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CHAPTER V

PRESUMPTIONS IN AID OF CONSTRUCTION AND INTERPRETATION

[G.R. No. 90501. August 5, 1991.]

ARIS (PHIL.) INC., Petitioner, v. NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER FELIPE
GARDUQUE III, LEODEGARIO DE GUZMAN, LILIA PEREZ, ROBERTO BESTAMONTE, AIDA OPENA,
REYNALDO TORIADO, APOLINARIO GAGAHINA, RUFINO DE CASTRO, FLORDELIZA RAYOS DEL SOL,
STEVE SANCHO, ESTER CAIRO, MARIETA MAGALAD, and MARY B. NADALA, Respondents.

Cesar C. Cruz & Partners for Petitioner.

Zosimo Morillo for respondent Rayos del Sol.

Banzuela, Flores, Miralles, Raneses, Sy & Associates for Private Respondents.

DECISION

DAVIDE, JR., J.:

Petitioner assails the constitutionality of the amendment introduced by Section 12 of Republic Act No. 6715 to
Article 223 of the Labor Code of the Philippines (PD. No. 442, as amended) allowing execution pending appeal of
the reinstatement aspect of a decision of a labor arbiter reinstating a dismissed or separated employee and of
Section 2 of the NLRC Interim Rules on Appeals under R.A. No. 6715 implementing the same. It also questions the
validity of the Transitory Provision (Section 17) of the said Interim Rules.

The challenged portion of Section 12 of Republic Act No. 6715, which took effect on 21 March 1989, reads as
follows:

"SECTION 12. Article 223 of the same code is amended to read as follows:

‘ARTICLE 223. Appeal.

x x x

In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, in so far as the
reinstatement aspect is concerned, shall immediately be executory, even pending appeal. The employee shall
either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation
or, at the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not
stay the execution for reinstatement provided therein.’"

This is a new paragraph ingrafted into the Article.

Sections 2 and 17 of the "NLRC Interim Rules On Appeals Under R.A. No. 6715, Amending the Labor Code", which
the National Labor Relations Commission (NLRC) promulgated on 8 August 1989, provide as follows:

"SECTION 2. Order of Reinstatement and Effect of Bond. — In so far as the reinstatement aspect is concerned, the
decision of the Labor Arbiter reinstating a dismissed or separated employee shall immediately be executory even
pending appeal. The employee shall either be admitted back to work under the same terms and conditions
prevailing prior to his dismissal or separation, or, at the option of the employer, merely be reinstated in the payroll.

The posting of a bond by the employer shall not stay the execution for reinstatement.

x x x

SECTION 17. Transitory provision. — Appeals filed on or after March 21, 1989, but prior to the effectivity of these
Interim Rules must conform to the requirements as herein set forth or as may be directed by the Commission."

The antecedent facts and proceedings which gave rise to this petition are not disputed:

On 11 April 1988, private respondents, who were employees of petitioner, aggrieved by management’s failure to
attend to their complaints concerning their working surroundings which had become detrimental and hazardous,
requested for a grievance conference. As none was arranged, and believing that their appeal would be fruitless,
they grouped together after the end of their work that day with other employees and marched directly to the
management’s office to protest its long silence and inaction on their complaints.

On 12 April 1988, the management issued a memorandum to each of the private respondents, who were identified
by the petitioner’s supervisors as the most active participants in the "rally", requiring them to explain why they
should not be terminated from the service for their conduct. Despite their explanation, private respondents were
dismissed for violation of company rules and regulations, more specifically of the provisions on security and public
order and on inciting or participating in illegal strikes or concerted actions.

Private respondents lost no time in filing a complaint for illegal dismissal against petitioner and Mr. Gavino Bayan
with the regional office of the NLRC at the National Capital Region, Manila, which was docketed therein as NLRC-
NCR-00-04-01630-88.

After due trial, Labor Arbiter Felipe Garduque III handed down on 22 June 1989 a decision 1 the dispositive portion
of which reads:

"ACCORDINGLY, respondent Aris (Phils.), Inc. is hereby ordered to reinstate within ten (10) days from receipt
hereof, herein complainants Leodegario de Guzman, Rufino de Castro, Lilia M. Perez, Marieta Magalad, Flordeliza
Rayos del Sol, Reynaldo Toriado, Roberto Besmonte, Apolinario Gagabina, Aidam (sic) Opena, Steve C. Sancho,
Ester Cairo, and Mary B. Nadala to their former respective positions or any substantial equivalent positions if
already filled up, without loss of seniority right and privileges but with limited backwages of six (6) months except
complainant Leodegario de Guzman.

All other claims and prayers are hereby denied for lack of merit.

SO ORDERED."

On 19 July 1989, complainants (herein private respondents) filed a Motion For Issuance of a Writ of Execution 2
pursuant to the above-quoted Section 12 of R.A. No. 6715.

On 21 July 1989, petitioner filed its Appeal. 3

On 26 July 1989, the complainants, except Flor Rayos del Sol, filed a Partial Appeal. 4

On 10 August 1989, complainant Flor Rayos del Sol filed a Partial Appeal. 5

On 29 August 1989, petitioner filed an Opposition 6 to the motion for execution alleging that Section 12 of R.A. No.
6715 on execution pending appeal cannot be applied retroactively to cases pending at the time of its effectivity
because it does not expressly provide that it shall be given retroactive effect 7 and to give retroactive effect to
Section 12 thereof to pending cases would not only result in the imposition of an additional obligation on petitioner
but would also dilute its right to appeal since it would be burdened with the consequences of reinstatement without
the benefit of a final judgment. In their Reply 8 filed on 1 September 1989, complainants argued that R.A. No.
6715 is not sought to be given retroactive effect in this case since the decision to be executed pursuant to it was
rendered after the effectivity of the Act. The said law took effect on 21 March 1989, while the decision was
rendered on 22 June 1989.

Petitioner submitted a Rejoinder to the Reply on 5 September 1989. 9

On 5 October 1989, the Labor Arbiter issued an Order 10 granting the motion for execution and the issuance of a
partial writ of execution "as far as reinstatement of herein complainants is concerned in consonance with the
provision of Section 2 of the rules particularly the last sentence thereof."

In this Order, the Labor Arbiter also made reference to Section 17 of the NLRC Interim Rules in this wise:

"Since Section 17 of the said rules made mention of appeals filed on or after March 21, 1989, but prior to the
effectivity of these interim rules which must conform with the requirements as therein set forth (Section 2) or as
may be directed by the Commission, it obviously treats of decisions of Labor Arbiters before March 21, 1989. With
more reason these interim rules be made to apply to the instant case since the decision hereof (sic) was rendered
thereafter. 11

Unable to accept the above Order, petitioner filed the instant petition on 26 October 1989 12 raising the issues
adverted to in the introductory portion of this decision under the following assignment of errors:

"A. THE LABOR ARBITER A QUO AND THE NLRC, IN ORDERING THE REINSTATEMENT OF THE PRIVATE
RESPONDENTS PENDING APPEAL AND IN PROVIDING FOR SECTION 2 OF THE INTERIM RULES, RESPECTIVELY,
ACTED WITHOUT AND IN EXCESS OF JURISDICTION SINCE THE BASIS FOR SAID ORDER AND INTERIM RULE, i.e.,
SECTION 12 OF R.A.6715 IS VIOLATIVE OF THE CONSTITUTIONAL GUARANTY OF DUE PROCESS—IT BEING
OPPRESSIVE AND UNREASONABLE.

B. GRANTING ARGUENDO THAT THE PROVISION IN (SIC) REINSTATEMENT PENDING APPEAL IS VALID,
NONETHELESS, THE LABOR ARBITER A QUO AND THE NLRC STILL ACTED IN EXCESS AND WITHOUT
JURISDICTION IN RETROACTIVELY APPLYING SAID PROVISION TO PENDING LABOR CASES."

In Our resolution of 7 March 1989, We required the respondents to comment on the petition.

Respondent NLRC, through the Office of the Solicitor General, filed its Comment on 20 November 1989. 13 Meeting
squarely the issues raised by petitioner, it submits that the provision concerning the mandatory and automatic
reinstatement of an employee whose dismissal is found unjustified by the labor arbiter is a valid exercise of the
police power of the state and the contested provision "is then a police legislation."

As regards the retroactive application thereof, it maintains that being merely procedural in nature, it can apply to
cases pending at the time of its effectivity on the theory that no one can claim a vested right in a rule of procedure.
Moreover, such a law is compatible with the constitutional provision on protection to labor.

On 11 December 1989, private respondents filed a Manifestation 14 informing the Court that they are adopting the
Comment filed by the Solicitor General and stressing that petitioner failed to comply with the requisites for a valid
petition for certiorari under Rule 65 of the Rules of Court.

On 20 December 1989, petitioner filed a Rejoinder 15 to the Comment of the Solicitor General.

In the resolution of 11 January 1990, 16 We considered the Comments as respondents’ Answers, gave due course
to the petition, and directed that the case be calendared for deliberation.

In urging Us to declare as unconstitutional that portion of Section 223 of the Labor Code introduced by Section 12
of R.A. No. 6715, as well as the implementing provision covered by Section 2 of the NLRC Interim Rules, allowing
immediate execution, even pending appeal, of the reinstatement aspect of a decision of a labor arbiter reinstating a
dismissed or separated employee, petitioner submits that said portion violates the due process clause of the
Constitution in that it is oppressive and unreasonable. It argues that a reinstatement pending appeal negates the
right of the employer to self-protection for it has been ruled that an employer cannot be compelled to continue in
employment an employee guilty of acts inimical to the interest of the employer; the right of an employer to dismiss
is consistent with the legal truism that the law, in protecting the rights of the laborer, authorizes neither the
oppression nor the destruction of the employer. For, social justice should be implemented not through mistaken
sympathy for or misplaced antipathy against any group, but evenhandedly and fairly. 17

To clinch its case, petitioner tries to demonstrate the oppressiveness of reinstatement pending appeal by
portraying the following consequences: (a) the employer would be compelled to hire additional employees or adjust
the duties of other employees simply to have someone watch over the reinstated employee to prevent the
commission of further acts prejudicial to the employer, (b) reinstatement of an undeserving, if not undesirable,
employee may demoralize the rank and file, and (c) it may encourage and embolden not only the reinstated
employees but also other employees to commit similar, if not graver infractions.

These rationalizations and portrayals are misplaced and are purely conjectural which, unfortunately, proceed from
a misunderstanding of the nature and scope of the relief of execution pending appeal.

Execution pending appeal is interlinked with the right to appeal. One cannot be divorced from the other. The latter
may be availed of by the losing party or a party who is not satisfied with a judgment, while the former may be
applied for by the prevailing party during the pendency of the appeal. The right to appeal, however, is not a
constitutional, natural or inherent right. It is a statutory privilege of statutory origin 18 and, therefore, available
only if granted or provided by statute. The law may then validly provide limitations or qualifications thereto or relief
to the prevailing party in the event an appeal is interposed by the losing party. Execution pending appeal is one
such relief long recognized in this jurisdiction. The Revised Rules of Court allows execution pending appeal and the
grant thereof is left to the discretion of the court upon good reasons to be stated in a special order. 19

Before its amendment by Section 12 of R.A. No. 6716, Article 223 of the Labor Code already allowed execution of
decisions of the NLRC pending their appeal to the Secretary of Labor and Employment.

In authorizing execution pending appeal of the reinstatement aspect of a decision of the Labor Arbiter reinstating a
dismissed or separated employee, the law itself has laid down a compassionate policy which, once more, vivifies
and enhances the provisions of the 1987 Constitution on labor and the workingman.
These provisions are the quintessence of the aspirations of the workingman for recognition of his role in the social
and economic life of the nation, for the protection of his rights, and the promotion of his welfare. Thus, in the
Article on Social Justice and Human Rights of the Constitution, 20 which principally directs Congress to give highest
priority to the enactment of measures that protect and enhance the right of all people to human dignity, reduce
social, economic, and political inequalities, and remove cultural inequities by equitably diffusing wealth and political
power for the common good, the State is mandated to afford full protection to labor, local and overseas, organized
and unorganized, and promote full employment and equality of employment opportunities for all; to guarantee the
rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities,
including the right to strike in accordance with law, security of tenure, human conditions of work, and a living
wage, to participate in policy and decision-making processes affecting their rights and benefits as may be provided
by law; and to promote the principle of shared responsibility between workers and employers and the preferential
use of voluntary modes in settling disputes. Incidentally, a study of the Constitutions of various nations readily
reveals that it is only our Constitution which devotes a separate article on Social Justice and Human Rights. Thus,
by no less than its fundamental law, the Philippines has laid down the strong foundations of a truly just and
humane society. This Article addresses itself to specified areas of concern — labor, agrarian and natural resources
reform, urban land reform and housing, health, working women, and people’s organizations—and reaches out to
the underprivileged sector of society, for which reason the President of the Constitutional Commission of 1986,
former Associate Justice of this Court Cecilia Muñoz-Palma, aptly describes this Article as the "heart of the new
Charter." 21

These duties and responsibilities of the State are imposed not so much to express sympathy for the workingman as
to forcefully and meaningfully underscore labor as a primary social and economic force, which the Constitution also
expressly affirms with equal intensity. 22 Labor is an indispensable partner for the nation’s progress and stability.

If in ordinary civil actions execution of judgment pending appeal is authorized for reasons the determination of
which is merely left to the discretion of the judge, We find no plausible reason to withhold it in cases of decisions
reinstating dismissed or separated employees. In such cases, the poor employees had been deprived of their only
source of livelihood, their only means of support for their family — their very lifeblood. To Us, this special
circumstance is far better than any other which a judge, in his sound discretion, may determine. In short, with
respect to decisions reinstating employees, the law itself has determined a sufficiently overwhelming reason for its
execution pending appeal.

The validity of the questioned law is not only supported and sustained by the foregoing considerations. As
contended by the Solicitor General, it is a valid exercise of the police power of the State. Certainly, if the right of an
employer to freely discharge his employees is subject to regulation by the State, basically in the exercise of its
permanent police power on the theory that the preservation of the lives of the citizens is a basic duty of the State,
that is more vital than the preservation of corporate profits. 23 Then, by and pursuant to the same power, the
State may authorize an immediate implementation, pending appeal, of a decision reinstating a dismissed or
separated employee since that saving act is designed to stop, although temporarily since the appeal may be
decided in favor of the appellant, a continuing threat or danger to the survival or even the life of the dismissed or
separated employee and his family.

The charge then that the challenged law as well as the implementing rule are unconstitutional is absolutely
baseless. Laws are presumed constitutional. 24 To justify nullification of a law, there must be a clear and
unequivocal breach of the Constitution, not a doubtful and argumentative implication; a law shall not be declared
invalid unless the conflict with the-constitution is clear beyond reasonable doubt. 25 In Paredes, Et. Al. v. Executive
Secretary, 26 We stated:

"2. For one thing, it is in accordance with the settled doctrine that between two possible constructions, one
avoiding a finding of unconstitutionality and the other yielding such a result, the former is to be preferred. That
which will save, not that which will destroy, commends itself for acceptance. After all, the basic presumption all
these years is one of validity. The onerous task of proving otherwise is on the party seeking to nullify a statute. It
must be proved by clear and convincing evidence that there is an infringement of a constitutional provision, save in
those cases where the challenged act is void on its face. Absent such a showing, there can be no finding of
unconstitutionality. A doubt, even if well-founded, does not suffice. Justice Malcolm’s aphorism is apropos: ‘To
doubt is to sustain.’" 27

The reason for this:

". . . can be traced to the doctrine of separation of powers which enjoins on each department a proper respect for
the acts of the other departments. . . . The theory is that, as the joint act of the legislative and executive
authorities, a law is supposed to have been carefully studied and determined to be constitutional before it was
finally enacted. Hence, as long as there is some other basis that can be used by the courts for its decision, the
constitutionality of the challenged law will not be touched upon and the case will be decided on other available
grounds." 28
The issue concerning Section 17 of the NLRC Interim Rules does not deserve a measure of attention. The reference
to it in the Order of the Labor Arbiter of 5 October 1989 was unnecessary since the procedure of the appeal proper
is not involved in this case. Moreover, the questioned interim rules of the NLRC, promulgated on 8 August 1989,
can validly be given retroactive effect. They are procedural or remedial in character, promulgated pursuant to the
authority vested upon it under Article 218 (a) of the Labor Code of the Philippines, as a mended. Settled is the rule
that procedural laws may be given retroactive effect. 29 There are no vested rights in rules of procedure. 30 A
remedial statute may be made applicable to cases pending at the time of its enactment. 31

WHEREFORE, the petition is hereby DISMISSED for lack of merit.

[G.R. No. 115044. January 27, 1995.]

HON. ALFREDO S. LIM, in his capacity as Mayor of Manila, and the City of Manila, Petitioners, v. HON.
FELIPE G. PACQUING, as Judge, branch 40, Regional Trial Court of Manila and ASSOCIATED
CORPORATION, Respondents.

[G.R. No. 117263 January 27, 1995.]

TEOFISTO GUINGONA, JR. and DOMINADOR R. CEPEDA, Petitioners, v. HON. VETINO REYES and
ASSOCIATED DEVELOPMENT CORPORATION, Respondents.

The Solicitor General, for Petitioners.

Cayanga, Zuniga and Angel for Private Respondent.

SYLLABUS

1. REMEDIAL LAW; SUPREME COURT; MAY CONSIDER PETITION FOR REVIEW ON CERTIORARI ON ALLEGED
USURPATION OF FRANCHISE AS QUO WARRANTO. — On the issue of the propriety of the intervention by the
Republic of the Philippines, a question was raised during the hearing on 10 November 1994 as to whether
intervention in G.R. No. 115044 was the proper remedy for the national government to take in questioning the
existence of a valid ADC franchise to operate the jai-alai or whether a separate action for quo warranto under
Section 2, Rule 66 of the Rules of Court was the proper remedy. We need not belabor this issue since counsel for
respondent ADC agreed to the suggestion that this Court once and for all settle all substantive issues raised by the
parties in these cases. Moreover, this Court can consider the petition filed in G. R. No. 117263 as one for quo
warranto which is within the original jurisdiction of the Court under Section 5(1), Article VIII of the Constitution.

2. ID.; ACTIONS; INTERVENTION; MAY BE ALLOWED EVEN AFTER TRIAL. — On the propriety of intervention by the
Republic, however, it will be recalled that this Court in Director of Lands v. Court of Appeals (93 SCRA. 238)
allowed intervention even beyond the period prescribed in Section 2, Rule 12 of the Rules of Court. The Court ruled
in said case that a denial of the motions for intervention would "lead the Court to commit an act of injustice to the
movants, to their successor-in-interest and to all purchasers for value and in good faith and thereby open the door
to fraud, falsehood and misrepresentation, should intervenors’ claim be proven to be true." Consequently, in the
light of the foregoing expostulation, we conclude that the Republic (in contra distinction to the City of Manila) may
be allowed to intervene in G. R. No. 115044. The Republic is intervening in G.R. No. 115044 in the exercise, not of
its business or. proprietary functions, but in the exercise of its governmental functions to protect public morals and
promote the general welfare.

3. CONSTITUTIONAL LAW; ALL LAWS ARE PRESUMED VALID AND CONSTITUTIONAL UNTIL OR UNLESS
OTHERWISE RULED BY THE SUPREME COURT; CASE AT BAR. — The time-honored doctrine is that all laws (PD No.
771 included) are presumed valid and constitutional until or unless otherwise ruled by this Court. Not only this;
Article XVIII, Section 3 of the Constitution states: "Sec. 3. All existing laws, decrees, executive orders,
proclamations, letters of instructions and other executive issuances not inconsistent with this Constitution shall
remain operative until amended, repealed or revoked." There is nothing on record to show or even suggest that PD
No. 771 has been repealed, altered or amended by any subsequent law or presidential issuance (when the
executive still exercised legislative powers).

4. ID.; SUPREME COURT; ONLY THE COURT SITTING EN BANC HAS THE POWER TO DECLARE A LAW
UNCONSTITUTIONAL. — Neither can it be tenably stated that the issue of the continued existence of ADC’s
franchise by reason of the unconstitutionality of PD No. 771 was settled in G.R. No. 115044, for the decision of the
Court’s First Division in said case, aside from not being final, cannot have the effect of nullifying PD No. 771 as
unconstitutional, since only the Court En Banc has that power under Article VIII, Section 4(2) of the Constitution.
5. POLITICAL LAW; STATE; ESTOPPEL; STATE CANNOT BE ESTOPPED BY THE MISTAKES OR ERRORS OF ITS
OFFICIALS OR AGENTS. — And on the question of whether or not the government is estopped from contesting
ADC’s possession of a valid franchise, the well-settled rule is that the State cannot be put in estoppel by the
mistakes or errors, if any, of its officials or agents (Republic v. Intermediate Appellate Court, 209 SCRA 90).

6. CONSTITUTIONAL LAW; LEGISLATURE; CONGRESS DID NOT DELEGATE TO THE CITY OF MANILA THE POWER
"TO FRANCHISE" WAGERS OR BETTING INCLUDING THE JAI-ALAI; CASE AT BAR. — It is worthy of note that
neither of the authorities relied upon by ADC to support its alleged possession of a valid franchise, namely, the
Charter of the City of Manila (Rep. Act No. 409) and Manila Ordinance No. 7065 uses the word "franchise." Rep. Act
No. 409 empowers the Municipal Board of Manila to "tax, license, permit and regulate wagers or betting" and to
"grant exclusive rights to establishments," while Ordinance No. 7065 authorized the Manila City Mayor to "allow
and permit" ‘AD to operate jai-alai facilities in the City of Manila. It is clear from the foregoing that Congress did
not delegate to the City of Manila the power "to franchise" wagers or betting, including the jai-alai, but retained for
itself such power "to franchise." What Congress delegated to the City of Manila in Rep. Act No. 409, with respect to
wagers or betting, was the power to "license, permit, or regulate" which therefore means that a license or permit
issued by the City of Manila to operate a wager or betting activity, such as the jai-alai where bets are accepted,
would not amount to something meaningful UNLESS the holder of the permit or license was also FRANCHISED by
the national government to so operate. Moreover, even this power to license, permit, or regulate wagers or betting
on jai-alai was removed from local governments, including the City of Manila, and transferred to the GAB on 1
January 1951 by Executive Order No. 392. The net result is that the authority to grant franchises for the operation
of jai-alai frontons is in Congress, while the regulatory function is vested in the GAB.

7. ID.; ID.; FRANCHISE; CANNOT BE EQUATED WITH THE ISSUANCE OF A LICENSE OR PERMIT FROM THE LOCAL
GOVERNMENT TO OPERATE A JAI-ALAI. — In relation, therefore, to the facts of this case, since ADC has no
franchise from Congress to operate the jai-alai, it may not so operate even if it has a license or permit from the
City Mayor to operate the jai-alai in the City of Manila.

8. ID.; LAWS PRESUMED VALID, CONSTITUTIONAL AND IN HARMONY WITH OTHER LAWS; ORDINANCE NO. 7065
OF THE CITY OF MANILA REFERS TO THE REGULATORY POWERS OF THE BOARD ON THE OPERATION OF JAI-ALAI
OF ENTITIES GRANTED CONGRESSIONAL FRANCHISE. — Republic Act No. 409 (the Revised Charter of the City of
Manila) which was enacted by Congress on 18 June 1949 gave the Municipal Board certain delegated legislative
powers under Section 18. A perusal of the powers enumerated under Section 18 shows that these powers are
basically regulatory in nature. The regulatory nature of these powers finds support not only in the plain words of
the enumerations under Section 18 but also in this Court’s ruling in People v. Vera (65 Phil. 56). In Vera, this Court
declared that a law which gives the Provincial Board the discretion to determine whether or not a law of general
application (such as, the Probation law — Act No. 4221) would or would not be operative within the province, is
unconstitutional for being an undue delegation of legislative power. From the ruling in Vera, it would be logical to
conclude that, if ADC’s arguments were to prevail, this Court would likewise declare Section 18(jj) of the Revised
Charter of Manila unconstitutional for the power it would delegate to the Municipal Board of Manila would give the
latter the absolute and unlimited discretion to render the penal code provisions on gambling inapplicable or
inoperative to persons or entities issued permits to operate gambling establishments in the City of Manila. We need
not go to this extent, however, since the rule is that laws must be presumed valid, constitutional and in harmony
with other laws. Thus, the relevant provisions of Rep. Acts Nos. 409 and 954 and Ordinance No. 7065 should be
taken together and it should then be clear that the legislative powers of the Municipal Board should be understood
to be regulatory in nature and that Republic Act No. 954 should be understood to refer to congressional franchises,
as a necessity for the operation of jai-alais.

9. POLITICAL LAW; POLICE POWER, CONSTRUED. — The police power has been described as the least limitable of
the inherent powers of the State. It is based on the ancient doctrine — salus populi est suprema lex (the welfare of
the people is the supreme law.) In the early case of Rubi v. Provincial Board of Mindoro (39 Phil. 660), this Court
through Mr. Justice George A. Malcolm stated thus: "The police power of the State . . . is a power coextensive with
self-protection, and is not inaptly termed the ‘law of overruling necessity.’ It may be said to be that inherent and
plenary power in the State which enables it to prohibit all things hurtful to the comfort, safety and welfare of
society. Carried onward by the current of legislation, the judiciary rarely attempts to dam the onrushing power of
legislative discretion, provided the purposes of the law do not go beyond the great principles that mean security for
the public welfare or do not arbitrarily interfere with the right of the individual."

10. ID.; POLITICAL QUESTION; EXAMINATION OF LEGISLATIVE MOTIVATION IS GENERALLY PROHIBITED. — ADC
questions the motive for the issuance of PD No. 771. Clearly, however, this Court cannot look into allegations that
PD No. 771 was enacted to benefit a select group which was later given authority to operate the jai-alai under PD
No. 810. The examination of legislative motivation is generally prohibited. (Palmer v. Thompson, 403 U.S. 217, 29
L. Ed. 2d 438 [1971], per Black, J.) There is, in the first place, absolute lack of evidence to support ADC’s
allegation of improper motivation in the issuance of PD No. 771. In the second place, as already averred, this Court
cannot go behind the expressed and proclaimed purposes of PD No. 771, which are reasonable and even laudable.

11. CONSTITUTIONAL LAW; LEGISLATURE; GAMBLING FRANCHISE; GRANT OR DENIAL THEREOF CANNOT BE
SUBJECT OF NON-IMPAIRMENT CLAUSE; REASON. — On the alleged violation of the non-impairment clause of the
Constitution, it should be remembered that a franchise is not in the strict sense a simple contract but rather it is,
more importantly, a mere privilege specially in matters which are within the government’s power to regulate and
even prohibit through the exercise of the police power. Thus, a gambling franchise is always subject to the exercise
of police power for the public welfare.

12. ID.; ID.; ID.; REVOCATIONS THEREOF BY PD 771 DOES NOT VIOLATE THE EQUAL PROTECTION CLAUSE OF
THE CONSTITUTION. — There was no violation by PD No. 771 of the equal protection clause since the decree
revoked all franchises issued by local governments without qualification or exception. ADC cannot allege violation
of the equal protection clause simply because it was the only one affected by the decree, for as correctly pointed
out by the government, ADC was not singled out when all jai-alai franchises were revoked. Besides, it is too late in
the day for ADC to seek redress for alleged violation of its constitutional rights for it could have raised these issues
as early as 1975, almost twenty (20) years ago.

13. ID.; ID.; ID.; PD 771; REQUIREMENT OF A LEGISLATIVE FRANCHISE IN THE OPERATION OF JAI-ALAI, NOT A
"RIDER." — Finally, we do not agree that Section 3 of PD No. 771 and the requirement of a legislative franchise in
Republic Act No. 954 are "riders" to the two (2) laws and are violative of the rule that laws should embrace one
subject which shall be expressed in the title, as argued by ADC. In Cordero v. Cabatuando (6 SCRA 418), this
Court ruled that the requirement under the Constitution that all laws should embrace only one subject which shall
be expressed in the title is sufficiently met if the title is comprehensive enough reasonably to include the general
object which the statute seeks to effect, without expressing each and every end and means necessary or
convenient for the accomplishing of the objective.

14. REMEDIAL LAW; SPECIAL CIVIL ACTION; CERTIORARI; ISSUANCE OF TEMPORARY RESTRAINING ORDER AND
A WRIT OF PRELIMINARY MANDATORY INJUNCTION TO AN ENTITY WITHOUT ANY LEGAL RIGHT THERETO
CONSTITUTES GRAVE ABUSE OF DISCRETION. — On the issue of whether or not there was grave abuse of
discretion committed by respondent Judge Reyes in issuing the temporary restraining order (later converted to a
writ of preliminary injunction) and the writ of preliminary mandatory injunction, we hold and rule there was.
Section 3, Rule 58 of the Rules of Court provides for the grounds for the issuance of a preliminary injunction. While
ADC could allege these grounds, respondent judge should have taken judicial notice of Republic Act No. 954 and PD
771, under Section 1, Rule 129 of the Rules of Court. These laws negate the existence of any legal right on the part
of ADC to the reliefs it sought so as to justify the issuance of a writ of preliminary injunction. Since PD No. 771 and
Republic Act No. 954 are presumed valid and constitutional until ruled otherwise by the Supreme Court after due
hearing, ADC was not entitled to the writs issued and consequently there was grave abuse of discretion in issuing
them.

DAVIDE, JR., J., separate opinion:

1. REMEDIAL LAW; ACTIONS; INTERVENTION; MOTION CAN BE FILED ONLY BEFORE OR DURING TRIAL. — As to
the first issue, I submit that unless we either amend the rule on intervention or suspend it, the motion to intervene
must be denied. Under Section 2, Rule 12 of the Rules of Court, such motion may be allowed only before or during
a trial. This provision was taken from Section 1, Rule 13 of the old Rules of Court with the modification that the
phrase "at any period of a trial" in the latter was changed to "before or during a trial. The phrase "at any period of
a trial" in Section 1, Rule 13 of the old Rules of Court has been construed to mean the period for the presentation
of evidence by both parties. And the phrase "before or during the trial" in Section 2, Rule 12 of the present Rules of
Court "simply means anytime before the rendition of the final judgment." Accordingly, intervention could not be
allowed after the trial had been concluded or after the trial and decision of the original case.

2. ID.; ID.; ID.; ANCILLARY AND SUPPLEMENTAL TO AN EXISTING LITIGATION. — Fundamentally then,
intervention is never an independent action but is ancillary and supplemental to an existing litigation. Its purpose is
not to obstruct nor unnecessarily delay the placid operation of the machinery of trial, but merely to afford one not
an original party, yet having a certain right or interest in the pending case, the opportunity to appear and be joined
so he could assert or protect such right or interest.

3. ID.; ID.; ID.; GRANT THEREOF LEFT TO SOUND JUDICIAL DISCRETION. — The grant of an intervention is left to
the discretion of the court. (Paragraph [b] Section 2, Rule 12 of the Rules of Court)

4. ID.; ID.; ID.; MAY BE DENIED IF THE INTERVENOR’S RIGHT MAY BE FULLY PROTECTED IN SEPARATE
PROCEEDINGS. — It is thus clear that, by its very nature, intervention presupposes an existing litigation or a
pending case, and by the opening paragraph of Section 2, Rule 12 of the Rules of Court, it may be properly filed
only before or during the trial of the said case. Even if it is filed before or during the trial, it should be denied if it
will unduly delay or prejudice the adjudication of the rights of the original parties and if the intervenor’s rights may
be fully protected in a separate proceeding.

5. ID.; ID.; ID.; SHOULD HAVE BEEN DENIED WHERE DECISION HAD BEEN EXECUTED; CASE AT BAR. — It is not
disputed that the motion to intervene was filed only on 16 September 1994, or on the fifteenth (15th) day after the
First Division had promulgated the decision, and after petitioner Mayor Alfredo Lim complied with or voluntarily
satisfied the judgment. The latter act brought to a definite end or effectively terminated G.R. No. 115044.
Consequently, intervention herein is impermissible under the rules. To grant it would be a capricious exercise of
discretion. The decision of this Court in Director of Lands v. Court of Appeals cannot be used to sanction such
capriciousness for such decision cannot be expanded further to justify a new doctrine on intervention. In the first
place, the motions to intervene in the said case were filed before the rendition by this Court of its decision therein.
In the second place, there were unusual and peculiar circumstances in the said case which this Court took into
account. Of paramount importance was the fact that the prospective intervenors were indispensable parties.
Considering then that the intervention in the case at bar was commenced only after the decision had been
executed, a suspension of the Rules to accommodate the motion for intervention and the intervention itself would
be arbitrary. The Government is not without any other recourse to protect any right or interest which the decision
might have impaired.

6. ID.; ID.; ID.; MOTION TO INTERVENE AND INTERVENTION PROPER MAY NOT BE TREATED AS A PETITION FOR
QUO WARRANTO WHERE THERE IS A PROPER FORUM WHERE VALIDITY OF A FRANCHISE MAY BE CHALLENGED. —
May the motion to intervene and intervention proper be, nevertheless, treated as a petition for quo warranto? The
majority opinion answers it in the affirmative because all the essential requisites for a petition for quo warranto are
present in said pleadings. I am almost tempted to agree with that opinion if not for the fact that there is pending
before the Regional Trial Court of Manila Civil Case No. 94-71656 which is a petition for prohibition, mandamus,
injunction, and damages filed by the Associated Development Corporation against Executive Secretary Guingona
and then Games and Amusement Board (GAB) Chairman Sumulong. That is the more appropriate forum where the
Government and petitioner Guingona may challenge the validity of ADC’s franchise. Its filing was provoked by the
withdrawal by the GAB of the provisional authority it granted to ADC in view of the 13 September 1994 directive of
Executive Secretary Guingona in forming the GAB of sufficient bases to hold in abeyance the operation of the jai-
alai until the legal questions stated therein are properly resolved. Said legal questions go into the validity of the
franchise issued to ADC. Consequently, it is to be logically presumed that for its affirmative defenses in Civil Case
No. 94-71656 the Government would raise the same issues raised in the intervention in G.R. No. 117263.
Accordingly, I vote to deny the motion for intervention in G.R. No. 115044.

7. ID.; PROVISIONAL REMEDIES; TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION; CANNOT
LEGALLY ALLOW WAGERING AND BETTING ON THE RESULTS OF JAI-ALAI. — However, I vote to partially grant the
petition in G.R. No. 117263 insofar as wagering or betting on the results of jai-alai is concerned. The temporary
restraining order and the preliminary mandatory injunction issued by respondent Judge cannot legally and validly
allow such wagering and betting. It was precisely for this reason that I earlier voted to grant a temporary
restraining order in G.R. No. 115044 and G.R. No. 117263 to restrain wagering or betting. I wish to reiterate here
what I stated in my supplemental concurring opinion in G.R. No. 115044. P.D. No. 483, enacted on 13 June 1974,
penalizes betting, game fixing or point shaving and machinations in sports contests, including jai-alai. Both P.D.
No. 483 and P.D. No. 1602 were promulgated in the exercise of the police power of the State. Pursuant to Section
2 of P.D. No. 483, which was not repealed by P.D. No. 1602 since the former is not inconsistent with the latter in
that respect, betting in jai-alai is illegal unless allowed by law. There was such a law, P.D. No. 810, which
authorized the Philippine Jai-Alai and Amusement Corporation. However, as stated in the ponencia, P.D. No. 810
was repealed by E.O. No. 169 issued by then President Corazon C. Aquino. I am not aware of any other law which
authorizes betting jai-alai. It follows then that while the private respondent may operate the jai-alai fronton and
conduct jai-alai games, it can do so solely as a sports contest. Betting on the results thereof, whether within or off-
fronton, is illegal and the City of Manila cannot, under the present state of the law, license such betting. The
dismissal of the petition in this case sustaining the challenged orders of the trial court does not legalize betting, for
this Court is not the legislature under our system of government. Accordingly, I vote to grant the petition in G.R.
No. 117263 and to set aside the questioned temporary restraining order and the writ of preliminary mandatory
injunction but only to the extent that they allow wagering or betting on the results of jai-alai.

KAPUNAN, J., separate opinion:

1. ADMINISTRATIVE LAW; LOCAL GOVERNMENT; CITY OF MANILA; MANILA MUNICIPAL BOARD; WITHOUT
AUTHORITY TO ISSUE FRANCHISE. — While the grant of authority under the Ordinance was made pursuant to R.A.
409, the City Charter of Manila, the authority granted could best be viewed as a grant of a license or a permit, not
a franchise. Nowhere is it pretended that Ordinance 7065 is a franchise enacted pursuant to the legislative powers
of the Municipal Board of the City of Manila under Section 18(jj) thereof. The absence of authority of the Manila
Municipal Board to issue a franchise, notwithstanding its legislative powers, is furthermore evident in the above-
cited Charter provision regulating gambling and other gambling establishments which enumerates the following
powers: (jj) To tax. license, permit and regulate wagers or betting by the public on boxing . . . cockpits, jai-alai . .
. as well as grant exclusive rights to establishments for this purpose, notwithstanding any existing law to the
contrary.

2. ID.; ID.; ID.; ORDINANCE No. 7065, NOT IN CONFLICT WITH P.D. 771. — I find no incompatibility therefore,
between P.D. 771, which revoked all authority by local governments to issue franchises for gambling and gaming
establishments on one hand, and the municipal ordinance of the City of Manila, granting a permit or license to
operate subject to compliance with the provisions found therein, on the other hand, a legislative franchise may be
required by the government as a condition for certain gambling operations. After obtaining such franchise, the
franchisee may establish operations in any city or municipality allowed under the terms of the legislative franchise,
subject to local licensing requirements. While the City of Manila granted a permit to operate under Ordinance No.
7065, this permit or authority was at best only a local permit to operate and could be exercised by the ADC only
after it shall have obtained a legislative franchise.

3. REMEDIAL LAW; ACTIONS; APPEAL; RULE OF AVOIDANCE, APPLIED IN CASE AT BENCH. — Both P.D. 771 and
Ordinance 7065 can stand alongside each other if one looks at the authority granted by the charter of the City of
Manila together with Ordinance No. 7065 merely as an authority to "allow" and "permit" the operation of jai-alai
facilities within the City of Manila. While the constitutional issue was raised by the respondent corporation in the
case at bench, I see no valid reason why we should jump into the fray of constitutional adjudication in this case, or
on every other opportunity where a constitutional issue is raised by parties before us. It is a settled rule of
avoidance, judiciously framed by the United States Supreme Court in Ashwander v. TVA that where a controversy
may be settled on a platform other than one involving constitutional adjudication, the court should exercise
becoming modesty and avoid the constitutional question.

4. POLITICAL LAW; STATE; POLICE POWER; REGULATIONS OF GAMBLING OPERATIONS, EMBRACED THEREIN. —
The State has every legitimate right, under the police power, to regulate gambling operations by requiring
legislative franchises for such operations. Gambling, in all its forms, unless specifically authorized by law and
carefully regulated pursuant to such law, is generally proscribed as offensive to the public morals and the public
good. In maintaining a "state policy" on various forms of gambling, the political branches of government are best
equipped to regulate and control such activities and therefore assume full responsibility to the people for such
policy. Parenthetically, gambling, in all its forms, is generally immoral.

5. CONSTITUTIONAL LAW; LEGISLATURE; FRANCHISE; AMENDMENT, ALTERATION OR REVOCATION THEREOF


DOES NOT VIOLATE THE EQUAL PROTECTION AND IMPAIRMENT OF CONTRACTS CLAUSES OF THE
CONSTITUTION; EXERCISE THEREOF CONSTITUTES POLICE POWER. — The disturbing implications of a grant of a
"franchise," in perpetuity, to the ADC militates against its posture that the government’s insistence that the ADC
first obtain a legislative franchise violates the equal protection and impairment of contracts clauses of the
Constitution. By their very nature, franchises are subject to amendment, alteration or revocation by the State
whenever appropriate. Under the exercise of its police power, the State, through its requirement for permits,
licenses and franchises to operate, undertakes to regulate what would otherwise be an illegal activity punished by
existing penal laws. The police power to establish all manner of regulation of otherwise illicit, immoral and illegal
activities is full, virtually illimitable and plenary.

6. POLITICAL LAW; STATE; POLICE POWER; DEFINED. — In Edu v. Ericta we defined the police power as the "state
authority to enact legislation that may interfere with personal liberty or property in order to promote the general
welfare." In its exercise, the State may impose appropriate impositions or restraints upon liberty or property in
order to foster the common good. Such imposition or restraint neither violates the impairment of contracts nor the
equal protection clauses of the Constitution if the purpose is ultimately the public good.

7. ID.; ID.; ID.; FRANCHISE AND LICENSING REGULATIONS ON GAMBLING, EXTENSION OF EXERCISE THEREOF.
— Restraints on property are not examined with the same microscopic scrutiny as restrictions on liberty. Such
restraints, sometimes bordering on outright violations of the impairments of contract principle have been made by
this Court for the general welfare of the people. Justice Holmes in Noble State Bank v. Haskel once expansively
described the police power as "extending to all public needs." Franchise and licensing regulations aimed at
protecting the public from the pernicious effects of gambling are extensions of the police power addressed to a
legitimate public need.

8. REMEDIAL LAW; ACTIONS; MOTION FOR INTERVENTION DURING APPEAL; CONSIDERED ONE FOR QUO
WARRANTO WHERE BOTH PARTIES AGREED TO THE RESOLUTION OF ALL ISSUES RAISED. — On the question of
the propriety of the Republic of the Philippine’s intervention late in the proceedings in G.R. No. 117263, the ADC
counsel’s agreeing to have all the issues raised by the parties in the case at bench paves the way for us to consider
the petition filed in G.R. No. 117263 as one for quo warranto.

QUIASON, J., Dissenting opinion:

1. REMEDIAL LAW; ACTIONS; INTERVENTION; ALLOWED ONLY BEFORE OR DURING TRIAL. — Intervention as
contemplated by Section 9, Rule 12 of the Revised Rules of Court is a proceeding whereby a third person is
permitted by the court "before or during a trial" to make himself a party by joining plaintiff or uniting with
defendant or taking a position adverse to both of them (Gutierrez v. Villegas, 5 SCRA 313 [1962]). The term "trial"
is used in its restrictive sense and means the period for the introduction of evidence by both parties (Bool v.
Mendoza, 92 Phil. 892 [1953]; Provincial Government of Sorsogon v. Stamatelaky, 65 Phil. 206 [1937]). The
period of trial terminates when the period of judgment begins (El Hogar Filipino v. Philippine National Bank, 64 Phil.
582 [1937]).
2. ID.; ID.; ID.; NOT COMPULSORY. — Intervention as an action is not compulsory. As deduced from the
permissive word "may" in the Rule, the availment of the remedy is discretionary on the courts (Garcia v. David, 67
Phil. 279 [1939]). An important factor taken into consideration by the courts in exercising their discretion is
whether the intervenor’s rights may be fully protected in a separate proceeding (Peyer v. Martinez, 88 Phil. 72
[1951]).

3. ID.; ID.; ID.; NOT AVAILABLE WHERE CASE HAS BECOME FINAL AND EXECUTORY. — The case of Director of
Lands v. Court of Appeals, 93 SCRA 23 8 (1979), can not serve as authority in support of the Republic’s
intervention at this late stage. While said case involved an intervention for the first time in the Supreme Court, the
motion to be allowed to intervene was filed before the appeal could be decided on the merits. The intervention
allowed in Republic v. Sandiganbayan, G.R. No. 9673, Resolution, March 3, 1992, was also made before the
decision on the merits by this Court. In contrast, the intervention of the Republic was sought after this Court had
decided the petition in G.R. No. 115044 and petitioners had complied with and satisfied the judgment. While the
intervention in Director of Lands was in a case that was timely appealed from the Regional Trial Court to the Court
of Appeals and from the Court of Appeals to the Supreme Court, the intervention of the Republic was in a case that
had become final and executory more than five years prior to the filing of the motion to intervene. As of September
16, 1994, therefore, when the Republic moved to intervene, there was no longer any pending litigation between
the parties in G.R. No. 115044. Intervention is an auxiliary and supplemental remedy to an existing, not a settled
litigation (cf. Clareza v. Rosales, 2 SCRA 455 [1961]). An intervention was disallowed in a case which has become
final an executory (Trazo v. Manila Pencil Co., 77 SCRA 181 [1977]).

4. ID.; ID.; ID.; INTERVENOR SHOULD NOT JUST SIT IDLY AND WATCH THE PASSING SCENE BEFORE HE SEEKS
JUDICIAL RELIEF. — An intervenor should not be permitted to just sit idly and watch the passing scene as an
uninterested overlooker before he wakes up to seek judicial relief (Pacursa v. Del Rosario, 24 SCRA 125 [1968]).
The Office of the President was aware of the plans of ADC to start operation as early as 1988. On May 5, 1988,
ADC informed said Office of its intention to operate under Ordinance No. 7065. The said Office perfunctorily
referred the letter of ADC to the Manila mayor, implying that the matter was not the concern of the National
Government.

5. ID.; SUPREME COURT; MAY RELAX THE STRICT APPLICATION OF RULES OF PROCEDURE. — Be that as it may,
the Court may consider the motion to intervene, motion for reconsideration-in-intervention, supplemental motion
for reconsideration-in-intervention and second supplemental motion-in-intervention as a petition for quo warranto
under Rule 66 of the Revised Rules of Court. In the liberal construction of the Rules in order to attain substantial
justice, the Court has treated petitions filed under one Rule as petitions filed under the more appropriate Rule
(Davao Fruits Corporation v. Associated Labor Union, 225 SCRA 562 [1993]).

6. ID.; SPECIAL CIVIL ACTION; QUO WARRANTO; A PROCEEDING TO DETERMINE THE RIGHT TO THE USE OF A
FRANCHISE. — In quo warranto, the government can require a corporation to show cause by what right it exercises
a privilege. which ordinarily can not legally be exercised except by virtue of a grant from the state. It is a
proceeding to determine the right to the use of a franchise or exercise of an office and to oust the holder from its
enjoyment if his claim is not well-founded (Castro v. Del Rosario, 19 SCRA 196 [1967]).

7. STATUTORY CONSTRUCTION; REPEAL BY IMPLICATION, NOT FAVORED. — Republic Act No. 954 did not
expressly repeal Section 18(jj). In such a case, if there is any repeal of the prior law by the later law, it can only be
by implication. Such kind of repeals is not favored. There is even a presumption against repeal by implication (The
Philippine American Management Co. Inc. v. The Philippine American Management Employees Association, 49 SCRA
194 [1973]).

8. ID.; A SUBSEQUENT LAW CAN NOT BE CONSTRUED AS REPEALING A PRIOR LAW IN THE ABSENCE OF AN
EXPRESS REPEAL. — In the absence of an express repeal, a subsequent law can not be construed as repealing a
prior law unless an irreconcilable inconsistency and repugnancy exist in the terms of the new and old law (Iloilo
Palay and Corn Planters Association, Inc. v. Feliciano, 13 SCRA 377 [1965]).

9. ID.; SPECIAL LAW CAN NOT BE REPEALED BY A GENERAL LAW. — But more importantly, the rule in legal
hermeneutics is that a special law, like the Charter of the City of Manila, is not deemed repealed by a general law,
like R.A. No. 954 (Commissioner of Internal Revenue v. Court of Appeals, 207 SCRA 487 [1992]).

10. ADMINISTRATIVE LAW; LOCAL GOVERNMENT; GRANT OF FRANCHISE UNDER A DELEGATED AUTHORITY,
BINDS THE PUBLIC AND CONSIDERED AN ACT OF THE STATE; ORDINANCE NO. 7065, CONSIDERED A
"LEGISLATIVE FRANCHISE." — In a way also, Ordinance No. 7065 can be considered a "legislative franchise" within
the purview of R.A. No. 954, having been enacted by the Municipal Board of the City of Manila pursuant to the
powers delegated to it by the legislature. A grant, under a delegated authority, binds the public and is considered
the act of the state. "The franchise [granted by the delegate] is a legislative grant, whether made directly by the
legislature itself or by any one of its properly constituted instrumentalities" (36 Am Jr 2d. 734).
11. CONSTITUTIONAL LAW; PRESIDENT; PRESIDENTIAL DECREE NO. 771; SECTION 3 THEREOF AS IT IS APPLIED
TO ORDINANCE NO. 7065 SUFFERS FROM CONSTITUTIONAL INFIRMITIES AND TRANSGRESSES CONSTITUTIONAL
PROVISIONS; EQUAL PROTECTION CLAUSE, VIOLATED. — Insofar as it is applied to Ordinance No. 7065, Section 3
of P.D. No. 771 suffers from constitutional infirmities and transgresses several constitutional provisions. Said
Section 3 provides: "All existing franchises and permits issued by local governments are hereby revoked and may
be renewed only in accordance with this Decree." Section 3 violated the equal protection clause (Section 1 of
Article IV) of the 1973 Constitution, which provided: "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." Less than two months
after the promulgation of P.D. No. 771, President Marcos issued P.D. No. 810, granting the Philippine Jai-Alai and
Amusement Corporation (PJAC) a franchise to operate jai-alai within the Greater Manila Area. It is obvious that
P.D. No. 771 was decreed to cancel the franchise of ADC so that the same could be given to another entity under
P.D. No. 810. A facially neutral statute (P.D. No. 771) may become discriminatory by the enactment of another
statute (P.D. No. 810) which allocates to a favored individual benefits withdrawn under the first statute (Ordinance
No. 7065), and when there is no valid basis for classification of the first and the second grantees. The only basis for
distinction we can think of is that the second grantee was Benjamin Romualdez, a brother-in-law of President
Marcos.

12. ID.; ID.; ID.; ID.; DUE PROCESS CLAUSE, ABRIDGED. — Section 3 violated the due process clause of the
Constitution, both in its procedural and substantive aspects. The right to due process is guaranteed by the same
Section 1 of Article IV of the 1973 Constitution Ordinance No. 7065, like any franchise, is a valuable property by
itself. The concept of "property" protected by the due process clause has been expanded to include economic
interests and investments. The rudiments of fair play under the "procedural due process" doctrine require that ADC
should at least have been given an opportunity to be heard in its behalf before its franchise was cancelled, more so
when the same franchise was given to another company. Under the "substantive due process" doctrine, a law may
be voided when it does not relate to a legitimate end and when it unreasonably infringes on contractual and
property rights. The doctrine as enunciated in Allgeyer v. Louisiana, 165 U.S. (1897) can be easily stated, thus: the
government has to employ means (legislation) which bear some reasonable relation to a legitimate end (Nowak,
Rotunda and Young, Constitutional Law 436, 443 [2d ed]). When President Marcos issued P.D. No. 771, he did not
have public interest in mind; otherwise, he would have simply outlawed jai-alai as something pernicious to the
public. Rather, all what he wanted to accomplish was to monopolize the grant of jai-alai franchises. The motivation
behind its issuance notwithstanding, there can be no constitutional objection to P.D. No. 771 insofar as it removed
the power to grant jai-alai franchises from the local governments. We said so in Basco v. Pagcor, 197 SCRA 52
(1991). The constitutional objection arises, however, when P.D. No. 771 cancelled all the existing franchises. We
search in vain to find any reasonable relation between Section 3 of P.D. No. 771 and any legitimate ends of
government intended to be achieved by its issuance. Besides, the grant of a franchise to PJAC exposed P.D. No.
771 as an exercise of arbitrary power to divest ADC of its property rights.

13. ID.; ID.; ID.; ID.; FAILURE OF THE BILL TO EMBRACE ONLY ONE SUBJECT. — Section 3 also violated Section 1
of Article VIII of the 1973 Constitution, which provided: "Every bill shall embrace only one subject which shall be
expressed in the title thereof." The title of P.D. No. 771 reads as follows: "REVOKING ALL POWERS AND
AUTHORITY OF LOCAL GOVERNMENT TO GRANT FRANCHISE, LICENSE OR PERMIT AND REGULATE WAGERS OR
BETTING BY THE PUBLIC ON HORSE AND DOG RACES, JAI-ALAI OR BASQUE PELOTA, AND OTHER FORMS OF
GAMING." The title of P.D. No. 771 refers only to the revocation of the power of local governments to grant jai-alai
franchises. It does not embrace nor even intimate the revocation of existing franchises.

14. ID.; ID.; ID.; ID.; IMPAIRED OBLIGATIONS OF CONTRACTS. — Lastly, Section 3 impaired the obligation of
contracts prohibited by Section 11 of Article IV of the 1973 Constitution. As authorized by Section 18(jj), Ordinance
No. 7065 grants ADC a permit "to establish, maintain and operate a jai-alai in the City of Manila, under the
following terms and conditions and such other terms and conditions as he [the Mayor] may prescribe for good
reasons of general interest." Section 11 of Article IV of the 1973 Constitution provided: "No law impairing the
obligation of contracts shall be passed." Any law which enlarges, abridges, or in any manner changes the intention
of the parties, necessarily impairs the contract itself (U.S. v. Conde, 42 Phil. 766 [1922]; Clemens v. Nolting, 42
Phil. 702 [1922]). A franchise constitutes a contract between the grantor and the grantee. Once granted, it may
not be invoked unless there are valid reasons for doing so (Papa v. Santiago, 105 Phil. 253 [1959]). A franchise is
not revocable at the will of the grantor after contractual or property rights thereunder have become vested in the
grantee, in the absence of any provision therefor in the grant or in the general law (Grand Trunk Western R. Co. v.
South Bend, 227 U.S. 544). Ordinance No. 7065 is not merely a personal privilege that can be withdrawn at any
time. It is a franchise that is protected by the Constitution.

15. ID.; LEGISLATURE; FRANCHISE DIFFERENTIATED FROM PRIVILEGE. — The distinction between the two is that
a privilege is bestowed out of pure beneficence on the part of the government. There is no obligation or burden
impose on the grantee except maybe to pay the ordinary license and permit fees. In a franchise, there are certain
obligations assumed by the grantee which make up the valuable consideration for the contract. That is why the
grantee is first required to signify his acceptance of the terms and conditions of the grant. Once the grantee
accepts the terms and conditions thereof, the grant becomes a binding contract between the grantor and the
grantee. Another test used to distinguish a franchise from a privilege is the big investment risked by the grantee.
In Papa v. Santiago, supra, we held that this factor should be considered in favor of the grantee. A franchise in
which money has been expended assumes the character of a vested right (Brazosport Savings and Loan
Association v. American Savings and Loan Association, 161 Tex. 543, 342 S.W. 2d. 747).

16. ID.; POLICE POWER; POWER TO REGULATE FRANCHISE DOES NOT INCLUDE POWER TO CANCEL. — That a
franchise is subject to regulation by the state by virtue of its police power is conceded. What is not acceptable is
the Republic’s proposition that the power to regulate and supervise includes the power to cancel the franchise
altogether.

17. ID.; PRESIDENT; EXECUTIVE ORDER NO. 135; 200 METER RADIUS FROM GOVERNMENT BUILDINGS, PUBLIC
PLAZA AND OTHER SIMILAR PLACES NO LONGER APPLICABLE TO PELOTA FRONTONS. — The Republic questioned
the siting of the ADC’s fronton as violative of E.O. No. 135 of President Quirino. Under said executive issuance, no
pelota fronton can be maintained and operated "within a radius of 200 lineal meters from any city hall or municipal
building, provincial capital building, national capital building, public plaza or park, public school, church, hospital,
athletic stadium, or any institution of learning or charity." However, the operative law on the siting of jai-alai
establishments is no longer E.O. No. 135 of President Quirino but R.A. No. 938 as amended by R.A. No. 1224.
Under said law only night clubs, cabarets, pavilions, or other similar places are covered by the 200-lineal meter
radius. In the case of all other places of amusements except cockpits, the proscribed radial distance has been
reduced to 50 meters. With respect to cockpits, the determination of the radial distance is left to the discretion of
the municipal council or city board (Sec. 1).

18. CIVIL LAW; OBLIGATIONS AND CONTRACTS; ABSENCE OF PERIOD OF CONTRACT; REMEDIES AVAILABLE. —
The Republic also questions the lack of the period of the grant under Ordinance No. 7065, thus making it
indeterminate (G.R. No. 117263). The ordinance leaves it to the Mayor of the City of Manila to lay down other
terms and conditions of the grant in addition to those specified therein. It is up to the parties to agree on the life or
term of the grant. In case the parties fail to reach an agreement on the term, the same can be fixed by the courts
under Article 1197 of the Civil Code of the Philippines.

19. REMEDIAL LAW; ACTIONS; CALENDAR; ASSIGNMENT OF CASES NEED NOT ALWAYS BE BY RAFFLE. — Section
7 of Rule 22 of the Revised Rules of Court does not require that the assignment of cases to the different branches
of a trial court should always be by raffle. The Rule talks of assignment "whether by raffle or otherwise." What it
requires is the giving of written notice to counsel or the parties "so that they may be present therein if they so
desire."

20. ID.; ID.; CALENDAR; SPECIAL RAFFLE; REQUISITES. — However, there may be cases necessitating the
issuance of a temporary restraining order to prevent irreparable injury on the petitioner. To await the regular raffle
before the court can act on the motion for temporary restraining order may render the case moot and academic.
Hence, Administrative Circular No. 1 dated January 28, 1988 was issued by this Court allowing a special raffle. Said
Circular provides: "8.3. Special raffles should not be permitted except on verified application of the interested party
who seeks issuance of a provisional remedy and only upon a finding by the Executive Judge that unless a special
raffle is conducted irreparable damage shall be suffered by the applicant. The special raffle shall be conducted by at
least two judges in a multiple-sala station."

21. ID.; EVIDENCE; BURDEN OF PROOF AND PRESUMPTIONS; REGULARITY IN THE PERFORMANCE OF DUTY;
APPLIED IN ASSIGNMENT OF CASES. — In a case where a verified application for special raffle is filed, the notice to
the adverse parties may be dispensed with but the raffle has to "be conducted by at least two judges in a multiple-
sala station." The Republic does not claim that Administrative Circular No. 1 has been violated in the assignment of
the case to respondent Judge. The presumption of regularity of official acts therefore prevails.

22. PROVISIONAL REMEDIES; TEMPORARY RESTRAINING ORDER OR PRELIMINARY INJUNCTION; PURPOSE. — The
purpose of a temporary restraining order or preliminary injunction, whether preventive or mandatory, is merely to
prevent a threatened wrong and to protect the property or rights involved from further injury, until the issues can
be determined after the hearing on the merits (Ohio Oil Co. v. Conway, 279 U.S. 813, 73 L. Ed. 972, 49 S. Ct. 256;
Gobbi v. Dilao, 58 Or. 14, 111 p. 49, 113, p. 57). What is intended to be preserved is the status quo ante litem
motam or the last actual, peaceable, noncontested status (Annotation, 15 ALR 2d 237).

23. CIVIL LAW; PROPERTY, OWNERSHIP AND ITS MODIFICATIONS; RIGHT TO CONDUCT A BUSINESS OR TO
PURSUE ONE’S BUSINESS OR TRADE, A PROPERTY RIGHT WHICH EQUITY WILL PROTECT BY INJUNCTION. — The
right to conduct a business or to pursue one’s business or trade without wrongful interference by others is a
property right which equity will, in proper cases, protect by injunction, provided of course, that such occupation or
vocation is legal and not prohibited by law (Rance v. Sperry & Hutchinson Co., 410 P. 2d. 859).

24. REMEDIAL LAW; SUPREME COURT; WITH JURISDICTION TO DECIDE ISSUES NOT SETTLED BY THE TRIAL
COURT. — Respondent Judge Reyes did not pre-empt this Court in deciding the basic issues raised in G.R. No.
115044 when it assumed jurisdiction over Civil Case No. 94-71656 and issued the orders questioned in G.R. No.
117263. The orders of Judge Reyes are provisional in nature and do not touch on the merits of the case. The issues
raised in Civil Case No. 94-71656 are the validity of the Directive and Memorandum, which were issued after the
decision of this Court in G.R. No. 115044. The respondents in the civil case before the trial court are not even
parties in G.R. No. 115044.

PUNO, J., dissenting opinion:

1. POLITICAL LAW; LEGISLATURE; BILL; TITLE OF LAW, VALUABLE INTRINSIC AID IN DETERMINING LEGISLATIVE
INTENT; REPUBLIC ACT NO. 954 DOES NOT REQUIRE A LEGISLATIVE FRANCHISE TO OPERATE JAI-ALAI. — I find
as completely baseless petitioners’ submission that R.A. No. 954 requires a legislative franchise to operate a jai-
alai, in effect, revoking the power of the City of Manila to issue permits for the same purpose as granted by its
Charter. A 20-20 visual reading of R.A. No. 954 will not yield the suggested interpretation by petitioners. The title
of R.A. No. 954 will immediately reveal that the law was enacted to achieve a special purpose. It states: "An Act To
Prohibit Certain Activities In Connection With Horse Races And Basque Pelota Games (Jai-Alai), And To Prescribe
Penalties For Its Violation." The prohibited activities related to jai-alai games are specified in Sections 4 to 6, viz:
The title of R.A. No. 954 does not show that it seeks to limit the operation of jai-alai only to entities with franchise
given by Congress. What the title trumpets as the sole subject of the law is the criminalization of certain practices
relating to jai-alai games. The title of a law is a valuable intrinsic aid in determining legislative intent. The
Explanatory Note of House Bill 3204, the precursor of R.A. No. 954, also reveals that the intent of the law is only to
criminalize the practice of illegal bookies and game-fixing in jai-alai. It states: "This bill seeks to prohibit certain
anomalous practice of ‘bookies’ in connection with the holding of horse races or ‘basque pelota’ games. . . .

2. ID.; ID.; ID.; EXPLANATORY NOTE GIVES A RELIABLE KEYHOLE ON SCOPE AND COVERAGE OF REPUBLIC ACT
NO. 954. — As said Explanatory Note is expressive of the purpose of the bill, it gives a reliable keyhole on the
scope and coverage of R.A. No. 954. Nothing from the Explanatory Note remotely suggests any intent of the law to
revoke the power of the City of Manila to issue permits to operate jai-alai games within its territorial jurisdiction.

3. ID.; ID.; ID.; LEGISLATIVE DEBATE, GOOD SOURCE TO DETERMINE INTENT OF THE LAW. — The Debates in
Congress likewise reject the reading of R.A. No. 954 by petitioners, thus: Again, legislative debate is a good source
to determine the intent of a law.

4. ID.; ID.; ID.; REPUBLIC ACT NO. 954; ABSENCE OF REPEALING PROVISION, MANIFEST. — To top it all, the text
of R.A. No. 954 itself does not intimate that it is repealing any existing law, especially Section 18(jj) of R.A. No.
409, otherwise known as the Charter of Manila. Indeed, R.A. No. 954 has no repealing provision. The reason is
obvious — it simply prohibited certain practices in jai-alai then still unregulated by the laws of the land. It did not
regulate aspects of jai-alai already regulated by existing laws, like the matter of whether it is the national
government alone that should issue franchises to operate jai-alai games.

5. ID.; ID.; DELEGATION OF LEGISLATIVE POWER TO LOCAL GOVERNMENTS BINDS THE FORMER; PERMIT
ISSUED BY THE CITY OF MANILA EQUIVALENT TO FRANCHISE ISSUED BY CONGRESS. — The passage of P.D. No.
771, also negates petitioners’ insistence that for ADC to continue operating, it must show it has a franchise from
Congress, not just a permit from the City of Manila. The suggested dichotomy between a legislative franchise and
city permit does not impress. If the City of Manila is empowered to license the ADC it is because the power was
delegated to it by Congress. The acts of the City of Manila in the exercise of its delegated power bind Congress as
well. Stated otherwise, the permit given by the City to ADC is not any whit legally inferior to a regular franchise.
Through the years, the permit given by the City endows the grantee complete right to operate. Not once, except in
these cases, has the national government questioned the completeness of this right. For this reason, P.D. No. 771
has to revoke all existing franchises and permits without making any distinction. It treated permits in the same
class as franchises.

6. ID.; POLICE POWER; DEFINED. — It was the legendary Chief Justice Marshall who first used the phrase police
power in 1824. Early attempts to fix the metes and bounds of police power were unsuccessful. For of all the
inherent powers of the State, police power is indubitably the most pervasive, the most insistent and the least
limitable. Rooted on the Latin maxims, salus populi suprema est lex (the welfare of the people is the supreme law)
and sic utere tuo ut alienum non laedas (so use your property as not to injure the property of others), it was not
without reason for Justice Holmes to stress that its reach extends "to all the great public needs." A similar
sentiment was echoed by our own Justice Laurel in Calalang v. Williams who defined police power as the "state
authority to enact legislation that may interfere with personal liberty or property in order to promote the general
welfare."

7. ID.; ID.; TEST TO DETERMINE VALIDITY OF POLICE MEASURE. — But while the State is bestowed near
boundless authority to promote public welfare, still the exercise of police power cannot be allowed to run riot in a
republic ruled by reason. Thus, our courts have laid down the test to determine the validity of a police measure as
follows: (1) the interest of the public generally, as distinguished from those of particular class, requires its
exercise; and (2) the means employed are reasonably necessary for the accomplishment of the purpose and not
unduly oppressive upon individuals. Deeper reflexion will reveal that the test reiterates the essence of our
constitutional guarantees of substantive due process, equal protection, and non-impairment of property rights.
8. ID.; PRESIDENT; PRESIDENTIAL DECREE NO. 771; SECTION 3 THEREOF REVOKING "ALL" EXISTING
FRANCHISE AND PERMITS, UNCONSTITUTIONAL. — Truth, has its own time of sprouting out. The truth behind the
revocation of ADC’s franchise revealed itself when former President Marcos transferred ADC’s franchise to the
Philippine Jai-Alai and Amusements Corporation then under the control of his brother-in-law, Mr. Alfredo "Bejo"
Romualdez. The favored treatment was extended hardly two (2) months after the revocation of ADC’s franchise
and it left Philippine Jai-Alai and Amusements Corporation the sole jai-alai operator in the Philippines. The Court is
not informed of any distinction of PJAC that will justify its different treatment. The evidence is thus clear and the
conclusion is irresistible that Sections 3 of P.D. No. 771 was designed with a malignant eye against ADC. In light of
the established facts in field, section 3 of P.D. No. 771 must be struck down as constitutionally infirmed. Despite its
cosmetics, Section 3 cannot be unblushingly foisted as a measure that will promote the public welfare. There is no
way to treat the self-interest of a favored entity as identical with the general interest of the Filipino people. It will
also be repulsive to reason to entertain the thesis that the revocation of the franchise of ADC is reasonably
necessary to enable the State to grapple to the ground the evil of jai-alai as a form of gambling. Petitioners have
not demonstrated that government lacks alternative options to succeed in its effort except to cancel the lone
franchise of ADC. Well to stress, it is not the lofty aim of P.D. No. 771 to completely eradicate jai-alai games; it
merely seeks to control its multiplication by restoring the monopoly of the national government in the dispensation
of franchises. Prescinding from these premises, I share the scholarly view of Mr. Justice Quiason that Sec. 3 of P.D.
No. 771 offends the Constitution which demands faithful compliance with the requirements of substantive due
process, equal protection of the law, and non-impairment of contracts.

9. ID.; ID.; ID.; ID.; VIOLATES PROCEDURAL DUE PROCESS. — But while I wholeheartedly subscribe to the many
impeccable theses of Mr. Justice Quiason, it is with regret that I cannot join his submittal that Sec. 3 of P.D. No.
771 violates procedural due process. We are dealing with the plenary power of the legislature to make and amend
laws. Congress has previously delegated to the City of Manila the power to grant permits to operate jai-alai within
its territorial jurisdiction and ADC was given its permit thru Ordinance No. 7065. ADC’s permit could have been
validly revoked by law if it were demonstrated that its revocation was called for by the public good and is not
capricious. In ascertaining the public good for the purpose of enacting a remedial law, it is not indispensable, albeit
sometimes desirable, to give notice and hearing to an affected party. The data the legislature seeks when engaged
in lawmaking does not focus on the liability of a person or entity which would require fair hearing of the latter’s
side. In fine, the legislature while making laws is not involved in establishing evidence that will convict, but in
unearthing neutral data that will direct its discretion in determining the general good.

10. ID.; JUDICIARY; SUPREME COURT; WITH EXPANDED JURISDICTION TO DETERMINE GRAVE ABUSE OF
DISCRETION OF ANY BRANCH OR AGENCY OF THE GOVERNMENT. — I also support the stance of Mr. Justice
Quiason which resisted the stance that the Court should close its eyes to allegations that Section 3 of P.D. No. 771
was conceived and effected to give naked preference to a favored entity due to pedigree. I reiterate the view that
Section 1, Article VIII of the Constitution expanding the jurisdiction of this Court to determine whether or not there
has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part, of any branch or
agency of government is not a pointless postulate. Without the grant of this new power, it would be difficult, if not
impossible, to pierce through the pretentious purposes of P.D. No. 771. P.D. No. 771 has no right to a reverential
treatment for it is not a real law as it is not the product of an authentic deliberative legislature. Rather, it is the
dictate of a public official who then had a monopoly of executive and legislative powers. As it was not infrequently
done at that time, the whereas clauses of laws were used to camouflage a private purpose by the invocation of
public welfare. The tragedy is that the bogus invocation of public welfare succeeded partly due to the indefensible
deference given to official acts of government. The new Constitution now calls for a heightened judicial scrutiny of
official acts. For this purpose, it has extirpated even the colonial roots of our impotence. It is time to respond to
this call with neither a pause nor a half-pause.

DECISION

PADILLA, J.:

These two (2) cases which are inter-related actually involve simple issues. if these issues have apparently become
complicated, it is not by reason of their nature because of the events and dramatis personae involved.

The petition in G.R. No. 115044 was dismissed by the First Division of this Court on 01 September 1994 based on a
finding that there was "no abuse of discretion, much less lack of or excess of jurisdiction, on the part of respondent
judge [Pacquing]", in issuing the questioned orders. Judge Pacquing had earlier issued in Civil Case No. 88-45660,
RTC of Manila, Branch 40, the following orders which were assailed by the Mayor of the City of Manila, Hon. Alfredo
S. Lim, in said G.R. No. 115044:

a. order dated 28 March 1994 directing Manila mayor Alfredo S. Lim to issue the permit/license to operate the jai-
alai in favor of Associated Development Corporation (ADC).

b. order dated 11 April 1994 directing mayor Lim to explain why he should not be cited for contempt for non-
compliance with the order dated 28 March 1994.chanroblesvirtuallawlibrary

c. order dated 20 April 1994 reiterating the previous order directing Mayor Lim to immediately issue the
permit/license to Associated Development Corporation (ADC).

The order dated 28 march 1994 was in turn issued upon motion by ADC for execution of a final judgment rendered
on 9 September 1988 which ordered the Manila Mayor to immediately issue to ADC the permit/license to operate
the jai-alai in Manila, under Manila Ordinance No. 7065.

On 13 September 1994, petitioner Guingona (as executive secretary) issued a directive to then chairman of the
Games and Amusements Board (GAB) Francisco R. Sumulong, Jr. to hold in abeyance the grant of authority, or if
any had been issued, to withdraw such grant of authority, to Associated Development Corporation to operate the
jai-alai in the City of Manila, until the following legal questions are properly resolved:

"1. Whether P.D. 771 which revoked all existing Jai-Alai franchisers issued by local governments as of 20 August
1975 is unconstitutional.

2. Assuming that the City of Manila had the power on 7 September 1971 to issue a Jai-Alai franchise to Associated
Development Corporation, whether the franchise granted is valied considering that the franchise has no duration,
and appears to be granted in perpetuity.

3. Whether the City of Manila had the power to issue a Jai-Alai franchise to Associated Development Corporation on
7 September 1971 in view of executive Order No. 392 dated 1 January 1951 which transferred from local
governments to the Games and Amusements Board the power to regulate Jai-Alai." 1

On 15 September 1994, respondent Associated Development Corporation (ADC) filed a petition for prohibition,
mandamus, injunction and damages with prayer for temporary restraining order and/or writ of preliminary
injunction in the Regional Trial Court of Manila against petitioner Guingona and then GAB chairman Sumulong,
docketed as Civil Case No. 94-71656, seeking to prevent GAB from withdrawing the provisional authority that had
earlier been granted to ADC. On the same day, the RTC of Manila, Branch 4, through presiding Judge Vetino Reyes,
issued a temporary restraining order enjoining the GAB from withdrawing ADC’s provisional authority. This
temporary restraining order was converted into a writ of preliminary injunction upon ADC’s posting of a bond in the
amount of P2,000,000.00. 2

Subsequently, also in G.R. No. 115044, the Republic of the Philippines, through the Games and Amusements
Board, filed a "Motion for Intervention; for Leave to File a Motion for reconsideration in Intervention; and to Refer
the case to the Court En Banc" and later a "Motion for Leave to File Supplemental Motion for Reconsideration-in-
Intervention and to Admit Attached Supplemental Motion for Reconsideration-in-Intervention" .

In an En Banc Resolution dated 20 September 1994, this Court referred G.R. No. 115044 to the Court En Banc and
required the respondents therein to comment on the aforementioned motions.

Meanwhile, Judge Reyes on 19 October 1994 issued another order, this time, granting ADC a writ of preliminary
mandatory injunction against Guingona and GAB to compel them to issue in favor of ADC the authority to operate
jai-alai.

Guingona, as executive secretary, and Dominador Cepeda, Jr. as the new GAB chairman, then filed the petition in
G.R. No. 117263 assailing the abovementioned orders of respondent Judge Vetino Reyes.

On 25 October 1994, in G.R. No. 117263, this Court granted petitioner’s motion for leave to file supplemental
petition and to admit attached supplemental petition with urgent prayer for restraining order. The Court further
required respondents to file their comment on the petition and supplemental petition with urgent prayer for
restraining order. The Court likewise set the case and all incidents thereof for hearing on 10 November 1994.

At the hearing on 10 November 1994, the issues to be resolved were formulated by the Court as follows:

1. whether or not intervention by the Republic of the Philippines at this stage of the proceedings is proper;

2. assuming such intervention is proper, whether or not the Associated Development Corporation has a valid and
subsisting franchise to maintain and operate the jai-alai;

3. whether or not there was grave abuse of discretion committed by respondent Judge Reyes in issuing the
aforementioned temporary restraining order (later writ of preliminary injunction); and
4. whether or not there was grave abuse of discretion committed by respondent Judge Reyes in issuing the
aforementioned writ of preliminary mandatory injunction.

On the issue of the propriety of the intervention by the Republic of the Philippines, a question was raised during the
hearing on 10 November 1994 as to whether intervention in G.R. No. 115044 was the proper remedy for the
national government to take in questioning the existence of a valid ADC franchise to operate the jai-alai or whether
a separate action for quo warranto under Section 2, Rule 66 of the Rules of Court was the proper remedy.

We need not belabor this issue since counsel for respondent ADC agreed to the suggestion that this Court once and
for all settle all substantive issues raised by the parties in these cases. Moreover, this Court can consider the
petition filed in G.R. No. 117263 as one for quo warranto which is within the original jurisdiction of the Court under
section 5(1), Article VIII of the Constitution. 3

On the propriety of intervention by the Republic, however, it will be recalled that this Court in Director of Lands v.
Court of Appeals (93 SCRA 238) allowed intervention even beyond the period prescribed in Section 2 Rule 12 of the
Rules of Court. The Court ruled in said case that a denial of the motions for intervention would "lead the Court to
commit an act of injustice to the movants, to their successor-in-interest and to all purchasers for value and in good
faith and thereby open the door to fraud, falsehood and misrepresentation, should intervenors’ claim be proven to
be true."

In the present case, the resulting injustice and injury, should the national government’s allegations be proven
correct, are manifest, since the latter has squarely questioned the very existence of a valid franchise to maintain
and operate the jai-alai (which is a gambling operation) in favor of ADC. As will be more extensively discussed
later, the national government contends that Manila Ordinance No. 7065 which purported to grant to ADC a
franchise to conduct jai-alai operations is void and ultra vires since Republic Act No. 954, approved on 20 June
1953, or very much earlier than said Ordinance No. 7065, the latter approved 7 September 1971, in Section 4
thereof, requires a legislative franchise, not a municipal franchise, for the operation of jai-alai. Additionally, the
national government argues that even assuming, arguendo, that the abovementioned ordinance is valid, ADC’s
franchise was nonetheless effectively revoked by Presidential Decree No. 771, issued on 20 August 1975, Sec. 3 of
which expressly revoked all existing franchises and permits to operate all forms of gambling facilities (including the
jai-alai) issued by local governments.

On the other hand, ADC’s position is that Ordinance No. 7065 was validly enacted by the City of Manila pursuant to
its delegated powers under it charter, Republic Act No. 409. ADC also squarely assails the constitutionality of PD
No. 771 as violative of the equal protection and non-impairment clauses of the Constitution. In this connection,
counsel for ADC contends that this Court should really rule on the validity of PD No. 771 to be able to determine
whether ADC continues to possess a valid franchise.

It will undoubtedly be a grave injustice to both parties in this case if this Court were to shirk from ruling on the
issue of constitutionality of PD No. 771. Such issue has, in our view, become the very lis mota in resolving the
present controversy, in view of ADC’s insistence that it was granted a valid and legal franchise by Ordinance No.
7065 to operate the jai-alai.

The time-honored doctrine is that all laws (PD No. 771 included) are presumed valid and constitutional until or
unless otherwise ruled by this Court. Not only this; Article XVIII Section 3 of the Constitution states:

"Sec. 3. All existing laws, decrees, executive orders, proclamations, letters of instructions and other executive
issuances not inconsistent with this Constitution shall remain operative until amended, repealed or revoked."

There is nothing on record to show or even suggest that PD No. 771 has been repealed, altered or amended by any
subsequent law or presidential issuance (when the executive still exercised legislative powers).

Neither can it be tenably stated that the issue of the continued existence of ADC’s franchise by reason of the
unconstitutionality of PD No. 771 was settled in G.R. No. 115044, for the decision of the Court’s First Division in
said case, aside from not being final, cannot have the effect of nullifying PD No. 771 as unconstitutional, since only
the Court En Banc has that power under Article VIII, Section 4(2) of the Constitution. 4

And on the question of whether or not the government is estopped from contesting ADC’s possession of a valid
franchise, the well-settled rule is that the State cannot be put in estoppel by the mistakes or errors, if any, of its
officials or agents (Republic v. Intermediate Appellate Court, 209 SCRA 90)

Consequently, in the light of the foregoing expostulation, we conclude that the republic (in contra distinction to the
City of Manila) may be allowed to intervene in G.R. No. 115044. The Republic is intervening in G.R. No. 115044 in
the exercise, not of its business or proprietary functions, but in the exercise of its governmental functions to
protect public morals and promote the general welfare.
II

Anent the question of whether ADC has a valid franchise to operate the Jai-Alai de Manila, a statement of the
pertinent laws is in order.

1. The Charter of the City of Manila was enacted by Congress on 18 June 1949. Section 18 thereof provides:

"Section 18. Legislative Powers. — The Municipal Board shall have the following legislative powers:

x x x

(jj) To tax, license, permit and regulate wagers or betting by the public on boxing, sipa, bowling, billiards, pools,
horse and dog races, cockpits, jai-alai, roller or ice-skating on any sporting or athletic contests, as well as grant
exclusive rights to establishments for this purpose, notwithstanding any existing law to the contrary."

2. On 1 January 1951, Executive Order No. 392 was issued transferring the authority to regulate jai-alais from local
government to the Games and Amusements Board (GAB).

3. On 20 June 1953, Congress enacted Republic Act No. 954, entitled "An Act to Prohibit With Horse Races and
Basque Pelota Games (Jai-Alai), And To Prescribe Penalties For Its Violation." The provisions of Republic Act No.
954 relating to jai-alai are as follows:

"Sec. 4. No person, or group of persons other than the operator or maintainer of a fronton with legislative franchise
to conduct basque pelota games (Jai-alai), shall offer, to take or arrange bets on any basque pelota game or event,
or maintain or use a totalizator or other device, method or system to bet or gamble on any basque pelota game or
event." (underscoring supplied).

"Sec. 5. No person, operator or maintainer of a fronton with legislative franchise to conduct basque pelota games
shall offer, take, or arrange bets on any basque pelota game or event, or maintain or use a totalizator or other
device, method or system to bet or gamble on any basque pelota game or event outside the place, enclosure, or
fronton where the basque pelota game is held." (Emphasis supplied).

4. On 07 September 1971, however, the Municipal Board of Manila nonetheless passed Ordinance No. 7065 entitled
"An Ordinance Authorizing the Mayor To Allow And Permit The Associated Development Corporation To Establish,
Maintain And Operate A Jai-Alai In The City Of Manila, Under Certain Terms And Conditions And For Other
Purposes."

5. On 20 August 1975, Presidential Decree No. 771 was issued by then President Marcos. The decree, entitled
"Revoking All Powers and Authority of Local Government(s) To Grant Franchise, License or Permit And Regulate
Wagers Or Betting By The Public On Horse And Dog Races, Jai-Alai Or Basque Pelota, And Other Forms Of
Gambling", in Section 3 thereof, expressly revoked all existing franchises and permits issued by local governments.

6. On 16 October 1975, Presidential Decree No. 810, entitled "An Act granting The Philippine Jai-Alai And
Amusement Corporation A Franchise To Operate, Construct And Maintain A Fronton For Basque Pelota And Similar
Games of Skill In THE Greater Manila Area," was promulgated.

7. On 08 May 1987, then President Aquino, by virtue of Article XVIII, Section 6, of the Constitution, which allowed
the incumbent legislative powers until the first Congress was convened, issued Executive Order No. 169 expressly
repealing PD 810 and revoking and cancelling the franchise granted to the Philippine Jai-Alai and Amusement
Corporation.

Petitioners in G.R. No. 117263 argue that Republic Act No. 954 effectively removed the power of the Municipal
Board of Manila to grant franchises for gambling operations. It is argued that the term "legislative franchise" in
Rep. Act No. 954 is used to refer to franchises issued by Congress.

On the other hand, ADC contends that Republic Act N. 409 (Manila Chapter) gives legislative powers to the
Municipal Board to grant franchises, and since Republic Act No. 954 does not specifically qualify the word
"legislative" as referring exclusively to Congress, then Rep. Act No. 954 did not remove the power of the Municipal
Board under Section 18(jj) of Republic Act No. 409 and consequently it was within the power of the City of Manila
to allow ADC to operate the jai-alai in the City of Manila.

On this point, the government counter-argues that the term "legislative powers" is used in Rep. Act No. 409 merely
to distinguish the powers under Section 18 of the law from the other powers of the Municipal Board, but that the
term "legislative franchise" in Rep. Act No. 954 refers to a franchise granted solely by Congress.
Further, the government argues that Executive Order No. 392 dated 01 January 1951 transferred even the power
to regulate Jai-Alai from the local governments to the Games and Amusements Board (GAB), a national
government agency.

It is worthy of note that neither of the authorities relied upon by ADC to support its alleged possession of a valid
franchise, namely the Charter of the City of Manila (Rep. Act No. 409) and Manila Ordinance No. 7065 uses the
word "franchise." Rep. Act No. 409 empowers the Municipal Board of Manila to "tax, license, permit and regulate
wagers or betting" and to "grant exclusive rights to establishments", while Ordinance No. 7065 authorized the
Manila City Mayor to "allow and permit" ADC to operate jai-alai facilities in the City of Manila.

It is clear from the foregoing that Congress did not delegate to the City of Manila the power "to franchise" wagers
or betting, including the jai-alai, but retained for itself such power "to franchise." What Congress delegated to the
City of Manila in Rep. Act No. 409, with respect to wagers or betting, was the power to "license, permit, or
regulate" which therefore means that a license or permit issued by the City of Manila to operate a wager or betting
activity, such as the jai-alai where bets are accepted, would not amount to something meaningful UNLESS the
holder of the permit or license was also FRANCHISED by the national government to so operate. Moreover, even
this power to license, permit, or regulate wagers or betting on jai-alai was removed from local governments,
including the City of Manila, and transferred to the GAB on 1 January 1951 by Executive Order No. 392. The net
result is that the authority to grant franchises for the operation of jai-alai frontons is in Congress, while the
regulatory function is vested in the GAB.

In relation, therefore, to the facts of this case, since ADC has no franchise from Congress to operate the jai-alai, it
may not so operate even if its has a license or permit from the City Mayor to operate the jai-alai in the City of
Manila.

It cannot be overlooked, in this connection, that the Revised Penal Code punishes gambling and betting under
Articles 195 to 199 thereof. Gambling is thus generally prohibited by law, unless another law is enacted by
Congress expressly exempting or excluding certain forms of gambling from the reach of criminal law. Among these
form the reach of criminal law. Among these forms of gambling allowed by special law are the horse races
authorized by Republic Acts Nos. 309 and 983 and gambling casinos authorized under Presidential Decree No.
1869.

While jai-alai as a sport is not illegal per se, the accepting of bets or wagers on the results of jai-alai games is
undoubtedly gambling and, therefore, a criminal offense punishable under Articles 195-199 of the Revised Penal
Code, unless it is shown that a later or special law had been passed allowing it. ADC has not shown any such
special law.

Republic Act No. 409 (the Revised Charter of the City of Manila) which was enacted by Congress on 18 June 1949
gave the Municipal Board certain delegated legislative powers under Section 18. A perusal of the powers
enumerated under Section 18 shows that these powers are basically regulatory in nature. 5 The regulatory nature
of these powers finds support not only in the plain words of the enumerations under Section 28 but also in this
Court’s ruling in People v. Vera (65 Phil. 56).

In Vera, this Court declared that a law which gives the Provincial Board the discretion to determine whether or not
a law of general application (such as, the Probation law-Act No. 4221) would or would not be operative within the
province, is unconstitutional for being an undue delegation of legislative power.

From the ruling in Vera, it would be logical to conclude that, if ADC’s arguments were to prevail, this Court would
likewise declare Section 18(jj) of the Revised Charter of Manila unconstitutional for the power it would delegate to
the Municipal Board of Manila would give the latter the absolute and unlimited discretion to render the penal code
provisions on gambling inapplicable or inoperative to persons or entities issued permits to operate gambling
establishments in the City of Manila.chanroblesvirtuallawlibrary

We need not go to this extent, however, since the rule is that laws must be presumed valid, constitutional and in
harmony with other laws. Thus, the relevant provisions of Rep. Acts Nos. 409 and 954 and Ordinance No. 7065
should be taken together and it should then be clear that the legislative powers of the Municipal Board should be
understood to be regulatory in nature and that Republic Act No. 954 should be understood to refer to congressional
franchises, as a necessity for the operation of jai-alai.

We need not, however, again belabor this issue further since the task at hand which will ultimately, and with
finality, decide the issues in this case is to determine whether PD No. 771 validly revoked ADC’s franchise to
operate the jai-alai, assuming (without conceding) that it indeed possessed such franchise under Ordinance No.
7065.

ADC argues that PD No. 771 is unconstitutional for being violative of the equal protection and non-impairment
provisions of the Constitution. On the other hand, the government contends that PD No. 771 is a valid exercise of
the inherent police power of the State.

The police power has been described as the least limitable of the inherent powers of the State. It is based on the
ancient doctrine — salus populi est suprema lex (the welfare of the people is the supreme law.) In the early case of
Rubi v. Provincial Board of Mindoro (39 Phil. 660), this Court through Mr. Justice George A. Malcolm stated thus:

"The police power of the State . . . is a power co-extensive with self-protection, and is not inaptly termed the "law
of overruling necessity." It may be said to be that inherent and plenary power in the State which enables it to
prohibit all things hurtful to the comfort, safety and welfare of society. Carried onward by the current of legislation,
the judiciary rarely attempts to dam the onrushing power of legislative discretion, provided the purposes of the law
do not go beyond the great principles that mean security for the public welfare or do not arbitrarily interfere with
the right of the individual."

In the matter of PD No. 771, the purpose of the law is clearly stated in the "whereas clause" as follows:

"WHEREAS, it has been reported that in spite of the current drive of our law enforcement agencies against vices
and illegal gambling, these social ills are still prevalent in many areas of the country;

"WHEREAS, there is need to consolidate all the efforts of the government to eradicate and minimize vices and other
forms of social ills in pursuance of the social and economic development program under the new society;

"WHEREAS, in order to effectively control and regulate wagers or betting by the public on horse and dog races, jai-
alai and other forms of gambling there is a necessity to transfer the issuance of permit and/or franchise from local
government to the National Government."

It cannot be argued that the control and regulation of gambling do not promote public morals and welfare.
Gambling is essentially antagonistic and self-reliance. It breeds indolence and erodes the value of good, honest and
hard work. It is, as very aptly stated by PD No. 771, a vice and a social ill which government must minimize (if not
eradicate) in pursuit of social and economic development.

In Magtajas v. Pryce Properties Corporation (20 July 1994, G.R. No. 111097), this Court stated thru Mr. Justice
Isagani A. Cruz:

"In the exercise of its own discretion, the legislative power may prohibit gambling altogether or allow it without
limitation or it may prohibit some forms of gambling and allow others for whatever reasons it may consider
sufficient. Thus, it has prohibited jueteng and monte but permits lotteries, cockfighting and horse-racing. In
making such choices, Congress has consulted its own wisdom, which this Court has no authority to review, much
less reverse. Well has it been said that courts do not sit to resolve the merits of conflicting theories. That is the
prerogative of the political departments. It is settled that questions regarding wisdom, morality and practicability of
statutes are not addressed to the judiciary but may be resolved only by the executive and legislative departments,
to which the function belongs in our scheme of government." (Emphasis supplied)

Talks regarding the supposed vanishing line between right and privilege in American constitutional law has no
relevance in the context of these cases since the reference there is to economic regulations. On the other hand, jai-
alai is not a mere economic activity which the law seeks to regulate. It is essentially gambling and whether it
should be permitted and, if so, under what conditions are questions primarily for the lawmaking authority to
determine, talking into account national and local interests. Here, it is the police power of the State that is
paramount.

ADC questions the motive for the issuance of PD Nos. 771. Clearly, however, this Court cannot look into allegations
that PD No. 771 was enacted to benefit a select group which was later given authority to operate the jai-alai under
PD No. 810. The examination of legislative motivation is generally prohibited. (Palmer v. Thompson, 403 U.S. 217,
29 L. Ed. 2d 438 [1971] per Black, J.) There is, the first place, absolute lack of evidence to support ADC’s
allegation of improper motivation in the issuance of PD No. 771. In the second place, as already averred, this Court
cannot go behind the expressed and proclaimed purposes of PD No. 771, which are reasonable and even
laudable.chanroblesvirtuallawlibrary

It should also be remembered that PD No. 771 provides that the national government can subsequently grant
franchises "upon proper application and verification of the qualifications of the applicant." ADC has not alleged that
it filed an application for a franchise with the national government subsequent to the enactment of PD No. 771;
thus, the allegations abovementioned (of preference to a select group) are based on conjectures, speculations and
imagined biases which do not warrant the consideration of this Court.

On the other hand, it is noteworthy that while then president Aquino issued Executive Order No. 169 revoking PD
No. 810 (which granted a franchise to a Marcos-crony to operate the jai-alai), she did not scrap or repeal PD No.
771 which had revoked all franchises to operate jai-alais issued by local governments, thereby re-affirming the
government policy that franchises to operate jai-alais are for the national government (not local governments) to
consider and approve.

On the alleged violation of the non-impairment and equal protection clauses of the Constitution, it should be
remembered that a franchise is not in the strict sense a simple contract but rather it is more importantly, a mere
privilege specially in matters which are within the government’s power to regulate and even prohibit through the
exercise of the police power. Thus, a gambling franchise is always subject to the exercise of police power for the
public welfare.

In RCPI v. NTC (150 SCRA 450), we held that:

"A franchise started out as a ‘royal privilege or (a) branch of the King’s prerogative, subsisting in the hands of a
subject.’ This definition was given by Finch, adopted by Blackstone, and accepted by every authority since . . .
Today, a franchise being merely a privilege emanating from the sovereign power of the state and owing its
existence to a grant, is subject to regulation by the state itself by virtue of its police power through its
administrative agencies."

There is a stronger reason for holding ADC’s permit to be a mere privilege because jai-alai, when played for bets, is
pure and simple gambling. To analogize a gambling franchise for the operation of a public utility, such as public
transportation company, is to trivialize the great historic origin of this branch of royal privilege.

As earlier noted, ADC has not alleged ever applying for a franchise under the provisions of PD No. 771. And yet,
the purpose of PD No. 771 is quite clear from its provisions, i.e., to give to the national government the exclusive
power to grant gambling franchises. Thus, all franchises then existing were revoked but were made subject to
reissuance by the national government upon compliance by the applicant with government-set qualifications and
requirements.

There was no violation by PD No. 771 of the equal protection clause since the decree revoked all franchises issued
by local governments without qualification or exception. ADC cannot allege violation of the equal protection clause
simply because it was the only one affected by the decree, for as correctly pointed out by the government, ADC
was not singled out when all jai-alai franchises were revoked. Besides, it is too late in the day for ADC to seek
redress for alleged violation of its constitutional rights for it could have raised these issues as early as 1975, almost
twenty 920) years ago.chanroblesvirtuallawlibrary

Finally, we do not agree that Section 3 of PD No. 771 and the requirement of a legislative franchise in Republic Act
No. 954 are "riders" to the two 92) laws and are violative of the rule that laws should embrace one subject which
shall be expressed in the title, as argued by ADC. In Cordero v. Cabatuando (6 SCRA 418), this Court ruled that
the requirement under the constitution that all laws should embrace only one subject which shall be expressed in
the title is sufficiently met if the title is comprehensive enough reasonably to include the general object which the
statute seeks to effect, without expressing each and every end and means necessary or convenient for the
accomplishing of the objective.

III

On the issue of whether or not there was grave abuse of discretion committed by respondent Judge Reyes in
issuing the temporary restraining order (later converted to a writ of preliminary injunction) and the writ of
preliminary mandatory injunction, we hold and rule there was.

Section 3, Rule 58 of the rules of Court provides for the grounds for the issuance of a preliminary injunction. While
ADC could allege these grounds, respondent judge should have taken judicial notice of Republic Act No. 954 and PD
771, under Section 1 rule 129 of the Rules of court. These laws negate the existence of any legal right on the part
of ADC to the reliefs it sought so as to justify the issuance of a writ of preliminary injunction. since PD No. 771 and
Republic Act No. 954 are presumed valid and constitutional until ruled otherwise by the Supreme Court after due
hearing, ADC was not entitled to the writs issued and consequently there was grave abuse of discretion in issuing
them.

WHEREFORE, for the foregoing reasons, judgment is hereby rendered:

1. allowing the Republic of the Philippines to intervene in G.R. No. 115044.

2. declaring Presidential Decree No. 771 valid and constitutional.

3. declaring that respondent Associated Development corporation (ADC) does not possess the required
congressional franchise to operate and conduct the jai-alai under Republic Act No. 954 and Presidential Decree No.
771.

4. setting aside the writs of preliminary injunction and preliminary mandatory injunction issued by respondent
Judge Vetino Reyes in civil Case No. 94-71656.

SO ORDERED.

Feliciano, Bidin, Regalado, Romero, Bellosillo and Mendoza, JJ., concur.

Narvasa, C.J. and Francisco, J., took no part.

[G.R. No. L-72873. May 28, 1987.]

CARLOS ALONZO and CASIMIRA ALONZO, Petitioners, v. INTERMEDIATE APPELLATE COURT and TECLA
PADUA, Respondents.

Perpetuo L.B. Alonzo, for Petitioners.

Luis R. Reyes for Private Respondent.

SYLLABUS

1. REMEDIAL LAW; STATUTORY CONSTRUCTION; STATUTES; INTERPRETED AND APPLIED IN CONSONANCE WITH
JUSTICE. — As has been aptly observed, we test a law by its results; and likewise, we may add, by its purposes. It
is a cardinal rule that, in seeking the meaning of the law, the first concern of the judge should be to discover in its
provisions the intent of the lawmaker. Unquestionably, the law should never be interpreted in such a way as to
cause injustice as this is never within the legislative intent. An indispensable part of that intent, in fact, for we
presume the good motives of the legislature, is to render justice. Thus, we interpret and apply the law not
independently of but in consonance with justice. Law and justice are inseparable, and we must keep them so. To
be sure, there are some laws that, while generally valid, may seem arbitrary when applied in a particular case
because of its peculiar circumstances. In such a situation, we are not bound, because only of our nature and
functions, to apply them just the same, in slavish obedience to their language. What we do instead is find a
balance between the word and the will, that justice may be done even as the law is obeyed. Justice is always an
essential ingredient of its decisions. Thus when the facts warrants, we interpret the law in a way that will render
justice, presuming that it was the intention of the lawmaker, to begin with, that the law be dispensed with justice.
So we have done in this case.

2. ID.; ID.; ID.; MUST BE READ ACCORDING TO ITS SPIRIT AND INTENT. — While we admittedly may not
legislate, we nevertheless have the power to interpret the law in such a way as to reflect the will of the legislature.
While we may not read into the law a purpose that is not there, we nevertheless have the right to read out of it the
reason for its enactment. In doing so, we defer not to "the letter that killeth" but to "the spirit that vivifieth," to
give effect to the lawmaker’s will. "The spirit, rather than the letter of a statute determines its construction, hence,
a statute must be read according to its spirit or intent. For what is within the spirit is within the statute although it
is not within the letter thereof, and that which is within the letter but not within the spirit is not within the statute.
Stated differently, a thing which is within the intent of the lawmaker is as much within the statute as if within the
letter; and a thing which is within the letter of the statute is not within the statute unless within the intent of the
lawmakers."

3. CIVIL LAW; CONTRACTS; PACTO DE RETRO SALE; EXCEPTION TO THE GENERAL RULE ADOPTED IN CASE AT
BAR. — In arriving at our conclusion today, we are deviating from the strict letter of the law, which the respondent
court understandably applied pursuant to existing jurisprudence. The said court acted properly as it had no
competence to reverse the doctrines laid down by this Court in the above-cited cases. In fact, and this should be
clearly stressed, we ourselves are not abandoning the De Conejero and Buttle doctrines. What we are doing simply
is adopting an exception to the general rule, in view of the peculiar circumstances of this case. The co-heirs in this
case were undeniably informed of the sales although no notice in writing was given them. And there is no doubt
either that the 30-day period began and ended during the 14 years between the sales in question and the filing of
the complaint for redemption in 1977, without the co-heirs exercising their right of redemption. These are the
justifications for this exception.

DECISION
CRUZ, J.:

The question is sometimes asked, in serious inquiry or in curious conjecture, whether we are a court of law or a
court of justice. Do we apply the law even if it is unjust or do we administer justice even against the law? Thus
queried, we do not equivocate. The answer is that we do neither because we are a court both of law and of justice.
We apply the law with justice for that is our mission and purpose in the scheme of our Republic. This case is an
illustration.

Five brothers and sisters inherited in equal pro indiviso shares a parcel of land registered in the mane of their
deceased parents under OCT No. 10977 of the Registry of Deeds of Tarlac. 1

On March 15, 1963, one of them, Celestino Padua, transferred his undivided share of the herein petitioners for the
sum of P550.00 by way of absolute sale. 2 One year later, on April 22, 1964, Eustaquia Padua, his sister, sold her
own share to the same vendees, in an instrument denominated "Con Pacto de Retro Sale," for the sum of P440.00.
3

By virtue of such agreements, the petitioners occupied, after the said sales, an area corresponding to two-fifths of
the said lot, representing the portions sold to them. The vendees subsequently enclosed the same with a fence. In
1975, with their consent, their son Eduardo Alonzo and his wife built a semi-concrete house on a part of the
enclosed area. 4

On February 25, 1976, Mariano Padua, one of the five co-heirs, sought to redeem the area sold to the spouses
Alonzo, but his complaint was dismissed when it appeared that he was an American citizen. 5 On May 27, 1977,
however, Tecla Padua, another co-heir, filed her own complaint invoking the same right of redemption claimed by
her brother. 6

The trial court * also dismiss this complaint, now on the ground that the right had lapsed, not having been
exercised within thirty days from notice of the sales in 1963 and 1964. Although there was no written notice, it was
held that actual knowledge of the sales by the co-heirs satisfied the requirement of the law. 7

In truth, such actual notice as acquired by the co-heirs cannot be plausibly denied. The other co-heirs, including
Tecla Padua, lived on the same lot, which consisted of only 604 square meters, including the portions sold to the
petitioners. 8 Eustaquia herself, who had sold her portion, was staying in the same house with her sister Tecla,
who later claimed redemption. 9 Moreover, the petitioners and the private respondents were close friends and
neighbors whose children went to school together. 10

It is highly improbable that the other co-heirs were unaware of the sales and that they thought, as they alleged,
that the area occupied by the petitioners had merely been mortgaged by Celestino and Eustaquia. In the
circumstances just narrated, it was impossible for Tecla not to know that the area occupied by the petitioners had
been purchased by them from the other co-heirs. Especially significant was the erection thereon of the permanent
semi-concrete structure by the petitioners’ son, which was done without objection on her part or of any of the
other co-heirs.

The only real question in this case, therefore, is the correct interpretation and application of the pertinent law as
invoked, interestingly enough, by both the petitioners and the private respondents. This is Article 1088 of the Civil
Code, providing as follows:

"Art. 1088. Should any of the heirs sell his hereditary rights to a stranger before the partition, any or all of the co-
heirs may be subrogated to the rights of the purchaser by reimbursing him for the price of the sale, provided they
do so within the period of one month from the time they were notified in writing of the sale by the vendor."

In reversing the trial court, the respondent court ** declared that the notice required by the said article was
written notice and that actual notice would not suffice as a substitute. Citing the same case of De Conejero v. Court
of Appeals 11 applied by the trial court, the respondent court held that decision, interpreting a like rule in Article
1623, stressed the need for written notice although no particular form was required.

Thus, according to Justice J.B.L. Reyes, who was the ponente of the Court, furnishing the co-heirs with a copy of
the deed of sale of the property subject to redemption would satisfy the requirement for written notice. "So long,
therefore, as the latter (i.e., the redemptioner) is informed in writing of the sale and the particulars thereof," he
declared, "the thirty days for redemption start running."

In the earlier decision of Butte v. Uy, 12 the Court, speaking through the same learned jurist, emphasized that the
written notice should be given by the vendor and not the vendees, conformably to a similar requirement under
Article 1623, reading as follows:

"Art. 1623. The right of legal predemption or redemption shall not be exercised except within thirty days from the
notice in writing by the prospective vendor, or by the vendors, as the case may be. The deed of sale shall not be
recorded in the Registry of Property, unless accompanied by an affidavit of the vendor that he has given written
notice thereof to all possible redemptioners.

"The right of redemption of co-owners excludes that of the adjoining owners."

As "it is thus apparent that the Philippine legislature in Article 1623 deliberately selected a particular method of
giving notice, and that notice must be deemed exclusive," the Court held that notice given by the vendees and not
the vendor would not toll the running of the 30-day period.chanrobles virtual lawlibrary

The petition before us appears to be an illustration of the Holmes dictum that "hard cases make bad laws" as the
petitioners obviously cannot argue against the fact that there was really no written notice given by the vendors to
their co-heirs. Strictly applied and interpreted, Article 1088 can lead to only one conclusion, to wit, that in view of
such deficiency, the 30-day period for redemption had not begun to run, much less expired in 1977.

But as has also been aptly observed, we test a law by its results; and likewise, we may add, by its purposes. It is a
cardinal rule that, in seeking the meaning of the law, the first concern of the judge should be to discover in its
provisions the intent of the lawmaker. Unquestionably, the law should never be interpreted in such a way as to
cause injustice as this is never within the legislative intent. An indispensable part of that intent, in fact, for we
presume the good motives of the legislature, is to render justice.

Thus, we interpret and apply the law not independently of but in consonance with justice. Law and justice are
inseparable, and we must keep them so. To be sure, there are some laws that, while generally valid, may seem
arbitrary when applied in a particular case because of its peculiar circumstances. In such a situation, we are not
bound, because only of our nature and functions, to apply them just the same, in slavish obedience to their
language. What we do instead is find a balance between the word and the will, that justice may be done even as
the law is obeyed.

As judges, we are not automatons. We do not and must not unfeelingly apply the law as it is worded, yielding like
robots to the literal command without regard to its cause and consequence. "Courts are apt to err by sticking too
closely to the words of a law," so we are warned, by Justice Holmes again, "where these words import a policy that
goes beyond them." 13 While we admittedly may not legislate, we nevertheless have the power to interpret the law
in such a way as to reflect the will of the legislature. While we may not read into the law a purpose that is not
there, we nevertheless have the right to read out of it the reason for its enactment. In doing so, we defer not to
"the letter that killeth" but to "the spirit that vivifieth," to give effect to the lawmaker’s will.

"The spirit, rather than the letter of a statute determines its construction, hence, a statute must be read according
to its spirit or intent. For what is within the spirit is within the statute although it is not within the letter thereof,
and that which is within the letter but not within the spirit is not within the statute. Stated differently, a thing which
is within the intent of the lawmaker is as much within the statute as if within the letter; and a thing which is within
the letter of the statute is not within the statute unless within the intent of the lawmakers." 14

In requiring written notice, Article 1088 seeks to ensure that the redemptioner is properly notified of the sale and
to indicate the date of such notice as the starting time of the 30-day period of redemption. Considering the
shortness of the period, it is really necessary, as a general rule, to pinpoint the precise date it is supposed to begin,
to obviate any problem of alleged delays, sometimes consisting of only a day or two.

The instant case presents no such problem because the right of redemption was invoked not days but years after
the sales were made in 1963 and 1964. The complaint was filed by Tecla Padua in 1977, thirteen years after the
first sale and fourteen years after the second sale. The delay invoked by the petitioners extends to more than a
decade, assuming of course that there was a valid notice that tolled the running of the period of redemption.

Was there a valid notice? Granting that the law requires the notice to be written, would such notice be necessary in
this case? Assuming there was a valid notice although it was not in writing, would there be any question that the
30-day period for redemption had expired long before the complaint was filed in 1977?

In the face of the established facts, we cannot accept the private respondents’ pretense that they were unaware of
the sales made by their brother and sister in 1963 and 1964. By requiring written proof of such notice, we would
be closing our eyes to the obvious truth in favor of their palpably false claim of ignorance, thus exalting the letter
of the law over its purpose. The purpose is clear enough: to make sure that the redemptioners are duly notified.
We are satisfied that in this case the other brothers and sisters were actually informed, although not in writing, of
the sales made in 1963 and 1964, and that such notice was sufficient.
Now, when did the 30-day period of redemption begin?

While we do not here declare that this period started from the dates of such sales in 1963 and 1964, we do say
that sometime between those years and 1976, when the first complaint for redemption was filed, the other co-heirs
were actually informed of the sale and that thereafter the 30-day period started running and ultimately expired.
This could have happened any time during the interval of thirteen years, when none of the co-heirs made a move
to redeem the properties sold. By 1977, in other words, when Tecla Padua filed her complaint, the right of
redemption had already been extinguished because the period for its exercise had already expired.

The following doctrine is also worth noting:

"While the general rule is, that to charge a party with laches in the assertion of an alleged right it is essential that
he should have knowledge of the facts upon which he bases his claim, yet if the circumstances were such as should
have induced inquiry, and the means of ascertaining the truth were readily available upon inquiry, but the party
neglects to make it, he will be chargeable with laches, the same as if he had known the facts." 15

It was the perfectly natural thing for the co-heirs to wonder why the spouses Alonzo, who were not among them,
should enclose a portion of the inherited lot and build thereon a house of strong materials. This definitely was not
the act of a temporary possessor or a mere mortgagee. This certainly looked like an act of ownership. Yet, given
this unseemly situation, none of the co-heirs saw fit to object or at least inquire, to ascertain the facts, which were
readily available. It took all of thirteen years before one of them chose to claim the right of redemption, but then it
was already too late.:

We realize that in arriving at our conclusion today, we are deviating from the strict letter of the law, which the
respondent court understandably applied pursuant to existing jurisprudence. The said court acted properly as it had
no competence to reverse the doctrines laid down by this Court in the above-cited cases. In fact, and this should
be clearly stressed, we ourselves are not abandoning the De Conejero and Buttle doctrines. What we are doing
simply is adopting an exception to the general rule, in view of the peculiar circumstances of this case.

The co-heirs in this case were undeniably informed of the sales although no notice in writing was given them. And
there is no doubt either that the 30-day period began and ended during the 14 years between the sales in question
and the filing of the complaint for redemption in 1977, without the co-heirs exercising their right of redemption.
These are the justifications for this exception.

More than twenty centuries ago, Justinian defined justice "as the constant and perpetual wish to render every one
his due." 16 That wish continues to motivate this Court when it assesses the facts and the law in every case
brought to it for decision. Justice is always an essential ingredient of its decisions. Thus when the facts warrants,
we interpret the law in a way that will render justice, presuming that it was the intention of the lawmaker, to begin
with, that the law be dispensed with justice. So we have done in this case.

WHEREFORE, the petition is granted. The decision of the respondent court is REVERSED and that of the trial court
is reinstated, without any pronouncement as to costs. It is so ordered.

Teehankee, C.J., Yap, Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Gancayco, Padilla, Bidin, Sarmiento and
Cortes, JJ., concur.

Fernan and Feliciano, JJ., on leave.

[G.R. No. 112099. February 21, 1995.]

ACHILLES C. BERCES, SR., Petitioner, v. HON. EXECUTIVE SECRETARY TEOFISTO T. GUINGONA, JR.,
CHIEF PRESIDENTIAL LEGAL COUNSEL ANTONIO CARPIO and MAYOR NAOMI C. CORRAL OF TIWI,
ALBAY, Respondents.

SYLLABUS

1. ADMINISTRATIVE LAW; RULES AND REGULATIONS GOVERNING APPEALS TO THE OFFICE OF THE PRESIDENT
(ADM. ORDER NO. 18); NOT REPEALED BY R.A. NO. 7160. — Petitioner invokes the repealing clause of Section 530
(f), R.A. No. 7160. The aforementioned clause is not an express repeal of Section 6 of Administrative Order No. 18
because it failed to identify or designate the laws or executive orders that are intended to be repealed. If there is
any repeal of Administrative Order No. 18 by R.A. No. 7160, it is through implication though such kind of repeal is
not favored. There is even a presumption against implied repeal. An implied repeal predicates the intended repeal
upon the condition that a substantial conflict must be found between the new and prior laws. In the absence of an
express repeal, a subsequent law cannot be construed as repealing a prior law unless an irreconcilable
inconsistency and repugnancy exists in the terms of the new and old laws. The two laws must be absolutely
incompatible. There must be such a repugnancy between the laws that they cannot be made to stand together.

2. ID.; ID.; ID.; PROVISION (SEC. 68) THAT APPEAL SHALL NOT PRESENT A DECISION FROM BECOMING FINAL
OR EXECUTORY; CONSTRUED. — We find that the provisions of Section 68 of R.A. No. 7160 and Section 6 of
Administrative Order No. 18 are not irreconcilably inconsistent and repugnant and the two laws must in fact be
read together. The first sentence of Section 68 merely provides that an "appeal shall not prevent a decision from
becoming final or executory." As worded, there is room to construe said provision as giving discretion to the
reviewing officials to stay the execution of the appealed decision. There is nothing to infer therefrom that the
reviewing officials are deprived of the authority to order a stay of the appealed order. If the intention of Congress
was to repeal Section 6 of Administrative Order No. 18, it could have used more direct language expressive of such
intention. The execution of decisions pending appeal is procedural and in the absence of a clear legislative intent to
remove from the reviewing officials the authority to order a stay of execution, such authority can be provided in
the rules and regulations governing the appeals of elective officials in administrative cases. The term "shall" may
be read either as mandatory or directory depending upon a consideration of the entire provision in which it is
found, its object and the consequences that would follow from construing it one way or the other. In the case at
bench, there is no basis to justify the construction of the word as mandatory.

DECISION

QUIASON, J.:

This is a petition for certiorari and prohibition under Rule 65 of the Revised Rules of Court with prayer for
mandatory preliminary injunction, assailing the Orders of the Office of the President as having been issued with
grave abuses of discretion. Said Orders directed the stay of execution of the decision of the Sangguniang
Panlalawigan suspending the Mayor of Tiwi, Albay from office.

Petitioner filed two administrative cases against respondent Naomi C. Corral, the incumbent Mayor of Tiwi, Albay
with the Sangguniang Panlalawigan of Albay, to wit:chanroblesvirtuallawlibrary

(1) Administrative Case No. 02-92 for abuse of authority and/or oppression for non-payment of accrued leave
benefits due the petitioner amounting to P36,779.02.

(2) Administrative Case No. 05-92 for dishonesty and abuse of authority for installing a water pipeline which is
being operated, maintained and paid for by the municipality to service respondent’s private residence and medical
clinic.

On July 1, 1993, the Sangguniang Panlalawigan disposed the two Administrative cases in the following manner:

"(1) Administrative Case No. 02-92

ACCORDINGLY, respondent Mayor Naomi C. Corral of Tiwi, Albay, is hereby ordered to pay Achilles Costo Berces,
Sr. the sum of THIRTY-SIX THOUSAND AND SEVEN HUNDRED SEVENTY-NINE PESOS and TWO CENTAVOS
(P36,779.02) per Voucher No. 352, plus legal interest due thereon from the time it was approved in audit up to
final payment, it being legally due the Complainant representing the money value of his leave credits accruing for
services rendered in the municipality from 1988 to 1992 as a duly elected Municipal Councilor. IN ADDITION,
respondent Mayor NAOMI C. CORRAL is hereby ordered SUSPENDED from office as Municipal Mayor of Tiwi, Albay,
for a period of two (2) months, effective upon receipt hereof for her blatant abuse of authority coupled with
oppression as a public example to deter others similarly inclined from using public office as a tool for personal
vengeance, vindictiveness and oppression at the expense of the Taxpayer (Rollo, p. 14).

"(2) Administrative Case No. 05-92

WHEREFORE, premises considered, respondent Mayor NAOMI C. CORRAL of Tiwi, Albay, is hereby sentenced to
suffer the penalty of SUSPENSION from office as Municipal Mayor thereof for a period of THREE (3) MONTHS
beginning after her service of the first penalty of suspension ordered in Administrative Case No. 02-92. She is
likewise ordered to reimburse the Municipality of Tiwi One-half of the amount the latter have paid for electric and
water bills from July to December 1992, inclusive" (Rollo, p. 16).
Consequently, respondent Mayor appealed to the Office of the President questioning the decision and at the same
time prayed for the stay of execution thereof in accordance with Section 67(b) of the Local Government Code,
which provides:

"Administrative Appeals. — Decision in administrative cases may, within thirty (30) days from receipt thereof, be
appealed to the following:

x x x

(b) The Office of the President, in the case of decisions of the sangguniang panlalawigan and the sangguniang
panglungsod of highly urbanized cities and independent component cities."

Acting on the prayer to stay execution during the pendency of the appeal, the Office of the President issued an
Order on July 28, 1993, pertinent portions of which read as follows:

x x x

"The stay or execution is governed by Section 68 of R.A. No. 7160 and Section 6 of Administrative Order No. 18
dated 12 February 1987, quoted below:

‘SEC. 68. Execution Pending Appeal. — An appeal shall not prevent a decision from becoming final or executory.
The respondent shall be considered as having been placed under preventive suspension during the pendency of an
appeal in the event he wins such appeal. In the event the appeal results in an exoneration, he shall be paid his
salary and such other emoluments during the pendency of the appeal (R.A. No. 7160).

‘SEC. 6. Except as otherwise provided by special laws, the execution of the decision/resolution/order appealed from
is stayed upon the filing of the appeal within the period prescribed herein. However, in all cases, at any time during
the pendency of the appeal, the Office of the President may direct or stay the execution of the
decision/resolution/order appealed from upon such terms and conditions as it may deem just and reasonable (Adm.
Order No. 18).’"

x x x

"After due consideration, and in the light of the Petition for Review filed before this Office, we find that a stay of
execution pending appeal would be just and reasonable to prevent undue prejudice to public interest.

"WHEREFORE, premises considered, this Office hereby orders the suspension/stay of execution of:

a) the Decision of the Sangguniang Panlalawigan of Albay in Administrative Case No. 02-92 dated 1 July 1993
suspending Mayor Naomi C. Corral from office for a period of two (2) months, and

b) the Resolution of the Sangguniang Panlalawigan of Albay in Administrative Case No. 05-92 dated 5 July 1993
suspending Mayor Naomi C. Corral from office for a period of three (3) months" (Rollo, pp. 55-56).chanrobles
virtual lawlibrary

Petitioner then filed a Motion for Reconsideration questioning the aforesaid Order of the Office of the President.

On September 13, 1990, the Motion for Reconsideration was denied.

Hence, this petition.

II

Petitioner claims that the governing law in the instant case is R.A. No. 7160, which contains a mandatory provision
that an appeal "shall not prevent a decision from becoming final and executory." He argues that Administrative
Order No. 18 dated February 12, 1987, (entitled "Prescribing the Rules and Regulations Governing Appeals to the
Office of the President") authorizing the President to stay the execution of the appealed decision at any time during
the pendency of the appeal, was repealed by R.A. No. 7160, which took effect on January 1, 1991 (Rollo, pp. 5-6).

The petition is devoid of merit.


Petitioner invokes the repealing clause of Section 530 (f), R.A. No. 7160, which provides:

"All general and special laws, acts, city charters, decrees, executive orders, administrative regulations, part or
parts thereof, which are inconsistent with any of the provisions of this Code, are hereby repealed or modified
accordingly." chanroblesvirtuallawlibrary

The aforementioned clause is not an express repeal of Section 6 of Administrative Order No. 18 because it failed to
identify or designate the laws or executive orders that are intended to be repealed (cf . I Sutherland, Statutory
Construction 467 [1943]).

If there is any repeal of Administrative Order No. 18 by R.A. No. 7160, it is through implication though such kind of
repeal is not favored (The Philippine American Management Co., Inc. v. The Philippine American Management
Employees Association, 49 SCRA 194 [1973]). There is even a presumption against implied repeal.

An implied repeal predicates the intended repeal upon the condition that a substantial conflict must be found
between the new and prior laws. In the absence of an express repeal, a subsequent law cannot be construed as
repealing a prior law unless an irreconcilable inconsistency and repugnancy exists in the terms of the new and old
laws (Iloilo Palay and Corn Planters Association, Inc. v. Feliciano, 13 SCRA 377 [1965]). There must be such a
repugnancy between the laws that they cannot be made to stand together (Crawford, Construction of Statutes 631
[1940]).

We find that the provisions of Section 68 of R.A. No. 7160 and Section 68 of R.A. No. 7160 and Section 6 of
Administrative Order No. 18 are not irreconcilably inconsistent and repugnant and the two laws must in fact be
read together.

The first sentence of Section 68 merely provides that an "appeal shall not prevent a decision from becoming final or
executory." As worded, there is room to construe said provision as giving discretion to the reviewing officials to
stay the execution of the appealed decision. There is nothing to infer therefrom that the reviewing officials are
deprived of the authority to order a stay of the appealed order. If the intention of Congress was to repeal Section 6
of Administrative Order No. 18, it could have used more direct language expressive of such intention.

The execution of decisions pending appeal is procedural and in the absence of a clear legislative intent to remove
from the reviewing officials the authority to order a stay of execution, such authority can be provided in the rules
and regulations governing the appeals of elective officials in administrative cases.

The term "shall" may be read either as mandatory or directory depending upon a consideration of the entire
provision in which it is found, its object and the consequences that would follow from construing it one way or the
other (cf. De Mesa v. Mencias, 18 SCRA 533 [1966]). In the case at bench, there is no basis to justify the
construction of the word as mandatory.chanroblesvirtuallawlibrary

The Office of the President made a finding that the execution of the decision of the Sangguniang Panlalawigan
suspending respondent Mayor from office might be prejudicial to the public interest. Thus, in order not to disrupt
the rendition of service by the mayor to the public, a stay of the execution of the decision is in order.chanrobles
virtual lawlibrary

WHEREFORE, the petition is DISMISSED.

SO ORDERED.

Narvasa, C.J., Feliciano, Padilla, Bidin, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan,
Mendoza and Francisco, JJ., concur.

[G.R. No. 103982. December 11, 1992.]

ANTONIO A. MECANO, Petitioner, v. COMMISSION ON AUDIT, Respondent.

SYLLABUS

1. STATUTORY CONSTRUCTION; STATUTES; KINDS OF REPEALS. — The question of whether a particular law has
been repealed or not by a subsequent law is a matter of legislative intent. The lawmakers may expressly repeal a
law by incorporating therein a repealing provision which expressly and specifically cites the particular law or laws,
and portions thereof, that are intended to be repealed. A declaration in a statute, usually in its repealing clause,
that a particular and specific law, identified by its number or title, is repealed is an express repeal; all others are
implied repeals.

2. ID.; ID.; REPEALS BY IMPLICATION; NECESSITY OF A CLEAR INDICATION OF LEGISLATIVE PURPOSE TO


REPEAL. — The fact that a later enactment may relate to the same subject matter as that of an earlier statute is
not of itself sufficient to cause an implied repeal of the prior act, since the new statute may merely be cumulative
or a continuation of the old one. What is necessary is a manifest indication of legislative purpose to repeal. Repeal
by implication proceeds on the premise that where a statute of later date clearly reveals an intention on the part of
the legislature to abrogate a prior act on the subject, that intention must be given effect. Hence, before there can
be a repeal, there must be a clear showing on the part of the lawmaker that the intent in enacting the new law was
to abrogate the old one. The intention to repeal must be clear and manifest; otherwise, at least, as a general rule,
the later act is to be construed as a continuation of, and not a substitute for, the first act and will continue so far as
the two acts are the same from the time of the first enactment.

3. ID.; ID.; ID.; CATEGORIES THEREOF. — There are two categories of repeal by implication. The first is where
provisions in the two acts on the same subject matter are in an irreconcilable conflict, The later act to the extent of
the conflict constitutes an implied repeal of the earlier one. The second is if the later act covers the whole subject
of the earlier one and is clearly intended as a substitute, it will operate to repeal the earlier law. Implied repeal by
irreconcilable inconsistency takes place when the two statutes cover the same subject matter; they are so clearly
inconsistent and incompatible with each other that they cannot be reconciled or harmonized; and both cannot be
given effect, that is, that one law cannot he enforced without nullifying the other. The second category of repeal —
the enactment of a statute revising or codifying the former laws on the whole subject matter. This is only possible
if this revised statute or code was intended to cover the whole subject to be a complete and perfect system in
itself. It is the rule that a subsequent statute is deemed to repeal a prior law if the former revises the whole
subject matter of the former statute. When both intent and scope clearly evince the idea of a repeal, then all parts
and provisions of the prior act that are omitted from the revised act are deemed repealed. Furthermore, before
there can be an implied repeal under this category, it must be the clear intent of the legislature that the later act
be the substitute to the prior act.

4. ID.; ID.; ID.; ID.; NOT IMPLIED REPEAL OF SECTION 699 OF THE REVISED ADMINISTRATIVE CODE BY
ADMINISTRATIVE CODE OF 1987; CASE AT BAR. — Comparing the two Codes, it is apparent that the new Code
does not cover nor attempt to cover the entire subject matter of the old Code. There are several matters treated in
the old Code which are not found in the new Code, such as the provisions on notaries public, the leave law, the
public bonding law, military reservations, claims for sickness benefits under Section 699, and still others. Moreover,
the COA failed to demonstrate that the provisions of the two Codes on the matter of the subject claim are in an
irreconcilable conflict. In fact, there can be no such conflict because the provision on sickness benefits of the nature
being claimed by petitioner has not been restated in the Administrative Code of 1987.

5. ADMINISTRATIVE LAW; ADMINISTRATIVE CONSTRUCTION AND INTERPRETATION OF LAWS; WEIGHT OF


OPINIONS OF THE SECRETARY OF JUSTICE ON STATUTES IN PARI MATERIAL; CASE AT BAR. — According to
Opinion No. 73, S. 1991 of the Secretary of Justice, what appears clear is the intent to cover only those aspects of
government that pertain to administration, organization and procedure, understandably because of the many
changes that transpired in the government structure since the enactment of the RAC decades of years ago. The
COA challenges the weight that this opinion carries in the determination of this controversy inasmuch as the body
which had been entrusted with the implementation of this particular provision has already rendered its decision.
The COA relied on the rule in administrative law enunciated in the case of Sison v. Pangramuyen that in the
absence of palpable error or grave abuse of discretion, the Court would be loathe to substitute its own judgment
for that of the administrative agency entrusted with the enforcement and implementation of the law. This will not
hold water. This principle is subject to limitations. Administrative decisions may be reviewed by the courts upon a
showing that the decision is vitiated by fraud, imposition or mistake. It has been held that Opinions of the
Secretary and Undersecretary of Justice are material in the construction of statutes in pari materia.

6. STATUTORY CONSTRUCTION; REPEALS BY IMPLICATION NOT FAVORED. — Lastly, it is a well-settled rule of


statutory construction that repeals of statutes by implication are not favored. The presumption is against
inconsistency and repugnancy for the legislature is presumed to know the existing laws on the subject and not to
have enacted inconsistent or conflicting statutes. This Court, in a case, explains the principle in detail as follows:
"Repeals by implication are not favored, and will not be decreed unless it is manifest that the legislature so
intended. As laws are presumed to be passed with deliberation with full knowledge of all existing ones on the
subject, it is but reasonable to conclude that in passing a statute it was not intended to interfere with or abrogate
any former law relating to some matter, unless the repugnancy between the two is not only irreconcilable, but also
clear and convincing, and flowing necessarily from the language used, unless the later act fully embraces the
subject matter of the earlier, or unless the reason for the earlier act is beyond peradventure renewed. Hence,
every effort must be used to make all acts stand and if, by any reasonable construction, they can be reconciled,
the later act will not operate as a repeal of the earlier."

7. LABOR CODE; ARTICLE 173 THEREOF; EMPLOYEES COMPENSATION; PAYMENT OF COMPENSATION


THEREUNDER NOT A BAR TO RECOVERY OF BENEFITS UNDER SEC. 699 OF THE REVISED ADMINISTRATIVE CODE.
— Regarding respondent’s contention that recovery under this subject section shall bar the recovery of benefits
under the Employees’ Compensation Program, the same cannot be upheld. The second sentence of Article 173,
Chapter II, Title II (dealing on Employees’ Compensation and State Insurance Fund), Book IV of the Labor Code, as
amended by P.D. 1921, expressly provides that "the payment of compensation under this Title shall not bar the
recovery of benefits as provided for in Section 669 of the Revised Administrative Code . . . whose benefits are
administered by the system (meaning SSS or GSIS) or by other agencies of the government."

DECISION

CAMPOS, JR., J.:

Antonio A. Mecano, through a petition for certiorari, seeks to nullify the decision of the Commission on Audit (COA,
for brevity) embodied in its 7th Indorsement, dated January 16, 1992, denying his claim for reimbursement under
Section 699 of the Revised Administrative Code (RAC), as amended, in the total amount of P40,831.00.

Petitioner is a Director II of the National Bureau of Investigation (NBI). He was hospitalized for cholecystitis from
March 26, 1990 to April 7, 1990, on account of which he incurred medical and hospitalization expenses, the total
amount of which he is claiming from the COA.

On May 11, 1990, in a memorandum to the NBI Director, Alfredo S. Lim (Director Lim, for brevity), he requested
reimbursement for his expenses on the ground that he is entitled to the benefits under Section 699 1 of the RAC,
the pertinent provisions of which read:

"SECTION 699. Allowances in case of injury, death, or sickness incurred in performance of duty. — When a person
in the service of the national government or in the service of the government of a province, city, municipality or
municipal district is so injured in the performance of duty as thereby to receive some actual physical hurt or
wound, the proper Head of Department may direct that absence during any period of disability thereby occasioned
shall be on full pay, though not more than six months, and in such case he may in his discretion also authorize the
payment of the medical attendance, necessary transportation, subsistence and hospital fees of the injured person.
Absence in the case contemplated shall be charged first against vacation leave, if any there be.

x x x

"In case of sickness caused by or connected directly with the performance of some act in the line of duty, the
Department head may in his discretion authorize the payment of the necessary hospital fees."

Director Lim then forwarded petitioner’s claim, in a 1st Indorsement dated June 22, 1990, to the Secretary of
Justice, along with the comment, bearing the same date, of Gerarda Galang, Chief, LED of the NBI, "recommending
favorable action thereof." Finding petitioner’s illness to be service -connected, the Committee on Physical
Examination of the Department of Justice favorably recommended the payment of petitioner’s claim.

However, then Undersecretary of Justice Silvestre H. Bello III, in a 4th Indorsement dated November 21, 1990,
returned petitioner’s claim to Director Lim, having considered the statements of the Chairman of the COA in its 5th
Indorsement dated 19 September 1990, to the effect that the RAC being relied upon was repealed by the
Administrative Code of 1987.

Petitioner then re-submitted his claim to Director Lim, with a copy of Opinion No. 73, S. 1991 2 dated April 26,
1991 of then Secretary of Justice Franklin M. Drilon (Secretary Drilon, for brevity) stating that "the issuance of the
Administrative Code did not operate to repeal or abrogate in its entirety the Revised Administrative Code, including
the particular Section 699 of the latter."

On May 10, 1991, Director Lim, under a 5th Indorsement transmitted anew Mecano’s claim to then Undersecretary
Bello for favorable consideration. Under a 6th Indorsement, dated July 2, 1991, Secretary Drilon forwarded
petitioner’s claim to the COA Chairman, recommending payment of the same. COA Chairman Eufemio C. Domingo,
in his 7th Indorsement of January 16, 1992, however denied petitioner’s claim on the ground that Section 699 of
the RAC has been repealed by the Administrative Code of 1987, solely for the reason that the same section was not
restated nor re-enacted in the Administrative Code of 1987. He commented, however, that the claim may be filed
with the Employees’ Compensation Commission, considering that the illness of Director Mecano occurred after the
effectivity of the Administrative Code of 1987.

Eventually, petitioner’s claim was returned by Undersecretary of Justice Eduardo Montenegro to Director Lim under
a 9th Indorsement dated February 7, 1992, with the advice that petitioner "elevate the matter to the Supreme
Court if he so desires."

On the sole issue of whether or not the Administrative Code of 1987 repealed or abrogated Section 699 of the RAC,
this petition was brought for the consideration of this Court.chanrobles virtual lawlibrary

Petitioner anchors his claim on Section 699 of the RAC, as amended, and on the aforementioned Opinion No. 73, S.
1991 of Secretary Drilon. He further maintains that in the event that a claim is filed with the Employees’
Compensation Commission, as suggested by respondent, he would still not be barred from filing a claim under the
subject section. Thus, the resolution of whether or not there was a repeal of the Revised Administrative Code of
1917 would decide the fate of petitioner’s claim for reimbursement.

The COA, on the other hand, strongly maintains that the enactment of the Administrative Code of 1987 (Exec.
Order No. 292) operated to revoke or supplant in its entirety the Revised Administrative Code of 1917. The COA
claims that from the "whereas" clauses of the new Administrative Code, it can be gleaned that it was the intent of
the legislature to repeal the old Code. Moreover, the COA questions the applicability of the aforesaid opinion of the
Secretary of Justice in deciding the matter. Lastly, the COA contends that employment-related sickness, injury or
death is adequately covered by the Employees’ Compensation Program under P.D. 626, such that to allow
simultaneous recovery of benefits under both laws on account of the same contingency would be unfair and unjust
to the government.

The question of whether a particular law has been repealed or not by a subsequent law is a matter of legislative
intent. The lawmakers may expressly repeal a law by incorporating therein a repealing provision which expressly
and specifically cites the particular law or laws, and portions thereof, that are intended to be repealed. 3 A
declaration in a statute, usually in its repealing clause, that a particular and specific law, identified by its number or
title, is repealed is an express repeal; all others are implied repeals. 4

In the case of the two Administrative Codes in question, the ascertainment of whether or not it was the intent of
the legislature to supplant the old Code with the new Code partly depends on the scrutiny of the repealing clause of
the new Code. This provision is found in Section 27, Book VII (Final Provisions) of the Administrative Code of 1987
which reads:

"SECTION 27. Repealing Clause. — All laws, decrees, orders, rules and regulations, or portions thereof,
inconsistent with this Code are hereby repealed or modified accordingly."

The question that should be asked is: What is the nature of this repealing clause? It is certainly not an express
repealing clause because it fails to identify or designate the act or acts that are intended to be repealed. 5 Rather,
it is an example of a general repealing provision, as stated in Opinion No. 73, S. 1991. It is a clause which
predicates the intended repeal under the condition that a substantial conflict must be found in existing and prior
acts. The failure to add a specific repealing clause indicates that the intent was not to repeal any existing law,
unless an irreconcilable inconsistency and repugnancy exist in the terms of the new and old laws. 6 This latter
situation falls under the category of an implied repeal.

Repeal by implication proceeds on the premise that where a statute of later date clearly reveals an intention on the
part of the legislature to abrogate a prior act on the subject, that intention must be given effect. 7 Hence, before
there can be a repeal, there must be a clear showing on the part of the lawmaker that the intent in enacting the
new law was to abrogate the old one. The intention to repeal must be clear and manifest; 8 otherwise, at least, as
a general rule, the later act is to be construed as a continuation of, and not a substitute for, the first act and will
continue so far as the two acts are the same from the time of the first enactment. 9

There are two categories of repeal by implication. The first is where provisions in the two acts on the same subject
matter are in an irreconcilable conflict, The later act to the extent of the conflict constitutes an implied repeal of the
earlier one. The second is if the later act covers the whole subject of the earlier one and is clearly intended as a
substitute, it will operate to repeal the earlier law. 10

Implied repeal by irreconcilable inconsistency takes place when the two statutes cover the same subject matter;
they are so clearly inconsistent and incompatible with each other that they cannot be reconciled or harmonized;
and both cannot be given effect, that is, that one law cannot he enforced without nullifying the other. 11

Comparing the two Codes, it is apparent that the new Code does not cover nor attempt to cover the entire subject
matter of the old Code. There are several matters treated in the old Code which are not found in the new Code,
such as the provisions on notaries public, the leave law, the public bonding law, military reservations, claims for
sickness benefits under Section 699, and still others.

Moreover, the COA failed to demonstrate that the provisions of the two Codes on the matter of the subject claim
are in an irreconcilable conflict. In fact, there can be no such conflict because the provision on sickness benefits of
the nature being claimed by petitioner has not been restated in the Administrative Code of 1987. However, the
COA would have Us consider that the fact that Section 699 was not restated in the Administrative Code of 1987
meant that the same section had been repealed. It further maintained that to allow the particular provisions not
restated in the new Code to continue in force argues against the Code itself. The COA anchored this argument on
the whereas clause of the 1987 Code, which states:

"WHEREAS, the effectiveness of the Government will be enhanced by a new Administrative Code which
incorporates in a unified document the major structural, functional and procedural principles and rules of
governance; and

x x x"

It argues, in effect, that what is contemplated is only one Code — the Administrative Code of 1987. This contention
is untenable.

The fact that a later enactment may relate to the same subject matter as that of an earlier statute is not of itself
sufficient to cause an implied repeal of the prior act, since the new statute may merely be cumulative or a
continuation of the old one. 12 What is necessary is a manifest indication of legislative purpose to repeal. 13

We come now to the second category of repeal — the enactment of a statute revising or codifying the former laws
on the whole subject matter. This is only possible if this revised statute or code was intended to cover the whole
subject to be a complete and perfect system in itself. It is the rule that a subsequent statute is deemed to repeal a
prior law if the former revises the whole subject matter of the former statute. 14 When both intent and scope
clearly evince the idea of a repeal, then all parts and provisions of the prior act that are omitted from the revised
act are deemed repealed. 15 Furthermore, before there can be an implied repeal under this category, it must be
the clear intent of the legislature that the later act be the substitute to the prior act. 16

According to Opinion No. 73, S. 1991 of the Secretary of Justice, what appears clear is the intent to cover only
those aspects of government that pertain to administration, organization and procedure, understandably because
of the many changes that transpired in the government structure since the enactment of the RAC decades of years
ago. The COA challenges the weight that this opinion carries in the determination of this controversy inasmuch as
the body which had been entrusted with the implementation of this particular provision has already rendered its
decision. The COA relied on the rule in administrative law enunciated in the case of Sison v. Pangramuyen 17 that
in the absence of palpable error or grave abuse of discretion, the Court would be loathe to substitute its own
judgment for that of the administrative agency entrusted with the enforcement and implementation of the law. This
will not hold water. This principle is subject to limitations. Administrative decisions may be reviewed by the courts
upon a showing that the decision is vitiated by fraud, imposition or mistake. 18 It has been held that Opinions of
the Secretary and Undersecretary of Justice are material in the construction of statutes in pari materia. 19

Lastly, it is a well-settled rule of statutory construction that repeals of statutes by implication are not favored. 20
The presumption is against inconsistency and repugnancy for the legislature is presumed to know the existing laws
on the subject and not to have enacted inconsistent or conflicting statutes. 21

This Court, in a case, explains the principle in detail as follows: "Repeals by implication are not favored, and will
not be decreed unless it is manifest that the legislature so intended. As laws are presumed to be passed with
deliberation with full knowledge of all existing ones on the subject, it is but reasonable to conclude that in passing
a statute it was not intended to interfere with or abrogate any former law relating to some matter, unless the
repugnancy between the two is not only irreconcilable, but also clear and convincing, and flowing necessarily from
the language used, unless the later act fully embraces the subject matter of the earlier, or unless the reason for
the earlier act is beyond peradventure renewed. Hence, every effort must be used to make all acts stand and if, by
any reasonable construction, they can be reconciled, the later act will not operate as a repeal of the earlier. 22

Regarding respondent’s contention that recovery under this subject section shall bar the recovery of benefits under
the Employees’ Compensation Program, the same cannot be upheld. The second sentence of Article 173, Chapter
II, Title II (dealing on Employees’ Compensation and State Insurance Fund), Book IV of the Labor Code, as
amended by P.D. 1921, expressly provides that "the payment of compensation under this Title shall not bar the
recovery of benefits as provided for in Section 669 of the Revised Administrative Code xxx whose benefits are
administered by the system (meaning SSS or GSIS) or by other agencies of the government."

WHEREFORE, premises considered, the Court resolves to GRANT the petition; respondent is, hereby ordered to
give due course to petitioner’s claim for benefits. No costs.

SO ORDERED.

Narvasa, C.J., Cruz, Feliciano, Padilla, Bidin, Griño-Aquino, Regalado, Davide, Jr., Romero, Nocon, Bellosillo and
Melo, JJ., concur.
Gutierrez, Jr., J., concurs in the result.

[G.R. No. 123169. November 4, 1996.]

DANILO E. PARAS, Petitioner, v. COMMISSION ON ELECTIONS, Respondent.

RESOLUTION

FRANCISCO, J.:

Petitioner Danilo E. Paras is the incumbent Punong Barangay of Pula, Cabanatuan City who won during the last
regular barangay election in 1994. A petition for his recall as Punong Barangay was filed by the registered voters of
the barangay. Acting on the petition for recall, public respondent Commission on Elections (COMELEC) resolved to
approve the petition, scheduled the petition signing on October 14, 1995, and set the recall election on November
13, 1995.1 At least 29.30% of the registered voters signed the petition, well above the 25% requirement provided
by law. The COMELEC, however, deferred the recall election in view of petitioner’s opposition. On December 6,
1995, the COMELEC set anew the recall election, this time on December 16, 1995. To prevent the holding of the
recall election, petitioner filed before the Regional Trial Court of Cabanatuan City a petition for injunction, docketed
as SP Civil Action No. 2254-AF, with the trial court issuing a temporary restraining order. After conducting a
summary hearing, the trial court lifted the restraining order, dismissed the petition and required petitioner and his
counsel to explain why they should not be cited for contempt for misrepresenting that the barangay recall election
was without COMELEC approval. 2

In a resolution dated January 5, 1996, the COMELEC, for the third time, re-scheduled the recall election on January
13, 1996; hence, the instant petition for certiorari with urgent prayer for injunction. On January 12, 1996, the
Court issued a temporary restraining order and required the Office of the Solicitor General, in behalf of public
respondent, to comment on the petition. In view of the Office of the Solicitor General’s manifestation maintaining
an opinion adverse to that of the COMELEC, the latter through its law department filed the required comment.
Petitioner thereafter filed a reply. 3

Petitioner’s argument is simple and to the point. Citing Section 74 (b) of Republic Act No. 7160, otherwise known
as the Local Government Code, which states that "no recall shall take place within one (1) year from the date of
the official’s assumption to office or one (1) year immediately preceding a regular local election", petitioner insists
that the scheduled January 13, 1996 recall election is now barred as the Sangguniang Kabataan (SK) election was
set by Republic Act No. 7808 on the first Monday of May 1996, and every three years thereafter. In support
thereof, petitioner cites Associated Labor Union v. Letrondo-Montejo, 237 SCRA 621, where the Court considered
the SK election as a regular local election. Petitioner maintains that as the SK election is a regular local election,
hence no recall election can be had for barely four months separate the SK election from the recall election. We do
not agree.

The subject provision of the Local Government Code provides:

"SEC. 74. Limitations on Recall. — (a) Any elective local official may be the subject of a recall election only once
during his term of office for loss of confidence

(b) No recall shall take place within one (1) year from the date of the official’s assumption to office or one (1) year
immediately preceding a regular local election."

[Emphasis added.]

It is a rule in statutory construction that every part of the statute must be interpreted with reference to the
context, i.e., that every part of the statute must be considered together with the other parts, and kept subservient
to the general intent of the whole enactment. 4 The evident intent of Section 74 is to subject an elective local
official to recall election once during his term of office. Paragraph (b) construed together with paragraph (a) merely
designates the period when such elective local official may be subject of a recall election, that is, during the second
year of his term of office. Thus, subscribing to petitioner’s interpretation of the phrase regular local election to
include the SK election will unduly circumscribe the novel provision of the Local Government Code on recall, a
mode of removal of public officers by initiation of the people before the end of his term. And if the SK election
which is set by R.A. No. 7808 to be held every three years from May 1996 were to be deemed within the purview
of the phrase "regular local election", as erroneously insisted by petitioner, then no recall election can be conducted
rendering inutile the recall provision of the Local Government Code.chanroblesvirtuallawlibrary

In the interpretation of a statute, the Court should start with the assumption that the legislature intended to enact
an effective law, and the legislature is not presumed to have done a vain thing in the enactment of a statute. 5 An
interpretation should, if possible, be avoided under which a statute or provision being construed is defeated, or as
otherwise expressed, nullified, destroyed, emasculated, repealed, explained away, or rendered insignificant,
meaningless, inoperative or nugatory. 6

It is likewise a basic precept in statutory construction that a statute should be interpreted in harmony with the
Constitution. 7 Thus, the interpretation of Section 74 of the Local Government Code, specifically paragraph (b)
thereof, should not be in conflict with the Constitutional mandate of Section 3 of Article X of the Constitution to
“enact a local government code which shall provide for a more responsive and accountable local government
structure instituted through a system of decentralization with effective mechanisms of recall, initiative, and
referendum . . ."

Moreover, petitioner’s too literal interpretation of the law leads to absurdity which we cannot countenance. Thus, in
a case, the Court made the following admonition:

"We admonish against a too-literal reading of the law as this is apt to constrict rather than fulfill its purpose and
defeat the intention of its authors. That intention is usually found not in ‘the letter that killeth but in the spirit that
vivifieth’ . . ." 8

The spirit, rather than the letter of a law determines its construction; hence, a statute, as in this case, must be
read according to its spirit and intent.

Finally, recall election is potentially disruptive of the normal working of the local government unit necessitating
additional expenses, hence the prohibition against the conduct of recall election one year immediately preceding
the regular local election. The proscription is due to the proximity of the next regular election for the office of the
local elective official concerned. The electorate could choose the official’s replacement in the said election who
certainly has a longer tenure in office than a successor elected through a recall election. It would, therefore, be
more in keeping with the intent of the recall provision of the Code to construe regular local election as one referring
to an election where the office held by the local elective official sought to be recalled will be contested and be filled
by the electorate.chanroblesvirtual|awlibrary

Nevertheless, recall at this time is no longer possible because of the limitation stated under Section 74 (b) of the
Code considering that the next regular election involving the barangay office concerned is barely seven (7) months
away, the same having been scheduled on May 1997. 9

ACCORDINGLY, the petition is hereby dismissed for having become moot and academic. The temporary restraining
order issued by the Court on January 12, 1996, enjoining the recall election should be as it is hereby made
permanent.

SO ORDERED.

Narvasa, C.J., Padilla, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza,
Hermosisima, Jr., Panganiban, and Torres, Jr., concur.

[G.R. Nos. 28502-03. April 18, 1989.]

COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. ESSO STANDARD EASTERN, INC. and THE COURT
TAX APPEALS, Respondents.

SYLLABUS

1. TAXATION; INCOME TAX; OVERPAYMENT THEREOF BY MISTAKE; RIGHT OF PAYOR TO REIMBURSEMENT ARISES
FROM THE MOMENT PAYMENT IS MADE AND NOT FROM THE TIME THAT THE PAYEE ADMITS THE OBLIGATION TO
REIMBURSE. — As early as July 15, 1960, the Government already had in its hands the sum of P221,033.00
representing excess income tax payment. Having been paid and received by mistake, that sum unquestionably
belonged to ESSO, and the Government had the obligation to return it to ESSO. That acknowledgment of the
erroneous payment came some four (4) years afterwards in nowise negates or detracts from its actuality. The
obligation to return money mistakenly paid arises from the moment that payment is made, and not from the time
that the payee admits the obligation to reimburse. The obligation of the payee to reimburse an amount paid to him
results from the mistake, not from the payee’s confession of the mistake or recognition of the obligation to
reimburse. In other words, since the amount of P221,033.00 belonging to ESSO was already in the hands of the
Government as of July, 1960, although the latter hand not right whatever to the amount and indeed was bound to
return it to ESSO, it was neither legally nor logically possible for ESSO thereafter to be considered a debtor of the
Government in that amount of P221,033.00; and whatever other obligation ESSO might subsequently incur in favor
of the Government would have to be reduced by that sum, in respect of which no interest could be charged.

2. ID.; TAX LAWS; INTERPRETATION THEREOF; LEGISLATIVE INTENT PREVAILS WHERE LITERAL INTERPRETATION
OF THE STATUTE RESULTS IN ABSURDITY. — In Interpreting a statute, "Nothing is better settled than that courts
are not to give words a meaning which would lead to absurd or unreasonable consequences. That is a principle that
goes back to In re Allen (2 Phil. 630) decided on October 29, 1903, where it was held that a literal interpretation is
to be rejected if it would be unjust or lead to absurd results." "Statutes should receive a sensible construction, such
as will give effect to the legislative intention and so as to avoid an unjust or absurd conclusion."

DECISION

NARVASA, J.:

In two (2) cases appealed to it 1 by the private respondent, hereafter simply referred to as ESSO, the Court of Tax
Appeals rendered judgment, 2 sustaining the decisions of the Commissioner of Internal Revenue excepted to, save
"the refund-claim . . . in the amount of P39,787.94 as overpaid interest" which it ordered refunded to ESSO.

Reversal of this decision is sought by the Commissioner by a petition for review on certiorari filed with this Court.
He ascribes to the Tax Court one sole error: "of applying the tax credit for overpayment of the 1959 income tax of .
. . ESSO, granted by the petitioner (Commissioner), to . . . (ESSO’S) basic 1960 deficiency income tax liability . . .
and imposing the 1-1/2% monthly interest 3 only on the remaining balance thereof in the sum of P146,961.00" 4
(instead of the full amount of the 1960 deficiency liability in the amount of P367,994.00). 5 Reversal of the same
judgment of the Court of Tax Appeals is also sought by ESSO in its own appeal (docketed as G.R. Nos. L-28508-
09); but in the brief filed by it in this case, it indicates that it will not press its appeal in the event that "the instant
petition for review be denied and that judgment be rendered affirming the decision of the Court of Tax Appeals."

The facts are simple enough and are quite quickly recounted.

ESSO overpaid its 1959 income tax by P221,033.00. It was accordingly granted a tax credit in this amount by the
Commissioner on August 5, 1964. However, ESSO’s payment of its income tax for 1960 was found to be short by
P367,994.00. So, on July 10, 1964, the Commissioner wrote to ESSO demanding payment of the deficiency tax,
together with interest thereon for the period from April 18, 1961 to April 18, 1964. On August 10, 1964, ESSO paid
under protest the amount alleged to be due, including the interest as reckoned by the Commissioner. It protested
the computation of interest, contending it was more than. that properly due. It claimed that it should not have
been required to pay interest on the total amount of the deficiency tax, P367,994.00, but only on the amount of
P146,961.00 — representing the difference between said deficiency, P367,994.00, and ESSO’s earlier overpayment
of P221,033.00 (for which it had been granted a tax credit). ESSO thus asked for a refund.

The Internal Revenue Commissioner denied the claim for refund. ESSO appealed to the Court of Tax Appeals. As
aforestated, that Court ordered payment to ESSO of its "refund-claim x x in the amount of P39,787.94 as overpaid
interest. Hence, this appeal by the Commissioner.

The CTA justified its award of the refund as follows:

". . . In the letter of August 5, 1964, . . . (the Commissioner) admitted that . . (ESSO) had overpaid its 1959
income tax by P221,033.00. Accordingly . . (the Commissioner) granted to . . (ESSO) a tax credit of P221,033.00.
In short, the said sum of P221,033.00 of (ESSO’s) money was in the Government’s hands at the latest on July 15,
1960 when it (ESSO) paid in full its second installment of income tax for 1959. On July 10, 1964 x x (the
Commissioner) claimed that for 1960, . . . (ESSO) underpaid its income tax by P367,994.00. However, instead of
deducting from P367,994.00 the tax credit of P221,033.00 which . . . (the Commissioner) had already admitted
was due . . . (ESSO), . . . (the Commissioner) still insists in collecting the interest on the full amount of
P367,994.00 for the period April 18, 1961 to April 18, 1964 when the Government had already in its hands the sum
of P221,033.00 of . . . (ESSO’s) money even before the latter’s income tax for 1960 was due and payable. If the
imposition of interest does not amount to a penalty but merely a just compensation to the State for the delay in
paying the tax, and for the concomitant use by the taxpayer of funds that rightfully should be in the Government’s
hand (Castro v. Collector, G.R. No. L-1274, Dec. 28, 1962), the collection of the interest on the full amount of
P367,994.00 without deducting first the tax credit of P221,033.00, which has long been in the hands of the
Government, becomes erroneous, illegal and arbitrary.:

". . . (ESSO) could hardly be charged of delinquency in paying P221,033.00 out of the deficiency income tax of
P367,994.00, for which the State should be compensated by the payment of interest because the said amount of
P221,033.00 was already in the coffers of the Government. Neither could . . . (ESSO) be charged for the
concomitant use of funds that rightfully belong to the Government because as early as July 15, 1960, it was the
Government that was using . . . (ESSO’s) funds of P221,033.00. In the circumstances, we find it unfair and unjust
for . . . (the Commissioner) to exact the interest on the said sum of P221,033.00 which, after all, was paid to and
received by the Government even before the incidence of the deficiency income tax of P367,994.00. (Itogon-Suyoc
Mines, Inc. v. Commissioner, C.T.A. Case No. 1327, Sept. 30, 1965). On the contrary, the Government should be
the first to blaze the trail and set the example of fairness and honest dealing in the administration of tax laws.

"Accordingly, we hold that the tax credit of P221,033.00 for 1959 should first be deducted from the basic deficiency
tax of P367,994.00 for 1960 and the resulting difference of P146,961.00 would be subject to the 18% interest
prescribed by Section 51 (d) of the Revenue Code. According to the prayer of . . . (ESSO) . . . (the Commissioner)
is hereby ordered to refund to . . . (ESSO) the amount of P39,787.94 as overpaid interest in the settlement of its
1960 income tax liability. However, as the collection of the tax was not attended with arbitrariness because . . .
(ESSO) itself followed . . . (the Commissioner’s) manner of computing the tax in paying the sum of P213,189.93 on
August 10, 1964, the prayer of . . . (ESSO) that it be granted the legal rate of interest on its overpayment of
P39,787.94 from August 10, 1964 to the time it is actually refunded is denied. (See Collector of Internal Revenue
v. Binalbagan Estate, Inc., G.R. No. L-12752, Jan. 30, 1965)."

The Commissioner’s position is that income taxes are determined and paid on an annual basis, and that such
determination and payment of annual taxes are separate and independent transactions; and that a tax credit could
not be so considered until it has been finally approved and the taxpayer duly notified thereof. Since in this case, he
argues, the tax credit of P221,033.00 was approved only on August 5, 1964, it could not be availed of in reduction
of ESSO’s earlier tax deficiency for the year 1960; as of that year, 1960, there was as yet no tax credit to speak of,
which would reduce the deficiency tax liability for 1960. In support of his position, the Commissioner invokes the
provisions of Section 51 of the Tax Code pertinently reading as follows:

"(c) Definition of deficiency. As used in this Chapter in respect of tax imposed by this Title, the term `deficiency’
means:

(1) The amount by which the tax Imposed by this Title exceeds the amount shown as the tax by the taxpayer upon
his return; but the amount so shown on the return shall first be increased by the amounts previously assessed (or
collected without assessment) as a deficiency, and decreased by the amount previously abated, credited, returned,
or otherwise in respect of such tax; . . .

x x x

(d) Interest on deficiency. — Interest upon the amount determined as deficiency shall be assessed at the same
time as the deficiency and shall be paid upon notice and demand from the Commissioner of Internal Revenue; and
shall be collected as a part of the tax, at the rate of six per centum per annum from the date prescribed for the
payment of the tax (or, if the tax is paid in installments, from the date prescribed for the payment of the first
installment) to the date the deficiency is assessed; Provided, That the amount that may be collected as interest on
deficiency shall in no case exceed the amount corresponding to a period of three years, the present provision
regarding prescription to the contrary notwithstanding."

The fact is that, as respondent Court of Tax Appeals has stressed, as early as July 15, 1960, the Government
already had in its hands the sum of P221,033.00 representing excess payment. Having been paid and received by
mistake, as petitioner Commissioner subsequently acknowledged, that sum unquestionably belonged to ESSO, and
the Government had the obligation to return it to ESSO. That acknowledgment of the erroneous payment came
some four (4) years afterward in nowise negates or detracts from its actuality. The obligation to return money
mistakenly paid arises from the moment that payment is made, and not from the time that the payee admits the
obligation to reimburse. The obligation of the payee to reimburse an amount paid to him results from the mistake,
not from the payee’s confession of the mistake or recognition of the obligation to reimburse. In other words, since
the amount of P221,033.00 belonging to ESSO was already in the hands of the Government as of July, 1960,
although the latter hand not right whatever to the amount and indeed was bound to return it to ESSO, it was
neither legally nor logically possible for ESSO thereafter to be considered a debtor of the Government in that
amount of P221,033.00; and whatever other obligation ESSO might subsequently incur in favor of the Government
would have to be reduced by that sum, in respect of which no interest could be charged. To interpret the words of
the statute in such a manner as to subvert these truisms simply can not and should not be countenanced. "Nothing
is better settled than that courts are not to give words a meaning which would lead to absurd or unreasonable
consequences. That is a principle that goes back to In re Allen (2 Phil. 630) decided on October 29, 1903, where it
was held that a literal interpretation is to be rejected if it would be unjust or lead to absurd results." 6 "Statutes
should receive a sensible construction, suck as will give effect to the legislative intention and so as to avoid an
unjust or absurd conclusion." 7
WHEREFORE, the petition for review is DENIED, and the Decision of the Court of Tax Appeals dated October 28,
1967 subject of the petition is AFFIRMED, without pronouncement as to costs.

Cruz, Gancayco, Griño-Aquino and Medialdea, JJ., concur.

G.R. No. 112170 April 10, 1996

CESARIO URSUA, petitioner,


vs.
COURT OF APPEALS AND PEOPLE OF THE PHILIPPINES, respondents.

BELLOSILLO, J.:p

This is a petition for review of the decision of the Court of Appeals which affirmed the conviction of petitioner by the Regional Trial
Court of Davao City for violation of Sec. 1 of C.A. No. 142, as amended by R.A. No. 6085, otherwise known as "An Act to Regulate
the Use of Aliases". 1

Petitioner Cesario Ursua was a Community Environment and Natural Resources Officer assigned in Kidapawan, Cotabato. On 9
May 1989 the Provincial Governor of Cotabato requested the Office of the Ombudsman in Manila to conduct an investigation on a
complaint for bribery, dishonesty, abuse of authority and giving of unwarranted benefits by petitioner and other officials of the
Department of Environment and Natural Resources. The complaint was initiated by the Sangguniang Panlalawigan of Cotabato
through a resolution advising the Governor to report the involvement of petitioner and others in the illegal cutting of mahogany trees
and hauling of illegally-cut logs in the area.2

On 1 August 1989 Atty. Francis Palmones, counsel for petitioner, wrote the Office of the Ombudsman in Davao City requesting that
he be furnished copy of the complaint against petitioner. Atty. Palmones then asked his client Ursua to take his letter-request to the
Office of the Ombudsman because his law firm's messenger, Oscar Perez, had to attend to some personal matters. Before
proceeding to the Office of the Ombudsman petitioner talked to Oscar Perez and told him that he was reluctant to personally ask for
the document since he was one of the respondents before the Ombudsman. However, Perez advised him not to worry as he could
just sign his (Perez) name if ever he would be required to acknowledge receipt of the complaint. 3

When petitioner arrived at the Office of the Ombudsman in Davao City he was instructed by the security officer to register in the
visitors' logbook. Instead of writing down his name petitioner wrote the name "Oscar Perez" after which he was told to proceed to
the Administrative Division for the copy of the complaint he needed. He handed the letter of Atty. Palmones to the Chief of the
Administrative Division, Ms. Loida Kahulugan, who then gave him a copy of the complaint, receipt of which he acknowledged by
writing the name "Oscar Perez."4

Before petitioner could leave the premises he was greeted by an acquaintance, Josefa Amparo, who also worked in the same office.
They conversed for a while then he left. When Loida learned that the person who introduced himself as "Oscar Perez" was actually
petitioner Cesario Ursua, a customer of Josefa Amparo in her gasoline station, Loida reported the matter to the Deputy Ombudsman
who recommended that petitioner be accordingly charged.

On 18 December 1990, after the prosecution had completed the presentation of its evidence, petitioner without leave of court filed a
demurrer to evidence alleging that the failure of the prosecution to prove that his supposed alias was different from his registered
name in the local civil registry was fatal to its cause. Petitioner argued that no document from the local civil registry was presented to
show the registered name of accused which according to him was a condition sine qua non for the validity of his conviction.

The trial court rejected his contentions and found him guilty of violating Sec. 1 of C.A. No. 142 as amended by R.A. No. 6085. He
was sentenced to suffer a prison term of one (1) year and one (1) day of prision correccional minimum as minimum, to four (4) years
of prision correccional medium as maximum, with all the accessory penalties provided for by law, and to pay a fine of P4,000.00
plus costs.

Petitioner appealed to the Court of Appeals.

On 31 May 1993 the Court of Appeals affirmed the conviction of petitioner but modified the penalty by imposing an indeterminate
term of one (1) year as minimum to three (3) years as maximum and a fine of P5,000.00.

Petitioner now comes to us for review of his conviction as he reasserts his innocence. He contends that he has not violated C.A. No.
142 as amended by R.A. No. 6085 as he never used any alias name; neither is "Oscar Perez" his alias. An alias, according to him,
is a term which connotes the habitual use of another name by which a person is also known. He claims that he has never been
known as "Oscar Perez" and that he only used such name on one occasion and it was with the express consent of Oscar Perez
himself. It is his position that an essential requirement for a conviction under C.A. No. 142 as amended by R.A. No. 6085 has not
been complied with when the prosecution failed to prove that his supposed alias was different from his registered name in the
Registry of Births. He further argues that the Court of Appeals erred in not considering the defense theory that he was charged
under the wrong law.5

Time and again we have decreed that statutes are to be construed in the light of the purposes to be achieved and the evils sought to
be remedied. Thus in construing a statute the reason for its enactment should be kept in mind and the statute should be construed
with reference to the intended scope and purpose.6 The court may consider the spirit and reason of the statute, where a literal
meaning would lead to absurdity, contradiction, injustice, or would defeat the clear purpose of the lawmakers.7

For a clear understanding of the purpose of C.A. No. 142 as amended, which was allegedly violated by petitioner, and the
surrounding circumstances under which the law was enacted, the pertinent provisions thereof, its amendments and related statutes
are herein cited. C.A. No. 142, which was approved on 7 November 1936, and before its amendment by R.A. No. 6085, is
entitled An Act to Regulate the Use of Aliases. It provides as follows:

Sec. 1. Except as a pseudonym for literary purposes, no person shall use any name different from the one with
which he was christened or by which he has been known since his childhood, or such substitute name as may
have been authorized by a competent court. The name shall comprise the patronymic name and one or two
surnames.

Sec. 2. Any person desiring to use an alias or aliases shall apply for authority therefor in proceedings like those
legally provided to obtain judicial authority for a change of name. Separate proceedings shall be had for
each alias, and each new petition shall set forth the original name and the alias or aliases for the use of which
judicial authority has been, obtained, specifying the proceedings and the date on which such authority was
granted. Judicial authorities for the use of aliases shall be recorded in the proper civil register . . . .

The above law was subsequently amended by R.A. No. 6085, approved on 4 August 1969. As amended, C.A. No. 142 now reads:

Sec. 1. Except as a pseudonym solely for literary, cinema, television, radio or other entertainment purposes and
in athletic events where the use of pseudonym is a normally accepted practice, no person shall use any name
different from the one with which he was registered at birth in the office of the local civil registry or with which he
was baptized for the first time, or in case of all alien, with which he was registered in the bureau of immigration
upon entry; or such substitute name as may have been authorized by a competent court: Provided, That
persons whose births have not been registered in any local civil registry and who have not been baptized, have
one year from the approval of this act within which to register their names in the civil registry of their residence.
The name shall comprise the patronymic name and one or two surnames.

Sec. 2. Any person desiring to use an alias shall apply for authority therefor in proceedings like those legally
provided to obtain judicial authority for a change of name and no person shall be allowed to secure such judicial
authority for more than one alias. The petition for an alias shall set forth the person's baptismal and family name
and the name recorded in the civil registry, if different, his immigrant's name, if an alien, and his pseudonym, if
he has such names other than his original or real name, specifying the reason or reasons for the desired alias.
The judicial authority for the use of alias, the Christian name and the alien immigrant's name shall be recorded
in the proper local civil registry, and no person shall use any name or names other than his original or real name
unless the same is or are duly recorded in the proper local civil registry.

The objective and purpose of C.A. No. 142 have their origin and basis in Act No. 3883, An Act to Regulate the Use in Business
Transactions of Names other than True Names, Prescribing the Duties of the Director of the Bureau of Commerce and Industry in its
Enforcement, Providing Penalties for Violations thereof, and for other purposes, which was approved on 14 November 1931 and
amended by Act No. 4147, approved on 28 November 1934.8 The pertinent provisions of Act No. 3883 as amended follow —

Sec. 1. It shall be unlawful for any person to use or sign, on any written or printed receipt including receipt for
tax or business or any written or printed contract not verified by a notary public or on any written or printed
evidence of any agreement or business transactions, any name used in connection with his business other than
his true name, or keep conspicuously exhibited in plain view in or at the place where his business is conducted,
if he is engaged in a business, any sign announcing a firm name or business name or style without first
registering such other name, or such firm name, or business name or style in the Bureau of Commerce together
with his true name and that of any other person having a joint or common interest with him in such contract,
agreement, business transaction, or business . . . .

For a bit of history, the enactment of C.A. No. 142 as amended was made primarily to curb the common practice among the
Chinese of adopting scores of different names and aliases which created tremendous confusion in the field of trade. Such a practice
almost bordered on the crime of using fictitious names which for obvious reasons could not be successfully maintained against the
Chinese who, rightly or wrongly, claimed they possessed a thousand and one names. C.A. No. 142 thus penalized the act of using
an alias name, unless such alias was duly authorized by proper judicial proceedings and recorded in the civil register. 9

In Yu Kheng Chiau v. Republic 10 the Court had occasion to explain the meaning, concept and ill effects of the use of an alias within
the purview of C.A. No. 142 when we ruled —

There can hardly be any doubt that petitioner's use of alias "Kheng Chiau Young" in addition to his real name
"Yu Cheng Chiau" would add to more confusion. That he is known in his business, as manager of the Robert
Reid, Inc., by the former name, is not sufficient reason to allow him its use. After all, petitioner admitted that he
is known to his associates by both names. In fact, the Anselmo Trinidad, Inc., of which he is a customer, knows
him by his real name. Neither would the fact that he had encountered certain difficulties in his transactions with
government offices which required him to explain why he bore two names, justify the grant of his petition, for
petitioner could easily avoid said difficulties by simply using and sticking only to his real name "Yu Kheng
Chiau."

The fact that petitioner intends to reside permanently in the Philippines, as shown by his having filed a petition
for naturalization in Branch V of the above-mentioned court, argues the more against the grant of his petition,
because if naturalized as a Filipino citizen, there would then be no necessity for his further using said alias, as it
would be contrary to the usual Filipino way and practice of using only one name in ordinary as well as business
transactions. And, as the lower court correctly observed, if he believes (after he is naturalized) that it would be
better for him to write his name following the Occidental method, "he can easily file a petition for change of
name, so that in lieu of the name "Yu Kheng Chian," he can, abandoning the same, ask for authority to adopt
the name Kheng Chiau Young."

All things considered, we are of the opinion and so hold, that petitioner has not shown satisfactory proper and
reasonable grounds under the aforequoted provisions of Commonwealth Act No. 142 and the Rules of Court, to
warrant the grant of his petition for the use of an alias name.

Clearly therefore an alias is a name or names used by a person or intended to be used by him publicly and habitually usually in
business transactions in addition to his real name by which he is registered at birth or baptized the first time or substitute name
authorized by a competent authority. A man's name is simply the sound or sounds by which he is commonly designated by his
fellows and by which they distinguish him but sometimes a man is known by several different names and these are known
as aliases. 11 Hence, the use of a fictitious name or a different name belonging to another person in a single instance without any
sign or indication that the user intends to be known by this name in addition to his real name from that day forth does not fall within
the prohibition contained in C.A. No. 142 as amended. This is so in the case at bench.

It is not disputed that petitioner introduced himself in the Office of the Ombudsman as "Oscar Perez," which was the name of the
messenger of his lawyer who should have brought the letter to that office in the first place instead of petitioner. He did so while
merely serving the request of his lawyer to obtain a copy of the complaint in which petitioner was a respondent. There is no question
then that "Oscar Perez" is not an alias name of petitioner. There is no evidence showing that he had used or was intending to use
that name as his second name in addition to his real name. The use of the name "Oscar Perez" was made by petitioner in an
isolated transaction where he was not even legally required to expose his real identity. For, even if he had identified himself properly
at the Office of the Ombudsman, petitioner would still be able to get a copy of the complaint as a matter of right, and the Office of
the Ombudsman could not refuse him because the complaint was part of public records hence open to inspection and examination
by anyone under the proper circumstances.

While the act of petitioner may be covered by other provisions of law, such does not constitute an offense within the concept of C.A.
No. 142 as amended under which he is prosecuted. The confusion and fraud in business transactions which the anti-alias law and
its related statutes seek to prevent are not present here as the circumstances are peculiar and distinct from those contemplated by
the legislature in enacting C.A. No. 142 as amended. 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. 12 Moreover, as C.A. No. 142 is a penal statute,
it should be construed strictly against the State and in favor of the accused. 13 The reason for this principle is the tenderness of the
law for the rights of individuals and the object is to establish a certain rule by conformity to which mankind would be safe, and the
discretion of the court limited. 14 Indeed, our mind cannot rest easy on the proposition that petitioner should be convicted on a law
that does not clearly penalize the act done by him.

WHEREFORE, the questioned decision of the Court of Appeals affirming that of the Regional Trial Court of Davao City is
REVERSED and SET ASIDE and petitioner CESARIO URSUA is ACQUITTED of the crime charged.

SO ORDERED.

Padilla, Vitug, Kapunan and Hermosisima, Jr., JJ., concur.


CHAPTER VI

INTRINSIC AIDS IN CONSTRUCTION AND INTERPRETATION

[G.R. No. 127325. March 19, 1997.]

MIRIAM DEFENSOR SANTIAGO, ALEXANDER PADILLA, and MARIA ISABEL ONGPIN, Petitioners, v.
COMMISSION ON ELECTIONS, JESUS DELFIN, ALBERTO PEDROSA & CARMEN PEDROSA, in their
capacities as founding members of the People’s Initiative for Reforms, Modernization and Action
(PIRMA), Respondents.

SENATOR RAUL S. ROCO, DEMOKRASYA-IPAGTANGGOL ANG KONSTITUSYON (DIK), MOVEMENT OF


ATTORNEYS FOR BROTHERHOOD INTEGRITY AND NATIONALISM, INC. (MABINI), INTEGRATED BAR OF
THE PHILIPPINES (IBP), and LABAN NG DEMOKRATIKONG PILIPINO (LABAN), Petitioners-Intervenors.

Roco Bunag Kapunan & Migallos for movant Raul S. Roco.

Rene V . Sarmiento and R.A.V . Saguisag for movants DIK & MABINI.

Pete Quirino Quadra for respondents Sps. Alberto & Carmen Pedrosa.

SYLLABUS

1. REMEDIAL LAW; SPECIAL CIVIL ACTIONS; CERTIORARI; COMELEC’S FAILURE TO ACT ON MOTION TO DISMISS
AND ITS INSISTENCE TO HOLD ON TO THE PETITION RENDERED RIPE AND VIABLE THE PETITION UNDER
SECTION 2 OF RULE 65 OF THE RULES OF COURT. — Except for the petitioners and intervenor Roco, the parties
paid no serious attention to the fifth issue, i.e., whether it is proper for this Court to take cognizance of this special
civil action when there is a pending case before the COMELEC. . . It must be recalled that intervenor Roco filed with
the COMELEC a motion to dismiss the Delfin Petition on the ground that the COMELEC has no jurisdiction or
authority to entertain the petition. The COMELEC made no ruling thereon evidently because after having heard the
arguments of Delfin and the oppositors at the hearing on 12 December 1996, it required them to submit within five
days their memoranda or oppositions/memoranda. The COMELEC’s failure to act on Roco’s motion to dismiss and
its insistence to hold onto the petition rendered ripe and viable the instant petition under Section 2 of Rule 65 of
the Rules of Court.

2. ID.; ID.; THE COURT MAY BRUSH ASIDE TECHNICALITIES OF PROCEDURE IN CASES OF TRANSCENDENTAL
IMPORTANCE. — The Court may brush aside technicalities of procedure in cases of transcendental importance. As
we stated in Kilosbayan, Inc. v. Guingona, Jr.: A Party’s standing before this Court is a procedural technicality
which it may, in the exercise of its discretion, set aside in view of the importance of issues raised. In the landmark
Emergency Powers Cases, this Court brushed aside this technicality because the transcendental importance to the
public of these cases demands that they be settled promptly and definitely, brushing aside, if we must,
technicalities of procedure.

3. CONSTITUTIONAL LAW; 1987 CONSTITUTION; AMENDMENTS OR REVISIONS; PROVISION ON THE RIGHT OF


THE PEOPLE TO DIRECTLY PROPOSE AMENDMENTS TO THE CONSTITUTION, NOT SELF-EXECUTORY. — Section 2
of Article XVII of the Constitution is not self-executory. In his book, Joaquin Bernas, a member of the 1986
Constitutional Commission, stated: Without implementing legislation Section 2 cannot operate. Thus, although this
mode of amending the Constitution is a mode of amendment which bypasses congressional action, in the last
analysis it still is dependent on congressional action. Bluntly stated the right of the people to directly propose
amendments to the Constitution through the system of initiative would remain entombed in the cold niche of the
Constitution until Congress provides for its implementation. Stated otherwise, while the Constitution has recognized
or granted that right, the people cannot exercise it if Congress, for whatever reason, does not provide for its
implementation.

4. ID.; ID.; ID.; R.A. 6735; INTENDED TO COVER INITIATIVE TO PROPOSE AMENDMENTS TO THE CONSTITUTION.
— We agree that R.A. No. 6735 was, as its history reveals, intended to cover initiative to propose amendments to
the Constitution. The Act is a consolidation of House Bill No. 21505 and Senate Bill No. 17. The former was
prepared by the committee on Suffrage and Electoral Reforms of Representatives on the basis of two House Bills
referred to it, viz., (a) House Bill No. 497, which dealt with the initiative and referendum mentioned in Sections 1
and 32 of Article VI of the Constitution; and (b) House Bill No. 988, which dealt with the subject matter of House
Bill No. 497, as well as with initiative and referendum under Section 3 of Article XVII of the Constitution. Senate Bill
No. 17 solely, dealt with initiative and referendum concerning ordinances or resolutions of local government units.
The Bicameral Conference Committee consolidated Senate Bill No. 17 and House Bill No. 21505 into a draft bill,
which was subsequently approved on 8 June 1989 by the Senate and by the House of Representatives. This
approved bill is now R.A. No. 6735.

5. ID.; ID.; ID.; ID.; CONGRESS, INVESTED WITH THE POWER TO PROVIDE FOR THE RULES IMPLEMENTING THE
EXERCISE OF THE RIGHT. — There is, of course, no other better way for Congress to implement the exercise of the
right than through the passage of a statute or legislative act. This is the essence or rationale of the last minute
amendment by the Constitutional Commission to substitute the last paragraph of Section 2 of Article XVII then
reading: "The Congress shall by law provide for the implementation of the exercise of this right with the Congress
shall provide for the implementation of the exercise of this right." This substitute amendment was an investiture on
Congress of a power to provide for the rules implementing the exercise of the right. The "rules" means "the details
on how [the right] is to be carried out."

6. ID.; ID.; ID.; ID.; NOT IN FULL COMPLIANCE WITH THE POWER AND DUTY OF CONGRESS TO PROVIDE FOR
THE IMPLEMENTATION OF THE EXERCISE OF THE RIGHT. — First, Contrary to the assertion of public respondent
COMELEC, Section 2 of the Act does not suggest an initiative on amendments to the Constitution. The inclusion of
the word "Constitution" therein was a delayed afterthought. That word is neither germane nor relevant to said
section, which exclusively relates to initiative and referendum on national laws and local laws, ordinances, and
resolutions. That section is silent as to amendments on the Constitution. As pointed out earlier, initiative on the
Constitution is confined only to proposals to AMEND. The people are not accorded the power to "directly propose,
enact, approve, or reject, in whole or in part, the Constitution" through the system of initiative. They can only do
so with respect to "laws, ordinances, or resolutions." ‘ . . . Second. It is true that Section 3 (Definition of Terms) of
the Act defines initiative on amendments to the Constitution and mentions it as one of the three systems of
initiative, and that Section 5 (Requirements) restates the constitutional requirements as to the percentage of the
registered voters who must submit the proposal. But unlike in the case of the other systems of initiative, the Act
does not provide for the contents of a petition for initiative on the Constitution. Section 5 paragraph (c) requires,
among other things, a statement of the proposed law sought to be enacted, approve or rejected, amended or
repealed, as the case may be. It does not include, as among the contents of the petition, the provisions of the
Constitution sought to be amended, in the case of initiative on the Constitution. . . . The use of the clause
"proposed laws sought to be enacted, approved or rejected, amended or repealed" only strengthens the conclusion
that Section 2, quoted earlier, excludes initiative on amendments to the Constitution. Third. While the Act provides
subtitles for National Initiative and Referendum (Subtitle, II) and for Local Initiative and Referendum (Subtitle III),
no subtitle is provided for initiative on the Constitution. This conspicuous silence as to the latter simply means that
the main thrust of the Act is initiative and referendum on national and local laws. If Congress intended R.A. No.
6735 to fully provide for the implementation of the initiative on amendments to the Constitution, it could have
provided for a subtitle therefor, considering that in the order of things, the primacy of interest, or hierarchy of
values, the right of the people to directly propose amendments to the Constitution is far more important than the
initiative on national and local laws. . . . The foregoing brings us to the conclusion that R.A. No. 6735 is incomplete,
inadequate, or wanting in essential terms and conditions insofar as initiative on amendments to the Constitution is
concerned. Its lacunae on this substantive matter are fatal and. cannot be cured by "empowering" the COMELEC
"to promulgate such rules and regulations as may be necessary to carry out the purposes of [the] Act."

7. ID.; ID.; ID.; ID.; SUBTITLING OF THE ACT, NOT ACCURATE. — A further examination of the Act even reveals
that the subtitling is not accurate. Provisions not germane to the subtitle on National Initiative and Referendum are
placed therein, like (1) paragraphs (b) and (c) of Section 9, (2) that portion of Section 1] (Indirect Initiative)
referring to indirect initiative with the legislative bodies of local governments, and (3) Section 12 on Appeal, since
it applies to decisions of the COMELEC on the findings of sufficiency or insufficiency of the petition for initiative or
referendum, which could be petitions for both national and local initiative and referendum.

8. ID.; ID.; ID.; ID.; SECTION 18 ON AUTHORITY OF COURTS UNDER SUBTITLE ON LOCAL INITIATIVE AND
REFERENDUM, MISPLACED. — Section 18 on "Authority of Courts" under subtitle III on Local Initiative and
Referendum is misplaced, since the provision therein applies to both national and local initiative and referendum.

9. ID.; ID.; ID.; ID.; FAILED TO GIVE SPECIAL ATTENTION ON THE SYSTEM OF INITIATIVE ON AMENDMENTS TO
THE CONSTITUTION WHICH IS MORE IMPORTANT BEING THE PARAMOUNT SYSTEM OF INITIATIVE. — While R.A.
No. 6735 exerted utmost diligence and care in providing for the details in the implementation of initiative and
referendum on national and local legislation thereby giving them special attention, it failed, rather intentionally, to
do so on the system of initiative on amendments to the Constitution. Upon the other hand, as to initiative on
amendments to the Constitution, R.A. No. 6735, in all of its twenty-three sections, merely (a) mentions the word
"Constitution" in Section 2. (b) defines "initiative on the Constitution" and includes it in the enumeration of the
three systems of initiative in Section 3; (c) speaks of "plebiscite" as the process by which the proposition, in an
initiative on the Constitution may be approved or rejected by the people., (d) reiterates the constitutional
requirements as to the number of voters who should sign the petition; and (e) provides for the date of effectivity of
the approved proposition. There was, therefore, an obvious downgrading of the more important or the paramount
system of initiative. R.A. No. 6735 thus delivered a humiliating blow to the system of initiative on amendments to
the Constitution by merely paying it a reluctant lip service.

10. ID.; ID.; ID.; ID.; ARGUMENT THAT INITIATIVE ON AMENDMENTS TO THE CONSTITUTION IS SUBSUMED
UNDER SUBTITLE ON NATIONAL INITIATIVE AND REFERENDUM, NOT ACCEPTABLE. — We cannot accept the
argument that the initiative on amendments to the Constitution is subsumed under the subtitle on National
Initiative and Referendum because it is national in scope. Our reading of Subtitle II (National Initiative and
Referendum) and Subtitle III (Local Initiative and Referendum) leaves no room for doubt that the classification is
not based on the scope of the initiative involved, but on its nature and character. It is national initiative," if what is
proposed to be adopted or enacted is a national law, or a law which only Congress can pass. It is "local initiative" if
what is proposed to be adopted or enacted is a law, ordinance, or resolution which only the legislative bodies of the
governments of the autonomous regions, provinces, cities, municipalities, and barangays can pass. This
classification of initiative into national and local is actually based on Section 3 of the Act.

11. ID.; ID.; ID.; ID.; COMELEC DOES NOT HAVE THE POWER TO VALIDLY PROMULGATE RULES AND
REGULATIONS TO IMPLEMENT THE EXERCISE OF THE RIGHT OF THE PEOPLE TO DIRECTLY PROPOSE
AMENDMENTS TO THE CONSTITUTION UNDER R.A. 6735. — It logically follows that the COMELEC cannot validly
promulgate rules and regulations to implement the exercise of the right of the people to directly propose
amendments to the Constitution through the system of initiative. It does not have that power under R.A. No. 6735.
Reliance on the COMELEC’s power under Section 2(1) of Article IX-C of the Constitution is misplaced, for the laws
and regulations referred to therein are those promulgated by the COMELEC under (a) Section 3 of Article IX-C of
the Constitution, or (b) a law where subordinate legislation is authorized and which satisfies the "completeness"
and the "sufficient standard" tests.

12. ID.; ID.; ID.; ID.; DELFIN PETITION, DEFECTIVE BECAUSE IT DOES NOT CONTAIN THE SIGNATURES OF THE
REQUIRED NUMBER OF VOTERS. — Under Section 2 of Article XVII of the Constitution and Section 5(b) of R.A. No.
6735, a petition for initiative on the Constitution must be signed by at least 12% of the total number of registered
voters of which every legislative district is represented by at least 3% of the registered voters therein. The Delfin
Petition does not contain signatures of the required number of voters. Delfin himself admits that he has not yet
gathered signatures and that the purpose of his petition is primarily to obtain assistance in his drive to gather
signatures. Without the required signatures, the petition cannot be deemed validly initiated.

13. ID.; ID.; ID.; ID.; DELFIN PETITION, NOTHING MORE THAN A MERE SCRAP OF PAPER. — The COMELEC
acquires jurisdiction over a petition for initiative only after its filing. The petition then is the initiatory pleading.
Nothing before its filing is cognizable by the COMELEC, sitting en banc. . . . Since the Delfin Petition is not the
initiatory petition under R.A. No. 6735 and COMELEC Resolution No. 2300, it cannot be entertained or given
cognizance of by the COMELEC. The respondent Commission must have known that the petition does not fall under
any of the actions or proceedings under the COMELEC Rules of Procedure or under Resolution No. 2300, for which
reason it did not assign to the petition a docket number. Hence, the said petition was merely entered as UND,
meaning, undocketed. That petition was nothing more than a mere scrap of paper, which should not have been
dignified by the Order of 6 December 1996, the hearing on 12 December 1996, and the order directing Delfin and
the oppositors to file their memoranda or oppositions. In so dignifying it, the COMELEC acted without jurisdiction or
with grave abuse of discretion and merely wasted its time, energy, and resources.

14. POLITICAL LAW; LEGISLATIVE DEPARTMENT; DELEGATION OF POWER; WHAT HAS BEEN DELEGATED CANNOT
BE DELEGATED; EXCEPTIONS THEREOF. — The rule is that what has been delegated, cannot be delegated or as
expressed in a Latin maxim: potestas delegata non delegari potest. The recognized exceptions to the rule are as
follows: (1) Delegation of tariff powers to the President under Section 28(2) of Article VI of the Constitution; (2)
Delegation of emergency powers to the President under Section 23 (2) of Article VI of the Constitution; (3)
Delegation to the people at large; (4) Delegation to local governments; and (5) Delegation to administrative
bodies.

15. ID.; ID.; ID.; REQUISITES FOR VALID DELEGATION; SUFFICIENT STANDARD; CONSTRUED; R.A. 6735
MISERABLY FAILED TO SATISFY BOTH REQUIREMENTS. — In every case of permissible delegation, there must be a
showing that the delegation itself is valid. It is valid only if the law (a) is complete in itself, setting forth therein the
policy to be executed, carried out, or implemented by the delegate; and (b) fixes a standard — the limits of which
are sufficiently determinate and determinable — to which the delegate must conform in the performance of his
functions. A sufficient standard is one which defines legislative policy, marks its limits, maps out its boundaries and
specifies the public agency to apply it. It indicates the circumstances under which the legislative command is to be
effected. Insofar as initiative to propose amendments to the Constitution is concerned, R.A. No. 6735 miserably
failed to satisfy both requirements in subordinate legislation. The delegation of the power to the COMELEC is then
invalid.

PUNO, J., concurring and dissenting:

1. CONSTITUTIONAL LAW; 1987 CONSTITUTION; AMENDMENTS OR REVISIONS: R.A. 6735; SUFFICIENTLY


IMPLEMENTS THE RIGHTS OF THE PEOPLE TO INITIATE AMENDMENTS TO THE CONSTITUTION THRU INITIATIVE.
— I submit that R.A. No. 6735 sufficiently implements the right of the people to initiate amendments to the
Constitution thru initiative. . . . We need not torture the text of said law to reach the conclusion that it implements
people’s initiative to amend the Constitution. R.A. No. 6735 is replete with references to this prerogative of the
people. First, the policy statement declares: "Sec. 2. Statement of Policy. — The power of the people under a
system of initiative and referendum to directly propose, enact, approve or reject, in whole or in part, the
Constitution, laws, ordinances, or resolutions passed by any legislative body upon compliance with the
requirements and guaranteed." Second, the law defines "initiative" as "the power of the people to propose
amendments to the Constitution or to propose and enact legislations through an election called for the purpose,"
and "plebiscite" as "the electoral process by which an initiative on the Constitution is approved or rejected by the
people." Third, the law provides the requirements for a petition for initiative to amend the Constitution. Section
5(b) states that" (a) petition for an initiative on the 1987 Constitution must have at least twelve per centum (12%)
of the total number of registered voters as signatories, of which every legislative district must be represented by at
least three per centum (3%) of the registered voters therein." It also states that" (i)nitiative on the Constitution
may be exercised only after five (5) years from the ratification of the 1987 Constitution and only once every five
(5) years thereafter." Finally, R.A. No. 6735 fixes the effectivity date of the amendment. Section 9(b) states that"
(t)he proposition in an initiative on the Constitution approved by a majority of the votes cast in the plebiscite shall
become effective as to the day of the plebiscite."

2. ID.; ID.; ID.; ID.; SUFFICIENTLY STATES THE POLICY AND STANDARDS TO GUIDE THE COMELEC IN
PROMULGATING THE IMPLEMENTING RULES AND REGULATIONS OF THE LAW; CASE AT BAR. — R.A. No. 6735
sufficiently states the policy and the standards to guide the COMELEC in promulgating the law’s implementing rules
and regulations of the law. . . . In the case at bar, the policy and the standards are bright-lined in R.A. No. 6735. A
20-20 look at the law cannot miss them. They were not written by our legislators in invisible ink. The policy and
standards can also be found in no less than Section 2, Article XVII of the Constitution on Amendments or Revisions.
There is thus no reason to hold that the standards provided for in R.A. No. 6735 are insufficient for in other cases
we have upheld as adequate more general standards such as "simplicity and dignity," "public interest," "public
welfare," "interest of law and order," "justice and equity," "adequate and efficient instruction," "public safety,"
"public policy," "greater national interest, "protect the local consumer by stabilizing and subsidizing domestic pump
rates," and "promote simplicity, economy and efficiency in government." A due regard and respect to the
legislature, a co-equal and coordinate branch of government, should counsel this Court to refrain from refusing to
effectuate laws unless they are clearly unconstitutional.

3. ID.; ID.; ID.; ID.; COMELEC RESOLUTION NO. 2300 MERELY PROVIDES THE PROCEDURE TO EFFECTUATE THE
POLICY OF R.A. 6735, HENCE, DID NOT VIOLATE THE RULES ON VALID DELEGATION. — In enacting R.A. No.
6735, it cannot be said that Congress totally transferred its power to enact the law implementing people’s initiative
to COMELEC. A close look at COMELEC Resolution No. 2300 will show that it merely provided the procedure to
effectuate the policy of R.A. No. 6735 giving life to the people’s initiative to amend the Constitution. The debates in
the Constitutional Commission make it clear that the rules of procedure to enforce the people’s initiative can be
delegated. . . . The prohibition against the legislature is to impair the substantive right of the people to initiate
amendments to the Constitution. It is not, however, prohibited from legislating the procedure to enforce the
people’s right of initiative or to delegate it to another body like the COMELEC with proper standard.

4. ID.; ID.; ID.; ID.; ARGUMENT ON LACK OF SUB-TITLE ON PEOPLE’S INITIATIVE TO AMEND THE
CONSTITUTION, SHOULD BE GIVEN THE WEIGHT OF HELIUM. — The argument that R.A. No. 6735 does not
include people’s initiative to amend the Constitution simply because it lacks a sub-title on the subject should be
given the weight of helium. Again, the hoary rule in statutory construction is that headings prefixed to titles,
chapters and sections of a statute may be consulted in aid of interpretation, but inferences drawn therefrom are
entitled to very little weight, and they can never control the plain terms of the enacting clauses.

5. ID.; ID.; ID.; ID.; ID.; LAPSES IN R.A. 6735 ARE TO BE EXPECTED, FOR LAWS ARE NOT ALWAYS WRITTEN IN
IMPECCABLE ENGLISH. — It is unfortunate that the majority decision resorts to a strained interpretation of R.A.
No. 6735 to defeat its intent which it itself concedes is to implement people’s initiative to propose amendments to
the Constitution. Thus, it laments that the word "Constitution" is neither germane nor relevant to the Policy thrust
of Section 2 and that the statute’s subtitling is not accurate. These lapses are to be expected for laws are not
always written in impeccable English. Rightly, the Constitution does not require our legislators to be word-smiths
with the ability to write bills with poetic commas like Jose Garcia Villa or in lyrical prose like Winston Churchill. But
it has always been our good policy not to refuse to effectuate the intent of a law on the ground that it is badly
written. As the distinguished Vicente Francisco reminds us: "Many laws contain words which have not been used
accurately. But the use of inapt or inaccurate language or words, will not vitiate the statute if the legislative
intention can be ascertained. The same is equally true with reference to awkward, slovenly, or ungrammatical
expressions, that is, such expressions and words will be construed as carrying the meaning the legislature intended
that they bear, although such a construction necessitates a departure from the literal meaning of the words used."

6. ID.; ID.; ID.; ID.; PETITION AGAINST RESPONDENTS PEDROSAS SHOULD BE DISMISSED BECAUSE IT STATES
NO CAUSE OF ACTION. — The petition should be dismissed with respect to the Pedrosas. The inclusion of the
Pedrosas in the petition is utterly baseless. The records show that the case at bar started when respondent Delfin
alone and by himself filed with the COMELEC a Petition to Amend the Constitution to Lift Term Limits of Elective
Officials by People’s Initiative. The Pedrosas did not join the petition. . . . Petitioners sued the COMELEC, Jesus
Delfin, Alberto Pedrosa and Carmen Pedrosa in their capacities as founding members of the People’s Initiative for
Reform, Modernization and Action (PIRMA). The suit is an original action for prohibition with prayer for temporary
restraining order and/or writ of preliminary injunction. The petition on its face states no cause of action against the
Pedrosas. The only allegation against the Pedrosas is that they are founding members of the PIRMA which proposes
to undertake the signature drive for people’s initiative to amend the Constitution.

7 ID.; ID.; ID.; ID.; SOLICITATION OF SIGNATURES IS A RIGHT GUARANTEED IN BLACK AND WHITE BY SECTION
2 OF ARTICLE XVII OF THE CONSTITUTION. — One need not draw a picture to impart the proposition that in
soliciting signatures to start a people’s initiative to amend the Constitution the Pedrosas are not engaged in any
criminal act. Their solicitation of signatures is a right guaranteed in black and white by Section 2 of Article XVII of
the Constitution which provides that." . . amendments to this Constitution may likewise be directly proposed by the
people through initiative . . . ." This right springs from the principle proclaimed in Section 1, Article II of the
Constitution that in a democratic and republican state "sovereignty resides in the people and all government
authority emanates from them." The Pedrosas are part of the people and their voice is part of the voice of the
people. They may constitute but a particle of our sovereignty but no power can trivialize them for sovereignty is
indivisible.

8. ID.; ID.; ID.; RESPONDENTS’ RIGHT OF SOLICITING SIGNATURES TO AMEND THE CONSTITUTION, CANNOT BE
ABRIDGED WITHOUT ANY IFS AND BUTS. — Section 16 of Article XIII of the Constitution provides: "The right of
the people and their organizations to effective and reasonable participation at all levels of social, political and
economic decision-making shall not be abridged. The State shall by law, facilitate the establishment of adequate
consultation mechanisms." This is another novel provision of the 1987 Constitution strengthening the sinews of the
sovereignty of our people. In soliciting signatures to amend the Constitution, the Pedrosas are participating in the
political decision-making process of our people. The Constitution says their right cannot be abridged without any ifs
and buts. We cannot put a question mark on their right.

9. ID.; ID.; ID.; RESPONDENTS’ CAMPAIGN TO AMEND THE CONSTITUTION IS AN EXERCISE OF THEIR FREEDOM
OF SPEECH AND EXPRESSION AND THEIR RIGHT TO PETITION THE GOVERNMENT FOR REDRESS OF GRIEVANCES.
— The Pedrosas’ campaign to amend the Constitution is an exercise of their freedom of speech and expression. We
have memorialized this universal right in all our fundamental laws from the Malolos Constitution to the 1987
Constitution. We have iterated and reiterated in our rulings that freedom of speech is a preferred right, the matrix
of other important rights of our people. Undeniably, freedom speech enervates the essence of the democratic creed
of think and let think. For this reason, the Constitution encourages speech even if it protects the speechless.

10. ID.; ID.; ID.; RESPONDENTS, RIGHT TO SOLICIT SIGNATURES TO START A PEOPLE’S INITIATIVE TO AMEND
THE CONSTITUTION DOES NOT DEPEND ON ANY LAW. — It is thus evident that the right of the Pedrosas to solicit
signatures to start a people’s initiative to amend the Constitution does not depend on any law, much less on R.A.
No. 6735 or COMELEC Resolution No. 2300. No law, no Constitution can chain the people to an undesirable status
quo. To be sure, there are no irrepealable laws just as there are no irrepealable Constitutions. Change is the
predicate of progress and we should not fear change. Mankind has long recognized the truism that the only
constant in life is change and so should the majority.

11. STATUTORY CONSTRUCTION; INTENT OF THE LEGISLATURE; THE INTENT OF R.A. 6735 IS TO IMPLEMENT THE
PEOPLE’S INITIATIVE TO AMEND THE CONSTITUTION. — Our effort to discover the meaning of R.A. No. 6735
should start with the search of the intent of our lawmakers. A knowledge of this intent is critical for the intent of
the legislature is the law and the controlling factor in its interpretation. Stated otherwise, intent is the essence of
the law, the spirit which gives life to its enactment. . . . Since it is crystalline that the intent of R.A. No. 6735 is to
implement the people’s initiative to amend the Constitution, it is our bounden duty to interpret the law as it was
intended by the legislature. We have ruled that once intent is ascertained, it must be enforced even if it may not be
consistent with the strict letter of the law and this ruling is as old as the mountain. We have also held that where a
law is susceptible of more than one interpretation, that interpretation which will most tend to effectuate the
manifest intent of the legislature will be adopted. The text of R.A. No. 6735 should therefore be reasonably
construed to effectuate its intent to implement the people’s initiative to amend the Constitution. . . . All said, it is
difficult to agree with the majority decision that refuses to enforce the manifest intent or spirit of R.A. No. 6735 to
implement the people’s initiative to amend the Constitution. It blatantly disregards the rule cast in concrete that
the letter of the law is its body but its spirit is its soul.

12. POLITICAL LAW; LEGISLATIVE DEPARTMENT; DELEGATION OF POWER; SUFFICIENT STANDARD; PURPOSE
THEREOF. — Former Justice Isagani A. Cruz similarly elucidated that "a sufficient standard is intended to map out
the boundaries of the delegates’ authority by defining the legislative policy and indicating the circumstances under
which it is to be pursued and effected. The purpose of the sufficient standard is to prevent a total transference of
legislative power from the lawmaking body to the delegate."

13. ID.; ID.; ID.; THE COURT HAS PRUDENTIALLY REFRAINED FROM INVALIDATING ADMINISTRATIVE RULES ON
THE GROUND OF LACK OF ADEQUATE STANDARD. — A survey of our case law will show that this Court has
prudentially refrained from invalidating administrative rules on the ground of lack of adequate legislative standard
to guide their promulgation. As aptly perceived by former Justice Cruz, "even if the law itself does not expressly
pinpoint the standard, the courts will bend backward to locate the same elsewhere in order to spare the statute, if
it can, from constitutional infirmity.

VITUG, J., separate opinion:

1. CONSTITUTIONAL LAW; 1987 CONSTITUTION; AMENDMENTS OR REVISIONS; R.A. 6735; DELFIN PETITION,
UTTERLY DEFICIENT. — The Delfin petition is thus utterly deficient. Instead of complying with the constitutional
imperatives, the petition would rather have much of its burden passed on, in effect, to the COMELEC. The petition
would require COMELEC to schedule "signature gathering all over the country," to cause the necessary publication
of the petition "in newspapers of general and local circulation," and to instruct "Municipal Election Registrars in all
Regions of the Philippines to assist petitioners and volunteers in establishing signing stations at the time and on the
dates designated for the purpose.

2. ID.; ID.; ID.; TEMPORARY RESTRAINING ORDER ISSUED BY THE COURT SHOULD BE HELD TO COVER ONLY
THE DELFIN PETITION. — The TRO earlier issued by the Court which, consequentially, is made permanent under
the ponencia should be held to cover only the Delfin petition and must not be so understood as having intended or
contemplated to embrace the signature drive of the Pedrosas. The grant of such a right is clearly implicit in the
constitutional mandate on people initiative.

FRANCISCO, J., dissenting and concurring:

1. CONSTITUTIONAL LAW; 1987 CONSTITUTION; AMENDMENTS OR REVISIONS; R.A. 6735; AMPLY COVERS AN
INITIATIVE ON THE CONSTITUTION. — Republic Act No. 6735, otherwise known as "The Initiative and Referendum
Act" amply covers an initiative on the Constitution. In its definition of terms, Republic Act No. 6735 defines
initiative as "the power of the people to propose amendments to the constitution or to propose and enact
legislations through an election called for the purpose." The same section, in enumerating the three systems of
initiative, included in "initiative on the constitution which refers to a petition proposing amendments to the
constitution." Paragraph (e) again of Section 3 defines "plebiscite" as "the electoral process by which an initiative
on the constitution is approved or rejected by the people." And as to the material requirements for an initiative on
the Constitution, Section 5(b) distinctly enumerates the following: "A petition for an initiative on the 1987
Constitution must have at least twelve per centum (12%) of the total number of the registered voters as
signatories, of which every legislative distinct must be represented by at least three per centum (3%) of the
registered voters therein. Initiative on the constitution may be exercised only after five (5) years from the
ratification of 1987 Constitution and only once every five years thereafter." These provisions were inserted, on
purpose, by Congress the intent being to provide for the implementation of the right to propose an amendment to
the Constitution by way of initiative. "A legal provision," the Court has previously said, "must not be construed as
to be a useless surplusage, and accordingly, meaningless, in the sense of adding nothing to the law or having no
effect whatsoever thereon." . . . Clearly then, Republic Act No. 6735 covers an initiative on the constitution. Any
other construction as what petitioners foist upon the Court constitute a betrayal of the intent and spirit behind the
enactment.

2. ID.; ID.; ID.; ID.; COMELEC CANNOT TAKE ANY ACTION ON DELFIN PETITION BECAUSE IT IS UNACCOMPANIED
BY THE REQUIRED PERCENTAGE OF REGISTERED VOTERS; CASE AT BAR. — I agree with the ponencia that the
Commission on Elections, at present, cannot take any action (such as those contained in the Commission’s orders
dated December 6, 9, and 12, 1996 [Annexes B, C and B-1 ]) indicative of its having already assumed jurisdiction
over private respondents’ petition. This is so because from the tenor of Section 5 (b) of R.A. No. 6735 it would
appear that proof of procurement of the required percentage of registered voters at the time the petition for
initiative is filed, is a jurisdictional requirement. Here private respondents’ petition is unaccompanied by the
required signatures. This defect notwithstanding, it is without prejudice to the refiling of their petition once
compliance with the required percentage is satisfactorily shown by private respondents. In the absence, therefore,
of an appropriate petition before the Commission on Elections, any determination of whether private respondents’
proposal constitutes an amendment or revision is premature.

3. STATUTORY CONSTRUCTION; EVERY PART OF THE STATUTE MUST BE INTERPRETED WITH REFERENCE TO THE
CONTEXT. — It is a rule that every part of the statute must be interpreted with reference to the context, i.e., that
every part of the statute must be construed together with the other parts and kept subservient to the general
intent of the whole enactment. Thus, the provisions of Republic Act No. 6735 may not be interpreted in isolation.
The legislative intent behind every law is to be extracted from the statute as a whole.

PANGANIBAN, J., concurring and dissenting:

1. CONSTITUTIONAL LAW; 1987 CONSTITUTION; AMENDMENTS OR REVISIONS; R.A. 6735; TAKEN TOGETHER
AND INTERPRETED PROPERLY, THE CONSTITUTION, R.A. 6735 AND COMELEC RESOLUTION 2300 ARE SUFFICIENT
TO IMPLEMENT CONSTITUTIONAL INITIATIVES. — While R.A. 6735 may not be a perfect law it was — as the
majority openly concedes — intended by the legislature to cover and, I respectfully submit, it contains enough
provisions to effectuate an initiative on the Constitution. I completely agree with the inspired and inspiring opinions
of Mr. Justice Reynato S. Puno and Mr. Justice Ricardo J. Francisco that RA 6735, the Roco law on initiative,
sufficiently implements the right of the people to initiate amendments to the Constitution. Such views, which I shall
no longer repeat nor elaborate on, are thoroughly consistent with this Court’s unanimous en banc rulings in Subic
Bay Metropolitan Authority v. Commission on Elections, that "provisions for initiative . . . are (to be) liberally
construed to effectuate their purposes, to facilitate and not hamper the exercise by the voters of the rights granted
thereby’; and in Garcia v. Comelec, that any effort to trivialize the effectiveness of people’s initiatives ought to be
rejected."

2. ID.; ID.; ID .; ID.; MAJORITY’S POSITION ALL TOO SWEEPING AND ALL TOO EXTREMIST. — I find the
majority’s position all too sweeping and all too extremist. It is equivalent to burning the whole house to
exterminate the rats, and to killing the patient to relieve him of pain. What Citizen Delfin wants the Comelec to do
we should reject. But we should not thereby preempt any future effort to exercise the right of initiative correctly
and judiciously. The fact that the Delfin Petition proposes a misuse of initiative does not justify a ban against its
proper use. Indeed, there is a right way to do the right thing at the right time and for the right reason.

3. ID.; ID.; ID.; ID.; COMELEC CANNOT ENTERTAIN ANY PETITION IN THE ABSENCE OF THE REQUIRED NUMBER
OF SIGNATURES. — Until and unless an initiatory petition can show the required number of signatures — in this
case, 12% of all the registered voters in the Philippines with at least 3% in every legislative district — no public
funds may be spent and no government resources may be used in an initiative to amend the Constitution. Verily,
the Comelec cannot even entertain any petition absent such signatures.

4. ID.; ID.; ID.; ID.; WISELY EMPOWERED THE COMMISSION ON ELECTIONS TO PROMULGATE RULES AND
REGULATIONS. — No law can completely and absolutely cover all administrative details. In recognition of this, R.A.
6735 wisely empowered the Commission on Elections "to promulgate such rules and regulations as may be
necessary to carry out the purposes of this Act." And pursuant thereto, the Comelec issued its Resolution 2300 on
16 January 1991. Such Resolution, by its very words, was promulgated "to govern the conduct of initiative on the
Constitution and initiative and referendum on national and local laws," not by the incumbent Commission on
Elections by one then composed of Acting Chairperson Haydee B. Yorac, Comms. Alfredo E. Abueg, Jr., Leopoldo L.
Africa, Andres R. Flores, Dario C. Rama and Magdara B. Dimaampao. All of these Commissioners who signed
resolution 2300 have retired from the Commission, and thus we cannot ascribe any vile motive unto them, other
than an honest, sincere and exemplary effort to give life to a cherished right of our people.

5. ID.; ID.; ID.; ID.; THE COURT HAS NO POWER TO RESTRAIN ANYONE FROM EXERCISING THEIR RIGHT OF
INITIATIVE. — The Court has no power to restrain them from exercising their right of initiative. The right to
propose amendments to the Constitution is really a species of the right of free speech and free assembly. And
certainly, it would be tyrannical and despotic to stop anyone from speaking freely and persuading others to
conform to his/her beliefs. As the eminent Voltaire once said, "I may disagree with what you say, but I will defend
to the death your right to say it." After all, freedom is not really for the thought we agree with, but as Justice
Holmes wrote, "freedom for the thought that we hate.

DECISION

DAVIDE, JR., J.:

The heart of this controversy brought to us by way of a petition for prohibition under Rule 65 of the Rules of Court
is the right of the people to directly propose amendments to the Constitution through the system of initiative under
Section 2 of Article XVII of the 1987 Constitution. Undoubtedly, this demands special attention, as this system of
initiative was unknown to the people of this country, except perhaps to a few scholars before the drafting of the
1987 Constitution. The 1986 Constitutional Commission itself, through the original proponent 1 and the main
sponsor 2 of the proposed Article on Amendments or Revision of the Constitution, characterized this system as
"innovative." 3 Indeed it is, for both under the 1935 and 1973 Constitutions, only two methods of proposing
amendments to, or revision of, the Constitution were recognized, viz., (1) by Congress upon a vote of three-fourths
of all its members and (2) by a constitutional convention. 4 For this and the other reasons hereafter discussed, we
resolved to give due course to this petition.

On 6 December 1996, private respondent Atty. Jesus S. Delfin filed with public respondent Commission on
Elections (hereafter, COMELEC) a "Petition to Amend the Constitution, to Lift Term Limits of Elective Officials, by
People’s Initiative" (hereafter, Delfin Petition) 5 wherein Delfin asked the COMELEC for an order

1. Fixing the time and dates for signature gathering all over the country;

2. Causing the necessary publications of said Order and the attached "Petition for Initiative on the 1987
Constitution, in newspapers of general and local circulation;
3. Instructing Municipal Election Registrars in all Regions of the Philippines, to assist Petitioners and volunteers, in
establishing signing stations at the time and on the dates designated for the purpose.

Delfin alleged in his petition that he is a founding member of the Movement for People’s Initiative, 6 a group of
citizens desirous to avail of the system intended to institutionalize people power; that he and the members of the
Movement and other volunteers intend to exercise the power to directly propose amendments to the Constitution
granted under Section 2, Article XVII of the Constitution; that the exercise of that power shall be conducted in
proceedings under the control and supervision of the COMELEC; that, as required in COMELEC Resolution No. 2300,
signature stations shall be established all over the country, with the assistance of municipal election registrars, who
shall verify the signatures affixed by individual signatories; that before the Movement and other volunteers can
gather signatures, it is necessary that the time and dates to be designated for the purpose be first fixed in an order
to be issued by the COMELEC; and that to adequately inform the people of the electoral process involved, it is
likewise necessary that the said order, as well as the Petition on which the signatures shall be affixed, be published
in newspapers of general and local circulation, under the control and supervision of the COMELEC.

The Delfin Petition further alleged that the provisions sought to be amended are Sections 4 and 7 of Article VI, 7
Section 4 of Article VII, 8 and Section 8 of Article X 9 of the Constitution. Attached to the petition is a copy of a
"Petition for Initiative on the 1987 Constitution" 10 embodying the proposed amendments which consist in the
deletion from the aforecited sections of the provisions concerning term limits, and with the following proposition:

DO YOU APPROVE OF LIFTING THE TERM LIMITS OF ALL ELECTIVE GOVERNMENT OFFICIALS, AMENDING FOR THE
PURPOSE SECTIONS 4 AND 7 OF ARTICLE VI, SECTION 4 OF ARTICLE VII, AND SECTION 8 OF ARTICLE X OF THE
1987 PHILIPPINE CONSTITUTION?

According to Delfin, the said Petition for Initiative will first be submitted to the people, and after it is signed by at
least twelve per cent of the total number of registered voters in the country it will be formally filed with the
COMELEC.

Upon the filing of the Delfin Petition, which was forthwith given the number UND 96-037 (INITIATIVE), the
COMELEC, through its Chairman, issued an Order 11 (a) directing Delfin "to cause the publication of the petition,
together with the attached Petition for Initiative on the 1987 Constitution (including the proposal, proposed
constitutional amendment, and the signature form), and the notice of hearing in three (3) daily newspapers of
general circulation at his own expense" not later than 9 December 1996; and (b) setting the case for hearing on 12
December 1996 at 10:00 a.m.

At the hearing of the Delfin Petition on 12 December 1996, the following appeared: Delfin and Atty. Pete Q.
Quadra; representatives of the People’s Initiative for Reforms, Modernization and Action (PIRMA); intervenor-
oppositor Senator Raul S. Roco, together with his two other lawyers and representatives of, or counsel for, the
Integrated Bar of the Philippines (IBP), Demokrasya-Ipagtanggol ang Konstitusyon (DIK), Public Interest Law
Center, and Laban ng Demokratikong Pilipino (LABAN). 12 Senator Roco, on that same day, filed a Motion to
Dismiss the Delfin Petition on the ground that it is not the initiatory petition properly cognizable by the COMELEC.

After hearing their arguments, the COMELEC directed Delfin and the oppositors to file their "memoranda and/or
oppositions/memoranda" within five days. 13

On 18 December 1996, the petitioners herein — Senator Miriam Defensor Santiago, Alexander Padilla, and Maria
Isabel Ongpin — filed this special civil action for prohibition raising the following arguments:

(1) The constitutional provision on people’s initiative to amend the Constitution can only be implemented by law to
be passed by Congress. No such law has been passed; in fact, Senate Bill No. 1290 entitled An Act Prescribing and
Regulating Constitutional Amendments by People’s Initiative, which petitioner Senator Santiago filed on 24
November 1995, is still pending before the Senate Committee on Constitutional Amendments.

(2) It is true that R.A. No. 6735 provides for three systems of initiative, namely, initiative on the Constitution, on
statutes, and on local legislation. However, it failed to provide any subtitle initiative on the Constitution, unlike in
the other modes of initiative, which are specifically provided for in Subtitle II and Subtitle III. This deliberate
omission indicates that the matter of people’s initiative to amend the Constitution was left to some future law.
Former Senator Arturo Tolentino stressed this deficiency in the law in his privilege speech delivered before the
Senate in 1994: "There is not a single word in that law which can be considered as implementing [the provision on
constitutional initiative]. Such implementing provisions have been obviously left to a separate law."

(3) Republic Act No. 6735 provides for the effectivity of the law after publication in print media. This indicates that
the Act covers only laws and not constitutional amendments because the latter take effect only upon ratification
and not after publication.
(4) COMELEC Resolution No. 2300, adopted on 16 January 1991 to govern "the conduct of initiative on the
Constitution and initiative and referendum on national and local laws, is ultra vires insofar as initiative on
amendments to the Constitution is concerned, since the COMELEC has no power to provide rules and regulations
for the exercise of the right of initiative to amend the Constitution. Only Congress is authorized by the Constitution
to pass the implementing law.

(5) The people’s initiative is limited to amendments to the Constitution, not to revision thereof. Extending or lifting
of term limits constitutes a revision and is, therefore, outside the power of the people’s
initiative.chanroblesvirtual|awlibrary

(6) Finally, Congress has not yet appropriated funds for people’s initiative; neither the COMELEC nor any other
government department, agency, or office has realigned funds for the purpose.

To justify their recourse to us via the special civil action for prohibition, the petitioners allege that in the event the
COMELEC grants the Delfin Petition, the people’s initiative spearheaded by PIRMA would entail expenses to the
national treasury for general re-registration of voters amounting to at least P180 million, not to mention the
millions of additional pesos in expenses which would be incurred in the conduct of the initiative itself. Hence, the
transcendental importance to the public and the nation of the issues raised demands that this petition for
prohibition be settled promptly and definitely, brushing aside technicalities of procedure and calling for the
admission of a taxpayer’s and legislator’s suit. 14 Besides, there is no other plain, speedy, and adequate remedy in
the ordinary course of law.

On 19 December 1996, this Court (a) required the respondents to comment on the petition within a non-extendible
period of ten days from notice; and (b) issued a temporary restraining order, effective immediately and continuing
until further orders, enjoining public respondent COMELEC from proceeding with the Delfin Petition, and private
respondents Alberto and Carmen Pedrosa from conducting a signature drive for people’s initiative to amend the
Constitution.

On 2 January 1997, private respondents, through Atty. Quadra, filed their Comment 15 on the petition. They argue
therein that:

1. IT IS NOT TRUE THAT IT WOULD ENTAIL EXPENSES TO THE NATIONAL TREASURY FOR GENERAL
REGISTRATION OF VOTERS AMOUNTING TO AT LEAST PESOS: ONE HUNDRED EIGHTY MILLION
(P180,000,000.00)" IF THE COMELEC GRANTS THE PETITION FILED BY RESPONDENT DELFIN BEFORE THE
COMELEC."

2. NOT A SINGLE CENTAVO WOULD BE SPENT BY THE NATIONAL GOVERNMENT IF THE COMELEC GRANTS THE
PETITION OF RESPONDENT DELFIN. ALL EXPENSES IN THE SIGNATURE GATHERING ARE ALL FOR THE ACCOUNT
OF RESPONDENT DELFIN AND HIS VOLUNTEERS PER THEIR PROGRAM OF ACTIVITIES AND EXPENDITURES
SUBMITTED TO THE COMELEC. THE ESTIMATED COST OF THE DAILY PER DIEM OF THE SUPERVISING SCHOOL
TEACHERS IN THE SIGNATURE GATHERING TO BE DEPOSITED and TO BE PAID BY DELFIN AND HIS VOLUNTEERS
IS P2,571,200.00;

3. THE PENDING PETITION BEFORE THE COMELEC IS ONLY ON THE SIGNATURE GATHERING WHICH BY LAW
COMELEC IS DUTY BOUND "TO SUPERVISE CLOSELY" PURSUANT TO ITS "INITIATORY JURISDICTION" UPHELD BY
THE HONORABLE COURT IN ITS RECENT SEPTEMBER 26, 1996 DECISION IN THE CASE OF SUBIC BAY
METROPOLITAN AUTHORITY VS . COMELEC, ET . AL. G.R. NO. 125416;

4. REP. ACT NO. 6735 APPROVED ON AUGUST 4, 1989 IS THE ENABLING LAW IMPLEMENTING THE POWER OF
PEOPLE INITIATIVE TO PROPOSE AMENDMENTS TO THE CONSTITUTION. SENATOR DEFENSOR-SANTIAGO’S
SENATE BILL NO. 1290 IS A DUPLICATION OF WHAT ARE ALREADY PROVIDED FOR IN REP. ACT NO. 6735;

5. COMELEC RESOLUTION NO. 2300 PROMULGATED ON JANUARY 16, 1991 PURSUANT TO REP. ACT 6735 WAS
UPHELD BY THE HONORABLE COURT IN THE RECENT SEPTEMBER 26, 1996 DECISION IN THE CASE OF SUBIC
BAY, METROPOLITAN AUTHORITY VS. COMELEC, ET AL. G.R. NO. 125416 WHERE THE HONORABLE COURT SAID:
"THE COMMISSION ON ELECTIONS CAN DO NO LESS BY SEASONABLY AND JUDICIOUSLY PROMULGATING
GUIDELINES AND RULES FOR BOTH NATIONAL AND LOCAL USE, IN IMPLEMENTING OF THESE LAWS."

6. EVEN SENATOR DEFENSOR-SANTIAGO’S SENATE BILL NO. 1290 CONTAINS A PROVISION DELEGATING TO THE
COMELEC THE POWER TO "PROMULGATE SUCH RULES AND REGULATIONS AS MAY BE NECESSARY TO CARRY OUT
THE PURPOSES OF THIS ACT." (SEC. 12, S.B. NO. 1290, ENCLOSED AS ANNEX E, PETITION);

7. THE LIFTING OF THE LIMITATION ON THE TERM OF OFFICE OF ELECTIVE OFFICIALS PROVIDED UNDER THE
1987 CONSTITUTION IS NOT A "REVISION" OF THE CONSTITUTION. IT IS ONLY AN AMENDMENT. "AMENDMENT
ENVISAGES AN ALTERATION OF ONE OR A FEW SPECIFIC PROVISIONS OF THE CONSTITUTION. REVISION
CONTEMPLATES A RE-EXAMINATION OF THE ENTIRE DOCUMENT TO DETERMINE HOW AND TO WHAT EXTENT IT
SHOULD BE ALTERED." (PP. 412-413, 2ND. ED. 1992, 1097 PHIL. CONSTITUTION, BY JOAQUIN G. BERNAS, SJ.).

Also on 2 January 1997, private respondent Delfin filed in his own behalf a Comment 16 which starts off with an
assertion that the instant petition is a "knee-jerk reaction to a draft ‘Petition for Initiative on the 1987 Constitution’
. . . which is not formally filed yet." What he filed on 6 December 1996 was an "Initiatory Pleading" or "Initiatory
Petition," which was legally necessary to start the signature campaign to amend the Constitution or to put the
movement to gather signatures under COMELEC power and function. On the substantive allegations of the
petitioners, Delfin maintain as follows:

(1) Contrary to the claim of the petitioners, there is a law, R.A. No. 6735, which governs the conduct of initiative to
amend the Constitution. The absence therein of a subtitle for such initiative is not fatal, since subtitles are not
requirements for the validity or sufficiency of laws.

(2) Section 9(b) of R.A. No. 6735 specifically provides that the proposition in an initiative to amend the
Constitution approved by the majority of the votes cast in the plebiscite shall become effective as of the day of the
plebiscite.

(3) The claim that COMELEC Resolution No. 2300 is ultra vires is contradicted by (a) Section 2, Article IX-C of the
Constitution, which grants the COMELEC the power to enforce and administer all laws and regulations relative to
the conduct of an election, plebiscite, initiative, referendum, and recall; and (b) Section 20 of R.A. 6735, which
empowers the COMELEC to promulgate such rules and regulations as may be necessary to carry out the purposes
of the Act.

(4) The proposed initiative does not involve a revision of, but mere amendment to, the Constitution because it
seeks to alter only a few specific provisions of the Constitution, or more specifically, only those which lay term
limits. It does not seek to reexamine or overhaul the entire document.

As to the public expenditures for registration of voters, Delfin considers petitioners’ estimate of P180 million as
unreliable, for only the COMELEC can give the exact figure. Besides, if there will be a plebiscite it will be
simultaneous with the 1997 Barangay Elections. In any event, fund requirements for initiative will be a priority
government expense because it will be for the exercise of the sovereign power of the people.

In the Comment 17 for the public respondent COMELEC, filed also on 2 January 1997, the Office of the Solicitor
General contends that:

(1) R.A. No. 6735 deals with, inter alia, people’s initiative to amend the Constitution. Its Section 2 on Statement of
Policy explicitly affirms, recognizes, and guarantees that power; and its Section 3, which enumerates the three
systems of initiative, includes initiative on the Constitution and defines the same as the power to propose
amendments to the Constitution. Likewise, its Section 5 repeatedly mentions initiative on the Constitution.

(2) A separate subtitle on initiative on the Constitution is not necessary in R.A. No. 6735 because, being national in
scope, that system of initiative is deemed included in the subtitle on National Initiative and Referendum; and
Senator Tolentino simply overlooked pertinent provisions of the law when he claimed that nothing therein was
provided for initiative on the Constitution.

(3) Senate Bill No. 1290 is neither a competent nor a material proof that R.A. No. 6735 does not deal with initiative
on the Constitution.

(4) Extension of term limits of elected officials constitutes a mere amendment to the Constitution, not a revision
thereof.

(5) COMELEC Resolution No. 2300 was validly issued under Section 20 of R.A. No. 6735 and under the Omnibus
Election Code. The rule-making power of the COMELEC to implement the provisions of R.A. No. 6735 was in fact
upheld by this Court in Subic Bay Metropolitan Authority v. COMELEC.

On 14 January 1997, this Court (a) confirmed nunc pro tunc the temporary restraining order; (b) noted the
aforementioned Comments and the Motion to Lift Temporary Restraining Order filed by private respondents
through Atty. Quadra, as well as the latter’s Manifestation stating that he is the counsel for private respondents
Alberto and Carmen Pedrosa only and the Comment he filed was for the Pedrosas; and (c) granted the Motion for
Intervention filed on 6 January 1997 by Senator Raul Roco and allowed him to file his Petition in Intervention not
later than 20 January 1997; and (d) set the case for hearing on 23 January 1997 at 9:30 a.m.

On 17 January 1997, the Demokrasya-Ipagtanggol ang Konstitusyon (DIK) and the Movement of Attorneys for
Brotherhood Integrity and Nationalism, Inc. (MABINI), filed a Motion for Intervention. Attached to the motion was
their Petition in Intervention, which was later replaced by an Amended Petition in Intervention wherein they
contend that:
(1) The Delfin proposal does not involve a mere amendment to, but a revision of, the Constitution because, in the
words of Fr. Joaquin Bernas, SJ., 18 it would involve a change from a political philosophy that rejects unlimited
tenure to one that accepts unlimited tenure; and although the change might appear to be an isolated one, it can
affect other provisions, such as, on synchronization of elections and on the State policy of guaranteeing equal
access to opportunities for public service and prohibiting political dynasties. 19 A revision cannot be done by
initiative which, by express provision of Section 2 of Article XVII of the Constitution, is limited to amendments.

(2) The prohibition against reelection of the President and the limits provided for all other national and local
elective officials are based on the philosophy of governance, "to open up the political arena to as many as there are
Filipinos qualified to handle the demands of leadership, to break the concentration of political and economic powers
in the hands of a few, and to promote effective proper empowerment for participation in policy and decision-
making for the common good" ; hence, to remove the term limits is to negate and nullify the noble vision of the
1987 Constitution.

(3) The Delfin proposal runs counter to the purpose of initiative particularly in a conflict-of-interest situation.
Initiative is intended as a fallback position that may be availed of by the people only if they are dissatisfied with the
performance of their elective officials, but not as a premium for good performance. 20

(4) R.A. No 6735 is deficient and inadequate in itself to be called the enabling law that implements the people’s
initiative on amendments to the Constitution. It fails to state (a) the proper parties who may file the petition, (b)
the appropriate agency before whom the petition is to be filed, (c) the contents of the petition, (d) the publication
of the same, (e) the ways and means of gathering the signatures of the voters nationwide and 3% per legislative
district, (f) the proper parties who may oppose or question the veracity of the signatures, (g) the role of the
COMELEC in the verification of the signatures and the sufficiency of the petition, (h) the appeal from any decision
of the COMELEC, (i) the holding of a plebiscite, and (g) the appropriation of funds for such people’s initiative.
Accordingly, there being no enabling law, the COMELEC has no jurisdiction to hear Delfin’s petition.

(5) The deficiency of R.A. No. 6735 cannot be rectified or remedied by COMELEC Resolution No. 2300, since the
COMELEC is without authority to legislate the procedure for a people’s initiative under Section 2 of Article XVII of
the Constitution. That function exclusively pertains to Congress. Section 20 of R.A. No. 6735 does not constitute a
legal basis for the Resolution, as the former does not set a sufficient standard for a valid delegation of power.

On 20 January 1997, Senator Raul Roco filed his Petition in Intervention. 21 He avers that R.A. No. 6735 is the
enabling law that implements the people’s right to initiate constitutional amendments. This law is a consolidation of
Senate Bill No. 17 and House Bill No. 21505; he co-authored the House Bill and even delivered a sponsorship
speech thereon. He likewise submits that the COMELEC was empowered under Section 20 of that law to
promulgate COMELEC Resolution No. 2300. Nevertheless, he contends that the respondent Commission is without
jurisdiction to take cognizance of the Delfin Petition and to order its publication because the said petition is not the
initiatory pleading contemplated under the Constitution, Republic Act No. 6735, and COMELEC Resolution No. 2300.
What vests jurisdiction upon the COMELEC in an initiative on the Constitution is the filing of a petition for initiative
which is signed by the required number of registered voters. He also submits that the proponents of a
constitutional amendment cannot avail of the authority and resources of the COMELEC to assist them in securing
the required number of signatures, as the COMELEC’s role in an initiative on the Constitution is limited to the
determination of the sufficiency of the initiative petition and the call and supervision of a plebiscite, if
warranted.chanroblesvirtuallawlibrary

On 20 January 1997, LABAN filed a Motion for Leave to Intervene.

The following day, the IBP filed a Motion for Intervention to which it attached a Petition in Intervention raising the
following arguments:

(1) Congress has failed to enact an enabling law mandated under Section 2, Article XVII of the 1987 Constitution.

(2) COMELEC Resolution No. 2300 cannot substitute for the required implementing law on the initiative to amend
the Constitution.

(3) The Petition for Initiative suffers from a fatal defect in that it does not have the required number of signatures.

(4) The petition seeks, in effect a revision of the Constitution, which can be proposed only by Congress or a
constitutional convention. 22

On 21 January 1997, we promulgated a Resolution (a) granting the Motions for Intervention filed by the DIK and
MABINI and by the IBP, as well as the Motion for Leave to Intervene filed by LABAN; (b) admitting the Amended
Petition in Intervention of DIK and MABINI, and the Petitions in Intervention of Senator Roco and of the IBP; (c)
requiring the respondents to file within a nonextendible period of five days their Consolidated Comments on the
aforesaid Petitions in Intervention; and (d) requiring LABAN to file its Petition in Intervention within a
nonextendible period of three days from notice, and the respondents to comment thereon within a nonextendible
period of five days from receipt of the said Petition in Intervention.

At the hearing of the case on 23 January 1997, the parties argued on the following pivotal issues, which the Court
formulated in light of the allegations and arguments raised in the pleadings so far filed:

1. Whether R.A. No. 6735, entitled An Act Providing for a System of Initiative and Referendum and Appropriating
Funds Therefor, was intended to include or cover initiative on amendments to the Constitution; and if so, whether
the Act, as worded, adequately covers such initiative.

2. Whether that portion of COMELEC Resolution No. 2300 (In re: Rules and Regulations Governing the Conduct of
Initiative on the Constitution, and Initiative and Referendum on National and Local Laws) regarding the conduct of
initiative on amendments to the Constitution is valid, considering the absence in the law of specific provisions on
the conduct of such initiative.

3. Whether the lifting of term limits of elective national and local officials, as proposed in the draft "Petition for
Initiative on the 1987 Constitution," would constitute a revision of, or an amendment to, the Constitution.

4. Whether the COMELEC can take cognizance of, or has jurisdiction over, a petition solely intended to obtain an
order (a) fixing the time and dates for signature gathering; (b) instructing municipal election officers to assist
Delfin’s movement and volunteers in establishing signature stations; and (c) directing or causing the publication of,
inter alia, the unsigned proposed Petition for Initiative on the 1987 Constitution.

5. Whether it is proper for the Supreme Court to take cognizance of the petition when there is a pending case
before the COMELEC.

After hearing them on the issues, we required the parties to submit simultaneously their respective memoranda
within twenty days and requested intervenor Senator Roco to submit copies of the deliberations on House Bill No.
21505.

On 27 January 1997, LABAN filed its Petition in Intervention wherein it adopts the allegations and arguments in the
main Petition. It further submits that the COMELEC should have dismissed the Delfin Petition for failure to state a
sufficient cause of action and that the Commission’s failure or refusal to do so constituted grave abuse of discretion
amounting to lack of jurisdiction.

On 28 January 1997, Senator Roco submitted copies of portions of both the Journal and the Record of the House of
Representatives relating to the deliberations of House Bill No. 21505, as well as the transcripts of stenographic
notes on the proceedings of the Bicameral Conference Committee, Committee on Suffrage and Electoral Reforms,
of 6 June 1989 on House Bill No. 21505 and Senate Bill No. 17.

Private respondents Alberto and Carmen Pedrosa filed their Consolidated Comments on the Petitions in Intervention
of Senator Roco, DIK and MABINI, and IBP. 23 The parties thereafter filed, in due time, their separate memoranda.
24

As we stated in the beginning, we resolved to give due course to this special civil action.

For a more logical discussion of the formulated issues, we shall first take up the fifth issue which appears to pose a
prejudicial procedural question.

THE INSTANT PETITION IS VIABLE DESPITE THE PENDENCY IN THE COMELEC OF THE DELFIN PETITION.

Except for the petitioners and intervenor Roco, the parties paid no serious attention to the fifth issue, i.e., whether
it is proper for this Court to take cognizance of this special civil action when there is a pending case before the
COMELEC. The petitioners provide an affirmative answer. Thus:

28. The Comelec has no jurisdiction to take cognizance of the petition filed by private respondent Delfin. This being
so, it becomes imperative to stop the Comelec from proceeding any further, and under the Rules of Court, Rule 65,
Section 2, a petition for prohibition is the proper remedy.

29. The writ of prohibition is an extraordinary judicial writ issuing out of a court of superior jurisdiction and directed
to an inferior court, for the purpose of preventing the inferior tribunal from usurping a jurisdiction with which it is
not legally vested. (People v. Vera, supra., p. 84). In this case the writ is an urgent necessity, in view of the highly
divisive and adverse environmental consequences on the body politic of the questioned Comelec order. The
consequent climate of legal confusion and political instability begs for judicial statesmanship.

30. In the final analysis, when the system of constitutional law is threatened by the political ambitions of man, only
the Supreme Court can save a nation in peril and uphold the paramount majesty of the Constitution.25

It must be recalled that intervenor Roco filed with the COMELEC a motion to dismiss the Delfin Petition on the
ground that the COMELEC has no jurisdiction or authority to entertain the petition. 26 The COMELEC made no
ruling thereon evidently because after having heard the arguments of Delfin and the oppositors at the hearing on
12 December 1996, it required them to submit within five days their memoranda or oppositions/memoranda. 27
Earlier, or specifically on 6 December 1996, it practically gave due course to the Delfin Petition by ordering Delfin
to cause the publication of the petition, together with the attached Petition for Initiative, the signature form, and
the notice of hearing; and by setting the case for hearing. The COMELEC’s failure to act on Roco’s motion to
dismiss and its insistence to hold on to the petition rendered ripe and viable the instant petition under Section 2 of
Rule 65 of the Rules of Court, which provides:

SEC. 2. Petition for prohibition. — Where the proceedings of any tribunal, corporation, board, or person, whether
exercising functions judicial or ministerial, are without or in excess of its or his jurisdiction, or with grave abuse of
discretion, and there is no appeal or any other plain, speedy and adequate remedy in the ordinary course of law, a
person aggrieved thereby may file a verified petition in the proper court alleging the facts with certainty and
praying that judgment be rendered commanding the defendant to desist from further proceedings in the action or
matter specified therein.

It must also be noted that intervenor Roco claims that the COMELEC has no jurisdiction over the Delfin Petition
because the said petition is not supported by the required minimum number of signatures of registered voters.
LABAN also asserts that the COMELEC gravely abused its discretion in refusing to dismiss the Delfin Petition, which
does not contain the required number of signatures. In light of these claims, the instant case may likewise be
treated as a special civil action for certiorari under Section I of Rule 65 of the Rules of Court.

In any event, as correctly pointed out by intervenor Roco in his Memorandum, this Court may brush aside
technicalities of procedure in cases of transcendental importance. As we stated in Kilosbayan, Inc. v. Guingona, Jr.;
28

A party’s standing before this Court is a procedural technicality which it may, in the exercise of its discretion, set
aside in view of the importance of issues raised. In the landmark Emergency Powers Cases, this Court brushed
aside this technicality because the transcendental importance to the public of these cases demands that they be
settled promptly and definitely, brushing aside, if we must, technicalities of procedure.

II

R.A. NO. 6735 INTENDED TO INCLUDE THE SYSTEM OF INITIATIVE ON AMENDMENTS TO THE CONSTITUTION,
BUT IS, UNFORTUNATELY, INADEQUATE TO COVER THAT SYSTEM.

Section 2 of Article XVII of the Constitution provides:

SEC. 2. Amendments to this Constitution may likewise be directly proposed by the people through initiative upon a
petition of at least twelve per centum of the total number of registered voters, of which every legislative district
must be represented by at least three per centum of the registered voters therein. No amendment under this
section shall be authorized within five years following the ratification of this Constitution nor oftener than once
every five years thereafter.

The Congress shall provide for the implementation of the exercise of this right.

This provision is not self-executory. In his book, 29 Joaquin Bernas, a member of the 1986 Constitutional
Commission, stated:

Without implementing legislation Section 2 cannot operate. Thus, although this mode of amending the Constitution
is a mode of amendment which bypasses congressional action, in the last analysis it still is dependent on
congressional action.

Bluntly stated, the right of the people to directly propose amendments to the Constitution through the system of
initiative would remain entombed in the cold niche of the Constitution until Congress provides for its
implementation. Stated otherwise, while the Constitution has recognized or granted that right, the people cannot
exercise it if Congress, for whatever reason, does not provide for its implementation.
This system of initiative was originally included in Section 1 of the draft Article on Amendment or Revision
proposed by the Committee on Amendments and Transitory Provisions of the 1986 Constitutional Commission in its
Committee Report No. 7 (Proposed Resolution No. 332). 30 That section reads as follows:

SEC. 1. Any amendment to, or revision of, this Constitution may be proposed:

(a) by the National Assembly upon a vote of three-fourths of all its members; or

(b) by a constitutional convention; or

(c) directly by the people themselves thru initiative as provided for in Article _____ Section _____ of the
Constitution. 31

After several interpellations, but before the period of amendments, the Committee submitted a new formulation of
the concept of initiative which it denominated as Section 2; thus:

MR. SUAREZ.

Thank you, Madam President. May we respectfully call attention of the Members of the Commission that pursuant
to the mandate given to us last night, we submitted this afternoon a complete Committee Report No. 7 which
embodies the proposed provision governing the matter of initiative. This is now covered by Section 2 of the
complete committee report. With the permission of the Members, may I quote Section 2:

"The people may, after five years from the date of the last plebiscite held, directly propose amendments to this
Constitution thru initiative upon petition of at least ten percent of the registered voters."

This completes the blanks appearing in the original Committee Report No. 7. 32

The interpellations on Section 2 showed that the details for carrying out Section 2 are left to the legislature. Thus:

FR. BERNAS.

Madam President, just two simple, clarificatory questions.

First, on Section 1 on the matter of initiative upon petition of at least 10 percent, there are no details in the
provision on how to carry this out. Do we understand therefore that we are leaving this matter to the legislature?

MR. SUAREZ.

That is right, Madam President.

FR. BERNAS.

And do we also understand, therefore, that for as long as the legislature does not pass the necessary implementing
law on this, this will not operate?

MR. SUAREZ.

That matter was also taken up during the committee hearing, especially with respect to the budget appropriations
which would have to be legislated so that the plebiscite could be called. We deemed it best that this matter be left
to the legislature. The Gentleman is right. In any event, as envisioned, no amendment through the power of
initiative can be called until after five years from the date of the ratification of this Constitution. Therefore, the first
amendment that could be proposed through the exercise of this initiative power would be after five years. It is
reasonably expected that within that five-year period, the National Assembly can come up with the appropriate
rules governing the exercise of this power.

FR. BERNAS.

Since the matter is left to the legislature — the details on how this is to be carried out — is it possible that, in
effect, what will be presented to the people for ratification is the work of the legislature rather than of the people?
Does this provision exclude that possibility?

MR. SUAREZ.

No, it does not exclude that possibility because even the legislature itself as a body could propose that
amendment, maybe individually or collectively, if it fails to muster the three-fourths vote in order to constitute
itself as a constituent assembly and submit that proposal to the people for ratification through the process of an
initiative.

x x x

MS. AQUINO.

Do I understand from the sponsor that the intention in the proposal is to vest constituent power in the people to
amend the Constitution?

MR. SUAREZ.

That is absolutely correct, Madam President.

MS. AQUINO.

I fully concur with the underlying precept of the proposal in terms of institutionalizing popular participation in the
drafting of the Constitution or in the amendment thereof, but I would have a lot of difficulties in terms of accepting
the draft of Section 2, as written. Would the sponsor agree with me that in the hierarchy of legal mandate,
constituent power has primacy over all other legal mandates?

MR. SUAREZ.

The Commissioner is right, Madam President.

MS. AQUINO.

And would the sponsor agree with me that in the hierarchy of legal values, the Constitution is source of all legal
mandates and that therefore we require a great deal of circumspection in the drafting and in the amendments of
the Constitution?

MR. SUAREZ.

That proposition is nondebatable.

MS. AQUINO.

Such that in order to underscore the primacy of constituent power we have a separate article in the Constitution
that would specifically cover the process and the modes of amending the Constitution?

MR. SUAREZ.

That is right, Madam President.

MS. AQUINO.

Therefore, is the sponsor inclined, as the provisions are drafted now, to again concede to the legislature the
process or the requirement of determining the mechanics of amending the Constitution by people’s initiative?

MR. SUAREZ.

The matter of implementing this could very well be placed in the hands of the National Assembly, not unless we
can incorporate into this provision the mechanics that would adequately cover all the conceivable situations. 33

It was made clear during the interpellations that the aforementioned Section 2 is limited to proposals to AMEND —
not to REVISE — the Constitution; thus:

MR. SUAREZ.

. . . This proposal was suggested on the theory that this matter of initiative, which came about because of the
extraordinary developments this year, has to be separated from the traditional modes of amending the Constitution
as embodied in Section 1. The committee members felt that this system of initiative should not extend to the
revision of the entire Constitution, so we removed it from the operation of Section 1 of the proposed Article on
Amendment or Revision. 34
x x x

MS. AQUINO.

In which case, I am seriously bothered by providing this process of initiative as a separate section in the Article on
Amendment. Would the sponsor be amenable to accepting an amendment in terms of realigning Section 2 as
another subparagraph (c) of Section 1, instead of setting it up as another separate section as if it were a self-
executing provision?

MR. SUAREZ.

We would be amenable except that, as we clarified a while ago, this process of initiative is limited to the matter of
amendment and should not expand into a revision which contemplates a total overhaul of the Constitution. That
was the sense that was conveyed by the Committee.

MS. AQUINO.

In other words, the Committee was attempting to distinguish the coverage of modes (a) and (b) in Section 1 to
include the process of revision; whereas the process of initiation to amend, which is given to the public, would only
apply to amendments?

MR. SUAREZ.

That is right. Those were the terms envisioned in the Committee. 35

Amendments to the proposed Section 2 were thereafter introduced by then Commissioner Hilario G. Davide, Jr.,
which the Committee accepted. Thus:

MR. DAVIDE.

Thank you Madam President. I propose to substitute the entire Section 2 with the following:

x x x

MR. DAVIDE.

Madam President, I have modified the proposed amendment after taking into account the modifications submitted
by the sponsor himself and the honorable Commissioners Guingona, Monsod, Rama, Ople, de los Reyes and
Romulo. The modified amendment in substitution of the proposed Section 2 will now read as follows:

"SEC. 2. — AMENDMENTS TO THIS CONSTITUTION MAY LIKEWISE BE DIRECTLY PROPOSED BY THE PEOPLE
THROUGH INITIATIVE UPON A PETITION OF AT LEAST TWELVE PERCENT OF THE TOTAL NUMBER OF REGISTERED
VOTERS, OF WHICH EVERY LEGISLATIVE DISTRICT MUST BE REPRESENTED BY AT LEAST THREE PERCENT OF THE
REGISTERED VOTERS THEREOF. NO AMENDMENT UNDER THIS SECTION SHALL BE AUTHORIZED WITHIN FIVE
YEARS FOLLOWING THE RATIFICATION OF THIS CONSTITUTION NOR OFTENER THAN ONCE EVERY FIVE YEARS
THEREAFTER.

THE NATIONAL ASSEMBLY SHALL BY LAW PROVIDE FOR THE IMPLEMENTATION OF THE EXERCISE OF THIS RIGHT.

MR. SUAREZ.

Madam President, considering that the proposed amendment is reflective of the sense contained in Section 2 of our
completed Committee Report No. 7, we accept the proposed amendment. 36

The interpellations which ensued on the proposed modified amendment to Section 2 clearly showed that it was a
legislative act which must implement the exercise of the right. Thus:

MR. ROMULO.

Under Commissioner Davide’s amendment, is it possible for the legislature to set forth certain procedures to carry
out the initiative . . .?

MR. DAVIDE.
It can.

x x x

MR. ROMULO.

But the Commissioner’s amendment does not prevent the legislature from asking another body to set the
proposition in proper form.

MR. DAVIDE.

The Commissioner is correct. In other words, the implementation of this particular right would be subject to
legislation, provided the legislature cannot determine anymore the percentage of the requirement.

MR. ROMULO.

But the procedures, including the determination of the proper form for submission to the people, may be subject to
legislation.

MR. DAVIDE.

As long as it will not destroy the substantive right to initiate. In other words, none of the procedures to be
proposed by the legislative body must diminish or impair the right conceded here.

MR. ROMULO.

In that provision of the Constitution can the procedures which I have discussed be legislated?

MR. DAVIDE.

Yes. 37

Commissioner Davide also reaffirmed that his modified amendment strictly confines initiative to AMENDMENTS to
— NOT REVISION of — the Constitution. Thus:

MR. DAVIDE.

With pleasure, Madam President.

MR. MAAMBONG.

My first question: Commissioner Davide’s proposed amendment on line 1 refers to "amendment." Does it not cover
the word "revision" as defined by Commissioner Padilla when he made the distinction between the words
"amendments" and "revision" ?

MR. DAVIDE.

No, it does not, because "amendments" and "revision" should be covered by Section 1. So insofar as initiative is
concerned, it can only relate to "amendments" not "revision." 38

Commissioner Davide further emphasized that the process of proposing amendments through initiative must be
more rigorous and difficult than the initiative on legislation. Thus:

MR. DAVIDE.

A distinction has to be made that under this proposal, what is involved is an amendment to the Constitution. To
amend a Constitution would ordinarily require a proposal by the National Assembly by a vote of three-fourths; and
to call a constitutional convention would require a higher number. Moreover, just to submit the issue of calling a
constitutional convention, a majority of the National Assembly is required, the import being that the process of
amendment must be made more rigorous and difficult than probably initiating an ordinary legislation or putting an
end to a law proposed by the National Assembly by way of a referendum. I cannot agree to reducing the
requirement approved by the Committee on the Legislative because it would require another voting by the
Committee, and the voting as precisely based on a requirement of 10 percent. Perhaps, I might present such a
proposal, by way of an amendment, when the Commission shall take up the Article on the Legislative or on the
National Assembly on plenary sessions. 39

The Davide modified amendments to Section 2 were subjected to amendments, and the final version, which the
Commission approved by a vote of 31 in favor and 3 against, reads as follows:

MR. DAVIDE.

Thank you Madam President. Section 2, as amended, reads as follows: "AMENDMENT TO THIS CONSTITUTION MAY
LIKEWISE BE DIRECTLY PROPOSED BY THE PEOPLE THROUGH INITIATIVE UPON A PETITION OF AT LEAST TWELVE
PERCENT OF THE TOTAL NUMBER OF REGISTERED VOTERS, OF WHICH EVERY LEGISLATIVE DISTRICT MUST BE
REPRESENTED BY AT LEAST THREE PERCENT OF THE REGISTERED VOTERS THEREOF. NO AMENDMENT UNDER
THIS SECTION SHALL BE AUTHORIZED WITHIN FIVE YEARS FOLLOWING THE RATIFICATION OF THIS
CONSTITUTION NOR OFTENER THAN ONCE EVERY FIVE YEARS THEREAFTER.

THE NATIONAL ASSEMBLY SHALL BY LAW PROVIDE FOR THE IMPLEMENTATION OF THE EXERCISE OF THIS RIGHT.
40

The entire proposed Article on Amendments or Revisions was approved on second reading on 9 July 1986. 41
Thereafter, upon his motion for reconsideration, Commissioner Gascon was allowed to introduce an amendment to
Section 2 which, nevertheless, was withdrawn. In view thereof, the Article was again approved on Second and
Third Readings on 1 August 1986. 42

However, the Committee on Style recommended that the approved Section 2 be amended by changing "percent" to
"per centum" and "thereof" to "therein" and deleting the phrase "by law" in the second paragraph so that said
paragraph reads: The Congress 43 shall provide for the implementation of the exercise of this right. 44 This
amendment was approved and is the text of the present second paragraph of Section 2.

The conclusion then is inevitable that, indeed, the system of initiative on the Constitution under Section 2 of Article
XVII of the Constitution is not self-executory.

Has Congress "provided" for the implementation of the exercise of this right? Those who answer the question in the
affirmative, like the private respondents and intervenor Senator Roco, point to us R.A. No. 6735.

There is, of course, no other better way for Congress to implement the exercise of the right than through the
passage of a statute or legislative act. This is the essence or rationale of the last minute amendment by the
Constitutional Commission to substitute the last paragraph of Section 2 of Article XVII then reading:

The Congress 45 shall by law provide for the implementation of the exercise of this right.

with

The Congress shall provide for the implementation of the exercise of this right.

This substitute amendment was an investiture on Congress of a power to provide for the rules implementing the
exercise of the right. The "rules" means "the details on how [the right] is to be carried out." 46

We agree that R.A. No. 6735 was, as its history reveals, intended to cover initiative to propose amendments to the
Constitution. The Act is a consolidation of House Bill No. 21505 and Senate Bill No. 17. The former was prepared by
the Committee on Suffrage and Electoral Reforms of the House of Representatives on the basis of two House Bills
referred to it, viz., (a) House Bill No. 497, 47 which dealt with the initiative and referendum mentioned in Sections
1 and 32 of Article VI of the Constitution; and (b) House Bill No. 988, 48 which dealt with the subject matter of
House Bill No. 497, as well as with initiative and referendum under Section 3 of Article X (Local Government) and
initiative provided for in Section 2 of Article XVII of the Constitution. Senate Bill No. 17 49 solely dealt with
initiative and referendum concerning ordinances or resolutions of local government units. The Bicameral
Conference Committee consolidated Senate Bill No. 17 and House Bill No. 21505 into a draft bill, which was
subsequently approved on 8 June 1989 by the Senate 50 and by the House of Representatives. 51 This approved
bill is now R.A. No. 6735.

But is R.A. No. 6735 a full compliance with the power and duty of Congress to "provide for the implementation of
the exercise of the right?"

A careful scrutiny of the Act yields a negative answer.

First. Contrary to the assertion of public respondent COMELEC, Section 2 of the Act does not suggest an initiative
on amendments to the Constitution. The said section reads:
SEC. 2. Statement and Policy. — The power of the people under a system of initiative and referendum to directly
propose, enact, approve or reject, in whole or in part, the Constitution, laws, ordinances, or resolutions passed by
any legislative body upon compliance with the requirements of this Act is hereby affirmed, recognized and
guaranteed. (Emphasis supplied).

The inclusion of the word "Constitution" therein was a delayed afterthought. That word is neither germane nor
relevant to said section, which exclusively relates to initiative and referendum on national laws and local laws,
ordinances, and resolutions. That section is silent as to amendments on the Constitution. As pointed out earlier,
initiative on the Constitution is confined only to proposals to AMEND. The people are not accorded the power to
"directly propose, enact, approve, or reject, in whole or in part, the Constitution" through the system of initiative.
They can only do so with respect to "laws, ordinances, or resolutions."

The foregoing conclusion is further buttressed by the fact that this section was lifted from Section 1 of Senate Bill
No. 17, which solely referred to a statement of policy on local initiative and referendum and appropriately used the
phrases "propose and enact," "approve or reject" and "in whole or in part." 52

Second. It is true that Section 3 (Definition of Terms) of the Act defines initiative on amendments to the
Constitution and mentions it as one of the three systems of initiative, and that Section 5 (Requirements) restates
the constitutional requirements as to the percentage of the registered voters who must submit the proposal. But
unlike in the case of the other systems of initiative, the Act does not provide for the contents of a petition for
initiative on the Constitution. Section 5, paragraph (c) requires, among other things, statement of the proposed
law sought to be enacted, approved or rejected, amended or repealed, as the case may be. It does not include, as
among the contents of the petition, the provisions of the Constitution sought to be amended, in the case of
initiative on the Constitution. Said paragraph (c) reads in full as follows:chanroblesvirtuallawlibrary:red

(c) The petition shall state the following:

c.1 contents or text of the proposed law sought to be enacted, approved or rejected, amended or repealed, as the
case may be;

c.2 the proposition;

c.3 the reason or reasons therefor;

c.4 that it is not one of the exceptions provided therein;

c.5 signatures of the petitioners or registered voters; and

c.6 an abstract or summary proposition is not more than one hundred (100) words which shall be legibly written or
printed at the top of every page of the petition. (Emphasis supplied).

The use of the clause "proposed laws sought to be enacted, approved or rejected, amended or repealed" only
strengthens the conclusion that Section 2, quoted earlier, excludes initiative on amendments to the Constitution.

Third. While the Act provides subtitles for National Initiative and Referendum (Subtitle II) and for Local Initiative
and Referendum (Subtitle III), no subtitle is provided for initiative on the Constitution. This conspicuous silence as
to the latter simply means that the main thrust of the Act is initiative and referendum on national and local laws. If
Congress intended R.A. No. 6735 to fully provide for the implementation of the initiative on amendments to the
Constitution, it could have provided for a subtitle therefor, considering that in the order of things, the primacy of
interest, or hierarchy of values, the right of the people to directly propose amendments to the Constitution is far
more important than the initiative on national and local laws.

We cannot accept the argument that the initiative on amendments to the Constitution is subsumed under the
subtitle on National Initiative and Referendum because it is national in scope. Our reading of Subtitle II (National
Initiative and Referendum) and Subtitle III (Local Initiative and Referendum) leaves no room for doubt that the
classification is not based on the scope of the initiative involved, but on its nature and character. It is "national
initiative," if what is proposed to be adopted or enacted is a national law, or a law which only Congress can pass. It
is "local initiative" if what is proposed to be adopted or enacted is a law, ordinance, or resolution which only the
legislative bodies of the governments of the autonomous regions, provinces, cities, municipalities, and barangays
can pass. This classification of initiative into national and local is actually based on Section 3 of the Act, which we
quote for emphasis and clearer understanding:

SEC. 3. Definition of Terms —

x x x
There are three (3) systems of initiative, namely:

a.1 Initiative on the Constitution which refers to a petition proposing amendments to the Constitution;

a.2 Initiative on Statutes which refers to a petition proposing to enact a national legislation; and

a.3 Initiative on local legislation which refers to a petition proposing to enact a regional, provincial, city, municipal,
or barangay law, resolution or ordinance. (Emphasis supplied).

Hence, to complete the classification under subtitles there should have been a subtitle on initiative on amendments
to the Constitution. 53

A further examination of the Act even reveals that the subtitling is not accurate. Provisions not germane to the
subtitle on National Initiative and Referendum are placed therein, like (1) paragraphs (b) and (c) of Section 9,
which reads:

(b) The proposition in an initiative on the Constitution approved by the majority of the votes cast in the plebiscite
shall become effective as to the day of the plebiscite.

(c) A national or local initiative proposition approved by majority of the votes cast in an election called for the
purpose shall become effective fifteen (15) days after certification and proclamation of the Commission. (Emphasis
supplied).

(2) that portion of Section 11 (Indirect Initiative) referring to indirect initiative with the legislative bodies of local
governments; thus:

SEC. 11. Indirect Initiative. — Any duly accredited people’s organization, as defined by law, may file a petition for
indirect initiative with the House of Representatives, and other legislative bodies. . .

and (3) Section 12 on Appeal, since it applies to decisions of the COMELEC on the findings of sufficiency or
insufficiency of the petition for initiative or referendum, which could be petitions for both national and local
initiative and referendum.

Upon the other hand, Section 18 on "Authority of Courts" under subtitle III on Local Initiative and Referendum is
misplaced, 54 since the provision therein applies to both national and local initiative and referendum. It reads:

SEC. 18. Authority of Courts. — Nothing in this Act shall prevent or preclude the proper courts from declaring null
and void any proposition approved pursuant to this Act for violation of the Constitution or want of capacity of the
local legislative body to enact the said measure.

Curiously, too, while R.A. No. 6735 exerted utmost diligence and care in providing for the details in the
implementation of initiative and referendum on national and local legislation thereby giving them special attention,
it failed, rather intentionally, to do so on the system of initiative on amendments to the Constitution. Anent the
initiative on national legislation, the Act provides for the following:

(a) The required percentage of registered voters to sign the petition and the contents of the petition;

(b) The conduct and date of the initiative;

(c) The submission to the electorate of the proposition and the required number of votes for its approval;

(d) The certification by the COMELEC of the approval of the proposition;

(e) The publication of the approved proposition in the Official Gazette or in a newspaper of general circulation in
the Philippines; and

(f) The effects of the approval or rejection of the proposition. 55

As regards local initiative, the Act provides for the following:

(a) The preliminary requirement as to the number of signatures of registered voters for the petition;

(b) The submission of the petition to the local legislative body concerned;
(c) The effect of the legislative body’s failure to favorably act thereon, and the invocation of the power of initiative
as a consequence thereof;

(d) The formulation of the proposition;

(e) The period within which to gather the signatures;

(f) The persons before whom the petition shall be signed;

(g) The issuance of a certification by the COMELEC through its official in the local government unit concerned as to
whether the required number of signatures have been obtained;

(h) The setting of a date by the COMELEC for the submission of the proposition to the registered voters for their
approval, which must be within the period specified therein;

(i) The issuance of a certification of the result;

(j) The date of effectivity of the approved proposition;

(k) The limitations on local initiative; and

(l) The limitations upon local legislative bodies. 56

Upon the other hand, as to initiative on amendments to the Constitution, R.A. No. 6735, in all of its twenty-three
sections, merely (a) mentions, the word "Constitution" in Section 2; (b) defines "initiative on the Constitution" and
includes it in the enumeration of the three systems of initiative in Section 3; (c) speaks of "plebiscite" as the
process by which the proposition in an initiative on the Constitution may be approved or rejected by the people;
(d) reiterates the constitutional requirements as to the number of voters who should sign the petition; and (e)
provides for the date of effectivity of the approved proposition.

There was, therefore, an obvious downgrading of the more important or the paramount system of initiative. R.A.
No. 6735 thus delivered a humiliating blow to the system of initiative on amendments to the Constitution by
merely paying it a reluctant lip service. 57

The foregoing brings us to the conclusion that R.A. No. 6735 is incomplete, inadequate, or wanting in essential
terms and conditions insofar as initiative on amendments to the Constitution is concerned. Its lacunae on this
substantive matter are fatal and cannot be cured by "empowering" the COMELEC "to promulgate such rules and
regulations as may be necessary to carry out the purposes of [the] Act. 58

The rule is that what has been delegated, cannot be delegated or as expressed in a Latin maxim: potestas delegata
non delegari potest. 59 The recognized exceptions to the rule are as follows:

(1) Delegation of tariff powers to the President under Section 28(2) of Article VI of the Constitution;

(2) Delegation of emergency powers to the President under Section 23(2) of Article VI of the Constitution;

(3) Delegation to the people at large;

(4) Delegation to local governments; and

(5) Delegation to administrative bodies. 60

Empowering the COMELEC, an administrative body exercising quasi-judicial functions, to promulgate rules and
regulations is a form of delegation of legislative authority under no. 5 above. However, in every case of permissible
delegation, there must be a showing that the delegation itself is valid. It is valid only if the law (a) is complete in
itself, setting forth therein the policy to be executed, carried out, or implemented by the delegate; and (b) fixes a
standard — the limits of which are sufficiently determinate and determinable — to which the delegate must
conform in the performance of his functions. 61 A sufficient standard is one which defines legislative policy, marks
its limits, maps out its boundaries and specifies the public agency to apply it. It indicates the circumstances under
which the legislative command is to be effected. 62

Insofar as initiative to propose amendments to the Constitution is concerned, R.A. No. 6735 miserably failed to
satisfy both requirements in subordinate legislation. The delegation of the power to the COMELEC is then invalid.

III
COMELEC RESOLUTION NO. 2300, INSOFAR AS IT PRESCRIBES RULES AND REGULATIONS ON THE CONDUCT OF
INITIATIVE ON AMENDMENTS TO THE CONSTITUTION, IS VOID.

It logically follows that the COMELEC cannot validly promulgate rules and regulations to implement the exercise of
the right of the people to directly propose amendments to the Constitution through the system of initiative. It does
not have that power under R.A. No. 6735. Reliance on the COMELEC’s power under Section 2(1) of Article IX-C of
the Constitution is misplaced, for the laws and regulations referred to therein are those promulgated by the
COMELEC under (a) Section 3 of Article IX-C of the Constitution, or (b) a law where subordinate legislation is
authorized and which satisfies the "completeness" and the "sufficient standard" tests.

IV

COMELEC ACTED WITHOUT JURISDICTION OR WITH GRAVE ABUSE OF DISCRETION IN ENTERTAINING THE
DELFIN PETITION.

Even if it be conceded ex gratia that R.A. No. 6735 is a full compliance with the power of Congress to implement
the right to initiate constitutional amendments, or that it has validly vested upon the COMELEC the power of
subordinate legislation and that COMELEC Resolution No. 2300 is valid, the COMELEC acted without jurisdiction or
with grave abuse of discretion in entertaining the Delfin Petition.

Under Section 2 of Article XVII of the Constitution and Section 5(b)of R.A. No. 6735, a petition for initiative on the
Constitution must be signed by at least 12% of the total number of registered voters of which every legislative
district is represented by at least 3% of the registered voters therein. The Delfin Petition does not contain
signatures of the required number of voters. Delfin himself admits that he has not yet gathered signatures and that
the purpose of his petition is primarily to obtain assistance in his drive to gather signatures. Without the required
signatures, the petition cannot be deemed validly initiated.

The COMELEC acquires jurisdiction over a petition for initiative only after its filing. The petition then is the initiatory
pleading. Nothing before its filing is cognizable by the COMELEC, sitting en banc. The only participation of the
COMELEC or its personnel before the filing of such petition are (1) to prescribe the form of the petition; 63 (2) to
issue through its Election Records and Statistics Office a certificate on the total number of registered voters in each
legislative district; 64 (3) to assist, through its election registrars, in the establishment of signature stations; 65
and (4) to verify, through its election registrars, the signatures on the basis of the registry list of voters, voters’
affidavits, and voters’ identification cards used in the immediately preceding election. 66

Since the Delfin Petition is not the initiatory petition under R.A. No. 6735 and COMELEC Resolution No. 2300, it
cannot be entertained or given cognizance of by the COMELEC. The respondent Commission must have known that
the petition does not fall under any of the actions or proceedings under the COMELEC Rules of Procedure or under
Resolution No. 2300, for which reason it did not assign to the petition a docket number. Hence, the said petition
was merely entered as UND, meaning, undocketed. That petition was nothing more than a mere scrap of paper,
which should not have been dignified by the Order of 6 December 1996, the hearing on 12 December 1996, and
the order directing Delfin and the oppositors to file their memoranda or oppositions. In so dignifying it, the
COMELEC acted without jurisdiction or with grave abuse of discretion and merely wasted its time, energy, and
resources.

The foregoing considered, further discussion on the issue of whether the proposal to lift the term limits of elective
national and local officials is an amendment to, and not a revision of, the Constitution is rendered unnecessary, if
not academic.

CONCLUSION

This petition must then be granted, and the COMELEC should be permanently enjoined from entertaining or taking
cognizance of any petition for initiative on amendments to the Constitution until a sufficient law shall have been
validly enacted to provide for the implementation of the system.

We feel, however, that the system of initiative to propose amendments to the Constitution should no longer be
kept in the cold; it should be given flesh and blood, energy and strength. Congress should not tarry any longer in
complying with the constitutional mandate to provide for the implementation of the right of the people under that
system.

WHEREFORE, judgment is hereby rendered

a) GRANTING the instant petition;


b) DECLARING R. A. No. 6735 inadequate to cover the system of initiative on amendments to the Constitution, and
to have failed to provide sufficient standard for subordinate legislation;

c) DECLARING void those parts of Resolution No. 2300 of the Commission on Elections prescribing rules and
regulations on the conduct of initiative or amendments to the Constitution; and

d) ORDERING the Commission on Elections to forthwith DISMISS the DELFIN petition (UND-96-037).

The Temporary Restraining Order issued on 18 December 1996 is made permanent as against the Commission on
Elections, but is LIFTED as against private respondents.

Resolution on the matter of contempt is hereby reserved.

SO ORDERED.

Narvasa, C.J., Regalado, Romero, Bellosillo, Kapunan, Hermosisima and Torres, Jr., JJ., concur.

Padilla, J., took no part.

[G.R. No. 109404. January 22, 1996.]

FLORENCIO EUGENIO, doing business under the name E & S Delta Village, Petitioner, v. EXECUTIVE
SECRETARY FRANKLIN Y. DRILLON, HOUSING AND LAND USE REGULATORY BOARD (HLURB) AND
PROSPERO PALMIANO, Respondents.chanroblesvirtual|awlibrary

Edwin Y. Chua, for Petitioner.

The Solicitor-General, for Private Respondents.

SYLLABUS

1. ADMINISTRATIVE LAW; OFFICE OF THE PRESIDENT; APPEAL THEREFROM MAY BE TAKEN TO THE, COURT OF
APPEALS. — Under Revised Administrative Circular No. 1-95 "appeals from judgments or final orders of the . . .
Office of the President . . . may be taken to the Court of Appeals . . . ." However, in order to hasten the resolution
of this case, which was deemed submitted for decision one and a half years ago, the Court resolved to make an
exception to the said Circular in the interest of speedy justice.

2. ID.; ID.; DECISIONS THEREOF BECOMES FINAL AFTER THE LAPSE OF 15 DAYS FROM RECEIPT OF THE COPY
UNLESS A MOTION FOR RECONSIDERATION IS FILED WITHIN SUCH PERIOD. — Petitioner’s motion for
reconsideration of the (Executive Secretary’s) Decision was filed only on the 21st. day from receipt thereof. Said
decision had become final and executory, pursuant to Section 7 of Administrative Order No. 18 which provides
that" (d)ecisions/ resolutions/ orders of the Office of the President shall, except as otherwise provided for by
special laws, become final after the lapse of fifteen (15) days from receipt of a copy thereof x x x, unless such
period."

3. CIVIL LAW; THE SUBDIVISION AND CONDOMINIUM BUYERS’ PROTECTIVE DECREE (P.D. 957) GIVEN
RETROACTIVE EFFECT AS INFERRED FROM THE INTENTION OF THE LAW. — Respondent Executive Secretary did
not abuse his discretion, and that P.D. 957 is to be given retroactive effect so as to cover even those contracts
executed prior to its enactment in 1976. P.D. 957 did not expressly provide for retroactivity in its entirety, but such
can be plainly inferred from the unmistakable intent of the law. The intent of the law, as culled from its preamble
and from the situation, circumstances and conditions it sought to remedy, must be enforced. P.D. 957 was enacted
to provide a protective mantle over citizens who may fall prey to the manipulations and machinations of
‘unscrupulous subdivision and condominium sellers’, and such intent is expressed clearly in its preamble. The
legislative intent must have been to remedy the alarming situation by having P.D. 957 operate retrospectively even
upon contracts already in existence at the time of its enactment. Indeed, a strictly prospective application of the
statute will effectively emasculate it, for then the State will not be able to exercise its regulatory functions and curb
fraudulent schemes and practices perpetrated under or in connection with those contracts and transactions which
happen to have been entered into prior to P.D. 957, despite obvious prejudice to the very subdivision lot buyers
sought to be protected by said law. And Sections 20, 21 and 23 of P.D. 957 by their very terms, have retroactive
effect and will impact upon even those contracts and transactions entered into prior to P.D. 957’s enactment .

4. ID.; ID.; FAILURE TO DEVELOP SUBDIVISION; JUSTIFIES DESISTANCE FROM FURTHER PAYMENT OF
AMORTIZATIONS THEREIN. — As P.D. 957 is undeniably applicable to the contracts in question, it follows that
Section 23 thereof had been properly invoked by private respondent when he desisted from making further
payment to petitioner due to petitioner’s failure to develop the subdivision project according to the approved plans
and within the time limit for complying with the same.

RESOLUTION

PANGANIBAN, J.:

Did the failure to develop a subdivision constitute legal justification for the non-payment of amortization by a buyer
on installment under land purchase agreements entered into prior to the enactment of P.D. 957, "The Subdivision
and Condominium Buyers’ Protective Decree" ? This is the major question raised in the instant Petition seeking to
set aside the decision of the respondent Executive Secretary dated March 10, 1992 in O.P. Case No. 3761, which
affirmed the order of the respondent HLURB dated September 1, 1987.

On May 10, 1972, private respondent purchased on installment basis from petitioner and his co-owner/developer
Fermin Salazar, two lots in the E & S Delta Village in Quezon City.

Acting on complaints for non-development docketed as NHA Cases Nos. 2619 and 2620 filed by the Delta Village
Homeowners’ Association, Inc., the National Housing Authority (NHA) rendered a resolution on January 17, 1979
inter alia ordering petitioner to cease and desist from making further sales of lots in said village or in any project
owned by him.chanroblesvirtuallawlibrary

While NHA Cases Nos. 2619 and 2620 were still pending, private respondent filed with the Office of Appeals,
Adjudication and Legal Affairs (OAALA) of the Human Settlements Regulatory Commission (HSRC), a complaint
(Case No. 80-589) against petitioner and spouses Rodolfo and Adelina Relevo alleging that, in view of the above
NHA resolution, he suspended payment of his amortization, but that petitioner resold one of the two lots to the said
spouses Relevo, in whose favor title to the said property was registered. Private respondent further alleged that he
suspended his payments because of petitioner’s failure to develop the village. Private respondent prayed for the
annulment of the sale to the Relevo spouses and for reconveyance of the lot to him.

On October 11, 1983, the OAALA rendered a decision upholding the right of petitioner to cancel the contract with
private respondent and dismissed private respondent’s complaint.

On appeal, the Commission Proper of the HSRC reversed the OAALA and, applying P.D. 957, ordered petitioner to
complete the subdivision development and to reinstate private respondent’s purchase contract over one lot, and as
to the other, "it appearing that Transfer Certificate of Title No. 269546 has been issued to . . . spouses Rodolfo and
Adelina Relevo . . ., the management of E & S Delta Village is hereby ordered to immediately refund to the
complainant-appellant (herein private respondent) all payments made thereon, plus interests computed at legal
rates from date of receipt hereof until fully paid." : virtual lawlibrary

The respondent Executive Secretary, on appeal, affirmed the decision of the HSRC and denied the subsequent
Motion for Reconsideration for lack of merit and for having been filed out of time. Petitioner has now filed this
Petition for review before the Supreme Court.

Under Revised Administrative Circular No. 1-95, "appeals from judgments or final orders of the . . . Office of the
President . . . may be taken to the Court of Appeals. . .." However, in order to hasten the resolution of this case,
which was deemed submitted for decision one and a half years ago, the Court resolved to make an exception to the
said Circular in the interest of speedy justice.

In his Petition before this Court, petitioner avers that the Executive Secretary erred in applying P.D. 957 and in
concluding that the non-development of the E & S Delta Village justified private respondent’s non-payment of his
amortization. Petitioner avers that inasmuch as the land purchase agreements were entered into in 1972, prior to
the effectivity of P.D. 957 in 1976, said law cannot govern the transaction.

We hold otherwise, and herewith rule that respondent Executive Secretary did not abuse his discretion, and that
P.D. 957 is to be given retroactive effect so as to cover even those contracts executed prior to its enactment in
1976.

P.D. 957 did not expressly provide for retroactivity in its entirety, but such can be plainly inferred from the
unmistakable intent of the law.

The intent of the law, as called from its preamble and from the situation, circumstances and conditions it sought to
remedy, must be enforced. On this point, a leading authority on statutory construction stressed:
‘The intent of a statute is the law. . . .. The intent is the vital part, the essence of the law, and the primary rule of
construction is to ascertain and give effect to the intent. The intention of the legislature in enacting a law is the law
itself. and must be enforced when ascertained, although it may not be consistent with the strict letter of the statute
. Courts will not follow the letter of a statute when it leads away from the true intent and purpose of the legislature
and to conclusions inconsistent with the general purpose of the act. . . .. In construing statutes the proper course is
to start out and follow the true intent of the legislature and to adopt that sense which harmonizes best with the
context and promotes in the fullest manner the apparent policy and objects of the legislature.’ 1 (Emphasis
supplied.)

It goes without saying that, as an instrument of social justice, the law must favor the weak and the disadvantaged,
including, in this instance, small lot buyers and aspiring homeowners. P.D. 957 was enacted with no other end in
view than to provide a protective mantle over helpless citizens who may fall prey to the manipulations and
machinations of ‘unscrupulous subdivision and condominium sellers’, and such intent is nowhere expressed more
clearly than in its preamble, pertinent portions of which read as follows:

"WHEREAS, it is the policy of the State to afford its inhabitants the requirements of decent human settlement and
to provide them with ample opportunities for improving their quality of life;chanroblesvirtuallawlibrary

"WHEREAS, numerous reports reveal that many real estate subdivision owners, developers, operators, and/or
sellers have reneged on their representations and obligations to Provide and maintain properly subdivision roads,
drainage. sewerage, water systems, lighting systems, and other similar basic requirements, thus endangering; the
health and safety of home and lot buyers;

"WHEREAS, reports of alarming magnitude also show cases of swindling and fraudulent manipulations perpetrated
by unscrupulous subdivision and condominium sellers and Operators. such as failure to deliver titles to the buyers
or titles free from liens and encumbrance, and to pay real estate taxes, and fraudulent sales of the same
subdivision lots to different innocent purchasers for value;" 2 (Emphasis supplied.)

From a dedicated reading of the preamble, it is manifest and unarguable that the legislative intent must have been
to remedy the alarming situation by having P.D. 957 operate retrospectively even upon contracts already in
existence at the time of its enactment. Indeed, a strictly prospective application of the statute will effectively
emasculate it, for then the State will not be able to exercise its regulatory functions and curb fraudulent schemes
and practices perpetrated under or in connection with those contracts and transactions which happen to have been
entered into prior to P.D. 957, despite obvious prejudice to the very subdivision lot buyers sought to be protected
by said law. It is hardly conceivable that the legislative authority intended to permit such a loophole to remain and
continue to be a source of misery for subdivision lot buyers well into the future.chanroblesvirtual|awlibrary

Adding force to the arguments for the retroactivity of P.D. 957 as a whole are certain of its provisions, viz.,
Sections 20, 21 and 23 thereof, which by their very terms have retroactive effect and will impact upon even those
contracts and transactions entered into prior to P.D. 957’s enactment:

"SEC. 20. Time of Completion. — Every owner or developer shall construct and provide the facilities,
improvements, infrastructures and other forms of development, including water supply and lighting facilities, which
are offered and indicated in the approved subdivision or condominium plans, brochures, prospectus, printed
matters letters or in any form of advertisement, within one year from the date of the issuance of the license for the
subdivision or condominium project or such other period of time as may be fixed by the Authority.

"SEC. 21. Sales Prior to Decree. — In cases of subdivision lots or condominium units sold or disposed of prior to
the effectivity of this Decree, it shall be incumbent upon the owner or developer of the subdivision or condominium
project to complete compliance with his or its obligations as provided in the preceding section within two years
from the date of this Decree unless otherwise extended by the Authority or unless an adequate performance bond
is filed in accordance with Section 6 hereof.

"Failure of the owner or developer to comply with the obligations under this and the preceding provisions shall
constitute a violation punishable under Section 38 and 39 of this Decree.chanroblesvirtuallawlibrary

"SEC. 23. Non-Forfeiture of Payments. — No installment payment made by a buyer in a subdivision or


condominium project for the lot or unit he contracted to buy shall be forfeited in favor of the owner or developer
when the buyer, after due notice to the owner or developer, desists from further payment due to the failure of the
owner or developer to develop the subdivision or condominium project according to the approved plans and within
the time limit for complying with the same. Such buyer may, at his option, be reimbursed the total amount paid
including amortization interests but excluding delinquency interests, with interest thereon at the legal rate."
(Emphasis supplied)

On the other hand, as argued by the respondent Executive Secretary, the application of P.D. 957 to the contracts
in question will be consistent with paragraph 4 of the contracts themselves, which expressly provides:

"(4) The party of the First Part hereby binds himself to subdivide, develop and improve the entire area covered by
Transfer Certificate of Title No. 168119 of which the parcels of lands subject of this contract is a part in accordance
with the provisions of Quezon City Ordinance No. 6561, S-66 and the Party of the First Part further binds himself to
comply with and abide by all laws, rules and regulations respecting the subdivision and development of lots for
residential purposes as may be presently in force or may hereafter be required by laws passed by the Congress of
the Philippines or required by regulations of the Bureau of Lands, the General Registration Office and other
government agencies." (Emphasis supplied) : virtual lawlibrary

Moreover, as P.D. 957 is undeniably applicable to the contracts in question, it follows that Section 23 thereof had
been properly invoked by private respondent when he desisted from making further payment to petitioner due to
petitioner’s failure to develop the subdivision project according to the approved plans and within the time limit for
complying with the same. Such incomplete development of the subdivision and non-performance of specific
contractual and statutory obligations on the part of the subdivision-owner had been established in the findings of
the HLURB which in turn were confirmed by the respondent Executive Secretary in his assailed Decision.
Furthermore, respondent Executive Secretary also gave due weight to the following matters: although private
respondent started to default on amortization payments beginning May 1975, so that by the end of July 1975 he
had already incurred three consecutive arrearages in payments, nevertheless, the petitioner, who had the
cancellation option available to him under the contract, did not exercise or utilize the same in timely fashion but
delayed until May 1979 when he finally made up his mind to cancel the contracts. But by that time the land
purchase agreements had already been overtaken by the provisions of P.D. 957, promulgated on July 12, 1976. (In
any event, as pointed out by respondent HLURB and seconded by the Solicitor General, the defaults in amortization
payments incurred by private respondent had been effectively condoned by the petitioner, by reason of the latter’s
tolerance of the defaults for a long period of time.)

Likewise, there is no merit in petitioner’s contention that respondent Secretary exceeded his jurisdiction in ordering
the refund of private respondent’s payments on Lot 12 although (according to petitioner) only Lot 13 was the
subject of the complaint. Respondent Secretary duly noted that the supporting documents submitted substantiating
the claim of non-development justified such order inasmuch as such claim was also the basis for non-payment of
amortization on said Lot. 12.

Finally, since petitioner’s motion for reconsideration of the (Executive Secretary’s) Decision dated March 10, 1992
was filed only on the 21st day from receipt thereof, said decision had become final and executory, pursuant to
Section 7 of Administrative Order No. 18 dated February 12, 1987, which provides that"
(d)ecisions/resolutions/orders of the Office of the President shall, except as otherwise provided for by special laws,
become final after the lapse of fifteen (15) days from receipt of a copy thereof . . ., unless a motion for
reconsideration thereof is filed within such period."

WHEREFORE, there being no showing of grave abuse of discretion, the petition is DENIED due course and is hereby
DISMISSED. No costs.

SO ORDERED.

Narvasa, C.J., Davide, Jr., Melo and Francisco, JJ., concur.

[G.R. Nos. L-47757-61. January 28, 1980.]

THE PEOPLE OF THE PHILIPPINES, ABUNDIO R. ELLO, as 4th Assistant Provincial Fiscal of Bohol, and
VICENTE DE LA SERNA, JR., as complainant and private prosecutor, Petitioners, v. HON. VICENTE B.
ECHAVES, JR., as Judge of the Court of First Instance of Bohol, Branch II, ANO DACULLO, GERONIMO
OROYAN, MARIO APARICI, RUPERTO CAJES and MODESTO SUELLO, Respondents.

DECISION

AQUINO, J.:

The legal issue in this case is whether Presidential Decree No. 772, which penalizes squatting and similar acts,
applies to agricultural lands. The decree (which took effect on August 20, 1975) provides:

"SECTION 1. Any person who, with the use of force, intimidation or threat, or taking advantage of the absence or
tolerance of the landowner, succeeds in occupying or possessing the property of the latter against his will for
residential, commercial or any other purposes, shall be punished by an imprisonment ranging from six months to
one year or a fine of not less than one thousand nor more than five thousand pesos at the discretion of the court,
with subsidiary imprisonment in case of insolvency." (2nd paragraph is omitted.)

The record shows that on October 25, 1977 Fiscal Abundio R. Ello filed with the lower court separate informations
against sixteen persons charging them with squatting as penalized by Presidential Decree No. 772. The information
against Mario Aparici, which is similar to the other fifteen informations, reads:

"That sometime in the year 1974 continuously up to the present at barangay Magsaysay, municipality of Talibon,
province of Bohol, Philippines and within the jurisdiction of this Honorable Court, the above-named accused, with
stealth and strategy, enter into, occupy and cultivate a portion of a grazing land physically occupied, possessed
and claimed by Atty. Vicente de la Serna, Jr. as successor to the pasture applicant Celestina de la Serna of Pasture
Lease Application No. 8919, Accused’s entrance into the area has been and is still against the will of the offended
party; did then and there willfully, unlawfully, and feloniously squat and cultivate a portion of the said grazing land:
said cultivating has rendered a nuisance to and has deprived the pasture applicant from the full use thereof for
which the land applied for has been intended, that is preventing applicant’s cattle from grazing the whole area,
thereby causing damage and prejudice to the said applicant-possessor-occupant, Atty. Vicente de la Serna, Jr."
(sic)

Five of the informations, wherein Ano Dacullo, Geronimo Oroyan, Mario Aparici, Ruperto Cajes and Modesto Suello
were the accused, were raffled to Judge Vicente B. Echaves, Jr. of Branch II (Criminal Cases Nos. 1824, 1828,
1832, 1833 and 1839, respectively).

Before the accused could be arraigned, Judge Echaves motu proprio issued an omnibus order dated December 9,
1977 dismissing the five informations on the grounds (1) that it was alleged that the accused entered the land
through "stealth and strategy", whereas under the decree the entry should be effected "with the use of force,
intimidation or threat, or taking advantage of the absence or tolerance of the landowner", and (2) that under the
rule of ejusdem generis the decree does not apply to the cultivation of a grazing land.

Because of that order, the fiscal amended the informations by using in lieu of "stealth and strategy" the expression
"with threat, and taking advantage of the absence of the ranchowner and/or tolerance of the said ranchowner." The
fiscal asked that the dismissal order be reconsidered and that the amended informations be admitted.

The lower court denied the motion. It insisted that the phrase "and for other purposes" in the decree does not
include agricultural purposes because its preamble does not mention the Secretary of Agriculture and makes
reference to the affluent class.

From the order of dismissal, the fiscal appealed to this Court under Republic Act No. 5440. The appeal is devoid of
merit.

We hold that the lower court correctly ruled that the decree does not apply to pasture lands because its preamble
shows that it was intended to apply to squatting in urban communities or more particularly to illegal constructions
in squatter areas made by well-to-do individuals. The squatting complained of involves pasture lands in rural areas.

The preamble of the decree is quoted below:

"WHEREAS, it came to my knowledge that despite the issuance of Letter of Instruction No. 19 dated October 2,
1972, directing the Secretaries of National Defense, Public Works and Communications, Social Welfare and the
Director of Public Works, the PHHC General Manager, the Presidential Assistant on Housing and Rehabilitation
Agency, Governors, City and Municipal Mayors, and City and District Engineers, ‘to remove all illegal constructions
including buildings on and along esteros and river banks, those along railroad tracks and those built without
permits on public and private property.’ Squatting is still a major problem in urban communities all over the
country;

"WHEREAS, many persons or entities found to have been unlawfully occupying public and private lands belong to
the affluent class;

"WHEREAS, there is a need to further intensify the government’s drive against this illegal and nefarious practice."

It should be stressed that Letter of Instruction No. 19 refers to illegal constructions on public and private property.
It is complemented by Letter of Instruction No. 19-A which provides for the relocation of squatters in the interest of
public health, safety and peace and order.

On the other hand, it should be noted that squatting on public agricultural lands, like the grazing lands involved in
this case, is punished by Republic Act No. 947 which makes it unlawful for any person, corporation or association to
forcibly enter or occupy public agricultural lands. That law provides:
"SECTION 1. It shall be unlawful for any person, corporation or association to enter or occupy, through force,
intimidation, threat, strategy or stealth, any public agricultural land including such public lands as are granted to
private individuals under the provisions of the Public Land Act or any other laws providing for the disposal of public
agricultural lands in the Philippines, and are duly covered by the corresponding applications required for the
purpose notwithstanding the fact that title thereto still remains in the Government; or for any person, natural or
judicial, to instigate, induce or force another to commit such acts."

Violations of the law are punished by a fine of not exceeding one thousand pesos or imprisonment for not more
than one year, or both such fine and imprisonment in the discretion of the court, with subsidiary imprisonment in
case of insolvency. (See People v. Lapasaran, 100 Phil. 40.)

The rule of ejusdem generis (of the same kind or species) invoked by the trial court does not apply to this case.
Here, the intent of the decree is unmistakable. It is intended to apply only to urban communities, particularly to
illegal constructions. The rule of ejusdem generis is merely a tool of statutory construction which is resorted to
when the legislative intent is uncertain (Genato Commercial Corp. v. Court of Tax Appeals, 104 Phil. 615, 618; 28
C.J.S. 1049-50).

WHEREFORE, the trial court’s order of dismissal is affirmed. No costs.

SO ORDERED.

Barredo, Antonio, Concepcion, Jr. and Abad Santos, J., concur.

CHAPTER VII

EXTRINSIC AIDS IN CONSTRUCTION AND INTERPRETATION

[G.R. No. L-28329. August 7, 1975.]

COMMISSIONER OF CUSTOMS, Petitioner, v. ESSO STANDARD EASTERN, INC., (Formerly: Standard-


Vacuum Refining Corp. (Phil.), Respondent.

Solicitor General Antonio P. Barredo, Assistant Solicitor General Antonio A. Torres and Solicitor Antonio
M. Martinez for Petitioner.

Carlos J . Valdez & Associates for Respondent.

SYNOPSIS

The respondent was held liable by the Commissioner of Custom for the payment of the amount of P775.62
representing special import tax on certain articles imported by it under R.A.. 387, otherwise known as the
Petroleum Act of 1949. A petition for review was filed with the Court of Tax Appeals. The Commissioner’s ruling
was reversed and refund of the amount paid by the respondent under protest was ordered. Hence this recourse by
the petitioner, contending that the special import tax under R.A.. 1394 is separate and distinct from the custom
duty prescribed by the Tariff and Custom Code, and that the exemption enjoyed by the respondent from the
payment of customs duties under the Petroleum Act of 1949 does not include exemption from the payment of the
special import tax provided in R.A.. 1394.

The Supreme Court, taking into consideration the rules of statutory construction and other extrinsic aids in
interpreting the ambiguous language of statutes, held that the exemption granted by R.A.. 387 embraces special
import tax imposed by R.A. 1394 for it is very clear that the legislature wanted to continue the incentive of tax
exemption for the continuing development of the petroleum industry.

Petition to reverse decision of the Court of Tax Appeals denied.

SYLLABUS

1. STATUTES; INTERPRETATION OF AMBIGUOUS STATUTES. — Where a statutes is ambiguous courts may


examine both the printed pages of the published Act as well as those extrinsic matters that may aid in construing
the meaning of the status, of all bill and purposes to be accomplished by the measure.
2. ID.; ID.; FUNDAMENTALS RULES. — In order to determine the true intent of the legislature, the particular
clauses and phrases of the statute should not be taken as detached and isolated expression, but the whole and
every part thereof must be considered in fixing the meaning of any of its parts. In fact every statute should receive
such construction as will make it harmonize with the pre-existing body of law. Antagonism between the Act to be
interpreted and existing or previous laws is to be avoided, unless it was clearly the intention of the legislature that
such antagonism should arise and one amends or appeals the other either expressly or by application. In addition
the courts may take judicial notice of the origin and history of the statutes which they are called upon to construct
and administer, and facts which effect their derivation, validity and operation.

3. ID.; ID.; R.A. 387 ENACTED TO INTENSIFY PETROLEUM EXPLORATION. — The title of Republic Act 387 and the
provisions of its articles (Art. 103-104) give a clue to the intent of the Philippine Congress, which is to encourage
the exploration and development of the petroleum resources of the country. Through the instrumentality of said
law, it declared in no uncertain terms that the intensification of the exploration for petroleum be carried on
unflinchingly even if, for the time being, no taxes, both national and local, may be collected from the industry. This
is the unequivocal intention of the Philippine Congress when the language of the Petroleum Act is examined. Until
this law or any substantial portion thereof is clearly amended or repealed by subsequent statutes, the intention of
the legislature must be upheld.

4. ID.; ID.; R.A. 387 IN RELATION TO R.A. 1394; EXEMPTION FROM CUSTOMS DUTIES GRANTED BY R.A.. 387
EMBRACES SPECIAL IMPORT TAX IMPOSED BY R.A. 1394. — Republic Act 1394, known as the Special Import Tax
Law repealed and revoked six earlier statutes which had something to do with the imposition of special levies
and/or exemption of certain importation’s from the burden of the special import taxes or levies. On the other hand,
it is apparent that Republic Act 387, the Petroleum Act, had been spared from the pruning Knife of Congress,
although this latter law had granted more concessions and tax-exemption privileges than any of the statutes that
were amended, repealed or revoked by Republic Act 1394. The answer must be that the Congress of the Philippines
saw fit to preserve the privileges granted the Petroleum Law of 1949 in order to keep the door open to the
exploitation and development of the petroleum resources of the country with such incentives as are given under
the law.

5. ID.; ID.; ID.; ID.; REPEAL BY IMPLICATION NOT FAVORED. — Republic Act 387 was intended to encourage the
exploitation, exploration and development of the petroleum resources of the country by giving it the necessary
incentive in the form of tax exemptions. This is the raison d’ etre for the generous grant of tax exemption to those
who would invest their financial resources towards the achievement of this national economic goal. On the
contention that the exemption enjoyed under Republic Act 387 have been abrogated by R.A. 1394 the Court holds
that repeal by implication is not favored unless it is manifest that the legislature so intended. As laws are presumed
to be passed with deliberation and with full knowledge of all existing ones on the subject, it is logical to conclude
that in passing a statute it was not intended to interfere with abrogate any former law relating to the same matter,
unless the repugnancy between the two is not only irreconcilable but also clear and convincing as a result of the
language used, or unless the latter act fully embraces the subject matter of the earlier.

DECISION

ESGUERRA, J.:

Appeal from the decision of the Court of Tax Appeals reversing the Commissioner of Customs’ decision holding
respondent ESSO Standard Eastern, Inc., (formerly the Standard-Vacuum Refining Corporation (Phil.) and
hereinafter referred to as ESSO) liable in the total sum of P775.62 as special import tax on certain articles
imported by the latter under Republic Act No. 387, otherwise known as the Petroleum Act of 1949.

Respondent ESSO is the holder of Refining Concession No. 2, issued by the Secretary of Agriculture and Natural
Resources on December 9, 1957, and operates a petroleum refining plant in Limay, Bataan. Under Article 103 of
Republic Act No. 387 which provides: "During the five years following the granting of any concession, the
concessionaire may import free of customs duty, all equipment, machinery, material, instruments, supplies and
accessories," respondent imported and was assessed the special import tax (which it paid under protest) on the
following separate importations:

1) One carton, scientific instruments with C & F value of $163.59; assessed a special import tax in the amount of
P31.98 Airport Protest No. 10);

2) One carton of recorder parts with C & F value of $221.56; assessed special import tax in the amount of P43.82
(Airport Protest No. 11);

3) One carton of valves with C & F value of $310.58; assessed special import tax in the amount of P60.72 (Airport
Protest No. 12);

4) One box of parts for Conversion boilers and Auxiliary Equipment with C & F value of $2,389.69; assessed special
import tax in the amount of P467.00 (Airport Protest No. 15);

5) One carton of X-ray films with C & F value of $132.80; assessed special import tax in the amount of P26.00
(Airport Protest No. 16); and

6) One carton of recorder parts with C & F value of $750.39; assessed special import tax in the amount of P147.00
(Airport Protest No. 17). 1

The Collector of Customs on February 16, 1962, held that respondent ESSO was subject to the payment of the
special import tax provided in Republic Act No. 1394, as amended by R.A. No. 2352, and dismissed the protests. 2

On March 1, 1962, respondent appealed the ruling of the Collector of Customs to the Commissioner of Customs
who, on March 19, 1965, affirmed the decision of said Collector of Customs. 3

On July 2, 1965, respondent ESSO filed a petition with the Court of Tax Appeals for review of the decision of the
Commissioner of Customs.chanroblesvirtuallawlibrary

The Court of Tax Appeals, on September 30, 1967, reversed the decision of herein petitioner Commissioner of
Customs and ordered refund of the amount of P775.62 to respondent ESSO which the latter had paid under
protest. 4

This decision of the Court of Tax Appeals is now before this Court for review.

Petitioner contends that the special import tax under Republic Act No. 1394 is separate and distinct from the
customs duty prescribed by the Tariff and Customs Code, and that the exemption enjoyed by respondent ESSO
from the payment of customs duties under the Petroleum Act of 1949 does not include exemption from the
payment of the special import tax provided in R.A. No. 1394. 5

For its stand petitioner puts forward this rationale:

"A perusal of the provisions of R.A. No. 1394 will show that the legislature considered the special import tax as a
tax distinct from customs duties as witness the fact that Section 2(a) of the said law made separate mention of
customs duties and special import tax when it provided that . . . if as a result of the application of the schedule
therein, the total revenue derived from the customs duties and from the special import tax on goods, . . . imported
from the United States is less in any calendar year than the proceeds from the exchange tax imposed under
Republic Act Numbered Six Hundred and One, as amended, on such goods, articles or products during the calendar
year 1955, the President may, by proclamation, suspend the reduction of the special import tax for the next
succeeding calendar year . . .

"If it were the intention of Congress to exempt the holders of petroleum refinery concessions like the protestant
(respondent herein), such exemption should have been clearly stated in the statute. Exemptions are never
presumed. They must be expressed in the clearest and most unambiguous language and not left to mere
implication." 6

Specifically, petitioner in his brief submitted two assignment of errors allegedly committed by the Court of Tax
Appeals in the controverted decision, to wit:

1st assignment of error:

THE COURT OF TAX APPEALS ERRED IN HOLDING THAT THE TERM "CUSTOMS DUTY" IN ARTICLE 103 OF
REPUBLIC ACT NO. 387 INCLUDES THE SPECIAL IMPORT TAX IMPOSED BY REPUBLIC ACT NO. 1394;

2nd assignment of error:

THE COURT OF TAX APPEALS ERRED IN HOLDING THAT EXEMPTION FROM PAYMENT OF CUSTOMS DUTIES UNDER
REPUBLIC ACT NO. 387 INCLUDES EXEMPTION FROM PAYMENT OF THE SPECIAL IMPORT TAX.

On the other hand, the Court of Tax Appeals rationalized the ground for its ruling thus:

"If we are to adhere, as we should, to the plain and obvious meaning of words in consonance with settled rules of
interpretation, it seems clear that the special import tax is an impost or a charge on the importation or bringing
into the Philippines of all goods, articles or products subject thereto, for the phrase "import tax on all goods,
articles or products imported or brought into the Philippines" in explicit and unambiguous terms simply means
customs duties. It is hardly necessary to add that "customs duties" are simply taxes assessed on merchandise
imported from, or exported to a foreign country.

"And being a charge upon importation, the special import tax is essentially a customs duty, or at least partakes of
the character thereof."

Citing numberous American decisions and definitions of terms "customs duties," "duties," "imposts," "levies," "tax,"
and "tolls," and their distinctions, including some pronouncements of this Court on the subject, the Court of Tax
Appeals in its decision, went to great lengths to show that the term "special import tax" as used in R.A. No. 1394
includes customs duties. It sees the special import tax as nothing but an impost or a charge on the importation or
bringing into the Philippines of goods, articles or products. 7

To clinch its theory the Court of Tax Appeals cited the similarity in the basis of computation of the customs duty as
well as the similarity in the phraseology of Section 3 of Republic Act No. 1394 (which establishes the special import
tax) and Section 201 of the Tariff & Customs Code (the basic law providing for and regulating the imposition of
customs duties and imposts on importations). 8

For its part, private respondent, ESSO, in its answer to the petition, leaned heavily on the same arguments as
those given by the Tax Court, the burden of which is that the special import tax law is a customs law. 9

It is clear that the only issue involved in this case is whether or not the exemption enjoyed by herein private
respondent ESSO Standard Eastern, Inc. from customs duties granted by Republic Act No. 387, or the Petroleum
Act of 1949, should embrace or include the special import tax imposed by R.A. No. 1394, or the Special Import Tax
Law.

We have examined the records of this case thoroughly and carefully considered the arguments presented by both
parties and We are convinced that the only thing left to this Court to do is to determine the intention of the
legislature through interpretation of the two statutes involved, i.e., Republic Act No. 1394 and Republic Act No.
387.chanroblesvirtual|awlibrary

It is a well accepted principle that where a statute is ambiguous, as Republic Act No. 1394 appears to be, courts
may examine both the printed pages of the published Act as well as those extrinsic matters that may aid in
construing the meaning of the statute, such as the history of its enactment, the reasons for the passage of the bill
and purposes to be accomplished by the measure. 10

Petitioner in the first assignment of error took exception to the finding of the Court of Tax Appeals that "The
language of Republic Act No. 1394 seems to leave no room for doubt that the law intends that the phrase ‘Special
import tax’ is taken to include customs duties" and countered with the argument that "An examination of the
provisions of Republic Act No. 1394 will indubitably reveal that Congress considered the special import tax as a tax
different from customs duties, as may be seen from the fact that Section 2(a) of said law made separate mention
of customs duties and special import tax . . ." Thus:

". . . if as a result of the application of the schedule therein the total revenue derived from the customs duties and
from the special import tax on goods, . . . imported from the United States is less in any calendar year than the
proceeds from the exchange tax imposed under Republic Act Numbered Six Hundred and One, as amended, on
such goods, articles or products during the calendar year 1955, the President may, by Proclamation, suspend the
reduction of the special import tax for the next succeeding calendar year . . ."

Petitioner further argues:

"Customs duties are prescribed by the Tariff and Customs Code, while the special import tax is provided for by
Republic Act No. 1394. If our legislature had intended to classify the special import tax as customs duty, the said
Act would not have expressly exempted from payment of the special import tax importations of machinery,
equipment, accessories, and spare parts for use of industries, without distinguishing whether the industries
referred to are the industries exempt from the payment of customs duties or the non-exempt ones (Sec. 6). It is
sufficient that the imported machinery, etc., is for the use of any industry." 11

A study of petitioner’s two assignments of errors shows that one is anchored on practically the same ground as the
other: both involve the interpretation of R.A. No. 387 (The Petroleum Act of 1949) in relation with R.A. No. 1394
(The Special Import Tax Law).

While the petitioner harps on particular clauses and phrases found in the two cited laws, which in a way was
likewise resorted to by the respondent ESSO, it would do Us well to restate the fundamental rule in the
construction of a statute.

In order to determine the true intent of the legislature, the particular clauses and phrases of the statute should not
be taken as detached and isolated expressions, but the whole and every part thereof must be considered in fixing
the meaning of any of its parts. In fact every statute should receive such construction as will make it harmonize
with the pre-existing body of laws. Antagonism between the Act to be interpreted and existing or previous laws is
to be avoided, unless it was clearly the intention of the legislature that such antagonism should arise and one
amends or repeals the other, either expressly or by implication.

Another rule applied by this Court is that the courts may take judicial notice of the origin and history of the
statutes which they are called upon to construe and administer, and of facts which affect their derivation, validity
and operation. 12

Applying the above stated rules and principles, let us consider the history, the purpose and objectives of Republic
Act No. 387 as it relates to Republic Act No. 1394 and other laws passed by the Congress of the Philippines insofar
as they relate to each other.

Republic Act No. 387, the Petroleum Act of 1949, has this for its title, to wit:

AN ACT TO PROMOTE THE EXPLORATION, DEVELOPMENT, EXPLOITATION, AND UTILIZATION OF THE PETROLEUM
RESOURCES OF THE PHILIPPINES; TO ENCOURAGE THE CONSERVATION OF SUCH PETROLEUM RESOURCES; TO
AUTHORIZE THE SECRETARY OF AGRICULTURE AND NATURAL RESOURCES TO CREATE AN ADMINISTRATION UNIT
AND A TECHNICAL BOARD IN THE BUREAU OF MINES; TO APPROPRIATE FUNDS THEREFOR; AND FOR OTHER
PURPOSES.

Art. 103 of said Act reads;

"ART. 103. Customs duties. — During the five years following the granting of any concessions, the concessionaire
may import free of customs duty, all equipment, machinery, material, instruments, supplies and accessories.

x x x

Art. 102 of the Same law insofar as pertinent, provides:

"ART. 102. Work obligations, taxes, royalties not to be charged. — . . .; nor shall any other special taxes or levies
be applied to such concessions, nor shall concessionaires under this Act be subjected to any provincial, municipal,
or other local taxes or levies nor shall any sales tax be charged on any petroleum produced from the concession or
portion thereof, manufactured by the concessionaire and used in the working of his concession. . . . ."

Art. 104, still of the same Act, reads:

ART. 104. No export tax to be imposed. — No export tax shall be levied upon petroleum produced from
concessions granted under this Act."

The title of Republic Act No. 387 and the provisions of its three articles just cited give a clue to the intent of the
Philippine legislature, which is to encourage the exploitation and development of the petroleum resources of the
country. Through the instrumentality of said law, it declared in no uncertain terms that the intensification of the
exploration for petroleum must be carried on unflinchingly even if, for the time being, no taxes, both national and
local, may be collected from the industry. This is the unequivocal intention of the Philippine Congress when the
language of the Petroleum Act is examined. Until this law or any substantial portion thereof is clearly amended or
repealed by subsequent statutes, the intention of the legislature must be upheld.

Against this unambiguous language of R.A. No. 387, there is the subsequent legislation. R.A. No. 1394, the Special
Import Tax Law, which, according to the herein petitioner, shows that the legislature considered the special import
tax as a tax distinct from customs duties.

Republic Act No. 1394, otherwise known as the Special Import Tax Law, is entitled as follows:

AN ACT TO IMPOSE A SPECIAL IMPORT TAX ON ALL GOODS, ARTICLES OR PRODUCTS IMPORTED OR BROUGHT
INTO THE PHILIPPINES, AND TO REPEAL REPUBLIC ACTS NUMBERED SIX HUNDRED AND ONE, EIGHT HUNDRED
AND FOURTEEN, EIGHT HUNDRED AND SEVENTY-ONE, ELEVEN HUNDRED AND SEVENTY-FIVE, ELEVEN HUNDRED
AND NINETY-SEVEN AND THIRTEEN HUNDRED AND SEVENTY-FIVE.

The title indicates unmistakably that it is repealing six prior statutes. As will be seen later, all these laws dealt with
the imposition of a special excise tax on foreign exchange or other form of levy on importation of goods into the
country.

Section 1 of Republic Act No. 1394 reads as follows:


"SECTION 1. Except as herein otherwise provided, there shall be levied, collected and paid as special import tax on
all goods, articles or products imported or brought into the Philippines, irrespective of source, during the period and
in accordance with the rates provided for in the following schedule:

x x x"

It would appear that by the provision of Section 1 of this Act, the pertinent provision of the Petroleum Law, for
which there appears to be no proviso to the contrary, has been modified or altered.

Section 6 of Republic Act No. 1394 declares that the tax provided for in its Section 1 shall not be imposed against
importation into the Philippines of machinery and/or raw materials to be used by new and necessary industries as
determined in accordance with R.A. No. 901 and a long list of other goods, articles, machinery, equipment,
accessories and others.

We shall now examine the six statutes repealed by R.A. No. 1394, namely:

R.A. No. 601 is an Act imposing a special excise tax of 17% on foreign exchange sold by the Central Bank or its
agents. This is known as the Exchange Tax Law;

R.A. No. 814 amended Sections one, two and five and repealed Sections three and four of R.A. No. 601;

R.A. No. 871 amended Sections one and two of R.A. No. 601, as amended earlier by R.A. No. 814;

R.A. No. 1175 amended further Sections one and two of R.A. No. 601, as amended;

R.A. No. 1197 amended furthermore R.A. No. 601 as amended previously by R.A. No. 1175;

R.A. No. 1375 amended Sections one and two of R.A. No. 601 as amended by R.A. Nos. 1175 and 1197.

As can be seen from the foregoing, in one fell swoop, Republic Act No. 1394 repealed and revoked six earlier
statutes which had something to do with the imposition of special levies and/or exemption of certain importations
from the burden of the special import taxes or levies. On the other hand, it is apparent that R.A. No. 387, the
Petroleum Act, had been spared from the pruning knife of Congress, although this latter law had granted more
concessions and tax-exemption privileges than any of the statutes that were amended, repealed or revoked by R.A.
No. 1394. The answer must be that the Congress of the Philippine saw fit to preserve the privileges granted under
the Petroleum Law of 1949 in order to keep the door open to the exploitation and development of the petroleum
resources of the country with such incentives as are given under that law.

This ascertained will and intention of the legislature finds a parallelism in a case brought earlier before this Court.

A fishpond owner was slapped with taxes as a "merchant" by the Collector of Internal Revenue. He paid under
protest and filed an action to recover the taxes paid, claiming that he was an agriculturist and not a merchant.
When this Court was called upon to interpret the provisions of the Internal Revenue Law on whether fish is an
agricultural product which falls under the exemption provisions of said law, it inquired into the purpose of the
legislature in establishing the exemption for agricultural products. We held::red

"The first inquiry, therefore, must relate to the purpose the legislature had in mind in establishing the exemption
contained in the clause now under consideration. It seems reasonable to assume that it was due to the belief on
the part of the law-making body that by exempting agricultural products from this tax the farming industry would
be favored and the development of the resources of the country encouraged . . ." 13

Having this in mind, particularly the manner in which extrinsic aids, the history of the enactment of the statute and
purpose of the legislature in employing a clause or provision in the law had been applied in determining the true
intent of the lawmaking body, We are convinced that R.A. No. 387, The Petroleum Act of 1949, was intended to
encourage the exploitation, exploration and development of the petroleum resources of the country by giving it the
necessary incentive in the form of tax exemptions. This is the raison d etre for the generous grant of tax
exemptions to those who would invest their financial resources towards the achievement of this national economic
goal.

On the contention of herein petitioner that the exemptions enjoyed by respondent ESSO under R.A. No. 387 have
been abrogated by R.A. No. 1394, We hold that repeal by implication is not favored unless it is manifest that the
legislature so intended. As laws are presumed to be passed with deliberation and with full knowledge of all existing
ones on the subject, it is logical to conclude that in passing a statute it was not intended to interfere with or
abrogate any former law relating to the same matter, unless the repugnancy between the two is not only
irreconcilable but also clear and convincing as a result of the language used, or unless the latter act fully embraces
the subject matter of the earlier. 14

As observed earlier, Congress lined up for revocation by Republic Act No. 1394 six statutes dealing with the
imposition of special imposts or levies or the granting of exemptions from special import taxes. Yet, considering the
tremendous amount of revenues it was losing under the Petroleum Law of 1949, it failed to include the latter
statute among those it chose to bury by the Special Import Tax Law. The reason for this is very clear: The
legislature wanted to continue the incentives for the continuing development of the petroleum industry.

It is not amiss to mention herein passing that contrary to the theory of the herein petitioner, R.A. No. 387 had not
been repealed by R.A. No. 2352 which expressly abrogated Section 6 of R.A. No. 1394 but did not repeal any part
of R.A. No. 387. Therefore, the exemption granted by Republic Act No. 387 still stands. cdi

WHEREFORE, taking into consideration the weight given by this Court to the findings and conclusions of the Court
of Tax Appeals on a matter it is well-equipped to handle, which findings and conclusions. We find no reason to
overturn, the petition of the Commissioner of Customs to reverse the decision of the Court of Tax Appeals should
be, as it is hereby, denied.

No costs.

SO ORDERED.

Castro, Makasiar, Muñoz Palma and Martin, JJ., concur.

G.R. No. L-33693-94 May 31, 1979

MISAEL P. VERA, as Commissioner of Internal Revenue, and THE FAIR TRADE BOARD, petitioner,
vs.
HON. SERAFIN R. CUEVAS, as Judge of the Court of First Instance of Manila, Branch IV, INSTITUTE OF EVAPORATED
FILLED MILK MANUFACTURERS OF THE PHILIPPINES, INC., CONSOLIDATED MILK COMPANY (PHIL.) INC., and MILK
INDUSTRIES, INC., respondents.

Solicitor General Felix Q. Antonio and Solicitor Bernardo P. Pardo for petitioners.

Sycip, Salazar, Luna, Manalo & Feliciano for private respondents.

DE CASTRO, J.:

This is a petition for certiorari with preliminary injunction to review the decision rendered by respondent judge, in Civil Case No.
52276 and in Special Civil Action No. 52383 both of the Court of First Instance of Manila.

Plaintiffs, in Civil Case No. 52276 private respondents herein, are engaged in the manufacture, sale and distribution of filled milk
products throughout the Philippines. The products of private respondent, Consolidated Philippines Inc. are marketed and sold under
the brand Darigold whereas those of private respondent, General Milk Company (Phil.), Inc., under the brand "Liberty;" and those of
private respondent, Milk Industries Inc., under the brand "Dutch Baby." Private respondent, Institute of Evaporated Filled Milk
Manufacturers of the Philippines, is a corporation organized for the principal purpose of upholding and maintaining at its highest the
standards of local filled milk industry, of which all the other private respondents are members.

Civil Case No. 52276 is an action for declaratory relief with ex-parte petition for preliminary injunction wherein plaintiffs pray for an
adjudication of their respective rights and obligations in relation to the enforcement of Section 169 of the Tax Code against their
filled milk products.

The controversy arose from the order of defendant, Commissioner of Internal Revenue now petitioner herein, requiring plaintiffs-
private respondents to withdraw from the market all of their filled milk products which do not bear the inscription required by Section
169 of the Tax Code within fifteen (15) days from receipt of the order with the explicit warning that failure of plaintiffs' private
respondents to comply with said order will result in the institution of the necessary action against any violation of the aforesaid order.
Section 169 of the Tax Code reads as follows:

Section 169. Inscription to be placed on skimmed milk. — All condensed skimmed milk and all milk in whatever
form, from which the fatty part has been removed totally or in part, sold or put on sale in the Philippines shall be
clearly and legibly marked on its immediate containers, and in all the language in which such containers are
marked, with the words, "This milk is not suitable for nourishment for infants less than one year of age," or with
other equivalent words.

The Court issued a writ of preliminary injunction dated February 16, 1963 restraining the Commissioner of Internal Revenue from
requiring plaintiffs' private respondents to print on the labels of their rifled milk products the words, "This milk is not suitable for
nourishment for infants less than one year of age or words of similar import, " as directed by the above quoted provision of Law, and
from taking any action to enforce the above legal provision against the plaintiffs' private respondents in connection with their rifled
milk products, pending the final determination of the case, Civil Case No. 52276, on the merits.

On July 25, 1969, however, the Office of the Solicitor General brought an appeal from the said order by way of certiorari to the
Supreme Court. 1 In view thereof, the respondent court in the meantime suspended disposition of these cases but in view of the
absence of any injunction or restraining order from the Supreme Court, it resumed action on them until their final disposition therein.

Special Civil Action No. 52383, on the other hand, is an action for prohibition and injunction with a petition for preliminary injunction.
Petitioners therein pray that the respondent Fair Trade Board desist from further proceeding with FTB I.S. No. I . entitled "Antonio R.
de Joya vs. Institute of Evaporated Milk Manufacturers of the Philippines, etc." pending final determination of Civil Case No. 52276.
The facts of this special civil action show that on December 7, 1962, Antonio R. de Joya and Sufronio Carrasco, both in their
individual capacities and in their capacities as Public Relations Counsel and President of the Philippine Association of Nutrition,
respectively, filed FTB I.S. No. 1 with Fair Trade Board for misleading advertisement, mislabeling and/or misbranding. Among other
things, the complaint filed include the charge of omitting to state in their labels any statement sufficient to Identify their filled milk
products as "imitation milk" or as an imitation of genuine cows milk. and omitting to mark the immediate containers of their filled milk
products with the words: "This milk is not suitable for nourishment for infants less than one year of age or with other equivalent
words as required under Section 169 of the Tax Code. The Board proceeded to hear the complaint until it received the writ of
preliminary injunction issued by the Court of First Instance on March 19, 1963.

Upon agreement of the parties, Civil Case No. 52276 and Special Civil Action No. 52383 were heard jointly being intimately related
with each other, with common facts and issues being also involved therein. On April 16, 1971, the respondent court issued its
decision, the dispositive part of which reads as follows:

Wherefore, judgment is hereby rendered:

In Civil Case No. 52276:

(a) Perpetually restraining the defendant, Commissioner of Internal Revenue, his agents, or employees from
requiring plaintiffs to print on the labels of their filled milk products the words: "This milk is not suitable for
nourishment for infants less than one year of age" or words with equivalent import and declaring as nun and
void and without authority in law, the order of said defendant dated September 28, 1961, Annex A of the
complaint, and the Ruling of the Secretary of Finance, dated November 12, 1962, Annex G of the complaint;
and

In Special Civil Action No. 52383:

(b) Restraining perpetually the respondent Fair Trade Board, its agents or employees from continuing in the
investigation of the complaints against petitioners docketed as FTB I.S. No. 2, or any charges related to the
manufacture or sale by the petitioners of their filled milk products and declaring as null the proceedings so far
undertaken by the respondent Board on said complaints. (pp. 20- 21, Rollo).

From the above decision of the respondent court, the Commissioner of Internal Revenue and the Fair Trade Board joined together
to file the present petition for certiorari with preliminary injunction, assigning the following errors:

I. THE LOWER COURT ERRED IN RULING THAT SEC. TION 169 OF THE TAX CODE HAS BEEN
REPEALED BY IMPLICATION.

II. THE LOWER COURT ERRED IN RULING THAT SECTION 169 OF THE TAX CODE HAS LOST ITS TAX
PURPOSE, AND THAT COMMISSIONER NECESSARILY LOST HIS AUTHORITY TO ENFORCE THE SAME
AND THAT THE PROPER AUTHORITY TO PROMOTE THE HEALTH OF INFANTS IS THE FOOD AND
DRUG ADMINISTRATION, THE SECRETARY OF HEALTH AND THE SECRETARY OF JUSTICE, AS
PROVIDED FOR IN RA 3720, NOT THE COMMISSIONER OF INTERNAL REVENUE.

III. THE LOWER COURT ERRED IN RULING THAT THE POWER TO INVESTIGATE AND TO PROSECUTE
VIOLATIONS OF FOOD LAWS IS ENTRUSTED TO THE FOOD AND DRUG INSPECTION, THE FOOD AND
DRUG ADMINISTRATION, THE SECRETARY OF HEALTH AND THE SECRETARY OF JUSTICE, AND THAT
THE FAIR TRADE BOARD IS WITHOUT JURISDICTION TO INVESTIGATE AND PROSECUTE ALLEGED
MISBRANDING, MISLABELLING AND/OR MISLEADING ADVERTISEMENT OF FILLED MILK PRODUCTS.
(pp, 4-5, Rollo).

The lower court did not err in ruling that Section 169 of the Tax Code has been repealed by implication. Section 169 was enacted in
1939, together with Section 141 (which imposed a Specific tax on skimmed milk) and Section 177 (which penalized the sale of
skimmed milk without payment of the specific tax and without the legend required by Section 169). However, Section 141 was
expressly repealed by Section 1 of Republic Act No. 344, and Section 177, by Section 1 of Republic Act No. 463. By the express
repeal of Sections 141 and 177, Section 169 became a merely declaratory provision, without a tax purpose, or a penal sanction.

Moreover, it seems apparent that Section 169 of the Tax Code does not apply to filled milk. The use of the specific and qualifying
terms "skimmed milk" in the headnote and "condensed skimmed milk" in the text of the cited section, would restrict the scope of the
general clause "all milk, in whatever form, from which the fatty pat has been removed totally or in part." In other words, the general
clause is restricted by the specific term "skimmed milk" under the familiar rule of ejusdem generis that general and unlimited terms
are restrained and limited by the particular terms they follow in the statute.

Skimmed milk is different from filled milk. According to the "Definitions, Standards of Purity, Rules and Regulations of the Board of
Food Inspection," skimmed milk is milk in whatever form from which the fatty part has been removed. Filled milk, on the other hand,
is any milk, whether or not condensed, evaporated concentrated, powdered, dried, dessicated, to which has been added or which
has been blended or compounded with any fat or oil other than milk fat so that the resulting product is an imitation or semblance of
milk cream or skim milk." The difference, therefore, between skimmed milk and filled milk is that in the former, the fatty part has
been removed while in the latter, the fatty part is likewise removed but is substituted with refined coconut oil or corn oil or both. It
cannot then be readily or safely assumed that Section 169 applies both to skimmed milk and filled milk.

The Board of Food Inspection way back in 1961 rendered an opinion that filled milk does not come within the purview of Section
169, it being a product distinct from those specified in the said Section since the removed fat portion of the milk has been replaced
with coconut oil and Vitamins A and D as fortifying substances (p. 58, Rollo). This opinion bolsters the Court's stand as to its
interpretation of the scope of Section 169. Opinions and rulings of officials of the government called upon to execute or implement
administrative laws command much respect and weight. (Asturias Sugar Central Inc. vs. Commissioner of Customs, G. R. No. L-
19337, September 30, 1969, 29 SCRA 617; Tan, et. al. vs. The Municipality of Pagbilao et. al., L-14264, April 30, 1963, 7 SCRA
887; Grapilon vs. Municipal Council of Carigara L-12347, May 30, 1961, 2 SCRA 103).

This Court is, likewise, induced to the belief that filled milk is suitable for nourishment for infants of all ages. The Petitioners
themselves admitted that: "the filled milk products of the petitioners (now private respondents) are safe, nutritious, wholesome and
suitable for feeding infants of all ages" (p. 44, Rollo) and that "up to the present, Filipino infants fed since birth with filled milk have
not suffered any defects, illness or disease attributable to their having been fed with filled milk." (p. 45, Rollo).

There would seem, therefore, to be no dispute that filled milk is suitable for feeding infants of all ages. Being so, the declaration
required by Section 169 of the Tax Code that filled milk is not suitable for nourishment for infants less than one year of age would, in
effect, constitute a deprivation of property without due. process of law.

Section 169 is being enforced only against respondent manufacturers of filled milk product and not as against manufacturers,
distributors or sellers of condensed skimmed milk such as SIMILAC, SMA, BREMIL, ENFAMIL, OLAC, in which, as admitted by the
petitioner, the fatty part has been removed and substituted with vegetable or corn oil. The enforcement of Section 169 against the
private respondents only but not against other persons similarly situated as the private respondents amounts to an unconstitutional
denial of the equal pro petition of the laws, for the law, equally enforced, would similarly offend against the Constitution. Yick Wo vs.
Hopkins, 118 U.S. 356,30 L. ed. 220).

As stated in the early part of this decision, with the repeal of Sections 141 and 177 of the Tax Code, Section 169 has lost its tax
purpose. Since Section 169 is devoid of any tax purpose, petitioner Commissioner necessarily lost his authority to enforce the same.
This was so held by his predecessor immediately after Sections 141 and 177 were repealed in General Circular No. V-85 as stated
in paragraph IX of the Partial Stipulation of facts entered into by the parties, to wit:

... As the act of sewing skimmed milk without first paying the specific tax thereon is no longer unlawful and the
enforcement of the requirement in regard to the placing of the proper legend on its immediate containers is a
subject which does not come within the jurisdiction of the Bureau of Internal Revenue, the penal provisions of
Section 177 of the said Code having been repealed by Republic Act No. 463. (p. 102, Rollo).

Petitioner's contention that he still has jurisdiction to enforce Section 169 by virtue of Section 3 of the Tax Code which provides that
the Bureau of Internal Revenue shall also "give effect to and administer the supervisory and police power conferred to it by this
Code or other laws" is untenable. The Bureau of Internal Revenue may claim police power only when necessary in the enforcement
of its principal powers and duties consisting of the "collection of all national internal revenue taxes, fees and charges, and the
enforcement of all forfeitures, penalties and fines connected therewith." The enforcement of Section 169 entails the promotion of the
health of the nation and is thus unconnected with any tax purpose. This is the exclusive function of the Food and Drug
Administration of the Department of Health as provided for in Republic Act No. 3720. In particular, Republic Act No. 3720 provides:
Section 9. ... It shall be the duty of the Board (Food and Drug Inspection), conformably with the rules and
regulations, to hold hearings and conduct investigations relative to matters touching the Administration of this
Act, to investigate processes of food, drug and cosmetic manufacture and to subject reports to the Food and
Drug Administrator, recommending food and drug standards for adoption. Said Board shall also perform such
additional functions, properly within the scope of the administration thereof, as maybe assigned to it by the Food
and Drug Administrator. The decisions of the Board shall be advisory to the Food and Drug Administrator.

Section 26. ...

xxx xxx xxx

(c) Hearing authorized or required by this Act shall be conducted by the Board of Food and Drug Inspection
which shall submit recommendation to the Food and Drug Administrator.

(d) When it appears to the Food and Drug Administrator from the reports of the Food and Drug Laboratory that
any article of food or any drug or cosmetic secured pursuant to Section 28 of this Act is adulterated or branded
he shall cause notice thereof to be given to the person or persons concerned and such person or persons shall
be given an opportunity to subject evidence impeaching the correctness of the finding or charge in question.

(e) When a violation of any provisions of this Act comes to the knowledge of the Food and Drug Administrator of
such character that a criminal prosecution ought to be instituted against the offender, he shall certify the facts to
the Secretary of Justice through the Secretary of Health, together with the chemists' report, the findings of the
Board of Food and Drug Inspection, or other documentary evidence on which the charge is based.

(f) Nothing in this Act shall be construed as requiring the Food and Drug Administrator to certify for prosecution
pursuant to subparagraph (e) hereof, minor violations of this Act whenever he believes that public interest will
be adequately served by a suitable written notice or warning.

The aforequoted provisions of law clearly show that petitioners, Commissioner of Internal Revenue and the Fair Trade Board, are
without jurisdiction to investigate and to prosecute alleged misbranding, mislabeling and/or misleading advertisements of filled milk.
The jurisdiction on the matters cited is vested upon the Board of Food and Drug inspection and the Food and Drug Administrator,
with the Secretary of Health and the Secretary of Justice, also intervening in case criminal prosecution has to be instituted. To hold
that the petitioners have also jurisdiction as would be the result were their instant petition granted, would only cause overlapping of
powers and functions likely to produce confusion and conflict of official action which is neither practical nor desirable.

WHEREFORE, the decision appealed from is hereby affirmed en toto. No costs.

SO ORDERED.

Teehankee, (Chairman), Fernandez, Melencio-Herrera, JJ., concur.

[G.R. No. L-43760. August 21, 1976.]

PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS (PAFLU), Petitioner, v. BUREAU OF LABOR


RELATIONS, HONORABLE CARMELO C. NORIEL, NATIONAL FEDERATION OF FREE LABOR UNIONS
(NAFLU), and PHILIPPINE BLOOMING MILLS CO., INC., Respondents.

Guevara, Pineda, Guevara & Castillon for Petitioner.

Olalia, Dimapilis & Associates for respondent Union (NAFLU).

Assistant Solicitor General Reynato S. Puno and Solicitor Jesus V. Diaz for respondent Bureau of Labor
Relations, etc., Et. Al.

DECISION

FERNANDO, J.:

A certification by respondent Director of Labor Relations, Carmelo C. Noriel, that respondent National Federation of
Free Labor Unions (NAFLU) as the exclusive bargaining agent of all the employees in the Philippine Blooming Mills,
Company, Inc. disregarding the objection raised by petitioner, the Philippine Association of Free Labor Unions
(PAFLU), is assailed in this certiorari proceeding. Admittedly, in the certification election held on February 27, 1976,
respondent Union obtained 429 votes as against 414 of petitioner Union. Again, admittedly, under the Rules and
Regulations implementing the present Labor Code, a majority of the valid votes cast suffices for certification of the
victorious labor union as the sole and exclusive bargaining agent. 1 There were four votes cast by employees who
did not want any union. 2 On its face therefore, respondent Union ought to have been certified in accordance with
the above applicable rule. Petitioner, undeterred, would seize upon the doctrine announced in the case of Allied
Workers Association of the Philippines v. Court of Industrial Relations 3 that spoiled ballots should be counted in
determining the valid votes cast. Considering there were seventeen spoiled ballots, it is the submission that there
was a grave abuse of discretion on the part of respondent Director. Implicit in the comment of respondent Director
of Labor Relations, 4 considered as an answer, is the controlling weight to be accorded the implementing rule
above-cited, no inconsistency being shown between such rule and the present Labor Code. Under such a view, the
ruling in the Allied Workers Association case that arose during the period when it was the Industrial Peace Act 5
that was in effect and not the present law, no longer possesses relevance. It cannot and should not be applied. It is
not controlling. There was no abuse of discretion then, much less a grave one.

This Court is in agreement. The law is on the side of respondent Director, not to mention the decisive fact
appearing in the petition itself that at most, only ten of the spoiled ballots "were intended for the petitioner Union,"
6 thus rendering clear that it would on its own showing obtain only 424 votes as against 429 for respondent
Union. Certiorari does not lie.

1. What is of the essence of the certification process, as noted in Lakas Ng Manggagawang Pilipino v. Benguet
Consolidated, Inc. 7 "is that every labor organization be given the opportunity in a free and honest election to
make good its claim that it should be the exclusive collective bargaining representative." 8 Petitioner cannot
complain. It was given that opportunity. It lost in a fair election. It came out second best. The implementing rule
favors, as it should, respondent Union. It obtained a majority of the valid votes cast. So our law prescribes. It is
equally the case in the United States as this excerpt from the work of Cox and Bok makes clear: "It is a well-
settled rule that a representative will be certified even though less than a majority of all the employees in the unit
cast ballots in favor of the union. It is enough that the union be designated by a majority of the valid ballots, and
this is so even though only a small proportion of the eligible voters participates. Following the analogy of political
elections, the courts have approved this practice of the Board." 9

2. There is this policy consideration. The country is at present embarked on a wide-scale industrialization project.
As a matter of fact, respondent firm is engaged in such activity. Industrialization, as noted by Professor Smith,
Merrifield and Rothschild, "can thrive only as there is developed a stable structure of law and order in the
productive sector." 10 That objective is best attained in a collective bargaining regime, which is a manifestation of
industrial democracy at work, if there be no undue obstacles placed in the way of the choice of a bargaining
representative. To insist on the absolute majority where there are various unions and where the possibility of
invalid ballots may not be ruled out, would be to frustrate that goal. For the probability of a long drawn-out,
protracted process is not easy to dismiss. That is not unlikely given the intensity of rivalry among unions capable of
enlisting the allegiance of a group of workers. It is to avoid such a contingency that there is this explicit
pronouncement in the implementing rule. It speaks categorically. It must be obeyed. That was what respondent
Director did.

3. Nor can fault of a grave and serious character be imputed to respondent Director presumably because of failure
to abide by the doctrine or pronouncement of this Court in the aforesaid Allied Workers Association case. The
reliance is on this excerpt from the opinion: "However, spoiled ballots, i.e., those which are defaced, torn or
marked (Rules for Certification Elections, Rule II, sec. 2[j]) should be counted in determining the majority since
they are nevertheless votes cast by those who are qualified to do so." 11 Nothing can be clearer than that its basis
is a paragraph in a section of the then applicable rules for certification elections. 12 They were promulgated under
the authority of the then prevailing Industrial Peace Act. 13 That Legislation is no longer in force, having been
superseded by the present Labor Code which took effect on November 1, 1974. This certification election is
governed therefore, as was made clear, by the present Labor Code and the Rules issued thereunder. Absent a
showing that such rules and regulations are violative of the Code, this Court cannot ignore their existence. When,
as should be the case, a public official acts in accordance with a norm therein contained, no infraction of the law is
committed. Respondent Director did, as he ought to, comply with its terms. He took into consideration only the
"valid votes" as was required by the Rules. He had no choice as long as they remain in force. On a proper showing,
the judiciary can nullify any rule if found in conflict with the governing statute. 14 That was not even attempted
here. All that petitioner did was to set forth in two separate paragraphs the applicable rule followed by respondent
Director 15 and the governing article 16 . It did not even bother to discuss why such rule was in conflict with the
present Labor Code. It failed to point out any repugnancy. Such being the case, respondent Director must be
upheld.

4. The conclusion reached by us derives further support from the deservedly high repute attached to the
construction placed by the executive officials entrusted with the responsibility of applying a statute. The Rules and
Regulations implementing the present Labor Code were issued by Secretary Blas Ople of the Department of Labor
and took effect on February 3, 1975, the present Labor Code having been made known to the public as far back as
May 1, 1974, although its date of effectivity was postponed to November 1, 1974, although its date of effectivity
was postponed to November 1, 1974. It would appear then that there was more than enough time for a really
serious and careful study of such suppletory rules and regulations to avoid any inconsistency with the Code. This
Court certainly cannot ignore the interpretation thereafter embodied in the Rules. As far back as In re Allen, 17 a
1903 decision, Justice McDonough, as ponente, cited this excerpt from the leading American case of Pennoyer v.
McConnaughy, decided in 1891: "The principle that the contemporaneous construction of a statute by the executive
officers of the government, whose duty it is to execute it, is entitled to great respect, and should ordinarily control
the construction of the statute by the courts, is so firmly embedded in our jurisprudence that no authorities need
be cited to support it." 18 There was a paraphrase by Justice Malcolm of such a pronouncement in Molina v.
Rafferty, 19 a 1918 decision: "Courts will and should respect the contemporaneous construction placed upon a
statute by the executive officers whose duty it is to enforce it, and unless such interpretation is clearly erroneous
will ordinarily be controlled thereby." 20 Since then, such a doctrine has been reiterated in numerous decisions. 21
As was emphasized by Chief Justice Castro, "the construction placed by the office charged with implementing and
enforcing the provisions of a Code] should be given controlling weight." 22

WHEREFORE, the petition for certiorari is dismissed. Costs against petitioner Philippine Association of Free Labor
Unions (PAFLU).

Barredo, Antonio, Aquino and Concepcion, Jr., JJ., concur.

[G.R. No. 87416. April 8, 1991.]

CECILIO S. DE VILLA, Petitioner, v. THE HONORABLE COURT OF APPEALS, PEOPLE OF THE


PHILIPPINES, HONORABLE JOB B. MADAYAG, and ROBERTO Z. LORAYES, Respondents.

San Jose, Enriquez, Lacas, Santos & Borje for Petitioner.

Eduardo R. Robles for Private Respondent.

SYLLABUS

1. REMEDIAL LAW; JURISDICTION; DEFINED. — Jurisdiction is the power with which courts are invested for
administering justice, that is, for hearing and deciding cases (Velunta v. Philippine Constabulary, 157 SCRA 147
[1988]).

2. ID.; ID.; CLASSIFICATION. — Jurisdiction in general, is either over the nature of the action, over the subject
matter, over the person of the defendant, or over the issues framed in the pleadings (Balais, v. Balais, 159 SCRA
37 [1988]).

3. ID.; ID.; JURISDICTION OVER THE SUBJECT MATTER, HOW DETERMINED. — Jurisdiction over the subject
matter is determined by the statute in force at the time of commencement of the action (De la Cruz v. Moya, 160
SCRA 538 [1988]).

4. ID.; ID.; DETERMINED BY THE ALLEGATIONS IN THE INFORMATION. — Jurisdiction or venue is determined by
the allegations in the information." (Lim v. Rodrigo; 167 SCRA 487 [1988]).

5. ID.; ID.; ID.; CASE AT BAR. — The information under consideration specifically alleged that the offense was
committed in Makati, Metro Manila and therefore, the same is controlling and sufficient to vest jurisdiction upon the
Regional Trial Court of Makati. The Court acquires jurisdiction over the case and over the person of the accused
upon the filing of a complaint or information in court which initiates a criminal action (Republic v. Sunga, 162 SCRA
191 [1988]).

6. ID.; PLACE OF ISSUANCE OF CHECK, VENUE OF VIOLATION OF BOUNCING CHECK LAW. — The determinative
factor in determining venue is the place of the issuance of the check. (People v. Grospe, 157 SCRA 154 [1988])

7. ID.; ID.; BATAS PAMBANSA BLG. 22; VENUE DETERMINED BY PLACE OF DELIVERY. — On the matter of venue
for violation of Batas Pambansa Bilang 22, the Ministry of Justice, citing the case of People v. Yabut (76 SCRA 624
[1977], laid down the following guidelines in Memorandum Circular No. 4 dated December 15, 1981 that" (1)
Venue of the offense lies at the place where the check was executed and delivered; (2) the place where the check
was written, signed or dated does not necessarily fix the place where it was executed, as what is of decisive
importance is the delivery thereof which is the final act essential to its consummation as an obligation; . . . (Res.
No. 377, s. 1980, Filtex Mfg. Corp. v. Manuel Chua, October 28, 1980)." (See The Law on Bouncing Checks
Analyzed by Judge Jesus F. Guerrero, Philippine Law Gazette, Vol. 7. Nos. 11 & 12, October-December, 1983, p.
14).

8. STATUTORY CONSTRUCTION AND INTERPRETATION; WHERE THE LAW DOES NOT DISTINGUISHED, WE
SHOULD NOT DISTINGUISH. — It will be noted that the law does not distinguish the currency involved in the case.
As the trial court correctly ruled in its order dated July 5, 1988: "Under the Bouncing Checks Law (B.P. Blg. 22),
foreign checks, provided they are either drawn and issued in the Philippines though payable outside thereof . . . are
within the coverage of said law." It is a cardinal principle in statutory construction that where the law does not
distinguish courts should not distinguish.

9. ID.; WHERE THE LAW DOES NOT MAKE ANY EXCEPTION, COURTS MAY NOT EXCEPT. — Where the law does not
make any exception, courts may not except something unless compelling reasons exist to justify it (Phil. British
Assurance Co., Inc. v. IAC, 150 SCRA 520 [1987]).

10. ID.; COURTS MAY AVAIL OF LEGISLATIVE PROCEEDINGS IN THE CONSTRUCTION OF STATUTES OF DOUBTFUL
MEANING. — Courts may avail themselves of the actual proceedings of the legislative body to assist in determining
the construction of a statute of doubtful meaning (Palanca v. City of Manila, 41 Phil. 125 [1920]). Thus, where
there is doubts as to what a provision of a statute means, the meaning put to the provision during the legislative
deliberation or discussion on the bill may be adopted (Arenas v. City of San Carlos, 82 SCRA 318 [1978]).

DECISION

PARAS, J.:

This petition for review on certiorari seeks to reverse and set aside the decision ** of the Court of Appeals
promulgated on February 1, 1989 in CA-G.R. SP No. 16071 entitled "Cecilio S. de Villa v. Judge Job B. Madayag,
etc. and Roberto Z. Lorayes", dismissing the petition for certiorari filed therein.

The factual backdrop of this case, as found by the Court of Appeals, is as follows:

"On October 5, 1987, petitioner Cecilio S. de Villa was charged before the Regional Trial Court of the National
Capital Judicial Region (Makati, Branch 145) with violation of Batas Pambansa Bilang 22, allegedly committed as
follows:

‘That on or about the 3rd day of April 1987, in the municipality of Makati, Metro Manila, Philippines and within the
jurisdiction of this Honorable Court, the above-named accused, did, then and there willfully, unlawfully and
feloniously make or draw and issue to ROBERTO Z. LORAYEZ, to apply on account or for value a Depositors Trust
Company Check No. 3371 antedated March 31, 1987, payable to herein complainant in the total amount of U.S.
$2,500.00 equivalent to P50,000.00, said accused well knowing that at the time of issue he had no sufficient funds
in or credit with drawee bank for payment of such check in full upon its presentment which check when presented
to the drawee bank within ninety (90) days from the date thereof was subsequently dishonored for the reason
‘INSUFFICIENT FUNDS’ and despite receipt of notice of such dishonor said accused failed to pay said ROBERTO Z.
LORAYEZ the amount of P50,000.00 of said check or to make arrangement for full payment of the same within five
(5) banking days after receiving said notice.’

"After arraignment and after private respondent had testified on direct examination, petitioner moved to dismiss
the Information on the following grounds: (a) Respondent court has no jurisdiction over the offense charged; and
b) That no offense was committed since the check involved was payable in dollars, hence, the obligation created is
null and void pursuant to Republic Act No. 529 (An Act to Assure Uniform Value of Philippine Coin and Currency).

"On July 19, 1988, respondent court issued its first questioned orders stating:

‘Accused’s motion to dismiss dated July 5, 1988, is denied for lack of merit.

‘Under the Bouncing Checks Law (B.P. Blg. 22), foreign checks, provided they are either drawn and issued in the
Philippines though payable outside thereof, or made payable and dishonored in the Philippines though drawn and
issued outside thereof, are within the coverage of said law. The law likewise applied to checks drawn against
current accounts in foreign currency.’

"Petitioner moved for reconsideration but his motion was subsequently denied by respondent court in its order
dated September 6, 1988, and which reads:

‘Accused’s motion for reconsideration, dated August 9, 1988, which was opposed by the prosecution, is denied for
lack of merit.

‘The Bouncing Checks Law is applicable to checks drawn against current accounts in foreign currency (Proceedings
of the Batasang Pambansa, February 7, 1979, p. 1376, cited in Makati RTC Judge (now Manila City Fiscal) Jesus F.
Guerrero’s The Ramifications of the Law on Bouncing Checks, p. 5).’" (Rollo, Annex "A", Decision, pp. 20-22)

A petition for certiorari seeking to declare the nullity of the aforequoted orders dated July 19, 1988 and September
6, 1988 was filed by the petitioner in the Court of Appeals wherein he contended:

"(a) That since the questioned check was drawn against the dollar account of petitioner with a foreign bank,
respondent court has no jurisdiction over the same or with accounts outside the territorial jurisdiction of the
Philippines and that Batas Pambansa Bilang 22 could have not contemplated extending its coverage over dollar
accounts;

"(b) That assuming that the subject check was issued in connection with a private transaction between petitioner
and private respondent, the payment could not be legally paid in dollars as it would violate Republic Act No. 529;
and

"(c) That the obligation arising from the issuance of the questioned check is null and void and is not enforceable
within the Philippines either in a civil or criminal suit. Upon such premises, petitioner concludes that the dishonor of
the questioned check cannot be said to have violated the provisions of Batas Pambansa Bilang 22." (Rollo, Annex
"A", Decision, p. 22).

On February 1, 1989, the Court of Appeals rendered a decision, the decretal portion of which reads:

"WHEREFORE, the petition is hereby dismissed. Costs against petitioner.

"SO ORDERED." (Rollo, Annex "A", Decision, p. 5).

A motion for reconsideration of the said decision was filed by the petitioner on February 7, 1989 (Rollo, Petition, p.
6) but the same was denied by the Court of Appeals in its resolution dated March 3, 1989 (Rollo, Annex "B", p. 26).

Hence, this petition.

In its resolution dated November 13, 1989, the Second Division of this Court gave due course to the petition and
required the parties to submit simultaneously their respective memoranda (Rollo, Resolution, p. 81).

The sole issue in this case is whether or not the Regional Trial Court of Makati has jurisdiction over the case in
question.

The petition is without merit.

Jurisdiction is the power with which courts are invested for administering justice, that is, for hearing and deciding
cases (Velunta v. Philippine Constabulary, 157 SCRA 147 [1988]).

Jurisdiction in general, is either over the nature of the action, over the subject matter, over the person of the
defendant, or over the issues framed in the pleadings (Balais, v. Balais, 159 SCRA 37 [1988]).

Jurisdiction over the subject matter is determined by the statute in force at the time of commencement of the
action (De la Cruz v. Moya, 160 SCRA 538 [1988]).

The trial court’s jurisdiction over the case, subject of this review, can not be questioned.

Sections 10 and 15(a), Rule 110 of the Rules of Court specifically provide that:

"Sec. 10. Place of the commission of the offense. The complaint or information is sufficient if it can be understood
therefrom that the offense was committed or some of the essential ingredients thereof occurred at some place
within the jurisdiction of the court, unless the particular place wherein it was committed constitutes an essential
element of the offense or is necessary for identifying the offense charged.

"Sec. 15. Place where action is to be instituted. (a) Subject to existing laws, in all criminal prosecutions the action
shall be instituted and tried in the court of the municipality or territory where the offense was committed or any of
the essential ingredients thereof took place."

In the case of People v. Hon. Manzanilla (156 SCRA 279 [1987] cited in the case of Lim v. Rodrigo, 167 SCRA 487
[1988]), the Supreme Court ruled "that jurisdiction or venue is determined by the allegations in the information."
The information under consideration specifically alleged that the offense was committed in Makati, Metro Manila
and therefore, the same is controlling and sufficient to vest jurisdiction upon the Regional Trial Court of Makati. The
Court acquires jurisdiction over the case and over the person of the accused upon the filing of a complaint or
information in court which initiates a criminal action (Republic v. Sunga, 162 SCRA 191 [1988]).

Moreover, it has been held in the case of Que v. People of the Philippines (154 SCRA 160 [1987] cited in the case
of People v. Grospe, 157 SCRA 154 [1988]) that ‘the determinative factor (in determining venue) is the place of
the issuance of the check."

On the matter of venue for violation of Batas Pambansa Bilang 22, the Ministry of Justice, citing the case of People
v. Yabut (76 SCRA 624 [1977], laid down the following guidelines in Memorandum Circular No. 4 dated December
15, 1981, the pertinent portion of which reads:

"(1) Venue of the offense lies at the place where the check was executed and delivered; (2) the place where the
check was written, signed or dated does not necessarily fix the place where it was executed, as what is of decisive
importance is the delivery thereof which is the final act essential to its consummation as an obligation; . . . (Res.
No. 377, s. 1980, Filtex Mfg. Corp. v. Manuel Chua, October 28, 1980)." (See The Law on Bouncing Checks
Analyzed by Judge Jesus F. Guerrero, Philippine Law Gazette, Vol. 7. Nos. 11 & 12, October-December, 1983, p.
14).

It is undisputed that the check in question was executed and delivered by the petitioner to herein private
respondent at Makati, Metro Manila.

However, petitioner argues that the check in question was drawn against the dollar account of petitioner with a
foreign bank, and is therefore, not covered by the Bouncing Checks Law (B.P. Blg. 22).

But it will be noted that the law does not distinguish the currency involved in the case. As the trial court correctly
ruled in its order dated July 5, 1988:

"Under the Bouncing Checks Law (B.P. Blg. 22), foreign checks, provided they are either drawn and issued in the
Philippines though payable outside thereof . . . are within the coverage of said law."

It is a cardinal principle in statutory construction that where the law does not distinguish courts should not
distinguish. Parenthetically, the rule is that where the law does not make any exception, courts may not except
something unless compelling reasons exist to justify it (Phil. British Assurance Co., Inc. v. IAC, 150 SCRA 520
[1987]).

More importantly, it is well established that courts may avail themselves of the actual proceedings of the legislative
body to assist in determining the construction of a statute of doubtful meaning (Palanca v. City of Manila, 41 Phil.
125 [1920]). Thus, where there is doubts as to what a provision of a statute means, the meaning put to the
provision during the legislative deliberation or discussion on the bill may be adopted (Arenas v. City of San Carlos,
82 SCRA 318 [1978]).

The records of the Batasan, Vol. III, unmistakably show that the intention of the lawmakers is to apply the law to
whatever currency may be the subject thereof. The discussion on the floor of the then Batasang Pambansa fully
sustains this view, as follows:

x x x

"THE SPEAKER. The Gentleman from Basilan is recognized.

"MR. TUPAY. Parliamentary inquiry. Mr. Speaker.

"THE SPEAKER. The Gentleman may proceed.

"MR. TUPAY. Mr. Speaker, it has been mentioned by one of the Gentlemen who interpellated that any check may
be involved, like U.S. dollar checks, etc. We are talking about checks in our country. There are U.S. dollar checks,
checks in our currency, and many others.

"THE SPEAKER. The Sponsor may answer that inquiry.

"MR. MENDOZA. The bill refers to any check, Mr. Speaker, and this check may be a check in whatever currency.
This would not even be limited to U.S. dollar checks. The check may be in French francs or Japanese yen or
deutschunorhs. (sic.) If drawn, then this bill will apply.
"MR. TUPAY. So, it include U.S. dollar checks.

"MR. MENDOZA. Yes, Mr. Speaker."

x x x

(p. 1376, Records of the Batasan, Volume III; Emphasis supplied, for emphasis).

PREMISES CONSIDERED, the petition is DISMISSED for lack of merit.

SO ORDERED.

Melencio-Herrera, Padilla, Sarmiento and Regalado, JJ., concur.

G.R. No. 106724 February 9, 1994

THE NATIONAL POLICE COMMISSION, represented by its Acting Chairman, Cesar Sarino, Teodolo C.
Natividad, Vice-Chairman and Executive Officer, Brig. Gen. Virgilio H. David, Edgar Dula Torre,
Guillermo P. Enriquez, Commissioners, and Chief Supt. Levy D. Macasiano Director for
Personnel, Petitioners, v. Honorable Judge Salvador de Guzman, Jr., Chief Supt. Norberto M. Lina, Chief
Supt. Ricardo Trinidad, Jr., Sr. Supt. Manuel Suarez, Supt. Justito B. Tagum, Sr. Supt. Tranquilino
Aspiras, Sr., Supt. Ramon I. Navarro,
Sr. Supt. Ramon I. Navarro, Sr. Supt. Jose P. Suria, Sr. Supt. Agaton Abiera, Chief Insp. Bienvenido
Torres, and the National (ROTC) Alumni Association Inc. (NARRA), represented by its President Col.
Benjamin Gundran, and Director Hermogenes Peralta, Jr., Respondents.

The Solicitor General for petitioners.

Renecio R. Espiritu for private respondents.

Diosdado P. Peralta for respondent-intervenor.

BIDIN, J.:

The case at bar had its origin in the implementation of the compulsory retirement of PNP officers as mandated in
Sec. 39, RA 6975, otherwise known as "An Act Establishing the Philippine National Police Under a Reorganized
Department of the Interior and Local Government", which took effect on
January 2, 1991. Among others, RA 6975 provides for a uniform retirement system for PNP members. Section 39
thereof reads:

Sec. 39. Compulsory Retirement. - Compulsory retirement, for officer and non-officer, shall be upon the attainment
of age fifty-six (56); Provided, That, in case of any officer with the rank of chief superintendent, director or deputy
director general, the Commission may allow his retention in the service for an unextendible period of one (1) year.

Based on the above provision, petitioners sent notices of retirement to private respondents who are all members of
the defunct Philippine Constabulary and have reached the age of fifty-six (56).

In response, private respondents filed a complaint on December 19, 1991 for declaratory relief with prayer for the
issuance of an ex parte restraining order and/or injunction (docketed as Civil Case No. 91-3498) before the
Regional Trial Court of Makati, Branch 142. In their complaint, respondents aver that the age of retirement set at
fifty-six (56) by Section 39 of RA 6975 cannot be applied to them since they are also covered by Sec. 89 thereof
which provides:

Any provision hereof to the contrary notwithstanding, and within the transition period of four (4) years following
the effectivity of this Act, the following members of the INP shall be considered compulsorily retired:

a) Those who shall attain the age of sixty (60) on the first year of the effectivity of this Act.
b) Those who shall attain the age of fifty-nine (59) on the second year of the effectivity of this Act.

c) Those who shall attain the age of fifty-eight (58) on the third year of the effectivity of this Act.

d) Those who shall attain the age of fifty-seven (57) on the fourth year of the effectivity of this Act.

It is the submission of respondents that the term "INP" includes both the former members of the Philippine
Constabulary and the local police force who were earlier constituted as the Integrated National Police (INP) by
virtue of
PD 765 in 1975.

On the other hand, it is the belief of petitioners that the 4-year transition period provided in Section 89 applies only
to the local police forces who previously retire, compulsorily, at age sixty (60) for those in the ranks of Police/Fire
Lieutenant or higher (Sec. 33, PD 1184); while the retirement age for the PC had already been set at fifty-six (56)
under the AFP law.

On December 23, 1991, respondent judge issued a restraining order followed by a writ of injunction on January 8,
1992 upon posting of a P100,000.00 bond by private respondents.

After the parties have submitted their respective pleadings, the case was submitted for resolution and on August
14, 1992, the respondent judge rendered the assailed decision, the decretal portion of which reads:

WHEREFORE, the court hereby declares that the term "INP" in Section 89 of the PNP Law includes all members of
the present Philippine National Police, irrespective of the original status of the present members of the Philippine
National Police before its creation and establishment, and that Section 39 thereof shall become operative after the
lapse of the
four-year transition period.

The preliminary injunction issued is made permanent.

SO ORDERED. (Rollo, pp. 29-30)

Petitioners filed the instant petition on October 8, 1992 seeking the reversal of the above judgment. On January
12, 1993, the Court resolved to treat the respondents' Comment as Answer and gave due course to the petition.

In ruling in favor of private respondents, respondent judge observed, among others, that:

It may have been the intention of Congress to refer to the local police forces as the "INP" but the PNP Law failed to
define who or what constituted the INP. The natural recourse of the court is to trace the source of the "INP" as
courts are permitted to look to prior laws on the same subject and to investigate the antecedents involved. There is
nothing extant in the statute books except that which was created and established under
PD 765 pursuant to the mandate of Article XV of the 1973 Constitution providing that the "State shall establish and
maintain an integrated national police force whose organization, administration and operation shall be provided by
law." Heretofore, INP was unknown. And the said law categorically declared the PC "as the principal component of
the Integrated National Police" (Sec. 5, PD 765).

The court was supplied by respondents (petitioners herein) with excerpts taken from the discussion amongst the
members of Congress concerning the particular provision of Section 89. The court is not persuaded by said
discussion; it was a simple matter for the members of the legislature to state precisely in clear and unequivocal
terms their meaning, such as "integrated police" as used in PD 765. Instead, they employed "INP", a generic term
that includes the PC as the principal component of the INP, supra. In failing to categorically restrict the application
of Section 89 as the members of legislature are said to have intended, it gave rise to the presumption that it has
not limited nor intended to limit the meaning of the word when the bill was finally passed into law. It is not difficult
for the court to also presume that in drafting the wording of the PNP Law, the legislators were aware of the
historical legislative origin of the "INP".

xxx xxx xxx

The court takes particular note of the fact that Section 89 is found in the Transitory Provisions of the law which do
not provide for any distinction between the former PC officers and those belonging to the civilian police forces.
These provision are specifically enacted to regulate the period covering the dissolution of the PC and the creation of
the PNP, a period that necessarily would be attended by imbalances and or confusion occasioned by the wholesale
and mass integration. In fact, the retirement payment scheme of the INP is still to be formulated, leaving the
impression that nothing is really settled until after the transition of four years has lapsed. Section 89 therefore
prevails over Section 39 up to the year 1995 when the retirement age for the members of the PNP shall then be
age 56; after the year 1995, Section 39 shall then be the applicable law on retirement of PNP members. (Rollo, pp.
27-28; emphasis supplied)

Petitioners disagree and claim that the use of the term INP in Sec. 89 does not imply the same meaning
contemplated under PD 765 wherein it is provided:

Sec. 1. Constitution of the Integrated National Police. - There is hereby established and constituted the Integrated
National Police (INP) which shall be composed of the Philippine Constabulary as the nucleus, and the integrated
police forces as established by Presidential Decrees
Nos. 421, 482, 531, 585 and 641, as components, under the Department of National Defense.

On the other hand, private respondents assert that being the nucleus of the Integrated National Police (INP) under
PD 765, former members of the Philippine Constabulary (PC) should not be discriminated against from the
coverage of the term "INP" in Sec. 89, RA 6975. Clearly, it is argued, the term "INP" found in Section 89 of RA
6975 refers to the INP in PD 765. Thus, where the law does not distinguish, the courts should not distinguish.

Does the law, RA 6975, distinguish INP from the PC? Petitioners submit that it does and cite Sections 23 and 85 to
stress the point, viz.:

Sec. 23. Composition. - Subject to the limitations provided for in this Act, the Philippine National Police, hereinafter
referred to as the PNP, is hereby established, initially consisting of the members of the police forces who were
integrated into the Integrated National Police (INP) pursuant to Presidential Decree No. 765, and the officers and
enlisted personnel of the Philippine Constabulary (PC). . .

xxx xxx xxx

The permanent civilian employees of the present PC, INP, Narcotics Command, CIS and the technical command of
the AFP assigned with the PC, including NAPOLCOM hearing officers holding regular items as such, shall be
absorbed by the Department as employees thereof, subject to existing laws and regulations.

xxx xxx xxx

Sec. 85. Phase of Implementation. - The implementation of this Act shall be undertaken in three (3) phases, to wit:

Phase I - Exercise of option by the uniformed members of the Philippine Constabulary, the PC elements assigned
with the Narcotics Command, CIS, and the personnel of the technical services of the AFP assigned with the PC to
include the regular CIS investigating agents and the operatives and agents of the NAPOLCOM Inspection,
Investigation and Intelligence Branch, and the personnel of the absorbed National Action Committee on Anti-
Hijacking (NACAH) of the Department of National Defense, to be completed within six (6) months from the date of
the effectivity of this Act. At the end of this phase, all personnel from the INP, PC, technical Services, NACAH, and
NAPOLCOM Inspection, Investigation and Intelligence Branch shall have been covered by official orders assigning
them to the PNP . . .

xxx xxx xxx

. . . Any PC-INP officer or enlisted personnel may, within the twelve-month period from the effectivity of this Act,
retire . . .

Phase III - . . . To accomplish the tasks of Phase III, the Commission shall create a Board of Officers composed of
the following: NAPOLCOM Commissioner as Chairman and one (1) representative each from the PC, INP, Civil
Service Commission and the Department of Budget and Management.

Section 86 of the same law further provides:


Sec. 86. Assumption by the PNP of Police Functions. - The PNP shall absorb the functions of the PC, the INP and the
Narcotics Command upon the effectivity of this Act.

From a careful perusal of the above provisions, it appears therefore that the use of the term INP is not synonymous
with the PC. Had it been otherwise, the statute could have just made a uniform reference to the members of the
whole Philippine National Police (PNP) for retirement purposes and not just the INP. The law itself distinguishes INP
from the PC and it cannot be construed that "INP" as used in Sec. 89 includes the members of the PC.

And contrary to the pronouncement of respondent judge that the law failed to define who constitutes the INP, Sec.
90 of RA 6975 has in fact defined the same. Thus,

Sec. 90. Status of Present NAPOLCOM, PC-INP. - Upon the effectivity of this Act, the present National Police
Commission and the Philippine Constabulary-Integrated National Police shall cease to exist. The Philippine
Constabulary, which is the nucleus of the Philippine Constabulary-Integrated National Police shall cease to be a
major service of the Armed Forces of the Philippines. The Integrated National Police, which is the civilian
component of the Philippine Constabulary-Integrated National Police, shall cease to be the national police force and
lieu thereof, a new police force shall be established and constituted pursuant to this Act. (emphasis supplied)

It is not altogether correct to state, therefore, that the legislature failed to define who the members of the INP are.
In this regard, it is of no moment that the legislature failed to categorically restrict the application of the transition
period in Sec. 89 specifically in favor of the local police forces for it would be a mere superfluity as the PC
component of the INP was already retirable at age fifty-six (56).

Having defined the meaning of INP, the trial court need not have belabored on the supposed dubious meaning of
the term. Nonetheless, if confronted with such a situation, courts are not without recourse in determining the
construction of the statute with doubtful meaning for they may avail themselves of the actual proceedings of the
legislative body. In case of doubt as to what a provision of a statute means, the meaning put to the provision
during the legislative deliberations may be adopted (De Villa v. Court of Appeals,
195 SCRA 722 [1991] citing Palanca v. City of Manila, 41 Phil. 125 [1920]; Arenas v. City of San Carlos, 82 SCRA
318 [1978]).

Courts should not give a literal interpretation to the letter of the law if it runs counter to the legislative intent
(Yellow Taxi and Pasay Transportation Workers' Association v. Manila Yellow Taxi Cab. Co., 80 Phil. 83 [1948]).

Examining the records of the Bicameral Conference Committee, we find that the legislature did intent to exclude
the members of the PC from the coverage of Sec. 89 insofar as the retirement age is concerned, thus:

THE CHAIRMAN. (SEN. MACEDA). Well, it seems what people really want is one common rule, so if it is fifty-six,
fifty-six; of course, the PC wants sixty for everybody. Of course, it is not acceptable to us in the sense that we tied
this up really to the question of: If you are lax in allowing their (the PC) entry into the PNP, then tighten up the
retirement. If we will be strict in, like requiring examinations and other conditions for their original entry, then
since we have sifted out a certain amount of undesirables, then we can allow a longer retirement age. That was the
rationale, that was the tie-up. Since we are relaxing the entry, we should speed up . . .

THE CHAIRMAN. (REP. GUTANG). Exit.

THE CHAIRMAN. (SEN. MACEDA) . . . the retirement, the exit.

THE CHAIRMAN. (REP. GUTANG). So let me get it very clear, Mr. Chairman. Fifty-six, let's say, that will not make
any adjustment in the PC because there (they) are (retirable at age) fifty-six.

THE CHAIRMAN. (SEN. MACEDA). Kaya nga, wala na silang masasabi.

THE CHAIRMAN. (REP. GUTANG). In the case of the Police, since they are retireable now at sixty, for the officers, it
will be
applicable to them on a one-year every year basis for a total period of four years transition. (Bicameral Conference
Committee on National Defense, March 12, 1990)

REP. GUTANG. On the first year of effectivity, the police will retire at 60 years.
THE CHAIRMAN. (SEN. MACEDA). Sixty.

REP. GUTANG. On the second year, 59.

THE CHAIRMAN. (SEN. MACEDA). Oo.

REP. GUTANG. On the third year, 58.

THE CHAIRMAN. (SEN. MACEDA). Fifty-eight. So 'yung 55, on the third year, 58, doon siya re-retire.

REP. GUTANG. Oo.

SEN. SAGUISAG. So kung 55, when the law becomes effective . . .

THE CHAIRMAN. (SEN. MACEDA). He will retire at 58, doon siya aabot.

REP. UNICO. Pwede.

SEN. SAGUISAG. Dahil 'yon, may time to . . .

THE CHAIRMAN. (SEN. MACEDA). Walang problema dito sa transition ng pulis, acceptable ito, eh.

THE CHAIRMAN. (REP. COJUANGCO). Sa PC?

THE CHAIRMAN. (SEN. MACEDA). PC, walang mawawala sa kanila, 56 ang retirement age nilang talaga, eh. Kaya
ayaw ko
ngang dagdagan 'yung 56 nila at 'yon din ang sa Armed Forces, 56. (Ibid., May 22, 1990)

In applying the provisions of Sec. 89 in favor of the local police force as established in PD 765, the Court does not,
in any manner, give any
undue preferential treatment in favor of the other group. On the contrary, the Court is merely giving life to the real
intent of the legislators based on the deliberations of the Bicameral Conference Committee that preceded the
enactment of RA 6975.

The legislative intent to classify the INP in such manner that Section 89 of RA 6975 is applicable only to the local
police force is clear. The question now is whether the classification is valid. The test for this is reasonableness such
that it must conform to the following requirements: (1) It must be based upon substantial distinctions; (2) It must
be germane to the purpose of the law; (3) It must not be limited to existing conditions only; (4) It must apply
equally to all members of the same class (People vs. Cayat, 68 Phil. 12 [1939]).

The classification is based upon substantial distinctions. The PC, before the effectivity of the law (RA 6975), were
already retirable at age 56 while the local police force were retirable at 60, and governed by different laws
(P.D. 1184, Sec. 33 and Sec. 50). The distinction is relevant for the purpose of the statute, which is to enable the
local police force to plan for their retirement which would be earlier than usual because of the new law. Section 89
is merely transitory, remedial in nature, and loses its force and effect once the four-year transitory period has
elapsed. Finally, it applies not only to some but to all local police officers.

It may be appropriate to state at this point that it seems absurd that a law will grant an extension to PC officers'
retirable age from 56 to 60 and then gradually lower it back to 56 without any cogent reason at all. Why should the
retirement age of PC officers be increased during the transitory period to the exclusion of other PC officers who
would retire at age 56 after such period? Such absurdity was never contemplated by the law and would defeat its
purpose of providing a uniform retirement age for PNP members.

WHEREFORE, the petition is GRANTED. The writ of injunction issued on January 8, 1992 is hereby LIFTED and the
assailed decision of respondent judge is REVERSED and SET ASIDE.

SO ORDERED.
Narvasa, C.J., Cruz, Feliciano, Padilla, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Quiason, Puno, Vitug and
Kapunan, JJ., concur.

Nocon, J., is on leave.

[G.R. No. L-17931. February 28, 1963.]

CASCO PHILIPPINE CHEMICAL CO., INC., Petitioner, v. HON. PEDRO GIMENEZ, in his capacity as Auditor
General of the Philippines, and HON. ISMAEL MATHAY, in his capacity as Auditor of the Central
Bank, Respondents.

Jalandoni & Jamir for Petitioner.

Solicitor General for Respondents.

DECISION

CONCEPCION, J.:

This is a petition for review of a decision of the Auditor General denying a claim for refund of petitioner Casco
Philippine Chemical Co., Inc.

The main facts are not disputed. Pursuant to the provisions of Republic Act No. 2609, otherwise known as the
Foreign Exchange Margin Fee Law, the Central Bank of the Philippines issued on July 1, 1959, its Circular No. 95,
fixing a uniform margin fee of 25% on foreign exchange transactions. To supplement the circular, the Bank later
promulgated a memorandum establishing the procedure for applications for exemption from the payment of said
fee, as provided in said Republic Act No. 2609. Several times in November and December 1959, petitioner Casco
Philippine Chemical Co., Inc. — which is engaged in the manufacture of synthetic resin glues, used in bonding
lumber and veneer by plywood and hardboard producers — bought foreign exchange for the importation of urea
and formaldehyde — which are the main raw materials in the production of said glues — and paid therefor the
aforementioned margin fee aggregating P33,765.42. In May, 1960, petitioner made another purchase of foreign
exchange and paid the sum of P6,345.72 as margin fee therefor.

Prior thereto, petitioner had sought the refund of the first sum of P33,765.42, relying upon Resolution No. 1529 of
the Monetary Board of said Bank, dated November 3, 1959, declaring that the separate importation of urea and
formaldehyde is exempt from said fee. Soon after the last importation of these products, petitioner made a similar
request for refund of the sum of P6,345.72 paid as margin fee therefor. Although the Central Bank issued the
corresponding margin fee vouchers for the refund of said amounts, the Auditor of the Bank refused to pass in audit
and approve said vouchers, upon the ground that the exemption granted by the Monetary Board for petitioner’s
separate importations of urea and formaldehyde is not in accord with the provisions of Section 2, paragraph XVIII
of Republic Act No. 2069. On appeal taken by petitioner, the Auditor General subsequently affirmed said action of
the Auditor of the Bank. Hence, this petition for review.

The only question for determination in this case is whether or not "urea" and "formaldehyde" are exempt by law
from the payment of the aforesaid margin fee. The pertinent portion of Section 2 of Republic Act No. 2069 reads:

"The margin established by the Monetary Board pursuant to the provision of section one hereof shall not be
imposed upon the sale of foreign exchange for the importation of the following:

x x x

"XVIII. Urea formaldehyde for the manufacture of plywood and hardboard when imported by and for the exclusive
use of end-users."

Petitioner maintains that the term "urea formaldehyde" appearing in this provision should be construed as "urea
and formaldehyde" (italic ours) and that respondents herein, the Auditor General and the Auditor of the Central
Bank have erred in holding otherwise. In this connection, it should be noted that, whereas "urea" and
"formaldehyde" are the principal raw materials in the manufacture of synthetic resin glues, the National Institute of
Science and Technology has expressed, through its Commissioner, the view that.

"Urea formaldehyde is not a chemical solution. It is the synthetic resin formed as a condensation product from
definite proportions of urea and formaldehyde under certain conditions relating to temperature, acidity, and time of
reaction. This produce when applied in water solution and extended with inexpensive fillers constitutes a fairly low
cost adhesive for use in the manufacture of plywood."

Hence, "urea formaldehyde" is clearly a finished product, which is patently distinct and different from "urea" and
"formaldehyde", as separate articles used in the manufacture of the synthetic resin known as "urea formaldehyde."
Petitioner contends, however, that the bill approved in Congress contained the copulative conjunction "and"
between the terms "urea" and, "formaldehyde", and that the members of Congress intended to exempt "urea" and
"formaldehyde" separately as essential elements in the manufacture of the synthetic resin glue called "urea
formaldehyde", not the latter a finished product, citing in support of this view the statements made on the floor of
the Senate, during the consideration of the bill before said House, by members thereof. But, said individual
statements do not necessarily reflect the view of the Senate. Much less do they indicate the intent of the House of
Representatives (see Song Kiat Chocolate Factory v. Central Bank, 54 Off. Gaz., 615; Mayon Motors, Inc. v. Acting
Commissioner of Internal Revenue, L-15000 [March 29, 1961]; Manila Jockey Club, Inc. v. Games & Amusement
Board, L-12727 [February 27, 1960]. Furthermore, it is well settled that the enrolled bill — which uses the term
"urea formaldehyde" instead of "urea and formaldehyde" — is conclusive upon the courts as regards the tenor of
the measure passed by Congress and approved by the President (Primicias v. Paredes, 61 Phil., 118, 120; Mabanag
v. Lopez Vito, 78 Phil., 1; Macias v. Comm. on Elections, L-18684, September 14, 1961). If there has been any
mistake in the printing of the bill before it was certified by the officers of Congress and approved by the Executive
— on which we cannot speculate, without jeopardizing the principle of separation of powers and undermining one
of the cornerstones of our democratic system — the remedy is by amendment or curative legislation, not by
judicial decree.

WHEREFORE, the decision appealed from is hereby affirmed, with costs against the petitioner. It is so ordered.

Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Reyes, J.B.L., Barrera, Paredes, Dizon, Regala and
Makalintal, JJ., concur.

[G.R. No. 118910. July 17, 1995.]

KILOSBAYAN, INCORPORATED, JOVITO R. SALONGA, CIRILO A. RIGOS, ERME CAMBA , EMILIO C.


CAPULONG, JR., JOSE T. APOLO, EPHRAIM TENDERO, FERNANDO SANTIAGO, JOSE ABCEDE, CHRISTINE
TAN, REFAEL G. FERNANDO, RAOUL V. VICTORINO, JOSE CUNANAN, QUINTIN S, DOROMAL, SEN.
FREDDIE WEBB, SEN. WIGBERTO TAÑADA, REP. JOKER P. ARROYO, Petitioners, v. MANUEL L. MORATO,
in his capacity as Chairman of the Philippine Charity Sweepstakes Office, and the PHILIPPINE GAMING
MANAGEMENT CORPORATION, Respondents.

Jovito R. Salonga, Fernando Santiago and Emilio C . Capulong, Jr., for the petitioners.

Renato L. Cayetano, Eleazar Reyes for private respondent PGMC.

The Solicitor General for public Respondent.

SYLLABUS

1. REMEDIAL LAW; ACTIONS; "LAW OF THE CASE" ; DOCTRINE APPLICABLE ONLY WHEN A CASE IS BEFORE A
COURT A SECOND TIME AFTER A RULING BY AN APPELLATE COURT. — Petitioners argue that inquiry into their
right to bring this suit is barred by the doctrine of "law of the case." We do not think this doctrine is applicable
considering the fact that while this case is a sequel to G.R. No. 113375, it is not its continuation. The doctrine
applies only when a case is before a court a second time after a ruling by an appellate court.

2. ID.; ID.; ID.; DEFINITION. — "Law of the case" has been defined as the opinion delivered on a former appeal.
More specifically, it means that whatever is once irrevocably established as the controlling legal rule of decision
between the same parties in the same case continues to be the law of the case, whether correct on general
principles or not, so long as the facts on which such decision was predicated continue to be the facts of the case
before the court.

3. ID.; ID.; "LAW OF THE CASE" DIFFERENTIATED FROM RES JUDICATA. — As this Court explained in another
case, "The law of the case, as applied to a former decision of an appellate court, merely expresses the practice of
the courts in refusing to reopen what has been decided. It differs from res judicata in that the conclusiveness of the
first judgment is not dependent upon its finality. The first judgment is generally, if not universally, not final. It
relates entirely to questions of law, and is confined in its operation to subsequent proceedings in the same case."
(Municipality of Daet v. Court of Appeals, 93 SCRA 503, 521 [1979])

4. ID.; ID.; "LAW OF THE CASE" ; DOCTRINE WILL NOT APPLY WHERE THE PARTIES ARE THE SAME BUT THE
CASES ARE DIFFERENT. — It follows that since the present case is not the same one litigated by the parties before
in G.R. No. 113375, the ruling there cannot in any sense be regarded as "the law of this case." The parties are the
same but the cases are not.

5. ID.; ID.; RULE ON CONCLUSIVENESS OF JUDGMENT OR PRECLUSION OF ISSUES; DOCTRINE CONSTRUED. —


Nor is inquiry into petitioners’ right to maintain this suit foreclosed by the related doctrine of "conclusiveness of
judgment." According to the doctrine, an issue actually and directly passed upon and determined in a former suit
cannot again be drawn in question in any future action between the same parties involving a different cause of
action. (Peñalosa v. Tuason, 22 Phil. 303, 313 [1912]; Heirs of Roxas v. Galido, 108 Phil. 582 [1960])

6. ID.; ID.; ID.; DOCTRINE DOES NOT APPLY TO ISSUES OF LAW. — It has been held that the rule on
conclusiveness of judgment or preclusion of issues or collateral estoppel does not apply to issues of law, at least
when substantially unrelated claims are involved. (Montana v. United States, 440 U.S. 147, 162, 59 L. Ed. 2d 210,
222 [1979]; BATOR MELTZER, MISHKIN AND SHAPIRO, THE FEDERAL COURTS AND THE FEDERAL SYSTEM 1058,
n. 2 [3rd Ed., 1988])

7. ID.; ID.; ID.; ID. — This exception to the General Rule of Issue Preclusion is authoritatively formulated in
Restatement of the Law 2d, on Judgments, as follows: Sec. 28. Although an issue is actually litigated and
determined by a valid and final judgment, and the determination is essential to the judgment, relitigation of the
issue in a subsequent action between the parties is not precluded in the following circumstances: . . . (2) The issue
is one of law and the two actions involve claims that are substantially unrelated or (b) a new determination is
warranted in order to take account of an intervening change in the applicable legal context or otherwise to avoid
inequitable administration of the laws.

8. ID.; ID.; ID.; ID.; QUESTION WHETHER PETITIONERS HAVE STANDING TO QUESTION THE EQUIPMENT LEASE
AGREEMENT (ELA), A LEGAL QUESTION. — The question whether petitioners have standing to question the
Equipment Lease Agreement or ELA is a legal question. As will presently be shown, the ELA, which petitioners seek
to declare invalid in this proceeding, is essentially different from the 1993 Contract of Lease entered into by the
PCSO with the PGMC. Hence the determination in the prior case (G.R. No. 113375) that petitioners had standing to
challenge the validity of the 1993 Contract of Lease of the parties does not preclude determination of their standing
in the present suit.

9. ID.; ID.; RULE ON STANDING AND REAL PARTY-IN-INTEREST, DIFFERENTIATED. — The difference between the
rule on standing and real party-in-interest has been noted by authorities thus: "It is important to note . . . that
standing because of its constitutional and public policy underpinnings, is very different from questions relating to
whether a particular plaintiff is the real party-in-interest or has capacity to sue. Although all three requirements are
directed towards ensuring that only certain parties can maintain an action, standing restrictions require a partial
consideration of the merits, as well as broader policy concerns relating to the proper role of the judiciary in certain
areas. (FRIEDENTHAL, KANE AND MILLER, CIVIL PROCEDURE 328 [1985]) Standing is a special concern in
constitutional law because in some cases suits are brought not by parties who, have been personally injured by the
operation of a law or by official action taken, but by concerned citizens, taxpayers or voters who actually sue in the
public interest. Hence the question in standing is whether such parties have "alleged such a personal stake in the
outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues upon
which the court so largely depends for illumination of difficult constitutional questions." (Baker v. Carr, 369 U.S. 7
L. Ed. 2d 633 [1962]) On the other hand, the question as to "real party-in-interest" is whether he is "the party who
would be benefitted or injured by the judgment, or the ‘party entitled to the avails of the suit." ‘ (Salonga v.
Warner Barnes & Co., Ltd., 88 Phil 125, 131 [1951])

10. ID.; ID.; REAL PARTIES-IN-INTEREST IN ANNULMENT OF CONTRACTS ARE PARTIES TO THE AGREEMENT. — In
actions for the annulment of contracts, such as this action, the real parties are those who are parties to the
agreement or are bound either principally or subsidiarily or are prejudiced in their rights with respect to one of the
contracting parties and can show the detriment which would positively result to them from the contract even
though they did not intervene in it (Ibañez v. Hongkong & Shanghai Bank, 22 Phil. 572 [1912]), or who claim a
right to take part in a public bidding but have been illegally excluded from it. (See De la Lara Co., Inc. v. Secretary
of Public Works and Communications, G.R. No. L-13460, Nov. 28, [1958])

11. ID.; ID.. ID.; PARTIES WITH PRESENT SUBSTANTIAL INTEREST; "PRESENT SUBSTANTIAL INTEREST,"
CONSTRUED. — These are parties with "a present substantial interest, as distinguished from a mere expectancy or
future, contingent, subordinate, or consequential interest. The phrase ‘present substantial interest’ more concretely
is meant such interest of a party in the subject matter of action as will entitle him, under the substantive law, to
recover if the evidence is sufficient, or that he has the legal title to demand and the defendant will be protected in
a payment to or recovery by him." (I MORAN, COMMENTS ON THE RULES OF COURT 154-155 [1979])
12. ID.; ID.; ID.; PARTIES WITHOUT PRESENT SUBSTANTIAL INTEREST IN THE EQUIPMENT LEASE AGREEMENT,
NOT ENTITLED TO BRING SUIT FOR ANNULMENT; CASE AT BAR. — But petitioners do not have such present
substantial interest in the ELA as would entitle them to bring this suit. Denying to them the right to intervene will
not leave without remedy any perceived illegality in the execution of government contracts. Questions as to the
nature or validity of public contracts or the necessity for a public bidding before they may be made can be raised in
an appropriate case before the Commission on Audit or before the Ombudsman. The Constitution requires that the
Ombudsman and his deputies, "as protectors of the people shall act promptly on complaints filed in any form or
manner against public officials or employees of the government, or any subdivision, agency or instrumentality
thereof including government-owned or controlled corporations." (Art. XI, 12) In addition, the Solicitor General is
authorized to bring an action for quo warranto if it should be thought that a government corporation, like the
PCSO, has offended against its corporate charter or misused its franchise. (Rule 66, Sec. 2 [a] [d] For reasons set
for, we hold that petitioner have no cause against respondents and therefore their petition should be dismissed.

13. CIVIL LAW; OBLIGATIONS AND CONTRACTS; EQUIPMENT LEASE AGREEMENT, A LEASE CONTRACT. — The
features of the old Contract of Lease have been removed in the present ELA. While the rent is still expressed in
terms of percentage (it is now 4.3% of the gross receipts from the sale of tickets) in the ELA, the PGMC is now
guaranteed a minimum rent of P35,000.00 a year per terminal in commercial operation. (Par. 2) The PGMC is thus
assured of payment of the rental. The PCSO now bears all losses because the operation of the system is completely
in its hands. This feature of the new contract negates any doubt that it is anything but a lease agreement. In this
case the rental has to be expressed in terms of percentage of the revenue of the PCSO because rentals are treated
in the charter of the agency (R.A.. No. 1169, Sec. 6[C]) as "operating expenses" and the allotment for "operating
expenses" is a percentage of the net receipts. We hold that the ELA is a lease contract and that it contains none of
the features of the former contract which were considered "badges of a joint venture agreement" To further find
fault with the new contract would be to cavil and expose the opposition to the contract to be actually an opposition
to lottery under any and all circumstances. But" [t]he morality of gambling is not a justiciable issue. Gambling is
not illegal per se. . . It is left to Congress to deal with the activity as it sees fit." (Magtajas v. Pryce Properties
Corp. Inc., 234 SCRA 255, 268 [1994]. Cf. Lim v. Pacquing, G.R. No. 115044, Jan. 27, 1995) In the case of lottery,
there is no dispute that, to enable the Philippine Charity Sweepstakes Office to raise funds for charity, Congress
authorized the Philippine Charity Sweepstakes Office (PCSO) to hold or conduct lotteries under certain conditions.

14. REMEDIAL LAW; COURTS; WILL GENERALLY NOT INTERFERE WITH MATTERS OF BUSINESS JUDGMENT. —
Petitioners reply that to obviate the possibility that the rental would not exceed 15% of the net receipts what the
respondents should have done was not to agree on a minimum fixed rental of P35,000.00 per terminal in
commercial operation. This is a matter of business judgment which, in the absence of a clear and convincing
showing that it was made in grave abuse of discretion of the PCSO, this Court is not inclined to review.

15. ID.; EVIDENCE; PRESUMPTIONS; GOVERNMENT IS PRESUMED TO HAVE ACTED IN GOOD FAITH IN TAKING
CONTRACTS; CASE AT BAR. — By virtue of the provision on upgrading of equipment, petitioners claim, the parties
can change their entire agreement and thereby, by "clever means and devices," enable the PGMC to "actually
operate, manage, control and supervise the conduct and holding of the on-line lottery system," considering that as
found in the first decision, "the PCSO had neither funds of its own nor the expertise to operate and manage an on-
line lottery." The claim is speculative. It is just as possible to speculate that after sometime operating the lottery
system the PCSO will be able to accumulate enough capital to enable it to buy its own equipment and gain
expertise. As for expertise, after three months of operation of the on-line lottery, there appears to be no complaint
that the PCSO is relying on others, outside its own personnel, to run the system. In any case as in the construction
of statutes, the presumption is that in making contracts the government has acted in good faith. The doctrine that
the possibility of abuse is not a reason for denying power to the government holds true also in cases involving the
validity of contracts made by it.

16. CIVIL LAW; OBLIGATIONS AND CONTRACTS; LEASE CONTRACT, DEFINED. — A contract of lease, as this is
defined in Civil law, may call for some form of collaboration or association between the parties since lease is a
"consensual, bilateral, onerous and commutative contract by which one person binds himself to grant temporarily
the use of a thing or the rendering of some service to another who undertakes to pay some rent, compensation or
price." (5 PADILLA, CIVIL CODE 611 [6TH Ed 1974]).

17. ADMINISTRATIVE LAW; PHILIPPINE CHARITY SWEEPSTAKES OFFICE (RA 1169); NOT PROHIBITED FROM
HOLDING OR CONDUCTING LOTTERY "IN COLLABORATION, ASSOCIATION OR JOINT VENTURE" WITH ANOTHER
PARTY; PROHIBITION REFERS TO INVESTMENT IN BUSINESS ENGAGED IN LOTTERIES AND SIMILAR ACTIVITIES.
— The charter of the PCSO does not absolutely prohibit it from holding or conducting lottery "in collaboration,
association or joint venture" with another party. What the PCSO is prohibited from doing is to invest in a business
engaged in sweepstakes races, lotteries and similar activities, and it is prohibited from doing so whether in
"collaboration, association or joint venture" with others or "by itself." The reason for this is that these are
competing activities and the PCSO should not invest in the business of a competitor. When parsed, it will be seen
that 1 grants the PCSO authority to do any of the following: (1) to hold or conduct charity sweepstakes races,
lotteries and similar activities; and/or (2) to invest whether "by itself or in collaboration, association or joint
venture with any person, association, company entity" in any "health and welfare-related investments, programs,
projects and activities which may be profit oriented," except "the activities mentioned in the preceding paragraph
(A)," i.e., sweepstakes races, lotteries and similar activities. The PCSO is prohibited from investing activities
mentioned in the preceding paragraph (A)" because, as already stated, these are competing activities. The subject
matter of 1(B) is the authority of the PCSO to invest in certain projects for profit in order to enable it to expand its
health medical assistance and charitable grants. The exception in the law refers to investment in businesses
engaged in sweepstakes races, lotteries and similar activities. The limitation applies not only when the investment
is undertaken by the PCSO "in collaboration, association or joint venture" but also when made by the PCSO alone,
"by itself." The prohibition can not apply to the holding of a lottery by the PCSO itself. Otherwise, what it is
authorize to do in par. (A) would be negated by what is prohibited b par. (B). To harmonize pars. (A) and (B), the
latter must be read as referring to the authority of the PCSO to invest in the business of others. Put in another
way, the prohibition in 1(B) is not so much against the PCSO entering into any collaboration, association or joint
venture with others as against the PCSO investing in the business of another franchise holder which would directly
compete with PCSO’s own charity sweepstakes races, lotteries or similar activities. The prohibition applies whether
the PCSO makes the investment alone or with others.

18. ID.; ID.; MAY ENTER INTO EQUIPMENT LEASE CONTRACT WITHOUT PUBLIC BIDDING. — Finally the question
is whether the ELA is subject to public bidding. In justifying the award of the contract to the PGMC without public
bidding, the PCSO invokes E.O. No. 301. E.O. No. 301, Sec. 1 applies only to contracts for the purchase of
supplies, materials and equipment. It does not refer to contracts of lease of equipment like the ELA. The provisions
on lease are found in Secs. 6 and 7 but they refer to the lease of privately-owned buildings or spaces for
government use, or of government-owned buildings or spaces for private use, and these provisions do not require
public bidding. It is thus difficult to see how E.O. No. 301 can be applied to the ELA when the only feature of the
ELA that may thought of as close to a contract of purchase and sale is the option to buy given to the PCSO. An
option to buy is not of course a contract of purchase and sale.

PADILLA, J., concurring opinion:

1. REMEDIAL LAW; SUPREME COURT; DUTY TO APPLY THE LAW IRRESPECTIVE OF PERSONAL CONVICTION OF
MEMBER. — It is the duty of the Supreme Court to apply the laws enacted by Congress and approved by the
President, (unless they are violative of the Constitution) even if such laws run counter to a Member’s personal
conviction that gambling should be totally prohibited by law.

2. CIVIL LAW; OBLIGATIONS AND CONTRACTS; LEASE, DEFINED. — A lease is a contract whereby one of the
parties binds himself to give to another the enjoyment or use of a thing for a price certain and for a period which
may be definite or indefinite (Article 1643, Civil Code).

3. ID.; ID.; ID.; LESSOR OF EQUIPMENT, FREE TO DEMAND AMOUNT OF RENTALS. — It would appear from the
above legal provision that the ELA is truly a straight contract of lease. That the parties to the ELA have stipulated
on flexible rentals does not render it less of a lease contract and more of a joint venture. Surely, the PGMC as
owner of the leased equipment is free to demand the amount of rentals it deems commensurate for the use thereof
and, as long as PCSO agrees to the amount of such rentals, as justifying an adequate net return to it, then the
contract is valid and binding between the parties thereto. This is the essence of freedom to enter into contracts.

4. ADMINISTRATIVE LAW; PHILIPPINE CHARITY SWEEPSTAKES OFFICE; EQUIPMENT LEASE AGREEMENT (ELA), A
STRAIGHT LEASE EQUIPMENT. — Petitioners have not cited any law which prevents such stipulations to be included
in contracts of lease or which changes the nature of such agreement from a lease to some other juridical relation.
In fact, such stipulations are common in leases of real estate for commercial purposes. A ruling that would prevent
PCSO from entering into such lease agreement for the operation by PCSO of the lottery would defeat the intent of
the law to raise, from such lotto operations, funds for charitable institutions and government civic projects,
because an outright purchase by PCSO of the lottery equipment appears next to impossible or at least not feasible
costwise considering the capital equipment involved. In enacting the law creating the PCSO, Congress, to be sure,
did not intend to make it impossible for PCSO to attain its given purposes. A rigid interpretation of the restriction
on "association, collaboration, and joint venture" will result in such impossibility. Neither can petitioners’ argument
that certain provisions in the ELA will ensure PGMC’s continued participation and interest in the lottery operations
provide enough grounds for granting the petition in this case. Such arguments are based on speculations devoid of
any material or concrete factual basis. In sum, the ELA constitutes, in my view, a straight lease agreement of
equipment between PCSO and PGMC. Such an agreement is, as far as PCSO’s charter is concerned, validly and
lawfully entered into.

5. REMEDIAL LAW; SUPREME COURT; SHOULD NOT PREEMPT JUDGMENT OF COMMISSION ON AUDIT (COA) ON
MATTERS WITHIN ITS JURISDICTION; ISSUE ON NECESSITY OF PUBLIC BIDDING IN ELA, WITHIN COA’S
JURISDICTION. — On the allegation of lack of public bidding on the ELA, the Commission on Audit (COA) has yet to
resolve a case where the issue of the validity of the ELA due to lack of public bidding has been squarely raised. This
matter surfaced during the hearing of the present case. Needless to say, the Court should not preempt the
determination and judgment of the COA on matters which are within its primary jurisdiction under the Constitution.
6. POLITICAL LAW; ISSUE AS TO WHETHER ELA IS GROSSLY DISADVANTAGEOUS TO THE GOVERNMENT, A
POLITICAL QUESTION. — As to whether or not the ELA is grossly disadvantageous to the government, it should be
stressed that the matter involves, basically, a policy-determination by the executive branch which this Court should
not ordinarily reverse or substitute with its own judgment, in keeping with the time honored doctrine of separation
of powers.

FELICIANO, J., dissenting opinion:

1. ADMINISTRATIVE LAW; PHILIPPINE CHARITY SWEEPSTAKES OFFICE; PROHIBITION AGAINST HOLDING OR


CONDUCTING LOTTERY IN COLLABORATION, ASSOCIATION OR JOINT VENTURE WITH ANOTHER PARTY; VIEW
EXPRESSED BY THE INDIVIDUAL LEGISLATOR WHO CRAFTED QUESTIONED PROVISION SHOULD AT LEAST BE
ENTITLED TO A STRONG PRESUMPTION OF CORRECTNESS. — I turn first to the novel argument made in the
majority opinion that the charter of PCSO does not "prohibit [—] it from holding or conducting lottery in
collaboration, association or joint venture with another party." That opinion argues that "what [PCSO] is prohibited
from doing is to invest in a business engaged in sweepstakes races, lotteries and similar activities" which are
"competing activities and the PCSO should not invest in the business of a competitor." In so doing, my learned
brother Mendoza, J . purports to controvert and overturn the reading that the majority of this Court, through Mr.
Justice Davide, Jr., in the first Kilosbayan case gave to the relevant provisions of the PCSO charter. It so happens
that the critical language in the relevant PCSO charter provision — that is, the "except" clause in Section 1 (B) of
the PCSO charter as amended by B.P. Blg. 42 — was crafted by the then Assemblyman Hilario G. Davide, Jr. during
the deliberations in the Interim Batasan Pambansa on the bill that became B.P. Blg. 42. It is impliedly contended
by the majority that the intent of an individual legislator should not be regarded as conclusive as to the "collect"
interpretation of the provision of a statute. This is true enough, as a general proposition, for it is the intent of the
legislative body as manifested in the language used by the legislature that must be examined and applied by this
Court. However, it seems to me that the view expressed by an individual legislator who eventually comes to sit in
this Court as to the meaning to be given to words crafted by himself should, at the very least, be regarded as
entitled to a strong presumption of correctness. Put a little differently, I respectfully submit that in a situation such
as that presented in this case, a strong presumption arises that the interpretation given by Mr. Justice Davide, Jr.
and approved and adopted by the majority of the Court in the first Kilosbayan case faithfully reflected the intent of
the legislative body as a whole.

2. ID.; ID.; ID.; INTENT CLEARLY DISCERNIBLE IN WORDS USED BY LEGISLATURE. — Fortunately, in the present
case, it is not necessary to take the word of Mr. Justice Davide, Jr. as to what the intent of the legislative body was
in respect of Section 1 (B) of the present PCSO charter. For that intent is clearly discernible in the very words used
by the legislative body itself. Examining the actual text of Section 1 (B), it will be noted that what PCSO has been
authorized to do is not simply "to invest — whether by itself or in collaboration, association or joint venture —’ in
any health and welfare-related investments, programs, projects and activities which may be profit-oriented . . ."
Rather, the PCSO has been authorized "to engage in health and welfare-related investments, programs, projects
and activities which may be profit-oriented.

3. ID.; ID.; ID.; CONSTRUED. — The "except" clause in Section 1 (B), is not designed as a non-competition
provision, nor as a measure intended to prevent PCSO from putting its money in enterprises competing with PCSO.
What the law seeks thereby to avoid, rather, is the PCSO sharing or franchising out its exclusive authority to hold
and conduct sweepstakes races, lotteries and similar activities by collaborating or associating or entering into joint
ventures with other persons or entities not government-owned and legislatively chartered like the PCSO is. The
prohibition against PCSO sharing its authority with others is designed, among other things, to prevent diversion to
other uses of revenue strewns that should go solely to the charitable and welfare-related purposes specified in
PCSO’s charter. It will be seen that without the "except" clause inserted at the initiative of former Assemblyman
Davide, Jr., Section 1(B) would be so comprehensively worded as to permit PCSO precisely to share its exclusive
right to hold and conduct sweepstakes races, lotteries and the like. It is this "except" clause which prevents such
sharing or lending or farming out the PCSO "franchise" "by itself or in collaboration, association or joint venture
with any person, association, company or entity, whether domestic or foreign, except for the activities mentioned
in the preceding paragraph (A) . . ." This "except" clause thus operates, as it were, as a renvoi clause which refers
back to Section 1 (A) and in this manner avoids the necessity of simultaneously amending the text of Section 1
(A). The textual location, in other words, of the "except" clause offers no support for the new-found and entirely
original interpretation offered in the majority opinion.

4. ID.; ID.; EQUIPMENT LEASE AGREEMENT (ELA); PUBLIC BIDDING, A NECESSARY PREREQUISITE; CASE AT BAR.
— I consider next the question of whether the "Equipment Lease Agreement" (ELA) is subject to public bidding.
PCSO refers to Executive Order No. 301 dated 26 July 1987 in seeking to justify the award of the ELA to the PGMC
without public bidding. In accepting the contentions of PCSO, the majority opinion relies basically on two (2)
propositions. The first of these is that Executive Order No. 301, Section 1 refers to contracts of purchase and sale
[only]. The second proposition offered is that the use of the term "supplies" "cannot be limited so as to exclude
‘materials’ and ‘equipment’ without defeating the purpose for which these exceptions are made." The first
proposition finds no basis in the actual language used in the operative paragraph of Section 1 of Executive Order
No. 301 setting out the general rule." . . no contract for public services or for furnishing supplies, materials and
equipment to the government or any of its branches, agencies or instrumentalities shall be renewed or entered into
without public bidding, except under any of the following situation . . . It is worthy of special note that the above
opening paragraph does not even use the words "purchase and sale" or "buy and sell" ; the actual term used is
"furnishing . . . equipment to the government." The term "furnishing can scarcely be limited to sales to the
government but must instead be held to embraced any contract which provides the government with either title to
or use of equipment. A contrary view can only result in serious emasculation of Executive Order No. 301. It is
common place knowledge that equipment leases (especially "financial leases" involving expensive capital
equipment) are often substitutes for or equivalents of purchase and sale contracts, given the multifarious credit
and tax constraints operating in the market place. Thus the above first proposition fails to take into account actual
commercial practice already reflected in our present commercial and tax law. The second proposition similarly
requires one who must interpret and apply the provisions of Section 1 of Executive Order No. 310 to disregard the
actual language used in that Order. For Executive Order No. 301 uses done (3) distinguishable terms "supplies,"
"materials" and "equipment." These terms are not always used simultaneously in Executive Order No. 301. In some
places, only "supplies" is used; in other places, only "materials" is employed; and in still other places, the term
"equipment" is used alongside with, but separately from, both of the other two (2) terms. To say that "supplies,"
"materials" and "equipment" are merely synonymous or fungible would appear too casual a treatment of the actual
language of Executive Order No. 301. The fundamental difficulty with the above two (2) propositions is this: that
public bidding is precisely the standard and best way of ensuring that a contract by which the government seeks to
provide itself with supplies or materials or equipment is in fact the most advantageous to government. It is true
enough that public bidding may be inconvenient and time consuming; but it is still the only method of procurement
so far invented by man by which the government could reasonably expect to keep relatively honest those who
would contract with it. This is the basic reason why competition through public bidding is the general rule and not
the exception.

5. ID.; ID.; JOINT VENTURE NOT CONVERTED INTO AN ORDINARY EQUIPMENT LEASE AGREEMENT BY SIMPLE
REARRANGEMENT OF WORDS AND PARAGRAPHS. — I would address finally the question of whether or not the
original contract between PCSO and PGMC which the Court in the first Kilosbayan case found to be a joint venture,
has been so substantially changed as to have been effectively converted from a joint venture arrangement to an
ordinary equipment lease agreement. The majority of the Court have concluded that the ELA has been effectively
"purged" of the characteristics of a joint venture arrangement and that it should now be regarded as lawful under
the provisions of the revised PCSO charter. It is suggested, with respect that the burden of showing that the
elements found by the Court in the first Kilosbayan case to constitute the prohibited "collaboration, association or
joint venture" have truly (and not simply ostensibly) been expunged from the relationship between PCSO and
PGMC rests, not on Kilosbayan nor on this Court, but rather on PCSO and PGMC. It is respectfully submitted further
that that burden has not been adequately discharged in the present case by the simple re-arrangement of words
and paragraphs of the old contract considering that the reality of the re-arrangement is controverted by the
commercial terms of the new contract.

6. ID.; ID.; ID.; RENTAL IS NOT EXPRESSED IN TERMS OF A FIXED AND ABSOLUTE FIGURE. — I begin with the
natare and form of the rental provisions of the ELA. The rental payable by PCSO as lessee of equipment and other
assets owned by PGMC as lessor, is fixed at a specified percentage, 4.3% of the gross revenues accruing to PCSO
out of or in connection with the operation of such equipment and assets. The rental payable is not, in other words,
expressed in terms of a fixed and absolute figure, although a floor amount per leased terminal is set. Instead, the
actual total amount of the rental rises and falls from month to month as the revenues grow or shrink in volume. I
respectfully suggest that thereby the lessor or the facilities leased has acquired a legal interest either in the
business of the lessee PCSO that is conducted through the operation of such facilities and equipment, or at least in
the income stream of PCSO originating from such operation. In the commercial world, a rental provision cast in
terms of a fixed participation in the gross revenues of the lessee, signals substantial economic interest in the
business of such lessee. Such a provision cannot be regarded as compatible with an "ordinary" equipment rental
agreement. On the other hand, it is of the very substance of a commercial joint venture and of economic
collaboration or association. The assertion that the 4.3% rental rate is "well within the maximum of 15% net
receipt fixed by law" is entirely meaningless insofar as explaining the structure of the rental provision and the
reasonableness thereof is concerned. In the second place, it is child’s play for an accountant to convert absolute
figures representing operating expenses [actual or budgeted] into a percentage of "net receipts [actual or
expected]" ; there is nothing in Section 6 (C) of the PCSO charter that either requires or justifies the adoption of
the rental provision found both in the old contract and in the ELA giving PGMC a fixed share in gross revenues. The
explanation offered by the Solicitor General is unfortunately merely contrived; its acceptance depends on lack of
familiarity with elementary accounting concepts.

7. ID.; ID.; APPROPRIATE RECOURSE TO THE LEGISLATIVE AUTHORITY TO VENTILATE LEGAL RESTRICTIONS ON
ITS REVISED CHARTER. — The PCSO appears sincerely convinced that the legal restrictions placed upon its
operations by the actual text of Section 1 (B) of its revised charter prevent it from realizing the kinds and volume
of revenues that it needs for charitable and health and welfare-oriented programs. In this situation, the appropriate
recourse is not to make light of nor to conjure away those legal restrictions but rather to go to the legislative
authority and there ask for further amendment of its charter. In that same forum, the petitioners may in turn
ventilate their own concerns and deeply felt convictions.

REGALADO., J., dissenting opinion:

1. REMEDIAL LAW; ACTIONS; "LAW OF THE CASE" DOCTRINE; PURPOSE. — Even in American law, the "law of the
case" doctrine was essentially designed to express the practice of courts generally to refuse to reopen what has
been decided and, thereby, to emphasize the rule that the final judgment of the highest court is a final
determination of the rights of the parties. That is the actual and basic role that it was conceived to play in judicial
determinations, just like the rationale for the doctrines of res judicata and conclusiveness of judgment.

2. ID.; ID.; ID.; MAY ARISE FROM AN ORIGINAL HOLDING OF A HIGHER COURT ON A WRIT OF CERTIORARI. —
The "law of the case" may also arise from an original holding of a higher court on a writ of certiorari, and is binding
not only in subsequent appeals or proceedings in the same case, but also in a subsequent suit between the same
parties. Furthermore, since in our jurisdiction an original action for certiorari to control and set aside a grave abuse
of official discretion can be commenced in the Supreme Court itself, it would be absurd that for its ruling therein to
constitute the law of the case, there must first be a remand to a lower court which naturally could not be the court
of origin from which the postulated second appeal should be taken.

3. ID.; ID.; ID.; ID.; WITH SAME BINDING EFFECT WITH THAT OF AN APPEALED CASE. — What I wish to
underscore is that where, as in the instant case, the holding of this highest Court on a specific issue was handed
down in an original action for certiorari, it has the same binding effect as it would have had if promulgated in a
case on appeal.

4. ID.; ID.; CAUSE OF ACTION; CONCEPT THEREOF IN PUBLIC INTEREST CASES SHOULD DIFFER FROM PRIVATE
INTEREST LITIGATIONS. — It is true that a right of action is the right or standing to enforce a cause of action. For
its purposes, the majority urges the adoption of the standard concept of a real party in interest based on his
possession of a cause of action. It could not have failed to perceive, but nonetheless refuses to concede that the
concept of a cause of action in public interest cases should not be straitjacketed within its usual narrow confines in
private interest litigations.

5. ID.; ID.; REAL PARTY-IN-INTEREST; NO DEFINED RULE FOR ITS DETERMINATION. — There is no clearly defined
rule by which one may determine who is or is not real party in interest, nor has there been found any concise
definition of the term. Who is the real party in interest depends on the peculiar facts of each separate case, and
one may be a party in interest and yet not be the sole real party in interest.

6. ID.; ID.; ID.; ABSENCE OF REMEDIAL MEASURE, AVAILABLE TO PERSONS NOT REAL PARTIES IN-INTEREST IN
QUESTIONING GOVERNMENT CONTRACTS. — If the majority would have its way in this case, there would be no
available judicial remedy against irregularities or excesses in government contracts for lack of a party with legal
standing or capacity to sue. The legal dilemma or vacuum is supposedly remediable under a suggestion submitted
in the majority opinion. The majority has apparently forgotten its own argument that in the present case
petitioners are not the real parties, hence they cannot avail of any remedial right to file a complaint or suit. It is,
therefore, highly improbable that the Commission on Audit would deign to deal with those whom the majority says
are strangers to the contract. Again, should this Court now sustain the assailed contract, of what avail would be the
suggested recourse to the Ombudsman? Finally, it is a perplexing suggestion that petitioners ask the Solicitor
General to bring a quo warranto suit, either in propria persona or ex relatione, not only because one has to contend
with that official’s own views or personal interests but because he is himself the counsel for respondents in this
case. Any proposed remedy must take into account not only the legalities in the case but also the realities of life.

7. ID.; ID.; JUDGMENT; CHANGE OF MEMBERSHIP OF MEMBERS OF COURT, NOT GROUND TO REEXAMINE
RULING. — The majority believes that in view of the retirement and replacement of two members of the Court, it is
time to reexamine the ruling in the first lotto case. A previous judgment of the Court may, of course, be revisited
but if the ostensible basis is the change of membership and known positions of the new members anent an issue
pending in a case in the Court, it may not sit well with the public as a judicious policy. This would be similar to the
situation where a judgment promulgated by the Court is held up by a motion for reconsideration and which motion,
just because the present Rules do not provide a time limit for the resolution thereof, stays unresolved until the
appointment of members sympathetic thereto. Thus, the unkind criticisms of "magistrate shopping" or "court
packing" levelled by disgruntled litigants is not unknown to this Court.

8. ID.; ID.; "LAW OF THE CASE" DOCTRINE; ISSUE ON RIGHT OF PETITIONER TO FILE AND MAINTAIN ACTION
QUESTIONING LEGALITY OF GOVERNMENT CONTRACTS, FORECLOSED BY COURT’S JUDGMENT IN FIRST LOTTO
CASE. — I hold the view that the matter of the right of petitioners to file and maintain this action — whether the
objection thereto is premised on lack of locus standi or right of action — has already been foreclosed by our
judgment in the first lotto case, G.R. No. 113375. If the majority refuses to recognize such right under the "law of
the case" principle, I see no reason why that particular issue can still be ventilated now as a survivor of the
doctrinal effects of res judicata.
9. ID.; ID.; ID.; REMOVAL AND REPLACEMENT OF SOME OBJECTIONABLE TERMS OF CONTRACT DOES NOT
EXTINGUISH IDENTITY OF SUBJECT MATTER IN BOTH CASES. — It is undeniable that in that case and the one at
bar, there is identity of parties, subject matter and cause of action. Evidently, the judgment in G.R. No. 113375
was rendered by a court of competent jurisdiction, it was an adjudication on the merits, and has long become final
and executory. There is, to be sure, an attempt to show that the subject matter in the first action is different from
that in the instant case, since the former was the original contract and the latter is the supposed expanded
contract. I am not persuaded by the proffered distinction. The removal and replacement of some objectionable
terms of a contract, which nevertheless continues to operate under the same basis, with on the same property, for
the same purpose, and through the same contracting parties does not service to extinguish the identity of the
subject matter in both cases. This would be to exalt form over substance. Furthermore, respondents themselves
admitted that the new contract is actually the same as the original one, with just some variants in the terms of the
latter to eliminate those which were objected to. The contrary assumption now being floated by respondents would
create chaos in our remedial and contractual laws, open the door to fraud, and subvert the rules on the finality of
judgments.

10. ID.; ID.; CONCLUSIVENESS OF JUDGMENT; ALL ISSUES FINALLY ADJUDGED SHALL BE CONCLUSIVE
BETWEEN PARTIES ON APPEAL; CASE AT BAR. — Even assuming purely ex hypothesi that the amended terms in
the expanded lease agreement created a discrete set of litigable violations of the statutory charter of the Philippine
Charity Sweepstakes Office, thereby collectively resulting in a disparate actionable wrong or delict, that would
merely constitute at most a difference in the causes of action in the former and the present cases. Under Section
49(c), Rule 39 of the Rules of Court, we would still have a situation of collateral estoppel, better known in this
jurisdiction as conclusiveness of judgment. Hence, all relevant issues finally adjudged in the prior judgment shall
be conclusive between the parties in the case now before us and that definitely includes at the very least the
adjudgment therein that petitioners have the locus standi or the right to sue respondents on the contracts
concerned.

DAVIDE, JR., J., dissenting opinion:

1. REMEDIAL LAW; SUPREME COURT; SUDDEN REVERSAL OF RULING PUTS TO JEOPARDY THE FAITH AND
CONFIDENCE OF THE PEOPLE IN THE CERTAINTY AND STABILITY OF THE PRONOUNCEMENTS OF THIS COURT. — I
am disturbed by the sudden reversal of our rulings in Kilosbayan, Inc., Et. Al. v. Guingona, Et. Al. (hereinafter
referred to as the first lotto case) regarding the application or interpretation of the exception clause in paragraph
B, Section 1 of the Charter of the PCSO (R.A. No. 1169), as amended by B.P. Blg. 442, and on the issue of locus
standi of the petitioners to question the contract of lease involving the on-line lottery system entered into between
the Philippine Charity Sweepstakes Office (PCSO) and the Philippine Gaming Management Corporation (PGMC).
Such reversal upsets the salutary doctrines of the law of the case, res judicata, and stare decisis. It puts to
jeopardy the faith and confidence of the people, specially the lawyers and litigants, in the certainty and stability of
the pronouncements of this Court. It opens the floodgates to endless litigations for reexamination of such
pronouncements and weakens this Court’s judicial and moral authority to demand from lower courts obedience
thereto and to impose sanctions for their opposite conduct.

2. ADMINISTRATIVE LAW; PHILIPPINE CHARITY SWEEPSTAKES OFFICE; CANNOT HOLD AND CONDUCT CHARITY
SWEEPSTAKES RACES, LOTTERIES AND OTHER SIMILAR ACTIVITIES IN COLLABORATION, ASSOCIATION OR
JOINT VENTURE WITH ANY OTHER PARTY. — In the first lotto case, this Court also emphatically ruled that the
language of Section 1 of R.A. No. 1169, as amended by B.P. Blg. 42, is indisputably clear that with respect to this
[PCSO’s] franchise or privilege "to hold and conduct charity sweepstakes races, lotteries and other similar
activities," the PCSO cannot exercise it "in collaboration, association or joint venture" with any other party. This is
the unequivocal meaning and import of the phrase "except for the activities mentioned in the preceding paragraph
(A)," namely, "charity sweepstakes races, lotteries and other similar activities.

3. REMEDIAL LAW; ACTIONS; UNDER THE PRINCIPLE OF EITHER THE LAW OF THE CASE OR RES JUDICATA, THE
PCSO AND PGMC ARE BOUND BY THE RULING IN THE FIRST LOTTO CASE ON THE LOCUS STANDI OF THE
PETITIONERS AND INTERPRETATION OF THE EXCEPTION CLAUSE IN PARAGRAPH B, SECTION 1 OF R.A. 1169, AS
AMENDED FOR FAILING TO MOVE FOR ITS RECONSIDERATION. — The PCSO and the PGMC never challenged our
application or interpretation of the exception clause and our definitions of the terms collaboration, association, and
joint venture. On the contrary, they unconditionally accepted the same by not asking for reconsideration of our
decision in the first lotto case. Under the principle of either the law of the case or res judicata the PCSO and the
PGMC are bound by the ruling in the first lotto case on the locus standi of the petitioners and the application or
interpretation of the exception clause in paragraph B, Section 1 of R.A. No. 1169, as amended. Moreover, that
application or interpretation has been laid to rest under the doctrine of stare decisis and has also become part of
our legal system pursuant to Article 8 of the Civil Code which provides: "Judicial decisions applying or interpreting
the laws or the constitution shall form part of the legal system of the Philippines."

4. ID.; ID.; LAW OF CASE; CONSTRUED. — The principle of the law of the case "is necessary as a matter of policy
to end litigation. There would be no end to a suit if every obstinate litigant could, by repeated appeals, compel a
court to listen to criticisms on their opinions, or speculate on chances from changes in its members."
5. ID.; ID.; ID.; DOCTRINE APPLIES WHERE THE SECOND CASE IS BUT A SEQUEL TO AND CONTINUATION OF THE
FIRST LOTTO CASE. — It is, however, contended that the law of the case is inapplicable because that doctrine
applies only when a case is before an appellate court a second time after its remand to a lower court. While indeed
the statement may be correct, it disregards the fact that this case is nothing but a sequel to and is, therefore, for
all intents and purposes, a continuation of the first lotto case. By their conduct, the parties admitted that it is, for
which reason the PGMC and the PCSO submitted in the first lotto case a copy of the ELA in question, and the
petitioners commenced the instant petition also in the said case. Our resolution that the validity of the ELA could
not be decided in the said case because the decision therein had become final does not detract from the fact that
this case is but a continuation of the first lotto case or a new chapter in the raging controversy between the
petitioners, on the one hand, and the PCSO and the PGMC, on the other, on the operation of the on-line lottery
system.

6. ID.; ID.; CONCLUSIVENESS OF JUDGMENT; APPLICABLE TO CASE AT BAR WHERE THE CONTRACT IN QUESTION
IS NOT DIFFERENT FROM OR UNRELATED TO THE FIRST NULLIFIED CONTRACT. — Equally unacceptable is the
majority opinion’s rejection of the related doctrine of conclusiveness of judgment on the ground that the question
of standing is a legal question, as this case involves a different or unrelated contract. The legal question of locus
standi which was resolved in favor of the petitioners in the first lotto case is the same in this case and in every
subsequent case which would involve contracts relating or incidental to the conduct or holding of lotteries by the
PCSO in collaboration, association, or joint venture with any person, association, company, or entity. And, the
contract in question is not different from or unrelated to the first nullified contract, for it is nothing but a substitute
for the latter. Respondent Morato was even candid enough to admit that no new and separate public bidding was
conducted for the ELA in question because the PCSO was of the belief that the public bidding for the nullified
contract was sufficient.

7. ID.; ID.; PRECLUSION OF ISSUES OR COLLATERAL ESTOPPEL; DOES NOT APPLY TO CASE AT BAR WHERE
ISSUE INVOLVED IS ONE OF LAW. — Its reliance on the ruling in Montana v. United States that preclusion of issues
or collateral estoppel does not apply to issues of law, at least when substantially unrelated claims are involved, is
misplaced. For one thing, the question of the petitioners’ legal standing in the first lotto case and in this case is one
and the same issue of law. For another, these cases involve the same and not substantially unrelated subject
matter, viz., the second contract between the PCSO and the PGMC on the operation of the on-line lottery system.
The majority opinion likewise failed to consider that in the very authority it cited regarding the exception to the rule
of issue preclusion (Restatement of Law, 2d Judgments S. 28), the second illustration stated therein is subject to
this NOTE: "The doctrine of the stare decisis may lead the court to refuse to reconsider the question of sovereign
immunity," which simply means that stare decisis is an effective bar to a re-examination of a prior judgment.

8. ID.; ID.; DOCTRINE OF STARE DECISIS; CONSTRUED; ABANDONMENT THEREOF NOT WARRANTED IN CASE AT
BAR. — The doctrine of stare decisis embodies the legal maxim that a principle or rule of law which has been
established by the decision of a court of controlling jurisdiction will be followed in other cases involving a similar
situation. It is founded on the necessity for securing certainty and stability in the law and does not require identity
or privity of parties. This is explicitly fleshed out in Article 8 of the Civil Code which provides that decisions applying
or interpreting the laws or the constitution shall form part of the legal system. Such decisions "assume the same
authority as the statute itself and, until authoritatively abandoned, necessarily become, to the extent that they are
applicable, the criteria which must control the actuations not only of those called upon to abide thereby but also of
those in duty bound to enforce obedience thereto." Abandonment thereof must be based only on strong and
compelling reasons — which I do not find in this case — otherwise, the becoming virtue of predictability which is
expected from this Court would be inuneasurably afflicted and the public’s confidence in the stability of its solemn
pronouncements diminished.

9. ID.; ID.; RES JUDICATA; ASPECTS. — The doctrine of res judicata has dual aspects: (1) as a bar to the
prosecution of a second action upon the same claim, demand, or cause of action; and (2) as preclusion to the
relitigation of particular facts or issues in another action between the same parties on a different claim or cause of
action.

10. ID.; ID.; ID.; CONSTRUED. — Public policy, judicial orderliness, economy of judicial time, and the interest of
litigants as well as the peace and order of society, all require that stability should be accorded judgments; that
controversies once decided on their merits shall remain in repose; that inconsistent judicial decisions shall not be
made on the same set of facts; and that there be an end to litigation which, without the said doctrine, would be
endless. It not only puts an end to strife, but recognizes that certainty in legal relations must be maintained. It
produces certainty as to individual rights and gives dignity and respect to judicial proceedings.

11. ID.; ID.; RULE ON REAL PARTY-IN-INTEREST SUBORDINATE TO DOCTRINE OF LOCUS STANDI. — In public law
the rule of real party-in-interest is subordinated to the doctrine of locus standi. The majority opinion declares that
the real issue in this case is not whether the petitioners have locus standi but whether they are the real parties-in-
interest. This proposition is a bold move to set up a bar to taxpayer’s suits or cases invested with public interest by
requiring strict compliance with the rule on real-party-in-interest in ordinary civil action, thereby effectively
subordinating to that rule the doctrine of locus standi. I am not prepared to be a party to that proposition. First.
Friendenthal, Et Al., whose book is cited in the majority opinion in its discussion of the rule on real party in interest
and the doctrine of locus standi, admit that there is a difference between the two, between the two, and that the
former is not strictly applicable in public law cases. Second. The attempt to use the real-party-in-interest rule is to
resurrect the abandoned restrictive application of locus standi, This Court, speaking through the constitutionalist
nonpareil, Justice and later Chief Justice Enrique Fernando, has already declared in Tan v. Macapagal that as far as
a taxpayer’s suit is concerned, this Court is not devoid of discretion as to whether or not it should be entertained.
Third. Such attempt directly or indirectly restricts the exercise of the judicial authority of this Court in an original
action — and there had been many in the past — to determine whether or not there has been grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the
Government. Only a very limited few may qualify, under the real-party-in-interest rule, to bring actions to question
acts or contracts tainted with such vice. Where, because of fear of reprisal, undue pressure, or even connivance
with the parties benefited by the contracts or transactions, the so-called real-party-in-interest chooses not to sue,
the patently unconstitutional and illegal contracts or transactions will be placed beyond the scrutiny of this Court,
to the irreparable damage of the Government, and prejudice to public interest and the general welfare.

12. STATUTORY CONSTRUCTION; LAWS; LEGISLATIVE AMENDMENT; AUTHOR THEREOF, BEST AUTHORITY ON
INTENTION OR RATIONALE OF AMENDMENT. — Before I take up the defined issues, I find it necessary to meet
squarely the majority opinion’s interpretation of paragraph B, Section 1 of R.A. No. 1169, as amended. This is, of
course, on the assumption that this Court may now disregard the doctrines of the law of the case, res judicata, and
stare decisis. I respectfully submit that the best authority on the intention or rationale of a legislative amendment
is its author. Fortunately, I happened to be the author of the exception clause in said provision. The language of
that clause is very short and simple, and the elaboration given therefor, as earlier shown, is equally short and
simple. The sponsor of the measure, then Assemblyman, now Congressman, Ronaldo Zamora did not even ask for
an explanation or clarification; he readily accepted the amendment. Nobody from the floor interpellated me for an
explanation or clarification. I regret then to say that neither the letter nor the spirit of the exception clause in
paragraph B supports the interpretation proposed in the majority opinion. The reason given in the majority opinion
for the alleged prohibition from investing in "activities mentioned in the preceding paragraph (A)" (i.e., the holding
or conducting of charity sweepstakes races, lotteries, and other similar activities) is that "these are competing
activities." In that aspect alone, the majority opinion has clearly misconstrued the exception clause. The prohibition
is not direct against such activities, since they are in fact the franchised primary activities of the PCSO. What is
prohibited is the conduct or holding thereof "in collaboration, association or joint venture with any person,
association, company, or entity, whether domestic or foreign." In the first lotto case, this Court explained the
principal reasons for such prohibition. If the purpose of the prohibition in the exception clause is indeed to prevent
competition, it would be with more reason that no other person, natural or juridical, should be allowed to share on
the PCSO’s franchise to hold and conduct lotteries. In short, the argument in the majority opinion sustains the
rationale of the prohibition.

13. ADMINISTRATIVE LAW; PHILIPPINE CHARITY SWEEPSTAKES OFFICE (PCSO); EQUIPMENT LEASE CONTRACT
(ELA), A JOINT VENTURE CONTRACT; DELETION OF PROVISIONS WHICH HOWEVER DID NOT AFFECT THE
INDIVISIBILITY OF COMMUNITY OF INTEREST ON THE ON-LINE LOTTERY SYSTEM DOES NOT TRANSFORM
CONTRACT TO ONE OF LEASE. — I am not persuaded. To my mind, the parties only performed a surgery on the
nullified contract by merely deleting therefrom provisions which this Court had considered in the first lotto case to
be badges of a joint venture contract and by engrafting some modifications on rental, which include an option to
purchase. The PGMC and the PCSO conveniently forgot that per this Court’s findings in the first lotto case, they had
an indivisible community of interest in conception, birth, and growth of the on-line lottery and that each is wed to
the other for better or for worse. The surgery affected only the post-natal activities of the union, but not the
indivisibility of their community of interest at conception and at the birth of the on-line lottery system. Put
differently, it only separated one from the other from bed and board but did not dissolve the bonds of such
indivisibility of community of interest. This was confirmed by respondent Morato when he candidly confessed in his
letter to the COA Chairman that: [I]t is apparent that the lease of the needed equipment through negotiations is
the most advantageous to the Government since so many studies, plans and procedures had already been worked
out with PGMC since October 1993 as a result of the previous bidding (Sec. October 1993 Executive Order No. 301
[1987]).

14. ID.; ID.; ID.; ID.; RENTAL CLAUSE. — Even on the face of the new ELA, the elements of the proscribe joint
venture or, at the very least, collaboration or association, can be detected, albeit they are hidden behind the skirt
of the following: (a) the Rental Clause; (b) the upgrading provision under the Repair Services Clause; and (c) the
details of what are embraced in the term Lottery Equipment and Accessories subject of the contract, which are
found in Annex "A" of the ELA. The Rental Clause provides for a flexible rate based on a percentage of the gross
amount of ticket sales, payable bi-weekly, with an annual minimum rental fixed at P35,000.00 per terminal in
commercial operation, any shortfall of which shall be paid out of the proceeds of the current ticket sales. This is an
unusually novel arrangement which insures and guarantees the PGMC full participation in the gross proceeds of
ticket sales even if, ultimately, a draw could mean losses to the PCSO. The rental clause is, indeed, a subtle
scheme to unconditionally guaranty PGMC’s share in the profits.
15. ID.; ID.; ID.; ID.; UPGRADING CLAUSE. — It should be stressed here that in the old contract the upgrading
clause is under facilities, which include among other things all capital equipment, computers, terminals, and
softwares. Under the upgrading provision, new equipment may be used; the number of terminals may be
increased; and new terms and conditions, including rates of "rentals" and the purchase price in case of exercise of
the option to buy, may be agreed upon. This makes the ELA not just a sweetheart contract, but one which will
preserve the parties’ indivisible union and community of interest, thereby giving further credence to this Court’s
observation in the first lotto case that each is wed to the other for better or for worse.

16. ID.; ID.; ID.; ID.; EQUIPMENT. — It may be observed that the term facilities in the old contract included all
capital equipment but excluded "technology, intellectual property rights, knowhow, processes and systems." As this
Court found in the first lotto case, there was a separate provision on the PGMC’s obligations (1) to train PCSO and
other local personnel and (2) to effect the transfer of technology and other expertise. Clearly, the inclusion of
"technology, intellectual property rights, knowhow, processes and systems" in the term Equipment was a ploy to
hide, again, the continuing indispensable collaboration of the PGMC in the conduct of the on-line lottery business.

17. ID.; ID.; ID.; PUBLIC BIDDING, A PREREQUISITE. — Even assuming that the subject ELA is not a joint venture
contract, still it must be nullified for having been entered into without public bidding and for being grossly
disadvantageous to the Government. The opening paragraph of E.O. No. 298, series of 1940, of President Manuel
L. Quezon, entitled "Prohibiting the Automatic Renewal of Contracts, Requiring Public Bidding Before Entering Into
New Contracts, Providing Exceptions Therefor," states that . . . contracts for public services or for furnishing of
supplies, materials, and equipment to the Government be submitted to public bidding. This was restated in E.O.
No. 301 of President Corazon C. Aquino, entitled "Decentralizing Actions on Government Negotiated Contracts,
Lease Contracts and Records Disposals," whose Section 1 reads in part that . . . no contract for public services or
for furnishing supplies, materials and equipment to the government or any of its branches, agencies or
instrumentalities shall be renewed or entered into without public bidding, except under any of the following
situations. It is clear that Sections 1 and 2 of Executive Order No. 301 refer to contracts for public services, or
furnishing supplies, materials, and equipment to the government. In no uncertain terms, the Executive Order itself
distinguishes the terms supplies, materials, and equipment from each other, i.e., it did not intend to consider them
as synonymous terms. If such were the intention, there would have been no need to enumerate them separately
and to limit subparagraphs (a), (b), and (e) to supplies; subparagraph (c) to materials, and subparagraph (f) to all
three (supplies, materials and equipment). The specific mention of supplies in subparagraphs (a), (b), and (e) was
clearly intended to exclude therefrom materials and equipment, and the specific mention of materials in
subparagraph (c) was likewise intended to exclude supplies and equipment. Expressio unius est exclusio alterius.
Elsewise stated, the Executive Order leaves no room for a construction that confuses supplies with materials or
equipment or either of the last two with the first or with each other. Besides, subparagraph (e) of Section 1
unequivocally refers to a contract of purchase of supplies. The ELA in question is not a contract of purchase of
supplies. The parties themselves proclaim to the whole world and solemnly represent to this Court that it is a
contract of lease of equipment. They entitled it, in bold big letters, "EQUIPMENT LEASE AGREEMENT," and devote
the first clause thereof to EQUIPMENT. Accordingly, since the ELA is not a contract of purchase of supplies, we are
unable to understand why the DOJ applied Section 1(e) of E.O. No. 301 to exempt the ELA from the public-bidding
requirement.

18. ID.; ID.; ID.; NOT COVERED BY COA RULES AND REGULATION FOR PREVENTION OF IRREGULAR,
UNNECESSARY, EXCESSIVE AND EXTRAVAGANT EXPENDITURES. — The submission of the petitioners that the ELA
violates paragraph 4.3 of the COA Rules and Regulations for the Prevention of Irregular, Unnecessary, Excessive,
and Extravagant Expenditures is not persuasive. The said paragraph covers Lease Purchase contracts. The ELA in
question hardly qualifies as a lease purchase contract because there is no perfected agreement to purchase (sale)
but only an option on the part of PCSO to purchase the equipment for P25 million. It is, in fact, an option which is
not supported by a separate and distinct consideration, hence, not really binding upon the PGMC.

19. CIVIL LAW; OBLIGATIONS AND CONTRACTS; OPTIONAL CONTRACT, CONSTRUED. — An optional contract is a
privilege existing in one person, for which he had paid a consideration, which gives him the right to buy certain
specified property from another person, if he chooses, at any time within the agreed period, at a fixed price. Said
contract is separate and distinct contract from the contract which the parties may enter into upon the
consummation of the option. The second paragraph of Article 1479 of the Civil Code expressly provides that" [a]n
accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promisor if
the promise supported by a consideration distinct from the price."

20. ADMINISTRATIVE LAW; PHILIPPINE CHARITY SWEEPSTAKES OFFICE (PCSO); EQUIPMENT LEASE CONTRACT
(ELA); CONTRACT GROSSLY DISADVANTAGEOUS TO THE PCSO. — A comparison between the nullified contract
and the assailed ELA to prove that the latter is grossly disadvantageous to the PCSO is not at all hampered by any
perceived difficulty. For all the representations, duties, obligations, and responsibilities well as the automatic loss of
its ownership over the facilities without any further consideration in favor of the PCSO after the expiration of only
eight years, the PGMC gets only a so-called rental of 4.9% of gross receipts from ticket sales, payable net of taxes
required by law to be withheld, which may, however, be drastically reduced, or in extreme cases, totally obliterated
because the PGMC bears "all risks if the revenue from ticket sales, on an annualized basis, are insufficient to pay
the entire prize money." Under the assailed ELA, however, the PGMC is entitled to receive a flexible rental
equivalent to 4.3% of the gross ticket sale (or only 0.6% lower than it was entitled to under the old contract) for
the use of its on-line lottery system equipment (as distinguished from facilities in the old contract), which does not
anymore include the nationwide telecommunications network, without any assumption of business risks and the
obligations (1) to keep the facilities in safe condition and if necessary, to upgrade, replace, and improve them from
time to time as technology develops, and bear all expenses relating thereto; (2) to undertake advertising and
promotions campaign; (3) to bear all taxes, amusements, or other charges imposed on the activities covered by
the contract; (4) to pay the premiums for third party or comprehensive insurance on the facilities: (5) to pay all
expenses for water, light, fuel, lubricants, electric power, gas, and other utilities used and necessary for the
operation of the facilities; and to pay the salaries and related costs of skilled and qualified personnel for
administrative and technical operations and maintenance crew. The PGMC is also given thereunder a special
privilege of receiving P25 million as purchase price for the equipment at the expiration of eight years should the
PCSO exercise its option to purchase. Unlike in the old contract where nothing may at all be due the PGMC of the
event that the ticket sales, computed-on an annual basis, are insufficient to pay the entire prize money, under the
new ELA the PCSO is under obligation to pay rental equivalent to 4.3% of the gross receipts from ticket sales, the
aggregate amount of which per year should not be less than the minimum annual rental of P35,000.00 per terminal
in commercial operation. Any shortfall shall be paid out of the proceeds of the then current ticket sales after
payment of prizes and agents’ commissions but prior to any other payments, allocations, or disbursements. The
grossness of the disadvantage to the PCSO is all too obvious, and why the PCSO accepted such unreasonable,
unconscionable, and inequitable terms and conditions confounds as.

VITUG, J., concurring opinion:

1. REMEDIAL LAW; COURTS; JUDICIAL POWER, DEFINED. — "Judicial power," is such authority and duty of courts
of justice "to settle actual controversies involving rights which are legally demandable and enforceable and to
determine whether or not there has been a grave abuse of discretion, amounting to lack or excess of jurisdiction,
on the part of any branch or instrumentality of the Government. I take it that the provision of Article VIII, Section
1, Constitution has not been intended to unduly mutate, let alone to disregard, the long established rules on locus
standi. Neither has it been meant, I most respectfully submit, to do away with the principle of separation of powers
and its essential incident such as by, in effect, conferring omnipotence on, or allowing an intrusion by, the courts in
respect to purely political decisions, the exercise of which is explicitly vested elsewhere, and subordinate to that of
their own the will of either the Legislative Department of the Executive Department — both co-equal, independent
and coordinate branches, along with the Judiciary, in our system of government. Again, if it were otherwise, there
indeed would be truth to the charge, in the words of some constitutionalist, that "judicial tyranny" has been
institutionalized by the 1987 Constitution, an apprehension which should, I submit, rather be held far from truth
and reality.

2. ID.; ACTIONS; LOCUS STANDI, RULE THEREON NOT DISREGARDED BY CONSTITUTIONAL DEFINITION OF
JUDICIAL POWER. — I most humbly reiterate the separate opinion I have made in Kilosbayan, Inc., Et Al., v.
Teofisto Guingona, Sr., etc., Et. Al. (G.R. No. 113375 promulgated on 05 May 1994). Back to the core of the
petition, however, the matter of the legal standing of petitioners in their suit assailing the subject-contract appears
to me, both under substantive law and the rules of procedure, to still be an insuperable issue. I have gone over
carefully the pleadings submitted in G.R. No. 118910, and I regret my inability to see anything new that can
convince me to depart from the view I have expressed on it in G.R. No. 113375.

DECISION

MENDOZA, J.:

A a result of our decision in G.R. No. 113375 (Kilosbayan, Incorporated v. Guingona, 232 SCRA 110 (1994)
invalidating the Contract of Lease between the Philippine Charity Sweepstakes Office (PCSO) and the Philippine
Gaming Management Corp. (PGMC) on the ground that it had been made in violation of the charter of the PCSO,
the parties entered into negotiations for a new agreement that would be "consistent with the latter’s [PCSO]
charter . . . and conformable to this Honorable Court’s aforesaid Decision." chanroblesvirtuallawlibrary

On January 25, 1195 the parties signed an Equipment Lease Agreement (thereafter called ELA) whereby the PGMC
leased on-line lottery equipment and accessories to the PCSO in consideration of a rental equivalent to 4.3 % of
the gross amount of ticket sale derived by the PCSO from the operation of the lottery which in no case shall be less
than an annual rental computed at P35,000.00 per terminal in Commercial Operation. The rental is to be computed
and paid bi-weekly. In the vent the bi-weekly rentals in any year fall short of the annual minimum fixed rental thus
computed, the PCSO agrees to pay the deficiency out of the proceeds of its current ticket sales. (Pars. 1-2)

Under the law, 30% of the net receipts from the sale of tickets is alloted to charity. (R.A. 1169, § (B))
The term of the leases is eight (8) years, commencing from the start of commercial operation of the lottery
equipment first delivered to the lessee pursuant to the agreed schedule. (Par. 3)chanroblesvirtual|awlibrary

In the operation of the lottery, the PCSO is to employ its own personnel. (Par. 5) It is responsible for the loss of, or
damage to, the equipment from any cause and for the cost of their maintenance and repair. (Pars. 7-8)

Upon the expiration of the leases, the PCSO has the option to purchase the equipment for the sum of P25 million.

A copy of the ELA was submitted to the Court by the PGMC in accordance with its manifestation in the prior
case.chanroblesvirtuallawlibrary

On February 21, 1995 this suit was filed seeking to declare the ELA invalid on the ground as the Contract of Leases
nullified in the first case. Petitioners argue:

1. THE AMENDED ELA IS NULL AND VOID SINCE IT IS BASICALLY OR SUBSTANTIALLY THE SAME AS OR SIMILAR
TO THE OLD LEASE CONTRACT AS REPRESENTED AND ADMITTED BY RESPONDENTS PGMC AND PCSO.

2. ASSUMING ARGUENDO, THAT THE AMENDED ELA IS MATERIALLY DIFFERENT FROM THE OLD LEASES
CONTRACT, THE AMENDED ELA IS NEVERTHELESS NULL AND VOID FOR BEING INCONSISTENT WITH AND
VIOLATIVE OF PCSO’S CHARTER AND THE DECISION OF THIS HONORABLE COURT OF MAY 5, 1995. : virtual
lawlibrary

3. THE AMENDED EQUIPMENT LEASE AGREEMENT IS NULL AND VOID FOR BEING VIOLATIVE OF THE LAW ON
PUBLIC BIDDING OF CONTRACTS FOR FURNISHING SUPPLIES, MATERIALS AND EQUIPMENT TO THE
GOVERNMENT, PARTICULARLY E.O. NO. 301 DATED 26 JULY AND E.O. NO. 298 DATED 12 AUGUST 1940 AS
AMENDED, AS WELL AS THE "RULES AND REGULATIONS FOR THE PREVENTION OF IRREGULAR, UNNECESSARY,
EXCESSIVE OR EXTRAVAGANT (IUEE) EXPENDITURE PROMULGATED UNDER COMMISSION ON AUDIT CIRCULAR
NO. 85-55-A DATED SEPTEMBER 8, 1985, CONSIDERING THAT IT WAS AWARDED AND EXECUTED WITHOUT THE
PUBLIC BIDDING REQUIRED UNDER SAID LAWS AND COA RULES AND REGULATIONS, IT HAS NOT BEEN
APPROVED BY THE PRESIDENT OF THE PHILIPPINES, AND IT IS NOT MOST ADVANTAGEOUS TO THE
GOVERNMENT.

4. THE ELA IS VIOLATIVE OF SECTION 2 (2), ARTICLE IX-D OF THE 1987 CONSTITUTION IN RELATION TO THE
COA CIRCULAR NO. 85-55-A.

The PCSO and PGMC filed a separate comments in which they question the petitioners’ standing to bring suit. They
maintain (1) the ELA is a different leases contract with none of the vestiges of a joint venture in the Contract of
Leases nullified in the prior case; (2) that the ELA did not have to be admitted to a public bidding because it fell
within the exception provided in E.O. No. 301, §1 (e); (3) that the power to determine whether the ELA is
advantageous to the government is vested in the Board of Directors of the PCSO; (4) that for the lack of funds the
PCSO cannot purchase its own on-line lottery equipment and has had to enter into a lease contract’ (5) that what
petitioners are actually seeking in this suit is to further their moral crusade and political agenda, using the Court as
their forum.

For the reason set forth, we hold that petitioners have no cause against respondents and therefore their petition
should be dismissed.

I. PETITIONERS’ STANDING

The Kilosbayan, In. is an organization described in its petition as "composed of civic-spirited citizens, pastors,
priests, nuns and lay leaders who are committed to the cause of truth, justice, and national renewal." Its trustees
are also suing in their individual and collective capacities as "taxpayers and concerned citizens." The other
petitioners (Sen. Freddie Webb, Sen. Wigberto Tañada and Rep. Joker P. Arroyo) are members of the Congress
suing as such and as "taxpayer and concerned citizens."

Respondents question the right of petitioners to bring this suit on the ground that, not being parties to the contract
of lease which they seek to nullify, they have no personal and substantial interest likely to be injured by the
enforcement of the contract. Petitioners on the other hand contend that the ruling in the previous case sustaining
their standing to challenge the validity of the first contract for the operation of lottery is now the "law of the case"
and therefore the question of their standing can no longer be reopened.chanroblesvirtuallawlibrary

Neither the doctrine of stare decisis nor that of "law of the case", nor that of conclusive of judgment poses a barrier
to a determination of petitioners’ right to maintain this suit.

Stare decisis is usually the wise policy. But in this case, concern for stability in decisional law does not call for
adherence to what has recently been laid down as the rule. The previous ruling sustaining petitioners’ intervention
may itself be considered a departure from settled rulings on "real parties in interest" because no constitutional
issues were actually involved. Just five years before that ruling this Court had denied standing to a party who, in
questioning the validity of another form of lottery, claimed the right to sue in the capacity of taxpayer, citizen and
member of the Bar. (Valmonte v. Philippine Charity Sweepstakes, G.R. No. 78716, Sept . 22, 1987) Only recently
this Court held that members of Congress have standing to question the validity of presidential veto on the ground
that, if it true, the illegality of the veto would impair their prerogative as members of Congress. Conversely if the
complaint is not grounded on the impairment of the powers of Congress, legislators do not have standing the
question the validity of any law or official action. (Philippine Constitution Association v Enriquez, 235 SCRA 506
(1994))

There is an additional reason for a reexamination of the ruling on standing. The voting on petitioners’ standing in
the previous case was a narrow one, with seven (7) members sustaining petitioners’ standing and six (6) denying
petitioners’ right to bring the suit. The majority was thus a tenuous one that is not likely to be maintained in any
subsequent litigation. In addition, there have been changes in the members of the Court, with the retirement of
Justices Cruz and Bidin and the appointment of the writer of this opinion and Justice Francisco. Given this fact it is
hardly tenable to insist on the maintenance of the ruling as to petitioners’ standing.

Petitioners argue that inquiry into their right to bring this suit is barred by the doctrine of "law of the case." We do
not think this doctrine is applicable considering the fact that while this case is a sequel to G.R. No. 113375, it is not
its continuation: The doctrine applies only when a case is before a court a second time after a ruling by an
appellate court. Thus in People v. Pinuila, 103 Phil. 992 999 (1958), it was stated:

"Law of the case’ has been defined as the opinion delivered on a former appeal. More specifically, it means that
whatever is once irrevocably established as the controlling legal rule of decision between the same parties in the
same case continues to be the law of these case, whether correct on general principles or not, so long as the facts
on which such decision was predicated continue to be facts of the case before the court." (21 C.J.S. 330)

"It may be stated as a rule of general application that, where the evidence on a second or succeeding appeal is
substantially the same as that on the first or preceding appeal, all matters, questions, points, or issues adjudicated
on the prior appeal are the law of the case on all subsequent appeals and will not be considered or re-adjudicated
therein. (5 C.J.S. 1267)chanroblesvirtuallawlibrary

"In accordance with the general rule stated in Section 1821, where after a definite determination, the court has
remanded the cause for further action below, it will refuse to examine question other than those arising
subsequently to such determination and remand, or other than the propriety of the compliance with its mandate;
and if the court below has proceeded in substantial conformity to the directions of the appellate court, its action will
not be questioned on a second appeal . . . .

"As a general rule a decision on a prior appeal of the same is held to be the law of the case whether that decision is
right or wrong, the remedy of the party deeming himself aggrieved to seek a rehearing. (5 C.J.S. 1276-77)

"Questions necessarily involved in the decision on a former appeal will be regarded as the law of the case on a
subsequent appeal, although the questions are not expressly treated in the opinion of the court, as the
presumption is that all the facts in the case bearing on the point decided have received due consideration whether
all or none of them are mentioned in the opinion. (5 C.J.S. 1286-87)" chanroblesvirtual|awlibrary

As this Court explained in another case. "The law of the case, as applied to a former decision of an appellate court,
,merely expresses the practice of the courts in refusing to reopen what has been decided. It differs from res
judicata in that the conclusive of the first judgment is not dependent upon its finality. The first judgment is
generally, if not universally, not final, It relates entirely to questions of law, and is confined in its questions of law,
and is confined in its operation to subsequent proceedings in the same case . . . ." (Municipality of Daet v. Court of
Appeals, 93 SCRA 503, 521 (1979))

It follows that since the present case is not the same one litigated by he parties before in G.R. No. 113375, the
ruling there cannot in any sense be regarded as "the law of this case." The parties are the same but the cases are
not.

Nor is inquiry into petitioners; right to maintain this suit foreclosed by the related doctrine of "conclusiveness of
judgment." 1 According to the doctrine, an issue actually and directly passed upon the and determined in a former
suit cannot again be drawn in question in any future action between the same parties involving a different of
action. (Peñalosa v. Tuason , 22 Phil. 303, 313 (1912); Heirs of Roxas v. Galido, 108. 582
(1960))chanroblesvirtuallawlibrary

It has been held that the rule on conclusiveness of judgment or preclusion of issues or collateral estoppel does not
apply to issues of law, at least when substantially unrelated claims are involved. (Montana v. United States, 440
U.S. 147, 162, 59 L. Ed. 2d 210 , 222 (1979); BATOR, MELTZER, MISHKIN AND SHAPIRO, THE FEDERAL COURTS
AND THE FEDERAL SYSTEM 1058, n. 2 (3rd Ed., 1988)) Following this ruling it was held in Commissioner v.
Sunnen, 333 U.S. 591, 92 L. Ed. 898 (1947) that where a taxpayer assigned to his wife interest in a patent in 1928
and in a suit it was determined that the money paid to his wife for the years 1929-1931 under the 1928
assignment was not part of his taxable income, this determination is not preclusive in a second action for collection
of taxes on amounts to his wife under another deed of assignment for other years (1937 to 1941). For income tax
purposes what is decided with respect to one contract is not conclusive as to any other contract which was not then
in issue, however similar or identical it may be. The rule on collateral estoppel. it was held, "must be confined to
situations where the matter raised in the second suit is identical in all respects with that decided in the first
preceding and where the controlling facts and applicable legal rules remain unchanged." (333 U.S. at 599-600, 92
L. Ed. at 907) Consequently, "if the relevant facts in the two cases are separate even though they may be similar
or identical, collateral estoppel does not govern the legal issues which occur in the second case. Thus the second
proceeding may involve an instrument or transaction identical with but in a form separable form, the one dealt with
in the first proceeding. In that situation a court is free in the second proceeding to make an independent
examination of the legal matters at issue. . . ." (333 U.S. at 601, 92 L. Ed. at 908)

This exception to the General Rule of the Issue Preclusion is authoritatively formulated in Restatement of the Law
2d , on Judgments, as follows:

§28. Although an issue is actually litigated and determined by a valid and final judgment, and the determination is
essential to the judgment, relitigation of the issue in a subsequent action between the parties is not precluded in
the following circumstances:chanroblesvirtuallawlibrary

....

(2) The issue is one of law and (a) the two actions involve claims that are substantially unrelated, or (b) a new
determination is warranted in order to take account of an intervening change in the applicable legal context or
otherwise to avoid inequitable administration of the laws; . . .

Illustration:

....

2. A brings an action against the municipality of B for tortious injury. The court sustain B’s defense of sovereign
immunity and dismisses the action. Several years later A brings the second action against B for an unrelated
tortious injury occurring after the dismissal. The judgment in the first action is not conclusive on the question
whether the defense immunity is available to B. Note: The doctrine of stare decisis may lead the court to refuse to
reconsider the question of sovereign immunity. See §29, Comment i.

The question whether the petitioners have standing to question the Equipment or ELA is a legal question. As will
presently be shown, the ELA, which the petitioners seek to declare invalid in this proceeding, is essentially different
from the 1993 Contract of lease entered into by the PCSO with the PGMC. Hence the determination in the prior
case (G.R. No. 113375) that the petitioner had standing to challenge the validity of the 1993 Contract of Lease of
the parties does not preclude determination of their standing in the present suit.

Not only is petitioners’ standing a legal issue that may be determined again in this case. It is, strictly speaking, not
even the issue in this case, since standing is a concept in constitutional law and here no constitutional question is
actually involved. The issue in this case is whether petitioners are the "real parties in interest" within the meaning
of Rule 3, §2 of the Rules of Court which requires that "Every action may be prosecuted and defended in the name
of the real party in interest."

The difference between the rule on standing and real party in interest has been noted by authorities thus: "It is
important to note . . . that standing because of its constitutional and public policy underpinnings, is very different
form questions relating to whether a particular plaintiff is the real party in interest or has capacity to sue. Although
all three requirements are directed towards ensuring that only certain parties can maintain an action, standing
restrictions require a partial consideration of the merits, as well as broader policy concerns relating to the proper
role of the judiciary in certain areas. (FRIEDENTHAL, KANE AND MILLER, CIVIL PROCEDURE 328 (1985)) : virtual
lawlibrary

Standing is a special concern in constitutional law because in some cases suits are brought not by parties who have
been personally injured by the operation of a law or by official action taken, but by concerned citizens, taxpayers or
voters who actually sue in the public interest. Hence the question in standing is whether such parties have "alleged
such a personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens
the presentation of issues upon which the court so largely depends for illumination of difficult constitutional
questions." (Baker v. Carr, 369 U.S. 186, 7 L. Ed. 2d 633 (1962))
Accordingly, in Valmonte v. Philippine Charity Sweepstakes Office, G.R. No. 78716, Sept. 22, 1987, standing was
denied to a petitioner who sought to declare a form of lottery known as Instant Sweepstakes invalid because, as
the Court held:

Valmonte brings the suit as a citizen, lawyer, taxpayer and father of three (3) minor children. But nowhere in his
petition does petitioner claim that his rights and privileges as a lawyer or citizen have been directly and personally
injured by the operation of the Instant Sweepstakes. The interest of the person assailing the constitutionality of a
statute must be direct and personal. He must be able to show, not only the law is invalid, but also that he has
sustained or is in immediate danger of sustaining some direct injury as a result of its enforcement, and not merely
that he suffers thereby in some indefinite way . It must appear that the person complaining has been or is about to
be denied some right or privilege to which he is lawfully entitled or that he is about to be subjected to some
burdens or penalties by reason of the statute complained of.

We apprehend no difference between the petitioner in Valmonte and the present petitioners. Petitioners do not in
fact shoe what particularized interest they have bringing this suit. It does not detract from the high regard for
petitioners as civic leaders to say that their interest falls short of that required to maintain an action under the Rule
3, §2.

It is true that the present action involves not a mere contract between private individuals but one made by a
government corporation. There is, however, no allegation that the public funds are being misspent so as to make
this action a public one and justify relaxation of the requirement that an action must be prosecuted in the name of
the real party in interest. (Valmonte v. PCSO, supra; Bugnay Const. and Dev. Corp. v. Laron, 176 SCRA 240
(1989))

On the other hand, the question as to "real party in interest" is whether he is "the party who would be benefited or
injured by the judgment, or the ‘party entitled to the avails of the suit.’" (Salonga v. Warner Barnes & Co., Ltd., 88
Phil. 125, 131 (1951))chanroblesvirtuallawlibrary

Petitioners invoke the following Principles and State Policies set forth in Art. II of the Constitution:

The maintenance of peace and order, the protection of life, liberty, and property, and the promotion of the general
welfare are essential for the employment by all the people of the blessings of democracy. (§5)

The natural and primary right and duty of the parents in the rearing of the youth for civic efficiency and the
development of moral character shall receive the support of the Government. (§12)chanroblesvirtual|awlibrary

The State recognizes the vital role of the youth in nation building and shall promote their physical, moral, spiritual,
intellectual, and social well-being. It shall inculcate in the youth patriotism and nationalism, and encourage their
involvement in public and civic affairs. (§13)

The state shall give priority to education, science and technology, arts, culture, and sports to foster patriotism and
nationalism, accelerate social progress, and promote total human liberation and development. (§17)

(Memorandum for Petitioners, p. 7)chanroblesvirtuallawlibrary

These are not, however, self executing provisions, the disregard which can give rise to a cause of action in the
courts. They do not embody judicially enforceable constitutional rights but guidelines for legislation.

Thus, while constitutional policies are invoked, this case involves basically questions of contract law. More
specifically, the question is whether petitioners have legal right which has been violated.

In action for annulment of contracts such as this action , the real parties are those who are parties to the
agreement or are bound either principally or subsidiarily or are prejudiced in their rights with respect to one of the
contracting parties and can show the detriment which would positively result to them from the contract even
though they did no intervene in it (Ibañez v. Hongkong & Shanghai Bank, 22 Phil. 572 (1912)), or who claim a
right to take part in a public bidding but have been illegally excluded from it. (See De la Lara Co., Inc. v. Secretary
of Public Works and Communications, G.R. No. L-13460, Nov. 28, 1958)

These are parties with "a present substantial interest, as distinguished from a mere expectancy or future,
contingent, subordinate, or consequential interest . . . . The phrase ‘present substantial interest’ more concretely is
meant such interest of a party in the subject matter of the action as will entitle him, under the substantive law, to
recover if the evidence is sufficient, or that he has the legal title to demand and the defendant will be protected in
a payment by him." (MORAN, COMMENTS ON THE RULES OF COURT 154-155 (1979)) Thus, in Gonzales v.
Hechenova, 118 Phil. 1065 (1963) petitioner’s right to question the validity of a government contract for the
importation of rice was sustained because he was a rice planter with substantial production, who had a right under
the law to sell to the government.chanroblesvirtuallawlibrary
But petitioners do not have such present substantial interest in the ELA as would entitle them to bring this suit.
Denying to them the right to intervene will not leave without remedy any perceived illegality in the execution of
government contracts. Question as to the nature or validity of public contracts or the necessity for a public bidding
before they may be made can be raised in an appropriate case before the Commission on Audit or before the
Ombudsman. The Constitution requires that the Ombudsman and his deputies, "as protectors of the people shall
act promptly on complaints filed in any form or manner against public officials or employees of the government, or
any subdivision, agency or instrumentality thereof including government-owned or controlled corporations." (Art.
XI , §12) In addition, the Solicitor General is authorized to bring an action for quo warranto if it should be thought
that a government corporation, like the PCSO, has offended against its corporate charter or misused its franchise.
(Rule 66, §2 (a) (d))

We now turn to the merits of petitioners’ claim constituting their cause of action.

II. THE EQUIPMENT LEASE AGREEMENT

This Court ruled in the previous case that the Contract of Leases, which the PCSO had entered into two with the
PGMC on December 17, 1993 for the operation of an on-line lottery system, was actually a joint venture agreement
or, at the very least, a contract involving "collaboration or association" with another party and for that reason, was
void. The Court noted the following features of the contract:chanroblesvirtuallawlibrary

(1) The PCSO had neither funds nor expertise to operate the on-line lottery system so that it would be dependent
on the PGMC for the operation of the lottery system.

(2) The PGMC would exclusively bear all costs and expense for printing tickets, payment of salaries and wages of
personnel, advertising and promotion and other expenses for the operation of the lottery system. Mention was
made of the provision, which the Court considered "unusual in a lessor-lessee relationship but inherent in a joint
venture," for the payment of the rental not at a fixed amount but at a certain percentage (4.9%) of the gross
receipts from the sale of tickets, and the possibility that "nothing may be due demandable at all because the PGMC
binds itself to ‘bear all risks if the revenue from the ticket sales, on an annualized basis, are insufficient to pay the
entire prize money.’" (232 SCRA at 147)

(3) It was only after the term of the contract that PCSO personnel would be ready to operate the lottery system
themselves because it would take the entire eight-year term of the contract for the technology transfer to be
completed. In the view of the Court, this meant that for the duration of the contract, the PGMC would actually be
the operator of the lottery system, and not simply the lessor of equipment. : virtual lawlibrary

The Court considered the Contract of Lease to be actually a joint venture agreement. From another angle, it said
that the arrangement, especially the provision that all the risks were for the account of the PGMC, was in effect a
leases by the PCSO of its franchise to the PGMC.

These features of the old Contract of Lease have been removed in the present ELA. While the rent ids still
expressed in terms of percentage (it is now 4.3% of the gross receipts from the sale of the tickets) in the ELA, the
PGMC is now guaranteed a minimum rent of P35,000.00 a year per terminal in commercial operation. (Par. 2) The
PGMC is thus assured of payment of the rental. Thus par. 2 of the ELA provides:

2. RENTAL

During the effectivity of this Agreement and the term of this leases as provided in paragraph 3 hereof, LESSEE
shall pay rental to LESSOR equivalent to FOUR POINT THREE PERCENT (4.3%) of the gross amount of ticket sales
from all the LESSEE’s on-line lottery operations in the Territory, which rental shall be computed and payable bi-
weekly net of withholding taxes on income, if any: provided that, in no case shall the annual aggregate rentals per
year during the term of the leases be less than the annual minimum fixed rental computed at P35,000.00 per
terminal in commercial operation per annum, provided, further that the annual minimum fixed rental shall be
reduced pro-rata for the number of days during the year that a terminal is not in commercial operation due to
repairs or breakdown. In the event the aggregate bi-weekly rentals in any year falls short of the annual minimum
fixed rental computed at P35,000.00 per terminal in commercial operation, the LESSEE shall pay such shortfall
from out of the proceeds of the then current ticket sales from LESSEE’s on-line lottery in the Territory (after
payment first of prizes and agent’s commissions but prior to any other payments, allocations or disbursements)
until said shortfall shall have been fully settled, but without prejudice to the payment to LESSOR of the then
current bi-weekly rentals in accordance with the provisions of the first sentence of this paragraph 2.

The PCSO now bears all losses because the operation of the system is completely in its hands. This feature of the
new contract negates any doubt that it is anything but a lease agreement.

It is contended that the rental of 4.3% is substantially the same as the 4.9% in the old contract because the
reduction is negligible especially now that the PCSO assumes all business risks and risk of loss of, or damage to,
equipment. Petitioners allege that: : virtual lawlibrary

PGMC’s annual minimum rental is P35,000.00 per terminal or a total of P70,000,000.00 per annum considering
that there are 2,000 terminals per the amended ELA. In order to meet the amount, based on the 4.3% rental
arrangement without shortfall, the gross ticket sales must amount to at least P1,627,906,977.00. Multiplying this
amount by 4.9 % we get the 4.9% rental fee fixed under the old lease contract and the product is P79,767,442
.00. Deducting from this amount the sum of P70,000,000.00 representing the annual minimum rental under the
amended ELA, we get the figure of P9,767,442 which is equivalent to the .06% difference between the rental under
the old lease contract and under the amended ELA.

This amount of P9,767,442.00 cannot possibly cover the costs, expenses and obligations shouldered by PGMC
under the old leases contract but which are now to be borne by the PCSO under the new ELA, not to mention the
additional P25 million that the PCSO has to pay the PGMC if the former exercises its option to purchase the
equipment at the end of the lease period under the amended ELA.

(Petition, p. 37)chanroblesvirtuallawlibrary

To be sure there is nothing unusual in fixing the rental as a certain percentage of the gross receipts. The leases of
space in commercial buildings, for example, involves the payment of a certain percentage of the receipts in rental.
Under the Civil Code (Art. 1643) the only requirement is that the rental be a "price certain." Petitioners do not
claim here that the rental is not "price certain," simply because it is expressed as a certain percentage of the total
gross amount of ticket sales.

Indeed it is not alone the fact that in the old contract the rental was expressed in terms of percentage of the net
proceeds from the sale of tickets which was held to be characteristics of a joint venture agreement. It was the fact
that, in the prior case, the PGMC assumed, in addition, all risks of loss from the operation of the lottery, with the
distinct possibility that nothing might be due it. In the view of the Court possibility belied claims that the PGMC had
no participation in the lottery other than being the lessor of equipment.

In the new contract the rental is also expressed in terms of percentage of the gross proceed from ticket sales
because the allocation of the receipts under the charter of the PCSO is also expressed in percentage, to wit: 55% is
set aside for prizes; 30% for operating expenses and capital expenditure. (R.A. No. 1169, §6) As the Solicitor
General points out in his Comment filed in behalf of the PCSO: : virtual lawlibrary

In the PCSO charter, operating cost are reflected as a percentage of the net receipts (which is defined as gross
receipts less ticket printing costs which shall not exceed 2% and the 1% granted to the Commission on Higher
Education under Republic Act No. 7722). The mandate of the law is that the operating costs, which include
payment for any leased equipment, cannot exceed 15% of net receipts, or 14.55% of gross receipts. The following
conclusion are therefore evident:

a. The 4.3% rental rate for the equipment is well within the maximum of 15% net receipts fixed by law;

b. To obviate any violation of the law, it is best to express large operating costs for budgetary purposes as a
percentage of either gross or net receipts, specifically since the amount of gross receipts can only be estimated.

c. Large fixed sums of money for major operating costs, such as fixed rental for equipment, can very well exceed
the maximum percentage fixed by law, specifically if actual gross receipts are lower than estimates for budgetary
purposes.

d. The problem of budgeting based on estimates is even more difficult when new projects are involved, as is the
case in the on-line lottery.

(PCSO’s Comment, pp. 18-20)chanroblesvirtuallawlibrary

Petitioners reply that to obviate the possibility that the rental would not exceed 15% of the net receipts what the
respondents should have done was not to agree on a minimum fixed rental of P35,000.00 per terminal in
commercial operation . This is a matter of business judgment which, in the absence of a clear and convincing
showing that it was made in grave abuse of discretion of the PCSO, this Court is not inclined to review. In this case
the rental has to be expressed in terms of percentage of the revenue of the PCSO because rental are treated in the
charter of the agency (R.A. No. 1169, §6 (C)) as "operating expenses" and the allotment for "operating expenses"
is a percentage of the net receipts.

The ELA also provides:

8. REPAIR SERVICES : virtual lawlibrary


LESSEE shall bear the costs of maintenance and necessary repairs, except those repairs to correct defective
workmanship or replace defective materials used in the manufacture of equipment discovered after delivery of the
Equipment, in which the case LESSOR shall bear the costs of such repairs and, if necessary, the replacements. The
LESSEE may at any time during the term of the lease, request the LESSOR to upgrade the equipment and/or
increase the number of terminals, in which the case the LESSEE and LESSOR shall agree on an arrangement
mutually satisfactory to both of them, upon such terms as may be mutually agreed upon.

By virtue of this provision on upgrading of equipment, petitioners claim, the parties can change their entire
agreement and thereby, by "clever means and devices," enable the PGMC to "actually operate, manage, control
and supervise the conduct and holding of the on-line lottery," considering that as found in the first decision, "the
PCSO had neither funds of its own nor the expertise to operate and manage an on-line lottery."

The claim is speculative. It is just as possible to speculate that after sometime operating the lottery system the
PCSO will be able to accumulate enough capital to enable it to buy its own equipment and gain expertise. As for
expertise, after three months of operation of the on-line lottery, there appears to be no complaint that the PCSO is
relying on others, outside its own personnel, to run the system. In any case as in the construction of statutes, the
presumption is that in making contracts the government has acted in good faith. The doctrine that the possibility of
abuse is not a reason for denying power to the government holds true also in cases involving the validity of
contacts made by it.

Finally because the term "Equipment" is defined in the ELA as including "technology, intellectual property rights,
know-how processes and systems," it is claimed that these items could only be transferred to the PCSO by the
PGMC personnel and this was found in the first case to be a badge of a joint venture.

Like the argument based on the upgrading of equipment, we think this contention is also based on speculation
rather than on fact or experience. Evidence is needed to show that the transfer of technology would involve the
PCSO and its personnel in prohibited or collaboration with the PGMC within the contemplation of the law.

A contract of lease, as this is defined in Civil law, may call for some form of collaboration or association the parties
since lease is a "consensual, bilateral, onerous and commutative contract by which one person binds himself to
grant temporarily the use of a thing or the rendering of some service to another who undertakes to pay some rent,
compensation or price." (5 PADILLA, CIVIL CODE 611 (6TH ED. 1974)). the lessor of a commercial building; it may
be assumed, would be interested in the success of its tenants. But it is untenable to contend that this is what the
charter of the PCSO contemplates in prohibiting it from entering into "collaboration or association" with any party.
It may be added that even if the PCSO purchases its own equipment, it still needs the assistance of the PGMC in
the initial phase of operation.chanroblesvirtuallawlibrary

We hold that the ELA is a lease contract and that it contains none of the features of the former contract which were
considered "badges of a joint venture agreement." To further find fault with the new contract would be to cavil and
expose the opposition to the contract to be actually an opposition to lottery under any and all circumstances. But"
[t]he morality of gambling is not a justifiable issue. Gambling is not illegal per se . . . . It is left to Congress to deal
with activity as it sees fit." (Magtajas v.. Pryce Properties Corp. Inc., 234 SCRA 255, 268 (1994). Cf. Lim v.
Pacquing, G.R. No. 115044, Jan 27, 1995) In the case of lottery, there is no dispute that, to enable the Philippine
Charity Sweepstakes Office to raise funds for charity, Congress authorized the Philippine Charity Sweepstakes
Office (PCSO) to hold r conduct lotteries under certain conditions.

We therefore now consider whether under the charter of the PCSO any contract for the operation of an on-line
lottery system which involves any form of collaboration or association, is prohibited.

III. THE INTERPRETATION of §1 OF R.A. 1169

In G.R. No. 113375 it was held that the PCSO does not have the power to enter into any contract which would
involve it any form of "collaboration, association or joint venture" for the holding of sweepstakes races, lotteries
and other similar activities. This interpretation must be reexamined especially in determining whether petitioners
have a cause of action.

We hold that the charter of the PCSO doe not absolutely prohibit it from holding or conducting lottery "in
collaborating, association or joint venture" with another party. What the PCSO is prohibited from doing is to invest
in a business engaged in sweepstakes races, lotteries and similar activities, and it is prohibited from doing so
whether in "collaboration, association or joint venture" with others or "by itself." The reason for that is that these
are competing activities and the PCSO should not invest in the business of a competitor.

It will be helpful to quote the pertinent provisions of R.A. No. 1169, as amended by B.P. Blg. 42:

§1. The Philippine Charity Sweepstakes Office. — The Philippine Charity Sweepstakes Office, hereinafter designated
the Office, shall be the principal government agency for raising and providing for funds for heath programs,
medical assistance and services and charities of national character, and as such shall have the general powers
conferred in section thirteen of Act Numbered One Thousand Four Hundred Fifty-Nine, as amended, and shall have
the authority:

A. To hold and conduct charity sweepstakes races, lotteries and other similar activities, in such frequency and
manner, as shall be determined, and subject to such rules and regulations as shall be promulgated by the Board of
Directors.

B. Subject to the approval of the Minister of Human Settlements, to engage in heath and welfare-related
investments, programs, projects and activities which may be profit-oriented, by itself or in collaboration,
association or joint venture with any person association, company or entity, whether domestic or foreign, except
for the activities mentioned in the preceding paragraph (A), for the purpose of providing for permanent and
continuing sources for health programs, including the expansion of existing ones , medical assistance and services,
and/or charitable grants: Provided, That such investments will not compete with the private sector in the areas
where the investments are adequate as may be determined by the National Economic and Development Authority.
: virtual lawlibrary

When passed, it will be seen that §1 grants the PCSO authority to do any of the following: (1) to hold or conduct
charity sweepstakes races, lotteries and similar activities; and/or (2) to invest — whether "by itself or in
collaboration, association or joint venture with any person, association, company or entity" — in any "health and
welfare-related investments, programs , projects and activities which may be profit oriented," except "the activities
mentioned in the preceding paragraph (A)," i.e., sweepstakes races, lotteries and similar activities. The PCSO is
prohibited from investing in" :activities mentioned in the preceding paragraph (A)" because, as already stated,
these are competing activities.

The subject of §1 (B) id the authority of the PCSO to invest in certain projects for the profit in order to enable it to
expand its health programs, medical assistance and charitable grants. The exception in the law refers to
investments in businesses engaged in sweepstakes races, lotteries and similar activities. The limitation applies not
only when the investments is undertaken by the PCSO "in collaboration, association or joint venture" but also when
made by the PCSO alone, "by itself." The prohibition can not apply to the holding of a lottery by the PCSO itself.
Otherwise when it is authorized to do in par. (A) would be negated by what is prohibited by par. (B).

To harmonize pars. (A) and (B), the latter must be read as referring to the authority of the PCSO to invest in the
business of others . But in another way, the prohibition in §1 (B) is not collaboration, association or joint venture
with others as against the PCSO investing in the business of another franchise holder which would directly compete
with PCSO’s own charity sweepstakes races, lotteries or similar activities. The prohibition applies whether the PCSO
makes the investment alone or with others.chanroblesvirtuallawlibrary

The contrary construction given to §1 in the previous decision is based on remarks made by then Assemblyman,
now Mr. Justice, Davide during the deliberations on what later became B.P. Blg. 42, amending R.A. No. 1169. It
appears, however, that the remark were made in connection with a proposal to give the PCSO the authority "to
engage in any and all investments." It was to provide exception with regard to the type of investments which the
PCSO is authorized to make that the Davide amendment was adopted. It is reasonable to suppose that the
members of the Batasan Pambansa, in approving the amendment, understood it as referring to the exception to
par (B) of §1 giving the PCSO the power to make investments. Had it been their intention to prohibit the PCSO
from entering into any collaboration, association or joint venture with others even in instances when the
sweepstakes races, lotteries or similar activities are operated by it ("itself"), they would have made the
amendment not in par. (B), but in par. (A), of §1, as the logical place for the amendment.

The following excerpt 2 from the record of the discussion on Parliamentary Bill No. 622, which became B.P. Blg.
422, bears out this conclusion:

MR. ZAMORA.

On the same page, starting from line 18 until line 23, delete the entire paragraph from "b. to engage in any and all
investments. . . ." until the words "charitable grants" on line 23 and in lieu thereof insert the
following:chanroblesvirtuallawlibrary

SUBJECT TO THE APPROVAL OF THE MINISTER OF HUMAN SETTLEMENTS, TO ENGAGE IN HEALTH-ORIENTED


INVESTMENTS, PROGRAMS, PROJECTS AND ACTIVITIES WHICH MAY BE PROFIT-ORIENTED, BY ITSELF OR IN A
COLLABORATION, ASSOCIATION, OR JOINT VENTURE WITH ANY PERSON, ASSOCIATION, COMPANY OR ENTITY,
WHETHER DOMESTIC OR FOREIGN, FOR THE PURPOSE OF PROVIDING FOR PERMANENT AND CONTINUING
SOURCES OF FUNDS FOR HEALTH PROGRAMS, INCLUDING THE EXPANSION F EXISTING ONES AND/OR
CHARITABLE GRANTS.
I move for approval of the amendment, Mr. Speaker.

MR. DAVIDE.

Mr, Speaker.

THE SPEAKER.

The gentleman from Cebu is recognized.

MR. DAVIDE.

May I introduce an amendment to the committee amendment? The amendment would be to insert after "foreign" in
the amendment just read the following: EXCEPT FOR THE ACTIVITY IN LETTER (A) ABOVE. : virtual lawlibrary

When it is a joint venture or in collaboration with any other entity such collaboration or joint venture must not
include activity letter (a) which is the holding and conducting of sweepstakes races, lotteries and other similar acts.

MR. ZAMORA.

We accept the amendment, Mr. Speaker.

MR. DAVIDE.

Thank you Mr. Speaker.chanroblesvirtual|awlibrary

THE SPEAKER.

Is there any objection to the amendment? (Silence) The amendment, as amended, is approved.

MR. ZAMORA.

Continuing the line, Mr. Speaker, after "charitable grants" change the period (.) into a semi-colon (;) and add the
following proviso: PROVIDED, THAT SUCH INVESTMENTS, PROGRAMS, PROJECTS AND ACTIVITIES SHALL NOT
COMPETE WITH THE PRIVATE SECTOR IN AREAS WHERE THE PRIVATE INVESTMENTS ARE ADEQUATE.

May I read the whole paragraph, Mr. speaker.

MR. DAVIDE.

May I introduce an amendment after "adequate." The intention of the amendment is not to leave the determination
of whether it is adequate or not to anybody. And my amendment is to add after "adequate" the words AS MAY BE
DETERMINED BY THE NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY. As a matter of fact, it will strengthen
the authority to invest in these areas, provided that the determination of whether the private sector’s activity is
already adequate must be determined by the National Economic and Development Authority.

MR. ZAMORA.

Mr. Speaker, the committee accepts the proposed amendment.

MR. DAVIDE.

Thank you, Mr. Speaker. : virtual lawlibrary

THE SPEAKER.

My the sponsor now read the entire paragraph?

MR. ZAMORA.

May I need the paragraph, Mr. Speaker.

"Subject to the Minister of Human Settlements, to engage in health and welfare-oriented investments programs,
projects, and activities which may be profit-oriented, by itself or in collaboration, association or joint venture with
any person, association, company or entity, whether domestic or foreign, EXCEPT FOR THE ACTIVITIES
MENTIONED IN PARAGRAPH (a) for the purpose of providing for permanent and continuing sources of funds for
health programs, including the expansion of existing ones, medical assistance and services and/or charitable
grants: PROVIDED THAT SUCH INVESTMENTS, HEALTH PROGRAMS, PROJECTS AND ACTIVITIES SHALL NOT
COMPETE WITH THE PRIVATE SECTOR IN AREAS WHERE THE PRIVATE INVESTMENTS ARE ADEQUATE AS MAY BE
DETERMINED BY THE NATIONAL AND ECONOMIC DEVELOPMENT AUTHORITY."

THE SPEAKER.

Is there any objection to the amendment? : virtual lawlibrary

MR. PALAEZ.

Mr. Speaker.

THE SPEAKER.

The Gentleman from Misamis Oriental is recognized.

MR. PALAEZ.

Mr. Speaker, may I suggest that in that proviso, we remove "health programs, projects and activities," because the
proviso refers only to investments activities — "Provided that such investments will not compete with the private
sector in areas where the investment are adequate . . ." : virtual lawlibrary

MR. ZAMORA.

It is accepted, Mr. Speaker.

THE SPEAKER.

Is there any objection?

MR. PALEZ.

Mr. Speaker, may I propose an improvement to the amendment of the Gentlemen from Cebu, just for style, I
would suggest the insertion of the word PRECEDING before the word "paragraph." The phrase will read "the
PRECEDING paragraph." : virtual lawlibrary

MR. ZAMORA.

It is accepted, Mr. Speaker.

THE SPEAKER.

Very well. Is there any objection to the committee amendment, as amended? (Silence) The Chair hears none; the
amendment is approved.

The construction given to §1 in the previous decision is unsupportable in light of both the text of §1 and the
deliberations of the Batasang Pambansa which enacted the amendatory law. : virtual lawlibrary

IV. REQUIREMENT OF PUBLIC BIDDING

Finally the question is whether the ELA is subject to public bidding. In justifying the award of the contract to the
PGMC without public bidding, the PCSO invokes E.O. No. 301, which states in pertinent part:

§1. Guidelines for Negotiated Contracts. Any provision of the law, decree, executive order or other issuances to the
contrary notwithstanding, no contract for public services or for furnishing supplies, materials and equipment to the
government or any of its branches, agencies or instrumentalities shall be renewed or entered into without public
bidding, except under any of the following situations.chanroblesvirtuallawlibrary

a. Whenever the supplies are urgently needed to meet an emergency which may be involve the loss of, or danger
to, life and/or property:

b. Whenever the supplies are to be used in connection with a project or activity which cannot be delayed without
causing detriment to the public service;

c. Whenever the materials are sold by an exclusive distributor or manufacturer who does not have sub-dealers
selling at lower prices and for which no suitable substitute can be obtained elsewhere at more advantageous terms
to the government;chanroblesvirtual|awlibrary

d. Whenever the supplies under procurement have been unsuccessfully placed on bid for at least two consecutive
times, either due to lack of bidders or the offers received in each instance were exorbitant or non-conforming to
specifications:

e. In cases where it is apparent that the requisition of the need supplies through negotiated purchase is most
advantageous to the government to be determined by the Department Head concerned; and

f. Whenever the purchase is made from an agency of the government.chanroblesvirtuallawlibrary

Petitioners point out that while the genera rule requiring public biding covers "contract[s] for public services or for
furnishing supplies, materials and equipment" to the government or to any of its branches, agencies or
instrumentalities, the exceptions in pars. (a), (b), (d), (e), and (f) refer to contracts for the furnishing of supplies
only, while par. (c) refers to the furnishing of materials, only. They argue that as the general rule covers the
furnishing of "supplies, materials and equipment," the reference in the exceptions to the furnishing of "supplies"
must be understood as excluding the furnishing of any of the other items, i.e. "materials" and "equipment."

E.O. No. 301, §1 applies only to the contracts for the purchase of supplies, materials and equipment. It does not
refer to contracts of lease of equipment like the ELA. The provisions on lease are found in §§ 6 and 7 but they refer
to the leases of privately-owned buildings or spaces for government use or of government-owned buildings or
spaces for private use and these provisions do not require public bidding. These provisions state:

§6. Guidelines for Lease Contracts. — Any provision of law, decree order or other issuances to the contrary
notwithstanding, the Department of Public Works and Highways (DPWH), with respect to the leasing of privately-
owned buildings or spaces for government use or of government-owned buildings or space for private use, shall
formulate uniform standards or guidelines for determining the reasonableness of the terms of lease contracts and
of rental rates involved. : virtual lawlibrary

§7. Jurisdiction Over Lease Contracts. — The heads of agency intending to rent privately-owned buildings or spaces
for their use, or to lease out government-owned buildings or spaces for private use, shall have authority to
determine the reasonableness of the terms of the lease and the rental rates thereof, and to enter in such leases
contracts without need of prior approval by higher authorities, subject to compliance with the uniform standards or
guidelines established pursuant to Section 6 hereof by the DPWH and to the audit jurisdiction of COA or its duly
authorized representative in § accordance with existing rules and regulations.

It thus difficult to see how E.O. No. 301 can be applied to the ELA when the only feature of the ELA that may be
thought of as close to a contract of purchase and sale is the option to buy given to the PCSO. An option to buy is
not a course a contract of purchase and sale.

Even assuming that §1 of E.O. 301 applies to lease contracts, the reference to "supplies" in the exceptions can not
strictly construed to exclude the furnishing of "materials" and "equipment" without defeating the purpose for which
these exceptions are made. For example, par. (a) excepts from the requirement of public bidding the furnishing of
"supplies" which are "urgently needed to meet an emergency which may involve the loss of, or danger to, life
and/or property." Should rescue operations during a calamity, such as an earthquake, require the use of heavy
equipment, either by purchase or lease, no one can insist that there should first be a public bidding before the
equipment may be purchased or leased because the heavy equipment is not a "supply" and §1 (a) is limited to the
furnishing of "supplies" that are urgently needed.

Petitioners contend that in any event the contract in question is not the "most advantageous to the government."
Whether the making of the present ELA meets this condition is not to be judged by a comparison, line by line, of its
provisions with those of the old contract which this Court found to be in reality a joint venture agreement. In some
respects the old contracts would be more favorable to the government because the PGMC assumed many of the
risks and burdens incident to the operation of the on-line lottery system, while under the ELA it is freed from these
burdens. That is because the old contract was a joint venture agreement. The ELA, on the other hand, is a leases
contract, with the PCSO, as lessee, bearing solely the risks and burdens of operating the on-line lottery system.

It is paradoxical that in their effort to show that the ELA is a joint venture agreement and not a leases contract,
petitioners point to contractual provisions whereby the PGMC assumed risk and losses which might be conceivably
be incurred in the operation of the lottery system, but to show that the present leases agreement is not the most
advantageous arrangement that can be obtained, the very absence of these features of the old contract which
made it a joint venture agreement, is criticized.

Indeed the question is not whether compared with the former joint venture agreement the present lease contract
is" [more] advantageous to the government." The question is whether under the circumstance, the ELA is the most
advantageous contract that could be obtained compared with similar leases agreements the PCSO could have made
with other parties. Petitioners have not shown that more favorable terms could have been obtained by the PCSO or
that at any rate the ELA, which the PCSO concluded with the PGMC is disadvantageous to the
government.chanroblesvirtuallawlibrary

For the foregoing reasons, we hold:

(1) that petitioners have neither standing to bring this suit nor substantial interest to make them real parties in
interest within the meaning of Rule 3, §2:

(2) that a determination of the petitioners’ right to bring this suit is not precluded or barred by the decision in the
prior case between the parties;chanroblesvirtual|awlibrary

(3) that the Equipment Leases Agreement of January 25, 1995 is valid as a lease contract under the Civil Code and
is not contrary to the charter of the Philippine Charity Sweepstakes Office;

(4) that under §1 (A) of its charter (R.A. 1169), the Philippine Charity Sweepstakes Office has authority to enter
into a contract for the holding of an on-line lottery, whether alone or in association, collaboration or joint venture
with another party, so long as it itself holds or conducts such lottery; and

(5) That the Equipment Lease Agreement in question did not have to be submitted to the public bidding as a
condition for its validity. : virtual lawlibrary

WHEREFORE, the Petition for Prohibition, Review and/or Injunction seeking to declare the Equipment Lease
Agreement between the Philippine Charity Sweepstakes Office and Philippine Gaming Management Corp. invalid is
DISMISSED.

SO ORDERED.

Melo, Quiason, Puno, Kapunan and Francisco, JJ., concur.

Narvasa, C.J., took no part.

CHAPTER VIII

STRICT AND LIBERAL CONSTRUCTION AND INTERPRETATION OF STATUTES

[G.R. No. 113092. September 1, 1994.]

MARTIN CENTENO, Petitioner, v. HON. VICTORIA VILLALON-PORNILLOS, Presiding Judge of the


Regional Trial Court of Malolos, Bulacan, Branch 10, and THE PEOPLE OF THE
PHILIPPINES, Respondents.

Santiago V . Marcos, Jr. for Petitioner.

SYLLABUS

1. STATUTORY CONSTRUCTION; EXPRESSIO UNIUS EST EXCLUSION ALTERIUS; CONSTRUED. — it is an


elementary rule of statutory construction that the express mention of one person, thing, act, or consequence
excludes all others. This rule is expressed in the familiar maxim "expressio unius est exclusio alterius." Where a
statute, by its terms, is expressly limited to certain matters, it may not, by interpretation or construction, be
extended to others. The rule proceeds from the premise that the legislature would not have made specified
enumerations in a statute had the intention been not to restrict its meaning and to confine its terms to those
expressly mentioned.

2. ID.; "CHARITABLE" ; RELIGIOUS; DISTINCTLY USED IN SEVERAL STATUTES. — It will be observed that the
1987 Constitution, as well as several other statutes, treat the words "charitable" and "religious" separately and
independently of each other. Thus, the word "charitable" is only one of three descriptive words used in Section 28
(3), Article VI of the Constitution which provides that "charitable institutions, churches and parsonages . . ., and all
lands, buildings, and improvements, actually, directly, and exclusively used for religious, charitable, or educational
purposes shall be exempt from taxation." There are certain provisions in statutes wherein these two terms are
likewise dissociated and individually mentioned, as for instance, Sections 26 (e) (corporations exempt from income
tax) and 28 (8) (E) (exclusions from gross income) of the National Internal Revenue Code; Section 88 (purposes
for the organization of non-stock corporations) of the Corporation Code; and Section 234 (b) (exemptions from real
property tax) of the Local Government Code. That these legislative enactments specifically spelled out "charitable"
and "religious" in an enumeration, whereas Presidential Decree No. 1564 merely stated "charitable or public
welfare purposes," only goes to show that the framers of the law in question never intended to include solicitations
for religious purposes within its coverage. Otherwise, there is no reason why it would not have so stated expressly.

3. ID.; PRESIDENTIAL DECREE NO. 1564; RELIGIOUS PURPOSE; CONSTRUED. — All contributions designed to
promote the work of the church are "charitable" in nature, since religious activities depend for their support on
voluntary contributions. However, "religious purpose" is not interchangeable with the expression "charitable
purpose." While it is true that there is no religious purpose which is not also a charitable purpose, yet the converse
is not equally true, for there may be a "charitable" purpose which is not "religious" in the legal sense of the term.
Although the term "charitable" may include matters which are "religious," it is a broader term and includes matters
which are not "religious," and, accordingly, there is a distinction between "charitable purpose" and "religious
purpose," except where the two terms are obviously used synonymously, or where the distinction has been done
away with by statute. The word "charitable," therefore, like most other words, is capable of different significations.
For example, in the law, exempting charitable uses from taxation, it has a very wide meaning, but under
Presidential Decree No. 1564 which is a penal law, it cannot be given such a broad application since it would be
prejudicial to petitioners. To illustrate, the rule is that tax exemptions are generally construed strictly against the
taxpayer. However, there are cases wherein claims for exemption from tax for "religious purposes" have been
liberally construed as covered in the law granting tax exemptions for "charitable purposes." Thus, the term
"charitable purposes," within the meaning of a statute providing that the succession of any property passing to or
for the use of any institution for purposes only of public charity shall not be subject to succession tax, is deemed to
include religious purposes. A gift for "religious purposes" was considered as a bequest for "charitable use" as
regards exemption from inheritance tax. On the other hand, to subsume the "religious" purpose of the solicitation
within the concept of "charitable" purpose which under Presidential Decree No. 1564 requires a prior permit from
the Department of Social Services and Development, under pain of penal liability in the absence thereof, would be
prejudicial to petitioner. Accordingly, the term "charitable" should be strictly construed so as to exclude
solicitations for "religious" purposes. Thereby, we adhere to the fundamental doctrine underlying virtually all penal
legislations that such interpretation should be adopted as would favor the accused.

4. ID.; "PENAL LAWS ARE TO BE CONSTRUED STRICTLY AGAINST THE STATE AND LIBERALLY IN FAVOR OF THE
ACCUSED" ; APPLICATION IN CASE AT BAR. — it is a well-entrenched rule that penal laws are to be construed
strictly against the State and liberally in favor of the accused. They are not to be extended or enlarged by
implications, intendments, analogies or equitable considerations. They are not to be strained by construction to
spell out a new offense, enlarge the field of crime or multiply felonies. Hence, in the interpretation of a penal
statute, the tendency is to subject it to careful scrutiny and to construe it with such strictness as to safeguard the
rights of the accused. If the statute is ambiguous and admits of two reasonable but contradictory constructions,
that which operates in favor of a party accused under its provisions is to be preferred. The principle is that acts in
and of themselves innocent and lawful cannot be held to be criminal unless there is a clear and unequivocal
expression of the legislative intent to make them such. Whatever is not plainly within the provisions of a penal
statute should be regarded as without its intendment. The purpose of strict construction is not to enable a guilty
person to escape punishment through a technicality but to provide a precise definition of forbidden acts. The word
"charitable" is a matter of description rather than of precise definition, and each case involving a determination of
that which is charitable must be decided on its own particular facts and circumstances. The law does not operate in
vacuo nor should its applicability be determined by circumstances in the abstract. Furthermore, in the provisions of
the Constitution and the statutes mentioned above, the enumerations therein given which include the words
"charitable" and "religious" make use of the disjunctive "or." In its elementary sense, "or" as used in a statute is a
disjunctive article in indicating an alternative. It often connects a series of words or propositions indicating a choice
of either. When "or" is used, the various members of the enumeration are to be taken separately. Accordingly,
"charitable" and "religious," which are integral parts of an enumeration using the disjunctive "or" should be given
different, distinct, and disparate meanings. There is no compelling consideration why the same treatment or usage
of these words cannot be made applicable to the questioned provisions of Presidential Decree No. 1564.

5. CONSTITUTIONAL LAW; BILL OF RIGHTS; RELIGIOUS FREEDOM; FREEDOM TO ACT; MAY BE SUBJECTED TO
RESTRICTION; CONSTRUED IN CASE AT BAR. — The constitutional inhibition of legislation on the subject of religion
has a double aspect. On the one hand, it forestalls compulsion by law of the acceptance of any creed or the
practice of any form of worship. Freedom of conscience and freedom to adhere to such religious organization or
form of worship as the individual may choose cannot be restricted by law. On the other hand, it safeguards the free
exercise of the chosen form of religion. Thus, the constitution embraces two concepts, that is, freedom to believe
and freedom to act. The first is absolute but, in the nature of things, the second cannot be. Conduct remains
subject to regulation for the protection of society. The freedom to act must have appropriate definitions to preserve
the enforcement of that protection. In every case, the power to regulate must be so exercised, in attaining a
permissible end, as not to unduly infringe on the protected freedom. Whence, even the exercise of religion may be
regulated, at some slight inconvenience, in order that the State may protect its citizens from injury. Without doubt,
a State may protect its citizens from fraudulent solicitation by requiring a stranger in the community, before
permitting him publicly to solicit funds for any purpose, to establish his identity and his authority to act for the
cause which he purports to represent. The State is likewise free to regulate the time and manner of solicitation
generally, in the interest of public safety, peace, comfort, or convenience. It does not follow, therefore, from the
constitutional guaranties of the free exercise of religion that everything which may be so called can be tolerated. It
has been said that a law advancing a legitimate governmental interest is not necessarily invalid as one interfering
with the "free exercise" of religion merely because it also incidentally has a detrimental effect on the adherents of
one or more religion. Thus, the general regulation, in the public interest, of solicitation, which does not involve any
religious test and does not unreasonably obstruct or delay the collection of funds, is not open to any constitutional
objection, even though the collection be for a religious purpose. Such regulation would not constitute a prohibited
previous restraint on the free exercise of religion or interpose an inadmissible obstacle to its exercise.

6. ID.; ID.; ID.; SOLICITATION FOR RELIGIOUS PURPOSE; MAY BE SUBJECTED TO PROPER REGULATIONS
THROUGH POLICE POWER OF THE STATE. — The State has authority under the exercise of its police power to
determine whether or not there shall be restrictions on soliciting by unscrupulous persons or for unworthy causes
or for fraudulent purposes. That solicitation of contributions under the guise of charitable and benevolent purposes
is grossly abused is a matter of common knowledge. Certainly the solicitation of contributions in good faith for
worthy purposes should not be denied, but somewhere should be lodged the power to determine within reasonable
limits the worthy from the unworthy. The objectionable practices of unscrupulous persons are prejudicial to worthy
and proper charities which naturally suffer when the confidence of the public in campaigns for the raising of money
for charity is lessened or destroyed. Some regulation of public solicitation is, therefore, in the public interest. To
conclude, solicitation for religious purposes may be subject to proper regulation by the State in the exercise of
police power. However, in the case at bar, considering that solicitations intended for a religious purpose are not
within the coverage of Presidential Decree no. 1564, as earlier demonstrated, petitioner cannot be held criminally
liable therefor.

MENDOZA, J., concurring:

1. CONSTITUTIONAL LAW; PRESIDENTIAL DECREE NO. 1564; PURPOSE. — The purpose of the Decree is to protect
the public against fraud in view of the proliferation of fund campaigns for charity and other civic projects. On the
other hand, since religious fund drives are usually conducted among those belonging to the same religion, the need
for public protection against fraudulent solicitations does not exist in as great a degree as does the need for
protection with respect to solicitations for charity or civic projects so as to justify state regulation.

2. ID.; ID.; SOLICITATION FOR RELIGIOUS PURPOSES; DISTINGUISHED FROM CHARITABLE OR PUBLIC WELFARE
PURPOSES. — Solicitation of contributions for the construction of a church is not solicitation for "charitable or public
welfare purpose" but for a religious purpose, and a religious purpose is not necessarily a charitable or public
welfare purpose. A fund campaign for the construction or repair of a church is not like fund drives for needy
families or victims of calamity or for the construction of a civic center and the like. Like solicitation of subscription
to religious magazines, it is part of the propagation of religious faith or evangelization. Such solicitation calls upon
the virtue of faith, not of charity, save as those solicited for money or aid may not belong to the same religion as
the solicitor. Such solicitation does not engage the philantrophic as much as the religious fervor of the person who
is solicited for contribution.

3. ID.; ID.; ID.; REQUIREMENT FOR GOVERNMENT PERMIT; RESTRAINT ON RELIGIOUS FREEDOM. — To require a
government permit before solicitation for religious purpose may be allowed is to lay a prior restraint on the free
exercise of religion. Such restraint, if allowed, may well justify requiring a permit before a church can make Sunday
collections or enforce tithing. But in American Bible Society v. City of Manila, we precisely held that an ordinance
requiring payment of a license fee before one may engage in business could not be applied to the appellant’s sale
of bibles because that would impose a condition on the exercise of a constitutional right. It is for the same reason
that religious rallies are exempted from the requirement of prior permit for public assemblies and other uses of
public parks and streets. To read the Decree, therefor, as including within its reach solicitations for religious
purposes would be to construe it in a manner that it violates the Free Exercise of Religion Clause of the
Constitution, when what we are called upon to do is to ascertain whether a construction of the statute is not fairly
possible by which a constitutional violation may be avoided.

DECISION

REGALADO, J.:

It is indeed unfortunate that a group of elderly men, who were moved by their desire to devote their remaining
years to the service of their Creator by forming their own civic organization for that purpose, should find
themselves enmeshed in a criminal case for making a solicitation from a community member allegedly without the
required permit from the Department of Social Welfare and Development.chanrobles virtual lawlibrary
The records of this case reveal that sometime in the last quarter of 1985, the officers of a civic organization known
as the Samahang Katandaan ng Nayon ng Tikay launched a fund drive for the purpose of renovating the chapel of
Barrio Tikay, Malolos, Bulacan. Petitioner Martin Centeno, the chairman of the group, together with Vicente Yco,
approached Judge Adoracion G. Angeles, a resident of Tikay, and solicited from her a contribution of P1,500.00. It
is admitted that the solicitation was made without a permit from the Department of Social Welfare and
Development.

As a consequence, based on the complaint of Judge Angeles, an information 1 was filed against petitioner Martin
Centeno, together with Religio Evaristo and Vicente Yco, for violation of Presidential Decree No. 1564, or the
Solicitation Permit Law, before the Municipal Trial Court of Malolos, Bulacan, Branch 2, and docketed as Criminal
Case No. 2602. Petitioner filed a motion to quash the information 2 on the ground that the facts alleged therein do
not constitute an offense, claiming that Presidential Decree No. 1564 only covers solicitations made for charitable
or public welfare purposes, but not those made for a religious purpose such as the construction of a chapel. This
was denied 3 by the trial court, and petitioner’s motion for reconsideration having met the same fate, trial on the
merits ensued.

On December 29, 1992, the said trial court rendered judgment 4 finding accused Vicente Yco and petitioner
Centeno guilty beyond reasonable doubt and sentencing them to each pay a fine of P200.00. Nevertheless, the trial
court recommended that the accused be pardoned on the basis of its finding that they acted in good faith, plus the
fact that it believed that the latter should not have been criminally liable were it not for the existence of
Presidential Decree No. 1564 which the court opined it had the duty to apply in the instant case.

Both accused Centeno and Yco appealed to the Regional Trial Court of Malolos, Bulacan, Branch 10.
However, Accused Yco subsequently withdrew his appeal, hence the case proceeded only with respect to petitioner
Centeno. On May 21, 1993, respondent Judge Villalon-Pornillos affirmed the decision of the lower court but
modified the penalty, allegedly because of the perversity of the act committed which caused damage and prejudice
to the complainant, by sentencing petitioner Centeno to suffer an increased penalty of imprisonment of 6 months
and a fine of P1,000.00, without subsidiary imprisonment in case of insolvency. 5 The motion for reconsideration of
the decision was denied by the court. 6

Thus it is that a fine of P200.00 imposed as a penalty by the lowest court in the judicial hierarchy eventually
reached this highest tribunal, challenged on the sole issue of whether solicitations for religious purposes are within
the ambit of Presidential Decree No. 1564. Quantitatively, the financial sanction is a nominal imposition but, on a
question of principle, it is not a trifling matter. This Court is gratified that it can now grant this case the benefit of a
final adjudication.

Petitioner questions the applicability of Presidential Decree No. 1564 to solicitations for contributions intended for
religious purposes with the submissions that (1) the term "religious purpose" is not expressly included in the
provisions of the statute, hence what the law does not include, it excludes; (2) penal laws are to be construed
strictly against the State and liberally in favor of the accused; and (3) to subject to State regulation solicitations
made for a religious purpose would constitute an abridgment of the right to freedom of religion guaranteed under
the Constitution.

Presidential Decree No. 1564 (which amended Act No. 4075, otherwise known as the Solicitation Permit Law),
provides as follows:

"Sec. 2. Any person, corporation, organization, or association desiring to solicit or receive contributions for
charitable or public welfare purposes shall first secure a permit from the Regional Offices of the Department of
Social Services and Development as provided in the Integrated Reorganization Plan. Upon the filing of a written
application for a permit in the form prescribed by the Regional Offices of the Department of Social Services and
Development, the Regional Director or his duly authorized representative may, in his discretion, issue a permanent
or temporary permit or disapprove the application. In the interest of the public, he may in his discretion renew or
revoke any permit issued under Act 4075."

The main issue to be resolved here is whether the phrase "charitable purposes" should be construed in its broadest
sense so as to include a religious purpose. We hold in the negative.

I. Indeed, it is an elementary rule of statutory construction that the express mention of one person, thing, act, or
consequence excludes all others. This rule is expressed in the familiar maxim "expressio unius est exclusio
alterius." Where a statute, by its terms, is expressly limited to certain matters, it may not, by interpretation or
construction, be extended to others. The rule proceeds from the premise that the legislature would not have made
specified enumerations in a statute had the intention been not to restrict its meaning and to confine its terms to
those expressly mentioned. 7

It will be observed that the 1987 Constitution, as well as several other statutes, treat the words "charitable" and
"religious" separately and independently of each other. Thus, the word "charitable" is only one of three descriptive
words used in Section 28 (3), Article VI of the Constitution which provides that "charitable institutions, churches
and parsonages . . ., and all lands, buildings, and improvements, actually, directly, and exclusively used for
religious, charitable, or educational purposes shall be exempt from taxation." There are certain provisions in
statutes wherein these two terms are likewise dissociated and individually mentioned, as for instance, Sections 26
(e) (corporations exempt from income tax) and 28 (8) (E) (exclusions from gross income) of the National Internal
Revenue Code; Section 88 (purposes for the organization of non-stock corporations) of the Corporation Code; and
Section 234 (b) (exemptions from real property tax) of the Local Government Code.

That these legislative enactments specifically spelled out "charitable" and "religious" in an enumeration, whereas
Presidential Decree No. 1564 merely stated "charitable or public welfare purposes," only goes to show that the
framers of the law in question never intended to include solicitations for religious purposes within its coverage.
Otherwise, there is no reason why it would not have so stated expressly.

All contributions designed to promote the work of the church are "charitable" in nature, since religious activities
depend for their support on voluntary contributions. 8 However, "religious purpose" is not interchangeable with the
expression "charitable purpose." While it is true that there is no religious purpose which is not also a charitable
purpose, yet the converse is not equally true, for there may be a "charitable" purpose which is not "religious" in the
legal sense of the term. 9 Although the term "charitable" may include matters which are "religious," it is a broader
term and includes matters which are not "religious," and, accordingly, there is a distinction between "charitable
purpose" and "religious purpose," except where the two terms are obviously used synonymously, or where the
distinction has been done away with by statute. 10 The word "charitable," therefore, like most other words, is
capable of different significations. For example, in the law, exempting charitable uses from taxation, it has a very
wide meaning, but under Presidential Decree No. 1564 which is a penal law, it cannot be given such a broad
application since it would be prejudicial to petitioners.

To illustrate, the rule is that tax exemptions are generally construed strictly against the taxpayer. However, there
are cases wherein claims for exemption from tax for "religious purposes" have been liberally construed as covered
in the law granting tax exemptions for "charitable purposes." Thus, the term "charitable purposes," within the
meaning of a statute providing that the succession of any property passing to or for the use of any institution for
purposes only of public charity shall not be subject to succession tax, is deemed to include religious purposes. 11 A
gift for "religious purposes" was considered as a bequest for "charitable use" as regards exemption from
inheritance tax. 12

On the other hand, to subsume the "religious" purpose of the solicitation within the concept of "charitable" purpose
which under Presidential Decree No. 1564 requires a prior permit from the Department of Social Services and
Development, under pain of penal liability in the absence thereof, would be prejudicial to petitioner. Accordingly,
the term "charitable" should be strictly construed so as to exclude solicitations for "religious" purposes. Thereby,
we adhere to the fundamental doctrine underlying virtually all penal legislations that such interpretation should be
adopted as would favor the accused.

For, it is a well-entrenched rule that penal laws are to be construed strictly against the State and liberally in favor
of the accused. They are not to be extended or enlarged by implications, intendments, analogies or equitable
considerations. They are not to be strained by construction to spell out a new offense, enlarge the field of crime or
multiply felonies. Hence, in the interpretation of a penal statute, the tendency is to subject it to careful scrutiny
and to construe it with such strictness as to safeguard the rights of the accused. If the statute is ambiguous and
admits of two reasonable but contradictory constructions, that which operates in favor of a party accused under its
provisions is to be preferred. The principle is that acts in and of themselves innocent and lawful cannot be held to
be criminal unless there is a clear and unequivocal expression of the legislative intent to make them such.
Whatever is not plainly within the provisions of a penal statute should be regarded as without its intendment. 13

The purpose of strict construction is not to enable a guilty person to escape punishment through a technicality but
to provide a precise definition of forbidden acts. 14 The word "charitable" is a matter of description rather than of
precise definition, and each case involving a determination of that which is charitable must be decided on its own
particular facts and circumstances. 15 The law does not operate in vacuo nor should its applicability be determined
by circumstances in the abstract.

Furthermore, in the provisions of the Constitution and the statutes mentioned above, the enumerations therein
given which include the words "charitable" and "religious" make use of the disjunctive "or." In its elementary
sense, "or" as used in a statute is a disjunctive article in indicating an alternative. It often connects a series of
words or propositions indicating a choice of either. When "or" is used, the various members of the enumeration are
to be taken separately. 16 Accordingly, "charitable" and "religious," which are integral parts of an enumeration
using the disjunctive "or" should be given different, distinct, and disparate meanings. There is no compelling
consideration why the same treatment or usage of these words cannot be made applicable to the questioned
provisions of Presidential Decree No. 1564.
II. Petitioner next avers that solicitations for religious purposes cannot be penalized under the law for, otherwise, it
will constitute an abridgment or restriction on the free exercise clause guaranteed under the Constitution.

It may be conceded that the construction of a church is a social concern of the people and, consequently,
solicitations appurtenant thereto would necessarily involve public welfare. Prefatorily, it is not implausible that the
regulatory powers of the State may, to a certain degree, extend to solicitations of this nature. Considering,
however, that such an activity is within the cloak of the free exercise clause under the right to freedom of religion
guaranteed by the Constitution, it becomes imperative to delve into the efficaciousness of a statutory grant of the
power to regulate the exercise of this constitutional right and the allowable restrictions which may possibly be
imposed thereon.

The constitutional inhibition of legislation on the subject of religion has a double aspect. On the one hand, it
forestalls compulsion by law of the acceptance of any creed or the practice of any form of worship. Freedom of
conscience and freedom to adhere to such religious organization or form of worship as the individual may choose
cannot be restricted by law. On the other hand, it safeguards the free exercise of the chosen form of religion. Thus,
the constitution embraces two concepts, that is, freedom to believe and freedom to act. The first is absolute but, in
the nature of things, the second cannot be. Conduct remains subject to regulation for the protection of society. The
freedom to act must have appropriate definitions to preserve the enforcement of that protection. In every case, the
power to regulate must be so exercised, in attaining a permissible end, as not to unduly infringe on the protected
freedom. 17

Whence, even the exercise of religion may be regulated, at some slight inconvenience, in order that the State may
protect its citizens from injury. Without doubt, a State may protect its citizens from fraudulent solicitation by
requiring a stranger in the community, before permitting him publicly to solicit funds for any purpose, to establish
his identity and his authority to act for the cause which he purports to represent. The State is likewise free to
regulate the time and manner of solicitation generally, in the interest of public safety, peace, comfort, or
convenience. 18

It does not follow, therefore, from the constitutional guaranties of the free exercise of religion that everything
which may be so called can be tolerated.19 It has been said that a law advancing a legitimate governmental
interest is not necessarily invalid as one interfering with the "free exercise" of religion merely because it also
incidentally has a detrimental effect on the adherents of one or more religion. 20 Thus, the general regulation, in
the public interest, of solicitation, which does not involve any religious test and does not unreasonably obstruct or
delay the collection of funds, is not open to any constitutional objection, even though the collection be for a
religious purpose. Such regulation would not constitute a prohibited previous restraint on the free exercise of
religion or interpose an inadmissible obstacle to its exercise. 21

Even with numerous regulative laws in existence, it is surprising how many operations are carried on by persons
and associations who, secreting their activities under the guise of benevolent purposes, succeed in cheating and
defrauding a generous public. It is in fact amazing how profitable the fraudulent schemes and practices are to
people who manipulate them. The State has authority under the exercise of its police power to determine whether
or not there shall be restrictions on soliciting by unscrupulous persons or for unworthy causes or for fraudulent
purposes. That solicitation of contributions under the guise of charitable and benevolent purposes is grossly abused
is a matter of common knowledge. Certainly the solicitation of contributions in good faith for worthy purposes
should not be denied, but somewhere should be lodged the power to determine within reasonable limits the worthy
from the unworthy. 22 The objectionable practices of unscrupulous persons are prejudicial to worthy and proper
charities which naturally suffer when the confidence of the public in campaigns for the raising of money for charity
is lessened or destroyed. 23 Some regulation of public solicitation is, therefore, in the public interest. 24

To conclude, solicitation for religious purposes may be subject to proper regulation by the State in the exercise of
police power. However, in the case at bar, considering that solicitations intended for a religious purpose are not
within the coverage of Presidential Decree no. 1564, as earlier demonstrated, petitioner cannot be held criminally
liable therefor.:

As a final note, we reject the reason advanced by respondent judge for increasing the penalty imposed by the trial
court, premised on the supposed perversity of petitioner’s act which thereby caused damage to the complainant. it
must be here emphasized that the trial court, in the dispositive portion of its decision, even recommended
executive clemency in favor of petitioner and the other accused after finding that the latter acted in good faith in
making the solicitation from the complainant, an observation with which we fully agree. After all, mistake upon a
doubtful and difficult question of law can be the basis of good faith, especially for a layman.

There is likewise nothing in the findings of respondent judge which would indicate, impliedly or otherwise, that
petitioner and his co-accused acted abusively or malevolently. this could be reflective upon her objectivity,
considering that the complainant in this case is herself a judge of the Regional Trial Court at Kalookan City. It bears
stressing at this point that a judge is required to so behave at all times as to promote public confidence in the
integrity and impartiality of the judiciary, 25 should be vigilant against any attempt to subvert its independence,
and must resist any pressure from whatever source.26

WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE, and petitioner Martin Centeno is
ACQUITTED of the offense charged, with costs de oficio.

SO ORDERED.

Narvasa, C.J., and Puno, J., concur.

[G.R. Nos. 136149-51. September 19, 2000.]

PEOPLE OF THE PHILIPPINES, Appellee, v. WALPAN LADJAALAM y MIHAJIL alias "WARPAN", Appellant.

DECISION

PANGANIBAN, J.:

Republic Act No. 8294 penalizes simple illegal possession of A firearms, provided that the person arrested
committed "no other crime" Furthermore, if the person is held liable for murder or homicide, illegal possession of
firearms is an aggravating circumstance, but not a separate offense. Hence, where an accused was convicted of
direct assault with multiple attempted homicide for firing an unlicensed M-14 rifle at several policemen who were
about to serve a search warrant, he cannot be held guilty of the separate offense of illegal possession of firearms.
Neither can such unlawful act be considered to have aggravated the direct assault.chanrob1es virtua1 1aw 1ibrary

The Case

Walpan Ladjaalam y Mihajil, also known as "Warpan," appeals before us the September 17, 1998 Decision 1 of the
Regional Trial Court (RTC) of Zamboanga City (Branch 16), which found him guilty of three out of the four charges
lodged against him.

Filed against appellant were four Informations, 2 all signed by Assistant Regional State Prosecutor Ricardo G.
Cabaron and dated September 25, 1997. The first Information 3 was for maintaining a den for the use of regulated
drugs It reads as follows:

"That on or about September 24, 1997, in the City of Zamboanga, Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused, Walpan Ladjaalam being then the owner of a residential house located
at Rio Hondo, 4 this City, conspiring and confederating together, mutually aiding and assisting . . . his co-accused
wife Nur-in Ladjaalam and Ahmad Sailabbi y Hajaraini, did then and there wilfully, unlawfully and feloniously,
maintain said house as a den, where regulated drug [was] used in any form." 5

The second Information 6 charged appellant with illegal possession of firearms and ammunition. We quote it below:

"That on or about September 24, 1997, in the City of Zamboanga, Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused, conspiring and Confederating together, mutually aiding and assisting
with one another, without any justifiable reason or purpose other than to use it in the commission of crime, did
then and there, wilfully, unlawfully, and feloniously have id their possession and under their custody and control,
the following weapons, to wit: one (1) M14 rifle with SN 1555225 with magazines and seven (7) rounds of live
ammunition; two (2) magazines with twenty (20) and twenty [-one] (21) rounds of live [ammunition]; one (1)
homemade caliber .38 revolvers with five (5) live ammunition; one (1) M-79 (single) rifle with pouch and with five
(5) empty shell[s]; one (1) home made caliber .38 with SN-311092 with five live ammunition and one empty shell
of [a] cal. 38 . . . Smith and Wesson; two (2) .38 Caliber paltik revolver with Serial Number 311092 and one
defaced M79 grenade launcher paltik, without first having obtained the necessary license and or permit therefor
from authorities concerned, in flagrant violation of the aforementioned law." 7

The third Information, 8 for multiples attempted murder with direct assault, was worded thus:chanrob1es virtua1
1aw 1ibrary

"That on or about September 24, 1997, in the City of Zamboanga, Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused being then armed with M-14 Armalite Rifles, M-16 Armalite Rifles and
other assorted firearms and explosives, conspiring and confederating together, mutually aiding and assisting . . .
one another and with intent to kill, did then and there wilfully, unlawfully and feloniously try and attempt to kill
SPO1 WILLIAM B. JONES, JR., PO3 ENRIQUE C. RIVERA[,] SPO1 AMADO A. MIRASOL, JR., and SPO1 RICARDO J.
LACASTESANTOS, in the following manner, to wit: by then and there firing their M-14 Armalite Rifles, M-16
Armalite Rifles and other assorted firearms and explosives, aimed and directed at the fatal parts of the bodies of
the above-named police officers, well known to the accused as members of the Philippine National Police,
Zamboanga City Police Office, and as such, agents of a person in authority, who at the time of the attack were
engaged in the performance of their duties, that is, on the occasion when said officers were about to serve the
Search Warrant legally issued by the Regional Trial Court, this City, to the person of the accused thus commencing
the commission of crime of multiple murder directly by overt acts, and if the accused did not accomplish their
unlawful purpose, that is, to kill the above-named Police Officers, it was not by reason of their own voluntary
desistance but rather because of the fact that all the above-named police officers were able to seek cover during
the firing and were not hit by the bullets and explosives fired by the accused and also by the fact said police
officers were able to wrestle with two (2) of the accused namely: Walpan Ladjaalam y Mihajil a.k.a.’Warpan’ and
Ahmad Sailabbi y Hajairani, who were subdued and subsequently placed under arrest; whereas accused PO2
Nurhakim T. Hadjula was able to make good his escape and has remained at-large." 9

In the fourth Information appellant was charged with illegal possession of drugs. 10

On December 21, 1997, the cases against Nur-in Ladjaalam and Ahmad Sailabbi y Hajaraini were dismissed upon
motion of the Office of the City Prosecutor, which had conducted a reinvestigation of the cases as ordered by the
lower court. The accused were consequently released from jail.

The arraignment of appellant on all four (4) charges took place on January 6, 1998, during which he entered a plea
of not guilty. 11

After pretrial, the assailed Decision was rendered, the dispositive part of which reads:

"WHEREFORE, the Court finds accused WALPAN LADJAALAM y MIHAJIL a.k.a.’WARPAN’ —

1. in Criminal Case No. 14636, GUILTY BEYOND REASONABLE DOUBT of Violation of Section 15-A, Article 111, of
Republic Act No. 6425, otherwise known as the Dangerous Drugs Act of 1972, as amended, and SENTENCES said
accused to the penalty of RECLUSION PERPETUA and to pay a fine of FIVE HUNDRED THOUSAND (P500,000.00)
and to pay the costs;

"2. In Criminal Case No. 1463, NOT GUILTY of Violation of Section 16, Article III, in relation to Section 21, Article
IV, of Republic Act No. 6425, otherwise known as the Dangerous Drugs Act of 1972, as amended, and ACQUITS
him of said crime with costs de officio;

"3. in Criminal Case No. 14638, GUILTY BEYOND REASONABLE DOUBT of the crime of Illegal Possession of Firearm
and Ammunition penalized under Presidential Decree No. 1866, as amended by Republic Act. No. 8294, and
SENTENCES said accused to suffer an indeterminate penalty of SIX (6) YEARS of prision correccional as minimum
to EIGHT (8) YEARS of prision mayor as maximum and to pay a fine [of] THIRTY THOUSAND (P30,000.00) and pay
the costs;

"4. in Criminal Case No. 14639, GUILTY BEYOND REASONABLE DOUBT of the crime of direct Assault with Multiple
Attempted Homicide and SENTENCES said accused to an indeterminate penalty of TWO (2) YEARS and FOUR (4)
MONTHS of prision correccional as minimum to SIX (6) YEARS of prision correctional as maximum and to pay a fine
of ONE THOUSAND (P1,000.00) and to pay the costs." (emphasis in the original)

Hence, this appeal. 12

The Facts

Prosecution’s Version

In its Brief, 13 the Office of the Solicitor General presents the facts in this wise:

"At 1:45 p.m. of September 24, 1997, PO3 Allan Marcos Obut filed an application for the issuance of a search
warrant against appellant, his wife and some John Does (Exh. C). After the search warrant was issued about 2:30
p.m. of the same day, a briefing was conducted inside the office of the Anti-Vice/Narcotics Unit of the Zamboanga
City Police Office in connection with the service of the search warrant. The briefing was conducted by SPO2 Felipe
Gaganting, Chief of the Anti-Vice/Narcotics Unit. During the briefing, PO3 Renato Dela Peña was assigned as
presentor of the warrant. SPO1 Ricardo Lacastesantos and PO3 Enrique Rivera were designated to conduct the
search. Other policemen were assigned as perimeter guards (TSN, March 3, 1998, pp. 33-36).

"After the briefing, more than thirty (30) policemen headed by Police Superintendent Edwin Soledad proceeded to
the house of appellant and his wife at Folio Hondo on board several police vehicles (TSN, March 4, 1948, p. 32;
April 22, 1998, p. 54). Before they could reach appellant’s house, three (3) persons sitting at a nearby store ran
towards the house shouting, ‘[P]olice, raid, raid’ (Ibid., March 3, 1998, pp. 41, 43-44; April 23, 1998, p. 4). When
the policemen were about ten (10) meters from the main gate of the house, they were met by a rapid burst of
gunfire coming from the second floor of the house. There was also gunfire at the back of the house (Ibid., March 5,
1998, pp. 14-16).chanrob1es virtua1 1aw 1ibrary

"SPO1 Mirasol, SPO2 Lacastesantos, PO3 Rivera, and PO3 Dela Peña who were with the first group of policemen
saw appellant fire an M14 rifle towards them. They all knew appellant. When they were fired upon, the group,
together with SPO2 Gaganting, PO3 Obut and Superintendent Soledad, sought cover at the concrete fence to
observe the movements at the second floor of the house while other policemen surrounded the house (Ibid., March
4, 1998, pp. 50-51).

"In front of the house was an extension building connected to the concrete fence (Ibid., pp. 45-46, 57-59, 73- 76).
Gaganting, Mirasol, Lacastesantos, Gregorio, and Obut entered the door of the extension building. Gaganting
opened the main (steel) gate of the house. The other members of the team then entered. Lacastesantos and
Mirasol entered the house through the main door and went inside the saga of the ground floor while other
policemen surrounded the house. Two (2) old women were in the saga together with a young girl and three (3)
children. One of the old women took the children to the second floor while the young girl remained seated at the
corner (Ibid., pp. 19-21).

"Lacastesantos and Mirasol proceeded to the second floor where they earlier saw appellant firing an M14 rifle at
them through the window. While they were going upstairs, appellant noticed their presence. He went inside the
bedroom and, after breaking and removing the jalousies, jumped from the window to the roof of a neighboring
house. Seeing this, Mirasol rushed downstairs and asked help from the other members of the raiding team to arrest
appellant. Lacastesantos went to the second floor and shouted to the policemen outside not to fire in the direction
of the second floor because there were children. Mirasol and SPO1 Cesar Rabuya arrested appellant at the back of
his house after a brief chase (Ibid., pp. 21-23).

"At the second floor, Lacastesantos saw an M14 rifle (Exh. B-3) with magazine on top of the sofa at the sala on the
second floor (Ibid., P. 2-7). The rifle bore Serial No. 1555225. He removed the magazine from the rifle and the
bullet inside the chamber of the rifle. He counted seventeen (17) live ammunition inside the magazine. He saw two
(2) more M14 rifle magazines on that sofa, one with twenty (20) five ammunition (Exh. G-3) and another with
twenty-one (21) live ammunition (Exh. G-4). He likewise saw three (3) M16 rifle magazines (Exh. G-2) in a corner
at the second floor (TSN, March 5, 1998, pp. 23-32, 53-57).

"After Lacastesantos and Mirasol entered appellant’s house, Rivera, Dela Peña, Gregorio and Obut followed and
entered the house. After identifying themselves as members of the PNP Anti-Vice/Narcotics Unit, Obut presented to
the old women a copy of the search warrant. Dela Peña and Rivera then searched appellant’s room on the ground
floor in the presence of Punong Barangay Elhano (TSN, March 3, 1998, pp. 41-43). on top of a table was a pencil
case (Exh. J) with fifty (50) folded aluminum foils inside (Exhs. J-1 to J-50), each containing methamphetamine
hydrochloride or ‘shabu’.

"Other items were found during the search, namely, assorted coins in different denominations (Exh. W; TSN, April
28, 1998, pp. 23-25), one (1) homemade .38 caliber revolver (Exh. B-2) with five (5) live [ammunition], one (1)
M79 single rifle with [a] pouch containing five (5) empty shells of an M79 rifle (Exh. B-4), and one (1) empty shell
of an M14 rifle (TSN, April 23, 1998, pp. 30-32).

"Rino Bartolome Locson was an informer of the Anti-Vice/Narcotics Unit of the Zamboanga Police. [O]n the morning
of September 24, 1997, he was instructed by SPO2 Gaganting to go to appellant’s house to buy ‘shabu.’ Locson
knew appellant as a seller of ‘shabu’ (TSN, April 22, 1998, p. 5) and had been to appellant’s house about fifteen
(15) times before. He went to Rio Hondo and arrived at appellant’s house at 3:20 p.m. He bought P300.00 worth of
‘shabu’ from appellant. The latter got three (3) decks of shabu from his waist bag. Appellant instructed Locson to
go behind the curtain where there was a table. There were six (6) persons already smoking. There was a lighted
kerosene lamp made of a medicine bottle placed on the table. They asked Locson to smoke ‘shabu’ and Locson
obliged. He placed the three (3) decks of ‘shabu’ he bought on the table (Ibid., pp. 8-15).

"While they were smoking ‘shabu,’ Locson heard gunfire coming from appellant’s house. They all stood and entered
appellant’s compound, but were instructed to pass [through] the other side. They met appellant at the back of his
house. Appellant told them to escape ‘because the police are already here.’ They scampered and ‘ran away because
there were already shots.’ Locson jumped over the fence and ran towards the seashore. Upon reaching a place
near the Fisheries School, he took a tricycle and went home (Ibid., pp. 17-19).

"The following day, September 25, 1997, he went to the police station and executed an affidavit (Exh. M) narrating
what transpired at appellant’s house [o]n the afternoon of September 24, 1997.

"After the search and before returning to the police station, PO3 Dela Peña prepared a Receipt for Property Seized’
(Exh. P & 3) listing the properties Seized during the search. The receipt was signed by Dela Peña as the seizure
officer, and by Punong Barangay Hadji Hussin Elhano and radio reporter Jun Cayona as witnesses. A copy of the
receipt was given to appellant but he refused to acknowledge the properties seized (TSN, April 23, 1998, pp. 11-
12)

"An examination conducted by Police Inspector Mercedes D. Diestro, Forensic Chemist of the PNP Crime Laboratory
Service Office 9, on the paraffin casts taken from both hands of appellant yielded positive for gunpowder nitrates
(Exh. A-3), giving rise to the possibility that appellant had fired a gun before the examination (TSN, March 3, 1998,
p. 11). Gunpowder residue examinations conducted on September 26, 1997 showed that the following firearms
‘were fired’ (Exh. B-5): a .38 caliber revolver (homemade) with Serial No. 311092 (Exh. B-1), another .38 caliber
revolver (homemade) without a serial number (Exh. B-2), a Cal. 7.62 mm M14 U.S. rifle with Serial No. 1555225
(Exh. B-3), and an M79 rifle without a serial number (Exh. B-4). They were fired within five (5) days prior to the
examination (TSN, March 3, 1998, pp. 16-21).

"With respect to the crystalline substances, an examination conducted by Police Inspector Susan M. Cayabyab,
likewise a Forensic Chemist of the PNP Crime Laboratory Service Office 9, on the fifty (50) pieces of folded
aluminum foils each containing white crystalline granules with a total weight of 1.7426 grams (Exh. J-1 to J-50)
yielded positive results for the presence of methamphetamine hydrochloride (shabu) (Exh. L). However, the
examination of one (1) crystalline stone weighing 83.2674 grams (Exh. K) yielded negative results for the presence
of methamphetamine hydrochloride (Exh. L).

"The records of the Regional Operation and Plans Division of the PNP Firearm and Explosive Section show that
appellant ‘had not applied/filed any application for license to possess firearm and ammunition or . . . been given
authority to carry [a] firearm outside of his residence ‘ (Exh. X)" 14

Defense’s Version

Appellant Ladjaalam agrees with the narration of facts given by the lower Court. 15 Hence, we quote the pertinent
parts of the assailed Decision:

"Accused Walpan Ladjaalam y Mihajil a.k.a.’Warpan’, 30 years old, married, gave his occupation as ‘smuggling’
(tsn, p. 2, May 4, 1998). He used to go to Labuan in Malaysia and bring cigarettes to the Philippines without paying
taxes (tsn, pp. 4041, id). He said that his true name [was] Abdul Nasser Abdurakman and that Warpan or Walpan
Ladjaalam [was] only his ‘alias’. However, he admitted that more people kn[e]w him as Walpan Ladjaalam rather
than Abdul Nasser Abdurakman (tsn. pp. 39-40; 46-47, id). He testified that [o]n the afternoon of September 24,
1997, when he was arrested by the police, he was sleeping in the house of Dandao, a relative of his wife. He was
alone. He slept in Dandao’s house and not in his house because they ha[d] ‘a sort of a conference’ as Dandao’s
daughter was leaving for Saudi Arabia. He noticed the presence of policemen in his neighborhood at Aplaya, Rio
Hondo when he heard shots. He woke up and went out of the house and that was the time that he was arrested.
He said he was arrested." . . [at] the other side of my house; at the other side of the fence where I was sleeping . .
. At the back of my house’ (tsn, p. 7, id.). He does not know who arrested him ‘considering that the one who
arrested me does not have nameplate.’ He was arrested by four (4) persons. Not one of those who arrested him
testified in Court. He was handcuffed and placed inside a jeep parked at Rio Hondo Elementary School. According
to him, he did not fire a gun at the policemen from [t]he second floor of his house. He said the ‘policemen’ [were]
‘the one[s] who fire[d] at us’ (tsn, p. 5, id.). If he fired a gun at the policemen for sure they [would] die ‘[b]ecause
the door is very near . . . the vicinity of my house’. He does not own the M14 rifle (Exh.’B-3’) which according to
policemen, he used in firing at them. The gun does not belong to him. He does not have a gun like that (tsn, p. 15,
id.). A policeman also owns an M14 rifle but he does not know the policeman (tsn, pp. 16-17, id). He said that the
M79 rifle (Exh.’B-4’), the three (3) empty M16 rifle magazines (Exh.’G’; ‘G-1’ to ‘G-2’), the two (2) M14 magazines
with live ammunition (Exh.’G-3’; ‘G-4’); the two (2) caliber .38 revolvers (Exhs.’B-1’; ‘B-2’), the fifty (50)
aluminum foils each containing shabu (Exhs.’J-1’ to ‘J-50’) placed inside a pencil case (Exh.’J’, the assorted coins
placed inside a blue bag (Exh.’W’) and the white crystalline stone (Exh.’K’) all do not belong to him. He said that
the policemen just produced those things as their evidence. The firearms do not belong to him. They were brought
by the policemen (tsn, p. 43, May 4, 1998). Regarding the blue bag containing assorted coins, he said: ‘that is not
ours, I think this (is) theirs, . . . they just brought that as their evidence’ (tsn, pp. 15-24, id.)chanrob1es virtua1
1aw 1ibrary

"Walpan Ladjaalam declared there were occupants who were renting his extension house. He affirmed that he owns
that house. Four (4) persons were staying in the extension house. He could only recognize the husband whose
name is Momoy. They are from Jolo. They left the place already because they were afraid when the police raided
the place. (tsn, pp. 8-10, May 4, 1998). He does not know prosecution witness Rino Locson y Bartolome. Although
Locson recognized him, in his case he does not know Locson and he does not recognize him (tsn, p. 11, id). He did
not sell anything to Locson and did not entertain him. He is not selling shabu but he knows ‘for a fact that there are
plenty of person who are engaged in selling shabu in that place’, in that area known as Aplaya, Rio Hondo. One of
them is Hadji Agbi (tsn, pp. 11-14, id).
"After his arrest Walpan Ladjaalam was brought to the police station where he stayed for one day and one night
before he was transferred to the City jail. While at the police station, he was not able to take a bath. He smokes
two packs of cigarette a day. While he was at the police station, he smoked [a] cigarette given to him by his
younger sister. He lighted the cigarettes with [a] match From the police station, he was brought to the PNP
Regional Office at R.T. Lim Boulevard where he was subject to paraffin examination (tsn, pp. 24-26, May 4, 1998).

"During the raid conducted on his house, his cousin Boy Ladjaalam, Ating Sapadi, and Jecar (Sikkal) Usman, the
younger brother of his wife were killed. Walpan Ladjaalam said that he saw that ‘it was the policeman who shot
them[,] only I do not know his name." They were killed at the back of his house. He said that no charges were filed
against the one responsible for their death (tsn, pp. 30-33. May 4, 1998).

"Anilhawa Ahamad, more or less 80 years old, a widow was in the house of Walpan Ladjaalam whom he calls ‘Hadji
Id’ at the time the police raided the house. She is the mother of Ahma Sailabbi. She was together with Babo
Dandan, two small children and a helper when ‘soldiers’ entered the house.’(W)hen they arrived, they kept on
firing (their guns) even inside the house’ (tsn, p.5, May 5, 1998). They were armed with short and long firearms.
They searched the house and scattered things and got what they wanted. They entered the room of Walpan
Ladjaalam. They tried to open a bag containing jewelry. When Anilhawa tried to bring the bag outside the room,
they grabbed the bag from her and poked a gun at her. At that time Walpan Ladjaalam was not in the house.
Ahamad Sailabbi was also not in the house. A Search Warrant was shown to Anilhawa after the search was
conducted and just before the policemen left the place. Anilhawa Ahamad said that ‘it was already late in the
afternoon[;] before they left that was the time the Search Warrant (was) given to us by . . . Barangay Captain
Hussin Elhano’ (tsn, pp. 6-8, May 5, 1998). Barangay Chairman Elhano arrived ‘already late in the afternoon,
almost sundown’ (tsn, p. 9, id). Anilhaw declared that aside from a bag containing jewelry and a bag full of money
, she had not seen anything else that was taken from Walpan Ladjaalam’s house (tsn, pp. 9-12, id).

"Akmad (Ahmad) Sailabbi, 37 years old, married testified that about 4:00 o’clock [o]n the afternoon of September
24, 1997, he was standing in front of his house when policemen arrived and immediately arrested him. He was
about to go to the City Proper to buy articles he was intending to bring to Sabah. He had ‘around P50,000.00’
placed inside a waist bag tied around his waist. The policemen told him to lie down in prone position and a
policeman searched his back. They pulled his waist bag and took his DiaStar wrist watch. He was shot three times
and was hit on the forehead leaving a scar. His injury was not treated. He was taken to the police station where he
was detained for one day and one night. He was detained at the City Jail for three months and five days after
which he was released (tsn, pp. 25-29, May 5,1998).

"Melba Usma, 20 years old, a widow, testified that [o]n the afternoon of September 24,1997, she was in the house
of her parents lying together with her husband Sikkal Usma. There is only one house between her parents’ house
and the house of Walpan Ladjaalam. Her husband Sikkal Usman is the brother of Nur-in Ladjaalam, Walpan’s wife.
When Melba heard shots, she went downstairs. A policeman was looking for her husband. The policeman called her
husband. When her husband went down, he was instructed by the policeman to lie down in prone position. Then
the policeman shot her husband. The policeman had two other companions who also shot her husband while he
was lying down in prone position (tsn, pp. 2-7, May 5,1998).

"Murkisa Usman, 30 years old, married, declared that [o]n the afternoon of September 24,1997, she was sitting at
the door of her house watching her children playing when a motorcycle, driven by a person, stopped near her
house The driver was Gaganting whom she called a soldier. He went down from his motorcycle, pulled a gun and
poked it at Murkisa. Murkisa stood up and raised her hands. She got her children and when she was about to enter
the room of her house, Gaganting again poked a gun at her and ‘there was a shot.’ As a result of firing, three
persons died, namely, Sikkal Usman, Boy Ladjaalam and Atip Sapali Sali (tsn, pp. 8-10, May 5, 1998).

"Barangay Captain Hadji Hussin Elhano, 51 years old, testified that about 4:00 o’clock [o]n the afternoon of
September 24,1997, he was fetched by two policemen at Catabangan where he was attending a seminar. Because
of traffic along the way, they arrived at the Rio Hondo already late in the afternoon. He saw policemen were
already inside the house. Upon entering the gate, he saw Walpan at the gate already handcuffed. Walpan called
him but, the police advised him not to approach Walpan. The search was already over and things were already
taken inside the house. When he went inside the house, he saw ‘the things that they (policemen) searched, the
firearms and the shabu’ (tsn, p. 17, May 8, 1998). He did not see the Search Warrant. What was shown to him
were the things recovered during the search which were being listed. They were being counted and placed on a
table.’Upon seeing the things that were recovered during the search, I just signed the receipt (Exh. "P." ; "P-1") of
the things . . . taken during the search" (tsn, pp. 17-18. May 8, 1998). He saw three dead bodies at the side of the
fence when he went to the other side of the house. The three persons were killed outside the fence of Walpan
Ladjaalam (tsn, p. 18, id)." 16

The Trial Court’s Ruling

The trial court observed that the house of appellant was raided on September 24, 1997 by virtue of Search
Warrant No. 20 issued on the same day. However, the lower court nullified the said Warrant because it had been
issued for more than one specific offense, 17 in violation of Section 3, Rule 126 of the Rules of Court. 18 The court
a quo ruled:

"It should be stated at the outset that Search Warrant No. 20 is totally ‘null and void’ because it was issued for
more than one specific offense . . . contrary to Section 3, Rule 1[2]6 of the Rules of Court which provides that ‘A
search warrant shall not issue but upon probable cause in Connection with one specific offense . . .’. in Tambasan
v. People, 246 SCRA 184 (1995), the Supreme Court ruled that a search warrant for more than one offense - a
‘scatter shot warrant’ violates Section 3, Rule 126 of the [R]evised Rules of Court and is ‘totally null and void." 19
(emphasis in the original)chanrob1es virtua1 1aw 1ibrary

Nevertheless, the trial court deemed appellant’s arrest as valid. It emphasized that he had shot at the officers who
were trying to serve the void search warrant. This fact was established by the testimonies of several police officers,
20 who were participants in the raid, and confirmed by the laboratory report on the paraffin tests conducted on the
firearms and appellant. 21 Additionally, the judge noted that Appellant Ladjaalam, based on his statements in his
Counter Affidavit, impliedly contradicted his assertions in open court that there had been no exchange of gunfire
during the raid. 22 the trial court concluded that the testimonies of these officers must prevail over appellant’s
narration that he was not in his house when the raid was conducted.

Prescinding from this point, the court a quo validated the arrest of appellant, reasoning thus:

"Under the circumstances, the policemen ‘had authority to pursue and arrest Walpan Ladjaalam and Confiscate the
firearm he used in shooting at the policemen and to enter his house to effect said arrest and confiscation of the
firearm.’ Under Rule 113, Section 5 (a), of the Rules of Court, ‘A peace Officer or a private person may, without a
warrant, arrest a person (w)hen in his presence, the person to be arrested has committed, is actually committing,
or is attempting to commit an offense.’ An offense is committed in the presence or within the view of an officer,
within the meaning of the rule authorizing an arrest without a warrant, when the officer sees the offense, although
at a distance, or hears the disturbances created thereby and proceeds at once to the scene thereof. At the time the
policemen entered the house of accused Walpan Ladjaalam after he had fired shots at the policemen who intended
to serve the Search Warrant to him, the accused was engaged in the commission of a crime, and was pursued and
arrested after he committed the crime of shooting at the policemen who were about to serve the Search Warrant."
23

As a consequence of the legal arrest, the seizure of the following was also deemed valid: the M14 rifle (with a
magazine containing seventeen live ammunition) 24 used by appellant against the police elements, two M14
magazines, and three other M16 rifle magazines. 25 The trial court observed that these items were in "plain view"
of the pursuing police officers. Moreover, it added that these same items were "evidence [of] the commission of a
crime and/or contraband and therefore, subject to seizure" 26 since appellant "had not applied for a license to
possess firearm and had not been given authority to carry firearm outside his residence." 27

For being incredible and unsupported by evidence, appellant’s claim that the items that were seized by the police
officers had been planted was disbelieved by the trial court. It ruled that if the police officers wanted to plant
evidence to incriminate him, they could have done so during the previous raids or those conducted after his arrest.
To its mind, it was unbelievable that they would choose to plant evidence, when they were accompanied by the
barangay chairman and a radio reporter who might testify against them. It then dismissed these allegations, saying
that frame-up, like alibi, was an inherently weak defense. 28

The trial court also convicted the accused of the crime of maintaining a drug den. It reasoned as follows:

"The testimony of Rino Bartolome Locson, corroborated by SPO1 Ricardo Lacastesantos and SPO1 Amado Mirasol,
Jr. clearly established that Walpan Ladjaalam operated and maintained a drug den in his extension house where
shabu or methamphetamine hydrochloride, a regulated drug, was sold, and where persons or customers bought
and used shabu or methamphetamine hydrochloride by burning the said regulated drug and sniffing its smoke with
the use of an aluminum foil tooter. A drug den is a lair or hideaway where prohibited or regulated drugs are used in
any form or are found. Its existence [may be] proved not only by direct evidence but may also be established by
proof of facts and circumstances, including evidence of the general reputation of the house, or its general
reputation among police officers. The uncorroborated testimony of accused Walpan Ladjaalam a.k.a.’Warpan’ that
he did not maintain an extension house or a room where drug users who allegedly buy shabu from him inhales or
smokes shabu cannot prevail over the testimonies of Locson, SPO1 Lacastesantos, and SPO1 Mirasol. He admitted
that he is the owner of the extension house but he alleged that there were four (4) occupants who rented that
extension house. He knew the name of only one of the four occupants who are allegedly from Jolo, a certain
Momoy, the husband. Aside from being uncorroborated, Walpan’s testimony was not elaborated by evidence as to
when or for how long was the extension house rented, the amount of rental paid, or by any other document
showing that the extension house was in fact rented. The defense of denial put up by accused Walpan Ladjaalam
a.k.a.’Warpan’ is a weak defense. Denial is the weakest defense and cannot prevail over the positive and
categorical testimonies of the prosecution witnesses. Denials, if unsubstantiated by clear and convincing evidence,
are negative and self-serving evidence which deserve no weight in law and cannot be given evidentiary weight over
the testimony of credible witnesses who testify on affirmative matters. As between the positive declaration of the
prosecution witnesses and the negative statements of the accused, the former deserve more credence." 29

In conclusion, the trial court explained appellant’s liability in this manner:

". . . . The act of the accused in firing an M14 rifle to the policemen who were about to enter his house to serve a
search warrant constitutes the crime of direct assault with multiple attempted homicides not multiple attempted
murder with direct assault[,] considering that no policeman was hit and injured by the accused and no
circumstance was proved to qualify the attempted killing to attempted murder.

"The accused Walpan Ladjaalam a.k.a.’Warpan’ cannot be held liable [for] the crime of Violation of Section 16,
Article 111, in relation to Sections 21, Article IV, of Republic Act 6425 otherwise known as the Dangerous Drugs
Act of 1992, as amended, because the fifty (50) pieces of folded aluminum foils having a total weight of 1.7426
grams all containing methamphetamine hydrochloride or shabu allegedly found in his house are inadmissible as
evidence against g him considering that they were seized after [a] search conducted by virtue of Search Warrant
No. 20 which is totally null and void as it was issued for more than one offense, and were not found in ‘plain view’
of the police officers who seized them. Neither could the accused be held liable for illegal possession of firearms
and ammunition except for the (1) M14 rifle with Serial Number 1555225 and with magazine containing fifteen
(15) live ammunition and two more M14 rifle magazines with twenty (20) and twenty-one (21) live ammunition
respectively considering that the policemen who recovered or seized the other firearms and ammunition did not
testify in court. The blue bag containing assorted coins cannot be returned to the accused Walpan Ladjaalam
a.k.a.’Warpan’ because according to the accused the blue bag and assorted coins do not belong to him[;] instead
the said assorted coins should be turned over to the National Treasury" 30

The Issues

In his Brief, appellant submits the following Assignment of Errors:

"The trial court erred when it concluded that appellant Walpan Ladjaalam y Mihajil [had] fired first at the police
officers who went to his house to serve a search warrant upon him which led to an exchange of fire between
Ladjaalam and the police officer.

II

"The trial court erred when it denied the appellant the right and opportunity for an ocular inspection of the scene of
the firefight and where the house of the appellant [was] located.chanrob1es virtua1 1aw 1ibrary

III

"The trial court erred when it ruled that the presumption of regularity in the performance of their duties [excluded]
the claim of the appellant that the firearms and methamphetamine hydrochloride (i.e. shabu) were planted by the
police." 31

In the interest of simplicity, we shall take up these issues seriatim: (a) denial of the request for ocular inspection,
(b) credibility of the prosecution witnesses, and (c) the defense of frame up. In addition, we shall also discuss the
proper crimes and penalties to be imposed on Appellant.

The Court’s Ruling

The appeal has no merit.

First Issue:

Denial of Request for Ocular Inspection

Appellant insists that the trial court erred in denying his request for an ocular inspection of the Ladjaalam
residence. He argues that an ocular inspection would have afforded the lower court "a better perspective and an
idea with respect to the scene of the crime." 32 We do not agree.
We fail to see the need for an ocular inspection in this case, especially in the light of the clear testimonies of the
prosecution witnesses. 33 We note in particular that the defense had even requested SPO1 Amado Mirasol Jr. to
sketch the subject premises to give the lower court a fairly good idea of appellant’s house. 34

Viewing the site of the raid would have only delayed the proceedings 35 Moreover, the question Whether to view
the setting of a relevant event has long been recognized to be within the discretion of the trial judge. 36 Here,
there is no reason to disturb the exercise of that discretion. 37

Second Issue:

Credibility of Prosecution Witnesses

Appellant, in essence, questions the credibility of the prosecution witnesses. 38 Suffice it to state that the trial
court’s assessment of their credibility is generally accorded respect, even finality. 39 After carefully examining the
records and finding no material inconsistencies to support appellant’s claim, we cannot exempt this case from the
general rule. 40 Quite the contrary, the testimonies of these witnesses positively showed that appellant had fired
upon the approaching police elements, and that he had subsequently attempted to escape. SPO1 Amado Mirasol Jr.
41 testified thus:

"PROSECUTOR NUVAL:

Q: And, this trail is towards the front of the house of the accused?

A: Yes.

Q: And it’s there where you were met by a volley of fire?

A: Yes, Your Honor.

COURT:

Q: How far were you from the concrete fen[c]e when you were met by a volley of fire? . . . You said you were fired
upon?

A: More or less, five (5) meters.

x x x

PROSECUTOR NUVAL:

Q: Now, you said you were able to enter the house after the gate was opened by your colleague Felipe Gaganting .
. . I will reform that question.

Q: Who opened the gate Mr. Witness?

A: SPO2 Felipe Gaganting, Efren Gregorio and Allan Marcos Obut.

Q: And, at that time you were hiding at the concrete fence?

A: Yes.

Q: Now, when this gate was opened, you said you went inside the house, right?

A: Yes.

Q: What did you see inside the house?

A: I, together with SPO1 Ricardo Lacastesantos, entered the main door of the house of Walfran [sic] Ladjaalam at
the ground floor. We went inside the sala on the ground floor of his house[;] I saw two old woman.chanrob1es
virtua1 1aw 1ibrary

x x x
PROSECUTOR NUVAL:

Q: Now, what did you do with these two old women?

A: I did not mind those two old women because those two women were sitting on the ground floor. I was
concentrating on the second floor because Ladjaalam was firing towards our group so, I, together with Ricardo
Lacastesantos, went upstairs to the second floor of the house.

Q: Were you able to go to the second floor of the house?

A: Yes.

Q: What happened when you were already on the second floor?

A: While we were proceeding to the second floor, Walfan [sic] Ladjaalam, noticed our presence and immediately
went inside the bedroom [o]n the second floor and he went immediately and jumped from the window of his house
. . . leading to the roof of the neighbor’s house.

x x x

COURT:

Reform. That is leading

Q: What happened when you entered and he jumped to the roofing of the neighbor’s house?

A: Immediately, I myself, we immediately went downstairs and asked the assistance of the members of the raiding
team to arrest Walfan Ladjaalam.

x x x

PROSECUTOR NUVAL:

Q: Were you able to go down?

A; Yes.

Q: What happened when you were there?

A: We immediately went out and I asked the assistance of the members of the raiding team and the investigator of
the unit especially SPO1 Cesar Rabuya. I was able to manage to arrest Walfan Ladjaalam." 42

What happened thereafter was narrated by Senior Police Officer Ricardo Lacastesantos, 43 as follows:

"Q: What did you notice [o]n the second floor?

A: I went where the firing came from, so, I saw [an] M14 rifle and I shouted from the outside, ‘do not fire at the
second floor because there [are] a lot of children here.’

Q: Now, that rifle you said [was an] M14, where did you find this?

A: At the sala set.

Q: This sala set where is this located?

A: Located [on] the second floor of the house.

Q: Is there a sala [o]n the second floor?

A: Yes.

Q: Can you still identify that M14 rifle which you said you recovered from the sale set?

A: Yes.
Q: Why can you identify that?

A: The Serial No. of M14 is 1555225 and I marked it with my initial.

Q: Now, I have here M14 rifle[;] will you please tell us where is the Serial No. of this?

A: 1555225 and I put my initial, RJL.

FISCAL NUVAL:

This is already marked as our Exhibit ‘B-3’ with magazine, one magazine and seven round [ammunition].

Q: After recovering this, what did you do with this firearm?

A: When I recovered it I removed the bullets inside the chamber[.] I removed the magazine and I turned it over to
the investigator.

Q: Where did you turn it over?

A: At the crime scene.

Q: Now, that magazine, can you still identify this?

A: Yes.

Q: Why?

A: I put . . . markings.

x x x

COURT

So, a[si]de from the magazine attached to the M14 rifle you found six more magazines?chanrob1es virtua1 1aw
1ibrary

A: Yes, so, all in all six magazines, three empty M16 rifle magazines and three M14.

Q: The M16 magazines [were] empty?

A: Empty.

Q: How about the M14?

A: Found with [ammunition].

x x x

Q: So, where are the three M16 magazines?

A: In the corner.

Q: What did you do with [these] three magazines of M16?

A: I turned [them] over to the investigator.

Q: Can you identify them?

A: Yes, because of my initials[.]

Q: Where are your initials?

A: On the magazines.
Q: RJL?

A: RJL." 44

These were confirmed by the results of the paraffin tests conducted on appellant and on the weapons seized during
the raid. Both of his hands as well as the weapons, particularly the M-14 which he had used, were positive for
gunpowder nitrate. Police Inspector Mercedes Delfin-Diestro explained in open court:

"Q: Okay. Now, what was the result of your examination, Madam Witness?

A: The result of the examination [was] that both hands of the subject person, ha[d] presence of gun powder
nitrates.

Q: What do you mean Madam Witness, what does that indicate?

A: It indicates there is presence of powder nitrates.

Q: Can we conclude that he fired a gun?

A: I cannot conclude that he fired a gun because there are so many circumstances [why] a person [would be]
positive on his hands for gun powder nitrates.

Q: But, most likely, he fired a gun?

A: Yes.

x x x

PROSECUTOR NUVAL:

Q: What about, Madam Witness this Exhibit ‘B-3’, which is the M14 rifle. What did you do with this?

A: SPO3 Abu did the swabbing both in the chamber and the barrel wherein I observed there [were] black and
traces of brown residue on the bolt, chamber and in the barrel.

Q: And, that indicates Madam Witness . . .?

A: It indicates that the gun was fired.

Q: Recently?

A: Because of the traces of brown residue; it could be possible that the gun was fired before the incident . . ..

COURT:

Q: There is also black residue?

A: Yes.

Q: What does it indicate?

A: It indicates that the firearm was recently fired.

Q: And, where is this swab used at the time of the swabbing of this Exhibit?chanrob1es virtua1 1aw 1ibrary

A: This one.

PROSECUTOR NUVAL:

May we ask that this be marked as Exhibit ‘B-3-A’.

COURT:

Q: The firing there indicates that the gun was recently fired, during the incident?
A: Yes.

Q: And also before the incident it was fired because of the brown residue?

A: Yes, Your Honor." 45 (Emphasis supplied)

Duly proven from the foregoing were the two elements 46 of the crime of illegal possession of firearms.
Undoubtedly, the established fact that appellant had fired an M-14 rifle upon the approaching police officers clearly
showed the existence of the firearm or weapon and his possession thereof. Sufficing to satisfy the second element
was the prosecution’s Certification 47 stating that he had not filed any application for license to possess a firearm,
and that he had not been given authority to carry any outside his residence. 48 Further, it should be pointed out
that his possession and use of an M-14 rifle were obviously unauthorized because this weapon could not be
licensed in favor of, or carried by, a private individual. 49

Third Issue:

Defense of Frame-up

From the convoluted arguments strewn before us by appellant, we gather that the main defense he raises is frame-
up. He claims that he items seized from his house were "planted," and that the entire Zamboanga police force was
out to get him at all cost.

This Court has invariably held that the defense of frame-up is inherently weak, since it is easy to fabricate, but
terribly difficult to disproved. 50 Absent any showing of an improper motive on the part of the police officers, 51
coupled with the presumption of regularity in the performance of their duty, such defense cannot be given much
credence. 52 Indeed, after examining the records of this case, we conclude that appellant has failed to substantiate
his claim. On the contrary, his statements in his Counter Affidavit are inconsistent with his testimony during the
trial. 53 He testified thus:

"Q Now, Mr. Witness, do you remember having executed an Affidavit/a Counter-Affidavit?

A I could not remember.

Q I have here a Counter-Affidavit and it was signed before this representation on the 8th day of December 1997[;]
tell us whose signature is this appearing above the typewritten name

FISCAL NUVAL:

Q . . . Walpan Ladjaalam, whose signature is this?

(Showing)

A Yes, Sir This is mine.

Q Now, in paragraph[s] 1, 2, 3, 4, 5, 6, 7 and 8; you stated in this Counter-Affidavit which I quote: ‘that I was
resting and sleeping when I heard the gunshots and I noticed that the shots were directed towards our house.. and
I inspected and . . . we were attacked by armed persons.. and I was apprehended by the persons who attacked . .
. our house’; [the] house you are referring to [in] this paragraph, whose house [are you] referring to, is this [what]
you are referring to [as] your house or the house of your neighbors [from] which you said you heard gunshots?

A Our house.

Q Now, in paragraph 6 of your Counter-Affidavit you stated and I quote: ‘that [o]n that afternoon of September 24,
1997, I was at home in my house Aplaya, Riohondo, Bo. Campo Muslim, my companions in my house [were] the
two old women and my children, is this correct?

A They were not there.

Q Now, in that statement Mr. Witness, you said that you were at home in [your] house at Aplaya, Riohondo, Bo.
Campo Muslim[;] which is which now, you were in your house or you were in your neighbors house at that time
when you heard gunshots?

A I was in the house near my house.

Q So, your statement particularly paragraph 6 of your Counter-Affidavit that you were at home in [your] house at
Aplaya Riohondo Bo. Campo Muslim, is . . . not correct?

A Yes, Sir. This is not correct." 54

Crime and Punishment

The trial court convicted appellant of three crimes: (1) maintenance of a drug den, (2) direct assault with
attempted homicide, and (3) illegal possession of firearms. We will discuss each of these.

Maintenance of a Drug Den

We agree with the trial court that appellant was guilty of maintenance of a drug den, an offense for which he was
correctly sentenced to reclusion perpetua. His guilt was clearly established by the testimony of Prosecution Witness
Rino Bartolome Locson, who himself had used the extension house of appellant as a drug den on several occasions,
including the time of the raid. The former’s testimony was corroborated by all the raiding police officers who
testified before the court. That appellant did not deny ownership of the house and its extension lent credence to
the prosecution’s story.chanrob1es virtua1 1aw 1ibrary

Direct Assault with Multiple Attempted Homicide

The trial court was also correct in convicting appellant of direct assault 55 with multiple counts of attempted
homicide. It found that" [t]he act of the accused [of] firing an M14 rifle [at] the policemen[,] who were about to
enter his house to serve a search warrant . . ." constituted such complex crime. 56

We note that direct assault with the use of a weapon carries the penalty of prision correccional in its medium and
maximum periods, while attempted homicide carries the penalty of prision correccional. 57 Hence, for the present
complex crime, the penalty for direct assault, which constitutes the "most serious crime," should be imposed and
applied in its maximum period. 58

Illegal Possession of Firearms

Aside from finding appellant guilty of direct assault with multiple attempted homicide, the trial court convicted him
also of the separate offense of illegal possession of firearms under PD 1866, as amended by RA 8294, and
sentenced him to 6 years of prision correccional to 8 years of prision mayor.

The Office of the Solicitor General (OSG) disagrees, on the ground that the trial court should not have applied the
new law. It contends that under the facts of the case, the applicable law should have been PD 1866, as worded
prior to its amendment by RA 8294.

The trial court’s ruling and the OSG’s submission exemplify the legal community’s difficulty in grappling with the
changes brought about by RA 8294. Hence, before us now are opposing views on how to interpret Section 1 of the
new law, which provides as follows:

"SECTION 1. Section 1 of Presidential Decree No. 1866, as amended, is hereby further amended to read as follows:

"Section 1. Unlawful Manufacture, Sale, Acquisition, Disposition or Possession of Firearms or Ammunition


Instruments Used or Intended to be Used in the Manufacture of Firearms or Ammunition. — The penalty of prision
correccional in its maximum period and a fine of not less than Fifteen thousand pesos (P15,000) shall be imposed
upon any person who shall unlawfully manufacture, deal in, acquire, dispose, or possess any low powered firearm,
such as rimfire handgun, .380 or .32 and other firearm of similar firepower, part of firearm, ammunition, or
machinery, tool or instrument used or intended to be used in the manufacture of any firearm or ammunition:
Provided, That no other crime was committed.

"The penalty of prision mayor in its minimum period and a fine of Thirty thousand pesos (P30,000) shall be
imposed if the firearm is classified as high powered firearm which includes those with bores bigger in diameter than
.30 caliber and 9 millimeter such as caliber .40, .41, .44, .45 and also lesser calibered firearms but considered
powerful such as caliber .357 and caliber .22 centerfire magnum and other firearms with firing capability of full
automatic and by burst of two or three: Provided, however, That no other crime was committed by the person
arrested.

"If homicide or murder is committed with the use of an unlicensed firearm, such use of an unlicensed firearm shall
be considered as an aggravating circumstance.

"If the violation of this Section is in furtherance of or incident to, or in connection with the crime of rebellion or
insurrection, sedition, or attempted coup d’etat, such violation shall be absorbed as an element of the crime of
rebellion or insurrection, sedition, or attempted coup d’etat.
"The same penalty shall be imposed upon the owner, president, manager, director or other responsible officer of
any public or private firm, company, corporation or entity, who shall willfully or knowingly allow any of the firearms
owned by such firm, company, corporation or entity to be used by any person or persons found guilty of violating
the provisions of the preceding paragraphs or willfully or knowingly allow any of them to use unlicensed firearms or
firearms without any legal authority to be carried outside of their residence in the course of their employment.

"The penalty of arresto mayor shall be imposed upon any person who shall carry any licensed firearm outside his
residence without legal authority therefor."

Citing People v. Jayson, 59 the OSG argues that the foregoing provision does not cover the specific facts of this
case. Since another crime - direct assault with multiple unlawful homicide — was committed, appellant cannot be
convicted of simple illegal possession of firearms under the second paragraph of the aforecited provision.
Furthermore, since there was no killing in this case, possession cannot be deemed as an aggravating circumstance
under the third paragraph of the provision. Based on these premises, the OSG concludes that the applicable law is
not RA 8294, but PD 1866 which, as worded prior the new law, penalizes simple illegal possession of firearms even
if another crime is committed at the same time. 60

Applying a different interpretation, the trial court posits that appellant should be convicted of illegal possession of
firearms, in addition to direct assault with multiple attempted homicide. It did not explain its ruling, however,
Considering that it could not have been ignorant of the proviso 61 in the second paragraph, it seemed to have
construed "no other crime" as referring only to homicide and murder, in both of which illegal possession of firearms
is an aggravating circumstance. In other words, if a crime other than murder or homicide is committed, a person
may still be convicted of illegal possession of firearms. In this case, the other crime committed was direct assault
with multiple attempted homicide; hence, the trial court found appellant guilty of illegal possession of
firearms.chanrob1es virtua1 1aw 1ibrary

We cannot accept either of these interpretations because they ignore the plain language of the statute. A simple
reading thereof shows that if an unlicensed firearm is used in the commission of any crime, there can be no
separate offense of simple illegal possession of firearms. Hence, if the "other crime" is murder or homicide, illegal
possession of firearms becomes merely an aggravating circumstance, not a separate offense. Since direct assault
with multiple attempted homicide was committed in this case, appellant can no longer be held liable for illegal
possession of firearms.

Moreover, penal laws are construed liberally in favor of the accused. 62 In this case, the plain meaning of RA
8294’s simple language is most favorable to herein appellant. Verily, no other interpretation is justified, for the
language of the new law demonstrates the legislative intent to favor the accused. 63 Accordingly, appellant cannot
be convicted of two separate offenses of illegal possession of firearms and direct assault with attempted homicide.
Moreover, since the crime committed was direct assault and not homicide or murder, illegal possession of firearms
cannot be deemed an aggravating circumstance.

We reject the OSG’s contention that PD 1866, as worded prior to its amendment by RA 8294, should be applied in
this case. When the crime was committed on September 24, 1997, the original language of PD 1866 had already
been expressly superseded by RA 8294 which took effect on July 6, 1997. 64 In other words, no longer in existence
was the earlier provision of PD 1866, which justified a conviction for illegal possession of firearms separate from
any other crime. It was replaced by RA 8294 which, among other amendments to PD 1866, contained the specific
proviso that "no other crime was committed."

Furthermore, the OSG’s reliance on People v. Jayson 65 is misplaced. True, this Court sustained the conviction of
appellant for illegal possession of firearms, although he had also committed homicide. We explained however, that
"the criminal case for homicide [was] not before us for consideration."

Just as unacceptable is the interpretation of the trial court. We find no justification for limiting the proviso in the
second paragraph to murder and homicide. The law is clear: the accused can be convicted of simple illegal
possession of firearms, provided that "no other crime was committed by the person arrested." If the intention of
the law in the second paragraph were to refer only to homicide and murder, it should have expressly said so, as it
did in the third paragraph. Verily, where the law does not distinguish, neither should we.

The Court is aware that this ruling effectively exonerates appellant of illegal possession of an M-14 rifle, an offense
which normally carries a penalty heavier than that for direct assault. While the penalty for the first is prision
mayor, for the second it is only prision correccional. Indeed, the accused may evade conviction for illegal
possession of firearms by using such weapons in committing an even lighter offense, 66 like alarm and scandal 67
or slight physical injuries, 68 both of which are punishable by arresto menor. 69 This consequence, however,
necessarily arises from the language of RA 8294, whose wisdom is not subject to the Court’s review. Any
perception that the result reached here appears unwise should be addressed to Congress. Indeed, the Court has no
discretion to give statutes a new meaning detached from the manifest intendment and language of the legislature.
Our task is constitutionally confined only to applying the law and jurisprudence 70 to the proven facts. and we have
done so in this case.

WHEREFORE, the appealed Decision is hereby AFFIRMED with the MODIFICATION that appellant is found guilty
only of two offenses: (1) direct assault and multiple attempted homicide with the use of a weapon, for which he is
sentenced to 2 years and 4 months to 6 years of prision correccional and (2) maintaining a drug den, for which he
was correctly sentenced by the trial court to reclusion perpetua. Costs against Appellant.

Let a copy of this Decision be furnished the Congress of the Philippines for a possible review, at its sound
discretion, of RA 8294.chanrob1es virtua1 1aw 1ibrary

SO ORDERED.

Melo, Vitug, Purisima and Gonzaga-Reyes, JJ., concur.

G.R. No. L-69344 April 26, 1991

REPUBLIC OF THE PHILIPPINES, petitioner,


vs.
INTERMEDIATE APPELLATE COURT and SPOUSES ANTONIO and CLARA PASTOR, respondents.

Roberto L. Bautista for private respondents.

GRIÑO-AQUINO, J.:

The legal issue presented in this petition for review is whether or not the tax amnesty payments made by the private respondents on
October 23, 1973 bar an action for recovery of deficiency income taxes under P.D.'s Nos. 23, 213 and 370.

On April 15, 1980, the Republic of the Philippines, through the Bureau of Internal Revenue, commenced an action in the Court of
First Instance (now Regional Trial Court) of Manila, Branch XVI, to collect from the spouses Antonio Pastor and Clara Reyes-Pastor
deficiency income taxes for the years 1955 to 1959 in the amount of P17,117.08 with a 5% surcharge and 1% monthly interest, and
costs.

The Pastors filed a motion to dismiss the complaint, but the motion was denied.1âwphi1 On August 2, 1975, they filed an answer
admitting there was an assessment against them of P17,117.08 for income tax deficiency but denying liability therefor. They
contended that they had availed of the tax amnesty under P.D.'s Nos. 23, 213 and 370 and had paid the corresponding amnesty
taxes amounting to P10,400 or 10% of their reported untaxed income under P.D. 23, P2,951.20 or 20% of the reported untaxed
income under P.D. 213, and a final payment on October 26, 1973 under P.D. 370 evidenced by the Government's Official Receipt
No. 1052388. Consequently, the Government is in estoppel to demand and compel further payment of income taxes by them.

The parties agreed that there were no issues of fact to be litigated, hence, the case was submitted for decision upon the pleadings
and memoranda on the lone legal question of: whether or not the payment of deficiency income tax under the tax amnesty, P.D. 23,
and its acceptance by the Government operated to divest the Government of the right to further recover from the taxpayer, even if
there was an existing assessment against the latter at the time he paid the amnesty tax.

It is not disputed that as a result of an investigation made by the Bureau of Internal Revenue in 1963, it was found that the private
respondents owed the Government P1,283,621.63 as income taxes for the years 1955 to 1959, inclusive of the 50% surcharge and
1% monthly interest. The defendants protested against the assessment. A reinvestigation was conducted resulting in the drastic
reduction of the assessment to only P17,117.08.

It appears that on April 27, 1978, the private respondents offered to pay the Bureau of Internal Revenue the sum of P5,000 by way
of compromise settlement of their income tax deficiency for the questioned years, but Assistant Commissioner Bernardo Carpio, in a
letter addressed to the Pastor spouses, rejected the offer stating that there was no legal or factual justification for accepting it. The
Government filed the action against the spouses in 1980, ten (10) years after the assessment of the income tax deficiency was
made.

On a motion for judgment on the pleadings filed by the Government, which the spouses did not oppose, the trial court rendered a
decision on February 28, 1980, holding that the defendants spouses had settled their income tax deficiency for the years 1955 to
1959, not under P.D. 23 or P.D. 370, but under P.D. 213, as shown in the Amnesty Income Tax Returns' Summary Statement and
the tax Payment Acceptance Order for P2,951.20 with its corresponding official receipt, which returns also contain the very
assessment for the questioned years. By accepting the payment of the amnesty income taxes, the Government, therefore, waived
its right to further recover deficiency incomes taxes "from the defendants under the existing assessment against them because:

1. the defendants' amnesty income tax returns' Summary Statement included therein the deficiency assessment for the
years 1955 to 1959;

2. tax amnesty payment was made by the defendants under Presidential Decree No. 213, hence, it had the effect of
remission of the income tax deficiency for the years 1955 to 1959;

3. P.D. No. 23 as well as P.D. No. 213 do not make any exceptions nor impose any conditions for their application, hence,
Revenue Regulation No. 7-73 which excludes certain taxpayers from the coverage of P.D. No. 213 is null and void, and

4. the acceptance of tax amnesty payment by the plaintiff-appellant bars the recovery of deficiency taxes. (pp. 3-4, IAC
Decision, pp. 031-032, Rollo.)

The Government appealed to the Intermediate Appellant Court (AC G.R. CV No. 68371 entitled, "Republic of the Philippines vs.
Antonio Pastor, et al."), alleging that the private respondents were not qualified to avail of the tax amnesty under P.D. 213 for the
benefits of that decree are available only to persons who had no pending assessment for unpaid taxes, as provided in Revenue
Regulations Nos. 8-72 and 7-73. Since the Pastors did in fact have a pending assessment against them, they were precluded from
availing of the amnesty granted in P.D.'s Nos. 23 and 213. The Government further argued that "tax exemptions should be
interpreted strictissimi juris against the taxpayer."

The respondent spouses, on the other hand, alleged that P.D. 213 contains no exemptions from its coverage and that, under Letter
of Instruction LOI 129 dated September 18, 1973, the immunities granted by P.D. 213 include:

II-Immunities Granted.

Upon payment of the amounts specified in the Decree, the following shall be observed:

1. . . . .

2. The taxpayer shall not be subject to any investigation, whether civil, criminal or administrative, insofar as his
declarations in the income tax returns are concerned nor shall the same be used as evidence against, or to the prejudice
of the declarant in any proceeding before any court of law or body, whether judicial, quasi-judicial or administrative, in
which he is a defendant or respondent, and he shall be exempt from any liability arising from or incident to his failure to
file his income tax return and to pay the tax due thereon, as well as to any liability for any other tax that may be due as a
result of business transactions from which such income, now voluntarily declared may have been derived. (Emphasis
supplied; p. 040, Rollo.)

There is nothing in the LOI which can be construed as authority for the Bureau of Internal Revenue to introduce exceptions and/or
conditions to the coverage of the law.

On November 23, 1984, the Intermediate Appellate Court (now Court of Appeals) rendered a decision dismissing the Government's
appeal and holding that the payment of deficiency income taxes by the Pastors under PD. No. 213, and the acceptance thereof by
the Government, operated to divest the latter of its right to further recover deficiency income taxes from the private respondents
pursuant to the existing deficiency tax assessment against them. The appellate court held that if Revenue Regulation No. 7-73 did
provide an exception to the coverage of P.D. 213, such provision was null and void for being contrary to, or restrictive of, the clear
mandate of P.D. No. 213 which the regulation should implement. Said revenue regulation may not prevail over the provisions of the
decree, for it would then be an act of administrative legislation, not mere implementation, by the Bureau of Internal Revenue.

On February 4, 1986, the Republic of the Philippines, through the Solicitor General, filed this petition for review of the decision dated
November 23, 1984 of the Intermediate Appellate Court affirming the dismissal, by the Court of First Instance of Manila, of the
Government's complaint against the respondent spouses.

The petition is devoid of merit.

Even assuming that the deficiency tax assessment of P17,117.08 against the Pastor spouses were correct, since the latter have
already paid almost the equivalent amount to the Government by way of amnesty taxes under P.D. No. 213, and were granted not
merely an exemption, but an amnesty, for their past tax failings, the Government is estopped from collecting the difference between
the deficiency tax assessment and the amount already paid by them as amnesty tax.
A tax amnesty, being a general pardon or intentional overlooking by the State of its authority to impose penalties on
persons otherwise guilty of evasion or violation of a revenue or tax law, partakes of an absolute forgiveness or waiver by
the Government of its right to collect what otherwise would be due it, and in this sense, prejudicial thereto, particularly to
give tax evaders, who wish to relent and are willing to reform a chance to do so and thereby become a part of the new
society with a clean slate (Commission of Internal Revenue vs. Botelho Corp. and Shipping Co., Inc., 20 SCRA 487).

The finding of the appellate court that the deficiency income taxes were paid by the Pastors, and accepted by the Government,
under P.D. 213, granting amnesty to persons who are required by law to file income tax returns but who failed to do so, is entitled to
the highest respect and may not be disturbed except under exceptional circumstances which have already become familiar (Rule
45, Sec. 4, Rules of Court; e.g., where: (1) the conclusion is a finding grounded entirely on speculation, surmise and conjecture; (2)
the inference made is manifestly mistaken; (3) there is grave abuse of discretion; (4) the judgment is based on misapprehension of
facts; (5) the Court of Appeals went beyond the issues of the case and its findings are contrary to the admissions of both the
appellant and the appellee; (6) the findings of fact of the Court of Appeals are contrary to those of the trial court; (7) said findings of
fact are conclusions without citation of specific evidence in which they are based; (8) the facts set forth in the petition as well as in
the petitioner's main and reply briefs are not disputed by the respondents; and (9) when the finding of fact of the Court of Appeals is
premised on the absense of evidence and is contradicted by the evidence on record (Thelma Fernan vs. CA, et al., 181 SCRA
546, citing Tolentino vs. de Jesus, 56 SCRA 67; People vs. Traya, 147 SCRA 381), none of which is present in this case.

The rule is that in case of doubt, tax statutes are to be construed strictly against the Government and liberally in favor of the
taxpayer, for taxes, being burdens, are not to be presumed beyond what the applicable statute (in this case P.D. 213) expressly and
clearly declares (Commission of Internal Revenue vs. La Tondena, Inc. and CTA, 5 SCRA 665, citing Manila Railroad Company vs.
Collector of Customs, 52 Phil, 950).

WHEREFORE, the petition for review is denied. No costs.

SO ORDERED.

Narvasa, Cruz, Gancayco and Medialdea, JJ., concur.

[G.R. No. L-23623. June 30, 1977.]

ACTING COMMISSIONER OF CUSTOMS, Petitioner, v. MANILA ELECTRIC COMPANY and COURT OF TAX
APPEALS, Respondents.

Solicitor General Arturo A. Alafriz, Assistant Solicitor General Felicisimo R. Rosete and Solicitor
Alejandro B. Afurong for Petitioner.

Ross, Selph, Salcedo, Del Rosario, Bito & Misa for Private Respondent.

DECISION

FERNANDO, J.:

The reversal by respondent Court of Tax Appeals of a determination by the then Acting Commissioner of Customs,
the late Norberto Romualdez, Jr., that private respondent Manila Electric Company was not exempt from the
payment of the special import tax under Republic Act No. 1394 1 for shipment to it of insulating oil, respondent
Court entertaining the contrary view, 2 led to this petition for review. The contention pressed in support of the
petition is that as a tax exemption is to be construed strictly, the decision of the respondent Court, which assumed
that insulating oil can be considered as insulators must be reversed and set aside. The appealed decision of
respondent Court in the light of applicable authorities supplies the best refutation of such contention. It must be
sustained.

The appealed decision 3 set forth that petitioner Manila Electric Co., nor private respondent, in appealing from a
determination by the then Acting Commissioner of Customs, now petitioner, "claims that it is exempt from the
special import tax not only by virtue of Section 6 of Republic Act No. 1394, which exempts from said tax equipment
and spare parts for use in industries; but also under Paragraph 9, Part Two, of its franchise, which expressly
exempts is insulators from all taxes of whatever kind and nature." 4 It then made reference to the franchise of
private respondent Manila Electric Co.: "Par. 9. The grantee shall be liable to pay the same taxes upon its real
estate, buildings, plant (not including poles, wires, transformers, and insulators), machinery and personal property
as other persons are or may be hereafter required by law to pay. In consideration of Part Two of the franchise
herein granted, to wit, the right to build and maintain in the City of Manila and its suburbs a plant for the
conveying and furnishing of electric current for light, heat, and power, and to charge for the same, the grantee
shall pay to the City of Manila two and one-half per centum of the gross earnings received from the business under
this franchise in the city and its suburbs: . . . and shall be in lieu of all taxes and assessments of whatsoever
nature, and by whatsoever authority upon the privileges, earnings, income, franchise, and poles, wires,
transformers, and insulators of the grantee, from which taxes and assessments the grantee is hereby expressly
exempted." 5 It noted that the above "exempts it from all taxes of whatever nature, and by whatever authority,
with respect to its insulators in consideration for the payment of the percentage tax on its gross earnings." 6

The question then, according to such decision of respondent Court is: "Does the insulating oil in question come
within the meaning of the term ‘insulator’?" 7 Then it went on: "Insulating oils are mineral oils of high di-electrics
strength and high flash point employed in circuit breakers, switches, transformers and other electric apparatus. An
oil with a flash point of 285ºF and fire point of 310ºF is considered safe. A clean, well-refined oil will have a
minimum di-electric of 22,00 volts, but the presence of a slow as 0.01% water will reduce the di-electric strength
drastically. The insulating oils, therefore, cannot be stored for long periods because of the danger of absorbing
moisture. Impurities such as acids or alkalies also detract from the strength of the oil. Since insulating oils are used
for cooling as well as for insulating, the viscosity should be low enough for free circulation, and they should not
gum. (Materials Handbook by George J. Brady, 8th Edition 1956, pp. 421-423.) . . . ." 8;

The last portion of the appealed decision explained why the determination of the Acting Commissioner of Customs
must be reversed: "There is no question that insulating oils of the type imported by petitioner are ‘used for cooling
as well as for insulating,’ and when used in oil circuit breakers, they are ‘required to maintain insulation between
the contacts inside the tank and the tank itself.’ . . . The decision appealed from not being in accordance with law,
the same is hereby reversed. Respondent is ordered to refund to petitioner the sum of P995.00 within thirty days
from the date this decision becomes final, without pronouncement as to costs." 9 It was therein made clear that
private respondent was not liable for the payment of the special import tax under Republic Act No.
1394.chanroblesvirtuallawlibrary

As noted at the outset, the decision speaks for itself. It cannot be stigmatized as suffering from any flaw that would
call for its reversal.

1. It is to be admitted, as contended by petitioner, that this Court is committed to the principle that an exemption
from taxation must be justified by words too clear to be misread. As set forth in Commissioner of Internal Revenue
v. Guerrero: 10 "From 1906, in Catholic Church v. Hastings to 1966, in Esso Standard Eastern, Inc. v. Acting
Commissioner of Customs, it has been the constant and uniform holding that exemption from taxation is not
favored and is never presumed, so that if granted it must be strictly construed against the taxpayer. Affirmatively
put, the law frowns on exemption from taxation, hence, an exempting provision should be construed strictissimi
juris." 11 Such a ruling was reaffirmed in subsequent decisions. 12 It does not mean, however, that petitioner
should prevail, for as was unequivocally set forth in the leading case of Republic Flour Mills v. Commissioner of
Internal Revenue, 13 this Court speaking through Justice J.B.L. Reyes. "It is true that in the construction of tax
statutes tax exemptions (and deductions are of this nature) are not favored in the law, and are construed
strictissimi juris against the taxpayer. However, it is equally a recognized principle that where the provision of the
law is clear and unambiguous, so that there is no occasion for the court’s seeking the legislative intent, the law
must be taken as it is, devoid of judicial addition or subtraction. In this case, we find the provision of Section 186-A
— ‘whenever a tax free product is utilized, . . . — all encompassing to comprehend tax-free raw materials, even if
imported. Where the law provided no qualification for the granting of the privilege, the court is not at liberty to
supply any." 14 That is what was done by respondent Court of Tax Appeals. It showed fealty to this equally well-
settled doctrine. It construed the statutory provision as it is written. It is precluded, in the language of the Republic
Flour Mills opinion, considering that the law is clear and ambiguous, to look further for any legislative intent, as
"the law must be taken as it is, devoid of judicial addition or subtraction." 15 If there is an extended discussion of
this point, it is due solely to the emphasis placed on the matter by petitioner.

2. Moreover, the decision of respondent Court under review finds support in Balbas v. Domingo. 16 Thus: "No other
conclusion is possible in view of the well-settled principle that this Court is bound by the finding of facts of the
Court of Tax Appeals, only questions of law being open to it for determination. As stated in another decision, ‘only
errors of law, and not rulings on the weight of evidence, are reviewable by this Court.’ The facts then as above
ascertained cannot be disturbed. In our latest decision, there is a categorical assertion that where the question is
one of fact, it is no longer reviewable." 17 Such a doctrine is not of limited application. It is a recognition of the
wide discretion enjoyed by the Court of Tax Appeals in construing tax statutes. So it was categorically held in
Alhambra Cigar and Cigarette Manufacturing Co. v. Commissioner of Internal Revenue: 18 "Nor as a matter of
principle is it advisable for this Court to set aside the conclusion reached by an agency such as 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 expertize on the subject, unless, as did not happen here, there has
been an abuse or improvident exercise of its authority." 19 That same approach was reflected in Reyes v.
Commissioner of Internal Revenue, 20 Chu Hoi Horn v. Court of Tax Appeals, 21 Vi Ve Chemical Products v.
Commissioner of Customs, 22 and Nasiad v. Court of Tax Appeals. 23 The Vi Ve decision has some relevance.
There the stand of the state that the Court of Tax Appeals could rightfully determine that" ‘priopionic glycine’ is the
same as glutamic acid" 24 was considered as well within the authority of respondent Court. It would be an affront
to the sense of fairness and of justice if in another case, respondent Court, in the exercise of its discretionary
authority, after determining that insulating oil comes within the term insulator, is not be
upheld.chanroblesvirtual|awlibrary

WHEREFORE, the petition for review is dismissed. No costs.

Barredo, Antonio and Concepcion Jr., JJ., concur.

Aquino, J., in the result.

[G.R. No. 108524. November 10, 1994.]

MISAMIS ORIENTAL ASSOCIATION OF COCO TRADERS, INC., Petitioner, v. DEPARTMENT OF FINANCE


SECRETARY, COMMISSIONER OF THE BUREAU OF INTERNAL REVENUE (BIR), AND REVENUE DISTRICT
OFFICER, BIR MISAMIS ORIENTAL, Respondents.

SYLLABUS

1. ADMINISTRATIVE LAW; ADMINISTRATIVE INTERPRETATION OF LAWS BY GOVERNMENT AGENCY CHARGED


WITH ITS ENFORCEMENT, ENTITLED TO GREAT WEIGHT. — Under S 103(a) of the NIRC, the sale of agricultural
non-food products in their original state is exempt from VAT only if the sale is made by the primary producer or
owner of the land from which the same are produced. The sale made by any other person or entity, like a trader or
dealer, is not exempt from the tax. On the other hand, under S 103(b) the sale of agricultural food products in
their original state is exempt from VAT at all stages of production or distribution regardless of who the seller is. We
agree with respondents. In interpreting S 103(a) and (b) of the NIRC, the Commissioner of Internal Revenue gave
it a strict construction consistent with the rule that tax exemptions must be strictly construed against the taxpayer
and liberally in favor of the state. Indeed, even Dr. Kintanar said that his classification of copra food was based on
"the broader definition of food which includes agricultural commodities and other components used in the
manufacture/processing of food." Moreover, as the government agency charged with the enforcement of the law,
the opinion of the Commissioner of Internal Revenue, in the absence of any showing that it is plainly wrong, is
entitled to great weight. Indeed, the ruling was made by the Commissioner of Internal Revenue in the exercise of
his power under S 245 of the NIRC to "make rulings or opinions in connection with the implementation of the
provisions of internal revenue laws, including rulings on the classification of articles for sales tax and similar
purposes."

2. ID.; DISTINCTION BETWEEN LEGISLATIVE RULES AND INTERPRETATIVE RULES. — There is a distinction in
administrative law between legislative rules and interpretative rules. There would be force in petitioner’s argument
if the circular in question were in the nature of a legislative rule. But it is not. It is a mere interpretative rule. In
addition such rule must be published. On the other hand, interpretative rules are designed to provide guidelines to
the law which the administrative agency is in charge of enforcing. Accordingly, in considering a legislative rule a
court is free to make three inquiries: (i) whether the rule is within the delegated authority of the administrative
agency; (ii) whether it is reasonable; and (iii) whether it was issued pursuant to proper procedure. But the court is
not free to substitute its judgment as to the desirability or wisdom of the rule for the legislative body, by its
delegation of administrative judgment, has committed those questions to administrative judgments and not to
judicial judgments. In the case of an interpretative rule, the inquiry is not into the validity but into the correctness
or propriety of the rule. As a matter of power a court, when confronted with an interpretative rule, is free to (i)
give the force of law to the rule; (ii) go to the opposite extreme and substitute its judgment; or (iii) give some
intermediate degree of authoritative weight to the interpretative rule.

3. ID.; ID.; REASON. — The reason for this distinction is that a legislative rule is in the nature of subordinate
legislation, designed to implement a primary legislation by providing the details thereof. In the same way that laws
must have the benefit of public hearing, it is generally required that before a legislative rule is adopted there must
be hearing.

4. TAXATION; NATIONAL INTERNAL REVENUE CODE; COMMISSIONER OF INTERNAL REVENUE; NOT BOUND BY
THE RULING OF HIS PREDECESSOR; MAY CONSIDER COPRA AS A NON-FOOD PRODUCT; CASE AT BAR. — In the
case at bar, we find no reason for holding that respondent Commissioner erred in not considering copra as an
"agricultural food product" within the meaning of S 103(b) of the NIRC. As the Solicitor General contends, "copra
per se is not food, that is, it is not intended for human consumption. Simply stated, nobody eats copra for food."
That previous Commissioners considered it so, is not reason for holding that the present interpretation is wrong.
The Commissioner of Internal Revenue is not bound by the ruling of his predecessors. To the contrary, the
overruling of decisions is inherent in the interpretation of laws.
5. CONSTITUTIONAL LAW; EQUAL PROTECTION CLAUSE; SUBSTANTIAL DIFFERENCE BETWEEN COCONUT FARMER
AND COPRA PRODUCERS, REASONABLE BASIS FOR DIFFERENT CLASSIFICATION FOR PURPOSES OF TAXATION;
CASE AT BAR. — Petitioner likewise claims that RMC No. 47-91 is discriminatory and violative of the equal
protection clause of the Constitution because while coconut farmers and copra producers are exempt, traders and
dealers are not, although both sell copra in its original state. Petitioners add that oil millers do not enjoy tax credit
out of the VAT payment of traders and dealers. The argument has no merit. There is a material or substantial
difference between coconut farmers and copra producers, on the one hand, and copra traders and dealers, on the
other. The former produce and sell copra, the latter merely sell copra. The Constitution does not forbid the
differential treatment of persons so long as there is a reasonable basis for classifying them differently. It is not true
that oil millers are exempt from VAT. Pursuant to S 102 of the NIRC, they are subject to 10% VAT on the sale of
services. Under S 104 of the Tax Code, they are allowed to credit the input tax on the sale of copra by traders and
dealers, but there is no tax credit if the sale is made directly by the copra producer as the sale is VAT exempt. In
the same manner, copra traders and dealers are allowed to credit the input tax on the sale of copra by other
traders and dealers, but there is no tax credit if the sale is made by the producer.

6. TAXATION; NATIONAL INTERNAL REVENUE CODE; VAT; ALLEGATION OF COUNTER PRODUCTIVITY OF


CLASSIFICATION OF COPRAS AS AN AGRICULTURAL NON-FOOD, A QUESTION OF WISDOM OR POLICY. — The sale
of agricultural non-food products is exempt from VAT only when made by the primary producer or owner of the
land from which the same is produced, but in the case of agricultural food products their sale in their original state
is exempt at all stages of production or distribution. At any rate, the argument that the classification of copra as
agricultural non-food product is counterproductive is a question of wisdom or policy which should be addressed to
respondent officials and to Congress.

DECISION

MENDOZA, J.:

This is a petition for prohibition and injunction seeking to nullify Revenue Memorandum Circular No. 47-91 and
enjoin the collection by respondent revenue officials of the Value Added Tax (VAT) on the sale of copra by
members of petitioner organization. 1

Petitioner Misamis Oriental Association of Coco Traders, Inc. is a domestic corporation whose members, individually
or collectively, are engaged in the buying and selling of copra in Misamis Oriental. The petitioner alleges that prior
to the issuance of Revenue Memorandum Circular 47-91 on June 11, 1991, which implemented VAT Ruling 190-90,
copra was classified as agricultural food product under $103(b) of the National Internal Revenue Code and,
therefore, exempt from VAT at all stages of production or distribution.

Respondents represent departments of the executive branch of government charged with the generation of funds
and the assessment, levy and collection of taxes and other imposts.

The pertinent provision of the NIRC states:

Sec. 103. Exempt Transactions. — The following shall be exempt from the value-added tax:

(a) Sale of nonfood agricultural, marine and forest products in their original state by the primary producer or the
owner of the land where the same are produced;

(b) Sale or importation in their original state of agricultural and marine food products, livestock and poultry of a
kind generally used as, or yielding or producing foods for human consumption, and breeding stock and genetic
material therefor;

Under § 103(a), as above quoted, the sale of agricultural non-food products in their original state is exempt from
VAT only if the sale is made by the primary producer or owner of the land from which the same are produced. The
sale made by any other person or entity, like a trader or dealer, is not exempt from the tax. On the other hand,
under §103(b) the sale of agricultural food products in their original state is exempt from VAT at all stages of
production or distribution regardless of who the seller is.

The question is whether copra is an agricultural food or non-food product for purposes of this provision of the
NIRC. On June 11, 1991, respondent Commissioner of Internal Revenue issued the circular in question, classifying
copra as an agricultural non-food product and declaring it "exempt from VAT only if the sale is made by the
primary producer pursuant to Section 103(a) of the Tax Code, as amended." 2

The reclassification had the effect of denying to the petitioner the exemption it previously enjoyed when copra was
classified as an agricultural food product under § 103(b) of the NIRC. Petitioner challenges RMC No. 47-91 on
various grounds, which will be presently discussed although not in the order raised in the petition for prohibition.

First. Petitioner contends that the Bureau of Food and Drug of the Department of Health and not the BIR is the
competent government agency to determine the proper classification of food products. Petitioner cites the opinion
of Dr. Quintin Kintanar of the Bureau of Food and Drug to the effect that copra should be considered "food"
because it is produced from coconut which is food and 80% of coconut products are edible.

On the other hand, the respondents argue that the opinion of the BIR, as the government agency charged with the
implementation and interpretation of the tax laws, is entitled to great respect.

We agree with respondents. In interpreting § 103(a) and (b) of the NIRC, the Commissioner of Internal Revenue
gave it a strict construction consistent with the rule that tax exemptions must be strictly construed against the
taxpayer and liberally in favor of the state. Indeed, even Dr. Kintanar said that his classification of copra as food
was based on "the broader definition of food which includes agricultural commodities and other components used in
the manufacture/processing of food." The full text of his letter reads:

10 April 1991

Mr. VICTOR A. DEOFERIO, JR.

Chairman VAT Review Committee

Bureau of Internal Revenue

Diliman, Quezon City

Dear Mr. Deoferio:

This is to clarify a previous communication made by this Office about copra in a letter dated 05 December 1990
stating that copra is not classified as food. The statement was made in the context of BFAD’s regulatory
responsibilities which focus mainly on foods that are processed and packaged, and thereby copra is not covered.

However, in the broader definition of food which include agricultural commodities and other components used in
the manufacture/processing of food, it is our opinion that copra should be classified as an agricultural food product
since copra is produced from coconut meat which is food and based on available information, more than 80% of
products derived from copra are edible products.

Very truly yours,

QUINTIN L. KINTANAR, M.D., Ph.D.

Director

Assistant Secretary of Health

for Standards and Regulations

Moreover, as the government agency charged with the enforcement of the law, the opinion of the Commissioner of
Internal Revenue, in the absence of any showing that it is plainly wrong, is entitled to great weight. Indeed, the
ruling was made by the Commissioner of Internal Revenue in the exercise of his power under $ 245 of the NIRC to
"make rulings or opinions in connection with the implementation of the provisions of internal revenue laws,
including rulings on the classification of articles for sales tax and similar purposes."

Second. Petitioner complains that it was denied due process because it was not heard before the ruling was made.
There is a distinction in administrative law between legislative rules and interpretative rules. 3 There would be
force in petitioner’s argument if the circular in question were in the nature of a legislative rule. But it is not. It is a
mere interpretative rule.

The reason for this distinction is that a legislative rule is in the nature of subordinate legislation, designed to
implement a primary legislation by providing the details thereof. In the same way that laws must have the benefit
of public hearing, it is generally required that before a legislative rule is adopted there must be hearing. In this
connection, the Administrative Code of 1987 provides:

Public Participation. — If not otherwise required by law, an agency shall, as far as practicable, publish or circulate
notices of proposed rules and afford interested parties the opportunity to submit their views prior to the adoption of
any rule.

(2) In the fixing of rates, no rule or final order shall be valid unless the proposed rates shall have been published in
a newspaper of general circulation at least two (2) weeks before the first hearing thereon.

(3) In case of opposition, the rules on contested cases shall be observed. 4

In addition such rule must be published. 5 On the other hand, interpretative rules are designed to provide
guidelines to the law which the administrative agency is in charge of enforcing.

Accordingly, in considering a legislative rule a court is free to make three inquiries: (i) whether the rule is within
the delegated authority of the administrative agency; (ii) whether it is reasonable; and (iii) whether it was issued
pursuant to proper procedure. But the court is not free to substitute its judgment as to the desirability or wisdom
of the rule for the legislative body, by its delegation of administrative judgment, has committed those questions to
administrative judgments and not to judicial judgments. In the case of an interpretative rule, the inquiry is not into
the validity but into the correctness or propriety of the rule. As a matter of power a court, when confronted with an
interpretative rule, is free to (i) give the force of law to the rule; (ii) go to the opposite extreme and substitute its
judgment; or (iii) give some intermediate degree of authoritative weight to the interpretative rule. 6

In the case at bar, we find no reason for holding that respondent Commissioner erred in not considering copra as
an "agricultural food product" within the meaning of § 103(b) of the NIRC. As the Solicitor General contends,
"copra per se is not food, that is, it is not intended for human consumption. Simply stated, nobody eats copra for
food." That previous Commissioners considered it so, is not reason for holding that the present interpretation is
wrong. The Commissioner of Internal Revenue is not bound by the ruling of his predecessors. 7 To the contrary,
the overruling of decisions is inherent in the interpretation of laws.

Third. Petitioner likewise claims that RMC No. 47-91 is discriminatory and violative of the equal protection clause of
the Constitution because while coconut farmers and copra producers are exempt, traders and dealers are not,
although both sell copra in its original state. Petitioners add that oil millers do not enjoy tax credit out of the VAT
payment of traders and dealers.

The argument has no merit. There is a material or substantial difference between coconut farmers and copra
producers, on the one hand, and copra traders and dealers, on the other. The former produce and sell copra, the
latter merely sell copra. The Constitution does not forbid the differential treatment of persons so long as there is a
reasonable basis for classifying them differently. 8

It is not true that oil millers are exempt from VAT. Pursuant to § 102 of the NIRC, they are subject to 10% VAT on
the sale of services. Under § 104 of the Tax Code, they are allowed to credit the input tax on the sale of copra by
traders and dealers, but there is no tax credit if the sale is made directly by the copra producer as the sale is VAT
exempt. In the same manner, copra traders and dealers are allowed to credit the input tax on the sale of copra by
other traders and dealers, but there is no tax credit if the sale is made by the producer.

Fourth. It is finally argued that RMC No. 47-91 is counterproductive because traders and dealers would be forced to
buy copra from coconut farmers who are exempt from the VAT and that to the extent that prices are reduced the
government would lose revenues as the 10% tax base is correspondingly diminished.

This is not so. The sale of agricultural non-food products is exempt from VAT only when made by the primary
producer or owner of the land from which the same is produced, but in the case of agricultural food products their
sale in their original state is exempt at all stages of production or distribution. At any rate, the argument that the
classification of copra as agricultural non-food product is counterproductive is a question of wisdom or policy which
should be addressed to respondent officials and to Congress.

WHEREFORE, the petition is DISMISSED.

SO ORDERED.

Narvasa, C.J., Regalado and Puno, JJ., concur.

[G.R. No. L-17888. October 29, 1968.]

RESINS INCORPORATED, Petitioner, v. AUDITOR GENERAL OF THE PHILIPPINES and THE CENTRAL
BANK OF THE PHILIPPINES, Respondents.

Lichauco, Picazo & Agcaoili, for Petitioners.


Assistant Solicitor General Jose P. Alejandro, Solicitor Jorge R. Coquia and Central Bank Legal Counsel
for Respondents.

SYLLABUS

1. CONSTITUTIONAL LAW; STATUTORY CONSTRUCTION; INDIVIDUAL STATEMENTS BY MEMBERS OF CONGRESS


ON THE FLOOR; LEGISLATIVE INTENT NOT NECESSARILY REFLECTED. — Petitioner contends that the bill approved
in Congress contained the copulative conjunction ‘and’ between the terms ‘urea’ and `formaldehyde’, and that the
members of Congress intended to exempt ‘urea’ and ‘formaldehyde’ separately as essential elements in the
manufacture of the synthetic resin glue called ‘urea formaldehyde’ not the latter as a finished product, citing in
support of this view the statements made on the floor of the Senate, during the consideration of the bill before said
House, by members thereof. But, said individual statements do not necessarily reflect the view of the Senate. Much
less do they indicate; the intent of the House of Representatives.

2. ID.; ID.; ENROLLED BILL CONCLUSIVE UPON THE COURTS; REMEDY IN CASE OF MISTAKE IN THE PRINTING OF
BILLS. — It is well settled that the enrolled bill is conclusive upon the courts as regards the tenor of the measure
passed by Congress and approved by the President. If there has been any mistake in the printing of the bill before
it was certified by the officers of Congress and approved by the Executive - on which we cannot speculate, without
jeopardizing the principle of separation of powers and undermining one of the cornerstones of our democratic
system — the remedy is by amendment or curative legislation, not by judicial decree.

3. ID.; SEPARATION OF POWERS; DUTY OF THE COURTS TO APPLY THE LAW AS IS. — Nothing is better settled
than the first and fundamental duty of courts is to apply the law as they find it, not as they would like it to be.
Fidelity to such a task precludes construction or interpretation, unless application is impossible or inadequate
without it.

4. ID.; PUBLIC OFFICERS; AUDITOR GENERAL; DUTY AND RESPONSIBILITY. — The authority of the Auditor
General, in connection with expenditures of the Government is limited to the auditing of expenditures of funds or
property pertaining to, or held in trust by, the Government or provinces or municipalities thereof. Such function is
limited to a determination of whether there is a law appropriating funds for a given purpose; whether a contract,
made by the proper officer, has been entered into in conformity with said appropriation law; whether the goods or
services covered by said contract have been delivered or rendered in pursuance of the provisions thereof, as
attested to by the proper officer; and whether payment therefor has been authorized by officials of the
corresponding department or bureau. If these requirements have been fulfilled, it is the ministerial duty of the
Auditor General to approve and pass in audit the voucher and treasury warrant for said payment.

5. TAXATION; REFUND IN THE NATURE OF EXEMPTION EXEMPTING PROVISION STRICTLY CONSTRUED. — There is
merit in the contention of the Solicitor General, as counsel for respondent Central Bank, and the Auditor General,
that as a refund partakes of a nature of exemption, it cannot be allowed unless granted in the most explicit and
categorical language. It has been the constant and uniform holding of this Court, that exemption from taxation is
not favored and is never presumed, so that if granted it must be strictly construed against the taxpayer.
Affirmatively put, the law frowns on exemption from taxation, hence, an exempting provision should be construed
strictissimi juris.

DECISION

FERNANDO, J.:

Petitioner here, as did petitioner in Casco Philippine Chemical Co., Inc. v. Gimenez, 1 would seek a refund 2 from
respondent Central Bank on the claim that it was exempt from the margin fee under Republic Act No. 2609 for the
importation of urea and formaldehyde, as separate units, used for the production of synthetic glue, of which it was
a manufacturer. Since the specific language of the Act speaks of "urea formaldehyde", 3 and petitioner admittedly
did import urea and formaldehyde separately, its plea could be granted only if we could construe the above
provision of law to read "urea and formaldehyde." In the above Casco decision, we could not see our way clear to
doing so. We still cannot see it that way. Hence, this petition must.

Our inability to indulge petitioner in the aforecited Casco petition was made clear by the present Chief Justice.
Thus: "Hence, `urea formaldehyde’ is clearly a finished product, which is patently distinct and different from `urea’
and `formaldehyde’, as separate articles used in the manufacture of the synthetic resins known as `urea
formaldehyde’. Petitioner contends, however, that the bill approved in Congress contained the copulative
conjunction `and’ between the terms `urea’ and `formaldehyde,’ and that the members of Congress intended to
exempt `urea’ and `formaldehyde’ separately as essential elements in the manufacture of the synthetic resin glue
called `urea formaldehyde’, not the latter as a finished product, citing in support of this view the statements made
on the floor of the Senate, during the consideration of the bill before said House, by members thereof. But, said
individual statements do not necessarily reflect the view of the Senate. Much less do they indicate the intent of the
House of Representatives . . . Furthermore, it is well settled that the enrolled bill — which uses the term `urea
formaldehyde’ instead of `urea and formaldehyde’ — is conclusive upon the courts as regards the tenor of the
measure passed by Congress and approved by the President.. If there has been any mistake in the printing of the
bill before it was certified by the officers of Congress and approved by the Executive — on which we cannot
speculate, without jeopardizing the principle of separation of powers and undermining one of the cornerstones of
our democratic system — the remedy is amendment or curative legislation, not by judicial decree."

To which we can only add the deference to the scope and implication of the function entrusted by the Constitution
to the judiciary leaves us no other alternative. For nothing is better settled than that the first and fundamental duty
of courts is to apply the law as they find it, not as they would like it to be. Fidelity to such a task precludes
construction or interpretation, unless application is impossible or inadequate without it. 4 Such is not the case in
the situation presented here. So we have held in Casco Philippine Chemical Co., Inc. v. Gimenez. We do so again.

Then, again, there is merit in the contention of the Solicitor General, as counsel for respondent Central Bank, and
the Auditor General, that as a refund undoubtedly partakes of a nature of an exemption, it cannot be allowed
unless granted in the most explicit and categorical language. As was held by us in Commissioner of Internal
Revenue v. Guerrero: 5 "From 1906, in Catholic Church v. Hastings to 1966, in Esso Standard Eastern, Inc. v.
Acting Commissioner of Customs, it has been the constant and uniform holding that exemption from taxation is not
favored and is never presumed, so that if granted it must be strictly construed against the taxpayer. Affirmatively
put, the law frowns on exemption from taxation, hence, an exempting provision should be construed strictissimi
juris." Certainly, whatever may be said of the statutory language found in Republic Act 2609, it would be going too
far to assert that there was such a clear and manifest intention of legislative will as to compel such a refund.

One last matter. Petitioner would assail as devoid of support in law the action taken by respondent Auditor-General
in an endorsement to the respondent Central Bank 6 causing it to overrule its previous resolution and to adopt the
view in such indorsement to the effect that the importation of urea and formaldehyde, as separate units, did not
come within the purview of the statutory language that granted such exemption. It does not admit of doubt that
the respondent Auditor-General’s interpretation amounts to a literal adherence to the statute as enacted. As such,
it cannot be said to be contrary to law. As a matter of fact, it is any other view, as is evident from the above, that
is susceptible to well-founded criticism, as lacking legal basis. Under the circumstances, the respondent Auditor-
General was merely complying with his duty in thus calling the attention of respondent Central Bank.

The limit of his constitutional function was clearly set forth in Guevara v. Gimenez, 7 the opinion being rendered by
the present Chief Justice. Thus: "Under our Constitution, the authority of the Auditor General, in connection with
expenditures of the Government is limited to the auditing of expenditures of funds or property pertaining to, or
held in trust by, the Government or the provinces or municipalities thereof (Article XI, section 2, of the
Constitution). Such function is limited to a determination of whether there is a law appropriating funds for a given
purpose; whether a contract, made by the proper officer, has been entered into in conformity with said
appropriation law; whether the goods or services covered by said contract have been delivered or rendered in
pursuance of the provisions thereof, as attested to by the proper officer; and whether payment therefor has been
authorized by the officials of the corresponding department or bureau. If these requirements have been fulfilled, it
is the ministerial duty of the Auditor General to approve and pass in audit the voucher and treasury warrant for
said payment. He has no discretion or authority to disapprove said payment upon the ground that the
aforementioned contract was unwise or that the amount stipulated thereon is unreasonable. If he entertains such
belief, he may do no more than discharge the duty imposed upon him by the Constitution (Article XI, section 2),
`to bring to the attention of the proper administrative officer expenditures of funds or property which, in his
opinion, are irregular, unnecessary, excessive or extravagant’. This duty implies a negation of the power to refuse
and disapprove payment of such expenditures, for its disapproval, if he had authority therefor, would bring to the
attention of the aforementioned administrative officer the reasons for the adverse action thus taken by the General
Auditing office, and, hence, render the imposition of said duty unnecessary."

In the same way that the Auditor General, by virtue of the above function, which is intended to implement the
constitutional mandate that no money can be paid out of the treasury except in the pursuance of appropriation
made by law, 8 must carefully see to it that there is in fact such statutory enactment, no refund, which likewise
represents a diminution of public funds in the treasury, should be allowed unless the law clearly so provides. The
Auditor General would be sadly remiss in the discharge of his responsibility under the Constitution if, having the
statute before him, he allows such a refund when, under the terms thereof, it cannot be done. His actuation here
cannot be stigmatized as violative of any legal precept; as a matter of fact, it is precisely in accordance with the
constitutional mandate.

WHEREFORE, this petition is denied, with costs against petitioner.


Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Sanchez, Castro, Angeles and Capistrano, JJ., concur.

Zaldivar, J., is on official leave.

[G.R. No. 127240. March 27, 2000.]

ONG CHIA, Petitioner, v. REPUBLIC OF THE PHILIPPINES and THE COURT OF APPEALS, Respondents.

DECISION

MENDOZA, J.:

This is a petition for review of the decision 1 of the Court of Appeals reversing the decision of the Regional Trial
Court, Branch 24, Koronadal, South Cotabato 2 admitting petitioner Ong Chia to Philippine citizenship.chanrobles
virtuallawlibrary:red

The facts are as follows:

Petitioner was born on January 1, 1923 in Amoy, China. In 1932, as a nine-year old boy, he arrived at the port of
Manila on board the vessel "Angking." Since then, he has stayed in the Philippines where he found employment and
eventually started his own business, married a Filipina, with whom he had four children. On July 4, 1989, at the
age of 66, he filed a verified petition to be admitted as a Filipino citizen under C.A. No. 473, otherwise known as
the Revised Naturalization Law, as amended. Petitioner, after stating his qualifications as required in §2, and lack
of the disqualifications enumerated in §3 of the law, stated —

17. That he has heretofore made (a) petition for citizenship under the provisions of Letter of Instruction No. 270
with the Special Committee on Naturalization, Office of the Solicitor General, Manila, docketed as SCN Case No.
031776, but the same was not acted upon owing to the fact that the said Special Committee on Naturalization was
not reconstituted after the February, 1986 revolution such that processing of petitions for naturalization by
administrative process was suspended;

During the hearings, petitioner testified as to his qualifications and presented three witnesses to corroborate his
testimony. So impressed was Prosecutor Isaac Alvero V. Moran with the testimony of petitioner that, upon being
asked by the court whether the State intended to present any witness against him, he remarked:chanrobles
virtuallawlibrary

Actually, Your Honor, with the testimony of the petitioner himself which is rather surprising, in the sense that he
seems to be well-versed with the major portion of the history of the Philippines, so, on our part, we are convinced,
Your Honor Please, that petitioner really deserves to be admitted as a citizen of the Philippines. And for this reason,
we do not wish to present any evidence to counteract or refute the testimony of the witnesses for the petitioner, as
well as the petitioner himself . 3

Accordingly, on August 25, 1999, the trial court granted the petition and admitted petitioner to Philippine
citizenship. The State, however, through the Office of the Solicitor General, appealed contending that petitioner:
(1) failed to state all the names by which he is or had been known; (2) failed to state all his former places of
residence in violation of C.A. No. 473, §7; (3) failed to conduct himself in a proper and irreproachable manner
during his entire stay in the Philippines, in violation of §2; (4) has no known lucrative trade or occupation and his
previous incomes have been insufficient or misdeclared, also in contravention of §2; and (5) failed to support his
petition with the appropriate documentary evidence. 4

Annexed to the State’s appellant’s brief was a copy of a 1977 petition for naturalization filed by petitioner with the
Special Committee on Naturalization in SCN Case No. 031767, 5 in which petitioner stated that in addition to his
name of "Ong Chia," he had likewise been known since childhood as "Loreto Chia Ong." As petitioner, however,
failed to state this other name in his 1989 petition for naturalization, it was contended that his petition must fail. 6
The State also annexed income tax returns 7 allegedly filed by petitioner from 1973 to 1977 to show that his net
income could hardly support himself and his family. To prove that petitioner failed to conduct himself in a proper
and irreproachable manner during his stay in the Philippines, the State contended that, although petitioner claimed
that he and Ramona Villaruel had been married twice, once before a judge in 1953, and then again in church in
1977, petitioner actually lived with his wife without the benefit of marriage from 1953 until they were married in
1977. It was alleged that petitioner failed to present his 1953 marriage contract, if there be any. The State also
annexed a copy of petitioner’s 1977 marriage contract 8 and a Joint-Affidavit 9 executed by petitioner and his wife.
These documents show that when petitioner married Ramona Villaruel on February 23, 1977, no marriage license
had been required in accordance with Art. 76 of the Civil Code because petitioner and Ramona Villaruel had been
living together as husband and wife since 1953 without the benefit of marriage. This, according to the State, belies
his claim that when he started living with his wife in 1953, they had already been married.

The State also argued that, as shown by petitioner’s Immigrant Certificate of Residence, 10 petitioner resided at
"J.M. Basa Street, Iloilo," but he did not include said address in his petition.

On November 15, 1996, the Court of Appeals rendered its decision which, as already noted, reversed the trial court
and denied petitioner’s application for naturalization. It ruled that due to the importance of naturalization cases,
the State is not precluded from raising questions not presented in the lower court and brought up for the first time
on appeal. 11 The appellate court held:chanroblesvirtual|awlibrary

As correctly observed by the Office of the Solicitor General, petitioner Ong Chia failed to state in this present
petition for naturalization his other name, "LORETO CHIA ONG," which name appeared in his previous application
under Letter of Instruction No. 270. Names and pseudonyms must be stated in the petition for naturalization and
failure to include the same militates against a decision in his favor . . . This is a mandatory requirement to allow
those persons who know (petitioner) by those other names to come forward and inform the authorities of any legal
objection which might adversely affect his application for citizenship.

Furthermore, Ong Chia failed to disclose in his petition for naturalization that he formerly resided in "J.M. Basa St.,
Iloilo" and "Alimodian, Iloilo." Section 7 of the Revised Naturalization Law requires the applicant to state in his
petition "his present and former places of residence." This requirement is mandatory and failure of the petitioner to
comply with it is fatal to the petition. As explained by the Court, the reason for the provision is to give the public,
as well as the investigating agencies of the government, upon the publication of the petition, an opportunity to be
informed thereof and voice their objections against the petitioner. By failing to comply with this provision, the
petitioner is depriving the public and said agencies of such opportunity, thus defeating the purpose of the law. . .

Ong Chia had not also conducted himself in a proper and irreproachable manner when he lived-in with his wife for
several years, and sired four children out of wedlock. It has been the consistent ruling that the "applicant’s 8-year
cohabitation with his wife without the benefit of clergy and begetting by her three children out of wedlock is a
conduct far from being proper and irreproachable as required by the Revised Naturalization Law", and therefore
disqualifies him from becoming a citizen of the Philippines by naturalization. . .

Lastly, petitioner Ong Chia’s alleged annual income in 1961 of P5,000.00, exclusive of bonuses, commissions and
allowances, is not lucrative income. His failure to file an income tax return "because he is not liable for income tax
yet" confirms that his income is low. . . "It is not only that the person having the employment gets enough for his
ordinary necessities in life. It must be shown that the employment gives one an income such that there is an
appreciable margin of his income over expenses as to be able to provide for an adequate support in the event of
unemployment, sickness, or disability to work and thus avoid one’s becoming the object of charity or public
charge.." . . Now that they are in their old age, petitioner Ong Chia and his wife are living on the allowance given
to them by their children. The monthly pension given by the elder children of the applicant cannot be added to his
income to make it lucrative because like bonuses, commissions and allowances, said pensions are contingent,
speculative and precarious. . .

Hence, this petition based on the following assignment of errors:

I. THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN RULING THAT IN NATURALIZATION CASES, THE
APPELLATE COURT CAN DENY AN APPLICATION FOR PHILIPPINE CITIZENSHIP ON THE BASIS OF DOCUMENTS NOT
PRESENTED BEFORE THE TRIAL COURT AND NOT FORMING PART OF THE RECORDS OF THE CASE.

II.. THE FINDING OF THE COURT OF APPEALS THAT THE PETITIONER HAS BEEN KNOWN BY SOME OTHER NAME
NOT STATED IN HIS PETITION IS NOT SUPPORTED BY THE EVIDENCE ON RECORD. : law library

III. CONTRARY TO THE FINDING OF THE COURT OF APPEALS, THE PETITIONER STATED IN HIS PETITION AND ITS
ANNEXES HIS PRESENT AND FORMER PLACES OF RESIDENCE.

IV. THE FINDING OF THE COURT OF APPEALS THAT THE PETITIONER FAILED TO CONDUCT HIMSELF IN A PROPER
AND IRREPROACHABLE MANNER IS NOT SUPPORTED BY THE EVIDENCE ON RECORD.

Petitioner’s principal contention is that the appellate court erred in considering the documents which had merely
been annexed by the State to its appellant’s brief and, on the basis of which, justified the reversal of the trial
court’s decision. Not having been presented and formally offered as evidence, they are mere "scrap(s) of paper
devoid of any evidentiary value," 12 so it was argued, because under Rule 132, §34 of the Revised Rules on
Evidence, the court shall consider no evidence which has not been formally offered.

The contention has no merit. Petitioner failed to note Rule 143 13 of the Rules of Court which provides that —
These rules shall not apply to land registration, cadastral and election cases, naturalization and insolvency
proceedings, and other cases not herein provided for, except by analogy or in a suppletory character and whenever
practicable and convenient. (Emphasis added)

Prescinding from the above, the rule on formal offer of evidence (Rule 132, §34) now being invoked by petitioner is
clearly not applicable to the present case involving a petition for naturalization. The only instance when said rules
may be applied by analogy or suppletorily in such cases is when it is "practicable and convenient." That is not the
case here, since reliance upon the documents presented by the State for the first time on appeal, in fact, appears
to be the more practical and convenient course of action considering that decisions in naturalization proceedings
are not covered by the rule on res judicata. 14 Consequently, a final favorable judgment does not preclude the
State from later on moving for a revocation of the grant of naturalization on the basis of the same documents.

Petitioner claims that as a result of the failure of the State to present and formally offer its documentary evidence
before the trial court, he was denied the right to object against their authenticity, effectively depriving him of his
fundamental right to procedural due process. 15 We are not persuaded. Indeed, the reason for the rule prohibiting
the admission of evidence which has not been formally offered is to afford the opposite party the chance to object
to their admissibility. 16 Petitioner cannot claim that he was deprived of the right to object to the authenticity of
the documents submitted to the appellate court by the State. He could have included his objections, as he, in fact,
did, in the brief he filed with the Court of Appeals, thus:

The authenticity of the alleged petition for naturalization (SCN Case-No. 031767) which was supposedly filed by
Ong Chia under LOI 270 has not been established. In fact, the case number of the alleged petition for
naturalization . . .is 031767 while the case number of the petition actually filed by the appellee is 031776. Thus,
said document is totally unreliable and should not be considered by the Honorable Court in resolving the instant
appeal. 17

Indeed, the objection is flimsy as the alleged discrepancy is trivial, and, at most, can be accounted for as a
typographical error on the part of petitioner himself. That "SCN Case No. 031767," a copy of which was annexed to
the petition, is the correct case number is confirmed by the Evaluation Sheet 18 of the Special Committee On
Naturalization which was also docketed as "SCN Case No. 031767." Other than this, petitioner offered no evidence
to disprove the authenticity of the documents presented by the State.chanrobles virtuallawlibrary:red

Furthermore, the Court notes that these documents — namely, the petition in SCN Case No. 031767, petitioner’s
marriage contract, the joint affidavit executed by him and his wife, and petitioner’s income tax returns — are all
public documents. As such, they have been executed under oath. They are thus reliable. Since petitioner failed to
make a satisfactory showing of any flaw or irregularity that may cast doubt on the authenticity of these documents,
it is our conclusion that the appellate court did not err in relying upon them.

One last point. The above discussion would have been enough to dispose of this case, but to settle all the issues
raised, we shall briefly discuss the effect of petitioner’s failure to include the address "J.M. Basa St., Iloilo" in his
petition, in accordance with §7, C.A. No. 473. This address appears on petitioner’s Immigrant Certificate of
Residence, a document which forms part of the records as Annex A of his 1989 petition for naturalization.
Petitioner admits that he failed to mention said address in petition, but argues that since the Immigrant Certificate
of Residence containing it had been fully published, 19 with the petition and the other annexes, such publication
constitutes substantial compliance with §7. 20 This is allegedly because the publication effectively satisfied the
objective sought to be achieved by such requirement, i.e., to give investigating agencies of the government the
opportunity to check on the background of the applicant and prevent suppression of information regarding any
possible misbehavior on his part in any community where he may have lived at one time or another. 21 It is
settled, however, that naturalization laws should be rigidly enforced and strictly construed in favor of the
government and against the applicant. 22 As noted by the State, C.A. No. 473, §7 clearly provides that the
applicant for naturalization shall set forth in the petition his present and former places of residence. 23 This
provision and the rule of strict application of the law in naturalization cases defeat petitioner’s argument of
"substantial compliance" with the requirement under the Revised Naturalization Law. On this ground alone, the
instant petition ought to be denied.

WHEREFORE, the decision of the Court of Appeals is AFFIRMED and the instant petition is hereby DENIED. :
virtuallawlibrary

SO ORDERED.

Bellosillo, Quisumbing, Buena and De Leon, Jr., JJ., concur.

[G.R. No. 100970. September 2, 1992.]

FINMAN GENERAL ASSURANCE CORPORATION, Petitioner, v. THE HONORABLE COURT OF APPEALS and
JULIA SURPOSA, Respondents.

Aquino and Associates for Petitioner.

Public Attorney’s Office for Private Respondent.

SYLLABUS

1. COMMERCIAL LAW; INSURANCE; ‘ACCIDENT’ AND ‘ACCIDENTAL’; DEFINED. — "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." ". . . 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. 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. 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 the policies insuring against death or injury from accident." [De la Cruz v. Capital Insurance &
Surety Co., Inc., 17 SCRA 559 (1966)].

2. ID.; ID.; PRINCIPLE OF EXPRESSO UNIUS EXCLUSIO ALTERIUS; APPLICATION IN CASE AT BAR. — The personal
accident insurance policy involved herein specifically enumerated only ten (10) circumstances wherein no liability
attaches to petitioner insurance company for any injury, disability or loss suffered by the insured as a result of any
of the stipulated causes. The principle of "expresso unius exclusio alterius" — the mention of one thing implies the
exclusion of another thing — is therefore applicable in the instant case since murder and assault, not having been
expressly included in the enumeration of the circumstances that would negate liability in said insurance policy
cannot be considered by implication to discharge the petitioner insurance company from liability for any injury,
disability or loss suffered by the insured. Thus, the failure of the petitioner insurance company to include death
resulting from murder or assault among the prohibited risks leads inevitably to the conclusion that it did not intend
to limit or exempt itself from liability for such death.

3. CIVIL LAW; CONTRACTS; INTERPRETATION OF OBSCURE WORDS OR STIPULATIONS THEREIN; RULE. — Article
1377 of the Civil Code of the Philippines provides that: "The interpretation of obscure words or stipulations in a
contract shall not favor the party who caused the obscurity."

4. ID.; ID.; ID.; ID.; APPLICATION IN CONTRACT OF INSURANCE; RULE. — Moreover, "it is well settled that
contracts of insurance are to be construed liberally in favor of the insured and strictly against the insurer. Thus
ambiguity in the words of an insurance contract should be interpreted in favor of its beneficiary." [National Power
Corporation v. Court of Appeals, 145 SCRA 533 (1986)].

DECISION

NOCON, J.:

This is a petition for certiorari with a prayer for the issuance of a restraining order and preliminary mandatory
injunction to annul and set aside the decision of the Court of Appeals dated July 11, 1991 1 affirming the decision
dated March 20, 1990 of the Insurance Commission 2 in ordering petitioner Finman General Assurance Corporation
to pay private respondent Julia Surposa the proceeds of the personal accident insurance policy with interest.

It appears on record that on October 22, 1986, deceased Carlie Surposa was insured with petitioner Finman
General Assurance Corporation under Finman General Teachers Protection Plan Master Policy No. 2005 and
Individual Policy No. 08924 with his parents, spouses Julia and Carlos Surposa, and brothers Christopher, Charles,
Chester and Clifton, all surnamed Surposa, as beneficiaries. 3

While said insurance policy was in full force and effect, the insured, Carlie Surposa, died on October 18, 1988 as a
result of a stab wound inflicted by one of the three (3) unidentified men without provocation and warning on the
part of the former as he and his cousin, Winston Surposa, were waiting for a ride on their way home along Rizal-
Locsin Streets, Bacolod City after attending the celebration of the "Maskarra Annual Festival."
Thereafter, private respondent and the other beneficiaries of said insurance policy filed a written notice of claim
with the petitioner insurance company which denied said claim contending that murder and assault are not within
the scope of the coverage of the insurance policy.

On February 24, 1989, private respondent filed a complaint with the Insurance Commission which subsequently
rendered a decision, the pertinent portion of which reads:

"In the light of the foregoing, we find respondent liable to pay complainant the sum of P15,000.00 representing the
proceeds of the policy with interest. As no evidence was submitted to prove the claim for mortuary aid in the sum
of P1,000.00, the same cannot be entertained.

"WHEREFORE, judgment is hereby rendered ordering respondent to pay complainant the sum of P15,000.00 with
legal interest from the date of the filing of the complaint until fully satisfied. With costs." 4

On July 11, 1991, the appellate court affirmed said decision.

Hence, petitioner filled this petition alleging grave abuse of discretion on the part of the appellate court in applying
the principle of "expresso unius exclusio alterius" in a personal accident insurance policy since death resulting from
murder and/or assault are impliedly excluded in said insurance policy considering that the cause of death of the
insured was not accidental but rather a deliberate and intentional act of the assailant in killing the former as
indicated by the location of the lone stab wound on the insured. Therefore, said death was committed with
deliberate intent which, by the very nature of a personal accident insurance policy, cannot be
indemnified.chanrobles virtual lawlibrary

We do not agree.

"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."

". . . 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. 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. 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 the policies insuring against death or injury from accident." 5

As correctly pointed out by the respondent appellate court in its decision:chanrobles virtual lawlibrary

"In the case at bar, it cannot be pretended that Carlie Surposa died in the course of an assault or murder as a
result of his voluntary act considering the very nature of these crimes. In the first place, the insured and his
companion were on their way home from attending a festival. They were confronted by unidentified persons. The
record is barren of any circumstance showing how the stab wound was inflicted. Nor can it be pretended that the
malefactor aimed at the insured precisely because the killer wanted to take his life. In any event, while the act may
not exempt the unknown perpetrator from criminal liability, the fact remains that the happening was a pure
accident on the part of the victim. The insured died from an event that took place without his foresight or
expectation, an event that proceeded from an unusual effect of a known cause and, therefore, not expected.
Neither can it be said that there was a capricious desire on the part of the accused to expose his life to danger
considering that he was just going home after attending a festival." 6

Furthermore, the personal accident insurance policy involved herein specifically enumerated only ten (10)
circumstances wherein no liability attaches to petitioner insurance company for any injury, disability or loss
suffered by the insured as a result of any of the stipulated causes. The principle of "expresso unius exclusio
alterius" — the mention of one thing implies the exclusion of another thing — is therefore applicable in the instant
case since murder and assault, not having been expressly included in the enumeration of the circumstances that
would negate liability in said insurance policy cannot be considered by implication to discharge the petitioner
insurance company from liability for any injury, disability or loss suffered by the insured. Thus, the failure of the
petitioner insurance company to include death resulting from murder or assault among the prohibited risks leads
inevitably to the conclusion that it did not intend to limit or exempt itself from liability for such death.

Article 1377 of the Civil Code of the Philippines provides that:


"The interpretation of obscure words or stipulations in a contract shall not favor the party who caused the
obscurity."

Moreover,

"it is well settled that contracts of insurance are to be construed liberally in favor of the insured and strictly against
the insurer. Thus ambiguity in the words of an insurance contract should be interpreted in favor of its beneficiary."
7

WHEREFORE, finding no irreversible error in the decision of the respondent Court of Appeals, the petition
for certiorari with restraining order and preliminary injunction is hereby DENIED for lack of merit.

SO ORDERED.

Narvasa, C.J., Padilla, Regalado and Melo, JJ., concur.

[G.R. No. 86020. August 5, 1994.]

RAMON CORPORAL, Petitioner, v. EMPLOYEES’ COMPENSATION COMMISSION and GOVERNMENT


SERVICE INSURANCE SYSTEM, Respondents.

SYLLABUS

1. LABOR LAWS AND SOCIAL LEGISLATION; EMPLOYEES’ COMPENSATION LAW; REQUIREMENTS FOR
COMPENSABILITY OF SICKNESS OR DEATH; APPLIED IN CASE AT BAR. — Under P.D. No. 626, as amended, for
sickness and the resulting death of an employee to be compensable, the claimant must show either: (a) that it is a
result of an occupational disease listed under Annex A of the Amended Rules on Employees’ Compensation with the
conditions set therein satisfied; or (b) that the risk of contacting the disease is increased by the working conditions.
Clearly, then, the principle of aggravation and presumption of compensability under the old Workmen’s
Compensation Act no longer applies. Since petitioner admits that his wife died of an ailment which is not listed as
compensable by the ECC and he merely anchors his claim on the second rule, he must positively show that the risk
of contracting Norma’s illness was increased by her working conditions. Petitioner failed to satisfactorily discharge
the onus imposed by law. The fact that Norma had to walk six kilometers everyday and thereafter, a shorter
distance of more than one kilometer just to reach her place of work, was not sufficient to establish that such
condition caused her to develop prolapse of the uterus. Petitioner did not even present medical findings on the
veracity of his claim that Norma had a tomato-like spherical tissue protruding from her vagina and rectum.

2. ID.; LIBERAL CONSTRUCTION THEREOF IN FAVOR OF LABOR; RULE AND EXCEPTION. — With the evidence
presented in support of the claim, petitioner’s prayer cannot be granted. While as a rule labor and social welfare
legislation should be liberally construed in favor of the applicant, there is also the rule that such liberal construction
and interpretation of labor laws may not be applied where the pertinent provisions of the Labor Code and P.D. No.
626, as amended, are clear and leave no room for interpretation.

DECISION

QUIASON, J.:

This is a petition for certiorari questioning the decision of the Employees’ Compensation Commission which denied
petitioner’s claim for death benefits under Presidential Decree No. 626, as amended.

Norma Peralta Corporal was employed as a public school teacher with assignment in Juban, Sorsogon. On
November 28 to November 30, 1977, she was confined at the Esteves Memorial Hospital for acute coronary
insufficiency and premature ventricular contractions.:

On June 30, 1983, she was assigned to the Banadero Elementary School in Daraga, Albay. Norma had to walk
three kilometers to and from said school as no transportation was available to ferry her and other teachers from
the national highway to the school. During her fourth pregnancy, Norma suffered a complete abortion and was
hospitalized for two days at the Albay Provincial Hospital. After her maternity leave, Norma reported back to work.

In March of 1984, she again conceived. However, in September of the same year, she was transferred to the
Kilicao Elementary School, where she had to walk more than one kilometer of rough road. On December 2, 1984,
she gave birth to a baby boy with the help of a "hilot." An hour later, she was rushed to the Immaculate
Concepcion Hospital due to profuse vaginal bleeding. She underwent a hysterectomy but unfortunately, she died on
the same day due to "shock, severe hemorrhage" resulting from a "prolapse(d) uterus post partum." Norma was
40 years old when she died.

Her husband, Ramon Corporal, petitioner herein, filed a claim for compensation benefit with the Government
Service Insurance System (GSIS). The GSIS denied petitioner’s claim thus:

"Please be advised that on the basis of the proofs and evidences (sic) submitted to the System, the cause of death
of your wife, Shock secondary to Severe Hemorrhage, Uterine PROLAPSE is not considered an occupational disease
as contemplated under the above-mentioned law (P.D. No. 626). Neither was there any showing that her position
as Teacher, MECS, Albay had increased the risk of contracting her ailment" (Rollo, p. 23).

Petitioner filed several motions for the reconsideration of the denial of his claim to no avail, because a re-
evaluation of the claim by the Medical Evaluation and Underwriting Group of the GSIS showed that there was "no
basis to alter its previous action of denial for the same reason . . . that her cause of death is non-work-connected
as contemplated under the law" and neither did her job as a teacher increase the risk of contracting her ailment
(Rollo, p. 25).

Petitioner appealed to the Employees’ Compensation Commission (ECC). The ECC requested the GSIS to re-
evaluate petitioner’s claim and to finally determine compensability, with instruction that in case the claim is denied
once more by the System, the entire record of the case be elevated to the ECC. The GSIS reiterated its denial of
petitioner’s claim.

On September 7, 1988, the ECC rendered a decision also denying petitioner’s claim. It said:

"Medical studies show that Prolapsed Uterus may occur in infants and nulliparous women as well as multiparas.
Defects in innervation and in the basic integrity of the supporting structures account(s) for prolapse(d) in the first
two and childbirth trauma for the latter. The cervix usually elongates because the weight of the nagging vaginal
tissues pulls it downward, whereas the attached but weak cardinal ligaments tend(s) to support it. In third degree
or complete prolapse(d) both the cervix and the body of the uterus have passed through the introitus and entire
vaginal canal is inverted. (Obstetrics and Gynecology, Wilson, Beecham, Carrington, 3rd Edition, p.
585).chanrobles virtual lawlibrary

On the other hand Acute Coronary Insufficiency are terms often used to describe a syndrome characterized by
prolonged substernal pain, usually not relieved by vasodilators of a short period of rest due to a more severe
inadequacy of coronary circulation. The symptoms in this condition are more intense and prolonged than in angina
pectoris, but abnormal ECG and other laboratory findings associated with myocardial infarction are absent. The
syndrome is covered by a temporary inability of one’s coronary arteries to supply sufficient oxygenated blood to
the heart muscle. (Merck, Manual of Diagnosis & Therapy, pp. 100-101).

Based on the above medical discussion of the subject ailments, we believe that the development of the fatal illness
has no relation whatsoever with the duties and working conditions of the late teacher. There is no showing that the
nature of her duties caused the development of prolapse of the uterus. The ailment was a complication of childbirth
causing profuse vaginal bleeding during the late stage. We also consider Acute Coronary Insufficiency as non-work-
connected illness for the reason that it is caused by temporary inability of one coronary arteries (sic) to supply
oxygenated blood to the heart muscle. There is no damage to heart muscle. In view thereof, we have no recourse
but to sustain respondent’s denial of the instant claim" (Rollo, pp. 29-31).

Hence, petitioner filed the instant petition, asserting compensability of the death of his wife.

II

Petitioner contends that although prolapsed uterus is not one of occupational diseases listed by the ECC, his claim
should prosper under the increased risk theory. He anchors such claim on the fact that as early as January 1984 or
before Norma’s fifth pregnancy, he had noticed a spherical tissue which appeared like a tomato protruding out of
Norma’s vagina and rectum. He avers that such condition was attributable to Norma’s long walks to and from her
place of teaching — Banadero Elementary Volcano. Moreover, the roads leading to the school are full of ruts and
rocks, and, during the rainy season, are flooded and slippery. Petitioner asserts that inspite of these, Norma
continued to discharge her duties as a public servant, notwithstanding her pregnancy and her prolapsed
uterus.chanrobles virtual lawlibrary
Petitioner also contends that the findings of the respondents contravene the constitutional provision on social
justice. He alleges that since the workmen’s compensation law is a social legislation, its provisions should be
interpreted liberally in favor of the employees whose rights it intends to protect.

Under P.D. No. 626, as amended, for sickness and the resulting death of an employee to be compensable, the
claimant must show either: (a) that it is a result of an occupational disease listed under Annex A of the Amended
Rules on Employees’ Compensation with the conditions set therein satisfied; or (b) that the risk of contracting the
disease is increased by the working conditions (Santos v. Employee’s Compensation Commission, 221 SCRA 182
[1993]; Quizon v. Employees’ Compensation Commission, 203 SCRA 426 [1991]). Clearly, then, the principle of
aggravation and presumption of compensability under the old Workmen’s Compensation Act no longer applies
(Latagan v. Employees’ Compensation Commission, 213 SCRA 715 [1992]).

Since petitioner admits that his wife died of an ailment which is not listed as compensable by the ECC and he
merely anchors his claim on the second rule, he must positively show that the risk of contracting Norma’s illness
was increased by her working conditions. Petitioner failed to satisfactorily discharge the onus imposed by
law.chanrobles virtual lawlibrary

The fact that Norma had to walk six kilometers everyday and thereafter, a shorter distance of more than one
kilometer just to reach her place of work, was not sufficient to establish that such condition caused her to develop
prolapse of the uterus. Petitioner did not even present medical findings on the veracity of his claim that Norma had
a tomato-like spherical tissue protruding from her vagina and rectum.

Norma developed prolapse of the uterus because she was multiparas, or one who had more than one child, and
quite beyond the safe child-bearing age when she gave birth to her fifth child — she was already forty years old.
Novak’s Textbook on Gynecology describes prolapse of the uterus (descensus uteri) as follows:

"An extremely common condition, being far more frequent in elderly than in young patients. This is explained by
the increasing laxity and atony of the muscular and fascial structures in later life. The effects of childbirth
structures in late life. The effects of childbirth injuries may thus make themselves evident, in the form of uterine
prolapse, may years after the last pregnancy. Pregnancies in a prolapsed uterus may lead to numerous
complications, as noted by Piver and Spezia.:

The important factor in the mechanism of the prolapse is undoubtedly injury or overstretching of the pelvic floor,
and especially of the cardinal ligaments (Mackenrodt) in the bases of the broad ligaments. Combined with this
there is usually extensive injury to the perineal structures, producing marked vaginal relaxation and also frequent
injury to the fascia or the anterior or posterior vaginal walls, with the production of cystocele or rectocele. Usually,
various combinations of these conditions are seen, although at times little or no cystocele or rectocele is associated
with the prolapse. Occasional cases are seen for that matter, in women who have never borne children, and in
these the prolapse apparently represents a hernia of the uterus through a defect in the pelvic fascial floor"
(Emphasis supplied).

The 1986 Current Medical Diagnosis & Treatment also describes the condition as follows:

"Uterine prolapse most commonly occurs as a delayed result of childbirth injury to the pelvic floor (particularly the
transverse cervical and uterosacral ligaments). Unrepaired obstetric lacerations of the levator musculature and
perineal body augment the weakness. Attenuation of the pelvic structures with aging and congenital weakness can
accelerate the development of prolapse."

The determination of whether the prolapse of Norma’s uterus developed before or after her fifth pregnancy is
therefore immaterial since this illness is the result of the physiological structure and changes in the body on
pregnancy and childbirth.

With the evidence presented in support of the claim, petitioner’s prayer cannot be granted. While as a rule labor
and social welfare legislation should be liberally construed in favor of the applicant, (Tria v. Employees’
Compensation Commission, 208 SCRA 834 [1992]), there is also the rule that such liberal construction and
interpretation of labor laws may not be applied where the pertinent provisions of the Labor code and P.D. No. 626,
as amended, are clear and leave no room for interpretation.

The Court commiserates with the petitioner and his children for the loss of a loved one. We also recognize the
importance of the services rendered by public elementary school teachers inspite of their meager salaries which are
not proportionate to their immense responsibility in molding the values and character of the youth in this country
(De Vera v. Employees’ Compensation Commission, 133 SCRA 685 [1984]).

But under the legal milieu of the case, we can only suggest, not mandate, that respondents grant ex gratia some
form of relief to their members similarly situated as petitioner’s wife.
WHEREFORE, the petition is DENIED.

SO ORDERED.

Cruz, Davide, Jr. and Kapunan, JJ., concur.

Bellosillo, J., is on leave.

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 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.

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.

Teehankee (Chairman), Makasiar, Guerrero and De Castro, JJ., concur.

[G.R. No. 78617. June 18, 1990.]

SALVADOR LAZO, Petitioner, v. EMPLOYEES’ COMPENSATION COMMISSION & GOVERNMENT SERVICE


INSURANCE SYSTEM (CENTRAL BANK OF THE PHILIPPINES), Respondents.

Oscar P. Paguinto for Petitioner.

SYLLABUS

1. LABOR LAWS; EMPLOYEES’ COMPENSATION; INJURIES SUSTAINED DUE TO VEHICULAR ACCIDENT ON THE
WAY HOME FROM WORK; COMPENSABLE; BALDEBRIN v. WCC (132 SCRA 510), CITED. — In the case at bar,
petitioner had come from work and was on his way home, just like in the Baldebrin v. WCC (132 SCRA 510) case,
where the employee." . . figured in an accident when he was going home from his official station at Pagadian City
to his place of residence at Aurora Zamboanga del Sur . . ." In Baldebrin, the Court said: "The principal issue is
whether petitioner’s injury comes within the meaning of and intendment of the phrase ‘arising out of and in the
course of employment.’ (Section 2, Workmen’s Compensation Act). In Philippine Engineer’s Syndicate, Inc. v. Flora
S. Martin and Workmen’s Compensation Commission, 4 SCRA 356, We held that `where an employee, after
working hours, attempted to ride on the platform of a service truck of the company near his place of work, and,
while thus attempting, slipped and fell to the ground and was run over by the truck, resulting in his death, the
accident may be said to have arisen out of or in the course of employment, for which reason his death is
compensable. The fact standing alone, that the truck was in motion when the employee boarded, is insufficient to
justify the conclusion that he had been notoriously negligent, where it does not appear that the truck was running
at a great speed.’ And, in a later case, Iloilo Dock & Engineering Co. v. Workmen’s Compensation Commission, 26
SCRA 102, 103, We ruled that ‘(e)mployment includes not only the actual doing of the work, but a reasonable
margin of time and space necessary to be used in passing to and from the place where the work is to be done. If
the employee be injured while passing, with the express or implied consent of the employer, to or from his work by
a way over the employer’s premises, or over those of another in such proximity and relation as to be in practical
effect a part of the employer’s premises, the injury is one arising out of and in the course of the employment as
much as though it had happened while the employee was engaged in his work at the place of its performance.’" In
the case at bar, it can be seen that petitioner left his station at the Central Bank several hours after his regular
time off, because the reliever did not arrive, and so petitioner was asked to go on overtime. After permission to
leave was given, he went home. There is no evidence on record that petitioner deviated from his usual, regular
homeward route or that interruptions occurred in the journey.

2. ID.; ID.; PROVISIONS THEREOF; LIBERALLY INTERPRETED IN FAVOR OF EMPLOYEES; RATIONALE. — While the
presumption of compensability and theory of aggravation under the Workmen’s Compensation Act (under which the
Baldebrin case was decided) may have been abandoned under the New Labor Code, it is significant that the
liberality of the law in general in favor of the workingman still subsists. As agent charged by the law to implement
social justice guaranteed and secured by the Constitution, the Employees Compensation Commission should adopt
a liberal attitude in favor of the employee in deciding claims for compensability, especially where there is some
basis in the facts for inferring a work connection to the accident. This kind of interpretation gives meaning and
substance to the compassionate spirit of the law as embodied in Article 4 of the New Labor Code which states that
"all doubts in the implementation and interpretation of the provisions of the Labor Code including its implementing
rules and regulations shall be resolved in favor of labor." The policy then is to extend the applicability of the decree
(PD 626) to as many employees who can avail of the benefits thereunder. This is in consonance with the avowed
policy of the State to give maximum aid and protection to labor. There is no reason, in principle, why employees
should not be protected for a reasonable period of time prior to or after working hours and for a reasonable
distance before reaching or after leaving the employer’s premises.

DECISION

PADILLA, J.:

This is an appeal from the decision of the respondent Employees Compensation Commission (ECC) in ECC Case No.
2883 which affirmed the dismissal of petitioner’s claim for compensation against the Government Service Insurance
System (GSIS).
The petitioner, Salvador Lazo, is a security guard of the Central Bank of the Philippines assigned to its main office
in Malate, Manila. His regular tour of duty is from 2:00 o’clock in the afternoon to 10:00 o’clock in the evening. On
18 June 1986, the petitioner rendered duty from 2:00 o’clock in the afternoon to 10:00 o’clock in the evening. But,
as the security guard who was to relieve him failed to arrive, the petitioner rendered overtime duty up to 5:00
o’clock in the morning of 19 June 1986, when he asked permission from his superior to leave early in order to take
home to Binangonan, Rizal, his sack of rice.

On his way home, at about 6:00 o’clock in the morning of 19 June 1986, the passenger jeepney the petitioner was
riding on turned turtle due to slippery road. As a result, he sustained injuries and was taken to the Angono
Emergency Hospital for treatment. He was later transferred to the National Orthopedic Hospital where he was
confined until 25 July 1986.

For the injuries he sustained, petitioner filed a claim for disability benefits under PD 626, as amended. His claim,
however, was denied by the GSIS for the reason that —

"It appears that after performing your regular duties as Security Guard from 2:00 P.M. to 10:00 P.M. on June 18,
1986, you rendered overtime duty from 10:00 P.M. to 5:06 A.M. of the following day; that at about 5:06 A.M. after
asking permission from your superior you were allowed to leave the Office to do certain personal matter — that of
bringing home a sack of rice and that, while on your way home, you met a vehicular accident that resulted to (sic)
your injuries. From the foregoing informations, it is evident that you were not at your work place performing your
duties when the incident occurred." 1

It was held that the condition for compensability had not been satisfied.

Upon review of the case, the respondent Employees Compensation Commission affirmed the decision since the
accident which involved the petitioner occurred far from his work place and while he was attending to a personal
matter.

Hence, the present recourse.

The petitioner contends that the injuries he sustained due to the vehicular accident on his way home from work
should be construed as "arising out of or in the course of employment" and thus, compensable. In support of his
prayer for the reversal of the decision, the petitioner cites the case of Pedro Baldebrin v. Workmen’s Compensation
Commission, 2 where the Court awarded compensation to the petitioner therein who figured in an accident on his
way home from his official station at Pagadian City to his place of residence at Aurora, Zamboanga del Sur. In the
accident, petitioner’s left eye was hit by a pebble while he was riding on a bus.

Respondents claim that the Baldebrin ruling is a deviation from cases earlier decided and hence, not applicable to
the present case.

The Court has carefully considered the petition and the arguments of the parties and finds that the petitioner’s
submission is meritorious.

Liberally interpreting the employees compensation law to give effect to its compassionate spirit as a social
legislation, 3 in Vda. de Torbela v. ECC, 4 the Court held:

"It is a fact that Jose P. Torbela, Sr. died on March 3, 1975 at about 5:45 o’clock in the morning due to injuries
sustained by him in a vehicular accident while he was on his way to school from Bacolod City, where he lived, to
Hinigaran, Negros Occidental where the school of which he was the principal was located and that at the time of
the accident he had in his possession official papers he allegedly worked on in his residence on the eve of his
death. The claim is compensable. When an employee is accidentally injured at a point reasonably proximate to the
place at work, while he is going to and from his work, such injury is deemed to have arisen out of and in the course
of his employment."

Again in Alano v. ECC, 5 it was reiterated:

"Dedicacion de Vera, a government employee during her lifetime, worked as principal of Salinap Community School
in San Carlos City, Pangasinan. Her tour of duty was from 7:30 a.m. to 5:30 p.m. On November 29, 1976, at 7:00
A.M., while she was waiting for a ride at Plaza Jaycee in San Carlos City on her way to the school, she was bumped
and run over by a speeding Toyota mini-bus which resulted in her instantaneous death . . ."

"In this case, it is not disputed that the deceased died while going to her place of work. She was at the place
where, as the petitioner puts it, her job necessarily required her to be if she was to reach her place of work on
time. There was nothing private or personal about the school principal’s being at the place of the accident. She was
there because her employment required her to be there."
More recently, in Vano v. GSIS & ECC, 6 this Court, applying the above quoted decisions, enunciated:

"Filomeno Vano was a letter carrier of the Bureau of Posts in Tagbilaran City. On July 31, 1983, a Sunday, at
around 3:30 p.m. Vano was driving his motorcycle with his son as backrider allegedly on his way to his station in
Tagbilaran for his work the following day, Monday. As they were approaching Hinawanan Bridge in Loay, Bohol, the
motorcycle skidded, causing its passengers to be thrown overboard. Vano’s head bit the bridge’s railing which
rendered him unconscious. He was taken to the Engelwood Hospital where he was declared dead on arrival due to
severe hemorrhage.

"We see no reason to deviate from the foregoing rulings. Like the deceased in these two (2) aforementioned cases,
it was established that petitioner’s husband in the case at bar was on his way to his place of work when he met the
accident. His death, therefore, is compensable under the law as an employment accident."

In the above cases, the employees were on their way to work. In the case at bar, petitioner had come from work
and was on his way home, just like in the Baldebrin case, where the employee." . . figured in an accident when he
was going home from his official station at Pagadian City to his place of residence at Aurora Zamboanga del Sur . .
." 7

In Baldebrin, the Court said:

"The principal issue is whether petitioner’s injury comes within the meaning of and intendment of the phrase
`arising out of and in the course of employment.’ (Section 2, Workmen’s Compensation Act). In Philippine
Engineer’s Syndicate, Inc. v. Flora S. Martin and Workmen’s Compensation Commission, 4 SCRA 356, We held that
`where an employee, after working hours, attempted to ride on the platform of a service truck of the company
near his place of work, and, while thus attempting, slipped and fell to the ground and was run over by the truck,
resulting in his death, the accident may be said to have arisen out of or in the course of employment, for which
reason his death is compensable. The fact standing alone, that the truck was in motion when the employee
boarded, is insufficient to justify the conclusion that he had been notoriously negligent, where it does not appear
that the truck was running at a great speed.’ And, in a later case, Iloilo Dock & Engineering Co. v. Workmen’s
Compensation Commission, 26 SCRA 102, 103, We ruled that ‘(e)mployment includes not only the actual doing of
the work, but a reasonable margin of time and space necessary to be used in passing to and from the place where
the work is to be done. If the employee be injured while passing, with the express or implied consent of the
employer, to or from his work by a way over the employer’s premises, or over those of another in such proximity
and relation as to be in practical effect a part of the employer’s premises, the injury is one arising out of and in the
course of the employment as much as though it had happened while the employee was engaged in his work at the
place of its performance.’" (Emhasis supplied)

In the case at bar, it can be seen that petitioner left his station at the Central Bank several hours after his regular
time off, because the reliever did not arrive, and so petitioner was asked to go on overtime. After permission to
leave was given, he went home. There is no evidence on record that petitioner deviated from his usual, regular
homeward route or that interruptions occurred in the journey.

While the presumption of compensability and theory of aggravation under the Workmen’s Compensation Act (under
which the Baldebrin case was decided) may have been abandoned under the New Labor Code, 8 it is significant
that the liberality of the law in general in favor of the workingman still subsists. As agent charged by the law to
implement social justice guaranteed and secured by the Constitution, the Employees Compensation Commission
should adopt a liberal attitude in favor of the employee in deciding claims for compensability, especially where
there is some basis in the facts for inferring a work connection to the accident.

This kind of interpretation gives meaning and substance to the compassionate spirit of the law as embodied in
Article 4 of the New Labor Code which states that "all doubts in the implementation and interpretation of the
provisions of the Labor Code including its implementing rules and regulations shall be resolved in favor of labor."

The policy then is to extend the applicability of the decree (PD 626) to as many employees who can avail of the
benefits thereunder. This is in consonance with the avowed policy of the State to give maximum aid and protection
to labor. 9

There is no reason, in principle, why employees should not be protected for a reasonable period of time prior to or
after working hours and for a reasonable distance before reaching or after leaving the employer’s premises. 10

If the Vano ruling awarded compensation to an employee who was on his way from home to his work station one
day before an official working day, there is no reason to deny compensation for accidental injury occurring while he
is on his way home one hour after he had left his work station.

We are constrained not to consider the defense of the street peril doctrine and instead interpret the law liberally in
favor of the employee because the Employees Compensation Act, like the Workmen’s Compensation Act, is
basically a social legislation designed to afford relief to the working men and women in our society.

WHEREFORE, the decision appealed from is REVERSED and SET ASIDE. Let the case be remanded to the ECC and
the GSIS for disposition in accordance with this decision.

SO ORDERED.

Melencio-Herrera, Paras, Sarmiento and Regalado, JJ., concur.

[G.R. No. 85024. January 23, 1991.]

DOMINGO VICENTE, Petitioner, v. EMPLOYEES’ COMPENSATION COMMISSION, Respondent.

Olandesca Law Offices for Petitioner.

SYLLABUS

1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; EMPLOYEES DISABILITY; CATEGORIES. — Employee’s
disability under the Labor Code is classified into three distinct categories. (a) temporary total disability; (b)
permanent total disability; and (c) permanent partial disability.

2. ID.; ID.; ID.; PERMANENT TOTAL DISABILITY; TEST. — The test of whether or not an employee suffers from
"permanent total disability" is a showing of the capacity of the employee to continue performing his work
notwithstanding the disability he incurred.

3. ID.; ID.; ID.; ID.; ESTABLISHED BY FACTORS IN CASE AT BAR. — In the case at bar, the petitioner’s permanent
total disability is established beyond doubt by several factors and circumstances. Noteworthy is the fact that from
all available indications, it appears that the petitioner’s application for optional retirement on the basis of his
ailments had been approved. The decision of the respondent Commission even admits that the petitioner "retired
from government service at the age of 45." Considering that the petitioner was only 45 years old when he retired
and still entitled, under good behavior, to 20 more years in service, the approval of his optional retirement
application proves that he was no longer fit to continue in his employment. For optional retirement is allowed only
upon proof that the employee-applicant is already physically incapacitated to render sound and efficient service.
The fact that the petitioner was granted benefits amounting to the equivalent of twenty-three months shows that
the petitioner was unable to perform any gainful occupation for a continuous period exceeding 120 days. This kind
of disability is precisely covered by Section 2(b), Rule VII of the Amended Rules on Employees’ Compensability.

4. REMEDIAL LAW; EVIDENCE; PHYSICIAN’S CERTIFICATION ON NATURE OF CLAIMANT’S DISABILITY, GIVEN


CREDENCE; REASON. — The doctor’s certification as to the nature of the claimant’s disability may be given
credence as he normally would not make a false certification." And," [N]o physician in his right mind and who is
aware of the far-reaching and serious effect that his statements would cause on a money claim filed with a
government agency, would issue certifications indiscriminately without even minding his own interests and
protection."

5. LABOR AND SOCIAL LEGISLATION; LABOR CODE; PROVISIONS THEREOF LIBERALLY CONSTRUED IN FAVOR OF
THE WORKINGMAN. — The court takes this occasion to stress once more its abiding concern for the welfare of
government workers, especially the humble rank and file, whose patience, industry, and dedication to duty have
often gone unheralded, but who, in spite of very little recognition, plod on dutifully to perform their appointed
tasks. It is for this reason that the sympathy of the law on social security is toward its beneficiaries, and the law,
by its own terms, requires a construction of utmost liberality in their favor. It is likewise for this reason that the
Court disposes of this case and ends a workingman’s struggle for his just dues.

DECISION

SARMIENTO, J.:

Central to this petition for certiorari which assails the decision 1 dated August 24, 1988 of the Employees’
Compensation Commission (ECC) in ECC Case No. 3764, affirming the decision of the Government Service
Insurance System (GSIS), is the question on whether the petitioner suffers from permanent total disability as he
claims, or from permanent partial disability as held by the respondent Commission.
The undisputed facts of the case are as follows:

The petitioner, Domingo Vicente, was formerly employed as a nursing attendant at the Veterans Memorial Medical
Center in Quezon City. On August 5, 1981, at the age of forty-five, and after having rendered more than twenty-
five years of government service, he applied for optional retirement (effective August 16, 1981) under the
provisions of Section 12(c) of Republic Act No. 1616, giving as reason therefor his inability to continue working as a
result of his physical disability. 2 The petitioner likewise filed with the Government Service Insurance System
(GSIS) an application for "income benefits claim for payment" under Presidential Decree (PD) No. 626, as
amended. Both applications were accompanied by the necessary supporting papers, among them being a
"Physician’s Certification" issued by the petitioner’s attending doctor at the Veterans Memorial Medical Center, Dr.
Avelino A. Lopez, M.D., F.P.C.S., ** F.I.C.S. *** (Section Chief, General, Thoracic & Peripheral Surgery, Surgical
Department, Veterans Medical Center, Hilaga Avenue, Quezon City), who had diagnosed the petitioner as suffering
from:

Osteoarthritis, multiple;

Hypertensive Cardiovascular Disease;

Cardiomegaly; and

Left Ventricular Hypertrophy;

and classified him as being under "permanent total disability." 3

The petitioner’s application for income benefits claim payment was granted but only for permanent partial disability
(PPD) compensation or for a period of nineteen months starting from August 16, 1981 up to March 1983. 4

On March 14, 1983, the petitioner requested the General Manager of the GSIS to reconsider the award given him
and prayed that the same be extended beyond nineteen months invoking the findings of his attending physician, as
indicated in the latter’s Certification. 5 As a consequence of his motion for reconsideration, and on the basis of the
"Summary of Findings and Recommendation" 6 of the Medical Services Center of the GSIS, the petitioner was
granted the equivalent of an additional four (4) months benefits. 7 Still unsatisfied, the petitioner again sent a
letter to the GSIS Disability Compensation Department Manager on November 6, 1986, insisting that he
(petitioner) should be compensated no less than for "permanent total disability." On June 30, 1987, the said
manager informed the petitioner that his request had been denied. Undaunted, the petitioner sought
reconsideration and as a result of which, on September 10, 1987, his case was elevated to the respondent
Employees Compensation Commission (ECC). Later, or on October 1, 1987, the petitioner notified the respondent
Commission that he was confined at the Veterans Memorial Medical Center for "CVA probably thrombosis of the left
middle cerebral artery." 8

There was nothing he could do but wait and hope.

Finally, on August 24, 1988, the respondent rendered a decision affirming the ruling of the GSIS Employees’
Disability Compensation and dismissed the petitioner’s appeal.

Hence this recourse.

Before us, the petitioner maintains that his disability is "permanent total" and not "permanent partial" as classified
by the respondent Commission. In support of his position, the petitioner points to the clinical evaluation and
certification earlier adverted to issued by his attending physicians at the Veterans Memorial Medical Center. He
likewise contends that contrary to the respondent’s ruling, his subsequent confinement in the hospital from August
31, 1987 to September 6, 1987, when he was found suffering from "CVA probably thrombosis," was a direct result
of his other ailments as previously diagnosed (before his retirement) by his attending physician and the Personnel
Physician of the Center, Dr. Salud C. Palattao.

On the other hand, the respondent Commission argues that the petitioner only suffers from "permanent partial
disability" and not from "permanent total disability." The findings of the petitioner’s attending physician is not
binding on the GSIS, nor on the Commission, as the proper evaluation of an employee’s degree of disability
exclusively belongs to the GSIS medical experts who have specialized on the subject.

The petition is impressed with merit.

Employee’s disability under the Labor Code is classified into three distinct categories. (a) temporary total disability;
9 (b) permanent total disability; 10 and (c) permanent partial disability. 11 Likewise, in Section 2, Rule VII of the
Amended Rules on Employees Compensation, it is provided that:
SEC. 2. Disability — (a) A total disability is temporary if as a result of the injury or sickness the employee is unable
to perform any gainful occupation for a continuous period not exceeding 120 days, except as otherwise provided in
Rule X of these Rules.

(b) A disability is total and permanent if as a result of the injury or sickness the employee is unable to perform any
gainful occupation for a continuous period exceeding 120 days except as otherwise provided for in Rule X of these
Rules.

(c) A disability is partial permanent if as a result of the injury or sickness the employee suffers a permanent partial
loss of the use of any part of his body.

Here, there is no question that the petitioner is not under "temporary total disability" as defined by law. The
respondent Commission’s decision classifying the petitioner’s disability as "permanent partial" attests, albeit
indirectly, to this fact. Our focus therefore, as stated earlier, is only in resolving out whether the petitioner suffers
from "permanent total disability" as he claims, or from "permanent partial disability" as the respondent
Commission would have us believe.

On the subject of "permanent total disability," the Court has stated, on several occasions, that:

Other authoritative comments on the coverage of the term "permanent total disability" as used in the Workmen’s
Compensation Act, are (a) Comments and Annotations on the Workmen’s Compensation Act by Severo M. Pucan
and Cornelio R. Besinga, that "total disability does not mean a state of absolute helplessness, but means
disablement of the employee to earn wages in the same kind of work, or a work of similar nature, that he was
trained for or accustomed to perform, or any kind of work which a person of his mentality and attainment could
do;" (b) Philippine Labor and Social Legislation by Justice Ruperto Martin, that "permanent total disability means
disablement of an employee to earn wages in the same kind of work, or work of a similar nature that he was
trained for, or accustomed to perform, or any other kind of work which a person of his mentality and attainment
could do . . .;" and (c) Labor Standards and Welfare legislation by Perfecto Fernandez and Camilo Quiason that
"permanent total disability means an incapacity to perform gainful work which is expected to be permanent. This
status does not require a condition of complete helplessness. Nor is it affected by the performance of occasional
odd jobs" (cited in Marcelino v. Seven-up Bottling Co. of the Philippines, 47 SCRA 343). 12

It may therefore be inferred from the Court’s pronouncements that while "permanent total disability" invariably
results in an employee’s loss of work or inability to perform his usual work, "permanent partial disability," on the
other hand, occurs when an employee loses the use of any particular anatomical part of his body which disables
him to continue with his former work. Stated otherwise, the test of whether or not an employee suffers from
"permanent total disability" is a showing of the capacity of the employee to continue performing his work
notwithstanding the disability he incurred. Thus, if by reason of the injury or sickness he sustained, the employee
is unable to perform his customary job for more than 120 days and he does not come within the coverage of Rule X
of the Amended Rules on Employees Compensability (which, in a more detailed manner, describes what constitutes
temporary total disability), then the said employee undoubtedly suffers from "permanent total disability" regardless
of whether or not he loses the use of any part of his body.

In the case at bar, the petitioner’s permanent total disability is established beyond doubt by several factors and
circumstances. Noteworthy is the fact that from all available indications, it appears that the petitioner’s application
for optional retirement on the basis of his ailments had been approved. The decision of the respondent Commission
even admits that the petitioner "retired from government service at the age of 45." 13 Considering that the
petitioner was only 45 years old when he retired and still entitled, under good behavior, to 20 more years in
service, the approval of his optional retirement application proves that he was no longer fit to continue in his
employment. 14 For optional retirement is allowed only upon proof that the employee-applicant is already
physically incapacitated to render sound and efficient service. 15

Further, the appropriate physicians of the petitioner’s employer, the Veterans Memorial Medical Center,
categorically certified that the petitioner was classified under permanent total disability. On this score, "the doctor’s
certification as to the nature of the claimant’s disability may be given credence as he normally would not make a
false certification." 16 And," [N]o physician in his right mind and who is aware of the far-reaching and serious
effect that his statements would cause on a money claim filed with a government agency, would issue certifications
indiscriminately without even minding his own interests and protection." 17

The fact that the petitioner was granted benefits amounting to the equivalent of twenty-three months shows that
the petitioner was unable to perform any gainful occupation for a continuous period exceeding 120 days. This kind
of disability is precisely covered by Section 2(b), Rule VII of the Amended Rules on Employees’ Compensability
which we again quote, to wit:

SEC. 2. Disability — (a) . . .


(b) A disability is total and permanent if as a result of the injury or sickness the employee is unable to perform any
gainful occupation for a continuous period exceeding 120 days except as otherwise provided for in Rule X of those
Rules.

x x x

There being no showing, as we mentioned earlier, that the petitioner’s disability is "temporary total" as defined by
the law, the inescapable conclusion is that he suffers from permanent total disability.

The court takes this occasion to stress once more its abiding concern for the welfare of government workers,
especially the humble rank and file, whose patience, industry, and dedication to duty have often gone unheralded,
but who, in spite of very little recognition, plod on dutifully to perform their appointed tasks. It is for this reason
that the sympathy of the law on social security is toward its beneficiaries, and the law, by its own terms, 18
requires a construction of utmost liberality in their favor. It is likewise for this reason that the Court disposes of this
case and ends a workingman’s struggle for his just dues.

WHEREFORE, the decision of the respondent Employees’ Compensation Commission is SET ASIDE and another one
is hereby ENTERED declaring the petitioner to be suffering from permanent total disability. Respondent Employees’
Compensation Commission is accordingly ORDERED to award the petitioner the benefits corresponding to his
permanent total disability.

SO ORDERED.

Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Griño-
Aquino, Medialdea and Regalado, JJ., concur.

[G.R. No. 96422. February 28, 1994.]

FRANCISCO S. TANTUICO, JR., Petitioner, v. HON. EUFEMIO DOMINGO, in his capacity as Chairman of
the Commission on Audit, ESTELITO SALVADOR, MARGARITO SILOT, VALENTINA EUSTAQUIO, ANICIA
CHICO and GERMINIANO PASCO, Respondents.

DECISION

QUIASON, J.:

This is a petition for certiorari, prohibition and mandamus, with prayer for temporary restraining order or
preliminary injunction, under Rule 65 of the Revised Rules of Court.

The petition mainly questions the withholding of one-half of petitioner’s retirement benefits.

On January 26, 1980, petitioner was appointed Chairman of the Commission on Audit (COA) to serve a term of
seven years expiring on January 26, 1987. Petitioner had discharged the functions of Chairman of the COA in an
acting capacity since 1975.

On December 31, 1985, petitioner applied for clearance from all money, property and other accountabilities in
preparation for his retirement. He obtained the clearance applied for, which covered the period from 1976 to
December 31, 1985. The clearance had all the required signatures and bore a certification that petitioner was
"cleared from money, property and/or other accountabilities by this Commission." (Rollo, p. 44).

After the EDSA Revolution, petitioner submitted his courtesy resignation to President Corazon C. Aquino. He
relinquished his office to the newly appointed Chairman, now Executive Secretary Teofisto Guingona, Jr. on March
10, 1986. That same day, he applied for retirement effective immediately.

Petitioner sought a second clearance to cover the period from January 1, 1986 to March 9, 1986. All the signatures
necessary to complete the second clearance, except that of Chairman Guingona, were obtained. The second
clearance embodies a certificate that petitioner was "cleared from money, property and/or accountability by this
Commission" (Rollo, p. 49). Chairman Guingona, however, failed to take any action thereon.
Chairman Guingona was replaced by respondent Chairman. A year later, respondent Chairman issued COA Office
Order No. 87-10182 (Rollo, p. 50), which created a committee to inventory all equipment acquired during the
tenure of his two predecessors.

On May 7, 1987, respondent Chairman indorsed petitioner’s retirement application to the Government Service
Insurance System (GSIS), certifying, among other matters, that petitioner was cleared of money and property
accountability (Rollo, p. 52). The application was returned to the COA pursuant to R.A. No. 1568, which vests in
the COA the final approval thereof.

On September 25, 1987, the inventory committee finally submitted its report, recommending petitioner’s clearance
from property accountability inasmuch as there was no showing that he personally gained from the missing
property or was primarily liable for the loss thereof (Rollo, pp. 53-58).

Not satisfied with the report, respondent Chairman issued a Memorandum directing the inventory committee to
explain why no action should be filed against its members for failure to complete a physical inventory and
verification of all equipment; for exceeding their authority in recommending clearances for petitioner and Chairman
Guingona; and for recommending petitioner’s clearance in total disregard of Section 102 of P.D. No. 1445
(Government Auditing Code of the Philippines). The members of the committee were subsequently administratively
charged.

On January 2, 1988, respondent Chairman created a special audit team for the purpose of conducting a financial
and compliance audit of the COA transactions and accounts during the tenure of petitioner from 1976 to 1984 (COA
Office Order 88-10677; Rollo, pp. 66-67).

On February 28, 1989, the special audit team submitted its report stating: (i) that the audit consisted of selective
review of post-audit transactions in the head offices and the State Accounting and Auditing Center; (ii) that the
audit disclosed a number of deficiencies which adversely affected the financial condition and operation of the COA,
such as violations of executive orders, presidential decrees and related rules and regulations; and (iii) that there
were some constraints in the audit, such as the unavailability of records and documents, and personnel movements
and turnover. While the report did not make any recommendation, it instead mentioned several officials and
employees, including petitioner, who may be responsible or accountable for the questioned transactions (Rollo, pp.
73, 147-151).

Respondent Chairman rendered a Decision dated November 20, 1989, in the administrative case filed against the
principal members of the first inventory committee. He found them guilty as charged and issued them a reprimand.
The other members were meted a stern warning, except for one who was exonerated for not taking part in the
preparation of the inventory report.chanrobles virtual lawlibrary

In a letter dated December 21, 1989, a copy of which was received by petitioner on December 27, 1989,
respondent Chairman informed petitioner of the approval of his application for retirement under R.A. No. 1568,
effective as of March 9, 1986 (Rollo, pp. 68-69). However, respondent Chairman added:

". . . In view, however, of the audit findings and inventory report adverted to above, payment of only one-half
(1/2) of the money value of the benefits due you by reason of such retirement will be allowed, subject to the
availability of funds and the usual accounting and auditing rules. Payment of the balance of said retirement benefits
shall be subject to the final results of the audit concerning your fiscal responsibility and/or accountability as former
Chairman of this Commission." chanrobles virtual lawlibrary

In a letter dated January 22, 1990, petitioner requested full payment of his retirement benefits.

Petitioner was furnished a copy of the report of the special audit team in the letter dated December 21, 1989 of
respondent Chairman on January 29, 1990, nearly a year after its completion. Attached to a copy of the report was
a letter dated November 14, 1989 from respondent Chairman, who required petitioner to submit his comment
within 30 days (Rollo, p. 153).

Petitioner submitted a letter-comment, wherein he cited certain defects in the manner the audit was conducted. He
further claimed that the re-audit was not authorized by law since it covered closed and settled accounts.

Upon petitioner’s request, he was furnished a set of documents which he needed to prepare his comment. He was
likewise given another 30-days to submit it.

A series of correspondence between petitioner and respondent Chairman ensued. On September 10, 1990,
petitioner requested a copy of the working papers on which the audit report was based. This was denied by
respondent Chairman, who claimed that under the State Audit Manual, access to the working paper was restricted.
Petitioner’s reconsideration was likewise denied and he was given a non-extendible period of five days to submit
his comment.

Instead of submitting his comment, petitioner sought several clarifications and specifications, and requested for 90
days within which to submit his comment, considering that the report covered a ten-year period of post-audited
transactions. Ignoring petitioner’s request, respondent Chairman demanded an accounting of funds and a turn over
of the assets of the Fiscal Administration Foundation, Inc. within 30 days.

II

Petitioner then filed the instant petition. As prayed for by petitioner, this Court issued a temporary restraining order
on January 17, 1991.

Petitioner argues that notwithstanding the two clearances previously issued, and respondent Chairman’s
certification that petitioner had been cleared of money and property accountability, respondent Chairman still
refuses to release the remaining half of his retirement benefits — a purely ministerial act.

Petitioner was already issued an initial clearance during his tenure, effective December 31, 1985 (Rollo, p. 44). All
the required signatures were present. It also bore a certification that petitioner "is cleared from money, property
and/or other accountabilities by this commission" with the following notation:

"No property accountability under the Chairman’s name as the person. Final clearance as COA Chairman subject to
the completion of ongoing reconciliation of Accounting & P(roperty) records and to complete turnover of COA
property assigned to him as agency head.

x x x

The responsibility of the Chairman for the disbursement and collection accounts of this Commission for CYs
Sept.’75 to Aug.’85, were completely post-audited, however as of Dec. 31, 1985, the suspensions and
disallowances in the amounts of P36,196,962.11 and P28,762.36 respectively are still in the process of settlement"
(Rollo, pp. 44-45).

Petitioner also applied for a second clearance to cover the period from January 1 to March 9, 1986, which
application had been signed by all the officials, except the Chairman (Rollo, p. 49).chanrobles virtual lawlibrary

Whatever infirmities or limitations existed in said clearances were cured after respondent Chairman favorably
indorsed petitioner’s application for retirement to the Government Service Insurance System and recommended its
approval to take effect on March 10, 1986. In said endorsement, respondent Chairman made it clear that there
were no pending administrative and criminal cases against petitioner (Rollo, p. 52).

Regardless of petitioner’s monetary liability to the government that may be discovered from the audit concerning
his fiscal responsibility or accountability as former COA Chairman, respondent Chairman cannot withhold the
benefits due petitioner under the retirement laws.chanrobles virtual lawlibrary

In Romana Cruz v. Hon. Francisco Tantuico, 166 SCRA 670 (1988), the National Treasurer withheld the retirement
benefits of an employee because of his finding that she negligently allowed the anomalous encashment of falsified
treasury warrants.

In said case, where petitioner herein was one of the respondents, we found that the employee had been cleared by
the National Treasurer from all money and property responsibility, and held that the retirement pay accruing to a
public officer may not be withheld and applied to his indebtedness to the government.

In Tantuico, we cited Justice Laurel’s essay on the rationale for the benign ruling in favor of the retired employees,
thus:

". . . Pension in this case is a bounty flowing from the graciousness of the Government intended to reward past
services and, at the same time, to provide the pensioner with the means with which to support himself and his
family. Unless otherwise clearly provided, the pension should inure wholly to the benefit of the pensioner. It is true
that the withholding and application of the amount involved was had under Section 624 of the Administrative Code
and not by any judicial process, but if the gratuity could not attached or levied upon execution in view of the
prohibition of Section 3 of Act No. 4051, the appropriation thereof by administrative action, if allowed, would lead
to the same prohibited result and enable the respondent to do indirectly what they can not do directly under
Section 3 of the Act No. 4051. Act No. 4051 is a later statute having been approved on February 21, 1933,
whereas the Administrative Code of 1917 which embodies Section 624 relied upon by the respondents was
approved on March 10 of that year. Considering Section 3 of Act No. 4051 as an exception to the general authority
granted in Section 624 of the Administrative Code, antagonism between the two provisions is avoided (Hunt v.
Hernandez, 64 Phil. 753 [1937]).

Under Section 4 of R.A. No. 1568 (An Act to Provide Life Pension to the Auditor General and the Chairman or Any
Member of the Commission on Elections), the benefits granted by said law to the Auditor General and the Chairman
and Members of the Commission on Elections shall not be subject to garnishment, levy or execution. Likewise,
under Section 33 of P.D. No. 1146, as amended (The Revised Government Service Insurance Act of 1977), the
benefits granted thereunder "shall not be subject, among others, to attachment, garnishment, levy or other
processes."

Well-settled is the rule that retirement laws are liberally interpreted in favor of the retiree because the intention is
to provide for the retiree’s sustenance and comfort, when he is no longer capable of earning his livelihood (Profeta
v. Drilon, 216 SCRA 777 [1992]).

Petitioner also wants us to enjoin the re-audit of his fiscal responsibility or accountability, invoking the following
grounds:

1. The re-audit involved settled and closed accounts which under Section 52 of the Audit Code can no longer be re-
opened and reviewed.

2. The re-audit was initiated by respondent Chairman alone, and not by the Commission as a collegial body;

3. The report of the special audit team that recommended the re-audit is faulty as the team members themselves
admitted several constraints in conducting the re-audit, e.g. unavailability of the documents, frequent turn-over
and movement of personnel, etc.;

4. The re-audit covered transactions done even after petitioner’s retirement;

5. He was not given prior notice of the re-audit;

6. He was not given access to the working papers; and

7. Respondents were barred by res judicata from proceeding with the re-audit (Rollo, pp. 19-40).

The petition must fail insofar as it seeks to abort the completion of the re-audit. While at the beginning petitioner
raised objections to the manner the audit was conducted and the authority of respondents to re-open the same, he
subsequently cooperated with the examination of his accounts and transactions as a COA official.

With respect to the legal objections raised by petitioner to the partial findings of the respondents with respect to
his accountability, such findings are still tentative. As petitioner has requested, he is entitled to a reasonable time
within which to submit his comment thereon.

But in order to prepare his comment, petitioner should be given access to the working papers used by the special
audit team. The audit report covered a period of ten years (1976-1985) and involved numerous transactions. It
would be unfair to expect petitioner to comment on the COA’s findings of the report without giving him a chance to
verify how those findings were arrived at.

It has been seven years since petitioner’s retirement. Since then he was only paid half of his retirement benefits,
with the other half being withheld despite the issuance of two clearances and the approval of his retirement
application. As of the filing of this petition on December 21, 1990, no criminal or administrative charge had been
filed against petitioner in connection with his position as former Acting Chairman and Chairman of the COA.

WHEREFORE, the petition is GRANTED insofar as it seeks to compel respondent Chairman of the COA to pay
petitioner’s retirement benefits in full and his monthly pensions beginning in March 1991.

The petition is DENIED insofar as it seeks to nullify COA Office Order No. 88-10677 and the audit report dated
February 28, 1989 but petitioner should be given full access to the working papers to enable him to prepare his
comment to any adverse findings in said report. The temporary restraining order is LIFTED.

SO ORDERED.

Narvasa, C.J., Cruz, Feliciano, Padilla, Bidin, Regalado, Davide, Jr., Romero, Nocon, Bellosillo, Melo, Puno, Vitug
and Kapunan, JJ., concur.

G.R. No. 110170 February 21, 1994


ROLETO A. PAHILAN, Petitioner, v. RUDY A. TABALBA, COMMISSION ON ELECTIONS, and HONORABLE
JUDGE SINFOROSO V. TABAMO, JR., BRANCH 28, MAMBAJAO, CAMIGUIN, Respondents.

Pimentel, Apostol, Layosa & Sibayan Law Office for petitioner.

Marciano Ll. Aparte, Jr. for Rudy A. Tabalba.

REGALADO, J.:

This original action for certiorari impugns the Order 1 of respondent Commission on Elections, dated January 19,
1993, dismissing the appeal filed by petitioner Roleto A. Pahilan for the latter's failure to file a notice of appeal with
the Regional Trial Court of Mumbajao, Camiguin, and, necessarily on the same rationale, the
Resolution 2promulgated by said respondent on May 6, 1993 denying petitioner's motion for reconsideration.

Petitioner Pahilan and private respondent Tabalba were candidates for Mayor of Guinsiliban, Camiguin during the
local elections held on May 11, 1992. On May 13, 1992, the Municipal Board of Canvassers proclaimed Tabalba as
the duly elected Mayor of Guinsilban, the latter having garnered 1,087 votes as against 806 votes for Pahilan.

Thereafter, Pahilan filed an election protest 3 which he sent by registered mail on May 23, 1992, addressed to the
Clerk of Court of the Regional Trial Court of Mambajao, Camiguin, attaching thereto P200.00 in cash as payment
for docket fees. In a letter 4 dated May 28, 1992, the OIC-Clerk of Court of the Regional Trial Court of Mambajao,
Camiguin, Branch 28, informed Pahilan that the correct fees that where supposed to be paid amounted to P620.00,
and that, accordingly, the petition would not be entered in the court docket and summons would not be issued
pending payment of the balance of P420.00.

On June 16, 1992, upon receipt of the latter, Pahilan paid the required balance in the total amount P470.00. 5

Subsequently, on June 22, 1992, Tabalba filed his answer with Counterclaim, 6 alleging as one of his affirmative
defenses lack of jurisdiction on the part of the trial court to entertain the election protest for having been filed
beyond the ten-day period provided by law.

On August 17, 1992, Pahilan filed a Motion for Inhibition, dated August 14, 1992, because of alleged serious and
grave doubts that the presiding judge could impartially hear and decide his election protest with the cold neutrality
of an impartial judge, as the latter allegedly belongs to and had supported a political group adverse to the
candidacy of petitioner.

On August 18, 1992, the trial court proceeded with the pre-trial conference, heard the defense on the allegation of
lack of jurisdiction for non-payment of docket fees, and thereafter ordered the parties to submit their respective
memoranda.

Tabalba filed his Memorandum in Support of Affirmative Defense of Lack of Jurisdiction, 7dated September 4, 1992.
Under date of September 22, 1992, Pahilan filed a Memorandum 8 as well as a Motion to Resolve Motion for
Inhibition Prior to Resolution of Affirmative Defenses. 9

On October 2, 1992, the trial court issued an Order 10 denying the motion for inhibition and dismissing the election
protest for "non-payment on time of the required fees for filing an initiatory pleading." Pahilan's counsel received a
copy of said order on October 12, 1992 in Cagayan de Oro City.

On October 17, 1992 and within the 5-day period to appeal, Pahilan filed a verified appeal brief 11 in respondent
Commission on Elections, with copies duly served on the Regional Trial Court of Mambajao, Camiguin and the
counsel for herein private respondent.

On December 12, 1992, the Comelec Contests Adjudication Department directed the Clerk of Court, Regional Trial
Court, Camiguin, Branch 28, to immediately transmit the complete records of EP case No. 3(92) which was being
appealed by herein petitioner. 12 Thereafter, in a letter 13 dated January 7, 1993, the said Clerk of Court informed
respondent Commission that "to this very late date, this office has not received any notice of appeal from the
aggrieved party." As a consequence, respondent Commission, in an Order dated January 19, 1993, dismissed
Pahilan's verified appeal for failure to appeal within the prescribed period.
Pahilan filed a motion for reconsideration 14 of the order dismissing his appeal. Both parties were required by
respondent Commission to file their respective memoranda. Finally, on May 6, 1993, respondent Commission
issued its aforestated resolution denying Pahilan's motion for reconsideration.

Hence, this petition on the bases of the following assigned errors:

1. Whether or not respondent Commission validly dismissed the verified "Appeal" of petitioner which contains all
the elements of a "notice of appeal" and more expressive of the intent to elevate the case for review by said
appellate body, and furnishing copies thereof to the respondent trial judge and counsel for the adverse party, aside
from the incomplete payment of the appeal fee; and

2. Whether or not the respondent trial judge validly dismissed the petition of protest of petitioner for non-payment
on time of the required fee.

We find cogency and merit in the petition.

The bone of contention in this petition is the alleged erroneous dismissal of petitioner's appeal by respondent
Commission because of the failure of petitioner to file a notice of appeal before the Regional Trial Court of
Mambajao, Camiguin which, in turn, dismissed the election protest of petitioner for non-payment of docket fees.

The COMELEC RULES OF PROCEDURE provide for the manner in which appeals from decisions of courts in election
contests shall be made, to wit:

RULE 22 - Appeals from Decisions of Courts


in Election Protest Cases

Sec. 1. Caption and title of appealed cases. - In all election contests involving the elections, returns, and
qualifications of municipal or barangay officials, the party interposing the appeal shall be called the "Appellant" and
the adverse party the "Appellee", but the title of the case shall remain as it was in the court of origin.

xxx xxx xxx

Sec. 3. Notice of Appeal. - Within five (5) days after promulgation of the decision of the court, the aggrieved party
may file with said court a notice of appeal, and serve a copy thereof upon the attorney of record of the adverse
party.

Sec. 4. Immediate transmittal of records of the case. - The Clerk of the court concerned shall, within fifteen (15)
days from the filing of the notice of appeal, transmit to the Electoral Contests Adjudication Department the
complete records of the case, together with all the evidence, including the original and three(3) copies of the
transcript of stenographic notes of the proceedings.

Sec. 5. Filing of briefs. - The Clerk of Court concerned, upon receipt of the complete records of the case, shall
notify the appellant or his counsel to file with the Electoral Contests Adjudication Department within thirty (30)
days from receipt of such notice, ten (10) legible copies of his brief with proof of service thereof upon the
appellee.

Within thirty (30) days from receipt of the brief of the appellant, the appellee shall file ten (10) legible copies of his
brief with proof of service thereof upon the appellant.

xxx xxx xxx

Sec. 9. Grounds for dismissal of appeal. - The appeal may be dismissed upon motion of either party or at the
instance of the Commission on any of the following grounds:

(a) Failure of the appellant to pay the appeal fee;

(b) Failure of the appellant to file copies of his brief within the time provided by these rules;
(c) Want of specific assignment of errors in the appellant's brief; and

(d) Failure to file notice of appeal within the prescribed period.

In the case at bar, petitioner received a copy of the trial court's order dismissing his election protest on October 12,
1992. As earlier stated, herein petitioner, instead of filing a notice of appeal as required by the rules, filed with
respondent Commission a verified appeal brief within the five-day reglementary period by registered mail under
Registry Receipt No. 43093, dated October 17, 1992. It will be noted, however, that on even date, petitioner
likewise sent by registered mail copies of his appeal brief to the Regional Trial Court of Mambajao, Camiguin, under
Registry Receipt No. 43091, and to the counsel of herein private respondent, under Registry Receipt No. 43092. 15

The question now posed by the foregoing factual situation is whether the notice of appeal can be validly substituted
by an appeal brief. We firmly believe and so hold, under the considerations hereinunder discussed, that the same
may be allowed.

First, in cases where a record on appeal is required under the Rules of Court, it has been consistently held that the
filing or presentation and approval of the record on appeal on time necessarily implies or involves the filing of the
notice of appeal, 16 because the act of taking or perfecting an appeal is more expressive of the intention to appeal
than the filing of a mere notice to do so. 17

If the courts can deign to be indulgent and lenient in the interpretation of the rules respecting ordinary civil actions
involving private parties representing private interests, with more reason should the rules involving election cases,
which are undoubtedly impressed with public interest, be construed with the same or even greater forbearance and
liberality.

It has been frequently decided, it may be stated as a general rule recognized by all courts, that statutes providing
for election contests are to be liberally construed to the end that the will of the people in the choice of public
officers may not be defeated by mere technical objections. An election contest, unlike an ordinary action, is imbued
with public interest since it involves not only the adjudication of the private interests of rival candidates but also
the paramount need of dispelling the uncertainty which beclouds the real choice of the electorate with respect to
who shall discharge the prerogatives of the office within their gift. Moreover, it is neither fair nor just to keep in
office for an uncertain period one whose right to it is under suspicion. It is imperative that his claim be immediately
cleared not only for the benefit of the winner but for the sake of public interest, which can only be achieved by
brushing aside technicalities of procedure with protract and delay the trial of an ordinary
action. 18

For this reason, broad perspectives of public policy impose upon courts the imperative duty to ascertain by all
means within their command who is the real candidate elected in as expeditious a manner as possible, without
being fettered by technicalities and procedural barriers to the end that the will of the people may not be
frustrated. 19

It is true that perfection of an appeal in the manner and within the period laid down by law is not only mandatory
but also jurisdictional, and that the failure to perfect an appeal as required by the rules has the effect of defeating
the right of appeal of a party and precluding the appellate court from acquiring jurisdiction over the
case. 20 Nevertheless, in some instances, this Court has disregarded such unintended lapses so as to give due
course to appeals on the basis of strong and compelling reasons, such as serving the ends of justice and preventing
a grave miscarriage thereof in the exercise of our equity
jurisdiction. 21

It is our considered opinion that public interest is of far greater importance than the justifications of substantial
justice and equity in seeking an exception to the general rule. Hence, election cases, by their very nature, should
and ought to merit a similar exemption from a strict application of technical rules of procedure.

Second, it has been shown and it is not even denied that the Regional Trial Court of Camiguin, as well as the
counsel for private respondent, was furnished copies of the appeal brief which were sent by registered mail on
October 17, 1992, within the reglementary period to appeal. This fact was never refuted by the Solicitor General in
his Comment. Concomitantly, although the Clerk of Court claimed that he had not received any notice of appeal
from herein petitioner, it would be safe to assume, under the circumstances, that the appeal brief duly directed
mailed was received in the regular course of the
mail 22 and was, therefore, deemed filed with the trial court as of the date of mailing.
Third, applying suppletorily the provisions of the Rules of Court, 23 particularly Section 4, Rule 41 thereof, the
requirement is that a notice of appeal shall specify the parties to the appeal; shall designate the judgment or order,
or part thereof, appealed from; and shall specify the court to which the appeal is taken. A perusal of herein
petitioner's appeal brief will disclose the following information: that the parties to the case are Roleto A. Pahilan as
protestant-appellant and Rudy A Tabalba as protestee-appellee; that appellant therein is appealing from the order
of the Regional Trial Court of Mambajao, Camiguin, dismissing the petition for election contest in Election Case No.
3(92); and that the appeal is being made pursuant to Section 22 of Republic Act No. 7166, that is, before the
Commission on Elections.

Accordingly, there is no gainsaying the fact that the particulars which ought to be reflected in the notice of appeal
have been specifically and categorically spelled out in the appeal brief of petitioner. Perforce, and in light of the
foregoing disquisitions, we find and so hold that petitioner is entitled to the relief prayed for.

We now proceed to resolve the issue anent the dismissal of petitioner's election protest by the Regional Trial Court
for non-payment, or more accurately the incomplete payment, of docket fees. Ordinarily, with the reversal of the
respondent Commission's questioned order, this case should be remanded to said court for adjudication on the
merits. Considering, however, the exigencies of time appurtenant to the disposition of election cases, and
considering further that the issue has at any rate been squarely raised in this petition, it is now incumbent upon
this Court to act on the propriety of the trial court's order dismissing the election protest for failure of petitioner to
pay the correct amount of docket fees.

In dismissing petitioner's action, the trial court relied on the rulings enunciated in the cases of Malimit
vs. Degamo 24 (an action for quo warranto), Magaspi, et al. vs. Ramolete, et al. 25 (a suit for recovery of
possession and ownership of land), Lee vs. Republic 26 (a petition for declaration of intention to become a Filipino
citizen), Manchester Development Corporation vs. Court of Appeals, et al. 27 (an action for a sum of money and
damages), Sun Insurance Office, Ltd., (SIOL) et al. vs. Asuncion. 28 (a suit for a sum of money and damages),
and Tacay, et al. vs. Regional Trial Court of Tagum, Davao del Norte, etc., et al. 29 (an action for damages). It
bears emphasis that the foregoing cases, except for Malimit vs. Degamo, are ordinary civil actions. This fact alone
would have sufficed for a declaration that there was no basis for the dismissal of petitioner's protest for the simple
reason that an election contest is not an ordinary civil action. Consequently the rules governing ordinary civil
actions are not necessarily binding on special actions like an election contest wherein public interest will be
adversely affected.

The case of Malimit vs. Degamo, on its part, is not on all fours with the present case. In that case, the petition
for quo warranto was mailed to the clerk of Court on December 14, 1959 and was received by the latter on
December 17, 1959. The docket fee was deemed paid only on January 5, 1960, because the petitioner therein
failed to prove his allegation that a postal money order for the docket fee was attached to his petition. Hence, the
petition for quo warranto was correctly dismissed.

In the case at bar, it cannot be gainsaid that the sum of P200.00 was attached to the petition mailed to the
Regional Trial Court of Camiguin and this fact was even acknowledged by the Clerk of Court thereof when he
requested herein petitioner to pay the balance of the correct docket fee. In Malimit, there was no docket fee paid at
all at the time of mailing; in the present case, the docket fee was paid except that the amount given was not
correct. Considering the fact that there was an honest effort on the part of herein petitioner to pay the full amount
of docket fees, we are not inclined to insist on a stringent application of the rules.

Furthermore, there are strong and compelling reasons to rule that the doctrine we have established
in Manchester and cases subsequent thereto cannot be made to apply to election cases.

As we have earlier stated, the cases cited are ordinary civil actions whereas election cases are not. The rules which
apply to ordinary civil actions may not necessarily serve the purpose of election cases, especially if we consider the
fact that election laws are to be accorded utmost liberality in their interpretation and application, bearing in mind
always that the will of the people must be upheld. Ordinary civil actions would generally involve private interests
while all elections cases are, at all times, invested with public interest which cannot be defeated by mere
procedural or technical infirmities.

Again, the Court in Manchester made its ruling in view of its finding that there existed the unethical practice of
lawyers and parties of filing an original complaint without specifying in the prayer the amount of damages which,
however, is stated in the body of the complaint. This stratagem is clearly intended for no other purpose than to
evade the payment of the correct filing fees by misleading the docket clerk in the assessment thereof. Thus, the
court therein held that jurisdiction shall be acquired only upon payment of the prescribed docket fee.
That ruling was later relaxed in the case of Sun Insurance which allowed the subsequent payment of the correct
docket fees provided it is made within the reglementary period or before prescription has set in. The reason given
was that there was no intent on the part of the petitioners therein to defraud the government, unlike the plaintiff in
the case of Manchester.

In Tacay, et al. vs. Tagum, et al., it was stated that this Court, inspired by the doctrine laid down
in Manchester, issued Circular No. 7 on March 24, 1988, which was aimed at the practice of certain parties who
omit from the prayer of their complaints any specification of the amount of damages, the omission being clearly
intended for no other purpose than to evade the payment of the correct filing fees by deluding the docket clerk in
his assessment of the same. In all these cases, the rule was applied for failure of the plaintiff to include in the
prayer of the complaint the total amount of damages sought against the defendant. The reason for this, according
to the Tacay case, is because the amount of damages will help determine two things: first, the jurisdiction of the
court; and, second, the amount of docket fees to be paid.

In the case now before us, and in election cases in general, it is not the amount of damages, if any, that is sought
to be recovered which vests in the courts the jurisdiction to try the same. Rather, it is the nature of the action
which is determinative of jurisdiction. Thus, regardless of the amount of damages claimed, the action will still have
to be filed with the Regional Trial Court. In such a case, the evil sought to be avoided in Manchester and like cases
will never arise. Peremptorily, there will be no occasion to apply the rulings in the cases mentioned. In addition, the
filing fee to be paid in an election case is a fixed amount of P300.00. There will consequently be no opportunity for
a situation to arise wherein an election contest will have to be dismissed for failure to state the exact amount of
damages and thus evince an intent to deprive the Government of the docket fees due.

Finally, in Manchester, there was a deliberate attempt on the part of the plaintiffs therein to evade payment of the
correct docket fees. In the case of petitioner, he already explained, and this we find acceptable and justified, that
"since the schedule of the new rates of court fees was not then available and the filing of the petition for election
contests was done thru the mails, the old rates readily came to mind, and this was the reason why only two
hundred pesos was remitted at the same time with the petition." 30

To summarize, the evil sought to be avoided in Manchester and similar cases can never obtain in election cases
since (1) the filing fee in an election cases is fixed and not dependent on the amount of damages sought to be
recovered, if any; and (2) a claim for damages in an election case is merely ancillary to the main cause of action
and is not even determinative of the court's jurisdiction which is governed by the nature of the election filed.

WHEREFORE, the Order of the Commission on Elections dated January 19, 1993, as well as its Resolution
promulgated on May 6, 1993, both in EAC No. 24-92; and the Order of the Regional Trial court of Mambajao,
Camiguin, dated October 2, 1992, in Election Case No. 3(92) are hereby REVERSED and SET ASIDE, and the
records of this case are hereby ordered REMANDED to the court a quo for the expeditious continuation of the
proceedings in and the adjudication of the election protest pending therein as early as practicable.

SO ORDERED.

Narvasa, C.J., Cruz, Feliciano, Padilla, Bidin, Davide, Jr., Romero, Nocon, Bellosillo, Melo, Quiason, Puno, Vitug and
Kapunan, JJ., concur.