Republic of the Philippines

SUPREME COURT
Manila

EN BANC

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.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-63318 August 18, 1984

PHILIPPINE CONSUMERS FOUNDATION, INC., petitioner, 
vs.
NATIONAL TELECOMMUNICATIONS COMMISSION and PHILIPPINE LONG DISTANCE TELEPHONE CO.,respondents.

Tomas C. Llamas for petitioners.

The Solicitor General for respondent NTC.

Eliseo Alampay, Jr., Graciano C. Regala and Augusto San Pedro for private respondents.

RESOLUTION

MAKASIAR, J.:

On March 2, 1983, petitioner filed the instant petition praying, among others, that the decision of respondent NTC dated November
22, 1982 and the order dated January 14, 1983 be annulled and set aside on the grounds therein stated (pp. 2-19, rec.).

After the petitioner, the private respondent, and the Solicitor General for public respondent NTC filed their respective comments and
memoranda (pp. 47-53, 96-106, 109-116, 127-142, 147-164, 206-221, rec.), on November 25, 1983, the decision sought to be
reconsidered was promulgated, annulling and setting aside the challenged decision and order, respectively dated November 22,
1982 and January 14, 1983 (pp. 225-232, rec.).

Said decision is not unanimous as it bears the concurrence of only 9 members of this Court, while 3 members took no part and 1
member reserved his vote (p 232, rec.)

In a resolution dated January 10, 1984 and released on January 17, 1984, the Court granted respondent PLDT's motion for 15-day
extension from the expiration of the reglementary period within which to file a motion for reconsideration (pp. 233, 236, rec.).

On January 12, 1984, PLDT filed its motion for reconsideration (pp. 237-268, rec.).

On February 27, 1984, respondent PLDT filed a motion to admit attached supplemental motion for reconsideration (pp. 281-301,
rec.).

On February 27, 1984, public respondent NTC, thru the Solicitor General, filed a manifestation and motion that it is joining core,
respondent PLDT in its motion for reconsideration thereby adopting the same as its own (pp. 302-303, 305-306, rec.).

In a resolution dated March 1, 1984 and issued on March 2, 1984, the Court admitted the supplemental motion for reconsideration
of PLDT, noted the manifestation and motion of the Solicitor General for and in behalf of respondent NTC that it is joining the motion
for reconsideration of PLDT and adopting it as its own, and required petitioner to convenient within 10 days from notice on the
aforesaid supplemental motion for reconsideration of PLDT (p. 304-A, rec.).

On March 28, 1984, petitioner filed its comment on respondent's motion for reconsideration (pp. 310-317, rec.).

In a resolution dated April 3, 1984 and issued on April 11, 1984, the Court denied the motion for reconsideration (p. 318A, rec.).

On April 6, 1984, respondent PLDT filed a motion to strike out "discussion (e)" in petitioner's "comment on respondents' motions"
dated March 20, 1984 (pp. 319-321, rec.).

In a resolution dated April 12, 1984 and issued on April 16, 1984, the Court required petitioner's counsel Atty. Tomas Llamas to
comment within 10 days from notice on the aforesaid motion to strike out (p. 323, rec.).

On April 17, 1984, respondent PLDT, thru counsel, filed a motion for leave to file within 15 days from date a second motion for
reconsideration (pp. 324-326, rec.).
On April 27, 1984, petitioner filed an opposition to the aforesaid motion of PLDT for leave to file within 15 days to file a second
motion for reconsideration (pp. 328-330, rec.).

On May 2, 1984, private respondent PLDT filed a second motion for reconsideration with an annex (pp. 332-344, rec.).

In a resolution dated May 8, 1984 but issued on May 11, 1984, the Court granted the motion of PLDT to file a second motion for
reconsideration within 15 days from April 16, 1984, noted the opposition of petitioner to said motion, and required petitioner to
comment within 15 days from notice on the aforesaid second motion for reconsideration of PLDT for the reconsideration of the
decision of November 25, 1983 (p. 345, rec.).

On May 4, 1984, petitioner filed its comment on the second motion for reconsideration of private respondent (pp. 346-350, rec.).

In a resolution dated May 10, 1984 and issued on May 16, 1984, the Court required respondents to file a reply within 10 days from
notice on the aforesaid comment of petitioner on private respondent PLDT's motion praying that the discussion (par. 3) in
petitioner's comment on the first motion for reconsideration and the supplemental motion for reconsideration be deleted (p. 352,
rec.).

On May 21, 1984, public respondent NTC filed a manifestation joining private respondent PLDT and adopting the latter's second
motion for reconsideration (pp. 353-354, rec.), which the Court granted in a resolution dated May 29, 1984 and issued on June 6,
1984 (p. 355-A).

On May 28,1984, respondent PLDT filed a motion for extension of 10 days or until June 7, 1984 within which to submit the required
reply in the resolution of May 10, 1984 and issued on May 16, 1984 (pp. 356-357, rec.), which was granted in a resolution dated
June 5, 1984 and issued on July 3, 1984 (p. 357-A, rec.).

On June 1, 1984, petitioner filed its comment on PLDT's second motion for reconsideration, with a motion to declare final the
decision with respect to public respondent NTC (pp. 358362, rec.).

A day before June 1, 1984, or on May 31, 1984, private respondent PLDT filed its reply to petitioner's "comment on motion of private
respondent" dated May 4, 1984 [motion to strike] (pp. 366-369, rec.).

On July 16, 1984, after its motions for extension were granted, public respondent NTC thru the Solicitor General, finally filed its reply
(pp. 370-371, 372-A, 373, 375-381, rec.).

It should be emphasized that the resolution of this Court dated April 3, 1984 but issued on April 11, 1984, denying the first motion
for reconsideration did not state that the denial is final (see p. 318-A, rec.).

And the motion of May 29, 1984 but filed on June 1, 1984 of petitioner to declare as final the decision of November 25, 1983 (which
motion was included in plaintiff's comment on PLDT's second motion for reconsideration) with respect to public respondent NTC (pp.
361-362, rec.), was not acted upon by this Court, ostensibly because as early as May 21, 1984, public respondent NTC, thru the
Solicitor General, filed a manifestation that it is joining private respondent PLDT in its second motion for reconsideration dated May
18, 1984 and adopting it as its own (pp. 353-354, rec.).

II

It is not disputed — and should be emphasized that on August 31, 1982, this Court set aside the NTC order dated April 14, 1982 in
the case of Samuel Bautista vs. NTC, et al. (16 SCRA 411) provisionally approving the revised schedule of rates for the Subscriber
Investments Plan, on the ground that there was necessity of a hearing by the Commission before it could have acted on the PLDT
application for said revised schedule, to give opportunity to the public, especially herein petitioner and the Solicitor General to
substantiate their objections to the said schedule as excessive and unreasonable, especially for the low-income and middle-income
groups, which cannot afford telephone connections and that there is no need to increase the rate because PLDT is financially
sound.

Thereafter, in NTC Case No. 82-87 entitled "Re Philippine Long Distance Telephone Co. respondent NTC conducted several
hearings on PLDT's revised Subscriber Investments Plan schedule at which written oppositions were filed by herein petitioner PCFI,
the Solicitor General, Atty. Samuel Bautista, Flora Alabanza, the municipality of Marikina, and the Integrated Telecommunications
Suppliers' Association of the Philippines (ITESAP). Other oppositors failed to file their written oppositions. The hearings on the
merits actually started on August 4, 1982 and continued for four (4) subsequent dates.

The oppositors, thru counsel, thoroughly cross-examined the witness for the applicant, Mr. Romeo Sisteban applicant's Vice-
President for Budget and Financial Planning.
None of the oppositors opted to present evidence but merely filed Memoranda and thereafter manifested that the case is submitted
for decision Because PLDT made some concessions in favor of the oppositors, oppositors ITESAP, Eastern Telecommunications,
Inc., Philippine Global Communications, Inc. (Philcom), Globe-Mackay Cable and Radio Corporation (GMCR) withdrew their
opposition and manifested that they are no longer opposing the application after which respondent NTC issued the challenged
decision of November 22, 1982.

Respondent NTC rendered the challenged decision dated November 22, 1982, approving the revised schedule on the ground that
the rates are within the 50% of cost limit provided in P.D. No. 217, that they are just and reasonable and in consonance with the
public policies declared in said decree, and that such approval is in the public interest (see NTC decision of Nov. 22, 1982, pp. 2-19,
rec.).

It is undisputed therefore that petitioner and the other oppositors were accorded due process.

From said decision dated November 22, 1982, petitioner filed the instant petition.

III

The decision promulgated on November 25, 1983 interprets the rule-making authority delegated in Section 2 of P.D. No. 217 to the
then Department of Public Works, Transportation and Communications as mandatory, which construction is not supported by the
actual phraseology of said Section 2, which reads thus:

The Department of Public Works, Transportation and Communications, through its Board of Communications
and/or appropriate agency shall see to it that the herein declared policies for the telephone industry are
immediately implemented and for this purpose, pertinent rules and regulations may be promulgated (emphasis
supplied).

The basic canon of statutory interpretation is that the word used in the law must be given its ordinary meaning, unless a contrary
intent is manifest from the law itself. Hence, the phrase "may be promulgated" should not be construed to mean "shall" or "must". It
shall be interpreted in its ordinary sense as permissive or discretionary on the part of the delegate — department or the Board 6f
Communications then, now the National Telecommunications Commission — whether or not to promulgate pertinent rules and
regulations. There is nothing in P.D. No. 217 which commands that the phrase "may be promulgated" should be construed as
"shall be promulgated." The National Telecommunications Commission can function and has functioned without additional rules,
aside from the existing Public Service Law, as amended, and the existing rules already issued by the Public Service Commission,
as well as the 1978 rules issued by the Board of Communications, the immediate predecessor of respondent NTC. It should be
recalled that the PLDT petition for approval of its revised SIP schedule was filed on March 20,1980.

P.D. No. 217 does not make the rules and regulations to be promulgated by the respondent NTC as essential to the exercise of its
jurisdiction over applications for SIP schedules. In Ang Tibay vs. CIR (69 Phil. 635), this Court, through Mr. Justice Jose P. Laurel,
did not include the promulgation of rules and regulations as among the seven (7) requirements of due process in quasi-judicial
proceedings before a quasi-judicial body such as the respondent NTC.

What is patently mandatory on the ministry or National Telecommunications Commission is the immediateimplementation of the
policies declared in P.D. No. 217. To repeat, the ministry or the NTC "shall see to it that the herein declared policies for the
telephone industry are immediately implemented ..." The formulation of rules and regulations is purely discretionary on the part of
the delegate.

Both words "shall and "may be" are employed in the lone sentence of Section 2 of P.D. No. 217. This graphically demonstrates that
P.D. No. 217 preserves the distinction between their ordinary, usual or nominal senses.

This is emphasized by the fact that under Section 3 of P.D. No. 217, only "the pertinent provisions" of the Public Service Act, as
amended, which are in conflict with the provisions of P.D. No. 217, had been repealed or modified by said P.D. No. 217.

Section 3 of P.D. No. 217 states:

The pertinent provisions of the Public Service Act, as amended, the franchise of the Philippine Long Distance
Telephone Company under Act 3436, as amended, all existing legislative and/or municipal franchises and other
laws, executive orders, proclamations, rules and regulations or parts thereof, as are in conflict with the
provisions of this Decree are hereby repealed or modified accordingly.

And under the Public Service Act, as amended (C.A. No. 146), the board of Communications then, now the NTC, can fix
a provisional amount for the subscriber's investment to be effective immediately, without hearing (par. 3 of Sec. 16, C.A. 146, as
amended).
Section 16 (c) of C.A. No. 146, as amended, provides:

(c) To fix and determine individual or joint rates, toll charges, classifications, or schedules thereof, as well as
communication, mileage, kilometrage, and oilier special rates which shall be imposed, observed, and followed
thereafter by any public service: Provided That the Commission may, in its discretion approve rates proposed
by public services provisionally and without necessity of any hearing, but it shall call a hearing thereon within
thirty days thereafter, upon publication and notice to the concerns operating in the territory affects Provided
further, That in case the public service equipment of an operator is used principally or secondarily for the
promotion of a private business, the net profits of said private business shall be considered in relation with the
public service of such operator for the purpose of fixing the rates.

The Rules of Practice and Procedures promulgated on January 25, 1978 by the Board of Communications, the immediate
predecessor of respondent NTC, pursuant to Section 11 of the Public Service Act, otherwise known as Commonwealth Act No. 146,
as amended, govern the rules of practice and procedure before the BOC then, now respondent NTC. Section 2 of said Rules
defines their scope, including exempting parties from the application of the rules in the interest of justice and to best serve the public
interest, and the NTC may apply such suitable procedure to improve the service in the transaction of public service. Thus, Section 2
of Rule 1 of said Rules reads:

Sec. 2. Scope. — These rules govern pleadings, practice and procedure before the Board of Communications
in all matters of hearing, investigation and proceedings within the jurisdiction of the Board. However, in the
broader interest of justice and in order to best serve the public interest, the Board may, in any particular matter,
except it from these rules and apply such suitable procedure to improve the service in the transaction of the
public business.

Sections 4 and 5 of Rule 2 of said rules insure the appearance of the Solicitor General and other consumers or users. The notice of
hearing is required to be published and to be served on the affected parties by Section 2 of Rule 8; while Section I of Rule 9 allows
the filing of written oppositions to the application Under Section 3 of Rule 15, the BOC then, now the NTC, may grant, on motion of
the applicant or on its own initiative, provisional relief based on the pleading, supporting affidavits and other documents attached
thereto, without prejudice to a final decision after completion of the hearing which shall be caged within thirty (30) days from the
grant of the provisional relief.

Finally, Section 1 of Rule 19 provides for the suppletory application of the Rules of Court governing proceedings before the Court of
First Instance then, now the Regional Trial Courts, which are not inconsistent with the rules of practice and procedure promulgated
by the BOC on January 25, 1978.

There is nothing in P.D. No. 217 modifying, much less repeating Section 16 (c) of the Public Service Act, as amended.

It is true that P.D. No. 1874 promulgated on July 21, 1983 amending Section 2 of P.D. No. 217 expressly authorizes the National
Telecommunications Commission (now the successor of the Board of Communications) to approve "such amounts for subscriber
investments as applied for provisionally and without the necessity of a hearing; but shall call a hearing thereon within thirty (30) days
thereafter, upon publication and notice to all parties affected." But such amendment merely reiterates or confirms paragraph (c) of
Section 16 of C.A. No. 146, as amended, otherwise known as the Public Service Law, and serves merely to clarify the seeming
ambiguity of the repealing clause in Section 3 of P.D. No. 217 to dissipate an doubts on such power of the National
Telecommunications Commission.

The construction of the majority decision of November 25, 1983 of the word "may" to mean "shall" is too strained, if not tortured.

IV

WE cannot subscribe to the view that the National Telecommunications Commission should or must promulgate "pertinent rules and
regulations because the existing substantive and procedural laws as well as the rules promulgated by the Public Service
Commission under and pursuant to the Public Service Law, otherwise known as CA No. 146, as amended, are more than adequate
to determine the reasonability of the amounts of investment of telephone subscribers, the viability of the company and the other
factors that go into determining such amounts and such viability. The existing laws and rules on rate-making are more than sufficient
for a proper determination of such amounts of investments of individual subscribers and the profitability of the venture.

The adequacy of the existing Public Service Law, otherwise known as C.A. No. 146, as amended, and rules had been
demonstrated, because they have been applied in the following cases involving PLDT:

1. PLDT vs. PSC, G.R. No. L-26762, Aug. 31, 1970, 34 SCRA 609;

2. Republic vs. PLDT, G.R. No. L-18841, Jan. 27, 1969, 26 SCRA 620;
 3. PLDT vs. PSC, G.R. Nos. L-24198 & L-24207-10, Dec. 18, 1968, 26 SCRA 427;

4. Republic Telephone Co. vs. PLDT, G.R. No. L-21070; PLDT vs. Republic Telephone Co., G.R. No. L-21075,
both decided on Sept. 23, 1968, 25 SCRA 80;

5. PLDT vs. Medina, G.R. No. L-24658, April 3, 1968, 23 SCRA 1; and

6. PLDT vs. Medina, G.R. Nos. L-24340-44, July 18, 1967, 20 SCRA 669.

As heretofore stated, as early as January 25, 1978, other pertinent rules of practice and procedure were promulgated by the then
Board of Communications, now the respondent National Telecommunications Commission, implementing P.D. No, 217, in addition
to the applicable provisions of the Public Service Law, as amended, and the rules previously issue by the Public Service
Commission (Annex 2 to the Memo of respondent PLDT filed on August 15, 1983, pp. 147-165, rec.).

Even before 1978, respondent applied the procedure prescribed by the Public Service Law, as amended, and the rules previously
issued by the Public Service Commission, the NTC predecessor, in several cases involving similar applications for SIP schedules of
Filipino Telephone Corporation (BOC Case No. 73-064; see BOC decision in said cases dated December 5, 1974, May 11, 1978,
March 15, 1977, Feb. 19, 1976 and Aug. 31, 1978 — Annexes 3, 4, 4-A, 5, pp. 166-195, rec.).

The majority opinion recognizes that for the last three years, the PLDT had earned a yearly average net profit of over P100 million
and the existing subscribers have been receiving their corresponding quarterly dividends on their investments.

It should be stressed that Section 5 of Article XIV of the 1973 Constitution, as amended, expressly directs that "the State shall
encourage equity participation in public utilities by the general public." As above-stated, the existing individual subscribers of PLDT
had been sharing in the net profits of the company every quarter after the promulgation of P.D. 217 on June 16, 1973.

The amount that is provisionally approved under the subscriber's investment plan for PBX/PAEX trunks and for business telephones
in Metro Manila and the provinces, whether new installations or transfers, appears to be reasonable, including those for the leased
lines or outside local.

To lighten the burden of subscribers, investments may be paid in installments or under some convenient arrangements which the
NTC may authorize, which is now expressly provided for in Section 1 of P.D. 1874 amending Sec. 6 of P.D. 217.

Section 1 of P.D. 1874 directs that:

Section 1, paragraph 6 of the Presidential Decree No. 217 is hereby amended to read as follows:

6. In any subscriber self-financing plan, the amount of subscriber self-financing wilt in no

case, exceed fifty per centum (50%) of the amount which results from dividing the
telephone utility's gross investment in telephone plant in service by its number of primary
stations in service, both as reported in the utility's latest audited annual report rendered he
National Telecommunications Commission; PROVIDED, however, that the amount payable
by the telephone subscriber may be paid on installment or under such payment
arrangement as the National Telecommunications Commission may authorize.

It should be likewise emphasized that pursuant to the mandate of Section 5, Article XIV of the 1973 Constitution, as amended, the
law-making authority, in issuing both P.D. Nos. 217 and 1874, established the all-important policy of making available on regular
and uninterrupted basis the telephone service because it is

a crucial element in the conduct of business activity ... and is essential for the smooth and efficient function of
industry,

... efficient telephone service contributes directly to national development by facilitating trade and commerce;

... the telephone industry is one of the most highly capital intensive industries;

... the telephone industry has fundamentally different financing characteristics from other utilities in that capital
requirements per telephone unit installed increase as the number of customers serviced also increases instead
of decreasing in cost per unit as in power and water utilities;
 ... continued reliance on the traditional sources of capital funds through foreign and domestic borrowing and
through public ownership of common capital stock will result in a high cost of capital heavy cash requirements
for amortization and thus eventually in higher effective cost of telephone service to subscribers;

... the subscribers to telephone service tend to be among the residents of urban areas and among the relatively
higher income segment of the population;

... it is in the interest of the national economy to encourage savings and to place these savings in productive
enterprises and

... it is the announced policies of the government to encourage the spreading out of ownership in public utilities
(see Whereases of P.D. 217; emphasis supplied).

P.D. No. 217 further states as the basic policies of the State concerning the telephone industry "in the interest of social, economic
and general well-being of the people ...

1. The attainment of efficient telephone service for as wide an area as possible at the lowest reasonable cost to
the subscriber;

2. The expansion of telephone service shall be financed through an optimal combination of domestic and
foreign sources of financing and an optimal combination of debt and equity funds so as to minimize the
aggregate cost of capital of telephone utilities;

3. Consistent with the declared policy of the State to attain widespread ownership of public utilities obtained
from ownership funds shall be raised from a broad base of investors, involving as large a number of individual
investors as may be possible;

4. In line with the objective of spreading ownership among a wide base of the people, the concept of telephone
subscriber self-financing is hereby adopted whereby a telephone subscriber finances part of the capital
investments in telephone installations through the purchase of stocks, whether common or preferred stock, of
the telephone company;

5. As part of any subscriber self-financing plan, when the issuance of preferred stock is contemplated, it is
required that the subscriber be assured, in all cases of a fixed annual income from his investment and that
these preferred capital stocks be convertible into common shares, after a reasonable period and under
reasonable terms, at the option of the preferred stockholder; and

6. In any subscriber self-financing plan, the amount of subscriber self-financing wig, in no case, exceed fifty per
centum (50%) of the cost of the installed telephone line, as may be determined from time to time by the
regulatory bodies of the State.

The same policies and objectives are substantially re-stated and capsulized in the three Whereases of P.D. No. 1874 amending
P.D. No. 217 as pointed out in the basic policies aforestated in P.D. No. 217 that the cost per telephone unit increases in proportion
to the increase in the number of customers served; and that foreign borrowing will impose heavy cash requirements for
amortizations of such foreign loans which would result in the higher effective costs of telephone service to subscribers and ultimately
would be a heavy drain on our dollar reserves, which will result in our inability to meet our other foreign commitments and mark the
image of the Republic of the Philippines in international trade relations. Thus, P.D. No. 217 stresses that in the interest of the
national economy it is essential to encourage savings and to place these savings (subscriber's investments) in productive
enterprises.

PLDT is profitable for the subscribers-investors as shown by its net profit and the dividends received quarterly by the existing
subscribers.

There is no showing — not even an allegation — that the net profits realized by PLDT all these years have been dissipated and not
plowed back into the firm to improve its service.

But the rising cost of materials and labor needed to improve the PLDT service, aggravated by the devaluation of our currency, all the
more justify the revised SIP schedule approved by the respondent NTC.

The approved revised SIP schedule, which appears reasonable and fair is herein reproduced:

REVISED SIP SCHEDULE

 Revised SIP Rates

Service Category Metro Provincia

Manila l

     

I. New    
Installations —

1. PBX/PABX P5,000 P3,000

Trunk

2. Phone:    

Single line 3,500 2,000

Party line 2,000 1,500

3. Phone:    

Single line 1,800 1,300

Party line 900 800

4. Leased line 2,500 2,500

5. Tie trunk or tie 2,500 2,500

line

6. Outside local 2,500 2,500

     

II. Transfers —    

1. PBX/PABX 1,500 1,200

2. Phone:    

Single line 800 600

Party line 600 500

3. Residential    
Phone:

Single line 600 500

Party line 500 300

4. Leased line 800 800

5. Tie trunk or tie 800 800

line

6. Outside local 800 800

(pp. 34-35, rec.).

With the dividends that will be received quarterly under the revised SIP schedule, the subscribers (whether of phone installations for
business with or without trunk lines, as wen as transfers of the same; or of residential phones whether single or party line as well as
transfers of the same), will recover their investments after some years and will thereafter remain stockholders and part-owners of
PLDT. All the subscribers therefore, are assured not only of profits from but also preservation of, their investments, which are not
donations to PLDT.

There are always two sides — sometimes more — to a case or proposition or issue. There are many cases decided by this Court
where this Court had reconsidered Its decisions and even reversed Itself, conformably to the environmental facts and the applicable
law.

After a re-study of the facts and the law, illuminated by mutual exchange of views the members of the Court may and do change
their minds.

To repeat, the decision of November 25, 1983 was not a unanimous decision for it has the concurrence of only
nine (9) members of the Court, because three (3) took no part and one (1) reserved his vote (p. 232, rec.).

WHEREFORE, THE DECISION OF NOVEMBER 25, 1983 SHOULD BE AS IT IS HEREBY RECONSIDERED AND SET ASIDE
AND THE PETTION IS HEREBY DISMISSED. NO COSTS.

SO ORDERED.

Concepcion, Jr., Guerrero, Escolin, De la Fuente and Cuevas, JJ., concur.

Aquino and Plana, JJ., concur in the result.

Fernando, C.J., took no part.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-34568 March 28, 1988

RODERICK DAOANG, and ROMMEL DAOANG, assisted by their father, ROMEO DAOANG, petitioners, 
vs.
THE MUNICIPAL JUDGE, SAN NICOLAS, ILOCOS NORTE, ANTERO AGONOY and AMANDA RAMOS-
AGONOY, respondents.

PADILLA, J.:

This is a petition for review on certiorari of the decision, dated 30 June 1971, rendered by the respondent judge *in Spec. Proc. No.
37 of Municipal Court of San Nicolas, Ilocos Norte, entitled: "In re Adoption of the Minors Quirino Bonilla and Wilson Marcos; Antero
Agonoy and Amanda R. Agonoy, petitioners", the dispositive part of which reads, as follows:

Wherefore, Court renders judgment declaring that henceforth Quirino Bonilla and Wilson Marcos be, to all
legitimate intents and purposes, the children by adoption of the joint petitioners Antero Agonoy and Amanda R.
Agonoy and that the former be freed from legal obedience and maintenance by their respective parents, Miguel
Bonilla and Laureana Agonoy for Quirino Bonilla and Modesto Marcos and Benjamina Gonzales for Wilson
Marcos and their family names 'Bonilla' and 'Marcos' be changed with "Agonoy", which is the family name of the
petitioners.

Successional rights of the children and that of their adopting parents shall be governed by the pertinent
provisions of the New Civil Code.

Let copy of this decision be furnished and entered into the records of the Local Civil Registry of San Nicolas,
Ilocos Norte, for its legal effects at the expense of the petitioners. 1

The undisputed facts of the case are as follows:

On 23 March 1971, the respondent spouses Antero and Amanda Agonoy filed a petition with the Municipal Court of San Nicolas,
Ilocos Norte, seeking the adoption of the minors Quirino Bonilla and Wilson Marcos. The case, entitled: "In re Adoption of the Minors
Quirino Bonilla and Wilson Marcos, Antero Agonoy and Amanda Ramos-Agonoy, petitioners", was docketed therein as Spec. Proc.
No. 37. 2

The petition was set for hearing on 24 April 1971 and notices thereof were caused to be served upon the office of the Solicitor
General and ordered published in the ILOCOS TIMES, a weekly newspaper of general circulation in the province of Ilocos Norte,
with editorial offices in Laoag City. 3

On 22 April 1971, the minors Roderick and Rommel Daoang, assisted by their father and guardian ad litem, the petitioners herein,
filed an opposition to the aforementioned petition for adoption, claiming that the spouses Antero and Amanda Agonoy had a
legitimate daughter named Estrella Agonoy, oppositors' mother, who died on 1 March 1971, and therefore, said spouses were
disqualified to adopt under Art. 335 of the Civil Code. 4

After the required publication of notice had been accomplished, evidence was presented. Thereafter, the Municipal Court of San
Nicolas, Ilocos Norte rendred its decision, granting the petition for adoption. 5

Hence, the present recourse by the petitioners (oppositors in the lower court).

The sole issue for consideration is one of law and it is whether or not the respondent spouses Antero Agonoy and Amanda Ramos-
Agonoy are disqualified to adopt under paragraph (1), Art. 335 of the Civil Code.

The pertinent provision of law reads, as follows:

Art. 335. The following cannot adopt:

(1) Those who have legitimate, legitimated, acknowledged natural children, or children by legal fiction;

xxx xxx xxx

In overruling the opposition of the herein petitioners, the respondents judge held that "to add grandchildren in this article where no
grandchil is included would violate to (sic) the legal maxim that what is expressly included would naturally exclude what is not
included".

But, it is contended by the petitioners, citing the case of In re Adoption of Millendez, 6 that the adoption of Quirino Bonilla and Wilson
Marcos would not only introduce a foreign element into the family unit, but would result in the reduction of their legititimes. It would
also produce an indirect, permanent and irrevocable disinheritance which is contrary to the policy of the law that a subsequent
reconciliation between the offender and the offended person deprives the latter of the right to disinherit and renders ineffectual any
disinheritance that may have been made.

We find, however, that the words used in paragraph (1) of Art. 335 of the Civil Code, in enumerating the persons who cannot adopt,
are clear and unambiguous. The children mentioned therein have a clearly defined meaning in law and, as pointed out by the
respondent judge, do not include grandchildren.

Well known is the rule of statutory construction to the effect that a statute clear and unambiguous on its face need not be
interpreted; stated otherwise, the rule is that only statutes with an ambiguous or doubtful meaning may be the subject of statutory
construction. 7

Besides, it appears that the legislator, in enacting the Civil Code of the Philippines, obviously intended that only those persons who
have certain classes of children, are disqualified to adopt. The Civil Code of Spain, which was once in force in the Philippines, and
which served as the pattern for the Civil Code of the Philippines, in its Article 174, disqualified persons who have legitimate or
legitimated descendants from adopting. Under this article, the spouses Antero and Amanda Agonoy would have been disqualified to
adopt as they have legitimate grandchildren, the petitioners herein. But, when the Civil Code of the Philippines was adopted, the
word "descendants" was changed to "children", in paragraph (1) of Article 335.

Adoption used to be for the benefit of the adoptor. It was intended to afford to persons who have no child of their own the
consolation of having one, by creating through legal fiction, the relation of paternity and filiation where none exists by blood
relationship. 8 The present tendency, however, is geared more towards the promotion of the welfare of the child and the
enhancement of his opportunities for a useful and happy life, and every intendment is sustained to promote that objective.  9 Under
the law now in force, having legitimate, legitimated, acknowledged natural children, or children by legal fiction, is no longer a ground
for disqualification to adopt. 10
WHEREFORE, the petition is DENIED. The judgment of the Municipal Court of San Nicolas, Ilocos Norte in Spec. Proc. No. 37 is
AFFIRMED. Without pronouncement as to costs in this instance.

SO ORDERED.

Yap, Melencio-Herrera, Paras and Sarmiento, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

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

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

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

Office of the Solicitor General Juan R. Liwag and Solicitor Jose P. Alejandro for appellant.
Manuel O. Chan for appellees.

MONTEMAYOR, J.:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

We have already said that the Legislature under our form of government is assigned the task and the power to make and enact
laws, but not to interpret them. This is more true with regard to the interpretation of the basic law, the Constitution, which is not
within the sphere of the Legislative department. If the Legislature may declare what a law means, or what a specific portion of the
Constitution means, especially after the courts have in actual case ascertain its meaning by interpretation and applied it in a
decision, this would surely cause confusion and instability in judicial processes and court decisions. Under such a system, a final
court determination of a case based on a judicial interpretation of the law of the Constitution may be undermined or even annulled
by a subsequent and different interpretation of the law or of the Constitution by the Legislative department. That would be neither
wise nor desirable, besides being clearly violative of the fundamental, principles of our constitutional system of government,
particularly those governing the separation of powers.
So much for the constitutional aspect of the case. Considering the practical side thereof, we believe that the collection of income tax
on a salary is an actual and evident diminution thereof. Under the old system where the in-come tax was paid at the end of the year
or sometime thereafter, the decrease may not be so apparent and clear. All that the official who had previously received his full
salary was called upon to do, was to fulfill his obligation and to exercise his privilege of paying his income tax on his salary. His
salary fixed by law was received by him in the amount of said tax comes from his other sources of income, he may not fully realize
the fact that his salary had been decreased in the amount of said income tax. But under the present system of withholding the
income tax at the source, where the full amount of the income tax corresponding to his salary is computed in advance and divided
into equal portions corresponding to the number of pay-days during the year and actually deducted from his salary corresponding to
each payday, said official actually does not receive his salary in full, because the income tax is deducted therefrom every payday,
that is to say, twice a month. Let us take the case of Justice Endencia. As Associate Justice of the Court of Appeals, his salary is
fixed at p12,000 a year, that is to say, he should receive P1,000 a month or P500 every payday, — fifteenth and end of month. In
the present case, the amount collected by the Collector of Internal Revenue on said salary is P1,744.45 for one year. Divided by
twelve (months) we shall have P145.37 a month. And further dividing it by two paydays will bring it down to P72.685, which is the
income tax deducted form the collected on his salary each half month. So, if Justice Endencia's salary as a judicial officer were not
exempt from payment of the income tax, instead of receiving P500 every payday, he would be actually receiving P427.31 only, and
instead of receiving P12,000 a year, he would be receiving but P10,255.55. Is it not therefor clear that every payday, his salary is
actually decreased by P72.685 and every year is decreased by P1,744.45?

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

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

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

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

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

Considering exemption in the abstract, there is nothing unusual or abhorrent in it, as long as it is based on public policy or public
interest. While all other citizens are subject to arrest when charged with the commission of a crime, members of the Senate and
House of Representatives except in cases of treason, felony and breach of the peace are exempt from arrest, during their
attendance in the session of the Legislature; and while all other citizens are generally liable for any speech, remark or statement,
oral or written, tending to cause the dishonor, discredit or contempt of a natural or juridical person or to blacken the memory of one
who is dead, Senators and Congressmen in making such statements during their sessions are extended immunity and exemption.
And as to tax exemption, there are not a few citizens who enjoy this exemption. Persons, natural and juridical, are exempt from
taxes on their lands, buildings and improvements thereon when used exclusively for educational purposes, even if they derive
income therefrom. (Art. VI, Sec. 22 [3].) Holders of government bonds are exempted from the payment of taxes on the income or
interest they receive therefrom (sec. 29 (b) [4], National Internal Revenue Code as amended by Republic Act No. 566). Payments or
income received by any person residing in the Philippines under the laws of the United States administered by the United States
Veterans Administration are exempt from taxation. (Republic Act No. 360). Funds received by officers and enlisted men of the
Philippine Army who served in the Armed Forces of the United States, allowances earned by virtue of such services corresponding
to the taxable years 1942 to 1945, inclusive, are exempted from income tax. (Republic Act No. 210). The payment of wages and
allowances of officers and enlisted men of the Army Forces of the Philippines sent to Korea are also exempted from taxation.
(Republic Act No. 35). In other words, for reasons of public policy and public interest, a citizen may justifiably by constitutional
provision or statute be exempted from his ordinary obligation of paying taxes on his income. Under the same public policy and
perhaps for the same it not higher considerations, the framers of the Constitution deemed it wise and necessary to exempt judicial
officers from paying taxes on their salaries so as not to decrease their compensation, thereby insuring the independence of the
Judiciary.

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

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

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

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-22753      December 18, 1967

JESUS RAMOS, ET AL., petitioners, 

vs.
COURT OF INDUSTRIAL RELATIONS, RICE AND CORN ADMINISTRATION (RCA), and NARIC WORKERS'
UNION, respondents.

Cruz & Cruz Law Office for petitioners.

Mariano B. Tuason for respondent Court.
Vicente T. Ocampo for respondent union.

SANCHEZ, J.:

The meat of the case, as tendered by the pleadings below, is whether Rice and Corn Administration [RCA] should be held
answerable — from June 14, 1962 when the National Rice and Corn Corporation [NARIC] ceased to exist and RCA was created —
for an obligation created by agreement confirmed in a partial judgment of the Commission of Industrial Relations [CIR]1 rendered on
February 16 1953, directing NARIC, to pay 25% additional compensation for overtime work, night work, and work rendered on
Sundays and legal holidays by its laborers and employees.

The present case had its incipiency in a petition filed with ClR2 on February 9, 1963, almost ten years to the date of the CIR partial
decision. Petitioners are 147 workers and employees, allegedly in the service of RCA, who lodged the petition in their individual
capacity, not as union members. They pray that respondent RCA be required to comply with CIR's February 16, 1953 partial
judgment from June, 1962 and to pay attorneys' fees. Some of the petitioners were former NARIC employees, others allegedly were
recently employed by RCA and never employed by NARIC. The record is not altogether clear as to whether petitioners are members
of the Naric Workers' Union [NWU]. For, they claim they are not, a fact negated, and no evidence was taken by CIR thereon.

RCA pleaded disclaimer upon the averment, inter alia, that because "RCA was created under Republic Act 3452 since June 14,
1962 as a service agency or instrumentality of the government to implement a government policy and program pursuant to R.A.
3452, the law applicable governing the extra hours of work of employees of the Administration, is no longer Commonwealth Act 444
known as the Eight-Hour Labor Law but Commonwealth Act 246 known as the Budget Act"; and that "the liabilities transferred from
the NARIC to the RCA are those liabilities incurred by the NARIC but not those to be incurred by the RCA such as the claims for
overtime from creation of the RCA on June 14, 1962 stated in the herein petition."

Allowed to intervene, NWU moved to dismiss upon the ground of pendency of incidental case No. 746-V (21) — filed 10 days after
the petition below — which is a petition similar in terms to the aforesaid petition filed in CIR by the 147 laborers and employees, in
that the union also sought to compel RCA to pay its laborers and employees under the same partial decision, from June 14, 1962. It
is to be noted that Case No. 746-V (21 )3 is filed as an incident in Case No. 746-V of the Court of Industrial Relations where said
partial judgment was entered.

CIR, through then Associate Judge Arsenio I. Martinez, on December 6, 1963, sustained the pendency of another action theory
advocated by NWU. On February 27, 1964, acting on petitioners' motion for reconsideration, CIR en banc in a resolution, affirmed
the order of Associate Judge Arsenio I. Martinez. Presiding Judge Jose S. Bautista dissented in an opinion subsequently filed on
March 30, 1964.

The resolution en banc finally disposed of petitioners' case below. Hence, this appeal to review the order and resolution en
banc aforesaid.

1. We do not go along with the majority of the CIR judges in their ruling that this case should be dismissed upon the ground of
pendency of another action. The action referred to is Case 746-V (21), which is a petition — filed as aforesaid after the petition
below was lodged in court — also to enforce the 1953 partial judgment in Case 746-V.

The 1953 judgment in that case (746-V) was against NARIC. It is contended on one side that RCA is responsible for NARIC's
obligation thus created. But a genuine issue was raised in RCA's answer: Under the law of its creation, RCA should not be held
liable from the time it was constituted on June 14, 1962, for any continuing obligation under the 1953 partial judgment aforesaid
contracted by NARIC which had ceased to exist. RCA did not contract that obligation.

In effect then, petitioner's action herein is a fresh suit against RCA to enforce NARIC's continuing liability against RCA as NARIC's
successor. It is idle to contend that the present should be but an incident of the former suit. For, petitioners here do not seek to alter
or clarify the partial judgment. Neither could the present petition be considered as one for execution of the partial judgment of 1953.
Because judgment for execution is against a defeated party or its privies. No privity, if RCA is to be believed, exists here between
RCA and NARIC. That is a question which, in our opinion, demands serious consideration. CIR should have passed upon it.
Pendency of another similar petition presented ten days after the present case was commenced in court should not have stood on
the way. First. Because the identity of party respondents in the previous 1953 case (Case 746-V), from which case 746-V (21)
sprang and in the present 1963 case (Case 1799-V) deserves explicit determination. Second. If at all, it is posterior Case 746-V (21)
which should be held in abeyance.itc-alf Indeed, CIR stopped proceedings therein pending decision by this Court of the present
case.

2. Is there merit then to RCA's defense that it is not liable for NARIC's continuing obligation aforesaid from and after its constitution
on June 14, 1962?

This is the poser because RCA concedes that under the law of its creation, Republic Act 3452, it should answer for all the liabilities
contracted by NARIC, but only those incurred prior to the date of NARIC's abolition.

Congress, by said Republic Act 3452, approved on June 14, 1962, created RCA, in pursuance of its declared policy, viz:

Sec. 1. It is hereby declared to be the policy of the Government that in order to stabilize the price of palay, rice and corn, it
shall engage in the purchase of these basic foods directly from those tenants, farmers, growers, producers and
landowners in the Philippines who wish to dispose of their produce at a price that will afford them a fair and just return for
their labor and capital investment and whenever circumstances brought about by any cause, natural or artificial, should so
require, shall sell and dispose of these commodities to the consumers at areas of consumption at a price that is within
their reach.4

RCA is, therefore, a government machinery to carry out a declared government policy just noted, and not for profit.

And more. By law, RCA depends for its continuous operation on appropriations yearly set aside by the General Appropriations Act.
So says Section 14 of Republic Act 3452:

Sec. 14. The sum of one hundred million pesos is hereby appropriated, out of any funds in the National Treasury not
otherwise appropriated, for the capitalization of the Administration: Provided, That the annual operational expenses of the
Administration shall not exceed three million pesos of the said amount:Provided, further, That the budget of the Rice and
Corn Administration for the fiscal year nineteen hundred and sixty-three to nineteen hundred and sixty-four and the years
thereafter shall be included in the General Appropriations submitted to Congress.
RCA is not possessed of a separate and distinct corporate existence. On the contrary, by the law of its creation, it is an office
directly "under the Office of the President of the Philippines." 5

3. So it is, that petitioners' claim against RCA must have to be planted upon Section 13 of R.A. 3452 which reads:

Sec. 13. The National Rice and Corn Corporation is hereby abolished and all its assets, liabilities, functions, powers
which are not inconsistent with the provisions of this Act, and all personnel are transferred to the Administration.6

The accent here is on the legal provision that liabilities which RCA is under obligation to respect are those of the defunct NARIC
"which are not inconsistent with the provisions" of Republic Act 3452.

But petitioners forge the argument that amongst the liabilities transferred to and to be met by RCA from NARIC's abolition in June,
1962 is the continuation by RCA of the payment of 25% additional. compensation assumed by NARIC under the 1953 judgment.

Thrust upon us then is the problem of ascertaining whether the liabilities under CIR's said decision are inconsistent with the
provisions of R.A. 3452. Our answer is in the affirmative.

To begin: At bottom, that decision was rendered in pursuance of an agreement touching on one aspect of employment — payment
of extra compensation. It was legally possible for NARIC to enter into such an agreement which was, indeed, incorporated in the
judgment. NARIC was a corporation, as aforesaid.7

But with the RCA, a different picture is presented. A mere instrumentality of the national government performing primarily
governmental functions to promote general welfare, the terms and conditions of employment of its laborers and employees, such as
herein petitioners, are governed by law.8 They are subject to civil service rules.itc-alfThey are governed by the WAPCO Salary Plan.
Explicit and unmistakable is Section 5 of R.A. 3452 which, in par, reads:

. . . He [General Manager] shall fix the number and, subject to WAPCO salary plan allowed by the Civil Service. salaries
of, and appoint, subject to the Civil Service Law and with the consent of the Board of Administrators, such subordinate
employees as may be necessary for the proper discharge of the duties of the Administration. He shall suspend or
otherwise discipline, for cause and subject to Civil Service Law, any subordinate employee of the Administration with the
consent of the Board of Administrators and perform such other duties as may be assigned by the Board.

By Section 562 of the Revised Administrative Code, as amended, the legal hours of labor of employees in every branch of the
government service shall be "eight (8) hours a day, for five (5) days a week or a total of forty (40) hours a week, exclusive of time for
lunch: . . . ."9 However, "[w]hen the interests of the public service so require, the head of any Department, Bureau, or Office may
extend the daily hours of labor, in what manner ever fixed, for any or all of the employees under him, and may likewise require any
or all of them to do overtime work not only on workdays but also on holidays."10

4. The foregoing notwithstanding, Congress had not left the workers and employees — previously with the NARIC and now with
RCA — without ample protection.

Section 259 of the Revised Administrative Code states that "[i]n the absence of special provision, persons regularly and
permanently appointed under the Civil Service Law or whose salary, wages, or emoluments are fixed by law or regulation shall not,
for any service rendered or labor done by them on holidays or for other overtime work, receive or be paid any additional
compensation: . . . ." The special provision contemplated in the status just mentioned is paragraph 32, Section 7-I of
Commonwealth Act 246, otherwise known as the Budget Act, which reads:

(32) Additional compensation for overtime service. — Officers and employees of the National Government, except
secretaries and undersecretaries of departments, chiefs of bureaus and offices, and those occupying positions of similar
category, when working overtime on Saturdays, Sundays, holidays, or during half-day sessions, and after five o'clock post
meridian on regular working days to finish work that must be completed within a specified time, when authorized by the
President, may be paid from any unexpended balance of the appropriation for salaries and wages authorized in any
annual General Appropriation Act, compensation at rates to be fixed by the heads of departments concerned, with the
approval of the President, which shall not exceed the rate of their regular compensation. Such additional compensation
shall not exceed, for any one month, the equivalent of the regular compensation, nor shall it exceed, for any one year, fifty
per centum of such regular compensation.11

Paragraph 16 of RCA's answer below avers:

That the President of the Philippines, thru the Executive Secretary, has authorized under certain limits the payment of
extra hours of work on ordinary days and on Saturdays, Sundays, and legal holidays under the provisions of the said
Commonwealth Act No. 246 which the President has authority to do under the provisions of said law;
The foregoing averment is not without prop. Through the years since the enactment of R.A. 3452 on June 14, 1962, the President of
the Philippines had authorized payment of overtime compensation.

On November 29, 1962, the President allowed additional pay for overtime service rendered by RCA personnel in "the procurement,
warehousing, milling and distribution of rice and in the inspection and inventory of property, to effectively implement the massive
palay procurement program of the President and the stabilization function of the RCA," for the period from July 1, 1962 to Decree
31, 1962 "pursuant to Section 7-I (32) of Commonwealth Act No. 246, as amended, subject to availability of funds and the usual
audit", provided "that at no time shall such additional compensation exceed for any one month the equivalent of the regular
compensation, nor shall it exceed for any one year fifty per centum thereof." This authority was, on October 24, 1963, extended up
to December 31, 1963.

In April, 1964, RCA was granted authority to pay overtime compensation to the replacement personnel of the Security Department
from January 1 up to June 30, 1964. On June 10, 1964, overtime pay was given RCA personnel for services rendered "in
connection with the unloading, checking, transporting, storage and distribution, including the financing and accounting of imported
rice, from April 15, 1964 to December 29, 1964."

On June 21, 1965, RCA employees who were required to render "overtime services during the period from March 16 to May 31,
1965" were granted meal allowance only, it "pursuant to GAO General Circular No. 301, series of 1939, as amended:" and payment
to employees who have rendered overtime services from June 1 to June 30, 1965 was approved as an exceptional case. On July 2,
1965, overtime compensation was authorized for RCA employees who rendered services in connection with the unloading and
stockpiling of imported rice for the months of July, August, And September, 1965.itc-alf RCA employees whose work involved the
distribution of rice from July 1 to December 31, 1965, were granted meal allowance upon the condition that "overtime services of
only needed personnel shall be required."

On April 5, 1966, the President permitted meal allowance and transportation expenses to RCA personnel for overtime services
rendered and to be rendered after office hours or beyond their tours of duty effective January 5, 1966 until June 30, 1966.

On August 3, 1967, payment of meal allowance and ordinary transportation expenses was allowed to not more than 20% of the
RCA personnel at any one time, for overtime services rendered and to be rendered up to December, 1967 in connection with the
distribution of rice and corn grits.

The facts just recited prove the consistent administrative interpretation by the Office of the President as to what may, under the law,
be granted RCA workers and employees for overtime work and work on Sundays and holidays. And, the President of the
Philippines, from time to time, authorized such payments. Not a matter of right, such compensation was given upon authority of
Section 7-I (32) of the Budget Act. It would seem incongruous if said employees and laborers, formerly of NARIC, were allowed to
recover under the partial judgment rendered on February 16, 1953 in CIR Case 746-V instituted by NARIC Workers' Union against
NARIC here in dispute, and at the same time reap the benefits under the aforesaid Budget Law. After all, they are no longer NARIC
workers and employees but workers and employees of RCA which operates by law "under the Office of the President of the
Philippines."

While executive construction is not necessarily binding upon courts, it is entitled to great weight and consideration. Reason for this is
that such construction comes from the particular branch of government called upon to implement the particular law involved. 12 We
adhere to the interpretation just mentioned. It is in accord with law.

5. The ruling enunciated in Garcia Valdez vs. Tuason, 40 Phil. 943, 951, oft-repeated, paves the way for the conclusion we reach
herein. We may affirm a challenged order and resolution en banc upon grounds different from those relied upon by the court below.
While we disagree with CIR on the basis of the dismissal of the petition, namely, pendency of another action, we nonetheless affirm
the order and resolution of dismissal, upon the ground that petitioners are not entitled to recover the additional compensation prayed
for. And for that reason, they have no cause of action against RCA.

Upon the view we take of this case, the order of December 6, 1963 and the CIR's resolution en banc of February 27, 1964 are
hereby affirmed. No costs allowed. So ordered.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Castro, Angeles and Fernan., concur.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 79347 January 26, 1989

PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS (SEPTEMBER CONVENTION), petitioner, 
vs.
DIRECTOR PURA FERRER CALLEJA of the Bureau of Labor Relations, Kalipunan ng Manggagawang Pilipino Malayang
Samahan ng mga Manggagawa sa Hundred Island Chemical Corporation and Hundred Island Chemical
Corporation, respondents.

Apolinar Sevilla for petitioner.

The Solicitor General for public respondent.

Dominguez, Armamento, Cabana & Associates for respondent Samahan ng mga Manggagawa sa Hundred Island Chemical Corp.,
Inc.

Isidro D. Amoroso for respondent Hundred Island Chemical Corp.

PARAS, J.:

Before Us is a special civil action for certiorari, questioning the order of respondent Director dated 27, July 1987,.which in part
states:

xxx

Without going into the merits of the above-entitled case this office finds that the best forum to determine once
and for all whether or not herein appellant-intervenor commands support of the rank-and-file in the unit is
through the process of a certification election.

WHEREFORE, in view thereof, Appellant-Intervenor, Kalipunan ng Manggagawang Pilipino is hereby included

as one of the contending unions.

Let, therefore, a certification election proceed without any further delay, with the following choices:

1. Malayang Samahan ng mga Manggagawa sa Hundred Island Chemical Corporation;

2. Philippine Association of Free Labor Unions (September Convention) and 3. Kalipunan ng Manggagawang
Pilipino.

SO ORDERED. (pp. 26-27, Rollo)

The basic facts of this case are undisputed:

A petition for certification election among the rank-and-file workers of the Hundred Island Chemical Corporation was filed with the
Bureau of Labor Relations (BLR) by respondent Malayang Samahan ng mga Manggagawa sa Hundred Island Chemical
Corporation (Samahan, for short) and was docketed as BLR Case No. A-6-201-87. A motion to intervene, accompanied by the
written consent of twenty percent (20%) of the rank-and-file employees of the said corporation was filed by petitioner Philippine
Association of Free Labor Unions (September Convention), or PAFLU, on 27 April 1987, Likewise the Katipunan ng Manggagawang
Pilipino (KAMAPI, for brevity) flied its motion to intervene on 1 June 1987 but unaccompanied by a similar written consent of the
employer's workers. Due to such want of a written consent, PAFLU moved for the striking out of KAMAPI's motion for intervention.
Acting on said motion, Med-Arbiter Renato D. Parungo issued an order dated 8 June 1987 denying KAMAPI's motion for
intervention and allowing PAFLU's inclusion in the certification election. On 17 June 1987, KAMAPI appealed the said Med-Arbiter's
order to the respondent Director of the BLR, who issued the afore-quoted order. Thus, on 17 August 1987, this petition was filed.
And as prayed for in the said petition, We issued a temporary restraining order dated 24, August 1987. Respondent Samahan has
contested the issuance of said restraining order and has prayed that it be lifted since the delay of the certification election only
defeats the constitutional right of labor to organize.

The main issue in this petition was aptly deposited by the Solicitor General in his consolidated comment; Whether or not KAMAPI
should be allowed to participate in a certification election thru a motion for intervention without a prior showing that it has the
required support expressed in the written consent of at least twenty (20%) percent of all employees in the collective bargaining unit.
In taking the negative stance, petitioner cites Section 6, Rule V of the Rules Implementing Executive Order No. 111, which reads:
 SEC. 6. PROCEDURE. Upon receipt of a petition, the Regional Director shall assign the case to a Med-Arbiter
for appropriate action. The Med-Arbiter shall have twenty (20) working days within which to grant or dismiss the
petition. In a petition filed by a legitimate organization involving an unorganized establishment, the Med-Arbiter
shall grant the petition upon verification that the same is supported by the written consent of at least twenty
(20%) of all the employees in the collective bargaining unit, the twenty (20%) support shall be satisfied upon the
filing of the petition for certification election, otherwise, the petition shall be dismissed. In either case, he shall
cite the ground.

Pertinent to the above rule is Section 7 of E.O. 111 to which the former relates, and which provides:

SEC. 7. Articles 257 and 258 of the Labor Code of the Philippines are hereby amended to read as follows:

xxx

Art. 258. Petitions in unorganized establishments. — In any establishment where there is no certified bargaining
agent, the petition for certification election filed by a legitimate labor organization shall be supported by the
written consent of at least twenty (20%) percent of all the employees in the bargaining unit. Upon receipt of
such petition, the Med-Arbiter shall automatically order the conduct of a certification election.

Considering the above provisions of law, We rule to dismiss the instant petition for certiorari. The respondent Director did not abuse
her discretion in issuing the contested order. It is crystal clear from the said provisions that the requisite written consent of at least
20% of the workers in the bargaining unit applies to petitioners for certification election only, and not to motions for intervention.
Nowhere in the aforesaid legal provisions does it appear that a motion for intervention in a certification election must be
accompanied by a similar written consent. Not even in the Implementing Rules of the Labor Code (see Rule V, Rules Implementing
the Labor Code). Obviously, the percentage requirement pertains only to the petition for certification election, and nothing else.

This leads Us to the question of purpose. the reason behind the 20% requirement is to ensure that the petitioning union has a
substantial interest in the representation proceedings ** and, as correctly pointed out by the Solicitor General, that a considerable
number of workers desire their representation by the said petitioning union for collective bargaining purposes. Hence, the mere fact
that 20% of the workers in the bargaining unit signify their support to the petition by their written consent, it becomes mandatory on
the part of the Med-Arbiter to order the holding of a certification election in an unorganized establishment (Samahang Manggagawa
ng Pacific Mills, Inc. vs. Noriel, 134 SCRA 152). The 20% requirement, thereof, is peculiar to petitions for certification election.

In the light of the foregoing, KAMAPI must be allowed to participate in the certification election since the essence of such proceeding
is to settle once and for all which union is preferred by the workers to represent them (PAFLU vs. BLR, 69 SCRA 132; PAFLU vs.
BLR, 72 SCRA 396). As long as the motion for intervention has been properly and timely filed and the intervention would not cause
any injustice to anyone, it should not be denied and this is so even if the eventual purpose of the motion for intervention is to
participate in the certification election. After all the original applicant had already met the 20% requirement.

WHEREFORE, the instant petition is hereby DISMISSED and the Temporary Restraining Order dated 24 August 1987 LIFTED.
With costs against petitioner.

SO ORDERED.

Melencio-Herrera, (Chairperson), Padilla, Sarmiento and Regalado, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-52415 October 23, 1984

INSULAR BANK OF ASIA AND AMERICA EMPLOYEES' UNION (IBAAEU), petitioner, 

vs.
HON. AMADO G. INCIONG, Deputy Minister, Ministry of Labor and INSULAR BANK OF ASIA AND AMERICA, respondents.

Sisenando R. Villaluz, Jr. for petitioner.

Abdulmaid Kiram Muin colloborating counsel for petitioner.

The Solicitor General Caparas, Tabios, Ilagan Alcantara & Gatmaytan Law Office and Sycip, Salazar, Feliciano & Hernandez Law
Office for respondents.

MAKASIAR, J.:ñé+.£ªwph!1

This is a petition for certiorari to set aside the order dated November 10, 1979, of respondent Deputy Minister of Labor, Amado G.
Inciong, in NLRC case No. RB-IV-1561-76 entitled "Insular Bank of Asia and America Employees' Union (complainant-appellee), vs.
Insular Bank of Asia and America" (respondent-appellant), the dispositive portion of which reads as follows: têñ.£îhqwâ£

xxx xxx xxx

ALL THE FOREGOING CONSIDERED, let the appealed Resolution en banc of the National Labor Relations
Commission dated 20 June 1978 be, as it is hereby, set aside and a new judgment. promulgated dismissing the
instant case for lack of merit (p. 109 rec.).

The antecedent facts culled from the records are as follows:

On June 20, 1975, petitioner filed a complaint against the respondent bank for the payment of holiday pay before the then
Department of Labor, National Labor Relations Commission, Regional Office No. IV in Manila. Conciliation having failed, and upon
the request of both parties, the case was certified for arbitration on July 7, 1975 (p. 18, NLRC rec.

On August 25, 1975, Labor Arbiter Ricarte T. Soriano rendered a decision in the above-entitled case, granting petitioner's complaint
for payment of holiday pay. Pertinent portions of the decision read: têñ.£îhqwâ£

xxx xxx xxx

The records disclosed that employees of respondent bank were not paid their wages on unworked regular
holidays as mandated by the Code, particularly Article 208, to wit: têñ.£îhqwâ£

Art. 208. Right to holiday pay.

(a) Every worker shall be paid his regular daily wage during regular holidays, except in
retail and service establishments regularly employing less than 10 workers.

(b) The term "holiday" as used in this chapter, shall include: New Year's Day, Maundy
Thursday, Good Friday, the ninth of April the first of May, the twelfth of June, the fourth of
July, the thirtieth of November, the twenty-fifth and the thirtieth of December and the day
designated by law for holding a general election.

xxx xxx xxx

This conclusion is deduced from the fact that the daily rate of pay of the bank employees was computed in the
past with the unworked regular holidays as excluded for purposes of determining the deductible amount for
absences incurred Thus, if the employer uses the factor 303 days as a divisor in determining the daily rate of
monthly paid employee, this gives rise to a presumption that the monthly rate does not include payments for
unworked regular holidays. The use of the factor 303 indicates the number of ordinary working days in a year
(which normally has 365 calendar days), excluding the 52 Sundays and the 10 regular holidays. The use of 251
as a factor (365 calendar days less 52 Saturdays, 52 Sundays, and 10 regular holidays) gives rise likewise to
the same presumption that the unworked Saturdays, Sundays and regular holidays are unpaid. This being the
case, it is not amiss to state with certainty that the instant claim for wages on regular unworked holidays is
found to be tenable and meritorious.

WHEREFORE, judgment is hereby rendered:

(a) xxx xxxx xxx

(b) Ordering respondent to pay wages to all its employees for all regular h(olidays since November 1, 1974 (pp.
97-99, rec., underscoring supplied).
Respondent bank did not appeal from the said decision. Instead, it complied with the order of Arbiter Ricarte T. Soriano by paying
their holiday pay up to and including January, 1976.

On December 16, 1975, Presidential Decree No. 850 was promulgated amending, among others, the provisions of the Labor Code
on the right to holiday pay to read as follows: têñ.£îhqwâ£

Art. 94. Right to holiday pay. — (a) Every worker shall be paid his regular daily wages during regular holidays,
except in retail and service establishments regularly employing less than ten (10) workers;

(b) The employer may require an employee to work on any holiday but such employee shall be paid a
compensation equivalent to twice his regular rate and

(c) As used in this Article, "holiday" includes New Year's Day, Maundy Thursday, Good Friday, the ninth of April,
the first of May, the twelfth of June, the fourth of July, the thirtieth of November, the twenty-fifth and the thirtieth
of December, and the day designated by law for holding a general election.

Accordingly, on February 16, 1976, by authority of Article 5 of the same Code, the Department of Labor (now Ministry of Labor)
promulgated the rules and regulations for the implementation of holidays with pay. The controversial section thereof reads: têñ.
£îhqwâ£

Sec. 2. Status of employees paid by the month. — Employees who are uniformly paid by the month,
irrespective of the number of working days therein, with a salary of not less than the statutory or established
minimum wage shall be presumed to be paid for all days in the month whether worked or not.

For this purpose, the monthly minimum wage shall not be less than the statutory minimum wage multiplied by
365 days divided by twelve" (italics supplied).

On April 23, 1976, Policy Instruction No. 9 was issued by the then Secretary of Labor (now Minister) interpreting the above-quoted
rule, pertinent portions of which read: têñ.£îhqwâ£

xxx xxx xxx

The ten (10) paid legal holidays law, to start with, is intended to benefit principally daily employees. In the case
of monthly, only those whose monthly salary did not yet include payment for the ten (10) paid legal holidays are
entitled to the benefit.

Under the rules implementing P.D. 850, this policy has been fully clarified to eliminate controversies on the
entitlement of monthly paid employees, The new determining rule is this: If the monthly paid employee is
receiving not less than P240, the maximum monthly minimum wage, and his monthly pay is uniform from
January to December, he is presumed to be already paid the ten (10) paid legal holidays. However, if
deductions are made from his monthly salary on account of holidays in months where they occur, then he is still
entitled to the ten (10) paid legal holidays. ..." (emphasis supplied).

Respondent bank, by reason of the ruling laid down by the aforecited rule implementing Article 94 of the Labor Code and by Policy
Instruction No. 9, stopped the payment of holiday pay to an its employees.

On August 30, 1976, petitioner filed a motion for a writ of execution to enforce the arbiter's decision of August 25, 1975, whereby the
respondent bank was ordered to pay its employees their daily wage for the unworked regular holidays.

On September 10, 1975, respondent bank filed an opposition to the motion for a writ of execution alleging, among others, that: (a)
its refusal to pay the corresponding unworked holiday pay in accordance with the award of Labor Arbiter Ricarte T. Soriano dated
August 25, 1975, is based on and justified by Policy Instruction No. 9 which interpreted the rules implementing P. D. 850; and (b)
that the said award is already repealed by P.D. 850 which took effect on December 16, 1975, and by said Policy Instruction No. 9 of
the Department of Labor, considering that its monthly paid employees are not receiving less than P240.00 and their monthly pay is
uniform from January to December, and that no deductions are made from the monthly salaries of its employees on account of
holidays in months where they occur (pp. 64-65, NLRC rec.).

On October 18, 1976, Labor Arbiter Ricarte T. Soriano, instead of issuing a writ of execution, issued an order enjoining the
respondent bank to continue paying its employees their regular holiday pay on the following grounds: (a) that the judgment is
already final and the findings which is found in the body of the decision as well as the dispositive portion thereof is res judicata or is
the law of the case between the parties; and (b) that since the decision had been partially implemented by the respondent bank,
appeal from the said decision is no longer available (pp. 100-103, rec.).
On November 17, 1976, respondent bank appealed from the above-cited order of Labor Arbiter Soriano to the National Labor
Relations Commission, reiterating therein its contentions averred in its opposition to the motion for writ of execution. Respondent
bank further alleged for the first time that the questioned order is not supported by evidence insofar as it finds that respondent bank
discontinued payment of holiday pay beginning January, 1976 (p. 84, NLRC rec.).

On June 20, 1978, the National Labor Relations Commission promulgated its resolution en banc dismissing respondent bank's
appeal, the dispositive portion of which reads as follows: têñ.£îhqwâ£

In view of the foregoing, we hereby resolve to dismiss, as we hereby dismiss, respondent's appeal; to set aside
Labor Arbiter Ricarte T. Soriano's order of 18 October 1976 and, as prayed for by complainant, to order the
issuance of the proper writ of execution (p. 244, NLRC rec.).

Copies of the above resolution were served on the petitioner only on February 9, 1979 or almost eight. (8) months after it was
promulgated, while copies were served on the respondent bank on February 13, 1979.

On February 21, 1979, respondent bank filed with the Office of the Minister of Labor a motion for reconsideration/appeal with urgent
prayer to stay execution, alleging therein the following: (a) that there is prima facie evidence of grave abuse of discretion, amounting
to lack of jurisdiction on the part of the National Labor Relations Commission, in dismissing the respondent's appeal on pure
technicalities without passing upon the merits of the appeal and (b) that the resolution appealed from is contrary to the law and
jurisprudence (pp. 260-274, NLRC rec.).

On March 19, 1979, petitioner filed its opposition to the respondent bank's appeal and alleged the following grounds: (a) that the
office of the Minister of Labor has no jurisdiction to entertain the instant appeal pursuant to the provisions of P. D. 1391; (b) that the
labor arbiter's decision being final, executory and unappealable, execution is a matter of right for the petitioner; and (c) that the
decision of the labor arbiter dated August 25, 1975 is supported by the law and the evidence in the case (p. 364, NLRC rec.).

On July 30, 1979, petitioner filed a second motion for execution pending appeal, praying that a writ of execution be issued by the
National Labor Relations Commission pending appeal of the case with the Office of the Minister of Labor. Respondent bank filed its
opposition thereto on August 8, 1979.

On August 13, 1979, the National Labor Relations Commission issued an order which states: têñ.£îhqwâ£

The Chief, Research and Information Division of this Commission is hereby directed to designate a Socio-
Economic Analyst to compute the holiday pay of the employees of the Insular Bank of Asia and America from
April 1976 to the present, in accordance with the Decision of the Labor Arbiter dated August 25, 1975" (p. 80,
rec.).

On November 10, 1979, the Office of the Minister of Labor, through Deputy Minister Amado G. Inciong, issued an order, the
dispositive portion of which states: têñ.£îhqwâ£

ALL THE FOREGOING CONSIDERED, let the appealed Resolution en banc of the National Labor Relations
Commission dated 20 June 1978 be, as it is hereby, set aside and a new judgment promulgated dismissing the
instant case for lack of merit (p. 436, NLRC rec.).

Hence, this petition for certiorari charging public respondent Amado G. Inciong with abuse of discretion amounting to lack or excess
of jurisdiction.

The issue in this case is: whether or not the decision of a Labor Arbiter awarding payment of regular holiday pay can still be set
aside on appeal by the Deputy Minister of Labor even though it has already become final and had been partially executed, the
finality of which was affirmed by the National Labor Relations Commission sitting en banc, on the basis of an Implementing Rule and
Policy Instruction promulgated by the Ministry of Labor long after the said decision had become final and executory.

WE find for the petitioner.

WE agree with the petitioner's contention that Section 2, Rule IV, Book III of the implementing rules and Policy Instruction No. 9
issued by the then Secretary of Labor are null and void since in the guise of clarifying the Labor Code's provisions on holiday pay,
they in effect amended them by enlarging the scope of their exclusion (p. 1 1, rec.).

Article 94 of the Labor Code, as amended by P.D. 850, provides: têñ.£îhqwâ£

 Art. 94. Right to holiday pay. — (a) Every worker shall be paid his regular daily wage during regular holidays,
except in retail and service establishments regularly employing less than ten (10) workers. ...

The coverage and scope of exclusion of the Labor Code's holiday pay provisions is spelled out under Article 82 thereof which
reads: têñ.£îhqwâ£

Art. 82. Coverage. — The provision of this Title shall apply to employees in all establishments and
undertakings, whether for profit or not, but not to government employees, managerial employees, field
personnel members of the family of the employer who are dependent on him for support domestic helpers,
persons in the personal service of another, and workers who are paid by results as determined by the Secretary
of Labor in appropriate regulations.

... (emphasis supplied).

From the above-cited provisions, it is clear that monthly paid employees are not excluded from the benefits of holiday pay. However,
the implementing rules on holiday pay promulgated by the then Secretary of Labor excludes monthly paid employees from the said
benefits by inserting, under Rule IV, Book Ill of the implementing rules, Section 2, which provides that: "employees who are
uniformly paid by the month, irrespective of the number of working days therein, with a salary of not less than the statutory or
established minimum wage shall be presumed to be paid for all days in the month whether worked or not. "

Public respondent maintains that "(T)he rules implementing P. D. 850 and Policy Instruction No. 9 were issued to clarify the policy in
the implementation of the ten (10) paid legal holidays. As interpreted, 'unworked' legal holidays are deemed paid insofar as monthly
paid employees are concerned if (a) they are receiving not less than the statutory minimum wage, (b) their monthly pay is uniform
from January to December, and (c) no deduction is made from their monthly salary on account of holidays in months where they
occur. As explained in Policy Instruction No, 9, 'The ten (10) paid legal holidays law, to start with, is intended to benefit principally
daily paid employees. In case of monthly, only those whose monthly salary did not yet include payment for the ten (10) paid legal
holidays are entitled to the benefit' " (pp. 340-341, rec.). This contention is untenable.

It is elementary in the rules of statutory construction that when the language of the law is clear and unequivocal the law must be
taken to mean exactly what it says. In the case at bar, the provisions of the Labor Code on the entitlement to the benefits of holiday
pay are clear and explicit - it provides for both the coverage of and exclusion from the benefits. In Policy Instruction No. 9, the then
Secretary of Labor went as far as to categorically state that the benefit is principally intended for daily paid employees, when the law
clearly states that every worker shall be paid their regular holiday pay. This is a flagrant violation of the mandatory directive of Article
4 of the Labor Code, which states that "All doubts in the implementation and interpretation of the provisions of this Code, including
its implementing rules and regulations, shall be resolved in favor of labor." Moreover, it shall always be presumed that the legislature
intended to enact a valid and permanent statute which would have the most beneficial effect that its language permits (Orlosky vs.
Haskell, 155 A. 112.)

Obviously, the Secretary (Minister) of Labor had exceeded his statutory authority granted by Article 5 of the Labor Code authorizing
him to promulgate the necessary implementing rules and regulations.

Public respondent vehemently argues that the intent and spirit of the holiday pay law, as expressed by the Secretary of Labor in the
case of Chartered Bank Employees Association v. The Chartered Bank (NLRC Case No. RB-1789-75, March 24, 1976), is to correct
the disadvantages inherent in the daily compensation system of employment — holiday pay is primarily intended to benefit the daily
paid workers whose employment and income are circumscribed by the principle of "no work, no pay." This argument may sound
meritorious; but, until the provisions of the Labor Code on holiday pay is amended by another law, monthly paid employees are
definitely included in the benefits of regular holiday pay. As earlier stated, the presumption is always in favor of law, negatively put,
the Labor Code is always strictly construed against management.

While it is true that the contemporaneous construction placed upon a statute by executive officers whose duty is to enforce it should
be given great weight by the courts, still if such construction is so erroneous, as in the instant case, the same must be declared as
null and void. It is the role of the Judiciary to refine and, when necessary, correct constitutional (and/or statutory) interpretation, in
the context of the interactions of the three branches of the government, almost always in situations where some agency of the State
has engaged in action that stems ultimately from some legitimate area of governmental power (The Supreme Court in Modern Role,
C. B. Swisher 1958, p. 36).

Thus. in the case of Philippine Apparel Workers Union vs. National Labor Relations Commission (106 SCRA 444, July 31, 1981)
where the Secretary of Labor enlarged the scope of exemption from the coverage of a Presidential Decree granting increase in
emergency allowance, this Court ruled that: têñ.£îhqwâ£

... the Secretary of Labor has exceeded his authority when he included paragraph (k) in Section 1 of the Rules
implementing P. D. 1 1 23.

xxx xxx xxx

 Clearly, the inclusion of paragraph k contravenes the statutory authority granted to the Secretary of Labor, and
the same is therefore void, as ruled by this Court in a long line of cases . . . .. têñ.£îhqwâ£

The recognition of the power of administrative officials to promulgate rules in the

administration of the statute, necessarily limited to what is provided for in the legislative
enactment, may be found in the early case of United States vs. Barrios decided in 1908.
Then came in a 1914 decision, United States vs. Tupasi Molina (29 Phil. 119) delineation of
the scope of such competence. Thus: "Of course the regulations adopted under legislative
authority by a particular department must be in harmony with the provisions of the law, and
for the sole purpose of carrying into effect its general provisions. By such regulations, of
course, the law itself cannot be extended. So long, however, as the regulations relate solely
to carrying into effect the provisions of the law, they are valid." In 1936, in People vs.
Santos, this Court expressed its disapproval of an administrative order that would amount
to an excess of the regulatory power vested in an administrative official We reaffirmed such
a doctrine in a 1951 decision, where we again made clear that where an administrative
order betrays inconsistency or repugnancy to the provisions of the Act, 'the mandate of the
Act must prevail and must be followed. Justice Barrera, speaking for the Court in Victorias
Milling inc. vs. Social Security Commission, citing Parker as well as Davis did tersely sum
up the matter thus: "A rule is binding on the Courts so long as the procedure fixed for its
promulgation is followed and its scope is within the statutory authority granted by the
legislature, even if the courts are not in agreement with the policy stated therein or its
innate wisdom. ... On the other hand, administrative interpretation of the law is at best
merely advisory, for it is the courts that finally determine chat the law means."

"It cannot be otherwise as the Constitution limits the authority of the President, in whom all
executive power resides, to take care that the laws be faithfully executed. No lesser
administrative executive office or agency then can, contrary to the express language of the
Constitution assert for itself a more extensive prerogative. Necessarily, it is bound to
observe the constitutional mandate. There must be strict compliance with the legislative
enactment. Its terms must be followed the statute requires adherence to, not departure
from its provisions. No deviation is allowable. In the terse language of the present Chief
Justice, an administrative agency "cannot amend an act of Congress." Respondents can be
sustained, therefore, only if it could be shown that the rules and regulations promulgated by
them were in accordance with what the Veterans Bill of Rights provides" (Phil. Apparel
Workers Union vs. National Labor Relations Commission, supra, 463, 464, citing Teozon
vs. Members of the Board of Administrators, PVA 33 SCRA 585; see also Santos vs. Hon.
Estenzo, et al, 109 Phil. 419; Hilado vs. Collector of Internal Revenue, 100 Phil. 295; Sy
Man vs. Jacinto & Fabros, 93 Phil. 1093; Olsen & Co., Inc. vs. Aldanese and Trinidad, 43
Phil. 259).

This ruling of the Court was recently reiterated in the case of American Wire & Cable Workers Union (TUPAS) vs. The National
Labor Relations Commission and American Wire & Cable Co., Inc., G.R. No. 53337, promulgated on June 29, 1984.

In view of the foregoing, Section 2, Rule IV, Book III of the Rules to implement the Labor Code and Policy instruction No. 9 issued
by the then Secretary of Labor must be declared null and void. Accordingly, public respondent Deputy Minister of Labor Amado G.
Inciong had no basis at all to deny the members of petitioner union their regular holiday pay as directed by the Labor Code.

II

It is not disputed that the decision of Labor Arbiter Ricarte T. Soriano dated August 25, 1975, had already become final, and was, in
fact, partially executed by the respondent bank.

However, public respondent maintains that on the authority of De Luna vs. Kayanan, 61 SCRA 49, November 13, 1974, he can
annul the final decision of Labor Arbiter Soriano since the ensuing promulgation of the integrated implementing rules of the Labor
Code pursuant to P.D. 850 on February 16, 1976, and the issuance of Policy Instruction No. 9 on April 23, 1976 by the then
Secretary of Labor are facts and circumstances that transpired subsequent to the promulgation of the decision of the labor arbiter,
which renders the execution of the said decision impossible and unjust on the part of herein respondent bank (pp. 342-343, rec.).

This contention is untenable.

To start with, unlike the instant case, the case of De Luna relied upon by the public respondent is not a labor case wherein the
express mandate of the Constitution on the protection to labor is applied. Thus Article 4 of the Labor Code provides that, "All doubts
in the implementation and interpretation of the provisions of this Code, including its implementing rules and regulations, shall be
resolved in favor of labor and Article 1702 of the Civil Code 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.
Consequently, contrary to public respondent's allegations, it is patently unjust to deprive the members of petitioner union of their
vested right acquired by virtue of a final judgment on the basis of a labor statute promulgated following the acquisition of the "right".

On the question of whether or not a law or statute can annul or modify a judicial order issued prior to its promulgation, this Court,
through Associate Justice Claro M. Recto, said: têñ.£îhqwâ£

xxx xxx xxx

We are decidedly of the opinion that they did not. Said order, being unappealable, became final on the date of
its issuance and the parties who acquired rights thereunder cannot be deprived thereof by a constitutional
provision enacted or promulgated subsequent thereto. Neither the Constitution nor the statutes, except penal
laws favorable to the accused, have retroactive effect in the sense of annulling or modifying vested rights, or
altering contractual obligations" (China Ins. & Surety Co. vs. Judge of First Instance of Manila, 63 Phil. 324,
emphasis supplied).

In the case of In re: Cunanan, et al., 19 Phil. 585, March 18, 1954, this Court said: "... when a court renders a decision or
promulgates a resolution or order on the basis of and in accordance with a certain law or rule then in force, the subsequent
amendment or even repeal of said law or rule may not affect the final decision, order, or resolution already promulgated, in the
sense of revoking or rendering it void and of no effect." Thus, the amendatory rule (Rule IV, Book III of the Rules to Implement the
Labor Code) cannot be given retroactive effect as to modify final judgments. Not even a law can validly annul final decisions (In re:
Cunanan, et al., Ibid).

Furthermore, the facts of the case relied upon by the public respondent are not analogous to that of the case at bar. The case of De
Luna speaks of final and executory judgment, while iii the instant case, the final judgment is partially executed. just as the court is
ousted of its jurisdiction to annul or modify a judgment the moment it becomes final, the court also loses its jurisdiction to annul or
modify a writ of execution upon its service or execution; for, otherwise, we will have a situation wherein a final and executed
judgment can still be annulled or modified by the court upon mere motion of a panty This would certainly result in endless litigations
thereby rendering inutile the rule of law.

Respondent bank counters with the argument that its partial compliance was involuntary because it did so under pain of levy and
execution of its assets (p. 138, rec.). WE find no merit in this argument. Respondent bank clearly manifested its voluntariness in
complying with the decision of the labor arbiter by not appealing to the National Labor Relations Commission as provided for under
the Labor Code under Article 223. A party who waives his right to appeal is deemed to have accepted the judgment, adverse or not,
as correct, especially if such party readily acquiesced in the judgment by starting to execute said judgment even before a writ of
execution was issued, as in this case. Under these circumstances, to permit a party to appeal from the said partially executed final
judgment would make a mockery of the doctrine of finality of judgments long enshrined in this jurisdiction.

Section I of Rule 39 of the Revised Rules of Court provides that "... execution shall issue as a matter of right upon the expiration of
the period to appeal ... or if no appeal has been duly perfected." This rule applies to decisions or orders of labor arbiters who are
exercising quasi-judicial functions since "... the rule of execution of judgments under the rules should govern all kinds of execution of
judgment, unless it is otherwise provided in other laws" Sagucio vs. Bulos 5 SCRA 803) and Article 223 of the Labor Code provides
that "... decisions, awards, or orders of the Labor Arbiter or compulsory arbitrators are final and executory unless appealed to the
Commission by any or both of the parties within ten (10) days from receipt of such awards, orders, or decisions. ..."

Thus, under the aforecited rule, the lapse of the appeal period deprives the courts of jurisdiction to alter the final judgment and the
judgment becomes final ipso jure (Vega vs. WCC, 89 SCRA 143, citing Cruz vs. WCC, 2 PHILAJUR 436, 440, January 31, 1978;
see also Soliven vs. WCC, 77 SCRA 621; Carrero vs. WCC and Regala vs. WCC, decided jointly, 77 SCRA 297; Vitug vs. Republic,
75 SCRA 436; Ramos vs. Republic, 69 SCRA 576).

In Galvez vs. Philippine Long Distance Telephone Co., 3 SCRA 422, 423, October 31, 1961, where the lower court modified a final
order, this Court ruled thus: têñ.£îhqwâ£

xxx xxx xxx

The lower court was thus aware of the fact that it was thereby altering or modifying its order of January 8, 1959.
Regardless of the excellence of the motive for acting as it did, we are constrained to hold however, that the
lower court had no authorities to make said alteration or modification. ...

xxx xxx xxx

The equitable considerations that led the lower court to take the action complained of cannot offset the dem
ands of public policy and public interest — which are also responsive to the tenets of equity — requiring that an
issues passed upon in decisions or final orders that have become executory, be deemed conclusively disposed
 of and definitely closed for, otherwise, there would be no end to litigations, thus setting at naught the main role
of courts of justice, which is to assist in the enforcement of the rule of law and the maintenance of peace and
order, by settling justiciable controversies with finality.

xxx xxx xxx

In the recent case of Gabaya vs. Mendoza, 113 SCRA 405, 406, March 30, 1982, this Court said: têñ.£îhqwâ£

xxx xxx xxx

In Marasigan vs. Ronquillo (94 Phil. 237), it was categorically stated that the rule is absolute that after a
judgment becomes final by the expiration of the period provided by the rules within which it so becomes, no
further amendment or correction can be made by the court except for clerical errors or mistakes. And such final
judgment is conclusive not only as to every matter which was offered and received to sustain or defeat the claim
or demand but as to any other admissible matter which must have been offered for that purpose (L-7044, 96
Phil. 526). In the earlier case of Contreras and Ginco vs. Felix and China Banking Corp., Inc. (44 O.G. 4306), it
was stated that the rule must be adhered to regardless of any possible injustice in a particular case for (W)e
have to subordinate the equity of a particular situation to the over-mastering need of certainty and immutability
of judicial pronouncements

xxx xxx xxx

III

The despotic manner by which public respondent Amado G. Inciong divested the members of the petitioner union of their rights
acquired by virtue of a final judgment is tantamount to a deprivation of property without due process of law Public respondent
completely ignored the rights of the petitioner union's members in dismissing their complaint since he knew for a fact that the
judgment of the labor arbiter had long become final and was even partially executed by the respondent bank.

A final judgment vests in the prevailing party a right recognized and protected by law under the due process clause of the
Constitution (China Ins. & Surety Co. vs. Judge of First Instance of Manila, 63 Phil. 324). A final judgment is "a vested interest which
it is right and equitable that the government should recognize and protect, and of which the individual could no. be deprived
arbitrarily without injustice" (Rookledge v. Garwood, 65 N.W. 2d 785, 791).

lt is by this guiding principle that the due process clause is interpreted. Thus, in the pithy language of then Justice, later Chief
Justice, Concepcion "... acts of Congress, as well as those of the Executive, can deny due process only under pain of nullity, and
judicial proceedings suffering from the same flaw are subject to the same sanction, any statutory provision to the contrary
notwithstanding (Vda. de Cuaycong vs. Vda. de Sengbengco 110 Phil. 118, emphasis supplied), And "(I)t has been likewise
established that a violation of a constitutional right divested the court of jurisdiction; and as a consequence its judgment is null and
void and confers no rights" (Phil. Blooming Mills Employees Organization vs. Phil. Blooming Mills Co., Inc., 51 SCRA 211, June 5,
1973).

Tested by and pitted against this broad concept of the constitutional guarantee of due process, the action of public respondent
Amado G. Inciong is a clear example of deprivation of property without due process of law and constituted grave abuse of
discretion, amounting to lack or excess of jurisdiction in issuing the order dated November 10, 1979.

WHEREFORE, THE PETITION IS HEREBY GRANTED, THE ORDER OF PUBLIC RESPONDENT IS SET ASIDE, AND THE
DECISION OF LABOR ARBITER RICARTE T. SORIANO DATED AUGUST 25, 1975, IS HEREBY REINSTATED.

COSTS AGAINST PRIVATE RESPONDENT INSULAR BANK OF ASIA AND AMERICA

SO ORDERED.1äwphï1.ñët

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-44717 August 28, 1985

THE CHARTERED BANK EMPLOYEES ASSOCIATION, petitioner, 
vs.
HON. BLAS F. OPLE, in his capacity as the Incumbent Secretary of Labor, and THE CHARTERED BANK,respondents.

GUTIERREZ, JR., J.:

This is a petition for certiorari seeking to annul the decision of the respondent Secretary, now Minister of Labor which denied the
petitioner's claim for holiday pay and its claim for premium and overtime pay differentials. The petitioner claims that the respondent
Minister of Labor acted contrary to law and jurisprudence and with grave abuse of discretion in promulgating Sec. 2, Rule IV, Book
III of the Integrated Rules and in issuing Policy Instruction No. 9, both referring to holidays with pay.

On May 20, 1975, the Chartered Bank Employees Association, in representation of its monthly paid employees/members, instituted
a complaint with the Regional Office No. IV, Department of Labor, now Ministry of Labor and Employment (MOLE) against private
respondent Chartered Bank, for the payment of ten (10) unworked legal holidays, as well as for premium and overtime differentials
for worked legal holidays from November 1, 1974.

The memorandum for the respondents summarizes the admitted and/or undisputed facts as follows:

l. The work force of respondent bank consists of 149 regular employees, all of whom are paid by the month;

2. Under their existing collective bargaining agreement, (Art. VII thereof) said monthly paid employees are paid
for overtime work as follows:

Section l. The basic work week for all employees excepting security guards who by virtue of the nature of their
work are required to be at their posts for 365 days per year, shall be forty (40) hours based on five (5) eight (8)
hours days, Monday to Friday.

Section 2. Time and a quarter hourly rate shall be paid for authorized work performed in excess of eight (8)
hours from Monday through Friday and for any hour of work performed on Saturdays subject to Section 5
hereof.

Section 3. Time and a half hourly rate shall be paid for authorized work performed on Sundays, legal and
special holidays.

xxx xxx xxx

xxx xxx xxx

Section 5. The provisions of Section I above notwithstanding the BANK may revert to the six (6) days work
week, to include Saturday for a four (4) hour day, in the event the Central Bank should require commercial
banks to open for business on Saturday.

3. In computing overtime pay and premium pay for work done during regular holidays, the divisor used in
arriving at the daily rate of pay is 251 days although formerly the divisor used was 303 days and this was when
the respondent bank was still operating on a 6-day work week basis. However, for purposes of computing
deductions corresponding to absences without pay the divisor used is 365 days.

4. All regular monthly paid employees of respondent bank are receiving salaries way beyond the statutory or
minimum rates and are among the highest paid employees in the banking industry.

5. The salaries of respondent bank's monthly paid employees suffer no deduction for holidays occurring within
the month.

On the bases of the foregoing facts, both the arbitrator and the National Labor Relations Commission (NLRC) ruled in favor of the
petitioners ordering the respondent bank to pay its monthly paid employees, holiday pay for the ten (10) legal holidays effective
November 1, 1974 and to pay premium or overtime pay differentials to all employees who rendered work during said legal holidays.
On appeal, the Minister of Labor set aside the decision of the NLRC and dismissed the petitioner's claim for lack of merit basing its
decision on Section 2, Rule IV, Book Ill of the Integrated Rules and Policy Instruction No. 9, which respectively provide:
 Sec. 2. Status of employees paid by the month. Employees who are uniformly paid by the month, irrespective of
the number of working days therein, with a salary of not less than the statutory or established minimum wage
shall be presumed to be paid for all days in the month whether worked or not.

POLICY INSTRUCTION NO. 9

TO: All Regional Directors

SUBJECT: PAID LEGAL HOLIDAYS

The rules implementing PD 850 have clarified the policy in the implementation of the ten (10) paid legal
holidays. Before PD 850, the number of working days a year in a firm was considered important in determining
entitlement to the benefit. Thus, where an employee was working for at least 313 days, he was considered
definitely already paid. If he was working for less than 313, there was no certainty whether the ten (10) paid
legal holidays were already paid to him or not.

The ten (10) paid legal holidays law, to start with, is intended to benefit principally daily employees. In the case
of monthly, only those whose monthly salary did not yet include payment for the ten (10) paid legal holidays are
entitled to the benefit.

Under the rules implementing PD 850, this policy has been fully clarified to eliminate controversies on the
entitlement of monthly paid employees. The new determining rule is this: 'If the monthly paid employee is
receiving not less than P240, the maximum monthly minimum wage, and his monthly pay is uniform from
January to December, he is presumed to be already paid the ten (10) paid legal holidays. However, if
deductions are made from his monthly salary on account of holidays in months where they occur, then he is still
entitled to the ten (10) paid legal holidays.

These new interpretations must be uniformly and consistently upheld.

This issuance shall take effect immediately.

The issues are presented in the form of the following assignments of errors:

First Error

Whether or not the Secretary of Labor erred and acted contrary to law in promulgating Sec.
2, Rule IV, Book III of the Integrated Rules and Policy Instruction No. 9.

Second Error

Whether or not the respondent Secretary of Labor abused his discretion and acted contrary
to law in applying Sec. 2, Rule IV of the Integrated Rules and Policy Instruction No. 9
abovestated to private respondent's monthly-paid employees.

Third Error

Whether or not the respondent Secretary of Labor, in not giving due credence to the
respondent bank's practice of paying its employees base pay of 100% and premium pay of
50% for work done during legal holidays, acted contrary to law and abused his discretion in
denying the claim of petitioners for unworked holidays and premium and overtime pay
differentials for worked holidays.

The petitioner contends that the respondent Minister of Labor gravely abused his discretion in promulgating Section 2, Rule IV, Book
III of the Integrated Rules and Policy Instruction No. 9 as guidelines for the implementation of Articles 82 and 94 of the Labor Code
and in applying said guidelines to this case. It maintains that while it is true that the respondent Minister has the authority in the
performance of his duty to promulgate rules and regulations to implement, construe and clarify the Labor Code, such power is
limited by provisions of the statute sought to be implemented, construed or clarified. According to the petitioner, the so-called
"guidelines" promulgated by the respondent Minister totally contravened and violated the Code by excluding the
employees/members of the petitioner from the benefits of the holiday pay, when the Code itself did not provide for their expanding
the Code's clear and concise conclusion and notwithstanding the Code's clear and concise phraseology defining those employees
who are covered and those who are excluded from the benefits of holiday pay.
On the other hand, the private respondent contends that the questioned guidelines did not deprive the petitioner's members of the
benefits of holiday pay but merely classified those monthly paid employees whose monthly salary already includes holiday pay and
those whose do not, and that the guidelines did not deprive the employees of holiday pay. It states that the question to be clarified is
whether or not the monthly salaries of the petitioner's members already includes holiday pay. Thus, the guidelines were
promulgated to avoid confusion or misconstruction in the application of Articles 82 and 94 of the Labor Code but not to violate them.
Respondent explains that the rationale behind the promulgation of the questioned guidelines is to benefit the daily paid workers
who, unlike monthly-paid employees, suffer deductions in their salaries for not working on holidays. Hence, the Holiday Pay Law
was enacted precisely to countervail the disparity between daily paid workers and monthly-paid employees.

The decision in Insular Bank of Asia and America Employees' Union (IBAAEU) v. Inciong (132 SCRA 663) resolved a similar issue.
Significantly, the petitioner in that case was also a union of bank employees. We ruled that Section 2, Rule IV, Book III of the
Integrated Rules and Policy Instruction No. 9, are contrary to the provisions of the Labor Code and, therefore, invalid This Court
stated:

It is elementary in the rules of statutory construction that when the language of the law is clear and unequivocal
the law must be taken to mean exactly what it says. In the case at bar, the provisions of the Labor Code on the
entitlement to the benefits of holiday pay are clear and explicit it provides for both the coverage of and exclusion
from the benefit. In Policy Instruction No. 9, the then Secretary of Labor went as far as to categorically state that
the benefit is principally intended for daily paid employees, when the law clearly states that every worker shall
be paid their regular holiday pay. This is flagrant violation of the mandatory directive of Article 4 of the Labor
Code, which states that 'All doubts in the implementation and interpretation of the provisions of this
Code, including its implementing rules and regulations, shall be resolved in favor of labor.' Moreover, it shall
always be presumed that the legislature intended to enact a valid and permanent statute which would have the
most beneficial effect that its language permits (Orlosky v. Hasken, 155 A. 112)

Obviously, the Secretary (Minister) of Labor had exceeded his statutory authority granted by Article 5 of the
Labor Code authorizing him to promulgate the necessary implementing rules and regulations.

We further ruled:

While it is true that the contemporaneous construction placed upon a statute by executive officers whose duty is
to enforce it should be given great weight by the courts, still if such construction is so erroneous, as in the
instant case, the same must be declared as null and void. It is the role of the Judiciary to refine and, when
necessary correct constitutional (and/or statutory) interpretation, in the context of the interactions of the three
branches of the government, almost always in situations where some agency of the State has engaged in
action that stems ultimately from some legitimate area of governmental power (The Supreme Court in Modern
Role, C.B. Swisher 1958, p. 36).

xxx xxx xxx

In view of the foregoing, Section 2, Rule IV, Book III of the Rules to implement the Labor Code and Policy
Instruction No. 9 issued by the then Secretary of Labor must be declared null and void. Accordinglyl public
respondent Deputy Minister of Labor Amado G. Inciong had no basis at all to deny the members of petitioner
union their regular holiday pay as directed by the Labor Code.

Since the private respondent premises its action on the invalidated rule and policy instruction, it is clear that the employees
belonging to the petitioner association are entitled to the payment of ten (10) legal holidays under Articles 82 and 94 of the Labor
Code, aside from their monthly salary. They are not among those excluded by law from the benefits of such holiday pay.

Presidential Decree No. 850 states who are excluded from the holiday provisions of that law. It states:

ART. 82. Coverage. The provision of this Title shall apply to employees in all establishments and undertakings,
whether for profit or not, but not to government employees, managerial employees, field personnel members of
the family of the employer who are dependent on him for support, domestic helpers, persons in the personal
service of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate
regulations. (Emphasis supplied).

The questioned Section 2, Rule IV, Book III of the Integrated Rules and the Secretary's Policy Instruction No. 9 add another
excluded group, namely, "employees who are uniformly paid by the month." While the additional exclusion is only in the form of a
presumption that all monthly paid employees have already been paid holiday pay, it constitutes a taking away or a deprivation which
must be in the law if it is to be valid. An administrative interpretation which diminishes the benefits of labor more than what the
statute delimits or withholds is obviously ultra vires.
It is argued that even without the presumption found in the rules and in the policy instruction, the company practice indicates that the
monthly salaries of the employees are so computed as to include the holiday pay provided by law. The petitioner contends
otherwise.

One strong argument in favor of the petitioner's stand is the fact that the Chartered Bank, in computing overtime compensation for
its employees, employs a "divisor" of 251 days. The 251 working days divisor is the result of subtracting all Saturdays, Sundays and
the ten (10) legal holidays from the total number of calendar days in a year. If the employees are already paid for all non-working
days, the divisor should be 365 and not 251.

The situation is muddled somewhat by the fact that, in computing the employees' absences from work, the respondent bank uses
365 as divisor. Any slight doubts, however, must be resolved in favor of the workers. This is in keeping with the constitutional
mandate of promoting social justice and affording protection to labor (Sections 6 and 9, Article II, Constitution). The Labor Code, as
amended, itself provides:

ART. 4. Construction in favor of labor. All doubts in the implementation and interpretation of the provisions of
this Code, including its implementing rules and regulations, shall be resolved in favor of labor.

Any remaining doubts which may arise from the conflicting or different divisors used in the computation of overtime pay and
employees' absences are resolved by the manner in which work actually rendered on holidays is paid. Thus, whenever monthly paid
employees work on a holiday, they are given an additional 100% base pay on top of a premium pay of 50%. If the employees'
monthly pay already includes their salaries for holidays, they should be paid only premium pay but not both base pay and premium
pay.

The contention of the respondent that 100% base pay and 50% premium pay for work actually rendered on holidays is given in
addition to monthly salaries only because the collective bargaining agreement so provides is itself an argument in favor of the
petitioner stand. It shows that the Collective Bargaining Agreement already contemplated a divisor of 251 days for holiday pay
computations before the questioned presumption in the Integrated Rules and the Policy Instruction was formulated. There is
furthermore a similarity between overtime pay, which is computed on the basis of 251 working days a year, and holiday pay, which
should be similarly treated notwithstanding the public respondents' issuances. In both cases overtime work and holiday work- the
employee works when he is supposed to be resting. In the absence of an express provision of the CBA or the law to the contrary,
the computation should be similarly handled.

We are not unmindful of the fact that the respondent's employees are among the highest paid in the industry. It is not the intent of
this Court to impose any undue burdens on an employer which is already doing its best for its personnel. we have to resolve the
labor dispute in the light of the parties' own collective bargaining agreement and the benefits given by law to all workers. When the
law provides benefits for "employees in all establishments and undertakings, whether for profit or not" and lists specifically the
employees not entitled to those benefits, the administrative agency implementing that law cannot exclude certain employees from its
coverage simply because they are paid by the month or because they are already highly paid. The remedy lies in a clear redrafting
of the collective bargaining agreement with a statement that monthly pay already includes holiday pay or an amendment of the law
to that effect but not an administrative rule or a policy instruction.

WHEREFORE, the September 7, 1976 order of the public respondent is hereby REVERSED and SET ASIDE. The March 24, 1976
decision of the National Labor Relations Commission which affirmed the October 30, 1975 resolution of the Labor Arbiter but
deleted interest payments is REINSTATED.

SO ORDERED.

Makasiar, C.J., Concepcion, Jr., Melencio-Herrera, Plana, Escolin, Relova, De la Fuente, Cuevas, Alampay and Patajo, JJ., concur.

Teehankee, J., in the result.

Aquino, J., took no part.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-28997 February 22, 1974

FELICISIMO M. ORENCIA, petitioner-appellant, 
vs.
JUAN PONCE ENRILE, as Secretary of Justice, HON. ANTONIO H. NOBLEJAS, in his personal capacity & HON. GREGORIO
BILOG, JR. as Commissioner of Land Registration, HON. ABELARDO SUBIDO, as Commissioner of Civil Service, and
ATTY. GUILLERMINA M. GENER, respondents-appellees.

Ramon A. Gonzales for petitioner-appellant.

Office of the Solicitor General Felix V. Makasiar for respondent-appellees Juan Ponce Enrile, etc., et al.

Ramon C. Aquino for respondent-appellee Antonio H. Noblejas.

FERNANDO, J.:p

Petitioner, in his appeal against a lower court decision, dismissing his suit for mandamus to compel respondent officials, the then
Secretary of Justice, the then Commissioner of Land Registration and the then Commissioner of Civil Service,  1 to recognize his
alleged right as Assistant Chief, Clerks of Court Division, Land Registration Commission is confronted with obstacles not only
formidable but insurmountable in character. For all the skill evident in his brief as appellant, submitted by his counsel, former
Delegate Ramon Gonzales, he was not able to demonstrate his clear legal right to such a position. Nor is the procedural hurdle the
only one that stands in the way. There are barriers substantive in character that refuse to yield even under the most vigorous and
insistent attack. For the crucial issue, a public office being involved and public interest being the prime consideration, is whether the
choice for the position of Assistant Chief of the Clerks of Court Division of the Land Registration Commission should fall on
respondent Guillermina M. Gener, a member of the Bar, rather than on petitioner, whose educational attainment was that of a high
school graduate. For respondent officials, the answer was not in doubt. Since there was a new legal provision to be construed, one
which admittedly, to follow the approach of counsel for petitioner, has an ambiguous aspect, they chose to follow the principle that a
public office is a public trust. Certainly, such a contemporaneous construction, one moreover dictated by the soundest constitutional
postulate, is entitled to the highest respect from the judiciary. In manifesting such an attitude, the lower court could not have been in
error. We affirm.

What did transpire in this suit? From petitioner's statement of the case: "On June 20, 1967, petitioner-appellant filed the said petition
for mandamus with preliminary injunction before the Manila Court of First Instance against respondents docketed as Civil Case No.
69840, alleging substantially that he is the deputy clerk of court of the Clerks of Court Division of the Land Registration Commission,
an he has been performing functions of Assistant Chief of said division and has been considered and recognized as such until Rep.
Act 4040, enacted June 18, 1964 increasing the salaries of Assistant Chiefs of Divisions, among others, implemented where he was
left out while co-assistant chief of the nine (9) other divisions of the Land Registration Commission were so recognized and
extended increased compensation, in spite of his protest to respondents Secretary of Justice, Land Registration Commissioner, and
Commissioner of Civil Service; and to add insult to injury, respondent Guillermina M. Gener, was appointed assistant of the Clerks
of Court Division, when there was no vacancy to said position and given an increased compensation of P9,600.00 for the said
position, while petitioner continued to receive the old rate of P3,070.08 per annum, and praying that he be extended similar
recognition as assistant chief of the Clerks of Court Division of the Land Registration Commission, and paid the corresponding
salary under Rep. Act 4040 and that the appointment of respondent Guillermina M. Gener be declared null and void, with damages
and attorney's fees. On July 17, 1967, respondents filed their answer, and after usual admissions and denials, interposed a defense
that petitioner is unqualified for the position of Assistant Chief, Clerks of Court Division, and being a new position created under
Republic Act 4040, the same can only be filed by a qualified person; that respondent [Gener], being a lawyer, is more qualified than
petitioner who is only a high school graduate with second grade civil service eligibility, and praying that the petition be dismissed."  2

Then from his statement of facts: "Petitioner is a deputy clerk of court of the Clerks of Court Division, Land Registration
Commission, having been appointed as such on July 16, 1962 after having [risen] from the ranks for the last 23 years in said
office ... with compensation of P3,070.08 per annum ... . The Clerks of Court Division is one of the ten (10) divisions in the Land
Registration Commission, all of which prior to Rep. Act 4040 are headed, each by a Chief and Assistant Chief, but none of them
carries an appointment of Division Chief and Assistant Chief, although they are considered and recognized as such, ... ." 3 Then on
the very next page of his brief, petitioner made clear that his position was not Assistant Chief of the Clerks of Court Division, for
there was none as yet existing, but Deputy Clerk of Court. 4

The rest of his statement of facts follows: "On July 6, 1964, petitioner formally requested respondent commissioner of Land
Registration commission for recommendation and payment of his differential salary, which request was, however, denied on July 10,
1964. ... On September 1, 1964, petitioner appealed to the Secretary of Justice, but his appeal was likewise denied ... . From the
ruling of the Secretary of Justice, he appealed to respondent Commissioner of Civil Service on June 3, 1965, and, again, he was
rebuffed on February 21, 1966 ... . On July 29, 1966, said respondent Gener was appointed Assistant Chief of the Clerks of Court
Division effective July 1, 1966, by the respondent Secretary of Justice, upon recommendation of respondent Land Registration
Commission, and duly attested to by the Commissioner of Civil Service ... . Aggrieved, petitioner has brought the present suit."  5
Petitioner's own summation of the matter thus renders clear that until the passage of Republic Act No. 4040, there was no such
position as Assistant Chief of the Clerks of Court Division. It would be only through the utmost straining of words that an assertion
may be made as to his right thereto, specially so as his designation was specifically of Deputy Clerk of Court. Where, then, is that
clear legal right so indispensable for a suit of mandamusto prosper? His claim being far-fetched and untenable, it is not for him to
dispute the appointment of respondent Gener, possessed of the very qualification of membership in the Bar which petitioner sadly
lacks. That is to accord the principle of public office being a public trust. Moreover, in a case where such appointment was sustained
by respondent Secretary of Justice and found favor with respondent Commissioner Civil Service, the contemporaneous construction
thus placed on the legal provision in Republic Act No. 4040, admitting its ambiguity, is for this court to uphold. Hence, as noted at
the outset, the appealed decision must be affirmed.

1. "Mandamus," as held in JRS Business Corporation v. Montesa, 6 a 1968 decision, "is the proper remedy if it could be shown that
there was neglect on the part of a tribunal in the performance of an act, which specifically the law enjoins as a duty or an unlawful
exclusion of a party from the use and enjoyment of a right to which he is 
entitled. ... According to former Chief Justice Moran, only specific legal rights may be enforced by mandamus if they are clear and
certain. If the legal rights of the petition are not well-defined, clear, and certain, the petition must be dismissed.' In support of the
above view, Viuda e Hijos de Crispulo Zamora v. Wright was cited. As was there categorically stated: 'This court has held that it is
fundamental that the duties to be enforced by mandamus must be those which are clear and enjoined by law or by reason of official
station, and that petitioner must have a clear, legal right to the thing demanded and that it must be the legal duty of the defendant to
perform the required act.' As expressed by the then Justice Recto in a subsequent opinion: 'It is well established that only specific
legal rights are enforceable by mandamus, that the right sought to be enforced must be certain and clear, and that the writ not issue
in cases where the right is doubtful.' To the same effect is the formulation of such doctrine by former Justice Barrera: 'Stated
otherwise, the writ never issues in doubtful cases. It neither confers powers nor imposes duties. It is simply a command to exercise
a power already possessed and to perform a duty already imposed.'"  7 A month after the JRS Business Corporation v.
Montesa decision, Justice J.B.L. Reyes, in Valdez v. Gutierrez, 8 categorically affirmed: "It is a rule well-entrenched in this jurisdiction
that mandamus requires a showing of clear and certain right, and never issues in doubtful cases."  9

2. This is not the worst of it. It is not merely that petitioner does not have a clear legal right. The more accurate way of putting it is
that he has no right at all to the position of Assistant Chief to the Clerks of Court Division. The ingenuity displayed by counsel,
worthy of a better cause, it might be added, cannot obscure the undeniable fact that without Republic Act No. 4040, there would be
no such position that is now the subject of dispute between him and respondent Gener. His position left untouched, it is to be
assumed, is that of deputy clerk. As was made mention of, he did so admit, for that was something he could not very well deny. He
would argue however that he might as well "be considered as Assistant Chief, Clerks of Court Division." 10 This is not the language
of affirmation but of surmise. It does credit to petitioner's respect for the truth, but it certainly leaves his contention legally without
support. Nothing daunted, petitioner would argue that to view the matter in a way opposed to his would in effect "sanction removal of
petitioner from such position, without cause in violation of the constitution ... ." 11 Here, he seeks shelter within the provision of
Section 4 of the 1935 Constitution. 12 There is here a glaring misapprehension. To so construe such provision by way merely of
assurance of term to a government functionary and to lose sight of the paramount public interest involved is to ignore and disregard
the fundamental postulate that a public office is a public trust. That accounts for the rather qualified and limited sense it possesses
as property safeguarded by the due process clause. 13 The essential requirement then for a place in the government service is the
possession of the requisite ability and competence. Only thus may there be fulfillment of a trust. Evidently, that was in the mind of
respondent dignitaries. A member of the bar, respondent Gener met the prescribed standard. The position in question is that of
Assistant Chief, precisely of the Division for the Clerks of Court.

On the other hand, it is not disputed that petitioner's scholastic background is much more limited, he being merely a high school
graduate. 14 Under such circumstances, his previous experience in his capacity as Deputy Clerk of Court attesting to his years of
service could not avail. As this Court had occasion to observe in Aguilar vs. Nieva, Jr.: 15"Whatever sympathy might be elicited for
public officials who had stayed long in the public service and who, for some reason or another, did not receive the promotion to
which they felt they should be entitled, cannot obscure the discretion that the law leaves in the hands of the appointing official. ...
The basic intent of the law itself is to foster a more efficient public service. It is ever timely to keep in mind the public trust character
of any governmental office. Its creation is justifiable only if it serves to assure that the functions of government, whether through the
traditional public offices or government-owned or controlled corporations, be attended to with dispatch and competence. Necessarily
then, the appointing official, especially so where his position is a constitutional creation, as in this case, must be left that necessary
latitude of choice as to who can best discharge the responsibilities of the office where the vacancy occurs. This is what happened
here, and no legal infirmity can validly be said to have vitiated such an appointment. The impassioned plea of counsel for petitioner,
while not without its plausibility, if the individual welfare of those in the ranks of government personnel were considered, certainly
cannot merit our approval in the light of the greater and more exigent public interest which has to be served." 16

3. Presumably not unaware of the inherent weakness of his stand, petitioner would discern an alleged legislative intent in Republic
Act No. 4040 to accord him the recognition his heart is set on. What he sees is a mirage. Assuming ambiguity in the applicable
statute, it must receive a construction in accordance with and not in disregard of the cardinal postulate of a public office being a
public trust. Moreover, if there is any other principle of legal hermeneutics that can be invoked, it is that of contemporaneous
construction. Petitioner, after the unanimity shown by the Commissioner of Land Registration, the Secretary of Justice, and the
Commissioner of Civil Service on the precise point at issue, certainly is not in a position to do so. All three find his pretension bereft
of any merit. They are for respondent Gener. It is not inappropriate to note that such a principle was given expression by Justice
Malcolm in Molina v. Rafferty 17 in these words: "Courts will should respect the contemporaneous construction placed upon a statute
by the executive officers whose duty it is to enforce it, and unless such interpretation is clearly erroneous will ordinarily be controlled
thereby." 18 Later that same year in 1918, in Madrigal v. Rafferty, 19 there was a reiteration of the same doctrine by the same jurist.
So it has been ever since. 20
WHEREFORE, the lower court decision of March 26, 1968, dismissing the petition for mandamus, is affirmed. No costs.

Zaldivar (Chairman), Barredo, Antonio, Fernandez and Muñoz Palma, * JJ., concur.

Aquino, J., took no part.