STAT CON 1
G.R. No. 182434 March 5, 2010
SULTAN YAHYA "JERRY" M. TOMAWIS, Petitioner,
vs.
HON. RASAD G. BALINDONG, AMNA A. PUMBAYA,
JALILAH A. MANGOMPIA, and RAMLA A.
MUSOR, Respondents.
DECISION
VELASCO, JR., J.:
This petition for certiorari, prohibition, and mandamus under
Rule 65 seeks to nullify the Orders dated July 13, 2005,
September 6, 2005, and February 6, 2008 issued by
respondent Judge Rasad G. Balindong of the Shari’a District
Court (SDC), Fourth Judicial District in Marawi City, in Civil
Case No. 102-97 entitled Amna A. Pumbaya, et al. v. Jerry
Tomawis, et al.
The Facts
Private respondents Amna A. Pumbaya, Jalilah A. Mangompia,
and Ramla A. Musor are the daughters of the late Acraman
Radia. On February 21, 1997, private respondents filed with the
SDC an action for quieting of title of a parcel of land located in
Banggolo, Marawi City, against petitioner Sultan Jerry Tomawis
and one Mangoda Radia. In their complaint, styled as
Petition1 and docketed as Civil Case No. 102-97, private
respondents, as plaintiffs a quo, alleged the following:
(1) They were the absolute owners of the lot subject of the
complaint, being the legal heirs of Acraman Radia, who had
always been in peaceful, continuous, and adverse possession
of the property; (2) Tomawis assumed ownership of the said
property on the claim that he bought the same from Mangoda
Radia, who, in turn, claimed that he inherited it from his late
father; (3) in 1996, they "were informed that their land [was]
leveled and the small houses [built] thereon with their
permission were removed" upon the orders of Tomawis; and (4)
they had been unlawfully deprived of their possession of the
land, and Tomawis’ actions had cast a cloud of doubt on their
title.
In his answer, Tomawis debunked the sisters’ claim of
ownership and raised, as one of his affirmative defenses
treated by the court as a motion to dismiss, SDC’s lack of
jurisdiction over the subject matter of the case.2 As argued, the
regular civil court, not SDC, had such jurisdiction pursuant to
Batas Pambansa Blg. (BP) 129 or the Judiciary Reorganization
Act of 1980.3
Following the hearing on the affirmative defenses, respondent
Judge Rasad Balindong, by Order of April 1, 2003, denied the
motion. Apropos the jurisdiction aspect of the motion,
respondent judge asserted the SDC’s original jurisdiction over
the case, concurrently with the Regional Trial Court (RTC), by
force of Article 143, paragraph 2(b) of Presidential Decree No.
(PD) 1083 or the Code of Muslim Personal Laws of the
Philippines.
On June 16, 2005, Tomawis filed an Urgent Motion to Dismiss
with Prayer to Correct the Name of Defendants to Read Sultan
Yahya "Jerry" M. Tomawis & Mangoda M. Radia.4 In it, he
alleged that title to or possession of real property or interest in it
was clearly the subject matter of the complaint which, thus,
brought it within the original exclusive jurisdiction of the regular
courts in consonance with existing law. 5 On July 13, 2005, the
SDC denied this motion to dismiss.
Unsatisfied, Tomawis later interposed an Urgent Motion for
Reconsideration with Prayer to Cancel and Reset the
Continuation of Trial Until After the Resolution of the Pending
Incident.6 Per Order7 dated September 6, 2005, the SDC
denied Tomawis’ urgent motion for reconsideration and ordered
the continuation of trial.
Forthwith, Tomawis repaired to the Court of Appeals (CA),
Mindanao Station, on a petition for certiorari, mandamus, and
prohibition under Rule 65 to nullify, on jurisdictional grounds,
the aforesaid SDC July 13, 2005 and September 6, 2005
Orders.
By Resolution8 of February 8, 2006, the appellate court
dismissed the petition on the ground that the CA was "not
empowered to resolve decisions, orders or final judgments of
the [SDCs]." Justifying its disposition, the CA held that,
pursuant to Art. 1459 of PD 1083, in relation to Art. VIII, Section
910 of Republic Act No. (RA) 9054,11 the new organic law of the
Autonomous Region in Muslim Mindanao, final decisions of the
SDC are reviewable by the yet to be established Shari’a
Appellate Court. Pending the reorganization of the Shari’a
Appellate Court, the CA ruled that such intermediate appellate
jurisdiction rests with the Supreme Court.
Undeterred by the foregoing setback before the CA, Tomawis
interposed, on January 29, 2008, before the SDC another
motion to dismiss on the same grounds as his previous motions
to dismiss. The motion was rejected by respondent Judge
Balindong per his order of February 6, 2008, denying the
motion with finality.
Hence, this recourse on the sole issue of:
WHETHER OR NOT THE PUBLIC RESPONDENT ACTED
WITH GRAVE ABUSE OF DISCRETION IN DENYING
PETITIONER’S MOTIONS TO DISMISS ON THE GROUND OF
LACK OF JURISDICTION AND IN DENYING PETITIONER’S
MOTION SEEKING RECONSIDERATION OF THE ORDER
DENYING HIS MOTION TO DISMISS.
Simply put, the issue is whether or not the SDC can validly take
cognizance of Civil Case No. 102-97.
The Court’s Ruling
Prefatorily, the Court acknowledges the fact that decades after
the enactment in 1989 of the law12 creating the Shari’a
Appellate Court and after the Court, per Resolution of June 8,
1999,13 authorized its creation, the Shari’a Appellate Court has
yet to be organized with the appointment of a Presiding Justice
and two Associate Justices. Until such time that the Shari’a
Appellate Court shall have been organized, however,
appeals or petitions from final orders or decisions of the
SDC filed with the CA shall be referred to a Special Division
to be organized in any of the CA stations preferably
composed of Muslim CA Justices.
For cases where only errors or questions of law are raised or
involved, the appeal shall be to this Court by a petition for
review on certiorari under Rule 45 of the Rules of Court
pursuant to Art. VIII, Sec. 5 of the Constitution and Sec. 2 of
Rule 41 of the Rules.
To be sure, the Court has, on several occasions, passed upon
and resolved petitions and cases emanating from Shari’a
courts. Among these was one involving the issue of whether or
not grave abuse of discretion attended the denial of a motion to
implement a writ of execution.14 Still another involved the
Shari’a courts’ jurisdiction in custody and guardianship
proceedings,15 nullity of marriage and divorce when the parties
were both married in civil and Muslim rites, 16 and settlement of
estate proceedings where the deceased was alleged to be not a
Muslim,17 or where the estate covered properties situated in
different provinces.18

The instant petition, involving only a question of law on the
jurisdiction of the SDC over a complaint for quieting of title, was
properly instituted before the Court.
Petitioner asserts that Sec. 19(2), in relation to Sec. 33(3) of BP
129, as amended––by vesting original exclusive jurisdiction to
the RTCs or Municipal Trial Courts (MTCs), as the case may
be, over civil actions that involve the title to, or possession of,
real property––effectively removed the concurrent jurisdiction
once pertaining to the SDC under Art. 143(2)(b) of PD 1083. In
fine, petitioner contends that Art. 143 of PD 1083, insofar as it
granted the SDC concurrent jurisdiction over certain real
actions, was repealed by the BP 129 provisions adverted to.
Disagreeing as to be expected, private respondents balk at the
notion of the implied repeal petitioner espouses, arguing that
PD 1083, being a special, albeit a prior, law, has not been
repealed by BP 129. Putting private respondents’ contention in
a narrower perspective, Art. 143(2)(b) of PD 1083 is of specific
applicability and, hence, cannot, under the rules of legal
hermeneutics, be superseded by laws of general application,
absent an express repeal.
Petitioner’s claim has no basis.
The allegations, as well as the relief sought by private
respondents, the elimination of the "cloud of doubts on the title
of ownership"19 on the subject land, are within the SDC’s
jurisdiction to grant.
A brief background. The Judiciary Act of 1948 (RA 296) was
enacted on June 17, 1948. It vested the Courts of First Instance
with original jurisdiction:
(b) In all civil actions which involve the title to or possession of
real property, or any interest therein, or the legality of any tax,
impost or assessment, except actions of forcible entry into and
detainer on lands or buildings, original jurisdiction of which is
conferred by this Act upon city and municipal courts.20 x x x
Subsequently, PD 1083, dated February 4, 1977, created the
Shari’a courts, i.e., the SDC and the Shari’a Circuit Court, both
of limited jurisdiction. In Republic v. Asuncion,21 the Court, citing
the Administrative Code of 1987,22 classified Shari’a courts as
"regular courts," meaning they are part of the judicial
department.
Art. 143 of PD 1083 vests SDCs, in certain cases, with
exclusive original jurisdiction and with concurrent original
jurisdiction over certain causes of action. As far as relevant, Art.
143 reads as follows:
ARTICLE 143. Original jurisdiction.— (1) The Shari’a District
Court shall have exclusive original jurisdiction over:
xxxx
d) All actions arising from customary contracts in which the
parties are Muslims, if they have not specified which law shall
govern their relations; and
xxxx
(2) Concurrently with existing civil courts, the Shari’a District
Court shall have original jurisdiction over:
xxxx
(b) All other personal and real actions not mentioned in
paragraph 1 (d) wherein the parties involved are Muslims
except those for forcible entry and unlawful detainer, which
shall fall under the exclusive original jurisdiction of the Municipal
Circuit Court. (Emphasis added.)
On August 14, 1981, BP 129 took effect. Sec. 19 of BP 129, as
later amended by RA 7691,23 defining the jurisdiction of the
RTCs, provides:
Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise
known as the "Judiciary Reorganization Act of 1980", is hereby
amended to read as follows:
"Sec. 19. Jurisdiction in civil cases.—Regional Trial Courts shall
exercise exclusive original jurisdiction:
xxxx
"(2) In all civil actions which involve the title to, or possession of,
real property, or any interest therein, where the assessed value
of the property involved exceeds Twenty thousand pesos
(P20,000,00) or, for civil actions in Metro Manila, where such
value exceeds Fifty thousand pesos (P50,000.00) except
actions for forcible entry into and unlawful detainer of lands or
buildings, original jurisdiction over which is conferred upon the
STAT CON 2
Metropolitan Trial Courts, Municipal Trial Courts, and Municipal
Circuit Trial Courts." (Emphasis supplied.)
As things stood prior to the effectivity date of BP 129, the SDC
had, by virtue of PD 1083, original jurisdiction, concurrently with
the RTCs and MTCs, over all personal and real actions outside
the purview of Art. 143(1)(d) of PD 1083, in which the parties
involved were Muslims, except those for ejectment. Personal
action is one that is founded on privity of contracts between the
parties;24 and in which the plaintiff usually seeks the recovery of
personal property, the enforcement of a contract, or recovery of
damages.25 Real action, on the other hand, is one anchored on
the privity of real estate,26 where the plaintiff seeks the recovery
of ownership or possession of real property or interest in it.27
On the other hand, BP 129, as amended, vests the RTC or the
municipal trial court with exclusive original jurisdiction in all civil
actions that involve the title to or possession of real property, or
any interest in it, and the value of the property subject of the
case or the jurisdictional amount, determining whether the case
comes within the jurisdictional competence of the RTC or the
MTC. Orbeta v. Orbeta28 differentiated personal action from real
action in the following wise:
A real action, under Sec. 1, Rule 4 of the Rules of Court, is one
that affects title to or possession of real property, or an interest
therein. Such actions should be commenced and tried in the
proper court which has jurisdiction over the area wherein the
real property involved, or a portion thereof, is situated. All other
actions are personal and may be commenced and tried where
the plaintiff or any of the principal plaintiffs resides, or where the
defendant or any of the principal defendants resides, or in the
case of a non-resident defendant where he may be found, at
the election of the plaintiff.
Civil Case No. 102-97, judging from the averments in the
underlying complaint, is basically a suit for recovery of
possession and eventual reconveyance of real property which,
under BP 129, as amended, falls within the original jurisdiction
of either the RTC or MTC. In an action for reconveyance, all
that must be alleged in the complaint are two facts that,
admitting them to be true, would entitle the plaintiff to recover
title to the disputed land, namely: (1) that the plaintiff is the
owner of the land or has possessed the land in the concept of
owner; and (2) that the defendant has illegally dispossessed the
plaintiff of the land.29 A cursory perusal of private respondents’
complaint readily shows that that these requisites have been
met: they alleged absolute ownership of the subject parcel of
land, and they were illegally dispossessed of their land by

petitioner. The allegations in the complaint, thus, make a case
for an action for reconveyance.
Given the above perspective, the question that comes to the
fore is whether the jurisdiction of the RTC or MTC is to the
exclusion of the SDC.
Petitioner’s version of the law would effectively remove the
concurrent original jurisdiction granted by Art. 143, par. 2(b) of
PD 1083 to civil courts and Shari’a courts over, among others:
All other personal and real actions not mentioned in paragraph
1 (d) wherein the parties involved are Muslims except those for
forcible entry and unlawful detainer, which shall fall under the
exclusive original jurisdiction of the Municipal Circuit Court. x x
x power that amounts to a shirking from or refusal to perform a
Petitioner’s interpretation of the law cannot be given serious
thought. One must bear in mind that even if Shari’a courts are
considered regular courts, these are courts of limited
jurisdiction. As we have observed in Rulona-Al Awadhi v.
Astih,30 the Code of Muslim Personal Laws creating said courts
was promulgated to fulfill "the aspiration of the Filipino Muslims
to have their system of laws enforced in their communities." It is
a special law intended for Filipino Muslims, as clearly stated in
the purpose of PD 1083:
ARTICLE 2. Purpose of Code. — Pursuant to Section 11 of
Article XV of the Constitution of the Philippines, which provides
that "The State shall consider the customs, traditions, beliefs
and interests of national cultural communities in the formulation
and implementation of state policies," this Code:
(a) Recognizes the legal system of the Muslims in the
Philippines as part of the law of the land and seeks to
make Islamic institutions more effective;
(b) Codifies Muslim personal laws; and
(c) Provides for an effective administration and
enforcement of Muslim personal laws among Muslims.
A reading of the pertinent provisions of BP 129 and PD 1083
shows that the former, a law of general application to civil
courts, has no application to, and does not repeal, the
provisions found in PD 1083, a special law, which only refers to
Shari’a courts.
A look at the scope of BP 129 clearly shows that Shari’a courts
were not included in the reorganization of courts that were
formerly organized under RA 296. The pertinent provision in BP
129 states:
SECTION 2. Scope. — The reorganization herein provided
shall include the Court of Appeals, the Court of First Instance,
the Circuit Criminal Courts, the Juvenile and Domestic
Relations Courts, the Courts of Agrarian Relations, the City
Courts, the Municipal Courts, and the Municipal Circuit Courts.
As correctly pointed out by private respondents in their
Comment,31 BP 129 was enacted to reorganize only existing
civil courts and is a law of general application to the judiciary. In
contrast, PD 1083 is a special law that only applies to Shari’a
courts.
We have held that a general law and a special law on the same
subject are statutes in pari materia and should be read together
and harmonized, if possible, with a view to giving effect to
both.32 In the instant case, we apply the principle generalia
specialibus non derogant. A general law does not nullify a
special law. The general law will yield to the special law in the
specific and particular subject embraced in the latter. 33 We must
read and construe BP 129 and PD 1083 together, then by
taking PD 1083 as an exception to the general law to reconcile
the two laws. This is so since the legislature has not made any
express repeal or modification of PD 1083, and it is well-settled
that repeals of statutes by implication are not favored. 34 Implied
repeals will not be declared unless the intent of the legislators is
manifest. Laws are assumed to be passed only after careful
deliberation and with knowledge of all existing ones on the
subject, and it follows that the legislature did not intend to
interfere with or abrogate a former law relating to the same
subject matter.35
In order to give effect to both laws at hand, we must continue to
recognize the concurrent jurisdiction enjoyed by SDCs with that
of RTCs under PD 1083.1avvphi1
Moreover, the jurisdiction of the court below cannot be made to
depend upon defenses set up in the answer, in a motion to
dismiss, or in a motion for reconsideration, but only upon the
allegations of the complaint.36 Jurisdiction over the subject
matter of a case is determined from the allegations of the
complaint and the character of the relief sought. 37 In the instant
case, private respondents’ petition38 in Civil Case No. 102-97
sufficiently alleged the concurrent original jurisdiction of the
SDC.
STAT CON 3
While we recognize the concurrent jurisdiction of the SDCs and
the RTCs with respect to cases involving only Muslims, the
SDC has exclusive original jurisdiction over all actions arising
from contracts customary to Muslims39 to the exclusion of the
RTCs, as the exception under PD 1083, while both courts have
concurrent original jurisdiction over all other personal actions.
Said jurisdictional conferment, found in Art. 143 of PD 1083, is
applicable solely when both parties are Muslims and shall not
be construed to operate to the prejudice of a non-Muslim,40 who
may be the opposing party against a Muslim.
Given petitioner’s flawed arguments, we hold that the
respondent court did not commit any grave abuse of discretion.
Grave abuse of discretion is present when there is an arbitrary
exercise of power owing from passion, prejudice, or personal
hostility; or a whimsical, arbitrary, or capricious exercise of
positive duty enjoined by law or to act at all in contemplation of
law. The abuse of discretion must be patent and gross for the
act to be held as one made with grave abuse of
discretion.41 We find respondent court’s issuance of the
assailed orders justified and with no abuse of discretion. Its
reliance on the provisions of PD 1083 in asserting its jurisdiction
was sound and unassailable.
We close with the observation that what is involved here are not
only errors of law, but also the errors of a litigant and his lawyer.
As may have been noted, petitioner Tomawis’ counsel veritably
filed two (2) motions to dismiss, each predicated on the sole
issue of jurisdiction. The first may have been understandable.
But the second motion was something else, interposed as it
was after the CA, by resolution, denied Tomawis’ petition for
certiorari for want of jurisdiction on the part of the appellate
court to review judgments or orders of the SDC. The CA stated
the observation, however, that Tomawis and his counsel may
repair to this Court while the Shari’a Appellate Court has yet to
be organized. Petitioner waited two years after the CA issued
its denial before filing what virtually turned out to be his second
motion to dismiss, coming finally to this Court after the same
motion was denied. The Court must express disapproval of the
cunning effort of Tomawis and his counsel to use procedural
rules to the hilt to prolong the final disposition of this case.
From Alonso v. Villamor,42 almost a century-old decision, the
Court has left no doubt that it frowns on such unsporting
practice. The rule is settled that a question of jurisdiction, as
here, may be raised at any time, even on appeal, provided its
application does not result in a mockery of the basic tenets of
fair play.43 Petitioner’s action at the later stages of the
proceedings below, doubtless taken upon counsel’s advice, is
less than fair and constitutes censurable conduct. Lawyers and

litigants must be brought to account for their improper conduct,
which trenches on the efficient dispensation of justice.
WHEREFORE, the petition is DISMISSED for lack of merit.
Petitioner Yahya "Jerry" Tomawis and Atty. Edgar A. Masorong
are ADMONISHED to refrain from engaging in activities tending
to frustrate the orderly and speedy administration of justice, with
a warning that repetition of the same or similar acts may result
in the imposition of a more severe sanction.
No costs.
SO ORDERED.
G.R. No. L-47796 April 22, 1941
MANILA TRADING & SUPPLY COMPANY, petitioner,
vs.
PHILIPPINE LABOR UNION, respondent.
Rosa, Lawrence, Selph & Carrascoso for petitioner.
Manabat & Fajardo for respondent.
MORAN, J.:
The present case is merely a sequel of a prior case (G.R. No.
47653) between the same parties. The questions here raised
emanate from respondent's petition for the execution of the
order of March 20, 1940, of the Court of Industrial Relations
directing the reinstatement of Felix Alcantara. A petition for a
writ of certiorari on the aforesaid case having been given due
course by this Court, the Court of Industrial Relations issued an
order on September 14,1940, requiring petitioner to file a bond
in an amount sufficient to cover the back wages of Felix
Alcantara during the pendency of his case. A motion to set
aside this order having been denied, petitioner took the instant
appeal by certiorari
Section 14 of Commonwealth Act No. 103, as amended by
Commonwealth Act No. 559, provides:
Enforcement of awards, orders, and decisions. — At
the expiration of ten days from the date of the award,
order, or decision, in cases brought under the
provisions of section four hereof, judgment shall be
entered in accordance therewith, unless during said
ten days an aggrieved party shall appeal therefrom to
the Supreme Court of the Philippines by writ
of certiorari as hereinafter provided. The institution of
such appeal shall not, however, stay execution of the
award, order, or decision sought to be reviewed,
unless for special reasons the Court shall order that
execution be stayed, in which event the Court, in its
discretion, may require the appellant to deposit with
the clerk of the court such amount of salaries or
wages due the employees, laborers, tenants, or farm-
laborers concerned under the award, order, or
decision appealed from or require him to give bond in
such form and of such amount as to insure
compliance with the award, order, or decision in case
the same is affirmed.
It is here contended that as enforcement or execution under
section 14 above-quoted, refers to an "award, order, or
decision, in cases brought under the provisions of section four"
of said Act, the Court of Industrial Relations is without power to
decree execution of its order under section 19 of the law. In the
first place, the ultimate effect of petitioner's theory is to concede
to the Court of Industrial Relations the power to decide a case
under section 19 but deny it the power to execute its decision
thereon. The absurdity of this proposition is too evident to
require argument. In the second place, considering that the
jurisdiction of the Court of Industrial Relations under section 19
is merely incidental to the same jurisdiction it has previously
acquired under section 4 of the law, it follows that the power to
execute its orders under section 19 is also the same power that
it possesses under section 4.
It is also contended that the order of the Court of Industrial
Relations requiring the filing of a bond is null and void it having
been issued after the appeal had already been perfected. It is
true that once an appeal has been perfected, the trial court
loses its jurisdiction over the case, where there is no express
statutory provision to the contrary. But section 14 of
Commonwealth Act No. 103, as amended by Commonwealth
Act No. 559, expressly provides that the appeal shall not stay
the execution of the award, order or decision sought to be
reviewed, unless, for special reason, the Court Industrial
Relations shall order that the execution be stayed, in which
event said court, in its discretion, may require the appellant to
deposit with the clerk of court such amount of salaries or wages
due the employees, laborers or tenants concerned, or require
him to give bond in such form and of such amount as to insure
compliance with the award, order or decision.
It is finally contended that the provisions of section Rule 44, of
the new Rule of Court, must prevail over the provisions of
section 14 of Commonwealth Act No. 103, as amended by
Commonwealth Act No. 559. Section, 7 of Rule 44 provides:
STAT CON 4
Effect of appeal. — The appeal shall stay the award,
order or decision appealed from unless the Supreme
Court shall direct otherwise upon such terms as it may
deem just.
On the other hand, section 14 of Commonwealth Act No. 103,
as amended by Commonwealth Act No. 559, provides that the
appeal shall not stay the execution of the award, order or
decision appealed from, unless the industrial court otherwise
provides. The new Rules of Court were approved in December,
1939, and made effective on July 1, 1940. Commonwealth Act
No. 559 was approved and made effective on June 7, 1940, or
six months after the Rules of Court were approved and twenty-
three days before said rules were made effective. When two
Acts are inconsistent, that which has been made effective in an
earlier date. (Goodwin v. Buckley, 54 Cal. 295; San Luis Obispo
County v. Felts, 104 Cal. 66, 37 Pac. 780; Mariposa
County v. Madera County, 142 Cal. 55, 75 Pac. 572; Re K
Sohncke, 82 Pac. 956, 2 L. R. A. [NS] 813).
Statutes speak from the time they take effect, and from that
time they have posteriority. If passed to take effect at a future
day, they are to be construed, as a general rule, as if passed on
that day and ordered to take immediate effect. But, as between
two acts, it has been held that one passed later and going into
effect earlier will prevail over one passed earlier and going into
effect later. Thus an act passed April 16th and in force April
21st was held to prevail over an act passed April 9th and in
effect July 4th of the same year. And an act going into effect
immediately has been held to prevail over an act passed before
but going into effect later." (1 Sutherland, Statutory
Construction, pp. 541-542.)
The question is one purely of legislative intent. The Supreme
Court, upon approving the Rules of Court in December, 1939,
could not have possibly intended to amend the procedural
provisions contained in Commonwealth Act No. 559, which was
not yet then in existence, for it was approved six months later,
that is, on June 7, 1940. Commonwealth Act No. 559 containing
provisions which are repugnant to the Rules of Court, may be
presumed to have intended a repeal to the extent of the
repugnance. Leges posteriores priores contrarias abrogant.
Order is affirmed, with costs against petitioner.

G.R. No. 181556 December 14, 2009
IN RE: PETITION FOR ASSISTANCE IN THE LIQUIDATION
OF INTERCITY SAVINGS AND LOAN BANK, INC.
PHILIPPINE DEPOSIT INSURANCE
CORPORATION, Petitioner,
vs.
STOCKHOLDERS OF INTERCITY SAVINGS AND LOAN
BANK, INC., Respondents.
DECISION
CARPIO MORALES, J.:
The Central Bank of the Philippines, now known as Bangko
Sentral ng Pilipinas, filed on June 17, 1987 with the Regional
Trial Court (RTC) of Makati a Petition for Assistance in the
Liquidation of Intercity Savings and Loan Bank, Inc. (Intercity
Bank) alleging that, inter alia, said bank was already insolvent
and its continuance in business would involve probable loss to
depositors, creditors and the general public. 1
Finding the petition sufficient in form and substance, the trial
court gave it due course.2 Petitioner Philippine Deposit
Insurance Corporation (PDIC) was eventually substituted as the
therein petitioner, liquidator of Intercity Bank.3
In the meantime, Republic Act No. 9302 (RA 9302) 4 was
enacted, Section 12 of which provides:
SECTION 12. Before any distribution of the assets of the closed
bank in accordance with the preferences established by law,
the Corporation shall periodically charge against said assets
reasonable receivership expenses and subject to approval by
the proper court, reasonable liquidation expenses, it has
incurred as part of the cost of receivership/liquidation
proceedings and collect payment therefor from available assets.
After the payment of all liabilities and claims against the closed
bank, the Corporation shall pay any surplus dividends at the
legal rate of interest, from date of takeover to date of
distribution, to creditors and claimants of the closed bank in
accordance with legal priority before distribution to the
shareholders of the closed bank. (emphasis supplied)
Relying thereon, PDIC filed on August 8, 2005 a Motion for
Approval of the Final Distribution of Assets and Termination of
the Liquidation Proceedings,5 praying that an Order be issued
for:
1. The reimbursement of the liquidation fees and
expenses incurred and/or advanced by herein
petitioner, PDIC, in the amount of ₱3,795,096.05;
2. The provision of ₱700,000.00 for future expenses in
the implementation of this distribution and the
winding-up of the liquidation of Intercity Savings and
Loan Bank, Inc.;
3. The write-off of assets in the total amount of
₱8,270,789.99, as set forth in par. 2.1 hereof;
4. The write-off of liabilities in the total amount of
₱1,562,185.35, as set forth in par. 8 hereof;
5. The Final Project of Distribution of Intercity Savings
and Loan Bank as set forth in Annex "Q" hereof;
6. Authorizing petitioner to hold as trustee the
liquidating and surplus dividends allocated in the
project of distribution for creditors who shall have a
period of three (3) years from date of last notice within
which to claim payment therefor. After the lapse of
said period, unclaimed payments shall be escheated
to the Republic of the Philippines in accordance with
Rule 91 of the Rules of Court;
7. Authorizing the disposal of all the pertinent bank
records in accordance with applicable laws, rules and
regulations after the lapse of one (1) year from the
approval of the instant Motion.
By Order of July 5, 2006,6 Branch 134 of the Makati RTC
granted the motion except the above-quoted paragraphs 5 and
6 of its prayer, respectively praying for the approval of the Final
Project of Distribution and for authority for PDIC "to hold as
trustee the liquidating and surplus dividends allocated . . . for
creditors" of Intercity Bank.
In granting the motion, the trial court resolved in the negative
the sole issue of whether Section 12 of RA 9302 should be
applied retroactively in order to entitle Intercity Bank creditors to
surplus dividends, it otherwise holding that to so resolve would
run counter to prevailing jurisprudence and unduly prejudice
Intercity Bank shareholders, the creditors having been paid their
STAT CON 5
principal claim in 2002 or before the passage of RA 9302 in
2004.
PDIC appealed to the Court of Appeals 7 before which
respondent Stockholders of Intercity Bank (the Stockholders)
moved to dismiss the appeal, arguing principally that the proper
recourse should be to this Court through a petition for review on
certiorari since the question involved was purely one of law. 8
By Resolution of October 17, 2007,9 the appellate court
dismissed the appeal, sustaining in the main the position of the
Stockholders. Its Motion for Reconsideration having been
denied by Resolution dated January 24, 2008, 10 PDIC filed the
present Petition for Review on Certiorari.1avvphi1
PDIC contends that the appellate court disregarded the issue of
the trial court’s disapproval of the payment of additional
liquidating dividends to Intercity Bank creditors, which involved
a question of fact that entailed a review of the evidence; that the
prayer for surplus dividends involved another question of fact as
there must first be a factual finding that all claims against
Intercity Bank have been paid; and that there having been
previously approved but unclaimed liquidating dividends, the
denial of its prayer for appointment as trustee therefor resulted
in an anomalous situation where no one has the authority to
handle them until they are claimed.11
The Stockholders, for their part, maintain that only a question of
law was brought to the appellate court, the parties having
stipulated in the trial court that the sole issue for determination
was whether RA 9302 may be applied retroactively; that the
payment of additional liquidating dividends should be deemed
approved since they never opposed it and the trial court
specifically disapproved only the payment of surplus dividends;
and that in any event, RA 9302 cannot be given retroactive
effect absent a provision therein providing for it. 12
The petition lacks merit.
Indeed, PDIC’s appeal to the appellate court raised the lone
issue of whether Section 12 of RA 9302 may be applied
retroactively in order to award surplus dividends to Intercity
Bank creditors, which was, as stated above, what the parties
had stipulated upon as the sole legal issue in PDIC’s Motion for
Approval of the Final Distribution of Assets and Termination of
the Liquidation Proceedings.
Whether a statute has retroactive effect is undeniably a pure
question of law. PDIC should thus have directly appealed to this

Court by filing a petition for review on certiorari under Rule 45,
not an ordinary appeal with the appellate court under Rule 41.
The appellate court did not err, thus, in holding that PDIC
availed of the wrong mode of appeal.13
In the interest of justice, however, and in order to write finis to
this controversy, the Court relaxes the rules and decides the
petition on the merits.14
A perusal of RA 9302 shows that nothing indeed therein
authorizes its retroactive application. In fact, its effectivity
clause indicates a clear legislative intent to the contrary:
Section 28. Effectivity Clause. - This Act shall take effect fifteen
(15) days following the completion of its publication in the
Official Gazette or in two (2) newspapers of general circulation.
(emphasis supplied)
Statutes are prospective and not retroactive in their operation,
they being the formulation of rules for the future, not the past.
Hence, the legal maxim lex de futuro, judex de praeterito — the
law provides for the future,
the judge for the past, which is articulated in Article 4 of the Civil
Code: "Laws shall have no retroactive effect, unless the
contrary is provided." The reason for the rule is the tendency of
retroactive legislation to be unjust and oppressive on account of
its liability to unsettle vested rights or disturb the legal effect of
prior transactions.15
En passant, PDIC’s citation of foreign jurisprudence that
supports the award of surplus dividends is unavailing. Resort to
foreign jurisprudence is proper only if no local law or
jurisprudence exists to settle the controversy. And even then, it
is only persuasive.16
WHEREFORE, the petition is DENIED.
SO ORDERED.
People vs. Garcia
85 Phil. 651
TUASON, J.:
The sole question presented on this appeal is whether the
appellant, being 17 years of age at the time of the commission
of the crime, was entitled to the privileged mitigating
circumstance of Article 68, paragraph 2, of the Revised Penal
Code. The lower court, ignoring defendant's minority, sentenced
him to an indeterminate penalty of from 4 years, 2 months and
1 day of prision correccional to 8 years of prision mayor for the
crime of robbery of which he was found guilty. He was also
sentenced to pay the offended party, jointly and severally with,
the other accused, the sum of P85 as indemnity.
Republic Act No. 47, which amended Article 80 of the Revised
Penal Code by reducing from 18 to 16 the age below which
accused have to "be committed to the custody or care of a
public or private, benevolent or charitable institution," instead of
being convicted and sentenced to prision, has given rise to the
controversy. The Solicitor General believes that the amendment
by implication has also amended paragraph 2 of Article 68 of
the Revised Penal Code, which provides that when the offender
is over fifteen and under eighteen years of age, "the penalty
next lower than that prescribed by law shall be imposed, but
always in the proper period."
There are well recognized rules of statutory construction which
are against the Government's contention.
One of these rules is that all parts of a statute are to be
harmonized and reconciled so that effect may be given to each
and every part thereof, and that conflicting intentions in the
name statute are never to be supposed or so regarded, unless
forced upon the court by an unambiguous language. (59 C. J.,
999.)
This rule applies in the construction of a statute and its
amendment, both being read together as a whole. "An
amended act is ordinarily to be construed as if the original
statute has been repealed, and a new and independent act in.
the amended form had been adopted in its stead; or, as
frequently stated by the courts, so far as regards any action
after the adoption of the amendment, as if the statute had been
originally enacted in its amended form. The amendment
becomes a, part of the original statute as if it had always been
contained therein, unless such amendment involves the
abrogation of contractual relations between the state and
others. Where an amendment leaves certain portions of the
original act unchanged, such portions are continued in force,
with the same meaning and effect they had before the
amendment. So where an amendatory act provides that an
existing statute shall be amended to read as recited in the
amendatory act, such portions of the existing law as are
retained, either literally or substantially, are regarded as a
continuation of the existing law, and not as a new enactment."
(59 C. J., 1096, 1097.)
STAT CON 6
We find, no irreconcilable conflict between Article 68, paragraph
2, as it now stands and Article 80 as amended, There is no
incompatibility between granting accused of the ages of 15 to
18 a privileged mitigating circumstance and fixing at 16 the
maximum age of persons who are to be placed in a reformatory
institution. In other words, there is no inconsistency between
sending defendants of certain ages to prison and giving them a
penalty lower than the imposable one on adults under the same
or similar circumstances. Let it be remembered that the
privilege of Article 68, supra, is not by its nature inherent in age
but purely statutory and conventional, and that this privilege is
granted adult offenders under given conditions.
At least there is no clear intention on the part of the Congress to
amend Article 68. Indeed the rational presumption is that if
there had been such an intention the lawmakers should have
said so expressly, instead of leaving the change to inference.
One other rule of interpretation that quarrels with the theory of
implied repeal or amendment is that penal law is to be
construed, in case of doubt, strictly against the state. "Criminal
and penal statutes must be strictly construed, that is, they
cannot be enlarged or extended by intendment, implication, or
by any equitable considerations . In other words, the language
cannot be enlarged beyond the ordinary meaning of its terns in
order to carry into effect the general purpose for which the
statute was enacted. Only those persons, offenses, and
penalties, clearly included, beyond any reasonable doubt, will
be considered within the statute's operation. They must come
clearly within both the spirit and the letter of the statute, and
where there is any reasonable doubt, it must be resolved in.
favor of the person accused of violating the statute; that is, all
questions in doubt will be resolved in favor of those from whom
the penalty is sought." (Statutory Construction, Crawford, pp.
460-462.)
The offense charged in the information of which the appellant
was found guilty is punishable under Article 294, case No. 5, of
the Revised Penal Code, as amended by Sect:ion 6 of Republic
Act No. 18, with prision correccional in its maximum period
to prision mayor in its medium period. The penalty one degree
lower than this is arresto mayor in its maximum period to prision
correccional in its medium, period. There being no modifying
circumstance, the appropriate penalty in the present case is
from 6 months and 1 day of arresto mayor to 2 years and 4
months of prision correccional. Being entitled to an
indeterminate penalty as provided in Section 1 of Act No. 4103
as amended, the accused should be, and he is hereby
sentenced to imprisonment of not less than 4 months of arresto
mayor, and not more than 2 years and 4 months of prision
correccional. In all other respects the appealed judgment is
affirmed., The appellant will pay the costs of this appeal.

Javellana vs. Nuñez
40 Phil. 761
STREET, J.:
In the year 1915 Julio Javellana, the plaintiff herein, recovered
a judgment for the sum of P5,710.50, with interest, in the Court
of First Instance of the Province of Iloilo against Maximino
Mirasol and Eugenio Kilayco, and in order to satisfy the same
an execution was in due time levied upon certain properties of
Maximino Mirasol. On July 6, 1915, said properties were
exposed to sale by the sheriff at public auction and were
purchased by the judgment creditor, Julio Javellana, the highest
bidder, for the sum of P5,920. Before the expiration of the
period of one year allowed by law for the redemption of property
sold under execution, or to be precise, on July 3, 1916,
Alejandro Mirasol, a brother of Maximino Mirasol, acting in
representation of another brother, Luis Mirasol, appeared
before Geronimo Nunez, deputy sheriff of the province
aforesaid, and, for the purpose of redeeming the properties in
accordance with section 465 of the Code of Civil Procedure,
placed in the hands of said officer a check, drawn on the Bank
of the Philippine Islands and payable to bearer, for the sum of
P6,604.74.
In making this redemption it was represented to the deputy
sheriff that Luis Mirasol was a redemptioner, or person entitled
to redeem, within the meaning of section 464 of the Code of
Civil Procedure; and in proof of this fact Alejandro Mirasol
exhibited a document bearing date of April 4, 1916, executed by
the president of the Bank of the Philippine Islands, transferring
to Luis Mirasol two claims, amounting to several thousand
pesos, which had been reduced to judgment by the bank
against Maximino Mirasol. The consideration for the transfer of
these judgments is stated in the document of transfer to be
P6,150, paid to the bank by Luis Mirasol.
The right of Luis Mirasol to redeem the property was not
questioned by the deputy sheriff, and the check presented by
Alejandro Mirasol was accepted. At the same: time a receipt
was delivered to Alejandro Mirasol, signed by Geronimo Nunez
as deputy sheriff, acknowledging the receipt of the sum of
P6,604.74, as a deposit for the purpose of redeeming the
properties which had been sold as the property of Maximino
Mirasol and purchased by the judgment creditor Julio Javellana.
Of this amount the sum of P5,920 was stated to be the amount
of the purchase price, the remainder being accrued interest.
The check which was delivered to Geronimo Nunez by
Alejandro Mirasol upon the occasion of making this deposit was
not immediately presented for payment to the bank upon which
it was drawn but was delivered by that officer to his superior,
the Honorable Amando Avanceña, at that time Governor of the
Province of Iloilo, and ex officio sheriff. By him the check was
retained until the expiration of his term of office, when it was
turned over to his successor in office, the Honorable Gregorio
Yulo. On December 13, 1916, the latter official presented the
check to the bank upon which it was drawn and received
payment.
Pursuant to the redemption thus effected, the deputy sheriff,
Geronimo Nunez, at the request of Luis Mirasol, on March 9,
1918, executed and delivered to the latter a public document
purporting to convey to him all the right, title and interest in said
property which had formerly been vested in Maximino Mirasol.
Julio Javellana, the original judgment creditor of Maximino
Mirasol, and purchaser of the properties which had been sold
as aforesaid, considering himself aggrieved by the redemption
thereof, appeared in the Court of First Instance of the Province
of Iloilo, on April 11, 1918, and filed the original complaint
herein, attacking said redemption as irregular and unauthorized
in point of law and as fraudulent, or simulated, in point of fact,
and praying that the document of March 9, 1918, executed by
Geronimo Nunez, and purporting to convey to Luis Mirasol the
title to said property which had formerly been vested in
Maximino Mirasol, be declared fraudulent and void, and that
said instrument be cancelled by order of the court. The plaintiff
further asked that the sheriff be required to issue to the plaintiff,
as purchaser, a deed of conveyance of said property of a
definitive character, as comtemplated in section 466 of the
Code of Civil Procedure.
The defendants having answered,, the cause came on to be
heard in due course; and his Honor, Judge L. M. Southworth,
presiding in the Court of First Instance of Iloilo, held that the
redemption had been effected in good faith and in accordance
with the requirements of law. Judgment was accordingly
entered on October 7, 1918, declaring Luis Mirasol to be the
owner of the properties in question and absolving the
defendants from the complaint, with costs. From this judgment
the plaintiff, Julio Avellana, appealed.
The most formidable question in the case is one of fact, namely,
whether the deposit made on July 3, 1916, by Alejandro
Mirasol, when he placed a check for P6,604.74 in the hands of
Geronimo Nunez, was in fact an absolute and unconditional
payment in good faith made for the purpose of effecting
redemption, or whether it was, on the other hand, a contingent
deposit, intended, with the connivance of the deputy sheriff, to
be returned in a certain event to Luis Mirasol, without ever
coming to the hands of the creditor, Julio Javellana.
STAT CON 7
It is not to be denied that counsel for the plaintiff-appellant have
been able to marshal a number of suspicious circumstances
which at first sight seem to sustain their contention that the
redemption was merely colorable and that the redemptioner did
not intend or desire that the redemption money should be
unconditionally placed at the disposal of the purchaser, the
plaintiff in this case. Nevertheless upon a careful examination of
the proof we are convinced that the trial judge was correct in
holding that the redemption was unconditional and made
without reservation. A brief exposition of certain facts bearing
on this aspect of the case will, we think, suffice to show the
correctness of this conclusion.
It appears in evidence that the members of the Mirasol family
whose names figure in these proceedings have long enjoyed
the reputation of being people of considerable substance. But a
few years ago Maximino Mirasol became heavily involved, as a
result of the financial operations of one Eugenio Kilayco, in
conjunction with whom Maximino Mirasol had signed a number
of promissory notes. Eugenio Kilayco speedily became
insolvent, and the burden of the obligations thus created
necessarily fell upon Maximino Mirasol, who was himself unable
to sustain the burden and was reduced to financial ruin. In this
crisis Maximino Mirasol became indebted to his brothers, Luis
and Alejandro; and for the purpose of protecting them, as well
doubtless as for the purpose of placing his own estate beyond
the reach of his creditors, Maximino Mirasol conveyed to his
brothers certain properties which had come to him by
inheritance. It was upon these properties that Julio Javellana,
the plaintiff herein, caused the execution to be levied in 1915 to
satisfy the judgment which he had recovered against Maximino
Mirasol and Eugenio Kilayco, as stated in the first paragraph of
this opinion. When said execution was levied Luis and
Alejandro Mirasol at once notified the sheriff that they were the
owners of said properties, basing their claim upon the
conveyances executed in their favor by Maximino Mirasol.
However, an indemnifying bond was executed by Julio
Javellana, to protect the sheriff, and the latter ignored the claim.
The sale accordingly took place on July 6, 1915, as already
stated; and on September 6. thereafter, Luis Mirasol and
Alejandro Mirasol simultaneously began actions against Julio
Javellana and others in the Court of First Instance of Iloilo to
quiet their alleged titles to the properties in question and to
annul the sheriff's sale. The defense interposed in those cases
was that the conveyances upon which the plaintiffs relied to
prove title in themselves were fraudulent and void as against
the creditors of Maximino Mirasol. On February 16, 1916, the
Court of First Instance sustained this defense, and absolved the
defendants from the complaint. This plaintiffs thereupon
appealed to the Supreme Court, where the judgment of the
Court of First Instance was affirmed on February 13 [16],

1918.[1]
From this statement it will be seen that the cases instituted by
Luis Mirasol and Alejandro Mirasol to recover the properties in
question were still pending upon appeal at the time when the
period for the redemption of those properties was about to
expire in July, 1916. Luis Mirasol and Alejandro Mirasol, the
plaintiffs in those actions, were therefore in a quandary upon
the problem of saving something out of the wreck of their
brother's fortune; for it was obvious that if the sixth day of July,
1916, should pass without redemption and the decision of the
lower court in the appealed cases should be finally affirmed, the
properties in question would be irretrievably lost. In this
dilemma Luis Mirasol decided to purchase the credits of the
Bank of the Philippine Islands against Maximino Mirasol, which
had already been reduced to judgment, and to proceed in the
character of judgment creditor to redeem the properties from
Julio Javellana. Accordingly on April 4, 1916, the purchase of
the judgments of the Bank of the Philippine Islands was
accomplished in the city of Manila by Mirasol; and a few days
later he transmitted to his brother Alejandro, in the city of Iloilo,
the sum of P7,000, with instructions to redeem the properties.
The steps taken by Alejandro pursuant to these instructions
have already been narrated.
It naturally would have occurred to persons circumstanced like
the Mirasols that, in case of the reversal of the judgment in the
appealed cases, the money which was thus used to effect
redemption might be lost, since it must have been considered
exceedingly doubtful whether in that event the creditor could be
compelled to return it. Parting from this suggestion, the case of
the plaintiff-appellant supposes that Alejandro Mirasol, with a
view to the eventual recovery of the check in case of the
reversal of the pending cases, entered into a collusive
agreement with Geronimo Nunez, whereby the latter agreed to
conceal the fact of redemption until the outcome of the
appealed cases should be known and in case of reversal to
return the check unused. In this connection it is shown that
Geronimo Nunez is related in some way to the Mirasols, and
the inference is suggested that he would be disposed to act in
the matter in a way friendly to their interests. As might be
expected the existence of this agreement is denied by both the
principals, Alejandro Mirasol and Geronimo Nunez, and the
conclusion that there was collusion of any sort rests entirely
upon circumstantial evidence.
It will be noted that the appellant's theory of the case upon this
point has as its principal basis a concealment of the
re4emption, but this view of the case is refuted by the proven
fact that there was no concealment of the redemption. The
delay of the sheriff in converting the check into money and his
failure to offer the proceeds to Julio Javellana, or his attorney,
possibly require some explanation; and this is in our opinion
found in the attitude of procrastination which was deliberately
adopted by Julio Javellana himself under the advice of his
attorney after the fact of the redemption of the property had
been brought to their attention.
Ruperto Montinola, one of the attorneys for Julio Javellana
throughout all this litigation, says that on July 4, 1916, he left
Iloilo for other parts and was absent from that city for three
days. He says that soon after returning he was informed by
some one in the corridor of the courthouse that Alejandro
Mirasol had deposited a sum of money in the hands of the
sheriff, whereupon he at once wrote a letter, asking information
of the sheriff, and on the same day [July 10] received a
notification from Geronimo Nunez, informing him that on July 3,
1916, Alejandro Mirasol, "as a creditor of Maximino Mirasol,"
had deposited in the sheriff's office the sum of P6,604.70, for
the redemption of the properties in question. Geronimo Nunez
says that on July 3, 1916, or the very day when the deposit was
made, he called up the office of Montinola to inform him of the
fact that the redemption of the property had been effected but
was told that Montinola was not in. The effort of the witness to
reach Montinola was again repeated on the two succeeding
days but without success, owing to the absence of Montinola
from the city. Finally, on or about July 10, Montinola himself
asked this witness to send him a formal notification of the
redemption. In the light of this testimony there can be no
question that Montinola knew of the redemption very soon after
July 3, 1916; and we have from his own lips the further
statement that when he next saw his client, Julio Javellana, he,
as attorney, advised him that they should wait since it was the
duty of the redemptioner to tender payment directly to the
creditor.
We attach no importance to the circumstance that the official
notification says that the redemption was effected by Alejandro
Mirasol "as creditor" instead of Alejandro Mirasol "as attorney in
fact for Luis Mirasol." This error in our opinion is merely an
example of those inaccuracies which naturally creep into
recitals hastily written by persons not intent upon the exactitude
of their statements.
The advice which Montinola gave his client, namely, to wait,
furnishes, we think, a natural and reasonable explanation of all
the delay that thereafter occurred in connection with the
cashing of the check; and we cannot believe that this delay was
the result of a plot to withhold the proceeds of the check from
Julio Javellana, its rightful owner. Concealment there was none.
The contention of the appellant on this question is in our opinion
untenable.
The contention is made in the appellant's brief that the position
STAT CON 8
of Luis Mirasol as a litigant in the prior appeal is inconsistent
with his position as litigant in this case; and he is supposed to
be estopped from now claiming in the character of redemptioner
the property which he then claimed in the character of owner.
We are unable to see any force in the suggestions; as the
positions occupied by this litigant are based upon alternative
rather than upon opposed pretension. No one can question the
right of a litigant to claim property as owner and to seek in the
same proceeding alternative relief founded upon some
secondary right. The right of redemption, for instance, is always
considered compatible with ownership, and one who fails to
obtain relief in the sense of absolute owner may successfully
assert the other right. That which a litigant may do in any one
case can of course be done in two different proceedings.
The proposition is advanced with apparent confidence in the
appellant's brief that if judgment had been reversed by the
Supreme Court in the cases brought by the Mirasol brothers
against Julio Javellana, the latter could have retained the
redemption money, supposing that he had seen fit to reduce it
to possession. As to this it is perhaps unnecessary here to
express a definite opinion. Nevertheless in view of the
emphasis placed on the point in the appellant's brief, we deem
it desirable to express a doubt as the correctness of the
proposition thus stated. The act of Luis Mirasol in redeeming
the property pending the decision of those appeals was not an
officious act in any sense. It was on the contrary necessary to
the reasonable protection of his right as a subsequent
judgment-creditor of Maximino Mirasol a right in no wise
involved in the issues of the appealed cases. Consequently, if
those cases had been versed, the title by virtue of which Julio
Javellana had obtained the redemption money would have
been destroyed, and in all probability the law would have
imposed upon him the obligation to restore what he had thus
acquired. (Hilario vs. Hicks, p. 576, ante.)
In the discussion of this case a number of subordinate
questions have been argued or suggested themselves as to the
proper interpretation of the provisions of the Code of Civil
Procedure which treat of redemption from execution sales,
among which may be noted the following, namely, whether the
redemption was rendered ineffectual by reason of the fact (1)
that a check was used as a medium of payment instead of
money, (2) that the tender of payment was made to the officer
who conducted the sale instead of directly to the purchaser, and
(3) that the redemptioner failed to produce to said officer the
documents specified in section 467 of the Code of Civil
Procedure in proof of his right to redeem. A few words upon
these points will not come amiss; and by way of preface we
may be permitted to repeat the following words from a decision
of the Supreme Court of Illinois, which have heretofore been
quoted with approval by this Court: "Redemptions are looked

upon with favor, and where no injury is to follow, a liberal
construction will be given to our redemption laws, to the end
that theproperty of the debtor may pay as many of the debtor's
liabilities as possible." (Enage vs. Vda. e Hijos de F. Escano, 38
Phil. Rep., 657.)
Upon the first point, we are of the opinion that the redemption
was not rendered invalid by the fact that the officer accepted a
check for the amount necessary to make the redemption
instead of requiring payment in money. It goes without saying
that if he had seen fit to do so, the officer could have required
payment to be made in lawful money, and he undoubtedly, in
accepting a check, placed himself in a position where he would
have been liable to Julio Javellana if any damage had been
suffered by the latter as a result of the medium in which
payment was made. But this cannot affect the validity of the
payment. The check as a medium of payment in commercial
transactions is too firmly established by usage to permit of any
doubt upon this point at the present day.
As to the second point, direct authority for making payment to
the officer who conducted the sale is found in section 466 of the
Code of Civil Procedure, and it was manifestly unnecessary for
the redemptioner to seek out the purchaser, Julio Javellana, for
the purpose of making payment to him. (Enage vs. Vda. e hijos
de F. Escaiio, 38 Phil. Rep., 657.)
The third point, which relates to the production of the document
necessary to prove the right of the redemptioner to make the
redemption, is of somewhat greater significance. Section 467 of
the Code of Civil Procedure provides, as may be recalled, that
where the assignee of a judgment seeks to redeem he must
produce, in proof of his right, to the person to whom the offer to
redeem is made: (1) a certified copy of the judgment of which
he claims to be the owner; (2) a copy of the assignment,
verified by the affidavit of himself, or of a subscribing witness
thereto; (3) an affidavit by himself or his agent showing the
amount then actually due on said judgment. In the present case
Geronimo Nunez was content to permit the redemption without
requiring compliance with these provisions. The original of the
assignment executed by the bank to Luis Mirasol was, however,
produced before him; and for the rest he was fully aware of the
existence of the judgments in favor of the bank against
Maximino Mirasol and of the fact that they still remained
unsatisfied upon the records of his court. This irregularity, if
such it may be termed, in the manner of making the redemption
does not affect the validity of that act. The primary purpose of
the provision under consideration is to define with precision the
conditions under which the person redeeming can enforce
redemption as a matter of unquestionable right; and, if the
person to whom the offer of redemption is made sees fit to
accept the money without reference to the information which
the documents mentioned would give, the failure on the part of
the person redeeming to produce them is of no moment. It is
hardly necessary to say that the act of the officer in accepting
the tender would not have made the redemption effectual, if the
person redeeming had in fact had no interest which entitled him
to redeem, and the sufficiency of his title or right to redeem may
of course be questioned. This circumstance affords all the
protection needed to prevent the purchaser at the execution
sale from being deprived of the property by an unwarranted
redemption.
We are aware of the fact that authority can be found in the
decisions of some American courts, notably the Supreme Court
of California, to the effect that under such a provision as that
now in question, the production of the documents mentioned is
a condition precedent to the right to effect redemption; and a
distinction is there drawn between the case of the judgment
debtor and his successors in interest and that of the
"redemptioner," or creditor having a lien by judgment
subsequent to that under which the property was sold, it being
held that the former need not produce the specified documents
while the latter must. (Haskell vs. Manlove, 14 Cal., 54; Philipps
vs. Hagart, 113 Cal., 552 [54 Am. Dec, 369].) The reasons
which have led this Court to adopt a view on this point more
favorale to the redemptioner were stated with much force by
Justice Fisher in Enage vs. Viuda e Hijos de F. Escaño, 38
Phil., 657; and we have no hesitancy in adhering to the doctrine
there announced.
A still more fundamental point than those above touched upon
has also been suggested, which is this: Can an ordinary
creditor whose judgment is subsequent to that under which the
property was sold exercise the right of redemption in any case?
The difficulty arises upon the interpretation of subsection 2 of
section 464 of said Code and has its origin in the use of the
word "lien" in the original English text of that provision. The
expression "a creditor having a lien by attachment, judgment, or
mortgage" apparently imputes to attachments and judgments
an attribute which they do not possess in this jurisdiction; for it
is well established with us that an ordinary judgment for a sum
of money does not create a lien upon the property of the debtor
in the sense of a real obligation binding on the property.
(Peterson vs. Newberry, 6 Phil. Rep., 260.) It is, however,
equally well settled that the judgment creditor has a preferential
right by virtue of paragraph (B) of subsection 3 of article 1924 of
the Civil Code (Peterson vs. Newberry, supra; Molina Salvador
vs. Somes, 31 Phil. Rep., 76); and upon examining the official
Spanish version of section 464 of the Code of Civil Procedure, it
will be noted that the translator, being evidently perplexed by
the use of the word "lien" in the English text, adopted the
expression "derecho preferente" as its nearest Spanish
STAT CON 9
equipment. In so doing, we think he displayed proper
discernment, and though he may not have produced a literal
version, he expressed the spirit of the original with approximate
fidelity.
It is well to add, furthermore, that even to the mind of the
American lawyer, the word "lien" as used in this context, does
not necessarily imply the existence of a specific real obligation
fixed upon the property of the judgment debtor. In proof of this it
is sufficient to quote the opening words on the topic "Lien of
Judgments" in the treatise on "Judgments" contained in the
Cyclopedia of Law and Procedure, where it is said: "The lien of
a judgment does not constitute or create an estate, interest, or
right of property in the lands which may be bound for its
satisfaction; it only gives a right to levy on such lands to the
exclusion of adverse interests subsequent to the judgment." (23
Cyc., 1350.)
The view that the "preferential right" of the civil law may be here
taken as the approximate equivalent of "lien," as used in the
English version, is corroborated by the decision of this Court in
Tec Bi & Co. vs. Chartered Bank of India, Australia and China
(16 Off. Gaz., 911), where it was held that the word "lien," as
used in section 59 of the Insolvency Law, includes the
preferences created by articles 1922 and 1924 of the Civil
Code.
The foregoing suggestions furnish the clue to the proper
interpretation of the provision now under consideration; and the
result is that any ordinary creditor, or assignee of such, having
a judgment subsequent to that under which the property was
sold may exercise the right of redemption. This interpretation,
instead of being strained or artificial, as might superficially
appear, is really forced upon us to save the provision from total
obliteration. No rule of interpretation is better acredited than that
which is expressed in the Latin maxim Ut res magis valeat
quam pereat.
The circumstance has not escaped ourvattention that upon this
question, as upon the other point of the necessity for the
production of the appropriate documents in proof of the right of
redemption, we are announcing a rule different from that
adopted by the Supreme Court of California in interpreting a
very similar provision contained in the Code of Civil Procedure
of that State. It is there held that no judgment creditor can
redeem until he has in fact acquired a lien on the property of the
debtor by virtue of his judgment; (Bagley vs. Ward and Mebius,
27 Cal., 369; Perkins vs. Center, 35 Cal., 713.) But it will be
noted that under the law of California a judgment may be made
a lien on the debtor's property; and provision is made as to the
time and manner in which the lien becomes, or is. made,
effective. The interpretation may naturally be quite different in a

jurisdiction where, as here, the" judgment, instead of creating a
lien, merely gives a preferential right, which attaches when the
judgment attains finality. In this connection it should not be
forgotten that, though our Code of Civil Procedure is derived
from American sources and the English version is controlling,
the official Spanish translation may be used as a legitimate aid
to interpretation; and where it is found that the original idea as
expressed in English is wholly unadapted to our system of
jurisprudence, the Spanish translation may be taken as
indicating the meaning which should be attached to the
expression in this jurisdiction. It is to be assumed that our
lawmakers, whether Americans or Filipinos by nationality, have
legislated with knowledge of conditions here existing; and even
those laws which have been bodily taken from American
sources not infrequently acquire a characteristic coloring from
the change of environment.
Our conclusion upon the whole case is that the redemption of
the properties in question by Luis Mirasol was lawfully
accomplished. The judgment of the trial court dismissing the
complaint must therefore be affirmed. It is so ordered, with
costs against the appellant.
G.R. Nos. 111734-35 June 16, 2000
PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
FERNANDO A. MALAPAYON, a.k.a. DANIEL S. MARTINEZ,
ARNULFO M. CINCO, a.k.a. NOLIE, TEODORO M. CINCO,
a.k.a. TEDDY, REMIGIO R. GONZALES, a.k.a. EMY, RAFAEL
B. ABELLO, a.k.a. TENYENTE, MACARIO U. CASTILLO, and
MERCEDITA PADILLA-CASTILLO, a.k.a. MERCY, accused,
MACARIO U. CASTILLO, MERCEDITA P. CASTILLO,
REMIGIO R. GONZALES, and RAFAEL B.
ABELLO, accused-appellants.
PARDO, J.:
Before the Court are separate appeals of accused Macario U.
Castillo, Mercedita Padilla-Castillo, Remigio R. Gonzales and
Rafael B. Abello from the decision of the Regional Trial Court,
Quezon City 1 convicting them of kidnapping for ransom 2 and
Remigio R. Gonzales for the added offense of illegal
possession of firearms and ammunition. 3
The court acquitted Rafael B. Abello, Teodoro M. Cinco and
Arnulfo M. Cinco of the charge of illegal possession of firearms
and convicted Fernando A. Malapayon and Remigio R.
Gonzales. In the case of kidnapping for ransom, the court
convicted Fernando A. Malapayon, Arnulfo M. Cinco, Teodoro
M. Cinco, Remigio R. Gonzales, Rafael B. Abello, Macario U.
Castillo and Mercedita Padilla-Castillo as principals and
sentenced them to each suffer the penalty of reclusion
perpetua. They were ordered to indemnify the victim,
Wilhelmina Andrada, in the amount of Five hundred Thousand
(P500,000.00) Pesos, and to pay the proportional costs. The
firearms and ammunition found in the possession of the
accused were confiscated in favor of the government. 4
On February 9, 1993, State Prosecutor II of the Department of
Justice Reynold Q. Yaneza filed with the Regional Trial Court,
Quezon City an information 5 charging accused Fernando A.
Malapayon, Arnulfo M. Cinco, Teodoro M. Cinco, Remigio R.
Gonzales and Rafael B. Abello with illegal possession of
firearms and ammunition, as follows:
That on or about 27 November 1992 and within the
jurisdiction of this Honorable Court, the above-named
accused, in concert with each other, did then and
there willfully, unlawfully, feloniously, and without
authority of law possessed the following unlicensed
firearms and ammunition which were recovered and
seized by police authorities from their safe house at
No. 52 Scout Santiago Street, Quezon City, to wit:
1. One (1) Cal. 5.56 (M-16) Baby Armalite
with Serial No. RP 054118;
2. One (1) Short magazine for Cal. 5.56 (M-
16) Rifle;
3. Nineteen (19) rounds of live ammunition
for Cal. 5.56 (M-16) rifle;
4. One (1) Cal. .38 revolver without Serial
Number ("paltik");
5. One (1) Ca1. .38 revolver snub-nosed
without Serial Number ("paltik"); and
6. Sixteen (16) rounds of live ammunition for
cal. .38 revolver.
CONTRARY TO LAW.
On the same day, February 9, 1993, State Prosecutor Yaneza
filed another information 6 charging all of the above-named
STAT CON 10
accused 7 together with Macario U. Castillo and Mercedita
Padilla-Castillo with kidnapping for ransom, as follows:
That on or about 26 November 1992 and within the
jurisdiction of this Honorable Court, the above-named
accused, conspiring, confederating, and in
confabulation with one another, did then and there
willfully, unlawfully and feloniously abducted (sic)
WILHELMINA VILLANUEVA ANDRADA along
Lantana Street, Quezon City, and detained her
against her will in their safe house situated at No. 52
Scout Santiago, Quezon City, with their demand for
payment of ransom for her release which was not paid
due to her timely rescue on 27 November 1992 by
police authorities.
CONTRARY TO LAW.
On March 8, 1993, at the arraignment of the accused for the
two cases, they pleaded "not guilty". 8 The court ordered the
consolidation of the two cases. 9 Trial ensued. 10
The relevant facts are:
Wilhelmina Andrada was engaged in the real estate business.
She was Vice President and Treasurer of her own agency.
Prosecution witness Nancy Millo was her secretary for ten
years. Accused-appellants, spouses Macario and Mercedita
Castillo were both her sales agents on commission basis.
In November 1992, her agency had a house for sale. 11 Two
weeks before, an alleged buyer called. He identified himself as
"Albert Gutierrez" 12 who turned out to be accused Arnulfo M.
Cinco. 13
On November 25, 1992, "Albert Gutierrez" called Wilhelmina
and asked for a discount on the property. He asked if they could
meet the next day at the Bank of the Philippine Islands Branch
along Kamuning in Quezon City.
On November 26, 1992, at 10:00 a.m., "Albert Gutierrez" called
and asked if they could meet instead at De los Santos Hospital
in Quezon City. Wilhelmina agreed. She and her secretary,
Nancy, proceeded to De los Santos Hospital in Wilhelmina's
white Toyota Corolla. 14

The accused Fernando A. Malapayon and Arnulfo M. Cinco met
them. Nancy recognized Arnulfo M. Cinco as the man who
introduced himself as "Albert Guttierez".
With Wilhelmina driving, they proceeded in Wilhelmina's car to
Lantana St. as Fernando A. Malapayon supposedly needed to
fetch his wife. 15 They reached a house with a brown gate.
Fernando A. Malapayon instructed Wilhelmina to stop. She
heard Nancy shout. She turned and found Fernando A.
Malapayon pointing a .45 caliber pistol at Nancy, instructing her
not to move ("huwag kang kikilos"). Wilhelmina tried to get out
of the car. Arnulfo M. Cinco grabbed her by the neck and locked
her in his grip. They struggled for about three minutes. She
wrestled herself from him and got out of the car. She saw a
man in a blue shirt and asked him for help. Instead of helping,
the man, one of the accused, Teodoro M. Cinco, dragged her
back into the car. 16
17
Nancy was able to escape.
The three accused tied Wilhelmina's hands with a cord. They
covered her mouth and blindfolded her with pieces of cloth.
They took her to an apartment along Sct. Santiago St., Quezon
City. 18 The apartment 19 used as a safe house was rented by
accused Fernando A. Malapayon at the time. 20
Wilhelmina was brought to the second floor of the safe house.
She saw three other men inside. The blindfold was apparently
not tight enough and not properly placed. She identified the
three other men as accused Macario U. Castillo, Rafael B.
Abello and Remigio R. Gonzales. 21 While held captive,
Wilhelmina heard and sensed several persons, including two
women talking in whispers. 22
On November 26, 1992, the victim's brother, Dr. Villanueva got
a call from one of the kidnappers. The caller demanded a
ransom of eight million pesos (P8M). After further negotiations,
the demand was lowered to four million pesos (P4M). 23
Fernando Malapayon instructed Remigio Gonzales to guard
Wilhelmina Andrada at all times. 24
On November 26, 1992, the Intelligence Command of the
Philippine National Police 25 ("IC-PNP") received information
about Wilhelmina's kidnapping. Immediately, they mobilized
fifteen (15) teams for her rescue. 26
As it happened, in the first two weeks of November 1992, the
IC-PNP was already suspicious of Fernando A. Malapayon. In
the second week of November, the IC-PNP conducted
surveillance operations on the safe house. The surveillance
was done in connection with the IC-PNP's "Oplan 2-Timer",
where Fernando A. Malapayon was identified as one of their
target personalities. 27 Apparently, the authorities had reason to
believe that Fernando A. Malapayon masterminded a series of
previous kidnappings. 28 Video cameras and still cameras were
used to take photographs of the area. There were video tapes
showing accused Mercedita Padilla-Castillo, Remigio R.
Gonzales and a certain Norma Gatlabayan near the safe
house, chatting by the gate and walking around. The tape was
recorded during the second week of November 1992. Another
tape showed that accused Macario U. Castillo had a key to the
safe house's gate which he used to enter. 29
On November 26, 1992, a breakthrough came when
30
Wilhelmina's car was sighted in the safe house's garage.
On November 27, 1992, a group of policemen headed by Col.
Jewel Canson arrived at the safe house and proceeded to the
second floor. 31 Wilhelmina heard men shouting, "mga pulis
kami". She took off her blindfold.
When the police entered the room, Remigio Gonzales threw the
firearm he was pointing at Wilhelmina towards one of the
room's corners. 32 More unlicensed firearms and ammunition
were found in the safehouse. 33 The accused were
arrested 34 and Wilhelmina was brought to Camp Crame. 35 The
ransom was never paid as Wilhelmina was timely rescued. 36
On June 21, 1993, after trial, the trial court rendered a decision,
the dispositive portion of which reads:
WHEREFORE, accused Rafael B. Abello, Teodoro M.
Cinco and Arnulfo M. Cinco, who are charged in
Criminal Case No. Q-93-41431 for Illegal Possession
of Firearms and Ammunition, are ACQUITTED, for
failure of the prosecution to prove their guilt beyond
reasonable doubt. Accused Fernando Malapayon and
Remigio Gonzales, are found guilty beyond
reasonable doubt as principals for the crime of Illegal
Possession of Firearms and Ammunition in Violation
of P.D. No. 1866, and are sentenced to suffer
imprisonment of Eight (8) Years and One (1) Day, as
minimum, to Ten (10) Years, as maximum, of Prision
Mayor. 37
STAT CON 11
In Criminal Case No. Q-93-41432, fortunately for the
accused the death penalty had been abolished and
reduced to life imprisonment in accordance with
Article III, Sec. 19 (1) of the 1987 Constitution.
Accused Fernando Malapayon, also known as Daniel
S. Martinez, Arnulfo M. Cinco, Teodoro M. Cinco,
Remigio Gonzales, Rafael B. Abello, Macario U.
Castillo and Mercedita Padilla-Castillo are found guilty
beyond reasonable doubt as principals for the crime of
Kidnapping for Ransom in violation of Article 267, of
the Revised Penal Code, and are sentenced to suffer
the penalty of RECLUSION PERPETUA. They are
ordered to indemnify jointly and severally the victim
Wilhelmina Villanueva-Andrada in the amount of Five
Hundred Thousand (P500,000.00) Pesos, and to pay
proportional costs.
The firearms and ammunition offered by the
prosecution as exhibits and admitted by the Court are
confiscated in favor of the government, to wit:
1. One (1) Cal. 5.56 (M-16) Baby Armalite
with Serial No. RP 054118;
2. One (1) Short magazine for Cal. 5.56 (M-
16) Rifle;
3. Nineteen (19) rounds of live ammunition
for Cal. 5.56 (M-16) rifle;
4. One (1) Ca1. .38 revolver without Serial
Number (paltik);
5. One (1) Ca1. .38 revolver snub-nosed
without Serial Number (paltik); and
6. Sixteen (16) rounds of live ammunition for
cal. .38 revolver.
SO ORDERED. 38
Of the seven (7) accused, only Mercedita Padilla-Castillo,
Macario U. Castillo, Rafael B. Abello and Remigio R. Gonzales
appealed. 39
The issue is whether the accused-appellants participated as
conspirators in the kidnapping of Wilhelmina.

Conspiracy need not be proved by direct evidence. It may be
inferred from the conduct of all accused before, during and after
the commission of the crime. 40 The conduct should point to a
joint purpose and design, concerted action and community of
interest. Conspiracy may be proven by circumstantial evidence
or deduced from the mode and manner in which the offense
was penetrated. 41
We shall discuss the individual appeals of the accused.
First, the appeal of Mercedita Castillo.
Mercedita was convicted based on the, following
circumstances:
First, Mercedita referred the accused, Fernando A. Malapayon
to Wilhelmina. 42 She and her spouse, accused-appellant,
Macario Castillo are the links that introduced Fernando A.
Malapayon to victim, Wilhelmina.
Second, when "Albert Gutierrez" called Wilhelmina to inquire
about the house for sale, he never mentioned that he was
referred by either of the Castillos. 43 This is suspicious.
Common practice is for a buyer to inform the seller who referred
him. Likewise, agents working on commission basis will not
normally pass up a commission by not informing their principal
of a referred buyer.
Third, while Wilhelmina was held captive, Mercedita freely
entered and exited the safe house. She was seen and
photographed coming out of the safe house on November 27,
1993. We do not believe that she did not see or know that
Wilhelmina was held against her will on the second floor of the
small apartment. The excuse that she was there to decorate the
apartment was too flimsy to believe.
To justify conviction upon circumstantial evidence, the
combination of circumstantial evidence must leave no
reasonable doubt as to the guilt of the accused. 44 From the
aforementioned circumstances, a fair and logical conclusion—
that Mercedita participated in the crime of kidnapping
Wilhelmina for ransom can be reached.
The exculpation of Norma Gatlabayan during preliminary
investigation cannot be made the basis for Mercedita's
acquittal. Public prosecutors during preliminary investigation do
not decide whether there is evidence beyond reasonable doubt
of the guilt of the person charged. A finding of probable cause
does not require an inquiry as to whether there is sufficient
evidence to secure a conviction. This is precisely what trial on
the merits is for. 45 If Mercedita found any irregularity in Norma
Gatlabayan's being dropped from the information, Mercedita
should have either (1) compelled Norma's prosecution or (2)
sought for the dropping of the charges against her with the
same agency that conducted the preliminary investigation. The
conduct of a preliminary investigation is executive in nature,
while trial is a judicial function. 46 Besides, when Mercedita
entered her plea, she is deemed to have waived any irregularity
in the information and in the preliminary investigation. 47
Consequently, we affirm Mercedita Castillo's conviction for
kidnapping for ransom.
Next, the appeal of Macario Castillo.
Wilhelmina testified that when she was brought to the
safe house, she saw three men, among them,
accused-appellant Macario. Macario saw Wilhelmina,
his employer, bound and blindfolded. She was clearly
held against her will. Yet, he did not do anything to
help her. The reasons which sufficed to convict
Mercedita apply also to Macario. We note that
Macario and Fernando Malapayon were together
when they were both arrested at Saint Luke's Hospital
on November 27, 1992. 48 Macario and Fernando
Malapayon were together from the time of the
abduction to the time of rescue. Verily, Macario
cannot claim ignorance of the kidnapping. Here we
find a closeness of personal association and a
concurrence of sentiment towards a common unlawful
purpose. This indicates participation in a
conspiracy. 49
Even in the face of accusations against him, Macario never
testified in his defense. This goes against the principle that "the
first impulse of an innocent man when accused of wrongdoing
is to express his innocence at the first opportune time" 50 In the
recent case of People v. Damaso Job, 51 appellant's conviction
for kidnapping for ransom was affirmed since he did not give
any plausible reason for his presence in the safe house. As we
did in that case, we do so here.
Hence, we affirm Macario Castillo's conviction of the charge of
kidnapping for ransom. In conspiracy, the act of one is the act
of all. 52
STAT CON 12
We come to the appeal of Rafael Abello. Rafael reasons that he
was at the safe house because he was hired to do a painting
job. 53 Fernando Malapayon confirmed that at about that time,
he hired helpers to paint the apartment. 54
Unlike Macario, Rafael sufficiently explained his presence at the
safe house. His justification was not rebutted by the
prosecution. Failure of the prosecution to overcome the
constitutional presumption of innocence entitles the accused-
appellant to an acquittal. 55 Conspiracy must be established, not
by conjectures, but by positive and conclusive evidence. 56 Mere
companionship does not establish conspiracy. 57 When a
circumstance is capable of two interpretations, one consistent
with the accused's guilt, and one with his innocence, the latter
must prevail. 58
We resolve to acquit Rafael Abello of the charge against him.
Lastly, we discuss Remigio Gonzales appeal. Remigio also
explains that he was at the safehouse because he was hired to
do a painting job. However, unlike Rafael, Remigio cannot be
acquitted. Remigio kept watch over Wilhelmina at gun point.
True, he claimed that he did it "against his will" and because he
wanted "to please his would be employer". 59 Still, we do not
believe his claim; we cannot acquit.
There is sufficient evidence of Remigio's participation in the
conspiracy to kidnap the victim. By guarding Wilhelmina at gun
point, Remigio concurred with the criminal design of the
principals and performed an act indispensable to the crime's
commission.
The law imposes the penalty of reclusion perpetua to death on
those guilty as principals in the crime of kidnapping and serious
illegal detention when the person kidnapped or detained shall
be a minor, female or public officer. The penalty imposed shall
be death if the purpose was to extort ransom from the
victim. 60 However, since the crime was committed when the
death penalty was abolished, we affirm the penalty of reclusion
perpetua imposed on accused-appellants, Macario and
Mercedita Castillo and Remigio Gonzales.
The trial court erred when it awarded the exorbitant amount of
Five Hundred Thousand (P500,000.00) as damages, without
designating the purpose and basis for the award. We, therefore,
delete the "general" award of damages.
However, an award of moral damages is in order. Wilhelmina
testified that the kidnapping had an adverse effect on her,

making her constantly fearful. 61 In People v. Jeanette Yanson-
Dumancas, 62 also a case of kidnapping for ransom, the
principals were ordered to pay moral damages in the amount of
fifty thousand pesos (P50,000.00). We do the same
here.1avvphi1
Remigio also appeals his conviction for illegal possession of
firearms and ammunition. His appeal must be denied. The
requisites for the crime are present. The subject firearms exist.
Accused-appellant Remigio possessed it without license. 63
However, the penalty imposed on him by the trial court
exceeded that prescribed by law. Under Republic Act No. 8294,
amending P.D. No. 1866, the penalty for illegal possession of
firearm classified as high powered is prision mayor minimum or
six (6) years and one (1) day to eight (8) years and a fine of
thirty thousand (P30,000.00) pesos. 64 Here, the offense was
committed on November 27, 1992. Since the amendatory law is
favorable to the accused, it shall be given retroactive
application. 65 And the Indeterminate Sentence Law shall be
applicable. 66
In the absence of any modifying circumstance, the penalty shall
be imposed in its medium period. 67 Applying the Indeterminate
Sentence Law, the Court shall sentence the accused to an
indeterminate sentence the maximum term of which shall be
that which, in view of the attending circumstances, could be
properly imposed under the rules of said Code 68 and the
minimum shall be within the range of the penalty next lower to
that prescribed by the Code for the offense. 69
WHEREFORE, the appeals of Mercedita Padilla Castillo and
Macario Castillo and Remigio Gonzales in Criminal Case No.
Q-93-41432 are DENIED. The decision of the Regional Trial
Court, Quezon City, dated June 21, 1993, convicting Mercedita
and Macario Castillo and Remigio Gonzales as principals of
kidnapping for ransom and sentencing each of them
to reclusion perpetua is AFFIRMED.
Likewise, Remigio Gonzales' appeal in Criminal Case No. Q-93-
4431 for illegal possession of firearms and ammunition is
DENIED and the trial court's decision convicting him as
principal of illegal possession of firearms under P.D. No. 1866,
as amended, is AFFIRMED, with the modification that accused
Remigio Gonzales is sentenced to four (4) years, two (2)
months and one (1) day of prision correccional, as minimum to
six (6) years, eight (8) months and one ((1) day of prision
mayor, as maximum, and to pay a fine of P10,000.00.
However, the trial court's award of damages in the amount of
five hundred thousand pesos (P500,000.00) is DELETED.
Accused-appellants Mercedita Castillo, Macario Castillo and
Remigio Gonzales are each ORDERED to pay, jointly and
severally, the victim Wilhelmina Andrada moral damages in the
amount of fifty thousand pesos (P50,000.00).
Accused-appellant Rafael B. Abello is ACQUITTED on
reasonable doubt. The Director of the Bureau of Corrections is
directed to RELEASE him immediately, unless he is lawfully
held for another cause and to inform the Court of the date of his
release, or the reasons for his continued confinement, within
ten (10) days from notice. Cost de oficio.
SO ORDERED.
G.R. No. L-55912 November 26, 1986
HEIRS OF DOMINGO P. BALOY, represented by RICARDO
BALOY, ET AL., petitioners,
vs.
COURT OF APPEALS, DIRECTOR OF LANDS and
PHILIPPINE NAVY, respondents.
PARAS, J.:
Petitioners seek herein the review on certiorari of the judgment
of the Court of Appeals in CA-G.R. No. 54050-R.
The record shows that petitioners applied with the Court of First
Instance of Zambales for the registration of 2 parcels of land
located in Bo. Barretto, Olongapo City formerly Bo. Batain
Subic, Zambales described as Lot 1 containing an area of
223,874 square meters and Lot 3 containing an area of 8,082 in
Psu-214162 marked as Exhibit R, in technical descriptions
marked as Exhibits S and S-1, and in the surveyors certificate
marked as Exhibit T alleging that these are part of petitioners'
ancestral estate and covered by possessory information title in
the name of Domingo Baloy y Petijono, petitioners'
predecessor-in-interest duly inscribed on pages 80 and 81 of
the Judicial Branch of Subic, Property No. 321, Record 1 (Exh.
"D").
Oppositors-appellees, (respondents Director of Lands and
Philippine Navy) maintain that the property used to be part of
the U.S. Naval Reservation by virtue of an Executive Order of
STAT CON 13
Pres. Theodore Roosevelt dated November 26, 1902; that for
failure of Domingo Baloy to file his claim in accordance with Act
No. 627, such claim is now forever barred; that the possession
of Baloy and his heirs was merely tolerated by the U.S.
Government; that when the U.S. Government relinquished to
the Philippine Government all its rights to the use of the
property known as Manga and Makinaya Beach in Zambales,
the President of the Philippines issued Proclamation No. 320
declaring certain tracts of land of the public domain in Olongapo
City and Subic in Zambales as a naval reservation subject
however to the limitation that existing rights shall be respected;
and that the lands in dispute are within such reservation and
may not, therefore, be subject of registration.
On October 4, 1971, the trial court rendered a decision
adjudicating in favor of applicants (petitioners herein) the two
parcels of land. Applicants immediately moved to amend the
decision for the reasons that:
A cursory reading of the dispositive part of
the decision which adjudicated the parcels of
land to the applicants shows that their
citizenship, legal capacities, and other
personal circumstances were not stated and
reflected which omission will hinder the
issuance of a decree by the Land
Registration Commission under Act 496,
hence, it is imperative that the citizenship
capacities, status and other personal
circumstances of the applicants with their
respective addresses be reflected therein,
(Sec. 21 of Act 496 as amended).
Likewise, the opposition interposed by the
Director of Lands as well as the Philippine
Navy has not been ordered dismissed
despite the decision which held that
applicants have a registerable right on the
property and the omission may cause a
possible technical error which oppositors
may assign should they choose to file an
appeal. (Record on Appeal, pp. 155-156)
On August 22, 1972, the trial court rendered an Amended
Decision denying the application for registration of applicants
(heirs of Domingo Baloy) in complete reversal of its former
judgment. Applicants appealed to the Court of Appeals with
several
ASSIGNMENT OF ERRORS

I V
THE LOWER COURT, AFTER RENDERING A DECISION
ADJUDGING APPLICANTS, THE OWNERS OF THE LOTS
SOUGHT TO BE REGISTERED, AND SUBSEQUENTLY
CONDUCTING A PROCEEDING CONFINED TO THE
MATTER OF APPLICANTS' PERSONAL
CIRCUMSTANCES, ERRED IN RENDERING A SECOND
DECISION REVERSING THE ORIGINAL ONE, AND IN
NOT INSTEAD MERELY HANDING OUT A SUPPLEMENT
TO THE ORIGINAL DECISION SETTING FORTH THE
DATA BROUGHT OUT IN THE SAID PROCEEDING.
II
THE LOWER COURT ERRED IN FAILING TO CONSIDER
THAT AT THE TIME IT RENDERED ITS SECOND
DECISION, THE FIRST HAS ALREADY BECOME FINAL
AND COULD NO LONGER BE DISTURBED FOR
FAILURE OF OPPOSITORS EITHER TO MOVE FOR THE
RECONSIDERATION THEREOF OR PERFECT AN
APPEAL THEREFROM, AND THAT, THEREFORE, THE
SECOND DECISION IS VOID.
III
ASSUMING, ARGUENDO, ITS SECOND DECISION TO
HAVE BEEN VALIDLY RENDERED, THE LOWER COURT
ERRED IN HOLDING THAT THE LOTS SOUGHT TO BE
REGISTERED USED TO BE PART OF THE LANDS SET
APART FOR USE AS U.S. NAVAL RESERVATION BY
THE U.S. PRESIDENT'S EXECUTIVE ORDER DATED
NOVEMBER 26, 1902.
IV
ON THE SAME ASSUMPTION, AND ON THE FURTHER
ASSUMPTION THAT THE AFORESAID U.S.
PRESIDENT'S EXECUTIVE ORDER PURPORTED TO
MAKE THE LOTS SOUGHT TO BE REGISTERED A PART
OF A U.S. NAVAL RESERVATION, THE LOWER COURT
ERRED IN NOT HOLDING THAT THE SAID ORDER WAS
IN THAT RESPECT VOID AND INEFFECTIVE, BY VIRTUE
OF THE TREATY OF PARIS, SINCE THE SAID LOTS
WERE THEN ALREADY PRIVATE LANDS IN THE
POSSESSION OF APPLICANTS' COMMON
PREDECESSOR IN INTEREST UNDER A POSSESSORY
INFORMATION TITLE.
ON THE SAME ASSUMPTIONS, THE LOWER COURT
ERRED IN CONSIDERING THE LOTS SOUGHT TO BE
REGISTERED SUBJECT TO THE OPERATION OF ACT
NO. 627, SINCE THE SAME WERE NEVER A PART NOR
COULD THEY HAVE BEEN VALIDLY MADE A PART OF A
U.S. NAVAL RESERVATION, AS THEY WERE COVERED
BY A POSSESSORY INFORMATION TITLE.
VI
ON THE SAME ASSUMPTIONS, AND ON THE FURTHER
ASSUMPTION THAT THE LOTS SOUGHT TO BE
REGISTERED BECAME PART OF A U.S. NAVAL
RESERVATION, THE LOWER COURT ERRED IN NOT
HOLDING THAT APPLICANTS NEVERTHELESS HAVE A
REGISTRABLE TITLE TO THE PARCELS OF LAND IN
QUESTION BY VIRTUE OF THEIR POSSESSORY
INFORMATION TITLE AS WELL AS THEIR REQUISITE
POSSESSION AND OCCUPATION FOR MORE THAN
THE REQUISITE PERIOD, ACT NO. 627 NOT-
WITHSTANDING.
VII
THE LOWER COURT ERRED IN NOT HOLDING THAT
THE LOT'S SOUGHT TO BE REGISTERED BEING
SUBJECT TO APPLICANTS' PRIVATE RIGHTS, ARE
EXCEPTED FROM THE OPERATION OF
PROCLAMATION NO. 328 OF THE PRESIDENT OF THE
PHILIPPINES.
VIII
THE LOWER COURT ERRED IN DENYING APPLICANTS'
APPLICATION FOR REGISTRATION.
Before the rendition of decision by the Court of Appeals in this
case, a sister case, CA-G.R. No. 52039-R, involving a portion of
the same ancestral estate, the same parties and the same
issues, was decided in favor of petitioners herein by the said
court. The decision in said case has been appealed to Us on
certiorari docketed as G.R. No. L-46145 Republic of the
Philippines (Bureau of Lands) versus Hon. Court of Appeals,
and heirs of Domingo Baloy, represented by Ricardo Baloy Et
Al wherein We affirmed the appealed decision rendering a
STAT CON 14
favorable judgment for the petitioners herein (applicants, heirs
of Domingo Baloy).
One of the vital issues is whether or not the property became
public lands pursuant to Act 627 for failure of Domingo Baloy to
claim the same in accordance with the said Act. In the sister
case, We affirmed the judgment of the Court of Appeals
resolving the question in the negative pointing out that the
property could not have been adjudged to be public land
pursuant to Act 627 for the reason that since there has not been
presented a formal order or decision of the Land Registration
Court declaring the land public due to the failure of Domingo
Baloy to file his application within the prescribed period. Quoted
hereunder is the pertinent portion of Our ruling in the sister
case:
A cursory reading of Sec. 3, Act 627 reveals that several
steps are to be followed before any affected land can "be
conclusively adjudged to be public lands." Sec. 3, Act 627
reads as follows:
SEC. 3. Immediately upon receipt of the notice from the
Civil Governor in the preceeding section mentioned it shall
be the duty of the judge of the Court of Land Registration
to issue a notice, stating that the lands within the
aforesaid have been reserved for military purposes, and
announced and declared to be military reservations, and
that claims for all private lands, buildings, and interests
therein, within the Emits aforesaid, must be presented for
registration under the Land Registration Act within six
calendar months from the date of issuing the notice, and
that all lands, buildings, and interests therein within the
limits aforesaid not so presented within the time therein
limited win be conclusively adjudged to be public lands,
and all claims on the part of private individuals for such
lands, buildings, or an interest therein not so presented
will be forever barred. The clerk of the Court of Land
Registration shall immediately upon the issuing of such
notice by the judge cause the same to be published once
a week for three successive weeks in two newspapers,
one of which newspapers shall be in the English
language, and one in the Spanish language in the city or
province where the land lies, if there be no such Spanish
or English newspapers having a general circulation in the
city or province wherein the land lies then it shall be a
sufficient compliance with this section if the notice be
published as herein provided, in a daily newspaper in the
Spanish language and one in the English language, in the
City of Manila, having a general circulation. The clerk shall
also cause a duly attested copy of the notice in the
Spanish language upon every person living upon or in

visible possession of any part of the military reservation. If
the person in possession is the head of the family living
upon the land, it shall be sufficient to serve the notice
upon him, and if he is absent it shall be sufficient to leave
a copy of his usual place of residence. The clerk shall
certify the manner in which the notices have been
published, posted, and served, and his certificate shall be
conclusive proof of such publication, posting, and service,
but the court shall have power to cause such further
notice to be given as in its opinion may be necessary.
Clearly under said provision, private land could be deemed to
have become public land only by virtue of a judicial declaration
after due notice and hearing. It runs contrary therefore to the
contention of petitioners that failure to present claims set forth
under Sec. 2 of Act 627 made the land ipso facto public without
any need of judicial pronouncements. Petitioner in making such
declaration relied on Sec. 4 of Act 627 alone. But in construing
a statute the entire provisions of the law must be considered in
order to establish the correct interpretation as intended by the
law-making body. Act 627 by its terms is not self-executory and
requires implementation by the Court of Land Registration. Act
627, to the extent that it creates a forfeiture, is a penal statute in
derogation of private rights, so it must be strictly construed so
as to safeguard private respondents' rights. Significantly,
petitioner does not even allege the existence of any judgment of
the Land Registration court with respect to the land in question.
Without a judgment or order declaring the land to be public, its
private character and the possessory information title over it
must be respected. Since no such order has been rendered by
the Land Registration Court it necessarily follows that it never
become public land thru the operation of Act 627. To assume
otherwise is to deprive private respondents of their property
without due process of law. In fact it can be presumed that the
notice required by law to be given by publication and by
personal service did not include the same of Domingo Baloy
and the subject land, and hence he and his land were never
brought within the operation of Act 627 as amended. The
procedure laid down in Sec. 3 is a requirement of due process.
"Due process requires that the statutes under which it is
attempted to deprive a citizen of private property without or
against his consent must, as in expropriation cases, be strictly
complied with, because such statutes are in derogation of
general rights. (Arriete vs. Director of Public Works, 58 Phil.
507, 508, 511).
We also find with favor private respondents' views that court
judgments are not to be presumed. It would be absurd to
speak of a judgment by presumption. If it could be contended
that such a judgment may be presumed, it could equally be
contended that applicants' predecessor Domingo Baloy
presumably seasonably filed a claim, in accordance with the
legal presumption that a person takes ordinary care of his
concerns, and that a judgment in his favor was rendered.
The finding of respondent court that during the interim of 57
years from November 26, 1902 to December 17, 1959 (when
the U. S. Navy possessed the area) the possessory rights of
Baloy or heirs were merely suspended and not lost by
prescription, is supported by Exhibit "U", a communication or
letter No. 1108-63, dated June 24, 1963, which contains an
official statement of the position of the Republic of the
Philippines with regard to the status of the land in question.
Said letter recognizes the fact that Domingo Baloy and/or his
heirs have been in continuous possession of said land since
1894 as attested by an "Information Possessoria" Title, which
was granted by the Spanish Government. Hence, the
disputed property is private land and this possession was
interrupted only by the occupation of the land by the U.S.
Navy in 1945 for recreational purposes. The U.S. Navy
eventually abandoned the premises. The heirs of the late
Domingo P. Baloy, are now in actual possession, and this
was been so since the abandonment by the U.S. Navy. A new
recreation area is now being used by the U.S. Navy personnel
and this place is remote from the land in question.
Clearly, the occupancy of the U.S. Navy was not in the
concept of owner. It partakes of the character of
a commodatum. It cannot therefore militate against the
title of Domingo Baloy and his successors-in-interest.
One's ownership of a thing may be lost by prescription
by reason of another's possession if such possession be
under claim of ownership, not where the possession is
only intended to be transient, as in the case of the U.S.
Navy's occupation of the land concerned, in which case
the owner is not divested of his title, although it cannot
be exercised in the meantime.
WHEREFORE, premises considered, finding no merit in
the petition the appealed decision is hereby AFFIRMED.
SO ORDERED.
Moreover, the Director of Lands, in order to support his claim
that the subject property became private pursuant to Act 627,
must also prove that it lies within the military reservation. A
map, (Exhibit 3 for Director of Lands) was presented by the
Director of Lands for the Land Registration Court to consider.
Anent this piece of evidence, petitioners herein pointed out the
following salient facts in the brief they filed with the respondent
Court of Appeals.
STAT CON 15
But, happily for applicants, this very map, insofar as they are
concerned, establishes that the lots sought to be registered lay
outside of, albeit contiguous to, the naval reservation set apart
by the U.S. President's Executive Order referred to by the court
below. From an examination thereof in connection with the
testimony of cartographer Dela Cruz, as summarized in the
lower court's decision itself, 1 the following appears: (a) the
portion of the map enclosed in red line and marked therein as
Exhibit "3-A" represents the naval reservation set apart by the
U.S. Executive Order adverted to by the court below; (b) the
portion shaded light blue and indicated as Exhibit "3-E"
represents the parcels of land herein sought to be registered;
and (c) plainly, the portion Exhibit "3-E" lies beyond the
boundaries of the portion Exhibit "3-A ", although adjacent
thereto.
Thus, taking into account Exhibit "3" itself of oppositors, the
lower court's second judgment, i. e., that the lots sought to be
registered used to be part of the U.S. naval reservation set
apart by U.S. President Theodore Roosevelt's Executive Order
dated November 26, 1902, falls to the ground. With it, therefore,
falls the trial court's assumption that the said parcels of land
were involved in a land registration proceeding under Act 627
that resulted in barring forever applicants' claim over the lots
sought to be registered.
Not a single word is found in respondent Court of Appeals'
decision presently sought to be reviewed concerning this
controlling piece of evidence, nor concerning the well-nigh
conclusive letter from the Bureau of Lands marked as Exhibit
"F". As pointed out by petitioners in their brief:
Moreover, there is the letter dated June 30, 1966, of the Bureau
of Lands, through the Chief of its Legal Division, officially
declaring that 'the land is not a part of the public domain' and
that therefore 'this Office has no jurisdiction over the
premises.' 1a This Bureau of Lands further buttressed by
approving the applicants' survey plan over the tract of land
(PSU-214168), 2 and the technical description of the same.3
How, in view of all the foregoing, could there be even a scintilla
of doubt that the tract of land here involved was never a part of
a U. S. naval reservation.
WHEREFORE, premises considered, finding the petition
meritorious, the assailed decision is hereby REVERSED and
SET ASIDE, and a new one is hereby rendered granting the
applications for land registration of the petitioners as prayed
for.SO ORDERED.

G.R. No. L-27275 November 18, 1967
C & C COMMERCIAL CORPORATION, plaintiff-appellee,
vs.
NATIONAL WATERWORKS AND SEWERAGE
AUTHORITY, defendant-appellant.
ANGELES, J.:
The main issue in this appeal is, whether or not the call for bids
for the supply of steel and centrifugal cast iron pipes for the
waterworks projects in Manila and suburbs, and in the cities of
Davao and Iloilo, the National Waterworks & Sewerage
Authority (NAWASA) violated the provisions of Republic Act
912, section 1 of which provides as follows:
Sec. 1. In construction or repair work undertaken by
the Government, whether done directly or through
contract awards, Philippine made materials and
products, whenever available, practicable and usable,
and will serve the purpose as equally well as foreign
made products or materials, shall be used in said
construction or repair work, upon the proper
certification of the availability, practicability, usability
and durability of said materials or products by the
Director of the Bureau of Public Works and/or his
assistants.
In the decision appealed from the Court of First Instance of
Manila has permanently enjoined the NAWASA from the
procurement of the materials needed for the projects involved
which, according to the appellant, are designed to alleviate the
sufferings of the millions of inhabitants in said places where
there is a crying need for more water — an item so vital to
human existence — and the delay occasioned by the
injunctions complained of, has in no little way, further
aggravated the inconvenience of the consuming public in said
metropolitan areas where acute water crises have recurred
through the years. Nevertheless, it is vehemently contended by
the appellee that the declaration of an economic national policy
as envisioned in the aforequoted provision of the law which, like
the original Flag Law1 is impressed with the clear nationalistic
policy of giving preference to locally produced materials and
products, has been violated; and if this is so, no amount of
public clamor could justify the acts of the NAWASA complained
of, for above all the supremacy of the law must be upheld. We
have, therefore, examined the record of this case with these
considerations foremost in Our minds.
It appears that the case, originally commenced in the Court of
First Instance of Manila, on July 7, 1965, as a petition for
declaratory relief for the purpose of securing a judicial
pronouncement on the interpretation of the word "practicable"
as used in Republic Act No. 912, i.e., whether it means that the
cheapest materials among the locally produced or
manufactured products should be preferred and specified in
construction and repair works undertaken by the Government,
was later converted into, an action for prohibition with
preliminary injunction through the process of supplemental
pleadings.
THE SAN PABLO WATERWORKS SYSTEM —
The corresponding complaint was filed on 19 July 1965,
alleging that the NAWASA had started to negotiate: for direct
purchase of centrifugally cast iron pipes (CCI) for the
improvement of the San Pablo Waterworks System in violation
of the provisions of Republic Act 912 and the law on public
biddings, excluding the C & C Commercial Company, the
plaintiff, which can supply instead asbestos cement pressure
pipes which are available, practicable and usable, and will
serve the purpose of the said project at a much lower cost.
On 6 August 1965, the NAWASA filed its answer to the
complaint. On 10 August 1965, the Filipino Pipe and Foundry
Corporation, with leave of court, also filed its answer in
intervention.
On 16 August 1965, as prayed for in the complaint, the court
issued a writ of preliminary injunction restraining the NAWASA
from further negotiating the purchase of the CCI pipes from the
intervenor.
On 23 September 1965, the plaintiff and the NAWASA entered
into a partial stipulation of facts, on the basis of which and the
additional evidence adduced at the hearing, the court rendered
a partial decision on 31 January 1966, dismissing the complaint
insofar as the San Pablo Waterworks System was concerned
and dissolving the preliminary injunction issued thereunder.
This partial decision has become final.
THE DAVAO METROPOLITAN WATERWORKS —
On 22 January 1965, the NAWASA called for bids for the
furnishing of labor and the supply of materials for the
construction of the proposed improvement of the Davao
Metropolitan Waterworks System. In the call for bids, the
bidders were required to submit proposals for the supply of 24-
STAT CON 16
inch steel pipes, asbestos, cement pressure pipes, and cast
iron pipes. The bidding was held on 23 February 1965. On 15
March 1965, the committee on award of the NAWASA
recommended to the board of directors that the bid be awarded
to the lowest bidder, Tirso del Rosario, under his proposal to
supply steel pipes.
On 10 August 1965, the plaintiff filed a (First) supplemental
complaint seeking to restrain the NAWASA from proceeding
with the award of the project in Davao, alleging that in
specifying steel pipes for the project, which is admittedly
imported material, without giving preference to locally produced
asbestos cement pressure pipes manufactured by the plaintiff,
violates the provisions of Republic Act 912. On 14 August 1965,
the court admitted the supplemental complaint; and as prayed
for therein on, 17 September 1965, the Court issued a writ of
preliminary injunction.
THE ILOILO WATERWORKS SYSTEM —
As early as on 26 November 1962, the NAWASA called for bids
for the supply of 18-inch steel pipes for the improvement of the
Iloilo Waterworks System. The bidding was conducted on 27
December 1962. C & C Commercial Co. participated in the
bidding offering to supply the needed 18-inch steel pipes for the
project, but lost in the bidding. The lowest bidder for the supply
of the specified 18-inch steel pipes was the Regal Trading
Corporation, and the bid was awarded to it.
On 8 September 1965, almost three (3) years after the date of
the bidding, the C & C Commercial Co. filed a
(Second) supplemental complaint; seeking to restrain the
NAWASA from formalizing or implementing the award on the
aforesaid Iloilo project for the supply of 18-inch steel pipes,
alleging that in specifying steel pipes for the particular project,
the NAWASA has violated the provisions of Republic Act 912
which requires the purchase of Philippine made materials and
products which are available, practicable and usable locally, like
plaintiff's product — asbestos cement pressure pipes — in
construction and repair undertaken by the government. On 24
September 1965, over the objection of the NAWASA, alleges
second supplemental complaint was admitted by the court. The
record is not clear when the restraining order under the second
supplemental complaint was issued, although the NAWASA
alleges that a restraining order was issued under date of 10
September 1965, which fact has not been traversed by the
plaintiff.
THE MANILA AND SUBURBS WATERWORKS SYSTEM —

On 13 September 1965, the NAWASA advertised for bids for
the supply of 30 to 42-inch steel pipes for the use and
improvement of the interim waterworks project in the City of
Manila and suburbs, the bidding to take place on 14 December
1955. On 10 November 1965, the C & C Commercial Co. filed a
(Third) Supplemental complaint seeking to restrain the
NAWASA and its representatives from holding the balding
under the aforementioned notice to bid, averring identical facts
as those alleged in the previous supplemental complaints, that
the call for bid for steel pipes for the Manila project and suburbs
violates the provisions of Republic Act 912. Over the objection
of the defendant NAWASA, the supplemental complaint was
admitted; and as prayed for therein, on 20 November 1965, a
writ of preliminary injunction was issued restraining the
NAWASA from holding the bidding scheduled on 14 December
1965, or on any subsequent date, until further orders from the
court.
Pending the case in the court a quo, the NAWASA filed three
separate motions praying for the dissolution of the preliminary
injunctive writs issued in connection with the Davao, Iloilo and
Manila projects, pleading to the court to consider the crying
need for a more adequate supply of water in those cities,
particularly in the City of Manila and its suburbs, where the lack
of adequate supply of potable water has been a recurrent crisis
which affected to a dangerous extent, the health and the life of
the inhabitants, and that the continuation of the injunctive writs
may bring about the cancellation of the $20,200,000.00 loan of
the NAWASA from the World Bank, which would result from the
failure of the NAWASA to comply with the formulated work
schedule of the waterworks projects, which under the
agreement with the World Bank, has to be completed in the
month of October 1967; but the court failed to take any action
on the motions. Parodying Shakespeare, "Set honor in one eye,
and death in the other, and I will look on both indifferently."
After a trial of the case, on 15 August 1966, the court rendered
a decision finding and concluding that the act of the NAWASA
in specifying steel pipes for the project of the city of Manila and
its suburbs, and in awarding the contracts for the supply of steel
pipes in the cases of the Davao and Iloilo Waterworks System,
constituted a violation of the provisions of Republic Act 912; the
dispositive portion of the decision reads as follows:
(a) On the supplemental complaint, making
permanent the preliminary injunction dated September
2, 1965, enjoining the defendant or its representatives
and agents from formalizing or implementing the
award for the construction of the Davao Waterworks
Project in respect of the award of pipes to be used
therein; rescinding the award made in favor of Tirso
del Rosario; and ordering the reappraisal of the bids
with a view to complying with the provisions of
Republic Act No 912;
(b) On the second supplemental complaint ordering
the issuance of a permanent injunction to enjoin the
defendants or its agents and representatives from
formalizing the award of the contract for the furnishing
of 18" steel pipes for the Iloilo Waterworks System;
ordering a new bidding for the said project so as to
include in the call for bids for the supply and delivery
of materials, asbestos cement pipes, as well as CCI
pipes; and rescinding the award of the contract in
favor of the Regal Trading Corporation;
(c) On the third supplemental complaint, making
permanent the preliminary injunction dated December
14, 1965, or any other subsequent date calling for
imported steel pipes from 30" to 42" diameter for the
interim Development of Waterworks System for
Manila and suburbs; and ordering the defendant to
specify asbestos cement pressure pipes for the said
project; and
(d) Ordering the defendants to pay the costs.
From the decision, NAWASA appealed to this Court.
Appellant contends that the provisions of Republic Act 912, are
applicable only to construction or repair works undertaken by
the Government. It argues, that since the NAWASA, though a
public corporation, is not a municipal corporation or agency of
the State empowered to regulate or administer the local affairs
of a town or city,2 nor one of the various arms of the
government through which political authority is made effective
in the Islands, consequently, the NAWASA should not be
included within the meaning of the term "Government" as used
in the law.3 It is to be noted, however, that Section 2 of the
Revised Administrative Code defining the term "Government"
which is heavily relied upon by the appellant recognizes an
exception: "when a different meaning for the word or phrase is
given a particular statute or is plainly to be collected from the
context or connection where the term is used." In this context of
the law, the term "government" without any qualification as used
in Republic Act 912, should be construed in its implied sense
and not in the strict signification of the term "Government of the
Philippines" as the political entity through which political
authority is exercised. A comparative analysis of Republic Act
912 and Commonwealth Act 138, otherwise known as the "Flag
Law" the latter "An Act to give Native Products and Domestic
STAT CON 17
Entities the Preference in the Purchase of Articles for the
Government", and the former "An Act to Require the Use,
Under Certain Conditions, of Philippine Made Materials or
Products in Government Projects or Public Works Construction,
Whether Done Directly by the Government or Awarded thru
Contracts", discloses that both relate to the same subject matter
and have the same nationalistic purpose or object: to give
preference to locally produced materials in purchases, works or
projects of the Government. The oberservation that
Commonwealth Act 138 expressly includes purchases by
Government-owned companies, while Republic Act 912 merely
relates to construction or repair work done by the Government,
is no argument for the proposition that government-owned or
controlled corporations have been excepted from the operation
of the latter law, for it is clear that Commonwealth Act 138 also
ordains that the Purchase and Equipment Division of
government-owned companies authorized to purchase or
contract for materials and supplies for public use, buildings, or
public works, shall give preference to locally produced materials
or products. Being statutes in pari materia they should be
construed together to attain the purpose of an expressed
national policy. Thus, it has been aptly stated:
On the presumption that whenever the legislature
enacts a provision it has in mind the previous statutes
relating to the same subject matter, it is held that in
the absence of any express repeal or amendment
therein, the new provision was enacted in accord with
the legislative policy embodied in those prior statutes,
and they all should be construed together. Provisions
in an act which are omitted in another act relating to
the same subject matter will be applied in a
proceeding under the other act, when not inconsistent
with its purpose. Prior statutes relating to the same
subject matter are to be compared with the new
provisions; and if possible by reasonable construction,
both are to be construed that effect is given to every
provision of each. Statutes in pari materia although in
apparent conflict, are so far as reasonably possible
construed to be in harmony with each other. 4
The main objective of the Government is to develop our
domestic industries so that the country will be economically
self-sufficient. And both Commonwealth Act 138 and Republic
Act 912 aim to contribute to the realization of the aforesaid
nationalistic policy by requiring, the use of Philippine made
products or materials,
whenever available, practicable and usable in government
construction work or repair projects. The alleged conflict
between the two laws is more apparent than real, and should
not be allowed to defeat the purpose of these laws. We have to

declare, therefore, that the NAWASA, like any other corporation
exercising proprietary or governmental functions should be
deemed embraced within the term "Government" found in
Republic Act 912, and in the repair or construction of their
works or projects or the purchase of materials therefor, local
materials should be given preference when available,
practicable and usable.
The next issue for consideration is: Did the NAWASA violate
the provisions of Republic Act 912?
Appellant vehemently denies the charge and decries the
holding of the lower court appealed from that in specifying steel
pipes in the call for bids for the supply of materials for the
waterworks projects under consideration it had defied the
mandate of the law. Appellant insists that at the time it called for
bids for the Davao project, followed by the call for the supply of
materials, for the Iloilo project, herein appellee's plant was only
capable of producing asbestos cement pressure pipes up to 12
inches diameter; while at the time the call for bids for the supply
of materials for the Interim Project of Manila and suburbs was
advertised, the largest size of asbestos cement pipes available
were of 24 inches being produced at the time by another local
manufacturer, the Eternit Corporation, which never protested
against the bids in question.
We have reexamined the record of the case with painstaking
solicitude and, instead, We find the facts indubitable and
conclusive that the C & C Commercial Corporation had not
therefore and even up to the present time ever produced pipes
larger than 12 inches in diameter. Said appellee corporation
has implicitly admitted this as a fact; and although it claims to
have a complete plant that is equipped with the necessary
machinery, technicians and skilled laborers capable of
producing pipes in the sizes called for in those bids (18 to 42
inches in diameter) had the NAWASA specified them in
asbestos cement, the weakness of the argument is at once
exposed by a mere examination of the pertinent evidence
adduced during the trial of the case on this particular point. The
claim is belied by Leopoldo del Rosario, a staff civil an engineer
of the NAWASA, who testified as follows:
Q. Engineer Del Rosario, what is the
limitation of the local asbestos cement
pressure pipes that are locally manufactured
in the Philippines?
A. We based on NAWASA's experience,
we have purchased only sizes up to 12
inches, but on certification of the Bureau of
Public Works, a report has been submitted
to us that asbestos cement pressure pipes
(is) being manufactured by one local
manufacturing company in the Philippines,
the Eternit Corporation, which is a pipe
manufacturer. and we have recently
purchased pipes for the Manila interim
project of sizes up to 24 inches non-
pressure pipes.
Q. Is there any other local manufacturer
of asbestos cement pressure pipes besides
C & C Commercial Corporation?
A. None, sir, only the C & C Commercial
Corporation.5
Q. Engineer del Rosario, as staff civil
engineer and the specification engineer,
member-secretary of the Pre-Qualifications
Committee and the present chairman of all
the bidding committees of the NAWASA, do
you know if C & C Commercial Corporation,
the plaintiff herein, is manufacturing
asbestos cement pressure pipes from sizes
thirty inches and up in diameter?
A. The company does not manufacture
size beyond twelve inches.
Q. Why do you say that the C & C
Commercial Corporation is not
manufacturing asbestos cement pressure.
pipes beyond twelve inches?
A. Because we had bi-yearly inspection
of all local plants here as a matter of policy
of the committee to determine the capacity
or capability of the local manufacturers to
supply and even to bid. So every six months
the pre-qualifications, committee in
collaboration with the procurement inspect
all the facilities of the chemical producing
plant, this cast iron and asbestos plant, the
galvanized iron pipe plant, these are
regularly inspected every six months and so
the pre-qualifications would know what is
available.6
STAT CON 18
And the foregoing testimony relative to the "non-availability" of
appellee's products in sizes above 12 inches in diameter was
corroborated by Mrs. Clara Reyes Pastor, herein appellee
corporation's President, who declared as follows:
Q. Is it not a fact Mrs. Reyes, that the
sizes of asbestos cement pressure pipes
locally manufactured by you and which you
furnish the NAWASA is only 12 inches in
diameter? Yes or No ?
A. Yes, sir, because that is the only pipe
required at the time I delivered it.
Q. And the asbestos cement pressure
pipes from sizes 12 to 42 inches that you
have supplied the NAWASA in the past, they
were all imported by you?
A. Yes, sir.
Q. I heard you testify Mrs. Reyes, that in
case you win in this particular bidding, you
intend to import equipments from abroad, is
that correct?
A. Not equipments, only mandril.
Q. So that presently what is the biggest
size of mandril that you have?
A. I have a 16-inch mandril the biggest of
them all.7
From the foregoing testimony of witnesses, and in the light of
other evidence submitted by the parties, the following may be
deduced: that it is the practice of the NAWASA — which we find
both practical and logical — to send out its own men to the
various local manufacturing plants for the purpose of knowing
the availability of materials needed for its projects; that at the
time it specified 18 and 24 inches diameter steel pipes for the
Davao and Iloilo waterworks projects, there were no locally
produced materials in said sizes; and that with respect to those
sizes that were already available, the NAWASA has actually
specified and used them in various other construction and
repair works even without the certification of the Director of
Public Works. We really do not see Our way clear how herein
appellee could have charged that the NAWASA had

discriminated against its products under the circumstances
when its own president admits that it has supplied the NAWASA
before locally produced asbestos cement pressure pipes up to
12 inches diameter only and all those with diameters above 12
inches were of foreign manufacture. The evidence, therefore, is
conclusive that locally produced asbestos pipes above 12
inches in diameter were not available for purposes of claiming
any preference under the provisions of Republic Act 912. And
this conclusion becomes even more cogent if We are to
consider the fact that C & C Commercial Corporation failed to
produce the necessary certification from the Director of Public
Works to show that its products were already certified as
available, practicable and usable at the time that the call for
bids for the supply of materials for the Davao, Iloilo and Manila
Interim projects were made to give some semblance of the right
it claims to have been violated.
Of course, appellee points out the fact that it has subsequently
secured the necessary certification from the Director of Public
Works certifying to the availability, practicability and durability of
the asbestos cement pressure pipes produced from its plant.
We agree, and there should be no quarrel at all that with
respect to pipes of 4 to 12 inches in diameter which it is actually
producing now, the preference claimed under the law may be
allowed. Be that as it may, however, the certification referred to
did not in any way improve its position; for the stubborn fact still
remains that at the time said certification was issued on July
6,1966, C & C Commercial Corporation was actually producing
asbestos pipe up to 12 inches only, which its existing
equipment or machinery, when inspected by a representative of
the Office that issued the certification, was found capable of
producing. Hence, We cannot subscribe to the holding of the
court below that locally produced asbestos cement pipes above
12 inches in diameter may be considered "'available" within the
meaning of Republic Act 912 simply because the President of
herein appellee corporation n had manifested or promised that
it can procure bigger mandrels worth $25,000.00 fom abroad
and will be able to produce pipes in the larger sizes called for in
the questioned bids shortly after their installation, for that would
be giving the term "available" a very strained meaning. It would
really be unfair to require in order to be "available" within the
meaning of the law that herein appellee should have in stock
the sizes of pipes called for in the bids in the quantity needed
by the appellant; but We cannot also believe, by any stretch of
the imagination, that the Director of Public Works would certify
to the availability, practicability, usability and durability of certain
products even before the machinery, equipment or tools
needed to produce said products are actually bought from
abroad and installed in its plant by the manufacturer.
Statutes granting advantages to private persons have in many
instances created special privileges or monopolies for the
grantees and thus have been viewed with suspicion and strictly
construed. This is altogether appropriate in the majority of
situations, for if public advantage is gained by the grant,it
normally appears to be of secondary significance compared
with the advantage gained by the grantee.8 And rights which
exist only by virtue of such statutes come into being only after
strict compliance with all the conditions found in those
statutes.9 These rules should apply to the case at bar where the
law invoked grants a preference to locally produced products or
materials. Since Republic Act 912 grants preference only upon
the certification of availability, practicability and usability of
locally produced materials by the Director of Public Works, that
certification must be existing and effective before any right
arising therefrom may be claimed to have been violated.
Notwithstanding the clear nationalistic policy of the law
aforementioned, We cannot, by any mistaken sympathy
towards herein appellee, recognize the existence of its right
under the law alleged to have been violated, which C & C
Commercial Corporation has miserably failed to prove in this
case.
With respect to the Interim Project for the City of Manila and its
suburbs, it would seem that the decision appealed from had
virtually become moot and academic by reason of the passage
of Republic Act 4858 which authorizes the President to allow
the procurement of supplies necessary for the rehabilitation of
the project as an exception to the restrictions and preferences
provided for in Republic Act 912, and the President appears to
have authorized the General Manager of the NAWASA under
the said statutory power to purchase all the pipes and materials
necessary for the project by negotiated sales.
For all the foregoing, We find it unnecessary to discuss further
the other errors assigned by the appellant.
WHEREFORE, the decision appealed from is hereby set aside,
with costs against the appellee. The writs of preliminary
injunctions issued by the lower court are set, aside, and
declared null and void.
G.R. No. L-21734 September 5, 1975
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
ABELARDO SUBlDO, defendant-appellant.
MARTIN, J.:
STAT CON 19
Appeal on questions of law from the Orders of the Court of First
Instance of Manila in Criminal Case No. 23041, entitled People
of the Philippines versus Abelardo Subido, denying defendant-
appellant's motion for the cancellation of his appeal bond and
declaring him to suffer subsidiary imprisonment in case of
failure to pay the fine and indemnity.
From an adverse decision in said case, the dispositive portion
of which reads:
From the facts above stated the Court finds
the accused guilty of libel and he is hereby
sentenced to three (3) months of arresto
mayor with the accessory penalties of the
law, to pay a fine of five hundred (P500.00)
pesos, to indemnify the offended party,
Mayor Arsenio Lacson in the sum of ten
thousand (P10,000.00) pesos, with
subsidiary imprisonment in case of
insolvency, and to pay the costs.
defendant-appellant Abelardo Subido has taken an appeal to
the Court of Appeals, which modified the said judgment in the
following tenor:
However, in the application of the penalty
provided for the violation of the libel law, the
courts are given discretion of whether or not
both fine and imprisonment are to be
imposed upon the offender. In the instant
case, we believe, considering the attendant
circumstances of the case that the
imposition of the corresponding penalty
should be tempered with judicial discretion.
For this reason, we impose upon accused-
appellant a fine of P500.00.
Similarly, the amount of the indemnity to be
paid by appellant to the offended party is
reduced to P5,000.00.
WHEREFORE, with the modifications above
indicated, the appealed judgment is hereby
affirmed at appellant's costs.
In due time the case was remanded to the trial court for
execution of the judgment.

On September 27, 1958, the accused-appellant filed a motion
with the trial court praying that (1) the court enter of record that
the judgment of the Court of Appeals has been promulgated
and (2) that his appeal bond be cancelled. Accused-appellant
argued that although he could not pay the fine and the
indemnity prescribed in the judgment of the Court of Appeals,
he could not be required to serve the amount of fine and
indemnity in the form of subsidiary imprisonment because said
judgment did not expressly and specifically provide that he
should serve the fine and indemnity in form of subsidiary
imprisonment in case of insolvency.
On December 20, 1958, upon motion of the offended party the
lower court issued a writ of execution of its judgment. However,
the writ was returned unsatisfied.
On February 25, 1959, the Sheriff of the City of Manila, armed
with an alias writ of execution, attached "whatever rights,
interests, or participation, if any, defendant Abelardo Subido
may have" in a two-storey building situated at No. 2313 Suter,
Sta. Ana, Manila, covered by Transfer Certificate of Title No.
54170 of the Register of Deeds of Manila. However, it turned
out that the property levied upon be the sheriff was registered in
the name of Agapito Subido who, upon learning of the levy,
immediately filed a Third party claim with the sheriff's office and
instituted an action in the lower court (Civil Case No. 41731) to
enjoin the Sheriff of Manila from proceeding with the sale of his
property. In the meantime the lower court issued a writ of
preliminary injunction enjoining the sale of property levied upon
by the sheriff.
On December 10, 1959, the offended party registered its
opposition to accused-appellant's motion for cancellation of
appeal bond and asked the lower court to require accused-
appellant to pay the fine of P500.00 and the indemnity of
P5,000.00 with subsidiary imprisonment in case of insolvency.
On December 19, 1959, the lower court issued an order
denying the accused-appellant's motion and declared that in
accordance with the terms of the judgment of the Court of
Appeals the accused-appellant has to suffer subsidiary
imprisonment in case he could not pay the fine and indemnity
prescribed in the decision. Accused-appellant moved for
reconsideration, but the same was denied on December 26,
1959.
Hence this appeal from the lower court's orders of December 19
and 26.
In his appeal, accused-appellant presses that the lower court
erred
I WHEREUPON, with the modifications above indicated, the
IN HOLDING THAT UNDER THE TERMS OF THE DECISION
OF THE COURT OF APPEALS ACCUSED-APPELLANT IS
LIABLE TO SUBSIDIARY IMPRISONMENT IN CASE OF
INSOLVENCY.
II
IN NOT HOLDING THAT THE CIVIL LIABILITY OF ACCUSED-
APPELLANT HAS BEEN SATISFIED WITH THE
ATTACHMENT SECURED BY THE OFFENDED PARTY.1
The threshold issue in this appeal is whether or not the
accused-appellant can be required to serve the fine and
indemnity prescribed in the judgment of the Court of Appeals in
form of subsidiary imprisonment in case of insolvency. Under
Article 355 of the Revised Penal Code "a libel committed by
means of writing, printing, litography, engraving, radio,
phonograph, paintings, theatrical exhibition, cinematographic
exhibition or any similar means, shall be punished by prision
correccional in its minimum and medium period or a fine
ranging from 200 to 6000 pesos or both, in addition to the civil
action which may be brought by the offended party". It is
evident from the foregoing provision that the court is given the
discretion to impose the penalty of imprisonment or fine or both
for the crime of libel. It will be noted that the lower court chose
to impose upon the accused: three months of arresto mayor; a
fine of P500.00; indemnification of the offended party in the sum
of P10,000.00; subsidiary imprisonment in case of insolvency;
and the payment of the costs. On the other hand, the Court of
Appeals in the exercise of its discretion decided to eliminate the
penalty of three (3) months arresto mayor and to reduce the
indemnity of P10,000.00 to P5,000.00.
Thus the Court of Appeals resolved:
However, in the application of the penalty provided for in the
violation of the libel law, the courts are given discretion of
whether or not both fine and imprisonment are to be
imposed upon the offender. In the instant case, we believe,
considering the attendant circumstances of the same, that
the imposition of the corresponding penalty should be
tempered with judicial discretion. For this reason we impose
the accused a fine of P500.00.
STAT CON 20
Similarly, the amount of the indemnity to be paid by
appellant to the offended party is reduced to P5,000.00.
appealed judgment is hereby affirmed at appellant's cost.
To Us it is clear that when the Court of Appeals provided in
the concluding portion of its decision:
WHEREUPON, with the modifications above indicated, the
appealed judgment is hereby affirmed at appellant's costs
the alluded modifications could mean no less than the
elimination of the three months of arresto mayor and the
reduction of the indemnity to the offended party, Mayor Arsenio
Lacson, from P10,000.00 to P5,000.00. All the rest of the
punishment remains including the subsidiary imprisonment in
case of insolvency. Had the Court wanted to do away with the
subsidiary imprisonment in case of insolvency of accused-
appellant to pay the fine and the indemnity it would have so
expressly provided.
A careful scrutiny of the decision of the trial court reveals that
the clause "with subsidiary imprisonment in case of insolvency"
is separated by a comma (,) from the preceding clause" is
hereby sentenced to three months of arresto mayor with the
accessory penalties of the law, to pay a fine of five hundred
(P500.00) pesos, to indemnify the offended party, Mayor
Arsenio Lacson, in the sum of Ten Thousand Pesos
(P10,000.00) pesos." The use of a comma (,) in the part of the
sentence is to make "the subsidiary imprisonment in case of
insolvency" refer not only to non-payment of the indemnity, but
also to non-payment of the fine.
If the lower court intended to make the phrase "with subsidiary
imprisonment in case of insolvency" refer to non-payment of
indemnity only and not to the non-payment of the fine, it would
have omitted the comma (,), after the phrase "to indemnify the
offended party, Mayor Arsenio Lacson in the amount of
P10,000.00 pesos," so that the decision of the lower court
would read:
From the facts above stated the Court finds the accused
guilty of libel and he is hereby sentenced to three (3)
months of arresto mayor, to pay a fine of five hundred
(P500.00) pesos, to indemnify the offended party, Mayor
Arsenio Lacson, in the sum of ten thousand (P10,000.00)
pesos with subsidiary imprisonment in case of insolvency,
and to pay the costs.

As thus worded and punctuated there would be no doubt that
the lower court would want to make accused-appellant serve
the subsidiary imprisonment in case of non-payment of the
indemnity only.
Besides, We see no plausible reason why the lower court would
want accused-appellant to suffer subsidiary imprisonment in
case of insolvency to pay the indemnity only and not to suffer
subsidiary imprisonment in case of non-payment of the fine.
Accordingly if according to the lower court's decision, the
accused-appellant should suffer subsidiary imprisonment in
case of insolvency to pay the fine and the indemnity and the
only modifications made by the Court of Appeals are to
eliminate the three (3) months of arresto mayor and to reduce
the indemnity to the offended party, Mayor Arsenio Lacson,
from P10,000.00 to P5,000.00, then by force of logic and
reason, the fine of P5000.00, the reduced indemnity of
P5,000.00 and the subsidiary imprisonment in case of
insolvency should stand.
Fortunately, however, accused-appellant is favored by the
retroactive force of Article 39 of the Revised Penal Code, as
amended by Republic Act No. 5465 which exempts an accused
person from subsidiary imprisonment in case of insolvency to
pay his civil liability.2
It is a well known rule of legal hermeneutics that penal statutes
are to be strictly construed against the government and liberally
in favor of the accused.3 In the interpretation of a penal statute,
the tendency is to give it careful scrutiny, and to construe it with
such strictness as to safeguard the rights of the
defendant.4 Considering that Article 39 of the Revised Penal
Code, as amended, is favorable to the accused-appellant, the
same should be made applicable to him. It is so provided in
Article 22 of the Revised Penal Code that:
Penal laws shall have a retroactive effect in
so far as they favor the person guilty of a
felony, who is not a habitual criminal, as this
term is defined in Rule 5 of Article 62 of this
Code, although at the time of the publication
of such laws a final sentence has been
pronounced and the convict is serving
sentence.
Thus applying Article 39 of the Revised Penal Code, as
amended, to the accused-appellant, he cannot also be required
to serve his civil liability to the offended party in form of
subsidiary imprisonment in case of insolvency because this is
no longer required by the aforesaid article.
Accused-appellant contends that he cannot be made to suffer
subsidiary imprisonment because his civil liability has been
satisfied with the attachment secured by the offended party on
the property of Agapito Subido, wherein he is supposed to have
an interest. He therefore argues that until the final
determinations of Civil Case No. 71731 which Agapito Subido
filed to enjoin the Sheriff of Manila from proceeding with the
sale of his property, accused-appellant's liability for subsidiary
imprisonment cannot attach as the determination of whether the
accused is solvent or not is a prejudicial question which must
first be determined before subsidiary imprisonment may be
imposed.
We cannot agree. Attachment does not operate as a
satisfaction of the judgment on civil liability and the accused
must suffer subsidiary imprisonment in case of non-payment
thereof. Subsidiary imprisonment applies when the offender is
insolvent as shown in the present case. There is nothing in the
law that before subsidiary imprisonment may attach, there must
be prior determination of the question of solvency of the
accused. The moment he cannot pay the fine, that means he is
insolvent and he must serve the same in form of subsidiary
imprisonment. So accused-appellant has to choose to pay the
fine or serve in jail.
IN VIEW OF THE FOREGOING except with the modification
that accused-appellant may no longer be required to suffer
subsidiary imprisonment in case of insolvency to pay the
indemnity provided for in the judgment below, the Orders of the
lower court dated December 19 and 26, 1959 denying
defendant-appellant's motion for cancellation of appeal bond
and sentencing him to suffer the subsidiary imprisonment in
case of insolvency to pay the fine imposed by said judgment,
are hereby affirmed.
SO ORDERED.
G.R. Nos. 124303-05 February 10, 1998
PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
ALEJANDRO ATOP @ "ALI," accused-appellant.
PANGANIBAN, J.:
The trial court sentenced the appellant to death, holding that his
common-law relationship with the victim's grandmother
aggravated the penalty. We hold, however, that Sec. 11 of RA
7659 prescribes the capital penalty in rape, only "when the
STAT CON 21
victim is under eighteen (18) years of age and the offender is a
parent, ascendant, step-parent, guardian, relative by
consanguinity or affinity within the third civil degree, or the
common-law spouse of the parent of the victim," and not by
reason of any other kinship. On the other hand, "relationship" as
an alternative aggravating circumstance under Art. 15 of the
Revised Penal Code encompasses only "the spouse,
ascendant, descendant, legitimate, natural or adopted brother
or sister, and relative by affinity in the same degrees." Outside
these enumeration's and consistent with the doctrine that
criminal laws must be liberally construed in favor of the
accused, no other relationship, kinship or association between
the offender and the victim may aggravate the imposable
penalty for the crime committed. The fact, then, that the
offended party is the granddaughter or descendant of
appellant's live-in partner cannot justify the imposition of death
upon the rapist.
The Case
This is a combined appeal from, and an automatic review of,
the Joint Decision of the Regional Trial Court, Branch 12, of
Ormoc City, finding Appellant Alejandro Atop, alias "Ali," guilty
beyond reasonable doubt of three (3) counts of rape and
sentencing him to two (2) terms of reclusion perpetua for the
first two counts, and to death for the third.
On April 21, 1995, Provincial Prosecutor I Rosario D. Beleta
filed four separate informations1 against accused-appellant
charging him with rape on three separate occasions — on
October 9, 1992, sometime in 1993 and on December 26, 1994
— as well as with attempted rape on December 31, 1994. The
informations charging rape, except for the date of commission
and the age of the victim, similarly allege the following:
That on or about the 9th day of October, 1992, at Sitio
Tambunan, Brgy. Sta. Rosa, Municipality of Matag-ob,
Province of Leyte, Philippines, and within the
jurisdiction of this Honorable Court, the above-named
accused, by means of force and intimidation, did then
and there willfully [sic], unlawfully and feloniously have
carnal knowledge of the herein offended party
REGINA GUAFIN, 11 years old, the accused is the
live-in partner of her grandmother with whom she is
living with [sic], against her will and without her
consent, with the use of a knife, mashed her breast,
embraced, kissed and inserted his penis over the
victim's genital organ to accomplish his lewd design,
to her damage and prejudice.

During his arraignment, appellant, assisted by Counsel de
Oficio Wenceslao Vanilla of the Public Attorney's Office,
pleaded not guilty.2 Thereafter, the cases were tried jointly. In
his Decision,3 the trial judge4 disposed of the cases as follows:
1. In Criminal Case No. 4627-0 finding the accused
Alejandro Atop GUILTY beyond reasonable doubt of
RAPE defined and penalized under Article 335 of the
Revised Penal Code. Appreciating the aggravating
circumstances of relationship and nighttime with no
mitigating circumstance to offset any of the two, this
court imposes upon the said ALEJANDRO ATOP the
sentence of RECLUSION PERPETUA and to
indemnify Regina Guafin the sum of THIRTY
THOUSAND PESOS (P30,000.00) and to pay the
costs.
2. In Criminal Case No. 4628-0 finding the accused
Alejandro Atop GUILTY beyond reasonable doubt of
RAPE defined and penalized under Article 335 of the
Revised Penal Code. Appreciating the aggravating
circumstances of relationship and nighttime with no
mitigating circumstance to offset any of the two, this
court imposes upon the said ALEJANDRO ATOP the
sentence of RECLUSION PERPETUA and to
indemnify Regina Guafin the sum of THIRTY
THOUSAND PESOS (P30,000.00) and to pay the
costs.
3. In Criminal Case No. 4630-0 finding the accused
Alejandro Atop NOT GUILTY for insufficiency of
evidence.
4. In Criminal Case No. 4629-0 finding the accused
ALEJANDRO ATOP guilty beyond reasonable doubt
of RAPE defined under Article 335 of the Revised
Penal Code, as amended by Republic Act 7659.
Appreciating the aggravating circumstances of
relationship and nighttime with no mitigating
circumstance to offset any of the two, this court
imposes upon the said ALEJANDRO ATOP, also
known as "Ali", the sentence of DEATH. Further, the
same Alejandro Atop is directed to indemnify Regina
Guafin the sum of THIRTY THOUSAND PESOS
(P30,000.00) as moral damages and to pay the costs.
By reason of the imposition of two reclusion
perpetua and of the death penalties the jail warden is
directed to immediately commit the person of
Alejandro Atop to the National Penitentiary at
Muntinlupa, Metro Manila while awaiting the review by
the Supreme Court of this decision.5
The Facts
Version of the Prosecution
The prosecution's evidence is narrated by the trial court 6 as
follows:
Private complainant Regina Guafin, told the court that
she is a granddaughter of Trinidad Mejos and that the
accused Alejandro Atop is the common law husband
of said Trinidad Atop [sic]. Her mother is a daughter of
said Trinidad Atop [sic] and lives in Pangasinan. She
is an illegitimate child and she does not even know
her father. Since her early childhood she stayed with
her grandmother Trinidad Atop [sic] and the accused
at Barangay Santa Rosa, Matag-ob, Leyte. Sometime
in 1991 when she was already 10 years of age the
accused started having lustful desire on her. The
accused then inserted his finger into her vagina. She
told her grandmother about this but her grandmother
did not believe her. She was then told by her
grandmother, Trinidad Mejos, that what her
grandfather did to her was just a manifestation of
fatherly concern. She continued staying with her
grandmother and her common law husband Alejandro
Atop, the herein accused.
On October 9, 1992, she was called by the accused
Alejandro Atop to do something for him. When she
approached him the accused rushed towards her,
removed her panty and inserted his male organ into
her vagina. She was not able to do anything to resist
him because the accused gagged her mouth and was
carrying a knife with him. She was then 12 years old
when the first rape was committed to her and at that
time her grandmother was then attending a delivery
since her grandmother was a "hilot". When her
grandmother returned home she told her what the
accused did to her but her grandmother, again,
refused to believe her. She also remember [sic] of
another incident wherein she was raped again by the
accused Alejandro Atop. It was in the year 1993 but
she could not recall the month when it was committed.
Only she and the accused were then at their house at
Barangay Santa Rosa, Matag-ob, Leyte as her
grandmother was at San Vicente attending to a
delivery. Again, she told her grandmother about the
STAT CON 22
heinous acts that the accused did to her but her Lola
refused to believe her.
On December 26, 1994, the accused again raped her.
She could not ask for help because her mouth was
gagged by the accused. Aside from gagging her, the
accused carried a knife which he placed at his side.
On December 31, 1994, while she together with her
Aunt Gloria Montealto and her two (2) nieces Rubilen
and Jubilen Atop were about to go to sleep, she
noticed that the accused was looking for her. Upon
seeing her the accused rushed towards her and was
about to lay on top of her. She kicked him. After that,
the accused caressed and touched his nieces but his
nieces also kicked him. Thereafter, the accused
stopped molesting her and his nieces and went to
sleep instead. In the following morning, January 1,
1995, she went to the barrio to go to school. She then
forgot that there were no classes. She was not able to
get a ride towards the school, so she went directly to
the house of her grandfather Zacarias Geva. While
she was at the house of her Lolo Geva, the accused
arrived and immediately entered the house of her
grandfather. The accused was met by Rubilen Atop
who was about to box him but they immediately went
out of the house and the accused followed them. The
accused wanted to bring her back to their house but
she refused. So, the accused pulled her. The accused
kept on holding her until they reached the waiting
shed were the accused smashed her to the concrete
wall.
She reported the incidents of rape that happened in
1992, 1993 and 1994 only in January 1995. It took her
so long to report the said incidents because she was
afraid. The accused threatened to kill her should she
tell anybody about that incidents. She was
accompanied by her Aunts Fe Decio and Rosenda
Andales in reporting the said incidents to the police.
Her statement was taken by the police at the police
headquarters. Thereafter, she filed a complaint with
the Municipal Trial Judge of Matag-ob, Leyte . . . In
her sworn statement which was also marked as
Exhibit "1" for the defense, she only stated therein that
what was inserted into her vagina on July 1991 was
only the finger of the accused. Out of fear, she
deliberately concealed from the investigator what
actually had happened to her because at that time,
because the accused would kill her. Then she filed
complaints with the Office of the Provincial Prosecutor

and requested the fiscal to make a re-investigation in
these cases. She told the Fiscal the truth of what was
done to her by the accused because at that time the
accused was already arrested. . . .
xxx xxx xxx
Another prosecution witness Fe Decio, an aunt of the
private offended party Regina Guafin, testified that
she knows the accused Alejandro Atop, the latter
being her stepfather. She pointed in court the said
accused. She testified also that when her niece
Regina Guafin went to her residence at Himarco,
Palompon, Leyte on January 2, 1995, she noticed that
Regina Guafin had abrasions on her body and was
then crying. She asked her the reason why she cried
and Regina told her that on January 1, 1995 the
accused again tried to rape her but did not succeed
because she fought back and was able to resist. The
abrasions in her body was the result of the
maltreatments made by the accused who forcibly
pulled her back to their house. Further, Regina told
her that the said accused Alejandro Atop had raped
her 3 to 4 times. She was told by Regina when the
said incidents happened but she forgot the actual
dates that the latter told to her. She accompanied
Regina to the police authorities of Matag-ob, Leyte
and reported the said incidents. During the time that
Regina was investigated by the police authorities, the
accused had also fled. Thereafter, she submitted
Regina for a medical examination at the Ormoc
District Hospital. Then, Regina Guafin filed a
complaint at the MCTC of Matag-ob, Leyte.
On cross examination, she testified that they offer no
objection with the relationship of the accused to her
mother. In fact during the time that the accused and
her mother were living together, they were in good
terms with the accused. She denied the fact of
sending her mother to Manila for the purpose of
separating her from the accused Alejandro Atop
because it was only the decision of her mother to
have a vacation in Manila. She testified also that the
age of her mother is more than 50 years old. 7
The third prosecution witness, Dr. Judith V. Lomocso who was
a resident gynecologist at the Ormoc District Hospital, testified
that she examined Regina Guafin. Her findings were reduced in
writing, as follows:
External Findings:
1. Incised wound with scab formation (L) middle
finger.
2. Tenderness (L) breast.
OB-Gyne Findings:
External genetalia [sic] — grossly
normal
— negative pubic hair
Vaginal canal — admits 2 fingers
with ease
hymen — healed laceration
Ruling of the Trial Court
uterus — small
The court a quo evaluated the testimony of the offended party
in this manner:
LMP — December 4, 1994 8
Version of the Defense
Appellant denied the accusations of Guafin and imputed ill
motive upon her aunts, who were the daughters of his live-in
partner.9 The trial court summed up his testimony this wise:
Accused Alejandro Atop [then 37 years old] testified
that he and Trinidad Mejos had been living together
as husband and wife for about 10 years already.
When they started living together, Trinidad Mejos was
already a widow with eight (8) children of her previous
marriage. When he started to live with Trinidad Mejos
the latter's children became mad at him because their
mother was already old and was still young. He
personally knew Regina Guafin, the latter being their
adopted child. Regina Guafin was still 2 years old
when he and his wife took care of her. That Regina
Guafin continuously resided at Sta. Rosa, Matag-ob,
Leyte. The other persons who also lived with them
aside from Regina Guafin, were the three sons of
Trinidad and his two (2) nieces whom he took from
Butuan City and sent them to school. He denied
committing rape against Regina Guafin on October 9,
1992, in the year 1993 and on December 26, 1994.
STAT CON 23
On December 31, 1994, while he was at his house,
Regina went to the barrio proper to go to school. In
the afternoon of the same date, he went to fetch
Regina Guafin because at that time classes were not
regular yet. At that time, the companions of Regina
were Jovelyn and Rubilyn. He also denied committing
an offense against Regina Guafin on December 31,
1994. He testified also that he did not evade arrest by
going out of Matag-ob, Leyte because during that time
he was working in Hideco as a laborer. The reason
why Regina Guafin filed a case against him because
the said private complainant was coached by her aunt
who wanted him and his wife Trinidad to be
separated.
On cross examination, he testified also that he was
told by his cousin Nicolas Valencia that her [sic] wife
Trinidad was prevented by her children from visiting
him in jail upon her arrival from Manila. 10
. . . this court observed both the complainant and the
accused when both were on the witness stand. The
tears that spontaneously flowed from the private
complainant's eyes and the sobs that punctuated
complainant's testimony when asked about her
experience with the accused eloquently conveyed the
hurt, the pain, and the anguish the private
complainant has suffered and lived with during all the
years. When she told the court that she was raped by
the accused she said it all with candor. The mixed
expression of sadness and anger shown in the private
complainant's face during her testimony convinced
this court that she was telling the truth. This court then
found nothing in the evidence which would indicate in
any way that the said Regina Guafin was motivated in
narrating to the court her ordeal other than her quest
for justice. The defense's claim that Regina was
coached by her aunts to fabricate her rape story in
order to force their mother Trinidad Mejos to separate
from the accused is nothing but a mere speculation
[upon] which this court found no probative value. This
court then gives the testimony of the private offended
party full faith and credit.11
 STAT CON 24

The trial court also ruled that the circumstances of nighttime
and relationship aggravated all the three incidents of rape, but
that there was no sufficient evidence proving attempted rape on
December 31, 1994. Considering that the last rape occurred
after the effectivity of RA 7659, the death penalty law, the court
meted out the capital punishment to accused-appellant.
Issues
In his appeal12 before us, appellant assigns the following
errors:13
I. The trial court erred in appreciating the
circumstances of nighttime and relationship as
aggravating the penalty imposable for the rape
allegedly committed on October 9, 1992, in 1993 and
on December 26, 1994.
II. The trial court erred in finding accused guilty
beyond reasonable doubt of the crimes charged.
encompasses (1) the spouse; (2) an ascendant; (3) a
descendant; (4) a legitimate, natural or adopted brother or
sister; or (5) a relative by affinity in the same
degree.17 Relationship by affinity refers to a relation by virtue of
a legal bond such as marriage. Relatives by affinity therefore
are those commonly referred to as "in-laws," or stepfather,
stepmother, stepchild and the like; in contrast to relatives by
consanguinity or blood relatives encompassed under the
second, third and fourth enumeration above. The law cannot be
stretched to include persons attached by common-law relations.
Here, there is no blood relationship or legal bond that links the
appellant to his victim. Thus, the modifying circumstance of
relationship cannot be considered against him.
Neither is the following provision of Sec. 11, R.A. 7659
applicable:
Sec. 11. Article 335 of the [Revised Penal] Code is
hereby amended to read as follows:
xxx xxx xxx
them.19 Any reasonable doubt must be resolved in favor of the
accused.20
Second Issue: Sufficiency of Prosecution Evidence
However, we do not agree with the claim of appellant that the
prosecution evidence was not sufficient to prove his guilt. In the
main, appellant relies on the disparity between, on the one
hand, the allegations of Regina in her sworn
statement21 executed before MCTC Judge Aquilino A.
Inopiquez Jr. of Matag-ob, Leyte which merely prove acts of
lasciviousness; and, on the other, her testimony in court
showing three counts of rape.
Such disparity, which at first glance may raise some doubts on
the truthfulness of complainant's statements, was cogently and
satisfactorily explained by her thus:
Q . . . why did you state in your affidavit that only the
finger that [sic] was inserted into your vagina?

The Court's Ruling
The appeal is partly meritorious. We find that the alleged
aggravating circumstances were not duly proved.
First Issue: Nighttime and Relationship
The time-settled rule is that nocturnity, as an aggravating
circumstance, must have been deliberately sought by the
offender to facilitate the crime or prevent its discovery or evade
his capture or facilitate his escape. 14 The culprit must have
purposely taken advantage of the cover of night as an
indispensable factor to attain his criminal purpose. 15
We find merit in Appellant Atop's contention, to which the
solicitor general agrees, that the prosecution failed to prove that
nighttime was deliberately sought by appellant to facilitate this
dastardly acts. In fact, the prosecution failed to show that
appellant consummated his carnal designs at night, except only
for the December 26, 1994 incident which the victim said
occurred at 11:00 p.m.16 Much less is there any evidence
substantiating the trial court's conclusion that appellant
intentionally sought the darkness to advance his criminal
exploits.
Neither can we appreciate relationship as an aggravating
circumstance The scope of relationship as defined by law
A Because during the time of the investigation, I did not
The death penalty shall also be imposed if the crime tell what was really true because he was not yet
of rape is committed with any of the following
apprehended, sir.
attendant circumstances:
Q So, you deliberately conceal[ed] from the investigator
1. when the victim is under eighteen (18) years of age what actually happened out of fear?
and the offender is a parent, ascendant, step-parent,
guardian relative by consanguinity or affinity within the
third civil degree, or the common law spouse of the A Yes, your Honor.
parent of the victim.
PROSECUTOR
xxx xxx xxx
Q And when you appeared before the Office of the Prov'l.
Fiscal, were you investigated?
Undisputed is the fact that appellant is not the common-law
spouse of the parent of the victim. He is the common-law
husband of the girl's grandmother. Needless to state, neither is A Yes, ma'am.
appellant the victim's "parent, ascendant, step-parent, guardian,
relative by consanguinity or affinity within the third civil degree."
Hence, he is not encompassed in any of the relationships Q And did you tell the Fiscal the truth of what had this
expressly enumerated the aforecited provision. accused done to you?
A Yes, ma'am.
It is a basic rule of statutory construction that penal statutes are
to be liberally construed in favor of the accused. 18 Courts must
not bring cases within the provision of a law which are not Q And what was that statement you have given to the
clearly embraced by it. No act can be pronounced criminal Fiscal?
which is not clearly made so by statute; so, too, no person who
is not clearly within the terms of a statute can be brought within

A I told the Fiscal the truth because the accused was already
arrested.
Q And what was the truth?
A The truth that it was his penis that was inserted to my
vagina.
Q How many times did the accused inserted [sic] his penis
into your vagina?
A Many times ma'am but I can remember only three (3) to
four (4) times.
Q And the first time that [sic] was on October 9, 1992?
A Yes, ma'am.
Q When was the second time he inserted his penis into your
vagina?
A In the year 1993.
Q And the third time?
A On December 26, 1994.22
From the testimony of Regina, the crimes evidently committed
by appellant on the aforestated dates were consummated
rapes, not merely acts of lasciviousness. Initially, she hesitated
to completely divulge her ravishment by appellant because of
his threats to kill her should she tell anybody of his
assaults.23 With his arrest and detention, she mustered the
courage to finally and completely reveal her embarrassing
story.
No simple barrio lass would so candidly admit before the public
that a man who had lived as common-law husband to her
grandmother had inserted his penis in her vagina for so many
times in the past. It is unthinkable that complainant, a young
lady of fifteen years, would allow her private parts to be
examined and would withstand the rigors of a public trial —
along with the shame, humiliation and dishonor of exposing her
own mortifying defilement — if she was not in fact ravished. A
careful examination of her testimony does not reveal any hint of
prevarication. Rather, her straightforward and unequivocal
statements, during both her direct and her cross-examinations,
show indelible badges of truth. As the trial judge keenly
observed, "The tears the spontaneously flowed from the private
complainant's eyes and the sobs that punctuated [her]
testimony when asked about her experience with the accused
eloquently conveyed the hurt, the pain, and the anguish the
private complainant has suffered and lived with during all the
years. When she told the court that she was raped by the
accused, she said it all with candor. The mixed expression of
sadness and anger shown in the private complainant's face
during her testimony convinced this court that she was telling
the truth."24 We find it apt to say once again that when a
woman, especially a minor, says that she has been raped, she
says in effect all that is necessary to show that the crime was
committed.25
Appellant's contention that private complainant was merely
induced by her aunts who had objected to his relationship with
their mother, Trinidad Mejos, is a trite defense that is
completely undeserving of credit. It is unnatural and
unbelievable for Regina's aunts to concoct a story of rape of
their own very young niece, that would bring shame and
scandal not only to her but to the entire family, especially to
their mother. There could have been so many ways to alienate
appellant from their mother, so many crimes to impute to him
without dragging the family's honor into it. The
preposterousness of appellant's assertion becomes more
obvious in light of the fact that this case was instituted only after
ten (10) years of his illegitimate union with Regina's
grandmother. If Regina's aunts truly wanted them to discontinue
such relationship, the long wait is inexplicable.
Consequently, in the face of private complainant's positive and
unequivocal testimony, appellant's plain denial of the
accusations against him cannot prevail.26 It is well-settled that
denial, if unsubstantiated by clear and convincing evidence, is a
negative self-serving assertion which deserves no weight in
law.27 The recognized rule is that testimonies of rape victims
who are young and immature are each worthy of full
credence.28
Time and again, we have also held that when the question
deals with the credibility of witnesses and their testimonies, the
trial court's observations and conclusions deserve great respect
and are often accorded finality, unless there appears in the
record some fact or circumstance of weight which the lower
court may have overlooked, misunderstood or misappreciated
and which, if properly considered, would alter the results of the
case.29 The trial judge has the valuable edge of observing the
witness' deportment and manner of testifying, her "furtive
glance, blush of conscious shame, hesitation, flippant or
sneering tone, calmness, sigh, or the scant or full realization of
STAT CON 25
an oath"30 — all of which are useful aids for an accurate
determination of a witness' honesty and sincerity. After a
thorough review of all the evidence on record, the Court finds
no reason to reverse the trial court's findings on the guilt of
appellant.
Penalties Imposable
For the rape incidents on October 9, 1992 and sometime in
1993, the court a quo correctly imposed the penalty of reclusion
perpetua for each of the two criminal acts. The third rape
incident, however, occurred after the effectivity of RA 7659, the
law which imposed the death penalty on certain heinous crimes.
Under this amendatory law, the penalty for rape committed with
the use of a deadly weapon is reclusion perpetua to
death.31 This provision is applicable in the instant case, since
private complainant was threatened with a knife when appellant
consummated his beastly acts on her.32
In cases where the penalty prescribed is composed of two
indivisible penalties and there is neither an aggravating nor a
mitigating circumstance in the commission of the felony, the
lesser penalty should be applied.33 Since there was no
modifying circumstance even in the third rape, the penalty
therefor should be reclusion perpetua, not the graver penalty of
death as imposed by the court a quo. As earlier explained, the
attendant relationships enumerated under Sec. 11 of RA 7659
do not apply either.
Consistent with prevailing jurisprudence, 34 we increase the civil
indemnity imposed upon appellant by the trial court to
P50,000.00 for each count of rape. The Court notes that, for
appellant's third conviction, the trial court ordered him to
indemnify the victim in the amount of P30,000 "as moral
damages." Civil indemnity under Art. 10035 of the Revised Penal
Code is separate and distinct from moral damages under Arts.
2217 and 2219 of the Civil Code.36 Conformably, Appellant Atop
should indemnify Regina Guafin in the total amount of
P150,000 for the three counts of rape — separately from
payment of moral damages which we find justified under the
circumstances. The moral sufferings of private complainants
were obvious during the court proceedings where, as observed
by the trial judge and also noted in the transcripts, she
spontaneously cried and sobbed and showed a mixed
expression of sadness, pain and anger.
WHEREFORE, the Decision appealed from is hereby
AFFIRMED, with the MODIFICATION that Appellant Alejandro
Atop shall not suffer the penalty of death but shall SERVE three
(3) terms of reclusion perpetua, one for each of the three (3)

counts of rape for which he was found GUILTY by the trial
court, and is ordered to PAY Regina Guafin indemnity in the
amount of P150,000 plus moral damages of P50,000.
SO ORDERED.
G.R. No. L-42050-66 November 20, 1978
THE PEOPLE OF THE PHILIPPINES, petitioner,
vs.
HONORABLE JUDGE AMANTE P. PURISIMA, COURT OF
FIRST INSTANCE OF MANILA, BRANCH VII, and PORFIRIO
CANDELOSAS, NESTOR BAES, ELIAS L. GARCIA, SIMEON
BUNDALIAN, JR., JOSEPH C. MAISO, EDUARDO A.
LIBORDO, ROMEO L. SUGAY, FEDERICO T. DIZON,
GEORGE M. ALBINO, MARIANO COTIA, JR., ARMANDO L.
DIZON, ROGELIO B. PARENO, RODRIGO V. ESTRADA,
ALFREDO A. REYES, JOSE A. BACARRA, REYNALDO
BOGTONG, and EDGARDO M. MENDOZA, respondents.
MUÑOZ PALMA, J.:
These twenty-six (26) Petitions for Review filed by the People of
the Philippines represented, respectively, by the Office of the
City Fiscal of Manila, the Office of the Provincial Fiscal of
Samar, and joined by the Solicitor General, are consolidated in
this one Decision as they involve one basic question of law.
These Petitions or appeals involve three Courts of First
Instance, namely: the Court of First Instance of Manila, Branch
VII, presided by Hon. Amante P. Purisima (17 Petitions), the
Court of First Instance of Manila, Branch XVIII, presided by
Hon. Maximo A. Maceren (8 Petitions) and, the Court of First
Instance of Samar, with Hon. Wenceslao M. Polo, presiding, (1
Petition).
Before those courts, Informations were filed charging the
respective accused with "illegal possession of deadly weapon"
in violation of Presidential Decree No. 9. On a motion to quash
filed by the accused, the three Judges mentioned above issued
in the respective cases filed before them — the details of which
will be recounted below — an Order quashing or dismissing the
Informations, on a common ground, viz, that the Information did
not allege facts which constitute the offense penalized by
Presidential Decree No. 9 because it failed to state one
essential element of the crime.
Thus, are the Informations filed by the People sufficient in form
and substance to constitute the offense of "illegal possession of
deadly weapon" penalized under Presidential Decree (PD for
short) No. 9? This is the central issue which we shall resolve
and dispose of, all other corollary matters not being
indispensable for the moment.
A — The Information filed by the People —
1. In L-42050-66, one typical Information filed with the Court
presided by Judge Purisima follows:
THE PEOPLE OF THE PHILIPPINES,
plaintiff, versus PORFIRIO CANDELOSAS Y
DURAN, accused.
Crim. Case No. 19639
VIOLATION OF PAR. 3, PRES. DECREE
No. 9 OF PROCLAMATION 1081
INFORMATION
The undersigned accuses PORFIRIO
CANDELOSAS Y DURAN of a violation of
paragraph 3, Presidential Decree No. 9 of
Proclamation 1081, committed as follows:
That on or about the 14 th day of December,
1974, in the City of Manila, Philippines, the
said accused did then and there wilfully,
unlawfully, feloniously and knowingly have in
his possession and under his custody and
control one (1) carving knife with a blade of
6-½ inches and a wooden handle of 5-1/4
inches, or an overall length of 11-¾ inches,
which the said accused carried outside of his
residence, the said weapon not being used
as a tool or implement necessary to earn his
livelihood nor being used in connection
therewith.
Contrary to law. (p. 32, rollo of L-42050-66)
The other Informations are similarly worded except for the
name of the accused, the date and place of the commission of
the crime, and the kind of weapon involved.
STAT CON 26
2. In L-46229-32 and L-46313-16, the Information filed with the
Court presided by Judge Maceren follows:
THE PEOPLE OF THE PHILIPPINES,
plaintiff, versus REYNALDO LAQUI Y
AQUINO, accused.CRIM. CASE NO. That
on or about the 28 th day of January, 1977,
in the City of Manila, Philippines, the said
accused did then and there wilfully,
unlawfully and knowingly carry outside of his
residence a bladed and pointed weapon, to
wit: an ice pick with an overall length of
about 8½ inches, the same not being used
as a necessary tool or implement to earn his
livelihood nor being used in connection
therewith.
Contrary to law. (p. 14, rollo of L-46229-32)
The other Informations are likewise similarly worded except for
the name of the accused, the date and place of the commission
of the crime, and the kind of weapon involved.
3. In L-46997, the Information before the Court of First Instance
of Samar is quoted hereunder:
PEOPLE OF THE PHILIPPINES, complainant, versus
PANCHITO REFUNCION, accuse
INFORMATION
The undersigned First Assistant Provincial Fiscal of
Samar, accuses PANCHITO REFUNCION of the crime
of ILLEGAL POSSESSION OF DEADLY WEAPON or
VIOLATION OF PD NO. 9 issued by the President of
the Philippines on Oct. 2, 1972, pursuant to
Proclamation No. 1081 dated Sept. 21 and 23, 1972,
committed as follows:
That on or about the 6th day of October, 1976, in the
evening at Barangay Barruz, Municipality of Matuginao,
Province of Samar Philippines, and within the
jurisdiction of this Honorabe Court, the abovenamed
accused, knowingly, wilfully, unlawfully and feloniously
carried with him outside of his residence a deadly
weapon called socyatan, an instrument which from its
very nature is no such as could be used as a necessary
tool or instrument to earn a livelihood, which act

committed by the accused is a Violation of Presidential
Decree No. 9.
CONTRARY TO LAW. (p. 8, rollo of L-
46997)
B. — The Orders of dismissal —
In dismissing or quashing the Informations the trial courts
concurred with the submittal of the defense that one essential
element of the offense charged is missing from the Information,
viz: that the carrying outside of the accused's residence of a
bladed, pointed or blunt weapon is in furtherance or on the
occasion of, connected with or related to subversion,
insurrection, or rebellion, organized lawlessness or public
disorder.
1. Judge Purisima reasoned out, inter alia, in this manner:
... the Court is of the opinion that in order that possession of
bladed weapon or the like outside residence may be
prosecuted and tried under P.D. No. 9, the information must
specifically allege that the possession of bladed weapon
charged was for the purpose of abetting, or in furtherance of
the conditions of rampant criminality, organized
lawlessness, public disorder, etc. as are contemplated and
recited in Proclamation No. 1081, as justification therefor.
Devoid of this specific allegation, not necessarily in the
same words, the information is not complete, as it does not
allege sufficient facts to constitute the offense contemplated
in P.D. No. 9. The information in these cases under
consideration suffer from this defect.
xxx xxx xxx
And while there is no proof of it before the Court, it is not
difficult to believe the murmurings of detained persons
brought to Court upon a charge of possession of bladed
weapons under P.D. No. 9, that more than ever before,
policemen - of course not all can be so heartless — now
have in their hands P.D. No. 9 as a most convenient tool for
extortion, what with the terrifying risk of being sentenced to
imprisonment of five to ten years for a rusted kitchen knife
or a pair of scissors, which only God knows where it came
from. Whereas before martial law an extortion-minded
peace officer had to have a stock of the cheapest paltik, and
even that could only convey the coercive message of one
year in jail, now anything that has the semblance of a sharp
edge or pointed object, available even in trash cans, may
already serve the same purpose, and yet five to ten times
more incriminating than the infamous paltik.
For sure, P.D. No. 9 was conceived with the
best of intentions and wisely applied, its
necessity can never be assailed. But it
seems it is back-firing, because it is too hot
in the hands of policemen who are inclined
to backsliding.
The checkvalves against abuse of P.D. No. 9 are to be found
in the heart of the Fiscal and the conscience of the Court, and
hence this resolution, let alone technical legal basis, is
prompted by the desire of this Court to apply said
checkvalves. (pp. 55-57, rollo of L-42050-66)
2. Judge Maceren in turn gave his grounds for dismissing the
charges as follows:
xxx xxx xxx
As earlier noted the "desired result" sought to be attained by
Proclamation No. 1081 is the maintenance of law and order
throughout the Philippines and the prevention and
suppression of all forms of lawless violence as well as any act
of insurrection or rebellion. It is therefore reasonable to
conclude from the foregoing premises that the carrying of
bladed, pointed or blunt weapons outside of one's residence
which is made unlawful and punishable by said par. 3 of P.D.
No. 9 is one that abets subversion, insurrection or rebellion,
lawless violence, criminality, chaos and public disorder or is
intended to bring about these conditions. This conclusion is
further strengthened by the fact that all previously existing
laws that also made the carrying of similar weapons
punishable have not been repealed, whether expressly or
impliedly. It is noteworthy that Presidential Decree No. 9 does
not contain any repealing clause or provisions.
xxx xxx xxx
The mere carrying outside of one's residence of these deadly
weapons if not concealed in one's person and if not carried in
any of the aforesaid specified places, would appear to be not
unlawful and punishable by law.
With the promulgation of Presidential Decree No. 9, however,
the prosecution, through Assistant Fiscal Hilario H. Laqui,
contends in his opposition to the motion to quash, that this act
STAT CON 27
is now made unlawful and punishable, particularly by
paragraph 3 thereof, regardless of the intention of the person
carrying such weapon because the law makes it "mala
prohibita". If the contention of the prosecution is correct, then
if a person happens to be caught while on his way home by
law enforcement officers carrying a kitchen knife that said
person had just bought from a store in order that the same
may be used by one's cook for preparing the meals in one's
home, such person will be liable for punishment with such a
severe penalty as imprisonment from five to ten years under
the decree. Such person cannot claim that said knife is going
to be used by him to earn a livelihood because he intended it
merely for use by his cook in preparing his meals.
This possibility cannot be discounted if
Presidential Decree No. 9 were to be
interpreted and applied in the manner that
that the prosecution wants it to be done. The
good intentions of the President in
promulgating this decree may thus be
perverted by some unscrupulous law
enforcement officers. It may be used as a
tool of oppression and tyranny or of
extortion.
xxx xxx xxx
It is therefore the considered and humble
view of this Court that the act which the
President intended to make unlawful and
punishable by Presidential Decree No. 9,
particularly by paragraph 3 thereof, is one
that abets or is intended to abet subversion,
rebellion, insurrection, lawless violence,
criminality, chaos and public disorder. (pp.
28-30, rollo of L-46229-32)
3. Judge Polo of the Court of First Instance of Samar
expounded his order dismissing the Information filed before
him, thus:
... We believe that to constitute an offense
under the aforcited Presidential decree, the
same should be or there should be an
allegation that a felony was committed in
connection or in furtherance of subversion,
rebellion, insurrection, lawless violence and
public disorder. Precisely Proclamation No.
1081 declaring a state of martial law
throughout the country was issued because

of wanton destruction to lives and properties
widespread lawlessness and anarchy. And
in order to restore the tranquility and stability
of the country and to secure the people from
violence anti loss of lives in the quickest
possible manner and time, carrying firearms,
explosives and deadly weapons without a
permit unless the same would fall under the
exception is prohibited. This conclusion
becomes more compelling when we
consider the penalty imposable, which is
from five years to ten years. A strict
enforcement of the provision of the said law
would mean the imposition of the Draconian
penalty upon the accused.
xxx xxx xxx
It is public knowledge that in rural areas,
even before and during martial law, as a
matter of status symbol, carrying deadly
weapons is very common, not necessarily
for committing a crime nor as their farm
implement but for self-preservation or self-
defense if necessity would arise specially in
going to and from their farm. (pp. 18-19, rollo
of L-46997)
In most if not all of the cases, the orders of dismissal were
given before arraignment of the accused. In the criminal case
before the Court of (First Instance of Samar the accused was
arraigned but at the same time moved to quash the Information.
In all the cases where the accused were under arrest, the three
Judges ordered their immediate release unless held on other
charges.
C. — The law under which the Informations in question were
filed by the People.
As seen from the Informations quoted above, the accused are
charged with illegal possession of deadly weapon in violation of
Presidential Decree No. 9, Paragraph 3.
We quote in full Presidential Decree No. 9, to wit:
PRESIDENTIAL DECREE NO. 9
DECLARING VIOLATIONS OF GENERAL ORDERS NO. 6
and NO. 7 DATED SEPTEMBER 22, 1972, AND
SEPTEMBER 23, 1972, RESPECTIVELY, TO BE
UNLAWFUL AND PROVIDING PENALTIES THEREFORE.
WHEREAS, pursuant to Proclamation No. 1081 dated
September 21, 1972, the Philippines has been placed under
a state of martial law;
WHEREAS, by virtue of said Proclamation No. 1081,
General Order No. 6 dated September 22, 1972 and
General Order No. 7 dated September 23, 1972, have been
promulgated by me;
WHEREAS, subversion, rebellion, insurrection, lawless
violence, criminality, chaos and public disorder mentioned in
the aforesaid Proclamation No. 1081 are committed and
abetted by the use of firearms, explosives and other deadly
weapons;
NOW, THEREFORE, I, FERDINAND E. MARCOS,
Commander-in-Chief of all the Armed Forces of the
Philippines, in older to attain the desired result of the
aforesaid Proclamation No. 1081 and General Orders Nos.
6 and 7, do hereby order and decree that:
1. Any violation of the aforesaid General Orders Nos. 6 and
7 is unlawful and the violator shall, upon conviction suffer:
(a) The mandatory penalty of death by a firing squad or
electrocution as a Military, Court/Tribunal/Commission may
direct, it the firearm involved in the violation is unlicensed
and is attended by assault upon, or resistance to persons in
authority or their agents in the performance of their official
functions resulting in death to said persons in authority or
their agent; or if such unlicensed firearm is used in the
commission of crimes against persons, property or chastity
causing the death of the victim used in violation of any other
General Orders and/or Letters of Instructions promulgated
under said Proclamation No. 1081:
(b) The penalty of imprisonment ranging from twenty years
to life imprisonment as a Military Court/Tribunal/commission
may direct, when the violation is not attended by any of the
circumstances enumerated under the preceding paragraph;
(c) The penalty provided for in the preceding paragraphs
shall be imposed upon the owner, president, manager,
STAT CON 28
members of the board of directors or other responsible
officers of any public or private firms, companies,
corporations or entities who shall willfully or knowingly allow
any of the firearms owned by such firm, company,
corporation or entity concerned to be used in violation of
said General Orders Nos. 6 and 7.
2. It is unlawful to posses deadly weapons, including hand
grenades, rifle grenades and other explosives, including,
but not limited to, "pill box bombs," "molotov cocktail
bombs," "fire bombs," or other incendiary device
consisting of any chemical, chemical compound, or
detonating agents containing combustible units or other
ingredients in such proportion, quantity, packing, or
bottling that ignites by fire, by friction, by concussion, by
percussion, or by detonation of all or part of the
compound or mixture which may cause such a sudden
generation of highly heated gases that the resultant
gaseous pressures are capable of producing destructive
effects on continguous objects or of causing injury or
death of a person; and any person convicted thereof shall
be punished by imprisonment ranging from ten to fifteen
years as a Military Court/Tribunal/Commission may direct.
3. It is unlawful to carry outside of residence any bladed,
pointed or blunt weapon such as "fan knife," "spear,"
"dagger," "bolo," "balisong," "barong," "kris," or club,
except where such articles are being used as necessary
tools or implements to earn a livelihood and while being
used in connection therewith; and any person found guilty
thereof shall suffer the penalty of imprisonment ranging
from five to ten years as a Military
Court/Tribunal/Commission may direct.
4. When the violation penalized in the preceding
paragraphs 2 and 3 is committed during the commission
of or for the purpose of committing, any other crime, the
penalty shall be imposed upon the offender in its
maximum extent, in addition to the penalty provided for
the particular offenses committed or intended to be
committed.
Done in the City of Manila, this 2nd day of October in the
year of Our Lord, nineteen hundred and seventy-two.
D. — The arguments of the People —
In the Comment filed in these cases by the Solicitor General
who as stated earlier joins the City Fiscal of Manila and the

Provincial Fiscal of Samar in seeking the setting aside of the
questioned orders of dismissal, the main argument advanced
on the issue now under consideration is that a perusal of
paragraph 3 of P.D. 9 'shows that the prohibited acts need not
be related to subversive activities; that the act proscribed is
essentially a malum prohibitum penalized for reasons of public
policy.1
The City Fiscal of Manila in his brief adds further that in
statutory offenses the intention of the accused who commits the
act is immaterial; that it is enough if the prohibited act is
voluntarily perpetuated; that P.D. 9 provides and condemns not
only the carrying of said weapon in connection with the
commission of the crime of subversion or the like, but also that
of criminality in general, that is, to eradicate lawless violence
which characterized pre-martial law days. It is also argued that
the real nature of the criminal charge is determined not from the
caption or preamble of the information nor from the specification
of the provision of law alleged to have been violated but by the
actual recital of facts in the complaint or information. 2
E. — Our Ruling on the matter —
1. It is a constitutional right of any person who stands charged
in a criminal prosecution to be informed of the nature and cause
of the accusation against him.3
Pursuant to the above, Section 5, Rule 110 of the Rules of
Court, expressly requires that for a complaint or information to
be sufficient it must, inter alia state the designation of the
offense by the statute, and the acts or omissions complained of
as constituting the offense. This is essential to avoid surprise on
the accused and to afford him the opportunity to prepare his
defense accordingly. 4
To comply with these fundamental requirements of the
Constitution and the Rules on Criminal Procedure, it is
imperative for the specific statute violated to be designated or
mentioned 4 in the charge. In fact, another compelling reason
exists why a specification of the statute violated is essential in
these cases. As stated in the order of respondent Judge
Maceren the carrying of so-called "deadly weapons" is the
subject of another penal statute and a Manila city ordinance.
Thus, Section 26 of Act No. 1780 provides:
Section 26. It should be unlawful for any
person to carry concealed about his person
any bowie knife, dirk dagger, kris, or other
deadly weapon: ... Any person violating the
provisions of this section shall, upon
conviction in a court of competent
jurisdiction, be punished by a fine not
exceeding five hundred pesos, or by
imprisonment for a period not exceeding six
months, or both such fine and imprisonment,
in the discretion of the court.
Ordinance No. 3820 of the City of Manila as amended by
Ordinance No. 3928 which took effect on December 4, 1957, in
turn penalizes with a fine of not more than P200.00 or
imprisonment for not more than one months, or both, at the
discretion of the court, anyone who shall carry concealed in his
person in any manner that would disguise its deadly character
any kind of firearm, bowie knife, or other deadly weapon ... in
any public place. Consequently, it is necessary that the
particular law violated be specified as there exists a substantial
difference between the statute and city ordinance on the one
hand and P.D. 9 (3) on the other regarding the circumstances of
the commission of the crime and the penalty imposed for the
offense.
We do not agree with petitioner that the above-mentioned
statute and the city ordinance are deemed repealed by P.D. 9
(3). 5 P. D. 9(3) does not contain any repealing clause or
provision, and repeal by implication is not favored. 6 This
principle holds true with greater force with regards to penal
statutes which as a rule are to be construed strictly against the
state and liberally in favor of the accused. 7 In fact, Article 7 of
the New Civil Code provides that laws are repealed only by
subsequent ones and their violation or non- observance shall
not be excused by disuse, or custom or practice to the contrary.
Thus we are faced with the situation where a particular act may
be made to fall, at the discretion of a police officer or a
prosecuting fiscal, under the statute, or the city ordinance, or
the presidential decree. That being the case, the right becomes
more compelling for an accused to be confronted with the facts
constituting the essential elements of the offense charged
against him, if he is not to become an easy pawn of oppression
and harassment, or of negligent or misguided official action — a
fear understandably shared by respondent Judges who by the
nature of their judicial functions are daily exposed to such
dangers.
2. In all the Informations filed by petitioner the accused are
charged in the caption as well as in the body of the Information
with a violation of paragraph 3, P.D. 9. What then are the
elements of the offense treated in the presidential decree in
question?
STAT CON 29
We hold that the offense carries two elements: first, the carrying
outside one's residence of any bladed, blunt, or pointed
weapon, etc. not used as a necessary tool or implement for a
livelihood; and second, that the act of carrying the weapon was
either in furtherance of, or to abet, or in connection with
subversion, rebellion, insurrection, lawless violence, criminality,
chaos, or public disorder.
It is the second element which removes the act of carrying a
deadly weapon, if concealed, outside of the scope of the statute
or the city ordinance mentioned above. In other words, a simple
act of carrying any of the weapons described in the presidential
decree is not a criminal offense in itself. What makes the act
criminal or punishable under the decree is the motivation
behind it. Without that motivation, the act falls within the
purview of the city ordinance or some statute when the
circumstances so warrant.
Respondent Judges correctly ruled that this can be the only
reasonably, logical, and valid construction given to P.D. 9(3).
3. The position taken by petitioner that P.D. 9(3) covers one
and all situations where a person carries outside his residence
any of the weapons mentioned or described in the decree
irrespective of motivation, intent, or purpose, converts these
cases into one of "statutory construction." That there is
ambiguity in the presidential decree is manifest from the
conflicting views which arise from its implementation. When
ambiguity exists, it becomes a judicial task to construe and
interpret the true meaning and scope of the measure, guided by
the basic principle that penal statutes are to be construed and
applied liberally in favor of the accused and strictly against the
state.
4. In the construction or interpretation of a legislative measure
— a presidential decree in these cases — the primary rule is to
search for and determine the intent and spirit of the
law. Legislative intent is the controlling factor, for in the words of
this Court in Hidalgo v. Hidalgo, per Mr. Justice Claudio
Teehankee, whatever is within the spirit of a statute is within the
statute, and this has to be so if strict adherence to the letter
would result in absurdity, injustice and contradictions. 8
There are certain aids available to Us to ascertain the intent or
reason for P.D. 9(3).
First, the presence of events which led to or precipitated the
enactment of P.D. 9. These events are clearly spelled out in the
"Whereas" clauses of the presidential decree, thus: (1) the state

of martial law in the country pursuant to Proclamation 1081
dated September 21, 1972; (2) the desired result of
Proclamation 1081 as well as General Orders Nos. 6 and 7
which are particularly mentioned in P.D. 9; and (3) the alleged
fact that subversion, rebellion, insurrection, lawless violence,
criminality, chaos, aid public disorder mentioned in
Proclamation 1081 are committed and abetted by the use of
firearms and explosives and other deadly weapons.
The Solicitor General however contends that a preamble of a
statute usually introduced by the word "whereas", is not an
essential part of an act and cannot enlarge or confer powers, or
cure inherent defects in the statute (p. 120, rollo of L-42050-66);
that the explanatory note or enacting clause of the decree, if it
indeed limits the violation of the decree, cannot prevail over the
text itself inasmuch as such explanatory note merely states or
explains the reason which prompted the issuance of the decree.
(pp. 114-115, rollo of 46997)
We disagree with these contentions. Because of the problem of
determining what acts fall within the purview of P.D. 9, it
becomes necessary to inquire into the intent and spirit of the
decree and this can be found among others in the preamble or,
whereas" clauses which enumerate the facts or events which
justify the promulgation of the decree and the stiff sanctions
stated therein.
A "preamble" is the key of the statute, to
open the minds of the makers as to
the mischiefs which are to be remedied, and
objects which are to be accomplished, by
the provisions of the statute." (West Norman
Timber v. State, 224 P. 2d 635, 639, cited in
Words and Phrases, "Preamble"; emphasis
supplied)
While the preamble of a statute is not strictly
a part thereof, it may, when the statute is in
itself ambiguous and difficult of
interpretation, be resorted to, but not to
create a doubt or uncertainty which
otherwise does not exist." (James v. Du
Bois, 16 N.J.L. (1 Har.) 285, 294, cited in
Words and Phrases, "Preamble")
In Aboitiz Shipping Corporation, et al. v. The City of Cebu, et
al. this Court had occasion to state that '(L)egislative intent must
be ascertained from a consideration of the statute as a whole,
and not of an isolated part or a particular provision alone. This
is a cardinal rule of statutory construction. For taken in the
abstract, a word or phrase might easily convey a meaning quite
different from the one actually intended and evident when the
word or phrase is considered with those with which it is
associated. Thus, an apparently general provision may have a
limited application if read together with other provisions. 9
Second, the result or effects of the presidential decree must be
within its reason or intent.
In the paragraph immediately following the last "Whereas"
clause, the presidential decree states:
NOW, THEREFORE, I , FERDINAND E. MARCOS,
Commander-in-Chief of an the Armed Forces of the
Philippines, in order to attain the desired result of the
aforesaid Proclamation No. 1081 and General Orders Nos.
6 and 7, do hereby order and decree that:
xxx xxx xxx
From the above it is clear that the acts penalized in P.D. 9
are those related to the desired result of Proclamation
1081 and General Orders Nos. 6 and 7. General Orders
Nos. 6 and 7 refer to firearms and therefore have no
relevance to P.D. 9(3) which refers to blunt or bladed
weapons. With respect to Proclamation 1081 some of the
underlying reasons for its issuance are quoted hereunder:
WHEREAS, these lawless elements having taken up arms
against our duly constituted government and against our
people, and having committed and are still committing acts
of armed insurrection and rebellion consisting of armed
raids, forays, sorties, ambushes, wanton acts of murders,
spoilage, plunder, looting, arsons, destruction of public and
private buildings, and attacks against innocent and
defenseless civilian lives and property, all of which activities
have seriously endangered and continue to endanger public
order and safety and the security of the nation, ...
xxx xxx xxx
WHEREAS, it is evident that there is throughout the land a
state of anarchy and lawlessness, chaos and disorder,
turmoil and destruction of a magnitude equivalent to an
actual war between the forces of our duly constituted
government and the New People's Army and their satellite
organizations because of the unmitigated forays, raids,
ambuscades, assaults, violence, murders, assassinations,
STAT CON 30
acts of terror, deceits, coercions, threats, intimidations,
treachery, machinations, arsons, plunders and depredations
committed and being committed by the aforesaid lawless
elements who have pledged to the whole nation that they
will not stop their dastardly effort and scheme until and
unless they have fully attained their primary and ultimate
purpose of forcibly seizing political and state power in this
country by overthrowing our present duly constituted
government, ... (See Book I, Vital Documents on the
Declaration of Martial Law in the Philippines by the
Supreme Court of the Philippines, pp. 13-39)
It follows that it is only that act of carrying a blunt or bladed
weapon with a motivation connected with or related to the
afore-quoted desired result of Proclamation 1081 that is within
the intent of P.D. 9(3), and nothing else.
Statutes are to be construed in the light of purposes to be
achieved and the evils sought to be remedied. (U.S. v.
American Tracking Association, 310 U.S. 534, cited in LVN
Pictures v. Philippine Musicians Guild, 110 Phil. 725, 731;
emphasis supplied)
When construing a statute, the reason for its enactment
should be kept in mind, and the statute should be construed
with reference to its intended scope and purpose. (Statutory
Construction by E.T. Crawford, pp. 604-605, cited in
Commissioner of Internal Revenue v. Filipinas Compania de
Seguros, 107 Phil. 1055, 1060; emphasis supplied)
5. In the construction of P.D. 9(3) it becomes relevant to inquire
into the consequences of the measure if a strict adherence to
the letter of the paragraph is followed.
It is a salutary principle in statutory construction that there
exists a valid presumption that undesirable consequences were
never intended by a legislative measure, and that a construction
of which the statute is fairly susceptible is favored, which will
avoid all objectionable, mischievous, indefensible, wrongful,
evil, and injurious consequences.9-a
It is to be presumed that when P.D. 9 was promulgated by the
President of the Republic there was no intent to work a
hardship or an oppressive result, a possible abuse of authority
or act of oppression, arming one person with a weapon to
impose hardship on another, and so on.10
At this instance We quote from the order of Judge Purisima the
following:

And while there is no proof of it before the
Court, it is not difficult to believe the
murmurings of detained persons brought to
Court upon a charge of possession of
bladed weapons under P.D. No. 9, that more
than ever before, policemen - of course not
all can be so heartless — now have in their
hands P.D. No. 9 as a most convenient tool
for extortion, what with the terrifying risk of
being sentenced to imprisonment of five to
ten years for a rusted kitchen knife or a pair
of scissors, which only God knows where it
came from. Whereas before martial law an
extortion-minded peace officer had to have a
stock of the cheapest paltik, and even that
could only convey the coercive message of
one year in jail, now anything that has the
semblance of a sharp edge or pointed
object, available even in trash cans, may
already serve the same purpose, and yet
five to ten times more incriminating than the
infamous paltik. (pp. 72-73, rollo L-42050-
66)
And as respondent Judge Maceren points out, the people's
interpretation of P.D. 9(3) results in absurdity at times. To his
example We may add a situation where a law-abiding citizen, a
lawyer by profession, after gardening in his house remembers
to return the bolo used by him to his neighbor who lives about
30 meters or so away and while crossing the street meets a
policeman. The latter upon seeing the bolo being carried by that
citizen places him under arrest and books him for a violation of
P.D. 9(3). Could the presidential decree have been conceived
to produce such absurd, unreasonable, and insensible results?
6. Penal statutes are to be construed strictly against the state
and liberally in favor of an accused.
American jurisprudence sets down the reason for this rule to be
"the tenderness of the law of the rights of individuals; the object
is to establish a certain rule by conformity to which mankind
would be safe, and the discretion of the court limited." 11 The
purpose is not to enable a guilty person to escape punishment
through a technicality but to provide a precise definition of
forbidden acts.12
Our own decisions have set down the same guidelines in this
manner, viz:
Criminal statutes are to be construed strictly.
No person should be brought within their
terms who is not clearly within them, nor
should any act be pronounced criminal
which is not made clearly so by the statute.
(U.S. v. Abad Santos, 36 Phil. 243, 246)
The rule that penal statutes are given a strict
construction is not the only factor controlling
the interpretation of such laws, instead, the
rule merely serves as an additional, single
factor to be considered as an aid in
determining the meaning of penal laws.
(People v. Manantan, 5 SCRA 684, 692)
F. The Informations filed by petitioner are fatally defective.
The two elements of the offense covered by P.D. 9(3) must be
alleged in the Information in order that the latter may constitute
a sufficiently valid charged. The sufficiency of an Information is
determined solely by the facts alleged therein. 13 Where the
facts are incomplete and do not convey the elements of the
crime, the quashing of the accusation is in order.
Section 2(a), Rule 117 of the Rules of Court provides that the
defendant may move to quash the complaint or information
when the facts charged do not constitute an offense.
In U.S.U. Gacutan, 1914, it was held that where an accused is
charged with knowingly rendering an unjust judgment under
Article 204 of the Revised Penal Code, failure to allege in the
Information that the judgment was rendered knowing it to be
unjust, is fatal. 14
In People v. Yadao, 1954, this Court through then Justice Cesar
Bengzon who later became Chief Justice of the Court affirmed
an order of the trial court which quashed an Information wherein
the facts recited did not constitute a public offense as defined in
Section 1, Republic Act 145. 15
G. The filing of these Petitions was unnecessary because the
People could have availed itself of other available remedies
below.
Pertinent provisions of the Rules of Court follow:
Rule 117, Section 7. Effect of sustaining the
motion to quash. — If the motion to quash is
STAT CON 31
sustained the court may order that another
information be filed. If such order is made
the defendant, if in custody, shall remain so
unless he shall be admitted to bail. If such
order is not made or if having been made
another information is not filed withuntime to
be specified in the order, or within such
further time as the court may allow for good
cause shown, the defendant, if in custody,
shall be discharged therefrom, unless he is
in custody on some other charge.
Rule 110, Section 13. Amendment. — The
information or complaint may be amended,
in substance or form, without leave of court,
at any time before the defendant pleads; and
thereafter and during the trial as to all
matters of form, by leave and at the
discretion of the court, when the same can
be done without prejudice to the rights of the
defendant.
xxx xxx xxx
Two courses of action were open to Petitioner upon the
quashing of the Informations in these cases, viz:
First, if the evidence on hand so warranted, the People could
have filed an amended Information to include the second
element of the offense as defined in the disputed orders of
respondent Judges. We have ruled that if the facts alleged in
the Information do not constitute a punishable offense, the case
should not be dismissed but the prosecution should be given an
opportunity to amend the Information.16
Second, if the facts so justified, the People could have filed a
complaint either under Section 26 of Act No. 1780, quoted
earlier, or Manila City Ordinance No. 3820, as amended by
Ordinance No. 3928, especially since in most if not all of the
cases, the dismissal was made prior to arraignment of the
accused and on a motion to quash.
Section 8. Rule 117 states that:
An order sustaining the motion to quash is
not a bar to another prosecution for the
same offense unless the motion was based
on the grounds specified in section 2,
subsections (f) and (h) of this rule.

Under the foregoing, the filing of another complaint or
Information is barred only when the criminal action or liability
had been extinguished (Section 2[f]) or when the motion to
quash was granted for reasons of double jeopardy. (ibid., [h])
As to whether or not a plea of double jeopardy may be
successfully invoked by the accused in all these cases should
new complaints be filed against them, is a matter We need not
resolve for the present.
H. — We conclude with high expectations that police authorities
and the prosecuting arm of the government true to the oath of
office they have taken will exercise utmost circumspection and
good faith in evaluating the particular circumstances of a case
so as to reach a fair and just conclusion if a situation falls within
the purview of P.D. 9(3) and the prosecution under said decree
is warranted and justified. This obligation becomes a sacred
duty in the face of the severe penalty imposed for the offense.
On this point, We commend the Chief State Prosecutor Rodolfo
A. Nocon on his letter to the City Fiscal of Manila on October
15, 1975, written for the Secretary, now Minister of Justice,
where he stated the following:
In any case, please study well each and
every case of this nature so that persons
accused of carrying bladed weapons,
specially those whose purpose is not to
subvert the duly constituted authorities, may
not be unduly indicted for the serious
offenses falling under P.D. No. 9.17
Yes, while it is not within the power of courts of justice to inquire
into the wisdom of a law, it is however a judicial task and
prerogative to determine if official action is within the spirit and
letter of the law and if basic fundamental rights of an individual
guaranteed by the Constitution are not violated in the process
of its implementation. We have to face the fact that it is an
unwise and unjust application of a law, necessary and justified
under prevailing circumstances, which renders the measure an
instrument of oppression and evil and leads the citizenry to lose
their faith in their government.
WHEREFORE, We DENY these 26 Petitions for Review and
We AFFIRM the Orders of respondent Judges dismissing or
quashing the Information concerned, subject however to Our
observations made in the preceding pages 23 to 25 of this
Decision regarding the right of the State or Petitioner herein to
file either an amended Information under Presidential Decree
No. 9, paragraph 3, or a new one under other existing statute or
city ordinance as the facts may warrant.
Without costs.
SO ORDERED.
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
STAT CON 32
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
STAT CON 33
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
STAT CON 34
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.
G.R. No. L-12436 May 31, 1961
LA CARLOTA SUGAR CENTRAL and ELIZALDE & CO.,
INC., petitioners-appellants,
vs.
PEDRO JIMENEZ, AUDITOR GENERAL OF THE
PHILIPPINES, respondent-appellee.
DIZON, J.:
Sometime in September, 1955 La Carlota Sugar Central — a
domestic corporation hereinafter referred to as the Central,
managed, controlled and operated by Elizalde & Co., Inc.,
referred to hereinafter as Elizalde, imported 500 short tons of
ammonium sulphate and 350 short tons of ammonium
phosphate. The corresponding letter of credit in the sum of
$60,930.00, U.S. currency, was opened through the Hongkong
& Shanghai Banking Corporation in the name of the Central and
in favor of the Overseas Central Enterprises, Inc., 141 Battery
St., San Francisco 11, California, U.S.A. The invoices, bill of
STAT CON 35
lading, and all other papers incident to said importation were
also in the name of the Central.
When the fertilizers arrived in the Philippines, the Central Bank
imposed on, and demanded with the provisions of Republic Act
No. 601, as amended, and the Central paid in that connection
the total sum of P20,872.09 (Annexes B and C attached to the
Petition for Review).
On November 18, 1955 the Central filed, through the Hongkong
& Shanghai Banking Corporation, a petition for the refund of the
P20,872.09 paid as above stated, claiming that it had imported
the fertilizers mentioned heretofore upon request and for the
exclusive use of five haciendas known as "Esperanza",
"Nahalin", "Valencia" — owned by Elizalde — "Consuelo" and
"Maayon", these last two managed by the same company, and
therefore the importation was exempt from the 17% exchange
tax in accordance with Sec. 2, Rep. Act 601, as amended by
Act 1375. The Auditor of the Central Bank, however, denied the
petition on July 2, 1956. The Central requested the Auditor to
reconsider his ruling, but after a reexamination of all pertinent
papers the reconsideration was denied. The Central then
appealed to the Auditor General of the Philippines, who on
January 18, 1957, affirmed the ruling of the Auditor of the
Central Bank upon the ground that "the importation of the
fertilizers here in question does not fall within the scope of the
exempting provisions of Section 2 of Republic Act No. 601, as
amended by Republic Act No. 1357. Accordingly, the decision
of the Auditor, Central Bank of the Philippines, denying the
aforementioned request for refund of 17% exchange tax, is
hereby affirmed." In view of this result, the Central and Elizalde
filed the present petition for review.
The only question to be resolved is whether upon the
undisputed facts of the case the importation of the fertilizers
mentioned heretofore is covered by the exemption provided by
Sections 1 and 2 of Republic Act No. 601, as amended by
Republic Acts Nos. 1175, 1197 and 1375, which read as
follows:
SECTION 1. Except as herein otherwise provided,
there shall be assessed, collected and paid a special
excise tax of seventeen per centum on the value in
Philippine peso of foreign exchange sold by the
Central Bank of the Philippines, or any of its agents
until June thirtieth, nineteen hundred and fifty-six.
SEC. 2. The tax provided for in section one of this Act
shall not be collected on foreign exchange used for
the payment of the cost, transportation and/or other

charges of canned milk, canned beef, cattle, canned
fish, cocoa beans, malt, stabilizer and flavors, vitamin
concentrate; supplies and equipment purchased
directly by the Government or any of its
instrumentalities for its own exclusive use; machinery,
equipment, accessories, and spare parts, for the use
of industries, miners, mining enterprises, planters and
farmers; and fertilizers when imported by planters or
farmers directly or through their cooperatives; . . . .
The law is, therefore, clear that imported fertilizers are exempt
from the payment of the 17% tax only if the same were
imported by planters or farmers directly or through their
cooperatives. In the present case, as appellants admit that the
Central "is not the planter ultimately benefited by the fertilizers,
much less a cooperative within the purview of Rep. Act No. 601,
as amended", the only possible conclusion is that the imported
fertilizers in question are not entitled to the exemption provided
by law.
It is, however, argued that the Central imported the fertilizers for
the exclusive purpose of accommodating the haciendas
mentioned heretofore, who were to use the fertilizers; that the
Central acted merely as an agent of the aforesaid haciendas;
that considering the relationship and corporate tie-up between
the Central, on the one hand, and Elizalde, on the other, the act
of the Central in importing the fertilizers should be considered
as an act of Elizalde and, therefore, the act of the haciendas
themselves, three of which were owned and two managed by
Elizalde. We find these contentions to be without merit.
As already stated, the exemption covers exclusively fertilizers
imported by planters or farmers directly or through their
cooperatives. The word "directly" has been interpreted to mean
"without anything intervening" (Words and Phrases, Vol. 12A, p.
140 — citing Gulf Atlantic Warehouse, etc. vs. Bennet, 51 So
2nd 544, 546, 36 Ala. App. 33); "proximately or without
intervening agency or person" (Idem, p. 142 — citing
Employers' Casualty Co. v. Underwood, 286 P. 7, 10; 142 Okl.
208). Consequently, an importation of fertilizers made by a
farmer or planter through an agent, other than his cooperative,
is not imported directly as required by the exemption. This
conclusion acquires added force upon consideration of the fact
that the legal provision in question has already established an
exception from the meaning or scope of the term "directly" by
providing coverage for fertilizers imported by planters or
farmers through their cooperatives. The latter, therefore, is the
only agent of planters or farmers recognized by the exception,
and we can not recognize any other.
On the other hand, that the agent acted simply to accommodate
the planter or farmer and without any idea of making any profit
from the transaction would seem to be immaterial considering
the language employed in the statute under consideration.
In connection with what has been stated heretofore, we have to
bear in mind likewise that when the issue is whether or not the
exemption from a tax imposed by law is applicable, the rule is
that the exempting provision is to be construed liberally in favor
of the taxing authority and strictly against exemption from tax
liability, the result being that statutory provisions for the refund
of taxes are strictly construed in favor of the State and against
the taxpayer (82 C.J.S. pp. 957-958; Helvering vs. Northwest
Steel Rolling Mills, 311 US 46 85 L. ed. 29 S. Ct., 51 Am. Jur. p.
526). Indeed, were we to adopt appellants' construction of the
law by exempting from the 17% tax all fertilizers imported by
planters or farmers through any agent other than their
cooperatives, we would be rendering useless the only exception
expressly established in the case of fertilizers imported by
planters or farmers through their cooperatives.
IN VIEW OF THE FOREGOING, the ruling appealed from is
hereby affirmed, with costs.
G.R. No. 184266 November 11, 2013
APPLIED FOOD INGREDIENTS COMPANY, INC., Petitioner,
vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.
DECISION
SERENO, CJ:
This is a Petition for Review on Certiorari 1 under Rule 45 of the
1997 Rules of Civil Procedure filed by Applied Food
Ingredients, Company, Inc. (petitioner). The Petition assails the
Decision2 dated 4 June 2008 and Resolution3 dated 26 August
2008 of the Court of Tax Appeals En Bane (CTA En Bane in
C.TA. EB No. 359. The assailed Decision and Resolution
affirmed the Decision4 dated 13 June 2007 and
Resolution5 dated 16 January 2008 rendered by the CTA First
Division in C.TA. Case No. 6513 which denied petitioner's claim
for the issuance of a tax credit Decision 2 G.R. No. 184266
certificate representing its alleged excess input taxes
attributable to zero-rated sales for the period 1 April 2000 to 31
December 2000.
STAT CON 36
THE FACTS
Considering that there are no factual issues in this case, we
adopt the findings of fact of the CTA En Banc, as follows:
Petitioner is registered with the Regional District Office (RDO)
No. 43 of the BIR in Pasig City (BIR-Pasig) as, among others, a
Value-Added Tax (VAT) taxpayer engaged in the importation
and exportation business, as a pure buy-sell trader.
Petitioner alleged that from September 1998 to December 31,
2000, it paid an aggregate sum of input taxes of ₱9,528,565.85
for its importation of food ingredients, as reported in its
Quarterly Vat Return.
Subsequently, these imported food ingredients were exported
between the periods of April 1, 2000 to December 31, 2000,
from which the petitioner was able to generate export sales
amounting to ₱114,577,937.24. The proceeds thereof were
inwardly remitted to petitioner's dollar accounts with Equitable
Bank Corporation and with Australia New Zealand Bank-
Philippine Branch.
Petitioner further claimed that the aforestated export sales
which transpired from April 1, 2000 to December 31, 2000 were
"zero-rated" sales, pursuant to Section 106(A (2)(a)(1) of the
N1RC of 1997.
Petitioner alleged that the accumulated input taxes of
₱9,528,565.85 for the period of September 1, 1998 to
December 31, 2000 have not been applied against any output
tax.
On March 26, 2002 and June 28, 2002, petitioner filed two
separate applications for the issuance of tax credit certificates
in the amounts of ₱5,385, 208.32 and ₱4,143,357.53,
respectively.
On July 24, 2002, in view of respondent's inaction, petitioner
elevated the case before this Court by way of a Petition for
Review, docketed as C.T.A. Case No. 6513.
In his Answer filed on August 28, 2002, respondent alleged by
way of special and affirmative defenses that the request for tax
credit certificate is still under examination by respondent's
examiners; that taxes paid and collected are presumed to have
been made in accordance with law and regulations, hence not
refundable; petitioner's allegation that it erroneously and

excessively paid the tax during the year under review does not
ipso facto warrant the refund/credit or the issuance of a
certificate thereto; petitioner must prove that it has complied
with the governing rules with reference to tax recovery or
refund, which are found in Sections 204(C) and 229 of the Tax
Code, as amended.6
Trial ensued and the CTA First Division rendered a Decision on
13 June 2007. It denied petitioner’s claim for failure to comply
with the invoicing requirements prescribed under Section 113 in
relation to Section 237 of the National Internal Revenue Code
(NIRC) of 1997 and Section 4.108-1 of Revenue Regulations
No. 7-95.
On appeal, the CTA En Banc likewise denied the claim of
petitioner on the same ground and ruled that the latter’s sales
for the subject period could not qualify for VAT zero-rating, as
the export sales invoices did not bear the following: 1) the
imprinted word "zero-rated;" 2) "TIN-VAT;" and 3) BIR’s permit
number, all in violation of the invoicing requirements.
THE ISSUES
Petitioner raises this sole issue for the consideration of this
Court:
WHETHER OR NOT THE PETITIONER IS ENTITLED TO THE
ISSUANCE OF A TAX CREDIT CERTIFICATE OR REFUND
OF THE AMOUNT OF ₱9,528,565.85 REPRESENTING
CREDITABLE INPUT TAXES INCURRED FOR THE PERIOD
OF SEPTEMBER 1, 1998 TO DECEMBER 31, 2000 WHICH
ARE ATTRIBUTABLE TO ZERO-RATED SALES FOR THE
PERIOD OF APRIL 1, 2000 TO DECEMBER 31, 2000.7
THE COURT’S RULING
The Petition has no merit.
Our VAT Law provides for a mechanism that would allow VAT-
registered persons to recover the excess input taxes over the
output taxes they had paid in relation to their sales.
In Panasonic Communications Imaging Corporation of the
Philippines v. Commissioner of Internal Revenue, 8 this Court
explained that "the VAT is a tax on consumption, an indirect tax
that the provider of goods or services may pass on to his
customers. Under the VAT method of taxation, which is invoice-
based, an entity can subtract from the VAT charged on its sales
or outputs the VAT it paid on its purchases, inputs and imports."
For zero-rated or effectively zero-rated sales, although the
sellers in these transactions charge no output tax, they can
claim a refund of the VAT that their suppliers charged them. 9
At the outset, bearing in mind that tax refunds or credits − just
like tax exemptions − are strictly construed against
taxpayers,10 the latter have the burden to prove strict
compliance with the conditions for the grant of the tax refund or
credit.
Section 112 of the NIRC of 1997 laid down the manner in which
the refund or credit of input tax may be made, to wit:
SEC. 112. Refunds or Tax Credits of Input Tax. –
(A) Zero-rated or Effectively Zero-rated Sales. - Any VAT-
registered person, whose sales are zero-rated or effectively
zero-rated may, within two (2) years after the close of the
taxable quarter when the sales were made, apply for the
issuance of a tax credit certificate or refund of creditable input
tax due or paid attributable to such sales, except transitional
input tax, to the extent that such input tax has not been applied
against output tax: Provided, however, That in the case of zero-
rated sales under Section 106(A)(2)(a)(1), (2) and (B) and
Section 108(B)(1) and (2), the acceptable foreign currency
exchange proceeds thereof had been duly accounted for in
accordance with the rules and regulations of the Bangko
Sentral ng Pilipinas (BSP): Provided, further, That where the
taxpayer is engaged in zero-rated or effectively zero-rated sale
and also in taxable or exempt sale of goods of properties or
services, and the amount of creditable input tax due or paid
cannot be directly and entirely attributed to any one of the
transactions, it shall be allocated proportionately on the basis of
the volume of sales.
xxxx
(D) Period within which Refund or Tax Credit of Input Taxes
shall be Made. - In proper cases, the Commissioner shall grant
a refund or issue the tax credit certificate for creditable input
taxes within one hundred twenty (120) days from the date of
submission of complete documents in support of the application
filed in accordance with Subsections (A) and (B) hereof.
STAT CON 37
In case of full or partial denial of the claim for tax refund or tax
credit, or the failure on the part of the Commissioner to act on
the application within the period prescribed above, the taxpayer
affected may, within thirty (30) days from the receipt of the
decision denying the claim or after the expiration of the one
hundred twenty day-period, appeal the decision or the unacted
claim with the Court of Tax Appeals.
This Court finds it appropriate to first determine the timeliness
of petitioner’s claim in accordance with the above provision.
Well-settled is the rule that the issue of jurisdiction over the
subject matter may, at any time, be raised by the parties or
considered by the Court motu proprio.11 Therefore, the
jurisdiction of the CTA over petitioner’s appeal may still be
considered and determined by this Court.
Although the ponente in this case expressed a different view on
the mandatory application of the 120+30 day period as
prescribed in the above provision, with the advent, however, of
this Court’s pronouncement on the consolidated tax cases of
Commissioner of Internal Revenue v. San Roque Power
Corporation, Taganito Mining Corporation v. Commissioner of
Internal Revenue, and Philex Mining Corporation v.
Commissioner of Internal Revenue12 (hereby collectively
referred as San Roque), we are constrained to apply the
dispositions therein to similar facts as those in the present case.
To begin with, Section 112(A) provides for a two-year
prescriptive period after the close of the taxable quarter when
the sales were made, within which a VAT-registered person
whose sales are zero-rated or effectively zero-rated may apply
for the issuance of a tax credit certificate or refund of creditable
input tax.
In this case, petitioner claims that from April 2000 to December
2000 it had zero-rated sales to which it attributed the
accumulated input taxes it had incurred from September 1998
to December 2000.
Applying Section 112(A), petitioner had until 30 June 2002, 30
September 2002 and 31 December 2002 − or the close of the
taxable quarter when the zero-rated sales were made − within
which to file its administrative claim for refund. Thus, we find
sufficient compliance with the two-year prescriptive period when
petitioner filed its claim on 26 March 200213 and 28 June
200214 covering its zero-rated sales for the period April to
September 2000 and October to December 2000, respectively.

The Commissioner of Internal Revenue (CIR) had one hundred
twenty (120) days from the date of submission of complete
documents in support of the application within which to decide
on the administrative claim.
In relation thereto, absent any evidence to the contrary and
bearing in mind that the burden to prove entitlement to a tax
refund is on the taxpayer, it is presumed that in order to
discharge its burden, petitioner had attached complete
supporting documents necessary to prove its entitlement to a
refund in its application filed on 26 March 2002 and 28 June
2002. Therefore, the CIR’s 120-day period to decide on
petitioner’s administrative claim commenced to run on 26 March
2002 and 28 June 2002, respectively.
Counting 120 days from 26 March 2002, the CIR had until 24
July 2002 within which to decide on the claim of petitioner for an
input VAT refund attributable to the its zero-rated sales for the
period April to September 2000.
On the other hand, the CIR had until 26 October 2002 within
which to decide on petitioner’s claim for refund filed on 28 June
2002, or for the period covering October to December 2000.
Records, however, show that the judicial claim of petitioner was
filed on 24 July 2002.15 Petitioner clearly failed to observe the
mandatory 120-day waiting period. Consequently, the
premature filing of its claim for refund/credit of input VAT before
the CTA warranted a dismissal, inasmuch as no jurisdiction was
acquired by the CTA.16
In San Roque, this Court, held thus: "Failure to comply with the
120-day waiting period violates a mandatory provision of law. It
violates the doctrine of exhaustion of administrative remedies
and renders the petition premature and thus without a cause of
action, with the effect that the CTA does not acquire jurisdiction
over the taxpayer’s petition. Philippine jurisprudence is replete
with cases upholding and reiterating these doctrinal
principles."17
Furthermore, the CTA, being a court of special jurisdiction, can
take cognizance only of matters that are clearly within its
jurisdiction.18 Section 7 of R.A. 1125,19 as amended by R.A.
9282,20 specifically provides:
SEC. 7. Jurisdiction. — The CTA shall exercise:
(a) Exclusive appellate jurisdiction to review by
appeal, as herein provided:
(1) Decisions of the Commissioner of Internal
Revenue in cases involving disputed assessments,
refunds of internal revenue taxes, fees or other
charges, penalties in relation thereto, or other matters
arising under the National Internal Revenue Code or
other laws administered by the Bureau of Internal
Revenue;
(2) Inaction by the Commissioner of Internal Revenue
in cases involving disputed assessments, refunds of
internal revenue taxes, fees or other charges,
penalties in relation thereto, or other matters arising
under the National Internal Revenue Code or other
laws administered by the Bureau of Internal Revenue,
where the National Internal Revenue Code provides a
specific period of action, in which case the inaction
shall be deemed a denial; x x x.(Emphases supplied)
"Inaction by the CIR" in cases involving the refund of creditable
input tax, arises only after the lapse of 120 days. Thus, prior
thereto and without a decision of the CIR, the CTA, as a court
of special jurisdiction, has no jurisdiction to entertain claims for
the refund or credit of creditable input tax. "The charter of the
CTA also expressly provides that if the Commissioner fails to
decide within "a specific period" required by law, such "inaction
shall be deemed a denial" of the application for tax refund or
credit. It is the Commissioner’s decision, or inaction "deemed a
denial," that the taxpayer can take to the CTA for review.
Without a decision or an "inaction x x x deemed a denial" of the
Commissioner, the CTA has no jurisdiction over a petition for
review."21
Considering further that the 30-day period to appeal to the CTA
is dependent on the 120-day period, both periods are hereby
rendered jurisdictional. Failure to observe 120 days prior to the
filing of a judicial claim is not a mere non-exhaustion of
administrative remedies, but is likewise considered
jurisdictional. The period of 120 days is a prerequisite for the
commencement of the 30-day period to appeal to the CTA. In
both instances, whether the CIR renders a decision (which must
be made within 120 days) or there was inaction, the period of
120 days is material.
This Court further ruled:
STAT CON 38
The old rule that the taxpayer may file the judicial claim, without
waiting for the Commissioner’s decision if the two-year
prescriptive period is about to expire, cannot apply because that
rule was adopted before the enactment of the 30-day period.
The 30-day period was adopted precisely to do away with the
old rule, so that under the VAT System the taxpayer will always
have 30 days to file the judicial claim even if the Commissioner
acts only on the 120th day, or does not act at all during the 120-
day period. With the 30-day period always available to the
taxpayer, the taxpayer can no longer file a judicial claim for
refund or credit of input VAT without waiting for the
Commissioner to decide until the expiration of the 120-day
period.
To repeat, a claim for tax refund or credit, like a claim for tax
exemption, is construed strictly against the
taxpayer.1âwphi1 One of the conditions for a judicial claim of
refund or credit under the VAT System is with the 120+ 30 day
mandatory and jurisdictional periods. Thus, strict compliance
with the 120+30 day periods is necessary for such a claim to
prosper, whether before, during, or after the effectivity of the
Atlas doctrine, except for the period from the issuance of BIR
Ruling No DA-489-03 on 10 December 2003 to 6 October 2010
when the Aichi doctrine was adopted, which again reinstated
the 120+ 30 day periods as mandatory and
jurisdictional.22 (Emphasis supplied)
In accordance with San Roque and considering that petitioner s
judicial claim was filed on 24 July 2002, when the 120+30 day
mandatory periods were already in the law and BIR Ruling No.
DA-489-03 had not yet been issued, petitioner does not have
an excuse for not observing the 120+ 30 day period. Failure of
petitioner to observe the mandatory 120-day period is fatal to its
claim and rendered the CT A devoid of jurisdiction over the
judicial claim.
The Court finds, in view of the absence of jurisdiction of the
Court of the Tax Appeals over the judicial claim of petitioner,
that there is no need to discuss the other issues raised.
WHEREFORE, premises considered, the instant Petition is
DENIED.
SO ORDERED.

G.R. No. 115349 April 18, 1997
COMMISSIONER OF INTERNAL REVENUE, petitioner,
vs.
THE COURT OF APPEALS, THE COURT OF TAX APPEALS
and ATENEO DE MANILA UNIVERSITY, respondents.
PANGANIBAN, J.:
In conducting researches and studies of social organizations
and cultural values thru its Institute of Philippine Culture, is the
Ateneo de Manila University performing the work of an
independent contractor and thus taxable within the purview of
then Section 205 of the National Internal Revenue Code levying
a three percent contractor's tax? This question is answer by the
Court in the negative as it resolves this petition assailing the
Decision 1 of the Respondent Court of Appeals 2 in CA-G.R. SP
No. 31790 promulgated on April 27, 1994 affirming that of the
Court of Tax Appeals. 3
The Antecedent Facts
The antecedents as found by the Court of Appeals are
reproduced hereinbelow, the same being largely undisputed by
the parties.
Private respondent is a non-stock, non-profit educational
institution with auxiliary units and branches all over the
Philippines. One such auxiliary unit is the Institute of
Philippine Culture (IPC), which has no legal personality
separate and distinct from that of private respondent. The IPC
is a Philippine unit engaged in social science studies of
Philippine society and culture. Occasionally, it accepts
sponsorships for its research activities from international
organizations, private foundations and government agencies.
On July 8, 1983, private respondent received from petitioner
Commissioner of Internal Revenue a demand letter dated
June 3, 1983, assessing private respondent the sum of
P174,043.97 for alleged deficiency contractor's tax, and an
assessment dated June 27, 1983 in the sum of P1,141,837
for alleged deficiency income tax, both for the fiscal year
ended March 31, 1978. Denying said tax liabilities, private
respondent sent petitioner a letter-protest and subsequently
filed with the latter a memorandum contesting the validity of
the assessments.
On March 17, 1988, petitioner rendered a letter-decision
canceling the assessment for deficiency income tax but
modifying the assessment for deficiency contractor's tax by
increasing the amount due to P193,475.55. Unsatisfied,
private respondent requested for a reconsideration or
reinvestigation of the modified assessment. At the same time,
it filed in the respondent court a petition for review of the said
letter-decision of the petitioner. While the petition was
pending before the respondent court, petitioner issued a final
decision dated August 3, 1988 reducing the assessment for
deficiency contractor's tax from P193,475.55 to P46,516.41,
exclusive of surcharge and interest.
On July 12, 1993, the respondent court
rendered the questioned decision which
dispositively reads:
WHEREFORE, in view of the foregoing, respondent's
decision is SET ASIDE. The deficiency contractor's tax
assessment in the amount of P46,516.41 exclusive of
surcharge and interest for the fiscal year ended March 31,
1978 is hereby CANCELED. No pronouncement as to cost.
SO ORDERED.
Not in accord with said decision, petitioner has come
to this Court via the present petition for review raising
the following issues:
1) WHETHER OR NOT PRIVATE RESPONDENT FALLS
UNDER THE PURVIEW OF INDEPENDENT
CONTRACTOR PURSUANT TO SECTION 205 OF THE
TAX CODE; and
2) WHETHER OR NOT PRIVATE RESPONDENT IS
SUBJECT TO 3% CONTRACTOR'S TAX UNDER
SECTION 205 OF THE TAX CODE.
The pertinent portions of Section 205 of the National Internal
Revenue Code, as amended, provide:
Sec. 205. Contractor, proprietors or
operators of dockyards, and others. — A
contractor's tax of three per centum of the
gross receipts is hereby imposed on the
following:
xxx xxx xxx
STAT CON 39
(16) Business agents and other independent contractors
except persons, associations and corporations under
contract for embroidery and apparel for export, as well as
their agents and contractors and except gross receipts of
or from a pioneer industry registered with the Board of
Investments under Republic Act No. 5186:
xxx xxx xxx
The term "independent contractors" include persons
(juridical or natural) not enumerated above (but not
including individuals subject to the occupation tax under
Section 12 of the Local Tax Code) whose activity consists
essentially of the sale of all kinds of services for a fee
regardless of whether or not the performance of the
service calls for the exercise or use of the physical or
mental faculties of such contractors or their employees.
xxx xxx xxx
Petitioner contends that the respondent court erred in holding
that private respondent is not an "independent contractor"
within the purview of Section 205 of the Tax Code. To
petitioner, the term "independent contractor", as defined by
the Code, encompasses all kinds of services rendered for a
fee and that the only exceptions are the following:
a. Persons, association and corporations under contract for
embroidery and apparel for export and gross receipts of or
from pioneer industry registered with the Board of Investment
under R.A. No. 5186;
b. Individuals occupation tax under Section 12 of the Local
Tax Code (under the old Section 182 [b] of the Tax Code);
and
c. Regional or area headquarters established in the
Philippines by multinational corporations, including their alien
executives, and which headquarters do not earn or derive
income from the Philippines and which act as supervisory,
communication and coordinating centers for their affiliates,
subsidiaries or branches in the Asia Pacific Region (Section
205 of the Tax Code).
Petitioner thus submits that since private respondent falls
under the definition of an "independent contractor" and is not
among the aforementioned exceptions, private respondent is

therefore subject to the 3% contractor's tax imposed under
the same Code. 4
The Court of Appeals disagreed with the Petitioner
Commissioner of Internal Revenue and affirmed the assailed
decision of the Court of Tax Appeals. Unfazed, petitioner now
asks us to reverse the CA through this petition for review.
The Issues
Petitioner submits before us the following issues:
1) Whether or not private respondent falls under the purview
of independent contractor pursuant to Section 205 of the Tax
Code.
2) Whether or not private respondent is subject to 3%
contractor's tax under Section 205 of the Tax Code. 5
In fine, these may be reduced to a single issue: Is Ateneo de
Manila University, through its auxiliary unit or branch — the
Institute of Philippine Culture — performing the work of an
independent contractor and, thus, subject to the three percent
contractor's tax levied by then Section 205 of the National
Internal Revenue Code?
The Court's Ruling
The petition is unmeritorious.
Interpretation of Tax Laws
The parts of then Section 205 of the National Internal Revenue
Code germane to the case before us read:
Sec. 205. Contractors, proprietors or operators of
dockyards, and others. — A contractor's tax of three per
centum of the gross receipts is hereby imposed on the
following:
xxx xxx xxx
(16) Business agents and other independent contractors,
except persons, associations and corporations under
contract for embroidery and apparel for export, as well as
their agents and contractors, and except gross receipts of
or from a pioneer industry registered with the Board of
Investments under the provisions of Republic Act No.
5186;
xxx xxx xxx
The term "independent contractors" include persons
(juridical or natural) not enumerated above (but not
including individuals subject to the occupation tax under
Section 12 of the Local Tax Code) whose activity consists
essentially of the sale of all kinds of services for a fee
regardless of whether or not the performance of the
service calls for the exercise or use of the physical or
mental faculties of such contractors or their employees.
The term "independent contractor" shall not include
regional or area headquarters established in the
Philippines by multinational corporations, including their
alien executives, and which headquarters do not earn or
derive income from the Philippines and which act as
supervisory, communications and coordinating centers for
their affiliates, subsidiaries or branches in the Asia-Pacific
Region.
The term "gross receipts" means all amounts received by
the prime or principal contractor as the total contract price,
undiminished by amount paid to the subcontractor, shall
be excluded from the taxable gross receipts of the
subcontractor.
Petitioner Commissioner of Internal Revenue contends that
Private Respondent Ateneo de Manila University "falls within
the definition" of an independent contractor and "is not one of
those mentioned as excepted"; hence, it is properly a subject of
the three percent contractor's tax levied by the foregoing
provision of law. 6 Petitioner states that the "term 'independent
contractor' is not specifically defined so as to delimit the scope
thereof, so much so that any person who . . . renders physical
and mental service for a fee, is now indubitably considered an
independent contractor liable to 3% contractor's
tax." 7 According to petitioner, Ateneo has the burden of proof to
show its exemption from the coverage of the law.
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
STAT CON 40
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 . . . (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." 8 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." 9
To fall under its coverage, Section 205 of the National Internal
Revenue Code requires that the independent contractor be
engaged in the business of selling its services. Hence, to
impose the three percent contractor's tax on Ateneo's Institute
of Philippine Culture, it should be sufficiently proven that the
private respondent is indeed selling its services for a fee in
pursuit of an independent business. And it is only after private
respondent has been found clearly to be subject to the
provisions of Sec. 205 that the question of exemption therefrom
would arise. Only after such coverage is shown does the rule of
construction — that tax exemptions are to be strictly construed
against the taxpayer — come into play, contrary to petitioner's
position. This is the main line of reasoning of the Court of Tax
Appeals in its decision, 10 which was affirmed by the CA.
The Ateneo de Manila University Did Not Contract
for the Sale of the Service of its Institute of Philippine
Culture
After reviewing the records of this case, we find no evidence
that Ateneo's Institute of Philippine Culture ever sold its
services for a fee to anyone or was ever engaged in a business
apart from and independently of the academic purposes of the
university.
Stressing that "it is not the Ateneo de Manila University per
se which is being taxed," Petitioner Commissioner of Internal
Revenue contends that "the tax is due on its activity of
conducting researches for a fee. The tax is due on the gross
receipts made in favor of IPC pursuant to the contracts the
latter entered to conduct researches for the benefit primarily of

its clients. The tax is imposed on the exercise of a taxable
activity. . . . [T]he sale of services of private respondent is made
under a contract and the various contracts entered into between
private respondent and its clients are almost of the same terms,
showing, among others, the compensation and terms of
payment." 11 (Emphasis supplied.)
In theory, the Commissioner of Internal Revenue may be
correct. However, the records do not show that Ateneo's IPC in
fact contracted to sell its research services for a fee. Clearly
then, as found by the Court of Appeals and the Court of Tax
Appeals, petitioner's theory is inapplicable to the established
factual milieu obtaining in the instant case.
In the first place, the petitioner has presented no evidence to
prove its bare contention that, indeed, contracts for sale of
services were ever entered into by the private respondent. As
appropriately pointed out by the latter:
An examination of the Commissioner's
Written Formal Offer of Evidence in the
Court of Tax Appeals shows that only the
following documentary evidence was
presented:
Exhibit 1 BIR letter of authority no. 331844
2 Examiner's Field Audit Report
3 Adjustments to Sales/Receipts
4 Letter-decision of BIR Commissioner Bienvenido
A. Tan Jr.
None of the foregoing evidence even comes
close to purport to be contracts between
private respondent and third parties. 12
Moreover, the Court of Tax Appeals accurately and correctly
declared that the " funds received by the Ateneo de Manila
University are technically not a fee. They may however fall as
gifts or donations which are tax-exempt" as shown by private
respondent's compliance with the requirement of Section 123 of
the National Internal Revenue Code providing for the exemption
of such gifts to an educational institution. 13
Respondent Court of Appeals elucidated on the ruling of the
Court of Tax Appeals:
To our mind, private respondent hardly fits into the definition
of an "independent contractor".
For one, the established facts show that IPC, as a unit of
the private respondent, is not engaged in business.
Undisputedly, private respondent is mandated by law to
undertake research activities to maintain its university
status. In fact, the research activities being carried out by
the IPC is focused not on business or profit but on social
sciences studies of Philippine society and culture. Since it
can only finance a limited number of IPC's research
projects, private respondent occasionally accepts
sponsorship for unfunded IPC research projects from
international organizations, private foundations and
governmental agencies. However, such sponsorships are
subject to private respondent's terms and conditions,
among which are, that the research is confined to topics
consistent with the private respondent's academic
agenda; that no proprietary or commercial purpose
research is done; and that private respondent retains not
only the absolute right to publish but also the ownership of
the results of the research conducted by the IPC. Quite
clearly, the aforementioned terms and conditions belie the
allegation that private respondent is a contractor or is
engaged in business.
For another, it bears stressing that private respondent is a
non-stock, non-profit educational corporation. The fact
that it accepted sponsorship for IPC's unfunded projects is
merely incidental. For, the main function of the IPC is to
undertake research projects under the academic agenda
of the private respondent. Moreover the records do not
show that in accepting sponsorship of research work, IPC
realized profits from such work. On the contrary, the
evidence shows that for about 30 years, IPC had
continuously operated at a loss, which means that
sponsored funds are less than actual expenses for its
research projects. That IPC has been operating at a loss
loudly bespeaks of the fact that education and not profit is
the motive for undertaking the research projects.
Then, too, granting arguendo that IPC made profits from the
sponsored research projects, the fact still remains that there
is no proof that part of such earnings or profits was ever
distributed as dividends to any stockholder, as in fact none
was so distributed because they accrued to the benefit of
the private respondent which is a non-profit educational
institution. 14
STAT CON 41
Therefore, it is clear that the funds received by Ateneo's
Institute of Philippine Culture are not given in the concept of a
fee or price in exchange for the performance of a service or
delivery of an object. Rather, the amounts are in the nature of
an endowment or donation given by IPC's benefactors solely for
the purpose of sponsoring or funding the research with no
strings attached. As found by the two courts below, such
sponsorships are subject to IPC's terms and conditions. No
proprietary or commercial research is done, and IPC retains the
ownership of the results of the research, including the absolute
right to publish the same. The copyrights over the results of the
research are owned by
Ateneo and, consequently, no portion thereof may be
reproduced without its permission. 15 The amounts given to IPC,
therefore, may not be deemed, it bears stressing as fees or
gross receipts that can be subjected to the three percent
contractor's tax.
It is also well to stress that the questioned transactions of
Ateneo's Institute of Philippine Culture cannot be deemed either
as a contract of sale or a contract of a piece of work. "By the
contract of sale, one of the contracting parties obligates himself
to transfer the ownership of and to deliver a determinate thing,
and the other to pay therefor a price certain in money or its
equivalent." 16 By its very nature, a contract of sale requires a
transfer of ownership. Thus, Article 1458 of the Civil Code
"expressly makes the obligation to transfer ownership as an
essential element of the contract of sale, following modern
codes, such as the German and the Swiss. Even in the
absence of this express requirement, however, most writers,
including Sanchez Roman, Gayoso, Valverde, Ruggiero, Colin
and Capitant, have considered such transfer of ownership as
the primary purpose of sale. Perez and Alguer follow the same
view, stating that the delivery of the thing does not mean a
mere physical transfer, but is a means of transmitting
ownership. Transfer of title or an agreement to transfer it for a
price paid or promised to be paid is the essence of sale." 17 In
the case of a contract for a piece of work, "the contractor binds
himself to execute a piece of work for the employer, in
consideration of a certain price or compensation. . . . If the
contractor agrees to produce the work from materials furnished
by him, he shall deliver the thing produced to the employer and
transfer dominion over the thing, . . ." 18 Ineludably, whether the
contract be one of sale or one for a piece of work, a transfer of
ownership is involved and a party necessarily walks away with
an object. 19 In the case at bench, it is clear from the evidence
on record that there was no sale either of objects or services
because, as adverted to earlier, there was no transfer of
ownership over the research data obtained or the results of
research projects undertaken by the Institute of Philippine
Culture.

Furthermore, it is clear that the research activity of the Institute
of Philippine Culture is done in pursuance of maintaining
Ateneo's university status and not in the course of an
independent business of selling such research with profit in
mind. This is clear from a reading of the regulations governing
universities:
31. In addition to the legal requisites an
institution must meet, among others, the
following requirements before an application
for university status shall be considered:
xxx xxx xxx
(e) The institution must undertake research
and operate with a competent qualified staff
at least three graduate departments in
accordance with the rules and standards for
graduate education. One of the departments
shall be science and technology. The
competence of the staff shall be judged by
their effective teaching, scholarly
publications and research activities
published in its school journal as well as
their leadership activities in the profession.
(f) The institution must show evidence of
adequate and stable financial resources and
support, a reasonable portion of which
should be devoted to institutional
development and research. (emphasis
supplied)
xxx xxx xxx
32. University status may be withdrawn,
after due notice and hearing, for failure to
maintain satisfactorily the standards and
requirements therefor. 20
Petitioner's contention that it is the Institute of Philippine Culture
that is being taxed and not the Ateneo is patently erroneous
because the former is not an independent juridical entity that is
separate and distinct form the latter.
Factual Findings and Conclusions of the Court of Tax
Appeals Affirmed by the Court of Appeals Generally
Conclusive
In addition, we reiterate that the "Court of Tax Appeals is a
highly specialized body specifically created for the purpose of
reviewing tax cases. Through its expertise, it is undeniably
competent to determine the issue of whether" 21 Ateneo de
Manila University may be deemed a subject of the three percent
contractor's tax "through the evidence presented before it."
Consequently, "as a matter of principle, this Court will not set
aside the conclusion reached by . . . the Court of Tax Appeals
which is, by the very nature of its function, dedicated exclusively
to the study and consideration of tax problems and has
necessarily developed an expertise on the subject unless there
has been an abuse or improvident exercise of authority . .
." 22 This point becomes more evident in the case before us
where the findings and conclusions of both the Court of Tax
Appeals and the Court of Appeals appear untainted by any
abuse of authority, much less grave abuse of discretion. Thus,
we find the decision of the latter affirming that of the former free
from any palpable error.
Public Service, Not Profit, is the Motive
The records show that the Institute of Philippine Culture
conducted its research activities at a huge deficit of
P1,624,014.00 as shown in its statements of fund and
disbursements for the period 1972 to 1985. 23 In fact, it was
Ateneo de Manila University itself that had funded the research
projects of the institute, and it was only when Ateneo could no
longer produce the needed funds that the institute sought
funding from outside. The testimony of Ateneo's Director for
Accounting Services, Ms. Leonor Wijangco, provides significant
insight on the academic and nonprofit nature of the institute's
research activities done in furtherance of the university's
purposes, as follows:
Q Now it was testified to earlier by Miss Thelma Padero
(Office Manager of the Institute of Philippine Culture) that as
far as grants from sponsored research it is possible that the
grant sometimes is less than the actual cost. Will you
please tell us in this case when the actual cost is a lot less
than the grant who shoulders the additional cost?
A The University.
Q Now, why is this done by the University?
A Because of our faculty development program as a
university, because a university has to have its own
research institute. 24
STAT CON 42
So, why is it that Ateneo continues to operate and conduct
researches through its Institute of Philippine Culture when it
undisputedly loses not an insignificant amount in the process?
The plain and simple answer is that private respondent is not a
contractor selling its services for a fee but an academic
institution conducting these researches pursuant to its
commitments to education and, ultimately, to public service. For
the institute to have tenaciously continued operating for so long
despite its accumulation of significant losses, we can only agree
with both the Court of Tax Appeals and the Court of Appeals
that "education and not profit is [IPC's] motive for undertaking
the research
projects." 25
WHEREFORE, premises considered, the petition is DENIED
and the assailed Decision of the Court of Appeals is hereby
AFFIRMED in full.
SO ORDERED.
G.R. No. 120082 September 11, 1996
MACTAN CEBU INTERNATIONAL AIRPORT
AUTHORITY, petitioner,
vs.
HON. FERDINAND J. MARCOS, in his capacity as the
Presiding Judge of the Regional Trial Court, Branch 20,
Cebu City, THE CITY OF CEBU, represented by its Mayor
HON. TOMAS R. OSMEÑA, and EUSTAQUIO B.
CESA, respondents.
DAVIDE, JR., J.:
For review under Rule 45 of the Rules of Court on a
pure question of law are the decision of 22 March
19951 of the Regional Trial Court (RTC) of Cebu City,
Branch 20, dismissing the petition for declaratory relief
in Civil Case No. CEB-16900 entitled "Mactan Cebu
International Airport Authority vs. City of Cebu", and
its order of 4, May 19952 denying the motion to
reconsider the decision.
We resolved to give due course to this petition for its
raises issues dwelling on the scope of the taxing
power of local government-owned and controlled
corporations.

The uncontradicted factual antecedents are
summarized in the instant petition as follows:
Petitioner Mactan Cebu International Airport Authority
(MCIAA) was created by virtue of Republic Act No. 6958,
mandated to "principally undertake the economical, efficient
and effective control, management and supervision of the
Mactan International Airport in the Province of Cebu and the
Lahug Airport in Cebu City, . . . and such other Airports as
may be established in the Province of Cebu . . . (Sec. 3, RA
6958). It is also mandated to:
a) encourage, promote and develop international and
domestic air traffic in the Central Visayas and Mindanao
regions as a means of making the regions centers of
international trade and tourism, and accelerating the
development of the means of transportation and
communication in the country; and
b) upgrade the services and facilities of the airports and to
formulate internationally acceptable standards of airport
accommodation and service.
Since the time of its creation, petitioner MCIAA enjoyed the
privilege of exemption from payment of realty taxes in
accordance with Section 14 of its Charter.
Sec. 14. Tax Exemptions. — The authority shall be exempt
from realty taxes imposed by the National Government or
any of its political subdivisions, agencies and
instrumentalities . . .
On October 11, 1994, however, Mr. Eustaquio B. Cesa,
Officer-in-Charge, Office of the Treasurer of the City of
Cebu, demanded payment for realty taxes on several
parcels of land belonging to the petitioner (Lot Nos. 913-G,
743, 88 SWO, 948-A, 989-A, 474, 109(931), I-M, 918, 919,
913-F, 941, 942, 947, 77 Psd., 746 and 991-A), located at
Barrio Apas and Barrio Kasambagan, Lahug, Cebu City, in
the total amount of P2,229,078.79.
Petitioner objected to such demand for payment as
baseless and unjustified, claiming in its favor the aforecited
Section 14 of RA 6958 which exempt it from payment of
realty taxes. It was also asserted that it is an instrumentality
of the government performing governmental functions, citing
section 133 of the Local Government Code of 1991 which
puts limitations on the taxing powers of local government
units:
Sec. 133. Common Limitations on the Taxing Powers of
Local Government Units. — Unless otherwise provided
herein, the exercise of the taxing powers of provinces,
cities, municipalities, and barangay shall not extend to the
levy of the following:
a) . . .
xxx xxx xxx
o) Taxes, fees or charges of any kind on the National
Government, its agencies and instrumentalities, and
local government units. (Emphasis supplied)
Respondent City refused to cancel and set
aside petitioner's realty tax account, insisting
that the MCIAA is a government-controlled
corporation whose tax exemption privilege
has been withdrawn by virtue of Sections
193 and 234 of the Local Governmental
Code that took effect on January 1, 1992:
Sec. 193. Withdrawal of Tax Exemption
Privilege. — Unless otherwise provided in
this Code, tax exemptions or incentives
granted to, or presently enjoyed by all
persons whether natural or
juridical, including government-owned or
controlled corporations, except local water
districts, cooperatives duly registered under
RA No. 6938, non-stock, and non-profit
hospitals and educational institutions, are
hereby withdrawn upon the effectivity of this
Code. (Emphasis supplied)
xxx xxx xxx
Sec. 234. Exemptions from Real Property
taxes. — . . .
(a) . . .
xxx xxx xxx
(c) . . .
STAT CON 43
Except as provided herein, any exemption from payment of
real property tax previously granted to, or presently enjoyed
by all persons, whether natural or juridical, including
government-owned or controlled corporations are hereby
withdrawn upon the effectivity of this Code.
As the City of Cebu was about to issue a warrant of levy
against the properties of petitioner, the latter was compelled
to pay its tax account "under protest" and thereafter filed a
Petition for Declaratory Relief with the Regional Trial Court of
Cebu, Branch 20, on December 29, 1994. MCIAA basically
contended that the taxing powers of local government units
do not extend to the levy of taxes or fees of any kind on
an instrumentality of the national government. Petitioner
insisted that while it is indeed a government-owned
corporation, it nonetheless stands on the same footing as an
agency or instrumentality of the national government.
Petitioner insisted that while it is indeed a government-owned
corporation, it nonetheless stands on the same footing as an
agency or instrumentality of the national government by the
very nature of its powers and functions.
Respondent City, however, asserted that MACIAA is not an
instrumentality of the government but merely a government-
owned corporation performing proprietary functions As such,
all exemptions previously granted to it were deemed
withdrawn by operation of law, as provided under Sections
193 and 234 of the Local Government Code when it took
effect on January 1, 1992.3
The petition for declaratory relief was docketed as
Civil Case No. CEB-16900.
In its decision of 22 March 1995, 4 the trial court
dismissed the petition in light of its findings, to wit:
A close reading of the New Local Government Code of
1991 or RA 7160 provides the express cancellation and
withdrawal of exemption of taxes by government owned and
controlled corporation per Sections after the effectivity of
said Code on January 1, 1992, to wit: [proceeds to quote
Sections 193 and 234]
Petitioners claimed that its real properties assessed by
respondent City Government of Cebu are exempted from
paying realty taxes in view of the exemption granted under
RA 6958 to pay the same (citing Section 14 of RA 6958).

However, RA 7160 expressly provides that "All general and
special laws, acts, city charters, decress [sic], executive
orders, proclamations and administrative regulations, or part
or parts thereof which are inconsistent with any of the
provisions of this Code are hereby repealed or modified
accordingly." ([f], Section 534, RA 7160).
With that repealing clause in RA 7160, it is safe to infer and
state that the tax exemption provided for in RA 6958
creating petitioner had been expressly repealed by the
provisions of the New Local Government Code of 1991.
So that petitioner in this case has to pay the assessed realty
tax of its properties effective after January 1, 1992 until the
present.
This Court's ruling finds expression to give impetus and
meaning to the overall objectives of the New Local
Government Code of 1991, RA 7160. "It is hereby declared
the policy of the State that the territorial and political
subdivisions of the State shall enjoy genuine and
meaningful local autonomy to enable them to attain their
fullest development as self-reliant communities and make
them more effective partners in the attainment of national
goals. Towards this end, the State shall provide for a more
responsive and accountable local government structure
instituted through a system of decentralization whereby
local government units shall be given more powers,
authority, responsibilities, and resources. The process of
decentralization shall proceed from the national government
to the local government units. . . .5
Its motion for reconsideration having been denied by
the trial court in its 4 May 1995 order, the petitioner
filed the instant petition based on the following
assignment of errors:
I RESPONDENT JUDGE ERRED IN FAILING TO
RULE THAT THE PETITIONER IS VESTED WITH
GOVERNMENT POWERS AND FUNCTIONS
WHICH PLACE IT IN THE SAME CATEGORY AS
AN INSTRUMENTALITY OR AGENCY OF THE
GOVERNMENT.
II RESPONDENT JUDGE ERRED IN RULING
THAT PETITIONER IS LIABLE TO PAY REAL
PROPERTY TAXES TO THE CITY OF CEBU.
Anent the first assigned error, the petitioner asserts that
although it is a government-owned or controlled corporation it
is mandated to perform functions in the same category as an
instrumentality of Government. An instrumentality of
Government is one created to perform governmental
functions primarily to promote certain aspects of the economic
life of the people.6 Considering its task "not merely to
efficiently operate and manage the Mactan-Cebu International
Airport, but more importantly, to carry out the Government
policies of promoting and developing the Central Visayas and
Mindanao regions as centers of international trade and
tourism, and accelerating the development of the means of
transportation and communication in the country,"7 and that it
is an attached agency of the Department of Transportation
and Communication (DOTC),8 the petitioner "may stand in
[sic] the same footing as an agency or instrumentality of the
national government." Hence, its tax exemption privilege
under Section 14 of its Charter "cannot be considered
withdrawn with the passage of the Local Government Code of
1991 (hereinafter LGC) because Section 133 thereof
specifically states that the taxing powers of local government
units shall not extend to the levy of taxes of fees or charges of
any kind on the national government its agencies and
instrumentalities."
As to the second assigned error, the petitioner contends that
being an instrumentality of the National Government,
respondent City of Cebu has no power nor authority to
impose realty taxes upon it in accordance with the aforesaid
Section 133 of the LGC, as explained in Basco vs. Philippine
Amusement and Gaming Corporation;9
Local governments have no power to tax instrumentalities of
the National Government. PAGCOR is a government owned
or controlled corporation with an original character, PD 1869.
All its shares of stock are owned by the National Government.
...
PAGCOR has a dual role, to operate and regulate gambling
casinos. The latter joke is governmental, which places it in the
category of an agency or instrumentality of the
Government. Being an instrumentality of the Government,
PAGCOR should be and actually is exempt from local taxes.
Otherwise, its operation might be burdened, impeded or
subjected to control by a mere Local government.
The states have no power by taxation or otherwise, to
retard, impede, burden or in any manner control the
operation of constitutional laws enacted by Congress to
carry into execution the powers vested in the federal
STAT CON 44
government. (McCulloch v. Maryland, 4 Wheat 316, 4 L Ed.
579).
This doctrine emanates from the "supremacy" of the
National Government over local government.
Justice Holmes, speaking for the Supreme Court, make
references to the entire absence of power on the part of the
States to touch, in that way (taxation) at least, the
instrumentalities of the United States (Johnson v. Maryland,
254 US 51) and it can be agreed that no state or political
subdivision can regulate a federal instrumentality in such a
way as to prevent it from consummating its federal
responsibilities, or even to seriously burden it in the
accomplishment of them. (Antieau Modern Constitutional
Law, Vol. 2, p. 140)
Otherwise mere creature of the State can defeat National
policies thru extermination of what local authorities may
perceive to be undesirable activities or enterprise using the
power to tax as "a toll for regulation" (U.S. v. Sanchez, 340
US 42). The power to tax which was called by Justice
Marshall as the "power to destroy" (McCulloch v.
Maryland, supra) cannot be allowed to defeat an
instrumentality or creation of the very entity which has the
inherent power to wield it. (Emphasis supplied)
It then concludes that the respondent Judge "cannot
therefore correctly say that the questioned provisions
of the Code do not contain any distinction between a
governmental function as against one performing
merely proprietary ones such that the exemption
privilege withdrawn under the said Code would apply
to all government corporations." For it is clear from
Section 133, in relation to Section 234, of the LGC
that the legislature meant to exclude instrumentalities
of the national government from the taxing power of
the local government units.
In its comment respondent City of Cebu alleges that
as local a government unit and a political subdivision,
it has the power to impose, levy, assess, and collect
taxes within its jurisdiction. Such power is guaranteed
by the Constitution10 and enhanced further by the
LGC. While it may be true that under its Charter the
petitioner was exempt from the payment of realty
taxes,11 this exemption was withdrawn by Section 234
of the LGC. In response to the petitioner's claim that
such exemption was not repealed because being an
instrumentality of the National Government, Section

133 of the LGC prohibits local government units from
imposing taxes, fees, or charges of any kind on it,
respondent City of Cebu points out that the petitioner
is likewise a government-owned corporation, and
Section 234 thereof does not distinguish between
government-owned corporation, and Section 234
thereof does not distinguish between government-
owned corporation, and Section 234 thereof does not
distinguish between government-owned or controlled
corporations performing governmental and purely
proprietary functions. Respondent city of Cebu urges
this the Manila International Airport Authority is a
governmental-owned corporation, 12 and to reject the
application of Basco because it was "promulgated . . .
before the enactment and the singing into law of R.A.
No. 7160," and was not, therefore, decided "in the
light of the spirit and intention of the framers of the
said law.
As a general rule, the power to tax is an incident of
sovereignty and is unlimited in its range, acknowledging in its
very nature no limits, so that security against its abuse is to
be found only in the responsibility of the legislature which
imposes the tax on the constituency who are to pay it.
Nevertheless, effective limitations thereon may be imposed by
the people through their Constitutions.13 Our Constitution, for
instance, provides that the rule of taxation shall be uniform
and equitable and Congress shall evolve a progressive
system of taxation.14 So potent indeed is the power that it was
once opined that "the power to tax involves the power to
destroy."15 Verily, taxation is a destructive power which
interferes with the personal and property for the support of the
government. Accordingly, tax statutes must be construed
strictly against the government and liberally in favor of the
taxpayer.16 But since taxes are what we pay for civilized
society,17 or are the lifeblood of the nation, the law frowns
against exemptions from taxation and statutes granting tax
exemptions are thus construed strictissimi juris against the
taxpayers and liberally in favor of the taxing authority. 18 A
claim of exemption from tax payment must be clearly shown
and based on language in the law too plain to be
mistaken.19 Elsewise stated, taxation is the rule, exemption
therefrom is the exception.20 However, if the grantee of the
exemption is a political subdivision or instrumentality, the rigid
rule of construction does not apply because the practical
effect of the exemption is merely to reduce the amount of
money that has to be handled by the government in the
course of its operations.21
The power to tax is primarily vested in the Congress;
however, in our jurisdiction, it may be exercised by local
legislative bodies, no longer merely by virtue of a valid
delegation as before, but pursuant to direct authority
conferred by Section 5, Article X of the Constitution. 22 Under
the latter, the exercise of the power may be subject to such
guidelines and limitations as the Congress may provide
which, however, must be consistent with the basic policy of
local autonomy.
There can be no question that under Section 14 of R.A. No.
6958 the petitioner is exempt from the payment of realty taxes
imposed by the National Government or any of its political
subdivisions, agencies, and instrumentalities. Nevertheless,
since taxation is the rule and exemption therefrom the
exception, the exemption may thus be withdrawn at the
pleasure of the taxing authority. The only exception to this
rule is where the exemption was granted to private parties
based on material consideration of a mutual nature, which
then becomes contractual and is thus covered by the non-
impairment clause of the Constitution.23
The LGC, enacted pursuant to Section 3, Article X of the
constitution provides for the exercise by local government
units of their power to tax, the scope thereof or its limitations,
and the exemption from taxation.
Section 133 of the LGC prescribes the common limitations on
the taxing powers of local government units as follows:
Sec. 133. Common Limitations on the
Taxing Power of Local Government Units. —
Unless otherwise provided herein, the
exercise of the taxing powers of provinces,
cities, municipalities, and barangays shall
not extend to the levy of the following:
(a) Income tax, except when levied on
banks and other financial institutions;
(b) Documentary stamp tax;
(c) Taxes on estates, "inheritance, gifts,
legacies and other acquisitions mortis
causa, except as otherwise provided
herein
(d) Customs duties, registration fees of vessels and
wharfage on wharves, tonnage dues, and all other kinds
of customs fees charges and dues except wharfage on
STAT CON 45
wharves constructed and maintained by the local
government unit concerned:
(e) Taxes, fees and charges and other imposition upon
goods carried into or out of, or passing through, the
territorial jurisdictions of local government units in the
guise or charges for wharfages, tolls for bridges or
otherwise, or other taxes, fees or charges in any form
whatsoever upon such goods or merchandise;
(f) Taxes fees or charges on agricultural and aquatic
products when sold by marginal farmers or fishermen;
(g) Taxes on business enterprise certified to be the Board
of Investment as pioneer or non-pioneer for a period of six
(6) and four (4) years, respectively from the date of
registration;
(h) Excise taxes on articles enumerated under the
National Internal Revenue Code, as amended, and taxes,
fees or charges on petroleum products;
(i) Percentage or value added tax (VAT) on sales, barters
or exchanges or similar transactions on goods or services
except as otherwise provided herein;
(j) Taxes on the gross receipts of transportation contractor
and person engage in the transportation of passengers of
freight by hire and common carriers by air, land, or water,
except as provided in this code;
(k) Taxes on premiums paid by ways reinsurance or
retrocession;
(l) Taxes, fees, or charges for the registration of motor
vehicles and for the issuance of all kinds of licenses or
permits for the driving of thereof, except, tricycles;
(m) Taxes, fees, or other charges on Philippine product
actually exported, except as otherwise provided herein;
(n) Taxes, fees, or charges, on Countryside and Barangay
Business Enterprise and Cooperatives duly registered
under R.A. No. 6810 and Republic Act Numbered Sixty
nine hundred thirty-eight (R.A. No. 6938) otherwise known
as the "Cooperative Code of the Philippines; and

(o) TAXES, FEES, OR CHARGES OF ANY KIND
ON THE NATIONAL GOVERNMENT, ITS
AGENCIES AND INSTRUMENTALITIES, AND
LOCAL GOVERNMENT UNITS. (emphasis
supplied)
Needless to say the last item (item o) is pertinent in
this case. The "taxes, fees or charges" referred to are
"of any kind", hence they include all of these, unless
otherwise provided by the LGC. The term "taxes" is
well understood so as to need no further elaboration,
especially in the light of the above enumeration. The
term "fees" means charges fixed by law or Ordinance
for the regulation or inspection of business
activity,24 while "charges" are pecuniary liabilities such
as rents or fees against person or property.25
Among the "taxes" enumerated in the LGC is real
property tax, which is governed by Section 232. It
reads as follows:
Sec. 232. Power to Levy Real Property Tax.
— A province or city or a municipality within
the Metropolitan Manila Area may levy on an
annual ad valorem tax on real property such
as land, building, machinery and other
improvements not hereafter specifically
exempted.
Section 234 of LGC provides for the exemptions from
payment of real property taxes and withdraws
previous exemptions therefrom granted to natural and
juridical persons, including government owned and
controlled corporations, except as provided therein. It
provides:
Sec. 234. Exemptions from Real Property
Tax. — The following are exempted from
payment of the real property tax:
(a) Real property owned by the Republic of
the Philippines or any of its political
subdivisions except when the beneficial use
thereof had been granted, for
reconsideration or otherwise, to a taxable
person;
(b) Charitable institutions, churches, parsonages or
convents appurtenants thereto, mosques nonprofits or
religious cemeteries and all lands, building and
improvements actually, directly, and exclusively used
for religious charitable or educational purposes;
(c) All machineries and equipment that are actually,
directly and exclusively used by local water districts
and government-owned or controlled corporations
engaged in the supply and distribution of water and/or
generation and transmission of electric power;
(d) All real property owned by duly registered
cooperatives as provided for under R.A. No. 6938;
and;
(e) Machinery and equipment used for pollution
control and environmental protection.
Except as provided herein, any exemptions from
payment of real property tax previously granted to or
presently enjoyed by, all persons whether natural or
juridical, including all government owned or controlled
corporations are hereby withdrawn upon the effectivity
of his Code.
These exemptions are based on the ownership,
character, and use of the property. Thus;
(a) Ownership Exemptions. Exemptions from real
property taxes on the basis of ownership are real
properties owned by: (i) the Republic, (ii) a province,
(iii) a city, (iv) a municipality, (v) a barangay, and (vi)
registered cooperatives.
(b) Character Exemptions. Exempted from real
property taxes on the basis of their character are: (i)
charitable institutions, (ii) houses and temples of
prayer like churches, parsonages or convents
appurtenant thereto, mosques, and (iii) non profit or
religious cemeteries.
(c) Usage exemptions. Exempted from real property
taxes on the basis of the actual, direct and
exclusive use to which they are devoted are: (i) all
lands buildings and improvements which are actually,
directed and exclusively used for religious, charitable
or educational purpose; (ii) all machineries and
equipment actually, directly and exclusively used or by
local water districts or by government-owned or
STAT CON 46
controlled corporations engaged in the supply and
distribution of water and/or generation and
transmission of electric power; and (iii) all machinery
and equipment used for pollution control and
environmental protection.
To help provide a healthy environment in the midst of
the modernization of the country, all machinery and
equipment for pollution control and environmental
protection may not be taxed by local governments.
2. Other Exemptions Withdrawn. All other exemptions
previously granted to natural or juridical persons
including government-owned or controlled
corporations are withdrawn upon the effectivity of the
Code.26
Section 193 of the LGC is the general provision on
withdrawal of tax exemption privileges. It provides:
Sec. 193. Withdrawal of Tax Exemption
Privileges. — Unless otherwise provided in
this code, tax exemptions or incentives
granted to or presently enjoyed by all
persons, whether natural or juridical,
including government-owned, or controlled
corporations, except local water districts,
cooperatives duly registered under R.A.
6938, non stock and non profit hospitals and
educational constitutions, are hereby
withdrawn upon the effectivity of this Code.
On the other hand, the LGC authorizes local
government units to grant tax exemption privileges.
Thus, Section 192 thereof provides:
Sec. 192. Authority to Grant Tax Exemption
Privileges. — Local government units may,
through ordinances duly approved, grant tax
exemptions, incentives or reliefs under such
terms and conditions as they may deem
necessary.
The foregoing sections of the LGC speaks of: (a) the
limitations on the taxing powers of local government
units and the exceptions to such limitations; and (b)
the rule on tax exemptions and the exceptions thereto.
The use of exceptions of provisos in these section, as
shown by the following clauses:

(1) "unless otherwise provided herein" in the opening
paragraph of Section 133;
(2) "Unless otherwise provided in this Code" in
section 193;
(3) "not hereafter specifically exempted" in Section
232; and
(4) "Except as provided herein" in the last paragraph
of Section 234
initially hampers a ready understanding of the
sections. Note, too, that the aforementioned clause in
section 133 seems to be inaccurately worded. Instead
of the clause "unless otherwise provided herein," with
the "herein" to mean, of course, the section, it should
have used the clause "unless otherwise provided in
this Code." The former results in absurdity since the
section itself enumerates what are beyond the taxing
powers of local government units and, where
exceptions were intended, the exceptions were
explicitly indicated in the text. For instance, in item (a)
which excepts the income taxes "when livied on banks
and other financial institutions", item (d) which excepts
"wharfage on wharves constructed and maintained by
the local government until concerned"; and item (1)
which excepts taxes, fees, and charges for the
registration and issuance of license or permits for the
driving of "tricycles". It may also be observed that
within the body itself of the section, there are
exceptions which can be found only in other parts of
the LGC, but the section interchangeably uses therein
the clause "except as otherwise provided herein" as in
items (c) and (i), or the clause "except as otherwise
provided herein" as in items (c) and (i), or the clause
"excepts as provided in this Code" in item (j). These
clauses would be obviously unnecessary or mere
surplus-ages if the opening clause of the section
were" "Unless otherwise provided in this Code"
instead of "Unless otherwise provided herein". In any
event, even if the latter is used, since under Section
232 local government units have the power to levy
real property tax, except those exempted therefrom
under Section 234, then Section 232 must be deemed
to qualify Section 133.
Thus, reading together Section 133, 232 and 234 of
the LGC, we conclude that as a general rule, as laid
down in Section 133 the taxing powers of local
government units cannot extend to the levy of inter
alia, "taxes, fees, and charges of any kind of the
National Government, its agencies and
instrumentalties, and local government units";
however, pursuant to Section 232, provinces, cities,
municipalities in the Metropolitan Manila Area may
impose the real property tax except on, inter alia, "real
property owned by the Republic of the Philippines or
any of its political subdivisions except when the
beneficial used thereof has been granted, for
consideration or otherwise, to a taxable person", as
provided in item (a) of the first paragraph of Section
234.
As to tax exemptions or incentives granted to or
presently enjoyed by natural or juridical persons,
including government-owned and controlled
corporations, Section 193 of the LGC prescribes the
general rule, viz., they are withdrawn upon the
effectivity of the LGC, except upon the effectivity of
the LGC, except those granted to local water districts,
cooperatives duly registered under R.A. No. 6938,
non stock and non-profit hospitals and educational
institutions, and unless otherwise provided in the
LGC. The latter proviso could refer to Section 234,
which enumerates the properties exempt from real
property tax. But the last paragraph of Section 234
further qualifies the retention of the exemption in so
far as the real property taxes are concerned by
limiting the retention only to those enumerated there-
in; all others not included in the enumeration lost the
privilege upon the effectivity of the LGC. Moreover,
even as the real property is owned by the Republic of
the Philippines, or any of its political subdivisions
covered by item (a) of the first paragraph of Section
234, the exemption is withdrawn if the beneficial use
of such property has been granted to taxable person
for consideration or otherwise.
Since the last paragraph of Section 234 unequivocally
withdrew, upon the effectivity of the LGC, exemptions
from real property taxes granted to natural or juridical
persons, including government-owned or controlled
corporations, except as provided in the said section,
and the petitioner is, undoubtedly, a government-
owned corporation, it necessarily follows that its
exemption from such tax granted it in Section 14 of its
charter, R.A. No. 6958, has been withdrawn. Any
claim to the contrary can only be justified if the
petitioner can seek refuge under any of the exceptions
provided in Section 234, but not under Section 133, as
STAT CON 47
it now asserts, since, as shown above, the said
section is qualified by Section 232 and 234.
In short, the petitioner can no longer invoke the
general rule in Section 133 that the taxing powers of
the local government units cannot extend to the levy
of:
(o) taxes, fees, or charges of any kind on the National
Government, its agencies, or instrumentalities, and local
government units.
I must show that the parcels of land in question, which
are real property, are any one of those enumerated in
Section 234, either by virtue of ownership, character,
or use of the property. Most likely, it could only be the
first, but not under any explicit provision of the said
section, for one exists. In light of the petitioner's theory
that it is an "instrumentality of the Government", it
could only be within be first item of the first paragraph
of the section by expanding the scope of the terms
Republic of the Philippines" to embrace . . . . .
. "instrumentalities" and "agencies" or expediency we
quote:
(a) real property owned by the Republic of the
Philippines, or any of the Philippines, or any of its
political subdivisions except when the beneficial use
thereof has been granted, for consideration or
otherwise, to a taxable person.
This view does not persuade us. In the first place, the
petitioner's claim that it is an instrumentality of the
Government is based on Section 133(o), which
expressly mentions the word "instrumentalities"; and
in the second place it fails to consider the fact that the
legislature used the phrase "National Government, its
agencies and instrumentalities" "in Section 133(o),but
only the phrase "Republic of the Philippines or any of
its political subdivision "in Section 234(a).
The terms "Republic of the Philippines" and "National
Government" are not interchangeable. The former is
boarder and synonymous with "Government of the
Republic of the Philippines" which the Administrative
Code of the 1987 defines as the "corporate
governmental entity though which the functions of the
government are exercised through at the Philippines,
including, saves as the contrary appears from the

context, the various arms through which political
authority is made effective in the Philippines, whether
pertaining to the autonomous reason, the provincial,
city, municipal or barangay subdivision or other forms
of local government."27 These autonomous regions,
provincial, city, municipal or barangay subdivisions"
are the political subdivision.28
On the other hand, "National Government" refers "to
the entire machinery of the central government, as
distinguished from the different forms of local
Governments."29 The National Government then is
composed of the three great departments the
executive, the legislative and the judicial.30
An "agency" of the Government refers to "any of the
various units of the Government, including a
department, bureau, office instrumentality, or
government-owned or controlled corporation, or a
local government or a distinct unit therein;"31 while an
"instrumentality" refers to "any agency of the National
Government, not integrated within the department
framework, vested with special functions or jurisdiction
by law, endowed with some if not all corporate
powers, administering special funds, and enjoying
operational autonomy; usually through a charter. This
term includes regulatory agencies, chartered
institutions and government-owned and controlled
corporations".32
If Section 234(a) intended to extend the exception
therein to the withdrawal of the exemption from
payment of real property taxes under the last
sentence of the said section to the agencies and
instrumentalities of the National Government
mentioned in Section 133(o), then it should have
restated the wording of the latter. Yet, it did not
Moreover, that Congress did not wish to expand the
scope of the exemption in Section 234(a) to include
real property owned by other instrumentalities or
agencies of the government including government-
owned and controlled corporations is further borne out
by the fact that the source of this exemption is Section
40(a) of P.D. No. 646, otherwise known as the Real
Property Tax Code, which reads:
Sec 40. Exemption from Real Property Tax.
— The exemption shall be as follows:
(a) Real property owned by the Republic of the Philippines
or any of its political subdivisions and any government-
owned or controlled corporations so exempt by is
charter: Provided, however, that this exemption shall not
apply to real property of the above mentioned entities the
beneficial use of which has been granted, for
consideration or otherwise, to a taxable person.
Note that as a reproduced in Section 234(a), the
phrase "and any government-owned or controlled
corporation so exempt by its charter" was excluded.
The justification for this restricted exemption in
Section 234(a) seems obvious: to limit further tax
exemption privileges, specially in light of the general
provision on withdrawal of exemption from payment of
real property taxes in the last paragraph of property
taxes in the last paragraph of Section 234. These
policy considerations are consistent with the State
policy to ensure autonomy to local governments 33 and
the objective of the LGC that they enjoy genuine and
meaningful local autonomy to enable them to attain
their fullest development as self-reliant communities
and make them effective partners in the attainment of
national goals.34 The power to tax is the most effective
instrument to raise needed revenues to finance and
support myriad activities of local government units for
the delivery of basic services essential to the
promotion of the general welfare and the
enhancement of peace, progress, and prosperity of
the people. It may also be relevant to recall that the
original reasons for the withdrawal of tax exemption
privileges granted to government-owned and
controlled corporations and all other units of
government were that such privilege resulted in
serious tax base erosion and distortions in the tax
treatment of similarly situated enterprises, and there
was a need for this entities to share in the
requirements of the development, fiscal or otherwise,
by paying the taxes and other charges due from
them.35
The crucial issues then to be addressed are: (a)
whether the parcels of land in question belong to the
Republic of the Philippines whose beneficial use has
been granted to the petitioner, and (b) whether the
petitioner is a "taxable person".
Section 15 of the petitioner's Charter provides:
STAT CON 48
Sec. 15. Transfer of Existing Facilities and
Intangible Assets. — All existing public
airport facilities, runways, lands, buildings
and other properties, movable or immovable,
belonging to or presently administered by
the airports, and all assets, powers, rights,
interests and privileges relating on airport
works, or air operations, including all
equipment which are necessary for the
operations of air navigation, acrodrome
control towers, crash, fire, and rescue
facilities are hereby transferred to the
Authority: Provided however, that the
operations control of all equipment
necessary for the operation of radio aids to
air navigation, airways communication, the
approach control office, and the area control
center shall be retained by the Air
Transportation Office. No equipment,
however, shall be removed by the Air
Transportation Office from Mactan without
the concurrence of the authority. The
authority may assist in the maintenance of
the Air Transportation Office equipment.
The "airports" referred to are the "Lahug Air Port" in
Cebu City and the "Mactan International AirPort in the
Province of Cebu",36 which belonged to the Republic
of the Philippines, then under the Air Transportation
Office (ATO).37
It may be reasonable to assume that the term "lands"
refer to "lands" in Cebu City then administered by the
Lahug Air Port and includes the parcels of land the
respondent City of Cebu seeks to levy on for real
property taxes. This section involves a "transfer" of
the "lands" among other things, to the petitioner and
not just the transfer of the beneficial use thereof, with
the ownership being retained by the Republic of the
Philippines.
This "transfer" is actually an absolute conveyance of
the ownership thereof because the petitioner's
authorized capital stock consists of, inter alia "the
value of such real estate owned and/or administered
by the airports."38 Hence, the petitioner is now the
owner of the land in question and the exception in
Section 234(c) of the LGC is inapplicable.

Moreover, the petitioner cannot claim that it was never
a "taxable person" under its Charter. It was only
exempted from the payment of real property taxes.
The grant of the privilege only in respect of this tax is
conclusive proof of the legislative intent to make it a
taxable person subject to all taxes, except real
property tax.
Finally, even if the petitioner was originally not a
taxable person for purposes of real property tax, in
light of the forgoing disquisitions, it had already
become even if it be conceded to be an "agency" or
"instrumentality" of the Government, a taxable person
for such purpose in view of the withdrawal in the last
paragraph of Section 234 of exemptions from the
payment of real property taxes, which, as earlier
adverted to, applies to the petitioner.
Accordingly, the position taken by the petitioner is
untenable. Reliance on Basco vs. Philippine
Amusement and Gaming Corporation39 is unavailing
since it was decided before the effectivity of the LGC.
Besides, nothing can prevent Congress from
decreeing that even instrumentalities or agencies of
the government performing governmental functions
may be subject to tax. Where it is done precisely to
fulfill a constitutional mandate and national policy, no
one can doubt its wisdom.
WHEREFORE, the instant petition is DENIED. The
challenged decision and order of the Regional Trial
Court of Cebu, Branch 20, in Civil Case No. CEB-
16900 are AFFIRMED.
No pronouncement as to costs.
SO ORDERED.
G.R. No. 183553 November 12, 2012
DIAGEO PHILIPPINES, INC., Petitioner,
vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.
DECISION
PERLAS-BERNABE, J.:
Before the Court is a Petition for Review under Rule 45 of the
Rules of Court assailing the Decision1 of the Court of Tax
Appeals (CTA) En Banc dated July 2, 2008 in CTA EB No. 260.
The petition seeks the proper interpretation of Section
130(D)2 of the National Internal Revenue Code of 1997 (Tax
Code), particularly, on the question of who may claim the refund
or tax credit of excise taxes paid on goods actually exported.
The Factual Antecedents
Petitioner Diageo Philippines, Inc. (Diageo) is a domestic
corporation organized and existing under the laws of the
Republic of Philippines and is primarily engaged in the business
of importing, exporting, manufacturing, marketing, distributing,
buying and selling, by wholesale, all kinds of beverages and
liquors and in dealing in any material, article, or thing required
in connection with or incidental to its principal business. 3 It is
registered with the Bureau of Internal Revenue (BIR) as an
excise tax taxpayer, with Tax Identification No. 000-161-879-
000.4
For the periodNovember 1, 2003 to December 31, 2004,
Diageo purchased raw alcohol from its supplier for use in the
manufacture of its beverage and liquor products. The supplier
imported the raw alcohol and paid the related excise taxes
thereon before the same were sold to the petitioner.5 The
purchase price for the raw alcohol included, among others, the
excise taxes paid by the supplierin the total amount of
P12,007,528.83.6
Subsequently, Diageo exported its locally manufactured liquor
products to Japan, Taiwan, Turkey and Thailand and received
the corresponding foreign currency proceeds of such export
sales.7
Within two (2) years from the time the supplier paid the subject
excise taxes, Diageo filed with the BIR Large Taxpayer’s Audit
and Investigation Division II applications for tax refund/issuance
of tax credit certificates corresponding to the excise taxes which
its supplier paid but passed on to it as part of the purchase
price of the subject raw alcohol invoking Section 130(D) of the
Tax Code.
However, due to the failure of the respondent Commissioner of
Internal Revenue (CIR) to act upon Diageo’s claims, the latter
was constrained to timely file a petition for review before the
CTA.8
STAT CON 49
On December 27, 2005, the CIR filed its Answer assailing
Diageo’s lack of legal personality to institute the claim for refund
because it was not the one that paid the alleged excise taxes
but its supplier.9 Subsequently, the CIR filed a motion to dismiss
reiterating the same issue.10
The Ruling of the Court of Tax Appeals
On July 20, 2006, the CTA Second Division issued a
Resolution11 dismissing the petition on the ground that Diageo is
not the real party in interest to file the claim for refund. Citing
Philippine Acetylene Co., Inc. v. Commissioner of Internal
Revenue,12 the CTA Second Division ruled that although an
excise tax is an indirect tax which can be passed on to the
purchaser of goods, the liability therefor still remains with the
manufacturer or seller, hence, the right to claim refund is only
available to it.13 Diageo filed a motion for reconsideration which
was subsequently denied in the Resolution dated January 8,
2007.14
On February 13, 2007, Diageo filed a petition for review 15 which
the CTAEn Bancin its Decision dated July 2,
2008dismissed,thereby affirming the ruling of the CTA Second
Division.16
Citing Rule 3, Section 2,17 of the Rules of Court, the CTA En
Banc held that the right to a refund or tax credit of the excise
taxes under Section 130(D) of the Tax Code is available only to
persons enumerated in Sections 130(A)(1)18 and (2)19 of the
same Code because they are the ones primarily and legally
liable to pay such taxes. As Diageo failed to prove that it had
actually paid the claimed excise taxes as manufacturer-
exporter, the CTA En Banc likewise did not find it as the proper
party to claim a refund.Hence, the instant petition.
Diageo claims to be a real party in interest entitled to recover
the subject refund or tax credit because it stands to be
benefited or injured by the judgment in this suit.20 It contends
that the tax privilege under Section 130(D) applies to every
exporter provided the conditions therein set forth are complied
with, namely, (1) the goods are exported either in their original
state or as ingredients or part of any manufactured goods or
products; (2) the exporter submits proof of exportation; and (3)
the exporter likewise submits proof of receipt of the
corresponding foreign exchange payment. 21 It argues that
Section 130(D) does not limit the grant of the tax privilege to
manufacturers/producers-exporters only but to every exporter of
locally manufactured/produced goods subject only to the
conditions aforementioned.22

The Issue
The sole issue to be resolved is whether Diageo has the legal
personality to file aclaim for refund or tax credit for the excise
taxes paid by its supplier on the raw alcohol it purchased and
used in the manufacture of its exported goods.
Ruling of the Court
The petition is without merit.
Excise taxes partake of the nature of
indirect taxes.
Diageo bases its claim for refund on Section 130 of the Tax
Code which reads:
Section 130.Filing of Return and Payment of Excise Tax on
Domestic Products. – xxx
(A) Persons Liable to File a Return, Filing of Return on Removal
and Payment of Tax.-
(1) Persons Liable to File a Return. – Every person liable to pay
excise tax imposed under this Title shall file a separate return
for each place of production setting forth, among others, the
description and quantity or volume of products to be removed,
the applicable tax base and the amount of tax due thereon;
Provided however, That in the case of indigenous petroleum,
natural gas or liquefied natural gas, the excise tax shall be paid
by the first buyer, purchaser or transferee for local sale, barter
or transfer, while the excise tax on exported products shall be
paid by the owner, lessee, concessionaire or operator of the
mining claim.Should domestic products be removed from the
place of production without the payment of the tax, the owner or
person having possession thereof shall be liable for the tax due
thereon.
xxxx
(D) Credit for Excise tax on Goods Actually Exported.- When
goods locally produced or manufactured are removed and
actually exported without returning to the Philippines, whether
so exported in their original state or as ingredients or parts of
any manufactured goods or products, any excise tax paid
thereon shall be credited or refunded upon submission of the
proof of actual exportation and upon receipt of the
corresponding foreign exchange payment: Provided, That the
excise tax on mineral products, except coal and coke, imposed
under Section 151 shall not be creditable or refundable even if
the mineral products are actually exported.
A reading of the foregoing provision, however, reveals that
contrary to the position of Diageo, the right to claim a refund or
be credited with the excise taxes belongs to its supplier. The
phrase "any excise tax paid thereon shall be credited or
refunded" requires that the claimant be the same person who
paid the excise tax. In Silkair (Singapore) Pte, Ltd. v.
Commissioner of Internal Revenue, the Court has categorically
declared that "[t]he proper party to question, or seek a refund
of, an indirect tax is the statutory taxpayer, the person on whom
the tax is imposed by law and who paid the same even if he
shifts the burden thereof to another."23
Excise taxes imposed under Title VI of the Tax Code are taxes
on property24 which are imposed on "goods manufactured or
produced in the Philippines for domestic sales or consumption
or for any other disposition and to things imported." 25 Though
excise taxes are paid by the manufacturer or producer before
removal of domestic products from the place of production26 or
by the owner or importer before the release of imported articles
from the customshouse,27 the same partake of the nature of
indirect taxes when it is passed on to the subsequent
purchaser.
Indirect taxesare defined asthose wherein the liability for the
payment of the tax falls on one person but the burden thereof
can be shifted to another person. When the seller passes on
the tax to his buyer, he, in effect, shifts the tax burden, not the
liability to pay it, to the purchaser as part of the price of goods
sold or services rendered.28
Accordingly, when the excise taxes paid by the supplier were
passed on to Diageo, what was shifted is not the tax per se but
anadditional cost of the goods sold. Thus, the supplier remains
the statutory taxpayer even if Diageo, the purchaser, actually
shoulders the burden of tax.
The statutory taxpayer is the proper
party to claim refund of indirect
taxes.
As defined in Section 22(N) of the Tax Code, a taxpayer means
any person subject to tax.1âwphi1 He is, therefore, the person
legally liable to file a return and pay the tax as provided for in
Section 130(A). As such, he is the person entitled to claim a
refund.
STAT CON 50
Relevant isSection 204(C) of the Tax Code which provides:
Section 204. Authority of the Commissioner to Compromise,
Abate, and Refund or Credit Taxes.- The Commissioner may -
xxxx
(C) Credit or refund taxes erroneously or illegally received or
penalties imposed without authority, refund the value of internal
revenue stamps when they are returned in good condition by
the purchaser, and, in his discretion, redeem or change unused
stamps that have been rendered unfit for use and refined their
value upon proof of destruction. No credit or refund of taxes or
penalties shall be allowed unless the taxpayer files in writing
with the Commissioner a claim for credit or refund within two (2)
years after the payment of the tax or penalty: Provided,
however, that a return filed showing an overpayment shall be
considered as a written claim for credit or refund. (Emphasis
supplied)
Pursuant to the foregoing, the person entitled to claim a tax
refund is the statutory taxpayer or the person liable for or
subject to tax.29 In the present case, it is not disputed that the
supplier of Diageo imported the subject raw alcohol, hence, it
was the one directly liable and obligated to file a return and pay
the excise taxes under the Tax Code before the goods or
products are removed from the customs house. It is, therefore,
the statutory taxpayer as contemplated by law and remains to
be so, even if it shifts the burden of tax to Diageo.
Consequently, the right to claim a refund, if legally allowed,
belongs to it and cannot be transferred to another, in this case
Diageo, without any clear provision of law allowing the same.
Unlike the law on Value Added Tax which allows the
subsequent purchaser under the tax credit method to refund or
credit input taxes passed on to it by a supplier, 30 no provision for
excise taxes exists granting non-statutory taxpayer like Diageo
to claim a refund or credit. It should also be stressed that when
the excise taxes were included in the purchase price of the
goods sold to Diageo, the same was no longer in the nature of
a tax but already formed part of the cost of the goods.
Finally, statutes granting tax exemptions are construed
stricissimi juris against the taxpayer and liberally in favor of the
taxing authority. A claim of tax exemption must be clearly
shown and based on language in law too plain to be
mistaken.31 Unfortunately, Diageo failed to meet the burden of
proof that it is covered by the exemption granted under Section
130(D) of the Tax Code.

In sum, Diageo, not being the party statutorily liable to pay
excise taxes and having failed to prove that it is covered by the
exemption granted under Section 130(D) of the Tax Code, is
not the proper party to claim a refund or credit of the excise
taxes paid on the ingredients of its exported locally produced
liquor.
WHIEREFORE, the petition is DENIED and the assailed CTA
En Banc Decision in CTA EB No. 260 dated July 2, 2008 is
AFFIRMED.
SO ORDERED.
G.R. No. L-40858 September 15, 1987
SPOUSES FEDERICO SERFINO and LORNA
BACHAR, petitioners,
vs.
THE COURT OF APPEALS and LOPEZ SUGAR CENTRAL
MILL CO., INC., respondents.
No. L-40751 September 15, 1987
PHILIPPINE NATIONAL BANK, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, LOPEZ SUGAR
CENTRAL MILL COMPANY, INC., SPOUSES FEDERICO
SERFINO and LORNA BACHAR, respondents.
PARAS, J.:
Before Us are two (2) Petitions for certiorari to review the
decision 1 of the Court of Appeals als in CA-G.R. No. 37748-R,
consolidated for Our disposition since they arose from the same
factual background.
The records of the case show that on August 25, 1937, a parcel
of land consisting of 21.1676 hectares situated in the
Municipality of Sagay, Province of Negros Occidental, was
patented in the name of Pacifico Casamayor, under Homestead
Patent No. 44139. Upon registration of said patent in the office
of the Register of Deeds of Negros Occidental, OCT No. 1839
was issued by said office in the name of Pacifico Casamayor.
On December 14, 1945, the latter sold said land in favor of
Nemesia D. Baltazar.
Apparently, OCT No. 1839 was lost during the war and upon
petition of Nemesia Baltazar, the Court of First Instance of
Negros Occidental ordered 2 the reconstitution thereof.
Pursuant thereto, OCT No. 14-R (1839) was issued on January
18, 1946 in the name of Pacifico Casamayor. On that same
day, TCT No. 57-N was issued in the name of Nemesia
Baltazar but after the cancellation of OCT No. 14-R (1839).
On August 25, 1951, Nemesia Baltazar, sold said property to
Lopez Sugar Central Mill Co., Inc. (Lopez Sugar Central, for
brevity). The latter, however did not present the documents for
registration until December 17, 1964 to the Office of the
Registry of Deeds. Said office refused registration upon its
discovery that the same property was covered by another
certificate of title, TCT No. 38985, in the name of Federico
Serfino.
An inquiry into this discrepancy reveals that the Provincial
Treasurer of Negros Occidental on October 30, 1956 had
conducted a public auction sale of this property for tax
delinquency for the period starting the year 1950. Notice of this
public auction sale was sent to Pacifico Casamayor but none to
Nemesia Baltazar and Lopez Sugar Million There being no
public bidders on the scheduled date of sale, the Provincial
Treasurer of Negros Occidental issued a Certification of Sale of
Delinquent Real Property over the disputed land to the Province
of Negros Occidental. On May 14, 1964, upon payment of the
amount of P1,838.49 by Federico Serfino, a Certificate of
Repurchase of Real Property was issued and executed by the
Provincial Treasurer in favor of Federico Serfino, for and in
behalf of Pacifico Casamayor.
On May 28, 1964, Serfino filed a petition with the Court of First
Instance of Negros Occidental for the Reconstitution of OCT
No. 1839 in the name of Pacifico Casamayor, upon the
allegation that said title was lost. After due publication and
hearing, said OCT was ordered reconstituted and thus OCT No.
RP-1304 (1839) was issued by the Registry of Deeds in the
name of Casamayor.
On October 30, 1964, Serfino petitioned the court for
confirmation of his title to the land as purchaser in the auction
sale. On October 31, 1964, court granted the petition and on
November 2, 1964, OCT No. RP-1304 (1839) was cancelled
and TCT No. 38985 was issued in the name of Federico
Serfino, married to Lorna Bachar.
On November 19, 1964, the spouses Serfinos mortgaged the
land to the Philippine National Bank (PNB) to secure a loan in
the amount of P5,000.00. Said mortgage in favor of PNB was
STAT CON 51
inscribed in TCT No. 38985. Hence, this was the situation of the
land when the Office of the Register of Deeds refused
registration of the property in question requested by the Lopez
Sugar Central.
The lower court in its Order, dated January 16, 1965 in the
Petition of the Office of the Register of Deeds seeking the
cancellation of either TCT No. 57-N (in the name of Nemesia
Baltazar) or TCT No. 38985 (in the name of Lopez Sugar
Central), ordered Lopez Sugar Central and spouses Serfino to
take the necessary steps towards the clearing of their
respective titles before a court of general jurisdiction. Pursuant
thereto, Lopez Sugar Central, on May 5, 1965, instituted an
action for 1) annulment of OCT No. RP-1304 (1839), of TCT
No. 38985 and of the mortgage executed by the Serfinos in
favor of PNB, 2) for the registration of the Deed of Sale, 3) for
the issuance of a TCT in its name and 4) for recovery of
possession of the disputed land from the Serfinos.
On February 4, 1966, the lower court rendered its
decision, 3 the dispositive portion reading as follows:
WHEREFORE, and considering the conclusions and
opinion set forth above, judgment is hereby rendered as
follows:
1. The Register of Deeds of Negros Occidental is
hereby ordered to cancel Transfer Certificate of Title No.
38985;
2. The same Register of Deeds is ordered to register the
deed of sale executed by Nemesia D. Baltazar on
August 25, 1951, and after cancelling Transfer
Certificate of Title No. 57-N and other titles issued prior
thereto, to issue a new transfer certificate of title in the
name of Lopez Sugar Central Mill Co., Inc., upon
previous payments of the legal fees;
3. The Lopez Sugar Central Mill Co., Inc., shall pay the
Philippine National Bank, Bacolod Branch, the sum of
P5,261.11 secured by a real estate mortgaged
registered and annotated on Transfer Certificate of Title
38985 which shall be carried over in the new transfer
certificate of title to be issued to the Lopez Sugar
Central Mill Co., Inc. with the right of recourse to the
Assurance Fund; and

4. The defendant, Federico Serfino, is hereby ordered to
vacate the land in question and to deliver the
possession thereof to the plaintiff;
5. The plaintiff is exempt from reimbursing the defendant,
Federico Serfino, for the sum of P602.94 which the latter paid
for the repurchase of the land in question for the reason that
the former is already burdened with the payment of the
mortgage indebtedness with the Philippine National Bank in
the amount of P5,261.11; and
6. The Court makes no award for damages and costs.
SO ORDERED. (Rollo L-40751, pp. 117 & 118, Joint Record
on Appeal, Annex "D", p. 50)
Both parties appealed from this decision of the trial court.
Ruling on the assignment of errors, the appellate court affirmed
the judgment of the trial court with modification in its decision,
the pertinent portion reading as follows:
Plaintiff contends that the mortgage executed by the Serfinos
in favor of PNB is null and void, because the property
conveyed in mortgage did not belong to them. The contention
is meritorious. That the mortgagor should be the absolute
owner of the property mortgaged is an essential requisite for
the validity of a contract of mortgage (Art. 2085, Civil Code);
and a mortgage constituted by one not the owner of the
property mortgaged is null and void, the registration of the
mortgage notwithstanding (Parqui vs. PNB, 96 Phil. 157).
Thus, the mortgage lien of PNB in the contract executed in its
favor by the Serfinos did not attach to the property in
question.
The argument advanced by appellee PNB that it is a
mortgagee in good faith deserves scant consideration. Note
that when the mortgage was constituted, the disputed land
was covered by a valid and existing title, TCT No. 57-N, in the
name of Nemesis D. Baltazar. Indeed, the whole world,
including appellee PNB, is charged with notice thereof.
Consequently, that portion of the trial court's decision
declaring plaintiff liable to the PNB for payment of the sum of
P5,261.11 should beset aside.
As to the plaintiff's claim for damages against the Serfinos,
We find the same devoid of merit. Whatever injury plaintiff
may have suffered was occasioned by the faulty and
defective indexing and filing system in the office of the
Register of Deeds of Negros Occidental, and not by any
intentional Act on the part of the Serfino Spouses. Anyway,
the evidence fails to show that they deliberately intended to
cause damage to plaintiff.
However, equity dictates that plaintiff should reimburse the
Serfino spouses of the sum of P1,839.49, representing the
unpaid taxes and penalties paid by the latter when they
repurchased the property from the province of Negros
Occidental.
WHEREFORE, with the modifications above
indicated, the judgment appealed from is
hereby affirmed. No costs.
SO ORDERED. (Decision, Annex "A", pp.
40-42, Rollo-L40751)
From the aforesaid ruling, the spouses Serfino and the
Philippine National Bank appealed to Us by way of certiorari.
Petitioners, spouses Serfinos 4 assign the following errors:
I. The Purchase by plaintiff-appellant corporation (Lopez
Sugar Central) of the lot in question was null and void from
the beginning.
II. Petitioners are proper parties to challenge the legality of
the sale of the land in question to private respondent.
III. Notice to Nemesia Baltazar of the Tax Sale of the land in
question was not essential to the validity of the sale.
IV. The legality of the auction sale of the property in question
was not in issue before the court a quo.
Petitioner Philippine National Bank 5 submits the following.
ASSIGNMENT OF ERRORS
I. The Court of Appeals erred in holding that the auction sale
of the disputed property was null and void.
II. The Court of Appeals erred in not holding that petitioner is
a mortgagee in good faith.
Petitioners spouses Serfinos maintain that sale of a land
covered by homestead to be valid must have the following
STAT CON 52
requisites: 1) consent of the grantee 2) approval of the
Secretary of Agriculture and Natural Resources 3) sale is
solely for educational, religious, or charitable purposes or for
a right of way (Sec. 121, CA No. 141 ).
Petitioner spouses Serfinos in support of their first assignment
of error cited Sec. 121, CA No. 141 reading as follows:
SEC. 121. Except with the consent of the grantee and the
approval of the Secretary of Agriculture and Commerce, and
solely for commercial, industrial, educational, religious or
charitable purposes or for a right of way, no corporation,
association, or partnership may acquire or have any right,
title, interest, or property right whatsoever to any land granted
under the free patent, homestead or individual sale provisions
of this Act or to any permanent improvement on such land.
They argue that since private respondent is a corporation, it is
barred from owning land granted under the free patent if the
aforementioned requisites are not present. Such Pacifico
Casamayor who obtained a Homestead Patent and later an
original certificate of title in his name. Later it was this original
grantee who sold the land in question to Nemesia Baltazar on
December 14, 1945 or more than eight (8) years after he
obtained his homestead patent on August 25, 1937. On these
facts, We now apply Sec. 118 of Commonwealth Act No. 141
which prohibits the alienation of homestead lots to private
individual within five (5) years from the date of the issuance of
the patent and not Sec. 121 which governs sale to corporation.
Since the grant was more than five (5) years before, the
transfer to Nemesia Baltazar was valid and legal. Nemesia
Baltazar who became the titled or registered owner as
evidenced by TCT No. 57-N, could exercise acts of ownership
over the land such as disposing of it to private respondent by a
deed of sale.
The assailed decision of the appellate court declares that the
prescribed procedure in auction sales of property for tax
delinquency being in derogation of property rights should be
followed punctiliously. Strict adherence to the statutes
governing tax sales is imperative not only for the protection of
the tax payers, but also to allay any possible suspicion of
collusion between the buyer and the public officials called upon
to enforce such laws. Notice of sale to the delinquent land
owners and to the public in general is an essential and
indispensable requirement of law, the non-fulfillment of which
initiates the sale.
We give our stamp of approval on the aforementioned ruling of
the respondent court. In the case at bar, there is no evidence

that Nemesia Baltazar, who had obtained a transfer certificate
of title in her name on January 18, 1946, was notified of the
auction sale which was scheduled on October 30, 1956. Neither
was she furnished as the owner of the delinquent real property
with the certificate of sale as prescribed by Sec. 37 of
Commonwealth Act No. 470. These infirmities are fatal. Worth
mentioning also is the fact that Lopez Sugar Central was not
entirely negligent in its payment of land taxes. The record
shows that taxes were paid for the years 1950 to 1953 and a
receipt therefor was obtained in its name. The sale therefore by
the Province of Negros Occidental of the land in dispute to the
spouses Serfinos was void since the Province of Negros
Occidental was not the real owner of the property thus sold. In
turn, the spouses Serfinos title which has been derived from
that of the Province of Negros Occidental is likewise void. A
purchaser of real estate at the tax sale obtains only such title as
that held by the taxpayer, the principle of caveat
emptor applies. Where land is sold for delinquency taxes under
the provisions of the Provincial Assessment Law, rights of
registered but undeclared owners of the land are not affected
by the proceedings and the sale conveys only such interest as
the person who has declared the property for taxation has
therein.
We now come to the arguments of petitioner Philippine National
Bank. The appellate court in modifying the trial court's decision
nullified the mortgage in favor of Philippine National Bank and
exempted Lopez Sugar Central from the payment to PNB of the
amount of the mortgage loan. Petitioner Philippine National
Bank now questions this maintaining that it is a mortgagee in
good faith and as such is entitled to the protection of the law.
We find merit in petitioner's contention. The findings of fact by
the trial court which were undisputed by the contending parties
show that after TCT No. 38985 had been issued in the name of
Federico Serfino, he declared the property in his name for the
year 1965 under T.D. No. 9382, continuously paid the taxes
and introduced improvements thereon in the nature of feeder
roads and sugar cane plants. It was under these circumstances
that PNB extended a loan to Serfino, secured by the land in
question on the strength of TCT No. 38985 in the name of the
Serfinos and after a spot investigation by one of the bank
inspectors who made a report of his investigation. After the
execution of a real estate mortgage in favor of the Philippine
National Bank duly annotated on the title of the Serfinos TCT
No. 38985, the bank actually loaned Serfino the amount of
P5,000.00 which amounted to P5,261.11 as of August 17,
1965. Petitioner Philippine National Bank relied on TCT No.
38985, the genuineness of which is not in issue as it was really
issued by the Register of Deeds of Negros Occidental.
Philippine National Bank had every right to rely on TCT No.
38985 as it was a sufficient evidence of ownership of the
mortgagor. The Philippine National Bank at that time had no
way of knowing of the existence of another genuine title
covering the same land in question.
The fact that the public auction sale of the disputed property
was not valid (for lack of notice of the auction sale to the actual
owner) can not in any way be attributed to the mortgagee's
(PNB's) fault. The fact remains that in spite of the lack of notice
to the actual registered owner at that time (who was Nemesia
Baltazar) the Register of Deeds issued a TCT in the name of
Federico Serfino married to Lorna Bachar which title was relied
upon by petitioner Philippine National Bank. The Register of
Deeds disowned liability and negligence or connivance claiming
that existence of TCT No. 57-N in the name of Nemesia
Baltazar was not found in the records of the Register of Deeds
for the reason that it did not exist in the index card as the land
was not designated by cadastral lot number. Thus the
discrepancy was due to the faulty system of indexing the
parcels of land. Be it noted that the inability of the Register of
Deeds to notify the actual owner or Lopez Sugar Central of the
scheduled public auction sale was partly due to the failure of
Lopez Sugar Central to declare the land in its name for a
number of years and to pay the complete taxes thereon.
Petitioner Philippine National Bank is therefore entitled to the
payment of the mortgage loan as ruled by the trial court and
exempted from the payment of costs.
WHEREFORE, premises considered, with the slight
modification that the PNB mortgage credit must be paid by
Lopez Sugar Central, the assailed decision is hereby
AFFIRMED.
SO ORDERED.
G.R. No. 154027 October 24, 2005
Spouses RAMON and ROSITA TAN, Petitioners,
vs.
GORGONIA BANTEGUI, Represented by GUADALUPE B.
BAUTISTA; and Spouses FLORANTE and FLORENCIA B.
CAEDO, Respondents.
DECISION
PANGANIBAN, J.:
STAT CON 53
he auction sale of land to satisfy alleged delinquencies in the
payment of real estate taxes derogates or impinges on property
rights and due process. Thus, the steps prescribed by law for
the sale, particularly the notices of delinquency and of sale,
must be followed strictly. Failure to observe those steps
invalidates the sale.
The Case
Before us is a Petition for Review1 under Rule 45 of the Rules
of Court, assailing the September 27, 2001 Decision2 and the
June 18, 2002 Resolution3 of the Court of Appeals (CA) in CA-
GR CV No. 51829. The assailed Decision reads as follows:
"WHEREFORE, finding no reversible error in the judgment
appealed from, the same is AFFIRMED, with costs against
[petitioners]."4
The assailed Resolution denied petitioners’ Motion for
Reconsideration.
The Facts
The antecedents are related by the CA as follows:
"The subject matter of the controversy is a 232 square-meter lot
situated at No. 37-E Calavite St. La Loma, Quezon City, Metro
Manila. Said piece of property was registered in the name of
[Respondent] Gorgonia Bantegui (Bantegui for brevity), married
to Jesus Bayot, under Transfer Certificate of Title [(TCT)] No.
47163 of the Register of Deeds of Quezon City, issued on May
6, 1959, and later reconstituted under [TCT] No. 28458.
"Bantegui acquired the property sometime in 1954 and rented it
to spouses Florante B. Caedo and Florencia B. Caedo (Caedos
for brevity), who resided therein until 1994. In 1970, she left for
the United States of America. She returned to the Philippines in
January 1988 and executed her special power of attorney[,]
making Guadalupe B. Bautista (Bautista for brevity) her
representative, [after which], she went back to the United
States.
"Her taxes on the subject property were paid[,] but only until
1977. The real property taxes from the year 1978 to 1983
amounting to ₱3,034.99[,] inclusive of penalties, however, were
not paid.

"For failure of Bantegui to pay said taxes, the [c]ity [t]reasurer of
Quezon City sold said property at public auction held on
November 21, 1984, to the spouses Edilberto and Josefina
Capistrano (Capistranos for brevity), for the sum of ₱10,000.00.
The Certificate of Sale of Delinquent Property was
subsequently issued in their favor on November 26, 1984.
"Since the property was not redeemed within the one (1) year
redemption period, title to said property was consolidated to the
Capistranos and [TCT] No. 361851 was issued in their names
on June 4, 1987. The Capistranos, however, did not take
possession of the land [or inform] the Caedos about the sale or
collected any rent from them. They[,] likewise[,] did not pay real
property taxes thereon.
"The property was later sold on June 20, 1988 by the
Capistranos to spouses Evelyn and Jesse Pereyra (Pereyras
for brevity) for ₱60,000.00. Their TCT was cancelled and a new
[TCT] No. 2059 was issued on January 10, 1989 in the name of
the Pereyras, who also did not take possession of the property
in question. They, however, mortgaged the same to the Rural
Bank of Imus, Cavite, which [mortgage] was annotated on the
title of the property.
"These transfers were unknown to Bantegui and the Caedos[,]
despite the fact that Evelyn Pereyra is the daughter of the
Caedos, as the latter did not inform them about anything
concerning these transactions. All this time[,] the actual
occupants, the Caedos, considered themselves as tenants of
Bantegui, such that they paid rent to her until December 1993,
when they handed the water pump as payment of their arrears.
"Bantegui, on her part, applied for administrative reconstitution
of her title[,] as it was lost in a fire. Reconstituted Title No.
28458 was subsequently issued in her name. She likewise paid
the realty taxes on the subject property for the years 1987 to
1989. The [c]ity [t]reasurer of Quezon City, however, refused to
accept her payment for the year 1990.
"Meanwhile, on May 3, 1990, said property was again sold by
the Pereyras to the spouses Ramon and Rosita Tan (Tans for
brevity) for ₱350,000.00, with the latter paying the amount of
₱300,000.00 to the Rural Bank of Imus, Cavite for the release
of the mortgage per agreement by the parties. They likewise
paid the overdue taxes and other expenses incurred by the
Pereyras pertaining to said mortgage.
"The Tans, like their predecessors, did not take immediate
possession of the property [or inform] the occupants (Caedos)
of their title to the land. Towards the latter part of 1990,
however, the Tans, thru their lawyer, informed the Caedos of
their ownership over the property and demanded that the
Caedos vacate the property. They subsequently filed an action
for ejectment against the Caedos before the Municipal Trial
Court of Quezon City on January 18, 1991. On October 31,
1991, the Court ruled in favor of the Tans. The Caedos then
interposed an appeal on February 2, 1992[,] which was
remanded to the same Court for further proceedings, and for
failure of the Caedos to appear during the hearing of the case,
they were declared in default and were subsequently ejected
from the property on February 20, 1994, when the house that
they erected thereon was demolished.
"On February 11, 1992, Bantegui, thru her sister Guadalupe
Bautista, and joined by the spouses Caedo[,] filed a Complaint
for Annulment of Sale, Quieting of Title, Injunction and
Damages with the Regional Trial Court of Quezon City. The
complaint was later amended on May 14, 1992, impleading the
spouses Capistrano and the [c]ity [t]reasurer of Quezon City as
co-defendants, and deleting ‘quieting of title’ from the prayer
and inserting ‘reconveyance.’"5
After the trial court rendered its Decision6 in favor of
respondents, petitioners appealed to the CA.
Ruling of the Court of Appeals
In declaring that petitioners were not purchasers in good faith
and had no better right to the subject property than that of any
of their predecessors-in-interest, the appellate court gave the
following reasons. First, the auction sale was tainted with
irregularities: no notices of delinquency and of sale were sent to
the owner. Second, the owner continued to pay realty taxes on
the property, even after the
date of the sale. She would not have done so had she been
aware that it had already been auctioned off. Third, the selling
price was grossly inadequate and, when viewed together with
the other facts and circumstances, would render the sale itself
void. Fourth, the purchasers failed to take possession of the
property, pay the real taxes, and inform the lessees of the
purchase. As a result, the latter continued to pay rent to the
owner. As stated earlier, the CA affirmed the trial court’s
Decision.
Hence, this Petition.7
The Issues
STAT CON 54
Petitioners raise the following issues for the Court’s
consideration:
"I.
"The Honorable Court of Appeals erred in affirming that the tax
sale of Bantegui’s property was tainted with irregularities that
rendered the same null and void.
"II.
"The Honorable Court of Appeals erred in affirming that the
Resolution of the Quezon City Regional Trial Court, Branch 85,
confirming in favor of the Capistranos the final bill of sale of the
auctioned property is not conclusive.
"III.
"The Honorable Court of Appeals likewise erred in declaring
that the petitioners were not purchasers in good faith and
innocent purchasers for value.
"IV.
"The Honorable Court of Appeals erred in affirming that
petitioners should pay respondents nominal damages of
₱50,000 and attorney’s fees of ₱50,000."8
The foregoing may be summed up into only one issue: whether
the auction sale was valid.
The Court’s Ruling
The Petition has no merit.
Sole Issue:
Whether the Auction Sale Was Valid
The tax sale did not conform to the requirements prescribed
under Presidential Decree (PD) No. 464, otherwise known as
the Real Property Tax Code.9
First, no notice of delinquency or of sale was given to either
Gorgonia Bantegui, the delinquent owner; or to her
representative.
On the one hand, Section 65 of PD 464 provides:
"SECTION 65. Notice of delinquency in the payment of the real
property tax. —
"Upon the real property tax or any installment thereof becoming
delinquent, the x x x city treasurer shall immediately cause
notice of the fact to be posted at the main entrance of the x x x
city hall and in a public and conspicuous place in each barrio of

the x x x city as the case may be. The notice of delinquency
shall also be published once a week for three consecutive
weeks, in a newspaper of general circulation in the x x x city, if
any there be, and announced by a crier at the market place for
at least three market days.
"Such notice shall specify the date upon which tax became
delinquent, and shall state that personal property may be
seized to effect payment. It shall also state that, at any time,
before the seizure of personal property, payment may be made
with penalty in accordance with the next following section, and
further, that unless the tax and penalties be paid before the
expiration of the year for which the tax is due, or the tax shall
have been judicially set aside, the entire delinquent real
property will be sold at public auction, and that thereafter the full
title to the property will be and remain with the purchaser,
subject only to the right of delinquent taxpayer or any other
person in his behalf to redeem the sold property within one year
from the date of sale."
On the other hand, Section 73 of PD 464 states:
"SECTION 73. Advertisement of sale of real property at public
auction. —
"After the expiration of the year for which the tax is due, the x x
x city treasurer shall advertise the sale at public auction of the
entire delinquent real property, except real property mentioned
in subsection (a) of Section forty hereof, to satisfy all the taxes
and penalties due and the costs of sale. Such advertisement
shall be made by posting a notice for three consecutive weeks
at the main entrance of the x x x city or x x x hall in the case of
cities, and in a public and conspicuous place in barrio or district
wherein the property is situated, in English, Spanish and the
local dialect commonly used, and by announcement at least
three market days at the market by crier, and, in the discretion
of the x x x city treasurer, by publication once a week for three
consecutive weeks in a newspaper of general circulation
published in the x x x city.
"The notice, publication, and announcement by crier shall state
the amount of the taxes, penalties and costs of sale; the date,
hour, and place of sale, the name of the taxpayer against whom
the tax was assessed; and the kind or nature of property and, if
land, its approximate areas, lot number, and location stating the
street and block number, district or barrio, municipality and the
province or city where the property to be sold is situated. Copy
of the notice shall forthwith be sent either by registered mail or
by messenger, or through the barrio captain, to the delinquent
taxpayer, at his address as shown in the tax rolls or property tax
record cards of the x x x city where the property is located, or at
his residence, if known to said treasurer or barrio captain:
Provided, however, That a return of the proof of service under
oath shall be filed by the person making the service with the x x
x city treasurer concerned."
The auction sale of real property for the collection of delinquent
taxes is in personam, not in rem.10 Although sufficient in
proceedings in rem like land registration, mere notice by
publication will not satisfy the requirements of proceedings in
personam.11 "[P]ublication of the notice of delinquency [will] not
suffice, considering that the procedure in tax sales is in
personam."12 It is still incumbent upon the city treasurer to send
the notice directly to the taxpayer -- the registered owner of the
property -- in order to protect the latter’s interests. Although
preceded by proper advertisement and publication, an auction
sale is void absent an actual notice to a delinquent taxpayer. 13
The sale of land "for tax delinquency is in derogation of property
rights and due process[;] the prescribed steps must be followed
strictly."14 In the present case, notices either of delinquency or
of sale were not given to the delinquent taxpayer. Those notices
are mandatory, and failure to issue them invalidates a sale. 15
Because it was clearly in contravention of the requirements
under the law and jurisprudence, the subsequent sale of the
real property did not make its purchaser the new owner.
A certificate of title under the Torrens system serves as
evidence of an indefeasible title to the property in favor of the
person whose name appears on it.16 While it is true that
Transfer Certificates of Title have already been issued in the
names of the subsequent purchasers, they should nonetheless
be invalidated. Considering the failure to abide by the
mandatory requirements of a proceeding in personam, no better
title than that of the original owner can be assumed by the
transferees.
Besides, the incontrovertible nature of a certificate of title
applies only when the issue involved is the validity of the
original and not of the transfer. Subsequent titles issued to the
prejudice of the rightful owner will produce no legal effects
whatsoever.17 Quod nullum est, nullum producit effectum. That
which is a nullity produces no effect.18
A gross inadequacy in the price is of no moment either. It is true
that the lower the price, the easier it will be for the owner to
effect redemption;19 but the fact remains that without the
mandatory notices, the registered owner will never be given the
opportunity to redeem the property, despite the lapse of one
year from the date the sale is registered. 20
STAT CON 55
Moreover, failure to assert ownership over a property is
indicative of the doubtful validity of its sale. The immediate
purchasers in the present case neither took possession nor
informed the occupants (the Caedos) of the former’s alleged
acquisition of the property. The purchasers did not even
demand rent or ask them to vacate, as a result of which the
Caedos continued to pay rent to Respondent Bantegui. Indeed,
registered owners have the right to enjoy the property that they
own,21 including the jus utendi or the right to receive from it
whatever it produces,22 like civil fruits.23
Second, only a copy of the Resolution of Branch 85 of the
Regional Trial Court of Quezon City, confirming the final bill of
sale to the Capistranos, has been submitted by the city
treasurer to show the validity of the sale. 24
This Resolution is, however, inconclusive. With greater
significance is the categorical and unrefuted statement in it that
the "[s]ealed envelope containing a copy of the petition
addressed to Gorgonia Bantegui x x x was returned to sender
unclaimed x x x."25 That statement definitely confirms the lack of
notices, without which the subsequent proceeding to sell the
property produces no legal effect. "Notice of sale to the
delinquent landowners and to the public[,] in general[,] is an
essential and indispensable requirement of law, the non-
fulfillment of which vitiates the sale."26
Third, Section 80 of PD 464 provides that "any balance of the
proceeds of the sale left after deducting the amount of the taxes
and
penalties due and the costs of sale, shall be returned to the
owner or his representative." Again contrary to the mandate of
the law, the balance of the proceeds from the tax sale was not
even returned to Respondent Bantegui or her representative
after the issuance of the final bill of sale. The failure to return
the proceeds reinforced the apparent irregularity not only in the
conduct of the tax sale, but also in its subsequent disposition.
Fourth, petitioners were not innocent purchasers for value.
Despite their awareness of defects in their title, they still failed
to investigate or take the necessary precaution.
Good faith is a question of intention.27 It consists in the
possessor’s belief that the person from whom a thing has been
received is its owner and can convey title. 28 It is determined by
outward acts and proven conduct.29
"A purchaser of real estate at the tax sale obtains only such title
as that held by the taxpayer[;] the principle of caveat

emptor applies."30 Purchasers cannot close their eyes to facts
that should have put any reasonable person upon guard, and
then claim that they "acted in good faith under the belief that
there was no defect in the title."31 If petitioners do not
investigate or take precaution despite knowing certain facts,
they cannot be considered in good faith. The defense of
indefeasibility of a Torrens title does not extend to a transferee
who takes the title despite a notice of the flaw in it.32 From a
vendor who does not have any title to begin with, no right is
passed to a transferee.
In the present case, the exercise of the right of possession over
the property was attempted by none of the purchasers, except
petitioners.33 The latter’s predecessors-in-interest did not deny
the fact that respondent spouses had continued to stay in and
rent the property from Respondent Bantegui, its registered
owner. Information about the purchase was not at all relayed by
Evelyn
Pereyra, a subsequent purchaser and former resident, to the
Caedos who were her very own parents.34 When "the land sold
is in the possession of a person other than the vendor, the
purchaser is required to go beyond the certificate of title and
make inquiries concerning the rights of the actual possessor."35
Furthermore, nothing on the record shows that, aside from
Respondent Bantegui, the purchasers paid real property taxes,
as required of every registered property owner. The tax on real
property for any year shall attach to, become due and
payable36 from, and be the personal liability of its "owner at the
beginning of the year."37 Curiously, the city government allowed
Respondent Bantegui to continue paying real property taxes
even after the redemption period and the confirmation of the
final bill of sale. Moreover, the records mention no payment of
real property taxes from 1984 to 1986.
Finally, Respondent Bantegui remained in continuous
possession of the owner’s duplicate copy of the Certificate of
Title. She was even allowed to undertake an administrative
reconstitution of her file copy after its destruction by fire.
Accordingly, the Register of Deeds issued a reconstituted title in
her name, in which the property had been registered as early as
1959. For reasons known only to the alleged purchasers, no
attempt was even made to have the title immediately cancelled.
It is basic that registration does not vest title, which is a mere
evidence of title to a property.
More important, the reconstituted title was allowed despite the
fact that several TCTs had already been previously issued in
favor of petitioners’ predecessors-in-interest. Although
reconstitution alone neither confirms nor adjudicates
ownership,38 considering the surrounding circumstances of this
case, the Court hereby confirms Respondent Bantegui’s rightful
ownership of the property.
Entitlement to Damages
As the trial and the appellate courts held, respondents indeed
failed to offer proof to justify the award of actual or
compensatory damages. The actual value of the house on the
property at the time of the demolition of the structure was not
established. One is entitled to adequate compensation only for
pecuniary loss that has been duly proved.39
Nominal damages as granted by the lower courts in the amount
of ₱50,000 may be a plausible remedy, however. These
damages are justified especially when common sense dictates
that a pecuniary loss has indeed been suffered, but is incapable
of precise computation. They are adjudicated, not for the
purpose of indemnifying respondents for any loss suffered, but
for vindicating or recognizing their right to a property that has
been violated or invaded.40
Lastly, the award by the appellate court of ₱50,000 in attorney’s
fees also appears reasonable because, by petitioners’ act,
respondents were compelled to incur expenses to protect their
interest.41
WHEREFORE, the Petition is hereby DENIED, and the assailed
Decision and Resolution are AFFIRMED. Costs against
petitioners.
SO ORDERED.
G.R. No. L-44899 April 22, 1981
MARIA E. MANAHAN, petitioner,
vs.
EMPLOYEES' COMPENSATION COMMISSION and GSIS
(LAS PIÑAS MUNICIPAL HIGH SCHOOL), respondents.
FERNANDEZ, J.:
This is a petition to review the decision of the Employees'
Compensation Commission in ECC Case No. 0070 (Nazario
Manahan, Jr., deceased), entitled "Maria Manahan, Appellant,
versus Government Service Insurance System, (Las Piñas
Municipal High School), Respondent" affirming the decision of
STAT CON 56
the Government Service Insurance System which denied the
claim for death benefit. 1
The claimant, petitioner herein, Maria E. Manahan, is the widow
of Nazario Manahan, Jr., who died of "Enteric Fever" while
employed as classroom teacher in Las Piñas Municipal High
School, Las Piñas Rizal, on May 8, 1975.
The petitioner filed a claim with the Government Service
Insurance for death benefit under Presidential Decree 626. In a
letter dated June 19, 1975, the Government Service Insurance
denied the claim on a finding that the ailment of Nazario
Manahan, Jr., typhoid fever, is not an occupational disease.
The petitioner filed a motion for reconsideration on the ground
that the deceased, Nazario Manahan, Jr., was in perfect health
when admitted to the service and that the ailment of said
deceased was attributable to his employment.
The Government Service Insurance System affirmed the denial
of the claim on the ground that enteric fever or paratyphoid is
similar in effect to typhoid fever, in the sense that both are
produced by Salmonella organisms.
The petitioner appealed to the Employees' Compensation
Commission which affirmed the decision of the Government
Service Insurance System on a finding that the ailment of the
deceased, enteric fever, was not induced by or aggravated by
the nature of the duties of Nazario Manahan, Jr. as a teacher. 2
To support her theory that the disease of Nazario Manahan, Jr.,
enteric fever, resulted from his employment as classroom
teacher of the Las Piñas Municipal High School, the petitioner
cites the following authority:
EPIDEMOLOGY AND PATHOLOGY
OF ENTERIC FEVER
THE SOURCE OF INFECTION is feces or urine from patients
and carriers. Family contacts may be transient carriers and 2
to 5% of patients become chronic carriers. In poorly sanitized
communities, water is the most frequent vehicle of
transmission; food, especially milk, is the next most important.
In modern urban areas, food, contaminated by healthy
carriers who are food handlers, is the principal vehicle. Flies
may spread the organism from feces to food. Direct contact
infection is infrequent.

The organism enters the body through the gastrointestinal
tract, invading the blood stream by way of the lymphatic
channels. There is hyperplasia and often ulceration of Pyeris
patches, especially in the ileum and cecum. When the ulcers
heals, no scar results. The kidneys and liver usually show
cloudly swelling and the latter may reveal a patchy necrosis
The spleen is enlarged and soft. Rarely, the lungs show
pneumonic changes. (Merck Manual 10th Edit., P. 842) 3
The factual findings of the respondent Commission indicate that
the deceased was in perfect health when he entered
government service on July 20, 1969, and that in the course of
his employment in 1974, he was treated for epigastric pain. He
succumbed to enteric fever on May 8, 1975.
Enteric fever is referred to in medical books as typhoid fever
(Dorlands Illustrated Medical Dictionary, 24th Ed., p. 548) or
paratyphoid fever (Harrison's Principles of Internal Medicine,
6th Ed., p. 817). Its symptoms include abdominal pain (id., p.
810). In discussing the clinical manifestations of the disease,
Mr. Harrison states that recovery (from enteric or paratyphoid
fever) may be followed by continued excretion of the causative
organism in the stools for several months (id., p. 817). This
lingering nature of the species producing enteric fever points
out the possibility that the illness which afflicted the deceased in
1974 was the same as, or at least, related to, his 1975 illness.
The medical record of the deceased shows that he had a
history of ulcer-like symptoms (p. 3, ECC rec.). This butresses
the claimant's claim that her husband had been suffer from
ulcer several months before his death on May 8, 1975. This is
likewise sustained by the medical certificate (p. 12, ECC rec.)
issued by Dr. Aquilles Bernabe to the effect that "Nazario
Manahan was treated for epigastric pain probably due to hyper-
acidity on December 10, 1974." Epigastric pain is a symptom of
ulcer, and ulcer is a common complication of typhoid fever.
There is even such a thing as "typhoidal ulcer" (p. 812, supra).
Because of these circumstances, the illness that claimed the life
of the deceased could have had its onset months before
December 10, 1974. Such being the case, his cause of action
accrued before December 10, 1974.
In the case of Corales vs. ECI (L-44063, Feb. 27, 1979), We
ruled that:
... Article 294, Title III (Transitory and Final
Provisions) of the New Labor Code provides
that all actions and claims accruing prior to
the effectivity of this Code shall be
determined in accordance with the laws in
force at the time of their accrual and under
the third paragraph of Article 292, Title 11
Prescription of Offenses and Claims,
workmen's compensation claims accruing
prior to the effectivity of this Code and during
the period from November 1, 1974 up to
December 31, 1974 shall be processed and
adjudicated in accordance with the laws and
rules at the time their causes of action
accrued. Hence, this Court applied the
provisions of the Workmen's Compensation
Act, as amended, on passing upon
petitioner's claim.
Pursuant to such doctrine and applying now the provisions of
the Workmen's Compensation Act in this case, the presumption
of compensability subsists in favor of the claimant.
In any case, We have always maintained that in case of doubt,
the same should be resolved in favor of the worker, and that
social legislations – like the Workmen's Compensation Act and
the Labor Code – should be liberally construed to attain their
laudable objective, i.e., to give relief to the workman and/or his
dependents in the event that the former should die or sustain an
injury.
Moreover, the constitutional guarantee of social justice and
protection to labor make Us take a second look at the evidence
presented by the claimant.
As a teacher of the Las Piñas Municipal High School at Las
Piñas Rizal, the deceased used to eat his meals at the school
canteen. He also used the toilet and other facilities of the
school. Said the respondent Commission," ... it is not
improbable that the deceased might have contracted the illness
during those rare moments that he was away from his family,
since it is medically accepted that enteric fever is caused by
salmonella organisms which are acquired by ingestion of
contaminated food or drinks. Contamination of food or water
may come from the excretion of animals such as rodents flies,
or human beings who are sick or who are carriers, or infection
in meat of animals as food. Meat, milk and eggs are the foods
most frequently involved in the transmission of this type of
species, since the organism may multiply even before ingestion.
..." These findings of the respondent Commission lead to the
conclusion that the risk of contracting the fatal illness was
increased by the decedent's working condition.
STAT CON 57
In view of the foregoing, the petition for review is meritorious.
WHEREFORE, the decision of the Employees' Compensation
Commission sought to be reviewed is hereby set aside the
Government Service Insurance System is ordered:
1. To pay the petitioner the amount of SIX THOUSAND PESOS
(P6,000.00) as death compensation benefit;
2. To pay the petitioner the amount of SIX HUNDRED PESOS
(P600.00) as attorney's fees;
3. To reimburse the petitioner expenses incurred for medical
services, hospitalization and medicines of the deceased
Nazario Manahan, Jr., duly supported by proper receipts; and
4. To pay administrative fees.
SO ORDERED.
G.R. No. L-48605 December 14, 1981
DOMNA N. VILLAVERT, petitioner,
vs.
EMPLOYEES' COMPENSATION COMMISSION &
GOVERNMENT SERVICE INSURANCE SYSTEM (Philippine
Constabulary), respondents.
FERNANDEZ, J.:
This is a petition to review the decision of the Employees'
Compensation Commission in ECC Case No. 0692, entitled
"Domna N. Villavert, appellant versus Government Service
Insurance System (Philippine Constabulary), respondents,"
affirming the decision of the Government Service Insurance
System denying the claim for death benefits. 1
The petitioner, Domna N. Villavert, is the mother of the late,
Marcelino N. Villavert who died of acute hemorrhagic
pancreatitis on December 12, 1975 employed as a Code
Verifier in the Philippine Constabulary. She filed a claim for
income benefits for the death of her son under P.D. No. 626 as
amended with the Government Service Insurance System on
March 18, 1976. The said claim was denied by the Government
Service Insurance System on the ground that acute
hemorrhagic pancreatitis is not an occupational disease and
that the petitioner had failed to show that there was a causal

connection between the fatal ailment of Marcelino N. Villavert
and the nature of his employment.
The petitioner appealed to the Employees' Compensation
Commission which affirmed on May 31, 1978 the decision of
the respondent, Government Service Insurance System,
denying the claim.
The record shows that in addition to his duties as Code Verifier,
Marcelino N. Villavert also performed the duties of a computer
operator and clerk typist. In the morning of December 11, 1975,
Marcelino reported as usual to the Constabulary Computer
Center at Camp Crame, Quezon City. He performed his duties
not only as code verifier but also handled administrative
functions, computer operation and typing jobs due to shortage
of civilian personnel. Although he was complaining of chest pain
and headache late in the afternoon of December 11, 1975, after
a whole day of strenuous activities, Marcelino was still required
to render overtime service until late in the evening of the same
day, typing voluminous classified communications, computing
allowances and preparing checks for the salary of Philippine
Constabulary and Integrated National Police personnel
throughout the country for distribution on or before December
15, 1975. He went home late at night and due to fatigue, he
went to bed as soon as he arrived without taking his meal.
Shortly thereafter, Marcelino was noticed by his mother, the
herein petitioner, gasping for breath, perspiring profusely, and
mumbling incoherent words. The petitioner tried to wake him up
and after all efforts to bring him to his senses proved futile, she
rushed Marcelino to the UE Ramon Magsaysay Memorial
Hospital where he was pronounced dead at 5:30 o'clock in the
morning of December 12, 1975 without regaining
consciousness. The case of death was acute hemorrhagic
pancreatitis.
To support the claim that Marcelino N. Villavert died of acute
hemorrhagic pancreatitis as a result of his duties as a code
verifier, computer operator and typist of the Philippine
Constabulary, the petitioner submitted the following certification
of Lt. Colonel Felino C. Pacheco Jr., commanding officer, of the
Philippine Constabulary, which reads:
THIS IS TO CERTIFY that MARCELINO N.
VILLAVERT, a regular employee of the Constabulary
Computer Center, had been performing the following
duty assignments in this office in addition to his
appointment as Coder Verifier before his death;
a. Computer Operator —As computer operator he was
subject to excessive heat and cold;
b. Clerk Typist—As typist he was responsible for typing
important communications not only for the office of the
Constabulary Computer Center but also for other posts,
including engagement speeches of the Chief of
Constabulary and other ranking officers of the Command;
c. Due to the shortage of qualified civilian personnel to
handle the task, he was given excessive work
responsibilities in the office which could have aggravated
his ailment.
d. That more often he took his meals irregularly late in view
of the nature of his work especially during the preparation of
checks for the salary of the Philippine Constabulary and the
National Integrated Police personnel throughout the
country;
e. He used to perform rotation duties, thereby leaving him in
sufficient time to consult the Constabulary Medical
Dispensary for routine physical check up about his health.
f. That subject employee never drinks alcoholic liquor,
neither smokes nor engages on immoral habits during his
lifetime.
g. That he died in line of duty after retiring from his night
shift.
This certification is being issued in behalf of legal heirs in
order to justify their claim for payment of benefits from the
Employees' Compensation to reciprocate the services
rendered by the late Marcelino N. Villavert, a loyal and
dedicated public servant. 2
The foregoing certification of Lt. Col. Felino C. Pacheco, Jr.
was corroborated by the affidavit of Rustico P. Valenzuela,
Chief Clerk of the Constabulary Computer Center, which
reads:
I, RUSTICO P. VALENZUELA, Master Sergeant, Philippine
Constabulary, Filipino of legal age, married and presently
Chief Clerk of the Constabulary Computer Center, Camp
Crame, Quezon City after having been duly sworn to in
accordance to law hereby depose and say:
a. That as Chief Clerk I am responsible to my Commanding
Officer about the accounting, detail, duties, etc. of all
military and civilian personnel in the office and therefore the
STAT CON 58
duties of the late Marcelino N. Villavert are personally
known to me prior to his death;
b. That the late Marcelino N. Villavert although was
appointed as Coder Verifier, still he was instructed to
perform extra additional workload due to shortage of
qualified civilian personnel to handle administrative function,
he being a graduate of the Computer Operator and an
expert typist which is seldom found among the qualities of
civilian personnel assigned in the Constabulary Computer
Center;
c. That the late Marcelino N. Villavert was complaining of
chest pain and headache prior to his death but because of
an urgent call to the service, although it necessitated his
rest; he was obliged to go on strenuous duty on the night of
December 11, 1975, typing voluminous classified
communications, compute allowances and prepare checks
for the salary of Philippine Constabulary and Integrated
National Police personnel throughout the country for
distribution on or before December 15, 1975, scheduled
payday, thereby aggravating his ailment due to excessive
work, disposed to heat and cold, operating computer
machine and over fatigue that caused his sudden death;
d. That the late Marcelino N. Villavert before his death have
insufficient time to consult the Medical Dispensary for
routine physical check-up due to the rotation of his duties
and therefore no record of his physical examination could
be found in this Headquarters;
e. That the death of late Marcelino N. Villavert was service
connected in view of the fact that he died while in the
performance of his official duties.
Affiant further sayeth none.
IN WITNESS WHEREOF, I have hereunto set my hand this
22nd day of August 1977 at Quezon City.
(SGD) RUSTICO P. VALENZUEL
Affiant
SUBSCRIBED AND SWORN to before me this 22nd day of
August 1977 at Quezon City, Metro Manila. Affiant exhibited
his Residence Certificate No. A-1183510 issued at Taguig,
Metro Manila on January 10, 1977.

(SGD) ENRIQUE C VILLANUEVA JR
1Lt. PC Administrative Officer 3
The Government Service Insurance System and the
Employees' Compensation Commission denied the claim for
compensation on the ground that the petitioner did not present
evidence that the illness of Marcelino N. Villavert, acute
hemorrhagic pancreatitis, was caused or aggravated by the
nature of his duties as employee of the Philippine Constabulary.
The Employees' Compensation Commission, citing a book on
medicine, said:
In medical science, acute hemorrhagic pancreatitis is "acute
inflammation with hemorrhagic necrosis of the pancreas." It
occurs most commonly in association with alcoholism. The
onset of the symptoms often occurs during or shortly after
bouts of alcoholic intoxication. It also occurs in association
with biliary tract disease. Occasionally, it occurs as a
complication of peptic ulcer, mumps, viral hepatitis or
following the use of drugs such as glucocorticoids, or
chlorothiazide. It is sometimes associated with metabolic
disorders such as hyperpidemia and hyperparathyroidism. It
may also be associated with a genetic type of pancreatitis
with onset in childhood. Trauma is a relatively frequent cause
of pancreatitis; it may result from a severe blow to the
abdomen, a penetrating injury from a bullet or knife wound,
inadvertent trauma from surgical procedures in the upper
abdomen or rarely, electric shock. Approximately 20% of the
patients have no apparent underlying or predisposing cause.
(Principles of Internal Medicine by Harrison, 7th Edition, pp.
157) 4
However, the Medico Legal Officer of the National Bureau of
Investigation stated that the exact cause of acute hemorrhagic
pancreatitis is still unknown despite extensive researches in this
field, although most research data are agreed that physical and
mental stresses are strong causal factors in the development of
the disease. 5
From the foregoing facts of record, it is clear that Marcelino N.
Villavert died of acute hemorrhagic pancreatitis which was
directly caused or at least aggravated by the duties he
performed as coder verifier, computer operator and clerk typist
of the Philippine Constabulary. There is no evidence at all that
Marcelino N. Villavert had a "bout of alcoholic intoxication"
shortly before he died. Neither is there a showing that he used
drugs.
It should be noted that Article 4 of the Labor Code of the
Philippines, as amended, provides that "All doubts in the
implementation and interpretation of this Code, including its
implementing rules and regulations shall be resolved in favor of
labor."
WHEREFORE, the decision of the Employees' Compensation
Commission sought to be reviewed is set aside and judgment is
hereby rendered ordering the Government Service Insurance
System to pay the petitioner death benefits in the amount of SIX
THOUSAND PESOS (P6,000.00).
SO ORDERED.
G.R. No. L-64204 May 31, 1985
DEL ROSARIO & SONS LOGGING ENTERPRISES,
INC., petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION,
PAULINO MABUTI, NAPOLEO BORATA, SILVINO TUDIO
and CALMAR SECURITY AGENCY, respondents.
MELENCIO-HERRERA, J.:
A petition for certiorari seeking the annulment of the National
Labor Relations Commission (NLRC) Resolution in ROX
Arbitration Case No. 445-79 entitled Paulino Mabuti, et al.
versus Calinar Security Agency, et al., and the affirmance
instead, of the Decision of the Labor Arbiter.
On February 1, 1978, petitioner Del Rosario & Sons Logging
Enterprises, Inc. entered into a "Contract of Services" with
private respondent Calinar Security Agency (Security Agency,
for short) whereby the latter undertook to supply the former with
security guards at the rate of P300.00 per month for each
guard.
On October 4, 1979, Paulino Mabuti, Napoleo Borata and
Silvino Tudio filed a Complaint against the Security Agency and
petitioner, for underpayment of salary, non-payment of living
allowance, and 13th month pay. Thereafter, five other guards
filed their complaint for the same causes of action.
In its Answer, petitioner contended that complainants have no
cause of action against it due to absence of employer-employee
relationship between them. The Security Agency also denied
liability alleging that due to the inadequacy of the amounts paid
STAT CON 59
to it under the Contract of Services, it could not possibly comply
with the payments required by labor laws.
Assigned for compulsory arbitration, on December 21, 1979,
the Labor Arbiter rendered a Decision dismissing the complaint
against petitioner for want of employer-employee relationship
but ordering the Security Agency to pay complainants the
amounts sought by them totalling P2,923.17.
The Security Agency appealed to the NLRC, which modified the
Decision of the Labor Arbiter by holding that petitioner is liable
to pay complainants, jointly and severally, with the Security
Agency on the ground that petitioner is an indirect employer
pursuant to Articles 106 and 107 of the Labor Code, as
amended.
Reconsideration sought by petitioner having been denied, this
certiorari petition was instituted contending that the NLRC erred
in giving due course to the appeal despite the fact that it was
not under oath and the required appeal fee was not paid; in
holding it jointly and severally liable with the Security Agency;
and in refusing to give due course to its Motion for
Reconsideration.
The formal defects in the appeal of the Security Agency were
not fatal defects. The lack of verification could have been easily
corrected by requiring an oath. 1 The appeal fee had been paid
although it was delayed. 2 In the case of Panes vs. Court of
Appeals, et al., 3 we held:
Clearly, failure to pay the docketing fees
does not automatically result in the dismissal
of the appeal, Dismissal is discretionary with
the Appellate Court (Nawasa vs. Secretary
of Public Works and Communications, 16
SCRA 536, 539 [1966]), and discretion must
be exercised wisely and prudently, never
capriciously, with a view to substantial
justice (Cucio vs. Court of Appeals, 57
SCRA 401 [1974]). Failure to pay the appeal
docketing fee confers a directory and not a
mandatory power to dismiss an appeal and
such power must be exercised with sound
discretion and with a great deal of
circumspection, considering all attendant
circumstances. 4
It may be that, as held in Acda vs. MOLE, 119 SCRA 306
[1982], payment of the appeal fee is "by no means a mere

technicality but is an essential requirement in the perfection of
an appeal." However, where as in this case, the fee had been
paid, unlike in the Acda case, although payment was delayed,
the broader interests of justice and the desired objective of
resolving controversies on the merits demanded that the appeal
be given course as, in fact, it was so given by the NLRC.
Besides, it was within the inherent power of the NLRC to have
allowed the late payment of the appeal fee.
Moreover, as provided for by Article 221 of the Labor Code "in
any proceeding before the Commission or any of the Labor
Arbiters, the rules of evidence prevailing in Courts of law or
equity shall not be controlling and it is the spirit and intention of
this Code that the Commission and its members and the Labor
Arbiters shall use every and an reasonable means to ascertain
the facts in each case speedily and objectively and without
regard to technicalities of law or procedure, all in the interest of
due process."
Petitioner's joint and several liability with the Security Agency
was correctly adjudged. When petitioner entered into a Contract
of Services with the Security Agency and the latter hired
complainants to work as guards for the former, petitioner
became an indirect employer of respondents-complainants
pursuant to the unequivocal terms of Articles 106 and 107 of
the Labor Code, as amended:
Art. 106. Contractor or subcontractor .— ...
In the event that the contractor or
subcontractor fails to pay the wages of his
employees in accordance with this Code, the
employer shag be jointly and severally liable
with his contractor or subcontractor to such
employees to the extent of the work
performed under the contract, in the same
manner and extent that he is liable to
employees directly employed by him.
Art. 107. Indirect employer. —The provisions
of the immediately preceding Article shall
likewise apply to any person, partnership,
association or corporation which, not being
an employer, contracts with an independent
contractor for the performance of any work,
task, job or project.
The joint and several liability imposed on petitioner and affirmed
herein, however, is without prejudice to a claim for
reimbursement by petitioner against the Security Agency for
such amounts as petitioner may have to pay to complainants.
The Security Agency may not seek exculpation by claiming that
petitioner's payments to it were inadequate. As an employer, it
is charged with knowledge of labor laws and the adequacy of
the compensation that it demands for contractual services is its
principal concern and not any other's.
WHEREFORE, the judgment under review is hereby affirmed,
without prejudice to petitioner's right to seek reimbursement
from Calinar Security Agency for such amounts as petitioner
may have to pay to complainants. Costs against the private
respondent.
SO ORDERED.
G.R. No. 196573 October 16, 2013
VICTORINO OPINALDO, Petitioner,
vs.
NARCISA RAVINA, Respondent.
DECISION
VILLARAMA, JR., J.:
On appeal under Rule 45 is the Decision1 dated October 19,
2010 and Resolution2 dated March 17, 2011 of the Court of
Appeals (CA), Cebu City, in CA-G.R. SP No. 04479 which
reversed and set aside the Decision3 and Resolution4 of the
National Labor Relations Commission (NLRC), Cebu City, and
dismissed petitioner s complaint for illegal dismissal against
respondent.
The facts follow.
Respondent Narcisa Ravina (Ravina) is the general manager
and sole proprietor of St. Louisse Security Agency (the
Agency). Petitioner Victorino Opinaldo (Opinaldo) is a security
guard who had worked for the Agency until his alleged illegal
dismissal by respondent on December 22, 2006.
Agency hired the services of petitioner on October 5, 2005, with
a daily salary of ₱176.66 and detailed him to PAIJR Furniture
Accessories (PAIJR) in Mandaue City.5
STAT CON 60
In a letter dated August 15, 2006, however, the owner of PAIJR
submitted a written complaint to respondent stating as follows:
I have two guards assigned here in my company, namely, SG.
Opinaldo and SGT. Sosmenia. Hence, ... I hereby formalize our
request to relieve one of our company guards and I choose SG.
VICTORINO B. OPINALDO, detailed/assigned at PAIJR
FURNITURE ACCESSORIES located at TAWASON,
MANDAUE CITY. For the reason: He is no longer physically fit
to perform his duties and responsibilities as a company guard
because of his health condition.
Looking forward to your immediate action. Thank you. 6
Acceding to PAIJR’s request, respondent relieved petitioner
from his work. Respondent also required petitioner to submit a
medical certificate to prove that he is physically and mentally fit
for work as security guard.
On September 6, 2006, respondent reassigned petitioner to
Gomez Construction at Mandaue City. After working for a
period of two weeks for Gomez Construction and upon receipt
of his salary for services rendered within the said two-week
period, petitioner ceased to report for work.7 The records show
that petitioner’s post at Gomez Construction was the last
assignment given to him by respondent.
On November 7, 2006, petitioner filed a complaint 8 against
respondent with the Department of Labor and Employment
(DOLE) Regional Office in Cebu City for underpayment of
salary and nonpayment of other labor standard benefits. The
parties agreed to settle and reached a compromise agreement.
On November 27, 2006, petitioner signed a Quitclaim and
Release9 before the DOLE Regional Office in Cebu City for the
amount of ₱5,000.10
After almost four weeks from the settlement of the case,
petitioner returned to respondent’s office on December 22,
2006. Petitioner claims that when he asked respondent to sign
an SSS11 Sickness Notification which he was going to use in
order to avail of the discounted fees for a medical check-up,
respondent allegedly refused and informed him that he was no
longer an employee of the Agency. Respondent allegedly told
him that when he signed the quitclaim and release form at the
DOLE Regional Office, she already considered him to have quit
his employment.12 Respondent, on the other hand,
counterclaims that she did not illegally dismiss petitioner and
that it was a valid exercise of management prerogative that he

was not given any assignment pending the submission of the
required medical certificate of his fitness to work.13
On January 26, 2007, petitioner filed a Complaint 14 for Illegal
Dismissal with a prayer for the payment of separation pay in
lieu of reinstatement against respondent and the Agency before
the NLRC Regional Arbitration Branch No. VII, Cebu City. After
trial and hearing, Labor Arbiter Maria Christina S. Sagmit
rendered a Decision15 on June 18, 2008 holding respondent
and the Agency liable for illegal dismissal and ordering them to
pay petitioner separation pay and back wages. The Labor
Arbiter ruled,
In the instant case, respondents failed to establish that
complainant was dismissed for valid causes. For one, there is
no evidence that complainant was suffering from physical
illness which will explain his lack of assignment. Further, there
is no admissible proof that Ravina even required complainant to
submit a medical certificate. Thus, complainant could not be
deemed to have refused or neglected to comply with this order.
xxxx
Considering that there is no evidence that complainant was
physically unfit to perform his duties, respondents must be held
liable for illegal dismissal. Ordinarily, complainant will be
entitled to reinstatement and full backwages. However,
complainant has expressed his preference not to be reinstated.
Hence, respondents must be ordered to give complainant
separation pay in lieu of reinstatement equivalent to one
month’s salary for every year of service. Complainant is also
entitled to full backwages from the time he was terminated until
the date of this Decision. WHEREFORE, respondents Narcisa
Ravina and/or St. Louisse Security Agency are ordered to pay
complainant the total amount EIGHTY-TWO THOUSAND
THREE HUNDRED FORTY PESOS (₱82,340.00), consisting of
₱22,500.00 in separation pay and ₱59,840.00 in full
backwages.
SO ORDERED.16
Respondent appealed to the NLRC which, however, affirmed
the decision of the Labor Arbiter and dismissed the appeal for
lack of merit.17 The NLRC ruled that there was no just and
authorized cause for dismissal and held that "without a
certification from a competent public authority that petitioner
suffers from a disease of such nature or stage that cannot be
cured within a period of six (6) months even with proper medical
attendance, respondents are not justified in refusing petitioner’s
presence in the workplace."18 The NLRC also ruled that neither
did petitioner abandon his job as his failure to work was due to
"respondents turning him down."19 Respondent moved for
reconsideration but the motion was denied in a
Resolution20 dated June 30, 2009 where the NLRC reiterated its
finding of illegal dismissal given the absence of any just or
authorized cause for the termination of petitioner and the failure
to prove abandonment on his part.
Respondent elevated the case to the CA on a Petition for
Certiorari.21 On October 19, 2010, the appellate court ruled for
respondent and reversed and set aside the decision and
resolution of the NLRC. Ruling on the issue raised by petitioner
that respondent’s petition should have been dismissed outright
as her motion for reconsideration before the NLRC was filed out
of time, the appellate court held that the issue was rendered
moot and academic when the NLRC gave due course to the
motion and decided the case on the merits. The appellate court
further held that petitioner should have filed his comment or
opposition upon the filing of the subject motion for
reconsideration and not after the termination of the proceedings
before the NLRC. As to the issue of illegal dismissal, the
appellate court ruled that it was petitioner himself who failed to
report for work and therefore severed his employment with the
Agency. The CA further held that petitioner’s claims relative to
his alleged illegal dismissal were not substantiated. The
pertinent portions of the assailed Decision reads,
Based from the evidence on record, the chain of events started
when PAIJR sent to Ravina its 15 August 2006 letter-complaint
to relieve Opinaldo. This led to Opinaldo’s reassignment to work
for Engr. Gomez on 06 September 2006. Upon his failure to
continue working for Engr. Gomez due to his refusal to obtain a
medical certificate, Opinaldo filed the complaint for money
claims on 07 November 2006. This was however settled when
Opinaldo and Ravina signed a quitclaim on 27 November 2006.
Still, Opinaldo did not obtain the medical certificate required by
Ravina. Then, Opinaldo’s hasty filing of a complaint for illegal
dismissal against Ravina on 26 January 2007.
xxxx
The requirement to undergo a medical examination is a lawful
exercise of management prerogative on Ravina’s part
considering the charges that Opinaldo was not only suffering
from hypertension but was also sleeping while on duty. The
management is free to regulate, according to its own discretion
and judgment, all aspects of employment, including hiring, work
assignments, working methods, time, place and manner of
work, processes to be followed, supervision of workers, working
STAT CON 61
regulations, transfer of employees, work supervision, lay off of
workers and discipline, dismissal and recall of workers.
Besides, as a security guard, the need to be physically fit
cannot be downplayed. If at all, Opinaldo’s obstinate refusal to
submit his medical certificate is equivalent to willful
disobedience to a lawful order. x x x.
xxxx
Verily, the totality of Opinaldo’s acts justifies the dismissal of his
complaint for illegal dismissal against Ravina. While it is true
that the state affirms labor as a primary social economic force,
we are also mindful that the management has rights which must
also be respected and enforced.22
Petitioner moved for reconsideration of the Decision but his
motion was denied in the questioned Resolution of March 17,
2011 on the ground that there are neither cogent reasons nor
new and substantial grounds which would warrant a reversal of
the appellate court’s findings. Hence, petitioner filed this petition
alleging that:
I THE HONORABLE COURT OF APPEALS ERRED AND
DECIDED THE CASE NOT IN ACCORDANCE WITH LAW
AND ESTABLISHED JURISPRUDENCE WHEN IT GAVE DUE
COURSE TO THE RESPONDENT’S PETITION FOR
CERTIORARI UNDER RULE 65 DESPITE BEING FILED OUT
OF TIME AND NOT PROPERLY VERIFIED
II THE HONORABLE COURT OF APPEALS ERRED AND
DECIDED THE CASE NOT IN ACCORDANCE WITH LAW
AND ESTABLISHED JURISPRUDENCE WHEN IT REVERSED
AND SET ASIDE THE DECISION AND RESOLUTION OF THE
HONORABLE NATIONAL LABOR RELATIONS COMMISSION,
FOURTH DIVISION, BY DECLARING THAT THE DISMISSAL
OF PETITIONER WAS LEGAL AND PROPER23
We first rule on the procedural issue.
Petitioner questions the appellate court for ruling that the issue
of the timeliness of the filing of respondent’s motion for
reconsideration of the NLRC decision has become moot and
academic when the NLRC dismissed the said motion based on
the merits and affirmed its decision. It is the opinion of petitioner
that "this should not and cannot be understood to mean that the
motion for reconsideration was filed within the period allowed,"
and that "the Commission may have accommodated the motion

for reconsideration although belatedly filed and had chosen to
decide it based on its merits x x x but it does not change the
fact that the motion for reconsideration before the Commission
was filed beyond the reglementary period."24 Petitioner believes
that respondent’s filing of the motion for reconsideration on time
is a precondition to the application of the rule that a petition for
certiorari must be filed within 60 days from the notice of the
denial of the motion for reconsideration. As petitioner puts it,
"the counting of the sixty (60)-day period from the notice of the
denial of the motion for reconsideration is proper only when the
motion was filed on time."25
The CA, ruling that the procedural issue is already moot and
academic, ratiocinated as follows:
Anent the first issue, Ravina argues that the issue of timeliness
of filing a Motion for Reconsideration with the NLRC has been
dispensed with when it resolved to dismiss said Motion based
on the merits and not on the mere technical issue of timeliness.
Ravina further insists that had the NLRC denied said Motion
based on the issue of timeliness, it would have just outrightly
dismissed it based on said ground and not on the merits she
raised in her Motion for Reconsideration.
The period within which to file a certiorari petition is 60 days as
provided under Section 4, Rule 65 of the 1997 Rules of Civil
Procedure as amended by Circular No. 39-98 and further
amended by A.M. No. 00-2-03-SC, thusly:
SECTION 4. When and where petition filed. – The petition shall
be filed not later than sixty (60) days from notice of the
judgment, order or resolution. In case a motion for
reconsideration or new trial is timely filed, whether such motion
is required or not, the sixty (60) day period shall be counted
from notice of the denial of said motion.
xxxx
xxxx
To reiterate, the NLRC promulgated its challenged Decision on
24 April 2009. Ravina alleged that her former counsel received
a copy of said decision on 08 June 2009. However, she
changed her counsel who, in turn, obtained a copy of the
decision on 17 June 2009. The NLRC then promulgated its
assailed Resolution on 30 June 2009 which Ravina received on
29 July 2009. Ravina’s Petition for Certiorari, dated 28 August
2009, was filed on 09 September 2009.
The reckoning period for the filing of a certiorari petition is sixty
(60) days counted from notice of the denial of said motion.
Prescinding from the foregoing, the Petition for Certiorari was
filed within the 60-day period.
At this stage of the proceeding, it is futile to belabor on the
timeliness of the Motion for Reconsideration. This is due to the
fact that the issue of timeliness has become moot and
academic considering that Ravina’s Motion for Reconsideration
was given due course by the NLRC. In fact, the NLRC even
decided the motion on the merits and not merely on technicality.
Moreover, Opinaldo should have filed a Comment or Opposition
as soon as the Motion for Reconsideration was filed. Opinaldo
should not have waited for the termination of the proceedings
before the NLRC. In point of fact, the belated questioning of the
issue of timeliness even operated to estop
Opinaldo.26 (Emphasis ours.)
Time and again, we have ruled and it has become doctrine that
the perfection of an appeal within the statutory or reglementary
period and in the manner prescribed by law is mandatory and
jurisdictional. Failure to do so renders the questioned decision
final and executory and deprives the appellate court of
jurisdiction to alter the final judgment, much less to entertain the
appeal.27 In labor cases, the underlying purpose of this principle
is to prevent needless delay, a circumstance which would allow
the employer to wear out the efforts and meager resources of
the worker to the point that the latter is constrained to settle for
less than what is due him.28
In the case at bar, the applicable rule on the perfection of an
appeal from the decision of the NLRC is Section 15, Rule VII of
the 2005 Revised Rules of Procedure of the National Labor
Relations Commission:
Section 15. Motions for Reconsideration. – Motion for
reconsideration of any decision, resolution or order of the
Commission shall not be entertained except when based on
palpable or patent errors; provided that the motion is under oath
and filed within ten (10) calendar days from receipt of decision,
resolution or order, with proof of service that a copy of the same
has been furnished, within the reglementary period, the adverse
party; and provided further, that only one such motion from the
same party shall be entertained.
Should a motion for reconsideration be entertained pursuant to
this SECTION, the resolution shall be executory after ten (10)
calendar days from receipt thereof.
STAT CON 62
We are not, however, unmindful that the NLRC is not bound by
the technical rules of procedure and is allowed to be liberal in
the application of its rules in deciding labor cases. Thus, under
Section 2, Rule I of the 2005 Revised Rules of Procedure of the
National Labor Relations Commission it is stated:
Section 2. Construction. – These Rules shall be liberally
construed to carry out the objectives of the Constitution, the
Labor Code of the Philippines and other relevant legislations,
and to assist the parties in obtaining just, expeditious and
inexpensive resolution and settlement of labor disputes.
It is significant that the 2011 NLRC Rules of Procedure, under
Section 2, Rule I thereof, also carries exactly the same
provision. Further, the 2005 Revised Rules and the 2011 Rules
carry identical provisions appearing under Section 10, Rule VII
of both laws:
Section 10. Technical rules not binding. – The rules of
procedure and evidence prevailing in courts of law and equity
shall not be controlling and the Commission shall use every and
all reasonable means to ascertain the facts in each case
speedily and objectively, without regard to technicalities of law
or procedure, all in the interest of due process.
In any proceeding before the Commission, the parties may be
represented by legal counsel but it shall be the duty of the
Chairman, any Presiding Commissioner or Commissioner to
exercise complete control of the proceedings at all stages.
All said, despite this jurisdiction’s stance towards the exercise
of liberality, the rules should not be relaxed when it would
render futile the very purpose for which the principle of liberality
is adopted.29 The liberal interpretation stems from the mandate
that the workingman’s welfare should be the primordial and
paramount consideration.30 We are convinced that the
circumstances in the case at bar warranted the NLRC’s
exercise of liberality when it decided respondent’s motion for
reconsideration on the merits.
The subject motion for reconsideration of the NLRC decision
was filed on June 25, 2009. The evidence on record shows that
the decision of the NLRC dated April 24, 2009 was received by
respondent herself on June 17, 2009. The same decision was,
however, earlier received on June 8, 2009 by respondent’s
former counsel who allegedly did not inform respondent of the
receipt of such decision until respondent went to his office on
June 23, 2009 to get the files of the case. If we follow a strict
construction of the ten-day rule under the 2005 Revised Rules

of Procedure of the National Labor Relations Commission and
consider notice to respondent’s former counsel as notice to
respondent herself, the expiration of the period to file a motion
for reconsideration should have been on June 18, 2009. The
NLRC, however, chose a liberal application of its rules: it
decided the motion on the merits. Nevertheless, it denied
reconsideration.
We defer to the exercise of discretion by the NLRC and uphold
its judgment in applying a liberal construction of its procedural
and technical rules to this case in order to ventilate and resolve
the issues raised by respondent in the motion for
reconsideration and fully resolve the case on the merits. It
would be purely conjectural to challenge the NLRC’s exercise of
such liberality for being tainted with grave abuse of discretion
especially that it did not reverse, but even affirmed, its
questioned decision – which sustained the ruling of the Labor
Arbiter – that respondent illegally dismissed petitioner. In view
of such disposition, that the NLRC gave due course to the
motion in the interest of due process and to render a full
resolution of the case on the merits is the more palpable
explanation for the liberal application of its rules. It is significant
to note that neither did petitioner ever raise the issue of the
NLRC’s ruling on the merits of the subject motion for
reconsideration. And the reason is clear: the motion for
reconsideration was resolved in favor of petitioner.
Furthermore, if the NLRC accorded credibility to the explanation
proffered by respondent for its belated filing of the motion, we
cannot now second-guess the NLRC’s judgment in view of the
circumstances of the case and in the absence of any showing
that it gravely abused its discretion.
In light of the foregoing, we cannot uphold the stand of
petitioner that the petition for certiorari before the CA was filed
out of time, and at the same time rule that the NLRC acted in
the proper exercise of its jurisdiction when it liberally applied its
rules and resolved the motion for reconsideration on the merits.
To so hold would nullify the latitude of discretion towards liberal
construction granted to the NLRC under the 2005 Revised
Rules of Procedure of the National Labor Relations
Commission – including the decisions and resolutions rendered
in the exercise of such discretion.
Petitioner also claims that the verification in respondent’s
petition for certiorari before the CA suffers from infirmity
because it was based only on "personal belief and information."
As it is, petitioner argues that it does not comply with Section
4,31 Rule 7 of the 1997 Rules on Civil Procedure, as amended,
which requires a pleading to be verified by an affidavit that the
affiant has read the pleading and that the allegations therein are
true and correct of his personal knowledge or based on
authentic records.32 The petition must therefore be considered
as an unsigned pleading producing no legal effect under
Section 3,33 Rule 7 of the Rules and should have resulted in the
outright dismissal of the petition.
It is a matter of procedural consequence in the case at bar that
whether we strictly or liberally apply the technical rules on the
requirement of verification in pleadings, the disposition of the
case will be the same. If we sustain petitioner’s stance that the
petition before the CA should have been outrightly dismissed,
the NLRC decision finding the dismissal of petitioner as illegal
would have reached finality. On the other hand, if we adopt
respondent’s view that the defect in the verification of the
petition is merely a formal defect and is neither jurisdictional nor
fatal, we will be sustaining the appellate court’s giving due
course to the petition. However, on substantive grounds, we
reverse the appellate court’s decision and reinstate the finding
of illegal dismissal by the NLRC and the Labor Arbiter.
The appellate court reversed both the NLRC and the Labor
Arbiter in consideration of the following factors: that petitioner
did not counter respondent’s receipt of the letter-complaint of
PAIJR relative to his work performance; that petitioner did not
refute the fact that respondent required him to submit a medical
certificate; and, that petitioner failed to comply with the
requirement to submit the medical certificate. Hence, when
petitioner failed to submit the required medical certificate, the
appellate court found it to be a valid exercise of management
prerogative on the part of respondent not to give petitioner any
work assignment pending its submission.
We do not agree.
Jurisprudence is replete with cases recognizing the right of the
employer to have free reign and enjoy sufficient discretion to
regulate all aspects of employment, including the prerogative to
instill discipline in its employees and to impose penalties,
including dismissal, upon erring employees. This is a
management prerogative where the free will of management to
conduct its own affairs to achieve its purpose takes
form.34 Even labor laws discourage interference with the
exercise of such prerogative and the Court often declines to
interfere in legitimate business decisions of
employers.35 However, the exercise of management prerogative
is not unlimited. Managerial prerogatives are subject to
limitations provided by law, collective bargaining agreements,
and general principles of fair play and justice.36 Hence, in the
exercise of its management prerogative, an employer must
ensure that the policies, rules and regulations on work-related
activities of the employees must always be fair and reasonable
STAT CON 63
and the corresponding penalties, when prescribed,
commensurate to the offense involved and to the degree of the
infraction.37
In the case at bar, we recognize, as did the appellate court, that
respondent’s act of requiring petitioner to undergo a medical
examination and submit a medical certificate is a valid exercise
of management prerogative. This is further justified in view of
the letter-complaint from one of respondent’s clients, PAIJR,
opining that petitioner was "no longer physically fit to perform
his duties and responsibilities as a company guard because of
his health condition."38 To be sure, petitioner’s job as security
guard naturally requires physical and mental fitness under
Section 5 of Republic Act No. 5487,39 as amended by
Presidential Decree No. 100.40
While the necessity to prove one’s physical and mental fitness
to be a security guard could not be more emphasized, the
question to be settled is whether it is a valid exercise of
respondent’s management prerogative to prevent petitioner’s
continued employment with the Agency unless he presents the
required medical certificate. Respondent argues, viz.:
Thus, respondents in the exercise of their MANAGEMENT
PREROGATIVE required Complainant to submit a Medical
Certificate to prove that he is "PHYSICALLY AND MENTALLY
FIT" for work as Security Guard. Unfortunately, however, up to
the present time, complainant failed to submit said Medical
Examination and Findings giving him clean bill of health, to
respondents. Herein respondents are ready and willing to
accept him as such Security Guard once he could submit said
Medical Examination and Findings.
The requirement anent the presentation of such MEDICAL
CERTIFICATE by Complainant to Respondents is but a
Management Measure of ensuring Respondents including
Complainant that Complainant is physically and mentally fit for
continued Employment and will not in any manner pose a
danger or, threat to the respondents’ properties and lives of
their customers and other employees as well as to the person
and life of Complainant himself.41
It is utterly significant in the case at bar that a considerably long
period has lapsed from petitioner’s last day of recorded work on
September 21, 2006 until he was informed by respondent on
December 22, 2006 that he was no longer an employee of the
Agency. In the words of petitioner, he had been on a "floating
status"42 for three months. Within this period, petitioner did not
have any work assignment from respondent who proffers the
excuse that he has not submitted the required medical

certificate. While it is a management prerogative to require
petitioner to submit a medical certificate, we hold that
respondent cannot withhold petitioner’s employment without
observing the principles of due process and fair play. The Labor
Arbiter and the CA have conflicting findings with respect to the
submission of the medical certificate.
The Labor Arbiter observed that "there is no admissible proof
that respondent even required petitioner to submit a medical
certificate. Thus, petitioner could not be deemed to have
refused or neglected to comply with this order."43 The CA
countered that while there is no documentary evidence to prove
it, the admission of both parties establishes that there is a
pending requirement for a medical certificate and it was not
complied with by petitioner. We agree with the appellate court
that despite the lack of documentary evidence, both parties
have admitted to respondent’s medical certificate requirement.
We so hold despite petitioner’s protestations that what
respondent required of him was to submit himself to a medical
check-up, and not to submit a medical certificate. Even if
petitioner’s allegation is to be believed, the fact remains that he
did not undergo the medical check-up which he himself claims
to have been required by respondent.
All said, what behooves the Court is the lack of evidence on
record which establishes that respondent informed petitioner
that his failure to submit the required medical certificate will
result in his lack of work assignment. It is a basic principle of
labor protection in this jurisdiction that a worker cannot be
deprived of his job without satisfying the requirements of due
process.44 Labor is property and the right to make it available is
next in importance to the rights of life and liberty. 45 As
enshrined under the Bill of Rights, no person shall be deprived
of life, liberty or property without due process of law. 46 The due
process requirement in the deprivation of one’s employment is
transcendental that it limits the exercise of the management
prerogative of the employer to control and regulate the affairs of
the business. In the case at bar, all that respondent employer
needed to prove was that petitioner employee was notified that
his failure to submit the required medical certificate will result in
his lack of work assignment – and eventually the termination of
his employment – as a security guard. There is no iota of
evidence in the records, save for the bare allegations of
respondent, that petitioner was notified of such consequence
for non-submission. In truth, the facts of the case clearly show
that respondent even reassigned petitioner to Gomez
Construction from his PAIJR post despite the non-submission of
a medical certificate. If it was indeed the policy of respondent
not to give petitioner any work assignment without the medical
certificate, why was petitioner reassigned despite his
noncompliance?
That is not all. In addition to invoking management prerogative
as a defense, respondent also alleges
abandonment.1âwphi1 Respondent claims that after petitioner
received his last salary from his assignment with Gomez
Construction, he no longer reported for work. The assailed
Decision found that petitioner indeed abandoned his work, viz.:
It was only when Opinaldo refused to report for work on his
assignment for Engr. Gomez after having received his salary for
work rendered starting on 06 September 2006 that Ravina
became firm that the medical certificate should be submitted.
But, Opinaldo did not heed Ravina’s order. It was Opinaldo who
altogether failed to report for work.47
We disagree.
Abandonment is the deliberate and unjustified refusal of an
employee to resume his employment.48 To constitute
abandonment of work, two elements must concur: (1) the
employee must have failed to report for work or must have been
absent without valid or justifiable reason; and, (2) there must
have been a clear intention on the part of the employee to sever
the employer-employee relationship manifested by some overt
act.49 None of these elements is present in the case at bar. As
succinctly stated by the NLRC:
From respondents’ own admission in their position paper, it is
clear that they prevented petitioner’s continued employment
with them unless the latter presents a medical certificate that he
is physically and mentally fit for work x x x.
xxxx
Moreover, if it was really true that complainant abandoned his
work, then why have not respondents sent him a notice to
report back for work? It is evident then that respondents found
an excuse to decline complainant’s continued stay with them on
the pretext that he has to submit first a medical certificate
before he could be allowed to resume employment. 50
Finally, respondent harps that she could not be held liable for
illegal dismissal because, in the first place, she did not dismiss
petitioner. Respondent maintains that she merely refused to
give petitioner any work assignment until the submission of a
medical certificate. On this issue, the CA concurred with
respondent and ruled that petitioner failed to "establish the facts
which would paint the picture that respondent terminated him." 51
STAT CON 64
We need not reiterate that respondent did not properly exercise
her management prerogative when she withheld petitioner’s
employment without due process. Respondent failed to prove
that she has notified petitioner that her continuous refusal to
provide him any work assignment was due to his non-
submission of the medical certificate. Had respondent exercised
the rules of fair play, petitioner would have had the option of
complying or not complying with the medical certificate
requirement – having full knowledge of the consequences of his
actions. Respondent failed to do so and she cannot now hide
behind the defense that there was no illegal termination
because petitioner cannot show proof that he had been illegally
dismissed. It is a time-honored legal principle that the employer
has the onus probandi to show that the dismissal or termination
was for a just and authorized cause under the Labor Code.
Respondent failed to show that the termination was justified and
authorized, nor was it done as a valid exercise of management
prerogative. Given the circumstances in the case at bar, it is not
fair to shift the burden to petitioner, and rule that he failed to
prove his claim, when respondent had successfully terminated
the employer-employee relationship without leaving a paper trail
in a clear case o illegal dismissal.
WHEREFORE, the petition for review on certiorari is
GRANTED. The assailed Decision dated October 19 2010 and
Resolution dated March 17 2011 o the Court o Appeals in CA-
G.R. SP No. 04479 dismissing petitioner s Complaint for Illegal
Dismissal are hereby REVERSED and SET ASIDE. The
Decision and Resolution dated April24, 2009 and June 30,
2009, respectively, o the NLRC in NLRC Case No. VAC 01-
000081-2009 (RAB Case No. Vll-01-0208-2007) requiring
respondent Narcisa Ravina and/or St. Louisse Security Agency
to pay petitioner Victorino Opinaldo the total amount o ₱82,340
consisting o ₱22,500 in separation pay and ₱59,840 in full back
wages, are hereby REINSTATED and UPHELD.
No costs.
SO ORDERED.
G.R. No. L-16138 April 29, 1961
DIOSDADO C. TY, plaintiff-appellant,
vs.
FIRST NATIONAL SURETY & ASSURANCE CO.,
INC., defendant-appellee.
LABRADOR, J.:

Appeal from a judgment of the Court of First Instance of Manila,
Hon. Gregorio S. Narvasa, presiding, dismissing the actions
filed in the above-entitled cases.
The facts found by the trial court, which are not disputed in this
appeal, are as follows:
At different times within a period of two months prior
to December 24, 1953, the plaintiff herein Diosdado
C. Ty, employed as operator mechanic foreman in the
Broadway Cotton Factory, in Grace Park, Caloocan,
Rizal, at a monthly salary of P185.00, insured himself
in 18 local insurance companies, among which being
the eight above named defendants, which issued to
him personal accident policies, upon payment of the
premium of P8.12 for each policy. Plaintiff's
beneficiary was his employer, Broadway Cotton
Factory, which paid the insurance premiums.
On December 24, 1953, a fire broke out which totally
destroyed the Broadway Cotton Factory. Fighting his
way out of the factory, plaintiff was injured on the left
hand by a heavy object. He was brought to the Manila
Central University hospital, and after receiving first aid
there, he went to the National Orthopedic Hospital for
treatment of his injuries which were as follows:
1. Fracture, simple, proximal phalanx index finger, left;
2. Fracture, compound, comminuted, proximal
phalanx, middle finger, left and 2nd phalanx, simple;
3. Fracture, compound, comminute phalanx, 4th
finger, left;
4. Fracture, simple, middle phalanx, middle finger, left;
5. Lacerated wound, sutured, volar aspect, small
finger, left;
6. Fracture, simple, chip, head, 1st phalanx, 5th digit,
left. He underwent medical treatment in the
Orthopedic Hospital from December 26, 1953 to
February 8, 1954. The above-described physical
injuries have caused temporary total disability of
plaintiff's left hand. Plaintiff filed the corresponding
notice of accident and notice of claim with all of the
abovenamed defendants to recover indemnity under
Part II of the policy, which is similarly worded in all of
the policies, and which reads pertinently as follows:
INDEMNITY FOR TOTAL OR PARTIAL DISABILITY
If the Insured sustains any Bodily Injury which is
effected solely through violent, external, visible and
accidental means, and which shall not prove fatal but
shall result, independently of all other causes and
within sixty (60) days from the occurrence thereof, in
Total or Partial Disability of the Insured, the Company
shall pay, subject to the exceptions as provided for
hereinafter, the amount set opposite such injury:
PARTIAL DISABILITY
LOSS OF:
xxx xxx xxx
Either hand
............................................................................
P650.00
xxx xxx xxx
... The loss of a hand shall mean the loss by
amputation through the bones of the wrist....
Defendants rejected plaintiff's claim for indemnity for
the reason that there being no severance of
amputation of the left hand, the disability suffered by
him was not covered by his policy. Hence, plaintiff
sued the defendants in the Municipal Court of this
City, and from the decision of said Court dismissing
his complaints, plaintiff appealed to this Court.
(Decision of the Court of First Instance of Manila, pp.
223-226, Records).
In view of its finding, the court absolved the defendants from the
complaints. Hence this appeal.
The main contention of appellant in these cases is that in order
that he may recover on the insurance policies issued him for the
loss of his left hand, it is not necessary that there should be an
amputation thereof, but that it is sufficient if the injuries prevent
him from performing his work or labor necessary in the
STAT CON 65
pursuance of his occupation or business. Authorities are cited
to the effect that "total disability" in relation to one's occupation
means that the condition of the insurance is such that common
prudence requires him to desist from transacting his business
or renders him incapable of working. (46 C.J.S., 970). It is also
argued that obscure words or stipulations should be interpreted
against the person who caused the obscurity, and the ones
which caused the obscurity in the cases at bar are the
defendant insurance companies.
While we sympathize with the plaintiff or his employer, for
whose benefit the policies were issued, we can not go beyond
the clear and express conditions of the insurance policies, all of
which define partial disability as loss of either hand
by amputation through the bones of the wrist." There was no
such amputation in the case at bar. All that was found by the
trial court, which is not disputed on appeal, was that the
physical injuries "caused temporary total disability of plaintiff's
left hand." Note that the disability of plaintiff's hand was merely
temporary, having been caused by fracture of the index, the
middle and the fourth fingers of the left hand.
We might add that the agreement contained in the insurance
policies is the law between the parties. As the terms of the
policies are clear, express and specific that only amputation of
the left hand should be considered as a loss thereof, an
interpretation that would include the mere fracture or other
temporary disability not covered by the policies would certainly
be unwarranted.
WHEREFORE, the decision appealed from is hereby affirmed,
with costs against the plaintiff-appellant.
G.R. No. L-21574 June 30, 1966
SIMON DE LA CRUZ, plaintiff and appellee,
vs.
THE CAPITAL INSURANCE and SURETY CO.,
INC., defendant and appellant.
BARRERA, J.:
This is an appeal by the Capital Insurance & Surety Company,
Inc., from the decision of the Court of First Instance of
Pangasinan (in Civ Case No. U-265), ordering it to indemnify
therein plaintiff Simon de la Cruz for the death of the latter's
son, to pay the burial expenses, and attorney's fees.

Eduardo de la Cruz, employed as a mucker in the Itogon-Suyoc
Mines, Inc. in Baguio, was the holder of an accident insurance
policy (No. ITO-BFE-170) underwritten by the Capital Insurance
& Surety Co., Inc., for the period beginning November 13, 1956
to November 12, 1957. On January 1, 1957, in connection with
the celebration of the New Year, the Itogon-Suyoc Mines, Inc.
sponsored a boxing contest for general entertainment wherein
the insured Eduardo de la Cruz, a non-professional boxer
participated. In the course of his bout with another person,
likewise a non-professional, of the same height, weight, and
size, Eduardo slipped and was hit by his opponent on the left
part of the back of the head, causing Eduardo to fall, with his
head hitting the rope of the ring. He was brought to the Baguio
General Hospital the following day. The cause of death was
reported as hemorrhage, intracranial, left.
Simon de la Cruz, the father of the insured and who was named
beneficiary under the policy, thereupon filed a claim with the
insurance company for payment of the indemnity under the
insurance policy. As the claim was denied, De la Cruz instituted
the action in the Court of First Instance of Pangasinan for
specific performance. Defendant insurer set up the defense that
the death of the insured, caused by his participation in a boxing
contest, was not accidental and, therefore, not covered by
insurance. After due hearing the court rendered the decision in
favor of the plaintiff which is the subject of the present appeal.
It is not disputed that during the ring fight with another non-
professional boxer, Eduardo slipped, which was unintentional.
At this opportunity, his opponent landed on Eduardo's head a
blow, which sent the latter to the ropes. That must have caused
the cranial injury that led to his death. Eduardo was insured
"against death or disability caused by accidental means".
Appellant insurer now contends that while the death of the
insured was due to head injury, said injury was sustained
because of his voluntary participation in the contest. It is
claimed that the participation in the boxing contest was the
"means" that produced the injury which, in turn, caused the
death of the insured. And, since his inclusion in the boxing card
was voluntary on the part of the insured, he cannot be
considered to have met his death by "accidental
means".1äwphï1.ñët
The terms "accident" and "accidental", as used in insurance
contracts, have not acquired any technical meaning, and are
construed by the courts in their ordinary and common
acceptation. Thus, the terms have been taken to mean that
which happen by chance or fortuitously, without intention and
design, and which is unexpected, unusual, and unforeseen. An
accident is an event that takes place without one's foresight or
expectation — an event that proceeds from an unknown cause,
or is an unusual effect of a known cause and, therefore, not
expected.1
Appellant however, would like to make a distinction between
"accident or accidental" and "accidental means", which is the
term used in the insurance policy involved here. It is argued that
to be considered within the protection of the policy, what is
required to be accidental is the means that caused or brought
the death and not the death itself. It may be mentioned in this
connection, that the tendency of court decisions in the United
States in recent years is to eliminate the fine distinction
between the terms "accidental" and "accidental means" and to
consider them as legally synonymous.2 But, even if we take
appellant's theory, the death of the insured in the case at bar
would still be entitled to indemnification under the policy. The
generally accepted rule is that, death or injury does not result
from accident or accidental means within the terms of an
accident-policy if it is the natural result of the insured's voluntary
act, unaccompanied by anything unforeseen except the death
or injury.3 There is no accident when a deliberate act is
performed unless some additional, unexpected, independent,
and unforeseen happening occurs which produces or brings
about the result of injury or death.4 In other words, where the
death or injury is not the natural or probable result of the
insured's voluntary act, or if something unforeseen occurs in the
doing of the act which produces the injury, the resulting death is
within the protection of policies insuring against death or injury
from accident.
In the present case, while the participation of the insured in the
boxing contest is voluntary, the injury was sustained when he
slid, giving occasion to the infliction by his opponent of the blow
that threw him to the ropes of the ring. Without this unfortunate
incident, that is, the unintentional slipping of the deceased,
perhaps he could not have received that blow in the head and
would not have died. The fact that boxing is attended with some
risks of external injuries does not make any injuries received in
the course of the game not accidental. In boxing as in other
equally physically rigorous sports, such as basketball or
baseball, death is not ordinarily anticipated to result. If,
therefore, it ever does, the injury or death can only be
accidental or produced by some unforeseen happening or event
as what occurred in this case.
Furthermore, the policy involved herein specifically excluded
from its coverage —
(e) Death or disablement consequent upon the
Insured engaging in football, hunting, pigsticking,
STAT CON 66
steeplechasing, polo-playing, racing of any kind,
mountaineering, or motorcycling.
Death or disablement resulting from engagement in boxing
contests was not declared outside of the protection of the
insurance contract. Failure of the defendant insurance company
to include death resulting from a boxing match or other sports
among the prohibitive risks leads inevitably to the conclusion
that it did not intend to limit or exempt itself from liability for
such death.5
Wherefore, in view of the foregoing considerations, the decision
appealed from is hereby affirmed, with costs against appellant.
so ordered.
G.R. No. L-4611 December 17, 1955
QUA CHEE GAN, plaintiff-appellee,
vs.
LAW UNION AND ROCK INSURANCE CO., LTD.,
represented by its agent, WARNER, BARNES AND CO.,
LTD., defendant-appellant.
REYES, J. B. L., J.:
Qua Chee Gan, a merchant of Albay, instituted this action in
1940, in the Court of First Instance of said province, seeking to
recover the proceeds of certain fire insurance policies totalling
P370,000, issued by the Law Union & Rock Insurance Co., Ltd.,
upon certain bodegas and merchandise of the insured that were
burned on June 21, 1940. The records of the original case were
destroyed during the liberation of the region, and were
reconstituted in 1946. After a trial that lasted several years, the
Court of First Instance rendered a decision in favor of the
plaintiff, the dispositive part whereof reads as follows:
Wherefore, judgment is rendered for the plaintiff and
against the defendant condemning the latter to pay
the former —
(a) Under the first cause of action, the sum of
P146,394.48;
(b) Under the second cause of action, the sum of
P150,000;
(c) Under the third cause of action, the sum of P5,000;

(d) Under the fourth cause of action, the sum of
P15,000; and
(e) Under the fifth cause of action, the sum of
P40,000;
all of which shall bear interest at the rate of 8% per annum in
accordance with Section 91 (b) of the Insurance Act from
September 26, 1940, until each is paid, with costs against the
defendant.
The complaint in intervention of the Philippine National Bank is
dismissed without costs. (Record on Appeal, 166-167.)
From the decision, the defendant Insurance Company appealed
directly to this Court.
The record shows that before the last war, plaintiff-appellee
owned four warehouses or bodegas (designated as Bodegas
Nos. 1 to 4) in the municipality of Tabaco, Albay, used for the
storage of stocks of copra and of hemp, baled and loose, in
which the appellee dealth extensively. They had been, with their
contents, insured with the defendant Company since 1937, and
the lose made payable to the Philippine National Bank as
mortgage of the hemp and crops, to the extent of its interest.
On June, 1940, the insurance stood as follows:
Policy No. Property Insured
2637164 (Exhibit "LL") Bodega No. 1 (Building)
Bodega No. 2 (Building)
Bodega No. 3 (Building)
2637165 (Exhibit "JJ")
Bodega No. 4 (Building)
Hemp Press — moved by steam engine
2637345 (Exhibit "X")
Merchandise contents (copra and empty sacks
2637346 (Exhibit "Y")
Merchandise contents (hemp) of Bodega No. 3
2637067 (Exhibit "GG")
Merchandise contents (loose hemp) of Bodega
Total
Fire of undetermined origin that broke out in the early morning
of July 21, 1940, and lasted almost one week, gutted and
completely destroyed Bodegas Nos. 1, 2 and 4, with the
merchandise stored theren. Plaintiff-appellee informed the
insurer by telegram on the same date; and on the next day, the
fire adjusters engaged by appellant insurance company arrived
and proceeded to examine and photograph the premises, pored
over the books of the insured and conducted an extensive
investigation. The plaintiff having submitted the corresponding
fire claims, totalling P398,562.81 (but reduced to the full amount
of the insurance, P370,000), the Insurance Company resisted
payment, claiming violation of warranties and conditions, filing
of fraudulent claims, and that the fire had been deliberately
caused by the insured or by other persons in connivance with
him.
With counsel for the insurance company acting as private
prosecutor, Que Chee Gan, with his brother, Qua Chee Pao,
and some employees of his, were indicted and tried in 1940 for
the crime of arson, it being claimed that they had set fire to the
destroyed warehouses to collect the insurance. They were,
however, acquitted by the trial court in a final decision dated
July 9, 1941 (Exhibit WW). Thereafter, the civil suit to collect the
insurance money proceeded to its trial and termination in the
Court below, with the result noted at the start of this opinion.
The Philippine National Bank's complaint in intervention was
dismissed because the appellee had managed to pay his
indebtedness to the Bank during the pendecy of the suit, and
despite the fire losses.
Amount
In its first assignment of error, the insurance company alleges
that the trial Court should have held that the policies were
P15,000.00
avoided for breach of warranty, specifically the one appearing
on a rider pasted (with other similar riders) on the face of the
10,000.00
policies (Exhibits X, Y, JJ and LL). These riders were attached
for the first time in 1939, and the pertinent25,000.00
portions read as
follows:
10,000.00
Memo. of Warranty. — The undernoted Appliances for
5,000.00
the extinction of fire being kept on the premises
insured
hereby, No.
of Bodega and1) it being declared and understood
150,000.00
that there is an ample and constant water supply with
sufficient
pressure available at all seasons for the
150,000.00
same, it is hereby warranted that the said appliances
shall No.
be maintained
4 in efficient working
5,000.00order during
the currency of this policy, by reason whereof a
discount of 2 1/2 per cent is allowed on the premium
chargeable under this policy. P370,000.00
STAT CON 67
Hydrants in the compound, not less in number than
one for each 150 feet of external wall measurement of
building, protected, with not less than 100 feet of hose
piping and nozzles for every two hydrants kept under
cover in convenient places, the hydrants being
supplied with water pressure by a pumping engine, or
from some other source, capable of discharging at the
rate of not less than 200 gallons of water per minute
into the upper story of the highest building protected,
and a trained brigade of not less than 20 men to work
the same.'
It is argued that since the bodegas insured had an external wall
perimeter of 500 meters or 1,640 feet, the appellee should have
eleven (11) fire hydrants in the compound, and that he actually
had only two (2), with a further pair nearby, belonging to the
municipality of Tabaco.
We are in agreement with the trial Court that the appellant is
barred by waiver (or rather estoppel) to claim violation of the so-
called fire hydrants warranty, for the reason that knowing fully
all that the number of hydrants demanded therein never existed
from the very beginning, the appellant neverthless issued the
policies in question subject to such warranty, and received the
corresponding premiums. It would be perilously close to
conniving at fraud upon the insured to allow appellant to claims
now as void ab initio the policies that it had issued to the
plaintiff without warning of their fatal defect, of which it was
informed, and after it had misled the defendant into believing
that the policies were effective.
The insurance company was aware, even before the policies
were issued, that in the premises insured there were only two
fire hydrants installed by Qua Chee Gan and two others nearby,
owned by the municipality of TAbaco, contrary to the
requirements of the warranty in question. Such fact appears
from positive testimony for the insured that appellant's agents
inspected the premises; and the simple denials of appellant's
representative (Jamiczon) can not overcome that proof. That
such inspection was made is moreover rendered probable by its
being a prerequisite for the fixing of the discount on the
premium to which the insured was entitled, since the discount
depended on the number of hydrants, and the fire fighting
equipment available (See "Scale of Allowances" to which the
policies were expressly made subject). The law, supported by a
long line of cases, is expressed by American Jurisprudence
(Vol. 29, pp. 611-612) to be as follows:
It is usually held that where the insurer, at the time of
the issuance of a policy of insurance, has knowledge

of existing facts which, if insisted on, would invalidate
the contract from its very inception, such knowledge
constitutes a waiver of conditions in the contract
inconsistent with the facts, and the insurer is stopped
thereafter from asserting the breach of such
conditions. The law is charitable enough to assume, in
the absence of any showing to the contrary, that an
insurance company intends to executed a valid
contract in return for the premium received; and when
the policy contains a condition which renders it
voidable at its inception, and this result is known to
the insurer, it will be presumed to have intended to
waive the conditions and to execute a binding
contract, rather than to have deceived the insured into
thinking he is insured when in fact he is not, and to
have taken his money without consideration. (29 Am.
Jur., Insurance, section 807, at pp. 611-612.)
The reason for the rule is not difficult to find.
The plain, human justice of this doctrine is perfectly
apparent. To allow a company to accept one's money
for a policy of insurance which it then knows to be
void and of no effect, though it knows as it must, that
the assured believes it to be valid and binding, is so
contrary to the dictates of honesty and fair dealing,
and so closely related to positive fraud, as to the
abhorent to fairminded men. It would be to allow the
company to treat the policy as valid long enough to
get the preium on it, and leave it at liberty to repudiate
it the next moment. This cannot be deemed to be the
real intention of the parties. To hold that a literal
construction of the policy expressed the true intention
of the company would be to indict it, for fraudulent
purposes and designs which we cannot believe it to
be guilty of (Wilson vs. Commercial Union Assurance
Co., 96 Atl. 540, 543-544).
The inequitableness of the conduct observed by the insurance
company in this case is heightened by the fact that after the
insured had incurred the expense of installing the two hydrants,
the company collected the premiums and issued him a policy so
worded that it gave the insured a discount much smaller than
that he was normaly entitledto. According to the "Scale of
Allowances," a policy subject to a warranty of the existence of
one fire hydrant for every 150 feet of external wall entitled the
insured to a discount of 7 1/2 per cent of the premium; while the
existence of "hydrants, in compund" (regardless of number)
reduced the allowance on the premium to a mere 2 1/2 per
cent. This schedule was logical, since a greater number of
hydrants and fire fighting appliances reduced the risk of loss.
But the appellant company, in the particular case now before
us, so worded the policies that while exacting the greater
number of fire hydrants and appliances, it kept the premium
discount at the minimum of 2 1/2 per cent, thereby giving the
insurance company a double benefit. No reason is shown why
appellant's premises, that had been insured with appellant for
several years past, suddenly should be regarded in 1939 as so
hazardous as to be accorded a treatment beyond the limits of
appellant's own scale of allowances. Such abnormal treatment
of the insured strongly points at an abuse of the insurance
company's selection of the words and terms of the contract,
over which it had absolute control.
These considerations lead us to regard the parol evidence rule,
invoked by the appellant as not applicable to the present case.
It is not a question here whether or not the parties may vary a
written contract by oral evidence; but whether testimony is
receivable so that a party may be, by reason of inequitable
conduct shown, estopped from enforcing forfeitures in its favor,
in order to forestall fraud or imposition on the insured.
Receipt of Premiums or Assessments afte Cause for
Forfeiture Other than Nonpayment. — It is a well
settled rule of law that an insurer which with
knowledge of facts entitling it to treat a policy as no
longer in force, receives and accepts a preium on the
policy, estopped to take advantage of the forfeiture. It
cannot treat the policy as void for the purpose of
defense to an action to recover for a loss thereafter
occurring and at the same time treat it as valid for the
purpose of earning and collecting further premiums."
(29 Am. Jur., 653, p. 657.)
It would be unconscionable to permit a company to
issue a policy under circumstances which it knew
rendered the policy void and then to accept and retain
premiums under such a void policy. Neither law nor
good morals would justify such conduct and the
doctrine of equitable estoppel is peculiarly applicable
to the situation. (McGuire vs. Home Life Ins. Co. 94
Pa. Super Ct. 457.)
Moreover, taking into account the well known rule that
ambiguities or obscurities must be strictly interpreted aganst the
prty that caused them, 1the "memo of warranty" invoked by
appellant bars the latter from questioning the existence of the
appliances called for in the insured premises, since its initial
expression, "the undernoted appliances for the extinction of
fire being kept on the premises insured hereby, . . . it is hereby
warranted . . .", admists of interpretation as an admission of the
STAT CON 68
existence of such appliances which appellant cannot now
contradict, should the parol evidence rule apply.
The alleged violation of the warranty of 100 feet of fire hose for
every two hydrants, must be equally rejected, since the
appellant's argument thereon is based on the assumption that
the insured was bound to maintain no less than eleven hydrants
(one per 150 feet of wall), which requirement appellant is
estopped from enforcing. The supposed breach of the wter
pressure condition is made to rest on the testimony of witness
Serra, that the water supply could fill a 5-gallon can in 3
seconds; appellant thereupon inferring that the maximum
quantity obtainable from the hydrants was 100 gallons a minute,
when the warranty called for 200 gallons a minute. The
transcript shows, however, that Serra repeatedly refused and
professed inability to estimate the rate of discharge of the
water, and only gave the "5-gallon per 3-second" rate because
the insistence of appellant's counsel forced the witness to
hazard a guess. Obviously, the testimony is worthless and
insufficient to establish the violation claimed, specially since the
burden of its proof lay on appellant.
As to maintenance of a trained fire brigade of 20 men, the
record is preponderant that the same was organized, and
drilled, from time to give, altho not maintained as a permanently
separate unit, which the warranty did not require. Anyway, it
would be unreasonable to expect the insured to maintain for his
compound alone a fire fighting force that many municipalities in
the Islands do not even possess. There is no merit in
appellant's claim that subordinate membership of the business
manager (Co Cuan) in the fire brigade, while its direction was
entrusted to a minor employee unders the testimony
improbable. A business manager is not necessarily adept at fire
fighting, the qualities required being different for both activities.
Under the second assignment of error, appellant insurance
company avers, that the insured violated the "Hemp Warranty"
provisions of Policy No. 2637165 (Exhibit JJ), against the
storage of gasoline, since appellee admitted that there were 36
cans (latas) of gasoline in the building designed as "Bodega No.
2" that was a separate structure not affected by the fire. It is
well to note that gasoline is not specifically mentioned among
the prohibited articles listed in the so-called "hemp warranty."
The cause relied upon by the insurer speaks of "oils (animal
and/or vegetable and/or mineral and/or their liquid products
having a flash point below 300o Fahrenheit", and is decidedly
ambiguous and uncertain; for in ordinary parlance, "Oils" mean
"lubricants" and not gasoline or kerosene. And how many
insured, it may well be wondered, are in a position to
understand or determine "flash point below 003o Fahrenheit.
Here, again, by reason of the exclusive control of the insurance

company over the terms and phraseology of the contract, the
ambiguity must be held strictly against the insurer and liberraly
in favor of the insured, specially to avoid a forfeiture (44 C. J.
S., pp. 1166-1175; 29 Am. Jur. 180).
Insurance is, in its nature, complex and difficult for the
layman to understand. Policies are prepared by
experts who know and can anticipate the hearing and
possible complications of every contingency. So long
as insurance companies insist upon the use of
ambiguous, intricate and technical provisions, which
conceal rather than frankly disclose, their own
intentions, the courts must, in fairness to those who
purchase insurance, construe every ambiguity in favor
of the insured. (Algoe vs. Pacific Mut. L. Ins. Co., 91
Wash. 324, LRA 1917A, 1237.)
An insurer should not be allowed, by the use of
obscure phrases and exceptions, to defeat the very
purpose for which the policy was procured (Moore vs.
Aetna Life Insurance Co., LRA 1915D, 264).
We see no reason why the prohibition of keeping gasoline in
the premises could not be expressed clearly and unmistakably,
in the language and terms that the general public can readily
understand, without resort to obscure esoteric expression (now
derisively termed "gobbledygook"). We reiterate the rule stated
in Bachrach vs. British American Assurance Co. (17 Phil. 555,
561):
If the company intended to rely upon a condition of
that character, it ought to have been plainly expressed
in the policy.
This rigid application of the rule on ambiguities has become
necessary in view of current business practices. The courts
cannot ignore that nowadays monopolies, cartels and
concentrations of capital, endowed with overwhelming
economic power, manage to impose upon parties dealing with
them cunningly prepared "agreements" that the weaker party
may not change one whit, his participation in the "agreement"
being reduced to the alternative to take it or leave it" labelled
since Raymond Baloilles" contracts by adherence" (con tracts
d'adhesion), in contrast to these entered into by parties
bargaining on an equal footing, such contracts (of which
policies of insurance and international bills of lading are prime
examples) obviously call for greater strictness and vigilance on
the part of courts of justice with a view to protecting the weaker
party from abuses and imposition, and prevent their becoming
traps for the unwarry (New Civil Coee, Article 24; Sent. of
Supreme Court of Spain, 13 Dec. 1934, 27 February 1942).
If it could be considered that condition 18 of the insurance
policy engulfed some darkness, it will have to be taken into
account that the insurance is, practically a contract of the
accession calls and therefore in case of doubt as to the
significance of the general clauses of a policy — drafted by
the partners without the intervention of their customers
— must be adopted in accordance with article 1268 of the
Civil Code, the interpretation more favourable to the
insured, since the darkness is attributable to the insurer,
which must be adopted in accordance with article 1268 of
the Civil Code, the interpretation more favourable to the
insured person, since the obscurity is attributable to the
insurer, which must be adopted in accordance with article
1268 of the Civil Code, the interpretation more favourable
to the explained more clearlybefore. (Dec. Trib. Sup. of
Spain 13 Dec. 1934)
The contract of insurance is one of perfect good faith (uferrimal
fidei) not for the insured alone, but equally so for the insurer; in
fact, it is mere so for the latter, since its dominant bargaining
position carries with it stricter responsibility.
Another point that is in favor of the insured is that the gasoline
kept in Bodega No. 2 was only incidental to his business, being
no more than a customary 2 day's supply for the five or six
motor vehicles used for transporting of the stored merchandise
(t. s. n., pp. 1447-1448). "It is well settled that the keeping of
inflammable oils on the premises though prohibited by the
policy does not void it if such keeping is incidental to the
business." Bachrach vs. British American Ass. Co., 17 Phil.
555, 560); and "according to the weight of authority, even
though there are printed prohibitions against keeping certain
articles on the insured premises the policy will not be avoided
by a violation of these prohibitions, if the prohibited articles are
necessary or in customary use in carrying on the trade or
business conducted on the premises." (45 C. J. S., p. 311; also
4 Couch on Insurance, section 966b). It should also be noted
that the "Hemp Warranty" forbade storage only "in the building
to which this insurance applies and/or in any building
communicating therewith", and it is undisputed that no gasoline
was stored in the burned bodegas, and that "Bodega No. 2"
which was not burned and where the gasoline was found, stood
isolated from the other insured bodegas.
The charge that the insured failed or refused to submit to the
examiners of the insurer the books, vouchers, etc. demanded
STAT CON 69
by them was found unsubstantiated by the trial Court, and no
reason has been shown to alter this finding. The insured gave
the insurance examiner all the date he asked for (Exhibits AA,
BB, CCC and Z), and the examiner even kept and
photographed some of the examined books in his possession.
What does appear to have been rejected by the insured was
the demand that he should submit "a list of all books, vouchers,
receipts and other records" (Age 4, Exhibit 9-c); but the refusal
of the insured in this instance was well justified, since the
demand for a list of all the vouchers (which were not in use by
the insured) and receipts was positively unreasonable,
considering that such listing was superfluous because the
insurer was not denied access to the records, that the volume
of Qua Chee Gan's business ran into millions, and that the
demand was made just after the fire when everything was in
turmoil. That the representatives of the insurance company
were able to secure all the date they needed is proved by the
fact that the adjuster Alexander Stewart was able to prepare his
own balance sheet (Exhibit L of the criminal case) that did not
differ from that submitted by the insured (Exhibit J) except for
the valuation of the merchandise, as expressly found by the
Court in the criminal case for arson. (Decision, Exhibit WW).
How valuations may differ honestly, without fraud being
involved, was strikingly illustrated in the decision of the arson
case (Exhibit WW) acquiting Qua Choc Gan, appellee in the
present proceedings. The decision states (Exhibit WW, p. 11):
Alexander D. Stewart stated that he has examined Qua
Choc Gan's tobacco books as well as his existence of copra
and abaca in the cellars at the time of the fireduring the
period from January 1 to June 21, 1940, and has found that
Qua Choc Gan has suffered a P1,750.76 loss in its Tobacco
business. According to Steward in reaching this conclusion
he has taken into account the check balance Exhibit 'J' that
has been given to him by the same defendant Que Choc
Gan in relation to his books and found it correct except for
the prices of abaca and copra that there appear that do
not agree with the prices in the market. This check appears
on the market balance exhibit J which was prepared by the
same witness.
In view of the discrepancy in the valuations between the insured
and the adjuster Stewart for the insurer, the Court referred the
controversy to a government auditor, Apolonio Ramos; but the
latter reached a different result from the other two. Not only
that, but Ramos reported two different valuations that could be
reached according to the methods employed (Exhibit WW, p.
35):

The science of accounting is good, as it has had its many
good uses to promote trade and finance, but in the
present case it has been somewhat fulfilled and
accommodating, as evidenced by the result of the
examination done by the accountants Stewart and Ramos ,
since the court does not see how having examined the
same items and the same books those accountants have to
reach two conclusions which differed substantially from
each other. In other words, not only does the check done
by Stewart differ from the check done by Ramos, but
according to the latter, its verification has resulted in two
different results depending on the method being used.
Clearly then, the charge of fraudulent overvaluation cannot be
seriously entertained. The insurer attempted to bolster its case
with alleged photographs of certain pages of the insurance
book (destroyed by the war) of insured Qua Chee Gan (Exhibits
26-A and 26-B) and allegedly showing abnormal purchases of
hemp and copra from June 11 to June 20, 1940. The Court
below remained unconvinced of the authenticity of those
photographs, and rejected them, because they were not
mentioned not introduced in the criminal case; and considering
the evident importance of said exhibits in establishing the
motive of the insured in committing the arson charged, and the
absence of adequate explanation for their omission in the
criminal case, we cannot say that their rejection in the civil case
constituted reversible error.
The next two defenses pleaded by the insurer, — that the
insured connived at the loss and that the fraudulently inflated
the quantity of the insured stock in the burnt bodegas, — are
closely related to each other. Both defenses are predicted on
the assumption that the insured was in financial difficulties and
set the fire to defraud the insurance company, presumably in
order to pay off the Philippine National Bank, to which most of
the insured hemp and copra was pledged. Both defenses are
fatally undermined by the established fact that, notwithstanding
the insurer's refusal to pay the value of the policies the
extensive resources of the insured (Exhibit WW) enabled him to
pay off the National Bank in a short time; and if he was able to
do so, no motive appears for attempt to defraud the insurer.
While the acquittal of the insured in the arson case is not res
judicata on the present civil action, the insurer's evidence, to
judge from the decision in the criminal case, is practically
identical in both cases and must lead to the same result, since
the proof to establish the defense of connivance at the fire in
order to defraud the insurer "cannot be materially less
convincing than that required in order to convict the insured of
the crime of arson"(Bachrach vs. British American Assurance
Co., 17 Phil. 536).
As to the defense that the burned bodegas could not possibly
have contained the quantities of copra and hemp stated in the
fire claims, the insurer's case rests almost exclusively on the
estimates, inferences and conclusionsAs to the defense that the
burned bodegas could not possibly have contained the
quantities of copra and hemp stated in the fire claims, the
insurer's case rests almost exclusively on the estimates,
inferences and conclusions of its adjuster investigator,
Alexander D. Stewart, who examined the premises during and
after the fire. His testimony, however, was based on inferences
from the photographs and traces found after the fire, and must
yield to the contradictory testimony of engineer Andres Bolinas,
and specially of the then Chief of the Loan Department of the
National Bank's Legaspi branch, Porfirio Barrios, and of Bank
Appraiser Loreto Samson, who actually saw the contents of the
bodegas shortly before the fire, while inspecting them for the
mortgagee Bank. The lower Court was satisfied of the veracity
and accuracy of these witnesses, and the appellant insurer has
failed to substantiate its charges aganst their character. In fact,
the insurer's repeated accusations that these witnesses were
later "suspended for fraudulent transactions" without giving any
details, is a plain attempt to create prejudice against them,
without the least support in fact.
Stewart himself, in testifying that it is impossible to determine
from the remains the quantity of hemp burned (t. s. n., pp. 1468,
1470), rebutted appellant's attacks on the refusal of the Court
below to accept its inferences from the remains shown in the
photographs of the burned premises. It appears, likewise, that
the adjuster's calculations of the maximum contents of the
destroyed warehouses rested on the assumption that all the
copra and hemp were in sacks, and on the result of his
experiments to determine the space occupied by definite
amounts of sacked copra. The error in the estimates thus
arrived at proceeds from the fact that a large amount of the
insured's stock were in loose form, occupying less space than
when kept in sacks; and from Stewart's obvious failure to give
due allowance for the compression of the material at the bottom
of the piles (t. s. n., pp. 1964, 1967) due to the weight of the
overlying stock, as shown by engineer Bolinas. It is probable
that the errors were due to inexperience (Stewart himself
admitted that this was the first copra fire he had investigated);
but it is clear that such errors render valueles Stewart's
computations. These were in fact twice passed upon and twice
rejected by different judges (in the criminal and civil cases) and
their concordant opinion is practically conclusive.
The adjusters' reports, Exhibits 9-A and 9-B, were correctly
disregarded by the Court below, since the opinions stated
therein were based on ex parte investigations made at the back
of the insured; and the appellant did not present at the trial the
STAT CON 70
original testimony and documents from which the conclusions in
the report were drawn.lawphi1.net
Appellant insurance company also contends that the claims
filed by the insured contained false and fraudulent statements
that avoided the insurance policy. But the trial Court found that
the discrepancies were a result of the insured's erroneous
interpretation of the provisions of the insurance policies and
claim forms, caused by his imperfect knowledge of English, and
that the misstatements were innocently made and without intent
to defraud. Our review of the lengthy record fails to disclose
reasons for rejecting these conclusions of the Court below. For
example, the occurrence of previous fires in the premises
insured in 1939, altho omitted in the claims, Exhibits EE and
FF, were nevertheless revealed by the insured in his claims
Exhibits Q (filed simultaneously with them), KK and WW.
Considering that all these claims were submitted to the smae
agent, and that this same agent had paid the loss caused by
the 1939 fire, we find no error in the trial Court's acceptance of
the insured's explanation that the omission in Exhibits EE and
FF was due to inadvertance, for the insured could hardly expect
under such circumstances, that the 1939 would pass unnoticed
by the insurance agents. Similarly, the 20 per cent overclaim on
70 per cent of the hemo stock, was explained by the insured as
caused by his belief that he was entitled to include in the claim
his expected profit on the 70 per cent of the hemp, because the
same was already contracted for and sold to other parties
before the fire occurred. Compared with other cases of over-
valuation recorded in our judicial annals, the 20 per cent excess
in the case of the insured is not by itself sufficient to establish
fraudulent intent. Thus, in Yu Cua vs. South British Ins. Co., 41
Phil. 134, the claim was fourteen (14) times (1,400 per cent)
bigger than the actual loss; in Go Lu vs. Yorkshire Insurance
Co., 43 Phil., 633, eight (8) times (800 per cent); in Tuason vs.
North China Ins. Co., 47 Phil. 14, six (6) times (600 per cent); in
Tan It vs. Sun Insurance, 51 Phil. 212, the claim totalled
P31,860.85 while the goods insured were inventoried at
O13,113. Certainly, the insured's overclaim of 20 per cent in the
case at bar, duly explained by him to the Court a quo, appears
puny by comparison, and can not be regarded as "more than
misstatement, more than inadvertence of mistake, more than a
mere error in opinion, more than a slight exaggeration" (Tan It
vs. Sun Insurance Office, ante) that would entitle the insurer to
avoid the policy. It is well to note that the overchange of 20 per
cent was claimed only on a part (70 per cent) of the hemp
stock; had the insured acted with fraudulent intent, nothing
prevented him from increasing the value of all of his copra,
hemp and buildings in the same proportion. This also applies to
the alleged fraudulent claim for burned empty sacks, that was
likewise explained to our satisfaction and that of the trial Court.
The rule is that to avoid a policy, the false swearing must be

wilful and with intent to defraud (29 Am. Jur., pp. 849-851)
which was not the cause. Of course, the lack of fraudulent
intent would not authorize the collection of the expected profit
under the terms of the polices, and the trial Court correctly
deducte the same from its award.
We find no reversible error in the judgment appealed from,
wherefore the smae is hereby affirmed. Costs against the
appellant. So ordered.
G.R. No. L-34382 July 20, 1983
THE HOME INSURANCE COMPANY, petitioner,
vs.
EASTERN SHIPPING LINES and/or ANGEL JOSE
TRANSPORTATION, INC. and HON. A. MELENCIO-
HERRERA, Presiding Judge of the Manila Court of First
Instance, Branch XVII, respondents.
GUTIERREZ, JR., J.:
Questioned in these consolidated petitions for review on
certiorari are the decisions of the Court of First Instance of
Manila, Branch XVII, dismissing the complaints in Civil Case
No. 71923 and in Civil Case No. 71694, on the ground that
plaintiff therein, now appellant, had failed to prove its capacity
to sue.
There is no dispute over the facts of these cases for recovery of
maritime damages. In L-34382, the facts are found in the
decision of the respondent court which stated:
On or about January 13, 1967, S. Kajita &
Co., on behalf of Atlas Consolidated Mining
& Development Corporation, shipped on
board the SS "Eastern Jupiter' from Osaka,
Japan, 2,361 coils of "Black Hot Rolled
Copper Wire Rods." The said VESSEL is
owned and operated by defendant Eastern
Shipping Lines (CARRIER). The shipment
was covered by Bill of Lading No. O-MA-9,
with arrival notice to Phelps Dodge Copper
Products Corporation of the Philippines
(CONSIGNEE) at Manila. The shipment was
insured with plaintiff against all risks in the
amount of P1,580,105.06 under its
Insurance Policy No. AS-73633.
xxx xxx xxx
The coils discharged from the VESSEL
numbered 2,361, of which 53 were in bad
order. What the CONSIGNEE ultimately
received at its warehouse was the same
number of 2,361 coils with 73 coils loose
and partly cut, and 28 coils entangled, partly
cut, and which had to be considered as
scrap. Upon weighing at CONSIGNEE's
warehouse, the 2,361 coils were found to
weight 263,940.85 kilos as against its
invoiced weight of 264,534.00 kilos or a net
loss/shortage of 593.15 kilos, according to
Exhibit "A", or 1,209,56 lbs., according to the
claims presented by the consignee against
the plaintiff (Exhibit "D-1"), the CARRIER
(Exhibit "J-1"), and the TRANSPORTATION
COMPANY (Exhibit "K- l").
For the loss/damage suffered by the cargo,
plaintiff paid the consignee under its
insurance policy the amount of P3,260.44,
by virtue of which plaintiff became
subrogated to the rights and actions of the
CONSIGNEE. Plaintiff made demands for
payment against the CARRIER and the
TRANSPORTATION COMPANY for
reimbursement of the aforesaid amount but
each refused to pay the same. ...
The facts of L-34383 are found in the decision of the lower court
as follows:
On or about December 22, 1966, the Hansa
Transport Kontor shipped from Bremen,
Germany, 30 packages of Service Parts of
Farm Equipment and Implements on board
the VESSEL, SS "NEDER RIJN" owned by
the defendant, N. V. Nedlloyd Lijnen, and
represented in the Philippines by its local
agent, the defendant Columbian Philippines,
Inc. (CARRIER). The shipment was covered
by Bill of Lading No. 22 for transportation to,
and delivery at, Manila, in favor of the
consignee, international Harvester Macleod,
Inc. (CONSIGNEE). The shipment was
insured with plaintiff company under its
Cargo Policy No. AS-73735 "with average
terms" for P98,567.79.
STAT CON 71
xxx xxx xxx
The packages discharged from the VESSEL
numbered 29, of which seven packages
were found to be in bad order. What the
CONSIGNEE ultimately received at its
warehouse was the same number of 29
packages with 9 packages in bad order. Out
of these 9 packages, 1 package was
accepted by the CONSIGNEE in good order
due to the negligible damages sustained.
Upon inspection at the consignee's
warehouse, the contents of 3 out of the 8
cases were also found to be complete and
intact, leaving 5 cases in bad order. The
contents of these 5 packages showed
several items missing in the total amount of
$131.14; while the contents of the
undelivered 1 package were valued at
$394.66, or a total of $525.80 or P2,426.98.
For the short-delivery of 1 package and the
missing items in 5 other packages, plaintiff
paid the CONSIGNEE under its Insurance
Cargo Policy the amount of P2,426.98, by
virtue of which plaintiff became subrogated
to the rights and actions of the
CONSIGNEE. Demands were made on
defendants CARRIER and CONSIGNEE for
reimbursement thereof but they failed and
refused to pay the same.
In both cases, the petitioner-appellant made the following
averment regarding its capacity to sue:
The plaintiff is a foreign insurance company duly authorized to
do business in the Philippines through its agent, Mr. VICTOR H.
BELLO, of legal age and with office address at Oledan Building,
Ayala Avenue, Makati, Rizal.
In L-34382, the respondent-appellee Eastern Shipping Lines,
Inc., filed its answer and alleged that it:
Denies the allegations of Paragraph I which refer to plaintiff's
capacity to sue for lack of knowledge or information sufficient to
form a belief as to the truth thereof.
Respondent-appellee, Angel Jose Transportation, Inc., in turn
filed its answer admitting the allegations of the complaint,

regarding the capacity of plaintiff-appellant. The pertinent
paragraph of this answer reads as follows:
Angel Jose Admits the jurisdictional averments in paragraphs 1,
2, and 3 of the heading Parties.
In L-34383, the respondents-appellees N. V. Nedlloyd Lijhen,
Columbian Philippines, Inc. and Guacods, Inc., filed their
answers. They denied the petitioner-appellant's capacity to sue
for lack of knowledge or information sufficient to form a belief as
to the truth thereof.
As earlier stated, the respondent court dismissed the
complaints in the two cases on the same ground, that the
plaintiff failed to prove its capacity to sue. The court reasoned
as follows:
In the opinion of the Court, if plaintiff had the capacity to
sue, the Court should hold that a) defendant Eastern Shipping
Lines should pay plaintiff the sum of P1,630.22 with interest at
the legal rate from January 5, 1968, the date of the institution of
the Complaint, until fully paid; b) defendant Angel Jose
Transportation, Inc. should pay plaintiff the sum of P1,630.22
also with interest at the legal rate from January 5, 1968 until
fully paid; c) the counterclaim of defendant Angel Jose
transportation, Inc. should be ordered dismissed; and d) each
defendant to pay one-half of the costs.
The Court is of the opinion that Section 68 of the Corporation
Law reflects a policy designed to protect the public interest.
Hence, although defendants have not raised the question of
plaintiff's compliance with that provision of law, the Court has
resolved to take the matter into account.
A suing foreign corporation, like plaintiff, has to plead
affirmatively and prove either that the transaction upon which it
bases its complaint is an isolated one, or that it is licensed to
transact business in this country, failing which, it will be deemed
that it has no valid cause of action (Atlantic Mutual Ins. Co. vs.
Cebu Stevedoring Co., Inc., 17 SCRA 1037). In view of the
number of cases filed by plaintiff before this Court, of which
judicial cognizance can be taken, and under the ruling in Far
East International Import and Export Corporation vs. Hankai
Koayo Co., 6 SCRA 725, it has to be held that plaintiff is doing
business in the Philippines. Consequently, it must have a
license under Section 68 of the Corporation Law before it can
be allowed to sue.
The situation of plaintiff under said Section 68 has been
described as follows in Civil Case No. 71923 of this Court,
entitled 'Home Insurance Co. vs. N. V. Nedlloyd Lijnen, of which
judicial cognizance can also be taken:
Exhibit "R",presented by plaintiff is a certified
copy of a license, dated July 1, 1967, issued by the Office of
the Insurance Commissioner authorizing plaintiff to transact
insurance business in this country. By virtue of Section 176 of
the Insurance Law, it has to be presumed that a license to
transact business under Section 68 of the Corporation Law
had previously been issued to plaintiff. No copy thereof,
however, was submitted for a reason unknown. The date of
that license must not have been much anterior to July 1,
1967. The preponderance of the evidence would therefore
call for the finding that the insurance contract involved in this
case, which was executed at Makati, Rizal, on February 8,
1967, was contracted before plaintiff was licensed to transact
business in the Philippines.
This Court views Section 68 of the Corporation Law as
reflective of a basic public policy. Hence, it is of the
opinion that, in the eyes of Philippine law, the insurance
contract involved in this case must be held void under
the provisions of Article 1409 (1) of the Civil Code, and
could not be validated by subsequent procurement of
the license. That view of the Court finds support in the
following citation:
According to many authorities, a constitutional or statutory
prohibition against a foreign corporation doing business in
the state, unless such corporation has complied with
conditions prescribed, is effective to make the contracts of
such corporation void, or at least unenforceable, and
prevents the maintenance by the corporation of any action
on such contracts. Although the usual construction is to the
contrary, and to the effect that only the remedy for
enforcement is affected thereby, a statute prohibiting a non-
complying corporation from suing in the state courts on any
contract has been held by some courts to render the
contract void and unenforceable by the corporation, even
after its has complied with the statute." (36 Am. Jur. 2d 299-
300).
xxx xxx xxx
The said Civil Case No. 71923 was
dismissed by this Court. As the insurance
contract involved herein was executed on
STAT CON 72
January 20, 1967, the instant case should
also be dismissed.
We resolved to consolidate the two cases when we gave due
course to the petition.
The petitioner raised the following assignments of errors:
First Assignment of Error
THE HONORABLE TRIAL COURT ERRED
IN CONSIDERING AS AN ISSUE THE
LEGAL EXISTENCE OR CAPACITY OF
PLAINTIFF-APPELLANT.
Second Assignment of Error
THE HONORABLE TRIAL COURT ERRED
IN DISMISSING THE COMPLAINT ON THE
FINDING THAT PLAINTIFF-APPELLANT
HAS NO CAPACITY TO SUE.
On the basis of factual and equitable considerations, there is no
question that the private respondents should pay the obligations
found by the trial court as owing to the petitioner. Only the
question of validity of the contracts in relation to lack of capacity
to sue stands in the way of the petitioner being given the
affirmative relief it seeks. Whether or not the petitioner was
engaged in single acts or solitary transactions and not engaged
in business is likewise not in issue. The petitioner was engaged
in business without a license. The private respondents'
obligation to pay under the terms of the contracts has been
proved.
When the complaints in these two cases were filed, the
petitioner had already secured the necessary license to conduct
its insurance business in the Philippines. It could already filed
suits.
Petitioner was, therefore, telling the truth when it averred in its
complaints that it was a foreign insurance company duly
authorized to do business in the Philippines through its agent
Mr. Victor H. Bello. However, when the insurance contracts
which formed the basis of these cases were executed, the
petitioner had not yet secured the necessary licenses and
authority. The lower court, therefore, declared that pursuant to
the basic public policy reflected in the Corporation Law, the
insurance contracts executed before a license was secured

must be held null and void. The court ruled that the contracts
could not be validated by the subsequent procurement of the
license.
The applicable provisions of the old Corporation Law, Act 1459,
as amended are:
Sec. 68. No foreign corporation or corporations formed,
organized, or existing under any laws other than those of the
Philippine Islands shall be permitted to transact business in the
Philippine Islands until after it shall have obtained a license for
that purpose from the chief of the Mercantile Register of the
Bureau of Commerce and Industry, (Now Securities and
Exchange Commission. See RA 5455) upon order of the
Secretary of Finance (Now Monetary Board) in case of banks,
savings, and loan banks, trust corporations, and banking
institutions of all kinds, and upon order of the Secretary of
Commerce and Communications (Now Secretary of Trade. See
5455, section 4 for other requirements) in case of all other
foreign corporations. ...
xxx xxx xxx
Sec. 69. No foreign corporation or corporation formed,
organized, or existing under any laws other than those of
the Philippine Islands shall be permitted to transact
business in the Philippine Islands or maintain by itself or
assignee any suit for the recovery of any debt, claim, or
demand whatever, unless it shall have the license
prescribed in the section immediately preceding. Any
officer, director, or agent of the corporation or any person
transacting business for any foreign corporation not
having the license prescribed shag be punished by
imprisonment for not less than six months nor more than
two years or by a fine of not less than two hundred pesos
nor more than one thousand pesos, or by both such
imprisonment and fine, in the discretion of the court.
As early as 1924, this Court ruled in the leading case
of Marshall Wells Co. v. Henry W. Elser & Co. (46 Phil. 70) that
the object of Sections 68 and 69 of the Corporation Law was to
subject the foreign corporation doing business in the Philippines
to the jurisdiction of our courts. The Marshall Wells Co. decision
referred to a litigation over an isolated act for the unpaid
balance on a bill of goods but the philosophy behind the law
applies to the factual circumstances of these cases. The Court
stated:
xxx xxx xxx
Defendant isolates a portion of one sentence of section 69 of
the Corporation Law and asks the court to give it a literal
meaning Counsel would have the law read thus: "No foreign
corporation shall be permitted to maintain by itself or assignee
any suit for the recovery of any debt, claim, or demand
whatever, unless it shall have the license prescribed in section
68 of the law." Plaintiff, on the contrary, desires for the court to
consider the particular point under discussion with reference to
all the law, and thereafter to give the law a common sense
interpretation.
The object of the statute was to subject the foreign
corporation doing business in the Philippines to the
jurisdiction of its courts. The object of the statute was not
to prevent the foreign corporation from performing single
acts, but to prevent it from acquiring a domicile for the
purpose of business without taking the steps necessary to
render it amenable to suit in the local courts. The
implication of the law is that it was never the purpose of
the Legislature to exclude a foreign corporation which
happens to obtain an isolated order for business from the
Philippines, from securing redress in the Philippine courts,
and thus, in effect, to permit persons to avoid their
contracts made with such foreign corporations. The effect
of the statute preventing foreign corporations from doing
business and from bringing actions in the local courts,
except on compliance with elaborate requirements, must
not be unduly extended or improperly applied. It should
not be construed to extend beyond the plain meaning of
its terms, considered in connection with its object, and in
connection with the spirit of the entire law.
(State vs. American Book Co. [1904], 69 Kan, 1; American
De Forest Wireless Telegraph Co. vs. Superior Court of
City & Country of San Francisco and Hebbard [1908], 153
Cal., 533; 5 Thompson on Corporations, 2d ed., chap.
184.)
Confronted with the option of giving to the Corporation Law
a harsh interpretation, which would disastrously embarrass
trade, or of giving to the law a reasonable interpretation,
which would markedly help in the development of trade;
confronted with the option of barring from the courts foreign
litigants with good causes of action or of assuming
jurisdiction of their cases; confronted with the option of
construing the law to mean that any corporation in the
United States, which might want to sell to a person in the
Philippines must send some representative to the Islands
before the sale, and go through the complicated formulae
provided by the Corporation Law with regard to the
obtaining of the license, before the sale was made, in order
to avoid being swindled by Philippine citizens, or of
STAT CON 73
construing the law to mean that no foreign corporation doing
business in the Philippines can maintain any suit until it
shall possess the necessary license;-confronted with these
options, can anyone doubt what our decision will be? The
law simply means that no foreign corporation shall be
permitted "to transact business in the Philippine Islands," as
this phrase is known in corporation law, unless it shall have
the license required by law, and, until it complies with the
law, shall not be permitted to maintain any suit in the local
courts. A contrary holding would bring the law to the verge
of unconstitutionality, a result which should be and can be
easily avoided. (Sioux Remedy Co. vs. Cope and
Cope, supra; Perkins, Philippine Business Law, p. 264.)
To repeat, the objective of the law was to subject the foreign
corporation to the jurisdiction of our courts. The Corporation
Law must be given a reasonable, not an unduly harsh,
interpretation which does not hamper the development of trade
relations and which fosters friendly commercial intercourse
among countries.
The objectives enunciated in the 1924 decision are even more
relevant today when we view commercial relations in terms of a
world economy, when the tendency is to re-examine the
political boundaries separating one nation from another insofar
as they define business requirements or restrict marketing
conditions.
We distinguish between the denial of a right to take remedial
action and the penal sanction for non-registration.
Insofar as transacting business without a license is concerned,
Section 69 of the Corporation Law imposed a penal sanction-
imprisonment for not less than six months nor more than two
years or payment of a fine not less than P200.00 nor more than
P1,000.00 or both in the discretion of the court. There is a
penalty for transacting business without registration.
And insofar as litigation is concerned, the foreign corporation or
its assignee may not maintain any suit for the recovery of any
debt, claim, or demand whatever. The Corporation Law is silent
on whether or not the contract executed by a foreign
corporation with no capacity to sue is null and void ab initio.
We are not unaware of the conflicting schools of thought both
here and abroad which are divided on whether such contracts
are void or merely voidable. Professor Sulpicio Guevarra in his
book Corporation Law (Philippine Jurisprudence Series, U.P.
Law Center, pp. 233-234) cites an Illinois decision which holds

the contracts void and a Michigan statute and decision
declaring them merely voidable:
xxx xxx xxx
Where a contract which is entered into by a foreign
corporation without complying with the local requirements of
doing business is rendered void either by the express terms
of a statute or by statutory construction, a subsequent
compliance with the statute by the corporation will not enable
it to maintain an action on the contract. (Perkins Mfg. Co. v.
Clinton Const. Co., 295 P. 1 [1930]. See also Diamond Glue
Co. v. U.S. Glue Co., supra see note 18.) But where the
statute merely prohibits the maintenance of a suit on such
contract (without expressly declaring the contract "void"), it
was held that a failure to comply with the statute rendered the
contract voidable and not void, and compliance at any time
before suit was sufficient. (Perkins Mfg. Co. v. Clinton Const.
Co., supra.) Notwithstanding the above decision, the Illinois
statute provides, among other things that a foreign
corporation that fails to comply with the conditions of doing
business in that state cannot maintain a suit or action, etc.
The court said: 'The contract upon which this suit was
brought, having been entered into in this state when appellant
was not permitted to transact business in this state, is in
violation of the plain provisions of the statute, and is therefore
null and void, and no action can be maintained thereon at any
time, even if the corporation shall, at some time after the
making of the contract, qualify itself to transact business in
this state by a compliance with our laws in reference to
foreign corporations that desire to engage in business here.
(United Lead Co. v. J.M. Ready Elevator Mfg. Co., 222 Ill.
199, 73 N.N. 567 [1906].)
A Michigan statute provides: "No foreign corporation subject
to the provisions of this Act, shall maintain any action in this
state upon any contract made by it in this state after the
taking effect of this Act, until it shall have fully complied with
the requirement of this Act, and procured a certificate to that
effect from the Secretary of State," It was held that the above
statute does not render contracts of a foreign corporation that
fails to comply with the statute void, but they may be enforced
only after compliance therewith. (Hastings Industrial Co. v.
Moral, 143 Mich. 679,107 N.E. 706 [1906]; Kuennan v. U.S.
Fidelity & G. Co., Mich. 122; 123 N.W. 799 [1909]; Despres,
Bridges & Noel v. Zierleyn, 163 Mich. 399, 128 N.W. 769
[1910]).
It has also been held that where the law provided that a
corporation which has not complied with the statutory
requirements "shall not maintain an action until such
compliance". "At the commencement of this action the
plaintiff had not filed the certified copy with the country
clerk of Madera County, but it did file with the officer
several months before the defendant filed his amended
answer, setting up this defense, as that at the time this
defense was pleaded by the defendant the plaintiff had
complied with the statute. The defense pleaded by the
defendant was therefore unavailable to him to prevent
the plaintiff from thereafter maintaining the action.
Section 299 does not declare that the plaintiff shall not
commence an action in any county unless it has filed a
certified copy in the office of the county clerk, but merely
declares that it shall not maintain an action until it has
filled it. To maintain an action is not the same as to
commence an action, but implies that the action has
already been commenced." (See also Kendrick &
Roberts Inc. v. Warren Bros. Co., 110 Md. 47, 72 A. 461
[1909]).
In another case, the court said: "The very fact that the
prohibition against maintaining an action in the courts of the
state was inserted in the statute ought to be conclusive
proof that the legislature did not intend or understand that
contracts made without compliance with the law were void.
The statute does not fix any time within which foreign
corporations shall comply with the Act. If such contracts
were void, no suits could be prosecuted on them in any
court. ... The primary purpose of our statute is to compel a
foreign corporation desiring to do business within the state
to submit itself to the jurisdiction of the courts of this state.
The statute was not intended to exclude foreign
corporations from the state. It does not, in terms, render
invalid contracts made in this state by non-complying
corporations. The better reason, the wiser and fairer policy,
and the greater weight lie with those decisions which hold
that where, as here, there is a prohibition with a penalty,
with no express or implied declarations respecting the
validity of enforceability of contracts made by qualified
foreign corporations, the contracts ... are enforceable ...
upon compliance with the law." (Peter & Burghard Stone
Co. v. Carper, 172 N.E. 319 [1930].)
Our jurisprudence leans towards the later view. Apart from the
objectives earlier cited from Marshall Wells Co. v. Henry W.
Elser & Co (supra), it has long been the rule that a foreign
corporation actually doing business in the Philippines without
license to do so may be sued in our courts. The defendant
American corporation in General Corporation of the Philippines
v. Union Insurance Society of Canton Ltd et al. (87 Phil. 313)
entered into insurance contracts without the necessary license
STAT CON 74
or authority. When summons was served on the agent, the
defendant had not yet been registered and authorized to do
business. The registration and authority came a little less than
two months later. This Court ruled:
Counsel for appellant contends that at the time of the
service of summons, the appellant had not yet been
authorized to do business. But, as already stated, section
14, Rule 7 of the Rules of Court makes no distinction as to
corporations with or without authority to do business in the
Philippines. The test is whether a foreign corporation was
actually doing business here. Otherwise, a foreign
corporation illegally doing business here because of its
refusal or neglect to obtain the corresponding license and
authority to do business may successfully though unfairly
plead such neglect or illegal act so as to avoid service and
thereby impugn the jurisdiction of the local courts. It would
indeed be anomalous and quite prejudicial, even disastrous,
to the citizens in this jurisdiction who in all good faith and in
the regular course of business accept and pay for
shipments of goods from America, relying for their
protection on duly executed foreign marine insurance
policies made payable in Manila and duly endorsed and
delivered to them, that when they go to court to enforce said
policies, the insurer who all along has been engaging in this
business of issuing similar marine policies, serenely pleads
immunity to local jurisdiction because of its refusal or
neglect to obtain the corresponding license to do business
here thereby compelling the consignees or purchasers of
the goods insured to go to America and sue in its courts for
redress.
There is no question that the contracts are enforceable. The
requirement of registration affects only the remedy.
Significantly, Batas Pambansa Blg. 68, the Corporation Code of
the Philippines has corrected the ambiguity caused by the
wording of Section 69 of the old Corporation Law.
Section 133 of the present Corporation Code provides:
SEC. 133. Doing business without a license.-No foreign
corporation transacting business in the Philippines without a
license, or its successors or assigns, shag be permitted to
maintain or intervene in any action, suit or proceeding in
any court or administrative agency in the Philippines; but
such corporation may be sued or proceeded against before
Philippine courts or administrative tribunals on any valid
cause of action recognized under Philippine laws.

The old Section 69 has been reworded in terms of non-access
to courts and administrative agencies in order to maintain or
intervene in any action or proceeding.
The prohibition against doing business without first securing a
license is now given penal sanction which is also applicable to
other violations of the Corporation Code under the general
provisions of Section 144 of the Code.
It is, therefore, not necessary to declare the contract nun and
void even as against the erring foreign corporation. The penal
sanction for the violation and the denial of access to our courts
and administrative bodies are sufficient from the viewpoint of
legislative policy.
Our ruling that the lack of capacity at the time of the execution
of the contracts was cured by the subsequent registration is
also strengthened by the procedural aspects of these cases.
The petitioner averred in its complaints that it is a foreign
insurance company, that it is authorized to do business in the
Philippines, that its agent is Mr. Victor H. Bello, and that its
office address is the Oledan Building at Ayala Avenue, Makati.
These are all the averments required by Section 4, Rule 8 of
the Rules of Court. The petitioner sufficiently alleged its
capacity to sue. The private respondents countered either
with an admission of the plaintiff's jurisdictional averments or
with a general denial based on lack of knowledge or information
sufficient to form a belief as to the truth of the averments.
We find the general denials inadequate to attack the foreign
corporations lack of capacity to sue in the light of its positive
averment that it is authorized to do so. Section 4, Rule 8
requires that "a party desiring to raise an issue as to the legal
existence of any party or the capacity of any party to sue or be
sued in a representative capacity shall do so by specific denial,
which shag include such supporting particulars as are
particularly within the pleader's knowledge. At the very least,
the private respondents should have stated particulars in their
answers upon which a specific denial of the petitioner's capacity
to sue could have been based or which could have supported
its denial for lack of knowledge. And yet, even if the plaintiff's
lack of capacity to sue was not properly raised as an issue by
the answers, the petitioner introduced documentary evidence
that it had the authority to engage in the insurance business at
the time it filed the complaints.
WHEREFORE, the petitions are hereby granted. The decisions
of the respondent court are reversed and set aside.
In L-34382, respondent Eastern Shipping Lines is ordered to
pay the petitioner the sum of P1,630.22 with interest at the legal
rate from January 5, 1968 until fully paid and respondent Angel
Jose Transportation Inc. is ordered to pay the petitioner the
sum of P1,630.22 also with interest at the legal rate from
January 5, 1968 until fully paid. Each respondent shall pay one-
half of the costs. The counterclaim of Angel Jose Transportation
Inc. is dismissed.
In L-34383, respondent N. V. Nedlloyd Lijnen, or its agent
Columbian Phil. Inc. is ordered to pay the petitioner the sum of
P2,426.98 with interest at the legal rate from February 1, 1968
until fully paid, the sum of P500.00 attorney's fees, and costs,
The complaint against Guacods, Inc. is dismissed.
SO ORDERED.
G.R. No. L-12150 May 26, 1960
BENJAMIN CO, petitioner-appellee,
vs.
REPUBLIC OF THE PHILIPPINES, oppositor-appellant.
BAUTISTA ANGELO, J.:
This is a petition for naturalization which, after hearing was
granted, the court ordering that after the lapse of two years from
the date the decision becomes final and all the requisites
provided for in Republic Act No. 503 have been complied with,
a certificate of naturalization be issued to petitioner.
Petitioner was born on March 13, 1931 in Bangued, Abra. He is
the son of Go Cham and Yu Suan, both Chinese. He owes his
allegiance to the Nacionalist Government of China. He is
married to Leonor Go, the marriage having been celebrated in
the Catholic church of Bangued, Abra. He speaks and writes
English as well as the Ilocano and Tagalog dialects. He
graduated from the Abra Valley College, and finished his
primary studies in the "Colegio" in Bangued, Abra, both schools
being recognized by the government. He has a child two
months old. He has never been accused of any crime involving
moral turpitude. He is not opposed to organized government,
nor is he a member of any subversive organization. He does
not believe in, nor practice, polygamy. Since his birth, he has
never gone abroad. He mingles with the Filipinos. He prefers a
democratic form of government and stated that if his petition is
granted he would serve the government either in the military or
civil department.
STAT CON 75
He is a merchant dealing in the buy and sell of tobacco. He also
is part owner of a store known as "Go Tian Store" in Bangued,
Abra. In his tobacco business, he has a working capital of
P10,000.00 which he claims to have been accumulated thru
savings. He contributes to civic and charitable organizations like
the Jaycees, Rotary, Red Cross and to town fiestas. He likes
the customs of the Filipinos because he has resided in the
Philippines for a long time. During the year 1956, he claims to
have earned P1,000.00 in his tobacco business. He expects to
make P2,000.00 more from the same business without however
specifying to what years said income would correspond. With
respect to the store of which he claims to be a part owner, he
stated that his father gave him a sum of less than P3,000.00
representing one-fourth of the sales. Aside from being a co-
owner of said store, he receives a monthly salary of P120.00 as
a salesman therein.
He took a course in radio mechanics and completed the same
in 1955. He has no vice of any kind. He claims that he has
never been deliquent in the payment of taxes. But he admitted
that he did not file his income tax return when he allegedly
received an amount of not less than P3,000 from his father
which he claims to have invested in his tobacco business. On
cross-examination, when the fiscal asked him if he believed in
the principle underlying the Philippine constitution, he answered
that "he believes in the laws of the Philippines." However, he
did not state what principles of the Constitution he knew,
although when asked what laws of the Philippines he believes
in, he answered "democracy". Asked why he did not file his
income tax return, he stated that his father had already filed his
income tax return. He merely promised, that he would file his.
He presented his alien certificate of registration, but did not
present the alien certificates of registration of his wife and child.
The government is now appealing the decision of the trial court
on the ground that it erred in finding that petitioner has all the
qualifications for naturalization and none of the disqualifications
mentioned in the law.
The government contends that from the evidence itself
introduced by petitioner it would appear that he failed to comply
with some of the requirements prescribed by law in order to
qualify him to become a Filipino citizen. Thus, it is claimed, he
has not stated that he believes in the principles underlying the
constitution and that it was only on cross-examination, when the
fiscal asked him whether he believed in the principles
underlying the constitution, that he answered that "He believes
in the laws of the Philippines", and that when he was asked
what those laws he believes in, he gave an answer which
conveys the meaning that he believes in democracy or in a
democratic form of government. It is contended that such belief

is not sufficient to comply with the requirement of the law that
one must believe in the principles underlying our constitution.
There is merit in this claim. Indeed, the scope of the word law in
ordinary legal parlance does not necessarily include the
constitution which is the fundamental law of the land, nor does it
cover all the principles underlying our constitution. Thus, our
constitution expressly declares as one of its fundamental
policies that the Philippines renounces war as an instrument of
national policy, that the defense of the State is the prime duty of
the government, that the duty and right of the parents to rear
their children for civic efficiency shall receive the support of the
State, and that the promotion of social justice shall be its main
concern. In so stating that he believes merely in our laws, he
did not necessarily refer to those principles embodied in our
constitution which are referred to in the law.
Our law also requires that petitioner must have conducted
himself in a proper and irreproachable manner during the entire
period of his residence in the Philippines in his relation with the
constituted government as well as with the community in which
he is living. It is contended that petitioner has also failed to
comply with this legal requirement for he failed to register his
wife and child with the Bureau of Immigration as required by the
Alien Registration Act. He has, therefore, failed to conduct
himself in a proper and irreproachable manner in his relation
with our government.
It furthermore appears that he failed to file his income tax return
despite the fact that he has a fixed salary of P1,440.00 a year
and made a profit of P1,000.00 in his tobacco business, and
received an amount less than P3,000 from his father as one-
fourth of the proceeds of the sale of the store, the total of which
is more than what is required by law for one to file an income
tax return, a fact which indicates that he has not also conducted
himself properly in his relation with our government. His
reasoning that he made that earning during the year in which
this case was being heard is not convincing.
Considering that "naturalization laws should be rigidly enforced
and strictly construed in favor of the government and against
the applicant" (Co Quing Reyes vs. Republic, 104 Phil., 889),
we are constrained to hold that the trial court erred in granting
the petition for naturalization.
Wherefore, the decision appealed from is reversed, without
pronouncement as to costs.
G.R. No. L-12408 December 28, 1959
LEE CHO alias SEM LEE, petitioner-appellee,
vs.
REPUBLIC OF THE PHILIPPINES, oppositor-appellant.
BAUTISTA ANGELO, J.:
This is a petition for naturalization filed by Lee Cho alias Sem
Lee before the Court of First Instance of Cebu.
After the reception of the evidence, the court on August 30,
1956 rendered decision finding petitioner qualified to be a
Filipino citizen. However, on October 2, 1957, the government
filed a motion for new trial on the ground of newly discovered
evidence which if presented may affect the qualification of
petitioner, and finding the same well founded, the court
entertained the motion. After the re-hearing, where the newly
discovered evidence was presented, the court again rendered
decision reaffirming its holding that petitioner is qualified to
become a Filipino citizen, whereupon the government
interposed the present appeal.
Petitioner was born in Amoy, China, on September 22, 1907, of
Chinese parents. He came to the Philippines sometime in
February, 1921 and was given the corresponding alien
certificate of residence and registration. He settled in the City of
Cebu where he has continuously resided up to the present time.
On December 8, 1929, he married one Sy Siok Bin with whom
he had 13 children, all born in the City of Cebu. All these
children had been issued the corresponding alien certificate of
registration, with the exception of Lourdes Lee who married a
naturalized Filipino citizen named Lim Kee Guan. With the
exception of William Lee who is not of school age, Angelita who
rendered only grade five and Lourdes who stopped in third year
high school, the other children are at present studying in private
schools and colleges recognized by the government.
Petitioner studied from first grade to seventh grade in the Cebu
Chinese High School, a private institution recognized by the
Government. He and his family profess the Roman Catholic
faith. He speaks and writes English and the Cebu dialect. From
1921 to the outbreak of the last war, petitioner was engaged in
corn business in the City of Cebu and from 1946 was engaged
in lumber business, having been associated with some
Filipinos. He invested P5,000.00 capital in the business and at
present the actual worth of his share is about P20,000.00.
Petitioner is receiving a monthly salary of P400.00 and realizes
a profit share is about P10,000.00 every year. he has no tax
STAT CON 76
liability to the government. In other respects, he possesses all
the qualifications and none of the disqualifications prescribed by
law.
Before an applicant may apply for Philippine citizenship, the law
requires that he file a declaration of intention to become a
Filipino citizen one year prior to the filing of application unless
he is exempt from complying with said requirement (Section 6.
Naturalization Law). This section exempts one from filing a
declaration of intention in two cases; (a) if he is born in the
Philippines and has received primary and secondary education
in any school recognized by the government; and (b) if he has
continuously resided in the Philippines for a period of 30 years
or more provided that he has given primary and school or in
private schools recognized by the government.
In the instant case, petitioner has not filed any declaration of
intention to become a Filipino citizen because, as he claims, he
has resided continuously in the Philippines for a period of more
than 30 years and has given primary and secondary education
to all his children in private schools recognized by the
government. This claim is, however, disputed by the
government who contends that petitioner has failed to comply
with the requirement of the law regarding his duty to afford
primary and secondary education to all his children because he
failed to give such education to his daughters Angelita Lee and
Lourdes Lee.lawphi1.net
We find merit in this contention. In the fist place, the evidence
shows that Angelita Lee has only reached grade five and no
explanation was given why no secondary education was
afforded her which requires the teaching of Philippine Civics.
Philippine History and Philippine Government, subjects that are
precisely required of aliens who desire to embrace Philippine
citizenship for their indoctrination on matters concerning our
history, government and nationalism. The reason advanced that
she was not able to complete her studies because she got
married is not only satisfactory but betrays the sincerity of
petitioner in embracing our citizenship.
The case of Lourdes Less is even more significant. It appears
that she studied only as far as third year high school and then
stopped allegedly because of poor health. But, by her own
admission in open court, it was shown that in spite of her
alleged sickness she continued her studies, not in the high
school proper, but in a Chinese school which employs strictly
Chinese curriculum where Philippine Civics, Philippine History
and Philippine Government are not taught. This circumstance
also betrays the sincerity of petitioner to become a Filipino
citizen for if his motive were proper he should not have

tolerated such deviation form the educational requirement of the (3) ordering defendants-spouses Manuel
law. and Maria Guerrero to pay damages to
plaintiffs in the amount of P14,911.20
beginning from July, 1973 and to pay the
Considering that the provisions of the Naturalization Law should
be strictly construed in order that its laudable and nationalistic same amount every year thereafter until
plaintiff is effectively reinstated to the ten-
purpose may be fully fulfilled, 1we are persuaded to conclude
that petitioner has failed to qualify to become a Filipino citizen hectare portion;
and so his petition should be denied.
(4) denying plaintiff-tenants' prayer for
reconstruction of the copra cottage: and
Wherefore, the decision appealed from is reversed, with costs
against petitioner.
(5) ordering defendants-spouses Manuel
G.R. No. L-44570 May 30, 1986 and Maria Guerrero to pay plaintiff the
amount of P200.00 by way of litigation
expenses.
MANUEL GUERRERO and MARIA GUERRERO, petitioners,
vs.
HON. COURT OF APPEALS, and APOLINARIO All other claims of the parties are denied.
With costs against defendants-spouses.
BENITEZ, respondents.
The petitioners adopt the respondent court's findings of fact
GUTIERREZ, JR., J.:
excepting, however, to its conclusion that tenancy relations
exist between the petitioners and the respondents, thus:
Whether or not a tenancy relationship exists between the
parties Manuel Guerrero, et al and Apolinario Benitez, et al. as
to determine their respective rights and obligations to one In 1969, plaintiff Apolinario Benitez was
another is the issue in this petition to review the decision of the taken by defendants- spouses Manuel and
Maria Guerrero to take care of their 60
then Court of Appeals, now the Intermediate Appellate Court,
which affirmed in toto the decision of the Court of Agrarian heads of cows which were grazing within
their 21-hectare coconut plantation situated
Relations in CAR Case No. 6793-NE (SA-Q) '73, the dispositive
portion of which reads: at Bo. San Joaquin, Maria Aurora,
Subprovince of Aurora, Quezon. Plaintiff
was allowed for that purpose to put up a hut
In view of all the foregoing, judgment is within the plantation where he and his family
hereby rendered: stayed. In addition to attending to the cows,
he was made to clean the already
fruitbearing coconut trees, burn dried leaves
(1) ordering defendants-spouses Manuel
and Maria Guerrero to reinstate plaintiff and grass and to do such other similar
Apolinario Benitez to the 10-hectare portion chores. During harvest time which usually
of the 16-hectare coconut holding in comes every three months, he was also
question, located at Bo. San Joaquin, Maria made to pick coconuts and gather the fallen
Aurora Sub-province Quezon and to ones from a 16-hectare portion of the 21-
maintain said plaintiff in the peaceful hectare plantation. He had to husk and split
possession and cultivation thereof, with all the nuts and then process its meat into
copra in defendants' copra kiln. For his work
the rights accorded and obligations imposed
upon him by law; related to the coconuts, he shared 1/3 of the
proceeds from the copra he processed and
sold in the market. For attending to the cows
(2) ordering defendants Paulino and Rogelio he was paid P500 a year.
both surnamed Latigay to vacate the said
ten-hectare portion and deliver possession
thereof to plaintiff Apolinario Benitez;
STAT CON 77
Sometime in the early part of 1973, plaintiff
was refrained from gathering nuts from the
10-hectare portion of the 16-hectare part of
the plantation from where he used to gather
nuts. He felt aggrieved by the acts of
defendants and he brought the matter to the
attention of the Office of Special Unit in the
Office of the President in Malacanang,
Manila. This led to an execution of an
agreement, now marked as Exh. D, whereby
defendants agreed, among others, to let
plaintiff work on the 16-hectare portion of the
plantation as tenant thereon and that their
relationship will be guided by the provisions
of republic Act No. 1199. The Agricultural
Tenancy Act of the Philippines.
Then in July, 1973, he was again refrained
from gathering nuts from the 10-hectare
portion of the plantation with threats of bodily
harm if he persists to gather fruits therefrom.
Defendant spouses, the Guerreros, then
assigned defendants Rogelio and Paulino
Latigay to do the gathering of the nuts and
the processing thereof into copra.
Defendants Guerreros also caused to be
demolished a part of the cottage where
plaintiff and his family lived, thus, making
plaintiffs feel that they (defendants) meant
business. Hence, this case for reinstatement
with damages.
The lower court formulated four (4) issues by
which it was guided in the resolution of the
questions raised by the pleadings and
evidence and we pertinently quote as
follows:
(1) whether or not plaintiff is the tenant on
the coconut landholding in question
consisting of sixteen (16) hectares;
(2) In The affirmative, whether or not he was
unlawfully dispossessed of ten (10) hectare
thereof;
(3) Whether or not the parties are entitled to
actual and moral damages, attorney's fees
and litigation expenses.

This petition for review poses the following questions of law:
I mean a reversion of tenants into mere farmhands or hired
Whether or not with the passage of
Presidential Decree 1038 only last October
21, 1976, Republic Act 6389 otherwise
known as the Code of Agrarian Reforms has
repealed in their entirety the Agricultural
Tenancy Act (Republic Act 1199) and the
Agricultural Reform Code (Republic Act
3844) abrogating or nullifying therefore all
agricultural share tenancy agreements over
all kinds of lands, as the one involved in the
case at bar-over coconut plantation-and
hence, the complaint below as well as the
challenged decision by the courts below,
based as they are on such share tenancy
agreements, have lost their validity cessante
ratio legis, cessat ipsa lex.
II
Assuming arguendo that said laws have not
thus been repealed, is respondent Benitez
hereunder the undisputed fact of the case as
found by the courts below a share tenant
within the purview of the said laws, i.e.,
Republic Acts 1199 and 3844, or a mere
farmhand or farm worker as such
relationship were extensively discussed
in Delos Reyes vs. Espinelli, 30 SCRA 574.
(Copied verbatim from Petition, p. 31- rollo)
Petitioner insists in this petition that Benitez was a mere
farmhand or laborer who was dismissed as an employee from
the landholding in question and not ousted therefrom as tenant.
Whether a person is a tenant or not is basically a question of
fact and the findings of the respondent court and the trial court
are, generally, entitled to respect and non-disturbance.
The law defines "agricultural tenancy" as the physical
possession by a person of land devoted to agriculture,
belonging to or legally possessed by another for the purpose of
production through the labor of the former and of the members
of his immediate farm household in consideration of which the
former agrees to share the harvest with the latter or to pay a
price certain or ascertainable, either in produce or in money, or
in both (Section 3, Republic Act 1199, The Agricultural tenancy
Act, as amended.)
With petitioner reference to this case, "share tenancy" exists
whenever two persons agree on a joint undertaking for
agricultural production wherein one party furnishes the land and
the other his labor, with either or both contributing any one or
several of the items of production, the tenant cultivating the land
with the aid of labor available from members of his immediate
farm household, and the produce thereof to be divided between
the landholder and the tenant in proportion to their respective
contributions (Sec. 4, RA 1199; Sec. 166(25) RA 3844,
Agricultural Land Reform Code).
In contrast, a farmhand or agricultural laborer is "any
agricultural salary or piece worker but is not limited to a
farmworker of a particular farm employer unless this Code
expressly provides otherwise, and any individual whose work
has ceased as a consequence of, or in connection with, a
current agrarian dispute or an unfair labor practice and who has
not obtained a substantially equivalent and regular
employment" (Sec. 166(15) RA 3844, Agricultural Land Reform
Code).
The petitioners contend that the two courts below applied
erroneous definitions of "tenancy" found in repealed laws. They
assert that the Agricultural Tenancy Act and the Agricultural
Land Reform Code have been superseded by the Code of
Agrarian Reforms, Rep. Act 6389, which the trial court and the
Court of Appeals failed to cite and apply.
There is no question that the latest law on land and tenancy
reforms seeks to abolish agricultural share tenancy as the basic
relationship governing farmers and landowners in the country.
On August 8, 1963, Republic Act 3844 abolished and outlawed
share tenancy and put in its stead the agricultural leasehold
system. On September 10, 1971, Republic Act 6389 amending
Republic Act 3844 declared share tenancy relationships as
contrary to public policy. On the basis of this national policy, the
petitioner asserts that no cause of action exists in the case at
bar and the lower court's committed grave error in upholding the
respondent's status as share tenant in the petitioners'
landholding.
The petitioners' arguments are regressive and, if followed,
would turn back the advances in agrarian reform law. The
repeal of the Agricultural Tenancy Act and the Agricultural Land
Reform Code mark the movement not only towards the
STAT CON 78
leasehold system but towards eventual ownership of land by its
tillers. The phasing out of share tenancy was never intended to
laborers with no tenurial rights whatsoever.
It is important to note that the Agricultural Tenancy Act (RA
1199) and the Agricultural Land Reform Code (RA 3844) have
not been entirely repealed by the Code of Agrarian Reform (RA
6389) even if the same have been substantially modified by the
latter.
However, even assuming such an abrogation of the law, the
rule that the repeal of a statute defeats all actions pending
under the repealed statute is a mere general principle. Among
the established exceptions are when vested rights are affected
and obligations of contract are impaired. (Aisporna vs. Court of
Appeals, 108 SCRA 481).
The records establish the private respondents' status as
agricultural tenants under the legal definitions.
Respondent Benitez has physically possessed the landholding
continuously from 1969 until he was ejected from it. Such
possession of longstanding is an essential distinction between a
mere agricultural laborer and a real tenant within the meaning
of the tenancy law (Moreno, Philippine Law Dictionary, 1972
Edition), a tenant being one who, has the temporary use and
occupation of land or tenements belonging to another (Bouvier's
Law Dictionary, Vol. II, p. 3254) for the purpose of production
(Sec. 3, Republic Act 1199; delos Reyes vs. Espinelli, 30 SCRA
574). Respondent Benitez lives on the landholding. He built his
house as an annex to the petitioner's copra kiln. A hired laborer
would not build his own house at his expense at the risk of
losing the same upon his dismissal or termination any time.
Such conduct is more consistent with that of an agricultural
tenant who enjoys security of tenure under the law.
Cultivation is another important factor in determining the
existence of tenancy relationships. It is admitted that it had
been one Conrado Caruruan, with others, who had originally
cleared the land in question and planted the coconut trees, with
the respondent coming to work in the landholding only after the
same were already fruit bearing. The mere fact that it was not
respondent Benitez who had actually seeded the land does not
mean that he is not a tenant of the land. The definition of
cultivation is not limited merely to the tilling, plowing or
harrowing of the land. It includes the promotion of growth and
the care of the plants, or husbanding the ground to forward the
products of the earth by general industry. The raising of
coconuts is a unique agricultural enterprise. Unlike rice, the

planting of coconut seedlings does not need harrowing and
plowing. Holes are merely dug on the ground of sufficient depth
and distance, the seedlings placed in the holes and the surface
thereof covered by soil. Some coconut trees are planted only
every thirty to a hundred years. The major work in raising
coconuts begins when the coconut trees are already
fruitbearing. Then it is cultivated by smudging or smoking the
plantation, taking care of the coconut trees, applying fertilizer,
weeding and watering, thereby increasing the produce. The fact
that respondent Benitez, together with his family, handles all
phases of farmwork from clearing the landholding to the
processing of copra, although at times with the aid of hired
laborers, thereby cultivating the land, shows that he is a tenant,
not a mere farm laborer. (delos Reyes vs.
Espinelli, supra Marcelo vs. de Leon, 105 Phil. 1175).
Further indicating the existence of a tenancy relationship
between petitioners and respondent is their agreement to share
the produce or harvest on a "tercio basis" that is, a 1/3 to 2/3
sharing in favor of the petitioner-landowners. Though not a
positive indication of the existence of tenancy
relations perse the sharing of harvest taken together with other
factors characteristic of tenancy shown to be present in the
case at bar, strengthens the claim of respondent that indeed, he
is a tenant. The case of delos Reyes vs. Espinelli
(supra) clearly explains the matter thus:
The agricultural laborer works for the
employer, and for his labor he receives a
salary or wage, regardless of whether the
employer makes a profit. On the other hand,
the share tenant par ticipates in the
agricultural produce. His share is necessarily
dependent on the amount of harvest.
Hence, the lower court's computation of damages in favor of
respondent based on the number of normal harvests. In most
cases, we have considered the system of sharing produce as
convincing evidence of tenancy relations.
The petitioners entered into an agreement on May 2, 1973
which in clear and categorical terms establishes respondent as
a tenant, to wit:
AGREEMENT
This agreement entered into by and between
Manuel Guerrero hereinafter referred to as
the landowner and Apolinario Benitez
hereinafter referred to as tenant.
xxx xxx xxx
The petitioners, however, contend that the word "tenant" in the
aforequoted agreement was used to mean a hired laborer farm
employee as understood agreed upon by the parties. The fact
that their relationship would be guided by the provisions of
Republic Act 1199 or the Agricultural Tenancy Act of the
Philippines militates against such an assertion. It would be an
absurdity for Republic Act 1199 to govern an employer-
employee relationship. If as the petitioners insist a meaning
other than its general acceptation had been given the word
"tenant", the instrument should have so stated '. Aided by a
lawyer, the petitioners, nor the respondent could not be said to
have misconstrued the same. In clear and categorical terms,
the private respondent appears to be nothing else but a tenant:
Finally, comes the admission by the petitioners' counsel of the
respondent's status as tenant:
ATTY. ESTEBAN:
Q You said you are living at San Joaquin, who cause the
sowing of the lumber you made as annex in the house?
ATTY. NALUNDASAN
Please remember that under the law, tenant is given the right
to live in the holding in question. We admit him as tenant.
The respondent's status as agricultural tenant should be without
question.
Once a tenancy relationship is established, the tenant has the
right to continue working until such relationship is extinguished
according to law.
The Agricultural Tenancy Act of 1954 (Republic Act 1199), the
Agricultural Land Reform Code of 1963 (Republic Act 3844),
the Code of Agrarian Reforms (Republic Act 6389) and
Presidential Decree 1038 (Strengthening the Security of Tenure
of Tenant Tillers in Non-Rice/Corn Producing Agricultural
Lands) all provide for the security of tenure of agricultural
tenants. Ejectment may be effected only for causes provided by
law, to wit:
STAT CON 79
l) Violation or failure of the tenant to comply with any of the
terms and conditions of the tenancy contract or any of the
provisions of the Agricultural Tenancy Act;
2) The tenant's failure to pay the agreed rental or to deliver the
landholder's share unless the tenant's failure is caused by a
fortuitous event or force majeure;
3) Use by the tenant of the land for purposes other than that
specified by the agreement of the parties;
4) Failure of the tenant to follow proven farm practices:
5) Serious injury to the land caused by the negligence of the
tenant;
6) Conviction by a competent court of a tenant or any member
of his immediate family or farm household of a crime against
the landholder or a member of his immediate family. (Section
50, Rep. Act 1199).
None of the above causes exists in the case at bar. The
respondent has been unlawfully deprived of his right to security
of tenure and the Court of Agrarian Reforms did not err in
ordering the reinstatement of respondent as tenant and granting
him damages therefor.
Before we close this case, it is pertinent to reiterate that the
respondent's right as share tenant do not end with the abolition
of share tenancy. As the law seeks to "uplift the farmers from
poverty, ignorance and stagnation to make them dignified, self-
reliant, strong and responsible citizens ... active participants in
nation-building", agricultural share tenants are given the right to
leasehold tenancy as a first step towards the ultimate status of
owner-cultivator, a goal sought to be achieved by the
government program of land reform.
It is true that leasehold tenancy for coconut lands and sugar
lands has not yet been implemented. The policy makers of
government are still studying the feasibility of its application and
the consequences of its implementation. Legislation still has to
be enacted. Nonetheless, wherever it may be implemented, the
eventual goal of having strong and independent farmers
working on lands which they own remains. The petitioners'
arguments which would use the enactment of the Agrarian
Reform Code as the basis for setting back or eliminating the
tenurial rights of the tenant have no merit.

WHEREFORE, the petition is DISMISSED for lack of merit. The
decision of the appellate court is AFFIRMED. No costs.
SO ORDERED.
G.R. No. L-38161 March 29, 1974
JUAN BELLO, FILOMENA C. BELLO, petitioners,
vs.
HON. COURT OF APPEALS, * HON. FRANCISCO LLAMAS,
as Judge of Pasay City Court, and REPUBLIC OF THE
PHILIPPINES, respondents.
TEEHANKEE, J.:p
The Court holds that the court of first instance of Pasay City in
an appeal erroneously taken to it from the city court's judgment
convicting petitioners-accused of the charge of estafa within the
concurrent original jurisdiction of said courts should grant
petitioners-accused's timely petition for certifying their appeal to
the Court of Appeals as the proper court rather than
peremptorily grant the prosecution's motion for dismissal of the
appeal and order the remand of the case to the city court for
execution of judgment. The appellate court's decision denying
the relief sought by petitioners of compelling the elevation of
their appeal to it as the proper court simply because of the non-
impleader of the court of first instance as a nominal party
notwithstanding that it was duly represented by the respondent
People as the real party in interest through the Solicitor General
who expressed no objection to the setting aside of the court of
first instance's dismissal order is set aside as sacrificing
substance to form and subordinating substantial justice to a
mere matter of procedural technicality.
Petitioners spouses were charged on August 25, 1970
for estafa before the City Court of Pasay1 for allegedly having
misappropriated a lady's ring with a value of P1,000.00 received
by them from Atty. Prudencio de Guzman for sale on
commission basis. After trial, they were convicted and
sentenced under respondent city court's decision of February
26, 1971 to six (6) months and one (1) day of prision
correccional and to indemnify the offended party in the sum of
P1,000.00 with costs of suit.
Petitioners filed their notice of appeal of the adverse judgment
to the Court of First Instance of Pasay City, but the prosecution
filed a "petition to dismiss appeal" on the ground that since the
case was within the concurrent jurisdiction of the city court and
the court of first instance and the trial in the city court had been
duly recorded, the appeal should have been taken directly to
the Court of Appeals as provided by section 87 of the Judiciary
Act, Republic Act 296, as amended.2
Petitioners opposed the prosecution's dismissal motion and
invoking the analogous provision of Rule 50, section 3 directing
that the Court of Appeals in cases erroneously brought to it
"shall not dismiss the appeal, but shall certify the case to the
proper court, with a specific and clear statement of the grounds
therefor," prayed of the court of first instance if it should find the
appeal to have been wrongly brought before it, to certify the
same "to either the Court of Appeals or the Supreme Court."3
The court of first instance per its order of October 29, 1971 did
find that the appeal should have been taken directly to the
Court of Appeals but ordered the dismissal of the appeal and
remand of the records to the city court "for execution of
judgment."4
Petitioners aver that they were not notified of the order of
dismissal of their appeal and learned of it only when they were
called by the Pasay city court for execution of the judgment of
conviction. Hence, they filed with the city court their "motion to
elevate appeal to Court of Appeals" of December 7, 1971
stating that "through inadvertence and/or excusable neglect"
they had erroneously filed a notice of appeal to the court of first
instance instead of to the Court of Appeals as the proper court
and prayed that the city court, following precedents of this Court
remanding appeals before it to the proper court instead of
dismissing appeals, "elevate the records ... to the Court of
Appeals for proper review."5
Respondent city court per its order of December 11, 1971
denied petitioners' motion "for having been erroneously
addressed to this court" instead of to the court of first
instance6 ignoring petitioners' predicament that the court of first
instance had already turned them down and ordered the
dismissal of their appeal without notice to them and that as a
consequence it was poised to execute its judgment of
conviction against them.
Petitioners spouses then filed on January 14, 1972 their petition
for prohibition and mandamus against the People and
respondent city court to prohibit the execution of the judgment
and to compel respondent city court to elevate their appeal to
the Court of Appeals.7
The Solicitor General filed respondents' answer to the petition
manifesting that "we shall not interpose any objection whichever
STAT CON 80
view point is adopted by this Honorable Court in resolving the
two apparently conflicting or clashing principles of law — finality
of judicial decision or equity in judicial decision," after observing
that "(F)rom the view point of equity considering that petitioners'
right to appeal lapsed or was lost through the fault, though not
excusable, of their counsel, and compounded by the alleged
error of judgment committed by the Court of First Instance to
which the appeal was erroneously brought, we sympathize with
petitioners' plight."
The Court of Appeals, however, per its decision of December
17, 1973 dismissed the petition, after finding that the city court's
judgment was directly appealable to it. Although recognizing
that the "CFI instead of dismissing appeal, could have in the
exercise of its inherent powers directed appeal to be endorsed
to this Court of Appeals" it held that since petitioners did not
implead the court of first instance as "principal party
respondent" it could not "grant any relief at all even on the
assumption that petitioners can be said to deserve some
equities," as follows:
... therefore, when they appealed to CFI, that
was procedurally wrong; of course, CFI instead of
dismissing appeal, could have in the exercise of its inherent
powers, directed appeal to be endorsed to this Court of
Appeals, but when instead of doing so, it dismissed, it also
had power to do so, and correction of it is difficult to see to
be remediable by mandamus, but ignoring this altogether,
what this Court finds is that since it was CFI that dismissed
the appeal and according to petitioners, wrongly, it must
follow that if CFI was wrong, this plea for mandamus to
compel it to act "correctly" should have been
directed against said CFI, it should have been the CFI, Hon.
Francisco de la Rosa, who should have been made under
Rule 65 Sec. 3, herein principal party respondent, but he
was not, this being the situation, this Court can not see how
it can grant any relief at all even on the assumption that
petitioners can be said to deserve some equities.
Petitioners moved for reconsideration on January 2, 19748 and
for elevation of their appeal to the Court of Appeals, stressing
the merits of their appeal and of their defense to the charge, viz,
that the offended party Atty. de Guzman had represented their
son who was a suspect with two others for robbery before the
Pasay city fiscal's office and upon dismissal of the charge
demanded payment from them as parents the sum of
P1,000.00 as attorney's fees, and since they had no money to
pay him required them to sign the receipt dated June 25, 1970
in his favor for an imaginary lady's ring to sell "on commission
basis" for P1,000.00 (their "commission" to be any overprice) to
assure payment of the sum by the stated deadline of July 9,

1970 under penalty, of criminal prosecution for estafa; and that
they had then newly met Atty. de Guzman, whose services had
been secured not by them but by the family of one of the other
suspects, implying the incredibility of his entrusting a lady's ring
to both of them (husband and wife) for sale on commission
basis when his only association with them was his demand of
payment of his P1,000-attorney's fee for having represented
their son-suspect.
Reconsideration having been denied by the appellate court "for
lack of sufficient merit," petitioners filed the present petition for
review.9 The Court required the Solicitor General's comment on
behalf of the People of the Philippines, and upon receipt thereof
resolved to consider the case as a special civil action with such
comment as answer and the case submitted for decision in the
interest of justice and speedy adjudication.
The Court finds merits in the petition and holds that the court of
first instance acted with grave abuse of discretion in dismissing
petitioners-accused's appeal which was erroneously brought to
it and ordering remand of the records to the city court for
execution of judgment instead of certifying and endorsing the
appeal to the Court of Appeals as the proper court as timely
prayed for by petitioners-accused in their opposition to the
prosecution's motion to dismiss appeal. We find that the Court
of Appeals also acted with grave abuse of discretion in
dismissing their petition instead of setting aside the challenged
order of the court of first instance peremptorily dismissing the
appeal pursuant to which respondent city court was poised to
execute its judgment of conviction simply because the court of
first instance which is but a nominal party had not been
impleaded as party respondent in disregard of the substantive
fact that the People as plaintiff and the real party in interest was
duly impleaded as principal party respondent and was
represented in the proceedings by the Solicitor General.
The appellate court while recognizing that petitioners' appeal
taken to the court of first instance was "procedurally wrong" and
that the court of first instance "in the exercise of its inherent
powers could have certified the appeal to it as the proper court
instead of dismissing the appeal, gravely erred in holding that it
could not "correct" the court of first instance's "wrong action"
and grant the relief sought of having the appeal elevated to it
since said court's presiding judge "who should have been-made
under Rule 65, sec. 3 10 herein principal party respondent, but
he was not." The Court has always stressed as in Torre vs.
Ericta 11 that a respondent judge is "merely a nominal party" in
special civil actions for certiorari, prohibition
and mandamus and that he "is not a person "in interest" within
the purview (of Rule 65, section 5 12)" and "accordingly, he has
no standing or authority to appeal from or seek a review
on certiorari" of an adverse decision of the appellate court
setting aside his dismissal of a party's appeal and issuing the
writ of mandamus for him to allow the appeal.
It is readily seen from the cited Rule that the court of first
instance or presiding judge who issued the challenged order or
decision is but a nominal party, the real parties in interest being
"the person or persons interested in sustaining the proceedings
in the court" and who are charged with the duty of appearing
and defending the challenged act both "in their own behalf and
in behalf of the court or judge affected by the proceedings."
Hence, the formal impleading of the court of first instance which
issued the challenged order of dismissal was not indispensable
and could be "overlooked in the interest of speedy
adjudication." 13
Since the real party in interest, the People as plaintiff in the
criminal proceeding against petitioners-accused was duly
impleaded and represented by the Solicitor General to defend
the proceedings in the court of first instance and had
expressed no objection to the appellate court's setting aside of
the court of first instance's dismissal order, in the interest of
justice and equity the appellate court's act of dismissing the
petition and denying the relief sought of endorsing the appeal to
the proper court simply because of the non impleader of the
court of first instance as a nominal party was tantamount to
sacrificing substance to form and to subordinating substantial
justice to a mere matter of procedural technicality. The
procedural infirmity of petitioners mis-directing their appeal to
the court of first instance rather than to the Court of Appeals,
which they had timely sought to correct in the court of first
instance itself by asking that court to certify the appeal to the
Court of Appeals as the proper court, should not be over-
magnified as to totally deprive them of their substantial right of
appeal and leave them without any remedy.
The Court therefore grants herein the relief denied by
respondent appellate court of mandamus to compel respondent
city court to elevate petitioners' appeal to the Court of Appeals
as the proper court as being within the context and spirit of Rule
50, section 3, providing for certification to the proper court by
the Court of Appeals of appealed cases erroneously brought to
it, 14 particularly where petitioners-accused have shown prima
facie (and without this Court prejudging the merits of their
appeal) that they have a valid cause for pursuing in good faith
their appeal (as against a manifestly dilatory or frivolous appeal)
and to have a higher court appreciate their evidence in support
of their defense that they were prosecuted and sentenced to
imprisonment (for estafa) for failure to pay a purely civil
indebtedness (the attorney's fee owed by their son to the
complainant).
STAT CON 81
Here, petitioners-accused's counsel, misdirected their appeal to
the court of first instance, confronted with the thorny question
(which has confused many a
practitioner) 15 of concurrent criminal jurisdiction of city
courts and municipal courts of provincial and sub-
provincial capitals with courts of first instance under sections 44
(f) and 87 (c) of the Judiciary Act where the appeal from the
municipal or city court's judgment should be taken directly to
the Court of Appeals as held in Esperat vs. Avila 16 as
distinguished however from judgments of ordinary municipal
courts in similar cases within the concurrent jurisdiction of the
courts of first instance where as held by this Court in People vs.
Valencia 17 the appeal should nevertheless be brought to
the court of first instance which retains its appellate jurisdiction
under section 45 of the Judiciary Act.
It certainly was within the inherent power of the court of first
instance in exercise of its power to "control its process and
orders so as to make them conformable to law and justice" 18 to
grant petitioners-accused's timely plea to endorse their appeal
to the Court of Appeals as the proper court and within the
context and spirit of Rule 50, section 3. In a mis-directed
appeal to the Court of Appeals of a case that pertains to the
court of first instance's jurisdiction, the said Rule expressly
provides that the Court of Appeals "shall not dismiss the appeal
but shall certify the case to the proper court" viz, the court of
first instance in the given example. There is no logical reason
why in all fairness and justice the court of first instance in
a misdirected appeal to it should not be likewise bound by
the same rule and therefore enjoined not to dismiss the appeal
but to certify the case to the Court of Appeals as the proper
court. The paucity of the language of the Rule and its failure to
expressly provide for such cases of misdirected appeals to the
court of first instance (owing possibly to the fact that at the time
of the revision of the Rules of Court in 1963 section 87 (c) had
been newly amended under Republic Act 2613 approved on
June 22, 1963 to enlarge the jurisdiction of city courts and
municipal courts of provincial capitals and provide for
their concurrent jurisdiction with the courts of first instance
and direct appeal from their judgments in such cases to the
Court of Appeals) should not be a cause for unjustly depriving
petitioners of their substantial right of appeal.
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 legislator" " 19 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)" 20 and that therefore "a literal interpretation is to be
rejected if it would be unjust or lead to absurd results". 21 In the
construction of its own Rules of Court, this Court is all the more

so bound to liberally construe them to avoid injustice,
discrimination and unfairness and to supply the void — that is
certainly within the spirit and purpose of the Rule to eliminate
repugnancy and inconsistency — by holding as it does now that
courts of first instance are equally bound as the higher courts
not to dismiss misdirected appeals timely made but to certify
them to the proper appellate court.
ACCORDINGLY, the decision of the Court of Appeals
dismissing the petition is hereby set aside and in lieu thereof,
judgment is hereby rendered granting the petition for prohibition
against respondent city court which is hereby enjoined from
executing its judgment of conviction against petitioners-accused
and further commanding said city court to elevate petitioners'
appeal from its judgment to the Court of Appeals for the latter's
disposition on the merits. No costs.
G.R. No. L-14355 October 31, 1919
THE CITY OF MANILA, plaintiff-appellant,
vs.
CHINESE COMMUNITY OF MANILA, ET AL., defendants-
appellees.
JOHNSON, J.:
The important question presented by this appeal is: In
expropriation proceedings by the city of Manila, may the courts
inquire into, and hear proof upon, the necessity of the
expropriation?
That question arose in the following manner:
On the 11th day of December, 1916, the city of Manila
presented a petition in the Court of First Instance of said city,
praying that certain lands, therein particularly described, be
expropriated for the purpose of constructing a public
improvement. The petitioner, in the second paragraph of the
petition, alleged:
That for the purpose of constructing a public
improvement, namely, the extension of Rizal Avenue,
Manila, it is necessary for the plaintiff to acquire
ownership in fee simple of certain parcels of land
situated in the district of Binondo of said city within
Block 83 of said district, and within the jurisdiction of
this court.
The defendant, the Comunidad de Chinos de Manila [Chinese
Community of Manila], answering the petition of the plaintiff,
alleged that it was a corporation organized and existing under
and by virtue of the laws of the Philippine Islands, having for its
purpose the benefit and general welfare of the Chinese
Community of the City of Manila; that it was the owner of
parcels one and two of the land described in paragraph 2 of the
complaint; that it denied that it was either
necessary or expedient that the said parcels be expropriated for
street purposes; that existing street and roads furnished ample
means of communication for the public in the district covered by
such proposed expropriation; that if the construction of the
street or road should be considered a public necessity, other
routes were available, which would fully satisfy the plaintiff's
purposes, at much less expense and without disturbing the
resting places of the dead; that it had a Torrens title for the
lands in question; that the lands in question had been used by
the defendant for cemetery purposes; that a great number of
Chinese were buried in said cemetery; that if said expropriation
be carried into effect, it would disturb the resting places of the
dead, would require the expenditure of a large sum of money in
the transfer or removal of the bodies to some other place or site
and in the purchase of such new sites, would involve the
destruction of existing monuments and the erection of new
monuments in their stead, and would create irreparable loss
and injury to the defendant and to all those persons owning and
interested in the graves and monuments which would have to
be destroyed; that the plaintiff was without right or authority to
expropriate said cemetery or any part or portion thereof for
street purposes; and that the expropriation, in fact, was not
necessary as a public improvement.
The defendant Ildefonso Tambunting, answering the petition,
denied each and every allegation of the complaint, and alleged
that said expropriation was not a public improvement; that it
was not necessary for the plaintiff to acquire the parcels of land
in question; that a portion of the lands in question was used as
a cemetery in which were the graves of his ancestors; that
monuments and tombstones of great value were found thereon;
that the land had become quasi-public property of a benevolent
association, dedicated and used for the burial of the dead and
that many dead were buried there; that if the plaintiff deemed it
necessary to extend Rizal Avenue, he had offered and still
offers to grant a right of way for the said extension over other
land, without cost to the plaintiff, in order that the sepulchers,
chapels and graves of his ancestors may not be disturbed; that
the land so offered, free of charge, would answer every public
necessity on the part of the plaintiff.
The defendant Feliza Concepcion de Delgado, with her
husband, Jose Maria Delgado, and each of the other
STAT CON 82
defendants, answering separately, presented substantially the
same defense as that presented by the Comunidad de Chinos
de Manila and Ildefonso Tambunting above referred to.
The foregoing parts of the defense presented by the defendants
have been inserted in order to show the general character of
the defenses presented by each of the defendants. The plaintiff
alleged that the expropriation was necessary. The defendants
each alleged (a) that no necessity existed for said expropriation
and (b) that the land in question was a cemetery, which had
been used as such for many years, and was covered with
sepulchres and monuments, and that the same should not be
converted into a street for public purposes.
Upon the issue thus presented by the petition and the various
answers, the Honorable Simplicio del Rosario, judge, in a very
elucidated opinion, with very clear and explicit reasons,
supported by ambulance of authorities, decided that there
was no necessity for the expropriation of the particular strip of
land in question, and absolved each and all of the defendants
from all liability under the complaint, without any finding as to
costs.
From that judgment the plaintiff appealed and presented the
above question as its principal ground of appeal.
The theory of the plaintiff is, that once it has established the
fact, under the law, that it has authority to expropriate land, it
may expropriate any land it may desire; that the only function of
the court in such proceedings is to ascertain the value of the
land in question; that neither the court nor the owners of the
land can inquire into the advisible purpose of purpose of the
expropriation or ask any questions concerning the necessities
therefor; that the courts are mere appraisers of the land
involved in expropriation proceedings, and, when the value of
the land is fixed by the method adopted by the law, to render a
judgment in favor of the defendant for its value.
That the city of Manila has authority to expropriate private lands
for public purposes, is not denied. Section 2429 of Act No. 2711
(Charter of the city of Manila) provides that "the city (Manila) . . .
may condemn private property for public use."
The Charter of the city of Manila contains no procedure by
which the said authority may be carried into effect. We are
driven, therefore, to the procedure marked out by Act No. 190
to ascertain how the said authority may be exercised. From an
examination of Act No. 190, in its section 241, we find how the
right of eminent domain may be exercised. Said section 241

provides that, "The Government of the Philippine Islands, or of
any province or department thereof, or of any municipality, and
any person, or public or private corporation having, by law, the
right to condemn private property for public use, shall exercise
that right in the manner hereinafter prescribed."
Section 242 provides that a complaint in expropriation
proceeding shall be presented; that the complaint shall state
with certainty the right of condemnation, with a description of
the property sought to be condemned together with the interest
of each defendant separately.
Section 243 provides that if the court shall find upon trial that
the right to expropriate the land in question exists, it shall then
appoint commissioners.
Sections 244, 245 and 246 provide the method of procedure
and duty of the commissioners. Section 248 provides for an
appeal from the judgment of the Court of First Instance to the
Supreme Court. Said section 248 gives the Supreme Court
authority to inquire into the right of expropriation on the part of
the plaintiff. If the Supreme Court on appeal shall determine
that no right of expropriation existed, it shall remand the cause
to the Court of First Instance with a mandate that the defendant
be replaced in the possession of the property and that he
recover whatever damages he may have sustained by reason
of the possession of the plaintiff.
It is contended on the part of the plaintiff that the phrase in said
section, "and if the court shall find the right to expropriate
exists," means simply that, if the court finds that there is some
law authorizing the plaintiff to expropriate, then the courts have
no other function than to authorize the expropriation and to
proceed to ascertain the value of the land involved; that the
necessity for the expropriation is a legislative and not a judicial
question.
Upon the question whether expropriation is a legislative function
exclusively, and that the courts cannot intervene except for the
purpose of determining the value of the land in question, there
is much legal legislature. Much has been written upon both
sides of that question. A careful examination of the
discussions pro and con will disclose the fact that the decisions
depend largely upon particular constitutional or statutory
provisions. It cannot be denied, if the legislature under proper
authority should grant the expropriation of a certain or particular
parcel of land for some specified public purpose, that the courts
would be without jurisdiction to inquire into the purpose of that
legislation.
If, upon the other hand, however, the Legislature should
grant general authority to a municipal corporation to
expropriate private land for public purposes, we think the courts
have ample authority in this jurisdiction, under the provisions
above quoted, to make inquiry and to hear proof, upon an issue
properly presented, concerning whether or not the lands
were private and whether the purpose was, in fact, public. In
other words, have no the courts in this jurisdiction the right,
inasmuch as the questions relating to expropriation must be
referred to them (sec. 241, Act No. 190) for final decision, to
ask whether or not the law has been complied with? Suppose in
a particular case, it should be denied that the property is
not private property but public, may not the courts hear proof
upon that question? Or, suppose the defense is, that the
purpose of the expropriation is not public but private, or that
there exists no public purpose at all, may not the courts make
inquiry and hear proof upon that question?
The city of Manila is given authority to expropriate private lands
for public purposes. Can it be possible that said authority
confers the right to determine for itself that the land is private
and that the purpose is public, and that the people of the city of
Manila who pay the taxes for its support, especially those who
are directly affected, may not question one or the other, or both,
of these questions? Can it be successfully contended that the
phrase used in Act No. 190, "and if the court upon trial shall find
that such right exists," means simply that the court shall
examine the statutes simply for the purpose of ascertaining
whether a law exists authorizing the petitioner to exercise the
right of eminent domain? Or, when the case arrives in the
Supreme Court, can it be possible that the phrase, "if the
Supreme Court shall determine that no right of expropriation
exists," that that simply means that the Supreme Court shall
also examine the enactments of the legislature for the purpose
of determining whether or not a law exists permitting the plaintiff
to expropriate?
We are of the opinion that the power of the court is not limited
to that question. The right of expropriation is not an inherent
power in a municipal corporation, and before it can exercise the
right some law must exist conferring the power upon it. When
the courts come to determine the question, they must only find
(a) that a law or authority exists for the exercise of the right of
eminent domain, but (b) also that the right or authority is being
exercised in accordance with the law. In the present case there
are two conditions imposed upon the authority conceded to the
City of Manila: First, the land must be private; and, second, the
purpose must be public. If the court, upon trial, finds that neither
of these conditions exists or that either one of them fails,
certainly it cannot be contended that the right is being exercised
in accordance with law.
STAT CON 83
Whether the purpose for the exercise of the right of eminent
domain is public, is a question of fact. Whether the land is
public, is a question of fact; and, in our opinion, when the
legislature conferred upon the courts of the Philippine Islands
the right to ascertain upon trial whether the right exists for the
exercise of eminent domain, it intended that the courts should
inquire into, and hear proof upon, those questions. Is it possible
that the owner of valuable land in this jurisdiction is compelled
to stand mute while his land is being expropriated for a use not
public, with the right simply to beg the city of Manila to pay him
the value of his land? Does the law in this jurisdiction permit
municipalities to expropriate lands, without question, simply for
the purpose of satisfying the aesthetic sense of those who
happen for the time being to be in authority? Expropriation of
lands usually calls for public expense. The taxpayers are called
upon to pay the costs. Cannot the owners of land question
the public use or the public necessity?
As was said above, there is a wide divergence of opinion upon
the authority of the court to question the necessity or
advisability of the exercise of the right of eminent domain. The
divergence is usually found to depend upon particular statutory
or constitutional provisions.
It has been contended — and many cases are cited in support
of that contention, and section 158 of volume 10 of Ruling Case
Law is cited as conclusive — that the necessity for taking
property under the right of eminent domain is not a judicial
question. But those who cited said section evidently overlooked
the section immediately following (sec. 159), which adds: "But it
is obvious that if the property is taken in the ostensible behalf of
a public improvement which it can never by any possibility
serve, it is being taken for a use not public, and the owner's
constitutional rights call for protection by the courts. While many
courts have used sweeping expression in the decisions in which
they have disclaimed the power of supervising the power of
supervising the selection of the sites of public improvements, it
may be safely said that the courts of the various states would
feel bound to interfere to prevent an abuse of the discretion
delegated by the legislature, by an attempted appropriation of
land in utter disregard of the possible necessity of its use, or
when the alleged purpose was a cloak to some sinister
scheme." (Norwich City vs. Johnson, 86 Conn., 151; Bell vs.
Mattoon Waterworks, etc. Co., 245 Ill., 544; Wheeling, etc. R.
R. Co. vs. Toledo Ry. etc. Co., 72 Ohio St., 368; State vs.
Stewart, 74 Wis., 620.)
Said section 158 (10 R. C. L., 183) which is cited as conclusive
authority in support of the contention of the appellant, says:

The legislature, in providing for the exercise of the
power of eminent domain, may directly determine the
necessity for appropriating private property for a
particular improvement for public use, and it may
select the exact location of the improvement. In such
a case, it is well settled that the utility of the proposed
improvement, the extent of the public necessity for its
construction, the expediency of constructing it, the
suitableness of the location selected and the
consequent necessity of taking the land selected for
its site, are all questions exclusively for the legislature
to determine, and the courts have no power to
interfere, or to substitute their own views for those of
the representatives of the people.
Practically every case cited in support of the above doctrine has
been examined, and we are justified in making the statement
that in each case the legislature directly determined the
necessity for the exercise of the right of eminent domain in the
particular case. It is not denied that if the necessity for the
exercise of the right of eminent domain is presented to the
legislative department of the government and that department
decides that there exists a necessity for the exercise of the right
in a particular case, that then and in that case, the courts will
not go behind the action of the legislature and make inquiry
concerning the necessity. But, in the case of Wheeling, etc. R.
R. Co. vs. Toledo, Ry, etc., Co. (72 Ohio St., 368 [106 Am. St.
rep., 622, 628]), which was cited in support of the doctrine laid
down in section 158 above quoted, the court said:
But when the statute does not designate the property
to be taken nor how may be taken, then the necessity
of taking particular property is a question for the
courts. Where the application to condemn or
appropriate is made directly to the court, the question
(of necessity) should be raised and decided in limene.
The legislative department of the government was rarely
undertakes to designate the precise property which should be
taken for public use. It has generally, like in the present case,
merely conferred general authority to take land for public use
when a necessity exists therefor. We believe that it can be
confidently asserted that, under such statute, the allegation of
the necessity for the appropriation is an issuable allegation
which it is competent for the courts to decide.
(Lynch vs. Forbes, 161 Mass., 302 [42 Am. St. Rep., 402, 407].)
There is a wide distinction between a legislative declaration that
a municipality is given authority to exercise the right of eminent
domain, and a decision by the municipality that there exist a
necessity for the exercise of that right in a particular case. The
first is a declaration simply that there exist reasons why the
right should be conferred upon municipal corporation, while the
second is the application of the right to a particular case.
Certainly, the legislative declaration relating to the advisability
of granting the power cannot be converted into a declaration
that a necessity exists for its exercise in a particular case, and
especially so when, perhaps, the land in question was not
within the territorial authority was granted.
Whether it was wise, advisable, or necessary to confer upon a
municipality the power to exercise the right of eminent domain,
is a question with which the courts are not concerned. But when
that right or authority is exercised for the purpose of depriving
citizens of their property, the courts are authorized, in this
jurisdiction, to make inquiry and to hear proof upon the
necessity in the particular case, and not the general authority.
Volume 15 of the Cyclopedia of Law and Procedure (Cyc.),
page 629, is cited as a further conclusive authority upon the
question that the necessity for the exercise of the right of
eminent domain is a legislative and not a judicial question.
Cyclopedia, at the page stated, says:
In the absence of some constitutional or statutory
provision to the contrary,
the necessity and expediency of exercising the right of
eminent domain are questions essentially political and
not judicial in their character. The determination of
those questions (the necessity and the expediency)
belongs to the sovereign power; the legislative
department is final and conclusive, and the courts
have no power to review it (the necessity and the
expediency) . . . . It (the legislature) may designate the
particular property to be condemned, and its
determination in this respect cannot be reviewed by
the courts.
The volume of Cyclopedia, above referred to, cites many cases
in support of the doctrine quoted. While time has not permitted
an examination of all of said citations, many of them have been
examined, and it can be confidently asserted that said cases
which are cited in support of the assertion that, "the necessity
and expediency of exercising the right of eminent domain are
questions essentially political and not judicial," show clearly and
invariably that in each case the legislature itself usually, by a
special law, designated the particular case in which the right of
eminent domain might be exercised by the particular municipal
corporation or entity within the state. (Eastern R.
Co. vs. Boston, etc., R. Co., 11 Mass., 125 [15 Am. Rep., 13];
STAT CON 84
Brooklyn Park Com'rs vs. Armstrong, 45 N.Y., 234 [6 Am. Rep.,
70]; Hairston vs. Danville, etc. Ry. Co., 208 U. S. 598;
Cincinnati vs. Louisville, etc. Ry. Co., 223 U. S., 390;
U.S. vs. Chandler-Dunbar Water Power Co., 229 U. S., 53;
U.S. vs. Gettysburg, etc. Co., 160 U. S., 668; Traction
Co. vs. Mining Co., 196 U.S., 239; Sears vs. City of Akron, 246
U.S., 351 [erroneously cited as 242 U.S.].)
In the case of Traction Co. vs. Mining Co. (196 U.S., 239), the
Supreme Court of the United States said: "It is erroneous to
suppose that the legislature is beyond the control of the courts
in exercising the power of eminent domain, either as to
the nature of the use or the necessity to the use of any
particular property. For if the use be not public or no necessity
for the taking exists, the legislature cannot authorize the taking
of private property against the will of the owner, notwithstanding
compensation may be required."
In the case of School Board of Carolina vs. Saldaña (14 Porto
Rico, 339, 356), we find the Supreme Court of Porto Rico,
speaking through Justice MacLeary, quoting approvingly the
following, upon the question which we are discussing: "It is well
settled that although the legislature must necessarily determine
in the first instance whether the use for which they
(municipalities, etc.) attempt to exercise the power is a public
one or not, their (municipalities, etc.) determination is not final,
but is subject to correction by the courts, who may undoubtedly
declare the statute unconstitutional, if it shall clearly appear that
the use for which it is proposed to authorize the taking of private
property is in reality not public but private." Many cases are
cited in support of that doctrine.
Later, in the same decision, we find the Supreme Court of Porto
Rico says: "At any rate, the rule is quite well settled that in the
cases under consideration the determination of the necessity of
taking a particular piece or a certain amount of land rests
ultimately with the courts." (Spring Valley etc. Co. vs. San
Mateo, etc. Co., 64 Cal., 123.) .
In the case of Board of Water Com'rs., etc. vs. Johnson (86
Conn., 571 [41 L. R. A., N. S., 1024]), the Supreme Court of
Connecticut approvingly quoted the following doctrine from
Lewis on Eminent Domain (3d ed.), section 599: "In all such
cases the necessity of public utility of the proposed work or
improvement is a judicial question. In all such cases, where the
authority is to take property necessary for the purpose, the
necessity of taking particular property for a particular purpose is
a judicial one, upon which the owner is entitled to be heard."
(Riley vs. Charleston, etc. Co., 71 S. C., 457, 489 [110 Am. St.
Rep., 579]; Henderson vs. Lexington 132 Ky., 390, 403.)

The taking of private property for any use which is not required
by the necessities or convenience of the inhabitants of the
state, is an unreasonable exercise of the right of eminent
domain, and beyond the power of the legislature to delegate.
(Bennett vs. Marion, 106 Iowa, 628, 633; Wilson vs. Pittsburg,
etc. Co., 222 Pa. St., 541, 545; Greasy, etc. Co. vs. Ely, etc.
Co., 132 Ky., 692, 697.)
In the case of New Central Coal Co. vs. George's etc. Co. (37
Md., 537, 564), the Supreme Court of the State of Maryland,
discussing the question before us, said: "To justify the exercise
of this extreme power (eminent domain) where the legislature
has left it to depend upon the necessity that may be found to
exist, in order to accomplish the purpose of the incorporation,
as in this case, the party claiming the right to the exercise of the
power should be required to show at least a reasonable degree
of necessity for its exercise. Any rule less strict than this, with
the large and almost indiscriminate delegation of the right to
corporations, would likely lead to oppression and the sacrifice of
private right to corporate power."
In the case of Dewey vs. Chicago, etc. Co. (184 Ill., 426, 433),
the court said: "Its right to condemn property is not a general
power of condemnation, but is limited to cases where a
necessity for resort to private property is shown to exist. Such
necessity must appear upon the face of the petition to
condemn. If the necessary is denied the burden is upon the
company (municipality) to establish it." (Highland, etc.
Co. vs. Strickley, 116 Fed., 852, 856; Kiney vs. Citizens' Water
& Light Co., 173 Ind., 252, 257 ; Bell vs. Mattoon Waterworks,
etc. Co., 245 Ill., 544 [137 Am. St. Rep. 338].)
It is true that naby decisions may be found asserting that what
is a public use is a legislative question, and many other
decisions declaring with equal emphasis that it is a judicial
question. But, as long as there is a constitutional or statutory
provision denying the right to take land for any use other than a
public use, it occurs to us that the question whether
any particular use is a public one or not is ultimately, at least, a
judicial question. The legislative may, it is true, in effect declare
certain uses to be public, and, under the operation of the well-
known rule that a statute will not be declared to be
unconstitutional except in a case free, or comparatively free,
from doubt, the courts will certainly sustain the action of the
legislature unless it appears that the particular use is clearly not
of a public nature. The decisions must be understood with this
limitation; for, certainly, no court of last resort will be willing to
declare that any and every purpose which the legislative might
happen to designate as a public use shall be conclusively held
to be so, irrespective of the purpose in question and of its
manifestly private character Blackstone in his Commentaries on
the English Law remarks that, so great is the regard of the law
for private property that it will not authorize the least violation of
it, even for the public good, unless there exists a very great
necessity therefor.
In the case of Wilkinson vs. Leland (2 Pet. [U.S.], 657), the
Supreme Court of the United States said: "That government can
scarcely be deemed free where the rights of property are left
solely defendant on the legislative body, without restraint. The
fundamental maxims of free government seem to require that
the rights of personal liberty and private property should be held
sacred. At least no court of justice in this country would be
warranted in assuming that the power to violate and disregard
them — a power so repugnant to the common principles of
justice and civil liberty — lurked in any general grant of
legislature authority, or ought to be implied from any general
expression of the people. The people ought no to be presumed
to part with rights so vital to their security and well-being without
very strong and direct expression of such intention." (Lewis on
Eminent Domain, sec. 603; Lecoul vs. Police Jury 20 La. Ann.,
308; Jefferson vs. Jazem, 7 La. Ann., 182.)
Blackstone, in his Commentaries on the English Law said that
the right to own and possess land — a place to live separate
and apart from others — to retain it as a home for the family in
a way not to be molested by others — is one of the most sacred
rights that men are heirs to. That right has been written into the
organic law of every civilized nation. The Acts of Congress of
July 1, 1902, and of August 29, 1916, which provide that "no
law shall be enacted in the Philippine Islands which shall
deprive any person of his property without due process of law,"
are but a restatement of the time-honored protection of the
absolute right of the individual to his property. Neither did said
Acts of Congress add anything to the law already existing in the
Philippine Islands. The Spaniard fully recognized the principle
and adequately protected the inhabitants of the Philippine
Islands against the encroachment upon the private property of
the individual. Article 349 of the Civil Code provides that: "No
one may be deprived of his property unless it be by competent
authority, for some purpose of proven public utility, and after
payment of the proper compensation Unless this requisite
(proven public utility and payment) has been complied with, it
shall be the duty of the courts to protect the owner of such
property in its possession or to restore its possession to him ,
as the case may be."
The exercise of the right of eminent domain, whether directly by
the State, or by its authorized agents, is necessarily in
derogation of private rights, and the rule in that case is that the
authority must be strictly construed. No species of property is
held by individuals with greater tenacity, and none is guarded
STAT CON 85
by the constitution and laws more sedulously, than the right to
the freehold of inhabitants. When the legislature interferes with
that right, and, for greater public purposes, appropriates the
land of an individual without his consent, the plain meaning of
the law should not be enlarged by doubtly interpretation.
(Bensely vs. Mountainlake Water Co., 13 Cal., 306 and cases
cited [73 Am. Dec., 576].)
The statutory power of taking property from the owner without
his consent is one of the most delicate exercise of government
authority. It is to be watched with jealous scrutiny. Important as
the power may be to the government, the inviolable sanctity
which all free constitutions attach to the right of property of the
citizens, constrains the strict observance of the substantial
provisions of the law which are prescribed as modes of the
exercise of the power, and to protect it from abuse. Not only
must the authority of municipal corporations to take property be
expressly conferred and the use for which it is taken specified,
but the power, with all constitutional limitation and directions for
its exercise, must be strictly pursued. (Dillon on Municipal
Corporations [5th Ed.], sec. 1040, and cases cited;
Tenorio vs. Manila Railroad Co., 22 Phil., 411.)
It can scarcely be contended that a municipality would be
permitted to take property for some public use unless some
public necessity existed therefor. The right to take private
property for public use originates in the necessity, and the
taking must be limited by such necessity. The appellant
contends that inasmuch as the legislature has given it general
authority to take private property for public use, that the
legislature has, therefore, settled the question of the necessity
in every case and that the courts are closed to the owners of
the property upon that question. Can it be imagined, when the
legislature adopted section 2429 of Act No. 2711, that it thereby
declared that it was necessary to appropriate the property of
Juan de la Cruz, whose property, perhaps, was not within the
city limits at the time the law was adopted? The legislature,
then, not having declared the necessity, can it be contemplated
that it intended that a municipality should be the sole judge of
the necessity in every case, and that the courts, in the face of
the provision that "if upon trial they shall find that a right exists,"
cannot in that trial inquire into and hear proof upon the
necessity for the appropriation in a particular case?
The Charter of the city of Manila authorizes the taking
of private property for public use. Suppose the owner of the
property denies and successfully proves that the taking of his
property serves no public use: Would the courts not be justified
in inquiring into that question and in finally denying the petition if
no public purpose was proved? Can it be denied that the courts
have a right to inquire into that question? If the courts can ask

questions and decide, upon an issue properly presented,
whether the use is public or not, is not that tantamount to
permitting the courts to inquire into the necessity of the
appropriation? If there is no public use, then there is no
necessity, and if there is no necessity, it is difficult to
understand how a public use can necessarily exist. If the courts
can inquire into the question whether a public use exists or not,
then it seems that it must follow that they can examine into the
question of the necessity.
The very foundation of the right to exercise eminent domain is a
genuine necessity, and that necessity must be of a public
character. The ascertainment of the necessity must precede or
accompany, and not follow, the taking of the
land. (Morrison vs. Indianapolis, etc. Ry. Co., 166 Ind., 511;
Stearns vs. Barre, 73 Vt., 281; Wheeling, etc. R. R.
Co. vs. Toledo, Ry. etc. Co., 72 Ohio St., 368.)
The general power to exercise the right of eminent domain must
not be confused with the right to exercise it in a particular case.
The power of the legislature to confer, upon municipal
corporations and other entities within the State, general
authority to exercise the right of eminent domain cannot be
questioned by the courts, but that general authority of
municipalities or entities must not be confused with the right to
exercise it in particular instances. The moment the municipal
corporation or entity attempts to exercise the authority
conferred, it must comply with the conditions accompanying the
authority. The necessity for conferring the authority upon a
municipal corporation to exercise the right of eminent domain is
admittedly within the power of the legislature. But whether or
not the municipal corporation or entity is exercising the right in a
particular case under the conditions imposed by the general
authority, is a question which the courts have the right to inquire
into.
The conflict in the authorities upon the question whether
the necessity for the exercise of the right of eminent domain is
purely legislative and not judicial, arises generally in the wisdom
and propriety of the legislature in authorizing the exercise of the
right of eminent domain instead of in the question of the right to
exercise it in a particular case. (Creston Waterworks
Co. vs. McGrath, 89 Iowa, 502.)
By the weight of authorities, the courts have the power of
restricting the exercise of eminent domain to the actual
reasonable necessities of the case and for the purposes
designated by the law. (Fairchild vs. City of St. Paul. 48 Minn.,
540.)
And, moreover, the record does not show conclusively that the
plaintiff has definitely decided that their exists a necessity for
the appropriation of the particular land described in the
complaint. Exhibits 4, 5, 7, and E clearly indicate that the
municipal board believed at one time that other land might be
used for the proposed improvement, thereby avoiding the
necessity of distributing the quiet resting place of the dead.
Aside from insisting that there exists no necessity for the
alleged improvements, the defendants further contend that the
street in question should not be opened through the cemetery.
One of the defendants alleges that said cemetery
is public property. If that allegations is true, then, of course, the
city of Manila cannot appropriate it for public use. The city of
Manila can only expropriate private property.
It is a well known fact that cemeteries may be public or private.
The former is a cemetery used by the general community, or
neighborhood, or church, while the latter is used only by a
family, or a small portion of the community or neighborhood. (11
C. J., 50.)
Where a cemetery is open to public, it is a public use and no
part of the ground can be taken for other public uses under a
general authority. And this immunity extends to the unimproved
and unoccupied parts which are held in good faith for future
use. (Lewis on Eminent Domain, sec. 434, and cases cited.)
The cemetery in question seems to have been established
under governmental authority. The Spanish Governor-General,
in an order creating the same, used the following language:
The cemetery and general hospital for indigent
Chinese having been founded and maintained by the
spontaneous and fraternal contribution of their
protector, merchants and industrials, benefactors of
mankind, in consideration of their services to the
Government of the Islands its internal administration,
government and regime must necessarily be adjusted
to the taste and traditional practices of those born and
educated in China in order that the sentiments which
animated the founders may be perpetually
effectuated.
It is alleged, and not denied, that the cemetery in question may
be used by the general community of Chinese, which fact, in
the general acceptation of the definition of a public cemetery,
would make the cemetery in question public property. If that is
true, then, of course, the petition of the plaintiff must be denied,
STAT CON 86
for the reason that the city of Manila has no authority or right
under the law to expropriate public property.
But, whether or not the cemetery is public or private property,
its appropriation for the uses of a public street, especially during
the lifetime of those specially interested in its maintenance as a
cemetery, should be a question of great concern, and its
appropriation should not be made for such purposes until it is
fully established that the greatest necessity exists therefor.
While we do not contend that the dead must not give place to
the living, and while it is a matter of public knowledge that in the
process of time sepulchres may become the seat of cities and
cemeteries traversed by streets and daily trod by the feet of
millions of men, yet, nevertheless such sacrifices and such
uses of the places of the dead should not be made unless and
until it is fully established that there exists an eminent necessity
therefor. While cemeteries and sepulchres and the places of the
burial of the dead are still within
the memory and command of the active care of the living; while
they are still devoted to pious uses and sacred regard, it is
difficult to believe that even the legislature would adopt a law
expressly providing that such places, under such
circumstances, should be violated.
In such an appropriation, what, we may ask, would be the
measure of damages at law, for the wounded sensibilities of the
living, in having the graves of kindred and loved ones blotted
out and desecrated by a common highway or street for public
travel? The impossibility of measuring the damage and
inadequacy of a remedy at law is too apparent to admit of
argument. To disturb the mortal remains of those endeared to
us in life sometimes becomes the sad duty of the living; but,
except in cases of necessity, or for laudable purposes, the
sanctity of the grave, the last resting place of our friends, should
be maintained, and the preventative aid of the courts should be
invoked for that object. (Railroad Company vs. Cemetery Co.,
116 Tenn., 400; Evergreen Cemetery Association vs. The City
of New Haven, 43 Conn., 234; Anderson vs. Acheson, 132
Iowa, 744; Beatty vs. Kurtz, 2 Peters, 566.)
In the present case, even granting that a necessity exists for the
opening of the street in question, the record contains no proof
of the necessity of opening the same through the cemetery. The
record shows that adjoining and adjacent lands have been
offered to the city free of charge, which will answer every
purpose of the plaintiff.

For all of the foregoing, we are fully persuaded that the
judgment of the lower court should be and is hereby affirmed,
with costs against the appellant. So ordered.
G.R. No. L-54718 December 4, 1985
CRISOLOGO VILLANUEVA Y PARDES, petitioner,
vs.
COMMISSION ON ELECTIONS, MUNICIPAL BOARD OF
CANVASSERS OF DOLORES, QUEZON, VIVENCIO G.
LIRIO respondents.
RESOLUTION
TEEHANKEE, J.:
Upon consideration of petitioner's motion for reconsideration of
the decision of May 3, 1983 1 (which dismissed his petition to
set aside respondent Comelec's resolutions of February 21,
1980 and July 31, 1980 denying his petition for annulment of
the proclamation of respondent Vivencio Lirio as the elected
vice-mayor of Dolores, Quezon and for his proclamation instead
as such elected vice-mayor for having received the clear
majority of the votes cast), the comments of public and private
respondents and petitioner's consolidated reply and
manifestation and motion of June 25, 1985 (stating that
respondent abandoned his claim to the office and accepted and
assumed on June 10, 1985, the position of municipal trial judge
of Lucban and Sampaloc, Quezon, as verified from the records
of the Office of the Court Administrator), the Court Resolved to
RECONSIDER and SET ASIDE its aforesaid decision and to
GRANT the petition at bar.
The undisputed facts show that one Narciso Mendoza, Jr. had
filed on January 4, 1980, the last day for filing of certificates of
candidacy in the January 30, 1980 local elections, his sworn
certificate of candidacy as independent for the office of vice-
mayor of the municipality of Dolores, Quezon. But later on
the very same day, Mendoza filed an unsworn letter in his own
handwriting withdrawing his said certificate of candidacy "for
personal reasons." Later on January 25, 1980, petitioner
Crisologo Villanueva, upon learning of his companion
Mendoza's withdrawal, filed his own sworn "Certificate of
Candidacy in substitution" of Mendoza's for the said office of
vice mayor as a one-man independent ticket. ... The results
showed petitioner to be the clear winner over respondent with a
margin of 452 votes (3,112 votes as against his opponent
respondent Lirio's 2,660 votes). But the Municipal Board of
Canvassers disregarded all votes cast in favor of petitioner as
stray votes on the basis of the Provincial Election Officer's
erroneous opinion that since petitioner's name does not appear
in the Comelec's certified list of candidates for that municipality,
it could be presumed that his candidacy was not duly approved
by the Comelec so that his votes could not be "legally counted.
" ... The canvassers accordingly proclaimed respondent
Vivencio G. Lirio as the only unopposed candidate and as the
duly elected vice mayor of the municipality of Dolores.
Respondent Comelec issued its questioned resolution on
February 21, 1980 denying the petition on two grounds after
citing the pertinent legal provisions, as follows:
The 1978 Election Code provides:
SEC. 27. ... No certificate of candidacy duly
filed shall be considered withdraw ... unless
the candidate files with the office which
received the certificate ... or with the
Commission a sworn statement of
withdrawal ...
SEC. 28. ... If, after last day for filing
certificates of candidacy, a candidate with a
certificate of candidacy duly filed should ...
withdraw ... any voter qualified for the office
may file his certificate of candidacy for the
office for which ... the candidate who has
withdrawn ... was a candidate on or before
midday of election ...
Clearly, Petitioner Villanueva could not have
substituted for Candidate Mendoza on the
strength of Section 28 of the 1978 Election
Code which he invokes, For one thing,
Mendoza's withdrawal of his certificate is not
under oath, as required under Section 27 of
the Code; hence it produces no legal effect.
For another, said withdrawal was made not
after the last day (January 4, 1980) for filing
certificates of candidacy,
as contemplated under Sec. 28 of the Code,
but on that very same day. (Emphasis
copies)
Upon a restudy of the case, the Court finds merit in the
reconsideration prayed for, which would respect the will of the
electorate instead of defeating the same through the invocation
of formal or technical defects. (De Guzman vs. Board of
STAT CON 87
Canvassers, 48 Phil. 211 [1925], citing Lino Luna vs.
Rodriguez, 39 Phil. 208 (1918) Badelles vs. Cabili 27 SCRA
121 [1969]; Yra vs. Abano 52 Phil. 380 [1928]; Canceran vs.
Comelec, 107 Phil. 607 (1960) Corocoro vs. Bascara, 9 SCRA
522 [1963], Pungutan vs. Abubakar, 43 SCRA 11 [19721; and
Lacson, Jr. vs. Posadas 72 SCRA 170 [19761).
The Court holds that the Comelec's first ground for denying due
course to petitioner's substitute certificate of candidacy, i.e. that
Mendoza's withdrawal of his certificate of candidacy was not
"under oath," should be rejected. It is not seriously contended
by respondent nor by the Comelec that Mendoza's withdrawal
was not an actual fact and a reality, so much so that no votes
were cast for him at all, In fact, Mendoza's name, even though
his candidacy was filed on the last day within the deadline, was
not in the Comelec's certified list of candidates. His unsworn
withdrawal filed later on the same day had been accepted by
the election registrar without protest nor objection, On the other
hand, since there was no time to include petitioner's name in
the Comelec list of registered candidates, because the election
was only four days away, petitioner as substitute candidate
circularized formal notices of his candidacy to all chairmen and
members of the citizens election committees in compliance with
the suggestion of the Comelec Law Manager, Atty. Zoilo
Gomez.
The fact that Mendoza's withdrawal was not sworn is but a
technicality which should not be used to frustrate the people's
will in favor of petitioner as the substitute candidate. In Guzman
us, Board of Canvassers, 48 Phil. 211, clearly
applicable, mutatis mutandis this Court held that "(T)he will of
the people cannot be frustrated by a technicality that the
certificate of candidacy had not been properly sworn to, This
legal provision is mandatory and non-compliance therewith
before the election would be fatal to the status of the candidate
before the electorate, but after the people have expressed their
will, the result of the election cannot be defeated by the fact that
the candidate has not sworn to his certificate or candidacy."
(See also Gundan vs. Court of First Instance, 66 Phil. 125). As
likewise ruled by this Court in Canceran vs. Comelec, 107 Phil.
607, the legal requirement that a withdrawal be under oath will
be held to be merely directory and Mendoza's failure to observe
the requirement should be "considered a harmless irregularity."
As to the second ground, Mendoza's withdrawal of his
certificate of candidacy right on the very same day that he filed
his certificate of candidacy on January 4, 1980 which was
the very last day for filing of certificates of candidacy shows that
he was not serious about his certificate of candidacy. But this
could not be done to would be bonafide candidates, like
petitioner who had not filed his candidacy in deference to

Mendoza's candidacy who was one of his " co-planners " with
"some concerned citizens ... (who) held causes to put up a slate
that will run against the erstwhile unopposed KBL slate."
The Comelec's post-election act of denying petitioner's
substitute candidacy certainly does not seem to be in
consonance with the substance and spirit of the law. Section 28
of the 1978 Election Code provides for such substitute
candidates in case of death. withdrawal or disqualification up to
mid-day of the very day of the elections. Mendoza's withdrawal
was filed on the last hour of the last day for regular filing of
candidacies on January 4, 1980, which he had filed earlier that
same day. For all intents and purposes, such withdrawal should
therefore be considered as having been made substantially and
in truth after the last day, even going by the literal reading of the
provision by the Comelec. Indeed, the statement of former
Chief Justice Enrique M. Fernando in his dissent that "the bona
fides of petitioner Crisologo Villanueva y Paredes as a
substitute candidate cannot, (in his opinion), be successfully
assailed. It follows that the votes cast in his favor must be
counted. Such being the case, there is more than sufficient
justification for his proclamation as Vice Mayor...
ACCORDINGLY, the Court SETS ASIDE the questioned
Resolutions of respondent Comelec and annuls the
proclamation of respondent Lirio as elected
vice-mayor of Dolores, Quezon and instead declares petitioner
as the duly elected vice-mayor of said municipality and entitled
forthwith to assume said office, take the oath of office and
discharge its functions. This resolution is IMMEDIATELY
EXECUTORY. SO ORDERED.
G.R. No. L-14322 February 25, 1960
In the matter of the TESTATE ESTATE OF PETRONILA
TAMPOY, deceased,
vs.
DIOSDADA ALBERASTINE, petitioner-appellant.
Agustin Y. Kintanar for appellant.
BAUTISTA ANGELO, J.:
This concerns the probate of a document which purports to be
the last will and testament of one Petronila Tampoy. After the
petition was published in accordance with law and petitioner
had presented oral and documentaryevidence, the trial court
denied the petition on the ground that the left hand margin of
the first of the will does not bear the thumbmark of the testatrix.
Petitioner appealed from this ruling but the Court of Appeals
certified the case to us because it involves purely a question of
law.
The facts of this case as found by the trial court as follows:
It is apparent from the evidence that Petronila Tampoy,
already widowed and childless, begged Bonigfacio Miñoza
to read the Exhibito A testament and toissue it in its
contents in its home in San Miguel Street, in the
municipality of Argao, Cebu province, on 19 November
1939 , and as Bonifacio Miñoza did in the presence of the
three instrumental witnesses, Rosario K. Chan, Mauricio de
la Peña and Simeon Omboy, and after conforming to the
content of the will, she begged Bonifacio Miñoza, to write
her name at the foot of the will, in the second page, and so
did Bonifacio Miñoza, and then she stamped her digital
mark enters her name and drenched in the presence of each
and every one of the three instrumental witnesses, Rosario
K. Chan, Mauricio de la Peña and Simeon Omboy and
Bonifacio Miñoza , and then, Bonifacio Miñoza also signed
at the foot of each and every one of the three witnesses
named above. The testator as well as Bonifacio Miñoza
starts from the first page of the will that is composed of two
pages. Each and every one of the three instrumental
witnesses, Rosario K. Chan, Mauricio de la Peña and
Simeon Omboy, signed at the foot of the witness clause that
is written on the second page of the will and on the left
bank of the same page 2 and the first page and n presence
of the testator, Bonifacio Miñoza, lawyer Kintanar and each
and every one of them. The will was granted by the free
testator and expontaneament, without being threatened,
forced or intimidated, and without having exercised undue
influence on it, being it in full use of her mental faculties
and enjoying good health. The testhesist died in his case in
Argao on February 22, 1957 (See Certificate of Function
Exhibit ofunction B). The heiress instituted in the will,
Carmen Alberastine, died two weeks after the testator, that
is, on March 7, 1957, leaving her mother, the applicant
Diosdada Alberastine.
The above facts are not controverted, there being no opposition
to the probate of the will. However, the trial court denied the
petition on the ground that the first page of the will does not
bear the thumbmark of the testatrix. Petitioner now prays that
this ruling be set aside for the reason that, although the first
page of the will does not bear the thumbmark of the testatrix,
the same however expresses her true intention to givethe
property to her whose claims remains undisputed. She wishes
to emphasize that no one has filed any to the opposition to the
probate of the will and that while the first page does not bear
STAT CON 88
the thumbmark of the testatrix, the second however bears her
thumbmark and both pages were signed by the three
testimonial witnesses. Moreover, despite the fact that the
petition for probate is unoppossed, the three testimonial
witnesses testified and manifested to the court that the
document expresses the true and voluntary will of the
deceased.
This contention cannot be sustained as it runs counter to the
express provision of the law. Thus, Section 618 of Act 190, as
amended, requires that the testator sign the will and each and
every page thereof in the presence of the witnesses, and that
the latter sign the will and each and every page thereof in the
presence of the testator and of each other, which requirement
should be expressed in the attestation clause. This requirement
is mandatory, for failure to comply with it is fatal to the validity of
the will (Rodriguez vs. Alcala, 55 Phil., 150). Thus, it has been
held that "Statutes prescribing the formalities to be observed in
the execution of wills are very strictly construed. As stated in 40
Cyc., at page 1097, 'A will must be executed in accordance with
the statutory requirements; otherwise it is entirely void.' All
these requirements stand as of equal importance and must be
observed, and courts cannot supply the defective execution of a
will. No power or discretion is vested in them, either to
superadd other conditions or dispence with those enumerated
in the statutes" (Uy Coque vs. Navas L. Sioca, 43 Phil., 405,
407; See also Saño vs. Quintana, 48 Phil., 506; Gumban vs.
Gorecho, 50 Phil., 30; Quinto vs. Morata, 54 Phil., 481).
Since the will in question suffers from the fatal defect that it
does not bear the thumbmark of the testatrix on its first page
even if it bears the signature of the three instrumental
witnesses, we cannot escape the conclusion that the same fails
to comply with the law and therefore, cannot be admitted to
probate.
Wherefore, the order appealed from is affirmed, without
pronouncement as to costs.