EN BANC

[G.R. No. 149276. September 27, 2002]

JOVENCIO LIM and TERESITA LIM, petitioners, vs. THE PEOPLE OF

THE PHILIPPINES, THE REGIONAL TRIAL COURT OF QUEZON
CITY, BRANCH 217, THE CITY PROSECUTOR OF QUEZON CITY,
AND WILSON CHAM, respondents.
DECISION
CORONA, J.:

The constitutionality of PD 818, a decree which amended Article 315 of the Revised
Penal Code by increasing the penalties for estafa committed by means of bouncing
checks, is being challenged in this petition for certiorari, for being violative of the due
process clause, the right to bail and the provision against cruel, degrading or inhuman
punishment enshrined under the Constitution.
The antecedents of this case, as gathered from the parties pleadings and
documentary proofs, follow.
In December 1991, petitioner spouses issued to private respondent two postdated
checks, namely, Metrobank check no. 464728 dated January 15, 1992 in the amount of
P365,750 and Metrobank check no. 464743 dated January 22, 1992 in the amount of
P429,000. Check no. 464728 was dishonored upon presentment for having been
drawn against insufficient funds while check no. 464743 was not presented for payment
upon request of petitioners who promised to replace the dishonored check.
When petitioners reneged on their promise to cover the amount of check no.
464728, the private respondent filed a complaint-affidavit before the Office of the City
Prosecutor of Quezon City charging petitioner spouses with the crime of estafa under
Article 315, par. 2 (d) of the Revised Penal Code, as amended by PD 818.
On February 16, 2001, the City Prosecutor issued a resolution finding probable
cause against petitioners and recommending the filing of an information for estafa with
no bail recommended. On the same day, an information for the crime of estafa was
filed with Branch 217 of the Regional Trial Court of Quezon City against
petitioners. The case was docketed as Criminal Case No. Q-01-101574. Thereafter,
the trial court issued a warrant for the arrest of herein petitioners, thus:

It appearing on the face of the information and from supporting affidavit of the
complaining witness and its annexes that probable cause exists, that the crime

charged was committed and accused is probably guilty thereof, let a warrant for the
arrest of the accused be issued.
No Bail Recommended.
SO ORDERED.

[1]

On July 18, 2001, petitioners filed an Urgent Motion to Quash Information and
Warrant of Arrest which was denied by the trial court. Likewise, petitioners motion for
bail filed on July 24, 2001 was denied by the trial court on the same day. Petitioner
Jovencio Lim was arrested by virtue of the warrant of arrest issued by the trial court and
was detained at the Quezon City Jail. However, petitioner Teresita Lim remained at
large.
On August 22, 2001, petitioners filed the instant petition for certiorari imputing grave
abuse of discretion on the part of the lower court and the Office of the City Prosecutor of
Quezon City, arguing that PD 818 violates the constitutional provisions on due process,
bail and imposition of cruel, degrading or inhuman punishment.
In a resolution dated February 26, 2002, this Court granted the petition of Jovencio
Lim to post bail pursuant to Department of Justice Circular No. 74 dated November 6,
2001 which amended the 2000 Bail Bond Guide involving estafa under Article 315, par.
2 (d), and qualified theft. Said Circular specifically provides as follows:
xxx

xxx

xxx

3) Where the amount of fraud is P32,000.00 or over in which the imposable penalty
is reclusion temporal to reclusion perpetua, bail shall be based on reclusion
temporal maximum, pursuant to Par. 2 (a) of the 2000 Bail Bond Guide, multiplied
by P2,000.00, plus an additional of P2,000.00 for every P10,000.00 in excess of
P22,000.00; Provided, however, that the total amount of bail shall not exceed
P60,000.00.

In view of the aforementioned resolution, the matter concerning bail shall no longer
be discussed. Thus, this decision will focus on whether or not PD 818 violates Sections
1 and 19 of Article III of the Constitution, which respectively provide:

Section 1. No person shall be deprived of life, liberty or property without due process
of law, nor shall any person be denied the equal protection of the laws.
x

Section 19 (1) Excessive fines shall not be imposed, nor cruel, degrading or inhuman
punishment inflicted. x x x.
We shall deal first with the issue of whether PD 818 was enacted in contravention of
Section 19 of Article III of the Constitution. In this regard, the impugned provision of PD
818 reads as follows:

SECTION 1. Any person who shall defraud another by means of false pretenses or
fraudulent acts as defined in paragraph 2(d) of Article 315 of the Revised Penal Code,
as amended by Republic Act No. 4885, shall be punished by:
1 . The penalty of reclusion temporal if the amount of the fraud is over 12,000 pesos
but does not exceed 22,000 pesos, and if such amount exceeds the later sum, the
penalty provided in this paragraph shall be imposed in its maximum period, adding
one year for each additional 10,000 pesos but the total penalty which may be imposed
shall in no case exceed thirty years. In such cases, and in connection with the
accessory penalties which may be imposed under the Revised Penal Code, the penalty
shall be termed reclusion perpetua;
st

2 . The penalty of prision mayor in its maximum period, if the amount of the fraud is
over 6,000 pesos but does not exceed 12,000 pesos.
nd

3 . The penalty of prision mayor in its medium period, if such amount is over 200
pesos but does not exceed 6,000 pesos; and
rd

4 . By prision mayor in its minimum period, if such amount does not exceed 200
pesos.
th

Petitioners contend that, inasmuch as the amount of the subject check is P365,750,
they can be penalized with reclusion perpetua or 30 years of imprisonment. This
penalty, according to petitioners, is too severe and disproportionate to the crime they
committed and infringes on the express mandate of Article III, Section 19 of the
Constitution which prohibits the infliction of cruel, degrading and inhuman punishment.
Settled is the rule that a punishment authorized by statute is not cruel, degrading or
disproportionate to the nature of the offense unless it is flagrantly and plainly oppressive
and wholly disproportionate to the nature of the offense as to shock the moral sense of
the community. It takes more than merely being harsh, excessive, out of proportion or
severe for a penalty to be obnoxious to the Constitution. [2] Based on this principle, the
Court has consistently overruled contentions of the defense that the penalty of fine or
imprisonment authorized by the statute involved is cruel and degrading.
In People vs. Tongko,[3] this Court held that the prohibition against cruel and unusual
punishment is generally aimed at the form or character of the punishment rather than its
severity in respect of its duration or amount, and applies to punishments which never
existed in America or which public sentiment regards as cruel or obsolete. This refers,
for instance, to those inflicted at the whipping post or in the pillory, to burning at the
stake, breaking on the wheel, disemboweling and the like. The fact that the penalty is
severe provides insufficient basis to declare a law unconstitutional and does not, by that
circumstance alone, make it cruel and inhuman.
Petitioners also argue that while PD 818 increased the imposable penalties for
estafa committed under Article 315, par. 2 (d) of the Revised Penal Code, it did not

increase the amounts corresponding to the said new penalties. Thus, the original
amounts provided for in the Revised Penal Code have remained the same
notwithstanding that they have become negligible and insignificant compared to the
present value of the peso.
This argument is without merit. The primary purpose of PD 818 is emphatically and
categorically stated in the following:

WHEREAS, reports received of late indicate an upsurge of estafa (swindling) cases

committed by means of bouncing checks;
WHEREAS, if not checked at once, these criminal acts would erode the peoples
confidence in the use of negotiable instruments as a medium of commercial
transaction and consequently result in the retardation of trade and commerce and the
undermining of the banking system of the country;
WHEREAS, it is vitally necessary to arrest and curb the rise in this kind of estafa
cases by increasing the existing penalties provided therefor.
Clearly, the increase in the penalty, far from being cruel and degrading, was
motivated by a laudable purpose, namely, to effectuate the repression of an evil that
undermines the countrys commercial and economic growth, and to serve as a
necessary precaution to deter people from issuing bouncing checks. The fact that PD
818 did not increase the amounts corresponding to the new penalties only proves that
the amount is immaterial and inconsequential. What the law sought to avert was the
proliferation of estafa cases committed by means of bouncing checks. Taking into
account the salutary purpose for which said law was decreed, we conclude that PD 818
does not violate Section 19 of Article III of the Constitution.
Moreover, when a law is questioned before the Court, the presumption is in favor of
its constitutionality. To justify its nullification, there must be a clear and unmistakable
breach of the Constitution, not a doubtful and argumentative one.[4] The burden of
proving the invalidity of a law rests on those who challenge it. In this case, petitioners
failed to present clear and convincing proof to defeat the presumption of constitutionality
of PD 818.
With respect to the issue of whether PD 818 infringes on Section 1 of Article III of
the Constitution, petitioners claim that PD 818 is violative of the due process clause of
the Constitution as it was not published in the Official Gazette. This claim is incorrect
and must be rejected. Publication, being an indispensable part of due process, is
imperative to the validity of laws, presidential decrees and executive orders. [5] PD 818
was published in the Official Gazette on December 1, 1975. [6]
With the foregoing considerations in mind, this Court upholds the constitutionality of
PD 818.
WHEREFORE, the petition is hereby DISMISSED.

SO ORDERED.
Davide, Jr., C.J., Bellosillo, Vitug, Panganiban, Quisumbing, Ynares-Santiago,
Sandoval-Gutierrez, Carpio, Austria-Martinez, Morales, and Callejo, Sr., JJ., concur.
Puno, J., no part due to relation to counsel.
Mendoza, J., on leave.

[1]

Rollo, p. 29.

[2]

People vs. Estoista, 93 Phil. 647 (1954).

[3]

290 SCRA 597 (1998).

[4]

Lacson vs. Executive Secretary, 301 SCRA 298 (1999).

[5]

Taada vs. Tuvera, 146 SCRA 446 (1986).

[6]

71 O.G. 8097 (1975).

Today is Tuesday, September 16, 2014

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 87047 October 31, 1990
FRANCISCO LAO LIM, petitioner,
vs.
COURT OF APPEALS and BENITO VILLAVICENCIO DY, respondents.
Gener E. Asuncion for petitioner.
Natividad T. Perez for private respondent.

REGALADO, J.:
Respondent Court of Appeals having affirmed in toto on June 30, 1988 in CA-G.R. SP No. 13925, 1 the decision of the Regional
Trial Court of Manila, Branch XLVI in Civil Case No. 87-42719, entitled "Francisco Lao Lim vs. Benito Villavicencio Dy," petitioner seeks
the reversal of such affirmance in the instant petition.

The records show that private respondent entered into a contract of lease with petitioner for a period of three (3) years, that is,
from 1976 to 1979. After the stipulated term expired, private respondent refused to vacate the premises, hence, petitioner filed an
ejectment suit against the former in the City Court of Manila, docketed therein as Civil Case No. 051063-CV. The case was
terminated by a judicially approved compromise agreement of the parties providing in part:
3. That the term of the lease shall be renewed every three years retroacting from October 1979 to
October 1982; after which the abovenamed rental shall be raised automatically by 20% every three years
for as long as defendant needed the premises and can meet and pay the said increases, the defendant to
give notice of his intent to renew sixty (60) days before the expiration of the term; 2
By reason of said compromise agreement the lease continued from 1979 to 1982, then from 1982 to 1985. On April 17, 1985,
petitioner advised private respondent that he would no longer renew the contract effective October, 1985. 3 However, on August 5,
1985, private respondent informed petitioner in writing of his intention to renew the contract of lease for another term, commencing
November, 1985 to October, 1988. 4 In reply to said letter, petitioner advised private respondent that he did not agree to a renewal of
the lease contract upon its expiration in October, 1985. 5

On January 15, 1986, because of private respondent's refusal to vacate the premises, petitioner filed another ejectment suit, this

time with the Metropolitan Trial Court of Manila in Civil Case No. 114659-CV. In its decision of September 24, 1987, said court
dismissed the complaint on the grounds that (1) the lease contract has not expired, being a continuous one the period whereof
depended upon the lessee's need for the premises and his ability to pay the rents; and (2) the compromise agreement entered
into in the aforesaid Civil Case No. 051063-CV constitutes res judicata to the case before it. 6
Petitioner appealed to the Regional Trial Court of Manila which, in its decision of January 28, 1988 in Civil Case No. 87-42719,
affirmed the decision of the lower court. 7
As stated at the outset, respondent Court of Appeals affirmed in full said decision of the Regional Trial Court and held that (1) the
stipulation in the compromise agreement which, in its formulation, allows the lessee to stay on the premises as long as he needs
it and can pay rents is valid, being a resolutory condition and, therefore, beyond the ambit of Article 1308 of the Civil Code; and
(2) that a compromise has the effect of res judicata. 8
Petitioner's motion for reconsideration having been denied by respondent Court of Appeals, this present petition is now before
us. We find the same to be meritorious.
Contrary to the ruling of respondent court, the disputed stipulation "for as long as the defendant needed the premises and can
meet and pay said increases" is a purely potestative condition because it leaves the effectivity and enjoyment of leasehold rights
to the sole and exclusive will of the lessee. It is likewise a suspensive condition because the renewal of the lease, which gives
rise to a new lease, depends upon said condition. It should be noted that a renewal constitutes a new contract of lease although
with the same terms and conditions as those in the expired lease. It should also not be overlooked that said condition is not
resolutory in nature because it is not a condition that terminates the lease contract. The lease contract is for a definite period of
three (3) years upon the expiration of which the lease automatically terminates.
The invalidity of a condition in a lease contract similar to the one at bar has been resolved in Encarnacion vs. Baldomar, et
al. 9 where we ruled that in an action for ejectment, the defense interposed by the lessees that the contract of lease authorized them to
continue occupying the premises as long as they paid the rents is untenable, because it would leave to the lessees the sole power to
determine whether the lease should continue or not. As stated therein, "(i)f this defense were to be allowed, so long as defendants
elected to continue the lease by continuing the payment of the rentals, the owner would never be able to discontinue it; conversely,
although the owner should desire the lease to continue, the lessees could effectively thwart his purpose if they should prefer to
terminate the contract by the simple expedient of stopping payment of the rentals. This, of course, is prohibited by the aforesaid article
of the Civil Code. (8 Manresa, 3rd ed., pp. 626, 627; Cuyugan vs. Santos, 34 Phil. 100.)

The continuance, effectivity and fulfillment of a contract of lease cannot be made to depend exclusively upon the free and
uncontrolled choice of the lessee between continuing the payment of the rentals or not, completely depriving the owner of any
say in the matter. Mutuality does not obtain in such a contract of lease and no equality exists between the lessor and the lessee
since the life of the contract is dictated solely by the lessee.
The interpretation made by respondent court cannot, therefore, be upheld. Paragraph 3 of the compromise agreement, read and
interpreted in its entirety, is actually to the effect that the last portion thereof, which gives the private respondent sixty (60) days
before the expiration of the term the right to give notice of his intent to renew, is subject to the first portion of said paragraph that
"the term of the lease shall be renewed every three (3) years," thereby requiring the mutual agreement of the parties. The use of
the word "renew" and the designation of the period of three (3) years clearly confirm that the contract of lease is limited to a
specific period and that it is not a continuing lease. The stipulation provides for a renewal of the lease every three (3) years; there
could not be a renewal if said lease did not expire, otherwise there is nothing to renew.
Resultantly, the contract of lease should be and is hereby construed as providing for a definite period of three (3) years and that
the automatic increase of the rentals by twenty percent (20%) will take effect only if the parties decide to renew the lease. A
contrary interpretation will result in a situation where the continuation and effectivity of the contract will depend only upon the will
of the lessee, in violation of Article 1308 of the Civil Code and the aforesaid doctrine in Encarnacion. The compromise agreement
should be understood as bearing that import which is most adequate to render it effectual. 10 Where the instrument is susceptible of
two interpretations, one which will make it invalid and illegal and another which will make it valid and legal, the latter interpretation

should be adopted. 11

Moreover, perpetual leases are not favored in law, nor are covenants for continued renewals tending to create a perpetuity, and
the rule of construction is well settled that a covenant for renewal or for an additional term should not be held to create a right to
repeated grants in perpetuity, unless by plain and unambiguous terms the parties have expressed such intention. 12 A lease will
not be construed to create a right to perpetual renewals unless the language employed indicates dearly and unambiguously that it was
the intention and purpose of the parties to do so. 13 A portion in a lease giving the lessee and his assignee the right to perpetual
renewals is not favored by the courts, and a lease will be construed as not making such a provision unless it does so clearly. 14

As we have further emphasized:

It is also important to bear in mind that in a reciprocal contract like a lease, the period of the lease must
be deemed to have been agreed upon for the benefit of both parties, absent language showing that the
term was deliberately set for the benefit of the lessee or lessor alone. We are not aware of any
presumption in law that the term of a lease is designed for the benefit of the lessee alone. Kohand Cruz in
effect rested upon such a presumption. But that presumption cannot reasonably be indulged in casually in
an era of rapid economic change, marked by, among other things, volatile costs of living and fluctuations
in the value of the domestic currency. The longer the period the more clearly unreasonable such a
presumption would be. In an age like that we live in, very specific language is necessary to show an intent
to grant a unilateral faculty to extend or renew a contract of lease to the lessee alone, or to the lessor
alone for that matter. We hold that the above-quoted rulings in Koh v. Ongsiaco and Cruz v.
Alberto should be and are overruled. 15
In addition, even assuming that the clause "for as long as the defendant needed the premises and can meet and pay, said
increases" gives private respondent an option to renew the lease, the same will be construed as providing for but one renewal or
extension and, therefore, was satisfied when the lease was renewed in 1982 for another three (3) years. A general covenant to
renew is satisfied by one renewal and will not be construed to confer the right to more than one renewal unless provision is
clearly and expressly made for further renewals. 16Leases which may have been intended to be renewable in perpetuity will
nevertheless be construed as importing but one renewal if there is any uncertainty in that regard.

17

The case of Buccat vs. Dispo et al., 18 relied upon by responddent court, to support its holding that respondent lessee can legally stay
on the premises for as long as he needs it and can pay the rents, is not in point. In said case, the lease contract provides for an
indefinite period since it merely stipulates "(t)hat the lease contract shall remain in full force and effect as long as the land will serve the
purpose for which it is intended as a school site of the National Business Institute, but the rentals now stipulated shall be subject to
review every after ten (10) years by mutual agreement of the parties." This is in clear contrast to the case at bar wherein, to repeat, the
lease is fixed at a period of three (3) years although subject to renewal upon agreement of the parties, and the clause "for as long as
defendant needs the premises and can meet and pay the rents" is not an independent stipulation but is controlled by said fixed term
and the option for renewal upon agreement of both parties.

On the second issue, we agree with petitioner that respondent court erred in holding that the action for ejectment is barred by res
judicata. While it is true that a compromise agreement has the effect of res judicata this doctrine does not apply in the present
case. It is elementary that for a judgment to be a bar to a subsequent case, (1) it must be a final judgment, (2) the court which
rendered it had jurisdiction over the subject matter and the parties, (3) it must be a judgment on the merits, and (4) there must be
identity between the two cases as to parties, subject matter and cause of action. 19
In the case at bar, the fourth requisite is lacking. Although there is identity of parties, there is no identity of subject matter and
cause of action. The subject matter in the first ejectment case is the original lease contract while the subject matter in the case at
bar is the lease created under the terms provided in the subsequent compromise agreement. The lease executed in 1978 is one
thing; the lease constituted in 1982 by the compromise agreement is another.
There is also no identity, in the causes of action. The test generally applied to determine the identity of causes of action is to
consider the identity of facts essential to their maintenance, or whether the same evidence would sustain both causes of

action. 20 In the case at bar, the delict or the wrong in the first case is different from that in the second, and the evidence that will
support and establish the cause of action in the former will not suffice to support and establish that in the latter.

In the first ejectment case, the cause of action was private respondent's refusal to comply with the lease contract which expired
on December 31, 1978. In the present case, the cause of action is a similar refusal but with respect to the lease which expired in
October, 1985 under the compromise agreement. While the compromise agreement may be res judicata as far as the cause of
action and issues in the first ejectment case is concerned, any cause of action that arises from the application or violation of the
compromise agreement cannot be said to have been settled in said first case. The compromise agreement was meant to settle,
as it did only settle, the first case. It did not, as it could not, cover any cause of action that might arise thereafter, like the present
case which was founded on the expiration of the lease in 1985, which necessarily requires a different set of evidence. The fact
that the compromise agreement was judicially approved does not foreclose any cause of action arising from a violation of the
terms thereof.
WHEREFORE, the decision of respondent Court of Appeals is REVERSED and SET ASIDE. Private respondent is hereby
ordered to immediately vacate and return the possession of the leased premises subject of the present action to petitioner and to
pay the monthly rentals due thereon in accordance with the compromise agreement until he shall have actually vacated the
same. This judgment is immediately executory.
SO ORDERED.
Melencio-Herrera (Chairperson), Paras, Padilla and Sarmiento, JJ., Concur.
Footnotes
1 Per Justice Emeterio C. Cui, with Justices Luis A. Javellana and Jesus M. Elbinias concurring.
2 Original Record, 19.
3 Ibid., 7.
4 Ibid., 63.
5 Ibid., 8.
6 Rollo, 68-70.
7 Ibid., 61-67.
8 Ibid., 39-42.
9 77 Phil. 470 (1946).
10 Art. 1373, Civil Code.
11 De Luna, et al. vs. Linatoc, 74 Phil. 15 (1942).
12 51 C.J.S. 606.
13 50 Am. Jur. 2d 56.

14 50 Am. Jur. 2d 53.

15 Fernandez vs. Court of Appeals, 166 SCRA 577 (1988).
16 51 C.J.S. 605-606.
17 Becker vs. Submarine Oil Co., 55 Cal App 698, 204 P. 245.
18 160 SCRA 240 (1988).
19 Aroc, etc. vs. People's Homesite and Housing Corporation, et al., 81 SCRA 350 (1978); Gitgano vs
Borromeo, etc., et al., 133 SCRA 437 (1984); Santos vs. Intermediate Appellate Court, et al., 145 SCRA
592 (1986).
20 Pagsisihan, et al. vs. Court of Appeals, et al., 95 SCRA 540 (1980); Aroc vs. People's Homesite and
Housing Corporation, et al., ante, as cited in Angela Estate, Inc. vs. Bacolod-Murcia Milling Co, Inc., et al.
144 SCRA 482 (1986).
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