statute at
the time of its repeal, including those which are pending
appeal. Accordingly, the Court of Appeals ordered the
dismissal of the appealed
case.chanroblesvirtualawlibrary chanrobles virtual law
library
From the above reversal, petitioner comes before Us and
submits the following issues: chanrobles virtual law
library
I
WHETHER OR NOT SECTION 36 OF REPUBLIC
ACT NO. 3844 IS APPLICABLE TO THE CASE AT
BAR.
II
WHETHER OR NOT THE REPEAL OF SECTION 36
OF REPUBLIC ACT NO. 3844 BY REPUBLIC ACT
NO. 6389, PLAINTIFF- APPELLEE LOST HIS RIGHT
OF ACTION FOR REINSTATEMENT.
III
WHETHER OR NOT THE TENANCY RIGHT OF
PLAINTIFF-APPELLEE OVER THE LANDHOLDING
IN QUESTION IS ANCHORED ON SECTION 36 OF
REPUBLIC ACT NO. 3844.
IV
WHETHER OR NOT THE DECISION OF THE
HONORABLE COURT OF APPEALS REVERSING
THE DECISION OF THE TRIAL COURT WOULD IN
EFFECT NULLIFY SECTION 7 OF REPUBLIC ACT
NO. 6389 ELIMINATING TOTALLY PERSONAL
CULTIVATION AS A GROUND FOR
DISPOSSESSION OF AN AGRICULTURAL
TENANT.
V
WHETHER OR NOT THE DECISION OF THE
HONORABLE COURT OF APPEALS
CONTRAVENES THE SPIRIT AND INTENT OF
PRESIDENTIAL DECREE NO. 27 AND RUNS
COUNTER TO THE POLICY OF AGRARIAN
REFORM AND THE EMANCIPATION OF TENANT-
FARMERS.
In amplification of the issues, petitioner maintains the
view of the trial court that to sustain the right of the lessor-
owner to eject his tenant on ground of personal
cultivation, the former's desire or intention must be
honest, sincere, and must have been motivated by good
faith, and bad faith is presumed if he does not cultivate the
land himself within the period of three (3) years from the
dispossession of the tenant, in which case, the latter shall
have the right to be reinstated and recover damages. In
line with the dissenting opinion in the appealed decision,
petitioner further argues that his right to remain as tenant
is not based on paragraph 1 of Section 36 of Republic Act
No. 3844, nor that his right to reinstatement was created
by the same, such that with the repeal of the said
provision, the ejected tenant may no longer be reverted to
the possession of the leasehold from which he was
ejected. Petitioner contends that what the law actually
repealed was the right of the landlord to eject his tenant
on ground of personal cultivation; and that where there is
bad faith on the part of the landowner consisting of a false
representation on the said ground, Congress in repealing
the paragraph did not intend to include the deprivation of
the tenant's right to be reinstated. Finally, petitioner sees
the reversal as contrary to the spirit and intent of the
current agrarian reform policy to emancipate the tenant
farmers from the bondage of the
soil.chanroblesvirtualawlibrary chanrobles virtual law
library
Respondent landowner, on the other hand, asserts that in
view of the amendment of Section 36 (1) of R.A. 3844 by
R.A. 6389 and since Congress has not provided for any
saving clause in R.A. No. 6389 with respect to cases
pending in the courts for the ejectment of agricultural
lessees on the ground that the agricultural lessor or a
member of his immediate family will personally cultivate
the landholding involved as authorized under Section 36,
paragraph (1) of R.A. 3844, the repeal defeats all actions
or proceedings pending under the repealed statute at the
time of its repeal including those which are pending
appeal, citing the case of Arambulo vs. Canicon CA-G.R.
No. 46727-R, January 26, 1972, which was elevated to the
Supreme Court in G.R. No. L-34816 but said petition was
denied for lack of merit, in effect sustaining the Court of
Appeals' ruling that R.A. 6389 abated pending appeals,
according to private respondent's theory. And he
concludes, thus: "Simply stated, the rights of the
landowner and the tenant being reciprocal under Sec. 36
(1) of R.A. No. 3844, it follows of necessity that the repeal
of said law by R.A. No. 6389 erases not only the rights of
the landholder but also the rights of the tenant for
reinstatement. Consequently, we cannot now disturb the
vested right of Avelino de la Cruz." chanrobles virtual law
library
Finally, respondent claims that the action for
reinstatement, assuming the remedy is still available, was
filed prematurely on May 5, 1970 or before the lapse of
three (3) years when no presumption of bad faith on the
part of the landowner has yet
arises.chanroblesvirtualawlibrary chanrobles virtual law
library
The central issue posed in these contentions is whether or
not petitioner's action for reinstatement to enforce his
right to demand possession of the leasehold pursuant to
paragraph (1) of Section 36 of Republic Act No. 3844 is
deemed abated by the repeal or abolition during the
pendency thereof, of the aforesaid
provision.chanroblesvirtualawlibrary chanrobles virtual
law library
Undoubtedly, the governing law then in force when
petitioner filed his action for reinstatement to the land in
question is paragraph (1) of Section 36 of R.A. 3844. This
provision states: chanrobles virtual law library
Sec. 36. Possession of Landholding; Exceptions.
- Notwithstanding any agreement as to the period or
future surrender of the land, an agricultural lessee shall
continue in the enjoyment and possession of his
landholding except when his dispossession has been
authorized by the Court in a judgment that is final and
executory if after due hearing it is shown that: chanrobles
virtual law library
(1) The agricultural lessor-owner or a member of his
immediate family will personally cultivate the
landholding or will convert the landholding, ff suitably
located, into residential, factory, hospital or school site or
other useful non-agricultural purposes; Provided That the
agricultural lessee shall be entitled to disturbance
compensation equivalent to five years rental on his
landholding in addition to his rights under Sections
twenty-five and thirty- four, except when the land owned
and leased by the agricultural lessor is not more than five
hectares, in which case instead of disturbance
compensation the lessee may be entitled to advance notice
of at least one agricultural year before ejectment
proceedings are filed against him: Provided further, That
should the landholder not cultivate the land himself for
three years or fail to substantially carry out such
conversion within one year after the dispossession of the
tenant, it shall be presumed that he acted in bad faith and
the tenant shall have the right to demand possession of the
land and recover damages for any loss incurred by him
because of said dispossession;
The amendatory act is Republic Act No. 6389 entitled
"An Act amending Republic Act numbered Thirty Eight
Hundred and Forty Four as amended, otherwise known as
the Agricultural Land Reform Code, and for other
purposes," approved September 10, 1971, otherwise
known as the Code of Agrarian Reforms of the
Philippines. Section 7 thereof provides as
follows: chanrobles virtual law library
Sec. 7. Section 36 (1) of the same Code is hereby amended
to read as follows: chanrobles virtual law library
(1) The landholding is declared by the department head
upon recommendation of the National Planning
Commission to be suited for residential, commercial
industrial or some other urban purposes: Provided, That
the agricultural lessee shall be entitled to disturbance
compensation equivalent to five times the average of the
gross harvests on his landholding during the last five
preceding calendar years.
A cursory reading of Republic Act 6389, Sec. 7 quoted
above clearly eliminated personal cultivation by the
landowner as grounds for the ejectment of an agricultural
tenant.chanroblesvirtualawlibrary chanrobles virtual law
library
The assailed decision of the respondent Court of Appeals,
in dismissing the appeal, based its action in the following
rationale: chanrobles virtual law library
When this case was still pending in the court below, the
Land Reform Code, otherwise known as Republic Act
6389, was passed by Congress which took effect on
September 10, 1971. Its repealing clause, Sec. 38,
paragraph 2, RA 6389, expressly repealed and/or
modified all laws or parts of any law inconsistent with the
provisions thereof'. Among the provisions thus repealed
or amended was the aforequoted provision of See. 36,
paragraph 1, of Republic Act 3844. Personal cultivation
by the landowner as a ground for ejectment of the
agricultural lessee was therein eliminated and with it, was
likewise eliminated the corollary proviso on reinstatement
of the ejected
lessee.chanroblesvirtualawlibrary chanrobles virtual law
library
Our main task now is to determine the effect of the repeal
of the provision under which this case was instituted, not
any more the issue of whether or not defendant-appellant
personally cultivated the landholding to determine the
plaintiff's right to a reinstatement. Let it be noted that the
repealing law Republic Act 6389 is silent as regards those
cases for ejectment and/or reinstatement authorized and
filed in court under Sec. 36, paragraph 1 of Republic Act
3844, and which are pending at the time of the repeal
thereof.chanroblesvirtualawlibrary chanrobles virtual law
library
That being the case, we believe that the dismissal of the
present case is in order. for this Court, and any court for
that matter, is already powerless to grant the remedy
sought by the plaintiff-appellee in view of the repeal of
the law upon which his right was predicated. No valid
judgment can be rendered in the pending case after the
repeal of the act under which it was brought. (Re
McCardle 7 Wall. 506.) chanrobles virtual law library
That a cause of action for reinstatement accrued under the
old law in favor of the plaintiff-appellee, on the
assumption that defendant- appellant really did not
personally cultivate his landholding, is not disputed. But
the right to bring an action and pursue the remedy albeit
already started, is already precluded by the repeal of
paragraph 1, Sec. 36, of Republic Act 3844 from which
the said right was deprived, the repealing law, not having
provided any saving clause with respect thereto.
The repealing clause is such an express enactment as
necessarily divests all inchoate rights which have arisen
under the statute which it destroys. These rights are but
incident of the statute and fall with it, unless saved by
express words in the repealing clause. (Dufus & Howard
Purnace Co., 40 N.Y.S. 925, 830, 8 App. Div. 567.) In
analogous cases, it had been held that: chanrobles virtual
law library
The powers derived wholly from a statute are
extinguished by its repealed and no proceedings can be
pursued under the repealed statute though begun before
the repeal, unless such proceedings be authorized under a
special clause in the repealing act. (Filanigan vs. Sierra
Country, 196 U.S. 553; 25 Supreme Court Rep. 314.) A
suit pending to enforce a right or remedy conferred solely
by a statute, is abated by the unconditional repeal of the
said statute (Globe Pub. Co. vs. State Bank, 27 L.R.A.
854.)
This Court ordered the dismissal of an ejectment case,
pending appeal herein when Republic Act 6489 took
effect, advocating the principle that "the repeal of a law
defeats all actions and proceedings under the repealed
statute at the time of its repeal, including those which are
pending appeal." (Canicon vs. Arambulo, CA-G.R. No.
46727-R, January 26, 1972.) Thus this Court, speaking
through Honorable Justice Jesus Y. Perez, said:
Since Congress has not provided for any saving clause in
Republic Act No. 6389 with respect to cases pending in
Court for the ejectment of agricultural lessee on the
ground that the agricultural lessor-owner or a member of
his immediate family will personally cultivate the
landholding involved as authorized under Section 36, par.
1, Rep. Act 3844, then the instant case should be
dismissed for it is settled that the repeal defeats all acts
and proceedings pending under the repealed statute at the
time of its repeal including those which are pending
appeal, chanrobles virtual law library
As a general rule the repeal of a statute without
reservation takes away all remedies given by the repealed
statute and defeats all actions and proceedings pending
under it at the time of its repeal. Gates vs. Osborne, 19 L.
Ed. 768; Louisville & N.R. Co. v. Western Union
Telegraph Co., 268 F. 4 (cert den 41 S. Ct. 147, 254 U.S.
650, 6,5 L. Ed. 457.) The rule is especially applicable to
the repeal of statutes creating a cause of action (Callet v.
Alioto 290 p. 438; Western Union Tel. Co. vs. Lumpkin
26 S.E. 73), providing a remedy not known to the
common law or conferring jurisdiction where it did not
exist before, and abates proceedings pending even after
judgment but before the entry thereof or pending appeal.
A suit the continuance of which is dependent upon the
statute repealed stops where the repeal finds it (South
Carolina v. Caellard 101 U.S. 433) (59 C.J. 1189-1190)
If upon the effectivity of Republic Act 6389 on September
10, 1971, a plaintiff landowner who has a pending case
for ejectment of his tenant, has lost his right to do so, as
above cited, then We see no reason why, under similar
prevailing circumstances, We should reinstate the herein
plaintiff-appellee to the landholding from where he had
been ejected pursuant to a final and executory judgment
of the same Agrarian Court in its CAR Case No. 4318.
We do not agree with respondent appellate
court.chanroblesvirtualawlibrary chanrobles virtual law
library
What Republic Act 6389 abolished, eliminated or
repealed is the right of the landowner to eject his tenant
on the grounds that said landowner would personally
cultivate the land. This amendatory Act did not abolish
the right of the tenant to continue in the enjoyment and
possession of his landholding. In fact, such right of the
tenant to remain in the enjoyment and possession of the
landholding was not created by paragraph (1) of Sec. 36,
Rep. Act 3844 because the main proviso of Sec. 36
actually recognizes the tenant's right to continue in the
enjoyment and possession of his landholding in these
terms: "Notwithstanding any agreement as to the period
or future surrender of the land, an agricultural lessee shall
continue in the enjoyment and possession of his
landholding ..." Such right to enjoy and possess is not only
a contractual right but also arises from a status of tenancy
or relationship duly recognized and protected by agrarian
reform legislation.chanroblesvirtualawlibrary chanrobles
virtual law library
Hence, Rep. Act 6389 in its Section 7 specifically
amending Sec. 36 (1) of Rep. Act 3844 cannot be
considered to have repealed the tenant's right to enjoy and
possess the landholding because such right is preserved
and maintained in the main proviso of Sec. 36 which is
not altered, amended or otherwise repealed. In other
words, Sec. 36 of R.A. 3844 as amended by Sec. 7 of R.A.
6389 will read as follows: chanrobles virtual law library
Sec. 36. Possession of Landholding; Exceptions. -
Notwithstanding and agreement as to the period or future
surrender of the land, an agricultural lessee shall continue
in the enjoyment and possession of his landholding except
when his dispossession has been authorized by the Court
in a judgment that is final and executory if after due
hearing, it is shown that: chanrobles virtual law library
(1) The landholding is declared by the department head
upon recommendation of the National Planning
Commission to be suited for residential, commercial,
industrial or some other urban purposes: Provided, That
the agricultural lessee shall be entitled to disturbance
compensation equivalent to. five times the average of the
gross harvests on his landholding during the last five
preceding calendar years.
That it was the intention of the legislature in amending
paragraph (1), Sec. 36 of R.A. 3844 to deprive the
landowner of the right to eject his tenant on the ground
that the former would personally cultivate the land and
also to abate cases brought by the landowner to eject the
tenant on the same ground which were still pending at the
time of the passage of the amendatory Act, is clear and
evident from the deliberations and debate of Congress
when Republic Act 6389 was being deliberated, as
published in the Senate Journal, thus:
SENATOR DIOKNO: Now I am very much interested in
one other aspect of the existing law which has been the
source of many problems, and that is, t ' he termination of
the tenancy relationship because the landowner would
want to cultivate the land
himself.chanroblesvirtualawlibrary chanrobles virtual
law library
SENATOR LAUREL: We have eliminated that option on
the part of the landowners, On p. 7, Your Honor you will
notice that we have deleted from fine 3 to line 21. This is
the basis of the owner's alibi in refusing to sell to the
tenants, that he will convert it into a subdivision, a
hospital site or a school site. We are deleting that portion
of the Code.chanroblesvirtualawlibrary chanrobles
virtual law library
SENATOR DIOKNO: Now, what happens those cases
which are now pending in court where this has been the
excuse given In other words the landowner, under the
existing law, has notified his tenants or lessess, 'You must
vacate because I will personally cultivate the land.' That
is under the existing law which gives him that right. But
if these cases are not yet decided and then this bill is
enacted into law, what would happen to those cases?
"SENATOR LAUREL: It will not affect whatever
contracts were entered
into.chanroblesvirtualawlibrary chanrobles virtual law
library
SENATOR DIOKNO: There is no contract. No existing
contract.chanroblesvirtualawlibrary chanrobles virtual
law library
SENATOR LAUREL:
Yes.chanroblesvirtualawlibrary chanrobles virtual law
library
SENATOR DIOKNO: It is just an old, old relationship
between fathers and grandfathers, etc. of both parties,
until they finally come down to the present parties. So the
right of the agricultural lessor-owner is based upon a legal
provision. And this legal provision in force now
authorizes him, with of course, certain provision that this
matter can be brought to court and so forth, to eject these
tenants. Now, can he continue to exercise that right or can
we say that he can no longer do so because the right so to
speak has not become final and it has now
disappeared? chanrobles virtual law library
SENATOR LAUREL: In answer to Your Honor's
question, the owner will lose the right to eject after the
enactment of this measure even on cases as those cited by
your Honor, because in those particular cases, the owner
has not really succeeded yet in ejecting the
tenants.chanroblesvirtualawlibrary chanrobles virtual law
library
SENATOR DIOKNO: In other words, where the
ejectment is already a final case, or "yari na" then it is
alright.chanroblesvirtualawlibrary chanrobles virtual law
library
SENATOR LAUREL:
Yes.chanroblesvirtualawlibrary chanrobles virtual law
library
SENATOR DIOKNO: Well, I am glad Your Honor has
the same view because that is the same view that I would
have advocated on p. 8, Your Honor refers. " (Senate
Journal, Nos. 43 & 44, March 30 & 31, 1971, 2nd Regular
Session-7th Congress)
Moreover, R.A. 6389 must be considered a remedial
legislation enacted with the principal aim and purpose of
curtailing and suppressing the pernicious practice of many
landowners who resort to the filing of cases of ejectment
against their tenants based on personal cultivation in
retaliation to harrass tenants who were determined to
enforce the rights granted them by law. Such justification
is clearly expressed in the original Senate Bill No. 478, as
quoted in The Code of Agrarian Reforms Annotated by
Justice Guillermo S. Santos, 1973 Revised Edition, p.
157, to wit: chanrobles virtual law library
Personal cultivation by the landowner of his land ... as a
basis for dispossession is being abused. This provision is
being availed of by landowners in driving their lessees out
of their landholding on the pretext of personal cultivation
... which often causes tension and explodes as an agrarian
unrest.chanroblesvirtualawlibrary chanrobles virtual law
library
SENATOR LAUREL. Well, Your Honor, just for the
record, the Committee would like to state its reason for
proposing the deletion of Section 36. First, based on
statistics, 80 to 85 percent of the farm lands here in this
country have also below 10 hectares. Second, the Idea of
personal cultivation has been abused; it has become an
alibi. It is the reason given always by landowners to
prevent the conversion from tenancy into leasehold. And
third, when it comes to the weighing of who needs it more,
we felt that the tenants on the land need it more to survive
than the owner who decides late in life to cultivate it
himself or with his sons. In other words, he who needs the
help more should receive it. Or "those who (have) less in
life should have more in law - borrowing" from President
Magsaysay That is the entire reason or philosophy for our
proposal to eliminate Section 36. (Congressional Record,
Senate, Vol. 11, No. 48, April 13, 1971, p. 1844).
In the light of this clear intention of the law, We hold that
the Court of Appeals erred in dismissing the appeal of the
petitioner-tenant whereby he seeks reinstatement and the
exercise of his right to the enjoyment and possession of
the landholding from which he had been previously
ousted by the landowner-respondent on the latter's false
representation and bad faith, which right of enjoyment
and possession has not been repealed or abolished by the
Amendatory Act.chanroblesvirtualawlibrary chanrobles
virtual law library
The Court of Appeals' holding that the repeal of a statute
defeats all actions and proceedings pending under the
repealed statute at the time of its repeal, including those
cases which are still pending appeal is, of course, correct
as the general rule in statutory construction. And for this
reason, the dismissal of pending cases including those on
appeal where the landowner seeks the privilege or
authority to oust his tenant on the ground of personal
cultivation, is justified and warranted because the repeal
had eliminated personal cultivation as a ground for
eviction.chanroblesvirtualawlibrary chanrobles virtual
law library
But given the facts of the case at bar, where it is the tenant
who, having been previously ousted by the landowner by
false representation and bad faith, now comes on appeal
as petitioner to enforce his right of security of tenure, We
hold that the general rule stated above does not apply but
the exceptions thereto which state that "a repealing statute
must not interfere with vested rights or impair the
obligation of contracts that if any other construction is
possible, the act should not be construed so as to affect
rights which have vested under the old law, or as requiring
the abatement of actions instituted for the enforcement of
such rights." (Statutory Construction by V.J. Francisco, p.
335; 23 Crawford, Statutory Construction, Sec. 296, pp.
599-600).chanroblesvirtualawlibrary chanrobles virtual
law library
The right of the petitioner-tenant to the enjoyment and
possession of the landholding is a right granted, conferred
and vested by law, in fact by and through the various
legislations that have been passed by the legislature to
improve the lot of the tillers of the soil and by progressive
land reforms to emancipate them from bondage and
poverty, even as the 1935 Philippine Constitution
mandated that the State shall afford protection to labor,
especially to working women and minors, and shall
regulate the relations between landowner and tenant, and
between labor and capital in industry and agriculture, "
(Art. XIV, Sec. 6, Constitution of the Philippines). Thus,
We find the right of security of tenure of the tenant
recognized under Act No. 4054 otherwise known as "The
Philippine Rice Share Tenancy Act" approved on
February 27, 1933, under Section 19 thereof which
provides as follows: chanrobles virtual law library
Sec. 19. Landlord cannot dismiss his tenant except for
good causes.- The landlord shall not dismiss his tenant
without just and reasonable cause, otherwise the former
shall be liable to the latter for losses and damages to the
extent of his share in the product of the farm entrusted to
the dismissed tenant.
Commonwealth Act No. 461 entitled "An Act to regulate
the relations between landowner and tenant and to provide
for compulsory arbitration of any controversy arising
between them," approved June 9, 1939 further protected
the security of tenure of the tenant under Section 1 thereof
which states: chanrobles virtual law library
Any agreement or provision of law to the contrary
notwithstanding, in all cases where land is held under any
system of tenancy the tenant shall not be dispossessed of
the land cultivated by him except for any of the causes
mentioned in section nineteen of Act Numbered Four
thousand fifty-four or for any just cause. and without the
approval of a representative of the Department of Justice
duly authorized for the purpose. Should the landowner or
the tenant feel aggrieved by the action taken by this
official, or in the event of any dispute between arising out
of their relationship as landowner and tenant, either party
may submit the matter to the Court of Industrial Relations
which is given jurisdiction to determine the controversy
in accordance with law.
Under Republic Act No. 1199, the Agricultural Tenancy
Act of the Philippines, enacted August 30, 1954, the
tenancy relationship between a landowner and a tenant is
clearly defined and under such relationship, the tenant
acquires the right to continue working on and cultivating
the land, until and unless he is dispossessed of his
holdings for any of the just causes enumerated in Section
50 or the relationship is terminated in accordance with
Section 9. Specifically, Sections 6 and 7 of Republic Act
No. 1199 provide: chanrobles virtual law library
Sec. 6. Tenancy Relationship; Its Definition.- Tenancy
relationship is a juridical tie which arises between a
landholder and tenant once they agree, expressly or
impliedly to undertake jointly the cultivation of land
belonging to the former, either under the share tenancy or
leasehold tenancy system, as a result of which relationship
the tenant acquires the right to continue working on and
cultivating the land, until and unless he is dispossessed of
his holdings for any of the just causes enumerated in
Section fifty or the relationship is terminated in
accordance with Section
nine.chanroblesvirtualawlibrary chanrobles virtual law
library
(5) Sec. 7. Tenancy Relationship; How Established
Security of
Tenure. - Tenancy relationship may be established either
verbally or in writing, expressly or impliedly. Once such
relationship is established, the tenant shall be entitled to
security of tenure as hereinafter provided. (emphasis
supplied).
It is interesting to note that under Republic Act 1199, Part
IV on Security of Tenure, the ejection of the tenant is
provided under Section 49 and the causes for the
dispossession of a tenant are enumerated (which are
similar to Section 36 of Republic Act No. 3844) and these
provisions read: chanrobles virtual law library
Sec. 49. Ejectment of Tenant. - Notwithstanding any
agreement or provision of law as to the period, in all cases
where land devoted to any agricultural purpose is held
under any system of tenancy, the tenant shall not be
dispossessed of his holdings except for any of the causes
hereinafter enumerated and only after the same has been
proved before, and the dispossession is authorized by the
court.chanroblesvirtualawlibrarychanrobles virtual law
library
Sec. 50. Causes for the Dispossession of a Tenant. - Any
of the following shall be a sufficient cause for the
dispossession of a tenant from this holdings: chanrobles
virtual law library
(a) The bona fide intention of the landholder to cultivate
the land himself personally or through the employment of
farm machinery and implements: Provided, however,
That should the landholder not cultivate the land himself
or should fail to employ mechanical farm implements for
a period of one year after the dispossession of the tenant,
it shall be presumed that he acted in bad faith and the
tenant shall have the right to demand possession of the
land and damages for any loss incurred by him because of
said dispossession; Provided, further, That the landholder
shall, at least one year but not more than two Years prior
to the date of his petition to dispossess the tenant under
this sub-section, file notice with the court and shall inform
the tenant in writing in a language or dialect known to the
latter of his intention to cultivate the land himself, either
personally or through the employment of mechanical
implements, together with a certification of the Secretary
of Agriculture and Natural Resources that the land is
suited for mechanization: Provided, further, That the
dispossessed tenant and the members of his immediate
household shall be preferred in the employment of
necessary laborers under the new set-
up.chanroblesvirtualawlibrary chanrobles virtual law
library
(b) ...
Republic Act 2263, approved June 19, 1959, amended
Section 49 of Republic Act I 1 99, the latter to read as
follows: chanrobles virtual law library
Sec. 49. Ejectment of Tenant. - Notwithstanding any
agreement or provision of law as to the period or future
surrender of the land, in all cases where land devoted to
any agricultural purpose is held under any system of
tenancy, the tenant shall not be dispossessed of his
landholdings by the landholder except for any of the
causes hereinafter enumerated and only after the same has
been proved before and the dispossession is authorized by
the court.chanroblesvirtualawlibrary chanrobles virtual
law library
xxx xxx xxx
Section 50 of Rep. Act 1199 was likewise amended to
include among the causes for the dispossession of the
tenant the bonafide intention of not only the landholder-
owner but also his relative within the first degree of
consanguinity to cultivate the land himself personally or
through the employment of farm machinery and
implements.chanroblesvirtualawlibrary chanrobles
virtual law library
The Agricultural Land Reform Code, which is Republic
Act No. 3844 approved August 8, 1963, contains
provisions establishing agricultural leasehold relation
(Sec. 5) and conferring and protecting the security of
tenure of the agricultural lessee (Sec. 7).
Thus -
Sec. 5. Establishment of Agricultural Leasehold Relation.
- The agricultural leasehold relation shall be established
by operation of law in accordance with Section four of
this Code and, in other cases, either orally or in writing,
expressly or
impliedly.chanroblesvirtualawlibrarychanrobles virtual
law library
Sec. 7. Tenure of Agricultural Leasehold Relation. - The
agricultural leasehold relation once established shall
confer upon the agricultural lessee the right to continue
working on the landholding until such leasehold relation
is extinguished. The agricultural lessee shall be entitled to
security of tenure on his landholding and cannot be
ejected therefrom unless authorized by the Court for
causes herein provided.
The different laws cited and enumerated above clearly
show that the right of the tenant to the enjoyment and
possession of the farmholding had been created and
conferred, protected and guaranteed therein previous to
the enactment of R.A. 3844 and that par. (1) of Sec. 36 of
said R.A. 3844 did not create such right. The security of
tenure of the tenant had been enjoyed by him long before
the passage of R.A. 3844. Hence, it is not correct for the
Court of Appeals to assume that the right of the tenant to
the security of his tenure was abolished by R.A. 6389
when the latter repealed by substitution paragraph (1) of
Sec. 36,R.A.3844.chanroblesvirtualawlibrary chanrobles
virtual law library
And more than that, the Supreme Court has upheld the
tenant's security of tenure on the police power of the State
in compliance with the mandate of the Constitution
expressed in Article II, Sec. 5, 193-0 Constitution of the
Philippines, as against alleged impairment of the
obligations of contract, a limitation to the freedom of
contract and a denial of the equal protection of the laws,
in Primers vs. Court of Agrarian Relations and Sinforoso
Quion, L-10594, May 29, 1957, 101 Phil. 675. The
Supreme Court, speaking thru Justice Endencia
said: chanrobles virtual law library
The provisions of law assailed as unconstitutional do not
impair the right of the landowner to dispose or alienate his
property nor prohibit him to make such transfer or
alienation; they only provide that in case of transfer or in
case of lease, as in the instant case, the tenancy
relationship between the landowner and his tenant should
be preserved in order to insure the well-being of the tenant
or protect him from being unjustly dispossessed by the
transferee or purchaser of the land; in other words, the
purpose of the law in question is to maintain the tenants
in the peaceful possession and cultivation of the land or
afford them protection against unjustified dismissal from
their holdings. Republic Act 1199 is unquestionably a
remedial legislation promulgated pursuant to the social
justice precepts of the. Constitution and in the exercise of
the police power of the State to promote the common
weal. It is a statute relating to public subjects within the
domain of the general legislative powers of the State and
involving the public rights and public welfare of the entire
community affected by it. Republic Act 1199, like the
precious tenancy laws enacted by our lawmaking body,
was passed by Congress in compliance with the
constitutional mandates that the promotion of social
justice to insure the well-being and economic security of
all the people should be the concern of the State (Art. 11,
see. 5 ) and that the State shall regulate the relations
between landlord and tenant ... in agriculture ... . (Art
XIV, Sec. 6).
The constitutional guarantee afforded the tenant's right to
security of tenure was further emphasized and
strengthened in the case of Pineda vs. De Guzman and
Feliciano, L-23773-74, December 29, 1967, 21 SCRA
1450, wherein the Supreme Court held - chanrobles
virtual law library
Section 49 of the Agricultural Tenancy Act, Republic Act
1199, as amended, enunciates the principle of security of
tenure of the tenant, such that it prescribes that the
relationship of landholder and tenant can only be
terminated for causes provided by law. The principle is
epitomized by the axiom in land tenure that - once a
tenant, always a tenant. Attacks on the constitutionality of
this guarantee have centered on the contention that it is a
limitation on freedom of contract, a denial of the equal
protection of the law, and an impairment of or a limitation
on property rights. The assault is without reason. The law
simply provides that the tenancy relationship between the
landholder and his tenant should be preserved in order to
insure the well-being of the tenant and protect him from
being unjustly dispossessed of the land. Its termination
can take place only for causes and reasons provided in the
law. lt was established pursuant to the social justice
precept of the Constitution and in the exercise of the
police power of the State to promote the common weal.
(Primero v. Court of Industrial Relations, G.R. No. L-
10594, May 29, 1957.)
Indeed, We find no clear and cogent reason, no logical
and legal ground to hold, as the Court of Appeals held,
that Republic Act 6389 abolished the right of the tenant to
be reinstated to the enjoyment and possession of the
farmholding in
question.chanroblesvirtualawlibrary chanrobles virtual
law library
There is one final point We cannot ignore, and that is, the
undisputed finding of the agrarian court and not disturbed
by the appellate court that the private respondent-
landowner has foisted false representations and
committed bad faith in successfully evicting the
petitioner-tenant from the landholding. We are bound by
such finding of fact. The authority given to said
landowner to oust the tenant-petitioner was, therefore,
vitiated with dishonesty and malice. We cannot and
should not reward such malice and bad faith. On both
justiciable and equitable grounds, the petitioner herein is
entitled to reinstatement and possession such that it must
be deemed that his possession has been continuous and
uninterrupted. To dismiss the present appeal of the tenant
is simply a backward step from the social justice and
agrarian progress of the nation, and this Court will not
allow nor sanction the
same.chanroblesvirtualawlibrary chanrobles virtual law
library
WHEREFORE, IN VIEW OF ALL THE FOREGOING,
the judgment of the Court of Appeals is hereby
REVERSED and SET ASIDE. The decision of the Court
of Agrarian Relations is hereby ordered reinstated. No
costs.chanroblesvirtualawlibrary chanrobles virtual law
library
SO ORDERED.
Teehankee (Chairman), Makasiar,Fernandez and
Melencio-Herrera, JJ., concur.
EN BANC
G.R. No. L-14787 January 28, 1961
COLGATE-PALMOLIVE PHILIPPINE,
INC., petitioner,
vs.
HON. PEDRO M. GIMENEZ as Auditor General and
ISMAEL MATHAY as AUDITOR OF THE
CENTRAL BANK OF THE
PHILIPPINES, respondents.
Ross, Selph and Carrascoso for petitioner.
Office of the Solicitor General for respondents.
GUTIERREZ DAVID, J.:
The petitioner Colgate-Palmolive Philippines, Inc. is a
corporation duly organized and existing under Philippine
laws engaged in the manufacture of toilet preparations and
household remedies. On several occasions, it imported
from abroad various materials such as irish moss extract,
sodium benzoate, sodium saccharinate precipitated
calcium carbonate and dicalcium phosphate, for use as
stabilizers and flavoring of the dental cream it
manufactures. For every importation made of these
materials, the petitioner paid to the Central Bank of the
Philippines the 17% special excise tax on the foreign
exchange used for the payment of the cost, transportation
and other charges incident thereto, pursuant to Republic
Act No. 601, as amended, commonly known as the
Exchange Tax Law.
On March 14, 1956, the petitioner filed with the Central
Bank three applications for refund of the 17% special
excise tax it had paid in the aggregate sum of
P113,343.99. The claim for refund was based on section
2 of Republic Act 601, which provides that "foreign
exchange used for the payment of the cost, transportation
and/or other charges incident to the importation into the
Philippines of . . . stabilizer and flavors . . . shall be
refunded to any importer making application therefor,
upon satisfactory proof of actual importation under the
rules and regulations to be promulgated pursuant to
section seven thereof." After the applications were
processed by the officer-in-charge of the Exchange Tax
Administration of the Central Bank, that official advised,
the petitioner that of the total sum of P113,343.99 claimed
by it for refund, the amount of P23,958.13 representing
the 17% special excise tax on the foreign exchange used
to import irish moss extract, sodium benzoate and
precipitated calcium carbonate had been approved. The
auditor of the Central Bank, however, refused to pass in
audit its claims for refund even for the reduced amount
fixed by the Officer-in-Charge of the Exchange Tax
Administration, on the theory that toothpaste stabilizers
and flavors are not exempt under section 2 of the
Exchange Tax Law.
Petitioner appealed to the Auditor General, but the latter
or, December 4, 1958 affirmed the ruling of the auditor of
the Central Bank, maintaining that the term "stabilizer and
flavors" mentioned in section 2 of the Exchange Tax Law
refers only to those used in the preparation or manufacture
of food or food products. Not satisfied, the petitioner
brought the case to this Court thru the present petition for
review.
The decisive issue to be resolved is whether or not the
foreign exchange used by petitioner for the importation of
dental cream stabilizers and flavors is exempt from the
17% special excise tax imposed by the Exchange Tax
Law, (Republic Act No. 601) so as to entitle it to refund
under section 2 thereof, which reads as follows:
SEC, 2. The tax collected under the preceding section on
foreign exchange used for the payment of the cost,
transportation and/or other charges incident to
importation into the Philippines of rice, flour, canned
milk, cattle and beef, canned fish, soya beans, butterfat,
chocolate, malt syrup, tapioca, stabilizer and flavors,
vitamin concentrate, fertilizer, poultry feed; textbooks,
reference books, and supplementary readers approved by
the Board of Textbooks and/or established public or
private educational institutions; newsprint imported by or
for publishers for use in the publication of books,
pamphlets, magazines and newspapers; book paper, book
cloth, chip board imported for the printing of
supplementary readers (approved by the Board of
Textbooks) to be supplied to the Government under
contracts perfected before the approval of this Act, the
quantity thereof to be certified by the Director of Printing;
anesthetics, anti-biotics, vitamins, hormones, x-ray films,
laboratory reagents, biologicals, dental supplies, and
pharmaceutical drugs necessary for compounding
medicines; medical and hospital supplies listed in the
appendix to this Act, in quantities to be certified by the
Director of Hospitals as actually needed by the hospitals
applying therefor; drugs and medicines listed in the said
appendix; and such other drugs and medicines as may be
certified by the Secretary of Health from time to time to
promote and protect the health of the people of the
Philippines shall be refunded to any importer making
application therefor, upon satisfactory proof of actual
importation under the rules and regulations to be
promulgated pursuant to section seven thereof."
(Emphasis supplied.)
The ruling of the Auditor General that the term "stabilizer
and flavors" as used in the law refers only to those
materials actually used in the preparation or manufacture
of food and food products is based, apparently, on the
principle of statutory construction that "general terms may
be restricted by specific words, with the result that the
general language will be limited by the specific language
which indicates the statute's object and purpose."
(Statutory Construction by Crawford, 1940 ed. p. 324-
325.) The rule, however, is, in our opinion, applicable
only to cases where, except for one general term, all the
items in an enumeration belong to or fall under one
specific class. In the case at bar, it is true that the term
"stabilizer and flavors" is preceded by a number of articles
that may be classified as food or food products, but it is
likewise true that the other items immediately following
it do not belong to the same classification. Thus
"fertilizer" and "poultry feed" do not fall under the
category of food or food products because they are used
in the farming and poultry industries, respectively.
"Vitamin concentrate" appears to be more of a medicine
than food or food product, for, as matter of fact, vitamins
are among those enumerated in the list of medicines and
drugs appearing in the appendix to the law. It should also
here be stated that "cattle", which is among those listed
preceding the term in question, includes not only those
intended for slaughter but also those for breeding
purposes. Again, it is noteworthy that under, Republic Act
No. 814 amending the above-quoted section of Republic
Act No. 601, "industrial starch", which does not always
refer to food for human consumption, was added among
the items grouped with "stabilizer and flavors". Thus, on
the basis of the grouping of the articles alone, it cannot
validly be maintained that the term "stabilizer and flavors"
as used in the above-quoted provision of the Exchange
Tax Law refers only to those used in the manufacture of
food and food products. This view is supported by the
principle "Ubi lex non distinguish nec nos distinguire
debemos", or "where the law does not distinguish, neither
do we distinguish". (Ligget & Myers Tobacco Company
vs. Collector of Internal Revenue, 53 Off. Gaz. No. 15,
page 4831). Since the law does not distinguish between
"stabilizer and flavors" used in the preparation of food and
those used in the manufacture of toothpaste or dental
cream, we are not authorized to make any distinction and
must construe the words in their general sense. The rule
of construction that general and unlimited terms are
restrained and limited by particular recitals when used in
connection with them, does not require the rejection of
general terms entirely. It is intended merely as an aid in
ascertaining the intention of the legislature and is to be
taken in connection with other rules of construction. (See
Handbook of the Construction and Interpretation of Laws
by Black, p. 215.216, 2nd ed.)
Having arrived at the above conclusion, we deem it now
idle to pass upon the other questions raised by the parties.
WHEREFORE, the decision under review is reversed and
the respondents are hereby ordered to audit petitioners
applications for refund which were approved by the
Officer-in-Charge of the Exchange Tax Administration in
the total amount of P23,958.13.
Bengzon, Bautista Angelo, Concepcion, Reyes, J.B.L.,
Barrera, Paredes and Dizon, JJ., concur.
Labrador, J., reserves his vote.
G.R. No. L-11988 April 4, 1918
JACINTO MOLINA, Plaintiff-Appellee, vs. JAMES J.
RAFFERTY, Collector of Internal Revenue, Defendant-
Appellant.
Acting Attorney-General Paredes for appellant.
Araneta & Zaragoza for appellee.
FISHER, J.:
After the publication of the decision announced under the
date of February 1st., 1918, 1 counsel for appellee
presented a petition for a rehearing. This petition was
granted and oral argument of the motion was permitted.
Two of the members of the court, as constituted at the time
of the argument on the motion for a rehearing, were not
present when the case was first submitted and did not
participate in the original decision. .
Upon the facts, as correctly stated in the original majority
decision, a majority of the members of the court as now
constituted is in favor of setting aside the original decision
and affirming the judgment of the trial court. .
Plaintiff contends that the fish produced by him are to be
regarded as an "agricultural product" within the meaning
of that term as used in paragraph ( c) of section 41 of Act
No. 2339 (now section 1460 of the Administrative Code
of 1917), in forced when the disputed tax was levied, and
that he is therefore exempt from the percentage tax on
merchants' sales established by section 40 of Act No.
2339, as amended. .
The provision upon which the plaintiff relies reads as
follows:
In computing the tax above imposed transactions in the
following commodities shall be excluded: . . . ( c)
Agricultural products when sold by the producer or owner
of the land where grown, whether in their original state or
not. (Act No. 2339, sec. 41.)
The same exemption, with a slight change in wording, is
now embodied in section 1460 of the Administrative
Code, of 1917. .
The question of law presented by this appeal, as we view,
is not whether fish in general constitute an agricultural
products, but whether fish produced as were those upon
which the tax in question was levied are an agricultural
product. .
As stated by judged Cooley in his great work on taxation:
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
of 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. (Cooley on Taxation [Vol. 1] 3d. Ed., p.
450.)
The first inquiry, therefore, must relate to the purpose of
the Legislative had in mind in establishing the exemption
contained in the clause now under consideration. It seems
reasonable to assume that it was due to the belief on the
part of the law making body that by exempting
agricultural products from this tax the farming industry
would be favored and the development of the resources of
the country encouraged. It is a fact, of which we take
judicial cognizance, that there are immense tracts of
public land in this country, at present wholly
unproductive, which might be made fruitful by
cultivation, and that large sums of money go abroad every
year for the purchase of food substances which might be
grown here. Every dollar's worth of food which the farmer
produces and sells in these Islands adds directly to the
wealth of the country. On the other hand, in the process of
distribution of commodities to the ultimate consumer, no
direct increase in value results solely from their transfer
from one person to another in the course of commercial
transactions. It is fairly to be inferred from the statute that
the object and purpose of the Legislature was, in general
terms, to levy the tax in question, significantly termed the
"merchant's tax," upon all persons engaged in making a
profit upon goods produced by others, but to exempt from
the tax all persons directly producing goods from the land.
In order to accomplish this purpose the Legislature,
instead of attempting an enumeration of exempted
products, has grouped them all under the general
designation of "agricultural products.".
It seems to require no argument to demonstrate that it is
just as much to the public interest to encourage the
artificial propagation and growth of fish as of corn, pork,
milk or any other food substance. If the artificial
production of fish is held not to be included within the
exemption of the statute this conclusion must be based
upon the inadequacy of the language used by the
Legislature to express its purpose, rather than the
assumption that it was actually intended to exclude
producers of artificially grown fish from the benefits
conferred upon producers of other substances brought into
the store of national wealth by the arts of husbandry and
animal industry.
While we have no doubt that the land occupied by the
ponds in which the fish in question are grown is
agricultural land within the meaning of the Acts of
Congress and of the Philippine Commission under
consideration in the case of Map vs. Insular Government
(10 Phil. Rep., 175) and others cited in the original
majority opinion, it does not seem to us that this
conclusion solves the problem. A man might cultivate the
surface of a tract of land patented to him under the mining
law, but the products of such soil would not for that
reason, we apprehend, be any the less "agricultural
products." Conversely, the admission that the land upon
which these fishponds are constructed is not to be
classified as mineral or forest land, does not lead of
necessity to the conclusion that everything produced upon
them is for that reason alone to be deemed an "agricultural
product" within the meaning of the statute under
consideration.
"Agriculture" is an English word made upon of Latin
words " ager," a field, and " cultura," cultivation. It is
defined by Webster's New International Dictionary as
meaning in its broader sense, "The science and art of the
production of plants and animal useful to man . . .".
In Dillard vs. Webb (55 Ala., 468) it is held that the words
"agriculture" includes "the rearing, feeding and managing
of live stock." The same view was expressed in the case
of Binzel vs. Grogan (67 Wis., 147) .
Webster defines "product" to be "anything that is
produced, whether as the result of generation, growth,
labor, or thought ... ," while "grow" is defined in the
Century Dictionary as meaning "to cause to grow;
cultivate; produce, raise . . ..".
While it is true that in a narrow and restricted sense
agricultural products are limited to vegetable substances
directly resulting from the tillage of the soil, it is evident
from the definitions quoted that the term also includes
animal which derived their sustenance from vegetable
growths, and are therefore indirectly the product of the
land. Thus it has been held that "The product of the dairy
and the product of the poultry yard, while it does not come
directly out of the soil is necessarily connected with the
soil . . . and is therefore farm produce. (District of
Columbia vs. Oyster, 15 D. C., 285.).
In the case of Mayor vs. Davis (6 Watts & Sergeant [Penn.
Rep.], 269) the court said:
Swine horses, meat cattle, sheep, manure, cordwood, hay,
vegetables, fruits, eggs, milk, butter, lard . . . are strictly
produce of the farm .
Without attempting to further multiply examples, we
think it may safely be asserted that courts and
lexicographers are in accord in holding that the term
"agricultural products" is not limited in its meaning to
vegetable growth, but includes everything which serves to
satisfy human needs which is grown upon the land,
whether it pertain to the vegetable kingdom, or to the
animal kingdom. It is true that there is no decision which
as yet has held that the fish grown in ponds are an
agricultural product, but that is no reason why we should
not so hold if we find that such fish fall within the scope
of the meaning of the term. Of necessity, the products of
land tend constantly to multiply in number and variety, as
population increases and new demands spring up. In
California there are farms devoted to the growth of frogs
for the market. In many places in North America foxes
and other animals usually found wild are reared in
confinement for their fur. In Japan land is devoted to the
culture of the silkworm and the growth of the plants
necessary for the food of those insects. Bees are
everywhere kept for the wax and honey into which the
land is made to produce by those engaged in these
occupations are "agricultural products" in the same sense
in which poultry, eggs, and butter have been held to be
agricultural products. .
Now, if the purpose of agriculture, in the broader sense of
the term, is to obtain from the land the products to which
it is best adapted and through which it will yield the
greatest return upon the expenditure of a given amount of
labor and capital, can it not be said that it is just as much
an agricultural process to enclose a given area of land with
dykes, flood it with water, grow aquatic plants in it, and
feed fish with the plants so produced as to fence in it and
allow poultry to feed upon the plants naturally or
artificially grown upon the surface? In the last analysis the
result is the same - a given area of land produces a certain
amount of food. In the one case it is the flesh of poultry,
in the other the flesh of fish. It has been agreed between
the parties that an important article of diet consumed by
fish grown in a pond consists of certain marine plants
which grow from roots which affix themselves to the
bottom of the pond. In a real sense, therefore, the fish are
just as truly a product of the land as are poultry or swine,
living upon its vegetable growths, aquatic or terrestrial.
Thus, land may truly be said to produce fish, although it
is true that the producer is not a fisherman. Neither is one
who grows foxes for their pelts a hunter. As contended by
counsel, the inquiry is not whether fish in general
constitute an agricultural product, but whether fish
artificially grown and fed in confinement are to be so
regarded. Honey produced by one who devotes his land to
apiculture might be so regarded, even if we were to admit
that wild honey gathered in the forest is not. Pigeons kept
in domestication and fed by the owner would fall within
the definition. Wild pigeons obtained by a hunter would
not. Firewood gathered in a natural forest is not an
agricultural product, but firewood cut from bacauan trees
planted for that purpose has been held to be such a
product, and its producer exempt from the merchant's tax.
(Mercado vs. Collector of Internal Revenue, 32 Phil. Rep.,
271.) Other comparisons might be made, many of which
will be found in the opinion in which two of the members
of the court expressed their dissent from the original
majority opinion, but enough have been given to make our
position clear. .
During the many hears 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. The opinion of the
Attorney-General, cited by Justice Malcolm, will be
found on examination to have no bearing upon the present
inquiry, as in that case question was, not whether fish
grown and fed in ponds were agricultural products, but
whether ". . . fishermen, shell and pearl gatherers . . ."
were liable to the occupation tax. There is nothing in the
opinion to indicate that the word "fishermen" was used to
mean men growing fish in ponds, and it must, therefore,
be assumed that it was used in its proper grammatical
sense to designate persons engaged in catching fish not
artificially produced.
The decision in the case of The United States vs. Laxa (36
Phil. Rep., 670) is not controlling, as the reasoning upon
which it is based was not concurred in by four members
of the court. Furthermore, the Laxa case might be
distinguished from the one now under consideration, were
it necessary to do so, in that it has been stipulated in this
case that fish cultivated in ponds subsist largely upon
aquatic plants which grow from roots which attach
themselves to the bottom of the pond, and are therefore in
a real sense a product of the land, while in the Laxa case
the evidence was that they subsisted solely upon free
floating algae.
We are therefore of the opinion, and so hold, that the
decision heretofore rendered herein must be set aside, and
the judgment of the lower court affirmed. So ordered.
Arellano, C.J., Torres and Johnson, JJ., concur.
Araullo, J., dissents.
EN BANC
G.R. No. L-4712 July 11, 1952
RAMON DIOKNO, Plaintiff-Appellant, vs.
REHABILITATION FINANCE CORPORATION,
Defendant-Appellee.
Sixto de la Costa for appellee.
LABRADOR, J.:
Plaintiff is the holder of a backpay certificate of
indebtedness issued by the Treasurer of the Philippines
under the provisions of Republic Act No. 304 of a face
value of P75,857.14 dated August 30, 1948. On or about
November 10, 1050, when the action was brought, he had
an outstanding loan with the Rehabilitation Finance
Corporation, contracted therewith on January 27, 1950, in
the total sum of P50,000, covered by a mortgage on his
property situated at 44 Alhambra, Ermita, Manila, with
interest at 4 per cent per annum, of which P47,355.28 was
still unpaid. In this action he seeks to compel the
defendant corporation to accept payment of the balance of
his indebted with his backpay certificate. The defendant
resists the suit on the ground that plaintiffs' demand is not
only not authorized by section 2 of Republic Act No. 304
but contrary to the provisions thereof, and furthermore
because plaintiff's loan was obtain on January 27, 1950,
much after the passage of Republic Act No. 304, and
because the law permits only "acceptance or discount of
backpay certificates," not the repayment of loans. The
court a quo held that section 2 of Republic Act No. 304 is
permissive merely, and that even if where mandatory,
plaintiff's case can not fall thereunder because he is not
acquiring property for a home or construing a residential
house, but compelling the acceptance of his backpay
certificate to pay a debt he contracted after the enactment
of Republic Act No. 304. It, therefore, dismissed the
complaint with costs. .
The appeal involves the interpretation of section 2 of
Republic Act No. 302, which provides:
. . . And provided, also, That investment funds or banks
or other financial institutions owned or controlled by the
Government shall, subject to the availability of loanable
funds, and any provision of the their charters, articles of
incorporation's, by-laws, or rules and regulations to the
contrary notwithstanding, accept or discount at not more
than two per centum per annum for ten years such
certificate for the following purposes only: (1) the
acquisition of real property for use as the applicant's
home, or (2) the building or construction of the residential
house of the payee of said certificate: . . .
It is first contended by the appellant that the above
provision is mandatory, not only because it employs the
word "shall", which in its ordinary signification is
mandatory, not permissive, but also because the provision
is applicable to institutions of credit under the control of
the Government, and because otherwise the phrases
"subject to availability of loanable funds" and "any
provisions of this charter, . . . and regulations to the
contrary notwithstanding" would be superfluous. .
It is true that its ordinary signification the word "shall" is
imperative.
In common or ordinary parlance, and in its ordinary
signification, the term "shall" is a word of command, and
one which has always or which must be given compulsory
meaning; as denoting obligation. It has a preemptory
meaning, and it is generally imperative or mandatory. It
has the invariable significance of operating to impose a
duty which may be enforced, particularly if public policy
is in favor of this meaning or when addressed to public
officials, or where a public interest is involved, or where
the public or persons have rights which ought to be
exercised or enforced, unless a contrary intent appears.
People vs. O'Rourke, 13 P. 2d. 989, 992, 124 Cal. App.
752. (39 Words and Phrases, Permanent Ed., p. 90.).
The presumption is that the word "shall" in a statute is
used is an imperative, and not in a directory, sense. If a
different interpretation is sought, it must rest upon
something in the character of the legislation or in the
context which will justify a different meaning. Haythorn
vs. Van Keuren & Son, 74 A. 502, 504, 79 N. J. L. 101;
Board of Finance of School City of Aurora vs. People's
Nat. Bank of Lawrenceburg, 89 N. E. 904, 905 44 Ind.
App. 578. (39 Words and Phrases, Permanent Ed., p. 93.)
However, the rule is not absolute; it may be construed as
"many", when so required by the context or by the
intention of the statute.
In the ordinary signification, "shall" is imperative, and not
permissive, though it may have the latter meaning when
required by the context. Town of Milton vs. Cook, 138
N.E. 589, 590, 244 Mass. 93. (39 Words and Phrases,
Permanent Ed., p. 89.).
"Must" or "shall" in a statute is not always imperative, but
may be consistent with an exercise of discretion. In re
O'Hara, 82 N.Y.S. 293, 296, 40 Misc. 355, citing In re
Thurber's Estate, 162 N.Y. 244, 252, 56 N.E. 638, 639.
(Ibid. p. 92.).
The word "shall" is generally regarded as imperative, but
in some context it is given a permissive meaning, the
intended meaning being determined by what is intended
by the statute. National Transit Corporation Co. vs.
Boardman, 197 A. 239, 241, 328, Pa. 450. .
The word "shall" is to be construed as merely permissive,
where no public benefit or private right requires it to be
given an imperative meaning Sheldon vs. Sheldon, 134 A.
904, 905, 100 N.J. Ex. 24. .
Presumption is that word "shall" in ordinance, is
mandatory; but, where it is necessary to give effect to
legislative intent, the word will be construed as "may."
City of Colorado Springs vs. Street, 254 p. 440, 441, 81
Colo. 181. .
The word "shall" does not necessarily indicate a
mandatory behest. Grimsrud vs. Johnson, 202 N. W. 72,
73, 162 Minn. 98. .
Words like "may," "must," "shall" etc., are constantly
used in statutes without intending that they shall be taken
literally, and in their construction the object evidently
designed to be reached limits and controls the literal
import of the terms and phrases employed. Fields vs.
United States, 27 App. D. C. 433, 440. (39 Words and
Phrases, Permanent Ed., 89, 92).
In this jurisdiction the tendency has been to interpret the
word "shall" as the context or a reasonable construction
of the statute in which it is used demands or requires. Thus
the provision of section 11 of Rule 4 of the Rules
requiring a municipal judge or a justice of the peace to
render judgment of the conclusion of the trial has been
held in the directory. (Alejandro vs. Judge of First
Instance 1 40 Off. Gaz., 9th Supp., 261). In like manner
section 178 of the Election Law, in so far a it requires that
appeals shall be decided in three months, has been to the
directory for the Court of Appeals. (Querubin vs. The
Court of Appeals, 2 46 Off. Gaz., 155). .
In the provision subject controversy, it is to be noted that
the verb-phrase "shall accept or discount" has two
modifiers, namely, "subject to availability of loanable
funds" and "at not more that two per centum per annum
for ten years." As to the second modifier, the interest to
be charged, there seems to be no question that the verb
phrase is mandatory, because not only does the law use
"at not more" but the legislative purpose and intent, to
conserve the value of the backpay certificate for the
benefit of the holders, for whose benefit the same have
been issued, can be carried out by fixing a maximum limit
for discounts. But as to when the discounting or
acceptance shall be made, the context and the sense
demand a contrary interpretation. The phrase "subject"
means "being under the contingency of" (Webster's Int.
Dict.) a condition. If the acceptance or discount of the
certificates to be "subject" to the condition of the
availability of a loanable funds, it is evident that the
Legislature intended that the acceptance shall be allowed
on the condition that there are "available loanable funds."
In other words, acceptance or discount is to be permitted
only if there are loanable funds. .
Let us now consider the meaning of the condition imposed
for accepting or discounting certificates, the "availability
of loanable funds." On this issue the appellant contends
that the mere fact that P50,000 was loaned to him and that
the Rehabilitation Finance Corporation has been granting
loans up to the time plaintiff offered to pay the loan with
his certificate - these prove that there are "available
loanable funds". As the court a quo did not pass on such
availability, he also contends that this is a question of fact
to be determined by the courts. The defendant denies the
existence of "available loanable funds." The gist of
plaintiffs' contention is that any and all funds of the
Rehabilitation Finance Corporation are subject to the
provision of the discount or acceptance of the certificates;
that of defendant-appellee is that only funds made
available for the purpose of discounting backpay
certificates may be used for such purpose and that at the
time the action was filed there was no such funds. .
The Rehabilitation Finance Corporation was created by
Republic Act No. 85, which was approved on October 29,
1946. The corporation was created "to provide credit
facilities for the rehabilitation and development of
agriculture, commerce, and industry, the reconstruction of
property damaged by war, and the broadening and
diversification of the national economy" (section 1), and
to achieve the above aims it was granted the following
powers:
SEC. 2. Corporate powers. - The Rehabilitation Finance
Corporation shall have the power:.
(a) To grant loans for home building and for the
rehabilitation, establishment or development of any
agricultural, commercial or industrial enterprise,
including public utilities;.
(b) To grant loans to provincial, city and municipal
governments for the rehabilitation, construction or
reconstruction of public markets, waterworks, toll
bridges, slaughterhouses, and other self-liquidating or
income-producing services;.
(c) To grant loans to agencies and corporations owned or
controlled by the Government of the Republic of the
Philippines for the production and distribution of
electrical power, for the purchase and subdivision of rural
and urban estates, for housing projects, for irrigation and
waterworks systems, and for other essential industrial and
agricultural enterprises;.
(d) To grant loans to cooperative associations to facilitate
production, the marketing of crops, and the acquisition of
essential commodities;.
(e) To underwrite, purchase, own, sell, mortgage or
otherwise dispose of stocks, bonds, debentures, securities
and other evidences of indebtedness issued for or in
connection with any project or enterprise referred to in the
proceeding paragraphs;.
(f) To issue bonds, debentures, securities, collaterals, and
other obligations with the approval of the President, but
in no case to exceed at any one time an aggregate amount
equivalent to one hundred per centum of its subscribed
capital and surplus. . . .
If the Rehabilitation Finance Corporation is to carry out
the aims and purposes for which it was created, It must
evolve a definite plan of the industries or activities which
it should be rehabilitate, establish, or develop, and
apportion its available funds and resources among these,
consistent with the policies outlined in its charter. .
As of May 31, 1948, immediately prior to the passage of
the Backpay Law, it had granted the following classes of
loans:
Agricultural loans
........................................................P23,610,350.74
Industrial loans
............................................................22,717,565.87
Real Estate Loans
........................................................34,601,258.29
Loans for purchase, Subdivision and Resale of Landed
Estates .........................................................7,271,258.78
Loans to Provinces, Cities, and Municipalities for Self-
liquidating Projects ..............................................
1,889,763.00
Total Loans ..................................................(Exhibit
2)P90,090,77.68
As of February 2, 1951, the corporation had accepted in
payment of loans granted before June 18, 1948, the total
amount of P8,225,229.96, as required by section 2 of the
Backpay Law. (See Exhibit 11, p.4.). .
The third anniversary report of the Rehabilitation Finance
Corporation dated January 2, 1950 (Exhibit 1,), shows
that the funds originally available to the corporation came
from the following sources:
Funds made available:
Initial cash capital
................................................................P50,000,000,00
Cash Transferred from Financial Rehabilitation Funds
....2,423,079.94
Cash received from Surplus Property Commission
.......26,350,000.00
Cash received from Phil. Shipping Adm.
...........................3,700,000.00
Cash payment of capital
..................................................82,473,079.74
Proceeds of bond issues
..................................................58,909,148.18
Advances from the Central Bank
.......................................10,000,000.00
There was also collectible from the loans the total amount
of P28,659,442.12, so that the total cash available to the
corporation from January 2, 1947, to November 30, 1949,
was P180,041,670.04. But the Total amount of loans
already approved as of the last date was P203,667,403.78
and the total of approved loans pending release was
P25,342,020.78, and the only cash balance available in
November, 1949, to meet these approved loans was
P1,716,286.71. .
It may readily be seen from the above data that were we
to follow appellant's theory and contention that the law is
mandatory, the loan he had applied for, as well as that of
any holder of a backpay certificate, would have to be paid
out of this available cash, pursuant to the alleged mandate
of section 2 of the Backpay Law. The compulsory
acceptance and discount of certificates will bring about,
as a direct and necessary consequence, the suspension of
all, if not of most, of the activities of the Rehabilitation
Finance Corporation; and no agricultural or industrial
loans, or loans to financial institutions and local
governments for their markets, waterworks, etc., would be
granted until all the backpay certificates (amounting to
some hundred millions of pesos) shall heave been
accepted or discounted. And as the defendant-appellant
forcefully argues, even funds obtained by the
Rehabilitation Finance Corporation by the issue of the
bonds, at rates of interest of more than 2 per cent, the rate
fixed for the discount of the backpay certificates, will
have to be loaned to holders of backpay certificates at a
loss, to the prejudice of the corporation. There would be
loans for holders of backpay certificates, but none for
rehabilitation or reconstruction, or development of
industries, or of the national economy; there would be
funds for employees' loans, but none for the
improvements of public services, etc., as all
Rehabilitation Finance Corporation funds will be
necessary to meet the demands of holders of backpay
certificates. And if it be remembered that the provision is
intended for all financial institutions controlled by the
Government, the consequences would be felt by all
industries and activities, and the whole scheme of national
financial organization and development disrupted. It
seems evident that the legislature never could have
intended such absurd consequences, even with all the
sympathy that it is showing for holders of backpay
certificates. .
But while we agree with the appellee that it could not have
been the intention of Congress to disrupt the whole
scheme of rehabilitation, reconstruction, and development
envisioned in the Rehabilitation Act, by its passage of
section 2 of the Backpay Law, neither we are prepared to
follow appellee's insinuation that the section is
impracticable or impossible of execution by the
Rehabilitation Finance Corporation in the situation in
which its funds and resources were at the time of the trial.
In our opinion, what the Legislature intended by the
provision in dispute is that the Rehabilitation Finance
Corporation, through its Board of Directors, should from
time to time set aside some reasonable amount for the
discount of backpay certificates, when this can be done
without unduly taxing its resources, or unduly prejudicing
the plan of rehabilitation and development that it has
mapped out, or that which the corresponding authority has
laid down as a policy. This legislative intention can be
inferred from the fact that Congress itself expressly
ordered that all financial institutions accept or discount
backpay certificates in payment of those loans, evidently
laying down an example to be followed by financial
institutions under its control. The loans granted under
section 2 of the law by the Rehabilitation Finance
Corporation amounted to P8,225,229.96. It is shown or
even presented that the payment of this considerable
amount has impaired or disrupted the activities of the
Rehabilitation Finance Corporation. It is not claimed,
either, that at the time of the filing of appellant's action the
Rehabilitation Finance Corporation was in no position to
set aside a modest sum, in a manner similar to the creation
of a sinking fund, for the discount of backpay certificates
to help the Government comply with its financial
commitments. We are convinced that the Rehabilitation
Finance Corporation may, without impairment of its
activities, set aside from time to time, say, half a million
pesos or a considerable part thereof, for the payment of
backpay certificates. But these circumstances
notwithstanding, we are of the opinion that the law in
question (section 2 of the Backpay Law), in so far as the
discount and acceptance of backpay certificates are
concerned, should be interpreted to be directory merely,
not mandatory, as claimed by plaintiff-appellant, the same
to be construed as a directive for the Rehabilitation
Finance Corporation to invest a reasonable portion of its
funds for the discount of backpay certificates, from time
to time and in its sound discretion, as circumstances and
its resources may warrant. .
Having come to the conclusion that section 2 of the
Backpay Law is directly merely, we now address
ourselves to the propriety of the action, which the plaintiff
and appellant labels specific performance. As the action
is not based on any contractual relation between the
plaintiff and appellant and the defendant and appellee, it
may be one for specific performance; it is in effect
predicated on a supposed legal duty imposed by law and
is properly the designated as a special civil action of
mandamus because the appellant seeks to compel the
appellee to accept his backpay certificate in payment of
his outstanding obligation. We are not impressed by the
defense technical in a sense, that the Rehabilitation
Finance Corporation is not expressly authorized to accept
certificates in payment of outstanding loans. There is no
provision expressly authorizing this procedure or system;
but neither is there one prohibiting it. The legislature has
once ordered it; the Rehabilitation Finance Corporation
has once authorized it. We believe the legislature could
not have intended to discriminate against those who have
already built their houses, who have contracted
obligations in so doing. We prefer to predicate court
ruling that this special action does not lie on the ground
that the duty imposed by the Backpay Law upon the
appellee as to the acceptance or discount of backpay
certificates is neither clear nor ministerial, but
discretionary merely and that mandamus does not issue to
control the exercise of discretion of public officer. (Viuda
e hijos de Crispulo Zamora vs. Wright and Segado, 53
Phil., 613, 621; Blanco vs. Board of Medical Examiners,
46 Phil., 190 192, citing Lamb vs. Phipps, 22 Phil., 456;
Gonzales vs. Board of Pharmacy, 20 Phil., 367, etc.) It is,
however, argued on behalf of the appellant that inasmuch
as the Board of Directors of the Rehabilitation Finance
Corporation has seen fit to approve a resolution accepting
backpay certificates amounting to P151,000 (Exhibit H),
law and equity demand that the same privilege should be
accorded him. The trial court held that the above
resolution was illegal and that its unauthorized enactment
(which he called a "wrong") does not justify its repetition
for the benefit of appellant. As we have indicated above,
we believe that its approval (not any supposed
discrimination on behalf of some special holders) can be
defended under the law, but that the passage of a similar
resolution can not be enjoined by an action of mandamus.
chanrobles virtual law library
We must admit, however, that appellant's case is not
entirely without any merit or justification; similar
situations have already been favorably acted upon by the
Congress, when it ordered that certificates be accepted in
payment of outstanding obligations, and by the
Rehabilitation Finance Corporation in its above-
mentioned resolution. But we feel we are powerless to
enforce his claim, as the acceptance and discount to
backpay certificates has been placed within the sound
discretion of the rehabilitation Finance Corporation, and
subject to the availability of loanable funds, and said
discretion may not be reviewed or controlled by us. It is
clear that this remedy must be available in other quarters,
not in the courts of justice. .
For all the foregoing considerations, we are constrained to
dismiss the appeal, with coasts against the appellant. .
Paras, C.J., Feria, Pablo, Padilla, Tuason, Montemayor,
and Bautista Angelo, JJ., concur.
G.R. No. L-28742 April 30, 1982
VIRGILIO CAPATI, plaintiff-appellant,
vs.
DR. JESUS P. OCAMPO, defendant-appellee.
ESCOLIN, J.:
We set aside the order of the Court of First Instance of
Pampanga in Civil Case No. 3188 which dismissed the
plaintiff's complaint on ground of improper venue.
Plaintiff Virgilio Capati a resident of Bacolor, Pampanga,
was the contractor of the Feati Bank for the construction
of its building in Iriga, Camarines Sur. On May 23, 1967,
plaintiff entered into a sub-contract with the defendant Dr.
Jesus Ocampo, a resident of Naga City, whereby the latter,
in consideration of the amount of P2,200.00, undertook to
construct the vault walls, exterior walls and columns of
the said Feati building in accordance with the
specifications indicated therein. Defendant further bound
himself to complete said construction on or before June 5,
1967 and, to emphasize this time frame for the completion
of the construction job, defendant affixed his signature
below the following stipulation written in bold letters in
the sub-contract: "TIME IS ESSENTIAL, TO BE
FINISHED 5 JUNE' 67."
Claiming that defendant finished the construction in
question only on June 20, 1967, plaintiff filed in the Court
of First Instance of Pampanga an action for recovery of
consequential damages in the sum of P85,000.00 with
interest, plus attorney's fees and costs. The complaint
alleged inter alia that "due to the long unjustified delay
committed by defendant, in open violation of his express
written agreement with plaintiff, the latter has suffered
great irreparable loss and damage ... "
Defendant filed a motion to dismiss the complaint on the
ground that venue of action was improperly laid. The
motion was premised on the stipulation printed at the back
of the contract which reads:
14. That all actions arising out, or relating to this contract
may be instituted in the Court of First Instance of the City
of Naga.
Plaintiff filed an opposition to the motion, claiming that
their agreement to hold the venue in the Court of First
Instance of Naga City was merely optional to both
contracting parties. In support thereof, plaintiff cited the
use of the word "may " in relation with the institution of
any action arising out of the contract.
The lower court, in resolving the motion to dismiss, ruled
that "there was no sense in providing the aforequoted
stipulation, pursuant to Sec. 3 of Rule 4 of the Revised
Rules of Court, if after all, the parties are given the
discretion or option of filing the action in their respective
residences," and thereby ordered the dismissal of the
complaint.
Hence, this appeal.
The rule on venue of personal actions cognizable by the
courts of first instance is found in Section 2 (b), Rule 4 of
the Rules of Court, which provides that such "actions may
be commenced and tried where the defendant or any of
the defendants resides or may be found, or where the
plaintiff or any of the plaintiffs resides, at the election of
the plaintiff." The said section is qualified by the
following provisions of Section 3 of the same rule:
By written agreement of the parties the venue of an action
may be changed or transferred from one province to
another.
Defendant stands firm on his contention that because of
the aforequoted covenant contained in par. 14 of the
contract, he cannot be sued in any court except the Court
of First Instance of Naga City. We are thus called upon to
rule on the issue as to whether the stipulation of the parties
on venue is restrictive in the sense that any litigation
arising from the contract can be filed only in the court of
Naga City, or merely permissive in that the parties may
submit their disputes not only in Naga City but also in the
court where the defendant or the plaintiff resides, at the
election of the plaintiff, as provided for by Section 2 (b)
Rule 4 of the Rules of Court.
It is well settled that the word "may" is merely permissive
and operates to confer discretion upon a party. Under
ordinary circumstances, the term "may be" connotes
possibility; it does not connote certainty. "May" is an
auxillary verb indicating liberty, opportunity, permission
or possibility. 1
In Nicolas vs. Reparations Commission 2, a case involving
the interpretation of a stipulation as to venue along lines
similar to the present one, it was held that the agreement
of the parties which provided that "all legal actions arising
out of this contract ... may be brought in and submitted to
the jurisdiction of the proper courts in the City of Manila,"
is not mandatory.
We hold that the stipulation as to venue in the contract in
question is simply permissive. By the said stipulation, the
parties did not agree to file their suits solely and
exclusively with the Court of First Instance of Naga. They
merely agreed to submit their disputes to the said court,
without waiving their right to seek recourse in the court
specifically indicated in Section 2 (b), Rule 4 of the Rules
of Court.
Since the complaint has been filed in the Court of First
Instance of Pampanga, where the plaintiff resides, the
venue of action is properly laid in accordance with
Section 2 (b), Rule 4 of the Rules of Court.
WHEREFORE, the order appealed from is hereby set
aside. Let the records be returned to the court of origin for
further proceedings. Costs against defendant-appellee.
SO ORDERED.
Barredo (Chairman), Aquino, De Castro and Ericta, JJ.,
concur.
Concepcion, Jr. and Abad Santos, J., are on leave.
G.R. No. 144104 June 29, 2004
LUNG CENTER OF THE PHILIPPINES, petitioner,
vs.
QUEZON CITY and CONSTANTINO P. ROSAS, in his
capacity as City Assessor of Quezon City, respondents.
DECISION
CALLEJO, SR., J.:
This is a petition for review on certiorari under Rule 45 of
the Rules of Court, as amended, of the Decision1 dated
July 17, 2000 of the Court of Appeals in CA-G.R. SP No.
57014 which affirmed the decision of the Central Board
of Assessment Appeals holding that the lot owned by the
petitioner and its hospital building constructed thereon are
subject to assessment for purposes of real property tax.
The Antecedents
The petitioner Lung Center of the Philippines is a non-
stock and non-profit entity established on January 16,
1981 by virtue of Presidential Decree No. 1823.2 It is the
registered owner of a parcel of land, particularly described
as Lot No. RP-3-B-3A-1-B-1, SWO-04-000495, located
at Quezon Avenue corner Elliptical Road, Central
District, Quezon City. The lot has an area of 121,463
square meters and is covered by Transfer Certificate of
Title (TCT) No. 261320 of the Registry of Deeds of
Quezon City. Erected in the middle of the aforesaid lot is
a hospital known as the Lung Center of the Philippines. A
big space at the ground floor is being leased to private
parties, for canteen and small store spaces, and to medical
or professional practitioners who use the same as their
private clinics for their patients whom they charge for
their professional services. Almost one-half of the entire
area on the left side of the building along Quezon Avenue
is vacant and idle, while a big portion on the right side, at
the corner of Quezon Avenue and Elliptical Road, is being
leased for commercial purposes to a private enterprise
known as the Elliptical Orchids and Garden Center.
The petitioner accepts paying and non-paying patients. It
also renders medical services to out-patients, both paying
and non-paying. Aside from its income from paying
patients, the petitioner receives annual subsidies from the
government.
On June 7, 1993, both the land and the hospital building
of the petitioner were assessed for real property taxes in
the amount of ₱4,554,860 by the City Assessor of Quezon
City.3 Accordingly, Tax Declaration Nos. C-021-01226
(16-2518) and C-021-01231 (15-2518-A) were issued for
the land and the hospital building, respectively.4 On
August 25, 1993, the petitioner filed a Claim for
Exemption5 from real property taxes with the City
Assessor, predicated on its claim that it is a charitable
institution. The petitioner’s request was denied, and a
petition was, thereafter, filed before the Local Board of
Assessment Appeals of Quezon City (QC-LBAA, for
brevity) for the reversal of the resolution of the City
Assessor. The petitioner alleged that under Section 28,
paragraph 3 of the 1987 Constitution, the property is
exempt from real property taxes. It averred that a
minimum of 60% of its hospital beds are exclusively used
for charity patients and that the major thrust of its hospital
operation is to serve charity patients. The petitioner
contends that it is a charitable institution and, as such, is
exempt from real property taxes. The QC-LBAA rendered
judgment dismissing the petition and holding the
petitioner liable for real property taxes.6
The QC-LBAA’s decision was, likewise, affirmed on
appeal by the Central Board of Assessment Appeals of
Quezon City (CBAA, for brevity)7 which ruled that the
petitioner was not a charitable institution and that its real
properties were not actually, directly and exclusively used
for charitable purposes; hence, it was not entitled to real
property tax exemption under the constitution and the law.
The petitioner sought relief from the Court of Appeals,
which rendered judgment affirming the decision of the
CBAA.8
Undaunted, the petitioner filed its petition in this Court
contending that:
A. THE COURT A QUO ERRED IN DECLARING
PETITIONER AS NOT ENTITLED TO REALTY TAX
EXEMPTIONS ON THE GROUND THAT ITS LAND,
BUILDING AND IMPROVEMENTS, SUBJECT OF
ASSESSMENT, ARE NOT ACTUALLY, DIRECTLY
AND EXCLUSIVELY DEVOTED FOR CHARITABLE
PURPOSES.
B. WHILE PETITIONER IS NOT DECLARED AS
REAL PROPERTY TAX EXEMPT UNDER ITS
CHARTER, PD 1823, SAID EXEMPTION MAY
NEVERTHELESS BE EXTENDED UPON PROPER
APPLICATION.
The petitioner avers that it is a charitable institution within
the context of Section 28(3), Article VI of the 1987
Constitution. It asserts that its character as a charitable
institution is not altered by the fact that it admits paying
patients and renders medical services to them, leases
portions of the land to private parties, and rents out
portions of the hospital to private medical practitioners
from which it derives income to be used for operational
expenses. The petitioner points out that for the years 1995
to 1999, 100% of its out-patients were charity patients and
of the hospital’s 282-bed capacity, 60% thereof, or 170
beds, is allotted to charity patients. It asserts that the fact
that it receives subsidies from the government attests to
its character as a charitable institution. It contends that the
"exclusivity" required in the Constitution does not
necessarily mean "solely." Hence, even if a portion of its
real estate is leased out to private individuals from whom
it derives income, it does not lose its character as a
charitable institution, and its exemption from the payment
of real estate taxes on its real property. The petitioner
cited our ruling in Herrera v. QC-BAA9 to bolster its
pose. The petitioner further contends that even if P.D. No.
1823 does not exempt it from the payment of real estate
taxes, it is not precluded from seeking tax exemption
under the 1987 Constitution.
In their comment on the petition, the respondents aver that
the petitioner is not a charitable entity. The petitioner’s
real property is not exempt from the payment of real estate
taxes under P.D. No. 1823 and even under the 1987
Constitution because it failed to prove that it is a
charitable institution and that the said property is actually,
directly and exclusively used for charitable purposes. The
respondents noted that in a newspaper report, it appears
that graft charges were filed with the Sandiganbayan
against the director of the petitioner, its administrative
officer, and Zenaida Rivera, the proprietress of the
Elliptical Orchids and Garden Center, for entering into a
lease contract over 7,663.13 square meters of the property
in 1990 for only ₱20,000 a month, when the monthly
rental should be ₱357,000 a month as determined by the
Commission on Audit; and that instead of complying with
the directive of the COA for the cancellation of the
contract for being grossly prejudicial to the government,
the petitioner renewed the same on March 13, 1995 for a
monthly rental of only ₱24,000. They assert that the
petitioner uses the subsidies granted by the government
for charity patients and uses the rest of its income from
the property for the benefit of paying patients, among
other purposes. They aver that the petitioner failed to
adduce substantial evidence that 100% of its out-patients
and 170 beds in the hospital are reserved for indigent
patients. The respondents further assert, thus:
13. That the claims/allegations of the Petitioner LCP do
not speak well of its record of service. That before a
patient is admitted for treatment in the Center, first
impression is that it is pay-patient and required to pay a
certain amount as deposit. That even if a patient is living
below the poverty line, he is charged with high hospital
bills. And, without these bills being first settled, the poor
patient cannot be allowed to leave the hospital or be
discharged without first paying the hospital bills or issue
a promissory note guaranteed and indorsed by an
influential agency or person known only to the Center;
that even the remains of deceased poor patients suffered
the same fate. Moreover, before a patient is admitted for
treatment as free or charity patient, one must undergo a
series of interviews and must submit all the requirements
needed by the Center, usually accompanied by
endorsement by an influential agency or person known
only to the Center. These facts were heard and admitted
by the Petitioner LCP during the hearings before the
Honorable QC-BAA and Honorable CBAA. These are the
reasons of indigent patients, instead of seeking treatment
with the Center, they prefer to be treated at the Quezon
Institute. Can such practice by the Center be called
charitable?10
The Issues
The issues for resolution are the following: (a) whether
the petitioner is a charitable institution within the context
of Presidential Decree No. 1823 and the 1973 and 1987
Constitutions and Section 234(b) of Republic Act No.
7160; and (b) whether the real properties of the petitioner
are exempt from real property taxes.
The Court’s Ruling
The petition is partially granted.
On the first issue, we hold that the petitioner is a charitable
institution within the context of the 1973 and 1987
Constitutions. To determine whether an enterprise is a
charitable institution/entity or not, the elements which
should be considered include the statute creating the
enterprise, its corporate purposes, its constitution and by-
laws, the methods of administration, the nature of the
actual work performed, the character of the services
rendered, the indefiniteness of the beneficiaries, and the
use and occupation of the properties.11
In the legal sense, a charity may be fully defined as a gift,
to be applied consistently with existing laws, for the
benefit of an indefinite number of persons, either by
bringing their minds and hearts under the influence of
education or religion, by assisting them to establish
themselves in life or otherwise lessening the burden of
government.12 It may be applied to almost anything that
tend to promote the well-doing and well-being of social
man. It embraces the improvement and promotion of the
happiness of man.13 The word "charitable" is not
restricted to relief of the poor or sick.14 The test of a
charity and a charitable organization are in law the same.
The test whether an enterprise is charitable or not is
whether it exists to carry out a purpose reorganized in law
as charitable or whether it is maintained for gain, profit,
or private advantage.
Under P.D. No. 1823, the petitioner is a non-profit and
non-stock corporation which, subject to the provisions of
the decree, is to be administered by the Office of the
President of the Philippines with the Ministry of Health
and the Ministry of Human Settlements. It was organized
for the welfare and benefit of the Filipino people
principally to help combat the high incidence of lung and
pulmonary diseases in the Philippines. The raison d’etre
for the creation of the petitioner is stated in the decree,
viz:
Whereas, for decades, respiratory diseases have been a
priority concern, having been the leading cause of illness
and death in the Philippines, comprising more than 45%
of the total annual deaths from all causes, thus, exacting a
tremendous toll on human resources, which ailments are
likely to increase and degenerate into serious lung
diseases on account of unabated pollution,
industrialization and unchecked cigarette smoking in the
country;lavvph!l.net
Whereas, the more common lung diseases are, to a great
extent, preventable, and curable with early and adequate
medical care, immunization and through prompt and
intensive prevention and health education programs;
Whereas, there is an urgent need to consolidate and
reinforce existing programs, strategies and efforts at
preventing, treating and rehabilitating people affected by
lung diseases, and to undertake research and training on
the cure and prevention of lung diseases, through a Lung
Center which will house and nurture the above and related
activities and provide tertiary-level care for more difficult
and problematical cases;
Whereas, to achieve this purpose, the Government intends
to provide material and financial support towards the
establishment and maintenance of a Lung Center for the
welfare and benefit of the Filipino people.15
The purposes for which the petitioner was created are
spelled out in its Articles of Incorporation, thus:
SECOND: That the purposes for which such corporation
is formed are as follows:
1. To construct, establish, equip, maintain, administer and
conduct an integrated medical institution which shall
specialize in the treatment, care, rehabilitation and/or
relief of lung and allied diseases in line with the concern
of the government to assist and provide material and
financial support in the establishment and maintenance of
a lung center primarily to benefit the people of the
Philippines and in pursuance of the policy of the State to
secure the well-being of the people by providing them
specialized health and medical services and by
minimizing the incidence of lung diseases in the country
and elsewhere.
2. To promote the noble undertaking of scientific research
related to the prevention of lung or pulmonary ailments
and the care of lung patients, including the holding of a
series of relevant congresses, conventions, seminars and
conferences;
3. To stimulate and, whenever possible, underwrite
scientific researches on the biological, demographic,
social, economic, eugenic and physiological aspects of
lung or pulmonary diseases and their control; and to
collect and publish the findings of such research for public
consumption;
4. To facilitate the dissemination of ideas and public
acceptance of information on lung consciousness or
awareness, and the development of fact-finding,
information and reporting facilities for and in aid of the
general purposes or objects aforesaid, especially in human
lung requirements, general health and physical fitness,
and other relevant or related fields;
5. To encourage the training of physicians, nurses, health
officers, social workers and medical and technical
personnel in the practical and scientific implementation of
services to lung patients;
6. To assist universities and research institutions in their
studies about lung diseases, to encourage advanced
training in matters of the lung and related fields and to
support educational programs of value to general health;
7. To encourage the formation of other organizations on
the national, provincial and/or city and local levels; and to
coordinate their various efforts and activities for the
purpose of achieving a more effective programmatic
approach on the common problems relative to the
objectives enumerated herein;
8. To seek and obtain assistance in any form from both
international and local foundations and organizations; and
to administer grants and funds that may be given to the
organization;
9. To extend, whenever possible and expedient, medical
services to the public and, in general, to promote and
protect the health of the masses of our people, which has
long been recognized as an economic asset and a social
blessing;
10. To help prevent, relieve and alleviate the lung or
pulmonary afflictions and maladies of the people in any
and all walks of life, including those who are poor and
needy, all without regard to or discrimination, because of
race, creed, color or political belief of the persons helped;
and to enable them to obtain treatment when such
disorders occur;
11. To participate, as circumstances may warrant, in any
activity designed and carried on to promote the general
health of the community;
12. To acquire and/or borrow funds and to own all funds
or equipment, educational materials and supplies by
purchase, donation, or otherwise and to dispose of and
distribute the same in such manner, and, on such basis as
the Center shall, from time to time, deem proper and best,
under the particular circumstances, to serve its general
and non-profit purposes and objectives;lavvphil.net
13. To buy, purchase, acquire, own, lease, hold, sell,
exchange, transfer and dispose of properties, whether real
or personal, for purposes herein mentioned; and
14. To do everything necessary, proper, advisable or
convenient for the accomplishment of any of the powers
herein set forth and to do every other act and thing
incidental thereto or connected therewith.16
Hence, the medical services of the petitioner are to be
rendered to the public in general in any and all walks of
life including those who are poor and the needy without
discrimination. After all, any person, the rich as well as
the poor, may fall sick or be injured or wounded and
become a subject of charity.17
As a general principle, a charitable institution does not
lose its character as such and its exemption from taxes
simply because it derives income from paying patients,
whether out-patient, or confined in the hospital, or
receives subsidies from the government, so long as the
money received is devoted or used altogether to the
charitable object which it is intended to achieve; and no
money inures to the private benefit of the persons
managing or operating the institution.18 In
Congregational Sunday School, etc. v. Board of
Review,19 the State Supreme Court of Illinois held, thus:
… [A]n institution does not lose its charitable character,
and consequent exemption from taxation, by reason of the
fact that those recipients of its benefits who are able to pay
are required to do so, where no profit is made by the
institution and the amounts so received are applied in
furthering its charitable purposes, and those benefits are
refused to none on account of inability to pay therefor.
The fundamental ground upon which all exemptions in
favor of charitable institutions are based is the benefit
conferred upon the public by them, and a consequent
relief, to some extent, of the burden upon the state to care
for and advance the interests of its citizens.20
As aptly stated by the State Supreme Court of South
Dakota in Lutheran Hospital Association of South Dakota
v. Baker:21
… [T]he fact that paying patients are taken, the profits
derived from attendance upon these patients being
exclusively devoted to the maintenance of the charity,
seems rather to enhance the usefulness of the institution
to the poor; for it is a matter of common observation
amongst those who have gone about at all amongst the
suffering classes, that the deserving poor can with
difficulty be persuaded to enter an asylum of any kind
confined to the reception of objects of charity; and that
their honest pride is much less wounded by being placed
in an institution in which paying patients are also
received. The fact of receiving money from some of the
patients does not, we think, at all impair the character of
the charity, so long as the money thus received is devoted
altogether to the charitable object which the institution is
intended to further.22
The money received by the petitioner becomes a part of
the trust fund and must be devoted to public trust purposes
and cannot be diverted to private profit or benefit.23
Under P.D. No. 1823, the petitioner is entitled to receive
donations. The petitioner does not lose its character as a
charitable institution simply because the gift or donation
is in the form of subsidies granted by the government. As
held by the State Supreme Court of Utah in Yorgason v.
County Board of Equalization of Salt Lake County:24
Second, the … government subsidy payments are
provided to the project. Thus, those payments are like a
gift or donation of any other kind except they come from
the government. In both Intermountain Health Care and
the present case, the crux is the presence or absence of
material reciprocity. It is entirely irrelevant to this
analysis that the government, rather than a private
benefactor, chose to make up the deficit resulting from the
exchange between St. Mark’s Tower and the tenants by
making a contribution to the landlord, just as it would
have been irrelevant in Intermountain Health Care if the
patients’ income supplements had come from private
individuals rather than the government.
Therefore, the fact that subsidization of part of the cost of
furnishing such housing is by the government rather than
private charitable contributions does not dictate the denial
of a charitable exemption if the facts otherwise support
such an exemption, as they do here.25
In this case, the petitioner adduced substantial evidence
that it spent its income, including the subsidies from the
government for 1991 and 1992 for its patients and for the
operation of the hospital. It even incurred a net loss in
1991 and 1992 from its operations.
Even as we find that the petitioner is a charitable
institution, we hold, anent the second issue, that those
portions of its real property that are leased to private
entities are not exempt from real property taxes as these
are not actually, directly and exclusively used for
charitable purposes.
The settled rule in this jurisdiction is that laws granting
exemption from tax are construed strictissimi juris against
the taxpayer and liberally in favor of the taxing power.
Taxation is the rule and exemption is the exception. The
effect of an exemption is equivalent to an appropriation.
Hence, a claim for exemption from tax payments must be
clearly shown and based on language in the law too plain
to be mistaken.26 As held in Salvation Army v. Hoehn:27
An intention on the part of the legislature to grant an
exemption from the taxing power of the state will never
be implied from language which will admit of any other
reasonable construction. Such an intention must be
expressed in clear and unmistakable terms, or must appear
by necessary implication from the language used, for it is
a well settled principle that, when a special privilege or
exemption is claimed under a statute, charter or act of
incorporation, it is to be construed strictly against the
property owner and in favor of the public. This principle
applies with peculiar force to a claim of exemption from
taxation . …28
Section 2 of Presidential Decree No. 1823, relied upon by
the petitioner, specifically provides that the petitioner
shall enjoy the tax exemptions and privileges:
SEC. 2. TAX EXEMPTIONS AND PRIVILEGES. Being
a non-profit, non-stock corporation organized primarily to
help combat the high incidence of lung and pulmonary
diseases in the Philippines, all donations, contributions,
endowments and equipment and supplies to be imported
by authorized entities or persons and by the Board of
Trustees of the Lung Center of the Philippines, Inc., for
the actual use and benefit of the Lung Center, shall be
exempt from income and gift taxes, the same further
deductible in full for the purpose of determining the
maximum deductible amount under Section 30, paragraph
(h), of the National Internal Revenue Code, as amended.
The Lung Center of the Philippines shall be exempt from
the payment of taxes, charges and fees imposed by the
Government or any political subdivision or
instrumentality thereof with respect to equipment
purchases made by, or for the Lung Center.29
It is plain as day that under the decree, the petitioner does
not enjoy any property tax exemption privileges for its
real properties as well as the building constructed thereon.
If the intentions were otherwise, the same should have
been among the enumeration of tax exempt privileges
under Section 2:
It is a settled rule of statutory construction that the express
mention of one person, thing, or consequence implies the
exclusion of all others. The rule is expressed in the
familiar maxim, expressio unius est exclusio alterius.
The rule of expressio unius est exclusio alterius is
formulated in a number of ways. One variation of the rule
is the principle that what is expressed puts an end to that
which is implied. Expressium facit cessare tacitum. Thus,
where a statute, by its terms, is expressly limited to certain
matters, it may not, by interpretation or construction, be
extended to other matters.
...
The rule of expressio unius est exclusio alterius and its
variations are canons of restrictive interpretation. They
are based on the rules of logic and the natural workings of
the human mind. They are predicated upon one’s own
voluntary act and not upon that of others. They proceed
from the premise that the legislature would not have made
specified enumeration in a statute had the intention been
not to restrict its meaning and confine its terms to those
expressly mentioned.30
The exemption must not be so enlarged by construction
since the reasonable presumption is that the State has
granted in express terms all it intended to grant at all, and
that unless the privilege is limited to the very terms of the
statute the favor would be intended beyond what was
meant.31
Section 28(3), Article VI of the 1987 Philippine
Constitution provides, thus:
(3) Charitable institutions, churches and parsonages or
convents appurtenant thereto, mosques, non-profit
cemeteries, and all lands, buildings, and improvements,
actually, directly and exclusively used for religious,
charitable or educational purposes shall be exempt from
taxation.32
The tax exemption under this constitutional provision
covers property taxes only.33 As Chief Justice Hilario G.
Davide, Jr., then a member of the 1986 Constitutional
Commission, explained: ". . . what is exempted is not the
institution itself . . .; those exempted from real estate taxes
are lands, buildings and improvements actually, directly
and exclusively used for religious, charitable or
educational purposes."34
Consequently, the constitutional provision is
implemented by Section 234(b) of Republic Act No. 7160
(otherwise known as the Local Government Code of
1991) as follows:
SECTION 234. Exemptions from Real Property Tax. –
The following are exempted from payment of the real
property tax:
...
(b) Charitable institutions, churches, parsonages or
convents appurtenant thereto, mosques, non-profit or
religious cemeteries and all lands, buildings, and
improvements actually, directly, and exclusively used for
religious, charitable or educational purposes.35
We note that under the 1935 Constitution, "... all lands,
buildings, and improvements used ‘exclusively’ for …
charitable … purposes shall be exempt from taxation."36
However, under the 1973 and the present Constitutions,
for "lands, buildings, and improvements" of the charitable
institution to be considered exempt, the same should not
only be "exclusively" used for charitable purposes; it is
required that such property be used "actually" and
"directly" for such purposes.37
In light of the foregoing substantial changes in the
Constitution, the petitioner cannot rely on our ruling in
Herrera v. Quezon City Board of Assessment Appeals
which was promulgated on September 30, 1961 before the
1973 and 1987 Constitutions took effect.38 As this Court
held in Province of Abra v. Hernando:39
… Under the 1935 Constitution: "Cemeteries, churches,
and parsonages or convents appurtenant thereto, and all
lands, buildings, and improvements used exclusively for
religious, charitable, or educational purposes shall be
exempt from taxation." The present Constitution added
"charitable institutions, mosques, and non-profit
cemeteries" and required that for the exemption of "lands,
buildings, and improvements," they should not only be
"exclusively" but also "actually" and "directly" used for
religious or charitable purposes. The Constitution is
worded differently. The change should not be ignored. It
must be duly taken into consideration. Reliance on past
decisions would have sufficed were the words "actually"
as well as "directly" not added. There must be proof
therefore of the actual and direct use of the lands,
buildings, and improvements for religious or charitable
purposes to be exempt from taxation. …
Under the 1973 and 1987 Constitutions and Rep. Act No.
7160 in order to be entitled to the exemption, the
petitioner is burdened to prove, by clear and unequivocal
proof, that (a) it is a charitable institution; and (b) its real
properties are ACTUALLY, DIRECTLY and
EXCLUSIVELY used for charitable purposes.
"Exclusive" is defined as possessed and enjoyed to the
exclusion of others; debarred from participation or
enjoyment; and "exclusively" is defined, "in a manner to
exclude; as enjoying a privilege exclusively."40 If real
property is used for one or more commercial purposes, it
is not exclusively used for the exempted purposes but is
subject to taxation.41 The words "dominant use" or
"principal use" cannot be substituted for the words "used
exclusively" without doing violence to the Constitutions
and the law.42 Solely is synonymous with exclusively.43
What is meant by actual, direct and exclusive use of the
property for charitable purposes is the direct and
immediate and actual application of the property itself to
the purposes for which the charitable institution is
organized. It is not the use of the income from the real
property that is determinative of whether the property is
used for tax-exempt purposes.44
The petitioner failed to discharge its burden to prove that
the entirety of its real property is actually, directly and
exclusively used for charitable purposes. While portions
of the hospital are used for the treatment of patients and
the dispensation of medical services to them, whether
paying or non-paying, other portions thereof are being
leased to private individuals for their clinics and a
canteen. Further, a portion of the land is being leased to a
private individual for her business enterprise under the
business name "Elliptical Orchids and Garden Center."
Indeed, the petitioner’s evidence shows that it collected
₱1,136,483.45 as rentals in 1991 and ₱1,679,999.28 for
1992 from the said lessees.
Accordingly, we hold that the portions of the land leased
to private entities as well as those parts of the hospital
leased to private individuals are not exempt from such
taxes.45 On the other hand, the portions of the land
occupied by the hospital and portions of the hospital used
for its patients, whether paying or non-paying, are exempt
from real property taxes.
IN LIGHT OF ALL THE FOREGOING, the petition is
PARTIALLY GRANTED. The respondent Quezon City
Assessor is hereby DIRECTED to determine, after due
hearing, the precise portions of the land and the area
thereof which are leased to private persons, and to
compute the real property taxes due thereon as provided
for by law.
SO ORDERED.
Davide, Jr., Puno, Vitug, Panganiban, Quisumbing,
Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-
Martinez, Corona, Carpio Morales, Azcuna, and Tinga,
JJ., concur.
G.R. Nos. L-69810-14 June 19, 1985
TEODULO RURA, petitioner,
vs.
THE HON. GERVACIO A. LEOPENA, Presiding Judge
of the 2nd Municipal Circuit Trial Court of Tubigon-
Clarin, Tubigon, Bohol and PEOPLE OF THE
PHILIPPINES, respondents.
ABAD SANTOS, J.:
This case involves the application of the Probation Law
(P.D. No. 968, as amended), more specifically Section 9
thereof which disqualifies from probation those persons:
(c) who have previously been convicted by final judgment
of an offense punished by imprisonment of not less than
one month and one day and or a fine of not less than Two
Hundred Pesos.
Petitioner Teodulo Rura was accused, tried and convicted
of five (5) counts of estafa committed on different dates
in the Municipal Circuit Trial Court of Tubigon-Clarin,
Tubigon, Bohol, denominated as Criminal Case Nos. 523,
524, 525, 526 and 527.
The five cases were jointly tried and a single decision was
rendered on August 18, 1983. Rura was sentenced to a
total prison term of seventeen (17) months and twenty-
five (25) days. In each criminal case the sentence was
three (3) months and fifteen (15) days.
Rura appealed to the Regional Trial Court of Bohol but
said court affirmed the decision of the lower court. When
the case was remanded to the court of origin for execution
of judgment, Rura applied for probation. The application
was opposed by a probation officer of Bohol on the
ground Chat Rura is disqualified for probation under Sec.
9 (c) of the Probation law quoted above. The court denied
the application for probation. A motion for
reconsideration was likewise denied. Hence the instant
petition.
The question which is raised is whether or not the
petitioner is disqualified for probation.
In denying the application for probation, the respondent
judge said:
Though the five estafa cases were jointly tried and
decided by the court convicting the accused thereof, yet
the dates of commission are different. Upon conviction he
was guilty of said offenses as of the dates of commission
of the acts complained of. (Rollo, p, 58.)
Upon the other hand, the petitioner argues:
We beg to disagree. There is no previous conviction by
final judgment to speak of. The five (5) cases of Estafa
were tried jointly and there is only one decision rendered
on the same date—August 18. 1983. It could not be
presumed that accused-petitioner had been convicted one
after the other for the five cases of Estafa because the
conviction in these cases took place within the same day,
August 18, 1983 by means of a Joint Decision, and not in
a separate decision.
Previous conviction, we submit, presupposes that there is
a prior sentence or that there was already a decision
rendered which convicted the accused. In this instant
cases, however, there is only one decision rendered on the
five (5) counts of Estafa which was promulgated on the
same date. In other words the effects of conviction does
not retract to the date of the commission of the offense as
the trial court held. (Id., pp, 8-9.)
We hold for the petitioner. When he applied for probation
he had no previous conviction by final judgment. When
he applied for probation the only conviction against him
was the judgment which was the subject of his
application. The statute relates "previous" to the date of
conviction, not to the date of the commission of the crime.

WHEREFORE, the petition is granted and the respondent
judge is directed to give due course to the petitioner's
application for probation. No costs.
SO ORDERED.
Makasiar (Chairman), Aquino, Concepcion, Jr., Escolin
and Cuevas, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-64313 January 17, 1985
NATIONAL HOUSING CORPORATION,
petitioner,
vs.
BENJAMIN JUCO AND THE NATIONAL LABOR
RELATIONS COMMISSION, respondents.
Government Corporate Counsel for petitioner.
Amante A. Pimentel for respondents.
GUTIERREZ, JR., J.:
Are employees of the National Housing Corporation
(NHC) covered by the Labor Code or by laws and
regulations governing the civil service?
The background facts of this case are stated in the
respondent-appellee's brief as follows:
The records reveal that private respondent (Benjamin C.
Juco) was a project engineer of the National Housing
Corporation (NHC) from November 16, 1970 to May 14,
1975. For having been implicated in a crime of theft
and/or malversation of public funds involving 214 pieces
of scrap G.I. pipes owned by the corporation which was
allegedly committed on March 5, 1975. Juco's services
were terminated by (NHC) effective as of the close of
working hours on May 14, 1975. On March 25, 1977 he
filed a complaint for illegal dismissal against petitioner
(NHC) with Regional Office No. 4, Department of Labor
(now Ministry of Labor and Employment) docketed as
R04-3-3309-77 (Annex A, Petition). The said complaint
was certified by Regional Branch No. IV of the NLRC for
compulsory arbitration where it was docketed as Case No.
RB-IV-12038-77 and assigned to Labor Arbiter Ernilo V.
Peñalosa. The latter conducted the hearing. By agreement
of the parties, the case was submitted for resolution upon
submission of their respective position papers. Private
respondent (Juco) submitted his position paper on July 15,
1977. He professed innocence of the criminal acts
imputed against him contending "that he was dismissed
based on purely fabricated charges purposely to harass
him because he stood as a witness in the theft case filed
against certain high officials of the respondent's
establishment" (NHC) and prayed for 'his immediate
reinstatement to his former position in the (NHC) without
loss of seniority rights and the consequent payment of his
will back wages plus all the benefits appertaining thereto.
On July 28, 1977, the NHC also filed its position paper
alleging that the Regional Office Branch IV, Manila,
NLRC, "is without authority to entertain the case for lack
of jurisdiction, considering that the NHC is a government
owned and controlled corporation; that even assuming
that this case falls within the jurisdiction of this Office,
respondent firm (now petitioner) maintains that
respondent (Juco), now private respondent, was separated
from the service for valid and justified reasons, i.e., for
having sold company properties consisting of 214 pieces
of scrap G.I. pipes at a junk shop in Alabang, Muntinlupa,
Metro Manila, and thereafter appropriating the proceeds
thereof to his own benefit."
The pertinent portion of the decision of respondent
National Labor Relations Commission (NLRC) reads:
The fact that in the early case of Fernandez v. Cedro
(NLRC Case No. 201165-74, May 19, 1975) the
Commission, (Second Division) ruled that the respondent
National Housing Corporation is a government-owned or
controlled corporation does not preclude us from later
taking a contrary stand if by doing so the ends of justice
could better be served.
For although adherence to precedents (stare decisis) is a
sum formula for achieving uniformity of action and
conducive to the smooth operation of an office, Idolatrous
reverence for precedents which have outlived their
validity and usefulness retards progress and should
therefore be avoided. In fact, even courts do reverse
themselves for reasons of justice and equity. This
Commission as an Administrative body performing quasi
judicial function is no exception.
WHEREFORE, in the light of the foregoing, the decision
appealed from is hereby, set aside. In view, however, of
the fact that the Labor Arbiter did not resolve the issue of
illegal dismissal we have opted to remand this case to the
Labor Arbiter a quo for resolution of the aforementioned
issue.
The NHC is a one hundred percent (100%) government-
owned corporation organized in accordance with
Executive Order No. 399, the Uniform Charter of
Government Corporations, dated January 5, 1951. Its
shares of stock are owned by the Government Service
Insurance System the Social Security System, the
Development Bank of the Philippines, the National
Investment and Development Corporation, and the
People's Homesite and Housing Corporation. Pursuant to
Letter of Instruction No. 118, the capital stock of NHC
was increased from P100 million to P250 million with the
five government institutions above mentioned subscribing
in equal proportion to the increased capital stock. The
NHC has never had any private stockholders. The
government has been the only stockholder from its
creation to the present.
There should no longer be any question at this time that
employees of government-owned or controlled
corporations are governed by the civil service law and
civil service rules and regulations.
Section 1, Article XII-B of the Constitution specifically
provides:
The Civil Service embraces every branch, agency,
subdivision, and instrumentality of the Government,
including every government-owned or controlled
corporation. ...
The 1935 Constitution had a similar provision in its
Section 1, Article XI I which stated:
A Civil Service embracing all branches and subdivisions
of the Government shall be provided by law.
The inclusion of "government-owned or controlled
corporations" within the embrace of the civil service
shows a deliberate effort of the framers to plug an earlier
loophole which allowed government-owned or controlled
corporations to avoid the full consequences of the an
encompassing coverage of the civil service system. The
same explicit intent is shown by the addition of "agency"
and "instrumentality" to branches and subdivisions of the
Government. All offices and firms of the government are
covered.
The amendments introduced in 1973 are not Idle exercises
or a meaningless gestures. They carry the strong message
that t civil service coverage is broad and an- embracing
insofar as employment in the government in any of its
governmental or corporate arms is concerned.
The constitutional provision has been implemented by
statute. Presidential Decree No. 807 is unequivocal that
personnel of government-owned or controlled
corporations belong to the civil service and are subject to
civil service requirements.
It provides:
SEC. 56. Government-owned or Controlled Corporations
Personnel. — All permanent personnel of government-
owned or controlled corporations whose positions are
now embraced in the civil service shall continue in the
service until they have been given a chance to qualify in
an appropriate examination, but in the meantime, those
who do not possess the appropriate civil service eligibility
shag not be promoted until they qualify in an appropriate
civil service examination. Services of temporary
personnel may be terminated any time.
The very Labor Code, P. D. No. 442 as amended, which
the respondent NLRC wants to apply in its entirety to the
private respondent provides:
ART. 277. Government employees. — The terms and
conditions of employment of all government employees,
including employees of government-owned and
controlled corporations shall be governed by the Civil
Service Law, rules and regulations. Their salaries shall be
standardized by the National Assembly as provided for in
the New Constitution. However, there shall be reduction
of existing wages, benefits and other terms and conditions
of employment being enjoyed by them at the time of the
adoption of the Code.
Our decision in Alliance of Government Workers, et al v.
Honorable Minister of Labor and Employment et all. (124
SCRA 1) gives the background of the amendment which
includes government-owned or controlled corporations in
the embrace of the civil service.
We stated:
Records of the 1971 Constitutional Convention show that
in the deliberation held relative to what is now Section
1(1), Article XII-B, supra, the issue of the inclusion of
government-owned or controlled corporations figured
prominently.
The late delegate Roberto S. Oca, a recognized labor
leader, vehemently objected to the inclusion of
government-owned or controlled corporations in the Civil
Service. He argued that such inclusion would put asunder
the right of workers in government corporations,
recognized in jurisprudence under the 1935 Constitution,
to form and join labor unions for purposes of collective
bargaining with their employers in the same manner as in
the private section (see: records of 1971 Constitutional
Convention).
In contrast, other labor experts and delegates to the 1971
Constitutional Convention enlightened the members of
the Committee on Labor on the divergent situation of
government workers under the 1935 Constitution, and
called for its rectification. Thus, in a Position Paper dated
November 22, 197 1, submitted to the Committee on
Labor, 1971 Constitutional Convention, then Acting
Commissioner of Civil Service Epi Rey Pangramuyen
declared:
It is the stand, therefore, of this Commission that by
reason of the nature of the public employer and the
peculiar character of the public service, it must necessary
regard the right to strike given to unions in private
industry as not applying to public employees and civil
service employees. It has been stated that the
Government, in contrast to the private employer, protects
the interests of all people in the public service, and that
accordingly, such conflicting interests as are present in
private labor relations could not exist in the relations
between government and those whom they employ.
Moreover, determination of employment conditions as
well as supervision of the management of the public
service is in the hands of legislative bodies. It is further
emphasized that government agencies in the performance
of their duties have a right to demand undivided
allegiance from their workers and must always maintain a
pronounced esprit de corps or firm discipline among their
staff members. It would be highly incompatible with these
requirements of the public service, if personnel took
orders from union leaders or put solidarity with members
of the working class above solidarity with the
Government. This would be inimical to the public
interest.
Moreover, it is asserted that public employees by joining
labor unions may be compelled to support objectives
which are political in nature and thus jeopardize the
fundamental principle that the governmental machinery
must be impartial and non-political in the sense of party
politics. (See: Records of 1971 Constitutional
Convention).
Similar, Delegate Leandro P. Garcia, expressing for the
inclusion of government-owned or controlled
corporations in the Civil Service, argued:
It is meretricious to contend that because Government-
owned or controlled corporations yield profits, their
employees are entitled to better wages and fringe benefits
than employees of Government other than Government-
owned and controlled corporations which are not making
profits. There is no gainsaying the fact that the capital they
use is the people's money. (see: Records of the 1971
Constitutional Convention).
Summarizing the deliberations of the 1971 Constitutional
Convention on the inclusion of Government-owned or
controlled corporation Dean Joaquin G. Bernas, SJ., of the
Ateneo de Manila University Professional School of Law,
stated that government-owned corporations came under
attack as g cows of a privileged few enjoying salaries far
higher than their counterparts in the various branches of
government, while the capital of these corporations
belongs to the Government and government money is
pumped into them whenever on the brink of disaster, and
they should therefore come under the strict surveillance of
the Civil Service System. (Bernas, The 1973 Philippine
Constitution, Notes and Cases, 1974 ed., p. 524).
Applying the pertinent provisions of the Constitution, the
Labor Code as amended, and the Civil Service Decree as
amended and the precedent in the Alliance of Government
Workers decision, it is clear that the petitioner National
Housing Corporation comes under the jurisdiction of the
Civil Service Commission, not the Ministry of Labor and
Employment.
This becomes more apparent if we consider the fact that
the NHC performs governmental functions and not
proprietary ones.
The NHC was organized for the governmental objectives
stated in its amended articles of incorporation as follows:
SECOND: That the purpose for which the corporation is
organized is to assist and carry out the coordinated
massive housing program of the government, principally
but not limited to low-cost housing with the integration
cooperation and assistance of all governmental agencies
concerned, through the carrying on of any or all the
following activities:
l) The acquisition, development or reclamation of lands
for the purpose of construction and building therein
preferably low-cost housing so as to provide decent and
durable dwelling for the greatest number of inhabitants in
the country;
2) The promotion and development of physical social and
economic community growth through the establishment
of general physical plans for urban, suburban and
metropolitan areas to be characterized by efficient land
use patterns;
3) The coordination and implementation of all projects of
the government for the establishment of nationwide and
massive low cost housing;
4) The undertaking and conducting of research and
technical studies of the development and promotion of
construction of houses and buildings of sound standards
of design liability, durability, safety, comfort and size for
improvement of the architectural and engineering designs
and utility of houses and buildings with the utilization of
new and/or native materials economics in material and
construction, distribution, assembly and construction and
of applying advanced housing and building technology.
5) Construction and installation in these projects of low-
cost housing privately or cooperatively owned water and
sewerage system or waste disposal facilities, and the
formulations of a unified or officially coordinated urban
transportation system as a part of a comprehensive
development plan in these areas.
The petitioner points out that it was established as an
instrumentality of the government to accomplish
governmental policies and objectives and extend essential
services to the people. It would be incongruous if
employees discharging essentially governmental
functions are not covered by the same law and rules which
govern those performing other governmental functions. If
government corporations discharging proprietary
functions now belong to the civil service with more reason
should those performing governmental functions be
governed by civil service law.
The respondent NLRC cites a 1976 opinion of the
Secretary of Justice which holds that the phrase
"government-owned or controlled corporations" in
Section 1, Article XII-B of the Constitution contemplates
only those government-owned or controlled corporations
created by special law. The opinion states that since the
Constitution provides for the organization or regulation of
private corporations only by "general law", expressly
excluding government-owned or controlled corporations,
it follows that whenever the Constitution mentions
government-owned or controlled corporations, it must
refer to those created by special law. P.D. No. 868 which
repeals all charters, laws, decrees, rules, and provisions
exempting any branch, agency, subdivision, or
instrumentality of the government, including
government- owned or controlled corporations from the
civil service law and rules is also cited to show that
corporations not governed by special charters or laws are
not to be brought within civil service coverage. The
discussions in the Constitutional Convention are also
mentioned. It appears that at the time the Convention
discussed government-owned or controlled corporations,
all such corporations were organized only under special
laws or charters.
The fact that "private" corporations owned or controlled
by the government may be created by special charter does
not mean that such corporations not created by special law
are not covered by the civil service. Nor does the decree
repealing all charters and special laws granting exemption
from the civil service law imply that government
corporations not created by special law are exempt from
civil service coverage. These charters and statutes are the
only laws granting such exemption and, therefore, they
are the only ones which could be repealed. There was no
similar exempting provision in the general law which
called for repeal. And finally, the fact that the
Constitutional Convention discussed only corporations
created by special law or charter cannot be an argument
to exclude petitioner NHC from civil service coverage. As
stated in the cited speech delivered during the convention
sessions of March 9, 1972, all government corporations
then in existence were organized under special laws or
charters. The convention delegates could not possibly
discuss government-owned or controlled corporations
which were still non-existent or about whose existence
they were unaware.
Section I of Article XII-B, Constitution uses the word
"every" to modify the phrase "government-owned or
controlled corporation."
"Every" means each one of a group, without exception It
means all possible and all taken one by one. Of course,
our decision in this case refers to a corporation created as
a government-owned or controlled entity. It does not
cover cases involving private firms taken over by the
government in foreclosure or similar proceedings. We
reserve judgment on these latter cases when the
appropriate controversy is brought to this Court.
The infirmity of the respondents' position lies in its
permitting a circumvention or emasculation of Section 1,
Article XII-B of the Constitution It would be possible for
a regular ministry of government to create a host of
subsidiary corporations under the Corporation Code
funded by a willing legislature. A government-owned
corporation could create several subsidiary corporations.
These subsidiary corporations would enjoy the best of two
worlds. Their officials and employees would be
privileged individuals, free from the strict accountability
required by the Civil Service Decree and the regulations
of the Commission on Audit. Their incomes would not be
subject to the competitive restraints of the open market
nor to the terms and conditions of civil service
employment. Conceivably, all government-owned or
controlled corporations could be created, no longer by
special charters, but through incorporation under the
general law. The constitutional amendment including
such corporations in the embrace of the civil service
would cease to have application. Certainly, such a
situation cannot be allowed to exist.
WHEREFORE, the petition is hereby GRANTED. The
questioned decision of the respondent National Labor
Relations Commission is SET ASIDE. The decision of the
Labor Arbiter dismissing the case before it for lack of
jurisdiction is REINSTATED.

SO ORDERED.
Fernando, C.J., Teehankee, Makasiar, Aquino,
Concepcion, Jr., Melencio-Herrera, Plana, Escolin,
Relova, De la Fuente and Cuevas, JJ., concur.
G.R. No. L-8848 November 21, 1913
THE UNITED STATES, plaintiff-appllee,
vs.
WILLIAM C. HART, C. J. MILLER, and
SERVILIANO NATIVIDAD, defendants-appellants.
Pedro Abad Santos, for appellants Hart and
Natividad.
W. H. Booram, for appellant Miller.
Office of the Solicitor-General Harvey, for appellee.
TRENT, J.:
The appellants, Hart, Miller, and Natividad, were
arraigned in the Court of First Instance of Pampanga on a
charge of vagrancy under the provisions of Act No. 519,
found guilty, and were each sentenced to six months'
imprisonment. Hart and Miller were further sentenced to
a fine of P200, and Natividad to a fine of P100. All
appealed.
The evidence of the prosecution as to the defendant Hart
shows that he pleaded guilty and was convicted on a
gambling charge about two or three weeks before his
arrest on the vagrancy charge; that he had been
conducting two gambling games, one in his saloon and the
other in another house, for a considerable length of time,
the games running every night. The defense showed that
Hart and one Dunn operated a hotel and saloon at Angeles
which did a business, according to the bookkeeper, of
P96,000 during the nineteen months preceding the trial;
that Hart was also the sole proprietor of a saloon in the
barrio of Tacondo; that he raised imported hogs which he
sold to the Army garrison at Camp Stotsenberg, which
business netted him during the preceding year about
P4,000; that he was authorized to sell several hundred
hectares of land owned by one Carrillo in Tacondo; that
he administered, under power of attorney, the same
property; and that he furnished a building for and paid the
teacher of the first public school in Tacondo, said school
being under Government supervision.
The evidence of the prosecution as to Miller was that he
had the reputation of being a gambler; that he pleaded
guilty and was fined for participating in a gambling game
about two weeks before his arrest on the present charge of
vagrancy; and that he was seen in houses of prostitution
and in a public dance hall in Tacondo on various
occasions. The defense showed without contradiction that
Miller had been discharged from the Army about a year
previously; that during his term of enlistment he had been
made a sergeant; that he received rating as "excellent" on
being discharged; that since his discharge he had been
engaged in the tailoring business near Camp Stotsenberg
under articles of partnership with one Burckerd, Miller
having contributed P1,000 to the partnership; that the
business netted each partner about P300 per month; that
Miller attended to business in an efficient manner every
day; and that his work was first class.
The evidence of the prosecution as to Natividad was that
he had gambled nearly every night for a considerable time
prior to his arrest on the charge of vagrancy, in the saloon
of one Raymundo, as well as in Hart's saloon; that
Natividad sometimes acted as banker; and that he had
pleaded guilty to a charge of gambling and had been
sentenced to pay a fine therefor about two weeks before
his arrest on the vagrancy charge. The defense showed
that Natividad was a tailor, married, and had a house of
his own; that he made good clothes, and earned from P80
to P100 per month, which was sufficient to support his
family.
From this evidence it will be noted that each of the
defendants was earning a living at a lawful trade or
business, quite sufficient to support himself in comfort,
and that the evidence which the prosecution must rely
upon for a conviction consists of their having spent their
evenings in regularly licensed saloons, participating in
gambling games which are expressly made unlawful by
the Gambling Act, No. 1757, and that Miller frequented a
dance hall and houses of prostitution.
Section 1 of Act No. 519 is divided into seven clauses,
separated by semicolons. Each clause enumerates a
certain class of persons who, within the meaning of this
statute, are to be considered as vagrants. For the purposes
of this discussion, we quote this section below, and
number each of these seven clauses.
(1) Every person having no apparent means of
subsistence, who has the physical ability to work, and who
neglects to apply himself or herself to some lawful
calling; (2) every person found loitering about saloons or
dram shops or gambling houses, or tramping or straying
through the country without visible means of support; (3)
every person known to be a pickpocket, thief, burglar,
ladrone, either by his own confession or by his having
been convicted of either of said offenses, and having no
visible or lawful means of support when found loitering
about any gambling house, cockpit, or in any outlying
barrio of a pueblo; (4) every idle or dissolute person or
associate of known thieves or ladrones who wanders
about the country at unusual hours of the night; (5) every
idle peron who lodges in any barn, shed, outhouse, vessel,
or place other than such as is kept for lodging purposes,
without the permission of the owner or person entitled to
the possession thereof; (6) every lewd or dissolute person
who lives in and about houses of ill fame; (7) every
common prostitute and common drunkard, is a vagrant.
It is insisted by the Attorney-General that as visible means
of support would not be a bar to a conviction under any
one of the last four clauses of this act, it was not the
intention of the Legislature to limit the crime of vagrancy
to those having no visible means of support. Relying upon
the second clause to sustain the guilt of the defendants,
the Attorney-General then proceeds to argue that "visible
means of support" as used in that clause does not apply to
"every person found loitering about saloons or dram shops
or gambling houses," but is confined entirely to "or
tramping or straying through the country." It is insisted
that had it been intended for "without visible means of
support" to qualify the first part of the clause, either the
comma after gambling houses would have been
ommitted, or else a comma after country would have been
inserted.
When the meaning of a legislative enactment is in
question, it is the duty of the courts to ascertain, if
possible, the true legislative intention, and adopt that
construction of the statute which will give it effect. The
construction finally adopted should be based upon
something more substantial than the mere punctuation
found in the printed Act. If the punctuation of the statute
gives it a meaning which is reasonable and in apparent
accord with the legislative will, it may be used as an
additional argument for adopting the literal meaning of
the words of the statute as thus punctuated. But an
argument based upon punctuation alone is not conclusive,
and the courts will not hesitate to change the punctuation
when necessary, to give to the Act the effect intended by
the Legislature, disregarding superfluous or incorrect
punctuation marks, and inserting others where necessary.
The Attorney-General has based his argument upon the
proposition that neither visible means of support nor a
lawful calling is a sufficient defense under the last four
paragraphs of the section; hence, not being universally a
defense to a charge of vagrancy, they should not be
allowed except where the Legislature has so provided. He
then proceeds to show, by a "mere grammatical criticism"
of the second paragraph, that the Legislature did not
intend to allow visible means of support or a lawful
calling to block a prosecution for vagrancy founded on the
charge that the defendant was found loitering around
saloons, dram shops, and gambling houses.
A most important step in reasoning, necessary to make it
sound, is to ascertain the consequences flowing from such
a construction of the law. What is loitering? The
dictionaries say it is idling or wasting one's time. The time
spent in saloons, dram shops, and gambling houses is
seldom anything but that. So that under the proposed
construction, practically all who frequent such places
commit a crime in so doing, for which they are liable to
punishment under the Vagrancy Law. We cannot believe
that it was the intention of the Legislature to penalize
what, in the case of saloons and dram shops, is under the
law's protection. If it be urged that what is true of saloons
and dram shops is not true of gambling houses in this
respect, we encounter the wording of the law, which
makes no distinction whatever between loitering around
saloons and dram shops, and loitering around gambling
houses.
The offense of vagrancy as defined in Act No. 519 is the
Anglo-Saxon method of dealing with the habitually idle
and harmful parasites of society. While the statutes of the
various States of the American Union differ greatly as to
the classification of such persons, their scope is
substantially the same. Of those statutes we have had an
opportunity to examine, but two or three contain a
provision similar to the second paragraph of Act No. 519.
(Mo. Ann. Stat., sec. 2228; N. D. Rev. Codes, sec. 8952;
N. M. Comp. Laws 1897, sec. 1314.) That the absence of
visible means of support or a lawful calling is necessary
under these statutes to a conviction for loitering around
saloons, dram shops, and gambling houses is not even
negatived by the punctuation employed. In the State of
Tennessee, however, we find an exact counterpart for
paragraph 2 of section 1 of our own Act (Code of Tenn.,
sec. 3023), with the same punctuation:lawph!1.net
. . . or of any person to be found loitering about saloons or
dram shops, gambling houses, or houses of ill fame, or
tramping or strolling through the country without any
visible means of support.
A further thought suggest itself in connection with the
punctuation of the paragraph in question. The section, as
stated above, is divided into seven clauses, separated by
semicolons. To say that two classes of vagrants are
defined in paragraph 2, as to one of which visible means
of support or a lawful calling is not a good defense, and
as to the other of which such a defense is sufficient, would
imply a lack of logical classification on the part of the
legislature of the various classes of vagrants. This we are
not inclined to do.
In the case at bar, all three of the defendants were earning
a living by legitimate methods in a degree of comfort
higher that the average. Their sole offense was gambling,
which the legislature deemed advisable to make the
subject of a penal law. The games in which they
participated were apparently played openly, in a licensed
public saloon, where the officers of the law could have
entered as easily as did the patrons. It is believed that Act
No. 1775 is adequate, if enforced, to supress the gambling
proclivities of any person making a good living at a lawful
trade or business.
For these reasons, the defendants are acquitted, with the
costs de oficio.
Arellano, C.J., Torres and Carson, JJ., concur.
Johnson and Moreland, JJ., concur in the result.
G.R. No. L-28396 December 29, 1967
AGRIPINO DEMAFILES, petitioner,
vs.
COMMISSION ON ELECTIONS, PROVINCIAL
BOARD OF ANTIQUE, in its capacity as Board of
Canvassers for the newly created Municipality of
Sebaste of the Province of Antique, and BENITO B.
GALIDO, respondents.
Salonga, Ordoñez Sicat and Associates for respondent.
Ramon Barrios for respondent Comelec.
Jose W. Diokno for petitioner.
CASTRO, J.:
The new municipality of Sebaste1 in Antique province
held its first election of officers in the general elections of
November 14, 1967, with the petitioner Agripino
Demafiles and the respondent Benito B. Galido vying for
the mayoralty.
On November 21 the respondent Galido asked the
provincial board, acting as municipal board of canvassers
pursuant to section 167 (b) of the Revised Election Code,
to disregard, as "obviously manufactured", the election
return from precinct 7 on the ground that the said return
shows that 195 voters were registered (of whom 188
voted), when, according to a certificate of the municipal
election registrar only 182 had registered in that precinct
as of October 30, 1997. At its session on the following
day, November 22, the board, over the objection of one
member, voted to reject the return from precinct 7 and
then proceeded with the canvass of the returns from the
other precints. The resulting tally gave Galido 888 votes
as against 844 for Demafiles. Accordingly, Galido was
proclaimed mayor-elect of the municipality of Sebaste.
On November 24 Demafiles wired the Commission on
Elections, protesting the board's action of rejection of the
return from precinct 7 and the subsequent proclamation of
Galido, and challenging the right of two board members,
Julito Moscoso and Quirico Escaño, to sit, considering
that they were reelectionists. Acting on the protest, the
COMELEC resolved on November 28, 1967:
To annul the canvass and proclamation of the local
officials of the new municipality of Sebaste, Antique,
which was made by the Provincial Board of Antique;
To constitute the Board of Canvassers by appointing the
substitutes pursuant to the provisions of Sec. 167 (a) of
the Revised Election Code, which shall canvass anew the
results of the election for local offices of Sebaste,
Antique, in accordance with the Instructions to Boards of
Canvassers contained in the Resolution of the
Commission No. RR-544, particularly No. 5-K thereof,
and thereafter to proclaim the winning candidates for local
offices of said municipality.
In turn, Galido asked for a reconsideration on the ground
that the two members of the provincial board who were
reelectionists were disqualified from sitting only when the
board was acting as a provincial, but not as a municipal,
board of canvassers and that the COMELEC resolution
annulling the canvass and proclamation of officials was
issued without giving him an opportunity to be heard. In
its resolution of December 4, 1967 the respondent
Commission reconsidered its previous order and held
"that the canvass and proclamation already made of the
local officials . . . stands".
Failing to secure a reconsideration of this latter resolution,
Demafiles filed the present petition for mandamus and
certiorari to set aside the aforesaid resolution of the
COMELEC, to annull the proclamation of Galido, and to
secure an order directing the COMELEC to appoint
substitute members of the provincial board and to order a
new canvass of the returns, including that from precinct
7.
The three principal issues tendered for resolution in this
case are: (1) whether the respondent board of canvassers
was within the periphery of its power in rejecting the
return from precinct 7 on the strength of an election
registrar's certificate that a less number of voters than that
shown in the return had registered; (2) whether the
provincial board members, who were candidates for
reelection, were disqualified from sitting in the board in
its capacity as a municipal board of canvassers; and (3)
whether the Commission on Elections can order the board
of canvassers to count a return from a given precinct.
These issues, together with the arguments of the parties,
will be discussed seriatim, but we must first proceed to
dispose of the preliminary question raised by the
respondent Galido, namely, that this case is moot because
he had taken his oath and assumed office on November
22, pursuant to Republic Act 4870.
Obviously, the frame of reference is section 2 of the
statute which reads:
The first mayor, vice-mayor and councilors of the
Municipality of Sebaste shall be elected in the next
general elections for local officials and shall have
qualified [sic].
In our view, the last portion of the provision — "and shall
have qualified" — is devoid of any meaning, is
unmitigated jargon in or out of context, and does not
warrant the respondent's reading that the term of office of
the first municipal officials of Sebaste begins immediately
after their proclamation. It is quite probable that that is
what the legislature meant. But here is a clear case of a
failure to express a meaning, and a becoming sense of
judicial modesty forbids the courts from assuming and,
consequently, from supplying.itc-alf "If there is no
meaning in it," said the King in Alice in Wonderland,
"that saves a world of trouble, you know, as we needn't
try to find any." Frankfurter, who himself was fond of
quoting this passage, admonishes that "a judge must not
rewrite a statute, neither to enlarge nor to contract it.
Whatever temptations the statesmanship of policy-
making might wisely suggest, construction must eschew
interpolation and evisceration."2 Accordingly, we have to
go by the general rule that the term of office of municipal
officials shall begin on the first day of January following
their election,3 and so the assumption of office by the
respondent Galido in no way affected the basic issues in
this case, which we need not reach and resolve.
First, a canvassing board performs a purely ministerial
function — that of compiling and adding the results they
appear in the returns, transmitted to it. This is the teaching
in Nacionalista Party v. Commission on Elections:4 "the
canvassers are to be satisfied of the, genuineness of the
returns — namely, that the papers presented to them are
not forged and spurious, that they are returns, and that
they are signed by the proper officers. When so satisfied,
. . . they may not reject any returns because of
informalities in them or because of illegal and fraudulent
practices in the elections."5 Thus, they cannot pass upon
the validity of an election return, much less exclude it
from the canvass on the ground that the votes cast in the
precinct from whence it came are illegal.6
But the exclusion of the return in this case is sought to be
justified on the ground that it is "obviously manufactured"
because, contrary to the statement therein that there were
195 registered voters, of whom 188 voted, the certificate
of the local election registrar states that only 182 voters
had registered on October 30, 1967. Lagumbay v.
Commission on Elections7 is cited in support of this view.
In Lagumbay the returns were palpably false as it was
indeed statistically improbable that "all the eight
candidates of one party garnered all the votes, each of
them receiving exactly the same number, whereas all the
eight candidates of the other party got precisely
nothing.itc-alf" In other words, the aid of evidence
aliunde was not needed, as "the fraud [being] so palpable
from the return itself (res ipsa loquitur — the thing speaks
for itself), there is no reason to accept it and give it prima
facie value.
On the other hand, the return in this case shows nothing
on its face from which the canvassers might conclude that
it does not speak the truth. It is only when it is compared
in the certificate of the election registrar that a
discrepancy appears as to the number of registered voters.
The return therefore is by no means "obviously
manufactured" so as to justify its exclusion.
This is not to belittle the respondent's claim that more
people than registered voters were allowed to vote in
precinct 7. Perhaps that is true, although the petitioner
claims that after October 30, 1967 eight more voters were
allowed to register (making a total of 190, voters), and on
the day of the election 5 voters erroneously assigned to
precinct 6 were allowed to vote in precinct 7 because that
was where they were really assigned. The point is simply
that this question should be threshed out in an election
contest.itc-alf Lagumbay itself explicitly says —
Of course we agree that fraud in the holding of the
election should be handled — and finally settled — by the
corresponding courts or electoral tribunals. That is the
general rule, where testimonial or documentary evidence
is necessary. . . .
Consequently, the canvass made and proclamation had
should be annulled.8
Second, the canvass and proclamation should be annulled
because two of the four members of the board of
canvassers were disqualified from sitting in it, they being
candidates for reelection. As this Court held in Salcedo v.
Commission on Elections:9
And added reason for the nullification of the actuation of
the Provincial Board of Oriental Mindoro is the fact that
its members were disqualified to act it appearing that they
were all candidates for reelection. This is clear from
Section 28 of the Revised Election Code which provides
that any member of the provincial board who is a
candidate for an elective office shall be incompetent to act
in said board in the performance of its duties in connection
with the election.

Branding the above statement as obiter dictum, the
respondent Galido argues that reelectionist members of
the provincial board are disqualified under section 28 only
when the board acts as a provincial board of canvassers,
to prevent them fro canvassing their own votes, and not
when they sit as a municipal board of canvassers.
With respect to the canvass and proclamation made the
provincial board of Oriental Mindoro, three issues raised
in Salcedo, in resolving which this Court held (1) that a
provincial board cannot act as a municipal board of
canvassers where a municipal council has been formed;
(2) that provincial board members who are candidates for
reelection are disqualified to sit in the board and (3) that
a board of canvassers which excludes from canvass the
return from a precinct acts "in contravention of law."
At any rate the language of section 28 is all-inclusive
Thus:
Any member of a provincial board or of a municipal
council who is a candidate for office in any election, shall
be incompetent to act on said body in the performance of
the duties the of relative to said election . . . .
The statute draws no distinction between the provincial
board acting as a provincial board of canvassers and the
same board acting as a municipal canvassing body new
municipalities, and so we make none, in line with the
maxim ubi lex non distinguit, nec nos distinguere
debemos.
Third, it is now settled doctrine that the COMELEC has
the power to annul an illegal canvass and an illegal
proclamation as when they are based on incomplete
returns, and order a new canvass to be made by counting
the returns wrongfully excluded.10 If it has power to
direct that certain copies of election returns be used in
preference to other copies of the same returns,11 there is
no reason why it cannot direct canvassing bodies to count
all turns which are otherwise regular.itc-alf Indeed, it is
its duty to do so, failing which it may be compelled by
mandamus. As earlier pointed out, it is the ministerial
function a board of canvassers to count the results as they
appeal in the returns which on their face do not reveal any
irregularities or falsities.
ACCORDINGLY, the resolutions dated December 4 and
8, 1967 of the Commission on Elections are set aside, and
the canvass of returns made and the subsequent
proclamation of the respondent Benito B. Galido are
annulled. The respondent Commission on Elections is
hereby directed. (1) to appoint new members of the board
of canvassers in substitution of Julito Moscoso and
Quirico Escaño, and (2) immediately thereafter to order
the board of canvassers as reconstituted to convene,
canvass all votes including those appearing in the return
from precinct 7, and, in accordance with the results of
such canvass, proclaim the winning candidates. Costs
against the private respondent Galido.
Concepcion, C.J., Reyes, J.B.L., Makalintal, Bengzon,
J.P., Sanchez and Angeles, JJ., concur.
Dizon, Zaldivar and Fernando, JJ., took no part.
G.R. No. L-26762 August 29, 1975
PHILIPPINE LONG DISTANCE TELEPHONE
COMPANY, petitioner,
vs.
THE PUBLIC SERVICE COMMISSION, respondent.
G.R. No. L-26765 August 29, 1975
MANILA ELECTRIC COMPANY, petitioner,
vs.
THE PUBLIC SERVICE COMMISSION,
respondent.
RESOLUTION
MAKALINTAL, C.J.:
In its decision dated August 31, 1970, this Court
affirmed with modification the position of the Public
Service Commission (now this Specialized Regulatory
Boards or "SRB") on the interpretation and
application of Section 40, paragraph (e), of the Public
Service Act (146), as amended by Section 5 of Republic
Act 3792. The said section as amended reads as
follows:
Section forty of the same Act, as amended by
Commonwealth Act numbered Four Hundred Fifty-
Four, is hereby further amended to read as follows:
Section 40. The Commission is authorized and ordered
to charge and collect from any public service or
applicant, as the case may be, the following fees as
reimbursement of its expenses in the authorization,
supervision and/or regulation of public services.
(e) For annual reimbursement of the expenses
incurred by the Commission in the supervision of
other public services and/or in the regulation or fixing
of their rates, twenty centavos for each one hundred
pesos or fraction thereof, of the capital stock
subscribed or paid, or if no shares have been issued, of
the capital invested, or of the property and equipment,
whichever is higher.
As construed by the Public Service Commission, the
foregoing provision lays down as basis for computing
the amount of supervision and/or regulation fees
payable by a public utility organized as a stock
corporation either the capital stock or the property
and equipment, whichever is higher; and if the public
utility is an entity without shares of stock, the basis for
computation is either the capital invested or the
property and equipment, whichever is higher. The
modification introduced by this Court in its decision
of August 31, 1970 is that the property and equipment
shall be net of depreciation. In other words, as thus
decided, the alternative basis added by the
amendatory Act (3792), namely, the property and
equipment, is made applicable to all public utilities,
whether they have or have not issued shares of stock.
Before this Court for resolution is the second motion
for reconsideration and supplemental second motion
for reconsideration filed by the petitioners Philippine
Long Distance Telephone Company and Manila
Electric Company. They contend that the amendment
introduced by Section 5 of Republic Act 3792 did not
change the basis for computing the supervision and/or
regulation fees due from stock corporations; that such
basis is still only the capital stock subscribed or paid
and not such capital stock or the property and
equipment, whichever is higher; that the amendment
altered the basis only with respect to public utilities
not organized as stock corporations, as to which it is
now the capital invested or the property and
equipment, whichever is higher.
In the decision which is now sought to be reconsidered
this Court relied heavily on the theory that Section 5
of Republic Act 3792 is a tax measure intended to
Fraise revenue and therefore the amounts collected as
supervision and/or regulation fees thereunder need
have no reasonable relation to the cost of such
supervision and/or regulation.
Reference was made in the briefs for the petitioners to
the "confiscatory and unreasonable" character of the
fees, if considered as taxes and computed on the basis
of "the property and equipment." Inasmuch as the
case was tried before the Public Service Commission
on the theory that such fees were purely regulatory in
character, so that the parties have no adequate
opportunity to submit evidence on their being
confiscatory and unreasonable," this Court, by
resolution of August 30, 1971, remanded the case to
the Public Service Commission for reception of
evidence on such alleged confiscatory and
unreasonable character of the fees prescribed by
Section 40(e) of the Public Service Act as amended, if
interpreted so as to make the alternative basis of
computation (property and equipment) applicable to
public utilities organized as stock corporations.
In October 1972 the Public Service Commission was
abolished and its powers and functions were
transferred to another entity called the Specialized
Regulatory Boards (SRB). The petitioners and the
SRB thereafter entered into a Stipulation of Facts,
which they submitted to this Court on January 16,
1975. Subsequently they filed their respective
memoranda. In its memorandum the SRB repudiates
the previous position of the Public Service
Commission and in effect makes common cause with
the petitioners, stating that Section 5 of Republic Act
3792 was not intended as a tax measure and that "it is
not only material in this incident to rule on said issue
but likewise in the public interest that the Honorable
Court in passing upon this issue, make a categorical
pronouncement that the same is a simple regulatory
legislation."
It is important to recall at this juncture, in view of the
submission of the SRB on this point, that previous
decisions of this Court construing the provision of
Section 40 of the Public Service Act before its
amendment by R.A. 3792 held that the fees being
collected thereunder were not in the nature of taxes
but were fees for purposes of the regulatory functions
of the Public Service Commission. Manila Electric Co.
v. Public Service Commission, 4 SCRA 1200; Manila
Electric Co. v. Auditor General, et al., 40 O.G. No. 13,
p. 2629. In this latter case this Court said:
xxx xxx xxx
Debe notarse que el articulo citado se refiere a
'derechos', los derechos que la Comision de Servicios
Publicos esta autorizada a cobrar para resarcirse de
los gastos en que ella o sus agentes incurren por el
trabajo que supone el ejercicio por la misma de su
poder de supervision y reglamentacion de las
operaciones y actividades que en el referido articulo se
enumeran; y debe notarse tambien que hace uso de
dicho vocable 'derechos', por lo menos tres veces,
indudablemente, con el fin de que no pueda haber
dudas de que permite y quiere que la Comision cobre
por supervision y reglamentacion no impuestos, sino
derechos. ...
We are of the opinion that neither the amendment
introduced by Section 5 of Republic Act 3792 to
Section 40(e) of the Public Service Act nor the
automatic appropriation clause added to the last
paragraph thereof altered the nature of the fees in
question as held by this Court in those decisions.
The stipulation of the parties bring out a number of
significant facts. At the rate of P0.20 for every P100.00
or fraction thereof of the gross value of the respective
properties and equipment in service of the petitioners,
the SRB has computed the fees which they would have
paid every year from 1964 to 1974, inclusive, as
follows:
PROPERTY & EQUIPMENT YEAR IN SERVICE
BILL
1964 P107,176,764.00 P 214,353.6
1965 172,345,729.00 344,691.60
 1966 240,809,709.00 418,619.60 1972 2,348,189,689.00 4,696,379.40

P 1967 268,357,379.00 536,714.80 1973 2,840,609,818.00 5,681,219.80

L 1968 427,254,070.00 854,508.20 1974 2,945,650,790.00 5,891,301.60

D 1969 523,076,219.00 1,046,152.60

Actually, however, the fees were collected not on the
basis of the gross value of their properties and
equipment in service but on the respective outstanding
T 1970 624,204,203.00 1,248,408.60capital stock; and the amounts of the collections were
as follows:
OUTSTANDING AMOUNT CAPITAL PAID O. R.
1971 1,100,768,321.00 2,201,536.80NO. DATE
YEAR STOCK
1964 P21,717,300.00 43,434.60
1972 1,220,149,965.00 2,440,300.00

1965 21,192,110.00 42,384.40

1973 1,451,945,532.00 2,903,891.20

1966 32,477,730.00 64,955.46

1974 1,506,101,070.00 3,012,202.20 P15,284,379.20

P 1967 55,213,000.00 110,426.00

1964 363,762,931.00 727,526.00

L 1968 55,414,120.00 110,828.24

M 1965 413,462,327.00 826,924.80

D 1969 46,957,860.00 93,915.72

E 1966 632,619,666.00 1,265,239.40

T 1970 54,554,310.00 109,108.80

R 1967 709,020,839.00 1,418,041.80

1971 54,309,340.00 108,618.68

A 1968 818,130,654.00 1,636,261.40

1972 54,629,570.00 109,259.14

L 1969 990,687,198.00 1,981,374.40

1973 55,556,330.00 111,112.66

C 1970 1,336,644,914.00 2,673,290.00

1974 110,242,750.00 220,485.50

O 1971 2,119,221,085.00 4,238,442.20
 P1,124,529.20 There are altogether 14,637 public utility operators
and/or companies in the Philippines under different
categories, as follows:
a. land transportation — 13,924
OUTSTANDING CAPITAL AMOUNT b. telephone service — 74
YEAR STOCK PAID O. R. NO. DATE c. electric service — 493
d. shipping, ferryboat &
1964 75,150,000.00 150,300.00 waterboat7956880
service — 99Sept. 30 '64
e. radio-communications — 25
f. waterworks & canal service — 22 14,637
1965 77,771,000.00 155,542.00 The total collections inSept.
7427760 the form
30 '65of supervision and/or
regulation fees from these public utilities from 1964-
1974, inclusive, amounted to P26,964,845.37. It will be
1966 77,171,000.00 155,542.00 noted 371433
that of this total, almost
Sept. 30 '664 million pesos, or
approximately 15%, came from just the two
petitioners herein, out of the more than 14,000 public
utilities in the entire Philippines. This proportion is
M 1967 78,861,880.00 157,723.76 undoubtedly
2515473more thanSept. 29 '67
the proportionate supervision
and/or regulation services the two petitioners have
been receiving.
E 1968 79,410,260.00 158,820.60 Another 9570258
significant fact
Sept.
which
30 '68
is pointed out in the
stipulation is that out of all the collections under
Section 40 of the Public Service Act, the Public Service
R 1969 80,897,960.00 161,796.00 Commission,
6048254 now the Oct.
SRB, 21had
'69 accumulated as of
June 30, 1974 a total savings of P28,007,408.09, which
amount may be disbursed by the SRB for the purposes
enumerated in said section, specifically "additional
A 1970 85,616,630.00 171,233.40 needed 2888663-K Sept.maintenance
personnel services, 30 '70 and operating
expenses, acquisition of urgently needed vehicles,
furniture and equipment, maintenance of an adequate
L 1971 87,282,050.00 174,564.20 reference9176488-L Sept. 29of'71
library, acquisition a lot and building for
the [Board] and other expenses necessary for efficient
administration and effective supervision and
C 1972 91,845,020.00 183,690.20 regulation of public services."
6988431 Sept. 15 '72
Upon considerations of fairness and equity, We find
the common plea of both the petitioners and the
respondent SRB fully justified. But the respondent has
O 1973 341,749,070.00 683,498.20 called2369885-O
our attention toSept.
an26even
'73 more compelling,
because practical, consideration in this case, which is,
that to interpret the supervision and/or regulation fees
1974 341,796,130.00 683,592.20 in question
9294134-P Sept.
as taxes under the30theory
'74 that the intention
is to raise revenue would entail self-defeating
consequences which, in the ultimate analysis, would be
P2,836,302.58contrary to public interest.
The franchise of each of these two petitioners contains
the so-called "in lieu of" provision. In the case of the
The stipulation of the parties also projects the Meralco the franchise tax paid by it "shall be in lieu of
amounts of the fees which would have been collected all taxes and assessments of whatsoever nature and by
on the basis of the value of the properties and whatsoever authority upon the privileges, earnings,
equipment in service minus depreciation. The income, franchises, ... of the grantee, from which taxes
Philippine Long Distance Telephone Company would and assessments the grant hereby expressly
have paid during the years 1964-1974, inclusive, the exempted." (Par. 9, Part II of Act 484 as adopted in
total amount of P9,832,145.65; and the Meralco the R.A. Nos. 150 and 4159) In the case of the PLDT, it
total amount of P21,223,640.60. pays a percentage tax on all gross receipts ....
transacted under its franchise, and "the said
percentage shall be in lieu of all taxes on this franchise
or earnings thereof." (Act No. 3436, as amended by
C.A. 407 and R.A. 6146).
In an opinion dated August 8, 1974, the Department of
Justice ruled that a provision in a legislative franchise
which ordains that the franchise tax prescribed
therein should be "in lieu of all taxes" is equivalent to
a "complete foreclosure against the imposition of any
other tax or decree of the tax therein vested by any of
the state's taxing authorities." The ruling was
reiterated in another opinion of the same office
rendered on October 14, 1974 and in a similar opinion
of the Secretary of Finance dated March 19, 1975.
These opinions are not in question here and are
binding upon the respondent SRB, which is an agency
under the Executive Department. To insist therefore
that Section 40(e) of the Public Service Act amended is
not only for the purpose of regulation and/or
supervision but is a tax measure would preclude the
collection of the fees thereunder.
Respondent SRB adverts to a number of cogent
circumstances in support of its position. We quote
from its memorandum:
xxx xxx xxx
Indeed, Respondent is unable to comprehend the law
in question as a tax measure, for the following reasons:
First, the law in question, Section 40(e) of the Public
Service Act, as amended by Republic Act No. 3792 is
found in Chapter VI of the said law under the heading
of 'FEES'.
Second, a 'tax' is imposed under the taxing power of
government principally for the purpose of raising
revenues. (Tabacos de Filipinas vs. City of Manila,
G.R. No.
L-1669, June 29, 1963, 8 SCRA 367). The law in
question, however, merely authorizes and requires the
collection of 'fees' as reimbursement of its (SRB's)
expenses in the AUTHORIZATION, SUPERVISION
AND/OR REGULATION of public services. (Sec. 40(e),
opening paragraph). By its own express provision,
therefore, the aforesaid law can be construed as no
more than a regulatory measure related to the
supervision and regulation of public utilities that are
subject to the jurisdiction of the SRB, and not as a
legislative instrument mainly for the purpose of
raising revenues.
Third, the last paragraph of Section 40(e) provides
that: .
Aside from the appropriations for the Commission
under the Annual General Appropriations Act, any
unexpended balance of the fees collected by the
Commission under this section shall be constituted
receipts automatically appropriated each year, and
together with any surplus in the standardizing meter
laboratory revolving fund under Commonwealth Act
numbered Three Hundred Forty Nine, shall be
disbursed by the Public Service Commissioner in
accordance with special budget to be approved by the
Department of Justice, the Budget Commission and
the Office of the President of the Philippines for
additional needed personal service maintenance and
operating expenses, acquisition of urgently needed
vehicles, furniture and equipment, maintenance of an
adequate reference library, acquisition of a lot and
building for the Commission, and other expenses
necessary for efficient administration and effective
supervision and regulation of public services.
(emphasis supplied)
It is, therefore, clear from the aforequoted paragraph
that the funding of the projects enumerated therein is
merely a secondary objective of the law in question to
attain the primary purpose of regulation and
supervision of all utilities failing under respondent
jurisdiction. The language of the aforequoted
paragraph is plain that the regulatory fees required to
be collected are not primarily intended to fund said
projects but that only the "unexpended balance of the
fees collected by the Commission under this Section" if
any shall be utilized for said projects. In other words,
it is not the collection themselves that Congress had
addressed to the funding of the said projects but only
"the unexpended balance thereof" when any such
excess is realized.
Fourth, this Honorable Court itself in the case of
Meralco vs. PSC, 4 SCRA 1,200, held that Section 40
of the Public Service Act is not a tax measure but a
simple regulatory provision for the collection of fees.
This judicial finding could not have been affected or in
any manner modified by the enactment of R.A. 3792
since the said Act as stated in its own Explanatory
Note, was simply intended to double the then
applicable rate of collectible supervision fees from the
public services in the Philippines. Respondent
reproduces hereunder the said explanatory note in
full, as follows:
3. Increase in the supervisory and regulation fees
collectible by the Commission and making them receipts
automatically appropriated.
The Supreme Court has taken judicial notice that legal
fees fixed before the war can no longer finance the
administration of justice. This was expressed in its
resolution doubling the legal fees from 1960. The fees
collected by the Commission serve a similar purpose as
fees collectibles, under the Rules of Court. Therefore, we
propose a similar increase in the fees provided in the
Public Act (fixed in 1936) to insure better service and
make the Commission a self-supporting Agency.
We also propose that adequate funds be appropriated
so that the Commission can take care of its needs and
achieve its purposes. It is prudent to have a ready
reserve of funds rather than wait for an appropriation,
because delays can be costly. These funds shall be used
for the appointment of needed personnel, acquisition
and maintenance of a reference library and of a lot and
permanent building, and for other necessary expenses.
The use of these funds shall be regulated by special
budgets to be approved by the Department of Justice,
the Budget Commission, and the Office of the
President. (Emphasis supplied).
The intention of Congress in the passage of R.A. 3792,
therefore, was not to invest upon the fees in question
the character or attributes of a 'tax,' but rather and
simply to double or revise upwards the then existing
rate of the said fees.
Fifth, Republic Act No. 3792 originated from the
Committee on Transportation of the House of
Representatives of the then Philippine Congress. (Par.
XV, Stipulation of Facts). If it was the legislature's
intent or purpose to enact the same as a tax measure,
rules obliged that the origin and sponsorship thereof
should be by the House's Committee On Ways and
Means.
Other significant facts that respondent SRB brings to
our attention are:
First: Up to last year, respondent has been collecting
the questioned supervision fees from corporate
utilities like the petitioners herein on the basis of their
subscribed capital stock (Stipulation of Facts, Par. II).
For this it accumulated a total savings of
P28,007,408.09 as of June 30, 1974 which is available
for the projects listed in the last paragraph of the
subject statute. (Idem., par. XIII). It is clear therefore,
that even on the basis of such subscribed capital stock,
the purposes for which R.A. 3792 was enacted would
still be amply served.
Second. Respondent, has noted that our interpretation
of the law in question so as to collect supervision fees
on the basis of 'property and equipment in service, net
of depreciation,' has self-defeating consequences
which in the ultimate analysis is not conducive to
public interest and welfare. Rather than encourage the
improvement and expansion of their existing facilities,
public utilities either defer or delay such projects
because of anxiety over a marked increase in
assessable supervision fees that such an expansion or
increase of equipment would entail.
Third: An assessment of the fees in question on the
basis of 'property and equipment in service, net of
depreciation,' will mean a liability therefor of at least
P2,058,378.41 and P3,976,510.80 for PLDT and
MERALCO, respectively, for the year 1974 alone.
(Par. III). In all candor, these amounts are rather
difficult to reconcile with respondent's contention that
the said collections are merely in the nature of
regulatory fees.
It is quite clear, for the reasons above stated, that the
supervision and/or regulation fees imposed by Section
40(e) of the Public Service Act, as amended by R.A.
3792, are not taxes but are exactly what the provision
says, and therefore the nature and amount of such fees
must be reasonably related to the cost of such
supervision and/or regulation. It is equally clear that
to base the computation of the fees on the value of the
properties and equipment of the petitioners, with or
without depreciation, would be to ignore altogether
the requirement of such reasonable relation.
The intention of Congress in enacting the law in
question is explicitly stated in the provision itself,
namely: "For annual reimbursement of expenses
incurred by the Commission in the supervision of other
public services and/or in the regulation or fixing of
their rates, ...," (Emphasis supplied). As pointed out
by respondent SRB (supra) the explanatory note of
House Bill 4613, which became R.A. 3792, states that
the purpose of the amendment to Section 40 was
merely to double the fees collected by the Public
Service Commission in the same way that the Supreme
Court doubled the fees collectible under the Rules of
Court. * The stipulation of facts submitted by the
parties shows that if the collection is based on the value
of the property and equipment in service minus
depreciation it would not only double the amounts
collected prior to the amendment but make them
almost 10 times more insofar as the two petitioners are
concerned. Such a result could not have been in the
mind of the lawmaking body, considering especially
the explanatory note which accompanied the bill when
it was filed.
Moreover, it would be violative of the principle that
there must be a reasonable relation between the
amounts collected as regulatory and/or supervision
fees and the cost of such regulation and/or supervision.
It may be noted that the term "property and
equipment" carries no qualification. It does not
specify whether it means the original cost of
acquisition, the original cost minus depreciation
(although in the decision sought to be reconsidered
this interpretation was adopted), the market value, or
the cost of construction and/or acquisition minus the
amount of loan obligations incurred for that purpose
and still outstanding. In the resolution of this Court of
May 8, 1975 the parties were required to submit their
views on whether this last alternative would be
justifiable under Section 40(e) of the Public Service
Act.
Both parties have rejected this basis of computation on
the grounds that it is not warranted by the language of
the provision in question; that it would pose
considerable administrative and accounting problems
and generate disputes and disagreements in the
manner of collection; and that it would not furnish a
stable basis at all because the amount of unpaid
financing (a great part of it from foreign sources) for
the construction and/or acquisition of property and
equipment varies from time to time, depending not
only on the periodic payments made by the petitioners
but also on fluctuating values of foreign currencies vis-
a-vis the Philippine peso.
Premises considered, this Court hereby reconsiders its
decision of August 31, 1970; declares that the
assessments under Section 40(e) of the Public Service
Act, as amended by Republic Act No. 3792, are not
taxes but regulation and supervision fees imposed
pursuant to the exercise of police power; and rules that
the basis for the computation thereof insofar as
petitioners are concerned is and remains "the capital
stock subscribed or paid" and not, alternatively, the
property and equipment.
Fernando, Teehankee, Esguerra, Muñoz Palma,
Aquino, Concepcion, Jr. and Martin, JJ., concur.
Makasiar, J., votes to maintain the decision of April 31,
1970 for the reasons therein stated.
Antonio, J., is on leave. *
Separate Opinions
CASTRO, J., concurring:
The resolution penned by Chief Justice Makalintal
compels my concurrence. I fully agree (1) that the fees
imposed by Section 40(e) of the Public Service Act, as
amended by Republic Act 3792, are supervision
and/or regulation fees, and not taxes; (2) that they are
exactly what the provision says they are; (3) that
therefore the nature and amount of such fees must be
reasonably related to the cost of such supervision
and/or regulation; and (4) that to base the
computation of the fees on the value of the properties
and equipment of the petitioners, with or without
depreciation, would be to ignore altogether the
requirement of such reasonable relation.
I wish to add my views on the matter, of legal
hermeneutics, which to me is likewise a vital
determinant of the issue at bar.
Section 40(e) of the Public Service Act, as amended by
Republic Act, 3792, reads as follows:
(e) For annual reimbursement of the expenses
incurred by the Commission in the supervision of
other public services and/or in the regulation or fixing
of their rates, twenty centavos for each one hundred
pesos or fraction thereof, of the capital stock
subscribed or paid, if no shares have been issued, of
the capital invested, or of the property and equipment,
whichever is higher.
The basic issue is whether the added phrase, "or of the
property and equipment, whichever is higher," was
intended as an alternative only to the immediately
antecedent phrase, "of the capital invested," or also to
the previous one, namely "of the capital stock
subscribed or paid."
The relevant and pertinent Congressional records do
not at all provide any indication of the meaning
intended by the lawmaking body.
The task may, however, be simplified by supplying the
words which obviously were deliberately omitted and
merely indicated by means of a comma between the
phrase, "or if no shares have been issued," and the
clause, "of the capital invested, or of the property and
equipment, whichever is higher." The omitted words
thus supplied, the provision would read as follows:
(e) For annual reimbursement of expenses incurred by
the Commission in the supervision of other public
services and/or in the regulation or fixing of their
rates, twenty centavos for each one hundred pesos or
fraction thereof, of the capital stock subscribed or
paid, or if no shares have been issued, twenty centavos
for each one hundred pesos or a fraction thereof, of the
capital invested, or of the property and equipment,
whichever is higher.
Viewed from this perspective, the meaning of the
provision, as intended by the lawmaking body,
becomes unmistakable, which is, to make the
alternative basis of computation (property and
equipment)applicable exclusively to the case or
situation to which it obviously relates, namely, "if no
shares have been issued."
The rule that a qualifying or relative word or clause,
such as "which," "said," and "such," is to be
construed as applying to the words, phrase or clause
next preceding or, as is frequently stated, to the next
preceding antecedent, and not as extending to or
including others more remote, unless a contrary
intention appears (Crawford, Sec. 193, p 331), may be
applied in the present case. This rule is known as the
doctrine of last antecedent, which is both a rule of
grammar and a rule of law (Wood vs. Baldwin, 10 N.Y.
S. 195).
In fine, the basis for the computation of the fees
collectible from stock corporations for supervision
and/or regulation is "twenty centavos for each one
hundred pesos or fraction thereof, of the capital stock
subscribed or paid." If no shares have been issued, as
in the case of non-stock corporations, the basis for the
computation of the fees collectible for supervision
and/or regulation is "twenty centavos for each one
hundred pesos or fraction thereof .... of the capital
invested, or of the property and equipment, whichever
is higher."
BARREDO, J., concurring:
I find it difficult to sanction the contention that the
clause "or of the property or equipment, whichever is
higher" in the last part of the amended paragraph (e)
of Section 40 of CA 146 applies to non-stock
corporations but does not apply to stock corporations.
The reason for the distinction escapes me. If the value
of the property or equipment of a non-stock
corporation can be used as alternate base for the
computation of the fee it should pay, I cannot see why
the same alternative may not be applied to stock
corporations. I do not believe there is really such
impossibility to determine the amount of capital
invested in a non-stock corporation as to warrant the
inference that the legislature intended to provide
another base insofar as such corporations are
concerned, for the simple reason that throughout the
years prior to Republic Act 3792, the capital invested
in non-stock corporations had always been the basis of
the fee paid by them under the original text of Section
40(e) of Commonwealth Act 146 as amended by
Commonwealth Act 454, and it does not appear that
in any of those years, the Public Service Commission
was unable to collect the stipulated fee because the
capital invested could not be determined.
But I concur in the view that the provision in question
is not and could not have been intended to be a tax
measure. The legislature that approved it did not
mean it to be so, as proven incontestibly by the fact
that the amendatory bill which later became Republic
Act 3792 originated from the Committee on
Transportation and not from the Committee on Ways
and Means of the House of Representatives as would
have been the case pursuant to the rules of the House.
Moreover, the explanatory note itself of the said bill
states categorically that its purpose is only to double
the amount of the fee which used to be paid previously,
which fee was unquestionably for supervision and
regulation, and not for revenue.1 The reason behind the
increase is to keep it abreast of the increase of the
corresponding fees in the courts and other administrative
agencies performing more or less similar functions as the
Public Service Commission. What is more, the
amendment in question expressly states that the fee to be
collected is for "reimbursement of the expenses incurred
by the Commission in the supervision" of public services
not only in paragraph (e) itself but in the main provision
preceding the enumeration of all the collectible fees. Of
course, with the increased fees, it was anticipated that
somehow there might be some excess of collections over
and above what might be needed for the expenses of
regulation, inspection and supervision and so, in order
that such excess may legally be utilized for other
purposes, the amendment had to provide for authority to
that end, hence the automatic appropriation clause at the
end of the section. In other words, contrary to the holding
in Our decision of August 31, 1970, whatever revenue Act
there is in the amendment could not have been its
motivation, since it relates only to "any unexpended
balance of the fees collected", which is naturally uncertain
and speculative as to how much the surplus or savings
would be.
Another circumstance, not less persuasive, that convinces
me that taxation was not in the mind of the legislature is
that most if not all public service operators of
consequence or from whom the biggest amounts could be
collected are holders of legislative franchises. Such are
the cases of Meralco and the PLDT, who alone, according
to the stipulation of facts before Us, have been paving at
least 15% of the total fees collected from all public
services coming under the provision in dispute. As stated
in the main opinion of the Chief Justice, under their
respective legislative franchises, these corporations are
required to pay a fixed percentage tax in lieu of all other
taxes of whatever nature. I cannot believe that the
legislature intended to repeal or amend such special
provision thru the amendments here in dispute. Nor could
it have done so, considering that a specific provision in a
legislative franchise to the effect that a tax equivalent to a
certain percentage of the gross earnings of the grantee
shall be in lieu of all taxes of any kind or nature and that
said grantee shall be exempt from the payment of such
other taxes cannot be repealed or amended by a general
law containing an apparently repugnant provision, unless
the intent to repeal is expressed in unmistakable terms in
the subsequent legislation. (Visayan Electric Co., S.A. vs.
David, 92 Phil. 969.) The reason for such ruling is given
in the cited case of Manila Railroad Co. vs. Rafferty, 40
Phil. 224 which held thus:
It is a canon of statutory construction that a later statute,
general in its terms and not expressly repealing a prior
special statute, will ordinarily not affect the special
provisions of such earlier statute. (Steamboat Company
vs. Collector, 18 Wall. [U.S.], 478; Cass County vs.
Gillett, 100 U.S., 585; Minnesota vs. Hitchcock, 185 U.S.,
373, 396.)
Where there are two statutes, the earlier special and the
later general—the terms of the general broad enough to
include the matter provided for in the special—the fact
that one is special and the other is general creates a
presumption that the special is to be considered as
remaining an exception to the general, one as a general
law of the land, the other as the law of a particular case.
(State vs. Stoll, 17 Wall, [U.S.], 425.)
Said Act No. 1510 is a charter granted to the plaintiff
company by the Government of the Philippine Islands. It
is in the nature of a private contract. It is not a law
constituting a part of the machinery of the general
government. It was adopted after careful consideration of
the private rights of the plaintiff in relation with the
resultant benefits to the State. It stands upon a different
footing from the general law. When a charter is granted,
it constitutes a certain property right. Charters or special
laws, such as Act No. 1510, stand upon a different footing
from general laws. Once granted, a charter becomes a
private contract and cannot be altered nor amended except
by (consent of all concerned, unless that right is expressly
reserved. (Dartmouth College vs. Woodword, 4 Wheat.,
578.) The reason for the rule is clear. The Legislature, in
passing a special charter, have their attention directed to
the special fact and circumstances which the Act or
charter is intended to meet. The Legislature consider and
make provision for all the circumstances of the particular
case. The Legislature having specially considered all of
the facts and circumstances in the particular case in
granting a special charter, it not be considered that the
Legislature, by adopting a general law containing
provisions repugnant to the provisions of the charter, and
without making any mention of its intention to amend or
modify the charter, intended to amend, repeal, or modify
the special act. (Lewis vs. Cook County, 74 111. App.,
151; Philippine Railway Co. vs. Nolting, 34 Phil., 401.)
I do not believe that Justice Laurel's postulation in
Pangasinan Transportation Co. vs. The Public Service
Commission, 70 Phil. 221, to the effect that the
Constitution does not permit the granting of irrepealable
or unamendable franchises, to which I adhere, covers the
situation on hand, since the point here is that the repeal
must be expressed not merely implied.
Indeed, before the amendment of the last paragraph of
Section 40 of Commonwealth Act 146, holders of
legislative franchises containing special fixed tax clauses
were exempt from even the regulation and inspection fees
provided in said section. Under the amendment, that
exemption was removed, but recognizing precisely the
character and nature of the fees prescribed by the
amended section as mainly for reimbursement of
expenses, and I am referring to all the fees prescribed in
Section 40 and not only to those in paragraph (e), the
amendment provides that the excess is automatically
appropriated to supplement the budgetary and other
appropriations for the maintenance and operation of the
Public Service Commission. In other words, the purpose
of the automatic appropriation is not to legalize and
conceptualize such excess as tax but rather to provide
legal authority for the utilization thereof to augment the
budgetary appropriations for the Commission.
Accordingly, the construction of the amendments must be
restrictive rather than expansive.
Factually, it is clearly demonstrated, as may be seen in the
main opinion, that to uphold the view that the frame of
reference or basis of computation of the fees should be the
value of the property and equipment of the operators
covered by the provision will surely amount to the
imposition of excessive and confiscatory fees or taxes. In
this connection, Our decision of August 31, 1970 did take
note of the point that the fees under discussion, if
collected on the basis of property or equipment, would be
"confiscatory and violative of substantive due process"
but declined to rule on the matter because petitioners
"have not submitted ... evidentiary data to substantiate this
point" and "that the amounts to be collected are large do
not, per se alone, suffice to establish their confiscatory
character." (34 SCRA pp. 615-616.) And it was precisely
to give the parties an opportunity to present evidence on
such score that in Our resolution exactly a year after, that
is, of August 31, 1971, We returned the case to the Public
Service Commission for further proceedings. Now that
there is not only evidence of the petitioners but a
stipulation of facts of the parties showing that the huge
amount to be collected would be exceedingly out of
proportion to the returns that could be expected by
petitioners, even if the minusdepreciation formula
adopted in Our decision of 1970 were to be followed, We
cannot close Our eyes anymore to the obvious unfairness
and inequity of accepting the alternate base indicated in
the provision. Indeed, it is undeniable that the application
of such base would be self-defeating in the end, since it
would be hardly possible for the operators to expand or
improve their facilities, not to say to survive. Besides, it
would also be self-defeating in the sense that to consider
the amendment as a tax measure would subject the
provision to the exemptions in the franchises of the
petitioners I have already referred to above.
It is my considered opinion that regardless of the basis of
computation, whether it be shares of stock subscribed or
sold, the capital invested of a non-stock corporation, or
the property or equipment of the public services
concerned, the application of the amendment may not be
done in a manner that will render it unreasonable and
confiscatory.2 Even conceding for a moment that the
power to tax includes the power to destroy, I am not
persuaded that the government is deliberately applying
such absolutist principle in this instance. I believe that the
doubling of the amount of the fee satisfies already the
legislative intent permissible within law and equity. As a
matter of fact, without using the alternate base in dispute,
according to the stipulation of facts, the accumulated
surplus of the fees collected by the Commission, now the
Specialized Regulatory Board, as of June 30, 1974 has
been already P28,007,408.09. Certainly, by all standards,
such amount is more than what could be expected of any
secondary source of funds. And since the respondent
Specialized Regulatory Board itself which is charged with
the duty, in the first instance, of determining the bases of
the fees and of collecting the same, has already deviced
its own practical way of implementing the amendment by
using the outstanding shares of stock of petitioners as
basis, I feel it is but fitting and proper that its construction
be sanctioned, the same being the nearest approach there
is to the clear legislative intent. Indeed, I visualize
complications and difficulties, if things were to be done
otherwise. For instance, if the amendment were to be
considered as a tax measure as to the excess over the
amount needed for regulatory purposes, then an involved
computation would have to be made in order to separate
such excess and determine the respective shares of the
petitioners therein the should be exempt from its
operation pursuant to the corresponding provisions of
their respective franchises. And should this be
mathematically possible to determine, then the other
question will arise as to whether or not, the exemption
would not result in unequal protection of the laws insofar
as the operators holding franchises or certificates to
operate other than legislative are concerned.
Premises considered, my vote is to approve the bases of
computation of the fees in question agreed to by the
respondent Specialized Regulatory Board and to
reconsider our previous decision accordingly. It is
understood that with respect to the non-stock corporations
and entities other than stock corporations, the amount of
capital invested should be the basis of the fees to be
collected from them. Otherwise stated, my considered
opinion is that construing the amendments in question
together with all the other related provisions of
Commonwealth Act 146, as previously amended, in the
light of the applicable principles in taxation, the alternate
base of property or equipment mentioned in the
amendment of paragraph (e,) of Section 40 cannot legally
be operative.
JOSE ANTONIO MAPA, Petitioner, v. HON. JOKER
ARROYO, in his Capacity as Executive Secretary, and
LABRADOR DEVELOPMENT CORPORATION,
Respondents.
Francisco T. Mamaug for Petitioner.
Emiliano S. Samson for Private Respondent.
SYLLABUS
1. ADMINISTRATIVE LAW; ADMINISTRATIVE
AGENCY; FINDINGS THEREOF WITHIN ITS
COMPETENCE WILL NOT BE DISTURBED BY THE
COURTS. — It is jurisprudentially settled that absent a
clear, manifest and grave abuse of discretion amounting
to want of jurisdiction, the findings of the administrative
agency on matters falling within its competence will not
be disturbed by the courts. Specifically with respect to
factual findings, they are accorded respect, if not finality,
because of the special knowledge and expertise gained by
these tribunals from handling the specific matters falling
under their jurisdiction. Such factual findings may be
disregarded only if they "are not supported by evidence;
where the findings are vitiated by fraud, imposition or
collusion; where the procedure which led to the factual
findings is irregular; when palpable errors are committed;
or when grave abuse of discretion, arbitrariness or
capriciousness is manifest."cralaw virtua1aw library
2. CIVIL LAW; SALES; THE SUBDIVISION AND
CONDOMINIUM BUYERS’ PROTECTIVE DECREE
(P.D. 957); NO RETROACTIVE EFFECT. —
Petitioner’s insistence on the applicability of Presidential
Decree No. 957 must be rejected. Said decree was issued
on July 12, 1976 long after the execution of the contracts
involved. Obviously and necessarily, what subsequently
were statutorily provided therein as obligations of the
owner or developer could not have been intended by the
parties to be a part of their contracts. No intention to give
restrospective application to the provisions of said decree
can be gathered from the language thereof. Section 20, in
relation to Section 21, of the decree merely requires the
owner or developer to construct the facilities,
improvements, infrastructures and other forms of
development but only such as are offered and indicated in
the approved subdivision or condominium plans,
brochures, prospectus, printed matters, letters or in any
form of advertisements. Other than what are provided in
Clause 20 of the contract, no further written commitment
was made by the developer in this respect. To read into
the contract the matters desired by petitioner would have
the law impose additional obligations on the parties to a
contract executed before that very law existed or was
contemplated.
3. ID.; ID.; SUSPENSION OF PAYMENTS ON THE
GROUND OF NON-DEVELOPMENT, NOT PROPER
IN CASE AT BAR. — As the OAALA noted, petitioner
"stopped payments of his monthly obligations as early as
December, 1976, which is a mere five months after the
effectivity of P.D. No. 957 or about a year after the
execution of the contracts. This means that respondent
still has 1 and 1/2 years to comply with its legal obligation
to develop the subdivision under said P.D. and two years
to do so under the agreement, hence, it was improper for
complainant to have suspended payments in December,
1976 on the ground of non-development since the period
allowed for respondent’s obligation to undertake such
development has not yet expired."cralaw virtua1aw
library
4. STATUTORY CONSTRUCTION; DOCTRINE OF
LAST ANTECEDENT; WORD "AND", A
CONJUNCTION TO DENOTE JOINDER OR UNION.
— While this subserves his purpose, such bifurcation,
whereby the supposed adjectival phrase is set apart from
the antecedent words, is illogical and erroneous. The
complete and applicable rule is ad proximum antecedens
fiat relatio nisi impediatur sentencia. Relative words refer
to the nearest antecedent, unless it be prevented by the
context. In the present case, the employment of the word
"and" between "facilities, improvements, infrastructures"
and "other forms of development," far from supporting
petitioner’s theory, enervates it instead since it is basic in
legal hermeneutics that "and" is not meant to separate
words but is a conjunction used to denote a joinder or
union.
DECISION
REGALADO, J.:
We are called upon once again, in this special civil action
for certiorari, for a pronouncement as to whether or not
there has been grave abuse of discretion amounting to lack
or excess of jurisdiction on the part of the executive
branch of Government, particularly in the adjudication of
a controversy originally commenced in one of its
regulatory agencies.
Petitioner herein seeks the reversal of the decision of the
Office of the President, rendered by the Deputy Executive
Secretary on April 24, 1987, 1 which dismissed his appeal
from the resolution of the Commission Proper, Human
Settlements Regulatory Commission (HSRC, for short),
promulgated on January 10, 1986 and affirming the
decision of July 3, 1985 of the Office of Adjudication and
Legal Affairs (OAALA, for brevity) of HSRC. Petitioner
avers that public respondent "gravely transcended the
sphere of his discretion" in finding that Presidential
Decree No. 957 is inapplicable to the contracts to sell
involved in this case and in consequently dismissing the
same. 2
The established facts on which the assailed decision is
based are set out therein as
follows:jgc:chanrobles.com.ph
"Records disclose that, on September 18, 1975, appellant
Jose Antonio Mapa and appellee Labrador Development
Corporation (Labrador, for short), owner/developer of the
Barangay Hills Subdivision in Antipolo, Rizal, entered
into two contracts to sell over lots 12 and 13 of said
subdivision. On different months in 1976, they again
entered into two similar contracts involving lots 15 and 16
in the same subdivision. Under said contracts, Mapa
undertook to make a total monthly installment of
P2,137.54 over a period of ten (10) years. Mapa, however,
defaulted in the payment thereof starting December 1976,
prompting Labrador to send to the former a demand letter,
dated May 5, 1977, giving him until May 18, 1977, within
which to settle his unpaid installments for the 4 lots
amounting to P15,411.66, with a warning that non-
payment thereof will result in the cancellation of the four
(4) contracts. Despite receipt of said letter on May 6,
1977, Mapa failed to take any action thereon. Labrador
subsequently wrote Mapa another letter, dated June 15,
1982, which the latter received on June 21, 1982,
reminding him of his total arrears amounting to
P180,065.27 and demanding payment within 5 days from
receipt thereof, but which letter Mapa likewise ignored.
Thus, on August 16, 1982, Labrador sent Mapa a notarial
cancellation of the four (4) contracts to sell, which Mapa
received on August 20, 1982. On September 10, 1982,
however, Mapa’s counsel sent Labrador a letter calling
Labrador’s attention to, and demanding its compliance
with, Clause 20 of the four (4) contracts to sell which
relates to Labrador’s obligation to provide, among others,
lighting/water facilities to subdivision lot buyers.
"On September 10, 1982, Labrador issued a certification
‘holding the implementation of the letter dated August 16,
1982 (re notarial cancellation) pending the complete
development of road lot cul de sac within the properties
of Mapa at Barangay Hills Subdivision.’ Thereafter, on
October 25, 1982, Labrador sent Mapa a letter informing
him ‘that the construction of road, sidewalk, curbs and
gutters adjacent to Block 11 Barangay Hills Subdivision
are already completed’ and further requesting Mapa to
‘come to our office within five (5) days upon receipt of
this letter to settle your account.’
"On December 10, 1982, Mapa tendered payment by
means of a check in the amount of P2,187.54, but
Labrador refused to accept payment for the reason that it
was agreed ‘that after the development of the cul de sac,
he (complainant) will pay in full the total amount due,’
which Labrador computed at P260,138.61. On December
14, 1982, Mapa wrote Labrador claiming that ‘you have
not complied with the requirements for water and light
facilities in lots 12, 13, 15 & 16 Block 2 of Barangay Hills
Subdivision.’ The following day, Mapa filed a complaint
against Labrador for the latter’s neglect to put 1) a water
system that meets the minimum standard as specified by
HSRC, and 2) electrical power supply. By way of relief,
Mapa requested the HSRC to direct Labrador to provide
the facilities aforementioned, and to issue a cease and
desist order enjoining Labrador from cancelling the
contracts to sell.
"After due hearing/investigation, which included an on-
site inspection of the subdivision, OAALA issued its
decision of July 3, 1985, dismissing the complaint and
declaring that ‘after the lapse of 5 years from
complainant’s default respondent had every right to
rescind the contract pursuant to Clause 7 thereof . . .’’
"Per its resolution of January 10, 1986, the Commission
Proper, HSRC, affirmed the aforesaid OAALA decision."
3
It was petitioner’s adamant submission in the
administrative proceedings that the provisions of
Presidential Decree No. 957 4 and implementing rules
form part of the contracts to sell executed by him and
respondent corporation, hence the obligations imposed
therein had to be complied with by Labrador within the
period provided. Since, according to petitioner, Labrador
failed to perform the aforementioned obligations, it is
precluded from rescinding the subject contracts to sell
since petitioner consequently did not incur in delay on his
part.
Such intransigent position of petitioner has not changed
in the petition at bar and unyielding reliance is placed on
the provisions of Presidential Decree No. 957 and its
implementing rules. The specific provisions of the Decree
which are persistently relied upon
read:jgc:chanrobles.com.ph
"SEC. 20. Time of Completion. — Every owner or
developer shall construct and provide the facilities,
improvements, infrastructures and other forms of
development, including water supply and lighting
facilities, which are offered and indicated in the approved
subdivision or condominium plans, brochures,
prospectus, printed matters, letters or in any form of
advertisements, within one year from the date of the
issuance of the license for the subdivision or
condominium project or such other period of time as may
be fixed by the Authority.
"SEC. 21. Sales Prior to Decree. — In cases of
subdivision lots or condominium units sold or disposed of
prior to the effectivity of this Decree, it shall be incumbent
upon the owner or developer of the subdivision or
condominium project to complete compliance with his or
its obligations as provided in the preceding section within
two years from the date of this Decree unless otherwise
extended by the Authority or unless an adequate
performance bond is filed in accordance with Section 6
hereof.
"Failure of the owner or developer to comply with the
obligations under this and the preceding provisions shall
constitute a violation punishable under Sections 38 and 39
of this Decree."cralaw virtua1aw library
Rule V of the implementing rules, on the other hand,
requires two (2) sources of electric power, two (2)
deepwell and pump sets with a specified capacity and two
standard fire hose flows with a capacity of 175 gallons per
minute. 5
The provision, in said contracts to sell which, according
to petitioner, includes and incorporates the aforequoted
statutory provisions, is Clause 20 of said contracts which
provides:jgc:chanrobles.com.ph
"Clause 20 — SUBDIVISION DEVELOPMENT — To
insure the physical development of the subdivision, the
SELLER hereby obliges itself to provide the individual
lot buyer with the following:chanrob1es virtual 1aw
library
a) PAVED ROADS
b) UNDERGROUND DRAINAGE
c) CONCRETE CURBS AND GUTTERS
d) WATER SYSTEM
e) PARK AND OPEN SPACE.
"These improvements shall apply only to the portions of
the subdivision which are for sale or have been sold.
"All improvements except those requiring the services of
a public utility company or the government shall be
completed within a period of three (3) years from date of
this contract. Failure by the SELLER to reasonably
comply with the above schedule shall permit the
BUYER/S to suspend his monthly installments without
any penalties or interest charges until such time that these
improvements shall have been made as scheduled. 6
As recently reiterated, it is jurisprudentially settled that
absent a clear, manifest and grave abuse of discretion
amounting to want of jurisdiction, the findings of the
administrative agency on matters falling within its
competence will not be disturbed by the courts. 7
Specifically with respect to factual findings, they are
accorded respect, if not finality, because of the special
knowledge and expertise gained by these tribunals from
handling the specific matters falling under their
jurisdiction. Such factual findings may be disregarded
only if they "are not supported by evidence; where the
findings are vitiated by fraud, imposition or collusion;
where the procedure which led to the factual findings is
irregular; when palpable errors are committed; or when
grave abuse of discretion, arbitrariness or capriciousness
is manifest." 8
A careful scrutiny of the records of the instant case reveals
that the circumstances thereof do not fall under the
aforesaid excepted cases, with the findings duly supported
by the evidence.
Petitioner’s insistence on the applicability of Presidential
Decree No. 957 must be rejected. Said decree was issued
on July 12, 1976 long after the execution of the contracts
involved. Obviously and necessarily, what subsequently
were statutorily provided therein as obligations of the
owner or developer could not have been intended by the
parties to be a part of their contracts. No intention to give
restrospective application to the provisions of said decree
can be gathered from the language thereof. Section 20, in
relation to Section 21, of the decree merely requires the
owner or developer to construct the facilities,
improvements, infrastructures and other forms of
development but only such as are offered and indicated in
the approved subdivision or condominium plans,
brochures, prospectus, printed matters, letters or in any
form of advertisements. Other than what are provided in
Clause 20 of the contract, no further written commitment
was made by the developer in this respect. To read into
the contract the matters desired by petitioner would have
the law impose additional obligations on the parties to a
contract executed before that very law existed or was
contemplated.
We further reject petitioner’s strained and tenuous
application of the so-called doctrine of last antecedent in
the interpretation of Section 20 and, correlatively, of
Section 21. He would thereby have the enumeration of
"facilities, improvements, infrastructures and other forms
of development" interpreted to mean that the
demonstrative phrase "which are offered and indicated in
the approved subdivision plans, etc." refer only to "other
forms of development" and not to "facilities,
improvements and infrastructures." While this subserves
his purpose, such bifurcation, whereby the supposed
adjectival phrase is set apart from the antecedent words,
is illogical and erroneous. The complete and applicable
rule is ad proximum antecedens fiat relatio nisi impediatur
sentencia. 9 Relative words refer to the nearest
antecedent, unless it be prevented by the context. In the
present case, the employment of the word "and" between
"facilities, improvements, infrastructures" and "other
forms of development," far from supporting petitioner’s
theory, enervates it instead since it is basic in legal
hermeneutics that "and" is not meant to separate words
but is a conjunction used to denote a joinder or union.
Thus, if ever there is any valid ground to suspend the
monthly installments due from petitioner, it would only
be based on non-performance of the obligations provided
in Clause 20 of the contract, particularly the alleged non-
construction of the cul-de-sac. But, even this is unavailing
and is obviously being used only to justify petitioner’s
default. The on-site inspection of the subdivision
conducted by the OAALA and its subsequent report
reveal that Labrador substantially complied with its
obligation. 10
Furthermore, the initial non-construction of the cul-de-
sac, as private respondent Labrador explained, was
because petitioner Mapa requested the suspension of its
construction since his intention was to purchase the
adjoining lots and thereafter enclose the same. 11 If these
were not true, petitioner would have invoked that
supposed default in the first instance. As the OAALA
noted, petitioner "stopped payments of his monthly
obligations as early as December, 1976, which is a mere
five months after the effectivity of P.D. No. 957 or about
a year after the execution of the contracts. This means that
respondent still has 1 and 1/2 years to comply with its
legal obligation to develop the subdivision under said
P.D. and two years to do so under the agreement, hence,
it was improper for complainant to have suspended
payments in December, 1976 on the ground of non-
development since the period allowed for respondent’s
obligation to undertake such development has not yet
expired." 12
ON THE FOREGOING CONSIDERATIONS, the
petition should be, as it is hereby DISMISSED.
SO ORDERED.
G.R. No. L-30264 March 12, 1929
MANILA RAILROAD COMPANY, plaintiff-
appellee,
vs.
INSULAR COLLECTOR OF CUSTOMS, defendant-
appellant.
Attorney-General Jaranilla for appellant.
Jose C. Abrew for appellee.
MALCOLM, J.:
The question involved in this appeal is the following:
How should dust shields be classified for the purposes of
the tariff, under paragraph 141 or under paragraph 197 of
section 8 of the Tariff Law of 1909? These paragraphs
placed in parallel columns for purposes of comparison
read:
141. Manufactures of wool not otherwise provided for,
forty per centum ad valorem
197. Vehicles for use on railways and tramways, and
detached parts thereof, ten per centum ad valorem.
Dust shields are manufactured of wool and hair mixed.
The component material of chief value is the wool. They
are used by the Manila Railroad Company on all of its
railway wagons. The purpose of the dust shield is to cover
the axle box in order to protect from dust the oil deposited
therein which serves to lubricate the bearings of the
wheel. "Dust guard," which is the same as "dust shield,"
is defined in the work Car Builders' Cyclopedia of
American Practice, 10th ed., 1922, p. 41, as follows: "A
this piece of wood, leather, felt, asbestos or other material
inserted in the dust guard chamber at the back of a journal
box, and fitting closely around the dust guard bearing of
the axle. Its purpose is to exclude dust and to prevent the
escape of oil and waste. Sometimes called axle packing or
box packing."
Based on these facts, it was the decision of the Insular
Collector of Customs that dust shields should be classified
as "manufactures of wool, not otherwise provided for."
That decision is entitled to our respect. The burden is upon
the importer to overcome the presumption of a legal
collection of duties by proof that their exaction was
unlawful. The question to be decided is not whether the
Collector was wrong but whether the importer was right.
(Erhardt vs. Schroeder [1894], 155 U. S., 124; Behn,
Meyer & Co. vs. Collector of Customs [1913], 26 Phil.,
647.) On the other hand, His Honor, Judge Simplicio del
Rosario, took an opposite view, overruled the decision of
the Collector of Customs, and held that dust shields
should be classified as "detached parts" of vehicles for the
use on railways. This impartial finding is also entitled to
our respect. It is the general rule in the interpretation of
statutes levying taxes or duties not to extend their
provisions beyond the clear import of the language used.
In every case of doubt, such statutes are construed most
strongly against the Government and in favor of the
citizen, because burdens are not to be imposed, nor
presumed to be imposed, beyond what the statutes
expressly and clearly import. (U. S. vs. Wigglesworth
[1842], 2 Story, 369; Froehlich & Kuttner vs. Collector of
Customs [1911], 18 Phil., 461.)
There are present two fundamental considerations which
guide the way out of the legal dilemma. The first is by
taking into account the purpose of the article and then
acknowledging that it is in reality used as a detached part
or railways vehicles. The second point is that paragraph
141 is a general provision while paragraph 197 is a special
provision. Where there is in the same statute a particular
enactment and also a general one which is embraced in
the former, the particular enactment must be operative,
and the general enactment must be taken to effect only
such cases within its general language as are not within
the provisions of the particular enactment (25 R. C. L., p.
1010, citing numerous cases).
We conclude that the trial judge was correct in classifying
dust shields under paragraph 197 of section 8 of the Tariff
Law of 1909, and in refusing to classify them under
paragraph 141 of the same section of the law.
Accordingly, the judgment appealed from will be
affirmed in its entirety, without special taxation of costs
in either instance.
Johnson, Street, Ostrand, Johns, Romualdez and Villa-
Real, JJ., concur.
G.R. No. 180066
COMMISSIONER OF INTERNAL REVENUE,
Petitioner,
vs.
PHILIPPINE AIRLINES, INC., Respondent.
DECISION
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari,
under Rule 45 of the Revised Rules of Court, seeking the
reversal and setting aside of the Decision1 dated 9 August
2007 and Resolution2 dated 11 October 2007 of the Court
of Tax Appeals (CTA) en banc in CTA E.B. No. 246. The
CTA en banc affirmed the Decision3 dated 31 July 2006
of the CTA Second Division in C.T.A. Case No. 7010,
ordering the cancellation and withdrawal of Preliminary
Assessment Notice (PAN) No. INC FY-3-31-01-000094
dated 3 September 2003 and Formal Letter of Demand
dated 12 January 2004, issued by the Bureau of Internal
Revenue (BIR) against respondent Philippine Airlines,
Inc. (PAL), for the payment of Minimum Corporate
Income Tax (MCIT) in the amount of ₱272,421,886.58.
There is no dispute as to the antecedent facts of this case.
PAL is a domestic corporation organized under the
corporate laws of the Republic of the Philippines;
declared the national flag carrier of the country; and the
grantee under Presidential Decree No. 15904 of a
franchise to establish, operate, and maintain transport
services for the carriage of passengers, mail, and property
by air, in and between any and all points and places
throughout the Philippines, and between the Philippines
and other countries.5
For its fiscal year ending 31 March 2001 (FY 2000-2001),
PAL allegedly incurred zero taxable income,6 which left
it with unapplied creditable withholding tax7 in the
amount of ₱2,334,377.95. PAL did not pay any MCIT for
the period.
In a letter dated 12 July 2002, addressed to petitioner
Commissioner of Internal Revenue (CIR), PAL requested
for the refund of its unapplied creditable withholding tax
for FY 2000-2001. PAL attached to its letter the
following: (1) Schedule of Creditable Tax Withheld at
Source for FY 2000-2001; (2) Certificates of Creditable
Taxes Withheld; and (3) Audited Financial
Statements.1avvphi1
Acting on the aforementioned letter of PAL, the Large
Taxpayers Audit and Investigation Division 1 (LTAID 1)
of the BIR Large Taxpayers Service (LTS), issued on 16
August 2002, Tax Verification Notice No. 00201448,
authorizing Revenue Officer Jacinto Cueto, Jr. (Cueto) to
verify the supporting documents and pertinent records
relative to the claim of PAL for refund of its unapplied
creditable withholding tax for FY 2000-20001. In a letter
dated 19 August 2003, LTAID 1 Chief Armit S.
Linsangan invited PAL to an informal conference at the
BIR National Office in Diliman, Quezon City, on 27
August 2003, at 10:00 a.m., to discuss the results of the
Sales/Revenues from Operation
investigation conducted by Revenue Officer Cueto,
supervised by Revenue Officer Madelyn T. Sacluti.
BIR officers and PAL representatives attended the
scheduled informal conference, during which the former Less: Cost of Services
relayed to the latter that the BIR was denying the claim
for refund of PAL and, instead, was assessing PAL for
deficiency MCIT for FY 2000-2001. The PAL Direct Costs - ₱ 30,749,761,017.00
representatives argued that PAL was not liable for MCIT
under its franchise. The BIR officers then informed the
PAL representatives that the matter would be referred to Less: Non-deductible
the BIR Legal Service for opinion.
The LTAID 1 issued, on 3 September 2003, PAN No. INC
FY-3-31-01-000094, which was received by PAL on 23
October 2003. LTAID 1 assessed PAL for interest expense 433,082,004.00
₱262,474,732.54, representing deficiency MCIT for FY
2000-2001, plus interest and compromise penalty,
computed as follows: Gross Income from Operation ₱ 8,482,042,672.00
Sales/Revenues from Operation ₱ 38,798,721,685.00

Add: Non-operating Income 465,111,368.00

Less: Cost of Services 30,316,679,013.00

Total Gross Income for MCIT purposes

Gross Income from Operation 8,482,042,672.00

MCIT tax due

Add: Non-operating income 465,111,368.00

Interest – 20% per annum – 7/16/01 to 02/15/04

Total Gross Income for MCIT purposes 9,947,154,040.008

Compromise Penalty
Rate of Tax 2%

Tax Due 178,943,080.80 Total MCIT due and demandable

Add: 20% interest (8-16-00 to 10-31-03) 83,506,651.74 PAL received the foregoing Formal Letter of Demand on
12 February 2004, prompting it to file with the BIR LTS
a formal written protest dated 13 February 2004.
Compromise Penalty 25,000.00 The BIR LTS rendered on 7 May 2004 its Final Decision
on Disputed Assessment, which was received by PAL on
26 May 2004. Invoking Revenue Memorandum Circular
(RMC) No. 66-2003, the BIR LTS denied with finality the
9protest of PAL and reiterated the request that PAL
Total Amount Due ₱ 262,474,732.54
immediately pay its deficiency MCIT for FY 2000-2001,
inclusive of penalties incident to delinquency.1avvphi1
PAL protested PAN No. INC FY-3-31-01-000094 PAL filed a Petition for Review with the CTA, which was
through a letter dated 4 November 2003 to the BIR LTS. docketed as C.T.A. Case No. 7010 and raffled to the CTA
On 12 January 2004, the LTAID 1 sent PAL a Formal Second Division. The CTA Second Division promulgated
Letter of Demand for deficiency MCIT for FY 2000-2001 its Decision on 31 July 2006, ruling in favor of PAL. The
in the amount of ₱271,421,88658, based on the following dispositive portion of the judgment of the CTA Second
calculation: Division reads:
WHEREFORE, premises considered, the instant Petition
for Review is hereby GRANTED. Accordingly,
Assessment Notice No. INC FY-3-31-01-000094 and
Formal Letter of Demand for the payment of deficiency
Minimum Corporate Income Tax in the amount of
₱272,421,886.58 are hereby CANCELLED and
WITHDRAWN.11
In a Resolution dated 2 January 2007, the CTA Second
Division denied the Motion for Reconsideration of the
CIR.
It was then the turn of the CIR to file a Petition for Review
with the CTA en banc, docketed as C.T.A. E.B. No. 246.
The CTA en banc found that "the cited legal provisions
and jurisprudence are teeming with life with respect to the
grant of tax exemption too vivid to pass unnoticed," and
that "the Court in Division correctly ruled in favor of the
respondent [PAL] granting its petition for the cancellation
of Assessment Notice No. INC FY-3-31-01-000094 and
Formal Letter of Demand for the deficiency MCIT in the
amount of ₱272,421,886.58."12 Consequently, the CTA
en banc denied the Petition of the CIR for lack of merit.
The CTA en banc likewise denied the Motion for
Reconsideration of the CIR in a Resolution dated 11
October 2007.
Hence, the CIR comes before this Court via the instant
Petition for Review on Certiorari, based on the grounds
stated hereunder:
THE COURT OF TAX APPEALS ERRED ON A
QUESTION OF LAW IN ITS ASSAILED DECISION
BECAUSE:
(1) [PAL] CLEARLY OPTED TO BE COVERED BY
THE INCOME TAX PROVISION OF THE NATIONAL
INTERNAL REVENUE CODE OF 1997 (NIRC OF
1997). (sic) AS AMENDED; HENCE, IT IS COVERED
BY THE MCIT PROVISION OF THE SAME CODE.
(2) THE MCIT DOES NOT BELONG TO THE
CATEGORY OF "OTHER TAXES" WHICH WOULD
ENABLE RESPONDENT TO AVAIL ITSELF OF THE
"IN LIEU" (sic) OF ALL OTHER TAXES" CLAUSE
UNDER SECTION 13 OF P.D. NO. 1590
("CHARTER").
(3) THE MCIT PROVISION OF THE NIRC OF 1997 IS
NOT AN AMENDMENT OF [PAL’S] CHARTER.
(4) PAL IS NOT ONLY GIVEN THE PRIVILEGE TO
CHOOSE BETWEEN WHAT WILL GIVE IT THE
BENEFIT OF A LOWER TAX, BUT ALSO THE
RESPONSIBILITY OF PAYING ITS SHARE OF THE
TAX BURDEN, AS IS EVIDENT IN SECTION 22 OF
RA NO. 9337.
(5) A CLAIM FOR EXEMPTION FROM TAXATION
IS NEVER PRESUMED; [PAL] IS LIABLE FOR THE
DEFICIENCY MCIT.13
There is only one vital issue that the Court must resolve
in the Petition at bar, i.e., whether PAL is liable for
deficiency MCIT for FY 2000-2001.
The Court answers in the negative.
Presidential Decree No. 1590, the franchise of PAL,
contains provisions specifically governing the taxation of
said corporation, to wit:
Section 13. In consideration of the franchise and rights
hereby granted, the grantee shall pay to the Philippine
Government during the life of this franchise whichever of
subsections (a) and (b) hereunder will result in a lower
tax:
(a) The basic corporate income tax based on the grantee's
annual net taxable income computed in accordance with
the provisions of the National Internal Revenue Code; or
(b) A franchise tax of two per cent (2%) of the gross
revenues derived by the grantee from all sources, without
distinction as to transport or nontransport operations;
provided, that with respect to international air-transport
service, only the gross passenger, mail, and freight
revenues from its outgoing flights shall be subject to this
tax.
The tax paid by the grantee under either of the above
alternatives shall be in lieu of all other taxes, duties,
royalties, registration, license, and other fees and charges
of any kind, nature, or description, imposed, levied,
established, assessed, or collected by any municipal, city,
provincial, or national authority or government agency,
now or in the future, including but not limited to the
following:
1. All taxes, duties, charges, royalties, or fees due on local
purchases by the grantee of aviation gas, fuel, and oil,
whether refined or in crude form, and whether such taxes,
duties, charges, royalties, or fees are directly due from or
imposable upon the purchaser or the seller, producer,
manufacturer, or importer of said petroleum products but
are billed or passed on to the grantee either as part of the
price or cost thereof or by mutual agreement or other
arrangement; provided, that all such purchases by, sales
or deliveries of aviation gas, fuel, and oil to the grantee
shall be for exclusive use in its transport and nontransport
operations and other activities incidental thereto;
2. All taxes, including compensating taxes, duties,
charges, royalties, or fees due on all importations by the
grantee of aircraft, engines, equipment, machinery, spare
parts, accessories, commissary and catering supplies,
aviation gas, fuel, and oil, whether refined or in crude
form and other articles, supplies, or materials; provided,
that such articles or supplies or materials are imported for
the use of the grantee in its transport and nontransport
operations and other activities incidental thereto and are
not locally available in reasonable quantity, quality, or
price;
3. All taxes on lease rentals, interest, fees, and other
charges payable to lessors, whether foreign or domestic,
of aircraft, engines, equipment, machinery, spare parts,
and other property rented, leased, or chartered by the
grantee where the payment of such taxes is assumed by
the grantee;
4. All taxes on interest, fees, and other charges on foreign
loans obtained and other obligations incurred by the
grantee where the payment of such taxes is assumed by
the grantee;
5. All taxes, fees, and other charges on the registration,
licensing, acquisition, and transfer of aircraft, equipment,
motor vehicles, and all other personal and real property of
the grantee; and
6. The corporate development tax under Presidential
Decree No. 1158-A.
The grantee, shall, however, pay the tax on its real
property in conformity with existing law.
For purposes of computing the basic corporate income tax
as provided herein, the grantee is authorized:
(a) To depreciate its assets to the extent of not more than
twice as fast the normal rate of depreciation; and
(b) To carry over as a deduction from taxable income any
net loss incurred in any year up to five years following the
year of such loss.
Section 14. The grantee shall pay either the franchise tax
or the basic corporate income tax on quarterly basis to the
Commissioner of Internal Revenue. Within sixty (60)
days after the end of each of the first three quarters of the
taxable calendar or fiscal year, the quarterly franchise or
income-tax return shall be filed and payment of either the
franchise or income tax shall be made by the grantee.
A final or an adjustment return covering the operation of
the grantee for the preceding calendar or fiscal year shall
be filed on or before the fifteenth day of the fourth month
following the close of the calendar or fiscal year. The
amount of the final franchise or income tax to be paid by
the grantee shall be the balance of the total franchise or
income tax shown in the final or adjustment return after
deducting therefrom the total quarterly franchise or
income taxes already paid during the preceding first three
quarters of the same taxable year.
Any excess of the total quarterly payments over the actual
annual franchise of income tax due as shown in the final
or adjustment franchise or income-tax return shall either
be refunded to the grantee or credited against the grantee's
quarterly franchise or income-tax liability for the
succeeding taxable year or years at the option of the
grantee.
The term "gross revenues" is herein defined as the total
gross income earned by the grantee from; (a) transport,
nontransport, and other services; (b) earnings realized
from investments in money-market placements, bank
deposits, investments in shares of stock and other
securities, and other investments; (c) total gains net of
total losses realized from the disposition of assets and
foreign-exchange transactions; and (d) gross income from
other sources. (Emphases ours.)
According to the afore-quoted provisions, the taxation of
PAL, during the lifetime of its franchise, shall be
governed by two fundamental rules, particularly: (1) PAL
shall pay the Government either basic corporate income
tax or franchise tax, whichever is lower; and (2) the tax
paid by PAL, under either of these alternatives, shall be in
lieu of all other taxes, duties, royalties, registration,
license, and other fees and charges, except only real
property tax.
The basic corporate income tax of PAL shall be based on
its annual net taxable income, computed in accordance
with the National Internal Revenue Code (NIRC).
Presidential Decree No. 1590 also explicitly authorizes
PAL, in the computation of its basic corporate income tax,
to (1) depreciate its assets twice as fast the normal rate of
depreciation;14 and (2) carry over as a deduction from
taxable income any net loss incurred in any year up to five
years following the year of such loss.15
Franchise tax, on the other hand, shall be two per cent
(2%) of the gross revenues derived by PAL from all
sources, whether transport or nontransport operations.
However, with respect to international air-transport
service, the franchise tax shall only be imposed on the
gross passenger, mail, and freight revenues of PAL from
its outgoing flights.
In its income tax return for FY 2000-2001, filed with the
BIR, PAL reported no net taxable income for the period,
resulting in zero basic corporate income tax, which would
necessarily be lower than any franchise tax due from PAL
for the same period.
The CIR, though, assessed PAL for MCIT for FY 2000-
2001. It is the position of the CIR that the MCIT is income
tax for which PAL is liable. The CIR reasons that Section
13(a) of Presidential Decree No. 1590 provides that the
corporate income tax of PAL shall be computed in
accordance with the NIRC. And, since the NIRC of 1997
imposes MCIT, and PAL has not applied for relief from
the said tax, then PAL is subject to the same.
The Court is not persuaded. The arguments of the CIR are
contrary to the plain meaning and obvious intent of
Presidential Decree No. 1590, the franchise of PAL.
Income tax on domestic corporations is covered by
Section 27 of the NIRC of 1997,16 pertinent provisions of
which are reproduced below for easy reference:
SEC. 27. Rates of Income Tax on Domestic Corporations.
–
(A) In General – Except as otherwise provided in this
Code, an income tax of thirty-five percent (35%) is hereby
imposed upon the taxable income derived during each
taxable year from all sources within and without the
Philippines by every corporation, as defined in Section
22(B) of this Code and taxable under this Title as a
corporation, organized in, or existing under the laws of the
Philippines: Provided, That effective January 1, 1998, the
rate of income tax shall be thirty-four percent (34%);
effective January 1, 1999, the rate shall be thirty-three
percent (33%); and effective January 1, 2000 and
thereafter, the rate shall be thirty-two percent (32%).
xxxx
(E) Minimum Corporate Income Tax on Domestic
Corporations. –
(1) Imposition of Tax. – A minimum corporate income tax
of two percent (2%) of the gross income as of the end of
the taxable year, as defined herein, is hereby imposed on
a corporation taxable under this Title, beginning on the
fourth taxable year immediately following the year in
which such corporation commenced its business
operations, when the minimum income tax is greater than
the tax computed under Subsection (A) of this Section for
the taxable year.
Hence, a domestic corporation must pay whichever is
higher of: (1) the income tax under Section 27(A) of the
NIRC of 1997, computed by applying the tax rate therein
to the taxable income of the corporation; or (2) the MCIT
under Section 27(E), also of the NIRC of 1997, equivalent
to 2% of the gross income of the corporation. Although
this may be the general rule in determining the income tax
due from a domestic corporation under the NIRC of 1997,
it can only be applied to PAL to the extent allowed by the
provisions in the franchise of PAL specifically governing
its taxation.
After a conscientious study of Section 13 of Presidential
Decree No. 1590, in relation to Sections 27(A) and 27(E)
of the NIRC of 1997, the Court, like the CTA en banc and
Second Division, concludes that PAL cannot be subjected
to MCIT for FY 2000-2001.
First, Section 13(a) of Presidential Decree No. 1590 refers
to "basic corporate income tax." In Commissioner of
Internal Revenue v. Philippine Airlines, Inc.,17 the Court
already settled that the "basic corporate income tax,"
under Section 13(a) of Presidential Decree No. 1590,
relates to the general rate of 35% (reduced to 32% by the
year 2000) as stipulated in Section 27(A) of the NIRC of
1997.
Section 13(a) of Presidential Decree No. 1590 requires
that the basic corporate income tax be computed in
accordance with the NIRC. This means that PAL shall
compute its basic corporate income tax using the rate and
basis prescribed by the NIRC of 1997 for the said tax.
There is nothing in Section 13(a) of Presidential Decree
No. 1590 to support the contention of the CIR that PAL is
subject to the entire Title II of the NIRC of 1997, entitled
"Tax on Income."
Second, Section 13(a) of Presidential Decree No. 1590
further provides that the basic corporate income tax of
PAL shall be based on its annual net taxable income. This
is consistent with Section 27(A) of the NIRC of 1997,
which provides that the rate of basic corporate income tax,
which is 32% beginning 1 January 2000, shall be imposed
on the taxable income of the domestic corporation.
Taxable income is defined under Section 31 of the NIRC
of 1997 as the pertinent items of gross income specified
in the said Code, less the deductions and/or personal and
additional exemptions, if any, authorized for such types of
income by the same Code or other special laws. The gross
income, referred to in Section 31, is described in Section
32 of the NIRC of 1997 as income from whatever source,
including compensation for services; the conduct of trade
or business or the exercise of profession; dealings in
property; interests; rents; royalties; dividends; annuities;
prizes and winnings; pensions; and a partner’s distributive
share in the net income of a general professional
partnership.
Pursuant to the NIRC of 1997, the taxable income of a
domestic corporation may be arrived at by subtracting
from gross income deductions authorized, not just by the
NIRC of 1997,18 but also by special laws. Presidential
Decree No. 1590 may be considered as one of such special
laws authorizing PAL, in computing its annual net taxable
income, on which its basic corporate income tax shall be
based, to deduct from its gross income the following: (1)
depreciation of assets at twice the normal rate; and (2) net
loss carry-over up to five years following the year of such
loss.
In comparison, the 2% MCIT under Section 27(E) of the
NIRC of 1997 shall be based on the gross income of the
domestic corporation. The Court notes that gross income,
as the basis for MCIT, is given a special definition under
Section 27(E)(4) of the NIRC of 1997, different from the
general one under Section 34 of the same Code.
According to the last paragraph of Section 27(E)(4) of the
NIRC of 1997, gross income of a domestic corporation
engaged in the sale of service means gross receipts, less
sales returns, allowances, discounts and cost of services.
"Cost of services" refers to all direct costs and expenses
necessarily incurred to provide the services required by
the customers and clients including (a) salaries and
employee benefits of personnel, consultants, and
specialists directly rendering the service; and (b) cost of
facilities directly utilized in providing the service, such as
depreciation or rental of equipment used and cost of
supplies.19 Noticeably, inclusions in and
exclusions/deductions from gross income for MCIT
purposes are limited to those directly arising from the
conduct of the taxpayer’s business. It is, thus, more
limited than the gross income used in the computation of
basic corporate income tax.
In light of the foregoing, there is an apparent distinction
under the NIRC of 1997 between taxable income, which
is the basis for basic corporate income tax under Section
27(A); and gross income, which is the basis for the MCIT
under Section 27(E). The two terms have their respective
technical meanings, and cannot be used interchangeably.
The same reasons prevent this Court from declaring that
the basic corporate income tax, for which PAL is liable
under Section 13(a) of Presidential Decree No. 1590, also
covers MCIT under Section 27(E) of the NIRC of 1997,
since the basis for the first is the annual net taxable
income, while the basis for the second is gross income.
Third, even if the basic corporate income tax and the
MCIT are both income taxes under Section 27 of the
NIRC of 1997, and one is paid in place of the other, the
two are distinct and separate taxes.
The Court again cites Commissioner of Internal Revenue
v. Philippine Airlines, Inc.,20 wherein it held that income
tax on the passive income21 of a domestic corporation,
under Section 27(D) of the NIRC of 1997, is different
from the basic corporate income tax on the taxable income
of a domestic corporation, imposed by Section 27(A), also
of the NIRC of 1997. Section 13 of Presidential Decree
No. 1590 gives PAL the option to pay basic corporate
income tax or franchise tax, whichever is lower; and the
tax so paid shall be in lieu of all other taxes, except real
property tax. The income tax on the passive income of
PAL falls within the category of "all other taxes" from
which PAL is exempted, and which, if already collected,
should be refunded to PAL.
The Court herein treats MCIT in much the same way.
Although both are income taxes, the MCIT is different
from the basic corporate income tax, not just in the rates,
but also in the bases for their computation. Not being
covered by Section 13(a) of Presidential Decree No. 1590,
which makes PAL liable only for basic corporate income
tax, then MCIT is included in "all other taxes" from which
PAL is exempted.
That, under general circumstances, the MCIT is paid in
place of the basic corporate income tax, when the former
is higher than the latter, does not mean that these two
income taxes are one and the same. The said taxes are
merely paid in the alternative, giving the Government the
opportunity to collect the higher amount between the two.
The situation is not much different from Section 13 of
Presidential Decree No. 1590, which reversely allows
PAL to pay, whichever is lower of the basic corporate
income tax or the franchise tax. It does not make the basic
corporate income tax indistinguishable from the franchise
tax.
Given the fundamental differences between the basic
corporate income tax and the MCIT, presented in the
preceding discussion, it is not baseless for this Court to
rule that, pursuant to the franchise of PAL, said
corporation is subject to the first tax, yet exempted from
the second.
Fourth, the evident intent of Section 13 of Presidential
Decree No. 1520 is to extend to PAL tax concessions not
ordinarily available to other domestic corporations.
Section 13 of Presidential Decree No. 1520 permits PAL
to pay whichever is lower of the basic corporate income
tax or the franchise tax; and the tax so paid shall be in lieu
of all other taxes, except only real property tax. Hence,
under its franchise, PAL is to pay the least amount of tax
possible.
Section 13 of Presidential Decree No. 1520 is not unusual.
A public utility is granted special tax treatment (including
tax exceptions/exemptions) under its franchise, as an
inducement for the acceptance of the franchise and the
rendition of public service by the said public utility.22 In
this case, in addition to being a public utility providing
air-transport service, PAL is also the official flag carrier
of the country.
The imposition of MCIT on PAL, as the CIR insists,
would result in a situation that contravenes the objective
of Section 13 of Presidential Decree No. 1590. In effect,
PAL would not just have two, but three tax alternatives,
namely, the basic corporate income tax, MCIT, or
franchise tax. More troublesome is the fact that, as
between the basic corporate income tax and the MCIT,
PAL shall be made to pay whichever is higher,
irrefragably, in violation of the avowed intention of
Section 13 of Presidential Decree No. 1590 to make PAL
pay for the lower amount of tax.
Fifth, the CIR posits that PAL may not invoke in the
instant case the "in lieu of all other taxes" clause in
Section 13 of Presidential Decree No. 1520, if it did not
pay anything at all as basic corporate income tax or
franchise tax. As a result, PAL should be made liable for
"other taxes" such as MCIT. This line of reasoning has
been dubbed as the Substitution Theory, and this is not the
first time the CIR raised the same. The Court already
rejected the Substitution Theory in Commissioner of
Internal Revenue v. Philippine Airlines, Inc.,23 to wit:
"Substitution Theory"
of the CIR Untenable
A careful reading of Section 13 rebuts the argument of the
CIR that the "in lieu of all other taxes" proviso is a mere
incentive that applies only when PAL actually pays
something. It is clear that PD 1590 intended to give
respondent the option to avail itself of Subsection (a) or
(b) as consideration for its franchise. Either option
excludes the payment of other taxes and dues imposed or
collected by the national or the local government. PAL
has the option to choose the alternative that results in
lower taxes. It is not the fact of tax payment that exempts
it, but the exercise of its option.
Under Subsection (a), the basis for the tax rate is
respondent’s annual net taxable income, which (as earlier
discussed) is computed by subtracting allowable
deductions and exemptions from gross income. By basing
the tax rate on the annual net taxable income, PD 1590
necessarily recognized the situation in which taxable
income may result in a negative amount and thus translate
into a zero tax liability.
Notably, PAL was owned and operated by the
government at the time the franchise was last amended. It
can reasonably be contemplated that PD 1590 sought to
assist the finances of the government corporation in the
form of lower taxes. When respondent operates at a loss
(as in the instant case), no taxes are due; in this instances,
it has a lower tax liability than that provided by
Subsection (b).
The fallacy of the CIR’s argument is evident from the fact
that the payment of a measly sum of one peso would
suffice to exempt PAL from other taxes, whereas a zero
liability arising from its losses would not. There is no
substantial distinction between a zero tax and a one-peso
tax liability. (Emphasis ours.)
Based on the same ratiocination, the Court finds the
Substitution Theory unacceptable in the present Petition.
The CIR alludes as well to Republic Act No. 9337, for
reasons similar to those behind the Substitution Theory.
Section 22 of Republic Act No. 9337, more popularly
known as the Expanded Value Added Tax (E-VAT) Law,
abolished the franchise tax imposed by the charters of
particularly identified public utilities, including
Presidential Decree No. 1590 of PAL. PAL may no longer
exercise its options or alternatives under Section 13 of
Presidential Decree No. 1590, and is now liable for both
corporate income tax and the 12% VAT on its sale of
services. The CIR alleges that Republic Act No. 9337
reveals the intention of the Legislature to make PAL share
the tax burden of other domestic corporations.
The CIR seems to lose sight of the fact that the Petition at
bar involves the liability of PAL for MCIT for the fiscal
year ending 31 March 2001. Republic Act No. 9337,
which took effect on 1 July 2005, cannot be applied
retroactively24 and any amendment introduced by said
statute affecting the taxation of PAL is immaterial in the
present case.
And sixth, Presidential Decree No. 1590 explicitly allows
PAL, in computing its basic corporate income tax, to carry
over as deduction any net loss incurred in any year, up to
five years following the year of such loss. Therefore,
Presidential Decree No. 1590 does not only consider the
possibility that, at the end of a taxable period, PAL shall
end up with zero annual net taxable income (when its
deductions exactly equal its gross income), as what
happened in the case at bar, but also the likelihood that
PAL shall incur net loss (when its deductions exceed its
gross income). If PAL is subjected to MCIT, the provision
in Presidential Decree No. 1590 on net loss carry-over
will be rendered nugatory. Net loss carry-over is material
only in computing the annual net taxable income to be
used as basis for the basic corporate income tax of PAL;
but PAL will never be able to avail itself of the basic
corporate income tax option when it is in a net loss
position, because it will always then be compelled to pay
the necessarily higher MCIT.
Consequently, the insistence of the CIR to subject PAL to
MCIT cannot be done without contravening Presidential
Decree No. 1520.
Between Presidential Decree No. 1520, on one hand,
which is a special law specifically governing the franchise
of PAL, issued on 11 June 1978; and the NIRC of 1997,
on the other, which is a general law on national internal
revenue taxes, that took effect on 1 January 1998, the
former prevails. The rule is that on a specific matter, the
special law shall prevail over the general law, which shall
be resorted to only to supply deficiencies in the former. In
addition, where there are two statutes, the earlier special
and the later general – the terms of the general broad
enough to include the matter provided for in the special –
the fact that one is special and the other is general creates
a presumption that the special is to be considered as
remaining an exception to the general, one as a general
law of the land, the other as the law of a particular case. It
is a canon of statutory construction that a later statute,
general in its terms and not expressly repealing a prior
special statute, will ordinarily not affect the special
provisions of such earlier statute.25
Neither can it be said that the NIRC of 1997 repealed or
amended Presidential Decree No. 1590.
While Section 16 of Presidential Decree No. 1590
provides that the franchise is granted to PAL with the
understanding that it shall be subject to amendment,
alteration, or repeal by competent authority when the
public interest so requires, Section 24 of the same Decree
also states that the franchise or any portion thereof may
only be modified, amended, or repealed expressly by a
special law or decree that shall specifically modify,
amend, or repeal said franchise or any portion thereof. No
such special law or decree exists herein.
The CIR cannot rely on Section 7(B) of Republic Act No.
8424, which amended the NIRC in 1997 and reads as
follows:
Section 7. Repealing Clauses. –
xxxx
(B) The provisions of the National Internal Revenue
Code, as amended, and all other laws, including charters
of government-owned or controlled corporations, decrees,
orders, or regulations or parts thereof, that are inconsistent
with this Act are hereby repealed or amended accordingly.
The CIR reasons that PAL was a government-owned and
controlled corporation when Presidential Decree No.
1590, its franchise or charter, was issued in 1978. Since
PAL was still operating under the very same charter when
Republic Act No. 8424 took effect in 1998, then the latter
can repeal or amend the former by virtue of Section 7(B).
The Court disagrees.
A brief recount of the history of PAL is in order. PAL was
established as a private corporation under the general law
of the Republic of the Philippines in February 1941. In
November 1977, the government, through the
Government Service Insurance System (GSIS), acquired
the majority shares in PAL. PAL was privatized in
January 1992 when the local consortium PR Holdings
acquired a 67% stake therein.26
It is true that when Presidential Decree No. 1590 was
issued on 11 June 1978, PAL was then a government-
owned and controlled corporation; but when Republic Act
No. 8424, amending the NIRC, took effect on 1 January
1998, PAL was already a private corporation for six years.
The repealing clause under Section 7(B) of Republic Act
No. 8424 simply refers to charters of government-owned
and controlled corporations, which would simply and
plainly mean corporations under the ownership and
control of the government at the time of effectivity of said
statute. It is already a stretch for the Court to read into said
provision charters, issued to what were then government-
owned and controlled corporations that are now private,
but still operating under the same charters.
That the Legislature chose not to amend or repeal
Presidential Decree No. 1590, even after PAL was
privatized, reveals the intent of the Legislature to let PAL
continue enjoying, as a private corporation, the very same
rights and privileges under the terms and conditions stated
in said charter. From the moment PAL was privatized, it
had to be treated as a private corporation, and its charter
became that of a private corporation. It would be
completely illogical to say that PAL is a private
corporation still operating under a charter of a
government-owned and controlled corporation.
The alternative argument of the CIR – that the imposition
of the MCIT is pursuant to the amendment of the NIRC,
and not of Presidential Decree No. 1590 – is just as
specious. As has already been settled by this Court, the
basic corporate income tax under Section 13(a) of
Presidential Decree No. 1590 relates to the general tax
rate under Section 27(A) of the NIRC of 1997, which is
32% by the year 2000, imposed on taxable income. Thus,
only provisions of the NIRC of 1997 necessary for the
computation of the basic corporate income tax apply to
PAL. And even though Republic Act No. 8424 amended
the NIRC by introducing the MCIT, in what is now
Section 27(E) of the said Code, this amendment is actually
irrelevant and should not affect the taxation of PAL, since
the MCIT is clearly distinct from the basic corporate
income tax referred to in Section 13(a) of Presidential
Decree No. 1590, and from which PAL is consequently
exempt under the "in lieu of all other taxes" clause of its
charter.
The CIR calls the attention of the Court to RMC No. 66-
2003, on "Clarifying the Taxability of Philippine Airlines
(PAL) for Income Tax Purposes As Well As Other
Franchise Grantees Similarly Situated." According to
RMC No. 66-2003:
Section 27(E) of the Code, as implemented by Revenue
Regulations No. 9-98, provides that MCIT of two percent
(2%) of the gross income as of the end of the taxable year
(whether calendar or fiscal year, depending on the
accounting period employed) is imposed upon any
domestic corporation beginning the 4th taxable year
immediately following the taxable year in which such
corporation commenced its business operations. The
MCIT shall be imposed whenever such corporation has
zero or negative taxable income or whenever the amount
of MCIT is greater than the normal income tax due from
such corporation.
With the advent of such provision beginning January 1,
1998, it is certain that domestic corporations subject to
normal income tax as well as those choose to be subject
thereto, such as PAL, are bound to pay income tax
regardless of whether they are operating at a profit or loss.
Thus, in case of operating loss, PAL may either opt to
subject itself to minimum corporate income tax or to the
2% franchise tax, whichever is lower. On the other hand,
if PAL is operating at a profit, the income tax liability
shall be the lower amount between:
(1) normal income tax or MCIT whichever is higher; and
(2) 2% franchise tax.
The CIR attempts to sway this Court to adopt RMC No.
66-2003 since the "[c]onstruction by an executive branch
of government of a particular law although not binding
upon the courts must be given weight as the construction
comes from the branch of the government called upon to
implement the law."27
But the Court is unconvinced.
It is significant to note that RMC No. 66-2003 was issued
only on 14 October 2003, more than two years after FY
2000-2001 of PAL ended on 31 March 2001. This violates
the well-entrenched principle that statutes, including
administrative rules and regulations, operate
prospectively only, unless the legislative intent to the
contrary is manifest by express terms or by necessary
implication.28
Moreover, despite the claims of the CIR that RMC No.
66-2003 is just a clarificatory and internal issuance, the
Court observes that RMC No. 66-2003 does more than
just clarify a previous regulation and goes beyond mere
internal administration. It effectively increases the tax
burden of PAL and other taxpayers who are similarly
situated, making them liable for a tax for which they were
not liable before. Therefore, RMC No. 66-2003 cannot be
given effect without previous notice or publication to
those who will be affected thereby. In Commissioner of
Internal Revenue v. Court of Appeals,29 the Court
ratiocinated that:
It should be understandable that when an administrative
rule is merely interpretative in nature, its applicability
needs nothing further than its bare issuance for it gives no
real consequence more than what the law itself has
already prescribed. When, upon the other hand, the
administrative rule goes beyond merely providing for the
means that can facilitate or render least cumbersome the
implementation of the law but substantially adds to or
increases the burden of those governed, it behooves the
agency to accord at least to those directly affected a
chance to be heard, and thereafter to be duly informed,
before that new issuance is given the force and effect of
law.
A reading of RMC 37-93, particularly considering the
circumstances under which it has been issued, convinces
us that the circular cannot be viewed simply as a
corrective measure (revoking in the process the previous
holdings of past Commissioners) or merely as construing
Section 142(c)(1) of the NIRC, as amended, but has, in
fact and most importantly, been made in order to place
"Hope Luxury," "Premium More" and "Champion" within
the classification of locally manufactured cigarettes
bearing foreign brands and to thereby have them covered
by RA 7654. Specifically, the new law would have its
amendatory provisions applied to locally manufactured
cigarettes which at the time of its effectivity were not so
classified as bearing foreign brands. Prior to the issuance
of the questioned circular, "Hope Luxury," "Premium
More," and "Champion" cigarettes were in the category of
locally manufactured cigarettes not bearing foreign brand
subject to 45% ad valorem tax. Hence, without RMC 37-
93, the enactment of RA 7654, would have had no new
tax rate consequence on private respondent's products.
Evidently, in order to place "Hope Luxury," "Premium
More," and "Champion" cigarettes within the scope of the
amendatory law and subject them to an increased tax rate,
the now disputed RMC 37-93 had to be issued. In so
doing, the BIR not simply interpreted the law; verily, it
legislated under its quasi-legislative authority. The due
observance of the requirements of notice, of hearing, and
of publication should not have been then ignored.
Indeed, the BIR itself, in its RMC 10-86, has observed and
provided:
"RMC NO. 10-86
Effectivity of Internal Revenue Rules and Regulations "It
has been observed that one of the problem areas bearing
on compliance with Internal Revenue Tax rules and
regulations is lack or insufficiency of due notice to the tax
paying public. Unless there is due notice, due compliance
therewith may not be reasonably expected. And most
importantly, their strict enforcement could possibly suffer
from legal infirmity in the light of the constitutional
provision on 'due process of law' and the essence of the
Civil Code provision concerning effectivity of laws,
whereby due notice is a basic requirement (Sec. 1, Art. IV,
Constitution; Art. 2, New Civil Code).
"In order that there shall be a just enforcement of rules
and regulations, in conformity with the basic element of
due process, the following procedures are hereby
prescribed for the drafting, issuance and implementation
of the said Revenue Tax Issuances:
"(1). This Circular shall apply only to (a) Revenue
Regulations; (b) Revenue Audit Memorandum Orders;
and (c) Revenue Memorandum Circulars and Revenue
Memorandum Orders bearing on internal revenue tax
rules and regulations.
"(2). Except when the law otherwise expressly provides,
the aforesaid internal revenue tax issuances shall not
begin to be operative until after due notice thereof may be
fairly presumed.
"Due notice of the said issuances may be fairly presumed
only after the following procedures have been taken:
"xxx xxx xxx "(5). Strict compliance with the foregoing
procedures is enjoined.13
Nothing on record could tell us that it was either
impossible or impracticable for the BIR to observe and
comply with the above requirements before giving effect
to its questioned circular. (Emphases ours.)
The Court, however, stops short of ruling on the validity
of RMC No. 66-2003, for it is not among the issues raised
in the instant Petition. It only wishes to stress the
requirement of prior notice to PAL before RMC No. 66-
2003 could have become effective. Only after RMC No.
66-2003 was issued on 14 October 2003 could PAL have
been given notice of said circular, and only following such
notice to PAL would RMC No. 66-2003 have taken effect.
Given this sequence, it is not possible to say that RMC
No. 66-2003 was already in effect and should have been
strictly complied with by PAL for its fiscal year which
ended on 31 March 2001.
Even conceding that the construction of a statute by the
CIR is to be given great weight, the courts, which include
the CTA, are not bound thereby if such construction is
erroneous or is clearly shown to be in conflict with the
governing statute or the Constitution or other laws. "It is
the role of the Judiciary to refine and, when necessary,
correct constitutional (and/or statutory) interpretation, in
the context of the interactions of the three branches of the
government."30 It is furthermore the rule of long standing
that this Court will not set aside lightly the conclusions
reached by the CTA which, by the very nature of its
functions, is dedicated exclusively to the resolution of tax
problems and has, accordingly, developed an expertise on
the subject, unless there has been an abuse or improvident
exercise of authority.31 In the Petition at bar, the CTA en
banc and in division both adjudged that PAL is not liable
for MCIT under Presidential Decree No. 1590, and this
Court has no sufficient basis to reverse them.
As to the assertions of the CIR that exemption from tax is
not presumed, and the one claiming it must be able to
show that it indubitably exists, the Court recalls its
pronouncements in Commissioner of Internal Revenue v.
Court of Appeals32:
We disagree. Petitioner Commissioner of Internal
Revenue erred in applying the principles of tax exemption
without first applying the well-settled doctrine of strict
interpretation in the imposition of taxes. It is obviously
both illogical and impractical to determine who are
exempted without first determining who are covered by
the aforesaid provision. The Commissioner should have
determined first if private respondent was covered by
Section 205, applying the rule of strict interpretation of
laws imposing taxes and other burdens on the populace,
before asking Ateneo to prove its exemption therefrom.
The Court takes this occasion to reiterate the hornbook
doctrine in the interpretation of tax laws that "(a) statute
will not be construed as imposing a tax unless it does so
clearly, expressly, and unambiguously. x x x (A) tax
cannot be imposed without clear and express words for
that purpose. Accordingly, the general rule of requiring
adherence to the letter in construing statutes applies with
peculiar strictness to tax laws and the provisions of a
taxing act are not to be extended by implication."
Parenthetically, in answering the question of who is
subject to tax statutes, it is basic that "in case of doubt,
such statutes are to be construed most strongly against the
government and in favor of the subjects or citizens
because burdens are not to be imposed nor presumed to
be imposed beyond what statutes expressly and clearly
import." (Emphases ours.)
For two decades following the grant of its franchise by
Presidential Decree No. 1590 in 1978, PAL was only
being held liable for the basic corporate income tax or
franchise tax, whichever was lower; and its payment of
either tax was in lieu of all other taxes, except real
property tax, in accordance with the plain language of
Section 13 of the charter of PAL. Therefore, the
exemption of PAL from "all other taxes" was not just a
presumption, but a previously established, accepted, and
respected fact, even for the BIR.
The MCIT was a new tax introduced by Republic Act No.
8424. Under the doctrine of strict interpretation, the
burden is upon the CIR to primarily prove that the new
MCIT provisions of the NIRC of 1997, clearly, expressly,
and unambiguously extend and apply to PAL, despite the
latter’s existing tax exemption. To do this, the CIR must
convince the Court that the MCIT is a basic corporate
income tax,33 and is not covered by the "in lieu of all other
taxes" clause of Presidential Decree No. 1590. Since the
CIR failed in this regard, the Court is left with no choice
but to consider the MCIT as one of "all other taxes," from
which PAL is exempt under the explicit provisions of its
charter.
Not being liable for MCIT in FY 2000-2001, it necessarily
follows that PAL need not apply for relief from said tax
as the CIR maintains.
WHEREFORE, premises considered, the instant Petition
for Review is hereby DENIED, and the Decision dated 9
August 2007 and Resolution dated 11 October 2007 of the
Court of Tax Appeals en banc in CTA E.B. No. 246 is
hereby AFFIRMED. No costs.
SO ORDERED.
G.R. No. L-41631 December 17, 1976
HON. RAMON D. BAGATSING, as Mayor of the City
of Manila; ROMAN G. GARGANTIEL, as Secretary
to the Mayor; THE MARKET ADMINISTRATOR;
and THE MUNICIPAL BOARD OF MANILA,
petitioners,
vs.
HON. PEDRO A. RAMIREZ, in his capacity as
Presiding Judge of the Court of First Instance of
Manila, Branch XXX and the FEDERATION OF
MANILA MARKET VENDORS, INC., respondents.
Santiago F. Alidio and Restituto R. Villanueva for
petitioners.
Antonio H. Abad, Jr. for private respondent.
Federico A. Blay for petitioner for intervention.
MARTIN, J.:
The chief question to be decided in this case is what law
shall govern the publication of a tax ordinance enacted by
the Municipal Board of Manila, the Revised City Charter
(R.A. 409, as amended), which requires publication of the
ordinance before its enactment and after its approval, or
the Local Tax Code (P.D. No. 231), which only demands
publication after approval.
On June 12, 1974, the Municipal Board of Manila enacted
Ordinance No. 7522, "AN ORDINANCE
REGULATING THE OPERATION OF PUBLIC
MARKETS AND PRESCRIBING FEES FOR THE
RENTALS OF STALLS AND PROVIDING
PENALTIES FOR VIOLATION THEREOF AND FOR
OTHER PURPOSES." The petitioner City Mayor,
Ramon D. Bagatsing, approved the ordinance on June 15,
1974.
On February 17, 1975, respondent Federation of Manila
Market Vendors, Inc. commenced Civil Case 96787
before the Court of First Instance of Manila presided over
by respondent Judge, seeking the declaration of nullity of
Ordinance No. 7522 for the reason that (a) the publication
requirement under the Revised Charter of the City of
Manila has not been complied with; (b) the Market
Committee was not given any participation in the
enactment of the ordinance, as envisioned by Republic
Act 6039; (c) Section 3 (e) of the Anti-Graft and Corrupt
Practices Act has been violated; and (d) the ordinance
would violate Presidential Decree No. 7 of September 30,
1972 prescribing the collection of fees and charges on
livestock and animal products.
Resolving the accompanying prayer for the issuance of a
writ of preliminary injunction, respondent Judge issued an
order on March 11, 1975, denying the plea for failure of
the respondent Federation of Manila Market Vendors, Inc.
to exhaust the administrative remedies outlined in the
Local Tax Code.
After due hearing on the merits, respondent Judge
rendered its decision on August 29, 1975, declaring the
nullity of Ordinance No. 7522 of the City of Manila on
the primary ground of non-compliance with the
requirement of publication under the Revised City
Charter. Respondent Judge ruled:
There is, therefore, no question that the ordinance in
question was not published at all in two daily newspapers
of general circulation in the City of Manila before its
enactment. Neither was it published in the same manner
after approval, although it was posted in the legislative
hall and in all city public markets and city public libraries.
There being no compliance with the mandatory
requirement of publication before and after approval, the
ordinance in question is invalid and, therefore, null and
void.
Petitioners moved for reconsideration of the adverse
decision, stressing that (a) only a post-publication is
required by the Local Tax Code; and (b) private
respondent failed to exhaust all administrative remedies
before instituting an action in court.
On September 26, 1975, respondent Judge denied the
motion.
Forthwith, petitioners brought the matter to Us through
the present petition for review on certiorari.
We find the petition impressed with merits.
1. The nexus of the present controversy is the apparent
conflict between the Revised Charter of the City of
Manila and the Local Tax Code on the manner of
publishing a tax ordinance enacted by the Municipal
Board of Manila. For, while Section 17 of the Revised
Charter provides:
Each proposed ordinance shall be published in two daily
newspapers of general circulation in the city, and shall not
be discussed or enacted by the Board until after the third
day following such publication. * * * Each approved
ordinance * * * shall be published in two daily
newspapers of general circulation in the city, within ten
days after its approval; and shall take effect and be in
force on and after the twentieth day following its
publication, if no date is fixed in the ordinance.
Section 43 of the Local Tax Code directs:
Within ten days after their approval, certified true copies
of all provincial, city, municipal and barrio ordinances
levying or imposing taxes, fees or other charges shall be
published for three consecutive days in a newspaper or
publication widely circulated within the jurisdiction of the
local government, or posted in the local legislative hall or
premises and in two other conspicuous places within the
territorial jurisdiction of the local government. In either
case, copies of all provincial, city, municipal and barrio
ordinances shall be furnished the treasurers of the
respective component and mother units of a local
government for dissemination.
In other words, while the Revised Charter of the City of
Manila requires publication before the enactment of the
ordinance and after the approval thereof in two daily
newspapers of general circulation in the city, the Local
Tax Code only prescribes for publication after the
approval of "ordinances levying or imposing taxes, fees
or other charges" either in a newspaper or publication
widely circulated within the jurisdiction of the local
government or by posting the ordinance in the local
legislative hall or premises and in two other conspicuous
places within the territorial jurisdiction of the local
government. Petitioners' compliance with the Local Tax
Code rather than with the Revised Charter of the City
spawned this litigation.
There is no question that the Revised Charter of the City
of Manila is a special act since it relates only to the City
of Manila, whereas the Local Tax Code is a general law
because it applies universally to all local governments.
Blackstone defines general law as a universal rule
affecting the entire community and special law as one
relating to particular persons or things of a class. 1 And
the rule commonly said is that a prior special law is not
ordinarily repealed by a subsequent general law. The fact
that one is special and the other general creates a
presumption that the special is to be considered as
remaining an exception of the general, one as a general
law of the land, the other as the law of a particular case. 2
However, the rule readily yields to a situation where the
special statute refers to a subject in general, which the
general statute treats in particular. The exactly is the
circumstance obtaining in the case at bar. Section 17 of
the Revised Charter of the City of Manila speaks of
"ordinance" in general, i.e., irrespective of the nature and
scope thereof, whereas, Section 43 of the Local Tax Code
relates to "ordinances levying or imposing taxes, fees or
other charges" in particular. In regard, therefore, to
ordinances in general, the Revised Charter of the City of
Manila is doubtless dominant, but, that dominant force
loses its continuity when it approaches the realm of
"ordinances levying or imposing taxes, fees or other
charges" in particular. There, the Local Tax Code
controls. Here, as always, a general provision must give
way to a particular provision. 3 Special provision governs.
4 This is especially true where the law containing the
particular provision was enacted later than the one
containing the general provision. The City Charter of
Manila was promulgated on June 18, 1949 as against the
Local Tax Code which was decreed on June 1, 1973. The
law-making power cannot be said to have intended the
establishment of conflicting and hostile systems upon the
same subject, or to leave in force provisions of a prior law
by which the new will of the legislating power may be
thwarted and overthrown. Such a result would render
legislation a useless and Idle ceremony, and subject the
law to the reproach of uncertainty and unintelligibility. 5
The case of City of Manila v. Teotico 6 is opposite. In that
case, Teotico sued the City of Manila for damages arising
from the injuries he suffered when he fell inside an
uncovered and unlighted catchbasin or manhole on P.
Burgos Avenue. The City of Manila denied liability on the
basis of the City Charter (R.A. 409) exempting the City
of Manila from any liability for damages or injury to
persons or property arising from the failure of the city
officers to enforce the provisions of the charter or any
other law or ordinance, or from negligence of the City
Mayor, Municipal Board, or other officers while
enforcing or attempting to enforce the provisions of the
charter or of any other law or ordinance. Upon the other
hand, Article 2189 of the Civil Code makes cities liable
for damages for the death of, or injury suffered by any
persons by reason of the defective condition of roads,
streets, bridges, public buildings, and other public works
under their control or supervision. On review, the Court
held the Civil Code controlling. It is true that, insofar as
its territorial application is concerned, the Revised City
Charter is a special law and the subject matter of the two
laws, the Revised City Charter establishes a general rule
of liability arising from negligence in general, regardless
of the object thereof, whereas the Civil Code constitutes a
particular prescription for liability due to defective streets
in particular. In the same manner, the Revised Charter of
the City prescribes a rule for the publication of
"ordinance" in general, while the Local Tax Code
establishes a rule for the publication of "ordinance levying
or imposing taxes fees or other charges in particular.
In fact, there is no rule which prohibits the repeal even by
implication of a special or specific act by a general or
broad one. 7 A charter provision may be impliedly
modified or superseded by a later statute, and where a
statute is controlling, it must be read into the charter
notwithstanding any particular charter provision. 8 A
subsequent general law similarly applicable to all cities
prevails over any conflicting charter provision, for the
reason that a charter must not be inconsistent with the
general laws and public policy of the state. 9 A chartered
city is not an independent sovereignty. The state remains
supreme in all matters not purely local. Otherwise stated,
a charter must yield to the constitution and general laws
of the state, it is to have read into it that general law which
governs the municipal corporation and which the
corporation cannot set aside but to which it must yield.
When a city adopts a charter, it in effect adopts as part of
its charter general law of such character. 10
2. The principle of exhaustion of administrative remedies
is strongly asserted by petitioners as having been violated
by private respondent in bringing a direct suit in court.
This is because Section 47 of the Local Tax Code provides
that any question or issue raised against the legality of any
tax ordinance, or portion thereof, shall be referred for
opinion to the city fiscal in the case of tax ordinance of a
city. The opinion of the city fiscal is appealable to the
Secretary of Justice, whose decision shall be final and
executory unless contested before a competent court
within thirty (30) days. But, the petition below plainly
shows that the controversy between the parties is deeply
rooted in a pure question of law: whether it is the Revised
Charter of the City of Manila or the Local Tax Code that
should govern the publication of the tax ordinance. In
other words, the dispute is sharply focused on the
applicability of the Revised City Charter or the Local Tax
Code on the point at issue, and not on the legality of the
imposition of the tax. Exhaustion of administrative
remedies before resort to judicial bodies is not an absolute
rule. It admits of exceptions. Where the question litigated
upon is purely a legal one, the rule does not apply. 11 The
principle may also be disregarded when it does not
provide a plain, speedy and adequate remedy. It may and
should be relaxed when its application may cause great
and irreparable damage. 12
3. It is maintained by private respondent that the subject
ordinance is not a "tax ordinance," because the imposition
of rentals, permit fees, tolls and other fees is not strictly a
taxing power but a revenue-raising function, so that the
procedure for publication under the Local Tax Code finds
no application. The pretense bears its own marks of
fallacy. Precisely, the raising of revenues is the principal
object of taxation. Under Section 5, Article XI of the New
Constitution, "Each local government unit shall have the
power to create its own sources of revenue and to levy
taxes, subject to such provisions as may be provided by
law." 13 And one of those sources of revenue is what the
Local Tax Code points to in particular: "Local
governments may collect fees or rentals for the occupancy
or use of public markets and premises * * *." 14 They can
provide for and regulate market stands, stalls and
privileges, and, also, the sale, lease or occupancy thereof.
They can license, or permit the use of, lease, sell or
otherwise dispose of stands, stalls or marketing privileges.
15
It is a feeble attempt to argue that the ordinance violates
Presidential Decree No. 7, dated September 30, 1972,
insofar as it affects livestock and animal products, is dispensed is public or private. The right to tax depends
because the said decree prescribes the collection of other upon the ultimate use, purpose and object for which the
fees and charges thereon "with the exception of ante- fund is raised. It is not dependent on the nature or
mortem and post-mortem inspection fees, as well as the character of the person or corporation whose intermediate
delivery, stockyard and slaughter fees as may be agency is to be used in applying it. The people may be
authorized by the Secretary of Agriculture and Natural taxed for a public purpose, although it be under the
Resources." 16 Clearly, even the exception clause of the direction of an individual or private corporation. 18
decree itself permits the collection of the proper fees for
livestock. And the Local Tax Code (P.D. 231, July 1, Nor can the ordinance be stricken down as violative of
1973) authorizes in its Section 31: "Local governments Section 3(e) of the Anti-Graft and Corrupt Practices Act
may collect fees for the slaughter of animals and the use because the increased rates of market stall fees as levied
of corrals * * * " by the ordinance will necessarily inure to the unwarranted
benefit and advantage of the corporation. 19 We are
4. The non-participation of the Market Committee in the concerned only with the issue whether the ordinance in
enactment of Ordinance No. 7522 supposedly in question is intra vires. Once determined in the affirmative,
accordance with Republic Act No. 6039, an amendment the measure may not be invalidated because of
to the City Charter of Manila, providing that "the market consequences that may arise from its enforcement. 20
committee shall formulate, recommend and adopt, subject
to the ratification of the municipal board, and approval of ACCORDINGLY, the decision of the court below is
the mayor, policies and rules or regulation repealing or hereby reversed and set aside. Ordinance No. 7522 of the
maneding existing provisions of the market code" does City of Manila, dated June 15, 1975, is hereby held to
not infect the ordinance with any germ of invalidity. 17 have been validly enacted. No. costs.
The function of the committee is purely recommendatory
as the underscored phrase suggests, its recommendation is SO ORDERED.
without binding effect on the Municipal Board and the
City Mayor. Its prior acquiescence of an intended or Castro, C.J., Barredo, Makasiar, Antonio, Muñoz Palma,
proposed city ordinance is not a condition sine qua non Aquino and Concepcion, Jr., JJ., concur.
before the Municipal Board could enact such ordinance.
The native power of the Municipal Board to legislate Teehankee, J., reserves his vote.
remains undisturbed even in the slightest degree. It can
move in its own initiative and the Market Committee
cannot demur. At most, the Market Committee may serve
as a legislative aide of the Municipal Board in the
enactment of city ordinances affecting the city markets or,
in plain words, in the gathering of the necessary data,
studies and the collection of consensus for the proposal of
ordinances regarding city markets. Much less could it be
said that Republic Act 6039 intended to delegate to the
Market Committee the adoption of regulatory measures
for the operation and administration of the city markets.
Potestas delegata non delegare potest.

5. Private respondent bewails that the market stall fees

imposed in the disputed ordinance are diverted to the
exclusive private use of the Asiatic Integrated
Corporation since the collection of said fees had been let
by the City of Manila to the said corporation in a
"Management and Operating Contract." The assumption
is of course saddled on erroneous premise. The fees
collected do not go direct to the private coffers of the
corporation. Ordinance No. 7522 was not made for the
corporation but for the purpose of raising revenues for the
city. That is the object it serves. The entrusting of the
collection of the fees does not destroy the public purpose
of the ordinance. So long as the purpose is public, it does
not matter whether the agency through which the money