G.R. No.

93833 September 28, 1995 CHUCHI — Hindi m'am, pero ilan beses na nila akong binalikan, sabing
SOCORRO D. RAMIREZ, petitioner, ganoon —
vs.
HONORABLE COURT OF APPEALS, and ESTER S. GARCIA, respondents. ESG — Ito and (sic) masasabi ko sa 'yo, ayaw kung (sic) mag
explain ka, kasi hanggang 10:00 p.m., kinabukasan hindi ka na pumasok.
Ngayon ako ang babalik sa 'yo, nag-aaply ka sa States, nag-aaply ka sa
KAPUNAN, J.: review mo, kung kakailanganin ang certification mo, kalimutan mo na kasi
hindi ka sa akin makakahingi.
A civil case damages was filed by petitioner Socorro D. Ramirez in the
Regional Trial Court of Quezon City alleging that the private respondent, CHUCHI — Hindi M'am. Kasi ang ano ko talaga noon i-cocontinue ko
Ester S. Garcia, in a confrontation in the latter's office, allegedly vexed, up to 10:00 p.m.
insulted and humiliated her in a "hostile and furious mood" and in a
manner offensive to petitioner's dignity and personality," contrary to ESG — Bastos ka, nakalimutan mo na kung paano ka pumasok dito
morals, good customs and public policy."1 sa hotel. Magsumbong ka sa Union kung gusto mo. Nakalimutan mo na
kung paano ka nakapasok dito "Do you think that on your own
In support of her claim, petitioner produced a verbatim transcript of the makakapasok ka kung hindi ako. Panunumbyoyan na kita (Sinusumbatan
event and sought moral damages, attorney's fees and other expenses of na kita).
litigation in the amount of P610,000.00, in addition to costs, interests and
other reliefs awardable at the trial court's discretion. The transcript on CHUCHI — Itutuloy ko na M'am sana ang duty ko.
which the civil case was based was culled from a tape recording of the
confrontation made by petitioner.2 The transcript reads as follows: ESG — Kaso ilang beses na akong binabalikan doon ng mga no
(sic) ko.
Plaintiff Soccoro D. Ramirez (Chuchi) — Good Afternoon M'am.
ESG — Nakalimutan mo na ba kung paano ka pumasok sa hotel,
Defendant Ester S. Garcia (ESG) — Ano ba ang nangyari sa 'yo, kung on your own merit alam ko naman kung gaano ka "ka bobo" mo.
nakalimot ka na kung paano ka napunta rito, porke member ka na, Marami ang nag-aaply alam kong hindi ka papasa.
magsumbong ka kung ano ang gagawin ko sa 'yo.
CHUCHI — Kumuha kami ng exam noon.
CHUCHI — Kasi, naka duty ako noon.
ESG — Oo, pero hindi ka papasa.
ESG — Tapos iniwan no. (Sic)
CHUCHI — Eh, bakit ako ang nakuha ni Dr. Tamayo
ESG — Kukunin ka kasi ako. As a result of petitioner's recording of the event and alleging that the said
act of secretly taping the confrontation was illegal, private respondent filed
CHUCHI — Eh, di sana — a criminal case before the Regional Trial Court of Pasay City for violation of
Republic Act 4200, entitled "An Act to prohibit and penalize wire tapping
ESG — Huwag mong ipagmalaki na may utak ka kasi wala kang and other related violations of private communication, and other
utak. Akala mo ba makukuha ka dito kung hindi ako. purposes." An information charging petitioner of violation of the said Act,
dated October 6, 1988 is quoted herewith:
CHUCHI — Mag-eexplain ako.
INFORMATION
ESG — Huwag na, hindi ako mag-papa-explain sa 'yo, makaalala
ka kung paano ka puma-rito. "Putang-ina" sasabi-sabihin mo kamag-anak The Undersigned Assistant City Fiscal Accusses Socorro D. Ramirez of
ng nanay at tatay mo ang mga magulang ko. Violation of Republic Act No. 4200, committed as follows:

ESG — Wala na akong pakialam, dahil nandito ka sa loob, nasa That on or about the 22nd day of February, 1988, in Pasay City Metro
labas ka puwede ka ng hindi pumasok, okey yan nasaloob ka umalis ka Manila, Philippines, and within the jurisdiction of this honorable court, the
doon. above-named accused, Socorro D. Ramirez not being authorized by Ester
S. Garcia to record the latter's conversation with said accused, did then and
CHUCHI — Kasi M'am, binbalikan ako ng mga taga Union. there willfully, unlawfully and feloniously, with the use of a tape recorder
secretly record the said conversation and thereafter communicate in
ESG — Nandiyan na rin ako, pero huwag mong kalimutan na hindi writing the contents of the said recording to other person.
ka makakapasok kung hindi ako. Kung hindi mo kinikilala yan okey lang sa
akin, dahil tapos ka na. Contrary to law.

CHUCHI — Ina-ano ko m'am na utang na loob. Pasay City, Metro Manila, September 16, 1988.

ESG — Huwag na lang, hindi mo utang na loob, kasi kung baga sa MARIANO M. CUNETA
no, nilapastangan mo ako. Asst. City Fiscal

CHUCHI — Paano kita nilapastanganan? Upon arraignment, in lieu of a plea, petitioner filed a Motion to Quash the
Information on the ground that the facts charged do not constitute an
ESG — Mabuti pa lumabas ka na. Hindi na ako makikipagusap sa offense, particularly a violation of R.A. 4200. In an order May 3, 1989, the
'yo. Lumabas ka na. Magsumbong ka.3 trial court granted the Motion to Quash, agreeing with petitioner that 1)
the facts charged do not constitute an offense under R.A. 4200; and that
2) the violation punished by R.A. 4200 refers to a the taping of a
communication by a person other than a participant to the
communication.4
From the trial court's Order, the private respondent filed a Petition for
Review on Certiorari with this Court, which forthwith referred the case to
the Court of Appeals in a Resolution (by the First Division) of June 19, 1989.
On February 9, 1990, respondent Court of Appeals promulgated its assailed
Decision declaring the trial court's order of May 3, 1989 null and void, and
holding that:
[T]he allegations sufficiently constitute an offense punishable under
Section 1 of R.A. 4200. In thus quashing the information based on the
ground that the facts alleged do not constitute an offense, the respondent
judge acted in grave abuse of discretion correctible by certiorari.5
Consequently, on February 21, 1990, petitioner filed a Motion for
Reconsideration which respondent Court of Appeals denied in its
Resolution6 dated June 19, 1990. Hence, the instant petition.
Petitioner vigorously argues, as her "main and principal issue"7 that the
applicable provision of Republic Act 4200 does not apply to the taping of a
private conversation by one of the parties to the conversation. She
contends that the provision merely refers to the unauthorized taping of a
private conversation by a party other than those involved in the
communication.8 In relation to this, petitioner avers that the substance or
content of the conversation must be alleged in the Information, otherwise
the facts charged would not constitute a violation of R.A. 4200.9 Finally,
petitioner agues that R.A. 4200 penalizes the taping of a "private
communication," not a "private conversation" and that consequently, her
act of secretly taping her conversation with private respondent was not
illegal under the said act. 10
We disagree.
First, legislative intent is determined principally from the language of a
statute. Where the language of a statute is clear and unambiguous, the law
is applied according to its express terms, and interpretation would be
resorted to only where a literal interpretation would be either impossible
11 or absurb or would lead to an injustice. 12
Section 1 of R.A. 4200 entitled, " An Act to Prohibit and Penalized Wire
Tapping and Other Related Violations of Private Communication and Other
Purposes," provides:
Sec. 1. It shall be unlawfull for any person, not being authorized by all the
parties to any private communication or spoken word, to tap any wire or
cable, or by using any other device or arrangement, to secretly overhear,
intercept, or record such communication or spoken word by using a device
commonly known as a dictaphone or dictagraph or detectaphone or
walkie-talkie or tape recorder, or however otherwise described.
The aforestated provision clearly and unequivocally makes it illegal for any
person, not authorized by all the parties to any private communication to
secretly record such communication by means of a tape recorder. The law
makes no distinction as to whether the party sought to be penalized by the
statute ought to be a party other than or different from those involved in
the private communication. The statute's intent to penalize all persons
unauthorized to make such recording is underscored by the use of the
qualifier "any". Consequently, as respondent Court of Appeals correctly
concluded, "even a (person) privy to a communication who records his
private conversation with another without the knowledge of the latter
(will) qualify as a violator" 13 under this provision of R.A. 4200.
A perusal of the Senate Congressional Records, moreover, supports the
respondent court's conclusion that in enacting R.A. 4200 our lawmakers
indeed contemplated to make illegal, unauthorized tape recording of
private conversations or communications taken either by the parties
themselves or by third persons. Thus:
xxx xxx xxx
Senator Tañada: That qualified only "overhear".
Senator Padilla: So that when it is intercepted or recorded, the element of
secrecy would not appear to be material. Now, suppose, Your Honor, the
recording is not made by all the parties but by some parties and involved
not criminal cases that would be mentioned under section 3 but would
cover, for example civil cases or special proceedings whereby a recording
is made not necessarily by all the parties but perhaps by some in an effort
to show the intent of the parties because the actuation of the parties prior,
simultaneous even subsequent to the contract or the act may be indicative
of their intention. Suppose there is such a recording, would you say, Your
Honor, that the intention is to cover it within the purview of this bill or
outside?
Senator Tañada: That is covered by the purview of this bill, Your
Honor.
Senator Padilla: Even if the record should be used not in the prosecution of
offense but as evidence to be used in Civil Cases or special proceedings?
Senator Tañada: That is right. This is a complete ban on tape
recorded conversations taken without the authorization of all the parties.
Senator Padilla: Now, would that be reasonable, your Honor?
Senator Tañada: I believe it is reasonable because it is not sporting
to record the observation of one without his knowing it and then using it
against him. It is not fair, it is not sportsmanlike. If the purpose; Your honor,
is to record the intention of the parties. I believe that all the parties should
know that the observations are being recorded.
Senator Padilla: This might reduce the utility of recorders.
Senator Tañada: Well no. For example, I was to say that in meetings
of the board of directors where a tape recording is taken, there is no
objection to this if all the parties know. It is but fair that the people whose
remarks and observations are being made should know that the
observations are being recorded.
Senator Padilla: Now, I can understand.
Senator Tañada: That is why when we take statements of persons,
we say: "Please be informed that whatever you say here may be used
against you." That is fairness and that is what we demand. Now, in spite of
that warning, he makes damaging statements against his own interest,
well, he cannot complain any more. But if you are going to take a recording
of the observations and remarks of a person without him knowing that it
is being taped or recorded, without him knowing that what is being
recorded may be used against him, I think it is unfair.
xxx xxx xxx
(Congression Record, Vol. III, No. 31, p. 584, March 12, 1964)
Senator Diokno:Do you understand, Mr. Senator, that under Section 1 of
the bill as now worded, if a party secretly records a public speech, he would
be penalized under Section 1? Because the speech is public, but the
recording is done secretly.

Senator Tañada: Well, that particular aspect is not contemplated by
the bill. It is the communication between one person and another person
— not between a speaker and a public.
xxx xxx xxx
(Congressional Record, Vol. III, No. 33, p. 626, March 12, 1964)
xxx xxx xxx
The unambiguity of the express words of the provision, taken together with
the above-quoted deliberations from the Congressional Record, therefore
plainly supports the view held by the respondent court that the provision
seeks to penalize even those privy to the private communications. Where
the law makes no distinctions, one does not distinguish.
Second, the nature of the conversations is immaterial to a violation of the
statute. The substance of the same need not be specifically alleged in the
information. What R.A. 4200 penalizes are the acts of secretly overhearing,
intercepting or recording private communications by means of the devices
enumerated therein. The mere allegation that an individual made a secret
recording of a private communication by means of a tape recorder would
suffice to constitute an offense under Section 1 of R.A. 4200. As the
Solicitor General pointed out in his COMMENT before the respondent
court: "Nowhere (in the said law) is it required that before one can be
regarded as a violator, the nature of the conversation, as well as its
communication to a third person should be professed." 14
Finally, petitioner's contention that the phrase "private communication" in
Section 1 of R.A. 4200 does not include "private conversations" narrows
the ordinary meaning of the word "communication" to a point of absurdity.
The word communicate comes from the latin word communicare, meaning
"to share or to impart." In its ordinary signification, communication
connotes the act of sharing or imparting signification, communication
connotes the act of sharing or imparting, as in a conversation, 15 or
signifies the "process by which meanings or thoughts are shared between
individuals through a common system of symbols (as language signs or
gestures)" 16 These definitions are broad enough to include verbal or non-
verbal, written or expressive communications of "meanings or thoughts"
which are likely to include the emotionally-charged exchange, on February
22, 1988, between petitioner and private respondent, in the privacy of the
latter's office. Any doubts about the legislative body's meaning of the
phrase "private communication" are, furthermore, put to rest by the fact
that the terms "conversation" and "communication" were interchangeably
used by Senator Tañada in his Explanatory Note to the bill quoted below:
It has been said that innocent people have nothing to fear from their
conversations being overheard. But this statement ignores the usual
nature of conversations as well the undeniable fact that most, if not all,
civilized people have some aspects of their lives they do not wish to
expose. Free conversations are often characterized by exaggerations,
obscenity, agreeable falsehoods, and the expression of anti-social desires
of views not intended to be taken seriously. The right to the privacy of
communication, among others, has expressly been assured by our
Constitution. Needless to state here, the framers of our Constitution must
have recognized the nature of conversations between individuals and the
significance of man's spiritual nature, of his feelings and of his intellect.
They must have known that part of the pleasures and satisfactions of life
are to be found in the unaudited, and free exchange of communication
between individuals — free from every unjustifiable intrusion by whatever
means.17
In Gaanan vs. Intermediate Appellate Court, 18 a case which dealt with the
issue of telephone wiretapping, we held that the use of a telephone
extension for the purpose of overhearing a private conversation without
authorization did not violate R.A. 4200 because a telephone extension
devise was neither among those "device(s) or arrangement(s)"
enumerated therein, 19 following the principle that "penal statutes must
be construed strictly in favor of the accused."20 The instant case turns on
a different note, because the applicable facts and circumstances pointing
to a violation of R.A. 4200 suffer from no ambiguity, and the statute itself
explicitly mentions the unauthorized "recording" of private
communications with the use of tape-recorders as among the acts
punishable.
WHEREFORE, because the law, as applied to the case at bench is clear and
unambiguous and leaves us with no discretion, the instant petition is
hereby DENIED. The decision appealed from is AFFIRMED. Costs against
petitioner.
SO ORDERED.
G.R. No. 82511 March 3, 1992
GLOBE-MACKAY CABLE AND RADIO CORPORATION, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and IMELDA SALAZAR,
respondents.
Castillo, Laman, Tan & Pantaleon for petitioner.
Gerardo S. Alansalon for private respondent.
ROMERO, J.:
For private respondent Imelda L. Salazar, it would seem that her close
association with Delfin Saldivar would mean the loss of her job. In May
1982, private respondent was employed by Globe-Mackay Cable and Radio
Corporation (GMCR) as general systems analyst. Also employed by
petitioner as manager for technical operations' support was Delfin Saldivar
with whom private respondent was allegedly very close.
Sometime in 1984, petitioner GMCR, prompted by reports that company
equipment and spare parts worth thousands of dollars under the custody
of Saldivar were missing, caused the investigation of the latter's activities.
The report dated September 25, 1984 prepared by the company's internal
auditor, Mr. Agustin Maramara, indicated that Saldivar had entered into a
partnership styled Concave Commercial and Industrial Company with
Richard A. Yambao, owner and manager of Elecon Engineering Services
(Elecon), a supplier of petitioner often recommended by Saldivar. The
report also disclosed that Saldivar had taken petitioner's missing Fedders
airconditioning unit for his own personal use without authorization and
also connived with Yambao to defraud petitioner of its property. The
airconditioner was recovered only after petitioner GMCR filed an action for
replevin against Saldivar.1
It likewise appeared in the course of Maramara's investigation that Imelda
Salazar violated company reglations by involving herself in transactions
conflicting with the company's interests. Evidence showed that she signed
as a witness to the articles of partnership between Yambao and Saldivar. It
also appeared that she had full knowledge of the loss and whereabouts of
the Fedders airconditioner but failed to inform her employer.
Consequently, in a letter dated October 8, 1984, petitioner company
placed private respondent Salazar under preventive suspension for one (1)
month, effective October 9, 1984, thus giving her thirty (30) days within
which to, explain her side. But instead of submitting an explanations three
(3) days later or on October 12, 1984 private respondent filed a complaint
against petitioner for illegal suspension, which she subsequently amended
to include illegal dismissal, vacation and sick leave benefits, 13th month
pay and damages, after petitioner notified her in writing that effective
November 8, 1984, she was considered dismissed "in view of (her) inability
to refute and disprove these findings. 2
After due hearing, the Labor Arbiter in a decision dated July 16, 1985,
ordered petitioner company to reinstate private respondent to her former
or equivalent position and to pay her full backwages and other benefits she
would have received were it not for the illegal dismissal. Petitioner was
also ordered to pay private respondent moral damages of P50,000.00. 3
On appeal, public respondent National Labor Relations, Commission in the
questioned resolution dated December 29, 1987 affirmed the aforesaid
decision with respect to the reinstatement of private respondent but
limited the backwages to a period of two (2) years and deleted the award
for moral damages. 4
Hence, this petition assailing the Labor Tribunal for having committed
grave abuse of discretion in holding that the suspension and subsequent
dismissal of private respondent were illegal and in ordering her
reinstatement with two (2) years' backwages.
On the matter of preventive suspension, we find for petitioner GMCR.
The inestigative findings of Mr. Maramara, which pointed to Delfin
Saldivar's acts in conflict with his position as technical operations manager,
necessitated immediate and decisive action on any employee closely,
associated with Saldivar. The suspension of Salazar was further impelled
by th.e discovery of the missing Fedders airconditioning unit inside the
apartment private respondent shared with Saldivar. Under such
circumstances, preventive suspension was the proper remedial recourse
available to the company pending Salazar's investigation. By itself,
preventive suspension does, not signify that the company has adjudged the
employee guilty of the charges she was asked to answer and explain. Such
disciplinary measure is resorted to for the protection of the company's
property pending investigation any alleged malfeasance or misfeasance
committed by the employee.5
Thus, it is not correct to conclude that petitioner GMCR had violated
Salazar's right to due process when she was promptly suspended. If at all,
the fault, lay with private respondent when she ignored petitioner's
memorandum of October 8, 1984 "giving her ample opportunity to present
(her) side to the Management." Instead, she went directly to the Labor
Department and filed her complaint for illegal suspension without giving
her employer a chance to evaluate her side of the controversy.
But while we agree with the propriety of Salazar's preventive suspension,
we hold that her eventual separation from employment was not for cause.
What is the remedy in law to rectify an unlawful dismissal so as to "make
whole" the victim who has not merely lost her job which, under settled
Jurisprudence, is a property right of which a person is not to be deprived
without due process, but also the compensation that should have accrued
to her during the period when she was unemployed?
Art. 279 of the Labor Code, as amended, provides:
Security of Tenure. — In cases of regular employment, the employer shall
not terminate the services of an employee except for a just cause or when
authorized by this Title. An employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his
other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual
reinstatement. 6 (Emphasis supplied)
Corollary thereto are the following provisions of the Implementing Rules
and Regulations of the Labor Code:

Sec. 2. Security of Tenure. — In cases of regular employments, the
employer shall not terminate the services of an employee except for a just
cause as provided in the Labor Code or when authorized by existing laws.
Sec. 3. Reinstatement. — An employee who is unjustly dismissed from
work shall by entitled to reinstatement without loss of seniority rights and
to backwages."7 (Emphasis supplied)
Before proceeding any furthers, it needs must be recalled that the present
Constitution has gone further than the 1973 Charter in guaranteeing vital
social and economic rights to marginalized groups of society, including
labor. Given the pro-poor orientation of several articulate Commissioners
of the Constitutional Commission of 1986, it was not surprising that a
whole new Article emerged on Social Justice and Human Rights designed,
among other things, to "protect and enhance the right of all the people to
human dignity, reduce social, economic and political inequalities, and
remove cultural inequities by equitably diffusing wealth and political
power for the common good." 8 Proof of the priority accorded to labor is
that it leads the other areas of concern in the Article on Social Justice, viz.,
Labor ranks ahead of such topics as Agrarian and Natural Resources
Reform, Urban Land Roform and Housing, Health, Women, Role and Rights
of Poople's Organizations and Human Rights.9
The opening paragraphs on Labor states
The State shall afford full protection to labor, local and overseas, organized
and unorganized, and promote full employment and equality of
employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective
bargaining and negotiations, and peaceful concerted activities, including
the right to strike in accordance with law. They shall be entitled to security
of tenure, humane conditions of work, and a living wage. They shall also
participate in policy and decision-making processes affecting their rights
and benefits is may be provided by law.10 (Emphasis supplied)
Compare this with the sole.provision on Labor in the 1973 Constitution
under the Article an Declaration of Principles and State Policies that
provides:
Sec. 9. The state shall afford protection to labor, promote full
employment and equality in employment, ensure equal work
opportunities regardless of sex, race, or creed, and regulate the relations
between workers and employers. The State shall ensure the rights of
workers to self-organization, collective baegaining, security of tenure, and
just and humane conditions of work. The State may provide for compulsory
arbitration. 11
To be sure, both Charters recognize "security of tenure" as one of the rights
of labor which the State is mandated to protect. But there is no gainsaying
the fact that the intent of the framers of the present Constitution was to
give primacy to the rights of labor and afford the sector "full protection,"
at least greater protection than heretofore accorded them, regardless of
the geographical location of the workers and whether they are organized
or not.
It was then CONCOM Commissioner, now Justice Hilario G. Davide, Jr., who
substantially contributed to the present formulation of the protection to
labor provision and proposed that the same be incorporated in the Article
on Social Justice and not just in the Article on Declaration of Principles and
State Policies "in the light of the special importance that we are giving now
to social justice and the necessity of emphasizing the scope and role of
social justice in national development." 12
If we have taken pains to delve into the background of the labor provisions
in our Constitution and the Labor Code, it is but to stress that the right of
an employee not to be dismissed from his job except for a just or
authorized cause provided by law has assumed greater importance under
the 1987 Constitution with the singular prominence labor enjoys under the
article on Social Justice. And this transcendent policy has been translated
into law in the Labor Code. Under its terms, where a case of unlawful or
unauthorized dismissal has been proved by the aggrieved employee, or on
the other hand, the employer whose duty it is to prove the lawfulness or
justness of his act of dismissal has failed to do so, then the remedies
provided in Article 279 should find, application. Consonant with this
liberalized stance vis-a-vis labor, the legislature even went further by
enacting Republic Act No. 6715 which took effect on March 2, 1989 that
amended said Article to remove any possible ambiguity that jurisprudence
may have generated which watered down the constitutional intent to
grant to labor "full protection." 13
To go back to the instant case, there being no evidence to show an
authorized, much less a legal, cause for the dismissal of private
respondent, she had every right, not only to be entitled to reinstatement,
but ay well, to full backwages." 14
The intendment of the law in prescribing the twin remedies of
reinstatement and payment of backwages is, in the former, to restore the
dismissed employee to her status before she lost her job, for the dictionary
meaning of the word "reinstate" is "to restore to a state, conditione
positions etc. from which one had been removed"15 and in the latter, to
give her back the income lost during the period of unemployment. Both
remedies, looking to the past, would perforce make her "whole."
Sadly, the avowed intent of the law has at times been thwarted when
reinstatement has not been forthcoming and the hapless dismissed
employee finds himself on the outside looking in.
Over time, the following reasons have been advanced by the Court for
denying reinstatement under the facts of the case and the law applicable
thereto; that reinstatement can no longer be effected in view of the long
passage of time (22 years of litigation) or because of the realities of the
situation; 16 or that it would be "inimical to the employer's interest; " 17
or that reinstatement may no longer be feasible; 18 or, that it will not serve
the best interests of the parties involved; 19 or that the company would be
prejudiced by the workers' continued employment; 20 or that it will not
serve any prudent purpose as when supervening facts have transpired
which make execution on that score unjust or inequitable 21 or, to an
increasing extent, due to the resultant atmosphere of "antipathy and
antagonism" or "strained relations" or "irretrievable estrangement"
between the employer and the employee. 22
In lieu of reinstatement, the Court has variously ordered the payment of
backwages and separation pay 23 or solely separation pay. 24
In the case at bar, the law is on the side of private respondent. In the first
place the wording of the Labor Code is clear and unambiguous: "An
employee who is unjustly dismissed from work shall be entitled to
reinstatement. . . . and to his full backwages. . . ." 25 Under the principlesof
statutory construction, if a statute is clears plain and free from ambiguity,
it must be given its literal meaning and applied without attempted
interpretation. This plain-meaning rule or verba legis derived from the
maxim index animi sermo est (speech is the index of intention) rests on the
valid presumption that the words employed by, the legislature in a statute
correctly express its intent or will and preclude the court from construing
it differently. 26 The legislature is presumed to know the meaning of the
words, to:have used words advisedly, and to have expressed its intent by
the use of such words as are found in the statute.27 Verba legis non est
recedendum, or from the words of a statute there should be no departure.
Neither does the provision admit of any qualification. If in the wisdom of
the Court, there may be a ground or grounds for non-application of the
above-cited provision, this should be by way of exception, such as when
the reinstatement may be inadmissible due to ensuing strained relations
between the employer and the employee.
In such cases, it should be proved that the employee concerned occupies
a position where he enjoys the trust and confidence of his employer; and
that it is likely that if reinstated, an atmosphere of antipathy and
antagonism may be generated as to adversely affect the efficiency and
productivity of the employee concerned.
A few examples, will suffice to illustrate the Court's application of the
above principles: where the employee is a Vice-President for Marketing
and as such, enjoys the full trust and confidence of top management; 28 or
is the Officer-In-Charge of the extension office of the bank where he works;
29 or is an organizer of a union who was in a position to sabotage the
union's efforts to organize the workers in commercial and industrial
establishments; 30 or is a warehouseman of a non-profit organization
whose primary purpose is to facilitate and maximize voluntary gifts. by
foreign individuals and organizations to the Philippines; 31 or is a manager
of its Energy Equipment Sales. 32
Obviously, the principle of "strained relations" cannot be applied
indiscriminately. Otherwisey reinstatement can never be possible simply
because some hostility is invariably engendered between the parties as a
result of litigation. That is human nature. 33
Besides, no strained relations should arise from a valid and legal act of
asserting one's right; otherwise an employee who shall assert his right
could be easily separated from the service, by merely paying his separation
pay on the pretext that his relationship with his employer had already
become strained. 34
Here, it has not been proved that the position of private respondent as
systems analyst is one that may be characterized as a position of trust and
confidence such that if reinstated, it may well lead to strained relations
between employer and employee. Hence, this does not constitute an
exception to the general rule mandating reinstatement for an employee
who has been unlawfully dismissed.
On the other hand, has she betrayed any confidence reposed in her by
engaging in transactions that may have created conflict of interest
situations? Petitioner GMCR points out that as a matter of company policy,
it prohibits its employees from involving themselves with any company
that has business dealings with GMCR. Consequently, when private
respondent Salazar signed as a witness to the partnership papers of
Concave (a supplier of Ultra which in turn is also a supplier of GMCR), she
was deemed to have placed. herself in an untenable position as far as
petitioner was concerned.
However, on close scrutiny, we agree with public respondent that such a
circumstance did not create a conflict of interests situation. As a systems
analyst, Salazar was very far removed from operations involving the
procurement of supplies. Salazar's duties revolved around the
development of systems and analysis of designs on a continuing basis. In
other words, Salazar did not occupy a position of trust relative to the
approval and purchase of supplies and company assets.
In the instant case, petitioner has predicated its dismissal of Salazar on loss
of confidence. As we have held countless times, while loss of confidence or
breach of trust is a valid ground for terminations it must rest an some basis
which must be convincingly established. 35 An employee who not be
dismissed on mere presumptions and suppositions. Petitioner's allegation
that since Salazar and Saldivar lived together in the same apartment, it
"presumed reasonably that complainant's sympathy would be with
Saldivar" and its averment that Saldivar's investigation although
unverified, was probably true, do not pass this Court's test. 36 While we
should not condone the acts of disloyalty of an employee, neither should
we dismiss him on the basis of suspicion derived from speculative
inferences.
To rely on the Maramara report as a basis for Salazar's dismissal would be
most inequitous because the bulk of the findings centered principally oh
her friend's alleged thievery and anomalous transactions as technical
operations' support manager. Said report merely insinuated that in view of
Salazar's special relationship with Saldivar, Salazar might have had direct
knowledge of Saldivar's questionable activities. Direct evidence implicating
private respondent is wanting from the records.
It is also worth emphasizing that the Maramara report came out after
Saldivar had already resigned from GMCR on May 31, 1984. Since Saldivar
did not have the opportunity to refute management's findings, the report
remained obviously one-sided. Since the main evidence obtained by
petitioner dealt principally on the alleged culpability of Saldivar, without
his having had a chance to voice his side in view of his prior resignation,
stringent examination should have been carried out to ascertain whether
or not there existed independent legal grounds to hold Salatar answerable
as well and, thereby, justify her dismissal. Finding none, from the records,
we find her to have been unlawfully dismissed.
WHEREFORE, the assailed resolution of public respondent National Labor
Relations Commission dated December 29, 1987 is hereby AFFIRMED.
Petitioner GMCR is ordered to REINSTATE private respondent Imelda
Salazar and to pay her backwages equivalent to her salary for a period of
two (2) years only.
This decision is immediately executory.
SO ORDERED.
G.R. No. 109835 November 22, 1993
JMM PROMOTIONS & MANAGEMENT, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and ULPIANO L. DE LOS
SANTOS, respondent.
CRUZ, J.:
The sole issue submitted in this case is the validity of the order of
respondent National Labor Relations Commission dated October 30, 1992,
dismissing the petitioner's appeal from a decision of the Philippine
Overseas Employment Administration on the ground of failure to post the
required appeal bond.1
The respondent cited the second paragraph of Article 223 of the Labor
Code as amended, providing that:
In the case of a judgment involving a monetary award, an appeal by the
employer may be perfected only upon the posting of a cash or surety bond
issued by a reputable bonding company duly accredited by the Commission
in an amount equivalent to the monetary award in the judgment appealed
from.
and Rule VI, Section 6 of the new Rules of Procedure of the NLRC, as
amended, reading as follows:
Sec. 6. Bond — In case the decision of a Labor Arbiter involves a monetary
award, an appeal by the employer shall be perfected only upon the posting
of a cash or surety bond issued by a reputable bonding company duly
accredited by the Commission or the Supreme Court in an amount
equivalent to the monetary award.
The petitioner contends that the NLRC committed grave abuse of
discretion in applying these rules to decisions rendered by the POEA. It
insists that the appeal bond is not necessary in the case of licensed
recruiters for overseas employment because they are already required
under Section 4, Rule II, Book II of the POEA Rules not only to pay a license
fee of P30,000 but also to post a cash bond of P100,000 and a surety bond
of P50,000, thus:
Upon approval of the application, the applicant shall pay a license fee of
P30,000. It shall also post a cash bond of P100,000 and surety bond of
P50,000 from a bonding company acceptable to the Administration and
duly accredited by the Insurance Commission. The bonds shall answer for
all valid and legal claims arising from violations of the conditions for the
grant and use of the license, and/or accreditation and contracts of
employment. The bonds shall likewise guarantee compliance with the
provisions of the Code and its implementing rules and regulations relating
to recruitment and placement, the Rules of the Administration and
relevant issuances of the Department and all liabilities which the
Administration may impose. The surety bonds shall include the condition
that the notice to the principal is notice to the surety and that any
judgment against the principal in connection with matters falling under
POEA's jurisdiction shall be binding and conclusive on the surety. The
surety bonds shall be co-terminus with the validity period of license.
(Emphasis supplied)
In addition, the petitioner claims it has placed in escrow the sum of
P200,000 with the Philippine National Bank in compliance with Section 17,
Rule II, Book II of the same Rule, "to primarily answer for valid and legal
claims of recruited workers as a result of recruitment violations or money
claims."
Required to comment, the Solicitor General sustains the appeal bond
requirement but suggest that the rules cited by the NLRC are applicable
only to decisions of the Labor Arbiters and not of the POEA. Appeals from
decisions of the POEA, he says, are governed by the following provisions of
Rule V, Book VII of the POEA Rules:
Sec. 5. Requisites for Perfection of Appeal. The appeal shall be filed within
the reglementary period as provided in Section 1 of this Rule; shall be
under oath with proof of payment of the required appeal fee and the
posting of a cash or surety bond as provided in Section 6 of this Rule; shall
be accompanied by a memorandum of appeal which shall state the
grounds relied upon and the arguments in support thereof; the relief
prayed for; and a statement of the date when the appellant received the
appealed decision and/or award and proof of service on the other party of
such appeal.
A mere notice of appeal without complying with the other requisites
aforestated shall not stop the running of the period for perfecting an
appeal.
Sec. 6. Bond. In case the decision of the Administration involves a
monetary award, an appeal by the employer shall be perfected only upon
the posting of a cash or surety bond issued by a reputable bonding
company duly accredited by the Commission in an amount equivalent to
the monetary award. (Emphasis supplied)
The question is, having posted the total bond of P150,000 and placed in
escrow the amount of P200,000 as required by the POEA Rules, was the
petitioner still required to post an appeal bond to perfect its appeal from a
decision of the POEA to the NLRC?
It was.
The POEA Rules are clear. A reading thereof readily shows that in addition
to the cash and surety bonds and the escrow money, an appeal bond in an
amount equivalent to the monetary award is required to perfect an appeal
from a decision of the POEA. Obviously, the appeal bond is intended to
further insure the payment of the monetary award in favor of the
employee if it is eventually affirmed on appeal to the NLRC.
It is true that the cash and surety bonds and the money placed in escrow
are supposed to guarantee the payment of all valid and legal claims against
the employer, but these claims are not limited to monetary awards to
employees whose contracts of employment have been violated. The POEA
can go against these bonds also for violations by the recruiter of the
conditions of its license, the provisions of the Labor Code and its
implementing rules, E.O. 247 (reorganizing POEA) and the POEA Rules, as
well as the settlement of other liabilities the recruiter may incur.
As for the escrow agreement, it was presumably intended to provide for a
standing fund, as it were, to be used only as a last resort and not to be
reduced with the enforcement against it of every claim of recruited
workers that may be adjudged against the employer. This amount may not
even be enough to cover such claims and, even if it could initially, may
eventually be exhausted after satisfying other subsequent claims.
As it happens, the decision sought to be appealed grants a monetary award
of about P170,000 to the dismissed employee, the herein private
respondent. The standby guarantees required by the POEA Rules would be
depleted if this award were to be enforced not against the appeal bond but
against the bonds and the escrow money, making them inadequate for the
satisfaction of the other obligations the recruiter may incur.
Indeed, it is possible for the monetary award in favor of the employee to
exceed the amount of P350,000, which is the sum of the bonds and escrow
money required of the recruiter.
It is true that these standby guarantees are not imposed on local
employers, as the petitioner observes, but there is a simple explanation for
this distinction. Overseas recruiters are subject to more stringent
requirement because of the special risks to which our workers abroad are
subjected by their foreign employers, against whom there is usually no
direct or effective recourse. The overseas recruiter is solidarily liable with
a foreign employer. The bonds and the escrow money are intended to
insure more care on the part of the local agent in its choice of the foreign
principal to whom our overseas workers are to be sent.
It is a principle of legal hermeneutics that in interpreting a statute (or a set
of rules as in this case), care should be taken that every part thereof be
given effect, on the theory that it was enacted as an integrated measure
and not as a hodge-podge of conflicting provisions. Ut res magis valeat
quam pereat. 2 Under the petitioner's interpretation, the appeal bond
required by Section 6 of the aforementioned POEA Rule should be
disregarded because of the earlier bonds and escrow money it has posted.
The petitioner would in effect nullify Section 6 as a superfluity but we do
not see any such redundancy; on the contrary, we find that Section 6
complements Section 4 and Section 17. The rule is that a construction that
would render a provision inoperative should be avoided; instead,
apparently inconsistent provisions should be reconciled whenever possible
as parts of a coordinated and harmonious whole.
Accordingly, we hold that in addition to the monetary obligations of the
overseas recruiter prescribed in Section 4, Rule II, Book II of the POEA Rules
and the escrow agreement under Section 17 of the same Rule, it is
necessary to post the appeal bond required under Section 6, Rule V, Book
VII of the POEA Rules, as a condition for perfecting an appeal from a
decision of the POEA.
Every intendment of the law must be interpreted in favor of the working
class, conformably to the mandate of the Constitution. By sustaining rather
than annulling the appeal bond as a further protection to the claimant
employee, this Court affirms once again its commitment to the interest of
labor.
WHEREFORE, the petition is DISMISSED, with costs against the petitioner.
It is so ordered.
G.R. No. 104712 May 6, 1992
MANUEL T. DE GUIA, in his capacity as Councilor of the Municipality of
Parañaque, Metro Manila, petitioner,
vs.
HON. COMMISSION ON ELECTIONS, respondent.
BELLOSILLO, J.:
This is a petition for certiorari and prohibition assailing the validity and the
enforcement by respondent Commission on Elections (COMELEC) of its
RESOLUTION NO. 2313, adopting rules and guidelines in the
apportionment, by district, of the number of elective members of the
Sangguniang Panlalawigan in provinces with only one (1) legislative district
and the Sangguniang Bayan of municipalities in the Metro Manila Area for
the preparation of the Project of District Apportionment by the Provincial
Election Supervisors and Election Registrars (Annex "A", Petition),
RESOLUTION NO. 2379, approving the Project of District Apportionment
submitted pursuant to Resolution No. 2313 (Annex "B", Petition), and
RESOLUTION UND. 92-010 holding that pars. (a), (b) and (c), and the first
sentence of par. (d), all of Sec. 3, R.A. 7166, apply to the May 11, 1992
elections (Annex "C", Petition).
Petitioner Manuel T. De Guia is an incumbent Member of the Sangguniang
Bayan of the Municipality of Parañaque, Metro Manila, having been
elected in the January 1988 local elections. He prays, more particularly, for
reversal of the position of respondent insofar as it affects the municipality
of Parañaque and all the other municipalities in the Metro Manila Area. He
claims that the second proviso of par. (c), Sec. 3 of R.A. 7166, which
requires the apportionment into districts of said municipalities does not
specify when the members of their Sangguniang Bayan will be elected by
district. He would consequently lean on par. (d) of Sec. 3, which
immediately succeeds par. (c), to support his view that the elected
members of these municipalities mentioned in par. (c) should continue to
be elected at large in the May 11, 1992 elections.
Paragraph (d) states that "[F]or purposes of the regular elections on May
11, 1992, elective members of the Sangguniang Panlunsod and
Sangguniang Bayan shall be elected at large in accordance with existing
laws. However, beginning with the regular elections in 1995, they shall be
elected by district." Petitioner therefore insists that the elected members
of the Sangguniang Bayan of Parañaque fall under this category so that
they should continue to be elected at large until the 1995 regular elections.
Before addressing the crux of the controversy, the Court observes that
petitioner does not allege that he is running for reelection, much less, that
he is prejudiced by the election, by district, in Parañaque. As such, he does
not appear to have a locus standi, a standing in law, personal or substantial
interest. 1 He does not also allege any legal right that has been violated by
respondent. If for this alone, petitioner does not appear to have any cause
of action.
However, considering the importance of the issue involved, concerning as
it does the political exercise of qualified voters affected by the
apportionment, and petitioner alleging abuse of discretion and violation of
the Constitution by respondent, We resolve to brush aside the question of
procedural infirmity, even as We perceive the petition to be one of
declaratory relief. We so held similarly through Mr. Justice Edgardo L. Paras
in Osmeña v. Commission on Elections. 2

Now on the meat of the dispute.
On November 18, 1991, Congress passed R.A. 7166, signed into law by the
President on November 26, 1991. It is "An Act Providing for Synchronized
National and Local Elections and for Electoral Reforms, Authorizing
Appropriations Therefor, and for Other Purposes." At issue in this case is
the proper interpretation of Sec. 3 thereof which provides:
Sec. 3. Elections of Members of the Sangguniang Panlalawigan,
Sangguniang Panlungsod and Sangguniang Bayan. — The elective
members of the Sangguniang Panlalawigan, Sangguniang Panlungsod and
Sangguniang Bayan shall be elected as follows:
(a) For provinces with two (2) or more legislative districts, the elective
members of the Sangguniang Panlalawigan shall be elected by legislative
districts . . .
(b) For provinces with only one (1) legislative district, the Commission
shall divide them into two (2) districts for purposes of electing the
members of the Sangguniang Panlalawigan . . .
(c) The number and election of elective members of the Sangguniang
Panlungsod and Sangguniang Bayan in the Metro Manila Area, City of
Cebu, City of Davao and any other city with two (2) or more legislative
districts shall continue to be governed by the provisions of Sections 2 and
3 of Republic Act No. 6636 . . . Provided, further, That, the Commission shall
divide each of the municipalities in Metro Manila Area into two (2) districts
by barangay for purposes of representation in the Sangguniang Bayan
. . . . and,
(d) For purposes of the regular elections on May 11, 1992, elective
members of the Sangguniang Panlungsod and Sangguniang Bayan shall be
elected at large in accordance with existing laws. However, beginning with
the regular elections in 1995, they shall be elected by district . . . .
On November 20, 1991, respondent COMELEC, invoking authority of the
Constitution, the Omnibus Election Code, R.A. 6636, R.A. 6646 and R.A.
7166, 3 issued Resolution No. 2313 and the subsequent resolutions in
question.
On February 20, 1992, in view of the perceived ambiguity in the meaning
of par. (d), particularly in relation to par. (c), Sec. 3, R.A. 7166, petitioner
filed with COMELEC a Motion for Clarification of its Resolution No. 2313
inquiring whether the members of the Sangguniang Bayan of Parañaque
and the other municipalities of Metro Manila enumerated therein, which
are all single-district municipalities, would be elected by district in May 11,
1992 or in the 1995 regular elections.
Meanwhile, on March 3, 1992 COMELEC issued Resolution No. 2379
approving the guidelines submitted by the Provincial Election Supervisors
and Municipal Election Registrars concerned pursuant to Resolution No.
2313, and stating therein its purpose in recommending to Congress the
districting/apportionment of Sangguniang Panlungsod and Sangguniang
Bayan seats, i.e., to reduce the number of candidates to be voted for in the
May 11, 1992 synchronized elections. In this Project of Apportionment,
Parañaque together with the other twelve (12) municipalities in the Metro
Manila Area was divided into two (2) districts with six (6) elective
councilors for each district.
On March 10, 1992, COMELEC resolved petitioner's Motion for Clarification
by interpreting Sec. 3, R.A. 7166, to mean that the election of elective
members of the Sangguniang Bayan, by district, of the thirteen (13)
municipalities in the Metro Manila Area shall apply in the May 11, 1992
elections (Resolution UND. 92-010, prom. March 10, 1992). Petitioner says
that he received copy of Resolution UND. 92-010 on March 13, 1992.

On April 7, 1992, apparently not satisfied with this third Resolution of
COMELEC, petitioner filed the instant petition asserting that under par. (d),
Sec. 3 of R.A. 7166 the elective members of the Sangguniang Panlungsod
and the Sangguniang Bayan, for purposes of the May 11, 1992 regular
elections, shall be elected at large in accordance with existing laws. He
would include in this class of sanggunian members to be elected at large
those of the municipality of Parañaque.
Petitioner therefore imputes grave abuse of discretion to COMELEC in
promulgating Resolution No. 2313, Resolution No. 2379 and Resolution
UND. 92-010 which clarifies, contrary to his view, that the district
apportionment of the municipalities in the Metro Manila Area is applicable
to the May 11, 1992 regular elections.
We have carefully examined pars. (a), (b), (c) and (d) of Sec. 3, R.A. 7166,
and its precursor bills on synchronized elections, Senate Bill No. 1861 and
House Bill No. 34811, and We realize the web of confusion generated by
the seeming abstruseness in the language of the law. Some framers of the
law were even fazed at the empirical implications of some of its provisions,
particularly Sec. 3 thereof, and they admitted in fact that said provisions
were susceptible of varied interpretations, as borne by the sponsorship
and explanatory speeches now spread in the Journals of Congress. Hence,
We can understand why petitioner would interpret Sec. 3 as he would. But
if we pursue his course, we may conclude in absurdity because then there
would have been no reason for R.A. 7166 to single out the single-district
provinces referred to in par. (b), and the municipalities in the Metro Manila
Area mentioned in the second proviso of par. (c), to be apportioned at once
into two (2) districts each if the members of their respective sanggunian
after all would still be elected at large as they were in the 1988 elections.
No law is ever enacted that is intended to be meaningless, much less
inutile. We must therefore, as far as we can, divine its meaning, its
significance, its reason for being. As it has oft been held, the key to open
the door to what the legislature intended which is vaguely expressed in the
language of a statute is its purpose or the reason which induced it to enact
the statute. If the statute needs construction, as it does in the present case,
the most dominant in that process is the purpose of the act. 4 Statutes
should be construed in the light of the object to be achieved and the evil
or mischief to be suppressed, 5 and they should be given such construction
as will advance the object, suppress the mischief, and secure the benefits
intended. 6 A construction should be rejected that gives to the language
used in a statute a meaning that does not accomplish the purpose for
which the statute was enacted, and that tends to defeat the ends which
are sought to be attained by the enactment. 7
The reason for the promulgation of R.A. 7166 is shown in the explanatory
note of Senate Bill No. 1861 which states in part:
This bill proposes to set the national and local elections for May 11, 1992,
and provide for the necessary implementing details. It also endorses
reforms and measures to ensure the conduct of free, orderly, honest,
peaceful and credible elections. Specifically, it seeks to: (1) Reduce the
number of positions to be voted for by providing therein that the members
of the Sangguniang Panlalawigan, Sangguniang Panlungsod and
Sangguniang Bayan be elected not at large, but by district . . . .
That respondent COMELEC is cognizant of this legislative intent of R.A.
7166 is reflected in the "WHEREAS" clauses constituting the preamble to
Resolution No. 2379. Thus —
WHEREAS, the Commission on Elections, in order to reduce the number of
candidates to be voted for in the May 11, 1992 synchronized elections
recommended, among others, to the Congress of the Philippines, the
districting/apportionment of sangguniang panlungsod and sangguniang
bayan seats;

WHEREAS, the Congress of the Philippines passed Republic Act 7166, and
approved by the President of the Philippines on November 26, 1991,
adopting among others, the recommendation of the Commission on
Elections aforestated;
WHEREAS, pursuant to, and in implementation of Republic Act 7166,
particularly Section 3 thereof, the Commission promulgated Resolution No.
2313, directing the Provincial Election Supervisors and Election Registrars
concerned to submit, after consultation, public hearings, and consensus-
taking with the different sectors in the community, the Project of District
Apportionment of single legislative-district provinces and municipalities in
the Metro Manila area;
WHEREAS, the established criteria/guidelines in the determination of the
district apportionment are as follows: a. compactness, contiguity and
adjacentness of territory; b. apportionment shall be based on the 1990
census of population; c. no municipality, in the case of provinces, and no
barangay, in the case of cities and municipalities, shall be fragmented or
apportioned into different districts.
This avowed policy of having sanggunian members elected by district is
also manifest from the four corners of Sec. 3 of R.A. 7166. 8 Thus, a careful
analysis of the provisions of Sec. 3 shows that the purpose of
districting/apportionment of the sanggunian seats is to reduce the number
of positions to be voted for in the May 11, 1992, synchronized elections
and ensure the efficiency of electoral process. Considering that the single-
district provinces and the municipalities in the Metro Manila Area, which
are all single-districts, and under pars. (b) and (c) have already been
apportioned into two (2) districts, they will henceforth be electing the
members of their Sangguniang Panlalawigan and Sangguniang Bayan by
district in the coming May 11, 1992, elections, although under par. (d), the
single-district cities and all the municipalities outside the Metro Manila
Area which are all likewise single-districts, will have to continue electing at
large the members of their Sangguniang Panlungsod and Sangguniang
Bayan as they have yet to be apportioned. But beginning the regular
elections of 1995, they will all have to be elected by district. By then,
COMELEC would have had enough time to apportion the single-district
cities and the municipalities outside the Metro Manila Area.
As they now stand in relation to the districting/apportionment of local
government units for purposes of election under Sec. 3 of R.A. 7166, it is
clear that: (1) for provinces with two (2) or more legislative districts
contemplated in par. (a), they shall continue to be elected by district; (2)
for provinces with single legislative districts, as they have already been
apportioned into two (2) districts each under par. (b), they shall henceforth
be elected likewise by district; (3) for cities with two (2) or more legislative
districts, e.g., the cities of Manila, Cebu and Davao, they shall also continue
to be elected by district under the first part of par. (c); and (4) for the
thirteen (13) municipalities in the Metro Manila Area, which have already
been apportioned into two (2) districts each under the second proviso of
par. (c), they shall likewise be elected by district in the regular elections of
May 11, 1992.
Then, that should leave us the Sangguniang Panlungsod of the single-
district cities and the Sangguniang Bayan of the municipalities outside
Metro Manila, which remain single-districts not having been ordered
apportioned under Sec. 3 of R.A. 7166. They will have to continue to be
elected at large in the May 11, 1992, elections, although starting 1995 they
shall all be elected by district to effect the full implementation of the letter
and spirit of R.A. 7166. That is the true import of par. (d). Consequently, as
We view it, where he stands, petitioner must fall.
WHEREFORE, finding no abuse of discretion, much less grave, on the part
of respondent, and for lack of merit, the instant petition is DISMISSED. No
costs.

SO ORDERED.
G.R. No. 88979 February 7, 1992
LYDIA O. CHUA, petitioner,
vs.
THE CIVIL SERVICE COMMISSION, THE NATIONAL IRRIGATION
ADMINISTRATION and THE DEPARTMENT OF BUDGET AND
MANAGEMENT, respondents.
PADILLA, J.:
Pursuant to the policy of streamlining and trimming the bureaucracy,
Republic Act No. 6683 was approved on 2 December 1988 providing for
benefits for early retirement and voluntary separation from the
government service as well as for involuntary separation due to
reorganization. Deemed qualified to avail of its benefits are those
enumerated in Sec. 2 of the Act, as follows:
Sec. 2. Coverage. — This Act shall cover all appointive officials and
employees of the National Government, including government-owned or
controlled corporations with original charters, as well as the personnel of
all local government units. The benefits authorized under this Act shall
apply to all regular, temporary, casual and emergency employees,
regardless of age, who have rendered at least a total of two (2) consecutive
years of government service as of the date of separation. Uniformed
personnel of the Armed Forces of the Philippines including those of the PC-
INP are excluded from the coverage of this Act.
Petitioner Lydia Chua believing that she is qualified to avail of the benefits
of the program, filed an application on 30 January 1989 with respondent
National Irrigation Administration (NIA) which, however, denied the same;
instead, she was offered separation benefits equivalent to one half (1/2)
month basic pay for every year of service commencing from 1980. A
recourse by petitioner to the Civil Service Commission yielded negative
results. 1 Her letter for reconsideration dated 25 April 1989 pleaded thus:
xxx xxx xxx
With due respect, I think the interpretation of the Honorable
Commissioner of RA 6683 does not conform with the beneficent purpose
of the law. The law merely requires that a government employee whether
regular, temporary, emergency, or casual, should have two consecutive
years of government service in order to be entitled to its benefits. I more
than meet the requirement. Persons who are not entitled are consultants,
experts and contractual(s). As to the budget needed, the law provides that
the Department of Budget and Management will shoulder a certain portion
of the benefits to be allotted to government corporations. Moreover,
personnel of these NIA special projects art entitled to the regular benefits,
such (sic) leaves, compulsory retirement and the like. There is no reason
why we should not be entitled to RA 6683.
xxx xxx xxx 2
Denying the plea for reconsideration, the Civil Service Commission (CSC)
emphasized:
xxx xxx xxx
We regret to inform you that your request cannot be granted. The
provision of Section 3.1 of Joint DBM-CSC Circular Letter No. 89-1 does not
only require an applicant to have two years of satisfactory service on the
date of separation/retirement but further requires said applicant to be on
a casual, emergency, temporary or regular employment status as of
December 2, 1988, the date of enactment of R.A. 6683. The law does not
contemplate contractual employees in the coverage.
Inasmuch as your employment as of December 31, 1988, the date of your
separation from the service, is co-terminous with the NIA project which is
contractual in nature, this Commission shall sustain its original decision.
xxx xxx xxx3
In view of such denial, petitioner is before this Court by way of a special
civil action for certiorari, insisting that she is entitled to the benefits
granted under Republic Act No. 6683. Her arguments:
It is submitted that R.A. 6683, as well as Section 3.1 of the Joint DBM-CSC
Circular Letter No. 89-1 requires an applicant to be on a casual, emergency,
temporary or regular employment status. Likewise, the provisions of
Section 23 (sic) of the Joint DBM-CSC Circular Letter No. 88-1,
implementing guidelines of R.A. No. 6683, provides:
"2.3 Excluded from the benefits under R.A. No. 6683 are the following:
a) Experts and Consultants hired by agencies for a limited period to
perform specific activities or services with a definite expected output: i.e.
membership in Task Force, Part-Time, Consultant/Employees.
b) Uniformed personnel of the Armed Forces of the Philippines
including those of the Philippine Constabulary and Integrated National
Police (PC-INP).
c) Appointive officials and employees who retire or elect to be
separated from the service for optional retirement with gratuity under R.A.
No. 1616, 4968 or with pension under R.A. No. 186, as amended by R.A.
No. 6680 or P.D. No. 1146, an amended, or vice- versa.
d) Officials and employees who retired voluntarily prior to the
enactment of this law and have received the corresponding benefits of that
retirement/separation.
e) Officials and employees with pending cases punishable by
mandatory separation from the service under existing civil service laws,
rules and regulations; provided that if such officials and employees apply
in writing within the prescriptive period for the availment of the benefits
herein authorized, shall be allowed only if acquitted or cleared of all
charges and their application accepted and approved by the head of office
concerned."
Based on the above exclusions, herein petitioner does not belong to any
one of them. Ms. Chua is a full time employee of NIA entitled to all the
regular benefits provided for by the Civil Service Commission. She held a
permanent status as Personnel Assistant A, a position which belongs to the
Administrative Service. . . . If casuals and emergency employees were given
the benefit of R.A. 6683 with more reason that this petitioner who was
holding a permanent status as Personnel Assistant A and has rendered
almost 15 years of faithful, continuous service in the government should
be similarly rewarded by the beneficient (sic) purpose of the law. 4
The NIA and the Civil Service Commission reiterate in their comment
petitioner's exclusion from the benefits of Republic Act No. 6683, because:
1. Petitioner's employment is co-terminous with the project per
appointment papers kept by the Administrative Service in the head office
of NIA (the service record was issued by the Watershed Management and
Erosion Control Project (WMECP), Pantabangan, Nueva Ecija). The project,
funded by the World Bank, was completed as of 31 December 1988, after
which petitioner's position became functus officio.
2. Petitioner is not a regular and career employee of NIA — her
position is not included in its regular plantilla. She belongs to the non-
career service (Sec. 6, P.D. No. 807) which is inherently short-lived,
temporary and transient; on the other hand, retirement presupposes
employment for a long period. The most that a non-career personnel can
expect upon the expiration of his employment is financial assistance.
Petitioner is not even qualified to retire under the GSIS law.
3. Assuming arguendo that petitioner's appointment is permanent,
security of tenure is available only for the term of office (i.e., duration of
project).
4. The objective of Republic Act No. 6683 is not really to grant
separation or retirement benefits but reorganization 5 to streamline
government functions. The application of the law must be made consistent
with the purpose for which it was enacted. Thus, as the expressed purpose
of the law is to reorganize the government, it will not have any application
to special projects such as the WMECP which exists only for a short and
definite period. This being the nature of special projects, there is no
necessity for offering its personnel early retirement benefits just to induce
voluntary separation as a step to reorganization. In fact, there is even no
need of reorganizing the WMECP considering its short and limited life-
span. 6
5. The law applies only to employees of the national government,
government-owned or controlled corporations with original charters and
local government units.
Due to the impossibility of reconciling the conflicting interpretations of the
parties, the Court is called upon to define the different classes of
employees in the public sector (i.e. government civil servants).
Who are regular employees? The Labor Code in Art. 280 (P.D. No. 492, as
amended) deems an employment regular where the employee has been
engaged to perform activities which are usually necessary or desirable in
the usual business or trade of the employer. No equivalent definition can
be found in P.D.No. 807 (promulgated on 6 October 1975, which
superseded the Civil Service Act of 1965 — R.A. No. 2260) or in the
Administrative Code of 1987 (Executive Order No. 292 promulgated on 25
July 1987). The Early Retirement Law itself (Rep. Act No. 6683) merely
includes such class of employees (regular employees) in its coverage,
unmindful that no such specie is employed in the public sector.
The appointment status of government employees in the career service is
classified as follows:
1. permanent — one issued to a person who has met the
requirements of the position to which appointment is made, in accordance
with the provisions of the Civil Service Act and the Rules and Standards
promulgated in pursuance thereof; 7
2. temporary — In the absence of appropriate eligibles and it
becomes necessary in the public interest to fill a vacancy, a temporary
appointment should be issued to a person who meets all the requirements
for the position to which he is being appointed except the appropriate civil
service eligibility: Provided, That such temporary appointment shall not
exceed twelve months, but the appointee may be replaced sooner if a
qualified civil service eligible becomes available. 8
The Administrative Code of 1987 characterizes the Career Service as:
(1) Open Career positions for appointment to which prior qualification
in an appropriate examination is required;
(2) Closed Career positions which are scientific, or highly technical in
nature; these include the faculty and academic staff of state colleges and
universities, and scientific and technical positions in scientific or research
institutions which shall establish and maintain their own merit systems;
(3) Positions in the Career Executive Service; namely, Undersecretary,
Assistant Secretary, Bureau Director, Assistant Bureau Director, Regional
Director, Assistant Regional Director, Chief of Department Service and
other officers of equivalent rank as may be identified by the Career
Executive Service Board, all of whom are appointed by the President.
(4) Career officers, other than those in the Career Executive Service,
who are appointed by the President, such as the Foreign Service Officers in
the Department of Foreign Affairs;
(5) Commission officers and enlisted men of the Armed Forces which
shall maintain a separate merit system;
(6) Personnel of government-owned or controlled corporations,
whether performing governmental or proprietary functions, who do not
fall under the non-career service; and
(7) Permanent laborers, whether skilled, semi-skilled, or unskilled. 9
The Non-Career Service, on the other hand, is characterized by:
. . . (1) entrance on bases other than those of the usual tests of merit and
fitness utilized for the career service; and (2) tenure which is limited to a
period specified by law, or which is coterminous with that of the appointing
authority or subject to his pleasure, or which is limited to the duration of a
particular project for which purpose employment was made.
Included in the non-career service are:
1. elective officials and their personal or confidential staff;
2. secretaries and other officials of Cabinet rank who hold their
positions at the pleasure of the President and their personal confidential
staff(s);
3. Chairman and Members of Commissions and boards with fixed
terms of office and their personal or confidential staff;
4. contractual personnel or those whose employment in the
government is in accordance with a special contract to undertake a specific
work or job requiring special or technical skills not available in the
employing agency, to be accomplished within a specific period, which in no
case shall exceed one year and performs or accomplishes the specific work
or job, under his own responsibility with a minimum of direction and
supervision from the hiring agency.
5. emergency and seasonal personnel. 10
There is another type of non-career employee:
Casual — where and when employment is not permanent but occasional,
unpredictable, sporadic and brief in nature (Caro v. Rilloroza, 102 Phil. 70;
Manuel v. P.P. Gocheco Lumber Co., 96 Phil. 945)
Consider petitioner's record of service:
Service with the government commenced on 2 December 1974 designated
as a laborer holding emergency status with the NIA — Upper Pampanga
River Project, R & R Division. 11 From 24 March 1975 to 31 August 1975,
she was a research aide with temporary status on the same project. On 1
September 1975 to 31 December 1976, she was with the NIA-FES III; R & R
Division, then on 1 January 1977 to 31 May 1980, she was with NIA — UPR
IIS (Upper Pampanga River Integrated Irrigation Systems) DRD. On 1 June
1980, she went to NIA — W.M.E.C.P. (Watershed Management & Erosion
Control Project) retaining the status of temporary employee. While with
this project, her designation was changed to personnel assistant on 5
November 1981; starting 9 July 1982, the status became permanent until
the completion of the project on 31 December 1988. The appointment
paper 12 attached to the OSG's comment lists her status as co-terminus
with the Project.
The employment status of personnel hired under foreign — assisted
projects is considered co-terminous, that is, they are considered
employees for the duration of the project or until the completion or
cessation of said project (CSC Memorandum Circular No. 39, S. 1990, 27
June 1990).
Republic Act No. 6683 seeks to cover and benefits regular, temporary,
casual and emergency employees who have rendered at least a total of
two (2) consecutive years government service.
Resolution No. 87-104 of the CSC, 21 April 1987, provides:
WHEREAS, pursuant to Executive Order No. 966 dated June 22, 1984, the
Civil Service Commission is charged with the function of determining
creditable services for retiring officers and employees of the national
government;
WHEREAS, Section 4 (b) of the same Executive Order No. 966 provides that
all previous services by an officer/employee pursuant to a duly approved
appointment to a position in the Civil Service are considered creditable
services, while Section 6 (a) thereof states that services rendered on
contractual, emergency or casual status are non-creditable services;
WHEREAS, there is a need to clarify the aforesaid provisions inasmuch as
some contractual, emergency or casual employment are covered by
contracts or appointments duly approved by the Commission.
NOW, therefore, the Commission resolved that services rendered on
contractual, emergency or casual status, irrespective of the mode or
manner of payment therefor shall be considered as creditable for
retirement purposes subject to the following conditions: (emphasis
provided)
1. These services are supported by approved appointments, official
records and/or other competent evidence. Parties/agencies concerned
shall submit the necessary proof of said services;
2. Said services are on full time basis and rendered prior to June 22,
1984, the effectivity date of Executive Order No. 966; and
3. The services for the three (3) years period prior to retirement are
continuous and fulfill the service requirement for retirement.
What substantial differences exist, if any, between casual, emergency,
seasonal, project, co-terminous or contractual personnel? All are tenurial
employees with no fixed term, non-career, and temporary. The 12 May
1989 CSC letter of denial 13 characterized herein petitioner's employment
as co-terminous with the NIA project which in turn was contractual in
nature. The OSG says petitioner's status is co-terminous with the Project.
CSC Memorandum Circular No. 11, series of 1991 (5 April 1991)
characterizes the status of a co-terminous employee —
(3) Co-terminous status shall be issued to a person whose entrance in
the service is characterized by confidentiality by the appointing authority
or that which is subject to his pleasure or co-existent with his tenure.
The foregoing status (co-terminous) may be further classified into the
following:
a) co-terminous with the project — When the appointment is co-
existent with the duration of a particular project for which purpose
employment was made or subject to the availability of funds for the same;
b) co-terminous with the appointing authority — when appointment
is co-existent with the tenure of the appointing authority.
c) co-terminous with the incumbent — when appointment is co-
existent with the appointee, in that after the resignation, separation or
termination of the services of the incumbent the position shall be deemed
automatically abolished; and
d) co-terminous with a specific period, e.g. "co-terminous for a period
of 3 years" — the appointment is for a specific period and upon expiration
thereof, the position is deemed abolished.
It is stressed, however, that in the last two classifications (c) and (d), what
is termed co-terminous is the position, and not the appointee-employee.
Further, in (c) the security of tenure of the appointee is guaranteed during
his incumbency; in (d) the security of tenure is limited to a specific period.
A co-terminous employee is a non-career civil servant, like casual and
emergency employees. We see no solid reason why the latter are extended
benefits under the Early Retirement Law but the former are not. It will be
noted that Rep. Act No. 6683 expressly extends its benefits for early
retirement to regular, temporary, casual and emergency employees. But
specifically excluded from the benefits are uniformed personnel of the AFP
including those of the PC-INP. It can be argued that, expressio unius est
exclusio alterius. The legislature would not have made a specific
enumeration in a statute had not the intention been to restrict its meaning
and confine its terms and benefits to those expressly mentioned 14 or
casus omissus pro omisso habendus est — A person, object or thing
omitted from an enumeration must be held to have been omitted
intentionally. 15 Yet adherence to these legal maxims can result in
incongruities and in a violation of the equal protection clause of the
Constitution.
The case of Fegurin, et al. v. NLRC, et al., 16 comes to mind where, workers
belonging to a work pool, hired and re-hired continuously from one project
to another were considered non-project-regular and permanent
employees.
Petitioner Lydia Chua was hired and re-hired in four (4) successive projects
during a span of fifteen (15) years. Although no proof of the existence of a
work pool can be assumed, her service record cannot be disregarded.
Art. III, Sec. 1 of the 1987 Constitution guarantees: "No person shall be
deprived of life, liberty, or property without due process of law, nor shall
any person be denied the equal protection of the laws."
. . . In Felwa vs. Salas, L-26511, Oct. 29, 1966, We ruled that the equal
protection clause applies only to persons or things identically situated and
does not bar a reasonable classification of the subject of legislation, and a
classification is reasonable where (1) it is based on substantial distinctions
which make real differences; (2) these are germane to the purpose of the
law; (3) the classification applies not only to present conditions but also to
future conditions which are substantially identical to those of the present;
(4) the classification applies only to those who belong to the same class. 17
Applying the criteria set forth above, the Early Retirement Law would
violate the equal protection clause were we to sustain respondents'
submission that the benefits of said law are to be denied a class of
government employees who are similarly situated as those covered by said
law. The maxim of Expressio unius est exclusio alterius should not be the
applicable maxim in this case but the doctrine of necessary implication
which holds that:
No statute can be enacted that can provide all the details involved in its
application. There is always an omission that may not meet a particular
situation. What is thought, at the time of enactment, to be an all-
embracing legislation may be inadequate to provide for the unfolding
events of the future. So-called gaps in the law develop as the law is
enforced. One of the rules of statutory construction used to fill in the gap
is the doctrine of necessary implication. The doctrine states that what is
implied in a statute is as much a part thereof as that which is expressed.
Every statute is understood, by implication, to contain all such provisions
as may be necessary to effectuate its object and purpose, or to make
effective rights, powers, privileges or jurisdiction which it grants, including
all such collateral and subsidiary consequences as may be fairly and
logically inferred from its terms. Ex necessitate legis. And every statutory
grant of power, right or privilege is deemed to include all incidental power,
right or privilege. This is so because the greater includes the lesser,
expressed in the Maxim, in eo plus sit, simper inest et minus. 18
During the sponsorship speech of Congressman Dragon (re: Early
Retirement Law), in response to Congressman Dimaporo's interpellation
on coverage of state university employees who are extended
appointments for one (1) year, renewable for two (2) or three (3) years, 19
he explained:
This Bill covers only those who would like to go on early retirement and
voluntary separation. It is irrespective of the actual status or nature of the
appointment one received, but if he opts to retire under this, then he is
covered.
It will be noted that, presently Pending in Congress, is House Bill No. 33399
(a proposal to extend the scope of the Early Retirement Law). Its wording
supports the submission that Rep. Act No. 6683 indeed overlooked a
qualified group of civil servants. Sec. 3 of said House bill, on coverage of
early retirement, would provide:
Sec. 3. Coverage. — It will cover all employees of the national
government, including government-owned or controlled corporations, as
well as the personnel of all local government units. The benefits authorized
under this Act shall apply to all regular, temporary, casual, emergency and
contractual employees, regardless of age, who have rendered at least a
total of two (2) consecutive years government service as of the date of
separation. The term "contractual employees" as used in this Act does not
include experts and consultants hired by agencies for a limited period to
perform specific activities or services with definite expected output.
Uniformed personnel of the Armed Forces of the Philippines, including
those of the PC-INP are excluded from the coverage of this Act. (emphasis
supplied)
The objective of the Early Retirement or Voluntary Separation Law is to
trim the bureaucracy, hence, vacated positions are deemed abolished
upon early/voluntary retirement of their occupants. Will the inclusion of
co-terminous personnel (like the petitioner) defeat such objective? In their
case, upon termination of the project and separation of the project
personnel from the service, the term of employment is considered expired,
the office functus officio. Casual, temporary and contractual personnel
serve for shorter periods, and yet, they only have to establish two (2) years
of continuous service to qualify. This, incidentally, negates the OSG's
argument that co-terminous or project employment is inherently short-
lived, temporary and transient, whereas, retirement presupposes
employment for a long period. Here, violation of the equal protection
clause of the Constitution becomes glaring because casuals are not even in
the plantilla, and yet, they are entitled to the benefits of early retirement.
How can the objective of the Early Retirement Law of trimming the
bureaucracy be achieved by granting early retirement benefits to a group
of employees (casual) without plantilla positions? There would, in such a
case, be no abolition of permanent positions or streamlining of functions;
it would merely be a removal of excess personnel; but the positions
remain, and future appointments can be made thereto.
Co-terminous or project personnel, on the other hand, who have rendered
years of continuous service should be included in the coverage of the Early
Retirement Law, as long as they file their application prior to the expiration
of their term, and as long as they comply with CSC regulations promulgated
for such purpose. In this connection, Memorandum Circular No. 14, Series
of 1990 (5 March 1990) implementing Rep. Act No. 6850, 20 requires, as a
condition to qualify for the grant of eligibility, an aggregate or total of
seven (7) years of government service which need not be continuous, in
the career or non-career service, whether appointive, elective, casual,
emergency, seasonal, contractual or co-terminous including military and
police service, as evaluated and confirmed by the Civil Service Commission.
21 A similar regulation should be promulgated for the inclusion in Rep. Act
No. 6683 of co-terminous personnel who survive the test of time. This
would be in keeping with the coverage of "all social legislations enacted to
promote the physical and mental well-being of public servants"22 After all,
co-terminous personnel, are also obligated to the government for GSIS
contributions, medicare and income tax payments, with the general
disadvantage of transience.
In fine, the Court believes, and so holds, that the denial by the respondents
NIA and CSC of petitioner's application for early retirement benefits under
Rep. Act No. 6683 is unreasonable, unjustified, and oppressive, as
petitioner had filed an application for voluntary retirement within a
reasonable period and she is entitled to the benefits of said law. While the
application was filed after expiration of her term, we can give allowance
for the fact that she originally filed the application on her own without the
assistance of counsel. In the interest of substantial justice, her application
must be granted; after all she served the government not only for two (2)
years — the minimum requirement under the law but for almost fifteen
(15) years in four (4) successive governmental projects.
WHEREFORE, the petition is GRANTED.
Let this case be remanded to the CSC-NIA for a favorable disposition of
petitioner's application for early retirement benefits under Rep. Act No.
6683, in accordance with the pronouncements in this decision.
SO ORDERED.
G.R. No. 14129 July 31, 1962
PEOPLE OF THE PHILIPPINES, plaintiff-appellant,
vs.
GUILLERMO MANANTAN, defendant-appellee.
REGALA, J.:
This is an appeal of the Solicitor General from the order of the Court of First
Instance of Pangasinan dismissing the information against the defendant.
The records show that the statement of the case and the facts, as recited
in the brief of plaintiff-appellant, is complete and accurate. The same is,
consequently, here adopted, to wit:
In an information filed by the Provincial Fiscal of Pangasinan in the Court
of First Instance of that Province, defendant Guillermo Manantan was
charged with a violation Section 54 of the Revised Election Code. A
preliminary investigation conducted by said court resulted in the finding a
probable cause that the crime charged as committed by defendant.
Thereafter, the trial started upon defendant's plea of not guilty, the
defense moved to dismiss the information on the ground that as justice of
the peace the defendant is one of the officers enumerated in Section 54 of
the Revised Election Code. The lower court denied the motion to dismiss
holding that a justice of the peace is within the purview Section 54. A
second motion was filed by defense counsel who cited in support thereof
the decision of the Court of Appeals in People vs. Macaraeg, (CA-G.R. No.
15613-R, 54 Off. Gaz., pp. 1873-76) where it was held that a justice of the
peace is excluded from the prohibition of Section 54 of the Revised Election
Code. Acting on this second motion to dismiss, the answer of the
prosecution, the reply of the defense, and the opposition of the
prosecution, the lower court dismissed the information against the
accused upon the authority of the ruling in the case cited by the defense.
Both parties are submitting this case upon the determination of this single
question of law: Is a justice the peace included in the prohibition of Section
54 of the Revised Election Code?
Section 54 of the said Code reads:
No justice, judge, fiscal, treasurer, or assessor of any province, no officer
or employee of the Army, no member of the national, provincial, city,
municipal or rural police force and no classified civil service officer or
employee shall aid any candidate, or exert any influence in any manner in
a election or take part therein, except to vote, if entitled thereto, or to
preserve public peace, if he is a peace officer.
Defendant-appellee argues that a justice of the peace is not
comprehended among the officers enumerated in Section 54 of the
Revised Election Code. He submits the aforecited section was taken from
Section 449 of the Revised Administrative Code, which provided the
following:
SEC. 449. Persons prohibited from influencing elections. — No judge of the
First Instance, justice of the peace, or treasurer, fiscal or assessor of any
province and no officer or employee of the Philippine Constabulary, or any
Bureau or employee of the classified civil service, shall aid any candidate
or exert influence in any manner in any election or take part therein
otherwise than exercising the right to vote.
When, therefore, section 54 of the Revised Election Code omitted the
words "justice of the peace," the omission revealed the intention of the
Legislature to exclude justices of the peace from its operation.
The above argument overlooks one fundamental fact. It is to be noted that
under Section 449 of the Revised Administrative Code, the word "judge"
was modified or qualified by the phrase "of First instance", while under
Section 54 of the Revised Election Code, no such modification exists. In
other words, justices of the peace were expressly included in Section 449
of the Revised Administrative Code because the kinds of judges therein
were specified, i.e., judge of the First Instance and justice of the peace. In
Section 54, however, there was no necessity therefore to include justices
of the peace in the enumeration because the legislature had availed itself
of the more generic and broader term, "judge." It was a term not modified
by any word or phrase and was intended to comprehend all kinds of judges,
like judges of the courts of First Instance, Judges of the courts of Agrarian
Relations, judges of the courts of Industrial Relations, and justices of the
peace.
It is a well known fact that a justice of the peace is sometimes addressed
as "judge" in this jurisdiction. It is because a justice of the peace is indeed
a judge. A "judge" is a public officer, who, by virtue of his office, is clothed
with judicial authority (U.S. v. Clark, 25 Fed. Cas. 441, 422). According to
Bouvier Law Dictionary, "a judge is a public officer lawfully appointed to
decide litigated questions according to law. In its most extensive sense the
term includes all officers appointed to decide litigated questions while
acting in that capacity, including justices of the peace, and even jurors, it is
said, who are judges of facts."
A review of the history of the Revised Election Code will help to justify and
clarify the above conclusion.
The first election law in the Philippines was Act 1582 enacted by the
Philippine Commission in 1907, and which was later amended by Act. Nos.
1669, 1709, 1726 and 1768. (Of these 4 amendments, however, only Act
No. 1709 has a relation to the discussion of the instant case as shall be
shown later.) Act No. 1582, with its subsequent 4 amendments were later
on incorporated Chapter 18 of the Administrative Code. Under the
Philippine Legislature, several amendments were made through the
passage of Acts Nos. 2310, 3336 and 3387. (Again, of these last 3
amendments, only Act No. 3587 has pertinent to the case at bar as shall be
seen later.) During the time of the Commonwealth, the National Assembly
passed Commonwealth Act No. 23 and later on enacted Commonwealth
Act No. 357, which was the law enforced until June 1947, when the Revised
Election Code was approved. Included as its basic provisions are the
provisions of Commonwealth Acts Nos. 233, 357, 605, 666, 657. The
present Code was further amended by Republic Acts Nos. 599, 867, 2242
and again, during the session of Congress in 1960, amended by Rep. Acts
Nos. 3036 and 3038. In the history of our election law, the following should
be noted:
Under Act 1582, Section 29, it was provided:
No public officer shall offer himself as a candidate for elections, nor shall
he be eligible during the time that he holds said public office to election at
any municipal, provincial or Assembly election, except for reelection to the
position which he may be holding, and no judge of the First Instance, justice
of the peace, provincial fiscal, or officer or employee of the Philippine
Constabulary or of the Bureau of Education shall aid any candidate or
influence in any manner or take part in any municipal, provincial, or
Assembly election under the penalty of being deprived of his office and
being disqualified to hold any public office whatsoever for a term of 5 year:
Provide, however, That the foregoing provisions shall not be construe to
deprive any person otherwise qualified of the right to vote it any election."
(Enacted January 9, 1907; Took effect on January 15, 1907.)
Then, in Act 1709, Sec. 6, it was likewise provided:
. . . No judge of the First Instance, Justice of the peace provincial fiscal or
officer or employee of the Bureau of Constabulary or of the Bureau of
Education shall aid any candidate or influence in any manner to take part
in any municipal provincial or Assembly election. Any person violating the
provisions of this section shall be deprived of his office or employment and
shall be disqualified to hold any public office or employment whatever for
a term of 5 years, Provided, however, that the foregoing provisions shall
not be construed to deprive any person otherwise qualified of the right to
vote at any election. (Enacted on August 31, 1907; Took effect on
September 15, 1907.)
Again, when the existing election laws were incorporated in the
Administrative Code on March 10, 1917, the provisions in question read:
SEC. 449. Persons prohibited from influencing elections. — No judge of the
First Instance, justice of the peace, or treasurer, fiscal or assessor of any
province and no officer or employee of the Philippine Constabulary or any
Bureau or employee of the classified civil service, shall aid any candidate
or exert influence in any manner in any election or take part therein
otherwise than exercising the right to vote. (Emphasis supplied)
After the Administrative Code, the next pertinent legislation was Act No.
3387. This Act reads:
SEC. 2636. Officers and employees meddling with the election. — Any
judge of the First Instance, justice of the peace, treasurer, fiscal or assessor
of any province, any officer or employee of the Philippine Constabulary or
of the police of any municipality, or any officer or employee of any Bureau
of the classified civil service, who aids any candidate or violated in any
manner the provisions of this section or takes part in any election
otherwise by exercising the right to vote, shall be punished by a fine of not
less than P100.00 nor more than P2,000.00, or by imprisonment for not
less than 2 months nor more than 2 years, and in all cases by
disqualification from public office and deprivation of the right of suffrage
for a period of 5 years. (Approved December 3, 1927.) (Emphasis supplied.)
Subsequently, however, Commonwealth Act No. 357 was enacted on
August 22, 1938. This law provided in Section 48:
SEC. 48. Active Interventation of Public Officers and Employees. — No
justice, judge, fiscal, treasurer or assessor of any province, no officer or
employee of the Army, the Constabulary of the national, provincial,
municipal or rural police, and no classified civil service officer or employee
shall aid any candidate, nor exert influence in any manner in any election
nor take part therein, except to vote, if entitled thereto, or to preserve
public peace, if he is a peace officer.
This last law was the legislation from which Section 54 of the Revised
Election Code was taken.
It will thus be observed from the foregoing narration of the legislative
development or history of Section 54 of the Revised Election Code that the
first omission of the word "justice of the peace" was effected in Section 48
of Commonwealth Act No. 357 and not in the present code as averred by
defendant-appellee. Note carefully, however, that in the two instances
when the words "justice of the peace" were omitted (in Com. Act No. 357
and Rep. Act No. 180), the word "judge" which preceded in the
enumeration did not carry the qualification "of the First Instance." In other
words, whenever the word "judge" was qualified by the phrase "of the First
Instance", the words "justice of the peace" would follow; however, if the
law simply said "judge," the words "justice of the peace" were omitted.
The above-mentioned pattern of congressional phraseology would seem
to justify the conclusion that when the legislature omitted the words
"justice of the peace" in Rep. Act No. 180, it did not intend to exempt the
said officer from its operation. Rather, it had considered the said officer as
already comprehended in the broader term "judge".
It is unfortunate and regrettable that the last World War had destroyed
congressional records which might have offered some explanation of the
discussion of Com. Act No. 357 which legislation, as indicated above, has
eliminated for the first time the words "justice of the peace." Having been
completely destroyed, all efforts to seek deeper and additional
clarifications from these records proved futile. Nevertheless, the
conclusions drawn from the historical background of Rep. Act No. 180 is
sufficiently borne out by reason hid equity.
Defendant further argues that he cannot possibly be among the officers
enumerated in Section 54 inasmuch as under that said section, the word
"judge" is modified or qualified by the phrase "of any province." The last
mentioned phrase, defendant submits, cannot then refer to a justice of the
peace since the latter is not an officer of a province but of a municipality.
Defendant's argument in that respect is too strained. If it is true that the
phrase "of any province" necessarily removes justices of the peace from
the enumeration for the reason that they are municipal and not provincial
officials, then the same thing may be said of the Justices of the Supreme
Court and of the Court of Appeals. They are national officials. Yet, can there
be any doubt that Justices of the Supreme Court and of the Court of
Appeals are not included in the prohibition? The more sensible and logical
interpretation of the said phrase is that it qualifies fiscals, treasurers and
assessors who are generally known as provincial officers.
The rule of "casus omisus pro omisso habendus est" is likewise invoked by
the defendant-appellee. Under the said rule, a person, object or thing
omitted from an enumeration must be held to have been omitted
intentionally. If that rule is applicable to the present, then indeed, justices
of the peace must be held to have been intentionally and deliberately
exempted from the operation of Section 54 of the Revised Election Code.
The rule has no applicability to the case at bar. The maxim "casus omisus"
can operate and apply only if and when the omission has been clearly
established. In the case under consideration, it has already been shown
that the legislature did not exclude or omit justices of the peace from the
enumeration of officers precluded from engaging in partisan political
activities. Rather, they were merely called by another term. In the new law,
or Section 54 of the Revised Election Code, justices of the peace were just
called "judges."
In insisting on the application of the rule of "casus omisus" to this case,
defendant-appellee cites authorities to the effect that the said rule, being
restrictive in nature, has more particular application to statutes that should
be strictly construed. It is pointed out that Section 54 must be strictly
construed against the government since proceedings under it are criminal
in nature and the jurisprudence is settled that penal statutes should be
strictly interpreted against the state.
Amplifying on the above argument regarding strict interpretation of penal
statutes, defendant asserts that the spirit of fair play and due process
demand such strict construction in order to give "fair warning of what the
law intends to do, if a certain line is passed, in language that the common
world will understand." (Justice Holmes, in McBoyle v. U.S., 283 U.S. 25, L.
Ed. 816).
The application of the rule of "casus omisus" does not proceed from the
mere fact that a case is criminal in nature, but rather from a reasonable
certainty that a particular person, object or thing has been omitted from a
legislative enumeration. In the present case, and for reasons already
mentioned, there has been no such omission. There has only been a
substitution of terms.
The rule that penal statutes are given a strict construction is not the only
factor controlling the interpretation of such laws; instead, the rule merely
serves as an additional, single factor to be considered as an aid in
determining the meaning of penal laws. This has been recognized time and
again by decisions of various courts. (3 Sutherland, Statutory Construction,
p. 56.) Thus, cases will frequently be found enunciating the principle that
the intent of the legislature will govern (U.S. vs. Corbet, 215 U.S. 233). It is
to be noted that a strict construction should not be permitted to defeat
the policy and purposes of the statute (Ash Sheep Co. v. U.S., 252 U.S. 159).
The court may consider the spirit and reason of a statute, as in this
particular instance, where a literal meaning would lead to absurdity,
contradiction, injustice, or would defeat the clear purpose of the law
makers (Crawford, Interpretation of Laws, Sec. 78, p. 294). A Federal
District court in the U.S. has well said:
The strict construction of a criminal statute does not mean such
construction of it as to deprive it of the meaning intended. Penal statutes
must be construed in the sense which best harmonizes with their intent
and purpose. (U.S. v. Betteridge 43 F. Supp. 53, 56, cited in 3 Sutherland
Statutory Construction 56.)
As well stated by the Supreme Court of the United States, the language of
criminal statutes, frequently, has been narrowed where the letter includes
situations inconsistent with the legislative plan (U.S. v. Katz, 271 U.S. 354;
See also Ernest Brunchen, Interpretation of the Written Law (1915) 25 Yale
L.J. 129.)
Another reason in support of the conclusion reached herein is the fact that
the purpose of the statute is to enlarge the officers within its purview.
Justices of the Supreme Court, the Court of Appeals, and various judges,
such as the judges of the Court of Industrial Relations, judges of the Court
of Agrarian Relations, etc., who were not included in the prohibition under
the old statute, are now within its encompass. If such were the evident
purpose, can the legislature intend to eliminate the justice of the peace
within its orbit? Certainly not. This point is fully explained in the brief of
the Solicitor General, to wit:
On the other hand, when the legislature eliminated the phrases "Judge of
First Instance" and justice of the peace", found in Section 449 of the
Revised Administrative Code, and used "judge" in lieu thereof, the obvious
intention was to include in the scope of the term not just one class of
judges but all judges, whether of first Instance justices of the peace or
special courts, such as judges of the Court of Industrial Relations. . . . .
The weakest link in our judicial system is the justice of the peace court, and
to so construe the law as to allow a judge thereof to engage in partisan
political activities would weaken rather than strengthen the judiciary. On
the other hand, there are cogent reasons found in the Revised Election
Code itself why justices of the peace should be prohibited from
electioneering. Along with Justices of the appellate courts and judges of
the Court of First Instance, they are given authority and jurisdiction over
certain election cases (See Secs. 103, 104, 117-123). Justices of the peace
are authorized to hear and decided inclusion and exclusion cases, and if
they are permitted to campaign for candidates for an elective office the
impartiality of their decisions in election cases would be open to serious
doubt. We do not believe that the legislature had, in Section 54 of the
Revised Election Code, intended to create such an unfortunate situation.
(pp. 708, Appellant's Brief.)
Another factor which fortifies the conclusion reached herein is the fact that
the administrative or executive department has regarded justices of the
peace within the purview of Section 54 of the Revised Election Code.
In Tranquilino O. Calo, Jr. v. The Executive Secretary, the Secretary of
Justice, etc. (G.R. No. L-12601), this Court did not give due course to the
petition for certiorari and prohibition with preliminary injunction against
the respondents, for not setting aside, among others, Administrative Order
No. 237, dated March 31, 1957, of the President of the Philippines,
dismissing the petitioner as justice of the peace of Carmen, Agusan. It is
worthy of note that one of the causes of the separation of the petitioner
was the fact that he was found guilty in engaging in electioneering,
contrary to the provisions of the Election Code.
Defendant-appellee calls the attention of this Court to House Bill No. 2676,
which was filed on January 25, 1955. In that proposed legislation, under
Section 56, justices of the peace are already expressly included among the
officers enjoined from active political participation. The argument is that
with the filing of the said House Bill, Congress impliedly acknowledged that
existing laws do not prohibit justices of the peace from partisan political
activities.
The argument is unacceptable. To begin with, House Bill No. 2676 was a
proposed amendment to Rep. Act No. 180 as a whole and not merely to
section 54 of said Rep. Act No. 180. In other words, House Bill No. 2676
was a proposed re-codification of the existing election laws at the time that
it was filed. Besides, the proposed amendment, until it has become a law,
cannot be considered to contain or manifest any legislative intent. If the
motives, opinions, and the reasons expressed by the individual members
of the legislature even in debates, cannot be properly taken into
consideration in ascertaining the meaning of a statute (Crawford, Statutory
Construction, Sec. 213, pp. 375-376), a fortiori what weight can We give to
a mere draft of a bill.
On law reason and public policy, defendant-appellee's contention that
justices of the peace are not covered by the injunction of Section 54 must
be rejected. To accept it is to render ineffective a policy so clearly and
emphatically laid down by the legislature.
Our law-making body has consistently prohibited justices of the peace
from participating in partisan politics. They were prohibited under the old
Election Law since 1907 (Act No. 1582 and Act No. 1709). Likewise, they
were so enjoined by the Revised Administrative Code. Another which
expressed the prohibition to them was Act No. 3387, and later, Com. Act
No. 357.
Lastly, it is observed that both the Court of Appeals and the trial court
applied the rule of "expressio unius, est exclusion alterius" in arriving at
the conclusion that justices of the peace are not covered by Section 54.
Said the Court of Appeals: "Anyway, guided by the rule of exclusion,
otherwise known as expressio unius est exclusion alterius, it would not be
beyond reason to infer that there was an intention of omitting the term
"justice of the peace from Section 54 of the Revised Election Code. . . ."
The rule has no application. If the legislature had intended to exclude a
justice of the peace from the purview of Section 54, neither the trial court
nor the Court of Appeals has given the reason for the exclusion. Indeed,
there appears no reason for the alleged change. Hence, the rule of
expressio unius est exclusion alterius has been erroneously applied.
(Appellant's Brief, p. 6.)
Where a statute appears on its face to limit the operation of its provisions
to particular persons or things by enumerating them, but no reason exists
why other persons or things not so enumerated should not have been
included, and manifest injustice will follow by not so including them, the
maxim expressio unius est exclusion alterius, should not be invoked.
(Blevins v. Mullally 135 p. 307, 22 Cal. App. 519.) .
FOR THE ABOVE REASONS, the order of dismissal entered by the trial court
should be set aside and this case is remanded for trial on the merits.
G.R. No. L-33140 October 23, 1978
J. M. TUASON & CO., INC., JOSE M. TUASON, NICASIO A. TUASON, TERESA
TUASON, CELSO S. TUASON and SEVERO A. TUASON, petitioners,
vs.
HON. HERMINIO C. MARIANO, Presiding Judge of the Court of First
Instance of Rizal MANUELA AQUIAL, MARIA AQUIAL, Spouses JOSE M.
CORDOVA and SATURNINA C. CORDOVA, respondents.
AQUINO, J.:
This is another litigation regarding the validity of the much controverted
Original Certificate of Title No. 735 covering the Santa Mesa and D Estates
of the Tuason mayorazgo or Entail with areas of 877 (879) and 1,625
hectares, respectively (Barrette vs. Tuason, 50 Phil. 888; Benin case, infra).
On October 1, 1965, Manuela Aquial and Maria Aquial filed a complaint in
forma pauperis in the Court of First Instance of Rizal Pasig Branch X,
wherein they prayed that they be declared the owners of a parcel of land
located at Balara, Marikina, Rizal (now Quezon City) and bounded on the
north by Sapang Mapalad, on the south by the land of Eladio, Tiburcio on
the east by Sapang Kolotkolotan, and on the west by Sapang Kuliat The
land, which has an area of three hundred eighty-three quiñones was
allegedly acquired by their father by means of a Spanish title issued to him
on May 10, 1877 (Civil Case No. 8943).
They alleged that sometime in 1960, or after J. M. Tuason & Co., Inc. had
illegally entered upon that land, they discovered that it had been
fraudulently or erroneously included in OCT No. 735 of the Registry of
Deeds of Rizal and that it was registered in the names of defendants
Mariano, Teresa, Juan, Demetrio and Augusta all surnamed Tuason
pursuant to a decree issued on July 6. 1914 in Case No. 7681 of the Court
of Land Registration.
They further alleged that transfer certificates of title, derived from OCT No.
735, were issued to defendants J. M. Tuason & Co., Inc., University of the
Philippines and National Waterworks and Sewerage Authority (Nawasa)
which leased a portion of its land to defendant Capitol Golf Club.
Plaintiffs Aquial prayed that OCT No. 735 and the titles derived therefrom
be declared void due to certain irregularities in the land registration
proceeding. They asked for damages.
Defendant J.M. Tuason & Co., Inc. filed a motion to dismiss on the grounds
of lack of jurisdiction, improper venue, prescription, laches and prior
judgment. The plaintiffs opposed that motion. The lower court denied it.
The grounds of the motion to dismiss were pleaded as affirmative defenses
in the answer of defendants Tuason and J. M. Tuason & Co., Inc. They
insisted that a preliminary hearing be held on those defenses.
On January 25, 1967, the spouses Jose M. Cordova and Saturnina C.
Cordova, who had bought eleven hectares of the disputed land from the
plaintiffs, were allowed to intervene in the case.
On September 5, 1970, the lower court issued an order requiring the
parties the Register of Deeds of Rizal to produce in court on October 16,
1970 OCT No. 735 and certain transfer certificates of title derived from that
first or basic title. Later, the court required the production in court of the
plan of the land covered by OCT No. 735 allegedly for the purpose of
determining whether the lands claimed by the plaintiffs and the
intervenors are included therein.
On February 11, 1971, the Tuason and J. M. Tuason & Co., Inc. filed the
instant civil actions of certiorari and prohibition praying, inter alia, that the
trial court be ordered to dismiss the complaint and enjoined from
proceeding in the said case. After the petitioners had filed the proper bond,
a writ of preliminary injunction was issued. Respondents Aquial and
Cordova answered the petition. The parties, except the Aquials, filed
memoranda in lieu of oral argument.
The issue is whether OCT No. 735 and the titles derived therefrom can be
questioned at this late hour by respondents Aquial and Cordova. The
supposed irregularities in the land registration proceeding, which led to the
issuance of the decree upon which OCT. No. 735 was based, are the same
issues raised in Civil Cases Nos. 3621, 3622 and 3623 of the lower court.
The 1965 decision of Judge Eulogio Mencias in those cases, in validating
OCT No. 735, is annexed to the complaint of the Aquials. It is cited by them
to support their support their action and it might have encouraged them
to ventilate their action in court.
On appeal to this Court, that decision was reversed and the validity of OCT
No. 735 and the titles derived therefrom was once more upheld. (Benin vs.
Tuason, L-26127, Alcantara vs. Tuason, L-26128 and Pili vs. Tuason, L-
26129, all decided on June 28, 1974, 57 SCRA 531).
The ruling in the Benin, Alcantara and Pili cases was applied in Mara, Inc.
vs. Estrella, L-40511, July 25, 1975, 65 SCRA 471. That ruling is simply a
reiteration or confirmation of the holding in the following cases directly or
incidentally sustaining OCT No. 735: Bank of the P. I. vs. Acuña, 59 Phil. 183;
Tiburcio vs. PHHC, 106 Phil. 447; Galvez and Tiburcio vs. Tuason y de la Paz,
119 Phil. 612; Alcantara vs. Tuason, 92 Phil. 796; Santiago vs. J. M. Tuason
& Co., Inc. 110 Phil. 16; J. M. Tuason & Co., Inc. vs. Bolaños, 95 Phil. 106; J.
M. Tuason & Co., Inc. vs. Santiago, 99 Phil. 615; J. M. Tuason & Co., Inc. vs.
De Guzman, 99 Phil. 281; J. M. Tuason & Co., Inc. vs. Aguirre, 117 Phil. 110;
J. M. Tuason & Co., Inc. vs. Macalindong, 116 Phil. 1227; J. M. Tuason &
Co., Inc. vs. Magdangal, 114 Phil. 42; Varsity Hills, Inc. vs. Navarro, L-30889,
February 29, 1972, 43 SCRA 503, and People's Homesite and Housing
Corporation vs. Mencias, L-24114, August 16, 1967, 20 SCRA 1031.
Considering the governing principle of stare decisis et non quieta movere
(follow past precedents and do not disturb what has been settled) it
becomes evident that respondents Aquial and Cordova cannot maintain
their action in Civil Case No. 8943 without eroding the long settled holding
of the courts that OCT No. 735 is valid and no longer open to attack.
It is against public policy that matters already decided on the merits be
relitigated again and again, consuming the court's time and energies at the
expense of other litigants: Interest rei publicae ut finis sit litium." (Varsity
Hills, Inc. vs. Navarro, supra).
Finding the petition for certiorari and prohibition to be meritorious, the
trial court is directed to dismiss Civil Case No. 8943 with prejudice and
without costs. No costs.
SO ORDERED.
G.R. No. 72005 May 29, 1987
PHILIPPINE BRITISH ASSURANCE CO., INC., petitioner,
vs.
HONORABLE INTERMEDIATE APPELLATE COURT; SYCWIN COATING &
WIRES, INC., and DOMINADOR CACPAL, CHIEF DEPUTY SHERRIF OF
MANILA, respondents.
GANCAYCO, J.:
This is a Petition for Review on certiorari of the Resolution dated
September 12, 1985 of the Intermediate Appellate Court in AC-G.R. No. CR-
05409 1 granting private respondent's motion for execution pending
appeal and ordering the issuance of the corresponding writ of execution
on the counterbond to lift attachment filed by petitioner. The focal issue
that emerges is whether an order of execution pending appeal of a
judgment maybe enforced on the said bond. In the Resolution of
September 25, 1985 2 this Court as prayed for, without necessarily giving
due course to the petition, issued a temporary restraining order enjoining
the respondents from enforcing the order complaint of.
The records disclose that private respondent Sycwin Coating & Wires, Inc.,
filed a complaint for collection of a sum of money against Varian Industrial
Corporation before the Regional Trial Court of Quezon City. During the
pendency of the suit, private respondent succeeded in attaching some of
the properties of Varian Industrial Corporation upon the posting of a
supersedeas bond. 3 The latter in turn posted a counterbond in the sum of
P1,400, 000.00 4 thru petitioner Philippine British Assurance Co., Inc., so
the attached properties were released.
On December 28, 1984, the trial court rendered a Decision, the dispositive
portion of which reads:
WHEREFORE, plaintiff's Motion for Summary Judgment is hereby
GRANTED, and judgment is rendered in favor of the plaintiff and against
the defendant Varian Industrial Corporation, and the latter is hereby
ordered:
1. To pay plaintiff the amount of P1,401,468.00, the principal
obligation with 12% interest per annum from the date of default until fully
paid;
2. To pay plaintiff 5% of the principal obligation as liquidated
damages;
3. To pay plaintiff P30,000.00 as exemplary damages;
4. To pay plaintiff 15% of P1,401,468.00, the principal obligation, as
and for attorney's fees; and
5. To pay the costs of suit.
Accordingly, the counterclaim of the defendant is hereby DISMISSED for
lack of merit.
SO ORDERED. 5
Varian Industrial Corporation appealed the decision to the respondent
Court. Sycwin then filed a petition for execution pending appeal against the
properties of Varian in respondent Court. Varian was required to file its
comment but none was filed. In the Resolution of July 5, 1985, respondent
Court ordered the execution pending appeal as prayed for. 6 However, the
writ of execution was returned unsatisfied as Varian failed to deliver the
previously attached personal properties upon demand. In a Petition dated
August 13, 1985 filed with respondent Court Sycwin prayed that the surety
(herein petitioner) be ordered to pay the value of its bond. 7 In compliance
with the Resolution of August 23, 1985 of the respondent Court herein
petitioner filed its comment. 8 In the Resolution of September 12, 1985, 9
the respondent Court granted the petition. Hence this action.
It is the submission of private respondent Sycwin that without a previous
motion for reconsideration of the questioned resolution, certiorari would
not lie. While as a general rule a motion for reconsideration has been
considered a condition sine qua non for the granting of a writ of certiorari,
this rule does not apply when special circumstances warrant immediate or
more direct action. 10 It has been held further that a motion for
reconsideration may be dispensed with in cases like this where execution
had been ordered and the need for relief was extremely urgent. 11
The counterbond provides:
WHEREAS, in the above-entitled case pending in the Regional Trial Court,
National Capital Judicial Region, Branch LXXXV, Quezon City, an order of
Attachment was issued against abovenamed Defendant;
WHEREAS, the Defendant, for the purpose of lifting and/or dissolving the
order of attachment issued against them in the above-en-titled case, have
offered to file a counterbond in the sum of PESOS ONE MILLION FOUR
HUNDRED THOUSAND ONLY (P1,400,000.00), Philippine Currency, as
provided for in Section 5, Rule 57 of the Revised Rules of Court.
NOW, THEREFORE, we, VARIAN INDUSTRIAL CORPORATION, as Principal
and the PHILIPPINE BRITISH ASSURANCE COMPANY, INC., a corporation
duly organized and existing under and by virtue of the laws of the
Philippines, as Surety, in consideration of the above and of the lifting or
dissolution of the order of attachment, hereby jointly and severally, bind
ourselves in favor of the above Plaintiff in the sum of PESOS ONE MILLION
FOUR HUNDRED THOUSAND ONLY (P1,400,000.00), Philippine Currency,
under the condition that in case the Plaintiff recovers judgment in the
action, and Defendant will, on demand, re-deliver the attached property
so released to the Officer of the Court and the same shall be applied to the
payment of the judgment, or in default thereof, the defendant and Surety
will, on demand, pay to the Plaintiff the full value of the property released.

EXECUTED at Manila, Philippines, this 28th day of June, 1984. 12
Sections 5, 12, and 17 of Rule 57 of the Revised Rules of Court also provide:
SEC. 5. Manner of attaching property. — The officer executing the order
shall without delay attach, to await judgment and execution in the action,
all the properties of the party against whom the order is issued in the
province, not exempt from execution, or so much thereof as may be
sufficient to satisfy the applicant's demand, unless the former makes a
deposit with the clerk or judge of the court from which the order issued,
or gives a counter-bond executed to the applicant, in an amount sufficient
to satisfy such demand besides costs, or in an amount equal to the value
of the property which is about to be attached, to secure payment to the
applicant of any judgement ment which he may recover in the action. The
officer shall also forthwith serve a copy of the applicant's affidavit and
bond, and of the order of attachment, on the adverse party, if he be found
within the province.
SEC. 12. Discharge of attachment upon giving counterbond. — At any time
after an order of attachment has been granted, the party whose property
has been attached, or the person appearing on his behalf, may, upon
reasonable notice to the applicant, apply to the judge who granted the
order, or to the judge of the court in which the action is pending, for an
order discharging the attachment wholly or in part on the security given.
The judge shall, after hearing, order the discharge of the attachment if a
cash deposit is made, or a counter-bond executed to the attaching creditor
is filed, on behalf of the adverse party, with the clerk or judge of the court
where the application is made, in an amount equal to the value of the
property attached as determined by the judge, to secure the payment of
any judgment that the attaching creditor may recover in the action. Upon
the filing of such counter-bond, copy thereof shall forthwith be served on
the attaching creditor or his lawyer. Upon the discharge of an attachment
in accordance with the provisions of this section the property attached, or
the proceeds of any sale thereof, shall be delivered to the party making the
deposit or giving the counterbond aforesaid standing in place of the
property so released. Should such counterbond for any reason be found to
be, or become, insufficient, and the party furnishing the same fail to file an
additional counterbond, the attaching creditor may apply for a new order
of attachment.
SEC. 17. When execution returned unsatisfied, recovery had upon bond. —
If the execution be returned unsatisfied in whole or in part, the surety or
sureties on any counter-bond given pursuant to the provisions of this rule
to secure the payment of the judgment shall become charged on such
counter- bond, and bound to pay to the judgement creditor upon demand,
the amount due under the judgment, which amount may be recovered
from such surety or sureties after notice and summary hearing in the same
action. (Emphasis supplied.)
Under Sections 5 and 12, Rule 57 above reproduced it is provided that the
counterbond is intended to secure the payment of "any judgment" that the
attaching creditor may recover in the action. Under Section 17 of same rule
it provides that when "the execution be returned unsatisfied in whole or in
part" it is only then that "payment of the judgment shall become charged
on such counterbond."
The counterbond was issued in accordance with the provisions of Section
5, Rule 57 of the Rules of Court as provided in the second paragraph
aforecited which is deemed reproduced as part of the counterbond. In the
third paragraph it is also stipulated that the counterbond is to be "applied
for the payment of the judgment." Neither the rules nor the provisions of
the counterbond limited its application to a final and executory judgment.
Indeed, it is specified that it applies to the payment of any judgment that
maybe recovered by plaintiff. Thus, the only logical conclusion is that an
execution of any judgment including one pending appeal if returned
unsatisfied maybe charged against such a counterbond.
It is well recognized rule that where the law does not distinguish, courts
should not distinguish. Ubi lex non distinguish nec nos distinguere
debemos. 13 "The rule, founded on logic, is a corollary of the principle that
general words and phrases in a statute should ordinarily be accorded their
natural and general significance. 14 The rule requires that a general term
or phrase should not be reduced into parts and one part distinguished from
the other so as to justify its exclusion from the operation of the law. 15 In
other words, there should be no distinction in the application of a statute
where none is indicated.16 For courts are not authorized to distinguish
where the law makes no distinction. They should instead administer the
law not as they think it ought to be but as they find it and without regard
to consequences. 17
A corollary of the principle is the rule that where the law does not make
any exception, courts may not except something therefrom, unless there
is compelling reason apparent in the law to justify it.18 Thus where a
statute grants a person against whom possession of "any land" is
unlawfully withheld the right to bring an action for unlawful detainer, this
Court held that the phrase "any land" includes all kinds of land, whether
agricultural, residential, or mineral.19 Since the law in this case does not
make any distinction nor intended to make any exception, when it speaks
of "any judgment" which maybe charged against the counterbond, it
should be interpreted to refer not only to a final and executory judgment
in the case but also a judgment pending appeal.
All that is required is that the conditions provided for by law are complied
with, as outlined in the case of Towers Assurance Corporation v. Ororama
Supermart, 20
Under Section 17, in order that the judgment creditor might recover from
the surety on the counterbond, it is necessary (1) that the execution be
first issued against the principal debtor and that such execution was
returned unsatisfied in whole or in part; (2) that the creditor make a
demand upon the surety for the satisfaction of the judgment, and (3) that
the surety be given notice and a summary hearing on the same action as
to his liability for the judgment under his counterbond.
The rule therefore, is that the counterbond to lift attachment that is issued
in accordance with the provisions of Section 5, Rule 57, of the Rules of
Court, shall be charged with the payment of any judgment that is returned
unsatisfied. It covers not only a final and executory judgement but also the
execution of a judgment pending appeal.
WHEREFORE, the petition is hereby DISMISSED for lack of merit and the
restraining order issued on September 25, 1985 is hereby dissolved with
costs against petitioner.
SO ORDERED.
G.R. No. 87416 April 8, 1991
CECILIO S. DE VILLA, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, PEOPLE OF THE PHILIPPINES,
HONORABLE JOB B. MADAYAG, and ROBERTO Z. LORAYES, respondents.
PARAS, J.:
This petition for review on certiorari seeks to reverse and set aside the
decision* of the Court of Appeals promulgated on February 1, 1989 in CA-
G.R. SP No. 16071 entitled "Cecilio S. de Villa vs. Judge Job B. Madayag, etc.
and Roberto Z. Lorayes," dismissing the petition for certiorari filed therein.

The factual backdrop of this case, as found by the Court of Appeals, is as
follows:
On October 5, 1987, petitioner Cecilio S. de Villa was charged before the
Regional Trial Court of the National Capital Judicial Region (Makati, Branch
145) with violation of Batas Pambansa Bilang 22, allegedly committed as
follows:
That on or about the 3rd day of April 1987, in the municipality of Makati,
Metro Manila, Philippines and within the jurisdiction of this Honorable
Court, the above-named accused, did, then and there willfully, unlawfully
and feloniously make or draw and issue to ROBERTO Z. LORAYEZ, to apply
on account or for value a Depositors Trust Company Check No. 3371
antedated March 31, 1987, payable to herein complainant in the total
amount of U.S. $2,500.00 equivalent to P50,000.00, said accused well
knowing that at the time of issue he had no sufficient funds in or credit
with drawee bank for payment of such check in full upon its presentment
which check when presented to the drawee bank within ninety (90) days
from the date thereof was subsequently dishonored for the reason
"INSUFFICIENT FUNDS" and despite receipt of notice of such dishonor said
accused failed to pay said ROBERTO Z. LORAYEZ the amount of P50,000.00
of said check or to make arrangement for full payment of the same within
five (5) banking days after receiving said notice.
After arraignment and after private respondent had testified on direct
examination, petitioner moved to dismiss the Information on the following
grounds: (a) Respondent court has no jurisdiction over the offense
charged; and (b) That no offense was committed since the check involved
was payable in dollars, hence, the obligation created is null and void
pursuant to Republic Act No. 529 (An Act to Assure Uniform Value of
Philippine Coin and Currency).
On July 19, 1988, respondent court issued its first questioned orders
stating:
Accused's motion to dismiss dated July 5, 1988, is denied for lack of merit.
Under the Bouncing Checks Law (B.P. Blg. 22), foreign checks, provided
they are either drawn and issued in the Philippines though payable outside
thereof, or made payable and dishonored in the Philippines though drawn
and issued outside thereof, are within the coverage of said law. The law
likewise applied to checks drawn against current accounts in foreign
currency.
Petitioner moved for reconsideration but his motion was subsequently
denied by respondent court in its order dated September 6, 1988, and
which reads:
Accused's motion for reconsideration, dated August 9, 1988, which was
opposed by the prosecution, is denied for lack of merit.1âwphi1
The Bouncing Checks Law is applicable to checks drawn against current
accounts in foreign currency (Proceedings of the Batasang Pambansa,
February 7, 1979, p. 1376, cited in Makati RTC Judge (now Manila City
Fiscal) Jesus F. Guerrero's The Ramifications of the Law on Bouncing
Checks, p. 5). (Rollo, Annex "A", Decision, pp. 20-22).
A petition for certiorari seeking to declare the nullity of the aforequoted
orders dated July 19, 1988 and September 6, 1988 was filed by the
petitioner in the Court of Appeals wherein he contended:
(a) That since the questioned check was drawn against the dollar
account of petitioner with a foreign bank, respondent court has no
jurisdiction over the same or with accounts outside the territorial
jurisdiction of the Philippines and that Batas Pambansa Bilang 22 could
have not contemplated extending its coverage over dollar accounts;
(b) That assuming that the subject check was issued in connection
with a private transaction between petitioner and private respondent, the
payment could not be legally paid in dollars as it would violate Republic Act
No. 529; and
(c) That the obligation arising from the issuance of the questioned
check is null and void and is not enforceable with the Philippines either in
a civil or criminal suit. Upon such premises, petitioner concludes that the
dishonor of the questioned check cannot be said to have violated the
provisions of Batas Pambansa Bilang 22. (Rollo, Annex "A", Decision, p. 22).
On February 1, 1989, the Court of Appeals rendered a decision, the
decretal portion of which reads:
WHEREFORE, the petition is hereby dismissed. Costs against petitioner.
SO ORDERED. (Rollo, Annex "A", Decision, p. 5)
A motion for reconsideration of the said decision was filed by the petitioner
on February 7, 1989 (Rollo, Petition, p. 6) but the same was denied by the
Court of Appeals in its resolution dated March 3, 1989 (Rollo, Annex "B", p.
26).
Hence, this petition.
In its resolution dated November 13, 1989, the Second Division of this
Court gave due course to the petition and required the parties to submit
simultaneously their respective memoranda (Rollo, Resolution, p. 81).
The sole issue in this case is whether or not the Regional Trial Court of
Makati has jurisdiction over the case in question.
The petition is without merit.
Jurisdiction is the power with which courts are invested for administering
justice, that is, for hearing and deciding cases (Velunta vs. Philippine
Constabulary, 157 SCRA 147 [1988]).
Jurisdiction in general, is either over the nature of the action, over the
subject matter, over the person of the defendant, or over the issues
framed in the pleadings (Balais vs. Balais, 159 SCRA 37 [1988]).
Jurisdiction over the subject matter is determined by the statute in force
at the time of commencement of the action (De la Cruz vs. Moya, 160 SCRA
538 [1988]).
The trial court's jurisdiction over the case, subject of this review, can not
be questioned.
Sections 10 and 15(a), Rule 110 of the Rules of Court specifically provide
that:
Sec. 10. Place of the commission of the offense. The complaint or
information is sufficient if it can be understood therefrom that the offense
was committed or some of the essential ingredients thereof occured at
some place within the jurisdiction of the court, unless the particular place
wherein it was committed constitutes an essential element of the offense
or is necessary for identifying the offense charged.
Sec. 15. Place where action is to be instituted. (a) Subject to existing
laws, in all criminal prosecutions the action shall be instituted and tried in
the court of the municipality or territory where the offense was committed
or any of the essential ingredients thereof took place.
In the case of People vs. Hon. Manzanilla (156 SCRA 279 [1987] cited in the
case of Lim vs. Rodrigo, 167 SCRA 487 [1988]), the Supreme Court ruled
"that jurisdiction or venue is determined by the allegations in the
information."
The information under consideration specifically alleged that the offense
was committed in Makati, Metro Manila and therefore, the same is
controlling and sufficient to vest jurisdiction upon the Regional Trial Court
of Makati. The Court acquires jurisdiction over the case and over the
person of the accused upon the filing of a complaint or information in court
which initiates a criminal action (Republic vs. Sunga, 162 SCRA 191 [1988]).
Moreover, it has been held in the case of Que v. People of the Philippines
(154 SCRA 160 [1987] cited in the case of People vs. Grospe, 157 SCRA 154
[1988]) that "the determinative factor (in determining venue) is the place
of the issuance of the check."
On the matter of venue for violation of Batas Pambansa Bilang 22, the
Ministry of Justice, citing the case of People vs. Yabut (76 SCRA 624 [1977],
laid down the following guidelines in Memorandum Circular No. 4 dated
December 15, 1981, the pertinent portion of which reads:
(1) Venue of the offense lies at the place where the check was
executed and delivered; (2) the place where the check was written, signed
or dated does not necessarily fix the place where it was executed, as what
is of decisive importance is the delivery thereof which is the final act
essential to its consummation as an obligation; . . . (Res. No. 377, s. 1980,
Filtex Mfg. Corp. vs. Manuel Chua, October 28, 1980)." (See The Law on
Bouncing Checks Analyzed by Judge Jesus F. Guerrero, Philippine Law
Gazette, Vol. 7. Nos. 11 & 12, October-December, 1983, p. 14).
It is undisputed that the check in question was executed and delivered by
the petitioner to herein private respondent at Makati, Metro Manila.
However, petitioner argues that the check in question was drawn against
the dollar account of petitioner with a foreign bank, and is therefore, not
covered by the Bouncing Checks Law (B.P. Blg. 22).
But it will be noted that the law does not distinguish the currency involved
in the case. As the trial court correctly ruled in its order dated July 5, 1988:
Under the Bouncing Checks Law (B.P. Blg. 22), foreign checks, provided
they are either drawn and issued in the Philippines though payable outside
thereof . . . are within the coverage of said law.
It is a cardinal principle in statutory construction that where the law does
not distinguish courts should not distinguish.1âwphi1 Parenthetically, the
rule is that where the law does not make any exception, courts may not
except something unless compelling reasons exist to justify it (Phil. British
Assurance Co., Inc. vs. IAC, 150 SCRA 520 [1987]).
More importantly, it is well established that courts may avail themselves
of the actual proceedings of the legislative body to assist in determining
the construction of a statute of doubtful meaning (Palanca vs. City of
Manila, 41 Phil. 125 [1920]). Thus, where there is doubts as to what a
provision of a statute means, the meaning put to the provision during the
legislative deliberation or discussion on the bill may be adopted (Arenas vs.
City of San Carlos, 82 SCRA 318 [1978]).
The records of the Batasan, Vol. III, unmistakably show that the intention
of the lawmakers is to apply the law to whatever currency may be the
subject thereof. The discussion on the floor of the then Batasang Pambansa
fully sustains this view, as follows:

xxx xxx xxx
THE SPEAKER. The Gentleman from Basilan is recognized.
MR. TUPAY. Parliamentary inquiry, Mr. Speaker.
THE SPEAKER. The Gentleman may proceed.
MR. TUPAY. Mr. Speaker, it has been mentioned by one of the
Gentlemen who interpellated that any check may be involved, like U.S.
dollar checks, etc. We are talking about checks in our country. There are
U.S. dollar checks, checks, in our currency, and many others.
THE SPEAKER. The Sponsor may answer that inquiry.
MR. MENDOZA. The bill refers to any check, Mr. Speaker, and this check
may be a check in whatever currency. This would not even be limited to
U.S. dollar checks. The check may be in French francs or Japanese yen or
deutschunorhs. (sic.) If drawn, then this bill will apply.
MR TUPAY. So it include U.S. dollar checks.
MR. MENDOZA. Yes, Mr. Speaker.
(p. 1376, Records of the Batasan, Volume III; Emphasis supplied).
PREMISES CONSIDERED, the petition is DISMISSED for lack of merit.
G.R. No. L-14787 January 28, 1961
COLGATE-PALMOLIVE PHILIPPINE, INC., petitioner,
vs.
HON. PEDRO M. GIMENEZ as Auditor General and ISMAEL MATHAY as
AUDITOR OF THE CENTRAL BANK OF THE PHILIPPINES, respondents.
GUTIERREZ DAVID, J.:
The petitioner Colgate-Palmolive Philippines, Inc. is a corporation duly
organized and existing under Philippine laws engaged in the manufacture
of toilet preparations and household remedies. On several occasions, it
imported from abroad various materials such as irish moss extract, sodium
benzoate, sodium saccharinate precipitated calcium carbonate and
dicalcium phosphate, for use as stabilizers and flavoring of the dental
cream it manufactures. For every importation made of these materials, the
petitioner paid to the Central Bank of the Philippines the 17% special excise
tax on the foreign exchange used for the payment of the cost,
transportation and other charges incident thereto, pursuant to Republic
Act No. 601, as amended, commonly known as the Exchange Tax Law.
On March 14, 1956, the petitioner filed with the Central Bank three
applications for refund of the 17% special excise tax it had paid in the
aggregate sum of P113,343.99. The claim for refund was based on section
2 of Republic Act 601, which provides that "foreign exchange used for the
payment of the cost, transportation and/or other charges incident to the
importation into the Philippines of . . . stabilizer and flavors . . . shall be
refunded to any importer making application therefor, upon satisfactory
proof of actual importation under the rules and regulations to be
promulgated pursuant to section seven thereof." After the applications
were processed by the officer-in-charge of the Exchange Tax
Administration of the Central Bank, that official advised, the petitioner that
of the total sum of P113,343.99 claimed by it for refund, the amount of
P23,958.13 representing the 17% special excise tax on the foreign
exchange used to import irish moss extract, sodium benzoate and
precipitated calcium carbonate had been approved. The auditor of the
Central Bank, however, refused to pass in audit its claims for refund even
for the reduced amount fixed by the Officer-in-Charge of the Exchange Tax
Administration, on the theory that toothpaste stabilizers and flavors are
not exempt under section 2 of the Exchange Tax Law.
Petitioner appealed to the Auditor General, but the latter or, December 4,
1958 affirmed the ruling of the auditor of the Central Bank, maintaining
that the term "stabilizer and flavors" mentioned in section 2 of the
Exchange Tax Law refers only to those used in the preparation or
manufacture of food or food products. Not satisfied, the petitioner brought
the case to this Court thru the present petition for review.
The decisive issue to be resolved is whether or not the foreign exchange
used by petitioner for the importation of dental cream stabilizers and
flavors is exempt from the 17% special excise tax imposed by the Exchange
Tax Law, (Republic Act No. 601) so as to entitle it to refund under section
2 thereof, which reads as follows:
SEC, 2. The tax collected under the preceding section on foreign exchange
used for the payment of the cost, transportation and/or other charges
incident to importation into the Philippines of rice, flour, canned milk,
cattle and beef, canned fish, soya beans, butterfat, chocolate, malt syrup,
tapioca, stabilizer and flavors, vitamin concentrate, fertilizer, poultry feed;
textbooks, reference books, and supplementary readers approved by the
Board of Textbooks and/or established public or private educational
institutions; newsprint imported by or for publishers for use in the
publication of books, pamphlets, magazines and newspapers; book paper,
book cloth, chip board imported for the printing of supplementary readers
(approved by the Board of Textbooks) to be supplied to the Government
under contracts perfected before the approval of this Act, the quantity
thereof to be certified by the Director of Printing; anesthetics, anti-biotics,
vitamins, hormones, x-ray films, laboratory reagents, biologicals, dental
supplies, and pharmaceutical drugs necessary for compounding medicines;
medical and hospital supplies listed in the appendix to this Act, in
quantities to be certified by the Director of Hospitals as actually needed by
the hospitals applying therefor; drugs and medicines listed in the said
appendix; and such other drugs and medicines as may be certified by the
Secretary of Health from time to time to promote and protect the health
of the people of the Philippines shall be refunded to any importer making
application therefor, upon satisfactory proof of actual importation under
the rules and regulations to be promulgated pursuant to section seven
thereof." (Emphasis supplied.)
The ruling of the Auditor General that the term "stabilizer and flavors" as
used in the law refers only to those materials actually used in the
preparation or manufacture of food and food products is based,
apparently, on the principle of statutory construction that "general terms
may be restricted by specific words, with the result that the general
language will be limited by the specific language which indicates the
statute's object and purpose." (Statutory Construction by Crawford, 1940
ed. p. 324-325.) The rule, however, is, in our opinion, applicable only to
cases where, except for one general term, all the items in an enumeration
belong to or fall under one specific class. In the case at bar, it is true that
the term "stabilizer and flavors" is preceded by a number of articles that
may be classified as food or food products, but it is likewise true that the
other items immediately following it do not belong to the same
classification. Thus "fertilizer" and "poultry feed" do not fall under the
category of food or food products because they are used in the farming
and poultry industries, respectively. "Vitamin concentrate" appears to be
more of a medicine than food or food product, for, as matter of fact,
vitamins are among those enumerated in the list of medicines and drugs
appearing in the appendix to the law. It should also here be stated that
"cattle", which is among those listed preceding the term in question,
includes not only those intended for slaughter but also those for breeding
purposes. Again, it is noteworthy that under, Republic Act No. 814
amending the above-quoted section of Republic Act No. 601, "industrial
starch", which does not always refer to food for human consumption, was
added among the items grouped with "stabilizer and flavors". Thus, on the
basis of the grouping of the articles alone, it cannot validly be maintained
that the term "stabilizer and flavors" as used in the above-quoted provision
of the Exchange Tax Law refers only to those used in the manufacture of
food and food products. This view is supported by the principle "Ubi lex
non distinguish nec nos distinguire debemos", or "where the law does not
distinguish, neither do we distinguish". (Ligget & Myers Tobacco Company
vs. Collector of Internal Revenue, 53 Off. Gaz. No. 15, page 4831). Since the
law does not distinguish between "stabilizer and flavors" used in the
preparation of food and those used in the manufacture of toothpaste or
dental cream, we are not authorized to make any distinction and must
construe the words in their general sense. The rule of construction that
general and unlimited terms are restrained and limited by particular
recitals when used in connection with them, does not require the rejection
of general terms entirely. It is intended merely as an aid in ascertaining the
intention of the legislature and is to be taken in connection with other rules
of construction. (See Handbook of the Construction and Interpretation of
Laws by Black, p. 215.216, 2nd ed.)
Having arrived at the above conclusion, we deem it now idle to pass upon
the other questions raised by the parties.
WHEREFORE, the decision under review is reversed and the respondents
are hereby ordered to audit petitioners applications for refund which were
approved by the Officer-in-Charge of the Exchange Tax Administration in
the total amount of P23,958.13.
REPUBLIC OF THE PHILIPPINES THRU: THE PRESIDENTIAL COMMISSION
ON GOOD GOVERNMENT (PCGG), AFP ANTI-GRAFT BOARD, COL.
ERNESTO A. PUNSALANG and PETER T. TABANG, Petitioners, v. HON.
EUTROPIO
This case puts in issue the authority of the Presidential Commission on
Good Government (PCGG), through the New Armed Forces of the
Philippines Anti-Graft Board (hereinafter referred to as the "Board"), to
investigate and cause the prosecution of petitioner, a retired military
officer, for violation of Republic Acts Nos. 3019 and 1379.
Assailed by the Republic in this petition for certiorari, prohibition and/or
mandamus with prayer for the issuance of a writ of preliminary injunction
and/or temporary restraining order are the orders of respondent judge in
Civil Case No. 57092 Branch 151 of the Regional Trial Court of Pasig, Metro
Manila: (1) dated June 23, 1989, denying petitioners’ Motion to Dismiss
and Opposition, and (2) dated June 26, 1989, granting private respondent’s
application for the issuance of a writ of preliminary injunction. Thus, the
petition seeks the annulment of the two orders, the issuance of an
injunction to enjoin respondent judge from proceeding with Civil Case No.
57092 and, finally, the dismissal of the case before the trial court.
The controversy traces its roots to the order of then PCGG Chairman Jovito
R. Salonga, dated May 13, 1986, which created the New Armed Forces of
the Philippines Anti-Graft Board. The Board was created to "investigate the
unexplained wealth and corrupt practices of AFP personnel, both retired
and in active service." The order further stated that" [t]he Board shall be
primarily charged with the task of investigating cases of alleged violations
of the Anti-Graft and Corrupt Practices Act (Republic Act No. 3019, as
amended) and shall make the necessary recommendations to appropriate
government agencies and instrumentalities with respect to the action to
be taken thereon based on its findings."cralaw virtua1aw library
Acting on information received by the Board, which indicated the
acquisition of wealth beyond his lawful income, private respondent Lt. Col.
Troadio Tecson (ret.) was required by the Board to submit his
explanation/comment together with his supporting evidence by October
31, 1987 [Annex "B", Petition]. Private respondent requested, and was
granted, several postponements, but was unable to produce his supporting
evidence because they were allegedly in the custody of his bookkeeper
who had gone abroad.
Just the same, the Board proceeded with its investigation and submitted
its resolution, dated June 30, 1988, recommending that private respondent
be prosecuted and tried for violation of Rep. Act No. 3019, as amended,
and Rep. Act No. 1379, as amended.chanrobles lawlibrary : rednad
The case was set for preliminary investigation by the PCGG. Private
respondent moved to dismiss the case on the following grounds: (1) that
the PCGG has no jurisdiction over his person; (2) that the action against
him under Rep. Act No. 1379 has already prescribed; (3) that E.O. No. 14,
insofar as it suspended the provisions of Rep. Act No. 1379 on prescription
of actions, was inapplicable to his case; and (4) that having retired from the
AFP on May 9, 1984, he was now beyond the reach of Rep. Act No. 3019.
The Board opposed the motion to dismiss.
In a resolution dated February 8, 1989, the PCGG denied the motion to
dismiss for lack of merit. Private respondent moved for reconsideration but
this was denied by the PCGG in a resolution dated March 8, 1989. Private
respondent was directed to submit his counter-affidavit and other
controverting evidence on March 20, 1989 at 2:00 p.m.
On March 13, 1989, private respondent filed a petition for prohibition with
preliminary injunction with the Regional Trial Court in Pasig, Metro Manila.
The case was docketed as Case No. 57092 and raffled to Branch 151,
respondent judge’s court. Petitioner filed a motion to dismiss and opposed
the application for the issuance of a writ of preliminary injunction on the
principal ground that the Regional Trial Court had no jurisdiction over the
Board, citing the case of PCGG v. Peña, G.R. No. 77663, April 12, 1988, 159
SCRA 556. Private respondent opposed the motion to dismiss. Petitioner
replied to the opposition.
On June 23, 1989, respondent judge denied petitioner’s motion to dismiss.
On June 26, 1989, respondent judge granted the application for the
issuance of a writ of preliminary injunction, enjoining petitioners from
investigating or prosecuting private respondent under Rep. Acts Nos. 3019
and 1379 upon the filing of a bond in the amount of Twenty Thousand
Pesos (P20,000.00).
Hence, the instant petition.
On August 29, 1989, the Court issued a restraining order enjoining
respondent judge from enforcing his orders dated June 23, 1989 and June
26, 1989 and from proceeding with Civil Case No. 57092.
Private respondent filed his comment, to which petitioners filed a reply. A
rejoinder to the reply was filed by private Respondent. The Court gave due
course to the petition and the parties filed their memoranda. Thereafter,
the case was deemed submitted.
The issues raised in the petition are as follows:chanrob1es virtual 1aw
library
I.
WHETHER OR NOT RESPONDENT JUDGE GRAVELY ABUSED HIS DISCRETION
OR ACTED WITHOUT OR IN EXCESS OF JURISDICTION IN ASSUMING
JURISDICTION OVER AND INTERFERING WITH THE ORDERS AND
FUNCTIONS OF THE PRESIDENTIAL COMMISSION ON GOOD
GOVERNMENT.
II.

WHETHER, OR NOT RESPONDENT JUDGE GRAVELY ABUSED HIS
DISCRETION OR ACTED WITHOUT OR IN EXCESS OF JURISDICTION IN
ISSUING THE ASSAILED ORDER DATED JUNE 26, 1989 ENJOINING
PETITIONERS FROM INVESTIGATING AND PROSECUTING PRIVATE
RESPONDENT FOR VIOLATION OF REPUBLIC ACT NO. 3019, OTHERWISE
KNOWN AS ANTI-GRAFT AND CORRUPT PRACTICES ACT AND REPUBLIC ACT
NO. 1379, OTHERWISE KNOWN AS AN ACT FOR THE FORFEITURE OF
UNLAWFULLY ACQUIRED PROPERTY [Rollo, p. 19].
As to the first issue, petitioner contends that following the ruling of the
Court in PCGG v. Peña the Board, being a creation and/or extension of the
PCGG, is beyond the jurisdiction of the Regional Trial Court. On the second
issue, petitioner strongly argues that the private respondent’s case falls
within the jurisdiction of the PCGG.
The pivotal issue is the second one. On this point, private respondent’s
position is as follows:chanrob1es virtual 1aw library
1. . . . he is not one of the subordinates contemplated in Executive
Orders 1 , 2 , 14 and 14-A as the alleged illegal acts being imputed to him,
that of alleged amassing wealth beyond his legal means while Finance
Officer of the Philippine Constabulary, are acts of his own alone, not
connected with his being a crony, business associate, etc. or subordinate
as the petition does not allege so. Hence the PCGG has no jurisdiction to
investigate him.
If indeed private respondent amassed wealth beyond his legal means, the
procedure laid down by Rep. Act 1379 as already pointed out before be
applied. And since, he has been separated from the government more than
four years ago, the action against him under Republic Act 1379 has already
prescribed.
2. . . . no action can be filed anymore against him now under Republic
Act 1379 for recovery of unexplained wealth for the reason that he has
retired more than four years ago.
3. . . . The order creating the AFP Anti-Graft Board (Annex "A",
Petition) is null and void. Nowhere in Executive Orders 1, 2, 14 and 14-A is
there any authority given to the commission, its chairman and members,
to create Boards or bodies to be invested with powers similar to the
powers invested with the commission .. [Comment, pp. 6-7; Rollo, pp. 117-
118].
1. The most important question to be resolved in this case is whether
or not private respondent may be investigated and caused to be
prosecuted by the Board, an agency of the PCGG, for violation of Rep. Acts
Nos. 3019 and 1379. According to petitioners, the PCGG has the power to
investigate and cause the prosecution of private respondent because he is
a "subordinate" of former President Marcos. They cite the PCGG’s
jurisdiction over —
(a) The recovery of all ill-gotten wealth accumulated by former
President Ferdinand E. Marcos, his immediate family, relatives,
subordinates and close associates, whether located in the Philippines or
abroad, including the takeover or sequestration of all business enterprises
and entities owned or controlled by them, during his administration,
directly or through nominees, by taking undue advantage of their public
office and/or using their powers, authority, influence, connections or
relationship. [E.O. No. 1, sec. 2.].
Undoubtedly, the alleged unlawful accumulation of wealth was done
during the administration of Pres. Marcos. However, what has to be
inquired into is whether or not private respondent acted as a
"subordinate" of Pres. Marcos within the contemplation of E.O. No. 1, the
law creating the PCGG, when he allegedly unlawfully acquired the
properties.
A close reading of E. O. No. 1 and related executive orders will readily show
what is contemplated within the term "subordinate."cralaw virtua1aw
library
The Whereas Clauses of E. O. No. 1 express the urgent need to recover the
ill-gotten wealth amassed by former President Ferdinand E. Marcos, his
immediate family, relatives, and close associates both here and abroad.
E.O. No. 2 freezes "all assets and properties in the Philippines in which
former President Marcos and/or his wife, Mrs. Imelda Romualdez Marcos,
their close relatives, subordinates, business associates, dummies, agents,
or nominees have any interest or participation."cralaw virtua1aw library
Applying the rule in statutory construction known as ejusdem generis, that
is —
[W]here general words follow an enumeration of persons or things, by
words of a particular and specific meaning, such general words are not to
be construed in their widest extent, but are to be held as applying only to
persons or things of the same kind or class as those specifically mentioned
[Smith, Bell & Co., Ltd. v. Register of Deeds of Davao, 96 Phil. 53, 58 (1954),
citing Black on Interpretation of Laws, 2nd Ed., 203].
the term "subordinate" as used in E.O. Nos. 1 and 2 would refer to one who
enjoys a close association or relation with former Pres. Marcos and/or his
wife, similar to the immediate family member, relative, and close associate
in E.O. No. 1 and the close relative, business associate, dummy, agent, or
nominee in E.O. No. 2.
Thus, as stated by the Court in Bataan Shipyard & Engineering Co., Inc. v.
PCGG, G.R. No. 75885, May 27, 1987, 150 SCRA 181, 205-206.
The situations envisaged and sought to be governed [by Proclamation No.
3 and E.O. Nos. 1, 2 and 14] are self-evident, these being:chanrob1es
virtual 1aw library
1) that" (i)ll gotten properties (were) amassed by the leaders and
supporters of the previous regime" ;
a) more particularly, that" (i)ll-gotten wealth (was) accumulated by
former President Ferdinand E. Marcos, his immediate family, relatives,
subordinates, and close associates, . . . located in the Philippines or abroad,
xx (and) business enterprises and entities (came to be) owned or controlled
by them, during . . . (the Marcos) administration, directly or through
nominees, by taking undue advantage of their public office and/or using
their powers, authority, influence, connections or relationship;"
b) otherwise stated, that "there are assets and properties pertaining
to former President Ferdinand E. Marcos, and/or his wife Mrs. Imelda
Romualdez Marcos, their close relatives, subordinates, business
associates, dummies, agents or nominees which had been or were
acquired by them directly or indirectly, through or as a result of the
improper or illegal use of funds or properties owned by the Government
of the Philippines or any of its branches, instrumentalities, enterprises,
banks or financial institutions, or by taking undue advantage of their office,
authority, influence, connections or relationship, resulting in their unjust
enrichment and causing grave damage and prejudice to the Filipino people
and the Republic of the Philippines" ;
c) that "said assets and properties are in the form of bank accounts,
deposits, trust accounts, shares of stocks, buildings, shopping centers,
condominiums, mansions, residences, estates, and other kinds of real and
personal properties in the Philippines and in various countries of the
world;" and.
2) that certain "business enterprises and properties (were) taken
over by the government of the Marcos Administration or by entities or
persons close to former President Marcos." [Footnotes deleted].
It does not suffice, as in this case, that the respondent is or was a
government official or employee during the administration of former Pres.
Marcos. There must be a prima facie showing that the respondent
unlawfully accumulated wealth by virtue of his close association or relation
with former Pres. Marcos and/or his wife. This is so because otherwise the
respondent’s case will fall under existing general laws and procedures on
the matter. Rep. Act No. 3019, the Anti-Graft and Corrupt Practices Act,
penalizes the corrupt practices of any public officer. Under Rep. Act No.
1379 (An Act Declaring Forfeited in Favor of the State Any Property Found
to Have Been Unlawfully Acquired By Any Public Officer or Employee and
Providing for the Procedure Therefor), whenever any public officer or
employee has acquired during his incumbency an amount of property
which is manifestly out of proportion to his salary as such public officer or
employee and to his other lawful income and the income from legitimately
acquired property, said property shall be presumed prima facie to have
been unlawfully acquired [Sec. 2]. The Solicitor General shall file the
petition and prosecute the case in behalf of the Republic, after preliminary
investigation by the provincial or city prosecutor [Ibid].
Moreover, the record shows that private respondent was being
investigated for unlawfully acquired wealth under Rep. Acts Nos. 3019 and
1379, and not under E.O. Nos. 1, 2, 14 and 14-A.
Since private respondent was being investigated by the PCGG through the
AFP Anti-Graft Board it would have been presumed that this was under
Rep. Acts Nos. 3019 and 1379 in relation to E.O. Nos. 1, 2, 14 and 14-A. But
the record itself belies this presumption:chanrob1es virtual 1aw library
(a) The letter of the chairman of the AFP Anti-Graft Board to private
respondent, dated October 16, 1987, states: "This letter is in connection
with the alleged information received by the AFP Anti-Graft Board
indicating your acquisition of wealth beyond legal means of income in
violation of Rep. Act No. 3019 known as the Anti-Graft and Corrupt
Practices Act." [Rollo, p. 39].
(b) The Resolution dated June 30, 1988 of the Board categorically
states:chanrob1es virtual 1aw library
I. PRELIMINARY STATEMENT:chanrob1es virtual 1aw library
This refers to the case against Col Troadio B. Tecson PC (Ret) for alleged
unexplained wealth pursuant to R.A. 3019, as amended, otherwise known
as Anti-Graft and Corrupt Practices Act and R.A. 1379, as amended,
otherwise known as the "Act for Forfeiture of Unlawfully Acquired
Property." [Rollo, p. 43].
The resolution alleges that private respondent unlawfully accumulated
wealth by taking advantage of his office as Finance Officer of the Philippine
Constabulary. No attempt is made in the Board’s resolution to link him or
his accumulation of wealth to former Pres. Marcos and/or his wife.
(c) The letter of the Board chairman to the chairman of the PCGG,
dated July 28, 1988, is clear:chanrob1es virtual 1aw library
Respectfully transmitted herewith for the prosecution before the
Sandiganbayan is the case folder of COLONEL TROADIO TECSON (Ret) who
after preliminary investigation of the case by the Board, found a prima facie
evidence against subject officer for violating Section 8, R.A. 3019, as
amended by BP 195, otherwise known as the Anti-Graft and Corrupt
Practices Act and R.A. 1379, otherwise known as an Act for the Forfeiture
of Unlawfully Acquired Property." [Rollo, p. 46].
Moreover, from the allegations of petitioner in its memorandum, it would
appear that private respondent accumulated his wealth for his own
account. Petitioner quoted the letter of Ignacio Datahan, a retired PC
sergeant, to General Fidel Ramos, the material portion of which
reads:chanrob1es virtual 1aw library
. . . After an official in the military unit received an Allotment Advice the
same signed a cash advance voucher, let us say in the amount of P5,000.00.
Without much ado, outright, Col. Tecson paid the amount. The official
concerned was also made to sign the receipt portion on the voucher the
amount of which was left blank. Before the voucher is passed for routine
processing by Mrs. Leonor Cagas, clerk of Col. Tecson and its facilitator, the
maneuver began. The amount on the face of the cash advance voucher is
altered or superimposed. The original amount of P5,000.00 was now made
say, P95,000.00. So it was actually the amount of P95,000.00 that appeared
on the records. The difference of P90,000.00 went to the syndicate.
. . . Boy Tanyag, bookkeeper in Col. Tecson’s office took care of the work.
. . . In the liquidation of the altered cash advance amount, names of
persons found in the Metropolitan Manila Telephone Directory with
fictitious addresses appeared as recipients or payees. Leonor and Boy got
their shares on commission basis of the looted amount while the greater
part went to Col. Tecson. [Rollo, pp. 184-185.].
Clearly, this alleged unlawful accumulation of wealth is not that
contemplated in E.O. Nos. 1, 2, 14 and 14-A.
2. It will not do to cite the order of the PCGG Chairman, dated May
13, 1986, creating the Board and authorizing it to investigate the
unexplained wealth and corrupt practices of AFP personnel, both retired
and in active service, to support the contention that PCGG has jurisdiction
over the case of private Respondent. The PCGG cannot do more than what
it was empowered to do. Its powers are limited. Its task is limited to the
recovery of the ill-gotten wealth of the Marcoses, their relatives and
cronies. The PCGG cannot, through an order of its chairman, grant itself
additional powers — powers not contemplated in its enabling law.
3. Petitioner assails the trial court’s cognizance of the petition filed
by private Respondent. Particularly, petitioner argues that the trial court
cannot acquire jurisdiction over the PCGG. This matter has already been
settled in Peña, supra, where the Court ruled that those who wish to
question or challenge the PCGG’s acts or orders must seek recourse in the
Sandiganbayan, which is vested with exclusive and original jurisdiction. The
Sandiganbayan’s decisions and final orders are in turn subject to review on
certiorari exclusively by this Court. [Ibid, at pp. 564-565].
The ruling in Peña was applied in PCGG v. Aquino, G.R. No. 77816, June 30,
1988, 163 SCRA 363, Soriano III v. Yuson, G.R. No. 74910 (and five other
cases), August 10, 1988, 164 SCRA 226 and Olaguer v. RTC, NCJR, Br. 48,
G.R. No. 81385, February 21, 1989, 170 SCRA 478, among others, to enjoin
the regional trial courts from interfering with the actions of the PCGG.
Respondent judge clearly acted without or in excess of his jurisdiction
when he took cognizance of Civil Case No. 57092 and issued the writ of
preliminary injunction against the PCGG.
4. Thus, we are confronted with a situation wherein the PCGG acted
in excess of its jurisdiction and, hence, may be enjoined from doing so, but
the court that issued the injunction against the PCGG has not been vested
by law with jurisdiction over it and, thus, the injunction issued was null and
void.
The nullification of the assailed order of respondent judge issuing the writ
of preliminary injunction is therefore in order. Likewise, respondent judge
must be enjoined from proceeding with Civil Case No. 57092.
But in view of the patent lack of authority of the PCGG to investigate and
cause the prosecution of private respondent for violation of Rep. Acts Nos.
3019 and 1379, the PCGG must also be enjoined from proceeding with the
case, without prejudice to any action that may be taken by the proper
prosecutory agency. The rule of law mandates that an agency of
government be allowed to exercise only the powers granted it.
5. The pronouncements made above should not be taken to mean
that the PCGG’s creation of the AFP Anti-Graft Board is a nullity and that
the PCGG has no authority to investigate and cause the prosecution of
members and former members of the Armed Forces of the Philippines for
violations of Rep. Acts Nos. 3019 and 1379. The PCGG may investigate and
cause the prosecution of active and retired members of the AFP for
violations of Rep. Acts Nos. 3019 and 1379 only in relation to E.O. Nos. 1,
2, 14 and 14-A, i.e., insofar as they involve the recovery of the ill-gotten
wealth of former Pres. Marcos and his family and "cronies." But the PCGG
would not have jurisdiction over an ordinary case falling under Rep. Acts
Nos. 3019 and 1379, as in the case at bar. E.O. Nos. 1, 2, 14 and 14-A did
not envision the PCGG as the investigator and prosecutor of all unlawful
accumulations of wealth. The PCGG was created for a specific and limited
purpose, as we have explained earlier, and necessarily its powers must be
construed with this in mind.
6. n his pleadings, private respondent contends that he may no
longer be prosecuted because of prescription. He relies on section 2 of Rep.
Act No. 1379 which provides that" [t]he right to file such petition [for
forfeiture of unlawfully acquired wealth] shall prescribe within four years
from the date of resignation, dismissal or separation or expiration of the
term of the officer or employee concerned." He retired on May 9, 1984, or
more than six (6) years ago. However, it must be pointed out that section
2 of Rep. Act No. 1379 should be deemed amended or repealed by Article
XI, section 15 of the 1987 Constitution which provides that" [t]he right of
the State to recover properties unlawfully acquired by public officials or
employees, from them or from their nominees or transferees, shall not be
barred by prescription, laches, or estoppel." Considering that sec. 2 of Rep.
Act No. 1379 was deemed amended or repealed before the prescriptive
period provided therein had lapsed insofar as private respondent is
concerned, we cannot say that he had already acquired a vested right that
may not be prejudiced by a subsequent enactment.
Moreover, to bar the Government from recovering ill-gotten wealth would
result in the validation or legitimization of the unlawful acquisition, a
consequence at variance with the clear intent of Rep. Act No. 1379, which
provides:chanrobles virtual lawlibrary
SEC. 11. Laws on prescription. — The laws concerning acquisitive
prescription and limitation of actions cannot be invoked by, nor shall they
benefit the respondent, in respect to any property unlawfully acquired by
him.
Thus, we hold that the appropriate prosecutory agencies, i.e., the city or
provincial prosecutor and the Solicitor General under sec. 2 of Rep. Act No.
1379, may still investigate the case and file the petition for the forfeiture
of unlawfully acquired wealth against private respondent, now a private
citizen. (On the other hand, as regards respondents for violations of Rep.
Acts Nos. 3019 and 1379 who are still in the government service, the
agency granted the power to investigate and prosecute them is the Office
of the Ombudsman [Rep. Act No. 6770]). Under Presidential Decree No.
1606, as amended, and Batas Pambansa Blg. 195 violations of Rep. Acts
Nos. 3019 and 1379 shall be tried by the Sandiganbayan.
7. The Court hastens to add that this decision is without prejudice to
the prosecution of private respondent under the pertinent provisions of
the Revised Penal Code and other related penal laws.
WHEREFORE, the order of respondent judge dated June 26, 1989 in Civil
Case No. 57092 is NULLIFIED and SET ASIDE. Respondent judge is ORDERED
to dismiss Civil Case No. 57092. The temporary restraining order issued by
the Court on August 29, 1989 is MADE PERMANENT. The PCGG is ENJOINED
from proceeding with the investigation and prosecution of private
respondent in I.S. No. 37, without prejudice to his investigation and
prosecution by the appropriate prosecutory agency.
SO ORDERED.
G.R. No. 147749 June 22, 2006
SAN PABLO MANUFACTURING CORPORATION, Petitioner,
vs.
COMMISSIONER OF INTERNAL REVENUE,* Respondent.
CORONA, J.:
In this petition for review under Rule 45 of the Rules of Court, San Pablo
Manufacturing Corporation (SPMC) assails the July 19, 20001 and April 3,
2001 resolutions of the Court of Appeals in CA-G.R. SP No. 59139.
SPMC is a domestic corporation engaged in the business of milling,
manufacturing and exporting of coconut oil and other allied products. It
was assessed and ordered to pay by the Commissioner of Internal Revenue
the total amount of P8,182,182.852 representing deficiency miller’s tax
and manufacturer’s sales tax,3 among other deficiency taxes,4 for taxable
year 1987. The deficiency miller’s tax was imposed on SPMC’s sales of
crude oil to United Coconut Chemicals, Inc. (UNICHEM) while the
deficiency sales tax was applied on its sales of corn and edible oil as
manufactured products.
SPMC opposed the assessments but the Commissioner denied its protest.
SPMC appealed the denial of its protest to the Court of Tax Appeals (CTA)
by way of a petition for review docketed as CTA Case No. 5423.
In its March 10, 2000 decision, the CTA cancelled SPMC’s liability for
deficiency manufacturer’s tax on the sales of corn and edible oils but
upheld the Commissioner’s assessment for the deficiency miller’s tax.
SPMC moved for the partial reconsideration of the CTA affirmation of the
miller’s tax assessment but it was denied.
SPMC elevated the case to the Court of Appeals via a petition for review of
the CTA decision insofar as it upheld the deficiency miller’s tax assessment.
In its July 19, 2000 resolution, the appellate court dismissed the petition
on the principal ground5 that the verification attached to it was signed
merely by SPMC’s chief financial officer ― without the corporate
secretary’s certificate, board resolution or power of attorney authorizing
him to sign the verification and certification against forum shopping. SPMC
sought a reconsideration of the resolution but the same was denied.
Hence, this petition.
Did the Court of Appeals err when it dismissed SPMC’s appeal?
SPMC contends that its appeal should have been given due course since it
substantially complied with the requirements on verification and
certification against forum shopping. It insists on the liberal application of
the rules because, on the merits of the petition, SPMC was not liable for
the 3% miller’s tax. It maintains that the crude oil which it sold to UNICHEM
was actually exported by UNICHEM as an ingredient of fatty acid and
glycerine, hence, not subject to miller’s tax pursuant to Section 168 of the
1987 Tax Code.
For SPMC, Section 168 of the 1987 Tax Code contemplates two exemptions
from the miller’s tax: (a) the milled products in their original state were
actually exported by the miller himself or by another person, and (b) the
milled products sold by the miller were actually exported as an ingredient
or part of any manufactured article by the buyer or manufacturer of the
milled products. The exportation may be effected by the miller himself or
by the buyer or manufacturer of the milled products. Since UNICHEM, the
buyer of SPMC’s milled products, subsequently exported said products,
SPMC should be exempted from the miller’s tax.
The petition must fail.
Under Rule 43, Section 5 of the Rules of Court, appeals from the CTA and
quasi-judicial agencies to the Court of Appeals should be verified. A
pleading required to be verified which lacks proper verification shall be
treated as an unsigned pleading.6
Moreover, a petition for review under Rule 43 requires a sworn
certification against forum shopping.7 Failure of the petitioner to comply
with any of the requirements of a petition for review is sufficient ground
for the dismissal of the petition.8
A corporation may exercise the powers expressly conferred upon it by the
Corporation Code and those that are implied by or are incidental to its
existence through its board of directors and/or duly authorized officers and
agents.9 Hence, physical acts, like the signing of documents, can be
performed only by natural persons duly authorized for the purpose by
corporate by-laws or by specific act of the board of directors.10 In the
absence of authority from the board of directors, no person, not even the
officers of the corporation, can bind the corporation.11
SPMC’s petition in the Court of Appeals did not indicate that the person
who signed the verification/certification on non-forum shopping was
authorized to do so. SPMC merely relied on the alleged inherent power of
its chief financial officer to represent SPMC in all matters regarding the
finances of the corporation including, among others, the filing of suits to
defend or protect it from assessments and to recover erroneously paid
taxes. SPMC even admitted that no power of attorney, secretary’s
certificate or board resolution to prove the affiant’s authority was attached
to the petition. Thus, the petition was not properly verified. Since the
petition lacked proper verification, it was to be treated as an unsigned
pleading subject to dismissal.12
In PET Plans, Inc. v. Court of Appeals,13 the Court upheld the dismissal by
the Court of Appeals of the petition on the ground that the verification and
certification against forum shopping was signed by PET Plans, Inc.’s first
vice-president for legal affairs/corporate secretary without any
certification that he was authorized to sign in behalf of the corporation.
In BPI Leasing Corporation v. Court of Appeals,14 the Court ruled that the
petition should be dismissed outright on the ground that the
verification/certification against forum shopping was signed by BPI Leasing
Corporation’s counsel with no specific authority to do so. Since the counsel
was purportedly acting for the corporation, he needed a resolution issued
by the board of directors that specifically authorized him to institute the
petition and execute the certification. Only then would his actions be
legally binding on the corporation.15
In this case, therefore, the appellate court did not commit an error when
it dismissed the petition on the ground that it was signed by a person who
had not been issued any authority by the board of directors to represent
the corporation.
Neither can the Court subscribe to SPMC’s claim of substantial compliance
or to its plea for a liberal application of the rules. Save for the most
persuasive of reasons, strict compliance with procedural rules is enjoined
to facilitate the orderly administration of justice.16 Substantial compliance
will not suffice in a matter involving strict observance such as the
requirement on non-forum shopping,17 as well as verification. Utter
disregard of the rules cannot justly be rationalized by harping on the policy
of liberal construction.18
But even if the fatal procedural infirmity were to be disregarded, the
petition must still fail for lack of merit.
As the CTA correctly ruled, SPMC’s sale of crude coconut oil to UNICHEM
was subject to the 3% miller’s tax. Section 168 of the 1987 Tax Code
provided:
Sec. 168. Percentage tax upon proprietors or operators of rope factories,
sugar central mills, coconut oil mills, palm oil mills, cassava mills and
desiccated coconut factories. Proprietors or operators of rope factories,
sugar central and mills, coconut oil mills, palm oil mills, cassava mills and
desiccated coconut factories, shall pay a tax equivalent to three percent
(3%) of the gross value in money of all the rope, sugar, coconut oil, palm
oil, cassava flour or starch, dessicated coconut, manufactured, processed
or milled by them, including the by-product of the raw materials from
which said articles are produced, processed or manufactured, such tax to
be based on the actual selling price or market value of these articles at the
time they leave the factory or mill warehouse: Provided, however, That this
tax shall not apply to rope, coconut oil, palm oil and the by-product of
copra from which it is produced or manufactured and dessicated coconut,
if such rope, coconut oil, palm oil, copra by-products and dessicated
coconuts, shall be removed for exportation by the proprietor or operator
of the factory or the miller himself, and are actually exported without
returning to the Philippines, whether in their original state or as an
ingredient or part of any manufactured article or products: Provided
further, That where the planter or the owner of the raw materials is the
exporter of the aforementioned milled or manufactured products, he shall
be entitled to a tax credit of the miller's taxes withheld by the proprietor
or operator of the factory or mill, corresponding to the quantity exported,
which may be used against any internal revenue tax directly due from him:
and Provided, finally, That credit for any sales, miller's or excise taxes paid
on raw materials or supplies used in the milling process shall not be
allowed against the miller's tax due, except in the case of a proprietor or
operator of a refined sugar factory as provided hereunder. (emphasis
supplied)
The language of the exempting clause of Section 168 of the 1987 Tax Code
was clear. The tax exemption applied only to the exportation of rope,
coconut oil, palm oil, copra by-products and dessicated coconuts, whether
in their original state or as an ingredient or part of any manufactured article
or products, by the proprietor or operator of the factory or by the miller
himself.
The language of the exemption proviso did not warrant the interpretation
advanced by SPMC. Nowhere did it provide that the exportation made by
the purchaser of the materials enumerated in the exempting clause or the
manufacturer of products utilizing the said materials was covered by the
exemption. Since SPMC’s situation was not within the ambit of the
exemption, it was subject to the 3% miller’s tax imposed under Section 168
of the 1987 Tax Code.
SPMC’s proposed interpretation unduly enlarged the scope of the
exemption clause. The rule is that the exemption must not be so enlarged
by construction since the reasonable presumption is that the State has
granted in express terms all it intended to grant and that, unless the
privilege is limited to the very terms of the statute, the favor would be
intended beyond what was meant.19
Where the law enumerates the subject or condition upon which it applies,
it is to be construed as excluding from its effects all those not expressly
mentioned. Expressio unius est exclusio alterius. Anything that is not
included in the enumeration is excluded therefrom and a meaning that
does not appear nor is intended or reflected in the very language of the
statute cannot be placed therein.20 The rule proceeds from the premise
that the legislature would not have made specific enumerations in a
statute if it had the intention not to restrict its meaning and confine its
terms to those expressly mentioned.21
The rule of expressio unius est exclusio alterius is a canon of restrictive
interpretation.22 Its application in this case is consistent with the
construction of tax exemptions in strictissimi juris against the taxpayer. To
allow SPMC’s claim for tax exemption will violate these established
principles and unduly derogate sovereign authority.
WHEREFORE, the petition is hereby DENIED.
Costs against petitioner.
SO ORDERED.
G.R. No. 106719 September 21, 1993
DRA. BRIGIDA S. BUENASEDA, Lt. Col. ISABELO BANEZ, JR., ENGR.
CONRADO REY MATIAS, Ms. CORA S. SOLIS and Ms. ENYA N. LOPEZ,
petitioners,
vs.
SECRETARY JUAN FLAVIER, Ombudsman CONRADO M. VASQUEZ, and
NCMH NURSES ASSOCIATION, represented by RAOULITO GAYUTIN,
respondents.
QUIASON, J.:
This is a Petition for Certiorari, Prohibition and Mandamus, with Prayer for
Preliminary Injunction or Temporary Restraining Order, under Rule 65 of
the Revised Rules of Court.
Principally, the petition seeks to nullify the Order of the Ombudsman dated
January 7, 1992, directing the preventive suspension of petitioners,
Dr. Brigida S. Buenaseda, Chief of Hospital III; Isabelo C. Banez, Jr.,
Administrative Officer III; Conrado Rey Matias, Technical Assistant to the
Chief of Hospital; Cora C. Solis, Accountant III; and Enya N. Lopez, Supply
Officer III, all of the National Center for Mental Health. The petition also
asks for an order directing the Ombudsman to disqualify Director Raul
Arnaw and Investigator Amy de Villa-Rosero, of the Office of the
Ombudsman, from participation in the preliminary investigation of the
charges against petitioner (Rollo, pp. 2-17; Annexes to Petition, Rollo, pp.
19-21).
The questioned order was issued in connection with the administrative
complaint filed with the Ombudsman (OBM-ADM-0-91-0151) by the
private respondents against the petitioners for violation of the Anti-Graft
and Corrupt Practices Act.
According to the petition, the said order was issued upon the
recommendation of Director Raul Arnaw and Investigator Amy de Villa-
Rosero, without affording petitioners the opportunity to controvert the
charges filed against them. Petitioners had sought to disqualify Director
Arnaw and Investigator Villa-Rosero for manifest partiality and bias (Rollo,
pp. 4-15).
On September 10, 1992, this Court required respondents' Comment on the
petition.
On September 14 and September 22, 1992, petitioners filed a
"Supplemental Petition (Rollo, pp. 124-130); Annexes to Supplemental
Petition; Rollo pp. 140-163) and an "Urgent Supplemental Manifestation"
(Rollo,
pp. 164-172; Annexes to Urgent Supplemental Manifestation; Rollo, pp.
173-176), respectively, averring developments that transpired after the
filing of the petition and stressing the urgency for the issuance of the writ
of preliminary injunction or temporary restraining order.
On September 22, 1992, this Court ". . . Resolved to REQUIRE the
respondents to MAINTAIN in the meantime, the STATUS QUO pending
filing of comments by said respondents on the original supplemental
manifestation" (Rollo, p. 177).
On September 29, 1992, petitioners filed a motion to direct respondent
Secretary of Health to comply with the Resolution dated September 22,
1992 (Rollo, pp. 182-192, Annexes, pp. 192-203). In a Resolution dated
October 1, 1992, this Court required respondent Secretary of Health to
comment on the said motion.
On September 29, 1992, in a pleading entitled "Omnibus Submission,"
respondent NCMH Nurses Association submitted its Comment to the
Petition, Supplemental Petition and Urgent Supplemental Manifestation.
Included in said pleadings were the motions to hold the lawyers of
petitioners in contempt and to disbar them (Rollo, pp. 210-267). Attached
to the "Omnibus Submission" as annexes were the orders and pleadings
filed in Administrative Case No. OBM-ADM-0-91-1051 against petitioners
(Rollo, pp. 268-480).
The Motion for Disbarment charges the lawyers of petitioners with:
(1) unlawfully advising or otherwise causing or inducing their clients —
petitioners Buenaseda, et al., to openly defy, ignore, disregard, disobey or
otherwise violate, maliciously evade their preventive suspension by Order
of July 7, 1992 of the Ombudsman . . ."; (2) "unlawfully interfering with and
obstructing the implementation of the said order (Omnibus Submission,
pp. 50-52; Rollo, pp. 259-260); and (3) violation of the Canons of the Code
of Professional Responsibility and of unprofessional and unethical conduct
"by foisting blatant lies, malicious falsehood and outrageous deception"
and by committing subornation of perjury, falsification and fabrication in
their pleadings (Omnibus Submission, pp. 52-54; Rollo, pp. 261-263).
On November 11, 1992, petitioners filed a "Manifestation and Supplement
to 'Motion to Direct Respondent Secretary of Health to Comply with 22
September 1992 Resolution'" (Manifestation attached to Rollo without
pagination between pp. 613 and 614 thereof).
On November 13, 1992, the Solicitor General submitted its Comment
dated November 10, 1992, alleging that: (a) "despite the issuance of the
September 22, 1992 Resolution directing respondents to maintain the
status quo, respondent Secretary refuses to hold in abeyance the
implementation of petitioners' preventive suspension; (b) the clear intent
and spirit of the Resolution dated September 22, 1992 is to hold in
abeyance the implementation of petitioners' preventive suspension, the
status quo obtaining the time of the filing of the instant petition; (c)
respondent Secretary's acts in refusing to hold in abeyance
implementation of petitioners' preventive suspension and in tolerating and
approving the acts of Dr. Abueva, the OIC appointed to replace petitioner
Buenaseda, are in violation of the Resolution dated September 22, 1992;
and
(d) therefore, respondent Secretary should be directed to comply with the
Resolution dated September 22, 1992 immediately, by restoring the status
quo ante contemplated by the aforesaid resolution" (Comment attached
to Rollo without paginations between pp. 613-614 thereof).

In the Resolution dated November 25, 1992, this Court required
respondent Secretary to comply with the aforestated status quo order,
stating inter alia, that:
It appearing that the status quo ante litem motam, or the last peaceable
uncontested status which preceded the present controversy was the
situation obtaining at the time of the filing of the petition at bar on
September 7, 1992 wherein petitioners were then actually occupying their
respective positions, the Court hereby ORDERS that petitioners be allowed
to perform the duties of their respective positions and to receive such
salaries and benefits as they may be lawfully entitled to, and that
respondents and/or any and all persons acting under their authority desist
and refrain from performing any act in violation of the aforementioned
Resolution of September 22, 1992 until further orders from the Court
(Attached to Rollo after p. 615 thereof).
On December 9, 1992, the Solicitor General, commenting on the Petition,
Supplemental Petition and Supplemental Manifestation, stated that (a)
"The authority of the Ombudsman is only to recommend suspension and
he has no direct power to suspend;" and (b) "Assuming the Ombudsman
has the power to directly suspend a government official or employee, there
are conditions required by law for the exercise of such powers; [and] said
conditions have not been met in the instant case" (Attached to Rollo
without pagination).
In the pleading filed on January 25, 1993, petitioners adopted the position
of the Solicitor General that the Ombudsman can only suspend
government officials or employees connected with his office. Petitioners
also refuted private respondents' motion to disbar petitioners' counsel and
to cite them for contempt (Attached to Rollo without pagination).
The crucial issue to resolve is whether the Ombudsman has the power to
suspend government officials and employees working in offices other than
the Office of the Ombudsman, pending the investigation of the
administrative complaints filed against said officials and employees.
In upholding the power of the Ombudsman to preventively suspend
petitioners, respondents (Urgent Motion to Lift Status Quo, etc, dated
January 11, 1993, pp. 10-11), invoke Section 24 of R.A. No. 6770, which
provides:
Sec. 24. Preventive Suspension. — The Ombudsman or his Deputy may
preventively suspend any officer or employee under his authority pending
an investigation, if in his judgment the evidence of guilt is strong, and (a)
the charge against such officer or employee involves dishonesty,
oppression or grave misconduct or neglect in the performance of duty; (b)
the charge would warrant removal from the service; or (c) the respondent's
continued stay in office may prejudice the case filed against him.
The preventive suspension shall continue until the case is terminated by
the Office of Ombudsman but not more than six months, without pay,
except when the delay in the disposition of the case by the Office of the
Ombudsman is due to the fault, negligence or petition of the respondent,
in which case the period of such delay shall not be counted in computing
the period of suspension herein provided.
Respondents argue that the power of preventive suspension given the
Ombudsman under Section 24 of R.A. No. 6770 was contemplated by
Section 13 (8) of Article XI of the 1987 Constitution, which provides that
the Ombudsman shall exercise such other power or perform such functions
or duties as may be provided by law."
On the other hand, the Solicitor General and the petitioners claim that
under the 1987 Constitution, the Ombudsman can only recommend to the
heads of the departments and other agencies the preventive suspension
of officials and employees facing administrative investigation conducted by
his office. Hence, he cannot order the preventive suspension himself.
They invoke Section 13(3) of the 1987 Constitution which provides that the
Office of the Ombudsman shall have inter alia the power, function, and
duty to:
Direct the officer concerned to take appropriate action against a public
official or employee at fault, and recommend his removal, suspension,
demotion, fine, censure or prosecution, and ensure compliance therewith.
The Solicitor General argues that under said provision of the Constitutions,
the Ombudsman has three distinct powers, namely: (1) direct the officer
concerned to take appropriate action against public officials or employees
at fault; (2) recommend their removal, suspension, demotion fine, censure,
or prosecution; and (3) compel compliance with the recommendation
(Comment dated December 3, 1992, pp. 9-10).
The line of argument of the Solicitor General is a siren call that can easily
mislead, unless one bears in mind that what the Ombudsman imposed on
petitioners was not a punitive but only a preventive suspension.
When the constitution vested on the Ombudsman the power "to
recommend the suspension" of a public official or employees (Sec. 13 [3]),
it referred to "suspension," as a punitive measure. All the words associated
with the word "suspension" in said provision referred to penalties in
administrative cases, e.g. removal, demotion, fine, censure. Under the rule
of Noscitor a sociis, the word "suspension" should be given the same sense
as the other words with which it is associated. Where a particular word is
equally susceptible of various meanings, its correct construction may be
made specific by considering the company of terms in which it is found or
with which it is associated (Co Kim Chan v. Valdez Tan Keh, 75 Phil. 371
[1945]; Caltex (Phils.) Inc. v. Palomar, 18 SCRA 247 [1966]).
Section 24 of R.A. No. 6770, which grants the Ombudsman the power to
preventively suspend public officials and employees facing administrative
charges before him, is a procedural, not a penal statute. The preventive
suspension is imposed after compliance with the requisites therein set
forth, as an aid in the investigation of the administrative charges.
Under the Constitution, the Ombudsman is expressly authorized to
recommend to the appropriate official the discipline or prosecution of
erring public officials or employees. In order to make an intelligent
determination whether to recommend such actions, the Ombudsman has
to conduct an investigation. In turn, in order for him to conduct such
investigation in an expeditious and efficient manner, he may need to
suspend the respondent.
The need for the preventive suspension may arise from several causes,
among them, the danger of tampering or destruction of evidence in the
possession of respondent; the intimidation of witnesses, etc. The
Ombudsman should be given the discretion to decide when the persons
facing administrative charges should be preventively suspended.
Penal statutes are strictly construed while procedural statutes are liberally
construed (Crawford, Statutory Construction, Interpretation of Laws, pp.
460-461; Lacson v. Romero, 92 Phil. 456 [1953]). The test in determining if
a statute is penal is whether a penalty is imposed for the punishment of a
wrong to the public or for the redress of an injury to an individual (59
Corpuz Juris, Sec. 658; Crawford, Statutory Construction, pp. 496-497). A
Code prescribing the procedure in criminal cases is not a penal statute and
is to be interpreted liberally (People v. Adler, 140 N.Y. 331; 35 N.E. 644).
The purpose of R.A. No. 6770 is to give the Ombudsman such powers as he
may need to perform efficiently the task committed to him by the
Constitution. Such being the case, said statute, particularly its provisions
dealing with procedure, should be given such interpretation that will
effectuate the purposes and objectives of the Constitution. Any
interpretation that will hamper the work of the Ombudsman should be
avoided.
A statute granting powers to an agency created by the Constitution should
be liberally construed for the advancement of the purposes and objectives
for which it was created (Cf. Department of Public Utilities v. Arkansas
Louisiana Gas. Co., 200 Ark. 983, 142 S.W. (2d) 213 [1940]; Wallace v.
Feehan, 206 Ind. 522, 190 N.E., 438 [1934]).
In Nera v. Garcia, 106 Phil. 1031 [1960], this Court, holding that a
preventive suspension is not a penalty, said:
Suspension is a preliminary step in an administrative investigation. If after
such investigation, the charges are established and the person investigated
is found guilty of acts warranting his removal, then he is removed or
dismissed. This is the penalty.
To support his theory that the Ombudsman can only preventively suspend
respondents in administrative cases who are employed in his office, the
Solicitor General leans heavily on the phrase "suspend any officer or
employee under his authority" in Section 24 of R.A. No. 6770.
The origin of the phrase can be traced to Section 694 of the Revised
Administrative Code, which dealt with preventive suspension and which
authorized the chief of a bureau or office to "suspend any subordinate or
employee in his bureau or under his authority pending an investigation . .
. ."
Section 34 of the Civil Service Act of 1959 (R.A. No. 2266), which
superseded Section 694 of the Revised Administrative Code also
authorized the chief of a bureau or office to "suspend any subordinate
officer or employees, in his bureau or under his authority."
However, when the power to discipline government officials and
employees was extended to the Civil Service Commission by the Civil
Service Law of 1975 (P.D. No. 805), concurrently with the President, the
Department Secretaries and the heads of bureaus and offices, the phrase
"subordinate officer and employee in his bureau" was deleted,
appropriately leaving the phrase "under his authority." Therefore, Section
41 of said law only mentions that the proper disciplining authority may
preventively suspend "any subordinate officer or employee under his
authority pending an investigation . . ." (Sec. 41).
The Administrative Code of 1987 also empowered the proper disciplining
authority to "preventively suspend any subordinate officer or employee
under his authority pending an investigation" (Sec. 51).
The Ombudsman Law advisedly deleted the words "subordinate" and "in
his bureau," leaving the phrase to read "suspend any officer or employee
under his authority pending an investigation . . . ." The conclusion that can
be deduced from the deletion of the word "subordinate" before and the
words "in his bureau" after "officer or employee" is that the Congress
intended to empower the Ombudsman to preventively suspend all officials
and employees under investigation by his office, irrespective of whether
they are employed "in his office" or in other offices of the government. The
moment a criminal or administrative complaint is filed with the
Ombudsman, the respondent therein is deemed to be "in his authority"
and he can proceed to determine whether said respondent should be
placed under preventive suspension.
In their petition, petitioners also claim that the Ombudsman committed
grave abuse of discretion amounting to lack of jurisdiction when he issued
the suspension order without affording petitioners the opportunity to
confront the charges against them during the preliminary conference and
even after petitioners had asked for the disqualification of Director Arnaw
and Atty. Villa-Rosero (Rollo, pp. 6-13). Joining petitioners, the Solicitor
General contends that assuming arguendo that the Ombudsman has the
power to preventively suspend erring public officials and employees who
are working in other departments and offices, the questioned order
remains null and void for his failure to comply with the requisites in Section
24 of the Ombudsman Law (Comment dated December 3, 1992, pp. 11-
19).
Being a mere order for preventive suspension, the questioned order of the
Ombudsman was validly issued even without a full-blown hearing and the
formal presentation of evidence by the parties. In Nera, supra, petitioner
therein also claimed that the Secretary of Health could not preventively
suspend him before he could file his answer to the administrative
complaint. The contention of petitioners herein can be dismissed
perfunctorily by holding that the suspension meted out was merely
preventive and therefore, as held in Nera, there was "nothing improper in
suspending an officer pending his investigation and before tho charges
against him are heard . . . (Nera v. Garcia., supra).
There is no question that under Section 24 of R.A. No. 6770, the
Ombudsman cannot order the preventive suspension of a respondent
unless the evidence of guilt is strong and (1) the charts against such officer
or employee involves dishonesty, oppression or grave misconduct or
neglect in the performance of duty; (2) the charge would warrant removal
from the service; or (3) the respondent's continued stay in office may
prejudice the case filed against him.
The same conditions for the exercise of the power to preventively suspend
officials or employees under investigation were found in Section 34 of R.A.
No. 2260.
The import of the Nera decision is that the disciplining authority is given
the discretion to decide when the evidence of guilt is strong. This fact is
bolstered by Section 24 of R.A. No. 6770, which expressly left such
determination of guilt to the "judgment" of the Ombudsman on the basis
of the administrative complaint. In the case at bench, the Ombudsman
issued the order of preventive suspension only after: (a) petitioners had
filed their answer to the administrative complaint and the "Motion for the
Preventive Suspension" of petitioners, which incorporated the charges in
the criminal complaint against them (Annex 3, Omnibus Submission, Rollo,
pp. 288-289; Annex 4, Rollo,
pp. 290-296); (b) private respondent had filed a reply to the answer of
petitioners, specifying 23 cases of harassment by petitioners of the
members of the private respondent (Annex 6, Omnibus Submission, Rollo,
pp. 309-333); and (c) a preliminary conference wherein the complainant
and the respondents in the administrative case agreed to submit their list
of witnesses and documentary evidence.
Petitioners herein submitted on November 7, 1991 their list of exhibits
(Annex 8 of Omnibus Submission, Rollo, pp. 336-337) while private
respondents submitted their list of exhibits (Annex 9 of Omnibus
Submission, Rollo, pp. 338-348).
Under these circumstances, it can not be said that Director Raul Arnaw and
Investigator Amy de Villa-Rosero acted with manifest partiality and bias in
recommending the suspension of petitioners. Neither can it be said that
the Ombudsman had acted with grave abuse of discretion in acting
favorably on their recommendation.
The Motion for Contempt, which charges the lawyers of petitioners with
unlawfully causing or otherwise inducing their clients to openly defy and
disobey the preventive suspension as ordered by the Ombudsman and the
Secretary of Health can not prosper (Rollo, pp. 259-261). The Motion
should be filed, as in fact such a motion was filed, with the Ombudsman.
At any rate, we find that the acts alleged to constitute indirect contempt
were legitimate measures taken by said lawyers to question the validity
and propriety of the preventive suspension of their clients.
On the other hand, we take cognizance of the intemperate language used
by counsel for private respondents hurled against petitioners and their
counsel (Consolidated: (1) Comment on Private Respondent" "Urgent
Motions, etc.;
(2) Adoption of OSG's Comment; and (3) Reply to Private Respondent's
Comment and Supplemental Comment, pp. 4-5).
A lawyer should not be carried away in espousing his client's cause. The
language of a lawyer, both oral or written, must be respectful and
restrained in keeping with the dignity of the legal profession and with his
behavioral attitude toward his brethren in the profession (Lubiano v.
Gordolla, 115 SCRA 459 [1982]). The use of abusive language by counsel
against the opposing counsel constitutes at the same time a disrespect to
the dignity of the court of justice. Besides, the use of impassioned language
in pleadings, more often than not, creates more heat than light.
The Motion for Disbarment (Rollo, p. 261) has no place in the instant
special civil action, which is confined to questions of jurisdiction or abuse
of discretion for the purpose of relieving persons from the arbitrary acts of
judges and quasi-judicial officers. There is a set of procedure for the
discipline of members of the bar separate and apart from the present
special civil action.
WHEREFORE, the petition is DISMISSED and the Status quo ordered to be
maintained in the Resolution dated September 22, 1992 is LIFTED and SET
ASIDE.
SO ORDERED.
G.R. No. L-35910 July 21, 1978
PURITA BERSABAL, petitioner,
vs.
HONORABLE JUDGE SERAFIN SALVADOR, as Judge of the Court of First
Instance of Caloocan City, Branch XIV, TAN THAT and ONG PIN TEE,
respondents.
MAKASIAR, J.:
On March 23, 1972, petitioner Purita Bersabal seeks to annul the orders of
respondent Judge of August 4, 1971, October 30, 1971 and March 15, 1972
and to compel said respondent Judge to decide petitioner's perfected
appeal on the basis of the evidence and records of the case submitted by
the City Court of Caloocan City plus the memorandum already submitted
by the petitioner and respondents.
Since only questions of law were raised therein, the Court of Appeals, on
October 13, 1972, issued a resolution certifying said case to this Court
pursuant to Section 17, paragraph (4) of the Judiciary Act of 1948, as
amended.
As found by the Court of Appeals, the facts of this case are as follows:
It appears that private respondents Tan That and Ong Pin Tee filed an
ejectment suit, docketed as Civil Case No. 6926 in the City Court of
Caloocan City, against the petitioner. A decision was rendered by said
Court on November 25, 1970, which decision was appealed by the
petitioner to the respondent Court and docketed therein as Civil Case No.
C-2036.
During the pendency of the appeal the respondent court issued on March
23, 1971 an order which reads:
Pursuant to the provisions of Rep. Act No. 6031, the Clerk of Court of
Caloocan City, is hereby directed to transmit to this Court within fifteen
(15) days from receipt hereof the transcripts of stenographic notes taken
down during the hearing of this case before the City Court of Caloocan City,
and likewise, counsels for both parties are given thirty (30) days from
receipt of this order within which to file their respective memoranda, and
thereafter, this case shall be deemed submitted for decision by this Court.
which order was apparently received by petitioner on April 17, 1971.
The transcript of stenographic notes not having yet been forwarded to the
respondent court, petitioner filed on May 5, 1971 a 'MOTION EX-PARTE TO
SUBMIT MEMORANDUM WITHIN 30 DAYS FROM RECEIPT OF NOTICE OF
SUBMISSION OF THE TRANSCRIPT OF STENOGRAPHIC NOTES TAKEN
DURING THE HEARING OF THE CASE BEFORE THE CITY COURT OF
CALOOCAN CITY' which was granted by respondent court on May 7, 1971.
However, before the petitioner could receive any such notice from the
respondent court, the respondent Judge issued an order on August 4, 1971
which says:
For failure of the defendant-appellant to prosecute her appeal the same is
hereby ordered DISMISSED with costs against her.
Petitioner filed a motion for reconsideration of the order on September 28,
1971, citing as a ground the granting of his ex-parte motion to submit
memorandum within 30 days from notice of the submission of the
stenographic notes taken before the City Court. Private respondents filed
their opposition to the motion on September 30,1971. In the meantime,
on October 20,1971, petitioner filed her memorandum dated October 18,
1971. On October 30, 1971 the respondent Court denied the motion for
reconsideration. Then on January 25, 1972, petitioner filed a motion for
leave to file second motion for reconsideration which was likewise denied
by the respondent court on March 15, 1972. Hence this petition.
The sole inquiry in the case at bar can be stated thus: Whether, in the light
of the provisions of the second paragraph of Section 45 of Republic Act No.
296, as amended by R.A. No. 6031, the mere failure of an appellant to
submit on nine the memorandum mentioned in the same paragraph would
empower the Court of First Instance to dismiss the appeal on the ground
of failure to Prosecute; or, whether it is mandatory upon said Court to
proceed to decide the appealed case on the basis of the evidence and
records transmitted to it, the failure of the appellant to submit a
memorandum on time notwithstanding.
The second paragraph of Section 45 of R.A. No. 296, otherwise known as
the Philippine Judiciary Act of 1948, as amended by R.A. No. 6031 provides,
in part, as follows:
Courts of First Instance shall decide such appealed cases on the basis of the
evidence and records transmitted from the city or municipal courts:
Provided, That the parties may submit memoranda and/or brief with oral
argument if so requested ... . (Emphasis supplied).
The foregoing provision is clear and leaves no room for doubt. It cannot be
interpreted otherwise than that the submission of memoranda is optional
on the part of the parties. Being optional on the part of the parties, the
latter may so choose to waive submission of the memoranda. And as a
logical concomitant of the choice given to the Parties, the Court cannot
dismiss the appeal of the party waiving the submission of said
memorandum the appellant so chooses not to submit the memorandum,
the Court of First Instance is left with no alternative but to decide the case
on the basis of the evidence and records transmitted from the city or
municipal courts. In other words, the Court is not empowered by law to
dismiss the appeal on the mere failure of an appellant to submit his
memorandum, but rather it is the Court's mandatory duty to decide the
case on the basis of the available evidence and records transmitted to it.
As a general rule, the word "may" when used in a statute is permissive only
and operates to confer discretion; while the word "shall" is imperative,
operating to impose a duty which may be enforced (Dizon vs. Encarnacion,
L-18615, Dec. 24, 1963, 9 SCRA 714, 716-717). The implication is that the
Court is left with no choice but to decide the appealed case either on the
basis of the evidence and records transmitted to it, or on the basis of the
latter plus memoranda and/or brief with oral argument duly submitted
and/or made on request.
Moreover, memoranda, briefs and oral arguments are not essential
requirements. They may be submitted and/or made only if so requested.
Finally, a contrary interpretation would be unjust and dangerous as it may
defeat the litigant's right to appeal granted to him by law. In the case of
Republic vs. Rodriguez
(L-26056, May 29, 1969, 28 SCRA 378) this Court underscored "the need of
proceeding with caution so that a party may not be deprived of its right to
appeal except for weighty reasons." Courts should heed the rule in
Municipality of Tiwi, Albay vs. Cirujales
(L-37520, Dec. 26, 1973, 54 SCRA 390, 395), thus:
The appellate court's summary dismissal of the appeal even before receipt
of the records of the appealed case as ordered by it in a prior mandamus
case must be set aside as having been issued precipitously and without an
opportunity to consider and appreciate unavoidable circumstances of
record not attributable to petitioners that caused the delay in the elevation
of the records of the case on appeal.
In the instant case, no notice was received by petitioner about the
submission of the transcript of the stenographic notes, so that his 30-day
period to submit his memorandum would commence to run. Only after the
expiration of such period can the respondent Judge act on the case by
deciding it on the merits, not by dismissing the appeal of petitioner.
WHEREFORE, THE CHALLENGED ORDERS OF RESPONDENT JUDGE DATED
AUGUST 4, 1971, OCTOBER 30, 1971 AND MARCH 15, 1971 ARE HEREBY
SET ASIDE AS NULL AND VOID AND THE RESPONDENT COURT IS HEREBY
DIRECTED TO DECIDE CIVIL CASE NO. C-2036 ON THE MERITS. NO COSTS.
Muñoz Palma, Fernandez and Guerrero, JJ., concur.
G.R. No. 117188 August 7, 1997
LOYOLA GRAND VILLAS HOMEOWNERS (SOUTH) ASSOCIATION, INC.,
petitioner,
vs.
HON. COURT OF APPEALS, HOME INSURANCE AND GUARANTY
CORPORATION, EMDEN ENCARNACION and HORATIO AYCARDO,
respondents.
ROMERO, J.:
May the failure of a corporation to file its by-laws within one month from
the date of its incorporation, as mandated by Section 46 of the Corporation
Code, result in its automatic dissolution?
This is the issue raised in this petition for review on certiorari of the
Decision1 of the Court of Appeals affirming the decision of the Home
Insurance and Guaranty Corporation (HIGC). This quasi-judicial body
recognized Loyola Grand Villas Homeowners Association (LGVHA) as the
sole homeowners' association in Loyola Grand Villas, a duly registered
subdivision in Quezon City and Marikina City that was owned and
developed by Solid Homes, Inc. It revoked the certificates of registration
issued to Loyola Grand Villas homeowners (North) Association
Incorporated (the North Association for brevity) and Loyola Grand Villas
Homeowners (South) Association Incorporated (the South Association).
LGVHAI was organized on February 8, 1983 as the association of
homeowners and residents of the Loyola Grand Villas. It was registered
with the Home Financing Corporation, the predecessor of herein
respondent HIGC, as the sole homeowners' organization in the said
subdivision under Certificate of Registration No. 04-197. It was organized
by the developer of the subdivision and its first president was Victorio V.
Soliven, himself the owner of the developer. For unknown reasons,
however, LGVHAI did not file its corporate by-laws.
Sometime in 1988, the officers of the LGVHAI tried to register its by-laws.
They failed to do so. 2 To the officers' consternation, they discovered that
there were two other organizations within the subdivision — the North
Association and the South Association. According to private respondents,
a non-resident and Soliven himself, respectively headed these
associations. They also discovered that these associations had five (5)
registered homeowners each who were also the incorporators, directors
and officers thereof. None of the members of the LGVHAI was listed as
member of the North Association while three (3) members of LGVHAI were
listed as members of the South Association.3 The North Association was
registered with the HIGC on February 13, 1989 under Certificate of
Registration No. 04-1160 covering Phases West II, East III, West III and East
IV. It submitted its by-laws on December 20, 1988.
In July, 1989, when Soliven inquired about the status of LGVHAI, Atty.
Joaquin A. Bautista, the head of the legal department of the HIGC,
informed him that LGVHAI had been automatically dissolved for two
reasons. First, it did not submit its by-laws within the period required by
the Corporation Code and, second, there was non-user of corporate
charter because HIGC had not received any report on the association's
activities. Apparently, this information resulted in the registration of the
South Association with the HIGC on July 27, 1989 covering Phases West I,
East I and East II. It filed its by-laws on July 26, 1989.
These developments prompted the officers of the LGVHAI to lodge a
complaint with the HIGC. They questioned the revocation of LGVHAI's
certificate of registration without due notice and hearing and
concomitantly prayed for the cancellation of the certificates of registration
of the North and South Associations by reason of the earlier issuance of a
certificate of registration in favor of LGVHAI.
On January 26, 1993, after due notice and hearing, private respondents
obtained a favorable ruling from HIGC Hearing Officer Danilo C. Javier who
disposed of HIGC Case No. RRM-5-89 as follows:
WHEREFORE, judgment is hereby rendered recognizing the Loyola Grand
Villas Homeowners Association, Inc., under Certificate of Registration No.
04-197 as the duly registered and existing homeowners association for
Loyola Grand Villas homeowners, and declaring the Certificates of
Registration of Loyola Grand Villas Homeowners (North) Association, Inc.
and Loyola Grand Villas Homeowners (South) Association, Inc. as hereby
revoked or cancelled; that the receivership be terminated and the Receiver
is hereby ordered to render an accounting and turn-over to Loyola Grand
Villas Homeowners Association, Inc., all assets and records of the
Association now under his custody and possession.
The South Association appealed to the Appeals Board of the HIGC. In its
Resolution of September 8, 1993, the Board 4 dismissed the appeal for lack
of merit.
Rebuffed, the South Association in turn appealed to the Court of Appeals,
raising two issues. First, whether or not LGVHAI's failure to file its by-laws
within the period prescribed by Section 46 of the Corporation Code
resulted in the automatic dissolution of LGVHAI. Second, whether or not
two homeowners' associations may be authorized by the HIGC in one
"sprawling subdivision." However, in the Decision of August 23, 1994 being
assailed here, the Court of Appeals affirmed the Resolution of the HIGC
Appeals Board.
In resolving the first issue, the Court of Appeals held that under the
Corporation Code, a private corporation commences to have corporate
existence and juridical personality from the date the Securities and
Exchange Commission (SEC) issues a certificate of incorporation under its
official seal. The requirement for the filing of by-laws under Section 46 of
the Corporation Code within one month from official notice of the issuance
of the certificate of incorporation presupposes that it is already
incorporated, although it may file its by-laws with its articles of
incorporation. Elucidating on the effect of a delayed filing of by-laws, the
Court of Appeals said:
We also find nothing in the provisions cited by the petitioner, i.e., Section
46 and 22, Corporation Code, or in any other provision of the Code and
other laws which provide or at least imply that failure to file the by-laws
results in an automatic dissolution of the corporation. While Section 46, in
prescribing that by-laws must be adopted within the period prescribed
therein, may be interpreted as a mandatory provision, particularly because
of the use of the word "must," its meaning cannot be stretched to support
the argument that automatic dissolution results from non-compliance.
We realize that Section 46 or other provisions of the Corporation Code are
silent on the result of the failure to adopt and file the by-laws within the
required period. Thus, Section 46 and other related provisions of the
Corporation Code are to be construed with Section 6 (1) of P.D. 902-A. This
section empowers the SEC to suspend or revoke certificates of registration
on the grounds listed therein. Among the grounds stated is the failure to
file by-laws (see also II Campos: The Corporation Code, 1990 ed., pp. 124-
125). Such suspension or revocation, the same section provides, should be
made upon proper notice and hearing. Although P.D. 902-A refers to the
SEC, the same principles and procedures apply to the public respondent
HIGC as it exercises its power to revoke or suspend the certificates of
registration or homeowners association. (Section 2 [a], E.O. 535, series
1979, transferred the powers and authorities of the SEC over homeowners
associations to the HIGC.)
We also do not agree with the petitioner's interpretation that Section 46,
Corporation Code prevails over Section 6, P.D. 902-A and that the latter is
invalid because it contravenes the former. There is no basis for such
interpretation considering that these two provisions are not inconsistent
with each other. They are, in fact, complementary to each other so that
one cannot be considered as invalidating the other.
The Court of Appeals added that, as there was no showing that the
registration of LGVHAI had been validly revoked, it continued to be the duly
registered homeowners' association in the Loyola Grand Villas. More
importantly, the South Association did not dispute the fact that LGVHAI
had been organized and that, thereafter, it transacted business within the
period prescribed by law.
On the second issue, the Court of Appeals reiterated its previous ruling 5
that the HIGC has the authority to order the holding of a referendum to
determine which of two contending associations should represent the
entire community, village or subdivision.

Undaunted, the South Association filed the instant petition for review on
certiorari. It elevates as sole issue for resolution the first issue it had raised
before the Court of Appeals, i.e., whether or not the LGVHAI's failure to file
its by-laws within the period prescribed by Section 46 of the Corporation
Code had the effect of automatically dissolving the said corporation.
Petitioner contends that, since Section 46 uses the word "must" with
respect to the filing of by-laws, noncompliance therewith would result in
"self-extinction" either due to non-occurrence of a suspensive condition or
the occurrence of a resolutory condition "under the hypothesis that (by)
the issuance of the certificate of registration alone the corporate
personality is deemed already formed." It asserts that the Corporation
Code provides for a "gradation of violations of requirements." Hence,
Section 22 mandates that the corporation must be formally organized and
should commence transaction within two years from date of
incorporation. Otherwise, the corporation would be deemed dissolved. On
the other hand, if the corporation commences operations but becomes
continuously inoperative for five years, then it may be suspended or its
corporate franchise revoked.
Petitioner concedes that Section 46 and the other provisions of the
Corporation Code do not provide for sanctions for non-filing of the by-laws.
However, it insists that no sanction need be provided "because the
mandatory nature of the provision is so clear that there can be no doubt
about its being an essential attribute of corporate birth." To petitioner, its
submission is buttressed by the facts that the period for compliance is
"spelled out distinctly;" that the certification of the SEC/HIGC must show
that the by-laws are not inconsistent with the Code, and that a copy of the
by-laws "has to be attached to the articles of incorporation." Moreover, no
sanction is provided for because "in the first place, no corporate identity
has been completed." Petitioner asserts that "non-provision for remedy or
sanction is itself the tacit proclamation that non-compliance is fatal and no
corporate existence had yet evolved," and therefore, there was "no need
to proclaim its demise." 6 In a bid to convince the Court of its arguments,
petitioner stresses that:
. . . the word MUST is used in Sec. 46 in its universal literal meaning and
corollary human implication — its compulsion is integrated in its very
essence — MUST is always enforceable by the inevitable consequence —
that is, "OR ELSE". The use of the word MUST in Sec. 46 is no exception —
it means file the by-laws within one month after notice of issuance of
certificate of registration OR ELSE. The OR ELSE, though not specified, is
inextricably a part of MUST . Do this or if you do not you are "Kaput". The
importance of the by-laws to corporate existence compels such meaning
for as decreed the by-laws is "the government" of the corporation. Indeed,
how can the corporation do any lawful act as such without by-laws. Surely,
no law is indeed to create chaos. 7
Petitioner asserts that P.D. No. 902-A cannot exceed the scope and power
of the Corporation Code which itself does not provide sanctions for non-
filing of by-laws. For the petitioner, it is "not proper to assess the true
meaning of Sec. 46 . . . on an unauthorized provision on such matter
contained in the said decree."
In their comment on the petition, private respondents counter that the
requirement of adoption of by-laws is not mandatory. They point to P.D.
No. 902-A as having resolved the issue of whether said requirement is
mandatory or merely directory. Citing Chung Ka Bio v. Intermediate
Appellate Court, 8 private respondents contend that Section 6(I) of that
decree provides that non-filing of by-laws is only a ground for suspension
or revocation of the certificate of registration of corporations and,
therefore, it may not result in automatic dissolution of the corporation.
Moreover, the adoption and filing of by-laws is a condition subsequent
which does not affect the corporate personality of a corporation like the
LGVHAI. This is so because Section 9 of the Corporation Code provides that
the corporate existence and juridical personality of a corporation begins
from the date the SEC issues a certificate of incorporation under its official
seal. Consequently, even if the by-laws have not yet been filed, a
corporation may be considered a de facto corporation. To emphasize the
fact the LGVHAI was registered as the sole homeowners' association in the
Loyola Grand Villas, private respondents point out that membership in the
LGVHAI was an "unconditional restriction in the deeds of sale signed by lot
buyers."
In its reply to private respondents' comment on the petition, petitioner
reiterates its argument that the word " must" in Section 46 of the
Corporation Code is mandatory. It adds that, before the ruling in Chung Ka
Bio v. Intermediate Appellate Court could be applied to this case, this Court
must first resolve the issue of whether or not the provisions of P.D. No.
902-A prescribing the rules and regulations to implement the Corporation
Code can "rise above and change" the substantive provisions of the Code.
The pertinent provision of the Corporation Code that is the focal point of
controversy in this case states:
Sec. 46. Adoption of by-laws. — Every corporation formed under this Code,
must within one (1) month after receipt of official notice of the issuance of
its certificate of incorporation by the Securities and Exchange Commission,
adopt a code of by-laws for its government not inconsistent with this Code.
For the adoption of by-laws by the corporation, the affirmative vote of the
stockholders representing at least a majority of the outstanding capital
stock, or of at least a majority of the members, in the case of non-stock
corporations, shall be necessary. The by-laws shall be signed by the
stockholders or members voting for them and shall be kept in the principal
office of the corporation, subject to the stockholders or members voting
for them and shall be kept in the principal office of the corporation, subject
to inspection of the stockholders or members during office hours; and a
copy thereof, shall be filed with the Securities and Exchange Commission
which shall be attached to the original articles of incorporation.
Notwithstanding the provisions of the preceding paragraph, by-laws may
be adopted and filed prior to incorporation; in such case, such by-laws shall
be approved and signed by all the incorporators and submitted to the
Securities and Exchange Commission, together with the articles of
incorporation.
In all cases, by-laws shall be effective only upon the issuance by the
Securities and Exchange Commission of a certification that the by-laws are
not inconsistent with this Code.
The Securities and Exchange Commission shall not accept for filing the by-
laws or any amendment thereto of any bank, banking institution, building
and loan association, trust company, insurance company, public utility,
educational institution or other special corporations governed by special
laws, unless accompanied by a certificate of the appropriate government
agency to the effect that such by-laws or amendments are in accordance
with law.
As correctly postulated by the petitioner, interpretation of this provision of
law begins with the determination of the meaning and import of the word
"must" in this section Ordinarily, the word "must" connotes an imperative
act or operates to impose a duty which may be enforced. 9 It is
synonymous with "ought" which connotes compulsion or mandatoriness.
10 However, the word "must" in a statute, like "shall," is not always
imperative. It may be consistent with an exercise of discretion. In this
jurisdiction, the tendency has been to interpret "shall" as the context or a
reasonable construction of the statute in which it is used demands or
requires. 11 This is equally true as regards the word "must." Thus, if the
languages of a statute considered as a whole and with due regard to its
nature and object reveals that the legislature intended to use the words
"shall" and "must" to be directory, they should be given that meaning.12
In this respect, the following portions of the deliberations of the Batasang
Pambansa No. 68 are illuminating:
MR. FUENTEBELLA. Thank you, Mr. Speaker.
On page 34, referring to the adoption of by-laws, are we made to
understand here, Mr. Speaker, that by-laws must immediately be filed
within one month after the issuance? In other words, would this be
mandatory or directory in character?
MR. MENDOZA. This is mandatory.
MR. FUENTEBELLA. It being mandatory, Mr. Speaker, what would be
the effect of the failure of the corporation to file these by-laws within one
month?
MR. MENDOZA. There is a provision in the latter part of the Code which
identifies and describes the consequences of violations of any provision of
this Code. One such consequences is the dissolution of the corporation for
its inability, or perhaps, incurring certain penalties.
MR. FUENTEBELLA. But it will not automatically amount to a
dissolution of the corporation by merely failing to file the by-laws within
one month. Supposing the corporation was late, say, five days, what would
be the mandatory penalty?
MR. MENDOZA. I do not think it will necessarily result in the automatic or
ipso facto dissolution of the corporation. Perhaps, as in the case, as you
suggested, in the case of El Hogar Filipino where a quo warranto action is
brought, one takes into account the gravity of the violation committed. If
the by-laws were late — the filing of the by-laws were late by, perhaps, a
day or two, I would suppose that might be a tolerable delay, but if they are
delayed over a period of months — as is happening now — because of the
absence of a clear requirement that by-laws must be completed within a
specified period of time, the corporation must suffer certain
consequences. 13
This exchange of views demonstrates clearly that automatic corporate
dissolution for failure to file the by-laws on time was never the intention
of the legislature. Moreover, even without resorting to the records of
deliberations of the Batasang Pambansa, the law itself provides the answer
to the issue propounded by petitioner.
Taken as a whole and under the principle that the best interpreter of a
statute is the statute itself (optima statuli interpretatix est ipsum
statutum), 14 Section 46 aforequoted reveals the legislative intent to
attach a directory, and not mandatory, meaning for the word "must" in the
first sentence thereof. Note should be taken of the second paragraph of
the law which allows the filing of the by-laws even prior to incorporation.
This provision in the same section of the Code rules out mandatory
compliance with the requirement of filing the by-laws "within one (1)
month after receipt of official notice of the issuance of its certificate of
incorporation by the Securities and Exchange Commission." It necessarily
follows that failure to file the by-laws within that period does not imply the
"demise" of the corporation. By-laws may be necessary for the
"government" of the corporation but these are subordinate to the articles
of incorporation as well as to the Corporation Code and related statutes.15
There are in fact cases where by-laws are unnecessary to corporate
existence or to the valid exercise of corporate powers, thus:
In the absence of charter or statutory provisions to the contrary, by-laws
are not necessary either to the existence of a corporation or to the valid
exercise of the powers conferred upon it, certainly in all cases where the
charter sufficiently provides for the government of the body; and even
where the governing statute in express terms confers upon the corporation
the power to adopt by-laws, the failure to exercise the power will be
ascribed to mere nonaction which will not render void any acts of the
corporation which would otherwise be valid. 16 (Emphasis supplied.)
As Fletcher aptly puts it:
It has been said that the by-laws of a corporation are the rule of its life, and
that until by-laws have been adopted the corporation may not be able to
act for the purposes of its creation, and that the first and most important
duty of the members is to adopt them. This would seem to follow as a
matter of principle from the office and functions of by-laws. Viewed in this
light, the adoption of by-laws is a matter of practical, if not one of legal,
necessity. Moreover, the peculiar circumstances attending the formation
of a corporation may impose the obligation to adopt certain by-laws, as in
the case of a close corporation organized for specific purposes. And the
statute or general laws from which the corporation derives its corporate
existence may expressly require it to make and adopt by-laws and specify
to some extent what they shall contain and the manner of their adoption.
The mere fact, however, of the existence of power in the corporation to
adopt by-laws does not ordinarily and of necessity make the exercise of
such power essential to its corporate life, or to the validity of any of its acts.
17
Although the Corporation Code requires the filing of by-laws, it does not
expressly provide for the consequences of the non-filing of the same within
the period provided for in Section 46. However, such omission has been
rectified by Presidential Decree No. 902-A, the pertinent provisions on the
jurisdiction of the SEC of which state:
Sec. 6. In order to effectively exercise such jurisdiction, the Commission
shall possess the following powers:
xxx xxx xxx
(1) To suspend, or revoke, after proper notice and hearing, the
franchise or certificate of registration of corporations, partnerships or
associations, upon any of the grounds provided by law, including the
following:
xxx xxx xxx
5. Failure to file by-laws within the required period;
xxx xxx xxx
In the exercise of the foregoing authority and jurisdiction of the
Commission or by a Commissioner or by such other bodies, boards,
committees and/or any officer as may be created or designated by the
Commission for the purpose. The decision, ruling or order of any such
Commissioner, bodies, boards, committees and/or officer may be
appealed to the Commission sitting en banc within thirty (30) days after
receipt by the appellant of notice of such decision, ruling or order. The
Commission shall promulgate rules of procedures to govern the
proceedings, hearings and appeals of cases falling with its jurisdiction.
The aggrieved party may appeal the order, decision or ruling of the
Commission sitting en banc to the Supreme Court by petition for review in
accordance with the pertinent provisions of the Rules of Court.
Even under the foregoing express grant of power and authority, there can
be no automatic corporate dissolution simply because the incorporators
failed to abide by the required filing of by-laws embodied in Section 46 of
the Corporation Code. There is no outright "demise" of corporate
existence. Proper notice and hearing are cardinal components of due
process in any democratic institution, agency or society. In other words,
the incorporators must be given the chance to explain their neglect or
omission and remedy the same.
That the failure to file by-laws is not provided for by the Corporation Code
but in another law is of no moment. P.D. No. 902-A, which took effect
immediately after its promulgation on March 11, 1976, is very much
apposite to the Code. Accordingly, the provisions abovequoted supply the
law governing the situation in the case at bar, inasmuch as the Corporation
Code and P.D. No. 902-A are statutes in pari materia. Interpretare et
concordare legibus est optimus interpretandi. Every statute must be so
construed and harmonized with other statutes as to form a uniform system
of jurisprudence. 18
As the "rules and regulations or private laws enacted by the corporation to
regulate, govern and control its own actions, affairs and concerns and its
stockholders or members and directors and officers with relation thereto
and among themselves in their relation to it," 19 by-laws are indispensable
to corporations in this jurisdiction. These may not be essential to corporate
birth but certainly, these are required by law for an orderly governance and
management of corporations. Nonetheless, failure to file them within the
period required by law by no means tolls the automatic dissolution of a
corporation.
In this regard, private respondents are correct in relying on the
pronouncements of this Court in Chung Ka Bio v. Intermediate Appellate
Court, 20 as follows:
. . . . Moreover, failure to file the by-laws does not automatically operate
to dissolve a corporation but is now considered only a ground for such
dissolution.
Section 19 of the Corporation Law, part of which is now Section 22 of the
Corporation Code, provided that the powers of the corporation would
cease if it did not formally organize and commence the transaction of its
business or the continuation of its works within two years from date of its
incorporation. Section 20, which has been reproduced with some
modifications in Section 46 of the Corporation Code, expressly declared
that "every corporation formed under this Act, must within one month
after the filing of the articles of incorporation with the Securities and
Exchange Commission, adopt a code of by-laws." Whether this provision
should be given mandatory or only directory effect remained a
controversial question until it became academic with the adoption of PD
902-A. Under this decree, it is now clear that the failure to file by-laws
within the required period is only a ground for suspension or revocation of
the certificate of registration of corporations.
Non-filing of the by-laws will not result in automatic dissolution of the
corporation. Under Section 6(I) of PD 902-A, the SEC is empowered to
"suspend or revoke, after proper notice and hearing, the franchise or
certificate of registration of a corporation" on the ground inter alia of
"failure to file by-laws within the required period." It is clear from this
provision that there must first of all be a hearing to determine the
existence of the ground, and secondly, assuming such finding, the penalty
is not necessarily revocation but may be only suspension of the charter. In
fact, under the rules and regulations of the SEC, failure to file the by-laws
on time may be penalized merely with the imposition of an administrative
fine without affecting the corporate existence of the erring firm.
It should be stressed in this connection that substantial compliance with
conditions subsequent will suffice to perfect corporate personality.
Organization and commencement of transaction of corporate business are
but conditions subsequent and not prerequisites for acquisition of
corporate personality. The adoption and filing of by-laws is also a condition
subsequent. Under Section 19 of the Corporation Code, a Corporation
commences its corporate existence and juridical personality and is deemed
incorporated from the date the Securities and Exchange Commission issues
certificate of incorporation under its official seal. This may be done even
before the filing of the by-laws, which under Section 46 of the Corporation
Code, must be adopted "within one month after receipt of official notice
of the issuance of its certificate of incorporation." 21
That the corporation involved herein is under the supervision of the HIGC
does not alter the result of this case. The HIGC has taken over the
specialized functions of the former Home Financing Corporation by virtue
of Executive Order No. 90 dated December 17, 1989. 22 With respect to
homeowners associations, the HIGC shall "exercise all the powers,
authorities and responsibilities that are vested on the Securities and
Exchange Commission . . . , the provision of Act 1459, as amended by P.D.
902-A, to the contrary notwithstanding." 23
WHEREFORE, the instant petition for review on certiorari is hereby DENIED
and the questioned Decision of the Court of Appeals AFFIRMED. This
Decision is immediately executory. Costs against petitioner.
SO ORDERED.
G.R. No. 98382 May 17, 1993
PHILIPPINE NATIONAL BANK, petitioner,
vs.
THE COURT OF APPEALS and EPIFANIO DE LA CRUZ, respondents.
MELO, J.:
The notices of sale under Section 3 of Act No. 3135, as amended by Act No.
4118, on extra-judicial foreclosure of real estate mortgage are required to
be posted for not less than twenty days in at least three public places of
the municipality or city where the property is situated, and if such property
is worth more than four hundred pesos, such notices shall also be
published once a week for at least three consecutive weeks in a newspaper
of general circulation in the municipality or city.
Respondent court, through Justice Filemon Mendoza with whom Justices
Campos, Jr. and Aldecoa, Jr. concurred, construed the publication of the
notices on March 28, April 11 and l2, 1969 as a fatal announcement and
reversed the judgment appealed from by declaring void, inter alia, the
auction sale of the foreclosed pieces of realty, the final deed of sale, and
the consolidation of ownership (p. 27, Rollo).
Hence, the petition at bar, premised on the following backdrop lifted from
the text of the challenged decision:
The facts of the case as related by the trial court are, as follows:
This is a verified complaint brought by the plaintiff for the reconveyance to
him (and resultant damages) of two (2) parcels of land mortgaged by him
to the defendant Philippine National Bank (Manila), which the defendant
allegedly unlawfully foreclosed. The defendant then consolidated
ownership unto itself, and subsequently sold the parcels to third parties.
The amended Answer of the defendant states on the other hand that the
extrajudicial foreclosure, consolidation of ownership, and subsequent sale
to the third parties were all valid, the bank therefore counterclaims for
damages and other equitable remedies.
xxx xxx xxx
From the evidence and exhibits presented by both parties, the Court is of
the opinion that the following facts have been proved: Two lots, located at
Bunlo, Bocaue, Bulacan (the first covered by Torrens Certificate No. 16743
and possessed of an area of approximately 3,109 square meters: the
second covered by Torrens Certificate No. 5787, possessed of an area of
around 610 square meters, and upon which stood a residential-commercial
building were mortgaged to the defendant Philippine National Bank. The
lots were under the common names of the plaintiff (Epifanio dela Cruz), his
brother (Delfin) and his sister (Maria). The mortgage was made possible
because of the grant by the latter two to the former of a special power of
attorney to mortgage the lots to the defendant. The lots were mortgaged
to guarantee the following promissory notes:
(1) a promissory note for Pl2,000.00, dated September 2, 1958, and
payable within 69 days (date of maturity — Nov. l0, 1958);
(2) a promissory note for P4,000.00, dated September 22, 1958, and
payable within 49 days (date of maturity — Nov. 10, 1958);
(3) a promissory note for P4,000.00, dated June 30, 1.9581 and
payable within 120 days (date of maturity — Nov. 10, 1958) See also Annex
C of the complaint itself).
[1 This date of June 30, 1958 is disputed by the plaintiff who claims
that the correct date is June 30, 1961, which is the date actually mentioned
in the promissory note. It is however difficult to believe the plaintiff's
contention since if it were true and correct, this would mean that nearly
three (3) years elapsed between the second and the third promissory note;
that at the time the third note was executed, the first two had not yet been
paid by the plaintiff despite the fact that the first two were supposed to be
payable within 69 and 49 days respectively. This state of affairs would have
necessitated the renewal of said two promissory notes. No such renewal
was proved, nor was the renewal ever alleged. Finally, and this is very
significant: the third mentioned promissory note states that the maturity
date is Nov. 10, 1958. Now then, how could the loan have been contracted
on June 30, 1961? It will be observed that in the bank records, the third
mentioned promissory note was really executed on June 30, 1958 (See
Exhs. 9 and 9-A). The Court is therefore inclined to believe that the date
"June 30, 1961" was a mere clerical error and hat the true and correct date
is June 1958. However, even assuming that the true and correct date is
June 30, 1961, the fact still remains that the first two promissory notes had
been guaranteed by the mortgage of the two lots, and therefore, it was
legal and proper to foreclose on the lots for failure to pay said two
promissory notes.
On September 6, 1961, Atty. Ramon de los Reyes of the bank (PNB)
presented under Act No. 3135 a foreclosure petition of the two mortgaged
lots before the Sheriff's Office at Malolos, Bulacan; accordingly, the two
lots were sold or auctioned off on October 20, 1961 with the defendant
PNB as the highest bidder for P28,908.46. On March 7, 1963, Sheriff
Leopoldo Palad executed a Final Deed of Sale, in response to a letter-
request by the Manager of the PNB (Malolos Branch). On January 15, 1963
a Certificate of Sale in favor of the defendant was executed by Sheriff
Palad. The final Deed of Sale was registered in the Bulacan Registry of
Property on March 19, 1963. Inasmuch as the plaintiff did not volunteer to
buy back from the PNB the two lots, the PNB sold on June 4, 1970 the same
to spouses Conrado de Vera and Marina de Vera in a "Deed of Conditional
Sale". (Decision, pp.3-5; Amended Record on Appeal, pp. 96-98).
After due consideration of the evidence, the CFI on January 22, 1978
rendered its Decision, the dispositive portion of which reads:
WHEREFORE, PREMISES CONSIDERED, the instant complaint against the
defendant Philippine National Bank is hereby ordered DISMISSED, with
costs against the plaintiff. The Counterclaim against the plaintiff is likewise
DISMISSED, for the Court does not believe that the complaint had been
made in bad faith.
SO ORDERED. (Decision, p. B.; Amended Record on Appeal, p. 100)
Not satisfied with the judgment, plaintiff interposed the present appeal
assigning as errors the following:
I.
THE LOWER COURT ERRED IN HOLDING IN FOOTNOTE I OF ITS DECISION
THAT IT IS THEREFORE INCLINED TO BELIEVE THAT THE DATE "JUNE 30,
1962" WAS A MERE CLERICAL ERROR AND THAT THE TRUE AND CORRECT
DATE IS JUNE 30, 1958. IT ALSO ERRED IN HOLDING IN THE SAME
FOOTNOTE I THAT "HOWEVER, EVEN ASSUMING THAT THE TRUE AND
CORRECT DATE IS JUNE 30, 1961, THE FACT STILL REMAINS THAT THE FIRST
TWO PROMISSORY NOTES HAD BEEN GUARANTEED BY THE MORTGAGE OF
THE TWO LOTS, AND THEREFORE, IT WAS LEGAL AND PROPER TO
FORECLOSE ON THE LOTS FOR FAILURE TO PAY SAID TWO PROMISSORY
NOTES". (page 115, Amended Record on Appeal)
II.
THE LOWER COURT ERRED IN NOT HOLDING THAT THE PETITION FOR
EXTRAJUDICIAL FORECLOSURE WAS PREMATURELY FILED AND IS A MERE
SCRAP OF PAPER BECAUSE IT MERELY FORECLOSED THE ORIGINAL AND
NOT THE AMENDED MORTGAGE.
III.
THE LOWER COURT ERRED IN HOLDING THAT "IT IS CLEAR THAT THE
AUCTION SALE WAS NOT PREMATURE". (page 117, Amended Record on
Appeal)
IV.
THE LOWER COURT ERRED IN HOLDING THAT "SUFFICE IT TO STATE THAT
ACTUALLY THE POWER OF ATTORNEY GIVEN TO THE PNB WAS EMBODIED
IN THE REAL ESTATE MORTGAGE (EXB. 10) WHICH WAS REGISTERED IN THE
REGISTRY OF PROPERTY OF BULACAN AND WAS ANNOTATED ON THE TWO
TORRENS CERTIFICATES INVOLVED" (page 118, Amended Record on
Appeal).
V.
THE LOWER COURT ERRED IN HOLDING THAT "THE NOTICES REQUIRED
UNDER SEC. 3 OF ACT NO. 3135 WERE ALL COMPLIED WITH" AND "THAT
THE DAILY RECORD . . . IS A NEWSPAPER OF GENERAL CIRCULATION (pages
117-118, Amended Record on Appeal).
VI.
THE LOWER COURT ERRED IN NOT DECLARING THE CERTIFICATE OF SALE,
FINAL DEED OF SALE AND AFFIDAVIT OF CONSOLIDATION, NULL AND VOID.
VII.
THE LOWER COURT ERRED IN NOT ORDERING DEFENDANT TO RECONVEY
TO PLAINTIFF THE PARCELS OF LAND COVERED BY T.C.T. NOS. 40712 AND
40713 OF BULACAN (page 8, Amended Record on Appeal)
VIII.
THE LOWER COURT ERRED IN NOT ORDERING DEFENDANT TO PAY TO
PLAINTIFF REASONABLE AMOUNTS OF MORAL AND EXEMPLARY
DAMAGES AND ATTORNEY'S FEES (page 8. Amended Record on Appeal).
IX.
THE LOWER COURT ERRED IN DISMISSING THE INSTANT COMPLAINT
AGAINST THE PHILIPPINE NATIONAL BANK WITH COSTS AGAINST THE
PLAINTIFF. (page 118, Amended Record on Appeal)." (Brief for Plaintiff-
Appellant, pp. 1-4) (pp. 17-21, Rollo)
With reference to the pertinent issue at hand, respondent court opined:
The Notices of Sale of appellant's foreclosed properties were published on
March 228, April 11 and April 12, 1969 issues of the newspaper "Daily
Record" (Amended Record on Appeal, p. 108). The date March 28, 1969
falls on a Friday while the dates April 11 and 12, 1969 are on a Friday and
Saturday, respectively. Section 3 of Act No. 3135 requires that the notice
of auction sale shall be "published once a week for at least three
consecutive weeks". Evidently, defendant-appellee bank failed to comly
with this legal requirement. The Supreme Court has held that:
The rule is that statutory provisions governing publication of notice of
mortgage foreclosure sales must be strictly complied with, and that even
slight deviations therefrom will invalidate the notice and render the sale at
least voidable (Jalandoni vs. Ledesma, 64 Phil. l058. G.R. No. 42589, August
1937 and October 29, 1937). Interpreting Sec. 457 of the Code of Civil
Procedure (reproduced in Sec. 18(c) of Rule 39, Rules of Court and in Sec.
3 of Act No. 3135) in Campomanes vs. Bartolome and German & Co. (38
Phil. 808, G.R. No. 1309, October 18, 1918), this Court held that if a sheriff
sells without notice prescribed by the Code of Civil Procedure induced
thereto by the judgment creditor, and the purchaser at the sale is the
judgment creditor, the sale is absolutely void and no title passes. This is
regarded as the settled doctrine in this jurisdiction whatever the rule may
be elsewhere (Boria vs. Addison, 14 Phil. 895, G.R. No. 18010, June 21,
1922).
. . . It has been held that failure to advertise a mortgage foreclosure sale in
compliance with statutory requirements constitutes a jurisdictional defect
invalidating the sale and that a substantial error or omission in a notice of
sale will render the notice insufticient and vitiate the sale (59 C.J.S. 1314).
(Tambunting vs. Court of Appeals, L-48278, November 8, 1988; 167 SCRA
16, 23-24).
In view of the admission of defendant-appellee in its pleading showing that
there was no compliance of the notice prescribed in Section 3 of Act No.
3135, as amended by Act 4118, with respect to the notice of sale of the
foreclosed real properties in this case, we have no choice but to declare
the auction sale as absolutely void in view of the fact that the highest
bidder and purchaser in said auction sale was defendant-appellee bank.
Consequently, the Certificate of Sale, the Final Deed of Sale and Affidavit
of Consolidation are likewise of no legal efffect. (pp. 24-25, Rollo)
Before we focus our attention on the subject of whether or not there was
valid compliance in regard to the required publication, we shall briefly
discuss the other observations of respondent court vis-a-vis herein private
respondent's ascriptions raised with the appellate court when his suit for
reconveyance was dismissed by the court of origin even as private
respondent does not impugn the remarks of respondent court along this
line.
Although respondent court acknowledged that there was an ambiguity on
the date of execution of the third promissory note (June 30, 1961) and the
date of maturity thereof (October 28, 1958), it was nonetheless
established that the bank introduced sufficient proof to show that the
discrepancy was a mere clerical error pursuant to Section 7, Rule l30 of the
Rules of Court. Anent the second disputation aired by private respondent,
the appellate court observed that inasmuch as the original as well as the
subsequent mortgage were foreclosed only after private respondent's
default, the procedure pursued by herein petitioner in foreclosing the
collaterals was thus appropriate albeit the petition therefor contained only
a copy of the original mortgage.
It was only on the aspect of publication of the notices of sale under Act No.
3135, as amended, and attorney's fees where herein private respondent
scored points which eliminated in the reversal of the trial court's decision.
Respondent court was of the impression that herein petitioner failed to
comply with the legal requirement and the sale effected thereafter must
be adjudged invalid following the ruling of this Court in Tambunting vs.
Court of Appeals (167 SCRA 16 [1988]); p. 8, Decision, p. 24, Rollo). In view
of petitioner's so-called indifference to the rules set forth under Act No.
3135, as amended, respondent court expressly authorized private
respondent to recover attorney's fees because he was compelled to incur
expenses to protect his interest.
Immediately upon the submission of a supplemental petition, the spouses
Conrado and Marina De Vera filed a petition in intervention claiming that
the two parcels of land involved herein were sold to them on June 4, 1970
by petitioner for which transfer certificates of title were issued in their
favor (p. 40, Rollo). On the other hand, private respondent pressed the idea
that the alleged intervenors have no more interest in the disputed lots in
view of the sale effected by them to Teresa Castillo, Aquilino and Antonio
dela Cruz in 1990 (pp. 105-106, Rollo).
On March 9, 1992, the Court resolved to give due course to the petition
and required the parties to submit their respective memoranda (p. 110,
Rollo).
Now, in support of the theory on adherence to the conditions spelled in
the preliminary portion of this discourse, the pronouncement of this Court
in Bonnevie vs. Court of Appeals (125 SCRA [1983]; p. 135, Rollo) is sought
to be utilized to press the point that the notice need not be published for
three full weeks. According to petitioner, there is no breach of the proviso
since after the first publication on March 28, 1969, the second notice was
published on April 11, 1969 (the last day of the second week), while the
third publication on April 12, 1969 was announced on the first day of the
third week. Petitioner thus concludes that there was no violation from the
mere happenstance that the third publication was made only a day after
the second publication since it is enough that the second publication be
made on any day within the second week and the third publication, on any
day within the third week. Moreover, in its bid to rectify its admission in
judicio, petitioner asseverates that said admission alluded to refers only to
the dates of publications, not that there was non-compliance with the
publication requirement.
Private respondent, on the other hand, views the legal question from a
different perspective. He believes that the period between each
publication must never be less than seven consecutive days (p. 4,
Memorandum; p. 124, Rollo).
We are not convinced by petitioner's submissions because the disquisition
in support thereof rests on the erroneous impression that the day on which
the first publication was made, or on March 28, 1969, should be excluded
pursuant to the third paragraph of Article 17 of the New Civil Code.
It must be conceded that Article 17 is completely silent as to the definition
of what is a "week". In Concepcion vs. Zandueta (36 O.G. 3139 [1938];
Moreno, Philippine Law Dictionary, Second Ed., 1972, p. 660), this term
was interpreted to mean as a period of time consisting of seven
consecutive days — a definition which dovetails with the ruling in E.M.
Derby and Co. vs. City of Modesto, et al. (38 Pac. Rep. 900 [1984]; 1 Paras,
Civil Code of the Philippines Annotated, Twelfth Ed., 1989, p. 88; 1
Tolentino, Commentaries and Jurisprudence on th Civil Code, 1990, p. 46).
Following the interpretation in Derby as to the publication of an ordinance
for "at least two weeks" in some newspaper that:
. . . here there is no date or event suggesting the exclusion of the first day's
publication from the computation, and the cases above cited take this case
out of the rule stated in Section 12, Code Civ. Proc. which excludes the first
day and includes the last; SO ORDERED.

the publication effected on April 11, 1969 cannot be construed as sufficient G.R. No. 109902 August 2, 1994
advertisement for the second week because the period for the first week ALU-TUCP,vs.NATIONAL LABOR RELATIONS COMMISSION and NATIONAL
should be reckoned from March 28, 1969 until April 3, 1969 while the STEEL
second week should be counted from April 4, 1969 until April 10, 1969. It FELICIANO, J.:
is clear that the announcement on April 11, 1969 was both theoretically
and physically accomplished during the first day of the third week and In this Petition for Certiorari, petitioners assail the Resolution of the
cannot thus be equated with compliance in law. Indeed, where the word is National Labor Relations Commission ("NLRC") dated 8 January 1993 which
used simply as a measure of duration of time and without reference to the declared petitioners to be project employees of private respondent
calendar, it means a period of seven consecutive days without regard to National Steel Corporation ("NSC"), and the NLRC's subsequent Resolution
the day of the week on which it begins (1 Tolentino, supra at p. 467 citing of 15 February 1993, denying petitioners' motion for reconsideration.
Derby).
Petitioners plead that they had been employed by respondent NSC in
Certainly, it would have been absurd to exclude March 28, 1969 as connection with its Five Year Expansion Program (FAYEP I & II) 1 for varying
reckoning point in line with the third paragraph of Article 13 of the New lengths of time when they were separated from NSC's service:
Civil Code, for the purpose of counting the first week of publication as to
the last day thereof fall on April 4, 1969 because this will have the effect of Employee Date Nature of Separated
extending the first week by another day. This incongruous repercussion
could not have been the unwritten intention of the lawmakers when Act Employed Employment
No. 3135 was enacted. Verily, inclusion of the first day of publication is in
keeping with the computation in Bonnevie vs. Court of Appeals (125 SCRA 1. Alan Barinque 5-14-82 Engineer 1 8-31-91
122 [1983]) where this Court had occasion to pronounce, through Justice 2. Jerry Bontilao 8-05-85 Engineer 2 6-30-92
Guerrero, that the publication of notice on June 30, July 7 and July 14, 1968 3. Edgar Bontuyan 11-03-82 Chairman to present
satisfied the publication requirement under Act No. 3135. Respondent 4. Osias Dandasan 9-21-82 Utilityman 1991
court cannot, therefore, be faulted for holding that there was no 5. Leonido Echavez 6-16-82 Eng. Assistant 6-30-92
compliance with the strict requirements of publication independently of 6. Darrell Eltagonde 5-20-85 Engineer 1 8-31-91
the so- called admission in judicio. 7. Gerry Fetalvero 4-08-85 Mat. Expediter regularized
8. Eduard Fookson 9-20-84 Eng. Assistant 8-31-91
WHEREFORE, the petitions for certiorari and intervention are hereby 9. Russell Gacus 1-30-85 Engineer 1 6-30-92
dismissed and the decision of the Court of Appeals dated April 17, 1991 is 10. Jose Garguena 3-02-81 Warehouseman to present
hereby affirmed in toto. 11. Eusebio Mejos 11-17-82 Survey Aide 8-31-91
12. Bonifacio Mejos11-17-82 Surv. Party Head 1992
13. Romeo Sarona 2-26-83 Machine Operator 8-31-912
On 5 July 1990, petitioners filed separate complaints for unfair labor
practice, regularization and monetary benefits with the NLRC, Sub-
Regional Arbitration Branch XII, Iligan City.
The complaints were consolidated and after hearing, the Labor Arbiter in a
Decision dated 7 June 1991, declared petitioners "regular project
employees who shall continue their employment as such for as long as such
[project] activity exists," but entitled to the salary of a regular employee
pursuant to the provisions in the collective bargaining agreement. It also
ordered payment of salary differentials. 3
Both parties appealed to the NLRC from that decision. Petitioners argued
that they were regular, not project, employees. Private respondent, on the
other hand, claimed that petitioners are project employees as they were
employed to undertake a specific project — NSC's Five Year Expansion
Program (FAYEP I & II).
The NLRC in its questioned resolutions modified the Labor Arbiter's
decision. It affirmed the Labor Arbiter's holding that petitioners were
project employees since they were hired to perform work in a specific
undertaking — the Five Years Expansion Program, the completion of which
had been determined at the time of their engagement and which operation
was not directly related to the business of steel manufacturing. The NLRC,
however, set aside the award to petitioners of the same benefits enjoyed
by regular employees for lack of legal and factual basis.
Deliberating on the present Petition for Certiorari, the Court considers that
petitioners have failed to show any grave abuse of discretion or any act
without or in excess of jurisdiction on the part of the NLRC in rendering its
questioned resolutions of 8 January 1993 and 15 February 1993.
The law on the matter is Article 280 of the Labor Code which reads in full:
Art. 280. Regular and Casual Employment — The provisions of the
written agreement to the contrary notwithstanding and regardless of the
oral agreement of the parties, and employment shall be deemed to be
regular where the employee has been engaged to perform activities which
are usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the
work or services to be performed is seasonal in nature and the
employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph: Provided, That, any employee who has rendered at
least one year service, whether such service is continuous or broken, shall
be considered a regular employee with respect to the activity in which he
is employed and his employment shall continue while such actually exists.
(Emphasis supplied)
Petitioners argue that they are "regular" employees of NSC because: (i)
their jobs are "necessary, desirable and work-related to private
respondent's main business, steel-making"; and (ii) they have rendered
service for six (6) or more years to private respondent NSC. 4
The basic issue is thus whether or not petitioners are properly
characterized as "project employees" rather than "regular employees" of
NSC. This issue relates, of course, to an important consequence: the
services of project employees are co-terminous with the project and may
be terminated upon the end or completion of the project for which they
were hired. 5 Regular employees, in contract, are legally entitled to remain
in the service of their employer until that service is terminated by one or
another of the recognized modes of termination of service under the Labor
Code. 6
It is evidently important to become clear about the meaning and scope of
the term "project" in the present context. The "project" for the carrying
out of which "project employees" are hired would ordinarily have some
relationship to the usual business of the employer. Exceptionally, the
"project" undertaking might not have an ordinary or normal relationship
to the usual business of the employer. In this latter case, the determination
of the scope and parameeters of the "project" becomes fairly easy. It is
unusual (but still conceivable) for a company to undertake a project which
has absolutely no relationship to the usual business of the company; thus,
for instance, it would be an unusual steel-making company which would
undertake the breeding and production of fish or the cultivation of
vegetables. From the viewpoint, however, of the legal characterization
problem here presented to the Court, there should be no difficulty in
designating the employees who are retained or hired for the purpose of
undertaking fish culture or the production of vegetables as "project
employees," as distinguished from ordinary or "regular employees," so
long as the duration and scope of the project were determined or specified
at the time of engagement of the "project employees." 7 For, as is evident
from the provisions of Article 280 of the Labor Code, quoted earlier, the
principal test for determining whether particular employees are properly
characterized as "project employees" as distinguished from "regular
employees," is whether or not the "project employees" were assigned to
carry out a "specific project or undertaking," the duration (and scope) of
which were specified at the time the employees were engaged for that
project.
In the realm of business and industry, we note that "project" could refer to
one or the other of at least two (2) distinguishable types of activities.
Firstly, a project could refer to a particular job or undertaking that is within
the regular or usual business of the employer company, but which is
distinct and separate, and identifiable as such, from the other undertakings
of the company. Such job or undertaking begins and ends at determined
or determinable times. The typical example of this first type of project is a
particular construction job or project of a construction company. A
construction company ordinarily carries out two or more discrete
identifiable construction projects: e.g., a twenty-five- storey hotel in
Makati; a residential condominium building in Baguio City; and a domestic
air terminal in Iloilo City. Employees who are hired for the carrying out of
one of these separate projects, the scope and duration of which has been
determined and made known to the employees at the time of
employment, are properly treated as "project employees," and their
services may be lawfully terminated at completion of the project.
The term "project" could also refer to, secondly, a particular job or
undertaking that is not within the regular business of the corporation. Such
a job or undertaking must also be identifiably separate and distinct from
the ordinary or regular business operations of the employer. The job or
undertaking also begins and ends at determined or determinable times.
The case at bar presents what appears to our mind as a typical example of
this kind of "project."
NSC undertook the ambitious Five Year Expansion Program I and II with the
ultimate end in view of expanding the volume and increasing the kinds of
products that it may offer for sale to the public. The Five Year Expansion
Program had a number of component projects: e.g., (a) the setting up of a
"Cold Rolling Mill Expansion Project"; (b) the establishment of a "Billet
Steel-Making Plant" (BSP); (c) the acquisition and installation of a "Five
Stand TDM"; and (d) the "Cold Mill Peripherals Project." 8 Instead of
contracting out to an outside or independent contractor the tasks of
constructing the buildings with related civil and electrical works that would
house the new machinery and equipment, the installation of the newly
acquired mill or plant machinery and equipment and the commissioning of
such machinery and equipment, NSC opted to execute and carry out its
Five Yeear Expansion Projects "in house," as it were, by administration. The
carrying out of the Five Year Expansion Program (or more precisely, each
of its component projects) constitutes a distinct undertaking identifiable
from the ordinary business and activity of NSC. Each component project,
of course, begins and ends at specified times, which had already been
determined by the time petitioners were engaged. We also note that NSC
did the work here involved — the construction of buildings and civil and
electrical works, installation of machinery and equipment and the
commissioning of such machinery — only for itself. Private respondent NSC
was not in the business of constructing buildings and installing plant
machinery for the general business community, i.e., for unrelated, third
party, corporations. NSC did not hold itself out to the public as a
construction company or as an engineering corporation.
Which ever type of project employment is found in a particular case, a
common basic requisite is that the designation of named employees as
"project employees" and their assignment to a specific project, are
effected and implemented in good faith, and not merely as a means of
evading otherwise applicable requirements of labor laws.
Thus, the particular component projects embraced in the Five Year
Expansion Program, to which petitioners were assigned, were
distinguishable from the regular or ordinary business of NSC which, of
course, is the production or making and marketing of steel products.
During the time petitioners rendered services to NSC, their work was
limited to one or another of the specific component projects which made
up the FAYEP I and II. There is nothing in the record to show that petitioners
were hired for, or in fact assigned to, other purposes, e.g., for operating or
maintaining the old, or previously installed and commissioned, steel-
making machinery and equipment, or for selling the finished steel
products.
We, therefore, agree with the basic finding of the NLRC (and the Labor
Arbiter) that the petitioners were indeed "project employees:"
It is well established by the facts and evidence on record that herein 13
complainants were hired and engaged for specific activities or undertaking
the period of which has been determined at time of hiring or engagement.
It is of public knowledge and which this Commission can safely take judicial
notice that the expansion program (FAYEP) of respondent NSC consist of
various phases [of] project components which are being executed or
implemented independently or simultaneously from each other . . .
In other words, the employment of each "project worker" is dependent
and co-terminous with the completion or termination of the specific
activity or undertaking [for which] he was hired which has been pre-
determined at the time of engagement. Since, there is no showing that
they (13 complainants) were engaged to perform work-related activities to
the business of respondent which is steel-making, there is no logical and
legal sense of applying to them the proviso under the second paragraph of
Article 280 of the Labor Code, as amended.
xxx xxx xxx
The present case therefore strictly falls under the definition of "project
employees" on paragraph one of Article 280 of the Labor Code, as
amended. Moreover, it has been held that the length of service of a project
employee is not the controlling test of employment tenure but whether or
not "the employment has been fixed for a specific project or undertaking
the completion or termination of which has been determined at the time
of the engagement of the employee". (See Hilario Rada v. NLRC, G.R. No.
96078, January 9, 1992; and Sandoval Shipping, Inc. v. NLRC, 136 SCRA 674
(1985). 9
Petitioners next claim that their service to NSC of more than six (6) years
should qualify them as regular employees. We believe this claim is without
legal basis. The simple fact that the employment of petitioners as project
employees had gone beyond one (1) year, does not detract from, or legally
dissolve, their status as project employees. 10 The second paragraph of
Article 280 of the Labor Code, quoted above, providing that an employee
who has served for at least one (1) year, shall be considered a regular
employee, relates to casual employees, not to project employees.

In the case of Mercado, Sr. vs. National Labor Relations Commission, 11

this Court ruled that the proviso in the second paragraph of Article 280
relates only to casual employees and is not applicable to those who fall
within the definition of said Article's first paragraph, i.e., project
employees. The familiar grammatical rule is that a proviso is to be
construed with reference to the immediately preceding part of the
provision to which it is attached, and not to other sections thereof, unless
the clear legislative intent is to restrict or qualify not only the phrase
immediately preceding the proviso but also earlier provisions of the statute
or even the statute itself as a whole. No such intent is observable in Article
280 of the Labor Code, which has been quoted earlier.

ACCORDINGLY, in view of the foregoing, the Petition for Certiorari is hereby

DISMISSED for lack of merit. The Resolutions of the NLRC dated 8 January
1993 and 15 February 1993 are hereby AFFIRMED. No pronouncement as
to costs.

SO ORDERED.