1. G.R. No.

100113 September 3, 1991

RENATO CAYETANO, petitioner, vs.CHRISTIAN MONSOD, HON. JOVITO R. SALONGA,

COMMISSION ON APPOINTMENT, and HON. GUILLERMO CARAGUE, in his capacity as
Secretary of Budget and Management, respondents.

PARAS, J.:

We are faced here with a controversy of far-reaching proportions. While ostensibly only legal issues
are involved, the Court's decision in this case would indubitably have a profound effect on the political
aspect of our national existence.

The 1987 Constitution provides in Section 1 (1), Article IX-C:

There shall be a Commission on Elections composed of a Chairman and six Commissioners

who shall be natural-born citizens of the Philippines and, at the time of their appointment, at
least thirty-five years of age, holders of a college degree, and must not have been candidates
for any elective position in the immediately preceding -elections. However, a majority thereof,
including the Chairman, shall be members of the Philippine Bar who have been engaged in the
practice of law for at least ten years. (Emphasis supplied)

The aforequoted provision is patterned after Section l(l), Article XII-C of the 1973 Constitution which
similarly provides:

There shall be an independent Commission on Elections composed of a Chairman and eight

Commissioners who shall be natural-born citizens of the Philippines and, at the time of their
appointment, at least thirty-five years of age and holders of a college degree. However, a majority
thereof, including the Chairman, shall be members of the Philippine Bar who have been engaged in
the practice of law for at least ten years.' (Emphasis supplied)

Regrettably, however, there seems to be no jurisprudence as to what constitutes practice of law as a

legal qualification to an appointive office.

Black defines "practice of law" as:

The rendition of services requiring the knowledge and the application of legal principles and
technique to serve the interest of another with his consent. It is not limited to appearing in
court, or advising and assisting in the conduct of litigation, but embraces the preparation of
pleadings, and other papers incident to actions and special proceedings, conveyancing, the
preparation of legal instruments of all kinds, and the giving of all legal advice to clients. It
embraces all advice to clients and all actions taken for them in matters connected with the law.
An attorney engages in the practice of law by maintaining an office where he is held out to be-
an attorney, using a letterhead describing himself as an attorney, counseling clients in legal
matters, negotiating with opposing counsel about pending litigation, and fixing and collecting
fees for services rendered by his associate. (Black's Law Dictionary, 3rd ed.)

The practice of law is not limited to the conduct of cases in court. (Land Title Abstract and Trust Co.
v. Dworken, 129 Ohio St. 23, 193 N.E. 650) A person is also considered to be in the practice of law
when he:

... for valuable consideration engages in the business of advising person, firms, associations or
corporations as to their rights under the law, or appears in a representative capacity as an
advocate in proceedings pending or prospective, before any court, commissioner, referee,
board, body, committee, or commission constituted by law or authorized to settle controversies
and there, in such representative capacity performs any act or acts for the purpose of obtaining
or defending the rights of their clients under the law. Otherwise stated, one who, in a
representative capacity, engages in the business of advising clients as to their rights under the
law, or while so engaged performs any act or acts either in court or outside of court for that
purpose, is engaged in the practice of law. (State ex. rel. Mckittrick v..C.S. Dudley and
Co., 102 S.W. 2d 895, 340 Mo. 852)

This Court in the case of Philippine Lawyers Association v.Agrava, (105 Phil. 173,176-177) stated:
 The practice of law is not limited to the conduct of cases or litigation in court; it embraces the
preparation of pleadings and other papers incident to actions and special proceedings, the
management of such actions and proceedings on behalf of clients before judges and courts,
and in addition, conveying. In general, all advice to clients, and all action taken for them in
matters connected with the law incorporation services, assessment and condemnation
services contemplating an appearance before a judicial body, the foreclosure of a mortgage,
enforcement of a creditor's claim in bankruptcy and insolvency proceedings, and conducting
proceedings in attachment, and in matters of estate and guardianship have been held to
constitute law practice, as do the preparation and drafting of legal instruments, where the work
done involves the determination by the trained legal mind of the legal effect of facts and
conditions. (5 Am. Jr. p. 262, 263). (Emphasis supplied)

Practice of law under modem conditions consists in no small part of work performed outside of
any court and having no immediate relation to proceedings in court. It embraces conveyancing,
the giving of legal advice on a large variety of subjects, and the preparation and execution of
legal instruments covering an extensive field of business and trust relations and other
affairs. Although these transactions may have no direct connection with court proceedings,
they are always subject to become involved in litigation. They require in many aspects a high
degree of legal skill, a wide experience with men and affairs, and great capacity for adaptation
to difficult and complex situations. These customary functions of an attorney or counselor at
law bear an intimate relation to the administration of justice by the courts. No valid distinction,
so far as concerns the question set forth in the order, can be drawn between that part of the
work of the lawyer which involves appearance in court and that part which involves advice and
drafting of instruments in his office. It is of importance to the welfare of the public that these
manifold customary functions be performed by persons possessed of adequate learning and
skill, of sound moral character, and acting at all times under the heavy trust obligations to
clients which rests upon all attorneys. (Moran, Comments on the Rules of Court, Vol. 3 [1953
ed.] , p. 665-666, citing In re Opinion of the Justices [Mass.], 194 N.E. 313, quoted in Rhode
Is. Bar Assoc. v. Automobile Service Assoc. [R.I.] 179 A. 139,144). (Emphasis ours)

The University of the Philippines Law Center in conducting orientation briefing for new lawyers (1974-
1975) listed the dimensions of the practice of law in even broader terms as advocacy, counselling and
public service.

One may be a practicing attorney in following any line of employment in the profession. If what
he does exacts knowledge of the law and is of a kind usual for attorneys engaging in the active
practice of their profession, and he follows some one or more lines of employment such as this
he is a practicing attorney at law within the meaning of the statute. (Barr v. Cardell, 155 NW
312)

Practice of law means any activity, in or out of court, which requires the application of law, legal
procedure, knowledge, training and experience. "To engage in the practice of law is to perform those
acts which are characteristics of the profession. Generally, to practice law is to give notice or render
any kind of service, which device or service requires the use in any degree of legal knowledge or
skill." (111 ALR 23)

The following records of the 1986 Constitutional Commission show that it has adopted a liberal
interpretation of the term "practice of law."

MR. FOZ. Before we suspend the session, may I make a manifestation which I forgot to do
during our review of the provisions on the Commission on Audit. May I be allowed to make a
very brief statement?

THE PRESIDING OFFICER (Mr. Jamir).

The Commissioner will please proceed.

MR. FOZ. This has to do with the qualifications of the members of the Commission on Audit.
Among others, the qualifications provided for by Section I is that "They must be Members of
the Philippine Bar" — I am quoting from the provision — "who have been engaged in the
practice of law for at least ten years".
To avoid any misunderstanding which would result in excluding members of the Bar who are now
employed in the COA or Commission on Audit, we would like to make the clarification that this
provision on qualifications regarding members of the Bar does not necessarily refer or involve actual
practice of law outside the COA We have to interpret this to mean that as long as the lawyers who
are employed in the COA are using their legal knowledge or legal talent in their respective work
within COA, then they are qualified to be considered for appointment as members or commissioners,
even chairman, of the Commission on Audit.

This has been discussed by the Committee on Constitutional Commissions and Agencies and we
deem it important to take it up on the floor so that this interpretation may be made available whenever
this provision on the qualifications as regards members of the Philippine Bar engaging in the practice
of law for at least ten years is taken up.

MR. OPLE. Will Commissioner Foz yield to just one question.

MR. FOZ. Yes, Mr. Presiding Officer.

MR. OPLE. Is he, in effect, saying that service in the COA by a lawyer is equivalent to the
requirement of a law practice that is set forth in the Article on the Commission on Audit?

MR. FOZ. We must consider the fact that the work of COA, although it is auditing, will
necessarily involve legal work; it will involve legal work. And, therefore, lawyers who are
employed in COA now would have the necessary qualifications in accordance with the
Provision on qualifications under our provisions on the Commission on Audit. And, therefore,
the answer is yes.

MR. OPLE. Yes. So that the construction given to this is that this is equivalent to the practice
of law.

MR. FOZ. Yes, Mr. Presiding Officer.

MR. OPLE. Thank you.... ( Emphasis supplied)

Section 1(1), Article IX-D of the 1987 Constitution, provides, among others, that the Chairman and
two Commissioners of the Commission on Audit (COA) should either be certified public accountants
with not less than ten years of auditing practice, or members of the Philippine Bar who have been
engaged in the practice of law for at least ten years. (emphasis supplied)

Corollary to this is the term "private practitioner" and which is in many ways synonymous with the
word "lawyer." Today, although many lawyers do not engage in private practice, it is still a fact that
the majority of lawyers are private practitioners. (Gary Munneke, Opportunities in Law Careers [VGM
Career Horizons: Illinois], [1986], p. 15).

At this point, it might be helpful to define private practice. The term, as commonly understood, means
"an individual or organization engaged in the business of delivering legal services." (Ibid.). Lawyers
who practice alone are often called "sole practitioners." Groups of lawyers are called "firms." The firm
is usually a partnership and members of the firm are the partners. Some firms may be organized as
professional corporations and the members called shareholders. In either case, the members of the
firm are the experienced attorneys. In most firms, there are younger or more inexperienced salaried
attorneyscalled "associates." (Ibid.).

The test that defines law practice by looking to traditional areas of law practice is essentially
tautologous, unhelpful defining the practice of law as that which lawyers do. (Charles W.
Wolfram, Modern Legal Ethics [West Publishing Co.: Minnesota, 1986], p. 593). The practice of law is
defined as the performance of any acts . . . in or out of court, commonly understood to be the practice
of law. (State Bar Ass'n v. Connecticut Bank & Trust Co., 145 Conn. 222, 140 A.2d 863, 870 [1958]
[quoting Grievance Comm. v. Payne, 128 Conn. 325, 22 A.2d 623, 626 [1941]). Because lawyers
perform almost every function known in the commercial and governmental realm, such a definition
would obviously be too global to be workable.(Wolfram, op. cit.).

The appearance of a lawyer in litigation in behalf of a client is at once the most publicly familiar role
for lawyers as well as an uncommon role for the average lawyer. Most lawyers spend little time in
courtrooms, and a large percentage spend their entire practice without litigating a case. (Ibid., p. 593).
Nonetheless, many lawyers do continue to litigate and the litigating lawyer's role colors much of both
the public image and the self perception of the legal profession. (Ibid.).

In this regard thus, the dominance of litigation in the public mind reflects history, not reality. (Ibid.).
Why is this so? Recall that the late Alexander SyCip, a corporate lawyer, once articulated on the
importance of a lawyer as a business counselor in this wise: "Even today, there are still uninformed
laymen whose concept of an attorney is one who principally tries cases before the courts. The
members of the bench and bar and the informed laymen such as businessmen, know that in most
developed societies today, substantially more legal work is transacted in law offices than in the
courtrooms. General practitioners of law who do both litigation and non-litigation work also know that
in most cases they find themselves spending more time doing what [is] loosely desccribe[d] as
business counseling than in trying cases. The business lawyer has been described as the planner,
the diagnostician and the trial lawyer, the surgeon. I[t] need not [be] stress[ed] that in law, as in
medicine, surgery should be avoided where internal medicine can be effective." (Business Star,
"Corporate Finance Law," Jan. 11, 1989, p. 4).

In the course of a working day the average general practitioner wig engage in a number of legal
tasks, each involving different legal doctrines, legal skills, legal processes, legal institutions, clients,
and other interested parties. Even the increasing numbers of lawyers in specialized practice wig
usually perform at least some legal services outside their specialty. And even within a narrow
specialty such as tax practice, a lawyer will shift from one legal task or role such as advice-giving to
an importantly different one such as representing a client before an administrative agency.
(Wolfram, supra, p. 687).

By no means will most of this work involve litigation, unless the lawyer is one of the relatively rare
types — a litigator who specializes in this work to the exclusion of much else. Instead, the work will
require the lawyer to have mastered the full range of traditional lawyer skills of client counselling,
advice-giving, document drafting, and negotiation. And increasingly lawyers find that the new skills of
evaluation and mediation are both effective for many clients and a source of employment. (Ibid.).

Most lawyers will engage in non-litigation legal work or in litigation work that is constrained in very
important ways, at least theoretically, so as to remove from it some of the salient features of
adversarial litigation. Of these special roles, the most prominent is that of prosecutor. In some
lawyers' work the constraints are imposed both by the nature of the client and by the way in which the
lawyer is organized into a social unit to perform that work. The most common of these roles are those
of corporate practice and government legal service. (Ibid.).

In several issues of the Business Star, a business daily, herein below quoted are emerging trends in
corporate law practice, a departure from the traditional concept of practice of law.

We are experiencing today what truly may be called a revolutionary transformation in corporate
law practice. Lawyers and other professional groups, in particular those members participating
in various legal-policy decisional contexts, are finding that understanding the major emerging
trends in corporation law is indispensable to intelligent decision-making.

Constructive adjustment to major corporate problems of today requires an accurate

understanding of the nature and implications of the corporate law research function
accompanied by an accelerating rate of information accumulation. The recognition of the need
for such improved corporate legal policy formulation, particularly "model-making" and
"contingency planning," has impressed upon us the inadequacy of traditional procedures in
many decisional contexts.

In a complex legal problem the mass of information to be processed, the sorting and weighing
of significant conditional factors, the appraisal of major trends, the necessity of estimating the
consequences of given courses of action, and the need for fast decision and response in
situations of acute danger have prompted the use of sophisticated concepts of information flow
theory, operational analysis, automatic data processing, and electronic computing equipment.
Understandably, an improved decisional structure must stress the predictive component of the
policy-making process, wherein a "model", of the decisional context or a segment thereof is
developed to test projected alternative courses of action in terms of futuristic effects flowing
therefrom.
Although members of the legal profession are regularly engaged in predicting and projecting
the trends of the law, the subject of corporate finance law has received relatively little
organized and formalized attention in the philosophy of advancing corporate legal education.
Nonetheless, a cross-disciplinary approach to legal research has become a vital necessity.

Certainly, the general orientation for productive contributions by those trained primarily in the
law can be improved through an early introduction to multi-variable decisional context and the
various approaches for handling such problems. Lawyers, particularly with either a master's or
doctorate degree in business administration or management, functioning at the legal policy
level of decision-making now have some appreciation for the concepts and analytical
techniques of other professions which are currently engaged in similar types of complex
decision-making.

Truth to tell, many situations involving corporate finance problems would require the services
of an astute attorney because of the complex legal implications that arise from each and every
necessary step in securing and maintaining the business issue raised. (Business Star,
"Corporate Finance Law," Jan. 11, 1989, p. 4).

In our litigation-prone country, a corporate lawyer is assiduously referred to as the "abogado

de campanilla." He is the "big-time" lawyer, earning big money and with a clientele composed
of the tycoons and magnates of business and industry.

Despite the growing number of corporate lawyers, many people could not explain what it is that
a corporate lawyer does. For one, the number of attorneys employed by a single corporation
will vary with the size and type of the corporation. Many smaller and some large corporations
farm out all their legal problems to private law firms. Many others have in-house counsel only
for certain matters. Other corporation have a staff large enough to handle most legal problems
in-house.

A corporate lawyer, for all intents and purposes, is a lawyer who handles the legal affairs of a
corporation. His areas of concern or jurisdiction may include, inter alia: corporate legal
research, tax laws research, acting out as corporate secretary (in board meetings),
appearances in both courts and other adjudicatory agencies (including the Securities and
Exchange Commission), and in other capacities which require an ability to deal with the law.

At any rate, a corporate lawyer may assume responsibilities other than the legal affairs of the
business of the corporation he is representing. These include such matters as determining
policy and becoming involved in management. ( Emphasis supplied.)

In a big company, for example, one may have a feeling of being isolated from the action, or not
understanding how one's work actually fits into the work of the orgarnization. This can be
frustrating to someone who needs to see the results of his work first hand. In short, a corporate
lawyer is sometimes offered this fortune to be more closely involved in the running of the
business.

Moreover, a corporate lawyer's services may sometimes be engaged by a multinational

corporation (MNC). Some large MNCs provide one of the few opportunities available to
corporate lawyers to enter the international law field. After all, international law is practiced in a
relatively small number of companies and law firms. Because working in a foreign country is
perceived by many as glamorous, tills is an area coveted by corporate lawyers. In most cases,
however, the overseas jobs go to experienced attorneys while the younger attorneys do their
"international practice" in law libraries. (Business Star, "Corporate Law Practice," May 25,1990,
p. 4).

This brings us to the inevitable, i.e., the role of the lawyer in the realm of finance. To borrow
the lines of Harvard-educated lawyer Bruce Wassertein, to wit: "A bad lawyer is one who fails
to spot problems, a good lawyer is one who perceives the difficulties, and the excellent lawyer
is one who surmounts them." (Business Star, "Corporate Finance Law," Jan. 11, 1989, p. 4).

Today, the study of corporate law practice direly needs a "shot in the arm," so to speak. No
longer are we talking of the traditional law teaching method of confining the subject study to
the Corporation Code and the Securities Code but an incursion as well into the intertwining
modern management issues.

Such corporate legal management issues deal primarily with three (3) types of learning: (1)
acquisition of insights into current advances which are of particular significance to the
corporate counsel; (2) an introduction to usable disciplinary skins applicable to a corporate
counsel's management responsibilities; and (3) a devotion to the organization and
management of the legal function itself.

These three subject areas may be thought of as intersecting circles, with a shared area linking
them. Otherwise known as "intersecting managerial jurisprudence," it forms a unifying theme
for the corporate counsel's total learning.

Some current advances in behavior and policy sciences affect the counsel's role. For that
matter, the corporate lawyer reviews the globalization process, including the resulting strategic
repositioning that the firms he provides counsel for are required to make, and the need to think
about a corporation's; strategy at multiple levels. The salience of the nation-state is being
reduced as firms deal both with global multinational entities and simultaneously with sub-
national governmental units. Firms increasingly collaborate not only with public entities but with
each other — often with those who are competitors in other arenas.

Also, the nature of the lawyer's participation in decision-making within the corporation is rapidly
changing. The modem corporate lawyer has gained a new role as a stakeholder — in some
cases participating in the organization and operations of governance through participation on
boards and other decision-making roles. Often these new patterns develop alongside existing
legal institutions and laws are perceived as barriers. These trends are complicated as
corporations organize for global operations. ( Emphasis supplied)

The practising lawyer of today is familiar as well with governmental policies toward the
promotion and management of technology. New collaborative arrangements for promoting
specific technologies or competitiveness more generally require approaches from industry that
differ from older, more adversarial relationships and traditional forms of seeking to influence
governmental policies. And there are lessons to be learned from other countries. In
Europe, Esprit, Eureka and Race are examples of collaborative efforts between governmental
and business Japan's MITI is world famous. (Emphasis supplied)

Following the concept of boundary spanning, the office of the Corporate Counsel comprises a
distinct group within the managerial structure of all kinds of organizations. Effectiveness of
both long-term and temporary groups within organizations has been found to be related to
indentifiable factors in the group-context interaction such as the groups actively revising their
knowledge of the environment coordinating work with outsiders, promoting team achievements
within the organization. In general, such external activities are better predictors of team
performance than internal group processes.

In a crisis situation, the legal managerial capabilities of the corporate lawyer vis-a-vis the
managerial mettle of corporations are challenged. Current research is seeking ways both to
anticipate effective managerial procedures and to understand relationships of financial liability
and insurance considerations. (Emphasis supplied)

Regarding the skills to apply by the corporate counsel, three factors are apropos:

First System Dynamics. The field of systems dynamics has been found an effective tool for
new managerial thinking regarding both planning and pressing immediate problems. An
understanding of the role of feedback loops, inventory levels, and rates of flow, enable users to
simulate all sorts of systematic problems — physical, economic, managerial, social, and
psychological. New programming techniques now make the system dynamics principles more
accessible to managers — including corporate counsels. (Emphasis supplied)

Second Decision Analysis. This enables users to make better decisions involving complexity
and uncertainty. In the context of a law department, it can be used to appraise the settlement
value of litigation, aid in negotiation settlement, and minimize the cost and risk involved in
managing a portfolio of cases. (Emphasis supplied)
 Third Modeling for Negotiation Management. Computer-based models can be used directly by
parties and mediators in all lands of negotiations. All integrated set of such tools provide
coherent and effective negotiation support, including hands-on on instruction in these
techniques. A simulation case of an international joint venture may be used to illustrate the
point.

[Be this as it may,] the organization and management of the legal function, concern three
pointed areas of consideration, thus:

Preventive Lawyering. Planning by lawyers requires special skills that comprise a major part of
the general counsel's responsibilities. They differ from those of remedial law. Preventive
lawyering is concerned with minimizing the risks of legal trouble and maximizing legal rights for
such legal entities at that time when transactional or similar facts are being considered and
made.

Managerial Jurisprudence. This is the framework within which are undertaken those activities
of the firm to which legal consequences attach. It needs to be directly supportive of this
nation's evolving economic and organizational fabric as firms change to stay competitive in a
global, interdependent environment. The practice and theory of "law" is not adequate today to
facilitate the relationships needed in trying to make a global economy work.

Organization and Functioning of the Corporate Counsel's Office. The general counsel has
emerged in the last decade as one of the most vibrant subsets of the legal profession. The
corporate counsel hear responsibility for key aspects of the firm's strategic issues, including
structuring its global operations, managing improved relationships with an increasingly
diversified body of employees, managing expanded liability exposure, creating new and varied
interactions with public decision-makers, coping internally with more complex make or by
decisions.

This whole exercise drives home the thesis that knowing corporate law is not enough to make
one a good general corporate counsel nor to give him a full sense of how the legal system
shapes corporate activities. And even if the corporate lawyer's aim is not the understand all of
the law's effects on corporate activities, he must, at the very least, also gain a working
knowledge of the management issues if only to be able to grasp not only the basic legal
"constitution' or makeup of the modem corporation. "Business Star", "The Corporate Counsel,"
April 10, 1991, p. 4).

The challenge for lawyers (both of the bar and the bench) is to have more than a passing
knowledge of financial law affecting each aspect of their work. Yet, many would admit to
ignorance of vast tracts of the financial law territory. What transpires next is a dilemma of
professional security: Will the lawyer admit ignorance and risk opprobrium?; or will he feign
understanding and risk exposure? (Business Star, "Corporate Finance law," Jan. 11, 1989, p.
4).

Respondent Christian Monsod was nominated by President Corazon C. Aquino to the position of
Chairman of the COMELEC in a letter received by the Secretariat of the Commission on
Appointments on April 25, 1991. Petitioner opposed the nomination because allegedly Monsod does
not possess the required qualification of having been engaged in the practice of law for at least ten
years.

On June 5, 1991, the Commission on Appointments confirmed the nomination of Monsod as

Chairman of the COMELEC. On June 18, 1991, he took his oath of office. On the same day, he
assumed office as Chairman of the COMELEC.

Challenging the validity of the confirmation by the Commission on Appointments of Monsod's

nomination, petitioner as a citizen and taxpayer, filed the instant petition for certiorari and Prohibition
praying that said confirmation and the consequent appointment of Monsod as Chairman of the
Commission on Elections be declared null and void.

Atty. Christian Monsod is a member of the Philippine Bar, having passed the bar examinations of
1960 with a grade of 86-55%. He has been a dues paying member of the Integrated Bar of the
Philippines since its inception in 1972-73. He has also been paying his professional license fees as
lawyer for more than ten years. (p. 124, Rollo)

After graduating from the College of Law (U.P.) and having hurdled the bar, Atty. Monsod worked in
the law office of his father. During his stint in the World Bank Group (1963-1970), Monsod worked as
an operations officer for about two years in Costa Rica and Panama, which involved getting
acquainted with the laws of member-countries negotiating loans and coordinating legal, economic,
and project work of the Bank. Upon returning to the Philippines in 1970, he worked with the Meralco
Group, served as chief executive officer of an investment bank and subsequently of a business
conglomerate, and since 1986, has rendered services to various companies as a legal and economic
consultant or chief executive officer. As former Secretary-General (1986) and National Chairman
(1987) of NAMFREL. Monsod's work involved being knowledgeable in election law. He appeared for
NAMFREL in its accreditation hearings before the Comelec. In the field of advocacy, Monsod, in his
personal capacity and as former Co-Chairman of the Bishops Businessmen's Conference for Human
Development, has worked with the under privileged sectors, such as the farmer and urban poor
groups, in initiating, lobbying for and engaging in affirmative action for the agrarian reform law and
lately the urban land reform bill. Monsod also made use of his legal knowledge as a member of the
Davide Commission, a quast judicial body, which conducted numerous hearings (1990) and as a
member of the Constitutional Commission (1986-1987), and Chairman of its Committee on
Accountability of Public Officers, for which he was cited by the President of the Commission, Justice
Cecilia Muñoz-Palma for "innumerable amendments to reconcile government functions with individual
freedoms and public accountability and the party-list system for the House of Representative. (pp.
128-129 Rollo) ( Emphasis supplied)

Just a word about the work of a negotiating team of which Atty. Monsod used to be a member.

In a loan agreement, for instance, a negotiating panel acts as a team, and which is adequately
constituted to meet the various contingencies that arise during a negotiation. Besides top
officials of the Borrower concerned, there are the legal officer (such as the legal counsel), the
finance manager, and an operations officer (such as an official involved in negotiating the
contracts) who comprise the members of the team. (Guillermo V. Soliven, "Loan Negotiating
Strategies for Developing Country Borrowers," Staff Paper No. 2, Central Bank of the
Philippines, Manila, 1982, p. 11). (Emphasis supplied)

After a fashion, the loan agreement is like a country's Constitution; it lays down the law as far
as the loan transaction is concerned. Thus, the meat of any Loan Agreement can be
compartmentalized into five (5) fundamental parts: (1) business terms; (2) borrower's
representation; (3) conditions of closing; (4) covenants; and (5) events of default. (Ibid., p. 13).

In the same vein, lawyers play an important role in any debt restructuring program. For aside
from performing the tasks of legislative drafting and legal advising, they score national
development policies as key factors in maintaining their countries' sovereignty. (Condensed
from the work paper, entitled "Wanted: Development Lawyers for Developing Nations,"
submitted by L. Michael Hager, regional legal adviser of the United States Agency for
International Development, during the Session on Law for the Development of Nations at the
Abidjan World Conference in Ivory Coast, sponsored by the World Peace Through Law Center
on August 26-31, 1973). ( Emphasis supplied)

Loan concessions and compromises, perhaps even more so than purely renegotiation policies,
demand expertise in the law of contracts, in legislation and agreement drafting and in
renegotiation. Necessarily, a sovereign lawyer may work with an international business
specialist or an economist in the formulation of a model loan agreement. Debt restructuring
contract agreements contain such a mixture of technical language that they should be carefully
drafted and signed only with the advise of competent counsel in conjunction with the guidance
of adequate technical support personnel. (See International Law Aspects of the Philippine
External Debts, an unpublished dissertation, U.S.T. Graduate School of Law, 1987, p. 321).
( Emphasis supplied)

A critical aspect of sovereign debt restructuring/contract construction is the set of terms and
conditions which determines the contractual remedies for a failure to perform one or more
elements of the contract. A good agreement must not only define the responsibilities of both
parties, but must also state the recourse open to either party when the other fails to discharge
 an obligation. For a compleat debt restructuring represents a devotion to that principle which in
the ultimate analysis is sine qua non for foreign loan agreements-an adherence to the rule of
law in domestic and international affairs of whose kind U.S. Supreme Court Justice Oliver
Wendell Holmes, Jr. once said: "They carry no banners, they beat no drums; but where they
are, men learn that bustle and bush are not the equal of quiet genius and serene mastery."
(See Ricardo J. Romulo, "The Role of Lawyers in Foreign Investments," Integrated Bar of the
Philippine Journal, Vol. 15, Nos. 3 and 4, Third and Fourth Quarters, 1977, p. 265).

Interpreted in the light of the various definitions of the term Practice of law". particularly the modern
concept of law practice, and taking into consideration the liberal construction intended by the framers
of the Constitution, Atty. Monsod's past work experiences as a lawyer-economist, a lawyer-manager,
a lawyer-entrepreneur of industry, a lawyer-negotiator of contracts, and a lawyer-legislator of both the
rich and the poor — verily more than satisfy the constitutional requirement — that he has been
engaged in the practice of law for at least ten years.

Besides in the leading case of Luego v. Civil Service Commission, 143 SCRA 327, the Court said:

Appointment is an essentially discretionary power and must be performed by the officer in

which it is vested according to his best lights, the only condition being that the appointee
should possess the qualifications required by law. If he does, then the appointment cannot be
faulted on the ground that there are others better qualified who should have been
preferred. This is a political question involving considerations of wisdom which only the
appointing authority can decide. (emphasis supplied)

No less emphatic was the Court in the case of (Central Bank v. Civil Service Commission, 171 SCRA
744) where it stated:

It is well-settled that when the appointee is qualified, as in this case, and all the other legal
requirements are satisfied, the Commission has no alternative but to attest to the appointment
in accordance with the Civil Service Law. The Commission has no authority to revoke an
appointment on the ground that another person is more qualified for a particular position. It
also has no authority to direct the appointment of a substitute of its choice. To do so would
be an encroachment on the discretion vested upon the appointing authority. An appointment is
essentially within the discretionary power of whomsoever it is vested, subject to the only
condition that the appointee should possess the qualifications required by law. ( Emphasis
supplied)

The appointing process in a regular appointment as in the case at bar, consists of four (4) stages: (1)
nomination; (2) confirmation by the Commission on Appointments; (3) issuance of a commission (in
the Philippines, upon submission by the Commission on Appointments of its certificate of
confirmation, the President issues the permanent appointment; and (4) acceptance e.g., oath-taking,
posting of bond, etc. . . . (Lacson v. Romero, No. L-3081, October 14, 1949; Gonzales, Law on Public
Officers, p. 200)

The power of the Commission on Appointments to give its consent to the nomination of Monsod as
Chairman of the Commission on Elections is mandated by Section 1(2) Sub-Article C, Article IX of the
Constitution which provides:

The Chairman and the Commisioners shall be appointed by the President with the consent of
the Commission on Appointments for a term of seven years without reappointment. Of those
first appointed, three Members shall hold office for seven years, two Members for five years,
and the last Members for three years, without reappointment. Appointment to any vacancy
shall be only for the unexpired term of the predecessor. In no case shall any Member be
appointed or designated in a temporary or acting capacity.

Anent Justice Teodoro Padilla's separate opinion, suffice it to say that his definition of the
practice of law is the traditional or stereotyped notion of law practice, as distinguished from the
modern concept of the practice of law, which modern connotation is exactly what was intended
by the eminent framers of the 1987 Constitution. Moreover, Justice Padilla's definition would
require generally a habitual law practice, perhaps practised two or three times a week
and would outlaw say, law practice once or twice a year for ten consecutive years. Clearly, this
is far from the constitutional intent.
Upon the other hand, the separate opinion of Justice Isagani Cruz states that in my written opinion, I
made use of a definition of law practice which really means nothing because the definition says that
law practice " . . . is what people ordinarily mean by the practice of law." True I cited the definition but
only by way of sarcasm as evident from my statement that the definition of law practice by "traditional
areas of law practice is essentially tautologous" or defining a phrase by means of the phrase itself
that is being defined.

Justice Cruz goes on to say in substance that since the law covers almost all situations, most
individuals, in making use of the law, or in advising others on what the law means, are actually
practicing law. In that sense, perhaps, but we should not lose sight of the fact that Mr. Monsod is a
lawyer, a member of the Philippine Bar, who has been practising law for over ten years. This is
different from the acts of persons practising law, without first becoming lawyers.

Justice Cruz also says that the Supreme Court can even disqualify an elected President of the
Philippines, say, on the ground that he lacks one or more qualifications. This matter, I greatly doubt.
For one thing, how can an action or petition be brought against the President? And even assuming
that he is indeed disqualified, how can the action be entertained since he is the incumbent President?

We now proceed:

The Commission on the basis of evidence submitted doling the public hearings on Monsod's
confirmation, implicitly determined that he possessed the necessary qualifications as required by law.
The judgment rendered by the Commission in the exercise of such an acknowledged power is
beyond judicial interference except only upon a clear showing of a grave abuse of discretion
amounting to lack or excess of jurisdiction. (Art. VIII, Sec. 1 Constitution). Thus, only where such
grave abuse of discretion is clearly shown shall the Court interfere with the Commission's judgment.
In the instant case, there is no occasion for the exercise of the Court's corrective power, since no
abuse, much less a grave abuse of discretion, that would amount to lack or excess of jurisdiction and
would warrant the issuance of the writs prayed, for has been clearly shown.

Additionally, consider the following:

(1) If the Commission on Appointments rejects a nominee by the President, may the Supreme
Court reverse the Commission, and thus in effect confirm the appointment? Clearly, the
answer is in the negative.

(2) In the same vein, may the Court reject the nominee, whom the Commission has confirmed?
The answer is likewise clear.

(3) If the United States Senate (which is the confirming body in the U.S. Congress) decides
to confirm a Presidential nominee, it would be incredible that the U.S. Supreme Court would
still reverse the U.S. Senate.

Finally, one significant legal maxim is:

We must interpret not by the letter that killeth, but by the spirit that giveth life.

Take this hypothetical case of Samson and Delilah. Once, the procurator of Judea asked Delilah (who
was Samson's beloved) for help in capturing Samson. Delilah agreed on condition that —

No blade shall touch his skin;

No blood shall flow from his veins.

When Samson (his long hair cut by Delilah) was captured, the procurator placed an iron rod burning
white-hot two or three inches away from in front of Samson's eyes. This blinded the man. Upon
hearing of what had happened to her beloved, Delilah was beside herself with anger, and fuming with
righteous fury, accused the procurator of reneging on his word. The procurator calmly replied: "Did
any blade touch his skin? Did any blood flow from his veins?" The procurator was clearly relying on
the letter, not the spirit of the agreement.

In view of the foregoing, this petition is hereby DISMISSED.

SO ORDERED.

Fernan, C.J., Griño-Aquino and Medialdea, JJ., concur.

Feliciano, J., I certify that he voted to dismiss the petition. (Fernan, C.J.)

Sarmiento, J., is on leave. Regalado, and Davide, Jr., J., took no part.

2. G.R. No. L-22301 August 30, 1967

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. MARIO MAPA Y MAPULONG,

defendant-appellant.

FERNANDO, J.:

The sole question in this appeal from a judgment of conviction by the lower court is whether or not the
appointment to and holding of the position of a secret agent to the provincial governor would
constitute a sufficient defense to a prosecution for the crime of illegal possession of firearm and
ammunition. We hold that it does not.

The accused in this case was indicted for the above offense in an information dated August 14, 1962
reading as follows: "The undersized accuses MARIO MAPA Y MAPULONG of a violation of Section
878 in connection with Section 2692 of the Revised Administrative Code, as amended by
Commonwealth Act No. 56 and as further amended by Republic Act No. 4, committed as follows:
That on or about the 13th day of August, 1962, in the City of Manila, Philippines, the said accused did
then and there wilfully and unlawfully have in his possession and under his custody and control one
home-made revolver (Paltik), Cal. 22, without serial number, with six (6) rounds of ammunition,
without first having secured the necessary license or permit therefor from the corresponding
authorities. Contrary to law."

When the case was called for hearing on September 3, 1963, the lower court at the outset asked the
counsel for the accused: "May counsel stipulate that the accused was found in possession of the gun
involved in this case, that he has neither a permit or license to possess the same and that we can
submit the same on a question of law whether or not an agent of the governor can hold a firearm
without a permit issued by the Philippine Constabulary." After counsel sought from the fiscal an
assurance that he would not question the authenticity of his exhibits, the understanding being that
only a question of law would be submitted for decision, he explicitly specified such question to be
"whether or not a secret agent is not required to get a license for his firearm."

Upon the lower court stating that the fiscal should examine the document so that he could pass on
their authenticity, the fiscal asked the following question: "Does the accused admit that this pistol cal.
22 revolver with six rounds of ammunition mentioned in the information was found in his possession
on August 13, 1962, in the City of Manila without first having secured the necessary license or permit
thereof from the corresponding authority?" The accused, now the appellant, answered categorically:
"Yes, Your Honor." Upon which, the lower court made a statement: "The accused admits, Yes, and
his counsel Atty. Cabigao also affirms that the accused admits."

Forthwith, the fiscal announced that he was "willing to submit the same for decision." Counsel for the
accused on his part presented four (4) exhibits consisting of his appointment "as secret agent of the
Hon. Feliciano Leviste," then Governor of Batangas, dated June 2, 1962;1 another document likewise
issued by Gov. Leviste also addressed to the accused directing him to proceed to Manila, Pasay and
Quezon City on a confidential mission;2 the oath of office of the accused as such secret agent,3 a
certificate dated March 11, 1963, to the effect that the accused "is a secret agent" of Gov. Leviste.4
Counsel for the accused then stated that with the presentation of the above exhibits he was "willing to
submit the case on the question of whether or not a secret agent duly appointed and qualified as such
of the provincial governor is exempt from the requirement of having a license of firearm." The exhibits
were admitted and the parties were given time to file their respective memoranda.1äwphï1.ñët
Thereafter on November 27, 1963, the lower court rendered a decision convicting the accused "of the
crime of illegal possession of firearms and sentenced to an indeterminate penalty of from one year
and one day to two years and to pay the costs. The firearm and ammunition confiscated from him are
forfeited in favor of the Government."

The only question being one of law, the appeal was taken to this Court. The decision must be
affirmed.

The law is explicit that except as thereafter specifically allowed, "it shall be unlawful for any person
to . . . possess any firearm, detached parts of firearms or ammunition therefor, or any instrument or
implement used or intended to be used in the manufacture of firearms, parts of firearms, or
ammunition."5 The next section provides that "firearms and ammunition regularly and lawfully issued
to officers, soldiers, sailors, or marines [of the Armed Forces of the Philippines], the Philippine
Constabulary, guards in the employment of the Bureau of Prisons, municipal police, provincial
governors, lieutenant governors, provincial treasurers, municipal treasurers, municipal mayors, and
guards of provincial prisoners and jails," are not covered "when such firearms are in possession of
such officials and public servants for use in the performance of their official duties."6

The law cannot be any clearer. No provision is made for a secret agent. As such he is not exempt.
Our task is equally clear. The first and fundamental duty of courts is to apply the law. "Construction
and interpretation come only after it has been demonstrated that application is impossible or
inadequate without them."7 The conviction of the accused must stand. It cannot be set aside.

Accused however would rely on People v. Macarandang,8 where a secret agent was acquitted on
appeal on the assumption that the appointment "of the accused as a secret agent to assist in the
maintenance of peace and order campaigns and detection of crimes, sufficiently put him within the
category of a "peace officer" equivalent even to a member of the municipal police expressly covered
by section 879." Such reliance is misplaced. It is not within the power of this Court to set aside the
clear and explicit mandate of a statutory provision. To the extent therefore that this decision conflicts
with what was held in People v. Macarandang, it no longer speaks with authority.

Wherefore, the judgment appealed from is affirmed.

3. G.R. No. L-12088 December 23, 1959

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. MORO SUMAGUINA

MACARANDANG, defendant-appellant.

PARAS, C. J.:

Moro Sumaguina Macarandang was accused an, after trial, convicted of the crime of illegal possesion
of fire-arms in the Court of First Instance of Lanao under the following information:

That on or about June 8, 1954, in the Municipality of Marantao, Province of Lanao, Republic of the
Philippines and within the jurisdiction of this Honorable Court, the above-named accused, did then
and there, wilfully, unlawfully and feloniously keep and have his custody and control one Riot Gun,
Winchester, 12 GA. SN-924131 and (8) rounds of ammunitions, without firs having obtained in proper
license or permit therefore from competent authority.

In the present appeal the accused, admitting the ownership and of the firearm and ammunitions in
question, invokes as his legal excuse or authority therefor, the appointment issued him by Governor
Dimakuta as secret agent on October 1, 1953, which reads as follows:

TO WHOM IT MAY CONCERN:

For having shown good faith by previously surrending to this Office a firearm, Datu Sumaguina
Macarandang of Kamalig, Marantao, Lanao, has been appointed SECRET AGENT of peace and
order campaigns and detention of crimes. Accordingly, he is hereby authorized to hold and carry in
his possession one (1) Riot Winchester Shotgun, 12 GA. Serial No. 942131 with twenty(20) rounds of
ammunitions for the successful execution of his hazardous mission.

Datu Sumaguina Macarandang shall personally report to me from time to time all activities and
whereabouts of lawless and wanted elements roaming in the Municipal District of Marantoa, as well
as all matters affecting tranquility therein existing.lawphi1.net

It may be true that, as held by the trial court, the Governor has no authority to issue any firearm
license or permit; but section 879 of the Revise Administrative Code provides, as shown at lease by
the subject matter therefor, that "peace officers" are exempted from the requirements relating to the
issuance of license to possess firearms. The appointment of the accused as secret agent to the assist
in the maintenance of peace and order campaigns and detention of crimes, sufficiently put him within
the category of a "peace officer" equivalent even to a member of the municipal police expressly
covered by section 879.

Wherefore, the decision appealed from is reversed and accused acquitted, with costs de officio. So
ordered.
4. G.R. No. L-22291 November 15, 1976

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. JESUS SANTAYANA Y ESCUDERO,

defendant-appellant.

CONCEPCION, JR., J:

Accused, Jesus Santayana y Escudero, was found guilty of the crime of illegal possesion of firearms
and sentenced to an indeterminate penalty of from one (1) year and one (1) day to two (2) years and
to pay the costs.

The essential facts are not in dispute. On February 19, 1962, accused Jesus Santayana, was
appointed as "Special Agent" 1 by then Colonel Jose C. Maristela, Chief of the CIS. On March 9,
1962, a Memorandum Receipt 2 for equipment was issued in the name of the accused regarding one
pistol Melior SN-122137 with one (1) mag and stock. Col. Maristela likewise issued an undated
certification 3 to the effect that the accused was an accredited member of the CIS and the pistol
described in the said Memorandum Receipt was given to him by virtue of his appointment as special
agent and that he was authorized to carry and possess the same in the performance of his official
duty and for his personal protection. On October 29, 1962, the accused was found in Plaza Miranda
in possession of the above-described pistol with four rounds of ammunition, cal. 25, without a license
to possess them. An investigation was conducted and thereupon, a corresponding complaint was
filed against the accused. The case underwent trial after which the accused was convicted of the
crime charged with its corresponding penalty. Hence, the case was appealed to US and the accused
assigned three errors allegedly committed by the trial court in disposing of this case.

Of these assigned errors, the two main issued posed are whether or not the present subject matter
falls within the exclusive jurisdiction of the municipal court pursuant to Republic Act No. 2613; and
whether or not the appointment of the appellant as special agent of the CIS which apparently
authorizes him to carry and posses firearms exempts him from securing a license or permit
corresponding thereto.

Resolving the issue of jurisdiction, there is no doubt that under Section 87 of Republic Act No. 286, as
amended by Republic Act No. 2613, the justice over cases of illegal possession of firearms. But
equally the Court of First Instance of Manila, which took cognizance of this case had jurisdiction over
the offense charged because under Section 44 of Republic Act No. 296, Court of First Instance have
original jurisdiction "in all criminal cases in which the penalty provided by law is imprisonment for
more than six (6) months, or a fine of more than two hundred pesos (P200.00)"; and the offense
charged in the information is punishable by imprisonment for a period of not less than one (1) year
and one (1) day nor more than five (5) years, or both such imprisonment and a fine of not less than
one thousand pesos (P1,000.00) or more than five thousand pesos (P5,000.00).

From the foregoing, it is evident that the jurisdiction of the Municipal Courts over Criminal Cases in
which the penalty provided by law is imprisonment for not more than six (6) months or fine of not
more than two hundred (P200.00) pesos or both such imprisonment and fine is exclusive and original
to said courts. But considering that the offense of illegal possession of firearms with which the
appellant was charged is penalized by imprisonment for a period of not less than one (1) year and
one (1) day or more than five (5) years, or both such imprisonment and a fine of not less than one
thousand (P1,000.00) pesos or more than five thousand (P5,000.00) pesos (Republic Act No. 4), the
offense, therefore, does not fall within the exclusive original jurisdiction of the Municipal Court. The
Court of First Instance has concurrent jurisdiction over the same.

As to the second issue to be resolved, there is no question that appellant was appointed as CIS
secret agent with the authority to carry and possess firearms. 4 Indeed, appellant was issued a
firearm in the performance of his official duties and for his personal protection. 5 It also appears that
appellant was informed by Col. Maristela that it was not necessary for him to apply for a license or to
register the said firearm because it was government property and therefore could not legally be
registered or licensed in appellant's name. 6 Capt. Adolfo M. Bringas from whom appellant received
the firearm also informed the latter that no permit to carry the pistol was necessary "because you are
already appointed as CIS agent."

At the time of appellant's apprehension, the doctrine then prevailing is enunciated in the case of
People vs. Macarandang 7 wherein We held that the appointment of a civilian as "secret agent to
assist in the maintenace of peace and order campaigns and detection of crimes sufficiently puts him
within the category of a 'peace officer' equivalent even to a member of the municipal police expressly
covered by Section 879." The case of People vs. Mapa 8 revoked the doctrine in the Macarandang
case only on August 30, 1967. Under the Macarandang rule therefore obtaining at the time of
appellant's appointment as secret agent, he incurred no criminal liability for possession of the pistol in
question.

Wherefore, and conformably with the recommendation of the Solicitor General, the decision appealed
from is hereby reversed and appellant Jesus Santayana y Escudero is hereby acquitted. The bond for
his provisional release is cancelled. Costs de oficio. SO ORDERED.
5. G.R. No. L-30061 February 27, 1974

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellees, vs. JOSE JABINAL Y CARMEN,

defendant-appellant.

ANTONIO, J.:p

Appeal from the judgment of the Municipal Court of Batangas (provincial capital), Batangas, in
Criminal Case No. 889, finding the accused guilty of the crime of Illegal Possession of Firearm and
Ammunition and sentencing him to suffer an indeterminate penalty ranging from one (1) year and one
(1) day to two (2) years imprisonment, with the accessories provided by law, which raises in issue the
validity of his conviction based on a retroactive application of Our ruling in People v. Mapa.1

The complaint filed against the accused reads:

That on or about 9:00 o'clock, p.m., the 5th day of September, 1964, in the poblacion, Municipality of
Batangas, Province of Batangas, Philippines, and within the jurisdiction of this Honorable Court, the
above-named accused, a person not authorized by law, did then and there wilfully, unlawfully and
feloniously keep in his possession, custody and direct control a revolver Cal. .22, RG8 German Made
with one (1) live ammunition and four (4) empty shells without first securing the necessary permit or
license to possess the same.

At the arraignment on September 11, 1964, the accused entered a plea of not guilty, after which trial
was accordingly held.

The accused admitted that on September 5, 1964, he was in possession of the revolver and the
ammunition described in the complaint, without the requisite license or permit. He, however, claimed
to be entitled to exoneration because, although he had no license or permit, he had an appointment
as Secret Agent from the Provincial Governor of Batangas and an appointment as Confidential Agent
from the PC Provincial Commander, and the said appointments expressly carried with them the
authority to possess and carry the firearm in question.

Indeed, the accused had appointments from the above-mentioned officials as claimed by him. His
appointment from Governor Feliciano Leviste, dated December 10, 1962, reads:

Reposing special trust and confidence in your civic spirit, and trusting that you will be an effective
agent in the detection of crimes and in the preservation of peace and order in the province of
Batangas, especially with respect to the suppression of trafficking in explosives, jueteng, illegal
cockfighting, cattle rustling, robbery and the detection of unlicensed firearms, you are hereby
appointed a SECRET AGENT of the undersigned, the appointment to take effect immediately, or as
soon as you have qualified for the position. As such Secret Agent, your duties shall be those
generally of a peace officer and particularly to help in the preservation of peace and order in this
province and to make reports thereon to me once or twice a month. It should be clearly understood
that any abuse of authority on your part shall be considered sufficient ground for the automatic
cancellation of your appointment and immediate separation from the service. In accordance with the
decision of the Supreme Court in G.R. No. L-12088 dated December 23, 1959, you will have the right
to bear a firearm, particularly described below, for use in connection with the performance of your
duties.
By virtue hereof, you may qualify and enter upon the performance of your duties by taking your oath
of office and filing the original thereof with us.

Very truly yours,

(Sgd.) FELICIANO LEVISTE

Provincial Governor

FIREARM AUTHORIZED TO CARRY:

Kind: — ROHM-Revolver

Make: — German

SN: — 64

Cal:— .22

On March 15, 1964, the accused was also appointed by the PC Provincial Commander of Batangas
as Confidential Agent with duties to furnish information regarding smuggling activities, wanted
persons, loose firearms, subversives and other similar subjects that might affect the peace and order
condition in Batangas province, and in connection with these duties he was temporarily authorized to
possess a ROHM revolver, Cal. .22 RG-8 SN-64, for his personal protection while in the performance
of his duties.

The accused contended before the court a quo that in view of his above-mentioned appointments as
Secret Agent and Confidential Agent, with authority to possess the firearm subject matter of the
prosecution, he was entitled to acquittal on the basis of the Supreme Court's decision in People vs.
Macarandang2 and People vs. Lucero.3 The trial court, while conceding on the basis of the evidence
of record the accused had really been appointed Secret Agent and Confidential Agent by the
Provincial Governor and the PC Provincial Commander of Batangas, respectively, with authority to
possess and carry the firearm described in the complaint, nevertheless held the accused in its
decision dated December 27, 1968, criminally liable for illegal possession of a firearm and
ammunition on the ground that the rulings of the Supreme Court in the cases of Macarandang and
Lucero were reversed and abandoned in People vs. Mapa, supra. The court considered as mitigating
circumstances the appointments of the accused as Secret Agent and Confidential Agent.

Let us advert to Our decisions in People v. Macarandang, supra, People v. Lucero, supra, and People
v. Mapa, supra. In Macarandang, We reversed the trial court's judgment of conviction against the
accused because it was shown that at the time he was found to possess a certain firearm and
ammunition without license or permit, he had an appointment from the Provincial Governor as Secret
Agent to assist in the maintenance of peace and order and in the detection of crimes, with authority to
hold and carry the said firearm and ammunition. We therefore held that while it is true that the
Governor has no authority to issue any firearm license or permit, nevertheless, section 879 of the
Revised Administrative Code provides that "peace officers" are exempted from the requirements
relating to the issuance of license to possess firearms; and Macarandang's appointment as Secret
Agent to assist in the maintenance of peace and order and detection of crimes, sufficiently placed him
in the category of a "peace officer" equivalent even to a member of the municipal police who under
section 879 of the Revised Administrative Code are exempted from the requirements relating to the
issuance of license to possess firearms. In Lucero, We held that under the circumstances of the case,
the granting of the temporary use of the firearm to the accused was a necessary means to carry out
the lawful purpose of the batallion commander to effect the capture of a Huk leader. In Mapa,
expressly abandoning the doctrine in Macarandang, and by implication, that in Lucero, We sustained
the judgment of conviction on the following ground:
The law is explicit that except as thereafter specifically allowed, "it shall be unlawful for any person
to ... possess any firearm, detached parts of firearms or ammunition therefor, or any instrument or
implement used or intended to be used in the manufacture of firearms, parts of firearms, or
ammunition." (Sec. 878, as amended by Republic Act No. 4, Revised Administrative Code.) The next
section provides that "firearms and ammunition regularly and lawfully issued to officers, soldiers,
sailors, or marines [of the Armed Forces of the Philippines], the Philippine Constabulary, guards in
the employment of the Bureau of Prisons, municipal police, provincial governors, lieutenant
governors, provincial treasurers, municipal treasurers, municipal mayors, and guards of provincial
prisoners and jails," are not covered "when such firearms are in possession of such officials and
public servants for use in the performance of their official duties." (Sec. 879, Revised Administrative
Code.)

The law cannot be any clearer. No provision is made for a secret agent. As such he is not
exempt. ... .

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). Our
decision in People v. Mapa 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 reversal of the Macarandang and Lucero
doctrine in Mapa? The Solicitor General is of the first view, and he accordingly recommends reversal
of the appealed judgment.

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 originally
passed, since this Court's construction merely establishes the contemporaneous legislative intent that
law thus construed intends to effectuate. The settled rule supported by numerous authorities is a
restatement of legal maxim "legis interpretatio 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 when he 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 punishability of
an act be reasonably foreseen for the guidance of society.

It follows, therefore, that considering that appellant conferred his appointments as Secret Agent and
Confidential Agent and authorized to possess a firearm pursuant to the prevailing doctrine enunciated
in Macarandang and Lucero, under which no criminal liability would attach to his possession of said
firearm in spite of the absence of a license and permit therefor, appellant must be absolved. Certainly,
appellant may not be punished for an act which at the time it was done was held not to be punishable.

WHEREFORE, the judgment appealed from is hereby reversed, and appellant is acquitted, with costs
de oficio.
6. G.R. No. L-2348             February 27, 1950

GREGORIO PERFECTO, plaintiff-appellee, vs.
BIBIANO MEER, Collector of Internal Revenue, defendant-appellant.

BENGZON, J.:

In April, 1947 the Collector of Internal Revenue required Mr. Justice Gregorio Perfecto to pay income
tax upon his salary as member of this Court during the year 1946. After paying the amount (P802), he
instituted this action in the Manila Court of First Instance contending that the assessment was illegal,
his salary not being taxable for the reason that imposition of taxes thereon would reduce it in violation
of the Constitution.

The Manila judge upheld his contention, and required the refund of the amount collected. The
defendant appealed.

The death of Mr. Justice Perfecto has freed us from the embarrassment of passing upon the claim of
a colleague. Still, as the outcome indirectly affects all the members of the Court, consideration of the
matter is not without its vexing feature. Yet adjudication may not be declined, because (a) we are not
legally disqualified; (b) jurisdiction may not be renounced, ad it is the defendant who appeals to this
Court, and there is no other tribunal to which the controversy may be referred; (c) supreme courts in
the United States have decided similar disputes relating to themselves; (d) the question touches all
the members of the judiciary from top to bottom; and (e) the issue involves the right of other
constitutional officers whose compensation is equally protected by the Constitution, for instance, the
President, the Auditor-General and the members of the Commission on Elections. Anyway the
subject has been thoroughly discussed in many American lawsuits and opinions, and we shall hardly
do nothing more than to borrow therefrom and to compare their conclusions to local conditions. There
shall be little occasion to formulate new propositions, for the situation is not unprecedented.

Our Constitution provides in its Article VIII, section 9, that the members of the Supreme Court and all
judges of inferior courts "shall receive such compensation as may be fixed by law, which shall not be
diminished during their continuance in office." It also provides that "until Congress shall provide
otherwise, the Chief Justice of the Supreme Court shall receive an annual compensation of sixteen
thousand pesos". When in 1945 Mr. Justice Perfecto assumed office, Congress had not "provided
otherwise", by fixing a different salary for associate justices. He received salary at the rate provided
by the Constitution, i.e., fifteen thousand pesos a year.

Now, does the imposition of an income tax upon this salary in 1946 amount to a diminution thereof?.
A note found at page 534 of volume 11 of the American Law Reports answers the question in the
affirmative. It says:

Where the Constitution of a state provides that the salaries of its judicial officers shall not be
dismissed during their continuance in office, it had been held that the state legislature cannot impose
a tax upon the compensation paid to the judges of its court. New Orleans v. Lea (1859) 14 La. Ann.
194; Opinion of Attorney-General if N. C. (1856) 48 N. C. (3 Jones, L.) Appx. 1; Re Taxation of
Salaries of Judges (1902) 131 N. C. 692, 42 S. E. 970; Com. ex. rel. Hepburn v. Mann (1843) 5 Watts
& S,. (Pa.) 403 [but see to the contrary the earlier and much criticized case of Northumberland county
v. Chapman (1829) 2 Rawle (Pa.) 73]*

A different rule prevails in Wisconsin, according to the same annotation. Another state holding the
contrary view is Missouri.

The Constitution of the United States, likes ours, forbids the diminution of the compensation of
Judges of the Supreme Court and of inferior courts. The Federal Governments has an income tax
law. Does it embrace the salaries of federal judges? In answering this question, we should consider
four periods:

First period. No attempts was made to tax the compensation of Federal judges up to 1862 1.

Second period. 1862-1918. In July, 1862, a statute was passed subjecting the salaries of "civil
officers of the United States" to an income tax of three per cent. Revenue officers, construed it as
including the compensation of all judges; but Chief Justice Taney, speaking for the judiciary, wrote to
the Secretary of the Treasury a letter of protest saying, among other things:

The act in question, as you interpret it, diminishes the compensation of every judge 3 per cent, and if
it can be diminished to that extent by the name of a tax, it may, in the same way, be reduced from
time to time, at the pleasure of the legislature.

The judiciary is one of the three great departments of the government, created and established by the
Constitution. Its duties and powers are specifically set forth, and are of a character that requires it to
be perfectly independent of the two other departments, and in order to place it beyond the reach and
above even the suspicion of any such influence, the power to reduce their compensation is expressly
withheld from Congress, and excepted from their powers of legislation.

Language could not be more plain than that used in the Constitution. It is, moreover, one of its most
important and essential provisions. For the articles which limits the powers of the legislative and
executive branches of the government, and those which provide safeguards for the protection of the
citizen in his person and property, would be of little value without a judiciary to uphold and maintain
them, which was free from every influence, direct and indirect, that might by possibility in times of
political excitement warp their judgments.

Upon these grounds I regard an act of Congress retaining in the Treasury a portion of the
Compensation of the judges, as unconstitutional and void2.

The protest was unheeded, although it apparently bore the approval of the whole Supreme Court, that
ordered it printed among its records. But in 1869 Attorney-General Hoar upon the request of the
Secretary of the Treasury rendered an opinion agreeing with the Chief Justice. The collection of the
tax was consequently discontinued and the amounts theretofore received were all refunded. For half
a century thereafter judges' salaries were not taxed as income.3

Third period. 1919-1938. The Federal Income Tax Act of February 24, 1919 expressly provided that
taxable income shall include "the compensation of the judges of the Supreme Court and inferior
courts of the United States". Under such Act, Walter Evans, United States judge since 1899, paid
income tax on his salary; and maintaining that the impost reduced his compensation, he sued to
recover the money he had delivered under protest. He was upheld in 1920 by the Supreme Court in
an epoch-making decision.*, explaining the purpose, history and meaning of the Constitutional
provision forbidding impairment of judicial salaries and the effect of an income tax upon the salary of
a judge.

With what purpose does the Constitution provide that the compensation of the judges "shall not be
diminished during their continuance in office"? Is it primarily to benefit the judges, or rather to promote
the public weal by giving them that independence which makes for an impartial and courageous
discharge of the judicial function? Does the provision merely forbid direct diminution, such as
expressly reducing the compensation from a greater to a less sum per year, and thereby leave the
way open for indirect, yet effective, diminution, such as withholding or calling back a part as tax on
the whole? Or does it mean that the judge shall have a sure and continuing right to the compensation,
whereon he confidently may rely for his support during his continuance in office, so that he need have
no apprehension lest his situation in this regard may be changed to his disadvantage?

The Constitution was framed on the fundamental theory that a larger measure of liberty and justice
would be assured by vesting the three powers — the legislative, the executive, and the judicial — in
separate departments, each relatively independent of the others and it was recognized that without
this independence — if it was not made both real and enduring — the separation would fail of its
purpose. all agreed that restraints and checks must be imposed to secure the requisite measure of
independence; for otherwise the legislative department, inherently the strongest, might encroach on
or even come to dominate the others, and the judicial, naturally the weakest, might be dwarf or
swayed by the other two, especially by the legislative.

The particular need for making the judiciary independent was elaborately pointed our by Alexander
Hamilton in the Federalist, No. 78, from which we excerpt the following:

xxx     xxx     xxx

At a later period John Marshall, whose rich experience as lawyer, legislator, and chief justice enable
him to speak as no one else could, tersely said (debates Va. Gonv. 1829-1831, pp. 616, 619): . . .
Our courts are the balance wheel of our whole constitutional system; and our is the only constitutional
system so balanced and controlled. Other constitutional systems lacks complete poise and certainly
of operation because they lack the support and interpretation of authoritative, undisputable courts of
law. It is clear beyond all need of exposition that for the definite maintenance of constitutional
understandings it is indispensable, alike for the preservation of the liberty of the individual and for the
preservation of the integrity of the powers of the government, that there should be some nonpolitical
forum in which those understandings can be impartially debated and determined. That forum our
courts supply. There the individual may assert his rights; there the government must accept definition
of its authority. There the individual may challenge the legality of governmental action and have it
adjudged by the test of fundamental principles, and that test the government must abide; there the
government can check the too aggressive self-assertion of the individual and establish its power upon
lines which all can comprehend and heed. The constitutional powers of the courts constitute the
ultimate safeguard alike of individual privilege and of governmental prerogative. It is in this sense that
our judiciary is the balance wheel of our entire system; it is meant to maintain that nice adjustment
between individual rights and governmental powers which constitutes political liberty. Constitutional
government in the United States, pp. 17, 142.

Conscious in the nature and scope of the power being vested in the national courts, recognizing that
they would be charge with responsibilities more delicate and important than any ever before confide
to judicial tribunals, and appreciating that they were to be, in the words of George Washington, "the
keystone of our political fabric", the convention with unusual accord incorporated in the Constitution
the provision that the judges "shall hold their offices during good behavior, and shall at stated times
receive for their services a compensation which shall not be diminished during their continuance in
office." Can there be any doubt that the two things thus coupled in place — the clause in respect of
tenure during good behaviour and that in respect of an undiminishable compensation-were equally
coupled in purpose? And is it not plain that their purposes was to invest the judges with an
independence in keeping with the delicacy and importance of their task, and with the imperative need
for its impartial and fearless performance? Mr. Hamilton said in explanation and support of the
provision (Federalist No. 79): "Next to permanency in office, nothing can contribute more to the
independence of the judges than a fixed provision for their support. . . . In the general course of
human nature, a power over a man's subsistence amounts to a power over his will.

xxx     xxx     xxx

These considerations make it very plain, as we think, that the primary purpose of the prohibition
against diminution was not to benefit the judges, but, like the clause in respect of tenure, to attract
good and competent men to the bench, and to promote that independence of action and judgment
which is essential to the maintenance of the guaranties, limitations, and pervading principles of the
constitution, and to the admiration of justice without respect to persons, and with equal concern for
the poor and the rich.

xxx     xxx     xxx

But it is urged that what plaintiff was made to pay back was an income tax, and that a like tax was
exacted of others engaged in private employment.

If the tax in respect of his compensation be prohibited, it can find no justification in the taxation of
other income as to which there is no prohibition, for, of course, doing what the Constitution permits
gives no license to do what it prohibits.

The prohibition is general, contains no excepting words, and appears to be directed against all
diminution, whether for one purpose or another; and the reason for its adoption, as publicly assigned
at the time and commonly accepted ever since, make with impelling force for the conclusion that the
fathers of the Constitution intended to prohibit diminution by taxation as well as otherwise, that they
regarded the independence of the judges as of far greater importance than any revenue that could
come from taxing their salaries. (American law Reports, annotated, Vol. 11, pp. 522-25; Evans vs.
Gore, supra.)

In September 1, 1919, Samuel J. Graham assumed office as judge of the Unites States court of
claims. His salary was taxed by virtue of the same time income tax of February 24, 1919. At the time
he qualified, a statute fixed his salary at P7,500. He filed action for reimbursement, submitting the
same theory on which Evans v. Gore had been decided. The Supreme Court of the United States in
1925 reaffirmed that decision. It overruled the distinction offered by Solicitor-General Beck that Judge
Graham took office after the income tax had been levied on judicial salaries, (Evans qualified before),
and that Congress had power "to impose taxes which should apply to the salaries of Federal judges
appointed after the enactment of the taxing statute." (The law had made no distinction as to judges
appointed before or after its passage)

Fourth period. 1939 — Foiled in their previous attempts, the Revenue men persisted, and succeeded
in inserting in the United States Revenue Act of June, 1932 the modified proviso that "gross income"
on which taxes were payable included the compensation "of judges of courts of the United States
taking office after June 6, 1932". Joseph W. Woodrough qualified as United States circuit judge on
May 1, 1933. His salary as judge was taxed, and before the Supreme Court of the United States the
issue of decrease of remuneration again came up. That court, however, ruled against him, declaring
(in 1939) that Congress had the power to adopt the law. It said:

The question immediately before us is whether Congress exceeded its constitutional power in
providing that United States judges appointed after the Revenue Act of 1932 shall not enjoy immunity
from the incidence of taxation to which everyone else within the defined classes of income is
subjected. Thereby, of course, Congress has committed itself to the position that a non-discriminatory
tax laid generally on net income is not, when applied to the income of federal judge, a diminution of
his salary within the prohibition of Article 3, Sec. 1 of the Constitution. To suggest that it makes
inroads upon the independence of judges who took office after the Congress has thus charged them
with the common duties of citizenship, by making them bear their aliquot share of the cost of
maintaining the Government, is to trivialize the great historic experience on which the framers based
the safeguards of Article 3, Sec. 1. To subject them to a general tax is merely to recognize that
judges also are citizens, and that their particular function in government does not generate an
immunity from sharing with their fellow citizens the material burden of the government whose
Constitution and laws they are charged with administering. (O'Malley vs. Woodrough, 59 S. Ct. 838,
A. L. R. 1379.)

Now, the case for the defendant-appellant Collector of Internal Revenue is premised mainly on this
decision (Note A). He claims it holds "that federal judges are subject to the payment of income taxes
without violating the constitutional prohibition against the reduction of their salaries during their
continuance in office", and that it "is a complete repudiation of the ratio decidenci of Evans vs. Gore".
To grasp the full import of the O'Malley precedent, we should bear in mind that:

1. It does not entirely overturn Miles vs. Graham. "To the extent that what the Court now says is
inconsistent with what said in Miles vs. Graham, the latter can not survive", Justice Frankfurter
announced.

2. It does not expressly touch nor amend the doctrine in Evans vs, Gore, although it indicates that the
Congressional Act in dispute avoided in part the consequences of that case.

Carefully analyzing the three cases (Evans, Miles and O'Malley) and piecing them together, the
logical conclusion may be reached that although Congress may validly declare by law that salaries of
judges appointed thereafter shall be taxed as income (O'Malley vs. Woodrough) it may not tax the
salaries of those judges already in office at the time of such declaration because such taxation would
diminish their salaries (Evans vs. Gore; Miles vs. Graham). In this manner the rationalizing principle
that will harmonize the allegedly discordant decision may be condensed.

By the way, Justice Frankfurter, writing the O'Malley decision, says the Evans precedent met with
disfavor from legal scholarship opinion. Examining the issues of Harvard Law review at the time
of Evans vs. Gore (Frankfurter is a Harvard graduate and professor), we found that such school
publication criticized it. Believing this to be the "inarticulate consideration that may have influenced
the grounds on which the case went off"4, we looked into the criticism, and discovered that it was
predicated on the position that the 16th Amendment empowered Congress "to collect taxes on
incomes from whatever source derived" admitting of no exception. Said the Harvard Law Journal:

In the recent case of Evans vs. Gore the Supreme Court of the United States decided that by taxing
the salary of a federal judge as a part of his income, Congress was in effect reducing his salary and
thus violating Art. III, sec. 1, of the Constitution. Admitting for the present purpose that such a tax
really is a reduction of salary, even so it would seem that the words of the amendment giving power
to tax 'incomes, from whatever source derived', are sufficiently strong to overrule pro tanto the
provisions of Art. III, sec. 1. But, two years ago, the court had already suggested that the amendment
in no way extended the subjects open to federal taxation. The decision in Evans vs. Gore affirms that
view, and virtually strikes from the amendment the words "from whatever source derived". (Harvard
law Review, vol. 34, p. 70)

The Unites States Court's shift of position5 might be attributed to the above detraction which, without
appearing on the surface, led to Frankfurter's sweeping expression about judges being also citizens
liable to income tax. But it must be remembered that undisclosed factor — the 16th Amendment —
has no counterpart in the Philippine legal system. Our Constitution does not repeat it. Wherefore, as
the underlying influence and the unuttered reason has no validity in this jurisdiction, the broad
generality loses much of its force.

Anyhow the O'Malley case declares no more than that Congress may validly enact a law taxing the
salaries of judges appointed after its passage. Here in the Philippines no such law has been
approved.

Besides, it is markworthy that, as Judge Woodrough had qualified after the express legislative
declaration taxing salaries, he could not very well complain. The United States Supreme Court
probably had in mind what in other cases was maintained, namely, that the tax levied on the salary in
effect decreased the emoluments of the office and therefore the judge qualified with such reduced
emoluments.6

The O'Malley ruling does not cover the situation in which judges already in office are made to pay tax
by executive interpretation, without express legislative declaration. That state of affairs is controlled
by the administrative and judicial standards herein-before described in the "second period" of the
Federal Government, namely, the views of Chief Justice Taney and of Attorney-General Hoar and the
constant practice from 1869 to 1938, i.e., when the Income Tax Law merely taxes "income" in
general, it does not include salaries of judges protected from diminution.

In this connection the respondent would make capital of the circumstance that the Act of 1932, upheld
in the O'Malley case, has subsequently been amended by making it applicable even to judges who
took office before1932. This shows, the appellant argues, that Congress interprets the O'Malley ruling
to permit legislative taxation of the salary of judges whether appointed before the tax or after. The
answer to this is that the Federal Supreme Court expressly withheld opinion on that amendment in
the O'Malley case. Which is significant. Anyway, and again, there is here no congressional directive
taxing judges' salaries.

Wherefore, unless and until our Legislature approves an amendment to the Income Tax Law
expressly taxing "that salaries of judges thereafter appointed", the O'Malley case is not relevant. As in
the United States during the second period, we must hold that salaries of judges are not included in
the word "income" taxed by the Income Tax Law. Two paramount circumstances may additionally be
indicated, to wit: First, when the Income Tax Law was first applied to the Philippines 1913, taxable
"income" did not include salaries of judicial officers when these are protected from diminution. That
was the prevailing official belief in the United States, which must be deemed to have been
transplanted here;7 and second, when the Philippine Constitutional Convention approved (in 1935)
the prohibition against diminution off the judges' compensation, the Federal principle was known that
income tax on judicial salaries really impairs them. Evans vs. Gore and Miles vs. Graham were then
outstanding doctrines; and the inference is not illogical that in restraining the impairment of judicial
compensation the Fathers of the Constitution intended to preclude taxation of the same.8

It seems that prior to the O'Malley decision the Philippine Government did not collect income tax on
salaries of judges. This may be gleaned from General Circular No. 449 of the Department of Finance
dated March 4, 1940, which says in part:

xxx     xxx     xxx

The question of whether or not the salaries of judges should be taken into account in computing
additional residence taxes is closely linked with the liability of judges to income tax on their salaries,
in fact, whatever resolution is adopted with respect to either of said taxes be followed with respect to
the other. The opinion of the Supreme Court of the United States in the case of O'Malley v.
Woodrough, 59 S. Ct. 838, to which the attention of this department has been drawn, appears to have
enunciated a new doctrine regarding the liability of judges to income tax upon their salaries. In view of
the fact that the question is of great significance, the matter was taken up in the Council of State, and
the Honorable, the Secretary of Justice was requested to give an opinion on whether or not, having in
mind the said decision of the Supreme Court of the United States in the case of O'Malley v.
Woodrough, there is justification in reversing our present ruling to the effect that judges are not liable
to tax on their salaries. After going over the opinion of the court in the said case, the Honorable, the
Secretary of Justice, stated that although the ruling of the Supreme Court of the United States is not
binding in the Philippines, the doctrine therein enunciated has resolved the issue of the taxability of
judges' salaries into a question of policy. Forthwith, His Excellency the President decided that the
best policy to adopt would be to collect income and additional residence taxes from the President of
the Philippines, the members of the Judiciary, and the Auditor General, and the undersigned was
authorized to act accordingly.

In view of the foregoing, income and additional residence taxes should be levied on the salaries
received by the President of the Philippines, members of the Judiciary, and the Auditor General
during the calendar year 1939 and thereafter. . . . . (Emphasis ours.)

Of course, the Secretary of Justice correctly opined that the O'Malley decision "resolved the issue of
taxability of judges' salaries into a question of policy." But that policy must be enunciated by
Congressional enactment, as was done in the O'Malley case, not by Executive Fiat or interpretation.

This is not proclaiming a general tax immunity for men on the bench. These pay taxes. Upon buying
gasoline, or other commodities, they pay the corresponding duties. Owning real property, they pay
taxes thereon. And on incomes other than their judicial salary, assessments are levied. It is only when
the tax is charged directly on their salary and the effect of the tax is to diminish their official stipend —
that the taxation must be resisted as an infringement of the fundamental charter.

Judges would indeed be hapless guardians of the Constitution if they did not perceive and block
encroachments upon their prerogatives in whatever form. The undiminishable character of judicial
salaries is not a mere privilege of judges — personal and therefore waivable — but a basic limitation
upon legislative or executive action imposed in the public interest. (Evans vs. Gore)

Indeed the exemption of the judicial salary from reduction by taxation is not really a gratuity or
privilege. Let the highest court of Maryland speak:

The exemption of the judicial compensation from reduction is not in any true sense a gratuity,
privilege or exemption. It is essentially and primarily compensation based upon valuable
consideration. The covenant on the part of the government is a guaranty whose fulfillment is as much
as part of the consideration agreed as is the money salary. The undertaking has its own particular
value to the citizens in securing the independence of the judiciary in crises; and in the establishment
of the compensation upon a permanent foundation whereby judicial preferment may be prudently
accepted by those who are qualified by talent, knowledge, integrity and capacity, but are not
possessed of such a private fortune as to make an assured salary an object of personal concern. On
the other hand, the members of the judiciary relinquish their position at the bar, with all its
professional emoluments, sever their connection with their clients, and dedicate themselves
exclusively to the discharge of the onerous duties of their high office. So, it is irrefutable that they
guaranty against a reduction of salary by the imposition of a tax is not an exemption from taxation in
the sense of freedom from a burden or service to which others are liable. The exemption for a public
purpose or a valid consideration is merely a nominal exemption, since the valid and full consideration
or the public purpose promoted is received in the place of the tax. Theory and Practice of Taxation
(1900), D. A. Wells, p. 541. (Gordy vs. Dennis (Md.) 1939, 5 Atl. Rep. 2d Series, p. 80)

It is hard to see, appellants asserts, how the imposition of the income tax may imperil the
independence of the judicial department. The danger may be demonstrated. Suppose there is power
to tax the salary of judges, and the judiciary incurs the displeasure of the Legislature and the
Executive. In retaliation the income tax law is amended so as to levy a 30 per cent on all salaries of
government officials on the level of judges. This naturally reduces the salary of the judges by 30 per
cent, but they may not grumble because the tax is general on all receiving the same amount of
earning, and affects the Executive and the Legislative branches in equal measure. However, means
are provided thereafter in other laws, for the increase of salaries of the Executive and the Legislative
branches, or their perquisites such as allowances, per diems, quarters, etc. that actually compensate
for the 30 per cent reduction on their salaries. Result: Judges compensation is thereby diminished
during their incumbency thanks to the income tax law. Consequence: Judges must "toe the line" or
else. Second consequence: Some few judges might falter; the great majority will not. But knowing the
frailty of human nature, and this chink in the judicial armor, will the parties losing their cases against
the Executive or the Congress believe that the judicature has not yielded to their pressure?

Respondent asserts in argumentation that by executive order the President has subjected his salary
to the income tax law. In our opinion this shows obviously that, without such voluntary act of the
President, his salary would not be taxable, because of constitutional protection against diminution. To
argue from this executive gesture that the judiciary could, and should act in like manner is to assume
that, in the matter of compensation and power and need of security, the judiciary is on a par with the
Executive. Such assumption certainly ignores the prevailing state of affairs.

The judgment will be affirmed. So ordered. Moran, C.J., Pablo, Padilla, Tuason, Montemayor, Reyes
and Torres, JJ., concur

7. G.R. No. L-6355-56             August 31, 1953

PASTOR M. ENDENCIA and FERNANDO JUGO, plaintiffs-appellees, 

vs.SATURNINO DAVID, as Collector of Internal Revenue, defendant-appellant.

MONTEMAYOR, J.:

This is a joint appeal from the decision of the Court of First Instance of Manila declaring section 13 of
Republic Act No. 590 unconstitutional, and ordering the appellant Saturnino David as Collector of
Internal Revenue to re-fund to Justice Pastor M. Endencia the sum of P1,744.45, representing the
income tax collected on his salary as Associate Justice of the Court of Appeals in 1951, and to
Justice Fernando Jugo the amount of P2,345.46, representing the income tax collected on his salary
from January 1,1950 to October 19, 1950, as Presiding Justice of the Court of Appeals, and from
October 20, 1950 to December 31,1950, as Associate Justice of the Supreme Court, without special
pronouncement as to costs.

Because of the similarity of the two cases, involving as they do the same question of law, they were
jointly submitted for determination in the lower court. Judge Higinio B. Macadaeg presiding, in a
rather exhaustive and well considered decision found and held that under the doctrine laid down by
this Court in the case of Perfecto vs. Meer, 85 Phil., 552, the collection of income taxes from the
salaries of Justice Jugo and Justice Endencia was a diminution of their compensation and therefore
was in violation of the Constitution of the Philippines, and so ordered the refund of said taxes.

We see no profit and necessity in again discussing and considering the proposition and the
arguments pro and cons involved in the case of Perfecto vs. Meer, supra, which are raised, brought
up and presented here. In that case, we have held despite the ruling enunciated by the United States
Federal Supreme Court in the case of O 'Malley vs. Woodrought 307 U. S., 277, that taxing the salary
of a judicial officer in the Philippines is a diminution of such salary and so violates the Constitution.
We shall now confine our-selves to a discussion and determination of the remaining question of
whether or not Republic Act No. 590, particularly section 13, can justify and legalize the collection of
income tax on the salary of judicial officers.

According to the brief of the Solicitor General on behalf of appellant Collector of Internal Revenue, our
decision in the case of Perfecto vs. Meer, supra, was not received favorably by Congress, because
immediately after its promulgation, Congress enacted Republic Act No. 590. To bring home his point,
the Solicitor General reproduced what he considers the pertinent discussion in the Lower House of
House Bill No. 1127 which became Republic Act No. 590.

For purposes of reference, we are reproducing section 9, Article VIII of our Constitution:.

SEC. 9. The members of the Supreme Court and all judges of inferior courts shall hold office during
good behavior, until they reach the age of seventy years, or become incapacitated to discharge the
duties of their office. They shall receive such compensation as may be fixed by law, which shall not
be diminished during their continuance in office. Until the Congress shall provide otherwise, the Chief
Justice of the Supreme Court shall receive an annual compensation of sixteen thousand pesos, and
each Associate Justice, fifteen thousand pesos.

As already stated construing and applying the above constitutional provision, we held in the Perfecto
case that judicial officers are exempt from the payment of income tax on their salaries, because the
collection thereof by the Government was a decrease or diminution of their salaries during their
continuance in office, a thing which is expressly prohibited by the Constitution. Thereafter, according
to the Solicitor General, because Congress did not favorably receive the decision in the Perfecto
case, Congress promulgated Republic Act No. 590, if not to counteract the ruling in that decision, at
least now to authorize and legalize the collection of income tax on the salaries of judicial officers. We
quote section 13 of Republic Act No. 590:

SEC 13. No salary wherever received by any public officer of the Republic of the Philippines shall be
considered as exempt from the income tax, payment of which is hereby declared not to be dimunition
of his compensation fixed by the Constitution or by law.

So we have this situation. The Supreme Court in a decision interpreting the Constitution, particularly
section 9, Article VIII, has held that judicial officers are exempt from payment of income tax on their
salaries, because the collection thereof was a diminution of such salaries, specifically prohibited by
the Constitution. Now comes the Legislature and in section 13, Republic Act No. 590, says that "no
salary wherever received by any public officer of the Republic (naturally including a judicial officer)
shall be considered as exempt from the income tax," and proceeds to declare that payment of said
income tax is not a diminution of his compensation. Can the Legislature validly do this? May the
Legislature lawfully declare the collection of income tax on the salary of a public official, specially a
judicial officer, not a decrease of his salary, after the Supreme Court has found and decided
otherwise? To determine this question, we shall have to go back to the fundamental principles
regarding separation of powers.

Under our system of constitutional government, the Legislative department is assigned the power to
make and enact laws. The Executive department is charged with the execution of carrying out of the
provisions of said laws. But the interpretation and application of said laws belong exclusively to the
Judicial department. And this authority to interpret and apply the laws extends to the Constitution.
Before the courts can determine whether a law is constitutional or not, it will have to interpret and
ascertain the meaning not only of said law, but also of the pertinent portion of the Constitution in order
to decide whether there is a conflict between the two, because if there is, then the law will have to
give way and has to be declared invalid and unconstitutional.

Defining and interpreting the law is a judicial function and the legislative branch may not limit or
restrict the power granted to the courts by the Constitution. (Bandy vs. Mickelson et al., 44N. W., 2nd
341, 342.)

When it is clear that a statute transgresses the authority vested in the legislature by the Constitution,
it is the duty of the courts to declare the act unconstitutional because they cannot shrink from it
without violating their oaths of office. This duty of the courts to maintain the Constitution as the
fundamental law of the state is imperative and unceasing; and, as Chief Justice Marshall said,
whenever a statute is in violation of the fundamental law, the courts must so adjudge and thereby
give effect to the Constitution. Any other course would lead to the destruction of the Constitution.
Since the question as to the constitutionality of a statute is a judicial matter, the courts will not decline
the exercise of jurisdiction upon the suggestion that action might be taken by political agencies in
disregard of the judgment of the judicial tribunals. (11 Am. Jur., 714-715.)

Under the American system of constitutional government, among the most important functions in
trusted to the judiciary are the interpreting of Constitutions and, as a closely connected power, the
determination of whether laws and acts of the legislature are or are not contrary to the provisions of
the Federal and State Constitutions. (11 Am. Jur., 905.).

By legislative fiat as enunciated in section 13, Republic Act NO. 590, Congress says that taxing the
salary of a judicial officer is not a decrease of compensation. This is a clear example of interpretation
or ascertainment of the meaning of the phrase "which shall not be diminished during their
continuance in office," found in section 9, Article VIII of the Constitution, referring to the salaries of
judicial officers. This act of interpreting the Constitution or any part thereof by the Legislature is an
invasion of the well-defined and established province and jurisdiction of the Judiciary.

The rule is recognized elsewhere that the legislature cannot pass any declaratory act, or act
declaratory of what the law was before its passage, so as to give it any binding weight with the courts.
A legislative definition of a word as used in a statute is not conclusive of its meaning as used
elsewhere; otherwise, the legislature would be usurping a judicial function in defining a term. (11 Am.
Jur., 914, emphasis supplied)

The legislature cannot, upon passing a law which violates a constitutional provision, validate it so as
to prevent an attack thereon in the courts, by a declaration that it shall be so construed as not to
violate the constitutional inhibition. (11 Am. Jur., 919, emphasis supplied)

We have already said that the Legislature under our form of government is assigned the task and the
power to make and enact laws, but not to interpret them. This is more true with regard to the
interpretation of the basic law, the Constitution, which is not within the sphere of the Legislative
department. If the Legislature may declare what a law means, or what a specific portion of the
Constitution means, especially after the courts have in actual case ascertain its meaning by
interpretation and applied it in a decision, this would surely cause confusion and instability in judicial
processes and court decisions. Under such a system, a final court determination of a case based on
a judicial interpretation of the law of the Constitution may be undermined or even annulled by a
subsequent and different interpretation of the law or of the Constitution by the Legislative department.
That would be neither wise nor desirable, besides being clearly violative of the fundamental,
principles of our constitutional system of government, particularly those governing the separation of
powers.

So much for the constitutional aspect of the case. Considering the practical side thereof, we believe
that the collection of income tax on a salary is an actual and evident diminution thereof. Under the old
system where the in-come tax was paid at the end of the year or sometime thereafter, the decrease
may not be so apparent and clear. All that the official who had previously received his full salary was
called upon to do, was to fulfill his obligation and to exercise his privilege of paying his income tax on
his salary. His salary fixed by law was received by him in the amount of said tax comes from his other
sources of income, he may not fully realize the fact that his salary had been decreased in the amount
of said income tax. But under the present system of withholding the income tax at the source, where
the full amount of the income tax corresponding to his salary is computed in advance and divided into
equal portions corresponding to the number of pay-days during the year and actually deducted from
his salary corresponding to each payday, said official actually does not receive his salary in full,
because the income tax is deducted therefrom every payday, that is to say, twice a month. Let us
take the case of Justice Endencia. As Associate Justice of the Court of Appeals, his salary is fixed at
p12,000 a year, that is to say, he should receive P1,000 a month or P500 every payday, — fifteenth
and end of month. In the present case, the amount collected by the Collector of Internal Revenue on
said salary is P1,744.45 for one year. Divided by twelve (months) we shall have P145.37 a month.
And further dividing it by two paydays will bring it down to P72.685, which is the income tax deducted
form the collected on his salary each half month. So, if Justice Endencia's salary as a judicial officer
were not exempt from payment of the income tax, instead of receiving P500 every payday, he would
be actually receiving P427.31 only, and instead of receiving P12,000 a year, he would be receiving
but P10,255.55. Is it not therefor clear that every payday, his salary is actually decreased by P72.685
and every year is decreased by P1,744.45?

Reading the discussion in the lower House in connection with House Bill No. 1127, which became
Republic Act No. 590, it would seem that one of the main reasons behind the enactment of the law
was the feeling among certain legislators that members of the Supreme Court should not enjoy any
exemption and that as citizens, out of patriotism and love for their country, they should pay income
tax on their salaries. It might be stated in this connection that the exemption is not enjoyed by the
members of the Supreme Court alone but also by all judicial officers including Justices of the Court of
Appeals and judges of inferior courts. The exemption also extends to other constitutional officers, like
the President of the Republic, the Auditor General, the members of the Commission on Elections, and
possibly members of the Board of Tax Appeals, commissioners of the Public Service Commission,
and judges of the Court of Industrial Relations. Compares to the number of all these officials, that of
the Supreme Court Justices is relatively insignificant. There are more than 990 other judicial officers
enjoying the exemption, including 15 Justices of the Court of Appeals, about 107 Judges of First
Instance, 38 Municipal Judges and about 830 Justices of the Peace. The reason behind the
exemption in the Constitution, as interpreted by the United States Federal Supreme Court and this
Court, is to preserve the independence of the Judiciary, not only of this High Tribunal but of the other
courts, whose present membership number more than 990 judicial officials.

The exemption was not primarily intended to benefit judicial officers, but was grounded on public
policy. As said by Justice Van Devanter of the United States Supreme Court in the case of Evans vs.
Gore (253 U. S., 245):

The primary purpose of the prohibition against diminution was not to benefit the judges, but, like the
clause in respect of tenure, to attract good and competent men to the bench and to promote that
independence of action and judgment which is essential to the maintenance of the guaranties,
limitations and pervading principles of the Constitution and to the administration of justice without
respect to person and with equal concern for the poor and the rich. Such being its purpose, it is to be
construed, not as a private grant, but as a limitation imposed in the public interest; in other words, not
restrictively, but in accord with its spirit and the principle on which it proceeds.

Having in mind the limited number of judicial officers in the Philippines enjoying this exemption,
especially when the great bulk thereof are justices of the peace, many of them receiving as low as
P200 a month, and considering further the other exemptions allowed by the income tax law, such as
P3,000 for a married person and P600 for each dependent, the amount of national revenue to be
derived from income tax on the salaries of judicial officers, were if not for the constitutional exemption,
could not be large or substantial. But even if it were otherwise, it should not affect, much less
outweigh the purpose and the considerations that prompted the establishment of the constitutional
exemption. In the same case of Evans vs. Gore, supra, the Federal Supreme Court declared "that
they (fathers of the Constitution) regarded the independence of the judges as far as greater
importance than any revenue that could come from taxing their salaries.

When a judicial officer assumed office, he does not exactly ask for exemption from payment of
income tax on his salary, as a privilege . It is already attached to his office, provided and secured by
the fundamental law, not primarily for his benefit, but based on public interest, to secure and preserve
his independence of judicial thought and action. When we come to the members of the Supreme
Court, this excemption to them is relatively of short duration. Because of the limited membership in
this High Tribunal, eleven, and due to the high standards of experience, practice and training
required, one generally enters its portals and comes to join its membership quite late in life, on the
aver-age, around his sixtieth year, and being required to retire at seventy, assuming that he does not
die or become incapacitated earlier, naturally he is not in a position to receive the benefit of
exemption for long. It is rather to the justices of the peace that the exemption can give more benefit.
They are relatively more numerous, and because of the meager salary they receive, they can less
afford to pay the income tax on it and its diminution by the amount of the income tax if paid would be
real, substantial and onerous.

Considering exemption in the abstract, there is nothing unusual or abhorrent in it, as long as it is
based on public policy or public interest. While all other citizens are subject to arrest when charged
with the commission of a crime, members of the Senate and House of Representatives except in
cases of treason, felony and breach of the peace are exempt from arrest, during their attendance in
the session of the Legislature; and while all other citizens are generally liable for any speech, remark
or statement, oral or written, tending to cause the dishonor, discredit or contempt of a natural or
juridical person or to blacken the memory of one who is dead, Senators and Congressmen in making
such statements during their sessions are extended immunity and exemption.

And as to tax exemption, there are not a few citizens who enjoy this exemption. Persons, natural and
juridical, are exempt from taxes on their lands, buildings and improvements thereon when used
exclusively for educational purposes, even if they derive income therefrom. (Art. VI, Sec. 22 [3].)
Holders of government bonds are exempted from the payment of taxes on the income or interest they
receive therefrom (sec. 29 (b) [4], National Internal Revenue Code as amended by Republic Act No.
566). Payments or income received by any person residing in the Philippines under the laws of the
United States administered by the United States Veterans Administration are exempt from taxation.
(Republic Act No. 360). Funds received by officers and enlisted men of the Philippine Army who
served in the Armed Forces of the United States, allowances earned by virtue of such services
corresponding to the taxable years 1942 to 1945, inclusive, are exempted from income tax. (Republic
Act No. 210). The payment of wages and allowances of officers and enlisted men of the Army Forces
of the Philippines sent to Korea are also exempted from taxation. (Republic Act No. 35). In other
words, for reasons of public policy and public interest, a citizen may justifiably by constitutional
provision or statute be exempted from his ordinary obligation of paying taxes on his income. Under
the same public policy and perhaps for the same it not higher considerations, the framers of the
Constitution deemed it wise and necessary to exempt judicial officers from paying taxes on their
salaries so as not to decrease their compensation, thereby insuring the independence of the
Judiciary.

In conclusion we reiterate the doctrine laid down in the case of Perfecto vs. Meer, supra, to the effect
that the collection of income tax on the salary of a judicial officer is a diminution thereof and so
violates the Constitution. We further hold that the interpretation and application of the Constitution
and of statutes is within the exclusive province and jurisdiction of the Judicial department, and that in
enacting a law, the Legislature may not legally provide therein that it be interpreted in such a way that
it may not violate a Constitutional prohibition, thereby tying the hands of the courts in their task of
later interpreting said statute, specially when the interpretation sought and provided in said statute
runs counter to a previous interpretation already given in a case by the highest court of the land.

In the views of the foregoing considerations, the decision appealed from is hereby affirmed, with no
pronouncement as to costs.

Pablo, Bengzon, Padilla, Tuason, Reyes, and Labrador, JJ., concur

8. G.R. No. 78780               July 23, 1987

DAVID G. NITAFAN, WENCESLAO M. POLO, and MAXIMO A. SAVELLANO, JR., petitioners, vs.

COMMISSIONER OF INTERNAL REVENUE and THE FINANCIAL OFFICER, SUPREME COURT
OF THE PHILIPPINES, respondents.

RESOLUTION

MELENCIO-HERRERA, J.:

Petitioners, the duly appointed and qualified Judges presiding over Branches 52, 19 and 53,
respectively, of the Regional Trial Court, National Capital Judicial Region, all with stations in Manila,
seek to prohibit and/or perpetually enjoin respondents, the Commissioner of Internal Revenue and
the Financial Officer of the Supreme Court, from making any deduction of withholding taxes from their
salaries.

In a nutshell, they submit that "any tax withheld from their emoluments or compensation as judicial
officers constitutes a decrease or diminution of their salaries, contrary to the provision of Section 10,
Article VIII of the 1987 Constitution mandating that "(d)uring their continuance in office, their salary
shall not be decreased," even as it is anathema to the Ideal of an independent judiciary envisioned in
and by said Constitution."

It may be pointed out that, early on, the Court had dealt with the matter administratively in response
to representations that the Court direct its Finance Officer to discontinue the withholding of taxes from
salaries of members of the Bench. Thus, on June 4, 1987, the Court en banc had reaffirmed the Chief
Justice's directive as follows:

RE: Question of exemption from income taxation. — The Court REAFFIRMED the Chief Justice's
previous and standing directive to the Fiscal Management and Budget Office of this Court to continue
with the deduction of the withholding taxes from the salaries of the Justices of the Supreme Court as
well as from the salaries of all other members of the judiciary.

That should have resolved the question. However, with the filing of this petition, the Court has
deemed it best to settle the legal issue raised through this judicial pronouncement. As will be shown
hereinafter, the clear intent of the Constitutional Commission was to delete the proposed express
grant of exemption from payment of income tax to members of the Judiciary, so as to "give substance
to equality among the three branches of Government" in the words of Commissioner Rigos. In the
course of the deliberations, it was further expressly made clear, specially with regard to
Commissioner Joaquin F. Bernas' accepted amendment to the amendment of Commissioner Rigos,
that the salaries of members of the Judiciary would be subject to the general income tax applied to all
taxpayers.

This intent was somehow and inadvertently not clearly set forth in the final text of the Constitution as
approved and ratified in February, 1987 (infra, pp. 7-8). Although the intent may have been obscured
by the failure to include in the General Provisions a proscription against exemption of any public
officer or employee, including constitutional officers, from payment of income tax, the Court since
then has authorized the continuation of the deduction of the withholding tax from the salaries of the
members of the Supreme Court, as well as from the salaries of all other members of the Judiciary.
The Court hereby makes of record that it had then discarded the ruling in Perfecto vs. Meer and
Endencia vs. David, infra, that declared the salaries of members of the Judiciary exempt from
payment of the income tax and considered such payment as a diminution of their salaries during their
continuance in office. The Court hereby reiterates that the salaries of Justices and Judges are
properly subject to a general income tax law applicable to all income earners and that the payment of
such income tax by Justices and Judges does not fall within the constitutional protection against
decrease of their salaries during their continuance in office.

A comparison of the Constitutional provisions involved is called for. The 1935 Constitution provided:

... (The members of the Supreme Court and all judges of inferior courts) shall receive such
compensation as may be fixed by law, which shall not be diminished during their continuance in office
... 1 (Emphasis supplied).

Under the 1973 Constitution, the same provision read:

The salary of the Chief Justice and of the Associate Justices of the Supreme court, and of judges of
inferior courts shall be fixed by law, which shall not be decreased during their continuance in
office. ... 2 (Emphasis ours).

And in respect of income tax exemption, another provision in the same 1973 Constitution specifically
stipulated:

No salary or any form of emolument of any public officer or employee, including constitutional officers,
shall be exempt from payment of income tax. 3

The provision in the 1987 Constitution, which petitioners rely on, reads:

The salary of the Chief Justice and of the Associate Justices of the Supreme Court, and of judges of
lower courts shall be fixed by law. During their continuance in office, their salary shall not
be decreased.  4(Emphasis supplied).

The 1987 Constitution does not contain a provision similar to Section 6, Article XV of the 1973
Constitution, for which reason, petitioners claim that the intent of the framers is to revert to the original
concept of "non-diminution "of salaries of judicial officers.
The deliberations of the 1986 Constitutional Commission relevant to Section 10, Article VIII, negate
such contention.

The draft proposal of Section 10, Article VIII, of the 1987 Constitution read:

Section 13. The salary of the Chief Justice and the Associate Justices of the Supreme Court and of
judges of the lower courts shall be fixed by law. During their continuance in office, their salary shall
not be diminished nor subjected to income tax. Until the National Assembly shall provide otherwise,
the Chief Justice shall receive an annual salary of _____________ and each Associate Justice
______________ pesos. 5(Emphasis ours)

During the debates on the draft Article (Committee Report No. 18), two Commissioners presented
their objections to the provision on tax exemption, thus:

MS. AQUINO. Finally, on the matter of exemption from tax of the salary of justices, does this not
violate the principle of the uniformity of taxation and the principle of equal protection of the law? After
all, tax is levied not on the salary but on the combined income, such that when the judge receives a
salary and it is comingled with the other income, we tax the income, not the salary. Why do we have
to give special privileges to the salary of justices?

MR. CONCEPCION. It is the independence of the judiciary. We prohibit the increase or decrease of
their salary during their term. This is an indirect way of decreasing their salary and affecting the
independence of the judges.

MS. AQUINO. I appreciate that to be in the nature of a clause to respect tenure, but the special
privilege on taxation might, in effect, be a violation of the principle of uniformity in taxation and the
equal protection clause. 6

x x x           x x x          x x x MR. OPLE. x x x

Of course, we share deeply the concern expressed by the sponsor, Commissioner Roberto
Concepcion, for whom we have the highest respect, to surround the Supreme Court and the judicial
system as a whole with the whole armor of defense against the executive and legislative invasion of
their independence. But in so doing, some of the citizens outside, especially the humble government
employees, might say that in trying to erect a bastion of justice, we might end up with the fortress of
privileges, an island of extra territoriality under the Republic of the Philippines, because a good
number of powers and rights accorded to the Judiciary here may not be enjoyed in the remotest
degree by other employees of the government.

An example is the exception from income tax, which is a kind of economic immunity, which is, of
course, denied to the entire executive department and the legislative. 7

And during the period of amendments on the draft Article, on July 14, 1986, Commissioner Cirilo A.
Rigos proposed that the term "diminished" be changed to "decreased" and that the words "nor
subjected to income tax" be deleted so as to "give substance to equality among the three branches in
the government.

Commissioner Florenz D. Regalado, on behalf of the Committee on the Judiciary, defended the
original draft and referred to the ruling of this Court in Perfecto vs. Meer  8 that "the independence of
the judges is of far greater importance than any revenue that could come from taxing their salaries."
Commissioner Rigos then moved that the matter be put to a vote. Commissioner Joaquin G. Bernas
stood up "in support of an amendment to the amendment with the request for a modification of the
amendment," as follows:

FR. BERNAS. Yes. I am going to propose an amendment to the amendment saying that it is not
enough to drop the phrase "shall not be subjected to income tax," because if that is all that the
Gentleman will do, then he will just fall back on the decision in Perfecto vs. Meer and in Dencia vs.
David [should be Endencia and Jugo vs. David, etc., 93 Phil. 696[ which excludes them from income
tax, but rather I would propose that the statement will read: "During their continuance in office, their
salary shall not be diminished BUT MAY BE SUBJECT TO GENERAL INCOME TAX."IN support of
this position, I would say that the argument seems to be that the justice and judges should not be
subjected to income tax because they already gave up the income from their practice. That is true
also of Cabinet members and all other employees. And I know right now, for instance, there are many
people who have accepted employment in the government involving a reduction of income and yet
are still subject to income tax. So, they are not the only citizens whose income is reduced by
accepting service in government.

Commissioner Rigos accepted the proposed amendment to the amendment. Commissioner Rustico
F. de los Reyes, Jr. then moved for a suspension of the session. Upon resumption, Commissioner
Bernas announced:

During the suspension, we came to an understanding with the original proponent, Commissioner
Rigos, that his amendment on page 6,. line 4 would read: "During their continuance in office, their
salary shall not be DECREASED."But this is on the understanding that there will be a provision in the
Constitution similar to Section 6 of Article XV, the General Provisions of the 1973 Constitution, which
says:

No salary or any form of emolument of any public officer or employee, including constitutional officers,
shall be exempt from payment of income tax.

So, we put a period (.) after "DECREASED" on the understanding that the salary of justices is subject
to tax.

When queried about the specific Article in the General Provisions on non-exemption from tax of
salaries of public officers, Commissioner Bernas replied:

FR BERNAS. Yes, I do not know if such an article will be found in the General Provisions. But at any
rate, when we put a period (.) after "DECREASED," it is on the understanding that the doctrine in
Perfecto vs. Meer and Dencia vs. David will not apply anymore.

The amendment to the original draft, as discussed and understood, was finally approved without
objection.

THE PRESIDING OFFICER (Mr. Bengzon). The understanding, therefore, is that there will be a
provision under the Article on General Provisions. Could Commissioner Rosario Braid kindly take
note that the salaries of officials of the government including constitutional officers shall not be
exempt from income tax? The amendment proposed herein and accepted by the Committee now
reads as follows: "During their continuance in office, their salary shall not be DECREASED"; and the
phrase "nor subjected to income tax" is deleted.9

The debates, interpellations and opinions expressed regarding the constitutional provision in question
until it was finally approved by the Commission disclosed that the true intent of the framers of the
1987 Constitution, in adopting it, was to make the salaries of members of the Judiciary taxable. The
ascertainment of that intent is but in keeping with the fundamental principle of constitutional
construction that the intent of the framers of the organic law and of the people adopting it should be
given effect.10 The primary task in constitutional construction is to ascertain and thereafter assure the
realization of the purpose of the framers and of the people in the adoption of the Constitution. 11it may
also be safely assumed that the people in ratifying the Constitution were guided mainly by the
explanation offered by the framers.12 1avvphi1
Besides, construing Section 10, Articles VIII, of the 1987 Constitution, which, for clarity, is again
reproduced hereunder:

The salary of the Chief Justice and of the Associate Justices of the Supreme Court, and of judges of
lower courts shall be fixed by law. During their continuance in office, their salary shall not
be decreased. (Emphasis supplied).

it is plain that the Constitution authorizes Congress to pass a law fixing another rate of compensation
of Justices and Judges but such rate must be higher than that which they are receiving at the time of
enactment, or if lower, it would be applicable only to those appointed after its approval. It would be a
strained construction to read into the provision an exemption from taxation in the light of the
discussion in the Constitutional Commission.

With the foregoing interpretation, and as stated heretofore, the ruling that "the imposition of income
tax upon the salary of judges is a dimunition thereof, and so violates the Constitution" in Perfecto vs.
Meer,13 as affirmed in Endencia vs. David  14 must be declared discarded. The framers of the
fundamental law, as the alter ego of the people, have expressed in clear and unmistakable terms the
meaning and import of Section 10, Article VIII, of the 1987 Constitution that they have adopted

Stated otherwise, we accord due respect to the intent of the people, through the discussions and
deliberations of their representatives, in the spirit that all citizens should bear their aliquot part of the
cost of maintaining the government and should share the burden of general income taxation
equitably.

WHEREFORE, the instant petition for Prohibition is hereby dismissed.

Teehankee, C.J., Fernan, Narvasa, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin,
Sarmiento and Cortes, JJ., concur.
Yap, J., is on leave.

9. G.R. No. L-44143 August 31, 1988

THE PEOPLE OF THE PHILIPPINES, plaintiff, vs.EUSEBIO NAZARIO, accused-appellant.

SARMIENTO, J.:

The petitioner was charged with violation of certain municipal ordinances of the municipal council of
Pagbilao, in Quezon province. By way of confession and avoidance, the petitioner would admit having
committed the acts charged but would claim that the ordinances are unconstitutional, or, assuming
their constitutionality, that they do not apply to him in any event.

The facts are not disputed:

This defendant is charged of the crime of Violation of Municipal Ordinance in an information filed by
the provincial Fiscal, dated October 9, 1968, as follows:
That in the years 1964, 1965 and 1966, in the Municipality of Pagbilao, Province of Quezon,
Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, being then
the owner and operator of a fishpond situated in the barrio of Pinagbayanan, of said municipality, did
then and there willfully, unlawfully and feloniously refuse and fail to pay the municipal taxes in the
total amount of THREE HUNDRED SIXTY TWO PESOS AND SIXTY TWO CENTAVOS (P362.62),
required of him as fishpond operator as provided for under Ordinance No. 4, series of 1955, as
amended, inspite of repeated demands made upon him by the Municipal Treasurer of Pagbilao,
Quezon, to pay the same.

Contrary to law.

For the prosecution the following witnesses testified in substance as follows;

MIGUEL FRANCIA, 39 years of age, married, farmer and resident of Lopez, Quezon —

In 1962 to 1967, I resided at Pinagbayanan, Pagbilao, Quezon. I know the accused as I worked in his
fishpond in 1962 to 1964. The fishpond of Nazario is at Pinagbayanan, Pagbilao, Quezon. I worked in
the clearing of the fishpond, the construction of the dikes and the catching of fish.

On cross-examination, this witness declared:

I worked with the accused up to March 1964.

NICOLAS MACAROLAY, 65 years of age, married, copra maker and resident of Pinagbayanan,
Pagbilao, Quezon —

I resided at Pinagbayanan, Pagbilao, Quezon since 1959 up to the present. I know the accused since
1959 when he opened a fishpond at Pinagbayanan, Pagbilao, Quezon. He still operates the fishpond
up to the present and I know this fact as I am the barrio captain of Pinagbayanan.

On cross-examination, this witness declared:

I came to know the accused when he first operated his fishpond since 1959.

On re-direct examination, this witness declared:

I was present during the catching of fish in 1967 and the accused was there.
On re-cross examination, this witness declared:

I do not remember the month in 1962 when the accused caught fish.

RODOLFO R. ALVAREZ, 45 years old, municipal treasurer of Pagbilao, Quezon, married —

As Municipal Treasurer I am in charge of tax collection. I know the accused even before I was
Municipal Treasurer of Pagbilao. I have written the accused a letter asking him to pay his taxes
(Exhibit B). Said letter was received by the accused as per registry return receipt, Exhibit B-1. The
letter demanded for payment of P362.00, more or less, by way of taxes which he did not pay up to the
present. The former Treasurer, Ceferino Caparros, also wrote a letter of demand to the accused
(Exhibit C). On June 28, 1967, I sent a letter to the Fishery Commission (Exhibit D), requesting
information if accused paid taxes with that office. The Commission sent me a certificate (Exhibits D-1,
D-2 & D-3). The accused had a fishpond lease agreement. The taxes unpaid were for the years 1964,
1965 and 1966.

On cross-examination, this witness declared:

I have demanded the taxes for 38.10 hectares.

On question of the court, this witness declared:

What I was collecting from the accused is the fee on fishpond operation, not rental.

The prosecution presented as part of their evidence Exhibits A, A-1, A-2, B, B-2, C, D, D-1, D-2, D-3,
E, F, F-1 and the same were admitted by the court, except Exhibits D, D-1, D-2 and D-3 which were
not admitted for being immaterial.

For the defense the accused EUSEBIO NAZARIO, 48 years of age, married, owner and general
manager of the ZIP Manufacturing Enterprises and resident of 4801 Old Sta. Mesa, Sampaloc,
Manila, declared in substance as follows:

I have lived in Sta. Mesa, Manila, since 1949. I buy my Residence Certificates at Manila or at San
Juan. In 1964, 1965 and 1966, I was living in Manila and my business is in Manila and my family lives
at Manila. I never resided at Pagbilao, Quezon. I do not own a house at Pagbilao. I am a lessee of a
fishpond located at Pagbilao, Quezon, and I have a lease agreement to that effect with the Philippine
Fisheries Commission marked as Exhibit 1. In 1964, 1965 and 1966, the contract of lease, Exhibit 1,
was still existing and enforceable. The Ordinances Nos. 4, 15 and 12, series of 1955, 1965 and 1966,
were translated into English by the Institute of National Language to better understand the
ordinances. There were exchange of letters between me and the Municipal Treasurer of Pagbilao
regarding the payment of the taxes on my leased fishpond situated at Pagbilao. There was a letter of
demand for the payment of the taxes by the treasurer (Exhibit 3) which I received by mail at my
residence at Manila. I answered the letter of demand, Exhibit 3, with Exhibit 3-A. I requested an
inspection of my fishpond to determine its condition as it was not then in operation. The Municipal
Treasurer Alvarez went there once in 1967 and he found that it was destroyed by the typhoon and
there were pictures taken marked as Exhibits 4, 4-A, 4-B and 4C. I received another letter of demand,
Exhibit 5, and I answered the same (Exhibit 5-A). I copied my reference quoted in Exhibit 5-A from
Administrative Order No. 6, Exhibit 6. I received another letter of demand from Tomas Ornedo, Acting
Municipal Treasurer of Pagbilao, dated February 16, 1966, Exhibit 7, and I answered the same with
the letter marked as Exhibit 7-A, dated February 26, 1966. I received another letter of demand from
Treasurer Alvarez of Pagbilao, Exhibit 8, and I answered the same (Exhibit 8-A). In 1964, I went to
Treasurer Caparros to ask for an application for license tax and he said none and he told me just to
pay my taxes. I did not pay because up to now I do not know whether I am covered by the Ordinance
or not. The letters of demand asked me to pay different amounts for taxes for the fishpond. Because
under Sec. 2309 of the Revised Administrative Code, municipal taxes lapse if not paid and they are
collecting on a lapsed ordinance. Because under the Tax Code, fishermen are exempted from
percentage tax and privilege tax. There is no law empowering the municipality to pass ordinance
taxing fishpond operators.

The defense presented as part of their evidence Exhibits 1, 2, 3, 3-A, 4, 4-B, 4-B, 4-C, 5, 5-A, 6, 6-A,
6-B, 6-C, 7, 7-A, 8 and 8-A and the same were admitted by the court.

From their evidence the prosecution would want to show to the court that the accused, as lessee or
operator of a fishpond in the municipality of Pagbilao, refused, and still refuses, to pay the municipal
taxes for the years 1964, 1965 and 1966, in violation of Municipal Ordinance No. 4, series of 1955, as
amended by Municipal Ordinance No. 15, series of 1965, and finally amended by Municipal
Ordinance No. 12, series of 1966.

On the other hand, the accused, by his evidence, tends to show to the court that the taxes sought to
be collected have already lapsed and that there is no law empowering municipalities to pass
ordinances taxing fishpond operators. The defense, by their evidence, tried to show further that, as
lessee of a forest land to be converted into a fishpond, he is not covered by said municipal
ordinances; and finally that the accused should not be taxed as fishpond operator because there is no
fishpond yet being operated by him, considering that the supposed fishpond was under construction
during the period covered by the taxes sought to be collected.

Finally, the defendant claims that the ordinance in question is ultra vires as it is outside of the power
of the municipal council of Pagbilao, Quezon, to enact; and that the defendant claims that the
ordinance in question is ambiguous and uncertain.

There is no question from the evidences presented that the accused is a lessee of a parcel of forest
land, with an area of 27.1998 hectares, for fishpond purposes, under Fishpond Lease Agreement No.
1066, entered into by the accused and the government, through the Secretary of Agriculture and
Natural Resources on August 21, 1959.

There is no question from the evidences presented that the 27.1998 hectares of land leased by the
defendant from the government for fishpond purposes was actually converted into fishpond and used
as such, and therefore defendant is an operator of a fishpond within the purview of the ordinance in
question. 1
The trial Court 2 returned a verdict of guilty and disposed as follows:

VIEWED IN THE LIGHT OF ALL THE FOREGOING, the Court finds the accused guilty beyond
reasonable doubt of the crime of violation of Municipal Ordinance No. 4, series of 1955, as amended
by Ordinance No. 15, series of 1965 and further amended by Ordinance No. 12, series of 1966, of the
Municipal Council of Pagbilao, Quezon; and hereby sentences him to pay a fine of P50.00, with
subsidiary imprisonment in case of insolvency at the rate of P8.00 a day, and to pay the costs of this
proceeding.

SO ORDERED.

In this appeal, certified to this Court by the Court of Appeals, the petitioner alleges that:

I.THE LOWER COURT ERRED IN NOT DECLARING THAT ORDINANCE NO. 4, SERIES OF 1955,
AS AMENDED BY ORDINANCE NO. 15, SERIES OF 1965, AND AS FURTHER AMENDED BY
ORDINANCE NO. 12, SERIES OF 1966, OF THE MUNICIPALITY OF PAGBILAO, QUEZON, IS
NULL AND VOID FOR BEING AMBIGUOUS AND UNCERTAIN.

II.THE LOWER COURT ERRED IN NOT HOLDING THAT THE ORDINANCE IN QUESTION, AS
AMENDED, IS UNCONSTITUTIONAL FOR BEING EX POST FACTO.

III.THE LOWER COURT ERRED IN NOT HOLDING THAT THE ORDINANCE IN QUESTION
COVERS ONLY OWNERS OR OVERSEER OF FISHPONDS OF PRIVATE OWNERSHIP AND NOT
TO LESSEES OF PUBLIC LANDS.

IV.THE LOWER COURT ERRED IN NOT FINDING THAT THE QUESTIONED ORDINANCE, EVEN
IF VALID, CANNOT BE ENFORCED BEYOND THE TERRITORIAL LIMITS OF PAGBILAO AND
DOES NOT COVER NON-

RESIDENTS. 4

The ordinances in question are Ordinance No. 4, series of 1955, Ordinance No. 15, series of 1965,
and Ordinance No. 12, series of 1966, of the Municipal Council of Pagbilao. Insofar as pertinent to
this appeal, the salient portions thereof are hereinbelow quoted:

Section 1. Any owner or manager of fishponds in places within the territorial limits of Pagbilao,
Quezon, shall pay a municipal tax in the amount of P3.00 per hectare of fishpond on part thereof per
annum. 5

xxx xxx xxx

Sec. l (a). For the convenience of those who have or owners or managers of fishponds within the
territorial limits of this municipality, the date of payment of municipal tax relative thereto, shall begin
after the lapse of three (3) years starting from the date said fishpond is approved by the Bureau of
Fisheries. 6

xxx xxx xxx

Section 1. Any owner or manager of fishponds in places within the territorial limits of Pagbilao shall
pay a municipal tax in the amount of P3.00 per hectare or any fraction thereof per annum beginning
and taking effect from the year 1964, if the fishpond started operating before the year 1964. 7

The first objection refers to the ordinances being allegedly "ambiguous and uncertain." 8 The
petitioner contends that being a mere lessee of the fishpond, he is not covered since the said
ordinances speak of "owner or manager." He likewise maintains that they are vague insofar as they
reckon the date of payment: Whereas Ordinance No. 4 provides that parties shall commence
payment "after the lapse of three (3) years starting from the date said fishpond is approved by the
Bureau of Fisheries." 9 Ordinance No. 12 states that liability for the tax accrues "beginning and taking
effect from the year 1964 if the fishpond started operating before the year 1964." 10

As a rule, a statute or act may be said to be vague when it lacks comprehensible standards that men
"of common intelligence must necessarily guess at its meaning and differ as to its application." 11 It is
repugnant to the Constitution in two respects: (1) it violates due process for failure to accord persons,
especially the parties targetted by it, fair notice of the conduct to avoid; and (2) it leaves law enforcers
unbridled discretion in carrying out its provisions and becomes an arbitrary flexing of the Government
muscle.

But the act must be utterly vague on its face, that is to say, it cannot be clarified by either a saving
clause or by construction. Thus, in Coates v. City of Cincinnati, 12 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." 13 Clearly, the
ordinance imposed no standard at all "because one may never know in advance what 'annoys some
people but does not annoy others.' " 14

Coates highlights what has been referred to as a "perfectly vague" 15 act whose obscurity is evident
on its face. It is to be distinguished, however, from legislation couched in imprecise language — but
which nonetheless specifies a standard though defectively phrased — in which case, it may be
"saved" by proper construction.

It must further be distinguished from statutes that are apparently ambiguous yet fairly applicable to
certain types of activities. In that event, such statutes may not be challenged whenever directed
against such activities. In Parker v. Levy, 16 a prosecution originally under the U.S. Uniform Code of
Military Justice (prohibiting, specifically, "conduct unbecoming an officer and gentleman"), the
defendant, an army officer who had urged his men not to go to Vietnam and called the Special Forces
trained to fight there thieves and murderers, was not allowed to invoke the void for vagueness
doctrine on the premise that accepted military interpretation and practice had provided enough
standards, and consequently, a fair notice that his conduct was impermissible.
It is interesting that in Gonzales v. Commission on Elections, 17 a divided Court sustained an act of
Congress (Republic Act No. 4880 penalizing "the too early nomination of candidates" 18 limiting the
election campaign period, and prohibiting "partisan political activities"), amid challenges of vagueness
and overbreadth on the ground that the law had included an "enumeration of the acts deemed
included in the terms 'election campaign' or 'partisan political activity" 19 that would supply the
standards. "As thus limited, the objection that may be raised as to vagueness has been minimized, if
not totally set at rest." 20 In his opinion, however, Justice Sanchez would stress that the conduct
sought to be prohibited "is not clearly defined at all." 21 "As worded in R.A 4880, prohibited
discussion could cover the entire spectrum of expression relating to candidates and political parties."
22 He was unimpressed with the "restrictions" Fernando's opinion had relied on: " 'Simple
expressions of opinions and thoughts concerning the election' and expression of 'views on current
political problems or issues' leave the reader conjecture, to guesswork, upon the extent of protection
offered, be it as to the nature of the utterance ('simple expressions of opinion and thoughts') or the
subject of the utterance ('current political problems or issues')." 23

The Court likewise had occasion to apply the "balancing-of-interests" test, 24 insofar as the statute's
ban on early nomination of candidates was concerned: "The rational connection between the
prohibition of Section 50-A and its object, the indirect and modest scope of its restriction on the rights
of speech and assembly, and the embracing public interest which Congress has found in the
moderation of partisan political activity, lead us to the conclusion that the statute may stand
consistently with and does not offend the Constitution." 25 In that case, Castro would have the
balance achieved in favor of State authority at the "expense" of individual liberties.

In the United States, which had ample impact on Castro's separate opinion, the balancing test finds a
close kin, referred to as the "less restrictive alternative " 26 doctrine, under which the court searches
for alternatives available to the Government outside of statutory limits, or for "less drastic means" 27
open to the State, that would render the statute unnecessary. In United States v. Robel, 28 legislation
was assailed, banning members of the (American) Communist Party from working in any defense
facility. The U.S. Supreme Court, in nullifying the statute, held that it impaired the right of association,
and that in any case, a screening process was available to the State that would have enabled it to
Identify dangerous elements holding defense positions. 29 In that event, the balance would have
been struck in favor of individual liberties.

It should be noted that it is in free expression cases that the result is usually close. It is said, however,
that the choice of the courts is usually narrowed where the controversy involves say, economic rights,
30 or as in the Levy case, military affairs, in which less precision in analysis is required and in which
the competence of the legislature is presumed.

In no way may the ordinances at bar be said to be tainted with the vice of vagueness. It is
unmistakable from their very provisions that the appellant falls within its coverage. As the actual
operator of the fishponds, he comes within the term " manager." He does not deny the fact that he
financed the construction of the fishponds, introduced fish fries into the fishponds, and had employed
laborers to maintain them. 31 While it appears that it is the National Government which owns them,
32 the Government never shared in the profits they had generated. It is therefore only logical that he
shoulders the burden of tax under the said ordinances.

We agree with the trial court that the ordinances are in the character of revenue measures 33
designed to assist the coffers of the municipality of Pagbilao. And obviously, it cannot be the owner,
the Government, on whom liability should attach, for one thing, upon the ancient principle that the
Government is immune from taxes and for another, since it is not the Government that had been
making money from the venture.

Suffice it to say that as the actual operator of the fishponds in question, and as the recipient of profits
brought about by the business, the appellant is clearly liable for the municipal taxes in question. He
cannot say that he did not have a fair notice of such a liability to make such ordinances vague.

Neither are the said ordinances vague as to dates of payment. There is no merit to the claim that "the
imposition of tax has to depend upon an uncertain date yet to be determined (three years after the
'approval of the fishpond' by the Bureau of Fisheries, and upon an uncertain event (if the fishpond
started operating before 1964), also to be determined by an uncertain individual or individuals." 34
Ordinance No. 15, in making the tax payable "after the lapse of three (3) years starting from the date
said fishpond is approved by the Bureau of Fisheries," 35 is unequivocal about the date of payment,
and its amendment by Ordinance No. 12, reckoning liability thereunder "beginning and taking effect
from the year 1964 if the fishpond started operating before the year 1964 ," 36 does not give rise to
any ambiguity. In either case, the dates of payment have been definitely established. The fact that the
appellant has been allegedly uncertain about the reckoning dates — as far as his liability for the years
1964, 1965, and 1966 is concerned — presents a mere problem in computation, but it does not make
the ordinances vague. In addition, the same would have been at most a difficult piece of legislation,
which is not unfamiliar in this jurisdiction, but hardly a vague law.

As it stands, then, liability for the tax accrues on January 1, 1964 for fishponds in operation prior
thereto (Ordinance No. 12), and for new fishponds, three years after their approval by the Bureau of
Fisheries (Ordinance No. 15). This is so since the amendatory act (Ordinance No. 12) merely granted
amnesty unto old, delinquent fishpond operators. It did not repeal its mother ordinances (Nos. 4 and
15). With respect to new operators, Ordinance No. 15 should still prevail.

To the Court, the ordinances in question set forth enough standards that clarify imagined ambiguities.
While such standards are not apparent from the face thereof, they are visible from the intent of the
said ordinances.

The next inquiry is whether or not they can be said to be ex post facto measures. The appellant
argues that they are: "Amendment No. 12 passed on September 19, 1966, clearly provides that the
payment of the imposed tax shall "beginning and taking effect from the year 1964, if the fishpond
started operating before the year 1964.' In other words, it penalizes acts or events occurring before its
passage, that is to say, 1964 and even prior thereto." 37

The Court finds no merit in this contention. As the Solicitor General notes, "Municipal Ordinance No. 4
was passed on May 14, 1955. 38 Hence, it cannot be said that the amendment (under Ordinance No.
12) is being made to apply retroactively (to 1964) since the reckoning period is 1955 (date of
enactment). Essentially, Ordinances Nos. 12 and 15 are in the nature of curative measures intended
to facilitate and enhance the collection of revenues the originally act, Ordinance No. 4, had
prescribed. 39 Moreover, the act (of non-payment of the tax), had been, since 1955, made
punishable, and it cannot be said that Ordinance No. 12 imposes a retroactive penalty. As we have
noted, it operates to grant amnesty to operators who had been delinquent between 1955 and 1964. It
does not mete out a penalty, much less, a retrospective one.
The appellant assails, finally, the power of the municipal council of Pagbilao to tax "public forest land."
40 In Golden Ribbon Lumber Co., Inc. v. City of Butuan 41 we held that local governments' taxing
power does not extend to forest products or concessions under Republic Act No. 2264, the Local
Autonomy Act then in force. (Republic Act No. 2264 likewise prohibited municipalities from imposing
percentage taxes on sales.)

First of all, the tax in question is not a tax on property, although the rate thereof is based on the area
of fishponds ("P3.00 per hectare" 42). Secondly, fishponds are not forest lands, although we have
held them to the agricultural lands. 43 By definition, "forest" is "a large tract of land covered with a
natural growth of trees and underbush; a large wood." 44 (Accordingly, even if the challenged taxes
were directed on the fishponds, they would not have been taxes on forest products.)

They are, more accurately, privilege taxes on the business of fishpond maintenance. They are not
charged against sales, which would have offended the doctrine enshrined by Golden Ribbon Lumber,
45 but rather on occupation, which is allowed under Republic Act No. 2264. 46 They are what have
been classified as fixed annual taxes and this is obvious from the ordinances themselves.

There is, then, no merit in the last objection.

WHEREFORE, the appeal is DISMISSED. Costs against the appellant.

Fernan, C.J., Narvasa, Gutierrez, Jr., Cruz, Paras, Feliciano, Padilla, Bidin, Cortes, Griño-Aquino and
Medialdea, JJ., concur.

Melencio-Herrera, and Regalado, J., took no part.

Gancayco, J., is on leave.

10. G.R. No. L-26702 October 18, 1979

JUAN AUGUSTO B. PRIMICIAS, plaintiff-appellee, vs.

THE MUNICIPALITY OF URDANETA, PANGASINAN, ET AL., defendants-appellants.

DE CASTRO, J.:

The main issue in this appeal is the validity of Ordinance No. 3, Series of 1964, enacted on March
13,1964 by the Municipal Council of Urdaneta, Pangasinan, which was declared null and void by the
Court of First Instance of Lingayen, Pangasinan, in its decision dated June 29, 1966, the dispositive
portion of which reads as follows:

WHEREFORE, this Court renders decision declaring Ordinance No, 3, Series of 1964, to be null and
void; making the writ of preliminary injunction heretofore issued against the defendant, Felix D.
Soriano definite and permanent; and further restraining the defendants, Amadeo R. Perez, Jr.,
Lorenzo G. Suyat and Estanislao Andrada, from enforcing the said ordinance all throughout
Urdaneta; and ordering the said defendants to return to the plaintiff his drivers (sic) license CIN
017644, a copy of which is Exhibit D-1, and to pay the costs of suit. 1

From the aforecited decision, defendants appealed to this Court. The antecedent facts of this case
are as follows: 2

On February 8, 1965, Juan Augusta B. Primacias plaintiff appellee, was driving his car within the
jurisdiction of Urdaneta when a member of Urdaneta's Municipal Police asked him to stop. He was
told, upon stopping, that he had violated Municipal Ordinance No. 3, Series of 1964, "and more
particularly, for overtaking a truck." The policeman then asked for plaintiff's license which he
surrendered, and a temporary operator's permit was issued to him. This incident took place about 200
meters away from a school building, at Barrio Nancamaliran, Urdaneta.

Thereafter, a criminal complaint was filed in the Municipal Court of Urdaneta against Primicias for
violation of Ordinance No. 3, Series of 1964. Due to the institution of the criminal case, plaintiff
Primicias initiated an action for the annulment of said ordinance with prayer for the issuance of
preliminary injunction for the purpose of restraining defendants Municipality of Urdaneta, Mayor
Perez, Police Chief Suyat, Judge Soriano and Patrolman Andrada from enforcing the ordinance. The
writ was issued and Judge Soriano was enjoined from further proceeding in the criminal case.

After trial, the Court of First Instance rendered the questioned decision holding that the ordinance was
null and void and had been repealed by Republic Act No. 4136, otherwise known as the Land
Transportation and Traffic Code. Now, defendants, appellants herein, allege that the lower court erred
in: 3

1. declaring that Municipal Ordinance No. 3 (Series of 1964) of Urdaneta is null and void;

2. requiring the municipal council of Urdaneta in the enactment of said ordinance to give maximum
allowable speed and to make classification of highways;

3. holding that said ordinance is in conflict with section 35 par. b(4) of Republic Act 4136;

4. requiring that said ordinance be approved by the Land Transportation Commissioner;

5. holding that said ordinance is not clear and definite in its terms;

6. issuing ex-parte a writ of injunction to restrain the proceedings in criminal case no. 3140.

The ordinance in question provides: 4

SECTION 1 - That the following speed limits for vehicular traffic along the National Highway and the
Provincial Roads within the territorial limits of Urdaneta shall be as follows:

a. Thru crowded streets approaching intersections at 'blind corners, passing school zones or thickly
populated areas, duly marked with sign posts, the maximum speed limit allowable shall be 20 kph.

SECTION 2 - That any person or persons caught driving any motor vehicle violating the provisions
of this ordinance shall be fined P10.00 for the first offense; P20.00 for the second offense; and
P30.00 for the third and succeeding offenses, the Municipal Judge shall recommend the cancellation
of the license of the offender to the Motor Vehicle's Office (MVO); or failure to pay the fine imposed,
he shall suffer a subsidiary imprisonment in accordance with law.

Appellants contend that the Ordinance is valid, being "patterned after and based on Section 53, 5 par.
4 of Act No. 3992, as amended (Revised Motor Vehicle Law)." In so arguing, appellants fail to note
that Act No. 3992 has been superseded by Republic Act No. 4136, the Land Transportation and
'Traffic Code, which became effective on June 20, 1964, about three months after the questioned
ordinance was approved by Urdaneta's Municipal Council. The explicit repeal of the aforesaid Act is
embodied in Section 63, Republic Act No. 4136, to wit:
Act Numbered thirty-nine hundred ninety-two (3992) as amended, and all laws, executive orders,
ordinance, resolutions, regulations or paints thereof in conflict with the provisions of this Act are
repealed.

By this express repeal, and the general rule that a later law prevails over an earlier law, 6 appellants
are in error in contending that "a later enactment of the law relating to the same subject matter as that
of an earlier statute is not sufficient to cause an implied repeal of the original law." Pursuant to
Section 63, Republic Act No. 4136, the ordinance at bar is thus placed within the ambit of Republic
Act No. 4136, and not Act No. 3992. The validity of Ordinance No. 3, Series of 1964, must therefore
be determined vis-a-vis Republic Act No. 4136, the "mother statute" so to speak, which was in force
at the time the criminal case was brought against Primicias for the violation of the said ordinance.

An essential requisite for a valid ordinance is, among others, that is "must not contravene . . . the
statute," 7 for it is a "fundamental principle that municipal ordinances are inferior in status and
subordinate to the laws of the state." 8 Following this general rule, whenever there is a conflict
between an ordinance and a statute, the ordinance "must give way. 9

Since the Ordinance is aimed at regulating traffic, Chapter IV Traffic Rules), Article I (Speed Limits
and Keeping to the Right), consisting of sections 35, to 38 of Republic Act No. 4136, particularly
Sections 35, 36, 38 contain the provisions material to its validity. Section 35 (b), Republic Act No.
4136, which took the place of Section 53, par. (4), Act No. 3992, provides restrictions as to speed
thus:

  Passenger cars and Motor trucks and

motorcycle buses

1. On open country roads, with "blind corners" not  80 km. per hour  50 km. per hour
closely bordered by habitation.

2. On through streets or boulevards, clear of traffic, with 40 km. per hour 30 km. per hour
"no blind corners" when so designated.

3. On city and municipal streets, with light traffic, when 30 km. per hour 30 km. per hour
not designated "through streets."

4. Through crowded streets approaching intersection at 20 km. per hour 20 km. per hour
"blind corners," passing school zones, passing other
vehicles which are stationary, or for similar
circumstances.

A look at the aforecited section and Section 1, par. (a) of the Ordinance shows that the latter is more
or less a restatement only of number (4), par. (b), Section 35. As observed by the trial court, the
Ordinance "refers to only one of the four classifications mentioned in paragraph (b), Section 35." 10
limiting the rates of speed for

vehicular traffic along the national highway and The provincial roads within the territorial limits of
Urdaneta to 20 kilometers per hour without regard to whether the road is an open country roads (six),
or through streets or boulevards, or city or municipal streets with light traffic. 11
As also found correctly by the lower court, the Municipal Council of Urdaneta did not make any
classification of its thoroughfares, contrary to the explicit requirement laid down by Section 38,
Republic Act No. 4136, which provides:

Classification of highways. - Public highways shall be properly classified for traffic purposes by the
provincial board or city council having jurisdiction over them, and said provincial board, municipal
board or city council shall provide appropriate signs therefor, subject to the approval of the
Commissioner. It shall be the duty of every provincial, city and municipal secretary to certify to the
Commissioner the names, locations, and limits of all "through streets" designated as such by the
provincial board, municipal board or council.

Under this section, a local legislative body intending to control traffic in public highways 12 is
supposed to classify, first, and then mark them with proper signs, all to be approved by the Land
Transportation Commissioner. To hold that the provisions of Section 38 are mandatory is sanctioned
by a ruling 13 that

statutes which confer upon a public body or officer . . . power to perform acts which concern the
public interests or rights of individuals, are generally, regarded as mandatory although the language
is permissive only since the are construed as imposing duties rather than conferring privileges.

The classifications which must be based on Section 35 are necessary in view of Section 36 which
states that "no provincial, city or municipal authority shall enact or enforce any ordinance or resolution
specifying maximum allowable speeds other than those provided in this Act." In this case, however,
there is no showing that the marking of the streets and areas falling under Section 1, par. (a),
Ordinance No. 3, Series of 1964, was done with the approval of the Land Transportation
Commissioner. Thus, on this very ground alone, the Ordinance becomes invalid. Since it lacks the
requirement imposed by Section 38, the provincial, city, or municipal board or council is enjoined
under Section 62 of the Land Transportation and Traffic Code from "enacting or enforcing any
ordinance or resolution in conflict with the provisions of this Act."

Regarding the contention that the lower court erred in holding that said "Ordinance is not clear and
definite in its terms." We agree with the Court a quo that when the Municipal Council of Urdaneta
used the phrase "vehicular traffic" (Section 1, Ordinance) it "did not distinguish between passenger
cars and motor vehicles and motor trucks and buses." 14 This conclusion is bolstered by the fact that
nowhere in the Ordinance is "vehicular traffic" defined. Considering that this is a regulatory ordinance,
its clearness, definiteness and certainty are all the more important so that "an average man should be
able with due care, after reading it,, to understand and ascertain whether he will incur a penalty for
particular acts or courses of conduct." 15 In comparison, Section 35(b), Republic Act No. 4136 on
which Section 1 of the Ordinance must be based, stated that the rates of speed enumerated therein
refer to motor vehicle, 16 specifying the speed for each kind of vehicle. At the same time, to avoid
vagueness, Art. 11, Section 3 defines what a motor vehicle is and passenger automobiles are.

On the issue of whether a writ of injunction can restrain the proceedings in Criminal Case No. 3140,
the general rule is that "ordinarily, criminal prosecution may not be blocked by court prohibition or
injunction." 17 Exceptions however are allowed in the following instances:

1. for the orderly administration of justice;

2. to prevent the use of the strong arm of the law in an oppressive and vindictive manner;

3. to avoid multiplicity of actions;

4. to afford adequate protection to constitutional rights;

5. in proper cases, because the statute relied upon is unconstitutional or was held invalid. 18

The local statute or ordinance at bar being invalid, the exception just cited obtains in this case.
Hence, the lower court did not err in issuing the writ of injunction against defendants. Moreover,
considering that "our law on municipal corporations is in principle patterned after that of the United
States, " 19 it would not be amiss for Us to adopt in this instance the ruling that to enjoin the
enforcement of a void ordinance, "injunction has frequently been sustained in order to prevent a
multiplicity of prosecutions under it." 20

In view of the foregoing, the appealed decision is hereby affirmed.

SO ORDERED.

Teehankee, Acting C.J., Barredo, Makasiar, Concepcion Jr., Santos, Fernandez, Guerrero, and
Melencio-Herrera, JJ., concur.

Aquino, J., took no part.

Antonio, J., is on leave.

11. G.R. No. L-24670 December 14, 1979

ORTIGAS & CO., LIMITED PARTNERSHIP, plaintiff-appellant, vs.

FEATI BANK AND TRUST CO., defendant-appellee.

SANTOS, J.:

An appeal interposed on June 23, 1965 by plaintiff-appellant, Ortigas & Co., Limited Partnership, from
the decision of the Court of First Instance of Rizal, Branch VI, at Pasig, Hon. Andres Reyes presiding,
which dismissed its complaint in Civil Case No. 7706, entitled, "Ortigas & Company, Limited
Partnership, plaintiff, v. Feati Bank and Trust Company, defendant," for lack of merit.

The following facts — a reproduction of the lower court's findings, which, in turn, are based on a
stipulation of facts entered into by the parties are not disputed. Plaintiff (formerly known as "Ortigas,
Madrigal y Cia") is a limited partnership and defendant Feati Bank and Trust Co., is a corporation duly
organized and existing in accordance with the laws of the Philippines. Plaintiff is engaged in real
estate business, developing and selling lots to the public, particularly the Highway Hills Subdivision
along Epifanio de los Santos Avenue, Mandaluyong, Rizal. 1

On March 4, 1952, plaintiff, as vendor, and Augusto Padilla y Angeles and Natividad Angeles, as
vendees, entered into separate agreements of sale on installments over two parcels of land, known
as Lots Nos. 5 and 6, Block 31, of the Highway Hills Subdivision, situated at Mandaluyong, Rizal. On
July 19, 1962, the said vendees transferred their rights and interests over the aforesaid lots in favor of
one Emma Chavez. Upon completion of payment of the purchase price, the plaintiff executed the
corresponding deeds of sale in favor of Emma Chavez. Both the agreements (of sale on installment)
and the deeds of sale contained the stipulations or restrictions that:

1. The parcel of land subject of this deed of sale shall be used the Buyer exclusively for residential
purposes, and she shall not be entitled to take or remove soil, stones or gravel from it or any other
lots belonging to the Seller.

2. All buildings and other improvements (except the fence) which may be constructed at any time in
said lot must be, (a) of strong materials and properly painted, (b) provided with modern sanitary
installations connected either to the public sewer or to an approved septic tank, and (c) shall not be at
a distance of less than two (2) meters from its boundary lines. 2

The above restrictions were later annotated in TCT Nos. 101509 and 101511 of the Register of
Deeds of Rizal, covering the said lots and issued in the name of Emma Chavez.3

Eventually, defendant-appellee acquired Lots Nos. 5 and 6, with TCT Nos. 101613 and 106092
issued in its name, respectively and the building restrictions were also annotated therein. 4
Defendant-appellee bought Lot No. 5 directly from Emma Chavez, "free from all liens and
encumbrances as stated in Annex 'D', 5 while Lot No. 6 was acquired from Republic Flour Mills
through a "Deed of Exchange," Annex "E". 6 TCT No. 101719 in the name of Republic Flour Mills
likewise contained the same restrictions, although defendant-appellee claims that Republic Flour Mills
purchased the said Lot No. 6 "in good faith. free from all liens and encumbrances," as stated in the
Deed of Sale, Annex "F" 7 between it and Emma Chavez.

Plaintiff-appellant claims that the restrictions annotated on TCT Nos. 101509, 101511, 101719,
101613, and 106092 were imposed as part of its general building scheme designed for the
beautification and development of the Highway Hills Subdivision which forms part of the big landed
estate of plaintiff-appellant where commercial and industrial sites are also designated or established.
8

Defendant-appellee, upon the other hand, maintains that the area along the western part of Epifanio
de los Santos Avenue (EDSA) from Shaw Boulevard to Pasig River, has been declared a commercial
and industrial zone, per Resolution No. 27, dated February 4, 1960 of the Municipal Council of
Mandaluyong, Rizal. 9 It alleges that plaintiff-appellant 'completely sold and transferred to third
persons all lots in said subdivision facing Epifanio de los Santos Avenue" 10 and the subject lots
thereunder were acquired by it "only on July 23, 1962 or more than two (2) years after the area ... had
been declared a commercial and industrial zone ... 11
On or about May 5, 1963, defendant-appellee began laying the foundation and commenced the
construction of a building on Lots Nos. 5 and 6, to be devoted to banking purposes, but which
defendant-appellee claims could also be devoted to, and used exclusively for, residential purposes.
The following day, plaintiff-appellant demanded in writing that defendant-appellee stop the
construction of the commerical building on the said lots. The latter refused to comply with the
demand, contending that the building was being constructed in accordance with the zoning
regulations, defendant-appellee having filed building and planning permit applications with the
Municipality of Mandaluyong, and it had accordingly obtained building and planning permits to
proceed with the construction.12

On the basis of the foregoing facts, Civil Case No. 7706, supra, was submitted in the lower court for
decision. The complaint sought, among other things, the issuance of "a writ of preliminary
injunction ... restraining and enjoining defendant, its agents, assigns, and those acting on its or their
behalf from continuing or completing the construction of a commercial bank building in the
premises ... involved, with the view to commanding the defendant to observe and comply with the
building restrictions annotated in the defendant's transfer certificate of title."

In deciding the said case, the trial court considered, as the fundamental issue, whether or not the
resolution of the Municipal Council of Mandaluyong declaring Lots Nos. 5 and 6, among others, as
part of the commercial and industrial zone of the municipality, prevailed over the building restrictions
imposed by plaintiff-appellant on the lots in question. 13 The records do not show that a writ of
preliminary injunction was issued.

The trial court upheld the defendant-appellee and dismissed the complaint, holding that the subject
restrictions were subordinate to Municipal Resolution No. 27, supra. It predicated its conclusion on
the exercise of police power of the said municipality, and stressed that private interest should "bow
down to general interest and welfare. " In short, it upheld the classification by the Municipal Council of
the area along Epifanio de los Santos Avenue as a commercial and industrial zone, and held that the
same rendered "ineffective and unenforceable" the restrictions in question as against defendant-
appellee.14 The trial court decision further emphasized that it "assumes said resolution to be valid,
considering that there is no issue raised by either of the parties as to whether the same is null and
void. 15

On March 2, 1965, plaintiff-appellant filed a motion for reconsideration of the above decision, 16
which motion was opposed by defendant-appellee on March 17, 1965.17 It averred, among others, in
the motion for reconsideration that defendant- appellee "was duty bound to comply with the conditions
of the contract of sale in its favor, which conditions were duly annotated in the Transfer Certificates of
Title issued in her (Emma Chavez) favor." It also invited the trial court's attention to its claim that the
Municipal Council had (no) power to nullify the contractual obligations assumed by the defendant
corporation." 18

The trial court denied the motion for reconsideration in its order of March 26, 1965. 19

On April 2, 1965 plaintiff-appellant filed its notice of appeal from the decision dismissing the complaint
and from the order of March 26, 1965 denying the motion for reconsideration, its record on appeal,
and a cash appeal bond." 20 On April 14, the appeal was given due course 21 and the records of the
case were elevated directly to this Court, since only questions of law are raised. 22
Plaintiff-appellant alleges in its brief that the trial court erred —

I. When it sustained the view that Resolution No. 27, series of 1960 of the Municipal Council of
Mandaluyong, Rizal declaring Lots Nos. 5 and 6, among others, as part of the commercial and
industrial zone, is valid because it did so in the exercise of its police power; and

II. When it failed to consider whether or not the Municipal Council had the power to nullify the
contractual obligations assumed by defendant-appellee and when it did not make a finding that the
building was erected along the property line, when it should have been erected two meters away from
said property line. 23

The defendant-appellee submitted its counter-assignment of errors. In this connection, We already

had occasion to hold in Relativo v. Castro 24 that "(I)t is not incumbent on the appellee, who occupies
a purely defensive position, and is seeking no affirmative relief, to make assignments of error, "

The only issues to be resolved, therefore, are: (1) whether Resolution No. 27 s-1960 is a valid
exercise of police power; and (2) whether the said Resolution can nullify or supersede the contractual
obligations assumed by defendant-appellee.

1. The contention that the trial court erred in sustaining the validity of Resolution No. 27 as an
exercise of police power is without merit. In the first place, the validity of the said resolution was never
questioned before it. The rule is that the question of law or of fact which may be included in the
appellant's assignment of errors must be those which have been raised in the court below, and are
within the issues framed by the parties. 25 The object of requiring the parties to present all questions
and issues to the lower court before they can be presented to the appellate court is to enable the
lower court to pass thereon, so that the appellate court upon appeal may determine whether or not
such ruling was erroneous. The requirement is in furtherance of justice in that the other party may not
be taken by surprise. 26 The rule against the practice of blowing "hot and cold" by assuming one
position in the trial court and another on appeal will, in the words of Elliot, prevent deception. 27 For it
is well-settled that issues or defenses not raised 28 or properly litigated 29 or pleaded 30 in the Court
below cannot be raised or entertained on appeal.

In this particular case, the validity of the resolution was admitted at least impliedly, in the stipulation of
facts below. when plaintiff-appellant did not dispute the same. The only controversy then as stated by
the trial court was whether or not the resolution of the Municipal Council of Mandaluyong ... which
declared lots Nos. 4 and 5 among others, as a part of the commercial and industrial zone of the
municipality, prevails over the restrictions constituting as encumbrances on the lots in question. 31
Having admitted the validity of the subject resolution below, even if impliedly, plaintiff-appellant
cannot now change its position on appeal.

But, assuming arguendo that it is not yet too late in the day for plaintiff-appellant to raise the issue of
the invalidity of the municipal resolution in question, We are of the opinion that its posture is
unsustainable. Section 3 of R.A. No. 2264, otherwise known as the Local Autonomy Act," 32
empowers a Municipal Council "to adopt zoning and subdivision ordinances or regulations"; 33 for the
municipality. Clearly, the law does not restrict the exercise of the power through an ordinance.
Therefore, granting that Resolution No. 27 is not an ordinance, it certainly is a regulatory measure
within the intendment or ambit of the word "regulation" under the provision. As a matter of fact the
same section declares that the power exists "(A)ny provision of law to the contrary notwithstanding ...
"

An examination of Section 12 of the same law 34 which prescribes the rules for its interpretation
likewise reveals that the implied power of a municipality should be "liberally construed in its favor" and
that "(A)ny fair and reasonable doubt as to the existence of the power should be interpreted in favor
of the local government and it shall be presumed to exist." The same section further mandates that
the general welfare clause be liberally interpreted in case of doubt, so as to give more power to local
governments in promoting the economic conditions, social welfare and material progress of the
people in the community. The only exceptions under Section 12 are existing vested rights arising out
of a contract between "a province, city or municipality on one hand and a third party on the other," in
which case the original terms and provisions of the contract should govern. The exceptions, clearly,
do not apply in the case at bar.

2. With regard to the contention that said resolution cannot nullify the contractual obligations assumed
by the defendant-appellee – referring to the restrictions incorporated in the deeds of sale and later in
the corresponding Transfer Certificates of Title issued to defendant-appellee – it should be stressed,
that while non-impairment of contracts is constitutionally guaranteed, the rule is not absolute, since it
has to be reconciled with the legitimate exercise of police power, i.e., "the power to prescribe
regulations to promote the health, morals, peace, education, good order or safety and general welfare
of the people. 35 Invariably described as "the most essential, insistent, and illimitable of powers" 36
and "in a sense, the greatest and most powerful attribute of government, 37 the exercise of the power
may be judicially inquired into and corrected only if it is capricious, 'whimsical, unjust or unreasonable,
there having been a denial of due process or a violation of any other applicable constitutional
guarantee. 38 As this Court held through Justice Jose P. Bengzon in Philippine Long Distance
Company vs. City of Davao, et al. 39 police power "is elastic and must be responsive to various social
conditions; it is not, confined within narrow circumscriptions of precedents resting on past conditions;
it must follow the legal progress of a democratic way of life." We were even more emphatic in Vda. de
Genuino vs. The Court of Agrarian Relations, et al., 40 when We declared: "We do not see why public
welfare when clashing with the individual right to property should not be made to prevail through the
state's exercise of its police power.

Resolution No. 27, s-1960 declaring the western part of highway 54, now E. de los Santos Avenue
(EDSA, for short) from Shaw Boulevard to the Pasig River as an industrial and commercial zone, was
obviously passed by the Municipal Council of Mandaluyong, Rizal in the exercise of police power to
safeguard or promote the health, safety, peace, good order and general welfare of the people in the
locality, Judicial notice may be taken of the conditions prevailing in the area, especially where lots
Nos. 5 and 6 are located. The lots themselves not only front the highway; industrial and commercial
complexes have flourished about the place. EDSA, a main traffic artery which runs through several
cities and municipalities in the Metro Manila area, supports an endless stream of traffic and the
resulting activity, noise and pollution are hardly conducive to the health, safety or welfare of the
residents in its route. Having been expressly granted the power to adopt zoning and subdivision
ordinances or regulations, the municipality of Mandaluyong, through its Municipal 'council, was
reasonably, if not perfectly, justified under the circumstances, in passing the subject resolution.

The scope of police power keeps expanding as civilization advances, stressed this Court, speaking
thru Justice Laurel in the leading case of Calalang v. Williams et al., 41 Thus-

As was said in the case of Dobbins v. Los Angeles (195 US 223, 238 49 L. ed. 169), 'the right to
exercise the police power is a continuing one, and a business lawful today may in the future, because
of changed situation, the growth of population or other causes, become a menace to the public health
and welfare, and be required to yield to the public good.' And in People v. Pomar (46 Phil. 440), it was
observed that 'advancing civilization is bringing within the scope of police power of the state today
things which were not thought of as being with in such power yesterday. The development of
civilization), the rapidly increasing population, the growth of public opinion, with an increasing desire
on the part of the masses and of the government to look after and care for the interests of the
individuals of the state, have brought within the police power many questions for regulation which
formerly were not so considered. 42 (Emphasis, supplied.)

Thus, the state, in order to promote the general welfare, may interfere with personal liberty, with
property, and with business and occupations. Persons may be subjected to all kinds of restraints and
burdens, in order to secure the general comfort health and prosperity of the state 43 and to this
fundamental aim of our Government, the rights of the individual are subordinated. 44

The need for reconciling the non-impairment clause of the Constitution and the valid exercise of
police power may also be gleaned from Helvering v. Davis 45 wherein Mr. Justice Cardozo, speaking
for the Court, resolved the conflict "between one welfare and another, between particular and general,
thus —

Nor is the concept of the general welfare static. Needs that were narrow or parochial a century ago
may be interwoven in our day with the well-being of the nation What is critical or urgent changes with
the times. 46

The motives behind the passage of the questioned resolution being reasonable, and it being a "
legitimate response to a felt public need," 47 not whimsical or oppressive, the non-impairment of
contracts clause of the Constitution will not bar the municipality's proper exercise of the power. Now
Chief Justice Fernando puts it aptly when he declared: "Police power legislation then is not likely to
succumb to the challenge that thereby contractual rights are rendered nugatory." 48

Furthermore, We restated in Philippine American Life Ins. Co. v. Auditor General49 that laws and
reservation of essential attributes of sovereign power are read into contracts agreed upon by the
parties. Thus —

Not only are existing laws read into contracts in order to fix obligations as between the parties, but the
reservation of essential attributes of sovereign power is also read into contracts as a postulate of the
legal order. The policy of protecting contracts against impairments presupposes the maintenance of a
government by virtue of which contractual relations are worthwhile – a government which retains
adequate authority to secure the peace and good order of society.

Again, We held in Liberation Steamship Co., Inc. v. Court of Industrial Relations, 50 through Justice
J.B.L. Reyes, that ... the law forms part of, and is read into, every contract, unless clearly excluded
therefrom in those cases where such exclusion is allowed." The decision in Maritime Company of the
Philippines v. Reparations Commission, 51 written for the Court by Justice Fernando, now Chief
Justice, restates the rule.

One last observation. Appellant has placed unqualified reliance on American jurisprudence and
authorities 52 to bolster its theory that the municipal resolution in question cannot nullify or supersede
the agreement of the parties embodied in the sales contract, as that, it claims, would impair the
obligation of contracts in violation of the Constitution. Such reliance is misplaced.

In the first place, the views set forth in American decisions and authorities are not per se controlling in
the Philippines, the laws of which must necessarily be construed in accordance with the intention of
its own lawmakers and such intent may be deduced from the language of each law and the context of
other local legislation related thereto. 53 and Burgess, et al v. Magarian, et al., 55 two Of the cases
cited by plaintiff-appellant, lend support to the conclusion reached by the trial court, i.e. that the
municipal resolution supersedes/supervenes over the contractual undertaking between the parties.
Dolan v. Brown, states that "Equity will not, as a rule, enforce a restriction upon the use of property by
injunction where the property has so changed in character and environment as to make it unfit or
unprofitable for use should the restriction be enforced, but will, in such a case, leave the complainant
to whatever remedy he may have at law. 56 (Emphasis supplied.) Hence, the remedy of injunction in
Dolan vs. Brown was denied on the specific holding that "A grantor may lawfully insert in his deed
conditions or restrictions which are not against public policy and do not materially impair the beneficial
enjoyment of the estate. 57 Applying the principle just stated to the present controversy, We can say
that since it is now unprofitable, nay a hazard to the health and comfort, to use Lots Nos. 5 and 6 for
strictly residential purposes, defendants- appellees should be permitted, on the strength of the
resolution promulgated under the police power of the municipality, to use the same for commercial
purposes. In Burgess v. Magarian et al. it was, held that "restrictive covenants running with the land
are binding on all subsequent purchasers ... " However, Section 23 of the zoning ordinance involved
therein contained a proviso expressly declaring that the ordinance was not intended "to interfere with
or abrogate or annul any easements, covenants or other agreement between parties." 58 In the case
at bar, no such proviso is found in the subject resolution.

It is, therefore, clear that even if the subject building restrictions were assumed by the defendant-
appellee as vendee of Lots Nos. 5 and 6, in the corresponding deeds of sale, and later, in Transfer
Certificates of Title Nos. 101613 and 106092, the contractual obligations so assumed cannot prevail
over Resolution No. 27, of the Municipality of Mandaluyong, which has validly exercised its police
power through the said resolution. Accordingly, the building restrictions, which declare Lots Nos. 5
and 6 as residential, cannot be enforced.

IN VIEW OF THE FOREGOING, the decision appealed from, dismissing the complaint, is hereby
AFFIRMED. "without pronouncement as to costs.

SO ORDERED.

Makasiar, Antonio, Concepcion, Jr., Fernandez, Guerrero, De Castro and Melencio-Herrera, JJ.,
concur.

Teehankee * and Aquino,JJ., took no part.

12. G.R. No. L-19190 November 29, 1922

THE PEOPLE OF THE PHILIPPINE ISLANDS, plaintiff-appellee, vs.

VENANCIO CONCEPCION, defendant-appellant.

MALCOLM, J.:

By telegrams and a letter of confirmation to the manager of the Aparri branch of the Philippine
National Bank, Venancio Concepcion, President of the Philippine National Bank, between April 10,
1919, and May 7, 1919, authorized an extension of credit in favor of "Puno y Concepcion, S. en C." in
the amount of P300,000. This special authorization was essential in view of the memorandum order
of President Concepcion dated May 17, 1918, limiting the discretional power of the local manager at
Aparri, Cagayan, to grant loans and discount negotiable documents to P5,000, which, in certain
cases, could be increased to P10,000. Pursuant to this authorization, credit aggregating P300,000,
was granted the firm of "Puno y Concepcion, S. en C.," the only security required consisting of six
demand notes. The notes, together with the interest, were taken up and paid by July 17, 1919.

"Puno y Concepcion, S. en C." was a copartnership capitalized at P100,000. Anacleto Concepcion

contributed P5,000; Clara Vda. de Concepcion, P5,000; Miguel S. Concepcion, P20,000; Clemente
Puno, P20,000; and Rosario San Agustin, "casada con Gral. Venancio Concepcion," P50,000.
Member Miguel S. Concepcion was the administrator of the company.

On the facts recounted, Venancio Concepcion, as President of the Philippine National Bank and as
member of the board of directors of this bank, was charged in the Court of First Instance of Cagayan
with a violation of section 35 of Act No. 2747. He was found guilty by the Honorable Enrique V.
Filamor, Judge of First Instance, and was sentenced to imprisonment for one year and six months, to
pay a fine of P3,000, with subsidiary imprisonment in case of insolvency, and the costs.
Section 35 of Act No. 2747, effective on February 20, 1918, just mentioned, to which reference must
hereafter repeatedly be made, reads as follows: "The National Bank shall not, directly or indirectly,
grant loans to any of the members of the board of directors of the bank nor to agents of the branch
banks." Section 49 of the same Act provides: "Any person who shall violate any of the provisions of
this Act shall be punished by a fine not to exceed ten thousand pesos, or by imprisonment not to
exceed five years, or by both such fine and imprisonment." These two sections were in effect in 1919
when the alleged unlawful acts took place, but were repealed by Act No. 2938, approved on January
30, 1921.

Counsel for the defense assign ten errors as having been committed by the trial court. These errors
they have argued adroitly and exhaustively in their printed brief, and again in oral argument. Attorney-
General Villa-Real, in an exceptionally accurate and comprehensive brief, answers the proposition of
appellant one by one.

The question presented are reduced to their simplest elements in the opinion which follows:

I. Was the granting of a credit of P300,000 to the copartnership "Puno y Concepcion, S. en C." by
Venancio Concepcion, President of the Philippine National Bank, a "loan" within the meaning of
section 35 of Act No. 2747?

Counsel argue that the documents of record do not prove that authority to make a loan was given, but
only show the concession of a credit. In this statement of fact, counsel is correct, for the exhibits in
question speak of a "credito" (credit) and not of a " prestamo" (loan).

The "credit" of an individual means his ability to borrow money by virtue of the confidence or trust
reposed by a lender that he will pay what he may promise. (Donnell vs. Jones [1848], 13 Ala., 490;
Bouvier's Law Dictionary.) A "loan" means the delivery by one party and the receipt by the other party
of a given sum of money, upon an agreement, express or implied, to repay the sum loaned, with or
without interest. (Payne vs. Gardiner [1864], 29 N. Y., 146, 167.) The concession of a "credit"
necessarily involves the granting of "loans" up to the limit of the amount fixed in the "credit,"

II. Was the granting of a credit of P300,000 to the copartnership "Puno y Concepcion, S. en C.," by
Venancio Concepcion, President of the Philippine National Bank, a "loan" or a "discount"?

Counsel argue that while section 35 of Act No. 2747 prohibits the granting of a "loan," it does not
prohibit what is commonly known as a "discount."

In a letter dated August 7, 1916, H. Parker Willis, then President of the National Bank, inquired of the
Insular Auditor whether section 37 of Act No. 2612 was intended to apply to discounts as well as to
loans. The ruling of the Acting Insular Auditor, dated August 11, 1916, was to the effect that said
section referred to loans alone, and placed no restriction upon discount transactions. It becomes
material, therefore, to discover the distinction between a "loan" and a "discount," and to ascertain if
the instant transaction comes under the first or the latter denomination.
Discounts are favored by bankers because of their liquid nature, growing, as they do, out of an actual,
live, transaction. But in its last analysis, to discount a paper is only a mode of loaning money, with,
however, these distinctions: (1) In a discount, interest is deducted in advance, while in a loan, interest
is taken at the expiration of a credit; (2) a discount is always on double-name paper; a loan is
generally on single-name paper.

Conceding, without deciding, that, as ruled by the Insular Auditor, the law covers loans and not
discounts, yet the conclusion is inevitable that the demand notes signed by the firm "Puno y
Concepcion, S. en C." were not discount paper but were mere evidences of indebtedness, because
(1) interest was not deducted from the face of the notes, but was paid when the notes fell due; and (2)
they were single-name and not double-name paper.

The facts of the instant case having relation to this phase of the argument are not essentially different
from the facts in the Binalbagan Estate case. Just as there it was declared that the operations
constituted a loan and not a discount, so should we here lay down the same ruling.

III. Was the granting of a credit of P300,000 to the copartnership, "Puno y Concepcion, S. en C." by
Venancio Concepcion, President of the Philippine National Bank, an "indirect loan" within the
meaning of section 35 of Act No. 2747?

Counsel argue that a loan to the partnership "Puno y Concepcion, S. en C." was not an "indirect
loan." In this connection, it should be recalled that the wife of the defendant held one-half of the
capital of this partnership.

In the interpretation and construction of statutes, the primary rule is to ascertain and give effect to the
intention of the Legislature. In this instance, the purpose of the Legislature is plainly to erect a wall of
safety against temptation for a director of the bank. The prohibition against indirect loans is a
recognition of the familiar maxim that no man may serve two masters — that where personal interest
clashes with fidelity to duty the latter almost always suffers. If, therefore, it is shown that the husband
is financially interested in the success or failure of his wife's business venture, a loan to partnership of
which the wife of a director is a member, falls within the prohibition.

Various provisions of the Civil serve to establish the familiar relationship called a conjugal
partnership. (Articles 1315, 1393, 1401, 1407, 1408, and 1412 can be specially noted.) A loan,
therefore, to a partnership of which the wife of a director of a bank is a member, is an indirect loan to
such director. That it was the intention of the Legislature to prohibit exactly such an occurrence is
shown by the acknowledged fact that in this instance the defendant was tempted to mingle his
personal and family affairs with his official duties, and to permit the loan P300,000 to a partnership of
no established reputation and without asking for collateral security.

In the case of Lester and Wife vs. Howard Bank ([1870], 33 Md., 558; 3 Am. Rep., 211), the Supreme
Court of Maryland said:

What then was the purpose of the law when it declared that no director or officer should borrow of the
bank, and "if any director," etc., "shall be convicted," etc., "of directly or indirectly violating this section
he shall be punished by fine and imprisonment?" We say to protect the stockholders, depositors and
creditors of the bank, against the temptation to which the directors and officers might be exposed,
and the power which as such they must necessarily possess in the control and management of the
bank, and the legislature unwilling to rely upon the implied understanding that in assuming this
relation they would not acquire any interest hostile or adverse to the most exact and faithful discharge
of duty, declared in express terms that they should not borrow, etc., of the bank.

In the case of People vs. Knapp ([1912], 206 N. Y., 373), relied upon in the Binalbagan Estate
decision, it was said:

We are of opinion the statute forbade the loan to his copartnership firm as well as to himself directly.
The loan was made indirectly to him through his firm.

IV. Could Venancio Concepcion, President of the Philippine National Bank, be convicted of a violation
of section 35 of Act No. 2747 in relation with section 49 of the same Act, when these portions of Act
No. 2747 were repealed by Act No. 2938, prior to the finding of the information and the rendition of
the judgment?

As noted along toward the beginning of this opinion, section 49 of Act No. 2747, in relation to section
35 of the same Act, provides a punishment for any person who shall violate any of the provisions of
the Act. It is contended, however, by the appellant, that the repeal of these sections of Act No. 2747
by Act No. 2938 has served to take away the basis for criminal prosecution.

This same question has been previously submitted and has received an answer adverse to such
contention in the cases of United Stated vs. Cuna ([1908], 12 Phil., 241); People vs. Concepcion
([1922], 43 Phil., 653); and Ong Chang Wing and Kwong Fok vs. United States ([1910], 218 U. S.,
272; 40 Phil., 1046). In other words, it has been the holding, and it must again be the holding, that
where an Act of the Legislature which penalizes an offense, such repeals a former Act which
penalized the same offense, such repeal does not have the effect of thereafter depriving the courts of
jurisdiction to try, convict, and sentenced offenders charged with violations of the old law.

V. Was the granting of a credit of P300,000 to the copartnership "Puno y Concepcion, S. en C." by
Venancio Concepcion, President of the Philippine National Bank, in violation of section 35 of Act No.
2747, penalized by this law?

Counsel argue that since the prohibition contained in section 35 of Act No. 2747 is on the bank, and
since section 49 of said Act provides a punishment not on the bank when it violates any provisions of
the law, but on a person violating any provisions of the same, and imposing imprisonment as a part of
the penalty, the prohibition contained in said section 35 is without penal sanction. The answer is that
when the corporation itself is forbidden to do an act, the prohibition extends to the board of directors,
and to each director separately and individually. (People vs. Concepcion, supra.)

VI. Does the alleged good faith of Venancio Concepcion, President of the Philippine National Bank, in
extending the credit of P300,000 to the copartnership "Puno y Concepcion, S. en C." constitute a
legal defense?
Counsel argue that if defendant committed the acts of which he was convicted, it was because he
was misled by rulings coming from the Insular Auditor. It is furthermore stated that since the loans
made to the copartnership "Puno y Concepcion, S. en C." have been paid, no loss has been suffered
by the Philippine National Bank. Neither argument, even if conceded to be true, is conclusive. Under
the statute which the defendant has violated, criminal intent is not necessarily material. The doing of
the inhibited act, inhibited on account of public policy and public interest, constitutes the crime. And,
in this instance, as previously demonstrated, the acts of the President of the Philippine National Bank
do not fall within the purview of the rulings of the Insular Auditor, even conceding that such rulings
have controlling effect.

Morse, in his work, Banks and Banking, section 125, says:

It is fraud for directors to secure by means of their trust, and advantage not common to the other
stockholders. The law will not allow private profit from a trust, and will not listen to any proof of honest
intent.

JUDGMENT

On a review of the evidence of record, with reference to the decision of the trial court, and the errors
assigned by the appellant, and with reference to previous decisions of this court on the same subject,
we are irresistibly led to the conclusion that no reversible error was committed in the trial of this case,
and that the defendant has been proved guilty beyond a reasonable doubt of the crime charged in the
information. The penalty imposed by the trial judge falls within the limits of the punitive provisions of
the law. Judgment is affirmed, with the costs of this instance against the appellant. So ordered.

13. G.R. No. 72873 May 28, 1987

CARLOS ALONZO and CASIMIRA ALONZO, petitioners, vs.

INTERMEDIATE APPELLATE COURT and TECLA PADUA, respondents.

CRUZ, J.:

The question is sometimes asked, in serious inquiry or in curious conjecture, whether we are a court
of law or a court of justice. Do we apply the law even if it is unjust or do we administer justice even
against the law? Thus queried, we do not equivocate. The answer is that we do neither because we
are a court both of law and of justice. We apply the law with justice for that is our mission and
purpose in the scheme of our Republic. This case is an illustration.

Five brothers and sisters inherited in equal pro indiviso shares a parcel of land registered in 'the
name of their deceased parents under OCT No. 10977 of the Registry of Deeds of Tarlac. On March
15, 1963, one of them, Celestino Padua, transferred his undivided share of the herein petitioners for
the sum of P550.00 by way of absolute sale. 2 One year later, on April 22, 1964, Eustaquia Padua,
his sister, sold her own share to the same vendees, in an instrument denominated "Con Pacto de
Retro Sale," for the sum of P 440.00.
By virtue of such agreements, the petitioners occupied, after the said sales, an area corresponding to
two-fifths of the said lot, representing the portions sold to them. The vendees subsequently enclosed
the same with a fence. In 1975, with their consent, their son Eduardo Alonzo and his wife built a semi-
concrete house on a part of the enclosed area.4

On February 25, 1976, Mariano Padua, one of the five coheirs, sought to redeem the area sold to the
spouses Alonzo, but his complaint was dismissed when it appeared that he was an American citizen .
5 On May 27, 1977, however, Tecla Padua, another co-heir, filed her own complaint invoking the
same right of redemption claimed by her brother. 6

The trial court * also dismiss this complaint, now on the ground that the right had lapsed, not having
been exercised within thirty days from notice of the sales in 1963 and 1964. Although there was no
written notice, it was held that actual knowledge of the sales by the co-heirs satisfied the requirement
of the law. In truth, such actual notice as acquired by the co-heirs cannot be plausibly denied. The
other co-heirs, including Tecla Padua, lived on the same lot, which consisted of only 604 square
meters, including the portions sold to the petitioners . 8 Eustaquia herself, who had sold her portion,
was staying in the same house with her sister Tecla, who later claimed redemption petition. 9
Moreover, the petitioners and the private respondents were close friends and neighbors whose
children went to school together. 10

It is highly improbable that the other co-heirs were unaware of the sales and that they thought, as
they alleged, that the area occupied by the petitioners had merely been mortgaged by Celestino and
Eustaquia. In the circumstances just narrated, it was impossible for Tecla not to know that the area
occupied by the petitioners had been purchased by them from the other. co-heirs. Especially
significant was the erection thereon of the permanent semi-concrete structure by the petitioners' son,
which was done without objection on her part or of any of the other co-heirs.

The only real question in this case, therefore, is the correct interpretation and application of the
pertinent law as invoked, interestingly enough, by both the petitioners and the private respondents.
This is Article 1088 of the Civil Code, providing as follows:

Art. 1088. Should any of the heirs sell his hereditary rights to a stranger before the partition, any or
all of the co-heirs may be subrogated to the rights of the purchaser by reimbursing him for the price of
the sale, provided they do so within the period of one month from the time they were notified in writing
of the sale by the vendor.

In reversing the trial court, the respondent court ** declared that the notice required by the said article
was written notice and that actual notice would not suffice as a substitute. Citing the same case of De
Conejero v. Court of Appeals 11 applied by the trial court, the respondent court held that that
decision, interpreting a like rule in Article 1623, stressed the need for written notice although no
particular form was required.

Thus, according to Justice J.B.L. Reyes, who was the ponente of the Court, furnishing the co-heirs
with a copy of the deed of sale of the property subject to redemption would satisfy the requirement for
written notice. "So long, therefore, as the latter (i.e., the redemptioner) is informed in writing of the
sale and the particulars thereof," he declared, "the thirty days for redemption start running. "
In the earlier decision of Butte v. UY, 12 " the Court, speaking through the same learned jurist,
emphasized that the written notice should be given by the vendor and not the vendees, conformably
to a similar requirement under Article 1623, reading as follows:

Art. 1623. The right of legal pre-emption or redemption shall not be exercised except within thirty
days from the notice in writing by the prospective vendor, or by the vendors, as the case may be. The
deed of sale shall not be recorded in the Registry of Property, unless accompanied by an affidavit of
the vendor that he has given written notice thereof to all possible redemptioners.

The right of redemption of co-owners excludes that of the adjoining owners.

As "it is thus apparent that the Philippine legislature in Article 1623 deliberately selected a particular
method of giving notice, and that notice must be deemed exclusive," the Court held that notice given
by the vendees and not the vendor would not toll the running of the 30-day period. The petition before
us appears to be an illustration of the Holmes dictum that "hard cases make bad laws" as the
petitioners obviously cannot argue against the fact that there was really no written notice given by the
vendors to their co-heirs. Strictly applied and interpreted, Article 1088 can lead to only one
conclusion, to wit, that in view of such deficiency, the 30 day period for redemption had not begun to
run, much less expired in 1977.

But as has also been aptly observed, we test a law by its results; and likewise, we may add, by its
purposes. It is a cardinal rule that, in seeking the meaning of the law, the first concern of the judge
should be to discover in its provisions the in tent of the lawmaker. Unquestionably, the law should
never be interpreted in such a way as to cause injustice as this is never within the legislative intent.
An indispensable part of that intent, in fact, for we presume the good motives of the legislature, is to
render justice.

Thus, we interpret and apply the law not independently of but in consonance with justice. Law and
justice are inseparable, and we must keep them so. To be sure, there are some laws that, while
generally valid, may seem arbitrary when applied in a particular case because of its peculiar
circumstances. In such a situation, we are not bound, because only of our nature and functions, to
apply them just the same, in slavish obedience to their language. What we do instead is find a
balance between the word and the will, that justice may be done even as the law is obeyed.

As judges, we are not automatons. We do not and must not unfeelingly apply the law as it is worded,
yielding like robots to the literal command without regard to its cause and consequence. "Courts are
apt to err by sticking too closely to the words of a law," so we are warned, by Justice Holmes again,
"where these words import a policy that goes beyond them." 13 While we admittedly may not
legislate, we nevertheless have the power to interpret the law in such a way as to reflect the will of the
legislature. While we may not read into the law a purpose that is not there, we nevertheless have the
right to read out of it the reason for its enactment. In doing so, we defer not to "the letter that killeth"
but to "the spirit that vivifieth," to give effect to the law maker's will.

The spirit, rather than the letter of a statute determines its construction, hence, a statute must be read
according to its spirit or intent. For what is within the spirit is within the letter but although it is not
within the letter thereof, and that which is within the letter but not within the spirit is not within the
statute. Stated differently, a thing which is within the intent of the lawmaker is as much within the
statute as if within the letter; and a thing which is within the letter of the statute is not within the statute
unless within the intent of the lawmakers. 14

In requiring written notice, Article 1088 seeks to ensure that the redemptioner is properly notified of
the sale and to indicate the date of such notice as the starting time of the 30-day period of
redemption. Considering the shortness of the period, it is really necessary, as a general rule, to
pinpoint the precise date it is supposed to begin, to obviate any problem of alleged delays, sometimes
consisting of only a day or two.The instant case presents no such problem because the right of
redemption was invoked not days but years after the sales were made in 1963 and 1964. The
complaint was filed by Tecla Padua in 1977, thirteen years after the first sale and fourteen years after
the second sale. The delay invoked by the petitioners extends to more than a decade, assuming of
course that there was a valid notice that tolled the running of the period of redemption.

Was there a valid notice? Granting that the law requires the notice to be written, would such notice be
necessary in this case? Assuming there was a valid notice although it was not in writing. would there
be any question that the 30-day period for redemption had expired long before the complaint was filed
in 1977?

In the face of the established facts, we cannot accept the private respondents' pretense that they
were unaware of the sales made by their brother and sister in 1963 and 1964. By requiring written
proof of such notice, we would be closing our eyes to the obvious truth in favor of their palpably false
claim of ignorance, thus exalting the letter of the law over its purpose. The purpose is clear enough:
to make sure that the redemptioners are duly notified. We are satisfied that in this case the other
brothers and sisters were actually informed, although not in writing, of the sales made in 1963 and
1964, and that such notice was sufficient.

Now, when did the 30-day period of redemption begin?

While we do not here declare that this period started from the dates of such sales in 1963 and 1964,
we do say that sometime between those years and 1976, when the first complaint for redemption was
filed, the other co-heirs were actually informed of the sale and that thereafter the 30-day period
started running and ultimately expired. This could have happened any time during the interval of
thirteen years, when none of the co-heirs made a move to redeem the properties sold. By 1977, in
other words, when Tecla Padua filed her complaint, the right of redemption had already been
extinguished because the period for its exercise had already expired.

The following doctrine is also worth noting:

While the general rule is, that to charge a party with laches in the assertion of an alleged right it is
essential that he should have knowledge of the facts upon which he bases his claim, yet if the
circumstances were such as should have induced inquiry, and the means of ascertaining the truth
were readily available upon inquiry, but the party neglects to make it, he will be chargeable with
laches, the same as if he had known the facts. It was the perfectly natural thing for the co-heirs to
wonder why the spouses Alonzo, who were not among them, should enclose a portion of the inherited
lot and build thereon a house of strong materials. This definitely was not the act of a temporary
possessor or a mere mortgagee. This certainly looked like an act of ownership. Yet, given this
unseemly situation, none of the co-heirs saw fit to object or at least inquire, to ascertain the facts,
which were readily available. It took all of thirteen years before one of them chose to claim the right of
redemption, but then it was already too late.

We realize that in arriving at our conclusion today, we are deviating from the strict letter of the law,
which the respondent court understandably applied pursuant to existing jurisprudence. The said court
acted properly as it had no competence to reverse the doctrines laid down by this Court in the above-
cited cases. In fact, and this should be clearly stressed, we ourselves are not abandoning the De
Conejero and Buttle doctrines. What we are doing simply is adopting an exception to the general rule,
in view of the peculiar circumstances of this case. The co-heirs in this case were undeniably informed
of the sales although no notice in writing was given them. And there is no doubt either that the 30-day
period began and ended during the 14 years between the sales in question and the filing of the
complaint for redemption in 1977, without the co-heirs exercising their right of redemption. These are
the justifications for this exception.

More than twenty centuries ago, Justinian defined justice "as the constant and perpetual wish to
render every one his due." 16 That wish continues to motivate this Court when it assesses the facts
and the law in every case brought to it for decision. Justice is always an essential ingredient of its
decisions. Thus when the facts warrants, we interpret the law in a way that will render justice,
presuming that it was the intention of the lawmaker, to begin with, that the law be dispensed with
justice. So we have done in this case.

WHEREFORE, the petition is granted. The decision of the respondent court is REVERSED and that
of the trial court is reinstated, without any pronouncement as to costs. It is so ordered.

14. G.R. No. L-53766 October 30, 1981

MARIA C. RAMOS, petitioner, vs.

COURT OF APPEALS, Judge JESUS R. DE VEGA of the Court of First Instance of Bulacan
Malolos Branch II and the MUNICIPALITY OF HAGONOY Bulacan, respondents.

AQUINO, J.:

This case is about the legality of a municipality's hiring of private counsel to file a suit in its behalf.
The municipality of Hagonoy, Bulacan, through the law firm of Cruz Durian & Academia (now Cruz
Durian Agabin Atienza & Alday), sued in the Court of First Instance of Bulacan Marciano Domingo,
Leonila Guzman, Maria C. Ramos and Consorcio Cruz for the recovery of its 74-hectare fishpond
(Civil Case No. 5095-M).

In paragraph 19 of the complaint it was alleged that the municipality had obligated itself to pay Cruz
Durian & Academia as attorney's fees not less than twenty percent of the amount to be recovered by
the plaintiff (p. 44, Rollo).
The provincial fiscal of Bulacan and the municipal attorney of Hagonoy entered their appearance as
counsel for the municipality with the manifestation that its private counsel would be under the control
and supervision of those officials. Notwithstanding that appearance, Domingo and Maria C. Ramos
(lessee and sublessee of the fishpond) moved to disqualify the Cruz law firm from serving as counsel
of the municipality.

The trial court denied the motion. It found that Angel Cruz, the head of the law firm, volunteered to act
as counsel for the municipality because he desired to serve his native town.

Ramos and Domingo assailed that order by means of certiorari in the Court of Appeals which in a
decision dated February 15, 1979 sustained the trial court (Ramos vs. Judge Jesus R. de Vega, et
al., CA-G.R. No. SP-7728-R). Ramos brought the case to this Court.

We hold that the trial court and the Court of Appeals erred in allowing the Cruz law firm to act as
counsel for the municipality in collaboration with the fiscal and the municipal attorney.

That ruling constitutes a grave abuse of discretion because it is manifestly a transgression of section
1683 of the Revised Administrative Code which provides that "the provincial fiscal shall represent the
province and any municipality or municipal district thereof in any court, except in cases whereof
original jurisdiction is vested in the Supreme Court or in cases where the municipality or municipal
district in question is a party adverse to the provincial government or to some other municipality or
municipal district in the same province. When the interests of a provincial government and of any
political division thereof are opposed, the provincial fiscal shall act on behalf of the province. When
the provincial fiscal is disqualified to serve any municipality or other political subdivision of a province,
a special attorney may be employed by its council.

The legislative intent to prohibit a municipality from employing private counsel in its lawsuits is further
implemented by section 3 of the Local Autonomy Act, Republic Act No. 2264, which provides that the
municipal attorney, as the head of the legal division or office of a municipality, "shall act as legal
counsel of the municipality and perform such duties and exercise such powers as may be assigned to
him by the council" The municipal attorney is paid out of municipal funds (Sec. 4, Republic Act No.
5185, Decentralization Act of 1967). He can represent the municipality even without the fiscal's
collaboration (Calleja vs. Court of Appeals, L-22501, July 31,1967,20 SCRA 895).

The questioned-ruling of the two courts also contravenes settled jurisprudence. Applying section
1683, it was held that the municipality's authority to employ a private lawyer is expressly limited only
to situations where the provincial fiscal is disqualified to represent it (De Guia vs. Auditor General; L-
29824, March 29, 197 2, 44 SCRA 169. See Reyes vs. Cornista, 92 Phil. 838, Municipality of Bocaue
vs. Manotok, 93 Phil. 173; Enriquez vs. Gimenez, 107 Phil. 932).

Evidently, the lawmaker in requiring that the municipality should be represented in its court cases by
a government lawyer like its municipal attorney and the provincial fiscal intended that the municipality
should not be burdened with the expenses of hiring a private lawyer. The lawmaker also assumed
that the interests of the municipality would be best protected if a government lawyer handles its
litigations.
It is to be expected that the municipal attorney and the fiscal would be faithful and dedicated to the
municipality's interests and that, as civil service employees, they could be held accountable for any
misconduct or dereliction of duty.

The Court of Appeals perceived nothing illegal in allowing the Cruz Law Office to represent the
municipality of Hagonoy because lawyer Cruz offered his legal services gratis. Petitioner Ramos in
her second motion for reconsideration called the Court's attention to paragraph 19 of the complaint
wherein the Cruz law firm alleged that the municipality had contracted to pay its lawyer a 20%
contingent fee.

The Court of Appeals in a resolution dated December 6, 1979 said that there was no cogent reason
to reconsider, its decision but at the same time it gave the Cruz law firm fifteen days from notice
within which "to amend the answer (should be complaint) in the trail court by "deleting therefrom the
claim for attorney's fees" and to report such amendment to the Court of Appeals; otherwise, it would
"motu proprio reconsider its decision".

Obviously, the Appellate Court wanted the complaint to conform to its erroneous factual finding that
the Cruz law firm was serving as counsel without compensation. It did not notice that its resolution
was ambivalent because while it denied the second motion for reconsideration, in the same breath it
threatened to "reconsider its decision" if the complaint was not amended.

Following that directive, the Cruz law firm filed in the trial court an amended complaint dated
December 31, 1979 containing the allegation in paragraph 19 thereof that the municipality was forced
to retain the Cruz law firm "as additional counsel under the control and supervision of plaintiff's
principal attorneys and/or the Provincial Fiscal without any obligation to pay attorney's fees". The
prayer for the payment of attorney's fees in the original complaint was eliminated in the amended
complaint.

Ramos contended in the trial court and in the Court of Appeals that the trial court could not admit the
amended complaint because it was immobilized by the restraining order issued by the Court of
Appeals. The Court of Appeals did not resolve that contention.

On May 7, 1980, Ramos filed in this Court her petition for certiorari, mandamus and prohibition
wherein she prayed that the Court of Appeals be directed to resolve the issue raised in her second
motion for reconsideration and that the amended complaint should not be taken into consideration
because it was improperly admitted by the trial court.

Although the Court of Appeals was furnished on May 7, 1980 with a copy of that petition, it,
nevertheless, issued a resolution dated May 22, 1981 requiring the Cruz law firm to inform it of "the
further development on the matter" (p. 113, Rollo).

This Court treated Ramos' petition as an appeal from the Appellate Court's decision. Ramos was
confused as to when she would appeal from that decision because, as noted earlier, while the
Appellate Court denied her second motion for reconsideration, the denial was not final since it was
accompanied by the warning that it would "reconsider its decision" if the complaint was not amended
to eliminate the claim of the Cruz law firm for attorney's fees. Hence, the alleged tardiness of the
petition was excusable.

The fact that the municipal attorney and the fiscal are supposed to collaborate with a private law firm
does not legalize the latter's representation of the municipality of Hagonoy in Civil Case No. 5095-M.
While a private prosecutor is allowed in criminal cases, an analogous arrangement is not allowed in
civil cases wherein a municipality is the plaintiff.

Section 1683 of the Revised Administrative Code, as complemented by section 3 of the Local
Autonomy Law is clear in providing that only the provincial fiscal and the municipal attorney can
represent a municipality in its lawsuits. That provision is mandatory.

The law being clear and unmistakable, there is no room for interpretation or for engrafting upon it
exceptions or qualifications not contemplated therein. As observed by Justice Moreland:

Where language is plain, subtle refinements which tinge words so as to give them the color of a
particular judicial theory are not only unnecessary but decidedly harmful. That which has caused so
much confusion in the law, which has made it so difficult for the public to understand and know what
the law is with respect to a given matter, is in considerable measure the unwarranted interference by
judicial tribunals with the English language as found in statutes and contracts, cutting out words here
and inserting them there, making them fit personal Ideas of what the legislature ought to have done or
what parties should have agreed upon, giving them meanings which they do not ordinarily have,
cutting, trimming, fitting, changing and coloring until lawyers themselves are unable to advise their
clients as to the meaning of a given statute or contract until it has been submitted to some court for its
'interpretation and construction (Yangco vs. Court of First Instance of Manila, 29 Phil. 183,188).

Construction and interpretation come only after it has been demonstrated that application is
impossible or inadequate without them. They are the very last functions which a court should
exercise. The majority of the laws need no interpretation or construction. They require only
application, and if there were more application and less construction, there would be more stability in
the law, and more people would know what the law is. (Lizarraga Hermanos vs. Yap Tico, 24 Phil.
504, 513).

WHEREFORE, the decision of the Court of Appeals is reversed and set aside. We hereby declare
that the appearance in the aforementioned case of Cruz Durian Agabin Atienza & Alday as counsel
for the municipality of Hagonoy is contrary to law. The municipality should be represented by its
municipal attorney and by the provincial fiscal of Bulacan. The restraining order is lifted. No costs.

SO ORDERED.

Barredo (Chairman), Concepcion, Jr. and De Castro, JJ., concur.

Abad Santos, J., concur in the result.

15. G.R. No. 93833 September 28, 1995

SOCORRO D. RAMIREZ, petitioner, vs.

HONORABLE COURT OF APPEALS, and ESTER S. GARCIA, respondents.

KAPUNAN, J.:

A civil case damages was filed by petitioner Socorro D. Ramirez in the Regional Trial Court of
Quezon City alleging that the private respondent, Ester S. Garcia, in a confrontation in the latter's
office, allegedly vexed, insulted and humiliated her in a "hostile and furious mood" and in a manner
offensive to petitioner's dignity and personality," contrary to morals, good customs and public policy."1

In support of her claim, petitioner produced a verbatim transcript of the event and sought moral
damages, attorney's fees and other expenses of litigation in the amount of P610,000.00, in addition to
costs, interests and other reliefs awardable at the trial court's discretion. The transcript on which the
civil case was based was culled from a tape recording of the confrontation made by petitioner.2 The
transcript reads as follows:

Plaintiff Soccoro D. Ramirez (Chuchi) — Good Afternoon M'am.

Defendant Ester S. Garcia (ESG) — Ano ba ang nangyari sa 'yo, nakalimot ka na kung paano ka
napunta rito, porke member ka na, magsumbong ka kung ano ang gagawin ko sa 'yo.

CHUCHI — Kasi, naka duty ako noon.

ESG — Tapos iniwan no. (Sic)

CHUCHI — Hindi m'am, pero ilan beses na nila akong binalikan, sabing ganoon —

ESG — Ito and (sic) masasabi ko sa 'yo, ayaw kung (sic) mag explain ka, kasi hanggang 10:00
p.m., kinabukasan hindi ka na pumasok. Ngayon ako ang babalik sa 'yo, nag-aaply ka sa States,
nag-aaply ka sa review mo, kung kakailanganin ang certification mo, kalimutan mo na kasi hindi ka sa
akin makakahingi.
CHUCHI — Hindi M'am. Kasi ang ano ko talaga noon i-cocontinue ko up to 10:00 p.m.

ESG — Bastos ka, nakalimutan mo na kung paano ka pumasok dito sa hotel. Magsumbong ka sa
Union kung gusto mo. Nakalimutan mo na kung paano ka nakapasok dito "Do you think that on your
own makakapasok ka kung hindi ako. Panunumbyoyan na kita (Sinusumbatan na kita).

CHUCHI — Itutuloy ko na M'am sana ang duty ko.

ESG — Kaso ilang beses na akong binabalikan doon ng mga no (sic) ko.

ESG — Nakalimutan mo na ba kung paano ka pumasok sa hotel, kung on your own merit alam ko
naman kung gaano ka "ka bobo" mo. Marami ang nag-aaply alam kong hindi ka papasa.

CHUCHI — Kumuha kami ng exam noon.

ESG — Oo, pero hindi ka papasa.

CHUCHI — Eh, bakit ako ang nakuha ni Dr. Tamayo

ESG — Kukunin ka kasi ako.

CHUCHI — Eh, di sana —

ESG — Huwag mong ipagmalaki na may utak ka kasi wala kang utak. Akala mo ba makukuha ka
dito kung hindi ako.

CHUCHI — Mag-eexplain ako.

ESG — Huwag na, hindi ako mag-papa-explain sa 'yo, makaalala ka kung paano ka puma-rito.
"Putang-ina" sasabi-sabihin mo kamag-anak ng nanay at tatay mo ang mga magulang ko.

ESG — Wala na akong pakialam, dahil nandito ka sa loob, nasa labas ka puwede ka ng hindi
pumasok, okey yan nasaloob ka umalis ka doon.
CHUCHI — Kasi M'am, binbalikan ako ng mga taga Union.

ESG — Nandiyan na rin ako, pero huwag mong kalimutan na hindi ka makakapasok kung hindi
ako. Kung hindi mo kinikilala yan okey lang sa akin, dahil tapos ka na.

CHUCHI — Ina-ano ko m'am na utang na loob.

ESG — Huwag na lang, hindi mo utang na loob, kasi kung baga sa no, nilapastangan mo ako.

CHUCHI — Paano kita nilapastanganan?

ESG — Mabuti pa lumabas ka na. Hindi na ako makikipagusap sa 'yo. Lumabas ka na.
Magsumbong ka.3

As a result of petitioner's recording of the event and alleging that the said act of secretly taping the
confrontation was illegal, private respondent filed a criminal case before the Regional Trial Court of
Pasay City for violation of Republic Act 4200, entitled "An Act to prohibit and penalize wire tapping
and other related violations of private communication, and other purposes." An information charging
petitioner of violation of the said Act, dated October 6, 1988 is quoted herewith:

INFORMATION

The Undersigned Assistant City Fiscal Accusses Socorro D. Ramirez of Violation of Republic Act No.
4200, committed as follows:

That on or about the 22nd day of February, 1988, in Pasay City Metro Manila, Philippines, and within
the jurisdiction of this honorable court, the above-named accused, Socorro D. Ramirez not being
authorized by Ester S. Garcia to record the latter's conversation with said accused, did then and there
willfully, unlawfully and feloniously, with the use of a tape recorder secretly record the said
conversation and thereafter communicate in writing the contents of the said recording to other person.

Contrary to law.

Pasay City, Metro Manila, September 16, 1988.

MARIANO M. CUNETA
Asst. City Fiscal

Upon arraignment, in lieu of a plea, petitioner filed a Motion to Quash the Information on the ground
that the facts charged do not constitute an offense, particularly a violation of R.A. 4200. In an order
May 3, 1989, the trial court granted the Motion to Quash, agreeing with petitioner that 1) the facts
charged do not constitute an offense under R.A. 4200; and that 2) the violation punished by R.A.
4200 refers to a the taping of a communication by a person other than a participant to the
communication.4

From the trial court's Order, the private respondent filed a Petition for Review on Certiorari with this
Court, which forthwith referred the case to the Court of Appeals in a Resolution (by the First Division)
of June 19, 1989.

On February 9, 1990, respondent Court of Appeals promulgated its assailed Decision declaring the
trial court's order of May 3, 1989 null and void, and holding that:

[T]he allegations sufficiently constitute an offense punishable under Section 1 of R.A. 4200. In thus
quashing the information based on the ground that the facts alleged do not constitute an offense, the
respondent judge acted in grave abuse of discretion correctible by certiorari.5

Consequently, on February 21, 1990, petitioner filed a Motion for Reconsideration which respondent
Court of Appeals denied in its Resolution6 dated June 19, 1990. Hence, the instant petition.

Petitioner vigorously argues, as her "main and principal issue"7 that the applicable provision of
Republic Act 4200 does not apply to the taping of a private conversation by one of the parties to the
conversation. She contends that the provision merely refers to the unauthorized taping of a private
conversation by a party other than those involved in the communication.8 In relation to this, petitioner
avers that the substance or content of the conversation must be alleged in the Information, otherwise
the facts charged would not constitute a violation of R.A. 4200.9 Finally, petitioner agues that R.A.
4200 penalizes the taping of a "private communication," not a "private conversation" and that
consequently, her act of secretly taping her conversation with private respondent was not illegal
under the said act. 10

We disagree.

First, legislative intent is determined principally from the language of a statute. Where the language of
a statute is clear and unambiguous, the law is applied according to its express terms, and
interpretation would be resorted to only where a literal interpretation would be either impossible 11 or
absurb or would lead to an injustice. 12

Section 1 of R.A. 4200 entitled, " An Act to Prohibit and Penalized Wire Tapping and Other Related
Violations of Private Communication and Other Purposes," provides:
Sec. 1. It shall be unlawfull for any person, not being authorized by all the parties to any private
communication or spoken word, to tap any wire or cable, or by using any other device or
arrangement, to secretly overhear, intercept, or record such communication or spoken word by using
a device commonly known as a dictaphone or dictagraph or detectaphone or walkie-talkie or tape
recorder, or however otherwise described.

The aforestated provision clearly and unequivocally makes it illegal for any person, not authorized by
all the parties to any private communication to secretly record such communication by means of a
tape recorder. The law makes no distinction as to whether the party sought to be penalized by the
statute ought to be a party other than or different from those involved in the private communication.
The statute's intent to penalize all persons unauthorized to make such recording is underscored by
the use of the qualifier "any". Consequently, as respondent Court of Appeals correctly concluded,
"even a (person) privy to a communication who records his private conversation with another without
the knowledge of the latter (will) qualify as a violator" 13 under this provision of R.A. 4200.

A perusal of the Senate Congressional Records, moreover, supports the respondent court's
conclusion that in enacting R.A. 4200 our lawmakers indeed contemplated to make illegal,
unauthorized tape recording of private conversations or communications taken either by the parties
themselves or by third persons. Thus:

xxx xxx xxx

Senator Tañada: That qualified only "overhear".

Senator Padilla: So that when it is intercepted or recorded, the element of secrecy would not
appear to be material. Now, suppose, Your Honor, the recording is not made by all the parties but by
some parties and involved not criminal cases that would be mentioned under section 3 but would
cover, for example civil cases or special proceedings whereby a recording is made not necessarily by
all the parties but perhaps by some in an effort to show the intent of the parties because the actuation
of the parties prior, simultaneous even subsequent to the contract or the act may be indicative of their
intention. Suppose there is such a recording, would you say, Your Honor, that the intention is to cover
it within the purview of this bill or outside?

Senator Tañada: That is covered by the purview of this bill, Your Honor.

Senator Padilla: Even if the record should be used not in the prosecution of offense but as
evidence to be used in Civil Cases or special proceedings?

Senator Tañada: That is right. This is a complete ban on tape recorded conversations taken without
the authorization of all the parties.

Senator Padilla: Now, would that be reasonable, your Honor?

Senator Tañada: I believe it is reasonable because it is not sporting to record the observation of
one without his knowing it and then using it against him. It is not fair, it is not sportsmanlike. If the
purpose; Your honor, is to record the intention of the parties. I believe that all the parties should know
that the observations are being recorded.

Senator Padilla: This might reduce the utility of recorders.

Senator Tañada: Well no. For example, I was to say that in meetings of the board of directors
where a tape recording is taken, there is no objection to this if all the parties know. It is but fair that
the people whose remarks and observations are being made should know that the observations are
being recorded.

Senator Padilla: Now, I can understand.

Senator Tañada: That is why when we take statements of persons, we say: "Please be informed
that whatever you say here may be used against you." That is fairness and that is what we demand.
Now, in spite of that warning, he makes damaging statements against his own interest, well, he
cannot complain any more. But if you are going to take a recording of the observations and remarks
of a person without him knowing that it is being taped or recorded, without him knowing that what is
being recorded may be used against him, I think it is unfair.

xxx xxx xxx

(Congression Record, Vol. III, No. 31, p. 584, March 12, 1964)

Senator Diokno: Do you understand, Mr. Senator, that under Section 1 of the bill as now worded, if
a party secretly records a public speech, he would be penalized under Section 1? Because the
speech is public, but the recording is done secretly.

Senator Tañada: Well, that particular aspect is not contemplated by the bill. It is the communication
between one person and another person — not between a speaker and a public.

xxx xxx xxx

(Congressional Record, Vol. III, No. 33, p. 626, March 12, 1964)

xxx xxx xxx

The unambiguity of the express words of the provision, taken together with the above-quoted
deliberations from the Congressional Record, therefore plainly supports the view held by the
respondent court that the provision seeks to penalize even those privy to the private communications.
Where the law makes no distinctions, one does not distinguish.

Second, the nature of the conversations is immaterial to a violation of the statute. The substance of
the same need not be specifically alleged in the information. What R.A. 4200 penalizes are the acts of
secretly overhearing, intercepting or recording private communications by means of the devices
enumerated therein. The mere allegation that an individual made a secret recording of a private
communication by means of a tape recorder would suffice to constitute an offense under Section 1 of
R.A. 4200. As the Solicitor General pointed out in his COMMENT before the respondent court:
"Nowhere (in the said law) is it required that before one can be regarded as a violator, the nature of
the conversation, as well as its communication to a third person should be professed." 14

Finally, petitioner's contention that the phrase "private communication" in Section 1 of R.A. 4200 does
not include "private conversations" narrows the ordinary meaning of the word "communication" to a
point of absurdity. The word communicate comes from the latin word communicare, meaning "to
share or to impart." In its ordinary signification, communication connotes the act of sharing or
imparting signification, communication connotes the act of sharing or imparting, as in a conversation,
15 or signifies the "process by which meanings or thoughts are shared between individuals through a
common system of symbols (as language signs or gestures)" 16 These definitions are broad enough
to include verbal or non-verbal, written or expressive communications of "meanings or thoughts"
which are likely to include the emotionally-charged exchange, on February 22, 1988, between
petitioner and private respondent, in the privacy of the latter's office. Any doubts about the legislative
body's meaning of the phrase "private communication" are, furthermore, put to rest by the fact that
the terms "conversation" and "communication" were interchangeably used by Senator Tañada in his
Explanatory Note to the bill quoted below:

It has been said that innocent people have nothing to fear from their conversations being overheard.
But this statement ignores the usual nature of conversations as well the undeniable fact that most, if
not all, civilized people have some aspects of their lives they do not wish to expose. Free
conversations are often characterized by exaggerations, obscenity, agreeable falsehoods, and the
expression of anti-social desires of views not intended to be taken seriously. The right to the privacy
of communication, among others, has expressly been assured by our Constitution. Needless to state
here, the framers of our Constitution must have recognized the nature of conversations between
individuals and the significance of man's spiritual nature, of his feelings and of his intellect. They must
have known that part of the pleasures and satisfactions of life are to be found in the unaudited, and
free exchange of communication between individuals — free from every unjustifiable intrusion by
whatever means.17

In Gaanan vs. Intermediate Appellate Court, 18 a case which dealt with the issue of telephone
wiretapping, we held that the use of a telephone extension for the purpose of overhearing a private
conversation without authorization did not violate R.A. 4200 because a telephone extension devise
was neither among those "device(s) or arrangement(s)" enumerated therein, 19 following the principle
that "penal statutes must be construed strictly in favor of the accused."20 The instant case turns on a
different note, because the applicable facts and circumstances pointing to a violation of R.A. 4200
suffer from no ambiguity, and the statute itself explicitly mentions the unauthorized "recording" of
private communications with the use of tape-recorders as among the acts punishable.

WHEREFORE, because the law, as applied to the case at bench is clear and unambiguous and
leaves us with no discretion, the instant petition is hereby DENIED. The decision appealed from is
AFFIRMED. Costs against petitioner.
SO ORDERED.

16. G.R. No. 168338 February 15, 2008

FRANCISCO CHAVEZ, petitioner, vs.

RAUL M. GONZALES, in his capacity as the Secretary of the Department of Justice; and
NATIONAL TELECOMMUNICATIONS COMMISSION (NTC), respondents.

DECISION

PUNO, C.J.:

A. Precis

In this jurisdiction, it is established that freedom of the press is crucial and so inextricably woven into
the right to free speech and free expression, that any attempt to restrict it must be met with an
examination so critical that only a danger that is clear and present would be allowed to curtail it.

Indeed, we have not wavered in the duty to uphold this cherished freedom. We have struck down
laws and issuances meant to curtail this right, as in Adiong v. COMELEC,[1] Burgos v. Chief of Staff,
[2] Social Weather Stations v. COMELEC,[3] and Bayan v. Executive Secretary Ermita.[4] When on
its face, it is clear that a governmental act is nothing more than a naked means to prevent the free
exercise of speech, it must be nullified.

B. The Facts

The case originates from events that occurred a year after the 2004 national and local elections. On
June 5, 2005, Press Secretary Ignacio Bunye told reporters that the opposition was planning to
destabilize the administration by releasing an audiotape of a mobile phone conversation allegedly
between the President of the Philippines, Gloria Macapagal Arroyo, and a high-ranking official of the
Commission on Elections (COMELEC). The conversation was audiotaped allegedly through wire-
tapping.[5] Later, in a Malacañang press briefing, Secretary Bunye produced two versions of the tape,
one supposedly the complete version, and the other, a spliced, “doctored” or altered version, which
would suggest that the President had instructed the COMELEC official to manipulate the election
results in the President’s favor.[6] It seems that Secretary Bunye admitted that the voice was that of
President Arroyo, but subsequently made a retraction.[7]

On June 7, 2005, former counsel of deposed President Joseph Estrada, Atty. Alan Paguia,
subsequently released an alleged authentic tape recording of the wiretap. Included in the tapes were
purported conversations of the President, the First Gentleman Jose Miguel Arroyo, COMELEC
Commissioner Garcillano, and the late Senator Barbers.[8]

On June 8, 2005, respondent Department of Justice (DOJ) Secretary Raul Gonzales warned
reporters that those who had copies of the compact disc (CD) and those broadcasting or publishing
its contents could be held liable under the Anti-Wiretapping Act. These persons included Secretary
Bunye and Atty. Paguia. He also stated that persons possessing or airing said tapes were committing
a continuing offense, subject to arrest by anybody who had personal knowledge if the crime was
committed or was being committed in their presence.[9]
On June 9, 2005, in another press briefing, Secretary Gonzales ordered the National Bureau of
Investigation (NBI) to go after media organizations “found to have caused the spread, the playing and
the printing of the contents of a tape” of an alleged wiretapped conversation involving the President
about fixing votes in the 2004 national elections. Gonzales said that he was going to start with
Inq7.net, a joint venture between the Philippine Daily Inquirer and GMA7 television network, because
by the very nature of the Internet medium, it was able to disseminate the contents of the tape more
widely. He then expressed his intention of inviting the editors and managers of Inq7.net and GMA7 to
a probe, and supposedly declared, “I [have] asked the NBI to conduct a tactical interrogation of all
concerned.”[10]

On June 11, 2005, the NTC issued this press release:[11]

NTC GIVES FAIR WARNING TO RADIO AND TELEVISION OWNERS/OPERATORS TO OBSERVE

ANTI-WIRETAPPING LAW AND PERTINENT CIRCULARS ON PROGRAM STANDARDS

xxx xxx xxx

Taking into consideration the country’s unusual situation, and in order not to unnecessarily aggravate
the same, the NTC warns all radio stations and television network owners/operators that the
conditions of the authorization and permits issued to them by Government like the Provisional
Authority and/or Certificate of Authority explicitly provides that said companies shall not use [their]
stations for the broadcasting or telecasting of false information or willful misrepresentation. Relative
thereto, it has come to the attention of the [NTC] that certain personalities are in possession of
alleged taped conversations which they claim involve the President of the Philippines and a
Commissioner of the COMELEC regarding supposed violation of election laws.

These personalities have admitted that the taped conversations are products of illegal wiretapping
operations.

Considering that these taped conversations have not been duly authenticated nor could it be said at
this time that the tapes contain an accurate or truthful representation of what was recorded therein, it
is the position of the [NTC] that the continuous airing or broadcast of the said taped conversations by
radio and television stations is a continuing violation of the Anti-Wiretapping Law and the conditions
of the Provisional Authority and/or Certificate of Authority issued to these radio and television
stations. It has been subsequently established that the said tapes are false and/or fraudulent after a
prosecution or appropriate investigation, the concerned radio and television companies are hereby
warned that their broadcast/airing of such false information and/or willful misrepresentation shall be
just cause for the suspension, revocation and/or cancellation of the licenses or authorizations issued
to the said companies.

In addition to the above, the [NTC] reiterates the pertinent NTC circulars on program standards to be
observed by radio and television stations. NTC Memorandum Circular 111-12-85 explicitly states,
among others, that “all radio broadcasting and television stations shall, during any broadcast or
telecast, cut off from the air the speech, play, act or scene or other matters being broadcast or
telecast the tendency thereof is to disseminate false information or such other willful
misrepresentation, or to propose and/or incite treason, rebellion or sedition.” The foregoing directive
had been reiterated by NTC Memorandum Circular No. 22-89, which, in addition thereto, prohibited
radio, broadcasting and television stations from using their stations to broadcast or telecast any
speech, language or scene disseminating false information or willful misrepresentation, or inciting,
encouraging or assisting in subversive or treasonable acts.
The [NTC] will not hesitate, after observing the requirements of due process, to apply with full force
the provisions of said Circulars and their accompanying sanctions on erring radio and television
stations and their owners/operators.

On June 14, 2005, NTC held a dialogue with the Board of Directors of the Kapisanan ng mga
Brodkaster sa Pilipinas (KBP). NTC allegedly assured the KBP that the press release did not violate
the constitutional freedom of speech, of expression, and of the press, and the right to information.
Accordingly, NTC and KBP issued a Joint Press Statement which states, among others, that:[12]

§ NTC respects and will not hinder freedom of the press and the right to information on matters of
public concern. KBP & its members have always been committed to the exercise of press freedom
with high sense of responsibility and discerning judgment of fairness and honesty.

§ NTC did not issue any MC [Memorandum Circular] or Order constituting a restraint of press
freedom or censorship. The NTC further denies and does not intend to limit or restrict the interview of
members of the opposition or free expression of views.

§ What is being asked by NTC is that the exercise of press freedom [be] done responsibly.

§ KBP has program standards that KBP members will observe in the treatment of news and public
affairs programs. These include verification of sources, non-airing of materials that would constitute
inciting to sedition and/or rebellion.

§ The KBP Codes also require that no false statement or willful misrepresentation is made in the
treatment of news or commentaries.

§ The supposed wiretapped tapes should be treated with sensitivity and handled responsibly giving
due consideration to the process being undertaken to verify and validate the authenticity and actual
content of the same.”

C. The Petition

Petitioner Chavez filed a petition under Rule 65 of the Rules of Court against respondents Secretary
Gonzales and the NTC, “praying for the issuance of the writs of certiorari and prohibition, as
extraordinary legal remedies, to annul void proceedings, and to prevent the unlawful, unconstitutional
and oppressive exercise of authority by the respondents.”[13]

Alleging that the acts of respondents are violations of the freedom on expression and of the press,
and the right of the people to information on matters of public concern,[14] petitioner specifically
asked this Court:
[F]or [the] nullification of acts, issuances, and orders of respondents committed or made since June 6,
2005 until the present that curtail the public’s rights to freedom of expression and of the press, and to
information on matters of public concern specifically in relation to information regarding the
controversial taped conversion of President Arroyo and for prohibition of the further commission of
such acts, and making of such issuances, and orders by respondents.[15]

Respondents[16] denied that the acts transgress the Constitution, and questioned petitioner’s legal
standing to file the petition. Among the arguments they raised as to the validity of the “fair warning”
issued by respondent NTC, is that broadcast media enjoy lesser constitutional guarantees compared
to print media, and the warning was issued pursuant to the NTC’s mandate to regulate the
telecommunications industry.[17] It was also stressed that “most of the [television] and radio stations
continue, even to this date, to air the tapes, but of late within the parameters agreed upon between
the NTC and KBP.”[18]

D. The Procedural Threshold: Legal Standing

To be sure, the circumstances of this case make the constitutional challenge peculiar. Petitioner, who
is not a member of the broadcast media, prays that we strike down the acts and statements made by
respondents as violations of the right to free speech, free expression and a free press. For another,
the recipients of the press statements have not come forward—neither intervening nor joining
petitioner in this action. Indeed, as a group, they issued a joint statement with respondent NTC that
does not complain about restraints on freedom of the press.

It would seem, then, that petitioner has not met the requisite legal standing, having failed to allege
“such a personal stake in the outcome of the controversy as to assure that concrete adverseness
which sharpens the presentation of issues upon which the Court so largely depends for illumination of
difficult constitutional questions.”[19]

But as early as half a century ago, we have already held that where serious constitutional questions
are involved, “the transcendental importance to the public of these cases demands that they be
settled promptly and definitely, brushing aside if we must, technicalities of procedure.”[20]
Subsequently, this Court has repeatedly and consistently refused to wield procedural barriers as
impediments to its addressing and resolving serious legal questions that greatly impact on public
interest,[21] in keeping with the Court's duty under the 1987 Constitution to determine whether or not
other branches of government have kept themselves within the limits of the Constitution and the laws
and that they have not abused the discretion given to them.

Thus, in line with the liberal policy of this Court on locus standi when a case involves an issue of
overarching significance to our society,[22] we therefore brush aside technicalities of procedure and
take cognizance of this petition,[23] seeing as it involves a challenge to the most exalted of all the civil
rights, the freedom of expression. The petition raises other issues like the extent of the right to
information of the public. It is fundamental, however, that we need not address all issues but only the
most decisive one which in the case at bar is whether the acts of the respondents abridge freedom of
speech and of the press.

But aside from the primordial issue of determining whether free speech and freedom of the press
have been infringed, the case at bar also gives this Court the opportunity: (1) to distill the essence of
freedom of speech and of the press now beclouded by the vagaries of motherhood statements; (2) to
clarify the types of speeches and their differing restraints allowed by law; (3) to discuss the core
concepts of prior restraint, content-neutral and content-based regulations and their constitutional
standard of review; (4) to examine the historical difference in the treatment of restraints between print
and broadcast media and stress the standard of review governing both; and (5) to call attention to the
ongoing blurring of the lines of distinction between print and broadcast media.

E. Re-examining The law on freedom of speech, of expression and of the press

No law shall be passed abridging the freedom of speech, of expression, or of the press, or the right of
the people peaceably to assemble and petition the government for redress of grievances.[24]

Freedom of expression has gained recognition as a fundamental principle of every democratic

government, and given a preferred right that stands on a higher level than substantive economic
freedom or other liberties. The cognate rights codified by Article III, Section 4 of the Constitution,
copied almost verbatim from the First Amendment of the U.S. Bill of Rights,[25] were considered the
necessary consequence of republican institutions and the complement of free speech.[26] This
preferred status of free speech has also been codified at the international level, its recognition now
enshrined in international law as a customary norm that binds all nations.[27]

In the Philippines, the primacy and high esteem accorded freedom of expression is a fundamental
postulate of our constitutional system.[28] This right was elevated to constitutional status in the 1935,
the 1973 and the 1987 Constitutions, reflecting our own lesson of history, both political and legal, that
freedom of speech is an indispensable condition for nearly every other form of freedom.[29]
Moreover, our history shows that the struggle to protect the freedom of speech, expression and the
press was, at bottom, the struggle for the indispensable preconditions for the exercise of other
freedoms.[30] For it is only when the people have unbridled access to information and the press that
they will be capable of rendering enlightened judgments. In the oft-quoted words of Thomas
Jefferson, we cannot both be free and ignorant.

E.1. Abstraction of Free Speech

Surrounding the freedom of speech clause are various concepts that we have adopted as part and
parcel of our own Bill of Rights provision on this basic freedom.[31] What is embraced under this
provision was discussed exhaustively by the Court in Gonzales v. Commission on Elections,[32] in
which it was held:

…At the very least, free speech and free press may be identified with the liberty to discuss publicly
and truthfully any matter of public interest without censorship and punishment. There is to be no
previous restraint on the communication of views or subsequent liability whether in libel suits,
prosecution for sedition, or action for damages, or contempt proceedings unless there be a clear and
present danger of substantive evil that Congress has a right to prevent.[33]

Gonzales further explained that the vital need of a constitutional democracy for freedom of expression
is undeniable, whether as a means of assuring individual self-fulfillment; of attaining the truth; of
assuring participation by the people in social, including political, decision-making; and of maintaining
the balance between stability and change.[34] As early as the 1920s, the trend as reflected in
Philippine and American decisions was to recognize the broadest scope and assure the widest
latitude for this constitutional guarantee. The trend represents a profound commitment to the principle
that debate on public issue should be uninhibited, robust, and wide-open.[35]

Freedom of speech and of the press means something more than the right to approve existing
political beliefs or economic arrangements, to lend support to official measures, and to take refuge in
the existing climate of opinion on any matter of public consequence.[36] When atrophied, the right
becomes meaningless.[37] The right belongs as well -- if not more – to those who question, who do
not conform, who differ.[38] The ideas that may be expressed under this freedom are confined not
only to those that are conventional or acceptable to the majority. To be truly meaningful, freedom of
speech and of the press should allow and even encourage the articulation of the unorthodox view,
though it be hostile to or derided by others; or though such view “induces a condition of unrest,
creates dissatisfaction with conditions as they are, or even stirs people to anger.”[39] To paraphrase
Justice Holmes, it is freedom for the thought that we hate, no less than for the thought that agrees
with us.[40]

The scope of freedom of expression is so broad that it extends protection to nearly all forms of
communication. It protects speech, print and assembly regarding secular as well as political causes,
and is not confined to any particular field of human interest. The protection covers myriad matters of
public interest or concern embracing all issues, about which information is needed or appropriate, so
as to enable members of society to cope with the exigencies of their period. The constitutional
protection assures the broadest possible exercise of free speech and free press for religious, political,
economic, scientific, news, or informational ends, inasmuch as the Constitution's basic guarantee of
freedom to advocate ideas is not confined to the expression of ideas that are conventional or shared
by a majority.

The constitutional protection is not limited to the exposition of ideas. The protection afforded free
speech extends to speech or publications that are entertaining as well as instructive or informative.
Specifically, in Eastern Broadcasting Corporation (DYRE) v. Dans,[41] this Court stated that all forms
of media, whether print or broadcast, are entitled to the broad protection of the clause on freedom of
speech and of expression.

While all forms of communication are entitled to the broad protection of freedom of expression clause,
the freedom of film, television and radio broadcasting is somewhat lesser in scope than the freedom
accorded to newspapers and other print media, as will be subsequently discussed.

E.2. Differentiation: The Limits & Restraints of Free Speech

From the language of the specific constitutional provision, it would appear that the right to free speech
and a free press is not susceptible of any limitation. But the realities of life in a complex society
preclude a literal interpretation of the provision prohibiting the passage of a law that would abridge
such freedom. For freedom of expression is not an absolute,[42] nor is it an “unbridled license that
gives immunity for every possible use of language and prevents the punishment of those who abuse
this freedom.”

Thus, all speech are not treated the same. Some types of speech may be subjected to some
regulation by the State under its pervasive police power, in order that it may not be injurious to the
equal right of others or those of the community or society.[43] The difference in treatment is expected
because the relevant interests of one type of speech, e.g., political speech, may vary from those of
another, e.g., obscene speech. Distinctions have therefore been made in the treatment, analysis, and
evaluation of the permissible scope of restrictions on various categories of speech.[44] We have
ruled, for example, that in our jurisdiction slander or libel, lewd and obscene speech, as well as
“fighting words” are not entitled to constitutional protection and may be penalized.[45]

Moreover, the techniques of reviewing alleged restrictions on speech (overbreadth, vagueness, and
so on) have been applied differently to each category, either consciously or unconsciously.[46] A
study of free speech jurisprudence—whether here or abroad—will reveal that courts have developed
different tests as to specific types or categories of speech in concrete situations; i.e., subversive
speech; obscene speech; the speech of the broadcast media and of the traditional print media;
libelous speech; speech affecting associational rights; speech before hostile audiences; symbolic
speech; speech that affects the right to a fair trial; and speech associated with rights of assembly and
petition.[47]

Generally, restraints on freedom of speech and expression are evaluated by either or a combination
of three tests, i.e., (a) the dangerous tendency doctrine which permits limitations on speech once a
rational connection has been established between the speech restrained and the danger
contemplated;[48] (b) the balancing of interests tests, used as a standard when courts need to
balance conflicting social values and individual interests, and requires a conscious and detailed
consideration of the interplay of interests observable in a given situation of type of situation;[49] and
(c) the clear and present danger rule which rests on the premise that speech may be restrained
because there is substantial danger that the speech will likely lead to an evil the government has a
right to prevent. This rule requires that the evil consequences sought to be prevented must be
substantive, “extremely serious and the degree of imminence extremely high.”[50]

As articulated in our jurisprudence, we have applied either the dangerous tendency doctrine or clear
and present danger test to resolve free speech challenges. More recently, we have concluded that we
have generally adhered to the clear and present danger test.[51]

E.3. IN FOCUS: FREEDOM OF THE PRESS

Much has been written on the philosophical basis of press freedom as part of the larger right of free
discussion and expression. Its practical importance, though, is more easily grasped. It is the chief
source of information on current affairs. It is the most pervasive and perhaps most powerful vehicle of
opinion on public questions. It is the instrument by which citizens keep their government informed of
their needs, their aspirations and their grievances. It is the sharpest weapon in the fight to keep
government responsible and efficient. Without a vigilant press, the mistakes of every administration
would go uncorrected and its abuses unexposed. As Justice Malcolm wrote in United States v.
Bustos:[52]

The interest of society and the maintenance of good government demand a full discussion of public
affairs. Complete liberty to comment on the conduct of public men is a scalpel in the case of free
speech. The sharp incision of its probe relieves the abscesses of officialdom. Men in public life may
suffer under a hostile and unjust accusation; the wound can be assuaged with the balm of clear
conscience.

Its contribution to the public weal makes freedom of the press deserving of extra protection. Indeed,
the press benefits from certain ancillary rights. The productions of writers are classified as intellectual
and proprietary. Persons who interfere or defeat the freedom to write for the press or to maintain a
periodical publication are liable for damages, be they private individuals or public officials.

E.4. ANATOMY OF RESTRICTIONS: PRIOR RESTRAINT, CONTENT-NEUTRAL AND CONTENT-

BASED REGULATIONS

Philippine jurisprudence, even as early as the period under the 1935 Constitution, has recognized
four aspects of freedom of the press. These are (1) freedom from prior restraint; (2) freedom from
punishment subsequent to publication;[53] (3) freedom of access to information;[54] and (4) freedom
of circulation.[55]

Considering that petitioner has argued that respondents’ press statement constitutes a form of
impermissible prior restraint, a closer scrutiny of this principle is in order, as well as its sub-specie of
content-based (as distinguished from content-neutral) regulations.

At this point, it should be noted that respondents in this case deny that their acts constitute prior
restraints. This presents a unique tinge to the present challenge, considering that the cases in our
jurisdiction involving prior restrictions on speech never had any issue of whether the governmental act
or issuance actually constituted prior restraint. Rather, the determinations were always about whether
the restraint was justified by the Constitution.

Be that as it may, the determination in every case of whether there is an impermissible restraint on
the freedom of speech has always been based on the circumstances of each case, including the
nature of the restraint. And in its application in our jurisdiction, the parameters of this principle have
been etched on a case-to-case basis, always tested by scrutinizing the governmental issuance or act
against the circumstances in which they operate, and then determining the appropriate test with
which to evaluate.

Prior restraint refers to official governmental restrictions on the press or other forms of expression in
advance of actual publication or dissemination.[56] Freedom from prior restraint is largely freedom
from government censorship of publications, whatever the form of censorship, and regardless of
whether it is wielded by the executive, legislative or judicial branch of the government. Thus, it
precludes governmental acts that required approval of a proposal to publish; licensing or permits as
prerequisites to publication including the payment of license taxes for the privilege to publish; and
even injunctions against publication. Even the closure of the business and printing offices of certain
newspapers, resulting in the discontinuation of their printing and publication, are deemed as previous
restraint or censorship.[57] Any law or official that requires some form of permission to be had before
publication can be made, commits an infringement of the constitutional right, and remedy can be had
at the courts.

Given that deeply ensconced in our fundamental law is the hostility against all prior restraints on
speech, and any act that restrains speech is presumed invalid,[58] and “any act that restrains speech
is hobbled by the presumption of invalidity and should be greeted with furrowed brows,”[59] it is
important to stress not all prior restraints on speech are invalid. Certain previous restraints may be
permitted by the Constitution, but determined only upon a careful evaluation of the challenged act as
against the appropriate test by which it should be measured against.

Hence, it is not enough to determine whether the challenged act constitutes some form of restraint on
freedom of speech. A distinction has to be made whether the restraint is (1) a content-neutral
regulation, i.e., merely concerned with the incidents of the speech, or one that merely controls the
time, place or manner, and under well defined standards;[60] or (2) a content-based restraint or
censorship, i.e., the restriction is based on the subject matter of the utterance or speech.[61] The cast
of the restriction determines the test by which the challenged act is assayed with.

When the speech restraints take the form of a content-neutral regulation, only a substantial
governmental interest is required for its validity.[62] Because regulations of this type are not designed
to suppress any particular message, they are not subject to the strictest form of judicial scrutiny but
an intermediate approach—somewhere between the mere rationality that is required of any other law
and the compelling interest standard applied to content-based restrictions.[63] The test is called
intermediate because the Court will not merely rubberstamp the validity of a law but also require that
the restrictions be narrowly-tailored to promote an important or significant governmental interest that
is unrelated to the suppression of expression. The intermediate approach has been formulated in this
manner:

A governmental regulation is sufficiently justified if it is within the constitutional power of the

Government, if it furthers an important or substantial governmental interest; if the governmental
interest is unrelated to the suppression of free expression; and if the incident restriction on alleged
[freedom of speech & expression] is no greater than is essential to the furtherance of that interest.[64]

On the other hand, a governmental action that restricts freedom of speech or of the press based on
content is given the strictest scrutiny in light of its inherent and invasive impact. Only when the
challenged act has overcome the clear and present danger rule will it pass constitutional muster,[65]
with the government having the burden of overcoming the presumed unconstitutionality.

Unless the government can overthrow this presumption, the content-based restraint will be struck
down.[66]

With respect to content-based restrictions, the government must also show the type of harm the
speech sought to be restrained would bring about— especially the gravity and the imminence of the
threatened harm – otherwise the prior restraint will be invalid. Prior restraint on speech based on its
content cannot be justified by hypothetical fears, “but only by showing a substantive and imminent evil
that has taken the life of a reality already on ground.”[67] As formulated, “the question in every case is
whether the words used are used in such circumstances and are of such a nature as to create a clear
and present danger that they will bring about the substantive evils that Congress has a right to
prevent. It is a question of proximity and degree.”[68]

The regulation which restricts the speech content must also serve an important or substantial
government interest, which is unrelated to the suppression of free expression.[69]

Also, the incidental restriction on speech must be no greater than what is essential to the furtherance
of that interest.[70] A restriction that is so broad that it encompasses more than what is required to
satisfy the governmental interest will be invalidated.[71] The regulation, therefore, must be
reasonable and narrowly drawn to fit the regulatory purpose, with the least restrictive means
undertaken.[72]

Thus, when the prior restraint partakes of a content-neutral regulation, it is subjected to an

intermediate review. A content-based regulation,[73] however, bears a heavy presumption of
invalidity and is measured against the clear and present danger rule. The latter will pass constitutional
muster only if justified by a compelling reason, and the restrictions imposed are neither overbroad nor
vague.[74]
Applying the foregoing, it is clear that the challenged acts in the case at bar need to be subjected to
the clear and present danger rule, as they are content-based restrictions. The acts of respondents
focused solely on but one object—a specific content— fixed as these were on the alleged taped
conversations between the President and a COMELEC official. Undoubtedly these did not merely
provide regulations as to the time, place or manner of the dissemination of speech or expression.

E.5. DICHOTOMY OF FREE PRESS: PRINT V. BROADCAST MEDIA

Finally, comes respondents’ argument that the challenged act is valid on the ground that broadcast
media enjoys free speech rights that are lesser in scope to that of print media. We next explore and
test the validity of this argument, insofar as it has been invoked to validate a content-based restriction
on broadcast media.

The regimes presently in place for each type of media differ from one other. Contrasted with the
regime in respect of books, newspapers, magazines and traditional printed matter, broadcasting, film
and video have been subjected to regulatory schemes.

The dichotomy between print and broadcast media traces its origins in the United States. There,
broadcast radio and television have been held to have limited First Amendment protection,[75] and
U.S. Courts have excluded broadcast media from the application of the “strict scrutiny” standard that
they would otherwise apply to content-based restrictions.[76] According to U.S. Courts, the three
major reasons why broadcast media stands apart from print media are: (a) the scarcity of the
frequencies by which the medium operates [i.e., airwaves are physically limited while print medium
may be limitless];[77] (b) its “pervasiveness” as a medium; and (c) its unique accessibility to children.
[78] Because cases involving broadcast media need not follow “precisely the same approach that
[U.S. courts] have applied to other media,” nor go “so far as to demand that such regulations serve
‘compelling’ government interests,”[79] they are decided on whether the “governmental restriction” is
narrowly tailored to further a substantial governmental interest,”[80] or the intermediate test.

As pointed out by respondents, Philippine jurisprudence has also echoed a differentiation in treatment
between broadcast and print media. Nevertheless, a review of Philippine case law on broadcast
media will show that—as we have deviated with the American conception of the Bill of Rights[81]—
we likewise did not adopt en masse the U.S. conception of free speech as it relates to broadcast
media, particularly as to which test would govern content-based prior restraints.

Our cases show two distinct features of this dichotomy. First, the difference in treatment, in the main,
is in the regulatory scheme applied to broadcast media that is not imposed on traditional print media,
and narrowly confined to unprotected speech (e.g., obscenity, pornography, seditious and inciting
speech), or is based on a compelling government interest that also has constitutional protection, such
as national security or the electoral process.

Second, regardless of the regulatory schemes that broadcast media is subjected to, the Court has
consistently held that the clear and present danger test applies to content-based restrictions on
media, without making a distinction as to traditional print or broadcast media.
The distinction between broadcast and traditional print media was first enunciated in Eastern
Broadcasting Corporation (DYRE) v. Dans,[82] wherein it was held that “[a]ll forms of media, whether
print or broadcast, are entitled to the broad protection of the freedom of speech and expression
clause. The test for limitations on freedom of expression continues to be the clear and present danger
rule…”[83]

Dans was a case filed to compel the reopening of a radio station which had been summarily closed
on grounds of national security. Although the issue had become moot and academic because the
owners were no longer interested to reopen, the Court still proceeded to do an analysis of the case
and made formulations to serve as guidelines for all inferior courts and bodies exercising quasi-
judicial functions. Particularly, the Court made a detailed exposition as to what needs be considered
in cases involving broadcast media. Thus:[84] xxx xxx xxx

(3)

All forms of media, whether print or broadcast, are entitled to the broad protection of the freedom of
speech and expression clause. The test for limitations on freedom of expression continues to be the
clear and present danger rule, that words are used in such circumstances and are of such a nature as
to create a clear and present danger that they will bring about the substantive evils that the lawmaker
has a right to prevent, In his Constitution of the Philippines (2nd Edition, pp. 569-570) Chief Justice
Enrique M. Fernando cites at least nine of our decisions which apply the test. More recently, the clear
and present danger test was applied in J.B.L. Reyes in behalf of the Anti-Bases Coalition v.
Bagatsing. (4) The clear and present danger test, however, does not lend itself to a simplistic and all
embracing interpretation applicable to all utterances in all forums.

Broadcasting has to be licensed. Airwave frequencies have to be allocated among qualified users. A
broadcast corporation cannot simply appropriate a certain frequency without regard for government
regulation or for the rights of others.

All forms of communication are entitled to the broad protection of the freedom of expression clause.
Necessarily, however, the freedom of television and radio broadcasting is somewhat lesser in scope
than the freedom accorded to newspaper and print media.

The American Court in Federal Communications Commission v. Pacifica Foundation (438 U.S. 726),
confronted with a patently offensive and indecent regular radio program, explained why radio
broadcasting, more than other forms of communications, receives the most limited protection from the
free expression clause. First, broadcast media have established a uniquely pervasive presence in the
lives of all citizens, Material presented over the airwaves confronts the citizen, not only in public, but
in the privacy of his home. Second, broadcasting is uniquely accessible to children. Bookstores and
motion picture theaters may be prohibited from making certain material available to children, but the
same selectivity cannot be done in radio or television, where the listener or viewer is constantly tuning
in and out.
Similar considerations apply in the area of national security.

The broadcast media have also established a uniquely pervasive presence in the lives of all Filipinos.
Newspapers and current books are found only in metropolitan areas and in the poblaciones of
municipalities accessible to fast and regular transportation. Even here, there are low income masses
who find the cost of books, newspapers, and magazines beyond their humble means. Basic needs
like food and shelter perforce enjoy high priorities.

On the other hand, the transistor radio is found everywhere. The television set is also becoming
universal. Their message may be simultaneously received by a national or regional audience of
listeners including the indifferent or unwilling who happen to be within reach of a blaring radio or
television set. The materials broadcast over the airwaves reach every person of every age, persons
of varying susceptibilities to persuasion, persons of different I.Q.s and mental capabilities, persons
whose reactions to inflammatory or offensive speech would be difficult to monitor or predict. The
impact of the vibrant speech is forceful and immediate. Unlike readers of the printed work, the radio
audience has lesser opportunity to cogitate analyze, and reject the utterance.

(5)

The clear and present danger test, therefore, must take the particular circumstances of broadcast
media into account. The supervision of radio stations-whether by government or through self-
regulation by the industry itself calls for thoughtful, intelligent and sophisticated handling.

The government has a right to be protected against broadcasts which incite the listeners to violently
overthrow it. Radio and television may not be used to organize a rebellion or to signal the start of
widespread uprising. At the same time, the people have a right to be informed. Radio and television
would have little reason for existence if broadcasts are limited to bland, obsequious, or pleasantly
entertaining utterances. Since they are the most convenient and popular means of disseminating
varying views on public issues, they also deserve special protection.

(6)

The freedom to comment on public affairs is essential to the vitality of a representative democracy. In
the 1918 case of United States v. Bustos (37 Phil. 731) this Court was already stressing that.

The interest of society and the maintenance of good government demand a full discussion of public
affairs. Complete liberty to comment on the conduct of public men is a scalpel in the case of free
speech. The sharp incision of its probe relieves the abscesses of officialdom. Men in public life may
suffer under a hostile and an unjust accusation; the wound can be assuaged with the balm of a clear
conscience. A public officer must not be too thin-skinned with reference to comment upon his official
acts. Only thus can the intelligence and dignity of the individual be exalted.
(7)

Broadcast stations deserve the special protection given to all forms of media by the due process and
freedom of expression clauses of the Constitution. [Citations omitted]

It is interesting to note that the Court in Dans adopted the arguments found in U.S. jurisprudence to
justify differentiation of treatment (i.e., the scarcity, pervasiveness and accessibility to children), but
only after categorically declaring that “the test for limitations on freedom of expression continues to be
the clear and present danger rule,” for all forms of media, whether print or broadcast. Indeed, a close
reading of the above-quoted provisions would show that the differentiation that the Court in Dans
referred to was narrowly restricted to what is otherwise deemed as “unprotected speech” (e.g.,
obscenity, national security, seditious and inciting speech), or to validate a licensing or regulatory
scheme necessary to allocate the limited broadcast frequencies, which is absent in print media. Thus,
when this Court declared in Dans that the freedom given to broadcast media was “somewhat lesser in
scope than the freedom accorded to newspaper and print media,” it was not as to what test should be
applied, but the context by which requirements of licensing, allocation of airwaves, and application of
norms to unprotected speech.[85]

In the same year that the Dans case was decided, it was reiterated in Gonzales v. Katigbak,[86] that
the test to determine free expression challenges was the clear and present danger, again without
distinguishing the media.[87] Katigbak, strictly speaking, does not treat of broadcast media but motion
pictures. Although the issue involved obscenity standards as applied to movies,[88] the Court
concluded its decision with the following obiter dictum that a less liberal approach would be used to
resolve obscenity issues in television as opposed to motion pictures:

All that remains to be said is that the ruling is to be limited to the concept of obscenity applicable to
motion pictures. It is the consensus of this Court that where television is concerned, a less liberal
approach calls for observance. This is so because unlike motion pictures where the patrons have to
pay their way, television reaches every home where there is a set. Children then will likely be among
the avid viewers of the programs therein shown…..It cannot be denied though that the State as
parens patriae is called upon to manifest an attitude of caring for the welfare of the young.

More recently, in resolving a case involving the conduct of exit polls and dissemination of the results
by a broadcast company, we reiterated that the clear and present danger rule is the test we
unquestionably adhere to issues that involve freedoms of speech and of the press.[89]

This is not to suggest, however, that the clear and present danger rule has been applied to all cases
that involve the broadcast media. The rule applies to all media, including broadcast, but only when
the challenged act is a content-based regulation that infringes on free speech, expression and the
press. Indeed, in Osmena v. COMELEC,[90] which also involved broadcast media, the Court refused
to apply the clear and present danger rule to a COMELEC regulation of time and manner of
advertising of political advertisements because the challenged restriction was content-neutral.[91]
And in a case involving due process and equal protection issues, the Court in Telecommunications
and Broadcast Attorneys of the Philippines v. COMELEC[92] treated a restriction imposed on a
broadcast media as a reasonable condition for the grant of the media’s franchise, without going into
which test would apply.
That broadcast media is subject to a regulatory regime absent in print media is observed also in other
jurisdictions, where the statutory regimes in place over broadcast media include elements of
licensing, regulation by administrative bodies, and censorship. As explained by a British author:

The reasons behind treating broadcast and films differently from the print media differ in a number of
respects, but have a common historical basis. The stricter system of controls seems to have been
adopted in answer to the view that owing to their particular impact on audiences, films, videos and
broadcasting require a system of prior restraints, whereas it is now accepted that books and other
printed media do not. These media are viewed as beneficial to the public in a number of respects, but
are also seen as possible sources of harm.[93]

Parenthetically, these justifications are now the subject of debate. Historically, the scarcity of
frequencies was thought to provide a rationale. However, cable and satellite television have
enormously increased the number of actual and potential channels. Digital technology will further
increase the number of channels available. But still, the argument persists that broadcasting is the
most influential means of communication, since it comes into the home, and so much time is spent
watching television. Since it has a unique impact on people and affects children in a way that the print
media normally does not, that regulation is said to be necessary in order to preserve pluralism. It has
been argued further that a significant main threat to free expression—in terms of diversity—comes
not from government, but from private corporate bodies. These developments show a need for a
reexamination of the traditional notions of the scope and extent of broadcast media regulation.[94]

The emergence of digital technology -- which has led to the convergence of broadcasting,
telecommunications and the computer industry -- has likewise led to the question of whether the
regulatory model for broadcasting will continue to be appropriate in the converged environment.[95]
Internet, for example, remains largely unregulated, yet the Internet and the broadcast media share
similarities,[96] and the rationales used to support broadcast regulation apply equally to the Internet.
[97] Thus, it has been argued that courts, legislative bodies and the government agencies regulating
media must agree to regulate both, regulate neither or develop a new regulatory framework and
rationale to justify the differential treatment.[98]

F. The Case At Bar

Having settled the applicable standard to content-based restrictions on broadcast media, let us go to
its application to the case at bar. To recapitulate, a governmental action that restricts freedom of
speech or of the press based on content is given the strictest scrutiny, with the government having
the burden of overcoming the presumed unconstitutionality by the clear and present danger rule. This
rule applies equally to all kinds of media, including broadcast media.

This outlines the procedural map to follow in cases like the one at bar as it spells out the following: (a)
the test; (b) the presumption; (c) the burden of proof; (d) the party to discharge the burden; and (e)
the quantum of evidence necessary. On the basis of the records of the case at bar, respondents who
have the burden to show that these acts do not abridge freedom of speech and of the press failed to
hurdle the clear and present danger test. It appears that the great evil which government wants to
prevent is the airing of a tape recording in alleged violation of the anti-wiretapping law. The records of
the case at bar, however, are confused and confusing, and respondents’ evidence falls short of
satisfying the clear and present danger test. Firstly, the various statements of the Press Secretary
obfuscate the identity of the voices in the tape recording. Secondly, the integrity of the taped
conversation is also suspect. The Press Secretary showed to the public two versions, one supposed
to be a “complete” version and the other, an “altered” version. Thirdly, the evidence of the
respondents on the who’s and the how’s of the wiretapping act is ambivalent, especially considering
the tape’s different versions. The identity of the wire-tappers, the manner of its commission and other
related and relevant proofs are some of the invisibles of this case. Fourthly, given all these unsettled
facets of the tape, it is even arguable whether its airing would violate the anti-wiretapping law.

We rule that not every violation of a law will justify straitjacketing the exercise of freedom of speech
and of the press. Our laws are of different kinds and doubtless, some of them provide norms of
conduct which even if violated have only an adverse effect on a person’s private comfort but does not
endanger national security. There are laws of great significance but their violation, by itself and
without more, cannot support suppression of free speech and free press. In fine, violation of law is
just a factor, a vital one to be sure, which should be weighed in adjudging whether to restrain freedom
of speech and of the press. The totality of the injurious effects of the violation to private and public
interest must be calibrated in light of the preferred status accorded by the Constitution and by related
international covenants protecting freedom of speech and of the press. In calling for a careful and
calibrated measurement of the circumference of all these factors to determine compliance with the
clear and present danger test, the Court should not be misinterpreted as devaluing violations of law.
By all means, violations of law should be vigorously prosecuted by the State for they breed their own
evil consequence. But to repeat, the need to prevent their violation cannot per se trump the exercise
of free speech and free press, a preferred right whose breach can lead to greater evils. For this failure
of the respondents alone to offer proof to satisfy the clear and present danger test, the Court has no
option but to uphold the exercise of free speech and free press. There is no showing that the feared
violation of the anti-wiretapping law clearly endangers the national security of the State.

This is not all the faultline in the stance of the respondents. We slide to the issue of whether the mere
press statements of the Secretary of Justice and of the NTC in question constitute a form of content-
based prior restraint that has transgressed the Constitution. In resolving this issue, we hold that it is
not decisive that the press statements made by respondents were not reduced in or followed up with
formal orders or circulars. It is sufficient that the press statements were made by respondents while in
the exercise of their official functions. Undoubtedly, respondent Gonzales made his statements as
Secretary of Justice, while the NTC issued its statement as the regulatory body of media. Any act
done, such as a speech uttered, for and on behalf of the government in an official capacity is covered
by the rule on prior restraint. The concept of an “act” does not limit itself to acts already converted to a
formal order or official circular. Otherwise, the non formalization of an act into an official order or
circular will result in the easy circumvention of the prohibition on prior restraint. The press statements
at bar are acts that should be struck down as they constitute impermissible forms of prior restraints on
the right to free speech and press.

There is enough evidence of chilling effect of the complained acts on record. The warnings given to
media came from no less the NTC, a regulatory agency that can cancel the Certificate of Authority of
the radio and broadcast media. They also came from the Secretary of Justice, the alter ego of the
Executive, who wields the awesome power to prosecute those perceived to be violating the laws of
the land. After the warnings, the KBP inexplicably joined the NTC in issuing an ambivalent Joint Press
Statement. After the warnings, petitioner Chavez was left alone to fight this battle for freedom of
speech and of the press. This silence on the sidelines on the part of some media practitioners is too
deafening to be the subject of misinterpretation.

The constitutional imperative for us to strike down unconstitutional acts should always be exercised
with care and in light of the distinct facts of each case. For there are no hard and fast rules when it
comes to slippery constitutional questions, and the limits and construct of relative freedoms are never
set in stone. Issues revolving on their construct must be decided on a case to case basis, always
based on the peculiar shapes and shadows of each case. But in cases where the challenged acts are
patent invasions of a constitutionally protected right, we should be swift in striking them down as
nullities per se. A blow too soon struck for freedom is preferred than a blow too late.
IN VIEW WHEREOF, the petition is GRANTED. The writs of certiorari and prohibition are hereby
issued, nullifying the official statements made by respondents on June 8, and 11, 2005 warning the
media on airing the alleged wiretapped conversation between the President and other personalities,
for constituting unconstitutional prior restraint on the exercise of freedom of speech and of the press

SO ORDERED.
17. [A.M. NO. CA-05-18-P : April 12, 2005]

ZALDY NUEZ, Complainant, v. ELVIRA CRUZ-APAO, Respondent.

DECISION

PER CURIAM:

What brings our judicial system into disrepute are often the actuations of a few erring court personnel
peddling influence to party-litigants, creating the impression that decisions can be bought and sold,
ultimately resulting in the disillusionment of the public. This Court has never wavered in its vigilance in
eradicating the so-called "bad eggs" in the judiciary. And whenever warranted by the gravity of the
offense, the supreme penalty of dismissal in an administrative case is meted to erring personnel.1

The above pronouncement of this Court in the case of Mendoza v. Tiongson2 is applicable to the
case at bar.

This is an administrative case for Dishonesty and Grave Misconduct3 against Elvira Cruz-Apao
(Respondent), Executive Assistant II of the Acting Division Clerk of Court of the Fifteenth (15th)
Division, Court of Appeals (CA). The complaint arose out of respondent's solicitation of One Million
Pesos (P1,000,000.00) from Zaldy Nuez (Complainant) in exchange for a speedy and favorable
decision of the latter's pending case in the CA,4 more particularly, CA-G.R. SP No. 73460 entitled
"PAGCOR v. Zaldy Nuez."5 Complainant initially lodged a complaint with the Action Center of the
Television program Imbestigador of GMA Network,6 the crew of which had accompanied him to the
Presidential Anti-Organized Crime Commission'Special Projects Group (PAOCC-SPG) in
Malacañang where he filed a complaint for extortion7 against respondent. This led to the conduct of
an entrapment operation by elements of the Presidential Anti-Organized Crime Task Force
(PAOCTF) on 28 September 2004 at the Jollibee Restaurant, 2nd Floor, Times Plaza Bldg., corner
Taft and United Nations Avenue, Manila,8 the place where the supposed hand-over of the money
was going to take place.
Respondent's apprehension by agents of the PAOCTF in the course of the entrapment operation
prompted then CA Presiding Justice (PJ) Cancio C. Garcia (now Supreme Court Justice) to issue
Office Order No. 297-04-CG9 (Order) which created an ad-hoc investigating committee
(Committee).10 The Committee was specifically tasked among others to conduct a thorough and
exhaustive investigation of respondent's case and to recommend the proper administrative sanctions
against her as the evidence may warrant.11

In accordance with the mandate of the Order, the Committee conducted an investigation of the case
and issued a Resolution12 dated 18 October 2004 where it concluded that a prima facie case of
Dishonesty and Serious Misconduct against respondent existed. The Committee thus recommended
respondent's preventive suspension for ninety (90) days pending formal investigation of the charges
against her.13 On 28 January 2005, the Committee submitted a Report14 to the new CA Presiding
Justice Romeo A. Brawner with its recommendation that respondent be dismissed from service.

Based on the hearings conducted and the evidence received by the Committee, the antecedent facts
are as follows:

Complainant's case referred to above had been pending with the CA for more than two years.15
Complainant filed an illegal dismissal case against PAGCOR before the Civil Service Commission
(CSC). The CSC ordered complainant's reinstatement but a writ of preliminary injunction and a
temporary restraining order was issued by the CA in favor of PAGCOR, thus complainant was not
reinstated to his former job pending adjudication of the case.16 Desiring an expeditious decision of
his case, complainant sought the assistance of respondent sometime in July 2004 after learning of
the latter's employment with the CA from her sister, Magdalena David. During their first telephone
conversation17 and thereafter through a series of messages they exchanged via SMS,18
complainant informed respondent of the particulars of his pending case. Allegedly, complainant
thought that respondent would be able to advise him on how to achieve an early resolution of his
case.

However, a week after their first telephone conversation, respondent allegedly told complainant that a
favorable and speedy decision of his case was attainable but the person who was to draft the
decision was in return asking for One Million Pesos (P1,000,000.00).19

Complainant expostulated that he did not have that kind of money since he had been jobless for a
long time, to which respondent replied, "Eh, ganoon talaga ang lakaran dito, eh. Kung wala kang
pera, pasensiya na."20 Complainant then tried to ask for a reduction of the amount but respondent
held firm asserting that the price had been set, not by her but by the person who was going to make
the decision.21 Respondent even admonished complainant with the words "Wala tayo sa palengke
iho!"22 when the latter bargained for a lower amount.23

Complainant then asked for time to determine whether or not to pay the money in exchange for the
decision. Instead, in August of 2004, he sought the assistance of Imbestigador.24 The crew of the TV
program accompanied him to PAOCCF-SPG where he lodged a complaint against respondent for
extortion.25 Thereafter, he communicated with respondent again to verify if the latter was still asking
for the money26 and to set up a meeting with her.27 Upon learning that respondent's offer of a
favorable decision in exchange for One Million Pesos (P1,000,000.00) was still standing, the plan for
the entrapment operation was formulated by Imbestigador in cooperation with the PAOCC.
On 24 September 2004, complainant and respondent met for the first time in person at the 2nd Floor
of Jollibee, Times Plaza Bldg.,28 the place where the entrapment operation was later conducted.
Patricia Siringan (Siringan), a researcher of Imbestigador, accompanied complainant and posed as
his sister-in-law.29 During the meeting, complainant clarified from respondent that if he gave the
amount of One Million Pesos (P1,000,000.00), he would get a favorable decision. This was confirmed
by the latter together with the assurance that it would take about a month for the decision to come
out.30 Respondent also explained that the amount of One Million Pesos (P1,000,000.00) guaranteed
a favorable decision only in the CA but did not extend to the Supreme Court should the case be
appealed later.31

When respondent was asked where the money will go, she claimed that it will go to a male
researcher whose name she refused to divulge. The researcher was allegedly a lawyer in the CA
Fifth (5th) Division where complainant case was pending.32 She also claimed that she will not get
any part of the money unless the researcher decides to give her some.33

Complainant tried once again to bargain for a lower amount during the meeting but respondent
asserted that the amount was fixed. She even explained that this was their second transaction and
the reason why the amount was closed at One Million Pesos (P1,000,000.00) was because on a
previous occasion, only Eight Hundred Thousand Pesos (P800,000.00) was paid by the client despite
the fact that the amount had been pegged at One Million Three Hundred Thousand Pesos
(P1,300,000.00).34 Complainant then proposed that he pay a down payment of Seven Hundred
Thousand Pesos (P700,000.00) while the balance of Three Hundred Thousand Pesos (P300,000.00)
will be paid once the decision had been released.35 However, respondent refused to entertain the
offer, she and the researcher having learned their lesson from their previous experience for as then,
the client no longer paid the balance of Five Hundred Thousand Pesos (P500,000.00) after the
decision had come out.36

Complainant brought along copies of the documents pertinent to his case during the first meeting.
After reading through them, respondent allegedly uttered, "Ah, panalo ka."37 The parties set the next
meeting date at lunchtime on 28 September 2004 and it was understood that the money would be
handed over by complainant to respondent then.38

On the pre-arranged meeting date, five (5) PAOCTF agents, namely: Capt. Reynaldo Maclang
(Maclang) as team leader, SPO1 Renato Banay (Banay), PO1 Bernard Villena (Villena), PO1 Danny
Feliciano, and PO2 Edgar delos Reyes39 arrived at around 11:30 in the morning at Jollibee.40 Nuez
and Siringan arrived at past noon and seated themselves at the table beside the one occupied by the
two (2) agents, Banay and Villena. Complainant had with him an unsealed long brown envelope
containing ten (10) bundles of marked money and paper money which was to be given to
respondent.41 The envelope did not actually contain the One Million Pesos (P1,000,000.00)
demanded by respondent, but instead contained paper money in denominations of One Hundred
Pesos (P100.00), Five Hundred Pesos (P500.00) and One Thousand Pesos (P1,000.00), as well as
newspaper cut-outs.42 There were also ten (10) authentic One Hundred Peso (P100.00) bills which
had been previously dusted with ultra-violet powder by the PAOCTF.43 The three other PAOCTF
agents were seated a few tables away44 and there were also three (3) crew members from
Imbestigador at another table operating a mini DV camera that was secretly recording the whole
transaction.45

Respondent arrived at around 1:00 p.m.46 She appeared very nervous and suspicious during the
meeting.47 Ironically, she repeatedly said that complainant might entrap her, precisely like those that
were shown on Imbestigador.48 She thus refused to receive the money then and there. What she
proposed was for complainant and Siringan to travel with her in a taxi and drop her off at the CA
where she would receive the money.49
More irony ensued. Respondent actually said that she felt there were policemen around and she
was afraid that once she took hold of the envelope complainant proffered, she would suddenly be
arrested and handcuffed.50 At one point, she even said, "Ayan o, tapos na silang kumain, bakit hindi
pa sila umaalis?,"51 referring to Banay and Villena at the next table. To allay respondent's suspicion,
the two agents stood up after a few minutes and went near the staircase where they could still see
what was going on.52

Complainant, respondent and Siringan negotiated for almost one hour.53 Complainant and Siringan
bargained for a lower price but respondent refused to accede. When respondent finally touched the
unsealed envelope to look at the money inside, the PAOCTF agents converged on her and invited
her to the Western Police District (WPD) Headquarters at United Nations Avenue for questioning.54
Respondent became hysterical as a commotion ensued inside the restaurant.55

On the way to the WPD on board the PAOCTF vehicle, Banay asked respondent why she went to the
restaurant. The latter replied that she went there to get the One Million Pesos (P1,000,000.00).56

Respondent was brought to the PNP Crime Laboratory at the WPD where she was tested and found
positive for ultra-violet powder that was previously dusted on the money.57 She was later detained
at the WPD Headquarters.

At seven o'clock in the evening of 28 September 2004, respondent called Atty. Lilia Mercedes
Encarnacion Gepty (Atty. Gepty), her immediate superior in the CA at the latter's house.58 She
tearfully confessed to Atty. Gepty that "she asked for money for a case and was entrapped by police
officers and the media."59 Enraged at the news, Atty. Gepty asked why she had done such a thing to
which respondent replied, "Wala lang ma'am, sinubukan ko lang baka makalusot."60 Respondent
claimed that she was ashamed of what she did and repented the same. She also asked for Atty.
Gepty's forgiveness and help. The latter instead reminded respondent of the instances when she and
her co-employees at the CA were exhorted during office meetings never to commit such offenses.61

Atty. Gepty rendered a verbal report62 of her conversation with their division's chairman, Justice
Martin S. Villarama. She reduced the report into writing and submitted the same to then PJ Cancio
Garcia on 29 September 2004.63 She also later testified as to the contents of her report to the
Committee.

During the hearing of this case, respondent maintained that what happened was a case of instigation
and not an entrapment. She asserted that the offer of money in exchange for a favorable decision
came not from her but from complainant. To support her contention, she presented witnesses who
testified that it was complainant who allegedly offered money to anyone who could help him with his
pending case. She likewise claimed that she never touched the money on 28 September 2004, rather
it was Capt. Maclang who forcibly held her hands and pressed it to the envelope containing the
money. She thus asked that the administrative case against her be dismissed.

This Court is not persuaded by respondent's version. Based on the evidence on record, what
happened was a clear case of entrapment, and not instigation as respondent would like to claim.
In entrapment, ways and means are resorted to for the purpose of ensnaring and capturing the law-
breakers in the execution of their criminal plan. On the other hand, in instigation, the instigator
practically induces the would-be defendant into the commission of the offense, and he himself
becomes a co-principal.64

In this case, complainant and the law enforcers resorted to entrapment precisely because respondent
demanded the amount of One Million Pesos (P1,000,000.00) from complainant in exchange for a
favorable decision of the latter's pending case. Complainant's narration of the incidents which led to
the entrapment operation are more in accord with the circumstances that actually transpired and are
more credible than respondent's version.

Complainant was able to prove by his testimony in conjunction with the text messages from
respondent duly presented before the Committee that the latter asked for One Million Pesos
(P1,000,000.00) in exchange for a favorable decision of the former's pending case with the CA. The
text messages were properly admitted by the Committee since the same are now covered by Section
1(k), Rule 2 of the Rules on Electronic Evidence65 which provides:

"Ephemeral electronic communication" refers to telephone conversations, text messages . . . and

other electronic forms of communication the evidence of which is not recorded or retained."

Under Section 2, Rule 11 of the Rules on Electronic Evidence, "Ephemeral electronic

communications shall be proven by the testimony of a person who was a party to the same or who
has personal knowledge thereof . . . ." In this case, complainant who was the recipient of said
messages and therefore had personal knowledge thereof testified on their contents and import.
Respondent herself admitted that the cellphone number reflected in complainant's cellphone from
which the messages originated was hers.66 Moreover, any doubt respondent may have had as to the
admissibility of the text messages had been laid to rest when she and her counsel signed and
attested to the veracity of the text messages between her and complainant.67 It is also well to
remember that in administrative cases, technical rules of procedure and evidence are not strictly
applied.68 We have no doubt as to the probative value of the text messages as evidence in
determining the guilt or lack thereof of respondent in this case.

Complainant's testimony as to the discussion between him and respondent on the latter's demand for
One Million Pesos (P1,000,000.00) was corroborated by the testimony of a disinterested witness,
Siringan, the reporter of Imbestigador who was present when the parties met in person. Siringan
was privy to the parties' actual conversation since she accompanied complainant on both meetings
held on 24 and 28 of September 2004 at Jollibee.

Respondent's evidence was comprised by the testimony of her daughter and sister as well as an
acquaintance who merely testified on how respondent and complainant first met. Respondent's own
testimony consisted of bare denials and self-serving claims that she did not remember either the
statements she herself made or the contents of the messages she sent. Respondent had a very
selective memory made apparent when clarificatory questions were propounded by the Committee.

When she was asked if she had sent the text messages contained in complainant's cellphone and
which reflected her cellphone number, respondent admitted those that were not incriminating but
claimed she did not remember those that clearly showed she was transacting with complainant.
Thus, during the 17 November 2004 hearing, where respondent was questioned by Justice Salazar-
Fernando, the following transpired:

Q:After reading those text messages, do you remember having made those text messages?

(Respondent)

A:Only some of these, your honors.

Justice Salazar-Fernando: Which one?

A:Sabi ko po magpunta na lang sila sa office. Yung nasa bandang unahan po, your Honors.

Q: What else?

A: Tapos yung sabi ko pong pagpunta niya magdala siya ng I.D. or isama niya sa kanya si Len David.

Q: Okay, You remember having texted Zaldy Nuez on September 23, 2004 at 1309 which was
around 1:09 in the afternoon and you said "di me pwede punta na lang kayo dito sa office Thursday
4:45 p.m. Room 107 Centennial Building.

A:Yes, your Honors.

Q: And on September 23, 2004 at 1731 which was around 5:31 in the afternoon you again texted
Zaldy Nuez and you said "Sige bukas nang tanghali sa Times Plaza, Taft Avenue, corner U.N.
Avenue. Magdala ka ng I.D. para makilala kita o isama mo si Len David.

A: Opo, your Honors.

Q:How about on September 23 at 5:05 in the afternoon when you said "Di pwede kelan mo gusto
fixed price na iyon."

A: I don't remember that, your Honors.

Q: Again on September 23 at 5:14 p.m. you said "Alam mo di ko iyon price and nagbigay noon yung
gagawa. Wala ako doon." You don't also remember this?

A: Yes, your Honors.

Q: September 27 at 1:42 p.m. "Oo naman ayusin nyo yung hindi halatang pera". You also don't
remember that?chanroblesvirtualawlibrary

A: Yes Your Honors.

Q: September 27 at 1:30 in the afternoon, "Di na pwede sabi sa akin. Pinakaiusapan ko na nga ulit
iyon." You don't remember that?

A: No, your Honors.69

Respondent would like this Court to believe that she never had any intention of committing a crime,
that the offer of a million pesos for a favorable decision came from complainant and that it was
complainant and the law enforcers who instigated the whole incident.

Respondent thus stated that she met with complainant only to tell the latter to stop calling and texting
her, not to get the One Million Pesos (P1,000,000.00) as pre-arranged.

This claim of respondent is preposterous to say the least. Had the offer of a million pesos really come
from complainant and had she really intended to stop the latter from corrupting her, she could have
simply refused to answer the latter's messages and calls. This she did not do. She answered those
calls and messages though she later claimed she did not remember having sent the same messages
to complainant. She could also have reported the matter to the CA Presiding Justice, an action
which respondent admitted during the hearing was the proper thing to do under the circumstances.70
But this course of action she did not resort to either, allegedly because she never expected things to
end this way.71

While claiming that she was not interested in complainant's offer of a million pesos, she met with him
not only once but twice, ostensibly, to tell the latter to stop pestering her. If respondent felt that
telling complainant to stop pestering her would be more effective if she did it in person, the same
would have been accomplished with a single meeting. There was no reason for her to meet with
complainant again on 28 September 2004 unless there was really an understanding between them
that the One Million Pesos (P1,000,000.00) will be handed over to her then. Respondent even
claimed that she became afraid of complainant when she learned that the latter had been dismissed
by PAGCOR for using illegal drugs.72 This notwithstanding, she still met with him on 28 September
2004.

Anent complainant's narration of respondent's refusal to reduce the amount of One Million Pesos
(P1,000.000.00) based on the lesson learned from a previous transaction, while admitting that she
actually said the same, respondent wants this Court to believe that she said it merely to have
something to talk about.73 If indeed, respondent had no intention of committing any wrongdoing, it
escapes the Court why she had to make up stories merely to test if complainant could make good on
his alleged boast that he could come up with a million pesos. It is not in accord with ordinary human
experience for an honest government employee to make up stories that would make party-litigants
believe that court decisions may be bought and sold. Time and again this Court has declared, thus:

"Everyone in the judiciary bears a heavy burden of responsibility for the proper discharge of his duty
and it behooves everyone to steer clear of any situations in which the slightest suspicion might be
cast on his conduct. Any misbehavior on his part, whether true or only perceived, is likely to reflect
adversely on the administration of justice."74

Respondent having worked for the government for twenty four (24) years, nineteen (19) of which
have been in the CA,75 should have known very well that court employees are held to the strictest
standards of honesty and integrity. Their conduct should at all times be above suspicion. As held
by this Court in a number of cases, "The conduct or behavior of all officials of an agency involved in
the administration of justice, from the Presiding Judge to the most junior clerk, should be
circumscribed with the heavy burden of responsibility."76 Their conduct must, at all times be
characterized by among others, strict propriety and decorum in order to earn and maintain the respect
of the public for the judiciary.77
Respondent's actuations from the time she started communicating with complainant in July 2004 until
the entrapment operation on 28 September 2004 show a lack of the moral fiber demanded from court
employees. Respondent's avowals of innocence notwithstanding, the evidence clearly show that she
solicited the amount of One Million Pesos (P1,000,000.00) from complainant in exchange for a
favorable decision. The testimony of Atty. Gepty, the recipient of respondent's confession
immediately after the entrapment operation, unmistakably supports the finding that respondent did
voluntarily engage herself in the activity she is being accused of.

Respondent's solicitation of money from complainant in exchange for a favorable decision violates
Canon I of the Code of Conduct for Court Personnel which took effect on 1 June 2004 pursuant to
A.M. No. 03-06-13-SC. Sections 1 and 2, Canon I of the Code of Conduct for Court Personnel
expressly provide:

"SECTION 1. Court personnel shall not use their official position to secure unwarranted benefits,
privileges or exemption for themselves or for others."

"SECTION 2. Court personnel shall not solicit or accept any gift, favor or benefit based on any explicit
or implicit understanding that such gift, favor or benefit shall influence their official actions."
(Underscoring supplied)ςrαlαωlιbrαrÿ

It is noteworthy that the penultimate paragraph of the Code of Conduct for Court Personnel
specifically provides:

INCORPORATION OF OTHER RULES

"SECTION 1. All provisions of the law, Civil Service rules, and issuances of the Supreme Court
governing the conduct of public officers and employees applicable to the judiciary are deemed
incorporated into this Code."

By soliciting the amount of One Million Pesos (P1,000,000.00) from complainant, respondent
committed an act of impropriety which immeasurably affects the honor and dignity of the judiciary and
the people's confidence in it.

In the recent case of Aspiras v. Abalos,78 complainant charged respondent, an employee of the
Records Section, Office of the Court Administrator (OCA), Supreme Court for allegedly deceiving him
into giving her money in the total amount of Fifty Two Thousand Pesos (P52,000.00) in exchange for
his acquittal in a murder case on appeal before the Supreme Court. It turned out that respondent's
representation was false because complainant was subsequently convicted of murder and sentenced
to suffer the penalty of reclusion perpetua by the Supreme Court.79

The Supreme Court en banc found Esmeralda Abalos guilty of serious misconduct and ordered her
dismissal from the service. This Court aptly held thus:
"In Mirano v. Saavedra,80 this Court emphatically declared that a public servant must exhibit at all
times the highest sense of honesty and integrity. The administration of justice is a sacred task, and by
the very nature of their duties and responsibilities, all those involved in it must faithfully adhere to,
hold inviolate, and invigorate the principle that public office is a public trust, solemnly enshrined in the
Constitution."81

Likewise, in the grave misconduct case against Datu Alykhan T. Amilbangsa of the Shari a Circuit
Court, Bengo, Tawi-Tawi,82 this Court stated:

"No position demands greater moral righteousness and uprightness from the occupant than the
judicial office. Those connected with the dispensation of justice bear a heavy burden of responsibility.
Court employees in particular, must be individuals of competence, honesty and probity charged as
they are with safeguarding the integrity of the court . . . . The High Court has consistently held that
persons involved in the administration of justice ought to live up to the strictest standards of honesty
and integrity in the public service. He should refrain from financial dealings which would interfere with
the efficient performance of his duties.83 The conduct required of court personnel must always be
beyond reproach."84

The following pronouncement of this Court in the case of Yrastorza, Sr. v. Latiza, Court Aide, RTC
Branch 14 Cebu City85 is also worth remembering:

"Court employees bear the burden of observing exacting standards of ethics and morality. This is the
price one pays for the honor of working in the judiciary. Those who are part of the machinery
dispensing justice from the lowliest clerk to the presiding judge must conduct themselves with utmost
decorum and propriety to maintain the public's faith and respect for the judiciary. Improper behavior
exhibits not only a paucity of professionalism at the workplace but also a great disrespect to the court
itself. Such demeanor is a failure of circumspection demanded of every public official and
employee."86

In view of the facts narrated above and taking into account the applicable laws and jurisprudence, the
Committee in their Report87 recommended that respondent be dismissed from government service
for GRAVE MISCONDUCT and violation of Sections 1 and 2, Canon 1 of the Code of Conduct for
Court Personnel.88

Finding the Committee's recommendation to be supported by more than substantial evidence and in
accord with the applicable laws and jurisprudence, the recommendation is well taken.

WHEREFORE, premises considered, respondent Elvira Cruz-Apao is found GUILTY of GRAVE

MISCONDUCT and violation of SECTIONS 1 and 2 of the CODE OF CONDUCT FOR COURT
PERSONNEL and is accordingly DISMISSED from government service, with prejudice to re-
employment in any branch, instrumentality or agency of the government, including government-
owned and controlled corporations. Her retirement and all benefits except accrued leave credits are
hereby FORFEITED.

SO ORDERED.
Davide, Jr., C.J., Puno, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio,
Austria-Martinez, Corona, Carpio-Morales, Callejo, Sr., Azcuna, Tinga and Chico-Nazario, JJ.,
concur.

Garcia, J., No part.

18. [ A.M. No. MTJ-96-1110, June 25, 2001 ]

Mamba v. Garcia

DECISION

PER CURIAM:

This is a “resolution,” which is more accurately a manifesto or a petition of concerned citizens of

Tuao, Cagayan, denouncing certain acts of Judge Dominador L. Garcia, Municipal Trial Court, Tuao,
Cagayan, in connection with his handling of Criminal Case No. 399, entitled “People vs. Renato
Bulatao.” The complainants are then Representative of the Third District of Cagayan, the mayor and
vice–mayor, ten (10) members of the Sangguniang Bayan, thirty-two (32) barrio captains, ten (10)
LGU department heads of Tuao, Cagayan, and eight (8) heads of non-governmental organizations or
NGOs in the municipality of Tuao.

The “resolution,” dated November 4, 1996, was presented to this Court. It was adopted at an
assembly led by Rep. Manuel N. Mamba which picketed the municipal trial court on that day.[1] The
"resolution" was treated as an administrative complaint and respondent Judge Dominador L. Garcia
was required to answer. The matter was referred to Executive Judge Orlando D. Beltran, Jr. of the
Regional Trial Court of Tuao, Cagayan, for investigation, report, and recommendation.[2]

Thereafter, an investigation was held during which the affidavits and sworn statements of NBI Special
Investigator Ablezer Rivera, the joint affidavit of NBI agents, Raul A. Ancheta and Paul D. Rivera, the
sworn statement of the accused in Criminal Case No. 699, Renato Bulatao, and the testimonies of
Abner P. Cardenas, clerk of court, MTC, Tuao, Cagayan and Tomas Latauan, Jr., interpreter of the
same court, were presented. The gist of the evidence for the complainants is as follows:

On August 23, 1996, a complaint for violation of Presidential Decree No.1866 (illegal possession of
firearms) was filed against a certain Renato Bulatao by the Cagayan Provincial Police Command
before the sala of respondent Judge Dominador L. Garcia of the Municipal Trial Court, Tuao,
Cagayan.[3] Respondent set the preliminary investigation on September 4, 1996, but the same was
subsequently postponed and reset to October 23, 1996 as respondent was not present, although the
complaining officer, P/Sr. Inspector Danny F. Salvador, appeared in court. On October 23, 1996, the
preliminary investigation was again reset to October 30, 1996. On October 29, 1996, the accused,
Renato Bulatao, complained to the NBI that at the scheduled preliminary investigation on September
4, 1996, P/Sr. Inspector Salvador demanded P30,000.00 from him in consideration of the withdrawal
of the criminal case against him. According to Bulatao, the demand was reiterated by Salvador and
respondent judge on October 23, 1996. As Bulatao told them that he could not afford it, the amount
was reduced to P6,000.00.
Based on Bulatao’s report, the NBI set out to entrap Salvador and respondent judge. The NBI gave
Bulatao 12 pieces of P500.00 marked bills amounting to P6,000.00, which the latter would give to
Salvador and respondent the next day.[4]

Accordingly, at about 7 o'clock in the morning of the following day, October 30, Bulatao met the NBI
operatives in the house of Francisco Mamba, Sr., former representative of the 3rd District of
Cagayan, where the entrapment was planned. Bulatao was given a tape recorder to record his
conversation with whoever will receive the money. At 9 a.m., Bulatao went to the Municipal Trial
Court and waited for his case to be called. At 10:30 a.m., respondent went out of his chambers and
talked to SPO2 Jonathan Santos and SPO4 Carlos Poli, representatives of P/Sr. Inspector Salvador
in the preliminary investigation. Respondent then called Bulatao and led him and the two police
officers to the office of the MTC court personnel. Inside, respondent asked Bulatao if he had the
money with him. When he answered in the affirmative, respondent took them to his chambers and left
them there as he proceeded to his sala. After handing the money to the police officers, Bulatao went
out of respondent's chambers. Upon his signal, the NBI operatives waiting outside respondent's court
then rushed to the judge's chambers and arrested the two police officers after recovering 11 pieces of
P500.00 marked bills in their possession.[5]

After the matter was referred by this Court to Executive Judge Orlando Beltran for investigation, the
latter scheduled several hearings for the reception of evidence for the respondent. The records show
that hearings were set on different dates (December 10, 1997, January 30, 1998, February 10, 1998,
March 3, 1998, March 10, 1998, September 10, 1998, October 9, 1998, November 11, 1998, January
5, 1999, February 9, 1999, March 4, 1999, and April 5, 1999), but respondent did not appear despite
due notice. Accordingly, he was deemed to have waived the right to present evidence and the case
was submitted for decision. Hence only his counter-affidavit was considered, in which respondent
claimed that it was Bulatao who asked permission to talk to the two police officers. He denied that he
took the three to his chambers.[6]

On the basis of these facts, the Investigating Judge made the following recommendation:

"The foregoing facts indisputably show that the respondent Judge allowed the use of his chambers by
the two (2) police officers SPOII Jonathan Santos and SPOIV Carlos Poli and Renato Bulatao, the
accused in the criminal case for illegal possession of firearms, so that they could talk about the
"settlement" of Bulatao's case which was then pending preliminary investigation by the respondent
Judge. Although the two (2) witnesses, Abner Cardenas and Tomas Latauan, Jr., claimed that they
did not hear the subject of the conversation between Bulatao, on one hand, and the two (2)
policemen and the respondent Judge Dominador L. Garcia, on the other, before the three first-named
persons went inside the chambers of the respondent Judge, it is not difficult to conclude that they
must have talked about the criminal case of Bulatao and its "settlement." For if the subject-matter of
their conversation were other than said "settlement" there appears no reason or purpose to allow the
policemen and the accused to go inside the judge's chambers and there to continue their
conversation. Simply stated, the respondent judge allowed the two (2) policemen and the accused
Renato Bulatao to use his chambers so that they could consummate the arrangements for the
dismissal of the case, particularly the payment of the sum of money being demanded as
consideration for such dismissal.

"In this connection, the undersigned Investigating Judge cannot help but refer to the taped
conversation between the two (2) policemen and Renato Bulatao inside the chamber of the
respondent Judge. A portion of the translated dialogue between Poli and Bulatao, which was in
Ilocano, tends to show that the P6,000.00 pay-off handed by Bulatao to the policemen was not
intended for the respondent Judge but solely for the policemen and their superior, P/Sr. Inspector
Salvador. However, it is not easy to disregard the implication obvious from the said conversation that
the respondent Judge was privy to the entire transaction. SPOIV Poli pointedly told Bulatao "to take
care of the Judge" which implies that the Judge knew of the pay-off being made and was willing to
abide by the "deal" provided he would be "taken care of" by Bulatao.

"Such acts of the respondent Judge are improper, to say the least. He, therefore, violated the duty of
every Judge to uphold the integrity of the judiciary and to avoid impropriety and the appearance of
impropriety in all activities. (Mortel vs. Leido, Jr. 44 SCAD 567). It cannot be over-emphasized that a
judge's official conduct should be free from the appearance of impropriety, and his personal behavior,
not only upon the bench and in the performance of official duties but also in his every day life, should
be beyond reproach. (Marcos, Sr. vs. Arcangel, 72 SCAD 1). Canon 2 of the Code of Judicial
Conduct enjoins judges to avoid not just impropriety in their conduct but even the mere appearance of
impropriety. This is true not only in the performance of their official duties but in all their activities,
including their private life. They must conduct themselves in such a manner that they give no ground
for reproach. (Pedro San Juan vs. Judge Lore V. Bagalsera, RTC, BR. 23, Naga City, A. M. No. RTJ-
97-1395, December 22, 1997). In this case, the acts of the respondent judge were clearly improper as
he facilitated, if not participated in, the obviously unauthorized/illegal transaction between the two (2)
police officers and the accused Renato Bulatao for the settlement/dismissal of the latter's criminal
case, in consideration of a sum of money, particularly since the offense charged against Bulatao is a
grievous one and that it is one which is not allowed by law to be compromised.

"In view of all the foregoing, the undersigned Investigating Judge respectfully recommends that the
respondent Judge Dominador L. Garcia be found guilty of improper conduct and be punished
accordingly.[7]"

The Investigating Judge's reliance on the tape-recorded conversation between Bulatao and the two
police officers is erroneous. The recording of private conversations without the consent of the parties
contravenes the provisions of Rep. Act. No. 4200, otherwise known as the Anti-Wire Tapping Law,
and renders the same inadmissible in evidence in any proceeding.[8] The law covers even those
recorded by persons privy to the private communications, as in this case.[9] Thus, the contents of the
tape recorder cannot be relied upon to determine the culpability of respondent judge.

In all other respects, however, the findings of the Investigating Judge are in accordance with the
evidence. We hold, however, that respondent judge is guilty not just of improper conduct but of
serious misconduct. Serious misconduct is such conduct which affects a public officer's performance
of his duties as such officer and not only that which affects his character as a private individual. For
serious misconduct to warrant a dismissal from the service, there must be reliable evidence showing
that the judicial acts complained of were corrupt or inspired by an intention to violate the law. It must
(1) be serious, important, weighty, momentary, and not trifling; (2) imply wrongful intention and not
mere error of judgment; and (3) have a direct relation to and be connected with the performance of
his official duties.[10]

In the case at bar, it is clear that the crime of bribery was committed. Although the evidence may not
be sufficient to support a conviction in a criminal case, it is adequate for the purpose of these
proceedings. The standards of integrity required of members of the Bench are not satisfied by
conduct which merely allows one to escape the penalties of the criminal law.[11] In an administrative
proceeding, such as this case, only substantial evidence, or that amount of relevant evidence which a
reasonable mind might accept as adequate to support a conclusion, is required.[12]

To constitute bribery, the following must be shown: (1) the offender is a public officer within the scope
of Art. 203; (2) the offender accepts an offer or a promise or receives a gift or present by himself or
through another; (3) such offer or promise is accepted, or gift received by the public officer, (a) with a
view to committing some crime; (b) in consideration of the execution of an act which does not
constitute a crime, but which is unjust; or (c) to refrain from doing something which it is his official
duty to do; and (4) the act which he agrees to perform is connected with the performance of his
official duties.[13] From the records, it is evident that P/Sr. Inspector Salvador, a public officer,
solicited money from Bulatao in consideration of the withdrawal of the case against the latter. The
former categorically told the latter that he would withdraw the criminal case against Bulatao if Bulatao
gives him P30,000.00, which was later lowered to P6,000.00. The fact that two of his men came for
the preliminary investigation and, without hesitation, followed respondent judge to his chambers after
hearing that Bulatao had the money, bears out Bulatao's allegations. Although these circumstances
do not show conclusively that respondent judge was privy to the crime of bribery, there is substantial
evidence showing that he was at least an accomplice to the crime who cooperated in the execution of
the offense by previous or simultaneous acts.[14] The following circumstances, as corroborated by
the report of the NBI and the testimonies of two employees of the MTC, who were disinterested
witnesses, show that respondent judge knowingly and voluntarily cooperated with P/Sr. Inspector
Salvador in consummating the crime:

(1) On the day of the entrapment, respondent judge asked Bulatao if he had the money, and when he
received an affirmative answer, he took Bulatao and the two police officers to his chambers, told the
police officers to receive whatever Bulatao would give them,[15] and then left; and

(2) When Bulatao left respondent's chambers and gave the signal to the NBI operatives waiting
outside, the marked bills were found by the agents in the possession of SPO2 Jonathan Santos, as
the latter was leaving the chambers of respondent judge with SPO4 Carlos Poli. As the Investigating
Judge observed, respondent willingly allowed his chambers to be used for the consummation of the
illegal transaction. The actions of respondent implies a wrongful intention to commit an unlawful act
while in the performance of his official duties.

Canon 2 of the Code of Judicial Conduct enjoins judges to avoid not only impropriety but even the
appearance of impropriety in all their conduct. This includes not taking an undue interest in the
settlement of criminal cases pending before them as this may compromise the integrity and
impartiality of their office.[16] As the visible representation of the law and of justice, their conduct
must be above reproach and suspicion.[17] By acting as an accomplice to P/Sr. Inspector Salvador,
respondent judge violated not only the law but also the Code of Judicial Conduct.

Nor does the fact that respondent committed misconduct during a preliminary investigation, which is
non-judicial in character, exempt him from the disciplinary power of this Court as the conduct of a
preliminary investigation is only an addition to his judicial functions.[18]

In Cabrera vs. Pajares,[19] where the payment of the money to respondent judge in his chambers
was witnessed by an NBI agent, this Court ordered his dismissal from the service. Likewise, in Court
Administrator vs. Hermoso,[20] where the judge received money from a party to a case pending
before his sala and was entrapped by an NBI agent, this Court ordered his dismissal. In addition, the
erring judge is liable to the forfeiture of his leave credits and retirement benefits and his dismissal
shall be with prejudice to reemployment in any branch of the government or any of its agencies or
instrumentalities, including government-owned and controlled corporations, as provided by Section 9,
Rule 14 of the Omnibus Rules Implementing Book V of Executive Order No. 292 (Administrative
Code of 1987) and our current rulings.[21]

Respondent judge was previously convicted in two administrative cases filed before this Court. In
A.M. No. MTJ-91-616, entitled "Clodualdo Escobar vs. Garcia," the Court, in a resolution dated
September l, 1992, found respondent guilty of palpable ignorance of Rule 114, section 8 resulting in
the denial of due process to the prosecution in a criminal case. Respondent was fined an amount
equivalent to 15 days salary with warning that a repetition of the same would be dealt with more
severely. In another case, A.M. No. MTJ-95-1049, entitled “Eloisa Bernardo v. Garcia,” the Court, in a
resolution dated June 28, 1995, found respondent guilty of deliberately delaying his decision in a civil
case and falsifying certificates of service. He was reprimanded and ordered to pay a fine of P5,000.00
with warning that a repetition of the same or similar acts will be dealt with more severely.

WHEREFORE, the Court finds respondent Judge Dominador L. Garcia guilty of serious misconduct
and accordingly orders his DISMISSAL from the service and the forfeiture of his leave credits and
retirement benefits, with prejudice to reemployment in any branch of the government or any of its
agencies or instrumentalities, including government-owned and controlled corporations.

SO ORDERED.

Davide, Jr., C.J., Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Panganiban, Quisumbing, Pardo,
Buena, Gonzaga-Reyes, Ynares-Santiago, De Leon, Jr., and Sandoval-Gutierrez, JJ., concur.
19. G.R. No. 107383 February 20, 1996

CECILIA ZULUETA, petitioner, vs.

COURT OF APPEALS and ALFREDO MARTIN, respondents.

DECISION

MENDOZA, J.:

This is a petition to review the decision of the Court of Appeals, affirming the decision of the Regional
Trial Court of Manila (Branch X) which ordered petitioner to return documents and papers taken by
her from private respondent's clinic without the latter's knowledge and consent.
The facts are as follows:

Petitioner Cecilia Zulueta is the wife of private respondent Alfredo Martin. On March 26, 1982,
petitioner entered the clinic of her husband, a doctor of medicine, and in the presence of her mother,
a driver and private respondent's secretary, forcibly opened the drawers and cabinet in her husband's
clinic and took 157 documents consisting of private correspondence between Dr. Martin and his
alleged paramours, greetings cards, cancelled checks, diaries, Dr. Martin's passport, and
photographs. The documents and papers were seized for use in evidence in a case for legal
separation and for disqualification from the practice of medicine which petitioner had filed against her
husband.

Dr. Martin brought this action below for recovery of the documents and papers and for damages
against petitioner. The case was filed with the Regional Trial Court of Manila, Branch X, which, after
trial, rendered judgment for private respondent, Dr. Alfredo Martin, declaring him "the
capital/exclusive owner of the properties described in paragraph 3 of plaintiff's Complaint or those
further described in the Motion to Return and Suppress" and ordering Cecilia Zulueta and any person
acting in her behalf to a immediately return the properties to Dr. Martin and to pay him P5,000.00, as
nominal damages; P5,000.00, as moral damages and attorney's fees; and to pay the costs of the suit.
The writ of preliminary injunction earlier issued was made final and petitioner Cecilia Zulueta and her
attorneys and representatives were enjoined from "using or submitting/admitting as evidence" the
documents and papers in question. On appeal, the Court of Appeals affirmed the decision of the
Regional Trial Court. Hence this petition.

There is no question that the documents and papers in question belong to private respondent, Dr.
Alfredo Martin, and that they were taken by his wife, the herein petitioner, without his knowledge and
consent. For that reason, the trial court declared the documents and papers to be properties of
private respondent, ordered petitioner to return them to private respondent and enjoined her from
using them in evidence. In appealing from the decision of the Court of Appeals affirming the trial
court's decision, petitioner's only ground is that in Alfredo Martin v. Alfonso Felix, Jr.,1 this Court ruled
that the documents and papers (marked as Annexes A-1 to J-7 of respondent's comment in that
case) were admissible in evidence and, therefore, their use by petitioner's attorney, Alfonso Felix did
not constitute malpractice or gross misconduct, For this reason it is contended that the Court of
Appeals erred in affirming the decision of the trial court instead of dismissing private respondent's
complaint.

Petitioner's contention has no merit. The case against Atty. Felix, Jr. was for disbarment. Among
other things, private respondent, Dr. Alfredo Martin, as complainant in that case, charged that in using
the documents in evidence, Atty. Felix, Jr. committed malpractice or gross misconduct because of the
injunctive order of the trial court. In dismissing the complaint against Atty. Felix, Jr., this Court took
note of the following defense of Atty. Felix; Jr. which it found to be "impressed with merit:"2

On the alleged malpractice or gross misconduct of respondent [Alfonso Felix, Jr.], he maintains that:

....
4. When respondent refiled Cecilia's case for legal separation before the Pasig Regional Trial Court,
there was admittedly an order of the Manila Regional Trial Court prohibiting Cecilia from using the
documents Annex "A-1 to J-7." On September 6, 1983, however having appealed the said order to
this Court on a petition for certiorari, this Court issued a restraining order on aforesaid date which
order temporarily set aside the order of the trial court. Hence, during the enforceability of this Court's
order, respondent's request for petitioner to admit the genuineness and authenticity of the subject
annexes cannot be looked upon as malpractice. Notably, petitioner Dr. Martin finally admitted the
truth and authenticity of the questioned annexes, At that point in time, would it have been malpractice
for respondent to use petitioner's admission as evidence against him in the legal separation case
pending in the Regional Trial Court of Makati? Respondent submits it is not malpractice.

Significantly, petitioner's admission was done not thru his counsel but by Dr. Martin himself under
oath, Such verified admission constitutes an affidavit, and, therefore, receivable in evidence against
him. Petitioner became bound by his admission. For Cecilia to avail herself of her husband's
admission and use the same in her action for legal separation cannot be treated as malpractice.

Thus, the acquittal of Atty. Felix, Jr. in the administrative case amounts to no more than a declaration
that his use of the documents and papers for the purpose of securing Dr. Martin's admission as to
their genuiness and authenticity did not constitute a violation of the injunctive order of the trial court.
By no means does the decision in that case establish the admissibility of the documents and papers
in question.

It cannot be overemphasized that if Atty. Felix, Jr. was acquitted of the charge of violating the writ of
preliminary injunction issued by the trial court, it was only because, at the time he used the
documents and papers, enforcement of the order of the trial court was temporarily restrained by this
Court. The TRO issued by this Court was eventually lifted as the petition for certiorari filed by
petitioner against the trial court's order was dismissed and, therefore, the prohibition against the
further use of the documents and papers became effective again.

Indeed the documents and papers in question are inadmissible in evidence. The constitutional
injunction declaring "the privacy of communication and correspondence [to be] inviolable"3 is no less
applicable simply because it is the wife (who thinks herself aggrieved by her husband's infidelity) who
is the party against whom the constitutional provision is to be enforced. The only exception to the
prohibition in the Constitution is if there is a "lawful order [from a] court or when public safety or order
requires otherwise, as prescribed by law."4 Any violation of this provision renders the evidence
obtained inadmissible "for any purpose in any proceeding." 5

The intimacies between husband and wife do not justify any one of them in breaking the drawers and
cabinets of the other and in ransacking them for any telltale evidence of marital infidelity. A person, by
contracting marriage, does not shed his/her integrity or his right to privacy as an individual and the
constitutional protection is ever available to him or to her.

The law insures absolute freedom of communication between the spouses by making it privileged.
Neither husband nor wife may testify for or against the other without the consent of the affected
spouse while the marriage subsists.6 Neither may be examined without the consent of the other as to
any communication received in confidence by one from the other during the marriage, save for
specified exceptions.7 But one thing is freedom of communication; quite another is a compulsion for
each one to share what one knows with the other. And this has nothing to do with the duty of fidelity
that each owes to the other.
WHEREFORE, the petition for review is DENIED for lack of merit.

SO ORDERED.

Regalado, Romero and Puno, JJ., concur.

20. G.R. No. L-69809 October 16, 1986

EDGARDO A. GAANAN, petitioner, vs.

INTERMEDIATE APPELLATE COURT and PEOPLE OF THE PHILIPPINES, respondents.

GUTIERREZ, JR., J.:

This petition for certiorari asks for an interpretation of Republic Act (RA) No. 4200, otherwise known
as the Anti-Wiretapping Act, on the issue of whether or not an extension telephone is among the
prohibited devices in Section 1 of the Act, such that its use to overhear a private conversation would
constitute unlawful interception of communications between the two parties using a telephone line.
The facts presented by the People and narrated in the respondent court's decision are not disputed
by the petitioner.

In the morning of October 22, 1975, complainant Atty. Tito Pintor and his client Manuel Montebon
were in the living room of complainant's residence discussing the terms for the withdrawal of the
complaint for direct assault which they filed with the Office of the City Fiscal of Cebu against
Leonardo Laconico. After they had decided on the proposed conditions, complainant made a
telephone call to Laconico (tsn, August 26, 1981, pp. 3-5).

That same morning, Laconico telephoned appellant, who is a lawyer, to come to his office and advise
him on the settlement of the direct assault case because his regular lawyer, Atty. Leon Gonzaga,
went on a business trip. According to the request, appellant went to the office of Laconico where he
was briefed about the problem. (Exhibit 'D', tsn, April 22, 1982, pp. 4-5).

When complainant called up, Laconico requested appellant to secretly listen to the telephone
conversation through a telephone extension so as to hear personally the proposed conditions for the
settlement. Appellant heard complainant enumerate the following conditions for withdrawal of the
complaint for direct assault.

(a) the P5,000.00 was no longer acceptable, and that the figure had been increased to P8,000.00. A
breakdown of the P8,000.00 had been made together with other demands, to wit: (a) P5,000.00 no
longer for the teacher Manuel Montebon, but for Atty. Pintor himself in persuading his client to
withdraw the case for Direct Assault against Atty. Laconico before the Cebu City Fiscal's Office;

(b) Public apology to be made by Atty. Laconico before the students of Don Bosco Technical High
School;

(c) Pl,000.00 to be given to the Don Bosco Faculty club;

(d) transfer of son of Atty. Laconico to another school or another section of Don Bosco Technical
High School;

(e) Affidavit of desistance by Atty. Laconico on the Maltreatment case earlier filed against Manuel
Montebon at the Cebu City Fiscal's Office, whereas Montebon's affidavit of desistance on the Direct
Assault Case against Atty. Laconico to be filed later;

(f) Allow Manuel Montebon to continue teaching at the Don Bosco Technical School;

(g) Not to divulge the truth about the settlement of the Direct Assault Case to the mass media;
(h) P2,000.00 attorney s fees for Atty. Pintor. (tsn, August 26, 1981, pp. 47-48).

Twenty minutes later, complainant called up again to ask Laconico if he was agreeable to the
conditions. Laconico answered 'Yes'. Complainant then told Laconico to wait for instructions on where
to deliver the money. (tsn, March 10, 1983, pp. 2-12).

Complainant called up again and instructed Laconico to give the money to his wife at the office of the
then Department of Public Highways. Laconico who earlier alerted his friend Colonel Zulueta of the
Criminal Investigation Service of the Philippine Constabulary, insisted that complainant himself should
receive the money. (tsn, March 10, 1982, pp. 26-33). When he received the money at the Igloo
Restaurant, complainant was arrested by agents of the Philippine Constabulary.

Appellant executed on the following day an affidavit stating that he heard complainant demand
P8,000.00 for the withdrawal of the case for direct assault. Laconico attached the affidavit of appellant
to the complainant for robbery/extortion which he filed against complainant. Since appellant listened
to the telephone conversation without complainant's consent, complainant charged appellant and
Laconico with violation of the Anti-Wiretapping Act.

After trial on the merits, the lower court, in a decision dated November 22, 1982, found both Gaanan
and Laconico guilty of violating Section 1 of Republic Act No. 4200. The two were each sentenced to
one (1) year imprisonment with costs. Not satisfied with the decision, the petitioner appealed to the
appellate court.

On August 16, 1984, the Intermediate Appellate Court affirmed the decision of the trial court, holding
that the communication between the complainant and accused Laconico was private in nature and,
therefore, covered by Rep. Act No. 4200; that the petitioner overheard such communication without
the knowledge and consent of the complainant; and that the extension telephone which was used by
the petitioner to overhear the telephone conversation between complainant and Laconico is covered
in the term "device' as provided in Rep. Act No. 4200.

In this petition for certiorari, the petitioner assails the decision of the appellate court and raises the
following issues; (a) whether or not the telephone conversation between the complainant and
accused Laconico was private in nature; (b) whether or not an extension telephone is covered by the
term "device or arrangement" under Rep. Act No. 4200; (c) whether or not the petitioner had authority
to listen or overhear said telephone conversation and (d) whether or not Rep. Act No. 4200 is
ambiguous and, therefore, should be construed in favor of the petitioner.

Section 1 of Rep. Act No. 4200 provides:

Section 1. It shall be unlawful for any person, not being authorized by all the parties to any private
communication or spoken word, to tap any wire or cable or by using any other device or arrangement,
to secretly overhear, intercept, or record such communication or spoken word by using a device
commonly known as a dictaphone or dictagraph or detectaphone or walkie-talkie or tape-recorder, or
however otherwise described:
It shall be unlawful for any person, be he a participant or not in the act or acts penalized in the next
preceeding sentence, to knowingly possess any tape record, wire record, disc record, or any other
such record, or copies thereof, of any communication or spoken word secured either before or after
the effective date of this Act in the manner prohibited by this law; or to replay the same for any other
person or persons; or to communicate the contents thereof, either verbally or in writing, or to furnish
transcriptions thereof, whether complete or partial, to any other person: Provided, that the use of such
record or any copies thereof as evidence in any civil, criminal investigation or trial of offenses
mentioned in Section 3 hereof, shall not be covered by this prohibition.

We rule for the petitioner.

We are confronted in this case with the interpretation of a penal statute and not a rule of evidence.
The issue is not the admissibility of evidence secured over an extension line of a telephone by a third
party. The issue is whether or not the person called over the telephone and his lawyer listening to the
conversation on an extension line should both face prison sentences simply because the extension
was used to enable them to both listen to an alleged attempt at extortion.

There is no question that the telephone conversation between complainant Atty. Pintor and accused
Atty. Laconico was "private" in the sense that the words uttered were made between one person and
another as distinguished from words between a speaker and a public. It is also undisputed that only
one of the parties gave the petitioner the authority to listen to and overhear the caller's message with
the use of an extension telephone line. Obviously, complainant Pintor, a member of the Philippine
bar, would not have discussed the alleged demand for an P8,000.00 consideration in order to have
his client withdraw a direct assault charge against Atty. Laconico filed with the Cebu City Fiscal's
Office if he knew that another lawyer was also listening. We have to consider, however, that
affirmance of the criminal conviction would, in effect, mean that a caller by merely using a telephone
line can force the listener to secrecy no matter how obscene, criminal, or annoying the call may be. It
would be the word of the caller against the listener's.

Because of technical problems caused by the sensitive nature of electronic equipment and the extra
heavy loads which telephone cables are made to carry in certain areas, telephone users often
encounter what are called "crossed lines". An unwary citizzen who happens to pick up his telephone
and who overhears the details of a crime might hesitate to inform police authorities if he knows that
he could be accused under Rep. Act 4200 of using his own telephone to secretly overhear the private
communications of the would be criminals. Surely the law was never intended for such mischievous
results.

The main issue in the resolution of this petition, however, revolves around the meaning of the phrase
"any other device or arrangement." Is an extension of a telephone unit such a device or arrangement
as would subject the user to imprisonment ranging from six months to six years with the accessory
penalty of perpetual absolute disqualification for a public officer or deportation for an alien? Private
secretaries with extension lines to their bosses' telephones are sometimes asked to use answering or
recording devices to record business conversations between a boss and another businessman.
Would transcribing a recorded message for the use of the boss be a proscribed offense? or for that
matter, would a "party line" be a device or arrangement under the law?

The petitioner contends that telephones or extension telephones are not included in the enumeration
of "commonly known" listening or recording devices, nor do they belong to the same class of
enumerated electronic devices contemplated by law. He maintains that in 1964, when Senate Bill No.
9 (later Rep. Act No. 4200) was being considered in the Senate, telephones and extension
telephones were already widely used instruments, probably the most popularly known communication
device.

Whether or not listening over a telephone party line would be punishable was discussed on the floor
of the Senate. Yet, when the bill was finalized into a statute, no mention was made of telephones in
the enumeration of devices "commonly known as a dictaphone or dictagraph, detectaphone or walkie
talkie or tape recorder or however otherwise described." The omission was not a mere oversight.
Telephone party lines were intentionally deleted from the provisions of the Act.

The respondent People argue that an extension telephone is embraced and covered by the term
"device" within the context of the aforementioned law because it is not a part or portion of a complete
set of a telephone apparatus. It is a separate device and distinct set of a movable apparatus
consisting of a wire and a set of telephone receiver not forming part of a main telephone set which
can be detached or removed and can be transferred away from one place to another and to be
plugged or attached to a main telephone line to get the desired communication corning from the other
party or end.

The law refers to a "tap" of a wire or cable or the use of a "device or arrangement" for the purpose of
secretly overhearing, intercepting, or recording the communication. There must be either a physical
interruption through a wiretap or the deliberate installation of a device or arrangement in order to
overhear, intercept, or record the spoken words.

An extension telephone cannot be placed in the same category as a dictaphone, dictagraph or the
other devices enumerated in Section 1 of RA No. 4200 as the use thereof cannot be considered as
"tapping" the wire or cable of a telephone line. The telephone extension in this case was not installed
for that purpose. It just happened to be there for ordinary office use. It is a rule in statutory
construction that in order to determine the true intent of the legislature, the particular clauses and
phrases of the statute should not be taken as detached and isolated expressions, but the whole and
every part thereof must be considered in fixing the meaning of any of its parts. (see Commissioner of
Customs v. Esso Estandard Eastern, Inc., 66 SCRA 113,120).

In the case of Empire Insurance Com any v. Rufino (90 SCRA 437, 443-444), we ruled:

Likewise, Article 1372 of the Civil Code stipulates that 'however general the terms of a contract may
be, they shall not be understood to comprehend things that are distinct and cases that are different
from those upon which the parties intended to agree.' Similarly, Article 1374 of the same Code
provides that 'the various stipulations of a contract shall be interpreted together, attributing to the
doubtful ones that sense which may result from all of them taken jointly.

xxx xxx xxx

Consequently, the phrase 'all liabilities or obligations of the decedent' used in paragraph 5(c) and 7(d)
should be then restricted only to those listed in the Inventory and should not be construed as to
comprehend all other obligations of the decedent. The rule that 'particularization followed by a
general expression will ordinarily be restricted to the former' is based on the fact in human experience
that usually the minds of parties are addressed specially to the particularization, and that the
generalities, though broad enough to comprehend other fields if they stood alone, are used in
contemplation of that upon which the minds of the parties are centered. (Hoffman v. Eastern
Wisconsin R., etc., Co., 134 Wis. 603, 607, 115 NW 383, cited in Francisco, Revised Rules of Court
(Evidence), 1973 ed, pp. 180-181).

Hence, the phrase "device or arrangement" in Section 1 of RA No. 4200, although not exclusive to
that enumerated therein, should be construed to comprehend instruments of the same or similar
nature, that is, instruments the use of which would be tantamount to tapping the main line of a
telephone. It refers to instruments whose installation or presence cannot be presumed by the party or
parties being overheard because, by their very nature, they are not of common usage and their
purpose is precisely for tapping, intercepting or recording a telephone conversation.

An extension telephone is an instrument which is very common especially now when the extended
unit does not have to be connected by wire to the main telephone but can be moved from place ' to
place within a radius of a kilometer or more. A person should safely presume that the party he is
calling at the other end of the line probably has an extension telephone and he runs the risk of a third
party listening as in the case of a party line or a telephone unit which shares its line with another. As
was held in the case of Rathbun v. United States (355, U.S. 107, 2 L Ed 2d 137-138):

Common experience tells us that a call to a particular telephone number may cause the bell to ring in
more than one ordinarily used instrument. Each party to a telephone conversation takes the risk that
the other party may have an extension telephone and may allow another to overhear the
conversation. When such takes place there has been no violation of any privacy of which the parties
may complain. Consequently, one element of 605, interception, has not occurred.

In the same case, the Court further ruled that the conduct of the party would differ in no way if instead
of repeating the message he held out his hand-set so that another could hear out of it and that there
is no distinction between that sort of action and permitting an outsider to use an extension telephone
for the same purpose.

Furthermore, it is a general rule that penal statutes must be construed strictly in favor of the accused.
Thus, in case of doubt as in the case at bar, on whether or not an extension telephone is included in
the phrase "device or arrangement", the penal statute must be construed as not including an
extension telephone. In the case of People v. Purisima, 86 SCRA 542, 562, we explained the
rationale behind the rule:

American jurisprudence sets down the reason for this rule to be the tenderness of the law of the rights
of individuals; the object is to establish a certain rule by conformity to which mankind would be safe,
and the discretion of the court limited. (United States v. Harris, 177 US 305, 44 L Ed 780, 20 S Ct
609; Braffith v. Virgin Islands (CA3) 26 F2d 646; Caudill v. State, 224 Ind 531, 69 NE2d; Jennings v.
Commonwealth, 109 VA 821,63 SE 1080, all cited in 73 Am Jur 2d 452). The purpose is not to enable
a guilty person to escape punishment through a technicality but to provide a precise definition of
forbidden acts." (State v. Zazzaro, 20 A 2d 737, quoted in Martin's Handbook on Statutory
Construction, Rev. Ed. pp. 183-184).

In the same case of Purisima, we also ruled that on the construction or interpretation of a legislative
measure, the primary rule is to search for and determine the intent and spirit of the law. A perusal of
the Senate Congressional Records will show that not only did our lawmakers not contemplate the
inclusion of an extension telephone as a prohibited device or arrangement" but of greater importance,
they were more concerned with penalizing the act of recording than the act of merely listening to a
telephone conversation.

xxx xxx xxx

Senator Tañada. Another possible objection to that is entrapment which is certainly objectionable. It is
made possible by special amendment which Your Honor may introduce.

Senator Diokno.Your Honor, I would feel that entrapment would be less possible with the amendment
than without it, because with the amendment the evidence of entrapment would only consist of
government testimony as against the testimony of the defendant. With this amendment, they would
have the right, and the government officials and the person in fact would have the right to tape record
their conversation.

Senator Tañada. In case of entrapment, it would be the government.

Senator Diokno. In the same way, under this provision, neither party could record and, therefore, the
court would be limited to saying: "Okay, who is more credible, the police officers or the defendant?" In
these cases, as experienced lawyers, we know that the Court go with the peace offices.

(Congressional Record, Vol. 111, No. 33, p. 628, March 12, 1964).

xxx xxx xxx

Senator Diokno. The point I have in mind is that under these conditions, with an agent outside
listening in, he could falsify the testimony and there is no way of checking it. But if you allow him to
record or make a recording in any form of what is happening, then the chances of falsifying the
evidence is not very much.

Senator Tañada. Your Honor, this bill is not intended to prevent the presentation of false testimony. If
we could devise a way by which we could prevent the presentation of false testimony, it would be
wonderful. But what this bill intends to prohibit is the use of tape record and other electronic devices
to intercept private conversations which later on will be used in court.

(Congressional Record, Vol. III, No. 33, March 12, 1964, p. 629).

It can be readily seen that our lawmakers intended to discourage, through punishment, persons such
as government authorities or representatives of organized groups from installing devices in order to
gather evidence for use in court or to intimidate, blackmail or gain some unwarranted advantage over
the telephone users. Consequently, the mere act of listening, in order to be punishable must strictly
be with the use of the enumerated devices in RA No. 4200 or others of similar nature. We are of the
view that an extension telephone is not among such devices or arrangements.

WHEREFORE, the petition is GRANTED. The decision of the then Intermediate Appellate Court
dated August 16, 1984 is ANNULLED and SET ASIDE. The petitioner is hereby ACQUITTED of the
crime of violation of Rep. Act No. 4200, otherwise known as the Anti-Wiretapping Act.

SO ORDERED.

Feria (Chairman), Fernan, Alampay and Paras, JJ., concur.

21. G.R. No. L-51201 May 29, 1980

IN THE MATTER OF THE PETITION FOR CHANGE OF NAME OF MARIA ESTRELLA VERONICA
PRIMITIVA DUTERTE, ESTRELLA S. ALFON, petitioner, vs.

REPUBLIC OF THE PHILIPPINES, respondent.

ABAD SANTOS, J.:ñé+.£ªwph!1

This is a petition filed pursuant to Republic Act No. 5440 to review an Order of the Court of First
Instance of Rizal, Branch XXIII, dated December 29, 1978, which partially denied petitioner's prayer
for a change of name. Only a question of law is involved and there is no controversy over the facts
which are well-stated in the questioned Order as follows: têñ.£îhqwâ£

This is verified petition filed on April 28, 1978 by petitioner Maria Estrella Veronica Primitiva Duterte
through her counsel, Atty. Rosauro Alvarez, praying that her name be changed from Maria Estrella
Veronica Primitiva Duterte to Estrella S. Alfon.

The notice setting the petition for hearing on December 14, 1978 at 8:30 o'clock in the morning was
published in the Times Journal in its issues of July 28, August 5 and 11, 1978 and a copy thereof
together with a copy of the petition was furnished the Office of the Solicitor General (Exhibits C, C-1,
C-2 and C-3).

At the hearing of the petition on December 14, 1978, Atty. Rosauro Alvarez appeared for the
petitioner and Fiscal Donato Sor. Suyat, Jr. represented the office of the Solicitor General, Upon
motion of counsel for the petitioner, without objection on the part of Fiscal Suyat, the Deputy Clerk of
Court was appointed commissioner to receive the evidence and to submit the same for resolution of
the Court.

From the testimonial and document evidence presented, it appears that petitioner Maria Estrella
Veronica Primitiva Duterte was born on May 15, 1952 at the U.S.T. Hospital (Exhibit A). She was
registered at the local Civil Registrar's Office as Maria Estrella Veronica Primitiva Duterte On June 15,
1952, she was baptized as Maria Estrella Veronica Primitiva Duterte at the St. Anthony de Padua
Church Singalong, Manila (Exhibit B). Her parents are Filomeno Duterte and Estrella Veronica
Primitiva Duterte has been taken cared of by Mr. and Mrs. Hector Alfon. Petitioner and her uncle,
Hector Alfon, have been residing at 728 J.R. Yulo Street corner Ideal Street, Mandaluyong, Metro
Manila for twenty-three (23) years. When petitioner started schooling, she used the name Estrella S.
Alfon. She attended her first grade up to fourth year high school at Stella Maris College using the
name Estrella S. Alfon (Exhibits E, E-1, E-2 and E-3). After graduating from high school she enrolled
at the Arellano University and finished Bachelor of Science in Nursing (Exhibit E-4). Her scholastic
records from elementary to college show that she was registered by the name of Estrella S. Alfon.
Petitioner has exercised her right of suffrage under the same name (Exhibit D). She has not
committed any felony or misdemeanor (Exhibits G, G-1, G-2, G-3 and G-4).

Petitioner has advanced the following reasons for filing the petition:

1. She has been using the name Estrella Alfon since her childhood;

2. She has been enrolled in the grade school and in college using the same name;
3. She has continuously used the name Estrella S. Alfon since her infancy and all her friends and
acquaintances know her by this name;

4. She has exercised her right of suffrage under the same name.

Section 5, Rule 103 of the Rules of Court provides:

Upon satisfactory proof in open court on the date fixed in the order that such order has been
published as directed and that the allegations of the petition are true, the court shall if proper and
reasonable cause appears for changing the name of the petitioner adjudge that such name be
changed in accordance with the prayer of the petition.

The evidence submitted shows that the change of name from Maria Estrella Veronica Primitiva
Duterte to Estrella Alfon is not proper and reasonable with respect to the surname. The fact that
petitioner has been using a different surname and has become known with such surname does not
constitute proper and reasonable cause to legally authorize and change her surname to Alfon. The
birth certificate clearly shows that the father of petitioner is Filomeno Duterte. Petitioner likewise
admitted this fact in her testimony. To allow petitioner to change her surname from Duterte to Alfon is
equivalent to allowing her to use her mother's surname. Article 364 of the Civil Code provides:

Legitimate and legitimated children shall principally use the surname of the father.

If another purpose of the petitioner is to carry the surname of Alfon because her uncle who reared her
since childhood has the surname "Alfon" then the remedy is not a petition for change of name.

WHEREFORE, the petition insofar as the first name is granted but denied with respect to the
surname. Petitioner is authorized to change her name from Maria Estrella Veronica Primitiva Duterte
to Estrella Alfon Duterte.

Let copy of this order be furnished the Local Civil Registrar of Pasig, Metro Manila pursuant to
Section 3, Rule 103 of the Rules of Court.

The lower court should have fully granted the petition.

The only reason why the lower court denied the petitioner's prayer to change her surname is that as
legitimate child of Filomeno Duterte and Estrella Alfon she should principally use the surname of her
father invoking Art. 364 of the Civil Code. But the word "principally" as used in the codal provision is
not equivalent to "exclusively" so that there is no legal obstacle if a legitimate or legitimated child
should choose to use the surname of its mother to which it is equally entitled. Moreover, this Court in
Haw Liong vs. Republic, G.R. No. L-21194. April 29, 1966, 16 SCRA 677, 679, said: têñ.£îhqwâ£
The following may be considered, among others, as proper or reasonable causes that may warrant
the grant of a petitioner for change of name; (1) when the name is ridiculous, tainted with dishonor, or
is extremely difficult to write or pronounce; (2) when the request for change is a consequence of a
change of' status, such as when a natural child is acknowledged or legitimated; and (3) when the
change is necessary to avoid confusion Tolentino, Civil Code of the Philippines, 1953 ed., Vol. 1, p.
660).

In the case at bar, it has been shown that petitioner has, since childhood, borne the name Estrella S.
Alfon although her birth records and baptismal certificate show otherwise; she was enrolled in the
schools from the grades up to college under the name Estrella S. Alfon; all her friends call her by this
name; she finished her course in Nursing in college and was graduated and given a diploma under
this name; and she exercised the right of suffrage likewise under this name. There is therefore ample
justification to grant fully her petition which is not whimsical but on the contrary is based on a solid
and reasonable ground, i.e. to avoid confusion.

WHEREFORE, the Order appealed from is hereby modified in that, the petitioner is allowed to
change not only her first name but also her surname so as to be known as ESTRELLA S. ALFON. No
costs.

SO ORDERED.

Barredo (Chairman), Aquino, Concepcion, Jr., and De Castro, JJ., concur.

22. G.R. No. 165879 November 10, 2006

MARIA B. CHING, Petitioner, vs.

JOSEPH C. GOYANKO, JR., EVELYN GOYANKO, JERRY GOYANKO, IMELDA GOYANKO,
JULIUS GOYANKO, MARY ELLEN GOYANKO AND JESS GOYANKO, Respondents.

DECISION

CARPIO MORALES, J.:

On December 30, 1947, Joseph Goyanko (Goyanko) and Epifania dela Cruz (Epifania) were
married.1 Out of the union were born respondents Joseph, Jr., Evelyn, Jerry, Imelda, Julius, Mary
Ellen and Jess, all surnamed Goyanko.

Respondents claim that in 1961, their parents acquired a 661 square meter property located at 29 F.
Cabahug St., Cebu City but that as they (the parents) were Chinese citizens at the time, the property
was registered in the name of their aunt, Sulpicia Ventura (Sulpicia).

On May 1, 1993, Sulpicia executed a deed of sale2 over the property in favor of respondents’ father
Goyanko. In turn, Goyanko executed on October 12, 1993 a deed of sale3 over the property in favor
of his common-law-wife-herein petitioner Maria B. Ching. Transfer Certificate of Title (TCT) No.
138405 was thus issued in petitioner’s name.

After Goyanko’s death on March 11, 1996, respondents discovered that ownership of the property
had already been transferred in the name of petitioner. Respondents thereupon had the purported
signature of their father in the deed of sale verified by the Philippine National Police Crime Laboratory
which found the same to be a forgery.4

Respondents thus filed with the Regional Trial Court of Cebu City a complaint for recovery of property
and damages against petitioner, praying for the nullification of the deed of sale and of TCT No.
138405 and the issuance of a new one in favor of their father Goyanko.

In defense, petitioner claimed that she is the actual owner of the property as it was she who provided
its purchase price. To disprove that Goyanko’s signature in the questioned deed of sale is a forgery,
she presented as witness the notary public who testified that Goyanko appeared and signed the
document in his presence.

By Decision of October 16, 1998,5 the trial court dismissed the complaint against petitioner, the
pertinent portions of which decision read:

There is no valid and sufficient ground to declare the sale as null and void, fictitious and simulated.
The signature on the questioned Deed of Sale is genuine. The testimony of Atty. Salvador Barrameda
who declared in court that Joseph Goyanko, Sr. and Maria Ching together with their witnesses
appeared before him for notarization of Deed of Sale in question is more reliable than the conflicting
testimonies of the two document examiners. Defendant Maria Ching asserted that the Deed of Sale
executed by Joseph Goyanko, Sr. in her favor is valid and genuine. The signature of Joseph
Goyanko, Sr. in the questioned Deed of Absolute Sale is genuine as it was duly executed and signed
by Joseph Goyanko, Sr. himself.

The parcel of lands known as Lot No. 6 which is sought to be recovered in this case could never be
considered as the conjugal property of the original Spouses Joseph C. Goyanko and Epifania dela
Cruz or the exclusive capital property of the husband. The acquisition of the said property by
defendant Maria Ching is well-elicited from the aforementioned testimonial and documentary
evidence presented by the defendant. Although for a time being the property passed through Joseph
Goyanko, Sr. as a buyer yet his ownership was only temporary and transitory for the reason that it
was subsequently sold to herein defendant Maria Ching. Maria Ching claimed that it was even her
money which was used by Joseph Goyanko, Sr. in the purchase of the land and so it was eventually
sold to her. In her testimony, defendant Ching justified her financial capability to buy the land for
herself. The transaction undertaken was from the original owner Sulpicia Ventura to Joseph Goyanko,
Sr. and then from Joesph Goyanko, Sr. to herein defendant Maria Ching.

The land subject of the litigation is already registered in the name of defendant Maria Ching under
TCT No. 138405. By virtue of the Deed of Sale executed in favor of Maria Ching, Transfer Certificate
of Title No. 138405 was issued in her favor. In recognition of the proverbial virtuality of a Torrens title,
it has been repeatedly held that, unless bad faith can be established on the part of the person
appearing as owner on the certificate of title, there is no other owner than that in whose favor it has
been issued. A Torrens title is not subject to collateral attack. It is a well-known doctrine that a
Torrens title, as a rule, is irrevocable and indefeasible, and the duty of the court is to see to it that this
title is maintained and respected unless challenged in a direct proceedings [sic].6 (Citations omitted;
underscoring supplied)

Before the Court of Appeals where respondents appealed, they argued that the trial court erred:

1. . . . when it dismissed the complaint a quo . . . , in effect, sustaining the sale of the subject property
between Joseph, Sr. and the defendant-appellee, despite the proliferation in the records and
admissions by both parties that defendant-appellee was the "mistress" or "common-law wife" of
Joseph, Sr..

2. . . . when it dismissed the complaint a quo . . . , in effect, sustaining the sale of the subject property
between Joseph, Sr. and the defendant-appellee, despite the fact that the marriage of Joseph, Sr.
and Epifania was then still subsisting thereby rendering the subject property as conjugal property of
Joseph, Sr. and Epifania.

3. . . . in dismissing the complaint a quo . . . , in effect, sustaining the validity of the sale of the subject
property between Joseph, Sr. and the defendant-appellee, despite the clear findings of forgery and
the non-credible testimony of notary public.7

By Decision dated October 21, 2003,8 the appellate court reversed that of the trial court and declared
null and void the questioned deed of sale and TCT No. 138405. Held the appellate court:
. . . The subject property having been acquired during the existence of a valid marriage between
Joseph Sr. and Epifania dela Cruz-Goyanko, is presumed to belong to the conjugal partnership.
Moreover, while this presumption in favor of conjugality is rebuttable with clear and convincing proof
to the contrary, we find no evidence on record to conclude otherwise. The record shows that while
Joseph Sr. and his wife Epifania have been estranged for years and that he and defendant-appellant
Maria Ching, have in fact been living together as common-law husband and wife, there has never
been a judicial decree declaring the dissolution of his marriage to Epifania nor their conjugal
partnership. It is therefore undeniable that the 661-square meter property located at No. 29 F.
Cabahug Street, Cebu City belongs to the conjugal partnership.

Even if we were to assume that the subject property was not conjugal, still we cannot sustain the
validity of the sale of the property by Joseph, Sr. to defendant-appellant Maria Ching, there being
overwhelming evidence on records that they have been living together as common-law husband and
wife. On this score, Art. 1352 of the Civil Code provides:

"Art. 1352. Contracts without cause, or with unlawful cause, produce no effect whatsoever. The cause
is unlawful if it is contrary to law, morals, good customs, public order or public policy."

We therefore find that the contract of sale in favor of the defendant-appellant Maria Ching was null
and void for being contrary to morals and public policy. The purported sale, having been made by
Joseph Sr. in favor of his concubine, undermines the stability of the family, a basic social institution
which public policy vigilantly protects. Furthermore, the law emphatically prohibits spouses from
selling property to each other, subject to certain exceptions. And this is so because transfers or
conveyances between spouses, if allowed during the marriage would destroy the system of conjugal
partnership, a basic policy in civil law. The prohibition was designed to prevent the exercise of undue
influence by one spouse over the other and is likewise applicable even to common-law relationships
otherwise, "the condition of those who incurred guilt would turn out to be better than those in legal
union.9 (Underscoring supplied)

Hence, the present petition, petitioners arguing that the appellate court gravely erred in:

I.. . . APPLYING THE STATE POLICY ON PROHIBITION AGAINST CONVEYANCES AND

TRANSFERS OF PROPERTIES BETWEEN LEGITIMATE AND COMMON LAW SPOUSES ON THE
SUBJECT PROPERTY, THE SAME BEING FOUND BY THE COURT A QUO, AS THE EXCLUSIVE
PROPERTY OF PETITIONER, AND THAT THE SAME WAS NEVER PART OF THE CONJUGAL
PROPERTY OF THE MARRIAGE BETWEEN RESPONDENTS’ MOTHER EPIFANIA GOYANKO
AND PETITIONER’S COMMON LAW HUSBAND, JOSEPH GOYANKO, SR., NOR THE EXCLUSIVE
OR CAPITAL PROPERTY OF THE LATTER AT ANYTIME BEFORE THE SAME WAS VALIDLY
ACQUIRED BY PETITIONER.

II.. . . NOT FINDING THAT A JURIDICAL RELATION OF TRUST AS PROVIDED FOR UNDER
ARTICLES 1448 AND 1450 OF THE NEW CIVIL CODE CAN VALIDLY EXIST BETWEEN COMMON
LAW SPOUSES.

III.. . . NOT FINDING THAT A CONVEYANCE OVER A PROPERTY MADE BY A TRUSTEE, WHO
BECAME AS SUCH IN CONTEMPLATION OF LAW, AND WHO HAPPENS TO BE A COMMON
LAW HUSBAND OF THE BENEFICIARY, IS NOT A VIOLATION OF A STATE POLICY ON
PROHIBITION AGAINST CONVEYANCES AND TRANSFERS OF PROPERTIES BETWEEN
LEGITIMATE AND COMMON LAW SPOUSES.

IV.. . . ALLOWING RESPONDENTS TO ABANDON THEIR ORIGINAL THEORY OF THEIR CASE

DURING APPEAL.10

The pertinent provisions of the Civil Code which apply to the present case read:

ART. 1352. Contracts without cause, or with unlawful cause, produce no effect whatever. The cause
is unlawful if it is contrary to law, morals, good customs, public order or public policy.

ART. 1409. The following contracts are inexistent and void from the beginning:

(1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order or
public policy;

(2) Those which are absolutely simulated or fictitious;

(3) Those whose cause or object did not exist at the time of the transaction;

(4) Those whose object is outside the commerce of men;

(5) Those which contemplate an impossible service;

(6) Those where the intention of the parties relative to the principal object of the contract cannot be
ascertained;

(7) Those expressly prohibited or declared void by law.

These contracts cannot be ratified. Neither can the right to set up the defense of illegality be waived.

ARTICLE 1490. The husband and wife cannot sell property to each other, except:

(1) When a separation of property was agreed upon in the marriage settlements; or
(2) When there has been a judicial separation of property under Article 191. (Underscoring supplied)

The proscription against sale of property between spouses applies even to common law relationships.
So this Court ruled in Calimlim-Canullas v. Hon. Fortun, etc., et al.:11

Anent the second issue, we find that the contract of sale was null and void for being contrary to
morals and public policy. The sale was made by a husband in favor of a concubine after he had
abandoned his family and left the conjugal home where his wife and children lived and from whence
they derived their support. The sale was subversive of the stability of the family, a basic social
institution which public policy cherishes and protects.

Article 1409 of the Civil Code states inter alia that: contracts whose cause, object, or purposes is
contrary to law, morals, good customs, public order, or public policy are void and inexistent from the
very beginning.

Article 1352 also provides that: "Contracts without cause, or with unlawful cause, produce no effect
whatsoever. The cause is unlawful if it is contrary to law, morals, good customs, public order, or
public policy."

Additionally, the law emphatically prohibits the spouses from selling property to each other subject to
certain exceptions.1âwphi1 Similarly, donations between spouses during marriage are prohibited.
And this is so because if transfers or conveyances between spouses were allowed during marriage,
that would destroy the system of conjugal partnership, a basic policy in civil law. It was also designed
to prevent the exercise of undue influence by one spouse over the other, as well as to protect the
institution of marriage, which is the cornerstone of family law. The prohibitions apply to a couple living
as husband and wife without benefit of marriage, otherwise, "the condition of those who incurred guilt
would turn out to be better than those in legal union." Those provisions are dictated by public interest
and their criterion must be imposed upon the will of the parties. . . .12 (Italics in the original; emphasis
and underscoring supplied)

As the conveyance in question was made by Goyangko in favor of his common- law-wife-herein
petitioner, it was null and void.

Petitioner’s argument that a trust relationship was created between Goyanko as trustee and her as
beneficiary as provided in Articles 1448 and 1450 of the Civil Code which read:

ARTICLE 1448. There is an implied trust when property is sold, and the legal estate is granted to one
party but the price is paid by another for the purpose of having the beneficial interest of the property.
The former is the trustee, while the latter is the beneficiary. However, if the person to whom the title is
conveyed is a child, legitimate or illegitimate, of the one paying the price of the sale, no trust is
implied by law, it being disputably presumed that there is a gift in favor of the child.
ARTICLE 1450. If the price of a sale of property is loaned or paid by one person for the benefit of
another and the conveyance is made to the lender or payor to secure the payment of the debt, a trust
arises by operation of law in favor of the person to whom the money is loaned or for whom it is paid.
The latter may redeem the property and compel a conveyance thereof to him.

does not persuade.

For petitioner’s testimony that it was she who provided the purchase price is uncorroborated. That
she may have been considered the breadwinner of the family and that there was proof that she
earned a living do not conclusively clinch her claim.

As to the change of theory by respondents from forgery of their father’s signature in the deed of sale
to sale contrary to public policy, it too does not persuade. Generally, a party in a litigation is not
permitted to freely and substantially change the theory of his case so as not to put the other party to
undue disadvantage by not accurately and timely apprising him of what he is up against,13 and to
ensure that the latter is given the opportunity during trial to refute all allegations against him by
presenting evidence to the contrary. In the present case, petitioner cannot be said to have been put to
undue disadvantage and to have been denied the chance to refute all the allegations against her. For
the nullification of the sale is anchored on its illegality per se, it being violative of the above-cited
Articles 1352, 1409 and 1490 of the Civil Code.

WHEREFORE, the petition is DENIED for lack of merit.

Costs against petitioner.

SO ORDERED

23. [G.R. No. L-28771. March 31, 1971.]

CORNELIA MATABUENA, Plaintiff-Appellant, v. PETRONILA CERVANTES, Defendant-

Appellee.
DECISION

FERNANDO, J.:

A question of first impression is before this Court in this litigation. We are called upon to decide
whether the ban on a donation between the spouses during a marriage applies to a common-law
relationship. 1 The plaintiff, now appellant Cornelia Matabuena, a sister to the deceased Felix
Matabuena, maintains that a donation made while he was living maritally without benefit of marriage
to defendant, now appellee Petronila Cervantes, was void. Defendant would uphold its validity. The
lower court, after noting that it was made at a time before defendant was married to the donor,
sustained the latter’s stand. Hence this appeal. The question, as noted, is novel in character, this
Court not having had as yet the opportunity of ruling on it. A 1954 decision of the Court of Appeals,
Buenaventura v. Bautista, 2 by the then Justice J. B. L. Reyes, who was appointed to this Court later
that year, is indicative of the appropriate response that should be given. The conclusion reached
therein is that a donation between common-law spouses falls within the prohibition and is "null and
void as contrary to public policy." 3 Such a view merits fully the acceptance of this Court. The
decision must be reversed.

In the decision of November 23, 1965, the lower court, after stating that in plaintiff’s complaint alleging
absolute ownership of the parcel of land in question, she specifically raised the question that the
donation made by Felix Matabuena to defendant Petronila Cervantes was null and void under the
aforesaid article of the Civil Code and that defendant on the other hand did assert ownership
precisely because such a donation was made in 1956 and her marriage to the deceased did not take
place until 1962, noted that when the case was called for trial on November 19, 1965, there was
stipulation of facts which it quoted. 4 Thus: "The plaintiff and the defendant assisted by their
respective counsels, jointly agree and stipulate: (1) That the deceased Felix Matabuena owned the
property in question; (2) That said Felix Matabuena executed a Deed of Donation inter vivos in favor
of Defendant, Petronila Cervantes over the parcel of land in question on February 20, 1956, which
same donation was accepted by defendant; (3) That the donation of the land to the defendant which
took effect immediately was made during the common law relationship as husband and wife between
the defendant-done and the now deceased donor and later said donor and done were married on
March 28, 1962; (4) That the deceased Felix Matabuena died intestate on September 13, 1962; (5)
That the plaintiff claims the property by reason of being the only sister and nearest collateral relative
of the deceased by virtue of an affidavit of self-adjudication executed by her in 1962 and had the land
declared in her name and paid the estate and inheritance taxes thereon’" 5

The judgment of the lower court on the above facts was adverse to plaintiff. It reasoned out thus: "A
donation under the terms of Article 133 of the Civil Code is void if made between the spouses during
the marriage. When the donation was made by Felix Matabuena in favor of the defendant on
February 20, 1956, Petronila Cervantes and Felix Matabuena were not yet married. At that time they
were not spouses. They became spouses only when they married on March 28, 1962, six years after
the deed of donation had been executed." 6

We reach a different conclusion. While Art. 133 of the Civil Code considers as void a "donation
between the spouses during the marriage," policy considerations of the most exigent character as
well as the dictates of morality require that the same prohibition should apply to a common-law
relationship. We reverse.
1. As announced at the outset of this opinion, a 1954 Court of Appeals decision, Buenaventura v.
Bautista, 7 interpreting a similar provision of the old Civil Code 8 speaks unequivocally. If the policy of
the law is, in the language of the opinion of the then Justice J.B.L. Reyes of that Court, "to prohibit
donations in favor of the other consort and his descendants because of fear of undue and improper
pressure and influence upon the donor, a prejudice deeply rooted in our ancient law; ‘porque no se
engañen despojandose el uno al otro por amor que han de consuno [according to] the Partidas (Part
IV, Tit. XI, LAW IV), reiterating the rationale ‘Ne mutuato amore invicem spoliarentur’ of the Pandects
(Bk. 24, Tit. 1, De donat, inter virum et uxorem); then there is every reason to apply the same
prohibitive policy to persons living together as husband and wife without the benefit of nuptials. For it
is not to be doubted that assent to such irregular connection for thirty years bespeaks greater
influence of one party over the other, so that the danger that the law seeks to avoid is
correspondingly increased. Moreover, as already pointed out by Ulpian (in his lib. 32 ad Sabinum, fr.
1), ‘it would not be just that such donations should subsist, lest the condition of those who incurred
guilt should turn out to be better.’ So long as marriage remains the cornerstone of our family law,
reason and morality alike demand that the disabilities attached to marriage should likewise attach to
concubinage." 9

2. It is hardly necessary to add that even in the absence of the above pronouncement, any other
conclusion cannot stand the test of scrutiny. It would be to indict the framers of the Civil Code for a
failure to apply a laudable rule to a situation which in its essentials cannot be distinguished.
Moreover, if it is at all to be differentiated, the policy of the law which embodies a deeply-rooted
notion of what is just and what is right would be nullified if such irregular relationship instead of being
visited with disabilities would be attended with benefits. Certainly a legal norm should not be
susceptible to such a reproach. If there is ever any occasion where the principle of statutory
construction that what is within the spirit of the law is as much a part of it as what is written, this is it.
Otherwise the basic purpose discernible in such codal provision would not be attained. Whatever
omission may be apparent in an interpretation purely literal of the language used must be remedied
by an adherence to its avowed objective. In the language of Justice Pablo: "El espiritu que informa la
ley debe ser la luz que ha de guiar a los tribunales en la aplicación de sus disposiciones.’’ 10

3. The lack of validity of the donation made by the deceased to defendant Petronila Cervantes does
not necessarily result in plaintiff having exclusive right to the disputed property. Prior to the death of
Felix Matabuena, the relationship between him and the defendant was legitimated by their marriage
on March 28, 1962. She is therefore his widow. As provided for in the Civil Code, she is entitled to
one-half of the inheritance and the plaintiff, as the surviving sister, to the other half. 11

WHEREFORE, the lower court decision of November 23, 1965 dismissing the complaint with costs is
reversed. The questioned donation is declared void, with the rights of plaintiff and defendant as pro
indiviso heirs to the property in question recognized. The case is remanded to the lower court for its
appropriate disposition in accordance with the above opinion. Without pronouncement as to costs.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Castro, Barredo, Villamor and Makasiar,
JJ., concur.

Teehankee, J, took no part.

24. G.R. No. 95398 August 16, 1991

MARIO R. MELCHOR, petitioner, vs. COMMISSION ON AUDIT, respondent.

GUTIERREZ, JR., J.:

Is the petitioner personally liable for the amout paid for the construction of a public school building on
the ground that the infrastructure contract is null and void for want of one signature?

The facts are uncontroverted.

On July 15, 1983, petitioner Mario R. Melchor, in his capacity as Vocational School Administrator of
Alangalang Agro-Industrial School of Alangalang, Leyte, entered into a contract with Cebu Diamond
Construction (hereinafter referred to as contractors for the construction of Phase I of the home
Technology Building of said school for the price of P488,000. Pablo Narido, (thief accountant of the
school, issued a certificate of availability of funds to cover the construction cost. Narido, however,
failed to sign as a Witness to the contract, contrarily to the requirement of Section I of Letter of
Instruction (LOI) No. 968.

The contract was approved by the then Minister of Education, Culture and Sports Onofre D. Corpuz.
The relevant parts of the contract are quoted below:

That for and in consideration of the sum of FOUR HUNDRED EIGHTY EIGHT THOUSAND PESOS
(P488,000.00), Philippine Currency, the CONTRACTOR, at his own proper cost and expense willfully
and faithfully perform all works, and unless otherwise provided, furnish all labor, materials, equipment
necessary for the construction and completion of Phase I of the Home Technology Building for the
Alangalang Agro-Industrial School of Alangalang, Leyte to be completed in accordance with the plans
and specifications and all terms, conditions and instructions contained in the general and special
conditions of contract, as well as those contained in the Notice to Bidders, Tenderers or
Advertisement, Instruction to Bidders Tenderers, Supplemental Specifications, Bond Articles, and
other essential related documents, which are made and acknowledged as Integral parts of this
Agreement, by reference and/or Incorporation, including the permission of Administrative Order No.
81 of the President, dated January 17, 1964, ... (Rollo, p. 25)

While the construction of Phase I was under way, the contractor, in a letter dated November 8, 1983
addressed to Melchor, sought an additional charge of P73,000 equivalent to 15% of the stipulated
amount due to an increase in the cost of labor and construction materials.

In a letter dated November 17, 1983, the petitioner referred the contractor's request for additional
charge to the Regional Director, Ministry of Education, Culture and Sports (MECS). The petitioner in
said letter asked for approval of the contractor's additional charge, pointing out that such additional
charge shall be taken from the 1984 non-infrastructure capital outlay and part of the 1984
maintenance and operating expenses. The petitioner, in a second Indorsement dated November 22,
1983, requested the approval by the COA Regional Director in Tacloban City of the contractor's
request for adjustment of the cost of the contract.

In an Indorsement dated November 17, 1983, Servillano C. Dela Cruz, Acting Assistant Regional
Director ' MECS Regional Office No. VIII, Tacloban City, approved the contractor's request for
additional charge subject, however, to the availability of funds and the imprimatur of the Resident
Auditor of the School. On its part, the COA Regional Office No. VIII, Tacloban City, through Regional
Director, Sopronio Flores, Jr., advanced the view that "the approval of the police escalation rests on
the Minister or head of the agency concerned. Our participation in this regard shall be on the post-
audit of transactions as emphasized under COA Circular No. 82195."
Meanwhile, the contractor, anticipating that it could not meet the deadline for the project, requested a
series of extensions which the petitioner granted. However, on April 10, 1984, the contractor gave up
the project mainly to save itself from further losses due to, among other things, increased cost of
construction materials and labor.

At the time the contractor ceased working on the project, it had accomplished only 61% of the
construction work valued at P344,430.88. However, as of September 13, 1984, the contractor had
been paid the total amount of P515,305.60. The excess paid on the value of the 61%
accomplishment costing approximately P172,003.26 represented the extra work done by the
contractor which was found necessary.

Consequently, the petitioner wrote a letter dated September 19, 1984 to Ms. Gilda Ramos, COA
Resident Auditor of the school, requesting the latter to advise the former on whether to pursue
condoning the contract or institute a legal action for breach of contract against the contractor. In turn,
Ms. Ramos referred the matter to COA Regional Director in Tacloban City, Cesar A. Damole who in a
third Indorsement dated April 8, 1985, directed Ms. Ramos to disallow the payment of P515,305.60 in
post-audit on the ground that the contract was null and void for lack of signature of the chief
accountant of the school as witness to it, as required under Section 1 of LOI 968, for which reason
the petitioner was made personally liable for the amount paid to the contractor.

On May 3, 1985, the petitioner wrote a letter addressed to the Regional Director, COA Regional
Office No. VIII, Tacloban City, seeking reconsideration of his directive to the Resident Auditor of the
school to disallow the payment of P515,305.60 to the contractor. The petitioner sought
reconsideration on the following grounds: a) the Certificate of Availability of Funds signed by the chief
accountant of the school, being an integral part, of the contract, substantially complied with the
requirement of LOI 968 that the signature of said accountant must be affixed as witness to the
contract, b) the petitioner did not exceed his authority because the contract was approved by the
head of the agency concerned c) the Resident Auditor of the school who had been furnished a copy
of the contract did not object to the contract because of that flaw; and d) the petitioner religiously
complied with the provisions of P.D. 1445 (otherwise known as "The Government Auditing Code of
the Phils."), specifically, Sections 85 and 86 as to the requirements in the execution of a government
contract.

In a first Indorsement dated July 17, 1985, COA Regional Director of Tacloban City, Cesar A. Damole
denied the petitioner's motion for reconsideration. Immediately, petitioner Melchor appealed to the
COA Head Office which dismissed his appeal for lack of merit. The COA Head Office likewise denied
the petitioner's requests for reconsideration.

Hence, this petition.

The sole issue of this Court's consideration is whether or not petitioner Melchor should be held
personally liable for the amount of P515,305.60 paid to the contractor. This P515,305.60 may be
broken down into:

1) P344,430.80 — representing 6l% of equivalent payment for the work done by the contractor
within the contract specifications, and
2) P172,003.206 — representing payment for extra work orders, not included in the contract
specifications, which were incurred to make the building structure strong.

The amounts of P344,430.80 and P172,003.26, when added together, do not equal P515,305.60.
The records do not explain the reason for the discrepancy. At any rate, the contending parties do not
question the correctness of these amounts.

Respondent COA maintains that the contract entered into by the petitioner with Cebu Diamond
Construction is null and void since the chief accountant did not affix his signature to the contract, in
violate on of the requirements of LOI 968.

Section 1 of LOI 968, dated December 17, 1979, provides:

1. All contracts for capital projects and for the supply of commodities and services, including
equipment, maintenance contracts., and other agreements requiring payments which are chargeable
to agency current operating or capital expenditure funds, shall be signed by agency heads or other
duly authorized official only when there are available funds. The Chief Accountant of the contracting
agency shall sign such contracts as witness and contracts without such witness hall be considered as
null and void.

According to COA, since there was no compliance with the above provision, then the amount of
P344,430.80 should be disallowed iii post-audit and the petitioner should be personally able for said
amount.

The petitioner reasons that the absence of the accountant's signature as witness to the contract
should not militate against its validity. He cites Section 86 of PD 1445, which states:

Certificate Showing Appropriation to Meet Contract — ... no contract involving the expenditure of
public fund by any government agency shall be entered into or authorized unless the proper
accounting official of the agency concerned shall have certified to the officer entering into the
obligation that funds have been duly appropriated for the purpose and that the amount necessary to
cover the proposed contract for the current fiscal year is available for expenditure on account thereof,
subject to verification, modification by the auditor concerned. The certificate, signed by the proper
accounting official and the, auditor who verified it, shall be attached to and become an integral part of
the proposed contract, and the sum so certified shall not thereafter be available for expenditure for
any other purpose until the obligation of the government agency concerned under the contract is fully
extinguished.

Petitioner Melchor urges that the issuance by the chief accountant of a "Certificate of Availability of
Funds" compensates for the latter's non-signing as a contract witness since under Section 86 of PD
1445, the certificate is attached to and becomes an integral part of the contract. He argues that there
was, in effect, substantial compliance with the mandate of LOI 968.
Moreover the petitioner contends that assuming arguendo that the contract is null and void, he should
still not be made personally accountable for the amount paid to the contractor. He cites this Court's
resolution in Royal Trust Corporation v. Commission on Audit, G.R. No. 84202, November 22, 1988.
In that case. despite the absence of a specific covering appropriation as required under COA
Resolution No. 86-58, the contractor was allowed by the Court to be compensated on a quantum
meruit basis.

Under the circumstances of this case, the Court finds that the contract executed by the petitioner and
Cebu Diamond Construction is enforceable and, therefore, the petitioner should not be made to
personally pay for the building already constructed.

LOI 968 and Sections 85 and 86 of PD 1445 implement and reinforce the constitutional mandate that
"No money shall be paid out of the Treasury except in pursuance of an appropriation made by law"
(Constitution, Article VI, Section 29 [1]).

Under Sections 85 and 86 of PD 1445, before a government agency can enter into a contract
involving expenditure of government funds there must be an appropriation for such expenditure and
the proper accounting official must certify that funds have been appropriated for the purpose. Under
LOI 968, the chief accountant of the government agency, as the verifier of the availability of funds,
must sign such contracts as witness. The uniform intent of these provisions is to ensure that
government contracts are signed only when supported by available funds.

In the case before us, the chief accountant issued a certificate of availability of funds but failed to sign
the contract as witness. But since Section 86 states that the certificate shall be attached to and
become an integral part of the proposed contract, then the failure of the chief accountant to affix his
signature to the contract was somehow made up by his own certification which is the basic and more
important validating document. The contract moreover provided that "other essential related
documents xxx are made and acknowledged as integral parts of this agreement, by reference and/or
incorporation." This is not to say that the heads of government offices or institutions should not read
carefully the fine print of official regulations governing contracts. However, under the peculiar
circumstances of this case, we agree with the petitioner's view that there was substantial compliance
with the requirements of LOI 968 in the execution of the contract. He has not been charged under
some regulations governing negligence in not going over auditing and accounting rules more
carefully. But even assuming some kind of administrative responsibility for not being more careful, he
should not be made to pay for a school building already constructed and serving an urgent need in
his province.

It is a rule of statutory construction that the court may consider the spirit and reason of a statute
where a literal meaning would lead to absurdity, contradiction, injustice or would defeat the clear
purpose of the lawmakers. (People v. Manantan 5 SCRA 684 [1962]) For this Court to draw a narrow
and stringent application of LOI 968 would be to lose sight of the purpose behind its enactment. The
rationale for LOI 968, which is to ensure that there are available funds to finance a proposed project,
was already served by the chief accountant's issuance of a certificate of fund availability.

Additionally, Section 2 of LOI 968 provides:

2. It shall be the responsibility of the Chief Accountant to verify the availability of funds, as duly
evidenced by programmed appropriations released by the Ministry of Budget and received by the
agency, from which such contract shall be ultimately payable. His signature shall be considered as
constituting a certification to that effect. (Emphasis Supplied)

Since, under the above proviso, the accountant's signature shall have the effect of a certification, then
it may be inferred that the accountant's certification, not his signature as a contract witness, is the
more reliable indicium of fund availability.

What further bolsters the contract's validity is the fact that the original contract for P488,000 and the
15% price escalation of P73,000 bore the approval of the Minister of Education, Culture and Sports
as required by COA Circular No. 83-101-J (dated June 8, 1983) and the Implementing Rules of PD
1594. Under COA Circular 83-101-J, the Minister of Education, Culture and Sports has the authority
to approve infrastructure projects not exceeding P2 Million. Under Section III, CIII of the Implementing
Rules of PD 1594, the Minister is empowered to approve contract price escalation not exceeding 18%
of the original contract price.

Moreover, under COA Circular No. 76-34 dated July 15,1976, within 5 days from receipt of a copy of
the contract, the COA is required to call the attention of management regarding defects or
deficiencies of the contract and suggest such corrective measures as are appropriate and warranted
to facilitate the process of the claim upon presentation. In this case, respondent COA does not deny
the petitioner's claim that it was furnished copies of the contract, together with supporting documents,
a few days after approval thereof by the Minister of Education, Culture and Sports. If the respondent
had complied with this requirement, then the absence of the accountant's signature as a witness to
the contract could have been remedied. COA was also negligent.

No less compelling than the foregoing reasons is the undisputed fact that the construction of the
Home Technology Building had long been completed and that the building is now being utilized as
part of the Alangalang Industrial School. In People v. Purisima 86 SCRA 542 (1978), we held that
there exists a valid presumption that undesirable consequences were never intended by a legislative
measure, and that a construction of which the statute is fairly susceptible is favored, which will avoid
all objectionable, mischievous, indefensible, wrongful, evil and injurious consequences. In the present
case we consider it highly inequitable to compel the petitioner, who had substantially complied With
the mandate of LOI 968, to shoulder the construction cost of the building when it is not he, but the
government, which is reaping benefits from it.

The Court therefore rules that respondent COA erred in disallowing in audit the amount of
P344,430.88.

With respect to the remaining P12,003.26 paid by the petitioner to the contractor for extra work done,
the COA reasons that the extra work done. being more than 25% of the escalated original contract
price, was null and void because no supplemental agreement was executed. The respondent cites
the implementing rules and regulations of PD 1594 which provide:

5. A separate supplemental agreement may be entered into for all change orders or extra work
orders if the aggregate amount exceeds 25% of the escalated original contract price. (III CI
paragraphs 5;) (Emphasis supplied).
Under the facts of this case, we adjudge that respondent COA is not without legal basis in disallowing
the P172,003.26 payment for the extra work orders. However, since the word "may" was used in the
Decree then the requirement of a supplemental agreement under all circumstances may not always
be mandatory. There is no need to go into any possible exceptions because we find the rule
applicable in this case.

Under COA Circular 83-101-J, supra, the Minister of Education, Culture and Sports has the authority
to approve extra work orders or other variation orders not exceeding 50% of the original contract price
or P1 Million whichever is less. In this case, there is no showing that the extra work order was
approved by the Minister.

Moreover, a variation order (which may take the form of a change order, extra work or supplemental
agreement) is a contract by itself and involves the expenditure of public funds to cover the cost of the
work called for thereunder. (Fernandez, A Treatise on Government Contracts under Philippine Law,
115-116 [1985]) As such, it is subject to the restrictions imposed by Sections 85 and 86 of PD 1445
and LOI 968-COA Circular No. 80-122, dated January 15, 1980, likewise ensures that an extra work
order is approved only when supported by available funds. Again, the petitioner has not presented
proof of an appropriation to cover the extra work order.

For a failure to show the approval by the proper authority and to submit the corresponding
appropriation, We declare the contract for extra works null and void. Section 87 of PD 1445 states:

Any contract entered into contrary to the requirements of the two immediately preceding sections
shall be void, and the officer or offices entering into the contract shall be liable to the government or
other contracting party for any consequent damage to the same extent as if the transaction had been
wholly between private parties. (Emphasis supplied)

This does not mean, however, that the petitioner should be held personally liable and automatically
ordered to return to the government the full amount of P172,003.26.

As previously discussed, it would be unjust to Order the petitioner to shoulder the expenditure when
the government had already received and accepted benefits from the utilization of the building.

In Royal Trust Construction v. Commission on Audit, supra, cited by the petitioner, the Court, in the
interest of substantial justice and equity, allowed payment to the contractor on a quantum meruit
basis despite the absence of a written contract and a covering appropriation.

In a more recent case, Dr. Rufino O. Eslao v. Commission on Audit, G.R. No. 89745, April 8, 1991,
the Court directed payment to the contractor on a quantum meruit basis despite the petitioner's failure
to undertake a public bidding. In that case, the Court held that "to deny payment to the contractor of
the two buildings which are almost fully completed and presently occupied by the university would be
to allow the government to unjustly enrich itself at the expense of another.1âwphi1
Where payment is based on quantum meruit the amount of recovery would only be the reasonable
value of the thing or services rendered regardless of any agreement as to value. (Tantuico, State
Audit Code of the Philippines Annotated, 471 [1982])

Although the two cases mentioned above contemplated a situation where it is the contractor who is
seeking recovery, we find that the principle of payment by quantum meruit likewise applies to this
case where the contractor had already been paid and the government is seeking reimbursement from
the public official who heads the school. If, after COA determines the value of the extra works
computed on the basis of quantum meruit it finds that the petitioner made an excess or improper
payment for these extra works, then petitioner Melchor shall be liable only for such excess payment.

WHEREFORE, the petition is GRANTED. The decision of the respondent COA denominated as 11th
Indorsement dated November 11, 1988 and its resolution dated July 31, 1990 are hereby
REVERSED and SET ASIDE. Respondent COA is directed to allow in post-audit the payment of
P344,430.80. Respondent COA is likewise directed to determine on a quantum meruit basis the value
of the extra works done, and after such determination, to disallow in post-audit the excess payment, if
any, made by the petitioner to the contractor. The petitioner shall be personally liable for any such
excess payment.

SO ORDERED.

Fernan, C.J., Narvasa, Melencio-Herrera, Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin,
Sarmiento, Griño-Aquino, Medialdea, Regalado and Davide, Jr., JJ., concur.

25. G.R. No. 78687 January 31, 1989

ELENA SALENILLAS AND BERNARDINO SALENILLAS, petitioners, vs.

HONORABLE COURT OF APPEALS and HONORABLE RAYMUNDO SEVA, JUDGE OF

BRANCH 38 OF THE REGIONAL TRIAL COURT OF CAMARINES NORTE and WILLIAM
GUERRA, respondents.
SARMIENTO, J.:

This petition for review on certiorari which seeks the reversal and setting aside of the decision 1 of the
Court of Appeals 2 dismissing the petition for certiorari against Judge Raymundo Seva of the
Regional Trial Court of Camarines Norte and the private respondent, William Guerra, involves a pure
question of law i.e., the coverage and application of Section 119 of Commonwealth Act No. 141, as
amended, known otherwise as the Public Land Act.

The facts are undisputed.

The property subject matter of the case was formerly covered by Original Certificate of Title No. P-
1248, issued by virtue of Free Patent Application No. 192765, in favor of the spouses, Florencia H. de
Enciso and Miguel Enciso. The said original certificate of title was inscribed in the Registration Book
for the Province of Camarines Norte on December 10, 1961. On February 28, 1970, the patentees,
the Enciso spouses, by an Absolute Deed of Sale, sold the property in favor of the petitioners, the
spouses Elena Salenillas and Bernardino Salenillas for a consideration of P900.00. Petitioner Elena
Salenillas is a daughter of the Encisos. As a result of the aforementioned sale, Transfer Certificate of
Title No. T-8104 of the Register of Deeds of Camarines Norte was issued in the name of the
Salenillas, cancelling Original Certificate of Title No. P-1248. On June 30, 1971, the petitioners
mortgaged the property now covered by T.C.T. No. T-8104 with the Rural Bank of Daet, Inc. The
mortgage was subsequently released on November 22, 1973 after the petitioners paid the amount of
P1,000.00. Later, or on December 4, 1975, the petitioners again mortgaged the property, this time in
favor of the Philippine National Bank Branch, Daet, Camarines Norte as security for a loan of
P2,500.00.

For failure of the petitioners to pay their loan, extrajudicial foreclosure proceeding, pursuant to Act No.
3135, was instituted by the Philippine National Bank against the mortgage and the property was sold
at a public auction held on February 27, 1981. The private respondent, William Guerra, emerged as
the highest bidder in the said public auction and as a result thereof a "Certificate of Sale" was issued
to him by the Ex Officio Provincial Sheriff of Camarines Norte. Ultimately, on July 12, 1983, a
"Sheriff's Final Deed" was executed in favor of the private respondent.

On August 17,1983, the Philippine National Bank filed with the Regional Trial Court of Camarines
Norte at Daet, a motion for a writ of possession. The public respondent, Judge Raymundo Seva of
the trial court, acting on the motion, issued on September 22, 1983 an order for the issuance of a writ
of possession in favor of the private respondent. When the deputy sheriff of Camarines Norte
however, attempted on November 17, 1983, to place the property in the possession of the private
respondent, the petitioners refused to vacate and surrender the possession of the same and instead
offered to repurchase it under Section 119 of the Public Land Act. On August 15, 1984, another
motion, this time for the issuance of an alias writ of possession was filed by the private respondent
with the trial court. The petitioners, on August 31, 1984, opposed the private respondents' motion and
instead made a formal offer to repurchase the property. Notwithstanding the petitioners' opposition
and formal offer, the trial court judge on October 12, 1984 issued the alias writ of possession prayed
for the private respondent. The petitioners moved for a reconsideration of the order but their motion
was denied.

Undeterred by their initial setback, the petitioners elevated the case to the respondent Court of
Appeals by way of a petition for certiorari claiming that the respondent trial court judge acted with
grave abuse of discretion in issuing the order dated October 12, 1984 granting the writ of possession,
and the order dated October 22, 1984, denying their motion for reconsider consideration.
In a resolution dated January 23, 1985, the respondent appellate court gave due course to the
petition; required the parties to submit simultaneous memoranda in support to their respective
positions; and restrained the trial court and the private respondent from executing, implementing or
otherwise giving effect to the assailed writ of possession until further orders from the court. 3
However, in a decision promulgated on September 17, 1986, the respondent Court of Appeals
dismissed the case for lack of merit. According to the appellate court:

It must be noted that when the original owner, Florencia H. Enciso whose title, OCT No. P-1248, was
issued on August 9, 1961, executed a deed of absolute sale on February 28, 1970 of the property
covered by said title to spouses Elena Salenillas and Bernardino Salenillas, the five year period to
repurchase the property provided for in Section 119 of Commonwealth Act No. 141 as amended
could have already started. Prom this fact alone, the petition should have been dismissed. However,
granting that the transfer from parent to child for a nominal sum may not be the "conveyance"
contemplated by the law. We will rule on the issue raised by the petitioners. 4

xxx xxx xxx

Applying the case of Monge, et al. vs. Angeles, et al., 5 the appellate court went on to hold that the
five-year period of the petitioners to repurchase under Section 119 of the Public Land Act had already
prescribed. The point of reckoning, ruled the respondent court in consonance with Monge is from the
date the petitioners mortgaged the property on December 4, 1973. Thus, when the petitioners made
their formal offer to repurchase on August 31, 1984, the period had clearly expired.

In an effort to still overturn the decision, the petitioners moved for reconsideration. Their motion
apparently went for naught because on May 7, 1987, the respondent appellate court resolved to deny
the same. Hence, this petition.

Before us, the petitioners maintain that contrary to the rulings of the courts below, their right to
repurchase within five years under Section 119 of the Public Land Act has not yet prescribed. To
support their contention, the petitioners cite the cases of Paras vs. Court of Appeals 6 and Manuel vs.
Philippine National Bank, et al. 7

On the other side, the private respondent, in support of the appellate court's decision, states that the
sale of the contested property by the patentees to the petitioners disqualified the latter from being
legal heirs vis-a-vis the said property. As such, they (the petitioners) no longer enjoy the right granted
to heirs under the provisions of Section 119 of the Public Land Act. 8

In fine, what need be determined and resolved here are: whether or not the petitioners have the right
to repurchase the contested property under Section 119 of the Public Land Act; and assuming the
answer to the question is in the affirmative, whether or not their right to repurchase had already
prescribed.

We rule for the petitioners. They are granted by the law the right to repurchase their property and
their right to do so subsists.
Section 119 of the Public Land Act, as amended, provides in full:

Sec. 119. Every conveyance of land acquired under the free patent or homestead provisions, when
proper, shall be subject to repurchase by the applicant, his widow, or legal heirs within a period of five
years from the date of the conveyance.

From the foregoing legal provision, it is explicit that only three classes of persons are bestowed the
right to repurchase — the applicant-patentee, his widow, or other legal heirs. Consequently, the
contention of the private respondent sustained by the respondent appellate court that the petitioners
do not belong to any of those classes of repurchasers because they acquired the property not
through inheritance but by sale, has no legal basis. The petitioners-spouses are the daughter and
son-in-law of the Encisos, patentees of the contested property. At the very least, petitioner Elena
Salenillas, being a child of the Encisos, is a "legal heir" of the latter. As such, and even on this score
alone, she may therefore validly repurchase. This must be so because Section 119 of the Public Land
Act, in speaking of "legal heirs," makes no distinction. Ubi lex non distinguit nec nos distinguere
debemos.

Moreover, to indorse the distinction made by the private respondent and the appellate court would be
to contravene the very purpose of Section 119 of the Public Land Act which is to give the
homesteader or patentee every chance to preserve for himself and his family the land that the State
had gratuitously given him as a reward for his labor in clearing and cultivating it. 9 Considering that
petitioner Salenillas is a daughter of the spouses Florencia H. Enciso and Miguel Enciso, there is no
gainsaying that allowing her (Elena) and her husband to repurchase the property would be more in
keeping with the spirit of the law. We have time and again said that between two statutory
interpretations, that which better serves the purpose of the law should prevail.

Guided by the same purpose of the law, and proceeding to the other issue here raised, we rule that
the five-year period for the petitioners to repurchase their property had not yet prescribed.

The case of Monge et al. vs. Angeles, et al., 10 cited as authority by the respondent Court of Appeals
is inapplicable to the present controversy. The facts obtaining there are substantially different from
those in this case. In Monge the conveyance involved was a pacto de retro sale and not a foreclosure
sale. More importantly, the question raised there was whether the five-year period provided for in
Section 119 "should be counted from the date of the sale even if the same is with an option to
repurchase or from the date the ownership of the land has become consolidated in favor of the
purchaser because of the homesteader's failure to redeem it. 11 It is therefore understandable why
the Court ruled there as it did. A sale on pacto de retro immediately vests title, ownership, and,
generally possession over the property on the vendee a retro, subject only to the right of the vendor a
retro to repurchase within the stipulated period. It is an absolute sale with a resolutory condition.

The cases 12 pointed to by the petitioner in support of their position, on the other hand, present facts
that are quite identical to those in the case at bar. Both cases involved properties the titles over which
were obtained either through homestead or free patent. These properties were mortgaged to a bank
as collateral for loans, and, upon failure of the owners to pay their indebtedness, the mortgages were
foreclosed. In both instances, the Court ruled that the five-year period to. repurchase a homestead
sold at public auction or foreclosure sale under Act 3135 begins on the day after the expiration of the
period of redemption when the deed of absolute sale is executed thereby formally transferring the
property to the purchaser, and not otherwise. Taking into account that the mortgage was foreclosed
and the mortgaged property sold at a public auction to the private respondent on February 27, 1981,
with the "Sheriff's Final Deed" issued on July 12, 1983, the two offers of the petitioners to repurchase
the first on November 17, 1983, and the second, formally, on August 31, 1984 were both made within
the prescribed five-year period.

Now, as regards the redemption price, applying Sec. 30 of Rule 39 of the Revised Rules of Court, the
petitioners should reimburse the private respondent the amount of the purchase price at the public
auction plus interest at the rate of one per centum per month up to November 17, 1983, together with
the amounts of assessments and taxes on the property that the private respondent might have paid
after purchase and interest on the last named amount at the same rate as that on the purchase price.
13

WHEREFORE, the petition is GRANTED. The Decision dated September 17, 1986, and the
Resolution dated May 7, 1987 of the Court of Appeals, and the Orders dated September 22, 1983,
October 12, 1984, and October 22, 1984 of the Regional Trial Court of Daet, Camarines Norte, are
hereby REVERSED and SET ASIDE, and another one ENTERED directing the private respondent to
reconvey the subject property and to execute the corresponding deed of reconveyance therefor in
favor of the petitioners upon the return to him by the latter of the purchase price and the amounts, if
any, of assessments or taxes he paid plus interest of one (1%) per centum per month on both
amounts up to November 17, 1983.

No costs.

SO ORDERED.

26. G.R. No. 74917 January 20, 1988

BANCO DE ORO SAVINGS AND MORTGAGE BANK, petitioner, vs.

EQUITABLE BANKING CORPORATION, PHILIPPINE CLEARING HOUSE CORPORATION, AND
REGIONAL TRIAL COURT OF QUEZON CITY, BRANCH XCII (92), respondents.

GANCAYCO, J.:

This is a petition for review on certiorari of a decision of the Regional Trial Court of Quezon City
promulgated on March 24, 1986 in Civil Case No. Q-46517 entitled Banco de Oro Savings and
Mortgage Bank versus Equitable Banking Corporation and the Philippine Clearing House Corporation
after a review of the Decision of the Board of Directors of the Philippine Clearing House Corporation
(PCHC) in the case of Equitable Banking Corporation (EBC) vs. Banco de Oro Savings and Mortgage
(BCO), ARBICOM Case No. 84033.

The undisputed facts are as follows:

It appears that some time in March, April, May and August 1983, plaintiff through its Visa Card
Department, drew six crossed Manager's check (Exhibits "A" to "F", and herein referred to as Checks)
having an aggregate amount of Forty Five Thousand Nine Hundred and Eighty Two & 23/100
(P45,982.23) Pesos and payable to certain member establishments of Visa Card. Subsequently, the
Checks were deposited with the defendant to the credit of its depositor, a certain Aida Trencio.

Following normal procedures, and after stamping at the back of the Checks the usual endorsements.
All prior and/or lack of endorsement guaranteed the defendant sent the checks for clearing through
the Philippine Clearing House Corporation (PCHC). Accordingly, plaintiff paid the Checks; its clearing
account was debited for the value of the Checks and defendant's clearing account was credited for
the same amount,

Thereafter, plaintiff discovered that the endorsements appearing at the back of the Checks and
purporting to be that of the payees were forged and/or unauthorized or otherwise belong to persons
other than the payees.

Pursuant to the PCHC Clearing Rules and Regulations, plaintiff presented the Checks directly to the
defendant for the purpose of claiming reimbursement from the latter. However, defendant refused to
accept such direct presentation and to reimburse the plaintiff for the value of the Checks; hence, this
case.

In its Complaint, plaintiff prays for judgment to require the defendant to pay the plaintiff the sum of
P45,982.23 with interest at the rate of 12% per annum from the date of the complaint plus attorney's
fees in the amount of P10,000.00 as well as the cost of the suit.

In accordance with Section 38 of the Clearing House Rules and Regulations, the dispute was
presented for Arbitration; and Atty. Ceasar Querubin was designated as the Arbitrator.
After an exhaustive investigation and hearing the Arbiter rendered a decision in favor of the plaintiff
and against the defendant ordering the PCHC to debit the clearing account of the defendant, and to
credit the clearing account of the plaintiff of the amount of P45,982.23 with interest at the rate of 12%
per annum from date of the complaint and Attorney's fee in the amount of P5,000.00. No
pronouncement as to cost was made. 1

In a motion for reconsideration filed by the petitioner, the Board of Directors of the PCHC affirmed the
decision of the said Arbiter in this wise:

In view of all the foregoing, the decision of the Arbiter is confirmed; and the Philippine Clearing House
Corporation is hereby ordered to debit the clearing account of the defendant and credit the clearing
account of plaintiff the amount of Forty Five Thousand Nine Hundred Eighty Two & 23/100
(P45,982.23) Pesos with interest at the rate of 12% per annum from date of the complaint, and the
Attorney's fee in the amount of Five Thousand (P5,000.00) Pesos.

Thus, a petition for review was filed with the Regional Trial Court of Quezon City, Branch XCII,
wherein in due course a decision was rendered affirming in toto the decision of the PCHC.

Hence this petition.

The petition is focused on the following issues:

1.Did the PCHC have any jurisdiction to give due course to and adjudicate Arbicom Case No. 84033?

2.Were the subject checks non-negotiable and if not, does it fall under the ambit of the power of the
PCHC?

3.Is the Negotiable Instrument Law, Act No. 2031 applicable in deciding controversies of this nature
by the PCHC?

4.What law should govern in resolving controversies of this nature?

5.Was the petitioner bank negligent and thus responsible for any undue payment?

Petitioner maintains that the PCHC is not clothed with jurisdiction because the Clearing House Rules
and Regulations of PCHC cover and apply only to checks that are genuinely negotiable. Emphasis is
laid on the primary purpose of the PCHC in the Articles of Incorporation, which states:

To provide, maintain and render an effective, convenient, efficient, economical and relevant exchange
and facilitate service limited to check processing and sorting by way of assisting member banks,
entities in clearing checks and other clearing items as defined in existing and in future Central Bank of
the Philippines circulars, memoranda, circular letters, rules and regulations and policies in pursuance
to the provisions of Section 107 of R.A. 265. ...
and Section 107 of R.A. 265 which provides:

xxx xxx xxx

The deposit reserves maintained by the banks in the Central Bank, in accordance with the provisions
of Section 1000 shall serve as a basis for the clearing of checks, and the settlement of interbank
balances ...

Petitioner argues that by law and common sense, the term check should be interpreted as one that
fits the articles of incorporation of the PCHC, the Central Bank and the Clearing House Rules stating
that it is a negotiable instrument citing the definition of a "check" as basically a "bill of exchange"
under Section 185 of the NIL and that it should be payable to "order" or to "bearer" under Section 126
of game law. Petitioner alleges that with the cancellation of the printed words "or bearer from the face
of the check, it becomes non-negotiable so the PCHC has no jurisdiction over the case.

The Regional Trial Court took exception to this stand and conclusion put forth by the herein petitioner
as it held:

Petitioner's theory cannot be maintained. As will be noted, the PCHC makes no distinction as to the
character or nature of the checks subject of its jurisdiction. The pertinent provisions quoted in
petitioners memorandum simply refer to check(s). Where the law does not distinguish, we shall not
distinguish.

In the case of Reyes vs. Chuanico (CA-G.R. No. 20813 R, Feb. 5, 1962) the Appellate Court
categorically stated that there are four kinds of checks in this jurisdiction; the regular check; the
cashier's check; the traveller's check; and the crossed check. The Court, further elucidated, that while
the Negotiable Instruments Law does not contain any provision on crossed checks, it is coon practice
in commercial and banking operations to issue checks of this character, obviously in accordance with
Article 541 of the Code of Commerce. Attention is likewise called to Section 185 of the Negotiable
Instruments Law:

Sec. 185. Check defined. — A check is a bill of exchange drawn on a bank payable on demand.
Except as herein otherwise provided, the provisions of this act applicable to a bill of exchange
payable on demand apply to a check

and the provisions of Section 61 (supra) that the drawer may insert in the instrument an express
stipulation negating or limiting his own liability to the holder. Consequently, it appears that the use of
the term "check" in the Articles of Incorporation of PCHC is to be perceived as not limited to
negotiable checks only, but to checks as is generally known in use in commercial or business
transactions.
Anent Petitioner's liability on said instruments, this court is in full accord with the ruling of the PCHC
Board of Directors that:

In presenting the Checks for clearing and for payment, the defendant made an express guarantee on
the validity of "all prior endorsements." Thus, stamped at the back of the checks are the defendant's
clear warranty; ALL PRIOR ENDORSEMENTS AND/OR LACK OF ENDORSEMENTS
GUARANTEED. With. out such warranty, plaintiff would not have paid on the checks.

No amount of legal jargon can reverse the clear meaning of defendant's warranty. As the warranty
has proven to be false and inaccurate, the defendant is liable for any damage arising out of the falsity
of its representation.

The principle of estoppel, effectively prevents the defendant from denying liability for any damage
sustained by the plaintiff which, relying upon an action or declaration of the defendant, paid on the
Checks. The same principle of estoppel effectively prevents the defendant from denying the existence
of the Checks. (Pp. 1011 Decision; pp. 4344, Rollo)

We agree.

As provided in the aforecited articles of incorporation of PCHC its operation extend to "clearing
checks and other clearing items." No doubt transactions on non-negotiable checks are within the
ambit of its jurisdiction.

In a previous case, this Court had occasion to rule: "Ubi lex non distinguish nec nos distinguere
debemos." 2 It was enunciated in Loc Cham v. Ocampo, 77 Phil. 636 (1946):

The rule, founded on logic is a corollary of the principle that general words and phrases in a statute
should ordinarily be accorded their natural and general significance. In other words, there should be
no distinction in the application of a statute where none is indicated.

There should be no distinction in the application of a statute where none is indicated for courts are not
authorized to distinguish where the law makes no distinction. They should instead administer the law
not as they think it ought to be but as they find it and without regard to consequences. 3

The term check as used in the said Articles of Incorporation of PCHC can only connote checks in
general use in commercial and business activities. It cannot be conceived to be limited to negotiable
checks only.

Checks are used between banks and bankers and their customers, and are designed to facilitate
banking operations. It is of the essence to be payable on demand, because the contract between the
banker and the customer is that the money is needed on demand. 4
The participation of the two banks, petitioner and private respondent, in the clearing operations of
PCHC is a manifestation of their submission to its jurisdiction. Sec. 3 and 36.6 of the PCHC-CHRR
clearing rules and regulations provide:

SEC. 3. AGREEMENT TO THESE RULES. — It is the general agreement and understanding that
any participant in the Philippine Clearing House Corporation, MICR clearing operations by the mere
fact of their participation, thereby manifests its agreement to these Rules and Regulations and its
subsequent amendments."

Sec 36.6. (ARBITRATION) — The fact that a bank participates in the clearing operations of the
PCHC shall be deemed its written and subscribed consent to the binding effect of this arbitration
agreement as if it had done so in accordance with section 4 of the Republic Act No. 876, otherwise
known as the Arbitration Law.

Further Section 2 of the Arbitration Law mandates:

Two or more persons or parties may submit to the arbitration of one or more arbitrators any
controversy existing between them at the time of the submission and which may be the subject of an
action, or the parties of any contract may in such contract agree to settle by arbitration a controversy
thereafter arising between them. Such submission or contract shall be valid and irrevocable, save
upon grounds as exist at law for the revocation of any contract.

Such submission or contract may include question arising out of valuations, appraisals or other
controversies which may be collateral, incidental, precedent or subsequent to any issue between the
parties. ...

Sec. 21 of the same rules, says:

Items which have been the subject of material alteration or items bearing forged endorsement when
such endorsement is necessary for negotiation shall be returned by direct presentation or demand to
the Presenting Bank and not through the regular clearing house facilities within the period prescribed
by law for the filing of a legal action by the returning bank/branch, institution or entity sending the
same. (Emphasis supplied)

Viewing these provisions the conclusion is clear that the PCHC Rules and Regulations should not be
interpreted to be applicable only to checks which are negotiable instruments but also to non-
negotiable instruments and that the PCHC has jurisdiction over this case even as the checks subject
of this litigation are admittedly non-negotiable.

Moreover, petitioner is estopped from raising the defense of non-negotiability of the checks in
question. It stamped its guarantee on the back of the checks and subsequently presented these
checks for clearing and it was on the basis of these endorsements by the petitioner that the proceeds
were credited in its clearing account.

The petitioner by its own acts and representation can not now deny liability because it assumed the
liabilities of an endorser by stamping its guarantee at the back of the checks.

The petitioner having stamped its guarantee of "all prior endorsements and/or lack of endorsements"
(Exh. A-2 to F-2) is now estopped from claiming that the checks under consideration are not
negotiable instruments. The checks were accepted for deposit by the petitioner stamping thereon its
guarantee, in order that it can clear the said checks with the respondent bank. By such deliberate and
positive attitude of the petitioner it has for all legal intents and purposes treated the said cheeks as
negotiable instruments and accordingly assumed the warranty of the endorser when it stamped its
guarantee of prior endorsements at the back of the checks. It led the said respondent to believe that it
was acting as endorser of the checks and on the strength of this guarantee said respondent cleared
the checks in question and credited the account of the petitioner. Petitioner is now barred from taking
an opposite posture by claiming that the disputed checks are not negotiable instrument.

This Court enunciated in Philippine National Bank vs. Court of Appeals 5 a point relevant to the issue
when it stated the doctrine of estoppel is based upon the grounds of public policy, fair dealing, good
faith and justice and its purpose is to forbid one to speak against his own act, representations or
commitments to the injury of one to whom they were directed and who reasonably relied thereon.

A commercial bank cannot escape the liability of an endorser of a check and which may turn out to be
a forged endorsement. Whenever any bank treats the signature at the back of the checks as
endorsements and thus logically guarantees the same as such there can be no doubt said bank has
considered the checks as negotiable.

Apropos the matter of forgery in endorsements, this Court has succinctly emphasized that the
collecting bank or last endorser generally suffers the loss because it has the duty to ascertain the
genuineness of all prior endorsements considering that the act of presenting the check for payment to
the drawee is an assertion that the party making the presentment has done its duty to ascertain the
genuineness of the endorsements. This is laid down in the case of PNB vs. National City Bank. 6 In
another case, this court held that if the drawee-bank discovers that the signature of the payee was
forged after it has paid the amount of the check to the holder thereof, it can recover the amount paid
from the collecting bank. 7

A truism stated by this Court is that — "The doctrine of estoppel precludes a party from repudiating an
obligation voluntarily assumed after having accepted benefits therefrom. To countenance such
repudiation would be contrary to equity and put premium on fraud or misrepresentation". 8

We made clear in Our decision in Philippine National Bank vs. The National City Bank of NY & Motor
Service Co. that:

Where a check is accepted or certified by the bank on which it is drawn, the bank is estopped to deny
the genuineness of the drawers signature and his capacity to issue the instrument.
If a drawee bank pays a forged check which was previously accepted or certified by the said bank, it
can not recover from a holder who did not participate in the forgery and did not have actual notice
thereof.

The payment of a check does not include or imply its acceptance in the sense that this word is used
in Section 62 of the Negotiable Instruments Act. 9

The point that comes uppermost is whether the drawee bank was negligent in failing to discover the
alteration or the forgery. Very akin to the case at bar is one which involves a suit filed by the drawer of
checks against the collecting bank and this came about in Farmers State Bank 10 where it was held:

A cause of action against the (collecting bank) in favor of the appellee (the drawer) accrued as a
result of the bank breaching its implied warranty of the genuineness of the indorsements of the name
of the payee by bringing about the presentation of the checks (to the drawee bank) and collecting the
amounts thereof, the right to enforce that cause of action was not destroyed by the circumstance that
another cause of action for the recovery of the amounts paid on the checks would have accrued in
favor of the appellee against another or to others than the bank if when the checks were paid they
have been indorsed by the payee. (United States vs. National Exchange Bank, 214 US, 302, 29 S
CT665, 53 L. Ed 1006, 16 Am. Cas. 11 84; Onondaga County Savings Bank vs. United States
(E.C.A.) 64 F 703)

Section 66 of the Negotiable Instruments ordains that:

Every indorser who indorsee without qualification, warrants to all subsequent holders in due course'
(a) that the instrument is genuine and in all respects what it purports to be; (b) that he has good title
to it; (c) that all prior parties have capacity to contract; and (d) that the instrument is at the time of his
indorsement valid and subsisting. 11

It has been enunciated in an American case particularly in American Exchange National Bank vs.
Yorkville Bank 12 that: "the drawer owes no duty of diligence to the collecting bank (one who had
accepted an altered check and had paid over the proceeds to the depositor) except of seasonably
discovering the alteration by a comparison of its returned checks and check stubs or other equivalent
record, and to inform the drawee thereof." In this case it was further held that:

The real and underlying reasons why negligence of the drawer constitutes no defense to the
collecting bank are that there is no privity between the drawer and the collecting bank (Corn
Exchange Bank vs. Nassau Bank, 204 N.Y.S. 80) and the drawer owe to that bank no duty of
vigilance (New York Produce Exchange Bank vs. Twelfth Ward Bank, 204 N.Y.S. 54) and no act of
the collecting bank is induced by any act or representation or admission of the drawer (Seaboard
National Bank vs. Bank of America (supra) and it follows that negligence on the part of the drawer
cannot create any liability from it to the collecting bank, and the drawer thus is neither a necessary
nor a proper party to an action by the drawee bank against such bank. It is quite true that depositors
in banks are under the obligation of examining their passbooks and returned vouchers as a protection
against the payment by the depository bank against forged checks, and negligence in the
performance of that obligation may relieve that bank of liability for the repayment of amounts paid out
on forged checks, which but for such negligence it would be bound to repay. A leading case on that
subject is Morgan vs. United States Mortgage and Trust Col. 208 N.Y. 218, 101 N.E. 871 Amn. Cas.
1914D, 462, L.R.A. 1915D, 74.

Thus We hold that while the drawer generally owes no duty of diligence to the collecting bank, the law
imposes a duty of diligence on the collecting bank to scrutinize checks deposited with it for the
purpose of determining their genuineness and regularity. The collecting bank being primarily engaged
in banking holds itself out to the public as the expert and the law holds it to a high standard of
conduct.

And although the subject checks are non-negotiable the responsibility of petitioner as indorser thereof
remains.

To countenance a repudiation by the petitioner of its obligation would be contrary to equity and would
deal a negative blow to the whole banking system of this country.

The court reproduces with approval the following disquisition of the PCHC in its decision —

II. Payments To Persons Other Than The Payees Are Not Valid And Give Rise To An Obligation

To Return Amounts Received

Nothing is more clear than that neither the defendant's depositor nor the defendant is entitled to
receive payment payable for the Checks. As the checks are not payable to defendant's depositor,
payments to persons other than payees named therein, their successor-in-interest or any person
authorized to receive payment are not valid. Article 1240, New Civil Code of the Philippines
unequivocably provides that:

"Art. 1240. Payment shall be made to the person in whose favor the obligation has been constituted,
or his successo-in-interest, or any person authorized to receive it. "

Considering that neither the defendant's depositor nor the defendant is entitled to receive payments
for the Checks, payments to any of them give rise to an obligation to return the amounts received.
Section 2154 of the New Civil Code mandates that:

Article 2154. If something is received when there is no right to demand it, and it was unduly
delivered through mistake, the obligation to return it arises.

It is contended that plaintiff should be held responsible for issuing the Checks notwithstanding that
the underlying transactions were fictitious This contention has no basis in our jurisprudence.
The nullity of the underlying transactions does not diminish, but in fact strengthens, plaintiffs right to
recover from the defendant. Such nullity clearly emphasizes the obligation of the payees to return the
proceeds of the Checks. If a failure of consideration is sufficient to warrant a finding that a payee is
not entitled to payment or must return payment already made, with more reason the defendant, who
is neither the payee nor the person authorized by the payee, should be compelled to surrender the
proceeds of the Checks received by it. Defendant does not have any title to the Checks; neither can it
claim any derivative title to them.

III. Having Violated Its Warranty On Validity Of All Endorsements, Collecting Bank Cannot Deny

liability To Those Who Relied On Its Warranty

In presenting the Checks for clearing and for payment, the defendant made an express guarantee on
the validity of "all prior endorsements." Thus, stamped at the bank of the checks are the defendant's
clear warranty: ALL PRIOR ENDORSEMENTS AND/OR LACK OF ENDORSEMENTS
GUARANTEED. Without such warranty, plaintiff would not have paid on the checks.

No amount of legal jargon can reverse the clear meaning of defendant's warranty. As the warranty
has proven to be false and inaccurate, the defendant is liable for any damage arising out of the falsity
of its representation.

The principle of estoppel effectively prevents the defendant from denying liability for any damages
sustained by the plaintiff which, relying upon an action or declaration of the defendant, paid on the
Checks. The same principle of estoppel effectively prevents the defendant from denying the existence
of the Checks.

Whether the Checks have been issued for valuable considerations or not is of no serious moment to
this case. These Checks have been made the subject of contracts of endorsement wherein the
defendant made expressed warranties to induce payment by the drawer of the Checks; and the
defendant cannot now refuse liability for breach of warranty as a consequence of such forged
endorsements. The defendant has falsely warranted in favor of plaintiff the validity of all
endorsements and the genuineness of the cheeks in all respects what they purport to be.

The damage that will result if judgment is not rendered for the plaintiff is irreparable. The collecting
bank has privity with the depositor who is the principal culprit in this case. The defendant knows the
depositor; her address and her history, Depositor is defendant's client. It has taken a risk on its
depositor when it allowed her to collect on the crossed-checks.

Having accepted the crossed checks from persons other than the payees, the defendant is guilty of
negligence; the risk of wrongful payment has to be assumed by the defendant.

On the matter of the award of the interest and attorney's fees, the Board of Directors finds no reason
to reverse the decision of the Arbiter. The defendant's failure to reimburse the plaintiff has
constrained the plaintiff to regular the services of counsel in order to protect its interest
notwithstanding that plaintiffs claim is plainly valid just and demandable. In addition, defendant's clear
obligation is to reimburse plaintiff upon direct presentation of the checks; and it is undenied that up to
this time the defendant has failed to make such reimbursement.

WHEREFORE, the petition is DISMISSED for lack of merit without pronouncement as to costs. The
decision of the respondent court of 24 March 1986 and its order of 3 June 1986 are hereby declared
to be immediately executory.

SO ORDERED.

Teehankee, C.J., Narvasa, Cruz and Paras, JJ., concur.

27. [ G.R. No. 118712, July 05, 1996 ]

LAND BANK OF THE PHILIPPINES, PETITIONER, VS. COURT OF APPEALS, PEDRO L. YAP,
HEIRS OF EMILIANO F. SANTIAGO, AGRICULTURAL MANAGEMENT & DEVELOPMENT
CORPORATION, RESPONDENTS.

[G.R. NO. 118745. JULY 5, 1996]

DEPARTMENT OF AGRARIAN REFORM, REPRESENTED BY THE SECRETARY OF AGRARIAN

REFORM, PETITIONER, VS. COURT OF APPEALS, PEDRO L. YAP, HEIRS OF EMILIANO F.
SANTIAGO, AGRICULTURAL MANAGEMENT AND DEVELOPMENT CORPORATION, ET AL.,
RESPONDENTS.

RESOLUTION

FRANCISCO, J.:

Consequent to the denial of their petitions for review on certiorari by this Court on October 6, 1995[1],
petitioners Department of Agrarian Reform (DAR) and Land Bank of the Philippines (LBP), filed their
respective motions for reconsideration contending mainly that, contrary to the Court's conclusion, the
opening of trust accounts in favor of the rejecting landowners is sufficient compliance with the
mandate of Republic Act 6657. Moreover, it is argued that there is no legal basis for allowing the
withdrawal of the money deposited in trust for the rejecting landowners pending the determination of
the final valuation of their properties.

Petitioner DAR maintains that "the deposit contemplated by Section 16(e) of Republic Act 6657,
absent any specific indication, may either be general or special, regular or irregular, voluntary or
involuntary (necessary) or other forms known in law, and any thereof should be, as it is the general
rule, deemed complying."[2]

We reject this contention. Section 16(e) of Republic Act 6657 was very specific in limiting the type of
deposit to be made as compensation for the rejecting landowners, that is in "cash" or in "LBP bonds",
to wit:

"Sec. 16. Procedure for Acquisition of Private Lands -

xxx xxx xxx

(e) Upon receipt by the landowner of the corresponding payment or, in case of rejection or no
response from the landowner, upon the deposit with an accessible bank designated by the DAR of
the compensation in cash or in LBP bonds in accordance with this Act, the DAR shall take immediate
possession of the land and shall request the proper Register of Deeds to issue a Transfer Certificate
of Title (TCT) in the name of the Republic of the Philippines. x x x" (Italics supplied)

The provision is very clear and unambiguous, foreclosing any doubt as to allow an expanded
construction that would include the opening of "trust accounts" within the coverage of term "deposit."
Accordingly, we must adhere to the well-settled rule that when the law speaks in clear and categorical
language, there is no reason for interpretation or construction, but only for application.[3] Thus,
recourse to any rule which allows the opening of trust accounts as a mode of deposit under Section
16(e) of R.A. 6657 goes beyond the scope of the said provision and is therefore impermissible. As we
have previously declared, the rule-making power must be confined to details for regulating the mode
or proceedings to carry into effect the law as it has been enacted, and it cannot be extended to
amend or expand the statutory requirements or to embrace matters not covered by the statute.[4]
Administrative regulations must always be in harmony with the provisions of the law because any
resulting discrepancy between the two will always be resolved in favor of the basic law.[5]

The validity of constituting trust accounts for the benefit of the rejecting landowners and withholding
immediate payment to them is further premised on the latter's refusal to accept the offered
compensation thereby making it necessary that the amount remains in the custody of the LBP for
safekeeping and in trust for eventual payment to the landowners.[6] Additionally, it is argued that the
release of the amount deposited in trust prior to the final determination of the just compensation
would be premature and expose the government to unnecessary risks and disadvantages, citing the
possibility that the government may subsequently decide to abandon or withdraw from the coverage
of the CARP certain portions of the properties that it has already acquired, through supervening
administrative determination that the subject land falls under the exempt category, or by subsequent
legislation allowing additional exemptions from the coverage, or even the total scrapping of the
program itself. Force majeure is also contemplated in view of the devastation suffered by Central
Luzon de to lahar. Petitioner DAR maintains that under these conditions, the government will be
forced to institute numerous actions for the recovery of the amounts that it has already paid in
advance to the rejecting landowners.[7]
We are not persuaded. As an exercise of police power, the expropriation of private property under the
CARP puts the landowner, and not the government, in a situation where the odds are already stacked
against his favor. He has no recourse but to allow it. His only consolation is that he can negotiate for
the amount of compensation to be paid for the expropriated property. As expected, the landowner will
exercise this right to the hilt, but subject however to the limitation that he can only be entitled to a "just
compensation." Clearly therefore, by rejecting and disputing the valuation of the DAR, the landowner
is merely exercising his right to seek just compensation. If we are to affirm the withholding of the
release of the offered compensation despite depriving the landowner of the possession and use of his
property, we are in effect penalizing the latter for simply exercising a right afforded to him by law.

Obviously, this would render the right to seek a fair and just compensation illusory as it would
discourage owners of private lands from contesting the offered valuation of the DAR even if they find
it unacceptable, for fear of the hardships that could result from long delays in the resolution of their
cases. This is contrary to the rules of fair play because the concept of just compensation embraces
not only the correct determination of the amount to be paid to the owners of the land, but also the
payment of the land within a reasonable time from its taking. Without prompt payment, compensation
cannot be considered "just" for the property owner is made to suffer the consequence of being
immediately deprived of his land while being made to wait for a decade or more before actually
receiving the amount necessary to cope with his loss.[8]

It is significant to note that despite petitioner's objections to the immediate release of the rejected
compensation, petitioner LBP, taking into account the plight of the rejecting landowners, has
nevertheless allowed partial withdrawal through LBP Executive Order No. 003,[9] limited to fifty (50)
per cent of the net cash proceeds. This is a clear confirmation that petitioners themselves realize the
overriding need of the landowners' immediate access to the offered compensation despite rejecting
its valuation. But the effort, though laudable, still falls short because the release of the amount was
unexplainably limited to only fifty per cent instead of the total amount of the rejected offer,
notwithstanding that the rejecting landowner's property is taken in its entirety. The apprehension
against the total release of the rejected compensation is discounted since the government's interest is
amply protected under the aforementioned payment scheme because among the conditions already
imposed is that the landowner must execute a Deed of Conditional Transfer for the subject property.
[10]

Anent the aforecited risks and disadvantages to which the government allegedly will be unnecessarily
exposed if immediate withdrawal of the rejected compensation is allowed, suffice it to say that in the
absence of any substantial evidence to support the same, the contemplated scenarios are at the
moment nothing but speculations. To allow the taking of the landowners' properties, and in the
meantime leave them empty handed by withholding payment of compensation while the government
speculates on whether or not it will pursue expropriation, or worse for government to subsequently
decide to abandon the property and return it to the landowner when it has already been rendered
useless by force majeure, is undoubtedly an oppressive exercise of eminent domain that must never
be sanctioned. Legislations in pursuit of the agrarian reform program are not mere overnight creations
but were the result of long exhaustive studies and even heated debates. In implementation of the
program, much is therefore expected from the government. Unduly burdening the property owners
from the resulting flaws in the implementation of the CARP which was supposed to have been a
carefully crafted legislation is plainly unfair and unacceptable.

WHEREFORE, in view of the foregoing, petitioners' motions for reconsideration are hereby DENIED
for lack of merit.

SO ORDERED.
Narvasa, C.J., (Chairman), Davide, Jr., Melo, and Panganiban, JJ., concur.

28. G.R. No. L-50999 March 23, 1990

JOSE SONGCO, ROMEO CIPRES, and AMANCIO MANUEL, petitioners, vs

NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION), LABOR ARBITER FLAVIO

AGUAS, and F.E. ZUELLIG (M), INC., respondents.

MEDIALDEA, J.:

This is a petition for certiorari seeking to modify the decision of the National Labor Relations
Commission in NLRC Case No. RB-IV-20840-78-T entitled, "Jose Songco and Romeo Cipres,
Complainants-Appellants, v. F.E. Zuellig (M), Inc., Respondent-Appellee" and NLRC Case No. RN-
IV-20855-78-T entitled, "Amancio Manuel, Complainant-Appellant, v. F.E. Zuellig (M), Inc.,
Respondent-Appellee," which dismissed the appeal of petitioners herein and in effect affirmed the
decision of the Labor Arbiter ordering private respondent to pay petitioners separation pay equivalent
to their one month salary (exclusive of commissions, allowances, etc.) for every year of service.

The antecedent facts are as follows:

Private respondent F.E. Zuellig (M), Inc., (hereinafter referred to as Zuellig) filed with the Department
of Labor (Regional Office No. 4) an application seeking clearance to terminate the services of
petitioners Jose Songco, Romeo Cipres, and Amancio Manuel (hereinafter referred to as petitioners)
allegedly on the ground of retrenchment due to financial losses. This application was seasonably
opposed by petitioners alleging that the company is not suffering from any losses. They alleged
further that they are being dismissed because of their membership in the union. At the last hearing of
the case, however, petitioners manifested that they are no longer contesting their dismissal. The
parties then agreed that the sole issue to be resolved is the basis of the separation pay due to
petitioners. Petitioners, who were in the sales force of Zuellig received monthly salaries of at least
P40,000. In addition, they received commissions for every sale they made.

The collective Bargaining Agreement entered into between Zuellig and F.E. Zuellig Employees
Association, of which petitioners are members, contains the following provision (p. 71, Rollo):

ARTICLE XIV — Retirement Gratuity

Section l(a)-Any employee, who is separated from employment due to old age, sickness, death or
permanent lay-off not due to the fault of said employee shall receive from the company a retirement
gratuity in an amount equivalent to one (1) month's salary per year of service. One month of salary as
used in this paragraph shall be deemed equivalent to the salary at date of retirement; years of service
shall be deemed equivalent to total service credits, a fraction of at least six months being considered
one year, including probationary employment. (Emphasis supplied)

On the other hand, Article 284 of the Labor Code then prevailing provides:

Art. 284. Reduction of personnel. — The termination of employment of any employee due to the
installation of labor saving-devices, redundancy, retrenchment to prevent losses, and other similar
causes, shall entitle the employee affected thereby to separation pay. In case of termination due to
the installation of labor-saving devices or redundancy, the separation pay shall be equivalent to one
(1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case
of retrenchment to prevent losses and other similar causes, the separation pay shall be equivalent to
one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher.
A fraction of at least six (6) months shall be considered one (1) whole year. (Emphasis supplied)

In addition, Sections 9(b) and 10, Rule 1, Book VI of the Rules Implementing the Labor Code provide:

xxx

Sec. 9(b). Where the termination of employment is due to retrechment initiated by the employer to
prevent losses or other similar causes, or where the employee suffers from a disease and his
continued employment is prohibited by law or is prejudicial to his health or to the health of his co-
employees, the employee shall be entitled to termination pay equivalent at least to his one month
salary, or to one-half month pay for every year of service, whichever is higher, a fraction of at least six
(6) months being considered as one whole year.

xxx

Sec. 10. Basis of termination pay. — The computation of the termination pay of an employee as
provided herein shall be based on his latest salary rate, unless the same was reduced by the
employer to defeat the intention of the Code, in which case the basis of computation shall be the rate
before its deduction. (Emphasis supplied)

On June 26,1978, the Labor Arbiter rendered a decision, the dispositive portion of which reads (p. 78,
Rollo):

RESPONSIVE TO THE FOREGOING, respondent should be as it is hereby, ordered to pay the

complainants separation pay equivalent to their one month salary (exclusive of commissions,
allowances, etc.) for every year of service that they have worked with the company.
SO ORDERED.

The appeal by petitioners to the National Labor Relations Commission was dismissed for lack of
merit.

Hence, the present petition.

On June 2, 1980, the Court, acting on the verified "Notice of Voluntary Abandonment and Withdrawal
of Petition dated April 7, 1980 filed by petitioner Romeo Cipres, based on the ground that he wants
"to abide by the decision appealed from" since he had "received, to his full and complete satisfaction,
his separation pay," resolved to dismiss the petition as to him.

The issue is whether or not earned sales commissions and allowances should be included in the
monthly salary of petitioners for the purpose of computation of their separation pay.

The petition is impressed with merit.

Petitioners' position was that in arriving at the correct and legal amount of separation pay due them,
whether under the Labor Code or the CBA, their basic salary, earned sales commissions and
allowances should be added together. They cited Article 97(f) of the Labor Code which includes
commission as part on one's salary, to wit;

(f) 'Wage' paid to any employee shall mean the remuneration or earnings, however designated,
capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or
commission basis, or other method of calculating the same, which is payable by an employer to an
employee under a written or unwritten contract of employment for work done or to be done, or for
services rendered or to be rendered, and includes the fair and reasonable value, as determined by
the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to
the employee. 'Fair reasonable value' shall not include any profit to the employer or to any person
affiliated with the employer.

Zuellig argues that if it were really the intention of the Labor Code as well as its implementing rules to
include commission in the computation of separation pay, it could have explicitly said so in clear and
unequivocal terms. Furthermore, in the definition of the term "wage", "commission" is used only as
one of the features or designations attached to the word remuneration or earnings.

Insofar as the issue of whether or not allowances should be included in the monthly salary of
petitioners for the purpose of computation of their separation pay is concerned, this has been settled
in the case of Santos v. NLRC, et al., G.R. No. 76721, September 21, 1987, 154 SCRA 166, where
We ruled that "in the computation of backwages and separation pay, account must be taken not only
of the basic salary of petitioner but also of her transportation and emergency living allowances." This
ruling was reiterated in Soriano v. NLRC, et al., G.R. No. 75510, October 27, 1987, 155 SCRA 124
and recently, in Planters Products, Inc. v. NLRC, et al., G.R. No. 78524, January 20, 1989.
We shall concern ourselves now with the issue of whether or not earned sales commission should be
included in the monthly salary of petitioner for the purpose of computation of their separation pay.

Article 97(f) by itself is explicit that commission is included in the definition of the term "wage". It has
been repeatedly declared by the courts that where the law speaks in clear and categorical language,
there is no room for interpretation or construction; there is only room for application (Cebu Portland
Cement Co. v. Municipality of Naga, G.R. Nos. 24116-17, August 22, 1968, 24 SCRA 708; Gonzaga
v. Court of Appeals, G.R.No. L-2 7455, June 28,1973, 51 SCRA 381). A plain and unambiguous
statute speaks for itself, and any attempt to make it clearer is vain labor and tends only to obscurity.
How ever, it may be argued that if We correlate Article 97(f) with Article XIV of the Collective
Bargaining Agreement, Article 284 of the Labor Code and Sections 9(b) and 10 of the Implementing
Rules, there appears to be an ambiguity. In this regard, the Labor Arbiter rationalized his decision in
this manner (pp. 74-76, Rollo):

The definition of 'wage' provided in Article 96 (sic) of the Code can be correctly be (sic) stated as a
general definition. It is 'wage ' in its generic sense. A careful perusal of the same does not show any
indication that commission is part of salary. We can say that commission by itself may be considered
a wage. This is not something novel for it cannot be gainsaid that certain types of employees like
agents, field personnel and salesmen do not earn any regular daily, weekly or monthly salaries, but
rely mainly on commission earned.

Upon the other hand, the provisions of Section 10, Rule 1, Book VI of the implementing rules in
conjunction with Articles 273 and 274 (sic) of the Code specifically states that the basis of the
termination pay due to one who is sought to be legally separated from the service is 'his latest salary
rates.

x x x.

Even Articles 273 and 274 (sic) invariably use 'monthly pay or monthly salary'.

The above terms found in those Articles and the particular Rules were intentionally used to express
the intent of the framers of the law that for purposes of separation pay they mean to be specifically
referring to salary only.

.... Each particular benefit provided in the Code and other Decrees on Labor has its own pecularities
and nuances and should be interpreted in that light. Thus, for a specific provision, a specific meaning
is attached to simplify matters that may arise there from. The general guidelines in (sic) the formation
of specific rules for particular purpose. Thus, that what should be controlling in matters concerning
termination pay should be the specific provisions of both Book VI of the Code and the Rules. At any
rate, settled is the rule that in matters of conflict between the general provision of law and that of a
particular- or specific provision, the latter should prevail.

On its part, the NLRC ruled (p. 110, Rollo):

From the aforequoted provisions of the law and the implementing rules, it could be deduced that
wage is used in its generic sense and obviously refers to the basic wage rate to be ascertained on a
time, task, piece or commission basis or other method of calculating the same. It does not, however,
mean that commission, allowances or analogous income necessarily forms part of the employee's
salary because to do so would lead to anomalies (sic), if not absurd, construction of the word "salary."
For what will prevent the employee from insisting that emergency living allowance, 13th month pay,
overtime, and premium pay, and other fringe benefits should be added to the computation of their
separation pay. This situation, to our mind, is not the real intent of the Code and its rules.

We rule otherwise. The ambiguity between Article 97(f), which defines the term 'wage' and Article XIV
of the Collective Bargaining Agreement, Article 284 of the Labor Code and Sections 9(b) and 10 of
the Implementing Rules, which mention the terms "pay" and "salary", is more apparent than real.
Broadly, the word "salary" means a recompense or consideration made to a person for his pains or
industry in another man's business. Whether it be derived from "salarium," or more fancifully from
"sal," the pay of the Roman soldier, it carries with it the fundamental idea of compensation for
services rendered. Indeed, there is eminent authority for holding that the words "wages" and "salary"
are in essence synonymous (Words and Phrases, Vol. 38 Permanent Edition, p. 44 citing Hopkins vs.
Cromwell, 85 N.Y.S. 839,841,89 App. Div. 481; 38 Am. Jur. 496). "Salary," the etymology of which is
the Latin word "salarium," is often used interchangeably with "wage", the etymology of which is the
Middle English word "wagen". Both words generally refer to one and the same meaning, that is, a
reward or recompense for services performed. Likewise, "pay" is the synonym of "wages" and
"salary" (Black's Law Dictionary, 5th Ed.). Inasmuch as the words "wages", "pay" and "salary" have
the same meaning, and commission is included in the definition of "wage", the logical conclusion,
therefore, is, in the computation of the separation pay of petitioners, their salary base should include
also their earned sales commissions.

The aforequoted provisions are not the only consideration for deciding the petition in favor of the
petitioners.

We agree with the Solicitor General that granting, in gratia argumenti, that the commissions were in
the form of incentives or encouragement, so that the petitioners would be inspired to put a little more
industry on the jobs particularly assigned to them, still these commissions are direct remuneration
services rendered which contributed to the increase of income of Zuellig . Commission is the
recompense, compensation or reward of an agent, salesman, executor, trustees, receiver, factor,
broker or bailee, when the same is calculated as a percentage on the amount of his transactions or
on the profit to the principal (Black's Law Dictionary, 5th Ed., citing Weiner v. Swales, 217 Md. 123,
141 A.2d 749, 750). The nature of the work of a salesman and the reason for such type of
remuneration for services rendered demonstrate clearly that commission are part of petitioners' wage
or salary. We take judicial notice of the fact that some salesmen do not receive any basic salary but
depend on commissions and allowances or commissions alone, are part of petitioners' wage or
salary. We take judicial notice of the fact that some salesman do not received any basic salary but
depend on commissions and allowances or commissions alone, although an employer-employee
relationship exists. Bearing in mind the preceeding dicussions, if we adopt the opposite view that
commissions, do not form part of wage or salary, then, in effect, We will be saying that this kind of
salesmen do not receive any salary and therefore, not entitled to separation pay in the event of
discharge from employment. Will this not be absurd? This narrow interpretation is not in accord with
the liberal spirit of our labor laws and considering the purpose of separation pay which is, to alleviate
the difficulties which confront a dismissed employee thrown the the streets to face the harsh
necessities of life.

Additionally, in Soriano v. NLRC, et al., supra, in resolving the issue of the salary base that should be
used in computing the separation pay, We held that:
The commissions also claimed by petitioner ('override commission' plus 'net deposit incentive') are
not properly includible in such base figure since such commissions must be earned by actual market
transactions attributable to petitioner.

Applying this by analogy, since the commissions in the present case were earned by actual market
transactions attributable to petitioners, these should be included in their separation pay. In the
computation thereof, what should be taken into account is the average commissions earned during
their last year of employment.

The final consideration is, in carrying out and interpreting the Labor Code's provisions and its
implementing regulations, the workingman's welfare should be the primordial and paramount
consideration. This kind of interpretation gives meaning and substance to the liberal and
compassionate spirit of the law as provided for in Article 4 of the Labor Code which states that "all
doubts in the implementation and interpretation of the provisions of the Labor Code including its
implementing rules and regulations shall be resolved in favor of labor" (Abella v. NLRC, G.R. No.
71812, July 30,1987,152 SCRA 140; Manila Electric Company v. NLRC, et al., G.R. No. 78763, July
12,1989), and Article 1702 of the Civil Code which provides that "in case of doubt, all labor legislation
and all labor contracts shall be construed in favor of the safety and decent living for the laborer.

ACCORDINGLY, the petition is hereby GRANTED. The decision of the respondent National Labor
Relations Commission is MODIFIED by including allowances and commissions in the separation pay
of petitioners Jose Songco and Amancio Manuel. The case is remanded to the Labor Arbiter for the
proper computation of said separation pay.

SO ORDERED.

Narvasa (Chairman), Cruz, Gancayco and Griño-Aquino, JJ., concur.

29. G.R. Nos. 24116-17 August 22, 1968

CEBU PORTLAND CEMENT COMPANY, plaintiff-appellant, vs.

MUNICIPALITY OF NAGA, CEBU, ET AL., defendants-appellees.

FERNANDO, J.:
In two separate actions, plaintiff-appellant Cebu Portland Cement Company sought to test the validity
of the distraint and thereafter the sale at public auction by the principal defendant-appellee,
Municipality of Naga, Cebu, of 100,000 bags of cement for the purpose of satisfying its alleged
deficiency in the payment of the municipal license tax for 1960, municipal license tax for 1961 as well
as the penalty, all in the total sum of P204,300.00. The lower court rendered a joint decision
sustaining the validity of the action taken by defendant-appellee Municipality of Naga. The case is
now before us on appeal. We affirm.

According to the appealed decision: "From all the evidence, mostly documentary, adduced during the
hearing the following facts have been established. The efforts of the defendant Treasurer to collect
from the plaintiff the municipal license tax imposed by Amended Ordinance No. 21. Series of 1959 on
cement factories located within the Municipality of Naga, Cebu, have met with rebuff time and again.
The demands made on the taxpayer ... have not been entirely successful. Finally, the defendant
Treasurer decided on June 26, 1961 to avail of the Civil remedies provided for under Section 2304 of
the Revised Administrative Code and gave the plaintiff a period of ten days from receipt thereof within
which to settle the account, computed as follows ...: Deficiency Municipal License Tax for 1960 —
P80,250.00; Municipal License Tax for 1961 — P90,000.00; and 20% Penalty — P34,050.00, stating
in exasperation, "This is our last recourse as we had exhausted all efforts for an amicable solution of
our problem." "1

It was further shown: "On July 6, 1961, at 11:00 A.M., the defendant Treasurer notified the Plant
Manager of the plaintiff that he was "distraining 100,000 bags of Apo cement in satisfaction of your
delinquency in municipal license taxes in the total amount of P204,300.00" ... This notice was
received by the acting officer in charge of the plaintiff's plant, Vicente T. Garaygay, according to his
own admission. At first, he was not in accord with the said letter, asking the defendant Treasurer for
time to study the same, but in the afternoon he [acknowledged the] distraint ..." 2

As was noted in the decision, the defendant Treasurer in turn "signed the receipt for goods, articles or
effects seized under authority of Section 2304 of the Revised Administrative Code, certifying that he
has constructively distrained on July 6, 1961 from the Cebu Portland Cement Company at its plant at
Tina-an, Naga, Cebu, 100,000 bags of Apo cement in tanks, and that "the said articles or goods will
be sold at public auction to the highest bidder on July 27, 1961, and the proceeds thereof will be
utilized in part satisfaction of the account of the said company in municipal licenses and penalties in
the total amount of P204,300.00 due the Municipality of Naga Province of Cebu" ..."3

The lower court likewise found as a fact that on the same day, July 6, 1961, the municipal treasurer
posted the notice of sale to the effect that pursuant to the provisions of Section 2305 of the Revised
Administrative Code, he would sell at public auction for cash to the highest bidder at the main
entrance of the municipal building of the Municipality of Naga, Province of Cebu, Philippines on the
27th day of July, 1961, at 9 o'clock in the morning, the property seized and distrained or levied upon
from the Cebu Portland Cement Company in satisfaction of the municipal license taxes and penalties
in the amount of P204,300.00, specifying that what was to be sold was 100,000 bags of Apo
cement.4 No sale, as thus announced, was held on July 27, 1961. It was likewise stated in the
appealed decision that there was stipulation by the parties to this effect: "1. The auction sale took
place on January 30, 1962, ..."5

In this appeal from the above joint decision, plaintiff-appellant Cebu Portland Cement Company
upholds the view that the distraint of the 100,000 bags of cement as well as the sale at public auction
thereafter made ran counter to the law. As earlier noted, we do not see it that way.
1. On the validity of the distraint — In the first two errors assigned, plaintiff-appellant submits as illegal
the distraint of 100,000 bags of cement made on July 6, 1961. Its contention is premised on the fact
that in the letter of defendant-appellee dated June 26, 1961, requiring plaintiff-appellant to settle its
account of P204,300.00, it was given a period of 10 days from receipt within which it could pay, failure
to do so being the occasion for the distraint of its property. It is now alleged that the 10-day period of
grace was not allowed to lapse, the distraint having taken place on July 6, 1961.

It suffices to answer such a contention by referring to the explicit language of the law. According to
the Revised Administrative Code: "The remedy by distraint shall proceed as follows: Upon the failure
of the person owing any municipal tax or revenue to pay the same, at the time required, the municipal
treasurer may seize and distrain any personal property belonging to such person or any property
subject to the tax lien, in sufficient quantity to satisfy the tax or charge in question, together with any
increment thereto incident to delinquency, and the expenses of the distraint."6

The clear and explicit language of the law leaves no room for doubt. The municipal treasurer "may
seize and distrain any personal property" of the individual or entity subject to the tax upon failure "to
pay the same, at the time required ..." There was such a failure on the part of plaintiff-appellant to pay
the municipal tax at the time required. The power of the municipal treasurer in accordance with the
above provision therefore came into play.1äwphï1.ñët

Whatever might have been set forth in the letter of the municipal treasurer could not change or
amend the law it has to be enforced as written. That was what the lower court did. What was done
then cannot be rightfully looked upon as a failure to abide by what the statutory provision requires.
Time and time again, it has been repeatedly declared by this Court that where the law speaks in clear
and categorical language, there is no room for interpretation. There is only room for application. That
was what occurred in this case.7

2. On the validity of the auction sale — The validity of the auction sale held on January 30, 1962 is
challenged in the next two errors assigned as allegedly committed by the lower court. Plaintiff-
appellant's argument is predicated on the fact that it was not until January 16, 1962 that it was
notified that the public auction sale was to take place on January 29, 1962. It is its view that under the
Revised Administrative Code8 the sale of the distrained property cannot take place "less than twenty
days after notice to the owner or possessor of the property [distrained] ... and the publication or
posting of such notice."

Why such a contention could not prosper is explained clearly by the lower court in the appealed
decision. Thus: "With respect to the claim that the auction sale held on January 30, 1962 pursuant to
the distraint was null and void for being contrary to law because not more than twenty days have
elapsed from the date of notice, it is believed that the defendant Municipality of Naga and Municipal
Treasurer of Naga have substantially complied with the requirements provided for by Section 2305 of
the Revised Administrative Code. From the time that the plaintiff was first notified of the distraint on
July 6, 1961 up to the date of the sale on January 30, 1962, certainly, more than twenty days have
elapsed. If the sale did not take place, as advertised, on July 27, 1961, but only on January 30, 1962,
it was due to the requests for deferment made by the plaintiff which unduly delayed the proceedings
for collection of the tax, and the said taxpayer should not be allowed now to complain that the
required period has not yet elapsed when the intention of the tax collector was already well-publicized
for many months."9 The reasonableness of the above observation of the lower court cannot be
disputed. Under the circumstances, the allegation that there was no observance of the twenty-day
period hardly carries conviction. The point is further made that the auction sale took place not on
January 29, 1962, as stated in the notice of sale, but on the next day, January 30, 1962. According to
plaintiff-appellant: "On this score alone, the sale ..., was illegal as it was not made on the time stated
in the notice." 10
There is no basis to sustain such a plea as the finding of the lower court is otherwise. Thus: "On
January 16, 1962, the defendant Treasurer informed Garaygay that he would cause the
readvertisement for sale at public auction of the 100,000 bags of Apo cement which were under
constructive distraint ... On January 19, 1962, the said defendant issued the corresponding notice of
sale, which fixed January 30, 1962, at 10:00 A.M., as the date of sale, posting the said notice in
public places and delivering copies thereof to the interested parties in the previous notice, ...
Ultimately, the bidding was conducted on that day, January 30, 1962, with the representatives of the
Provincial Auditor and Provincial Treasurer present. Only two bidders submitted sealed bids. After the
bidding, the defendant-treasurer informed the plaintiff that an award was given to the winning
bidder, ..." 11

This being a direct appeal to us, plaintiff-appellant must be deemed to have accepted as conclusive
what the lower court found as established by the evidence, only questions of law being brought to us
for review. It is the established rule that when a party appeals directly to this Court, he is deemed to
have waived the right to dispute any finding of fact made by the court below. 12

WHEREFORE, the decision of the lower court dated 23, 1964, is affirmed in toto. With costs against
plaintiff-appellant.

30. [G.R. No. L-27455. June 28, 1973.]

ANA GONZAGA, SERVILLANO IGNACIO and ANASTACIA SAN JUAN, Petitioners-Appellants,

v. COURT OF APPEALS, BONIFACIO EVANGELISTA, JOSE EVANGELISTA CHUA, PAULINO
EVANGELISTA, PEDRO TRINIDAD, FORTUNATA TRINIDAD, RUPERTA DE ROSAS,
ANASTACIA DE ROSAS, PATRICIA EVANGELISTA, and JUANA EVANGELISTA, Respondents-
Appellees.

FERNANDO, J.:

It must have been well-founded doubts about the strength of the original position taken by petitioners
both in the Court of First Instance of Rizal and subsequently in respondent Court of Appeals, that in
this appeal by certiorari from the decision of the latter tribunal, a novel aspect is sought to be
introduced by them. It represents a last-ditch effort in their thus far hopeless quest for excluding
private respondents, nephews and nieces of the late Juan Evangelista, from any share in that portion
of his estate sold by his widow, petitioner Ana Gonzaga, to the other petitioners. The point raised by
them, not previously passed upon by this Court, is that the requirement in Section 20 of the Public
Land Act, 1 couched in absolute terms, of the previous approval of the Secretary of Agriculture and
Natural Resources for the proposed sale of the rights of one seeking a free patent, does not apply
unless the application deals with a homestead. 2 It is their contention that if such interpretation be
adopted, then the decision adverse to them, both in the lower court as well as in respondent Court of
Appeals, should be reversed. We do not feel called upon to rule squarely on such an issue, as the
factual basis thereof is completely lacking, not only as shown in the decision of respondent Court
sought to be reviewed, but also as reflected in the answer of petitioners in the lower court as well as
in their brief with the respondent Court. Such an omission has consequences fatal to their belated
claim. What is more, the approach followed by petitioners is not in conformity with our past
pronouncements, which had indicated the fullness of the power of the state as to how public lands
may be acquired and under what conditions, as well as the restrictions imposed on original
applicants, who could thus legally be prevented from being victimized as a result of improvidence or
even poor judgment, by requiring such approval. As thus viewed, it would clearly appear that this
appeal by way of certiorari lacks merit. We affirm.
There was a stipulation of facts before the lower court which was quoted in the decision of the Court
of Appeals. Thus: "1. That on October 13, 1958, Juan Evangelista died intestate, leaving among
others, a parcel of land situated in Barrio Darangan, [Municipality] of Binangonan, [Province] of Rizal,
covered by [Original Certificate] of Title No. 183 of the Register of Deeds of Rizal and Tax
[Declaration] No. 12131 of the [Provincial] Assessor of Rizal, which parcel is now the subject of this
litigation; 2. That said Juan Evangelista was survived by the defendant, Ana Gonzaga and plaintiffs,
the latter being the sons and daughters of the brothers and sisters of the deceased; 3. That during the
lifetime of Juan Evangelista, he and said Ana Gonzaga on April 21,1956 sold for valuable
consideration several parcels of land to the spouses, Anastacia San Juan and Servillano Ignacio
(defendants herein) including that parcel of land described in the foregoing paragraph (1) and as a
consequence of which sale, the corresponding tax declaration was transferred (to) said vendees; that
at the time of said sale, there was a pending application of Juan Evangelista and Ana Gonzaga over
the land in question with the Bureau of Lands, but the title thereto was not issued until November 28,
1958, i.e., after the death of Juan Evangelista; 4. That on April 21, 1962, defendant Ana Gonzaga
alleging to (be) the surviving spouse of the deceased Juan Evangelista, executed an Extra-Judicial
Partition and Sale of the same parcel of land in question in favor of the same vendees, herein
defendants, Servillano Ignacio and Anastacia San Juan; 5. That in a series of subsequent transfers
and conveyances, the same parcel of land was sold on March 6, 1963 by the spouses Servillano
Ignacio and Anastacia San Juan to the defendant R & R Realty Co., Inc. and the latter, together with
other properties owned by it, mortgaged the same to the Continental Bank; that it was by reason of
these subsequent conveyances that defendants Filipinas Agricultural & Realty Co., Inc. and the
Continental Bank were impleaded as party defendants." 3 On the above facts, the lower court relying
on the aforesaid Section 20, declared he 1956 sale void and consequently ruled in favor of the
successional rights of private respondents as heirs of the deceased, Juan Evangelista. Respondent
Court of Appeals affirmed.

As set forth at the outset, there is no legal basis for reversing the decision of respondent Court.

1. Petitioners are well aware and therefore cannot deny that unless the sale made by the deceased
Juan Evangelista in his lifetime of the disputed lot was valid, then the rights of private respondents as
his heirs should be respected. Both the lower court and respondent Court of Appeals were agreed
that considering the express and categorical language of Section 20 of the Public Land Act, such sale
"shall be null and void" there being no "previous approval" of the Secretary of Agriculture and Natural
Resources. It could not have been otherwise, for there is nothing in the stipulation of facts that would,
in any way, take this transaction out of the operation of that legal provision. It has been repeated time
and time again that where the statutory norm speaks unequivocally, there is nothing for the courts to
do except to apply it. The law, leaving no doubt as to the scope of its operation, must be obeyed. Our
decisions have consistently been to that effect. 4 Now petitioners before this Court apparently would
try to extricate themselves from what for them is an untenable situation by alleging that it was not a
homestead that was applied for by the deceased. Such a contention does not carry persuasion.
There was no such allegation in their answer filed before the lower court. 5 There was nothing to that
effect in the stipulation of facts. After losing in the lower court, there was not even a motion for
reconsideration filed. The matter was immediately taken to respondent Court of Appeals. In their brief
before respondent Court of Appeals, again, such a defense now interposed is conspicuous by its
absence, the two paragraphs devoted to that point merely confining itself to the assertion that the
Public Land Act does not prohibit an applicant from selling his rights and interests during his
application for a free patent. 6

Apparently realizing the weakness that characterized their vain effort to prevent private respondents
from enjoying their successional rights, an attempt is made by petitioners in this appeal by way of
certiorari as well as in their brief, to mitigate its shortcoming by raising what in effect is a new matter,
namely, that the application was not for a homestead. Outside of such an assertion lacking support in
the facts as found by respondent Court, to which we must accord deference, there is another obstacle
to its being considered. Such an issue was not raised before the lower court. It was not even brought
to the attention of respondent Court of Appeals. What was said, therefore, in the recent case of
Arangco v. Baloso 7 has relevance. Thus: "As far back as 1904, in Tan Machan v. Trinidad, for the
appellate tribunal to consider a legal question, it must be raised in the court below. Such a principle
has been consistently adhered to. As was categorically announced in City of Manila v. Roxas by
Justice Hull, ‘the rule is almost universal, and it has been repeatedly followed by this court . . .’" 8 It
cannot be said then that respondent Court erred in affirming the decision of the lower court, declaring
the nullity of the sale dated April 21, 1956 executed without the approval of the Secretary of
Agriculture and Natural Resources. Thus is the first assigned error disposed of.

2. The principal argument, thus exposed as devoid of any persuasive force, was sought to be
strengthened in the second assignment of error by an attempted distinction between the limitation
placed on the grantee after the free patent is issued and the absence thereof prior thereto, except if
the application is for a homestead. That, in effect, is the error imputed to respondent Court under this
category. Petitioners again labor under a misapprehension. Section 118 of the Public Land Act 9
reads: "Except in favor of the Government or any of its branches, units, or institutions, or legally
constituted banking corporations, lands acquired under the free patent or homestead provisions shall
not be subject to encumbrance or alienation from the date of the approval of the application and for a
term of five years from and after the date of issuance of the patent or grant, nor shall they become
liable to the satisfaction of any debt contracted prior to the expiration of said period; but the
improvements or crops of the land may be mortgaged or pledged to qualified persons, associations,
or corporations." Is it not a clear expression then of the state policy to assure that the original grantee,
even if he were minded otherwise, is deprived for a period of five years of his freedom of disposition?
Thus is he protected from his own weaknesses or temptation to sell, or lack of business acumen, the
purpose being, in the language of Justice J.B.L. Reyes in Artates v. Urbi, 10 to keep and preserve for
him "or his family the land given to him gratuitously by the State, so that being a property owner, he
may become and remain a contented and useful member of our society." 11 Considering that such is
the policy, does it not logically follow that he is precluded from disposing of his rights prior even to his
obtaining the free patent? Both policy and reason, therefore, unite in the conclusion that no such
distinction should be made. Then, too, it is not to be forgotten that the state is possessed of the
plenary power as the persona in law to determine who shall be the favored recipients of public lands,
as well as under what terms they may be granted such privilege, not excluding the placing of
obstacles in the way of their exercising what otherwise would be ordinary acts of ownership? 12

3. The third assigned error impugning the judgment of respondent Court of Appeals in favor of
appellees before it, now private respondents, being a logical consequence of the foregoing, need not
be discussed at all.

WHEREFORE, the decision of February 24, 1967 is affirmed. With costs against petitioners.

31. G.R. No. 118712 October 6, 1995

LAND BANK OF THE PHILIPPINES, petitioner, vs.

COURT OF APPEALS, PEDRO L. YAP, HEIRS OF EMILIANO F. SANTIAGO, AGRICULTURAL

MANAGEMENT & DEVELOPMENT CORP., respondents.

G.R. No. 118745 October 6, 1995

DEPARTMENT OF AGRARIAN REFORM, represented by the Secretary of Agrarian Reform,

petitioner, vs.
COURT OF APPEALS, PEDRO L. YAP, HEIRS OF EMILIANO F. SANTIAGO, AGRICULTURAL
MANAGEMENT & DEVELOPMENT CORP., ET AL., respondents.

FRANCISCO, R., J.:

It has been declared that the duty of the court to protect the weak and the underprivileged should not
be carried out to such an extent as deny justice to the landowner whenever truth and justice happen
to be on his side.1 As eloquently stated by Justice Isagani Cruz:

. . . social justice — or any justice for that matter — is for the deserving, whether he be a millionaire in
his mansion or a pauper in his hovel. It is true that, in case of reasonable doubt, we are called upon to
tilt the balance in favor of the poor, to whom the Constitution fittingly extends its sympathy and
compassion. But never is it justified to prefer the poor simply because they are poor, or to reject the
rich simply because they are rich, for justice must always be served, for poor and rich alike, according
to the mandate of the law.2

In this agrarian dispute, it is once more imperative that the aforestated principles be applied in its
resolution.

Separate petitions for review were filed by petitioners Department of Agrarian Reform (DAR) (G.R.
No. 118745) and Land Bank of the Philippines (G.R. No. 118712) following the adverse ruling by the
Court of Appeals in CA-G.R. SP No. 33465. However, upon motion filed by private respondents, the
petitions were ordered consolidated.3

Petitioners assail the decision of the Court of Appeals promulgated on October 20, 1994, which
granted private respondents' Petition for Certiorari and Mandamus and ruled as follows:

WHEREFORE, premises considered, the Petition for Certiorari and Mandamus is hereby GRANTED:

a) DAR Administrative Order No. 9, Series of 1990 is declared null and void insofar as it provides for
the opening of trust accounts in lieu of deposits in cash or bonds;

b) Respondent Landbank is ordered to immediately deposit — not merely "earmark", "reserve" or

"deposit in trust" — with an accessible bank designated by respondent DAR in the names of the
following petitioners the following amounts in cash and in government financial instruments — within
the parameters of Sec. 18 (1) of RA 6657:

P 1,455,207.31 Pedro L. Yap

P 135,482.12 Heirs of Emiliano Santiago

P 15,914,127.77 AMADCOR;

c) The DAR-designated bank is ordered to allow the petitioners to withdraw the above-deposited
amounts without prejudice to the final determination of just compensation by the proper authorities;
and

d) Respondent DAR is ordered to 1) immediately conduct summary administrative proceedings to

determine the just compensation for the lands of the petitioners giving the petitioners 15 days from
notice within which to submit evidence and to 2) decide the cases within 30 days after they are
submitted for decision.4

Likewise, petitioners seek the reversal of the Resolution dated January 18, 1995,5 denying their
motion for reconsideration.

Private respondents are landowners whose landholdings were acquired by the DAR and subjected to
transfer schemes to qualified beneficiaries under the Comprehensive Agrarian Reform Law (CARL,
Republic Act No. 6657).

Aggrieved by the alleged lapses of the DAR and the Landbank with respect to the valuation and
payment of compensation for their land pursuant to the provisions of RA 6657, private respondents
filed with this Court a Petition for Certiorari and Mandamus with prayer for preliminary mandatory
injunction. Private respondents questioned the validity of DAR Administrative Order No. 6, Series of
19926 and DAR Administrative Order No. 9, Series of 1990,7 and sought to compel the DAR to
expedite the pending summary administrative proceedings to finally determine the just compensation
of their properties, and the Landbank to deposit in cash and bonds the amounts respectively
"earmarked", "reserved" and "deposited in trust accounts" for private respondents, and to allow them
to withdraw the same.

Through a Resolution of the Second Division dated February 9, 1994, this Court referred the petition
to respondent Court of Appeals for proper determination and disposition.

As found by respondent court , the following are undisputed:

Petitioner Pedro Yap alleges that "(o)n 4 September 1992 the transfer certificates of title (TCTs) of
petitioner Yap were totally cancelled by the Registrar of Deeds of Leyte and were transferred in the
names of farmer beneficiaries collectively, based on the request of the DAR together with a
certification of the Landbank that the sum of P735,337.77 and P719,869.54 have been earmarked for
Landowner Pedro L. Yap for the parcels of lands covered by TCT Nos. 6282 and 6283, respectively,
and issued in lieu thereof TC-563 and TC-562, respectively, in the names of listed beneficiaries
(ANNEXES "C" & "D") without notice to petitioner Yap and without complying with the requirement of
Section 16 (e) of RA 6657 to deposit the compensation in cash and Landbank bonds in an accessible
bank. (Rollo, p. 6).
The above allegations are not disputed by any of the respondents.

Petitioner Heirs of Emiliano Santiago allege that the heirs of Emiliano F. Santiago are the owners of a
parcel of land located at Laur, NUEVA ECIJA with an area of 18.5615 hectares covered by TCT No.
NT-60359 of the registry of Deeds of Nueva Ecija, registered in the name of the late Emiliano F.
Santiago; that in November and December 1990, without notice to the petitioners, the Landbank
required and the beneficiaries executed Actual tillers Deed of Undertaking (ANNEX "B") to pay rentals
to the LandBank for the use of their farmlots equivalent to at least 25% of the net harvest; that on 24
October 1991 the DAR Regional Director issued an order directing the Landbank to pay the
landowner directly or through the establishment of a trust fund in the amount of P135,482.12, that on
24 February 1992, the Landbank reserved in trust P135,482.12 in the name of Emiliano F. Santiago.
(ANNEX "E"; Rollo,

p. 7); that the beneficiaries stopped paying rentals to the landowners after they signed the Actual
Tiller's Deed of Undertaking committing themselves to pay rentals to the LandBank (Rollo, p. 133).

The above allegations are not disputed by the respondents except that respondent Landbank claims
1) that it was respondent DAR, not Landbank which required the execution of Actual Tillers Deed of
Undertaking (ATDU, for brevity); and 2) that respondent Landbank, although armed with the ATDU,
did not collect any amount as rental from the substituting beneficiaries (Rollo, p. 99).

Petitioner Agricultural Management and Development Corporation (AMADCOR, for brevity) alleges —
with respect to its properties located in San Francisco, Quezon — that the properties of AMADCOR in
San Francisco, Quezon consist of a parcel of land covered by TCT No. 34314 with an area of
209.9215 hectares and another parcel covered by TCT No. 10832 with an area of 163.6189 hectares;
that a summary administrative proceeding to determine compensation of the property covered by
TCT No. 34314 was conducted by the DARAB in Quezon City without notice to the landowner; that a
decision was rendered on 24 November 1992 (ANNEX "F") fixing the compensation for the parcel of
land covered by TCT No. 34314 with an area of 209.9215 hectares at P2,768,326.34 and ordering
the Landbank to pay or establish a trust account for said amount in the name of AMADCOR; and that
the trust account in the amount of P2,768,326.34 fixed in the decision was established by adding
P1,986,489.73 to the first trust account established on 19 December 1991 (ANNEX "G"). With respect
to petitioner AMADCOR's property in Tabaco, Albay, it is alleged that the property of AMADCOR in
Tabaco, Albay is covered by TCT No. T-2466 of the Register of Deeds of Albay with an area of
1,629.4578 hectares'; that emancipation patents were issued covering an area of 701.8999 hectares
which were registered on 15 February 1988 but no action was taken thereafter by the DAR to fix the
compensation for said land; that on 21 April 1993, a trust account in the name of AMADCOR was
established in the amount of P12,247,217.83', three notices of acquisition having been previously
rejected by AMADCOR. (Rollo, pp. 8-9)

The above allegations are not disputed by the respondents except that respondent Landbank claims
that petitioner failed to participate in the DARAB proceedings (land valuation case) despite due notice
to it (Rollo, p. 100).8

Private respondents argued that Administrative Order No. 9, Series of 1990 was issued without
jurisdiction and with grave abuse of discretion because it permits the opening of trust accounts by the
Landbank, in lieu of depositing in cash or bonds in an accessible bank designated by the DAR, the
compensation for the land before it is taken and the titles are cancelled as provided under Section
16(e) of RA 6657.9 Private respondents also assail the fact that the DAR and the Landbank merely
"earmarked", "deposited in trust" or "reserved" the compensation in their names as landowners
despite the clear mandate that before taking possession of the property, the compensation must be
deposited in cash or in bonds. 10
Petitioner DAR, however, maintained that Administrative Order No. 9 is a valid exercise of its rule-
making power pursuant to Section 49 of RA 6657.11 Moreover, the DAR maintained that the
issuance of the "Certificate of Deposit" by the Landbank was a substantial compliance with Section
16(e) of RA 6657 and the ruling in the case of Association of Small Landowners in the Philippines,
Inc., et al. vs. Hon. Secretary of Agrarian Reform, G.R. No. 78742, July 14, 1989 (175 SCRA 343).12

For its part, petitioner Landbank declared that the issuance of the Certificates of Deposits was in
consonance with Circular Nos. 29, 29-A and 54 of the Land Registration Authority where the words
"reserved/deposited" were also used.13

On October 20, 1994, the respondent court rendered the assailed decision in favor of private
respondents.14 Petitioners filed a motion for reconsideration but respondent court denied the
same.15

Hence, the instant petitions.

On March 20, 1995, private respondents filed a motion to dismiss the petition in G.R. No. 118745
alleging that the appeal has no merit and is merely intended to delay the finality of the appealed
decision.16 The Court, however, denied the motion and instead required the respondents to file their
comments.17

Petitioners submit that respondent court erred in (1) declaring as null and void DAR Administrative
Order No. 9, Series of 1990, insofar as it provides for the opening of trust accounts in lieu of deposit
in cash or in bonds, and (2) in holding that private respondents are entitled as a matter of right to the
immediate and provisional release of the amounts deposited in trust pending the final resolution of the
cases it has filed for just compensation.

Anent the first assignment of error, petitioners maintain that the word "deposit" as used in Section
16(e) of RA 6657 referred merely to the act of depositing and in no way excluded the opening of a
trust account as a form of deposit. Thus, in opting for the opening of a trust account as the acceptable
form of deposit through Administrative Circular No. 9, petitioner DAR did not commit any grave abuse
of discretion since it merely exercised its power to promulgate rules and regulations in implementing
the declared policies of RA 6657.

The contention is untenable. Section 16(e) of RA 6657 provides as follows:

Sec. 16. Procedure for Acquisition of Private Lands —

xxx xxx xxx

(e) Upon receipt by the landowner of the corresponding payment or, in case of rejection or no
response from the landowner, upon the deposit with an accessible bank designated by the DAR of
the compensation in cash or in LBP bonds in accordance with this Act, the DAR shall take immediate
possession of the land and shall request the proper Register of Deeds to issue a Transfer Certificate
of Title (TCT) in the name of the Republic of the Philippines. . . . (emphasis supplied)

It is very explicit therefrom that the deposit must be made only in "cash" or in "LBP bonds". Nowhere
does it appear nor can it be inferred that the deposit can be made in any other form. If it were the
intention to include a "trust account" among the valid modes of deposit, that should have been made
express, or at least, qualifying words ought to have appeared from which it can be fairly deduced that
a "trust account" is allowed. In sum, there is no ambiguity in Section 16(e) of RA 6657 to warrant an
expanded construction of the term "deposit".

The conclusive effect of administrative construction is not absolute. Action of an administrative

agency may be disturbed or set aside by the judicial department if there is an error of law, a grave
abuse of power or lack of jurisdiction or grave abuse of discretion clearly conflicting with either the
letter or the spirit of a legislative enactment.18 In this regard, it must be stressed that the function of
promulgating rules and regulations may be legitimately exercised only for the purpose of carrying the
provisions of the law into effect. The power of administrative agencies is thus confined to
implementing the law or putting it into effect. Corollary to this is that administrative regulations cannot
extend

the law and amend a legislative enactment,19 for settled is the rule that administrative regulations
must be in harmony with the provisions of the law. And in case there is a discrepancy between the
basic law and an implementing rule or regulation, it is the former that prevails.20

In the present suit, the DAR clearly overstepped the limits of its power to enact rules and regulations
when it issued Administrative Circular No. 9. There is no basis in allowing the opening of a trust
account in behalf of the landowner as compensation for his property because, as heretofore
discussed, Section 16(e) of RA 6657 is very specific that the deposit must be made only in "cash" or
in "LBP bonds". In the same vein, petitioners cannot invoke LRA Circular Nos. 29, 29-A and 54
because these implementing regulations cannot outweigh the clear provision of the law. Respondent
court therefore did not commit any error in striking down Administrative Circular No. 9 for being null
and void.

Proceeding to the crucial issue of whether or not private respondents are entitled to withdraw the
amounts deposited in trust in their behalf pending the final resolution of the cases involving the final
valuation of their properties, petitioners assert the negative.

The contention is premised on the alleged distinction between the deposit of compensation under
Section 16(e) of RA 6657 and payment of final compensation as provided under Section 1821 of the
same law. According to petitioners, the right of the landowner to withdraw the amount deposited in his
behalf pertains only to the final valuation as agreed upon by the landowner, the DAR and the LBP or
that adjudged by the court. It has no reference to amount deposited in the trust account pursuant to
Section 16(e) in case of rejection by the landowner because the latter amount is only provisional and
intended merely to secure possession of the property pending final valuation. To further bolster the
contention petitioners cite the following pronouncements in the case of "Association of Small
Landowners in the Phil. Inc. vs. Secretary of Agrarian Reform".22
The last major challenge to CARP is that the landowner is divested of his property even before actual
payment to him in full of just compensation, in contravention of a well-accepted principle of eminent
domain.

xxx xxx xxx

The CARP Law, for its part conditions the transfer of possession and ownership of the land to the
government on receipt by the landowner of the corresponding payment or the deposit by the DAR of
the compensation in cash or LBP bonds with an accessible bank. Until then, title also remains with
the landowner. No outright change of ownership is contemplated either.

xxx xxx xxx

Hence the argument that the assailed measures violate due process by arbitrarily transferring title
before the land is fully paid for must also be rejected.

Notably, however, the aforecited case was used by respondent court in discarding petitioners'
assertion as it found that:

. . . despite the "revolutionary" character of the expropriation envisioned under RA 6657 which led the
Supreme Court, in the case of Association of Small Landowners in the Phil. Inc. vs. Secretary of
Agrarian Reform (175 SCRA 343), to conclude that "payments of the just compensation is not always
required to be made fully in money" — even as the Supreme Court admits in the same case "that the
traditional medium for the payment of just compensation is money and no other" — the Supreme
Court in said case did not abandon the "recognized rule . . . that title to the property expropriated shall
pass from the owner to the expropriator only upon full payment of the just compensation." 23
(Emphasis supplied)

We agree with the observations of respondent court. The ruling in the "Association" case merely
recognized the extraordinary nature of the expropriation to be undertaken under RA 6657 thereby
allowing a deviation from the traditional mode of payment of compensation and recognized payment
other than in cash. It did not, however, dispense with the settled rule that there must be full payment
of just compensation before the title to the expropriated property is transferred.

The attempt to make a distinction between the deposit of compensation under Section 16(e) of RA
6657 and determination of just compensation under Section 18 is unacceptable. To withhold the right
of the landowners to appropriate the amounts already deposited in their behalf as compensation for
their properties simply because they rejected the DAR's valuation, and notwithstanding that they have
already been deprived of the possession and use of such properties, is an oppressive exercise of
eminent domain. The irresistible expropriation of private respondents' properties was painful enough
for them. But petitioner DAR rubbed it in all the more by withholding that which rightfully belongs to
private respondents in exchange for the taking, under an authority (the "Association" case) that is,
however, misplaced. This is misery twice bestowed on private respondents, which the Court must
rectify.
Hence, we find it unnecessary to distinguish between provisional compensation under Section 16(e)
and final compensation under Section 18 for purposes of exercising the landowners' right to
appropriate the same. The immediate effect in both situations is the same, the landowner is deprived
of the use and possession of his property for which he should be fairly and immediately
compensated. Fittingly, we reiterate the cardinal rule that:

. . . within the context of the State's inherent power of eminent domain, just compensation means not
only the correct determination of the amount to be paid to the owner of the land but also the payment
of the land within a reasonable time from its taking. Without prompt payment, compensation cannot
be considered "just" for the property owner is made to suffer the consequence of being immediately
deprived of his land while being made to wait for a decade or more before actually receiving the
amount necessary to cope with his loss. 24 (Emphasis supplied)

The promulgation of the "Association" decision endeavored to remove all legal obstacles in the
implementation of the Comprehensive Agrarian Reform Program and clear the way for the true
freedom of the farmer.25 But despite this, cases involving its implementation continue to multiply and
clog the courts' dockets. Nevertheless, we are still optimistic that the goal of totally emancipating the
farmers from their bondage will be attained in due time. It must be stressed, however, that in the
pursuit of this objective, vigilance over the rights of the landowners is equally important because
social justice cannot be invoked to trample on the rights of property owners, who under our
Constitution and laws are also entitled to protection.26

WHEREFORE, the foregoing premises considered, the petition is hereby DENIED for lack of merit
and the appealed decision is AFFIRMED in toto.

SO ORDERED.

32. G.R. No. 72005 May 29, 1987

PHILIPPINE BRITISH ASSURANCE CO., INC., petitioner, vs.

HONORABLE INTERMEDIATE APPELLATE COURT; SYCWIN COATING & WIRES, INC., and
DOMINADOR CACPAL, CHIEF DEPUTY SHERRIF OF MANILA, respondents.
GANCAYCO, J.:

This is a Petition for Review on certiorari of the Resolution dated September 12, 1985 of the
Intermediate Appellate Court in AC-G.R. No. CR-05409 1 granting private respondent's motion for
execution pending appeal and ordering the issuance of the corresponding writ of execution on the
counterbond to lift attachment filed by petitioner. The focal issue that emerges is whether an order of
execution pending appeal of a judgment maybe enforced on the said bond. In the Resolution of
September 25, 1985 2 this Court as prayed for, without necessarily giving due course to the petition,
issued a temporary restraining order enjoining the respondents from enforcing the order complaint of.

The records disclose that private respondent Sycwin Coating & Wires, Inc., filed a complaint for
collection of a sum of money against Varian Industrial Corporation before the Regional Trial Court of
Quezon City. During the pendency of the suit, private respondent succeeded in attaching some of the
properties of Varian Industrial Corporation upon the posting of a supersedeas bond. 3 The latter in
turn posted a counterbond in the sum of P1,400, 000.00 4 thru petitioner Philippine British Assurance
Co., Inc., so the attached properties were released.

On December 28, 1984, the trial court rendered a Decision, the dispositive portion of which reads:

WHEREFORE, plaintiff's Motion for Summary Judgment is hereby GRANTED, and judgment is
rendered in favor of the plaintiff and against the defendant Varian Industrial Corporation, and the
latter is hereby ordered:

1. To pay plaintiff the amount of P1,401,468.00, the principal obligation with 12% interest per annum
from the date of default until fully paid;

2. To pay plaintiff 5% of the principal obligation as liquidated damages;

3. To pay plaintiff P30,000.00 as exemplary damages;

4. To pay plaintiff 15% of P1,401,468.00, the principal obligation, as and for attorney's fees; and

5. To pay the costs of suit.

Accordingly, the counterclaim of the defendant is hereby DISMISSED for lack of merit.

SO ORDERED. 5
Varian Industrial Corporation appealed the decision to the respondent Court. Sycwin then filed a
petition for execution pending appeal against the properties of Varian in respondent Court. Varian
was required to file its comment but none was filed. In the Resolution of July 5, 1985, respondent
Court ordered the execution pending appeal as prayed for. 6 However, the writ of execution was
returned unsatisfied as Varian failed to deliver the previously attached personal properties upon
demand. In a Petition dated August 13, 1985 filed with respondent Court Sycwin prayed that the
surety (herein petitioner) be ordered to pay the value of its bond. 7 In compliance with the Resolution
of August 23, 1985 of the respondent Court herein petitioner filed its comment. 8 In the Resolution of
September 12, 1985, 9 the respondent Court granted the petition. Hence this action.

It is the submission of private respondent Sycwin that without a previous motion for reconsideration of
the questioned resolution, certiorari would not lie. While as a general rule a motion for reconsideration
has been considered a condition sine qua non for the granting of a writ of certiorari, this rule does not
apply when special circumstances warrant immediate or more direct action. 10 It has been held
further that a motion for reconsideration may be dispensed with in cases like this where execution
had been ordered and the need for relief was extremely urgent. 11

The counterbond provides:

WHEREAS, in the above-entitled case pending in the Regional Trial Court, National Capital Judicial
Region, Branch LXXXV, Quezon City, an order of Attachment was issued against abovenamed
Defendant;

WHEREAS, the Defendant, for the purpose of lifting and/or dissolving the order of attachment issued
against them in the above-en-titled case, have offered to file a counterbond in the sum of PESOS
ONE MILLION FOUR HUNDRED THOUSAND ONLY (P1,400,000.00), Philippine Currency, as
provided for in Section 5, Rule 57 of the Revised Rules of Court.

NOW, THEREFORE, we, VARIAN INDUSTRIAL CORPORATION, as Principal and the PHILIPPINE
BRITISH ASSURANCE COMPANY, INC., a corporation duly organized and existing under and by
virtue of the laws of the Philippines, as Surety, in consideration of the above and of the lifting or
dissolution of the order of attachment, hereby jointly and severally, bind ourselves in favor of the
above Plaintiff in the sum of PESOS ONE MILLION FOUR HUNDRED THOUSAND ONLY
(P1,400,000.00), Philippine Currency, under the condition that in case the Plaintiff recovers judgment
in the action, and Defendant will, on demand, re-deliver the attached property so released to the
Officer of the Court and the same shall be applied to the payment of the judgment, or in default
thereof, the defendant and Surety will, on demand, pay to the Plaintiff the full value of the property
released.

EXECUTED at Manila, Philippines, this 28th day of June, 1984. 12

Sections 5, 12, and 17 of Rule 57 of the Revised Rules of Court also provide:

SEC. 5. Manner of attaching property. — The officer executing the order shall without delay attach, to
await judgment and execution in the action, all the properties of the party against whom the order is
issued in the province, not exempt from execution, or so much thereof as may be sufficient to satisfy
the applicant's demand, unless the former makes a deposit with the clerk or judge of the court from
which the order issued, or gives a counter-bond executed to the applicant, in an amount sufficient to
satisfy such demand besides costs, or in an amount equal to the value of the property which is about
to be attached, to secure payment to the applicant of any judgement ment which he may recover in
the action. The officer shall also forthwith serve a copy of the applicant's affidavit and bond, and of the
order of attachment, on the adverse party, if he be found within the province.

SEC. 12. Discharge of attachment upon giving counterbond. — At any time after an order of
attachment has been granted, the party whose property has been attached, or the person appearing
on his behalf, may, upon reasonable notice to the applicant, apply to the judge who granted the order,
or to the judge of the court in which the action is pending, for an order discharging the attachment
wholly or in part on the security given. The judge shall, after hearing, order the discharge of the
attachment if a cash deposit is made, or a counter-bond executed to the attaching creditor is filed, on
behalf of the adverse party, with the clerk or judge of the court where the application is made, in an
amount equal to the value of the property attached as determined by the judge, to secure the
payment of any judgment that the attaching creditor may recover in the action. Upon the filing of such
counter-bond, copy thereof shall forthwith be served on the attaching creditor or his lawyer. Upon the
discharge of an attachment in accordance with the provisions of this section the property attached, or
the proceeds of any sale thereof, shall be delivered to the party making the deposit or giving the
counterbond aforesaid standing in place of the property so released. Should such counterbond for
any reason be found to be, or become, insufficient, and the party furnishing the same fail to file an
additional counterbond, the attaching creditor may apply for a new order of attachment.

SEC. 17. When execution returned unsatisfied, recovery had upon bond. — If the execution be
returned unsatisfied in whole or in part, the surety or sureties on any counter-bond given pursuant to
the provisions of this rule to secure the payment of the judgment shall become charged on such
counter- bond, and bound to pay to the judgement creditor upon demand, the amount due under the
judgment, which amount may be recovered from such surety or sureties after notice and summary
hearing in the same action. (Emphasis supplied.)

Under Sections 5 and 12, Rule 57 above reproduced it is provided that the counterbond is intended to
secure the payment of "any judgment" that the attaching creditor may recover in the action. Under
Section 17 of same rule it provides that when "the execution be returned unsatisfied in whole or in
part" it is only then that "payment of the judgment shall become charged on such counterbond."

The counterbond was issued in accordance with the provisions of Section 5, Rule 57 of the Rules of
Court as provided in the second paragraph aforecited which is deemed reproduced as part of the
counterbond. In the third paragraph it is also stipulated that the counterbond is to be "applied for the
payment of the judgment." Neither the rules nor the provisions of the counterbond limited its
application to a final and executory judgment. Indeed, it is specified that it applies to the payment of
any judgment that maybe recovered by plaintiff. Thus, the only logical conclusion is that an execution
of any judgment including one pending appeal if returned unsatisfied maybe charged against such a
counterbond.

It is well recognized rule that where the law does not distinguish, courts should not distinguish. Ubi lex
non distinguish nec nos distinguere debemos. 13 "The rule, founded on logic, is a corollary of the
principle that general words and phrases in a statute should ordinarily be accorded their natural and
general significance. 14 The rule requires that a general term or phrase should not be reduced into
parts and one part distinguished from the other so as to justify its exclusion from the operation of the
law. 15 In other words, there should be no distinction in the application of a statute where none is
indicated.16 For courts are not authorized to distinguish where the law makes no distinction. They
should instead administer the law not as they think it ought to be but as they find it and without regard
to consequences. 17

A corollary of the principle is the rule that where the law does not make any exception, courts may not
except something therefrom, unless there is compelling reason apparent in the law to justify it.18
Thus where a statute grants a person against whom possession of "any land" is unlawfully withheld
the right to bring an action for unlawful detainer, this Court held that the phrase "any land" includes all
kinds of land, whether agricultural, residential, or mineral.19 Since the law in this case does not make
any distinction nor intended to make any exception, when it speaks of "any judgment" which maybe
charged against the counterbond, it should be interpreted to refer not only to a final and executory
judgment in the case but also a judgment pending appeal.

All that is required is that the conditions provided for by law are complied with, as outlined in the case
of Towers Assurance Corporation v. Ororama Supermart, 20

Under Section 17, in order that the judgment creditor might recover from the surety on the
counterbond, it is necessary (1) that the execution be first issued against the principal debtor and that
such execution was returned unsatisfied in whole or in part; (2) that the creditor make a demand upon
the surety for the satisfaction of the judgment, and (3) that the surety be given notice and a summary
hearing on the same action as to his liability for the judgment under his counterbond.

The rule therefore, is that the counterbond to lift attachment that is issued in accordance with the
provisions of Section 5, Rule 57, of the Rules of Court, shall be charged with the payment of any
judgment that is returned unsatisfied. It covers not only a final and executory judgement but also the
execution of a judgment pending appeal.

WHEREFORE, the petition is hereby DISMISSED for lack of merit and the restraining order issued on
September 25, 1985 is hereby dissolved with costs against petitioner.

SO ORDERED.
33. G.R. No. 95667 May 8, 1991

JOSE C. BORJA, petitioner, vs.

THE COURT OF APPEALS and RURAL BANKERS ASSOCIATION OF THE PHILIPPINES, INC.,
respondents.

CRUZ, J.:

We deal here only with the validity of the orders of the respondent Court of Appeals denying the
petitioner's motion for execution pending appeal of a judgment rendered in his favor by the Regional
Trial Court of Manila.1 That appeal shall be resolved on the merits in due course but not in this
petition.

On October 11, 1979, the petitioner filed a complaint against the private respondent for the sum of
P78,325.00, representing unpaid commissions, and damages. He was then 66 years old. Judgment
was rendered in his favor five years later,2 when he was already 71 years, and promulgated on
November 28, 1986, after he had turned 73.

On December 3, 1986, before the private respondent's appeal was perfected, the petitioner moved
for execution of the judgment. The motion was denied by the trial court on July 28, 1988, on the
ground that the grant thereof "would affect the issues involved in the appeal."

On March 14, 1989, the petitioner filed with the trial court, the records of the case not yet having been
elevated to the appellate court, a second motion for execution pending appeal. This was also denied
on the same ground.

On April 18, 1990, the petitioner filed a third motion for execution pending appeal, this time with the
respondent court. This was also denied. The appellate court saw no justification for execution at that
time, observing that it had ordered the retaking by the trial court of the testimony of one of the
witnesses.

It was only on September 14, 1990, that the complete records of the case were finally elevated to the
respondent court, at which time the petitioner was already 75.
The petitioner now seeks certiorari under Rule 65 of the Rules of Court against the resolutions of the
respondent court dated August 24, 1990, denying his motion for execution, and September 28, 1990,
denying reconsideration. He avers that these orders were issued with grave abuse of discretion
amounting to lack of jurisdiction and should therefore be set aside.

The general rule in Rule 39, Section 1, of the Rules of Court is that a judgment can be executed only
after it has become final and executory, or "finally disposes of the action or proceeding." Such
execution shall issue as a matter of right upon the expiration of the final appeal therefrom if the
appeal has been duly perfected.

However, execution pending appeal is allowed under Section 2 of the same Rule as follows:

Sec. 2. Execution pending appeal. — On motion of the prevailing party with notice to the adverse
party, the court may in its discretion, order execution to issue even before the expiration of the time to
appeal, upon good reasons to be stated in a special order. If a record on appeal is filed thereafter the
motion and the special order shall be included.

The petitioner argues that the case has been dragging for more than ten years since it was filed in
1979, with no early resolution of the appeal in sight. The elevation of the records alone from the trial
court took all of six years. The proceedings in the appellate court will entail further delay. The
petitioner has grown old with the case and is now 76 years of age. He fears he may no longer be in
this world when the case is finally decided.

The private respondent points out that the petitioner is raising the argument about his age only at this
time, when he should have invoked it earlier. Not having been seasonably raised, the issue cannot
now be considered on appeal.

We are not persuaded by this argument. The petitioner's attitude is understandable. He may not have
considered himself old in 1984, but now, at 76, he is feeling his age. While we may not agree that a
man of his years is practically moribund, the Court can appreciate his apprehension that he will not be
long for this world and may not enjoy the fruit of the judgment before he finally passes away. That is
the reason why he has raised the issue now. Belatedly if you will, but no less validly in our view.

The Court realizes the seriousness of the private respondent's challenge to the appealed decision,
which appears to have been rendered by Judge Tomas P. Maddela, Jr. on June 13, 1984, but
promulgated only after two years, when he had already retired. This contention must be carefully
examined. But factual verification thereof cannot be made by us in the first instance. At this stage of
the proceedings, the issue cannot be resolved directly by this Court on the basis of the evidence
before it.

The important point is that if the appealed judgment is annulled, the complaint of the petitioner will
have to be tried anew and will probably be appealed whatever its outcome. It will take years again
before it is finally decided. By that time, the petitioner may be facing a different judgment from a Court
higher than any earthly tribunal. The decision on his complaint, even if it be in his favor, will have
become meaningless as far as he himself is concerned.

The Court feels that this circumstance is a "good reason" to allow execution of the challenged
judgment pending appeal, consistently with Rule 39, Section 2. Despite the misgivings of the private
respondent, we may presume the said judgment to be valid at this time in the absence of evidence
that it is a nullity. The applicable rule is Rule 131, Section 5, of the Rules of Court under which it is
presumed that "official duty has been regularly performed3 and that "a court, or judge acting as such,
whether in the Philippines or elsewhere, was acting in the lawful exercise of his jurisdiction."4

So presuming, we apply our ruling in De Leon v. Soriano,5 where this Court approved the following
observations of the trial court:

Therefore, in conclusion this court is of the opinion and so holds that the fact that the appeal is
frivolous and intended for the purpose of delay, and considering that the herein plaintiff is an old
woman of 75 years, sickly and without any means of living, are all in the opinion of the court strong
grounds to justify the execution of the judgment in spite of the supersedeas bond, because the right
of the plaintiff to live and to pursue her happiness are paramount rights which outweigh the security
offered by the supersedeas bond.

As for the supersedeas bond, we note that the petitioner is willing to post it in the amount to be
determined by the lower court. It is of course settled that the filing of a supersedeas bond cannot by
itself alone entitle the appellee to execution pending appeal. In the case at bar, however, we find that
the bond provides added justification, together with the advanced age of the petitioner, for the grant of
the motion under the exception to the general rule.

We agree that in a petition for certiorari under Rule 65 of the Rules of Court, the impugned decision
may be reversed only if it is clearly shown to be tainted with grave abuse of discretion amounting to
lack or excess of jurisdiction. This requirement has been established in the present case, in light of
Rule 39, Section 2, and the particular circumstance of the petitioner's advanced age, which is the
most formidable argument in his favor. We reach this conclusion on the basis not only of the law but
also of equity, which supports the law. Aequitas non facit jus, sed juri auxiliatur.

It should be added that even if filed under Rule 45 rather than Rule 65, the petition would still
prosper.1âwphi1 The record shows that the petitioner was notified of the denial of his motion for
reconsideration by the respondent court on October 11, 1990, and that on October 26, 1990, he
moved for and was granted an extension of thirty days from that date within which to file his petition.
This was actually filed on November 23, 1990. The docket fees were also paid on time, on October
26, 1990. No less importantly, the petition raises a question of law, to wit, the correct interpretation
and application of Rule 39, Section 2, of the Rules of Court.

It is therefore not correct to say, as the private respondent does, that the petitioner is availing himself
of certiorari under Rule 65 as a substitute for a lost appeal.

We are convinced that the petitioner's motion for execution pending appeal should have been
granted. In sustaining its denial by the trial court, the respondent court committed an error of
judgment reversible under Rule 45 or grave abuse of discretion that can be corrected under Rule 65.

WHEREFORE, the petition is GRANTED. The resolutions of respondent Court of Appeals dated
August 24, 1990, and September 28, 1990, are SET ASIDE. The Court hereby ALLOWS execution
pending appeal of the decision of the Regional Trial Court of Manila, Branch 34, in Civil Case No.
127114 upon the filing of a sufficient supersedeas bond.

SO ORDERED. Narvasa, Gancayco, Griño-Aquino and Medialdea, JJ., concur.

34. G.R. No. 167976 : January 20, 2010

ROSARIO T. FLORENDO, FOR HERSELF AND THE OTHER HEIRS OF THE LATE DR.
REGALADO FLORENDO, Petitioner, v. PARAMOUNT INSURANCE CORP. (NOW RENAMED AS
MAA GENERAL ASSURANCE, INC.), Respondent.

DECISION

ABAD, J.:

This case is about what a trial court may consider "good reasons" for allowing the execution of its
judgment pending appeal.

The Facts and the Case

On March 11, 1999 petitioner Rosario Florendo (Rosario) and the other heirs of her late husband,
Regalado Florendo, (collectively, the Florendos) filed before the Regional Trial Court (RTC) of Imus,
Cavite, an action against respondent Paramount Insurance Corp. (Paramount) for annulment of its
liens over their lands.

The Florendos claimed that on February 26, 1980 Rosario and her husband bought five agricultural
lots, consisting of about 9.5 hectares, in Dasmariñas, Cavite, from Adolfo C. Aguirre (Aguirre). The
five lots were covered by Transfer Certificates of Title T-80998, T-80999,1cralaw T-81000 and T-
81001, in Aguirres name. Unfortunately, although the Florendos religiously paid the real estate taxes
on the properties from then on, they did not cause the titles to be transferred in their names.2cralaw

Eighteen years later, in 1998, after the Municipal Treasurer of Dasmariñas refused to receive their tax
payments, the Florendos discovered that respondent Paramount had earlier caused the attachment
of the lots and, after judgment had been rendered in its favor by the Court of First Instance of Manila
in Civil Case 134374, also caused the sheriffs sale in its favor to be annotated on the titles.3cralaw

In its defense, respondent Paramount claimed that, when it caused the annotations of its notices of lis
pendens, attachment, and execution and the sheriffs certificate of sale on Aguirres registered titles,
the same were free of any adverse claim.

On November 15, 2002 the RTC rendered judgment in favor of the Florendos,4cralaw upholding their
right over the subject lots. The RTC also ordered Aguirre to pay the Florendos P500,000.00 in actual
damages and P200,000.00 in attorneys fees. The court, however, ordered the Florendos to reimburse
Paramount its bid of P1,750,000.00 with 6% interest as well as the sum that it paid in real estate
taxes also with 6% interest. Finally, the RTC granted the Florendos the right to be reimbursed by
Aguirre the full amount of what they would have paid Paramount under the decision, with 6% interest.
On December 20, 2002 Paramount appealed the RTC decision to the Court of Appeals5cralaw (CA)
in CA-G.R. CV 85397. On the same day, however, the Florendos filed a motion with the RTC for
execution pending appeal, citing the following as "good and special reasons" for it:6

1. Rosario T. Florendos advanced age and illness;

2. Paramounts dilatory and frivolous appeal and strong likelihood of becoming insolvent during the
pendency of the appeal; and

3. The Florendos readiness and willingness to post a bond to answer for whatever damage
Paramount might suffer on account of such execution.

Respondent Paramount opposed the motion,7cralaw pointing out that with the filing of its notice of
appeal, the RTC already lost jurisdiction to act on the motion. Paramount also said that execution
pending appeal might render its appeal moot and academic. And it is not true, it said, that it might
become insolvent while the case is on appeal. In reply,8cralaw the Florendos submitted Rosarios
medical certificate and medical abstract showing her various life-threatening ailments and
Paramounts corporate papers showing recent changes in its corporate name and capital
structure.9cräläwvirtualibräry

On February 11, 2003 the trial court issued a "Special Order," directing the execution of its judgment
pending appeal upon the posting of a bond of P4 million.10cralaw The RTC explained the special and
good reasons it had for ordering execution pending appeal, thus:

As to the existence or non-existence of good reasons for the issuance of a writ of execution pending
appeal, the court finds that there are special and good reasons to justify the grant of the motion under
consideration, namely:

I. That the principal plaintiff (Rosario T. Florendo), although admittedly 62 years old, is presently
suffering from various ailments which in the words of the attending physician, are life-threatening
medical conditions. Because of this fact, she may not be able to live long enough or survive to enjoy
the reliefs and rights granted to her under the decision sought to be executed pending appeal (De
Leon, et al. vs. Soriano, L-7648, September 17, 1954; PBC vs. CA, 279 SCRA 364; and Ma-ao Sugar
Central vs. Canete, 19 SCRA 646);

II. That apparently there are indications of dilatory tactics and frivolous legal moves undertaken by
defendant Paramount existing in the records of this case, numerous postponements and tactics that
prolonged the pendency of this case. It would also appear that the tactics it had taken brought forth
the fact that defendant Paramount has not only changed its corporate name from Paramount
Insurance Corporation to MAA General Assurance (Phils.), Inc. but has also assigned its ownership
and capital structure way back September 2001 (Exhs. "B" and "C" of the plaintiffs instant motion,
and "N", "O", "P" and "R" offered in the main case) without even divulging the same to the Court. "The
insolvency of a defeated party, as a ground for immediate execution of a decision, may be inferred
from a number of circumstances appearing on the record" (Astraquillo vs. Javier, 13 SCRA 125);

III. The offer may be made by the plaintiffs to put up a bond to guarantee or secure the payments of
whatever amounts are due defendant Paramount under the decision under consideration may also be
considered as another special or good reason for execution pending appeal (Lu vs. Valeriano, 111
SCRA 87; PVTA vs. Lucero, et al., 125 SCRA 337).11

On February 14, 2003 the RTC issued the corresponding writ of execution pending appeal.12cralaw
Feeling aggrieved, on May 13, 2003 respondent Paramount filed with the CA in CA-G.R. SP 77213 a
special civil action of certiorari with application for a temporary restraining order and preliminary
injunction, assailing the RTC order.13cralaw On August 31, 2004 the CA rendered judgment, granting
respondent Paramounts petition.14cralaw While conceding that the RTC still had jurisdiction to act on
the Florendos motion for execution pending appeal, the CA found no special reasons to warrant such
execution. The Florendos moved for the reconsideration of the decision15cralaw but the CA denied
the same on February 8, 2005,16cralaw hence, the Florendos present recourse.

Parenthetically, in the appeal from the main case in CA-G.R. CV 85397, the CA meantime rendered
judgment in respondent Paramounts favor and ordered the issuance of titles over the subject
properties in its name. Nothing in the record indicates whether such judgment has already become
final.

The Issues Presented

At any rate, the Florendos present the following issues in this case:

1) Whether or not the CA erred in giving due course to the petition considering Paramounts failure to
file a motion for reconsideration of the RTCs special order granting execution pending appeal;

2) Whether or not the CA erred in taking cognizance of the present action (re: execution pending
appeal) considering how Paramount addressed the same matters in its appeal to the CA in the main
case; and

3) Whether or not the CA erred in reversing the RTCs special order for lack of good reasons to justify
the issuance of a writ of execution pending appeal.

The Courts Rulings

One. The Florendos argue that the CA should not have taken cognizance of respondent Paramounts
special civil action of certiorari considering its failure to first seek the RTCs reconsideration of its
questioned special order.

The general rule is of course that a motion for reconsideration of the challenged order is a
prerequisite to the filing of a special civil action of certiorari in a higher court to annul such order. This
gives the lower court a chance to correct the errors imputed to it. But one of the exceptions to such
requirement is where the matter involved is urgent. Here, the CA correctly dispensed with the
requirement since the RTC had already issued a writ of execution and so its enforcement was
imminent. Besides, the issue of the validity of the execution pending appeal in this case was a pure
question of law.17cralaw
Two. The Florendos also point out that a special civil action of certiorari can no longer be resorted to
when, as in this case, the matter raised in such action may be deemed already covered by the appeal
that respondent Paramount had taken from the RTC decision. These two remedies, they argue, are
mutually exclusive and, when instituted, the second constitutes forum shopping.

There is no forum shopping in this case. What respondent Paramount imputes in the certiorari action
is the RTCs grave abuse of discretion in allowing the execution pending appeal of its decision. In the
ordinary appeal from the main case, what Paramount challenges is the merit of the trial courts
decision.18cralaw

>Three. The Florendos insist that the CA erred in rejecting as reasonable basis for execution pending
appeal a) Rosarios old age, given that precedents exist for such justification; b) respondent
Paramounts delaying tactics and its possible insolvency; and c) the P4 million bond that the
Florendos posted.

Normally, execution will issue as a matter of right only (a) when the judgment has become final and
executory; (b) when the judgment debtor has renounced or waived his right of appeal; (c) when the
period for appeal has lapsed without an appeal having been filed; or (d) when, having been filed, the
appeal has been resolved and the records of the case have been returned to the court of origin.
Execution pending appeal is the exception to the general rule. 19cräläwvirtualibräry

As such exception, the courts discretion in allowing it must be strictly construed and firmly grounded
on the existence of good reasons. "Good reasons," it has been held, consist of compelling
circumstances that justify immediate execution lest the judgment becomes illusory. The
circumstances must be superior, outweighing the injury or damages that might result should the
losing party secure a reversal of the judgment.20cralaw Lesser reasons would make of execution
pending appeal, instead of an instrument of solicitude and justice, a tool of oppression and
inequity.21cräläwvirtualibräry

The Florendos point out that Rosario is already in her old age and suffers from life threatening
ailments. But the trial court has allowed execution pending appeal for all of the Florendos, not just for
Rosario whose share in the subject lands had not been established. No claim is made that the rest of
the Florendos are old and ailing. Consequently, the execution pending appeal was indiscreet and too
sweeping. All the lands could be sold for P42 million, the value mentioned in the petition, and
distributed to all the Florendos for their enjoyment with no sufficient assurance that they all will and
can return such sum in case the CA reverses, as it has in fact done, the RTC decision. Moreover, it is
unclear how much of the proceeds of the sale of the lands Rosario needed for her old age.

The RTC also justified the execution pending appeal on respondent Paramounts delaying tactics and
the possibility that it could become insolvent during the appeal. But these justifications are purely
speculative. The RTC has already decided the case and whether the proceedings on appeal will be
delayed is not in the hands of Paramount. The CA has control of the time elements in appealed
cases. As for the Florendos fear of Paramounts insolvency, such is wholly irrelevant since the
judgment did not require it to pay them any form of damages. Indeed, the Florendos are the ones
required by the RTC to reimburse Paramount the value of its bid and the amounts of real estate taxes
that it had paid on the properties.
Lastly, the Florendos posting of a P4 million bond to answer for the damages that respondent
Paramount might suffer in case the RTC decision is reversed on appeal is quite insufficient.22cralaw
The lands had a market value of P42 million in 2001.23cräläwvirtualibräry

What is more, on October 28, 2008 the CA decided in the main case 24cralaw to reverse and set
aside the decision of the RTC, dismiss the Florendos complaint, and order the issuance of new titles
to the lands in the name of respondent Paramount. Assuming that such decision has not yet become
final, the RTC decision subject of execution pending appeal has nonetheless already lost its
presumptive validity. This development gives the Court all the more reason to affirm the CA decision
subject of the present petition.

ACCORDINGLY, the Court DENIES the petition and AFFIRMS the decision of the Court of Appeals in
CA-G.R. SP 77213 dated August 31, 2004. SO ORDERED.

35. G.R. No. 73155 July 11, 1986

PATRICIO TAN, FELIX FERRER, JUAN M. HAGAD, SERGIO HILADO, VIRGILIO GASTON,
CONCHITA MINAYA, TERESITA ESTACIO, DESIDERIO DEFERIA, ROMEO GAMBOA, ALBERTO
LACSON, FE HOFILENA, EMILY JISON, NIEVES LOPEZ AND CECILIA MAGSAYSAY,
petitioners, vs.

THE COMMISSION ON ELECTIONS and THE PROVINCIAL TREASURER OF NEGROS

OCCIDENTAL, respondents.

ALAMPAY, J.:

Prompted by the enactment of Batas Pambansa Blg. 885-An Act Creating a New Province in the
Island of Negros to be known as the Province of Negros del Norte, which took effect on December 3,
1985, Petitioners herein, who are residents of the Province of Negros Occidental, in the various cities
and municipalities therein, on December 23, 1985, filed with this Court a case for Prohibition for the
purpose of stopping respondents Commission on Elections from conducting the plebiscite which,
pursuant to and in implementation of the aforesaid law, was scheduled for January 3, 1986. Said law
provides:

SECTION 1. The Cities of Silay, Cadiz, and San Carlos and the municipalities of Calatrava, Taboso,
Escalante, Sagay, Manapla, Victorias, E.R. Magalona; and Salvador Benedicto, all in the northern
portion of the Island of Negros, are hereby separated from the province to be known as the Province
of Negros del Norte.

SEC. 2. The boundaries of the new province shall be the southern limits of the City of Silay, the
Municipality of Salvador Benedicto and the City of San Carlos on the south and the territorial limits of
the northern portion to the Island of Negros on the west, north and east, comprising a territory of
4,019.95 square kilometers more or less.

SEC. 3. The seat of government of the new province shall be the City of Cadiz.
SEC. 4.A plebiscite shall be conducted in the proposed new province which are the areas affected
within a period of one hundred and twenty days from the approval of this Act. After the ratification of
the creation of the Province of Negros del Norte by a majority of the votes cast in such plebiscite, the
President of the Philippines shall appoint the first officials of the province.

SEC. 5.The Commission on Elections shall conduct and supervise the plebiscite herein provided, the
expenses for which shall be charged to local funds.

SEC. 6.This Act shall takeeffect upon its approval.(Rollo, pp. 23-24)

Petitioners contend that Batas Pambansa Blg. 885 is unconstitutional and it is not in complete accord
with the Local Government Code as in Article XI, Section 3 of our Constitution, it is expressly
mandated that—

See. 3. No province, city, municipality or barrio may be created, divided, merged, abolished, or its
boundary substantially altered, except in accordance with the criteria established in the local
government code, and subject to the approval by a majority of the votes in a plebiscite in the unit or
units affected.

Section 197 of the Local Government Code enumerates the conditions which must exist to provide
the legal basis for the creation of a provincial unit and these requisites are:

SEC. 197. Requisites for Creation. A province may be created if it has a territory of at least three
thousand five hundred square kilometers, a population of at least five hundred thousand persons, an
average estimated annual income, as certified by the Ministry of Finance, of not less than ten million
pesos for the last three consecutive years, and its creation shall not reduce the population and
income of the mother province or provinces at the time of said creation to less than the minimum
requirements under this section. The territory need not be contiguous if it comprises two or more
islands.

The average estimated annual income shall include the income alloted for both the general and
infrastructural funds, exclusive of trust funds, transfers and nonrecurring income. (Rollo, p. 6)

Due to the constraints brought about by the supervening Christmas holidays during which the Court
was in recess and unable to timely consider the petition, a supplemental pleading was filed by
petitioners on January 4, 1986, averring therein that the plebiscite sought to be restrained by them
was held on January 3, 1986 as scheduled but that there are still serious issues raised in the instant
case affecting the legality, constitutionality and validity of such exercise which should properly be
passed upon and resolved by this Court.

The plebiscite was confined only to the inhabitants of the territory of Negros del Nrte, namely: the
Cities of Silay, Cadiz, and San Carlos, and the municipalities of Calatrava, Taboso, Escalante, Sagay,
Manapla, Victorias, E.B. Magalona and Don Salvador Benedicto. Because of the exclusions of the
voters from the rest of the province of Negros Occidental, petitioners found need to change the prayer
of their petition "to the end that the constitutional issues which they have raised in the action will be
ventilated and given final resolution.'"At the same time, they asked that the effects of the plebiscite
which they sought to stop be suspended until the Supreme Court shall have rendered its decision on
the very fundamental and far-reaching questions that petitioners have brought out.

Acknowledging in their supplemental petition that supervening events rendered moot the prayer in
their initial petition that the plebiscite scheduled for January 3, 1986, be enjoined, petitioners plead,
nevertheless, that-

... a writ of Prohibition be issued, directed to Respondent Commission on Elections to desist from
issuing official proclamation of the results of the plebiscite held on January 3, 1986.

Finding that the exclusion and non-participation of the voters of the Province of Negros Occidental
other than those living within the territory of the new province of Negros del Norte to be not in
accordance with the Constitution, that a writ of mandamus be issued, directed to the respondent
Commission on Elections, to schedule the holding of another plebiscite at which all the qualified
voters of the entire Province of Negros Occidental as now existing shall participate, at the same time
making pronouncement that the plebiscite held on January 3, 1986 has no legal effect, being a patent
legal nullity;

And that a similar writ of Prohibition be issued, directed to the respondent Provincial Treasurer, to
desist from ordering the release of any local funds to answer for expenses incurred in the holding of
such plebiscite until ordered by the Court. (Rollo pp. 9-10).

Petitioners further prayed that the respondent COMELEC hold in abeyance the issuance of any
official proclamation of the results of the aforestated plebiscite.

During the pendency of this case, a motion that he be allowed to appear as amicus curiae in this case
(dated December 27, 1985 and filed with the Court on January 2, 1986) was submitted by former
Senator Ambrosio Padilla. Said motion was granted in Our resolution of January 2, 1986.

Acting on the petition, as well as on the supplemental petition for prohibition with preliminary
injunction with prayer for restraining order, the Court, on January 7, 1986 resolved, without giving due
course to the same, to require respondents to comment, not to file a motion to dismiss. Complying
with said resolution, public respondents, represented by the Office of the Solicitor General, on
January 14, 1986, filed their Comment, arguing therein that the challenged statute.-Batas Pambansa
885, should be accorded the presumption of legality. They submit that the said law is not void on its
face and that the petition does not show a clear, categorical and undeniable demonstration of the
supposed infringement of the Constitution. Respondents state that the powers of the Batasang-
Pambansa to enact the assailed law is beyond question. They claim that Batas Pambansa Big. 885
does not infringe the Constitution because the requisites of the Local Government Code have been
complied with. Furthermore, they submit that this case has now become moot and academic with the
proclamation of the new Province of Negros del Norte.

Respondents argue that the remaining cities and municipalities of the Province of Negros Occidental
not included in the area of the new Province of Negros del Norte, de not fall within the meaning and
scope of the term "unit or units affected", as referred to in Section 3 of Art. XI of our Constitution. On
this reasoning, respondents maintain that Batas Pambansa Blg. 885 does not violate the Constitution,
invoking and citing the case of Governor Zosimo Paredes versus the Honorable Executive Secretary
to the President, et al. (G.R. No. 55628, March 2, 1984 (128 SCRA 61), particularly the
pronouncements therein, hereunder quoted:

1. Admittedly,this is one of those cases where the discretion of the Court is allowed considerable
leeway. There is indeed an element of ambiguity in the use of the expression 'unit or units affected'. It
is plausible to assert as petitioners do that when certain Barangays are separated from a parent
municipality to form a new one, all the voters therein are affected. It is much more persuasive,
however, to contend as respondents do that the acceptable construction is for those voters, who are
not from the barangays to be separated, should be excluded in the plebiscite.

2. For one thing, it is in accordance with the settled doctrine that between two possible constructions,
one avoiding a finding of unconstitutionality and the other yielding such a result, the former is to be
preferred. That which will save, not that which will destroy, commends itself for acceptance. After all,
the basic presumption all these years is one of validity. ...

3. ... Adherence to such philosophy compels the conclusion that when there are indications that the
inhabitants of several barangays are inclined to separate from a parent municipality they should be
allowed to do so. What is more logical than to ascertain their will in a plebiscite called for that
purpose. It is they, and they alone, who shall constitute the new unit. New responsibilities will be
assumed. New burdens will be imposed. A new municipal corporation will come into existence. Its
birth will be a matter of choice-their choice. They should be left alone then to decide for themselves.
To allow other voters to participate will not yield a true expression of their will. They may even
frustrate it, That certainly will be so if they vote against it for selfish reasons, and they constitute the
majority. That is not to abide by the fundamental principle of the Constitution to promote local
autonomy, the preference being for smaller units. To rule as this Tribunal does is to follow an
accepted principle of constitutional construction, that in ascertaining the meaning of a particular
provision that may give rise to doubts, the intent of the framers and of the people may be gleaned
from provisions in pari materia.

Respondents submit that said ruling in the aforecited case applies equally with force in the case at
bar. Respondents also maintain that the requisites under the Local Government Code (P.D. 337) for
the creation of the new province of Negros del Norte have all been duly complied with, Respondents
discredit petitioners' allegations that the requisite area of 3,500 square kilometers as so prescribed in
the Local Government Code for a new province to be created has not been satisfied. Petitioners insist
that the area which would comprise the new province of Negros del Norte, would only be about
2,856.56 square kilometers and which evidently would be lesser than the minimum area prescribed
by the governing statute. Respondents, in this regard, point out and stress that Section 2 of Batas
Pambansa Blg. 885 creating said new province plainly declares that the territorial boundaries of
Negros del Norte comprise an area of 4,019.95 square kilometers, more or less.

As a final argument, respondents insist that instant petition has been rendered moot and academic
considering that a plebiscite has been already conducted on January 3, 1986; that as a result thereof,
the corresponding certificate of canvass indicated that out of 195,134 total votes cast in said
plebiscite, 164,734 were in favor of the creation of Negros del Norte and 30,400 were against it; and
because "the affirmative votes cast represented a majority of the total votes cast in said plebiscite, the
Chairman of the Board of Canvassers proclaimed the new province which shall be known as "Negros
del Norte". Thus, respondents stress the fact that following the proclamation of Negros del Norte
province, the appointments of the officials of said province created were announced. On these
considerations, respondents urge that this case should be dismissed for having been rendered moot
and academic as the creation of the new province is now a "fait accompli."

In resolving this case, it will be useful to note and emphasize the facts which appear to be agreed to
by the parties herein or stand unchallenged.

Firstly, there is no disagreement that the Provincial Treasurer of the Province of Negros Occidental
has not disbursed, nor was required to disburse any public funds in connection with the plebiscite
held on January 3, 1986 as so disclosed in the Comment to the Petition filed by the respondent
Provincial Treasurer of Negros Occidental dated January 20, 1986 (Rollo, pp. 36-37). Thus, the
prayer of the petitioners that said Provincial Treasurer be directed by this Court to desist from
ordering the release of any public funds on account of such plebiscite should not longer deserve
further consideration.

Secondly, in Parliamentary Bill No. 3644 which led to the enactment of Batas Pambansa Blg. 885 and
the creation of the new Province of Negros del Norte, it expressly declared in Sec. 2 of the
aforementioned Parliamentary Bill, the following:

SEC. 2.The boundaries of the new province shall be the southern limits of the City of Silay, the
Municipality of Salvador Benedicto and the City of San Carlos on the South and the natural
boundaries of the northern portion of the Island of Negros on the West, North and East, containing an
area of 285,656 hectares more or less. (Emphasis supplied).

However, when said Parliamentary Bill No. 3644 was very quickly enacted into Batas Pambansa Blg.
885, the boundaries of the new Province of Negros del Norte were defined therein and its boundaries
then stated to be as follows:

SECTION 1. The Cities of Silay, Cadiz, and San Carlos and the municipalities of Calatrava, Toboso,
Escalante, Sagay, Manapla, Victorias, E.R. Magalona; and Salvador Benedicto, all in the northern
portion of the Island of Negros, are hereby separated from the Province of Negros Occidental and
constituted into a new province to be known as the Province of Negros del Norte.

SEC. 1. The boundaries of the new province shall be the southern limits of the City of Silay, the
Municipality of Salvador Benedicto and the City of San Carlos on the south and the territorial limits of
the northern portion of the Island of Negros on the West, North and East, comprising a territory of
4,019.95 square kilometers more or less.

Equally accepted by the parties is the fact that under the certification issued by Provincial Treasurer
Julian L. Ramirez of the Province of Negros Occidental, dated July 16, 1985, it was therein certified
as follows:

xxx xxx xxx

This is to certify that the following cities and municipalities of Negros Occidental have the land area
as indicated hereunder based on the Special Report No. 3, Philippines 1980, Population, Land Area
and Density: 1970, 1975 and 1980 by the National Census and Statistics Office, Manila.

Land Area

(Sq. Km.)

1. Silay City ...................................................................214.8

2. E.B. Magalona............................................................113.3

3. Victorias.....................................................................133.9

4. Manapla......................................................................112.9

5. Cadiz City ..................................................................516.5

6. Sagay .........................................................................389.6

7. Escalante ....................................................................124.0

8. Toboso.......................................................................123.4

9. Calatrava.....................................................................504.5

10. San Carlos City...........................................................451.3

11. Don Salvador Benedicto.................................... (not available)

This certification is issued upon the request of Dr. Patricio Y. Tan for whatever purpose it may serve
him.
(SGD.) JULIAN L. RAMIREZ

Provincial Treasurer (Exh. "C" of Petition, Rollo, p. 90).

Although in the above certification it is stated that the land area of the relatively new municipality of
Don Salvador Benedicto is not available, it is an uncontradicted fact that the area comprising Don
Salvador municipality, one of the component units of the new province, was derived from the City of
San Carlos and from the Municipality of Calatrava, Negros Occidental, and added thereto was a
portion of about one-fourth the land area of the town of Murcia, Negros Occidental. It is significant to
note the uncontroverted submission of petitioners that the total land area of the entire municipality of
Murcia, Negros Occidental is only 322.9 square kilometers (Exh. "D", Rollo, p. 91). One-fourth of this
total land area of Murcia that was added to the portions derived from the land area of Calatrava,
Negros Occidental and San Carlos City (Negros Occidental) would constitute, therefore, only 80.2
square kilometers. This area of 80.2 square kilometers if then added to 2,685.2 square kilometers,
representing the total land area of the Cities of Silay, San Carlos and Cadiz and the Municipalities of
E.R. Magalona, Victorias, Manapla, Sagay, Escalante, Taboso and Calatrava, will result in
approximately an area of only 2,765.4 square kilometers using as basis the Special Report,
Philippines 1980, Population, Land Area and Density: 1970, 1975 and 1980 of the National Census
and Statistics Office, Manila (see Exhibit "C", Rollo, p. 90).

No controversion has been made by respondent with respect to the allegations of petitioners that the
original provision in the draft legislation, Parliamentary Bill No. 3644, reads:

SEC. 4.A plebiscite shall be conducted in the areas affected within a period of one hundred and
twenty days from the approval of this Act. After the ratification of the creation of the Province of
Negros del Norte by a majority of the votes cast in such plebiscite, the President shall appoint the first
officials of the new province.

However, when Batas Pambansa Blg. 885 was enacted, there was a significant change in the above
provision. The statute, as modified, provides that the requisite plebiscite "shall be conducted in the
proposed new province which are the areas affected."

It is this legislative determination limiting the plebiscite exclusively to the cities and towns which would
comprise the new province that is assailed by the petitioners as violative of the provisions of our
Constitution. Petitioners submit that Sec. 3, ART XI thereof, contemplates a plebiscite that would be
held in the unit or units affected by the creation of the new province as a result of the consequent
division of and substantial alteration of the boundaries of the existing province. In this instance, the
voters in the remaining areas of the province of Negros Occidental should have been allowed to
participate in the questioned plebiscite.

Considering that the legality of the plebiscite itself is challenged for non-compliance with constitutional
requisites, the fact that such plebiscite had been held and a new province proclaimed and its officials
appointed, the case before Us cannot truly be viewed as already moot and academic. Continuation of
the existence of this newly proclaimed province which petitioners strongly profess to have been
illegally born, deserves to be inquired into by this Tribunal so that, if indeed, illegality attaches to its
creation, the commission of that error should not provide the very excuse for perpetuation of such
wrong. For this Court to yield to the respondents' urging that, as there has been fait accompli then this
Court should passively accept and accede to the prevailing situation is an unacceptable suggestion.
Dismissal of the instant petition, as respondents so propose is a proposition fraught with mischief.
Respondents' submission will create a dangerous precedent. Should this Court decline now to
perform its duty of interpreting and indicating what the law is and should be, this might tempt again
those who strut about in the corridors of power to recklessly and with ulterior motives, create, merge,
divide and/or alter the boundaries of political subdivisions, either brazenly or stealthily, confident that
this Court will abstain from entertaining future challenges to their acts if they manage to bring about a
fait accompli.

In the light of the facts and circumstances alluded to by petitioners as attending to the unusually rapid
creation of the instant province of Negros del Norte after a swiftly scheduled plebiscite, this Tribunal
has the duty to repudiate and discourage the commission of acts which run counter to the mandate of
our fundamental law, done by whatever branch of our government. This Court gives notice that it will
not look with favor upon those who may be hereafter inclined to ram through all sorts of legislative
measures and then implement the same with indecent haste, even if such acts would violate the
Constitution and the prevailing statutes of our land. It is illogical to ask that this Tribunal be blind and
deaf to protests on the ground that what is already done is done. To such untenable argument the
reply would be that, be this so, the Court, nevertheless, still has the duty and right to correct and
rectify the wrong brought to its attention.

On the merits of the case.

Aside from the simpler factual issue relative to the land area of the new province of Negros del Norte,
the more significant and pivotal issue in the present case revolves around in the interpretation and
application in the case at bar of Article XI, Section 3 of the Constitution, which being brief and for
convenience, We again quote:

SEC. 3. No province, city, municipality or barrio may be created, divided, merged abolished, or its
boundary substantially altered, except in accordance with the criteria established in the local
government code, and subject to the approval by a majority of the votes in a plebiscite in the unit or
units affected.

It can be plainly seen that the aforecited constitutional provision makes it imperative that there be first
obtained "the approval of a majority of votes in the plebiscite in the unit or units affected" whenever a
province is created, divided or merged and there is substantial alteration of the boundaries. It is thus
inescapable to conclude that the boundaries of the existing province of Negros Occidental would
necessarily be substantially altered by the division of its existing boundaries in order that there can be
created the proposed new province of Negros del Norte. Plain and simple logic will demonstrate than
that two political units would be affected. The first would be the parent province of Negros Occidental
because its boundaries would be substantially altered. The other affected entity would be composed
of those in the area subtracted from the mother province to constitute the proposed province of
Negros del Norte.

We find no way to reconcile the holding of a plebiscite that should conform to said constitutional
requirement but eliminates the participation of either of these two component political units. No
amount of rhetorical flourishes can justify exclusion of the parent province in the plebiscite because of
an alleged intent on the part of the authors and implementors of the challenged statute to carry out
what is claimed to be a mandate to guarantee and promote autonomy of local government units. The
alleged good intentions cannot prevail and overrule the cardinal precept that what our Constitution
categorically directs to be done or imposes as a requirement must first be observed, respected and
complied with. No one should be allowed to pay homage to a supposed fundamental policy intended
to guarantee and promote autonomy of local government units but at the same time transgress,
ignore and disregard what the Constitution commands in Article XI Section 3 thereof. Respondents
would be no different from one who hurries to pray at the temple but then spits at the Idol therein.

We find no merit in the submission of the respondents that the petition should be dismissed because
the motive and wisdom in enacting the law may not be challenged by petitioners. The principal point
raised by the petitioners is not the wisdom and motive in enacting the law but the infringement of the
Constitution which is a proper subject of judicial inquiry.

Petitioners' discussion regarding the motives behind the enactment of B.P. Blg. 885 to say the least,
are most enlightening and provoking but are factual issues the Court cannot properly pass upon in
this case. Mention by petitioners of the unexplained changes or differences in the proposed
Parliamentary Bill No. 3644 and the enacted Batas Pambansa Blg. 885; the swift and surreptitious
manner of passage and approval of said law; the abrupt scheduling of the plebiscite; the reference to
news articles regarding the questionable conduct of the said plebiscite held on January 3, 1986; all
serve as interesting reading but are not the decisive matters which should be reckoned in the
resolution of this case.

What the Court considers the only significant submissions lending a little support to respondents'
case is their reliance on the rulings and pronouncements made by this Court in the case of Governor
Zosimo Paredes versus The Honorable Executive Secretary to the President, et al., G.R. No. 55628,
March 2, 1984 (128 SCRA 6). In said case relating to a plebiscite held to ratify the creation of a new
municipality from existing barangays, this Court upheld the legality of the plebiscite which was
participated in exclusively by the people of the barangay that would constitute the new municipality.

This Court is not unmindful of this solitary case alluded to by respondents. What is, however, highly
significant are the prefatory statements therein stating that said case is "one of those cases where the
discretion of the Court is allowed considerable leeway" and that "there is indeed an element of
ambiguity in the use of the expression unit or units affected." The ruling rendered in said case was
based on a claimed prerogative of the Court then to exercise its discretion on the matter. It did not
resolve the question of how the pertinent provision of the Constitution should be correctly interpreted.

The ruling in the aforestated case of Paredes vs. The Honorable Executive Secretary, et al. (supra)
should not be taken as a doctrinal or compelling precedent when it is acknowledged therein that "it is
plausible to assert, as petitioners do, that when certain Barangays are separated from a parent
municipality to form a new one, all the voters therein are affected."

It is relevant and most proper to mention that in the aforecited case of Paredes vs. Executive
Secretary, invoked by respondents, We find very lucidly expressed the strong dissenting view of
Justice Vicente Abad Santos, a distinguished member of this Court, as he therein voiced his opinion,
which We hereunder quote:

2. ... when the Constitution speaks of "the unit or units affected" it means all of the people of the
municipality if the municipality is to be divided such as in the case at bar or an of the people of two or
more municipalities if there be a merger. I see no ambiguity in the Constitutional provision.
This dissenting opinion of Justice Vicente Abad Santos is the— forerunner of the ruling which We
now consider applicable to the case at bar, In the analogous case of Emilio C. Lopez, Jr., versus the
Honorable Commission on Elections, L-56022, May 31, 1985, 136 SCRA 633, this dissent was
reiterated by Justice Abad Santos as he therein assailed as suffering from a constitutional infirmity a
referendum which did not include all the people of Bulacan and Rizal, when such referendum was
intended to ascertain if the people of said provinces were willing to give up some of their towns to
Metropolitan Manila. His dissenting opinion served as a useful guideline in the instant case.

Opportunity to re-examine the views formerly held in said cases is now afforded the present Court.
The reasons in the mentioned cases invoked by respondents herein were formerly considered
acceptable because of the views then taken that local autonomy would be better promoted However,
even this consideration no longer retains persuasive value.

The environmental facts in the case before Us readily disclose that the subject matter under
consideration is of greater magnitude with concomitant multifarious complicated problems. In the
earlier case, what was involved was a division of a barangay which is the smallest political unit in the
Local Government Code. Understandably, few and lesser problems are involved. In the case at bar,
creation of a new province relates to the largest political unit contemplated in Section 3, Art. XI of the
Constitution. To form the new province of Negros del Norte no less than three cities and eight
municipalities will be subtracted from the parent province of Negros Occidental. This will result in the
removal of approximately 2,768.4 square kilometers from the land area of an existing province whose
boundaries will be consequently substantially altered. It becomes easy to realize that the consequent
effects cf the division of the parent province necessarily will affect all the people living in the separate
areas of Negros Occidental and the proposed province of Negros del Norte. The economy of the
parent province as well as that of the new province will be inevitably affected, either for the better or
for the worse. Whatever be the case, either or both of these political groups will be affected and they
are, therefore, the unit or units referred to in Section 3 of Article XI of the Constitution which must be
included in the plebiscite contemplated therein.

It is a well accepted rule that "in ascertaining the meaning of a particular provision that may give rise
to doubts, the intent of the framers and of the people, may be gleaned from the provisions in pari
materia." Parliamentary Bill No. 3644 which proposed the creation of the new province of Negros del
Norte recites in Sec. 4 thereof that "the plebiscite shall be conducted in the areas affected within a
period of one hundred and twenty days from the approval of this Act." As this draft legislation speaks
of "areas," what was contemplated evidently are plurality of areas to participate in the plebiscite.
Logically, those to be included in such plebiscite would be the people living in the area of the
proposed new province and those living in the parent province. This assumption will be consistent
with the requirements set forth in the Constitution.

We fail to find any legal basis for the unexplained change made when Parliamentary Bill No. 3644
was enacted into Batas Pambansa Blg. 885 so that it is now provided in said enabling law that the
plebiscite "shall be conducted in the proposed new province which are the areas affected." We are
not disposed to agree that by mere legislative fiat the unit or units affected referred in the fundamental
law can be diminished or restricted by the Batasang Pambansa to cities and municipalities comprising
the new province, thereby ignoring the evident reality that there are other people necessarily affected.

In the mind of the Court, the change made by those responsible for the enactment of Batas
Pambansa Blg. 885 betrays their own misgivings. They must have entertained apprehensions that by
holding the plebiscite only in the areas of the new proposed province, this tactic will be tainted with
illegality. In anticipation of a possible strong challenge to the legality of such a plebiscite there was,
therefore, deliberately added in the enacted statute a self-serving phrase that the new province
constitutes the area affected. Such additional statement serves no useful purpose for the same is
misleading, erroneous and far from truth. The remaining portion of the parent province is as much an
area affected. The substantial alteration of the boundaries of the parent province, not to mention the
other adverse economic effects it might suffer, eloquently argue the points raised by the petitioners.

Petitioners have averred without contradiction that after the creation of Negros del Norte, the province
of Negros Occidental would be deprived of the long established Cities of Silay, Cadiz, and San
Carlos, as well as the municipality of Victorias. No controversion has been made regarding
petitioners' assertion that the areas of the Province of Negros Occidental will be diminished by about
285,656 hectares and it will lose seven of the fifteen sugar mills which contribute to the economy of
the whole province. In the language of petitioners, "to create Negros del Norte, the existing territory
and political subdivision known as Negros Occidental has to be partitioned and dismembered. What
was involved was no 'birth' but "amputation." We agree with the petitioners that in the case of Negros
what was involved was a division, a separation; and consequently, as Sec. 3 of Article XI of the
Constitution anticipates, a substantial alteration of boundary.

As contended by petitioners,—

Indeed, the terms 'created', 'divided', 'merged', 'abolished' as used in the constitutional provision do
not contemplate distinct situation isolated from the mutually exclusive to each other. A Province
maybe created where an existing province is divided or two provinces merged. Such cases
necessarily will involve existing unit or units abolished and definitely the boundary being substantially
altered.

It would thus be inaccurate to state that where an existing political unit is divided or its boundary
substantially altered, as the Constitution provides, only some and not all the voters in the whole unit
which suffers dismemberment or substantial alteration of its boundary are affected. Rather, the
contrary is true.

It is also Our considered view that even hypothetically assuming that the merits of this case can
depend on the mere discretion that this Court may exercise, nevertheless, it is the petitioners' case
that deserve to be favored.

It is now time for this Court to set aside the equivocations and the indecisive pronouncements in the
adverted case of Paredes vs. the Honorable Executive Secretary, et al. (supra). For the reasons
already here express, We now state that the ruling in the two mentioned cases sanctioning the
exclusion of the voters belonging to an existing political unit from which the new political unit will be
derived, from participating in the plebiscite conducted for the purpose of determining the formation of
another new political unit, is hereby abandoned.

In their supplemental petition, dated January 4, 1986, it is prayed for by petitioners that a writ of
mandamus be issued, directing the respondent Commission on Elections, to schedule the holding of
another plebiscite at which all the qualified voters of the entire province of Negros Occidental as now
existing shall participate and that this Court make a pronouncement that the plebiscite held on
January 3, 1986 has no legal effect for being a patent nullity.
The Court is prepared to declare the said plebiscite held on January 3, 1986 as null and void and
violative of the provisions of Sec. 3, Article XI of the Constitution. The Court is not, however, disposed
to direct the conduct of a new plebiscite, because We find no legal basis to do so. With constitutional
infirmity attaching to the subject Batas Pambansa Big. 885 and also because the creation of the new
province of Negros del Norte is not in accordance with the criteria established in the Local
Government Code, the factual and legal basis for the creation of such new province which should
justify the holding of another plebiscite does not exist.

Whatever claim it has to validity and whatever recognition has been gained by the new province of
Negros del Norte because of the appointment of the officials thereof, must now be erased. That
Negros del Norte is but a legal fiction should be announced. Its existence should be put to an end as
quickly as possible, if only to settle the complications currently attending to its creation. As has been
manifested, the parent province of Negros del Norte has been impleaded as the defendant in a suit
filed by the new Province of Negros del Norte, before the Regional Trial Court of Negros (del Norte),
docketed as Civil Case No. 169-C, for the immediate allocation, distribution and transfer of funds by
the parent province to the new province, in an amount claimed to be at least P10,000,000.00.

The final nail that puts to rest whatever pretension there is to the legality of the province of Negros del
Norte is the significant fact that this created province does not even satisfy the area requirement
prescribed in Section 197 of the Local Government Code, as earlier discussed.

It is of course claimed by the respondents in their Comment to the exhibits submitted by the
petitioners (Exhs. C and D, Rollo, pp. 19 and 91), that the new province has a territory of 4,019.95
square kilometers, more or less. This assertion is made to negate the proofs submitted, disclosing
that the land area of the new province cannot be more than 3,500 square kilometers because its land
area would, at most, be only about 2,856 square kilometers, taking into account government statistics
relative to the total area of the cities and municipalities constituting Negros del Norte. Respondents
insist that when Section 197 of the Local Government Code speaks of the territory of the province to
be created and requires that such territory be at least 3,500 square kilometers, what is contemplated
is not only the land area but also the land and water over which the said province has jurisdiction and
control. It is even the submission of the respondents that in this regard the marginal sea within the
three mile limit should be considered in determining the extent of the territory of the new province.
Such an interpretation is strained, incorrect, and fallacious.

The last sentence of the first paragraph of Section 197 is most revealing. As so stated therein the
"territory need not be contiguous if it comprises two or more islands." The use of the word territory in
this particular provision of the Local Government Code and in the very last sentence thereof, clearly
reflects that "territory" as therein used, has reference only to the mass of land area and excludes the
waters over which the political unit exercises control.

Said sentence states that the "territory need not be contiguous." Contiguous means (a) in physical
contact; (b) touching along all or most of one side; (c) near, text, or adjacent (Webster's New World
Dictionary, 1972 Ed., p. 307). "Contiguous", when employed as an adjective, as in the above
sentence, is only used when it describes physical contact, or a touching of sides of two solid masses
of matter. The meaning of particular terms in a statute may be ascertained by reference to words
associated with or related to them in the statute (Animal Rescue League vs. Assessors, 138 A.L.R. p.
110). Therefore, in the context of the sentence above, what need not be "contiguous" is the "territory"
the physical mass of land area. There would arise no need for the legislators to use the word
contiguous if they had intended that the term "territory" embrace not only land area but also territorial
waters. It can be safely concluded that the word territory in the first paragraph of Section 197 is meant
to be synonymous with "land area" only. The words and phrases used in a statute should be given
the meaning intended by the legislature (82 C.J.S., p. 636). The sense in which the words are used
furnished the rule of construction (In re Winton Lumber Co., 63 p. 2d., p. 664).

The distinction between "territory" and "land area" which respondents make is an artificial or strained
construction of the disputed provision whereby the words of the statute are arrested from their plain
and obvious meaning and made to bear an entirely different meaning to justify an absurd or unjust
result. The plain meaning in the language in a statute is the safest guide to follow in construing the
statute. A construction based on a forced or artificial meaning of its words and out of harmony of the
statutory scheme is not to be favored (Helvering vs. Hutchings, 85 L. Ed., p. 909).

It would be rather preposterous to maintain that a province with a small land area but which has a
long, narrow, extended coast line, (such as La Union province) can be said to have a larger territory
than a land-locked province (such as Ifugao or Benguet) whose land area manifestly exceeds the
province first mentioned.

Allegations have been made that the enactment of the questioned state was marred by "dirty tricks",
in the introduction and passing of Parliamentary Bill No. 3644 "in secret haste" pursuant to sinister
designs to achieve "pure and simple gerrymandering; "that recent happenings more than amply
demonstrate that far from guaranteeing its autonomy it (Negros del Norte) has become the fiefdom of
a local strongman" (Rollo, p. 43; emphasis supplied).

It is not for this Court to affirm or reject such matters not only because the merits of this case can be
resolved without need of ascertaining the real motives and wisdom in the making of the questioned
law. No proper challenge on those grounds can also be made by petitioners in this proceeding.
Neither may this Court venture to guess the motives or wisdom in the exercise of legislative powers.
Repudiation of improper or unwise actions taken by tools of a political machinery rests ultimately, as
recent events have shown, on the electorate and the power of a vigilant people.

Petitioners herein deserve and should receive the gratitude of the people of the Province of Negros
Occidental and even by our Nation. Commendable is the patriotism displayed by them in daring to
institute this case in order to preserve the continued existence of their historic province. They were
inspired undoubtedly by their faithful commitment to our Constitution which they wish to be respected
and obeyed. Despite the setbacks and the hardships which petitioners aver confronted them, they
valiantly and unfalteringly pursued a worthy cause. A happy destiny for our Nation is assured as long
as among our people there would be exemplary citizens such as the petitioners herein.

WHEREFORE, Batas Pambansa Blg. 885 is hereby declared unconstitutional. The proclamation of
the new province of Negros del Norte, as well as the appointment of the officials thereof are also
declared null and void.

SO ORDERED.

Abad Santos, Feria, Yap, Fernan, Narvasa, Gutierrez, Jr., Cruz and Paras, JJ., concur.
Melencio-Herrera, J., concurs in the result.
36. G.R. No. L-55230 November 8, 1988

HON. RICHARD J. GORDON, in his capacity as City Mayor of Olongapo, petitioner, vs.

JUDGE REGINO T. VERIDIANO II and Spouses EDUARDO and ROSALINDA YAMBAO,

respondents.

CRUZ, J.:

The issue before the Court is the conflict between the Food and Drug Administration and the mayor of
Olongapo City over the power to grant and revoke licenses for the operation of drug stores in the said
city. While conceding that the FDA possesses such power, the mayor claims he may nevertheless, in
the exercise of his own power, prevent the operation of drug stores previously permitted by the
former.

There are two drug stores involved in this dispute, to wit, the San Sebastian Drug Store and the
Olongapo City Drug Store, both owned by private respondent Rosalinda Yambao. 1 They are located
a few meters from each other in the same building on Hospital Road, Olongapo City. 2 They were
covered by Mayor's Permits Nos. 1954 and 1955, respectively, issued for the year 1980, 3 and
licenses to operate issued by the FDA for the same year. 4

This case arose when on March 21, 1980, at about 5:00 o'clock in the afternoon, a joint team
composed of agents from the FDA and narcotics agents from the Philippine Constabulary conducted
a "test buy" at San Sebastian Drug Store and was sold 200 tablets of Valium 10 mg. worth P410.00
without a doctor's prescription.. 5

A report on the operation was submitted to the petitioner, as mayor of Olongapo City, on April 9,
1980. 6 On April 17, 1980, he issued a letter summarily revoking Mayor's Permit No. 1954, effective
April 18, 1980, "for rampant violation of R.A. 5921, otherwise known as the Pharmacy Law and R.A.
6425 or the Dangerous Drugs Act of 1972." 7 Later, when the petitioner went to Singapore, Vice-
Mayor Alfredo T. de Perio, Jr. caused the posting of a signboard at the San Sebastian Drug Store
announcing its permanent closure. 8

Acting on the same investigation report of the "test-buy," and after hearing, FDA Administrator
Arsenio Regala, on April 25, 1980, directed the closure of the drug store for three days and its
payment of a P100.00 fine for violation of R.A. No. 3720. He also issued a stern warning to Yambao
against a repetition of the infraction. 9 On April 29, 1980, the FDA lifted its closure order after noting
that the penalties imposed had already been discharged and allowed the drug store to resume
operations. 10

On April 30, 1980, Yambao, through her counsel, wrote a letter to the petitioner seeking
reconsideration of the revoca tion of Mayor's Permit No. 1954. 11 On May 7, 1980, having received
no reply, she and her husband filed with the Regional Trial Court of Olongapo City a complaint for
mandamus and damages, with a prayer for a writ of preliminary injunction, against the petitioner and
Vice-Mayor de Perio. 12

On the same date, Yambao requested permission from the FDA to exchange the locations of the San
Sebastian Drug Store and the Olongapo City Drug Store for reasons of "business preference." 13

The request was granted. 14 But when informed of this action, the petitioner, in a letter to the private
respondent dated May 13, 1980, disapproved the transfers and suspended Mayor's Permit No. 1955
for the Olongapo City Drug Store. 15

The Yambaos then filed on May 15, 1980, a supplemental complaint questioning the said suspension
and praying for the issuance of a preliminary writ of prohibitory injunction. 16 On the same day, the
respondent judge issued an order directing the maintenance of the status quo with respect to the
Olongapo City Drug Store pending resolution of the issues. 17

On May 21, 1980, the petitioner wrote the FDA requesting reconsideration of its order of April 29,
1980, allowing resumption of the operation of the San Sebastian Drug Store. 18 The request was
denied by the FDA in its reply dated May 27, 1980. 19

A motion for reconsideration of the status quo order had earlier been filed on May 1, 1980 by the
petitioner. After a joint hearing and an exchange of memoranda thereon, the respondent judge issued
an order on July 16, 1980, 20 the dispositive portion of which read as follows:

WHEREFORE, the defendants' motion for reconsideration of the status quo order dated May 15,
1980, is hereby DENIED and the letter of the defendant city mayor dated April 17, 1980, for the
revocation of Mayor's Permit No. 1954 for the San Sebastian Drug Store is declared null and void.

Accordingly, a writ of preliminary prohibitory injunction is heretofore issued enjoining defendants from
doing acts directed towards the closure of the San Sebastian Drug Store and the suspension of the
Olongapo City Drug Store both situated at Hospital Road, Olongapo City. Further, the signboard
posted at San Sebastian Drug Store by the defendants is ordered removed in order that the said drug
store will resume its normal business operation.

The hearing of the main petition for damages is set on August 14, 1980, at 1:30 o'clock in the
afternoon.
The petitioner's motion for reconsideration of the above stated order was denied in an order dated
September 4, 1980. 21 The petitioner thereupon came to this Court in this petition for certiorari and
prohibition with preliminary, injunction, to challenge the aforesaid orders.

We issued a temporary restraining order against the respondent judge on October 2 7, 1980, 22 but
lifted it on December 10, 1980, for failure of the petitioner to file his comment on the private
respondents' motion to lift the said order and/or for issuance of a counter restraining order. 23

First, let us compare the bases of the powers and functions respectively claimed by the FDA and the
petitioner as mayor of Olongapo City.

The task of drug inspection was originally lodged with the Board of Pharmaceutical Examiners
pursuant to Act 2762, as amended by Act 4162. By virtue of Executive Order No. 392 dated January
1, 1951 (mandating reorganization of various departments and agencies), this was assumed by the
Department of Health and exercised through an office in the Bureau of Health known as the Drug
Inspection Section. This section was empowered "to authorize the opening of pharmacies, drug
stores and dispensaries, and similar establishments after inspection by persons authorized by law."

The Food and Drug Administration was created under R.A. No. 3720 (otherwise known as the Food,
Drug and Cosmetic Act), approved on June 22, 1963, and vested with all drug inspection functions in
line with "the policy of the State to insure safe and good quality supply of food, drug and cosmetics,
and to regulate the production, sale and traffic of the same to protect the health of the people."
Section 5 of this Act specifically empowers it:

(e) to issue certificates of compliance with technical requirements to serve as basis for the issuance
of license and spotcheck for compliance with regulations regarding operation of food, drug and
cosmetic manufacturers and establishments.

For a more effective exercise of this function, the Department of Health issued on March 5, 1968,
Administrative Order No. 60, series of 1968, laying down the requirements for the application to be
filed with the FDA for authorization to operate or establish a drug establishment. The order provides
that upon approval of the application, the FDA shall issue to the owner or administrator of the drug
store or similar establishment a "License to Operate" which "shall be renewed within the first 3
months of each year upon payment of the required fees." This license contains the following
reservation:

However, should during the period of issue, a violation of any provisions of the Food, Drug and
Cosmetic Act and/or the regulations issued thereunder be committed, this License shall be subject to
suspension or revocation.

When the drug addiction problem continued to aggravate, P.D. No. 280 was promulgated on August
27, 1973, to give more teeth to the powers of the FDA, thus:
Section 1. Any provision of law to the contrary notwithstanding, the Food and Drug Administrator is
hereby authorized to order the closure, or suspend or revoke the license of any drug establishment
which after administrative investigation is found guilty of selling or dispensing drugs medicines and
other similar substances in violation of the Food, Drug and Cosmetic Act, and Dangerous Drugs Act
of 1972, or other laws regulating the sale or dispensation of drugs, or rules and regulations issued
pursuant thereto.

Sec. 2. The administrative investigation shall be summary in character. The owner of the drug store
shall be given an opportunity to be heard. (P.D. 280, emphasis supplied.)

For his part, the petitioner, traces his authority to the charter of Olongapo City, R.A. No. 4645, which
inter alia empowers the city mayor under Section 10 thereof:

k.to grant or refuse municipal licenses to operate or permits of all classes and to revoke the same for
violation of the conditions upon which they were granted, or if acts prohibited by law or city
ordinances are being committed under protection of such licenses or in the premises in which the
business for which the same have been granted is carried on, or for any other good reason of general
interest.

The charter also provides, in connection with the powers of the city health officer, that:

Sec. 6 (k). He and his representatives shall have the power to arrest violators of health laws,
ordinances, rules and regulations and to recommend the revocation or suspension of the permits of
the different establishments to the City Mayor for violation of health laws, ordinances, rules and
regulations. (Emphasis supplied.)

An application to establish a drug store in Olongapo City must be filed with the Office of the Mayor
and must show that the applicant has complied with the existing ordinances on health and sanitation,
location or zoning, fire or building, and other local requirements. If the application is approved, the
applicant is granted what is denominated a "Mayor's Permit" providing inter alia that it "is valid only at
the place stated above and until (date), unless sooner revoked for cause." 24

Courts of justice, when confronted with apparently conflicting statutes, should endeavor to reconcile
the same instead of declaring outright the invalidity of one as against the other. Such alacrity should
be avoided. The wise policy is for the judge to harmonize them if this is possible, bearing in mind that
they are equally the handiwork of the same legislature, and so give effect to both while at the same
time also according due respect to a coordinate department of the government. It is this policy the
Court will apply in arriving at the interpretation of the laws above-cited and the conclusions that
should follow therefrom.

A study of the said laws will show that the authorization to operate issued by the FDA is a condition
precedent to the grant of a mayor's permit to the drug store seeking to operate within the limits of the
city. This requirement is imperative. The power to determine if the opening of the drug store is
conformable to the national policy and the laws on the regulation of drug sales belongs to the FDA.
Hence, a permit issued by the mayor to a drug store not previously cleared with and licensed by the
said agency will be a nullity.
This is not to say, however, that the issuance of the mayor's permit is mandatory once it is shown that
the FDA has licensed the operation of the applicant drug store. This is not a necessary consequence.
For while it may appear that the applicant has complied with the pertinent national laws and policies,
this fact alone will not signify compliance with the particular conditions laid down by the local
authorities like zoning, building, health, sanitation, and safety regulations, and other municipal
ordinances enacted under the general welfare clause. This compliance still has to be ascertained by
the mayor if the permit is to be issued by his office. Should he find that the local requirements have
not been observed, the mayor must then, in the exercise of his own authority under the charter,
refuse to grant the permit sought.

The power to approve a license includes by implication,. even if not expressly granted, the power to
revoke it. By extension, the power to revoke is limited by the authority to grant the license, from which
it is derived in the first place. Thus, if the FDA grants a license upon its finding that the applicant drug
store has complied with the requirements of the general laws and the implementing administrative
rules and regulations, it is only for their violation that the FDA may revoke the said license. By the
same token, having granted the permit upon his ascertainment that the conditions thereof as applied
particularly to Olongapo City have been complied with, it is only for the violation of such conditions
that the mayor may revoke the said permit.

Conversely, the mayor may not revoke his own permit on the ground that the compliance with the
conditions laid down and found satisfactory by the FDA when it issued its license is in his own view
not acceptable. This very same principle also operates on the FDA. The FDA may not revoke its
license on the ground that the conditions laid down in the mayor's permit have been violated
notwithstanding that no such finding has been made by the mayor.

In the present case, the closure of the San Sebastian Drug Store was ordered by the FDA for
violation of its own conditions, which it certainly had the primary power to enforce. By revoking the
mayor's permit on the same ground for which the San Sebastian Drug Store had already been
penalized by the FDA, the mayor was in effect reversing the derision of the latter on a matter that
came under its jurisdiction. As the infraction involved the pharmacy and drug laws which the FDA had
the direct responsibility to execute, the mayor had no authority to interpose his own findings on the
matter and substitute them for the decision already made by the FDA.

It would have been different if the offense condoned by the FDA was a violation of, say, a city
ordinance requiring buildings to be provided with safety devices or equipment, like fire extinguishers.
The city executive may ignore such condonation and revoke the mayor's permit just the same. In this
situation, he would be acting properly because the enforcement of the city ordinance is his own
prerogative. In the present case, however, the condition allegedly violated related to a national law,
not to a matter of merely local concern, and so came under the 'jurisdiction of the FDA.

Settled is the rule that the factual findings of administrative authorities are accorded great respect
because of their acknowledged expertise in the fields of specialization to which they are assigned. 25
Even the courts of justice, including this Court, are concluded by such findings in the absence of a
clear showing of a grave abuse of discretion, which is not present in the case at bar. For all his
experience in the enforcement of city ordinances, the petitioner cannot claim the superior aptitudes of
the FDA in the enforcement of the pharmacy and drug addiction laws. He should therefore also be
prepared, like the courts of justice themselves, to accept its decisions on this matter.
The petitioner magnifies the infraction committed by the San Sebastian Drug Store but the FDA
minimizes it. According to the FDA Administrator, Valium is not even a prohibited drug, which is why
the penalty imposed was only a 3-day closure of the drug store and a fine of P100.00. 26 Notably, the
criminal charges filed against the private respondent for the questioned transaction were dismissed
by the fiscal's office. 27

It is also worth noting that the San Sebastian Drug Store was penalized by the FDA only after a
hearing held on April 25, 1980, at which private respondent Yambao, assisted by her lawyer-
husband, appeared and testified. 28 By contrast, the revocation of the mayor's permit was
communicated to her in a letter 29 reading simply as follows:

April 17, 1980

Rosalinda Yambao

c/o San Sebastian Drug Store

Hospital Road, Olongapo City

Madame:

Based on a report submitted by PC Major Virtus V. Gil, Chief 3 RFO, Dis. B, Task Force "Bagong
Buhay," "you are rampantly violating the provisions of Republic Act 5921 otherwise known as the
'Pharmacy Law."

Aside from this, there is evidence that you are dispensing regulated drugs contrary to the provisions
of R.A. 6425 otherwise known as the Dangerous Drugs Act of 1972.

In view of the above, Mayors Permit No. 1954 heretofore issued in your name for the operation of a
drug store (San Sebastian) at the Annex Building of the Fil-Am (IYC), along Hospital Road, this City,
is REVOKED effective April 18, 1980.

PLEASE BE GUIDED ACCORDINGLY.

Very truly yours,

(SGD.) RICHARD J. GORDON

City Mayor
If only for the violation of due process which is manifest from this letter, the mayor's arbitrary action
can be annulled.

The indefinite suspension of the mayor's permit for Olongapo City Drug Store was based on the
transfer thereof to the site of the San Sebastian Drug Store as approved by the FDA but without
permission from the petitioner. On this matter, the Court believes that the final decision rested with
the mayor. The condition violated related more to the location in Olongapo City of business
establishments in general than to the regulation of drug stores in particular. It therefore came under
the petitioner's jurisdiction.

The FDA would have the right to disapprove the site of the drug store only if it would impair the health
or other interests of the customers in contravention of the national laws or policies, as where the drug
store is located in an unsanitary site. But the local executive would have reason to object to the
location, even if approved by the FDA, where it does not conform to, say, a zoning ordinance
intended to promote the comfort and convenience of the city residents.

The reason given by the petitioner in disapproving the transfer was violation of Mayor's Permit No.
1955, which by its terms was valid only at the place stated therein. In the letter of May 13, 1980 30
the private respondent was clearly informed that for violation of the condition of Mayor's Permit No.
1955 granting her the of operating the Olongapo City Drug Store at No. 1-B Fil-Am Bldg., Hospital
Road, the said permit was "hereby suspended." We find that that reason was valid enough. The
permit clearly allowed the drug store to operate in the address given and not elsewhere. No hearing
was necessary because the transfer without the mayor's permission is not disputed and was in fact
impliedly admitted by the private respondent.

If the private respondent wanted to transfer her drug store, what she should have done was to secure
the approval not only of the FDA but also, and especially, of the mayor. Merely notifying the petitioner
of the change in the location of her drug stores as allowed by the FDA was not enough. The FDA had
no authority to revoke that particular condition of the mayor's permits indicating the sites of the two
drug stores as approved by the mayor in the light of the needs of the city. Only the mayor could.

We assume that Mayor's Permit No. 1954 could also have been validly suspended for the same
reason (as the sites of the two drug stores were exchanged without amendment of their respective
permits) were it not for the fact that such permit was revoked by the petitioner on the more serious
ground of violation of the Pharmacy Law and the Dangerous Drugs Act of 1972.

It is understood, however, that the suspension should be deemed valid only as the two drug stores
have not returned to their original sites as specified in their respective permits. Indefinite suspension
will amount to a permanent revocation, which will not be a commensurate penalty with the degree of
the violation being penalized.

The Court adds that denial of the request for transfer, if properly made by the private respondents,
may not be validly denied by the judge in the absence of a clear showing that the transfer sought will
prejudice the residents of the city. As the two drug stores are only a few meters from each other, and
in the same building, there would seem to be no reason why the mere exchange of their locations
should not be permitted. Notably, the location of the two drug stores had previously been approved in
Mayor's Permit Nos. 1954 and 1955.
Our holding is that the petitioner acted invalidly in revoking Mayor's Permit No. 1954 after the FDA
had authorized the resumption of operations of the San Sebastian Drug Store following the
enforcement of the penalties imposed upon it. However, it was competent for the petitioner to
suspend Mayor's Permit No. 1955 for the transfer of the Olongapo City Drug Store in violation of the
said permit. Such suspension should nevertheless be effective only pending the return of the drug
store to its authorized original site or the eventual approval by the mayor of the requested transfer if
found to be warranted.

The petitioner is to be commended for his zeal in the promotion of the campaign against drug
addiction, which has sapped the vigor and blighted the future of many of our people, especially the
youth. The legal presumption is that he acted in good faith and was motivated only by his concern for
the residents of Olongapo City when he directed the closure of the first drug store and the suspension
of the permit of the other drug store. It appears, though, that he may have overreacted and was for
this reason properly restrained by the respondent judge.

WHEREFORE, the challenged Orders of July 6, 1980 and September 4, 1980, are MODIFIED in the
sense that the suspension of Mayor's Permit No. 1955 shall be considered valid but only until the San
Sebastian Drug Store and the Olongapo City Drug Store return to their original sites as specified in
the FDA licenses and the mayor's permits or until the request for transfer, if made by the private
respondents, is approved by the petitioner. The rest of the said Orders are AFFIRMED, with costs
against the petitioner.

SO ORDERED.
37. G.R. No. L-23305 June 30, 1966

BENEDICTO C. LAGMAN, doing business under the firm name and style "MARCO TRANSIT",
petitioner, vs.CITY OF MANILA, its officers and/or agents, respondents.

REYES, J.B.L., J.:

Petitioner Benedicto C. Lagman originally filed, on 6 August 1964, with this Court a petition for
declaratory relief seeking a declaration of his rights under the so-called "provincial bus ban"
ordinance (No. 4986, approved on 13 July 1964 by the City Mayor) of respondent City of Manila, with
prayer for writs of preliminary and permanent injunctions to restrain and enjoin said respondent, its
officers and/or agents, from enforcing and implementing said ordinance. At first, this Court, in its
resolution dated 11 August 1964, dismissed said petition without prejudice to action, if any, in the
lower court; but, upon herein petitioner's motion for reconsideration and supplemental petition to
convert said petition into one for prohibition, on the ground, among others, that respondents have
been actually enforcing said ordinance effective 17 August 1964, this Court reconsidered its first
resolution, gave due course to the petition and required respondents to answer. This Court did not,
however, issue the writ of preliminary injunction prayed for.

As disclosed by the record, the facts are:

Petitioner was granted a certificate of public convenience by the Public Service Commission (by a
decision, dated 20 March 1963, in PSC Case No. 61-7383) to operate for public service fifteen (15)
auto trucks with fixed routes and regular terminal for the transportation of passengers and freight, on
the line Bocaue (Bulacan) — Parañaque (Rizal) via Meycauayan, Marilao, Obando, Polo, Malabon,
Rizal, Grace Park, Rizal Avenue, Recto Avenue, Sta. Cruz Bridge, Taft Avenue, Libertad, Pasay City
and Baclaran, and vice versa. Within Manila, the line passes thru Rizal Avenue, Plaza Goiti, McArthur
Bridge, Plaza Lawton, P. Burgos, Taft Avenue and Taft Avenue Extension. Pursuant to said
certificate, petitioner, who is doing business under the firm name and style of "Marco Transit", began
operating twelve (12) passenger buses along his authorized line.

On 17 June 1964, the Municipal Board of respondent City of Manila, in pursuance to Section 18,
paragraph hh, of Republic Act No. 409, as amended (otherwise known as the Revised Charter of the
City of Manila), that reads:
The Municipal board shall have the following legislative powers:

xxx xxx xxx

(hh) To establish and regulate the size, speed, and operation of motor and other public vehicles
within the city; to establish bus stops and terminals; and prohibit and regulate the entrance of
provincial utility vehicles into the city, except those passing thru the city."

xxx xxx xxx

enacted Ordinance No. 4986, entitled "An Ordinance Rerouting Traffic On Roads and Streets Within
The City of Manila, and For Other Purposes", which the City Mayor approved, on 13 July 1964,
effective upon approval thereof. The pertinent provisions of said ordinance, insofar as it affect the
certificate of public convenience of petitioner, are quoted below, to wit:

SECTION 1. As a positive measure to relieve the critical traffic congestion in the City of Manila, which
has grown to alarming and emergency proportions, and in the best interest of public welfare and
convenience, the following traffic rules and regulations are hereby Promulgated:

RULE 1. DEFINITIONS

A. Definition of Terms. — When used in this ordinance and in subsequent ordinance having reference
thereto, unless the context indicates otherwise:

(a) The terms "provincial passenger buses" and provincial passenger jeepneys' shall be understood
to mean those whose route (or origin-destination) lines come from or going to points beyond Pasay
City, Makati, Mandaluyong, San Juan, Quezon City, Caloocan City and Navotas.

xxx xxx xxx

RULE II. ENTRY POINTS AND ROUTES OF PROVINCIAL PASSENGER BUSES AND JEEPNEYS

1. Provincial passenger buses and jeepneys (PUB and PUJ) shall be allowed to enter Manila, but
only through the following entry points and routes, from 6:30 A.M. to 8:30 P.M. every day except
Sundays and Holidays:

(a) Those coming from the north shall enter the city through Rizal Avenue; turn right to Mt. Samat;
right to Dinalupihan right to J. Abad Santos; left to Rizal Avenue towards Caloocan City;
xxx xxx xxx

(n) Those coming from the south through Taft Avenue shall turn left at Vito Cruz; turn right to Dakota;
turn right to Harrison Boulevard; turn right to Taft Avenue; thence proceed towards Pasay City;

xxx xxx xxx

RULE III. FLEXIBLE SHUTTLE BUS SERVICE

1. In order that provincial commuters shall not be unduly inconvenienced as a result of the
implementation of these essential traffic control regulations, operators of provincial passenger buses
shall be allowed to provide buses to shuttle their passengers from their respective entry control
points, under the following conditions:

(a) Each provincial bus company or firm Shall be allowed such number of shuttle buses proportionate
to the number of units authorized it, the ratio to be determined by the Chief, Traffic Control Bureau,
based on his observations as to the actual needs of commuters and traffic volume; in no case shall
the allocation be more than one shuttle bus for every 10 authorized units, or fraction thereof.

(b) No shuttle bus shall enter Manila unless the same shall have been provided with identification
stickers as required under Rule IV hereof, which shall be furnished and allocated by the Chief, Traffic
Control Bureau to each provincial bus company or firm.1äwphï1.ñët

(c) All such shuttle buses are not permitted to load or unload or to pick and/or drop passengers along
the way but must do so only in the following places:

(1) North

(a) J. Abad Santos corner Rizal Avenue, or vicinities

xxx xxx xxx

(3) South

(a) Harrison Boulevard, between Dakota and Taft Avenue

xxx xxx xxx

GENERAL PROVISIONS

SEC. 4. Any violation of the provisions of this ordinance and of any other ordinance regulating traffic
in the city, shall be punished by a fine of not less than P20.00, nor more than P200.00, or by
imprisonment for not less than five (5) days nor more than six (6) months, or both such fine or
imprisonment in the discretion of the court.

On 17 August 1964, the Mayor of respondent City of Manila, through its police agencies, began
actual enforcement of said ordinance and prevented petitioner from operating his buses, except two
(2) "Shuttle" buses, along the line specified in his certificate of public convenience.

Petitioner Lagman claims in his original and supplemental petitions that the enactment and
enforcement of Ordinance No. 4986 is unconstitutional, illegal, ultra vires, and null and void. Thus, he
contends that the routes within Manila through which he has been authorized to operate his buses
are national roads or streets, and the regulation and control relating to the use of and traffic of which
(roads) are vested, under Commonwealth Act No. 548, in the Director of Public Works, subject to the
approval of the Secretary of Public Works and Communications; but, since said ordinance was not
proposed nor approved by the executive officials mentioned in said Act, its enactment and
enforcement is a usurpation of the latter officials' functions, and said ordinance is, therefore,
unauthorized and illegal.

He also contends that the power conferred upon respondent City of Manila, under said Section 18
(hh) of Republic Act No. 409, as amended, does not include the right to enact an ordinance such as
the one in question, which has the effect of amending or modifying a certificate of public convenience
granted by the Public Service Commission because any amendment or modification of said certificate
is solely vested by law in the latter governmental agency, and only after notice and hearing (Sec.
16[m], Public Service Act); but since this procedure was not adopted or followed by respondents in
enacting the disputed ordinance, the same is likewise illegal and null and void.

He further contends that the enforcement of said ordinance is arbitrary, oppressive and unreasonable
because the city streets from which he had been prevented to operate his buses are the cream of his
business.

He finally contends that, even assuming that Ordinance No. 4986 is valid, it is only the Public Service
Commission which can require compliance with its provisions (Sec. 17[j], Public Service Act), but
since its implementation is without the sanction or approval of the Commission, its enforcement is
also unauthorized and illegal.

In his memorandum, petitioner adds as contention therefor that although his buses fall within the
definition of the term "provincial passenger buses" under the disputed ordinance — his route line
having terminal outside the City of Manila and its immediate suburbs — they merely "pass thru the
city"; hence, its operation is covered within the saving clause of the above-quoted Section 18 (hh) of
Republic Act No. 409, as amended, and he should not have been prevented from operating his buses
within the city streets specified in his certificate of public convenience.

On the other hand, respondent City of Manila, in its answer to the original and supplemental petitions,
maintains that its power to "prohibit and regulate the entrance of provincial public utility vehicles into
the City, except those passing thru the City", as provided in its charter, is an explicit delegation of
police power which is paramount and superior both with respect to the administrative power of the
Director of Public Works, under Commonwealth Act No. 548, to regulate and control the use of, and
traffic on, national roads or streets and to the administrative authority of the Public Service
Commission, under Section 16 (m), of the Public Service Act, to amend, modify or revoke certificates
of public convenience.

It also maintains that the provisions of Commonwealth Act No. 548 have been repealed by Section 27
of Republic Act No. 917; and, even assuming that the former has not been so repealed by the latter,
Ordinance No. 4968 does not contravene Commonwealth Act No. 548 because, even assuming that
a repugnancy or conflict exists between this Act and Section 18 (hh) of Republic Act No. 409, as
amended, the latter provisions prevails over the former. Republic Act No. 409 being a special law and
of later enactment. Neither does Republic Act No. 409 contravene Section 16 (m) of the Public
Service Act, Section 17(j) of the latter Act having imposed a duty in the Public Service Commission to
require any public service to comply with any ordinance relating thereto.

Lastly, respondent, in its reply memorandum, maintains that since petitioner admittedly engages in
business within the city limits by picking up passengers therein, his buses do not merely pass thru the
city; and they are not, therefore, covered within the saving clause of Section 18 (hh), of Republic Act
No. 409, as amended.

In our opinion, the present petition for prohibition should be denied.

First, as correctly maintained by respondents, Republic Act No. 409, as amended, otherwise known
as the Revised Charter of the City of Manila, is a special law and of later enactment than
Commonwealth Act No. 548 and the Public Service Law (Commonwealth Act No. 146, as amended),
so that even if conflict exists between the provisions of the former act and the latter acts, Republic Act
No. 409 should prevail over both Commonwealth Acts Nos. 548 and 146. In Cassion vs. Banco
Nacional Filipino, 89 Phil. 560, 561, this Court said:

for with or without an express enactment it is a familiar rule of statutory construction that to the extent
of any necessary repugnancy between a general and a special law or provision, the latter will control
the former without regard to the respective dates of passage.

It is to be noted that Commonwealth Act No. 548 does not confer an exclusive power or authority
upon the Director of Public Works, subject to the approval of the Secretary of Public Works and
Communications, to promulgate rules and regulations relating to the use of and traffic on national
roads or streets. This being the case, section 18 (hh) of the Manila Charter is deemed enacted as an
exception to the provisions of Commonwealth Act No. 548.
It is a well settled principle that, because repeals by implication are not favored, a special law must be
taken as intended to constitute an exception to the general law, in the absence of special
circumstances forcing a contrary conclusion. (Baga vs. Philippine National Bank, 52 O.G. 6140).

Where a special act is repugnant to or inconsistent with a prior general act, a partial repeal of the
latter act will be implied or exception grafted upon the general act. (City of Geneses vs. Illinois
Northern Utility Co., 39 NE 2d, p. 26)

Second, the same situation holds true with respect to the provisions of the Public Service Act.
Although the Public Service Commission is empowered, under its Section 16 (m), to amend, modify
or revoke certificates of public convenience after notice and hearing, yet there is no provision, specific
or otherwise, which can be found in this statute (Commonwealth Act No. 146) vesting power in the
Public Service Commission to superintend, regulate, or control the streets of respondent City or
suspend its power to license or prohibit the occupancy thereof. On the other hand, this right or
authority, as hereinabove concluded, is conferred upon respondent City of Manila. The power vested
in the Public Service Commission under Section 16 (m) is, therefore, subordinate to the authority
granted to respondent City, under said section 18 (hh). As held in an American case:

Ordinances designating the streets within a municipality upon which buses may operate, or
prohibiting their operation in certain streets do not encroach upon the jurisdiction of the Public Service
Commission over motorbus common carriers, so long as the ordinances do not prevent or
unreasonably interfere with the utility's operation under the certificate or franchise granted by that
Commission. (Stuck vs. Town of Beech Grove, 163 N.E. 483; 166 N.E. 153).

That the powers conferred by law upon the Public Service Commission were not designed to deny or
supersede the regulatory power of local governments over motor traffic, in the streets subject to their
control, is made evident by section 17 (j) of the Public Service Act (Commonwealth Act No. 146) that
provides as follows:

SEC. 17. Proceedings of Commission without previous hearing. — The Commission shall have
power, without previous hearing, subject to established limitations and exceptions, and saving
provisions to the contrary:

xxx xxx xxx

(j) To require any public service to comply with the laws of the Philippines, and with any provincial
resolution or municipal ordinance relating thereto, and to conform to the duties imposed upon it
thereby, or by the provisions of its own charter, whether obtained under any general or special law of
the Philippines. (Emphasis supplied)

The petitioner's contention that, under this section, the respective ordinances of the City can only be
enforced by the Commission alone is obviously unsound. Subsection (j) refers not only to ordinances
but also to "the laws of the Philippines", and it is plainly absurd to assume that even laws relating to
public services are to remain a dead letter without the placet of the Commission; and the section
makes no distinction whatever between enforcement of laws and that of municipal ordinances.
The very fact, furthermore, that the Commission is empowered, but not required, to demand
compliance with apposite laws and ordinances proves that the Commission's powers are merely
supplementary to those of state organs, such as the police, upon which the enforcement of laws
primarily rests.

Third, the implementation of the ordinance in question cannot be validly assailed as arbitrary,
oppressive and unreasonable. Aside from the fact that there is no evidence to substantiate this
charge, it is not disputed that petitioner has not been totally banned or prohibited from operating all
his buses, he having allowed to operate two (2) "shuttle" buses within the city limits.

And finally, respondents correctly maintain that petitioner cannot avail of the saving clause of said
section 18 (hh), he having admitted that his buses engaged in business within the city limits by
picking up passengers therein; hence, they do not merely "pass thru the city".

Wherefore, the instant petition for prohibition should be as it is hereby, dismissed. With cost against
petitioner Benedicto C. Lagman.

Concepcion, C.J., Barrera, Dizon, Regala, Makalintal, Bengzon, J.P., Zaldivar and Sanchez, JJ.,
concur.
38. G.R. No. L-23052 January 29, 1968
CITY OF MANILA, petitioner, vs.

GENARO N. TEOTICO and COURT OF APPEALS, respondents.

CONCEPCION, C.J.:

Appeal by certiorari from a decision of the Court of Appeals.

On January 27, 1958, at about 8:00 p.m., Genaro N. Teotico was at the corner of the Old Luneta and
P. Burgos Avenue, Manila, within a "loading and unloading" zone, waiting for a jeepney to take him
down town. After waiting for about five minutes, he managed to hail a jeepney that came along to a
stop. As he stepped down from the curb to board the jeepney, and took a few steps, he fell inside an
uncovered and unlighted catch basin or manhole on P. Burgos Avenue. Due to the fall, his head hit
the rim of the manhole breaking his eyeglasses and causing broken pieces thereof to pierce his left
eyelid. As blood flowed therefrom, impairing his vision, several persons came to his assistance and
pulled him out of the manhole. One of them brought Teotico to the Philippine General Hospital, where
his injuries were treated, after which he was taken home. In addition to the lacerated wound in his left
upper eyelid, Teotico suffered contusions on the left thigh, the left upper arm, the right leg and the
upper lip apart from an abrasion on the right infra-patella region. These injuries and the allergic
eruption caused by anti-tetanus injections administered to him in the hospital, required further medical
treatment by a private practitioner who charged therefor P1,400.00.

As a consequence of the foregoing occurrence, Teotico filed, with the Court of First Instance of
Manila, a complaint — which was, subsequently, amended — for damages against the City of Manila,
its mayor, city engineer, city health officer, city treasurer and chief of police. As stated in the decision
of the trial court, and quoted with approval by the Court of Appeals,

At the time of the incident, plaintiff was a practicing public accountant, a businessman and a
professor at the University of the East. He held responsible positions in various business firms like the
Philippine Merchandising Co., the A.U. Valencia and Co., the Silver Swan Manufacturing Company
and the Sincere Packing Corporation. He was also associated with several civic organizations such
as the Wack Wack Golf Club, the Chamber of Commerce of the Philippines, Y's Men Club of Manila
and the Knights of Rizal. As a result of the incident, plaintiff was prevented from engaging in his
customary occupation for twenty days. Plaintiff has lost a daily income of about P50.00 during his
incapacity to work. Because of the incident, he was subjected to humiliation and ridicule by his
business associates and friends. During the period of his treatment, plaintiff was under constant fear
and anxiety for the welfare of his minor children since he was their only support. Due to the filing of
this case, plaintiff has obligated himself to pay his counsel the sum of P2,000.00.

On the other hand, the defense presented evidence, oral and documentary, to prove that the Storm
Drain Section, Office of the City Engineer of Manila, received a report of the uncovered condition of a
catchbasin at the corner of P. Burgos and Old Luneta Streets, Manila, on January 24, 1958, but the
same was covered on the same day (Exhibit 4); that again the iron cover of the same catch basin was
reported missing on January 30, 1958, but the said cover was replaced the next day (Exhibit 5); that
the Office of the City Engineer never received any report to the effect that the catchbasin in question
was not covered between January 25 and 29, 1968; that it has always been a policy of the said office,
which is charged with the duty of installation, repair and care of storm drains in the City of Manila, that
whenever a report is received from whatever source of the loss of a catchbasin cover, the matter is
immediately attended to, either by immediately replacing the missing cover or covering the catchbasin
with steel matting that because of the lucrative scrap iron business then prevailing, stealing of iron
catchbasin covers was rampant; that the Office of the City Engineer has filed complaints in court
resulting from theft of said iron covers; that in order to prevent such thefts, the city government has
changed the position and layout of catchbasins in the City by constructing them under the sidewalks
with concrete cement covers and openings on the side of the gutter; and that these changes had
been undertaken by the city from time to time whenever funds were available.

After appropriate proceedings the Court of First Instance of Manila rendered the aforementioned
decision sustaining the theory of the defendants and dismissing the amended complaint, without
costs.

On appeal taken by plaintiff, this decision was affirmed by the Court of Appeals, except insofar as the
City of Manila is concerned, which was sentenced to pay damages in the aggregate sum of
P6,750.00. 1 Hence, this appeal by the City of Manila.

The first issue raised by the latter is whether the present case is governed by Section 4 of Republic
Act No. 409 (Charter of the City of Manila) reading:

The city shall not be liable or held for damages or injuries to persons or property arising from the
failure of the Mayor, the Municipal Board, or any other city officer, to enforce the provisions of this
chapter, or any other law or ordinance, or from negligence of said Mayor, Municipal Board, or other
officers while enforcing or attempting to enforce said provisions.

or by Article 2189 of the Civil Code of the Philippines which provides:

Provinces, cities and municipalities shall be liable for damages for the death of, or injuries suffered
by, any person by reason of defective conditions of road, streets, bridges, public buildings, and other
public works under their control or supervision.

Manila maintains that the former provision should prevail over the latter, because Republic Act 409, is
a special law, intended exclusively for the City of Manila, whereas the Civil Code is a general law,
applicable to the entire Philippines.

The Court of Appeals, however, applied the Civil Code, and, we think, correctly. It is true that, insofar
as its territorial application is concerned, Republic Act No. 409 is a special law and the Civil Code a
general legislation; but, as regards the subject-matter of the provisions above quoted, Section 4 of
Republic Act 409 establishes a general rule regulating the liability of the City of Manila for: "damages
or injury to persons or property arising from the failure of" city officers "to enforce the provisions of"
said Act "or any other law or ordinance, or from negligence" of the city "Mayor, Municipal Board, or
other officers while enforcing or attempting to enforce said provisions." Upon the other hand, Article
2189 of the Civil Code constitutes a particular prescription making "provinces, cities and
municipalities . . . liable for damages for the death of, or injury suffered by any person by reason" —
specifically — "of the defective condition of roads, streets, bridges, public buildings, and other-public
works under their control or supervision." In other words, said section 4 refers to liability arising from
negligence, in general, regardless of the object thereof, whereas Article 2189 governs liability due to
"defective streets," in particular. Since the present action is based upon the alleged defective
condition of a road, said Article 2189 is decisive thereon.
It is urged that the City of Manila cannot be held liable to Teotico for damages: 1) because the
accident involving him took place in a national highway; and 2) because the City of Manila has not
been negligent in connection therewith.

As regards the first issue, we note that it is based upon an allegation of fact not made in the answer
of the City. Moreover, Teotico alleged in his complaint, as well as in his amended complaint, that his
injuries were due to the defective condition of a street which is "under the supervision and control" of
the City. In its answer to the amended complaint, the City, in turn, alleged that "the streets
aforementioned were and have been constantly kept in good condition and regularly inspected and
the storm drains and manholes thereof covered by the defendant City and the officers concerned"
who "have been ever vigilant and zealous in the performance of their respective functions and duties
as imposed upon them by law." Thus, the City had, in effect, admitted that P. Burgos Avenue was and
is under its control and supervision.

Moreover, the assertion to the effect that said Avenue is a national highway was made, for the first
time, in its motion for reconsideration of the decision of the Court of Appeals. Such assertion raised,
therefore, a question of fact, which had not been put in issue in the trial court, and cannot be set up,
for the first time, on appeal, much less after the rendition of the decision of the appellate court, in a
motion for the reconsideration thereof.

At any rate, under Article 2189 of the Civil Code, it is not necessary for the liability therein established
to attach that the defective roads or streets belong to the province, city or municipality from which
responsibility is exacted. What said article requires is that the province, city or municipality have
either "control or supervision" over said street or road. Even if P. Burgos Avenue were, therefore, a
national highway, this circumstance would not necessarily detract from its "control or supervision" by
the City of Manila, under Republic Act 409. In fact Section 18(x) thereof provides:

Sec. 18. Legislative powers. — The Municipal Board shall have the following legislative powers:

xxx xxx xxx

(x) Subject to the provisions of existing law to provide for the laying out, construction and
improvement, and to regulate the use of streets, avenues, alleys, sidewalks, wharves, piers, parks,
cemeteries, and other public places; to provide for lighting, cleaning, and sprinkling of streets and
public places; . . . to provide for the inspection of, fix the license fees for and regulate the openings in
the same for the laying of gas, water, sewer and other pipes, the building and repair of tunnels,
sewers, and drains, and all structures in and under the same and the erecting of poles and the
stringing of wires therein; to provide for and regulate cross-works, curbs, and gutters therein, . . . to
regulate traffic and sales upon the streets and other public places; to provide for the abatement of
nuisances in the same and punish the authors or owners thereof; to provide for the construction and
maintenance, and regulate the use, of bridges, viaducts and culverts; to prohibit and regulate ball
playing, kite-flying, hoop rolling, and other amusements which may annoy persons using the streets
and public places, or frighten horses or other animals; to regulate the speed of horses and other
animals, motor and other vehicles, cars, and locomotives within the limits of the city; to regulate the
lights used on all vehicles, cars, and locomotives; . . . to provide for and change the location, grade,
and crossing of railroads, and compel any such railroad to raise or lower its tracks to conform to such
provisions or changes; and to require railroad companies to fence their property, or any part thereof,
to provide suitable protection against injury to persons or property, and to construct and repair
ditches, drains, sewers, and culverts along and under their tracks, so that the natural drainage of the
streets and adjacent property shall not be obstructed.

This authority has been neither withdrawn nor restricted by Republic Act No. 917 and Executive
Order No. 113, dated May 2, 1955, upon which the City relies. Said Act governs the disposition or
appropriation of the highway funds and the giving of aid to provinces, chartered cities and
municipalities in the construction of roads and streets within their respective boundaries, and
Executive Order No. 113 merely implements the provisions of said Republic Act No. 917, concerning
the disposition and appropriation of the highway funds. Moreover, it provides that "the construction,
maintenance and improvement of national primary, national secondary and national aid provincial and
city roads shall be accomplished by the Highway District Engineers and Highway City Engineers
under the supervision of the Commissioner of Public Highways and shall be financed from such
appropriations as may be authorized by the Republic of the Philippines in annual or special
appropriation Acts."

Then, again, the determination of whether or not P. Burgos Avenue is under the control or supervision
of the City of Manila and whether the latter is guilty of negligence, in connection with the maintenance
of said road, which were decided by the Court of Appeals in the affirmative, is one of fact, and the
findings of said Court thereon are not subject to our review.

WHEREFORE, the decision appealed from should be as it is hereby affirmed, with costs against the
City of Manila. It is so ordered.1äwphï1.ñët

Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Castro, Angeles and Fernando,
JJ., concur.