G.R. No.

L-19650             September 29, 1966

CALTEX (PHILIPPINES), INC., petitioner-appellee,

vs.
ENRICO PALOMAR, in his capacity as THE POSTMASTER GENERAL, respondent-appellant.

Office of the Solicitor General for respondent and appellant.

Ross, Selph and Carrascoso for petitioner and appellee.

CASTRO, J.:

In the year 1960 the Caltex (Philippines) Inc. (hereinafter referred to as Caltex) conceived and laid
the groundwork for a promotional scheme calculated to drum up patronage for its oil products.
Denominated "Caltex Hooded Pump Contest", it calls for participants therein to estimate the actual
number of liters a hooded gas pump at each Caltex station will dispense during a specified period.
Employees of the Caltex (Philippines) Inc., its dealers and its advertising agency, and their
immediate families excepted, participation is to be open indiscriminately to all "motor vehicle owners
and/or licensed drivers". For the privilege to participate, no fee or consideration is required to be
paid, no purchase of Caltex products required to be made. Entry forms are to be made available
upon request at each Caltex station where a sealed can will be provided for the deposit of
accomplished entry stubs.

A three-staged winner selection system is envisioned. At the station level, called "Dealer Contest",
the contestant whose estimate is closest to the actual number of liters dispensed by the hooded
pump thereat is to be awarded the first prize; the next closest, the second; and the next, the third.
Prizes at this level consist of a 3-burner kerosene stove for first; a thermos bottle and a Ray-O-Vac
hunter lantern for second; and an Everready Magnet-lite flashlight with batteries and a screwdriver
set for third. The first-prize winner in each station will then be qualified to join in the "Regional
Contest" in seven different regions. The winning stubs of the qualified contestants in each region will
be deposited in a sealed can from which the first-prize, second-prize and third-prize winners of that
region will be drawn. The regional first-prize winners will be entitled to make a three-day all-
expenses-paid round trip to Manila, accompanied by their respective Caltex dealers, in order to take
part in the "National Contest". The regional second-prize and third-prize winners will receive cash
prizes of P500 and P300, respectively. At the national level, the stubs of the seven regional first-
prize winners will be placed inside a sealed can from which the drawing for the final first-prize,
second-prize and third-prize winners will be made. Cash prizes in store for winners at this final stage
are: P3,000 for first; P2,000 for second; Pl,500 for third; and P650 as consolation prize for each of
the remaining four participants.

Foreseeing the extensive use of the mails not only as amongst the media for publicizing the contest
but also for the transmission of communications relative thereto, representations were made by
Caltex with the postal authorities for the contest to be cleared in advance for mailing, having in view
sections 1954(a), 1982 and 1983 of the Revised Administrative Code, the pertinent provisions of
which read as follows:

SECTION 1954. Absolutely non-mailable matter. — No matter belonging to any of the

following classes, whether sealed as first-class matter or not, shall be imported into the
Philippines through the mails, or to be deposited in or carried by the mails of the Philippines,
or be delivered to its addressee by any officer or employee of the Bureau of Posts:
 Written or printed matter in any form advertising, describing, or in any manner pertaining to,
or conveying or purporting to convey any information concerning any lottery, gift enterprise,
or similar scheme depending in whole or in part upon lot or chance, or any scheme, device,
or enterprise for obtaining any money or property of any kind by means of false or fraudulent
pretenses, representations, or promises.

"SECTION 1982. Fraud orders.—Upon satisfactory evidence that any person or company is

engaged in conducting any lottery, gift enterprise, or scheme for the distribution of money, or
of any real or personal property by lot, chance, or drawing of any kind, or that any person or
company is conducting any scheme, device, or enterprise for obtaining money or property of
any kind through the mails by means of false or fraudulent pretenses, representations, or
promises, the Director of Posts may instruct any postmaster or other officer or employee of
the Bureau to return to the person, depositing the same in the mails, with the word
"fraudulent" plainly written or stamped upon the outside cover thereof, any mail matter of
whatever class mailed by or addressed to such person or company or the representative or
agent of such person or company.

SECTION 1983. Deprivation of use of money order system and telegraphic transfer service.
—The Director of Posts may, upon evidence satisfactory to him that any person or company
is engaged in conducting any lottery, gift enterprise or scheme for the distribution of money,
or of any real or personal property by lot, chance, or drawing of any kind, or that any person
or company is conducting any scheme, device, or enterprise for obtaining money or property
of any kind through the mails by means of false or fraudulent pretenses, representations, or
promise, forbid the issue or payment by any postmaster of any postal money order or
telegraphic transfer to said person or company or to the agent of any such person or
company, whether such agent is acting as an individual or as a firm, bank, corporation, or
association of any kind, and may provide by regulation for the return to the remitters of the
sums named in money orders or telegraphic transfers drawn in favor of such person or
company or its agent.

The overtures were later formalized in a letter to the Postmaster General, dated October 31, 1960, in
which the Caltex, thru counsel, enclosed a copy of the contest rules and endeavored to justify its
position that the contest does not violate the anti-lottery provisions of the Postal Law. Unimpressed,
the then Acting Postmaster General opined that the scheme falls within the purview of the provisions
aforesaid and declined to grant the requested clearance. In its counsel's letter of December 7, 1960,
Caltex sought a reconsideration of the foregoing stand, stressing that there being involved no
consideration in the part of any contestant, the contest was not, under controlling authorities,
condemnable as a lottery. Relying, however, on an opinion rendered by the Secretary of Justice on
an unrelated case seven years before (Opinion 217, Series of 1953), the Postmaster General
maintained his view that the contest involves consideration, or that, if it does not, it is nevertheless a
"gift enterprise" which is equally banned by the Postal Law, and in his letter of December 10, 1960
not only denied the use of the mails for purposes of the proposed contest but as well threatened that
if the contest was conducted, "a fraud order will have to be issued against it (Caltex) and all its
representatives".

Caltex thereupon invoked judicial intervention by filing the present petition for declaratory relief
against Postmaster General Enrico Palomar, praying "that judgment be rendered declaring its
'Caltex Hooded Pump Contest' not to be violative of the Postal Law, and ordering respondent to
allow petitioner the use of the mails to bring the contest to the attention of the public". After issues
were joined and upon the respective memoranda of the parties, the trial court rendered judgment as
follows:
 In view of the foregoing considerations, the Court holds that the proposed 'Caltex Hooded
Pump Contest' announced to be conducted by the petitioner under the rules marked as
Annex B of the petitioner does not violate the Postal Law and the respondent has no right to
bar the public distribution of said rules by the mails.

The respondent appealed.

The parties are now before us, arrayed against each other upon two basic issues: first, whether the
petition states a sufficient cause of action for declaratory relief; and second, whether the proposed
"Caltex Hooded Pump Contest" violates the Postal Law. We shall take these up in seriatim.

1. By express mandate of section 1 of Rule 66 of the old Rules of Court, which was the applicable
legal basis for the remedy at the time it was invoked, declaratory relief is available to any person
"whose rights are affected by a statute . . . to determine any question of construction or validity
arising under the . . . statute and for a declaration of his rights thereunder" (now section 1, Rule 64,
Revised Rules of Court). In amplification, this Court, conformably to established jurisprudence on the
matter, laid down certain conditions sine qua non therefor, to wit: (1) there must be a justiciable
controversy; (2) the controversy must be between persons whose interests are adverse; (3) the party
seeking declaratory relief must have a legal interest in the controversy; and (4) the issue involved
must be ripe for judicial determination (Tolentino vs. The Board of Accountancy, et al., G.R. No. L-
3062, September 28, 1951; Delumen, et al. vs. Republic of the Philippines, 50 O.G., No. 2, pp. 576,
578-579; Edades vs. Edades, et al., G.R. No. L-8964, July 31, 1956). The gravamen of the
appellant's stand being that the petition herein states no sufficient cause of action for declaratory
relief, our duty is to assay the factual bases thereof upon the foregoing crucible.

As we look in retrospect at the incidents that generated the present controversy, a number of
significant points stand out in bold relief. The appellee (Caltex), as a business enterprise of some
consequence, concededly has the unquestioned right to exploit every legitimate means, and to avail
of all appropriate media to advertise and stimulate increased patronage for its products. In contrast,
the appellant, as the authority charged with the enforcement of the Postal Law, admittedly has the
power and the duty to suppress transgressions thereof — particularly thru the issuance of fraud
orders, under Sections 1982 and 1983 of the Revised Administrative Code, against legally non-
mailable schemes. Obviously pursuing its right aforesaid, the appellee laid out plans for the sales
promotion scheme hereinbefore detailed. To forestall possible difficulties in the dissemination of
information thereon thru the mails, amongst other media, it was found expedient to request the
appellant for an advance clearance therefor. However, likewise by virtue of his jurisdiction in the
premises and construing the pertinent provisions of the Postal Law, the appellant saw a violation
thereof in the proposed scheme and accordingly declined the request. A point of difference as to the
correct construction to be given to the applicable statute was thus reached. Communications in
which the parties expounded on their respective theories were exchanged. The confidence with
which the appellee insisted upon its position was matched only by the obstinacy with which the
appellant stood his ground. And this impasse was climaxed by the appellant's open warning to the
appellee that if the proposed contest was "conducted, a fraud order will have to be issued against it
and all its representatives."

Against this backdrop, the stage was indeed set for the remedy prayed for. The appellee's insistent
assertion of its claim to the use of the mails for its proposed contest, and the challenge thereto and
consequent denial by the appellant of the privilege demanded, undoubtedly spawned a live
controversy. The justiciability of the dispute cannot be gainsaid. There is an active antagonistic
assertion of a legal right on one side and a denial thereof on the other, concerning a real — not a
mere theoretical — question or issue. The contenders are as real as their interests are substantial.
To the appellee, the uncertainty occasioned by the divergence of views on the issue of construction
hampers or disturbs its freedom to enhance its business. To the appellant, the suppression of the
appellee's proposed contest believed to transgress a law he has sworn to uphold and enforce is an
unavoidable duty. With the appellee's bent to hold the contest and the appellant's threat to issue a
fraud order therefor if carried out, the contenders are confronted by the ominous shadow of an
imminent and inevitable litigation unless their differences are settled and stabilized by a tranquilizing
declaration (Pablo y Sen, et al. vs. Republic of the Philippines, G.R. No. L-6868, April 30, 1955).
And, contrary to the insinuation of the appellant, the time is long past when it can rightly be said that
merely the appellee's "desires are thwarted by its own doubts, or by the fears of others" — which
admittedly does not confer a cause of action. Doubt, if any there was, has ripened into a justiciable
controversy when, as in the case at bar, it was translated into a positive claim of right which is
actually contested (III Moran, Comments on the Rules of Court, 1963 ed., pp. 132-133, citing:
Woodward vs. Fox West Coast Theaters, 36 Ariz., 251, 284 Pac. 350).

We cannot hospitably entertain the appellant's pretense that there is here no question of
construction because the said appellant "simply applied the clear provisions of the law to a given set
of facts as embodied in the rules of the contest", hence, there is no room for declaratory relief. The
infirmity of this pose lies in the fact that it proceeds from the assumption that, if the circumstances
here presented, the construction of the legal provisions can be divorced from the matter of their
application to the appellee's contest. This is not feasible. Construction, verily, is the art or process of
discovering and expounding the meaning and intention of the authors of the law with respect to its
application to a given case, where that intention is rendered doubtful, amongst others, by reason of
the fact that the given case is not explicitly provided for in the law (Black, Interpretation of Laws, p.
1). This is precisely the case here. Whether or not the scheme proposed by the appellee is within the
coverage of the prohibitive provisions of the Postal Law inescapably requires an inquiry into the
intended meaning of the words used therein. To our mind, this is as much a question of construction
or interpretation as any other.

Nor is it accurate to say, as the appellant intimates, that a pronouncement on the matter at hand can
amount to nothing more than an advisory opinion the handing down of which is anathema to a
declaratory relief action. Of course, no breach of the Postal Law has as yet been committed. Yet, the
disagreement over the construction thereof is no longer nebulous or contingent. It has taken a fixed
and final shape, presenting clearly defined legal issues susceptible of immediate resolution. With the
battle lines drawn, in a manner of speaking, the propriety — nay, the necessity — of setting the
dispute at rest before it accumulates the asperity distemper, animosity, passion and violence of a
full-blown battle which looms ahead (III Moran, Comments on the Rules of Court, 1963 ed., p. 132
and cases cited), cannot but be conceded. Paraphrasing the language in Zeitlin vs. Arnebergh 59
Cal., 2d., 901, 31 Cal. Rptr., 800, 383 P. 2d., 152, cited in 22 Am. Jur., 2d., p. 869, to deny
declaratory relief to the appellee in the situation into which it has been cast, would be to force it to
choose between undesirable alternatives. If it cannot obtain a final and definitive pronouncement as
to whether the anti-lottery provisions of the Postal Law apply to its proposed contest, it would be
faced with these choices: If it launches the contest and uses the mails for purposes thereof, it not
only incurs the risk, but is also actually threatened with the certain imposition, of a fraud order with
its concomitant stigma which may attach even if the appellee will eventually be vindicated; if it
abandons the contest, it becomes a self-appointed censor, or permits the appellant to put into effect
a virtual fiat of previous censorship which is constitutionally unwarranted. As we weigh these
considerations in one equation and in the spirit of liberality with which the Rules of Court are to be
interpreted in order to promote their object (section 1, Rule 1, Revised Rules of Court) — which, in
the instant case, is to settle, and afford relief from uncertainty and insecurity with respect to, rights
and duties under a law — we can see in the present case any imposition upon our jurisdiction or any
futility or prematurity in our intervention.

The appellant, we apprehend, underrates the force and binding effect of the ruling we hand down in
this case if he believes that it will not have the final and pacifying function that a declaratory
judgment is calculated to subserve. At the very least, the appellant will be bound. But more than this,
he obviously overlooks that in this jurisdiction, "Judicial decisions applying or interpreting the law
shall form a part of the legal system" (Article 8, Civil Code of the Philippines). In effect, judicial
decisions assume the same authority as the statute itself and, until authoritatively abandoned,
necessarily become, to the extent that they are applicable, the criteria which must control the
actuations not only of those called upon to abide thereby but also of those in duty bound to enforce
obedience thereto. Accordingly, we entertain no misgivings that our resolution of this case will
terminate the controversy at hand.

It is not amiss to point out at this juncture that the conclusion we have herein just reached is not
without precedent. In Liberty Calendar Co. vs. Cohen, 19 N.J., 399, 117 A. 2d., 487, where a
corporation engaged in promotional advertising was advised by the county prosecutor that its
proposed sales promotion plan had the characteristics of a lottery, and that if such sales promotion
were conducted, the corporation would be subject to criminal prosecution, it was held that the
corporation was entitled to maintain a declaratory relief action against the county prosecutor to
determine the legality of its sales promotion plan. In pari materia, see also: Bunis vs. Conway, 17
App. Div. 2d., 207, 234 N.Y.S. 2d., 435; Zeitlin vs. Arnebergh, supra; Thrillo, Inc. vs. Scott, 15 N.J.
Super. 124, 82 A. 2d., 903.

In fine, we hold that the appellee has made out a case for declaratory relief.

2. The Postal Law, chapter 52 of the Revised Administrative Code, using almost identical
terminology in sections 1954(a), 1982 and 1983 thereof, supra, condemns as absolutely non-
mailable, and empowers the Postmaster General to issue fraud orders against, or otherwise deny
the use of the facilities of the postal service to, any information concerning "any lottery, gift
enterprise, or scheme for the distribution of money, or of any real or personal property by lot,
chance, or drawing of any kind". Upon these words hinges the resolution of the second issue posed
in this appeal.

Happily, this is not an altogether untrodden judicial path. As early as in 1922, in "El Debate", Inc. vs.
Topacio, 44 Phil., 278, 283-284, which significantly dwelt on the power of the postal authorities
under the abovementioned provisions of the Postal Law, this Court declared that —

While countless definitions of lottery have been attempted, the authoritative one for this
jurisdiction is that of the United States Supreme Court, in analogous cases having to do with
the power of the United States Postmaster General, viz.: The term "lottery" extends to all
schemes for the distribution of prizes by chance, such as policy playing, gift exhibitions, prize
concerts, raffles at fairs, etc., and various forms of gambling. The three essential elements of
a lottery are: First, consideration; second, prize; and third, chance. (Horner vs. States [1892],
147 U.S. 449; Public Clearing House vs. Coyne [1903], 194 U.S., 497; U.S. vs. Filart and
Singson [1915], 30 Phil., 80; U.S. vs. Olsen and Marker [1917], 36 Phil., 395; U.S. vs. Baguio
[1919], 39 Phil., 962; Valhalla Hotel Construction Company vs. Carmona, p. 233, ante.)

Unanimity there is in all quarters, and we agree, that the elements of prize and chance are too
obvious in the disputed scheme to be the subject of contention. Consequently as the appellant
himself concedes, the field of inquiry is narrowed down to the existence of the element of
consideration therein. Respecting this matter, our task is considerably lightened inasmuch as in the
same case just cited, this Court has laid down a definitive yard-stick in the following terms —

In respect to the last element of consideration, the law does not condemn the gratuitous
distribution of property by chance, if no consideration is derived directly or indirectly from the
 party receiving the chance, but does condemn as criminal schemes in which a valuable
consideration of some kind is paid directly or indirectly for the chance to draw a prize.

Reverting to the rules of the proposed contest, we are struck by the clarity of the language in which
the invitation to participate therein is couched. Thus —

No puzzles, no rhymes? You don't need wrappers, labels or boxtops? You don't have to buy
anything? Simply estimate the actual number of liter the Caltex gas pump with the hood at
your favorite Caltex dealer will dispense from — to —, and win valuable prizes . . . ." .

Nowhere in the said rules is any requirement that any fee be paid, any merchandise be bought, any
service be rendered, or any value whatsoever be given for the privilege to participate. A prospective
contestant has but to go to a Caltex station, request for the entry form which is available on demand,
and accomplish and submit the same for the drawing of the winner. Viewed from all angles or turned
inside out, the contest fails to exhibit any discernible consideration which would brand it as a lottery.
Indeed, even as we head the stern injunction, "look beyond the fair exterior, to the substance, in
order to unmask the real element and pernicious tendencies which the law is seeking to prevent" ("El
Debate", Inc. vs. Topacio, supra, p. 291), we find none. In our appraisal, the scheme does not only
appear to be, but actually is, a gratuitous distribution of property by chance.

There is no point to the appellant's insistence that non-Caltex customers who may buy Caltex
products simply to win a prize would actually be indirectly paying a consideration for the privilege to
join the contest. Perhaps this would be tenable if the purchase of any Caltex product or the use of
any Caltex service were a pre-requisite to participation. But it is not. A contestant, it hardly needs
reiterating, does not have to buy anything or to give anything of value. 1awphîl.nèt

Off-tangent, too, is the suggestion that the scheme, being admittedly for sales promotion, would
naturally benefit the sponsor in the way of increased patronage by those who will be encouraged to
prefer Caltex products "if only to get the chance to draw a prize by securing entry blanks". The
required element of consideration does not consist of the benefit derived by the proponent of the
contest. The true test, as laid down in People vs. Cardas, 28 P. 2d., 99, 137 Cal. App. (Supp.) 788,
is whether the participant pays a valuable consideration for the chance, and not whether those
conducting the enterprise receive something of value in return for the distribution of the prize.
Perspective properly oriented, the standpoint of the contestant is all that matters, not that of the
sponsor. The following, culled from Corpus Juris Secundum, should set the matter at rest:

The fact that the holder of the drawing expects thereby to receive, or in fact does receive,
some benefit in the way of patronage or otherwise, as a result of the drawing; does not
supply the element of consideration. Griffith Amusement Co. vs. Morgan, Tex. Civ. App., 98
S.W., 2d., 844" (54 C.J.S., p. 849).

Thus enlightened, we join the trial court in declaring that the "Caltex Hooded Pump Contest"
proposed by the appellee is not a lottery that may be administratively and adversely dealt with under
the Postal Law.

But it may be asked: Is it not at least a "gift enterprise, or scheme for the distribution of money, or of
any real or personal property by lot, chance, or drawing of any kind", which is equally prescribed?
Incidentally, while the appellant's brief appears to have concentrated on the issue of consideration,
this aspect of the case cannot be avoided if the remedy here invoked is to achieve its tranquilizing
effect as an instrument of both curative and preventive justice. Recalling that the appellant's action
was predicated, amongst other bases, upon Opinion 217, Series 1953, of the Secretary of Justice,
which opined in effect that a scheme, though not a lottery for want of consideration, may
nevertheless be a gift enterprise in which that element is not essential, the determination of whether
or not the proposed contest — wanting in consideration as we have found it to be — is a prohibited
gift enterprise, cannot be passed over sub silencio.

While an all-embracing concept of the term "gift enterprise" is yet to be spelled out in explicit words,
there appears to be a consensus among lexicographers and standard authorities that the term is
commonly applied to a sporting artifice of under which goods are sold for their market value but by
way of inducement each purchaser is given a chance to win a prize (54 C.J.S., 850; 34 Am. Jur.,
654; Black, Law Dictionary, 4th ed., p. 817; Ballantine, Law Dictionary with Pronunciations, 2nd ed.,
p. 55; Retail Section of Chamber of Commerce of Plattsmouth vs. Kieck, 257 N.W., 493, 128 Neb.
13; Barker vs. State, 193 S.E., 605, 56 Ga. App., 705; Bell vs. State, 37 Tenn. 507, 509, 5 Sneed,
507, 509). As thus conceived, the term clearly cannot embrace the scheme at bar. As already noted,
there is no sale of anything to which the chance offered is attached as an inducement to the
purchaser. The contest is open to all qualified contestants irrespective of whether or not they buy the
appellee's products.

Going a step farther, however, and assuming that the appellee's contest can be encompassed within
the broadest sweep that the term "gift enterprise" is capable of being extended, we think that the
appellant's pose will gain no added comfort. As stated in the opinion relied upon, rulings there are
indeed holding that a gift enterprise involving an award by chance, even in default of the element of
consideration necessary to constitute a lottery, is prohibited (E.g.: Crimes vs. States, 235 Ala 192,
178 So. 73; Russell vs. Equitable Loan & Sec. Co., 129 Ga. 154, 58 S.E., 88; State ex rel. Stafford
vs. Fox-Great Falls Theater Corporation, 132 P. 2d., 689, 694, 698, 114 Mont. 52). But this is only
one side of the coin. Equally impressive authorities declare that, like a lottery, a gift enterprise comes
within the prohibitive statutes only if it exhibits the tripartite elements of prize, chance and
consideration (E.g.: Bills vs. People, 157 P. 2d., 139, 142, 113 Colo., 326; D'Orio vs. Jacobs, 275 P.
563, 565, 151 Wash., 297; People vs. Psallis, 12 N.Y.S., 2d., 796; City and County of Denver vs.
Frueauff, 88 P., 389, 394, 39 Colo., 20, 7 L.R.A., N.S., 1131, 12 Ann. Cas., 521; 54 C.J.S., 851,
citing: Barker vs. State, 193 S.E., 605, 607, 56 Ga. App., 705; 18 Words and Phrases, perm. ed., pp.
590-594). The apparent conflict of opinions is explained by the fact that the specific statutory
provisions relied upon are not identical. In some cases, as pointed out in 54 C.J.S., 851, the terms
"lottery" and "gift enterprise" are used interchangeably (Bills vs. People, supra); in others, the
necessity for the element of consideration or chance has been specifically eliminated by statute. (54
C.J.S., 351-352, citing Barker vs. State, supra; State ex rel. Stafford vs. Fox-Great Falls Theater
Corporation, supra). The lesson that we derive from this state of the pertinent jurisprudence is,
therefore, that every case must be resolved upon the particular phraseology of the applicable
statutory provision.

Taking this cue, we note that in the Postal Law, the term in question is used in association with the
word "lottery". With the meaning of lottery settled, and consonant to the well-known principle of legal
hermeneutics noscitur a sociis — which Opinion 217 aforesaid also relied upon although only insofar
as the element of chance is concerned — it is only logical that the term under a construction should
be accorded no other meaning than that which is consistent with the nature of the word associated
therewith. Hence, if lottery is prohibited only if it involves a consideration, so also must the term "gift
enterprise" be so construed. Significantly, there is not in the law the slightest indicium of any intent to
eliminate that element of consideration from the "gift enterprise" therein included.

This conclusion firms up in the light of the mischief sought to be remedied by the law, resort to the
determination thereof being an accepted extrinsic aid in statutory construction. Mail fraud orders, it is
axiomatic, are designed to prevent the use of the mails as a medium for disseminating printed
matters which on grounds of public policy are declared non-mailable. As applied to lotteries, gift
enterprises and similar schemes, justification lies in the recognized necessity to suppress their
tendency to inflame the gambling spirit and to corrupt public morals (Com. vs. Lund, 15 A. 2d., 839,
143 Pa. Super. 208). Since in gambling it is inherent that something of value be hazarded for a
chance to gain a larger amount, it follows ineluctably that where no consideration is paid by the
contestant to participate, the reason behind the law can hardly be said to obtain. If, as it has been
held —

Gratuitous distribution of property by lot or chance does not constitute "lottery", if it is not
resorted to as a device to evade the law and no consideration is derived, directly or
indirectly, from the party receiving the chance, gambling spirit not being cultivated or
stimulated thereby. City of Roswell vs. Jones, 67 P. 2d., 286, 41 N.M., 258." (25 Words and
Phrases, perm. ed., p. 695, emphasis supplied).

we find no obstacle in saying the same respecting a gift enterprise. In the end, we are persuaded to
hold that, under the prohibitive provisions of the Postal Law which we have heretofore examined, gift
enterprises and similar schemes therein contemplated are condemnable only if, like lotteries, they
involve the element of consideration. Finding none in the contest here in question, we rule that the
appellee may not be denied the use of the mails for purposes thereof.

Recapitulating, we hold that the petition herein states a sufficient cause of action for declaratory
relief, and that the "Caltex Hooded Pump Contest" as described in the rules submitted by the
appellee does not transgress the provisions of the Postal Law.

ACCORDINGLY, the judgment appealed from is affirmed. No costs.

Concepcion, C.J., Reyes, J.B.L., Barrera, Dizon, Regala, Makalintal, Bengzon, J.P., Zaldivar and
Sanchez, JJ., concur.
G.R. No. 103578 January 29, 1993

JUDGE RODOLFO T. ALLARDE, petitioner,

vs.
THE COMMISSION ON AUDIT and the MUNICIPAL TREASURER OF
MUNTINLUPA, respondents.

GRIÑO-AQUINO, J.:

This is a petition for certiorari and/or mandamus seeking to annul and set aside the decisions dated
June 5, 1991, November 5, 1991, August 20, 1991 and January 27, 1992 of the Commission on
audit (COA) which denied petitioner's request for inclusion of the monthly allowance he had been
receiving from the Municipality of Muntinlupa as Metropolitan Trial Court Judge, as part of his
retirement benefits.

Petitioner Rodolfo T. Allarde was the Presiding Judge of Branch LXXX, Metropolitan Trial Court in
Muntinlupa, Metro Manila, until his courtesy resignation was accepted on January 13, 1987. He
applied for retirement under Republic Act No. 910, as amended by Presidential Decree No. 1438,
which this Court approved on July 11, 1989.

In computing his total retirement pay, the Government Service Insurance System (GSIS) included
the amount of P240,000.00 representing the five-year lump sum of the P4,000.00-monthly allowance
which he had been receiving from the Municipality of Muntinlupa during his incumbency therein as
judge, provided said lump sum of P240,000.00 should be charged to the funds of the municipality
pursuant to Section 30 of Batas Pambansa Blg. 866, and subject to the availability of funds. On April
16, 1990, the Sangguniang Bayan of Muntinlupa, by Resolution No. 90-145, appropriated and
awarded the amount of P240,000.00 in favor of the petitioner.

However, petitioner's claim for payment of that additional retirement benefit reached the Metro
Manila Authority which denied it on the ground that:

. . . the Commission on Audit who is the final authority on questions of money claims
against the government has already ruled (in similar cases as the one at bar) that
(like) allowances formerly granted you by the Municipal Government of Muntinlupa,
by the very nature and intent of the grant, "are expense items not to be equated with
compensation for purposes of computing retirement benefits." (p. 49, Rollo.)

On April 4, 1991, the petitioner filed his claim with the Commission on Audit (COA). On June 5,
1991, the COA rendered Decision No. 1877 denying the claim.

On September 9, 1991, petitioner flied a Memorandum/Motion for Reconsideration of the decision,

but the COA issued Decision No. 1983 dated November 5, 1991, reiterating its denial of the
petitioner's claim.

A second reconsideration met the same fate (COA Decision No. 2159, dated January 27, 1992).
Hence, this petition for review.
The sole issue in this case is: whether or not the P4,000.00 monthly allowance that the petitioner
had been receiving from the Municipality of Muntinlupa should be included in the computation of his
retirement benefits under Republic Act No. 910, as amended by Presidential Decree No. 1438.

Petitioner's claim is anchored on Section 3 of Republic Act No. 910. An Act Providing For The
Retirement of Justices and All Judges in the Judiciary, as amended by P.D. No. 1438 which
provides:

Sec. 3. Upon retirement, a justice of the Supreme Court or of the Court of Appeals,
or a judge of the Court of First Instance, Circuit Criminal Court, Agrarian Relations,
Tax Appeals, Juvenile and Domestic Relations, city or municipal court, or any other
court hereafter established shall be automatically entitled to a lump sum of five years'
gratuity computed on the basis of the highest monthly salary plus the highest
monthly aggregate of transportation, living and representation allowances he was
receiving on the date of his retirement; Provided, however, that if the reason for the
retirement be any permanent disability contracted during his incumbency in office
and prior to the date of retirement he shall receive only a gratuity equivalent to ten
years' salary and allowances aforementioned with no further annuity payable monthly
during the rest of the retiree's natural life.

As clearly specified in the law, only transportation, living and representation allowances may be
included in the computation of the first
five-year lump sum retirement benefits for members of the judiciary.

It is an elementary principle of statutory construction that where the words and phrases of a statute
are not obscure or ambiguous, the meaning and intention of the legislature should be determined
from the language employed, and where there is no ambiguity in the words, there is no room for
construction (Provincial Board of Cebu vs. Presiding Judge of Cebu, CFI, Branch IV, 171 SCRA 1).

Accordingly, the provisions of Section 3, P.D. No. 1438, which are clear and unambiguous, should
be given their plain and natural meaning. Inasmuch as the law limits the computation of the lump
sum of 5 years' gratuity to "the highest monthly salary plus the highest monthly aggregate of
transportation, living and representation allowances that the judge was receiving on the date of his
retirement," it is understood that other allowances are excluded. Inclusio unius est exclusio alterius.

The petitioner failed to prove that the P4,000.00 additional monthly allowance that he was receiving
from the Municipal Government of Muntinlupa was a representation, living or transportation
allowance, for as indicated in the sample disbursement voucher that he used to fill up whenever he
claimed such allowance, the amount was in the nature of reimbursement for expenses which Judge
Allarde certified "were incurred by me while performing my duties."
(p. 52, Rollo.)

The pertinent observations of the COA in its decision dated June 5, 1991 are quoted as follows:

Upon a close scrutiny and examination of PD 1438, we note that the allowances
contemplated therein are "transportation, living and representation allowances" being
granted to Justices and Judges from national and/or local funds as authorized by
existing laws, rules and regulations which constitute integral part of their
remuneration. (Vide. WHEREAS clauses) That being so, these allowances are
deemed as commutable in character and, hence, partake of the nature of additional
compensation. For this reason, they are included in the computation of the retirement
benefits of Justices and Judges as provided in the said law.
 In your case, however, it appears that the allowances you have been collecting from
the Municipality of Muntinlupa during your stint therein as Municipal Trial Court Judge
were non-commutable or reimbursable in nature, let alone the fact that there is no
indication as to whether they were transportation, living or representation allowances.
This conclusion can be readily drawn from the copy of a sample voucher forming part
of the set of papers accompanying your present claim whereby you sought to collect
"payment of the allowance of P4,000.00 a month for the period January
1-31, 1985" from the Municipality of Muntinlupa, and whereon you had to "certify that
the expenses were incurred by me (you) while performing my (your) duties covering
the period heretofore cited," thereby signifying the reimbursable nature thereof.
(Emphasis and words in parenthesis ours) Evidently then, the allowances that you
now seek to collect as part of your retirement gratuity are expense items that cannot
be equated with salary or compensation. On this score, it was patent error for the
GSIS to identify such allowance as "RATA" and to include the aggregate amount
thereof corresponding to a 60-month period in its computation of your retirement
gratuity as the local share of the Municipality of Muntinlupa. (p. 52, Rollo.)

Letter of Instruction No. 1418 which authorizes local governments to pay additional allowances to
judges of the courts within their territorial jurisdiction, limits the amount of such allowance and does
not provide that it shall be treated as part of the judge's remuneration in computing the retirement
benefits.

WHEREAS, some local government units are ready, willing, and able to pay

additional allowances to Judges of the various courts within their respective territorial
jurisdiction;

xxx xxx xxx

3. The allowances provided in this letter shall be borne exclusively by the National
Government. However, provincial, city and municipal governments may pay
additional allowances to the members and personnel of the Judiciary assigned in
their respective areas out of available local funds but not to exceed
P1,500.00: Provided, that in Metropolitan Manila, the city and municipal governments
therein may pay additional allowances not exceeding P3,000.00. (Emphasis ours).
(pp.
42-43, Rollo.)

As observed by the Solicitor General the use of the word "may" signifies that the allowance may not
be demanded as a matter of right, but is entirely dependent on the will of the municipality concerned
(p. 43, Rollo). It should be treated as an honorarium, an amount that is "given not as a matter of
obligation but in appreciation for services rendered, a voluntary donation in consideration for
services which admit of no compensation in money" (Santiago vs. Commission on Audit, 199 SCRA
128, 130).

As the Solicitor General aptly observed: such additional allowance does not constitute an integral
part of the judge's remuneration for it may or may not be given by the local government and it is
dependent on the liberality of the latter. If said allowance were to be included in the computation of
the retirement benefits of judges, the result would be inequality and disparity in their retirement
benefits. For there are rich municipalities that can give generous allowances to the judges of the
courts within their territorial jurisdiction, and there are poorer municipalities that can give less
substantial amounts or none at all. The result would be an unseemly jockeying among the trial
judges for assignment in the wealthy municipalities, and injustice to those who may be assigned to
the less affluent regions, for while they may have the same rank and perform essentially the same
tasks, their more fortunate colleagues would be enjoying more benefits. The retirement law was not
intended to deal unequally and unfairly with the judges.

WHEREFORE, finding no grave abuse of discretion in the decision of the Commission on Audit, the
petition for review is hereby DISMISSED.

SO ORDERED.

Narvasa, C.J., Gutierrez, Jr., Cruz, Feliciano, Padilla, Bidin, Regalado, Davide, Jr., Romero, Nocon,
Bellosillo, Melo and Campos, Jr., JJ., concur.
G.R. No. 116719             January 18, 1996

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
PATRICIO AMIGO alias "BEBOT", accused-appellant.

DECISION

MELO, J.:

Initially, Patricio Amigo was charged with frustrated murder in an Information reading as follows:

The undersigned accuses the above-named accused of the crime of FRUSTRATED

MURDER, under Art. 248, in relation to Art. 5 of the Revised Penal Code, committed as
follows:

That on or about December 29, 1989, in the City of Davao, Philippines, and within the
jurisdiction of this Honorable Court, the above-mentioned accused, armed with a knife, with
treachery and evident premeditation and with intent to kill wilfully, unlawfully and feloniously
attacked, assaulted and stab with said weapon one Benito Ng Suy, thereby inflicting injuries
upon the latter, the following injuries, to wit:

MULTIPLE STAB WOUNDS-LEFT ARM, LEFT CHEST, ABDOMEN AND LEFT

THIGH WITH PENETRATION TO LEFT PLEURAL CAVITY, DIAPHRAGM
STOMACH, DUODENUM, PANCREAS AND MIDTRANVERSE COLON.

thus performing all the acts of execution which should have produced the crime of murder as
a consequence but nevertheless, did not produce it by reason of causes independent of his
will, that is, because of the timely and able medical assistance immediately rendered to the
said Benito Ng Suy.

(p. 1, Rollo.)

to which he pleaded not guilty.

Subsequently, due to the death of the victim, an amended Information was filed charging now the
crime of murder, to wit:

That on or about December 29, 1989, in the City of Davao, Philippines, and within the
jurisdiction of this Honorable Court, the above-mentioned accused, armed with a knife, with
treachery and evident premeditation and with intent to kill wilfully, unlawfully and feloniously
attacked, assaulted and stabbed with said weapon one Benito Ng Suy, thereby inflicting
upon the latter multiple wounds which caused his death and the consequent loss and
damage to the heirs of the victim.

(p. 3, Rollo.)

After trial on the merits, the court a quo rendered a decision, disposing:

 WHEREFORE, finding the accused Patricio Amigo guilty beyond reasonable doubt of the
crime of MURDER punishable under Art. 248 of the Revised Penal Code, with no modifying
circumstance present, the accused is hereby sentenced to the penalty of reclusion
perpetua, which is the medium period of the penalty of reclusion temporal in its maximum to
death and to pay the cost; to indemnify the offended party the amount of P93,214.70 as
actual damages and P50,000.00 as compensatory damages and P50,000.00 as moral
damages.

(p. 32, Rollo.)

Reversal thereof is now sought, with accused-appellant arguing that error was committed by the trial
court in imposing or meting out the penalty of reclusion perpetua against him despite the fact that
Sec. 19 (1), Article III of the 1987 Constitution was already in effect when the offense was
committed.

The facts of the case, as briefly summarized in the brief submitted by the Office of the Solicitor
General and as borne out by the evidence, are as follows:

On December 29, 1989, at around 1:00 P.M., after having spent half-day at their store,
located at No. 166-A, Ramon Magsaysay Avenue, Davao City, Benito Ng Suy was driving
their gray Ford Fiera back home, situated at the back of Car Asia, Bajada, Davao City. With
him during that time were his daughters, Jocelyn Ng Suy and a younger one together with
his two year old son, who were all seated at the front seat beside him while a five year old
boy was also seated at the back of the said vehicle. (TSN, April 29, 1991, pp. 3-5; TSN,
March 31, 1992)

On their way home and while traversing the National Highway of Bajada, Davao City, an
orange Toyota Tamaraw driven by one Virgilio Abogada, suddenly made a left turn in front of
the Regional Hospital, Bajada, Davao City, without noticing the Ford Fiera coming from the
opposite direction. This Tamaraw was heading for Sterlyn Kitchenette, which was situated at
the comer of the said hospital. (TSN, April 29, 1991, p. 4; TSN, March 31, 1992, pp. 3 and
13)

With Virgilio was Patricio Amigo alias Bebot, a vulcanizer at Lingling's vulcanizing shop

owned and operated by a certain Galadua. He was also seated at the right front seat beside
Virgilio.

Due to the unexpected veer made by Virgilio, an accidental head on collision occurred
between the Fiera and the Tamaraw, causing a slight damaged to the right bumper of the
latter. (TSN, March 31, 1992, p. 4)

Right after the collision, Benito immediately alighted from the driver's seat and confronted
Virgilio Abogada who also went down from his vehicle. (TSN, April 29, 1991, p. 5)

Benito, who was a big man with a loud voice told Virgilio, "You were not looking," to which
Virgilio retorted, I did not see you". (TSN, April 29, 1991, p. 16)

While the two drivers where having this verbal confrontation, Patricio who was merely a
passenger of Virgilio also alighted from the front seat of the Tamaraw and instantaneously
approached Benito and advised the latter to leave since it was merely a small and minor
accident. (TSN, April 29, 1991, pp. 16-18)
A bit irritated with the actuation exhibit by Patricio, Benito rebuked the former and told him
not to interfere, since he had nothing to do with the accident. (ibid. p. 7)

Irked by the comment made by Benito, Patricio sarcastically asked; "You are Chinese, is it
you?" With a ready answer Benito said; "Yes, I am a Chinese and why?" Patricio in turn
replied; So, you are a Chinese, wait for a while," then left. (ibid. pp. 7 and 19)

Immediately thereafter, Benito ordered Jocelyn to call a policeman, but after a lapsed of
about one minute, Patricio returned and arrogantly approached Benito, asking the latter once
again, "You are a Chinese, is it not?" To this Benito calmly responded in the affirmative. (ibid.
pp. 7, 19-20)

Upon hearing the response, Patricio mumbled "Ah, so you are a Chinese," and suddenly
took a five inch knife from his waist and simultaneously stabbed Benito hitting him twice on
the chest. (Ibid. p. 20)

After being hit, Benito wounded and sensing that his life was in peril, tried to evade his
assailant by pushing Patricio away and run around the Tamaraw but Patricio wielding the
same knife and not content with the injuries he had already inflicted, still chased Benito and
upon overtaking the latter embraced him and thrusted his knife on the victim several times,
the last of which hit Benito on the left side of his body. (ibid. pp. 8, 10, 22)

It was at this juncture that Jocelyn who was still inside the Ford Fiera, pleading for mercy to
spare her father tried to get out of the vehicle but it was very unfortunate that she could not
open its door. (Ibid. p. 10)

Knowing that Patricio was really determined to kill her father by refusing to heed her pleas,
Joselyn shouted for help, since there were already several people around witnessing that
fatal incident, but to her consternation nobody lifted a single finger to help them. (ibid. pp. 6,
10, 18, 21-22) Only after her father lay seated on the floor of their Ford Fiera after being hit
on the left side of his body that she was able to open the door of the said vehicle. (Ibid. p 12)

After this precise moment, her younger sister, upon seeing their father bathing with his own
blood, embraced him, causing Patricio to cease from his ferocious assault and noticing the
presence of several people, he fled. (Ibid. p. 22)

Thereafter, an enraged Jocelyn chased him, but since the assailant ran faster than her, she
was not able to overtake him, thus, she instead decided to go back to where her father was
and carried him inside the Tamaraw who bumped them and consequently brought him to
San Pedro Hospital where he was attended to at the Emergency Room. (ibid. p 13)

While at the Emergency Room, Benito who was on a very critical condition, due to multiple
(13) stabbed wounds, was operated by Dr. Rolando Chiu. After the operation, he was
subsequently brought to the ICU and stayed there for three (3) weeks. (July 12, 1991, pp. 3
and 4)

In a last ditch effort to save his life, having only 10 to 20 percent survival, Benito was airlifted
to Manila and was directly confined at the Chinese General Hospital. After three (3) weeks of
confinement, Benito expired. CAUSE OF DEATH — SEPSIS (an overwhelming infection).
This means that the infection has already circulated in the blood all over the body. (ibid. pp.
6-7)
 (pp. 59-65, Rollo.)

Accused-appellant contends that under the 1987 Constitution and prior to the promulgation of
Republic Act No. 7659, the death penalty had been abolished and hence, the penalty that should
have been imposed for the crime of murder committed by accused-appellant without the attendance
of any modifying circumstances, should be reclusion temporal in its medium period or 17 years, 4
months and 1 day, to 20 years of reclusion temporal.

Reasons out accused-appellant:

. . . Since the death penalty (or capital punishment) is not imposable when the stabbing and
killing happened, the computation of the penalty should be regarded from reclusion
perpetua down and not from death penalty. Indeed, the appropriate penalty is deducible
from reclusion perpetua down to reclusion temporal in its medium period. Hence, there being
no modifying circumstances present (p. 5 Decision, ibid.), the correct penalty should be in
the medium period (Art. 64, par. 1, Revised Penal Code) which is 17 years, 4 months and 1
day to 20 years of reclusion temporal.

(p. 10, Appellant's Brief, ff. p. 50, Rollo.)

The question raised by accused-appellant was settled by this Court in People vs. Muñoz (170 SCRA
107 [1989]) thusly:

In People vs. Gavarra, Justice Pedro L. Yap declared for the Court that "in view of the
abolition of the death penalty under Section 19, Article III of the 1987 Constitution, the
penalty that may be imposed for murder is reclusion temporal in its maximum period
to reclusion perpetua," thereby eliminating death as the original maximum period. Later,
without categorically saying so, the Court, through Justice Ameurfina A. Melencio-Herrera
in People vs. Masangkay and through Justice Andres R. Narvasa in People vs. Atencio,
divided the modified penalty into three new periods, the limits of which were specified by
Justice Edgardo L. Paras in People vs. Intino, as follows: the lower half of reclusion
temporal maximum as the minimum; the upper half of reclusion temporal maximum as the
medium; and reclusion perpetua as the maximum.

The Court has reconsidered the above cases and, after extended discussion, come to the
conclusion that the doctrine announced therein does not reflect the intention of the framers
as embodied in Article III, Section 19(1) of the Constitution. This conclusion is not
unanimous, to be sure. Indeed, there is much to be said of the opposite view, which was in
fact shared by many of those now voting for its reversal. The majority of the Court, however,
is of the belief that the original interpretation should be restored as the more acceptable
reading of the constitutional provision in question.

The advocates of the Masangkay ruling argue that the Constitution abolished the death
penalty and thereby limited the penalty for murder to the remaining periods, to wit, the
minimum and the medium. These should now be divided into three new periods in keeping
with the three-grade scheme intended by the legislature. Those who disagree feel that Article
III, Section 19(1) merely prohibits the imposition of the death penalty and has not, by
reducing it to reclusion perpetua, also correspondingly reduced the remaining penalties.
These should be maintained intact.

A reading of Section 19(1) of Article III will readily show that here is really nothing therein
which expressly declares the abolition of the death penalty. The provision merely says that
the death penalty shall not be imposed unless for compelling reasons involving heinous
crimes the Congress hereafter provides for it and, if already imposed, shall be reduced
to reclusion perpetua. The language, while rather awkward, is still plain enough. And it is a
settled rule of legal hermeneutics that if the language under consideration is plain, it is
neither necessary nor permissible to resort to extrinsic aids, like the records of the
constitutional convention, for its interpretation.

xxx       xxx       xxx

The question as we see it is not whether the framers intended to abolish the death penalty or
merely to prevent its imposition. Whatever the intention was, what we should determine is
whether or not they also meant to require a corresponding modification in the other periods
as a result of the prohibition against the death penalty.

It is definite that such a requirement, if there really was one, is not at all expressed in Article
III, Section 19(1) of the Constitution or indicated therein by at least clear and unmistakable
implication. It would have been so easy, assuming such intention, to state it categorically and
plainly, leaving no doubts as to its meaning.

One searches in vain for such a statement, express or even implied. The writer of this
opinion makes the personal observation that this might be still another instance where the
framers meant one thing and said another or — strangely, considering their loquacity
elsewhere — did not say enough.

The original ruling as applied in the Gavarra, Masangkay, Atencio and Intino cases
represented the unanimous thinking of the Court as it was then constituted. All but two
members at that time still sit on the Court today. If we have seen fit to take a second look at
the doctrine on which we were all agreed before, it is not because of a change in the
composition of this body. It is virtually the same Court that is changing its mind after
reflecting on the question again in the light of new perspectives. And well it might, and can,
for the tenets it lays down are not immutable. The decisions of this Court are not petrified
rules grown rigid once pronounced but vital, growing things subject to change as all life is.
While we are told that the trodden path is best, this should not prevent us from opening a
fresh trial or exploring the other side or testing a new idea in a spirit of continuing inquiry.

Accordingly, with the hope that "as judges, (we) will be equal to (our) tasks," whatever that
means, we hereby reverse the current doctrine providing for three new periods for the
penalty for murder as reduced by the Constitution. Instead, we return to our original
interpretation and hold that Article III, Section 19(1) does not change the periods of the
penalty prescribed by Article 248 of the Revised Penal Code except only insofar as it
prohibits the imposition of the death penalty and reduces it to reclusion perpetua. The range
of the medium and minimum penalties remains unchanged.

The Court realizes that this interpretation may lead to certain inequities that would not have
arisen under Article 248 of the Revised Penal Code before its modification. Thus, a person
originally subject to the death penalty and another who committed the murder without the
attendance of any modifying circumstance will now be both punishable with the same
medium period although the former is concededly more guilty than the latter. True enough.
But that is the will not of this Court but of the Constitution. That is a question of wisdom, not
construction. Of some relevance perhaps is the parable in the Bible of the workman who was
paid the stipulated daily wage of one penny although he had worked longer than others hired
later in the day also paid the same amount. When he complained because he felt unjustly
 treated by the hoe jurisdiction of the court over the person. An appearance may be madt
agree with me for a penny?

The problem in any event is addressed not to this Court but to the Congress. Penalties are
prescribed by statute and are essentially and exclusively legislative. As judges, we can only
interpret and apply them and have no authority to modify them or revise their range as
determined exclusively by the legislature. We should not encroach on this prerogative of the
lawmaking body.

Coming back to the case at bar, we find that there being no generic aggravating or mitigating
circumstance attending the commission of the offenses, the applicable sentence is the
medium period of the penalty prescribed by Article 248 of the Revised Penal Code which,
conformably to the new doctrine here adopted and announced, is still reclusion perpetua.
This is the penalty we imposed on all the accused-appellants for each of the three murders
they have committed in conspiracy with the others. The award of civil indemnity for the heirs
of each of the victims is affirmed but the amount thereof is hereby increased to P30,000.00 in
line with the present policy.

(at pp. 120-125.)

The above ruling was reiterated in People vs. Parominog (203 SCRA 673 [1991]) and in People
vs. De la Cruz (216 SCRA 476 [1992]).

Finally, accused-appellant claims that the penalty of reclusion perpetua is too cruel and harsh a
penalty and pleads for sympathy. Courts are not the forum to plead for sympathy. The duty of courts
is to apply the law, disregarding their feeling of sympathy or pity for an accused. DURA LEX SED
LEX. The remedy is elsewhere — clemency from the executive or an amendment of the law by the
legislative, but surely, at this point, this Court can but apply the law.

WHEREFORE, the appealed decision is hereby AFFIRMED.

SO ORDERED.

Narvasa, C.J., Davide, Jr., Francisco and Panganiban, JJ., concur.

G.R. No. 150464             June 27, 2006

SECURITY BANK AND TRUST COMPANY, Petitioner,

vs.
ERIC GAN, Respondent.

DECISION

CORONA, J.:

This petition for review on certiorari1 seeks the reversal of the decision2 of the Court of Appeals (CA)
dated October 18, 2001 in CA-G.R. CV No. 45701, the dispositive portion of which read:

WHEREFORE, finding no reversible error therefrom, the Decision now on appeal is hereby
AFFIRMED in toto.

SO ORDERED.3

The factual antecedents follow.

Petitioner Security Bank and Trust Company is a banking institution duly organized and existing
under the laws of the Philippines. In 1981, respondent Eric Gan opened a current account with
petitioner at its Soler Branch in Santa Cruz, Manila. Petitioner alleged that it had an agreement with
respondent wherein the latter would deposit an initial amount in his current account and he could
draw checks on said account provided there were sufficient funds to cover them. Furthermore, under
a special arrangement with petitioner’s branch manager then, Mr. Qui,4 respondent was allowed to
transfer funds from his account to another person’s account also within the same
branch.5 Respondent availed of such arrangement several times by depositing checks in his account
and even before they cleared, he withdrew the proceeds thereof and transferred them to the other
account. These transactions were covered by what were known as "debit memos" since respondent
had no sufficient funds to cover the amounts he transferred.6

Later on, respondent purportedly incurred an overdraft or negative balance in his account. As of
December 14, 1982, the overdraft balance came up to P153,757.78. According to petitioner,
respondent refused to heed petitioner’s repeated demands for payment. For the period December
14, 1982 to September 15, 1990, the total obligation of respondent reached P297,060.01, inclusive
of interest.7

Thus, in 1991, petitioner filed a complaint for sum of money against respondent to recover
the P297,060.01 with 12% interest per annum from September 16, 1990 until fully paid, attorney’s
fees, litigation expenses and costs of suit. The case was docketed as Civil Case No. 91-55605 with
the Regional Trial Court of Manila, Branch 13.8

Respondent denied liability to petitioner for the said amount. He contended that the alleged overdraft
resulted from transactions done without his knowledge and consent.

In a decision dated March 31, 1993, the trial court dismissed the complaint. It held that petitioner
was not able to prove that respondent owed it the amount claimed considering that the ledger cards
it presented were merely hearsay evidence. On petitioner’s appeal, the CA affirmed the trial court’s
decision.
Hence, this petition anchored on the following grounds:

I. The honorable Court of Appeals erred in not ruling that petitioner has sufficiently proved its
cause of action against respondent; and that the ledger cards and the testimony of Mr.
Patricio Mercado constituted the best evidence of the transactions made by the respondent
relative to his account.

II. The honorable Court of Appeals erred in not applying the principle of estoppel against
respondent who has benefited from the special arrangement accorded to him by petitioner
which resulted in an overdraft / negative balance.

III. The honorable Court of Appeals erred in affirming the decision of the trial court.9

We deny the petition for lack of merit.

It is well established that under Rule 45 of the Rules of Court, only questions of law, not of fact, may
be raised before the Supreme Court. It must be stressed that this Court is not a trier of facts and it is
not its function to re-examine and weigh anew the respective evidence of the parties. Factual
findings of the trial court, especially those affirmed by the CA, are conclusive on this Court when
supported by the evidence on record.10

Here, both the trial court and the CA found that petitioner failed to substantiate its claim that
respondent knowingly incurred an overdraft against his account. We see no reason to disturb this
finding.

To prove its claim, petitioner presented Patricio Mercado who was the bookkeeper who handled the
account of respondent and recorded his transactions in a ledger. Based on this ledger, respondent
allegedly had a negative balance of P153,757.78. This resulted from transfers of funds from
respondent’s current account to another person’s account. These transfers were made under the
authority of Qui.11 Respondent categorically denied that he ever authorized these "funds transfers."12

The entries in the ledger, as testified to by Mercado, were not competent evidence to prove that
respondent consented to the transfers of funds. These entries merely showed that the transfers were
indeed made and that Qui approved them. Petitioner’s claim that respondent availed of a special
arrangement to transfer funds from his account to another person’s account was a bare allegation
that was never substantiated. Admittedly, Mercado had no personal knowledge of this
arrangement.13 In fact, when asked about the details of the alleged consent given by respondent to
the transfers, he stated that he could not remember because respondent talked to Qui and not to
him.14 Petitioner could have presented Qui whom they alleged allowed the special arrangement with
respondent. But it did not.

Neither can we accept petitioner’s argument that the entries made by Mercado in the ledger were
competent evidence to prove how and when the negative balance was incurred. Petitioner invokes
Section 43 of Rule 130:

Entries in the course of business. – Entries made at, or near the time of the transactions to which
they refer, by a person deceased, or unable to testify, who was in a position to know the facts therein
stated, may be received as prima facie evidence, if such person made the entries in his professional
capacity or in the performance of duty and in the ordinary or regular course of business or duty.
Under this exception to the hearsay rule, the admission in evidence of entries in corporate books
required the satisfaction of the following conditions:

1. the person who made the entry must be dead, or unable to testify;

2. the entries were made at or near the time of the transactions to which they refer;

3. the entrant was in a position to know the facts stated in the entries;

4. the entries were made in his professional capacity or in the performance of a duty,
whether legal, contractual, moral or religious; and

5. the entries were made in the ordinary or regular course of business or duty.15

The ledger entries did not meet the first and third requisites.

Mercado, petitioner’s bookkeeper who prepared the entries, was presented to testify on the
transactions pertaining to the account of respondent. It was in the course of his testimony that the
ledger entries were presented. There was, therefore, neither justification nor necessity for the
presentation of the entries as the person who made them was available to testify in court.16

Moreover, Mercado had no personal knowledge of the facts constituting the entries, particularly
those entries which resulted in the negative balance. He had no knowledge of the truth or falsity of
these entries. We agree entirely with the following discussion of the trial court which was affirmed by
the CA:

The plaintiff submits that the ledger cards constituted the best evidence of the transactions made by
the defendant with the bank relative to his account, pursuant to Section 43 of Rule 130 of the
Revised Rules on Evidence. There is no question that the entries in the ledgers were made by one
whose duty it was to record transactions in the ordinary or regular course of the business. But for the
entries to be prima facie evidence of the facts recorded, the Rule interpose[s] a very important
condition, one which we think is truly indispensable to the probative worth of the entries as an
exception to the hearsay rule, and that is that the entrant must be "in a position to know the facts
therein stated." Undeniably, Mr. Mercado was in a position to know the facts of the check deposits
and withdrawals. But the transfers of funds through the debit memos in question?

Let us be clear, at the outset, what the transactions covered by the debit memos are. They are, at
bottom, credit accommodations said to have been granted by the bank’s branch manager Mr. [Q]ui
to the defendant, and they are, therefore loans, to prove which competent testimonial or
documentary evidence must be presented. In the fac[e] of the denial by the defendant of the
existence of any such agreement, and the absence of any document reflecting it, the testimony of a
party to the transaction, i.e., Mr. [Q]ui, or of any witness to the same, would be necessary. The
plaintiff failed to explain why it did not or could not present any party or witness to the transactions,
but even if it had a reason why it could not, it is clear that the existence of the agreements cannot be
established through the testimony of Mr. Mercado, for he was [not in] a position to [know] those
facts. As a subordinate, he could not have done more than record what was reported to him by his
superior the branch manager, and unless he was allowed to be privy to the latter’s dealings with the
defendant, the information that he received and entered in the ledgers was incapable of being
confirmed by him.
There is good reason why evidence of this nature is incorrigibly hearsay. Entries in business records
which spring from the duty of other employees to communicate facts occurring in the ordinary course
of business are prima facie admissible, the duty to communicate being itself a badge of
trustworthiness of the entries, but not when they purport to record what were independent
agreements arrived at by some bank officials and a client. In this case, the entries become mere
casual or voluntary reports of the official concerned. To permit the ledgers, prepared by the bank at
its own instance, to substitute the contract as proof of the agreements with third parties, is to set a
dangerous precedent. Business entries are allowed as an exception to the hearsay rule only under
certain conditions specified in Section 43, which must be scrupulously observed to prevent them
from being used as a source of undue advantage for the party preparing them.17 (citations omitted)

Thus, petitioner did not prove that respondent had incurred a negative balance in his account.
Consequently, there was nothing to show that respondent was indebted to it in the amount claimed. lavvphil.net

Petitioner’s next argument is that respondent was estopped from denying the claim of petitioner
since he benefited from the special arrangement accorded to him resulting in the negative balance.
This must likewise fail. The so-called special arrangement was never established. In addition, there
was no evidence that respondent benefited from it. As held by the CA:

The trial court satisfactorily explained the reason for not applying the principle of estoppel against
defendant-appellee. As held by the trial court:

"There is no scope here for the application of estoppel against the defendant-appellee, since it was
not established that he had ever received copies of the ledgers, and therefore given the opportunity
to review the correctness of the entries. As we see it, the case of the [plaintiff suffers from its failure
to document its] transactions with its clients, and it is hardly right to close our eyes to that infirmity at
the expense of the defendant-appellee."

The temporary overdraft allegedly accorded by plaintiff-appellant to defendant-appellee has not

benefited the defendant-appellee in any manner. The 3 debit memos amounting to P150,000.00
appearing on defendant-appellee’s ledger consisted of fund transfers from and not to defendant-
appellee’s account. The transfers resulted [in] the benefit of other accounts, not that of defendant-
appellee.18

In view of the foregoing, the CA did not err in affirming the decision of the trial court.

WHEREFORE, the petition is hereby DENIED. The assailed decision of the Court of Appeals dated
October 18, 2001 in CA-G.R. CV No. 45701 is AFFIRMED in toto.
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.

Raul E. Espinosa for petitioners.

Lucas Emmanuel B. Canilao for petitioner A. Manuel.

Atienza, Tabora, Del Rosario & Castillo for private respondent.

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.

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.  The transcript reads as follows:
2

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 Resolution  dated June 19, 1990. Hence, the instant petition.
6

Petitioner vigorously argues, as her "main and principal issue"  that the applicable provision of
7

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.  In relation to this, petitioner
8

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.  Finally, petitioner agues that R.A.
9

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   or
11

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"   under this provision of R.A. 4200.
13

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,   or signifies the "process by which meanings or thoughts are shared between
15

individuals through a common system of symbols (as language signs or gestures)"   These
16

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,   a case which dealt with the issue of telephone
18

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,   following the principle
19

that "penal statutes must be construed strictly in favor of the accused."  The instant case turns on a
20

different note, because the applicable facts and circumstances pointing to a violation of R.A. 4200
suffer from no ambiguity, and the statute itself explicitly mentions the unauthorized "recording" of
private communications with the use of tape-recorders as among the acts punishable.
WHEREFORE, because the law, as applied to the case at bench is clear and unambiguous and
leaves us with no discretion, the instant petition is hereby DENIED. The decision appealed from is
AFFIRMED. Costs against petitioner.

SO ORDERED.
 G.R. No. 112371 October 7, 1998

AIDA DOMINGO, Petitioner, vs. COMMISSION ON AUDIT, Respondent.

PURISIMA, J.:

This is an original petition for certiorari  under Rule 65 of the Rules of Court seeking to nullify Decision
No. 93-3081 of respondent Commission on Audit.

The antecedent facts that matter are, as follows:

On March 23, 1987, petitioner Aida Domingo was appointed by the President as Regional Director,
Region V of the Department of Social Welfare and Development, and she assumed office as such.

Several government vehicles were thereafter endorsed to her office for the use of the personnel of the
entire Region V of DSWD. Including a Toyota Land Cruiser Jeep, a Kaiser Cargo Truck, a Trailer Jeep,
a Willy's Army Rebuilt Jeep, and a Nissan Double Cab.

On November 14, 1989, Regional Auditor Manuel Cañares sent a communication to the petitioner
informing her that post-audit reports on the DSWD Regional Office disbursement accounts showed
that officials provided with government vehicles were still collecting transportation allowances. The
said Auditor then requested the petitioner, in her capacity as Regional Director, to instruct all persons
concerned to cease from collecting the transportation allowances in question.

However, despite the assignment to her of a vehicle for her official use, the petitioner asserted
entitlement to a commutable transportation allowance and collected a total amount of P48,600.00 as
transportation allowance for the period from July 1, 1988 to December 31, 1990.

Petitioner asked for reconsideration of the auditor's directive; contending that she should only be
disallowed to claim transportation allowance on the days she actually used a government vehicle.
According to petitioner, she already refunded P1,600.00 for the thirty two (32) days she actually
utilized a government vehicle.

But on May 18, 1990, the auditor denied petitioner's motion for reconsideration, and issued to
petitioner CSB No. 92-003-101, dated July 8, 1992, with the following notation:

A special audit of your TA account was disallowed inaccordance with COA Decision No. 1745 dated
February 26, 1991 by the Commission proper less payment made under OR No. 7714009 dated
December 6, 1990 - P1,600.00.

On August 8, 1992, the petitioner appealed the auditor's action to the Commission on Audit, which
handed down its decision of August 25, 1993, finding petitioner's appeal devoid of merit.

Respondent Commission based its aforesaid decision on an earlier COA decision No. 1745, dated
February 26, 1991, wherein it was held that a government official assigned a vehicle for his/her official
use, is not entitled to collect transportation allowance whether or not he/she actually used such
vehicle.

Undaunted, petitioner found her way to this court via the present petition, posing the issue of whether
or not a commutable transporlation allowance may still be claimed by a government official provided
with a government vehicle, for the days the official did not actually use the vehicle.
The provision of law in point is found in Section 28 of Republic Act 6688, otherwise known as the
General Appropriations Act of 1989, to wit:

Sec. 28. Representation and Transportation Allowances - . . . "The transportation allowance herein
authorized shall not be granted to officials who are assigned a government vehicle or use government
motor transportation, except as may be approved by the President of the Philippines. Unless otherwise
provided by law, no amount appropriated in this Act shall be used to pay for representation and/or
transportation allowances, whether commutable or reimbursable, which exceed the rates authorized
under this Section. Previous administrative authorization not consistent with the rates and conditions
herein specified shall no longer be valid and payment shall not be allowed.

The General Appropriations Acts of 1998, 1990 and 1991 provide:

The transportation allowance herein authorized shall not be granted to officials who are assigned a
government vehicle or use a government motor transportation, except as may be approved by the
President of the Philippines. (GAA 1988).

The transportation allowance herein authorized shall not be granted to officials who are assigned a
government vehicle or use government transportation, except as may be approved by the President of
the Philippines. (GAA 1990).

The transportation allowance herein authorized shall not be granted to officials who are assigned a
government vehicle or use government motor transportation. (GAA 1991).

The aforesaid provision in the General Appropriations Law is based on Presidential Decree 733 and
Commission on Audit Circular No. 75-6 dated November 7, 1975, regulating the use of government
vehicles, aircrafts and watercrafts. Portion of said circular, reads:

VI Prohibition Against Use of Government Vehicles by Officials provided with transportation allowance
- "No official who has been furnished motor corporation allowance by any government corporations or
other office shall be allowed to use motor vehicle transportation operated and maintained from funds
appropriated in the abovecited Decree. (Sec. 14, P.D. 733).

In the case of Bustamante vs. Commissioner on Audit, 216 SCRA 134, decided by this Court on
November 27, 1992, COA also disallowed the claim for transportation allowance of the legal counsel of
National Power Corporation because he was already issued a government vehicle. Involving the
circular aforementioned and almost the same facts as in this case, it was therein held that COA
Circular No. 75-6 is categorical in prohibiting the use of government vehicles by officials receiving
transportation allowance and in stressing that the use of government motor vehicle and claim for
transportation allowance are mutually exclusive and incompatible.

The issue need no longer be belabored for no less than this Court ruled in the aforesaid case that a
government official, to whom a motor vehicle has been assigned, cannot, at the sametime claim
transportation allowance.

Furthermore, it is an elementary rule that when the law speaks in clear and categorical language,
there is no need, in the absence of legislative intent to the contrary, for any interpretation. Words and
phrases used in a statute should be given their plain, ordinary, and common usage meaning.  1

In the case under consideration, it must be noted that the provisions of law referred to in the General
Appropriations Acts of 1988, 1989, 1990 and 1991, utilized the word "assigned" and not "used".
Webster's Dictionary defines the word "assign" as "to transfer (property) to another in trust". Had
legislative intent been that government officials issued an official vehicle could still collect
transportation allowance if they do not actually use subject vehicle, the word "use" instead of "assign"
should have been employed.
As correctly pointed out by the Solicitor General, there are two instances when transportation
allowance cannot be granted to a government official, as when a government official is assigned a
vehicle, and when a government official uses government transportation facilities. It is undeniable that
several government vehicles were issued to the Regional Office of DSWD in Region V. That the
vehicles thereat were issued not to petitioner herself, as Regional Director, but to the Regional Office
itself, is of no moment. What is important and decisive is that such vehicles were intended primarily
for the official use of subject office and its officials and employees. As maintained by the Solicitor
General, whether or not the herein petitioner used the vehicle assigned to her office, is not an issue,
as it is undeniable that she could have used the said vehicle whenever she wanted to since it was
assigned to her office.

In the case of Ursua vs. Court of Appeals, 256 SCRA 147, it was held that there is a valid presumption
that undesirable consequences were never intended by a legislative measure and a construction of
which the statute is fairly susceptible is favored which will avoid objectionable, mischievous,
indefensible, wrongful, evil, and injurious consequences. It is abundantly clear that the evil sought to
be remedied by the legislative prohibition is the collection of additional transportation allowance
despite the availability of free transportation supplied by a government motor vehicle assigned to the
office.

WHEREFORE, the appealed decision of the Commission on Audit is hereby AFFIRMED. No

pronouncement as to costs.

SO ORDERED.

Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Panganiban, Martinez
and Quisumbing, JJ., concur.
G.R. No. 126316             June 25, 2004

REPUBLIC OF THE PHILIPPINES, petitioner,

vs.
COURT OF APPEALS, HON. JOSE D. AZARRAGA AND ANGEL T. YU, respondents.

DECISION

CALLEJO, SR., J.:

This is a petition for review on certiorari of the Decision1 of the Court of Appeals dismissing the
petition for annulment of judgment filed before it by the petitioner.

The antecedent facts are as follows:

On June 22, 1994, respondent Angel T. Yu filed a petition2 for registration of a parcel of land,
designated as Lot 524, Cad. 633-D, Estancia Cadastre, Ap-063019-005139, with an area of
1,194 square meters, more or less, situated at the Poblacion, Zone 1, Municipality of
Estancia, Province of Iloilo. The case was docketed as LRC Case No.1000, LRA Rec. No. N-
64463 and raffled to the Regional Trial Court, Sixth Judicial Region, Iloilo City, Branch
37.3 The petition was later amended to include the adjoining lots and the corresponding
owner’s name.

Initial hearing was scheduled on February 9, 1995 at 8:30 a.m. For the purpose, the Office of the
Solicitor General (OSG) entered its appearance on January 18, 1995 and at the same time
deputized the City Prosecutor of Iloilo City to appear for and in behalf of the Solicitor General under
the latter’s supervision and control. Except for the opposition filed by the Solicitor General, no one
else appeared to oppose the application/petition. The case was then set for reception of applicant’s
evidence on February 16, 19954 which was again set to another day.5

On February 22, 1995, the RTC received a letter from the Land Registration Authority (LRA)
requesting the court to require the Land Management Bureau, Manila and the Community
Environment and Natural Resources Office (CENRO) at Barotac Viejo, Iloilo to report on the status
of the subject land considering that a discrepancy was noted after plotting the land.6

Thus, on March 6, 1995, the RTC issued an Order to the effect.7

On March 31, 1995, the RTC received a certification from the Land Management Bureau,
Department of Environment and Natural Resources (DENR), Manila stating that "according to the
verification of our records, this Office (formerly Bureau of Lands) has no record of any kind of public
land application/land patent covering the parcel of land situated in Estancia, Iloilo, identified as Lot
No. 524, Cad. 633-D, Ap-063019-005139, …"8

Based on this certification and after reception of evidence, the RTC rendered judgment on May 3,
1995, the decretal portion of which reads:

WHEREFORE, ratifying the Order of general default previously entered in this case, and
after considering the evidence adduced and finding that petitioner Angel T. Yu had sufficient
title proper for the registration in his name of the land subject of the application, JUDGMENT
is hereby rendered confirming the title of the applicant/petitioner ANGEL T. YU, Filipino, of
 legal age, married and a resident of Estancia, Iloilo, over a parcel of land (Lot 524, Cad. 633-
D, Estancia Cadastre, AP-063019-005139) situated in the Poblacion Zone 1, Municipality of
Estancia, Province of Iloilo, Island of Panay, identified in the Plan, Exhibit "E" and technically
described in Exhibit "F".

As soon as this Decision becomes final, let an order for the issuance of the permanent
decree and the corresponding certificate of title be issued in accordance with law.9

No motion for reconsideration was filed by the City Prosecutor on behalf of the Solicitor General.
Hence, the said decision became final and executory on June 14, 1995, and entry of judgment was
duly made on July 7, 1995. An order was consequently issued by the RTC directing the issuance of
the corresponding decree of registration and certificate of title to respondent Angel T. Yu.10

On May 29, 1995,11 the OSG received a copy of the supplementary report and findings of Land
Management Officer Myra B. Rosal dated April 12, 1995 (Rosal Report), which was submitted to the
trial court in compliance with the court’s Order dated March 6, 1995. The report was worded, thus:

The Honorable Judge

JOSE AZARRAGA
Regional Trial Court
Sixth Judicial Region
Branch 37, Iloilo City

April 12, 1995

SUBJECT: LAND REGISTRATION CASE NO.

N-1000 LOT NO. 524, CAD,

CAD-633-D, ESTANCIA CADASTRE
ANGEL TILOS YU – APPLICANT

___________________________________

In compliance with the Order of March 6, 1995, received by this Office on March 15, 1995,
attached for your ready reference is the amended report in three (3) pages of Land
Management Officer III Fabio O. Catalan, Jr., of this Office, which was sent to Office of the
Regional Technical Director, Land Management Bureau, DENR Masonic Temple, Iloilo City,
in a cover memorandum dated September 24, 1994, duly endorsed by the CENR Officer of
CENRO, Sara, Iloilo, Edgardo J. Himatay.

This supplementary report of the undersigned is prepared with the request that the additional
findings be made on record when the undersigned repaired on the premises of the land on
April 7, 1995, in the morning to conduct an ocular inspection. The following facts were
ascertained and found;

1. [That] the Cadastral lot in question and subject of a Land Registration Case at bar,
is Lot 524, Cad 633-D, Estancia Cadastre, containing an area of 1,194 square
meters, approved on October 21, 1980, located at Zone 1, Poblacion Estancia, Iloilo.
Again, Engr. Rogelio Santome, adopting the cadastral survey of the then Bureau of
 Lands, prepared an Advance Plan and subsequently approved as Ap-063019-
005139 on May 25, 1994.

2. That Lot No. 524, Cad-633-D is covered by a Foreshore Lease Application (FLA
No. (VI-I)78) applied for by Angel Tilos Yu on July 1, 1977, with the then Bureau of
Lands, MNR, Ministry of Natural Resources, NRD (VI-7) Barotac Viejo, duly ratified
by Land Investigator Antonio L. Luis. An amount of ₱775.00 each had been paid in
the year 1982 and the year 1983, (please see certification hereto attached) dated
February 6, 1995, of CENR Officer Edgardo J. Himatay.

3. That Lot No. 524, Cad-633-D is declared public land and is Alienable and
Disposable per L.C. Map 1020, Project 44 dated July 26, 1933.

4. That the improvements found on the land are as follows:

a) A commercial complex built of strong materials (concrete steel and

galvanized iron with 18-20 feet structure in depth, as foundation of the
building, occupying around 600 square meters of the whole area

of Lot 524. The building itself houses 14 commercial concrete stalls of 14 x 5

meters which is offered for rent as boutiques and dry goods stalls.

b) On the second floor now undergoing are bowling lanes (6 alleys) for
recreational purposes which will soon open to the public in 3 months time.

5. That Lot No. 524, Cad-633-D is not an agricultural land. That out of the total area
of 1,194 square meters, only around 850 square meters is dry land and that an area
of 334 sq. meters which used to be covered and uncovered by water during high tide
is now a reclaimed area, since way back 1977 when applicant Angel Tilos Yu applied
for a Foreshore Lease Application with [the] then Bureau of Lands.

Respectfully submitted,

(signed)
MYRA B. ROSAL12

On June 22, 1995, the OSG received a letter from Regional Executive Director Jose P. Catus of the
DENR, stating that an investigation was conducted on the instant case, and it was found that there
were grounds for opposition to the respondent’s land application. Land Investigator Fabio O.
Catalan, Jr., who conducted an ocular inspection of the subject land, found the same to be a
reclaimed foreshore area. Attached therein was the Amended Report of Land Investigator Catalan,
Jr.(Catalan Report);13 the 1977 Foreshore Lease Application of Angel T. Yu;14 the November 16,
1983 Visitation and Examination Report of Land Investigator Antonio L. Luis over Lot No. 524;15 and
a blueprint plan of Lot 524 (formerly Lot 2) of the Estancia Cadastre.16

After discovering the actual status of Lot 524, the Republic filed a petition for the annulment of
judgment with a prayer for a writ of preliminary injunction with the Court of Appeals on July 20,
1995.17

On February 5, 1996, respondent Angel T. Yu filed a motion with the CA, praying that he be allowed
to submit to the Land Registration Authority the corrected technical description and the republication
in the Official Gazette of the corrected technical description of Plan Ap-063019, Lot 524, Cad. 633-D
dated January 15, 1996.18 The OSG filed its objection thereto.19

On September 10, 1996, the Court of Appeals dismissed the petition for annulment of judgment. It
also ruled that since the RTC decision had already become final and executory, the technical
description could no longer be modified to include the increased area as prayed for by the private
respondent. The CA held as follows:

Lot 524 is not a foreshore land.….

The CENRO report is proof that Lot 524, Cad-633-D, is an agricultural land. Out of the total
area of 1,194 square meters, around 850 square meters is dry land. That an area of 334 sq.
meters which used to be covered and uncovered by water during high tide is now a
reclaimed area, since way back 1977.(underlining supplied)

WHEREFORE, the petition for annulment of judgment is hereby DISMISSED. The motion of
private respondent dated January 15, 1996 is DENIED.20

Finding no relief from the CA, the Republic filed the instant petition, raising the issue that:

THE COURT OF APPEALS ERRED IN DENYING THE REPUBLIC’S PETITION FOR

ANNULMENT OF JUDGMENT ON THE MERE SUPPOSITION THAT LOT 524 IS NOT
FORESHORE LAND, BUT AGRICULTURAL LAND.21

We find merit in the petition.

At the outset, there is a need to take a closer look at the true nature of the land in question.

The petitioner asserts that Lot 524 is foreshore land.

Foreshore land is that strip of land that lies between the high and low water marks and is
alternatively wet and dry according to the flow of tide. It is that part of the land adjacent to the sea,
which is alternately covered and left dry by the ordinary flow of tides.22 It is part of the alienable land
of the public domain and may be disposed of only by lease and not otherwise.23 Foreshore land
remains part of the public domain and is outside the commerce of man. It is not capable of private
appropriation.24

It is for this reason that the petitioner persists in its action to revert the subject land to the State.
Thus, even if the decision of the RTC has become final and executory, we find that the respondent
court abused its discretion in dismissing the petition for annulment of judgment filed before it which is
impressed with public interest. There are valid and meritorious grounds to justify such action. The
State has to protect its interests and can not be bound by, or estopped from, the mistakes or
negligent acts of its officials or agents, much more, non-suited as a result thereof. As held
in Republic vs. Alagad:25

…[T]he state as a persona in law is the judicial entity, which is the source of any asserted
right to ownership in land under the basic doctrine embodied in the 1935 Constitution as well
as the present charter. It is charged moreover with the conservation of such patrimony.
There is need therefore of the most rigorous scrutiny before private claims to portions thereof
 are judicially accorded recognition, especially so where the matter is sought to be raked up
anew after almost fifty years. Such primordial consideration, not the apparent carelessness,
much less the acquiescence of public officials, is the controlling norm…

The Catalan Report, which states that the subject land is foreshore land, was received by the OSG
only on June 22, 1995, long after the RTC rendered its judgment on May 3, 1995. Angel T. Yu had,
in fact, filed a foreshore lease application in 1977 and paid the corresponding fees thereon. There is,
therefore, doubt to the respondent’s claim that he had been in actual, open, notorious, continuous
possession , in the concept of an owner.

Moreover, the Rosal Report dated April 12, 1995 was received by the OSG only on May 29, 1995.
Although the report states that Lot No. 524, Cad-633-D is declared public land and is alienable and
disposable per L.C. Map 1020, Project 44 dated July 26, 1933, the same report buttresses the
contention that the subject land is foreshore land and covered by a foreshore lease application filed
by Angel T. Yu. Finding the reports to be revealing and significant as to the real status of the land
being foreshore, the petitioner lost no time in filing the petition for annulment of judgment with the
Court of Appeals.

We can not fault the trial court for not having considered in its decision the Rosal Report dated April
12, 1995 which was apparently submitted to it. On March 15, 1995, the trial court issued an order
where it considered the case submitted for decision "upon the submission to this court by the Land
Management Bureau, Manila and CENRO, Barotac Viejo, Iloilo of the report as directed in the Order
of this Court dated March 6, 1995, and after the Land Management Sector, Region 6, Iloilo City had
duly verified the discrepancy of plan Ap-063019-005139 of the subject land applied for."26 In
compliance with the order, the trial court received a certification from the Land Management Bureau
that "the office has no record of any kind of public land application/land patent covering the parcel of
land"27 and thereby approved the registration of the land in favor of respondent. The records reveal
that the Rosal Report, through a 1st Indorsement dated April 24, 1995, was received by the RTC
only on May 5, 1995,28 after the court had already rendered its decision on May 3, 1995. No motion
for reconsideration was filed to controvert the said decision based on the report. The OSG’s receipt
of the Rosal and Catalan Reports on the status of the land were also belated through no fault of
theirs.

Finally, we can not uphold the respondent court’s finding regarding the character of the land. The
Rosal Report clearly states that the subject land is not an agricultural land. Despite such declaration,
the respondent court continued to rule that the subject land is agricultural on the basis that out of the
total area of 1,194 square meters, 850 square meters is dry land and that 334 square meters is now
a reclaimed area.29

Clearly, there is a need to determine once and for all whether the subject land is really foreshore
land and/or whether the respondent has registerable title thereto. The classification of public lands is
a function of the executive branch of government, specifically, the director of lands (now the director
of the Land Management Bureau).30 This Court is not a trier of facts. Thus, for a proper and
conclusive classification of the land involved, the instant case has to be remanded to the trial court
for that determination.31

WHEREFORE, the petition is GRANTED. The Decisions of the Court of Appeals and the Regional
Trial Court are REVERSED and SET ASIDE. The case is REMANDED to the Regional Trial Court,
Iloilo City, Branch 37 for further proceedings.

SO ORDERED.