Republic of the Philippines estimate is closest to the actual number of liters dispensed by the
SUPREME COURT hooded pump thereat is to be awarded the first prize; the next
Manila
EN BANC
G.R. No. L-19650 September 29, 1966
CALTEX (PHILIPPINES), INC., petitioner-appellee,
vs.
ENRICO PALOMAR, in his capacity as THE POSTMASTER
GENERAL, respondent-appellant.
Office of the Solicitor General for respondent and appellant.
Ross, Selph and Carrascoso for petitioner and appellee.
CASTRO, J.:
In the year 1960 the Caltex (Philippines) Inc. (hereinafter referred
to as Caltex) conceived and laid the groundwork for a promotional
scheme calculated to drum up patronage for its oil products.
Denominated "Caltex Hooded Pump Contest", it calls for
participants therein to estimate the actual number of liters a
hooded gas pump at each Caltex station will dispense during a
specified period. Employees of the Caltex (Philippines) Inc., its
dealers and its advertising agency, and their immediate families
excepted, participation is to be open indiscriminately to all "motor
vehicle owners and/or licensed drivers". For the privilege to
participate, no fee or consideration is required to be paid, no
purchase of Caltex products required to be made. Entry forms are
to be made available upon request at each Caltex station where a
sealed can will be provided for the deposit of accomplished entry
stubs.
A three-staged winner selection system is envisioned. At the
station level, called "Dealer Contest", the contestant whose
closest, the second; and the next, the third. Prizes at this level
consist of a 3-burner kerosene stove for first; a thermos bottle
and a Ray-O-Vac hunter lantern for second; and an Everready
Magnet-lite flashlight with batteries and a screwdriver set for third.
The first-prize winner in each station will then be qualified to join
in the "Regional Contest" in seven different regions. The winning
stubs of the qualified contestants in each region will be deposited
in a sealed can from which the first-prize, second-prize and third-
prize winners of that region will be drawn. The regional first-prize
winners will be entitled to make a three-day all-expenses-paid
round trip to Manila, accompanied by their respective Caltex
dealers, in order to take part in the "National Contest". The
regional second-prize and third-prize winners will receive cash
prizes of P500 and P300, respectively. At the national level, the
stubs of the seven regional first-prize winners will be placed
inside a sealed can from which the drawing for the final first-prize,
second-prize and third-prize winners will be made. Cash prizes in
store for winners at this final stage are: P3,000 for first; P2,000 for
second; Pl,500 for third; and P650 as consolation prize for each
of the remaining four participants.
Foreseeing the extensive use of the mails not only as amongst
the media for publicizing the contest but also for the transmission
of communications relative thereto, representations were made
by Caltex with the postal authorities for the contest to be cleared
in advance for mailing, having in view sections 1954(a), 1982 and
1983 of the Revised Administrative Code, the pertinent provisions
of which read as follows:
SECTION 1954. Absolutely non-mailable matter. — No
matter belonging to any of the following classes, whether
sealed as first-class matter or not, shall be imported into
the Philippines through the mails, or to be deposited in or
carried by the mails of the Philippines, or be delivered to
its addressee by any officer or employee of the Bureau of
Posts:
Written or printed matter in any form advertising, describing, or in
any manner pertaining to, or conveying or purporting to convey
any information concerning any lottery, gift enterprise, or similar
scheme depending in whole or in part upon lot or chance, or any
scheme, device, or enterprise for obtaining any money or
property of any kind by means of false or fraudulent pretenses,
representations, or promises.
"SECTION 1982. Fraud orders.—Upon satisfactory evidence that
any person or company is engaged in conducting any lottery, gift
enterprise, or scheme for the distribution of money, or of any real
or personal property by lot, chance, or drawing of any kind, or that
any person or company is conducting any scheme, device, or
enterprise for obtaining money or property of any kind through the
mails by means of false or fraudulent pretenses, representations,
or promises, the Director of Posts may instruct any postmaster or
other officer or employee of the Bureau to return to the person,
depositing the same in the mails, with the word "fraudulent"
plainly written or stamped upon the outside cover thereof, any
mail matter of whatever class mailed by or addressed to such
person or company or the representative or agent of such person
or company.
SECTION 1983. Deprivation of use of money order system and
telegraphic transfer service.—The Director of Posts may, upon
evidence satisfactory to him that any person or company is
engaged in conducting any lottery, gift enterprise or scheme for
the distribution of money, or of any real or personal property by
lot, chance, or drawing of any kind, or that any person or
company is conducting any scheme, device, or enterprise for
obtaining money or property of any kind through the mails by
means of false or fraudulent pretenses, representations, or
promise, forbid the issue or payment by any postmaster of any
postal money order or telegraphic transfer to said person or
company or to the agent of any such person or company, whether
such agent is acting as an individual or as a firm, bank,
corporation, or association of any kind, and may provide by
regulation for the return to the remitters of the sums named in
money orders or telegraphic transfers drawn in favor of such
person or company or its agent.
The overtures were later formalized in a letter to the Postmaster
General, dated October 31, 1960, in which the Caltex, thru
counsel, enclosed a copy of the contest rules and endeavored to
justify its position that the contest does not violate the anti-lottery
provisions of the Postal Law. Unimpressed, the then Acting
Postmaster General opined that the scheme falls within the
purview of the provisions aforesaid and declined to grant the
requested clearance. In its counsel's letter of December 7, 1960,
Caltex sought a reconsideration of the foregoing stand, stressing
that there being involved no consideration in the part of any
contestant, the contest was not, under controlling authorities,
condemnable as a lottery. Relying, however, on an opinion
rendered by the Secretary of Justice on an unrelated case seven
years before (Opinion 217, Series of 1953), the Postmaster
General maintained his view that the contest involves
consideration, or that, if it does not, it is nevertheless a "gift
enterprise" which is equally banned by the Postal Law, and in his
letter of December 10, 1960 not only denied the use of the mails
for purposes of the proposed contest but as well threatened that if
the contest was conducted, "a fraud order will have to be issued
against it (Caltex) and all its representatives".
Caltex thereupon invoked judicial intervention by filing the present
petition for declaratory relief against Postmaster General Enrico
Palomar, praying "that judgment be rendered declaring its 'Caltex
Hooded Pump Contest' not to be violative of the Postal Law, and
ordering respondent to allow petitioner the use of the mails to
bring the contest to the attention of the public". After issues were
joined and upon the respective memoranda of the parties, the trial
court rendered judgment as follows:
In view of the foregoing considerations, the Court holds that the
proposed 'Caltex Hooded Pump Contest' announced to be
conducted by the petitioner under the rules marked as Annex B of
the petitioner does not violate the Postal Law and the respondent
has no right to bar the public distribution of said rules by the
mails.
The respondent appealed.
The parties are now before us, arrayed against each other upon
two basic issues: first, whether the petition states a sufficient
cause of action for declaratory relief; and second, whether the
proposed "Caltex Hooded Pump Contest" violates the Postal Law.
We shall take these up in seriatim.
1. By express mandate of section 1 of Rule 66 of the old Rules of
Court, which was the applicable legal basis for the remedy at the
time it was invoked, declaratory relief is available to any person
"whose rights are affected by a statute . . . to determine any
question of construction or validity arising under the . . . statute
and for a declaration of his rights thereunder" (now section 1,
Rule 64, Revised Rules of Court). In amplification, this Court,
conformably to established jurisprudence on the matter, laid down
certain conditions sine qua non therefor, to wit: (1) there must be
a justiciable controversy; (2) the controversy must be between
persons whose interests are adverse; (3) the party seeking
declaratory relief must have a legal interest in the controversy;
and (4) the issue involved must be ripe for judicial determination
(Tolentino vs. The Board of Accountancy, et al., G.R. No. L-3062,
September 28, 1951; Delumen, et al. vs. Republic of the
Philippines, 50 O.G., No. 2, pp. 576, 578-579; Edades vs.
Edades, et al., G.R. No. L-8964, July 31, 1956). The gravamen of
the appellant's stand being that the petition herein states no
sufficient cause of action for declaratory relief, our duty is to
assay the factual bases thereof upon the foregoing crucible.
As we look in retrospect at the incidents that generated the
present controversy, a number of significant points stand out in
bold relief. The appellee (Caltex), as a business enterprise of
some consequence, concededly has the unquestioned right to
exploit every legitimate means, and to avail of all appropriate
media to advertise and stimulate increased patronage for its
products. In contrast, the appellant, as the authority charged with
the enforcement of the Postal Law, admittedly has the power and
the duty to suppress transgressions thereof — particularly thru
the issuance of fraud orders, under Sections 1982 and 1983 of
the Revised Administrative Code, against legally non-mailable
schemes. Obviously pursuing its right aforesaid, the appellee laid
out plans for the sales promotion scheme hereinbefore detailed.
To forestall possible difficulties in the dissemination of information
thereon thru the mails, amongst other media, it was found
expedient to request the appellant for an advance clearance
therefor. However, likewise by virtue of his jurisdiction in the
premises and construing the pertinent provisions of the Postal
Law, the appellant saw a violation thereof in the proposed
scheme and accordingly declined the request. A point of
difference as to the correct construction to be given to the
applicable statute was thus reached. Communications in which
the parties expounded on their respective theories were
exchanged. The confidence with which the appellee insisted upon
its position was matched only by the obstinacy with which the
appellant stood his ground. And this impasse was climaxed by
the appellant's open warning to the appellee that if the proposed
contest was "conducted, a fraud order will have to be issued
against it and all its representatives."
Against this backdrop, the stage was indeed set for the remedy
prayed for. The appellee's insistent assertion of its claim to the
use of the mails for its proposed contest, and the challenge
thereto and consequent denial by the appellant of the privilege
demanded, undoubtedly spawned a live controversy. The
justiciability of the dispute cannot be gainsaid. There is an active
antagonistic assertion of a legal right on one side and a denial
thereof on the other, concerning a real — not a mere theoretical
— question or issue. The contenders are as real as their interests
are substantial. To the appellee, the uncertainty occasioned by
the divergence of views on the issue of construction hampers or
disturbs its freedom to enhance its business. To the appellant, the
suppression of the appellee's proposed contest believed to
transgress a law he has sworn to uphold and enforce is an
unavoidable duty. With the appellee's bent to hold the contest and
the appellant's threat to issue a fraud order therefor if carried out,
the contenders are confronted by the ominous shadow of an
imminent and inevitable litigation unless their differences are
settled and stabilized by a tranquilizing declaration (Pablo y
Sen, et al. vs. Republic of the Philippines, G.R. No. L-6868, April
30, 1955). And, contrary to the insinuation of the appellant, the
time is long past when it can rightly be said that merely the
appellee's "desires are thwarted by its own doubts, or by the fears
of others" — which admittedly does not confer a cause of action.
Doubt, if any there was, has ripened into a justiciable controversy
when, as in the case at bar, it was translated into a positive claim
of right which is actually contested (III Moran, Comments on the
Rules of Court, 1963 ed., pp. 132-133, citing: Woodward vs. Fox
West Coast Theaters, 36 Ariz., 251, 284 Pac. 350).
We cannot hospitably entertain the appellant's pretense that there
is here no question of construction because the said appellant
"simply applied the clear provisions of the law to a given set of
facts as embodied in the rules of the contest", hence, there is no
room for declaratory relief. The infirmity of this pose lies in the
fact that it proceeds from the assumption that, if the
circumstances here presented, the construction of the legal
provisions can be divorced from the matter of their application to
the appellee's contest. This is not feasible. Construction, verily, is
the art or process of discovering and expounding the meaning
and intention of the authors of the law with respect to its
application to a given case, where that intention is rendered
doubtful, amongst others, by reason of the fact that the given
case is not explicitly provided for in the law (Black, Interpretation
of Laws, p. 1). This is precisely the case here. Whether or not the
scheme proposed by the appellee is within the coverage of the
prohibitive provisions of the Postal Law inescapably requires an
inquiry into the intended meaning of the words used therein. To
our mind, this is as much a question of construction or
interpretation as any other.
Nor is it accurate to say, as the appellant intimates, that a
pronouncement on the matter at hand can amount to nothing
more than an advisory opinion the handing down of which is
anathema to a declaratory relief action. Of course, no breach of
the Postal Law has as yet been committed. Yet, the disagreement
over the construction thereof is no longer nebulous or contingent.
It has taken a fixed and final shape, presenting clearly defined
legal issues susceptible of immediate resolution. With the battle
lines drawn, in a manner of speaking, the propriety — nay, the
necessity — of setting the dispute at rest before it accumulates
the asperity distemper, animosity, passion and violence of a full-
blown battle which looms ahead (III Moran, Comments on the
Rules of Court, 1963 ed., p. 132 and cases cited), cannot but be
conceded. Paraphrasing the language in Zeitlin vs. Arnebergh 59
Cal., 2d., 901, 31 Cal. Rptr., 800, 383 P. 2d., 152, cited in 22 Am.
Jur., 2d., p. 869, to deny declaratory relief to the appellee in the
situation into which it has been cast, would be to force it to
choose between undesirable alternatives. If it cannot obtain a
final and definitive pronouncement as to whether the anti-lottery
provisions of the Postal Law apply to its proposed contest, it
would be faced with these choices: If it launches the contest and
uses the mails for purposes thereof, it not only incurs the risk, but
is also actually threatened with the certain imposition, of a fraud
order with its concomitant stigma which may attach even if the
appellee will eventually be vindicated; if it abandons the contest, it
becomes a self-appointed censor, or permits the appellant to put
into effect a virtual fiat of previous censorship which is
constitutionally unwarranted. As we weigh these considerations in
one equation and in the spirit of liberality with which the Rules of
Court are to be interpreted in order to promote their object
(section 1, Rule 1, Revised Rules of Court) — which, in the
instant case, is to settle, and afford relief from uncertainty and
insecurity with respect to, rights and duties under a law — we can
see in the present case any imposition upon our jurisdiction or
any futility or prematurity in our intervention.
The appellant, we apprehend, underrates the force and binding
effect of the ruling we hand down in this case if he believes that it
will not have the final and pacifying function that a declaratory
judgment is calculated to subserve. At the very least, the
appellant will be bound. But more than this, he obviously
overlooks that in this jurisdiction, "Judicial decisions applying or
interpreting the law shall form a part of the legal system" (Article
8, Civil Code of the Philippines). In effect, judicial 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. Accordingly, we
entertain no misgivings that our resolution of this case will
terminate the controversy at hand.
It is not amiss to point out at this juncture that the conclusion we
have herein just reached is not without precedent. In Liberty
Calendar Co. vs. Cohen, 19 N.J., 399, 117 A. 2d., 487, where a
corporation engaged in promotional advertising was advised by
the county prosecutor that its proposed sales promotion plan had
the characteristics of a lottery, and that if such sales promotion
were conducted, the corporation would be subject to criminal
prosecution, it was held that the corporation was entitled to
maintain a declaratory relief action against the county prosecutor
to determine the legality of its sales promotion plan. In pari
materia, see also: Bunis vs. Conway, 17 App. Div. 2d., 207, 234
N.Y.S. 2d., 435; Zeitlin vs. Arnebergh, supra; Thrillo, Inc. vs.
Scott, 15 N.J. Super. 124, 82 A. 2d., 903.
In fine, we hold that the appellee has made out a case for
declaratory relief.
2. The Postal Law, chapter 52 of the Revised Administrative
Code, using almost identical terminology in sections 1954(a),
1982 and 1983 thereof, supra, condemns as absolutely non-
mailable, and empowers the Postmaster General to issue fraud
orders against, or otherwise deny the use of the facilities of the
postal service to, any information concerning "any lottery, gift
enterprise, or scheme for the distribution of money, or of any real
or personal property by lot, chance, or drawing of any kind". Upon
these words hinges the resolution of the second issue posed in
this appeal.
Happily, this is not an altogether untrodden judicial path. As early
as in 1922, in "El Debate", Inc. vs. Topacio, 44 Phil., 278, 283-
284, which significantly dwelt on the power of the postal
authorities under the abovementioned provisions of the Postal
Law, this Court declared that —
While countless definitions of lottery have been attempted, the
authoritative one for this jurisdiction is that of the United States
Supreme Court, in analogous cases having to do with the power
of the United States Postmaster General, viz.: The term "lottery"
extends to all schemes for the distribution of prizes by chance,
such as policy playing, gift exhibitions, prize concerts, raffles at
fairs, etc., and various forms of gambling. The three essential
elements of a lottery are: First, consideration; second, prize; and
third, chance. (Horner vs. States [1892], 147 U.S. 449; Public
Clearing House vs. Coyne [1903], 194 U.S., 497; U.S. vs. Filart
and Singson [1915], 30 Phil., 80; U.S. vs. Olsen and Marker
[1917], 36 Phil., 395; U.S. vs. Baguio [1919], 39 Phil., 962;
Valhalla Hotel Construction Company vs. Carmona, p. 233, ante.)
Unanimity there is in all quarters, and we agree, that the elements
of prize and chance are too obvious in the disputed scheme to be
the subject of contention. Consequently as the appellant himself
concedes, the field of inquiry is narrowed down to the existence
of the element of consideration therein. Respecting this matter,
our task is considerably lightened inasmuch as in the same case
just cited, this Court has laid down a definitive yard-stick in the
following terms —
In respect to the last element of consideration, the law does not
condemn the gratuitous distribution of property by chance, if no
consideration is derived directly or indirectly from the party
receiving the chance, but does condemn as criminal schemes in
which a valuable consideration of some kind is paid directly or
indirectly for the chance to draw a prize.
Reverting to the rules of the proposed contest, we are struck by
the clarity of the language in which the invitation to participate
therein is couched. Thus —
No puzzles, no rhymes? You don't need wrappers, labels
or boxtops? You don't have to buy anything? Simply
estimate the actual number of liter the Caltex gas pump
with the hood at your favorite Caltex dealer will dispense
from — to —, and win valuable prizes . ." .
Nowhere in the said rules is any requirement that any fee be paid,
any merchandise be bought, any service be rendered, or any
value whatsoever be given for the privilege to participate. A
prospective contestant has but to go to a Caltex station, request
for the entry form which is available on demand, and accomplish
and submit the same for the drawing of the winner. Viewed from
all angles or turned inside out, the contest fails to exhibit any
discernible consideration which would brand it as a lottery.
Indeed, even as we head the stern injunction, "look beyond the
fair exterior, to the substance, in order to unmask the real
element and pernicious tendencies which the law is seeking to
prevent" ("El Debate", Inc. vs. Topacio, supra, p. 291), we find
none. In our appraisal, the scheme does not only appear to be,
but actually is, a gratuitous distribution of property by chance.
There is no point to the appellant's insistence that non-Caltex
customers who may buy Caltex products simply to win a prize
would actually be indirectly paying a consideration for the
privilege to join the contest. Perhaps this would be tenable if the
purchase of any Caltex product or the use of any Caltex service
were a pre-requisite to participation. But it is not. A contestant, it
hardly needs reiterating, does not have to buy anything or to give
anything of value. 1awphîl.nèt
Off-tangent, too, is the suggestion that the scheme, being
admittedly for sales promotion, would naturally benefit the
sponsor in the way of increased patronage by those who will be
encouraged to prefer Caltex products "if only to get the chance to
draw a prize by securing entry blanks". The required element of
consideration does not consist of the benefit derived by the
proponent of the contest. The true test, as laid down in People vs.
Cardas, 28 P. 2d., 99, 137 Cal. App. (Supp.) 788, is whether the
participant pays a valuable consideration for the chance, and not
whether those conducting the enterprise receive something of
value in return for the distribution of the prize. Perspective
properly oriented, the standpoint of the contestant is all that
matters, not that of the sponsor. The following, culled from
Corpus Juris Secundum, should set the matter at rest:
The fact that the holder of the drawing expects thereby to
receive, or in fact does receive, some benefit in the way of
patronage or otherwise, as a result of the drawing; does
not supply the element of consideration. Griffith
Amusement Co. vs. Morgan, Tex. Civ. App., 98 S.W., 2d.,
844" (54 C.J.S., p. 849).
Thus enlightened, we join the trial court in declaring that the
"Caltex Hooded Pump Contest" proposed by the appellee is not a
lottery that may be administratively and adversely dealt with
under the Postal Law.
But it may be asked: Is it not at least a "gift enterprise, or scheme
for the distribution of money, or of any real or personal property
by lot, chance, or drawing of any kind", which is equally
prescribed? Incidentally, while the appellant's brief appears to
have concentrated on the issue of consideration, this aspect of
the case cannot be avoided if the remedy here invoked is to
achieve its tranquilizing effect as an instrument of both curative
and preventive justice. Recalling that the appellant's action was
predicated, amongst other bases, upon Opinion 217, Series
1953, of the Secretary of Justice, which opined in effect that a
scheme, though not a lottery for want of consideration, may
nevertheless be a gift enterprise in which that element is not
essential, the determination of whether or not the proposed
contest — wanting in consideration as we have found it to be —
is a prohibited gift enterprise, cannot be passed over sub silencio.
While an all-embracing concept of the term "gift enterprise" is yet
to be spelled out in explicit words, there appears to be a
consensus among lexicographers and standard authorities that
the term is commonly applied to a sporting artifice of under which
goods are sold for their market value but by way of inducement
each purchaser is given a chance to win a prize (54 C.J.S., 850;
34 Am. Jur., 654; Black, Law Dictionary, 4th ed., p. 817;
Ballantine, Law Dictionary with Pronunciations, 2nd ed., p. 55;
Retail Section of Chamber of Commerce of Plattsmouth vs.
Kieck, 257 N.W., 493, 128 Neb. 13; Barker vs. State, 193 S.E.,
605, 56 Ga. App., 705; Bell vs. State, 37 Tenn. 507, 509, 5
Sneed, 507, 509). As thus conceived, the term clearly cannot
embrace the scheme at bar. As already noted, there is no sale of
anything to which the chance offered is attached as an
inducement to the purchaser. The contest is open to all qualified
contestants irrespective of whether or not they buy the appellee's
products.
Going a step farther, however, and assuming that the appellee's
contest can be encompassed within the broadest sweep that the
term "gift enterprise" is capable of being extended, we think that
the appellant's pose will gain no added comfort. As stated in the
opinion relied upon, rulings there are indeed holding that a gift
enterprise involving an award by chance, even in default of the
element of consideration necessary to constitute a lottery, is
prohibited (E.g.: Crimes vs. States, 235 Ala 192, 178 So. 73;
Russell vs. Equitable Loan & Sec. Co., 129 Ga. 154, 58 S.E., 88;
State ex rel. Stafford vs. Fox-Great Falls Theater Corporation,
132 P. 2d., 689, 694, 698, 114 Mont. 52). But this is only one side
of the coin. Equally impressive authorities declare that, like a
lottery, a gift enterprise comes within the prohibitive statutes only
if it exhibits the tripartite elements of prize, chance and
consideration (E.g.: Bills vs. People, 157 P. 2d., 139, 142, 113
Colo., 326; D'Orio vs. Jacobs, 275 P. 563, 565, 151 Wash., 297;
People vs. Psallis, 12 N.Y.S., 2d., 796; City and County of Denver
vs. Frueauff, 88 P., 389, 394, 39 Colo., 20, 7 L.R.A., N.S., 1131,
12 Ann. Cas., 521; 54 C.J.S., 851, citing: Barker vs. State, 193
S.E., 605, 607, 56 Ga. App., 705; 18 Words and Phrases, perm.
ed., pp. 590-594). The apparent conflict of opinions is explained
by the fact that the specific statutory provisions relied upon are
not identical. In some cases, as pointed out in 54 C.J.S., 851, the
terms "lottery" and "gift enterprise" are used interchangeably (Bills
vs. People, supra); in others, the necessity for the element of
consideration or chance has been specifically eliminated by
statute. (54 C.J.S., 351-352, citing Barker vs. State, supra;
State ex rel. Stafford vs. Fox-Great Falls Theater
Corporation, supra). The lesson that we derive from this state of
the pertinent jurisprudence is, therefore, that every case must be
resolved upon the particular phraseology of the applicable
statutory provision.
Taking this cue, we note that in the Postal Law, the term in
question is used in association with the word "lottery". With the
meaning of lottery settled, and consonant to the well-known
principle of legal hermeneutics noscitur a sociis — which Opinion
217 aforesaid also relied upon although only insofar as the
element of chance is concerned — it is only logical that the term
under a construction should be accorded no other meaning than
that which is consistent with the nature of the word associated
therewith. Hence, if lottery is prohibited only if it involves a
consideration, so also must the term "gift enterprise" be so
construed. Significantly, there is not in the law the slightest
indicium of any intent to eliminate that element of consideration
from the "gift enterprise" therein included.
This conclusion firms up in the light of the mischief sought to be
remedied by the law, resort to the determination thereof being an
accepted extrinsic aid in statutory construction. Mail fraud orders,
it is axiomatic, are designed to prevent the use of the mails as a
medium for disseminating printed matters which on grounds of
public policy are declared non-mailable. As applied to lotteries,
gift enterprises and similar schemes, justification lies in the
recognized necessity to suppress their tendency to inflame the
gambling spirit and to corrupt public morals (Com. vs. Lund, 15 A.
2d., 839, 143 Pa. Super. 208). Since in gambling it is inherent
that something of value be hazarded for a chance to gain a larger
amount, it follows ineluctably that where no consideration is paid
by the contestant to participate, the reason behind the law can
hardly be said to obtain. If, as it has been held —
Gratuitous distribution of property by lot or chance does
not constitute "lottery", if it is not resorted to as a device to
evade the law and no consideration is derived, directly or
indirectly, from the party receiving the chance, gambling
spirit not being cultivated or stimulated thereby. City of
Roswell vs. Jones, 67 P. 2d., 286, 41 N.M., 258." (25
Words and Phrases, perm. ed., p. 695, emphasis
supplied).
we find no obstacle in saying the same respecting a gift
enterprise. In the end, we are persuaded to hold that, under the
prohibitive provisions of the Postal Law which we have heretofore
examined, gift enterprises and similar schemes therein
contemplated are condemnable only if, like lotteries, they involve
the element of consideration. Finding none in the contest here in
question, we rule that the appellee may not be denied the use of
the mails for purposes thereof.
Recapitulating, we hold that the petition herein states a sufficient
cause of action for declaratory relief, and that the "Caltex Hooded
Pump Contest" as described in the rules submitted by the
appellee does not transgress the provisions of the Postal Law.
ACCORDINGLY, the judgment appealed from is affirmed. No
costs.
Concepcion, C.J., Reyes, J.B.L., Barrera, Dizon, Regala,
Makalintal, Bengzon, J.P., Zaldivar and Sanchez, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-63318 August 18, 1984
PHILIPPINE CONSUMERS FOUNDATION, INC., petitioner,
vs.
NATIONAL TELECOMMUNICATIONS COMMISSION and
PHILIPPINE LONG DISTANCE TELEPHONE CO., respondents.
Tomas C. Llamas for petitioners.
The Solicitor General for respondent NTC.
Eliseo Alampay, Jr., Graciano C. Regala and Augusto San Pedro
for private respondents.
RESOLUTION
MAKASIAR, J.:
I
On March 2, 1983, petitioner filed the instant petition praying,
among others, that the decision of respondent NTC dated
November 22, 1982 and the order dated January 14, 1983 be
annulled and set aside on the grounds therein stated (pp. 2-19,
rec.).
After the petitioner, the private respondent, and the Solicitor
General for public respondent NTC filed their respective
comments and memoranda (pp. 47-53, 96-106, 109-116, 127-
142, 147-164, 206-221, rec.), on November 25, 1983, the
decision sought to be reconsidered was promulgated, annulling
and setting aside the challenged decision and order, respectively
dated November 22, 1982 and January 14, 1983 (pp. 225-232,
rec.).
Said decision is not unanimous as it bears the concurrence of
only 9 members of this Court, while 3 members took no part and
1 member reserved his vote (p 232, rec.)
In a resolution dated January 10, 1984 and released on January
17, 1984, the Court granted respondent PLDT's motion for 15-day
extension from the expiration of the reglementary period within
which to file a motion for reconsideration (pp. 233, 236, rec.).
On January 12, 1984, PLDT filed its motion for reconsideration
(pp. 237-268, rec.).
On February 27, 1984, respondent PLDT filed a motion to admit
attached supplemental motion for reconsideration (pp. 281-301,
rec.).
On February 27, 1984, public respondent NTC, thru the Solicitor
General, filed a manifestation and motion that it is joining core,
respondent PLDT in its motion for reconsideration thereby
adopting the same as its own (pp. 302-303, 305-306, rec.).
In a resolution dated March 1, 1984 and issued on March 2,
1984, the Court admitted the supplemental motion for
reconsideration of PLDT, noted the manifestation and motion of
the Solicitor General for and in behalf of respondent NTC that it is
joining the motion for reconsideration of PLDT and adopting it as
its own, and required petitioner to convenient within 10 days from
notice on the aforesaid supplemental motion for reconsideration
of PLDT (p. 304-A, rec.).
On March 28, 1984, petitioner filed its comment on respondent's
motion for reconsideration (pp. 310-317, rec.).
In a resolution dated April 3, 1984 and issued on April 11, 1984,
the Court denied the motion for reconsideration (p. 318A, rec.).
On April 6, 1984, respondent PLDT filed a motion to strike out
"discussion (e)" in petitioner's "comment on respondents'
motions" dated March 20, 1984 (pp. 319-321, rec.).
In a resolution dated April 12, 1984 and issued on April 16, 1984,
the Court required petitioner's counsel Atty. Tomas Llamas to
comment within 10 days from notice on the aforesaid motion to
strike out (p. 323, rec.).
On April 17, 1984, respondent PLDT, thru counsel, filed a motion
for leave to file within 15 days from date a second motion for
reconsideration (pp. 324-326, rec.).
On April 27, 1984, petitioner filed an opposition to the aforesaid
motion of PLDT for leave to file within 15 days to file a second
motion for reconsideration (pp. 328-330, rec.).
On May 2, 1984, private respondent PLDT filed a second motion
for reconsideration with an annex (pp. 332-344, rec.).
In a resolution dated May 8, 1984 but issued on May 11, 1984,
the Court granted the motion of PLDT to file a second motion for
reconsideration within 15 days from April 16, 1984, noted the
opposition of petitioner to said motion, and required petitioner to
comment within 15 days from notice on the aforesaid second
motion for reconsideration of PLDT for the reconsideration of the
decision of November 25, 1983 (p. 345, rec.).
On May 4, 1984, petitioner filed its comment on the second
motion for reconsideration of private respondent (pp. 346-350,
rec.).
In a resolution dated May 10, 1984 and issued on May 16, 1984,
the Court required respondents to file a reply within 10 days from
notice on the aforesaid comment of petitioner on private
respondent PLDT's motion praying that the discussion (par. 3) in
petitioner's comment on the first motion for reconsideration and
the supplemental motion for reconsideration be deleted (p. 352,
rec.).
On May 21, 1984, public respondent NTC filed a manifestation
joining private respondent PLDT and adopting the latter's second
motion for reconsideration (pp. 353-354, rec.), which the Court
granted in a resolution dated May 29, 1984 and issued on June 6,
1984 (p. 355-A).
On May 28,1984, respondent PLDT filed a motion for extension of
10 days or until June 7, 1984 within which to submit the required
reply in the resolution of May 10, 1984 and issued on May 16,
1984 (pp. 356-357, rec.), which was granted in a resolution dated
June 5, 1984 and issued on July 3, 1984 (p. 357-A, rec.).
On June 1, 1984, petitioner filed its comment on PLDT's second
motion for reconsideration, with a motion to declare final the
decision with respect to public respondent NTC (pp. 358362,
rec.).
A day before June 1, 1984, or on May 31, 1984, private
respondent PLDT filed its reply to petitioner's "comment on
motion of private respondent" dated May 4, 1984 [motion to
strike] (pp. 366-369, rec.).
On July 16, 1984, after its motions for extension were granted,
public respondent NTC thru the Solicitor General, finally filed its
reply (pp. 370-371, 372-A, 373, 375-381, rec.).
It should be emphasized that the resolution of this Court dated
April 3, 1984 but issued on April 11, 1984, denying the first
motion for reconsideration did not state that the denial is
final (see p. 318-A, rec.).
And the motion of May 29, 1984 but filed on June 1, 1984 of
petitioner to declare as final the decision of November 25, 1983
(which motion was included in plaintiff's comment on PLDT's
second motion for reconsideration) with respect to public
respondent NTC (pp. 361-362, rec.), was not acted upon by this
Court, ostensibly because as early as May 21, 1984, public
respondent NTC, thru the Solicitor General, filed a manifestation
that it is joining private respondent PLDT in its second motion for
reconsideration dated May 18, 1984 and adopting it as its own
(pp. 353-354, rec.).
II
It is not disputed — and should be emphasized that on August
31, 1982, this Court set aside the NTC order dated April 14, 1982
in the case of Samuel Bautista vs. NTC, et al. (16 SCRA
411) provisionally approving the revised schedule of rates for the
Subscriber Investments Plan, on the ground that there was
necessity of a hearing by the Commission before it could have
acted on the PLDT application for said revised schedule, to give
opportunity to the public, especially herein petitioner and the
Solicitor General to substantiate their objections to the said
schedule as excessive and unreasonable, especially for the low-
income and middle-income groups, which cannot afford
telephone connections and that there is no need to increase the
rate because PLDT is financially sound.
Thereafter, in NTC Case No. 82-87 entitled "Re Philippine Long
Distance Telephone Co. respondent NTC conducted several
hearings on PLDT's revised Subscriber Investments Plan
schedule at which written oppositions were filed by herein
petitioner PCFI, the Solicitor General, Atty. Samuel Bautista,
Flora Alabanza, the municipality of Marikina, and the Integrated
Telecommunications Suppliers' Association of the Philippines
(ITESAP). Other oppositors failed to file their written oppositions.
The hearings on the merits actually started on August 4, 1982
and continued for four (4) subsequent dates.
The oppositors, thru counsel, thoroughly cross-examined the
witness for the applicant, Mr. Romeo Sisteban applicant's Vice-
President for Budget and Financial Planning.
None of the oppositors opted to present evidence but merely filed
Memoranda and thereafter manifested that the case is submitted
for decision Because PLDT made some concessions in favor of
the oppositors, oppositors ITESAP, Eastern Telecommunications,
Inc., Philippine Global Communications, Inc. (Philcom), Globe-
Mackay Cable and Radio Corporation (GMCR) withdrew their
opposition and manifested that they are no longer opposing the
application after which respondent NTC issued the challenged
decision of November 22, 1982.
Respondent NTC rendered the challenged decision dated
November 22, 1982, approving the revised schedule on the
ground that the rates are within the 50% of cost limit provided in
P.D. No. 217, that they are just and reasonable and in
consonance with the public policies declared in said decree, and
that such approval is in the public interest (see NTC decision of
Nov. 22, 1982, pp. 2-19, rec.).
It is undisputed therefore that petitioner and the other oppositors
were accorded due process.
From said decision dated November 22, 1982, petitioner filed the
instant petition.
III
The decision promulgated on November 25, 1983 interprets the
rule-making authority delegated in Section 2 of P.D. No. 217 to
the then Department of Public Works, Transportation and
Communications as mandatory, which construction is not
supported by the actual phraseology of said Section 2, which
reads thus:
The Department of Public Works, Transportation and
Communications, through its Board of Communications and/or
appropriate agency shall see to it that the herein declared policies
for the telephone industry are immediately implemented and for
this purpose, pertinent rules and regulations may be promulgated
(emphasis supplied).
The basic canon of statutory interpretation is that the word used
in the law must be given its ordinary meaning, unless a contrary
intent is manifest from the law itself. Hence, the phrase "may be
promulgated" should not be construed to mean "shall" or "must".
It shall be interpreted in its ordinary sense as permissive or
discretionary on the part of the delegate — department or the
Board 6f Communications then, now the National
Telecommunications Commission — whether or not to
promulgate pertinent rules and regulations. There is nothing in
P.D. No. 217 which commands that the phrase "may be
promulgated" should be construed as "shall be promulgated." The
National Telecommunications Commission can function and has
functioned without additional rules, aside from the existing Public
Service Law, as amended, and the existing rules already issued
by the Public Service Commission, as well as the 1978 rules
issued by the Board of Communications, the immediate
predecessor of respondent NTC. It should be recalled that the
PLDT petition for approval of its revised SIP schedule was filed
on March 20,1980.
P.D. No. 217 does not make the rules and regulations to be
promulgated by the respondent NTC as essential to the exercise
of its jurisdiction over applications for SIP schedules. In Ang
Tibay vs. CIR (69 Phil. 635), this Court, through Mr. Justice Jose
P. Laurel, did not include the promulgation of rules and
regulations as among the seven (7) requirements of due process
in quasi-judicial proceedings before a quasi-judicial body such as
the respondent NTC.
What is patently mandatory on the ministry or National
Telecommunications Commission is the
immediate implementation of the policies declared in P.D. No.
217. To repeat, the ministry or the NTC "shall see to it that the
herein declared policies for the telephone industry are
immediately implemented ..." The formulation of rules and
regulations is purely discretionary on the part of the delegate.
Both words "shall and "may be" are employed in the lone
sentence of Section 2 of P.D. No. 217. This graphically
demonstrates that P.D. No. 217 preserves the distinction between
their ordinary, usual or nominal senses.
This is emphasized by the fact that under Section 3 of P.D. No.
217, only "the pertinent provisions" of the Public Service Act, as
amended, which are in conflict with the provisions of P.D. No.
217, had been repealed or modified by said P.D. No. 217.
Section 3 of P.D. No. 217 states:
The pertinent provisions of the Public Service Act, as amended,
the franchise of the Philippine Long Distance Telephone
Company under Act 3436, as amended, all existing legislative
and/or municipal franchises and other laws, executive orders,
proclamations, rules and regulations or parts thereof, as are in
conflict with the provisions of this Decree are hereby repealed or
modified accordingly.
And under the Public Service Act, as amended (C.A. No. 146),
the board of Communications then, now the NTC, can fix
a provisional amount for the subscriber's investment to be
effective immediately, without hearing (par. 3 of Sec. 16, C.A.
146, as amended).
Section 16 (c) of C.A. No. 146, as amended, provides:
(c) To fix and determine individual or joint rates, toll charges,
classifications, or schedules thereof, as well as communication,
mileage, kilometrage, and oilier special rates which shall be
imposed, observed, and followed thereafter by any public
service: Provided That the Commission may, in its discretion
approve rates proposed by public services provisionally and
without necessity of any hearing, but it shall call a hearing
thereon within thirty days thereafter, upon publication and notice
to the concerns operating in the territory affects Provided further,
That in case the public service equipment of an operator is used
principally or secondarily for the promotion of a private business,
the net profits of said private business shall be considered in
relation with the public service of such operator for the purpose of
fixing the rates.
The Rules of Practice and Procedures promulgated on January
25, 1978 by the Board of Communications, the immediate
predecessor of respondent NTC, pursuant to Section 11 of the
Public Service Act, otherwise known as Commonwealth Act No.
146, as amended, govern the rules of practice and procedure
before the BOC then, now respondent NTC. Section 2 of said
Rules defines their scope, including exempting parties from the
application of the rules in the interest of justice and to best serve
the public interest, and the NTC may apply such suitable
procedure to improve the service in the transaction of public
service. Thus, Section 2 of Rule 1 of said Rules reads:
Sec. 2. Scope. — These rules govern pleadings, practice and
procedure before the Board of Communications in all matters of
hearing, investigation and proceedings within the jurisdiction of
the Board. However, in the broader interest of justice and in order
to best serve the public interest, the Board may, in any particular
matter, except it from these rules and apply such suitable
procedure to improve the service in the transaction of the public
business.
Sections 4 and 5 of Rule 2 of said rules insure the appearance of
the Solicitor General and other consumers or users. The notice of
hearing is required to be published and to be served on the
affected parties by Section 2 of Rule 8; while Section I of Rule 9
allows the filing of written oppositions to the application Under
Section 3 of Rule 15, the BOC then, now the NTC, may grant, on
motion of the applicant or on its own initiative, provisional relief
based on the pleading, supporting affidavits and other documents
attached thereto, without prejudice to a final decision after
completion of the hearing which shall be caged within thirty (30)
days from the grant of the provisional relief.
Finally, Section 1 of Rule 19 provides for the suppletory
application of the Rules of Court governing proceedings before
the Court of First Instance then, now the Regional Trial Courts,
which are not inconsistent with the rules of practice and
procedure promulgated by the BOC on January 25, 1978.
There is nothing in P.D. No. 217 modifying, much less repeating
Section 16 (c) of the Public Service Act, as amended.
It is true that P.D. No. 1874 promulgated on July 21, 1983
amending Section 2 of P.D. No. 217 expressly authorizes the
National Telecommunications Commission (now the successor of
the Board of Communications) to approve "such amounts for
subscriber investments as applied for provisionally and without
the necessity of a hearing; but shall call a hearing thereon within
thirty (30) days thereafter, upon publication and notice to all
parties affected." But such amendment merely reiterates or
confirms paragraph (c) of Section 16 of C.A. No. 146, as
amended, otherwise known as the Public Service Law, and
serves merely to clarify the seeming ambiguity of the repealing
clause in Section 3 of P.D. No. 217 to dissipate an doubts on
such power of the National Telecommunications Commission.
The construction of the majority decision of November 25, 1983
of the word "may" to mean "shall" is too strained, if not tortured.
IV
WE cannot subscribe to the view that the National
Telecommunications Commission should or must promulgate
"pertinent rules and regulations because the existing substantive
and procedural laws as well as the rules promulgated by the
Public Service Commission under and pursuant to the Public
Service Law, otherwise known as CA No. 146, as amended, are
more than adequate to determine the reasonability of the
amounts of investment of telephone subscribers, the viability of
the company and the other factors that go into determining such
amounts and such viability. The existing laws and rules on rate-
making are more than sufficient for a proper determination of
such amounts of investments of individual subscribers and the
profitability of the venture.
The adequacy of the existing Public Service Law, otherwise
known as C.A. No. 146, as amended, and rules had been
demonstrated, because they have been applied in the following
cases involving PLDT:
1. PLDT vs. PSC, G.R. No. L-26762, Aug. 31, 1970, 34 SCRA
609;
2. Republic vs. PLDT, G.R. No. L-18841, Jan. 27, 1969, 26 SCRA
620;
3. PLDT vs. PSC, G.R. Nos. L-24198 & L-24207-10, Dec. 18,
1968, 26 SCRA 427;
4. Republic Telephone Co. vs. PLDT, G.R. No. L-21070; PLDT
vs. Republic Telephone Co., G.R. No. L-21075, both decided on
Sept. 23, 1968, 25 SCRA 80;
5. PLDT vs. Medina, G.R. No. L-24658, April 3, 1968, 23 SCRA
1; and
6. PLDT vs. Medina, G.R. Nos. L-24340-44, July 18, 1967, 20
SCRA 669.
As heretofore stated, as early as January 25, 1978, other
pertinent rules of practice and procedure were promulgated by
the then Board of Communications, now the respondent National
Telecommunications Commission, implementing P.D. No, 217, in
addition to the applicable provisions of the Public Service Law, as
amended, and the rules previously issue by the Public Service
Commission (Annex 2 to the Memo of respondent PLDT filed on
August 15, 1983, pp. 147-165, rec.).
Even before 1978, respondent applied the procedure prescribed
by the Public Service Law, as amended, and the rules previously
issued by the Public Service Commission, the NTC predecessor,
in several cases involving similar applications for SIP schedules
of Filipino Telephone Corporation (BOC Case No. 73-064; see
BOC decision in said cases dated December 5, 1974, May 11,
1978, March 15, 1977, Feb. 19, 1976 and Aug. 31, 1978 —
Annexes 3, 4, 4-A, 5, pp. 166-195, rec.).
The majority opinion recognizes that for the last three years, the
PLDT had earned a yearly average net profit of over P100 million
and the existing subscribers have been receiving their
corresponding quarterly dividends on their investments.
It should be stressed that Section 5 of Article XIV of the 1973
Constitution, as amended, expressly directs that "the State shall
encourage equity participation in public utilities by the general
public." As above-stated, the existing individual subscribers of
PLDT had been sharing in the net profits of the company every
quarter after the promulgation of P.D. 217 on June 16, 1973.
The amount that is provisionally approved under the subscriber's
investment plan for PBX/PAEX trunks and for business
telephones in Metro Manila and the provinces, whether new
installations or transfers, appears to be reasonable, including
those for the leased lines or outside local.
To lighten the burden of subscribers, investments may be paid in
installments or under some convenient arrangements which the
NTC may authorize, which is now expressly provided for in
Section 1 of P.D. 1874 amending Sec. 6 of P.D. 217.
Section 1 of P.D. 1874 directs that:
Section 1, paragraph 6 of the Presidential Decree No. 217 is
hereby amended to read as follows:
6. In any subscriber self-financing plan, the amount of subscriber
self-financing wilt in no case, exceed fifty per centum (50%) of the
amount which results from dividing the telephone utility's gross
investment in telephone plant in service by its number of primary
stations in service, both as reported in the utility's latest audited
annual report rendered he National Telecommunications
Commission; PROVIDED, however, that the amount payable by
the telephone subscriber may be paid on installment or under
such payment arrangement as the National Telecommunications
Commission may authorize.
V
It should be likewise emphasized that pursuant to the mandate of
Section 5, Article XIV of the 1973 Constitution, as amended, the
law-making authority, in issuing both P.D. Nos. 217 and 1874,
established the all-important policy of making available on regular
and uninterrupted basis the telephone service because it is
a crucial element in the conduct of business activity ... and
is essential for the smooth and efficient function of industry,
... efficient telephone service contributes directly to national
development by facilitating trade and commerce;
... the telephone industry is one of the most highly capital
intensive industries;
... the telephone industry has fundamentally different financing
characteristics from other utilities in that capital requirements per
telephone unit installed increase as the number of customers
serviced also increases instead of decreasing in cost per unit as
in power and water utilities;
... continued reliance on the traditional sources of capital funds
through foreign and domestic borrowing and through public
ownership of common capital stock will result in a high cost of
capital heavy cash requirements for amortization and thus
eventually in higher effective cost of telephone service to
subscribers;
... the subscribers to telephone service tend to be among the
residents of urban areas and among the relatively higher income
segment of the population;
... it is in the interest of the national economy to encourage
savings and to place these savings in productive enterprises and
... it is the announced policies of the government to encourage
the spreading out of ownership in public utilities (see Whereases
of P.D. 217; emphasis supplied).
P.D. No. 217 further states as the basic policies of the State
concerning the telephone industry "in the interest of social,
economic and general well-being of the people ...
1. The attainment of efficient telephone service for as wide an
area as possible at the lowest reasonable cost to the subscriber;
2. The expansion of telephone service shall be financed through
an optimal combination of domestic and foreign sources of
financing and an optimal combination of debt and equity funds so
as to minimize the aggregate cost of capital of telephone utilities;
3. Consistent with the declared policy of the State to attain
widespread ownership of public utilities obtained from ownership
funds shall be raised from a broad base of investors, involving as
large a number of individual investors as may be possible;
4. In line with the objective of spreading ownership among a wide
base of the people, the concept of telephone subscriber self-
financing is hereby adopted whereby a telephone subscriber
finances part of the capital investments in telephone installations
through the purchase of stocks, whether common or preferred
stock, of the telephone company;
5. As part of any subscriber self-financing plan, when the
issuance of preferred stock is contemplated, it is required that the
subscriber be assured, in all cases of a fixed annual income from
his investment and that these preferred capital stocks be
convertible into common shares, after a reasonable period and
under reasonable terms, at the option of the preferred
stockholder; and
6. In any subscriber self-financing plan, the amount of subscriber
self-financing wig, in no case, exceed fifty per centum (50%) of
the cost of the installed telephone line, as may be determined
from time to time by the regulatory bodies of the State.
The same policies and objectives are substantially re-stated and
capsulized in the three Whereases of P.D. No. 1874 amending
P.D. No. 217 as pointed out in the basic policies aforestated in
P.D. No. 217 that the cost per telephone unit increases in
proportion to the increase in the number of customers served;
and that foreign borrowing will impose heavy cash requirements
for amortizations of such foreign loans which would result in the
higher effective costs of telephone service to subscribers and
ultimately would be a heavy drain on our dollar reserves, which
will result in our inability to meet our other foreign commitments
and mark the image of the Republic of the Philippines in
international trade relations. Thus, P.D. No. 217 stresses that in
the interest of the national economy it is essential to encourage
savings and to place these savings (subscriber's investments) in Party line 2,000 1,500
productive enterprises.
3. Phone:
PLDT is profitable for the subscribers-investors as shown by its
net profit and the dividends received quarterly by the existing Single line 1,800 1,300
subscribers. Party line 900 800

There is no showing — not even an allegation — that the net 4. Leased line 2,500 2,500
profits realized by PLDT all these years have been dissipated and
5. Tie trunk or 2,500 2,500
not plowed back into the firm to improve its service.
tie line
But the rising cost of materials and labor needed to improve the 6. Outside 2,500 2,500
PLDT service, aggravated by the devaluation of our currency, all local
the more justify the revised SIP schedule approved by the
respondent NTC.
II. Transfers
The approved revised SIP schedule, which appears reasonable —
and fair is herein reproduced:
1. PBX/PABX 1,500 1,200
REVISED SIP SCHEDULE
2. Phone:
Revised SIP Rates Single line 800 600
Party line 600 500
Service Category Metro Provincial
Manila 3. Residential
Phone:
Single line 600 500
I. New
Installations — Party line 500 300

1. PBX/PABX P5,000 P3,000 4. Leased line 800 800

Trunk
5. Tie trunk or 800 800
2. Phone: tie line

Single line 3,500 2,000 6. Outside 800 800

local
With the dividends that will be received quarterly under the
revised SIP schedule, the subscribers (whether of phone
installations for business with or without trunk lines, as wen as
transfers of the same; or of residential phones whether single or
party line as well as transfers of the same), will recover their
investments after some years and will thereafter remain
stockholders and part-owners of PLDT. All the subscribers
therefore, are assured not only of profits from but also
preservation of, their investments, which are not donations to
PLDT.
There are always two sides — sometimes more — to a case or
proposition or issue. There are many cases decided by this Court
where this Court had reconsidered Its decisions and even
reversed Itself, conformably to the environmental facts and the
applicable law.
After a re-study of the facts and the law, illuminated by mutual
exchange of views the members of the Court may and do change
their minds.
To repeat, the decision of November 25, 1983 was not a
unanimous decision for it has the concurrence of only nine (9)
members of the Court, because three (3) took no part and one (1)
reserved his vote (p. 232, rec.).
WHEREFORE, THE DECISION OF NOVEMBER 25, 1983
SHOULD BE AS IT IS HEREBY RECONSIDERED AND SET
ASIDE AND THE PETTION IS HEREBY DISMISSED. NO
COSTS.
SO ORDERED.
Concepcion, Jr., Guerrero, Escolin, De la Fuente and Cuevas,
JJ., concur.
Aquino and Plana, JJ., concur in the result.
Fernando, C.J., took no part.
Separate Opinions
TEEHANKEE, J., dissenting:
I join the dissents of Justices Abad Santos and Relova. I only
wish to add that there has been a departure here from the Court's
usual practice and rules (cf. Rule 52, sec. 2; Rule 51, sec. 1; and
Rule 56, Secs. 1 and 11) of setting the case for rehearing and
hearing the parties in oral argument when a new majority
(because of a change of votes or new members or for whatever
reason) is inclined to reconsider and overturn the original
majority; more so, on a second motion for reconsideration, the
first motion for reconsideration having been denied without a
dissenting vote and the parties not having been previously heard
in oral argument.
GUTIERREZ, JR., J., separate opinion:
My concurrence in Mr. Justice Makasiar's ponencia is not without
certain misgivings. I agree with the Court's views on the powers
of the National Telecommunications Commission, the applicability
of existing rules and regulations, and the policy declarations in
P.D. Nos. 217 and 1874. However, while now convinced that the
increase in mandatory investments for subscribers is based on
law and that there is no showing of arbitrariness in the law's
implementation, I must confess that I see no justification for the
continued inefficient services rendered by the respondent
telephone company. When the Court was deliberating on the
motion for reconsideration, my own residential telephone was out
of order. And I believe that our experiences in our neighborhood
do not represent isolated cases. I have yet to hear from or about
satisfied PLDT customers.
My point is —increased rates and increases in the "subscribers'
self-financing plan" must be matched by equivalent and
demonstrably improved telephone service. More than its duty to
increase rates and subscribers' fees whenever warranted, the
respondent Commission has the statutory and greater obligation
to supervise "the attainment of efficient telephone service for as
wide an area as possible at the lowest reasonable cost to the
subscribers."
I am aware that almost all major or components of our telephone
system must be imported from foreign sources. Since the
Philippine peso is now worth one American nickel the cost of
services based on imported materials must increase. Loans
contracted when the foreign exchange rate was not so
disadvantageous now require double or treble amortizations in
depreciated pesos. The Court cannot assume the role of King
Canute. Only the financial experts in the political departments can
return the peso to a respectable value. Moreover, it is indeed to
the nation's advantage to look for local capital sources instead of
resorting to more foreign borrowings.
I must stress, however, that consumers would not mind paying
reasonable increases if they get satisfactory services. The
respondent telephone company has yet to solve this elementary
and glaringly obvious problem. Pinpointing the cause and
applying the solution should be the company's number one
concern.
ABAD SANTOS, J., dissenting:
I vote to deny the second Motion for Reconsideration. I am
amazed that the decision which was promulgated as recently as
November 25, 1983, with no dissenting opinion to dilute its
acceptability should now be reconsidered. My amazement is
heightened by the fact that when the case was discussed on July
26, 1984, I had the impression that the motion was doomed so
that a request to defer action on it would have met the same fate
had not the request been put on a pag-bigyan basis.
The case involves a simple problem of statutory construction —
that of Section 2 of Presidential Decree No. 217. It reads as
follows:
The Department of Public Works, Transportation
and Commissions, through its Board of
Communications and/or appropriate agency shall
see to it that the herein declared policies for the
telephone industry are immediately implemented
and for this purpose, pertinent rules and
regulations may be promulgated.
The issue is whether or not the National Telecommunications
(NTC) must first promulgate the rules and regulations mentioned
in the decree before it can approve the Subscriber Investment
Plan (SIP) of private respondent Philippine Long Distance
Telephone Co. (PLDT).
The decision, without any dissenting opinion, sustained the
petitioner's contention that it is the duty of NTC to first Promulgate
rules and regulations.
The resolution, which is not unanimous, does not subscribe to the
view that the NTC should or must promulgate rules and
regulations because, it is said, the decree must be given its
ordinary meaning; the word used is the permissive "may" and not
the mandatory "shall The non-unanimous resolution thus relies on
the canons index animi sermo est (speech is the indication of
intent) and a verba legis non est recedendum (from the words of
the statute there should be no departure).
Any lawyer of modest sophistication knows that canons of
statutory construction march in pairs of opposite. Thus with the
canons above mentioned we have the following opposite: verba
intention, non e contra, debent incservice(words ought to be more
subservient to the intent and not the intent to the words).
Sutherland explains the limits of literalism thus:
The literal interpretation of the words of an act should not prevail
if it creates a result contrary to the apparent intention of the
legislature and if the words are sufficiently flexible to admit of a
construction which will effectuate the legislative intention The
intention prevails over the letter, and the letter must if possible be
read so as to conform to the spirit of the act. 'While the intention
of the legislature must be ascertained from the words used to
express it, the manifest reason and obvious purpose of the law
should not be sacrificed to a literal interpretation of such words.
Thus words or clauses may be enlarged or restricted to
harmonize with other provisions of an act. The particular inquiry is
not what is the abstract force of the words or what they may
comprehend, but in what sense were they intended to be
understood or what understanding do they convey as used in the
particular act. (Vol. 2A Statutory Construction, pp. 65-66 [1972].)
It is an elementary rule in statutory construction that the word
"may" in a statute is permissive while the word "shall" is
mandatory. The rule, however, is not absolute. Thus Professor
Luis J. Gonzaga states:
According to Black, 'Where the statute provides for the doing of
some act which is required by justice or public duty, or where it
invests a public body, municipality or officer with power and
authority to take some action which concerns the public interest
or rights of individuals, the permissive language win be construed
as mandatory and the execution of the power may be insisted
upon as a duty. Thus, where the statute provided that 'the
commissioners may take into consideration the enhanced value
to the remaining land of an owner whose land was taken for
highway purposes it was held that the word may should be given
a mandatory meaning and is the same as the word 'shall', since it
directs the doing of a thing for the sake of justice or the public
good. Similarly, a statute by which municipal corporations are
'authorized and empowered to provide for the support of indigent
persons within their limits or to make public improvements as to
open and repair streets, remove obstructions from highways,
construct sewers and the like, are to be construed as mandatory
although they only purport to grant permission or authority since
the public has an interest in such matters and the grant of
authority is therefore equivalent to the imposition of duty."
(Statutes and their Construction, pp. 98-99 [1969].)
In the case at bar compelling reasons dictate that the provision of
the decree should be construed as mandatory mother than
merely directory. They are stated in the unanimous decision as
follows:
1. P.D. 217 deals with matters so alien innovative and untested
such that existing substantive and procedural laws would not be
applicable. Thus, the Subscriber Investment Plan (SIP) was so
set up precisely to ensure the financial viability of public
telecommunications companies which in turn assures the
enjoyment of the population at minimum cost the benefits of a
telephone facility.
The SIP has never been contemplated prior to P.D. 217.
The existing law on the other hand, the Public Service Act,
diametrically runs counter to the split and intention, if not the
purpose of P.D. 217. It may even be gained that as long as the
Optimum number of individuals may enjoy telephone service,
there is no station on the profitability of such companies. Hence,
while P.D. 217 encourages the profitability of public
telecommunication companies, the Public Service Act limits the
same.
2. In the absence of such rules and regulations, there is outright
confusion among the rights of PLDT, the consumers and the
government itself. As may clearly be after how can the Decision
be said to have assured that most of the population will enjoy
telephone facilities? Did the Decision likewise assure the financial
viability of PLDT? Was the government's duty to provide
telephone service to its constituents subserved by the Decision?
These questions can never be answered unless such rules and
regulations are set up.
3. Finally, it should be emphasized that NTC is estopped from
claiming that there is no need to promulgate such rules and
regulations. In the case of PCFI vs. NTC, G.R. No. 61892, now
pending resolution before this Honorable Tribunal, NTC totally
refused to act on a petition filed by PLDT precisely for the
promulgation of such rules and regulations.
Why then did NTC refuse to act on such petition if and when
there is no need for the promulgation of such rules and
regulations? After all NTC could have simply ruled that the
petition in G.R. No. 618R2 is unnecessary because such rules
and regulations are also unnecessary. (pp. 135-136, Rollo)
The above reasons also rebut the contention in the non-
unanimous resolution that the existing substantive and procedure
laws as well as the rules promulgated by the Public Service
Commission are more than adequate to determine the
reasonableness of the amounts of investment of telephone
subscribers, etc.
The PLDT's SIP is an unreasonable imposition by a utility
company on a captive public. The injury is compounded by the
fact that although the company makes mega profits its service, to
use a McEnroe expression, is the pits.
Melencio-Herrera, J., concur.
RELOVA, J., dissenting:
For the reasons stated in my ponencia of November 25, 1983, I
vote to DENY the second motion for reconsideration, dated May
2, 1984, filed by private respondent Philippine Long Distance
Telephone Company, through counsel. The argument advanced
in the motion that Presidential Decree No. 217 was amended by
Presidential Decree No. 1874 which was issued on July 21, 1983,
is without merit. Section 4 of said PD 1874 specifically provides
that "all decisions or orders of the National Telecommunications
Commission heretofore issued approving subscribers investment
plans or revisions thereof, are hereby declared valid and legal in
all respects, excepting such decisions or orders as, on the date of
this decree, are pending review by the Supreme Court." The case
at bar was filed with this Court on March 3, 1983 or before the
issuance of Presidential Decree No. 1874.
Besides, Section 1 of Presidential Decree No. 217 which was
promulgated on June 16, 1973 declares that "in the interest of the
social, economic and general well being of the people, the State
hereby adopts the following basic policies of the telephone
industry:
1. The attainment of efficient telephone service for as wide an
area as possible at the lowest reasonable cost to the subsciber.
xxx xxx xxx
Melencio-Herrera, J., concur.
Separate Opinions
TEEHANKEE, J., dissenting:
I join the dissents of Justices Abad Santos and Relova. I only
wish to add that there has been a departure here from the Court's
usual practice and rules (cf. Rule 52, sec. 2; Rule 51, sec. 1; and
Rule 56, Secs. 1 and 11) of setting the case for rehearing and
hearing the parties in oral argument when a new majority
(because of a change of votes or new members or for whatever
reason) is inclined to reconsider and overturn the original
majority; more so, on a second motion for reconsideration, the
first motion for reconsideration having been denied without a
dissenting vote and the parties not having been previously heard
in oral argument.
GUTIERREZ, JR., J., separate opinion:
My concurrence in Mr. Justice Makasiar's ponencia is not without
certain misgivings. I agree with the Court's views on the powers
of the National Telecommunications Commission, the applicability
of existing rules and regulations, and the policy declarations in
P.D. Nos. 217 and 1874. However, while now convinced that the
increase in mandatory investments for subscribers is based on
law and that there is no showing of arbitrariness in the law's
implementation, I must confess that I see no justification for the
continued inefficient services rendered by the respondent
telephone company. When the Court was deliberating on the
motion for reconsideration, my own residential telephone was out
of order. And I believe that our experiences in our neighborhood
do not represent isolated cases. I have yet to hear from or about
satisfied PLDT customers.
My point is —increased rates and increases in the "subscribers'
self-financing plan" must be matched by equivalent and
demonstrably improved telephone service. More than its duty to
increase rates and subscribers' fees whenever warranted, the
respondent Commission has the statutory and greater obligation
to supervise "the attainment of efficient telephone service for as
wide an area as possible at the lowest reasonable cost to the
subscribers."
I am aware that almost all major or components of our telephone
system must be imported from foreign sources. Since the
Philippine peso is now worth one American nickel the cost of
services based on imported materials must increase. Loans
contracted when the foreign exchange rate was not so
disadvantageous now require double or treble amortizations in
depreciated pesos. The Court cannot assume the role of King
Canute. Only the financial experts in the political departments can
return the peso to a respectable value. Moreover, it is indeed to
the nation's advantage to look for local capital sources instead of
resorting to more foreign borrowings.
I must stress, however, that consumers would not mind paying
reasonable increases if they get satisfactory services. The
respondent telephone company has yet to solve this elementary
and glaringly obvious problem. Pinpointing the cause and
applying the solution should be the company's number one
concern.
ABAD SANTOS, J., dissenting:
I vote to deny the second Motion for Reconsideration. I am
amazed that the decision which was promulgated as recently as
November 25, 1983, with no dissenting opinion to dilute its
acceptability should now be reconsidered. My amazement is
heightened by the fact that when the case was discussed on July
26, 1984, I had the impression that the motion was doomed so
that a request to defer action on it would have met the same fate
had not the request been put on a pag-bigyan basis.
The case involves a simple problem of statutory construction —
that of Section 2 of Presidential Decree No. 217. It reads as
follows:
The Department of Public Works, Transportation and
Commissions, through its Board of Communications and/or
appropriate agency shall see to it that the herein declared policies
for the telephone industry are immediately implemented and for
this purpose, pertinent rules and regulations may be promulgated.
The issue is whether or not the National Telecommunications
(NTC) must first promulgate the rules and regulations mentioned
in the decree before it can approve the Subscriber Investment
Plan (SIP) of private respondent Philippine Long Distance
Telephone Co. (PLDT).
The decision, without any dissenting opinion, sustained the
petitioner's contention that it is the duty of NTC to first Promulgate
rules and regulations.
The resolution, which is not unanimous, does not subscribe to the
view that the NTC should or must promulgate rules and
regulations because, it is said, the decree must be given its
ordinary meaning; the word used is the permissive "may" and not
the mandatory "shall The non-unanimous resolution thus relies on
the canons index animi sermo est (speech is the indication of
intent) and a verba legis non est recedendum (from the words of
the statute there should be no departure).
Any lawyer of modest sophistication knows that canons of
statutory construction march in pairs of opposite. Thus with the
canons above mentioned we have the following opposite: verba
intention, non e contra, debent incservice(words ought to be more
subservient to the intent and not the intent to the words).
Sutherland explains the limits of literalism thus:
The literal interpretation of the words of an act should not prevail
if it creates a result contrary to the apparent intention of the
legislature and if the words are sufficiently flexible to admit of a
construction which will effectuate the legislative intention The
intention prevails over the letter, and the letter must if possible be
read so as to conform to the spirit of the act. 'While the intention
of the legislature must be ascertained from the words used to
express it, the manifest reason and obvious purpose of the law
should not be sacrificed to a literal interpretation of such words.
Thus words or clauses may be enlarged or restricted to
harmonize with other provisions of an act. The particular inquiry is
not what is the abstract force of the words or what they may
comprehend, but in what sense were they intended to be
understood or what understanding do they convey as used in the
particular act. (Vol. 2A Statutory Construction, pp. 65-66 [1972].)
It is an elementary rule in statutory construction that the word
"may" in a statute is permissive while the word "shall" is
mandatory. The rule, however, is not absolute. Thus Professor
Luis J. Gonzaga states:
According to Black, 'Where the statute provides for the doing of
some act which is required by justice or public duty, or where it
invests a public body, municipality or officer with power and
authority to take some action which concerns the public interest
or rights of individuals, the permissive language win be construed
as mandatory and the execution of the power may be insisted
upon as a duty. Thus, where the statute provided that 'the
commissioners may take into consideration the enhanced value
to the remaining land of an owner whose land was taken for
highway purposes it was held that the word may should be given
a mandatory meaning and is the same as the word 'shall', since it
directs the doing of a thing for the sake of justice or the public
good. Similarly, a statute by which municipal corporations are
'authorized and empowered to provide for the support of indigent
persons within their limits or to make public improvements as to
open and repair streets, remove obstructions from highways,
construct sewers and the like, are to be construed as mandatory
although they only purport to grant permission or authority since
the public has an interest in such matters and the grant of
authority is therefore equivalent to the imposition of duty."
(Statutes and their Construction, pp. 98-99 [1969].)
In the case at bar compelling reasons dictate that the provision of
the decree should be construed as mandatory mother than
merely directory. They are stated in the unanimous decision as
follows:
1. P.D. 217 deals with matters so alien innovative and untested
such that existing substantive and procedural laws would not be
applicable. Thus, the Subscriber Investment Plan (SIP) was so
set up precisely to ensure the financial viability of public
telecommunications companies which in turn assures the
enjoyment of the population at minimum cost the benefits of a
telephone facility.
The SIP has never been contemplated prior to P.D. 217.
The existing law on the other hand, the Public Service Act,
diametrically runs counter to the split and intention, if not the
purpose of P.D. 217. It may even be gained that as long as the
Optimum number of individuals may enjoy telephone service,
there is no station on the profitability of such companies. Hence,
while P.D. 217 encourages the profitability of public
telecommunication companies, the Public Service Act limits the
same.
2. In the absence of such rules and regulations, there is outright
confusion among the rights of PLDT, the consumers and the
government itself. As may clearly be after how can the Decision
be said to have assured that most of the population will enjoy
telephone facilities? Did the Decision likewise assure the financial
viability of PLDT? Was the government's duty to provide
telephone service to its constituents subserved by the Decision?
These questions can never be answered unless such rules and
regulations are set up.
3. Finally, it should be emphasized that NTC is estopped from
claiming that there is no need to promulgate such rules and
regulations. In the case of PCFI vs. NTC, G.R. No. 61892, now
pending resolution before this Honorable Tribunal, NTC totally
refused to act on a petition filed by PLDT precisely for the
promulgation of such rules and regulations.
Why then did NTC refuse to act on such petition if and when
there is no need for the promulgation of such rules and
regulations? After all NTC could have simply ruled that the
petition in G.R. No. 618R2 is unnecessary because such rules
and regulations are also unnecessary. (pp. 135-136, Rollo)
The above reasons also rebut the contention in the non-
unanimous resolution that the existing substantive and procedure
laws as well as the rules promulgated by the Public Service
Commission are more than adequate to determine the
reasonableness of the amounts of investment of telephone
subscribers, etc.
The PLDT's SIP is an unreasonable imposition by a utility
company on a captive public. The injury is compounded by the
fact that although the company makes mega profits its service, to
use a McEnroe expression, is the pits.
Melencio-Herrera, J., concur.
RELOVA, J., dissenting:
For the reasons stated in my ponencia of November 25, 1983, I
vote to DENY the second motion for reconsideration, dated May
2, 1984, filed by private respondent Philippine Long Distance
Telephone Company, through counsel. The argument advanced
in the motion that Presidential Decree No. 217 was amended by
Presidential Decree No. 1874 which was issued on July 21, 1983,
is without merit. Section 4 of said PD 1874 specifically provides
that "all decisions or orders of the National Telecommunications
Commission heretofore issued approving subscribers investment
plans or revisions thereof, are hereby declared valid and legal in
all respects, excepting such decisions or orders as, on the date of
this decree, are pending review by the Supreme Court." The case
at bar was filed with this Court on March 3, 1983 or before the
issuance of Presidential Decree No. 1874.
Besides, Section 1 of Presidential Decree No. 217 which was
promulgated on June 16, 1973 declares that "in the interest of the
social, economic and general well being of the people, the State
hereby adopts the following basic policies of the telephone
industry:
1. The attainment of efficient telephone service for as wide an
area as possible at the lowest reasonable cost to the subsciber.
 Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 111107 January 10, 1997
LOEONARDO A. PAAT, in his capacity as Officer-in-Charge
(OIC), Regional Executive Director (RED), Region 2 and
JOVITO LAYUGAN, JR., in his capacity as Community
Environment and Natural Resources Officer (CENRO), both
of the Department of Environment and Natural Resources
(DENR), petitioners,
vs.
COURT OF APPEALS, HON. RICARDO A. BACULI in his
capacity as Presiding Judge of Branch 2, Regional Trial
Court at Tuguegarao, Cagayan, and SPOUSES BIENVENIDO
and VICTORIA DE GUZMAN, respondents.
TORRES, JR., J.:
Without violating the principle of exhaustion of administrative
remedies, may an action for replevin prosper to recover a
movable property which is the subject matter of an administrative
forfeiture proceeding in the Department of Environment and
Natural Resources pursuant to Section 68-A of P.D. 705, as
amended, entitled The Revised Forestry Code of the Philippines?
Are the Secretary of DENR and his representatives empowered
to confiscate and forfeit conveyances used in transporting illegal
forest products in favor of the government?
These are two fundamental questions presented before us for our
resolution.
The controversy on hand had its incipiency on May 19, 1989
when the truck of private respondent Victoria de Guzman while
on its way to Bulacan from San Jose, Baggao, Cagayan, was
seized by the Department of Environment and Natural Resources
(DENR, for brevity) personnel in Aritao, Nueva Vizcaya because
the driver could not produce the required documents for the forest
products found concealed in the truck. Petitioner Jovito Layugan,
the Community Environment and Natural Resources Officer
(CENRO) in Aritao, Cagayan, issued on May 23, 1989 an order of
confiscation of the truck and gave the owner thereof fifteen (15)
days within which to submit an explanation why the truck should
not be forfeited. Private respondents, however, failed to submit
the required explanation. On June 22, 1989,1 Regional Executive
Director Rogelio Baggayan of DENR sustained petitioner
Layugan's action of confiscation and ordered the forfeiture of the
truck invoking Section 68-A of Presidential Decree No. 705 as
amended by Executive Order No. 277. Private respondents filed a
letter of reconsideration dated June 28, 1989 of the June 22,
1989 order of Executive Director Baggayan, which was, however,
denied in a subsequent order of July 12, 1989.2 Subsequently, the
case was brought by the petitioners to the Secretary of DENR
pursuant to private respondents' statement in their letter dated
June 28, 1989 that in case their letter for reconsideration would
be denied then "this letter should be considered as an appeal to
the Secretary."3 Pending resolution however of the appeal, a suit
for replevin, docketed as Civil Case 4031, was filed by the private
respondents against petitioner Layugan and Executive Director
Baggayan4 with the Regional Trial Court, Branch 2 of
Cagayan,5 which issued a writ ordering the return of the truck to
private respondents.6 Petitioner Layugan and Executive Director
Baggayan filed a motion to dismiss with the trial court
contending, inter alia, that private respondents had no cause of
action for their failure to exhaust administrative remedies. The
trial court denied the motion to dismiss in an order dated
December 28, 1989.7 Their motion for reconsideration having
been likewise denied, a petition for certiorari was filed by the
petitioners with the respondent Court of Appeals which sustained
the trial court's order ruling that the question involved is purely a
legal question.8 Hence, this present petition,9 with prayer for
temporary restraining order and/or preliminary injunction, seeking
to reverse the decision of the respondent Court of Appeals was
filed by the petitioners on September 9, 1993. By virtue of the
Resolution dated September 27, 1993,10 the prayer for the
issuance of temporary restraining order of petitioners was granted
by this Court.
Invoking the doctrine of exhaustion of administrative remedies,
petitioners aver that the trial court could not legally entertain the
suit for replevin because the truck was under administrative
seizure proceedings pursuant to Section 68-A of P.D. 705, as
amended by E.O. 277. Private respondents, on the other hand,
would seek to avoid the operation of this principle asserting that
the instant case falls within the exception of the doctrine upon the
justification that (1) due process was violated because they were
not given the chance to be heard, and (2) the seizure and
forfeiture was unlawful on the grounds: (a) that the Secretary of
DENR and his representatives have no authority to confiscate
and forfeit conveyances utilized in transporting illegal forest
products, and (b) that the truck as admitted by petitioners was not
used in the commission of the crime.
Upon a thorough and delicate scrutiny of the records and relevant
jurisprudence on the matter, we are of the opinion that the plea of
petitioners for reversal is in order.
This Court in a long line of cases has consistently held that before
a party is allowed to seek the intervention of the court, it is a pre-
condition that he should have availed of all the means of
administrative processes afforded him. Hence, if a remedy within
the administrative machinery can still be resorted to by giving the
administrative officer concerned every opportunity to decide on a
matter that comes within his jurisdiction then such remedy should
be exhausted first before court's judicial power can be sought,
The premature invocation of court's intervention is fatal to one's
cause of action.11 Accordingly, absent any finding of waiver or
estoppel the case is susceptible of dismissal for lack of cause of
action.12 This doctrine of exhaustion of administrative remedies
was not without its practical and legal reasons, for one thing,
availment of administrative remedy entails lesser expenses and
provides for a speedier disposition of controversies. It is no less
true to state that the courts of justice for reasons of comity and
convenience will shy away from a dispute until the system of
administrative redress has been completed and complied with so
as to give the administrative agency concerned every opportunity
to correct its error and to dispose of the case. However, we are
not amiss to reiterate that the principle of exhaustion of
administrative remedies as tested by a battery of cases is not an
ironclad rule. This doctrine is a relative one and its flexibility is
called upon by the peculiarity and uniqueness of the factual and
circumstantial settings of a case. Hence, it is disregarded (1)
when there is a violation of due process,13 (2) when the issue
involved is purely a legal question,14 (3) when the administrative
action is patently illegal amounting to lack or excess of
jurisdiction,15 (4) when there is estoppel on the part of the
administrative agency concerned,16 (5) when there is irreparable
injury,17 (6) when the respondent is a department secretary whose
acts as an alter ego of the President bears the implied and
assumed approval of the latter,18 (7) when to require exhaustion of
administrative remedies would be unreasonable,19 (8) when it
would amount to a nullification of a claim,20 (9) when the subject
matter is a private land in land case proceedings,21 (10) when the
rule does not provide a plain, speedy and adequate remedy, and
(11) when there are circumstances indicating the urgency of
judicial intervention.22
In the case at bar, there is no question that the controversy was
pending before the Secretary of DENR when it was forwarded to
him following the denial by the petitioners of the motion for
reconsideration of private respondents through the order of July
12, 1989. In their letter of reconsideration dated June 28,
1989,23 private respondents clearly recognize the presence of an
administrative forum to which they seek to avail, as they did avail,
in the resolution of their case. The letter, reads, thus:
If this motion for reconsideration does not merit your favorable
action, then this letter should be considered as an appeal to the
Secretary.24
It was easy to perceive then that the private respondents looked
up to the Secretary for the review and disposition of their case. By
appealing to him, they acknowledged the existence of an
adequate and plain remedy still available and open to them in the
ordinary course of the law. Thus, they cannot now, without
violating the principle of exhaustion of administrative remedies,
seek court's intervention by filing an action for replevin for the
grant of their relief during the pendency of an administrative
proceedings.
Moreover, it is important to point out that the enforcement of
forestry laws, rules and regulations and the protection,
development and management of forest lands fall within the
primary and special responsibilities of the Department of
Environment and Natural Resources. By the very nature of its
function, the DENR should be given a free hand unperturbed by
judicial intrusion to determine a controversy which is well within
its jurisdiction. The assumption by the trial court, therefore, of the
replevin suit filed by private respondents constitutes an unjustified
encroachment into the domain of the administrative agency's
prerogative. The doctrine of primary jurisdiction does not warrant
a court to arrogate unto itself the authority to resolve a
controversy the jurisdiction over which is initially lodged with an
administrative body of special competence.25 In Felipe Ismael,
Jr. and Co. vs. Deputy Executive Secretary,26 which was
reiterated in the recent case of Concerned Officials of MWSS
vs. Vasquez,27 this Court held:
Thus, while the administration grapples with the complex and
multifarious problems caused by unbriddled exploitation of these
resources, the judiciary will stand clear. A long line of cases
establish the basic rule that the courts will not interfere in matters
which are addressed to the sound discretion of government
agencies entrusted with the regulation of activities coming under
the special technical knowledge and training of such agencies.
To sustain the claim of private respondents would in effect bring
the instant controversy beyond the pale of the principle of
exhaustion of administrative remedies and fall within the ambit of
excepted cases heretofore stated. However, considering the
circumstances prevailing in this case, we can not but rule out
these assertions of private respondents to be without merit. First,
they argued that there was violation of due process because they
did not receive the May 23, 1989 order of confiscation of
petitioner Layugan. This contention has no leg to stand on. Due
process does not necessarily mean or require a hearing, but
simply an opportunity or right to be heard.28 One may be heard,
not solely by verbal presentation but also, and perhaps many
times more creditably and practicable than oral argument,
through pleadings.29 In administrative proceedings moreover,
technical rules of procedure and evidence are not strictly applied;
administrative process cannot be fully equated with due process
in its strict judicial sense.30 Indeed, deprivation of due process
cannot be successfully invoked where a party was given the
chance to be heard on his motion for reconsideration,31 as in the
instant case, when private respondents were undisputedly given
the opportunity to present their side when they filed a letter of
reconsideration dated June 28, 1989 which was, however, denied
in an order of July 12, 1989 of Executive Director Baggayan,
In Navarro III vs. Damasco,32 we ruled that :
The essence of due process is simply an opportunity to be heard,
or as applied to administrative proceedings, an opportunity to
explain one's side or an opportunity to seek a reconsideration of
the action or ruling complained of. A formal or trial type hearing is
not at all times and in all instances essential. The requirements
are satisfied when the parties are afforded fair and reasonable
opportunity to explain their side of the controversy at hand. What
is frowned upon is the absolute lack of notice or hearing.
Second, private respondents imputed the patent illegality of
seizure and forfeiture of the truck because the administrative
officers of the DENR allegedly have no power to perform these
acts under the law. They insisted that only the court is authorized
to confiscate and forfeit conveyances used in transporting illegal
forest products as can be gleaned from the second paragraph of
Section 68 of P.D. 705, as amended by E.O. 277. The pertinent
provision reads as follows:
Sec. 68.
xxx xxx xxx
The court shall further order the confiscation in favor of the
government of the timber or any forest products cut, gathered,
collected, removed, or possessed, as well as
the machinery, equipments, implements and tools illegaly [sic]
used in the area where the timber or forest products are found.
(Emphasis ours)
A reading, however, of the law persuades us not to go along with
private respondents' thinking not only because the aforequoted
provision apparently does not mention nor include "conveyances"
that can be the subject of confiscation by the courts, but to a large
extent, due to the fact that private respondents' interpretation of
the subject provision unduly restricts the clear intention of the law
and inevitably reduces the other provision of Section 68-A, which
is quoted herein below:
Sec. 68-A. Administrative Authority of the Department or His Duly
Authorized Representative To Order Confiscation. In all cases of
violation of this Code or other forest laws, rules and regulations,
the Department Head or his duly authorized representative,
may order the confiscation of any forest products illegally cut,
gathered, removed, or possessed or abandoned, and all
conveyances used either by land, water or air in the commission
of the offense and to dispose of the same in accordance with
pertinent laws, regulations and policies on the matter. (Emphasis
ours)
It is, thus, clear from the foregoing provision that the Secretary
and his duly authorized representatives are given the authority to
confiscate and forfeit any conveyances utilized in violating the
Code or other forest laws, rules and regulations. The phrase "to
dispose of the same" is broad enough to cover the act of forfeiting
conveyances in favor of the government. The only limitation is
that it should be made "in accordance with pertinent laws,
regulations or policies on the matter." In the construction of
statutes, it must be read in such a way as to give effect to the
purpose projected in the statute.33 Statutes should be construed in
the light of the object to be achieved and the evil or mischief to be
suppressed, and they should be given such construction as will
advance the object, suppress the mischief, and secure the
benefits intended.34 In this wise, the observation of the Solicitor
General is significant, thus:
But precisely because of the need to make forestry laws "more
responsive to present situations and realities" and in view of the
"urgency to conserve the remaining resources of the country,"
that the government opted to add Section 68-A. This amendatory
provision is an administrative remedy totally separate and distinct
from criminal proceedings. More than anything else, it is intended
to supplant the inadequacies that characterize enforcement of
forestry laws through criminal actions. The preamble of EO 277-
the law that added Section 68-A to PD 705-is most revealing:
"WHEREAS, there is an urgency to conserve the remaining forest
resources of the country for the benefit and welfare of the present
and future generations of Filipinos;
WHEREAS, our forest resources may be effectively conserved
and protected through the vigilant enforcement and
implementation of our forestry laws, rules and regulations;
WHEREAS, the implementation of our forestry laws suffers from
technical difficulties, due to certain inadequacies in the penal
provisions of the Revised Forestry Code of the Philippines; and
WHEREAS, to overcome this difficulties, there is a need to
penalize certain acts more responsive to present situations and
realities;"
It is interesting to note that Section 68-A is a new provision
authorizing the DENR to confiscate, not only "conveyances," but
forest products as well. On the other hand, confiscation of forest
products by the "court" in a criminal action has long been
provided for in Section 68. If as private respondents insist, the
power on confiscation cannot be exercised except only through
the court under Section 68, then Section 68-A would have no
Purpose at all. Simply put, Section 68-A would not have provided
any solution to the problem perceived in EO 277, supra.35
Private respondents, likewise, contend that the seizure was illegal
because the petitioners themselves admitted in the Order dated
July 12, 1989 of Executive Director Baggayan that the truck of
private respondents was not used in the commission of the crime.
This order, a copy of which was given to and received by the
counsel of private respondents, reads in part, viz.:
. . . while it is true that the truck of your client was not used by her
in the commission of the crime, we uphold your claim that the
truck owner is not liable for the crime and in no case could a
criminal case be filed against her as provided under Article 309
and 310 of the Revised Penal Code. . .36
We observed that private respondents misread the content of the
aforestated order and obviously misinterpreted the intention of
petitioners. What is contemplated by the petitioners when they
stated that the truck "was not used in the commission of the
crime" is that it was not used in the commission of the crime of
theft, hence, in no case can a criminal action be filed against the
owner thereof for violation of Article 309 and 310 of the Revised
Penal Code. Petitioners did not eliminate the possibility that the
truck was being used in the commission of another crime, that is,
the breach of Section 68 of P.D. 705 as amended by E.O. 277. In
the same order of July 12, 1989, petitioners pointed out:
. . . However, under Section 68 of P.D. 705 as amended and
further amended by Executive Order No. 277 specifically provides
for the confiscation of the conveyance used in the transport of
forest products not covered by the required legal documents. She
may not have been involved in the cutting and gathering of the
product in question but the fact that she accepted the goods for a
fee or fare the same is therefor liable. . .37
Private respondents, however, contended that there is no crime
defined and punishable under Section 68 other than qualified
theft, so that, when petitioners admitted in the July 12, 1989 order
that private respondents could not be charged for theft as
provided for under Articles 309 and 310 of the Revised Penal
Code, then necessarily private respondents could not have
committed an act constituting a crime under Section 68. We
disagree. For clarity, the provision of Section 68 of P.D. 705
before its amendment by E.O. 277 and the provision of Section 1
of E.O. No. 277 amending the aforementioned Section 68 are
reproduced herein, thus:
Sec. 68. Cutting, gathering and/or collecting timber or other
products without license. — Any person who shall cut, gather,
collect, or remove timber or other forest products from any forest
land, or timber from alienable and disposable public lands, or
from private lands, without any authority under a license
agreement, lease, license or permit, shall be guilty of qualified
theft as defined and punished under Articles 309 and 310 of the
Revised Penal Code . . . (Emphasis ours; Section 68, P.D. 705
before its amendment by E.O. 277)
Sec. 1. Section 68 of Presidential Decree No. 705, as amended,
is hereby amended to read as follows:
Sec. 68. Cutting, gathering and/or collecting timber or other forest
products without license. — Any person who
shall cut, gather, collect, remove timber or other forest products
from any forest land, or timber from alienable or disposable public
land, or from private land, without any authority, or
possess timber or other forest products without the legal
documents as required under existing forest laws and regulations,
shall be punished with the penalties imposed under Articles 309
and 310 of the Revised Penal Code . . . (Emphasis ours; Section
1, E.O. No. 277 amending Section 68, P.D. 705 as amended)
With the introduction of Executive Order No. 277 amending
Section 68 of P.D. 705, the act of cutting, gathering, collecting,
removing, or possessing forest products without authority
constitutes a distinct offense independent now from the crime of
theft under Articles 309 and 310 of the Revised Penal Code, but
the penalty to be imposed is that provided for under Article 309
and 310 of the Revised Penal Code. This is clear from the
language of Executive Order No. 277 when it eliminated the
phrase "shall be guilty of qualified theft as defined and punished
under Articles 309 and 310 of the Revised Penal Code" and
inserted the words "shall be punished with the penalties imposed
under Article 309 and 310 of the Revised Penal Code". When the
statute is clear and explicit, there is hardly room for any extended
court ratiocination or rationalization of the law.38
From the foregoing disquisition, it is clear that a suit for replevin
can not be sustained against the petitioners for the subject truck
taken and retained by them for administrative forfeiture
proceedings in pursuant to Section 68-A of the P.D. 705, as
amended. Dismissal of the replevin suit for lack of cause of action
in view of the private respondents' failure to exhaust
administrative remedies should have been the proper course of
action by the lower court instead of assuming jurisdiction over the
case and consequently issuing the writ ordering the return of the
truck. Exhaustion of the remedies in the administrative forum,
being a condition precedent prior to one's recourse to the courts
and more importantly, being an element of private respondents'
right of action, is too significant to be waylaid by the lower court.
It is worth stressing at this point, that a suit for replevin is founded
solely on the claim that the defendant wrongfully withholds the
property sought to be recovered. It lies to recover possession of
personal chattels that are unlawfully detained.39 "To detain" is
defined as to mean "to hold or keep in custody,"40 and it has been
held that there is tortious taking whenever there is an unlawful
meddling with the property, or an exercise or claim of dominion
over it, without any pretense of authority or right; this, without
manual seizing of the property is sufficient.41 Under the Rules of
Court, it is indispensable in replevin proceeding that the plaintiff
must show by his own affidavit that he is entitled to the
possession of property, that the property is wrongfully detained by
the defendant, alleging the cause of detention, that the same has
not been taken for tax assessment, or seized under execution, or
attachment, or if so seized, that it is exempt from such seizure,
and the actual value of the property.42 Private respondents
miserably failed to convince this Court that a wrongful detention
of the subject truck obtains in the instant case. It should be noted
that the truck was seized by the petitioners because it was
transporting forest products without the required permit of the
DENR in manifest contravention of Section 68 of P.D. 705 as
amended by E.O 277. Section 68-A of P.D. 705, as amended,
unquestionably warrants the confiscation as well as the
disposition by the Secretary of DENR or his duly authorized
representatives of the conveyances used in violating the provision
of forestry laws. Evidently, the continued possession or detention
of the truck by the petitioners for administrative forfeiture
proceeding is legally permissible, hence, no wrongful detention
exists in the case at bar.
Moreover, the suit for replevin is never intended as a procedural
tool to question the orders of confiscation and forfeiture issued by
the DENR in pursuance to the authority given under P.D. 705, as
amended. Section 8 of the said law is explicit that actions taken
by the Director of the Bureau of Forest Development concerning
the enforcement of the provisions of the said law are subject to
review by the Secretary of DENR and that courts may not review
the decisions of the Secretary except through a special civil
action for certiorari or prohibition. It reads:
Sec. 8. REVIEW — All actions and decisions of the Director are
subject to review, motu propio or upon appeal of any person
aggrieved thereby, by the Department Head whose decision shall
be final and executory after the lapse of thirty (30) days from the
receipt of the aggrieved party of said decision, unless appealed to
the President in accordance with Executive Order No. 19, Series
of 1966. The Decision of the Department Head may not be
reviewed by the courts except through a special civil action
for certiorari or prohibition.
WHEREFORE, the Petition is GRANTED; the Decision of the
respondent Court of Appeals dated October 16, 1991 and its
Resolution dated July 14, 1992 are hereby SET ASIDE AND
REVERSED; the Restraining Order promulgated on September
27, 1993 is hereby made permanent; and the Secretary of DENR
is directed to resolve the controversy with utmost dispatch.
SO ORDERED.
Regalado, Romero, Puno and Mendoza, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-22301 August 30, 1967
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
MARIO MAPA Y MAPULONG, defendant-appellant.
Francisco P. Cabigao for defendant-appellant.
Office of the Solicitor General Arturo A. Alafriz, Assistant Solicitor
General F. R. Rosete and Solicitor O. C. Hernandez for plaintiff-
appellee.
FERNANDO, J.:
The sole question in this appeal from a judgment of conviction by
the lower court is whether or not the appointment to and holding
of the position of a secret agent to the provincial governor would
constitute a sufficient defense to a prosecution for the crime of
illegal possession of firearm and ammunition. We hold that it does
not.
The accused in this case was indicted for the above offense in an
information dated August 14, 1962 reading as follows: "The
undersized accuses MARIO MAPA Y MAPULONG of a violation
of Section 878 in connection with Section 2692 of the Revised
Administrative Code, as amended by Commonwealth Act No. 56
and as further amended by Republic Act No. 4, committed as
follows: That on or about the 13th day of August, 1962, in the City
of Manila, Philippines, the said accused did then and there wilfully
and unlawfully have in his possession and under his custody and
control one home-made revolver (Paltik), Cal. 22, without serial
number, with six (6) rounds of ammunition, without first having
secured the necessary license or permit therefor from the
corresponding authorities. Contrary to law."
When the case was called for hearing on September 3, 1963, the
lower court at the outset asked the counsel for the accused: "May
counsel stipulate that the accused was found in possession of the
gun involved in this case, that he has neither a permit or license
to possess the same and that we can submit the same on a
question of law whether or not an agent of the governor can hold
a firearm without a permit issued by the Philippine Constabulary."
After counsel sought from the fiscal an assurance that he would
not question the authenticity of his exhibits, the understanding
being that only a question of law would be submitted for decision,
he explicitly specified such question to be "whether or not a
secret agent is not required to get a license for his firearm."
Upon the lower court stating that the fiscal should examine the
document so that he could pass on their authenticity, the fiscal
asked the following question: "Does the accused admit that this
pistol cal. 22 revolver with six rounds of ammunition mentioned in
the information was found in his possession on August 13, 1962,
in the City of Manila without first having secured the necessary
license or permit thereof from the corresponding authority?" The
accused, now the appellant, answered categorically: "Yes, Your
Honor." Upon which, the lower court made a statement: "The
accused admits, Yes, and his counsel Atty. Cabigao also affirms
that the accused admits."
Forthwith, the fiscal announced that he was "willing to submit the
same for decision." Counsel for the accused on his part
presented four (4) exhibits consisting of his appointment "as
secret agent of the Hon. Feliciano Leviste," then Governor of
Batangas, dated June 2, 1962;1 another document likewise
issued by Gov. Leviste also addressed to the accused directing
him to proceed to Manila, Pasay and Quezon City on a
confidential mission;2 the oath of office of the accused as such
secret agent,3 a certificate dated March 11, 1963, to the effect
that the accused "is a secret agent" of Gov. Leviste.4 Counsel for
the accused then stated that with the presentation of the above
exhibits he was "willing to submit the case on the question of
whether or not a secret agent duly appointed and qualified as
such of the provincial governor is exempt from the requirement of
having a license of firearm." The exhibits were admitted and the
parties were given time to file their respective memoranda. 1äwphï1.ñët
Thereafter on November 27, 1963, the lower court rendered a
decision convicting the accused "of the crime of illegal possession
of firearms and sentenced to an indeterminate penalty of from
one year and one day to two years and to pay the costs. The
firearm and ammunition confiscated from him are forfeited in
favor of the Government."
The only question being one of law, the appeal was taken to this
Court. The decision must be affirmed.
The law is explicit that except as thereafter specifically allowed, "it
shall be unlawful for any person to . . . possess any firearm,
detached parts of firearms or ammunition therefor, or any
instrument or implement used or intended to be used in the
manufacture of firearms, parts of firearms, or ammunition."5 The
next section provides that "firearms and ammunition regularly and
lawfully issued to officers, soldiers, sailors, or marines [of the
Armed Forces of the Philippines], the Philippine Constabulary,
guards in the employment of the Bureau of Prisons, municipal
police, provincial governors, lieutenant governors, provincial
treasurers, municipal treasurers, municipal mayors, and guards of
provincial prisoners and jails," are not covered "when such
firearms are in possession of such officials and public servants for
use in the performance of their official duties."6
The law cannot be any clearer. No provision is made for a secret
agent. As such he is not exempt. Our task is equally clear. The
first and fundamental duty of courts is to apply the law.
"Construction and interpretation come only after it has been
demonstrated that application is impossible or inadequate without
them."7 The conviction of the accused must stand. It cannot be
set aside.
Accused however would rely on People v. Macarandang,8 where
a secret agent was acquitted on appeal on the assumption that
the appointment "of the accused as a secret agent to assist in the
maintenance of peace and order campaigns and detection of
crimes, sufficiently put him within the category of a "peace officer"
equivalent even to a member of the municipal police expressly
covered by section 879." Such reliance is misplaced. It is not
within the power of this Court to set aside the clear and explicit
mandate of a statutory provision. To the extent therefore that this
decision conflicts with what was held in People v. Macarandang,
it no longer speaks with authority.
Wherefore, the judgment appealed from is affirmed.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. L-66614 January 25, 1988
PRIMITIVO LEVERIZA, FE LEVERIZA, PARUNGAO &
ANTONIO C. VASCO, petitioners,
vs.
INTERMEDIATE APPELLATE COURT, MOBIL OIL
PHILIPPINES & CIVIL AERONAUTICS
ADMINISTRATION, respondents.
BIDIN, J.:
This is a Petition for Review on certiorari seeking the reversal of the decision of the
Intermediate Appellate Court, Third Division * dated February 29, 1984 in AC-G.R. No. CV
No. 61705 entitled Mobil Oil Philippines, Inc., plaintiff-appellee vs. Primitivo Leveriza
Parungao, Antonio C. Vasco and Civil Aeronautics Administration, defendants-appellants;
Primitive Leveriza, Fe Leveriza Parungao and Antonio C. Leveriza, cross-defendant,
affirming in toto the decision of the trial court dated April 6, 1976.
As found by the trial court and adopted by the Intermediate
Appellate Court, the facts of this case are as follows:
Around three contracts of lease resolve the basic issues in the
instant case. These three contracts are as follows:
First Contract. — For purposes of easy reference and brevity, this
contract shall be referred to hereinafter as Contract A. This is a
"CONTRACT OF LEASE", executed between the REPUBLIC OF
THE PHILIPPINES, represented by Defendant CIVIL
AERONAUTICS ADMINISTRATION, as lessor, and ROSARIO C.
LEVERIZA, as lessee, on April 2, 1965, over a certain parcel of
land at the MIA area, consisting of approximately 4,502 square
meters, at a monthly rental of P450.20, for a period of 25 years,
(Exhibit "A", Exhibit "I-Leverizas", Exhibit "I-CAA").
Second Contracts. — For purposes of easy references and
brevity, this contract shall be referred to hereinafter as Contract
B. This is a "LEASE AGREEMENT", executed between
ROSARIO C. LEVERIZA, as lessor, and Plaintiff MOBIL OIL
PHILIPPINES, INC., as lessee on May 21, 1965, over 3,000
square meters of that SAME Parcel of land subject of Contract A
above mentioned, at a monthly rental of P1,500.00, for a period of
25 years (Exhibit 'B', Exhibit 4-Leverizas' ).
Third Contract. — For purposes of easy reference and brevity,
this contract shall be referred to hereinafter as Contract C. This is
a "LEASE AGREEMENT", executed between Defendant CIVIL
AERONAUTICS ADMINISTRATION, as lessor, and plaintiff
MOBIL OIL PHILIPPINES, INC., as lessee, on June 1, 1968 over
that SAME parcel of land (Lot A, on plan being a portion of
Parcel, Psu 2031), containing an area of 3,000 square meters
more or less, at a monthly rental of P.25 per square meter for the
second 200 square meters, and P.20 per square meter for the
rest, for a period of 29 (sic) years. (Exhibit "C").
There is no dispute among the parties that the subject matter of
the three contracts of lease above mentioned, Contract A,
Contract B, and Contract C, is the same parcel of land, with the
noted difference that while in Contract A, the area leased is 4,502
square meters, in Contract B and Contract C, the area has been
reduced to 3,000 square meters. To summarize:
Contract A — a lease contract of April 2, 1965 between the
Republic of the Philippines, represented by Defendant Civil
Aeronautics Administration and Rosario C. Leveriza over a parcel
of land containing an area of 4,502 square meters, for 25 years.
Contract B — a lease contract (in effect a sublease) of May 21,
1965 between defendant Rosario C. Leveriza and plaintiff Mobil
Oil Philippines, Inc. over the same parcel of land, but reduced to
3,000 square meters for 25 years; and
Contract C — a lease contract of June 1, 1968 between
defendant Civil Aeronautics Administration and plaintiff Mobil Oil
Philippines, Inc., over the same parcel of land, but reduced to
3,000 square meters, for 25 years.
It is important to note, for a clear understanding of the issues
involved, that it appears that defendant Civil Aeronautics
Administration as LESSOR, leased the same parcel of land, for
durations of time that overlapped to two lessees, to wit: (1)
Defendant Rosario C. Leveriza, and that plaintiff Mobil Oil
Philippines, Inc., as LESSEE, leased the same parcel of land
from two lessors, to wit: (1) defendant Rosario C. Leveriza and
(2) defendant Civil Aeronautics Administration, Inc., for durations
of time that also overlapped.
For purposes of brevity defendant Civil Aeronautics
Administration shall be referred to hereinafter as defendant CAA.
Rosario C. Leveriza, the lessee in Contract A and the lessor in
Contract B, is now deceased. This is the reason why her
successor-in-interest, her heirs, are sued, namely: Defendants
Primitive Leveriza, her second husband, (now also deceased), Fe
Leveriza Parungao, her daughter by her second husband, and
Antonio C. Vasco, her son by her first husband. For purposes of
brevity, these defendants shall be referred to hereinafter as
Defendants Leveriza.
Plaintiff Mobil Oil Philippines, Inc., shall be referred to hereinafter
simply as the Plaintiff. (pp. 95-99, Record on Appeal).
Plaintiff in this case seeks the rescission or cancellation of
Contract A and Contract B on the ground that Contract A from
which Contract B is derived and depends has already been
cancelled by the defendant Civil Aeronautics Administration and
maintains that Contract C with the defendant CAA is the only
valid and subsisting contract insofar as the parcel of land, subject
to the present litigation is concerned. On the other hand,
defendants Leverizas' claim that Contract A which is their contract
with CAA has never been legally cancelled and still valid and
subsisting; that it is Contract C between plaintiff and defendant
CAA which should be declared void.
Defendant CAA asserts that Exhibit "A" is still valid and subsisting
because its cancellation by Guillermo Jurado was ineffective and
asks the court to annul Contract A because of the violation
committed by defendant Leveriza in leasing the parcel of land to
plaintiff by virtue of Contract B without the consent of defendant
CAA. Defendant CAA further asserts that Contract C not having
been approved by the Director of Public Works and
Communications is not valid. ...
xxx xxx xxx
After trial, the lower court render judgment on April 6, 1976 the
dispositive part of which reads:
WHEREFORE, after having thus considered the evidence of all
the parties, testimonial and documentary, and their memoranda
and reply-memoranda, this Court hereby renders judgment:
1. Declaring Contract A as having been validly cancelled on June
28, 1966, and has therefore ceased to have any effect as of that
date;
2. Declaring that Contract B has likewise ceased to have any
effect as of June 28, 1966 because of the cancellation of Contract
A;
3. Declaring that Contract C was validly entered into on June 1,
1968, and that it is still valid and subsisting;
4. Ordering defendant CAA to refund to defendants Leverizas the
amount of P32,189.30 with 6% per annum until fully paid;
5. Ordering defendants Leverizas to refund to plaintiff the amount
of P48,000.00 with 6% interest per annum until fully paid;
6. Dismissing defendants Leverizas' four counterclaims against
plaintiff;
7. Dismissing defendants Leverizas' cross-claim against
defendant CAA;
8. Dismissing defendant CAA's counterclaim against plaintiff;
9. Dismissing defendant CAA's counterclaim against defendant
Leverizas.
No pronouncements as to costs.
On June 2, 1976, defendant Leveriza filed a motion for new trial
on the ground of newly discovered evidence, lack of jurisdiction of
the court over the case and lack of evidentiary support of the
decision which was denied in the order of November 12,1976
(Rollo, p. 17).
On July 27, 1976, the CAA filed a Motion for Reconsideration,
averring that because the lot lease was properly registered in the
name of the Republic of the Philippines, it was only the President
of the Philippines or an officer duly designated by him who could
execute the lease contract pursuant to Sec. 567 of the Revised
Administrative Code; that the Airport General Manager has no
authority to cancel Contract A, the contract entered into between
the CAA and Leveriza, and that Contract C between the CAA and
Mobil was void for not having been approved by the Secretary of
Public Works and Communications. Said motion was however
denied on November 12, 1976 (Rollo, p. 18).
On appeal, the Intermediate Appellate Court, being in full accord
with the trial court, rendered a decision on February 29, 1984, the
dispositive part of which reads:
WHEREFORE, finding no reversible error in the decision of the
lower court dated April 6, 1976, the same is hereby affirmed
in toto.
Hence, this petition.
The petitioners raised the following assignment of errors:
I.THE INTERMEDIATE APPELLATE COURT ERRED IN
HOLDING THAT THE ADMINISTRATOR OF THE CIVIL
AERONAUTICS ADMINISTRATION (CAA) HAD THE
STATUTORY AUTHORITY TO LEASE, EVEN WITHOUT
APPROVAL OF THE THEN SECRETARY OF PUBLIC WORKS
AND COMMUNICATIONS, REAL PROPERTY BELONGING TO
THE REPUBLIC OF THE PHILIPPINES.
II. THE INTERMEDIATE APPELLATE COURT ERRED IN
HOLDING THAT THE ADMINISTRATOR OF THE CIVIL
AERONAUTICS ADMINISTRATION HAD STATUTORY
AUTHORITY, WITHOUT THE APPROVAL OF THE THEN
SECRETARY OF PUBLIC WORKS AND COMMUNICATIONS,
TO CANCEL A LEASE CONTRACT OVER REAL PROPERTY
OWNED BY THE REPUBLIC OF THE PHILIPPINES, WHICH
CONTRACT WAS APPROVED, AS REQUIRED BY LAW, BY
THE SECRETARY.
III. THE INTERMEDIATE APPELLATE COURT ERRED WHEN
IT RULED THAT THE CONTRACT OF SUBLEASE (CONTRACT
B) ENTERED INTO BETWEEN PETITIONERS'
PREDECESSOR-IN-INTEREST AND RESPONDENT MOBIL OIL
PHILIPPINES, INC. WAS WITHOUT THE CONSENT OF THE
ADMINISTRATOR OF THE CIVIL AERONAUTICS
ADMINISTRATION.
The petition is devoid of merit.
There is no dispute that Contract "A" at the time of its execution
was a valid contract. The issue therefore is whether or not said
contract is still subsisting after its cancellation by CAA on the
ground of a sublease executed by petitioners with Mobil Oil
Philippines without the consent of CAA and the execution of
another contract of lease between CAA and Mobil Oil Philippines
(Contract "C").
Petitioners contend that Contract "A" is still subsisting because
Contract "B" is a valid sublease and does not constitute a ground
for the cancellation of Contract "A", while Contract "C", a
subsequent lease agreement between CAA and Mobil Oil
Philippines is null and void, for lack of approval by the
Department Secretary. Petitioners anchor their position on
Sections 567 and 568 of the Revised Administrative Code which
require among others, that subject contracts should be executed
by the President of the Philippines or by an officer duly
designated by him, unless authority to execute the same is by law
vested in some other officer (Petition, Rollo, pp. 15-16).
At the other extreme, respondent Mobil Oil Philippines asserts
that Contract "A" was validly cancelled on June 28, 1966 and so
was Contract "B" which was derived therefrom. Accordingly, it
maintains that Contract "C" is the only valid contract insofar as
the parcel of land in question is concerned and that approval of
the Department Head is not necessary under Section 32 (par. 24)
of the Republic Act 776 which expressly vested authority to enter
into such contracts in the Administrator of CAA (Comment; Rollo,
p. 83).
On its part, respondent Civil Aeronautics Administration took the
middle ground with its view that Contract "A" is still subsisting as
its cancellation is ineffective without the approval of the
Department Head but said contract is not enforceable because of
petitioners' violation of its terms and conditions by entering into
Contract "B" of sublease without the consent of CAA. The CAA
further asserts that Contract "C" not having been approved by the
Secretary of Public Works and Communications, is not valid
(Rollo, p. 43). However, in its comment filed with the Supreme
Court, the CAA made a complete turnabout adopting the
interpretation and ruling made by the trial court which was
affirmed by the Intermediate Appellate Court (Court of Appeals),
that the CAA Administrator has the power to execute the deed or
contract of lease involving real properties under its administration
belonging to the Republic of the Philippines without the approval
of the Department Head as clearly provided in Section 32,
paragraph (24) of Republic Act 776.
The issue narrows down to whether or not there is a valid ground
for the cancellation of Contract "A."
Contract "A" was entered into by CAA as the lessor and the
Leverizas as the lessee specifically "for the purpose of operating
and managing a gasoline station by the latter, to serve vehicles
going in and out of the airport."
As regards prior consent of the lessor to the transfer of rights to
the leased premises, the provision of paragraph 7 of said
Contract reads in full:
7. The Party of the Second part may transfer her rights to the
leased premises but in such eventuality, the consent of the Party
of the First Part shall first be secured. In any event, such transfer
of rights shall have to respect the terms and conditions of this
agreement.
Paragraph 8 provides the sanction for the violation of the above-
mentioned terms and conditions of the contract. Said paragraph
reads:
8. Failure on the part of the Party of the Second Part to comply
with the terms and conditions herein agreed upon shall be
sufficient for revocation of this contract by the Party of the First
Part without need of judicial demand.
It is not disputed that the Leverizas (lessees) entered into a
contract of sublease (Contract "B") with Mobil Oil Philippines
without the consent of CAA (lessor). The cancellation of the
contract was made in a letter dated June 28, 1966 of Guillermo P.
Jurado, Airport General Manager of CAA addressed to Rosario
Leveriza, as follows:
(Letterhead)
June 28, 1966
Mrs. Rosario Leveriza
Manila International Airport
Madam:
It has been found out by the undersigned that you have sublet the
property of the CAA leased to you and by virtue of this, your lease
contract is hereby cancelled because of the violation of the
stipulations of the contract. I would like to inform you that even
without having sublet the said property the said contract would
have been cancelled as per attached communication.
RMO P. JURADO
Airport General Manager
Respondent Leverizas and the CAA assailed the validity of such
cancellation, claiming that the Airport General Manager had no
legal authority to make the cancellation. They maintain that it is
only the Secretary of Public Works and Communications, acting
for the President, or by delegation of power, the Director of Civil
Aeronautics Administration who could validly cancel the contract.
They do admit, however, and it is evident from the records that
the Airport General Manager signed "For the Director." Under the
circumstances, there is no question that such act enjoys the
presumption of regularity, not to mention the unassailable fact
that such act was subsequently affirmed or ratified by the Director
of the CAA himself (Record on Appeal, pp. 108-110).
Petitioners argue that cancelling or setting aside a contract
approved by the Secretary is, in effect, repealing an act of the
Secretary which is beyond the authority of the Administrator.
Such argument is untenable. The terms and conditions under
which such revocation or cancellation may be made, have
already been specifically provided for in Contract "A" which has
already been approved by the Department Head, It is evident that
in the implementation of aforesaid contract, the approval of said
Department Head is no longer necessary if not redundant.
It is further contended that even granting that such cancellation
was effective, a subsequent billing by the Accounting Department
of the CAA has in effect waived or nullified the rescission of
Contract "A."
It will be recalled that the questioned cancellation of Contract "A"
was among others, mainly based on the violation of its terms and
conditions, specifically, the sublease of the property by the lessee
without the consent of the lessor.
The billing of the petitioners by the Accounting Department of the
CAA if indeed it transpired, after the cancellation of Contract "A"
is obviously an error. However, this Court has already ruled that
the mistakes of government personnel should not affect public
interest. In San Mauricio Mining Company v. Ancheta (105 SCRA
391, 422), it has been held that as a matter of law rooted in the
protection of public interest, and also as a general policy to
protect the government and the people, errors of government
personnel in the performance of their duties should never deprive
the people of the right to rectify such error and recover what
might be lost or be bartered away in any actuation, deal or
transaction concerned. In the case at bar, the lower court in its
decision which has been affirmed by the Court of Appeals,
ordered the CAA to refund to the petitioners the amount of rentals
which was not due from them with 6% interest per annum until
fully paid.
Petitioners further assail the interpretation of Contract "A",
claiming that Contract "B" was a mere sublease to respondent
Mobil Oil Philippines, Inc. and requires no prior consent of CAA to
perfect the same. Citing Article 1650 of the Civil Code, they
assert that the prohibition to sublease must be expressed and
cannot be merely implied or inferred (Rollo, p. 151).
As correctly found by the Court of Appeals, petitioners in
asserting the non- necessity for a prior consent interprets the first
sentence of paragraph 7 of Contract "A" to refer to an assignment
of lease under Article 1649 of the Civil Code and not to a mere
sublease. A careful scrutiny of said paragraph of Contract "A"
clearly shows that it speaks of transfer of rights of Rosario
Leveriza to the leased premises and not to assignment of the
lease (Rollo, pp. 48-49).
Petitioners likewise argued that it was contemplated by the
parties to Contract "A" that Mobil Oil Philippines would be the
owner of the gasoline station it would construct on the leased
premises during the period of the lease, hence, it is understood
that it must be given a right to use and occupy the lot in question
in the form of a sub-lease (Rollo, p. 152).
In Contract "A", it was categorically stated that it is the lessee
(petitioner) who will manage and operate the gasoline station.
The fact that Mobil Oil was mentioned in that contract was clearly
not intended to give approval to a sublease between petitioners
and said company but rather to insure that in the arrangements to
be made between them, it must be understood that after the
expiration of the lease contract, whatever improvements have
been constructed in the leased premises shall be relinquished to
CAA. Thus, this Court held that "the primary and elementary rule
of construction of documents is that when the words or language
thereof is clear and plain or readily understandable by any
ordinary reader thereof, there is absolutely no room for
interpretation or construction anymore." (San Mauricio Mining
Company v. Ancheta, supra).
Finally, petitioners contend that the administrator of CAA cannot
execute without approval of the Department Secretary, a valid
contract of lease over real property owned by the Republic of the
Philippines, citing Sections 567 and 568 of the Revised
Administrative Code, which provide as follows:
SEC. 567. Authority of the President of the Philippines to execute
contracts relative to real property. — When the Republic of the
Philippines is party to a deed conveying the title to real property
or is party to any lease or other contract relating to real property
belonging to said government, said deed or contract shall be
executed on behalf of said government by the President of the
Philippines or by an officer duly designated by him, unless
authority to execute the same is by law expressly vested in some
other officer. (Emphasis supplied)
SEC. 568. Authority of national officials to make contract. —
Written contracts not within the purview of the preceding section
shall, in the absence of special provision, be executed, with the
approval of the proper Department Head, by the Chief of the
Bureau or Office having control of the appropriation against which
the contract would create a charge; or if there is no such chief, by
the proper Department Head himself or the President of the
Philippines as the case may require.
On the other hand, respondent CAA avers that the CAA
Administrator has the authority to lease real property belonging to
the Republic of the Philippines under its administration even
without the approval of the Secretary of Public Works and
Communications, which authority is expressly vested in it by law,
more particularly Section 32 (24) of Republic Act 776, which
reads:
Sec. 32. Powers and Duties of the Administrator. — Subject to
the general control and supervision of the Department Head, the
Administrator shall have, among others, the following powers and
duties:
xxx xxx xxx
(24) To administer, operate, manage, control, maintain and
develop the Manila International Airport and all government
aerodromes except those controlled or operated by the Armed
Forces of the Philippines including such power and duties as: ...
(b) to enter into, make and execute contracts of any kind with any
person, firm, or public or private corporation or entity; (c) to
acquire, hold, purchase, or lease any personal or real property;
right of ways, and easements which may be proper or necessary:
Provided, that no real property thus acquired and any other real
property of the Civil Aeronautics Administration shall be sold
without the approval of the President of the Philippines. ...
There is no dispute that the Revised Administrative Code is a
general law while Republic Act 776 is a special law nor in the fact
that the real property subject of the lease in Contract "C" is real
property belonging to the Republic of the Philippines.
Under 567 of the Revised Administrative Code, such contract of
lease must be executed: (1) by the President of the Philippines,
or (2) by an officer duly designated by him or (3) by an officer
expressly vested by law. It is readily apparent that in the case at
bar, the Civil Aeronautics Administration has the authority to enter
into Contracts of Lease for the government under the third
category. Thus, as correctly ruled by the Court of Appeals, the
Civil Aeronautics Administration has the power to execute the
deed or contract involving leases of real properties belonging to
the Republic of the Philippines, not because it is an entity duly
designated by the President but because the said authority to
execute the same is, by law expressly vested in it.
Under the above-cited Section 32 (par. 24) of Republic Act 776,
the Administrator (Director) of the Civil Aeronautics Administration
by reason of its creation and existence, administers properties
belonging to the Republic of the Philippines and it is on these
properties that the Administrator must exercise his vast power
and discharge his duty to enter into, make and execute contract
of any kind with any person, firm, or public or private corporation
or entity and to acquire, hold, purchase, or lease any personal or
real property, right of ways and easements which may be proper
or necessary. The exception, however, is the sale of properties
acquired by CAA or any other real properties of the same which
must have the approval of the President of the Philippines. The
Court of appeals took cognizance of the striking absence of such
proviso in the other transactions contemplated in paragraph (24)
and is convinced as we are, that the Director of the Civil
Aeronautics Administration does not need the prior approval of
the President or the Secretary of Public Works and
Communications in the execution of Contract "C."
In this regard, this Court, ruled that another basic principle of
statutory construction mandates that general legislation must give
way to special legislation on the same subject, and generally be
so interpreted as to embrace only cases in which the special
provisions are not applicable (Sto. Domingo v. De los Angeles, 96
SCRA 139),. that specific statute prevails over a general statute
(De Jesus v. People, 120 SCRA 760) and that where two statutes
are of equal theoretical application to a particular case, the one
designed therefor specially should prevail (Wil Wilhensen, Inc. v.
Baluyot, 83 SCRA 38)
WHEREFORE, the petition is DISMISSED for lack of merit and
the decision of the Court of Appeals appealed from is
AFFIRMED in toto.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-34568 March 28, 1988
RODERICK DAOANG, and ROMMEL DAOANG, assisted by
their father, ROMEO DAOANG, petitioners,
vs.
THE MUNICIPAL JUDGE, SAN NICOLAS, ILOCOS NORTE,
ANTERO AGONOY and AMANDA RAMOS-
AGONOY, respondents.
PADILLA, J.:
This is a petition for review on certiorari of the decision, dated 30 June 1971, rendered by
the respondent judge * in Spec. Proc. No. 37 of Municipal Court of San Nicolas, Ilocos
Norte, entitled: "In re Adoption of the Minors Quirino Bonilla and Wilson Marcos; Antero
Agonoy and Amanda R. Agonoy, petitioners", the dispositive part of which reads, as follows:
Wherefore, Court renders judgment declaring that henceforth
Quirino Bonilla and Wilson Marcos be, to all legitimate intents and
purposes, the children by adoption of the joint petitioners Antero
Agonoy and Amanda R. Agonoy and that the former be freed
from legal obedience and maintenance by their respective
parents, Miguel Bonilla and Laureana Agonoy for Quirino Bonilla
and Modesto Marcos and Benjamina Gonzales for Wilson Marcos
and their family names 'Bonilla' and 'Marcos' be changed with
"Agonoy", which is the family name of the petitioners.
Successional rights of the children and that of their adopting
parents shall be governed by the pertinent provisions of the New
Civil Code.
Let copy of this decision be furnished and entered into the
records of the Local Civil Registry of San Nicolas, Ilocos Norte,
for its legal effects at the expense of the petitioners. 1
The undisputed facts of the case are as follows:
On 23 March 1971, the respondent spouses Antero and Amanda
Agonoy filed a petition with the Municipal Court of San Nicolas,
Ilocos Norte, seeking the adoption of the minors Quirino Bonilla
and Wilson Marcos. The case, entitled: "In re Adoption of the
Minors Quirino Bonilla and Wilson Marcos, Antero Agonoy and
Amanda Ramos-Agonoy, petitioners", was docketed therein as
Spec. Proc. No. 37. 2
The petition was set for hearing on 24 April 1971 and notices
thereof were caused to be served upon the office of the Solicitor
General and ordered published in the ILOCOS TIMES, a weekly
newspaper of general circulation in the province of Ilocos Norte,
with editorial offices in Laoag City. 3
On 22 April 1971, the minors Roderick and Rommel Daoang,
assisted by their father and guardian ad litem, the petitioners
herein, filed an opposition to the aforementioned petition for
adoption, claiming that the spouses Antero and Amanda Agonoy
had a legitimate daughter named Estrella Agonoy, oppositors'
mother, who died on 1 March 1971, and therefore, said spouses
were disqualified to adopt under Art. 335 of the Civil Code. 4
After the required publication of notice had been accomplished,
evidence was presented. Thereafter, the Municipal Court of San
Nicolas, Ilocos Norte rendred its decision, granting the petition for
adoption. 5
Hence, the present recourse by the petitioners (oppositors in the
lower court).
The sole issue for consideration is one of law and it is whether or
not the respondent spouses Antero Agonoy and Amanda Ramos-
Agonoy are disqualified to adopt under paragraph (1), Art. 335 of
the Civil Code.
The pertinent provision of law reads, as follows:
Art. 335. The following cannot adopt:
(1) Those who have legitimate, legitimated, acknowledged natural
children, or children by legal fiction;
xxx xxx xxx
In overruling the opposition of the herein petitioners, the
respondents judge held that "to add grandchildren in this article
where no grandchil is included would violate to (sic) the legal
maxim that what is expressly included would naturally exclude
what is not included".
But, it is contended by the petitioners, citing the case of In re
Adoption of Millendez,6 that the adoption of Quirino Bonilla and
Wilson Marcos would not only introduce a foreign element into
the family unit, but would result in the reduction of their
legititimes. It would also produce an indirect, permanent and
irrevocable disinheritance which is contrary to the policy of the
law that a subsequent reconciliation between the offender and the
offended person deprives the latter of the right to disinherit and
renders ineffectual any disinheritance that may have been made.
We find, however, that the words used in paragraph (1) of Art.
335 of the Civil Code, in enumerating the persons who cannot
adopt, are clear and unambiguous. The children mentioned
therein have a clearly defined meaning in law and, as pointed out
by the respondent judge, do not include grandchildren.
Well known is the rule of statutory construction to the effect that a
statute clear and unambiguous on its face need not be
interpreted; stated otherwise, the rule is that only statutes with an
ambiguous or doubtful meaning may be the subject of statutory
construction. 7
Besides, it appears that the legislator, in enacting the Civil Code
of the Philippines, obviously intended that only those persons
who have certain classes of children, are disqualified to adopt.
The Civil Code of Spain, which was once in force in the
Philippines, and which served as the pattern for the Civil Code of
the Philippines, in its Article 174, disqualified persons who have
legitimate or legitimated descendants from adopting. Under this
article, the spouses Antero and Amanda Agonoy would have
been disqualified to adopt as they have legitimate grandchildren,
the petitioners herein. But, when the Civil Code of the Philippines
was adopted, the word "descendants" was changed to "children",
in paragraph (1) of Article 335.
Adoption used to be for the benefit of the adoptor. It was intended
to afford to persons who have no child of their own the
consolation of having one, by creating through legal fiction, the
relation of paternity and filiation where none exists by blood
relationship. 8 The present tendency, however, is geared more
towards the promotion of the welfare of the child and the
enhancement of his opportunities for a useful and happy life, and
every intendment is sustained to promote that objective.9 Under
the law now in force, having legitimate, legitimated,
acknowledged natural children, or children by legal fiction, is no
longer a ground for disqualification to adopt. 10
WHEREFORE, the petition is DENIED. The judgment of the
Municipal Court of San Nicolas, Ilocos Norte in Spec. Proc. No.
37 is AFFIRMED. Without pronouncement as to costs in this
instance.
SO ORDERED.
Yap, Melencio-Herrera, Paras and Sarmiento, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 111722 May 27, 1997
ALPHA INVESTIGATION AND SECURITY AGENCY, INC.
(AISA), petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, THIRD
DIVISION, and WILLIAM GALIMBA, NESTOR LOLOQUISEN,
NESTOR IBUYAT, CARLITO CASTRO, JOSE PERDIDO,
FELIPE TOLENTINO, LEONARDO IBUYAT, FELINO
CULANNAY RONIE NINO, ROMAN NALUNDASAN, JAIME
FONTANILLA, WILFRED BUTAY, JOSE ACIO, EDISON
VALDEZ, CRESENCIO AGRES, RODRIGO LUIS, MARIO
SUGUI, BENEDICTO SUGUI, ROGER RAMBAUD, respondents.
ROMERO, J.:
May the principal of a security service agreement be held jointly
and severally liable with the contractor for non-payment of the
minimum wage?
The facts are undisputed.
Petitioner Alpha Investigation and Agency, Inc. (AISA) is a private
corporation engaged in the business of providing security
services to its clients, one of whom is the Don Mariano Marcos
State University (DMMSU).
Private respondents were hired as security guards by AISA. on
February 16, 1990. Five months later, 43 security guards filed
before the Regional Office of the Department of Labor and
Employment (DOLE) a complaint against AISA for non-
compliance with the current minimum wage order. After 24 of the
original complainants filed a motion for the exclusion from the
case, the remaining 19 security guards filed their individual
amended complaints impleading DMMSU as party-respondent.
Private respondents have been receiving a monthly salary of
P900.00 although the security service agreement between AISA
and DMMSU 1 provided a monthly pay of P1,200.00 for each
security guard. AISA made representations with DMMSU for an
increase in the contract rates of the security guards to enable
them to pay the mandated minimum wage rates without
compromising its administrative and operational expenses.
DMMSU, however, replied that, being a government corporation,
it cannot grant said request due to budgetary constraints.
On August 17, 1992, Labor Arbiter Emiliano T. de Asis rendered
a decision, the dispositive portion of which reads as follows:
RESPONSIVE TO THE FOREGOING, judgment is hereby
rendered:
a) Ordering the respondent Alpha Investigation and Security
Agency and Mariano Marcos State University to pay each
complainant the amount of FORTY ONE THOUSAND FOUR
HUNDRED FIFTY NINE PESOS AND FIFTY ONE CENTAVOS
(P41,459.51) representing salary differential for the period from
February 16 September 30, 1991, or the total amount of
P787,730.69 as follows:
1. Nestor Loloquisen P41,459.51
2. Nestor Ibuyat 41,459.51
3. Jose Acio 41,459.51
4. Cresencio Agres 41,459.51
5. Wilfred Butay 41,459.51
6. Carlito Castro 41,459.51
7. Federico Calunnay 41,459.51
8. Jaime Fontanilla 41,459.51
9. William Galimba 41,459.51
10. Leonardo Ibuyat 41,459.51
11. Rodrigo Luis 41,459.51
12. Roman Nalundasan 41,459.51
13. Ronnie Nino 41,459.51
14. Jose Perdido 41,459.51
15. Roger Rambaud 41,459.51
16. Benedicto Sugui 41,459.51
17. Mario Sugui 41,459.51
18. Felipe Tolentino 41,459.51
19. Edison Valdez 41,459.51
—————
P787,730.69
b) Dismissing the claims for 13th month pay for failure to
substantiate the same.
c) Claims of complainants who filed their motion for
reconsideration are hereby dismissed.
SO ORDERED. 2
AISA and DMMSU interposed separate appeals. The NLRC, on
May 7, 1993, rendered a decision affirming the solidary liability of
AISA and DMMSU and remanding the records of the case to the
arbitration branch of origin for computation of the salary
differentials awarded by the Labor Arbiter.
Only AISA filed a motion for reconsideration, which was denied
by the NLRC on July 1, 1993, for lack of merit.
The judgment against DMMSU, finding it jointly and severally
liable with AISA for the payment of increase in wages, became
final and executory after it failed to file a petition for certiorari with
this Court within a reasonable time. "Although Rule 65 does not
specify any period for the filing of a petition
for certiorari and mandamus, it must, nevertheless, be filed within
a reasonable time. In certiorari cases, the definitive rule now is
that such reasonable time is within three months from the
commission of the complained act." 3
In this petition, AISA alleges that payment of the wage increases
under the current minimum wage order should be borne
exclusively by DMMSU, pursuant to Section 6 of Republic Act
6727 (RA 6727) 4 which reads as follows:
Sec. 6. — In the case of contracts for construction projects and
for security, janitorial and similar services, the prescribed
increases in the wage rates of the workers shall be borne by the
principals or clients of the construction/service contractors and
the contract shall be deemed amended accordingly. In the event,
however, that the principal or client fails to pay the prescribed
wage rates, the construction/service contractor shall
be jointly and severally liable with his principal or client.
It further contends that Articles 106, 107 and 109 of the Labor
Code generally refer to the failure of the contractor or sub-
contractor to pay wages in accordance with the Labor Code with
a mandate that failure to pay such wages would make the
employer and contractor jointly and severally liable for such
payment. AISA insists that the matter involved in the case at bar
hinges on wage differentials or wage increases, as prescribed in
the aforequoted Section 6 of RA 6727, and not wages in general,
as provided by the Labor Code.
This interpretation is not acceptable. It is a cardinal rule in
statutory construction that in interpreting the meaning and scope
of a term used in the law, a careful review of the whole law
involved, as well as the intendment of the law, must be made. 5 In
fact, legislative intent must be ascertained from a consideration of
the statute as a whole, and not of an isolated part or a particular
provision alone. 6
AISA's solidary liability for the amounts due the security guards
finds support in Articles 106, 107 and 109 of the Labor Code, to
wit:
Art. 106. Contractor or Sub-Contractor. Whenever an employer
enters into a contract with another person for the performance of
the former's work, the employees of the contractor and of the
latter's sub-contractor, if any, shall be paid in accordance with the
provisions of this code.
In the event that the contractor or sub-contractor fails to pay the
wages of his employees in accordance with this Code, the
employer shall be jointly and severally liable with his contractor or
sub-contractor to such employees to the extent of the work
performed under the contract, in the same manner and extent
that he is liable to employees directly employed by him. . . .
Art. 107. Indirect employer. The provisions of the immediately
preceding Article shall likewise apply to any person, partnership,
association or corporation which, not being an employer,
contracts with an independent contractor for the performance of
any work, task, job or project.
Art. 109. Solidary Liability. The provisions of existing laws to the
contrary notwithstanding, every employer or indirect employer
shall be held responsible with his contractor or sub-contractor for
any violation of any provision of this Code. For purposes of
determining the extent of their civil liability under the Chapter,
they shall be considered as direct employers.
The joint and several liability of the contractor and the principal is
mandated by the Labor Code to ensure compliance with its
provisions, including the statutory minimum wage. 7 The
contractor is made liable by virtue of his status as direct
employer, while the principal becomes the indirect employer of
the former's employees for the purpose of paying their wages in
the event of failure of the contractor to pay them. This gives the
workers ample protection consonant with the labor and social
justice provisions of the 1987 Constitution. 8
In the case at bar, it is not disputed that private respondents are
the employees of AISA. Neither is there any question that they
were assigned to guard the premises of DMMSU pursuant to the
latter's security service agreement with AISA and that these two
entities paid their wage increases.
It is to be borne in mind that wage orders, being statutory and
mandatory, cannot be waived. AISA cannot escape liability since
the law provides for the joint and solidary liability of the principal
and the contractor to protect the laborers. 9 Thus, the Court held
in the case of Eagle Security v. NLRC: 10
The solidary liability of PTSI and EAGLE, however, does not
preclude the right of reimbursement from his co-debtor by the one
who paid (See Article 1217, Civil Code). It is with respect to this
right of reimbursement that petitioners can find support in the
aforecited contractual stipulation and Wage Order provision.
The Wage Orders are explicit that payment of the increases are
"to be borne" by the principal or client. "To be borne", however,
does not mean that the principal, PTSI in this case, would directly
pay the security guards the wage and allowance increases
because there is no privity of contract between them. The security
guards' contractual relationship is with their immediate employer,
EAGLE. As an employer, EAGLE is tasked, among others, with
the payment of their wages. (See Article VII Sec. 3 of the
Contract for Security Services, supra and Bautista v. Inciong,
G.R. No. 52824, March 16, 1988, 158 SCRA 556).
Premises considered, the security guards' immediate recourse for
the payment of the increases is with their direct employer,
EAGLE. However, in order for the security agency to comply with
the new wage and allowance rates it has to pay the security
guards, the Wage Order made specific provision to amend
existing contracts for security services by allowing the
adjustments of the consideration paid by the principal to the
security agency concerned. What the Wage Orders require,
therefore, is the amendment of the contract as to the
consideration to cover the service contractor's payment of the
increases mandated. In the end, therefore, ultimate liability for the
payment of the increases rests with the principal. (Emphasis
supplied).
Section 6 of RA 6727 merely provides that in case of wage
increases resulting in a salary differential, the liability of the
principal and contractor shall be joint and several. The same
liability attaches under Articles 106, 107 and 109 of the Labor
Code, which refer to the prevailing standard minimum wage.
The Court finds that the NLRC acted correctly in holding
petitioner jointly and severally liable with DMMSU for the payment
of the wage increases to private respondents. Accordingly, no
grave abuse of discretion may be attributed to the NLRC in
arriving at the impugned decision.
WHEREFORE, premises considered, the petition is DISMISSED
for lack of merit and the assailed resolution is AFFIRMED. Costs
against petitioner.
SO ORDERED.
Regalado, Puno, Mendoza and Torres, Jr., JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 123169 November 4, 1996
DANILO E. PARAS, petitioner,
vs.
COMMISSION ON ELECTIONS, respondent.
RESOLUTION
FRANCISCO, J.:
Petitioner Danilo E. Paras is the incumbent Punong Barangay of
Pula, Cabanatuan City who won during the last regular barangay
election in 1994. A petition for his recall as Punong Barangay was
filed by the registered voters of the barangay. Acting on the
petition for recall, public respondent Commission on Elections
(COMELEC) resolved to approve the petition, scheduled the
petition signing on October 14, 1995, and set the recall election
on November 13,
1995.1 At least 29.30% of the registered voters signed the
petition, well above the 25% requirement provided by law. The
COMELEC, however, deferred the recall election in view of
petitioner's opposition. On December 6, 1995, the COMELEC set
anew the recall election, this time on December 16, 1995. To
prevent the holding of the recall election, petitioner filed before
the Regional Trial Court of Cabanatuan City a petition for
injunction, docketed as SP Civil Action No. 2254-AF, with the trial
court issuing a temporary restraining order. After conducting a
summary hearing, the trial court lifted the restraining order,
dismissed the petition and required petitioner and his counsel to
explain why they should not be cited for contempt for
misrepresenting that the barangay recall election was without
COMELEC approval.2
In a resolution dated January 5, 1996, the COMELEC, for the
third time, re-scheduled the recall election an January 13, 1996;
hence, the instant petition for certiorari with urgent prayer for
injunction. On January 12, 1996, the Court issued a temporary
restraining order and required the Office of the Solicitor General,
in behalf of public respondent, to comment on the petition. In view
of the Office of the Solicitor General's manifestation maintaining
an opinion 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.
In the interpretation of a statute, the Court should start with the
assumption that the legislature intended to enact an effective law,
and the legislature is not presumed to have done a vain thing in
the enactment of a statute.5 An interpretation should, if possible,
be avoided under which a statute or provision being construed is
defeated, or as otherwise expressed, nullified, destroyed,
emasculated, repealed, explained away, or rendered insignificant,
meaningless, inoperative or nugatory.6
It is likewise a basic precept in statutory construction that a
statute should be interpreted in harmony with the
Constitution.7 Thus, the interpretation of Section 74 of the Local
Government Code, specifically paragraph (b) thereof, should not
be in conflict with the Constitutional mandate of Section 3 of
Article X of the Constitution to "enact a local government code
which shall provide for a more responsive and accountable local
government structure instituted through a system of
decentralization with effective mechanism of recall, initiative, and
referendum . . . ."
Moreover, petitioner's too literal interpretation of the law leads to
absurdity which we cannot countenance. Thus, in a case, the
Court made the following admonition:
We admonish against a too-literal reading of the law as this is apt
to constrict rather than fulfill its purpose and defeat the intention
of its authors. That intention is usually found not in "the letter that
killeth but in the spirit that vivifieth". . .8
The spirit, rather than the letter of a law determines its
construction; hence, a statute, as in this case, must be read
according to its spirit and intent.
Finally, recall election is potentially disruptive of the normal
working of the local government unit necessitating additional
expenses, hence the prohibition against the conduct of recall
election one year immediately preceding the regular local
election. The proscription is due to the proximity of the next
regular election for the office of the local elective official
concerned. The electorate could choose the official's replacement
in the said election who certainly has a longer tenure in office
than a successor elected through a recall election. It would,
therefore, be more in keeping with the intent of the recall
provision of the Code to construe regular local election as one
referring to an election where the office held by the local elective
official sought to be recalled will be contested and be filled by the
electorate.
Nevertheless, recall at this time is no longer possible because of
the limitation stated under Section 74 (b) of the Code considering
that the next regular election involving the barangay office
concerned is barely seven (7) months away, the same having
been scheduled on May 1997. 9
ACCORDINGLY, the petition is hereby dismissed for having
become moot and academic. The temporary restraining order
issued by the Court on January 12, 1996, enjoining the recall
election should be as it is hereby made permanent.
SO ORDERED.
Narvasa, C.J., Padilla, Regalado, Romero, Bellosillo, Melo, Puno,
Vitug, Kapunan, Mendoza, Hermosisima, Jr., Panganiban and
Torres, Jr., JJ., concur.
Separate Opinions
DAVIDE, JR., J., concurring:
I concur with Mr. Justice Ricardo J. Francisco in his ponencia.
However, I wish to add another reason as to why the SK
election cannot be considered a "regular local election" for
purposes of recall under Section 74 of the Local Government
Code of 1991.
The term "regular local election" must be confined to the regular
election of elective local officials, as distinguished from the
regular election of national officials. The elective national officials
are the President, Vice-President, Senators and Congressmen.
The elective local officials are Provincial Governors, Vice-
Governors of provinces, Mayors and Vice-Mayors of cities and
municipalities, Members of the Sanggunians of provinces, cities
and municipalities, punong barangays and members of
the sangguniang barangays, and the elective regional officials of
the Autonomous Region of Muslim Mindanao. These are the only
local elective officials deemed recognized by Section 2(2) of
Article IX-C of the Constitution, which provides:
Sec. 2. The Commission on Elections shall exercise the following
powers and functions:
xxx xxx xxx
(2) Exercise exclusive original jurisdiction over all contests
relating to the elections, returns, and qualifications of all elective
regional, provincial, and city officials, and appellate jurisdiction
over all contests involving elective municipal officials decided by
trial courts of general jurisdiction, or involving elective barangay
officials decided by trial courts of limited jurisdiction.
A regular election, whether national or local, can only refer to an
election participated in by those who possess the right of
suffrage, are not otherwise disqualified by law, and who are
registered voters. One of the requirements for the exercise of
suffrage under Section 1, Article V of the Constitution is that the
person must be at least 18 years of age, and one requisite before
he can vote is that he be a registered voter pursuant to the rules
on registration prescribed in the Omnibus Election Code (Section
113-118).
Under the law, the SK includes the youth with ages ranging from
15 to 21 (Sec. 424, Local Government Code of 1991).
Accordingly, they include many who are not qualified to vote in a
regular election, viz., those from ages 15 to less than 18. In no
manner then may SK elections be considered a regular election
(whether national or local).
Indeed the Sangguniang Kabataan is nothing more than a youth
organization, and although fully recognized in the Local
Government Code and vested with certain powers and
functions, its elective officials have not attained the status of local
elective officials. So, in Mercado vs. Board of Election
Supervisors (243 SCRA 422 [1995]), this Court ruled that
although the SK Chairman is an ex-officio member of
the sangguniang barangay — an elective body — that fact does
not make him "an elective barangay official," since the law
specifically provides who comprise the elective officials of
the sangguniang barangay, viz., the punong barangay and the
seven (7) regular sangguniang barangay members elected at
large by those qualified to exercise the right of suffrage under
Article V of the Constitution, who are likewise registered voters of
the barangay. This shows further that the SK election is not a
regular local election for purposes of recall under Section 74 of
the Local Government Code.
Separate Opinions
DAVIDE, JR., J., concurring:
I concur with Mr. Justice Ricardo J. Francisco in his ponencia.
However, I wish to add another reason as to why the SK
election cannot be considered a "regular local election" for
purposes of recall under Section 74 of the Local Government
Code of 1991.
The term "regular local election" must be confined to the regular
election of elective local officials, as distinguished from the
regular election of national officials. The elective national officials
are the President, Vice-President, Senators and Congressmen.
The elective local officials are Provincial Governors, Vice-
Governors of provinces, Mayors and Vice-Mayors of cities and
municipalities, Members of the Sanggunians of provinces, cities
and municipalities, punong barangays and members of
the sangguniang barangays, and the elective regional officials of
the Autonomous Region of Muslim Mindanao. These are the only
local elective officials deemed recognized by Section 2(2) of
Article IX-C of the Constitution, which provides:
Sec. 2. The Commission on Elections shall exercise the following
powers and functions:
xxx xxx xxx
(2) Exercise exclusive original jurisdiction over all contests
relating to the elections, returns, and qualifications of all elective
regional, provincial, and city officials, and appellate jurisdiction
over all contests involving elective municipal officials decided by
trial courts of general jurisdiction, or involving elective barangay
officials decided by trial courts of limited jurisdiction.
A regular election, whether national or local, can only refer to an
election participated in by those who possess the right of
suffrage, are not otherwise disqualified by law, and who are
registered voters. One of the requirements for the exercise of
suffrage under Section 1, Article V of the Constitution is that the
person must be at least 18 years of age, and one requisite before
he can vote is that he be a registered voter pursuant to the rules
on registration prescribed in the Omnibus Election Code (Section
113-118).
Under the law, the SK includes the youth with ages ranging from
15 to 21 (Sec. 424, Local Government Code of 1991).
Accordingly, they include many who are not qualified to vote in a
regular election, viz., those from ages 15 to less than 18. In no
manner then may SK elections be considered a regular election
(whether national or local).
Indeed the Sangguniang Kabataan is nothing more than a youth
organization, and although fully recognized in the Local
Government Code and vested with certain powers and
functions, its elective officials have not attained the status of local
elective officials. So, in Mercado vs. Board of Election
Supervisors (243 SCRA 422 [1995]), this Court ruled that
although the SK Chairman is an ex-officio member of
the sangguniang barangay — an elective body — that fact does
not make him "an elective barangay official," since the law
specifically provides who comprise the elective officials of
the sangguniang barangay, viz., the punong barangay and the
seven (7) regular sangguniang barangay members elected at
large by those qualified to exercise the right of suffrage under
Article V of the Constitution, who are likewise registered voters of
the barangay. This shows further that the SK election is not a
regular local election for purposes of recall under Section 74 of
the Local Government Code.
Narvasa, C.J., Padilla, Regalado, Bellosillo, Vitug and Mendoza,
JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-30642 April 30, 1985
PERFECTO S. FLORESCA, in his own behalf and on behalf of
the minors ROMULO and NESTOR S. FLORESCA; and
ERLINDA FLORESCA-GABUYO, PEDRO S. FLORESCA, JR.,
CELSO S. FLORESCA, MELBA S. FLORESCA, JUDITH S.
FLORESCA and CARMEN S. FLORESCA;
LYDIA CARAMAT VDA. DE MARTINEZ in her own behalf and
on behalf of her minor children LINDA, ROMEO, ANTONIO
JEAN and ELY, all surnamed Martinez; and DANIEL
MARTINEZ and TOMAS MARTINEZ;
SALUSTIANA ASPIRAS VDA. DE OBRA, in her own behalf
and on behalf of her minor children JOSE, ESTELA, JULITA
SALUD and DANILO, all surnamed OBRA;
LYDIA CULBENGAN VDA. DE VILLAR, in her own behalf and
on behalf of her minor children EDNA, GEORGE and LARRY
III, all surnamed VILLAR;
DOLORES LOLITA ADER VDA. DE LANUZA, in her own
behalf and on behalf of her minor children EDITHA,
ELIZABETH, DIVINA, RAYMUNDO, NESTOR and AURELIO,
JR. all surnamed LANUZA;
EMERENCIANA JOSE VDA. DE ISLA, in her own behalf and
on behalf of her minor children JOSE, LORENZO, JR.,
MARIA, VENUS and FELIX, all surnamed ISLA, petitioners,
vs.
PHILEX MINING CORPORATION and HON. JESUS P. MORFE,
Presiding Judge of Branch XIII, Court of First Instance of
Manila, respondents.
Rodolfo C. Pacampara for petitioners.
Tito M. Villaluna for respondents.
MAKASIAR, J.:
This is a petition to review the order of the former Court of First
Instance of Manila, Branch XIII, dated December 16, 1968
dismissing petitioners' complaint for damages on the ground of
lack of jurisdiction.
Petitioners are the heirs of the deceased employees of Philex
Mining Corporation (hereinafter referred to as Philex), who, while
working at its copper mines underground operations at Tuba,
Benguet on June 28, 1967, died as a result of the cave-in that
buried them in the tunnels of the mine. Specifically, the complaint
alleges that Philex, in violation of government rules and
regulations, negligently and deliberately failed to take the required
precautions for the protection of the lives of its men working
underground. Portion of the complaint reads:
xxx xxx xxx
9. That for sometime prior and up to June 28,1967, the defendant
PHILEX, with gross and reckless negligence and imprudence and
deliberate failure to take the required precautions for the due
protection of the lives of its men working underground at the time,
and in utter violation of the laws and the rules and regulations
duly promulgated by the Government pursuant thereto, allowed
great amount of water and mud to accumulate in an open pit area
at the mine above Block 43-S-1 which seeped through and
saturated the 600 ft. column of broken ore and rock below it,
thereby exerting tremendous pressure on the working spaces at
its 4300 level, with the result that, on the said date, at about 4
o'clock in the afternoon, with the collapse of all underground
supports due to such enormous pressure, approximately 500,000
cubic feet of broken ores rocks, mud and water, accompanied by
surface boulders, blasted through the tunnels and flowed out and
filled in, in a matter of approximately five (5) minutes, the
underground workings, ripped timber supports and carried off
materials, machines and equipment which blocked all avenues of
exit, thereby trapping within its tunnels of all its men above
referred to, including those named in the next preceding
paragraph, represented by the plaintiffs herein;
10. That out of the 48 mine workers who were then working at
defendant PHILEX's mine on the said date, five (5) were able to
escape from the terrifying holocaust; 22 were rescued within the
next 7 days; and the rest, 21 in number, including those referred
to in paragraph 7 hereinabove, were left mercilessly to their fate,
notwithstanding the fact that up to then, a great many of them
were still alive, entombed in the tunnels of the mine, but were not
rescued due to defendant PHILEX's decision to abandon rescue
operations, in utter disregard of its bounden legal and moral
duties in the premises;
xxx xxx xxx
13. That defendant PHILEX not only violated the law and the
rules and regulations duly promulgated by the duly constituted
authorities as set out by the Special Committee above referred to,
in their Report of investigation, pages 7-13, Annex 'B' hereof, but
also failed completely to provide its men working underground the
necessary security for the protection of their lives notwithstanding
the fact that it had vast financial resources, it having made, during
the year 1966 alone, a total operating income of P 38,220,254.00,
or net earnings, after taxes of P19,117,394.00, as per its llth
Annual Report for the year ended December 31, 1966, and with
aggregate assets totalling P 45,794,103.00 as of December 31,
1966;
xxx xxx xxx
A motion to dismiss dated May 14, 1968 was filed by Philex
alleging that the causes of action of petitioners based on an
industrial accident are covered by the provisions of the
Workmen's Compensation Act (Act 3428, as amended by RA
772) and that the former Court of First Instance has no jurisdiction
over the case. Petitioners filed an opposition dated May 27, 1968
to the said motion to dismiss claiming that the causes of action
are not based on the provisions of the Workmen's Compensation
Act but on the provisions of the Civil Code allowing the award of
actual, moral and exemplary damages, particularly:
Art. 2176. Whoever by act or omission causes damage to
another, there being fault or negligence, is obliged to pay for the
damage done. Such fault or negligence, if there is no pre- existing
contractual relation between the parties, is called a quasi-delict
and is governed by the provisions of this Chapter.
Art. 2178. The provisions of articles 1172 to 1174 are also
applicable to a quasi-delict.
(b) Art. 1173—The fault or negligence of the obligor consists in
the omission of that diligence which is required by the nature of
the obligation and corresponds with the circumstances of the
persons, of the time and of the place. When negligence shows
bad faith, the provisions of Articles 1171 and 2201, paragraph 2
shall apply.
Art. 2201. x x x x x x x x x
In case of fraud, bad faith, malice or wanton attitude, the obligor
shall be responsible for all damages which may be reasonably
attributed to the non-performance of the obligation.
Art. 2231. In quasi-delicts, exemplary damages may be granted if
the defendant acted with gross negligence.
After a reply and a rejoinder thereto were filed, respondent Judge
issued an order dated June 27, 1968 dismissing the case on the
ground that it falls within the exclusive jurisdiction of the
Workmen's Compensation Commission. On petitioners' motion for
reconsideration of the said order, respondent Judge, on
September 23, 1968, reconsidered and set aside his order of
June 27, 1968 and allowed Philex to file an answer to the
complaint. Philex moved to reconsider the aforesaid order which
was opposed by petitioners.
On December 16, 1968, respondent Judge dismissed the case
for lack of jurisdiction and ruled that in accordance with the
established jurisprudence, the Workmen's Compensation
Commission has exclusive original jurisdiction over damage or
compensation claims for work-connected deaths or injuries of
workmen or employees, irrespective of whether or not the
employer was negligent, adding that if the employer's negligence
results in work-connected deaths or injuries, the employer shall,
pursuant to Section 4-A of the Workmen's Compensation Act, pay
additional compensation equal to 50% of the compensation fixed
in the Act.
Petitioners thus filed the present petition.
In their brief, petitioners raised the following assignment of errors:
I. THE LOWER COURT ERRED IN DISMISSING THE
PLAINTIFFS- PETITIONERS' COMPLAINT FOR
LACK OF JURISDICTION.
II. THE LOWER COURT ERRED IN FAILING TO
CONSIDER THE CLEAR DISTINCTION BETWEEN
CLAIMS FOR DAMAGES UNDER THE CIVIL CODE
AND CLAIMS FOR COMPENSATION UNDER THE
WORKMEN'S COMPENSATION ACT.
A. In the first assignment of error, petitioners argue that the lower
court has jurisdiction over the cause of action since the complaint
is based on the provisions of the Civil Code on damages,
particularly Articles 2176, 2178, 1173, 2201 and 2231, and not on
the provisions of the Workmen's Compensation Act. They point
out that the complaint alleges gross and brazen negligence on
the part of Philex in failing to take the necessary security for the
protection of the lives of its employees working underground.
They also assert that since Philex opted to file a motion to
dismiss in the court a quo, the allegations in their complaint
including those contained in the annexes are deemed admitted.
In the second assignment of error, petitioners asseverate that
respondent Judge failed to see the distinction between the claims
for compensation under the Workmen's Compensation Act and
the claims for damages based on gross negligence of Philex
under the Civil Code. They point out that workmen's
compensation refers to liability for compensation for loss resulting
from injury, disability or death of the working man through
industrial accident or disease, without regard to the fault or
negligence of the employer, while the claim for damages under
the Civil Code which petitioners pursued in the regular court,
refers to the employer's liability for reckless and wanton
negligence resulting in the death of the employees and for which
the regular court has jurisdiction to adjudicate the same.
On the other hand, Philex asserts that work-connected injuries
are compensable exclusively under the provisions of Sections 5
and 46 of the Workmen's Compensation Act, which read:
SEC. 5. Exclusive right to compensation.—The rights and
remedies granted by this Act to an employee by reason of a
personal injury entitling him to compensation shall exclude all
other rights and remedies accruing to the employee, his personal
representatives, dependents or nearest of kin against the
employer under the Civil Code and other laws because of said
injury ...
SEC. 46. Jurisdiction.— The Workmen's Compensation
Commissioner shall have exclusive jurisdiction to hear and decide
claims for compensation under the Workmen's Compensation
Act, subject to appeal to the Supreme Court, ...
Philex cites the case of Manalo vs. Foster Wheeler (98 Phil. 855
[1956]) where it was held that "all claims of workmen against their
employer for damages due to accident suffered in the course of
employment shall be investigated and adjudicated by the
Workmen's Compensation Commission," subject to appeal to the
Supreme Court.
Philex maintains that the fact that an employer was negligent,
does not remove the case from the exclusive character of
recoveries under the Workmen's Compensation Act; because
Section 4-A of the Act provides an additional compensation in
case the employer fails to comply with the requirements of safety
as imposed by law to prevent accidents. In fact, it points out that
Philex voluntarily paid the compensation due the petitioners and
all the payments have been accepted in behalf of the deceased
miners, except the heirs of Nazarito Floresca who insisted that
they are entitled to a greater amount of damages under the Civil
Code.
In the hearing of this case, then Undersecretary of Labor Israel
Bocobo, then Atty. Edgardo Angara, now President of the
University of the Philippines, Justice Manuel Lazaro, as corporate
counsel and Assistant General Manager of the GSIS Legal Affairs
Department, and Commissioner on Elections, formerly UP Law
Center Director Froilan Bacungan, appeared as amici curiae and
thereafter, submitted their respective memoranda.
The issue to be resolved as WE stated in the resolution of
November 26, 1976, is:
Whether the action of an injured employee or worker or that of his
heirs in case of his death under the Workmen's Compensation
Act is exclusive, selective or cumulative, that is to say, whether
his or his heirs' action is exclusively restricted to seeking the
limited compensation provided under the Workmen's
Compensation Act or whether they have a right of selection or
choice of action between availing of the worker's right under the
Workmen's Compensation Act and suing in the regular courts
under the Civil Code for higher damages (actual, moral and/or
exemplary) from the employer by virtue of negligence (or fault) of
the employer or of his other employees or whether they may avail
cumulatively of both actions, i.e., collect the limited compensation
under the Workmen's Compensation Act and sue in addition for
damages in the regular courts.
There are divergent opinions in this case. Justice Lazaro is of the
opinion that an injured employee or worker, or the heirs in case of
his death, may initiate a complaint to recover damages (not
compensation under the Workmen's Compensation Act) with the
regular court on the basis of negligence of an employer pursuant
to the Civil Code provisions. Atty. Angara believes otherwise. He
submits that the remedy of an injured employee for work-
connected injury or accident is exclusive in accordance with
Section 5 of the Workmen's Compensation Act, while Atty.
Bacungan's position is that the action is selective. He opines that
the heirs of the employee in case of his death have a right of
choice to avail themselves of the benefits provided under the
Workmen's Compensation Act or to sue in the regular court under
the Civil Code for higher damages from the employer by virtue of
negligence of the latter. Atty. Bocobo's stand is the same as that
of Atty. Bacungan and adds that once the heirs elect the remedy
provided for under the Act, they are no longer entitled to avail
themselves of the remedy provided for under the Civil Code by
filing an action for higher damages in the regular court, and vice
versa.
On August 3, 1978, petitioners-heirs of deceased employee
Nazarito Floresca filed a motion to dismiss on the ground that
they have amicably settled their claim with respondent Philex. In
the resolution of September 7, 1978, WE dismissed the petition
only insofar as the aforesaid petitioners are connected, it
appearing that there are other petitioners in this case.
WE hold that the former Court of First Instance has jurisdiction to
try the case,
It should be underscored that petitioners' complaint is not for
compensation based on the Workmen's Compensation Act but a
complaint for damages (actual, exemplary and moral) in the total
amount of eight hundred twenty-five thousand (P825,000.00)
pesos. Petitioners did not invoke the provisions of the Workmen's
Compensation Act to entitle them to compensation thereunder. In
fact, no allegation appeared in the complaint that the employees
died from accident arising out of and in the course of their
employments. The complaint instead alleges gross and reckless
negligence and deliberate failure on the part of Philex to protect
the lives of its workers as a consequence of which a cave-in
occurred resulting in the death of the employees working
underground. Settled is the rule that in ascertaining whether or
not the cause of action is in the nature of workmen's
compensation claim or a claim for damages pursuant to the
provisions of the Civil Code, the test is the averments or
allegations in the complaint (Belandres vs. Lopez Sugar Mill, Co.,
Inc., 97 Phil. 100).
In the present case, there exists between Philex and the
deceased employees a contractual relationship. The alleged
gross and reckless negligence and deliberate failure that amount
to bad faith on the part of Philex, constitute a breach of contract
for which it may be held liable for damages. The provisions of the
Civil Code on cases of breach of contract when there is fraud or
bad faith, read:
Art. 2232. In contracts and quasi-contracts, the court may award
exemplary damages if the defendant acted in a wanton,
fraudulent, reckless, oppressive or malevolent manner.
Art. 2201. In contracts and quasi-contracts, the damages for
which the obligor who acted in good faith is able shall be those
that are the natural and probable consequences of the breach of
the obligation, and which the parties have foreseen or could have
reasonably foreseen at the time the obligation was constituted.
In cases of fraud, bad faith, malice or wanton attitude, the obligor
shall be responsible for all damages which may be reasonably
attributed to the non-performance of the obligation.
Furthermore, Articles 2216 et seq., Civil Code, allow the payment
of all kinds of damages, as assessed by the court.
The rationale in awarding compensation under the Workmen's
Compensation Act differs from that in giving damages under the
Civil Code. The compensation acts are based on a theory of
compensation distinct from the existing theories of damages,
payments under the acts being made as compensation and not
as damages (99 C.J.S. 53). Compensation is given to mitigate the
harshness and insecurity of industrial life for the workman and his
family. Hence, an employer is liable whether negligence exists or
not since liability is created by law. Recovery under the Act is not
based on any theory of actionable wrong on the part of the
employer (99 C.J.S. 36).
In other words, under the compensation acts, the employer is
liable to pay compensation benefits for loss of income, as long as
the death, sickness or injury is work-connected or work-
aggravated, even if the death or injury is not due to the fault of the
employer (Murillo vs. Mendoza, 66 Phil. 689). On the other hand,
damages are awarded to one as a vindication of the wrongful
invasion of his rights. It is the indemnity recoverable by a person
who has sustained injury either in his person, property or relative
rights, through the act or default of another (25 C.J.S. 452).
The claimant for damages under the Civil Code has the burden of
proving the causal relation between the defendant's negligence
and the resulting injury as well as the damages suffered. While
under the Workmen's Compensation Act, there is a presumption
in favor of the deceased or injured employee that the death or
injury is work-connected or work-aggravated; and the employer
has the burden to prove otherwise (De los Angeles vs. GSIS, 94
SCRA 308; Carino vs. WCC, 93 SCRA 551; Maria Cristina
Fertilizer Corp. vs. WCC, 60 SCRA 228).
The claim of petitioners that the case is not cognizable by the
Workmen's Compensation Commission then, now Employees
Compensation Commission, is strengthened by the fact that
unlike in the Civil Code, the Workmen's Compensation Act did not
contain any provision for an award of actual, moral and
exemplary damages. What the Act provided was merely the right
of the heirs to claim limited compensation for the death in the
amount of six thousand (P6,000.00) pesos plus burial expenses
of two hundred (P200.00) pesos, and medical expenses when
incurred (Sections 8, 12 and 13, Workmen's Compensation Act),
and an additional compensation of only 50% if the complaint
alleges failure on the part of the employer to "install and maintain
safety appliances or to take other precautions for the prevention
of accident or occupational disease" (Section 4-A, Ibid.). In the
case at bar, the amount sought to be recovered is over and
above that which was provided under the Workmen's
Compensation Act and which cannot be granted by the
Commission.
Moreover, under the Workmen's Compensation Act,
compensation benefits should be paid to an employee who
suffered an accident not due to the facilities or lack of facilities in
the industry of his employer but caused by factors outside the
industrial plant of his employer. Under the Civil Code, the liability
of the employer, depends on breach of contract or tort. The
Workmen's Compensation Act was specifically enacted to afford
protection to the employees or workmen. It is a social legislation
designed to give relief to the workman who has been the victim of
an accident causing his death or ailment or injury in the pursuit of
his employment (Abong vs. WCC, 54 SCRA 379).
WE now come to the query as to whether or not the injured
employee or his heirs in case of death have a right of selection or
choice of action between availing themselves of the worker's right
under the Workmen's Compensation Act and suing in the regular
courts under the Civil Code for higher damages (actual, moral
and exemplary) from the employers by virtue of that negligence or
fault of the employers or whether they may avail themselves
cumulatively of both actions, i.e., collect the limited compensation
under the Workmen's Compensation Act and sue in addition for
damages in the regular courts.
In disposing of a similar issue, this Court in Pacana vs. Cebu
Autobus Company, 32 SCRA 442, ruled that an injured worker
has a choice of either to recover from the employer the fixed
amounts set by the Workmen's Compensation Act or to prosecute
an ordinary civil action against the tortfeasor for higher damages
but he cannot pursue both courses of action simultaneously.
In Pacaña WE said:
In the analogous case of Esguerra vs. Munoz Palma, involving
the application of Section 6 of the Workmen's Compensation Act
on the injured workers' right to sue third- party tortfeasors in the
regular courts, Mr. Justice J.B.L. Reyes, again speaking for the
Court, pointed out that the injured worker has the choice of
remedies but cannot pursue both courses of action
simultaneously and thus balanced the relative advantage of
recourse under the Workmen's Compensation Act as against an
ordinary action.
As applied to this case, petitioner Esguerra cannot maintain his
action for damages against the respondents (defendants below),
because he has elected to seek compensation under the
Workmen's Compensation Law, and his claim (case No. 44549 of
the Compensation Commission) was being processed at the time
he filed this action in the Court of First Instance. It is argued for
petitioner that as the damages recoverable under the Civil Code
are much more extensive than the amounts that may be awarded
under the Workmen's Compensation Act, they should not be
deemed incompatible. As already indicated, the injured laborer
was initially free to choose either to recover from the employer
the fixed amounts set by the Compensation Law or else, to
prosecute an ordinary civil action against the tortfeasor for higher
damages. While perhaps not as profitable, the smaller indemnity
obtainable by the first course is balanced by the claimant's being
relieved of the burden of proving the causal connection between
the defendant's negligence and the resulting injury, and of having
to establish the extent of the damage suffered; issues that are apt
to be troublesome to establish satisfactorily. Having staked his
fortunes on a particular remedy, petitioner is precluded from
pursuing the alternate course, at least until the prior claim is
rejected by the Compensation Commission. Anyway, under the
proviso of Section 6 aforequoted, if the employer Franklin Baker
Company recovers, by derivative action against the alleged
tortfeasors, a sum greater than the compensation he may have
paid the herein petitioner, the excess accrues to the latter.
Although the doctrine in the case of Esguerra vs. Munoz Palma
(104 Phil. 582), applies to third-party tortfeasor, said rule should
likewise apply to the employer-tortfeasor.
Insofar as the heirs of Nazarito Floresca are concerned, as
already stated, the petition has been dismissed in the resolution
of September 7, 1978 in view of the amicable settlement reached
by Philex and the said heirs.
With regard to the other petitioners, it was alleged by Philex in its
motion to dismiss dated May 14, 1968 before the court a quo, that
the heirs of the deceased employees, namely Emerito Obra,
Larry Villar, Jr., Aurelio Lanuza, Lorenzo Isla and Saturnino
Martinez submitted notices and claims for compensation to the
Regional Office No. 1 of the then Department of Labor and all of
them have been paid in full as of August 25, 1967, except
Saturnino Martinez whose heirs decided that they be paid in
installments (pp. 106-107, rec.). Such allegation was admitted by
herein petitioners in their opposition to the motion to dismiss
dated May 27, 1968 (pp. 121-122, rec.) in the lower court, but
they set up the defense that the claims were filed under the
Workmen's Compensation Act before they learned of the official
report of the committee created to investigate the accident which
established the criminal negligence and violation of law by Philex,
and which report was forwarded by the Director of Mines to the
then Executive Secretary Rafael Salas in a letter dated October
19, 1967 only (p. 76, rec.).
WE hold that although the other petitioners had received the
benefits under the Workmen's Compensation Act, such may not
preclude them from bringing an action before the regular court
because they became cognizant of the fact that Philex has been
remiss in its contractual obligations with the deceased miners
only after receiving compensation under the Act. Had petitioners
been aware of said violation of government rules and regulations
by Philex, and of its negligence, they would not have sought
redress under the Workmen's Compensation Commission which
awarded a lesser amount for compensation. The choice of the
first remedy was based on ignorance or a mistake of fact, which
nullifies the choice as it was not an intelligent choice. The case
should therefore be remanded to the lower court for further
proceedings. However, should the petitioners be successful in
their bid before the lower court, the payments made under the
Workmen's Compensation Act should be deducted from the
damages that may be decreed in their favor.
B. Contrary to the perception of the dissenting opinion, the Court
does not legislate in the instant case. The Court merely applies
and gives effect to the constitutional guarantees of social justice
then secured by Section 5 of Article 11 and Section 6 of Article
XIV of the 1935 Constitution, and now by Sections 6, 7, and 9 of
Article 11 of the DECLARATION OF PRINCIPLES AND STATE
POLICIES of the 1973 Constitution, as amended, and as
implemented by Articles 2176, 2177, 2178, 1173, 2201, 2216,
2231 and 2232 of the New Civil Code of 1950.
To emphasize, the 1935 Constitution declares that:
Sec. 5. The promotion of social justice to insure the well-being
and economic security of all the people should be the concern of
the State (Art. II).
Sec. 6. The State shall afford protection to labor, especially to
working women, and minors, and shall regulate the relations
between landowner and tenant, and between labor and capital in
industry and in agriculture. The State may provide for compulsory
arbitration (Art. XIV).
The 1973 Constitution likewise commands the State to "promote
social justice to insure the dignity, welfare, and security of all the
people "... regulate the use ... and disposition of private property
and equitably diffuse property ownership and profits "establish,
maintain and ensure adequate social services in, the field
of education, health, housing, employment, welfare and social
security to guarantee the enjoyment by the people of a decent
standard of living" (Sections 6 and 7, Art. II, 1973 Constitution);
"... afford protection to labor, ... and regulate the relations
between workers and employers ..., and assure the rights of
workers to ... just and humane conditions of work" (Sec. 9, Art. II,
1973 Constitution, emphasis supplied).
The foregoing constitutional guarantees in favor of labor
institutionalized in Section 9 of Article 11 of the 1973 Constitution
and re-stated as a declaration of basic policy in Article 3 of the
New Labor Code, thus:
Art. 3. Declaration of basic policy.—The State shall afford
protection to labor, promote full employment, ensure equal work
opportunities regardless of sex, race or creed, and regulate the
relations between workers and employers. The State shall assure
the rights of workers to self-organization, collective bargaining,
security of tenure, and just and humane conditions of work.
(emphasis supplied).
The aforestated constitutional principles as implemented by the
aforementioned articles of the New Civil Code cannot be impliedly
repealed by the restrictive provisions of Article 173 of the New
Labor Code. Section 5 of the Workmen's Compensation Act
(before it was amended by R.A. No. 772 on June 20, 1952),
predecessor of Article 173 of the New Labor Code, has been
superseded by the aforestated provisions of the New Civil Code,
a subsequent law, which took effect on August 30, 1950, which
obey the constitutional mandates of social justice enhancing as
they do the rights of the workers as against their employers.
Article 173 of the New Labor Code seems to diminish the rights of
the workers and therefore collides with the social justice
guarantee of the Constitution and the liberal provisions of the
New Civil Code.
The guarantees of social justice embodied in Sections 6, 7 and 9
of Article II of the 1973 Constitution are statements of legal
principles to be applied and enforced by the courts. Mr. Justice
Robert Jackson in the case of West Virginia State Board of
Education vs. Barnette, with characteristic eloquence,
enunciated:
The very purpose of a Bill of Rights was to withdraw certain
subjects from the vicissitudes of political controversy, to place
them beyond the reach of majorities and officials and to establish
them as legal principles to be applied by the courts. One's right to
life, liberty, and property, to free speech, a free press, freedom of
worship and assembly, and other fundamental rights may not be
submitted to vote; they depend on the outcome of no elections
(319 U.S. 625, 638, 87 L.ed. 1638, emphasis supplied).
In case of any doubt which may be engendered by Article 173 of
the New Labor Code, both the New Labor Code and the Civil
Code direct that the doubts should be resolved in favor of the
workers and employees.
Thus, Article 4 of the New Labor Code, otherwise known as
Presidential Decree No. 442, as amended, promulgated on May
1, 1974, but which took effect six months thereafter, provides that
"all doubts in the implementation and interpretation of the
provisions of this Code, including its implementing rules and
regulations, shall be resolved in favor of labor" (Art. 2, Labor
Code).
Article 10 of the New Civil Code states: "In case of doubt in the
interpretation or application of laws, it is presumed that the law-
making body intended right and justice to prevail. "
More specifically, Article 1702 of the New Civil Code likewise
directs that. "In case of doubt, all labor legislation and all labor
contracts shall be construed in favor of the safety and decent
living of the laborer."
Before it was amended by Commonwealth Act No. 772 on June
20, 1952, Section 5 of the Workmen's Compensation Act
provided:
Sec. 5. Exclusive right to compensation.- The rights and remedies
granted by this Act to an employee by reason of a personal injury
entitling him to compensation shall exclude all other rights and
remedies accruing to the employee, his personal representatives,
dependents or nearest of kin against the employer under the Civil
Code and other laws, because of said injury (emphasis supplied).
Employers contracting laborecsrs in the Philippine Islands for
work outside the same may stipulate with such laborers that the
remedies prescribed by this Act shall apply exclusively to injuries
received outside the Islands through accidents happening in and
during the performance of the duties of the employment; and all
service contracts made in the manner prescribed in this section
shall be presumed to include such agreement.
Only the second paragraph of Section 5 of the Workmen's
Compensation Act No. 3428, was amended by Commonwealth
Act No. 772 on June 20, 1952, thus:
Sec. 5. Exclusive right to compensation.- The rights and remedies
granted by this Act to an employee by reason of a personal injury
entitling him to compensation shall exclude all other rights and
remedies accruing to the employee, his personal representatives,
dependents or nearest of kin against the employer under the Civil
Code and other laws, because of said injury.
Employers contracting laborers in the Philippine Islands for work
outside the same shall stipulate with such laborers that the
remedies prescribed by this Act shall apply to injuries received
outside the Island through accidents happening in and during the
performance of the duties of the employment. Such stipulation
shall not prejudice the right of the laborers to the benefits of the
Workmen's Compensation Law of the place where the accident
occurs, should such law be more favorable to them (As amended
by section 5 of Republic Act No. 772).
Article 173 of the New Labor Code does not repeal expressly nor
impliedly the applicable provisions of the New Civil Code,
because said Article 173 provides:
Art. 173. Exclusiveness of liability.- Unless otherwise provided,
the liability of the State Insurance Fund under this Title shall be
exclusive and in place of all other liabilities of the employer to the
employee, his dependents or anyone otherwise entitled to receive
damages on behalf of the employee or his dependents. The
payment of compensation under this Title shall bar the recovery
of benefits as provided for in Section 699 of the Revised
Administrative Code, Republic Act Numbered Eleven hundred
sixty-one, as amended, Commonwealth Act Numbered One
hundred eighty- six, as amended, Commonwealth Act Numbered
Six hundred ten, as amended, Republic Act Numbered Forty-
eight hundred Sixty-four, as amended, and other laws whose
benefits are administered by the System during the period of such
payment for the same disability or death, and conversely
(emphasis supplied).
As above-quoted, Article 173 of the New Labor Code expressly
repealed only Section 699 of the Revised Administrative Code,
R.A. No. 1161, as amended, C.A. No. 186, as amended, R.A. No.
610, as amended, R.A. No. 4864, as amended, and all other laws
whose benefits are administered by the System (referring to the
GSIS or SSS).
Unlike Section 5 of the Workmen's Compensation Act as
aforequoted, Article 173 of the New Labor Code does not even
remotely, much less expressly, repeal the New Civil Code
provisions heretofore quoted.
It is patent, therefore, that recovery under the New Civil Code for
damages arising from negligence, is not barred by Article 173 of
the New Labor Code. And the damages recoverable under the
New Civil Code are not administered by the System provided for
by the New Labor Code, which defines the "System" as referring
to the Government Service Insurance System or the Social
Security System (Art. 167 [c], [d] and [e] of the New Labor Code).
Furthermore, under Article 8 of the New Civil Code, decisions of
the Supreme Court form part of the law of the land.
Article 8 of the New Civil Code provides:
Art. 8. Judicial decisions applying or interpreting the laws or the
Constitution shall form a part of the legal system of the
Philippines.
The Court, through the late Chief Justice Fred Ruiz Castro, in
People vs. Licera ruled:
Article 8 of the Civil Code of the Philippines decrees that judicial
decisions applying or interpreting the laws or the Constitution
form part of this jurisdiction's legal system. These decisions,
although in themselves not laws, constitute evidence of what the
laws mean. The application or interpretation placed by the Court
upon a law is part of the law as of the date of the enactment of
the said law since the Court's application or interpretation merely
establishes the contemporaneous legislative intent that the
construed law purports to carry into effect" (65 SCRA 270, 272-
273 [1975]).
WE ruled that judicial decisions of the Supreme Court assume the
same authority as the statute itself (Caltex vs. Palomer, 18 SCRA
247; 124 Phil. 763).
The aforequoted provisions of Section 5 of the Workmen's
Compensation Act, before and after it was amended by
Commonwealth Act No. 772 on June 20, 1952, limited the right of
recovery in favor of the deceased, ailing or injured employee to
the compensation provided for therein. Said Section 5 was not
accorded controlling application by the Supreme Court in the
1970 case of Pacana vs. Cebu Autobus Company (32 SCRA
442) when WE ruled that an injured worker has a choice of either
to recover from the employer the fixed amount set by the
Workmen's Compensation Act or to prosecute an ordinary civil
action against the tortfeasor for greater damages; but he cannot
pursue both courses of action simultaneously. Said Pacana case
penned by Mr. Justice Teehankee, applied Article 1711 of the
Civil Code as against the Workmen's Compensation Act,
reiterating the 1969 ruling in the case of Valencia vs. Manila
Yacht Club (28 SCRA 724, June 30,1969) and the 1958 case of
Esguerra vs. Munoz Palma (104 Phil. 582), both penned by
Justice J.B.L. Reyes. Said Pacana case was concurred in by
Justices J.B.L. Reyes, Dizon, Makalintal, Zaldivar, Castro,
Fernando and Villamor.
Since the first sentence of Article 173 of the New Labor Code is
merely a re-statement of the first paragraph of Section 5 of the
Workmen's Compensation Act, as amended, and does not even
refer, neither expressly nor impliedly, to the Civil Code as Section
5 of the Workmen's Compensation Act did, with greater reason
said Article 173 must be subject to the same interpretation
adopted in the cases of Pacana, Valencia and Esguerra
aforementioned as the doctrine in the aforesaid three (3) cases is
faithful to and advances the social justice guarantees enshrined
in both the 1935 and 1973 Constitutions.
It should be stressed likewise that there is no similar provision on
social justice in the American Federal Constitution, nor in the
various state constitutions of the American Union. Consequently,
the restrictive nature of the American decisions on the Workmen's
Compensation Act cannot limit the range and compass of OUR
interpretation of our own laws, especially Article 1711 of the New
Civil Code, vis-a-vis Article 173 of the New Labor Code, in
relation to Section 5 of Article II and Section 6 of Article XIV of the
1935 Constitution then, and now Sections 6, 7 and 9 of the
Declaration of Principles and State Policies of Article II of the
1973 Constitution.
The dissent seems to subordinate the life of the laborer to the
property rights of the employer. The right to life is guaranteed
specifically by the due process clause of the Constitution. To
relieve the employer from liability for the death of his workers
arising from his gross or wanton fault or failure to provide safety
devices for the protection of his employees or workers against the
dangers which are inherent in underground mining, is to deprive
the deceased worker and his heirs of the right to recover
indemnity for the loss of the life of the worker and the consequent
loss to his family without due process of law. The dissent in effect
condones and therefore encourages such gross or wanton
neglect on the part of the employer to comply with his legal
obligation to provide safety measures for the protection of the life,
limb and health of his worker. Even from the moral viewpoint
alone, such attitude is un-Christian.
It is therefore patent that giving effect to the social justice
guarantees of the Constitution, as implemented by the provisions
of the New Civil Code, is not an exercise of the power of law-
making, but is rendering obedience to the mandates of the
fundamental law and the implementing legislation
aforementioned.
The Court, to repeat, is not legislating in the instant case.
It is axiomatic that no ordinary statute can override a
constitutional provision.
The words of Section 5 of the Workmen's Compensation Act and
of Article 173 of the New Labor Code subvert the rights of the
petitioners as surviving heirs of the deceased mining employees.
Section 5 of the Workmen's Compensation Act and Article 173 of
the New Labor Code are retrogressive; because they are a
throwback to the obsolete laissez-faire doctrine of Adam Smith
enunciated in 1776 in his treatise Wealth of Nations (Collier's
Encyclopedia, Vol. 21, p. 93, 1964), which has been discarded
soon after the close of the 18th century due to the Industrial
Revolution that generated the machines and other mechanical
devices (beginning with Eli Whitney's cotton gin of 1793 and
Robert Fulton's steamboat of 1807) for production and
transportation which are dangerous to life, limb and health. The
old socio-political-economic philosophy of live-and-let-live is now
superdesed by the benign Christian shibboleth of live-and-help
others to live. Those who profess to be Christians should not
adhere to Cain's selfish affirmation that he is not his brother's
keeper. In this our civilization, each one of us is our brother's
keeper. No man is an island. To assert otherwise is to be as
atavistic and ante-deluvian as the 1837 case of Prisley vs. Fowler
(3 MN 1,150 reprint 1030) invoked by the dissent, The Prisley
case was decided in 1837 during the era of economic royalists
and robber barons of America. Only ruthless, unfeeling
capitalistics and egoistic reactionaries continue to pay obeisance
to such un-Christian doctrine. The Prisley rule humiliates man
and debases him; because the decision derisively refers to the
lowly worker as "servant" and utilizes with aristocratic arrogance
"master" for "employer." It robs man of his inherent dignity and
dehumanizes him. To stress this affront to human dignity, WE
only have to restate the quotation from Prisley, thus: "The mere
relation of the master and the servant never can imply an
obligation on the part of the master to take more care of the
servant than he may reasonably be expected to do himself." This
is the very selfish doctrine that provoked the American Civil War
which generated so much hatred and drew so much precious
blood on American plains and valleys from 1861 to 1864.
"Idolatrous reverence" for the letter of the law sacrifices the
human being. The spirit of the law insures man's survival and
ennobles him. In the words of Shakespeare, "the letter of the law
killeth; its spirit giveth life."
C. It is curious that the dissenting opinion clings to the myth that
the courts cannot legislate.
That myth had been exploded by Article 9 of the New Civil Code,
which provides that "No judge or court shall decline to render
judgment by reason of the silence, obscurity or insufficiency of
the laws. "
Hence, even the legislator himself, through Article 9 of the New
Civil Code, recognizes that in certain instances, the court, in the
language of Justice Holmes, "do and must legislate" to fill in the
gaps in the law; because the mind of the legislator, like all human
beings, is finite and therefore cannot envisage all possible cases
to which the law may apply Nor has the human mind the infinite
capacity to anticipate all situations.
But about two centuries before Article 9 of the New Civil Code,
the founding fathers of the American Constitution foresaw and
recognized the eventuality that the courts may have to legislate to
supply the omissions or to clarify the ambiguities in the American
Constitution and the statutes.
'Thus, Alexander Hamilton pragmatically admits that judicial
legislation may be justified but denies that the power of the
Judiciary to nullify statutes may give rise to Judicial tyranny (The
Federalist, Modern Library, pp. 503-511, 1937 ed.). Thomas
Jefferson went farther to concede that the court is even
independent of the Nation itself (A.F.L. vs. American Sash
Company, 1949 335 US 538).
Many of the great expounders of the American Constitution
likewise share the same view. Chief Justice Marshall pronounced:
"It is emphatically the province and duty of the Judicial
department to say what the law is (Marbury vs. Madison I Cranch
127 1803), which was re-stated by Chief Justice Hughes when he
said that "the Constitution is what the judge says it is (Address on
May 3, 1907, quoted by President Franklin Delano Roosevelt on
March 9, 1937). This was reiterated by Justice Cardozo who
pronounced that "No doubt the limits for the judge are narrower.
He legislates only between gaps. He fills the open spaces in the
law. " (The Nature of the Judicial Process, p. 113). In the
language of Chief Justice Harlan F. Stone, "The only limit to the
judicial legislation is the restraint of the judge" (U.S. vs. Butler 297
U.S. 1 Dissenting Opinion, p. 79), which view is also entertained
by Justice Frankfurter and Justice Robert Jackson. In the rhetoric
of Justice Frankfurter, "the courts breathe life, feeble or strong,
into the inert pages of the Constitution and all statute books."
It should be stressed that the liability of the employer under
Section 5 of the Workmen's Compensation Act or Article 173 of
the New Labor Code is limited to death, ailment or injury caused
by the nature of the work, without any fault on the part of the
employers. It is correctly termed no fault liability. Section 5 of the
Workmen's Compensation Act, as amended, or Article 173 of the
New Labor Code, does not cover the tortious liability of the
employer occasioned by his fault or culpable negligence in failing
to provide the safety devices required by the law for the
protection of the life, limb and health of the workers. Under either
Section 5 or Article 173, the employer remains liable to pay
compensation benefits to the employee whose death, ailment or
injury is work-connected, even if the employer has faithfully and
diligently furnished all the safety measures and contrivances
decreed by the law to protect the employee.
The written word is no longer the "sovereign talisman." In the
epigrammatic language of Mr. Justice Cardozo, "the law has
outgrown its primitive stage of formalism when the precise word
was the sovereign talisman, and every slip was fatal" (Wood vs.
Duff Gordon 222 NW 88; Cardozo, The Nature of the Judicial
Process 100). Justice Cardozo warned that: "Sometimes the
conservatism of judges has threatened for an interval to rob the
legislation of its efficacy. ... Precedents established in those items
exert an unhappy influence even now" (citing Pound, Common
Law and Legislation 21 Harvard Law Review 383, 387).
Finally, Justice Holmes delivered the coup de grace when he
pragmatically admitted, although with a cautionary undertone:
"that judges do and must legislate, but they can do so only
interstitially they are confined from molar to molecular motions"
(Southern Pacific Company vs. Jensen, 244 US 204 1917). And
in the subsequent case of Springer vs. Government (277 US 188,
210-212, 72 L.ed. 845, 852- 853), Justice Holmes pronounced:
The great ordinances of the Constitution do not establish and
divide fields of black and white. Even the more specific of them
are found to terminate in a penumbra shading gradually from one
extreme to the other. x x x. When we come to the fundamental
distinctions it is still more obvious that they must be received with
a certain latitude or our government could not go on.
To make a rule of conduct applicable to an individual who but for
such action would be free from it is to legislate yet it is what the
judges do whenever they determine which of two competing
principles of policy shall prevail.
xxx xxx xxx
It does not seem to need argument to show that however we may
disguise it by veiling words we do not and cannot carry out the
distinction between legislative and executive action with
mathematical precision and divide the branches into waterlight
compartments, were it ever so desirable to do so, which I am far
from believing that it is, or that the Constitution requires.
True, there are jurists and legal writers who affirm that judges
should not legislate, but grudgingly concede that in certain cases
judges do legislate. They criticize the assumption by the courts of
such law-making power as dangerous for it may degenerate into
Judicial tyranny. They include Blackstone, Jeremy Bentham,
Justice Black, Justice Harlan, Justice Roberts, Justice David
Brewer, Ronald Dworkin, Rolf Sartorious, Macklin Fleming and
Beryl Harold Levy. But said Justices, jurists or legal
commentators, who either deny the power of the courts to
legislate in-between gaps of the law, or decry the exercise of
such power, have not pointed to examples of the exercise by the
courts of such law-making authority in the interpretation and
application of the laws in specific cases that gave rise to judicial
tyranny or oppression or that such judicial legislation has not
protected public interest or individual welfare, particularly the
lowly workers or the underprivileged.
On the other hand, there are numerous decisions interpreting the
Bill of Rights and statutory enactments expanding the scope of
such provisions to protect human rights. Foremost among them is
the doctrine in the cases of Miranda vs. Arizona (384 US 436
1964), Gideon vs. Wainright (372 US 335), Escubedo vs. Illinois
(378 US 478), which guaranteed the accused under custodial
investigation his rights to remain silent and to counsel and to be
informed of such rights as even as it protects him against the use
of force or intimidation to extort confession from him. These rights
are not found in the American Bill of Rights. These rights are now
institutionalized in Section 20, Article IV of the 1973 Constitution.
Only the peace-and-order adherents were critical of the activism
of the American Supreme Court led by Chief Justice Earl Warren.
Even the definition of Identical offenses for purposes of the
double jeopardy provision was developed by American judicial
decisions, not by amendment to the Bill of Rights on double
jeopardy (see Justice Laurel in People vs. Tarok, 73 Phil. 260,
261-268). And these judicial decisions have been re-stated in
Section 7 of Rule 117 of the 1985 Rules on Criminal Procedure,
as well as in Section 9 of Rule 117 of the 1964 Revised Rules of
Court. In both provisions, the second offense is the same as the
first offense if the second offense is an attempt to commit the first
or frustration thereof or necessarily includes or is necessarily
included in the first offense.
The requisites of double jeopardy are not spelled out in the Bill of
Rights. They were also developed by judicial decisions in the
United States and in the Philippines even before people vs.
Ylagan (58 Phil. 851-853).
Again, the equal protection clause was interpreted in the case of
Plessy vs. Ferguson (163 US 537) as securing to the Negroes
equal but separate facilities, which doctrine was revoked in the
case of Brown vs. Maryland Board of Education (349 US 294),
holding that the equal protection clause means that the Negroes
are entitled to attend the same schools attended by the whites-
equal facilities in the same school-which was extended to public
parks and public buses.
De-segregation, not segregation, is now the governing principle.
Among other examples, the due process clause was interpreted
in the case of People vs. Pomar (46 Phil. 440) by a conservative,
capitalistic court to invalidate a law granting maternity leave to
working women-according primacy to property rights over human
rights. The case of People vs. Pomar is no longer the rule.
As early as 1904, in the case of Lochner vs. New York (198 US
45, 76, 49 L. ed. 937, 949), Justice Holmes had been railing
against the conservatism of Judges perverting the guarantee of
due process to protect property rights as against human rights or
social justice for the working man. The law fixing maximum hours
of labor was invalidated. Justice Holmes was vindicated finally in
1936 in the case of West Coast Hotel vs. Parish (300 US 377-79;
81 L. ed. 703) where the American Supreme Court upheld the
rights of workers to social justice in the form of guaranteed
minimum wage for women and minors, working hours not
exceeding eight (8) daily, and maternity leave for women
employees.
The power of judicial review and the principle of separation of
powers as well as the rule on political questions have been
evolved and grafted into the American Constitution by judicial
decisions (Marbury vs. Madison, supra Coleman vs. Miller, 307
US 433, 83 L. ed. 1385; Springer vs. Government, 277 US 210-
212, 72 L. ed. 852, 853).
It is noteworthy that Justice Black, who seems to be against
judicial legislation, penned a separate concurring opinion in the
case of Coleman vs. Miller, supra, affirming the doctrine of
political question as beyond the ambit of judicial review. There is
nothing in both the American and Philippine Constitutions
expressly providing that the power of the courts is limited by the
principle of separation of powers and the doctrine on political
questions. There are numerous cases in Philippine jurisprudence
applying the doctrines of separation of powers and political
questions and invoking American precedents.
Unlike the American Constitution, both the 1935 and 1973
Philippine Constitutions expressly vest in the Supreme Court the
power to review the validity or constitutionality of any legislative
enactment or executive act.
WHEREFORE, THE TRIAL COURT'S ORDER OF DISMISSAL
IS HEREBY REVERSED AND SET ASIDE AND THE CASE IS
REMANDED TO IT FOR FURTHER PROCEEDINGS. SHOULD
A GREATER AMOUNT OF DAMAGES BE DECREED IN FAVOR
OF HEREIN PETITIONERS, THE PAYMENTS ALREADY MADE
TO THEM PURSUANT TO THE WORKMEN'S COMPENSATION
ACT SHALL BE DEDUCTED. NO COSTS.
SO ORDERED.
Fernando, C.J., Teehankee, Plana, Escolin, De la Fuente,
Cuevas and Alampay JJ., concur.
Concepcion, Jr., J., is on leave.
Abad Santos and Relova, JJ., took no part.
Separate Opinions
MELENCIO-HERRERA, J., dissenting:
A. This case involves a complaint for damages for the death
of five employees of PHILEX Mining Corporation under
the general provisions of the Civil Code. The Civil Code
itself, however, provides for its non-applicability to the
complaint. It is specifically provided in Article 2196 of the
Code, found in Title XVIII-Damages that:
COMPENSATION FOR WORKMEN AND OTHER EMPLOYEES
IN CASE OF DEATH, INJURY OR ILLNESS IS REGULATED BY
SPECIAL LAWS.
Compensation and damages are synonymous. In Esguerra vs.
Muñoz Palma, etc., et al., 104 Phil. 582, 586, Justice J.B.L.
Reyes had said:
Petitioner also avers that compensation is not damages. This
argument is but a play on words. The term compensation' is used
in the law (Act 3812 and Republic Act 772) in the sense of
indemnity for damages suffered, being awarded for a personal
injury caused or aggravated by or in the course of employment. ...
By the very provisions of the Civil Code, it is a "special law", not
the Code itself, which has to apply to the complaint involved in
the instant case. That "special law", in reference to the complaint,
can be no other than the Workmen's Compensation
Even assuming, without conceding, that an employee is entitled
to an election of remedies, as the majority rules, both options
cannot be exercised simultaneously, and the exercise of one will
preclude the exercise of the other. The petitioners had already
exercised their option to come under the Workmen's
Compensation Act, and they have already received compensation
payable to them under that Act. Stated differently, the remedy
under the Workmen's Compensation Act had already become a
"finished transaction".
There are two considerations why it is believed petitioners should
no longer be allowed to exercise the option to sue under the Civil
Code. In the first place, the proceedings under the Workmen's
Compensation Act have already become the law in regards to"
the "election of remedies", because those proceedings had
become a "finished transaction".
In the second place, it should be plainly equitable that, if a person
entitled to an "election of remedies" makes a first election and
accepts the benefits thereof, he should no longer be allowed to
avail himself of the second option. At the very least, if he wants to
make a second election, in disregard of the first election he has
made, when he makes the second election he should surrender
the benefits he had obtained under the first election, This was not
done in the case before the Court.
B. 'There is full concurrence on my part with the dissenting
opinion of Mr. Justice Gutierrez upholding "the exclusory
provision of the Workmen's Compensation Act." I may further
add:
1. The Workmen's Compensation Act (Act No. 3428) was
approved on December 10, 1927 and took effect on June 10,
1928. It was patterned from Minnesota and Hawaii statutes.
Act No. 3428 was adopted by the Philippine legislature, in
Spanish and some sections of the law were taken from the
statutes of Minnesota and Hawaii, (Chapter 209 of the Revised
Laws of Hawaii, 1925). [Morabe & Inton, Workmen's
Compensation Act, p. 2]
Under the Workmen's Compensation Act of Hawaii, when the Act
is applicable, the remedy under the Act is exclusive The following
is stated in 1 Schneider Workmen's Compensation Text, pp. 266,
267.
Sec. 112. Hawaii
Statutory Synopsis. The act is compulsory as to employees in 'all
industrial employment' and employees of the territory and its
political subdivisions. (Sections 7480-7481, S.S., Vol. 1, p. 713.)
Compensation is not payable when injury is due to employee's
willful intention to injure himself or another or to his intoxication.
(Sec. 7482, S.S., p. 713.)
When the act is applicable the remedy thereunder is exclusive
(Sec. 7483, S.S., p. 714.)
2. In providing for exclusiveness of the remedy under our
Workmen's Compensation Act, the Philippine Legislature worded
the first paragraph of Section 5 of the Act as follows:
SEC. 5. Exclusive right to compensation.-The rights and
remedies granted by this Act to an employee
by reason of a personal injury entitling him to compensation
shall exclude all other rights and remedies accruing to the
employee, his personal representatives, dependents or nearest of
kin against the employer
under the Civil Code and other laws, because of said injury
(Paragraphing and emphasis supplied)
In regards to the intent of the Legislature under the foregoing
provision:
A cardinal rule in the interpretation of statutes is that the meaning
and intention of the law-making body must be sought, first of all in
the words of the statute itself, read and considered in their
natural, ordinary, commonly-accepted and most obvious
significations, according to good and approved usage and without
resorting to forced or subtle construction Courts, therefore, as a
rule, cannot presume that the law-making body does not know
the meaning of words and the rules of grammar. Consequently,
the grammatical reading of a statute must be presumed to yield
its correct sense. (Espino vs. Cleofe 52 SCRA 92, 98) [Italics
supplied]
3. The original second paragraph of Section 5 provided:
Employers contracting laborers in the Philippine Islands for work
outside the same shall stipulate with such laborers that the
remedies prescribed by this Act shall apply exclusively to injuries
received outside the Islands through accidents happening in and
during the performance of the duties of the employment. (Italics
supplied)
The use of the word "exclusively is a further confirmation of the
exclusory provision of the Act, subject only to exceptions which
may be provided in the Act itself.
4. It might be mentioned that, within the Act itself, provision is
made for remedies other than within the Act itself. Thus, Section
6, in part, provides:
SEC. 6. Liability of third parties.-In case an employee suffers an
injury for which compensation is due under this Act by any other
person besides his employer, it shall be optional with such injured
employee either to claim compensation from his employer, under
this Act, or sue such other person for damages, in accordance
with law; ... (Emphasis supplied)
If the legislative intent under the first paragraph of Section 5 were
to allow the injured employee to sue his employer under the Civil
Code, the legislator could very easily have formulated the said
first paragraph of Section 5 according to the pattern of Section 6.
That that was not done shows the legislative intent not to allow
any option to an employee to sue the employer under the Civil
Code for injuries compensable under the Act.
5. There should be no question but that the original first
paragraph of Section 5 of the Workmen's Compensation Act,
formulated in 1927, provided that an injured worker or employee,
or his heirs, if entitled to compensation under the Act, cannot
have independent recourse neither to the Civil Code nor to any
other law relative to the liability of the employer. After 1927, there
were occasions when the legislator had the opportunity to amend
the first paragraph of Section 5 such that the remedies under the
Act would not be exclusive; yet, the legislator refrained from doing
so. That shows the legislatives continuing intent to maintain the
exclusory provision of the first paragraph of Section 5 unless
otherwise provided in the Act itself.
(a) The original second paragraph of Section 5 provided:
Employers contracting laborers in the Philippine Islands for work
outside the same shall stipulate with such laborers that the
remedies prescribed by this Act shall apply (exclusively) to
injuries received outside the Islands through accidents happening
in and during the performance of the duties of the employment
(and all service contracts made in the manner prescribed in this
section be presumed to include such agreement).
On June 20, 1952, through RA 772, the foregoing second
paragraph was amended with the elimination of the underlined
words in parentheses, and the addition of this sentence at the
end of the paragraph:
Such stipulation shall not prejudice the right of the laborers to the
benefits of the Workmen's Compensation Law of the place where
the accident occurs, should such law be more favorable to them.
(Emphasis supplied)
It will be seen that, within the Act itself, the exclusory character of
the Act was amended. At that time, if he had so desired, the
legislator could have amended the first paragraph of Section 5 so
that the employee would have the option to sue the employer
under the Act, or under the Civil Code, should the latter be more
favorable to him.
(b) The Workmen's Compensation Act, which took effect in 1927,
grants compensation to an injured employee without regard to the
presence or absence of negligence on the part of the employer.
The compensation is deemed an expense chargeable to the
industry (Murillo vs. Mendoza, 66 Phil. 689 [1938]).
In time, it must have been thought that it was inequitable to have
the amount of compensation, caused by negligence on the part of
the employer, to be the same amount payable when the employer
was not negligent. Based on that thinking, Section 4-A 1 was
included into the Act, on June 20, 1952, through RA 772. Said
Section 4-A increased the compensation payable by 50% in case
there was negligence on the part of the employer. That additional
section evidenced the intent of the legislator not to give an option
to an employee, injured with negligence on the part of the
employer, to sue the latter under the provisions of the Civil Code.
On June 20, 1964, Section 4-A was amended (insubstantially) by
RA 4119. The legislator was again given the opportunity to
provide, but he did not, the option to an employee to sue under
the Act or under the Civil Code.
When a Court gives effect to a statute not in accordance with the
intent of the law-maker, the Court is unjustifiably legislating.
It is in view of the foregoing that I vote for affirmation of the trial
Court's dismissal of the Complaint.
GUTIERREZ, JR., J., dissenting:
To grant the petition and allow the victims of industrial accidents
to file damages suits based on torts would be a radical innovation
not only contrary to the express provisions of the Workmen's
Compensation Act but a departure from the principles evolved in
the long history of workmen's compensation. At the very least, it
should be the legislature and not this Court which should remove
the exclusory provision of the Workmen's Compensation Act, a
provision reiterated in the present Labor Code on employees'
compensation.
Workmen's compensation evolved to remedy the evils associated
with the situation in the early years of the industrial revolution
when injured workingmen had to rely on damage suits to get
recompense.
Before workmen's compensation, an injured worker seeking
damages would have to prove in a tort suit that his employer was
either negligent or in bad faith, that his injury was caused by the
employer and not a fellow worker, and that he was not guilty of
contributory negligence. The employer could employ not only his
wealth in defeating the claim for damages but a host of common
law defenses available to him as well. The worker was supposed
to know what he entered into when he accepted employment. As
stated in the leading case of Priestley u. Fowler (3 M. & W. 1, 150
Reprint 1030) decided in 1837 "the mere relation of the master
and the servant never can imply an obligation on the part of the
master to take more care of the servant than he may reasonably
be expected to do of himself." By entering into a contract of
employment, the worker was deemed to accept the risks of
employment that he should discover and guard against himself.
The problems associated with the application of the fellow servant
rule, the assumption of risk doctrine, the principle of contributory
negligence, and the many other defenses so easily raised in
protracted damage suits illustrated the need for a system
whereby workers had only to prove the fact of covered
employment and the fact of injury arising from employment in
order to be compensated.
The need for a compensation scheme where liability is created
solely by statute and made compulsory and where the element of
fault-either the fault of the employer or the fault of the employee-
disregarded became obvious. Another objective was to have
simplified, expeditious, inexpensive, and non-litigious procedures
so that victims of industrial accidents could more readily, if not
automatically, receive compensation for work-related injuries.
Inspite of common law defenses to defeat a claim being
recognized, employers' liability acts were a major step in the
desired direction. However, employers liability legislation proved
inadequate. Legislative reform led to the workmen's
compensation.
I cite the above familiar background because workmen's
compensation represents a compromise. In return for the near
certainty of receiving a sum of money fixed by law, the injured
worker gives up the right to subject the employer to a tort suit for
huge amounts of damages. Thus, liability not only disregards the
element of fault but it is also a pre- determined amount based on
the wages of the injured worker and in certain cases, the actual
cost of rehabilitation. The worker does not receive the total
damages for his pain and suffering which he could otherwise
claim in a civil suit. The employer is required to act swiftly on
compensation claims. An administrative agency supervises the
program. And because the overwhelming mass of workingmen
are benefited by the compensation system, individual workers
who may want to sue for big amounts of damages must yield to
the interests of their entire working class.
The nature of the compensation principle is explained as follows:
An appreciation of the nature of the compensation principle is
essential to an understanding of the acts and the cases
interpreting them.
By the turn of the century it was apparent that the toll of industrial
accidents of both the avoidable and unavoidable variety had
become enormous, and government was faced with the problem
of who was to pay for the human wreckage wrought by the
dangers of modern industry. If the accident was avoidable and
could be attributed to the carelessness of the employer, existing
tort principles offered some measure of redress. Even here,
however, the woeful inadequacy of the fault principle was
manifest. The uncertainty of the outcome of torts litigation in court
placed the employee at a substantial disadvantage. So long as
liability depended on fault there could be no recovery until the
finger of blame had been pointed officially at the employer or his
agents. In most cases both the facts and the law were uncertain.
The witnesses, who were usually fellow workers of the victim,
were torn between friendship or loyalty to their class, on the one
hand, and fear of reprisal by the employer, on the other. The
expense and delay of litigation often prompted the injured
employee to accept a compromise settlement for a fraction of the
full value of his claim. Even if suit were successfully prosecuted, a
large share of the proceeds of the judgment were exacted as
contingent fees by counsel. Thus the employer against whom
judgment was cast often paid a substantial damage bill, while
only a part of this enured to the benefit of the injured employee or
his dependents. The employee's judgment was nearly always too
little and too late.
xxx xxx xxx
Workmen's Compensation rests upon the economic principle that
those persons who enjoy the product of a business- whether it be
in the form of goods or services- should ultimately bear the cost
of the injuries or deaths that are incident to the manufacture,
preparation and distribution of the product. ...
xxx xxx xxx
Under this approach the element of personal fault either
disappears entirely or is subordinated to broader economic
considerations. The employer absorbs the cost of accident loss
only initially; it is expected that this cost will eventually pass down
the stream of commerce in the form of increase price until it is
spread in dilution among the ultimate consumers. So long as
each competing unit in a given industry is uniformly affected, no
producer can gain any substantial competitive advantage or
suffer any appreciable loss by reason of the general adoption of
the compensation principle.
In order that the compensation principle may operate properly
and with fairness to all parties it is essential that the anticipated
accident cost be predictable and that it be fixed at a figure that
will not disrupt too violently the traffic in the product of the
industry affected. Thus predictability and moderateness of cost
are necessary from the broad economic viewpoint. ....
Compensation, then, differs from the conventional damage suit in
two important respects: Fault on the part of either employer or
employee is eliminated; and compensation payable according to
a definitely limited schedule is substituted for damages. All
compensation acts alike work these two major changes,
irrespective of how they may differ in other particulars.
Compensation, when regarded from the viewpoint of employer
and employee represents a compromise in which each party
surrenders certain advantages in order to gain others which are
of more importance both to him and to society. The employer
gives up the immunity he otherwise would enjoy in cases where
he is not at fault, and the employee surrenders his former right to
full damages and accepts instead a more modest claim for bare
essentials, represented by compensation.
The importance of the compromise character of compensation
cannot be overemphasized. The statutes vary a great deal with
reference to the proper point of balance. The amount of weekly
compensation payments and the length of the period during
which compensation is to be paid are matters concerning which
the acts differ considerably. The interpretation of any
compensation statute will be influenced greatly by the court's
reaction to the basic point of compromise established in the Act. If
the court feels that the basic compromise unduly favors the
employer, it will be tempted to restore what it regards as a proper
balance by adopting an interpretation that favors the worker. In
this way, a compensation act drawn in a spirit of extreme
conservatism may be transformed by a sympathetic court into a
fairly liberal instrument; and conversely, an act that greatly favors
the laborer may be so interpreted by the courts that employers
can have little reason to complain. Much of the unevenness and
apparent conflict in compensation decisions throughout the
various jurisdictions must be attributed to this." (Malone & Plant,
Workmen's Compensation American Casebook Series, pp. 63-
65).
The schedule of compensation, the rates of payments, the
compensable injuries and diseases, the premiums paid by
employers to the present system, the actuarial stability of the trust
fund and many other interrelated parts have all been carefully
studied before the integrated scheme was enacted in to law. We
have a system whose parts must mesh harmonious with one
another if it is to succeed. The basic theory has to be followed.
If this Court disregards this totality of the scheme and in a spirit of
generosity recasts some parts of the system without touching the
related others, the entire structure is endangered. For instance, I
am personally against stretching the law and allowing payment of
compensation for contingencies never envisioned to be
compensable when the law was formulated. Certainly, only
harmful results to the principle of workmen's compensation can
arise if workmen, whom the law allows to receive employment
compensation, can still elect to file damage suits for industrial
accidents. It was precisely for this reason that Section 5 of the
Workmen's Compensation Act, which reads:
SEC. 5. Exclusive right to compensation.-The rights and
remedies granted by this Act to an employee by reason of a
personal injury entitling him to compensation shall exclude all
other rights and remedies accruing to the employee, his personal
representatives, dependents or nearest of kin against the
employer under the Civil Code and other laws because of said
injury. ...
Article 173 of the labor Code also provides:
ART. 173. Exclusivenesss of liability.—Unless otherwise
provided, the liability of the State Insurance Fund under this Title
shall be exclusive and in place of all other liabilities of the
employer to the employee his dependents or anyone otherwise
entitled to receive damages on behalf of the employee or his
dependents.
I am against the Court assuming the role of legislator in a matter
calling for actuarial studies and public hearings. If employers
already required to contribute to the State Insurance Fund will still
have to bear the cost of damage suits or get insurance for that
purpose, a major study will be necessary. The issue before us is
more far reaching than the interests of the poor victims and their
families. All workers covered by workmen's compensation and all
employers who employ covered employees are affected. Even as
I have deepest sympathies for the victims, I regret that I am
constrained to dissent from the majority opinion.
Separate Opinions
MELENCIO-HERRERA, J., dissenting:
A. This case involves a complaint for damages for the death
of five employees of PHILEX Mining Corporation under
the general provisions of the Civil Code. The Civil Code
itself, however, provides for its non-applicability to the
complaint. It is specifically provided in Article 2196 of the
Code, found in Title XVIII-Damages that:
COMPENSATION FOR WORKMEN AND OTHER EMPLOYEES
IN CASE OF DEATH, INJURY OR ILLNESS IS REGULATED BY
SPECIAL LAWS.
Compensation and damages are synonymous. In Esguerra vs.
Muñoz Palma, etc., et al., 104 Phil. 582, 586, Justice J.B.L.
Reyes had said:
Petitioner also avers that compensation is not damages. This
argument is but a play on words. The term compensation' is used
in the law (Act 3812 and Republic Act 772) in the sense of
indemnity for damages suffered, being awarded for a personal
injury caused or aggravated by or in the course of employment. ...
By the very provisions of the Civil Code, it is a "special law", not
the Code itself, which has to apply to the complaint involved in
the instant case. That "special law", in reference to the complaint,
can be no other than the Workmen's Compensation
Even assuming, without conceding, that an employee is entitled
to an election of remedies, as the majority rules, both options
cannot be exercised simultaneously, and the exercise of one will
preclude the exercise of the other. The petitioners had already
exercised their option to come under the Workmen's
Compensation Act, and they have already received compensation
payable to them under that Act. Stated differently, the remedy
under the Workmen's Compensation Act had already become a
"finished transaction".
There are two considerations why it is believed petitioners should
no longer be allowed to exercise the option to sue under the Civil
Code. In the first place, the proceedings under the Workmen's
Compensation Act have already become the law in regards to"
the "election of remedies", because those proceedings had
become a "finished transaction".
In the second place, it should be plainly equitable that, if a person
entitled to an "election of remedies" makes a first election and
accepts the benefits thereof, he should no longer be allowed to
avail himself of the second option. At the very least, if he wants to
make a second election, in disregard of the first election he has
made, when he makes the second election he should surrender
the benefits he had obtained under the first election, This was not
done in the case before the Court.
B.'There is full concurrence on my part with the dissenting opinion
of Mr. Justice Gutierrez upholding "the exclusory provision of the
Workmen's Compensation Act." I may further add:
1. The Workmen's Compensation Act (Act No. 3428) was
approved on December 10, 1927 and took effect on June 10,
1928. It was patterned from Minnesota and Hawaii statutes.
Act No. 3428 was adopted by the Philippine legislature, in
Spanish and some sections of the law were taken from the
statutes of Minnesota and Hawaii, (Chapter 209 of the Revised
Laws of Hawaii, 1925). [Morabe & Inton, Workmen's
Compensation Act, p. 2]
Under the Workmen's Compensation Act of Hawaii, when the Act
is applicable, the remedy under the Act is exclusive The following
is stated in 1 Schneider Workmen's Compensation Text, pp. 266,
267.
Sec. 112. Hawaii
Statutory Synopsis. The act is compulsory as to employees in 'all
industrial employment' and employees of the territory and its
political subdivisions. (Sections 7480-7481, S.S., Vol. 1, p. 713.)
Compensation is not payable when injury is due to employee's
willful intention to injure himself or another or to his intoxication.
(Sec. 7482, S.S., p. 713.)
When the act is applicable the remedy thereunder is exclusive
(Sec. 7483, S.S., p. 714.)
2. In providing for exclusiveness of the remedy under our
Workmen's Compensation Act, the Philippine Legislature worded
the first paragraph of Section 5 of the Act as follows:
SEC. 5. Exclusive right to compensation.-The rights and
remedies granted by this Act to an employee
by reason of a personal injury entitling him to compensation
shall exclude all other rights and remedies accruing to the
employee, his personal representatives, dependents or nearest of
kin against the employer
under the Civil Code and other laws, because of said injury
(Paragraphing and emphasis supplied)
In regards to the intent of the Legislature under the foregoing
provision:
A cardinal rule in the interpretation of statutes is that the meaning
and intention of the law-making body must be sought, first of all in
the words of the statute itself, read and considered in their
natural, ordinary, commonly-accepted and most obvious
significations, according to good and approved usage and without
resorting to forced or subtle construction Courts, therefore, as a
rule, cannot presume that the law-making body does not know
the meaning of words and the rules of grammar. Consequently,
the grammatical reading of a statute must be presumed to yield
its correct sense. (Espino vs. Cleofe 52 SCRA 92, 98) [Italics
supplied]
3. The original second paragraph of Section 5 provided:
Employers contracting laborers in the Philippine Islands for work
outside the same shall stipulate with such laborers that the
remedies prescribed by this Act shall apply exclusively to injuries
received outside the Islands through accidents happening in and
during the performance of the duties of the employment. (Italics
supplied)
The use of the word "exclusively is a further confirmation of the
exclusory provision of the Act, subject only to exceptions which
may be provided in the Act itself.
4. It might be mentioned that, within the Act itself, provision is
made for remedies other than within the Act itself. Thus, Section
6, in part, provides:
SEC. 6. Liability of third parties.-In case an employee suffers an
injury for which compensation is due under this Act by any other
person besides his employer, it shall be optional with such injured
employee either to claim compensation from his employer, under
this Act, or sue such other person for damages, in accordance
with law; ... (Emphasis supplied)
If the legislative intent under the first paragraph of Section 5 were
to allow the injured employee to sue his employer under the Civil
Code, the legislator could very easily have formulated the said
first paragraph of Section 5 according to the pattern of Section 6.
That that was not done shows the legislative intent not to allow
any option to an employee to sue the employer under the Civil
Code for injuries compensable under the Act.
5. There should be no question but that the original first
paragraph of Section 5 of the Workmen's Compensation Act,
formulated in 1927, provided that an injured worker or employee,
or his heirs, if entitled to compensation under the Act, cannot
have independent recourse neither to the Civil Code nor to any
other law relative to the liability of the employer. After 1927, there
were occasions when the legislator had the opportunity to amend
the first paragraph of Section 5 such that the remedies under the
Act would not be exclusive; yet, the legislator refrained from doing
so. That shows the legislatives continuing intent to maintain the
exclusory provision of the first paragraph of Section 5 unless
otherwise provided in the Act itself.
(a) The original second paragraph of Section 5 provided:
Employers contracting laborers in the Philippine Islands for work
outside the same shall stipulate with such laborers that the
remedies prescribed by this Act shall apply (exclusively) to
injuries received outside the Islands through accidents happening
in and during the performance of the duties of the employment
(and all service contracts made in the manner prescribed in this
section be presumed to include such agreement).
On June 20, 1952, through RA 772, the foregoing second
paragraph was amended with the elimination of the underlined
words in parentheses, and the addition of this sentence at the
end of the paragraph:
Such stipulation shall not prejudice the right of the laborers to the
benefits of the Workmen's Compensation Law of the place where
the accident occurs, should such law be more favorable to them.
(Emphasis supplied)
It will be seen that, within the Act itself, the exclusory character of
the Act was amended. At that time, if he had so desired, the
legislator could have amended the first paragraph of Section 5 so
that the employee would have the option to sue the employer
under the Act, or under the Civil Code, should the latter be more
favorable to him.
(b) The Workmen's Compensation Act, which took effect in 1927,
grants compensation to an injured employee without regard to the
presence or absence of negligence on the part of the employer.
The compensation is deemed an expense chargeable to the
industry (Murillo vs. Mendoza, 66 Phil. 689 [1938]).
In time, it must have been thought that it was inequitable to have
the amount of compensation, caused by negligence on the part of
the employer, to be the same amount payable when the employer
was not negligent. Based on that thinking, Section 4-A 1 was
included into the Act, on June 20, 1952, through RA 772. Said
Section 4-A increased the compensation payable by 50% in case
there was negligence on the part of the employer. That additional
section evidenced the intent of the legislator not to give an option
to an employee, injured with negligence on the part of the
employer, to sue the latter under the provisions of the Civil Code.
On June 20, 1964, Section 4-A was amended (insubstantially) by
RA 4119. The legislator was again given the opportunity to
provide, but he did not, the option to an employee to sue under
the Act or under the Civil Code.
When a Court gives effect to a statute not in accordance with the
intent of the law-maker, the Court is unjustifiably legislating.
It is in view of the foregoing that I vote for affirmation of the trial
Court's dismissal of the Complaint.
GUTIERREZ, JR., J., dissenting:
To grant the petition and allow the victims of industrial accidents
to file damages suits based on torts would be a radical innovation
not only contrary to the express provisions of the Workmen's
Compensation Act but a departure from the principles evolved in
the long history of workmen's compensation. At the very least, it
should be the legislature and not this Court which should remove
the exclusory provision of the Workmen's Compensation Act, a
provision reiterated in the present Labor Code on employees'
compensation.
Workmen's compensation evolved to remedy the evils associated
with the situation in the early years of the industrial revolution
when injured workingmen had to rely on damage suits to get
recompense.
Before workmen's compensation, an injured worker seeking
damages would have to prove in a tort suit that his employer was
either negligent or in bad faith, that his injury was caused by the
employer and not a fellow worker, and that he was not guilty of
contributory negligence. The employer could employ not only his
wealth in defeating the claim for damages but a host of common
law defenses available to him as well. The worker was supposed
to know what he entered into when he accepted employment. As
stated in the leading case of Priestley u. Fowler (3 M. & W. 1, 150
Reprint 1030) decided in 1837 "the mere relation of the master
and the servant never can imply an obligation on the part of the
master to take more care of the servant than he may reasonably
be expected to do of himself." By entering into a contract of
employment, the worker was deemed to accept the risks of
employment that he should discover and guard against himself.
The problems associated with the application of the fellow servant
rule, the assumption of risk doctrine, the principle of contributory
negligence, and the many other defenses so easily raised in
protracted damage suits illustrated the need for a system
whereby workers had only to prove the fact of covered
employment and the fact of injury arising from employment in
order to be compensated.
The need for a compensation scheme where liability is created
solely by statute and made compulsory and where the element of
fault-either the fault of the employer or the fault of the employee-
disregarded became obvious. Another objective was to have
simplified, expeditious, inexpensive, and non-litigious procedures
so that victims of industrial accidents could more readily, if not
automatically, receive compensation for work-related injuries.
Inspite of common law defenses to defeat a claim being
recognized, employers' liability acts were a major step in the
desired direction. However, employers liability legislation proved
inadequate. Legislative reform led to the workmen's
compensation.
I cite the above familiar background because workmen's
compensation represents a compromise. In return for the near
certainty of receiving a sum of money fixed by law, the injured
worker gives up the right to subject the employer to a tort suit for
huge amounts of damages. Thus, liability not only disregards the
element of fault but it is also a pre- determined amount based on
the wages of the injured worker and in certain cases, the actual
cost of rehabilitation. The worker does not receive the total
damages for his pain and suffering which he could otherwise
claim in a civil suit. The employer is required to act swiftly on
compensation claims. An administrative agency supervises the
program. And because the overwhelming mass of workingmen
are benefited by the compensation system, individual workers
who may want to sue for big amounts of damages must yield to
the interests of their entire working class.
The nature of the compensation principle is explained as follows:
An appreciation of the nature of the compensation principle is
essential to an understanding of the acts and the cases
interpreting them.
By the turn of the century it was apparent that the toll of industrial
accidents of both the avoidable and unavoidable variety had
become enormous, and government was faced with the problem
of who was to pay for the human wreckage wrought by the
dangers of modern industry. If the accident was avoidable and
could be attributed to the carelessness of the employer, existing
tort principles offered some measure of redress. Even here,
however, the woeful inadequacy of the fault principle was
manifest. The uncertainty of the outcome of torts litigation in court
placed the employee at a substantial disadvantage. So long as
liability depended on fault there could be no recovery until the
finger of blame had been pointed officially at the employer or his
agents. In most cases both the facts and the law were uncertain.
The witnesses, who were usually fellow workers of the victim,
were torn between friendship or loyalty to their class, on the one
hand, and fear of reprisal by the employer, on the other. The
expense and delay of litigation often prompted the injured
employee to accept a compromise settlement for a fraction of the
full value of his claim. Even if suit were successfully prosecuted, a
large share of the proceeds of the judgment were exacted as
contingent fees by counsel. Thus the employer against whom
judgment was cast often paid a substantial damage bill, while
only a part of this enured to the benefit of the injured employee or
his dependents. The employee's judgment was nearly always too
little and too late.
xxx xxx xxx
Workmen's Compensation rests upon the economic principle that
those persons who enjoy the product of a business- whether it be
in the form of goods or services- should ultimately bear the cost
of the injuries or deaths that are incident to the manufacture,
preparation and distribution of the product. ...
xxx xxx xxx
Under this approach the element of personal fault either
disappears entirely or is subordinated to broader economic
considerations. The employer absorbs the cost of accident loss
only initially; it is expected that this cost will eventually pass down
the stream of commerce in the form of increase price until it is
spread in dilution among the ultimate consumers. So long as
each competing unit in a given industry is uniformly affected, no
producer can gain any substantial competitive advantage or
suffer any appreciable loss by reason of the general adoption of
the compensation principle.
In order that the compensation principle may operate properly
and with fairness to all parties it is essential that the anticipated
accident cost be predictable and that it be fixed at a figure that
will not disrupt too violently the traffic in the product of the
industry affected. Thus predictability and moderateness of cost
are necessary from the broad economic viewpoint. ....
Compensation, then, differs from the conventional damage suit in
two important respects: Fault on the part of either employer or
employee is eliminated; and compensation payable according to
a definitely limited schedule is substituted for damages. All
compensation acts alike work these two major changes,
irrespective of how they may differ in other particulars.
Compensation, when regarded from the viewpoint of employer
and employee represents a compromise in which each party
surrenders certain advantages in order to gain others which are
of more importance both to him and to society. The employer
gives up the immunity he otherwise would enjoy in cases where
he is not at fault, and the employee surrenders his former right to
full damages and accepts instead a more modest claim for bare
essentials, represented by compensation.
The importance of the compromise character of compensation
cannot be overemphasized. The statutes vary a great deal with
reference to the proper point of balance. The amount of weekly
compensation payments and the length of the period during
which compensation is to be paid are matters concerning which
the acts differ considerably. The interpretation of any
compensation statute will be influenced greatly by the court's
reaction to the basic point of compromise established in the Act. If
the court feels that the basic compromise unduly favors the
employer, it will be tempted to restore what it regards as a proper
balance by adopting an interpretation that favors the worker. In
this way, a compensation act drawn in a spirit of extreme
conservatism may be transformed by a sympathetic court into a
fairly liberal instrument; and conversely, an act that greatly favors
the laborer may be so interpreted by the courts that employers
can have little reason to complain. Much of the unevenness and
apparent conflict in compensation decisions throughout the
various jurisdictions must be attributed to this." (Malone & Plant,
Workmen's Compensation American Casebook Series, pp. 63-
65).
The schedule of compensation, the rates of payments, the
compensable injuries and diseases, the premiums paid by
employers to the present system, the actuarial stability of the trust
fund and many other interrelated parts have all been carefully
studied before the integrated scheme was enacted in to law. We
have a system whose parts must mesh harmonious with one
another if it is to succeed. The basic theory has to be followed.
If this Court disregards this totality of the scheme and in a spirit of
generosity recasts some parts of the system without touching the
related others, the entire structure is endangered. For instance, I
am personally against stretching the law and allowing payment of
compensation for contingencies never envisioned to be
compensable when the law was formulated. Certainly, only
harmful results to the principle of workmen's compensation can
arise if workmen, whom the law allows to receive employment
compensation, can still elect to file damage suits for industrial
accidents. It was precisely for this reason that Section 5 of the
Workmen's Compensation Act, which reads:
SEC. 5. Exclusive right to compensation.-The rights and
remedies granted by this Act to an employee by reason of a
personal injury entitling him to compensation shall exclude all
other rights and remedies accruing to the employee, his personal
representatives, dependents or nearest of kin against the
employer under the Civil Code and other laws because of said
injury. ...
Article 173 of the labor Code also provides:
ART. 173. Exclusivenesss of liability.—Unless otherwise
provided, the liability of the State Insurance Fund under this Title
shall be exclusive and in place of all other liabilities of the
employer to the employee his dependents or anyone otherwise
entitled to receive damages on behalf of the employee or his
dependents.
I am against the Court assuming the role of legislator in a matter
calling for actuarial studies and public hearings. If employers
already required to contribute to the State Insurance Fund will still
have to bear the cost of damage suits or get insurance for that
purpose, a major study will be necessary. The issue before us is
more far reaching than the interests of the poor victims and their
families. All workers covered by workmen's compensation and all
employers who employ covered employees are affected. Even as
I have deepest sympathies for the victims, I regret that I am
constrained to dissent from the majority opinion.
Footnotes
1 SEC. 4-A. Right to additional compensation.- In case of the
employee's death, injury or sickness due to the failure of the to
comply with any law, or with any order, rule or regulation of the
Workmen's Compensation Commission or the Bureau of Labor
Standards or should the employer violate the provisions of
Republic Act Numbered Six hundred seventy-nine and its
amendments or fail to install and maintain safety appliances, or
take other precautions for the prevention of accidents or
occupational disease, he shall be liable to pay an additional
compensation equal to fifty per centum of the compensation fixed
in this Act.
 Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-39419 April 12, 1982
MAPALAD AISPORNA, petitioner,
vs.
THE COURT OF APPEALS and THE PEOPLE OF THE
PHILIPPINES, respondents.
DE CASTRO, J.:
In this petition for certiorari, petitioner-accused Aisporna seeks
the reversal of the decision dated August 14, 1974 1in CA-G.R.
No. 13243-CR entitled "People of the Philippines, plaintiff-appellee,
vs. Mapalad Aisporna, defendant-appellant" of respondent Court of
Appeals affirming the judgment of the City Court of
Cabanatuan 2 rendered on August 2, 1971 which found the petitioner
guilty for having violated Section 189 of the Insurance Act (Act No.
2427, as amended) and sentenced her to pay a fine of P500.00 with
subsidiary imprisonment in case of insolvency, and to pay the costs.
Petitioner Aisporna was charged in the City Court of Cabanatuan
for violation of Section 189 of the Insurance Act on November 21,
1970 in an information 3 which reads as follows:
That on or before the 21st day of June, 1969, in the City of
Cabanatuan, Republic of the Philippines, and within the
jurisdiction of this Honorable Court, the above-named accused,
did then and there, wilfully, unlawfully and feloniously act as
agent in the solicitation or procurement of an application for
insurance by soliciting therefor the application of one Eugenio S.
Isidro, for and in behalf of Perla Compania de Seguros, Inc., a
duly organized insurance company, registered under the laws of
the Republic of the Philippines, resulting in the issuance of a
Broad Personal Accident Policy No. 28PI-RSA 0001 in the
amount not exceeding FIVE THOUSAND PESOS (P5,000.00)
dated June 21, 1969, without said accused having first secured a
certificate of authority to act as such agent from the office of the
Insurance Commissioner, Republic of the Philippines.
CONTRARY TO LAW.
The facts, 4 as found by the respondent Court of Appeals are quoted
hereunder:
IT RESULTING: That there is no debate that since 7 March, 1969
and as of 21 June, 1969, appellant's husband, Rodolfo S.
Aisporna was duly licensed by Insurance Commission as agent to
Perla Compania de Seguros, with license to expire on 30 June,
1970, Exh. C; on that date, at Cabanatuan City, Personal
Accident Policy, Exh. D was issued by Perla thru its author
representative, Rodolfo S. Aisporna, for a period of twelve (12)
months with beneficiary as Ana M. Isidro, and for P5,000.00;
apparently, insured died by violence during lifetime of policy, and
for reasons not explained in record, present information was filed
by Fiscal, with assistance of private prosecutor, charging wife of
Rodolfo with violation of Sec. 189 of Insurance Law for having,
wilfully, unlawfully, and feloniously acted, "as agent in the
solicitation for insurance by soliciting therefore the application of
one Eugenio S. Isidro for and in behalf of Perla Compaña de
Seguros, ... without said accused having first secured a certificate
of authority to act as such agent from the office of the Insurance
Commission, Republic of the Philippines."
and in the trial, People presented evidence that was hardly
disputed, that aforementioned policy was issued with active
participation of appellant wife of Rodolfo, against which appellant
in her defense sought to show that being the wife of true agent,
Rodolfo, she naturally helped him in his work, as clerk, and that
policy was merely a renewal and was issued because Isidro had
called by telephone to renew, and at that time, her husband,
Rodolfo, was absent and so she left a note on top of her
husband's desk to renew ...
Consequently, the trial court found herein petitioner guilty as
charged. On appeal, the trial court's decision was affirmed by the
respondent appellate court finding the petitioner guilty of a
violation of the first paragraph of Section 189 of the Insurance
Act. Hence, this present recourse was filed on October 22,
1974. 5
In its resolution of October 28, 1974, 6 this Court resolved, without
giving due course to this instant petition, to require the respondent to
comment on the aforesaid petition. In the comment 7 filed on
December 20, 1974, the respondent, represented by the Office of the
Solicitor General, submitted that petitioner may not be considered as
having violated Section 189 of the Insurance Act. 8 On April 3, 1975,
petitioner submitted his Brief 9 while the Solicitor General, on behalf
of the respondent, filed a manifestation 10 in lieu of a Brief on May 3,
1975 reiterating his stand that the petitioner has not violated Section
189 of the Insurance Act.
In seeking reversal of the judgment of conviction, petitioner
assigns the following errors 11 allegedly committed by the appellate
court:
1. THE RESPONDENT COURT OF APPEALS ERRED IN
FINDING THAT RECEIPT OF COMPENSATION IS NOT AN
ESSENTIAL ELEMENT OF THE CRIME DEFINED BY THE
FIRST PARAGRAPH OF SECTION 189 OF THE INSURANCE
ACT.
2. THE RESPONDENT COURT OF APPEALS ERRED IN
GIVING DUE WEIGHT TO EXHIBITS F, F-1, TO F-17,
INCLUSIVE SUFFICIENT TO ESTABLISH PETITIONER'S
GUILT BEYOND REASONABLE DOUBT.
3. THE RESPONDENT COURT OF APPEALS ERRED IN NOT
ACQUITTING HEREIN PETITIONER.
We find the petition meritorious.
The main issue raised is whether or not a person can be
convicted of having violated the first paragraph of Section 189 of
the Insurance Act without reference to the second paragraph of
the same section. In other words, it is necessary to determine
whether or not the agent mentioned in the first paragraph of the
aforesaid section is governed by the definition of an insurance
agent found on its second paragraph.
The pertinent provision of Section 189 of the Insurance Act reads
as follows:
No insurance company doing business within the Philippine
Islands, nor any agent thereof, shall pay any commission or other
compensation to any person for services in obtaining new
insurance, unless such person shall have first procured from the
Insurance Commissioner a certificate of authority to act as an
agent of such company as hereinafter provided. No person shall
act as agent, sub-agent, or broker in the solicitation of
procurement of applications for insurance, or receive for services
in obtaining new insurance, any commission or other
compensation from any insurance company doing business in the
Philippine Islands, or agent thereof, without first procuring a
certificate of authority so to act from the Insurance Commissioner,
which must be renewed annually on the first day of January, or
within six months thereafter. Such certificate shall be issued by
the Insurance Commissioner only upon the written application of
persons desiring such authority, such application being approved
and countersigned by the company such person desires to
represent, and shall be upon a form approved by the Insurance
Commissioner, giving such information as he may require. The
Insurance Commissioner shall have the right to refuse to issue or
renew and to revoke any such certificate in his discretion. No
such certificate shall be valid, however, in any event after the first
day of July of the year following the issuing of such certificate.
Renewal certificates may be issued upon the application of the
company.
Any person who for compensation solicits or obtains insurance on
behalf of any insurance company, or transmits for a person other
than himself an application for a policy of insurance to or from
such company or offers or assumes to act in the negotiating of
such insurance, shall be an insurance agent within the intent of
this section, and shall thereby become liable to all the duties,
requirements, liabilities, and penalties to which an agent of such
company is subject.
Any person or company violating the provisions of this section
shall be fined in the sum of five hundred pesos. On the conviction
of any person acting as agent, sub-agent, or broker, of the
commission of any offense connected with the business of
insurance, the Insurance Commissioner shall immediately revoke
the certificate of authority issued to him and no such certificate
shall thereafter be issued to such convicted person.
A careful perusal of the above-quoted provision shows that the
first paragraph thereof prohibits a person from acting as agent,
sub-agent or broker in the solicitation or procurement of
applications for insurance without first procuring a certificate of
authority so to act from the Insurance Commissioner, while its
second paragraph defines who is an insurance agent within the
intent of this section and, finally, the third paragraph thereof
prescribes the penalty to be imposed for its violation.
The respondent appellate court ruled that the petitioner is
prosecuted not under the second paragraph of Section 189 of the
aforesaid Act but under its first paragraph. Thus —
... it can no longer be denied that it was appellant's most active
endeavors that resulted in issuance of policy to Isidro, she was
there and then acting as agent, and received the pay thereof —
her defense that she was only acting as helper of her husband
can no longer be sustained, neither her point that she received no
compensation for issuance of the policy because
any person who for compensation solicits or obtains insurance on
behalf of any insurance company or transmits for a person other
than himself an application for a policy of insurance to or from
such company or offers or assumes to act in the negotiating of
such insurance, shall be an insurance agent within the intent of
this section, and shall thereby become liable to all the duties,
requirements, liabilities, and penalties, to which an agent of such
company is subject. paragraph 2, Sec. 189, Insurance Law,
now it is true that information does not even allege that she had
obtained the insurance,
for compensation
which is the gist of the offense in Section 189 of the Insurance
Law in its 2nd paragraph, but what appellant apparently overlooks
is that she is prosecuted not under the 2nd but under the 1st
paragraph of Sec. 189 wherein it is provided that,
No person shall act as agent, sub-agent, or broker, in the
solicitation or procurement of applications for insurance, or
receive for services in obtaining new insurance any commission
or other compensation from any insurance company doing
business in the Philippine Island, or agent thereof, without first
procuring a certificate of authority to act from the insurance
commissioner, which must be renewed annually on the first day
of January, or within six months thereafter.
therefore, there was no technical defect in the wording of the
charge, so that Errors 2 and 4 must be overruled. 12
From the above-mentioned ruling, the respondent appellate court
seems to imply that the definition of an insurance agent under the
second paragraph of Section 189 is not applicable to the insurance
agent mentioned in the first paragraph. Parenthetically, the
respondent court concludes that under the second paragraph of
Section 189, a person is an insurance agent if he solicits and obtains
an insurance for compensation, but, in its first paragraph, there is no
necessity that a person solicits an insurance for compensation in
order to be called an insurance agent.
We find this to be a reversible error. As correctly pointed out by
the Solicitor General, the definition of an insurance agent as
found in the second paragraph of Section 189 is intended to
define the word "agent" mentioned in the first and second
paragraphs of the aforesaid section. More significantly, in its
second paragraph, it is explicitly provided that the definition of an
insurance agent is within the intent of Section 189. Hence —
Any person who for compensation ... shall be an insurance agent
within the intent of this section, ...
Patently, the definition of an insurance agent under the second
paragraph holds true with respect to the agent mentioned in the
other two paragraphs of the said section. The second paragraph
of Section 189 is a definition and interpretative clause intended to
qualify the term "agent" mentioned in both the first and third
paragraphs of the aforesaid section.
Applying the definition of an insurance agent in the second
paragraph to the agent mentioned in the first and second
paragraphs would give harmony to the aforesaid three
paragraphs of Section 189. Legislative intent must be ascertained
from a consideration of the statute as a whole. The particular
words, clauses and phrases should not be studied as detached
and isolated expressions, but the whole and every part of the
statute must be considered in fixing the meaning of any of its
parts and in order to produce harmonious whole. 13 A statute must
be so construed as to harmonize and give effect to all its provisions
whenever possible. 14 The meaning of the law, it must be borne in
mind, is not to be extracted from any single part, portion or section or
from isolated words and phrases, clauses or sentences but from a
general consideration or view of the act as a whole. 15 Every part of
the statute must be interpreted with reference to the context. This
means 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, not separately and independently. 16 More
importantly, the doctrine of associated words (Noscitur a Sociis)
provides that where a particular word or phrase in a statement is
ambiguous in itself or is equally susceptible of various meanings, its
true meaning may be made clear and specific by considering the
company in which it is found or with which it is associated. 17
Considering that the definition of an insurance agent as found in the
second paragraph is also applicable to the agent mentioned in the
first paragraph, to receive a compensation by the agent is an
essential element for a violation of the first paragraph of the
aforesaid section. The appellate court has established ultimately that
the petitioner-accused did not receive any compensation for the
issuance of the insurance policy of Eugenio Isidro. Nevertheless, the
accused was convicted by the appellate court for, according to the
latter, the receipt of compensation for issuing an insurance policy is
not an essential element for a violation of the first paragraph of
Section 189 of the Insurance Act.
We rule otherwise. Under the Texas Penal Code 1911, Article
689, making it a misdemeanor for any person for direct or indirect
compensation to solicit insurance without a certificate of authority
to act as an insurance agent, an information, failing to allege that
the solicitor was to receive compensation either directly or
indirectly, charges no offense. 18 In the case of Bolen vs.
Stake, 19 the provision of Section 3750, Snyder's Compiled Laws of
Oklahoma 1909 is intended to penalize persons only who acted as
insurance solicitors without license, and while acting in such capacity
negotiated and concluded insurance contracts for compensation. It
must be noted that the information, in the case at bar, does not
allege that the negotiation of an insurance contracts by the accused
with Eugenio Isidro was one for compensation. This allegation is
essential, and having been omitted, a conviction of the accused
could not be sustained. It is well-settled in Our jurisprudence that to
warrant conviction, every element of the crime must be alleged and
proved. 20
After going over the records of this case, We are fully convinced,
as the Solicitor General maintains, that accused did not violate
Section 189 of the Insurance Act.
WHEREFORE, the judgment appealed from is reversed and the
accused is acquitted of the crime charged, with costs de oficio.
SO ORDERED.
SUPREME COURT
Manila
EN BANC
G.R. No. L-34964 January 31, 1973
CHINA BANKING CORPORATION and TAN KIM LIONG,
petitioners-appellants,
vs.
HON. WENCESLAO ORTEGA, as Presiding Judge of the
Court of First Instance of Manila, Branch VIII, and VICENTE
G. ACABAN, respondents-appellees.
Sy Santos, Del Rosario and Associates for petitioners-appellants.
Tagalo, Gozar and Associates for respondents-appellees.
MAKALINTAL, J.:
The only issue in this petition for certiorari to review the orders
dated March 4, 1972 and March 27, 1972, respectively, of the
Court of First Instance of Manila in its Civil Case No. 75138, is
whether or not a banking institution may validly refuse to comply
with a court process garnishing the bank deposit of a judgment
debtor, by invoking the provisions of Republic Act No. 1405. *
On December 17, 1968 Vicente Acaban filed a complaint in the court a quo against Bautista
Logging Co., Inc., B & B Forest Development Corporation and Marino Bautista for the
collection of a sum of money. Upon motion of the plaintiff the trial court declared the
defendants in default for failure to answer within the reglementary period, and authorized
the Branch Clerk of Court and/or Deputy Clerk to receive the plaintiff's evidence. On
January 20, 1970 judgment by default was rendered against the defendants.
To satisfy the judgment, the plaintiff sought the garnishment of
the bank deposit of the defendant B & B Forest Development
Corporation with the China Banking Corporation. Accordingly, a
notice of garnishment was issued by the Deputy Sheriff of the trial
court and served on said bank through its cashier, Tan Kim Liong.
In reply, the bank' cashier invited the attention of the Deputy
Sheriff to the provisions of Republic Act No. 1405 which, it was
alleged, prohibit the disclosure of any information relative to bank
deposits. Thereupon the plaintiff filed a motion to cite Tan Kim
Liong for contempt of court.
In an order dated March 4, 1972 the trial court denied the
plaintiff's motion. However, Tan Kim Liong was ordered "to inform
the Court within five days from receipt of this order whether or not
there is a deposit in the China Banking Corporation of defendant
B & B Forest Development Corporation, and if there is any
deposit, to hold the same intact and not allow any withdrawal until
further order from this Court." Tan Kim Liong moved to reconsider
but was turned down by order of March 27, 1972. In the same
order he was directed "to comply with the order of this Court
dated March 4, 1972 within ten (10) days from the receipt of copy
of this order, otherwise his arrest and confinement will be ordered
by the Court." Resisting the two orders, the China Banking
Corporation and Tan Kim Liong instituted the instant petition.
The pertinent provisions of Republic Act No. 1405 relied upon by
the petitioners reads:
Sec. 2. All deposits of whatever nature with banks or banking
institutions in the Philippines including investments in bonds
issued by the Government of the Philippines, its political
subdivisions and its instrumentalities, are hereby considered as of
absolutely confidential nature and may not be examined, inquired
or looked into by any person, government official, bureau or
office, except upon written permission of the depositor, or in
cases of impeachment, or upon order of a competent court in
cases of bribery or dereliction of duty of public officials, or in
cases where the money deposited or invested is the subject
matter of the litigation.
Sec 3. It shall be unlawful for any official or employee of a
banking institution to disclose to any person other than those
mentioned in Section two hereof any information concerning said
deposits.
Sec. 5. Any violation of this law will subject offender upon
conviction, to an imprisonment of not more than five years or a
fine of not more than twenty thousand pesos or both, in the
discretion of the court.
The petitioners argue that the disclosure of the information
required by the court does not fall within any of the four (4)
exceptions enumerated in Section 2, and that if the questioned
orders are complied with Tan Kim Liong may be criminally liable
under Section 5 and the bank exposed to a possible damage suit
by B & B Forest Development Corporation. Specifically referring
to this case, the position of the petitioners is that the bank deposit
of judgment debtor B & B Forest Development Corporation
cannot be subject to garnishment to satisfy a final judgment
against it in view of the aforequoted provisions of law.
We do not view the situation in that light. The lower court did not
order an examination of or inquiry into the deposit of B & B Forest
Development Corporation, as contemplated in the law. It merely
required Tan Kim Liong to inform the court whether or not the
defendant B & B Forest Development Corporation had a deposit
in the China Banking Corporation only for purposes of the
garnishment issued by it, so that the bank would hold the same
intact and not allow any withdrawal until further order. It will be
noted from the discussion of the conference committee report on
Senate Bill No. 351 and House Bill No. 3977, which later became
Republic Act 1405, that it was not the intention of the lawmakers
to place bank deposits beyond the reach of execution to satisfy a
final judgment. Thus:
Mr. MARCOS. Now, for purposes of the record, I should like the
Chairman of the Committee on Ways and Means to clarify this
further. Suppose an individual has a tax case. He is being held
liable by the Bureau of Internal Revenue for, say, P1,000.00
worth of tax liability, and because of this the deposit of this
individual is attached by the Bureau of Internal Revenue.
Mr. RAMOS. The attachment will only apply after the court has
pronounced sentence declaring the liability of such person. But
where the primary aim is to determine whether he has a bank
deposit in order to bring about a proper assessment by the
Bureau of Internal Revenue, such inquiry is not authorized by this
proposed law.
Mr. MARCOS. But under our rules of procedure and under the
Civil Code, the attachment or garnishment of money deposited is
allowed. Let us assume, for instance, that there is a preliminary
attachment which is for garnishment or for holding liable all
moneys deposited belonging to a certain individual, but such
attachment or garnishment will bring out into the open the value
of such deposit. Is that prohibited by this amendment or by this
law?
Mr. RAMOS. It is only prohibited to the extent that the inquiry is
limited, or rather, the inquiry is made only for the purpose of
satisfying a tax liability already declared for the protection of the
right in favor of the government; but when the object is merely to
inquire whether he has a deposit or not for purposes of taxation,
then this is fully covered by the law.
Mr. MARCOS. And it protects the depositor, does it not?
Mr. RAMOS. Yes, it protects the depositor.
Mr. MARCOS. The law prohibits a mere investigation into the
existence and the amount of the deposit.
Mr. RAMOS. Into the very nature of such deposit.
Mr. MARCOS. So I come to my original question. Therefore,
preliminary garnishment or attachment of the deposit is not
allowed?
Mr. RAMOS. No, without judicial authorization.
Mr. MARCOS. I am glad that is clarified. So that the established
rule of procedure as well as the substantive law on the matter is
amended?
Mr. RAMOS. Yes. That is the effect.
Mr. MARCOS. I see. Suppose there has been a decision,
definitely establishing the liability of an individual for taxation
purposes and this judgment is sought to be executed ... in the
execution of that judgment, does this bill, or this proposed law, if
approved, allow the investigation or scrutiny of the bank deposit
in order to execute the judgment?
Mr. RAMOS. To satisfy a judgment which has become executory.
Mr. MARCOS. Yes, but, as I said before, suppose the tax liability
is P1,000,000 and the deposit is half a million, will this bill allow
scrutiny into the deposit in order that the judgment may be
executed?
Mr. RAMOS. Merely to determine the amount of such money to
satisfy that obligation to the Government, but not to determine
whether a deposit has been made in evasion of taxes.
xxx xxx xxx
Mr. MACAPAGAL. But let us suppose that in an ordinary civil
action for the recovery of a sum of money the plaintiff wishes to
attach the properties of the defendant to insure the satisfaction of
the judgment. Once the judgment is rendered, does the
gentleman mean that the plaintiff cannot attach the bank deposit
of the defendant?
Mr. RAMOS. That was the question raised by the gentleman from
Pangasinan to which I replied that outside the very purpose of
this law it could be reached by attachment.
Mr. MACAPAGAL. Therefore, in such ordinary civil cases it can
be attached?
Mr. RAMOS. That is so.
(Vol. II, Congressional Record, House of Representatives, No.
12, pp. 3839-3840, July 27, 1955).
It is sufficiently clear from the foregoing discussion of the
conference committee report of the two houses of Congress that
the prohibition against examination of or inquiry into a bank
deposit under Republic Act 1405 does not preclude its being
garnished to insure satisfaction of a judgment. Indeed there is no
real inquiry in such a case, and if the existence of the deposit is
disclosed the disclosure is purely incidental to the execution
process. It is hard to conceive that it was ever within the intention
of Congress to enable debtors to evade payment of their just
debts, even if ordered by the Court, through the expedient of
converting their assets into cash and depositing the same in a
bank.
WHEREFORE, the orders of the lower court dated March 4 and
27, 1972, respectively, are hereby affirmed, with costs against the
petitioners-appellants.
Zaldivar, Castro, Fernando, Barredo, Makasiar, Antonio and
Esguerra, JJ., concur.
Concepcion, C.J. and Teehankee, J., took no part.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-37867 February 22, 1982
BOARD OF ADMINISTRATORS, PHILIPPINES VETERANS
ADMINISTRATION, petitioner,
vs.
HON. JOSE G. BAUTISTA, in his capacity as Presiding Judge
of the CFI Manila, Branch III, and CALIXTO V.
GASILAO, respondents.
GUERRERO, J.:
This is a petition to review on certiorari the decision of respondent
Court of First Instance of Manila, Branch III, rendered on October
25, 1973 in Civil Case No. 90450 for mandamus filed by Calixto
V. Gasilao against the Board of Administrators of the Philippine
Veterans Administration.
The facts as found by the Court a quo to have been established
by the pleadings find by the parties are stated in the decision
under review from which We quote the following:
Calixto V. Gasilao, pauper litigant and petitioner in the above-
entitled case, was a veteran in good standing during World War
II. On October 19, 1955, he filed a claim for disability pension
under Section 9, Republic Act No. 65. The claim was disapproved
by the Philippine Veterans Board (now Board of Administrators,
Philippine Veterans Administration).
Meanwhile, Republic Act 65 was amended by Republic Act 1362
on June 22, 1955 by including as part of the benefit of P50.00,
P10.00 a month for each of the unmarried minor children below
18 of the veteran Republic Act No. 1362 was implemented by the
respondents only on July 1, 1955.
On June 18, 1957, Section 9 of Republic Act No. 65 was further
amended by Republic Act 1920 increasing the life pension of the
veteran to P100.00 a month and maintaining the P10.00 a month
each for the unmarried minor children below 18.
Fortunately, on August 8, 1968, the claim of the petitioner which
was disapproved in December, 1955 was reconsidered and his
claim was finally approved at the rate of P100.00 a month, life
pension, and the additional Pl0.00 for each of his ten unmarried
minor children below 18. In view of the approval of the claim of
petitioner, he requested respondents that his claim be made
retroactive as of the date when his original application was flied or
disapproved in 1955. Respondents did not act on his request.
On June 22, 1969, Section 9 of Republic Act No. 65 was
amended by Republic Act No. 5753 which increased the life
pension of the veteran to P200.00 a month and granted besides
P30.00 a month for the wife and P30.00 a month each for his
unmarried minor children below 18. In view of the new law,
respondents increased the monthly pension of petitioner to
P125.00 effective January 15, 1971 due to insufficient funds to
cover full implementation. His wife was given a monthly pension
of P7.50 until January 1, 1972 when Republic Act 5753 was fully
implemented.
Petitioner now claims that he was deprived of his right to the
pension from October 19, 1955 to June 21, 1957 at the rate of
P50.00 per month plus P10.00 a month each for his six (6)
unmarried minor children below 18. lie also alleges that from June
22, 1957 to August 7, 1968 he is entitled to the difference of
P100.00 per month plus P10.00 a month each for his seven (7)
unmarried nor children below 18. Again, petitioner asserts the
difference of P100.00 per month, plus P30.00 a month for his wife
and the difference of P20.00 a month each for his four (4)
unmarried minor children below 18 from June 22, 1969 up to
January 14, 1971 and finally, the difference of P75.00 per month
plus P30.00 a month for his wife and the difference of P20.00 a
month for his three (3) unmarried minor children below 18 from
January 15, 1971 to December 31, 1971. 1
According to the records, the parties, through their respective
counsels, filed on September 24, 1973 the following stipulation of
facts in the lower Court:
STIPULATION OF FACTS
COME NOW the parties thru their respective counsel, and unto
this Honorable Court, respectfully state that they agree on the
following facts which may be considered as proved without the
need of the introduction of any evidence thereon, to wit:
1. Petitioner was a veteran in good standing during the last World
War that took active participation in the liberation drive against
the enemy, and due to his military service, he was rendered
disabled.
2. The Philippine Veterans Administration, formerly the Philippine
Veterans Board, (now Philippine Veterans Affairs Office) is an
agency of the Government charged with the administration of
different laws giving various benefits in favor of veterans and their
orphans/or widows and parents; that it has the power to adopt
rules and regulations to implement said laws and to pass upon
the merits and qualifications of persons applying for rights and
privileges extended by this Act pursuant to such rules and
regulations as it may adopt to insure the speedy and honest
fulfillment of its aims and purposes.
3. On July 23, 1955, petitioner filed a claim (Claim No. Dis-12336)
for disability pension under Section 9 of RA 65, with the Philippine
Veterans Board (later succeeded by the Philippine Veterans
Administration, now Philippine Veterans Affairs Office), alleging
that he was suffering from PTB, which he incurred in line of duty.
4. Due to petitioner's failure to complete his supporting papers
and submit evidence to establish his service connected illness,
his claim was disapproved by the Board of the defunct Philippine
Veterans Board on December 18, 1955.
5. On August 8, 1968, petitioner was able to complete his
supporting papers and, after due investigation and processing,
the Board of Administrators found out that his disability was 100%
thus he was awarded the full benefits of section 9 of RA 65, and
was therefore given a pension of P100.00 a month and with an
additional P 10.00 a month for each of his unmarried minor
children pursuant to RA 1920, amending section 9 of RA 65.
6. RA 5753 was approved on June 22, 1969, providing for an
increase in the basic pension to P200.00 a month and the
additional pension, to P30.00 a month for the wife and each of the
unmarried minor children. Petitioner's monthly pension was,
however, increased only on January 15, 1971, and by 25% of the
increases provided by law, due to the fact that it was only on said
date that funds were released for the purpose, and the amount so
released was only sufficient to pay only 25% of the increase.
7. On January 15, 1972, more funds were released to implement
fully RA 5753 and snow payment in full of the benefits thereunder
from said date.
WHEREFORE, it is respectfully prayed that a decision be
rendered in accordance with the foregoing stipulation of facts. It is
likewise prayed that the parties be granted a period of (15) days
within which to file their memoranda. 2
Upon consideration of the foregoing and the Memoranda filed by the
parties, the lower Court rendered judgment against therein
respondent Board of Administrators, the dispositive portion of which
reads as follows:
WHEREFORE, premises considered, judgment is hereby
rendered for petitioner and the respondents are ordered to make
petitioner's pension effective as of December 18, 1955 at the rate
of P50.00 per month; and the rate increased to P100.00 per
month plus P10.00 per month each for his ten unmarried minor
children below 18 years of age from June 22, 1957 up to August
7..1968; to pay the difference of P100.00 per month plus P30.00
per month and P20.00 per month each for his ten unmarried
children below 18 years of age from June 22, 1969 up to January
15, 1971, the difference of P75.00 per month plus P22.50 per
month for his wife and P20.00 per month each for his unmarried
nor children then below 18 years of age from January 16, 1971
up to December 31, 1971.
SO ORDERED.
Manila, October 25, 1973. 3
In its Petition before this Court, the Board of Administrators of the
Philippine Veterans Administration, through the Office of the Solicitor
General, challenges the abovementioned decision of the Court a
quo on the following grounds:
1. The lower Court erred in ordering the petitioners to retroact the
effectivity of their award to respondent Calixto V. Gasilao of full
benefits under section 9 of RA 65 to December 18, 1955, the date
when his application was disapproved due to dis failure to
complete his supporting papers and submit evidence to establish
his service connected illness, and not August 8, 1968, the date
when he was able to complete his papers and allow processing
and approval of his application.
2. The lower Court erred in ordering payment of claims which had
prescribed.
3. The lower Court erred in allowing payment of claims under a
law for which no funds had been released. 4
The question raised under the first assigned error is: When
should private respondent Gasilao's pension benefits start
The lower Court, quoting excerpts from Our decision in Begosa
vs. Chairman Philippine Veterans Administration, 5ruled that
Gasilao's pension benefits should retroact to the date of the
disapproval of his claim on December 18, 1955, and not commence
from the approval thereon on August 8, 1968 as contended by the
Board of Administrators.
Petitioner maintains the stand that the facts of the Begosa case
are not similar to those of the case at bar to warrant an
application of the ruling therein on the retroactivity of a pension
award to the date of prior disapproval of the claim. In
the Begosa case, the Supreme Court speaking thru then
Associate Justice, now Chief Justice Fernando, affirmed the
decision of the lower Court, and ruled in part as follows:
From the facts just set out, it will be noted that plaintiff filed his
said claim for disability pension as far back as March 4, 1955;
that it was erroneously disapproved on June 21, 1955, because
his dishonorable discharge from the Army was not a good or
proper ground for the said disapproval and that on
reconsideration asked for by him on November 1, 1957, which he
continued to follow up, the Board of Administrators, Philippine
Veterans Administration, composed of herein defendants, which
took over the duties of the Philippine Veterans Board, finally
approved his claim on September 2, 1964, at the rate of P30.00 a
month. 6
Had it not been for the said error, it appears that there was no
good ground to deny the said claim, so that the latter was valid
and meritorious even as of the date of its filing on March 4, 1955,
hence to make the same effective only as of the date of its
approval on September 2, 1964 — according to defendant's stand
— would be greatly unfair and prejudicial to plaintiff. 7
In other words, the favorable award which claimant Begosa finally
obtained on September 2, 1964 was made to retroact to the date
of prior disapproval of the claim on June 2, 1955 for the reason
that such disapproval was erroneously made.
In the instant case, on the other hand, the herein claim of
respondent Gasilao was denied on December 18, 1955 because
of his "failure to complete his supporting papers and submit
evidence to establish his service-connected illness" (Stipulation of
Facts, Par. 4, ante). Nonetheless, the Stipulation of Facts
admitted in par. 1 that "Petitioner was a veteran in good standing
during the last World War that took active participation in the
liberation drive against the enemy, and due to his military service,
he was rendered disabled." From this admission in par. 1, it can
reasonably be deduced that the action on the claim of Gasilao
was merely suspended by the Philippine Veterans Administration
pending the completion of the required supporting papers and
evidence to establish his service-connected illness. Hence, Our
ruling in the Begosa case making retroactive the award in favor of
the veteran still holds.
Republic Act No. 65 otherwise known as the Veterans' Bill of
Rights, as amended, does not explicitly provide for the effectivity
of pension awards. However, petitioner seeks to remedy this
legislative deficiency by citing Section 15 of the law which in part
reads as follows:
Sec. 15. Any person who desires to take advantage of the rights
and privileges provided for in this Act should file his application
with the Board ...
Petitioner contends that since the foregoing section impliedly
requires that the application filed should first be approved by the
Board of Administrators before the claimant could receive his
pension, therefore, an award of pension benefits should
commence form the date of he approval of the application.
This stand of the petitioner does not appear to be in consonance
with the spirit and intent of the law, considering that Republic Act
65 is a veteran pension law which must be accorded a liberal
construction and interpretation in order to favor those entitled to
the rights, privileges and benefits granted thereunder, among
which are the right to resume old positions in the government,
educational benefits, the privilege to take promotional
examinations, a life pension for the incapacitated, pensions for
widow and children, hospitalization and medical care benefits.
As it is generally known, the purpose of Congress in granting
veteran pensions is to compensate, as far as may be, a class of
men who suffered in the service for the hardships they endured
and the dangers they encountered, 8 and more particularly, those
who have become incapacitated for work owing to sickness, disease
or injuries sustained while in line of duty. 9 A veteran pension law is,
therefore, a governmental expression of gratitude to and recognition
of those who rendered service for the country, especially during
times of war or revolution, by extending to them regular monetary
aid. For this reason, it is the general rule that a liberal construction is
given to pension statutes in favor of those entitled to pension. Courts
tend to favor the pensioner, but such constructional preference is to
be considered with other guides to interpretation, and a construction
of pension laws must depend on its own particular language. 10
Significantly, the original text of RA 65 provided that:
Sec. 6. It also shall be the duty of the Board (then the Philippine
Veterans Board) to pass upon the merits and qualifications of
persons applying for the rights and/or privileges extended by this
Act, pursuant to such rules as it may adopt to insure the
speedy and honest fulfillment of its aims and purposes.
(Emphasis supplied.)
The foregoing provision clearly makes it incumbent upon the
implementing Board to carry out the provisions of the statute in
the most expeditious way possible and without unnecessary
delay. In the Begosa case, it took nine years (from June 2, 1955
to September 2, 1964) before the claimant finally obtained his
pension grant, whereas in the instant case, it took about twelve
years (from December, 1955 to August 8, 1968) for respondent
Gasilao to receive his pension claim. To Our mind, it would be
more in consonance with the spirit and intentment of the law that
the benefits therein granted be received and enjoyed at the
earliest possible time by according retroactive effect to the grant
of the pension award as We have done in the Begosa case.
On the other hand, if the pension awards are made effective only
upon approval of the corresponding application which would be
dependent on the discretion of the Board of Administrators which
as noted above had been abused through inaction extending to
nine years, even to twelve years, the noble and humanitarian
purposes for which the law had enacted could easily be thwarted
or defeated.
On the issue of prescription, petitioner cites Article 1144 of the
Civil Code which provides:
Art. 1144. The following actions must be brought within ten years
from the time the right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law; and
(3) Upon a judgment.
Petitioner now contends that since the action was filed in the
lower Court on April 13, 1973 seeking the payment of alleged
claims which have accrued more than ten (10) years prior to said
date, the same should have been disallowed as to the prescribed
claims.
The obligation of the government to pay pension was created by
law (Sec. 9, R.A. 65). Hence, the ten-year prescriptive period
should be counted from the date of passage of the law which is
September 25, 1946, the reason being that it is only from said
date that private respondent could have filed his application.
Taking September 25, 1946 as the point of reference, the actual
filing of Gasilao's application on July 23, 1955 was clearly made
within and effectively interrupted the prescriptive period. It is not
the date of the commencement of the action in the lower Court
which should be reckoned with, for it was not on said date that
Gasilao first sought to claim his pension benefits, but on July 23,
1955 when he filed his application with the defunct Philippine
Veterans Board. As We had the occasion to state in the case
of Vda. de Nator vs. C.I.R., 11 "the basis of prescription is the
unwarranted failure to bring the matter to the attention of those who
are by law authorized to take cognizance thereof."
The Stipulation of Facts do not show and neither do the records
indicate when Gasilao attempted to reinstate his claim after the
same was disapproved on December 18, 1955. What is evident is
that he did take steps to reinstate his claim because on August 8,
1968, herein petitioner finally approved his application. We find it
more logical to presume that upon being properly notified of the
disapproval of his application and the reasons therefor, Gasilao,
being the interested party that he was proceeded to work for the
completion of the requirements of the Board, as in fact he was
successful in meeting such requirements. There is nothing in the
record to show intentional abandonment of the claim to as to
make the prescriptive period continue to run again.
The third ground relied upon in support of this Petition involves
the issue as to whether or not the payment of increased pension
provided in the amendatory Act, R.A. 5753, could be ordered,
even where there was no actual release of funds for the purpose,
although the law itself expressly provided for an appropriation. In
the case of Board of Adminitrators, Philippine Veterans
Administration vs. Hon. Agcoili, et al., 12 penned by Chief Justice
Fred Ruiz Castro, the same issue was treated in this wise:
... The inability of the petitioner to pay Abrera the differential of
P60.00 in monthly pension is attributed by it, in its own words, "to
the failure of Congress to appropriate the necessary funds to
cover all claims for benefits, pensions and allowances." And the
petitioner states that it has "no alternative but to suspend (full
implementation of said laws until such time, as sufficient funds
have been appropriated by Congress" to cover the total amount
of all approved claims.
We find the explanation of the petitioner satisfactory, but we
nevertheless hold that as a matter of law Abrera is entitled to a
monthly pension of P120.00 from January 1, 1972 when Republic
Act 5753 was implemented up to the present, if his physical
disability rating has continued and continues to be 60%. Payment
to him of what is due him from January 1, 1972 must however
remain subject to the availability of Government funds duly set
aside for the purpose and subject further periodic re-rating of his
physical disability.
But even if we have thus defined the precise terms, nature and
scope of the entitlement of the respondent Abrera, for the
guidance of petitioner, we nevertheless refrain from ordering the
petitioner to pay the amount of P120.00 per month from January
1, 1972 that is due to the respondent by virtue of the mandate of
section 9 of Republic Act 65, as amended by Republic Act
5753, because the Government has thus far not provided the
necessary funds to pay all valid claims duly approved under the
authority of said statute. 13 (Emphasis supplied.)
ACCORDINGLY, the judgment of the Court a quo is hereby
modified to read as follows:
WHEREFORE, premises considered, the Board of Administrators
of the Philippine Veterans Administration (now the Philippine
Veterans Affairs Office) is hereby ordered to make Gasilao's
pension effective December 18, 1955 at the rate of P50-00 per
month plus P10.00 per month for each of his then unmarried
minor children below 18, and the former amount increased to
P100.00 from June 22, 1957 to August 7, 1968.
The differentials in pension to which said Gasilao, his wife and his
unmarried minor children below 18 are entitled for the period from
June 22, 1969 to January 14, 1972 by virtue of Republic Act No.
5753 are hereby declared subject to the availability of
Government funds appropriated for the purpose.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 107797 August 26, 1996
PURITA SALVATIERRA, ELENITA SALVATIERRA NUNEZ,
ANSELMO SALVATIERRA, JR., EMELITA SALVATIERRA, and
ROMEL SALVATIERRA, petitioners,
vs.
THE HONORABLE COURT OF APPEALS and SPS. LINO
LONGALONG and PACIENCIA MARIANO, respondents.
HERMOSISIMA, JR. J.:p
The intricate yet timeworn issue of prescription has come to the fore in this case. Which
prescriptive period for actions for annulment should prevail, Art. 1391 of the New Civil Code
which limits the filing of actions to four (4) years or Art. 1144 of the same Code which limits
the period of the filing of actions on certain grounds to ten years? Likewise, at issue is
whether or not there was a double sale to a party or parties under the facts obtaining.
The petitioners in this case filed the herein petition for certiorari,
assailing as they do the decision of the Court of Appeals which
held 1:
WHEREFORE, the decision appealed from is herein
REVERSED, defendants-appellees are ordered to reconvey to
plaintiffs-appellants the 149-sq. m. portion of Lot. 26 registered in
the name of Anselmo Salvatierra under OCT 0-4221 as described
in the deed of sale Exh. "A" or "1" of this case; and defendants-
appellees are furthermore ordered to pay plaintiffs-appellants the
amount of P5,000.00 as attorney's fees.
The antecedent facts are not disputed:
In 1930, Enrique Salvatierra died intestate and without any issue.
He was survived by his legitimate
brothers: Tomas, Bartolome, Venancio and Macario, and
sister Marcela, all surnamed Salvatierra. His estate consisted of
three (3) parcels of land, more particularly described in the
following manner:
Cad. Lot No. 25 covered by Tax Declaration No. 11950
A parcel of land Lot No. 25, situated at Poblacion, San Leonardo,
Nueva Ecija. Bounded on the NE-Lots Nos. 26 & 27; on the SE-
Rizal St., SW-Lot No. 24; and on the NW-Bonifacio Street.
Containing an area of ONE THOUSAND ONE HUNDRED AND
SIXTEEN (1,116) sq. m. more or less and assessed at
P1,460.00.
Cad. Lot No. 26 covered by Tax Decl. No. 11951
A parcel of land situated at Poblacion, San Leonardo, Nueva
Ecija, Lot No. 26, bounded on the NE-Lot No. 29 & 27; on the SE-
Lot No. 25; and on the NW-Bonifacio St. Containing an area of
SEVEN HUNDRED FORTY NINE (749) sq. m. more or less and
assessed at P720.00.
Cad. Lot No. 27 Covered by Tax Decl. No. 11949
A parcel of land situated at Poblacion, San Leonardo, Nueva
Ecija, Lot No. 27, bounded on the NE-Lot No. 28; SE-Rizal St.;
SW-Lot No. 25 and on the NW-Lot No. 26. Containing an area of
SIX HUNDRED SEVENTY (670) sq. m. more or less.
(Exh. :B: or "2")
On May 4, 1966, Macario Salvatierra sold Lot No. 26 to his son,
Anselmo Salvatierra by means of a deed of sale, and in
consideration of the amount of P1,000.00. Meanwhile, Marcela,
prior to her death sold her 1/5 undivided share in the Estate of
Enrique Salvatierra to her brother, Venancio. After the death of
Bartolome, his heirs Catalina and Ignacia Marquez sold his 1/5
undivided share to Tomas and his wife, Catalina Azarcon.
On September 24, 1968, an "Extrajudicial Partition with
Confirmation of Sale" was executed by and among the
surviving legal heirs and descendants of Enrique
Salvatierra, which consisted of the aforementioned Lot
No. 25, 26 and 27. By virtue of the sale executed by
Marcela in favor of Venancio, the latter now owns 2/5
shares of the estate. By virtue of the sale by Bartolome's
heirs Catalina and Ignacia, of his undivided shares to
Tomas, now deceased, represented by his widow,
Catalina Azarcon, the latter now owns 2/5 shares in the
said estate. Anselmo Salvatierra represented his father
Macario, who had already died. The extrajudicial partition
with confirmation of sale summed up the shares assigned
to the heirs of Enrique Salvatierra:
To: VENANCIO SALVATIERRA — 1,041 sq. m. known as Lot
No. 27 covered by Tax Decl. N. 11949 and portion of Lot
No. 26 covered by Tax Decl. No. 11951;
To: Macario Salvatierra now ANSELMO SALVATIERRA — 405
sq. m. known as Lot No. 26-part and covered by Tax. Decl. No.
11951;
To: HEIRS OF TOMAS SALVATIERRA — 1,116 sq. m. the whole
of Lot No. 25 and declared under Tax Decl. No. 11950.
Legal Heirs of Tomas Salvatierra are:
Montano Salvatierra
Anselmo Salvatierra
Donata Salvatierra
Francisco Salvatierra
Cecilio Salvatierra
Leonilla Salvatierra
(Emphasis supplied)
Thereafter, on June 15, 1970, Venancio sold the whole of Lot No.
27 and a 149-sq. m. portion of Lot 26 for the consideration of
P8,500.00 to herein respondent spouses Lino Longalong and
Paciencia Mariano. The Longalongs took possession of the said
lots. It was discovered in 1982 (through a relocation survey) that
the 149 sq. m. portion of Lot No. 26 was outside their fence. It
turned out that Anselmo Salvatierra was able to obtain a title,
Original Certificate of Title No. 0-4221 in his name, the title
covering the whole of Lot No. 26 which has an area of 749 sq. m.
Efforts to settle the matter at the barangay level proved futile
because Purita Salvatierra (widow of Anselmo) refused to yield to
the demand of Lino Longalong to return to the latter the 149 sq.
m. portion of Lot No. 26.
Private respondents Longalong then filed a case with the RTC for
the reconveyance of the said portion of Lot 26. The court a
quo dismissed the case on the following grounds: 1) that
Longalong, et al. failed to establish ownership of the portion of the
land in question, and 2) that the prescriptive period of four (4)
years from discovery of the alleged fraud committed by
defendants' predecessor Anselmo Salvatierra within which
plaintiffs should have filed their action had already elapsed. 3
On appeal, the Court of Appeals ruled:
To start with, a vendor can sell only what he owns or what he is
authorized to sell (Segura v. Segura, 165 SCRA 368). As to the
co-owner of a piece of land, he can of course sell his pro
indiviso share therein to anyone (Art. 493, New Civil Code;
Pamplona v. Moreto, 96 SCRA 775), but he cannot sell more than
his share therein.
The deed of extrajudicial partition with confirmation of previous
sale Exh. "B" or "2" executed by the heirs of Enrique Salvatierra
was explicit that the share of Anselmo Salvatierra which he got
from his father Macario Salvatierra thru sale, was only Four
Hundred Five (405) sq. mts. out of Lot No. 26 (Exhs. "B-1" and
"B-2"), the whole lot of which has an area of 749 sq. mts., so that
344 sq. mts. of said lot do not pertain to Anselmo Salvatierra and
his heirs, herein defendants-appellees. This must be the reason
why, in said deed of extrajudicial partition, Venancio Salvatierra
was still given a "portion of Lot No. 26 covered by Tax Declaration
No. 11951" (Exh. "B-3", p. 7, Rec.), for logically, if the whole of
Lot No. 26 measuring 749 sq. mts. had been given to Anselmo
Salvatierra, Venancio Salvatierra would no longer be entitled to a
portion of said lot. And as both parties to this case do not at all
dispute the truth, correctness, and authenticity of the deed of
extrajudicial partition with confirmation of sale Exh. "B" or "2"
dated September 24, 1968, as in fact both parties even marked
the same as their own exhibit, we have no choice but simply to
enforce the provisions of said deed.
Now, as we have stated earlier, Macario Salvatierra, even before
the extrajudicial partition of the three lots left by the late Enrique
Salvatierra among his heirs, could very well dispose only of
his pro indiviso share in said lots, as he in fact did on May 4, 1966
in a deed of sale in favor of his son Anselmo Salvatierra; and two
years later, on September 24, 1968, when the deed of
extrajudicial partition Exh. "B" or "2" was executed by the heirs of
Enrique Salvatierra, it was stipulated that Macario's share in Lot
No. 26 was only 405 sq. mts. thereof, which share Macario had
already sold to his son Anselmo Salvatierra. As of September 24,
1968, the date of said deed of partition, then, Anselmo Salvatierra
already knew that he had only acquired 405 sq. mts. of Lot No. 26
from his father Macario Salvatierra, and yet on May 20, 1980, or
12 years later, he proceeded with the registration of the earlier
deed of sale between him and his father and of the whole Lot No.
26 with an area of 749 sq. mts. although he already knew through
the deed of extrajudicial partition Exh. "A" or "1" that he was only
entitled to 405 sq. mts. out of Lot No. 26, and which knowledge
he could not deny as he was one of the signatories to said deed
of extrajudicial partition (Exh. "B-1" or "2-b").
It is, therefore, obvious and clear, on the basis of the evidence on
record, that when Anselmo Salvatierra registered the deed of sale
Exh. "7" dated May 4, 1966 between him and his father Macario
Salvatierra on May 20, 1980, and when he obtained a title in his
name over the whole of Lot No. 26 with an area of 749 sq. mts.,
he did so with intent to defraud the other heirs of the late Enrique
Salvatierra, particularly Venancio Salvatierra and the latter's heirs
and successors-in-interest, for he, Anselmo Salvatierra, knew that
he was entitled to only 405 sq. mts. out of the whole Lot No. 26
with an area of 749 sq. mts. In fact, a closer look at the deed of
sale Exh. "7" dated May 4, 1966 between father and son, Macario
and Anselmo, reveals that the word and figure "SEVEN
HUNDRED FORTY NINE (749)" sq. mts. written therein appear to
have been only superimposed over another word and figure that
had been erased, and even the word "FORTY NINE" was merely
inserted and written above the regular line, thereby creating the
strong conviction that said word and figure were altered to suit
Anselmo's fraudulent design (p. 12, Rec.).
Apparently, the lower court failed to examine carefully the deed of
extrajudicial partition Exh. "B" or "2" and the deed of sale Exh. "7"
between Macario Salvatierra and his son Anselmo Salvatierra, for
had it done so, it could not have failed to notice that Anselmo
Salvatierra received only 405 sq. mts. out of Lot No. 26 from his
father Macario Salvatierra, not the whole Lot No. 26 measuring
749 sq. mts. The lower court was also of the mistaken impression
that this case involves a double sale of Lot No. 26, when the truth
is that Macario Salvatierra could only sell and, therefore, sold only
405 sq. mts. out of Lot No. 26 to his son Anselmo by virtue of the
deed of sale Exh. "7", not the whole 749 sq. mts. of said lot, and
plaintiffs in turn bought by virtue of the deed of sale Exh. "A" 149
sq. mts. out of the remaining area of 344 sq. mts. of Lot No. 26
from Venancio Salvatierra, to whom said 344-sq. mt. portion of
Lot No. 26 was given under the deed of partition Exh. "B" or "2".
Neither can we agree with the lower court that even if plaintiffs-
appellants had established their ownership over the 149-sq. mt.
portion of Lot No. 26 in question, they are already barred by
prescription to recover said portion from defendants. In this
connection, the lower court ratiocinated that an action for
reconveyance should be filed within four (4) years from the
discovery of the fraud, citing Esconde v. Barlongay, 152 SCRA
603, which in turn cited Babin v. Medalla, 108 SCRA 666, so that
since plaintiffs-appellants filed their action for reconveyance only
on November 22, 1985 or five years after the issuance of
Anselmo Salvatierra's title over Lot No. 26 on May 20, 1980, said
court held that appellant's action for reconveyance against
defendants has already prescribed.
At this juncture, we find the need to remind the court a quo as
well as other trial courts to keep abreast with the latest
jurisprudence so as not to cause possible miscarriages of justice
in the disposition of the cases before them. In the relatively recent
case of Caro v. CA, 180 SCRA 401, the Supreme Court clarified
the seemingly confusing precedents on the matter of prescription
of actions for reconveyance of real property, as follows:
We disagree. The case of Liwalug Amerold, et al. v. Molok
Bagumbaran, G.R. L-33261, September 30, 1987, 154 SCRA 396
illuminated what used to be a gray area on the prescriptive period
for an action to reconvey the title to real property and corrollarily,
its point of reference:
. . . It must be remembered that before August 30, 1950, the date
of the effectivity of the new Civil Code, the Old Code of Civil
Procedure (Act No. 190) governed prescription. It provided:
Sec. 43. Other civil actions; how limited. — Civil actions other
than for the recovery of real property can only be brought within
the following periods after the right of action accrues:
3. Within four years: . . . An action for relief on the ground of
fraud, but the right of action in such case shall not be deemed to
have accrued until the discovery of the fraud:
xxx xxx xxx
In contract under the present Civil Code, we find that just as an
implied or constructive trust in an offspring of the law (Art. 1465,
Civil Code), so is the corresponding obligation to reconvey the
property and the title thereto in favor of the true owner. In this
context, and vis-a-vis prescription, Article 1144 of the Civil Code
is applicable.
Art. 1144. The following actions must be brought within ten years
from the time the right of action accrues:
1) Upon a written contract;
2) Upon an obligation created by law;
3) Upon a judgment;
xxx xxx xxx
An action for reconveyance based on an implied or constructive
trust must perforce prescribe in ten years and not otherwise. A
long line of decisions of this Court, and of very recent vintage at
that, illustrated this rule. Undoubtedly, it is now well-settled that
an action for reconveyance based on an implied or constructive
trust prescribes in ten years from the issuance of the Torrens title
over the property. The only discordant note, it seems, is Balbin
v. Medalla, which states that the prescriptive period for a
reconveyance action is four years. However, this variance can be
explained by the erroneous reliance on Gerona v. de Guzman.
But in Gerona, the fraud was discovered on June 25, 1948, hence
Section 43(3) of Act No. 190 was applied, the New Civil Code not
coming into effect until August 30, 1950 as mentioned earlier. It
must be stressed, at this juncture, that Article 1144 and Article
1456, are new provisions. They have "no counterparts in the old
Civil Code or in the old Code of Civil Procedure, the latter being
than resorted to as legal basis of the four-year prescriptive period
for an action for reconveyance of title of real property acquired
under false pretenses.
An Action for reconveyance has its basis in Section 53,
paragraph 3 of Presidential Decree No. 1529, which provides:
In all cases of registration procured by fraud, the owner may
pursue all his legal and equitable remedies against the parties to
such fraud without prejudice, however, to the rights of any
innocent holder of the decree of registration on the original
petition or application, . . .
This provision should be read in conjunction with Article 1456 of
the Civil Code, which provides:
Art. 1456. If property is acquire through mistake or fraud, the
person obtaining it is, by force of law, considered a trustee of an
implied trust for the benefit of the person from whom the property
comes.
The law thereby creates the obligation of the trustee to reconvey
the property and the tile thereto in favor of the true
owner. Correlating Section 53, paragraph 3 of Presidential
Decree No. 1529 and Article 1456 of the Civil Code with Article
1144 (2) of the Civil Code, supra, the prescriptive period for the
reconveyance of fraudulently registered real property is ten (10)
years reckoned from the date of the issuance of the certificate of
title. In the present case, therefore, inasmuch as Civil Case No.
10235 was filed on June 4, 1975, it was well-within the
prescriptive period of ten (10) years from the date of the issuance
of "Original Certificate of Title No. 0-6836 on September 17,
1970."
(All Emphasis Supplied).
And the above ruling was re-affirmed in the very recent case
of Tale vs. C.A. G.R. No. 101028, promulgated only last April 23,
1992.
Guided by the above clarificatory doctrine on prescription of
actions for reconveyance of real property, it is obvious that the
lower court erred in relying on the discredited ruling in Esconde
v. Barlongay, supra, which case in turn relied on the earlier
discredited case of Balbin v. Medalla, also supra, which
mistakenly limited the running of the prescriptive period in an
action for reconveyance of real property to only four (4) years
form the issuance of the certificate of title.
Since OCT No. 0-4221 over Lot No. 26 was issued to Anselmo
Salvatierra on May 20, 1980, appellants' filing of the instance
action for reconveyance on November 22, 1985 was well within
the ten (10) year prescriptive period provided by law for such
action.
A motion for reconsideration having been denied, petitioners
brought this petition to set aside the decision of the respondent
appellate court and to affirm in toto the decision of the trial court.
Petitioners assail the decision of the respondent appellate court
for its failure to consider the application and interpretation of
certain provisions of the New Civil Code in the case at bar,
namely Articles 1134, 493, 1088, 1544, 1431, 1396, and 1391. 4
Since petitioners invoke the abovementioned provisions of law, it
is apparent that they rely on the theory that this is a case of
double sale of Lot No. 26 to both petitioners and respondents
Longalong, et al. A perusal of the records and evidence (exhibits
and annexes), however, reveals otherwise. Both parties did not
dispute the existence and contents of the Extrajudicial Partition
with Confirmation of Sale, as both presented them as their
respective exhibits (Exh. "B-1" and "2"). The parties may not have
realized it, but the deciding factor of this dispute is this very
document itself. It is very clear therein that Macario Salvatierra's
share in the estate of the deceased Enrique Salvatierra is only
405 sq. m. out of the 749 sq. m. comprising Lot No. 26. Since
Venancio Salvatierra, under this document, is to get a portion of
Lot No. 26 in addition to Lot No. 27, then it follows that Venancio
is entitled to the remaining 344 sq. m. of Lot No. 26, after
deducting the 405 sq. m. share of Macario.
We find no ambiguity in the terms and stipulations of the
extrajudicial partition. The terms of the agreement are clear and
unequivocal, hence the literal and plain meaning thereof should
be observed. 5 The applicable provision of law in the case at bar
is Article 1370 of the New Civil Code which states:
Art. 1370. If the terms of a contract are clear and leave no doubt
upon the intention of the contracting parties, the literal meaning of
its stipulation shall control.
Contracts which are the private laws of the contracting parties,
should be fulfilled according to the literal sense of their
stipulations, if their terms are clear and leave no room for doubt
as to the intention of the contracting parties, for contracts are
obligatory, no matter what their forms maybe, whenever the
essential requisites for their validity are present. 6
As such, the confirmation of sale between Macario and his son
Anselmo, mentioned in the extrajudicial partition involves only the
share of Macario in the estate. The law is clear on the matter that
where there are two or more heirs, the whole estate of the
decedent its, before its partition, owned in common by such
heirs, 7and hence, the effect of the alienation or the mortgage,
with respect to the co-owners, shall be limited to the portion which
may be alloted to him in the division upon the termination of the
co-ownership. 8
It goes without saying, therefore, that what Anselmo bought from
his father in 1966 was only his father's share in the estate which
turned out to be 405 sq. m. of Lot No. 26, as agreed upon during
their extrajudicial partition, in which Anselmo was a signatory.
The registration of the whole Lot No. 26 in the name of Anselmo
Salvatierra was therefore, done with evident bad faith. A careful
examination of Deed of Sale (Exh. 7) dated May 4, 1966 between
Macario and Anselmo (father and son) shows that an alteration
was perpetrated by the superimposition of the words and figure
SEVEN HUNDRED FORTY NINE (749) sq. m. over other words
and figures therein. Besides, when Anselmo Salvatierra obtained
the Original Certificate of Title No. 0-4221 covering the whole of
Lot No. 26 on May 20, 1980, he had already known that he was
entitled to only 405 sq. m. of the said lot since the extrajudicial
partition has already been executed earlier in 1968. Obviously,
Anselmo's act of registering the whole Lot No. 26 in his name was
intended to defraud Venancio who was then legally entitled to a
certain portion of Lot No. 26 by the extrajudicial partition.
With regard to the issue as to prescription of the action, we agree
with the respondents appellate court that this action has not yet
prescribed. Indeed, the applicable provision in the case at bar is
Art. 1144 of the New Civil Code which provides that:
Art. 1144. The following actions must be brought within ten years
from the time the right of action accrues:
(1) Upon written contract;
(2) Upon an obligation created by law; and
(3) Upon a judgment.
Art. 1391 9 of the same code, referred to by petitioners is not in
point. This article must be read in conjunction with Art.
1390 10 which refers to voidable contracts. This case at hand
involves fraud committed by petitioner Anselmo Salvatierra in
registering the whole of Lot No. 26 in his name, with evident bad
faith. In effect, an implied trust was created by virtue of Art. 1456
of the New Civil Code which states:
Art. 1456. If property is acquired through mistake or fraud, the
person obtaining it is, by force of law, considered a trustee of an
implied trust for the benefit of the person from whom the property
comes.
Implied trust is defined as the right, enforceable solely in equity,
to the beneficial enjoyment of property, the legal title to which is
vested in another and is further subdivided into resulting and
constructive trust. 11 While resulting trust is one raised by
implication of law and presumed to have been contemplated by
the parties; constructive trust, on the other hand, is one raised by
construction of law or arising by operation of law. 12
This case more specifically involves constructive trust. In a more
restricted sense, it is a trust not created by any words, either
expressly or impliedly, evincing a direct intention to create a trust,
but by the construction of equity in order to satisfy the demands
of justice. 13 It does not arise by agreement or intention but by
operation of law. 14
In this connection, we hold that an action for reconveyance of
registered land based on an implied trust may be barred by
laches. The prescriptive period for such actions is ten (10) years
from the date the right of action accrued. 15 We have held in the
case of Armamento v. Central Bank 16 that an action for
reconveyance of registered land based on implied trust,
prescribes in ten (10) years even if the decree of registration is no
longer open to review.
In Duque v. Domingo, 17 especially, we went further by stating:
The registration of an instrument in the Office of the Register of
Deeds constitutes constructive notice to the whole world, and,
therefore, discovery of the fraud is deemed to have taken place at
the time of registration. Such registration is deemed to be a
constructive notice that the alleged fiduciary or trust relationship
has been repudiated. It is now settled that an action on an implied
or constructive trust prescribes in ten (10) years from the date the
right of action accrued.
The complaint for reconveyance was filed by the Longalong
spouses on November 22, 1985, only five (5) years after the
issuance of the O.C.T.
No. 0-4221 over Lot No. 26 in the name of Anselmo Salvatierra.
Hence prescription has not yet set in.
We find no reason to disturb the findings of the respondent Court
of Appeals as to facts its said factual findings having been
supported by substantial evidence on record. They are final and
conclusive and may not be reviewed on appeal. The analysis by
the Court of Appeals of the evidence on record and the process
by which it arrived at its findings on the basis thereof, impel
conferment of the Supreme Court's approval on said findings, on
account of the intrinsic merit and cogency thereof no less than
that Court's superior status as a review tribunal. 18 No reversible
errors can be attributed to the findings of the respondent Court of
Appeals because the decision herein assailed was properly
supported by substantial evidence on record, which were not in
anyway impugned by the petitioners.
IN VIEW OF THE FOREGOING CONSIDERATIONS, we resolve
to DENY the petition for want of merit, with costs against
petitioners.
SO ORDERED.
Padilla, Vitug and Kapunan, JJ., concur.
Bellosillo, J., took no part.
Footnotes
Rollo, pp. 7-9 quoting:
"Art. 1134. Ownership and other real rights over immovable
property are acquired by ordinary prescription through possession
of ten years. (1957a)
"Art. 493. Each co-owner shall have the full ownership of his part
and of the fruits and benefits pertaining thereto, and he may
therefore alienate, assign or mortgage it, and even substitute
another person in its enjoyment, except when personal rights are
involved. But the effect of the alienation or the mortgage, with
respect to the co-owners, shall be limited to the portion which
may be allotted to him in the division upon the termination of the
co-ownership. (399)
"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. (1067a).
"Art. 1544. If the same thing should have been sold to different
vendees, the ownership shall be transferred to the person who
may have first taken possession thereof in good faith, if it should
be immovable property.
Should it be immovable property, the ownership shall belong to
the person acquiring it who in good faith first recorded it in the
Registry of Property.
Should there be no inscription, the ownership shall pertain to the
person who in good faith was first in the possession; and, in the
absence thereof, to the person who presents the oldest title,
provided there is good faith. (1473).
"Art. 1431. Through estoppel an admission or representation is
rendered conclusive upon the person making it, and cannot be
denied or disproved as against the person relying thereon.
"Art. 1396. Ratification cleanses the contract from all its defects
from the moment it was constituted. (1313).
"Art. 1391. The action for annulment shall be brought within four
years.
This period shall begin:
In cases of intimidation, violence or undue influence, from the
time the defect of the consent ceases.
In case of mistake or fraud, from the time of the discovery of the
same.
And when the action refers to contracts entered into by minors or
other incapacitated persons, from the time the guardianship
ceases. (1301a).
2. Art. 1391. The action for annulment shall be brought within four
years.
This period shall begin:
In cases of intimidation, violence or undue influence, from the
time the defect of the consent ceases.
In case of mistake of fraud, from the time of the discovery of the
same.
And when the action refers to contracts entered into by minors or
other
incapacitated persons, from the time the guardianship ceases.
(1301a).
3. Art. 1390 The following contracts are voidable or annullable,
even though there may have been no damage to the contracting
parties:
(1) Those where one of the parties is incapable of giving consent
to a contract;
(2) Those where the consent is vitiated by mistake, violence,
intimidation, undue influence or fraud.
These contracts are binding, unless they are annulled by a proper
action in court. They are susceptible of ratification. (n)
 Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-25316 February 28, 1979
KAPISANAN NG MGA MANGGAGAWA SA MANILA
RAILROAD COMPANY CREDIT UNION, INC., petitioner-
appellant,
vs.
MANILA RAILROAD COMPANY, respondent appellee.
Gregorio E. Fajardo for appellant.
Gregorio Baroque for appellee.
FERNANDO, J.:
In this mandamus petition dismissed by the lower court,
petitioner-appellant would seek a reversal of such decision relying
on what it considered to be a right granted by Section 62 of the
Republic Act No. 2023, more specifically the first two paragraphs
thereof: "... (1) A member of a cooperative may, notwithstanding
the provisions of existing laws, execute an agreement in favor of
the co-operative authorizing his employer to deduct from the
salary or wages payable to him by the employer such amount as
may be specified in the agreement and to pay the amount so
deducted to the co-operative in satisfaction of any debt or other
demand owing from the member to the co-operative. (2) Upon the
exemption of such agreement the employer shall if so required by
the co-operative by a request in writing and so long as such debt
or other demand or any part of it remains unpaid, make the
claimant and remit forth with the amount so deducted to the co-
operative."1
To show that such is futile, the appealed decision, as quoted in
the brief for petitioner-appellant, stated the following: "Then
petitioner contends that under the above provisions of Rep. Act
2023, the loans granted by credit union to its members enjoy first
priority in the payroll collection from the respondent's employees'
wages and salaries. As can be clearly seen, there is nothing in
the provision of Rep. Act 2023 hereinabove quoted which
provides that obligation of laborers and employees payable to
credit unions shall enjoy first priority in the deduction from the
employees' wages and salaries. The only effect of Rep. Act 2023
is to compel the employer to deduct from the salaries or wages
payable to members of the employees' cooperative credit unions
the employees' debts to the union and to pay the same to the
credit union. In other words, if Rep. Act 2023 had been enacted,
the employer could not be compelled to act as the collecting
agent of the employees' credit union for the employees' debt to
his credit union but to contend that the debt of a member of the
employees cooperative credit union as having first priority in the
matter of deduction, is to write something into the law which does
not appear. In other words, the mandatory character of Rep. Act
2023 is only to compel the employer to make the deduction of the
employees' debt from the latter's salary and turn this over to the
employees' credit union but this mandatory character does not
convert the credit union's credit into a first priority credit. If the
legislative intent in enacting pars. 1 and 2 of Sec. 62 of Rep. Act
2023 were to give first priority in the matter of payments to the
obligations of employees in favor of their credit unions, then, the
law would have so expressly declared. Thus, the express
provisions of the New Civil Code, Arts. 2241, 2242 and 2244
show the legislative intent on preference of credits. 2
Such an interpretation, as could be expected, found favor with the
respondent-appellee, which, in its brief, succinctly pointed out
"that there is nothing in said provision from which it could be
implied that it gives top priority to obligations of the nature of that
payable to petitioner, and that, therefore, respondent company, in
issuing the documents known as Exhibit "3" and Exhibit "P",
which establish the order of priority of payment out of the salaries
of the employees of respondent-appellee, did not violate the
above-quoted Section 62 of Republic Act 2023. In promulgating
Exhibit "3", [and] Exhibit "P" respondent, in effect, implemented
the said provision of law. 3
This petition being one for mandamus and the provision of law
relied upon being clear on its face, it would appear that no
favorable action can be taken on this appeal. We affirm.
1. The applicable provision of Republic Act No. 2023 quoted
earlier, speaks for itself. There is no ambiguity. As thus worded, it
was so applied. Petitioner-appellant cannot therefore raise any
valid objection. For the lower court to view it otherwise would
have been to alter the law. That cannot be done by the judiciary.
That is a function that properly appertains to the legislative
branch. As was pointed out in Gonzaga v. Court of Appeals: 4 "It
has been repeated time and time again that where the statutory
norm speaks unequivocally, there is nothing for the courts to do
except to apply it. The law, leaving no doubt as to the scope of its
operation, must be obeyed. Our decisions have consistently born
to that effect. 5.
2. Clearly, then, mandamus does not lie. Petitioner-appellant was
unable to show a clear legal right. The very law on which he
would base his action fails to supply any basis for this petition. A
more rigorous analysis would have prevented him from instituting
a a suit of this character. In J.R.S. Business Corporation v.
Montesa, 6 this Court held. "Man-damus is the proper remedy if it
could be shown that there was neglect on the part of a tribunal in
the performance of an act, which specifically the law enjoins as a
duty or an unlawful exclusion of a party from the use and
enjoyment of a right to which he is entitled. 7 The opinion
continued in this wise:"According to former Chief Justice Moran,"
only specific legal rights may be enforced by mandamus if they
are clear and certain. If the legal rights are of the petitioner are
not well defined, clear, and certain, the petition must be
dismissed. In support of the above view, Viuda e Hijos de
Crispulo Zamora v. Wright was cited. As was there categorically
stated: "This court has held that it is fundamental that the duties
to be enforced by mandamus must be those which are clear and
enjoined by law or by reason of official station, and that petitioner
must have a clear, legal right to the thing and that it must be the
legal duty of the defendant to perform the required act.' As
expressed by the then Justice Recto in a subsequent opinion: "It
is well establish that only specific legal rights are enforceable by
mandamus, that the right sought to be enforced must be certain
and clear, and that the writ not issue in cases where the right is
doubtful." To the same effect is the formulation of such doctrine
by former Justice Barrera: "Stated otherwise, the writ never
issues in doubtful cases. It neither confers powers nor imposes
duties. It is simply a command to exercise a power already
possessed and to perform a duty already imposed." 8 So it has
been since then. 9 The latest reported case, Province. of
Pangasinan v. Reparations Commission, 10 this court speaking
through Justice Concepcion Jr., reiterated such a well-settled
doctrine: "It has also been held that it is essential to the issuance
of the writ of mandamus that the plaintiff should have a clear legal
right to the thing demanded, and it must be the imperative duty of
the defendant to perform the act required. It never issues in
doubtful cases. 11
WHEREFORE, the appealed decision is affirmed. No
pronouncement as to costs.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-27760 May 29, 1974
CRISPIN ABELLANA and FRANCISCO
ABELLANA, petitioners,
vs.
HONORABLE GERONIMO R. MARAVE, Judge, Court of First
Instance of Misamis Occidental, Branch II; and GERONIMO
CAMPANER, MARCELO LAMASON, MARIA GURREA,
PACIENCIOSA FLORES and ESTELITA
NEMEN0, respondents.
Prud. V. Villafuerte for petitioners.
Hon. Geronimo R. Marave in his own behalf.
FERNANDO, J.:p
This petition for certiorari is characterized by a rather vigorous insistence on the part of
petitioners Crispin Abellana and Francisco Abellana that an order of respondent Judge was
issued with grave abuse of discretion. It is their contention that he ought to have dismissed
an independent civil action filed in his court, considering that the plaintiffs, as offended
parties, private respondents here,1 failed to reserve their right to institute it separately in the
City Court of Ozamis City, when the criminal case for physical injuries through reckless
imprudence was commenced. Such a stand of petitioners was sought to be bolstered by a
literal reading of Sections 1 and 2 of Rule 111.2 It does not take into account, however, the
rule as to a trial de novo found in Section 7 of Rule 123.3 What is worse, petitioners appear
to be oblivious of the principle that if such an interpretation were to be accorded the
applicable Rules of Court provisions, it would give rise to a grave constitutional question in
view of the constitutional grant of power to this Court to promulgate rules concerning
pleading, practice, and procedure being limited in the sense that they "shall not diminish,
increase, or modify substantive rights."4 It thus appears clear that the petition for certiorari is
without merit.
The relevant facts were set forth in the petition and admitted in
the answer. The dispute had its origins in a prosecution of
petitioner Francisco Abellana of the crime of physical injuries
through reckless imprudence in driving his cargo truck, hitting a
motorized pedicab resulting in injuries to its passengers, namely,
private respondents Marcelo Lamason, Maria Gurrea,
Pacienciosa Flores, and Estelita Nemeño. The criminal case was
filed with the city court of Ozamis City, which found the accused
Francisco Abellana guilty as charged, damages in favor of the
offended parties likewise being awarded. The accused, now
petitioner, Francisco Abellana appealed such decision to the
Court of First Instance.5 At this stage, the private respondents as
the offended parties filed with another branch of the Court of First
Instance of Misamis Occidental, presided by respondent Judge, a
separate and independent civil action for damages allegedly
suffered by them from the reckless driving of the aforesaid
Francisco Abellana.6 In such complaint, the other petitioner,
Crispin Abellana, as the alleged employer, was included as
defendant. Both of them then sought the dismissal of such action
principally on the ground that there was no reservation for the
filing thereof in the City Court of Ozamis. It was argued by them
that it was not allowable at the stage where the criminal case was
already on appeal.7
Respondent Judge was not persuaded. On April 28, 1967, he
issued the following order: "This is a motion to dismiss this case
on the ground that in Criminal Case No. OZ-342 which was
decided by the City Court and appealed to this Court, the
offended parties failed to expressly waive the civil action or
reserve their right to institute it separately in said City Court, as
required in Section 1, Rule 111, Rules of Court. From the
Records of Criminal Case No. OZ-342, it appears that the City
Court convicted the accused. On appeal to this Court, the
judgment of the City Court was vacated and a trial de novo will
have to be conducted. This Court has not as yet begun trying said
criminal case. In the meantime, the offended parties expressly
waived in this Court the civil action impliedly instituted with the
criminal action, and reserve their right to institute a separate
action as in fact, they did file. The Court is of the opinion that at
this stage, the offended parties may still waive the civil action
because the judgment of the City Court is vacated and a trial de
novo will have to be had. In view of this waiver and reservation,
this Court would be precluded from judging civil damages against
the accused and in favor of the offended parties. [Wherefore], the
motion to dismiss is hereby denied. ..."8 There was a motion for
reconsideration which was denied. Hence this petition.
The only basis of petitioners for the imputation that in the
issuance of the challenged order there was a grave abuse of
discretion, is their reading of the cited Rules of Court provision to
the effect that upon the institution of a criminal action "the civil
action for recovery of civil liability arising from the offense charge
is impliedly instituted with the criminal action, unless the offended
party ...reserves his right to institute it
separately."9 Such an interpretation, as noted, ignores the de
novo aspect of appealed cases from city courts.10 It does likewise,
as mentioned, give rise to a constitutional question to the extent
that it could yield a meaning to a rule of court that may trench on
a substantive right. Such an interpretation is to be
rejected. Certiorari, to repeat, clearly does not lie.
1. In the language of the petition, this is the legal proposition
submitted for the consideration of this Court : "That a separate
civil action can be legally filed and allowed by the court only at the
institution, or the right to file such separate civil action reserved or
waived, at such institution of the criminal action, and never on
appeal to the next higher court."11 It admits of no doubt that an
independent civil action was filed by private respondents only at
the stage of appeal. Nor was there any reservation to that effect
when the criminal case was instituted in the city court of Ozamis.
Petitioners would then take comfort from the language of the
aforesaid Section 1 of Rule 111 for the unwarranted conclusion
that absent such a reservation, an independent civil action is
barred. In the first place, such an inference does not per se arise
from the wording of the cited rule. It could be looked upon
plausibly as a non-sequitur. Moreover, it is vitiated by the
grievous fault of ignoring what is so explicitly provided in Section
7 of Rule 123: "An appealed case shall be tried in all respects
anew in the Court of First Instance as if it had been originally
instituted in that court."12 Unlike petitioners, respondent Judge
was duly mindful of such a norm. This Court has made clear that
its observance in appealed criminal cases is mandatory.13 In a
1962 decision, People v. Carreon,14Justice Barrera, as ponente,
could trace such a rule to a 1905 decision, Andres v.
Wolfe.15 Another case cited by him is Crisostomo v. Director of
Prisons,16 where Justice Malcolm emphasized how deeply rooted
in Anglo-American legal history is such a rule. In the latest case in
point, People v. Jamisola,17 this Court, through Justice Dizon,
reiterated such a doctrine in these words: "The rule in this
jurisdiction is that upon appeal by the defendant from a judgment
of conviction by the municipal court, the appealed decision is
vacated and the appealed case 'shall be tried in all respects anew
in the court of first instance as if it had been originally instituted in
that court.'"18 So it is in civil cases under Section 9 of Rule
40.19 Again, there is a host of decisions attesting to its
observance.20 It cannot be said then that there was an error
committed by respondent Judge, much less a grave abuse of
discretion, which is indispensable if this petition were to prosper.
2. Nor is the above the only ground for rejecting the contention of
petitioners. The restrictive interpretation they would place on the
applicable rule does not only result in its emasculation but also
gives rise to a serious constitutional question. Article 33 of the
Civil Code is quite clear: "In cases of ... physical injuries, a civil
action for damages, entirely separate and distinct from the
criminal action, may be brought by the injured party. Such civil
action shall proceed independently of the criminal prosecution,
and shall require only a preponderance of evidence."21 That is a
substantive right, not to be frittered away by a construction that
could render it nugatory, if through oversight, the offended parties
failed at the initial stage to seek recovery for damages in a civil
suit. As referred to earlier, the grant of power to this Court, both in
the present Constitution and under the 1935 Charter, does not
extend to any diminution, increase or modification of substantive
right.22 It is a well-settled doctrine that a court is to avoid
construing a statute or legal norm in such a manner as would give
rise to a constitutional doubt. Unfortunately, petitioners, unlike
respondent Judge, appeared to lack awareness of the
undesirable consequence of their submission. Thus is discernible
another insuperable obstacle to the success of this suit.
3. Nor is this all that needs to be said. It is understandable for any
counsel to invoke legal propositions impressed with a certain
degree of plausibility if thereby the interest of his client would be
served. That is though, merely one aspect of the matter. There is
this other consideration. He is not to ignore the basic purpose of a
litigation, which is to assure parties justice according to law. He is
not to fall prey, as admonished by Justice Frankfurter, to the vice
of literalness. The law as an instrument of social control will fail in 3 Section 7 of Rule 123 reads as follows: "An appeal case shall
its function if through an ingenious construction sought to be be tried in all respects anew in the Court of First Instances as if it
fastened on a legal norm, particularly a procedural rule, there is had been originally instituted in that court."
placed an impediment to a litigant being given an opportunity of
vindicating an alleged right.23 The commitment of this Court to 4 According to Article VIII, Section 13 of the 1935 Constitution:
such a primordial objective has been manifested time and time "The Supreme Court shall have the power to promulgate runs
again.24 concerning pleading, practice, and procedure in all courts, and
the admission to the practice of law. Said rules shall be uniform
WHEREFORE, this petition for certiorari is dismissed. for all courts of the same grade and shall not diminish, increase,
or modify substantive rights. The existing laws on pleading,
Costs against petitioners. practice, and procedure are hereby repealed as statutes, and are
declared Rules of Courts, subject to the power of the Supreme
Zaldivar (Chairman), Barredo, Fernandez and Aquino, JJ., Court to alter and modify the same. The Congress shall have the
concur. power to repeal, alter, or supplement the rules concerning
pleading, practice, and procedure, and the admission to the
practice of law in the Philippines." The present Constitution, in its
Antonio, J., concurs on the bases of par. nos. 2 & 3 of opinion.
Article X, Section 5, paragraph (5), empowers this Court to
promulgate "rules concerning pleading, practice, and procedure in
Footnotes all courts, the admission to the practice of law, and the integration
of the Bar, which, however, may be repealed, altered, or
1 The private respondents are: Geronimo Campaner, Marcelo supplemented by the National Assembly. Such rules shall provide
Lamason, Maria Gurrea, Pacienciosa Flores and Estelita a simplified and inexpensive procedure for the speedy disposition
Nemeño. of cases, shall be uniform for all courts of the same grade, and
shall not diminish, increase, or modify substantive rights."
2 The aforesaid sections read as follows: "Sec. 1. Institution of
criminal and civil actions. — When a criminal action is instituted,
the civil action for recovery of civil liability arising from the offense
charged is impliedly instituted with the criminal action, unless the
offended party expressly waives the civil action or reserves his
right to institute it separately. Sec. 2. Independent civil action. —
In the cases provided for in Articles 31, 32, 33, 34 and 2177 of
the Civil Code of the Philippines, an independent civil action
entirely separate and distinct from the criminal action, may be
brought by the injured party during the pendency of the criminal
case, provided the right is reserved as required in the preceding
section. Such civil action shall proceed independently of the
criminal prosecution, and shall require only a preponderance of
evidence." .