G.R. No.

L-19650
September 29, 1966
CALTEX (PHILIPPINES), INC., petitioner-appellee,
vs.
ENRICO PALOMAR, in his capacity as THE POSTMASTER GENERAL, respondent-appellant.
Office of the Solicitor General for respondent and appellant.
Ross, Selph and Carrascoso for petitioner and appellee.
CASTRO, J.:
In the year 1960 the Caltex (Philippines) Inc. (hereinafter referred to as Caltex) conceived and laid the groundwork for a
promotional scheme calculated to drum up patronage for its oil products. Denominated "Caltex Hooded Pump Contest", it
calls for participants therein to estimate the actual number of liters a hooded gas pump at each Caltex station will
dispense during a specified period. Employees of the Caltex (Philippines) Inc., its dealers and its advertising agency, and
their immediate families excepted, participation is to be open indiscriminately to all "motor vehicle owners and/or licensed
drivers". For the privilege to participate, no fee or consideration is required to be paid, no purchase of Caltex products
required to be made. Entry forms are to be made available upon request at each Caltex station where a sealed can will be
provided for the deposit of accomplished entry stubs.
A three-staged winner selection system is envisioned. At the station level, called "Dealer Contest", the contestant whose
estimate is closest to the actual number of liters dispensed by the hooded pump thereat is to be awarded the first prize;
the next closest, the second; and the next, the third. Prizes at this level consist of a 3-burner kerosene stove for first; a
thermos bottle and a Ray-O-Vac hunter lantern for second; and an Everready Magnet-lite flashlight with batteries and a
screwdriver set for third. The first-prize winner in each station will then be qualified to join in the "Regional Contest" in
seven different regions. The winning stubs of the qualified contestants in each region will be deposited in a sealed can
from which the first-prize, second-prize and third-prize winners of that region will be drawn. The regional first-prize winners
will be entitled to make a three-day all-expenses-paid round trip to Manila, accompanied by their respective Caltex
dealers, in order to take part in the "National Contest". The regional second-prize and third-prize winners will receive cash
prizes of P500 and P300, respectively. At the national level, the stubs of the seven regional first-prize winners will be
placed inside a sealed can from which the drawing for the final first-prize, second-prize and third-prize winners will be
made. Cash prizes in store for winners at this final stage are: P3,000 for first; P2,000 for second; Pl,500 for third; and
P650 as consolation prize for each of the remaining four participants.
Foreseeing the extensive use of the mails not only as amongst the media for publicizing the contest but also for the
transmission of communications relative thereto, representations were made by Caltex with the postal authorities for the
contest to be cleared in advance for mailing, having in view sections 1954(a), 1982 and 1983 of the Revised
Administrative Code, the pertinent provisions of which read as follows:

SECTION 1954. Absolutely non-mailable matter. — No matter belonging to any of the following classes, whether sealed
as first-class matter or not, shall be imported into the Philippines through the mails, or to be deposited in or carried by the
mails of the Philippines, or be delivered to its addressee by any officer or employee of the Bureau of Posts:

Written or printed matter in any form advertising, describing, or in any manner pertaining to, or conveying or purporting to
convey any information concerning any lottery, gift enterprise, or similar scheme depending in whole or in part upon lot or
chance, or any scheme, device, or enterprise for obtaining any money or property of any kind by means of false or
fraudulent pretenses, representations, or promises.

"SECTION 1982. Fraud orders.—Upon satisfactory evidence that any person or company is engaged in conducting any
lottery, gift enterprise, or scheme for the distribution of money, or of any real or personal property by lot, chance, or
drawing of any kind, or that any person or company is conducting any scheme, device, or enterprise for obtaining money
or property of any kind through the mails by means of false or fraudulent pretenses, representations, or promises, the
Director of Posts may instruct any postmaster or other officer or employee of the Bureau to return to the person,
depositing the same in the mails, with the word "fraudulent" plainly written or stamped upon the outside cover thereof, any
mail matter of whatever class mailed by or addressed to such person or company or the representative or agent of such
person or company.

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

The overtures were later formalized in a letter to the Postmaster General, dated October 31, 1960, in which the Caltex,
thru counsel, enclosed a copy of the contest rules and endeavored to justify its position that the contest does not violate
the anti-lottery provisions of the Postal Law. Unimpressed, the then Acting Postmaster General opined that the scheme
falls within the purview of the provisions aforesaid and declined to grant the requested clearance. In its counsel's letter of
December 7, 1960, Caltex sought a reconsideration of the foregoing stand, stressing that there being involved no
consideration in the part of any contestant, the contest was not, under controlling authorities, condemnable as a lottery.
Relying, however, on an opinion rendered by the Secretary of Justice on an unrelated case seven years before (Opinion
217, Series of 1953), the Postmaster General maintained his view that the contest involves consideration, or that, if it
does not, it is nevertheless a "gift enterprise" which is equally banned by the Postal Law, and in his letter of December 10,
1960 not only denied the use of the mails for purposes of the proposed contest but as well threatened that if the contest
was conducted, "a fraud order will have to be issued against it (Caltex) and all its representatives".
Caltex thereupon invoked judicial intervention by filing the present petition for declaratory relief against Postmaster
General Enrico Palomar, praying "that judgment be rendered declaring its 'Caltex Hooded Pump Contest' not to be
violative of the Postal Law, and ordering respondent to allow petitioner the use of the mails to bring the contest to the
attention of the public". After issues were joined and upon the respective memoranda of the parties, the trial court
rendered judgment as follows:

In view of the foregoing considerations, the Court holds that the proposed 'Caltex Hooded Pump Contest' announced to
be conducted by the petitioner under the rules marked as Annex B of the petitioner does not violate the Postal Law and
the respondent has no right to bar the public distribution of said rules by the mails.

The respondent appealed.

The parties are now before us, arrayed against each other upon two basic issues: first, whether the petition states a
sufficient cause of action for declaratory relief; and second, whether the proposed "Caltex Hooded Pump Contest" violates
the Postal Law. We shall take these up in seriatim.
1. By express mandate of section 1 of Rule 66 of the old Rules of Court, which was the applicable legal basis for the
remedy at the time it was invoked, declaratory relief is available to any person "whose rights are affected by a statute . . .
to determine any question of construction or validity arising under the . . . statute and for a declaration of his rights
thereunder" (now section 1, Rule 64, Revised Rules of Court). In amplification, this Court, conformably to established
jurisprudence on the matter, laid down certain conditions sine qua non therefor, to wit: (1) there must be a justiciable
controversy; (2) the controversy must be between persons whose interests are adverse; (3) the party seeking declaratory
relief must have a legal interest in the controversy; and (4) the issue involved must be ripe for judicial determination
(Tolentino vs. The Board of Accountancy, et al., G.R. No. L-3062, September 28, 1951; Delumen, et al. vs. Republic of
the Philippines, 50 O.G., No. 2, pp. 576, 578-579; Edades vs. Edades, et al., G.R. No. L-8964, July 31, 1956). The
gravamen of the appellant's stand being that the petition herein states no sufficient cause of action for declaratory relief,
our duty is to assay the factual bases thereof upon the foregoing crucible.
As we look in retrospect at the incidents that generated the present controversy, a number of significant points stand out
in bold relief. The appellee (Caltex), as a business enterprise of some consequence, concededly has the unquestioned
right to exploit every legitimate means, and to avail of all appropriate media to advertise and stimulate increased
patronage for its products. In contrast, the appellant, as the authority charged with the enforcement of the Postal Law,
admittedly has the power and the duty to suppress transgressions thereof — particularly thru the issuance of fraud orders,
under Sections 1982 and 1983 of the Revised Administrative Code, against legally non-mailable schemes. Obviously
pursuing its right aforesaid, the appellee laid out plans for the sales promotion scheme hereinbefore detailed. To forestall
possible difficulties in the dissemination of information thereon thru the mails, amongst other media, it was found
expedient to request the appellant for an advance clearance therefor. However, likewise by virtue of his jurisdiction in the
premises and construing the pertinent provisions of the Postal Law, the appellant saw a violation thereof in the proposed
scheme and accordingly declined the request. A point of difference as to the correct construction to be given to the
applicable statute was thus reached. Communications in which the parties expounded on their respective theories were
exchanged. The confidence with which the appellee insisted upon its position was matched only by the obstinacy with
which the appellant stood his ground. And this impasse was climaxed by the appellant's open warning to the appellee that
if the proposed contest was "conducted, a fraud order will have to be issued against it and all its representatives."
Against this backdrop, the stage was indeed set for the remedy prayed for. The appellee's insistent assertion of its claim
to the use of the mails for its proposed contest, and the challenge thereto and consequent denial by the appellant of the
privilege demanded, undoubtedly spawned a live controversy. The justiciability of the dispute cannot be gainsaid. There is
an active antagonistic assertion of a legal right on one side and a denial thereof on the other, concerning a real — not a
mere theoretical — question or issue. The contenders are as real as their interests are substantial. To the appellee, the
uncertainty occasioned by the divergence of views on the issue of construction hampers or disturbs its freedom to
enhance its business. To the appellant, the suppression of the appellee's proposed contest believed to transgress a law
he has sworn to uphold and enforce is an unavoidable duty. With the appellee's bent to hold the contest and the
appellant's threat to issue a fraud order therefor if carried out, the contenders are confronted by the ominous shadow of an
imminent and inevitable litigation unless their differences are settled and stabilized by a tranquilizing declaration (Pablo y
Sen, et al. vs. Republic of the Philippines, G.R. No. L-6868, April 30, 1955). And, contrary to the insinuation of the
appellant, the time is long past when it can rightly be said that merely the appellee's "desires are thwarted by its own
doubts, or by the fears of others" — which admittedly does not confer a cause of action. Doubt, if any there was, has
ripened into a justiciable controversy when, as in the case at bar, it was translated into a positive claim of right which is
actually contested (III Moran, Comments on the Rules of Court, 1963 ed., pp. 132-133, citing: Woodward vs. Fox West
Coast Theaters, 36 Ariz., 251, 284 Pac. 350).
We cannot hospitably entertain the appellant's pretense that there is here no question of construction because the said
appellant "simply applied the clear provisions of the law to a given set of facts as embodied in the rules of the contest",
hence, there is no room for declaratory relief. The infirmity of this pose lies in the fact that it proceeds from the assumption
that, if the circumstances here presented, the construction of the legal provisions can be divorced from the matter of their
application to the appellee's contest. This is not feasible. Construction, verily, is the art or process of discovering and
expounding the meaning and intention of the authors of the law with respect to its application to a given case, where that
intention is rendered doubtful, amongst others, by reason of the fact that the given case is not explicitly provided for in the
law (Black, Interpretation of Laws, p. 1). This is precisely the case here. Whether or not the scheme proposed by the
appellee is within the coverage of the prohibitive provisions of the Postal Law inescapably requires an inquiry into the
intended meaning of the words used therein. To our mind, this is as much a question of construction or interpretation as
any other.
Nor is it accurate to say, as the appellant intimates, that a pronouncement on the matter at hand can amount to nothing
more than an advisory opinion the handing down of which is anathema to a declaratory relief action. Of course, no breach
of the Postal Law has as yet been committed. Yet, the disagreement over the construction thereof is no longer nebulous
or contingent. It has taken a fixed and final shape, presenting clearly defined legal issues susceptible of immediate
resolution. With the battle lines drawn, in a manner of speaking, the propriety — nay, the necessity — of setting the
dispute at rest before it accumulates the asperity distemper, animosity, passion and violence of a full-blown battle which
looms ahead (III Moran, Comments on the Rules of Court, 1963 ed., p. 132 and cases cited), cannot but be conceded.
Paraphrasing the language in Zeitlin vs. Arnebergh 59 Cal., 2d., 901, 31 Cal. Rptr., 800, 383 P. 2d., 152, cited in 22 Am.
Jur., 2d., p. 869, to deny declaratory relief to the appellee in the situation into which it has been cast, would be to force it
to choose between undesirable alternatives. If it cannot obtain a final and definitive pronouncement as to whether the anti-
lottery provisions of the Postal Law apply to its proposed contest, it would be faced with these choices: If it launches the
contest and uses the mails for purposes thereof, it not only incurs the risk, but is also actually threatened with the certain
imposition, of a fraud order with its concomitant stigma which may attach even if the appellee will eventually be vindicated;
if it abandons the contest, it becomes a self-appointed censor, or permits the appellant to put into effect a virtual fiat of
previous censorship which is constitutionally unwarranted. As we weigh these considerations in one equation and in the
spirit of liberality with which the Rules of Court are to be interpreted in order to promote their object (section 1, Rule 1,
Revised Rules of Court) — which, in the instant case, is to settle, and afford relief from uncertainty and insecurity with
respect to, rights and duties under a law — we can see in the present case any imposition upon our jurisdiction or any
futility or prematurity in our intervention.
The appellant, we apprehend, underrates the force and binding effect of the ruling we hand down in this case if he
believes that it will not have the final and pacifying function that a declaratory judgment is calculated to subserve. At the
very least, the appellant will be bound. But more than this, he obviously overlooks that in this jurisdiction, "Judicial
decisions applying or interpreting the law shall form a part of the legal system" (Article 8, Civil Code of the Philippines). In
effect, judicial decisions assume the same authority as the statute itself and, until authoritatively abandoned, necessarily
become, to the extent that they are applicable, the criteria which must control the actuations not only of those called upon
to abide thereby but also of those in duty bound to enforce obedience thereto. Accordingly, we entertain no misgivings
that our resolution of this case will terminate the controversy at hand.
It is not amiss to point out at this juncture that the conclusion we have herein just reached is not without precedent. In
Liberty Calendar Co. vs. Cohen, 19 N.J., 399, 117 A. 2d., 487, where a corporation engaged in promotional advertising
was advised by the county prosecutor that its proposed sales promotion plan had the characteristics of a lottery, and that
if such sales promotion were conducted, the corporation would be subject to criminal prosecution, it was held that the
corporation was entitled to maintain a declaratory relief action against the county prosecutor to determine the legality of its
sales promotion plan. In pari materia, see also: Bunis vs. Conway, 17 App. Div. 2d., 207, 234 N.Y.S. 2d., 435; Zeitlin vs.
Arnebergh, supra; Thrillo, Inc. vs. Scott, 15 N.J. Super. 124, 82 A. 2d., 903.
In fine, we hold that the appellee has made out a case for declaratory relief.
2. The Postal Law, chapter 52 of the Revised Administrative Code, using almost identical terminology in sections 1954(a),
1982 and 1983 thereof, supra, condemns as absolutely non-mailable, and empowers the Postmaster General to issue
fraud orders against, or otherwise deny the use of the facilities of the postal service to, any information concerning "any
lottery, gift enterprise, or scheme for the distribution of money, or of any real or personal property by lot, chance, or
drawing of any kind". Upon these words hinges the resolution of the second issue posed in this appeal.
Happily, this is not an altogether untrodden judicial path. As early as in 1922, in "El Debate", Inc. vs. Topacio, 44 Phil.,
278, 283-284, which significantly dwelt on the power of the postal authorities under the abovementioned provisions of the
Postal Law, this Court declared that —

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

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

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

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

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

Nowhere in the said rules is any requirement that any fee be paid, any merchandise be bought, any service be rendered,
or any value whatsoever be given for the privilege to participate. A prospective contestant has but to go to a Caltex
station, request for the entry form which is available on demand, and accomplish and submit the same for the drawing of
the winner. Viewed from all angles or turned inside out, the contest fails to exhibit any discernible consideration which
would brand it as a lottery. Indeed, even as we head the stern injunction, "look beyond the fair exterior, to the substance,
in order to unmask the real element and pernicious tendencies which the law is seeking to prevent" ("El Debate", Inc. vs.
Topacio, supra, p. 291), we find none. In our appraisal, the scheme does not only appear to be, but actually is, a
gratuitous distribution of property by chance.
There is no point to the appellant's insistence that non-Caltex customers who may buy Caltex products simply to win a
prize would actually be indirectly paying a consideration for the privilege to join the contest. Perhaps this would be tenable
if the purchase of any Caltex product or the use of any Caltex service were a pre-requisite to participation. But it is not. A
contestant, it hardly needs reiterating, does not have to buy anything or to give anything of value.1awphîl.nèt
Off-tangent, too, is the suggestion that the scheme, being admittedly for sales promotion, would naturally benefit the
sponsor in the way of increased patronage by those who will be encouraged to prefer Caltex products "if only to get the
chance to draw a prize by securing entry blanks". The required element of consideration does not consist of the benefit
derived by the proponent of the contest. The true test, as laid down in People vs. Cardas, 28 P. 2d., 99, 137 Cal. App.
(Supp.) 788, is whether the participant pays a valuable consideration for the chance, and not whether those conducting
the enterprise receive something of value in return for the distribution of the prize. Perspective properly oriented, the
standpoint of the contestant is all that matters, not that of the sponsor. The following, culled from Corpus Juris Secundum,
should set the matter at rest:

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

Thus enlightened, we join the trial court in declaring that the "Caltex Hooded Pump Contest" proposed by the appellee is
not a lottery that may be administratively and adversely dealt with under the Postal Law.
But it may be asked: Is it not at least a "gift enterprise, or scheme for the distribution of money, or of any real or personal
property by lot, chance, or drawing of any kind", which is equally prescribed? Incidentally, while the appellant's brief
appears to have concentrated on the issue of consideration, this aspect of the case cannot be avoided if the remedy here
invoked is to achieve its tranquilizing effect as an instrument of both curative and preventive justice. Recalling that the
appellant's action was predicated, amongst other bases, upon Opinion 217, Series 1953, of the Secretary of Justice,
which opined in effect that a scheme, though not a lottery for want of consideration, may nevertheless be a gift enterprise
in which that element is not essential, the determination of whether or not the proposed contest — wanting in
consideration as we have found it to be — is a prohibited gift enterprise, cannot be passed over sub silencio.
While an all-embracing concept of the term "gift enterprise" is yet to be spelled out in explicit words, there appears to be a
consensus among lexicographers and standard authorities that the term is commonly applied to a sporting artifice of
under which goods are sold for their market value but by way of inducement each purchaser is given a chance to win a
prize (54 C.J.S., 850; 34 Am. Jur., 654; Black, Law Dictionary, 4th ed., p. 817; Ballantine, Law Dictionary with
Pronunciations, 2nd ed., p. 55; Retail Section of Chamber of Commerce of Plattsmouth vs. Kieck, 257 N.W., 493, 128
Neb. 13; Barker vs. State, 193 S.E., 605, 56 Ga. App., 705; Bell vs. State, 37 Tenn. 507, 509, 5 Sneed, 507, 509). As thus
conceived, the term clearly cannot embrace the scheme at bar. As already noted, there is no sale of anything to which the
chance offered is attached as an inducement to the purchaser. The contest is open to all qualified contestants irrespective
of whether or not they buy the appellee's products.
Going a step farther, however, and assuming that the appellee's contest can be encompassed within the broadest sweep
that the term "gift enterprise" is capable of being extended, we think that the appellant's pose will gain no added comfort.
As stated in the opinion relied upon, rulings there are indeed holding that a gift enterprise involving an award by chance,
even in default of the element of consideration necessary to constitute a lottery, is prohibited (E.g.: Crimes vs. States, 235
Ala 192, 178 So. 73; Russell vs. Equitable Loan & Sec. Co., 129 Ga. 154, 58 S.E., 88; State ex rel. Stafford vs. Fox-Great
Falls Theater Corporation, 132 P. 2d., 689, 694, 698, 114 Mont. 52). But this is only one side of the coin. Equally
impressive authorities declare that, like a lottery, a gift enterprise comes within the prohibitive statutes only if it exhibits the
tripartite elements of prize, chance and consideration (E.g.: Bills vs. People, 157 P. 2d., 139, 142, 113 Colo., 326; D'Orio
vs. Jacobs, 275 P. 563, 565, 151 Wash., 297; People vs. Psallis, 12 N.Y.S., 2d., 796; City and County of Denver vs.
Frueauff, 88 P., 389, 394, 39 Colo., 20, 7 L.R.A., N.S., 1131, 12 Ann. Cas., 521; 54 C.J.S., 851, citing: Barker vs. State,
193 S.E., 605, 607, 56 Ga. App., 705; 18 Words and Phrases, perm. ed., pp. 590-594). The apparent conflict of opinions
is explained by the fact that the specific statutory provisions relied upon are not identical. In some cases, as pointed out in
54 C.J.S., 851, the terms "lottery" and "gift enterprise" are used interchangeably (Bills vs. People, supra); in others, the
necessity for the element of consideration or chance has been specifically eliminated by statute. (54 C.J.S., 351-352,
citing Barker vs. State, supra; State ex rel. Stafford vs. Fox-Great Falls Theater Corporation, supra). The lesson that we
derive from this state of the pertinent jurisprudence is, therefore, that every case must be resolved upon the particular
phraseology of the applicable statutory provision.
Taking this cue, we note that in the Postal Law, the term in question is used in association with the word "lottery". With the
meaning of lottery settled, and consonant to the well-known principle of legal hermeneutics noscitur a sociis — which
Opinion 217 aforesaid also relied upon although only insofar as the element of chance is concerned — it is only logical
that the term under a construction should be accorded no other meaning than that which is consistent with the nature of
the word associated therewith. Hence, if lottery is prohibited only if it involves a consideration, so also must the term "gift
enterprise" be so construed. Significantly, there is not in the law the slightest indicium of any intent to eliminate that
element of consideration from the "gift enterprise" therein included.
This conclusion firms up in the light of the mischief sought to be remedied by the law, resort to the determination thereof
being an accepted extrinsic aid in statutory construction. Mail fraud orders, it is axiomatic, are designed to prevent the use
of the mails as a medium for disseminating printed matters which on grounds of public policy are declared non-mailable.
As applied to lotteries, gift enterprises and similar schemes, justification lies in the recognized necessity to suppress their
tendency to inflame the gambling spirit and to corrupt public morals (Com. vs. Lund, 15 A. 2d., 839, 143 Pa. Super. 208).
Since in gambling it is inherent that something of value be hazarded for a chance to gain a larger amount, it follows
ineluctably that where no consideration is paid by the contestant to participate, the reason behind the law can hardly be
said to obtain. If, as it has been held —

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

we find no obstacle in saying the same respecting a gift enterprise. In the end, we are persuaded to hold that, under the
prohibitive provisions of the Postal Law which we have heretofore examined, gift enterprises and similar schemes therein
contemplated are condemnable only if, like lotteries, they involve the element of consideration. Finding none in the contest
here in question, we rule that the appellee may not be denied the use of the mails for purposes thereof.
Recapitulating, we hold that the petition herein states a sufficient cause of action for declaratory relief, and that the "Caltex
Hooded Pump Contest" as described in the rules submitted by the appellee does not transgress the provisions of the
Postal Law.
ACCORDINGLY, the judgment appealed from is affirmed. No costs.
Concepcion, C.J., Reyes, J.B.L., Barrera, Dizon, Regala, Makalintal, Bengzon, J.P., Zaldivar and Sanchez, JJ., concur.
 G.R. No. L-22301 August 30, 1967
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
MARIO MAPA Y MAPULONG, defendant-appellant.
Francisco P. Cabigao for defendant-appellant.
Office of the Solicitor General Arturo A. Alafriz, Assistant Solicitor General F. R. Rosete and Solicitor O. C. Hernandez for
plaintiff-appellee.
FERNANDO, J.:
The sole question in this appeal from a judgment of conviction by the lower court is whether or not the appointment to and
holding of the position of a secret agent to the provincial governor would constitute a sufficient defense to a prosecution
for the crime of illegal possession of firearm and ammunition. We hold that it does not.
The accused in this case was indicted for the above offense in an information dated August 14, 1962 reading as follows:
"The undersized accuses MARIO MAPA Y MAPULONG of a violation of Section 878 in connection with Section 2692 of
the Revised Administrative Code, as amended by Commonwealth Act No. 56 and as further amended by Republic Act
No. 4, committed as follows: That on or about the 13th day of August, 1962, in the City of Manila, Philippines, the said
accused did then and there wilfully and unlawfully have in his possession and under his custody and control one home-
made revolver (Paltik), Cal. 22, without serial number, with six (6) rounds of ammunition, without first having secured the
necessary license or permit therefor from the corresponding authorities. Contrary to law."
When the case was called for hearing on September 3, 1963, the lower court at the outset asked the counsel for the
accused: "May counsel stipulate that the accused was found in possession of the gun involved in this case, that he has
neither a permit or license to possess the same and that we can submit the same on a question of law whether or not an
agent of the governor can hold a firearm without a permit issued by the Philippine Constabulary." After counsel sought
from the fiscal an assurance that he would not question the authenticity of his exhibits, the understanding being that only a
question of law would be submitted for decision, he explicitly specified such question to be "whether or not a secret agent
is not required to get a license for his firearm."
Upon the lower court stating that the fiscal should examine the document so that he could pass on their authenticity, the
fiscal asked the following question: "Does the accused admit that this pistol cal. 22 revolver with six rounds of ammunition
mentioned in the information was found in his possession on August 13, 1962, in the City of Manila without first having
secured the necessary license or permit thereof from the corresponding authority?" The accused, now the appellant,
answered categorically: "Yes, Your Honor." Upon which, the lower court made a statement: "The accused admits, Yes,
and his counsel Atty. Cabigao also affirms that the accused admits."
Forthwith, the fiscal announced that he was "willing to submit the same for decision." Counsel for the accused on his part
presented four (4) exhibits consisting of his appointment "as secret agent of the Hon. Feliciano Leviste," then Governor of
Batangas, dated June 2, 1962;1 another document likewise issued by Gov. Leviste also addressed to the accused
directing him to proceed to Manila, Pasay and Quezon City on a confidential mission; 2 the oath of office of the accused as
such secret agent,3 a certificate dated March 11, 1963, to the effect that the accused "is a secret agent" of Gov. Leviste. 4
Counsel for the accused then stated that with the presentation of the above exhibits he was "willing to submit the case on
the question of whether or not a secret agent duly appointed and qualified as such of the provincial governor is exempt
from the requirement of having a license of firearm." The exhibits were admitted and the parties were given time to file
their respective memoranda.1äwphï1.ñët
Thereafter on November 27, 1963, the lower court rendered a decision convicting the accused "of the crime of illegal
possession of firearms and sentenced to an indeterminate penalty of from one year and one day to two years and to pay
the costs. The firearm and ammunition confiscated from him are forfeited in favor of the Government."
The only question being one of law, the appeal was taken to this Court. The decision must be affirmed.
The law is explicit that except as thereafter specifically allowed, "it shall be unlawful for any person to . . . possess any
firearm, detached parts of firearms or ammunition therefor, or any instrument or implement used or intended to be used in
the manufacture of firearms, parts of firearms, or ammunition."5 The next section provides that "firearms and ammunition
regularly and lawfully issued to officers, soldiers, sailors, or marines [of the Armed Forces of the Philippines], the
Philippine Constabulary, guards in the employment of the Bureau of Prisons, municipal police, provincial governors,
lieutenant governors, provincial treasurers, municipal treasurers, municipal mayors, and guards of provincial prisoners
and jails," are not covered "when such firearms are in possession of such officials and public servants for use in the
performance of their official duties."6
The law cannot be any clearer. No provision is made for a secret agent. As such he is not exempt. Our task is equally
clear. The first and fundamental duty of courts is to apply the law. "Construction and interpretation come only after it has
been demonstrated that application is impossible or inadequate without them." 7 The conviction of the accused must stand.
It cannot be set aside.
Accused however would rely on People v. Macarandang,8 where a secret agent was acquitted on appeal on the
assumption that the appointment "of the accused as a secret agent to assist in the maintenance of peace and order
campaigns and detection of crimes, sufficiently put him within the category of a "peace officer" equivalent even to a
member of the municipal police expressly covered by section 879." Such reliance is misplaced. It is not within the power
of this Court to set aside the clear and explicit mandate of a statutory provision. To the extent therefore that this decision
conflicts with what was held in People v. Macarandang, it no longer speaks with authority.
Wherefore, the judgment appealed from is affirmed.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Castro and Angeles, JJ., concur.
Footnotes
1
Exhibit 1.
2
Exhibit 2.
3
Exhibit 3.
4
Exhibit 4.
5
Sec. 878 as amended by Republic Act No. 4, Revised Administrative Code.
6
Sec. 879, Revised Administrative Code.
7
Lizarraga Hermanos v. Yap Tico, (1913) 24 Phil. 504, 513.
8
L-12088, December 23, 1959.
 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.
Footnotes
* Judge Pascual C. Barab.
1 Rollo, pp. 19-20.
2 Id., p. 8.
3 Id., p. 12.
4 Id., p. 13.
5 Id., p. 14.
6 G.R. No. L-28195, June 10, 1971, 39 SCRA 499.
7 2 Sutherland, Statutory Construction, 3rd. ed., Section 4502, p. 316.
8 In re Adoption of Resaba, 95 Phil. 244.
9 Santos vs. Aranzanso, 123 Phil. 160.
10 Child and Welfare Code, Art. 28.
 G.R. No. 72873 May 28, 1987

CARLOS ALONZO and CASIMIRA ALONZO, petitioners,

vs.
INTERMEDIATE APPELLATE COURT and TECLA PADUA, respondents.

Perpetuo L.B. Alonzo for petitioners.

Luis R. Reyes for private respondent.

CRUZ, J.:

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

Five brothers and sisters inherited in equal pro indiviso shares a parcel of land registered in 'the name of their deceased
parents under OCT No. 10977 of the Registry of Deeds of Tarlac. 1

On March 15, 1963, one of them, Celestino Padua, transferred his undivided share of the herein petitioners for the sum of
P550.00 by way of absolute sale. 2 One year later, on April 22, 1964, Eustaquia Padua, his sister, sold her own share to
the same vendees, in an instrument denominated "Con Pacto de Retro Sale," for the sum of P 440.00. 3

By virtue of such agreements, the petitioners occupied, after the said sales, an area corresponding to two-fifths of the said
lot, representing the portions sold to them. The vendees subsequently enclosed the same with a fence. In 1975, with their
consent, their son Eduardo Alonzo and his wife built a semi-concrete house on a part of the enclosed area.4

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

The trial court * also dismiss this complaint, now on the ground that the right had lapsed, not having been exercised within
thirty days from notice of the sales in 1963 and 1964. Although there was no written notice, it was held that actual
knowledge of the sales by the co-heirs satisfied the requirement of the law. 7

In truth, such actual notice as acquired by the co-heirs cannot be plausibly denied. The other co-heirs, including Tecla
Padua, lived on the same lot, which consisted of only 604 square meters, including the portions sold to the petitioners . 8
Eustaquia herself, who had sold her portion, was staying in the same house with her sister Tecla, who later claimed
redemption petition. 9 Moreover, the petitioners and the private respondents were close friends and neighbors whose
children went to school together. 10

It is highly improbable that the other co-heirs were unaware of the sales and that they thought, as they alleged, that the
area occupied by the petitioners had merely been mortgaged by Celestino and Eustaquia. In the circumstances just
narrated, it was impossible for Tecla not to know that the area occupied by the petitioners had been purchased by them
from the other. co-heirs. Especially significant was the erection thereon of the permanent semi-concrete structure by the
petitioners' son, which was done without objection on her part or of any of the other co-heirs.
The only real question in this case, therefore, is the correct interpretation and application of the pertinent law as invoked,
interestingly enough, by both the petitioners and the private respondents. This is Article 1088 of the Civil Code, providing
as follows:

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

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

Thus, according to Justice J.B.L. Reyes, who was the ponente of the Court, furnishing the co-heirs with a copy of the
deed of sale of the property subject to redemption would satisfy the requirement for written notice. "So long, therefore, as
the latter (i.e., the redemptioner) is informed in writing of the sale and the particulars thereof," he declared, "the thirty days
for redemption start running. "

In the earlier decision of Butte v. UY, 12 " the Court, speaking through the same learned jurist, emphasized that the
written notice should be given by the vendor and not the vendees, conformably to a similar requirement under Article
1623, reading as follows:

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

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

As "it is thus apparent that the Philippine legislature in Article 1623 deliberately selected a particular method of giving
notice, and that notice must be deemed exclusive," the Court held that notice given by the vendees and not the vendor
would not toll the running of the 30-day period.

The petition before us appears to be an illustration of the Holmes dictum that "hard cases make bad laws" as the
petitioners obviously cannot argue against the fact that there was really no written notice given by the vendors to their co-
heirs. Strictly applied and interpreted, Article 1088 can lead to only one conclusion, to wit, that in view of such deficiency,
the 30 day period for redemption had not begun to run, much less expired in 1977.

But as has also been aptly observed, we test a law by its results; and likewise, we may add, by its purposes. It is a
cardinal rule that, in seeking the meaning of the law, the first concern of the judge should be to discover in its provisions
the in tent of the lawmaker. Unquestionably, the law should never be interpreted in such a way as to cause injustice as

this is never within the legislative intent. An indispensable part of that intent, in fact, for we presume the good motives of
the legislature, is to render justice.

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

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

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

In requiring written notice, Article 1088 seeks to ensure that the redemptioner is properly notified of the sale and to
indicate the date of such notice as the starting time of the 30-day period of redemption. Considering the shortness of the
period, it is really necessary, as a general rule, to pinpoint the precise date it is supposed to begin, to obviate any problem
of alleged delays, sometimes consisting of only a day or two.

The instant case presents no such problem because the right of redemption was invoked not days but years after the
sales were made in 1963 and 1964. The complaint was filed by Tecla Padua in 1977, thirteen years after the first sale and
fourteen years after the second sale. The delay invoked by the petitioners extends to more than a decade, assuming of
course that there was a valid notice that tolled the running of the period of redemption.

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

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

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

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

The following doctrine is also worth noting:

While the general rule is, that to charge a party with laches in the assertion of an alleged right it is essential that he should
have knowledge of the facts upon which he bases his claim, yet if the circumstances were such as should have induced
inquiry, and the means of ascertaining the truth were readily available upon inquiry, but the party neglects to make it, he
will be chargeable with laches, the same as if he had known the facts. 15

It was the perfectly natural thing for the co-heirs to wonder why the spouses Alonzo, who were not among them, should
enclose a portion of the inherited lot and build thereon a house of strong materials. This definitely was not the act of a
temporary possessor or a mere mortgagee. This certainly looked like an act of ownership. Yet, given this unseemly
situation, none of the co-heirs saw fit to object or at least inquire, to ascertain the facts, which were readily available. It
took all of thirteen years before one of them chose to claim the right of redemption, but then it was already too late.

We realize that in arriving at our conclusion today, we are deviating from the strict letter of the law, which the respondent
court understandably applied pursuant to existing jurisprudence. The said court acted properly as it had no competence to
reverse the doctrines laid down by this Court in the above-cited cases. In fact, and this should be clearly stressed, we
ourselves are not abandoning the De Conejero and Buttle doctrines. What we are doing simply is adopting an exception
to the general rule, in view of the peculiar circumstances of this case.

The co-heirs in this case were undeniably informed of the sales although no notice in writing was given them. And there is
no doubt either that the 30-day period began and ended during the 14 years between the sales in question and the filing
of the complaint for redemption in 1977, without the co-heirs exercising their right of redemption. These are the
justifications for this exception.

More than twenty centuries ago, Justinian defined justice "as the constant and perpetual wish to render every one his
due." 16 That wish continues to motivate this Court when it assesses the facts and the law in every case brought to it for
decision. Justice is always an essential ingredient of its decisions. Thus when the facts warrants, we interpret the law in a
way that will render justice, presuming that it was the intention of the lawmaker, to begin with, that the law be dispensed
with justice. So we have done in this case.
WHEREFORE, the petition is granted. The decision of the respondent court is REVERSED and that of the trial court is
reinstated, without any pronouncement as to costs. It is so ordered.

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

Fernan and Feliciano, JJ., are on leave.

Footnotes
1 Rollo, p. 5.
2 Ibid, p. 6.
3 Id, p. 64,
5 Id. p. 21
6 Id, p. 21.
* Presided by Judge Cezar D. Francisco.
7 Id, p. 65.
8 Id, p. 5.
9 Id, p. 64.
10 Id, p. 26.
** Gaviola, Jr., P.J., ponente, Caguioa, Quetulio-Losa & Luciano, JJ.
11 16 SCRA 775.
12 4 SCRA 527.
13 Dissenting in Olmstead v. U.S., 277 U.S. 438.
14 Statutory Construction, Ruben E. Agpalo, pp. 64-65, 1986, citing Manila Race Horse Trainers' Assn. v. De la Fuente,
88 Phil. 60; Go Chi v. Go Cho, 96 Phil. 622; Hidalgo v. Hidalgo, 33 SCRA 105; Roa v. Collector of Customs, 23 Phil. 315;
Villanueva v. City of Iloilo, 26 SCRA 578: People v. Purisima, 86 SCRA 542; US v. Go Chico, 14 Phil. 128.
15 Ater v. Smith 245 111. 57, 19 Am. Cases 105.
16 Institutes 1, 1, pr. as cited in Handbook for Roman Law, Miravite, Lorenzo F., p. 39, 1981,
 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 therefore 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 average, 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.

Separate Opinions
BAUTISTA ANGELO, J., concurring:
Without expressing any opinion on the doctrine laid down by this Court in the case of Perfecto vs. Meer, G. R. No. L-2314,
in view of the part I had in that case as former Solicitor General, I wish however to state that I concur in the opinion of the
majority to the effect that section 13, Republic Act No. 590, in so far as it provides that taxing of the salary of a judicial
officer shall be considered "not to be a diminution of his compensation fixed by the Constitution or by law", constitutes an
invasion of the province and jurisdiction of the judiciary. In this sense, I am of the opinion that said section is null and void,
it being a transgression of the fundamental principle underlying the separation of powers.

PARAS, C.J., concurring and dissenting:

I dissent for the same reasons stated in the dissenting opinion of Mr. Justice Ozaeta in Perfecto vs. Meer, 85 Phil., 552, in
which I concurred. But I disagree with the majority in ruling that no legislation may provide that it be held valid although
against a provision of the Constitution.

G.R. No. 78780 July 23, 1987

DAVID G. NITAFAN, WENCESLAO M. POLO, and MAXIMO A. SAVELLANO, JR., petitioners,
vs.
COMMISSIONER OF INTERNAL REVENUE and THE FINANCIAL OFFICER, SUPREME COURT OF THE
PHILIPPINES, respondents.
RESOLUTION
MELENCIO-HERRERA, J.:
Petitioners, the duly appointed and qualified Judges presiding over Branches 52, 19 and 53, respectively, of the Regional
Trial Court, National Capital Judicial Region, all with stations in Manila, seek to prohibit and/or perpetually enjoin
respondents, the Commissioner of Internal Revenue and the Financial Officer of the Supreme Court, from making any
deduction of withholding taxes from their salaries.
In a nutshell, they submit that "any tax withheld from their emoluments or compensation as judicial officers constitutes a
decrease or diminution of their salaries, contrary to the provision of Section 10, Article VIII of the 1987 Constitution
mandating that "(d)uring their continuance in office, their salary shall not be decreased," even as it is anathema to the
Ideal of an independent judiciary envisioned in and by said Constitution."
It may be pointed out that, early on, the Court had dealt with the matter administratively in response to representations
that the Court direct its Finance Officer to discontinue the withholding of taxes from salaries of members of the Bench.
Thus, on June 4, 1987, the Court en banc had reaffirmed the Chief Justice's directive as follows:
RE: Question of exemption from income taxation. — The Court REAFFIRMED the Chief Justice's previous and standing
directive to the Fiscal Management and Budget Office of this Court to continue with the deduction of the withholding taxes
from the salaries of the Justices of the Supreme Court as well as from the salaries of all other members of the judiciary.
That should have resolved the question. However, with the filing of this petition, the Court has deemed it best to settle the
legal issue raised through this judicial pronouncement. As will be shown hereinafter, the clear intent of the Constitutional
Commission was to delete the proposed express grant of exemption from payment of income tax to members of the
Judiciary, so as to "give substance to equality among the three branches of Government" in the words of Commissioner
Rigos. In the course of the deliberations, it was further expressly made clear, specially with regard to Commissioner
Joaquin F. Bernas' accepted amendment to the amendment of Commissioner Rigos, that the salaries of members of the
Judiciary would be subject to the general income tax applied to all taxpayers.
This intent was somehow and inadvertently not clearly set forth in the final text of the Constitution as approved and ratified
in February, 1987 (infra, pp. 7-8). Although the intent may have been obscured by the failure to include in the General
Provisions a proscription against exemption of any public officer or employee, including constitutional officers, from
payment of income tax, the Court since then has authorized the continuation of the deduction of the withholding tax from
the salaries of the members of the Supreme Court, as well as from the salaries of all other members of the Judiciary. The
Court hereby makes of record that it had then discarded the ruling in Perfecto vs. Meer and Endencia vs. David, infra, that
declared the salaries of members of the Judiciary exempt from payment of the income tax and considered such payment
as a diminution of their salaries during their continuance in office. The Court hereby reiterates that the salaries of Justices
and Judges are properly subject to a general income tax law applicable to all income earners and that the payment of
such income tax by Justices and Judges does not fall within the constitutional protection against decrease of their salaries
during their continuance in office.
A comparison of the Constitutional provisions involved is called for. The 1935 Constitution provided:
... (The members of the Supreme Court and all judges of inferior courts) shall receive such compensation as may be fixed
by law, which shall not be diminished during their continuance in office ... 1 (Emphasis supplied).
Under the 1973 Constitution, the same provision read:
The salary of the Chief Justice and of the Associate Justices of the Supreme court, and of judges of inferior courts shall
be fixed by law, which shall not be decreased during their continuance in office. ... 2 (Emphasis ours).
And in respect of income tax exemption, another provision in the same 1973 Constitution specifically stipulated:
No salary or any form of emolument of any public officer or employee, including constitutional officers, shall be exempt
from payment of income tax. 3
The provision in the 1987 Constitution, which petitioners rely on, reads:
The salary of the Chief Justice and of the Associate Justices of the Supreme Court, and of judges of lower courts shall be
fixed by law. During their continuance in office, their salary shall not be decreased. 4 (Emphasis supplied).
The 1987 Constitution does not contain a provision similar to Section 6, Article XV of the 1973 Constitution, for which
reason, petitioners claim that the intent of the framers is to revert to the original concept of "non-diminution "of salaries of
judicial officers.
The deliberations of the 1986 Constitutional Commission relevant to Section 10, Article VIII, negate such contention.
The draft proposal of Section 10, Article VIII, of the 1987 Constitution read:
Section 13. The salary of the Chief Justice and the Associate Justices of the Supreme Court and of judges of the lower
courts shall be fixed by law. During their continuance in office, their salary shall not be diminished nor subjected to income
tax. Until the National Assembly shall provide otherwise, the Chief Justice shall receive an annual salary of
_____________ and each Associate Justice ______________ pesos. 5 (Emphasis ours)
During the debates on the draft Article (Committee Report No. 18), two Commissioners presented their objections to the
provision on tax exemption, thus:
MS. AQUINO. Finally, on the matter of exemption from tax of the salary of justices, does this not violate the principle of
the uniformity of taxation and the principle of equal protection of the law? After all, tax is levied not on the salary but on the
combined income, such that when the judge receives a salary and it is comingled with the other income, we tax the
income, not the salary. Why do we have to give special privileges to the salary of justices?
MR. CONCEPCION. It is the independence of the judiciary. We prohibit the increase or decrease of their salary during
their term. This is an indirect way of decreasing their salary and affecting the independence of the judges.
MS. AQUINO. I appreciate that to be in the nature of a clause to respect tenure, but the special privilege on taxation
might, in effect, be a violation of the principle of uniformity in taxation and the equal protection clause. 6
xxx xxx xxx
MR. OPLE. x x x
Of course, we share deeply the concern expressed by the sponsor, Commissioner Roberto Concepcion, for whom we
have the highest respect, to surround the Supreme Court and the judicial system as a whole with the whole armor of
defense against the executive and legislative invasion of their independence. But in so doing, some of the citizens
outside, especially the humble government employees, might say that in trying to erect a bastion of justice, we might end
up with the fortress of privileges, an island of extra territoriality under the Republic of the Philippines, because a good
number of powers and rights accorded to the Judiciary here may not be enjoyed in the remotest degree by other
employees of the government.
An example is the exception from income tax, which is a kind of economic immunity, which is, of course, denied to the
entire executive department and the legislative. 7
And during the period of amendments on the draft Article, on July 14, 1986, Commissioner Cirilo A. Rigos proposed that
the term "diminished" be changed to "decreased" and that the words "nor subjected to income tax" be deleted so as to
"give substance to equality among the three branches in the government.
Commissioner Florenz D. Regalado, on behalf of the Committee on the Judiciary, defended the original draft and referred
to the ruling of this Court in Perfecto vs. Meer 8 that "the independence of the judges is of far greater importance than any
revenue that could come from taxing their salaries." Commissioner Rigos then moved that the matter be put to a vote.
Commissioner Joaquin G. Bernas stood up "in support of an amendment to the amendment with the request for a
modification of the amendment," as follows:
FR. BERNAS. Yes. I am going to propose an amendment to the amendment saying that it is not enough to drop the
phrase "shall not be subjected to income tax," because if that is all that the Gentleman will do, then he will just fall back on
the decision in Perfecto vs. Meer and in Dencia vs. David [should be Endencia and Jugo vs. David, etc., 93 Phil.
696[ which excludes them from income tax, but rather I would propose that the statement will read: "During their
continuance in office, their salary shall not be diminished BUT MAY BE SUBJECT TO GENERAL INCOME TAX."IN
support of this position, I would say that the argument seems to be that the justice and judges should not be subjected to
income tax because they already gave up the income from their practice. That is true also of Cabinet members and all
other employees. And I know right now, for instance, there are many people who have accepted employment in the
government involving a reduction of income and yet are still subject to income tax. So, they are not the only citizens
whose income is reduced by accepting service in government.
Commissioner Rigos accepted the proposed amendment to the amendment. Commissioner Rustico F. de los Reyes, Jr.
then moved for a suspension of the session. Upon resumption, Commissioner Bernas announced:
During the suspension, we came to an understanding with the original proponent, Commissioner Rigos, that his
amendment on page 6,. line 4 would read: "During their continuance in office, their salary shall not be DECREASED."But
this is on the understanding that there will be a provision in the Constitution similar to Section 6 of Article XV, the General
Provisions of the 1973 Constitution, which says:
No salary or any form of emolument of any public officer or employee, including constitutional officers, shall be exempt
from payment of income tax.
So, we put a period (.) after "DECREASED" on the understanding that the salary of justices is subject to tax.
When queried about the specific Article in the General Provisions on non-exemption from tax of salaries of public officers,
Commissioner Bernas replied:
FR BERNAS. Yes, I do not know if such an article will be found in the General Provisions. But at any rate, when we put a
period (.) after "DECREASED," it is on the understanding that the doctrine in Perfecto vs. Meer and Dencia vs. David will
not apply anymore.
The amendment to the original draft, as discussed and understood, was finally approved without objection.
THE PRESIDING OFFICER (Mr. Bengzon). The understanding, therefore, is that there will be a provision under the
Article on General Provisions. Could Commissioner Rosario Braid kindly take note that the salaries of officials of the
government including constitutional officers shall not be exempt from income tax? The amendment proposed herein and
accepted by the Committee now reads as follows: "During their continuance in office, their salary shall not be
DECREASED"; and the phrase "nor subjected to income tax" is deleted.9
The debates, interpellations and opinions expressed regarding the constitutional provision in question until it was finally
approved by the Commission disclosed that the true intent of the framers of the 1987 Constitution, in adopting it, was to
make the salaries of members of the Judiciary taxable. The ascertainment of that intent is but in keeping with the
fundamental principle of constitutional construction that the intent of the framers of the organic law and of the people
adopting it should be given effect.10 The primary task in constitutional construction is to ascertain and thereafter assure the
realization of the purpose of the framers and of the people in the adoption of the Constitution. 11 it may also be safely
assumed that the people in ratifying the Constitution were guided mainly by the explanation offered by the framers. 12
1avvphi1
Besides, construing Section 10, Articles VIII, of the 1987 Constitution, which, for clarity, is again reproduced hereunder:
The salary of the Chief Justice and of the Associate Justices of the Supreme Court, and of judges of lower courts shall be
fixed by law. During their continuance in office, their salary shall not be decreased. (Emphasis supplied).
it is plain that the Constitution authorizes Congress to pass a law fixing another rate of compensation of Justices and
Judges but such rate must be higher than that which they are receiving at the time of enactment, or if lower, it would be
applicable only to those appointed after its approval. It would be a strained construction to read into the provision an
exemption from taxation in the light of the discussion in the Constitutional Commission.
With the foregoing interpretation, and as stated heretofore, the ruling that "the imposition of income tax upon the salary of
judges is a diminution thereof, and so violates the Constitution" in Perfecto vs. Meer,13 as affirmed in Endencia vs. David 14
must be declared discarded. The framers of the fundamental law, as the alter ego of the people, have expressed in clear
and unmistakable terms the meaning and import of Section 10, Article VIII, of the 1987 Constitution that they have
adopted
Stated otherwise, we accord due respect to the intent of the people, through the discussions and deliberations of their
representatives, in the spirit that all citizens should bear their aliquot part of the cost of maintaining the government and
should share the burden of general income taxation equitably.
WHEREFORE, the instant petition for Prohibition is hereby dismissed.
Teehankee, C.J., Fernan, Narvasa, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Sarmiento and
Cortes, JJ., concur.
Yap, J., is on leave.

Footnotes
1
Section 9,Articie VIII.
2
Section 10, Article X.
3
Section 6, Article XV, General Provisions.
4
Section 10, Article VIII.
5
Record of the Constitutional Commission, Vol. I, p. 433.
6
Record of the Constitutional Commission, p. 460.
7
Ibid., at page 467,
8
85 Phil. 552 (1950).
9
Record of the Constitutional Commission, Vol. 1, p. 506.
10
Gold Creek Mining Co. vs. Rodriguez, 66 Phil. 259 (1938).
11
J.M. Tuason & Co., Inc. vs. Land Tenure Administration, No. L-21064, February 18, 1970, 31 SCRA 413.
12
Tanada, Fernando, Constitution of the Philippines, Fourth Ed., Vol. 1, p. 21.
13
85 Phil. 552 (1950).
14
93 Phil. 696 (1953).
G.R. No. L-19190 - November 29, 1922
THE PEOPLE OF THE PHILIPPINE ISLANDS, plaintiff-appellee,
vs.
VENANCIO CONCEPCION, defendant-appellant.
Recaredo Ma. Calvo for appellant.
Attorney-General Villa-Real for appellee.
MALCOLM, J.:
By telegrams and a letter of confirmation to the manager of the Aparri branch of the Philippine National Bank,
Venancio Concepcion, President of the Philippine National Bank, between April 10, 1919, and May 7, 1919,
authorized an extension of credit in favor of "Puno y Concepcion, S. en C." in the amount of P300,000. This special
authorization was essential in view of the memorandum order of President Concepcion dated May 17, 1918, limiting
the discretional power of the local manager at Aparri, Cagayan, to grant loans and discount negotiable documents
to P5,000, which, in certain cases, could be increased to P10,000. Pursuant to this authorization, credit aggregating
P300,000, was granted the firm of "Puno y Concepcion, S. en C.," the only security required consisting of six
demand notes. The notes, together with the interest, were taken up and paid by July 17, 1919.
"Puno y Concepcion, S. en C." was a copartnership capitalized at P100,000. Anacleto Concepcion contributed
P5,000; Clara Vda. de Concepcion, P5,000; Miguel S. Concepcion, P20,000; Clemente Puno, P20,000; and Rosario
San Agustin, "casada con Gral. Venancio Concepcion," P50,000. Member Miguel S. Concepcion was the
administrator of the company.
On the facts recounted, Venancio Concepcion, as President of the Philippine National Bank and as member of the
board of directors of this bank, was charged in the Court of First Instance of Cagayan with a violation of section 35
of Act No. 2747. He was found guilty by the Honorable Enrique V. Filamor, Judge of First Instance, and was
sentenced to imprisonment for one year and six months, to pay a fine of P3,000, with subsidiary imprisonment in
case of insolvency, and the costs.
Section 35 of Act No. 2747, effective on February 20, 1918, just mentioned, to which reference must hereafter
repeatedly be made, reads as follows: "The National Bank shall not, directly or indirectly, grant loans to any of the
members of the board of directors of the bank nor to agents of the branch banks." Section 49 of the same Act
provides: "Any person who shall violate any of the provisions of this Act shall be punished by a fine not to exceed
ten thousand pesos, or by imprisonment not to exceed five years, or by both such fine and imprisonment." These
two sections were in effect in 1919 when the alleged unlawful acts took place, but were repealed by Act No. 2938,
approved on January 30, 1921.
Counsel for the defense assign ten errors as having been committed by the trial court. These errors they have
argued adroitly and exhaustively in their printed brief, and again in oral argument. Attorney-General Villa-Real, in an
exceptionally accurate and comprehensive brief, answers the proposition of appellant one by one.
The question presented are reduced to their simplest elements in the opinion which follows:
I. Was the granting of a credit of P300,000 to the copartnership "Puno y Concepcion, S. en C." by Venancio
Concepcion, President of the Philippine National Bank, a "loan" within the meaning of section 35 of Act No. 2747?
Counsel argue that the documents of record do not prove that authority to make a loan was given, but only show the
concession of a credit. In this statement of fact, counsel is correct, for the exhibits in question speak of a "credito"
(credit) and not of a " prestamo" (loan).
The "credit" of an individual means his ability to borrow money by virtue of the confidence or trust reposed by a
lender that he will pay what he may promise. (Donnell vs. Jones [1848], 13 Ala., 490; Bouvier's Law Dictionary.) A
"loan" means the delivery by one party and the receipt by the other party of a given sum of money, upon an
agreement, express or implied, to repay the sum loaned, with or without interest. (Payne vs. Gardiner [1864], 29 N.
Y., 146, 167.) The concession of a "credit" necessarily involves the granting of "loans" up to the limit of the amount
fixed in the "credit,"
II. Was the granting of a credit of P300,000 to the copartnership "Puno y Concepcion, S. en C.," by Venancio
Concepcion, President of the Philippine National Bank, a "loan" or a "discount"?
Counsel argue that while section 35 of Act No. 2747 prohibits the granting of a "loan," it does not prohibit what is
commonly known as a "discount."
In a letter dated August 7, 1916, H. Parker Willis, then President of the National Bank, inquired of the Insular Auditor
whether section 37 of Act No. 2612 was intended to apply to discounts as well as to loans. The ruling of the Acting
Insular Auditor, dated August 11, 1916, was to the effect that said section referred to loans alone, and placed no
restriction upon discount transactions. It becomes material, therefore, to discover the distinction between a "loan"
and a "discount," and to ascertain if the instant transaction comes under the first or the latter denomination.
Discounts are favored by bankers because of their liquid nature, growing, as they do, out of an actual, live,
transaction. But in its last analysis, to discount a paper is only a mode of loaning money, with, however, these
distinctions: (1) In a discount, interest is deducted in advance, while in a loan, interest is taken at the expiration of a
credit; (2) a discount is always on double-name paper; a loan is generally on single-name paper.
Conceding, without deciding, that, as ruled by the Insular Auditor, the law covers loans and not discounts, yet the
conclusion is inevitable that the demand notes signed by the firm "Puno y Concepcion, S. en C." were not discount
paper but were mere evidences of indebtedness, because (1) interest was not deducted from the face of the notes,
but was paid when the notes fell due; and (2) they were single-name and not double-name paper.
The facts of the instant case having relation to this phase of the argument are not essentially different from the facts
in the Binalbagan Estate case. Just as there it was declared that the operations constituted a loan and not a
discount, so should we here lay down the same ruling.

III. Was the granting of a credit of P300,000 to the copartnership, "Puno y Concepcion, S. en C." by Venancio
Concepcion, President of the Philippine National Bank, an "indirect loan" within the meaning of section 35 of Act No.
2747?
Counsel argue that a loan to the partnership "Puno y Concepcion, S. en C." was not an "indirect loan." In this
connection, it should be recalled that the wife of the defendant held one-half of the capital of this partnership.

In the interpretation and construction of statutes, the primary rule is to ascertain and give effect to the intention of
the Legislature. In this instance, the purpose of the Legislature is plainly to erect a wall of safety against temptation
for a director of the bank. The prohibition against indirect loans is a recognition of the familiar maxim that no man
may serve two masters — that where personal interest clashes with fidelity to duty the latter almost always suffers.
If, therefore, it is shown that the husband is financially interested in the success or failure of his wife's business
venture, a loan to partnership of which the wife of a director is a member, falls within the prohibition.
Various provisions of the Civil serve to establish the familiar relationship called a conjugal partnership. (Articles
1315, 1393, 1401, 1407, 1408, and 1412 can be specially noted.) A loan, therefore, to a partnership of which the
wife of a director of a bank is a member, is an indirect loan to such director.

That it was the intention of the Legislature to prohibit exactly such an occurrence is shown by the acknowledged fact
that in this instance the defendant was tempted to mingle his personal and family affairs with his official duties, and
to permit the loan P300,000 to a partnership of no established reputation and without asking for collateral security.

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

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

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

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

IV. Could Venancio Concepcion, President of the Philippine National Bank, be convicted of a violation of section 35
of Act No. 2747 in relation with section 49 of the same Act, when these portions of Act No. 2747 were repealed by
Act No. 2938, prior to the finding of the information and the rendition of the judgment?
As noted along toward the beginning of this opinion, section 49 of Act No. 2747, in relation to section 35 of the same
Act, provides a punishment for any person who shall violate any of the provisions of the Act. It is contended,
however, by the appellant, that the repeal of these sections of Act No. 2747 by Act No. 2938 has served to take
away the basis for criminal prosecution.

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

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

Counsel argue that since the prohibition contained in section 35 of Act No. 2747 is on the bank, and since section
49 of said Act provides a punishment not on the bank when it violates any provisions of the law, but on a person
violating any provisions of the same, and imposing imprisonment as a part of the penalty, the prohibition contained
in said section 35 is without penal sanction.lawph!l.net
The answer is that when the corporation itself is forbidden to do an act, the prohibition extends to the board of
directors, and to each director separately and individually. (People vs. Concepcion, supra.)
VI. Does the alleged good faith of Venancio Concepcion, President of the Philippine National Bank, in extending the
credit of P300,000 to the copartnership "Puno y Concepcion, S. en C." constitute a legal defense?
Counsel argue that if defendant committed the acts of which he was convicted, it was because he was misled by
rulings coming from the Insular Auditor. It is furthermore stated that since the loans made to the copartnership
"Puno y Concepcion, S. en C." have been paid, no loss has been suffered by the Philippine National Bank.

Neither argument, even if conceded to be true, is conclusive. Under the statute which the defendant has violated,
criminal intent is not necessarily material. The doing of the inhibited act, inhibited on account of public policy and
public interest, constitutes the crime. And, in this instance, as previously demonstrated, the acts of the President of
the Philippine National Bank do not fall within the purview of the rulings of the Insular Auditor, even conceding that
such rulings have controlling effect.

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

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

JUDGMENT

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

Judgment is affirmed, with the costs of this instance against the appellant. So ordered.
Araullo, C. J., Johnson, Street, Avanceña, Villamor, Ostrand, Johns, and Romualdez, JJ., concur.

G.R. No. L-43575 May 31, 1935

JUAN TAÑADA, petitioner,
vs.
JOSE YULO, Secretary of Justice,
EDUARDO GUTIERREZ DAVID, Judge of First Instance of the Thirteenth Judicial District,
and SANTIAGO TAÑADA, Justice of the Peace of Alabat, Tayabas, respondents.
Pedro Ynsua for petitioner.
Office of the Solicitor-General Hilado for respondents.
MALCOLM, J.:
For the second time the court is called upon to determine the right of a justice of the peace appointed prior to the approval
of Act No. 3899, but who completed sixty-five years of age subsequent to the approval of the Act and to the date, January
1, 1933, specified in the Act, to continue in office. The answer of the Solicitor-General presents two questions, the first
predicated on the contention that Act No. 3899 applies to all justices of the peace who reach the age of sixty-five years,
and the second on the acceptance of a transfer by the petitioner as denoting a new appointment bringing him within the
purview of the cited law.
Juan Tañada, the petitioner, was appointed justice of the peace of Alabat, Tayabas, by the Governor-General with the
advice and consent of the Philippine Commission on December 4, 1911. He continued in that position until September 8,
1934, when at his own request, "Pursuant to the provisions of section 206 of the Revised Administrative Code", he was
"transferred from the position of justice of the peace for the municipality of Alabat, Province of Tayabas, of the same
position in the municipality of Perez, same province", by a communication signed by the Governor-General from which the
foregoing is quoted. Tañada completed the age of sixty-five years on October 5, 1934. Thereupon the Judge of First
Instance of Tayabas, acting in accordance with instructions from the Department of Justice, directed Tañada to cease to
act as justice of the peace of Perez, Tayabas. Tañada surrendered his office under protest, and thereafter instituted this
original action of quo warranto.
The applicable law is found in the last proviso to section 203 of the Administrative Code, as inserted by Act No. 3899, and
in the proviso to section 206 of the same Code as last amended by Act No. 2768, which read as follows:
SEC. 203. Appointment and distribution of justices of the peace. — * * * Provided, further, That the present justice and
auxiliary justice of the peace who shall, at the time this Act takes effect, have completed sixty-five years of age, shall
cease to hold office on January first, nineteen hundred and thirty-three; and the Governor-General, with the advise and
consent of the Philippine Senate, shall make new appointments to cover the vacancies occurring by operation of this Act.
SEC 206. Tenure of office — Transfer from one municipality of another. — A justice of the peace having the requisite
legal qualifications shall hold office during good behavior unless his office be lawfully abolished or merged in the
jurisdiction of some other justice: Provided, That in case the public interest requires it, a justice of the peace of one
municipality may be transferred to another.
The first question raised by the Solicitor-General was considered in the recent case of Felipe Regalado, petitioner, vs.
Jose Yulo, Secretary of Justice, Juan G. Lesaca, Judge of First Instance of Albay, and Esteban T. Villar, respondents
(page 173, ante). It was there decided that the natural and reasonable meaning of the language used in Act No. 3899,
leaves room for no other deducting than that a justice of the peace appointed prior to the approval of the Act and who
completed sixty-five years of age on September 13, 1934, subsequent to the approval of the Act, which was on November
16, 1931, and to the date fixed for cessation from office which was on January 1, 1933, is not affected by the said Act.
The law officer of the Government has indicated that the above cited decision came from a Division of Five and has
requested a reconsideration of the issue therein resolved.
Acceding to this petition, we have again examined microscopically word for word the terminology used in Act No. 3899.
Having done so, all of us are agreed that a justice of the peace like the petitioner who became sixty-five years of age on
October 5, 1934, was not included in a law which required justice of the peace sixty-five years of age to cease to hold
office on January 1, 1933. That result is now arrived at in banc.
In substantiation of what has just been said, it is of course fundamental that the determination of the legislative intent is
the primary consideration. However, it is equally fundamental that that legislative intent must be determined from the
language of the statute itself. This principle must be adhered to even though the court be convinced by extraneous
circumstances that the Legislature intended to enact something very different from that which it did enact. An obscurity
cannot be created to be cleared up by construction and hidden meanings at variance with the language used cannot be
sought out. To attempt to do so is a perilous undertaking, and is quite apt to lead to an amendment of a law by judicial
construction. To depart from the meaning expressed by the words is to alter the statute, is to legislate not to interpret.
As corroborative authority it is only necessary to advert to a decision coming from the United States Supreme Court, in
which the court was asked to insert the word "lawfully", but the court declined to do so, saying that there is no authority to
import a word into a statute in order to change its meaning. (Newhall vs. Sanger, 92, U.S., 761.) The thought was
expressed by the same court in another case, when it said that court are bound to follow the plain words of a statute as to
which there is no room for construction regardless of the consequences. (Commissioner of Immigration vs. Gottlieb, 265
U.S., 310; see 25 R.C.L., 961 et seq.)
Counsel in effect urges us to adopt a liberal construction of the statute. That in this instance, as in the past, we aim to do.
But counsel in his memorandum concedes "that the language of the proviso in question is somewhat defective and does
not clearly convey the legislative intent", and at the hearing in response to questions was finally forced to admit that what
the Government desired was for the court to insert words and phrases in the law in order to supply an intention for the
legislature. That we cannot do. By liberal construction of statutes, courts from the language use, the subject matter, and
the purposes of those framing them are able to find their true meaning. There is a sharp distinction, however, between
construction of this nature and the act of a court in engrafting upon a law something that has been omitted which
someone believes ought to have been embraced. The former is liberal construction and is a legitimate exercise of judicial
power. The latter is judicial legislation forbidden by the tripartite division of powers among the three departments of
government, the executive, the legislative, and the judicial.
We give application to the decision of this court in Regalado vs. Yulo, supra, and as a result overrule the first defense of
the Government.
Passing to the second phase of the case, counsel has endeavoured to draw a distinction between the Regalado case
above cited and the present case. On the facts there is admittedly one difference. In the Regalado case the petitioner had
not been transferred from one municipality to another, while in the present case, Tañada accepted a transfer from one
municipality to another. Did the transfer amount to a new appointment bringing Tañada under the purview of the law
relating to relinquishment of office on attaining the age of sixty-five?
The effect of the Organic Act is that an appointment of a justice of the peace by the Governor-General must be consented
to by the Philippine Senate. In consonance with this provision, the method of appointment and distribution of justices of
the peace are outlined in section 203 of the Administrative Code, a portion of which is hereinbefore quoted. The transfer
from one municipality to another, however, is accomplished by the Governor-General without the advise and consent of
the Philippine Senate, in accordance with codal section 206.
In the case of Nicolas vs. Alberto (51 Phil., 370), the issue was the legal right of the Governor-General to transfer a justice
of the peace from one municipality to another, without the consent of the Philippine Senate. This court held that the
consent of the Philippine Senate was a necessary attribute of the transfer. As the basis for this holding, it was stated that
the appointing power consists of the Governor-General acting in conjunction with the Philippine Senate. But that case was
taken to the United States Supreme Court, and there is was held that the consent of the Senate was unnecessary to
make the transfer legal. (Alberto vs. Nicolas, 279 U.S., 139.) The holding of the higher court, to follow the language of the
syllabus, was that in view of the plenary legislative powers of the Philippine Legislature regarding justice of the peace, Act
No. 2768 of the Philippine Legislature is valid as applied to justice of the peace whose appointment was made by the
Governor-General, and confirmed by the Senate, after its enactment. In the body of the decision appeared the following:
. . . When the Senate confirmed Severino Alberto to be a justice of the peace for San Jose del Monte, sec. 206, with the
proviso, was in force; and when the Senate confirmed him, it confirmed him with the knowledge of the possibility declared
in the law that his power and his functions as a justice of the peace upon designation of the Governor-General might be
performed and exercised in another jurisdiction, if the Governor-General should think it wise in the public interest in his
regulation of the conduct of justice of the peace. There is no such necessary difference between the duties of a justice of
the peace in one part of the Islands and those to be performed in another part as to make such enlargement or change of
his jurisdiction already provided for in existing law unreasonably beyond the scope of the consent to the original
appointment.
It is to be deduced from what has been stated above that according to the United States Supreme Court, the transfer
simply amounted to an enlargement or change of jurisdiction grounded on the original appointment and thus did not
require a new appointment. Whatever our view s might have been to the contrary, it now becomes out duty to follow the
decision of the higher court. It also seems evident that a transfer as applied to officers amounts merely to a change of
position or to another grade of service. (Cliff vs. Wentworth, 220 Mass., 393.)
We give application to the decision of the Supreme Court of the United States in Nicolas vs. Alberto, supra, and as a
result overrule the second defense of the Government.
Before closing it is incumbent upon us to observe that this case was heard in banc because of the suggestion of the
Solicitor-General that the principal issue raised by the pleadings is the validity of Act No. 3899 of the Philippine
Legislature. Our review of the case has convinced us that this allegation overstates the matter. It is unnecessary to
discuss petitioner's contention that Act No. 3899 is unconstitutional because of a defective title. On the other hand, the
allegation in the answer that the law is discriminatory and class legislation, and, consequently, unconstitutional has
apparently been abandoned. Finally it is to be observed that the fear of disorder in the affairs of the Department of Justice
and the Office of the Governor-General on account of the displacement of incumbent justices of the peace, is unfounded,
for as is well known, acquiescence or voluntary surrender of an office precludes the maintenance of a quo warranto
proceeding.
Giving effect to the decisions of this court in the Regalado case and of the Supreme Court of the United States in the
Alberto vs. Nicolas case, and as a consequence ruling that Act No. 3899 does not apply to a justice of the peace
appointed prior to the approval of the Act who completed sixty-five years of age after January 1, 1933, and that a transfer
of a justice of the peace does not amount to an appointment, we reach the conclusion that the special defenses
interposed by the Solicitor-General must be overruled. Accordingly, the writ will be granted and the petitioner Juan
Tañada will be placed in possession of the office of justice of the peace of Perez, Tayabas. So ordered, without special
pronouncement as to the costs.
Abad Santos, Hull, Vickers, Butte, Goddard, and Diaz, JJ., concur.
 G.R. No. L-30642 April 30, 1985
PERFECTO S. FLORESCA, in his own behalf and on behalf of the minors ROMULO and NESTOR S. FLORESCA;
and ERLINDA FLORESCA-GABUYO, PEDRO S. FLORESCA, JR., CELSO S. FLORESCA, MELBA S. FLORESCA,
JUDITH S. FLORESCA and CARMEN S. FLORESCA;
LYDIA CARAMAT VDA. DE MARTINEZ in her own behalf and on behalf of her minor children LINDA, ROMEO,
ANTONIO JEAN and ELY, all surnamed Martinez; and DANIEL MARTINEZ and TOMAS MARTINEZ;
SALUSTIANA ASPIRAS VDA. DE OBRA, in her own behalf and on behalf of her minor children JOSE, ESTELA,
JULITA SALUD and DANILO, all surnamed OBRA;
LYDIA CULBENGAN VDA. DE VILLAR, in her own behalf and on behalf of her minor children EDNA, GEORGE and
LARRY III, all surnamed VILLAR;
DOLORES LOLITA ADER VDA. DE LANUZA, in her own behalf and on behalf of her minor children EDITHA,
ELIZABETH, DIVINA, RAYMUNDO, NESTOR and AURELIO, JR. all surnamed LANUZA;
EMERENCIANA JOSE VDA. DE ISLA, in her own behalf and on behalf of her minor children JOSE, LORENZO, JR.,
MARIA, VENUS and FELIX, all surnamed ISLA, petitioners,
vs.
PHILEX MINING CORPORATION and HON. JESUS P. MORFE, Presiding Judge of Branch XIII, Court of First Instance
of Manila, respondents.
Rodolfo C. Pacampara for petitioners.
Tito M. Villaluna for respondents.

MAKASIAR, J.:
This is a petition to review the order of the former Court of First Instance of Manila, Branch XIII, dated December 16, 1968
dismissing petitioners' complaint for damages on the ground of lack of jurisdiction.
Petitioners are the heirs of the deceased employees of Philex Mining Corporation (hereinafter referred to as Philex), who,
while working at its copper mines underground operations at Tuba, Benguet on June 28, 1967, died as a result of the
cave-in that buried them in the tunnels of the mine. Specifically, the complaint alleges that Philex, in violation of
government rules and regulations, negligently and deliberately failed to take the required precautions for the protection of
the lives of its men working underground. Portion of the complaint reads:
xxx xxx xxx
9. That for sometime prior and up to June 28,1967, the defendant PHILEX, with gross and reckless negligence and
imprudence and deliberate failure to take the required precautions for the due protection of the lives of its men working
underground at the time, and in utter violation of the laws and the rules and regulations duly promulgated by the
Government pursuant thereto, allowed great amount of water and mud to accumulate in an open pit area at the mine
above Block 43-S-1 which seeped through and saturated the 600 ft. column of broken ore and rock below it, thereby
exerting tremendous pressure on the working spaces at its 4300 level, with the result that, on the said date, at about 4
o'clock in the afternoon, with the collapse of all underground supports due to such enormous pressure, approximately
500,000 cubic feet of broken ores rocks, mud and water, accompanied by surface boulders, blasted through the tunnels
and flowed out and filled in, in a matter of approximately five (5) minutes, the underground workings, ripped timber
supports and carried off materials, machines and equipment which blocked all avenues of exit, thereby trapping within its
tunnels of all its men above referred to, including those named in the next preceding paragraph, represented by the
plaintiffs herein;
10. That out of the 48 mine workers who were then working at defendant PHILEX's mine on the said date, five (5) were
able to escape from the terrifying holocaust; 22 were rescued within the next 7 days; and the rest, 21 in number, including
those referred to in paragraph 7 hereinabove, were left mercilessly to their fate, notwithstanding the fact that up to then, a
great many of them were still alive, entombed in the tunnels of the mine, but were not rescued due to defendant PHILEX's
decision to abandon rescue operations, in utter disregard of its bounden legal and moral duties in the premises;
xxx xxx xxx
13. That defendant PHILEX not only violated the law and the rules and regulations duly promulgated by the duly
constituted authorities as set out by the Special Committee above referred to, in their Report of investigation, pages 7-13,
Annex 'B' hereof, but also failed completely to provide its men working underground the necessary security for the
protection of their lives notwithstanding the fact that it had vast financial resources, it having made, during the year 1966
alone, a total operating income of P 38,220,254.00, or net earnings, after taxes of P19,117,394.00, as per its llth Annual
Report for the year ended December 31, 1966, and with aggregate assets totalling P 45,794,103.00 as of December 31,
1966;
xxx xxx xxx
(pp. 42-44, rec.)
A motion to dismiss dated May 14, 1968 was filed by Philex alleging that the causes of action of petitioners based on an
industrial accident are covered by the provisions of the Workmen's Compensation Act (Act 3428, as amended by RA 772)
and that the former Court of First Instance has no jurisdiction over the case. Petitioners filed an opposition dated May 27,
1968 to the said motion to dismiss claiming that the causes of action are not based on the provisions of the Workmen's
Compensation Act but on the provisions of the Civil Code allowing the award of actual, moral and exemplary damages,
particularly:
Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the
damage done. Such fault or negligence, if there is no pre- existing contractual relation between the parties, is called a
quasi-delict and is governed by the provisions of this Chapter.
Art. 2178. The provisions of articles 1172 to 1174 are also applicable to a quasi-delict.
(b) Art. 1173—The fault or negligence of the obligor consists in the omission of that diligence which is required by the
nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place. When
negligence shows bad faith, the provisions of Articles 1171 and 2201, paragraph 2 shall apply.
Art. 2201. x x x x x x x x x
In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may be
reasonably attributed to the non-performance of the obligation.
Art. 2231. In quasi-delicts, exemplary damages may be granted if the defendant acted with gross negligence.
After a reply and a rejoinder thereto were filed, respondent Judge issued an order dated June 27, 1968 dismissing the
case on the ground that it falls within the exclusive jurisdiction of the Workmen's Compensation Commission. On
petitioners' motion for reconsideration of the said order, respondent Judge, on September 23, 1968, reconsidered and set
aside his order of June 27, 1968 and allowed Philex to file an answer to the complaint. Philex moved to reconsider the
aforesaid order which was opposed by petitioners.
On December 16, 1968, respondent Judge dismissed the case for lack of jurisdiction and ruled that in accordance with the
established jurisprudence, the Workmen's Compensation Commission has exclusive original jurisdiction over damage or
compensation claims for work-connected deaths or injuries of workmen or employees, irrespective of whether or not the
employer was negligent, adding that if the employer's negligence results in work-connected deaths or injuries, the
employer shall, pursuant to Section 4-A of the Workmen's Compensation Act, pay additional compensation equal to 50%
of the compensation fixed in the Act.
Petitioners thus filed the present petition.
In their brief, petitioners raised the following assignment of errors:
I
THE LOWER COURT ERRED IN DISMISSING THE PLAINTIFFS- PETITIONERS' COMPLAINT FOR LACK OF
JURISDICTION.
II
THE LOWER COURT ERRED IN FAILING TO CONSIDER THE CLEAR DISTINCTION BETWEEN CLAIMS FOR
DAMAGES UNDER THE CIVIL CODE AND CLAIMS FOR COMPENSATION UNDER THE WORKMEN'S
COMPENSATION ACT.
A
In the first assignment of error, petitioners argue that the lower court has jurisdiction over the cause of action since the
complaint is based on the provisions of the Civil Code on damages, particularly Articles 2176, 2178, 1173, 2201 and
2231, and not on the provisions of the Workmen's Compensation Act. They point out that the complaint alleges gross and
brazen negligence on the part of Philex in failing to take the necessary security for the protection of the lives of its
employees working underground. They also assert that since Philex opted to file a motion to dismiss in the court a quo,
the allegations in their complaint including those contained in the annexes are deemed admitted.
In the second assignment of error, petitioners asseverate that respondent Judge failed to see the distinction between the
claims for compensation under the Workmen's Compensation Act and the claims for damages based on gross negligence
of Philex under the Civil Code. They point out that workmen's compensation refers to liability for compensation for loss
resulting from injury, disability or death of the working man through industrial accident or disease, without regard to the
fault or negligence of the employer, while the claim for damages under the Civil Code which petitioners pursued in the
regular court, refers to the employer's liability for reckless and wanton negligence resulting in the death of the employees
and for which the regular court has jurisdiction to adjudicate the same.
On the other hand, Philex asserts that work-connected injuries are compensable exclusively under the provisions of
Sections 5 and 46 of the Workmen's Compensation Act, which read:
SEC. 5. Exclusive right to compensation.—The rights and remedies granted by this Act to an employee by reason of a
personal injury entitling him to compensation shall exclude all other rights and remedies accruing to the employee, his
personal representatives, dependents or nearest of kin against the employer under the Civil Code and other laws because
of said injury ...
SEC. 46. Jurisdiction.— The Workmen's Compensation Commissioner shall have exclusive jurisdiction to hear and decide
claims for compensation under the Workmen's Compensation Act, subject to appeal to the Supreme Court, ...
Philex cites the case of Manalo vs. Foster Wheeler (98 Phil. 855 [1956]) where it was held that "all claims of workmen
against their employer for damages due to accident suffered in the course of employment shall be investigated and
adjudicated by the Workmen's Compensation Commission," subject to appeal to the Supreme Court.
Philex maintains that the fact that an employer was negligent, does not remove the case from the exclusive character of
recoveries under the Workmen's Compensation Act; because Section 4-A of the Act provides an additional compensation
in case the employer fails to comply with the requirements of safety as imposed by law to prevent accidents. In fact, it
points out that Philex voluntarily paid the compensation due the petitioners and all the payments have been accepted in
behalf of the deceased miners, except the heirs of Nazarito Floresca who insisted that they are entitled to a greater
amount of damages under the Civil Code.
In the hearing of this case, then Undersecretary of Labor Israel Bocobo, then Atty. Edgardo Angara, now President of the
University of the Philippines, Justice Manuel Lazaro, as corporate counsel and Assistant General Manager of the GSIS
Legal Affairs Department, and Commissioner on Elections, formerly UP Law Center Director Froilan Bacungan, appeared
as amici curiae and thereafter, submitted their respective memoranda.
The issue to be resolved as WE stated in the resolution of November 26, 1976, is:
Whether the action of an injured employee or worker or that of his heirs in case of his death under the Workmen's
Compensation Act is exclusive, selective or cumulative, that is to say, whether his or his heirs' action is exclusively
restricted to seeking the limited compensation provided under the Workmen's Compensation Act or whether they have a
right of selection or choice of action between availing of the worker's right under the Workmen's Compensation Act and
suing in the regular courts under the Civil Code for higher damages (actual, moral and/or exemplary) from the employer
by virtue of negligence (or fault) of the employer or of his other employees or whether they may avail cumulatively of both
actions, i.e., collect the limited compensation under the Workmen's Compensation Act and sue in addition for damages in
the regular courts.
There are divergent opinions in this case. Justice Lazaro is of the opinion that an injured employee or worker, or the heirs
in case of his death, may initiate a complaint to recover damages (not compensation under the Workmen's Compensation
Act) with the regular court on the basis of negligence of an employer pursuant to the Civil Code provisions. Atty. Angara
believes otherwise. He submits that the remedy of an injured employee for work-connected injury or accident is exclusive
in accordance with Section 5 of the Workmen's Compensation Act, while Atty. Bacungan's position is that the action is
selective. He opines that the heirs of the employee in case of his death have a right of choice to avail themselves of the
benefits provided under the Workmen's Compensation Act or to sue in the regular court under the Civil Code for higher
damages from the employer by virtue of negligence of the latter. Atty. Bocobo's stand is the same as that of Atty.
Bacungan and adds that once the heirs elect the remedy provided for under the Act, they are no longer entitled to avail
themselves of the remedy provided for under the Civil Code by filing an action for higher damages in the regular court,
and vice versa.
On August 3, 1978, petitioners-heirs of deceased employee Nazarito Floresca filed a motion to dismiss on the ground that
they have amicably settled their claim with respondent Philex. In the resolution of September 7, 1978, WE dismissed the
petition only insofar as the aforesaid petitioners are connected, it appearing that there are other petitioners in this case.
WE hold that the former Court of First Instance has jurisdiction to try the case,
It should be underscored that petitioners' complaint is not for compensation based on the Workmen's Compensation Act
but a complaint for damages (actual, exemplary and moral) in the total amount of eight hundred twenty-five thousand
(P825,000.00) pesos. Petitioners did not invoke the provisions of the Workmen's Compensation Act to entitle them to
compensation thereunder. In fact, no allegation appeared in the complaint that the employees died from accident arising
out of and in the course of their employments. The complaint instead alleges gross and reckless negligence and
deliberate failure on the part of Philex to protect the lives of its workers as a consequence of which a cave-in occurred
resulting in the death of the employees working underground. Settled is the rule that in ascertaining whether or not the
cause of action is in the nature of workmen's compensation claim or a claim for damages pursuant to the provisions of the
Civil Code, the test is the averments or allegations in the complaint (Belandres vs. Lopez Sugar Mill, Co., Inc., 97 Phil.
100).
In the present case, there exists between Philex and the deceased employees a contractual relationship. The alleged
gross and reckless negligence and deliberate failure that amount to bad faith on the part of Philex, constitute a breach of
contract for which it may be held liable for damages. The provisions of the Civil Code on cases of breach of contract when
there is fraud or bad faith, read:
Art. 2232. In contracts and quasi-contracts, the court may award exemplary damages if the defendant acted in a wanton,
fraudulent, reckless, oppressive or malevolent manner.
Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in good faith is able shall be
those that are the natural and probable consequences of the breach of the obligation, and which the parties have
foreseen or could have reasonably foreseen at the time the obligation was constituted.
In cases of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may be
reasonably attributed to the non-performance of the obligation.
Furthermore, Articles 2216 et seq., Civil Code, allow the payment of all kinds of damages, as assessed by the court.
The rationale in awarding compensation under the Workmen's Compensation Act differs from that in giving damages
under the Civil Code. The compensation acts are based on a theory of compensation distinct from the existing theories of
damages, payments under the acts being made as compensation and not as damages (99 C.J.S. 53). Compensation is
given to mitigate the harshness and insecurity of industrial life for the workman and his family. Hence, an employer is
liable whether negligence exists or not since liability is created by law. Recovery under the Act is not based on any theory
of actionable wrong on the part of the employer (99 C.J.S. 36).
In other words, under the compensation acts, the employer is liable to pay compensation benefits for loss of income, as
long as the death, sickness or injury is work-connected or work-aggravated, even if the death or injury is not due to the
fault of the employer (Murillo vs. Mendoza, 66 Phil. 689). On the other hand, damages are awarded to one as a
vindication of the wrongful invasion of his rights. It is the indemnity recoverable by a person who has sustained injury
either in his person, property or relative rights, through the act or default of another (25 C.J.S. 452).
The claimant for damages under the Civil Code has the burden of proving the causal relation between the defendant's
negligence and the resulting injury as well as the damages suffered. While under the Workmen's Compensation Act, there
is a presumption in favor of the deceased or injured employee that the death or injury is work-connected or work-
aggravated; and the employer has the burden to prove otherwise (De los Angeles vs. GSIS, 94 SCRA 308; Carino vs.
WCC, 93 SCRA 551; Maria Cristina Fertilizer Corp. vs. WCC, 60 SCRA 228).
The claim of petitioners that the case is not cognizable by the Workmen's Compensation Commission then, now
Employees Compensation Commission, is strengthened by the fact that unlike in the Civil Code, the Workmen's
Compensation Act did not contain any provision for an award of actual, moral and exemplary damages. What the Act
provided was merely the right of the heirs to claim limited compensation for the death in the amount of six thousand
(P6,000.00) pesos plus burial expenses of two hundred (P200.00) pesos, and medical expenses when incurred (Sections
8, 12 and 13, Workmen's Compensation Act), and an additional compensation of only 50% if the complaint alleges failure
on the part of the employer to "install and maintain safety appliances or to take other precautions for the prevention of
accident or occupational disease" (Section 4-A, Ibid.). In the case at bar, the amount sought to be recovered is over and
above that which was provided under the Workmen's Compensation Act and which cannot be granted by the
Commission.
Moreover, under the Workmen's Compensation Act, compensation benefits should be paid to an employee who suffered
an accident not due to the facilities or lack of facilities in the industry of his employer but caused by factors outside the
industrial plant of his employer. Under the Civil Code, the liability of the employer, depends on breach of contract or tort.
The Workmen's Compensation Act was specifically enacted to afford protection to the employees or workmen. It is a
social legislation designed to give relief to the workman who has been the victim of an accident causing his death or
ailment or injury in the pursuit of his employment (Abong vs. WCC, 54 SCRA 379).
WE now come to the query as to whether or not the injured employee or his heirs in case of death have a right of
selection or choice of action between availing themselves of the worker's right under the Workmen's Compensation Act
and suing in the regular courts under the Civil Code for higher damages (actual, moral and exemplary) from the
employers by virtue of that negligence or fault of the employers or whether they may avail themselves cumulatively of both
actions, i.e., collect the limited compensation under the Workmen's Compensation Act and sue in addition for damages in
the regular courts.
In disposing of a similar issue, this Court in Pacana vs. Cebu Autobus Company, 32 SCRA 442, ruled that an injured
worker has a choice of either to recover from the employer the fixed amounts set by the Workmen's Compensation Act or
to prosecute an ordinary civil action against the tortfeasor for higher damages but he cannot pursue both courses of action
simultaneously.
In Pacaña WE said:
In the analogous case of Esguerra vs. Munoz Palma, involving the application of Section 6 of the Workmen's
Compensation Act on the injured workers' right to sue third- party tortfeasors in the regular courts, Mr. Justice J.B.L.
Reyes, again speaking for the Court, pointed out that the injured worker has the choice of remedies but cannot pursue
both courses of action simultaneously and thus balanced the relative advantage of recourse under the Workmen's
Compensation Act as against an ordinary action.
As applied to this case, petitioner Esguerra cannot maintain his action for damages against the respondents (defendants
below), because he has elected to seek compensation under the Workmen's Compensation Law, and his claim (case No.
44549 of the Compensation Commission) was being processed at the time he filed this action in the Court of First
Instance. It is argued for petitioner that as the damages recoverable under the Civil Code are much more extensive than
the amounts that may be awarded under the Workmen's Compensation Act, they should not be deemed incompatible. As
already indicated, the injured laborer was initially free to choose either to recover from the employer the fixed amounts set
by the Compensation Law or else, to prosecute an ordinary civil action against the tortfeasor for higher damages. While
perhaps not as profitable, the smaller indemnity obtainable by the first course is balanced by the claimant's being relieved
of the burden of proving the causal connection between the defendant's negligence and the resulting injury, and of having
to establish the extent of the damage suffered; issues that are apt to be troublesome to establish satisfactorily. Having
staked his fortunes on a particular remedy, petitioner is precluded from pursuing the alternate course, at least until the
prior claim is rejected by the Compensation Commission. Anyway, under the proviso of Section 6 aforequoted, if the
employer Franklin Baker Company recovers, by derivative action against the alleged tortfeasors, a sum greater than the
compensation he may have paid the herein petitioner, the excess accrues to the latter.
Although the doctrine in the case of Esguerra vs. Munoz Palma (104 Phil. 582), applies to third-party tortfeasor, said rule
should likewise apply to the employer-tortfeasor.
Insofar as the heirs of Nazarito Floresca are concerned, as already stated, the petition has been dismissed in the
resolution of September 7, 1978 in view of the amicable settlement reached by Philex and the said heirs.
With regard to the other petitioners, it was alleged by Philex in its motion to dismiss dated May 14, 1968 before the court a
quo, that the heirs of the deceased employees, namely Emerito Obra, Larry Villar, Jr., Aurelio Lanuza, Lorenzo Isla and
Saturnino Martinez submitted notices and claims for compensation to the Regional Office No. 1 of the then Department of
Labor and all of them have been paid in full as of August 25, 1967, except Saturnino Martinez whose heirs decided that
they be paid in installments (pp. 106-107, rec.). Such allegation was admitted by herein petitioners in their opposition to
the motion to dismiss dated May 27, 1968 (pp. 121-122, rec.) in the lower court, but they set up the defense that the
claims were filed under the Workmen's Compensation Act before they learned of the official report of the committee
created to investigate the accident which established the criminal negligence and violation of law by Philex, and which
report was forwarded by the Director of Mines to the then Executive Secretary Rafael Salas in a letter dated October 19,
1967 only (p. 76, rec.).
WE hold that although the other petitioners had received the benefits under the Workmen's Compensation Act, such may
not preclude them from bringing an action before the regular court because they became cognizant of the fact that Philex
has been remiss in its contractual obligations with the deceased miners only after receiving compensation under the Act.
Had petitioners been aware of said violation of government rules and regulations by Philex, and of its negligence, they
would not have sought redress under the Workmen's Compensation Commission which awarded a lesser amount for
compensation. The choice of the first remedy was based on ignorance or a mistake of fact, which nullifies the choice as it
was not an intelligent choice. The case should therefore be remanded to the lower court for further proceedings. However,
should the petitioners be successful in their bid before the lower court, the payments made under the Workmen's
Compensation Act should be deducted from the damages that may be decreed in their favor.
B
Contrary to the perception of the dissenting opinion, the Court does not legislate in the instant case. The Court merely
applies and gives effect to the constitutional guarantees of social justice then secured by Section 5 of Article 11 and
Section 6 of Article XIV of the 1935 Constitution, and now by Sections 6, 7, and 9 of Article 11 of the DECLARATION OF
PRINCIPLES AND STATE POLICIES of the 1973 Constitution, as amended, and as implemented by Articles 2176, 2177,
2178, 1173, 2201, 2216, 2231 and 2232 of the New Civil Code of 1950.
To emphasize, the 1935 Constitution declares that:
Sec. 5. The promotion of social justice to insure the well-being and economic security of all the people should be the
concern of the State (Art. II).
Sec. 6. The State shall afford protection to labor, especially to working women, and minors, and shall regulate the
relations between landowner and tenant, and between labor and capital in industry and in agriculture. The State may
provide for compulsory arbitration (Art. XIV).
The 1973 Constitution likewise commands the State to "promote social justice to insure the dignity, welfare, and security
of all the people "... regulate the use ... and disposition of private property and equitably diffuse property ownership and
profits "establish, maintain and ensure adequate social services in, the field of education, health, housing, employment,
welfare and social security to guarantee the enjoyment by the people of a decent standard of living" (Sections 6 and 7,
Art. II, 1973 Constitution); "... afford protection to labor, ... and regulate the relations between workers and employers ...,
and assure the rights of workers to ... just and humane conditions of work" (Sec. 9, Art. II, 1973 Constitution, emphasis
supplied).
The foregoing constitutional guarantees in favor of labor institutionalized in Section 9 of Article 11 of the 1973 Constitution
and re-stated as a declaration of basic policy in Article 3 of the New Labor Code, thus:
Art. 3. Declaration of basic policy.—The State shall afford protection to labor, promote full employment, ensure equal work
opportunities regardless of sex, race or creed, and regulate the relations between workers and employers. The State shall
assure the rights of workers to self-organization, collective bargaining, security of tenure, and just and humane conditions
of work. (emphasis supplied).
The aforestated constitutional principles as implemented by the aforementioned articles of the New Civil Code cannot be
impliedly repealed by the restrictive provisions of Article 173 of the New Labor Code. Section 5 of the Workmen's
Compensation Act (before it was amended by R.A. No. 772 on June 20, 1952), predecessor of Article 173 of the New
Labor Code, has been superseded by the aforestated provisions of the New Civil Code, a subsequent law, which took
effect on August 30, 1950, which obey the constitutional mandates of social justice enhancing as they do the rights of the
workers as against their employers. Article 173 of the New Labor Code seems to diminish the rights of the workers and
therefore collides with the social justice guarantee of the Constitution and the liberal provisions of the New Civil Code.
The guarantees of social justice embodied in Sections 6, 7 and 9 of Article II of the 1973 Constitution are statements of
legal principles to be applied and enforced by the courts. Mr. Justice Robert Jackson in the case of West Virginia State
Board of Education vs. Barnette, with characteristic eloquence, enunciated:
The very purpose of a Bill of Rights was to withdraw certain subjects from the vicissitudes of political controversy, to place
them beyond the reach of majorities and officials and to establish them as legal principles to be applied by the courts.
One's right to life, liberty, and property, to free speech, a free press, freedom of worship and assembly, and other
fundamental rights may not be submitted to vote; they depend on the outcome of no elections (319 U.S. 625, 638, 87
L.ed. 1638, emphasis supplied).
In case of any doubt which may be engendered by Article 173 of the New Labor Code, both the New Labor Code and the
Civil Code direct that the doubts should be resolved in favor of the workers and employees.
Thus, Article 4 of the New Labor Code, otherwise known as Presidential Decree No. 442, as amended, promulgated on
May 1, 1974, but which took effect six months thereafter, 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" (Art. 2,
Labor Code).
Article 10 of the New Civil Code states: "In case of doubt in the interpretation or application of laws, it is presumed that the
law-making body intended right and justice to prevail. "
More specifically, Article 1702 of the New Civil Code likewise directs that. "In case of doubt, all labor legislation and all
labor contracts shall be construed in favor of the safety and decent living of the laborer."
Before it was amended by Commonwealth Act No. 772 on June 20, 1952, Section 5 of the Workmen's Compensation Act
provided:
Sec. 5. Exclusive right to compensation.- The rights and remedies granted by this Act to an employee by reason of a
personal injury entitling him to compensation shall exclude all other rights and remedies accruing to the employee, his
personal representatives, dependents or nearest of kin against the employer under the Civil Code and other laws,
because of said injury (emphasis supplied).
Employers contracting laborecsrs in the Philippine Islands for work outside the same may stipulate with such laborers that
the remedies prescribed by this Act shall apply exclusively to injuries received outside the Islands through accidents
happening in and during the performance of the duties of the employment; and all service contracts made in the manner
prescribed in this section shall be presumed to include such agreement.
Only the second paragraph of Section 5 of the Workmen's Compensation Act No. 3428, was amended by Commonwealth
Act No. 772 on June 20, 1952, thus:
Sec. 5. Exclusive right to compensation.- The rights and remedies granted by this Act to an employee by reason of a
personal injury entitling him to compensation shall exclude all other rights and remedies accruing to the employee, his
personal representatives, dependents or nearest of kin against the employer under the Civil Code and other laws,
because of said injury.
Employers contracting laborers in the Philippine Islands for work outside the same shall stipulate with such laborers that
the remedies prescribed by this Act shall apply to injuries received outside the Island through accidents happening in and
during the performance of the duties of the employment. Such stipulation shall not prejudice the right of the laborers to the
benefits of the Workmen's Compensation Law of the place where the accident occurs, should such law be more favorable
to them (As amended by section 5 of Republic Act No. 772).
Article 173 of the New Labor Code does not repeal expressly nor impliedly the applicable provisions of the New Civil
Code, because said Article 173 provides:
Art. 173. Exclusiveness of liability.- Unless otherwise provided, the liability of the State Insurance Fund under this Title
shall be exclusive and in place of all other liabilities of the employer to the employee, his dependents or anyone otherwise
entitled to receive damages on behalf of the employee or his dependents. The payment of compensation under this Title
shall bar the recovery of benefits as provided for in Section 699 of the Revised Administrative Code, Republic Act
Numbered Eleven hundred sixty-one, as amended, Commonwealth Act Numbered One hundred eighty- six, as amended,
Commonwealth Act Numbered Six hundred ten, as amended, Republic Act Numbered Forty-eight hundred Sixty-four, as
amended, and other laws whose benefits are administered by the System during the period of such payment for the same
disability or death, and conversely (emphasis supplied).
As above-quoted, Article 173 of the New Labor Code expressly repealed only Section 699 of the Revised Administrative
Code, R.A. No. 1161, as amended, C.A. No. 186, as amended, R.A. No. 610, as amended, R.A. No. 4864, as amended,
and all other laws whose benefits are administered by the System (referring to the GSIS or SSS).
Unlike Section 5 of the Workmen's Compensation Act as aforequoted, Article 173 of the New Labor Code does not even
remotely, much less expressly, repeal the New Civil Code provisions heretofore quoted.
It is patent, therefore, that recovery under the New Civil Code for damages arising from negligence, is not barred by
Article 173 of the New Labor Code. And the damages recoverable under the New Civil Code are not administered by the
System provided for by the New Labor Code, which defines the "System" as referring to the Government Service
Insurance System or the Social Security System (Art. 167 [c], [d] and [e] of the New Labor Code).
Furthermore, under Article 8 of the New Civil Code, decisions of the Supreme Court form part of the law of the land.
Article 8 of the New Civil Code provides:
Art. 8. Judicial decisions applying or interpreting the laws or the Constitution shall form a part of the legal system of the
Philippines.
The Court, through the late Chief Justice Fred Ruiz Castro, in People vs. Licera ruled:
Article 8 of the Civil Code of the Philippines decrees that judicial decisions applying or interpreting the laws or the
Constitution form part of this jurisdiction's legal system. These decisions, although in themselves not laws, constitute
evidence of what the laws mean. The application or interpretation placed by the Court upon a law is part of the law as of
the date of the enactment of the said law since the Court's application or interpretation merely establishes the
contemporaneous legislative intent that the construed law purports to carry into effect" (65 SCRA 270, 272-273 [1975]).
WE ruled that judicial decisions of the Supreme Court assume the same authority as the statute itself (Caltex vs. Palomer,
18 SCRA 247; 124 Phil. 763).
The aforequoted provisions of Section 5 of the Workmen's Compensation Act, before and after it was amended by
Commonwealth Act No. 772 on June 20, 1952, limited the right of recovery in favor of the deceased, ailing or injured
employee to the compensation provided for therein. Said Section 5 was not accorded controlling application by the
Supreme Court in the 1970 case of Pacana vs. Cebu Autobus Company (32 SCRA 442) when WE ruled that an injured
worker has a choice of either to recover from the employer the fixed amount set by the Workmen's Compensation Act or
to prosecute an ordinary civil action against the tortfeasor for greater damages; but he cannot pursue both courses of
action simultaneously. Said Pacana case penned by Mr. Justice Teehankee, applied Article 1711 of the Civil Code as
against the Workmen's Compensation Act, reiterating the 1969 ruling in the case of Valencia vs. Manila Yacht Club (28
SCRA 724, June 30,1969) and the 1958 case of Esguerra vs. Munoz Palma (104 Phil. 582), both penned by Justice
J.B.L. Reyes. Said Pacana case was concurred in by Justices J.B.L. Reyes, Dizon, Makalintal, Zaldivar, Castro, Fernando
and Villamor.
Since the first sentence of Article 173 of the New Labor Code is merely a re-statement of the first paragraph of Section 5
of the Workmen's Compensation Act, as amended, and does not even refer, neither expressly nor impliedly, to the Civil
Code as Section 5 of the Workmen's Compensation Act did, with greater reason said Article 173 must be subject to the
same interpretation adopted in the cases of Pacana, Valencia and Esguerra aforementioned as the doctrine in the
aforesaid three (3) cases is faithful to and advances the social justice guarantees enshrined in both the 1935 and 1973
Constitutions.
It should be stressed likewise that there is no similar provision on social justice in the American Federal Constitution, nor
in the various state constitutions of the American Union. Consequently, the restrictive nature of the American decisions on
the Workmen's Compensation Act cannot limit the range and compass of OUR interpretation of our own laws, especially
Article 1711 of the New Civil Code, vis-a-vis Article 173 of the New Labor Code, in relation to Section 5 of Article II and
Section 6 of Article XIV of the 1935 Constitution then, and now Sections 6, 7 and 9 of the Declaration of Principles and
State Policies of Article II of the 1973 Constitution.
The dissent seems to subordinate the life of the laborer to the property rights of the employer. The right to life is
guaranteed specifically by the due process clause of the Constitution. To relieve the employer from liability for the death of
his workers arising from his gross or wanton fault or failure to provide safety devices for the protection of his employees or
workers against the dangers which are inherent in underground mining, is to deprive the deceased worker and his heirs of
the right to recover indemnity for the loss of the life of the worker and the consequent loss to his family without due
process of law. The dissent in effect condones and therefore encourages such gross or wanton neglect on the part of the
employer to comply with his legal obligation to provide safety measures for the protection of the life, limb and health of his
worker. Even from the moral viewpoint alone, such attitude is un-Christian.
It is therefore patent that giving effect to the social justice guarantees of the Constitution, as implemented by the
provisions of the New Civil Code, is not an exercise of the power of law-making, but is rendering obedience to the
mandates of the fundamental law and the implementing legislation aforementioned.
The Court, to repeat, is not legislating in the instant case.
It is axiomatic that no ordinary statute can override a constitutional provision.
The words of Section 5 of the Workmen's Compensation Act and of Article 173 of the New Labor Code subvert the rights
of the petitioners as surviving heirs of the deceased mining employees. Section 5 of the Workmen's Compensation Act
and Article 173 of the New Labor Code are retrogressive; because they are a throwback to the obsolete laissez-faire
doctrine of Adam Smith enunciated in 1776 in his treatise Wealth of Nations (Collier's Encyclopedia, Vol. 21, p. 93, 1964),
which has been discarded soon after the close of the 18th century due to the Industrial Revolution that generated the
machines and other mechanical devices (beginning with Eli Whitney's cotton gin of 1793 and Robert Fulton's steamboat
of 1807) for production and transportation which are dangerous to life, limb and health. The old socio-political-economic
philosophy of live-and-let-live is now superdesed by the benign Christian shibboleth of live-and-help others to live. Those
who profess to be Christians should not adhere to Cain's selfish affirmation that he is not his brother's keeper. In this our
civilization, each one of us is our brother's keeper. No man is an island. To assert otherwise is to be as atavistic and ante-
deluvian as the 1837 case of Prisley vs. Fowler (3 MN 1,150 reprint 1030) invoked by the dissent, The Prisley case was
decided in 1837 during the era of economic royalists and robber barons of America. Only ruthless, unfeeling capitalistics
and egoistic reactionaries continue to pay obeisance to such un-Christian doctrine. The Prisley rule humiliates man and
debases him; because the decision derisively refers to the lowly worker as "servant" and utilizes with aristocratic
arrogance "master" for "employer." It robs man of his inherent dignity and dehumanizes him. To stress this affront to
human dignity, WE only have to restate the quotation from Prisley, thus: "The mere relation of the master and the servant
never can imply an obligation on the part of the master to take more care of the servant than he may reasonably be
expected to do himself." This is the very selfish doctrine that provoked the American Civil War which generated so much
hatred and drew so much precious blood on American plains and valleys from 1861 to 1864.
"Idolatrous reverence" for the letter of the law sacrifices the human being. The spirit of the law insures man's survival and
ennobles him. In the words of Shakespeare, "the letter of the law killeth; its spirit giveth life."
C
It is curious that the dissenting opinion clings to the myth that the courts cannot legislate.
That myth had been exploded by Article 9 of the New Civil Code, which provides that "No judge or court shall decline to
render judgment by reason of the silence, obscurity or insufficiency of the laws. "
Hence, even the legislator himself, through Article 9 of the New Civil Code, recognizes that in certain instances, the court,
in the language of Justice Holmes, "do and must legislate" to fill in the gaps in the law; because the mind of the legislator,
like all human beings, is finite and therefore cannot envisage all possible cases to which the law may apply Nor has the
human mind the infinite capacity to anticipate all situations.
But about two centuries before Article 9 of the New Civil Code, the founding fathers of the American Constitution foresaw
and recognized the eventuality that the courts may have to legislate to supply the omissions or to clarify the ambiguities in
the American Constitution and the statutes.
'Thus, Alexander Hamilton pragmatically admits that judicial legislation may be justified but denies that the power of the
Judiciary to nullify statutes may give rise to Judicial tyranny (The Federalist, Modern Library, pp. 503-511, 1937 ed.).
Thomas Jefferson went farther to concede that the court is even independent of the Nation itself (A.F.L. vs. American
Sash Company, 1949 335 US 538).
Many of the great expounders of the American Constitution likewise share the same view. Chief Justice Marshall
pronounced: "It is emphatically the province and duty of the Judicial department to say what the law is (Marbury vs.
Madison I Cranch 127 1803), which was re-stated by Chief Justice Hughes when he said that "the Constitution is what the
judge says it is (Address on May 3, 1907, quoted by President Franklin Delano Roosevelt on March 9, 1937). This was
reiterated by Justice Cardozo who pronounced that "No doubt the limits for the judge are narrower. He legislates only
between gaps. He fills the open spaces in the law. " (The Nature of the Judicial Process, p. 113). In the language of Chief
Justice Harlan F. Stone, "The only limit to the judicial legislation is the restraint of the judge" (U.S. vs. Butler 297 U.S. 1
Dissenting Opinion, p. 79), which view is also entertained by Justice Frankfurter and Justice Robert Jackson. In the
rhetoric of Justice Frankfurter, "the courts breathe life, feeble or strong, into the inert pages of the Constitution and all
statute books."
It should be stressed that the liability of the employer under Section 5 of the Workmen's Compensation Act or Article 173
of the New Labor Code is limited to death, ailment or injury caused by the nature of the work, without any fault on the part
of the employers. It is correctly termed no fault liability. Section 5 of the Workmen's Compensation Act, as amended, or
Article 173 of the New Labor Code, does not cover the tortious liability of the employer occasioned by his fault or culpable
negligence in failing to provide the safety devices required by the law for the protection of the life, limb and health of the
workers. Under either Section 5 or Article 173, the employer remains liable to pay compensation benefits to the employee
whose death, ailment or injury is work-connected, even if the employer has faithfully and diligently furnished all the safety
measures and contrivances decreed by the law to protect the employee.
The written word is no longer the "sovereign talisman." In the epigrammatic language of Mr. Justice Cardozo, "the law has
outgrown its primitive stage of formalism when the precise word was the sovereign talisman, and every slip was fatal"
(Wood vs. Duff Gordon 222 NW 88; Cardozo, The Nature of the Judicial Process 100). Justice Cardozo warned that:
"Sometimes the conservatism of judges has threatened for an interval to rob the legislation of its efficacy. ... Precedents
established in those items exert an unhappy influence even now" (citing Pound, Common Law and Legislation 21 Harvard
Law Review 383, 387).
Finally, Justice Holmes delivered the coup de grace when he pragmatically admitted, although with a cautionary
undertone: "that judges do and must legislate, but they can do so only interstitially they are confined from molar to
molecular motions" (Southern Pacific Company vs. Jensen, 244 US 204 1917). And in the subsequent case of Springer
vs. Government (277 US 188, 210-212, 72 L.ed. 845, 852- 853), Justice Holmes pronounced:
The great ordinances of the Constitution do not establish and divide fields of black and white. Even the more specific of
them are found to terminate in a penumbra shading gradually from one extreme to the other. x x x. When we come to the
fundamental distinctions it is still more obvious that they must be received with a certain latitude or our government could
not go on.
To make a rule of conduct applicable to an individual who but for such action would be free from it is to legislate yet it is
what the judges do whenever they determine which of two competing principles of policy shall prevail.
xxx xxx xxx
It does not seem to need argument to show that however we may disguise it by veiling words we do not and cannot carry
out the distinction between legislative and executive action with mathematical precision and divide the branches into
waterlight compartments, were it ever so desirable to do so, which I am far from believing that it is, or that the Constitution
requires.
True, there are jurists and legal writers who affirm that judges should not legislate, but grudgingly concede that in certain
cases judges do legislate. They criticize the assumption by the courts of such law-making power as dangerous for it may
degenerate into Judicial tyranny. They include Blackstone, Jeremy Bentham, Justice Black, Justice Harlan, Justice
Roberts, Justice David Brewer, Ronald Dworkin, Rolf Sartorious, Macklin Fleming and Beryl Harold Levy. But said
Justices, jurists or legal commentators, who either deny the power of the courts to legislate in-between gaps of the law, or
decry the exercise of such power, have not pointed to examples of the exercise by the courts of such law-making authority
in the interpretation and application of the laws in specific cases that gave rise to judicial tyranny or oppression or that
such judicial legislation has not protected public interest or individual welfare, particularly the lowly workers or the
underprivileged.
On the other hand, there are numerous decisions interpreting the Bill of Rights and statutory enactments expanding the
scope of such provisions to protect human rights. Foremost among them is the doctrine in the cases of Miranda vs.
Arizona (384 US 436 1964), Gideon vs. Wainright (372 US 335), Escubedo vs. Illinois (378 US 478), which guaranteed
the accused under custodial investigation his rights to remain silent and to counsel and to be informed of such rights as
even as it protects him against the use of force or intimidation to extort confession from him. These rights are not found in
the American Bill of Rights. These rights are now institutionalized in Section 20, Article IV of the 1973 Constitution. Only
the peace-and-order adherents were critical of the activism of the American Supreme Court led by Chief Justice Earl
Warren.
Even the definition of Identical offenses for purposes of the double jeopardy provision was developed by American judicial
decisions, not by amendment to the Bill of Rights on double jeopardy (see Justice Laurel in People vs. Tarok, 73 Phil.
260, 261-268). And these judicial decisions have been re-stated in Section 7 of Rule 117 of the 1985 Rules on Criminal
Procedure, as well as in Section 9 of Rule 117 of the 1964 Revised Rules of Court. In both provisions, the second offense
is the same as the first offense if the second offense is an attempt to commit the first or frustration thereof or necessarily
includes or is necessarily included in the first offense.
The requisites of double jeopardy are not spelled out in the Bill of Rights. They were also developed by judicial decisions
in the United States and in the Philippines even before people vs. Ylagan (58 Phil. 851-853).
Again, the equal protection clause was interpreted in the case of Plessy vs. Ferguson (163 US 537) as securing to the
Negroes equal but separate facilities, which doctrine was revoked in the case of Brown vs. Maryland Board of Education
(349 US 294), holding that the equal protection clause means that the Negroes are entitled to attend the same schools
attended by the whites-equal facilities in the same school-which was extended to public parks and public buses.
De-segregation, not segregation, is now the governing principle.
Among other examples, the due process clause was interpreted in the case of People vs. Pomar (46 Phil. 440) by a
conservative, capitalistic court to invalidate a law granting maternity leave to working women-according primacy to
property rights over human rights. The case of People vs. Pomar is no longer the rule.
As early as 1904, in the case of Lochner vs. New York (198 US 45, 76, 49 L. ed. 937, 949), Justice Holmes had been
railing against the conservatism of Judges perverting the guarantee of due process to protect property rights as against
human rights or social justice for the working man. The law fixing maximum hours of labor was invalidated. Justice
Holmes was vindicated finally in 1936 in the case of West Coast Hotel vs. Parish (300 US 377-79; 81 L. ed. 703) where
the American Supreme Court upheld the rights of workers to social justice in the form of guaranteed minimum wage for
women and minors, working hours not exceeding eight (8) daily, and maternity leave for women employees.
The power of judicial review and the principle of separation of powers as well as the rule on political questions have been
evolved and grafted into the American Constitution by judicial decisions (Marbury vs. Madison, supra Coleman vs. Miller,
307 US 433, 83 L. ed. 1385; Springer vs. Government, 277 US 210-212, 72 L. ed. 852, 853).
It is noteworthy that Justice Black, who seems to be against judicial legislation, penned a separate concurring opinion in
the case of Coleman vs. Miller, supra, affirming the doctrine of political question as beyond the ambit of judicial review.
There is nothing in both the American and Philippine Constitutions expressly providing that the power of the courts is
limited by the principle of separation of powers and the doctrine on political questions. There are numerous cases in
Philippine jurisprudence applying the doctrines of separation of powers and political questions and invoking American
precedents.
Unlike the American Constitution, both the 1935 and 1973 Philippine Constitutions expressly vest in the Supreme Court
the power to review the validity or constitutionality of any legislative enactment or executive act.
WHEREFORE, THE TRIAL COURT'S ORDER OF DISMISSAL IS HEREBY REVERSED AND SET ASIDE AND THE
CASE IS REMANDED TO IT FOR FURTHER PROCEEDINGS. SHOULD A GREATER AMOUNT OF DAMAGES BE
DECREED IN FAVOR OF HEREIN PETITIONERS, THE PAYMENTS ALREADY MADE TO THEM PURSUANT TO THE
WORKMEN'S COMPENSATION ACT SHALL BE DEDUCTED. NO COSTS.
SO ORDERED.
Fernando, C.J., Teehankee, Plana, Escolin, De la Fuente, Cuevas and Alampay JJ., concur.
Concepcion, Jr., J., is on leave.
Abad Santos and Relova, JJ., took no part.

Separate Opinions

MELENCIO-HERRERA, J., dissenting:

A
This case involves a complaint for damages for the death of five employees of PHILEX Mining Corporation under the
general provisions of the Civil Code. The Civil Code itself, however, provides for its non-applicability to the complaint. It is
specifically provided in Article 2196 of the Code, found in Title XVIII-Damages that:
COMPENSATION FOR WORKMEN AND OTHER EMPLOYEES IN CASE OF DEATH, INJURY OR ILLNESS IS
REGULATED BY SPECIAL LAWS.
Compensation and damages are synonymous. In Esguerra vs. Muñoz Palma, etc., et al., 104 Phil. 582, 586, Justice
J.B.L. Reyes had said:
Petitioner also avers that compensation is not damages. This argument is but a play on words. The term compensation' is
used in the law (Act 3812 and Republic Act 772) in the sense of indemnity for damages suffered, being awarded for a
personal injury caused or aggravated by or in the course of employment. ...
By the very provisions of the Civil Code, it is a "special law", not the Code itself, which has to apply to the complaint
involved in the instant case. That "special law", in reference to the complaint, can be no other than the Workmen's
Compensation
Even assuming, without conceding, that an employee is entitled to an election of remedies, as the majority rules, both
options cannot be exercised simultaneously, and the exercise of one will preclude the exercise of the other. The
petitioners had already exercised their option to come under the Workmen's Compensation Act, and they have already
received compensation payable to them under that Act. Stated differently, the remedy under the Workmen's
Compensation Act had already become a "finished transaction".
There are two considerations why it is believed petitioners should no longer be allowed to exercise the option to sue under
the Civil Code. In the first place, the proceedings under the Workmen's Compensation Act have already become the law
in regards to" the "election of remedies", because those proceedings had become a "finished transaction".
In the second place, it should be plainly equitable that, if a person entitled to an "election of remedies" makes a first
election and accepts the benefits thereof, he should no longer be allowed to avail himself of the second option. At the very
least, if he wants to make a second election, in disregard of the first election he has made, when he makes the second
election he should surrender the benefits he had obtained under the first election, This was not done in the case before
the Court.
B.
'There is full concurrence on my part with the dissenting opinion of Mr. Justice Gutierrez upholding "the exclusory
provision of the Workmen's Compensation Act." I may further add:
1. The Workmen's Compensation Act (Act No. 3428) was approved on December 10, 1927 and took effect on June 10,
1928. It was patterned from Minnesota and Hawaii statutes.
Act No. 3428 was adopted by the Philippine legislature, in Spanish and some sections of the law were taken from the
statutes of Minnesota and Hawaii, (Chapter 209 of the Revised Laws of Hawaii, 1925). [Morabe & Inton, Workmen's
Compensation Act, p. 2]
Under the Workmen's Compensation Act of Hawaii, when the Act is applicable, the remedy under the Act is exclusive The
following is stated in 1 Schneider Workmen's Compensation Text, pp. 266, 267.
Sec. 112. Hawaii
Statutory Synopsis. The act is compulsory as to employees in 'all industrial employment' and employees of the territory
and its political subdivisions. (Sections 7480-7481, S.S., Vol. 1, p. 713.)
Compensation is not payable when injury is due to employee's willful intention to injure himself or another or to his
intoxication. (Sec. 7482, S.S., p. 713.)
When the act is applicable the remedy thereunder is exclusive (Sec. 7483, S.S., p. 714.)
2. In providing for exclusiveness of the remedy under our Workmen's Compensation Act, the Philippine Legislature
worded the first paragraph of Section 5 of the Act as follows:
SEC. 5. Exclusive right to compensation.-The rights and remedies granted by this Act to an employee
by reason of a personal injury entitling him to compensation
shall exclude all other rights and remedies accruing to the employee, his personal representatives, dependents or nearest
of kin against the employer
under the Civil Code and other laws, because of said injury (Paragraphing and emphasis supplied)
In regards to the intent of the Legislature under the foregoing provision:
A cardinal rule in the interpretation of statutes is that the meaning and intention of the law-making body must be sought,
first of all in the words of the statute itself, read and considered in their natural, ordinary, commonly-accepted and most
obvious significations, according to good and approved usage and without resorting to forced or subtle construction
Courts, therefore, as a rule, cannot presume that the law-making body does not know the meaning of words and the rules
of grammar. Consequently, the grammatical reading of a statute must be presumed to yield its correct sense. (Espino vs.
Cleofe 52 SCRA 92, 98) [Italics supplied]
3. The original second paragraph of Section 5 provided:
Employers contracting laborers in the Philippine Islands for work outside the same shall stipulate with such laborers that
the remedies prescribed by this Act shall apply exclusively to injuries received outside the Islands through accidents
happening in and during the performance of the duties of the employment. (Italics supplied)
The use of the word "exclusively is a further confirmation of the exclusory provision of the Act, subject only to exceptions
which may be provided in the Act itself.
4. It might be mentioned that, within the Act itself, provision is made for remedies other than within the Act itself. Thus,
Section 6, in part, provides:
SEC. 6. Liability of third parties.-In case an employee suffers an injury for which compensation is due under this Act by
any other person besides his employer, it shall be optional with such injured employee either to claim compensation from
his employer, under this Act, or sue such other person for damages, in accordance with law; ... (Emphasis supplied)
If the legislative intent under the first paragraph of Section 5 were to allow the injured employee to sue his employer under
the Civil Code, the legislator could very easily have formulated the said first paragraph of Section 5 according to the
pattern of Section 6. That that was not done shows the legislative intent not to allow any option to an employee to sue the
employer under the Civil Code for injuries compensable under the Act.
5. There should be no question but that the original first paragraph of Section 5 of the Workmen's Compensation Act,
formulated in 1927, provided that an injured worker or employee, or his heirs, if entitled to compensation under the Act,
cannot have independent recourse neither to the Civil Code nor to any other law relative to the liability of the employer.
After 1927, there were occasions when the legislator had the opportunity to amend the first paragraph of Section 5 such
that the remedies under the Act would not be exclusive; yet, the legislator refrained from doing so. That shows the
legislatives continuing intent to maintain the exclusory provision of the first paragraph of Section 5 unless otherwise
provided in the Act itself.
(a) The original second paragraph of Section 5 provided:
Employers contracting laborers in the Philippine Islands for work outside the same shall stipulate with such laborers that
the remedies prescribed by this Act shall apply (exclusively) to injuries received outside the Islands through accidents
happening in and during the performance of the duties of the employment (and all service contracts made in the manner
prescribed in this section be presumed to include such agreement).
On June 20, 1952, through RA 772, the foregoing second paragraph was amended with the elimination of the underlined
words in parentheses, and the addition of this sentence at the end of the paragraph:
Such stipulation shall not prejudice the right of the laborers to the benefits of the Workmen's Compensation Law of the
place where the accident occurs, should such law be more favorable to them. (Emphasis supplied)
It will be seen that, within the Act itself, the exclusory character of the Act was amended. At that time, if he had so desired,
the legislator could have amended the first paragraph of Section 5 so that the employee would have the option to sue the
employer under the Act, or under the Civil Code, should the latter be more favorable to him.
(b) The Workmen's Compensation Act, which took effect in 1927, grants compensation to an injured employee without
regard to the presence or absence of negligence on the part of the employer. The compensation is deemed an expense
chargeable to the industry (Murillo vs. Mendoza, 66 Phil. 689 [1938]).
In time, it must have been thought that it was inequitable to have the amount of compensation, caused by negligence on
the part of the employer, to be the same amount payable when the employer was not negligent. Based on that thinking,
Section 4-A 1 was included into the Act, on June 20, 1952, through RA 772. Said Section 4-A increased the compensation
payable by 50% in case there was negligence on the part of the employer. That additional section evidenced the intent of
the legislator not to give an option to an employee, injured with negligence on the part of the employer, to sue the latter
under the provisions of the Civil Code.
On June 20, 1964, Section 4-A was amended (insubstantially) by RA 4119. The legislator was again given the opportunity
to provide, but he did not, the option to an employee to sue under the Act or under the Civil Code.
When a Court gives effect to a statute not in accordance with the intent of the law-maker, the Court is unjustifiably
legislating.
It is in view of the foregoing that I vote for affirmation of the trial Court's dismissal of the Complaint.
GUTIERREZ, JR., J., dissenting:
To grant the petition and allow the victims of industrial accidents to file damages suits based on torts would be a radical
innovation not only contrary to the express provisions of the Workmen's Compensation Act but a departure from the
principles evolved in the long history of workmen's compensation. At the very least, it should be the legislature and not
this Court which should remove the exclusory provision of the Workmen's Compensation Act, a provision reiterated in the
present Labor Code on employees' compensation.
Workmen's compensation evolved to remedy the evils associated with the situation in the early years of the industrial
revolution when injured workingmen had to rely on damage suits to get recompense.
Before workmen's compensation, an injured worker seeking damages would have to prove in a tort suit that his employer
was either negligent or in bad faith, that his injury was caused by the employer and not a fellow worker, and that he was
not guilty of contributory negligence. The employer could employ not only his wealth in defeating the claim for damages
but a host of common law defenses available to him as well. The worker was supposed to know what he entered into
when he accepted employment. As stated in the leading case of Priestley u. Fowler (3 M. & W. 1, 150 Reprint 1030)
decided in 1837 "the mere relation of the master and the servant never can imply an obligation on the part of the master to
take more care of the servant than he may reasonably be expected to do of himself." By entering into a contract of
employment, the worker was deemed to accept the risks of employment that he should discover and guard against
himself.
The problems associated with the application of the fellow servant rule, the assumption of risk doctrine, the principle of
contributory negligence, and the many other defenses so easily raised in protracted damage suits illustrated the need for
a system whereby workers had only to prove the fact of covered employment and the fact of injury arising from
employment in order to be compensated.
The need for a compensation scheme where liability is created solely by statute and made compulsory and where the
element of fault-either the fault of the employer or the fault of the employee-disregarded became obvious. Another
objective was to have simplified, expeditious, inexpensive, and non-litigious procedures so that victims of industrial
accidents could more readily, if not automatically, receive compensation for work-related injuries.
Inspite of common law defenses to defeat a claim being recognized, employers' liability acts were a major step in the
desired direction. However, employers liability legislation proved inadequate. Legislative reform led to the workmen's
compensation.
I cite the above familiar background because workmen's compensation represents a compromise. In return for the near
certainty of receiving a sum of money fixed by law, the injured worker gives up the right to subject the employer to a tort
suit for huge amounts of damages. Thus, liability not only disregards the element of fault but it is also a pre- determined
amount based on the wages of the injured worker and in certain cases, the actual cost of rehabilitation. The worker does
not receive the total damages for his pain and suffering which he could otherwise claim in a civil suit. The employer is
required to act swiftly on compensation claims. An administrative agency supervises the program. And because the
overwhelming mass of workingmen are benefited by the compensation system, individual workers who may want to sue
for big amounts of damages must yield to the interests of their entire working class.
The nature of the compensation principle is explained as follows:
An appreciation of the nature of the compensation principle is essential to an understanding of the acts and the cases
interpreting them.
By the turn of the century it was apparent that the toll of industrial accidents of both the avoidable and unavoidable variety
had become enormous, and government was faced with the problem of who was to pay for the human wreckage wrought
by the dangers of modern industry. If the accident was avoidable and could be attributed to the carelessness of the
employer, existing tort principles offered some measure of redress. Even here, however, the woeful inadequacy of the
fault principle was manifest. The uncertainty of the outcome of torts litigation in court placed the employee at a substantial
disadvantage. So long as liability depended on fault there could be no recovery until the finger of blame had been pointed
officially at the employer or his agents. In most cases both the facts and the law were uncertain. The witnesses, who were
usually fellow workers of the victim, were torn between friendship or loyalty to their class, on the one hand, and fear of
reprisal by the employer, on the other. The expense and delay of litigation often prompted the injured employee to accept
a compromise settlement for a fraction of the full value of his claim. Even if suit were successfully prosecuted, a large
share of the proceeds of the judgment were exacted as contingent fees by counsel. Thus the employer against whom
judgment was cast often paid a substantial damage bill, while only a part of this enured to the benefit of the injured
employee or his dependents. The employee's judgment was nearly always too little and too late.
xxx xxx xxx
Workmen's Compensation rests upon the economic principle that those persons who enjoy the product of a business-
whether it be in the form of goods or services- should ultimately bear the cost of the injuries or deaths that are incident to
the manufacture, preparation and distribution of the product. ...
xxx xxx xxx
Under this approach the element of personal fault either disappears entirely or is subordinated to broader economic
considerations. The employer absorbs the cost of accident loss only initially; it is expected that this cost will eventually
pass down the stream of commerce in the form of increase price until it is spread in dilution among the ultimate
consumers. So long as each competing unit in a given industry is uniformly affected, no producer can gain any substantial
competitive advantage or suffer any appreciable loss by reason of the general adoption of the compensation principle.
In order that the compensation principle may operate properly and with fairness to all parties it is essential that the
anticipated accident cost be predictable and that it be fixed at a figure that will not disrupt too violently the traffic in the
product of the industry affected. Thus predictability and moderateness of cost are necessary from the broad economic
viewpoint. ....
Compensation, then, differs from the conventional damage suit in two important respects: Fault on the part of either
employer or employee is eliminated; and compensation payable according to a definitely limited schedule is substituted
for damages. All compensation acts alike work these two major changes, irrespective of how they may differ in other
particulars.
Compensation, when regarded from the viewpoint of employer and employee represents a compromise in which each
party surrenders certain advantages in order to gain others which are of more importance both to him and to society. The
employer gives up the immunity he otherwise would enjoy in cases where he is not at fault, and the employee surrenders
his former right to full damages and accepts instead a more modest claim for bare essentials, represented by
compensation.
The importance of the compromise character of compensation cannot be overemphasized. The statutes vary a great deal
with reference to the proper point of balance. The amount of weekly compensation payments and the length of the period
during which compensation is to be paid are matters concerning which the acts differ considerably. The interpretation of
any compensation statute will be influenced greatly by the court's reaction to the basic point of compromise established in
the Act. If the court feels that the basic compromise unduly favors the employer, it will be tempted to restore what it
regards as a proper balance by adopting an interpretation that favors the worker. In this way, a compensation act drawn in
a spirit of extreme conservatism may be transformed by a sympathetic court into a fairly liberal instrument; and
conversely, an act that greatly favors the laborer may be so interpreted by the courts that employers can have little reason
to complain. Much of the unevenness and apparent conflict in compensation decisions throughout the various jurisdictions
must be attributed to this." (Malone & Plant, Workmen's Compensation American Casebook Series, pp. 63-65).
The schedule of compensation, the rates of payments, the compensable injuries and diseases, the premiums paid by
employers to the present system, the actuarial stability of the trust fund and many other interrelated parts have all been
carefully studied before the integrated scheme was enacted in to law. We have a system whose parts must mesh
harmonious with one another if it is to succeed. The basic theory has to be followed.
If this Court disregards this totality of the scheme and in a spirit of generosity recasts some parts of the system without
touching the related others, the entire structure is endangered. For instance, I am personally against stretching the law
and allowing payment of compensation for contingencies never envisioned to be compensable when the law was
formulated. Certainly, only harmful results to the principle of workmen's compensation can arise if workmen, whom the law
allows to receive employment compensation, can still elect to file damage suits for industrial accidents. It was precisely for
this reason that Section 5 of the Workmen's Compensation Act, which reads:
SEC. 5. Exclusive right to compensation.-The rights and remedies granted by this Act to an employee by reason of a
personal injury entitling him to compensation shall exclude all other rights and remedies accruing to the employee, his
personal representatives, dependents or nearest of kin against the employer under the Civil Code and other laws because
of said injury. ...
Article 173 of the labor Code also provides:
ART. 173. Exclusivenesss of liability.—Unless otherwise provided, the liability of the State Insurance Fund under this Title
shall be exclusive and in place of all other liabilities of the employer to the employee his dependents or anyone otherwise
entitled to receive damages on behalf of the employee or his dependents.
I am against the Court assuming the role of legislator in a matter calling for actuarial studies and public hearings. If
employers already required to contribute to the State Insurance Fund will still have to bear the cost of damage suits or get
insurance for that purpose, a major study will be necessary. The issue before us is more far reaching than the interests of
the poor victims and their families. All workers covered by workmen's compensation and all employers who employ
covered employees are affected. Even as I have deepest sympathies for the victims, I regret that I am constrained to
dissent from the majority opinion.
Separate Opinions

MELENCIO-HERRERA, J., dissenting:

A
This case involves a complaint for damages for the death of five employees of PHILEX Mining Corporation under the
general provisions of the Civil Code. The Civil Code itself, however, provides for its non-applicability to the complaint. It is
specifically provided in Article 2196 of the Code, found in Title XVIII-Damages that:
COMPENSATION FOR WORKMEN AND OTHER EMPLOYEES IN CASE OF DEATH, INJURY OR ILLNESS IS
REGULATED BY SPECIAL LAWS.
Compensation and damages are synonymous. In Esguerra vs. Muñoz Palma, etc., et al., 104 Phil. 582, 586, Justice
J.B.L. Reyes had said:
Petitioner also avers that compensation is not damages. This argument is but a play on words. The term compensation' is
used in the law (Act 3812 and Republic Act 772) in the sense of indemnity for damages suffered, being awarded for a
personal injury caused or aggravated by or in the course of employment. ...
By the very provisions of the Civil Code, it is a "special law", not the Code itself, which has to apply to the complaint
involved in the instant case. That "special law", in reference to the complaint, can be no other than the Workmen's
Compensation
Even assuming, without conceding, that an employee is entitled to an election of remedies, as the majority rules, both
options cannot be exercised simultaneously, and the exercise of one will preclude the exercise of the other. The
petitioners had already exercised their option to come under the Workmen's Compensation Act, and they have already
received compensation payable to them under that Act. Stated differently, the remedy under the Workmen's
Compensation Act had already become a "finished transaction".
There are two considerations why it is believed petitioners should no longer be allowed to exercise the option to sue under
the Civil Code. In the first place, the proceedings under the Workmen's Compensation Act have already become the law
in regards to" the "election of remedies", because those proceedings had become a "finished transaction".
In the second place, it should be plainly equitable that, if a person entitled to an "election of remedies" makes a first
election and accepts the benefits thereof, he should no longer be allowed to avail himself of the second option. At the very
least, if he wants to make a second election, in disregard of the first election he has made, when he makes the second
election he should surrender the benefits he had obtained under the first election, This was not done in the case before
the Court.
B.
'There is full concurrence on my part with the dissenting opinion of Mr. Justice Gutierrez upholding "the exclusory
provision of the Workmen's Compensation Act." I may further add:
1. The Workmen's Compensation Act (Act No. 3428) was approved on December 10, 1927 and took effect on June 10,
1928. It was patterned from Minnesota and Hawaii statutes.
Act No. 3428 was adopted by the Philippine legislature, in Spanish and some sections of the law were taken from the
statutes of Minnesota and Hawaii, (Chapter 209 of the Revised Laws of Hawaii, 1925). [Morabe & Inton, Workmen's
Compensation Act, p. 2]
Under the Workmen's Compensation Act of Hawaii, when the Act is applicable, the remedy under the Act is exclusive The
following is stated in 1 Schneider Workmen's Compensation Text, pp. 266, 267.
Sec. 112. Hawaii
Statutory Synopsis. The act is compulsory as to employees in 'all industrial employment' and employees of the territory
and its political subdivisions. (Sections 7480-7481, S.S., Vol. 1, p. 713.)
Compensation is not payable when injury is due to employee's willful intention to injure himself or another or to his
intoxication. (Sec. 7482, S.S., p. 713.)
When the act is applicable the remedy thereunder is exclusive (Sec. 7483, S.S., p. 714.)
2. In providing for exclusiveness of the remedy under our Workmen's Compensation Act, the Philippine Legislature
worded the first paragraph of Section 5 of the Act as follows:
SEC. 5. Exclusive right to compensation.-The rights and remedies granted by this Act to an employee
by reason of a personal injury entitling him to compensation
shall exclude all other rights and remedies accruing to the employee, his personal representatives, dependents or nearest
of kin against the employer
under the Civil Code and other laws, because of said injury (Paragraphing and emphasis supplied)
In regards to the intent of the Legislature under the foregoing provision:
A cardinal rule in the interpretation of statutes is that the meaning and intention of the law-making body must be sought,
first of all in the words of the statute itself, read and considered in their natural, ordinary, commonly-accepted and most
obvious significations, according to good and approved usage and without resorting to forced or subtle construction
Courts, therefore, as a rule, cannot presume that the law-making body does not know the meaning of words and the rules
of grammar. Consequently, the grammatical reading of a statute must be presumed to yield its correct sense. (Espino vs.
Cleofe 52 SCRA 92, 98) [Italics supplied]
3. The original second paragraph of Section 5 provided:
Employers contracting laborers in the Philippine Islands for work outside the same shall stipulate with such laborers that
the remedies prescribed by this Act shall apply exclusively to injuries received outside the Islands through accidents
happening in and during the performance of the duties of the employment. (Italics supplied)
The use of the word "exclusively is a further confirmation of the exclusory provision of the Act, subject only to exceptions
which may be provided in the Act itself.
4. It might be mentioned that, within the Act itself, provision is made for remedies other than within the Act itself. Thus,
Section 6, in part, provides:
SEC. 6. Liability of third parties.-In case an employee suffers an injury for which compensation is due under this Act by
any other person besides his employer, it shall be optional with such injured employee either to claim compensation from
his employer, under this Act, or sue such other person for damages, in accordance with law; ... (Emphasis supplied)
If the legislative intent under the first paragraph of Section 5 were to allow the injured employee to sue his employer under
the Civil Code, the legislator could very easily have formulated the said first paragraph of Section 5 according to the
pattern of Section 6. That that was not done shows the legislative intent not to allow any option to an employee to sue the
employer under the Civil Code for injuries compensable under the Act.
5. There should be no question but that the original first paragraph of Section 5 of the Workmen's Compensation Act,
formulated in 1927, provided that an injured worker or employee, or his heirs, if entitled to compensation under the Act,
cannot have independent recourse neither to the Civil Code nor to any other law relative to the liability of the employer.
After 1927, there were occasions when the legislator had the opportunity to amend the first paragraph of Section 5 such
that the remedies under the Act would not be exclusive; yet, the legislator refrained from doing so. That shows the
legislatives continuing intent to maintain the exclusory provision of the first paragraph of Section 5 unless otherwise
provided in the Act itself.
(a) The original second paragraph of Section 5 provided:
Employers contracting laborers in the Philippine Islands for work outside the same shall stipulate with such laborers that
the remedies prescribed by this Act shall apply (exclusively) to injuries received outside the Islands through accidents
happening in and during the performance of the duties of the employment (and all service contracts made in the manner
prescribed in this section be presumed to include such agreement).
On June 20, 1952, through RA 772, the foregoing second paragraph was amended with the elimination of the underlined
words in parentheses, and the addition of this sentence at the end of the paragraph:
Such stipulation shall not prejudice the right of the laborers to the benefits of the Workmen's Compensation Law of the
place where the accident occurs, should such law be more favorable to them. (Emphasis supplied)
It will be seen that, within the Act itself, the exclusory character of the Act was amended. At that time, if he had so desired,
the legislator could have amended the first paragraph of Section 5 so that the employee would have the option to sue the
employer under the Act, or under the Civil Code, should the latter be more favorable to him.
(b) The Workmen's Compensation Act, which took effect in 1927, grants compensation to an injured employee without
regard to the presence or absence of negligence on the part of the employer. The compensation is deemed an expense
chargeable to the industry (Murillo vs. Mendoza, 66 Phil. 689 [1938]).
In time, it must have been thought that it was inequitable to have the amount of compensation, caused by negligence on
the part of the employer, to be the same amount payable when the employer was not negligent. Based on that thinking,
Section 4-A 1 was included into the Act, on June 20, 1952, through RA 772. Said Section 4-A increased the compensation
payable by 50% in case there was negligence on the part of the employer. That additional section evidenced the intent of
the legislator not to give an option to an employee, injured with negligence on the part of the employer, to sue the latter
under the provisions of the Civil Code.
On June 20, 1964, Section 4-A was amended (insubstantially) by RA 4119. The legislator was again given the opportunity
to provide, but he did not, the option to an employee to sue under the Act or under the Civil Code.
When a Court gives effect to a statute not in accordance with the intent of the law-maker, the Court is unjustifiably
legislating.
It is in view of the foregoing that I vote for affirmation of the trial Court's dismissal of the Complaint.
GUTIERREZ, JR., J., dissenting:
To grant the petition and allow the victims of industrial accidents to file damages suits based on torts would be a radical
innovation not only contrary to the express provisions of the Workmen's Compensation Act but a departure from the
principles evolved in the long history of workmen's compensation. At the very least, it should be the legislature and not
this Court which should remove the exclusory provision of the Workmen's Compensation Act, a provision reiterated in the
present Labor Code on employees' compensation.
Workmen's compensation evolved to remedy the evils associated with the situation in the early years of the industrial
revolution when injured workingmen had to rely on damage suits to get recompense.
Before workmen's compensation, an injured worker seeking damages would have to prove in a tort suit that his employer
was either negligent or in bad faith, that his injury was caused by the employer and not a fellow worker, and that he was
not guilty of contributory negligence. The employer could employ not only his wealth in defeating the claim for damages
but a host of common law defenses available to him as well. The worker was supposed to know what he entered into
when he accepted employment. As stated in the leading case of Priestley u. Fowler (3 M. & W. 1, 150 Reprint 1030)
decided in 1837 "the mere relation of the master and the servant never can imply an obligation on the part of the master to
take more care of the servant than he may reasonably be expected to do of himself." By entering into a contract of
employment, the worker was deemed to accept the risks of employment that he should discover and guard against
himself.
The problems associated with the application of the fellow servant rule, the assumption of risk doctrine, the principle of
contributory negligence, and the many other defenses so easily raised in protracted damage suits illustrated the need for
a system whereby workers had only to prove the fact of covered employment and the fact of injury arising from
employment in order to be compensated.
The need for a compensation scheme where liability is created solely by statute and made compulsory and where the
element of fault-either the fault of the employer or the fault of the employee-disregarded became obvious. Another
objective was to have simplified, expeditious, inexpensive, and non-litigious procedures so that victims of industrial
accidents could more readily, if not automatically, receive compensation for work-related injuries.
Inspite of common law defenses to defeat a claim being recognized, employers' liability acts were a major step in the
desired direction. However, employers liability legislation proved inadequate. Legislative reform led to the workmen's
compensation.
I cite the above familiar background because workmen's compensation represents a compromise. In return for the near
certainty of receiving a sum of money fixed by law, the injured worker gives up the right to subject the employer to a tort
suit for huge amounts of damages. Thus, liability not only disregards the element of fault but it is also a pre- determined
amount based on the wages of the injured worker and in certain cases, the actual cost of rehabilitation. The worker does
not receive the total damages for his pain and suffering which he could otherwise claim in a civil suit. The employer is
required to act swiftly on compensation claims. An administrative agency supervises the program. And because the
overwhelming mass of workingmen are benefited by the compensation system, individual workers who may want to sue
for big amounts of damages must yield to the interests of their entire working class.
The nature of the compensation principle is explained as follows:
An appreciation of the nature of the compensation principle is essential to an understanding of the acts and the cases
interpreting them.
By the turn of the century it was apparent that the toll of industrial accidents of both the avoidable and unavoidable variety
had become enormous, and government was faced with the problem of who was to pay for the human wreckage wrought
by the dangers of modern industry. If the accident was avoidable and could be attributed to the carelessness of the
employer, existing tort principles offered some measure of redress. Even here, however, the woeful inadequacy of the
fault principle was manifest. The uncertainty of the outcome of torts litigation in court placed the employee at a substantial
disadvantage. So long as liability depended on fault there could be no recovery until the finger of blame had been pointed
officially at the employer or his agents. In most cases both the facts and the law were uncertain. The witnesses, who were
usually fellow workers of the victim, were torn between friendship or loyalty to their class, on the one hand, and fear of
reprisal by the employer, on the other. The expense and delay of litigation often prompted the injured employee to accept
a compromise settlement for a fraction of the full value of his claim. Even if suit were successfully prosecuted, a large
share of the proceeds of the judgment were exacted as contingent fees by counsel. Thus the employer against whom
judgment was cast often paid a substantial damage bill, while only a part of this enured to the benefit of the injured
employee or his dependents. The employee's judgment was nearly always too little and too late.
xxx xxx xxx
Workmen's Compensation rests upon the economic principle that those persons who enjoy the product of a business-
whether it be in the form of goods or services- should ultimately bear the cost of the injuries or deaths that are incident to
the manufacture, preparation and distribution of the product. ...
xxx xxx xxx
Under this approach the element of personal fault either disappears entirely or is subordinated to broader economic
considerations. The employer absorbs the cost of accident loss only initially; it is expected that this cost will eventually
pass down the stream of commerce in the form of increase price until it is spread in dilution among the ultimate
consumers. So long as each competing unit in a given industry is uniformly affected, no producer can gain any substantial
competitive advantage or suffer any appreciable loss by reason of the general adoption of the compensation principle.
In order that the compensation principle may operate properly and with fairness to all parties it is essential that the
anticipated accident cost be predictable and that it be fixed at a figure that will not disrupt too violently the traffic in the
product of the industry affected. Thus predictability and moderateness of cost are necessary from the broad economic
viewpoint. ....
Compensation, then, differs from the conventional damage suit in two important respects: Fault on the part of either
employer or employee is eliminated; and compensation payable according to a definitely limited schedule is substituted
for damages. All compensation acts alike work these two major changes, irrespective of how they may differ in other
particulars.
Compensation, when regarded from the viewpoint of employer and employee represents a compromise in which each
party surrenders certain advantages in order to gain others which are of more importance both to him and to society. The
employer gives up the immunity he otherwise would enjoy in cases where he is not at fault, and the employee surrenders
his former right to full damages and accepts instead a more modest claim for bare essentials, represented by
compensation.
The importance of the compromise character of compensation cannot be overemphasized. The statutes vary a great deal
with reference to the proper point of balance. The amount of weekly compensation payments and the length of the period
during which compensation is to be paid are matters concerning which the acts differ considerably. The interpretation of
any compensation statute will be influenced greatly by the court's reaction to the basic point of compromise established in
the Act. If the court feels that the basic compromise unduly favors the employer, it will be tempted to restore what it
regards as a proper balance by adopting an interpretation that favors the worker. In this way, a compensation act drawn in
a spirit of extreme conservatism may be transformed by a sympathetic court into a fairly liberal instrument; and
conversely, an act that greatly favors the laborer may be so interpreted by the courts that employers can have little reason
to complain. Much of the unevenness and apparent conflict in compensation decisions throughout the various jurisdictions
must be attributed to this." (Malone & Plant, Workmen's Compensation American Casebook Series, pp. 63-65).
The schedule of compensation, the rates of payments, the compensable injuries and diseases, the premiums paid by
employers to the present system, the actuarial stability of the trust fund and many other interrelated parts have all been
carefully studied before the integrated scheme was enacted in to law. We have a system whose parts must mesh
harmonious with one another if it is to succeed. The basic theory has to be followed.
If this Court disregards this totality of the scheme and in a spirit of generosity recasts some parts of the system without
touching the related others, the entire structure is endangered. For instance, I am personally against stretching the law
and allowing payment of compensation for contingencies never envisioned to be compensable when the law was
formulated. Certainly, only harmful results to the principle of workmen's compensation can arise if workmen, whom the law
allows to receive employment compensation, can still elect to file damage suits for industrial accidents. It was precisely for
this reason that Section 5 of the Workmen's Compensation Act, which reads:
SEC. 5. Exclusive right to compensation.-The rights and remedies granted by this Act to an employee by reason of a
personal injury entitling him to compensation shall exclude all other rights and remedies accruing to the employee, his
personal representatives, dependents or nearest of kin against the employer under the Civil Code and other laws because
of said injury. ...
Article 173 of the labor Code also provides:
ART. 173. Exclusivenesss of liability.—Unless otherwise provided, the liability of the State Insurance Fund under this Title
shall be exclusive and in place of all other liabilities of the employer to the employee his dependents or anyone otherwise
entitled to receive damages on behalf of the employee or his dependents.
I am against the Court assuming the role of legislator in a matter calling for actuarial studies and public hearings. If
employers already required to contribute to the State Insurance Fund will still have to bear the cost of damage suits or get
insurance for that purpose, a major study will be necessary. The issue before us is more far reaching than the interests of
the poor victims and their families. All workers covered by workmen's compensation and all employers who employ
covered employees are affected. Even as I have deepest sympathies for the victims, I regret that I am constrained to
dissent from the majority opinion.

Footnotes
1 SEC. 4-A. Right to additional compensation.- In case of the employee's death, injury or sickness due to the failure of the
to comply with any law, or with any order, rule or regulation of the Workmen's Compensation Commission or the Bureau
of Labor Standards or should the employer violate the provisions of Republic Act Numbered Six hundred seventy-nine
and its amendments or fail to install and maintain safety appliances, or take other precautions for the prevention of
accidents or occupational disease, he shall be liable to pay an additional compensation equal to fifty per centum of the
compensation fixed in this Act.