G.R. No. 127116 April 8, 1997 Respondent Commission on Elections, through Chairman Bernardo P.
Respondent Commission on Elections, through Chairman Bernardo P. Pardo, defends its assailed Resolutions and maintains that the
ALEX L. DAVID, in his own behalf as Barangay Chairman of Barangay 77, Zone 7, Kalookan City and as President of the LIGA
NG MGA BARANGAY SA PILIPINAS, petitioner,
vs.
COMMISSION ON ELECTIONS, Department of Interior and Local Government, and THE HONORABLE SECRETARY,
Department of Budget and Management, respondents.
The two petitions before us raise a common question: How long is the term of office of barangay chairmen and other barangay officials
who were elected to their respective offices on the second Monday of May 1994? Is it three years, as provided by RA 7160 (the Local
Government Code) or five years, as contained in RA 6679? Contending that their term is five years, petitioners ask this Court to order
the cancellation of the scheduled barangay election this coming May 12, 1997 and to reset it to the second Monday of May, 1999.
The Antecedents
G.R. No. 127116
In his capacity as barangay chairman of Barangay 77, Zone 7, Kalookan City and as president of the Liga ng mga Barangay sa
Pilipinas, Petitioner Alex L. David filed on December 2, 1996 a petition for prohibition docketed in this Court as G.R. No. 127116, under
Rule 65 of the Rules of Court, to prohibit the holding of the barangay election scheduled on the second Monday of May 1997. On
January 14, 1997, the Court resolved to require the respondents to comment on the petition within a non-extendible period of fifteen
days ending on January 29, 1997.
On January 29, 1997, the Solicitor General filed his four-page Comment siding with petitioner and praying that "the election scheduled
on May 12, 1997 be held in abeyance." Respondent Commission on Elections filed a separate Comment, dated February 1, 1997
opposing the petition. On February 11, 1997, the Court issued a Resolution giving due course to the petition and requiring the parties to
file simultaneous memoranda within a non-extendible period of twenty days from notice. It also requested former Senator Aquilino Q.
Pimentel, Jr.1 to act as amicus curiae and to file a memorandum also within a non-extendible period of twenty days. It noted but did not
grant petitioner's Urgent Motion for Issuance of Temporary Restraining Order and/or Writ of Preliminary Injunction dated January 31,
1997 (as well as his Urgent Ex-Parte Second Motion to the same effect, dated March 6, 1997). Accordingly, the parties filed their
respective memoranda. The Petition for Leave to Intervene filed on March 17, 1997 by Punong Barangay Rodson F. Mayor was denied
as it would just unduly delay the resolution of the case, his interest like those of all other barangay officials being already adequately
represented by Petitioner David who filed this petition as "president of the Liga ng mga Barangay sa Pilipinas."
G.R. No. 128039
On February 20, 1997, Petitioner Liga ng mga Barangay Quezon City Chapter represented by its president Bonifacio M. Rillon filed a
petition, docketed as G.R. No. 128039, "to seek a judicial review by certiorari to declare as unconstitutional:
1. Section 43(c) of R.A. 7160 which reads as follows:
(c) The term of office of barangay officials and members of the sangguniang kabataan shall be for three (3)
years, which shall begin after the regular election of barangay officials on the second Monday of May 1994.
2. COMELEC Resolution Nos. 2880 and 2887 fixing the date of the holding of the barangay elections on May
12, 1997 and other activities related thereto;
3. The budgetary appropriation of P400 million contained in Republic Act No. 8250 otherwise known as the
General Appropriations Act of 1997 intended to defray the costs and expenses in holding the 1997 barangay
elections:2
Comelec Resolution 2880,3 promulgated on December 27, 1996 and referred to above, adopted a "Calendar of Activities and List and
Periods of Certain Prohibited Acts for the May 12, 1997 Barangay Elections." On the other hand, Comelec Resolution 2887 promulgated
on February 5, 1997 moved certain dates fixed in Resolution 2880.4
Acting on the petition, the Court on February 25, 1997 required respondents to submit their comment thereon within a non-extendible
period of ten days ending on March 7, 1997. The Court further resolved to consolidate the two cases inasmuch as they raised basically
the same issue. Respondent Commission filed its Comment on March 6, 19975 and the Solicitor General, in representation of the other
respondent, filed his on March 6, 1997. Petitioner's Urgent Omnibus Motion for oral argument and temporary restraining order was
noted but not granted. The petition was deemed submitted for resolution by the Court without need of memoranda.
The Issues
Both petitions though worded differently raise the same ultimate issue: How long is the term of office of barangay officials?
Petitioners contend that under Sec. 2 of Republic Act No. 6653, approved on May 6, 1988, "(t)he term of office of barangay officials
6
shall be for five (5) years . . ." This is reiterated in Republic Act No. 6679, approved on November 4, 1988, which reset the barangay
elections from "the second Monday of November 1988" to March 28, 1989 and provided in Sec. 1 thereof that such five-year term shall
begin on the "first day of May 1989 and ending on the thirty-first day of May 1994." Petitioners further aver7 that although Sec. 43 of RA
7160 reduced the term of office of all local elective officials to three years, such reduction does not apply to barangay officials because
(1) RA 6679 is a special law applicable only to barangays while RA 7160 is a general law which applies to all other local government
units; (2) RA 7160 does not expressly or impliedly repeal RA 6679 insofar as the term of barangay officials is concerned; (3) while Sec.
8 of Article X of the 1987 constitution fixes the term of elective local officials at three years, the same provision states that the term of
barangay officials "shall be determined by law"; and (4) thus, it follows that the constitutional intention is to grant barangay officials any
term, except three years; otherwise, "there would be no rhyme or reason for the framers of the Constitution to except barangay officials
from the three year term found in Sec. 8 (of) Article X of the Constitution." Petitioners conclude (1) that the Commission on Elections
committed grave abuse of discretion when it promulgated Resolution Nos. 2880 and 2887 because it "substituted its own will for that of
the legislative and usurped the judicial function . . . by interpreting the conflicting provisions of Sec. 1 of RA 6679 and Sec. 43 (c) of RA
7160; and (2) that the appropriation of P400 million in the General Appropriation Act of 1997 (RA 8250) to be used in the conduct of the
barangay elections on May 12, 1997 is itself unconstitutional and a waste of public funds.
The Solicitor General agrees with petitioners, arguing that RA 6679 was not repealed by RA 7160 and thus "he believes that the holding
of the barangay elections (o)n the second Monday of May 1997 is without sufficient legal basis."
repealing clause of RA 7160 includes "all laws, whether general or special, inconsistent, with the provisions of the Local Government
Code," citing this Court's dictum in Paras vs. Comelec8 that "the next regular election involving the barangay office is barely seven (7)
months away, the same having been scheduled in May 1997." Furthermore, RA 8250 (the General Appropriations Act for 1997) and RA
8189 (providing for a general registration of voters) both "indicate that Congress considered that the barangay elections shall take place
in May, 1997, as provided for in RA 7160, Sec. 43 (c)."9 Besides, petitioners cannot claim a term of more than three years since they
were elected under the aegis of the Local Government Code of 1991 which prescribes a term of only three years. Finally, Respondent
Comelec denies the charge of grave abuse of discretion stating that the "question presented . . . is a purely legal one involving no
exercise of an act without or in excess of jurisdiction or with grave abuse of discretion." 10
As amicus curiae, former Senator Aquilino Q. Pimentel, Jr. urges the Court to deny the petitions because (1) the Local Autonomy Code
repealed both RA 6679 and 6653 "not only by implication but by design as well"; (2) the legislative intent is to shorten the term of
barangay officials to three years; (3) the barangay officials should not have a term longer than that of their administrative superiors, the
city and municipal mayors; and (4) barangay officials are estopped from contesting the applicability of the three-year term provided by
the Local Government Code as they were elected under the provisions of said Code.
From the foregoing discussions of the parties, the Court believes that the issues can be condensed into; three, as follows:
1. Which law governs the term of office of barangay official: RA 7160 or RA 6679?
2. Is RA 7160 insofar as it shortened such term to only three years constitutional?
3. Are petitioners estopped from claiming a term other than that provided under RA 7160?.
The Court's Ruling
The petitions are devoid of merit.
Brief Historical Background
of Barangay Elections
For a clear understanding of the issues, it is necessary to delve briefly into the history of barangay elections.
An a unit of government, the barangay antedated the Spanish conquest of the Philippines The word "barangay" is derived from the
Malay "balangay," a boat which transported them (the Malays) to these shores. 11 Quoting from Juan de Plasencia, a Franciscan
missionary in 1577, Historian Conrado Benitez 12 wrote that the barangay was ruled by a dato who exercised absolute powers of
government. While the Spaniards kept the barangay as the basic structure of government, they stripped the dato or rajah, of his
powers. 13 Instead, power was centralized nationally in the governor general and locally in the encomiendero and later, in the alcalde
mayor and the gobernadorcillo. The dato or rajah was much later renamed cabeza de barangay, who was elected by the local citizens
possessing property. The position degenerated from a title of honor to that of a "mere government employee. Only the poor who needed
a salary, no matter how low, accepted the post." 14
After the Americans colonized the Philippines, the barangays became known as "barrios." 15 For some time, the laws governing barrio
governments were found in the Revised Administrative Code of 1916 and later in the Revised Administrative Code of 1917. 16 Barrios
were granted autonomy by the original Barrio Charter, RA 2370, and formally recognized as quasi-municipal corporations 17 by the
Revised Barrio Charter, RA 3590. During the martial law regime, barrios were "declared" or renamed "barangays" — a reversion really
to their pre-Spanish names — by PD. No. 86 and PD No. 557. Their basic organization and functions under RA 3590, which was
expressly "adopted as the Barangay Charter, were retained. However, the titles of the officials were changed to "barangay captain,"
"barangay councilman," "barangay secretary" and "barangay treasurer."
Pursuant to Sec. 6 of Batas Pambansa Big. 222, 18 "a Punong Barangay (Barangay Captain) and six Kagawads ng Sangguniang
Barangay (Barangay Councilmen), who shall constitute the presiding officer and members of the Sangguniang Barangay (Barangay
Council) respectively" were first elected on May 17, 1982. They had a term of six years which began on June 7, 1982.
The Local Government Code of 1983 19 also fixed the term of office of local elective officials at six years. 20 Under this Code, the chief
officials of the barangay were the punong barangay, six elective sangguniang barangay members, the kabataang barangay chairman, a
barangay secretary and a barangay treasurer. 21 B.P. Blg. 881, the Omnibus Election Code, 22 reiterated that barangay officials "shall
hold office, for six years," and stated that their election was to be held "on the second Monday of May nineteen hundred and eighty eight
and on the same day every six years thereafter." 23
This election scheduled by B.P. Blg. 881 on the second Monday of May 1988 was reset to "the second Monday of November 1988 and
every five years thereafter 24 by RA 6653. Under this law, the term of office of the barangay officials was cut to five years 25 and the
punong barangay was to be chosen from among themselves by seven kagawads, who in turn were to be elected at large by the
barangay electorate. 26
But the election date set by RA 6653 on the second Monday of November 1988 was again "postponed and reset to March 28, 1989" by
RA 6679, 27 and the term of office of barangay officials was to begin on May 1, 1989 and to end on May 31, 1994. RA 6679 further
provided that "there shall be held a regular election of barangay officials on the second Monday of May 1994 and on the same day every
five (5) years thereafter Their term shall be for five years . . . " 28 Significantly, the manner of election of the punong barangay was
changed. Sec. 5 of said law ordained that while the seven kagawads were to be elected by the registered voters of the barangay, "(t)he
candidate who obtains the highest number of votes shall be the punong barangay and in the event of a tie, there shall be a drawing of
lots under the supervision of the Commission on Elections."
Under the Local Government Code of 1991, RA 7160, 29 several provisions concerning barangay official were introduced:
(1) The term of office was reduced to three years, as follows:
Sec. 43. Term of Office. —
xxx xxx xxx
(c) The term of office of barangay officials and members of the sangguniang kabataan shall be for three
(3) years, which shall begin after the regular election of barangay officials on the second Monday of May,
1994 (Emphasis supplied.)
(2) The composition of the Sangguniang Barangay and the manner of electing its officials were altered, inter alia, the barangay chairman
was to be elected directly by the electorate, as follows:
 Sec. 387. Chief Officials and Offices. — (a) There shall be in each barangay a punong barangay, seven (7) Congress from legislating a three year term for such officers. We find this theory rather novel but nonetheless logically and legally
sanggunian barangay members, the sanggunian kabataan chairman, a barangay secretary and a barangay flawed.
treasurer. Undoubtedly, the Constitution did not expressly prohibit Congress from fixing any term of office for barangay officials. It merely left the
xxx xxx xxx determination of such term to the lawmaking body, without any specific limitation or prohibition, thereby leaving to the lawmakers full
Sec. 390. Composition. — The Sangguniang barangay, the legislative body of the barangay, shall be discretion to fix such term in accordance with the exigencies of public service. It must be remembered that every law has in its favor the
composed of the punong barangay as presiding officer, and the seven (7) regular sangguniang barangay presumption of constitutionality. 38 For a law to be nullified, it must be shown that there is a clear and unequivocal (not just implied)
members elected at large and the sangguniang kabataan chairman as members. breach of the Constitution. 39To strike down a law as unconstitutional, there must be a clear and unequivocal showing that what the
Sec. 41. Manner of Election. — (a) The . . . punong barangay shall be elected at large . . . by the qualified fundamental law prohibits, the statute permits. 40 The petitioners have miserably failed to discharge this burden and to show clearly the
voters in the barangay. (Emphasis supplied.) unconstitutionality they aver.
Pursuant to the foregoing mandates of the Local Autonomy Code, the qualified barangay voters actually voted for one punong barangay There is absolutely no doubt in our mind that Sec. 43-c of RA 7160 is constitutional. Sec. 8, Article X of the Constitution — limiting the
and seven (7) kagawads during the barangay elections held on May 9, 1994. In other words, the punong barangay was elected directly term of all elective local officials to three years, except that of barangay officials which "shall be determined by law" — was an
and separately by the electorate, and not by the seven (7) kagawads from among themselves. amendment proposed by Constitutional Commissioner (now Supreme Court Justice) Hilario G. Davide, Jr. According to Fr. Joaquin G.
The First Issue: Clear Legislative Intent Bernas, S.J., the amendment was "readily accepted without much discussion and formally approved." Indeed, a search into the Record
and Design to Limit Term to Three Years of the Constitutional Commission yielded only a few pages 41 of actual deliberations, the portions pertinent to the Constitutional
In light of the foregoing brief historical background, the intent and design of the legislature to limit the term of barangay officials to only Commission's intent being the following:
three (3) years as provided under the Local Government Code emerges as bright as the sunlight. The cardinal rule in the interpretation MR. NOLLEDO. One clarificatory question, Madam President. What will be the term of the office of barangay
of all laws is to ascertain and give effect to the intent of the law. 30And three years is the obvious intent. officials as provided for?
First. RA 7160, the Local Government Code, was enacted later than RA 6679. It is basic that in case of an irreconciliable conflict MR. DAVIDE. As may be determined by law..
between two laws of different vintages, the later enactment prevails. 31 Legis posteriores priores contrarias abrogant. The rationale is MR. NOLLEDO. As provided for in the Local Government Code?
simple: a later law repeals an earlier one because it is the later legislative will. It is to be presumed that the lawmakers knew the older MR. DAVIDE. Yes.
law and intended to change it. In enacting the older law, the legislators could not have known the newer one and hence could not have xxx xxx xxx
intended to change what they did not know. Under the Civil Code, laws are repealed only by subsequent ones 32 — and not the other THE PRESIDENT. Is there any other comment? Is there any objection to this proposed new section as
way around. submitted by Commissioner Davide and accepted by the Committee?
Under Sec. 43-c of RA 7160, the term of office of barangay officials was fixed at "three (3) years which shall begin after the regular MR. RODRIGO. Madam President, does this prohibition to serve for more than three consecutive terms apply
election of barangay officials on the second Monday of May 1994." This provision is clearly inconsistent with and repugnant to Sec. 1 of to barangay officials?
RA 6679 which states that such "term shall be for five years." Note that both laws refer to the same officials who were elected "on the MR. DAVIDE. Madam President, the voting that we had on the terms of office did not include the barangay
second Monday of May 1994." officials because it was then the stand of the Chairman of the Committee on Local Governments that the term
Second. RA 6679 requires the barangay voters to elect seven kagawads and the candidate obtaining the highest number of votes shall of barangay officials must be determined by law. So it is now for the law to determine whether the restriction
automatically be the punong barangay. RA 6653 empowers the seven elected barangay kagawads to select the punong barangay from on the number of reelections will be included in the Local Government Code.
among themselves. On the other hand, the Local Autonomy Code mandates a direct vote on the barangay chairman by the entire MR. RODRIGO. So that is up to Congress to decide.
barangay electorate, separately from the seven kagawads. Hence, under the Code, voters elect eight barangay officials, namely, the MR. DAVIDE. Yes.
punong barangay plus the seven kagawads. Under both RA 6679 and 6653, they vote for only seven kagawads, and not for the MR. RODRIGO. I just wanted that clear in the record.
barangay chairman. Although the discussions in the Constitutional Commission were very brief, they nonetheless provide the exact answer to the main
Third. During the barangay elections held on May 9, 1994 (second Monday), the voters actually and directly elected one punong issue. To the question at issue here on how long the term of barangay officials is, the answer of the Commission was simple, clear and
barangay and seven kagawads. If we agree with the thesis of petitioners, it follows that all the punong barangays were elected illegally quick: "As may be determined by law"; more precisely, "(a)s provided for in the Local Autonomy Code." And the Local Autonomy Code,
and thus, Petitioner Alex David cannot claim to be a validly elected barangay chairman, much less president of the national league, of in its Sec. 43-c, limits their term to three years.
barangays which he purports to represent in this petition. It then necessarily follows also that he is not the real party-in-interest and on The Third Issue: Petitioners Estopped From
that ground, his petition should be summarily dismissed. Challenging Their Three-Year Terms
Fourth. In enacting the general appropriations act of 1997, 33 Congress appropriated the amount of P400 million to cover expenses for We have already shown that constitutionally, statutorily, logically, historically and commonsensically, the petitions are completely devoid
the holding of barangay elections this year. Likewise, under Sec. 7 of RA 8189, Congress ordained that a general registration of voters of merit. And we could have ended our Decision right here. But there is one last point why petitioners have no moral ascendancy for
shall be held "immediately after the barangay elections in 1997." These are clear and express contemporaneous statements of their dubious claim to a longer term of office: the equities of their own petition militate against them. As pointed out by Amicus
Congress that barangay officials shall be elected this May, in accordance with Sec. 43-c of RA 7160. Curiae Pimentel, 42 petitioners are barred by estoppel from pursuing their petitions.
Fifth. In Paras vs. Comelec, 34 this Court said that "the next regular election involving the barangay office concerned is barely seven (7) Respondent Commission on Elections submitted as Annex "A" of its memorandum, 43 a machine copy of the certificate of candidacy of
months away, the same having been scheduled in May, 1997." This judicial decision, per Article 8 of the Civil Code, is now a "part of the Petitioner Alex L. David in the May 9, 1994 barangay elections, the authenticity of which was not denied by said petitioner. In said
legal system of the Philippines." certificate of candidacy, he expressly stated under oath that he was announcing his "candidacy for the office of punong barangay for
Sixth. Petitioners pompously claim that RA 6679, being a special law, should prevail over RA 7160, all alleged general law pursuant to Barangay 77, Zone 7" of Kalookan City and that he was "eligible for said office." The Comelec also submitted as Annex "B" 44 to its said
the doctrine of generaila specialibus non derogant. Petitioners are wrong. RA. 7160 is a codified set of laws that specifically applies to memorandum, a certified statement of the votes obtained by the candidates in said elections, thus:
local government units. It specifically and definitively provides in its Sec. 43-c that "the term of office of barangay officials . . . shall be for BARANGAY 77
three years." It is a special provision that applies only to the term of barangay officials who were elected on the second Monday of May CERTIFIED LIST OF CANDIDATES
1994. With such particularity, the provision cannot be deemed a general law. Petitioner may be correct in alleging that RA 6679 is a VOTES OBTAINED
special law, but they are incorrect in stating (without however giving the reasons therefor) that RA 7160 is necessarily a general law. 35 It May 9, 1994 BARANGAY ELECTIONS
is a special law insofar as it governs the term of office of barangay officials. In its repealing clause, 36 RA 7160 states that "all general PUNONG BARANGAY VOTES OBTAINED
and special laws . . . which are inconsistent with any of the provisions of this Code are hereby repealed or modified accordingly." There 1. DAVID, ALEX L. 112
being a clear repugnance and incompatibility between the two specific provisions, they cannot stand together. The later law, RA 7160, KAGAWAD
should thus prevail in accordance with its repealing clause. When a subsequent law encompasses entirely the subject matter of the 1. Magalona, Ruben 150
former enactments, the latter is deemed repealed. 37 2. Quinto, Nelson L. 130
The Second Issue: Three-Year Term 3. Ramon, Dolores Z. 120
Not Repugnant, to Constitution 4. Dela Pena, Roberto T. 115
Sec. 8, Article X of the Constitution states: 5. Castillo, Luciana 114
Sec. 8. The term of office of elective local officials, except barangay officials, which shall be determined by 6. Lorico, Amy A. 107
law, shall be three years, and no such official shall serve for more than three consecutive terms. Voluntary 7. Valencia, Arnold 102
renunciation of the office for any length of time shall not be considered as an interruption in the continuity of 8. Ang, Jose 97
his service for the full term for which he was elected. 9. Dequilla, Teresita D. 58
Petetioner Liga ng mga Barangay Quezon City Chapter posits that by excepting barangay officials whose "term shall be determined by 10. Primavera, Marcelina 52
law" from the general provision fixing the term of "elective local officials" at three years, the Constitution thereby impliedly prohibits If, as claimed by petitioners, the applicable law is RA 6679, then (1) Petitioner David should not have run and could not have been
elected chairman of his barangay because under RA 6679, there was to be no direct election for the punong barangay; the kagawad
candidate who obtained the highest number of votes was to be automatically elected barangay chairman; (2) thus, applying said law, the
punong barangay should have been Ruben Magalona, who obtained the highest number of votes among the kagawads — 150, which
was much more than David's 112; (3) the electorate should have elected only seven kagawads and not one punong barangay plus
seven kagawads.
In other words, following petitioners' own theory, the election of Petitioner David as well as all the barangay chairmen of the two Liga
petitioners was illegal.
The sum total of these absurdities in petitioners' theory is that barangay officials are estopped from asking for any term other than that
which they ran for and were elected to, under the law governing thie very claim to such offices: namely, RA 7160, the Local Government
Code. Petitioners' belated claim of ignorance as to what law governed their election to office in 1994 is unacceptable because under Art.
3 of the Civil Code, "(i)gnorance of the law excuses no one from compliance therewith."
Epilogue
It is obvious that these two petitions must fail. The Constitution and the laws do not support them. Extant jurisprudence militates against
them. Reason and common sense reject them. Equity and morality abhor them. They are subtle but nonetheless self-serving
propositions to lengthen governance without a mandate from the governed. In a democracy, elected leaders can legally and morally
justify their reign only by obtaining the voluntary consent of the electorate. In this case however, petitioners propose to extend their
terms not by seeking the people's vote but by faulty legal argumentation This Court cannot and will not grant its imprimatur to such
untenable proposition. If they want to continue serving, they must get a new mandate in the elections scheduled on May 12, 1997.
WHEREFORE, the petitions are DENIED for being completely devoid of merit.
SO ORDERED.
G.R. No. 215705-07
COMMISSIONER OF INTERNAL REVENUE AND COMMISSIONER OF CUSTOMS, Petitioners
vs.
PHILIPPINE AIRLINES, INC., Respondent
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari seeking the reversal and setting aside of the Decision1 and Resolution2 of the Court
of Tax Appeals (CTA) En Banc, dated April 30, 2014 and December 16, 2014, respectively, in CTA EB Nos. 1029, 1031 and 1032. The
assailed judgment affirmed the January 17, 2013 Decision3 and June 4, 2013 Resolution4 of the CTA Special 2nd Division in CTA Case
No. 8153.
The controversy in the instant case, which gave rise to the present petition for review on certiorari, revolves around the interpretation of
the provisions of Presidential Decree No. 1590 (PD 1590), otherwise known as "An Act Granting a New Franchise to Philippine Airlines,
Inc. to Establish, Operate, and Maintain Air Transport Services in the Philippines and Other Countries" vis-a-vis Republic Act No.
9334 (RA 9334), otherwise known as "An Act Increasing the Excise Tax Rates Imposed on Alcohol and Tobacco Products, Amending
for the Purpose Sections 131, 141, 142, 145, and 228 of the National Internal Revenue Code of 1997." PD 1590 was enacted on June
11, 1978, while RA 9334 took effect on January 1, 2005.
Prior to the effectivity of RA 9334, Republic Act No. 8424 (RA 8424), otherwise known as the "Tax Reform Act of 1997," was enacted
and took effect on January 1, 1998, thereby amending the National Internal Revenue Code (NIRC). Section 131 of the NIRC, as
amended by RA 8424, provides:
SEC. 131. Payment of Excise Taxes on Imported Articles. –
(A) Persons Liable. - Excise taxes on imported articles shall be paid by the owner or importer to the Customs Officers, conformably with
the regulations of the Department of Finance and before the release of such articles from the customs house, or by the person who is
found in possession of articles which are exempt from excise taxes other than those legally entitled to exemption.
In the case of tax-free articles brought or imported into the Philippines by persons, entitles, or agencies exempt from tax which are
subsequently sold, transferred or exchanged in the Philippines to non-exempt persons or entitles, the purchasers or recipients shall be
considered the importers thereof, and shall be liable for the duty and internal revenue tax due on such importation.
The provision of any special or general law to the contrary notwithstanding, the importation of cigars and cigarettes, distilled
spirits and wines into the Philippines, even if destined for tax and duty free shops, shall be subject to all applicable taxes,
duties, charges, including excise taxes due thereon: Provided, however, That this shall not apply to cigars and cigarettes,
distilled spirits and wines brought directly into the duly chartered or legislated freeports of the Subic Special Economic and
Freeport Zone, crated under Republic Act No. 7227; the Cagayan Special Economic Zone and Freeport, created under Republic
Act No. 7922; and the Zamboanga City Special Economic Zone, created under Republic Act No. 7903, and are not transshipped
to any other port in the Philippines: Provided, further, That importations of cigars and cigarettes, distilled spirits and wines by
a government-owned and operated duty-free shop, like the DutyFree Philippines (DFP), shall be exempted from all applicable
taxes, duties, charges, including excise tax due thereon: Provided, still.further, That if such articles directly imported by a
government-owned and operated duty-free shop like the Duty-Free Philippines, shall be labeled "tax and duty-free" and "not for resale":
Provided, still further, That is such articles brought into the duly chartered or legislated freeports under Republic Acts No. 7227, 7922
and 7903 are subsequently introduced into the Philippine customs territory, then such articles shall, upon such introduction, be deemed
imported into the Philippines and shall be subject to all imposts and excise taxes provided herein and other statutes: Provided,
finally, That the removal and transfer of tax and duty-free goods, products, machinery, equipment and other similar articles, from one
freeport to another freeport, shall not be deemed an introduction into the Philippine customs territory.
Articles confiscated shall be disposed of in accordance with the rules and regulations to be promulgated by the Secretary of Finance,
upon recommendation of the Commissioner of Customs and Internal Revenue, upon consultation with the Secretary of Tourism and the
General manager of the Philippine Tourism Authority.
The tax due on any such goods, products, machinery, equipment or other similar articles shall constitute a lien on the article itself, and
such lien shall be superior to all other charges or liens, irrespective of the possessor thereof.
(B) Rate and Basis of the Excise Tax on Imported Articles. - Unless otherwise specified imported articles shall be subject to the same
rates and basis of excise taxes applicable to locally manufactured articles.5
On January 1, 2005, RA 9334 took effect, Section 6 of which amended the abovequoted Section 131 of the NIRC and, accordingly,
reads as follows:
SEC. 131. Payment of Excise Taxes on Imported Articles. –
(A) Persons Liable. - Excise taxes on imported articles shall be paid by the owner or importer to the Customs Officers, conformably with
the regulations of the Department of Finance and before the release of such articles from the customs house, or by the person who is
found in possession of articles which are exempt from excise taxes other than those legally entitled to exemption. "In the case of tax-free
articles brought or imported into the Philippines by persons, entities, or agencies exempt from tax which are subsequently sold,
transferred or exchanged in the Philippines to non-exempt persons or entities, the purchasers or recipients shall be considered the
importers thereof, and shall be liable for the duty and internal revenue tax due on such importation.
"The provision of any special or general law to the contrary notwithstanding, the importation of cigars and cigarettes, distilled
spirits, fermented liquors and wines into the Philippines, even if destined for tax and duty-free shops, shall be subject to all
applicable taxes, duties, charges, including excise taxes due thereon. This shall apply to cigars and cigarettes, distilled spirits,
fermented liquors and wines brought directly into the duly chartered or legislated freeports of the Subic Special Economic and
Freeport Zone, created under Republic Act No. 7227; the Cagayan Special Economic Zone and Freeport, created under
Republic Act No. 7922; and the Zamboanga City Special Economic Zone, created under Republic Act No. 7903, and such other
freeports as may hereafter be established or created by law: Provided, further, That importations of cigars and cigarettes,
distilled spirits, fermented liquors and wines made directly by a governmentowned and operated duty-free shop, like the Duty-
Free Philippines (DFP), shall be exempted from all applicable duties only: Provided, still further, That such articles directly
imported by a government-owned and operated duty-free shop, like the DutyFree Philippines, shall be labeled 'duty-free' and 'not for
resale': Provided, finally, That the removal and transfer of tax and duty-free goods, products, machinery, equipment and other similar
articles other than cigars and cigarettes, distilled spirits, fermented liquors and wines, from one freeport to another freeport, shall not be
deemed an introduction into the Philippine customs territory."
"Cigars and cigarettes, distilled spirits and wines within the premises of all duty-free shops which are not labelled as hereinabove
required, as well as tax and duty-free articles obtained from a duty-free shop and subsequently found in a non-duty-free shop to be
offered for resale shall be confiscated, and the perpetrator of such non-labelling or re-selling shall be punishable under the applicable
provisions of this Code.
"Articles confiscated shall be disposed of in accordance with the rules and regulations to be promulgated by the Secretary of Finance,
upon recommendation of the Commissioners of Customs and Internal Revenue, upon consultation with the Secretary of Tourism and
the General Manager of the Philippine Tourism Authority.
"The tax due on any such goods, products, machinery, equipment or other similar articles shall constitute a lien on the article itself, and
such lien shall be superior to all other charges or liens, irrespective of the possessor thereof.
"(B) Rate and Basis of the Excise Tax on Imported Articles. - Unless otherwise specified, imported articles shall be subject to the same
rates and basis of excise taxes applicable to locally manufactured articles."6
The amendment increased the rates of excise tax imposed on alcohol and tobacco products. It also removed the exemption from taxes,
duties and charges, including excise taxes, on importations of cigars, cigarettes, distilled spirits, wines and fermented liquor into the
Philippines.
Thereafter, PAL's importations of alcohol and tobacco products which were intended for use inits commissary supplies during
international flights, were subjected to excise taxes. For the said imported articles, which arrived in Manila between October 3, 2007 and
December 22, 2007, PAL was assessed excise taxes amounting to a total of ₱6,329,735.21.
On September 5, 2008, PAL paid under protest. On March 5, 2009, PAL filed an administrative claim for refund of the above excise
taxes it paid with the Bureau of Internal Revenue (BIR) contending that it is entitled to tax privileges under Section 13 of PD 1590, which
provides as follows:
Section 13. In consideration of the franchise and rights hereby granted, the grantee shall pay to the Philippine Government
during the life of this franchise whichever of subsections (a) and (b) hereunder will result in a lower tax:
(a) The basic corporate income tax based on the grantee's annual net taxable income computed in accordance with the
provisions of the National Internal Revenue Code; or
(b) A franchise tax of two per cent (2%) of the gross revenues derived by the grantee from all sources, without distinction as to
transport or nontransport operations; provided, that with respect to international air-transport service, only the gross
passenger, mail, and freight revenues from its outgoing flights shall be subject to this tax.
The tax paid by the grantee under either of the above alternatives shall be in lieu of all other taxes, duties, royalties,
registration, license, and other fees and charges of any kind, nature, or description, imposed, levied, established, assessed, or
collected by any municipal, city, provincial, or national authority or government agency, now or in the future, including but not
limited to the following:
1. All taxes, duties, charges, royalties, or fees due on local purchases by the grantee of aviation gas, fuel, and oil, whether refined or in
crude form, and whether such taxes, duties, charges, royalties, or fees are directly due from or imposable upon the purchaser or the
seller, producer, manufacturer, or importer of said petroleum products but are billed or passed on the grantee either as part of the price
or cost thereof or by mutual agreement or other arrangement; provided, that all such purchases by, sales or deliveries of aviation gas,
fuel, and oil to the grantee shall be for exclusive use in its transport and nontransport operations and other activities incidental thereto;
2. All taxes, including compensating taxes, duties, charges, royalties, or fees due on all importations by the grantee of aircraft,
engines, equipment, machinery, spare parts, accessories, commissary and catering supplies, aviation gas, fuel, and oil,
whether refined or in crude form and other articles, supplies, or materials; provided, that such articles or supplies or materials
are imported for the use of the grantee in its transport and transport operations and other activities incidental thereto and are
not locally available in reasonable quantity, quality, or price;
3. All taxes on lease rentals, interest, fees, and other charges payable to lessors, whether foreign or domestic, of aircraft, engines,
equipment, machinery, spare parts, and other property rented, leased, or chartered by the grantee where the payment of such taxes is
assumed by the grantee;
4. All taxes on interest, fees, and other charges on foreign loans obtained and other obligations incurred by the grantee where the
payment of such taxes is assumed by the grantee;
5. All taxes, fees, and other charges on the registration, licensing, acquisition, and transfer of aircraft, equipment, motor vehicles, and all
other personal and real property of the grantee; and
6. The corporate development tax under Presidential Decree No. 1158-A.
The grantee, shall, however, pay the tax on its real property in conformity with existing law.
For purposes of computing the basic corporate income tax as provided herein, the grantee is authorized:
(a) To depreciate its assets to the extent of not more than twice as fast the normal rate of depreciation; and
(b) To carry over as a deduction from taxable income any net loss incurred in any year up to five years following the year of
such loss.7
Considering that the two-year prescriptive period for filing a judicial claim for refund was about to expire and the BIR was yet to act on its
claims, PAL filed a judicial claim for refund, via a petition for review, with the CTA on September 2, 2010. The case, docketed as CTA
Case No. 8153, was raffled-off to the Second Division of the tax court.
Respondent CIR filed his Answer, while respondent COC was declared in default for failure to file his Answer and Pre-Trial Brief.
Thereafter, trial ensued.
On January 17, 2013, the CTA Second Division issued a Decision8 partially granting PAL's claim for refund. The dispositive portion of
the said Decision reads:
WHEREFORE, the instant Petition for Review is hereby PARTIALLY GRANTED. Accordingly, respondents are hereby ORDERED to
REFUND to petitioner the amount of ₱2,094,985.21, representing petitioner's erroneously-paid excise tax on September 5, 2008.
SO ORDERED.9
The CTA Second Division found that PAL was able to sufficiently prove its exemption from the payment of excise taxes pertaining to its
importation of alcoholic products and since it already paid the disputed excise taxes on the subject importation, it is entitled to refund.
However, the tax court ruled that, with respect to its subject importation of tobacco products, PAL failed to discharge its burden of
proving that the said product were not locally available in reasonable quantity, quality or price, in accordance with the requirements of
the law. Thus, it is not entitled to refund for the excise taxes paid on such importation.
The herein parties filed separate motions for reconsideration, but these were all denied by the CTA Second Division in its Resolution
dated June 4, 2013.
Consequently, the parties appealed to the CTA En Banc via separate petitions for review, docketed as CTA EB Nos. 1029,
1031and1032, which were later consolidated.
On April 30, 2014, the CTA En Banc rendered a Decision dismissing the consolidated petitions and affirming in toto the assailed
Decision of the CTA Second Division.
The parties filed their respective motions for reconsideration, but the CTA En Banc denied them in its Resolution dated December 16,
2014.
Hence, the instant petition for review on certiorari raising a sole issue, to wit:
Whether PAL's alcohol and tobacco importations for its commissary supplies are subject to excise tax.10
In the present petition, petitioner argues that:
I.
Section 131 of the NIRC revoked PAL's tax privilege under Section 13 of P.D No. 1590 with respect to excise tax on its alcohol and
tobacco importation.
II
Assuming that it is still entitled to the tax privilege, PAL failed to adequately prove that the conditions under Section 13 of P.D. No. 1590
were met in this case.11
The main question raised in the instant case is whether the tax privilege of PAL provided in Section 13 of PD 1590 has been revoked by
Section 131 of the NIRC of 1997, as amended by Section 6 of RA 9334.
The Court rules in the negative.
This issue is not novel. Thus, as in previous cases resolving the same question and involving substantially similar factual backgrounds,
the ruling will not change.
In the fairly recent case of Commissioner of Internal Revenue and Commissioner of Customs v. Philippine Airlines, Inc.,12 the core issue
raised was whether or not PAL's importations of alcohol and tobacco products for its commissary supplies are subject to excise tax. This
Court, ruling in favor of PAL, held that:
It is a basic principle of statutory construction that a later law, general in terms and not expressly repealing or amending a prior special
law, will not ordinarily affect the special provisions of such earlier statute. So it must be here.
Indeed, as things stand, PD 1590 has not been revoked by the NIRC of 1997, as amended. Or to be more precise, the tax privilege of
PAL provided in Sec. 13 of PD 1590 has not been revoked by Sec. 131 of the NIRC of 1997, as amended by Sec. 6 of RA 9334. We
said as much in Commissioner of Internal Revenue v. Philippine Air Lines, Inc [GR. No. 180066, July 7, 2009, 609 Phil. 695]:
That the Legislature chose not to amend or repeal [PD] 1590 even after PAL was privatized reveals the intent of the Legislature to let
PAL continue to enjoy, as a private corporation, the very same rights and privileges under the terms and conditions stated in said
charter. x x x
To be sure, the manner to effectively repeal or at least modify any specific provision of PAL's franchise under PD 1590, as decreed in
the aforequoted Sec. 24, has not been demonstrated. And as aptly held by the CTA en banc, borrowing from the same Commissioner of
Internal Revenue case:
While it is true that Sec. 6 of RA 9334 as previously quoted states that "the provisions of any special or general law to the contrary
notwithstanding," such phrase left alone cannot be considered as an express repeal of the exemptions granted under PAL's franchise
because it fails to specifically identify PD 1590 as one of the acts intended to be repealed. x x x
Noteworthy is the fact that PD 1590 is a special law, which governs the franchise of PAL. Between the provisions under PD 1590 as
against the provisions under the NIRC of 1997, as amended by 9334, which is a general law, the former necessary prevails. This is in
accordance with the rule that on a specific matter, the special law shall prevail over the general law, which shall be resorted only to
supply deficiencies in the former. In addition, where there are two statutes, the earlier special and the later general - the terms of the
general broad enough to include the matter provided for in the special - the fact that one is special and other general creates a
presumption that the special is considered as remaining an exception tothe general, one as a general law of the land and the other as
the law of a particular case.
Any lingering doubt, however, as to the continued entitlement of PAL under Sec. 13 of its franchise to excise tax exemption on otherwise
taxable items contemplated therein, e.g., aviation gas, wine, liquor or cigarettes, should once and for all be put to rest by the fairly recent
pronouncement in Philippine Airlines, Inc. v. Commissioner of Internal Revenue. In that case, the Court, on the premise that the
"propriety of a tax refund is hinged on the kind of exemption which forms its basis," declared in no uncertain terms that PAL has
"sufficiently prove[d]" its entitlement to a tax refund of the excise taxes and that PAL's payment of either the franchise tax or basic
corporate income tax in the amount fixed thereat shall be in lieu of all other taxes or duties, and inclusive of all taxes on all importations
of commissary and catering supplies, subject to the condition of their availability and eventual use.x x x13
In the more recent consolidated cases of Republic of the Philippines v. Philippine Airlines, Inc. (PAL)14 and Commissioner of Internal
Revenue v. Philippine Airlines, Inc. (PAL),15 this Court, echoing the ruling in the abovecited case of CIR v. PAL, held that:
In other words, the franchise of PAL remains the governing law on its exemption from taxes. Its payment of either basic corporate
income tax or franchise tax - whichever is lower - shall be in lieu of all other taxes, duties, royalties, registrations, licenses, and other
fees and charges, except only real property tax. The phrase "in lieu of all other taxes" includes but is not limited to taxes, duties,
charges, royalties, or fees due on all importations by the grantee of the commissary and catering supplies, provided that such articles or
supplies or materials are imported for the use of the grantee in its transport and nontransport operations and other activities incidental
thereto and are not locally available in reasonable quantity, quality, or price.16
On July 1, 2005, Republic Act No. 9337 (RA 9337) took effect thereby further amending certain provisions of the NIRC.1âwphi1 Section
22 of RA 9337 specifically provides as follows:
SEC. 22. Franchises of Domestic Airlines. - The provisions of P.D. No. 1590 on the franchise tax of Philippine Airlines, Inc., R.A.
No. 7151 on the franchise tax of Cebu Air, Inc., R.A. No. 7583 on the franchise tax of Aboitiz Air Transport Corporation, R.A. No. 7909
on the franchise tax of Pacific Airways Corporation, R.A. No. 8339 on the franchise tax of Air Philippines, or any other franchise
agreement or law pertaining to a domestic airline to the contrary notwithstanding:
(A) The franchise tax is abolished;
(B) The franchisee shall be liable to the corporate income tax;
(C) The franchisee shall register for value-added tax under Section 236, and to account under Title IV of the National Internal Revenue
Code of 1997, as amended, for value-added tax on its sale of goods, property or services and its lease of property; and
(D) The franchisee shall otherwise remain exempt from any taxes, duties, royalties, registration, license, and other fees and
charges, as may be provided by their respective franchise agreement.17
Thus, this Court held in the abovecited PAL consolidated cases:
However, upon the amendment of the 1997 NIRC, Section 22 of R.A. 9337 abolished the franchise tax and subjected PAL and similar
entities to corporate income tax and value-added tax (VAT). PAL nevertheless remains exempt from taxes, duties, royalties,
registrations, licenses, and other fees and charges, provided it pays corporate income tax as granted in its franchise agreement.
Accordingly, PAL is left with no other option but to pay its basic corporate income tax, the payment of which shall be in lieu of all other
taxes, except VAT, and subject to certain conditions provided in its charter.18
It bears to note that the repealing clause of RA 933 7 enumerated the laws or provisions of laws which it repeals. However, there is
nothing in the repealing clause, nor in any other provisions of the said law, which makes specific mention of PD 1590 as one of the acts
intended to be repealed.
Lastly, as in the abovecited cases, petitioners in the present petition again raise the issue regarding PAL's alleged failure to comply with
the conditions set by Section 13 of PD 1590 for its imported tobacco and alcohol products to be exempt from excise tax. These
conditions are: (1) such supplies are imported for the use of the franchisee in its transport/nontransport operations and other incidental
activities; and (2) they are not locally available in reasonable quantity, quality and price.19 However, as this Court has previously held,
the matter as to PAL's supposed noncompliance with the conditions set by Section 13 of P.D. 1590 for its imported supplies to be
exempt from excise tax, are factual determinations that are best left to the CTA, which found that PAL had, in fact, complied with the
above conditions.20 The CTA is a highly specialized body that reviews tax cases and conducts trial de nova. Thus, without any showing
that the findings of the CTA are unsupported by substantial evidence, its findings are binding on this Court.21
WHEREFORE, the instant petition for review on certiorari is DENIED. The assailed Decision and Resolution of the Court of Tax
Appeals En Banc, dated April 30, 2014 and December 16, 2014, respectively, in CTA EB Nos. 1029, 1031 and 1032 are AFFIRMED.
SO ORDERED.
G.R. No. L-41631 December 17, 1976
HON. RAMON D. BAGATSING, as Mayor of the City of Manila; ROMAN G. GARGANTIEL, as Secretary to the Mayor; THE
MARKET ADMINISTRATOR; and THE MUNICIPAL BOARD OF MANILA, petitioners,
vs.
HON. PEDRO A. RAMIREZ, in his capacity as Presiding Judge of the Court of First Instance of Manila, Branch XXX and the
FEDERATION OF MANILA MARKET VENDORS, INC., respondents.
Santiago F. Alidio and Restituto R. Villanueva for petitioners.
Antonio H. Abad, Jr. for private respondent.
Federico A. Blay for petitioner for intervention.
MARTIN, J.:
The chief question to be decided in this case is what law shall govern the publication of a tax ordinance enacted by the Municipal Board
of Manila, the Revised City Charter (R.A. 409, as amended), which requires publication of the ordinance before its enactment and after
its approval, or the Local Tax Code (P.D. No. 231), which only demands publication after approval.
On June 12, 1974, the Municipal Board of Manila enacted Ordinance No. 7522, "AN ORDINANCE REGULATING THE OPERATION OF
PUBLIC MARKETS AND PRESCRIBING FEES FOR THE RENTALS OF STALLS AND PROVIDING PENALTIES FOR VIOLATION
THEREOF AND FOR OTHER PURPOSES." The petitioner City Mayor, Ramon D. Bagatsing, approved the ordinance on June 15,
1974.
On February 17, 1975, respondent Federation of Manila Market Vendors, Inc. commenced Civil Case 96787 before the Court of First
Instance of Manila presided over by respondent Judge, seeking the declaration of nullity of Ordinance No. 7522 for the reason that (a)
the publication requirement under the Revised Charter of the City of Manila has not been complied with; (b) the Market Committee was
not given any participation in the enactment of the ordinance, as envisioned by Republic Act 6039; (c) Section 3 (e) of the Anti-Graft and
Corrupt Practices Act has been violated; and (d) the ordinance would violate Presidential Decree No. 7 of September 30, 1972
prescribing the collection of fees and charges on livestock and animal products.
Resolving the accompanying prayer for the issuance of a writ of preliminary injunction, respondent Judge issued an order on March 11,
1975, denying the plea for failure of the respondent Federation of Manila Market Vendors, Inc. to exhaust the administrative remedies
outlined in the Local Tax Code.
After due hearing on the merits, respondent Judge rendered its decision on August 29, 1975, declaring the nullity of Ordinance No. 7522
of the City of Manila on the primary ground of non-compliance with the requirement of publication under the Revised City Charter.
Respondent Judge ruled:
There is, therefore, no question that the ordinance in question was not published at all in two daily
newspapers of general circulation in the City of Manila before its enactment. Neither was it published in the
same manner after approval, although it was posted in the legislative hall and in all city public markets and
city public libraries. There being no compliance with the mandatory requirement of publication before and
after approval, the ordinance in question is invalid and, therefore, null and void.
Petitioners moved for reconsideration of the adverse decision, stressing that (a) only a post-publication is required by the Local Tax
Code; and (b) private respondent failed to exhaust all administrative remedies before instituting an action in court.
On September 26, 1975, respondent Judge denied the motion.
Forthwith, petitioners brought the matter to Us through the present petition for review on certiorari.
We find the petition impressed with merits.
1. The nexus of the present controversy is the apparent conflict between the Revised Charter of the City of Manila and the Local Tax
Code on the manner of publishing a tax ordinance enacted by the Municipal Board of Manila. For, while Section 17 of the Revised
Charter provides:
Each proposed ordinance shall be published in two daily newspapers of general circulation in the city, and
shall not be discussed or enacted by the Board until after the third day following such publication. * * * Each
approved ordinance * * * shall be published in two daily newspapers of general circulation in the city, within
ten days after its approval; and shall take effect and be in force on and after the twentieth day following its
publication, if no date is fixed in the ordinance.
Section 43 of the Local Tax Code directs:
Within ten days after their approval, certified true copies of all provincial, city, municipal and barrio ordinances
levying or imposing taxes, fees or other charges shall be published for three consecutive days in a newspaper
or publication widely circulated within the jurisdiction of the local government, or posted in the local legislative
hall or premises and in two other conspicuous places within the territorial jurisdiction of the local government.
In either case, copies of all provincial, city, municipal and barrio ordinances shall be furnished the treasurers
of the respective component and mother units of a local government for dissemination.
In other words, while the Revised Charter of the City of Manila requires publication before the enactment of the ordinance and after the
approval thereof in two daily newspapers of general circulation in the city, the Local Tax Code only prescribes for publication after the
approval of "ordinances levying or imposing taxes, fees or other charges" either in a newspaper or publication widely circulated within
the jurisdiction of the local government or by posting the ordinance in the local legislative hall or premises and in two other conspicuous
places within the territorial jurisdiction of the local government. Petitioners' compliance with the Local Tax Code rather than with the
Revised Charter of the City spawned this litigation.
There is no question that the Revised Charter of the City of Manila is a special act since it relates only to the City of Manila, whereas the
Local Tax Code is a general law because it applies universally to all local governments. Blackstone defines general law as a universal
rule affecting the entire community and special law as one relating to particular persons or things of a class. 1 And the rule commonly
said is that a prior special law is not ordinarily repealed by a subsequent general law. The fact that one is special and the other general
creates a presumption that the special is to be considered as remaining an exception of the general, one as a general law of the land,
the other as the law of a particular case. 2 However, the rule readily yields to a situation where the special statute refers to a subject in
general, which the general statute treats in particular. The exactly is the circumstance obtaining in the case at bar. Section 17 of the
Revised Charter of the City of Manila speaks of "ordinance" in general, i.e., irrespective of the nature and scope thereof, whereas,
Section 43 of the Local Tax Code relates to "ordinances levying or imposing taxes, fees or other charges" in particular. In regard,
therefore, to ordinances in general, the Revised Charter of the City of Manila is doubtless dominant, but, that dominant force loses its
continuity when it approaches the realm of "ordinances levying or imposing taxes, fees or other charges" in particular. There, the Local
Tax Code controls. Here, as always, a general provision must give way to a particular provision. 3 Special provision governs. 4 This is
especially true where the law containing the particular provision was enacted later than the one containing the general provision. The
City Charter of Manila was promulgated on June 18, 1949 as against the Local Tax Code which was decreed on June 1, 1973. The law-
making power cannot be said to have intended the establishment of conflicting and hostile systems upon the same subject, or to leave
in force provisions of a prior law by which the new will of the legislating power may be thwarted and overthrown. Such a result would
render legislation a useless and Idle ceremony, and subject the law to the reproach of uncertainty and unintelligibility. 5
The case of City of Manila v. Teotico 6 is opposite. In that case, Teotico sued the City of Manila for damages arising from the injuries he
suffered when he fell inside an uncovered and unlighted catchbasin or manhole on P. Burgos Avenue. The City of Manila denied liability
on the basis of the City Charter (R.A. 409) exempting the City of Manila from any liability for damages or injury to persons or property
arising from the failure of the city officers to enforce the provisions of the charter or any other law or ordinance, or from negligence of the
City Mayor, Municipal Board, or other officers while enforcing or attempting to enforce the provisions of the charter or of any other law or
ordinance. Upon the other hand, Article 2189 of the Civil Code makes cities liable for damages for the death of, or injury suffered by any
persons by reason of the defective condition of roads, streets, bridges, public buildings, and other public works under their control or
supervision. On review, the Court held the Civil Code controlling. It is true that, insofar as its territorial application is concerned, the
Revised City Charter is a special law and the subject matter of the two laws, the Revised City Charter establishes a general rule of
liability arising from negligence in general, regardless of the object thereof, whereas the Civil Code constitutes a
particular prescription for liability due to defective streets in particular. In the same manner, the Revised Charter of the City prescribes a
rule for the publication of "ordinance" in general, while the Local Tax Code establishes a rule for the publication of "ordinance levying or
imposing taxes fees or other charges in particular.
In fact, there is no rule which prohibits the repeal even by implication of a special or specific act by a general or broad one. 7 A charter
provision may be impliedly modified or superseded by a later statute, and where a statute is controlling, it must be read into the charter
notwithstanding any particular charter provision. 8 A subsequent general law similarly applicable to all cities prevails over any conflicting
charter provision, for the reason that a charter must not be inconsistent with the general laws and public policy of the state. 9 A chartered
city is not an independent sovereignty. The state remains supreme in all matters not purely local. Otherwise stated, a charter must yield
to the constitution and general laws of the state, it is to have read into it that general law which governs the municipal corporation and
which the corporation cannot set aside but to which it must yield. When a city adopts a charter, it in effect adopts as part of its charter
general law of such character. 10
2. The principle of exhaustion of administrative remedies is strongly asserted by petitioners as having been violated by private
respondent in bringing a direct suit in court. This is because Section 47 of the Local Tax Code provides that any question or issue raised
against the legality of any tax ordinance, or portion thereof, shall be referred for opinion to the city fiscal in the case of tax ordinance of a
city. The opinion of the city fiscal is appealable to the Secretary of Justice, whose decision shall be final and executory unless contested
before a competent court within thirty (30) days. But, the petition below plainly shows that the controversy between the parties is deeply
rooted in a pure question of law: whether it is the Revised Charter of the City of Manila or the Local Tax Code that should govern the
publication of the tax ordinance. In other words, the dispute is sharply focused on the applicability of the Revised City Charter or the
Local Tax Code on the point at issue, and not on the legality of the imposition of the tax. Exhaustion of administrative remedies before
resort to judicial bodies is not an absolute rule. It admits of exceptions. Where the question litigated upon is purely a legal one, the rule
does not apply. 11 The principle may also be disregarded when it does not provide a plain, speedy and adequate remedy. It may and
should be relaxed when its application may cause great and irreparable damage. 12
3. It is maintained by private respondent that the subject ordinance is not a "tax ordinance," because the imposition of rentals, permit
fees, tolls and other fees is not strictly a taxing power but a revenue-raising function, so that the procedure for publication under the
Local Tax Code finds no application. The pretense bears its own marks of fallacy. Precisely, the raising of revenues is the principal
object of taxation. Under Section 5, Article XI of the New Constitution, "Each local government unit shall have the power to create its
own sources of revenue and to levy taxes, subject to such provisions as may be provided by law." 13 And one of those sources of
revenue is what the Local Tax Code points to in particular: "Local governments may collect fees or rentals for the occupancy or use of
public markets and premises * * *." 14 They can provide for and regulate market stands, stalls and privileges, and, also, the sale, lease or
occupancy thereof. They can license, or permit the use of, lease, sell or otherwise dispose of stands, stalls or marketing privileges. 15
It is a feeble attempt to argue that the ordinance violates Presidential Decree No. 7, dated September 30, 1972, insofar as it affects
livestock and animal products, because the said decree prescribes the collection of other fees and charges thereon "with the exception
of ante-mortem and post-mortem inspection fees, as well as the delivery, stockyard and slaughter fees as may be authorized by the
Secretary of Agriculture and Natural Resources." 16Clearly, even the exception clause of the decree itself permits the collection of the
proper fees for livestock. And the Local Tax Code (P.D. 231, July 1, 1973) authorizes in its Section 31: "Local governments may collect
fees for the slaughter of animals and the use of corrals * * * "
4. The non-participation of the Market Committee in the enactment of Ordinance No. 7522 supposedly in accordance with Republic Act
No. 6039, an amendment to the City Charter of Manila, providing that "the market committee shall formulate, recommend and
adopt, subject to the ratification of the municipal board, and approval of the mayor, policies and rules or regulation repealing or
maneding existing provisions of the market code" does not infect the ordinance with any germ of invalidity. 17 The function of the
committee is purely recommendatory as the underscored phrase suggests, its recommendation is without binding effect on the
Municipal Board and the City Mayor. Its prior acquiescence of an intended or proposed city ordinance is not a condition sine qua non
before the Municipal Board could enact such ordinance. The native power of the Municipal Board to legislate remains undisturbed even
in the slightest degree. It can move in its own initiative and the Market Committee cannot demur. At most, the Market Committee may
serve as a legislative aide of the Municipal Board in the enactment of city ordinances affecting the city markets or, in plain words, in the
gathering of the necessary data, studies and the collection of consensus for the proposal of ordinances regarding city markets. Much
less could it be said that Republic Act 6039 intended to delegate to the Market Committee the adoption of regulatory measures for the
operation and administration of the city markets. Potestas delegata non delegare potest.
5. Private respondent bewails that the market stall fees imposed in the disputed ordinance are diverted to the exclusive private use of
the Asiatic Integrated Corporation since the collection of said fees had been let by the City of Manila to the said corporation in a
"Management and Operating Contract." The assumption is of course saddled on erroneous premise. The fees collected do not go direct
to the private coffers of the corporation. Ordinance No. 7522 was not made for the corporation but for the purpose of raising revenues
for the city. That is the object it serves. The entrusting of the collection of the fees does not destroy the public purpose of the ordinance.
So long as the purpose is public, it does not matter whether the agency through which the money is dispensed is public or private. The
right to tax depends upon the ultimate use, purpose and object for which the fund is raised. It is not dependent on the nature or
character of the person or corporation whose intermediate agency is to be used in applying it. The people may be taxed for a public
purpose, although it be under the direction of an individual or private corporation. 18
Nor can the ordinance be stricken down as violative of Section 3(e) of the Anti-Graft and Corrupt Practices Act because the increased
rates of market stall fees as levied by the ordinance will necessarily inure to the unwarranted benefit and advantage of the
corporation. 19 We are concerned only with the issue whether the ordinance in question is intra vires. Once determined in the affirmative,
the measure may not be invalidated because of consequences that may arise from its enforcement. 20
ACCORDINGLY, the decision of the court below is hereby reversed and set aside. Ordinance No. 7522 of the City of Manila, dated June
15, 1975, is hereby held to have been validly enacted. No. costs.
SO ORDERED.
G.R. No. L-7899             June 23, 1955
ALFREDO MONTELIBANO, PASTOR MALLORCA, GONZALGO DE LA TORRE, and JOSE ARTICULO,petitioners-appellants,
vs.
THE HONORABLE FELIX S. FERRER, as Judge of the Municipal Court of Bacolod, and JOSE F. BENARES,respondents-
appellees.
Arrieta and Nolan for appellants.
Parreño and Banzon for appellees.
CONCEPCION, J.:
The question involved in this case is one purely of law.
On June 13, 1953, respondent Jose F. Benares filed, with the Municipal Court of the City of Bacolod, a criminal complaint, which was
docketed as Case No. 2864 of said court, against petitioners herein, Alfredo Montelibano, Pastor Mallorca, Gonzalgo de la Torre and
Jose Articulo, charging them with the crime of malicious mischief. It is alleged in said complaint:
That on or about the 5th, the 7th and the 8th of June, 1953, in the City of Bacolod, Philippines, and within the jurisdiction of
this court, Alfredo Montelibano, as author by inducement, Pastor Mallorca, Gonzalo de la Torre and Jose Articulo, as
authors by direct participations, conspiring and confederating together and helping one another, did then and there,
willfully, unlawfully and deliberately cause damage to the sugarcane plantation belonging to Jose F. Benares, the offended
party herein, intentionally and using bulldozer and destroying completely eighteen (18) hectares of sugarcanes obviously
under the impulse of hatred and a desire for revenge, as the accused, Alfredo Montelibano, failed in his attempt to have the
herein offended party punished for contempt of Court in Civil Case No. 1896 of the Court of First Instance of Negros
Occidental, thereby causing upon said Jose F. Benares damage in the amount of more than P13,000.00.
Upon the filing of this complaint, due course was given thereto by the herein respondent, Hon. Felix S. Ferrer, Municipal Judge of the
City of Bacolod, who, likewise, issued the corresponding warrant of arrest. On or about June 22, 1953, the aforementioned defendants
(petitioners herein) filed a motion to quash said warrant of arrest, as well as the complaint, upon several grounds, which may be reduced
to two, namely : (1) The only officer authorized by the Charter of the City of Bacolod to initiate criminal cases in the courts thereof is its
City Attorney, who is opposed to the institution of said Case No. 2864; and (2) Said case involves a prejudicial question.
In this connection, petitioners alleged, and Benares has not denied, the following: Sometime in 1940, the Capitol Subdivision Inc.
(hereinafter referred to as the Subdivision), of which petitioner Alfredo Montelibano is the president and general manager, leased Lot
No. 1205-I-1 (which is the same property involved in Case No. 2864) to Benares, for a period of five (5) crop years, ending in the crop-
year 1944-1945, with an option in favor of Benares, of another five (5) crop-years. On June 5, 1951, the Subdivision instituted against
Benares, unlawful detainer case No. 1896 of the Municipal Court of the City of Bacolod, which, in due course, subsequently, rendered a
decision ordering his ejectment from said lot. Benares appealed to the Court of First Instance of Negros Occidental (in which it was
docketed as Civil Case No. 1896). On motion of the Subdivision, this court issued a writ of preliminary mandatory injunction,
commanding Benares to turn over the aforementioned lot to the Subdivision, which filed a bond undertaking to pay to Benares "all
damages which he may sustain" by reason of the issuance of said writ, "if the court should finally decide that the plaintiff was not entitled
thereto." Inasmuch as Benares continued planting on Lot No. 1205-L-1, instead of delivering it to the Subdivision, the latter filed a
petition praying that the former be declared in contempt of court. This petition was denied, by an order dated April 30, 1953, which
however, required Benares to "immediately and promptly obey the order of preliminary mandatory injunction." On June 5, 1953 the
provincial sheriff delivered the land in question to the Subdivision. Seemingly, acting upon instructions of petitioner Montelibano, his co-
petitioners thereupon cleared the land of the sugarcane planted therein by Benares. Hence, the criminal complaint filed by the latter.
The Municipal Court denied the aforementioned motion to quash said complaint and the warrant of arrest, as well as a subsequent
motion for reconsideration, whereupon petitioners instituted the case at bar, in the Court of First Instance of Negros Occidental, where it
was docketed as Civil Case No. 2828, against said Municipal Judge, and complainant Benares, for the purpose of securing a writ
of certiorari and mandamus — "annulling and vacating all the proceedings so far taken by respondent Judge in said Case no. 2864" and
"holding that said Judge had no jurisdiction to take cognizance of the same" and "dismissing said case" — with a writ of preliminary
injunction, enjoining respondent judge "to desist from further proceedings in the case." The writ of preliminary injunction was issued by
said court of first instance, which, in due course, eventually rendered a decision, dismissing the petition for certiorari and mandamus,
and dissolving the writ of preliminary injunction, with costs against the petitioners. The case is now before us on appeal taken, from said
decision, by the aforementioned petitioners, the defendants in said criminal case.
It is not disputed that the complaint in question was filed by Benares directly with the municipal court of Bacolod, and that the City
Attorney had, not only no intervention whatsoever therein, but, also, expressed, in open court, his opposition thereto. The issue boils
down to whether said municipal court may entertain said complaint. Petitioners contend that it may not, relying upon section 22 of
Commonwealth Act No. 326, otherwise known as the Charter of the City of Bacolod, the pertinent part of which provides:
. . . The City attorney . . . shall also have charge of the prosecution of all crimes, misdemeanors, and violations of city
ordinances, in the Court of First Instance and the Municipal Court of the city, and shall discharge all the duties in respect to
criminal prosecutions enjoined by law upon provincial fiscals.
The city attorney shall cause to be investigated all charges of crimes, misdemeanors, and violation of ordinances, and
have the necessary informations or complaints prepared or made against the persons accused. . . ..
Upon the other hand, respondents argue that this provision is merely declaratory of the powers of the City Attorney of Bacolod and does
not preclude the application of Sec. 2 of Rule 106 of the Rules of Court reading:
Complaint is a sworn written statement charging a person with an offense, subscribed by the offended party, any peace
officer or other employees of the government or governmental institution in charge of the enforcement or execution of the
law violated.
This was the very same provision invoked by the petitioner in the case of Espiritu vs. Dela Rosa (45 Off. Gaz. 196), in which this Court
refused to issue a writ of mandamus to compel the Court of First Instance of Manila to accept a complaint filed, directly with said court,
by the offended party in a given case, without the intervention of the City Fiscal of Manila. In his concurring opinion therein, then Chief
Justice Moran had the following to say:
I concur upon the ground that Rule 108 section 4 does not apply in the City of Manila where the only officer authorized by
law to conduct preliminary investigation is the City Fiscal (sec. 2474, Adm. Code) and therefore, all criminal complaints
should be filed with that officer who in turn may, after investigation, file the corresponding information with the Court of First
Instance. The provisions of the Administrative Code on this matter have not been repealed by the Rules of Court.
(Hashim vs. Boncan, 40 Off. Gaz., p. 13.) (Emphasis supplied.)
As indicated in said decision, the same was based, partly, upon the rule laid down in Hashim vs. Boncan (71 Phil. 216), which, in turn,
was predicated upon earlier precedents (U. S. vs. Wilson, 4 Phil. 317; U. S. vs. McGovern, 6 Phil. 621; U. S. vs. Ocampo, 18 Phil. 1; U.
S. vs. Grant and Kennedy, 18 Phil. 122; U. S. vs. Carlos, 21 Phil. 553).
In case of Sayo vs. Chief of Police (45 Off. Gaz. 4875) the language used by this Court was:
Under the law, a complaint charging a person with the commission of an offense cognizable by the courts of Manila is not
filed with the municipal court of First Instance of Manila, because as above stated, the latter do not make or conduct a
preliminary investigation proper. The complaint must be made or filed with the city fiscal of Manila who, personally or
through one of his assistance, makes the investigation, not for the purpose of ordering the arrest of the accused, but of
filing with the proper court the necessary information against the accused if the result of the investigation so warrants, and
obtaining from the court a warrant of arrest or commitment of the accused.
xxx xxx xxx
In the City of Manila, where complaints are not filed directly with the municipal court or the Court of First Instance, the
officer or person making the arrest without warrant shall surrender or take the person arrested to the city fiscal, and the
latter shall make the investigation abovementioned and file, if proper, the corresponding information without the time
prescribed by section 125 of the Revised Penal Code, so that the court may issue a warrant of commitment for the
temporary detention of the accused. . . .. (Emphasis supplied.)
It is clear, therefore, that, in the City of Manila, criminal complaints may be filed only with the City Fiscal, who is thereby given, by
implication, the exclusive authority to institute criminal cases in the different courts of said city, under the provisions of its Charter,
originally found in Section 39 of Act the pertinent part of which we quote:
. . . The prosecuting attorney of the city of Manila shall have charge of the prosecution of all crimes, misdemeanors, and
violations of city ordinances, in the Court of First Instance and the municipal courts of the city of Manila. He shall
investigate all charges of crimes, misdemeanors, and violations of ordinances, and prepare the necessary informations or
make the necessary complaints against the persons accused, and discharge all other duties in respect to criminal
prosecutions enjoined upon provincial fiscals . . ..
This provision was mutatis mutandis reproduced, firstly, in section 2437 of the Old Administrative Code (Act No. 2657), then in section
2465 of the Revised Administrative Code, and lastly in section 38 of Republic Act no. 409. We do not see, and respondents herein have
not pointed out, any reason why the above quoted provision of the Charter of the City of Bacolod, should be interpreted differently from
said sections of the Charter of the City of Manila, which are substantially identical thereto. On the contrary, considering that said
provisions of the Charter of the City of Manila had been consistently construed in the manner above indicated, before being incorporated
in the Charter of the City of Bacolod, the conclusion is inevitable that the framers of the latter had reproduced the former with intent of
adopting, also its settled interpretation by the judicial department (In re Dick, 38 Phil. 41, 77).
In the interpretation of reenacted statutes the court will follow the construction which they received when previously in
force. The legislature will be presumed to know the effect which such status originally had, and by reenactment to intend
that they should again have the same effect. . . . It is not necessary that a statute should be reenacted in identical words in
order that the rule may apply. It is sufficient if it is reenacted in substantially the same words. . . . The rule has been held to
apply to the reenactment of a statute which received a practical construction on the part of those who are called upon to
execute it. The Supreme Court of Nebraska says : "Where the legislature in framing an act resorts to language similar in its
import to the language of other acts which have received a practical construction by the executive departments and by the
legislature itself, it is fair to presume that the language was used in the later act with a view to the construction so given the
earlier." . . . (Sutherland Statutory Construction, Vol. II, 2d. ed., section 403
. . . two statutes with a parallel scope, purpose and terminology should, each in its own field, have a like interpretation,
unless in particular instances there is something peculiar in the question under consideration, or dissimilar in the terms of
the act relating thereto, requiring a different conclusion. (50 Am. Jur. 343)
. . . Since it may be presumed that the legislature knew a construction, long acquieced in, which had been given by the
courts to a statute re-enacted by the legislature, there is a presumption of an intention to adopt the construction as well as
the language of the prior enactment. It is accordingly a settled rule of statutory construction that when a statute or a clause
 or provision thereof has been construed by a court of last resort, and the same is substantially re-enacted, the legislature
may be regarded as adopting such construction. (50 Am. Jur. 461)
In view of the foregoing, the decision appealed from must be, as it is hereby, reversed and another one shall be entered annulling the
warrant of arrest issued by respondent Judge and enjoining the latter to refrain from entertaining the complaint aforementioned and to
dismiss the same. With cost against respondent Jose F. Benares. It is so ordered.
G.R. No. 82670 September 15, 1989
DOMETILA M. ANDRES, doing business under the name and style "IRENE'S WEARING APPAREL," petitioner,
vs.
MANUFACTURERS HANOVER & TRUST CORPORATION and COURT OF APPEALS, respondents.
Roque A. Tamayo for petitioner.
Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles for private respondent.
CORTES, J.:
Assailed in this petition for review on certiorari is the judgment of the Court of Appeals, which, applying the doctrine of solutio indebiti,
reversed the decision of the Regional Trial Court, Branch CV, Quezon City by deciding in favor of private respondent.
Petitioner, using the business name "Irene's Wearing Apparel," was engaged in the manufacture of ladies garments, children's wear,
men's apparel and linens for local and foreign buyers. Among its foreign buyers was Facets Funwear, Inc. (hereinafter referred to as
FACETS) of the United States.
In the course of the business transaction between the two, FACETS from time to time remitted certain amounts of money to petitioner in respondent which was indebted to petitioner. On the other hand, the contract for the transmittal of dollars from the United States to
payment for the items it had purchased. Sometime in August 1980, FACETS instructed the First National State Bank of New Jersey,
Newark, New Jersey, U.S.A. (hereinafter referred to as FNSB) to transfer $10,000.00 to petitioner via Philippine National Bank, Sta.
Cruz Branch, Manila (hereinafter referred to as PNB).
Acting on said instruction, FNSB instructed private respondent Manufacturers Hanover and Trust Corporation to effect the above-
mentioned transfer through its facilities and to charge the amount to the account of FNSB with private respondent. Although private
respondent was able to send a telex to PNB to pay petitioner $10,000.00 through the Pilipinas Bank, where petitioner had an account,
the payment was not effected immediately because the payee designated in the telex was only "Wearing Apparel." Upon query by PNB,
private respondent sent PNB another telex dated August 27, 1980 stating that the payment was to be made to "Irene's Wearing
Apparel." On August 28, 1980, petitioner received the remittance of $10,000.00 through Demand Draft No. 225654 of the PNB.
Meanwhile, on August 25, 1980, after learning about the delay in the remittance of the money to petitioner, FACETS informed FNSB
about the situation. On September 8, 1980, unaware that petitioner had already received the remittance, FACETS informed private
respondent about the delay and at the same time amended its instruction by asking it to effect the payment through the Philippine
Commercial and Industrial Bank (hereinafter referred to as PCIB) instead of PNB.
Accordingly, private respondent, which was also unaware that petitioner had already received the remittance of $10,000.00 from PNB
instructed the PCIB to pay $10,000.00 to petitioner. Hence, on September 11, 1980, petitioner received a second $10,000.00
remittance.
Private respondent debited the account of FNSB for the second $10,000.00 remittance effected through PCIB. However, when FNSB
discovered that private respondent had made a duplication of the remittance, it asked for a recredit of its account in the amount of
$10,000.00. Private respondent complied with the request.
Private respondent asked petitioner for the return of the second remittance of $10,000.00 but the latter refused to pay. On May 12, 1982 review. The Court holds that the finding by the Court of Appeals that the second $10,000.00 remittance was made by mistake, being
a complaint was filed with the Regional Trial Court, Branch CV, Quezon City which was decided in favor of petitioner as defendant. The based on substantial evidence, is final and conclusive. The rule regarding questions of fact being raised with this Court in a petition
trial court ruled that Art. 2154 of the New Civil Code is not applicable to the case because the second remittance was made not by
mistake but by negligence and petitioner was not unjustly enriched by virtue thereof [Record, p. 234]. On appeal, the Court of Appeals
held that Art. 2154 is applicable and reversed the RTC decision. The dispositive portion of the Court of Appeals' decision reads as
follows:
WHEREFORE, the appealed decision is hereby REVERSED and SET ASIDE and another one entered in
favor of plaintiff-appellant and against defendant-appellee Domelita (sic) M. Andres, doing business under the
name and style "Irene's Wearing Apparel" to reimburse and/or return to plaintiff-appellant the amount of
$10,000.00, its equivalent in Philippine currency, with interests at the legal rate from the filing of the complaint
on May 12, 1982 until the whole amount is fully paid, plus twenty percent (20%) of the amount due as
attomey's fees; and to pay the costs.
With costs against defendant-appellee.
SO ORDERED. [Rollo, pp. 29-30.]
Thereafter, this petition was filed. The sole issue in this case is whether or not the private respondent has the right to recover the second
$10,000.00 remittance it had delivered to petitioner. The resolution of this issue would hinge on the applicability of Art. 2154 of the New
Civil Code which provides that:
Art. 2154. If something received when there is no right to demand it, and it was unduly delivered through
mistake, the obligation to return it arises.
This provision is taken from Art. 1895 of the Spanish Civil Code which provided that:
Art. 1895. If a thing is received when there was no right to claim it and which, through an error, has been
unduly delivered, an obligation to restore it arises.
In Velez v. Balzarza, 73 Phil. 630 (1942), the Court, speaking through Mr. Justice Bocobo explained the nature of this article thus:
Article 1895 [now Article 2154] of the Civil Code abovequoted, is therefore applicable. This legal provision,
which determines the quasi-contract of solution indebiti, is one of the concrete manifestations of the ancient
principle that no one shall enrich himself unjustly at the expense of another. In the Roman Law Digest the
maxim was formulated thus: "Jure naturae acquum est, neminem cum alterius detrimento et injuria fieri
locupletiorem." And the Partidas declared: "Ninguno non deue enriquecerse tortizeramente con dano de
otro." Such axiom has grown through the centuries in legislation, in the science of law and in court decisions.
The lawmaker has found it one of the helpful guides in framing statutes and codes. Thus, it is unfolded in
many articles scattered in the Spanish Civil Code. (See for example, articles, 360, 361, 464, 647, 648, 797,
1158, 1163, 1295, 1303, 1304, 1893 and 1895, Civil Code.) This time-honored aphorism has also been
adopted by jurists in their study of the conflict of rights. It has been accepted by the courts, which have not
hesitated to apply it when the exigencies of right and equity demanded its assertion. It is a part of that affluent
reservoir of justice upon which judicial discretion draws whenever the statutory laws are inadequate because
they do not speak or do so with a confused voice. [at p. 632.]
For this article to apply the following requisites must concur: "(1) that he who paid was not under obligation to do so; and, (2) that
payment was made by reason of an essential mistake of fact" [City of Cebu v. Piccio, 110 Phil. 558, 563 (1960)].
It is undisputed that private respondent delivered the second $10,000.00 remittance. However, petitioner contends that the doctrine
of solutio indebiti, does not apply because its requisites are absent.
First, it is argued that petitioner had the right to demand and therefore to retain the second $10,000.00 remittance. It is alleged that even
after the two $10,000.00 remittances are credited to petitioner's receivables from FACETS, the latter allegedly still had a balance of
$49,324.00. Hence, it is argued that the last $10,000.00 remittance being in payment of a pre-existing debt, petitioner was not thereby
unjustly enriched.
The contention is without merit.
The contract of petitioner, as regards the sale of garments and other textile products, was with FACETS. It was the latter and not private
petitioner was entered into by private respondent with FNSB. Petitioner, although named as the payee was not privy to the contract of
remittance of dollars. Neither was private respondent a party to the contract of sale between petitioner and FACETS. There being no
contractual relation between them, petitioner has no right to apply the second $10,000.00 remittance delivered by mistake by private
respondent to the outstanding account of FACETS.
Petitioner next contends that the payment by respondent bank of the second $10,000.00 remittance was not made by mistake but was
the result of negligence of its employees. In connection with this the Court of Appeals made the following finding of facts:
The fact that Facets sent only one remittance of $10,000.00 is not disputed. In the written interrogatories sent
to the First National State Bank of New Jersey through the Consulate General of the Philippines in New York,
Adelaide C. Schachel, the investigation and reconciliation clerk in the said bank testified that a request to
remit a payment for Facet Funwear Inc. was made in August, 1980. The total amount which the First National
State Bank of New Jersey actually requested the plaintiff-appellant Manufacturers Hanover & Trust
Corporation to remit to Irene's Wearing Apparel was US $10,000.00. Only one remittance was requested by
First National State Bank of New Jersey as per instruction of Facets Funwear (Exhibit "J", pp. 4-5).
That there was a mistake in the second remittance of US $10,000.00 is borne out by the fact that both
remittances have the same reference invoice number which is 263 80. (Exhibits "A-1- Deposition of Mr.
Stanley Panasow" and "A-2-Deposition of Mr. Stanley Panasow").
Plaintiff-appellant made the second remittance on the wrong assumption that defendant-appellee did not
receive the first remittance of US $10,000.00. [Rollo, pp. 26-27.]
It is evident that the claim of petitioner is anchored on the appreciation of the attendant facts which petitioner would have this Court
for certiorari under Rule 45 of the Revised Rules of Court has been stated in Remalante v. Tibe, G.R. No. 59514, February 25, 1988,
158 SCRA 138, thus:
The rule in this jurisdiction is that only questions of law may be raised in a petition for certiorari under Rule 45
of the Revised Rules of Court. "The jurisdiction of the Supreme Court in cases brought to it from the Court of
Appeals is limited to reviewing and revising the errors of law imputed to it, its findings of fact being conclusive"
[Chan v. Court of Appeals, G.R. No. L-27488, June 30, 1970, 33 SCRA 737, reiterating a long line of
decisions]. This Court has emphatically declared that "it is not the function of the Supreme Court to analyze or
weigh such evidence all over again, its jurisdiction being limited to reviewing errors of law that might have
been committed by the lower court" [Tiongco v. De la Merced, G.R. No. L-24426, July 25, 1974, 58 SCRA 89;
Corona v. Court of Appeals, G.R. No. L-62482, April 28, 1983, 121 SCRA 865; Baniqued v. Court of Appeals,
G. R. No. L-47531, February 20, 1984, 127 SCRA 596]. "Barring, therefore, a showing that the findings
complained of are totally devoid of support in the record, or that they are so glaringly erroneous as to
constitute serious abuse of discretion, such findings must stand, for this Court is not expected or required to
examine or contrast the oral and documentary evidence submitted by the parties" [Santa Ana, Jr. v.
Hernandez, G.R. No. L-16394, December 17, 1966, 18 SCRA 9731. [at pp. 144-145.]
Petitioner invokes the equitable principle that when one of two innocent persons must suffer by the wrongful act of a third person, the
loss must be borne by the one whose negligence was the proximate cause of the loss.
The rule is that principles of equity cannot be applied if there is a provision of law specifically applicable to a case [Phil. Rabbit Bus
Lines, Inc. v. Arciaga, G.R. No. L-29701, March 16, 1987,148 SCRA 433; Zabat, Jr. v. Court of Appeals, G.R. No. L36958, July 10,
1986, 142 SCRA 587; Rural Bank of Paranaque, Inc. v. Remolado, G.R. No. 62051, March 18, 1985, 135 SCRA 409; Cruz v. Pahati, 98
Phil. 788 (1956)]. Hence, the Court in the case of De Garcia v. Court of Appeals, G.R. No. L-20264, January 30, 1971, 37 SCRA 129,
citing Aznar v. Yapdiangco, G.R. No. L-18536, March 31, 1965, 13 SCRA 486, held:
... The common law principle that where one of two innocent persons must suffer by a fraud perpetrated by
another, the law imposes the loss upon the party who, by his misplaced confidence, has enabled the fraud to
be committed, cannot be applied in a case which is covered by an express provision of the new Civil Code,
 specifically Article 559. Between a common law principle and a statutory provision, the latter must prevail in
this jurisdiction. [at p. 135.]
Having shown that Art. 2154 of the Civil Code, which embodies the doctrine of solutio indebiti, applies in the case at bar, the Court must
reject the common law principle invoked by petitioner.
Finally, in her attempt to defeat private respondent's claim, petitioner makes much of the fact that from the time the second $10,000.00
remittance was made, five hundred and ten days had elapsed before private respondent demanded the return thereof. Needless to say,
private respondent instituted the complaint for recovery of the second $10,000.00 remittance well within the six years prescriptive period
for actions based upon a quasi-contract [Art. 1145 of the New Civil Code].
WHEREFORE, the petition is DENIED and the decision of the Court of Appeals is hereby AFFIRMED.
SO ORDERED.
G.R. No. 215847
GOV. EXEQUIEL B. JAVIER, Petitioner,
vs.
COMMISSION ON ELECTIONS, CORNELIO P. ALDON, and RAYMUNDO T. ROQUERO, Respondents.
DECISION
BRION, J.:
This is a petition for certiorari under Rule 65 in relation to Rule 64 of the Rules of Court, filed to challenge the January 12, 2015 per
curiam order of the Commission on Elections (COMELEC/The Commission) en banc in SPA No. 13-254 (DC).1 The Commission
granted the petition to disqualify the petitioner Exequiel Javier and to annul his proclamation as the duly elected governor of Antique.
THE ANTECEDENTS
On December 3, 1985, the Batasang Pambansa enacted the Omnibus Election Code (Election Code).2 Section 261(d) and (e) of this
Code prescribe the following elements of coercion as an election offense:
Section 261. Prohibited Acts. - The following shall be guilty of an election offense: x x x
(d) Coercion of subordinates. -
(1) Any public officer, or any officer of any public or private corporation or association, or any head, superior, or
administrator of any religious organization, or any employer or landowner who coerces or intimidates or compels, or in
any manner influence, directly or indirectly, any of his subordinates or members or parishioners or employees or
house helpers, tenants, overseers, farm helpers, tillers, or lease holders to aid, campaign or vote for or against any
candidate or any aspirant for the nomination or selection of candidates.
(2) Any public officer or any officer of any commercial, industrial, agricultural, economic or social enterprise or public or
private corporation or association, or any head, superior or administrator of any religious organization, or any employer or
landowner who dismisses or threatens to dismiss, punishes or threatens to punish by reducing his salary, wage or
compensation, or by demotion, transfer, suspension, separation, excommunication, ejectment, or causing him annoyance
in the performance of his job or in his membership, any subordinate member or affiliate, parishioner, employee or house
helper, tenant, overseer, farm helper, tiller, or lease holder, for disobeying or not complying with any of the acts ordered by
the former to aid, campaign or vote for or against any candidate, or any aspirant for the nomination or selection of
candidates.
(e) Threats, intimidation, terrorism, use of fraudulent device or other forms of coercion. - Any person who, directly or indirectly,
threatens, intimidates or actually causes, inflicts or produces any violence, injury, punishment, damage, loss or disadvantage upon any
person or persons or that of the immediate members of his family, his honor or property, or uses any fraudulent device or scheme to
compel or induce the registration or refraining from registration of any voter, or the participation in a campaign or refraining or desistance
from any campaign, or the casting of any vote or omission to vote, or any promise of such registration, campaign, vote, or omission
therefrom. (emphases supplied)
Coercion, as an election offense, is punishable by imprisonment of not less than one year but not more than six years.3 Notably, Section
68 of the Election Code provides that the Commission may administratively disqualify a candidate who violates Section 261(d) or (e).
On February 20, 1995, Congress enacted Republic Act No. 7890 amending the definition of Grave Coercion under the Revised Penal
Code.4 It increased the penalty for coercion committed in violation of a person’s right to suffrage to prision mayor. Further, Section 3 of
R.A. 7890 expressly repealed Section 26, paragraphs (d)(1) and (2) of the Election Code.
On April 3, 2012, COMELEC issued Resolution No. 93855 fixing the calendar of activities for the May 2013 elections. The resolution set
the election period from January 13, 2013 until June 12, 2013.
On September 3, 2012, Valderrama Municipal Vice-Mayor Christopher B. Maguad filed an administrative complaint for Gross
Misconduct/Dereliction of Duty and Abuse of Authority against Valderrama Mayor Mary Joyce U. Roquero (Mayor Roquero). This
complaint was docketed as Administrative Case No. 05-2012.
On November 9, 2012, the Sangguniang Panlalawigan (SP) issued Resolution No. 291-2012 recommending to Antique Governor
Exequiel Javier (Gov. Javier) the preventive suspension of Mayor Roquero.
On November 21, 2012, Mayor Roquero filed a petition for certiorari and prohibition with prayer for the issuance of a temporary
restraining order (TRO) before the Regional Trial Court (RTC), Branch 12, Antique, against Gov. Javier and the members of the SP to
restrain them from proceeding with Administrative Case No. 05-2012. The petition was docketed as Special Civil Action No. 12-11-86.
The case was re-raffled to the RTC, Branch 11 which issued a writ of preliminary injunction.
Gov. Javier, Vice-Governor Dimamay, and the members of the SP filed a petition for certiorari with urgent prayer for TRO and
preliminary injunction before the CA, docketed as CA-G.R. SP-07307.
On December 18, 2012, COMELEC issued Resolution No. 95816 prohibiting any public official from suspending any elective provincial,
city, municipal, or barangay officer during the election period for the May 13, 2013 elections. This resolution implements Section 261
(x)7 of the Election Code.
On January 15, 2013, the CA issued a TRO in CA-G.R. SP-07307.
On January 16, 2013, the RTC, Branch 11 promulgated its judgment granting certiorari and prohibition. It ordered the SP to cease and
desist from further proceeding with Administrative Case No. 05-2012. It likewise ordered Gov. Javier to refrain from implementing SP
Resolution No. 291-2012 and from preventively suspending Mayor Roquero.
On January 23, 2013, Gov. Javier issued Executive Order No. 003, S. 2013, preventively suspending Mayor Roquero for thirty (30)
days.
On February 7, 2013, the SP of Antique issued a decision finding Mayor Roquero guilty of Grave Misconduct in relation with Section
3(e) of R. A. 3019, the Anti-Graft and Corrupt Practices Act, and Grave Abuse of Authority in relation with Section 5(e) of R.A.
No. 6713. The SP suspended her for four (4) months.
Mayor Roquero filed an Election Offense complaint against Gov. Javier for violating Section 261(x) of the Election Code. The case was
filed before the COMELEC Law Department and docketed as Election Offense Case (EOC) No. 13-025.
Meanwhile (or on March 15, 2013), the CA granted the writ of preliminary injunction filed by Gov. Javier, et al., in CA-G.R. SP-07307. It
enjoined Judge Nery Duremdes of the RTC, Branch 11 from conducting further proceedings in SPL Civil Action No. 12-11-86.
On March 22, 2013, private respondents Cornelio P. Aldon (Aldon) and Raymundo T. Roquero (Roquero) also filed a petition for
disqualification before the Commission against Gov. Javier, Vice-Governor Rosie A. Dimamay, and the other members of the SP. The
case was docketed as COMELEC Special Action (SPA) No. 13-254 (DC.)
Aldon and Roquero sought to disqualify Gov. Javier and the other incumbent officials from running in the 2013 elections on the ground
that the latter committed the election offenses of Coercion of Subordinates [Sec. 261(d)] and Threats, Intimidation, Terrorism x x x
or Other Forms of Coercion [Sec. 261(e)] by suspending Mayor Roquero. They alleged that the suspension was political harassment
calculated to intimidate the Roqueros into backing out of the 2013 elections.8
On April 29, 2013, the Clerk of the Commission conducted a conference hearing between the parties.
On April 30, 2013, Gov. Javier (together with the SP Members) filed a motion to dismiss with answer ex abundante ad cautelam.
After the May 13, 2013 Elections, only Gov. Javier and SP Members Tobias M. Javier, Edgar D. Denosta, Teopisto C. Estaris, Jr., and
Victor R. Condez were proclaimed winners. Hence, the Commission considered the disqualification cases against the losing candidates
moot.
On October 3, 2014, the COMELEC Second Division issued a resolution in SPA No. 13-254 (DC) disqualifying Gov. Javier and
annulling his proclamation as the Governor of Antique. The resolution was penned by Commissioner Elias R. Yusoph.
The COMELEC held that the preventive suspension of Mayor Roquero under Executive Order No. 003 violated the election period ban
because it was not for the purpose of applying the Anti-Graft and Corrupt Practices Act. It also considered the Commission’s findings
in EOC No. 13-025 that there was substantial evidence showing that Gov. Javier acted in bad faith when he suspended Mayor Roquero
as a form of punishment for opposing him.9
The COMELEC ruled that Gov. Javier’s act of preventively suspending Mayor Roquero during the election period ban fell within the
contemplation of Section 261(d) of the Election Code, which is a ground for disqualification under Section 68. It held that while Section
261(d) of the Election Code was repealed by Republic Act No. 7890, it did not remove coercion "as a ground per se for disqualification
under [Section] 68." In fact, R.A. 7890 made Coercion (an election offense) a felony with a higher penalty.10 The COMELEC added that
the general repealing clause of R.A. No. 7890 cannot impliedly repeal Section 68 because the latter was "not absolutely and
irreconcilably incompatible with Article 286."11
Commissioner Luie Tito F. Guia dissented from the resolution. Commissioner Guia reasoned that the legal basis to dismiss Gov. Javier
no longer exists because Section 3 of Republic Act No. 7890 had repealed Section 261(d) of the Election Code. Commissioner Arthur D.
Lim took no part in the vote because he did not participate in the deliberations.
With the votes tied at 1-1-1 (one voted to grant, one dissenting, and one not participating), the case failed to obtain the necessary
majority. Consequently on October 14, 2014, the COMELEC Second Division issued an order elevating the case to the en banc for its
disposition.12
The Commission en banc agreed, as a matter of internal arrangement, to submit their respective opinions explaining their respective
votes or their concurrence with either Commissioner Yusoph or Commissioner Guia.
Three (3) Commissioners concurred with Commissioner Yusoph: Chairman Sixto Brillantes, Jr., Commissioner Lucenito Tagle, and
Commissioner Arthur Lim. Commissioner Christian Robert Lim joined Commissioner Guia’s dissent. Commissioner Al A. Parreño did not
participate in the vote as he was away on official business. Thus, the vote was 4-2-1 in favor of disqualification; in a per curiam order
promulgated on January 12, 2015, the Commission en banc disqualified Gov. Javier and annulled his proclamation as the governor of
Antique.
On January 20, 2015, Gov. Javier filed the present petition for certiorari under Rule 65 in relation with Rule 64 of the Rules of Court.
THE PETITION
The petitioner argues that the Commission en banc committed grave abuse of discretion because: (1) its January 12, 2015 order was
arrived at on the basis of an "internal arrangement; and (2) the order did not obtain a majority vote because Commissioner Arthur Lim
should not have been allowed to participate.
The petitioner also asserts that the Commission erred in ruling that R.A. 7890 did not remove Section 261(d) of the Election Code as a
ground for administrative disqualification. Finally, the petitioner maintains that the Commission unconstitutionally set the Election Period
for the May 13, 2013 elections in violation of Article IX-C, Section 9 of the Constitution, Sec. 62 (c) of the Local Government Code, and
Section 8 of Republic Act No. 7056.13
In its comment on the petition, COMELEC, through the Office of the Solicitor General (OSG), counters that it did not abuse its discretion
in issuing the January 12, 2015 order disqualifying Gov. Javier. The Commission insists that the procedure observed during the
proceedings was not infirm and that there was no legal impediment for Commissioner Arthur Lim to participate in the en banc vote.
On the alleged errors of law, the Commission insists that there was legal basis to disqualify Gov. Javier under both Sections 261 (d) and
(e) of the Election Code; the repeal of Section 261(d) by R.A. 7890 did not ipso facto remove coercion as a ground for disqualification
under Section 68 of the Election Code. It added that Section 261(e), on the other hand, has not been repealed, either expressly or
impliedly.
Finally, the Commission asserts that COMELEC Resolution No. 9581 fixing the date of the election period is expressly authorized by
Article IX, Section 9 of the Constitution and Section 8 of Republic Act No. 7056.
Based on these submissions, the following issues now confront the Court:
I.
Whether the Commission gravely abused its discretion when it issued Resolution No. 9581 fixing the 2013 election period from January
13, 2013 until June 12, 2013, for the purpose of determining administrative and criminal liability for election offenses.
II.
Whether the Commission erred in ruling that R.A. No. 7890 did not remove coercion as a ground for disqualification under Section 68 of
the Election Code.
III.
Whether the Commission en banc committed grave abuse of discretion in issuing its Order dated January 12, 2015, disqualifying Gov.
Javier and annulling his proclamation as the governor of Antique.
OUR RULING:
After due consideration, we resolve to grant the petition.
The COMELEC is expressly authorized to fix a different date of the election period.
The petitioner contends that the election period for the reckoning of administrative and criminal liabilities under election laws should
always be the same-90 days before and 30 days after an election-fixed in Article IX-C, Section 9 of the Constitution and Section 8 of
Republic Act No. 7056.14 He argues that the Commission’s authority to fix the pre-election period refers only to the period needed to
properly administer and conduct orderly elections. The petitioner argues that by extending the period for incurring criminal liability
beyond the 90-day period, the Commission encroached on the legislature’s prerogative to impute criminal and administrative liability
on mala prohibita acts. Therefore, COMELEC Resolution Nos. 9385 and 9581 were issued ultra vires.
We do not find this argument meritorious.
No less than the Constitution authorizes the Commission to fix the dates of the election period. Article IX-C, Section 9 provides:
Section 9. Unless otherwise fixed by the Commission in special cases, the election period shall commence ninety days before the
day of election and shall end thirty days thereafter.15
Congress, through the Election Code, explicitly recognizes this authority:
Sec. 3. Election and campaign periods. – Unless otherwise fixed in special cases by the Commission on Elections, which
hereinafter shall be referred to as the Commission, the election period shall commence ninety days before the day of the election and
shall end thirty days thereafter.16 (emphases supplied)
Evidently, the 120-day period is merely the default election period. The Commission is not precluded from fixing the length and the
starting date of the election period to ensure free, orderly, honest, peaceful, and credible elections. This is not merely a statutory but
a constitutionally granted power of the Commission.
Contrary to the petitioner’s contention, the Commission’s act of fixing the election period does not amount to an encroachment on
legislative prerogative. The Commission did not prescribe or define the elements of election offenses. Congress already defined them
through the Omnibus Election Code, the Fair Elections Act, and other pertinent election laws.
As defined by Congress, some election offenses and prohibited acts can only be committed during the election period. An element of
these offenses (i.e., that it be committed during the election period) is variable, as election periods are not affixed to a specific and
permanent date. Nevertheless, the definition of the offense is already complete. By fixing the date of the election period, the
Commission did not change what the offense is or how it is committed. There is thus no intrusion into the legislative sphere.
There is also no merit in the petitioner’s argument that the extended election period only applies to pre-election activities other than the
determination of administrative or criminal liability for violating election laws. Neither the law nor the Constitution authorizes the use of
two distinct election periods for the same election. The law does not distinguish between election offenses and other pre-election
activities in terms of the applicable election period. Where the law does not distinguish, neither should this Court.
The Alleged Lack of Due Process
We find the petitioner’s claim – that the Commission committed grave abuse of discretion since there was no preliminary investigation
as required under Section 265 of the Omnibus Election Code – to be misplaced.17
SPA No. 13-254 was an administrative proceeding for disqualification and not a criminal prosecution of an election offense. The due
process requirements and the procedures for these are not the same. Section 265 of the Election Code only applies to criminal
prosecutions. Disqualification cases are summary in nature and governed by Rule 25 of the COMELEC Rules of Procedure.
There is likewise no merit in the petitioner’s allegation that he was denied due process because the Commission adjudicated the issue
without conducting any subsequent hearings and without requiring the submission of position papers or memoranda, notarized witness
affidavits, or other documentary evidence aside from the annexes included in the petition and the answer.
Administrative due process cannot be fully equated with due process in its strict judicial sense.18 A formal hearing is not always
necessary and the observance of technical rules of procedure is not strictly applied in administrative proceedings.19 The essence of
administrative due process is the right to be heard and to be given an opportunity to explain one’s side.20 Where the Commission hears
both sides and considers their contentions, the requirements of administrative due process are complied with.
As we held in Lanot v. Commission on Elections:21
The electoral aspect of a disqualification case determines whether the offender should be disqualified from being a candidate or from
holding office. Proceedings are summary in character and require only clear preponderance of evidence. An erring candidate may be
disqualified even without prior determination of probable cause in a preliminary investigation. The electoral aspect may proceed
independently of the criminal aspect, and vice versa.
The criminal aspect of a disqualification case determines whether there is probable cause to charge a candidate for an election offense.
The prosecutor is the COMELEC, through its Law Department, which determines whether probable cause exists. If there is probable
cause, the COMELEC, through its Law Department, files the criminal information before the proper court. Proceedings before the proper
court demand a full-blown hearing and require proof beyond reasonable doubt to convict. A criminal conviction shall result in the
disqualification of the offender, which may even include disqualification from holding a future public office.
Commissioner Arthur Lim’s Participation in the En Banc Voting
The petitioner further argues that the Commission committed grave abuse of discretion by allowing Commissioner Arthur D. Lim to
participate in the proceedings before the Commission en banc. The petitioner maintains that because Commissioner Arthur Lim took no
part in the proceedings before the COMELEC Second Division, then he should have inhibited from the en banc proceedings pursuant to
the ruling in Estrella v. COMELEC.22 If we disregard Commissioner Arthur Lim’s vote, then the Commission would have failed to attain
the necessary majority vote of all the members of the Commission.
The petitioner’s reliance on Estrella is misplaced because the facts of this case are different from those of the present
case. Estrella involved two related election cases between the same parties: an election protest and an action for certiorari. One party
moved for Commissioner Lantion’s inhibition which the Commission denied. However, Commissioner Lantion later inhibited himself from
the certiorari proceeding and was substituted by another Commissioner.23 The substitution order was also adopted in the election protest
case. When the election protest was elevated to the COMELEC en banc, Commissioner Lantion participated in the deliberations and
voted despite his prior inhibition. This Court granted certiorari and held that Commissioner Lantion’s piecemeal voluntary inhibition was
illegal and unethical.
In the present case, Commissioner Arthur Lim did not inhibit from the proceedings. If the Commissioner had inhibited, there would have
been a need to replace him pursuant to Rule 3, Section 6 of the COMELEC Rules of Procedure24 (as what happened in Estrella where
there was an issuance of an order designating Commissioner Borra as Commissioner Lantion’s substitute). Commissioner Arthur Lim
only abstained from voting; he did not participate in the deliberations. When the Commission en banc, as a matter of internal
arrangement, agreed among themselves to submit their own opinion explaining their respective vote or merely their concurrence with
either Commissioner Elias R. Yusoph or Commissioner Luie Tito F. Guia’s position on the matter, no legal or ethical impediment existed
preventing him (Commissioner Arthur Lim) from subsequently participating in the deliberations and from casting his vote.
COMELEC’s Internal Arrangement
The petitioner also maintains that the Commission gravely abused its discretion when it set aside its own rules and resolved the case
through an "internal arrangement." He submits that the Commission should have waited for the assigned ponente to write an opinion
before agreeing to vote based on the positions of Commissioner Yusoph and Commissioner Guia. The petitioner also claims that the
assailed Order is a "midnight decision" and cites the absence of a promulgation date on the front page and of a certification signed by
the Chairman as procedural infirmities.
The petitioner clearly refers to Rule 18 of the COMELEC Rules of Procedure which states:
Part IV
Rule 18 – Decisions
Sec. 1 Procedure in Making Decisions. – The conclusions of the Commission in any case submitted to it for decision en banc or in
Division shall be reached in consultation before the case is assigned by raffle to a Member for the writing of the opinion of the
Commission or the Division and a certification to this effect signed by the Chairman or the Presiding Commissioner, as the case may be,
shall be incorporated in the decision. Any member who took no part, dissented, or abstained from a decision or resolution must state the
reason therefor.
Every decision shall express therein clearly and distinctly the facts and the law on which it is based. (emphasis supplied)
To our mind, the essence of this provision is: (1) that decisions of the Commission, whether in Division or en banc, must be reached in
consultation; and (2) that the decisions must state their factual and legal bases. Moreover, Rule 18, Section 1 must be read together
with the other provisions of the COMELEC Rules of Procedure, particularly the following related portions:
Rule 1 – Introductory Provisions
Sec. 3. Construction – These rules shall be liberally construed in order to promote the effective and efficient implementation of the
objectives of ensuring the holding of free, orderly, honest, peaceful and credible elections and to achieve just, expeditious and
inexpensive determination and disposition of every action and proceeding brought before the Commission.
Sec. 4. Suspension of the Rules – In the interest of justice and in order to obtain speedy disposition of all matters pending before
the Commission, these rules or any portion thereof may be suspended by the Commission.
The COMELEC Rules specifically authorize the Commission to suspend the strict application of its rules in the interest of justice and the
speedy disposition of cases. In this case, the Commission suspended Rule 18, Section 1. The Commission, as a body, dispensed with
the preparation of another ponencia and opted to vote on the legal positions of Commissioners Yusoph and Guia. Nevertheless, the
decision was evidently reached through consultation. Then Chairman Sixto Brillantes, Jr., Commissioner Lucenito Tagle, and
Commissioner Arthur Lim concurred with Commissioner Yusoph. Commissioner Christian Robert Lim joined Commissioner Guia’s
dissent. Chairman Brillantes, Jr. and Commissioner Arthur Lim also wrote separate concurring opinions. The Court does not see any
arbitrariness or infirmity in this internal arrangement that would have deprived the petitioner of due process.
Moreover, the Commission resorted to this arrangement because, as the petitioner pointed out, three Commissioners were retiring soon.
There was a need to resolve the cases because the impending vacancies would have resulted in further delay. Contrary to the
petitioner’s insinuations, "midnight decisions" are not illegal. Judges and other quasi-judicial officers cannot sit back, relax, and refuse to
do their work just because they are nearing retirement or are near the end of their term. As civil servants, they are expected to diligently
carry out their duties until their separation from service. Thus, the Commission’s suspension of its rules and use of an internal
arrangement to expedite its internal proceedings is not at all unusual in collegial bodies. We note that the vote was divided and dissents
were filed, thereby indicating the absence of any malicious departure from the usual procedures in arriving at the Commission’s ruling
on the case.
Absence of a Promulgated Date and Failure to Serve Advance Copy
With respect to the absence of a promulgation date on the first page of the assailed order, this Court directs the petitioner’s attention to
the last page stating that the Order was "Given this 12th day of January 2015, Manila, Philippines.”25 Promulgation is the process by
which a decision is published, officially announced, made known to the public, or delivered to the clerk of court for filing, coupled with
notice to the parties or their counsel.26 The order was evidently promulgated on January 12, 2015.
The Commission does not deny that it failed to serve an advance copy of the order to the petitioner as required under Rule 18, Section
527 of its Rules. But as we previously held in the cases of Lindo v. COMELEC28 and Pimping v. COMELEC,29 this kind of procedural lapse
does not affect the validity of the order and is insufficient to warrant the grant of a writ of certiorari in the absence of any grave abuse of
discretion prejudicing the rights of the parties.
Repeal of Section 261 (d) of Batas Pambansa Blg. 881 by Republic Act No. 7890
No less than the Constitution empowers the Commission to decide all questions affecting elections except those involving the right to
vote.30 It is the sole arbiter of all issues involving elections. Hence, unless tainted with grave abuse of discretion, simple errors of
judgment committed by COMELEC cannot be reviewed even by this Court.31
An error of judgment is one that the court may commit in the exercise of its jurisdiction;32 they only involve errors in the court or tribunal’s
appreciation of the facts and the law.33 An error of jurisdiction is one where the act complained of was issued by the court without or in
excess of its jurisdiction, or with grave abuse of discretion tantamount to lack or excess of jurisdiction.34
A review of the October 3, 2014 COMELEC Second Division resolution (penned by Commissioner Yusoph), however, showed that the
main thrust of this resolution ‒to which four Commissioners concurred in when the case was elevated to the en banc – is faulty.35 It
considered the repeal of Section 261(d) by R.A. No.7890 to be an implied one, which is contrary to the wordings of R.A. 7890.
For clarity, we reproduce the pertinent provisions of R.A. No. 7890, thus:
SECTION 1. Article 286, Section Three, Chapter Two, Title Nine of Act No. 3815, as amended, is hereby further amended to read as
follows:
“ART. 286. Grave Coercions. – The penalty of prision correccional and a fine not exceeding Six thousand pesos shall be imposed upon
any person who, without any authority of law, shall, by means of violence, threats or intimidation, prevent another from doing something
not prohibited by law, or compel him to do something against his will, whether it be right or wrong.
“If the coercion be committed in violation of the exercise of the right of suffrage, or for the purpose of compelling another to perform any
religious act, to prevent him from exercising such right or from so doing such act, the penalty next higher in degree shall be imposed."
SEC. 2. Section 261, Paragraphs (d)(1) and (2), Article XXII of Batas Pambansa Blg. 881 is hereby repealed.
SEC. 3. All other election laws, decrees, executive orders rules and regulations, or parts thereof inconsistent with the provisions of this
Act are hereby repealed.
xxxx
A repeal may be express or implied.36 An express repeal is one wherein a statute declares, usually in its repealing clause, that a
particular and specific law, identified by its number or title, is repealed.37 An implied repeal, on the other hand, transpires when a
substantial conflict exists between the new and the prior laws. In the absence of an express repeal, a subsequent law cannot be
construed as repealing a prior law unless an irreconcilable inconsistency and repugnancy exist in the terms of the new and the old
laws.38
In the present case, it is clear that R.A. No. 7890 expressly repealed Section 261, paragraphs (d)(1) and (2) of the Omnibus Election
Code. The COMELEC Second Division’s October 3, 2014 resolution, however, treated this repeal as merely an implied one.
Commissioner Yusoph reasoned out as follows:
Moreover, the general repealing clause in Section 3 of RA 7890 cannot impliedly repeal Section 68 because the latter is not
absolutely and irreconcilably incompatible with Article 286, as amended by RA 7890. Meaning, a case for disqualification due to
coercion under Section 68 can very well stand apart from the criminal case for coercion under Article 286, as amended. This is so
because Section 68 involves an administrative proceeding intended to disqualify a candidate whereas Article 286, supra, involves a
criminal proceeding intended to penalize coercion. Both laws, therefore, can be given effect without nullifying the other, hence the
inapplicability of implied repeal.
To firm up our stance against implied repeal of coercion as a ground for disqualification, the following pronouncements of the Supreme
Court are guiding:
“Implied repeal by irreconcilable inconsistency takes place when the two statutes cover the same subject matter; they are so clearly
inconsistent and incompatible with each other that they cannot be reconciled or harmonized; and both cannot be given effect, that is,
that one law cannot be enforced without nullifying the other."
“Well-settled is the rule is statutory construction that implied repeals are disfavored. In order to effect a repeal by implication, the latter
statute must be so irreconcilably inconsistent and repugnant with the existing law that they cannot be made to reconcile and stand
together. The clearest case possible must be made before the inference of implied repeal may be drawn, for inconsistency is never
presumed. x x x x"39
We point out that this resolution and the dissenting opinion of Commissioner Guia became the basis of the internal arrangement
reached upon by the Commission en banc whereby the commissioners agreed to submit their respective opinions explaining their votes
or their concurrence with either Commissioner Yusoph or Guia.
As earlier stated, the vote was 4-2-1 in favor of disqualification; in a per curiam order promulgated on January 12, 2015, the
Commission en banc disqualified Gov. Javier and annulled his proclamation as the governor of Antique. Chairman Brillantes and
Commissioner Arthur Lim wrote their own opinions concurring with the position of Commissioner Yusoph, while Commissioner Tagle
submitted his vote concurring with the opinions of Commissioner Yusoph and Chairman Brillantes.
In his Separate Opinion, Chairman Brillantes agreed with Commissioner Yusoph that the repeal of Section 261(d) by R.A. No. 7890 was
merely implied, and made the following disquisition:
xxxx
The Supreme Court, in a long line of cases, has constantly disfavored and struck down the use of repeal by implication. Pursuant to
jurisprudence, well entrenched is the rule that an implied repeal is disfavored. The apparently conflicting provisions of a law or two laws
should be harmonized as much as possible, so that each shall be effective. For a law to operate to repeal another law, the two laws
must actually be inconsistent. The former must be so repugnant as to be irreconcilable with the latter act. Stated plainly, a petition for
disqualification on the ground of coercion shall be taken differently and distinctly from coercion punishable under the RPC for the two
can very well stand independently from each other. x x x Therefore, unless proven that the two are inconsistent and would render futile
the application and enforcement of the other, only then that a repeal by implication will be preferred. x x x x40
A law that has been expressly repealed ceases to exist and becomes inoperative from the moment the repealing law becomes
effective.41 The discussion on implied repeals by the Yusoph resolution, (and the concurring opinion of Chairman Brillantes, Jr.),
including the concomitant discussions on the absence of irreconcilable provisions between the two laws, were thus misplaced. The
harmonization of laws can only be had when the repeal is implied, not when it is express, as in this case.
The COMELEC’s reasoning that coercion remains to be a ground for disqualification under Section 68 of the Election Code despite the
passage of R.A. No. 7890 is erroneous. To the point of our being repetitive, R.A. No. 7890 expressly repealed Section 261 d(1) and (2)
of Batas Pambansa Blg. 881, rendering these provisions inoperative. The effect of this repeal is to remove Section 261(d) from among
those listed as ground for disqualification under Section 68 of the Omnibus Election Code.
In his Memorandum/Concurring Opinion, Commissioner Arthur Lim stated that the petition for disqualification is anchored not only on
violation of Section 261 (d), but also on the violation of Section 261(e) in relation to Section 68 of the OEC. We point out, however, that
the COMELEC Second Division’s October 3, 2014 resolution in SPA No. 13-254 (disqualifying Gov. Javier and annulling his
proclamation as the Governor of Antique) was premised solely on violation of Section 261(d) of the OEC; it did not find that Gov. Javier
– even by substantial evidence - violated the provisions of Section 261(e). For clarity and accuracy, we quote the pertinent portions of
the COMELEC’s (Second Division) October 3, 2014 resolution:
Ineluctably, the act of Gov. Javier in preventively suspending Mayor Roquero during the Election period ban falls within the
contemplation of Section 261(d) of the Election Code which is a ground for disqualification under Section 68, Election Code. That is,
Gov. Javier issued Executive Order No. 003 suspending Mayor Roquero to coerce, intimidate, compel, or influence the latter to
collaborate with or campaign for the former, or to punish the latter for having manifested political opposition against the former. For that,
he must be disqualified.42
With the express repeal of Section 261(d), the basis for disqualifying Javier no longer existed. As we held in Jalosjos, Jr. v. Commission
on Elections,43 [t]he jurisdiction of the COMELEC to disqualify candidates is limited to those enumerated in Section 68 of the Omnibus
Election Code. All other election offenses are beyond the ambit of COMELEC jurisdiction. They are criminal and not administrative in
nature.44 Pursuant to sections 265 and 268 of the Omnibus Election Code, the power of the COMELEC is confined to the conduct of
preliminary investigation on the alleged election offenses for the purpose of prosecuting the alleged offenders before the regular courts
of justice.45
There is grave abuse of discretion justifying the issuance of the writ of certiorari when there is such capricious and whimsical exercise of
judgment as is equivalent to lack of jurisdiction,46 where power is exercised arbitrarily or in a despotic manner by reason of passion,
prejudice, or personal hostility amounting to an evasion of positive duty, or to virtual refusal to perform the duty enjoined, or to act at all
in contemplation of law, as where the power is exercised in an arbitrary and despotic manner by reason of passion and hostility.47
To our mind, the COMELEC gravely abused its discretion when it disqualified Gov. Javier based on a provision of law that had already
been expressly repealed. Its stubborn insistence that R.A. No. 7890 merely impliedly repealed Section 261 (d) despite the clear
wordings of the law, amounted to an arbitrary and whimsical exercise of judgment.
WHEREFORE, premises considered, we hereby GRANT the petition and SET ASIDE the January 12, 2015 per curiam order of the
Commission on Elections en banc in SPA No. 13-254 (DC).
SO ORDERED.
G.R. No. 138810             September 29, 2004
BATANGAS CATV, INC., petitioner,
vs.
THE COURT OF APPEALS, THE BATANGAS CITY SANGGUNIANG PANLUNGSOD and BATANGAS CITY MAYOR, respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:
In the late 1940s, John Walson, an appliance dealer in Pennsylvania, suffered a decline in the sale of television (tv) sets because of
poor reception of signals in his community. Troubled, he built an antenna on top of a nearby mountain. Using coaxial cable lines, he
distributed the tv signals from the antenna to the homes of his customers. Walson’s innovative idea improved his sales and at the same
time gave birth to a new telecommunication system -- the Community Antenna Television (CATV) or Cable Television.1
This technological breakthrough found its way in our shores and, like in its country of origin, it spawned legal controversies, especially in
the field of regulation. The case at bar is just another occasion to clarify a shady area. Here, we are tasked to resolve the inquiry -- may
a local government unit (LGU) regulate the subscriber rates charged by CATV operators within its territorial jurisdiction?
This is a petition for review on certiorari filed by Batangas CATV, Inc. (petitioner herein) against the Sangguniang Panlungsod and the
Mayor of Batangas City (respondents herein) assailing the Court of Appeals (1) Decision2dated February 12, 1999
and (2) Resolution3 dated May 26, 1999, in CA-G.R. CV No. 52361.4 The Appellate Court reversed and set aside the Judgment5 dated
October 29, 1995 of the Regional Trial Court (RTC), Branch 7, Batangas City in Civil Case No. 4254,6 holding that neither of the
respondents has the power to fix the subscriber rates of CATV operators, such being outside the scope of the LGU’s power.
The antecedent facts are as follows:
On July 28, 1986, respondent Sangguniang Panlungsod enacted Resolution No. 2107 granting petitioner a permit to
construct, install, and operate a CATV system in Batangas City. Section 8 of the Resolution provides that petitioner is
authorized to charge its subscribers the maximum rates specified therein, "provided, however, that any increase of rates
shall be subject to the approval of the Sangguniang Panlungsod."8
Sometime in November 1993, petitioner increased its subscriber rates from ₱88.00 to ₱180.00 per month. As a result, respondent
Mayor wrote petitioner a letter9 threatening to cancel its permit unless it secures the approval of respondent Sangguniang Panlungsod,
pursuant to Resolution No. 210.
Petitioner then filed with the RTC, Branch 7, Batangas City, a petition for injunction docketed as Civil Case No. 4254. It alleged that
respondent Sangguniang Panlungsod has no authority to regulate the subscriber rates charged by CATV operators because under
Executive Order No. 205, the National Telecommunications Commission (NTC) has the sole authority to regulate the CATV operation in
the Philippines.
On October 29, 1995, the trial court decided in favor of petitioner, thus:
"WHEREFORE, as prayed for, the defendants, their representatives, agents, deputies or other persons acting on their
behalf or under their instructions, are hereby enjoined from canceling plaintiff’s permit to operate a Cable Antenna
 Television (CATV) system in the City of Batangas or its environs or in any manner, from interfering with the
authority and power of the National Telecommunications Commission to grant franchises to operate CATV
systems to qualified applicants, and the right of plaintiff in fixing its service rates which needs no prior approval
of the Sangguniang Panlungsod of Batangas City.
The counterclaim of the plaintiff is hereby dismissed. No pronouncement as to costs.
IT IS SO ORDERED."10
The trial court held that the enactment of Resolution No. 210 by respondent violates the State’s deregulation policy as set forth by then
NTC Commissioner Jose Luis A. Alcuaz in his Memorandum dated August 25, 1989. Also, it pointed out that the sole agency of the
government which can regulate CATV operation is the NTC, and that the LGUs cannot exercise regulatory power over it without
appropriate legislation.
Unsatisfied, respondents elevated the case to the Court of Appeals, docketed as CA-G.R. CV No. 52361.
On February 12, 1999, the Appellate Court reversed and set aside the trial court’s Decision, ratiocinating as follows:
"Although the Certificate of Authority to operate a Cable Antenna Television (CATV) System is granted by the
National Telecommunications Commission pursuant to Executive Order No. 205, this does not preclude the
Sangguniang Panlungsod from regulating the operation of the CATV in their locality under the powers vested
upon it by Batas Pambansa Bilang 337, otherwise known as the Local Government Code of 1983. Section 177
(now Section 457 paragraph 3 (ii) of Republic Act 7160) provides:
‘Section 177. Powers and Duties – The Sangguniang Panlungsod shall:
a) Enact such ordinances as may be necessary to carry into effect and discharge the
responsibilities conferred upon it by law, and such as shall be necessary and proper to provide
for health and safety, comfort and convenience, maintain peace and order, improve the morals,
and promote the prosperity and general welfare of the community and the inhabitants thereof,
and the protection of property therein;
xxx
d) Regulate, fix the license fee for, and tax any business or profession being carried on and
exercised within the territorial jurisdiction of the city, except travel agencies, tourist guides,
tourist transports, hotels, resorts, de luxe restaurants, and tourist inns of international standards
which shall remain under the licensing and regulatory power of the Ministry of Tourism which
shall exercise such authority without infringement on the taxing and regulatory powers of the city
government;’
Under cover of the General Welfare Clause as provided in this section, Local Government Units can perform just about any
power that will benefit their constituencies. Thus, local government units can exercise powers that are: (1) expressly
granted; (2) necessarily implied from the power that is expressly granted; (3)necessary, appropriate or incidental for its
efficient and effective governance; and (4) essential to the promotion of the general welfare of their inhabitants. (Pimentel,
The Local Government Code of 1991, p. 46)
Verily, the regulation of businesses in the locality is expressly provided in the Local Government Code. The fixing
of service rates is lawful under the General Welfare Clause.
Resolution No. 210 granting appellee a permit to construct, install and operate a community antenna television (CATV)
system in Batangas City as quoted earlier in this decision, authorized the grantee to impose charges which cannot be
increased except upon approval of the Sangguniang Bayan. It further provided that in case of violation by the grantee of
the terms and conditions/requirements specifically provided therein, the City shall have the right to withdraw the franchise.
Appellee increased the service rates from EIGHTY EIGHT PESOS (₱88.00) to ONE HUNDRED EIGHTY PESOS
(₱180.00) (Records, p. 25) without the approval of appellant. Such act breached Resolution No. 210 which gives
appellant the right to withdraw the permit granted to appellee."11
Petitioner filed a motion for reconsideration but was denied.12
Hence, the instant petition for review on certiorari anchored on the following assignments of error:
"I
THE COURT OF APPEALS ERRED IN HOLDING THAT THE GENERAL WELFARE CLAUSE of the LOCAL
GOVERNMENT CODE AUTHORIZES RESPONDENT SANGGUNIANG PANLUNGSOD TO EXERCISE THE
REGULATORY FUNCTION SOLELY LODGED WITH THE NATIONAL TELECOMMUNICATIONS COMMISSION
UNDER EXECUTIVE ORDER NO. 205, INCLUDING THE AUTHORITY TO FIX AND/OR APPROVE THE SERVICE
RATES OF CATV OPERATORS; AND
II
THE COURT OF APPEALS ERRED IN REVERSING THE DECISION APPEALED FROM AND DISMISSING
PETITIONER’S COMPLAINT." 13
Petitioner contends that while Republic Act No. 7160, the Local Government Code of 1991, extends to the LGUs the general power to
perform any act that will benefit their constituents, nonetheless, it does not authorize them to regulate the CATV operation. Pursuant to
E.O. No. 205, only the NTC has the authority to regulate the CATV operation, including the fixing of subscriber rates.
Respondents counter that the Appellate Court did not commit any reversible error in rendering the assailed Decision. First, Resolution
No. 210 was enacted pursuant to Section 177(c) and (d) of Batas Pambansa Bilang 337, the Local Government Code of 1983, which
authorizes LGUs to regulate businesses. The term "businesses" necessarily includes the CATV industry. And second, Resolution No.
210 is in the nature of a contract between petitioner and respondents, it being a grant to the former of a franchise to operate a CATV
system. To hold that E.O. No. 205 amended its terms would violate the constitutional prohibition against impairment of contracts.14
The petition is impressed with merit.
Earlier, we posed the question -- may a local government unit (LGU) regulate the subscriber rates charged by CATV operators within its
territorial jurisdiction? A review of pertinent laws and jurisprudence yields a negative answer.
President Ferdinand E. Marcos was the first one to place the CATV industry under the regulatory power of the national
government.15 On June 11, 1978, he issued Presidential Decree (P.D.) No. 151216 establishing a monopoly of the industry by
granting Sining Makulay, Inc., an exclusive franchise to operate CATV system in any place within the Philippines. Accordingly, it
terminated all franchises, permits or certificates for the operation of CATV system previously granted by local governments or by any
instrumentality or agency of the national government.17Likewise, it prescribed the subscriber rates to be charged by Sining Makulay,
Inc. to its customers.18
On July 21, 1979, President Marcos issued Letter of Instruction (LOI) No. 894 vesting upon the Chairman of the Board of
Communications direct supervision over the operations of Sining Makulay, Inc. Three days after, he issued E.O. No. 54619 integrating
the Board of Communications20 and the Telecommunications Control Bureau21 to form a single entity to be known as the "National
Telecommunications Commission." Two of its assigned functions are:
"a. Issue Certificate of Public Convenience for the operation of communications utilities and services, radio
communications systems, wire or wireless telephone or telegraph systems, radio and television broadcasting system and
other similar public utilities;
b. Establish, prescribe and regulate areas of operation of particular operators of public service communications; and
determine and prescribe charges or rates pertinent to the operation of such public utility facilities and services except in
cases where charges or rates are established by international bodies or associations of which the Philippines is a
participating member or by bodies recognized by the Philippine Government as the proper arbiter of such charges or
rates;"
Although Sining Makulay Inc.’s exclusive franchise had a life term of 25 years, it was cut short by the advent of the 1986 Revolution.
Upon President Corazon C. Aquino’s assumption of power, she issued E.O. No. 20522 opening the CATV industry to all citizens of the
Philippines. It mandated the NTC to grant Certificates of Authority to CATV operators and to issue the necessary implementing
rules and regulations.
On September 9, 1997, President Fidel V. Ramos issued E.O. No. 43623 prescribing policy guidelines to govern CATV operation in the
Philippines. Cast in more definitive terms, it restated the NTC’s regulatory powers over CATV operations, thus:
"SECTION 2. The regulation and supervision of the cable television industry in the Philippines shall remain
vested solely with the National Telecommunications Commission (NTC).
SECTION 3. Only persons, associations, partnerships, corporations or cooperatives, granted a Provisional Authority or
Certificate of Authority by the Commission may install, operate and maintain a cable television system or render cable
television service within a service area."
Clearly, it has been more than two decades now since our national government, through the NTC, assumed regulatory power over the
CATV industry. Changes in the political arena did not alter the trend. Instead, subsequent presidential issuances further reinforced the
NTC’s power. Significantly, President Marcos and President Aquino, in the exercise of their legislative power, issued P.D. No. 1512,
E.O. No. 546 and E.O. No. 205. Hence, they have the force and effect of statutes or laws passed by Congress.24 That the regulatory
power stays with the NTC is also clear from President Ramos’ E.O. No. 436 mandating that the regulation and supervision of the CATV
industry shall remain vested "solely" in the NTC. Black’s Law Dictionary defines "sole" as "without another or others."25 The logical
conclusion, therefore, is that in light of the above laws and E.O. No. 436, the NTC exercises regulatory power over CATV
operators to the exclusion of other bodies.
But, lest we be misunderstood, nothing herein should be interpreted as to strip LGUs of their general power to prescribe regulations
under the general welfare clause of the Local Government Code. It must be emphasized that when E.O. No. 436 decrees that the
"regulatory power" shall be vested "solely" in the NTC, it pertains to the "regulatory power" over those matters which are peculiarly within
the NTC’s competence, such as, the: (1) determination of rates, (2) issuance of "certificates of authority, (3) establishment of areas of
operation, (4) examination and assessment of the legal, technical and financial qualifications of applicant operators, (5) granting of
permits for the use of frequencies, (6) regulation of ownership and operation, (7) adjudication of issues arising from its functions, and (8)
other similar matters.26 Within these areas, the NTC reigns supreme as it possesses the exclusive power to regulate -- a power
comprising varied acts, such as "to fix, establish, or control; to adjust by rule, method or established mode; to direct by rule or restriction;
or to subject to governing principles or laws."27
Coincidentally, respondents justify their exercise of regulatory power over petitioner’s CATV operation under the general welfare clause
of the Local Government Code of 1983. The Court of Appeals sustained their stance.
There is no dispute that respondent Sangguniang Panlungsod, like other local legislative bodies, has been empowered to enact
ordinances and approve resolutions under the general welfare clause of B.P. Blg. 337, the Local Government Code of 1983. That it
continues to posses such power is clear under the new law, R.A. No. 7160 (the Local Government Code of 1991). Section 16 thereof
provides:
"SECTION 16. General Welfare. – Every local government unit shall exercise the powers expressly granted, those
necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient and effective
governance, and those which are essential to the promotion of the general welfare. Within their respective territorial
jurisdictions, local government units shall ensure and support, among others, the preservation and enrichment of culture,
promote health and safety, enhance the right of the people to a balanced ecology, encourage and support the development
of appropriate and self-reliant, scientific and technological capabilities, improve public morals, enhance economic
prosperity and social justice, promote full employment among their residents, maintain peace and order, and preserve the
comfort and convenience of their inhabitants."
In addition, Section 458 of the same Code specifically mandates:
"SECTION 458. Powers, Duties, Functions and Compensation. — (a) The Sangguniang Panlungsod, as the legislative
body of the city, shall enact ordinances, approve resolutions and appropriate funds for the general welfare of the city and
its inhabitants pursuant to Section 16 of this Code and in the proper exercise of the corporate powers of the city as
provided for under Section 22 of this Code, x x x:"
The general welfare clause is the delegation in statutory form of the police power of the State to LGUs.28Through this, LGUs may
prescribe regulations to protect the lives, health, and property of their constituents and maintain peace and order within their respective
territorial jurisdictions. Accordingly, we have upheld enactments providing, for instance, the regulation of gambling,29 the occupation of
rig drivers,30 the installation and operation of pinball machines,31 the maintenance and operation of cockpits,32 the exhumation and
transfer of corpses from public burial grounds,33 and the operation of hotels, motels, and lodging houses34 as valid exercises by local
legislatures of the police power under the general welfare clause.
Like any other enterprise, CATV operation maybe regulated by LGUs under the general welfare clause. This is primarily because the
CATV system commits the indiscretion of crossing public properties. (It uses public properties in order to reach subscribers.) The
physical realities of constructing CATV system – the use of public streets, rights of ways, the founding of structures, and the parceling of
large regions – allow an LGU a certain degree of regulation over CATV operators.35 This is the same regulation that it exercises over all
private enterprises within its territory.
But, while we recognize the LGUs’ power under the general welfare clause, we cannot sustain Resolution No. 210. We are convinced
that respondents strayed from the well recognized limits of its power. The flaws in Resolution No. 210 are: (1) it violates the mandate of
existing laws and (2) it violates the State’s deregulation policy over the CATV industry.
I.
Resolution No. 210 is an enactment of an LGU acting only as agent of the national legislature. Necessarily, its act must reflect and
conform to the will of its principal. To test its validity, we must apply the particular requisites of a valid ordinance as laid down by the
accepted principles governing municipal corporations.36
Speaking for the Court in the leading case of United States vs. Abendan,37 Justice Moreland said: "An ordinance enacted by virtue of the
general welfare clause is valid, unless it contravenes the fundamental law of the Philippine Islands, or an Act of the Philippine
Legislature, or unless it is against public policy, or is unreasonable, oppressive, partial, discriminating, or in derogation of common right."
In De la Cruz vs. Paraz,38 we laid the general rule "that ordinances passed by virtue of the implied power found in the general welfare
clause must be reasonable, consonant with the general powers and purposes of the corporation, and not inconsistent with the laws or
policy of the State."
The apparent defect in Resolution No. 210 is that it contravenes E.O. No. 205 and E.O. No. 436 insofar as it permits respondent
Sangguniang Panlungsod to usurp a power exclusively vested in the NTC, i.e., the power to fix the subscriber rates charged by CATV
operators. As earlier discussed, the fixing of subscriber rates is definitely one of the matters within the NTC’s exclusive domain.
In this regard, it is appropriate to stress that where the state legislature has made provision for the regulation of conduct, it has
manifested its intention that the subject matter shall be fully covered by the statute, and that a municipality, under its general powers,
cannot regulate the same conduct.39 In Keller vs. State,40 it was held that: "Where there is no express power in the charter of a
municipality authorizing it to adopt ordinances regulating certain matters which are specifically covered by a general statute, a municipal
ordinance, insofar as it attempts to regulate the subject which is completely covered by a general statute of the legislature, may be
rendered invalid. x x x Where the subject is of statewide concern, and the legislature has appropriated the field and declared the rule, its
declaration is binding throughout the State." A reason advanced for this view is that such ordinances are in excess of the powers
granted to the municipal corporation.41
Since E.O. No. 205, a general law, mandates that the regulation of CATV operations shall be exercised by the NTC, an LGU cannot
enact an ordinance or approve a resolution in violation of the said law.
It is a fundamental principle that municipal ordinances are inferior in status and subordinate to the laws of the state. An ordinance in
conflict with a state law of general character and statewide application is universally held to be invalid.42 The principle is frequently
expressed in the declaration that municipal authorities, under a general grant of power, cannot adopt ordinances which infringe the spirit
of a state law or repugnant to the general policy of the state.43 In every power to pass ordinances given to a municipality, there is an
implied restriction that the ordinances shall be consistent with the general law.44 In the language of Justice Isagani Cruz (ret.), this Court,
in Magtajas vs. Pryce Properties Corp., Inc.,45 ruled that:
"The rationale of the requirement that the ordinances should not contravene a statute is obvious. Municipal governments
are only agents of the national government. Local councils exercise only delegated legislative powers conferred on them
by Congress as the national lawmaking body. The delegate cannot be superior to the principal or exercise powers higher
than those of the latter. It is a heresy to suggest that the local government units can undo the acts of Congress, from which
they have derived their power in the first place, and negate by mere ordinance the mandate of the statute.
‘Municipal corporations owe their origin to, and derive their powers and rights wholly from the legislature. It
breathes into them the breath of life, without which they cannot exist. As it creates, so it may destroy. As it
may destroy, it may abridge and control. Unless there is some constitutional limitation on the right, the
legislature might, by a single act, and if we can suppose it capable of so great a folly and so great a wrong,
sweep from existence all of the municipal corporations in the State, and the corporation could not prevent it.
We know of no limitation on the right so far as to the corporation themselves are concerned. They are, so to
phrase it, the mere tenants at will of the legislature.’
This basic relationship between the national legislature and the local government units has not been enfeebled by the new
provisions in the Constitution strengthening the policy of local autonomy. Without meaning to detract from that policy, we
here confirm that Congress retains control of the local government units although in significantly reduced degree now than
under our previous Constitutions. The power to create still includes the power to destroy. The power to grant still includes
the power to withhold or recall. True, there are certain notable innovations in the Constitution, like the direct conferment on
the local government units of the power to tax, which cannot now be withdrawn by mere statute. By and large, however,
the national legislature is still the principal of the local government units, which cannot defy its will or modify or
violate it."
Respondents have an ingenious retort against the above disquisition. Their theory is that the regulatory power of the LGUs is granted by
R.A. No. 7160 (the Local Government Code of 1991), a handiwork of the national lawmaking authority. They contend that R.A. No. 7160
repealed E.O. No. 205 (issued by President Aquino). Respondents’ argument espouses a bad precedent. To say that LGUs exercise the
same regulatory power over matters which are peculiarly within the NTC’s competence is to promote a scenario of LGUs and the NTC
locked in constant clash over the appropriate regulatory measure on the same subject matter. LGUs must recognize that technical
matters concerning CATV operation are within the exclusive regulatory power of the NTC.
At any rate, we find no basis to conclude that R.A. No. 7160 repealed E.O. No. 205, either expressly or impliedly. It is noteworthy that
R.A. No. 7160 repealing clause, which painstakingly mentions the specific laws or the parts thereof which are repealed, does not include
E.O. No. 205, thus:
"SECTION 534. Repealing Clause. — (a) Batas Pambansa Blg. 337, otherwise known as the Local Government Code."
Executive Order No. 112 (1987), and Executive Order No. 319 (1988) are hereby repealed.
(b) Presidential Decree Nos. 684, 1191, 1508 and such other decrees, orders, instructions, memoranda and issuances
related to or concerning the barangay are hereby repealed.
(c) The provisions of Sections 2, 3, and 4 of Republic Act No. 1939 regarding hospital fund; Section 3, a (3) and b (2) of
Republic Act. No. 5447 regarding the Special Education Fund; Presidential Decree No. 144 as amended by Presidential
Decree Nos. 559 and 1741; Presidential Decree No. 231 as amended; Presidential Decree No. 436 as amended by
Presidential Decree No. 558; and Presidential Decree Nos. 381, 436, 464, 477, 526, 632, 752, and 1136 are hereby
repealed and rendered of no force and effect.
(d) Presidential Decree No. 1594 is hereby repealed insofar as it governs locally-funded projects.
(e) The following provisions are hereby repealed or amended insofar as they are inconsistent with the provisions of this
Code: Sections 2, 16, and 29 of Presidential Decree No. 704; Section 12 of Presidential Decree No. 87, as amended;
Sections 52, 53, 66, 67, 68, 69, 70, 71, 72, 73, and 74 of Presidential Decree No. 463, as amended; and Section 16 of
Presidential Decree No. 972, as amended, and
(f) All general and special laws, acts, city charters, decrees, executive orders, proclamations and administrative
regulations, or part or parts thereof which are inconsistent with any of the provisions of this Code are hereby repealed or
modified accordingly."
Neither is there an indication that E.O. No. 205 was impliedly repealed by R.A. No. 7160. It is a settled rule that implied repeals are not
lightly presumed in the absence of a clear and unmistakable showing of such intentions. In Mecano vs. Commission on Audit,46 we ruled:
"Repeal by implication proceeds on the premise that where a statute of later date clearly reveals an intention on the part of
the legislature to abrogate a prior act on the subject, that intention must be given effect. Hence, before there can be a
repeal, there must be a clear showing on the part of the lawmaker that the intent in enacting the new law was to abrogate
the old one. The intention to repeal must be clear and manifest; otherwise, at least, as a general rule, the later act is to be
construed as a continuation of, and not a substitute for, the first act and will continue so far as the two acts are the same
from the time of the first enactment."
As previously stated, E.O. No. 436 (issued by President Ramos) vests upon the NTC the power to regulate the CATV operation in this
country. So also Memorandum Circular No. 8-9-95, the Implementing Rules and Regulations of R.A. No. 7925 (the "Public
Telecommunications Policy Act of the Philippines"). This shows that the NTC’s regulatory power over CATV operation is continuously
recognized.
It is a canon of legal hermeneutics that instead of pitting one statute against another in an inevitably destructive confrontation, courts
must exert every effort to reconcile them, remembering that both laws deserve a becoming respect as the handiwork of coordinate
branches of the government.47 On the assumption of a conflict between E.O. No. 205 and R.A. No. 7160, the proper action is not to
uphold one and annul the other but to give effect to both by harmonizing them if possible. This recourse finds application here. Thus, we
hold that the NTC, under E.O. No. 205, has exclusive jurisdiction over matters affecting CATV operation, including specifically the fixing
of subscriber rates, but nothing herein precludes LGUs from exercising its general power, under R.A. No. 7160, to prescribe regulations
to promote the health, morals, peace, education, good order or safety and general welfare of their constituents. In effect, both laws
become equally effective and mutually complementary.
The grant of regulatory power to the NTC is easily understandable. CATV system is not a mere local concern. The complexities that
characterize this new technology demand that it be regulated by a specialized agency. This is particularly true in the area of rate-fixing.
Rate fixing involves a series of technical operations.48 Consequently, on the hands of the regulatory body lies the ample discretion in the
choice of such rational processes as might be appropriate to the solution of its highly complicated and technical problems. Considering
that the CATV industry is so technical a field, we believe that the NTC, a specialized agency, is in a better position than the LGU, to
regulate it. Notably, in United States vs. Southwestern Cable Co.,49 the US Supreme Court affirmed the Federal Communications
Commission’s (FCC’s) jurisdiction over CATV operation. The Court held that the FCC’s authority over cable systems assures the
preservation of the local broadcast service and an equitable distribution of broadcast services among the various regions of the country.
II.
Resolution No. 210 violated the State’s deregulation policy.
Deregulation is the reduction of government regulation of business to permit freer markets and competition.50Oftentimes, the State,
through its regulatory agencies, carries out a policy of deregulation to attain certain objectives or to address certain problems. In the field
of telecommunications, it is recognized that many areas in the Philippines are still "unserved" or "underserved." Thus, to encourage
private sectors to venture in this field and be partners of the government in stimulating the growth and development of
telecommunications, the State promoted the policy of deregulation.
In the United States, the country where CATV originated, the Congress observed, when it adopted the Telecommunications Act of 1996,
that there was a need to provide a pro-competitive, deregulatory national policy framework designed to accelerate rapidly private sector
deployment of advanced telecommunications and information technologies and services to all Americans by opening all
telecommunications markets to competition. The FCC has adopted regulations to implement the requirements of the 1996 Act and the
intent of the Congress.
Our country follows the same policy. The fifth Whereas Clause of E.O. No. 436 states:
 "WHEREAS, professionalism and self-regulation among existing operators, through a nationally recognized cable
television operator’s association, have enhanced the growth of the cable television industry and must therefore be
maintained along with minimal reasonable government regulations;"
This policy reaffirms the NTC’s mandate set forth in the Memorandum dated August 25, 1989 of Commissioner Jose Luis A. Alcuaz, to
wit:
"In line with the purpose and objective of MC 4-08-88, Cable Television System or Community Antenna Television (CATV)
is made part of the broadcast media to promote the orderly growth of the Cable Television Industry it being in its
developing stage. Being part of the Broadcast Media, the service rates of CATV are likewise considered deregulated in
accordance with MC 06-2-81 dated 25 February 1981, the implementing guidelines for the authorization and operation of
Radio and Television Broadcasting stations/systems.
Further, the Commission will issue Provisional Authority to existing CATV operators to authorize their operations for a
period of ninety (90) days until such time that the Commission can issue the regular Certificate of Authority."
When the State declared a policy of deregulation, the LGUs are bound to follow. To rule otherwise is to render the State’s policy
ineffective. Being mere creatures of the State, LGUs cannot defeat national policies through enactments of contrary measures. Verily, in
the case at bar, petitioner may increase its subscriber rates without respondents’ approval.
At this juncture, it bears emphasizing that municipal corporations are bodies politic and corporate, created not only as local units of local
self-government, but as governmental agencies of the state.51 The legislature, by establishing a municipal corporation, does not divest
the State of any of its sovereignty; absolve itself from its right and duty to administer the public affairs of the entire state; or divest itself
of any power over the inhabitants of the district which it possesses before the charter was granted.52
Respondents likewise argue that E.O. No. 205 violates the constitutional prohibition against impairment of contracts, Resolution No. 210
of Batangas City Sangguniang Panlungsod being a grant of franchise to petitioner.
We are not convinced.
There is no law specifically authorizing the LGUs to grant franchises to operate CATV system. Whatever authority the LGUs had before,
the same had been withdrawn when President Marcos issued P.D. No. 1512 "terminating all franchises, permits or certificates for the
operation of CATV system previously granted by local governments." Today, pursuant to Section 3 of E.O. No. 436, "only persons,
associations, partnerships, corporations or cooperatives granted a Provisional Authority or Certificate of Authority by the NTC may
install, operate and maintain a cable television system or render cable television service within a service area." It is clear that in the
absence of constitutional or legislative authorization, municipalities have no power to grant franchises.53 Consequently, the protection of
the constitutional provision as to impairment of the obligation of a contract does not extend to privileges, franchises and grants given by
a municipality in excess of its powers, or ultra vires.54
One last word. The devolution of powers to the LGUs, pursuant to the Constitutional mandate of ensuring their autonomy, has bred
jurisdictional tension between said LGUs and the State. LGUs must be reminded that they merely form part of the whole. Thus, when
the Drafters of the 1987 Constitution enunciated the policy of ensuring the autonomy of local governments,55 it was never their intention
to create an imperium in imperio and install an intra-sovereign political subdivision independent of a single sovereign state.
WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals dated February 12, 1999 as well as its
Resolution dated May 26, 1999 in CA-G.R. CV No. 52461, are hereby REVERSED. The RTC Decision in Civil Case No. 4254
is AFFIRMED.
No pronouncement as to costs.
SO ORDERED.
G.R. No. 100776 October 28, 1993
ALBINO S. CO, petitioner,
vs.
COURT OF APPEALS and PEOPLE OF THE PHILIPPINES, respondents.
Antonio P. Barredo for petitioner.
The Solicitor General for the people.
NARVASA, C.J.:
In connection with an agreement to salvage and refloat asunken vessel — and in payment of his share of the expenses of the salvage
operations therein stipulated — petitioner Albino Co delivered to the salvaging firm on September 1, 1983 a check drawn against the
Associated Citizens' Bank, postdated November 30, 1983 in the sum of P361,528.00.1 The check was deposited on January 3, 1984. It
was dishonored two days later, the tersely-stated reason given by the bank being: "CLOSED ACCOUNT."
A criminal complaint for violation of Batas Pambansa Bilang 222 was filed by the salvage company against Albino Co with the Regional
Trial Court of Pasay City. The case eventuated in Co's conviction of the crime charged, and his being sentenced to suffer a term of
imprisonment of sixty (60) days and to indemnify the salvage company in the sum of P361,528.00.
Co appealed to the Court of Appeals. There he sought exoneration upon the theory that it was reversible error for the Regional Trial
Court to have relied, as basis for its verdict of conviction, on the ruling rendered on September 21, 1987 by this Court in Que v. People,
154 SCRA 160 (1987)3 — i.e., that a check issued merely to guarantee the performance of an obligation is nevertheless covered by B.P.
Blg. 22. This was because at the time of the issuance of the check on September 1, 1983, some four (4) years prior to the promulgation
of the judgment in Que v. Peopleon September 21, 1987, the delivery of a "rubber" or "bouncing" check as guarantee for an obligation
was not considered a punishable offense, an official pronouncement made in a Circular of the Ministry of Justice. That Circular (No. 4),
dated December 15, 1981, pertinently provided as follows:
2.3.4. Where issuance of bouncing check is neither estafa nor violation of B.P. Blg. 22.
Where the check is issued as part of an arrangement to guarantee or secure the payment of an obligation,
whether pre-existing or not, the drawer is not criminally liable for either estafa or violation of B.P. Blg. 22 (Res.
No. 438, s. 1981, Virginia Montano vs. Josefino Galvez, June 19, 1981; Res. No. 707, s. 1989; Alice Quizon
vs. Lydia Calingo, October 23, 1981, Res. No. 769, s. 1981, Alfredo Guido vs. Miguel A. Mateo, et. al.,
November 17, 1981; Res. No. 589, s. 1981, Zenaida Lazaro vs. Maria Aquino, August 7, 1981).
This administrative circular was subsequently reversed by another issued on August 8, 1984 (Ministry Circular No. 12) — almost one (1)
year after Albino Co had delivered the "bouncing" check to the complainant on September 1, 1983. Said Circular No. 12, after
observing inter alia that Circular No. 4 of December 15, 1981 appeared to have been based on "a misapplication of the deliberation in
the Batasang Pambansa, . . . (or) the explanatory note on the original bill, i.e. that the intention was not to penalize the issuance of a
check to secure or guarantee the payment of an obligation," as follows:4
Henceforth, conforming with the rule that an administrative agency having interpreting authority may reverse
its administration interpretation of a statute, but that its review interpretation applies only prospectively
(Waterbury Savings Bank vs. Danaher, 128 Conn., 476; 20 a2d 455 (1941), in all cases involving violation of
Batas Pambansa Blg. 22 where the check in question is issued after this date, the claim that the check is
issued as a guarantee or part of an arrangement to secure an obligation collection will no longer be
considered a valid defense.
Co's theory was rejected by the Court of Appeals which affirmed his conviction. Citing Senarillos v. Hermosisima, 101 Phil. 561, the
Appellate Court opined that the Que doctrine did not amount to the passage of new law but was merely a construction or interpretation
of a pre-existing one, i.e., BP 22, enacted on April 3, 1979.
From this adverse judgment of the Court of Appeals, Albino Co appealed to this Court on certiorari under Rule 45 of the Rules of Court.
By Resolution dated September 9, 1991, the Court dismissed his appeal. Co moved for reconsideration under date of October 2, 1991.
The Court required comment thereon by the Office of the Solicitor General. The latter complied and, in its comment dated December 13,
1991, extensively argued against the merits of Albino Co's theory on appeal, which was substantially that proffered by him in the Court
of Appeals. To this comment, Albino Co filed a reply dated February 14, 1992. After deliberating on the parties' arguments and
contentions, the Court resolved, in the interests of justice, to reinstate Albino Co's appeal and adjudicate the same on its merits.
Judicial decisions applying or interpreting the laws or the Constitution shall form a part of the legal system of
the Philippines," according to Article 8 of the Civil Code. "Laws shall have no retroactive effect, unless the
contrary is provided," declares Article 4 of the same Code, a declaration that is echoed by Article 22 of the
Revised Penal Code: "Penal laws shall have, a retroactive effect insofar as they favor the person guilty of a
felony, who is not a habitual criminal . . .5
The principle of prospectivity of statutes, original or amendatory, has been applied in many cases. These include: Buyco v. PNB, 961 2
SCRA 682 (June 30, 1961), holding that Republic Act No. 1576 which divested the Philippine National Bank of authority to accept back
pay certificates in payment of loans, does not apply to an offer of payment made before effectivity of the act; Largado v. Masaganda, et
al., 5 SCRA 522 (June 30, 1962), ruling that RA 2613, s amended by RA 3090 on June, 1961, granting to inferior courts jurisdiction over
guardianship cases, could not be given retroactive effect, in the absence of a saving clause; Larga v. Ranada, Jr., 64 SCRA 18, to the
effect that Sections 9 and 10 of Executive Order No. 90, amending Section 4 of PD 1752, could have no retroactive application; People
v. Que Po Lay, 94 Phil. 640, holding that a person cannot be convicted of violating Circular No. 20 of the Central, when the alleged
violation occurred before publication of the Circular in the Official Gazette; Baltazar v. C.A., 104 SCRA 619, denying retroactive
application to P.D. No. 27 decreeing the emancipation of tenants from the bondage of the soil, and P.D. No. 316 prohibiting ejectment of
tenants from rice and corn farmholdings, pending the promulgation of rules and regulations implementing P.D. No. 27; Nilo v. Court of
Appeals, 128 SCRA 519, adjudging that RA 6389 whichremoved "personal cultivation" as a ground for the ejectment of a tenant cannot
be given retroactive effect in the absence of a statutory statement for retroactivity; Tac-An v. CA, 129 SCRA 319, ruling that the repeal
of the old Administrative Code by RA 4252 could not be accorded retroactive effect; Ballardo v. Borromeo, 161 SCRA 500, holding that
RA 6389 should have only prospective application; (see also Bonifacio v. Dizon, 177 SCRA 294 and Balatbat v. CA, 205 SCRA 419).
The prospectivity principle has also been made to apply to administrative rulings and circulars, to wit: ABS-CBN Broadcasting
Corporation v. CTA, Oct. 12, 1981, 108 SCRA 142, holding that a circular or ruling of the Commissioner of Internal Revenue may not be
given retroactive effect adversely to a taxpayer: Sanchez v.COMELEC, 193 SCRA 317, ruling that Resolution No. 90-0590 of the
Commission on Elections, which directed the holding of recall proceedings, had no retroactive application; Romualdez v. CSC, 197
SCRA 168, where it was ruled that CSC Memorandum Circular No. 29, s. 1989 cannot be given retrospective effect so as to entitle to
permanent appointment an employee whose temporary appointment had expired before the Circular was issued.
The principle of prospectivity has also been applied to judicial decisions which, "although in themselves not laws, are nevertheless
evidence of what the laws mean, . . . (this being) the reason whyunder Article 8 of the New Civil Code, 'Judicial decisions applying or
interpreting the laws or the Constitution shall form a part of the legal system . . .'"
So did this Court hold, for example, in Peo. v. Jabinal, 55 SCRA 607, 611:
It will be noted that when appellant was appointed Secret Agent by the Provincial Government in 1962, and
Confidential Agent by the Provincial commander in 1964, the prevailing doctrine on the matter was that laid
down by Us in People v. Macarandang (1959) and People v. Lucero (1958).6 Our decision in People
v. Mapa,7 reversing the aforesaid doctrine, came only in 1967. The sole question in this appeal is: should
appellant be acquitted on the basis of Our rulings in Macarandang and Lucero, or should his conviction stand
in view of the complete reverse of the Macarandang and Lucero doctrine in Mapa? . . .
Decisions of this Court, although in themselves not laws, are nevertheless evidence of what the laws mean,
and this is the reason why under Article 8 of the New Civil Code, "Judicial decisions applying or interpreting
the laws or the Constitution shall form a part of the legal system . . ."The interpretation upon a law by this
Court constitutes, in a way, a part of the law as of the date that law was originally passed, since this Court's
construction merely establishes the contemporaneous legislative intent that the law thus construed intends to
effectuate. The settled rule supported by numerous authorities is a restatement of the legal maxim "legis
interpretation legis vim obtinet" — the interpretation placed upon the written law by a competent court has the
force of law. The doctrine laid down in Lucero and Macarandang was part of the jurisprudence, hence, of the
law, of the land, at the time appellant was found in possession of the firearm in question and where he was
 arraigned by the trial court. It is true that the doctrine was overruled in the Mapa case in 1967, but when a
doctrine of this Court is overruled and a different view is adopted, the new doctrine should be applied
prospectively, and should not apply to parties who had relied on, the old doctrine and acted on the faith
thereof. This is especially true in the construction and application of criminal laws, where it is necessary that
the punishment of an act be reasonably foreseen for the guidance of society.
So, too, did the Court rule in Spouses Gauvain and Bernardita Benzonan v. Court of Appeals, et al. (G.R. No. 97973) and Development
Bank of the Philippines v. Court of Appeals, et al (G.R. No 97998), Jan. 27, 1992, 205 SCRA 515, 527-528:8
We sustain the petitioners' position, It is undisputed that the subject lot was mortgaged to DBP on February
24, 1970. It was acquired by DBP as the highest bidder at a foreclosure sale on June 18, 1977, and then sold
to the petitioners on September 29, 1979.
At that time, the prevailing jurisprudence interpreting section 119 of R.A. 141 as amended was that
enunciated in Monge and Tupas cited above. The petitioners Benzonan and respondent Pe and the DBP are
bound by these decisions for pursuant to Article 8 of the Civil Code "judicial decisions applying or interpreting
the laws or the Constitution shall form a part of the legal system of the Philippines." But while our decisions
form part of the law of the land, they are also subject to Article 4 of the Civil Code which provides that "laws
shall have no retroactive effect unless the contrary is provided." This is expressed in the familiar legal
maxim lex prospicit, non respicit, the law looks forward not backward. The rationale against retroactivity is
easy to perceive. The retroactive application of a law usually divests rights that have already become vested
or impairs the obligations of contract and hence, is unconstitutional (Francisco vs. Certeza, 3 SCRA 565
[1061]).
The same consideration underlies our rulings giving only prospective effect to decisions enunciating new
doctrines. Thus, we emphasized in People v. Jabinal, 55 SCRA 607 [1974]" . . . when a doctrine of this Court
is overruled and a different view is adopted, the new doctrine should be applied prospectively and should not
apply to parties who had relied on the old doctrine and acted on the faith thereof.
A compelling rationalization of the prospectivity principle of judicial decisions is well set forth in the oft-cited case of Chicot County
Drainage Dist. v. Baxter States Bank, 308 US 371, 374 [1940]. The Chicot doctrine advocates the imperative necessity to take account
of the actual existence of a statute prior to its nullification, as an operative fact negating acceptance of "a principle of absolute retroactive
invalidity.
Thus, in this Court's decision in Tañada v. Tuvera,9 promulgated on April 24, 1985 — which declared "that presidential issuances of
general application, which have not been published,shall have no force and effect," and as regards which declaration some members of
the Court appeared "quite apprehensive about the possible unsettling effect . . . (the) decision might have on acts done in reliance on
the validity of these presidential decrees . . ." — the Court said:
. . . . The answer is all too familiar. In similar situation is in the past this Court, had taken the pragmatic and
realistic course set forth in Chicot County Drainage District vs. Baxter Bank (308 U.S. 371, 374) to wit:
The courts below have proceeded on the theory that the Act of Congress, having found to be unconstitutional,
was not a law; that it was inoperative, conferring no rights and imposing no duties, and hence affording no
basis for the challenged decree. Norton vs. Shelby County, 118 US 425, 442; Chicago, I. & L. Ry. Co. v.
Hackett, 228 U. S. 559, 566. It is quite clear, however, that such broad statements as to the effect of a
determination of unconstitutionality must be taken with qualifications. The actual existence of a statute, prior
to such a determination, is an operative fact and may have consequences which cannot justly be ignored.
The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to
invalidity may have to be considered in various aspects — with respect to particular conduct, private and
official. Questions of rights claimed to have become vested, of status, of prior determinations deemed to have
finality and acted upon accordingly, of public policy in the light of the nature both of the statute and of its
previous application, demand examination. These questions are among the most difficult of those who have
engaged the attention of courts, state and federal, and it is manifest from numerous decisions that an all-
inclusive statement of a principle of absolute retroactive invalidity cannot be justified.
Much earlier, in De Agbayani v. PNB, 38 SCRA 429 — concerning the effects of the invalidation of "Republic Act No. 342, the
moratorium legislation, which continued Executive Order No. 32, issued by the then President Osmeña, suspending the enforcement of
payment of all debts and other monetary obligations payable by war sufferers," and which had been "explicitly held in Rutter v. Esteban
(93 Phil. 68 [1953] 10 . . . (to be) in 1953 'unreasonable and oppressive, and should not be prolonged a minute longer . . ." — the Court
made substantially the same observations, to wit:11
. . . . The decision now on appeal reflects the orthodox view that an unconstitutional act, for that matter an
executive order or a municipal ordinance likewise suffering from that infirmity, cannot be the source of any
legal rights or duties. Nor can it justify any official act taken under it. Its repugnancy to the fundamental law
once judicially declared results in its being to all intents and purposes amere scrap of paper. . . . It is
understandable why it should be so, the Constitution being supreme and paramount. Any legislative or
executive act contrary to its terms cannot survive.
Such a view has support in logic and possesses the merit of simplicity. lt may not however be sufficiently
realistic. It does not admit of doubt that prior to the declaration of nullity such challenged legislative or
executive act must have been in force and had to be compiled with. This is so as until after the judiciary, in an
appropriate case, declares its invalidity,, it is entitled to obedience and respect. Parties may have acted under
it and may have changed theirpositions, what could be more fitting than that in a subsequent litigation regard
be had to what has been done while such legislative or executive act was in operation and presumed to be
valid in all respects. It is now accepted as a doctrine that prior to its being nullified, its existence is a fact must
be reckoned with. This is merely to reflect awareness that precisely because the judiciary is the governmental
organ which has the final say on whether or not a legislative or executive measure is valid, a, period of time
may have elapsed before it can exercise the power of judicial review that may lead to a declaration of nullity.
It would be to deprive the law of its quality of fairness and justice then, if there be no recognition of what had
transpired prior to such adjudication.
In the language of an American Supreme Court decision: 'The actual existence of a statute, prior to such a
determination [of unconstitutionality], is an operative fact and may have consequences which cannot justly be
ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling
as to invalidity may have to be considered in various aspects, — with respect to particular relations, individual
and corporate, and particular conduct, private and official (Chicot County Drainage Dist. v. Baxter States
Bank, 308 US 371, 374 [1940]). This language has been quoted with approval in a resolution in Araneta v. Hill
(93 Phil. 1002 [1953]) and the decision in Manila Motor Co. Inc. v. Flores (99 Phil. 738 [1956]). An even more
recent instance is the opinion of Justice Zaldivar speaking for the Court in Fernandez v. Cuerva and Co. (L-
21114, Nov. 28, 1967, 21 SCRA 1095).
Again, treating of the effect that should be given to its decision in Olaguer v. Military Commission No 34, 12 — declaring invalid criminal
proceedings conducted during the martial law regime against civilians, which had resulted in the conviction and incarceration of
numerous persons — this Court, in Tan vs. Barrios, 190 SCRA 686, at p. 700, ruled as follows:
In the interest of justice and consistently, we hold that Olaguer should, in principle, be applied prospectively
only to future cases and cases still ongoing or not yet final when that decision was promulgated. Hence, there
should be no retroactive nullification of final judgments, whether of conviction or acquittal, rendered by military
courts against civilians before the promulgation of the Olaguer decision. Such final sentences should not be
disturbed by the State. Only in particular cases where the convicted person or the State shows that there was
serious denial of constitutional rights of the accused, should the nullity of the sentence be declared and a
retrial be ordered based on the violation of the constitutional rights of the accused and not on the Olaguer
doctrine. If a retrial is no longer possible, the accused should be released since judgment against him is null
on account of the violation of his constitutional rights and denial of due process.
xxx xxx xxx
The trial of thousands of civilians for common crimes before the military tribunals and commissions during the
ten-year period of martial rule (1971-1981) which were created under general orders issued by President
Marcos in the exercise of his legislative powers is an operative fact that may not just be ignored. The belated
declaration in 1987 of the unconstitutionality and invalidity of those proceedings did not erase the reality of
their consequences which occurred long before our decision in Olaguer was promulgated and which now
prevent us from carrying Olaguer to the limit of its logic. Thus did this Court rule in Municipality of Malabang
v. Benito, 27 SCRA 533, where the question arose as to whether the nullity of creation of a municipality by
executive order wiped out all the acts of the local government abolished. 13
It would seem then, that the weight of authority is decidedly in favor of the proposition that the Court's decision of September 21, 1987
in Que v. People, 154 SCRA 160 (1987) 14 that a check issued merely to guarantee the performance of an obligation is nevertheless
covered by B.P. Blg. 22 — should not be given retrospective effect to the prejudice of the petitioner and other persons situated, who
relied on the official opinion of the Minister of Justice that such a check did not fall within the scope of B.P. Blg. 22.
Inveighing against this proposition, the Solicitor General invokes U.S. v. Go Chico, 14 Phil. 128, applying the familiar doctrine that in
crimes mala prohibita, the intent or motive of the offender is inconsequential, the only relevant inquiry being, "has the law been
violated?" The facts in Go Chico are substantially different from those in the case at bar. In the former, there was no official issuance by
the Secretary of Justice or other government officer construing the special law violated; 15 and it was there observed, among others, that
"the defense . . . (of) an honest misconstruction of the law under legal advice" 16 could not be appreciated as a valid defense. In the
present case on the other hand, the defense is that reliance was placed, not on the opinion of a private lawyer but upon an official
pronouncement of no less than the attorney of the Government, the Secretary of Justice, whose opinions, though not law, are entitled to
great weight and on which reliance may be placed by private individuals is reflective of the correct interpretation of a constitutional or
statutory provision; this, particularly in the case of penal statutes, by the very nature and scope of the authority that resides in as regards
prosecutions for their violation.17 Senarillos vs.Hermosisima, supra, relied upon by the respondent Court of Appeals, is crucially different
in that in said case, as in U.S. v. Go Chico, supra, no administrative interpretation antedated the contrary construction placed by the
Court on the law invoked.
This is after all a criminal action all doubts in which, pursuant to familiar, fundamental doctrine, must be resolved in favor of the accused.
Everything considered, the Court sees no compelling reason why the doctrine of mala prohibita should override the principle of
prospectivity, and its clear implications as herein above set out and discussed, negating criminal liability.
WHEREFORE, the assailed decisions of the Court of Appeals and of the Regional Trial Court are reversed and set aside, and the
criminal prosecution against the accused-petitioner is DISMISSED, with costs de oficio.
SO ORDERED.
G.R. No. 136368            January 16, 2002
JAIME TAN, JR., as Judicial Administrator of the Intestate Estate of Jaime C. Tan, petitioner,
vs.
HON. COURT OF APPEALS (Ninth Special Div.) and JOSE A. MAGDANGAL and ESTRELLA MAGDANGAL, respondents.
PUNO, J.:
This is a petition for review of the Decision of the Court of Appeals dated July 15, 19981 and its Resolution dated November 9,
19982 denying petitioner's motion for reconsideration in CA-G.R. SP-41738.
The facts are as stated in the impugned Decision, viz:
"Involved in this case is a parcel of land, designated as Lot No. 645-C, with an area of 34,829 square meters, more or less,
situated in Bunawan, Davao City. The lot was once covered by TCT No. T-72067 of the Registry of Deeds of Davao City in
the name of the late Jaime C. Tan (Tan, for short) married to Praxedes V. Tan.
From the petition, the motion to dismiss petition, their respective annexes and other pleadings, we gather the following
factual antecedents:
On January 22, 1981, Tan, for a consideration of P59,200.00, executed a deed of absolute sale over the property in
question in favor of spouses Jose Magdangal and Estrella Magdangal. Simultaneous with the execution of this deed, the
same contracting parties entered into another agreement whereunder Tan given one (1) year within which to redeem or
repurchase the property.
Albeit given several opportunities and/or extensions to exercise the option, Tan failed to redeem the property until his death
on January 4, 1988.
On May 2, 1988, Tan's heirs filed before the Regional Trial Court at Davao City a suit against the Magdangals for
reformation of instrument. Docketed as CIVIL CASE NO. 19049-88, the complaint alleged that, while Tan and the
Magdangals denominated their agreement as deed of absolute sale, their real intention was to conclude an equitable
mortgage.
Barely hours after the complaint was stamped 'received,' the Magdangals were able to have Tan's title over the lot in
question canceled and to secure in their names TCT No. T-134470. This development prompted the heirs of Tan, who
were to be later substituted by Jaime V. Tan, Jr. (Tan, Jr.) as plaintiff, to file a supplemental complaint.
The intervening legal tussles are not essential to this narration. What is material is that on June 4, 1991, Branch 11 of the
Regional Trial Court of Davao City rendered judgment finding for Tan, Jr., as plaintiff therein. The dispositive portion of the
decision reads:.
'WHEREFORE, judgment is rendered:
1. The Deed of Absolute Sale (Exhibits B, B-1) is, in accordance with the true intention of the parties, hereby
declared and reformed an equitable mortgage;
2. The plaintiff is ordered to pay the defendants within 120 days after the finality of this decisionP59,200
plus interest at the rate of 12% per annum from May 2, 1988, the date the complaint was filed, until paid;
3. In order to avoid multiplicity of suits and to fully give effect to the true intention of the parties, upon the
payment of the aforesaid amount, TCT No. T-134470 in the name of defendants Jose Magdangal and Estrella
Magdangal (Exh. 13) and shall be deemed canceled and null and void and TCT No. T-72067 in the name of
Jaime C. Tan and Praxedes Valles Tan (Exh. A) be reinstated).
No pronouncement as to costs.
SO ORDERED. (Annex 'B', Petition; Emphasis added).'
From the above, the Magdangals appealed to this Court in CA-G.R. CV No. 33657.
In a decision promulgated on September 28, 1995, this Court, thru its then Special Third Division, affirmed in toto the
appealed decision of the lower court. Copy of this affirmatory judgment was each received by the Magdangals and Tan, Jr.
on October 5, 1995.
On March 13, 1996, the Clerk of this Court entered in the Book of Entries of Judgment the Decision in CA-G.R. CV No.
33657 and issued the corresponding Entry of Judgment which, on its face, stated that the said Decision 'has on October
21, 1995 become final and executory' (Annex 'L', Petition; Emphasis added).
On March 21, 1996, the Magdangals filed in the lower court a MOTION FOR CONSOLIDATION AND WRIT OF
POSSESSION, therein alleging that they did not appeal from the aforesaid decision of this Court, adding '[T]hat the
appealed judgment of the Court of Appeals has become final and executory 15 days from October 5, 1995 or up to October
20, 1995, which the 120 days redemption period commences. And noting that the redemption period has expired without
Tan, Jr. exercising his option, the Magdangals thus prayed that the title 'in the name of Jaime C. Tan and Praxedes Tan be
consolidated and confirmed in the name of the (Magdangals) x x x and pending such issuance, a writ of possession be
ordered issued (Annex "C", Petition).1âwphi1.nêt
In opposition to this motion (Annex 'F', Petition), Tan, Jr. alleged, among other things, that until an entry of judgment has
been issued by the Court of Appeals and copy thereof furnished the parties, the appealed decision of the court a quo in this
case cannot be considered final and executory. Pressing the point, Tan, Jr., citing Cueto vs. Collantes, infra., would then
assert that the period of redemption on his part commenced to run from receipt of entry of judgment in CA-G.R. CV No.
33657.
Meanwhile, Tan, Jr. via a motion for execution dated March 27, 1996, which he filed directly with this court, prayed this
court to direct the court a quo to issue the corresponding writ of execution in Civil Case No. 19049-88. In a related move,
Tan, Jr. filed on April 16, 1996, a MANIFESTATION AND MOTION therein advising the court a quo of his intention to
redeem the property in question and of the fact that, on such date, he has deposited with its clerk of court the repurchase
price, plus interest, as required by its original decision. By way of relief, Tan, Jr. prayed that the Magdangals be ordered to
claim the amount thus deposited and the Register of Deeds of Davao City, to reinstate the title of Jaime Tan and Praxedes
Tan.
Jointly acting on the aforementioned MOTON FOR CONSOLIDATION AND WRIT OF POSSESION of the Magdangals
(Annex 'C', Petition), MANIFESTATION AND MOTION of Tan, Jr. (Annex 'I', Petition), the court a quo presided by the
respondent judge, came out with the first challenged order of June 10, 1996 (Annex 'N', Petition) dispositively reading, as
follows:
'WHEREFORE, x x x the Motion for Consolidation and a Writ of Possession is hereby DENIED for lack of
merit.
The deposit of the amount of P116,032.00 made by plaintiff with the Office of Court x x x on April 17, 1996 is
hereby considered full payment of the redemption price and the Clerk of Court is hereby ordered to deliver
said amount to herein defendants.
The Register of Deeds of Davao City x x x is hereby directed to cancel TCT No. T-134470 in the name of
Jose Magdangal and Estrella Magdangal and, thereafter, to reinstate TCT No. 72067 in the name of Jaime C.
Tan and Praxedes Valles Tan and to submit her compliance thereto within ten (10) days from receipt of this
Order.
SO ORDERED.'
Explaining her action, the respondent judge wrote in the same order:
'Following the ruling of the Supreme Court in Cueto vs. Collantes, et al., 97 Phil. 325, the 120 days period for
plaintiff to pay the amount of P59,200.00 plus interest x x x should be reckoned from the date of Entry of
Judgment x x x which was March 13, 1996. The plaintiff made a deposit on April 17, 1996 well within the 120-
day period mandated by the decision of this Court.'
In due time, the Magdangals moved for a reconsideration. However, in her next assailed order of July 24, 1996 (Annex 'R',
Petition), the respondent judge denied the motion for being proforma and fatally defective."3
Petitioner assails the aforequoted Decision as follows:
"I. Petitioner's right to due process was violated when the Court of Appeals rendered a judgment on the merits of private
respondents' petition without granting to petitioner the opportunity to controvert the same.
II. Appeal not certiorari was the appropriate remedy of private respondents as there was no grave abuse of discretion as to
amount to lack of or excess of jurisdiction on the part of the trial judge. Neither is delay in resolving the main case a ground
for giving due course to the petition.
III. Cueto vs. Collantes, 97 Phil. 325, was disregarded by the Court of Appeals in resolving the petition of private
respondents. It is still good case law and was in effect made a part of section 2 of Rule 68 of the 1997 Rules of Civil
Procedure on Foreclosure of Mortgage.
IV. The St. Dominic vs. Intermediate Appellate Court, 138 SCRA 242 case is not applicable to the case at bar; on the other
hand the ruling in Gutierrez Hermanos vs. de La Riva, 46 Phil. 827, applies.
V. Equity considerations justify giving due course to this petition."4 (emphasis ours)
We will immediately resolve the key issue of what rule should govern the finality of judgment favorably obtained in the trial court by the
petitioner.
The operative facts show that in its Decision of June 4, 1991, the trial court held that: (1) the contract between the parties is not an
absolute sale but an equitable mortgage; and (2) petitioner Tan should pay to the respondents Magdangal "within 120 days after the
finality of this decision P59,200.00 plus interest at the rate of 12% per annum from May 2, 1988, the date the complaint was filed, until
paid."5
On September 28, 1995 in CA-G.R. CV No. 33657, the Special Third Division of the Court of Appeals affirmed the decision of the trial
court in toto. Both parties received the decision of the appellate court on October 5, 1995. On March 13, 1996, the clerk of court of the
appellate court entered in the Book of Entries of Judgement the decision in CA-G.R. CV No. 33657 and issued the corresponding Entry
of Judgment which, on its face, stated that the said decision "has on October 21, 1995 become final and executory."6
The respondents Magdangal filed in the trial court a Motion for Consolidation and Writ of Possession.7 They alleged that the 120-day
period of redemption of the petitioner has expired. They reckoned that the said period began 15 days after October 5, 1995, the date
when the finality of the judgment of the trial court as affirmed by the appellate court commenced to run.
On the other hand, petitioner filed on March 27, 1996 a motion for execution in the appellate court praying that it "direct the court a
quo to issue the corresponding writ of execution in Civil Case No. 19049-88."8 On April 17, 1996, petitioner deposited with the clerk of
court the repurchase price of the lot plus interest as ordered by the decision.
On June 10, 1996, the trial court allowed the petitioner to redeem the lot in question. It ruled that the 120-day redemption period should
be reckoned from the date of Entry of Judgment in the appellate court or from March 13, 1996.9 The redemption price was deposited on
April 17, 1996. As aforestated, the Court of Appeals set aside the ruling of the trial court.
From 1991-1996, the years relevant to the case at bar, the rule that governs finality of judgment is Rule 51 of the Revised Rules of
Court. Its sections 10 and 11 provide:
"SEC. 10. Entry of judgments and final resolutions. - If no appeal or motion for new trial or reconsideration is filed within the
time provided in these Rules, the judgment or final resolution shall forthwith be entered by the clerk in the book of entries of
judgments. The date when the judgment or final resolution becomes executory shall be deemed as the date of its entry.
The record shall contain the dispositive part of the judgment or final resolution and shall be signed by the clerk, with a
certificate that such judgment or final resolution has become final and executory. (2a, R36)
SEC. 11. Execution of judgment. - Except where the judgment or final order or resolution, or a portion thereof, is ordered to
be immediately executory, the motion for its execution may only be filed in the proper court after its entry.
In original actions in the Court of Appeals, its writ of execution shall be accompanied by a certified true copy of the entry of
judgment or final resolution and addressed to any appropriate officer for its enforcement.
In appealed cases, where the motion for execution pending appeal is filed in the Court of Appeals at a time that it is in
possession of the original record or the record on appeal, the resolution granting such motion shall be transmitted to the
lower court from which the case originated, together with a certified true copy of the judgment or final order to be executed,
with a directive for such court of origin to issue the proper writ for its enforcement."
This rule has been interpreted by this Court in Cueto vs. Collantes as follows:10
"The only error assigned by appellants refer to the finding of the lower court that plaintiff can still exercise his right of
redemption notwithstanding the expiration of the 90-day period fixed in the original decision and, therefore, defendants
should execute the deed of reconveyance required in said decision. Appellants contend that, the final judgment of the
Court of Appeals having been entered on July 8, 1953, the 90-day period for the exercise of the right of redemption has
 long expired, it appearing that plaintiff deposited the redemption money with the clerk of court only on October 17, 1953, or,
after the expiration of 101 days. Appellee brands this computation as erroneous, or one not in accordance with the
procedure prescribed by the rules of court.
Appellee's contention should be sustained. The original decision provides that appellee may exercise his right of
redemption within the period of 90 days from the date the judgment has become final. It should be noted that appellee had
appealed from this decision. This decision was affirmed by the court of appeals and final judgment was entered on July 8,
1953. Does this mean that the judgment became final on that date?
Let us make a little digression for purposes of clarification. Once a decision is rendered by the Court of Appeals a party
may appeal therefrom by certiorari by filing with the Supreme Court a petition within 10 days from the date of entry of such
decision (Section 1, Rule 46). The entry of judgment is made after it has become final, i.e., upon the expiration of 15 days
after notice thereof to the parties (Section 8, Rule 53, as modified by a resolution of the Supreme Court dated October 1,
1945). But, as Chief Justice Moran has said, 'such finality *** is subject to the aggrieved party's right of filing a petition for
certiorari under this section,' which means that 'the Court of Appeals shall remand the case to the lower court for the
execution of its judgment, only after the expiration of ten (10) days from the date of such judgment, if no petition for
certiorari is filed within that period.' (1 Moran, Comments on the Rules of Court, 1952 ed., p. 950) It would therefore appear
that the date of entry of judgment of the Court of Appeals is suspended when a petition for review is filed to await the
final entry of the resolution or decision of the Supreme Court.
Since in the present case appellee has filed a petition for review within the reglementary period, which was dismissed by
resolution of July 6, 1953, and for lack of a motion for reconsideration the entry of final judgment was made on August 7,
1953, it follows that the 90-day period within which appellee may exercise his right of redemption should be counted from
said date, August 7, 1953. And appellee having exercised such right on October 17, 1953 by depositing the redemption
money with the clerk of court, it is likewise clear that the motion be filed for the exercise of such right is well taken and is
within the purview of the decision of the lower court."11
On April 18, 1994, this Court issued Circular No. 24-94, viz:
"TO: COURT OF APPEALS, SANDIGANBAYAN, COURT OF TAX APPEALS, REGIONAL TRIAL COURTS,
METROPOLITAN TRIAL COURTS, MUNICIPAL TRIAL COURTS, MUNICIPAL CIRCUIT TRIAL COURTS,
AND ALL MEMBERS OF THE INTEGRATED BAR OF THE PHILIPPINES
SUBJECT: RESOLUTION OF THE COURT EN BANC APPROVING AND PROMULGATING THE REVISED
PROVISION ON EXECUTION OF JUDGMENTS. SPECIFICALLY IN APPEALED CASES, AND AMENDING
SECTION 1, RULE 39 OF THE RULES OF COURT
It appears that in a number of instances, the execution of judgments in appealed cases cannot be promptly enforced
because of undue administrative delay in the remand of the records to the court of origin, aggravated at times by
misplacement or misdelivery of said records. The Supreme Court Committee on the Revision of the Rules of Court has
drafted proposals including a provision which can remedy the procedural impasse created by said contingencies.
Accordingly, pending approval by the Court of the revised rules on Civil Procedure, and to provide a solution to the
aforestated problems, the Court Resolved to approve and promulgate the following section thereof on execution of
judgments, amending Section 1, Rule 39 of the Rules of Court:
Section 1. Execution upon judgments or final orders. - Execution shall issue as a matter of right, on motion, upon a
judgment or order that disposes of the action or proceeding upon expiration of the period to appeal therefrom if no appeal
has been duly perfected.
If the appeal has been duly perfected and finally resolved, such execution may forthwith be applied for in the lower court
from which the action originated, on motion of the judgment obligee, submitting therewith certified true copies of the
judgment or judgments or the final order or orders sought to be enforced and of the entry thereof, with notice to the
adverse party.
The appellate court may, on motion in the same case, when the interest of justice so requires, direct the court of origin to
issue the writ of execution.
This resolution shall be published in two (2) newspapers of general circulation and shall take effect on June 1, 1994.
April 18, 1994.
"(Sgd.) ANDRES R. NARVASA
Chief Justice"
The Circular took effect on June 1, 1994.
The 1997 Revised Rules of Civil Procedure, however, amended the rule on finality of judgment by providing in section 1, Rule 39 as
follows:
"Section 1. Execution upon judgments or final orders. - Execution shall issue as a matter of right, on motion, upon a
judgment or order that disposes of the action or proceeding upon the expiration of the period to appeal therefrom if no
appeal has been duly perfected. (1a)
If the appeal has been duly perfected and finally resolved, the execution may forthwith be applied for in the court of origin,
on motion of the judgment obligee, submitting therewith certified true copies of the judgment or judgments or final order or
orders sought to be enforced and of the entry thereof, with notice to the adverse party.
The appellate court may, on motion in the same case, when the interest of justice so requires, direct the court of origin to
issue the writ of execution."
The rationale of the new rule is explained by retired Justice F.D. Regalado as follows:12
"1. The term 'final order' is used in two senses depending on whether it is used on the issue of appealability or on the issue
of binding effect. For purposes of appeal, an order is "final" if it disposes of the action, as distinguished from an
interlocutory order which leaves something to be done in the trial court with respect to the merits of the case (De la Cruz, et
al. vs. Paras, et al., L-41053, Feb. 27, 1976). For purposes of binding effect or whether it can be subject of execution, an
order is 'final' or executory after the lapse of the reglementary period to appeal and no appeal has been perfected
(see Perez, et al. vs. Zulueta, L-10374, Sept. 30, 1959; cf. Denso [Phil.], Inc. vs. IAC, et al., G.R. No. 75000, Feb. 27,
1987; Montilla vs. CA, et al., L-47968, May 9, 1988).
2. On the aspect of appealability, these revised Rules use the adjective 'final' with respect to orders and resolutions, since
to terminate a case the trial courts issue orders while the appellate courts and most of the quasi-judicial agencies issue
resolutions. Judgment are not so qualified since the use of the so-called interlocutory judgments is not favored in this
jurisdiction, while the categorization of an order or a resolution for purposes of denoting that it is appealable is to
distinguish them from interlocutory orders or resolutions. However, by force of extended usage the phrase 'final and
executory judgment' is sometimes used and tolerated, although the use of 'executory' alone would suffice. These
observations also apply to the several and separate judgments contemplated in Rule 36, or partial judgments which totally
dispose of a particular claim or severable part of the case, subject to the power of the court to suspend or defer action on
an appeal from or further proceedings in such special judgment, or as provided by Rule 35 on the matter of partial
summary judgments which are not considered as appealable (see Sec. 4, Rule 35 and the explanation therein).
The second paragraph of this section is an innovation in response to complaints over the delay caused by the former
procedure in obtaining a writ of execution of a judgment, which has already been affirmed on appeal, with notice to the
parties. As things then stood, after the entry of judgment in the appellate court, the prevailing party had to wait for the
records of the case to be remanded to the court of origin when and where he could then move for the issuance of a writ of
execution. The intervening time could sometimes be substantial, especially if the court a quo is in a remote province, and
could also be availed of by the losing party to delay or thwart actual execution.
On these considerations, the Supreme Court issued Circular No. 24-94, dated April 18, 1994, approving and promulgating
in advance this amended Section 1 of Rule 39 and declaring the same effective as of June 1, 1994.
Under the present procedure, the prevailing party can secure certified true copies of the judgment or final order of the
appellate court and the entry thereof, and submit the same to the court of origin with and to justify his motion for a writ of
execution, without waiting for its receipt of the records from the appellate court. That motion must be with notice to the
adverse party, with a hearing when the circumstances so require, to enable him to file any objection thereto or bring to the
attention of said court matters which may have transpired during the pendency of the appeal and which may have a
bearing on the execution sought to enforce the judgment.
The third paragraph of this section, likewise a new provision, is due to the experience of the appellate courts wherein the
trial court, for reasons of its own or other unjustifiable circumstances, unduly delays or unreasonably refuses to act on the
motion for execution or issue the writ therefor. On motion in the same case while the records are still with the appellate
court, or even after the same have been remanded to the lower court, the appellate court can direct the issuance of the writ
of execution since such act is merely in the enforcement of its judgment and which it has the power to require."
It is evident that if we apply the old rule on finality of judgment, petitioner redeemed the subject property within the 120-day period of
redemption reckoned from the appellate court's entry of judgment. The appellate court, however, did not apply the old rule but the 1997
Revised Rules of Civil Procedure. In fine, it applied the new rule retroactively and we hold that given the facts of the case at bar this is
an error.
There is no dispute that rules of procedure can be given retroactive effect. This general rule, however, has well-delineated exceptions.
We quote author Agpalo:13
"9.17. Procedural laws.
Procedural laws are adjective laws which prescribe rules and forms of procedure of enforcing rights or obtaining redress for
their invasion; they refer to rules of procedure by which courts applying laws of all kinds can properly administer justice.
They include rules of pleadings, practice and evidence. As applied to criminal law, they provide or regulate the steps by
which one who commits a crime is to be punished.
The general rule that statutes are prospective and not retroactive does not ordinarily apply to procedural laws. It has been
held that "a retroactive law, in a legal sense, is one which takes away or impairs vested rights acquired under laws, or
creates a new obligation and imposes a new duty, or attaches a new disability, in respect of transactions or considerations
already past. Hence, remedial statutes or statutes relating to remedies or modes of procedure, which do not create new or
take away vested rights, but only operate in furtherance of the remedy or confirmation of rights already existing, do not
come within the legal conception of a retroactive law, or the general rule against the retroactive operation of statutes." The
general rule against giving statutes retroactive operation whose effect is to impair the obligations of contract or to disturb
vested rights does not prevent the application of statutes to proceedings pending at the time of their enactment where they
neither create new nor take away vested rights. A new statute which deals with procedure only is presumptively applicable
to all actions - those which have accrued or are pending.
Statutes regulating the procedure of the courts will be construed as applicable to actions pending and undetermined at the
time of their passage. Procedural laws are retroactive in that sense and to that extent. The fact that procedural statutes
may somehow affect the litigants' rights may not preclude their retroactive application to pending actions. The retroactive
application of procedural laws is not violative of any right of a person who may feel that he is adversely affected. Nor is the
retroactive application of procedural statutes constitutionally objectionable. The reason is that as a general rule no vested
right may attach to, nor arise from, procedural laws. It has been held that "a person has no vested right in any particular
remedy, and a litigant cannot insist on the application to the trial of his case, whether civil or criminal, of any other than the
existing rules of procedure."
Thus, the provision of Batas Bilang 129 in Section 39 thereof prescribing that "no record on appeal shall be required to
take an appeal" is procedural in nature and should therefore be applied retroactively to pending actions. Hence, the
question as to whether an appeal from an adverse judgment should be dismissed for failure of appellant to file a record on
 appeal within thirty days as required under the old rules, which question is pending resolution at the time Batas Bilang 129
took effect, became academic upon the effectivity of said law because the law no longer requires the filing of a record on
appeal and its retroactive application removed the legal obstacle to giving due course to the appeal. A statute which
transfers the jurisdiction to try certain cases from a court to a quasi-judicial tribunal is a remedial statute that is applicable
to claims that accrued before its enactment but formulated and filed after it took effect, for it does not create new nor take
away vested rights. The court that has jurisdiction over a claim at the time it accrued cannot validly try the claim where at
the time the claim is formulated and filed the jurisdiction to try it has been transferred by law to a quasi-judicial tribunal, for
even actions pending in one court may be validly taken away and transferred to another and no litigant can acquire a
vested right to be heard by one particular court.
9.18. Exceptions to the rule.
The rule that procedural laws are applicable to pending actions or proceedings admits certain exceptions. The rule does
not apply where the statute itself expressly or by necessary implication provides that pending actions are excepted from its
operation, or where to apply it to pending proceedings would impair vested rights. Under appropriate circumstances, courts
may deny the retroactive application of procedural laws in the event that to do so would not be feasible or would work
injustice. Nor may procedural laws be applied retroactively to pending actions if to do so would involve intricate problems of
due process or impair the independence of the courts."
We hold that section 1, Rule 39 of the 1997 Revised Rules of Procedure should not be given retroactive effect in this case as it would
result in great injustice to the petitioner. Undoubtedly, petitioner has the right to redeem the subject lot and this right is a substantive
right. Petitioner followed the procedural rule then existing as well as the decisions of this Court governing the reckoning date of the
period of redemption when he redeemed the subject lot. Unfortunately for petitioner, the rule was changed by the 1997 Revised Rules of
Procedure which if applied retroactively would result in his losing the right to redeem the subject lot. It is difficult to reconcile the
retroactive application of this procedural rule with the rule of fairness. Petitioner cannot be penalized with the loss of the subject lot when
he faithfully followed the laws and the rule on the period of redemption when he made the redemption. The subject lot may only be
34,829 square meters but as petitioner claims, "it is the only property left behind by their father, a private law practitioner who was felled
by an assassin's bullet."14
Petitioner fought to recover this lot from 1988. To lose it because of a change of procedure on the date of reckoning of the period of
redemption is inequitous. The manner of exercising the right cannot be changed and the change applied retroactively if to do so will
defeat the right of redemption of the petitioner which is already vested.
IN VIEW WHEREOF, the decision of the Court of Appeals dated July 15, 1998 and its Resolution dated November 9, 1998 in CA-G.R.
SP-41738 are annulled and set aside. The Orders dated June 10, 1996 and July 24, 1996 of the RTC of Davao City, 11th Judicial
Region, Branch 11, in Civil Case No. 19049-88 are reinstated. No costs.
SO ORDERED.
G.R. No. 190809
DE LA SALLE ARANETA UNIVERSITY, Petitioner
vs.
JUANITO c. BERNARDO, Respondent
DECISION
LEONARDO-DE CASTRO, J.:
Before Us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court filed by De La Salle-Araneta University (DLS-AU)
seeking the annulment and reversal of the Decision1 dated June 29, 2009 and Resolution2dated January 4, 2010 of the Court of Appeals
in CA-G.R. SP No. 106399, which affirmed in toto the Decision3 of the National Labor Relations Commission (NLRC) in NLRC NCR CA
No. 043416-05. The NLRC reversed and set aside the Labor Arbiter's Decision4 dated December 13, 2004 in NLRC NCR Case No. 00-
02-02729-04 and found that respondent Juanito C. Bernardo (Bernardo) was entitled to retirement benefits.
On February 26, 2004, Bernardo filed a complaint against DLS-AU and its owner/manager, Dr. Oscar Bautista (Dr. Bautista), for the
payment of retirement benefits. Bernardo alleged that he started working as a part-time professional lecturer at DLS-AU (formerly known
as the Araneta University Foundation) on June 1, 1974 for an hourly rate of ₱20.00. Bernardo taught for two semesters and the summer
for the school year 1974-1975. Bernardo then took a leave of absence from June 1, 197 5 to October 31, 1977 when he was assigned
by the Philippine Government to work in Papua New Guinea. When Bernardo came back in 1977, he resumed teaching at DLS-AU until
October '12, 2003, the end of the first semester for school year 2003-2004. Bernardo's teaching contract was renewed at the start of
every semester and summer. However, on November 8, 2003, DLS-AU informed Bernardo through a telephone call that he could not
teach at the school anymore as the school was implementing the retirement age limit for its faculty members. As he was already 75
years old, Bernardo had no choice but to retire. At the time of his retirement, Bernardo was being paid ₱246.50 per hour.5
Bernardo immediately sought advice from the Department of Labor and Employment (DOLE) regarding his entitlement to retirement
benefits after 27 years of employment. In letters dated January 20, 20046 and February 3, 2004,7 the DOLE, through its Public
Assistance Center and Legal Service Office, opined that Bernardo was entitled to receive benefits under Republic Act No. 7641,
otherwise known as the "New Retirement Law," and its Implementing Rules and Regulations.
Yet, Dr. Bautista, in a letter8 dated February 12, 2004, stated that Bernardo was not entitled to any kind of separation pay or benefits. Dr.
Bautista explained to Bernardo that as mandated by the DLS-AU's policy and Collective Bargaining Agreement (CBA), only full-time
permanent faculty of DLS-AU for at least five years immediately preceeding the termination of their employment could avail themselves
of the postemployment benefits. As part-time faculty member, Bernardo did not acquire permanent employment under the Manual of
Regulations for Private Schools, in relation to the Labor Code, regardless of his length of service.
Aggrieved by the repeated denials of his claim for retirement benefits, Bernardo filed before the NLRC, National Capital Region, a
complaint for non-payment of retirement benefits and damages against DLS-AU and Dr. Bautista.
DLS-AU and Dr. Bautista averred that DLS-AU is a non-stock, non-profit educational institution duly organized under Philippine laws,
and Dr. Bautista was then its Executive Vice-President. DLS-AU and Dr. Bautista countered that Bernardo was hired as a part-time
lecturer at the Graduate School of DLS-AU to teach Recent Advances in Animal Nutrition for the first semester of school year 2003-
2004. As stated in the Contract for Part-Time Faculty Member Semestral, Bernardo bound himself to teach "for the period of one
semester beginning June 9, 2003 to October 12, 2003." The contract also provided that "this Contract shall automatically expire unless
expressly renewed in writing."9 Prior contracts entered into between Bernardo and DLS-AU essentially contained the same provisions.
On November 8, 2003, DLS-AU informed Bernardo that his contract would no longer be renewed. DLS-AU and Dr. Bautista were
surprised when they received a letter from Bernardo on February 18, 2004 claiming retirement benefits and Summons dated February
26, 2004 from the NLRC in relation to Bernardo's complaint.10
DLS-AU and Dr. Bautista maintained that Bernardo, as a part-time employee, was not entitled to retirement benefits. The contract
between DLS-AU and Bernardo was for a fixed term, i.e., one semester. Contracts of employment for a fixed term are not proscribed by
law, provided that they had been entered into by the parties without any force, duress, or improper pressure being brought to bear upon
the employee and absent any other circumstance vitiating consent. That DLS-AU no longer renewed Bernardo's contract did not
necessarily mean that Bernardo should be deemed retired from service.
DLS-AU and Dr. Bautista also contended that Bernardo, as a part-time employee, was not entitled to retirement benefits pursuant to any
retirement plan, CBA, or employment contract. Neither was DLS-AU mandated by law to pay Bernardo retirement benefits. The
compulsory retirement age under Article 302 [287] of the Labor Code, as amended, is 65 years old. When the employee reaches said
age, his/her employment is deemed terminated. The matter of extension of the employee's service is addressed to the sound discretion
of the employer; it is a privilege only the employer can grant. In this case, Bernardo was effectively separated from the service upon
reaching the age of 65 years old. DLS-AU merely granted Bernardo the privilege to teach by engaging his services for several more
years after reaching the compulsory retirement age. Assuming arguendo that Bernardo was entitled to retirement benefits, he should
have claimed the same upon reaching the age of 65 years old. Under Article 291 of the Labor Code, as amended, all money claims
arising from employer-employee relations shall be filed within three years from the time the cause of action accrues.
Still according to DLS-AU and Dr. Bautista, Bernardo had no cause of action against Dr. Bautista because the latter was only acting on
behalf of DLS-AU as its Executive Vice-President. It is a well-settled rule that a corporation is a juridical entity with a legal personality
separate and distinct from the people comprising it and those acting for and on its behalf. There was no showing that Dr. Bautista acted
deliberately or maliciously in refusing to pay Bernardo his retirement benefits, so as to make Dr. Bautista personally liable for any
corporate obligations of DLS-AU to Bernardo.
Finally, DLS-AU asserted that Bernardo failed to establish the factual and legal bases for his claims for actual, moral, and exemplary
damages, and attorney's fees. There was no proof of the alleged value of the profits or any other loss suffered by Bernardo because of
the non-payment of his retirement benefits. There was likewise no evidence of bad faith or fraud on the part of DLS-AU in refusing to
grant Bernardo retirement benefits.
On December 13, 2004, the Labor Arbiter rendered its Decision dismissing Bernardo's complaint on the ground of prescription, thus:
[T]he age of sixty-five (65) is declared as the compulsory retirement age under Article 287 of the Labor Code, as amended. When the
compulsory retirement age is reached by an employee or official, he is thereby effectively separated from the service (UST Faculty
Union v. National Labor Relations Commission, University of Santo Tomas, G.R. No. 89885, August 6, 1990). As mentioned earlier,
[Bernardo] is already seventy-five (75) years old, and is way past the compulsory retirement age. If he were indeed entitled to receive
his retirement pay/benefits, he should have claimed the same ten (10) years ago upon reaching the age of sixty-five (65).
In this connection, it would be worthy to mention that the Labor Code contains a specific provision that deals with money claims arising
out of employer-employee relationships. Article 291 of the Labor Code as amended clearly provides:
"ART 291. MONEY CLAIMS. - All money claims arising from employer-employee relations accruing during the effectivity of this Code
shall be filed within three (3) years from the time the cause of action accrued; otherwise they shall forever be barred.
xxxx
The prescriptive period referred to in Article 291 of the Labor Code, as amended applies to all kinds of money claims arising from
employer-employee relations including claims for retirement benefits.
The ruling of the Supreme Court in De Guzman v. Court of Appeals, (G.R. No. 132257, October 12, 1998), squarely applies to the
instant case:
"The language of Article 291 of the Labor Code does not limit its application only to "money claims specifically recoverable under said
Code, " but covers all money claims arising from employer-employee relations. Since petitioners' demand for unpaid
retirement/separation benefits is a money claim arising from their employment by private respondent, Article 291 of the Labor Code is
applicable. Therefore, petitioners' claim should be filed within three years from the time their cause of action accrued, or forever barred
by prescription. "
It cannot be denied that the claim for retirement benefits/pay arose out of employer-employee relations. In line with the decision of the
Supreme Court in De Guzman, it should be treated as a money claim that must be claimed within three years from the time the cause of
action accrued.
Thus, upon reaching the compulsory retirement age of sixty-five (65), [Bernardo] was effectively separated from the service. Clearly,
such was the time when his cause of action accrued. He should have sought the payment of such benefits/pay within three (3) years
from such time. It cannot be denied that [Bernardo] belatedly sought the payment of his retirement benefits/pay considering that he filed
the instant Complaint only ten (10) years after his cause of action accrued. For failure to claim the retirement benefits/pay to which he
claims to be entitled within three (3) years from the time he reached the age of sixty-five (65), his claim should be forever barred.11
The Labor Arbiter decreed:
WHEREFORE, premises considered, judgment is hereby rendered DISMISSING the instant Complaint on the ground that the claim for
retirement benefits/pay is already barred by prescription.12
Bernardo appealed the foregoing Labor Arbiter's Decision to the NLRC, arguing that since he continuously worked for DLS-AU and Dr.
Bautista until October 12, 2003, he was considered retired and the cause of action for his retirement benefits accrued only on said date.
There was clearly an agreement between Bernardo and DLS-AU that the former would continue teaching even after reaching the
compulsory retirement age of 65 years. In addition, under Republic Act No. 7641, part-time workers are entitled to retirement pay of one-
half month salary for every years of service, provided that the following conditions are present: (a) there is no retirement plan between
the employer and employees; (b) the employee has reached the age of 60 years old for optional retirement or 65 years old for
compulsory retirement; and (c) the employee should have rendered at least five years of service with the employer. Bernardo avowed
that all these conditions were extant in his case.
The NLRC, in its Decision dated June 30, 2008, reversed the Labor Arbiter's ruling and found that Bernardo timely filed his complaint for
retirement benefits. The NLRC pointed out that DLS-AU and Dr. Bautista, knowing fully well that Bernardo already reached the
compulsory age of retirement of 65 years old, still extended Bernardo's employment. Thus, Bernardo's cause of action for payment of
his retirement benefits accrued only on November 8, 2003, when he was informed by DLS-AU that his contract would no longer be
renewed and he was deemed separated from employment. The principle of estoppel was also applicable against DLS-AU and Dr.
Bautista who could not validly claim prescription when they were the ones who permitted Bernardo to work beyond retirement age. As to
Bernardo's entitlement to retirement benefits, the NLRC held:
Equally untenable is the contention that [Bernardo], being a part time employee, is not entitled to retirement benefits under Republic Act
No. 7641. Indeed, a perusal of the retirement law does not exclude a part time employee from enjoying retirement benefits. On this
score, Republic Act No. 7641 explicitly provides as within its coverage "all employees in the private sector, regardless of their position,
designation, or status, and irrespective of the method by which their wages are paid" (Section 1, Rules Implementing the New
Retirement Law) (Underlined for emphasis). The only exceptions are employees covered by the Civil Service Law; domestic helpers and
persons in the personal service of another; and employees in retail, service and agricultural establishments or operations regularly
employing not more than ten employees (ibid). Clearly, [Bernardo] does not fall under any of the exceptions.
Lastly, it is axiomatic that retirement law should be construed liberally in favor of the employee, and all doubts as to the intent of the laws
should be resolved in favor of the retiree to achieve its humanitarian purpose (Re: Gregorio G. Pineda, 187 SCRA 469, 1990). A
contrary ruling would inevitably defy such settled rule.13
In the end, the NLRC adjudged:
WHEREFORE, judgment is hereby rendered REVERSING and SETTING ASIDE the appealed decision of the Labor Arbiter.
Accordingly, a new one is issued finding [Bernardo] entitled to retirement benefits under Republic Act No. 7641 and ordering [DLS-AU
and Dr. Bautista] to pay [Bernardo] his retirement benefits equivalent to at least one-half (1/2) month of his latest salary for every year of
his service. Other claims are hereby denied for lack of merit.14
In a Resolution dated September 15, 2008, the NLRC denied the Motion for Reconsideration of DLS-AU and Dr. Bautista for lack of
merit.
DLS-AU filed before the Court of Appeals a Petition for Certiorari and Prohibition, imputing grave abuse of discretion on the part of the
NLRC for (1) holding that Bernardo was entitled to retirement benefits despite the fact that he was a mere part-time employee; and (2)
not holding that Bernardo's claim for retirement benefits was barred by prescription.
The Court of Appeals promulgated its Decision on June 29, 2009, affirming in toto the NLRC judgment. The Court of Appeals ruled that
the coverage of, as well as the exclusion from, Republic Act No. 7641 are clearly delineated under Sections 1 and 2 of the Implementing
Rules of Book VI, Rule II of the Labor Code, as well as the Labor Advisory on Retirement Pay Law; and part-time employees are not
among those excluded from enjoying retirement benefits. Labor and social laws, being remedial in character, should be liberally
construed in order to further their purpose. The appellate court also declared that the NLRC did not err in relying on the Implementing
Rules of Republic Act No. 7641 because administrative rules and regulations issued by a competent authority remain valid unless
shown to contravene the Constitution or used to enlarge the power of the administrative agency beyond the scope intended.
The Court of Appeals additionally determined that Bernardo's cause of action accrued only upon his separation from employment and
the subsequent denial of his demand for retirement benefits. To the appellate court, the NLRC was correct in applying the equitable
doctrine of estoppel since the continuous extension of Bernardo's employment, despite him being well over the statutory compulsory
age of retirement, prevented him from already claiming his retirement benefits for he was under the impression that he could avail
himself of the same eventually upon the termination of his employment.
The dispositive portion of the Decision of the Court of Appeals reads:
WHEREFORE, the petition is DISMISSED for lack of merit. The assailed Decision of the National Labor Relations Commission, dated
30 June 2008, is hereby AFFIRMED in toto. [Bernardo's] application for the issuance of a Temporary Restraining Order and/or Writ of
Preliminary Injunction is accordingly DENIED.15
The Motion for Reconsideration of DLS-AU was denied by the Court of Appeals in its Resolution dated January 4, 2010.
Hence, DLS-AU lodged the present petition before us, raising the following issues:
I As a part-time employee with fixed-term
WHETHER OR NOT PART-TIME EMPLOYEES ARE EXCLUDED FROM THE COVERAGE OF THOSE ENTITLED TO RETIREMENT
BENEFITS UNDER REPUBLIC ACT NO. [7641].
II.
WHETHER OR NOT A CLAIM FOR RETIREMENT BENEFITS FILED BEYOND THE PERIOD PROVIDED FOR UNDER ART. 291 OF
THE LABOR CODE HAS PRESCRIBED.16
We find the instant petition bereft of merit.
Bernardo is not questioning the
termination of his employment, but
only asserting his right to retirement
benefits.
There is no dispute that Bernardo was a part-time lecturer at DLS-AU, with a fixed-term employment. As a part-time lecturer, Bernardo
did not attain permanent status. Section 93 of the 1992 Manual of Regulations for Private Schools provided:
Sec. 93. Regular or Permanent Status. - Those who have served the probationary period shall be made regular or permanent. Full-time
teachers who have satisfactorily completed their probationary period shall be considered regular or permanent.
Per Section 92 of the same Regulations, probationary period for academic personnel "shall not be more than three (3) consecutive
years of satisfactory service for those in the elementary and secondary levels, six (6) consecutive regular semesters of satisfactory
service for those in the tertiary level, and nine (9) consecutive trimesters of satisfactory service for those in the tertiary level where
collegiate courses are offered on the trimester basis."
Thus, jurisprudence identified the requisites which should concur for a private school teacher to acquire permanent status, viz.: (1) the
teacher is a full-time teacher; (2) the teacher must have rendered three consecutive years of service; and (3) such service must have
been satisfactory.17
Considering the foregoing requirements, a part-time employee would not attain permanent status no matter how long he had served the
school.18 Bernardo did not become a permanent employee of DLS-AU despite teaching there as a part-time lecturer for a total of 27
years.
Our jurisprudence had likewise settled the legitimacy of fixed-term employment. In the landmark case of Brent School, Inc. v.
Zamora,19 the Court pronounced:
From the premise - that the duties of an employee entail "activities which are usually necessary or desirable in the usual business or
trade of the employer" - the conclusion does not necessarily follow that the employer and employee should be forbidden to stipulate any
period of time for the performance of those activities. There is nothing essentially contradictory between a definite period of an
employment contract and the nature of the employee's duties set down in that contract as being "usually necessary or desirable in the
usual business or trade of the employer." The concept of the employee's duties as being "usually necessary or desirable in the usual
business or trade of the employer" is not synonymous with or identical to employment with a fixed term. Logically, the decisive
determinant in the term employment should not be the activities that the employee is called upon to perform, but the day certain agreed
upon by the parties for the commencement and termination of their employment relationship, a day certain being understood to be "that
which must necessarily come, although it may not be known when." Seasonal employment, and employment for a particular project are
merely instances of employment in which a period, where not expressly set down, is necessarily implied.
xxxx
Accordingly, and since the entire purpose behind the development of legislation culminating in the present Article 280 of the Labor Code
clearly appears to have been, as already observed, to prevent circumvention of the employee's right to be secure in his tenure, the
clause in said article indiscriminately and completely ruling out all written or oral agreements conflicting with the concept of regular
employment as defined therein should be construed to refer to the substantive evil that the Code itself has singled out: agreements
entered into precisely to circumvent security of tenure. It should have no application to instances where a fixed period of employment
was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon
the employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the employer and
employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the
latter. Unless thus limited in its purview, the law would be made to apply to purposes other than those explicitly stated by its framers; it
thus becomes pointless and arbitrary, unjust in its effects and apt to lead to absurd and unintended consequences.
Such interpretation puts the seal on [Bibiso v. Victorias Milling Co., Inc.]upon the effect of the expiry of an agreed period of employment
as still good rule - a rule reaffirmed in the recent case of Escudero v. Office of the President (G.R. No. 57822, April 26, 1989) where, in
the fairly analogous case of a teacher being served by her school a notice of termination following the expiration of the last of three
successive fixedterm employment contracts, the Court held:
"Reyes' (the teacher's) argument is not persuasive. It loses sight of the fact that her employment was probationary, contractual in nature,
and one with a definitive period. At the expiration of the period stipulated in the contract, her appointment was deemed terminated and
the letter informing her of the non-renewal of her contract is not a condition sine qua non before Reyes may be deemed to have ceased
in the employ of petitioner UST. The notice is a mere reminder that Reyes' contract of employment was due to expire and that the
contract would no longer be renewed. It is not a letter of termination. The interpretation that the notice is only a reminder is consistent
with the court's finding in Labajo, supra. x xx."
Bernardo's employment with DLS-AU had always been for a fixed-term, i.e., for a semester or summer. Absent allegation and proof to
the contrary, Bernardo entered into such contracts of employment with DLS-AU knowingly and voluntarily. Hence, Bernardo's contracts
of employment with DLS-AU for a fixed term were valid, legal, and binding. Bernardo's last contract of employment with DLS-AU ended
on October 12, 2003, upon the close of the first semester for school year 2003-2004, without DLS-AU offering him another contract for
the succeeding semester.
Nonetheless, that Bernardo was a part-time employee and his employment was for a fixed period are immaterial in this case. Bernardo
is not alleging illegal dismissal nor claiming separation pay. Bernardo is asserting his right to retirement benefits given the termination of
his employment with DLS-AU when he was already 75 years old.
employment, Bernardo is
entitled to retirement benefits.
The Court declared in Aquino v. National Labor Relations Commission20 that retirement benefits are intended to help the employee enjoy
the remaining years of his life, lessening the burden of worrying for his financial support, and are a form of reward for his loyalty and
service to the employer. Retirement benefits, where not mandated by law, may be granted by agreement of the employees and their
employer or as a voluntary act on the part of the employer.
In the present case, DLS-AU, through Dr. Bautista, denied Bernardo's claim for retirement benefits because only full-time permanent
faculty of DLS-AU are entitled to said benefits pursuant to university policy and the CBA. Since Bernardo has not been granted
retirement benefits under any agreement with or by voluntary act of DLS-AU, the next question then is, can Bernardo claim retirement
benefits by mandate of any law?
We answer in the affirmative.
Republic Act No. 7641 is a curative social legislation. It precisely intends to give the minimum retirement benefits to employees not
entitled to the same under collective bargaining and other agreements. It also applies to establishments with existing collective
bargaining or other agreements or voluntary retirement plans whose benefits are Jess than those prescribed in said law.21
Article 302 [287] of the Labor Code, as amended by Republic Act No. 7641, reads:
Art. 302 [287]. Retirement. -Any employee may be retired upon reaching the retirement ageestablished in the collective bargaining
agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing Jaws and
any collective bargaining agreement and other agreements: Provided however, That an employee's retirement benefits under any
collective bargaining and other agreement shall not be less than those provided herein.
In the absence of retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon
reaching the age of sixty (60) years or more, but not beyond sixty five (65) years which is hereby declared the compulsory retirement
age, who has served at least five (5) years in said establishment, may retire and shall be entitled to retirement pay equivalent to at least
one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the term one-half month salary shall mean fifteen (15) days plus one twelfth (1/12) of
the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves.
xxxx
Retail, service and agricultural establishments or operations employing not more than ten (10) employees or workers are
exempted from the coverage of this provision.
Violation of this provision is hereby declared unlawful and subject to the penal provisions provided under Article 288 of this Code.
(Emphases ours.)
Book VI, Rule II of the Rules Implementing the Labor Code clearly describes the coverage of Republic Act No. 7641 and specifically
identifies the exemptions from the same, to wit:
Sec. 1. General Statement on Coverage. - This Rule shall apply to all employees in the private sector, regardless of their position,
designation or status and irrespective of the method by which their wages are paid, except to those specifically exempted
under Section 2 hereof. As used herein, the term "Act" shall refer to Republic Act No. 7641, which took effect on January 7, 1993.
Section 2. Exemptions. - This Rule shall not apply to the following employees:
2.1 Employees of the National Government and its political subdivisions, including Government-owned and/or controlled
corporations, if they are covered by the Civil Service Law and its regulations.
2.2 Domestic helpers and persons in the personal service of another. (Deleted by Department Order No. 20 issued by Secretary Ma.
Nieves R. Confessor on May 31, 1994.)
2.3. Employees of retail, service and agricultural establishments or operations regularly employing not more than ten (10)
employees. As used in this sub-section:
(a) "Retail establishment" is one principally engaged in the sale of goods to end-users for personal or household use. It shall lose its
retail character qualified for exemption if it is engaged in both retail and wholesale of goods.
(b) "Service establishment" is one principally engaged in the sale of service to individuals for their own or household use and is
generally recognized as such.
(c) "Agricultural establishment/operation" refers to an employer which is engaged in agriculture. This term refers to all farming activities
in all its branches and includes, among others, the cultivation and tillage of the soil, production, cultivation, growing and harvesting of
any agricultural or horticultural commodities, dairying, raising of livestock or poultry, the culture of fish and other aquatic products in
farms or ponds, and any activities performed by a farmer or on a farm as an incident to or in conjunctions with such farming operations,
but does not include the manufacture and/or processing of sugar, coconut, abaca, tobacco, pineapple, aquatic or other farm products.
(Emphases ours.)
Through a Labor Advisory dated October 24, 1996, then Secretary of Labor, and later Supreme Court Justice, Leonardo A. Quisumbing
(Secretary Quisumbing), provided Guidelines for the Effective Implementation of Republic Act No. 7641, The Retirement Pay Law,
addressed to all employers in the private sector. Pertinent portions of said Labor Advisory are reproduced below:
A. COVERAGE
RA 7641 or the Retirement Pay Law shall apply to all employees in the private sector, regardless of their position, designation or status
and irrespective of the method by which their wages are paid. They shall include part-time employees, employees of service and
other job contractors and domestic helpers or persons in the personal service of another.
The law does not cover employees of retail, service and agricultural establishments or operations employing not more than [ten] (10)
employees or workers and employees of the National Government and its political subdivisions, including Government-owned and/or
controlled corporations, if they are covered by the Civil Service Law and its regulations.
xxxx
C. SUBSTITUTE RETIREMENT PLAN
Qualified workers shall be entitled to the retirement benefit under RA 7641 in the absence of any individual or collective agreement,
company policy or practice. x x x (Emphasis ours.)
Republic Act No. 7641 states that "any employee may be retired upon reaching the retirement age x x x;" and "[i]n case of retirement,
the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective
bargaining agreement and other agreements." The Implementing Rules provide that Republic Act No. 7641 applies to "all employees in
the private sector, regardless of their position, designation or status and irrespective of the method by which their wages are paid,
except to those specifically exempted x x x." And Secretary Quisumbing' s Labor Advisory further clarifies that the employees covered
by Republic Act No. 7641 shall "include part-time employees, employees of service and other job contractors and domestic helpers or
persons in the personal service of another."
The only exemptions specifically identified by Republic Act No. 7641 and its Implementing Rules are: (1) employees of the National
Government and its political subdivisions, including government-owned and/or controlled corporations, if they are covered by the Civil
Service Law and its regulations; and (2) employees of retail, service and agricultural establishments or operations regularly employing
not more than 10 employees.
Based on Republic Act No. 7641, its Implementing Rules, and Secretary Quisumbing's Labor Advisory, Bernardo, as a part-time
employee of DLS-AU, is entitled to retirement benefits. The general coverage of Republic Act No. 7641 is broad enough to encompass
all private sector employees, and part-time employees are not among those specifically exempted from the law. The provisions of
Republic Act No. 7641 and its Implementing Rules are plain, direct, unambiguous, and need no further elucidation. Any doubt is
dispelled by the unequivocal statement in Secretary Quisumbing's Labor Advisory that Republic Act No. 7641 applies to even part-time
employees.
Under the rule of statutory construction of expressio unius est exclusio alterius, Bernardo's claim for retirement benefits cannot be
denied on the ground that he was a part-time employee as part-time employees are not among those specifically exempted under
Republic Act No. 7641 or its Implementing Rules. Said rule of statutory construction is explained thus:
It is a settled rule of statutory construction that the express mention of one person, thing, or consequence implies the exclusion of all
others. The rule is expressed in the familiar maxim, expressio unius est exclusio alterius.
The rule of expressio unius est exclusio alterius is formulated in a number of ways. One variation of the rule is the principle that what is
expressed puts an end to that which is implied. Expressum facit cessare taciturn. Thus, where a statute, by its terms, is expressly limited
to certain matters, it may not, by interpretation or construction, be extended to other matters.
xxxx
The rule of expressio unius est exclusio alterius and its variations are canons of restrictive interpretation. They are based on the rules of
logic and the natural workings of the human mind. They are predicated upon one's own voluntary act and not upon that of others. They
proceed from the premise that the legislature would not have made specified enumeration in a statute had the intention been not to
restrict its meaning and confine its terms to those expressly mentioned.22
The NLRC and the Court of Appeals did not err in relying on the Implementing Rules of Republic Act No. 7641 in their respective
judgments which favored Bernardo.
Congress, through Article 5 of the Labor Code, delegated to the Department of Labor and Employment (DOLE) and other government
agencies charged with the administration and enforcement of said Code the power to promulgate the necessary implementing rules and
regulations. It was pursuant to Article 5 of the Labor Code that then Secretary of Labor Ma. Nieves R. Confesor issued on January 7,
1993 the Rules Implementing the New Retirement Law, which became Rule II of Book VI of the Rules Implementing the Labor Code.
In ruling that Bernardo, as part-time employee, is entitled to retirement benefits, we do no less and no more than apply Republic Act No.
7641 and its Implementing Rules issued by the DOLE under the authority given to it by the Congress. Needless to stress, the
Implementing Rules partake the nature of a statute and are binding as if written in the law itself. They have the force and effect of law
and enjoy the presumption of constitutionality and legality until they are set aside with finality in an appropriate case by a competent
court.23
Moreover, as a matter of contemporaneous interpretation of law, Secretary Quisumbing's Labor Advisory has persuasive effect. It is
undisputed that in administrative law, contemporaneous and practical interpretation of law by administrative officials charged with its
administration and enforcement carries great weight and should be respected, unless contrary to law or manifestly erroneous.24
We further find that the Implementing Rules and Secretary Quisumbing' s Labor Advisory are consistent with Article 4 of the Labor
Code, which expressly mandates that "all doubts in the implementation and interpretation of the provisions of this Code, including its
implementing rules and regulations, shall be resolved in favor of labor." There being no compelling argument herein to convince us
otherwise, we uphold the legality and validity of the Implementing Rules and Secretary Quisumbing's Labor Advisory, and likewise apply
the same to Bernardo's case.
For the availment of the retirement benefits under Article 302 [287] of the Labor Code, as amended by Republic Act No. 7641, the
following requisites must concur: (1) the employee has reached the age of 60 years for optional retirement or 65 years for compulsory
retirement; (2) the employee has served at least five years in the establishment; and (3) there is no retirement plan or other applicable
agreement providing for retirement benefits of employees in the establishment. Bernardo - being 75 years old at the time of his
retirement, having served DLS-AU for a total of 27 years, and not being covered by the grant of retirement benefits in the CBA - is
unquestionably qualified to avail himself of retirement benefits under said statutory provision, i.e., equivalent to one-half month salary for
every year of service, a fraction of at least six months being considered as one whole year.25
Bernardo's employment was
extended beyond the compulsory
retirement age and the cause of
action for his retirement benefits
accrued only upon the termination of
his extended employment with DLS-AU.
Article 306 [291] of the Labor Code mandates:
Art. 306 [291]. Money claims. - All money claims arising from employer-employee relations accruing during the effectivity of this Code
shall be filed within three years from the time the cause of action accrued; otherwise they shall be forever barred.
DLS-AU invokes UST Faculty Union v. National Labor Relations Commission,26 wherein it was held that when an employee or official
has reached the compulsory retirement age, he is thereby effectively separated from the service. And so, DLS-AU maintains that
Bernardo's cause of action for his retirement benefits, which is patently a money claim, accrued when he reached the compulsory
retirement age of 65 years old, and had already prescribed when Bernardo filed his complaint only 10 years later, when he was already
75 years old.
We are not persuaded.
The case of UST Faculty Union is not in point as the issue involved therein was the right of a union to intervene in the extension of the
service of a retired employee. Professor Tranquilina J. Marilio (Prof. Marilio) already reached the compulsory retirement age of 65 years
old, but was granted by the University of Sto. Tomas (UST) an extension of two years tenure. We ruled in said case that UST no longer
needed to consult the union before refusing to further extend Prof. Marilio' s tenure.1âwphi1
A cause of action has three elements, to wit, (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is
created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or omission on the
part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff.27
Bernardo's right to retirement benefits and the obligation of DLS-AU to pay such benefits are already established under Article 302 [287]
of the Labor Code, as amended by Republic Act No. 7641. However, there was a violation of Bernardo's right only after DLS-AU
informed him on November 8, 2003 that the university no longer intended to offer him another contract of employment, and already
accepting his separation from service, Bernardo sought his retirement benefits, but was denied by DLSAU. Therefore, the cause of
action for Bernardo's retirement benefits only accrued after the refusal of DLS-AU to pay him the same, clearly expressed in Dr.
Bautista's letter dated February 12, 2004. Hence, Bernardo's complaint, filed with the NLRC on February 26, 2004, was filed within the
three-year prescriptive period provided under Article 291 of the Labor Code.
Even granting arguendo that Bernardo's cause of action already accrued when he reached 65 years old, we cannot simply overlook the
fact that DLS-AU had repeatedly extended Bernardo's employment even when he already reached 65 years old. DLS-AU still knowingly
offered Bernardo, and Bernardo willingly accepted, contracts of employment to teach for semesters and summers in the succeeding 10
years. Since DLS-AU was still continuously engaging his services even beyond his retirement age, Bernardo deemed himself still
employed and deferred his claim for retirement benefits, under the impression that he could avail himself of the same upon the actual
termination of his employment. The equitable doctrine of estoppel is thus applicable against DLS-AU. In Planters Development Bank v.
Spouses Lopez,28 we expounded on the principle of estoppels as follows:
Section 2, Rule 131 of the Rules of Court provides that whenever a party has, by his own declaration, act, or omission, intentionally and
deliberately led another to believe that a particular thing is true, and to act upon such belief, he cannot, in any litigation arising out of
such declaration, act or omission, be permitted to falsify it.
The concurrence of the following requisites is necessary for the principle of equitable estoppel to apply: (a) conduct amounting to false
representation or concealment of material facts or at least calculated to convey the impression that the facts are otherwise than, and
inconsistent with, those which the party subsequently attempts to assert; (b) intent, or at least expectation that this conduct shall be
acted upon, or at least influenced by the other party; and (c) knowledge, actual or constructive, of the actual facts.
Inaction or silence may under some circumstances amount to a misrepresentation, so as to raise an equitable estoppel. When the
silence is of such a character and under such circumstances that it would become a fraud on the other party to permit the party who has
kept silent to deny what his silence has induced the other to believe and act on, it will operate as an estoppel. This doctrine rests on the
principle that if one maintains silence, when in conscience he ought to speak, equity will debar him from speaking when in conscience
he ought to remain silent.
DLS-AU, in this case, not only kept its silence that Bernardo had already reached the compulsory retirement age of 65 years old, but
even continuously offered him contracts of employment for the next 10 years. It should not be allowed to escape its obligation to pay
Bernardo's retirement benefits by putting entirely the blame for the deferred claim on Bernardo's shoulders.
WHEREFORE, premises considered, the instant Petition 1s DISMISSED for lack of merit. The Decision dated June 29, 2009 and
Resolution dated January 4, 2010 of the Court of Appeals in CA-G.R. SP No. 106399 are AFFIRMED.
SO ORDERED.
G.R. No. 192330               November 14, 2012
ARNOLD JAMES M. YSIDORO, Petitioner,
vs.
PEOPLE OF THE PHILIPPINES, Respondent.
DECISION
ABAD, J.:
This case is about a municipal mayor charged with illegal diversion of food intended for those suffering from malnutrition to the
beneficiaries of reconsideration projects affecting the homes of victims of calamities.
The Facts and the Case
The Office of the Ombudsman for the Visayas accused Arnold James M. Ysidoro before the Sandiganbayan in Criminal Case 28228 of
violation of illegal use of public propertry (technical malversation) under Article 220 of the Revised Penal Code.1
The facts show that the Municipal Social Welfare and Development Office (MSWDO) of Leyte, Leyte, operated a Core Shelter
Assistance Program (CSAP) that provided construction materials to indigent calamity victims with which to rebuild their homes. The
beneficiaries provided the labor needed for construction.
On June 15, 2001 when construction for calamity victims in Sitio Luy-a, Barangay Tinugtogan, was 70% done, the beneficiaries stopped
reporting for work for the reason that they had to find food for their families. This worried Lolita Garcia (Garcia), the CSAP Officer-in-
Charge, for such construction stoppage could result in the loss of construction materials particularly the cement. Thus, she sought the
help of Cristina Polinio (Polinio), an officer of the MSWDO in charge of the municipality’s Supplemental Feeding Program (SFP) that
rationed food to malnourished children. Polinio told Garcia that the SFP still had sacks of rice and boxes of sardines in its storeroom.
And since she had already distributed food to the mother volunteers, what remained could be given to the CSAP beneficiaries.
Garcia and Polinio went to petitioner Arnold James M. Ysidoro, the Leyte Municipal Mayor, to seek his approval. After explaining the
situation to him, Ysidoro approved the release and signed the withdrawal slip for four sacks of rice and two boxes of sardines worth
P3,396.00 to CSAP.2 Mayor Ysidoro instructed Garcia and Polinio, however, to consult the accounting department regarding the matter.
On being consulted, Eldelissa Elises, the supervising clerk of the Municipal Accountant’s Office, signed the withdrawal slip based on her
view that it was an emergency situation justifying the release of the goods. Subsequently, CSAP delivered those goods to its
beneficiaries. Afterwards, Garcia reported the matter to the MSWDO and to the municipal auditor as per auditing rules.
On August 27, 2001 Alfredo Doller, former member of the Sangguniang Bayan of Leyte, filed the present complaint against Ysidoro.
Nierna Doller, Alfredo's wife and former MSWDO head, testified that the subject SFP goods were intended for its target beneficiaries,
Leyte’s malnourished children. She also pointed out that the Supplemental Feeding Implementation Guidelines for Local Government
Units governed the distribution of SFP goods.3 Thus, Ysidoro committed technical malversation when he approved the distribution of
SFP goods to the CSAP beneficiaries.
In his defense, Ysidoro claims that the diversion of the subject goods to a project also meant for the poor of the municipality was valid
since they came from the savings of the SFP and the Calamity Fund. Ysidoro also claims good faith, believing that the municipality’s
poor CSAP beneficiaries were also in urgent need of food. Furthermore, Ysidoro pointed out that the COA Municipal Auditor conducted
a comprehensive audit of their municipality in 2001 and found nothing irregular in its transactions.
On February 8, 2010 the Sandiganbayan found Ysidoro guilty beyond reasonable doubt of technical malversation. But, since his action
caused no damage or embarrassment to public service, it only fined him P1,698.00 or 50% of the sum misapplied. The Sandiganbayan
held that Ysidoro applied public property to a pubic purpose other than that for which it has been appropriated by law or ordinance. On
May 12, 2010 the Sandiganbayan denied Ysidoro’s motion for reconsideration. On June 8, 2010 Ysidoro appealed the Sandiganbayan
Decision to this Court.
The Questions Presented
In essence, Ysidoro questions the Sandiganbayan’s finding that he committed technical malversation. He particularly raises the
following questions:
1. Whether or not he approved the diversion of the subject goods to a public purpose different from their originally intended
purpose;
2. Whether or not the goods he approved for diversion were in the nature of savings that could be used to augment the
other authorized expenditures of the municipality;
3. Whether or not his failure to present the municipal auditor can be taken against him; and
4. Whether or not good faith is a valid defense for technical malversation.
The Court’s Rulings
One. The crime of technical malversation as penalized under Article 220 of the Revised Penal Code4 has three elements: a) that the
offender is an accountable public officer; b) that he applies public funds or property under his administration to some public use; and c)
that the public use for which such funds or property were applied is different from the purpose for which they were originally
appropriated by law or ordinance.5 Ysidoro claims that he could not be held liable for the offense under its third element because the four
sacks of rice and two boxes of sardines he gave the CSAP beneficiaries were not appropriated by law or ordinance for a specific
purpose.
But the evidence shows that on November 8, 2000 the Sangguniang Bayan of Leyte enacted Resolution 00-133 appropriating the
annual general fund for 2001.6 This appropriation was based on the executive budget7 which allocated P100,000.00 for the SFP and
P113,957.64 for the Comprehensive and Integrated Delivery of Social Services8 which covers the CSAP housing projects.9 The creation
of the two items shows the Sanggunian’s intention to appropriate separate funds for SFP and the CSAP in the annual budget.
Since the municipality bought the subject goods using SFP funds, then those goods should be used for SFP’s needs, observing the
rules prescribed for identifying the qualified beneficiaries of its feeding programs. The target clientele of the SFP according to its
manual10 are: 1) the moderately and severely underweight pre-school children aged 36 months to 72 months; and 2) the families of six
members whose total monthly income is P3,675.00 and below.11 This rule provides assurance that the SFP would cater only to the
malnourished among its people who are in urgent need of the government’s limited resources.
Ysidoro disregarded the guidelines when he approved the distribution of the goods to those providing free labor for the rebuilding of their
own homes. This is technical malversation. If Ysidoro could not legally distribute the construction materials appropriated for the CSAP
housing beneficiaries to the SFP malnourished clients neither could he distribute the food intended for the latter to CSAP beneficiaries.
Two. Ysidoro claims that the subject goods already constituted savings of the SFP and that, therefore, the same could already be
diverted to the CSAP beneficiaries. He relies on Abdulla v. People12 which states that funds classified as savings are not considered
appropriated by law or ordinance and can be used for other public purposes. The Court cannot accept Ysidoro’s argument.
The subject goods could not be regarded as savings. The SFP is a continuing program that ran throughout the year. Consequently, no
one could say in mid-June 2001 that SFP had already finished its project, leaving funds or goods that it no longer needed. The fact that
Polinio had already distributed the food items needed by the SFP beneficiaries for the second quarter of 2001 does not mean that the
remaining food items in its storeroom constituted unneeded savings. Since the requirements of hungry mouths are hard to predict to the
last sack of rice or can of sardines, the view that the subject goods were no longer needed for the remainder of the year was quite
premature.
In any case, the Local Government Code provides that an ordinance has to be enacted to validly apply funds, already appropriated for a
determined public purpose, to some other purpose. Thus:
SEC. 336. Use of Appropriated Funds and Savings. – Funds shall be available exclusively for the specific purpose for which they have
been appropriated. No ordinance shall be passed authorizing any transfer of appropriations from one item to another. However, the local
chief executive or the presiding officer of the sanggunian concerned may, by ordinance, be authorized to augment any item in the
approved annual budget for their respective offices from savings in other items within the same expense class of their respective
appropriations.
The power of the purse is vested in the local legislative body. By requiring an ordinance, the law gives the Sanggunian the power to
determine whether savings have accrued and to authorize the augmentation of other items on the budget with those savings.
Three. Ysidoro claims that, since the municipal auditor found nothing irregular in the diversion of the subject goods, such finding should
be respected. The SB ruled, however, that since Ysidoro failed to present the municipal auditor at the trial, the presumption is that his
testimony would have been adverse if produced. Ysidoro argues that this goes against the rule on the presumption of innocence and the
presumption of regularity in the performance of official functions.
Ysidoro may be right in that there is no basis for assuming that had the municipal auditor testified, his testimony would have been
adverse to the mayor. The municipal auditor’s view regarding the transaction is not conclusive to the case and will not necessarily
negate the mayor’s liability if it happened to be favorable to him. The Court will not, therefore, be drawn into speculations regarding what
the municipal auditor would have said had he appeared and testified.
Four. Ysidoro insists that he acted in good faith since, first, the idea of using the SFP goods for the CSAP beneficiaries came, not from
him, but from Garcia and Polinio; and, second, he consulted the accounting department if the goods could be distributed to those
beneficiaries. Having no criminal intent, he argues that he cannot be convicted of the crime.1âwphi1
But criminal intent is not an element of technical malversation. The law punishes the act of diverting public property earmarked by law or
ordinance for a particular public purpose to another public purpose. The offense is mala prohibita, meaning that the prohibited act is not
inherently immoral but becomes a criminal offense because positive law forbids its commission based on considerations of public policy,
order, and convenience.13 It is the commission of an act as defined by the law, and not the character or effect thereof, that determines
whether or not the provision has been violated. Hence, malice or criminal intent is completely irrelevant.14
Dura lex sed lex. Ysidoro’s act, no matter how noble or miniscule the amount diverted, constitutes the crime of technical malversation. xxxx
The law and this Court, however, recognize that his offense is not grave, warranting a mere fine. Despite the postponement, however, [Cecilia Que, et al.] proceeded with the scheduled annual stockholder's meeting participated only
WHEREFORE, this Court AFFIRMS in its entirely the assailed Decision of the Sandiganbayan in Criminal Case 28228 dated February by a few stockholders. In the said meeting, they elected the new members of the Board of Directors and officers of Phil-Ville namely:
8, 2010. Cecilia, Ma. Corazon and Eumir, Chairman/Vice President/Treasurer, President/General Manager, and Secretary, respectively.
SO ORDERED. Meantime, two days prior to the stockholders' meeting, Carolina, Ana Maria, and Angelica, together with several others, had already
G.R. No. 225022, February 05, 2018 filed a Complaint for Annulment of Sale/Distribution or Settlement of Shares of Stock/Injunction against Cecilia, Eumir Carlo and Ma.
CAROLINA QUE VILLONGCO, ANA MARIA QUE TAN, ANGELICA QUE GONZALES, ELAINE VICTORIA QUE TAN AND EDISON Corazon. They subsequently filed an Amended and Supplemental Complaint for Annulment of Sale/Distribution or Settlement of Shares
WILLIAMS QUE TAN, Petitioners, v. CECILIA QUE YABUT, EUMIR CARLO QUE CAMARA AND MA. CORAZON QUE of Stock/Annulment of Meeting/Injunction (with Prayer for the Issuance of Temporary Restraining Order and Writ of Preliminary
GARCIA, Respondents. Prohibitory and Mandatory Injunction). x x x
xxxx
G.R. No. 225024, February 5, 2018 While Civil Case No. CV-940-MN was still pending, on January 15, 2014, Eumir Carlo sent a Notice of Annual Stockholders' Meeting to
all the stockholders of Phil-Ville, notifying them of the setting of the annual stockholders' meeting on January 25, 2014 at 5:00 P.M. at
CECILIA QUE YABUT, EUMIR CARLO QUE CAMARA AND MA. CORAZON QUE GARCIA, Petitioners, v. CAROLINA QUE Max's Restaurant, Gov. Pascual comer M.H. Del Pilar Streets, Tugatog, Malabon City. During the meeting, Cecilia, Ma. Corazon and
VILLONGCO, ANA MARIA QUE TAN, ANGELICA QUE GONZALES, ELAINE VICTORIA QUE TAN AND EDISON WILLIAMS QUE Eumir Carlo were elected as directors and later elected themselves to the following positions: Cecilia as Chairperson/Vice
TAN, Respondents. President/Treasurer; Ma. Corazon as Vice Chairperson/President/General Manager; and Eumir Carlo as Corporate Secretary/Secretary.
DECISION xxxx
TIJAM, J.: Consequently, on February 10, 2014, Carolina, Ana Maria, Angelica, Elaine and Edison Williams [Carolina, et al.] filed the instant
Before Us are separate Petitions for Review on Certiorari1 assailing the Decision2 dated September 4, 2015 and Amended election case against [Cecilia Que, et al.] before the RTC of Malabon City docketed as SEC Case No. 14-001-MN. The Complaint
Decision3 dated June 8, 2016 of the Court of Appeals (CA) in CA-G.R. SP No. 134666 declaring the annual stockholder's meeting held prayed that the election of Cecilia, Ma. Corazon and Eumir Carlo as directors be declared void considering the invalidity of the holding of
by Cecilia Que Yabut, Eumir Carlo Que and Ma. Corazon Que Garcia (Cecilia Que, et al.) on January 25, 2014 void for lack of quorum the meeting at Max's Restaurant for lack of quorum therein, the questionable manner by which it was conducted, including the invalid
and declared all acts performed by Cecilia Que, et al. as ultra vires acts as they were not legally clothed with corporate authority to do inclusion in the voting of the shares of the late Geronima, the questionable validation of proxies, the representation and exercise of
so. voting rights by the alleged proxies representing those who were not personally present at the said meeting, and the invalidity of the
The pertinent facts of the case as found by the CA are as follows: proclamation of the winners. [Carolina, et al.] also questioned the election of Cecilia, Ma. Corazon and Eumir Carlo as officers of the
Phil-Ville Development and Housing Corporation (Phil-Ville) is a family corporation founded by Geronima Gallego Que (Geronima) that corporation. They likewise prayed that all the actions taken by the petitioners in relation to their election as directors and officers of the
is engaged in the real estate business. The authorized capital stock of Phil-Ville is Twenty Million Pesos (P20,000,000) divided into Two corporation be declared void, including but not limited to the filing of the General Information Sheet with the Securities and Exchange
Hundred Thousand (200,000) shares with a par value of One Hundred Pesos (P100.00) per share. During her lifetime, Geronima owned Commission on January 27, 2014.4
3,140 shares of stock while the remaining 196,860 shares were equally distributed among Geronima's six children, namely: Carolina Cecilia Que, et al., filed a Motion for Additional Time to file Answer on March 7, 2014 arguing that the summons was not properly served
Que Villongco, Ana Maria Que Tan, Angelica Que Gonzales, Cecilia Que Yabut, Ma. Corazon Que Garcia, and Maria Luisa Que on them. The RTC however denied said motion since it should have been filed within ten (10) days or on March 2, 2014, in accordance
Camara, as follows: with Section 5; Rule 65 of the Interim Rules of Procedure for Intra-Corporate Controversies.6
(a) Carolina Que Villongco- 32,810 shares; Thus, On March 14, 2014, the RTC rendered a Decision7 declaring the election of Cecilia Que, et al. as void and of no effect considering
(b) Ana Maria Que Tan- out of her 32,810 shares, she retained 17,710 shares and transferred the rest to her six children, thus: Edmund the lack of quorum during the annual stockholders' meeting conducted by the latter, thus:
Williams Que Tan- 2,600 shares; Edward Williams Que Tan- 2,500 [shares]; Edison Williams Que Tan- 2,500 shares; Elaine Victoria WHEREFORE, judgment is hereby rendered:
Que Tan[-] 2,500 shares; Eloisa Victoria- 2,500 shares; and Elinor Victoria- 2,500 shares; a. On the First Cause of Action, declaring as null and void and of no effect whatsoever the election of defendants Cecilia Que Yabut,
(c) Angelica Que Gonzales- 32,810; Ma. Corazon Que Garcia and Eumir Que Camara as Directors of Phil-Ville considering the lack of quorum during the alleged annual
(d) Cecilia Que Yabut- out of her 32,810 shares, she retained 22,810 shares and transferred the rest to her four children, thus: meeting of the stockholders on 25 January 2014 at Max's Restaurant, Gov. Pascual cor. M.H. Del Pilar, Tugatog, Malabon City at 5:00
Geminiano Que Yabut III- 2,500 shares; Carlos Que Yabut- 2,500 shares; Geronimo Que Yabut- 2,500 shares; and Jose Elston Que o'clock in the afternoon;
Yabut- 2,500 shares; b. On the Second Cause of Action, declaring as null and void and of no effect whatsoever the election of defendants Cecilia Que Yabut,
(e) Ma. Corazon Que Garcia- out of her 32,810 shares, she retained 21,460 shares and transferred the rest to her four children, thus: Ma. Corazon Que Garcia and Eumir Que Camara to the positions of Chairperson, Vice Chairperson and Corporate Secretary,
Anthony Que Garcia- 2,500 shares; Geronima Que Garcia- 2,950 shares; Michelle Que Garcia- 2,950 shares; and Ma. Christina Que respectively in the Board of Directors of Phil-Ville, as well as their election as Vice-President/Treasurer, President/General Manager and
Garcia- 2,950 shares; Secretary, respective[ly], of PhilVille, considering the invalidity of the proclamation of the winners in the election supposedly conducted
(f) Maria Luisa Que Camara- upon her death, her shares were divided among her children: Eumir Que Camara- 10,936.67 shares; on that date, the alleged "Annual Meeting of the Board of Directors of Phil-Ville held at Max's Restaurant, Gov. Pascual cor. M.H. Del
Pablo Que Camara- 10,936.67 shares; and Abimar Que Camara- 10,936.66 shares. Pilar, Tugatog, Malabon City on 25 January 2014 at 6:30 o'clock in the evening being null and void; and
Geronima died on August 31, 2007. By virtue of the Sale of Shares of Stocks dated June 11, 2005 purportedly executed by Cecilia as c. On the Third Cause of Action, declaring as null and void and of no effect whatsoever any and all actions taken by defendants Cecilia
the attorney-in-fact of Geronima, Cecilia allegedly effected an inequitable distribution of the 3,140 shares that belonged to Geronima, to Que Yabut, Ma. Corazon Que Garcia and Eumir Que Camara in relation to their alleged election as Directors, their alleged elecion to
wit: certain positions in the Board of Directors, and their alleged election as officers of Phil-Ville including but not limited to the filing of the
(a) Carolina's children were given a total of 523 shares distributed as follows: Francis Villongco- 131 shares; Carlo Villongco- 131 General Information Sheet with the Securities and Exchange Commission on 27 January 2014.
shares; Michael Villongco- 131 shares; and Marcelia Villongco- 130 shares; SO ORDERED.8
(b) Ana Maria's daughter Elaine Victoria Que Tan was given 523 shares; On appeal to the CA, the latter in its Decision dated September 4, 2015, while it declared the RTC decision void for violating Section 14,
(c) Angelica- 523 shares; Article VIII of the Constitution9, the CA however declared the annual stockholders meeting conducted by Cecilia Que, et al. void for lack
(d) Cecilia's children were given a total of 524 shares distributed as follows: Geminiano Yabut- 131 shares; Carlos Yabut- 131 shares; of quorum. The dispositive portion reads:
Geronimo Yabut- 131 shares; and John Elston Yabut- 131 shares; WHEREFORE, the instant Petition for Review is DENIED for lack of merit. The Decision dated March 14, 2014 Decision[sic] of the
(e) Ma. Corazon's son Anthony Garcia was given 523 shares; Regional Trial Court of the City of Malabon, Branch 74, in SEC Case No. SEC14-00l-MN is declared VOID for failure to comply with the
(f) Maria Luisa's children were given a total of 524 shares distributed as follows: Eumir Carlo Camara- 174 shares; Paolo Camara- 175 constitutional requirement of a valid judgment and a new one is ENTERED declaring as invalid for lack of quorum the Phil-Ville
shares; Abimar Camara-175 shares[.] Development and Housing Corporation's stockholders annual meeting conducted by petitioners Cecilia Que Yabut, Eumir Carlo Que
Accordingly, the distribution of Geronima's shares in accordance with the Sale of Shares of Stocks was reflected in the General Camara and Ma. Corazon Que Garcia on January 14, 2014. The election of the members of the board of directors and officers of Phil-
Information Sheets filed by Phil-Ville in 2010 and 2011, x x x Ville that emanated from the said invalid meetings is likewise struck as void.
On January 18, 2013, Cecilia, Eumir Carlo Que Camara and Ma. Corazon [Cecilia Que, et. al.] wrote a letter to Ana Maria, Corporate SO ORDERED.10
Secretary of Phil-Ville, to send out notices for the holding of the annual stockholders' meeting. However, before Ana Maria could reply On the parties' separate Motions for Partial Reconsideration, the CA issued an Amended Decision dated June 8, 2016 ruling as follows:
thereto, on January 21, 2013, several letters were sent to Phil-Ville's stockholders containing a document captioned "Notice of Annual WHEREFORE, petitioner's Motion for Partial Reconsideration is DENIED for lack of merit while that of respondents' is PARTLY
Stockholders' Meeting" signed by Cecilia and Ma. Corazon as directors, x x x GRANTED with respect to the ultra vires acts committed by petitioners after the invalidation of the election conducted on January 25,
xxxx 2014. The dispositive portion of the assailed Decision dated September 4, 2015 is hereby amended to reflect the following modifications
Thereafter, Carolina, Ana Maria, and Angelica, comprising the majority of the Board of Directors of Phil-Ville held an emergency meeting and shall read as follows:
and made a decision, by concensus, to postpone the annual stockholders' meeting of Phil-Ville until the issue of the distribution of the WHEREFORE, the instant Petition for Review is DENIED for lack of merit The Decision dated March 14, 2014 Decision[sic] of the
3,140 shares of stocks in the name of certain stockholders is settled. All the stockholders were apprised of the decision to postpone the Regional Trial Court of the City of Malabon, Branch 74, in SEC Case No. SEC14-001-MN is declared VOID for failure to comply with the
meeting in a letter dated January 21, 2013. Ana Maria, in her capacity as Corporate Secretary and Director of Phil-Ville likewise gave constitutional requirement of a valid judgment and a new one is ENTERED declaring as invalid for lack of quorum the Phil-Ville
notice to the Securities and Exchange Commission (SEC) with regard to the postponement of the meeting. Development and Housing Corporation's stockholders annual meeting conducted by petitioners Cecilia Que Yabut, Eumir Carlo Que
Camara and Ma. Corazon Que Garcia on January 25, 2014. The election of the members of the board of directors and officers of Phil-
Ville that emanated from the said invalid meetings is likewise struck as void. All acts performed by petitioners by reason of said election,
including but not limited to the filing of the General Information Sheet with the SEC on January 27, 2014, were ultra vires as they were
not legally clothed with corporate authority to do so.
SO ORDERED.
SO ORDERED.11
Both parties filed before Us their separate Petitions for Review on Certiorari.
Carolina, et al., raised in their petition the following assignment of errors:
I. The Honorable Court of Appeals committed manifest error in not upholding that the applicability of Section 14, Article VIII of the
Constitution ensconed in Section 1, Rule 36 of the Revised Rules of Court was adhered to by the RTC-Malabon City, Branch 74 in the
rendition of its decision as warranted by the facts alleged in the complaint.
II. The Honorable Court of Appeals committed manifest error in not upholding the applicability of the exception to the general rule in the
determination of a quorum.12
While Cecilia Que, et al., raised the following in their petition, to wit:
I. The Court of Appeals gravely erred when it ruled that petitioners were barred from filing an answer.
II. The Court of Appeals gravely erred in ruling on the merits, despite the finding that there was a need to remand the case.
III. At any rate, the issues raised in the case are being litigated in another case, barring its resolution on the merits here.13
Ultimately, the issues to be resolved are: 1) whether the CA was correct in holding that the RTC decision violated Section 14, Article VIII
of the Constitution; 2) whether the total undisputed shares of stocks in Phil-Ville should be the basis in determining the presence of a
quorum; and 3) whether Cecilia et al., were barred from filing an answer.
Both petitions are unmeritorious.
The Procedural Aspect
The Motion for Extension of Time to file Answer is a voluntary appearance on the part of Cecilia, et al.
Cecilia Que, et al., alleged the CA erred in holding that the Motion for Extension of Time to File Answerfiled by them was a voluntary
appearance on their part. We do not agree.
14
It is well-settled that jurisdiction over the person of the defendant in a civil case is obtained through a valid service of summons. When
there is no service of summons upon the defendant, the court acquires no jurisdiction over his person, and a judgment rendered against automatically mean that the trial court will render a judgment in favor of the plaintiff. The trial court must still determine whether the
him is null and void.15
However, the invalidity of the service of summons is cured by the voluntary appearance of the defendant in court and their submission to on which it based its decision. This is sadly not followed by the RTC in its Decision dated March 14, 2014. The RTC merely adopted the
the court's authority. As held in the case of Carson Realty & Management Corporation v. Red Robin Security Agency, et al., this Court allegations of Carolina et al. without any rhyme or reason. The decision merely stated that quorum was not established during the
16
has repeatedly held that the filing of a motion of time to file answer is considered voluntary appearance on the part of the defendant,
such that the trial court nevertheless acquired jurisdiction over his person despite the defectiveness of the service of summons, to wit:
We have, time and again, held that the filing of a motion for additional time to file answer is considered voluntary submission to the
jurisdiction of the court. If the defendant knowingly does an act inconsistent with the right to object to the lack of personal jurisdiction as
to him, like voluntarily appearing in the action, he is deemed to have submitted himself to the jurisdiction of the court. Seeking an
affirmative relief is inconsistent with the position that no voluntary appearance had been made, and to ask for such relief, without the
proper objection, necessitates submission to the Court's jurisdiction. In the instant case, Cecilia Que, et al., filed a motion for extension
17
to file an answer. Thus, is deemed to be a voluntary submission to the authority of the trial court over their persons.
The Substantive Aspect
The RTC Decision dated March 14, 2014 is void for violating Section 14, Article VIII of the Constitution.
Carolina, et al., alleged in their petition that the RTC Decision did not violate Section 14, Article VIII of the Constitution since the decision Section 52 of the Corporation Code states that:
clearly stated the facts and the law on which it was based. They alleged that "the decision thoroughly passed upon all the allegations in
the complaint, vis-a-vis the Judicial affidavit of x x x Carolina x x x, which remams unrebutted."18 We are not persuaded.
The RTC decision is hereby quoted in toto:
Before the Court is the Election Contest filed by plaintiffs stockholders/board members/officers of Phil-Ville Housing and Development
Corporation questioning the validity of the election held by defendants on January 25, 2014 at Max's Restaurant, Malabon City.
Having been served with Summons on February 20, 2014, and not having filed an Answer but instead filed a Motion for Extension of
Time to the Answer on March 7, 2014 by registered mail, which was received by this Court only on March 13, 2014, the Court is duty
bound to render judgment motu proprio within ten (10) days from the lapse of the period to file an Answer, as may be warranted by the
allegations of the Complaint, as well as the affidavits, documentary and other evidence on record, awarding relief, if any, only as prayed voted.23 Thus, for stock corporations, the quorum is based on the number of outstanding voting stocks.24 The distinction of undisputed or
for.
After thoroughly passing upon all and[sic] the allegations in the Complaint, vis-a-vis the Judicial Affidavit of plaintiff Carolina Que
Villongco, which remains unrebutted, the Court finds that plaintiffs have fully established that there was no quorum during the annual
stockholder's meeting held on 25 January 2014 at Max's Restaurant, Malabon City. Only 98,428 voting shares out of the 200,000
outstanding shares were represented. Therefore, no valid election of board members/officers of Phil-Ville could have taken place.
Necessarily, the organizational meeting supposedly conducted thereafter is likewise null and void and could not possibly binding[sic] to
the said corporation.
WHEREFORE, judgment is hereby rendered:
a. On the First Cause of Action, declaring as null and void and of no effect whatsoever the election of defendants Cecilia Que Yabut,
Ma. Corazon Que Garcia and Eumir Que Camara as Directors of Phil-Ville considering the lack of quorum during the alleged annual
meeting of the stockholders on 25 January 2014 at Max's Restaurant, Gov. Pascual cor. M.H. Del Pilar, Tugatog, Malabon City at 5:00
o'clock in the afternoon;
b. On the Second Cause of Action, declaring as null and void and of no effect whatsoever the election of defendants Cecilia Que Yabut,
Ma. Corazon Que Garcia and Eumir Que Camara to the positions of Chairperson, Vice-Chairperson and Corporate Secretary,
respectively in the Board of Directors of Phil-Ville, as well as their election as Vice President/Treasurer, President/General Manager and
Secretary, respectively, of Phil-Ville, considering the invalidity of the proclamation of the winners in the election supposedly conducted
on that date, the alleged "Annual Meeting of the Board of Directors of Phil-Ville held at Max's Restaurant, Gov. Pascual cor. M.H. Del
Pilar, Tugatog, Malabon City on 25 January 2014 at 6:30 o'clock in the evening being null and void; and
c. On the Third Cause of Action, declaring as null and void and of no effect whatsoever any and all actions taken by defendants Cecilia
Que Yabut, Ma. Corazon Que Garcia and Eumir Que Camara in relation to their alleged election as Directors, their alleged elecion to
certain positions in the Board of Directors, and their alleged election as officers of Phil-Ville including but not limited to the filing of the
General Information Sheet with the Securities and Exchange Commission on 27 January 2014.
SO ORDERED.19
In the case of De Leon v. People20 this Court held that:
Under Section 14, Article VIII of the Constitution, no decision shall be rendered by any court without expressing therein clearly and
distinctly the facts and the law on which it is based. Section 1 of Rule 36 of the Rules of Court provides that a judgment or final order
determining the merits of the case shall be in writing personally and directly prepared by the judge, stating clearly and distinctly the facts
and the law on which it is based, signed by him and filed with the clerk of the court.
Faithful adherence to the requirements of Section 14, Article VIII of the Constitution is indisputably a paramount component of due
process and fair play. A decision that does not clearly and distinctly state the facts and the law on which it is based leaves the parties in
the dark as to how it was reached and is precisely prejudicial to the losing party, who is unable to pinpoint the possible errors of the
court for review by a higher tribunal. More than that, the requirement is an assurance to the parties that, in arriving at a judgment, the
judge did so through the processes of legal reasoning. It is, thus, a safeguard against the impetuosity of the judge, preventing him from
deciding ipse dixit.
The standard "expected of the judiciary" is that the decision rendered makes clear why either party prevailed under the applicable law to
the facts as established. Nor is there any rigid formula as to the language to be employed to satisfy the requirement of clarity and
distinctness. The discretion of the particular judge in this respect, while not unlimited, is necessarily broad. There is no sacramental form
of words which he must use upon pain of being considered as having failed to abide by what the Constitution directs.21
Thus, Section 14, Article VIII of the Constitution mandates Us to craft Our decisions stating clearly and distinctly the facts and the law on
which We based Our decisions. It should be emphasized that the mere fact that the defendant was not able to file an answer does not
plaintiff is entitled to the reliefs prayed for. Thus, it is incumbent upon the RTC to clearly and distinctly state the facts and the legal basis
annual stockholders meeting conducted by Cecilia Que, et al. and that only 98,428 shares were present during the said meeting without
any explanation or justification as to why the trial court ruled that way. Therefore, We agree with the CA that the RTC decision is null
and void for violating the constitutional provision.
Total outstanding capital stocks, without distinction as to disputed or undisputed shares of stock, is the basis in determining
the presence of quorum.
Carolina et. al., claimed that the basis for determining quorum should have been the total number of undisputed shares of stocks of Phil-
Ville due to the exceptional nature of the case since the 3,140 shares of the late Geronima and the fractional .67, .67, and .66 shares of
Eumir Que Camara, Paolo Que Camara and Abimar Que Camara are the subject of another dispute filed before the RTC. Thus,
excluding the 3,142 shares from the 200,000 outstanding capital stock, the proper basis of determining the presence of quorum should
be 196,858 shares of stocks.22 We do not agree.
Section 52. Quorum in meetings. - Unless otherwise provided for in this Code or in the by-laws, a quorum shall consist of the
stockholders representing a majority of the outstanding capital stock or a majority of the members in the case of non-stock corporations.
While Section 137 of the same Code defines "outstanding capital stock", thus:
Section 137. Outstanding capital stock defined. - The term "outstanding capital stock", as used in this Code, means the total shares of
stock issued under binding subscription agreements to subscribers or stockholders, whether or not fully or partially paid, except treasury
shares.
The right to vote is inherent in and incidental to the ownership of corporate stocks. It is settled that unissued stocks may not be voted or
considered in determining whether a quorum is present in a stockholders' meeting. Only stocks actually issued and outstanding may be
disputed shares of stocks is not provided for in the law or the jurisprudence. Ubi lex non distinguit nec nos distinguere debemus — when
the law does not distinguish we should not distinguish. Thus, the 200,000 outstanding capital stocks of Phil-Ville should be the basis for
determining the presence of a quorum, without any distinction.
Therefore, to constitute a quorum, the presence of 100,001 shares of stocks in Phil-Ville is necessary.
We agree with the CA when it held that only 98,430 shares of stocks. were present during the January 25, 2014 stockholders meeting at
Max's Restaurant, therefore, no quorum had been established.
There is no evidence that the 3,140 shares which allegedly had been transferred to 1) Carolina's children, namely: Francis Villongco,
Carlo Villongco, Michael Villongco and Marcelia Villongco; 2) Ana Maria's daughter, namely: Elaine Victoria Que Tan; 3) Angelica Que;
4) Cecilia's children, namely: Geminiano, Carlos, Geronimo and John Elston; 5) Ma. Corazon's son, Anthony; and, 6) Maria Luisa's
children, namely: Eumir Carlo Camara, Paolo Camara, and Abimar Camara; where transferred and recorded in the stocks and transfer
book of Phil-Ville.
Section 6325 of the Corporation Code states that "No transfer, however, shall be valid, except as between the parties, until the transfer is
recorded in the books of the corporation showing the names of the parties to the transaction, the date of the transfer, the number of the
certificate or certificates and the number of shares transferred. "
As held in the case of Interport Resources Corporation v. Securities Specialist, Inc.,26 held that:
A transfer of shares of stock not recorded in the stock and transfer book of the corporation is non-existent as far as the corporation is
concerned. As between the corporation on the one hand, and its shareholders and third persons on the other, the corporation looks only
to its books for the purpose of determining who its shareholders are. It is only when the transfer has been recorded in the stock and
transfer book that a corporation may rightfully regard the transferee as one of its stockholders. From this time, the consequent obligation
on the part of the corporation to recognize such rights as it is mandated by law to recognize arises.27
The contention of Cecilia Que, et al., that they should not be faulted for their failure to present the stock and transfer book because the
same is in the possession of the corporate secretary, Ana Maria Que Tan, who has an interest adverse from them, is devoid of merit. It
is basic that a stockholder has the right to inspect the books of the corporation,28 and if the stockholder is refused by an officer of the
corporation to inspect or examine the books of the corporation, the stockholder is not without any remedy. The Corporation Code grants
the stockholder a remedy—to file a case in accordance with Section 144.29
In this case, there is no evidence that the 3,140 shares of the late Geronima were recorded in the stocks and transfer book of Phil-Ville.
Thus, insofar as Phil-Ville is concerned, the 3,140 shares of the late Geronima allegedly transferred to several persons is non-existent.
Therefore, the transferees of the said shares cannot exercise the rights granted unto stockholders of a corporation, including the right to
vote and to be voted upon.
WHEREFORE, premises considered, the instant Petitions for Review on Certiorari are DENIED. The Decision dated September 4, 2015
and Amended Decision dated June 8, 2016 of the Court of Appeals in CA-G.R. SP No. 134666 are hereby AFFIRMED in toto.
SO ORDERED.
G.R. No. 118127             April 12, 2005
CITY OF MANILA, ,Petitioner,
vs.
HON. PERFECTO A.S. LAGUIO, JR., as Presiding Judge, RTC, Manila and MALATE TOURIST DEVELOPMENT
CORPORATION, Respondents.
DECISION
TINGA, J.:
I know only that what is moral is what you feel good after and what is immoral is what you feel bad after.
Ernest Hermingway
Death in the Afternoon, Ch. 1
It is a moral and political axiom that any dishonorable act, if performed by oneself, is less immoral than if performed by
someone else, who would be well-intentioned in his dishonesty.
J. Christopher  Gerald
Bonaparte in Egypt, Ch. I
The Court's commitment to the protection of morals is secondary to its fealty to the fundamental law of the land. It is foremost a guardian
of the Constitution but not the conscience of individuals. And if it need be, the Court will not hesitate to "make the hammer fall, and
heavily" in the words of Justice Laurel, and uphold the constitutional guarantees when faced with laws that, though not lacking in zeal to
promote morality, nevertheless fail to pass the test of constitutionality.
The pivotal issue in this Petition1 under Rule 45 (then Rule 42) of the Revised Rules on Civil Procedure seeking the reversal of
the Decision2 in Civil Case No. 93-66511 of the Regional Trial Court (RTC) of Manila, Branch 18 (lower court),3 is the validity of
Ordinance No. 7783 (the Ordinance) of the City of Manila.4
The antecedents are as follows:
Private respondent Malate Tourist Development Corporation (MTDC) is a corporation engaged in the business of operating hotels,
motels, hostels and lodging houses.5 It built and opened Victoria Court in Malate which was licensed as a motel although duly accredited
with the Department of Tourism as a hotel.6 On 28 June 1993, MTDC filed a Petition for Declaratory Relief with Prayer for a Writ of
Preliminary Injunction and/or Temporary Restraining Order7 (RTC Petition) with the lower court impleading as defendants, herein
petitioners City of Manila, Hon. Alfredo S. Lim (Lim), Hon. Joselito L. Atienza, and the members of the City Council of Manila (City
Council). MTDC prayed that the Ordinance, insofar as it includes motels and inns as among its prohibited establishments, be declared
invalid and unconstitutional.8
Enacted by the City Council9 on 9 March 1993 and approved by petitioner City Mayor on 30 March 1993, the said Ordinance is entitled–
AN ORDINANCE PROHIBITING THE ESTABLISHMENT OR OPERATION OF BUSINESSES PROVIDING CERTAIN
FORMS OF AMUSEMENT, ENTERTAINMENT, SERVICES AND FACILITIES IN THE ERMITA-MALATE AREA,
PRESCRIBING PENALTIES FOR VIOLATION THEREOF, AND FOR OTHER PURPOSES.10
The Ordinance is reproduced in full, hereunder:
SECTION 1. Any provision of existing laws and ordinances to the contrary notwithstanding, no person, partnership,
corporation or entity shall, in the Ermita-Malate area bounded by Teodoro M. Kalaw Sr. Street in the North, Taft
Avenue in the East, Vito Cruz Street in the South and Roxas Boulevard in the West, pursuant to P.D. 499 be allowed or
authorized to contract and engage in, any business providing certain forms of amusement, entertainment,
services and facilities where women are used as tools in entertainment and which tend to disturb the community,
annoy the inhabitants, and adversely affect the social and moral welfare of the community, such as but not limited
to:
1. Sauna Parlors
2. Massage Parlors
3. Karaoke Bars
4. Beerhouses
5. Night Clubs
6. Day Clubs
7. Super Clubs
8. Discotheques
9. Cabarets
10. Dance Halls
11. Motels
12. Inns
SEC. 2 The City Mayor, the City Treasurer or any person acting in behalf of the said officials are prohibited from
issuing permits, temporary or otherwise, or from granting licenses and accepting payments for the operation of
business enumerated in the preceding section.
SEC. 3. Owners and/or operator of establishments engaged in, or devoted to, the businesses enumerated in Section 1
hereof are hereby given three (3) months from the date of approval of this ordinance within which to wind up
business operations or to transfer to any place outside of the Ermita-Malate area or convert said businesses to
other kinds of business allowable within the area, such as but not limited to:
1. Curio or antique shop
2. Souvenir Shops
3. Handicrafts display centers
4. Art galleries
5. Records and music shops
6. Restaurants
7. Coffee shops
8. Flower shops
9. Music lounge and sing-along restaurants, with well-defined activities for wholesome family entertainment
that cater to both local and foreign clientele.
10. Theaters engaged in the exhibition, not only of motion pictures but also of cultural shows, stage and
theatrical plays, art exhibitions, concerts and the like.
11. Businesses allowable within the law and medium intensity districts as provided for in the zoning
ordinances for Metropolitan Manila, except new warehouse or open-storage depot, dock or yard, motor repair
shop, gasoline service station, light industry with any machinery, or funeral establishments.
SEC. 4. Any person violating any provisions of this ordinance, shall upon conviction, be punished by
imprisonment of one (1) year or fine of FIVE THOUSAND (P5,000.00) PESOS, or both, at the discretion of the Court,
PROVIDED, that in case of juridical person, the President, the General Manager, or person-in-charge of operation shall be
liable thereof; PROVIDED FURTHER, that in case of subsequent violation and conviction, the premises of the erring
establishment shall be closed and padlocked permanently.
SEC. 5. This ordinance shall take effect upon approval.
Enacted by the City Council of Manila at its regular session today, March 9, 1993.
Approved by His Honor, the Mayor on March 30, 1993. (Emphasis supplied)
In the RTC Petition, MTDC argued that the Ordinance erroneously and improperly included in its enumeration of prohibited
establishments, motels and inns such as MTDC's Victoria Court considering that these were not establishments for "amusement" or
"entertainment" and they were not "services or facilities for entertainment," nor did they use women as "tools for entertainment," and
neither did they "disturb the community," "annoy the inhabitants" or "adversely affect the social and moral welfare of the community."11
MTDC further advanced that the Ordinance was invalid and unconstitutional for the following reasons: (1) The City Council has no
power to prohibit the operation of motels as Section 458 (a) 4 (iv)12 of the Local Government Code of 1991 (the Code) grants to the City
Council only the power to regulate the establishment, operation and maintenance of hotels, motels, inns, pension houses, lodging
houses and other similar establishments; (2) The Ordinance is void as it is violative of Presidential Decree (P.D.) No. 49913 which
specifically declared portions of the Ermita-Malate area as a commercial zone with certain restrictions; (3) The Ordinance does not
constitute a proper exercise of police power as the compulsory closure of the motel business has no reasonable relation to the
legitimate municipal interests sought to be protected; (4) The Ordinance constitutes an ex post facto law by punishing the operation of
Victoria Court which was a legitimate business prior to its enactment; (5) The Ordinance violates MTDC's constitutional rights in that: (a)
it is confiscatory and constitutes an invasion of plaintiff's property rights; (b) the City Council has no power to find as a fact that a
particular thing is a nuisance per se nor does it have the power to extrajudicially destroy it; and (6) The Ordinance constitutes a denial of
equal protection under the law as no reasonable basis exists for prohibiting the operation of motels and inns, but not pension houses,
hotels, lodging houses or other similar establishments, and for prohibiting said business in the Ermita-Malate area but not outside of this
area.14
In their Answer15 dated 23 July 1993, petitioners City of Manila and Lim maintained that the City Council had the power to "prohibit
certain forms of entertainment in order to protect the social and moral welfare of the community" as provided for in Section 458 (a) 4 (vii)
of the Local Government Code,16 which reads, thus:
Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang panlungsod, as the legislative body of
the city, shall enact ordinances, approve resolutions and appropriate funds for the general welfare of the city and its
inhabitants pursuant to Section 16 of this Code and in the proper exercise of the corporate powers of the city as provided
for under Section 22 of this Code, and shall:
....
(4) Regulate activities relative to the use of land, buildings and structures within the city in order to promote the general
welfare and for said purpose shall:
 ....
(vii) Regulate the establishment, operation, and maintenance of any entertainment or amusement facilities,
including theatrical performances, circuses, billiard pools, public dancing schools, public dance halls, sauna
baths, massage parlors, and other places for entertainment or amusement; regulate such other events or
activities for amusement or entertainment, particularly those which tend to disturb the community or annoy the
inhabitants, or require the suspension or suppression of the same; or, prohibit certain forms of amusement or
entertainment in order to protect the social and moral welfare of the community.
Citing Kwong Sing v. City of Manila,17 petitioners insisted that the power of regulation spoken of in the above-quoted provision included
the power to control, to govern and to restrain places of exhibition and amusement.18
Petitioners likewise asserted that the Ordinance was enacted by the City Council of Manila to protect the social and moral welfare of the
community in conjunction with its police power as found in Article III, Section 18(kk) of Republic Act No. 409,19 otherwise known as the
Revised Charter of the City of Manila (Revised Charter of Manila)20 which reads, thus:
ARTICLE III
THE MUNICIPAL BOARD
. . .
Section 18. Legislative powers. – The Municipal Board shall have the following legislative powers:
. . .
(kk) To enact all ordinances it may deem necessary and proper for the sanitation and safety, the furtherance of the
prosperity, and the promotion of the morality, peace, good order, comfort, convenience, and general welfare of the city and
its inhabitants, and such others as may be necessary to carry into effect and discharge the powers and duties conferred by
this chapter; and to fix penalties for the violation of ordinances which shall not exceed two hundred pesos fine or six
months' imprisonment, or both such fine and imprisonment, for a single offense.
Further, the petitioners noted, the Ordinance had the presumption of validity; hence, private respondent had the burden to prove its
illegality or unconstitutionality.21
Petitioners also maintained that there was no inconsistency between P.D. 499 and the Ordinance as the latter simply disauthorized
certain forms of businesses and allowed the Ermita-Malate area to remain a commercial zone.22 The Ordinance, the petitioners likewise
claimed, cannot be assailed as ex post facto as it was prospective in operation.23 The Ordinance also did not infringe the equal
protection clause and cannot be denounced as class legislation as there existed substantial and real differences between the Ermita-
Malate area and other places in the City of Manila.24
On 28 June 1993, respondent Judge Perfecto A.S. Laguio, Jr. (Judge Laguio) issued an ex-parte temporary restraining order against
the enforcement of the Ordinance.25 And on 16 July 1993, again in an intrepid gesture, he granted the writ of preliminary injunction
prayed for by MTDC.26
After trial, on 25 November 1994, Judge Laguio rendered the assailed Decision, enjoining the petitioners from implementing
the Ordinance. The dispositive portion of said Decision reads:27
WHEREFORE, judgment is hereby rendered declaring Ordinance No. 778[3], Series of 1993, of the City of Manila null and
void, and making permanent the writ of preliminary injunction that had been issued by this Court against the defendant. No
costs.
SO ORDERED.28
Petitioners filed with the lower court a Notice of Appeal29 on 12 December 1994, manifesting that they are elevating the case to this
Court under then Rule 42 on pure questions of law.30
On 11 January 1995, petitioners filed the present Petition, alleging that the following errors were committed by the lower court in its
ruling: (1) It erred in concluding that the subject ordinance is ultra vires, or otherwise, unfair, unreasonable and oppressive exercise of
police power; (2) It erred in holding that the questioned Ordinancecontravenes P.D. 49931 which allows operators of all kinds of
commercial establishments, except those specified therein; and (3) It erred in declaring the Ordinance void and unconstitutional.32
In the Petition and in its Memorandum,33 petitioners in essence repeat the assertions they made before the lower court. They contend
that the assailed Ordinance was enacted in the exercise of the inherent and plenary power of the State and the general welfare clause
exercised by local government units provided for in Art. 3, Sec. 18 (kk) of the Revised Charter of Manila and conjunctively, Section 458
(a) 4 (vii) of the Code.34 They allege that the Ordinance is a valid exercise of police power; it does not contravene P.D. 499; and that it
enjoys the presumption of validity.35
In its Memorandum36 dated 27 May 1996, private respondent maintains that the Ordinance is ultra vires and that it is void for being
repugnant to the general law. It reiterates that the questioned Ordinance is not a valid exercise of police power; that it is violative of due
process, confiscatory and amounts to an arbitrary interference with its lawful business; that it is violative of the equal protection clause;
and that it confers on petitioner City Mayor or any officer unregulated discretion in the execution of the Ordinance absent rules to guide
and control his actions.
This is an opportune time to express the Court's deep sentiment and tenderness for the Ermita-Malate area being its home for several
decades. A long-time resident, the Court witnessed the area's many turn of events. It relished its glory days and endured its days of
infamy. Much as the Court harks back to the resplendent era of the Old Manila and yearns to restore its lost grandeur, it believes that
the Ordinance is not the fitting means to that end. The Court is of the opinion, and so holds, that the lower court did not err in declaring
the Ordinance, as it did, ultra vires and therefore null and void.
The Ordinance is so replete with constitutional infirmities that almost every sentence thereof violates a constitutional provision. The
prohibitions and sanctions therein transgress the cardinal rights of persons enshrined by the Constitution. The Court is called upon to
shelter these rights from attempts at rendering them worthless.
The tests of a valid ordinance are well established. A long line of decisions has held that for an ordinance to be valid, it must not only be
within the corporate powers of the local government unit to enact and must be passed according to the procedure prescribed by law, it
must also conform to the following substantive requirements: (1) must not contravene the Constitution or any statute; (2) must not be
unfair or oppressive; (3) must not be partial or discriminatory; (4) must not prohibit but may regulate trade; (5) must be general and
consistent with public policy; and (6) must not be unreasonable.37
Anent the first criterion, ordinances shall only be valid when they are not contrary to the Constitution and to the
laws.38 The Ordinance must satisfy two requirements: it must pass muster under the test of constitutionality and the test of consistency
with the prevailing laws. That ordinances should be constitutional uphold the principle of the supremacy of the Constitution. The
requirement that the enactment must not violate existing law gives stress to the precept that local government units are able to legislate
only by virtue of their derivative legislative power, a delegation of legislative power from the national legislature. The delegate cannot be
superior to the principal or exercise powers higher than those of the latter.39
This relationship between the national legislature and the local government units has not been enfeebled by the new provisions in the
Constitution strengthening the policy of local autonomy. The national legislature is still the principal of the local government units, which
cannot defy its will or modify or violate it.40
The Ordinance was passed by the City Council in the exercise of its police power, an enactment of the City Council acting as agent of
Congress. Local government units, as agencies of the State, are endowed with police power in order to effectively accomplish and carry
out the declared objects of their creation.41 This delegated police power is found in Section 16 of the Code, known as the general welfare
clause, viz:
SECTION 16. General Welfare.Every local government unit shall exercise the powers expressly granted, those
necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient and effective
governance, and those which are essential to the promotion of the general welfare. Within their respective territorial
jurisdictions, local government units shall ensure and support, among other things, the preservation and enrichment of
culture, promote health and safety, enhance the right of the people to a balanced ecology, encourage and support the
development of appropriate and self-reliant scientific and technological capabilities, improve public morals, enhance
economic prosperity and social justice, promote full employment among their residents, maintain peace and order, and
preserve the comfort and convenience of their inhabitants.
Local government units exercise police power through their respective legislative bodies; in this case, the sangguniang panlungsod or
the city council. The Code empowers the legislative bodies to "enact ordinances, approve resolutions and appropriate funds for the
general welfare of the province/city/municipality and its inhabitants pursuant to Section 16 of the Code and in the proper exercise of the
corporate powers of the province/city/ municipality provided under the Code.42 The inquiry in this Petition is concerned with the validity of
the exercise of such delegated power.
The Ordinance contravenes
the Constitution
The police power of the City Council, however broad and far-reaching, is subordinate to the constitutional limitations thereon; and is
subject to the limitation that its exercise must be reasonable and for the public good.43 In the case at bar, the enactment of
the Ordinance was an invalid exercise of delegated power as it is unconstitutional and repugnant to general laws.
The relevant constitutional provisions are the following:
SEC. 5. The maintenance of peace and order, the protection of life, liberty, and property, and the promotion of the general
welfare are essential for the enjoyment by all the people of the blessings of democracy.44
SEC. 14. The State recognizes the role of women in nation-building, and shall ensure the fundamental equality before the
law of women and men.45
SEC. 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 laws.46
Sec. 9. Private property shall not be taken for public use without just compensation.47
A. The Ordinance infringes
the Due Process Clause
The constitutional safeguard of due process is embodied in the fiat "(N)o person shall be deprived of life, liberty or property without due
process of law. . . ."48
There is no controlling and precise definition of due process. It furnishes though a standard to which governmental action should
conform in order that deprivation of life, liberty or property, in each appropriate case, be valid. This standard is aptly described as a
responsiveness to the supremacy of reason, obedience to the dictates of justice,49and as such it is a limitation upon the exercise of the
police power.50
The purpose of the guaranty is to prevent governmental encroachment against the life, liberty and property of individuals; to secure the
individual from the arbitrary exercise of the powers of the government, unrestrained by the established principles of private rights and
distributive justice; to protect property from confiscation by legislative enactments, from seizure, forfeiture, and destruction without a trial
and conviction by the ordinary mode of judicial procedure; and to secure to all persons equal and impartial justice and the benefit of the
general law.51
The guaranty serves as a protection against arbitrary regulation, and private corporations and partnerships are "persons" within the
scope of the guaranty insofar as their property is concerned.52
This clause has been interpreted as imposing two separate limits on government, usually called "procedural due process" and
"substantive due process."
Procedural due process, as the phrase implies, refers to the procedures that the government must follow before it deprives a person of
life, liberty, or property. Classic procedural due process issues are concerned with what kind of notice and what form of hearing the
government must provide when it takes a particular action.53
Substantive due process, as that phrase connotes, asks whether the government has an adequate reason for taking away a person's
life, liberty, or property. In other words, substantive due process looks to whether there is a sufficient justification for the government's
action.54 Case law in the United States (U.S.) tells us that whether there is such a justification depends very much on the level of scrutiny
used.55 For example, if a law is in an area where only rational basis review is applied, substantive due process is met so long as the law
is rationally related to a legitimate government purpose. But if it is an area where strict scrutiny is used, such as for protecting
fundamental rights, then the government will meet substantive due process only if it can prove that the law is necessary to achieve a
compelling government purpose.56
The police power granted to local government units must always be exercised with utmost observance of the rights of the people to due
process and equal protection of the law. Such power cannot be exercised whimsically, arbitrarily or despotically57 as its exercise is
subject to a qualification, limitation or restriction demanded by the respect and regard due to the prescription of the fundamental law,
particularly those forming part of the Bill of Rights. Individual rights, it bears emphasis, may be adversely affected only to the extent that
may fairly be required by the legitimate demands of public interest or public welfare.58 Due process requires the intrinsic validity of the
law in interfering with the rights of the person to his life, liberty and property.59
Requisites for the valid exercise
of Police Power are not met
To successfully invoke the exercise of police power as the rationale for the enactment of the Ordinance, and to free it from the
imputation of constitutional infirmity, not only must it appear that the interests of the public generally, as distinguished from those of a
particular class, require an interference with private rights, but the means adopted must be reasonably necessary for the
accomplishment of the purpose and not unduly oppressive upon individuals.60It must be evident that no other alternative for the
accomplishment of the purpose less intrusive of private rights can work. A reasonable relation must exist between the purposes of the
police measure and the means employed for its accomplishment, for even under the guise of protecting the public interest, personal
rights and those pertaining to private property will not be permitted to be arbitrarily invaded.61
Lacking a concurrence of these two requisites, the police measure shall be struck down as an arbitrary intrusion into private rights62 a
violation of the due process clause.
The Ordinance was enacted to address and arrest the social ills purportedly spawned by the establishments in the Ermita-Malate area
which are allegedly operated under the deceptive veneer of legitimate, licensed and tax-paying nightclubs, bars, karaoke bars, girlie
houses, cocktail lounges, hotels and motels. Petitioners insist that even the Court in the case of Ermita-Malate Hotel and Motel
Operators Association, Inc. v. City Mayor of Manila63 had already taken judicial notice of the "alarming increase in the rate of prostitution,
adultery and fornication in Manila traceable in great part to existence of motels, which provide a necessary atmosphere for clandestine
entry, presence and exit and thus become the ideal haven for prostitutes and thrill-seekers."64
The object of the Ordinance was, accordingly, the promotion and protection of the social and moral values of the community. Granting
for the sake of argument that the objectives of the Ordinance are within the scope of the City Council's police powers, the means
employed for the accomplishment thereof were unreasonable and unduly oppressive.
It is undoubtedly one of the fundamental duties of the City of Manila to make all reasonable regulations looking to the promotion of the
moral and social values of the community. However, the worthy aim of fostering public morals and the eradication of the community's
social ills can be achieved through means less restrictive of private rights; it can be attained by reasonable restrictions rather than by an
absolute prohibition. The closing down and transfer of businesses or their conversion into businesses "allowed" under
the Ordinance have no reasonable relation to the accomplishment of its purposes. Otherwise stated, the prohibition of the enumerated
establishments will not per seprotect and promote the social and moral welfare of the community; it will not in itself eradicate the alluded
social ills of prostitution, adultery, fornication nor will it arrest the spread of sexual disease in Manila.
Conceding for the nonce that the Ermita-Malate area teems with houses of ill-repute and establishments of the like which the City
Council may lawfully prohibit,65 it is baseless and insupportable to bring within that classification sauna parlors, massage parlors, karaoke
bars, night clubs, day clubs, super clubs, discotheques, cabarets, dance halls, motels and inns. This is not warranted under the
accepted definitions of these terms. The enumerated establishments are lawful pursuits which are not per se offensive to the moral
welfare of the community.
That these are used as arenas to consummate illicit sexual affairs and as venues to further the illegal prostitution is of no moment. We
lay stress on the acrid truth that sexual immorality, being a human frailty, may take place in the most innocent of places that it may even
take place in the substitute establishments enumerated under Section 3 of the Ordinance. If the flawed logic of the Ordinance were to
be followed, in the remote instance that an immoral sexual act transpires in a church cloister or a court chamber, we would behold the
spectacle of the City of Manila ordering the closure of the church or court concerned. Every house, building, park, curb, street or even
vehicles for that matter will not be exempt from the prohibition. Simply because there are no "pure" places where there are impure men.
Indeed, even the Scripture and the Tradition of Christians churches continually recall the presence and universality of sin in man's
history.66
The problem, it needs to be pointed out, is not the establishment, which by its nature cannot be said to be injurious to the health or
comfort of the community and which in itself is amoral, but the deplorable human activity that may occur within its premises. While a
motel may be used as a venue for immoral sexual activity, it cannot for that reason alone be punished. It cannot be classified as a house
of ill-repute or as a nuisance per se on a mere likelihood or a naked assumption. If that were so and if that were allowed, then the
Ermita-Malate area would not only be purged of its supposed social ills, it would be extinguished of its soul as well as every human
activity, reprehensible or not, in its every nook and cranny would be laid bare to the estimation of the authorities.
The Ordinance seeks to legislate morality but fails to address the core issues of morality. Try as the Ordinance may to shape morality, it
should not foster the illusion that it can make a moral man out of it because immorality is not a thing, a building or establishment; it is in
the hearts of men. The City Council instead should regulate human conduct that occurs inside the establishments, but not to the
detriment of liberty and privacy which are covenants, premiums and blessings of democracy.
While petitioners' earnestness at curbing clearly objectionable social ills is commendable, they unwittingly punish even the proprietors
and operators of "wholesome," "innocent" establishments. In the instant case, there is a clear invasion of personal or property rights,
personal in the case of those individuals desirous of owning, operating and patronizing those motels and property in terms of the
investments made and the salaries to be paid to those therein employed. If the City of Manila so desires to put an end to prostitution,
fornication and other social ills, it can instead impose reasonable regulations such as daily inspections of the establishments for any
violation of the conditions of their licenses or permits; it may exercise its authority to suspend or revoke their licenses for these
violations;67 and it may even impose increased license fees. In other words, there are other means to reasonably accomplish the desired
end.
Means employed are
constitutionally infirm
The Ordinance disallows the operation of sauna parlors, massage parlors, karaoke bars, beerhouses, night clubs, day clubs, super
clubs, discotheques, cabarets, dance halls, motels and inns in the Ermita-Malate area. In Section 3 thereof, owners and/or operators of
the enumerated establishments are given three (3) months from the date of approval of the Ordinance within which "to wind up business
operations or to transfer to any place outside the Ermita-Malate area or convert said businesses to other kinds of business allowable
within the area." Further, it states in Section 4 that in cases of subsequent violations of the provisions of the Ordinance, the "premises of
the erring establishment shall be closed and padlocked permanently."
It is readily apparent that the means employed by the Ordinance for the achievement of its purposes, the governmental interference
itself, infringes on the constitutional guarantees of a person's fundamental right to liberty and property.
Liberty as guaranteed by the Constitution was defined by Justice Malcolm to include "the right to exist and the right to be free from
arbitrary restraint or servitude. The term cannot be dwarfed into mere freedom from physical restraint of the person of the citizen, but is
deemed to embrace the right of man to enjoy the facilities with which he has been endowed by his Creator, subject only to such restraint
as are necessary for the common welfare."68 In accordance with this case, the rights of the citizen to be free to use his faculties in all
lawful ways; to live and work where he will; to earn his livelihood by any lawful calling; and to pursue any avocation are all deemed
embraced in the concept of liberty.69
The U.S. Supreme Court in the case of Roth v. Board of Regents,70 sought to clarify the meaning of "liberty." It said:
While the Court has not attempted to define with exactness the liberty. . . guaranteed [by the Fifth and Fourteenth
Amendments], the term denotes not merely freedom from bodily restraint but also the right of the individual to contract, to
engage in any of the common occupations of life, to acquire useful knowledge, to marry, establish a home and bring up
children, to worship God according to the dictates of his own conscience, and generally to enjoy those privileges long
recognized…as essential to the orderly pursuit of happiness by free men. In a Constitution for a free people, there can be
no doubt that the meaning of "liberty" must be broad indeed.
In another case, it also confirmed that liberty protected by the due process clause includes personal decisions relating to marriage,
procreation, contraception, family relationships, child rearing, and education. In explaining the respect the Constitution demands for the
autonomy of the person in making these choices, the U.S. Supreme Court explained:
These matters, involving the most intimate and personal choices a person may make in a lifetime, choices central to
personal dignity and autonomy, are central to the liberty protected by the Fourteenth Amendment. At the heart of liberty is
the right to define one's own concept of existence, of meaning, of universe, and of the mystery of human life. Beliefs about
these matters could not define the attributes of personhood where they formed under compulsion of the State.71
Persons desirous to own, operate and patronize the enumerated establishments under Section 1 of the Ordinancemay seek autonomy
for these purposes.
Motel patrons who are single and unmarried may invoke this right to autonomy to consummate their bonds in intimate sexual conduct
within the motel's premisesbe it stressed that their consensual sexual behavior does not contravene any fundamental state policy as
contained in the Constitution.72 Adults have a right to choose to forge such relationships with others in the confines of their own private
lives and still retain their dignity as free persons. The liberty protected by the Constitution allows persons the right to make this
choice.73 Their right to liberty under the due process clause gives them the full right to engage in their conduct without intervention of the
government, as long as they do not run afoul of the law. Liberty should be the rule and restraint the exception.
Liberty in the constitutional sense not only means freedom from unlawful government restraint; it must include privacy as well, if it is to
be a repository of freedom. The right to be let alone is the beginning of all freedomit is the most comprehensive of rights and the right
most valued by civilized men.74
The concept of liberty compels respect for the individual whose claim to privacy and interference demands respect. As the case of Morfe
v. Mutuc,75 borrowing the words of Laski, so very aptly stated:
Man is one among many, obstinately refusing reduction to unity. His separateness, his isolation, are indefeasible; indeed,
they are so fundamental that they are the basis on which his civic obligations are built. He cannot abandon the
consequences of his isolation, which are, broadly speaking, that his experience is private, and the will built out of that
experience personal to himself. If he surrenders his will to others, he surrenders himself. If his will is set by the will of
others, he ceases to be a master of himself. I cannot believe that a man no longer a master of himself is in any real sense
free.
Indeed, the right to privacy as a constitutional right was recognized in Morfe, the invasion of which should be justified by a compelling
state interest. Morfe accorded recognition to the right to privacy independently of its identification with liberty; in itself it is fully deserving
of constitutional protection. Governmental powers should stop short of certain intrusions into the personal life of the citizen.76
There is a great temptation to have an extended discussion on these civil liberties but the Court chooses to exercise restraint and
restrict itself to the issues presented when it should. The previous pronouncements of the Court are not to be interpreted as a license for
adults to engage in criminal conduct. The reprehensibility of such conduct is not diminished. The Court only reaffirms and guarantees
their right to make this choice. Should they be prosecuted for their illegal conduct, they should suffer the consequences of the choice
they have made. That, ultimately, is their choice.
Modality employed is
unlawful taking
In addition, the Ordinance is unreasonable and oppressive as it substantially divests the respondent of the beneficial use of its
property.77 The Ordinance in Section 1 thereof forbids the running of the enumerated businesses in the Ermita-Malate area and in
Section 3 instructs its owners/operators to wind up business operations or to transfer outside the area or convert said businesses into
allowed businesses. An ordinance which permanently restricts the use of property that it can not be used for any reasonable purpose
goes beyond regulation and must be recognized as a taking of the property without just compensation.78 It is intrusive and violative of the
private property rights of individuals.
The Constitution expressly provides in Article III, Section 9, that "private property shall not be taken for public use without just
compensation." The provision is the most important protection of property rights in the Constitution. This is a restriction on the general
power of the government to take property. The constitutional provision is about ensuring that the government does not confiscate the
property of some to give it to others. In part too, it is about loss spreading. If the government takes away a person's property to benefit
society, then society should pay. The principal purpose of the guarantee is "to bar the Government from forcing some people alone to
bear public burdens which, in all fairness and justice, should be borne by the public as a whole.79
There are two different types of taking that can be identified. A "possessory" taking occurs when the government confiscates or
physically occupies property. A "regulatory" taking occurs when the government's regulation leaves no reasonable economically viable
use of the property.80
In the landmark case of Pennsylvania Coal v. Mahon,81 it was held that a taking also could be found if government regulation of the use
of property went "too far." When regulation reaches a certain magnitude, in most if not in all cases there must be an exercise of eminent
domain and compensation to support the act. While property may be regulated to a certain extent, if regulation goes too far it will be
recognized as a taking.82
No formula or rule can be devised to answer the questions of what is too far and when regulation becomes a taking. In Mahon, Justice
Holmes recognized that it was "a question of degree and therefore cannot be disposed of by general propositions." On many other
occasions as well, the U.S. Supreme Court has said that the issue of when regulation constitutes a taking is a matter of considering the
facts in each case. The Court asks whether justice and fairness require that the economic loss caused by public action must be
compensated by the government and thus borne by the public as a whole, or whether the loss should remain concentrated on those few
persons subject to the public action.83
What is crucial in judicial consideration of regulatory takings is that government regulation is a taking if it leaves no reasonable
economically viable use of property in a manner that interferes with reasonable expectations for use.84 A regulation that permanently
denies all economically beneficial or productive use of land is, from the owner's point of view, equivalent to a "taking" unless principles of
nuisance or property law that existed when the owner acquired the land make the use prohibitable.85 When the owner of real property
has been called upon to sacrifice all economically beneficial uses in the name of the common good, that is, to leave his property
economically idle, he has suffered a taking.86
A regulation which denies all economically beneficial or productive use of land will require compensation under the takings clause.
Where a regulation places limitations on land that fall short of eliminating all economically beneficial use, a taking nonetheless may have
occurred, depending on a complex of factors including the regulation's economic effect on the landowner, the extent to which the
regulation interferes with reasonable investment-backed expectations and the character of government action. These inquiries are
informed by the purpose of the takings clause which is to prevent the government from forcing some people alone to bear public
burdens which, in all fairness and justice, should be borne by the public as a whole.87
A restriction on use of property may also constitute a "taking" if not reasonably necessary to the effectuation of a substantial public
purpose or if it has an unduly harsh impact on the distinct investment-backed expectations of the owner.88
The Ordinance gives the owners and operators of the "prohibited" establishments three (3) months from its approval within which to
"wind up business operations or to transfer to any place outside of the Ermita-Malate area or convert said businesses to other kinds of
business allowable within the area." The directive to "wind up business operations" amounts to a closure of the establishment, a
permanent deprivation of property, and is practically confiscatory. Unless the owner converts his establishment to accommodate an
"allowed" business, the structure which housed the previous business will be left empty and gathering dust. Suppose he transfers it to
another area, he will likewise leave the entire establishment idle. Consideration must be given to the substantial amount of money
invested to build the edifices which the owner reasonably expects to be returned within a period of time. It is apparent that
the Ordinance leaves no reasonable economically viable use of property in a manner that interferes with reasonable expectations for
use.
The second and third options to transfer to any place outside of the Ermita-Malate area or to convert into allowed businessesare
confiscatory as well. The penalty of permanent closure in cases of subsequent violations found in Section 4 of the Ordinance is also
equivalent to a "taking" of private property.
The second option instructs the owners to abandon their property and build another one outside the Ermita-Malate area. In every
sense, it qualifies as a taking without just compensation with an additional burden imposed on the owner to build another establishment
solely from his coffers. The proffered solution does not put an end to the "problem," it merely relocates it. Not only is this impractical, it is
unreasonable, onerous and oppressive. The conversion into allowed enterprises is just as ridiculous. How may the respondent convert a
motel into a restaurant or a coffee shop, art gallery or music lounge without essentially destroying its property? This is a taking of private
property without due process of law, nay, even without compensation.
The penalty of closure likewise constitutes unlawful taking that should be compensated by the government. The burden on the owner to
convert or transfer his business, otherwise it will be closed permanently after a subsequent violation should be borne by the public as
this end benefits them as a whole.
Petitioners cannot take refuge in classifying the measure as a zoning ordinance. A zoning ordinance, although a valid exercise of police
power, which limits a "wholesome" property to a use which can not reasonably be made of it constitutes the taking of such property
without just compensation. Private property which is not noxious nor intended for noxious purposes may not, by zoning, be destroyed
without compensation. Such principle finds no support in the principles of justice as we know them. The police powers of local
government units which have always received broad and liberal interpretation cannot be stretched to cover this particular taking.
Distinction should be made between destruction from necessity and eminent domain. It needs restating that the property taken in the
exercise of police power is destroyed because it is noxious or intended for a noxious purpose while the property taken under the power
of eminent domain is intended for a public use or purpose and is therefore "wholesome."89 If it be of public benefit that a "wholesome"
property remain unused or relegated to a particular purpose, then certainly the public should bear the cost of reasonable compensation
for the condemnation of private property for public use.90
Further, the Ordinance fails to set up any standard to guide or limit the petitioners' actions. It in no way controls or guides the discretion
vested in them. It provides no definition of the establishments covered by it and it fails to set forth the conditions when the
establishments come within its ambit of prohibition. The Ordinance confers upon the mayor arbitrary and unrestricted power to close
down establishments. Ordinances such as this, which make possible abuses in its execution, depending upon no conditions or
qualifications whatsoever other than the unregulated arbitrary will of the city authorities as the touchstone by which its validity is to be
tested, are unreasonable and invalid. The Ordinance should have established a rule by which its impartial enforcement could be
secured.91
Ordinances placing restrictions upon the lawful use of property must, in order to be valid and constitutional, specify the rules and
conditions to be observed and conduct to avoid; and must not admit of the exercise, or of an opportunity for the exercise, of unbridled
discretion by the law enforcers in carrying out its provisions.92
Thus, in Coates v. City of Cincinnati,93 as cited in People v. Nazario,94 the U.S. Supreme Court struck down an ordinance that had
made it illegal for "three or more persons to assemble on any sidewalk and there conduct themselves in a manner annoying to persons
passing by." The ordinance was nullified as it imposed no standard at all "because one may never know in advance what 'annoys some
people but does not annoy others.' "
Similarly, the Ordinance does not specify the standards to ascertain which establishments "tend to disturb the community," "annoy the
inhabitants," and "adversely affect the social and moral welfare of the community." The cited case supports the nullification of
the Ordinance for lack of comprehensible standards to guide the law enforcers in carrying out its provisions.
Petitioners cannot therefore order the closure of the enumerated establishments without infringing the due process clause. These lawful
establishments may be regulated, but not prevented from carrying on their business. This is a sweeping exercise of police power that is
a result of a lack of imagination on the part of the City Council and which amounts to an interference into personal and private rights
which the Court will not countenance. In this regard, we take a resolute stand to uphold the constitutional guarantee of the right to liberty
and property.
Worthy of note is an example derived from the U.S. of a reasonable regulation which is a far cry from the ill-
considered Ordinance enacted by the City Council.
In FW/PBS, INC. v. Dallas,95 the city of Dallas adopted a comprehensive ordinance regulating "sexually oriented businesses," which are
defined to include adult arcades, bookstores, video stores, cabarets, motels, and theaters as well as escort agencies, nude model studio
and sexual encounter centers. Among other things, the ordinance required that such businesses be licensed. A group of motel owners
were among the three groups of businesses that filed separate suits challenging the ordinance. The motel owners asserted that the city
violated the due process clause by failing to produce adequate support for its supposition that renting room for fewer than ten (10) hours
resulted in increased crime and other secondary effects. They likewise argued than the ten (10)-hour limitation on the rental of motel
rooms placed an unconstitutional burden on the right to freedom of association. Anent the first contention, the U.S. Supreme Court held
that the reasonableness of the legislative judgment combined with a study which the city considered, was adequate to support the city's
determination that motels permitting room rentals for fewer than ten (10 ) hours should be included within the licensing scheme. As
regards the second point, the Court held that limiting motel room rentals to ten (10) hours will have no discernible effect on personal
bonds as those bonds that are formed from the use of a motel room for fewer than ten (10) hours are not those that have played a
critical role in the culture and traditions of the nation by cultivating and transmitting shared ideals and beliefs.
The ordinance challenged in the above-cited case merely regulated the targeted businesses. It imposed reasonable restrictions; hence,
its validity was upheld.
The case of Ermita Malate Hotel and Motel Operators Association, Inc. v. City Mayor of Manila,96 it needs pointing out, is also different
from this case in that what was involved therein was a measure which regulated the mode in which motels may conduct business in
order to put an end to practices which could encourage vice and immorality. Necessarily, there was no valid objection on due process or
equal protection grounds as the ordinance did not prohibit motels. The Ordinance in this case however is not a regulatory measure but
is an exercise of an assumed power to prohibit.97
The foregoing premises show that the Ordinance is an unwarranted and unlawful curtailment of property and personal rights of citizens.
For being unreasonable and an undue restraint of trade, it cannot, even under the guise of exercising police power, be upheld as valid.
B. The Ordinance violates Equal
Protection Clause
Equal protection requires that all persons or things similarly situated should be treated alike, both as to rights conferred and
responsibilities imposed. Similar subjects, in other words, should not be treated differently, so as to give undue favor to some and
unjustly discriminate against others.98 The guarantee means that no person or class of persons shall be denied the same protection of
laws which is enjoyed by other persons or other classes in like circumstances.99 The "equal protection of the laws is a pledge of the
protection of equal laws."100 It limits governmental discrimination. The equal protection clause extends to artificial persons but only insofar
as their property is concerned.101
The Court has explained the scope of the equal protection clause in this wise:
… What does it signify? To quote from J.M. Tuason & Co. v. Land Tenure Administration: "The ideal situation is for the
law's benefits to be available to all, that none be placed outside the sphere of its coverage. Only thus could chance and
favor be excluded and the affairs of men governed by that serene and impartial uniformity, which is of the very essence of
the idea of law." There is recognition, however, in the opinion that what in fact exists "cannot approximate the ideal. Nor is
the law susceptible to the reproach that it does not take into account the realities of the situation. The constitutional
guarantee then is not to be given a meaning that disregards what is, what does in fact exist. To assure that the general
welfare be promoted, which is the end of law, a regulatory measure may cut into the rights to liberty and property. Those
adversely affected may under such circumstances invoke the equal protection clause only if they can show that the
governmental act assailed, far from being inspired by the attainment of the common weal was prompted by the spirit of
hostility, or at the very least, discrimination that finds no support in reason." Classification is thus not ruled out, it being
sufficient to quote from the Tuason decision anew "that the laws operate equally and uniformly on all persons under similar
circumstances or that all persons must be treated in the same manner, the conditions not being different, both in the
privileges conferred and the liabilities imposed. Favoritism and undue preference cannot be allowed. For the principle is
that equal protection and security shall be given to every person under circumstances which, if not identical, are
 analogous. If law be looked upon in terms of burden or charges, those that fall within a class should be treated in the same
fashion, whatever restrictions cast on some in the group equally binding on the rest.102
Legislative bodies are allowed to classify the subjects of legislation. If the classification is reasonable, the law may operate only on some
and not all of the people without violating the equal protection clause.103 The classification must, as an indispensable requisite, not be
arbitrary. To be valid, it must conform to the following requirements:
1) It must be based on substantial distinctions.
2) It must be germane to the purposes of the law.
3) It must not be limited to existing conditions only.
4) It must apply equally to all members of the class.104
In the Court's view, there are no substantial distinctions between motels, inns, pension houses, hotels, lodging houses or other similar
establishments. By definition, all are commercial establishments providing lodging and usually meals and other services for the public.
No reason exists for prohibiting motels and inns but not pension houses, hotels, lodging houses or other similar establishments. The
classification in the instant case is invalid as similar subjects are not similarly treated, both as to rights conferred and obligations
imposed. It is arbitrary as it does not rest on substantial distinctions bearing a just and fair relation to the purpose of the Ordinance.
The Court likewise cannot see the logic for prohibiting the business and operation of motels in the Ermita-Malate area but not outside of
this area. A noxious establishment does not become any less noxious if located outside the area.
The standard "where women are used as tools for entertainment" is also discriminatory as prostitutionone of the hinted ills
the Ordinance aims to banishis not a profession exclusive to women. Both men and women have an equal propensity to engage in
prostitution. It is not any less grave a sin when men engage in it. And why would the assumption that there is an ongoing immoral
activity apply only when women are employed and be inapposite when men are in harness? This discrimination based on gender
violates equal protection as it is not substantially related to important government objectives.105 Thus, the discrimination is invalid.
Failing the test of constitutionality, the Ordinance likewise failed to pass the test of consistency with prevailing laws.
C. The Ordinance is repugnant
to general laws; it is ultra vires
The Ordinance is in contravention of the Code as the latter merely empowers local government units to regulate, and not prohibit, the
establishments enumerated in Section 1 thereof.
The power of the City Council to regulate by ordinances the establishment, operation, and maintenance of motels, hotels and other
similar establishments is found in Section 458 (a) 4 (iv), which provides that:
Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang panlungsod, as the legislative body of
the city, shall enact ordinances, approve resolutions and appropriate funds for the general welfare of the city and its
inhabitants pursuant to Section 16 of this Code and in the proper exercise of the corporate powers of the city as provided
for under Section 22 of this Code, and shall:
. . .
(4) Regulate activities relative to the use of land, buildings and structures within the city in order to promote the general
welfare and for said purpose shall:
. . .
(iv) Regulate the establishment, operation and maintenance of cafes, restaurants, beerhouses, hotels, motels, inns,
pension houses, lodging houses, and other similar establishments, including tourist guides and transports . . . .
While its power to regulate the establishment, operation and maintenance of any entertainment or amusement facilities, and to prohibit
certain forms of amusement or entertainment is provided under Section 458 (a) 4 (vii) of the Code, which reads as follows:
Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang panlungsod, as the legislative body of
the city, shall enact ordinances, approve resolutions and appropriate funds for the general welfare of the city and its
inhabitants pursuant to Section 16 of this Code and in the proper exercise of the corporate powers of the city as provided
for under Section 22 of this Code, and shall:
. . .
(4) Regulate activities relative to the use of land, buildings and structures within the city in order to promote the general
welfare and for said purpose shall:
. . .
(vii) Regulate the establishment, operation, and maintenance of any entertainment or amusement facilities,
including theatrical performances, circuses, billiard pools, public dancing schools, public dance halls, sauna
baths, massage parlors, and other places for entertainment or amusement; regulate such other events or
activities for amusement or entertainment, particularly those which tend to disturb the community or annoy the
inhabitants, or require the suspension or suppression of the same; or, prohibit certain forms of amusement or
entertainment in order to protect the social and moral welfare of the community.
Clearly, with respect to cafes, restaurants, beerhouses, hotels, motels, inns, pension houses, lodging houses, and other similar
establishments, the only power of the City Council to legislate relative thereto is to regulate them to promote the general welfare. The
Code still withholds from cities the power to suppress and prohibit altogether the establishment, operation and maintenance of such
establishments. It is well to recall the rulings of the Court in Kwong Sing v. City of Manila106 that:
The word "regulate," as used in subsection (l), section 2444 of the Administrative Code, means and includes the power to
control, to govern, and to restrain; but "regulate" should not be construed as synonymous with "suppress" or "prohibit."
Consequently, under the power to regulate laundries, the municipal authorities could make proper police regulations as to
the mode in which the employment or business shall be exercised.107
And in People v. Esguerra,108 wherein the Court nullified an ordinance of the Municipality of Tacloban which prohibited the selling, giving
and dispensing of liquor ratiocinating that the municipality is empowered only to regulate the same and not prohibit. The Court therein
declared that:
(A)s a general rule when a municipal corporation is specifically given authority or power to regulate or to license and
regulate the liquor traffic, power to prohibit is impliedly withheld.109
These doctrines still hold contrary to petitioners' assertion110 that they were modified by the Code vesting upon City Councils prohibitory
powers.
Similarly, the City Council exercises regulatory powers over public dancing schools, public dance halls, sauna baths, massage parlors,
and other places for entertainment or amusement as found in the first clause of Section 458 (a) 4 (vii). Its powers to regulate, suppress
and suspend "such other events or activities for amusement or entertainment, particularly those which tend to disturb the community or
annoy the inhabitants" and to "prohibit certain forms of amusement or entertainment in order to protect the social and moral welfare of
the community" are stated in the second and third clauses, respectively of the same Section. The several powers of the City Council as
provided in Section 458 (a) 4 (vii) of the Code, it is pertinent to emphasize, are separated by semi-colons (;), the use of which indicates
that the clauses in which these powers are set forth are independent of each other albeit closely related to justify being put together in a
single enumeration or paragraph.111 These powers, therefore, should not be confused, commingled or consolidated as to create a
conglomerated and unified power of regulation, suppression and prohibition.112
The Congress unequivocably specified the establishments and forms of amusement or entertainment subject to regulation among which
are beerhouses, hotels, motels, inns, pension houses, lodging houses, and other similar establishments (Section 458 (a) 4 (iv)), public
dancing schools, public dance halls, sauna baths, massage parlors, and other places for entertainment or amusement (Section 458 (a)
4 (vii)). This enumeration therefore cannot be included as among "other events or activities for amusement or entertainment, particularly
those which tend to disturb the community or annoy the inhabitants" or "certain forms of amusement or entertainment" which the City
Council may suspend, suppress or prohibit.
The rule is that the City Council has only such powers as are expressly granted to it and those which are necessarily implied or
incidental to the exercise thereof. By reason of its limited powers and the nature thereof, said powers are to be construed strictissimi
juris and any doubt or ambiguity arising out of the terms used in granting said powers must be construed against the City
Council.113 Moreover, it is a general rule in statutory construction that the express mention of one person, thing, or consequence is
tantamount to an express exclusion of all others. Expressio unius est exclusio alterium. This maxim is based upon the rules of logic and
the natural workings of human mind. It is particularly applicable in the construction of such statutes as create new rights or remedies,
impose penalties or punishments, or otherwise come under the rule of strict construction.114
The argument that the City Council is empowered to enact the Ordinance by virtue of the general welfare clause of the Code and of Art.
3, Sec. 18 (kk) of the Revised Charter of Manila is likewise without merit. On the first point, the ruling of the Court in People v.
Esguerra,115 is instructive. It held that:
The powers conferred upon a municipal council in the general welfare clause, or section 2238 of the Revised
Administrative Code, refers to matters not covered by the other provisions of the same Code, and therefore it can not be
applied to intoxicating liquors, for the power to regulate the selling, giving away and dispensing thereof is granted
specifically by section 2242 (g) to municipal councils. To hold that, under the general power granted by section 2238, a
municipal council may enact the ordinance in question, notwithstanding the provision of section 2242 (g), would be to make
the latter superfluous and nugatory, because the power to prohibit, includes the power to regulate, the selling, giving away
and dispensing of intoxicating liquors.
On the second point, it suffices to say that the Code being a later expression of the legislative will must necessarily prevail and override
the earlier law, the Revised Charter of Manila. Legis posteriores priores contrarias abrogant, or later statute repeals prior ones which are
repugnant thereto. As between two laws on the same subject matter, which are irreconcilably inconsistent, that which is passed later
prevails, since it is the latest expression of legislative will.116 If there is an inconsistency or repugnance between two statutes, both
relating to the same subject matter, which cannot be removed by any fair and reasonable method of interpretation, it is the latest
expression of the legislative will which must prevail and override the earlier.117
Implied repeals are those which take place when a subsequently enacted law contains provisions contrary to those of an existing law
but no provisions expressly repealing them. Such repeals have been divided into two general classes: those which occur where an act is
so inconsistent or irreconcilable with an existing prior act that only one of the two can remain in force and those which occur when an act
covers the whole subject of an earlier act and is intended to be a substitute therefor. The validity of such a repeal is sustained on the
ground that the latest expression of the legislative will should prevail.118
In addition, Section 534(f) of the Code states that "All general and special laws, acts, city charters, decrees, executive orders,
proclamations and administrative regulations, or part or parts thereof which are inconsistent with any of the provisions of this Code are
hereby repealed or modified accordingly." Thus, submitting to petitioners' interpretation that the Revised Charter of Manila empowers
the City Council to prohibit motels, that portion of the Charter stating such must be considered repealed by the Code as it is at variance
with the latter's provisions granting the City Council mere regulatory powers.
It is well to point out that petitioners also cannot seek cover under the general welfare clause authorizing the abatement of nuisances
without judicial proceedings. That tenet applies to a nuisance per se, or one which affects the immediate safety of persons and property
and may be summarily abated under the undefined law of necessity. It can not be said that motels are injurious to the rights of property,
health or comfort of the community. It is a legitimate business. If it be a nuisance per accidens it may be so proven in a hearing
conducted for that purpose. A motel is not per se a nuisance warranting its summary abatement without judicial intervention.119
Notably, the City Council was conferred powers to prevent and prohibit certain activities and establishments in another section of the
Code which is reproduced as follows:
Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang panlungsod, as the legislative body of
the city, shall enact ordinances, approve resolutions and appropriate funds for the general welfare of the city and its
inhabitants pursuant to Section 16 of this Code and in the proper exercise of the corporate powers of the city as provided
for under Section 22 of this Code, and shall:
(1) Approve ordinances and pass resolutions necessary for an efficient and effective city government, and in this
connection, shall:
. . .
 (v) Enact ordinances intended to prevent, suppress and impose appropriate penalties for habitual drunkenness in public
places, vagrancy, mendicancy, prostitution, establishment and maintenance of houses of ill repute, gambling and other
prohibited games of chance, fraudulent devices and ways to obtain money or property, drug addiction, maintenance of
drug dens, drug pushing, juvenile delinquency, the printing, distribution or exhibition of obscene or pornographic materials
or publications, and such other activities inimical to the welfare and morals of the inhabitants of the city;
. . .
If it were the intention of Congress to confer upon the City Council the power to prohibit the establishments enumerated in Section 1 of
the Ordinance, it would have so declared in uncertain terms by adding them to the list of the matters it may prohibit under the above-
quoted Section. The Ordinance now vainly attempts to lump these establishments with houses of ill-repute and expand the City
Council's powers in the second and third clauses of Section 458 (a) 4 (vii) of the Code in an effort to overreach its prohibitory powers. It
is evident that these establishments may only be regulated in their establishment, operation and maintenance.
It is important to distinguish the punishable activities from the establishments themselves. That these establishments are recognized
legitimate enterprises can be gleaned from another Section of the Code. Section 131 under the Title on Local Government Taxation
expressly mentioned proprietors or operators of massage clinics, sauna, Turkish and Swedish baths, hotels, motels and lodging houses
as among the "contractors" defined in paragraph (h) thereof. The same Section also defined "amusement" as a "pleasurable diversion
and entertainment," "synonymous to relaxation, avocation, pastime or fun;" and "amusement places" to include "theaters, cinemas,
concert halls, circuses and other places of amusement where one seeks admission to entertain oneself by seeing or viewing the show
or performances." Thus, it can be inferred that the Code considers these establishments as legitimate enterprises and activities. It is well
to recall the maxim reddendo singula singulis which means that words in different parts of a statute must be referred to their appropriate
connection, giving to each in its place, its proper force and effect, and, if possible, rendering none of them useless or superfluous, even
if strict grammatical construction demands otherwise. Likewise, where words under consideration appear in different sections or are
widely dispersed throughout an act the same principle applies.120
Not only does the Ordinance contravene the Code, it likewise runs counter to the provisions of P.D. 499. As correctly argued by MTDC,
the statute had already converted the residential Ermita-Malate area into a commercial area. The decree allowed the establishment and
operation of all kinds of commercial establishments except warehouse or open storage depot, dump or yard, motor repair shop, gasoline
service station, light industry with any machinery or funeral establishment. The rule is that for an ordinance to be valid and to have force
and effect, it must not only be within the powers of the council to enact but the same must not be in conflict with or repugnant to the
general law.121As succinctly illustrated in Solicitor General v. Metropolitan Manila Authority:122
The requirement that the enactment must not violate existing law explains itself. Local political subdivisions are able to
legislate only by virtue of a valid delegation of legislative power from the national legislature (except only that the power to
create their own sources of revenue and to levy taxes is conferred by the Constitution itself). They are mere agents vested
with what is called the power of subordinate legislation. As delegates of the Congress, the local government units cannot
contravene but must obey at all times the will of their principal. In the case before us, the enactment in question, which are
merely local in origin cannot prevail against the decree, which has the force and effect of a statute.123
Petitioners contend that the Ordinance enjoys the presumption of validity. While this may be the rule, it has already been held that
although the presumption is always in favor of the validity or reasonableness of the ordinance, such presumption must nevertheless be
set aside when the invalidity or unreasonableness appears on the face of the ordinance itself or is established by proper evidence. The
exercise of police power by the local government is valid unless it contravenes the fundamental law of the land, or an act of the
legislature, or unless it is against public policy or is unreasonable, oppressive, partial, discriminating or in derogation of a common
right.124
Conclusion
All considered, the Ordinance invades fundamental personal and property rights and impairs personal privileges. It is constitutionally
infirm. The Ordinance contravenes statutes; it is discriminatory and unreasonable in its operation; it is not sufficiently detailed and
explicit that abuses may attend the enforcement of its sanctions. And not to be forgotten, the City Council under the Code had no power
to enact the Ordinance and is therefore ultra vires, null and void.
Concededly, the challenged Ordinance was enacted with the best of motives and shares the concern of the public for the cleansing of
the Ermita-Malate area of its social sins. Police power legislation of such character deserves the full endorsement of the judiciary we
reiterate our support for it. But inspite of its virtuous aims, the enactment of the Ordinance has no statutory or constitutional authority to
stand on. Local legislative bodies, in this case, the City Council, cannot prohibit the operation of the enumerated establishments under
Section 1 thereof or order their transfer or conversion without infringing the constitutional guarantees of due process and equal
protection of laws not even under the guise of police power.
WHEREFORE, the Petition is hereby DENIED and the decision of the Regional Trial Court declaring the Ordinancevoid is AFFIRMED.
Costs against petitioners.
SO ORDERED.
G.R. No. 222838
PHILIPPINE HEALTH INSURANCE CORPORATION, Petitioner
vs.
COMMISSION ON AUDIT, CHAIRPERSON MICHAEL G. AGUINALDO, DIRECTOR JOSEPH B. ANACAY, AND SUPERVISING
AUDITOR ELENA L. AGUSTIN, Respondents
DECISION
JARDELEZA, J.:
This petition for review on certiorari1 under Rule 64,2 with prayer for issuance of a temporary restraining order and/or writ of preliminary
injunction, seeks to annul and set aside the Decision No. 2015-0933 dated April 1, 2015 and Resolution4 dated December 15, 2015,
respectively, of the Commission on Audit (COA). The COA affirmed the disallowance of the Institutional Meeting Expenses (IME) for
2010 paid to members of the Board of Directors (BOD) of Philippine Health Insurance Corporation (PhilHealth) in the total amount of
₱2,965,428.59.
In October 2007, the PhilHealth BOD passed Board Resolution No. 1055 approving the entitlement of its members (or their authorized
representatives) to the Board Extraordinary and Miscellaneous Expense (BEME) in the reimbursable amount of ₱30,000.00 each per
month effective October 4, 2007. These allowances were intended to cover the expenses of said BOD members in the performance of
their official functions, which they would otherwise personally shoulder. 5 Correspondingly, a supplemental budget in the amount of
₱1,560,000.00 was also appropriated for the purpose.6
In December 2007, the BOD amended Board Resolution No. 1055 through Board Resolution No. 1084. It allowed the unexpended
balance of the monthly Extraordinary and Miscellaneous Expense (EME) to be carried over and expended in the succeeding months
within the same calendar year, effective retroactively from October 5, 2007.7
In another Resolution8 dated February 12, 2009, the BOD resolved to allocate the amount of ₱4,320,000.00 from the 2009 Corporate
Operating Budget (COB) of the Office of the Corporate Secretary and every year thereafter for the reimbursement of expenses incurred
by the members of the BOD (or their authorized representatives) in the discharge of their official functions and duties outside board
meetings.
On May 24, 2011, the COA Supervising Auditor issued an Audit Observation Memorandum9 (AOM) which showed that reimbursements
of EME totaling ₱19.95 million in calendar year 2010 were charged to the Representation Expenses account under the sub-accounts
"Institutional Meeting Expenses (865-10) and Committee Meeting Expenses (865-20)." The AOM noted that PhilHealth had been using
IME and Committee Meeting Expenses accounts to accommodate reimbursements of EME since charges to the EME account already
far exceeded the General Appropriations Act (GAA) prescribed limitation for each official. The COA Supervising Auditor viewed the
charging of EME against other accounts to be irregular because the nature and purpose of these expenses fall under the budgetary
controls in the disbursement of EME as stated in the GAA and COA Circular No. 2006-01. The charging of EME against other accounts
likewise increased the amount of the excess from the GAA-prescribed annual rate for EME. 10 The Supervising Auditor also observed
that ₱5.63 million of the total amount was reimbursement of expenses made by members of the PhilHealth BOD and personnel whose
positions were not entitled to EME. 11
PhilHealth commented on the AOM, but its comment was found unsatisfactory. Consequently, Notice of Disallowance (ND) No. HO 12-
004 (10) was issued on July 18, 2012 disallowing the payment for IME of the members of the PhilHealth BOD for the period January to
December 2010 in the amount of ₱2,965,428.59 for lack of legal basis. 12
PhilHealth filed an appeal before the COA-Corporate Government Sector (CGS), but the same was denied. The COA-CGS affirmed the
ruling of the Supervising Auditor that Section 18(d) of Republic Act (RA) No. 7875 13expressly provides that a per diem is precisely
intended to be the compensation for members of the PhilHealth BOD. Nowhere in RA No. 7875 can it be found that PhilHealth is
authorized to grant additional compensation, allowances or benefits to its BOD. Neither is the BOD authorized to grant compensation
beyond what RA No. 7875 provides. Although the BOD is empowered to formulate the necessary rules and regulations pursuant to RA
No. 7875, this power must be exercised within the scope of the authority given by the legislature. Thus, the COA-CGS found that the
BOD exceeded its authority when it issued Board Resolution No. 1193 authorizing its members to receive EME contrary to Section 18(
d) of RA No. 7875 .14
The COA-CGS further ruled that PhilHealth cannot seek refuge on the previous rulings of the Court with regard to the non-refund of the
disallowed benefits. Citing the AOM, the COA-CGS pointed out that the expenses in question were already disallowed in audit. As such,
the BOD members already knew, at the time they received the IME, that said benefits had no legal basis. 15
PhilHealth filed a petition for review before the COA Proper. In its assailed Decision, however, the COA Proper dismissed the petition for
being filed out of time, noting that the ND and the COA-CGS Decision were appealed only after 181 and 42 days, respectively, had
lapsed from the dates of their receipt by PhilHealth. The COA Proper also found no compelling reason to relax its procedural rules
because PhilHealth did not offer any justification for the belated filing of its petition. PhilHealth moved for reconsideration, but the same
was also denied. 16
Hence, this petition which raises grave abuse of discretion on the part of COA for denying the appeal on mere procedural grounds
instead of deciding on the merits of the case in the interest of substantial justice.
We deny the petition.
Firstly, PhilHealth maintains that the term "month" in the six-month reglementary period to file an appeal under the 2009 Revised Rules
of Procedure of COA should be understood to mean the 30-day month and should, accordingly, not use the equivalent of 180 days. We
are not persuaded.
Section 4, Rule V of the 2009 Revised Rules of Procedure of the COA provides that an appeal before the Director of a Central Office
Audit Cluster in the National, Local or Corporate Sector, or of a Regional Office of the Commission, must be filed within six months after
receipt of the decision appealed from. The receipt by the Director of the appeal memorandum shall stop the running of the period to
appeal; the period shall resume to run upon receipt by the appellant of the Director's decision. Section 3, Rule VII further provides that
the appeal before the COA Proper shall be taken within the time remaining of the six-month period, taking into account the suspension
of the running thereof. There is no dispute that PhilHealth received the ND on July 27, 2012 and filed an appeal before the COA-CGS on
January 24, 2013. In ruling that the reglementary period had already lapsed by then, the COA employed 180 days as the equivalent of
the six-month period, thereby making January 23, 2013 as the last date for PhilHealth to file its appeal.
PhilHealth, on the other hand, takes its cue from our Decision in Commissioner of Internal Revenue v. Primetown Property Group,
Inc. 17 (Primetown), positing that the six-month reglementary period should be determined as the entire period from July 28, 2012 to
January 27, 2013. This conclusion stemmed from our explanation in Primetownwhich included a definition of a calendar month as one
designated in the calendar without regard to the number of days it may contain. 18 Thus:
It is the "period of time running from the beginning of a certain numbered day up to, but not including, the corresponding numbered day
of the next month, and if there is not a sufficient number of days in the next month, then up to and including the last day of that month."
To illustrate, one calendar month from December 31, 2007 will be from January 1, 2008 to January 31, 2008; one calendar month from
January 31, 2008 will be from February 1, 2008 until February 29, 2008. 19 (Citations omitted.)
Glaringly, however, the issue in Primetown was with respect to the two-year prescriptive period within which to file for a tax refund or
credit under the National Internal Revenue Code. In computing this legal period, the Court held that there was a manifest incompatibility
with regard to the manner of computing legal periods, particularly as to what constitutes a year, under Article 13 of the Civil Code and
Section 31, Chapter VIII, Book I of the Administrative Code of 1987. Under the Civil Code, a year is equivalent to 365 days, whether it
be a regular year or a leap year. Under the Administrative Code of 1987, however, a year is composed of 12 calendar months, with the
number of days being irrelevant. To address this incompatibility, the Court held that Section 31, Chapter VIII, Book I of the
Administrative Code of 1987, being the more recent law, governs the computation of legal periods.20
What is at issue here, conversely, is the computation of the legal period for a "month." Unlike in Primetown, there is no incompatibility
with respect to the definition of a month under the Civil Code and the Administrative Code. A month is understood under both laws to be
30 days. In ascertaining the last day of the reglementary period to appeal, one month is to be treated as equivalent to 30 days, such that
six months is equal to 180 days. Thus, the period began to run on July 27, 2012 upon receipt of the ND and ended on January 23,
2013.21 The COA was correct, therefore, in denying the appeal on the ground that the six-month period within which to file an appeal
from the ND had already lapsed when PhilHealth filed its appeal to the COA-CGS on January 24, 2013.
II
Even if we were to relax the rules and entertain the appeal, we find that PhilHealth's case would still fail on its merits. The COA correctly
disallowed the IME on the ground that its grant was without legal basis.
A Section 9 specifies that Board members shall receive a per diem for every board meeting; limits the amount of per diem to not more
To begin with, we shall distinguish between the appointive and ex officio members of the BOD. The composition of the BOD under RA
No. 9241,22 which amended RA No. 7875 in 2004, is as follows:
Sec. 3. Section 18 of the Law shall be amended to read as follows:
"Sec. 18. The Board of Directors. -
a) Composition - The Corporation shall be governed by a Board of Directors hereinafter referred to as the Board, composed of the
following members:
The Secretary of Health;
The Secretary of Labor and Employment or his representative;
The Secretary of the Interior and Local Government or his representative;
The Secretary of Social Welfare and Development or his representative;
The President of the Corporation;
A representative of the labor sector;
A representative of employers;
The SSS Administrator or his representative;
The GSIS General Manager or his representative;
The Vice Chairperson for the basic sector of the National Anti-Poverty Commission or his representative;
A representative of Filipino overseas workers;
A representative of the self-employed sector; and
A representative of health care providers to be endorsed by the national associations of health care institutions and medical health
professionals.
The Secretary of Health shall be the ex officio Chairperson while the President of the Corporation shall be the Vice Chairperson of the
Board.
As can be gleaned from above, there are members of the BOD who are appointed to the position, and there are those who are
designated to serve by virtue of their office (or in other words, in an ex officio capacity). Appointment is the selection by the proper
authority of an individual who is to exercise the functions of an office. Designation, on the other hand, connotes merely the imposition of
additional duties, upon a person already in the public service by virtue of an earlier appointment or election. 23
Section 18(d) of RA No. 7875, which allows the members of the BOD to receive per diems for every meeting they actually attend, must
be understood to refer only to the appointive members and not to those who are designated in an ex officio capacity or by virtue of their
title to a certain office. The ex officio position being actually and in legal contemplation part of the principal office, it follows that the
official concerned has no right to receive any other form of additional compensation for his services in the said position; otherwise, it
would run counter with the constitutional prohibitions against holding multiple positions in the government and receiving additional or
double compensation. 24We explained:
The reason is that these services are already paid for and covered by the compensation attached to his principal office. It should be
obvious that if, say, the Secretary of Finance attends a meeting of the Monetary Board as an ex-officio member thereof, he is actually
and in legal contemplation performing the primary function of his principal office in defining policy in monetary and banking matters,
which come under the jurisdiction of his department. For such attendance, therefore, he is not entitled to collect any extra
compensation, whether it be in the form of a per diem or an honorarium or an allowance, or some other such euphemism. By
whatever name it is designated, such additional compensation is prohibited by the Constitution.25 (Emphasis supplied.)
Prescinding from above, the disallowance of the IME granted to the members of the BOD serving in an ex officio capacity is clearly
warranted.26 It would not be inaccurate to say that these members were already receiving these allowances from their respective
departments in the form of EME and as appropriated in the GAA. As such, the additional allowances from PhilHealth were no longer
necessary.27
In the same vein, PhilHealth erroneously invokes Department of Budget and Management (DBM)-National Budget Circular No. 2007-
51028 which provides in the last sentence of its Section 5.4 that department secretaries, department undersecretaries, and department
assistant secretaries who are ex officio members of governing boards of collegial bodies may receive reimbursement for actual
transportation and miscellaneous expenses incurred in attending board meetings. This provision must be understood to mean that
members of the BOD serving in an ex officio capacity may, indeed, receive such allowances, but only as appropriated in the GAA of
their own respective departments.
On the other hand, as far as the disallowance of the IME granted to the appointive members is concerned, the same is also proper.
Contrary to the posturing of PhilHealth, its charter does not authorize the grant of additional allowances to the BOD beyond per diems.
For one, while Section 18(d) of RA No. 7875 is entitled "allowances and per diems," its body significantly fails to mention any other
allowances or benefits besides per diems. It is a basic precept of statutory construction that the express mention of one person, thing,
act, or consequence excludes all others, as expressed in the oft-repeated maxim expressio unius est exlusio alterius. Elsewise
stated, expressium facit cessare taciturn-what is expressed puts an end to what is implied.29 Casus omissus pro omisso habendus est. A
person, object or thing omitted must have been omitted intentionally.30 If the legislature intended to give PhilHealth the authority to grant
allowances to the BOD other than the per diems, it could have facilely mentioned so. Our ruling in Bases Conversion and Development
Authority v. COA31 (BCDA) is instructive:
First, the BCDA claims that the Board can grant the yearend benefit to its members and full-time consultants because, under Section 10
of RA No. 7227, the functions of the Board include the adoption of a compensation and benefit scheme.
The Court is not impressed. The Board's power to adopt a compensation and benefit scheme is not unlimited. Section 9 of RA No. 7227
states that Board members are entitled to a per diem:
"Members of the Board shall receive a per diem of not more than Five thousand pesos (₱ 5,000) for every board
meeting: Provided, however, That the per diem collected per month does not exceed the equivalent of four (4)
meetings: Provided, further, That the amount of per diem for every board meeting may be increased by the President but such amount
shall not be increased within two (2) years after its last increase." xx x
than ₱5,000; and limits the total amount of per diem for one month to not more than four meetings. In Magno v. Commission on Audit,
Cabili v. Civil Service Commission, De Jesus v. Civil Service Commission, Molen, Jr. v. Commission on Audit, and Baybay Water
District v. Commission on Audit, the Court held that the specification of compensation and limitation of the amount of
compensation in a statute indicate that Board members are entitled only to the per diem authorized by law and no
other. In Baybay Water District, the Court held that:
"By specifying the compensation which a director is entitled to receive and by limiting the amount he/she is allowed to receive in a
month, x x x the law quite clearly indicates that directors xx x are authorized to receive only the per diem authorized by law and no other
compensation or allowance in whatever form."
Fourth, the BCDA claims that the Board can grant the year-end benefit to its members and the full-time consultants because RA No.
7227 does not expressly prohibit it from doing so.
The Court is not impressed. A careful reading of Section 9 of RA No. 7227 reveals that the Board is prohibited from granting its
members other benefits. x x x
x x xx
Section 9 specifies that Board members shall receive a per diem for every board meeting; limits the amount of per diem to not more
than ₱5,000; limits the total amount of per diem for one month to not more than four meetings; and does not state that Board members
may receive other benefits. In Magno, Cabili, De Jesus, Molen, Jr., and Baybay Water District, the Court held that the specification of
compensation and limitation of the amount of compensation in a statute indicate that Board members are entitled only to the
per diem authorized by law and no other.
The specification that Board members shall receive a per diem of not more than ₱5,000 for every meeting and the omission of a
provision allowing Board members to receive other benefits lead the Court to the inference that Congress intended to limit the
compensation of Board members to the per diem authorized by law and no other. Expressio unius est exclusio alterius. Had
Congress intended to allow the Board members to receive other benefits, it would have expressly stated so. For example,
Congress' intention to allow Board members to receive other benefits besides the per diem authorized by law is expressly stated in
Section 1 of RA No. 9286:
"SECTION 1. Section 13 of Presidential Decree No. 198, as amended, is hereby amended to read as follows:
"SEC. 13. Compensation.-Each director shall receive per diem to be determined by the Board, for each meeting of the Board actually
attended by him, but no director shall receive per diems in any given month in excess of the equivalent of the total per diem of four
meetings in any given month.
Any per diem in excess of One hundred fifty pesos (₱150.00) shall be subject to the approval of the Administration. In addition thereto,
each director shall receive allowances and benefits as the Board may prescribe subject to the approval of the
Administration." x x x
The Court cannot, in the guise of interpretation, enlarge the scope of a statute or insert into a statute what Congress omitted,
whether intentionally or unintentionally.32 (Emphasis supplied; citations omitted.)
Secondly, PhilHealth, cannot take refuge behind its assertion that it may grant additional benefits on the strength of its fiscal autonomy
under Section 16(n)33 of RA No. 7875, as tempered by the limitations provided in Section 26(b).34We have already ruled on this same
argument in PhilHealth v. COA, 35 where it was posited that it is the intent of the legislature to limit the determination and approval of
allowances to the PhilHealth BOD alone, subject only to the 12% to 13% limitation. We have declared in that case that PhilHealth does
not have unbridled discretion to issue any and all kinds of allowances, limited only by the provisions of its charter:
As clearly expressed in PCSO v. COA, even if it is assumed that there is an explicit provision exempting a GOCC from the rules of the
then Office of Compensation and Position Classification (OCPC) under the DBM, the power of its Board to fix the salaries and determine
the reasonable allowances, bonuses and other incentives was still subject to the standards laid down by applicable laws: P.D. No. 985,
its 1978 amendment, P.D. No. 1597, the SSL, and at present, R.A. 10149. To sustain petitioners' claim that it is the PHIC, and PHIC
alone, that will ensure that its compensation system conforms with applicable law will result in an invalid delegation of
legislative power, granting the PHIC unlimited authority to unilaterally fix its compensation structure. Certainly, such effect
could not have been the intent of the legislature.36 (Emphasis supplied; citations omitted.)
It may not be amiss to point out that even on the fair assumption that RA No. 7875 grants PhilHealth the power to fix compensation, the
same is limited to; as expressly worded in Section 16(n); the personnel of PhilHealth. In BCDA37the Court upheld DBM Circular Letter
No. 2002-2 which states that "[m]embers of the Board of Directors of agencies are not salaried officials of the government. As non-
salaried officials they are not entitled to PERA, ADCOM, YEB and retirement benefits unless expressly provided by law."38 It appears
that the consistent rule, therefore, is that the organic law must expressly provide the allowances and benefits due the BOD; entitlement
thereto can never be implied.
Neither can PhilHealth find solace in the alleged approval or confirmation by former President Gloria Macapagal-Arroyo of PhilHealth's
fiscal autonomy through two executive communications relative to its request to exercise fiscal authority in line with the PhilHealth
Rationalization Plan. 39 We observe that the alleged presidential approval was merely on the marginal note of the said communications
and was never reduced in any formal memorandum. 40So, too, the Court has previously held in BCDA that the presidential approval of a
new compensation and benefit scheme which included the grant of allowances found to be unauthorized by law shall not estop the State
from correcting the erroneous application of a statute.41
Equally important, we are reminded of our recent ruling in Social Security System (SSS) v. COA,42 where similarly, issues on the grant of
EME to the appointive members of the SSS and the alleged fiscal autonomy of a government-owned and controlled corporation were
put into fore. In said case, the COA disallowed the EME on the ground that the Social Security Law (SS Law) only mentions the grant
of per diems and representation and transportation allowances. The SSS countered that the SS Law, when taken as a whole, authorizes
the SSS to grant additional allowances to its members. The SSS believed, in particular, that it may grant additional benefits to its
members because the SS Law allegedly empowers it to adopt its own budget within the limits provided by the said law. In ruling against
the SSS, we took significant note of the nature of the funds possessed by the SSS, citing our previous ruling that the funds of the SSS
were merely held in trust for the benefit of workers and employees in the private sector. As such, the provisions of the SS Law
empowering the Social Security Commission to allocate its funds to pay for the salaries and benefits of its officials and employees are
not absolute and unrestricted because the SSS is a mere trustee of the said funds. In other words, the salaries and benefits to be
endowed by the SSS must always be reasonable so that the funds, which it holds in trust, will be devoted to its primary purpose of
servicing workers and employees from the private sector.43
This foregoing analysis is applicable in the instant case. RA No. 7875 was enacted pursuant to the constitutional policy to create a
National Health Insurance Program (Program) that would grant discounted medical coverage to all citizens, with priority to the needs of
the underprivileged, sick, elderly, disabled, women and children, and free medical care to paupers.44 The Program is designed to be
compulsory, universal in coverage, affordable, acceptable, available, and accessible for all citizens of the Philippines.45 In order to
achieve this noble goal, RA No. 7875 created the National Health Insurance Fund which consists of contributions from members; current
balances of the Health Insurance Funds of the SSS and Government Service Insurance System (GSIS) collected under the Philippine
Medical Care Act of 1969, as amended, including arrearages of the Government of the Philippines with the GSIS for the said Fund;
other appropriations earmarked by the national and local governments purposely for the implementation of the Program; subsequent
appropriations; donations and grants-in-aid; and all accruals thereof.46The National Health Insurance Fund is managed by PhilHealth
through its BOD, subject to certain limitations.47 In line with managing the Program, RA No. 7875 speaks of ensuring fund viability, as
well as carrying out a fiduciary responsibility such that the Program shall provide effective stewardship, funds management, and
maintenance of reserves.48 In a lot of ways, therefore, it is also imperative for PhilHealth to utilize funds for the salaries and allowances
of its BOD members with as much circumspection and restraint as the SSS. Like the latter, the funds under the PhilHealth's stewardship
need to be devoted primarily to providing universal and affordable health care to all Filipinos.
B the COA-CGS:
Having established that RA No. 7875 does not authorize the grant of additional allowances and benefits to the BOD, it does not follow
(as we have already mentioned) that such grants are strictly and absolutely proscribed. The authority to grant EMEs may be derived
from the GAA. The COA, in its Circular No. 2006-001,49 recognizes this much, to wit:
III. Audit Guidelines
1. The amount of extraordinary and miscellaneous expenses, as authorized in the corporate charters of GOCCs/GFIs, shall be the
ceiling in the disbursement of these funds. Where no such authority is granted in the corporate charter and the authority to grant
extraordinary and miscellaneous expenses is derived from the General Appropriations Act (GAA), the amounts fixed
thereunder shall be the ceiling in the disbursements;
2. Payment of these expenditures shall be strictly on a non-commutable or reimbursable basis;
3. The claim for reimbursement of such expenses shall be supported by receipts and/or other documents evidencing disbursements;
and
4. No portion of the amounts appropriated shall be used for salaries, wages, allowances, intelligence and confidential expenses which
are covered by separate appropriations. (Emphasis supplied.)
Indeed, in its AOM, the Supervising Auditor acknowledged the authority of PhilHealth to grant EMEs derived from the GAA. Section 28
of RA No. 9970,50 the 2010 GAA, on the other hand, provides for a ceiling of EMEs to be appropriated:
Sec. 28. Extraordinary and Miscellaneous Expenses. Appropriations authorized herein may be used for extraordinary expenses of the
following officials and those of equivalent rank as may be determined by the DBM, not exceeding:
(a) P220,000 for each Department Secretary;
(b) P90,000 for each Department Undersecretary;
(c) P50,000 for each Department Assistant Secretary;
(d) P38,000 for each head of bureau or organization of equivalent rank, and for each head of a Department Regional
Office;
(e) P22,000 for each head of a Bureau Regional Office or organization of equivalent rank; and
(f) P16,000 for each Municipal Trial Court Judge, Municipal Circuit Trial Court Judge, and Shari' a Circuit Court Judge.
In addition, miscellaneous expenses not exceeding Seventy-Two Thousand Pesos (P72,000) for each of the offices under the above
named officials are herein authorized.
xxxx
However, the Supervising Auditor observed that the EMEs granted were irregularly charged to other accounts of PhilHealth in order to
accommodate reimbursements of EMEs which have already far exceeded the prescribed limitation set under the 2010 GAA. This act of
charging was found to be irregular because it was conducted in a manner that deviated from the set standards, which in this case were
the budgetary controls in the disbursement of the EME as stated in the GAA and COA Circular No. 2006- 001. The irregular charging
also resulted to an increase in the "excess from the GAA prescribed annual rate for EME."51 There is no cogent reason to overturn these
findings of the Supervising Auditor, which PhilHealth failed to refute squarely in their comment to the AOM. 52
C
Finally, the defense of PhilHealth that its BOD members were reimbursed the IME in good faith and must, therefore, be not required to
refund the disallowed amount, does not lie. Insofar as ex officio members are concerned, we reiterate our ruling in Tetangco that, by
jurisprudence, patent disregard of case law and COA directives amounts to gross negligence; hence, good faith on the part of the the
approving officers cannot be presumed: 53
As the records bear out, the petitioners who approve the EMEs failed to observe the following: first, there is already a law, the GAA, that
limits the grant of EMEs; second, COA Memorandum No. 97-038 dated September 19, 1997 is a directive issued by the COA to its
auditors to enforce the self-executing prohibition imposed by Section 13, Article VII of the Constitution on the President and his official
family, their deputies and assistants, or their representatives from holding multiple offices and receiving double compensation; and third,
the irregularity of giving additional compensation or allowances to ex officiomembers was already settled by jurisprudence, during the
time that the subject allowances were authorized by the BSP.
Indeed, the petitioners-approving officers' disregard of the aforementioned case laws, COA issuances, and the Constitution, cannot be
deemed as a mere lapse consistent with the presumption of good faith.
In line with this, We cannot subscribe to petitioner Favila's insistence that he should not be liable in the approving, processing and
receiving of EMEs on the basis that he did not participate in the adoption of the resolutions authorizing the payment of the EMEs.
As pointed out during the deliberation by Our learned colleague, Hon. Justice Lucas P. Bersamin, the doctrine on the non-liability of
recipients of disallowed benefits based on good faith did not extend to petitioner Favila for the following reasons: first, there was
precisely a law (the relevant GAAs) that expressly limited the amounts of the EMEs to be received by the ex officio members;
and second, insofar as ND No. 10-004GF (2007-2008) is concerned, his liability arose from his receipt of the subject allowances in
2008, when he was an ex officio member of the Board. Hence, good faith did not favor him not only because he had failed to exercise
the highest degree of responsibility, but also because as a cabinet member he was aware of the extent of the benefits he was entitled
to.
Verily, petitioners Tetangco, Jr., Favila, Amatong, FavisVillafuerte, Antonio, and Bunye, who were members of the Monetary Board were
expected to keep abreast of the laws that may affect the performance of their functions. The law, jurisprudence and COA issuances
subject of this case are of such clearness that the concerned officials could not have mistaken their meaning. It was incumbent upon
them to instruct Petitioners Ong, Prudencio, Reyes and Catarroja who participated in the processing of the EMEs, to comply with these
laws. Unfortunately, they did not. Thus, they cannot find shelter in the defense of good faith. 54 (Citations omitted.)
Neither can good faith be appreciated with respect to the appointive members of the BOD. The Court can understand that the BOD
might have merely relied on, albeit erroneously: (1) PhilHealth's power to fix the compensation of its personnel and for the BOD to
exercise fiscal management; and (2) the fact that RA No. 7875 does not expressly prohibit Board members from receiving benefits other
than the per diem authorized by law. 55There are findings, however, from the COA-CGS that the BOD members already knew at the time
of their receipt of the IMEs that said benefits had no legal basis. 56 This findings remain unrebutted by PhilHealth. As correctly held by
As can be read from AOM No. 2011-10(10) dated May 24, 2011 and issued by the Supervising Auditor, PhilHealth:
"Claims for reimbursement of EME by the PhilHealth Board of Directors and those holding position titles with SG+ were already
disallowed in audit as these reimbursements were not in conformity with the above stated provisions in the GAA that only positions of
equivalent rank as may be determined by the DBM are entitled to reimbursements of EME. 57 (Underscoring in the original.)
Good faith, in relation to the requirement of refund of disallowed benefits or allowances, is "that state of mind denoting 'honesty of
intention, and freedom from knowledge of circumstances which ought to put the holder upon inquiry; an honest intention to abstain from
taking any unconscientious advantage of another, even though technicalities oflaw, together with absence of all information, notice, or
benefit or belief of facts which render transactions unconscientious."58 In this regard, therefore, this Court finds that the PhilHealth BOD
members failed to earn the presumption of good faith.
WHEREFORE, the petition is DENIED. The Decision No. 2015-093 dated April 1, 2015 of the Commission on Audit disallowing the
Institutional Meeting Expenses for 2010 paid to members of the Board of Directors of Philippine Health Insurance Corporation in the
total amount of ₱2,965,428.59 is AFFIRMED.
SO ORDERED.
G.R. No. 220598
GLORIA MACAPAGAL ARROYO, Petitioner,
vs.
PEOPLE OF THE PHILIPPINES AND THE SANDIGANBAYAN, (First Division), Respondents
RESOLUTION
BERSAMIN,, J.:
On July 19, 2016, the Court promulgated its decision, disposing:
WHEREFORE, the Court GRANTS the petitions for certiorari; ANNULS and SETS ASIDE the resolutions issued in Criminal Case No.
SB-12-CRM-0174 by the Sandiganbayan on April 6, 2015 and September 10, 2015; GRANTSthe petitioners' respective demurrers to
evidence; DISMISSES Criminal Case No. SB-12-CRM-0174 as to the petitioners GLORIAMACAPAGAL-
ARROYO and BENIGNOAGUAS for insufficiency of evidence; ORDERS the immediate release from detention of said petitioners;
and MAKES no pronouncements on costs of suit.
SO ORDERED. 1
On August 3, 2016, the State, through the Office of the Ombudsman, has moved for the reconsideration of the decision, submitting that:
I. THIS HONORABLE COURT'S GIVING DUE COURSE TO A CERTIORARI ACTION ASSAILING AN INTERLOCUTORY ORDER
DENYING DEMURRER TO EVIDENCE VIOLA TES RULE 119, SECTION 23 OF THE RULES OF COURT, WHICH PROVIDES
THAT AN ORDER DENYING THE DEMURRER TO EVIDENCE SHALL NOT BE REVIEWABLE BY APPEAL OR BY
CERTIORARI BEFORE JUDGMENT.
II. THE HONORABLE COURT COMMITTED GRAVE ERRORS WHICH AMOUNT TO A VIOLATION OR DEPRIVATION OF THE
STATE'S FUNDAMENTAL RIGHT TO DUE PROCESS OF LAW.
A. THE DECISION REQUIRES ADDITIONAL ELEMENTS IN THE PROSECUTION OF
PLUNDER, VIZ. IDENTIFICATION OF THE MAIN PLUNDERER AND PERSONAL BENEFIT TO HIM/HER, BOTH OF
WHICH ARE NOT PROVIDED IN THE TEXT OF REPUBLIC ACT (R.A.) NO. 7080.
B. THE EVIDENCE PRESENTED BY THE PROSECUTION WAS NOT FULLY TAKEN INTO ACCOUNT, INCLUDING
BUT NOT LIMITED TO THE IRREGULARITIES IN THE CONFIDENTIAL/INTELLIGENCE FUND (CIF)
DISBURSEMENT PROCESS, QUESTIONABLE PRACTICE OF CO-MINGLING OF FUNDSAND AGUAS'
REPORTS TO THE COMMISSION ON AUDIT (COA) THAT BULK OF THE PHP365,997,915.00 WITHDRAWN FROM
THE PHILIPPINE CHARITY SWEEPSTAKES OFFICE'S (PCSO) CIF WERE DIVERTED TO THE ARROYO-HEADED
OFFICE OF THE PRESIDENT.
C. ARROYO AND AGUAS, BY INDISPENSABLE COOPERATION, IN CONSPIRACY WITH THEIR COACCUSED IN
SB-12-CRM-0174, COMMITTED PLUNDER VIA· A COMPLEX ILLEGAL SCHEME WHICH DEFRAUDED PCSO IN
HUNDREDS OF MILLIONS OF PESOS.
D. EVEN ASSUMING THAT THE ELEMENTS OF PLUNDER WERE NOT PROVEN BEYOND REASONABLE DOUBT,
THE EVIDENCE PRESENTED BY THE PEOPLE SHOWS, BEYOND REASONABLE DOUBT, THAT ARROYO, AGUAS
AND THEIR COACCUSED IN SB-12-CRM-0174 ARE GUILTY OF MALVERSATION.2
In contrast, the petitioners submit that the decision has effectively barred the consideration and granting of the motion for
reconsideration of the State because doing so would amount to the re-prosecution or revival of the charge against them despite their
acquittal, and would thereby violate the constitutional proscription against double jeopardy.
Petitioner Gloria M. Macapagal-Arroyo (Arroyo) points out that the State miserably failed to prove the corpus delicti of plunder; that the
Court correctly required the identification of the main plunderer as well as personal benefit on the part of the raider of the public treasury
to enable the successful prosecution of the crime of plunder; that the State did not prove the conspiracy that justified her inclusion in the
charge; that to sustain the case for malversation against her, in lieu of plunder, would violate her right to be informed of the accusation
against her because the information did not necessarily include the crime of malversation; and that even if the information did so, the
constitutional prohibition against double jeopardy already barred the re-opening of the case for that purpose.
Petitioner Benigno B. Aguas echoes the contentions of Arroyo in urging the Com1 to deny the motion for reconsideration.
In reply, the State avers that the prohibition against double jeopardy does not apply because it was denied its day in court, thereby
rendering the decision void; that the Court should re-examine the facts and pieces of evidence in order to find the petitioners guilty as
charged; and that the allegations of the information sufficiently included all that was necessary to fully inform the petitioners of the
accusations against them.
Ruling of the Court
The Court DENIES the motion for reconsideration for its lack of merit.
To start with, the State argues' that the consolidated petitions for certiorari were improper remedies in light of Section 23, Rule 119 of
the Rules of Court expressly prohibiting the review of the denial of their demurrer prior to the judgment in the case either by appeal or
by certiorari; that the Court has thereby limited its own power, which should necessarily prevent the giving of due course to the petitions
for certiorari, as well as the undoing of the order denying the petitioners' demurrer to evidence; that the proper remedy under the Rules
of Court was for the petitioners to proceed to trial and to present their evidence-in-chief thereat; and that even if there had been grave
abuse of discretion attending the denial, the Court's certiorari powers should be exercised only upon the petitioners' compliance with the
stringent requirements of Rule 65, particularly with the requirement that there be no plain, speedy or adequate remedy in the ordinary
course of law, which they did not establish.
Section 23, Rule 119 of the Rules of Court, pertinently provides:
Section 23. Demurrer to evidence. – xxx
xxxx
The order denying the motion for leave of court to file demurrer to evidence or the demurrer itself shall not be reviewable by
appeal or by certiorari before judgment. (n)
The argument of the State, which is really a repetition of its earlier submission, was squarely resolved in the decision, as follows:
The Court holds that it should take cognizance of the petitions for certiorari because the Sandiganbayan, as shall shortly be
demonstrated, gravely abused its discretion amounting to lack or excess of jurisdiction.
The special civil action for certiorari is generally not proper to assail such an interlocutory order issued by the trial court because of the
availability of another remedy in the ordinary course of law. Moreover, Section 23, Rule 119 of the Rules of Court expressly provides
that "the order denying the motion for leave of court to file demurrer to evidence or the demurrer itself shall not be reviewable by appeal
or by certiorari before judgment." It is not an insuperable obstacle to this action, however, that the denial of the demurrers to evidence of
the petitioners was an interlocutory order that did not terminate the proceedings, and the proper recourse of the demurring accused was
to go to trial, and that in case of their conviction they may then appeal the conviction, and assign the denial as among the errors to be
reviewed. Indeed, it is doctrinal that the situations in which the writ of certiorari may issue should not be limited, because to do so -
x x x would be to destroy its comprehensiveness and usefulness. So wide is the discretion of the com1 that authority is not wanting to
show that certiorari is more discretionary than either prohibition or mandamus. In the exercise of oursuperintending control over
other courts, we are to be guided by all the circumstances of each particular case 'as the ends of justice may require.' So it is
that the writ will be granted where necessary to prevent a substantial wrong or to do substantial justice.
The Constitution itself has imposed upon the Court and the other courts of justice the duty to correct errors of jurisdiction as a result of
capricious, arbitrary, whimsical and despotic exercise of discretion by expressly incorporating in Section 1 of Article VIII the following
provision:
Section 1. The judicial power shall be vested in one Supreme Court and in such lower courts as may be established by law.
Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally
demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack
or excess of jurisdiction on the part of any branch or instrumentality of the Government. The exercise of this power to correct
grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the
Government cannot be thwarted by rules of procedure to the contrary or for the sake of the convenience of one side. This is
because the Court has the bounden constitutional duty to strike down grave abuse of discretion whenever and wherever it is
committed. Thus, notwithstanding the interlocutory character and effect of the denial of the demurrers to evidence, the
petitioners as the accused could avail themselves of the remedy of certiorari when the denial was tainted with grave abuse of
discretion. As we shall soon show, the Sandiganbayan as the trial court was guilty of grave abuse of discretion when it
capriciously denied the demurrers to evidence despite the absence of competent and sufficient evidence to sustain the
indictment for plunder, and despite the absence of the factual bases to expect a guilty verdict.3
We reiterate the foregoing resolution, and stress that the prohibition contained in Section 23, Rule 119 of the Rules of Court is not an
insuperable obstacle to the review by the Court of the denial of the demurrer to evidence through certiorari. We have had many rulings
to that effect in the past. For instance, in Nicolas v. Sandiganbayan,4the Court expressly ruled that the petition for certiorari was the
proper remedy to assail the denial of the demurrer to evidence that was tainted with grave abuse of discretion or excess of jurisdiction,
or oppressive exercise of judicial authority.
Secondly, the State submits that its right to due process was violated because the decision imposed additional elements for plunder that
neither ' Republic Act No. 7080 nor jurisprudence had theretofore required, i.e., the identification of the main plunderer, and personal
benefit on the part of the accused committing the predicate crime of raid on the public treasury. The State complains that it was not
given the opportunity to establish such additional elements; that the imposition of new elements fu1iher amounted to judicial legislation
in violation of the doctrine of separation of powers; that the Court nitpicked on the different infirmities of the information despite the issue
revolving only around the sufficiency of the evidence; and that it established all the elements of plunder beyond reasonable doubt.
The State cites the plain meaning rule to highlight that the crime of plunder did not require personal benefit on the part of the raider of
the public treasury. It insists that the definition of raids on the public treasury, conformably with the plain meaning rule, is the taking of
public money through fraudulent or unlawful means, and such definition does not require enjoyment or personal benefit on the part of
plunderer or on the part of any of his co-conspirators for them to be convicted for plunder.
The submissions of the State are unfounded.
The requirements for the identification of the main plunderer and for personal benefit in the predicate act of raids on the public
treasury have been written in R.A. No. 7080 itself as well as embedded in pertinent jurisprudence. This we made clear in the decision,
as follows:
A perusal of the information suggests that what the Prosecution sought to show was an implied conspiracy to commit plunder among all
of the accused on the basis of their collective actions prior to, during and after the implied agreement. It is notable that the Prosecution
did not allege that the conspiracy among all of the accused was by express agreement, or was a wheel conspiracy or a chain
conspiracy.
This was another fatal flaw of the Prosecution.
In its present version, under which the petitioners were charged, Section 2 of Republic Act No. 7080 (Plunder Law) states:
Section 2. Definition of the Crime of Plunder: Penalties. - Any public officer who, by himself or in connivance with members of his family,
relatives by affinity or consanguinity, business associates, subordinates or other persons, amasses, accumulates or acquires ill-gotten
wealth through a combination or series of overt criminal acts as described in Section 1 (d) hereof in the aggregate amount or total value
of at least Fifty million pesos (₱50,000,000.00) shall be guilty of the crime of plunder and shall be punished by reclusion perpetua to
death. Any person who participated with the said public officer in the commission of an offense contributing to the crime of plunder shall
likewise be punished for such offense. In the imposition of penalties, the degree of participation and the attendance of mitigating and
extenuating circumstances, as provided by the Revised Penal Code, shall be considered by the court. The court shall declare any and
all ill-gotten wealth and their interests and other incomes and assets including the properties and shares of stocks derived from the
deposit or investment thereof forfeited in favor of the State. [As Amended by Section 12, Republic Act No. 7659 (The Death Penalty
Law)]
Section l(d) of Republic Act No. 7080 provides:
Section 1. Definition of terms. - As used in this Act, the term:
xxxx
d. "Ill-gotten wealth" means any asset, property, business enterprise or material possession of any person within the purview of Section
two (2) hereof, acquired by him directly or indirectly through dummies, nominees, agents, subordinates and/or business associates by
any combination or series of the following means or similar schemes:
1. Through misappropriation, conversion, misuse, or malversation of public funds or raids on the public treasury;
2. By receiving, directly or indirectly, any commission, gift, share, percentage, kickbacks or any/or entity in connection with
any government contract or project or by reason of the office or position of the public officer concerned;
3. By the illegal or fraudulent conveyance or disposition of assets belonging to the National Government or any of its
subdivisions, agencies or instrumentalities or government-owned or controlled corporations and their subsidiaries;
4. By obtaining, receiving or accepting directly or indirectly any shares of stock, equity or any other form of interest or
participation including the promise of future employment in any business enterprise or undertaking;
5. By establishing agricultural, industrial or commercial monopolies or other combinations and/or implementation of
decrees and orders intended to benefit particular persons or special interests; or
6. By taking undue advantage of official positi0n, authority, relationship, connection or influence to unjustly enrich himself
or themselves at the expense and to the damage and prejudice
The law on plunder requires that a particular public officer must be identified as the one who amassed, acquired or
accumulated ill-gotten wealth because it plainly states that plunder is committed by any public officer who, by himself or in
connivance with members of his family, relatives by affinity or consanguinity, business associates, subordinates or other
persons, amasses, accumulates or acquires ill-gotten wealth in the aggregate amount or total value of at least ₱50,000,000.00
through a combination or series of overt criminal acts as described in Section l(d) hereof. Surely, the law requires in the
criminal charge for plunder against several individuals that there must be a main plunderer and her co-conspirators, who may
be members of her family, relatives by affinity or consanguinity, business associates, subordim1tes or other persons. In other
words, the allegation of the wheel conspiracy or express conspiracy in the information was appropriate because the main
plunderer would then be identified in either manner. Of course, implied conspiracy could also identify the main plunderer, but
that fact must be properly alleged and duly proven by the Prosecution.
This interpretation is supported by Estrada v. Sandiganbayan, where the Court explained the nature of the conspiracy charge and the
necessity for the main plunderer for whose benefit the amassment, accumulation and acquisition was made, thus:
There is no denying the fact that the "plunder of an entire nation resulting in material damage to the national economy" is made up of a
complex and manifold network of crimes. In the crime of plunder, therefore, different parties may be united by a common purpose. In the
case at bar, the different accused and their different criminal acts have a commonality - to help the former President amass, accumulate
or acquire ill-gotten wealth. Sub-paragraphs (a) to (d) in the Amended Information alleged the different participation of each accused in
the conspiracy. The gravamen of the conspiracy charge, therefore, is not that each accused agreed to receive protection money
from illegal gambling, that each misappropriated a portion of the tobacco excise tax, that each accused ordered the GSIS and SSS to
purchase shares of Belle Corporation and receive commissions from such sale, nor that each unjustly enriched himself from
commissions, gifts and kickbacks; rather, it is that each of them, by their individual acts, agreed to participate, directly or
indirectly, in the amassing, accumulation and acquisition of ill-gotten wealth of and/or for former President Estrada. 5 [bold
underscoring supplied for emphasis]
Indeed, because plunder is a crime that only a public official can commit by amassing, accumulating, or acquiring ill-gotten wealth in the
aggregate amount or total value of at least ₱50,000,000.00, the identification in the information of such public official as the main
plunderer among the several individuals thus charged is logically necessary under the law itself. In particular reference to Criminal Case
No. SB-12-CRM-0174, the individuals charged therein - including the petitioners - were 10 public officials; hence, it was only proper to
identify the main plunderer or plunderers among the 10 accused who herself or himself had amassed, accumulated, or acquired ill-
gotten wealth with the total value of at least ₱50,000,000.00.
The phrase raids on the public treasury as used in Section 1 (d) of R. A. No. 7080 is itself ambiguous. In order to ascertain the objective
meaning of the phrase, the act of raiding the public treasury cannot be divided into parts. This is to differentiate the predicate act of raids
on the public treasury from other offenses involving property, like robbery, theft, or estafa. Considering that R.A. No. 7080 does not
expressly define this predicate act, the Court has necessarily resorted to statutory construction. In so doing, the Court did not adopt the
State's submission that personal benefit on the part of the accused need not be alleged and shown because doing so would have
defeated the clear intent of the law itself,6 which was to punish the amassing, accumulating, or acquiring of ill-gotten wealth in the
aggregate amount or total value of at least ₱150,000,000.00 by any combination or series of acts of misappropriation, conversion,
misuse, or malversation of public funds or raids on the public treasury.
As the decision has observed, the rules of statutory construction as well as the deliberations of Congress indicated the intent of
Congress to require personal benefit for the predicate act of raids on the public treasury, viz.:
The phrase raids on the public treasury is found in Section 1 (d) of R.A. No. 7080, which provides:
Section l .Definition of Terms. – xxx
xxxx
d) Ill-gotten wealth means any asset, prope1iy, business enterprise or material possession of any person within the purview of Section
Two (2) hereof, acquired by him directly or indirectly through dummies, nominees, agents, subordinates and/or business associates by
any combination or series of the following means or similar schemes:
1) Through misappropriation, conversion, misuse, or malversation of public funds or raids on the public treasury;
xxxx
To discern the proper import of the phrase raids on the public treasury, the key is to look at the accompanying
words: misappropriation, conversion, misuse or malversation of public funds. This process is conformable with the maxim of
statutory construction noscitur a sociis, by which the correct construction of a particular word or phrase that is ambiguous in
itself or is equally susceptible of various meanings may be made by considering the company of the words in which the word
or phrase is found or with which it is associated. Verily, a word or phrase in a statute is always used in association with other
words or phrases, and its meaning may, therefore, be modified or restricted by the latter.
To convert connotes the act of using or disposing of another's property as if it were one's own; to misappropriate means to own, to take
something for one's own benefit; misuse means "a good, substance, privilege, or right used improperly, unforcsccably, or not as
intended;" and malversation occurs when "any public officer who, by reason of the duties of his office, is accountable for public funds or
property, shall appropriate the same or shall take or misappropriate or shall consent, through abandonment or negligence, shall permit
any other person to take such public funds, or property, wholly or partially." The common thread that binds all the four terms together is
that the public officer used the property taken. Considering that raids on the public treasury is in the company of the four other terms that
require the use of the property taken, the phrase raids on the public treasury similarly requires such use of the property taken.
Accordingly, the Sandiganbayan gravely erred in contending that the mere accumulation and gathering constituted the forbidden act
of raids on the public treasury. Pursuant to the maxim of noscitur a sociis, raids on the public treasury requires the raider to use the
property taken impliedly for his personal benefit.7
The Prosecution asserts that the Senate deliberations removed personal benefit as a requirement for plunder. In not requiring personal
benefit, the Sandiganbayan quoted the following exchanges between Senator Enrile and Senator Tafiada, viz.:
Senator Enrile. The word here, Mr. President, "such public officer or person who conspired or knowingly benefited". One does not
have to conspire or rescheme. The only element needed is that he "knowingly benefited". A candidate for the Senate for instance,
who received a political contribution from a plunderer, knowing that the contributor is a plunderer and therefore, he knowingly benefited
from the plunder, would he also suffer the penalty, Mr. President, for life imprisonment?
Senator Tafiada. In the committee amendments, Mr. President, we have deleted these lines 1 to 4 and part of line 5, on page 3. But, in a
way, Mr. President, it is good that the Gentleman is bringing out these questions, I believe that under the examples he has given, the
Court will have to...
Senator Enrile. How about the wife, Mr. President, he may not agree with the plunderer to plunder the country but because she is a
dutiful wife or a faithful husband, she has to keep her or his vow of fidelity to the spouse. And, of course, she enjoys the benefits out of
the plunder. Would the Gentleman now impute to her or him the crime of plunder simply because she or he knowingly benefited out of
the fruits of the plunder and, therefore, he must suffer or he must suffer the penalty of life imprisonment?
The President. That was stricken out already in the Committee amendment.
Senator Tañada. Yes, Mr. President. Lines 1 to 4 and part of line 5 were stricken out in the Committee amendment. But, as I said, the
examples of the Minority Floor Leader are still worth spreading the Record. And, I believe that in those examples, the Court will have
just to take into consideration all the other circumstances prevailing in the case and the evidence that will be submitted.
The President. In any event, 'knowingly benefited' has already been stricken off."
The exchanges between Senator Enrile and Senator Tañada reveal, therefore, that what was removed from the coverage of the bill and
the final version that eventually became the law was a person who was not the main plunderer or a co-conspirator, but one who
personally benefited from the plunderers' action. The requirement of personal benefit on the part of the main plunderer or his co-
conspirators by virtue of their plunder was not removed.
As a result, not only did the Prosecution fail to show where the money went but, more importantly, that GMA and Aguas had personally
benefited from the same. Hence, the Prosecution did not prove the predicate act of raids on the public treasury beyond reasonable
doubt. 8
Thirdly, the State contends that the Court did not appreciate the totality of its evidence, particularly the different irregularities committed
in the disbursement of the PCSO funds, i.e., the commingling of funds, the non-compliance with LOI No. 1282, and the unilateral
approval of the disbursements. Such totality, coupled with the fact of the petitioners' indispensable cooperation in the pilfering of public
funds, showed the existence of the conspiracy to commit plunder among all of the accused.
The contention lacks basis.
As can be readily seen from the decision, the Court expressly granted the petitioners' respective demurrers to evidence and dismissed
the plunder case against them for insufficiency of evidence because:
x x x the Sandiganbayan as the trial court was guilty of grave abuse of discretion when it capriciously denied the demurrers to
evidence despite the absence of competent and sufficient evidence to sustain the indictment for plunder, and despite the
absence of the factual bases to expect a guilty verdict. 9
Such disposition of the Court fully took into consideration all the evidence adduced against the petitioners. We need not rehash our
review of the evidence thus adduced, for it is enough simply to stress that the Prosecution failed to establish the corpus delicti of plunder
- that any or all of the accused public officials, particularly petitioner Arroyo, had amassed, accumulated, or acquired ill-gotten wealth in
the aggregate amount or total value of at least ₱50,000,000.00.
Fourthly, in accenting certain inadequacies of the allegations of the information, the Court did not engage in purposeless nitpicking, and
did not digress from the primary task of determining the sufficiency of the evidence presented by the State against the petitioners. What
the Court thereby intended to achieve was to highlight what would have been relevant in the proper prosecution of plunder and thus
enable itself to discern and determine whether the evidence of guilt was sufficient or not. In fact, the Court categorically clarified that in
discussing the essential need for the identification of the main plunderer it was not harping on the sufficiency of the information, but was
only enabling itself to search for and to find the relevant proof that unequivocally showed petitioner Arroyo as the "mastermind" - which
was how the Sandiganbayan had characterized her participation - in the context of the implied conspiracy alleged in the information. But
the search came to naught, for the information contained nothing that averred her commission of the overt act necessary to implicate
her in the supposed conspiracy to commit the crime of plunder. Indeed, the Court assiduously searched for but did not find the sufficient
incriminatory evidence against the petitioners. Hence, the Sandiganbayan capriciously and oppressively denied their demurrers to
evidence.
Fifthly, the State posits that it established at least a case for malversation against the petitioners.
Malversation is defined and punished under Article 217 of the Revised Penal Code, which reads thusly:
Article 217. Malversation of public funds or property; Presumption of malversation. - Any public officer who, by reason of the duties of his
office, is accountable for public funds or property, shall appropriate the same or shall take or misappropriate or shall consent, through
abandonment or negligence, shall permit any other person to take such public funds, or property, wholly or partially, or shall otherwise
be guilty of the misappropriation or malversation of such funds or property, shall suffer:
1. The penalty of prision correccional in its medium and maximum periods, if the amount involved in the misappropriation
or malversation does not exceed two hundred pesos.
2. The penalty of prision mayor in its minimum and medium periods, if the amount involved is more than two hundred
pesos but does not exceed six thousand pesos.
3. The penalty of prision mayor in its maximum period to reclusion temporal in its minimum period, if the amount involved is
more than six thousand pesos but is less than twelve thousand pesos.
4. The penalty of reclusion temporal, in its medium and maximum periods, if the amount involved is more than twelve
thousand pesos but is less than twenty-two thousand pesos. If the amount exceeds the latter, the penalty shall be reclusion
temporal in its maximum period to reclusion perpetua.
In all cases, persons guilty of malversation shall also suffer the penalty of perpetual special disqualification and a fine equal to the
amount of the funds malversed or equal to the total value of the property embezzled.
The failure of a public officer to have duly forthcoming any public funds or property with which he is chargeable, upon demand by any
duly authorized officer, shall be prima facie evidence that he has put such missing funds or property to personal use. (As amended by
RA 1060).
The elements of malversation are that: (a) the offender is an accountable public officer; (b) he/she is responsible for the
misappropriation of public funds or property through intent or negligence; and (c) he/she has custody of and received such funds and
property by reason of his/her office. 10
The information in Criminal Case No. SB-12-CRM-017411 avers:
The undersigned Assistant Ombudsman and Graft Investigation and Prosecution Officer III, Office of the Ombudsman, hereby accuse
GLORIA MACAPAGAL-ARROYO, ROSARIO C. URIARTE, SERGIO O. VALENCIA, MANUEL L. MORATO, JOSE R. TARUC V,
RAYMUNDO T. ROQUERO, MA. FATIMA AS. VALDES, BENIGNO B. AGUAS, REYNALDO A. VILLAR and NILDA B. PLARAS, of the
crime of PLUNDER, as defined by, and penalized under Section 2 of Republic Act (R.A.) No. 7080, as amended by R.A. No. 7659,
committed, as follows:
That during the period from January 2008 to June 2010 or sometime prior or subsequent thereto, in Quezon City, Philippines, and within
the jurisdiction of this Honorable Court, accused GLORIA MACAPAGAL-ARROYO, then the President of the Philippines, ROSARIO C.
URIARTE, then General Manager and Vice Chairman, SERGIO 0. VALENCIA, then Chairman of the Board of Directors, MANUEL L.
MORA TO, JOSE R. TARUC V, RAYMUNDO T. ROQUERO, MA. FATIMA AS. VALDES, then members of the Board of Directors,
BENIGNO B. AGUAS, then Budget and Accounts Manager, all of the Philippine Charity Sweepstakes Office (PCSO), REYNALDO A.
VILLAR, then Chairman, and NILDA B. PLARAS, then Head of Intelligence/Confidential Fund Fraud Audit Unit, both of the Commission
on Audit, all public officers committing the offense in relation to their respective offices and taking undue advantage of their respective
official positions, authority, relationships, connections or influence, conniving, conspiring and confederating with one another, did then
and there willfully, unlawfully and criminally 'amass,, accumulate and/or acquire directly or indirectly, ill-gotten wealth in the aggregate
amount or total value of THREE HUNDRED SIXTY FIVE MILLION NINE HUNDRED NINETY SEVEN THOUSAND NINE HUNDRED
FIFTEEN PESOS (PHP365,997,915.00), more or less, through any or a combination or a series of overt or criminal acts, or similar
schemes or means, described as follows:
(a) diverting in several instances, funds from the operating budget of PCSO to its Confidential/Intelligence Fund that could
be accessed and withdrawn at any time with minimal restrictions, and converting, misusing, and/or illegally conveying or
transferring the proceeds drawn from said fund in the aforementioned sum, also in several instances, to themselves, in the
guise of fictitious expenditures, for their personal gain and benefit;
(b) raiding the public treasury by withdrawing and receiving, in several instances, the above-mentioned amount from the
Confidential/Intelligence Fund from PCSO's accounts, and or unlawfully transferring or conveying the same into their
possession and control through irregularly issued disbursement vouchers and fictitious expenditures; and
(c) taking advantage of their respective official positions, authority, relationships, connections or influence, in several
instances, to unjustly enrich themselves in the aforementioned sum, at the expense of, and the damage and prejudice of
the Filipino people and the Republic of the Philippines.
CONTRARY TO LAW.
In thereby averring the predicate act of malversation, the State did not sufficiently allege the aforementioned essential elements of
malversation in the information. The omission from the information of factual details descriptive of the aforementioned elements of
malversation highlighted the insufficiency of the allegations. Consequently, the State's position is entirely unfounded.
Lastly, the petitioners insist that the consideration and granting of the motion for reconsideration of the State can amount to a violation of
the constitutional prohibition against double jeopardy because their acquittal under the decision was a prior jeopardy within the context
of Section 21, Article III (Bill of Rights) of the 1987 Constitution, to wit:
Section 21. No person shall be twice put in jeopardy of punishment for the same offense. If an act is punished by a law and an
ordinance, conviction or acquittal under either shall constitute a bar to another prosecution for the same act.
The insistence of the petitioners is fully warranted. Indeed, the consideration and granting of the motion for reconsideration of the State
will amount to the violation of the constitutional guarantee against double jeopardy.
The Court's consequential dismissal of Criminal Case No. SB-12- CRM-0174 as to the petitioners for insufficiency of evidence amounted
to their acquittal of the crime of plunder charged against them. In People v. Tan, 12the Court shows why:
In People v. Sandiganbayan, this Com1 explained the general rule that the grant of a demurrer to evidence operates as an acquittal and
is, thus, final and unappealable, to wit:
The demurrer to evidence in criminal cases, such as the one at bar, is ''filed after tile prosecution had rested its case," and
when the same is granted, it calls "for an appreciation of the evidence adduced by the prosecution and its sufficiency to
warrant conviction beyond reasonable doubt, resulting in a dismissal of the case on the merits, tantamount to an acquittal of
the accused." Such dismissal of a criminal case by the grant of demurrer to evidence may not be appealed, for to do so would
be to place the accused in double jeopardy. The verdict being one of acquittal, the case ends there.
xxxx
The rule on double jeopardy, however, is not without exceptions. In People v. Laguio, Jr., this Court stated that the only instance when
double jeopardy will not attach is when the RTC acted with grave abuse of discretion, thus:
... The only instance when double ,jeopardy will not attach is when the trial court acted with grave abuse of discretion amounting to lack
or excess of jurisdiction, such as where the prosecution was denied the opportunity to present its case or where the trial was a sham.
However, while certiorari may be availed of to correct an erroneous acquittal, the petitioner in such an extraordinary proceeding must
clearly demonstrate that the trial court blatantly abused its authority to a point so grave as to deprive it of its very power to dispense
justice. 13
The constitutional prohibition against placing a person under double jeopardy for the same offense bars not only a new and independent
prosecution but also an appeal in the same action after jeopardy had attached. 14 As such, every acquittal becomes final immediately
upon promulgation and cannot be recalled for correction or amendment. With the acquittal being immediately final, granting the State's
motion for reconsideration in this case would violate the Constitutional prohibition against double jeopardy because it would effectively
reopen the prosecution and subject the petitioners to a second jeopardy despite their acquittal.
It is cogent to remind in this regard that the Constitutional prohibition against double jeopardy provides to the accused three related
protections, specifically: protection against a second prosecution for the same offense after acquittal; protection against a second
prosecution for the same offense after conviction; and protection against multiple punishments for the same offense. 15The rationale for
the three protections is expounded in United States v. Wilson: 16
The interests underlying these three protections arc quite similar. When a defendant has been once convicted and punished
for a particular crime, principles of fairness and finality require that he not be subjected to the possibility of further
punishment by being again tried or sentenced for the same offense.Ex pa rte Lange, 18 Wall 163 (1874); In re Nielsen, 131 U.S.
176 (1889). When a defendant has been acquitted of an offense, the Clause guarantees that the State shall not be permitted to
make repeated attempts to convict him,
"thereby subjecting him to embarrassment, expense and ordeal, and compelling him to live in a continuing state of anxiety
and insecurity, as well as enhancing the possibility that, even though innocent, he may be found guilty."
Green v. United States, 355 U.S. 184, 187-188 (1957).
The policy of avoiding multiple trials has been regarded as so important that exceptions to the principle have been only
grudgingly allowed. Initially, a new trial was thought to be unavailable after appeal, whether requested by the prosecution or
the defendant. See United States v. Gibert, 25 F. Cas. 1287 (No. 15,204) (CCD Mass. 1834) (Story, J.). It was not until 1896 that it
was made clear that a defendant could seek a new trial after conviction, even though the Government enjoyed no similar
right. United States v. Ball, 163 U.S. 662. (Bold underscoring supplied for emphasis)
WHEREFORE, the Court DENIES the motion for reconsideration for lack of merit.
SO ORDERED.
G.R. No. 183137               April 10, 2013
PELIZLOY REALTY CORPORATION, represented herein by its President, GREGORY K. LOY, Petitioner,
vs.
THE PROVINCE OF BENGUET, Respondent.
DECISION
LEONEN, J.:
The principal issue in this case is the scope of authority of a province to impose an amusement tax.
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court praying that the December 10, 2007 decision of the
Regional Trial Court,- Branch 62, La Trinidad, Benguet in Civil Case No. 06-CV-2232 be reversed and set aside and a new one issued
in which: ( 1) respondent Province of Benguet is declared as having no authority to levy amusement taxes on admission fees for resorts,
swimming pools, bath houses, hot springs, tourist spots, and other places for recreation; (2) Section 59, Article X of the Benguet
Provincial Revenue Code of 2005 is declared null and void; and (3) the respondent Province of Benguet is permanently enjoined from
enforcing Section 59, Article X of the Benguet Provincial Revenue Code of 2005.
Petitioner Pelizloy Realty Corporation ("Pelizloy") owns Palm Grove Resort, which is designed for recreation and which has facilities like
swimming pools, a spa and function halls. It is located at Asin, Angalisan, Municipality of Tuba, Province of Benguet.
On December 8, 2005, the Provincial Board of the Province of Benguet approved Provincial Tax Ordinance No. 05-107, otherwise
known as the Benguet Revenue Code of 2005 ("Tax Ordinance"). Section 59, Article X of the Tax Ordinance levied a ten percent (10%)
amusement tax on gross receipts from admissions to "resorts, swimming pools, bath houses, hot springs and tourist spots." Specifically,
it provides the following:
Article Ten: Amusement Tax on Admission
Section 59. Imposition of Tax. There is hereby levied a tax to be collected from the proprietors, lessees, or operators of theaters,
cinemas, concert halls, circuses, cockpits, dancing halls, dancing schools, night or day clubs, and other places of amusement at the rate
of thirty percent (30%) of the gross receipts from admission fees; and
A tax of ten percent (10%) of gross receipts from admission fees for boxing, resorts, swimming pools, bath houses, hot springs, and
tourist spots is likewise levied. [Emphasis and underscoring supplied]
Section 162 of the Tax Ordinance provided that the Tax Ordinance shall take effect on January 1, 2006.
It was Pelizloy's position that the Tax Ordinance's imposition of a 10% amusement tax on gross receipts from admission fees for resorts,
swimming pools, bath houses, hot springs, and tourist spots is an ultra vires act on the part of the Province of Benguet. Thus, it filed an
appeal/petition before the Secretary of Justice on January 27, 2006.
The appeal/petition was filed within the thirty (30)-day period from the effectivity of a tax ordinance allowed by Section 187 of Republic
Act No. 7160, otherwise known as the Local Government Code (LGC).1 The appeal/petition was docketed as MSO-OSJ Case No. 03-
2006.
Under Section 187 of the LGC, the Secretary of Justice has sixty (60) days from receipt of the appeal to render a decision. After the
lapse of which, the aggrieved party may file appropriate proceedings with a court of competent jurisdiction.
Treating the Secretary of Justice's failure to decide on its appeal/petition within the sixty (60) days provided by Section 187 of the LGC
as an implied denial of such appeal/petition, Pelizloy filed a Petition for Declaratory Relief and Injunction before the Regional Trial Court,
Branch 62, La Trinidad, Benguet. The petition was docketed as Civil Case No. 06-CV-2232.
Pelizloy argued that Section 59, Article X of the Tax Ordinance imposed a percentage tax in violation of the limitation on the taxing
powers of local government units (LGUs) under Section 133 (i) of the LGC. Thus, it was null and void ab initio. Section 133 (i) of the
LGC provides:
Section 133. Common Limitations on the Taxing Powers of Local Government Units. - Unless otherwise provided herein, the exercise of
the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the following:
xxx
(i) Percentage or value-added tax (VAT) on sales, barters or exchanges or similar transactions on goods or services except as
otherwise provided herein
The Province of Benguet assailed the Petition for Declaratory Relief and Injunction as an improper remedy. It alleged that once a tax
liability has attached, the only remedy of a taxpayer is to pay the tax and to sue for recovery after exhausting administrative remedies.2
On substantive grounds, the Province of Benguet argued that the phrase ‘other places of amusement’ in Section 140 (a) of the
LGC3 encompasses resorts, swimming pools, bath houses, hot springs, and tourist spots since "Article 220 (b) (sic)" of the LGC defines
"amusement" as "pleasurable diversion and entertainment x x x synonymous to relaxation, avocation, pastime, or fun."4 However, the
Province of Benguet erroneously cited Section 220 (b) of the LGC. Section 220 of the LGC refers to valuation of real property for real
estate tax purposes. Section 131 (b) of the LGC, the provision which actually defines "amusement", states:
Section 131. Definition of Terms. - When used in this Title, the term:
xxx
(b) "Amusement" is a pleasurable diversion and entertainment. It is synonymous to relaxation, avocation, pastime, or fun On December
10, 2007, the RTC rendered the assailed Decision dismissing the Petition for Declaratory Relief and Injunction for lack of merit.
Procedurally, the RTC ruled that Declaratory Relief was a proper remedy. On the validity of Section 59, Article X of the Tax Ordinance,
the RTC noted that, while Section 59, Article X imposes a percentage tax, Section 133 (i) of the LGC itself allowed for exceptions. It
noted that what the LGC prohibits is not the imposition by LGUs of percentage taxes in general but the "imposition and levy of
percentage tax on sales, barters, etc., on goods and services only."5It further gave credence to the Province of Benguet's assertion that
resorts, swimming pools, bath houses, hot springs, and tourist spots are encompassed by the phrase ‘other places of amusement’ in
Section 140 of the LGC.
On May 21, 2008, the RTC denied Pelizloy’s Motion for Reconsideration.
Aggrieved, Pelizloy filed the present petition on June 10, 2008 on pure questions of law. It assailed the legality of Section 59, Article X of
the Tax Ordinance as being a (supposedly) prohibited percentage tax per Section 133 (i) of the LGC.
In its Comment, the Province of Benguet, erroneously citing Section 40 of the LGC, argued that Section 59, Article X of the Tax
Ordinance does not levy a percentage tax "because the imposition is not based on the total gross receipts of services of the petitioner
but solely and actually limited on the gross receipts of the admission fees collected."6 In addition, it argued that provinces can validly
impose amusement taxes on resorts, swimming pools, bath houses, hot springs, and tourist spots, these being ‘amusement places’.
For resolution in this petition are the following issues:
1. Whether or not Section 59, Article X of Provincial Tax Ordinance No. 05-107, otherwise known as the Benguet Revenue
Code of 2005, levies a percentage tax.
2. Whether or not provinces are authorized to impose amusement taxes on admission fees to resorts, swimming pools,
bath houses, hot springs, and tourist spots for being "amusement places" under the Local Government Code.
The power to tax "is an attribute of sovereignty,"7 and as such, inheres in the State. Such, however, is not true for provinces, cities,
municipalities and barangays as they are not the sovereign;8 rather, they are mere "territorial and political subdivisions of the Republic of
the Philippines".9
The rule governing the taxing power of provinces, cities, muncipalities and barangays is summarized in Icard v. City Council of Baguio:10
It is settled that a municipal corporation unlike a sovereign state is clothed with no inherent power of taxation. The charter or statute
must plainly show an intent to confer that power or the municipality, cannot assume it. And the power when granted is to be construed in
strictissimi juris. Any doubt or ambiguity arising out of the term used in granting that power must be resolved against the municipality.
Inferences, implications, deductions – all these – have no place in the interpretation of the taxing power of a municipal
corporation.11 [Underscoring supplied]
Therefore, the power of a province to tax is limited to the extent that such power is delegated to it either by the Constitution or by statute.
Section 5, Article X of the 1987 Constitution is clear on this point:
Section 5. Each local government unit shall have the power to create its own sources of revenues and to levy taxes, fees and charges
subject to such guidelines and limitations as the Congress may provide, consistent with the basic policy of local autonomy. Such taxes,
fees, and charges shall accrue exclusively to the local governments. [Underscoring supplied]
Per Section 5, Article X of the 1987 Constitution, "the power to tax is no longer vested exclusively on Congress; local legislative bodies
are now given direct authority to levy taxes, fees and other charges."12 Nevertheless, such authority is "subject to such guidelines and
limitations as the Congress may provide".13
In conformity with Section 3, Article X of the 1987 Constitution,14 Congress enacted Republic Act No. 7160, otherwise known as the
Local Government Code of 1991. Book II of the LGC governs local taxation and fiscal matters.
Relevant provisions of Book II of the LGC establish the parameters of the taxing powers of LGUS found below.
First, Section 130 provides for the following fundamental principles governing the taxing powers of LGUs:
1. Taxation shall be uniform in each LGU.
2. Taxes, fees, charges and other impositions shall:
a. be equitable and based as far as practicable on the taxpayer's ability to pay;
b. be levied and collected only for public purposes;
c. not be unjust, excessive, oppressive, or confiscatory;
d. not be contrary to law, public policy, national economic policy, or in the restraint of trade.
3. The collection of local taxes, fees, charges and other impositions shall in no case be let to any private person.
4. The revenue collected pursuant to the provisions of the LGC shall inure solely to the benefit of, and be subject to the
disposition by, the LGU levying the tax, fee, charge or other imposition unless otherwise specifically provided by the LGC.
5. Each LGU shall, as far as practicable, evolve a progressive system of taxation.
Second, Section 133 provides for the common limitations on the taxing powers of LGUs. Specifically, Section 133 (i) prohibits the levy
by LGUs of percentage or value-added tax (VAT) on sales, barters or exchanges or similar transactions on goods or services except as
otherwise provided by the LGC.
As it is Pelizloy’s contention that Section 59, Article X of the Tax Ordinance levies a prohibited percentage tax, it is crucial to understand
first the concept of a percentage tax.
In Commissioner of Internal Revenue v. Citytrust Investment Phils. Inc.,15 the Supreme Court defined percentage tax as a "tax measured
by a certain percentage of the gross selling price or gross value in money of goods sold, bartered or imported; or of the gross receipts or
earnings derived by any person engaged in the sale of services." Also, Republic Act No. 8424, otherwise known as the National Internal
Revenue Code (NIRC), in Section 125, Title V,16 lists amusement taxes as among the (other) percentage taxes which are levied
regardless of whether or not a taxpayer is already liable to pay value-added tax (VAT).
Amusement taxes are fixed at a certain percentage of the gross receipts incurred by certain specified establishments.
Thus, applying the definition in CIR v. Citytrust and drawing from the treatment of amusement taxes by the NIRC, amusement taxes are
percentage taxes as correctly argued by Pelizloy.
However, provinces are not barred from levying amusement taxes even if amusement taxes are a form of percentage taxes. Section
133 (i) of the LGC prohibits the levy of percentage taxes "except as otherwise provided" by the LGC.
Section 140 of the LGC provides:
SECTION 140. Amusement Tax - (a) The province may levy an amusement tax to be collected from the proprietors, lessees, or
operators of theaters, cinemas, concert halls, circuses, boxing stadia, and other places of amusement at a rate of not more than thirty
percent (30%) of the gross receipts from admission fees.
(b) In the case of theaters of cinemas, the tax shall first be deducted and withheld by their proprietors, lessees, or
operators and paid to the provincial treasurer before the gross receipts are divided between said proprietors, lessees, or
operators and the distributors of the cinematographic films.
(c) The holding of operas, concerts, dramas, recitals, painting and art exhibitions, flower shows, musical programs, literary
and oratorical presentations, except pop, rock, or similar concerts shall be exempt from the payment of the tax herein
imposed.
(d) The Sangguniang Panlalawigan may prescribe the time, manner, terms and conditions for the payment of tax. In case
of fraud or failure to pay the tax, the Sangguniang Panlalawigan may impose such surcharges, interests and penalties.
(e) The proceeds from the amusement tax shall be shared equally by the province and the municipality where such
amusement places are located. [Underscoring supplied]
Evidently, Section 140 of the LGC carves a clear exception to the general rule in Section 133 (i). Section 140 expressly allows for the
imposition by provinces of amusement taxes on "the proprietors, lessees, or operators of theaters, cinemas, concert halls, circuses,
boxing stadia, and other places of amusement."
However, resorts, swimming pools, bath houses, hot springs, and tourist spots are not among those places expressly mentioned by
Section 140 of the LGC as being subject to amusement taxes. Thus, the determination of whether amusement taxes may be levied on
admissions to resorts, swimming pools, bath houses, hot springs, and tourist spots hinges on whether the phrase ‘other places of
amusement’ encompasses resorts, swimming pools, bath houses, hot springs, and tourist spots.
Under the principle of ejusdem generis, "where a general word or phrase follows an enumeration of particular and specific words of the
same class or where the latter follow the former, the general word or phrase is to be construed to include, or to be restricted to persons,
things or cases akin to, resembling, or of the same kind or class as those specifically mentioned."17
The purpose and rationale of the principle was explained by the Court in National Power Corporation v. Angas18 as follows:
The purpose of the rule on ejusdem generis is to give effect to both the particular and general words, by treating the particular words as
indicating the class and the general words as including all that is embraced in said class, although not specifically named by the
particular words. This is justified on the ground that if the lawmaking body intended the general terms to be used in their unrestricted
sense, it would have not made an enumeration of particular subjects but would have used only general terms. [2 Sutherland, Statutory
Construction, 3rd ed., pp. 395-400].19
In Philippine Basketball Association v. Court of Appeals,20 the Supreme Court had an opportunity to interpret a starkly similar provision
or the counterpart provision of Section 140 of the LGC in the Local Tax Code then in effect. Petitioner Philippine Basketball Association
(PBA) contended that it was subject to the imposition by LGUs of amusement taxes (as opposed to amusement taxes imposed by the
national government).1âwphi1 In support of its contentions, it cited Section 13 of Presidential Decree No. 231, otherwise known as the
Local Tax Code of 1973, (which is analogous to Section 140 of the LGC) providing the following:
Section 13. Amusement tax on admission. - The province shall impose a tax on admission to be collected from the proprietors, lessees,
or operators of theaters, cinematographs, concert halls, circuses and other places of amusement xxx.
Applying the principle of ejusdem generis, the Supreme Court rejected PBA's assertions and noted that:
In determining the meaning of the phrase 'other places of amusement', one must refer to the prior enumeration of theaters,
cinematographs, concert halls and circuses with artistic expression as their common characteristic. Professional basketball games do
not fall under the same category as theaters, cinematographs, concert halls and circuses as the latter basically belong to artistic forms
of entertainment while the former caters to sports and gaming.21 [Underscoring supplied]
However, even as the phrase ‘other places of amusement’ was already clarified in Philippine Basketball Association, Section 140 of the
LGC adds to the enumeration of 'places of amusement' which may properly be subject to amusement tax. Section 140 specifically
mentions 'boxing stadia' in addition to "theaters, cinematographs, concert halls and circuses" which were already mentioned in PD No.
231. Also, 'artistic expression' as a characteristic does not pertain to 'boxing stadia'.
In the present case, the Court need not embark on a laborious effort at statutory construction. Section 131 (c) of the LGC already
provides a clear definition of ‘amusement places’:
Section 131. Definition of Terms. - When used in this Title, the term:
xxx
(c) "Amusement Places" include theaters, cinemas, concert halls, circuses and other places of amusement where one seeks admission
to entertain oneself by seeing or viewing the show or performances [Underscoring supplied]
Indeed, theaters, cinemas, concert halls, circuses, and boxing stadia are bound by a common typifying characteristic in that they are all
venues primarily for the staging of spectacles or the holding of public shows, exhibitions, performances, and other events meant to be
viewed by an audience. Accordingly, ‘other places of amusement’ must be interpreted in light of the typifying characteristic of being
venues "where one seeks admission to entertain oneself by seeing or viewing the show or performances" or being venues primarily
used to stage spectacles or hold public shows, exhibitions, performances, and other events meant to be viewed by an audience.
As defined in The New Oxford American Dictionary,22 ‘show’ means "a spectacle or display of something, typically an impressive
one";23 while ‘performance’ means "an act of staging or presenting a play, a concert, or other form of entertainment."24 As such, the
ordinary definitions of the words ‘show’ and ‘performance’ denote not only visual engagement (i.e., the seeing or viewing of things) but
also active doing (e.g., displaying, staging or presenting) such that actions are manifested to, and (correspondingly) perceived by an
audience.
Considering these, it is clear that resorts, swimming pools, bath houses, hot springs and tourist spots cannot be considered venues
primarily "where one seeks admission to entertain oneself by seeing or viewing the show or performances". While it is true that they may
be venues where people are visually engaged, they are not primarily venues for their proprietors or operators to actively display, stage
or present shows and/or performances.
Thus, resorts, swimming pools, bath houses, hot springs and tourist spots do not belong to the same category or class as theaters,
cinemas, concert halls, circuses, and boxing stadia. It follows that they cannot be considered as among the ‘other places of amusement’
contemplated by Section 140 of the LGC and which may properly be subject to amusement taxes.
At this juncture, it is helpful to recall this Court’s pronouncements in Icard:
The power to tax when granted to a province is to be construed in strictissimi juris. Any doubt or ambiguity arising out of the term used in
granting that power must be resolved against the province. Inferences, implications, deductions – all these – have no place in the
interpretation of the taxing power of a province.25
In this case, the definition of' amusement places' in Section 131 (c) of the LGC is a clear basis for determining what constitutes the
'other places of amusement' which may properly be subject to amusement tax impositions by provinces. There is no reason for going
beyond such basis. To do otherwise would be to countenance an arbitrary interpretation/application of a tax law and to inflict an injustice
on unassuming taxpayers.
The previous pronouncements notwithstanding, it will be noted that it is only the second paragraph of Section 59, Article X of the Tax
Ordinance which imposes amusement taxes on "resorts, swimming pools, bath houses, hot springs, and tourist spots". The first
paragraph of Section 59, Article X of the Tax Ordinance refers to "theaters, cinemas, concert halls, circuses, cockpits, dancing halls,
dancing schools, night or day clubs, and other places of amusement".1âwphi1 In any case, the issues raised by Pelizloy are pertinent
only with respect to the second paragraph of Section 59, Article X of the Tax Ordinance. Thus, there is no reason to invalidate the first
paragraph of Section 59, Article X of the Tax Ordinance. Any declaration as to the Province of Benguet's lack of authority to levy
amusement taxes must be limited to admission fees to resorts, swimming pools, bath houses, hot springs and tourist spots.
Moreover, the second paragraph of Section 59, Article X of the Tax Ordinance is not limited to resorts, swimming pools, bath houses,
hot springs, and tourist spots but also covers admission fees for boxing. As Section 140 of the LGC allows for the imposition of
amusement taxes on gross receipts from admission fees to boxing stadia, Section 59, Article X of the Tax Ordinance must be sustained
with respect to admission fees from boxing stadia.
WHEREFORE, the petition for review on certiorari is GRANTED. The second paragraph of Section 59, Article X of the Benguet
Provincial Revenue Code of 2005, in so far as it imposes amusement taxes on admission fees to resorts, swimming pools, bath houses,
hot springs and tourist spots, is declared null and void. Respondent Province of Benguet is permanently enjoined from enforcing the
second paragraph of Section 59, Article X of the Benguet Provincial Revenue Code of 2005 with respect to resorts, swimming pools,
bath houses, hot springs and tourist spots.
SO ORDERED.