G.R. No.
L-35910 July 21, 1978 reconsideration which was likewise denied by the respondent court on
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
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 I am not prepared at this stage to concur with the ratio decidendi of the
submission of the transcript of the stenographic notes, so that his 30- decision penned by Mr. Justice Makasiar that the Court is not
day period to submit his memorandum would commence to run. Only empowered by law to dismiss the appeal on the mere failure of an
after the expiration of such period can the respondent Judge act on the appellant to submit his memorandum, but rather it is the Court's
case by deciding it on the merits, not by dismissing the appeal of mandatory duty to decide the case on the basis of the available
petitioner. evidence and records transmitted to it." I entertain serious doubts
about such pronouncement, once when the court of first instance
WHEREFORE, THE CHALLENGED ORDERS OF RESPONDENT JUDGE
"requests" the party-appellant to submit a memorandum or brief on
DATED AUGUST 4, 1971, OCTOBER 30, 1971 AND MARCH 15, 1971 ARE
appeal under the provisions of Republic Act No. 6031 amending section
HEREBY SET ASIDE AS NULL AND VOID AND THE RESPONDENT COURT IS
45 of Republic Act No. 296, such "request" is tantamount to a
HEREBY DIRECTED TO DECIDE CIVIL CASE NO. C-2036 ON THE MERITS.
requirement for the proper prosecution of the appeal; thus, when the
NO COSTS.
appellant willfuly fails to file such memorandum or brief, the judge
Muñoz Palma, Fernandez and Guerrero, JJ., concur. should be empowered to dismiss the appeal, applying suppletorily the
Separate Opinions analogous provisions of Rule 50, section 1 for dismissal of appeal by the
higher appellate courts and taking into account that Rule 40, section 9
TEEHANKEE, J, concurring: of the Rules of Court now expressly authorizes the court of first instance
I concur with the setting aside of the questioned dismissal of to dismiss an appeal before it "for failure to prosecute."
petitioner's appeal on the ground that the record shows quite clearly
that there was no failure on part of petitioner-appellant to prosecute
her appeal in respondent judge's court. Petitioner had been granted in
respondent judge's Order of May 7, 1971, 30 days from notice of
submission of the transcripts within which to file her memorandum on
appeal, yet her appeal was dismissed per his Order of August 4, 1971
for alleged failure to prosecute (by failure to file the memorandum)
even before she had received any such notice. Upon receipt of the
dismissal order, petitioner had promptly moved for reconsideration and
filed her memorandum on appeal.
I am not prepared at this stage to concur with the ratio decidendi of the
decision penned by Mr. Justice Makasiar that 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." I entertain serious doubts
about such pronouncement, once when the court of first instance
"requests" the party-appellant to submit a memorandum or brief on
appeal under the provisions of Republic Act No. 6031 amending section
45 of Republic Act No. 296, such "request" is tantamount to a
requirement for the proper prosecution of the appeal; thus, when the
appellant willfuly fails to file such memorandum or brief, the judge
should be empowered to dismiss the appeal, applying suppletorily the
analogous provisions of Rule 50, section 1 for dismissal of appeal by the
higher appellate courts and taking into account that Rule 40, section 9
of the Rules of Court now expressly authorizes the court of first instance
to dismiss an appeal before it "for failure to prosecute."
Separate Opinions
TEEHANKEE, J, Concurring:
I concur with the setting aside of the questioned dismissal of
petitioner's appeal on the ground that the record shows quite clearly
that there was no failure on part of petitioner-appellant to prosecute
her appeal in respondent judge's court. Petitioner had been granted in
respondent judge's Order of May 7, 1971, 30 days from notice of
submission of the transcripts within which to file her memorandum on
appeal, yet her appeal was dismissed per his Order of August 4, 1971
for alleged failure to prosecute (by failure to file the memorandum)
even before she had received any such notice. Upon receipt of the
dismissal order, petitioner had promptly moved for reconsideration and
filed her memorandum on appeal.
 G.R. No. 167631 December 16, 2005
Jenette Marie B. Crisologo, Petitioner,
vs.
GLOBE TELECOM INC. and Cesar M. Maureal, Vice President for
Human Resources, Respondents.
RESOLUTION
AUSTRIA-MARTINEZ, J.:
Petitioner was an employee of respondent company. When she was
promoted as Director of Corporate Affairs and Regulatory Matters, she
became entitled to an executive car, and she procured a 1997 Toyota
Camry. In April 2002, she was separated from the company. Petitioner
filed a complaint for illegal dismissal and reinstatement with the
National Labor Relations Commission (NLRC), which later dismissed the
complaint. Petitioner filed, on August 12, 2004, a petition for certiorari
with the Court of Appeals, docketed as CA-G.R. SP No. 85679 assailing
the NLRC’s dismissal.
Pending said petition, respondent company filed with the Regional Trial
Court of Mandaluyong (Branch 213) an action for recovery of
possession of a motor vehicle with application for a writ of replevin with
damages, docketed as Civil Case No. MC04-2480. Petitioner filed a
motion to dismiss on the ground of litis pendentia and forum shopping
but this was denied by the trial court. Thus, petitioner filed a petition
for certiorari with the Court of Appeals, docketed as CA-G.R. SP No.
85927.1 Petitioner also filed with the Court of Appeals a motion for the
issuance of a writ of prohibition to enjoin proceedings in the replevin
case before the trial court.
Thereafter, respondent company filed a motion to declare defendant in
default in Civil Case No. MC04-2480, which was granted by the trial
court. Respondent company was thus allowed to present its evidence
ex-parte. Petitioner filed a motion for reconsideration of the order of
default but it was denied by the trial court. On April 5, 2005, the trial
court rendered a judgment by default, the dispositive portion of which
reads:
WHEREFORE, finding merit in all the foregoing uncontroverted facts
supported by documentary exhibits, judgment is hereby rendered
declaring plaintiff to have the right of possession over the subject motor
vehicle and ordering defendant plaintiff to pay plaintiff the following:
1. The amount of TWO MILLION FIVE HUNDRED FIFTY SIX THOUSAND
FOUR HUNDRED SIXTY PESOS (p2,556,460.00) as damages in the form
of unpaid daily car rental for 730 (From 15 August 2002 until 22 June
2004) days at THREE THOUSAND FIVE HUNDRED TWO PESOS
(P3,502.00) per day;
2. The sum of TWO HUNDRED THOUSAND PESOS (₱200,000.00) AS AND
BY WAY OF Attorney’s fee;
3. The sum of TWO HUNDRED THOUSAND PESOS (₱200,000.00) as
exemplary damages in order to deter others from doing similar act in
withholding possession of a property to another to which he/she has no
right to possess; and
4. Costs of suit.
SO ORDERED.
Petitioner then filed with the Court a petition for review on certiorari
under Rule 45 of the Rules of Court, which was denied by the Court in a
Resolution dated May 16, 2005, for being the wrong remedy under the
1997 Rules of Civil Procedure, as amended.
Petitioner thus filed the present motion for reconsideration, alleging
that the filing of said petition is the proper recourse, citing Matute vs.
Court of Appeals, 26 SCRA 798 (1969), wherein it was ruled that a
defendant declared in default has the remedy set forth in Section 2,
paragraph 3 of Rule 41 of the old Rules of Court.2 Petitioner then cited
in her motion, "Section 2, paragraph 3 or (c) of the Rules of Civil
Procedure."3
Evidently, petitioner misread the provision cited in the Matute case as
that pertaining to Section 2(c), Rule 41 of the 1997 Rules of Civil
Procedure, as amended, which states: "(c) Appeal by certiorari. - In all
cases where only questions of law are raised or involved, the appeal
shall be to the Supreme Court by petition for review on certiorari in
accordance with Rule 45." Hence, she directly filed her petition for
review on certiorari with the Court.
Petitioner should be reminded that the Matute case is of 1969 vintage
and pertained to the old Rules of Court. As stated in the Matute case, a
defendant validly declared in default has the remedy set forth in Section
2, paragraph 3 of Rule 41. Note that under the old Rules, Section 2,
paragraph 3 of Rule 41 governed appeals from Courts of First Instance,
the Social Security Commission and the Court of Agrarian Relations TO
THE COURT OF APPEALS, and reads:
A party who has been declared in default may likewise appeal from the
judgment rendered against him as contrary to the evidence or to the
law, even if no petition for relief to set aside the order of default has
been presented by him in accordance with Rule 38. (Emphasis supplied)
Had petitioner been more circumspect, she would have easily
ascertained that said Section 2, paragraph 3 of Rule 41 of the old Rules
of Court, as cited in the Matute case, had already been superseded by
the 1997 Rules of Civil Procedure, as amended, and under these new
rules, the different modes of appeal are clearly laid down.
The decision sought to be reviewed in this case is a judgment by default
rendered by the trial court in Civil Case No. MC04-2480. As such, the
applicable rule is Section 2, Rule 41 of the 1997 Rules of Civil
Procedure, as amended, which provides for the different modes of
appeal from a Regional Trial Court’s judgment or final order, to wit:
Section 2. Modes of appeal. —
(a) Ordinary appeal. — The appeal to the Court of Appeals in cases
decided by the Regional Trial Court in the exercise of its original
jurisdiction shall be taken by filing a notice of appeal with the court
which rendered the judgment or final order appealed from and
serving a copy thereof upon the adverse party. No record on appeal
shall be required except in special proceedings and other cases of
multiple or separate appeals where the law or these Rules so require.
In such cases, the record on appeal shall be filed and served in like
manner.
(b) Petition for review. — The appeal to the Court of Appeals in cases
decided by the Regional Trial Court in the exercise of its appellate
jurisdiction shall be by petition for review in accordance with Rule 42.
(c) Appeal by certiorari. — In all cases where only questions of law are
raised or involved, the appeal shall be to the Supreme Court by petition
for review on certiorari in accordance with Rule 45. (Emphasis supplied)
In Cerezo vs. Tuazon,4 the Court reiterated the remedies available to a
party declared in default:
a) The defendant in default may, at any time after discovery thereof and
before judgment, file a motion under oath to set aside the order of
default on the ground that his failure to answer was due to fraud,
accident, mistake or excusable negligence, and that he has a
meritorious defense (Sec. 3, Rule 18 [now Sec. 3(b), Rule 9]);
b) If the judgment has already been rendered when the defendant COURSE OF JUDICIAL PROCEEDINGS AS TO CALL FOR THE EXERCISE BY
discovered the default, but before the same has become final and THE SUPREME COURT OF ITS POWER OF SUPERVISION
executory, he may file a motion for new trial under Section 1 (a) of Rule
The test of whether a question is one of law or of fact is not the
37;
appellation given to such question by the party raising the same; rather,
c) If the defendant discovered the default after the judgment has it is whether the appellate court can determine the issue raised without
become final and executory, he may file a petition for relief under reviewing or evaluating the evidence, in which case, it is a question of
Section 2 [now Section 1] of Rule 38; and law; otherwise, it is a question of fact.7 The issues on the award of
damages call for a re-evaluation of the evidence before the trial court,
d) He may also appeal from the judgment rendered against him as
which is obviously a question of fact. Cases where an appeal involved
contrary to the evidence or to the law, even if no petition to set aside
questions of fact, of law, or both fall within the exclusive appellate
the order of default has been presented by him (Sec. 2, Rule 41).
jurisdiction of the Court of Appeals.8 (Emphasis supplied)
Moreover, a petition for certiorari to declare the nullity of a judgment
It is on this score that the Court is inclined to concur with petitioner’s
by default is also available if the trial court improperly declared a party
argument that even if the remedy resorted to was wrong, the Court may
in default, or even if the trial court properly declared a party in default,
refer the case to the Court of Appeals under Rule 56, Section 6,
if grave abuse of discretion attended such declaration.5
paragraph 2 of the 1997 Rules of Civil Procedure, as amended, which
The filing of the present petition is clearly not the proper remedy to provides: "(A)n appeal by certiorari taken to the Supreme Court from
assail the default judgment rendered by the trial court. Petitioner still the Regional Trial Court submitting issues of fact may be referred to the
has the available remedy of filing with the Regional Trial Court a motion Court of Appeals for decision or appropriate action." This despite the
for new trial or an ordinary appeal to the Court of Appeals from the trial express provision in Section 5(f) of the same Rule, which provides that
court’s default judgment. Note that petitioner admits that she was an appeal may be dismissed when there is error in the choice or mode
"properly declared in default."6 Thus, there is no question of any of appeal.
improvident or improper declaration of default by the trial court, and
Both Sections 5(f) and 6 of Rule 57 use the term "may," denoting
the remedy of filing a special civil action for certiorari has been
discretion on the part of the Court in dismissing the appeal or referring
effectively foreclosed on petitioner. Her only recourse then is to file an
the case to the Court of Appeals. The question of fact involved in the
ordinary appeal with the Court of Appeals under Section 2(a), Rule 41
appeal and substantial ends of justice warrant a referral of this case to
of the 1997 Rules of Civil Procedure, as amended.
the Court of Appeals for further appropriate proceedings.
Instead, she came directly to this Court via petition for review on
WHEREFORE, the motion for reconsideration is GRANTED. The petition
certiorari, without setting forth substantial reasons why the ordinary
is reinstated and the case is REFERRED to the Court of Appeals for
remedies under the law should be disregarded and the petition
appropriate action.
entertained. Petitioner cannot even find solace in the Matute case as
the old Rules of Court then applicable explicitly laid down the remedy SO ORDERED.
of an ordinary appeal to the Court of Appeals, and not appeal by
certiorari to this Court, by a defendant declared in default.
Petitioner further argues that the petition involved questions of law,
and the Court should have taken cognizance of the case. The grounds
set forth in her petition prove otherwise, viz.:
GROUNDS
I
THE COMPLAINT FOR REPLEVIN FILED BY RESPONDENTS AGAINST
PETITIONER SHOULD HAVE BEEN DISMISSED ON THE GROUND OF LITIS
PENDENTIA AND FOR RESPONDENTS’ VIOLATION OF THE RULES
AGAINST FORUM-SHOPPING
II
THE TRIAL COURT WENT AHEAD WITH THE EX-PARTE PRESENTATION
OF RESPONDENT’S EVIDENCE DESPITE THE PETITIONER’S PENDING
MOTION FOR RECONSIDERATION
III
THE MONETARY AWARDS FOR DAMAGES AND ATTORNEY’S FEES ARE
UNWARRANTED AND UNJUSTIFIABLE CONSIDERING THAT SUCH ARE
NOT SUPPORTED BY LAW AND JURISPRUDENCE
IV
THE COURT A QUO ISSUED THE ASSAILED DECISION IN A WAY THAT IT
IS NOT IN ACCORD WITH LAW OR APPLICABLE DECISIONS OF THE
SUPREME COURT AND HAS SO FAR DEPARTED FROM THE USUAL
 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. 170678 July 17, 2006
ROMMEL G. MUÑOZ, petitioner,
vs.
COMMISSION ON ELECTIONS, CARLOS IRWIN G. BALDO, JR.,
respondents.
DECISION
YNARES-SANTIAGO, J.:
This is a petition for certiorari and prohibition with prayer for the
issuance of a writ of preliminary injunction and/or temporary
restraining order filed by petitioner Rommel G. Muñoz assailing the
Resolution1 dated December 15, 2005 of the Commission on Elections
(COMELEC) En Banc in SPC No. 04-124 which affirmed the Resolution2
dated October 25, 2004 of the COMELEC First Division granting the
petition of private respondent Carlos Irwin G. Baldo, Jr. to annul
petitioner's proclamation as mayor of Camalig, Albay.
The facts of the case are as follows:
Petitioner and private respondent were candidates for mayor of
Camalig, Albay in the May 10, 2004 election.3 At 6:00 o'clock in the
evening of May 10, 2004, the Municipal Board of Canvassers (MBC)
convened and canvassed the election returns (ER).4
On May 11, 2004, the lawyers of private respondent objected to the
inclusion of the 26 ERs from various precincts based on the following
grounds: 1) eight ERs lack inner seal; 2) seven ERs lack material data; 3)
one ER lack signatures; 4) four ERs lack signatures and thumbmarks of
the members of the Board of Election Inspectors on the envelope
containing them; 5) one ER lack the name and signature of the poll clerk
on the second page thereof; 6) one ER lack the number of votes in words
and figures; and 7) four ERs were allegedly prepared under
intimidation.5
On May 13, 2004, the MBC denied the objections and ruled to include
the objected ERs in the canvass. Private respondent appealed the said
ruling to the COMELEC on May 18, 2004 and was docketed as SPC No.
04-087 and raffled to the COMELEC First Division.6
Despite the pendency of the appeal, petitioner was proclaimed on May
19, 2004 by the MBC as the winning candidate for mayor of Camalig,
Albay.7
On May 21, 2004, private respondent filed with the COMELEC a petition
to annul the proclamation of the petitioner for being premature and
illegal. The case was docketed as SPC No. 04-124 and raffled to the
COMELEC First Division.8
On October 25, 2004, the COMELEC First Division rendered a Resolution
in SPC No. 04-124 granting the petition to annul the proclamation. The
dispositive portion thereof reads:
WHEREFORE, in view of the foregoing, the Commission (FIRST DIVISION)
hereby GRANTS the Petition. The proclamation of x x x ROMMEL
MUñOZ as winning candidate for mayor of Camalig, Albay is ANNULLED
for having been made in an irregular proceeding and for being
precipitate and premature.
SO ORDERED.9
Petitioner's motion for reconsideration10 was denied for lack of merit
by the COMELEC En Banc in a Resolution dated December 15, 2005,
thus:
WHEREFORE, premises considered, the Commission En Banc hereby
DENIES the Motion for Reconsideration filed by x x x Muñoz for lack of
merit. Accordingly, the ANNULMENT and SETTING ASIDE, by the First
Division, of the proclamation of x x x ROMMEL MUñOZ as the duly
elected Mayor is hereby AFFIRMED.
The Regional Election Director of Region V, Atty. Zacarias C. Zaragoza,
Jr., is hereby DIRECTED to constitute a new Municipal Board of
Canvassers from among the Election Officers in the Region.
Accordingly, the new Municipal Board of Canvassers of Camalig, Albay
is hereby DIRECTED to:
a) RECONVENE, and after due notice to all parties/candidates
concerned,
b) RE-CANVASS all the election returns of Camalig, Albay, and on the
basis thereof,
c) PREPARE a new Certificate of Canvass, and forthwith
d) PROCLAIM the winning candidates for Mayoralty position.
SO ORDERED.11
Hence, petitioner files the instant petition for certiorari and prohibition
with prayer for the issuance of a writ of preliminary injunction and/or
temporary restraining order.
On January 17, 2006, the Court issued a temporary restraining order
effective immediately and ordered the COMELEC to cease and desist
from implementing and enforcing the December 15, 2005 Resolution in
SPC No. 04-124.12
Petitioner relies on the following grounds in support of his petition:
I
THE PUBLIC [RESPONDENT] COMELEC COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION
WHEN IT ISSUED THE ASSAILED RESOLUTION DENYING FOR LACK OF
MERIT PETITIONER'S MOTION FOR RECONSIDERATION OF THE 25
OCTOBER [2004] RESOLUTION OF THE PUBLIC RESPONDENT'S FIRST
DIVISION, FOR BEING CONTRARY TO LAW, RULES AND WELL-SETTLED
JURISPRUDENCE;
II
THE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT ISSUED
THE ASSAILED RESOLUTION ANNULLING AND SETTING ASIDE THE
PROCLAMATION OF PETITIONER AS DULY ELECTED MAYOR OF
CAMALIG, ALBAY WITHOUT FIRST RESOLVING THE PENDING APPEAL
FIRST INITIATED, SPC 04-87;
III
THE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT ISSUED
THE ASSAILED RESOLUTION DIRECTING THE NEW MUNICIPAL BOARD
OF CANVASSERS OF CAMALIG, ALBAY, TO RECONVENE AND RE-
CANVASS ALL ELECTION RESULTS OF CAMALIG, ALBAY, FOR BEING
CONTRARY TO LAW.13
The foregoing issues may be summarized into two: 1) whether or not
the COMELEC First Division committed grave abuse of discretion when
it decided only the Petition to Annul Proclamation despite the
agreement of the parties to consolidate private respondent's appeal
from the ruling of the MBC since both cases were raffled to the same
Division and the issue in the latter case was connected to, if not
determinative of, the merits of the former case; and 2) whether or not
the COMELEC En Banc correctly ordered the new MBC to re-canvass all
the ERs and to proclaim the winner on the basis thereof despite the
pendency of the appeal with the First Division.
The petition is partly granted.
Anent the first issue, we find no merit in petitioner's contention.
While Section 9, Rule 3 of the COMELEC Rules of Procedure provides
that "when an action or proceeding involves a question of law and fact
which is similar to or common with that of another action or proceeding,
the same may be consolidated with the action or proceeding bearing
the lower docket number," however, this rule is only permissive, not
mandatory. We have consistently held that the term "may" is indicative
of a mere possibility, an opportunity or an option. The grantee of that
opportunity is vested with a right or faculty which he has the option to
exercise. If he chooses to exercise the right, he must comply with the
conditions attached thereto,14 which in this case require that the cases
to be consolidated must involve similar questions of law and fact.
In the case at bar, the consolidation of SPC No. 04-087 with SPC No. 04-
124 is inappropriate as they do not involve similar questions of law and
fact. SPC No. 04-087 assails the inclusion of the 26 ERs by the MBC on
the ground that these were incomplete, contained material defects and
were prepared under intimidation, issues which are proper for a pre-
proclamation controversy under paragraphs (b) and (c) of Section 243
of the Omnibus Election Code. On the other hand, SPC No. 04-124 is a
petition for the annulment of petitioner's proclamation for allegedly
being prematurely done, in violation of Section 36(i) of COMELEC
Resolution No. 666915 which instructs the board of canvassers "not
proclaim any candidate as winner unless authorized by the Commission
after the latter has ruled on the objections brought to it on appeal by
the losing party; [a]ny proclamation made in violation hereof shall be
void ab initio, unless the contested returns/certificates will not affect the
results of the elections." In fine, SPC No. 04-087 pertains to the
preparation of the ERs which is a pre-proclamation controversy, while
SPC No. 04-124 refers to the conduct of the MBC in proclaiming the
petitioner without authority of the COMELEC.
Mere pendency of the two cases before the same division of the
COMELEC is not a ground for their outright consolidation. The discretion
to consolidate cases may be exercised only when the conditions are
present. In any event, the records are bereft of evidence that the parties
agreed to consolidate the two cases or that the COMELEC First Division
had granted the same.
Further, we find that the COMELEC First Division correctly annulled the
proclamation of the petitioner. Time and again, this Court has given its
imprimatur on the principle that COMELEC is with authority to annul
any canvass and proclamation which was illegally made. 16 At the time
the proclamation was made, the COMELEC First Division had not yet
resolved SPC No. 04-087. Pursuant to Section 36(i) of COMELEC
Resolution No. 6669, which finds basis in Section 20(i) of Republic Act
(R.A.) No. 7166,17 the MBC should not have proclaimed petitioner as the
winning candidate absent the authorization from the COMELEC. Any
proclamation made under such circumstances is void ab initio.18
We likewise do not agree with petitioner's contention that the
proclamation was valid as the contested ERs will not affect the results
of the election.
Section 20(i) of R.A. No. 7166 reads:
Sec. 20. Procedure in Disposition of Contested Election Returns. –
xxxx
(i) The board of canvassers shall not proclaim any candidate as winner
unless authorized by the Commission after the latter has ruled on the
objections brought to it on appeal by the losing party. Any proclamation
made in violation hereof shall be void ab initio, unless the contested
returns will not adversely affect the results of the election. (Emphasis
supplied)
The phrase "results of the election" is not statutorily defined. However,
it had been jurisprudentially explained in Lucero v. Commission on
Elections19 to mean:
[T]he net result of the election in the rest of the precincts in a given
constituency, such that if the margin of a leading candidate over that of
his closest rival in the latter precincts is less than the total number of
votes in the precinct where there was failure of election, then such
failure would certainly affect "the result of the election."20
Although the Lucero case involves a failure of election, the definition of
"results of election" applies to the disposition of contested election
returns under Section 20(i) of R.A. No. 7166. In both situations, the law
endeavors to determine the will of the people in an expeditious manner
in that if the total number of votes in the precinct where there is a
failure of election or in case of the contested ERs, is less than the lead
of a candidate over his closest rival, the results of the election would
not be adversely affected. Hence, a proclamation may be made because
the winning candidate can be ascertained. Otherwise, a special election
must be held or an authorization of the COMELEC is necessary after
ruling on the objections brought to it on appeal by the losing party in
order to determine the will of the electorate. Proclamation made in
violation of the rules is void ab initio as it would be based on an
incomplete canvass of votes. It is well settled that an incomplete
canvass of votes is illegal and cannot be the basis of a subsequent
proclamation. A canvass is not reflective of the true vote of the
electorate unless the board of canvassers considers all returns and
omits none.21
In the case at bar, petitioner obtained a margin of 762 votes over the
private respondent based on the canvass of the uncontested ERs
whereas the total number of votes in the 26 contested ERs is 5,178,
which is higher than the 762-lead of the petitioner over the private
respondent. Clearly, the results of the election would be adversely
affected by the uncanvassed returns.
As aptly held by the COMELEC First Division:
The votes obtained by petitioner and private respondent tallied in the
contested election returns can not be the basis of the partial
proclamation. The objected election returns cannot be considered,
even provisionally, as the true and final result of the elections in the
contested precincts. The possibility remains, remote thought (sic) it may
be that they could be excluded and the results reflected therein
disregarded. The contested election returns involved 5,178 votes as this
is the number of voters who actually voted in the precincts covered by
the objections. The lead of [petitioner] over [private respondent] as
shown in the uncontested returns was less than this number. Clearly,
the results of the elections could be adversely affected by the
uncanvassed returns. Truly, the Board erred in its perception that its
partial proclamation was warranted.22
While the COMELEC En Banc correctly affirmed the October 25, 2004
Resolution of its First Division in SPC 04-124 insofar as it annulled
petitioner's proclamation, however, we find that it exceeded its
authority and thus gravely abused its discretion when it ordered the
new MBC to re-canvass all ERs even before its First Division could decide
on SPC No. 04-087 filed by private respondent assailing the ruling of the
MBC to include the 26 contested ERs in the canvass.
Section 3 of Article IX-C of the 1987 Constitution provides:
Sec. 3. The Commission on Elections may sit en banc or in two divisions,
and shall promulgate its rules of procedure in order to expedite
disposition of election cases, including pre-proclamation controversies.
All such election cases shall be heard and decided in division, provided
that motions for reconsideration of decisions shall be decided by the
Commission en banc.
In Sarmiento v. Commission on Elections23 and Zarate v. Commission on
Elections,24 the Court similarly held that "election cases must first be
heard and decided by a Division of the Commission," and that the
"Commission, sitting en banc, does not have the authority to hear and
decide the same at the first instance."
Thus, in Acosta v. Commission on Elections,25 the Court held that the
COMELEC En Banc violated the foregoing Constitutional mandate when
it affirmed the trial court's decision that was not the subject of the
special civil action before it, but of the appeal filed by therein petitioner,
which was still undocketed at the time and the parties have not yet
submitted any evidence in relation thereto.
Clearly, by ordering the re-canvass of all the ERs in SPC No. 04-124, the
COMELEC En Banc in effect rendered a decision on the merits of SPC No.
04-087, which up to the present is still pending before its First Division,
in violation of the rule that it does not have the authority to hear and
decide election cases, including pre-proclamation controversies, at the
first instance. As the proclamation of the winning candidate has been
delayed for more than two years now due to these cases, the COMELEC
First Division is directed to expeditiously resolve SPC No. 04-087, which
is summary in nature.
WHEREFORE, in view of the foregoing, the petition is PARTLY
GRANTED. The December 15, 2005 Resolution of the COMELEC En Banc
in SPC No. 04-124 which affirmed the annulment and setting aside by
its First Division of the proclamation of petitioner Rommel G. Muñoz as
Mayor of Camalig, Albay for being premature, is AFFIRMED with the
MODIFICATION that the order to constitute a new Municipal Board of
Canvassers to re-canvass all the election returns of Camalig, Albay; to
prepare a new Certificate of Canvass; and to declare the winning
candidate for mayoralty position is SET ASIDE for having been issued
with grave abuse of discretion. The temporary restraining order issued
on January 17, 2006 is hereby SET ASIDE.
SO ORDERED.
 G.R. No. 98382 May 17, 1993
PHILIPPINE NATIONAL BANK, petitioner,
vs.
THE COURT OF APPEALS and EPIFANIO DE LA CRUZ, respondents.
Santiago, Jr., Vidad, Corpus & Associates for petitioner.
Pedro R. Lazo for spouses-intervenors.
Rosendo G. Tansinsin, Jr. for private respondent.
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 the third week and cannot thus be equated with compliance in law.
spouses Conrado and Marina De Vera filed a petition in intervention Indeed, where the word is used simply as a measure of duration of time
claiming that the two parcels of land involved herein were sold to them and without reference to the calendar, it means a period of seven
on June 4, 1970 by petitioner for which transfer certificates of title were consecutive days without regard to the day of the week on which it
issued in their favor (p. 40, Rollo). On the other hand, private begins (1 Tolentino, supra at p. 467 citing Derby).
respondent pressed the idea that the alleged intervenors have no more
Certainly, it would have been absurd to exclude March 28, 1969 as
interest in the disputed lots in view of the sale effected by them to
reckoning point in line with the third paragraph of Article 13 of the New
Teresa Castillo, Aquilino and Antonio dela Cruz in 1990 (pp. 105-106,
Civil Code, for the purpose of counting the first week of publication as
Rollo).
to the last day thereof fall on April 4, 1969 because this will have the
On March 9, 1992, the Court resolved to give due course to the petition effect of extending the first week by another day. This incongruous
and required the parties to submit their respective memoranda (p. 110, repercussion could not have been the unwritten intention of the
Rollo). lawmakers when Act No. 3135 was enacted. Verily, inclusion of the first
day of publication is in keeping with the computation in Bonnevie vs.
Now, in support of the theory on adherence to the conditions spelled in
Court of Appeals (125 SCRA 122 [1983]) where this Court had occasion
the preliminary portion of this discourse, the pronouncement of this
to pronounce, through Justice Guerrero, that the publication of notice
Court in Bonnevie vs. Court of Appeals (125 SCRA [1983]; p. 135, Rollo)
on June 30, July 7 and July 14, 1968 satisfied the publication
is sought to be utilized to press the point that the notice need not be
requirement under Act No. 3135. Respondent court cannot, therefore,
published for three full weeks. According to petitioner, there is no
be faulted for holding that there was no compliance with the strict
breach of the proviso since after the first publication on March 28, 1969,
requirements of publication independently of the so- called admission
the second notice was published on April 11, 1969 (the last day of the
in judicio.
second week), while the third publication on April 12, 1969 was
announced on the first day of the third week. Petitioner thus concludes WHEREFORE, the petitions for certiorari and intervention are hereby
that there was no violation from the mere happenstance that the third dismissed and the decision of the Court of Appeals dated April 17, 1991
publication was made only a day after the second publication since it is is hereby affirmed in toto.
enough that the second publication be made on any day within the
SO ORDERED.
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;
the publication effected on April 11, 1969 cannot be construed as
sufficient advertisement for the second week because the period for
the first week should be reckoned from March 28, 1969 until April 3,
1969 while the second week should be counted from April 4, 1969 until
April 10, 1969. It is clear that the announcement on April 11, 1969 was
both theoretically and physically accomplished during the first day of
 G.R. No. 109902 August 2, 1994
ALU-TUCP, Representing Members: ALAN BARINQUE, with
13 others, namely: ENGR. ALAN G. BARINQUE, ENGR.
DARRELL LEE ELTAGONDE, EDUARD H. FOOKSON, JR.,
ROMEO R. SARONA, RUSSELL GACUS, JERRY BONTILAO,
EUSEBIO MARIN, JR., LEONIDO ECHAVEZ, BONIFACIO
MEJOS, EDGAR S. BONTUYAN, JOSE G. GARGUENA, JR.,
OSIAS B. DANDASAN, and GERRY I. FETALVERO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and NATIONAL
STEEL CORPORATION (NSC), respondents.
Leonard U. Sawal for petitioners.
Saturnino Mejorada for private respondent.
FELICIANO, J.:
In this Petition for Certiorari, petitioners assail the Resolution
of the National Labor Relations Commission ("NLRC") dated 8
January 1993 which declared petitioners to be project
employees of private respondent National Steel Corporation
("NSC"), and the NLRC's subsequent Resolution of 15 February
1993, denying petitioners' motion for reconsideration.
Petitioners plead that they had been employed by respondent
NSC in connection with its Five Year Expansion Program
(FAYEP I & II) 1 for varying lengths of time when they were
separated from NSC's service:
Employee Date Nature of Separated
Employed Employment
1. Alan Barinque 5-14-82 Engineer 1 8-31-91
2. Jerry Bontilao 8-05-85 Engineer 2 6-30-92
3. Edgar Bontuyan 11-03-82 Chairman to present
4. Osias Dandasan 9-21-82 Utilityman 1991
5. Leonido Echavez 6-16-82 Eng. Assistant 6-30-92
6. Darrell Eltagonde 5-20-85 Engineer 1 8-31-91
7. Gerry Fetalvero 4-08-85 Mat. Expediter regularized
8. Eduard Fookson 9-20-84 Eng. Assistant 8-31-91
9. Russell Gacus 1-30-85 Engineer 1 6-30-92
10. Jose Garguena 3-02-81 Warehouseman to present
11. Eusebio Mejos 11-17-82 Survey Aide 8-31-91
12. Bonifacio Mejos 11-17-82 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 believe this claim is without legal basis. The simple fact that
evading otherwise applicable requirements of labor laws. the employment of petitioners as project employees had
Thus, the particular component projects embraced in the Five gone beyond one (1) year, does not detract from, or legally
Year Expansion Program, to which petitioners were assigned, dissolve, their status as project employees. 10 The second
were distinguishable from the regular or ordinary business of paragraph of Article 280 of the Labor Code, quoted above,
NSC which, of course, is the production or making and providing that an employee who has served for at least one
marketing of steel products. During the time petitioners (1) year, shall be considered a regular employee, relates to
rendered services to NSC, their work was limited to one or casual employees, not to project employees.
another of the specific component projects which made up In the case of Mercado, Sr. vs. National Labor Relations
the FAYEP I and II. There is nothing in the record to show that Commission, 11 this Court ruled that the proviso in the second
petitioners were hired for, or in fact assigned to, other paragraph of Article 280 relates only to casual employees and
purposes, e.g., for operating or maintaining the old, or is not applicable to those who fall within the definition of said
previously installed and commissioned, steel-making Article's first paragraph, i.e., project employees. The familiar
machinery and equipment, or for selling the finished steel grammatical rule is that a proviso is to be construed with
products. reference to the immediately preceding part of the provision
We, therefore, agree with the basic finding of the NLRC (and to which it is attached, and not to other sections thereof,
the Labor Arbiter) that the petitioners were indeed "project unless the clear legislative intent is to restrict or qualify not
employees:" only the phrase immediately preceding the proviso but also
earlier provisions of the statute or even the statute itself as a
It is well established by the facts and evidence on record that whole. No such intent is observable in Article 280 of the Labor
herein 13 complainants were hired and engaged for specific Code, which has been quoted earlier.
activities or undertaking the period of which has been
determined at time of hiring or engagement. It is of public ACCORDINGLY, in view of the foregoing, the Petition for
knowledge and which this Commission can safely take judicial Certiorari is hereby DISMISSED for lack of merit. The
notice that the expansion program (FAYEP) of respondent NSC Resolutions of the NLRC dated 8 January 1993 and 15
consist of various phases [of] project components which are February 1993 are hereby AFFIRMED. No pronouncement as
being executed or implemented independently or to costs.
simultaneously from each other . . . SO ORDERED.
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
 G.R. No. 90501 August 5, 1991
ARIS (PHIL.) INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER FELIPE
GARDUQUE III, LEODEGARIO DE GUZMAN, LILIA PEREZ, ROBERTO
BESTAMONTE, AIDA OPENA, REYNALDO TORIADO, APOLINARIO
GAGAHINA, RUFINO DE CASTRO, FLORDELIZA RAYOS DEL SOL, STEVE
SANCHO, ESTER CAIRO, MARIETA MAGALAD, and MARY B. NADALA,
respondents.
Cesar C. Cruz & Partners for petitioner.
Zosimo Morillo for respondent Rayos del Sol.
Banzuela, Flores, Miralles, Raneses, Sy & Associates for private
respondents.
DAVIDE, JR., J.:
Petitioner assails the constitutionality of the amendment introduced by
Section 12 of Republic Act No. 6715 to Article 223 of the Labor Code of
the Philippines (PD No. 442, as amended) allowing execution pending
appeal of the reinstatement aspect of a decision of a labor arbiter
reinstating a dismissed or separated employee and of Section 2 of the
NLRC Interim Rules on Appeals under R.A. No. 6715 implementing the
same. It also questions the validity of the Transitory Provision (Section
17) of the said Interim Rules.
The challenged portion of Section 12 of Republic Act No. 6715, which
took effect on 21 March 1989, reads as follows:
SEC 12. Article 223 of the same code is amended to read as follows:
ART. 223. Appeal.
xxx xxx xxx
In any event, the decision of the Labor Arbiter reinstating a dismissed
or separated employee, in so far as the reinstatement aspect is
concerned, shall immediately be executory, even pending appeal. The
employee shall either be admitted back to work under the same terms
and conditions prevailing prior to his dismissal or separation or, at the
option of the employer, merely reinstated in the payroll. The posting of
a bond by the employer shall not stay the execution for reinstatement
provided therein.
This is a new paragraph ingrafted into the Article.
Sections 2 and 17 of the "NLRC Interim Rules On Appeals Under R.A. No.
6715, Amending the Labor Code", which the National Labor Relations
Commission (NLRC) promulgated on 8 August 1989, provide as follows:
Section 2. Order of Reinstatement and Effect of Bond. — In so far as the
reinstatement aspect is concerned, the decision of the Labor Arbiter
reinstating a dismissed or separated employee shall immediately be
executory even pending appeal. The employee shall either be admitted
back to work under the same terms and conditions prevailing prior to
his dismissal or separation, or, at the option of the employer, merely be
reinstated in the payroll.
The posting of a bond by the employer shall not stay the execution for
reinstatement.
xxx xxx xxx
Section 17. Transitory provision. — Appeals filed on or after March 21,
1989, but prior to the effectivity of these Interim Rules must conform
to the requirements as herein set forth or as may be directed by the
Commission.
The antecedent facts and proceedings which gave rise to this petition
are not disputed:
On 11 April 1988, private respondents, who were employees of
petitioner, aggrieved by management's failure to attend to their
complaints concerning their working surroundings which had become
detrimental and hazardous, requested for a grievance conference. As
none was arranged, and believing that their appeal would be fruitless,
they grouped together after the end of their work that day with other
employees and marched directly to the management's office to protest
its long silence and inaction on their complaints.
On 12 April 1988, the management issued a memorandum to each of
the private respondents, who were identified by the petitioner's
supervisors as the most active participants in the rally requiring them to
explain why they should not be terminated from the service for their
conduct. Despite their explanation, private respondents were dismissed
for violation of company rules and regulations, more specifically of the
provisions on security and public order and on inciting or participating
in illegal strikes or concerted actions.
Private respondents lost no time in filing a complaint for illegal dismissal
against petitioner and Mr. Gavino Bayan with the regional office of the
NLRC at the National Capital Region, Manila, which was docketed
therein as NLRC-NCR-00-0401630-88.
After due trial, Labor Arbiter Felipe Garduque III handed down on 22
June 1989 a decision' the dispositive portion of which reads:
ACCORDINGLY, respondent Aris (Phils.), Inc. is hereby ordered to
reinstate within ten (10) days from receipt hereof, herein complainants
Leodegario de Guzman, Rufino de Castro, Lilia M. Perez, Marieta
Magalad, Flordeliza Rayos del Sol, Reynaldo Toriado, Roberto
Besmonte, Apolinario Gagahina, Aidam (sic) Opena, Steve C. Sancho
Ester Cairo, and Mary B. Nadala to their former respective positions or
any substantial equivalent positions if already filled up, without loss of
seniority right and privileges but with limited backwages of six (6)
months except complainant Leodegario de Guzman.
All other claims and prayers are hereby denied for lack of merit.
SO ORDERED.
On 19 July 1989, complainants (herein private respondents) filed a
Motion For Issuance of a Writ of Execution2 pursuant to the above-
quoted Section 12 of R.A. No. 6715.
On 21 July 1989, petitioner filed its Appeal.3
On 26 July 1989, the complainants, except Flor Rayos del Sol, filed a
Partial Appeal.4
On 10 August 1989, complainant Flor Rayos del Sol filed a Partial
Appeal.5
On 29 August 1989, petitioner filed an Opposition6 to the motion for
execution alleging that Section 12 of R.A. No. 6715 on execution
pending appeal cannot be applied retroactively to cases pending at the
time of its effectivity because it does not expressly provide that it shall
be given retroactive effect7 and to give retroactive effect to Section 12
thereof to pending cases would not only result in the imposition of an
additional obligation on petitioner but would also dilute its right to
appeal since it would be burdened with the consequences of
reinstatement without the benefit of a final judgment. In their Reply8
filed on 1 September 1989, complainants argued that R.A. No. 6715 is
not sought to be given retroactive effect in this case since the decision
to be executed pursuant to it was rendered after the effectivity of the
Act. The said law took effect on 21 March 1989, while the decision was
rendered on 22 June 1989.
Petitioner submitted a Rejoinder to the Reply on 5 September 1989.9
On 5 October 1989, the Labor Arbiter issued an Order granting the
motion for execution and the issuance of a partial writ of execution10
as far as reinstatement of herein complainants is concerned in
consonance with the provision of Section 2 of the rules particularly the
last sentence thereof.
In this Order, the Labor Arbiter also made reference to Section 17 of the
NLRC Interim Rules in this wise:
Since Section 17 of the said rules made mention of appeals filed on or
after March 21, 1989, but prior to the effectivity of these interim rules
which must conform with the requirements as therein set forth (Section
9) or as may be directed by the Commission, it obviously treats of
decisions of Labor Arbiters before March 21,1989. With more reason
these interim rules be made to apply to the instant case since the
decision hereof (sic) was rendered thereafter.11
Unable to accept the above Order, petitioner filed the instant petition
on 26 October 198912 raising the issues adverted to in the introductory
portion of this decision under the following assignment of errors:
A. THE LABOR ARBITER A QUO AND THE NLRC, IN ORDERING THE
REINSTATEMENT OF THE PRIVATE RESPONDENTS PENDING APPEAL
AND IN PROVIDING FOR SECTION 2 OF THE INTERIM RULES,
RESPECTIVELY, ACTED WITHOUT AND IN EXCESS OF JURISDICTION
SINCE THE BASIS FOR SAID ORDER AND INTERIM RULE, i.e., SECTION 12
OF R.A. 6715 IS VIOLATIVE OF THE CONSTITUTIONAL GUARANTY OF
DUE PROCESS IT BEING OPPRESSIVE AND UNREASONABLE.
B. GRANTING ARGUENDO THAT THE PROVISION IN(SIC)
REINSTATEMENT PENDING APPEAL IS VALID, NONETHELESS, THE
LABOR ARBITER A QUO AND THE NLRC STILL ACTED IN EXCESS AND
WITHOUT JURISDICTION IN RETROACTIVELY APPLYING SAID PROVISION
TO PENDING LABOR CASES.
In Our resolution of 7 March 1989, We required the respondents to
comment on the petition.
Respondent NLRC, through the Office of the Solicitor General, filed its
Comment on 20 November 1989.13 Meeting squarely the issues raised
by petitioner, it submits that the provision concerning the mandatory
and automatic reinstatement of an employee whose dismissal is found
unjustified by the labor arbiter is a valid exercise of the police power of
the state and the contested provision "is then a police legislation."
As regards the retroactive application thereof, it maintains that being
merely procedural in nature, it can apply to cases pending at the time
of its effectivity on the theory that no one can claim a vested right in a
rule of procedure. Moreover, such a law is compatible with the
constitutional provision on protection to labor.
On 11 December 1989, private respondents filed a Manifestation14
informing the Court that they are adopting the Comment filed by the
Solicitor General and stressing that petitioner failed to comply with the
requisites for a valid petition for certiorari under Rule 65 of the Rules of
Court.
On 20 December 1989, petitioner filed a Rejoinder15 to the Comment
of the Solicitor General.
In the resolution of 11 January 1990,16 We considered the Comments
as respondents' Answers, gave due course to the petition, and directed
that the case be calendared for deliberation.
In urging Us to declare as unconstitutional that portion of Section 223
of the Labor Code introduced by Section 12 of R.A. No. 6715, as well as
the implementing provision covered by Section 2 of the NLRC Interim
Rules, allowing immediate execution, even pending appeal, of the
reinstatement aspect of a decision of a labor arbiter reinstating a
dismissed or separated employee, petitioner submits that said portion
violates the due process clause of the Constitution in that it is
oppressive and unreasonable. It argues that a reinstatement pending
appeal negates the right of the employer to self-protection for it has
been ruled that an employer cannot be compelled to continue in
employment an employee guilty of acts inimical to the interest of the
employer; the right of an employer to dismiss is consistent with the
legal truism that the law, in protecting the rights of the laborer,
authorizes neither the oppression nor the destruction of the employer.
For, social justice should be implemented not through mistaken
sympathy for or misplaced antipathy against any group, but even-
handedly and fairly.17
To clinch its case, petitioner tries to demonstrate the oppressiveness of
reinstatement pending appeal by portraying the following
consequences: (a) the employer would be compelled to hire additional
employees or adjust the duties of other employees simply to have
someone watch over the reinstated employee to prevent the
commission of further acts prejudicial to the employer, (b)
reinstatement of an undeserving, if not undesirable, employee may
demoralize the rank and file, and (c) it may encourage and embolden
not only the reinstated employees but also other employees to commit
similar, if not graver infractions.
These rationalizations and portrayals are misplaced and are purely
conjectural which, unfortunately, proceed from a misunderstanding of
the nature and scope of the relief of execution pending appeal.
Execution pending appeal is interlinked with the right to appeal. One
cannot be divorced from the other. The latter may be availed of by the
losing party or a party who is not satisfied with a judgment, while the
former may be applied for by the prevailing party during the pendency
of the appeal. The right to appeal, however, is not a constitutional,
natural or inherent right. It is a statutory privilege of statutory origin18
and, therefore, available only if granted or provided by statute. The law
may then validly provide limitations or qualifications thereto or relief to
the prevailing party in the event an appeal is interposed by the losing
party. Execution pending appeal is one such relief long recognized in
this jurisdiction. The Revised Rules of Court allows execution pending
appeal and the grant thereof is left to the discretion of the court upon
good reasons to be stated in a special order.19
Before its amendment by Section 12 of R.A. No. 6715, Article 223 of the
Labor Code already allowed execution of decisions of the NLRC pending
their appeal to the Secretary of Labor and Employment.
In authorizing execution pending appeal of the reinstatement aspect of
a decision of the Labor Arbiter reinstating a dismissed or separated
employee, the law itself has laid down a compassionate policy which,
once more, vivifies and enhances the provisions of the 1987
Constitution on labor and the working-man.
These provisions are the quintessence of the aspirations of the
workingman for recognition of his role in the social and economic life of
the nation, for the protection of his rights, and the promotion of his
welfare. Thus, in the Article on Social Justice and Human Rights of the
Constitution,20 which principally directs Congress to give highest
priority to the enactment of measures that protect and enhance the
right of all people to human dignity, reduce social, economic, and
political inequalities, and remove cultural inequities by equitably
diffusing wealth and political power for the common good, the State is
mandated to afford full protection to labor, local and overseas,
organized and unorganized, and promote full employment and equality
of employment opportunities for all; to guarantee the rights of all
workers to self-organization, collective bargaining and negotiations,
and peaceful concerted activities, including the right to strike in
accordance with law, security of tenure, human conditions of work, and
a living wage, to participate in policy and decision-making processes
affecting their rights and benefits as may be provided by law; and to
promote the principle of shared responsibility between workers and
employers and the preferential use of voluntary modes in settling
disputes. Incidentally, a study of the Constitutions of various nations
readily reveals that it is only our Constitution which devotes a separate
article on Social Justice and Human Rights. Thus, by no less than its
fundamental law, the Philippines has laid down the strong foundations
of a truly just and humane society. This Article addresses itself to
specified areas of concern labor, agrarian and natural resources reform,
urban land reform and housing, health, working women, and people's
organizations and reaches out to the underprivileged sector of society,
for which reason the President of the Constitutional Commission of
1986, former Associate Justice of this Court Cecilia Muñoz-Palma, aptly
describes this Article as the "heart of the new Charter."21
These duties and responsibilities of the State are imposed not so much
to express sympathy for the workingman as to forcefully and
meaningfully underscore labor as a primary social and economic force,
which the Constitution also expressly affirms With equal intensity.22
Labor is an indispensable partner for the nation's progress and stability.
If in ordinary civil actions execution of judgment pending appeal is
authorized for reasons the determination of which is merely left to the
discretion of the judge, We find no plausible reason to withhold it in
cases of decisions reinstating dismissed or separated employees. In
such cases, the poor employees had been deprived of their only source
of livelihood, their only means of support for their family their very
lifeblood. To Us, this special circumstance is far better than any other
which a judge, in his sound discretion, may determine. In short, with
respect to decisions reinstating employees, the law itself has
determined a sufficiently overwhelming reason for its execution
pending appeal.
The validity of the questioned law is not only supported and sustained
by the foregoing considerations. As contended by the Solicitor General,
it is a valid exercise of the police power of the State. Certainly, if the
right of an employer to freely discharge his employees is subject to
regulation by the State, basically in the exercise of its permanent police
power on the theory that the preservation of the lives of the citizens is
a basic duty of the State, that is more vital than the preservation of
corporate profits.23 Then, by and pursuant to the same power, the
State may authorize an immediate implementation, pending appeal, of
a decision reinstating a dismissed or separated employee since that
saving act is designed to stop, although temporarily since the appeal
may be decided in favor of the appellant, a continuing threat or danger
to the survival or even the life of the dismissed or separated employee
and its family.
The charge then that the challenged law as well as the implementing
rule are unconstitutional is absolutely baseless.1âwphi1 Laws are
presumed constitutional.24 To justify nullification of a law, there must
be a clear and unequivocal breach of the Constitution, not a doubtful
and argumentative implication; a law shall not be declared invalid
unless the conflict with the constitution is clear beyond reasonable
doubt.25 In Parades, et al. vs. Executive Secretary26 We stated:
2. For one thing, it is in accordance with the settled doctrine that
between two possible constructions, one avoiding a finding of
unconstitutionality and the other yielding such a result, the former is to
be preferred. That which will save, not that which will destroy,
commends itself for acceptance. After all, the basic presumption all
these years is one of validity. The onerous task of proving otherwise is
on the party seeking to nullify a statute. It must be proved by clear and
convincing evidence that there is an infringement of a constitutional
provision, save in those cases where the challenged act is void on its
face. Absent such a showing, there can be no finding of
unconstitutionality. A doubt, even if well-founded, does not suffice.
Justice Malcolm's aphorism is apropos: To doubt is to sustain.27
The reason for this:
... can be traced to the doctrine of separation of powers which enjoins
on each department a proper respect for the acts of the other
departments. ... The theory is that, as the joint act of the legislative and
executive authorities, a law is supposed to have been carefully studied
and determined to be constitution before it was finally enacted. Hence,
as long as there is some other basis that can be used by the courts for
its decision, the constitutionality of the challenged law will not be
touched upon and the case will be decided on other available
grounds.28
The issue concerning Section 17 of the NLRC Interim Rules does not
deserve a measure of attention. The reference to it in the Order of the
Labor Arbiter of 5 October 1989 was unnecessary since the procedure
of the appeal proper is not involved in this case. Moreover, the
questioned interim rules of the NLRC, promulgated on 8 August 1989,
can validly be given retroactive effect. They are procedural or remedial
in character, promulgated pursuant to the authority vested upon it
under Article 218(a) of the Labor Code of the Philippines, as amended.
Settled is the rule that procedural laws may be given retroactive
effect.29 There are no vested rights in rules of procedure.30 A remedial
statute may be made applicable to cases pending at the time of its
enactment.31
WHEREFORE, the petition is hereby DISMISSED for lack of merit. Costs
against petitioner.
SO ORDERED.
G.R. No. 115044 January 27, 1995
HON. ALFREDO S. LIM, in his capacity as Mayor of Manila, and the
City of Manila, petitioners,
vs.
 HON. FELIPE G. PACQUING, as Judge, branch 40, Regional Trial
Court of Manila and ASSOCIATED CORPORATION, respondents.
G.R. No. 117263 January 27, 1995
TEOFISTO GUINGONA, JR. and DOMINADOR R. CEPEDA,
petitioners,
vs.
HON. VETINO REYES and ASSOCIATED DEVELOPMENT
CORPORATION, respondents.
PADILLA, J.:
These two (2) cases which are inter-related actually involve simple
issues. if these issues have apparently become complicated, it is not
by reason of their nature because of the events and dramatis
personae involved.
The petition in G.R. No. 115044 was dismissed by the First Division
of this Court on 01 September 1994 based on a finding that there
was "no abuse of discretion, much less lack of or excess of
jurisdiction, on the part of respondent judge [Pacquing]", in issuing
the questioned orders. Judge Pacquing had earlier issued in Civil
Case No. 88-45660, RTC of Manila, Branch 40, the following orders
which were assailed by the Mayor of the City of Manila, Hon. Alfredo
S. Lim, in said G.R. No. 115044:
a. order dated 28 March 1994 directing Manila mayor Alfredo S. Lim
to issue the permit/license to operate the jai-alai in favor of
Associated Development Corporation (ADC).
b. order dated 11 April 1994 directing mayor Lim to explain why he
should not be cited for contempt for non-compliance with the order
dated 28 March 1994.
c. order dated 20 April 1994 reiterating the previous order directing
Mayor Lim to immediately issue the permit/license to Associated
Development Corporation (ADC).
The order dated 28 march 1994 was in turn issued upon motion by
ADC for execution of a final judgment rendered on 9 September
1988 which ordered the Manila Mayor to immediately issue to ADC
the permit/license to operate the jai-alai in Manila, under Manila
Ordinance No. 7065.
On 13 September 1994, petitioner Guingona (as executive
secretary) issued a directive to then chairman of the Games and
Amusements Board (GAB) Francisco R. Sumulong, jr. to hold in
abeyance the grant of authority, or if any had been issued, to
withdraw such grant of authority, to Associated Development
Corporation to operate the jai-alai in the City of Manila, until the
following legal questions are properly resolved:
1. Whether P.D. 771 which revoked all existing Jai-Alai franchisers
issued by local governments as of 20 August 1975 is
unconstitutional.
2. Assuming that the City of Manila had the power on 7 September
1971 to issue a Jai-Alai franchise to Associated Development
Corporation, whether the franchise granted is valied considering
that the franchise has no duration, and appears to be granted in
perpetuity.
3. Whether the City of Manila had the power to issue a Jai-Alai
franchise to Associated Development Corporation on 7 September
1971 in view of executive Order No. 392 dated 1 January 1951 which
transferred from local governments to the Games and Amusements
Board the power to regulate Jai-Alai.1
On 15 September 1994, respondent Associated Development
Corporation (ADC) filed a petition for prohibition, mandamus,
injunction and damages with prayer for temporary restraining order
and/or writ of preliminary injunction in the Regional Trial Court of
Manila against petitioner Guingona and then GAB chairman
Sumulong, docketed as Civil Case No. 94-71656, seeking to prevent
GAB from withdrawing the provisional authority that had earlier
been granted to ADC. On the same day, the RTC of Manila, Branch
4, through presiding Judge Vetino Reyes, issued a temporary
restraining order enjoining the GAB from withdrawing ADC's
provisional authority. This temporary restraining order was
converted into a writ of preliminary injunction upon ADC's posting
of a bond in the amount of P2,000,000.00.2
Subsequently, also in G.R. No. 115044, the Republic of the
Philippines, through the Games and Amusements Board, filed a
"Motion for Intervention; for Leave to File a Motion for
reconsideration in Intervention; and to Refer the case to the Court
En Banc" and later a "Motion for Leave to File Supplemental Motion
for Reconsideration-in-Intervention and to Admit Attached
Supplemental Motion for Reconsideration-in-Intervention".
In an En Banc Resolution dated 20 September 1994, this Court
referred G.R. No. 115044 to the Court En Banc and required the
respondents therein to comment on the aforementioned motions.
Meanwhile, Judge Reyes on 19 October 1994 issued another order,
this time, granting ADC a writ of preliminary mandatory injunction
against Guingona and GAB to compel them to issue in favor of ADC
the authority to operate jai-alai.
Guingona, as executive secretary, and Dominador Cepeda, Jr. as the
new GAB chairman, then filed the petition in G.R. No. 117263
assailing the abovementioned orders of respondent Judge Vetino
Reyes.
On 25 October 1994, in G.R. No. 117263, this Court granted
petitioner's motion for leave to file supplemental petition and to
admit attached supplemental petition with urgent prayer for
restraining order. The Court further required respondents to file
their comment on the petition and supplemental petition with
urgent prayer for restraining order. The Court likewise set the case
and all incidents thereof for hearing on 10 November 1994.
At the hearing on 10 November 1994, the issues to be resolved were
formulated by the Court as follows:
1. whether or not intervention by the Republic of the Philippines at
this stage of the proceedings is proper;
2. assuming such intervention is proper, whether or not the
Associated Development Corporation has a valid and subsisting
franchise to maintain and operate the jai-alai;
3. whether or not there was grave abuse of discretion committed by
respondent Judge Reyes in issuing the aforementioned temporary
restraining order (later writ of preliminary injunction); and
4. whether or not there was grave abuse of discretion committed by
respondent Judge Reyes in issuing the aforementioned writ of
preliminary mandatory injunction.
On the issue of the propriety of the intervention by the Republic of
the Philippines, a question was raised during the hearing on 10
November 1994 as to whether intervention in G.R. No. 115044 was
the proper remedy for the national government to take in
questioning the existence of a valid ADC franchise to operate the jai-
alai or whether a separate action for quo warranto under Section 2,
Rule 66 of the Rules of Court was the proper remedy.
We need not belabor this issue since counsel for respondent ADC
agreed to the suggestion that this Court once and for all settle all
substantive issues raised by the parties in these cases. Moreover,
this Court can consider the petition filed in G.R. No. 117263 as one
for quo warranto which is within the original jurisdiction of the Court
under section 5(1), Article VIII of the Constitution. 3
On the propriety of intervention by the Republic, however, it will be
recalled that this Court in Director of Lands v. Court of Appeals (93
SCRA 238) allowed intervention even beyond the period prescribed
in Section 2 Rule 12 of the Rules of Court. The Court ruled in said
case that a denial of the motions for intervention would "lead the
Court to commit an act of injustice to the movants, to their
successor-in-interest and to all purchasers for value and in good
faith and thereby open the door to fraud, falsehood and
misrepresentation, should intervenors' claim be proven to be true."
In the present case, the resulting injustice and injury, should the
national government's allegations be proven correct, are manifest,
since the latter has squarely questioned the very existence of a valid
franchise to maintain and operate the jai-alai (which is a gambling
operation) in favor of ADC. As will be more extensively discussed
later, the national government contends that Manila Ordinance No.
7065 which purported to grant to ADC a franchise to conduct jai-alai
operations is void and ultra vires since Republic Act No. 954,
approved on 20 June 1953, or very much earlier than said Ordinance
No. 7065, the latter approved 7 September 1971, in Section 4
thereof, requires a legislative franchise, not a municipal franchise,
for the operation of jai-alai. Additionally, the national government
argues that even assuming, arguendo, that the abovementioned
ordinance is valid, ADC's franchise was nonetheless effectively
revoked by Presidential decree No. 771, issued on 20 August 1975,
Sec. 3 of which expressly revoked all existing franchises and permits
to operate all forms of gambling facilities (including the jai-alai)
issued by local governments.
On the other hand, ADC's position is that Ordinance No. 7065 was
validly enacted by the City of Manila pursuant to its delegated
powers under it charter, Republic Act No. 409. ADC also squarely
assails the constitutionality of PD No. 771 as violative of the equal
protection and non-impairment clauses of the Constitution. In this
connection, counsel for ADC contends that this Court should really
rule on the validity of PD No. 771 to be able to determine whether
ADC continues to possess a valid franchise.
It will undoubtedly be a grave injustice to both parties in this case if
this Court were to shirk from ruling on the issue of constitutionality
of PD No. 771. Such issue has, in our view, become the very lis mota
in resolving the present controversy, in view of ADC's insistence that
it was granted a valid and legal franchise by Ordinance No. 7065 to
operate the jai-alai.
The time-honored doctrine is that all laws (PD No. 771 included) are
presumed valid and constitutional until or unless otherwise ruled by
this Court. Not only this; Article XVIII Section 3 of the Constitution
states:
Sec. 3. All existing laws, decrees, executive orders, proclamations,
letters of instructions and other executive issuances not
inconsistent with this Constitution shall remain operative until
amended, repealed or revoked.
There is nothing on record to show or even suggest that PD No. 771
has been repealed, altered or amended by any subsequent law or
presidential issuance (when the executive still exercised legislative
powers).
Neither can it be tenably stated that the issue of the continued
existence of ADC's franchise by reason of the unconstitutionality of
PD No. 771 was settled in G.R. No. 115044, for the decision of the
Court's First Division in said case, aside from not being final, cannot
have the effect of nullifying PD No. 771 as unconstitutional, since
only the Court En Banc has that power under Article VIII, Section 4(2)
of the Constitution.4
And on the question of whether or not the government is estopped
from contesting ADC's possession of a valid franchise, the well-
settled rule is that the State cannot be put in estoppel by the
mistakes or errors, if any, of its officials or agents (Republic v.
Intermediate Appellate Court, 209 SCRA 90)
Consequently, in the light of the foregoing expostulation, we
conclude that the republic (in contra distinction to the City of
Manila) may be allowed to intervene in G.R. No. 115044. The
Republic is intervening in G.R. No. 115044 in the exercise, not of its
business or proprietary functions, but in the exercise of its
governmental functions to protect public morals and promote the
general welfare.
II
Anent the question of whether ADC has a valid franchise to operate
the Jai-Alai de Manila, a statement of the pertinent laws is in order.
1. The Charter of the City of Manila was enacted by Congress on 18
June 1949. Section 18 thereof provides:
Sec. 18. Legislative Powers. — The Municipal Board shall have the
following legislative powers:
xxx xxx xxx
(jj) To tax, license, permit and regulate wagers or betting by the
public on boxing, sipa, bowling, billiards, pools, horse and dog races,
cockpits, jai-alai, roller or ice-skating on any sporting or athletic
contests, as well as grant exclusive rights to establishments for this
purpose, notwithstanding any existing law to the contrary.
2. On 1 January 1951, Executive Order No. 392 was issued
transferring the authority to regulate jai-alais from local
government to the Games and Amusements Board (GAB).
3. On 20 June 1953, Congress enacted Republic Act No. 954, entitled
"An Act to Prohibit With Horse Races and Basque Pelota Games (Jai-
Alai), And To Prescribe Penalties For Its Violation". The provisions of
Republic Act No. 954 relating to jai-alai are as follows:
Sec. 4. No person, or group of persons other than the operator or
maintainer of a fronton with legislative franchise to conduct basque
pelota games (Jai-alai), shall offer, to take or arrange bets on any
basque pelota game or event, or maintain or use a totalizator or
other device, method or system to bet or gamble on any basque
pelota game or event. (emphasis supplied).
Sec. 5. No person, operator or maintainer of a fronton with
legislative franchise to conduct basque pelota games shall offer,
take, or arrange bets on any basque pelota game or event, or
maintain or use a totalizator or other device, method or system to
bet or gamble on any basque pelota game or event outside the
place, enclosure, or fronton where the basque pelota game is held.
(emphasis supplied).
4. On 07 September 1971, however, the Municipal Board of Manila
nonetheless passed Ordinance No. 7065 entitled "An Ordinance
Authorizing the Mayor To Allow And Permit The Associated
Development Corporation To Establish, Maintain And Operate A Jai-
Alai In The City Of Manila, Under Certain Terms And Conditions And
For Other Purposes."
5. On 20 August 1975, Presidential Decree No. 771 was issued by
then President Marcos. The decree, entitled "Revoking All Powers
and Authority of Local Government(s) To Grant Franchise, License
or Permit And Regulate Wagers Or Betting By The Public On Horse
And Dog Races, Jai-Alai Or Basque Pelota, And Other Forms Of
Gambling", in Section 3 thereof, expressly revoked all existing
franchises and permits issued by local governments.
6. On 16 October 1975, Presidential Decree No. 810, entitled "An Act
granting The Philippine Jai-Alai And Amusement Corporation A
Franchise To Operate, Construct And Maintain A Fronton For Basque
Pelota And Similar Games of Skill In THE Greater Manila Area," was
promulgated.
7 On 08 May 1987, then President Aquino, by virtue of Article XVIII,
Section 6, of the Constitution, which allowed the incumbent
legislative powers until the first Congress was convened, issued
Executive Order No. 169 expressly repealing PD 810 and revoking
and cancelling the franchise granted to the Philippine Jai-Alai and
Amusement Corporation.
Petitioners in G.R. No. 117263 argue that Republic Act No. 954
effectively removed the power of the Municipal Board of Manila to
grant franchises for gambling operations. It is argued that the term
"legislative franchise" in Rep. Act No. 954 is used to refer to
franchises issued by Congress.
On the other hand, ADC contends that Republic Act N. 409 (Manila
Chapter) gives legislative powers to the Municipal Board to grant
franchises, and since Republic Act No. 954 does not specifically
qualify the word "legislative" as referring exclusively to Congress,
then Rep. Act No. 954 did not remove the power of the Municipal
Board under Section 18(jj) of Republic Act No. 409 and consequently
it was within the power of the City of Manila to allow ADC to operate
the jai-alai in the City of Manila.
On this point, the government counter-argues that the term
"legislative powers" is used in Rep. Act No. 409 merely to distinguish
the powers under Section 18 of the law from the other powers of
the Municipal Board, but that the term "legislative franchise" in Rep.
Act No. 954 refers to a franchise granted solely by Congress.
Further, the government argues that Executive Order No. 392 dated
01 January 1951 transferred even the power to regulate Jai-Alai
from the local governments to the Games and Amusements Board
(GAB), a national government agency.
It is worthy of note that neither of the authorities relied upon by
ADC to support its alleged possession of a valid franchise, namely
the Charter of the City of Manila (Rep. Act No. 409) and Manila
Ordinance No. 7065 uses the word "franchise". Rep. Act No. 409
empowers the Municipal Board of Manila to "tax, license, permit
and regulate wagers or betting" and to "grant exclusive rights to
establishments", while Ordinance No. 7065 authorized the Manila
City Mayor to "allow and permit" ADC to operate jai-alai facilities in
the City of Manila.
It is clear from the foregoing that Congress did not delegate to the
City of Manila the power "to franchise" wagers or betting, including
the jai-alai, but retained for itself such power "to franchise". What
Congress delegated to the City of Manila in Rep. Act No. 409, with
respect to wagers or betting, was the power to "license, permit, or
regulate" which therefore means that a license or permit issued by
the City of Manila to operate a wager or betting activity, such as the
jai-alai where bets are accepted, would not amount to something
meaningful UNLESS the holder of the permit or license was also
FRANCHISED by the national government to so operate. Moreover,
even this power to license, permit, or regulate wagers or betting on
jai-alai was removed from local governments, including the City of
Manila, and transferred to the GAB on 1 January 1951 by Executive
Order No. 392. The net result is that the authority to grant franchises
for the operation of jai-alai frontons is in Congress, while the
regulatory function is vested in the GAB.
In relation, therefore, to the facts of this case, since ADC has no
franchise from Congress to operate the jai-alai, it may not so
operate even if its has a license or permit from the City Mayor to
operate the jai-alai in the City of Manila.
It cannot be overlooked, in this connection, that the Revised Penal
Code punishes gambling and betting under Articles 195 to 199
thereof. Gambling is thus generally prohibited by law, unless
another law is enacted by Congress expressly exempting or
excluding certain forms of gambling from the reach of criminal law.
Among these form the reach of criminal law. Among these forms of
gambling allowed by special law are the horse races authorized by
Republic Acts Nos. 309 and 983 and gambling casinos authorized
under Presidential Decree No. 1869.
While jai-alai as a sport is not illegal per se, the accepting of bets or
wagers on the results of jai-alai games is undoubtedly gambling and,
therefore, a criminal offense punishable under Articles 195-199 of
the Revised Penal Code, unless it is shown that a later or special law
had been passed allowing it. ADC has not shown any such special
law.
Republic Act No. 409 (the Revised Charter of the City of Manila)
which was enacted by Congress on 18 June 1949 gave the Municipal
Board certain delegated legislative powers under Section 18. A
perusal of the powers enumerated under Section 18 shows that
these powers are basically regulatory in nature.5 The regulatory
nature of these powers finds support not only in the plain words of
the enumerations under Section 28 but also in this Court's ruling in
People v. Vera (65 Phil. 56).
In Vera, this Court declared that a law which gives the Provincial
Board the discretion to determine whether or not a law of general
application (such as, the Probation law-Act No. 4221) would or
would not be operative within the province, is unconstitutional for
being an undue delegation of legislative power.
From the ruling in Vera, it would be logical to conclude that, if ADC's
arguments were to prevail, this Court would likewise declare Section
18(jj) of the Revised Charter of Manila unconstitutional for the
power it would delegate to the Municipal Board of Manila would
give the latter the absolute and unlimited discretion to render the
penal code provisions on gambling inapplicable or inoperative to
persons or entities issued permits to operate gambling
establishments in the City of Manila.
We need not go to this extent, however, since the rule is that laws
must be presumed valid, constitutional and in harmony with other
laws. Thus, the relevant provisions of Rep. Acts Nos. 409 and 954
and Ordinance No. 7065 should be taken together and it should then
be clear that the legislative powers of the Municipal Board should
be understood to be regulatory in nature and that Republic Act No.
954 should be understood to refer to congressional franchises, as a
necessity for the operation of jai-alai.
We need not, however, again belabor this issue further since the
task at hand which will ultimately, and with finality, decide the
issues in this case is to determine whether PD No. 771 validly
revoked ADC's franchise to operate the jai-alai, assuming (without
conceding) that it indeed possessed such franchise under Ordinance
No. 7065.
ADC argues that PD No. 771 is unconstitutional for being violative of
the equal protection and non-impairment provisions of the
Constitution. On the other hand, the government contends that PD
No. 771 is a valid exercise of the inherent police power of the State.
The police power has been described as the least limitable of the
inherent powers of the State. It is based on the ancient doctrine —
salus populi est suprema lex (the welfare of the people is the
supreme law.) In the early case of Rubi v. Provincial Board of
Mindoro (39 Phil. 660), this Court through Mr. Justice George A.
Malcolm stated thus:
The police power of the State . . . is a power co-extensive with self-
protection, and is not inaptly termed the "law of overruling
necessity." It may be said to be that inherent and plenary power in
the State which enables it to prohibit all things hurtful to the
comfort, safety and welfare of society. Carried onward by the
current of legislation, the judiciary rarely attempts to dam the
onrushing power of legislative discretion, provided the purposes of
the law do not go beyond the great principles that mean security for
the public welfare or do not arbitrarily interfere with the right of the
individual.
In the matter of PD No. 771, the purpose of the law is clearly stated
in the "whereas clause" as follows:
WHEREAS, it has been reported that in spite of the current drive of
our law enforcement agencies against vices and illegal gambling,
these social ills are still prevalent in many areas of the country;
WHEREAS, there is need to consolidate all the efforts of the
government to eradicate and minimize vices and other forms of
social ills in pursuance of the social and economic development
program under the new society;
WHEREAS, in order to effectively control and regulate wagers or
betting by the public on horse and dog races, jai-alai and other forms
of gambling there is a necessity to transfer the issuance of permit
and/or franchise from local government to the National
Government.
It cannot be argued that the control and regulation of gambling do
not promote public morals and welfare. Gambling is essentially
antagonistic and self-reliance. It breeds indolence and erodes the
value of good, honest and hard work. It is, as very aptly stated by PD
No. 771, a vice and a social ill which government must minimize (if
not eradicate) in pursuit of social and economic development.
In Magtajas v. Pryce Properties Corporation (20 July 1994, G.R. No.
111097), this Court stated thru Mr. Justice Isagani A. Cruz:
In the exercise of its own discretion, the legislative power may
prohibit gambling altogether or allow it without limitation or it may
prohibit some forms of gambling and allow others for whatever
reasons it may consider sufficient. Thus, it has prohibited jueteng
and monte but permits lotteries, cockfighting and horse-racing. In
making such choices, Congress has consulted its own wisdom, which
this Court has no authority to review, much less reverse. Well has it
been said that courts do not sit to resolve the merits of conflicting
theories. That is the prerogative of the political departments. It is
settled that questions regarding wisdom, morality and practicability
of statutes are not addressed to the judiciary but may be resolved
only by the executive and legislative departments, to which the
function belongs in our scheme of government. (Emphasis supplied)
Talks regarding the supposed vanishing line between right and
privilege in American constitutional law has no relevance in the
context of these cases since the reference there is to economic
regulations. On the other hand, jai-alai is not a mere economic
activity which the law seeks to regulate. It is essentially gambling
and whether it should be permitted and, if so, under what
conditions are questions primarily for the lawmaking authority to
determine, talking into account national and local interests. Here, it
is the police power of the State that is paramount.
ADC questions the motive for the issuance of PD Nos. 771. Clearly,
however, this Court cannot look into allegations that PD No. 771 was
enacted to benefit a select group which was later given authority to
operate the jai-alai under PD No. 810. The examination of legislative
motivation is generally prohibited. (Palmer v. Thompson, 403 U.S.
217, 29 L. Ed. 2d 438 [1971] per Black, J.) There is, the first place,
absolute lack of evidence to support ADC's allegation of improper
motivation in the issuance of PD No. 771. In the second place, as
already averred, this Court cannot go behind the expressed and
proclaimed purposes of PD No. 771, which are reasonable and even
laudable.
It should also be remembered that PD No. 771 provides that the
national government can subsequently grant franchises "upon
proper application and verification of the qualifications of the
applicant." ADC has not alleged that it filed an application for a
franchise with the national government subsequent to the
enactment of PD No. 771; thus, the allegations abovementioned (of
preference to a select group) are based on conjectures, speculations
and imagined biases which do not warrant the consideration of this
Court.
On the other hand, it is noteworthy that while then president
Aquino issued Executive Order No. 169 revoking PD No. 810 (which
granted a franchise to a Marcos-crony to operate the jai-alai), she
did not scrap or repeal PD No. 771 which had revoked all franchises
to operate jai-alais issued by local governments, thereby re-
affirming the government policy that franchises to operate jai-alais
are for the national government (not local governments) to consider
and approve.
On the alleged violation of the non-impairment and equal
protection clauses of the Constitution, it should be remembered
that a franchise is not in the strict sense a simple contract but rather
it is more importantly, a mere privilege specially in matters which
are within the government's power to regulate and even prohibit
through the exercise of the police power. Thus, a gambling franchise
is always subject to the exercise of police power for the public
welfare.
In RCPI v. NTC (150 SCRA 450), we held that:
A franchise started out as a "royal privilege or (a) branch of the
King's prerogative, subsisting in the hands of a subject." This
definition was given by Finch, adopted by Blackstone, and accepted
by every authority since . . . Today, a franchise being merely a
privilege emanating from the sovereign power of the state and
owing its existence to a grant, is subject to regulation by the state
itself by virtue of its police power through its administrative
agencies.
There is a stronger reason for holding ADC's permit to be a mere
privilege because jai-alai, when played for bets, is pure and simple
gambling. To analogize a gambling franchise for the operation of a
public utility, such as public transportation company, is to trivialize
the great historic origin of this branch of royal privilege.
As earlier noted, ADC has not alleged ever applying for a franchise
under the provisions of PD No. 771. and yet, the purpose of PD No.
771 is quite clear from its provisions, i.e., to give to the national
government the exclusive power to grant gambling franchises. Thus,
all franchises then existing were revoked but were made subject to
reissuance by the national government upon compliance by the
applicant with government-set qualifications and requirements.
There was no violation by PD No. 771 of the equal protection clause
since the decree revoked all franchises issued by local governments
without qualification or exception. ADC cannot allege violation of
the equal protection clause simply because it was the only one
affected by the decree, for as correctly pointed out by the
government, ADC was not singled out when all jai-alai franchises
were revoked. Besides, it is too late in the day for ADC to seek
redress for alleged violation of its constitutional rights for it could
have raised these issues as early as 1975, almost twenty 920) years
ago.
Finally, we do not agree that Section 3 of PD No. 771 and the
requirement of a legislative franchise in Republic Act No. 954 are
"riders" to the two 92) laws and are violative of the rule that laws
should embrace one subject which shall be expressed in the title, as
argued by ADC. In Cordero v. Cabatuando (6 SCRA 418), this Court
ruled that the requirement under the constitution that all laws
should embrace only one subject which shall be expressed in the
title is sufficiently met if the title is comprehensive enough
reasonably to include the general object which the statute seeks to
effect, without expressing each and every end and means necessary
or convenient for the accomplishing of the objective.
III
On the issue of whether or not there was grave abuse of discretion
committed by respondent Judge Reyes in issuing the temporary
restraining order (later converted to a writ of preliminary injunction)
and the writ of preliminary mandatory injunction, we hold and rule
there was.
Section 3, Rule 58 of the rules of Court provides for the grounds for
the issuance of a preliminary injunction. While ADC could allege
these grounds, respondent judge should have taken judicial notice
of Republic Act No. 954 and PD 771, under Section 1 rule 129 of the
Rules of court. These laws negate the existence of any legal right on
the part of ADC to the reliefs it sought so as to justify the issuance
of a writ of preliminary injunction. since PD No. 771 and Republic
Act No. 954 are presumed valid and constitutional until ruled
otherwise by the Supreme Court after due hearing, ADC was not
entitled to the writs issued and consequently there was grave abuse
of discretion in issuing them.
WHEREFORE, for the foregoing reasons, judgment is hereby
rendered:
1. allowing the Republic of the Philippines to intervene in G.R. No.
115044.
2. declaring Presidential Decree No. 771 valid and constitutional.
3. declaring that respondent Associated Development corporation
(ADC) does not possess the required congressional franchise to
operate and conduct the jai-alai under Republic Act No. 954 and
Presidential Decree No. 771.
4. setting aside the writs of preliminary injunction and preliminary
mandatory injunction issued by respondent Judge Vetino Reyes in
civil Case No. 94-71656. SO ORDERED.
[G.R. No. 149276. September 27, 2002]
JOVENCIO LIM and TERESITA LIM, petitioners, vs. THE PEOPLE OF THE
PHILIPPINES, THE REGIONAL TRIAL COURT OF QUEZON CITY, BRANCH
217, THE CITY PROSECUTOR OF QUEZON CITY, AND WILSON CHAM,
respondents.
DECISION
CORONA, J.:
The constitutionality of PD 818, a decree which amended Article 315 of
the Revised Penal Code by increasing the penalties for estafa committed
by means of bouncing checks, is being challenged in this petition for
certiorari, for being violative of the due process clause, the right to bail
and the provision against cruel, degrading or inhuman punishment
enshrined under the Constitution.
The antecedents of this case, as gathered from the parties pleadings
and documentary proofs, follow.
In December 1991, petitioner spouses issued to private respondent two
postdated checks, namely, Metrobank check no. 464728 dated January
15, 1992 in the amount of P365,750 and Metrobank check no. 464743
dated January 22, 1992 in the amount of P429,000. Check no. 464728
was dishonored upon presentment for having been drawn against
insufficient funds while check no. 464743 was not presented for
payment upon request of petitioners who promised to replace the
dishonored check.
When petitioners reneged on their promise to cover the amount of
check no. 464728, the private respondent filed a complaint-affidavit
before the Office of the City Prosecutor of Quezon City charging
petitioner spouses with the crime of estafa under Article 315, par. 2 (d)
of the Revised Penal Code, as amended by PD 818.
On February 16, 2001, the City Prosecutor issued a resolution finding
probable cause against petitioners and recommending the filing of an
information for estafa with no bail recommended. On the same day, an
information for the crime of estafa was filed with Branch 217 of the
Regional Trial Court of Quezon City against petitioners. The case was
docketed as Criminal Case No. Q-01-101574. Thereafter, the trial court
issued a warrant for the arrest of herein petitioners, thus:
It appearing on the face of the information and from supporting
affidavit of the complaining witness and its annexes that probable cause
exists, that the crime charged was committed and accused is probably
guilty thereof, let a warrant for the arrest of the accused be issued.
No Bail Recommended.
SO ORDERED.i[1]
On July 18, 2001, petitioners filed an Urgent Motion to Quash
Information and Warrant of Arrest which was denied by the trial court.
Likewise, petitioners motion for bail filed on July 24, 2001 was denied
by the trial court on the same day. Petitioner Jovencio Lim was arrested
by virtue of the warrant of arrest issued by the trial court and was
detained at the Quezon City Jail. However, petitioner Teresita Lim
remained at large.
On August 22, 2001, petitioners filed the instant petition for certiorari
imputing grave abuse of discretion on the part of the lower court and
the Office of the City Prosecutor of Quezon City, arguing that PD 818
violates the constitutional provisions on due process, bail and
imposition of cruel, degrading or inhuman punishment.
In a resolution dated February 26, 2002, this Court granted the petition
of Jovencio Lim to post bail pursuant to Department of Justice Circular
No. 74 dated November 6, 2001 which amended the 2000 Bail Bond
Guide involving estafa under Article 315, par. 2 (d), and qualified theft.
Said Circular specifically provides as follows:
xxx xxx xxx
3) Where the amount of fraud is P32,000.00 or over in which the
imposable penalty is reclusion temporal to reclusion perpetua, bail shall
be based on reclusion temporal maximum, pursuant to Par. 2 (a) of the
2000 Bail Bond Guide, multiplied by P2,000.00, plus an additional of
P2,000.00 for every P10,000.00 in excess of P22,000.00; Provided,
however, that the total amount of bail shall not exceed P60,000.00.
In view of the aforementioned resolution, the matter concerning bail
shall no longer be discussed. Thus, this decision will focus on whether
or not PD 818 violates Sections 1 and 19 of Article III of the Constitution,
which respectively provide:
Section 1. No person shall be deprived of life, liberty or property
without due process of law, nor shall any person be denied the equal
protection of the laws.
x x x
Section 19 (1) Excessive fines shall not be imposed, nor cruel, degrading
or inhuman punishment inflicted. x x x.
We shall deal first with the issue of whether PD 818 was enacted in
contravention of Section 19 of Article III of the Constitution. In this
regard, the impugned provision of PD 818 reads as follows:
SECTION 1. Any person who shall defraud another by means of false
pretenses or fraudulent acts as defined in paragraph 2(d) of Article 315
of the Revised Penal Code, as amended by Republic Act No. 4885, shall
be punished by:
1st. The penalty of reclusion temporal if the amount of the fraud is over
12,000 pesos but does not exceed 22,000 pesos, and if such amount
exceeds the later sum, the penalty provided in this paragraph shall be
imposed in its maximum period, adding one year for each additional
10,000 pesos but the total penalty which may be imposed shall in no
case exceed thirty years. In such cases, and in connection with the
accessory penalties which may be imposed under the Revised Penal
Code, the penalty shall be termed reclusion perpetua;
2nd. The penalty of prision mayor in its maximum period, if the amount
of the fraud is over 6,000 pesos but does not exceed 12,000 pesos.
3rd. The penalty of prision mayor in its medium period, if such amount is
over 200 pesos but does not exceed 6,000 pesos; and
4th. By prision mayor in its minimum period, if such amount does not
exceed 200 pesos.
Petitioners contend that, inasmuch as the amount of the subject check
is P365,750, they can be penalized with reclusion perpetua or 30 years
of imprisonment. This penalty, according to petitioners, is too severe
and disproportionate to the crime they committed and infringes on the
express mandate of Article III, Section 19 of the Constitution which
prohibits the infliction of cruel, degrading and inhuman punishment.
Settled is the rule that a punishment authorized by statute is not cruel,
degrading or disproportionate to the nature of the offense unless it is
flagrantly and plainly oppressive and wholly disproportionate to the
nature of the offense as to shock the moral sense of the community. It
takes more than merely being harsh, excessive, out of proportion or
severe for a penalty to be obnoxious to the Constitution.ii[2] Based on
this principle, the Court has consistently overruled contentions of the
defense that the penalty of fine or imprisonment authorized by the
statute involved is cruel and degrading.
In People vs. Tongko,iii[3] this Court held that the prohibition against
cruel and unusual punishment is generally aimed at the form or
character of the punishment rather than its severity in respect of its
duration or amount, and applies to punishments which never existed in
America or which public sentiment regards as cruel or obsolete. This
refers, for instance, to those inflicted at the whipping post or in the
pillory, to burning at the stake, breaking on the wheel, disemboweling
and the like. The fact that the penalty is severe provides insufficient
basis to declare a law unconstitutional and does not, by that
circumstance alone, make it cruel and inhuman.
Petitioners also argue that while PD 818 increased the imposable
penalties for estafa committed under Article 315, par. 2 (d) of the
Revised Penal Code, it did not increase the amounts corresponding to
the said new penalties. Thus, the original amounts provided for in the
Revised Penal Code have remained the same notwithstanding that they
have become negligible and insignificant compared to the present value
of the peso.
This argument is without merit. The primary purpose of PD 818 is
emphatically and categorically stated in the following:
WHEREAS, reports received of late indicate an upsurge of estafa
(swindling) cases committed by means of bouncing checks;
WHEREAS, if not checked at once, these criminal acts would erode the
peoples confidence in the use of negotiable instruments as a medium of
commercial transaction and consequently result in the retardation of
trade and commerce and the undermining of the banking system of the
country;
WHEREAS, it is vitally necessary to arrest and curb the rise in this kind of
estafa cases by increasing the existing penalties provided therefor.
Clearly, the increase in the penalty, far from being cruel and degrading,
was motivated by a laudable purpose, namely, to effectuate the
repression of an evil that undermines the countrys commercial and
economic growth, and to serve as a necessary precaution to deter
people from issuing bouncing checks. The fact that PD 818 did not
increase the amounts corresponding to the new penalties only proves
that the amount is immaterial and inconsequential. What the law
sought to avert was the proliferation of estafa cases committed by
means of bouncing checks. Taking into account the salutary purpose for
which said law was decreed, we conclude that PD 818 does not violate
Section 19 of Article III of the Constitution.
Moreover, when a law is questioned before the Court, the presumption
is in favor of its constitutionality. To justify its nullification, there must
be a clear and unmistakable breach of the Constitution, not a doubtful
and argumentative one.iv[4] The burden of proving the invalidity of a
law rests on those who challenge it. In this case, petitioners failed to
present clear and convincing proof to defeat the presumption of
constitutionality of PD 818.
With respect to the issue of whether PD 818 infringes on Section 1 of
Article III of the Constitution, petitioners claim that PD 818 is violative
of the due process clause of the Constitution as it was not published in
the Official Gazette. This claim is incorrect and must be rejected.
Publication, being an indispensable part of due process, is imperative to
the validity of laws, presidential decrees and executive orders.v[5] PD
818 was published in the Official Gazette on December 1, 1975.vi[6]
With the foregoing considerations in mind, this Court upholds the
constitutionality of PD 818.
WHEREFORE, the petition is hereby DISMISSED.
SO ORDERED.
G.R. No. 94723 August 21, 1997
KAREN E. SALVACION, minor, thru Federico N. Salvacion, Jr., father
and Natural Guardian, and Spouses FEDERICO N. SALVACION, JR.,
and EVELINA E. SALVACION, petitioners,
vs.
CENTRAL BANK OF THE PHILIPPINES, CHINA BANKING
CORPORATION and GREG BARTELLI y NORTHCOTT, respondents.
TORRES, JR., J.:
In our predisposition to discover the "original intent" of a statute, courts
become the unfeeling pillars of the status quo. Ligle do we realize that
statutes or even constitutions are bundles of compromises thrown our way by
their framers. Unless we exercise vigilance, the statute may already be out of
tune and irrelevant to our day.
The petition is for declaratory relief. It prays for the following reliefs:
a.) Immediately upon the filing of this petition, an Order be issued restraining
the respondents from applying and enforcing Section 113 of Central Bank
Circular No. 960;
b.) After hearing, judgment be rendered:
1.) Declaring the respective rights and duties of petitioners and respondents;
2.) Adjudging Section 113 of Central Bank Circular No. 960 as contrary to the
provisions of the Constitution, hence void; because its provision that "Foreign
currency deposits shall be exempt from attachment, garnishment, or any
other order or process of any court, legislative body, government agency or
any administrative body whatsoever
i.) has taken away the right of petitioners to have the bank deposit of
defendant Greg Bartelli y Northcott garnished to satisfy the judgment
rendered in petitioners' favor in violation of substantive due process
guaranteed by the Constitution;
ii.) has given foreign currency depositors an undue favor or a class privilege
in violation of the equal protection clause of the Constitution;
iii.) has provided a safe haven for criminals like the herein respondent Greg
Bartelli y Northcott since criminals could escape civil liability for their wrongful
acts by merely converting their money to a foreign currency and depositing it
in a foreign currency deposit account with an authorized bank.
The antecedent facts:
On February 4, 1989, Greg Bartelli y Northcott, an American tourist, coaxed
and lured petitioner Karen Salvacion, then 12 years old to go with him to his
apartment. Therein, Greg Bartelli detained Karen Salvacion for four days, or
up to February 7, 1989 and was able to rape the child once on February 4,
and three times each day on February 5, 6, and 7, 1989. On February 7,
1989, after policemen and people living nearby, rescued Karen, Greg Bartelli
was arrested and detained at the Makati Municipal Jail. The policemen
recovered from Bartelli the following items: 1.) Dollar Check No. 368, Control
No. 021000678-1166111303, US 3,903.20; 2.) COCOBANK Bank Book No.
104-108758-8 (Peso Acct.); 3.) Dollar Account — China Banking Corp.,
US$/A#54105028-2; 4.) ID-122-30-8877; 5.) Philippine Money (P234.00)
cash; 6.) Door Keys 6 pieces; 7.) Stuffed Doll (Teddy Bear) used in seducing
the complainant.
On February 16, 1989, Makati Investigating Fiscal Edwin G. Condaya filed
against Greg Bartelli, Criminal Case No. 801 for Serious Illegal Detention and
Criminal Cases Nos. 802, 803, 804, and 805 for four (4) counts of Rape. On
the same day, petitioners filed with the Regional Trial Court of Makati Civil
Case No. 89-3214 for damages with preliminary attachment against Greg
Bartelli. On February 24, 1989, the day there was a scheduled hearing for
Bartelli's petition for bail the latter escaped from jail.
On February 28, 1989, the court granted the fiscal's Urgent Ex-Parte Motion
for the Issuance of Warrant of Arrest and Hold Departure Order. Pending the
arrest of the accused Greg Bartelli y Northcott, the criminal cases were
archived in an Order dated February 28, 1989.
Meanwhile, in Civil Case No. 89-3214, the Judge issued an Order dated
February 22, 1989 granting the application of herein petitioners, for the
issuance of the writ of preliminary attachment. After petitioners gave Bond
No. JCL (4) 1981 by FGU Insurance Corporation in the amount of
P100,000.00, a Writ of Preliminary Attachment was issued by the trial court
on February 28, 1989.
On March 1, 1989, the Deputy Sheriff of Makati served a Notice of
Garnishment on China Banking Corporation. In a letter dated March 13, 1989
to the Deputy Sheriff of Makati, China Banking Corporation invoked Republic
Act No. 1405 as its answer to the notice of garnishment served on it. On
March 15, 1989, Deputy Sheriff of Makati Armando de Guzman sent his reply
to China Banking Corporation saying that the garnishment did not violate the
secrecy of bank deposits since the disclosure is merely incidental to a
garnishment properly and legally made by virtue of a court order which has
placed the subject deposits in custodia legis. In answer to this letter of the
Deputy Sheriff of Makati, China Banking Corporation, in a letter dated March
20, 1989, invoked Section 113 of Central Bank Circular No. 960 to the effect
that the dollar deposits or defendant Greg Bartelli are exempt from
attachment, garnishment, or any other order or process of any court,
legislative body, government agency or any administrative body, whatsoever.
This prompted the counsel for petitioners to make an inquiry with the Central
Bank in a letter dated April 25, 1989 on whether Section 113 of CB Circular
No. 960 has any exception or whether said section has been repealed or
amended since said section has rendered nugatory the substantive right of
the plaintiff to have the claim sought to be enforced by the civil action
secured by way of the writ of preliminary attachment as granted to the
plaintiff under Rule 57 of the Revised Rules of Court. The Central Bank
responded as follows:
May 26, 1989
Ms. Erlinda S. Carolino
12 Pres. Osmena Avenue
South Admiral Village
Paranaque, Metro Manila
Dear Ms. Carolino:
This is in reply to your letter dated April 25, 1989 regarding your inquiry on
Section 113, CB Circular No. 960 (1983).
The cited provision is absolute in application. It does not admit of any
exception, nor has the same been repealed nor amended.
The purpose of the law is to encourage dollar accounts within the country's
banking system which would help in the development of the economy. There
is no intention to render futile the basic rights of a person as was suggested
in your subject letter. The law may be harsh as some perceive it, but it is still
the law. Compliance is, therefore, enjoined.
Very truly yours,
(SGD) AGAPITO S. FAJARDO
Director1
Meanwhile, on April 10, 1989, the trial court granted petitioners' motion for
leave to serve summons by publication in the Civil Case No. 89-3214 entitled
"Karen Salvacion, et al. vs. Greg Bartelli y Northcott." Summons with the
complaint was a published in the Manila Times once a week for three
consecutive weeks. Greg Bartelli failed to file his answer to the complaint and
was declared in default on August 7, 1989. After hearing the case ex-parte,
the court rendered judgment in favor of petitioners on March 29, 1990, the
dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against
defendant, ordering the latter:
1. To pay plaintiff Karen E. Salvacion the amount of P500,000.00 as moral
damages;
2. To pay her parents, plaintiffs spouses Federico N. Salvacion, Jr., and
Evelina E. Salvacion the amount of P150,000.00 each or a total of
P300,000.00 for both of them;
3. To pay plaintiffs exemplary damages of P100,000.00; and
4. To pay attorney's fees in an amount equivalent to 25% of the total amount
of damages herein awarded;
5. To pay litigation expenses of P10,000.00; plus
6. Costs of the suit.
SO ORDERED.
The heinous acts of respondent Greg Bartelli which gave rise to the award
were related in graphic detail by the trial court in its decision as follows:
The defendant in this case was originally detained in the municipal jail of
Makati but was able to escape therefrom on February 24, 1989 as per report
of the Jail Warden of Makati to the Presiding Judge, Honorable Manuel M.
Cosico of the Regional Trial Court of Makati, Branch 136, where he was
charged with four counts of Rape and Serious Illegal Detention (Crim. Cases
Nos. 802 to 805). Accordingly, upon motion of plaintiffs, through counsel,
summons was served upon defendant by publication in the Manila Times, a
newspaper of general circulation as attested by the Advertising Manager of
the Metro Media Times, Inc., the publisher of the said newspaper. Defendant,
however, failed to file his answer to the complaint despite the lapse of the
period of sixty (60) days from the last publication; hence, upon motion of the
plaintiffs, through counsel, defendant was declared in default and plaintiffs
were authorized to present their evidence ex parte.
In support of the complaint, plaintiffs presented as witnesses the minor Karen
E. Salvacion, her father, Federico N. Salvacion, Jr., a certain Joseph Aguilar
and a certain Liberato Madulio, who gave the following testimony:
Karen took her first year high school in St. Mary's Academy in Pasay City but
has recently transferred to Arellano University for her second year.
In the afternoon of February 4, 1989, Karen was at the Plaza Fair Makati
Cinema Square, with her friend Edna Tangile whiling away her free time. At
about 3:30 p.m. while she was finishing her snack on a concrete bench in
front of Plaza Fair, an American approached her. She was then alone
because Edna Tangile had already left, and she was about to go home.
(TSN, Aug. 15, 1989, pp. 2 to 5)
The American asked her name and introduced himself as Greg Bartelli. He
sat beside her when he talked to her. He said he was a Math teacher and
told her that he has a sister who is a nurse in New York. His sister allegedly
has a daughter who is about Karen's age and who was with him in his house
along Kalayaan Avenue. (TSN, Aug. 15, 1989, pp. 4-5)
The American asked Karen what was her favorite subject and she told him
it's Pilipino. He then invited her to go with him to his house where she could
teach Pilipino to his niece. He even gave her a stuffed toy to persuade her to
teach his niece. (Id., pp. 5-6)
They walked from Plaza Fair along Pasong Tamo, turning right to reach the
defendant's house along Kalayaan Avenue. (Id., p. 6)
When they reached the apartment house, Karen noticed that defendant's
alleged niece was not outside the house but defendant told her maybe his
niece was inside. When Karen did not see the alleged niece inside the
house, defendant told her maybe his niece was upstairs, and invited Karen to
go upstairs. (Id., p. 7)
Upon entering the bedroom defendant suddenly locked the door. Karen
became nervous because his niece was not there. Defendant got a piece of
cotton cord and tied Karen's hands with it, and then he undressed her. Karen
cried for help but defendant strangled her. He took a packing tape and he
covered her mouth with it and he circled it around her head. (Id., p. 7)
Then, defendant suddenly pushed Karen towards the bed which was just
near the door. He tied her feet and hands spread apart to the bed posts. He
knelt in front of her and inserted his finger in her sex organ. She felt severe
pain. She tried to shout but no sound could come out because there were
tapes on her mouth. When defendant withdrew his finger it was full of blood
and Karen felt more pain after the withdrawal of the finger. (Id., p. 8)
He then got a Johnson's Baby Oil and he applied it to his sex organ as well
as to her sex organ. After that he forced his sex organ into her but he was
not able to do so. While he was doing it, Karen found it difficult to breathe
and she perspired a lot while feeling severe pain. She merely presumed that
he was able to insert his sex organ a little, because she could not see. Karen
could not recall how long the defendant was in that position. (Id. pp. 8-9)
After that, he stood up and went to the bathroom to wash. He also told Karen
to take a shower and he untied her hands. Karen could only hear the sound
of the water while the defendant, she presumed, was in the bathroom
washing his sex organ. When she took a shower more blood came out from
her. In the meantime, defendant changed the mattress because it was full of
blood. After the shower, Karen was allowed by defendant to sleep. She fell
asleep because she got tired crying. The incident happened at about 4:00
p.m. Karen had no way of determining the exact time because defendant
removed her watch. Defendant did not care to give her food before she went
to sleep. Karen woke up at about 8:00 o'clock the following morning. (Id., pp.
9-10)
The following day, February 5, 1989, a Sunday, after a breakfast of biscuit
and coke at about 8:30 to 9:00 a.m. defendant raped Karen while she was
still bleeding. For lunch, they also took biscuit and coke. She was raped for
the second time at about 12:00 to 2:00 p.m. In the evening, they had rice for
dinner which defendant had stored downstairs; it was he who cooked the rice
that is why it looks like "lugaw". For the third time, Karen was raped again
during the night. During those three times defendant succeeded in inserting
his sex organ but she could not say whether the organ was inserted wholly.
Karen did not see any firearm or any bladed weapon. The defendant did not
tie her hands and feet nor put a tape on her mouth anymore but she did not
cry for help for fear that she might be killed; besides, all the windows and
doors were closed. And even if she shouted for help, nobody would hear her.
She was so afraid that if somebody would hear her and would be able to call
the police, it was still possible that as she was still inside the house,
defendant might kill her. Besides, the defendant did not leave that Sunday,
ruling out her chance to call for help. At nighttime he slept with her again.
(TSN, Aug. 15, 1989, pp. 12-14)
On February 6, 1989, Monday, Karen was raped three times, once in the
morning for thirty minutes after a breakfast of biscuits; again in the afternoon;
and again in the evening. At first, Karen did not know that there was a
window because everything was covered by a carpet, until defendant opened
the window for around fifteen minutes or less to let some air in, and she
found that the window was covered by styrofoam and plywood. After that, he
again closed the window with a hammer and he put the styrofoam, plywood,
and carpet back. (Id., pp. 14-15)
That Monday evening, Karen had a chance to call for help, although
defendant left but kept the door closed. She went to the bathroom and saw a
small window covered by styrofoam and she also spotted a small hole. She
stepped on the bowl and she cried for help through the hole. She cried:
"Maawa no po kayo so akin. Tulungan n'yo akong makalabas dito. Kinidnap
ako!" Somebody heard her. It was a woman, probably a neighbor, but she
got angry and said she was "istorbo". Karen pleaded for help and the woman
told her to sleep and she will call the police. She finally fell asleep but no
policeman came. (TSN, Aug. 15, 1989, pp. 15-16)
She woke up at 6:00 o'clock the following morning, and she saw defendant in
bed, this time sleeping. She waited for him to wake up. When he woke up, he
again got some food but he always kept the door locked. As usual, she was
merely fed with biscuit and coke. On that day, February 7, 1989, she was
again raped three times. The first at about 6:30 to 7:00 a.m., the second at
about 8:30 — 9:00, and the third was after lunch at 12:00 noon. After he had
raped her for the second time he left but only for a short while. Upon his
return, he caught her shouting for help but he did not understand what she
was shouting about. After she was raped the third time, he left the house.
(TSN, Aug. 15, 1989, pp. 16-17) She again went to the bathroom and
shouted for help. After shouting for about five minutes, she heard many
voices. The voices were asking for her name and she gave her name as
Karen Salvacion. After a while, she heard a voice of a woman saying they
will just call the police. They were also telling her to change her clothes. She
went from the bathroom to the room but she did not change her clothes being
afraid that should the neighbors call for the police and the defendant see her
in different clothes, he might kill her. At that time she was wearing a T-shirt of
the American because the latter washed her dress. (Id., p. 16)
Afterwards, defendant arrived and he opened the door. He asked her if she
had asked for help because there were many policemen outside and she
denied it. He told her to change her clothes, and she did change to the one
she was wearing on Saturday. He instructed her to tell the police that she left
home and willingly; then he went downstairs but he locked the door. She
could hear people conversing but she could not understand what they were
saying. (Id., p. 19)
When she heard the voices of many people who were conversing
downstairs, she knocked repeatedly at the door as hard as she could. She
heard somebody going upstairs and when the door was opened, she saw a
policeman. The policeman asked her name and the reason why she was
there. She told him she was kidnapped. Downstairs, he saw about five
policemen in uniform and the defendant was talking to them. "Nakikipag-
areglo po sa mga pulis," Karen added. "The policeman told him to just
explain at the precinct. (Id., p. 20)
They went out of the house and she saw some of her neighbors in front of
the house. They rode the car of a certain person she called Kuya Boy
together with defendant, the policeman, and two of her neighbors whom she
called Kuya Bong Lacson and one Ate Nita. They were brought to Sub-
Station I and there she was investigated by a policeman. At about 2:00 a.m.,
her father arrived, followed by her mother together with some of their
neighbors. Then they were brought to the second floor of the police
headquarters. (Id., p. 21)
At the headquarters, she was asked several questions by the investigator.
The written statement she gave to the police was marked as Exhibit A. Then
they proceeded to the National Bureau of Investigation together with the
investigator and her parents. At the NBI, a doctor, a medico-legal officer,
examined her private parts. It was already 3:00 in the early morning of the
following day when they reached the NBI. (TSN, Aug. 15, 1989, p. 22) The
findings of the medico-legal officer has been marked as Exhibit B.
She was studying at the St. Mary's Academy in Pasay City at the time of the
incident but she subsequently transferred to Apolinario Mabini, Arellano
University, situated along Taft Avenue, because she was ashamed to be the
subject of conversation in the school. She first applied for transfer to Jose
Abad Santos, Arellano University along Taft Avenue near the Light Rail
Transit Station but she was denied admission after she told the school the
true reason for her transfer. The reason for their denial was that they might
be implicated in the case. (TSN, Aug. 15, 1989, p. 46)
xxx xxx xxx
After the incident, Karen has changed a lot. She does not play with her
brother and sister anymore, and she is always in a state of shock; she has
been absent-minded and is ashamed even to go out of the house. (TSN,
Sept. 12, 1989, p. 10) She appears to be restless or sad, (Id., p. 11) The
father prays for P500,000.00 moral damages for Karen for this shocking
experience which probably, she would always recall until she reaches old
age, and he is not sure if she could ever recover from this experience. (TSN,
Sept. 24, 1989, pp. 10-11)
Pursuant to an Order granting leave to publish notice of decision, said notice
was published in the Manila Bulletin once a week for three consecutive
weeks. After the lapse of fifteen (15) days from the date of the last
publication of the notice of judgment and the decision of the trial court had
become final, petitioners tried to execute on Bartelli's dollar deposit with
China Banking Corporation. Likewise, the bank invoked Section 113 of
Central Bank Circular No. 960.
Thus, petitioners decided to seek relief from this Court.
The issues raised and the arguments articulated by the parties boil down to
two:
May this Court entertain the instant petition despite the fact that original
jurisdiction in petitions for declaratory relief rests with the lower court? Should
Section 113 of Central Bank Circular No. 960 and Section 8 of R.A. 6426, as
amended by P.D. 1246, otherwise known as the Foreign Currency Deposit
Act be made applicable to a foreign transient?
Petitioners aver as heretofore stated that Section 113 of Central Bank
Circular No. 960 providing that "Foreign currency deposits shall be exempt
from attachment, garnishment, or any other order or process of any court,
legislative body, government agency or any administrative body whatsoever."
should be adjudged as unconstitutional on the grounds that: 1.) it has taken
away the right of petitioners to have the bank deposit of defendant Greg
Bartelli y Northcott garnished to satisfy the judgment rendered in petitioners'
favor in violation of substantive due process guaranteed by the Constitution;
2.) it has given foreign currency depositors an undue favor or a class
privilege in violation of the equal protection clause of the Constitution; 3.) it
has provided a safe haven for criminals like the herein respondent Greg
Bartelli y Northcott since criminals could escape civil liability for their wrongful
acts by merely converting their money to a foreign currency and depositing it
in a foreign currency deposit account with an authorized bank; and 4.) The
Monetary Board, in issuing Section 113 of Central Bank Circular No. 960 has
exceeded its delegated quasi-legislative power when it took away: a.) the
plaintiffs substantive right to have the claim sought to be enforced by the civil
action secured by way of the writ of preliminary attachment as granted by
Rule 57 of the Revised Rules of Court; b.) the plaintiffs substantive right to
have the judgment credit satisfied by way of the writ of execution out of the
bank deposit of the judgment debtor as granted to the judgment creditor by
Rule 39 of the Revised Rules of Court, which is beyond its power to do so.
On the other hand, respondent Central Bank, in its Comment alleges that the
Monetary Board in issuing Section 113 of CB Circular No. 960 did not exceed
its power or authority because the subject Section is copied verbatim from a
portion of R.A. No. 6426 as amended by P.D. 1246. Hence, it was not the
Monetary Board that grants exemption from attachment or garnishment to
foreign currency deposits, but the law (R.A. 6426 as amended) itself; that it
does not violate the substantive due process guaranteed by the Constitution
because a.) it was based on a law; b.) the law seems to be reasonable; c.) it
is enforced according to regular methods of procedure; and d.) it applies to
all members of a class.
Expanding, the Central Bank said; that one reason for exempting the foreign
currency deposits from attachment, garnishment or any other order or
process of any court, is to assure the development and speedy growth of the
Foreign Currency Deposit System and the Offshore Banking System in the
Philippines; that another reason is to encourage the inflow of foreign
currency deposits into the banking institutions thereby placing such
institutions more in a position to properly channel the same to loans and
investments in the Philippines, thus directly contributing to the economic
development of the country; that the subject section is being enforced
according to the regular methods of procedure; and that it applies to all
foreign currency deposits made by any person and therefore does not violate
the equal protection clause of the Constitution.
Respondent Central Bank further avers that the questioned provision is
needed to promote the public interest and the general welfare; that the State
cannot just stand idly by while a considerable segment of the society suffers
from economic distress; that the State had to take some measures to
encourage economic development; and that in so doing persons and
property may be subjected to some kinds of restraints or burdens to secure
the general welfare or public interest. Respondent Central Bank also alleges
that Rule 39 and Rule 57 of the Revised Rules of Court provide that some
properties are exempted from execution/attachment especially provided by
law and R.A. No. 6426 as amended is such a law, in that it specifically
provides, among others, that foreign currency deposits shall be exempted
from attachment, garnishment, or any other order or process of any court,
legislative body, government agency or any administrative body whatsoever.
For its part, respondent China Banking Corporation, aside from giving
reasons similar to that of respondent Central Bank, also stated that
respondent China Bank is not unmindful of the inhuman sufferings
experienced by the minor Karen E. Salvacion from the beastly hands of Greg
Bartelli; that it is only too willing to release the dollar deposit of Bartelli which
may perhaps partly mitigate the sufferings petitioner has undergone; but it is
restrained from doing so in view of R.A. No. 6426 and Section 113 of Central
Bank Circular No. 960; and that despite the harsh effect of these laws on
petitioners, CBC has no other alternative but to follow the same.
This Court finds the petition to be partly meritorious.
manners and opinions change with the change of circumstances, institutions
must advance also, and keep pace with the times. . . We might as well
require a man to wear still the coat which fitted him when a boy, as civilized
society to remain ever under the regimen of their barbarous ancestors.

In his Comment, the Solicitor General correctly opined, thus:

Petitioner deserves to receive the damages awarded to her by the court. But
this petition for declaratory relief can only be entertained and treated as a
petition for mandamus to require respondents to honor and comply with the The present petition has far-reaching implications on the right of a national to
writ of execution in Civil Case No. 89-3214. obtain redress for a wrong committed by an alien who takes refuge under a
law and regulation promulgated for a purpose which does not contemplate
the application thereof envisaged by the alien. More specifically, the petition
This Court has no original and exclusive jurisdiction over a petition for
raises the question whether the protection against attachment, garnishment
declaratory relief.2 However, exceptions to this rule have been recognized.
or other court process accorded to foreign currency deposits by PD No. 1246
Thus, where the petition has far-reaching implications and raises questions
and CB Circular No. 960 applies when the deposit does not come from a
that should be resolved, it may be treated as one for mandamus.3
lender or investor but from a mere transient or tourist who is not expected to
maintain the deposit in the bank for long.
Here is a child, a 12-year old girl, who in her belief that all Americans are
good and in her gesture of kindness by teaching his alleged niece the Filipino
The resolution of this question is important for the protection of nationals who
language as requested by the American, trustingly went with said stranger to
are victimized in the forum by foreigners who are merely passing through.
his apartment, and there she was raped by said American tourist Greg
Bartelli. Not once, but ten times. She was detained therein for four (4) days.
This American tourist was able to escape from the jail and avoid punishment. xxx xxx xxx
On the other hand, the child, having received a favorable judgment in the
Civil Case for damages in the amount of more than P1,000,000.00, which
. . . Respondents China Banking Corporation and Central Bank of the
amount could alleviate the humiliation, anxiety, and besmirched reputation
Philippines refused to honor the writ of execution issued in Civil Case No. 89-
she had suffered and may continue to suffer for a long, long time; and
3214 on the strength of the following provision of Central Bank Circular No.
knowing that this person who had wronged her has the money, could not,
960:
however get the award of damages because of this unreasonable law. This
questioned law, therefore makes futile the favorable judgment and award of
damages that she and her parents fully deserve. As stated by the trial court Sec. 113. Exemption from attachment. — Foreign
in its decision, currency deposits shall be exempt from attachment,
garnishment, or any other order or process of any court,
legislative body, government agency or any
Indeed, after hearing the testimony of Karen, the Court believes that it was
administrative body whatsoever.
undoubtedly a shocking and traumatic experience she had undergone which
could haunt her mind for a long, long time, the mere recall of which could
make her feel so humiliated, as in fact she had been actually humiliated once Central Bank Circular No. 960 was issued pursuant to Section 7 of Republic
when she was refused admission at the Abad Santos High School, Arellano Act No. 6426:
University, where she sought to transfer from another school, simply because
the school authorities of the said High School learned about what happened
to her and allegedly feared that they might be implicated in the case. Sec. 7. Rules and Regulations. The Monetary Board of
the Central Bank shall promulgate such rules and
regulations as may be necessary to carry out the
xxx xxx xxx provisions of this Act which shall take effect after the
publication of such rules and regulations in the Official
Gazette and in a newspaper of national circulation for at
The reason for imposing exemplary or corrective damages is due to the
least once a week for three consecutive weeks. In case
wanton and bestial manner defendant had committed the acts of rape during
the Central Bank promulgates new rules and regulations
a period of serious illegal detention of his hapless victim, the minor Karen
decreasing the rights of depositors, the rules and
Salvacion whose only fault was in her being so naive and credulous to
regulations at the time the deposit was made shall
believe easily that defendant, an American national, could not have such a
govern.
bestial desire on her nor capable of committing such a heinous crime. Being
only 12 years old when that unfortunate incident happened, she has never
heard of an old Filipino adage that in every forest there is a The aforecited Section 113 was copied from Section 8 of Republic Act NO.
snake, . . . .4 6426, as amended by P.D. 1246, thus:

If Karen's sad fate had happened to anybody's own kin, it would be difficult
for him to fathom how the incentive for foreign currency deposit could be
more important than his child's rights to said award of damages; in this case,
the victim's claim for damages from this alien who had the gall to wrong a
child of tender years of a country where he is a mere visitor. This further
illustrates the flaw in the questioned provisions.
It is worth mentioning that R.A. No. 6426 was enacted in 1983 or at a time
when the country's economy was in a shambles; when foreign investments
were minimal and presumably, this was the reason why said statute was
enacted. But the realities of the present times show that the country has
recovered economically; and even if not, the questioned law still denies those
entitled to due process of law for being unreasonable and oppressive. The
intention of the questioned law may be good when enacted. The law failed to
anticipate the iniquitous effects producing outright injustice and inequality
such as the case before us.
Sec. 8. Secrecy of Foreign Currency Deposits. — All
foreign currency deposits authorized under this Act, as
amended by Presidential Decree No. 1035, as well as
foreign currency deposits authorized under Presidential
Decree No. 1034, are hereby declared as and
considered of an absolutely confidential nature and,
except upon the written permission of the depositor, in
no instance shall such foreign currency deposits be
examined, inquired or looked into by any person,
government official, bureau or office whether judicial or
administrative or legislative or any other entity whether
public or private: Provided, however, that said foreign
currency deposits shall be exempt from attachment,
garnishment, or any other order or process of any court,
legislative body, government agency or any
administrative body whatsoever.

The purpose of PD 1246 in according protection against attachment,

It has thus been said that —
garnishment and other court process to foreign currency deposits is stated in
its whereases, viz.:
But I also know,5 that laws and institutions must go hand in hand with the
progress of the human mind. As that becomes more developed, more
WHEREAS, under Republic Act No. 6426, as amended
enlightened, as new discoveries are made, new truths are disclosed and
by Presidential Decree No. 1035, certain Philippine
 banking institutions and branches of foreign banks are
authorized to accept deposits in foreign currency;
WHEREAS, under the provisions of Presidential Decree
No. 1034 authorizing the establishment of an offshore
banking system in the Philippines, offshore banking units
are also authorized to receive foreign currency deposits
in certain cases;
WHEREAS, in order to assure the development and
speedy growth of the Foreign Currency Deposit System
and the Offshore Banking System in the Philippines,
certain incentives were provided for under the two
Systems such as confidentiality of deposits subject to
certain exceptions and tax exemptions on the interest
income of depositors who are nonresidents and are not
engaged in trade or business in the Philippines;
WHEREAS, it is timely to expand the foreign currency
lending authority of the said depository banks under RA
6426 and apply to their transactions the same taxes as
would be applicable to transaction of the proposed
offshore banking units;
It is evident from the above [Whereas clauses] that the Offshore Banking
System and the Foreign Currency Deposit System were designed to draw
deposits from foreign lenders and investors (Vide second Whereas of PD No.
1034; third Whereas of PD No. 1035). It is these deposits that are induced by
the two laws and given protection and incentives by them.
Obviously, the foreign currency deposit made by a transient or a tourist is not
the kind of deposit encouraged by PD Nos. 1034 and 1035 and given
incentives and protection by said laws because such depositor stays only for
a few days in the country and, therefore, will maintain his deposit in the bank
only for a short time.

WHEREAS, making absolute the protective cloak of Respondent Greg Bartelli, as stated, is just a tourist or a transient. He
confidentiality over such foreign currency deposits, deposited his dollars with respondent China Banking Corporation only for
exempting such deposits from tax, and guaranteeing the safekeeping during his temporary stay in the Philippines.
vested rights of depositors would better encourage the
inflow of foreign currency deposits into the banking
For the reasons stated above, the Solicitor General thus submits that the
institutions authorized to accept such deposits in the
dollar deposit of respondent Greg Bartelli is not entitled to the protection of
Philippines thereby placing such institutions more in a
Section 113 of Central Bank Circular No. 960 and PD No. 1246 against
position to properly channel the same to loans and
attachment, garnishment or other court processes.6
investments in the Philippines, thus directly contributing
to the economic development of the country;
In fine, the application of the law depends on the extent of its justice.
Eventually, if we rule that the questioned Section 113 of Central Bank
Thus, one of the principal purposes of the protection accorded to foreign
Circular No. 960 which exempts from attachment, garnishment, or any other
currency deposits is "to assure the development and speedy growth of the
order or process of any court, legislative body, government agency or any
Foreign Currency Deposit system and the Offshore Banking in the
administrative body whatsoever, is applicable to a foreign transient, injustice
Philippines" (3rd Whereas).
would result especially to a citizen aggrieved by a foreign guest like accused
Greg Bartelli. This would negate Article 10 of the New Civil Code which
The Offshore Banking System was established by PD No. 1034. In turn, the provides that "in case of doubt in the interpretation or application of laws, it is
purposes of PD No. 1034 are as follows: presumed that the lawmaking body intended right and justice to prevail.
"Ninguno non deue enriquecerse tortizeramente con dano de otro." Simply
stated, when the statute is silent or ambiguous, this is one of those
WHEREAS, conditions conducive to the establishment of
fundamental solutions that would respond to the vehement urge of
an offshore banking system, such as political stability, a
conscience. (Padilla vs. Padilla, 74 Phil. 377).
growing economy and adequate communication
facilities, among others, exist in the Philippines;
It would be unthinkable, that the questioned Section 113 of Central Bank No.
960 would be used as a device by accused Greg Bartelli for wrongdoing, and
WHEREAS, it is in the interest of developing countries to
in so doing, acquitting the guilty at the expense of the innocent.
have as wide access as possible to the sources of
capital funds for economic development;
Call it what it may — but is there no conflict of legal policy here? Dollar
against Peso? Upholding the final and executory judgment of the lower court
WHEREAS, an offshore banking system based in the
against the Central Bank Circular protecting the foreign depositor? Shielding
Philippines will be advantageous and beneficial to the
or protecting the dollar deposit of a transient alien depositor against injustice
country by increasing our links with foreign lenders,
to a national and victim of a crime? This situation calls for fairness against
facilitating the flow of desired investments into the
legal tyranny.
Philippines, creating employment opportunities and
expertise in international finance, and contributing to the
national development effort. We definitely cannot have both ways and rest in the belief that we have
served the ends of justice.
WHEREAS, the geographical location, physical and
human resources, and other positive factors provide the IN VIEW WHEREOF, the provisions of Section 113 of CB Circular No. 960
Philippines with the clear potential to develop as another and PD No. 1246, insofar as it amends Section 8 of R.A. No. 6426 are
financial center in Asia; hereby held to be INAPPLICABLE to this case because of its peculiar
circumstances. Respondents are hereby REQUIRED to COMPLY with the
writ of execution issued in Civil Case No. 89-3214, "Karen Salvacion, et al.
On the other hand, the Foreign Currency Deposit system was created by PD.
vs. Greg Bartelli y Northcott, by Branch CXLIV, RTC Makati and to RELEASE
No. 1035. Its purposes are as follows:
to petitioners the dollar deposit of respondent Greg Bartelli y Northcott in
such amount as would satisfy the judgment.
WHEREAS, the establishment of an offshore banking
system in the Philippines has been authorized under a
SO ORDERED.
separate decree;

WHEREAS, a number of local commercial banks, as

depository bank under the Foreign Currency Deposit Act
(RA No. 6426), have the resources and managerial
competence to more actively engage in foreign
exchange transactions and participate in the grant of
foreign currency loans to resident corporations and firms;
G.R. No. 72873 May 28, 1987
CARLOS ALONZO and CASIMIRA ALONZO, petitioners,
vs.
INTERMEDIATE APPELLATE COURT and TECLA
PADUA, respondents.
Perpetuo L.B. Alonzo for petitioners.
Luis R. Reyes for private respondent.
CRUZ, J.:
The question is sometimes asked, in serious inquiry or in curious
conjecture, whether we are a court of law or a court of justice. Do we
apply the law even if it is unjust or do we administer justice even
against the law? Thus queried, we do not equivocate. The answer is
that we do neither because we are a court both of law and of justice.
We apply the law with justice for that is our mission and purpose in
the scheme of our Republic. This case is an illustration.
Five brothers and sisters inherited in equal pro indiviso shares a
parcel of land registered in 'the name of their deceased parents
under OCT No. 10977 of the Registry of Deeds of Tarlac. 1
On March 15, 1963, one of them, Celestino Padua, transferred his
undivided share of the herein petitioners for the sum of P550.00 by
way of absolute sale. 2 One year later, on April 22, 1964, Eustaquia
Padua, his sister, sold her own share to the same vendees, in an
instrument denominated "Con Pacto de Retro Sale," for the sum of P
440.00. 3
By virtue of such agreements, the petitioners occupied, after the said
sales, an area corresponding to two-fifths of the said lot,
representing the portions sold to them. The vendees subsequently
enclosed the same with a fence. In 1975, with their consent, their
son Eduardo Alonzo and his wife built a semi-concrete house on a
part of the enclosed area.4
On February 25, 1976, Mariano Padua, one of the five coheirs,
sought to redeem the area sold to the spouses Alonzo, but his
complaint was dismissed when it appeared that he was an American
citizen .5 On May 27, 1977, however, Tecla Padua, another co-heir,
filed her own complaint invoking the same right of redemption
claimed by her brother. 6
The trial court * also dismiss this complaint, now on the ground that
the right had lapsed, not having been exercised within thirty days
from notice of the sales in 1963 and 1964. Although there was no
written notice, it was held that actual knowledge of the sales by the
co-heirs satisfied the requirement of the law. 7
In truth, such actual notice as acquired by the co-heirs cannot be
plausibly denied. The other co-heirs, including Tecla Padua, lived on
the same lot, which consisted of only 604 square meters, including
the portions sold to the petitioners . 8 Eustaquia herself, who had
sold her portion, was staying in the same house with her sister
Tecla, who later claimed redemption petition. 9 Moreover, the
petitioners and the private respondents were close friends and
neighbors whose children went to school together. 10
It is highly improbable that the other co-heirs were unaware of the
sales and that they thought, as they alleged, that the area occupied
by the petitioners had merely been mortgaged by Celestino and
Eustaquia. In the circumstances just narrated, it was impossible for
Tecla not to know that the area occupied by the petitioners had been
purchased by them from the other. co-heirs. Especially significant
was the erection thereon of the permanent semi-concrete structure
by the petitioners' son, which was done without objection on her part
or of any of the other co-heirs.
The only real question in this case, therefore, is the correct
interpretation and application of the pertinent law as invoked,
interestingly enough, by both the petitioners and the private
respondents. This is Article 1088 of the Civil Code, providing as
follows:
Art. 1088. Should any of the heirs sell his hereditary rights to a
stranger before the partition, any or all of the co-heirs may be
subrogated to the rights of the purchaser by reimbursing him for the
price of the sale, provided they do so within the period of one month
from the time they were notified in writing of the sale by the vendor.
In reversing the trial court, the respondent court ** declared that the
notice required by the said article was written notice and that actual
notice would not suffice as a substitute. Citing the same case of De
Conejero v. Court of Appeals 11 applied by the trial court, the
respondent court held that that decision, interpreting a like rule in
Article 1623, stressed the need for written notice although no
particular form was required.
Thus, according to Justice J.B.L. Reyes, who was the ponente of the
Court, furnishing the co-heirs with a copy of the deed of sale of the
property subject to redemption would satisfy the requirement for
written notice. "So long, therefore, as the latter (i.e., the
redemptioner) is informed in writing of the sale and the particulars
thereof," he declared, "the thirty days for redemption start running. "
In the earlier decision of Butte v. UY, 12 " the Court, speaking
through the same learned jurist, emphasized that the written notice
should be given by the vendor and not the vendees, conformably to
a similar requirement under Article 1623, reading as follows:
Art. 1623. The right of legal pre-emption or redemption shall not be
exercised except within thirty days from the notice in writing by the
prospective vendor, or by the vendors, as the case may be. The
deed of sale shall not be recorded in the Registry of Property, unless
accompanied by an affidavit of the vendor that he has given written
notice thereof to all possible redemptioners.
The right of redemption of co-owners excludes that of the adjoining
owners.
As "it is thus apparent that the Philippine legislature in Article 1623
deliberately selected a particular method of giving notice, and that
notice must be deemed exclusive," the Court held that notice given
by the vendees and not the vendor would not toll the running of the
30-day period.
The petition before us appears to be an illustration of the Holmes
dictum that "hard cases make bad laws" as the petitioners obviously
cannot argue against the fact that there was really no written notice
given by the vendors to their co-heirs. Strictly applied and
interpreted, Article 1088 can lead to only one conclusion, to wit, that
in view of such deficiency, the 30 day period for redemption had not
begun to run, much less expired in 1977.
But as has also been aptly observed, we test a law by its results;
and likewise, we may add, by its purposes. It is a cardinal rule that,
in seeking the meaning of the law, the first concern of the judge
should be to discover in its provisions the in tent of the lawmaker.
Unquestionably, the law should never be interpreted in such a way
as to cause injustice as this is never within the legislative intent. An
indispensable part of that intent, in fact, for we presume the good
motives of the legislature, is to render justice.
Thus, we interpret and apply the law not independently of but in
consonance with justice. Law and justice are inseparable, and we
must keep them so. To be sure, there are some laws that, while
generally valid, may seem arbitrary when applied in a particular case
because of its peculiar circumstances. In such a situation, we are
not bound, because only of our nature and functions, to apply them
just the same, in slavish obedience to their language. What we do
instead is find a balance between the word and the will, that justice
may be done even as the law is obeyed.
As judges, we are not automatons. We do not and must not
unfeelingly apply the law as it is worded, yielding like robots to the
literal command without regard to its cause and consequence.
"Courts are apt to err by sticking too closely to the words of a law,"
so we are warned, by Justice Holmes again, "where these words
import a policy that goes beyond them." 13 While we admittedly may
not legislate, we nevertheless have the power to interpret the law in
such a way as to reflect the will of the legislature. While we may not
read into the law a purpose that is not there, we nevertheless have
the right to read out of it the reason for its enactment. In doing so,
we defer not to "the letter that killeth" but to "the spirit that vivifieth,"
to give effect to the law maker's will.
The spirit, rather than the letter of a statute determines its
construction, hence, a statute must be read according to its spirit or
intent. For what is within the spirit is within the letter but although it is
not within the letter thereof, and that which is within the letter but not
within the spirit is not within the statute. Stated differently, a thing
which is within the intent of the lawmaker is as much within the
statute as if within the letter; and a thing which is within the letter of
the statute is not within the statute unless within the intent of the
lawmakers. 14
In requiring written notice, Article 1088 seeks to ensure that the
redemptioner is properly notified of the sale and to indicate the date
of such notice as the starting time of the 30-day period of
redemption. Considering the shortness of the period, it is really
necessary, as a general rule, to pinpoint the precise date it is
supposed to begin, to obviate any problem of alleged delays,
sometimes consisting of only a day or two.
The instant case presents no such problem because the right of
redemption was invoked not days but years after the sales were
made in 1963 and 1964. The complaint was filed by Tecla Padua in
1977, thirteen years after the first sale and fourteen years after the
second sale. The delay invoked by the petitioners extends to more
than a decade, assuming of course that there was a valid notice that
tolled the running of the period of redemption.
Was there a valid notice? Granting that the law requires the notice to
be written, would such notice be necessary in this case? Assuming
there was a valid notice although it was not in writing. would there be
any question that the 30-day period for redemption had expired long
before the complaint was filed in 1977?
In the face of the established facts, we cannot accept the private
respondents' pretense that they were unaware of the sales made by
their brother and sister in 1963 and 1964. By requiring written proof
of such notice, we would be closing our eyes to the obvious truth in
favor of their palpably false claim of ignorance, thus exalting the
letter of the law over its purpose. The purpose is clear enough: to
make sure that the redemptioners are duly notified. We are satisfied
that in this case the other brothers and sisters were actually
informed, although not in writing, of the sales made in 1963 and
1964, and that such notice was sufficient.
Now, when did the 30-day period of redemption begin?
While we do not here declare that this period started from the dates
of such sales in 1963 and 1964, we do say that sometime between
those years and 1976, when the first complaint for redemption was
filed, the other co-heirs were actually informed of the sale and that
thereafter the 30-day period started running and ultimately expired.
This could have happened any time during the interval of thirteen
years, when none of the co-heirs made a move to redeem the
properties sold. By 1977, in other words, when Tecla Padua filed her
complaint, the right of redemption had already been extinguished
because the period for its exercise had already expired.
The following doctrine is also worth noting:
While the general rule is, that to charge a party
with laches in the assertion of an alleged right it is
essential that he should have knowledge of the
facts upon which he bases his claim, yet if the
circumstances were such as should have induced
inquiry, and the means of ascertaining the truth
were readily available upon inquiry, but the party
neglects to make it, he will be chargeable with
laches, the same as if he had known the facts. 15
It was the perfectly natural thing for the co-heirs to wonder why the
spouses Alonzo, who were not among them, should enclose a
portion of the inherited lot and build thereon a house of strong
materials. This definitely was not the act of a temporary possessor
or a mere mortgagee. This certainly looked like an act of ownership.
Yet, given this unseemly situation, none of the co-heirs saw fit to
object or at least inquire, to ascertain the facts, which were readily
available. It took all of thirteen years before one of them chose to
claim the right of redemption, but then it was already too late.
We realize that in arriving at our conclusion today, we are deviating
from the strict letter of the law, which the respondent court
understandably applied pursuant to existing jurisprudence. The said
court acted properly as it had no competence to reverse the
doctrines laid down by this Court in the above-cited cases. In fact,
and this should be clearly stressed, we ourselves are not
abandoning the De Conejero and Buttle doctrines. What we are
doing simply is adopting an exception to the general rule, in view of
the peculiar circumstances of this case.
The co-heirs in this case were undeniably informed of the sales
although no notice in writing was given them. And there is no doubt
either that the 30-day period began and ended during the 14 years
between the sales in question and the filing of the complaint for
redemption in 1977, without the co-heirs exercising their right of
redemption. These are the justifications for this exception.
More than twenty centuries ago, Justinian defined justice "as the
constant and perpetual wish to render every one his due." 16 That
wish continues to motivate this Court when it assesses the facts and
the law in every case brought to it for decision. Justice is always an
essential ingredient of its decisions. Thus when the facts warrants,
we interpret the law in a way that will render justice, presuming that
it was the intention of the lawmaker, to begin with, that the law be
dispensed with justice. So we have done in this case.
WHEREFORE, the petition is granted. The decision of the
respondent court is REVERSED and that of the trial court is
reinstated, without any pronouncement as to costs. It is so ordered.