(2) NATURAL LAW I

II.) BRANCHES OF LAW

A.) POLITICAL LAW

i.Ynot v. CA, G.R. No. 74457 March 20, 1987

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 74457 March 20, 1987

RESTITUTO YNOT, petitioner,
vs.
INTERMEDIATE APPELLATE COURT, THE STATION COMMANDER, INTEGRATED
NATIONAL POLICE, BAROTAC NUEVO, ILOILO and THE REGIONAL DIRECTOR,
BUREAU OF ANIMAL INDUSTRY, REGION IV, ILOILO CITY, respondents.

Ramon A. Gonzales for petitioner.

CRUZ, J.:

Petitioner Respondent Ponente

YNOT, Restituto 1. Intermediate Appellate Court Cruz, J.
(CA)
2. Station Commander
(Integrated National Police,
Barotac Nuevo)
3. Regional Director (Bureau of
Animal Industry, Region VI,
Iloilo City)

The essence of due process is distilled (obtained) in the immortal cry of Themistocles to
Alcibiades "Strike — but hear me first!" It is this cry that the petitioner in effect repeats
here as he challenges the constitutionality of Executive Order No. 626-A.

Ynot, R. is challenging the constitutionality of EO 626-A

The said executive order reads in full as follows:

WHEREAS, the President has given orders prohibiting the interprovincial (occurring or
existing between or involving two or more provinces) movement of carabaos and the
slaughtering of carabaos not complying with the requirements of Executive Order No.
626 particularly with respect to age;

WHEREAS, it has been observed that despite such orders the violators still manage to
circumvent the prohibition against inter-provincial movement of carabaos by transporting
carabeef instead; and
WHEREAS, in order to achieve the purposes and objectives of Executive Order No. 626
and the prohibition against interprovincial movement of carabaos, it is necessary to
strengthen the said Executive Order and provide for the disposition of the carabaos and
carabeef subject of the violation;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue

of the powers vested in me by the Constitution, do hereby promulgate the following:

SECTION 1. Executive Order No. 626 is hereby amended such that henceforth, no
carabao regardless of age, sex, physical condition or purpose and no carabeef shall be
transported from one province to another. The carabao or carabeef transported in
violation of this Executive Order as amended shall be subject to confiscation and
forfeiture by the government, to be distributed to charitable institutions and other similar
institutions as the Chairman of the National Meat Inspection Commission may ay see
fit, in the case of carabeef, and to deserving farmers through dispersal as the Director
of Animal Industry may see fit, in the case of carabaos.

SECTION 2. This Executive Order shall take effect immediately.

Done in the City of Manila, this 25th day of October, in the year of Our Lord, nineteen
hundred and eighty.

(SGD.) FERDINAND E. MARCOS

President

Republic of the Philippines

The petitioner had transported six carabaos in a pump boat from Masbate to Iloilo on
January 13, 1984, when they were confiscated by the police station commander of
Barotac Nuevo, Iloilo, for violation of the above measure (EO 626-A). 1 The petitioner sued for
recovery, and the Regional Trial Court of Iloilo City issued a writ of replevin upon his filing of a supersedeas bond of
P12,000.00. After considering the merits of the case, the court sustained the confiscation of the carabaos and, since
they ((carabao) could no longer be produced, ordered the confiscation of the bond. The court also declined to rule on
the constitutionality of the executive order, as raise by the petitioner, for lack of authority and also for its presumed
validity. 2

(01-13-1984) Ynot (petitioner) transported 6 Carabaos from Masbate to Iloilo by

means of a pumpboat but was confiscated by the Police Station Commander of
Barotac Nuevo, Iloilo in violation of EO 626-A. The petitioner sued for recovery and
the RTC issued writ of replevin upon his filing of a supersedeas bond. However, after
the consideration of the court of the merit of the case, they sustained the confiscation
of the carabaos. Since it can no longer be produced, they ordered the confiscation of
the bond instead. The court also declined to rule on the constitutionality of the EO on
the basis of its lack of authority and presumed validity as raised by the Ynot.
The petitioner appealed the decision to the Intermediate Appellate Court, * 3 which upheld the
trial court, ** and he has now come before us in this petition for review on certiorari.

Ynot filed for a petition for review on certiorari.

The thrust of his petition is that the executive order is unconstitutional insofar as it
authorizes outright confiscation of the carabao or carabeef being transported across
provincial boundaries. His claim is that the penalty is invalid because it is imposed
without according the owner a right to be heard before a competent and impartial court
as guaranteed by due process. He complains that the measure should not have been
presumed, and so sustained, as constitutional. There is also a challenge to the improper
exercise of the legislative power by the former President under Amendment No. 6 of the
1973 Constitution.  4

While also involving the same executive order, the case of Pesigan v. Angeles   is not5

applicable here. The question raised there was the necessity of the previous publication
of the measure in the Official Gazette before it could be considered enforceable. We
imposed the requirement then on the basis of due process of law. In doing so, however,
this Court did not, as contended by the Solicitor General, impliedly affirm the
constitutionality of Executive Order No. 626-A. That is an entirely different matter.

This Court has declared that while lower courts should observe a becoming modesty in
examining constitutional questions, they are nonetheless not prevented from resolving
the same whenever warranted, subject only to review by the highest tribunal.   We 6

have jurisdiction under the Constitution to "review, revise, reverse, modify or affirm
(RRRMA) on appeal or certiorari, as the law or rules of court may provide," final
judgments and orders of lower courts in, among others, all cases involving the
constitutionality of certain measures.   This simply means that the resolution of such
7

cases may be made in the first instance by these lower courts.

And while it is true that laws are presumed to be constitutional, that presumption is not
by any means conclusive and in fact may be rebutted. Indeed, if there be a clear showing
of their invalidity, and of the need to declare them so, then "will be the time to make the
hammer fall, and heavily,"   to recall Justice Laurel's trenchant warning. Stated otherwise,
8

courts should not follow the path of least resistance by simply presuming the
constitutionality of a law when it is questioned. On the contrary, they should probe
the issue more deeply, to relieve the abscess, paraphrasing another distinguished
jurist,   and so heal the wound or excise the affliction.
9

Judicial power authorizes this; and when the exercise is demanded, there should be no
shirking (avoiding) of the task for fear of retaliation, or loss of favor, or popular censure
(judgement involving condemnation), or any other similar inhibition unworthy of the
bench, especially this Court.

The challenged measure is denominated (given name) an executive order but it is really
presidential decree, promulgating a new rule instead of merely implementing an existing
law. It was issued by President Marcos not for the purpose of taking care that the laws
were faithfully executed but in the exercise of his legislative authority under
Amendment No. 6. It was provided thereunder that whenever in his judgment there
existed a grave emergency or a threat or imminence (impending evil or danger) thereof
or whenever the legislature failed or was unable to act adequately on any matter that in
his judgment required immediate action, he could, in order to meet the exigency, issue
decrees, orders or letters of instruction that were to have the force and effect of law. As
there is no showing of any exigency to justify the exercise of that extraordinary
power then, the petitioner has reason, indeed, to question the validity of the
executive order. Nevertheless, since the determination of the grounds was supposed
to have been made by the President "in his judgment, " a phrase that will lead to
protracted (delayed) discussion not really necessary at this time, we reserve resolution of
this matter until a more appropriate occasion. For the nonce (time being) , we confine
ourselves to the more fundamental question of due process.

It is part of the art of constitution-making that the provisions of the charter be cast in
precise and unmistakable language to avoid controversies that might arise on their
correct interpretation. That is the Ideal. In the case of the due process clause, however,
this rule was deliberately not followed and the wording was purposely kept ambiguous. In
fact, a proposal to delineate (describe or portray (something) precisely) it more clearly
was submitted in the Constitutional Convention of 1934, but it was rejected by Delegate
Jose P. Laurel, Chairman of the Committee on the Bill of Rights, who forcefully argued
against it. He was sustained (continuing for an extended period or without interruption) by
the body. 10

The due process clause was kept intentionally vague so it would remain also conveniently
resilient (able to withstand or recover quickly from difficult conditions). This was felt necessary
because due process is not, like some provisions of the fundamental law, an "iron rule"
laying down an implacable (unable to be forgiven) and immutable (unchanging over
time)command for all seasons and all persons. Flexibility must be the best virtue of the
guaranty. The very elasticity of the due process clause was meant to make it adapt easily to
every situation, enlarging or constricting its protection as the changing times and
circumstances may require.

Aware of this, the courts have also hesitated to adopt their own specific description of
due process lest (to avoid risk) they confine themselves in a legal straitjacket that will
deprive them of the elbow room they may need to vary the meaning of the clause
whenever indicated. Instead, they have preferred to leave the import of the protection
open-ended, as it were, to be "gradually ascertained by the process of inclusion and
exclusion in the course of the decision of cases as they arise." 11 Thus, Justice Felix
Frankfurter of the U.S. Supreme Court, for example, would go no farther than to define due process —
and in so doing sums it all up — as nothing more and nothing less than "the embodiment (a tangible or
visible form of an idea, quality, or feeling)of the sporting Idea of fair play." 12

When the barons of England extracted from their sovereign liege the reluctant promise that Crown
would thenceforth not proceed against the life liberty or property of any of its subjects except by the
lawful judgment of his peers or the law of the land, they thereby won for themselves and their progeny
(descendant) that splendid guaranty of fairness that is now the hallmark of the free society. The solemn
vow that King John made at Runnymede in 1215 has since then resounded through the ages, as a
ringing reminder to all rulers, benevolent or base, that every person, when confronted by the stern
visage of the law, is entitled to have his say in a fair and open hearing of his cause.

The closed mind has no place in the open society. It is part of the sporting Idea of fair
play to hear "the other side" before an opinion is formed or a decision is made by those
who sit in judgment. Obviously, one side is only one-half of the question; the other half
must also be considered if an impartial verdict is to be reached based on an informed
appreciation of the issues in contention. It is indispensable that the two sides
complement each other, as unto the bow the arrow, in leading to the correct ruling after
examination of the problem not from one or the other perspective only but in its totality. A
judgment based on less that this full appraisal, on the pretext that a hearing is
unnecessary or useless, is tainted with the vice of bias or intolerance or ignorance, or
worst of all, in repressive regimes, the insolence of power.

The minimum requirements of due process are notice and hearing 13 which, generally
speaking, may not be dispensed with because they are intended as a safeguard against
official arbitrariness. It is a gratifying commentary on our judicial system that the jurisprudence
of this country is rich with applications of this guaranty as proof of our fealty (loyalty) to the
rule of law and the ancient rudiments of fair play. We have consistently declared that every
person, faced by the awesome power of the State, is entitled to "the law of the land," which
Daniel Webster described almost two hundred years ago in the famous Dartmouth College
Case, 14 as "the law which hears before it condemns, which proceeds upon inquiry
and renders judgment only after trial." It has to be so if the rights of every person are to be
secured beyond the reach of officials who, out of mistaken zeal or plain arrogance, would
degrade the due process clause into a worn and empty catchword.
This is not to say that notice and hearing are imperative in every case for, to be sure,
there are a number of admitted exceptions. The conclusive presumption, for example,
bars the admission of contrary evidence as long as such presumption is based on human
experience or there is a rational connection between the fact proved and the fact
ultimately presumed therefrom. 15 There are instances when the need for expeditions (quick) action will
justify omission of these requisites, as in the summary abatement of a nuisance per se, like a mad dog on the loose,
which may be killed on sight because of the immediate danger it poses to the safety and lives of the people.
Pornographic materials, contaminated meat and narcotic drugs are inherently pernicious (having harmful effect) and
may be summarily destroyed. The passport of a person sought for a criminal offense may be cancelled without
hearing, to compel his return to the country he has fled. 16 Filthy restaurants may be summarily padlocked in the
interest of the public health and bawdy (dealing with sexual things) houses to protect the public morals. 17 In such
instances, previous judicial hearing may be omitted without violation of due process in view of the nature of the
property involved or the urgency of the need to protect the general welfare from a clear and present danger.

The protection of the general welfare is the particular function of the police power which
both restraints and is restrained by due process. The police power is simply defined as
the power inherent in the State to regulate liberty and property for the promotion of the
general welfare. 18 By reason of its function, it extends to all the great public needs and is described
as the most pervasive (widely spread), the least limitable (does not extend) and the most demanding of
the three inherent powers of the State, far outpacing taxation and eminent domain. The individual, as a
member of society, is hemmed in by the police power, which affects him even before he is born and
follows him still after he is dead — from the womb to beyond the tomb — in practically everything he
does or owns. Its reach is virtually limitless. It is a ubiquitous (found everywhere) and often unwelcome
intrusion. Even so, as long as the activity or the property has some relevance to the public welfare, its
regulation under the police power is not only proper but necessary. And the justification is found in the
venerable Latin maxims, Salus populi est suprema lex (The welfare of the people is the supreme
law) and Sic utere tuo ut alienum non laedas (use your own property in such a manner as not to injure
that of another) , which call for the subordination of individual interests to the benefit of the greater
number.

It is this power (police) that is now invoked by the government to justify Executive
Order No. 626-A, amending the basic rule in Executive Order No. 626, prohibiting
the slaughter of carabaos except under certain conditions. The original measure
was issued for the reason, as expressed in one of its Whereases, that "present
conditions demand that the carabaos and the buffaloes be conserved for the benefit of
the small farmers who rely on them for energy needs." We affirm at the outset the need
for such a measure. In the face of the worsening energy crisis and the increased
dependence of our farms on these traditional beasts of burden, the government would
have been remiss (lack care) , indeed, if it had not taken steps to protect and preserve
them.

A similar prohibition was challenged in United States v. Toribio, 19 where a law regulating

the registration, branding and slaughter of large cattle was claimed to be a deprivation of property
without due process of law. The defendant had been convicted thereunder for having slaughtered
his own carabao without the required permit, and he appealed to the Supreme Court. The
conviction was affirmed. The law was sustained as a valid police measure to prevent the
indiscriminate killing of carabaos, which were then badly needed by farmers. An epidemic had stricken
many of these animals and the reduction of their number had resulted in an acute decline in agricultural
output, which in turn had caused an incipient famine. Furthermore, because of the scarcity of the
animals and the consequent increase in their price, cattle-rustling had spread alarmingly, necessitating
more effective measures for the registration and branding of these animals. The Court held that the
questioned statute was a valid exercise of the police power and declared in part as follows:

To justify the State in thus interposing (placing) its authority in behalf of the public, it must
appear, first, that the interests of the public generally, as distinguished from those of a
particular class, require such interference; and second, that the means are reasonably
necessary for the accomplishment of the purpose, and not unduly oppressive upon
individuals. ...

From what has been said, we think it is clear that the enactment of the provisions of the
statute under consideration was required by "the interests of the public generally, as
distinguished from those of a particular class" and that the prohibition of the slaughter of
carabaos for human consumption, so long as these animals are fit for agricultural work or
draft purposes was a "reasonably necessary" limitation on private ownership, to protect
the community from the loss of the services of such animals by their slaughter by
improvident owners, tempted either by greed of momentary gain, or by a desire to enjoy
the luxury of animal food, even when by so doing the productive power of the community
may be measurably and dangerously affected.

In the light of the tests mentioned above, we hold with the Toribio Case that the carabao,
as the poor man's tractor, so to speak, has a direct relevance to the public welfare and so
is a lawful subject of Executive Order No. 626. The method chosen in the basic measure
is also reasonably necessary for the purpose sought to be achieved and not unduly
oppressive upon individuals, again following the above-cited doctrine. There is no doubt
that by banning the slaughter of these animals except where they are at least seven
years old if male and eleven years old if female upon issuance of the necessary permit,
the executive order will be conserving those still fit for farm work or breeding and
preventing their improvident depletion.

But while conceding that the amendatory measure has the same lawful subject as the
original executive order, we cannot say with equal certainty that it complies with the
second requirement, viz., that there be a lawful method. We note that to strengthen the
original measure, Executive Order No. 626-A imposes an absolute ban not on
the slaughter of the carabaos but on their (carabao) movement, providing that "no
carabao regardless of age, sex, physical condition or purpose (sic) and no carabeef shall
be transported from one province to another." The object of the prohibition escapes us.
The reasonable connection between the means employed and the purpose sought
to be achieved by the questioned measure is missing.

We do not see how the prohibition of the inter-provincial transport of carabaos can
prevent their indiscriminate slaughter, considering that they can be killed anywhere, with
no less difficulty in one province than in another. Obviously, retaining the carabaos in one
province will not prevent their slaughter there, any more than moving them to another
province will make it easier to kill them there. As for the carabeef, the prohibition is made
to apply to it as otherwise, so says executive order, it could be easily circumvented (find
a a way around) by simply killing the animal. Perhaps so. However, if the movement of
the live animals for the purpose of preventing their slaughter cannot be prohibited, it
should follow that there is no reason either to prohibit their transfer as, not to be flippant
(not shown as serious) dead meat.

Even if a reasonable relation between the means and the end were to be assumed, we
would still have to reckon (establish) with the sanction that the measure applies for
violation of the prohibition. The penalty is outright confiscation of the carabao or carabeef
being transported, to be meted out by the executive authorities, usually the police only. In
the Toribio Case, the statute was sustained because the penalty prescribed was fine
and imprisonment, to be imposed by the court after trial and conviction of the accused.
Under the challenged measure, significantly, no such trial is prescribed, and the property
being transported is immediately impounded by the police and declared, by the measure
itself, as forfeited to the government.

In the instant case, the carabaos were arbitrarily confiscated by the police station
commander, were returned to the petitioner only after he had filed a complaint for
recovery and given a supersedeas bond of P12,000.00, which was ordered
confiscated upon his failure to produce the carabaos when ordered by the trial
court. The executive order defined the prohibition, convicted the petitioner and
immediately imposed punishment, which was carried out forthright (straightforward). The
measure struck at once and pounced upon the petitioner without giving him a chance
to be heard, thus denying him the centuries-old guaranty of elementary fair play.

It has already been remarked that there are occasions when notice and hearing may
be validly dispensed with notwithstanding the usual requirement for these
minimum guarantees of due process. It is also conceded that summary action may be
validly taken in administrative proceedings as procedural due process is not
necessarily judicial only.   In the exceptional cases accepted, however. there is a
20

justification for the omission of the right to a previous hearing, to wit,

the immediacy of the problem sought to be corrected and the urgency of the need
to correct it.

In the case before us, there was no such pressure of time or action calling for the
petitioner's peremptory (insisting on immediate action) treatment. The properties involved
were not even inimical (tending to harm) per se (by itself) as to require their instant
destruction. There certainly was no reason why the offense prohibited by the executive
order should not have been proved first in a court of justice, with the accused being
accorded all the rights safeguarded to him under the Constitution. Considering that, as
we held in Pesigan v. Angeles,   Executive Order No. 626-A is penal in nature, the
21

violation thereof should have been pronounced not by the police only but by a court of
justice, which alone would have had the authority to impose the prescribed penalty, and
only after trial and conviction of the accused.

We also mark, on top of all this, the questionable manner of the disposition of the
confiscated property as prescribed in the questioned executive order. It is there
authorized that the seized property shall "be distributed to charitable institutions and
other similar institutions as the Chairman of the National Meat Inspection
Commission may see fit, in the case of carabeef, and to deserving farmers through
dispersal as the Director of Animal Industry  may see fit, in the case of carabaos."
(Emphasis supplied.) The phrase "may see fit" is an extremely generous and dangerous
condition, if condition it is. It is laden (loaded) with perilous (danger) opportunities for
partiality and abuse, and even corruption. One searches in vain for the usual standard
and the reasonable guidelines, or better still, the limitations that the said officers must
observe when they make their distribution. There is none. Their options are apparently
boundless. Who shall be the fortunate beneficiaries of their generosity and by what
criteria shall they be chosen? Only the officers named can supply the answer, they and
they alone may choose the grantee as they see fit, and in their own exclusive discretion.
Definitely, there is here a "roving commission," a wide and sweeping authority that is not
"canalized (convert) within banks that keep it from overflowing," in short, a clearly
profligate and therefore invalid delegation of legislative powers.

To sum up then, we find that the challenged measure is an invalid exercise of the
police power because the method employed to conserve the carabaos is not reasonably
necessary to the purpose of the law and, worse, is unduly oppressive. Due process is
violated because the owner of the property confiscated is denied the right to be heard in
his defense and is immediately condemned and punished. The conferment on the
administrative authorities of the power to adjudge the guilt of the supposed offender is a
clear encroachment on judicial functions and militates against the doctrine of
separation of powers. There is, finally, also an invalid delegation of legislative powers to
the officers mentioned therein who are granted unlimited discretion in the distribution of
the properties arbitrarily taken. For these reasons, we hereby declare Executive Order
No. 626-A unconstitutional.

We agree with the respondent court, however, that the police station commander who
confiscated the petitioner's carabaos is not liable in damages for enforcing the executive
order in accordance with its mandate. The law was at that time presumptively valid, and it
was his obligation, as a member of the police, to enforce it. It would have been
impertinent (not showing respect) of him, being a mere subordinate of the President, to
declare the executive order unconstitutional and, on his own responsibility alone, refuse
to execute it. Even the trial court, in fact, and the Court of Appeals itself did not feel they
had the competence, for all their superior authority, to question the order we now annul.

The Court notes that if the petitioner had not seen fit to assert and protect his rights as he
saw them, this case would never have reached us and the taking of his property under
the challenged measure would have become a fait accompli despite its invalidity. We
commend him for his spirit. Without the present challenge, the matter would have ended
in that pump boat in Masbate and another violation of the Constitution, for all its
obviousness, would have been perpetrated, allowed without protest, and soon forgotten
in the limbo of relinquished rights.

The strength of democracy lies not in the rights it guarantees but in the courage of the
people to invoke them whenever they are ignored or violated. Rights are but weapons on
the wall if, like expensive tapestry, all they do is embellish and impress. Rights, as
weapons, must be a promise of protection. They become truly meaningful, and fulfill the
role assigned to them in the free society, if they are kept bright and sharp with use by
those who are not afraid to assert them.

WHEREFORE, Executive Order No. 626-A is hereby declared unconstitutional.

Except as affirmed above, the decision of the Court of Appeals is reversed.
The supersedeas bond is cancelled and the amount thereof is ordered restored to the
petitioner. No costs.

SO ORDERED.

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

Melencio-Herrera and Feliciano, JJ., are on leave.

Footnotes

1 Rollo, pp. 7, 28, 29, 34.

2 Ibid, pp. 6-7; Annex B.

* Justices Coquia, Bartolome and Ejercito.

3 Rollo, pp. 6, 27, 33.

** Judge Bethel Katalbas-Moscardon.

4 Ibid., pp. 10; 11, 14-16, 76.

5 129 SCRA 174.

6 Espiritu vs. Fugoso, 81 Phil. 637.

7 Sec. 5[2(a)], Art. X, 1973 Constitution; Sec. 5[2(a)], Art.VIII, 1987 Constitution.
8 J. Laurel, concurring opinion, Zandueta v. dela Costa, 66 Phil. 615, 627.

9 US v. Bustos, 37 Phil. 731.

10 I Aruego, The Framing of the Constitution (1936), pp. 153-159.

11 Twinning vs. New Jersey, 211 U.S. 78.

12 Frankfurter, Mr. Justice Holmes and the Supreme Court, pp. 32-33.

13 David vs. Aquilizan, 94 SCRA 707; Montemayor vs. Araneta Univ. Foundation, 77
SCRA 321; Lentelera vs. Amores, 70 SCRA 37; Flores vs. Buencamino, 74 SCRA 332;
DBP vs. Bautista, 26 SCRA 366; Ong Su Han vs. Gutierrez David, 76 Phil. 546; Banco-
Espanol Filipino vs. Palanca, 37 Phil. 921.

14 Dartmouth College vs. Woodward, 4 Wheaton 518.

15 Manley v. Georgia, 279 U.S. 1; 1 Cooley 639.

16 Suntay vs. People, 101 Phil. 833.

17 12 C.J. 1224.

18 People v. Vera Reyes, 67 Phil. 190; Ermita-Malate Hotel & Motel Operators Ass. v.
City Mayor, 20 SCRA 849; Primicias v. Fugoso 80 Phil. 75; U.S. v. Ling Su Tan, 10 Phil.
114; Collins v. Wolfe 5 Phil. 297; U.S. v. Gomez Jesus, 31 Phil. 225; Churchill v. Rafferty
32 Phil. 603.

19 15 Phil. 85.

20 New Filipino Maritime Agencies, Inc. vs. Rivera, 83 SCRA 602; Gas Corp. of the Phil.
vs. Inciong 93 SCRA 653.

21 supra.

B. Labor law

i.Oro Enterprises v. NLRC, G.R. No. 110861 November 14, 1994

ii.Jao v. BCC Products Sales Inc., G.R. No. 163700, April 18, 2012

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 110861 November 14, 1994

ORO ENTERPRISES, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and LORETO L.
CECILIO, respondents.

Reyes, Navarro & Associates for petitioner.

Jose C. Espinas for private respondent.

VITUG, J.:

Petitioner Respondent Ponente

ORO Enterprises INC 1. National Labor Relations Vitug, J.
Commission
2. Loreto L. Cecilio

In this petition for certiorari, Oro Enterprises, Inc., seeks a reversal of the 22nd March
1993 decision and 29th May 1993 order of respondent National Labor Relations
Commission (NLRC) directing petitioner to pay private respondent Loreto Cecilio
retirement pay in the amount of P61,500.00.

Private respondent was first employed by petitioner in August of 1949. After working
continuously with the company for forty one (41) years, private respondent manifested,
on 03 September 1990, her intention to retire from work by filing with petitioner a "Claim
for Retirement Pay."

In her claim, private respondent pleaded that "the retirement pay she (was) receiving
from the Social Security System in the total sum of five
hundred pesos (P500.00) a month could hardly (suffice to) meet her daily
subsistence . . . ."
1

On 15 September 1990, petitioner wrote private respondent, informing her that it was in
no financial position to give her any retirement benefit apart from the retirement pay she
was already receiving from the Social Security System ("SSS"). Nonetheless, she was
offered a house and lot located in San Jose, del Monte, Bulacan, in accordance with a
"plan"  which was then still being conceived by the company president for retiring
2

employees. The offer did not materialize, nor did the proposed company plan come into
being, for one reason or another.

On 26 September 1990, private respondent filed her complaint with the Office of the
Labor Arbiter (docketed as NLRC Case No. 00-09-05167-90). In her position paper, she
reiterated —

. . . that she has been employed and faithfully worked for petitioner continuously for forty-
one (41) years until she reached the age of 65 on 19 August 1990; that when she
requested petitioner for her "retirement or termination pay," the President of the company
refused to comply; and that the lot being offered to her which is located in Bulacan would
not meet her basic needs for subsistence in the remaining years of her life." 3

On 04 October 1990, petitioner filed its own position paper, stating

that —
. . . private respondent was not dismissed from the service but voluntarily stopped
working on September 15, 1990; that it has no collective bargaining agreement or any
other agreement or established policy concerning payment of retirement benefits to
employees who reach a certain age except that which is required by the Social Security
Law; that it has not agreed, whether expressly or impliedly, to pay any retirement benefit
to private respondent or any of its employees; and that in Llora Motors, Inc., and/or
Constantino Carlota, Jr. vs. Honorable Franklin Drilon, et al., (G.R. No. 82895, Nov. 7,
1989), this Honorable Court . . . ruled that payment of retirement benefits cannot be
required in the absence of a collective bargaining agreement or other contractual basis or
any established employer policy providing the grant of such retirement benefits.4

On 11 February 1991, Labor Arbiter Edilberto J. Pangan, to whom the case was
assigned, rendered a decision, the dispositive portions of which read:

DAHIL DITO, inuutusan ang Oro Enterprises, Inc. na bayaran and nagsusumbong na si
Bb. Loreto L. Cecilio ng kanyang bayad sa pamamahinga (Retirement Benefits), batay sa
kalahating buwan sahod sa bawat isang taong paglilingkod (half month pay for every
year of service), nagkakahalaga ng ANIMNAPU AT TATLONG LIBONG PISO
(P63,000.00).

Gayon din, ipinag-uutos na bayaran ng sampung bahagi (10%) nang nasabing halaga o
ANIM NA LIBO AT TATLONG DAANG PISO (P6,300.00) bilang bayad sa manananggol,
sa paghahain ng usaping ito.

At ang kabuuang dapat ibayad ng isinusumbong ay ANIMNAPU AT SIYAM NA LIBO AT

TATLONG DAANG PISO (P69,300.00).

Sapagkat salat sa sapat na batayan, ang kahilingan sa bayad pinsala, ay IPINAG-

KAKAIT (DENIED).

IPINAG-UUTOS. 5

Petitioner appealed to the NLRC. Private respondent likewise interposed her own appeal
insofar as the decision denied her claim for damages.

During the pendency of the appeal, or on 07 January 1993, Republic Act ("R.A.") No.
7641  took effect, providing among other things, thusly:
6

Art. 287. Retirement. — Any employee may be retired upon reaching the retirement age
established in the collective bargaining agreement or other applicable employment
contract.

xxx xxx xxx

In the absence of a 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 the 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 (1/2) 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.
 xxx xxx xxx

Violation of this provision is hereby declared unlawful and subject to the penal provisions
under Article 288 of this Code.7

On 22 March 1993, the NLRC rendered its decision awarding to private respondent a
retirement pay on the basis of Republic Act 7641; hence —

WHEREFORE, the respondent is hereby directed to pay complainant a retirement pay of

P61,500.00. Since complainant's cause of action became meritorious only out of the
curative effect of R.A. 7641, her award of 10% attorney's fee must fail.
8

Petitioner filed a motion for reconsideration. In an Order, dated 19 May 1993, the NLRC
denied the motion for lack of merit.

In the instant petition, Oro Enterprises ascribes grave abuse of discretion on the part of
the NLRC in applying R.A. No. 7641. Petitioner argues that the law, which became
effective only on 07 January 1993, cannot be given any such retroactive effect as to
cover private respondent who, at the age of 65 years, retired from employment with
petitioner on 03 September 1990.

At the time private respondent supposedly ceased to work with petitioner, Article 287 of
the Labor Code, then in force, provided:

Art. 287. Retirement. — Any employee maybe retired upon reaching the retirement age
established 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 laws and any collective bargaining or other
agreement.

Rule 1, Book VI, of the Implementing Rules of the Labor Code, in turn, expressed:

Sec. 13. Retirement. — In the absence of any collective bargaining agreement or other

applicable agreement concerning terms and conditions of employment which provides for
retirement at an older age, an employee maybe retired upon reaching the age of sixty
(60) years.

Sec. 14. Retirement benefits. — (a) An employee who is retired pursuant to

a bonafide retirement plan or in accordance with the applicable individual or collective
agreement or established employer policy shall be entitled to all the retirement benefits
provided therein or to termination pay equivalent at least to one-half month salary for
every year of service, whichever is higher, a fraction of at least six (6) months being
considered as one whole year.

Private respondent, sustained by the Labor Arbiter, posits that there being no collective
bargaining agreement ("CBA") that granted retirement benefits, conformably with Section
14 of the Implementing Rules aforequoted, she should be entitled to a "termination pay
equivalent at least to one-half month salary for every year of service . . . .

This particular issue has long been put to rest. In Llora Motors, Inc., vs. Drilon, 179
SCRA 175, Mr. Justice Florentino P. Feliciano, speaking for the Court in an eruditely
written ponencia, explained:
Section 14 (a) refers to "termination pay equivalent to at least one-half (1/2) month for
every year of service" while Section 14 (b) mentions "termination pay to which the
employee would have been entitled had there been no such retirement fund" as well as
"termination pay the employee is entitled to receive." It should be recalled that Sections
13 and 14 are found in Implementing Rule I which deals with both "termination of
employment" and "retirement." It is important to keep the two (2) concepts of "termination
pay" and "retirement benefits" separate and distinct from each other. Termination pay or
separation pay is required to be paid by an employer in particular situations identified by
the Labor Code itself or by Implementing Rule I.  Termination pay where properly due
9

and payable under some applicable provision of the Labor Code or under Section 4 (b) of
Implementing Rule I, must be paid whether or not an additional retirement plan has been
set up under an agreement with the employer or under an "established employer policy."

What needs to be stressed, however, is that Section 14 of Implementing Rule I, like

Article 287 of the Labor Code, does not purport to require "termination pay" to be paid to
an employee who may want to retire but for whom no additional retirement plan had been
set up prior agreement with the employer. Thus, Section 14 itself speaks of an employee
"who is retired pursuant to a bona-fide retirement plan or in accordance with the
applicable individual or collective agreement or established employer policy." What
Section 14 of Implementing Rule I may be seen to be saying is that where termination
pay is otherwise payable to an employee under an applicable provision of the Labor
Code, and an additional or consensual retirement plan exists, then payments under such
retirement plan may be credited against the termination pay that is due, subject,
however, to certain conditions. These conditions are: (a) that payments under the
additional retirement plan cannot have the effect of reducing the amount of termination
pay due and payable to less than one-half (1/2) month's salary for every year of service
and (b) the employee cannot be made to contribute to the termination pay that he is
entitled to receive under some provision of the Labor Code; in other words, the employee
is entitled to the full amount of his termination pay plus at least the return of his own
contributions to the additional retirement plan. 10

While there apparently was some kind of a retirement plan then being devised by the
company president for its retiring employees, it was, however, never formalized or
implemented. The Labor Arbiter found thusly:

Sa usaping pinag-uusapan ay mayroong plano sa pamamahinga (retirement plan) at ito

nga, ay ang sinasabing lote na ipagkakaloob sa mga manggagawang may mahigit na
sampung (10) taong paglilingkod, ngunit hanggang ngayon ay ito ay isang panaginip
lamang. Wala pa, ni isang naisa-katuparan. At isa pa, napakalayo ang nasabing pook
(San Jose del Monte, Bulacan) para sa isang katulad ng nagsusumbong upang doon
siya tuluyan pumanaw, sa kabila ng kanyang pag-iisa. Kaya't ang sinasabing lote ay
pansamantalang pang-palubag-loob lamang, at hindi seryosong biyaya o tunay na alay-
biyaya.11

It then goes without saying, applying Llora Motors, that the beneficial provisions of
Section 14 of Implementative Rules cannot properly be invoked by private respondent.

Instead, the pivotal issue, in our view, is whether or not R.A. 7641 can favorably apply to
private respondent's case.

RA 7641 is undoubtedly a social legislation. The law has been enacted as a labor
protection measure and as a curative statute that — absent a retirement plan devised by,
an agreement with, or a voluntary grant from, an employer — can respond, in part at
least, to the financial well-being of workers during their twilight years soon following their
life of labor. There should be little doubt about the fact that the law can apply to labor
contracts still existing at the time the statute has taken effect, and that its benefits can be
reckoned not only from the date of the law's enactment but retroactively to the time said
employment contracts have started. On this score, the case of Allied Investigation
Bureau, Inc., vs. Ople, 91 SCRA 265, finds strong relevance:

1. There is no question that petitioner had agreed to grant retirement benefits to private
respondent. It would, however, limit such retirement benefits only from the date of the
effectivity of the Labor Code. That is its contention. The refutation given in the Comment
of Solicitor General Estelito P. Mendoza is persuasive. As was pointed out, "in the
computation thereof, public respondents acted judiciously in reckoning the retirement pay
from the time private respondent started working with petitioner since respondent
employee's application for retirement benefits and the company's approval of the same
make express mention of Sections 13 and 14, Rule 1, Book VI of the Implementing Rules
and Regulations of the Labor Code as the basis for retirement pay. Section 14 (a) of said
rule provides that an employee who is retired pursuant to a bona-fide retirement plan or
in accordance with the applicable individual or collective agreement or established
employer policy shall be entitled to all the retirement benefits provided therein or to
termination pay equivalent to at least one-half month salary for every year of service,
whichever is higher, a fraction of at least six (6) months being considered as one whole
year.'' Further it was stated: "This position taken by public respondents squares with the
principle that social legislation should be interpreted in favor of workers in the light of the
Constitutional mandate that the State shall afford protection to labor."

2. Petitioner's insistence that the retirement benefits should date only from the time that
the present Labor Code came into force could be based on the assumption that it should
not be given a retroactive effect. That would be to ignore the well-settled principle that
police power legislation intended to promote public welfare applies to existing contracts.
It was held in Ongsiako v. Gamboa, decided in 1950, that a police power measure being
remedial in character covers existing situations; otherwise, it would be self-
defeating. Abe v. Foster Wheeler Corporation, this Court, speaking through Justice
Barrera, is even more in point. In that case, the contracts of employment were entered
into at a time when there was no law granting the workers said right. Such being the
case, it was then contended that the application as to them of the subsequent enactment
would amount to an impairment of contractual obligations. In refuting such a view, it was
made clear in the opinion that "constitutional guaranty of non-impairment . . . is limited by
the exercise of the police power of the State, in the interest of public health, safety,
morals and general welfare." The latest reiteration of such a doctrine came in Gutierrez
v. Cantada, decided barely a month ago.

3. Nor is it accurate to assert that the right to retirement benefits started from the
enactment of the present Labor Code. That would be to ignore the social justice and
protection to labor provisions of the 1935 Constitution. In the leading case of Antamok
Goldfields Mining Company v. Court of Industrial Relations, decided in 1940, a
concurring opinion of Justice Laurel to this effect was cited: "By and large, these
provisions in our Constitution all evince and express the need of shifting emphasis to
community interest with a view to affirmative enhancement of human values." He had
occasion to repeat it in his well-known definition of social justice in Calalang v. Williams,
 
decided the same year. Thus: "Social justice is "neither communism, nor despositism,
nor atomism, nor anarchy," but the humanization of laws and the equalization of social
and economic forces by the State so that justice in its rational and objectively secular
conception may at least be approximated. Social justice means the promotion of the
welfare of all the people, the adoption by the Government of measures calculated to
insure economic stability of all the component elements of society, through the
maintenance of a proper economic and social equilibrium in the interrelations of the
members of the community, constitutionally, through the adoption of measures legally
justifiable, or extra-constitutionally, through the exercise of powers underlying the
existence of all governments on the time-honored principle of salus populi est suprema
lex." The present Civil Code, which took effect on August 13, 1950, has a chapter on
labor contracts, the first article of which recognizes that the relations between capital and
labor "are not merely contractual. They are so impressed with public interest that labor
contracts must yield to the common good."

Republic Act 7641 took effect on 07 January 1993, while the appeal of private
respondent was still pending consideration by the NLRC. Still for determination at the
time was, among other things, the issue of whether or not private respondent has, in fact,
been effectively retired.

Petitioner asserts that private respondent has never reported for work after the rejection
of her application for retirement benefits. This claim is denied by private respondent, who
avers that she did report for work again but that petitioner has refused to accept her on
the ground of abandonment of duty. The Labor Arbiter has made these findings:

Sa sinasabi ng isinusumbong na ang nagsusumbong daw ay kusang-loob na tinalikuran

ang paglilingkod (abandonment of work) ay mahirap paniwalaan. Ang isang
manggagawa na iningatan ang matapat niyang paglilingkod sa loob ng mahabang
panahon, ay hindi basta na lamang lilisan at ipahahamak ito. Ang isang manggagawa na
sa kanyang huling taon nang paglilingkod, ay walang dahilan na karaka-raka na lilisan ito
upang ang biyayang tatanggapin ay masalalay sa alinlangan. Ang sinasabing pag-lisan
ay hindi na-aayon sa katutuhanan ng pangyayari (natural course of events), kaya't hindi
namin ito masasang-ayunan.

Ang katotohanan nito, ay noong malaman ni Gng. Marietta G. Holmgren, Pangulo ng

isinusumbong (Oro Enterprises, Inc.) na ang nagsusumbong ay naglilingkod pa, ay
nagalit ito at ang sabi, "pag nalaman ng SSS na nag(papa)trabaho pa ako na retired na,
ay malilintikan kami (referring to Oro Enterprises, Inc.) sa SSS. . . ." Kaya't noong siya
(naglilingkod) ay pumasok noong Setyembre 15, 1990, ay sinabihan siya na ito na ang
kahulihulihan niyang araw ng paglilingkod. At simula noon ay hindi na siya pumasok. At
ang sinasabing ulat ng pagputol ng paglilingkod (letter of termination) na may petsang
Oktubre 12, 1990, ay walang sapat na batayan.  12

The NLRC, in turn, has said:

After all, the least that could be said here is that the complainant filed her claim for
retirement pay only on January 7, 1993 the date R.A.
No. 7641 took effect and that against the backdrop that she retired only on September
15, 1990, her monetary claim could be treated as well filed within the three (3) years
prescriptive period set by law . . . . 13

Given the above findings, which must be accorded due respect, we cannot see our way
clear to attributing to NLRC grave abuse of discretion in concluding thereby that private
respondent's claim for retirement benefits should accordingly be held to fall within the
ambit of Republic Act No. 7641. Grave abuse of discretion, albeit an elastic phrase,   has
14

always been understood as a capricious and whimsical exercise of judgment as is

equivalent to lack of jurisdiction, such as, to exemplify, "where the power is exercised in
an arbitrary or despotic manner." 15

WHEREFORE, the petition for certiorari is DISMISSED, and the decision of the NLRC is
AFFIRMED.

SO ORDERED.

Bidin, Romero and Melo, JJ., concur.

Feliciano, J., is on leave.

#Footnotes

1 Rollo p. 60.

2 Rollo p. 53, Records p. 12.

3 Rollo, pp. 53-54.

4 Rollo, p. 55.

5 Records, p. 18.

6 An Act Amending Article 287 of Presidential Decree No. 442, As Amended. Otherwise
Known As The Labor Code Of The Philippines, By Providing For Retirement Pay To
Qualified Private Sector Employees In The Absence Of Any Retirement Plan In The
Establishment.

7 Article 287, as amended by Republic Act. No. 7641, Labor Code of the Philippines.

8 Rollo pp. 23-24.

9 See Article 283 of the Labor Code dealing with:

1. installation of labor saving devices;

2. redundancy;

3. retrenchment to prevent losses;

4. closing or cessation of operation of the company; and

Article 284 referring to —

5. termination of services by reason of disease; and Sec. 4 (b), Rule I, Book VI of the
Implementing Rules and Regulations relating to situations —

6. where reinstatement of the employee to his former position is required but is not
possible because the company has closed or ceased operations or his former position no
longer exists at the time of reinstatement (for reasons not attributable to the fault of the
employer).

10 179 SCRA 175, pp. 183-185.

11 Rollo pp. 34-35.

12 Rollo pp. 36-37.

13 Rollo p. 23

14 Cruz, Philippine Political Law, 1991 ed., p. 229.

15 Bustamante vs. Commissioner on Audit, 216 SCRA 134; Planters Products, Inc. vs.
Court of Appeals, 193 SCRA 563; Kapatiran ng mga Naglilingkod sa Pamahalaan ng
Pilipinas, Inc. vs. Tan, 163 SCRA 371.