G.R. No.

L-23979

August 30, 1968

HOMEOWNERS' ASSOCIATION OF THE PHILIPPINES, INC. and VICENTE A. RUFINO, petitioners-appellees, vs. THE MUNICIPAL BOARD OF THE CITY OF MANILA, ET AL., respondents, ANTONIO J. VILLEGAS, Mayor of the City of Manila, respondentappellant. Ambrosio Padilla Law Offices for petitioners-appellees. Gregorio A. Ejercito and Felix C. Chavez for respondent respondentappellant. CONCEPCION, C.J.: This is an action, against the Municipal Board and the Mayor of the City of Manila, for a declaratory relief. It was brought by the Homeowners' Association of the Philippines, Inc. and its President, Vicente A. Rufino, to nullify Municipal Ordinance No. 4841 of the City of Manila, approved on December 31, 1963, to take effect on January 1, 1964. After appropriate proceedings, the Court of First Instance of Manila rendered judgment declaring said ordinance "ultra vires, unconstitutional, illegal and void ab initio without pronouncement as to costs. Hence, this appeal by the Mayor of Manila Said Ordinance reads: AN ORDINANCE REGULATING RENTALS OF LOTS AND BUILDING FOR RESIDENTIAL PURPOSES. WHEREAS, in view of the prevailing scarcity of lands and buildings for residential purposes in the City of Manila and the present high cost of living, a state of emergency in the the matter of providing housing accommodations especially for poor at reasonable rates is hereby declared to exist: Now, therefore. SECTION 1. Lessors or sublessors of lands, or parts thereof, primarily devoted to residential purposes, and persons claiming title or color of title thereto from such lessors or sublessors, are hereby prohibited from increasing the rental to an amount in excess of the proportion, percentage wise, in the increase of the assessed value of the land leased or subleased. If only a portion of the land is leased or subleased, the proportionate value of the leased premises shall be the basis for determining the maximum rental to which the same may be increased. SEC. 2. Lessors or sublessors of buildings, or parts thereof, primarily devoted to residential purposes, and persons claiming title or color of title thereto from such lessors or sublessors, are hereby prohibited from increasing the rentals to an amount in excess of ten (10) percentum per annum of the assessed value of the building leased or subleased and of the land on which the building stands. If only a portion of the building is leased or subleased, the proportionate assessed value of the building and the land on which the building stands shall be the basis for determining the maximum rental to which the same may be increased. SEC. 3. This Ordinance shall not apply to contracts of lease or sublease existing upon its approval and to lands used by, or to rooms of, boarding house, and lodging houses; PROVIDED, HOWEVER, That renewals or modifications of such contracts made on or after the approval of this Ordinance shall be governed by the provisions hereof. SEC. 4. Any person violating the provisions of this Ordinance shall, upon conviction, be punished by a fine of not less than one hundred (P100.00) pesos nor more than two hundred (P200.00) pesos and imprisonment for not less

than one (1) month nor more than six (6) months. In the case of juridical persons, the general manager, director, or any other person in control thereof shall be liable. SEC. 5. This Ordinance shall take effect on January 1, 1964.1wph1.t The lower court struck down the questioned ordinance upon the ground that the power to "declare a state of emergency ... exclusively pertains to Congress"; that "there is no longer any state of emergency" which may justify the regulation of house rentals; that said ordinance disconstitutes an unreasonable and unjustified limitation on the use of private properties and arbitrarily encroaches on the constitutional rights of property owners"; that the power of the City of Manila to "regulate the business of ... letting or subletting of lands and buildings" does not include the authority to prohibit what is forbidden in said ordinance; and that the same cannot be deemed sanctioned by the general welfare clause in the City Charter. Although some members of the Court are not prepared either to concede the alleged power of the City of Manila to declare a state of emergency or to acknowledge the existence thereof, as a fact, we do not deem it necessary to pass upon these questions or upon the soundness of the other points relied upon by His Honor, the trial Judge, on which we express here no opinion whatsoever. Even if the City had said power and a state of emergency really existed, the ordinance under consideration would still be illegal and unconstitutional, for the reasons presently to be stated. The authority of municipal corporations to regulate is essentially police power. Inasmuch as the same generally entails a curtailment of the liberty, the rights and/or the property of persons, which are protected and even guaranteed by the Constitution, the exercise of police power is necessarily subject to a qualification, limitation or restriction demanded by the regard, the respect and the obedience due to the prescriptions of the fundamental law, particularly those forming part of the Constitution of Liberty, otherwise known as the Bill of Rights the police power measure must be "reasonable". In other words, individual rights may be adversely affected by the exercise of police power to the extent only and only to the extent that may fairly be required by the legitimate demands of public interest or public welfare. If such demands are brought about by a state of emergency, the interference upon individual rights, resulting from the regulations adopted to meet the situation, must be, by and large, co-extensive, co-equal or coterminous with the existence thereof. And, since an emergency is by naturetemporary in character, so must the regulations promulgated therefor be. In the language of Justice Holmes,1"circumstances may so change in time or differ in space as to clothe with such an interest2 what at other times or in other places would be a matter of purely private concern." Or, as the American Jurisprudence puts it, "a limit in time to tide over a passing trouble may justify a law that could not be upheld as a permanent change."3 As a consequence a law or ordinance affecting the rights of individuals, as a means to tide over a critical condition, to be valid and legal, must be for a "definite" period of time, the length of which must be "reasonable", in relation to the nature and duration of the crisis it seeks to overcome or surmount. Hence, in Rutter v. Esteban4 we declared, on May 18, 1953, that a moratorium of eight (8) years, given by Republic Act No. 342 to war damage claimants, from and after the settlement of their war damage claims, for the payment of their pre-war obligations5is "unreasonable, if not oppressive", in the light of "the conditions" then "prevailing in our country", and that, accordingly said Act was "null and void and without effect". We further held that "what we say here with respect to said Act holds true as regards Executive Orders Nos. 256 and 32,7 perhaps with greater force and reason as to the latter, considering that said Orders contain no limitation whatsoever in point of time as regards the suspension of the enforcement and effectivity of monetary obligations". This ruling, it should be noted, was made deliberately and does not constitute an obiter dictum, for, in the language of the Court, "there is need to make this pronouncement in view of the revival clause embodied in said Act if and when it is declared unconstitutional or invalid".8

The practical reason for the requirement that a statute passed to meet a given emergency, should limit the period of its effectivity, is that, otherwise, a new and different law would be necessary to repeal it, and said period would, accordingly, be "unlimited, indefinite, negative and uncertain", so that "that which was intended to meet a temporary emergency may become a permanent law",9 because "Congress might not enact the repeal, and, even if it would, the repeal might not meet with the approval of the President, and the Congress might not be able to override the veto". In line with the basic philosophy underlying the authority to affect individual rights, this Court felt that Commonwealth Act No. 671, otherwise known as the Emergency Powers Act, was meant to be and "became inoperative when Congress met in regular session on May 25, 1946," and that Executive Orders Nos. 62, 192, 225 and 226 promulgated subsequently thereto "were issued without authority of law", because, otherwise, said emergency regulations would purport to be in force for an indefinite and unlimited period of time, and, hence, would be unconstitutional. 10 The same considerations impelled the Court to invalidate Executive Order Nos. 545 and 546, issued on November 10, 1952. Indeed, otherwise "the result would be obvious unconstitutionality", by making permanent a law intended to afford a relief for a temporary emergency, the length of which should be "fixed in the law itself and not dependent upon the arbitrary or elastic will of either Congress or the President". 11 We have not overlooked the fact that the cases adverted to refer particularly to the constitutional provision 12authorizing Congress, "in times of war or other national emergency", to delegate to the President, "for a limited period", and subject to specified "restrictions", the power "to promulgate rules and regulations to carry out a declared national policy". We are inclined to believe, however, that in providing that the lifetime of the authority given must be "for a limited period", the framers of our Charter were influenced by the fact that powers were being delegated to the Executive, as much as by the circumstance that, since the cause for the grant of power was temporary, so should the grant be, for the effect cannot remain in existence upon the removal of its cause. In fact, Congress has, in actual practice, accepted this limitation upon its exercise of police power to meet a condition of emergency. Thus, Commonwealth Act No. 499 13 regulated the transfer of vessels and of shipping facilities, effective until adjournment of the next regular session of the National Assembly. This was followed by Commonwealth Act No. 689 14 which penalized speculation on rents of buildings destined for dwelling purposes, but only "for a period of two (2) years after its approval." This Act was amended by Republic Act No. 6615 which,inter alia, extended its period of effectivity to "four (4) years after it approval." Needless to say, the powers of municipal corporations delegated thereto by the National Government cannot escape the inherent limitations to which the latter as the source of said powers is subject. Then, again, since our law on municipal corporations is, in principle, patterned after that of the United States, the rule therein, to the effect that "in a proper case, emergency legislation, limited in time, may be enacted under the police power" of a municipal corporation, 16 should be considered a part of our legal system. Appellant assails the validity of the proceedings in the lower court upon the round that, although petitioners herein had assailed Municipal Ordinance No. 4841, not merely as ultra vires, but, also, as unconstitutional, the Solicitor General had been neither heard nor notified in connection therewith, in violation of Section 4 of Rule 64 of the Rules of Court.17 It should be noted, however, that appellant did not raise this question or invoke said Section 4, either in his answer or in a motion to dismiss in the lower court. Upon the other hand, the City Fiscal of Manila was notified therein. In fact, he filed a memorandum, apart from the memorandum submitted by counsel for appellant herein. Neither did his motion for reconsideration of the appealed decision touch upon said question, which was raised, for the firsttime, in a "supplement" to said motion for reconsideration.

At any rate, the determination of the question whether or not the Solicitor General should be required to appear "in any action involving the validity of any treaty, law, ordinance or executive order, rules or regulation" is a matter left to the "discretion" of the Court, pursuant to Section 23 of Rule 3 of the Rules of Court. 18 Inasmuch as said requirement is not mandatory, but discretionary, non-compliance therewith and with Section 4 of Rule 64 the interpretation of which should be harmonized with said Section 23 of Rule 3 affected neither the jurisdiction of the trial court nor the validity of the proceedings therein, in connection with the present case. Thus, in San Buenaventura vs. Municipality of San Jose, 19 we held: ... that the requirement regarding notification to the Provincial Fiscal of the pendency of an action involving the validity of a municipal ordinance, as provided in Sec. 5, Rule 66 of the Rules of Court (now See. 4, Rule 64 of the Revised Rules of Court), is not jurisdictional; and failure on the part of petitioner to notify the Provincial Fiscal will not be a sufficient ground to throw the case out of court. We believe the purpose of the above-quoted rule is simply to give the Provincial Fiscal, who is the legal officer of the local governments, a chance to participate in the deliberation to determine the validity of a questioned municipal ordinance before the competent court. If it appears, however, that the ordinance in question is patently illegal, as in the present case, and the matter had already been passed upon by a competent court, the requirements of Sec. 5 of Rule 66 of the Rules of Court (now See. 4 of Rule 64 of the Revised Rules of Court) may be dispensed with. WHEREFORE, the decision appealed from should be as it is hereby affirmed, with costs against the appellant. It is so ordered. 1wph1.t Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur.

G.R. No. L-23475 April 30, 1974 HERMINIO A. ASTORGA, in his capacity as Vice-Mayor of Manila, petitioner, vs. ANTONIO J. VILLEGAS, in his capacity as Mayor of Manila, THE HON., THE EXECUTIVE SECRETARY, ABELARDO SUBIDO, in his capacity as Commissioner of Civil Service, EDUARDO QUINTOS, in his capacity as Chief of Police of Manila, MANUEL CUDIAMAT, in his capacity as City Treasurer of Manila, CITY OF MANILA, JOSE SEMBRANO, FRANCISCO GATMAITAN, MARTIN ISIDRO, CESAR LUCERO, PADERES TINOCO, LEONARDO FUGOSO, FRANCIS YUSECO, APOLONIO GENER, AMBROCIO LORENZO, JR., ALFONSO MENDOZA, JR., SERGIO LOYOLA, GERINO TOLENTINO, MARIANO MAGSALIN, EDUARDO QUINTOS, JR., AVELINO VILLACORTA, PABLO OCAMPO, FELICISIMO CABIGAO, JOSE BRILLANTES, JOSE VILLANUEVA and MARINA FRANCISCO, in their capacities as members of the Municipal Board,respondents. Artemio V. Panganiban and Renito V. Saguisag and Crispin D. Baizas and Associates for petitioner. Paredes Poblador, Cruz and Nazareno and Antonio Barredo for respondent Mayor of Manila. Romeo L. Kahayon for respondents City Treasurer of Manila, etc., et al. Office of the Solicitor General Arturo A. Alafriz, Assistant Solicitor General Pacifico P. de Castro, Solicitor Jorge R. Coquia and Solicitor

Ricardo L. Pronove, Jr. for respondents The Executive Secretary and Commissioner of Civil Service. Fortunato de Leon and Antonio V. Raquiza as amici curiae.

in view of the circumstances he was officially withdrawing his signature on House Bill No. 9266 (which had been returned to the Senate the previous July 3), adding that "it would be untenable and against public policy to convert into law what was not actually approved by the two Houses of Congress." Upon the foregoing facts the Mayor of Manila, Antonio Villegas, issued circulars to the department heads and chiefs of offices of the city government as well as to the owners, operators and/or managers of business establishments in Manila to disregard the provisions of Republic Act 4065. He likewise issued an order to the Chief of Police to recall five members of the city police force who had been assigned to the Vice-Mayor presumably under authority of Republic Act 4065. Reacting to these steps taken by Mayor Villegas, the then Vice-Mayor, Herminio A. Astorga, filed a petition with this Court on September 7, 1964 for "Mandamus, Injunction and/or Prohibition with Preliminary Mandatory and Prohibitory Injunction" to compel respondents Mayor of Manila, the Executive Secretary, the Commissioner of Civil Service, the Manila Chief of Police, the Manila City Treasurer and the members of the municipal board to comply with the provisions of Republic Act 4065. Respondents' position is that the so-called Republic Act 4065 never became law since it was not the bill actually passed by the Senate, and that the entries in the journal of that body and not the enrolled bill itself should be decisive in the resolution of the issue. On April 28, 1965, upon motion of respondent Mayor, who was then going abroad on an official trip, this Court issued a restraining order, without bond, "enjoining the petitioner Vice-Mayor Herminio Astorga from exercising any of the powers of an Acting Mayor purportedly conferred upon the Vice-Mayor of Manila under the so-called Republic Act 4065 and not otherwise conferred upon said Vice-Mayor under any other law until further orders from this Court." The original petitioner, Herminio A. Astorga, has since been succeeded by others as Vice-Mayor of Manila. Attorneys Fortunato de Leon and Antonio Raquiza, with previous leave of this Court, appeared as amici curiae, and have filed extensive and highly enlightening memoranda on the issues raised by the parties. Lengthy arguments, supported by copious citations of authorities, principally decisions of United States Federal and State Courts, have been submitted on the question of whether the "enrolled bill" doctrine or the "journal entry" rule should be adhered to in this jurisdiction. A similar question came up before this Court and elicited differing opinions in the case of Mabanag, et al. vs. Lopez Vito, et al. (March 5, 1947), 78 Phil. Reports 1. While the majority of the Court in that case applied the "enrolled bill" doctrine, it cannot be truly said that the question has been laid to rest and that the decision therein constitutes a binding precedent. The issue in that case was whether or not a resolution of both Houses of Congress proposing an amendment to the (1935) Constitution to be appended as an ordinance thereto (the so-called parity rights provision) had been passed by "a vote of three-fourths of all the members of the Senate and of the House of Representatives" pursuant to Article XV of the Constitution. The main opinion, delivered by Justice Pedro Tuason and concurred in by Justices Manuel V. Moran, Guillermo F. Pablo and Jose M. Hontiveros, held that the case involved a political question which was not within the province of the judiciary in view of the principle of separation of powers in our government. The "enrolled bill" theory was relied upon merely to bolster the ruling on the jurisdictional question, the reasoning being that "if a political question conclusively binds the judges out of respect to the political departments, a duly certified law or resolution also binds the judges under the "enrolled bill rule" born of that respect." Justice Cesar Bengzon wrote a separate opinion, concurred in by Justice Sabino Padilla, holding that the Court had jurisdiction to resolve

MAKALINTAL, C.J.:p The present controversy revolves around the passage of House Bill No. 9266, which became Republic Act 4065, "An Act Defining the Powers, Rights and Duties of the Vice-Mayor of the City of Manila, Further Amending for the Purpose Sections Ten and Eleven of Republic Act Numbered Four Hundred Nine, as Amended, Otherwise Known as the Revised Charter of the City of Manila." The facts as set forth in the pleadings appear undisputed: On March 30, 1964 House Bill No. 9266, a bill of local application, was filed in the House of Representatives. It was there passed on third reading without amendments on April 21, 1964. Forthwith the bill was sent to the Senate for its concurrence. It was referred to the Senate Committee on Provinces and Municipal Governments and Cities headed by Senator Gerardo M. Roxas. The committee favorably recommended approval with a minor amendment, suggested by Senator Roxas, that instead of the City Engineer it be the President Protempore of the Municipal Board who should succeed the ViceMayor in case of the latter's incapacity to act as Mayor. When the bill was discussed on the floor of the Senate on second reading on May 20, 1964, substantial amendments to Section 1 1 were introduced by Senator Arturo Tolentino. Those amendments were approved in toto by the Senate. The amendment recommended by Senator Roxas does not appear in the journal of the Senate proceedings as having been acted upon. On May 21, 1964 the Secretary of the Senate sent a letter to the House of Representatives that House Bill No. 9266 had been passed by the Senate on May 20, 1964 "with amendments." Attached to the letter was a certification of the amendment, which was the one recommended by Senator Roxas and not the Tolentino amendments which were the ones actually approved by the Senate. The House of Representatives thereafter signified its approval of House Bill No. 9266 as sent back to it, and copies thereof were caused to be printed. The printed copies were then certified and attested by the Secretary of the House of Representatives, the Speaker of the House of Representatives, the Secretary of the Senate and the Senate President. On June 16, 1964 the Secretary of the House transmitted four printed copies of the bill to the President of the Philippines, who affixed his signatures thereto by way of approval on June 18, 1964. The bill thereupon became Republic Act No. 4065. The furor over the Act which ensued as a result of the public denunciation mounted by respondent City Mayor drew immediate reaction from Senator Tolentino, who on July 5, 1964 issued a press statement that the enrolled copy of House Bill No. 9266 signed into law by the President of the Philippines was a wrong version of the bill actually passed by the Senate because it did not embody the amendments introduced by him and approved on the Senate floor. As a consequence the Senate President, through the Secretary of the Senate, addressed a letter dated July 11, 1964 to the President of the Philippines, explaining that the enrolled copy of House Bill No. 9266 signed by the secretaries of both Houses as well as by the presiding officers thereof was not the bill duly approved by Congress and that he considered his signature on the enrolled bill as invalid and of no effect. A subsequent letter dated July 21, 1964 made the further clarification that the invalidation by the Senate President of his signature meant that the bill on which his signature appeared had never been approved by the Senate and therefore the fact that he and the Senate Secretary had signed it did not make the bill a valid enactment. On July 31, 1964 the President of the Philippines sent a message to the presiding officers of both Houses of Congress informing them that

the question presented, and affirming categorically that "the enrolled copy of the resolution and the legislative journals are conclusive upon us," specifically in view of Section 313 of Act 190, as amended by Act No. 2210. This provision in the Rules of Evidence in the old Code of Civil Procedure appears indeed to be the only statutory basis on which the "enrolled bill" theory rests. It reads: The proceedings of the Philippine Commission, or of any legislative body that may be provided for in the Philippine Islands, or of Congress (may be proved) by the journals of those bodies or of either house thereof, or by published statutes or resolutions, or by copies certified by the clerk or secretary, printed by their order; provided, that in the case of acts of the Philippine Commission or the Philippine Legislature, when there is in existence a copy signed by the presiding officers and secretaries of said bodies, it shall be conclusive proof of the provisions of such acts and of the due enactment thereof. Congress devised its own system of authenticating bills duly approved by both Houses, namely, by the signatures of their respective presiding officers and secretaries on the printed copy of the approved bill. 2 It has been held that this procedure is merely a mode of authentication, 3 to signify to the Chief Executive that the bill being presented to him has been duly approved by Congress and is ready for his approval or rejection. 4 The function of an attestation is therefore not of approval, because a bill is considered approved after it has passed both Houses. Even where such attestation is provided for in the Constitution authorities are divided as to whether or not the signatures are mandatory such that their absence would render the statute invalid. 5 The affirmative view, it is pointed out, would be in effect giving the presiding officers the power of veto, which in itself is a strong argument to the contrary 6 There is less reason to make the attestation a requisite for the validity of a bill where the Constitution does not even provide that the presiding officers should sign the bill before it is submitted to the President. In one case in the United States, where the (State)Constitution required the presiding officers to sign a bill and this provision was deemed mandatory, the duly authenticated enrolled bill was considered as conclusive proof of its due enactment. 7 Another case however, under the same circumstances, held that the enrolled bill was not conclusive evidence. 8 But in the case of Field vs. Clark, 9 the U.S. Supreme Court held that the signatures of the presiding officers on a bill, although not required by the Constitution, is conclusive evidence of its passage. The authorities in the United States are thus not unanimous on this point. The rationale of the enrolled bill theory is set forth in the said case of Field vs. Clark as follows: The signing by the Speaker of the House of Representatives, and, by the President of the Senate, in open session, of an enrolled bill, is an official attestation by the two houses of such bill as one that has passed Congress. It is a declaration by the two houses, through their presiding officers, to the President, that a bill, thus attested, has received, in due form, the sanction of the legislative branch of the government, and that it is delivered to him in obedience to the constitutional requirement that all bills which pass Congress shall be presented to him. And when a bill, thus attested, receives his approval, and is deposited in the public archives, its authentication as a bill that has passed Congress should be deemed complete and unimpeachable. As the President has no authority to approve a bill not passed by Congress, an enrolled Act in the custody of the Secretary of State, and having the official attestations of the Speaker of the House of Representatives, of the President of the Senate, and of the President of the United States, carries,

on its face, a solemn assurance by the legislative and executive departments of the government, charged, respectively, with the duty of enacting and executing the laws, that it was passed by Congress. The respect due to coequal and independent departments requires the judicial department to act upon that assurance, and to accept, as having passed Congress, all bills authenticated in the manner stated; leaving the courts to determine, when the question properly arises, whether the Act, so authenticated, is in conformity with the Constitution. It may be noted that the enrolled bill theory is based mainly on "the respect due to coequal and independent departments," which requires the judicial department "to accept, as having passed Congress, all billsauthenticated in the manner stated." Thus it has also been stated in other cases that if the attestation is absent and the same is not required for the validity of a statute, the courts may resort to the journals and other records of Congress for proof of its due enactment. This was the logical conclusion reached in a number of decisions, 10although they are silent as to whether the journals may still be resorted to if the attestation of the presiding officers is present. The (1935) Constitution is silent as to what shall constitute proof of due enactment of a bill. It does not require the presiding officers to certify to the same. But the said Constitution does contain the following provisions: Sec. 10 (4). "Each House shall keep a Journal of its proceedings, and from time to time publish the same, excepting such parts as may in its judgment require secrecy; and the yeas and nays on any question shall, at the request of one-fifth of the Members present, be entered in the Journal." Sec. 21 (2). "No bill shall be passed by either House unless it shall have been printed and copies thereof in its final form furnished its Members at least three calendar days prior to its passage, except when the President shall have certified to the necessity of its immediate enactment. Upon the last reading of a bill no amendment thereof shall be allowed, and the question upon its passage shall be taken immediately thereafter, and the yeas and nays entered on the Journal." Petitioner's argument that the attestation of the presiding officers of Congress is conclusive proof of a bill's due enactment, required, it is said, by the respect due to a co-equal department of the government, 11 is neutralized in this case by the fact that the Senate President declared his signature on the bill to be invalid and issued a subsequent clarification that the invalidation of his signature meant that the bill he had signed had never been approved by the Senate. Obviously this declaration should be accorded even greater respect than the attestation it invalidated, which it did for a reason that is undisputed in fact and indisputable in logic. As far as Congress itself is concerned, there is nothing sacrosanct in the certification made by the presiding officers. It is merely a mode of authentication. The lawmaking process in Congress ends when the bill is approved by both Houses, and the certification does not add to the validity of the bill or cure any defect already present upon its passage. In other words it is the approval by Congress and not the signatures of the presiding officers that is essential. Thus the (1935) Constitution says that "[e] very bill passed by the Congress shall, before it becomes law, be presented to the President. 12 In Brown vs. Morris, supra, the Supreme Court of Missouri, interpreting a similar provision in the State Constitution, said that the same "makes it clear that the indispensable step is the final passage and it follows that if a bill, otherwise fully enacted as a law, is not attested by the presiding officer, of the proof that it has "passed both houses" will satisfy the constitutional requirement."

Petitioner agrees that the attestation in the bill is not mandatory but argues that the disclaimer thereof by the Senate President, granting it to have been validly made, would only mean that there was no attestation at all, but would not affect the validity of the statute. Hence, it is pointed out, Republic Act No. 4065 would remain valid and binding. This argument begs the issue. It would limit the court's inquiry to the presence or absence of the attestation and to the effect of its absence upon the validity of the statute. The inquiry, however, goes farther. Absent such attestation as a result of the disclaimer, and consequently there being no enrolled bill to speak of, what evidence is there to determine whether or not the bill had been duly enacted? In such a case the entries in the journal should be consulted. The journal of the proceedings of each House of Congress is no ordinary record. The Constitution requires it. While it is true that the journal is not authenticated and is subject to the risks of misprinting and other errors, the point is irrelevant in this case. This Court is merely asked to inquire whether the text of House Bill No. 9266 signed by the Chief Executive was the same text passed by both Houses of Congress. Under the specific facts and circumstances of this case, this Court can do this and resort to the Senate journal for the purpose. The journal discloses that substantial and lengthy amendments were introduced on the floor and approved by the Senate but were not incorporated in the printed text sent to the President and signed by him. This Court is not asked to incorporate such amendments into the alleged law, which admittedly is a risky undertaking, 13 but to declare that the bill was not duly enacted and therefore did not become law. This We do, as indeed both the President of the Senate and the Chief Executive did, when they withdrew their signatures therein. In the face of the manifest error committed and subsequently rectified by the President of the Senate and by the Chief Executive, for this Court to perpetuate that error by disregarding such rectification and holding that the erroneous bill has become law would be to sacrifice truth to fiction and bring about mischievous consequences not intended by the lawmaking body. In view of the foregoing considerations, the petition is denied and the so-called Republic Act No. 4065 entitled "AN ACT DEFINING THE POWERS, RIGHTS AND DUTIES OF THE VICE-MAYOR OF THE CITY OF MANILA, FURTHER AMENDING FOR THE PURPOSE SECTIONS TEN AND ELEVEN OF REPUBLIC ACT NUMBERED FOUR HUNDRED NINE, AS AMENDED, OTHERWISE KNOWN AS THE REVISED CHARTER OF THE CITY OF MANILA" is declared not to have been duly enacted and therefore did not become law. The temporary restraining order dated April 28, 1965 is hereby made permanent. No pronouncement as to costs. Castro, Teehankee, Antonio, Esguerra, Fernandez, Muoz Palma and Aquino, JJ., concur. Zaldivar (Chairman), Fernando and Barredo, JJ., took no part. Makasiar, J., is on leave.

each filed a reply. In turn the Solicitor General filed on June 1, 1995 a rejoinder to the PPI's reply. On June 27, 1995 the matter was submitted for resolution. I. Power of the Senate to propose amendments to revenue bills. Some of the petitioners (Tolentino, Kilosbayan, Inc., Philippine Airlines (PAL), Roco, and Chamber of Real Estate and Builders Association (CREBA)) reiterate previous claims made by them that R.A. No. 7716 did not "originate exclusively" in the House of Representatives as required by Art. VI, 24 of the Constitution. Although they admit that H. No. 11197 was filed in the House of Representatives where it passed three readings and that afterward it was sent to the Senate where after first reading it was referred to the Senate Ways and Means Committee, they complain that the Senate did not pass it on second and third readings. Instead what the Senate did was to pass its own version (S. No. 1630) which it approved on May 24, 1994. Petitioner Tolentino adds that what the Senate committee should have done was to amend H. No. 11197 by striking out the text of the bill and substituting it with the text of S. No. 1630. That way, it is said, "the bill remains a House bill and the Senate version just becomes the text (only the text) of the House bill." The contention has no merit. The enactment of S. No. 1630 is not the only instance in which the Senate proposed an amendment to a House revenue bill by enacting its own version of a revenue bill. On at least two occasions during the Eighth Congress, the Senate passed its own version of revenue bills, which, in consolidation with House bills earlier passed, became the enrolled bills. These were: R.A. No. 7369 (AN ACT TO AMEND THE OMNIBUS INVESTMENTS CODE OF 1987 BY EXTENDING FROM FIVE (5) YEARS TO TEN YEARS THE PERIOD FOR TAX AND DUTY EXEMPTION AND TAX CREDIT ON CAPITAL EQUIPMENT) which was approved by the President on April 10, 1992. This Act is actually a consolidation of H. No. 34254, which was approved by the House on January 29, 1992, and S. No. 1920, which was approved by the Senate on February 3, 1992. R.A. No. 7549 (AN ACT GRANTING TAX EXEMPTIONS TO WHOEVER SHALL GIVE REWARD TO ANY FILIPINO ATHLETE WINNING A MEDAL IN OLYMPIC GAMES) which was approved by the President on May 22, 1992. This Act is a consolidation of H. No. 22232, which was approved by the House of Representatives on August 2, 1989, and S. No. 807, which was approved by the Senate on October 21, 1991. On the other hand, the Ninth Congress passed revenue laws which were also the result of the consolidation of House and Senate bills. These are the following, with indications of the dates on which the laws were approved by the President and dates the separate bills of the two chambers of Congress were respectively passed: 1. R.A. NO. 7642 AN ACT INCREASING THE PENALTIES FOR TAX EVASION, AMENDING FOR THIS PURPOSE THE PERTINENT SECTIONS OF THE NATIONAL INTERNAL REVENUE CODE (December 28, 1992). House Bill No. 2165, October 5, 1992 Senate Bill No. 32, December 7, 1992 2. R.A. NO. 7643 AN ACT TO EMPOWER THE COMMISSIONER OF INTERNAL REVENUE TO REQUIRE THE

MENDOZA, J.: These are motions seeking reconsideration of our decision dismissing the petitions filed in these cases for the declaration of unconstitutionality of R.A. No. 7716, otherwise known as the Expanded Value-Added Tax Law. The motions, of which there are 10 in all, have been filed by the several petitioners in these cases, with the exception of the Philippine Educational Publishers Association, Inc. and the Association of Philippine Booksellers, petitioners in G.R. No. 115931. The Solicitor General, representing the respondents, filed a consolidated comment, to which the Philippine Airlines, Inc., petitioner in G.R. No. 115852, and the Philippine Press Institute, Inc., petitioner in G.R. No. 115544, and Juan T. David, petitioner in G.R. No. 115525,

PAYMENT OF THE VALUE-ADDED TAX EVERY MONTH AND TO ALLOW LOCAL GOVERNMENT UNITS TO SHARE IN VAT REVENUE, AMENDING FOR THIS PURPOSE CERTAIN SECTIONS OF THE NATIONAL INTERNAL REVENUE CODE (December 28, 1992) House Bill No. 1503, September 3, 1992 Senate Bill No. 968, December 7, 1992 3. R.A. NO. 7646 AN ACT AUTHORIZING THE COMMISSIONER OF INTERNAL REVENUE TO PRESCRIBE THE PLACE FOR PAYMENT OF INTERNAL REVENUE TAXES BY LARGE TAXPAYERS, AMENDING FOR THIS PURPOSE CERTAIN PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED (February 24, 1993) House Bill No. 1470, October 20, 1992 Senate Bill No. 35, November 19, 1992 4. R.A. NO. 7649 AN ACT REQUIRING THE GOVERNMENT OR ANY OF ITS POLITICAL SUBDIVISIONS, INSTRUMENTALITIES OR AGENCIES INCLUDING GOVERNMENT-OWNED OR CONTROLLED CORPORATIONS (GOCCS) TO DEDUCT AND WITHHOLD THE VALUE-ADDED TAX DUE AT THE RATE OF THREE PERCENT (3%) ON GROSS PAYMENT FOR THE PURCHASE OF GOODS AND SIX PERCENT (6%) ON GROSS RECEIPTS FOR SERVICES RENDERED BY CONTRACTORS (April 6, 1993) House Bill No. 5260, January 26, 1993

House Bill No. 7789, May 31, 1993 Senate Bill No. 1330, November 18, 1993 7. R.A. NO. 7717 AN ACT IMPOSING A TAX ON THE SALE, BARTER OR EXCHANGE OF SHARES OF STOCK LISTED AND TRADED THROUGH THE LOCAL STOCK EXCHANGE OR THROUGH INITIAL PUBLIC OFFERING, AMENDING FOR THE PURPOSE THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, BY INSERTING A NEW SECTION AND REPEALING CERTAIN SUBSECTIONS THEREOF (May 5, 1994) House Bill No. 9187, November 3, 1993 Senate Bill No. 1127, March 23, 1994 Thus, the enactment of S. No. 1630 is not the only instance in which the Senate, in the exercise of its power to propose amendments to bills required to originate in the House, passed its own version of a House revenue measure. It is noteworthy that, in the particular case of S. No. 1630, petitioners Tolentino and Roco, as members of the Senate, voted to approve it on second and third readings. On the other hand, amendment by substitution, in the manner urged by petitioner Tolentino, concerns a mere matter of form. Petitioner has not shown what substantial difference it would make if, as the Senate actually did in this case, a separate bill like S. No. 1630 is instead enacted as a substitute measure, "taking into Consideration . . . H.B. 11197." Indeed, so far as pertinent, the Rules of the Senate only provide: RULE XXIX AMENDMENTS xxx xxx xxx

Senate Bill No. 1141, March 30, 1993 5. R.A. NO. 7656 AN ACT REQUIRING GOVERNMENT-OWNED OR CONTROLLED CORPORATIONS TO DECLARE DIVIDENDS UNDER CERTAIN CONDITIONS TO THE NATIONAL GOVERNMENT, AND FOR OTHER PURPOSES (November 9, 1993) House Bill No. 11024, November 3, 1993 Senate Bill No. 1168, November 3, 1993 6. R.A. NO. 7660 AN ACT RATIONALIZING FURTHER THE STRUCTURE AND ADMINISTRATION OF THE DOCUMENTARY STAMP TAX, AMENDING FOR THE PURPOSE CERTAIN PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, ALLOCATING FUNDS FOR SPECIFIC PROGRAMS, AND FOR OTHER PURPOSES (December 23, 1993) 68. Not more than one amendment to the original amendment shall be considered. No amendment by substitution shall be entertained unless the text thereof is submitted in writing. Any of said amendments may be withdrawn before a vote is taken thereon. 69. No amendment which seeks the inclusion of a legislative provision foreign to the subject matter of a bill (rider) shall be entertained. xxx xxx xxx 70-A. A bill or resolution shall not be amended by substituting it with another which covers a subject distinct from that proposed in the original bill or resolution. (emphasis added). Nor is there merit in petitioners' contention that, with regard to revenue bills, the Philippine Senate possesses less power than the U.S. Senate because of textual differences between constitutional provisions giving them the power to propose or concur with amendments.

Art. I, 7, cl. 1 of the U.S. Constitution reads: All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on other Bills. Art. VI, 24 of our Constitution reads: All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments. The addition of the word "exclusively" in the Philippine Constitution and the decision to drop the phrase "as on other Bills" in the American version, according to petitioners, shows the intention of the framers of our Constitution to restrict the Senate's power to propose amendments to revenue bills. Petitioner Tolentino contends that the word "exclusively" was inserted to modify "originate" and "the words 'as in any other bills' (sic) were eliminated so as to show that these bills were not to be like other bills but must be treated as a special kind." The history of this provision does not support this contention. The supposed indicia of constitutional intent are nothing but the relics of an unsuccessful attempt to limit the power of the Senate. It will be recalled that the 1935 Constitution originally provided for a unicameral National Assembly. When it was decided in 1939 to change to a bicameral legislature, it became necessary to provide for the procedure for lawmaking by the Senate and the House of Representatives. The work of proposing amendments to the Constitution was done by the National Assembly, acting as a constituent assembly, some of whose members, jealous of preserving the Assembly's lawmaking powers, sought to curtail the powers of the proposed Senate. Accordingly they proposed the following provision: All bills appropriating public funds, revenue or tariff bills, bills of local application, and private bills shall originate exclusively in the Assembly, but the Senate may propose or concur with amendments. In case of disapproval by the Senate of any such bills, the Assembly may repass the same by a twothirds vote of all its members, and thereupon, the bill so repassed shall be deemed enacted and may be submitted to the President for corresponding action. In the event that the Senate should fail to finally act on any such bills, the Assembly may, after thirty days from the opening of the next regular session of the same legislative term, reapprove the same with a vote of two-thirds of all the members of the Assembly. And upon such reapproval, the bill shall be deemed enacted and may be submitted to the President for corresponding action. The special committee on the revision of laws of the Second National Assembly vetoed the proposal. It deleted everything after the first sentence. As rewritten, the proposal was approved by the National Assembly and embodied in Resolution No. 38, as amended by Resolution No. 73. (J. ARUEGO, KNOW YOUR CONSTITUTION 6566 (1950)). The proposed amendment was submitted to the people and ratified by them in the elections held on June 18, 1940. This is the history of Art. VI, 18 (2) of the 1935 Constitution, from which Art. VI, 24 of the present Constitution was derived. It explains why the word "exclusively" was added to the American text from which the framers of the Philippine Constitution borrowed and why the phrase "as on other Bills" was not copied. Considering the defeat of the proposal, the power of the Senate to propose amendments must be understood to be full, plenary and complete "as on other Bills." Thus, because revenue bills are required to originate exclusively in the House of Representatives, the Senate cannot enact revenue measures

of its own without such bills. After a revenue bill is passed and sent over to it by the House, however, the Senate certainly can pass its own version on the same subject matter. This follows from the coequality of the two chambers of Congress. That this is also the understanding of book authors of the scope of the Senate's power to concur is clear from the following commentaries: The power of the Senate to propose or concur with amendments is apparently without restriction. It would seem that by virtue of this power, the Senate can practically re-write a bill required to come from the House and leave only a trace of the original bill. For example, a general revenue bill passed by the lower house of the United States Congress contained provisions for the imposition of an inheritance tax . This was changed by the Senate into a corporation tax. The amending authority of the Senate was declared by the United States Supreme Court to be sufficiently broad to enable it to make the alteration. [Flint v. Stone Tracy Company, 220 U.S. 107, 55 L. ed. 389]. (L. TAADA AND F. CARREON, POLITICAL LAW OF THE PHILIPPINES 247 (1961)) The above-mentioned bills are supposed to be initiated by the House of Representatives because it is more numerous in membership and therefore also more representative of the people. Moreover, its members are presumed to be more familiar with the needs of the country in regard to the enactment of the legislation involved. The Senate is, however, allowed much leeway in the exercise of its power to propose or concur with amendments to the bills initiated by the House of Representatives. Thus, in one case, a bill introduced in the U.S. House of Representatives was changed by the Senate to make a proposed inheritance tax a corporation tax. It is also accepted practice for the Senate to introduce what is known as an amendment by substitution, which may entirely replace the bill initiated in the House of Representatives. (I. CRUZ, PHILIPPINE POLITICAL LAW 144-145 (1993)). In sum, while Art. VI, 24 provides that all appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills must "originate exclusively in the House of Representatives," it also adds, "but the Senate may propose or concur with amendments." In the exercise of this power, the Senate may propose an entirely new bill as a substitute measure. As petitioner Tolentino states in a high school text, a committee to which a bill is referred may do any of the following: (1) to endorse the bill without changes; (2) to make changes in the bill omitting or adding sections or altering its language; (3) to make and endorse an entirely new bill as a substitute, in which case it will be known as a committee bill; or (4) to make no report at all. (A. TOLENTINO, THE GOVERNMENT OF THE PHILIPPINES 258 (1950)) To except from this procedure the amendment of bills which are required to originate in the House by prescribing that the number of the House bill and its other parts up to the enacting clause must be preserved although the text of the Senate amendment may be incorporated in place of the original body of the bill is to insist on a

mere technicality. At any rate there is no rule prescribing this form. S. No. 1630, as a substitute measure, is therefore as much an amendment of H. No. 11197 as any which the Senate could have made. II. S. No. 1630 a mere amendment of H. No. 11197. Petitioners' basic error is that they assume that S. No. 1630 is an independent and distinct bill. Hence their repeated references to its certification that it was passed by the Senate "in substitution of S.B. No. 1129, taking into consideration P.S. Res. No. 734 and H.B. No. 11197," implying that there is something substantially different between the reference to S. No. 1129 and the reference to H. No. 11197. From this premise, they conclude that R.A. No. 7716 originated both in the House and in the Senate and that it is the product of two "half-baked bills because neither H. No. 11197 nor S. No. 1630 was passed by both houses of Congress." In point of fact, in several instances the provisions of S. No. 1630, clearly appear to be mere amendments of the corresponding provisions of H. No. 11197. The very tabular comparison of the provisions of H. No. 11197 and S. No. 1630 attached as Supplement A to the basic petition of petitioner Tolentino, while showing differences between the two bills, at the same time indicates that the provisions of the Senate bill were precisely intended to be amendments to the House bill. Without H. No. 11197, the Senate could not have enacted S. No. 1630. Because the Senate bill was a mere amendment of the House bill, H. No. 11197 in its original form did not have to pass the Senate on second and three readings. It was enough that after it was passed on first reading it was referred to the Senate Committee on Ways and Means. Neither was it required that S. No. 1630 be passed by the House of Representatives before the two bills could be referred to the Conference Committee. There is legislative precedent for what was done in the case of H. No. 11197 and S. No. 1630. When the House bill and Senate bill, which became R.A. No. 1405 (Act prohibiting the disclosure of bank deposits), were referred to a conference committee, the question was raised whether the two bills could be the subject of such conference, considering that the bill from one house had not been passed by the other and vice versa. As Congressman Duran put the question: MR. DURAN. Therefore, I raise this question of order as to procedure: If a House bill is passed by the House but not passed by the Senate, and a Senate bill of a similar nature is passed in the Senate but never passed in the House, can the two bills be the subject of a conference, and can a law be enacted from these two bills? I understand that the Senate bill in this particular instance does not refer to investments in government securities, whereas the bill in the House, which was introduced by the Speaker, covers two subject matters: not only investigation of deposits in banks but also investigation of investments in government securities. Now, since the two bills differ in their subject matter, I believe that no law can be enacted. Ruling on the point of order raised, the chair (Speaker Jose B. Laurel, Jr.) said: THE SPEAKER. The report of the conference committee is in order. It is precisely in cases like this where a conference should be had. If the House bill had been approved by the Senate, there would have been no need of a conference; but precisely because the Senate passed another bill on the same subject matter, the conference committee had to be created, and we are now considering the report of that committee.

(2 CONG. REC. NO. 13, July 27, 1955, pp. 384142 (emphasis added)) III. The President's certification. The fallacy in thinking that H. No. 11197 and S. No. 1630 are distinct and unrelated measures also accounts for the petitioners' (Kilosbayan's and PAL's) contention that because the President separately certified to the need for the immediate enactment of these measures, his certification was ineffectual and void. The certification had to be made of the version of the same revenue bill which at the momentwas being considered. Otherwise, to follow petitioners' theory, it would be necessary for the President to certify as many bills as are presented in a house of Congress even though the bills are merely versions of the bill he has already certified. It is enough that he certifies the bill which, at the time he makes the certification, is under consideration. Since on March 22, 1994 the Senate was considering S. No. 1630, it was that bill which had to be certified. For that matter on June 1, 1993 the President had earlier certified H. No. 9210 for immediate enactment because it was the one which at that time was being considered by the House. This bill was later substituted, together with other bills, by H. No. 11197. As to what Presidential certification can accomplish, we have already explained in the main decision that the phrase "except when the President certifies to the necessity of its immediate enactment, etc." in Art. VI, 26 (2) qualifies not only the requirement that "printed copies [of a bill] in its final form [must be] distributed to the members three days before its passage" but also the requirement that before a bill can become a law it must have passed "three readings on separate days." There is not only textual support for such construction but historical basis as well. Art. VI, 21 (2) of the 1935 Constitution originally provided: (2) No bill shall be passed by either House unless it shall have been printed and copies thereof in its final form furnished its Members at least three calendar days prior to its passage, except when the President shall have certified to the necessity of its immediate enactment. Upon the last reading of a bill, no amendment thereof shall be allowed and the question upon its passage shall be taken immediately thereafter, and the yeas and nays entered on the Journal. When the 1973 Constitution was adopted, it was provided in Art. VIII, 19 (2): (2) No bill shall become a law unless it has passed three readings on separate days, and printed copies thereof in its final form have been distributed to the Members three days before its passage, except when the Prime Minister certifies to the necessity of its immediate enactment to meet a public calamity or emergency. Upon the last reading of a bill, no amendment thereto shall be allowed, and the vote thereon shall be taken immediately thereafter, and the yeas and nays entered in the Journal. This provision of the 1973 document, with slight modification, was adopted in Art. VI, 26 (2) of the present Constitution, thus: (2) No bill passed by either House shall become a law unless it has passed three readings on separate days, and printed copies thereof in its final form have been distributed to its Members three days before its passage, except when the President certifies to the necessity of its immediate enactment to meet a public calamity or emergency. Upon the last reading of a bill, no amendment thereto shall be allowed, and the vote thereon shall be taken immediately thereafter, and the yeasand nays entered in the Journal.

The exception is based on the prudential consideration that if in all cases three readings on separate days are required and a bill has to be printed in final form before it can be passed, the need for a law may be rendered academic by the occurrence of the very emergency or public calamity which it is meant to address. Petitioners further contend that a "growing budget deficit" is not an emergency, especially in a country like the Philippines where budget deficit is a chronic condition. Even if this were the case, an enormous budget deficit does not make the need for R.A. No. 7716 any less urgent or the situation calling for its enactment any less an emergency. Apparently, the members of the Senate (including some of the petitioners in these cases) believed that there was an urgent need for consideration of S. No. 1630, because they responded to the call of the President by voting on the bill on second and third readings on the same day. While the judicial department is not bound by the Senate's acceptance of the President's certification, the respect due coequal departments of the government in matters committed to them by the Constitution and the absence of a clear showing of grave abuse of discretion caution a stay of the judicial hand. At any rate, we are satisfied that S. No. 1630 received thorough consideration in the Senate where it was discussed for six days. Only its distribution in advance in its final printed form was actually dispensed with by holding the voting on second and third readings on the same day (March 24, 1994). Otherwise, sufficient time between the submission of the bill on February 8, 1994 on second reading and its approval on March 24, 1994 elapsed before it was finally voted on by the Senate on third reading. The purpose for which three readings on separate days is required is said to be two-fold: (1) to inform the members of Congress of what they must vote on and (2) to give them notice that a measure is progressing through the enacting process, thus enabling them and others interested in the measure to prepare their positions with reference to it. (1 J. G. SUTHERLAND, STATUTES AND STATUTORY CONSTRUCTION 10.04, p. 282 (1972)). These purposes were substantially achieved in the case of R.A. No. 7716. IV. Power of Conference Committee. It is contended (principally by Kilosbayan, Inc. and the Movement of Attorneys for Brotherhood, Integrity and Nationalism, Inc. (MABINI)) that in violation of the constitutional policy of full public disclosure and the people's right to know (Art. II, 28 and Art. III, 7) the Conference Committee met for two days in executive session with only the conferees present. As pointed out in our main decision, even in the United States it was customary to hold such sessions with only the conferees and their staffs in attendance and it was only in 1975 when a new rule was adopted requiring open sessions. Unlike its American counterpart, the Philippine Congress has not adopted a rule prescribing open hearings for conference committees. It is nevertheless claimed that in the United States, before the adoption of the rule in 1975, at least staff members were present. These were staff members of the Senators and Congressmen, however, who may be presumed to be their confidential men, not stenographers as in this case who on the last two days of the conference were excluded. There is no showing that the conferees themselves did not take notes of their proceedings so as to give petitioner Kilosbayan basis for claiming that even in secret diplomatic negotiations involving state interests, conferees keep notes of their meetings. Above all, the public's right to know was fully served because the Conference Committee in this case submitted a report showing the changes made on the differing versions of the House and the Senate. Petitioners cite the rules of both houses which provide that conference committee reports must contain "a detailed, sufficiently explicit statement of the changes in or other amendments." These changes are shown in the bill attached to the Conference Committee Report. The members of both houses could thus ascertain what changes had been made in the original bills without the need of a statement detailing the changes.

The same question now presented was raised when the bill which became R.A. No. 1400 (Land Reform Act of 1955) was reported by the Conference Committee. Congressman Bengzon raised a point of order. He said: MR. BENGZON. My point of order is that it is out of order to consider the report of the conference committee regarding House Bill No. 2557 by reason of the provision of Section 11, Article XII, of the Rules of this House which provides specifically that the conference report must be accompanied by a detailed statement of the effects of the amendment on the bill of the House. This conference committee report is not accompanied by that detailed statement, Mr. Speaker. Therefore it is out of order to consider it. Petitioner Tolentino, then the Majority Floor Leader, answered: MR. TOLENTINO. Mr. Speaker, I should just like to say a few words in connection with the point of order raised by the gentleman from Pangasinan. There is no question about the provision of the Rule cited by the gentleman from Pangasinan, but this provision applies to those cases where only portions of the bill have been amended. In this case before us an entire bill is presented; therefore, it can be easily seen from the reading of the bill what the provisions are. Besides, this procedure has been an established practice. After some interruption, he continued: MR. TOLENTINO. As I was saying, Mr. Speaker, we have to look into the reason for the provisions of the Rules, and the reason for the requirement in the provision cited by the gentleman from Pangasinan is when there are only certain words or phrases inserted in or deleted from the provisions of the bill included in the conference report, and we cannot understand what those words and phrases mean and their relation to the bill. In that case, it is necessary to make a detailed statement on how those words and phrases will affect the bill as a whole; but when the entire bill itself is copied verbatim in the conference report, that is not necessary. So when the reason for the Rule does not exist, the Rule does not exist. (2 CONG. REC. NO. 2, p. 4056. (emphasis added)) Congressman Tolentino was sustained by the chair. The record shows that when the ruling was appealed, it was upheld by viva voce and when a division of the House was called, it was sustained by a vote of 48 to 5. (Id., p. 4058) Nor is there any doubt about the power of a conference committee to insert new provisions as long as these are germane to the subject of the conference. As this Court held in Philippine Judges Association v. Prado, 227 SCRA 703 (1993), in an opinion written by then Justice Cruz, the jurisdiction of the conference committee is not limited to resolving differences between the Senate and the House. It may propose an entirely new provision. What is important is that its report is subsequently approved by the respective houses of Congress. This Court ruled that it would not entertain allegations that, because new provisions had been added by the conference committee, there was thereby a violation of the constitutional injunction that "upon the last reading of a bill, no amendment thereto shall be allowed."

Applying these principles, we shall decline to look into the petitioners' charges that an amendment was made upon the last reading of the bill that eventually became R.A. No. 7354 and that copiesthereof in its final form were not distributed among the members of each House. Both the enrolled bill and the legislative journals certify that the measure was duly enacted i.e., in accordance with Article VI, Sec. 26 (2) of the Constitution. We are bound by such official assurances from a coordinate department of the government, to which we owe, at the very least, a becoming courtesy. (Id. at 710. (emphasis added)) It is interesting to note the following description of conference committees in the Philippines in a 1979 study: Conference committees may be of two types: free or instructed. These committees may be given instructions by their parent bodies or they may be left without instructions. Normally the conference committees are without instructions, and this is why they are often critically referred to as "the little legislatures." Once bills have been sent to them, the conferees have almost unlimited authority to change the clauses of the bills and in fact sometimes introduce new measures that were not in the original legislation. No minutes are kept, and members' activities on conference committees are difficult to determine. One congressman known for his idealism put it this way: "I killed a bill on export incentives for my interest group [copra] in the conference committee but I could not have done so anywhere else." The conference committee submits a report to both houses, and usually it is accepted. If the report is not accepted, then the committee is discharged and new members are appointed. (R. Jackson, Committees in the Philippine Congress, in COMMITTEES AND LEGISLATURES: A COMPARATIVE ANALYSIS 163 (J. D. LEES AND M. SHAW, eds.)). In citing this study, we pass no judgment on the methods of conference committees. We cite it only to say that conference committees here are no different from their counterparts in the United States whose vast powers we noted in Philippine Judges Association v. Prado, supra. At all events, under Art. VI, 16(3) each house has the power "to determine the rules of its proceedings," including those of its committees. Any meaningful change in the method and procedures of Congress or its committees must therefore be sought in that body itself. V. The titles of S. No. 1630 and H. No. 11197. PAL maintains that R.A. No. 7716 violates Art. VI, 26 (1) of the Constitution which provides that "Every bill passed by Congress shall embrace only one subject which shall be expressed in the title thereof." PAL contends that the amendment of its franchise by the withdrawal of its exemption from the VAT is not expressed in the title of the law. Pursuant to 13 of P.D. No. 1590, PAL pays a franchise tax of 2% on its gross revenue "in lieu of all other taxes, duties, royalties, registration, license and other fees and charges of any kind, nature, or description, imposed, levied, established, assessed or collected by any municipal, city, provincial or national authority or government agency, now or in the future." PAL was exempted from the payment of the VAT along with other entities by 103 of the National Internal Revenue Code, which provides as follows:

103. Exempt transactions. The following shall be exempt from the value-added tax: xxx xxx xxx (q) Transactions which are exempt under special laws or international agreements to which the Philippines is a signatory. R.A. No. 7716 seeks to withdraw certain exemptions, including that granted to PAL, by amending 103, as follows: 103. Exempt transactions. The following shall be exempt from the value-added tax: xxx xxx xxx (q) Transactions which are exempt under special laws, except those granted under Presidential Decree Nos. 66, 529, 972, 1491, 1590. . . . The amendment of 103 is expressed in the title of R.A. No. 7716 which reads: AN ACT RESTRUCTURING THE VALUE-ADDED TAX (VAT) SYSTEM, WIDENING ITS TAX BASE AND ENHANCING ITS ADMINISTRATION, AND FOR THESE PURPOSES AMENDING AND REPEALING THE RELEVANT PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND FOR OTHER PURPOSES. By stating that R.A. No. 7716 seeks to "[RESTRUCTURE] THE VALUE-ADDED TAX (VAT) SYSTEM [BY] WIDENING ITS TAX BASE AND ENHANCING ITS ADMINISTRATION, AND FOR THESE PURPOSES AMENDING AND REPEALING THE RELEVANT PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED AND FOR OTHER PURPOSES," Congress thereby clearly expresses its intention to amend any provision of the NIRC which stands in the way of accomplishing the purpose of the law. PAL asserts that the amendment of its franchise must be reflected in the title of the law by specific reference to P.D. No. 1590. It is unnecessary to do this in order to comply with the constitutional requirement, since it is already stated in the title that the law seeks to amend the pertinent provisions of the NIRC, among which is 103(q), in order to widen the base of the VAT. Actually, it is the bill which becomes a law that is required to express in its title the subject of legislation. The titles of H. No. 11197 and S. No. 1630 in fact specifically referred to 103 of the NIRC as among the provisions sought to be amended. We are satisfied that sufficient notice had been given of the pendency of these bills in Congress before they were enacted into what is now R.A. No. 7716. In Philippine Judges Association v. Prado, supra, a similar argument as that now made by PAL was rejected. R.A. No. 7354 is entitled AN ACT CREATING THE PHILIPPINE POSTAL CORPORATION, DEFINING ITS POWERS, FUNCTIONS AND RESPONSIBILITIES, PROVIDING FOR REGULATION OF THE INDUSTRY AND FOR OTHER PURPOSES CONNECTED THEREWITH. It contained a provision repealing all franking privileges. It was contended that the withdrawal of franking privileges was not expressed in the title of the law. In holding that there was sufficient description of the subject of the law in its title, including the repeal of franking privileges, this Court held: To require every end and means necessary for the accomplishment of the general objectives of the statute to be expressed in its title would not only be unreasonable but would actually render legislation impossible. [Cooley, Constitutional

Limitations, 8th Ed., p. 297] As has been correctly explained: The details of a legislative act need not be specifically stated in its title, but matter germane to the subject as expressed in the title, and adopted to the accomplishment of the object in view, may properly be included in the act. Thus, it is proper to create in the same act the machinery by which the act is to be enforced, to prescribe the penalties for its infraction, and to remove obstacles in the way of its execution. If such matters are properly connected with the subject as expressed in the title, it is unnecessary that they should also have special mention in the title. (Southern Pac. Co. v. Bartine, 170 Fed. 725) (227 SCRA at 707-708) VI. Claims of press freedom and religious liberty. We have held that, as a general proposition, the press is not exempt from the taxing power of the State and that what the constitutional guarantee of free press prohibits are laws which single out the press or target a group belonging to the press for special treatment or which in any way discriminate against the press on the basis of the content of the publication, and R.A. No. 7716 is none of these. Now it is contended by the PPI that by removing the exemption of the press from the VAT while maintaining those granted to others, the law discriminates against the press. At any rate, it is averred, "even nondiscriminatory taxation of constitutionally guaranteed freedom is unconstitutional." With respect to the first contention, it would suffice to say that since the law granted the press a privilege, the law could take back the privilege anytime without offense to the Constitution. The reason is simple: by granting exemptions, the State does not forever waive the exercise of its sovereign prerogative. Indeed, in withdrawing the exemption, the law merely subjects the press to the same tax burden to which other businesses have long ago been subject. It is thus different from the tax involved in the cases invoked by the PPI. The license tax in Grosjean v. American Press Co., 297 U.S. 233, 80 L. Ed. 660 (1936) was found to be discriminatory because it was laid on the gross advertising receipts only of newspapers whose weekly circulation was over 20,000, with the result that the tax applied only to 13 out of 124 publishers in Louisiana. These large papers were critical of Senator Huey Long who controlled the state legislature which enacted the license tax. The censorial motivation for the law was thus evident. On the other hand, in Minneapolis Star & Tribune Co. v. Minnesota Comm'r of Revenue, 460 U.S. 575, 75 L. Ed. 2d 295 (1983), the tax was found to be discriminatory because although it could have been made liable for the sales tax or, in lieu thereof, for the use tax on the privilege of using, storing or consuming tangible goods, the press was not. Instead, the press was exempted from both taxes. It was, however, later made to pay a special use tax on the cost of paper and ink which made these items "the only items subject to the use tax that were component of goods to be sold at retail." The U.S. Supreme Court held that the differential treatment of the press "suggests that the goal of regulation is not related to suppression of expression, and such goal is presumptively unconstitutional." It would therefore appear that even a law that favors the press is constitutionally suspect. (See the dissent of Rehnquist, J. in that case)

Nor is it true that only two exemptions previously granted by E.O. No. 273 are withdrawn "absolutely and unqualifiedly" by R.A. No. 7716. Other exemptions from the VAT, such as those previously granted to PAL, petroleum concessionaires, enterprises registered with the Export Processing Zone Authority, and many more are likewise totally withdrawn, in addition to exemptions which are partially withdrawn, in an effort to broaden the base of the tax. The PPI says that the discriminatory treatment of the press is highlighted by the fact that transactions, which are profit oriented, continue to enjoy exemption under R.A. No. 7716. An enumeration of some of these transactions will suffice to show that by and large this is not so and that the exemptions are granted for a purpose. As the Solicitor General says, such exemptions are granted, in some cases, to encourage agricultural production and, in other cases, for the personal benefit of the end-user rather than for profit. The exempt transactions are: (a) Goods for consumption or use which are in their original state (agricultural, marine and forest products, cotton seeds in their original state, fertilizers, seeds, seedlings, fingerlings, fish, prawn livestock and poultry feeds) and goods or services to enhance agriculture (milling of palay, corn, sugar cane and raw sugar, livestock, poultry feeds, fertilizer, ingredients used for the manufacture of feeds). (b) Goods used for personal consumption or use (household and personal effects of citizens returning to the Philippines) or for professional use, like professional instruments and implements, by persons coming to the Philippines to settle here. (c) Goods subject to excise tax such as petroleum products or to be used for manufacture of petroleum products subject to excise tax and services subject to percentage tax. (d) Educational services, medical, dental, hospital and veterinary services, and services rendered under employer-employee relationship. (e) Works of art and similar creations sold by the artist himself. (f) Transactions exempted under special laws, or international agreements. (g) Export-sales by persons not VAT-registered. (h) Goods or services with gross annual sale or receipt not exceeding P500,000.00. (Respondents' Consolidated Comment on the Motions for Reconsideration, pp. 58-60) The PPI asserts that it does not really matter that the law does not discriminate against the press because "even nondiscriminatory taxation on constitutionally guaranteed freedom is unconstitutional." PPI cites in support of this assertion the following statement in Murdock v. Pennsylvania, 319 U.S. 105, 87 L. Ed. 1292 (1943): The fact that the ordinance is "nondiscriminatory" is immaterial. The protection afforded by the First Amendment is not so restricted. A license tax certainly does not acquire constitutional validity because it classifies the privileges protected by the First Amendment along with the wares and merchandise of hucksters and peddlers and treats them all alike. Such equality in treatment does not

save the ordinance. Freedom of press, freedom of speech, freedom of religion are in preferred position. The Court was speaking in that case of a license tax, which, unlike an ordinary tax, is mainly for regulation. Its imposition on the press is unconstitutional because it lays a prior restraint on the exercise of its right. Hence, although its application to others, such those selling goods, is valid, its application to the press or to religious groups, such as the Jehovah's Witnesses, in connection with the latter's sale of religious books and pamphlets, is unconstitutional. As the U.S. Supreme Court put it, "it is one thing to impose a tax on income or property of a preacher. It is quite another thing to exact a tax on him for delivering a sermon." A similar ruling was made by this Court in American Bible Society v. City of Manila, 101 Phil. 386 (1957) which invalidated a city ordinance requiring a business license fee on those engaged in the sale of general merchandise. It was held that the tax could not be imposed on the sale of bibles by the American Bible Society without restraining the free exercise of its right to propagate. The VAT is, however, different. It is not a license tax. It is not a tax on the exercise of a privilege, much less a constitutional right. It is imposed on the sale, barter, lease or exchange of goods or properties or the sale or exchange of services and the lease of properties purely for revenue purposes. To subject the press to its payment is not to burden the exercise of its right any more than to make the press pay income tax or subject it to general regulation is not to violate its freedom under the Constitution. Additionally, the Philippine Bible Society, Inc. claims that although it sells bibles, the proceeds derived from the sales are used to subsidize the cost of printing copies which are given free to those who cannot afford to pay so that to tax the sales would be to increase the price, while reducing the volume of sale. Granting that to be the case, the resulting burden on the exercise of religious freedom is so incidental as to make it difficult to differentiate it from any other economic imposition that might make the right to disseminate religious doctrines costly. Otherwise, to follow the petitioner's argument, to increase the tax on the sale of vestments would be to lay an impermissible burden on the right of the preacher to make a sermon. On the other hand the registration fee of P1,000.00 imposed by 107 of the NIRC, as amended by 7 of R.A. No. 7716, although fixed in amount, is really just to pay for the expenses of registration and enforcement of provisions such as those relating to accounting in 108 of the NIRC. That the PBS distributes free bibles and therefore is not liable to pay the VAT does not excuse it from the payment of this fee because it also sells some copies. At any rate whether the PBS is liable for the VAT must be decided in concrete cases, in the event it is assessed this tax by the Commissioner of Internal Revenue. VII. Alleged violations of the due process, equal protection and contract clauses and the rule on taxation. CREBA asserts that R.A. No. 7716 (1) impairs the obligations of contracts, (2) classifies transactions as covered or exempt without reasonable basis and (3) violates the rule that taxes should be uniform and equitable and that Congress shall "evolve a progressive system of taxation." With respect to the first contention, it is claimed that the application of the tax to existing contracts of the sale of real property by installment or on deferred payment basis would result in substantial increases in the monthly amortizations to be paid because of the 10% VAT. The additional amount, it is pointed out, is something that the buyer did not anticipate at the time he entered into the contract. The short answer to this is the one given by this Court in an early case: "Authorities from numerous sources are cited by the plaintiffs, but none of them show that a lawful tax on a new subject, or an increased tax on an old one, interferes with a contract or impairs its obligation, within the meaning of the Constitution. Even though such taxation may affect particular contracts, as it may increase the debt of one person and lessen the security of another, or may impose additional burdens upon

one class and release the burdens of another, still the tax must be paid unless prohibited by the Constitution, nor can it be said that it impairs the obligation of any existing contract in its true legal sense." (La Insular v. Machuca Go-Tauco and Nubla Co-Siong, 39 Phil. 567, 574 (1919)). Indeed not only existing laws but also "the reservation of the essential attributes of sovereignty, is . . . read into contracts as a postulate of the legal order." (Philippine-American Life Ins. Co. v. Auditor General, 22 SCRA 135, 147 (1968)) Contracts must be understood as having been made in reference to the possible exercise of the rightful authority of the government and no obligation of contract can extend to the defeat of that authority. (Norman v. Baltimore and Ohio R.R., 79 L. Ed. 885 (1935)). It is next pointed out that while 4 of R.A. No. 7716 exempts such transactions as the sale of agricultural products, food items, petroleum, and medical and veterinary services, it grants no exemption on the sale of real property which is equally essential. The sale of real property for socialized and low-cost housing is exempted from the tax, but CREBA claims that real estate transactions of "the less poor," i.e., the middle class, who are equally homeless, should likewise be exempted. The sale of food items, petroleum, medical and veterinary services, etc., which are essential goods and services was already exempt under 103, pars. (b) (d) (1) of the NIRC before the enactment of R.A. No. 7716. Petitioner is in error in claiming that R.A. No. 7716 granted exemption to these transactions, while subjecting those of petitioner to the payment of the VAT. Moreover, there is a difference between the "homeless poor" and the "homeless less poor" in the example given by petitioner, because the second group or middle class can afford to rent houses in the meantime that they cannot yet buy their own homes. The two social classes are thus differently situated in life. "It is inherent in the power to tax that the State be free to select the subjects of taxation, and it has been repeatedly held that 'inequalities which result from a singling out of one particular class for taxation, or exemption infringe no constitutional limitation.'" (Lutz v. Araneta, 98 Phil. 148, 153 (1955). Accord, City of Baguio v. De Leon, 134 Phil. 912 (1968); Sison, Jr. v. Ancheta, 130 SCRA 654, 663 (1984); Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas, Inc. v. Tan, 163 SCRA 371 (1988)). Finally, it is contended, for the reasons already noted, that R.A. No. 7716 also violates Art. VI, 28(1) which provides that "The rule of taxation shall be uniform and equitable. The Congress shall evolve a progressive system of taxation." Equality and uniformity of taxation means that all taxable articles or kinds of property of the same class be taxed at the same rate. The taxing power has the authority to make reasonable and natural classifications for purposes of taxation. To satisfy this requirement it is enough that the statute or ordinance applies equally to all persons, forms and corporations placed in similar situation. (City of Baguio v. De Leon, supra; Sison, Jr. v. Ancheta, supra) Indeed, the VAT was already provided in E.O. No. 273 long before R.A. No. 7716 was enacted. R.A. No. 7716 merely expands the base of the tax. The validity of the original VAT Law was questioned in Kapatiran ng Naglilingkod sa Pamahalaan ng Pilipinas, Inc. v. Tan, 163 SCRA 383 (1988) on grounds similar to those made in these cases, namely, that the law was "oppressive, discriminatory, unjust and regressive in violation of Art. VI, 28(1) of the Constitution." (At 382) Rejecting the challenge to the law, this Court held: As the Court sees it, EO 273 satisfies all the requirements of a valid tax. It is uniform. . . . The sales tax adopted in EO 273 is applied similarly on all goods and services sold to the public, which are not exempt, at the constant rate of 0% or 10%. The disputed sales tax is also equitable. It is imposed only on sales of goods or services by persons engaged in business with an aggregate

gross annual sales exceeding P200,000.00. Small corner sari-sari stores are consequently exempt from its application. Likewise exempt from the tax are sales of farm and marine products, so that the costs of basic food and other necessities, spared as they are from the incidence of the VAT, are expected to be relatively lower and within the reach of the general public. (At 382-383) The CREBA claims that the VAT is regressive. A similar claim is made by the Cooperative Union of the Philippines, Inc. (CUP), while petitioner Juan T. David argues that the law contravenes the mandate of Congress to provide for a progressive system of taxation because the law imposes a flat rate of 10% and thus places the tax burden on all taxpayers without regard to their ability to pay. The Constitution does not really prohibit the imposition of indirect taxes which, like the VAT, are regressive. What it simply provides is that Congress shall "evolve a progressive system of taxation." The constitutional provision has been interpreted to mean simply that "direct taxes are . . . to be preferred [and] as much as possible, indirect taxes should be minimized." (E. FERNANDO, THE CONSTITUTION OF THE PHILIPPINES 221 (Second ed. (1977)). Indeed, the mandate to Congress is not to prescribe, but to evolve, a progressive tax system. Otherwise, sales taxes, which perhaps are the oldest form of indirect taxes, would have been prohibited with the proclamation of Art. VIII, 17(1) of the 1973 Constitution from which the present Art. VI, 28(1) was taken. Sales taxes are also regressive. Resort to indirect taxes should be minimized but not avoided entirely because it is difficult, if not impossible, to avoid them by imposing such taxes according to the taxpayers' ability to pay. In the case of the VAT, the law minimizes the regressive effects of this imposition by providing for zero rating of certain transactions (R.A. No. 7716, 3, amending 102 (b) of the NIRC), while granting exemptions to other transactions. (R.A. No. 7716, 4, amending 103 of the NIRC). Thus, the following transactions involving basic and essential goods and services are exempted from the VAT: (a) Goods for consumption or use which are in their original state (agricultural, marine and forest products, cotton seeds in their original state, fertilizers, seeds, seedlings, fingerlings, fish, prawn livestock and poultry feeds) and goods or services to enhance agriculture (milling of palay, corn sugar cane and raw sugar, livestock, poultry feeds, fertilizer, ingredients used for the manufacture of feeds). (b) Goods used for personal consumption or use (household and personal effects of citizens returning to the Philippines) and or professional use, like professional instruments and implements, by persons coming to the Philippines to settle here. (c) Goods subject to excise tax such as petroleum products or to be used for manufacture of petroleum products subject to excise tax and services subject to percentage tax. (d) Educational services, medical, dental, hospital and veterinary services, and services rendered under employer-employee relationship. (e) Works of art and similar creations sold by the artist himself.

(f) Transactions exempted under special laws, or international agreements. (g) Export-sales by persons not VAT-registered. (h) Goods or services with gross annual sale or receipt not exceeding P500,000.00. (Respondents' Consolidated Comment on the Motions for Reconsideration, pp. 58-60) On the other hand, the transactions which are subject to the VAT are those which involve goods and services which are used or availed of mainly by higher income groups. These include real properties held primarily for sale to customers or for lease in the ordinary course of trade or business, the right or privilege to use patent, copyright, and other similar property or right, the right or privilege to use industrial, commercial or scientific equipment, motion picture films, tapes and discs, radio, television, satellite transmission and cable television time, hotels, restaurants and similar places, securities, lending investments, taxicabs, utility cars for rent, tourist buses, and other common carriers, services of franchise grantees of telephone and telegraph. The problem with CREBA's petition is that it presents broad claims of constitutional violations by tendering issues not at retail but at wholesale and in the abstract. There is no fully developed record which can impart to adjudication the impact of actuality. There is no factual foundation to show in the concrete the application of the law to actual contracts and exemplify its effect on property rights. For the fact is that petitioner's members have not even been assessed the VAT. Petitioner's case is not made concrete by a series of hypothetical questions asked which are no different from those dealt with in advisory opinions. The difficulty confronting petitioner is thus apparent. He alleges arbitrariness. A mere allegation, as here, does not suffice. There must be a factual foundation of such unconstitutional taint. Considering that petitioner here would condemn such a provision as void on its face, he has not made out a case. This is merely to adhere to the authoritative doctrine that where the due process and equal protection clauses are invoked, considering that they are not fixed rules but rather broad standards, there is a need for proof of such persuasive character as would lead to such a conclusion. Absent such a showing, the presumption of validity must prevail. (Sison, Jr. v. Ancheta, 130 SCRA at 661) Adjudication of these broad claims must await the development of a concrete case. It may be that postponement of adjudication would result in a multiplicity of suits. This need not be the case, however. Enforcement of the law may give rise to such a case. A test case, provided it is an actual case and not an abstract or hypothetical one, may thus be presented. Nor is hardship to taxpayers alone an adequate justification for adjudicating abstract issues. Otherwise, adjudication would be no different from the giving of advisory opinion that does not really settle legal issues. We are told that it is our duty under Art. VIII, 1, 2 to decide whenever a claim is made that "there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the government." This duty can only arise if an actual case or controversy is before us. Under Art . VIII, 5 our jurisdiction is defined in terms of "cases" and all that Art. VIII, 1, 2 can plausibly mean is that in the exercise of that jurisdiction we have the judicial power to determine questions of grave abuse of discretion by any branch or instrumentality of the government.

Put in another way, what is granted in Art. VIII, 1, 2 is "judicial power," which is "the power of a court to hear and decide cases pending between parties who have the right to sue and be sued in the courts of law and equity" (Lamb v. Phipps, 22 Phil. 456, 559 (1912)), as distinguished from legislative and executive power. This power cannot be directly appropriated until it is apportioned among several courts either by the Constitution, as in the case of Art. VIII, 5, or by statute, as in the case of the Judiciary Act of 1948 (R.A. No. 296) and the Judiciary Reorganization Act of 1980 (B.P. Blg. 129). The power thus apportioned constitutes the court's "jurisdiction," defined as "the power conferred by law upon a court or judge to take cognizance of a case, to the exclusion of all others." (United States v. Arceo, 6 Phil. 29 (1906)) Without an actual case coming within its jurisdiction, this Court cannot inquire into any allegation of grave abuse of discretion by the other departments of the government. VIII. Alleged violation of policy towards cooperatives . On the other hand, the Cooperative Union of the Philippines (CUP), after briefly surveying the course of legislation, argues that it was to adopt a definite policy of granting tax exemption to cooperatives that the present Constitution embodies provisions on cooperatives. To subject cooperatives to the VAT would therefore be to infringe a constitutional policy. Petitioner claims that in 1973, P.D. No. 175 was promulgated exempting cooperatives from the payment of income taxes and sales taxes but in 1984, because of the crisis which menaced the national economy, this exemption was withdrawn by P.D. No. 1955; that in 1986, P.D. No. 2008 again granted cooperatives exemption from income and sales taxes until December 31, 1991, but, in the same year, E.O. No. 93 revoked the exemption; and that finally in 1987 the framers of the Constitution "repudiated the previous actions of the government adverse to the interests of the cooperatives, that is, the repeated revocation of the tax exemption to cooperatives and instead upheld the policy of strengthening the cooperatives by way of the grant of tax exemptions," by providing the following in Art. XII: 1. The goals of the national economy are a more equitable distribution of opportunities, income, and wealth; a sustained increase in the amount of goods and services produced by the nation for the benefit of the people; and an expanding productivity as the key to raising the quality of life for all, especially the underprivileged. The State shall promote industrialization and full employment based on sound agricultural development and agrarian reform, through industries that make full and efficient use of human and natural resources, and which are competitive in both domestic and foreign markets. However, the State shall protect Filipino enterprises against unfair foreign competition and trade practices. In the pursuit of these goals, all sectors of the economy and all regions of the country shall be given optimum opportunity to develop. Private enterprises, including corporations, cooperatives, and similar collective organizations, shall be encouraged to broaden the base of their ownership. 15. The Congress shall create an agency to promote the viability and growth of cooperatives as instruments for social justice and economic development. Petitioner's contention has no merit. In the first place, it is not true that P.D. No. 1955 singled out cooperatives by withdrawing their exemption from income and sales taxes under P.D. No. 175, 5. What P.D. No. 1955, 1 did was to withdraw the exemptions and preferential treatments theretofore granted to private business enterprises in general, in view of the economic crisis which then beset the nation. It is true that after P.D. No. 2008, 2 had restored the tax exemptions of cooperatives in 1986, the exemption was again repealed by E.O. No. 93, 1, but then again cooperatives were not the only ones whose

exemptions were withdrawn. The withdrawal of tax incentives applied to all, including government and private entities. In the second place, the Constitution does not really require that cooperatives be granted tax exemptions in order to promote their growth and viability. Hence, there is no basis for petitioner's assertion that the government's policy toward cooperatives had been one of vacillation, as far as the grant of tax privileges was concerned, and that it was to put an end to this indecision that the constitutional provisions cited were adopted. Perhaps as a matter of policy cooperatives should be granted tax exemptions, but that is left to the discretion of Congress. If Congress does not grant exemption and there is no discrimination to cooperatives, no violation of any constitutional policy can be charged. Indeed, petitioner's theory amounts to saying that under the Constitution cooperatives are exempt from taxation. Such theory is contrary to the Constitution under which only the following are exempt from taxation: charitable institutions, churches and parsonages, by reason of Art. VI, 28 (3), and non-stock, non-profit educational institutions by reason of Art. XIV, 4 (3). CUP's further ground for seeking the invalidation of R.A. No. 7716 is that it denies cooperatives the equal protection of the law because electric cooperatives are exempted from the VAT. The classification between electric and other cooperatives (farmers cooperatives, producers cooperatives, marketing cooperatives, etc.) apparently rests on a congressional determination that there is greater need to provide cheaper electric power to as many people as possible, especially those living in the rural areas, than there is to provide them with other necessities in life. We cannot say that such classification is unreasonable. We have carefully read the various arguments raised against the constitutional validity of R.A. No. 7716. We have in fact taken the extraordinary step of enjoining its enforcement pending resolution of these cases. We have now come to the conclusion that the law suffers from none of the infirmities attributed to it by petitioners and that its enactment by the other branches of the government does not constitute a grave abuse of discretion. Any question as to its necessity, desirability or expediency must be addressed to Congress as the body which is electorally responsible, remembering that, as Justice Holmes has said, "legislators are the ultimate guardians of the liberties and welfare of the people in quite as great a degree as are the courts." (Missouri, Kansas & Texas Ry. Co. v. May, 194 U.S. 267, 270, 48 L. Ed. 971, 973 (1904)). It is not right, as petitioner in G.R. No. 115543 does in arguing that we should enforce the public accountability of legislators, that those who took part in passing the law in question by voting for it in Congress should later thrust to the courts the burden of reviewing measures in the flush of enactment. This Court does not sit as a third branch of the legislature, much less exercise a veto power over legislation. WHEREFORE, the motions for reconsideration are denied with finality and the temporary restraining order previously issued is hereby lifted. SO ORDERED. Narvasa, C.J., Feliciano, Melo, Kapunan, Francisco and Hermosisima, Jr., JJ., concur. Padilla and Vitug, JJ., maintained their separate opinion. Regalado, Davide, Jr., Romero, Bellosillo and Puno, JJ, maintained their dissenting opinion. Panganiban, J., took no part.

G.R. No. L-29658

February 27, 1969

ENRIQUE V. vs. ABELARDO SUBIDO, as Service, respondent. RESOLUTION CASTRO, J.:

MORALES, petitioner, Commissioner of Civil

The petitioner's motions for reconsideration are directed specifically at the following portion of our decision: In the Senate, the Committee on Government Reorganization, to which House Bill 6951 was referred, reported a substitute measure. It is to this substitute bill that section 10 of the Act owes its present form and substance The provision of the substitute bill reads: No person may be appointed chief of a city police agency unless he holds a bachelor's degree and has served either in the Armed Forces of the Philippines or the National Bureau of Investigation or police department of any city and has held the rank of captain or its equivalent therein for at least three years or any high school graduate who has served the police department of a city for at least 8 years with the rank of captain and/or higher. xxx xxx xxx

SEC. 10. Minimum qualifications for appointment as Chief of a Police Agency. No person may be appointed chief of a city police agency unless he holds a bachelor's degree from a recognized institution of learning and has served either the Armed Forces of the Philippines or has served as chief of police with exemplary record or the National Bureau of Investigation or the police department of any city and has held the rank of captain or its equivalent therein for at least three years or any high school graduate who has served the police department of a city or has served as officer in the Armed Forces for at least eight years from the rank of captain and/or higher. It is unmistakable up to this point that the phrase, "who has served the police department of a city or was still part of the provision, but according to the petitioner the House bill division deleted the entire provision and substituted what now is section 10 of the Police Act of 1966, which section reads: Minimum qualification for appointment as Chief of Police Agency. No person may be appointed chief of a city police agency unless he holds a bachelor's degree from a recognized institution of learning and has served either in the Armed Forces of the Philippines or the National Bureau of Investigation, or has served as chief of police with exemplary record, or has served in the police department of any city with the rank of captain or its equivalent therein for at least three years; or any high school graduate who has served as officer in the Armed Forces for at least eight years with the rank of captain and/or higher. The petitioner also submitted a certified photostatic copy of a memorandum which according to him was signed by an employee in the Senate bill division, and can be found attached to the page proofs of the bill, explaining the change in section 10, thus: . Section 10 was recast for clarity (with the consent of Sen. Ganzon & Congressman Montano). It would thus appear that the omission whether deliberate or unintended of the phrase, "who has served the police department of a city or was made not at any stage of the legislative proceedings but only in the course of the engrossment of the bill, more specifically in the proofreading thereof; that the change was made not by Congress but only by an employee thereof; and that what purportedly was a rewriting to suit some stylistic preferences was in truth an alteration of meaning. It is for this reason that the petitioner would have us look searchingly into the matter. The petitioner wholly misconceives the function of the judiciary under our system of government. As we observed explicitly in our decision, the enrolled Act in the office of the legislative secretary of the President of the Philippines shows that section 10 is exactly as it is in the statute as officially published in slip form by the Bureau of Printing. We cannot go behind the enrolled Act to discover what really happened. The respect due to the other branches of the Government demands that we act upon the faith and credit of what the officers of the said branches attest to as the official acts of their respective departments. Otherwise we would be cast in the unenviable and unwanted role of a sleuth trying to determine what actually did happen in the labyrinth of law-making with consequent impairment of the integrity of the legislative process. The investigation which the petitioner would like this Court to make can be better done in Congress. After all, House cleaning the immediate and imperative need for which seems to be suggested by the petitioner can best be effected by the occupants thereof. Expressed elsewise, this is a matter worthy of the attention not of an Oliver Wendell Holmes but of a Sherlock Holmes. What the first Mr. Justice Harlan said in Hardwood v. Wentworth 1 might aptly be said in answer to the petitioner: "If there be danger, under the principles announced in Field v. Clark, 143 U.S. 649, 671, that the governor and the presiding officers of the two houses of a territorial legislature may impose upon the people an act that was

At the behest of Senator Francisco Rodrigo, the phrase "has served as officer in the Armed Forces" was inserted so as to make the provision read: No person may be appointed chief of a city police agency unless he holds a bachelor's degree and has served either in the Armed Forces of the Philippines or the National Bureau of Investigation or police department of any city and has held the rank of captain or its equivalent therein for at least three years or any high school graduate who has served the police department of a city or who has served as officer of the Armed Forces for at least 8 years with the rank of captain and/or higher. It is to be noted that the Rodrigo amendment was in the nature of an addition to the phrase "who has served the police department of a city for at least 8 years with the rank of captain and/or higher," under which the petitioner herein, who is at least a high school graduate (both parties agree that the petitioner finished the second year of the law course) could possibly qualify. However, somewhere in the legislative process the phrase ["who has served the police department of a city or"] was dropped and only the Rodrigo amendment was retained. The present insistence of the petitioner is that the version of the provision, as amended at the behest of Sen. Rodrigo, was the version approved by the Senate on third reading, and that when the bill emerged from the conference committee the only change made in the provision was the insertion of the phrase "or has served as chief of police with exemplary record". In support of this assertion, the petitioner submitted certified photostatic copies of the different drafts of House Bill 6951 showing the various changes made. In what purport to be the page proofs of the bill as finally approved by both Houses of Congress (annex G), the following provision appears:

never passed in the form in which it is preserved in the published statutes, how much greater is the danger of permitting the validity of a legislative enactment to be questioned by evidence furnished by the general indorsements made by clerks upon bills previous to their final passage and enrollment, indorsements usually so expressed as not to be intelligible to any one except those who made them, and the scope and effect of which cannot in many cases be understood unless supplemented by the recollection of clerks as to what occurred in the hurry and confusion often attendant upon legislative proceedings." 2 Indeed the course suggested to us by the petitioner would be productive of nothing but mischief. Both Marshall Field & Co. v. Clark and Harwood v. Wentworth involved claims similar to that made by the petitioner in this case. In both the claims were rejected. Thus, in Marshall Field & Co. it was contended that the Tariff Act of October 1, 1890 was a nullity because "it is shown by the congressional records of proceedings, reports of committees of conference, and other papers printed by authority of Congress, and having reference to House Bill 9416, that a section of the bill as it finally passed, was not in the bill authenticated by the signatures of the presiding officers of the respective houses of Congress, and approved by the President." 3 In rejecting the contention, the United States Supreme Court held that the signing by the Speaker of the House of Representatives and by the President of the Senate of an enrolled bill is an official attestation by the two houses that such bill is the one that has passed Congress. And when the bill thus attested is signed by the President and deposited in the archives, its authentication as a bill that has passed Congress should be deemed complete and peachable. 4 In Harwood the claim was that an act of the legislature of Arizona "contained, at the time of it final passage, provisions that were omitted from it without authority of the council or the house, before it was presented, to the governor for his approval." 5 The Court reiterated its ruling in Marshall Field & Co. It is contended, however, that in this jurisdiction the journals of the legislature have been declared conclusive upon the courts, the petitioner citing United States v. Pons. 6 The case cited is inapposite of it does not involve a discrepancy between an enrolled bill and the journal. Rather the issue tendered was whether evidence could be received to show that, contrary to the entries of the journals, the legislature did not adjourn at midnight of February 28, 1914 but after, and that "the hands of the clock were stayed in order to enable the legislature to effect an adjournment apparently within the time fixed by the Governor's proclamation for the expiration of the special session." In answering in the negative this Court held that if the clock was in fact stopped, "the resultant evil might be slight as compared with that of altering the probative force and character of legislative records, and making the proof of legislative action depend upon uncertain oral evidence, liable to loss by death or absence, and so imperfect on account of the treachery of memory." 7 This Court "passed over the question" whether the enrolled bill was conclusive as to its contents and mode of passage. It was not until 1947 that the question was presented Mabanao v. Lopez-Vito, 8 and we there held that an enrolled bill "imports absolute verity and is binding on the courts". This Court held itself bound by an authenticated resolution despite the fact that the vote of three-fourths of the members of the Congress (as required by the Constitution to approve proposals for constitutional amendments) was not actually obtained on account of the suspension of some members of the House of Representative and the Senate.lawphi1.nt Thus in Mabanag the enrolled bill theory was adopted. Whatever doubt there might have been as to the status and force of the theory in the Philippines, in view of the dissent of three Justices in Mabanag, 9 was finally laid to rest by the unanimous decision in Casco Philippine Chemical Co. v. Gimenez. 10 Speaking for the Court, the then Justice (now Chief Justice) Concepcion said: Furthermore it is well settled that the enrolled bill which uses the term "urea formaldehyde" instead of "urea

and formaldehyde" is conclusive upon the courts as regards the tenor of the measure passed by Congress and approved by the President (Primicias vs. Paredes, 61 Phil. 118, 120; Mabanag vs. Lopez Vito, 78 Phil. 1; Macias vs. Comm. on Elections, L-18684, September 14, 1961). If there has been any mistake in the printing of the bill before it was certified by the officers of Congress and approved by the Executive on which we cannot speculate, without jeopardizing the principle of separation of powers and undermining one of the cornerstones of our democratic system the remedy is by amendment or curative legislation, not by judicial decree. By what we have essayed above we are not of course to be understood as holding that in all cases the journals must yield to the enrolled bill. To be sure there are certain matters which the Constitution 11 expressly requires must be entered on the journal of each house. To what extent the validity of a legislative act may be affected by a failure to have such matters entered on the journal, is a question which we do not now decide. 12 All we hold is that with respect to matters not expressly required to be entered on the journal, the enrolled bill prevails in the event of any discrepancy. ACCORDINGLY, the motions for reconsideration are denied. Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Fernando and Capistrano, JJ., concur.

G.R. No. L-16704

March 17, 1962

VICTORIAS MILLING COMPANY, INC., petitioner-appellant, vs. SOCIAL SECURITY COMMISSION, respondent-appellee. Ross, Selph and Carrascoso for petitioner-appellant. Office of the Solicitor General and Ernesto T. Duran for respondentappellee. BARRERA, J.: On October 15, 1958, the Social Security Commission issued its Circular No. 22 of the following tenor: . Effective November 1, 1958, all Employers in computing the premiums due the System, will take into consideration and include in the Employee's remuneration all bonuses and overtime pay, as well as the cash value of other media of remuneration. All these will comprise the Employee's remuneration or earnings, upon which the 3-1/2% and 21/2% contributions will be based, up to a maximum of P500 for any one month. Upon receipt of a copy thereof, petitioner Victorias Milling Company, Inc., through counsel, wrote the Social Security Commission in effect protesting against the circular as contradictory to a previous Circular No. 7, dated October 7, 1957 expressly excluding overtime pay and bonus in the computation of the employers' and employees' respective monthly premium contributions, and submitting, "In order to assist your System in arriving at a properinterpretation of the term 'compensation' for the purposes of" such computation, their observations on Republic Act 1161 and its amendment and on the general interpretation of the words "compensation", "remuneration" and "wages". Counsel further questioned the validity of the circular for lack of authority on the part of the Social Security Commission to promulgate it without the approval of the President and for lack of publication in the Official Gazette.

Overruling these objections, the Social Security Commission ruled that Circular No. 22 is not a rule or regulation that needed the approval of the President and publication in the Official Gazette to be effective, but a mere administrative interpretation of the statute, a mere statement of general policy or opinion as to how the law should be construed. Not satisfied with this ruling, petitioner comes to this Court on appeal. The single issue involved in this appeal is whether or not Circular No. 22 is a rule or regulation, as contemplated in Section 4(a) of Republic Act 1161 empowering the Social Security Commission "to adopt, amend and repeal subject to the approval of the President such rules and regulations as may be necessary to carry out the provisions and purposes of this Act." There can be no doubt that there is a distinction between an administrative rule or regulation and an administrative interpretation of a law whose enforcement is entrusted to an administrative body. When an administrative agency promulgates rules and regulations, it "makes" a new law with the force and effect of a valid law, while when it renders an opinion or gives a statement of policy, it merely interprets a preexisting law (Parker, Administrative Law, p. 197; Davis, Administrative Law, p. 194). Rules and regulations when promulgated in pursuance of the procedure or authority conferred upon the administrative agency by law, partake of the nature of a statute, and compliance therewith may be enforced by a penal sanction provided in the law. This is so because statutes are usually couched in general terms, after expressing the policy, purposes, objectives, remedies and sanctions intended by the legislature. The details and the manner of carrying out the law are often times left to the administrative agency entrusted with its enforcement. In this sense, it has been said that rules and regulations are the product of a delegated power to create new or additional legal provisions that have the effect of law. (Davis, op. cit., p. 194.) . A rule is binding on the courts so long as the procedure fixed for its promulgation is followed and its scope is within the statutory authority granted by the legislature, even if the courts are not in agreement with the policy stated therein or its innate wisdom (Davis, op. cit., 195-197). On the other hand, administrative interpretation of the law is at best merely advisory, for it is the courts that finally determine what the law means. Circular No. 22 in question was issued by the Social Security Commission, in view of the amendment of the provisions of the Social Security Law defining the term "compensation" contained in Section 8 (f) of Republic Act No. 1161 which, before its amendment, reads as follows: . (f) Compensation All remuneration for employment include the cash value of any remuneration paid in any medium other than cash except (1) that part of the remuneration in excess of P500 received during the month; (2) bonuses, allowances or overtime pay; and (3) dismissal and all other payments which the employer may make, although not legally required to do so. Republic Act No. 1792 changed the definition of "compensation" to: (f) Compensation All remuneration for employment include the cash value of any remuneration paid in any medium other than cash except that part of the remuneration in excess of P500.00 received during the month. It will thus be seen that whereas prior to the amendment, bonuses, allowances, and overtime pay given in addition to the regular or base pay were expressly excluded, or exempted from the definition of the term "compensation", such exemption or exclusion was deleted by the amendatory law. It thus became necessary for the Social Security Commission to interpret the effect of such deletion or elimination. Circular No. 22 was, therefore, issued to apprise those concerned of the interpretation or understanding of the Commission, of the law as amended, which it was its duty to enforce. It did not add any duty or

detail that was not already in the law as amended. It merely stated and circularized the opinion of the Commission as to how the law should be construed. 1wph1.t The case of People v. Jolliffe (G.R. No. L-9553, promulgated on May 30, 1959) cited by appellant, does not support its contention that the circular in question is a rule or regulation. What was there said was merely that a regulation may be incorporated in the form of a circular. Such statement simply meant that the substance and not the form of a regulation is decisive in determining its nature. It does not lay down a general proposition of law that any circular, regardless of its substance and even if it is only interpretative, constitutes a rule or regulation which must be published in the Official Gazette before it could take effect. The case of People v. Que Po Lay (50 O.G. 2850) also cited by appellant is not applicable to the present case, because the penalty that may be incurred by employers and employees if they refuse to pay the corresponding premiums on bonus, overtime pay, etc. which the employer pays to his employees, is not by reason of non-compliance with Circular No. 22, but for violation of the specific legal provisions contained in Section 27(c) and (f) of Republic Act No. 1161. We find, therefore, that Circular No. 22 purports merely to advise employers-members of the System of what, in the light of the amendment of the law, they should include in determining the monthly compensation of their employees upon which the social security contributions should be based, and that such circular did not require presidential approval and publication in the Official Gazette for its effectivity. It hardly need be said that the Commission's interpretation of the amendment embodied in its Circular No. 22, is correct. The express elimination among the exemptions excluded in the old law, of all bonuses, allowances and overtime pay in the determination of the "compensation" paid to employees makes it imperative that such bonuses and overtime pay must now be included in the employee's remuneration in pursuance of the amendatory law. It is true that in previous cases, this Court has held that bonus is not demandable because it is not part of the wage, salary, or compensation of the employee. But the question in the instant case is not whether bonus is demandable or not as part of compensation, but whether, after the employer does, in fact, give or pay bonus to his employees, such bonuses shall be considered compensation under the Social Security Act after they have been received by the employees. While it is true that terms or words are to be interpreted in accordance with their wellaccepted meaning in law, nevertheless, when such term or word is specifically defined in a particular law, such interpretation must be adopted in enforcing that particular law, for it can not be gainsaid that a particular phrase or term may have one meaning for one purpose and another meaning for some other purpose. Such is the case that is now before us. Republic Act 1161 specifically defined what "compensation" should mean "For the purposes of this Act". Republic Act 1792 amended such definition by deleting same exemptions authorized in the original Act. By virtue of this express substantial change in the phraseology of the law, whatever prior executive or judicial construction may have been given to the phrase in question should give way to the clear mandate of the new law. IN VIEW OF THE FOREGOING, the Resolution appealed from is hereby affirmed, with costs against appellant. So ordered. Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Paredes, Dizon and De Leon, JJ., concur.

G.R. No. L-29788 August 30, 1972

RAFAEL S. SALAS, in his capacity as Executive Secretary; CONRADO F. ESTRELLA, in his capacity as Governor of the Land Authority; and LORENZO GELLA, in his capacity as Register of Deeds of Manila,petitioners-appellants, vs. HON. HILARION U. JARENCIO, as Presiding Judge of Branch XXIII, Court of First Instance of Manila; ANTONIO J. VILLEGAS, in his capacity as Mayor of the City of Manila; and the CITY OF MANILA,respondents-appellees. Office of the Solicitor General Felix V. Makasiar, Assistant SolicitorGeneral Antonio A. Torres, Solicitor Raul I. Goco and Magno B. Pablo & Cipriano A. Tan, Legal Staff, Land Authority for petitionersappellants. Gregorio A. Ejercito and Felix C. Chavez for respondents-appellees.

The said resolution of the Municipil Board of the City of Manila was officially transmitted to the President of the Philippines by then ViceMayor Antonio J. Villegas on September 21, 1960, with the information that the same resolution was, on the same date, transmitted to the Senate and House of Representatives of the Congress of the Philippines. 3 During the First Session of the Fifth Congress of the Philippines, House Bill No. 191 was filed in the House of Representatives by then Congressman Bartolome Cabangbang seeking to declare the property in question as patrimonial property of the City of Manila, and for other purposes. The explanatory note of the Bill gave the grounds for its enactment, to wit: In the particular case of the property subject of this bill, the City of Manila does not seem to have use thereof as a public communal property. As a matter of fact, a resolution was adopted by the Municipal Board of Manila at its regular session held on September 21, 1960, to request the feasibility of declaring the city property bounded by Florida, San Andres and Nebraska Streets as a patrimonial property of the City of Manila for the purpose of reselling these lots to the actual occupants thereof. Therefore, it will be to the best interest of society that the said property be used in one way or another. Since this property has been occupied for a long time by the present occupants thereof and since said occupants have expressed their willingness to buy the said property, it is but proper that the same be sold to them. 4 Subsequently, a revised version of the Bill was introduced in the House of Representatives by Congressmen Manuel Cases, Antonio Raquiza and Nicanor Yiguez as House Bill No. 1453, with the following explanatory note: The accompanying bill seeks to convert one (1) parcel of land in the district of Malate, which is reserved as communal property into a disposable or alienable property of the State and to provide its subdivision and sale to bona fide occupants or tenants. This parcel of land in question was originally an aggregate part of a piece of land with an area of 9,689.8 square meters, more or less. ... On September 21, 1960, the Municipal Board of Manila in its regular session unanimously adopted a resolution requesting the President of the Philippines and Congress of the Philippines the feasibility of declaring this property into disposable or alienable property of the State. There is therefore a precedent that this parcel of land could be subdivided and sold to bona fide occupants. This parcel of land will not serve any useful public project because it is bounded on all sides by private properties which were formerly parts of this lot in question. Approval of this bill will implement the policy of the Administration of land for the landless and the Fifth Declaration of Principles of the Constitution, which states that the promotion of Social Justice to insure the well-being and economic security of all people should be the concern of the State. We are ready and willing to enact legislation promoting the social and economic well-being of the people whenever an opportunity for enacting such kind of legislation arises. In view of the foregoing consideration and to insure fairness and justice to the present bona fide occupants thereof, approval of this Bill is strongly urged. 5

ESGUERRA, J.:p This is a petition for review of the decision of the Court of First Instance of Manila, Branch XXIII, in Civil Case No. 67946, dated September 23, 1968, the dispositive portion of which is as follows: WHEREFORE, the Court renders judgment declaring Republic Act No. 4118 unconstitutional and invalid in that it deprived the City of Manila of its property without due process and payment of just compensation. Respondent Executive Secretary and Governor of the Land Authority are hereby restrained and enjoined from implementing the provisions of said law. Respondent Register of Deeds of the City of Manila is ordered to cancel Transfer Certificate of Title No. 80876 which he had issued in the name of the Land Tenure Administration and reinstate Transfer Certificate of Title No. 22547 in the name of the City of Manila which he cancelled, if that is feasible, or issue a new certificate of title for the same parcel of land in the name of the City of Manila. 1 The facts necessary for a clear understanding of this case are as follows: On February 24, 1919, the 4th Branch of the Court of First Instance of Manila, acting as a land registration court, rendered judgment in Case No. 18, G.L.R.O. Record No. 111, declaring the City of Manila the owner in fee simple of a parcel of land known as Lot No. 1, Block 557 of the Cadastral Survey of the City of Mani1a, containing an area of 9,689.8 square meters, more or less. Pursuant to said judgment the Register of Deeds of Manila on August 21, 1920, issued in favor of the City of Manila, Original Certificate of Title No. 4329 covering the aforementioned parcel of land. On various dates in 1924, the City of Manila sold portions of the aforementioned parcel of land in favor of Pura Villanueva. As a consequence of the transactions Original Certificate of Title No. 4329 was cancelled and transfer certificates of title were issued in favor of Pura Villanueva for the portions purchased by her. When the last sale to Pura Villanueva was effected on August 22, 1924, Transfer Certificate of Title No. 21974 in the name of the City of Manila was cancelled and in lieu thereof Transfer Certificate of Title (TCT) No. 22547 covering the residue thereof known as Lot 1-B-2-B of Block 557, with an area of 7,490.10 square meters, was issued in the name of the City of Manila. On September 21, 1960, the Municipal Board of Manila, presided by then Vice-Mayor Antono J. Villegas, adopted a resolution requesting His Excellency, the President of the Philippines to consider the feasibility of declaring the City property bounded by Florida, San Andres, and Nebraska Streets, under Transfer Certificate of Title Nos. 25545 and 22547, containing a total area of 7,450 square meters as a patrimonial property of the City of Manila for the purpose of reselling these lots to the actual occupants thereof. 2

The Bill having been passed by the House of Representatives, the same was thereafter sent to the Senate where it was thoroughly discussed, as evidenced by the Congressional Records for May 20, 1964, pertinent portion of which is as follows: SENATOR FERNANDEZ: Mr. President, it will be re called that when the late Mayor Lacson was still alive, we approved a similar bill. But afterwards, the late Mayor Lacson came here and protested against the approval, and the approval was reconsidered. May I know whether the defect in the bill which we approved, has already been eliminated in this present bill? SENATOR TOLENTINO: I understand Mr. President, that that has already been eliminated and that is why the City of Manila has no more objection to this bill. SENATOR FERNANDEZ: Mr. President, in view of that manifestation and considering that Mayor Villegas and Congressman Albert of the Fourth District of Manila are in favor of the bill. I would not want to pretend to know more what is good for the City of Manila. SENATOR TOLENTINO: Mr. President, there being no objection, I move that we approve this bill on second reading. PRESIDENT PRO-TEMPORE: The biII is approved on second reading after several Senetors said aye and nobody said nay. The bill was passed by the Senate, approved by the President on June 20, 1964, and became Republic Act No. 4118. It reads as follows: Lot I-B-2-B of Block 557 of the cadastral survey of the City of Manila, situated in the District of Malate, City of Manila, which is reserved as communal property, is hereby converted into disposal or alienable land of the State, to be placed under the disposal of the Land Tenure Administration. The Land Tenure Administration shall subdivide the property into small lots, none of which shall exceed one hundred and twenty square meters in area and sell the same on installment basis to the tenants or bona fide occupants thereof and to individuals, in the order mentioned: Provided, That no down payment shall be required of tenants or bona fide occupants who cannot afford to pay such down payment: Provided, further, That no person can purchase more than one lot: Provided, furthermore, That if the tenant or bona fide occupant of any given lot is not able to purchase the same, he shall be given a lease from month to month until such time that he is able to purchase the lot: Provided, still further, That in the event of lease the rentals which may be charged shall not exceed eight per cent per annum of the assessed value of the property leased: And provided, finally, That in fixing the price of each lot, which shall not exceed twenty pesos per square meter, the cost of subdivision and survey shall not be included. Sec. 2. Upon approval of this Act no ejectment proceedings against any tenant or bona fide occupant of the above lots shall be instituted and any ejectment proceedings pending in court against any such tenant or bona fide occupant shall be dismissed upon motion of the defendant: Provided, That any demolition order directed

against any tenant or bona fide occupant shall be lifted. Sec. 3. Upon approval of this Act, if the tenant or bona fide occupant is in arrears in the payment of any rentals, the amount legally due shall be liquidated and shall be payable in twenty-four equal monthly installments from the date of liquidation. Sec. 4. No property acquired by virtue of this Act shall be transferred, sold, mortgaged, or otherwise disposed of within a period of five years from the date full ownership thereof has been vested in the purchaser without the consent of the Land Tenure Administration. Sec. 5. In the event of the death of the purchaser prior to the complete payment of the price of the lot purchased by him, his widow and children shall succeed in all his rights and obligations with respect to his lot. Sec. 6. The Chairman of the Land Tenure Administration shall implement and issue such rules and regulations as may be necessary to carry out the provisions of this Act. Sec. 7. The sum of one hundred fifty thousand pesos is appropriated out of any funds in the National Treasury not otherwise appropriated, to carry out the purposes of this Act. Sec. 8. All laws or parts of laws inconsistent with this Act are repealed or modified accordingly. Sec. 9. This Act shall take effect upon its approval. Approved, June 20, 1964. To implement the provisions of Republic Act No. 4118, and pursuant to the request of the occupants of the property involved, then Deputy Governor Jose V. Yap of the Land Authority (which succeeded the Land Tenure Administration) addressed a letter, dated February 18, 1965, to Mayor Antonio Villegas, furnishing him with a copy of the proposed subdivision plan of said lot as prepared for the Republic of the Philippines for resale of the subdivision lots by the Land Authority to bona fide applicants. 6 On March 2, 1965, the City Mayor of Manila, through his Executive and Technical Adviser, acknowledged receipt of the proposed subdivision plan of the property in question and informed the Land Authority that his office would interpose no objection to the implementation of said law, provided that its provisions be strictly complied with. 7 With the above-mentioned written conformity of the City of Manila for the implementation of Republic Act No. 4118, the Land Authority, thru then Deputy Governor Jose V. Yap, requested the City Treasurer of Manila, thru the City Mayor, for the surrender and delivery to the former of the owner's duplicate of Transfer Certificate of Title No. 22547 in order to obtain title thereto in the name of the Land Authority. The request was duly granted with the knowledge and consent of the Office of the City Mayor. 8 With the presentation of Transfer Certificate of Title No. 22547, which had been yielded as above stated by the, City authorities to the Land Authority, Transfer Certificate of Title (T.C.T. No. 22547) was cancelled by the Register of Deeds of Manila and in lieu thereof Transfer Certificate of Title No. 80876 was issued in the name of the Land Tenure Administration (now Land Authority) pursuant to the provisions of Republic Act No. 4118. 9

But due to reasons which do not appear in the record, the City of Manila made a complete turn-about, for on December 20, 1966, Antonio J. Villegas, in his capacity as the City Mayor of Manila and the City of Manila as a duly organized public corporation, brought an action for injunction and/or prohibition with preliminary injunction to restrain, prohibit and enjoin the herein appellants, particularly the Governor of the Land Authority and the Register of Deeds of Manila, from further implementing Republic Act No. 4118, and praying for the declaration of Republic Act No. 4118 as unconstitutional. With the foregoing antecedent facts, which are all contained in the partial stipulation of facts submitted to the trial court and approved by respondent Judge, the parties waived the presentation of further evidence and submitted the case for decision. On September 23, 1968, judgment was rendered by the trial court declaring Republic Act No. 4118 unconstitutional and invalid on the ground that it deprived the City of Manila of its property without due process of law and payment of just compensation. The respondents were ordered to undo all that had been done to carry out the provisions of said Act and were restrained from further implementing the same. Two issues are presented for determination, on the resolution of which the decision in this case hinges, to wit: I. Is the property involved private or patrimonial property of the City of Manila? II. Is Republic Act No. 4118 valid and not repugnant to the Constitution? I. As regards the first issue, appellants maintain that the land involved is a communal land or "legua comunal" which is a portion of the public domain owned by the State; that it came into existence as such when the City of Manila, or any pueblo or town in the Philippines for that matter, was founded under the laws of Spain, the former sovereign; that upon the establishment of a pueblo, the administrative authority was required to allot and set aside portions of the public domain for a public plaza, a church site, a site for public buildings, lands to serve as common pastures and for streets and roads; that in assigning these lands some lots were earmarked for strictly public purposes, and ownership of these lots (for public purposes) immediately passed to the new municipality; that in the case of common lands or "legua comunal", there was no such immediate acquisition of ownership by the pueblo, and the land though administered thereby, did not automatically become its property in the absence of an express grant from the Central Government, and that the reason for this arrangement is that this class of land was not absolutely needed for the discharge of the municipality's governmental functions. It is argued that the parcel of land involved herein has not been used by the City of Manila for any public purpose and had not been officially earmarked as a site for the erection of some public buildings; that this circumstance confirms the fact that it was originally "communal" land alloted to the City of Manila by the Central Government not because it was needed in connection with its organization as a municipality but simply for the common use of its inhabitants; that the present City of Manila as successor of the Ayuntamiento de Manila under the former Spanish sovereign merely enjoys the usufruct over said land, and its exercise of acts of ownership by selling parts thereof did not necessarily convert the land into a patrimonial property of the City of Manila nor divest the State of its paramount title. Appellants further argue that a municipal corporation, like a city is a governmental agent of the State with authority to govern a limited portion of its territory or to administer purely local affairs in a given political subdivision, and the extent of its authority is strictly delimited by the grant of power conferred by the State; that Congress has the exclusive power to create, change or destroy municipal corporations; that even if We admit that legislative control over municipal corporations is not absolute and even if it is true that the City of Manila has a registered title over the property in question, the mere transfer of such land by an act of the legislature from one class of public land to

another, without compensation, does not invade the vested rights of the City. Appellants finally argue that Republic Act No. 4118 has treated the land involved as one reserved for communal use, and this classification is conclusive upon the courts; that if the City of Manila feels that this is wrong and its interests have been thereby prejudiced, the matter should be brought to the attention of Congress for correction; and that since Congress, in the exercise of its wide discretionary powers has seen fit to classify the land in question as communal, the Courts certainly owe it to a coordinate branch of the Government to respect such determination and should not interfere with the enforcement of the law. Upon the other hand, appellees argue by simply quoting portions of the appealed decision of the trial court, which read thus: The respondents (petitioners-appellants herein) contend, among other defenses, that the property in question is communal property. This contention is, however, disproved by Original Certificate of Title No. 4329 issued on August 21, 1920 in favor of the City of Manila after the land in question was registered in the City's favor. The Torrens Title expressly states that the City of Manila was the owner in 'fee simple' of the said land. Under Sec. 38 of the Land Registration Act, as amended, the decree of confirmation and registration in favor of the City of Manila ... shall be conclusive upon and against all persons including the Insular Government and all the branches there ... There is nothing in the said certificate of title indicating that the land was 'communal' land as contended by the respondents. The erroneous assumption by the Municipal Board of Manila that the land in question was communal land did not make it so. The Municipal Board had no authority to do that. The respondents, however, contend that Congress had the power and authority to declare that the land in question was 'communal' land and the courts have no power or authority to make a contrary finding. This contention is not entirely correct or accurate. Congress has the power to classify 'land of the public domain', transfer them from one classification to another and declare them disposable or not. Such power does not, however, extend to properties which are owned by cities, provinces and municipalities in their 'patrimonial' capacity. Art. 324 of the Civil Code provides that properties of provinces, cities and municipalities are divided into properties for public use and patrimonial property. Art. 424 of the same code provides that properties for public use consist of provincial roads, city streets, municipal streets, the squares, fountains, public waters, promenades and public works for public service paid for by said province, cities or municipalities. All other property possessed by any of them is patrimonial. Tested by this criterion the Court finds and holds that the land in question is patrimonial property of the City of Manila. Respondents contend that Congress has declared the land in question to be 'communal' and, therefore, such designation is conclusive upon the courts. The Courts holds otherwise. When a statute is assailed as unconstitutional the Courts have the power and authority to inquire into the question and pass upon it. This has long ago been settled in Marbury vs. Madison, 2 L. ed. 60, when the United States Supreme Court speaking thru Chief Justice Marshall held:

... If an act of the legislature, repugnant to the constitution, is void, does it, notwithstanding its validity, bind the courts, and oblige them to give effect? It is emphatically the province and duty of the judicial department to say what the law is ... So if a law be in opposition to the constitution; if both the law and the constitution apply to a particular case, so that the court must either decide that case conformable to the constitution, disregarding the law, the court must determine which of these conflicting rules governs the case. This is of the very essence of unconstitutional judicial duty. Appellees finally concluded that when the courts declare a law unconstitutional it does not mean that the judicial power is superior to the legislative power. It simply means that the power of the people is superior to both and that when the will of the legislature, declared in statutes, stands in opposition to that of the people, declared in the Constitution, the judges ought to be governed by the Constitution rather than by the statutes. There is one outstanding factor that should be borne in mind in resolving the character of the land involved, and it is that the City of Manila, although declared by the Cadastral Court as owner in fee simple, has not shown by any shred of evidence in what manner it acquired said land as its private or patrimonial property. It is true that the City of Manila as well as its predecessor, the Ayuntamiento de Manila, could validly acquire property in its corporate or private capacity, following the accepted doctrine on the dual character public and private of a municipal corporation. And when it acquires property in its private capacity, it acts like an ordinary person capable of entering into contracts or making transactions for the transmission of title or other real rights. When it comes to acquisition of land, it must have done so under any of the modes established by law for the acquisition of ownership and other real rights. In the absence of a title deed to any land claimed by the City of Manila as its own, showing that it was acquired with its private or corporate funds, the presumption is that such land came from the State upon the creation of the municipality (Unson vs. Lacson, et al., 100 Phil. 695). Originally the municipality owned no patrimonial property except those that were granted by the State not for its public but for private use. Other properties it owns are acquired in the course of the exercise of its corporate powers as a juridical entity to which category a municipal corporation pertains. Communal lands or "legua comunal" came into existence when a town or pueblo was established in this country under the laws of Spain (Law VII, Title III, Book VI, Recopilacion de las Leyes de Indios). The municipalities of the Philippines were not entitled, as a matter of right, to any part of the public domain for use as communal lands. The Spanish law provided that the usufruct of a portion of the public domain adjoining municipal territory might be granted by the Government for communal purposes, upon proper petition, but, until granted, no rights therein passed to the municipalities, and, in any event, the ultimate title remained in the sovereign (City of Manila vs. Insular Government, 10 Phil. 327). For the establishment, then, of new pueblos the administrative authority of the province, in representation of the Governor General, designated the territory for their location and extension and the metes and bounds of the same; and before alloting the lands among the new settlers, a special demarcation was made of the places which were to serve as the public square of the pueblo, for the erection of the church, and as sites for the public buildings, among others, the

municipal building or the casa real, as well as of the lands whick were to constitute the common pastures, and propios of the municipality and the streets and roads which were to intersect the new town were laid out, ... . (Municipality of Catbalogan vs. Director of Lands, 17 Phil. 216, 220) (Emphasis supplied) It may, therefore, be laid down as a general rule that regardless of the source or classification of land in the possession of a municipality, excepting those acquired with its own funds in its private or corporate capacity, such property is held in trust for the State for the benefit of its inhabitants, whether it be for governmental or proprietary purposes. It holds such lands subject to the paramount power of the legislature to dispose of the same, for after all it owes its creation to it as an agent for the performance of a part of its public work, the municipality being but a subdivision or instrumentality thereof for purposes of local administration. Accordingly, the legal situation is the same as if the State itself holds the property and puts it to a different use (2 McQuilin,Municipal Corporations, 3rd Ed., p. 197, citing Monagham vs. Armatage, 218 Minn. 27, 15 N. W. 2nd 241). True it is that the legislative control over a municipal corporation is not absolute even when it comes to its property devoted to public use, for such control must not be exercised to the extent of depriving persons of their property or rights without due process of law, or in a manner impairing the obligations of contracts. Nevertheless, when it comes to property of the municipality which it did not acquire in its private or corporate capacity with its own funds, the legislature can transfer its administration and disposition to an agency of the National Government to be disposed of according to its discretion. Here it did so in obedience to the constitutional mandate of promoting social justice to insure the well-being and economic security of the people. It has been held that a statute authorizing the transfer of a Municipal airport to an Airport Commission created by the legislature, even without compensation to the city, was not violative of the due process clause of the American Federal Constitution. The Supreme Court of Minnessota in Monagham vs. Armatage, supra, said: ... The case is controlled by the further rule that the legislature, having plenary control of the local municipality, of its creation and of all its affairs, has the right to authorize or direct the expenditures of money in its treasury, though raised, for a particular purpose, for any legitimate municipal purpose, or to order and direct a distribution thereof upon a division of the territory into separate municipalities ... . The local municipality has no such vested right in or to its public funds, like that which the Constitution protects in the individual as precludes legislative interferences. People vs. Power, 25 Ill. 187; State Board (of Education) vs. City, 56 Miss. 518. As remarked by the supreme court of Maryland in Mayor vs. Sehner, 37 Md. 180: "It is of the essence of such a corporation, that the government has the sole right as trustee of the public interest, at its own good will and pleasure, to inspect, regulate, control, and direct the corporation, its funds, and franchises." We therefore hold that c.500, in authorizing the transfer of the use and possession of the municipal airport to the commission without compensation to the city or to the park board, does not violate the Fourteenth Amendment to the Constitution of the United States. The Congress has dealt with the land involved as one reserved for communal use (terreno comunal). The act of classifying State property calls for the exercise of wide discretionary legislative power and it should not be interfered with by the courts.

This brings Us to the second question as regards the validity of Republic Act No. 4118, viewed in the light of Article III, Sections 1, subsection (1) and (2) of the Constitution which ordain that no person shall be deprived of his property without due process of law and that no private property shall be taken for public use without just compensation. II . The trial court declared Republic Act No. 4118 unconstitutional for allegedly depriving the City of Manila of its property without due process of law and without payment of just compensation. It is now well established that the presumption is always in favor of the constitutionality of a law (U S. vs. Ten Yu, 24 Phil. 1; Go Ching, et al. vs. Dinglasan, et al., 45 O.G. No. 2, pp. 703, 705). To declare a law unconstitutional, the repugnancy of that law to the Constitution must be clear and unequivocal, for even if a law is aimed at the attainment of some public good, no infringement of constitutional rights is allowed. To strike down a law there must be a clear showing that what the fundamental law condemns or prohibits, the statute allows it to be done (Morfe vs. Mutuc, et al., G.R. No. L-20387, Jan. 31, 1968; 22 SCRA 424). That situation does not obtain in this case as the law assailed does not in any manner trench upon the constitution as will hereafter be shown. Republic Act No. 4118 was intended to implement the social justice policy of the Constitution and the Government program of "Land for the Landless". The explanatory note of House Bill No. 1453 which became Republic Act No. 4118, reads in part as follows: Approval of this bill will implement the policy of the administration of "land for the landless" and the Fifth Declaration of Principles of the Constitution which states that "the promotion of social justice to insure the well-being and economic security of all people should be the concern of the State." We are ready and willing to enact legislation promoting the social and economic well-being of the people whenever an opportunity for enacting such kind of legislation arises. The respondent Court held that Republic Act No. 4118, "by converting the land in question which is the patrimonial property of the City of Manila into disposable alienable land of the State and placing it under the disposal of the Land Tenure Administration violates the provisions of Article III (Secs. 1 and 2) of the Constitution which ordain that "private property shall not be taken for public use without just compensation, and that no person shall be deprived of life, liberty or property without due process of law". In support thereof reliance is placed on the ruling in Province of Zamboanga del Norte vs. City of Zamboanga, G.R. No. 2440, March 28, 1968; 22 SCRA 1334, which holds that Congress cannot deprive a municipality of its private or patrimonial property without due process of law and without payment of just compensation since it has no absolute control thereof. There is no quarrel over this rule if it is undisputed that the property sought to be taken is in reality a private or patrimonial property of the municipality or city. But it would be simply begging the question to classify the land in question as such. The property, as has been previously shown, was not acquired by the City of Manila with its own funds in its private or proprietary capacity. That it has in its name a registered title is not questioned, but this title should be deemed to be held in trust for the State as the land covered thereby was part of the territory of the City of Manila granted by the sovereign upon its creation. That the National Government, through the Director of Lands, represented by the Solicitor General, in the cadastral proceedings did not contest the claim of the City of Manila that the land is its property, does not detract from its character as State property and in no way divests the legislature of its power to deal with it as such, the state not being bound by the mistakes and/or negligence of its officers. One decisive fact that should be noted is that the City of Manila expressly recognized the paramount title of the State over said land when by its resolution of September 20, 1960, the Municipal Board, presided by then Vice-Mayor Antonio Villegas, requested "His Excellency the President of the Philippines to consider the feasibility of declaring the city property bounded by Florida, San Andres and Nebraska Streets, under Transfer Certificate of Title Nos. 25545 and

25547, containing an area of 7,450 square meters, as patrimonial property of the City of Manila for the purpose of reselling these lots to the actual occupants thereof." (See Annex E, Partial Stipulation of Facts, Civil Case No. 67945, CFI, Manila, p. 121, Record of the Case) [Emphasis Supplied] The alleged patrimonial character of the land under the ownership of the City of Manila is totally belied by the City's own official act, which is fatal to its claim since the Congress did not do as bidden. If it were its patrimonial property why should the City of Manila be requesting the President to make representation to the legislature to declare it as such so it can be disposed of in favor of the actual occupants? There could be no more blatant recognition of the fact that said land belongs to the State and was simply granted in usufruct to the City of Manila for municipal purposes. But since the City did not actually use said land for any recognized public purpose and allowed it to remain idle and unoccupied for a long time until it was overrun by squatters, no presumption of State grant of ownership in favor of the City of Manila may be acquiesced in to justify the claim that it is its own private or patrimonial property (Municipality of Tigbauan vs. Director of Lands, 35 Phil. 798; City of Manila vs. Insular Government, 10 Phil. 327; Municipality of Luzuriaga vs. Director of Lands, 24 Phil. 193). The conclusion of the respondent court that Republic Act No. 4118 converted a patrimonial property of the City of Manila into a parcel of disposable land of the State and took it away from the City without compensation is, therefore, unfounded. In the last analysis the land in question pertains to the State and the City of Manila merely acted as trustee for the benefit of the people therein for whom the State can legislate in the exercise of its legitimate powers. Republic Act No. 4118 was never intended to expropriate the property involved but merely to confirm its character as communal land of the State and to make it available for disposition by the National Government: And this was done at the instance or upon the request of the City of Manila itself. The subdivision of the land and conveyance of the resulting subdivision lots to the occupants by Congressional authorization does not operate as an exercise of the power of eminent domain without just compensation in violation of Section 1, subsection (2), Article III of the Constitution, but simply as a manifestation of its right and power to deal with state property. It should be emphasized that the law assailed was enacted upon formal written petition of the Municipal Board of Manila in the form of a legally approved resolution. The certificate of title over the property in the name of the City of Manila was accordingly cancelled and another issued to the Land Tenure Administration after the voluntary surrender of the City's duplicate certificate of title by the City Treasurer with the knowledge and consent of the City Mayor. To implement the provisions of Republic Act No. 4118, the then Deputy Governor of the Land Authority sent a letter, dated February 18, 1965, to the City Mayor furnishing him with a copy of the "proposed subdivision plan of the said lot as prepared for the Republic of the Philippines for subdivision and resale by the Land Authority to bona fide applicants." On March 2, 1965, the Mayor of Manila, through his Executive and Technical Adviser, acknowledged receipt of the subdivision plan and informed the Land Authority that his Office "will interpose no objection to the implementation of said law provided that its provisions are strictly complied with." The foregoing sequence of events, clearly indicate a pattern of regularity and observance of due process in the reversion of the property to the National Government. All such acts were done in recognition by the City of Manila of the right and power of the Congress to dispose of the land involved. Consequently, the City of Manila was not deprived of anything it owns, either under the due process clause or under the eminent domain provisions of the Constitution. If it failed to get from the Congress the concession it sought of having the land involved given to it as its patrimonial property, the Courts possess no power to grant that relief. Republic Act No. 4118 does not, therefore, suffer from any constitutional infirmity. WHEREFORE, the appealed decision is hereby reversed, and petitioners shall proceed with the free and untrammeled implementation of Republic Act No. 4118 without any obstacle from the respondents. Without costs.

Concepcion, C.J., Makalintal, Zaldivar, Castro, Fernando, Teehankee and Antonio, JJ., concur. Barredo and Makasiar, JJ., took no part.

(b) That the crime was committed by a band; and afford impunity. (c) With the aid of armed men or persons who insure or afford impunity. Co moved to quash on the ground that the Anti-Subversion Act is a bill of attainder. Meanwhile, on May 25, 1970, another criminal complaint was filed with the same court, sharing the respondent Nilo Tayag and five others with subversion. After preliminary investigation was had, an information was filed, which, as amended, reads: The undersigned provincial Fiscal of Tarlac and State Prosecutors duly designated by the Secretary of Justice to collaborate with the Provincial Fiscal of Tarlac, pursuant to the Order dated June 5, above entitled case, hereby accuse Nilo S. Tayag, alias Romy Reyes alias TABA, ARTHUR GARCIA, RENATO (REY) CASIPE, ABELARDO GARCIA, MANUEL ALAVADO, BENJAMIN BIE alias COMMANDER MELODY and several JOHN DOES, whose identities are still unknown, for violation of REPUBLIC ACT No. 1700, otherwise known as the Anti-Subversion Law, committed as follows: That in or about March 1969 and for sometime prior thereto and thereafter, in the Province of Tarlac, within the jurisdiction of this Honorable Court, and elsewhere in the Philippines, the above-named accused knowingly, willfully and by overt acts organized, joined and/or remained as offices and/or ranking leaders, of the KABATAANG MAKABAYAN, a subversive organization as defined in Republic Act No. 1700; that BENJAMIN BIE and COMMANDER MELODY, in addition thereto, knowingly, willfully and by over acts joined and/or remained as a member and became an officer and/or ranking leader not only of the Communist Party of the Philippines but also of the New People's Army, the military arm of the Communist Party of the Philippines; and that all the above-named accused, as such officers and/or ranking leaders of the aforestated subversive organizations, conspiring, confederating and mutually helping one another, did then and there knowingly, willfully and feloniously commit subversive and/or seditious acts, by inciting, instigating and stirring the people to unite and rise publicly and tumultuously and take up arms against the government, and/or engage in rebellious conspiracies and riots to overthrow the government of the Republic of the Philippines by force, violence, deceit, subversion and/or other illegal means among which are the following: 1. On several occasions within the province of Tarlac, the accused conducted meetings and/or seminars wherein the said accused delivered speeches instigating and inciting the people to unite, rise in arms and overthrow the Government of the Republic of the Philippines, by force, violence, deceit, subversion and/or other illegal means; and toward this end, the said accused organized, among others a chapter of the KABATAANG MAKABAYAN in barrio Motrico, La Paz, Tarlac for the avowed purpose of undertaking or promoting an armed revolution, subversive and/or seditious propaganda, conspiracies, and/or riots and/or other illegal means to discredit and overthrow the Government of the Republic of the

G.R. Nos. L-32613-14 December 27, 1972 PEOPLE OF THE PHILIPPINES, petitioner, vs. HON. SIMEON. FERRER (in his capacity as Judge of the Court of First Instance of Tarlac, Branch I), FELICIANO CO alias LEONCIO CO alias "Bob," and NILO S. TAYAG alias Romy Reyes alias "Taba,"respondents. Solicitor R. Mutuc for respondent Feliciano Co. Jose W. Diokno for respondent Nilo Tayag.

CASTRO, J.:p I. Statement of the Case Posed in issue in these two cases is the constitutionality of the AntiSubversion Act, 1 which outlaws the Communist Party of the Philippines and other "subversive associations," and punishes any person who "knowingly, willfully and by overt acts affiliates himself with, becomes or remains a member" of the Party or of any other similar "subversive" organization. On March 5, 1970 a criminal complaint for violation of section 4 of the Anti-Subversion Act was filed against the respondent Feliciano Co in the Court of First Instance of Tarlac. On March 10 Judge Jose C. de Guzman conducted a preliminary investigation and, finding a prima facie case against Co, directed the Government prosecutors to file the corresponding information. The twice-amended information, docketed as Criminal Case No. 27, recites: That on or about May 1969 to December 5, 1969, in the Municipality of Capas, Province of Tarlac, Philippines, and within the jurisdiction of this Honorable Court, the abovenamed accused, feloniously became an officer and/or ranking leader of the Communist Party of the Philippines, an outlawed and illegal organization aimed to overthrow the Government of the Philippines by means of force, violence, deceit, subversion, or any other illegal means for the purpose of establishing in the Philippines a totalitarian regime and placing the government under the control and domination of an alien power, by being an instructor in the Mao Tse Tung University, the training school of recruits of the New People's Army, the military arm of the said Communist Party of the Philippines. That in the commission of the above offense, the following aggravating circumstances are present, to wit: (a) That the crime has been committed in contempt of or with insult to public authorities;

Philippines and to established in the Philippines a Communist regime. 2. The accused NILO TAYAG alias ROMY REYES alias TABA, together with FRANCISCO PORTEM alias KIKO Gonzales and others, pursued the above subversive and/or seditious activities in San Pablo City by recruiting members for the New People's Army, and/or by instigating and inciting the people to organize and unite for the purpose of overthrowing the Government of the Republic of the Philippines through armed revolution, deceit, subversion and/or other illegal means, and establishing in the Philippines a Communist Government. That the following aggravating circumstances attended the commission of the offense: (a) aid of armed men or persons to insure or afford impunity; and (b) craft, fraud, or disguise was employed. On July 21, 1970 Tayag moved to quash, impugning the validity of the statute on the grounds that (1) it is a bill of attainder; (2) it is vague; (3) it embraces more than one subject not expressed in the title thereof; and (4) it denied him the equal protection of the laws. Resolving the constitutional issues raised, the trial court, in its resolution of September 15, 1970, declared the statute void on the grounds that it is a bill of attainder and that it is vague and overboard, and dismissed the informations against the two accused. The Government appealed. We resolved to treat its appeal as a special civil action for certiorari. II. Is the Act a Bill of Attainder? Article III, section 1 (11) of the Constitution states that "No bill of attainder or ex port facto law shall be enacted." 2A bill of attainder is a legislative act which inflicts punishment without trial. 3 Its essence is the substitution of a legislative for a judicial determination of guilt. 4 The constitutional ban against bills of attainder serves to implement the principle of separation of powers 5 by confining legislatures to rule-making 6 and thereby forestalling legislative usurpation of the judicial function. 7 History in perspective, bills of attainder were employed to suppress unpopular causes and political minorities, 8 and it is against this evil that the constitutional prohibition is directed. The singling out of a definite class, the imposition of a burden on it, and a legislative intent, suffice to stigmatizea statute as a bill of attainder. 9 In the case at bar, the Anti-Subversion Act was condemned by the court a quo as a bill of attainder because it "tars and feathers" the Communist Party of the Philippines as a "continuing menace to the freedom and security of the country; its existence, a 'clear, present and grave danger to the security of the Philippines.'" By means of the Act, the trial court said, Congress usurped "the powers of the judge," and assumed "judicial magistracy by pronouncing the guilt of the CCP without any of the forms or safeguards of judicial trial." Finally, according to the trial court, "if the only issue [to be determined] is whether or not the accused is a knowing and voluntary member, the law is still a bill of attainder because it has expressly created a presumption of organizational guilt which the accused can never hope to overthrow." 1. When the Act is viewed in its actual operation, it will be seen that it does not specify the Communist Party of the Philippines or the members thereof for the purpose of punishment. What it does is simply to declare the Party to be an organized conspiracy for the overthrow of the Government for the purposes of the prohibition, stated in section 4, against membership in the outlawed organization. The term "Communist Party of the Philippines" issued solely for definitional purposes. In fact the Act applies not only to the Communist Party of the Philippines but also to "any other organization having the same purpose and their successors." Its focus is not on individuals but on conduct. 10

This feature of the Act distinguishes it from section 504 of the U.S. Federal Labor-Management Reporting and Disclosure Act of 1959 11 which, in U.S. vs. Brown, 12 was held to be a bill of attainder and therefore unconstitutional. Section 504 provided in its pertinent parts as follows: (a) No person who is or has been a member of the Communist Party ... shall serve (1) as an officer, director, trustee, member of any executive board or similar governing body, business agent, manager, organizer, or other employee (other than as an employee performing exclusively clerical or custodial duties) of any labor organization. during or for five years after the termination of his membership in the Communist Party.... (b) Any person who willfully violates this section shall be fined not more than $10,000 or imprisoned for not more than one year, or both. This statute specified the Communist Party, and imposes disability and penalties on its members. Membership in the Party, without more, ipso facto disqualifies a person from becoming an officer or a member of the governing body of any labor organization. As the Supreme Court of the United States pointed out: Under the line of cases just outlined, sec. 504 of the Labor Management Reporting and Disclosure Act plainly constitutes a bill of attainder. Congress undoubtedly possesses power under the Commerce Clause to enact legislation designed to keep from positions affecting interstate commerce persons who may use of such positions to bring about political strikes. In section 504, however, Congress has exceeded the authority granted it by the Constitution. The statute does not set forth a generally applicable rule decreeing that any person who commits certain acts or possesses certain characteristics (acts and characteristics which, in Congress' view, make them likely to initiate political strikes) shall not hold union office, and leaves to courts and juries the job of deciding what persons have committed the specified acts or possessed the specified characteristics. Instead, it designates in no uncertain terms the persons who possess the feared characteristics and therefore cannot hold union office without incurring criminal liability members of the Communist Party. Communist Party v. Subversive Activities Control Board, 367 US 1, 6 L ed 2d 625, 81 S CT 1357, lend a support to our conclusion. That case involved an appeal from an order by the Control Board ordering the Communist Party to register as a "Communist-action organization," under the Subversive Activities Control Act of 1950, 64 Stat 987, 50 USC sec. 781 et seq. (1958 ed). The definition of "Communist-action organization" which the Board is to apply is set forth in sec. 3 of the Act: [A]ny organization in the United States ... which (i)is substantially directed, dominated, or controlled by the foreign government or foreign organization controlling the world Communist movement referred to in section 2 of this title, and(ii) operates primarily to advance the objectives of such world Communist movement... 64 Stat 989, 50 USC sec. 782 (1958 ed.)

A majority of the Court rejected the argument that the Act was a bill of attainder, reasoning that sec. 3 does not specify the persons or groups upon which the deprivations setforth in the Act are to be imposed, but instead sets forth a general definition. Although the Board has determined in 1953 that the Communist Party was a "Communist-action organization," the Court found the statutory definition not to be so narrow as to insure that the Party would always come within it: In this proceeding the Board had found, and the Court of Appeals has sustained its conclusion, that the Communist Party, by virtud of the activities in which it now engages, comes within the terms of the Act. If the Party should at anytime choose to abandon these activities, after it is once registered pursuant to sec. 7, the Act provides adequate means of relief. (367 US, at 87, 6 L ed 2d at 683) Indeed, were the Anti-Subversion Act a bill of attainder, it would be totally unnecessary to charge Communists in court, as the law alone, without more, would suffice to secure their punishment. But the undeniable fact is that their guilt still has to be judicially established. The Government has yet to prove at the trial that the accused joined the Party knowingly, willfully and by overt acts, and that they joined the Party, knowing its subversive character and with specific intent to further its basic objective, i.e., to overthrow the existing Government by force deceit, and other illegal means and place the country under the control and domination of a foreign power. As to the claim that under the statute organizationl guilt is nonetheless imputed despite the requirement of proof of knowing membership in the Party, suffice it to say that is precisely the nature of conspiracy, which has been referred to as a "dragneet device" whereby all who participate in the criminal covenant are liable. The contention would be correct if the statute were construed as punishing mere membership devoid of any specific intent to further the unlawful goals of the Party. 13 But the statute specifically required that membership must be knowing or active, with specific intent to further the illegal objectives of the Party. That is what section 4 means when it requires that membership, to be unlawful, must be shown to have been acquired "knowingly, willfully and by overt acts." 14 The ingredient of specific intent to pursue the unlawful goals of the Party must be shown by "overt acts."15 This constitutes an element of "membership" distinct from the ingredient of guilty knowledge. The former requires proof of direct participation in the organization's unlawful activities, while the latter requires proof of mere adherence to the organization's illegal objectives. 2. Even assuming, however, that the Act specifies individuals and not activities, this feature is not enough to render it a bill of attainder. A statute prohibiting partners or employees of securities underwriting firms from serving as officers or employees of national banks on the basis of a legislative finding that the persons mentioned would be subject to the temptation to commit acts deemed inimical to the national economy, has been declared not to be a bill of attainder. 16 Similarly, a statute requiring every secret, oath-bound society having a membership of at least twenty to register, and punishing any person who becomes a member of such society which fails to register or remains a member thereof, was declared valid even if in its operation it was shown to apply only to the members of the Ku Klux Klan. 17 In the Philippines the validity of section 23 (b) of the Industrial Peace Act, 18 requiring labor unions to file with the Department of Labor affidavits of union officers "to the effect that they are not members of the Communist Party and that they are not members of any organization which teaches the overthrow of the Government by force or by any illegal or unconstitutional method," was upheld by this Court. 19 Indeed, it is only when a statute applies either to named individuals or to easily ascertainable members of a group in such a way as to inflict punishment on them without a judicial trial does it become a bill of

attainder. 20 It is upon this ground that statutes which disqualified those who had taken part in the rebellion against the Government of the United States during the Civil War from holding office, 21 or from exercising their profession, 22 or which prohibited the payment of further compensation to individuals named in the Act on the basis of a finding that they had engages in subversive activities, 23 or which made it a crime for a member of the Communist Party to serve as an officer or employee of a labor union, 24 have been invalidated as bills of attainder. But when the judgment expressed in legislation is so universally acknowledged to be certain as to be "judicially noticeable," the legislature may apply its own rules, and judicial hearing is not needed fairly to make such determination. 25 In New York ex rel. Bryant vs. Zimmerman, 26 the New York legislature passed a law requiring every secret, oath-bound society with a membership of at least twenty to register, and punishing any person who joined or remained a member of such a society failing to register. While the statute did not specify the Ku Klux Klan, in its operation the law applied to the KKK exclusively. In sustaining the statute against the claim that it discriminated against the Ku Klux Klan while exempting other secret, oath-bound organizations like masonic societies and the Knights of Columbus, the United States Supreme Court relied on common knowledge of the nature and activities of the Ku Klux Klan. The Court said: The courts below recognized the principle shown in the cases just cited and reached the conclusion that the classification was justified by a difference between the two classes of associations shown by experience, and that the difference consisted (a) in a manifest tendency on the part of one class to make the secrecy surrounding its purpose and membership a cloak for acts and conduct inimical to personal rights and public welfare, and (b) in the absence of such a tendency on the part of the other class. In pointing out this difference one of the courts said of the Ku Klux Klan, the principal association in the included class: "It is a matter of common knowledge that this organization functions largely at night, its members disguised by hoods and gowns and doing things calculated to strike terror into the minds of the people;" and later said of the other class: "These organizations and their purposes are well known, many of them having been in existence for many years. Many of them are oath-bound and secret. But we hear no complaint against them regarding violation of the peace or interfering with the rights of others." Another of the courts said: "It is a matter of common knowledge that the association or organization of which the relator is concededly a member exercises activities tending to the prejudice and intimidation of sundry classes of our citizens. But the legislation is not confined to this society;" and later said of the other class: "Labor unions have a recognized lawful purpose. The benevolent orders mentioned in the Benevolent Orders Law have already received legislative scrutiny and have been granted special privileges so that the legislature may well consider them beneficial rather than harmful agencies." The third court, after recognizing "the potentialities of evil in secret societies," and observing that "the danger of certain organizations has been judicially demonstrated," meaning in that state, said: "Benevolent orders, labor unions and college fraternities have existed for many years, and, while not immune from hostile criticism, have on the whole justified their existence." We assume that the legislature had before it such information as was readily available including the published report of a hearing, before a committee of the House of Representatives of the 57th

Congress relating to the formation, purposes and activities of the Klu Klux Klan. If so it was advised putting aside controverted evidence that the order was a revival of the Ku Klux Klan of an earlier time with additional features borrowed from the Know Nothing and the A. P. A. orders of other periods; that its memberships was limited to native-born, gentile, protestant whites; that in part of its constitution and printed creed it proclaimed the widest freedom for all and full adherence to the Constitution of the United States; in another exacted of its member an oath to shield and preserve "white supremacy;" and in still another declared any person actively opposing its principles to be "a dangerous ingredient in the body politic of our country and an enemy to the weal of our national commonwealth;" that it was conducting a crusade against Catholics, Jews, and Negroes, and stimulating hurtful religious and race prejudices; that it was striving for political power and assuming a sort of guardianship over the administration of local, state and national affairs; and that at times it was taking into its own hands the punishment of what some of its members conceived to be crimes. 27 In the Philippines the character of the Communist Party has been the object of continuing scrutiny by this Court. In 1932 we found the Communist Party of the Philippines to be an illegal association. 28 In 1969 we again found that the objective of the Party was the "overthrow of the Philippine Government by armed struggle and to establish in the Philippines a communist form of government similar to that of Soviet Russia and Red China." 29 More recently, in Lansang vs. Garcia, 30 we noted the growth of the Communist Party of the Philippines and the organization of Communist fronts among youth organizations such as the Kabataang Makabayan (KM) and the emergence of the New People's Army. After meticulously reviewing the evidence, we said: "We entertain, therefore, no doubts about the existence of a sizeable group of men who have publicly risen in arms to overthrow the government and have thus been and still are engaged in rebellion against the Government of the Philippines. 3. Nor is it enough that the statute specify persons or groups in order that it may fall within the ambit of the prohibition against bills of attainder. It is also necessary that it must apply retroactively and reach past conduct. This requirement follows from the nature of a bill of attainder as a legislative adjudication of guilt. As Justice Frankfurter observed, "frequently a bill of attainder was ... doubly objectionable because of its ex post factofeatures. This is the historic explanation for uniting the two mischiefs in one clause 'No Bill of Attainder or ex post facto law shall be passed.' ... Therefore, if [a statute] is a bill of attainder it is also an ex post facto law. But if it is not an ex post facto law, the reasons that establish that it is not are persuasive that it cannot be a bill of attainder." 31 Thus in Gardner vs. Board of Public Works, the U.S. Supreme Court upheld the validity of the Charter of the City of Los Angeles which provided: ... [N]o person shall hold or retain or be eligible for any public office or employment in the service of the City of Los Angeles, in any office or department thereof, either elective or appointive, who has within five (5) years prior to the effective date of this section advised, advocated, or taught, or who may, after this section becomes effective, become a member of or affiliated with any group, society, association, organization or party which advises, advocates or teaches or has within said period of five (5) years advised, advocated, or taught the overthrow by force or violence of the Government of the United States of America or of the State of California.
32

In upholding the statute, the Court stressed the prospective application of the Act to the petitioner therein, thus: ... Immaterial here is any opinion we might have as to the charter provision insofar as it purported to apply restrospectively for a five-year period to its effective date. We assume that under the Federal Constitution the Charter Amendment is valid to the extent that it bars from the city's public service persons who, subsequently to its adoption in 1941, advise, advocate, or reach the violent overthrow of the Government or who are or become affiliated with any group doing so. The provisions operating thus prospectively were a reasonable regulation to protect the municipal service by establishing an employment qualification of loyalty to the State and the United States. ... Unlike the provisions of the charter and ordinance under which petitioners were removed, the statute in the Lovett case did not declare general and prospectively operative standards of qualification and eligibility for public employment. Rather, by its terms it prohibited any further payment of compensationto named individuals or employees. Under these circumstances, viewed against the legislative background, the statutewas held to have imposed penalties without judicial trial. Indeed, if one objection to the bill of attainder is thatCongress thereby assumed judicial magistracy, them it mustbe demonstrated that the statute claimed to be a bill of attainderreaches past conduct and that the penalties it imposesare inescapable. As the U.S. Supreme Court observedwith respect to the U.S. Federal Subversive Activities ControlAct of 1950: Nor is the statute made an act of "outlawry" or of attainderby the fact that the conduct which it regulates is describedwith such particularity that, in probability, few organizationswill come within the statutory terms. Legislatures may act tocurb behaviour which they regard as harmful to the public welfare,whether that conduct is found to be engaged in by manypersons or by one. So long as the incidence of legislation issuch that the persons who engage in the regulated conduct, bethey many or few, can escape regulation merely by altering thecourse of their own present activities, there can be no complaintof an attainder. 33 This statement, mutatis mutandis, may be said of theAnti-Subversion Act. Section 4 thereof expressly statesthat the prohibition therein applies only to acts committed"After the approval of this Act." Only those who "knowingly,willfully and by overt acts affiliate themselves with,become or remain members of the Communist Party of thePhilippines and/or its successors or of any subversive association"after June 20, 1957, are punished. Those whowere members of the Party or of any other subversive associationat the time of the enactment of the law, weregiven the opportunity of purging themselves of liability byrenouncing in writing and under oath their membershipin the Party. The law expressly provides that such renunciationshall operate to exempt such persons from penalliability. 34 The penalties prescribed by the Act are thereforenot inescapable. III. The Act and the Requirements of Due Process 1. As already stated, the legislative declaration in section 2 of the Act that the Communist Party of the Philippinesis an organized conspiracy for the overthrow of theGovernment is inteded not to provide the basis for a legislativefinding of guilt of the members of the Party butrather to justify the proscription spelled out in section 4. Freedom of expression

and freedom of association are sofundamental that they are thought by some to occupy a"preferred position" in the hierarchy of constitutional values. 35 Accordingly, any limitation on their exercise mustbe justified by the existence of a substantive evil. This isthe reason why before enacting the statute in question Congressconducted careful investigations and then stated itsfindings in the preamble, thus: ... [T]he Communist Party of the Philippines althoughpurportedly a political party, is in fact an organized conspiracyto overthrow the Government of the Republic of the Philippinesnot only by force and violence but also by deceit, subversionand other illegal means, for the purpose of establishing in thePhilippines a totalitarian regime subject to alien dominationand control; ... [T]he continued existence and activities of the CommunistParty of the Philippines constitutes a clear, present andgrave danger to the security of the Philippines; ... [I]n the face of the organized, systematice and persistentsubversion, national in scope but international in direction,posed by the Communist Party of the Philippines and its activities,there is urgent need for special legislation to cope withthis continuing menace to the freedom and security of the country. In truth, the constitutionality of the Act would be opento question if, instead of making these findings in enactingthe statute, Congress omitted to do so. In saying that by means of the Act Congress has assumed judicial magistracy, the trial courd failed to takeproper account of the distinction between legislative fact and adjudicative fact. Professor Paul Freund elucidatesthe crucial distinction, thus: ... A law forbidding the sale of beverages containingmore than 3.2 per cent of alcohol would raise a question of legislativefact, i.e., whether this standard has a reasonable relationto public health, morals, and the enforcement problem. Alaw forbidding the sale of intoxicating beverages (assuming itis not so vague as to require supplementation by rule-making)would raise a question of adjudicative fact, i.e., whether thisor that beverage is intoxicating within the meaning of the statuteand the limits on governmental action imposed by the Constitution. Of course what we mean by fact in each case is itselfan ultimate conclusion founded on underlying facts and oncriteria of judgment for weighing them. A conventional formulation is that legislative facts those facts which are relevant to the legislative judgment will not be canvassed save to determine whether there is a rationalbasis for believing that they exist, while adjudicativefacts those which tie the legislative enactment to the litigant are to be demonstrated and found according to the ordinarystandards prevailing for judicial trials. 36 The test formulated in Nebbia vs. new York, 37 andadopted by this Court in Lansang vs. Garcia, 38 is that 'if laws are seen to have a reasonable relation to a proper legislative purpose, and are neither arbitrary nor discriminatory, the requirements of due process are satisfied, and judicial determination to that effect renders a court functus officio." The recital of legislative findings implements this test.

With respect to a similar statement of legislative findingsin the U.S. Federal Subversive Activities Control Actof 1950 (that "Communistaction organizations" are controlledby the foreign government controlling the worldCommunist movement and that they operate primarily to"advance the objectives of such world Communist movement"),the U.S. Supreme Court said: It is not for the courts to reexamine the validity of theselegislative findings and reject them....They are the productof extensive investigation by Committes of Congress over morethan a decade and a half. Cf. Nebbia v. New York, 291 U.S.502, 516, 530. We certainly cannot dismiss them as unfoundedirrational imaginings. ... And if we accept them, as we mustas a not unentertainable appraisal by Congress of the threatwhich Communist organizations pose not only to existing governmentin the United States, but to the United States as asovereign, independent Nation. ...we must recognize that thepower of Congress to regulate Communist organizations of thisnature is extensive. 39 This statement, mutatis mutandis, may be said of thelegislative findings articulated in the Anti-Subversion Act. That the Government has a right to protect itself againstsubversion is a proposition too plain to require elaboration.Self-preservation is the "ultimate value" of society. It surpasses and transcendes every other value, "forif a society cannot protect its very structure from armedinternal attack, ...no subordinate value can be protected" 40 As Chief Justice Vinson so aptly said in Dennis vs. United States: 41 Whatever theoretical merit there may be to the argumentthat there is a 'right' to rebellion against dictatorial governmentsis without force where the existing structure of government provides for peaceful and orderly change. We rejectany principle of governmental helplessness in the face of preparationfor revolution, which principle, carried to its logical conclusion,must lead to anarchy. No one could conceive that it isnot within the power of Congress to prohibit acts intended tooverthrow the government by force and violence. 2. By carefully delimiting the reach of the Act to conduct (as explicitly described in sectin 4 thereof), Congressreaffirmed its respect for the rule that "even throughthe governmental purpose be legitimate and substantial,that purpose cannot be pursued by means that broadly stiflefundamental personal liberties when the end can be more narrowly achieved." 42 The requirement of knowing membership,as distinguished from nominalmembership, hasbeen held as a sufficient basis for penalizing membershipin a subversive organization. 43 For, as has been stated: Membership in an organization renders aid and encouragement to the organization; and when membership is acceptedor retained with knowledge that the organization is engaged inan unlawful purpose, the one accepting or retaining membershipwith such knowledge makes himself a party to the unlawfulenterprise in which it is engaged. 44 3. The argument that the Act is unconstitutionallyoverbroad because section 2 merely speaks of "overthrow"of the Government and overthrow may be achieved by peaceful means, misconceives the function of the phrase"knowingly, willfully and by overt acts" in section 4. Section 2 is merely a legislative declaration; the definitionsof and the penalties prescribed for the different acts prescribedare stated in section 4 which requires that membershipin the Communist Party of the Philippines, to be unlawful, must be acquired "knowingly, willfully and by overt acts." Indeed, the first "whereas" clause makes clear thatthe overthrow contemplated is "overthrow not only by forceand

violence but also be deceit, subversion and other illegalmeans." The absence of this qualificatio in section 2 appearsto be due more to an oversight rather than to deliberateomission. Moreover, the word "overthrow' sufficiently connotesthe use of violent and other illegal means. Only in a metaphoricalsense may one speak of peaceful overthrow ofgovernments, and certainly the law does not speak in metaphors.In the case of the Anti-Subversion Act, the use ofthe word "overthrow" in a metaphorical sense is hardlyconsistent with the clearly delineated objective of the "overthrow,"namely, "establishing in the Philippines a totalitarianregime and place [sic] the Government under thecontrol and domination of an alien power." What thisCourt once said in a prosecution for sedition is appropos: "The language used by the appellant clearly imported anoverthrow of the Government by violence, and it should beinterpreted in the plain and obvious sense in which it wasevidently intended to be understood. The word 'overthrow'could not have been intended as referring to an ordinarychange by the exercise of the elective franchise. The useof the whip [which the accused exhorted his audience to useagainst the Constabulary], an instrument designed toleave marks on the sides of adversaries, is inconsistentwith the mild interpretation which the appellant wouldhave us impute to the language." 45 IV. The Act and the Guaranty of Free Expression As already pointed out, the Act is aimed against conspiracies to overthrow the Government by force, violence orother illegal means. Whatever interest in freedom of speechand freedom of association is infringed by the prohibitionagainst knowing membership in the Communist Party ofthe Philippines, is so indirect and so insubstantial as to beclearly and heavily outweighed by the overriding considerationsof national security and the preservartion of democraticinstitutions in his country. The membership clause of the U.S. Federal Smith Actis similar in many respects to the membership provision ofthe Anti-Subversion Act. The former provides: Whoever organizes or helps or attempts to organize anysociety, group, or assembly of persons who teach, advocate, orencourage the overthrow or destruction of any such governmentby force or violence; or becomes or is a member of, or affiliatedwith, any such society, group or assembly of persons, knowingthe purpose thereof Shall be fined not more than $20,000 or imprisoned notmore than twenty years, or both, and shall be ineligible for emplymentby the United States or any department or agencythereof, for the five years next following his conviction.... 46 In sustaining the validity of this provision, the "Court said in Scales vs. United States: 47 It was settled in Dennis that advocacy with which we arehere concerned is not constitutionally protected speech, and itwas further established that a combination to promote suchadvocacy, albeit under the aegis of what purports to be a politicalparty, is not such association as is protected by the firstAmendment. We can discern no reason why membership, whenit constitutes a purposeful form of complicity in a group engagingin this same forbidden advocacy, should receive anygreater degree of protection from the guarantees of that Amendment. Moreover, as was held in another case, where the problemsof accommodating the exigencies of self-preservationand the values of liberty are as complex and intricate as inthe situation described in the legislative findings stated inthe U.S. Federal Subversive Activities

Control Act of 1950,the legislative judgment as to how that threat may best bemet consistently with the safeguards of personal freedomsis not to be set aside merely because the judgment of judgeswould, in the first instance, have chosen other methods. 48 For in truth, legislation, "whether it restrains freedom tohire or freedom to speak, is itself an effort at compromisebetween the claims of the social order and individual freedom,and when the legislative compromise in either case isbrought to the judicial test the court stands one step removedfrom the conflict and its resolution through law." 49 V. The Act and its Title The respondent Tayag invokes the constitutional commandthat "no bill which may be enacted into law shall embrace more than one subject which shall be expressed in the title of the bill." 50 What is assailed as not germane to or embraced in thetitle of the Act is the last proviso of section 4 which reads: And provided, finally, That one who conspires with anyother person to overthrow the Government of the Republic ofthe Philippines, or the government of any of its political subdivisionsby force, violence, deceit, subversion or illegal means,for the purpose of placing such Government or political subdivisionunder the control and domination of any lien power, shallbe punished by prision correccional to prision mayor with allthe accessory penalties provided therefor in the same code. It is argued that the said proviso, in reality, punishes notonly membership in the Communist Party of the Philippinesor similar associations, but as well "any conspiracyby two persons to overthrow the national or any local governmentby illegal means, even if their intent is not to establisha totalitarian regime, burt a democratic regime, evenif their purpose is not to place the nation under an aliencommunist power, but under an alien democratic power likethe United States or England or Malaysia or even an anti-communistpower like Spain, Japan, Thailand or Taiwanor Indonesia." The Act, in addition to its main title ("An Act to Outlawthe Communist Party of the Philippines and SimilarAssociations, Penalizing Membership Therein, and forOther Purposes"), has a short title. Section 1 providesthat "This Act shall be known as the Anti-Subversion Act."Together with the main title, the short title of the statuteunequivocally indicates that the subject matter is subversionin general which has for its fundamental purpose the substitutionof a foreign totalitarian regime in place of theexisting Government and not merely subversion by Communistconspiracies.. The title of a bill need not be a catalogue or an indexof its contents, and need not recite the details of the Act. 51 It is a valid title if it indicates in broad but clear termsthe nature, scope, and consequences of the proposed lawand its operation. 52 A narrow or technical construction isto be avoided, and the statute will be read fairly and reasonablyin order not to thwart the legislative intent. We holdthat the Anti-Subversion Act fully satisfies these requirements. VI. Conclusion and Guidelines In conclusion, even as we uphold the validity of theAnti-Subversion Act, we cannot overemphasize the needfor prudence and circumspection in its enforcement, operatingas it does in the sensitive area of freedom of expressionand belief. Accordingly, we set the following basic guidelines to be observed in any prosecution under the Act.The Government, in addition to proving such circumstancesas may affect liability, must establish the following elementsof the crime of joining the Communist Party of the Philippinesor any other subversive association: (1) In the case of subversive organizations other thanthe Communist Party of the Philippines, (a) that thepurpose of the organization is to

overthrow the presentGovernment of the Philippines and to establish in thiscountry a totalitarian regime under the domination of aforeign power; (b) that the accused joined such organization;and (c) that he did so knowingly, willfully and byovert acts; and (2) In the case of the Communist Party of the Philippines,(a) that the CPP continues to pursue the objectiveswhich led Congress in 1957 to declare it to be an organizedconspiracy for the overthrow of the Government by illegalmeans for the purpose of placing the country under thecontrol of a foreign power; (b) that the accused joined theCPP; and (c) that he did so willfully, knowingly and byovert acts. We refrain from making any pronouncement as to thecrime or remaining a member of the Communist Party ofthe Philippines or of any other subversive association: weleave this matter to future determination. ACCORDINGLY, the questioned resolution of September15, 1970 is set aside, and these two cases are herebyremanded to the court a quo for trial on the merits. Costs de oficio. Makalintal, Zaldivar, Teehankee, Barredo and Esguerra, JJ., concur. Concepcion, C.J., concurs in the result. Makasiar and Antonio, JJ., took no part.

(p. 1, Rollo.) to which he pleaded not guilty. Subsequently, due to the death of the victim, an amended Information was filed charging now the crime of murder, to wit: That on or about December 29, 1989, in the City of Davao, Philippines, and within the jurisdiction of this Honorable Court, the above-mentioned accused, armed with a knife, with treachery and evident premeditation and with intent to kill wilfully, unlawfully and feloniously attacked, assaulted and stabbed with said weapon one Benito Ng Suy, thereby inflicting upon the latter multiple wounds which caused his death and the consequent loss and damage to the heirs of the victim. (p. 3, Rollo.) After trial on the merits, the court a quo rendered a decision, disposing: WHEREFORE, finding the accused Patricio Amigo guilty beyond reasonable doubt of the crime of MURDER punishable under Art. 248 of the Revised Penal Code, with no modifying circumstance present, the accused is hereby sentenced to the penalty of reclusion perpetua, which is the medium period of the penalty ofreclusion temporal in its maximum to death and to pay the cost; to indemnify the offended party the amount of P93,214.70 as actual damages and P50,000.00 as compensatory damages and P50,000.00 as moral damages. (p. 32, Rollo.) Reversal thereof is now sought, with accused-appellant arguing that error was committed by the trial court in imposing or meting out the penalty of reclusion perpetua against him despite the fact that Sec. 19 (1), Article III of the 1987 Constitution was already in effect when the offense was committed. The facts of the case, as briefly summarized in the brief submitted by the Office of the Solicitor General and as borne out by the evidence, are as follows: On December 29, 1989, at around 1:00 P.M., after having spent half-day at their store, located at No. 166-A, Ramon Magsaysay Avenue, Davao City, Benito Ng Suy was driving their gray Ford Fiera back home, situated at the back of Car Asia, Bajada, Davao City. With him during that time were his daughters, Jocelyn Ng Suy and a younger one together with his two year old son, who were all seated at the front seat beside him while a five year old boy was also seated at the back of the said vehicle. (TSN, April 29, 1991, pp. 3-5; TSN, March 31, 1992) On their way home and while traversing the National Highway of Bajada, Davao City, an orange Toyota Tamaraw driven by one Virgilio Abogada, suddenly made a left turn in front of the Regional Hospital, Bajada, Davao City, without noticing the Ford Fiera coming from the opposite direction. This Tamaraw was heading for Sterlyn Kitchenette, which was situated at the comer of the said hospital. (TSN, April 29, 1991, p. 4; TSN, March 31, 1992, pp. 3 and 13) With Virgilio was Patricio Amigo alias Bebot, a vulcanizer at Lingling's vulcanizing shop owned and operated by a certain Galadua. He was also seated at the right front seat beside Virgilio. Due to the unexpected veer made by Virgilio, an accidental head on collision occurred between the Fiera and the

G.R. No. 116719

January 18, 1996

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. PATRICIO AMIGO alias "BEBOT", accused-appellant. DECISION MELO, J.: Initially, Patricio Amigo was charged with frustrated murder in an Information reading as follows: The undersigned accuses the above-named accused of the crime of FRUSTRATED MURDER, under Art. 248, in relation to Art. 5 of the Revised Penal Code, committed as follows: That on or about December 29, 1989, in the City of Davao, Philippines, and within the jurisdiction of this Honorable Court, the above-mentioned accused, armed with a knife, with treachery and evident premeditation and with intent to kill wilfully, unlawfully and feloniously attacked, assaulted and stab with said weapon one Benito Ng Suy, thereby inflicting injuries upon the latter, the following injuries, to wit: MULTIPLE STAB WOUNDS-LEFT ARM, LEFT CHEST, ABDOMEN AND LEFT THIGH WITH PENETRATION TO LEFT PLEURAL CAVITY, DIAPHRAGM STOMACH, DUODENUM, PANCREAS AND MIDTRANVERSE COLON. thus performing all the acts of execution which should have produced the crime of murder as a consequence but nevertheless, did not produce it by reason of causes independent of his will, that is, because of the timely and able medical assistance immediately rendered to the said Benito Ng Suy.

Tamaraw, causing a slight damaged to the right bumper of the latter. (TSN, March 31, 1992, p. 4) Right after the collision, Benito immediately alighted from the driver's seat and confronted Virgilio Abogada who also went down from his vehicle. (TSN, April 29, 1991, p. 5) Benito, who was a big man with a loud voice told Virgilio, "You were not looking," to which Virgilio retorted, I did not see you". (TSN, April 29, 1991, p. 16) While the two drivers where having this verbal confrontation, Patricio who was merely a passenger of Virgilio also alighted from the front seat of the Tamaraw and instantaneously approached Benito and advised the latter to leave since it was merely a small and minor accident. (TSN, April 29, 1991, pp. 16-18) A bit irritated with the actuation exhibit by Patricio, Benito rebuked the former and told him not to interfere, since he had nothing to do with the accident. (ibid. p. 7) Irked by the comment made by Benito, Patricio sarcastically asked; "You are Chinese, is it you?" With a ready answer Benito said; "Yes, I am a Chinese and why?" Patricio in turn replied; So, you are a Chinese, wait for a while," then left. (ibid. pp. 7 and 19) Immediately thereafter, Benito ordered Jocelyn to call a policeman, but after a lapsed of about one minute, Patricio returned and arrogantly approached Benito, asking the latter once again, "You are a Chinese, is it not?" To this Benito calmly responded in the affirmative. (ibid. pp. 7, 19-20) Upon hearing the response, Patricio mumbled "Ah, so you are a Chinese," and suddenly took a five inch knife from his waist and simultaneously stabbed Benito hitting him twice on the chest. (Ibid. p. 20) After being hit, Benito wounded and sensing that his life was in peril, tried to evade his assailant by pushing Patricio away and run around the Tamaraw but Patricio wielding the same knife and not content with the injuries he had already inflicted, still chased Benito and upon overtaking the latter embraced him and thrusted his knife on the victim several times, the last of which hit Benito on the left side of his body. (ibid. pp. 8, 10, 22) It was at this juncture that Jocelyn who was still inside the Ford Fiera, pleading for mercy to spare her father tried to get out of the vehicle but it was very unfortunate that she could not open its door. (Ibid. p. 10) Knowing that Patricio was really determined to kill her father by refusing to heed her pleas, Joselyn shouted for help, since there were already several people around witnessing that fatal incident, but to her consternation nobody lifted a single finger to help them. (ibid. pp. 6, 10, 18, 21-22) Only after her father lay seated on the floor of their Ford Fiera after being hit on the left side of his body that she was able to open the door of the said vehicle. (Ibid. p 12) After this precise moment, her younger sister, upon seeing their father bathing with his own blood, embraced him, causing Patricio to cease from his ferocious assault and noticing the presence of several people, he fled. (Ibid. p. 22) Thereafter, an enraged Jocelyn chased him, but since the assailant ran faster than her, she was not able to overtake him, thus, she instead decided to go back to where her father was and carried him inside the Tamaraw who bumped them and consequently brought him to San Pedro Hospital

where he was attended to at the Emergency Room. (ibid. p 13) While at the Emergency Room, Benito who was on a very critical condition, due to multiple (13) stabbed wounds, was operated by Dr. Rolando Chiu. After the operation, he was subsequently brought to the ICU and stayed there for three (3) weeks. (July 12, 1991, pp. 3 and 4) In a last ditch effort to save his life, having only 10 to 20 percent survival, Benito was airlifted to Manila and was directly confined at the Chinese General Hospital. After three (3) weeks of confinement, Benito expired. CAUSE OF DEATH SEPSIS (an overwhelming infection). This means that the infection has already circulated in the blood all over the body. (ibid. pp. 6-7) (pp. 59-65, Rollo.) Accused-appellant contends that under the 1987 Constitution and prior to the promulgation of Republic Act No. 7659, the death penalty had been abolished and hence, the penalty that should have been imposed for the crime of murder committed by accused-appellant without the attendance of any modifying circumstances, should bereclusion temporal in its medium period or 17 years, 4 months and 1 day, to 20 years of reclusion temporal. Reasons out accused-appellant: . . . Since the death penalty (or capital punishment) is not imposable when the stabbing and killing happened, the computation of the penalty should be regarded from reclusion perpetua down and not from death penalty. Indeed, the appropriate penalty is deducible from reclusion perpetua down to reclusion temporal in its medium period. Hence, there being no modifying circumstances present (p. 5 Decision, ibid.), the correct penalty should be in the medium period (Art. 64, par. 1, Revised Penal Code) which is 17 years, 4 months and 1 day to 20 years of reclusion temporal. (p. 10, Appellant's Brief, ff. p. 50, Rollo.) The question raised by accused-appellant was settled by this Court in People vs. Muoz (170 SCRA 107 [1989]) thusly: In People vs. Gavarra, Justice Pedro L. Yap declared for the Court that "in view of the abolition of the death penalty under Section 19, Article III of the 1987 Constitution, the penalty that may be imposed for murder isreclusion temporal in its maximum period to reclusion perpetua," thereby eliminating death as the original maximum period. Later, without categorically saying so, the Court, through Justice Ameurfina A. Melencio-Herrera in People vs. Masangkay and through Justice Andres R. Narvasa in People vs. Atencio, divided the modified penalty into three new periods, the limits of which were specified by Justice Edgardo L. Paras inPeople vs. Intino, as follows: the lower half of reclusion temporal maximum as the minimum; the upper half ofreclusion temporal maximum as the medium; and reclusion perpetua as the maximum. The Court has reconsidered the above cases and, after extended discussion, come to the conclusion that the doctrine announced therein does not reflect the intention of the framers as embodied in Article III, Section 19(1) of the Constitution. This conclusion is not unanimous, to be sure. Indeed, there is much to be said of the opposite view, which was in fact shared by many of those now voting for its reversal. The majority of the Court, however, is of the belief that the original interpretation should be restored as the more acceptable reading of the constitutional provision in question.

The advocates of the Masangkay ruling argue that the Constitution abolished the death penalty and thereby limited the penalty for murder to the remaining periods, to wit, the minimum and the medium. These should now be divided into three new periods in keeping with the three-grade scheme intended by the legislature. Those who disagree feel that Article III, Section 19(1) merely prohibits the imposition of the death penalty and has not, by reducing it to reclusion perpetua, also correspondingly reduced the remaining penalties. These should be maintained intact. A reading of Section 19(1) of Article III will readily show that here is really nothing therein which expressly declares the abolition of the death penalty. The provision merely says that the death penalty shall not be imposed unless for compelling reasons involving heinous crimes the Congress hereafter provides for it and, if already imposed, shall be reduced to reclusion perpetua. The language, while rather awkward, is still plain enough. And it is a settled rule of legal hermeneutics that if the language under consideration is plain, it is neither necessary nor permissible to resort to extrinsic aids, like the records of the constitutional convention, for its interpretation. xxx xxx xxx

The Court realizes that this interpretation may lead to certain inequities that would not have arisen under Article 248 of the Revised Penal Code before its modification. Thus, a person originally subject to the death penalty and another who committed the murder without the attendance of any modifying circumstance will now be both punishable with the same medium period although the former is concededly more guilty than the latter. True enough. But that is the will not of this Court but of the Constitution. That is a question of wisdom, not construction. Of some relevance perhaps is the parable in the Bible of the workman who was paid the stipulated daily wage of one penny although he had worked longer than others hired later in the day also paid the same amount. When he complained because he felt unjustly treated by the hoe jurisdiction of the court over the person. An appearance may be madt agree with me for a penny? The problem in any event is addressed not to this Court but to the Congress. Penalties are prescribed by statute and are essentially and exclusively legislative. As judges, we can only interpret and apply them and have no authority to modify them or revise their range as determined exclusively by the legislature. We should not encroach on this prerogative of the lawmaking body. Coming back to the case at bar, we find that there being no generic aggravating or mitigating circumstance attending the commission of the offenses, the applicable sentence is the medium period of the penalty prescribed by Article 248 of the Revised Penal Code which, conformably to the new doctrine here adopted and announced, is still reclusion perpetua. This is the penalty we imposed on all the accused-appellants for each of the three murders they have committed in conspiracy with the others. The award of civil indemnity for the heirs of each of the victims is affirmed but the amount thereof is hereby increased to P30,000.00 in line with the present policy. (at pp. 120-125.) The above ruling was reiterated in People vs. Parominog (203 SCRA 673 [1991]) and in People vs. De la Cruz(216 SCRA 476 [1992]). Finally, accused-appellant claims that the penalty of reclusion perpetua is too cruel and harsh a penalty and pleads for sympathy. Courts are not the forum to plead for sympathy. The duty of courts is to apply the law, disregarding their feeling of sympathy or pity for an accused. DURA LEX SED LEX. The remedy is elsewhere clemency from the executive or an amendment of the law by the legislative, but surely, at this point, this Court can but apply the law. WHEREFORE, the appealed decision is hereby AFFIRMED. SO ORDERED. Narvasa, C.J., Davide, Jr., Francisco and Panganiban, JJ., concur.

The question as we see it is not whether the framers intended to abolish the death penalty or merely to prevent its imposition. Whatever the intention was, what we should determine is whether or not they also meant to require a corresponding modification in the other periods as a result of the prohibition against the death penalty. It is definite that such a requirement, if there really was one, is not at all expressed in Article III, Section 19(1) of the Constitution or indicated therein by at least clear and unmistakable implication. It would have been so easy, assuming such intention, to state it categorically and plainly, leaving no doubts as to its meaning. One searches in vain for such a statement, express or even implied. The writer of this opinion makes the personal observation that this might be still another instance where the framers meant one thing and said another or strangely, considering their loquacity elsewhere did not say enough. The original ruling as applied in the Gavarra, Masangkay, Atencio and Intino cases represented the unanimous thinking of the Court as it was then constituted. All but two members at that time still sit on the Court today. If we have seen fit to take a second look at the doctrine on which we were all agreed before, it is not because of a change in the composition of this body. It is virtually the same Court that is changing its mind after reflecting on the question again in the light of new perspectives. And well it might, and can, for the tenets it lays down are not immutable. The decisions of this Court are not petrified rules grown rigid once pronounced but vital, growing things subject to change as all life is. While we are told that the trodden path is best, this should not prevent us from opening a fresh trial or exploring the other side or testing a new idea in a spirit of continuing inquiry. Accordingly, with the hope that "as judges, (we) will be equal to (our) tasks," whatever that means, we hereby reverse the current doctrine providing for three new periods for the penalty for murder as reduced by the Constitution. Instead, we return to our original interpretation and hold that Article III, Section 19(1) does not change the periods of the penalty prescribed by Article 248 of the Revised Penal Code except only insofar as it prohibits the imposition of the death penalty and reduces it to reclusion perpetua. The range of the medium and minimum penalties remains unchanged.

G.R. No. 141386

November 29, 2001

THE COMMISSION ON AUDIT OF THE PROVINCE OF CEBU, Represented by Provincial Auditor ROY L. URSAL, petitioner, vs. PROVINCE OF CEBU, Represented by Governor PABLO P. GARCIA, respondent. YNARES-SANTIAGO, J.:

May the salaries and personnel-related benefits of public school teachers appointed by local chief executives in Connection with the establishment and maintenance of extension classes; as well as the expenses for college scholarship grants, be charged to the Special Education Fund (SEF) of the local government unit concerned? The instant petition for review, which raises a pure question of law, seeks to annul and set aside the decision1 of the Regional Trial Court of Cebu, Branch 20, in a petition for declaratory relief, docketed as Civil Case No. CEB-24422. The provincial governor of the province of Cebu, as chairman of the local school board, under Section 98 of the Local Government Code, appointed classroom teachers who have no items in the DECS plantilla to handle extension classes that would accommodate students in the public schools. In the audit of accounts conducted by the Commission on Audit (COA) of the Province of Cebu, for the period January to June 1998, it appeared that the salaries and personnel-related benefits of the teachers appointed by the province for the extension classes were charged against the provincial SEF. Likewise charged to the SEF were the college scholarship grants of the province. Consequently, the COA issued Notices of Suspension to the province of Cebu,2 saying that disbursements for the salaries of teachers and scholarship grants are not chargeable to the provincial SEF. Faced with the Notices of Suspension issued by the COA, the province of Cebu, represented by its governor, filed a petition for declaratory relief with the trial court. On December 13, 1999, the court a quo rendered a decision declaring the questioned expenses as authorized expenditures of the SEF. The dispositive portion thereof reads: WHEREFORE, in view of all the foregoing premises considered, judgment is hereby rendered giving due course to this instant petition for declaratory relief declaring and confirming that petitioner is vested with the authority to disburse the proceeds from the Special Educational Fund [SEF] for the payment of salaries, allowances or honoraria for teachers and non-teaching personnel in the public schools in the Province of Cebu and its component cities, and, municipalities, as well as the expenses for scholarship grants of petitioners specially to poor but deserving students therein. Declaring, further, respondents audit findings on pages 36 and 37 in the Annual Audit Report on the Province of Cebu: for the year ending December 31, 1999 as null and void.3 Hence, the instant petition by the Commission on Audit. The Special Education Fund was created by virtue of R.A. No. 5447, which is An act creating a special education fund to be constituted from the proceeds of an additional real property tax and a certain portion of the taxes on Virginia-type cigarettes and duties on imported leaf tobacco, defining the activities to be financed, creating school boards for the purpose, and appropriating funds therefrom, which took effect on January 1, 1969. Pursuant thereto, P.D. No. 464, also known as the Real Property Tax Code of the Philippines, imposed an annual tax of 1% on real property which shall accrue to the SEF. 4 Under R.A. No. 5447, the SEF may be expended exclusively for the following activities of the DECS (a) the organization and operation of such number of extension classes as may be needed to accommodate all children of school age desiring to enter Grade I, including the creation of positions of classroom teachers, head teachers and principals for such extension classes x x x;

(b) the programming of the construction and repair of elementary school buildings, acquisition of sites, and the construction and repair of workshops and similar buildings and accessories thereof to house laboratory, technical and similar equipment and apparatus needed by public schools offering practical arts, home economics and vocational courses, giving priority to elementary schools on the basis of the actual needs and total requirements of the country x x x; (c) the payment and adjustment of salaries of public school teachers under and by virtue of Republic Act Numbered Five Thousand One Hundred Sixty-Eight and all the benefits in favor of public school teachers provided under Republic Act Numbered Four Thousand Six Hundred Seventy; (d) preparation, printing and/or purchase of textbooks, teacher's guides. forms and pamphlets x x x; (e) the purchase and/or improvement, repair and refurbishing of machinery, laboratory, technical and similar equipment and apparatus, including spare parts needed by the Bureau of Vocational Education and secondary schools offering courses; (f) the establishment of printing plant to be used exclusively for the printing needs of the Department of Education and the improvement of regional printing plants in the vocational schools; (g) the purchase of teaching materials such as work books, atlases, flip charts, science and mathematics teaching aids, and simple laboratory devices for elementary and secondary classes; (h) the implementation of the existing program for citizenship development in barrio high schools, folk schools and adult education classes; (i) the undertaking of education research, including that of the Board of National Education; (j) the granting of government scholarships to poor but deserving students under Republic Act Numbered Four Thousand Ninety; and (k) the promotion of physical education, such as athletic meets. (Emphasis supplied) With the effectivity of the Local Government Code of 1991, petitioner contends that R.A. No. 5447 was repealed, leaving Sections 235, 272 and 100 (c) of the Code to govern the disposition of the SEF, to wit: SEC. 235. Additional Levy on Real Property for the Special Education Fund (SEF). A province or city or a municipality within the Metropolitan Manila Area, may levy and collect an annual tax of one percent (1%) on the assessed value of real property which shall be in addition to the basic real property tax. The proceeds thereof shall exclusively accrue to the Special Education Fund (SEF). SEC. 272. Application of Proceeds of the Additional One Percent SEF Tax. The proceeds from the additional one percent (1%) tax on real properly accruing to the SEF shall be automatically released to the local school boards: Provided, That, in case of provinces, the proceeds shall be divided equally between the provincial and municipal school boards: Provided, however, That the proceeds shall be allocated for the operation and maintenance of public schools, construction and repair of school buildings, facilities and equipment, educational research, purchase of books and periodicals, and sports development as determined and approved by the local school board. (Emphasis supplied)

SEC. 100. Meeting and Quorum; Budget xxx xxx xxx

Similarly instructive are the foregoing deliberations in the House of Representatives on August 16, 1990: INTERPELLATION OF MS. RAYMUNDO

(c) The annual school board budget shall give priority to the following: (1) Construction, repair, and maintenance of school buildings and other facilities of public elementary and secondary schools; (2) Establishment and maintenance of extension classes where necessary; and (3) Sports activities at the division, district, municipal, and barangay levels. (Emphasis supplied) Invoking the legal maxim "expressio unius est exclusio alterius," petitioner alleges that since salaries, personnel-related benefits and scholarship grants are not among those authorized as lawful expenditures of the SEF under the Local Government Code, they should be deemed excluded therefrom. Moreover, petitioner claims that since what is allowed for local school boards to determine under Section 995 of the Local Government Code is only the "annual supplementary budgetary needs; for the operation and maintenance of public schools," as well as the "supplementary local cost to meet such needs," the budget of the local school boards for the establishment and maintenance of extension classes should be construed to refer only to the upkeep and maintenance of public school building, facilities and similar expenses other than personnel-related benefits. This is because, petitioner argued, the maintenance and operation of public schools pertain principally to the DECS. The contentions are without merit. It is a basic precept in statutory construction that the intent of the legislature is the controlling factor in the interpretation of a statute.6 In this connection, the following portions of the deliberations of the Senate on the second reading of the Local Government Code on July 30, 1990 are significant: Senator Guingona. Mr. President. The President. Senator Guingona is recognized. Senator Guingona. Just for clarification, Mr. President. In this transfer, will it include everything eventually lock, stock and barrel, including curriculum? Senator Pimentel. Mr. President, our stand in the Committee is to respect the decision of the National Government in terms of curriculum. Senator Guingona. But, supposing the Local Education Board wishes to adopt a certain curriculum for that particular region? Senator Pimentel. Mr. President, pursuant to the wording of the proposed transfer of this elementary school system to local government units, what are specifically covered here are merely the construction, repair, and maintenance of elementary school buildings and other structures connected with public elementary school education, payment of salaries, emoluments, allowances et cetera, procurement of books, other teaching materials and equipment needed for the proper implementation of the program. There is nothing here that will indicate that the local government will have any right to- alter the curriculum. (Emphasis supplied) Senator Guingona. Thank you, Mr. President.

(Continuation) Continuing her interpellation, Ms. Raymundo then adverted to subsection 4 of Section 101 [now Section 100, paragraph (c)] and asked if the budget is limited only to the three priority areas mentioned. She also asked what is meant by the phrase "maintenance of extension classes." In response, Mr. De Pedro clarified that the provision is not limited to the three activities, to which may be added other sets of priorities at the proper time. As to extension classes, he pointed out that the school boards may provide out of its own funds, for additional teachers or other requirements if the national government cannot provide funding therefor. Upon Ms. Raymundo's query, Mr. de Pedro further explained that support for teacher tools could fall under the priorities cited and is covered by certain circulars. Undoubtedly, the aforecited exchange of views clearly demonstrates that the legislature intended the SEF to answer for the compensation of teachers handling extension classes. Furthermore, the pertinent portion of the repealing clause of the Local Government Code, provides: SEC. 534. Repealing Clause. x x x (c) The provisions of . . . Sections 3, a (3) and b (2) of Republic Act No. 5447, regarding the Special Education Fund . . . are hereby repealed and rendered of no force and effect. Evidently, what was expressly repealed by the Local Government Code was only Section 3, of R.A. No. 5447, which deals with the "Allocation of taxes on Virginia type cigarettes and duties on imported leaf tobacco." The legislature is presumed to know the existing laws, such that whenever it intends to repeal a particular or specific provision of law, it does so expressly. The failure to add a specific repealing clause particularly mentioning the statute to be repealed indicates that the intent was not to repeal any existing law on the matter, unless an irreconcilable inconsistency and repugnancy exists in the terms of the new and the old laws.7 Hence, the provisions allocating funds for the salaries of teachers under Section 1, of R.A. No. 5447, which are not inconsistent with Sections 272 and 100 (c) of the Local Government Code, remain in force and effect. Even under the doctrine of necessary implication, the allocation of the SEF for the establishment and maintenance of extension classes logically implies the hiring of teachers who should, as a matter of course be compensated for their services. Every statute is understood, by implication, to contain all such provisions as may be necessary to effectuate its object and purpose, or to make effective rights, powers, privileges or jurisdiction which it grants, including all such collateral and subsidiary consequences as may be fairly and logically inferred from its terms. Ex necessitate legis.8 Verily, the services and the corresponding compensation of these teachers are necessary and indispensable to the establishment and maintenance of extension classes. Indeed, the operation and maintenance of public schools is lodged principally with the DECS. This is the reason why only salaries of public school teachers appointed in connection with the establishment and maintenance of extension classes, inter alia, pertain to the supplementary budget of the local school boards. Thus, it should be made clear that not every kind of personnel-related benefits of public school teachers may be charged to the SEF. The SEF may be expended only for the salaries and personnel-related benefits of

teachers appointed by the local school boards in connection with the establishment and maintenance of extension classes. Extension classes as referred to mean additional classes needed to accommodate all children of school age desiring to enter in public schools to acquire basic education.9 With respect, however, to college scholarship grants, a reading of the pertinent laws of the Local Government Code reveals that said grants are not among the projects for which the proceeds of the SEF may be appropriated. It should be noted that Sections 100 (c) and 272 of the Local Government Code substantially reproduced Section 1, of R.A. No. 5447. But, unlike payment of salaries of teachers which falls within the ambit of "establishment and maintenance of extension classes" and "operation and maintenance of public schools," the "granting of government scholarship to poor but deserving students" was omitted in Sections 100 (c) and 272 of the Local Government Code. Casus omissus pro omisso habendus est. A person, object, or thing omitted from an enumeration in a statute must be held to have been omitted intentionally. It is not for this Court to supply such grant of scholarship where the legislature has omitted it.10 In the same vein, however noble the intention of the province in extending said scholarship to deserving students, we cannot apply the doctrine of necessary implication inasmuch as the grant of scholarship is neither necessary nor indispensable to the operation and maintenance of public schools. Instead, such scholarship grants may be charged to the General Funds of the province. Pursuant to Section 1, Rule 6311 of the 1997 Rules of Civil Procedure, a petition for declaratory relief may be filed before there is a breach or violation. The Solicitor General claims that the Notices of Suspension issued by the COA to the respondent province amounted to a breach or violation, and therefore, the petition for declaratory relief should have been denied by the trial court. We are not convinced. As held in Shell Company of the Philippines, Ltd. v. Municipality of Sipocot,12 my breach of the statute subject of the controversy will not affect the case; the action for declaratory relief will prosper because the applicability of the statute in question to future transactions still remains to be resolved. Absent a definite ruling in the instant case for declaratory relief, doubts as to the disposition of the SEF will persist. Hence, the trial court did not err in giving due course to the petition for declaratory relief filed by the province of Cebu. WHEREFORE, in view of all the foregoing, the Decision of the Regional Trial Court of Cebu City, Branch 20, in Civil Case No. CEB24422, is AFFIRMED with MODIFICATION. The salaries and personnel-related benefits of the teachers appointed by the provincial school board of Cebu in connection with the establishment and maintenance of extension classes, are declared chargeable against the Special Education Fund of the province. However, the expenses incurred by the provincial government for the college scholarship grants should not be charged against the Special Education Fund, but against the General Funds of the province of Cebu. SO ORDERED. Davide, Jr., C. J., Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Panganiban, Quisumbing, Pardo, Buena, De Leon, Jr., SandovalGutierrez and Carpio, JJ., concur.

ROMERO, J.: The instant special civil action for certiorari and prohibition impugns the resolution of the Commission on Elections (COMELEC) en banc in SPA No. 95-212 dated July 31, 1996, dismissing petitioner's motion for reconsideration of an earlier resolution rendered by the COMELEC's First Division on October 6, 1995, which also dismissed the petition for disqualification 1 filed by petitioner Wilmer Grego against private respondent Humberto Basco. The essential and undisputed factual antecedents of the case are as follows: On October 31, 1981, Basco was removed from his position as Deputy Sheriff by no less than this Court upon a finding of serious misconduct in an administrative complaint lodged by a certain Nena Tordesillas. The Court held: WHEREFORE, FINDING THE RESPONDENT DEPUTY SHERIFF HUMBERTO BASCO OF THE CITY COURT OF MANILA GUILTY OF SERIOUS MISCONDUCT IN OFFICE FOR THE SECOND TIME, HE IS HEREBY DISMISSED FROM THE SERVICE WITH FORFEITURE OF ALL RETIREMENT BENEFITS AND WITH PREJUDICE TO REINSTATEMENT TO ANY POSITION IN THE NATIONAL OR LOCAL GOVERNMENT, INCLUDING ITS AGENCIES AND INSTRUMENTALITIES, OR GOVERNMENT-OWNED OR CONTROLLED CORPORATIONS. xxx xxx xxx 2 Subsequently, Basco ran as a candidate for Councilor in the Second District of the City of Manila during the January 18, 1988, local elections. He won and, accordingly, assumed office. After his term, Basco sought re-election in the May 11, 1992 synchronized national elections. Again, he succeeded in his bid and he was elected as one of the six (6) City Councilors. However, his victory this time did not remain unchallenged. In the midst of his successful reelection, he found himself besieged by lawsuits of his opponents in the polls who wanted to dislodge him from his position. One such case was a petition for quo warranto 3 filed before the COMELEC by Cenon Ronquillo, another candidate for councilor in the same district, who alleged Basco's ineligibility to be elected councilor on the basis of the Tordesillas ruling. At about the same time, two more cases were also commenced by Honorio Lopez II in the Office of the Ombudsman and in the Department of Interior and Local Government. 4 All these challenges were, however, dismissed, thus, paving the way for Basco's continued stay in office. Despite the odds previously encountered, Basco remained undaunted and ran again for councilor in the May 8, 1995, local elections seeking a third and final term. Once again, he beat the odds by emerging sixth in a battle for six councilor seats. As in the past, however, his right to office was again contested. On May 13, 1995, petitioner Grego, claiming to be a registered voter of Precinct No. 966, District II, City of Manila, filed with the COMELEC a petition for disqualification, praying for Basco's disqualification, for the suspension of his proclamation, and for the declaration of Romualdo S. Maranan as the sixth duly elected Councilor of Manila's Second District. On the same day, the Chairman of the Manila City Board of Canvassers (BOC) was duly furnished with a copy of the petition. The other members of the BOC learned about this petition only two days later.

G.R. No. 125955 June 19, 1997 WILMER GREGO, petitioner, vs. COMMISSION ON ELECTIONS and HUMBERTO BASCO, respondents.

The COMELEC conducted a hearing of the case on May 14, 1995, where it ordered the parties to submit simultaneously their respective memoranda. Before the parties could comply with this directive, however, the Manila City BOC proclaimed Basco on May 17, 1995, as a duly elected councilor for the Second District of Manila, placing sixth among several candidates who vied for the seats. 5 Basco immediately took his oath of office before the Honorable Ma. Ruby Bithao-Camarista, Presiding Judge, Metropolitan Trial Court, Branch I, Manila. In view of such proclamation, petitioner lost no time in filing an Urgent Motion seeking to annul what he considered to be an illegal and hasty proclamation made on May 17, 1995, by the Manila City BOC. He reiterated Basco's disqualification and prayed anew that candidate Romualdo S. Maranan be declared the winner. As expected, Basco countered said motion by filing his Urgent Opposition to: Urgent Motion (with Reservation to Submit Answer and/or Motion to Dismiss Against Instant Petition for Disqualification with Temporary Restraining Order). On June 5, 1995, Basco filed his Motion to Dismiss Serving As Answer pursuant to the reservation he made earlier, summarizing his contentions and praying as follows: Respondent thus now submits that the petitioner is not entitled to relief for the following reasons: 1. The respondent cannot be disqualified on the ground of Section 40 paragraph b of the Local Government Code because the Tordesillas decision is barred by laches, prescription, res judicata, lis pendens, bar by prior judgment, law of the case and stare decisis; 2. Section 4[0] par. B of the Local Government Code may not be validly applied to persons who were dismissed prior to its effectivity. To do so would make it ex post facto, bill of attainder, and retroactive legislation which impairs vested rights. It is also a class legislation and unconstitutional on the account. 3. Respondent had already been proclaimed. And the petition being a preproclamation contest under the Marquez v. Comelec Ruling, supra, it should be dismissed by virtue of said pronouncement. 4. Respondent's three-time election as candidate for councilor constitutes implied pardon by the people of previous misconduct (Aguinaldo v. Comelec G.R. 105128; Rice v. State 161 SCRA 401; Montgomery v. Newell 40 SW 2d 4181; People v. Bashaw 130 P. 2nd 237, etc.). 5. As petition to nullify certificate of candidacy, the instant case has prescribed; it was premature as an election protest and it was not brought by a proper party in interest as such protest.: PRAYER WHEREFORE it is respectfully prayed that the instant case be dismissed on instant motion to dismiss the prayer for restraining order denied (sic). If this Honorable Office is not minded to dismiss, it is respectfully prayed that instant motion be considered as respondent's answer. All other reliefs and remedies just and proper in the premises are likewise hereby prayed for. After the parties' respective memoranda had been filed, the COMELEC's First Division resolved to dismiss the petition for

disqualification on October 6, 1995, ruling that "the administrative penalty imposed by the Supreme Court on respondent Basco on October 31, 1981 was wiped away and condoned by the electorate which elected him" and that on account of Basco's proclamation on May 17, 1995, as the sixth duly elected councilor of the Second District of Manila, "the petition would no longer be viable." 6 Petitioner's motion for reconsideration of said resolution was later denied by the COMELEC en banc in its assailed resolution promulgated on July 31, 1996. 7 Hence, this petition. Petitioner argues that Basco should be disqualified from running far any elective position since he had been "removed from office as a result of an administrative case" pursuant to Section 40 (b) of Republic Act No. 7160, otherwise known as the Local Government Code (the Code), which took effect on January 1, 1992. 8 Petitioner wants the Court to likewise resolve the following issues, namely: 1. Whether or not Section 40 (b) of Republic Act No. 7160 applies retroactively to those removed from office before it took effect on January 1, 1992; 2. Whether or not private respondent's election in 1988, 1992 and in 1995 as City Councilor of Manila wiped away and condoned the administrative penalty against him; 3. Whether or not private respondent's proclamation as sixth winning candidate on May 17, 1995, while the disqualification case was still pending consideration by COMELEC, is void ab initio; and 4. Whether or not Romualdo S. Maranan, who placed seventh among the candidates for City Councilor of Manila, may be declared a winner pursuant to Section 6 of Republic Act No. 6646. While we do not necessarily agree with the conclusions and reasons of the COMELEC in the assailed resolution, nonetheless, we find no grave abuse of discretion on its part in dismissing the petition for disqualification. The instant petition must, therefore, fail. We shall discuss the issues raised by petitioner in seriatim. I. Does Section 40 (b) of Republic Act No. 7160 apply retroactively to those removed from office before it took effect on January 1, 1992? Section 40 (b) of the Local Government Code under which petitioner anchors Basco's alleged disqualification to run as City Councilor states: Sec. 40. Disqualifications. The following persons are disqualified from running for any elective local position: xxx xxx xxx (b) Those removed from office as a result of an administrative case; xxx xxx xxx In this regard, petitioner submits that although the Code took effect only on January 1, 1992, Section 40 (b) must nonetheless be given

retroactive effect and applied to Basco's dismissal from office which took place in 1981. It is stressed that the provision of the law as worded does not mention or even qualify the date of removal from office of the candidate in order for disqualification thereunder to attach. Hence, petitioner impresses upon the Court that as long as a candidate was once removed from office due to an administrative case, regardless of whether it took place during or prior to the effectivity of the Code, the disqualification applies. 9 To him, this interpretation is made more evident by the manner in which the provisions of Section 40 are couched. Since the past tense is used in enumerating the grounds for disqualification, petitioner strongly contends that the provision must have also referred to removal from office occurring prior to the effectivity of the Code. 10 We do not, however, subscribe to petitioner's view. Our refusal to give retroactive application to the provision of Section 40 (b) is already a settled issue and there exist no compelling reasons for us to depart therefrom. Thus, inAguinaldo v. COMELEC, 11 reiterated in the more recent cases of Reyes v. COMELEC 12 and Salalima v.Guingona, Jr., 13 we ruled, thus: The COMELEC applied Section 40 (b) of the Local Government Code (Republic Act 7160) which provides: Sec. 40. The following persons are disqualified from running for any elective local positions: xxx xxx xxx (b) Those removed from office as a result of an administrative case. Republic Act 7160 took effect only on January 1, 1992. The rule is: xxx xxx xxx . . . Well-settled is the principle that while the Legislature has the power to pass retroactive laws which do not impair the obligation of contracts, or affect injuriously vested rights, it is equally true that statutes are not to be construed as intended to have a retroactive effect so as to affect pending proceedings, unless such intent is expressly declared or clearly and necessarily implied from the language of the enactment. . . . (Jones v. Summers, 105 Cal. App. 51, 286 Pac. 1093; U.S. v. Whyel 28 (2d) 30; Espiritu v. Cipriano, 55 SCRA 533 [1974], cited in Nilo v. Court of Appeals, 128 SCRA 519 [1974]. See also Puzon v. Abellera, 169 SCRA 789 [1989]; Al-Amanah Islamic Investment Bank of the Philippines v. Civil Service Commission, et al., G.R. No. 100599, April 8, 1992).

There is no provision in the statute which would clearly indicate that the same operates retroactively. It, therefore, follows that [Section] 40 (b) of the Local Government Code is not applicable to the present case. (Emphasis supplied). That the provision of the Code in question does not qualify the date of a candidate's removal from office and that it is couched in the past tense should not deter us from applying the law prospectively. The basic tenet in legal hermeneutics that laws operate only prospectively and not retroactively provides the qualification sought by petitioner. A statute, despite the generality in its language, must not be so construed as to overreach acts, events or matters which transpired before its passage. Lex prospicit, non respicit. The law looks forward, not backward. 14 II. Did private respondent's election to office as City Councilor of Manila in the 1988, 1992 and 1995 elections wipe away and condone the administrative penalty against him, thus restoring his eligibility for public office? Petitioner maintains the negative. He quotes the earlier ruling of the Court in Frivaldo v. COMELEC 15 to the effect that a candidate's disqualification cannot be erased by the electorate alone through the instrumentality of the ballot. Thus: . . . (T)he qualifications prescribed for elective office cannot be erased by the electorate alone. The will of the people as expressed through the ballot cannot cure the vice of ineligibility, especially if they mistakenly believed, as in this case, that the candidate was qualified. . . . At first glance, there seems to be a prima facie semblance of merit to petitioner's argument. However, the issue of whether or not Basco's triple election to office cured his alleged ineligibility is actually beside the point because the argument proceeds on the assumption that he was in the first place disqualified when he ran in the three previous elections. This assumption, of course, is untenable considering that Basco was NOT subject to any disqualification at all under Section 40 (b) of the Local Government Code which, as we said earlier, applies only to those removed from office on or after January 1, 1992. In view of the irrelevance of the issue posed by petitioner, there is no more reason for the Court to still dwell on the matter at length. Anent Basco's alleged circumvention of the prohibition in Tordesillas against reinstatement to any position in the national or local government, including its agencies and instrumentalities, as well as government-owned or controlled corporations, we are of the view that petitioner's contention is baseless. Neither does petitioner's argument that the term "any position" is broad enough to cover without distinction both appointive and local positions merit any consideration. Contrary to petitioner's assertion, the Tordesillas decision did not bar Basco from running for any elective position. As can be gleaned from the decretal portion of the said decision, the Court couched the prohibition in this wise: . . . AND WITH PREJUDICE TO REINSTATEMENT TO ANY POSITION IN THE NATIONAL OR LOCAL GOVERNMENT, INCLUDING ITS AGENCIES AND INSTRUMENTALITIES, OR GOVERNMENTOWNED OR CONTROLLED CORPORATIONS. In this regard, particular attention is directed to the use of the term "reinstatement." Under the former Civil Service Decree, 16 the law applicable at the time Basco, a public officer, was administratively dismissed from office, the term "reinstatement" had a technical meaning, referring only to an appointive position. Thus:

Art. VIII. PERSONNEL POLICIES AND STANDARDS. Sec. 24. Personnel Actions. xxx xxx xxx (d) Reinstatement. Any person who has been permanently APPOINTED to a position in the career service and who has, through no delinquency or misconduct, been separated therefrom, may be reinstated to a position in the same level for which he is qualified. xxx xxx xxx (Emphasis supplied). The Rules on Personnel Actions and Policies issued by the Civil Service Commission on November 10, 1975, 17 provides a clearer definition. It reads: RULE VI. OTHER PERSONNEL ACTIONS Sec. 7. Reinstatement is the REAPPOINTMENT of a person who was previously separated from the service through no delinquency or misconduct on his part from a position in the career service to which he was permanently appointed, to a position for which he is qualified. (Emphasis supplied). In light of these definitions, there is, therefore, no basis for holding that Basco is likewise barred from running for an elective position inasmuch as what is contemplated by the prohibition in Tordesillas is reinstatement to anappointive position. III. Is private respondent's proclamation as sixth winning candidate on May 17, 1995, while the disqualification case was still pending consideration by COMELEC, void ab initio? To support its position, petitioner argues that Basco violated the provisions of Section 20, paragraph (i) of Republic Act No. 7166, Section 6 of Republic Act No. 6646, as well as our ruling in the cases of Duremdes v.COMELEC, 18 Benito v. COMELEC 19 and Aguam v. COMELEC. 20 We are not convinced. The provisions and cases cited are all misplaced and quoted out of context. For the sake of clarity, let us tackle each one by one. Section 20, paragraph (i) of Rep. Act 7166 reads: Sec. 20. Procedure in Disposition of Contested Election Returns. xxx xxx xxx (i) The board of canvassers shall not proclaim any candidate as winner unless authorized by the Commission after the latter has ruled on the objections brought to it on appeal by the losing party. Any proclamation made in violation hereof shall be void ab initio, unless the contested returns will not adversely affect the results of the election. xxx xxx xxx

The inapplicability of the abovementioned provision to the present case is very much patent on its face considering that the same refers only to a void proclamation in relation to contested returns and NOT to contested qualifications of a candidate. Next, petitioner cites Section 6 of Rep. Act 6646 which states: Sec. 6. Effect of Disqualification Case. Any candidate who has been declared by final judgment to be disqualified shall not be voted for, and the votes cast for him shall not be counted. If for any reason, a candidate is not declared by final judgment before an election to be disqualified and he is voted for and receives the winning number of votes in such election, the Court or Commission shall continue with the trial and hearing of the action, inquiry or protest and, upon motion of the complainant or any intervenor, may during the pendency thereof order the suspension of the proclamation of such candidate whenever the evidence of his guilt is strong. (Emphasis supplied). This provision, however, does not support petitioner's contention that the COMELEC, or more properly speaking, the Manila City BOC, should have suspended the proclamation. The use of the word "may" indicates that the suspension of a proclamation is merely directory and permissive in nature and operates to confer discretion. 21What is merely made mandatory, according to the provision itself, is the continuation of the trial and hearing of the action, inquiry or protest. Thus, in view of this discretion granted to the COMELEC, the question of whether or not evidence of guilt is so strong as to warrant suspension of proclamation must be left for its own determination and the Court cannot interfere therewith and substitute its own judgment unless such discretion has been exercised whimsically and capriciously. 22 The COMELEC, as an administrative agency and a specialized constitutional body charged with the enforcement and administration of all laws and regulations relative to the conduct of an election, plebiscite, initiative, referendum, and recall, 23 has more than enough expertise in its field that its findings or conclusions are generally respected and even given finality. 24 The COMELEC has not found any ground to suspend the proclamation and the records likewise fail to show any so as to warrant a different conclusion from this Court. Hence, there is no ample justification to hold that the COMELEC gravely abused its discretion. It is to be noted that Section 5, Rule 25 of the COMELEC Rules of Procedure 25 states that: Sec. 5. Effect of petition if unresolved before completion of canvass. . . . (H)is proclamation shallbe suspended notwithstanding the fact that he received the winning number of votes in such election. However, being merely an implementing rule, the same must not override, but instead remain consistent with and in harmony with the law it seeks to apply and implement. Administrative rules and regulations are intended to carry out, neither to supplant nor to modify, the law. 26 Thus, in Miners Association of the Philippines, Inc. v. Factoran, Jr., 27 the Court ruled that: We reiterate the principle that the power of administrative officials to promulgate rules and regulations in the implementation of a statute is necessarily limited only to carrying into effect what is provided in the legislative enactment. The principle was enunciated as early as 1908 in the case of United States v. Barrias. The scope of the exercise of such rule-making power was clearly expressed in the case ofUnited States v. Tupasi Molina, decided in 1914, thus: "Of course, the regulations adopted under legislative authority by a particular department must be in harmony with

the provisions of the law, and for the sole purpose of carrying into effect its general provisions. By such regulations, of course, the law itself can not be extended. So long, however, as the regulations relate solely to carrying into effect the provision of the law, they are valid. Recently, the case of People v. Maceren gave a brief delineation of the scope of said power of administrative officials: Administrative regulations adopted under legislative authority by a particular department must be in harmony with the provisions of the law, and should be for the sole purpose of carrying into effect its general provisions. By such regulations, of course, the law itself cannot be extended (U.S. v. Tupasi Molina, supra). An administrative agency cannot amend an act of Congress (Santos v. Estenzo, 109 Phil. 419, 422; Teoxon vs. Members of the Board of Administrators, L-25619, June 30, 1970, 33 SCRA 585; Manuel vs. General Auditing Office, L-28952, December 29, 1971, 42 SCRA 660; Deluao v. Casteel, L-21906, August 29, 1969, 29 SCRA 350). The rule-making power must be confined to details for regulating the mode or proceeding to carry into effect the law as it has been enacted. The power cannot be extended to amending or expanding the statutory requirements or to embrace matters not covered by the statute. Rules that subvert the statute cannot be sanctioned (University of Santo Tomas v. Board of Tax Appeals, 93 Phil. 376, 382, citing 12 C.J. 845-46. As to invalid regulations, see Collector of Internal Revenue v. Villaflor, 69 Phil. 319; Wise & Co. v. Meer, 78 Phil. 655, 676; Del Mar v. Phil. Veterans Administration, L-27299, June 27, 1973, 51 SCRA 340, 349). xxx xxx xxx . . . The rule or regulations should be within the scope of the statutory authority granted by the legislature to the administrative agency (Davis, Administrative Law, p. 194, 197, cited in Victorias Milling Co., Inc. v. Social Security Commission, 114 Phil. 555, 558). In case of discrepancy between the basic law and a rule or regulation issued to implement said law, the basic law prevails because said rule or regulations cannot go beyond the terms and provisions of the basic law (People v. Lim, 108 Phil. 1091). Since Section 6 of Rep. Act 6646, the law which Section 5 of Rule 25 of the COMELEC Rules of Procedure seeks to implement, employed the word "may," it is, therefore, improper and highly irregular for the COMELEC to have used instead the word "shall" in its rules. Moreover, there is no reason why the Manila City BOC should not have proclaimed Basco as the sixth winning City Councilor. Absent any determination of irregularity in the election returns, as well as an order enjoining the canvassing and proclamation of the winner, it is a mandatory and ministerial duty of the Board of Canvassers concerned to count the votes based on such returns and declare the result. This has been the rule as early as in the case of Dizon v. Provincial Board of Canvassers of Laguna 28 where we clarified the nature of the functions of the Board of Canvassers, viz.: The simple purpose and duty of the canvassing board is to ascertain and declare the apparent

result of the voting. All other questions are to be tried before the court or other tribunal for contesting elections or in quo warranto proceedings. (9 R.C.L., p. 1110) To the same effect is the following quotation: . . . Where there is no question as to the genuineness of the returns or that all the returns are before them, the powers and duties of canvassers are limited to the mechanical or mathematical function of ascertaining and declaring the apparent result of the election by adding or compiling the votes cast for each candidate as shown on the face of the returns before them, and then declaring or certifying the result so ascertained. (20 C.J., 200-201) [Emphasis supplied] Finally, the cases of Duremdes, Benito and Aguam, supra, cited by petitioner are all irrelevant and inapplicable to the factual circumstances at bar and serve no other purpose than to muddle the real issue. These three cases do not in any manner refer to void proclamations resulting from the mere pendency of a disqualification case. In Duremdes, the proclamation was deemed void ab initio because the same was made contrary to the provisions of the Omnibus Election Code regarding the suspension of proclamation in cases of contested election returns. In Benito, the proclamation of petitioner Benito was rendered ineffective due to the Board of Canvassers' violation of its ministerial duty to proclaim the candidate receiving the highest number of votes and pave the way to succession in office. In said case, the candidate receiving the highest number of votes for the mayoralty position died but the Board of Canvassers, instead of proclaiming the deceased candidate winner, declared Benito, a mere second-placer, the mayor. Lastly, in Aguam, the nullification of the proclamation proceeded from the fact that it was based only on advanced copies of election returns which, under the law then prevailing, could not have been a proper and legal basis for proclamation. With no precedent clearly in point, petitioner's arguments must, therefore, be rejected. IV. May Romualdo S. Maranan, a seventh placer, be legally declared a winning candidate? Obviously, he may not be declared a winner. In the first place, Basco was a duly qualified candidate pursuant to our disquisition above. Furthermore, he clearly received the winning number of votes which put him in sixth place. Thus, petitioner's emphatic reference to Labo v. COMELEC, 29 where we laid down a possible exception to the rule that a second placer may not be declared the winning candidate, finds no application in this case. The exception is predicated on the concurrence of two assumptions, namely: (1) the one who obtained the highest number of votes is disqualified; and (2) the electorate is fully aware in fact and in law of a candidate's disqualification so as to bring such awareness within the realm of notoriety but would nonetheless cast their votes in favor of the ineligible candidate. Both assumptions, however, are absent in this case. Petitioner's allegation that Basco was well-known to have been disqualified in the small community where he ran as a candidate is purely speculative and conjectural, unsupported as it is by any convincing facts of record to show notoriety of his alleged disqualification. 30 In sum, we see the dismissal of the petition for disqualification as not having been attended by grave abuse of discretion. There is then no more legal impediment for private respondent's continuance in office as City Councilor for the Second District of Manila.

WHEREFORE, the instant petition for certiorari and prohibition is hereby DISMISSED for lack of merit. The assailed resolution of respondent Commission on Elections (COMELEC) in SPA 95-212 dated July 31, 1996 is hereby AFFIRMED. Costs against petitioner. SO ORDERED. Narvasa, C.J., Regalado, Davide, Jr., Melo, Puno, Vitug, Mendoza, Hermosisima, Jr., Panganiban and Torres, Jr., JJ., concur. Padilla, Bellosillo, Kapunan and Francisco, JJ., are on leave.

Proceedings before the BIR Regional Office On June 26, 2002, petitioner received two Pre-Assessment Notices for deficiency withholding taxes for taxable years 1999 and 2000 which were protested by petitioner on July 23, 2002.9 Thereafter, on October 16, 2002, petitioner received two other Pre-Assessment Notices for deficiency withholding taxes also for taxable years 1999 and 2000.10 The deficiency withholding taxes cover the payments of the honorarium of the Board of Directors, security and janitorial services, legal and professional fees, and interest on savings and time deposits of its members. On October 22, 2002, petitioner informed BIR Regional Director Sonia L. Flores that it would only pay the deficiency withholding taxes corresponding to the honorarium of the Board of Directors, security and janitorial services, legal and professional fees for the year 1999 in the amount of P87,977.86, excluding penalties and interest.11

G.R. No. 182722 DUMAGUETE CATHEDRAL CREDIT COOPERATIVE [DCCCO], Represented by Felicidad L. Ruiz, its General Manager, Petitioner, vs. COMMISSIONER OF INTERNAL REVENUE, Respondent. DECISION DEL CASTILLO, J.: The clashing interests of the State and the taxpayers are again pitted against each other. Two basic principles, the States inherent power of taxation and its declared policy of fostering the creation and growth of cooperatives come into play. However, the one that embodies the spirit of the law and the true intent of the legislature prevails. This Petition for Review on Certiorari under Section 11 of Republic Act (RA) No. 9282,1 in relation to Rule 45 of the Rules of Court, seeks to set aside the December 18, 2007 Decision2 of the Court of Tax Appeals (CTA), ordering petitioner to pay deficiency withholding taxes on interest from savings and time deposits of its members for taxable years 1999 and 2000, pursuant to Section 24(B)(1) of the National Internal Revenue Code of 1997 (NIRC), as well as the delinquency interest of 20% per annum under Section 249(C) of the same Code. It also assails the April 11, 2008 Resolution3 denying petitioners Motion for Reconsideration. Factual Antecedents Petitioner Dumaguete Cathedral Credit Cooperative (DCCCO) is a credit cooperative duly registered with and regulated by the Cooperative Development Authority (CDA).4 It was established on February 17, 19685 with the following objectives and purposes: (1) to increase the income and purchasing power of the members; (2) to pool the resources of the members by encouraging savings and promoting thrift to mobilize capital formation for development activities; and (3) to extend loans to members for provident and productive purposes. 6 It has the power (1) to draw, make, accept, endorse, guarantee, execute, and issue promissory notes, mortgages, bills of exchange, drafts, warrants, certificates and all kinds of obligations and instruments in connection with and in furtherance of its business operations; and (2) to issue bonds, debentures, and other obligations; to contract indebtedness; and to secure the same with a mortgage or deed of trust, or pledge or lien on any or all of its real and personal properties.7 On November 27, 2001, the Bureau of Internal Revenue (BIR) Operations Group Deputy Commissioner, Lilian B. Hefti, issued Letters of Authority Nos. 63222 and 63223, authorizing BIR Officers Tomas Rambuyon and Tarcisio Cubillan of Revenue Region No. 12, Bacolod City, to examine petitioners books of accounts and other accounting records for all internal revenue taxes for the taxable years 1999 and 2000.8

In another letter dated November 8, 2002, petitioner also informed the BIR Assistant Regional Director, Rogelio B. Zambarrano, that it would pay the withholding taxes due on the honorarium and per diems of the Board of Directors, security and janitorial services, commissions and legal & professional fees for the year 2000 in the amount of P119,889.37, excluding penalties and interest, and that it would avail of the Voluntary Assessment and Abatement Program (VAAP) of the BIR under Revenue Regulations No. 17-2002.12 On November 29, 2002, petitioner availed of the VAAP and paid the amounts of P105,574.62 and P143,867.2413corresponding to the withholding taxes on the payments for the compensation, honorarium of the Board of Directors, security and janitorial services, and legal and professional services, for the years 1999 and 2000, respectively. On April 24, 2003, petitioner received from the BIR Regional Director, Sonia L. Flores, Letters of Demand Nos. 00027-2003 and 00026-2003, with attached Transcripts of Assessment and Audit Results/Assessment Notices, ordering petitioner to pay the deficiency withholding taxes, inclusive of penalties, for the years 1999 and 2000 in the amounts of P1,489,065.30 and P1,462,644.90, respectively.14 Proceedings before the Commissioner of Internal Revenue On May 9, 2003, petitioner protested the Letters of Demand and Assessment Notices with the Commissioner of Internal Revenue (CIR).15 However, the latter failed to act on the protest within the prescribed 180-day period. Hence, on December 3, 2003, petitioner filed a Petition for Review before the CTA, docketed as C.T.A. Case No. 6827.16 Proceedings before the CTA First Division The case was raffled to the First Division of the CTA which rendered its Decision on February 6, 2007, disposing of the case in this wise: IN VIEW OF ALL THE FOREGOING, the Petition for Review is hereby PARTIALLY GRANTED. Assessment Notice Nos. 00026-2003 and 00027-2003 are hereby MODIFIED and the assessment for deficiency withholding taxes on the honorarium and per diems of petitioners Board of Directors, security and janitorial services, commissions and legal and professional fees are hereby CANCELLED. However, the assessments for deficiency withholding taxes on interests are hereby AFFIRMED. Accordingly, petitioner is ORDERED TO PAY the respondent the respective amounts of P1,280,145.89 andP1,357,881.14 representing deficiency withholding taxes on interests from savings and time deposits of its members for the taxable years 1999 and 2000. In addition, petitioner is ordered to pay the 20% delinquency interest from May 26, 2003 until the amount of deficiency withholding taxes are fully paid pursuant to Section 249 (C) of the Tax Code. SO ORDERED.17

Dissatisfied, petitioner moved for a partial reconsideration, but it was denied by the First Division in its Resolution dated May 29, 2007. 18 Proceedings before the CTA En Banc On July 3, 2007, petitioner filed a Petition for Review with the CTA En Banc,19 interposing the lone issue of whether or not petitioner is liable to pay the deficiency withholding taxes on interest from savings and time deposits of its members for taxable years 1999 and 2000, and the consequent delinquency interest of 20% per annum. 20 Finding no reversible error in the Decision dated February 6, 2007 and the Resolution dated May 29, 2007 of the CTA First Division, the CTA En Banc denied the Petition for Review21 as well as petitioners Motion for Reconsideration.22 The CTA En Banc held that Section 57 of the NIRC requires the withholding of tax at source. Pursuant thereto, Revenue Regulations No. 2-98 was issued enumerating the income payments subject to final withholding tax, among which is "interest from any peso bank deposit and yield, or any other monetary benefit from deposit substitutes and from trust funds and similar arrangements x x x". According to the CTA En Banc, petitioners business falls under the phrase "similar arrangements;" as such, it should have withheld the corresponding 20% final tax on the interest from the deposits of its members. Issue Hence, the present recourse, where petitioner raises the issue of whether or not it is liable to pay the deficiency withholding taxes on interest from savings and time deposits of its members for the taxable years 1999 and 2000, as well as the delinquency interest of 20% per annum. Petitioners Arguments Petitioner argues that Section 24(B)(1) of the NIRC which reads in part, to wit: SECTION 24. Income Tax Rates. xxxx (B) Rate of Tax on Certain Passive Income: (1) Interests, Royalties, Prizes, and Other Winnings. A final tax at the rate of twenty percent (20%) is hereby imposed upon the amount of interest from any currency bank deposit and yield or any other monetary benefit from deposit substitutes and from trust funds and similar arrangements; x x x applies only to banks and not to cooperatives, since the phrase "similar arrangements" is preceded by terms referring to banking transactions that have deposit peculiarities. Petitioner thus posits that the savings and time deposits of members of cooperatives are not included in the enumeration, and thus not subject to the 20% final tax. To bolster its position, petitioner cites BIR Ruling No. 551-88823 and BIR Ruling [DA591-2006]24 where the BIR ruled that interests from deposits maintained by members of cooperative are not subject to withholding tax under Section 24(B)(1) of the NIRC. Petitioner further contends that pursuant to Article XII, Section 15 of the Constitution25 and Article 2 of Republic Act No. 6938 (RA 6938) or the Cooperative Code of the Philippines,26cooperatives enjoy a preferential tax treatment which exempts their members from the application of Section 24(B)(1) of the NIRC. Respondents Arguments As a counter-argument, respondent invokes the legal maxim "Ubi lex non distinguit nec nos distinguere debemos" (where the law does not

distinguish, the courts should not distinguish). Respondent maintains that Section 24(B)(1) of the NIRC applies to cooperatives as the phrase "similar arrangements" is not limited to banks, but includes cooperatives that are depositaries of their members. Regarding the exemption relied upon by petitioner, respondent adverts to the jurisprudential rule that tax exemptions are highly disfavored and construed strictissimi juris against the taxpayer and liberally in favor of the taxing power. In this connection, respondent likewise points out that the deficiency tax assessments were issued against petitioner not as a taxpayer but as a withholding agent. Our Ruling The petition has merit. Petitioners invocation of BIR Ruling No. 551-888, reiterated in BIR Ruling [DA-591-2006], is proper. On November 16, 1988, the BIR declared in BIR Ruling No. 551-888 that cooperatives are not required to withhold taxes on interest from savings and time deposits of their members. The pertinent BIR Ruling reads: November 16, 1988 BIR RULING NO. 551-888 24 369-88 551-888 Gentlemen: This refers to your letter dated September 5, 1988 stating that you are a corporation established under P.D. No. 175 and duly registered with the Bureau of Cooperatives Development as full fledged cooperative of good standing with Certificate of Registration No. FF 563-RR dated August 8, 1985; and that one of your objectives is to provide and strengthen cooperative endeavor and extend assistance to members and non-members through credit scheme both in cash and in kind. Based on the foregoing representations, you now request in effect a ruling as to whether or not you are exempt from the following: 1. Payment of sales tax 2. Filing and payment of income tax 3. Withholding taxes from compensation of employees and savings account and time deposits of members. (Underscoring ours) In reply, please be informed that Executive Order No. 93 which took effect on March 10, 1987 withdrew all tax exemptions and preferential privileges e.g., income tax and sales tax, granted to cooperatives under P.D. No. 175 which were previously withdrawn by P.D. No. 1955 effective October 15, 1984 and restored by P.D. No. 2008 effective January 8, 1986. However, implementation of said Executive Order insofar as electric, agricultural, irrigation and waterworks cooperatives are concerned was suspended until June 30, 1987. (Memorandum Order No. 65 dated January 21, 1987 of the President) Accordingly, your tax exemption privilege expired as of June 30, 1987. Such being the case, you are now subject to income and sales taxes. Moreover, under Section 72(a) of the Tax Code, as amended, every employer making payment of wages shall deduct and withhold upon such wages a tax at the rates prescribed by Section 21(a) in relation to section 71, Chapter X, Title II, of the same Code as amended by Batas Pambansa Blg. 135 and implemented by Revenue Regulations No. 682 as amended. Accordingly, as an employer you are required to withhold the corresponding tax due from the compensation of your employees.

Furthermore, under Section 50(a) of the Tax Code, as amended, the tax imposed or prescribed by Section 21(c) of the same Code on specified items of income shall be withheld by payor-corporation and/or person and paid in the same manner and subject to the same conditions as provided in Section 51 of the Tax Code, as amended. Such being the case, and since interest from any Philippine currency bank deposit and yield or any other monetary benefit from deposit substitutes are paid by banks, you are not the party required to withhold the corresponding tax on the aforesaid savings account and time deposits of your members. (Underscoring ours) Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner The CTA First Division, however, disregarded the above quoted ruling in determining whether petitioner is liable to pay the deficiency withholding taxes on interest from the deposits of its members. It ratiocinated in this wise: This Court does not agree. As correctly pointed out by respondent in his Memorandum, nothing in the above quoted resolution will give the conclusion that savings account and time deposits of members of a cooperative are tax-exempt. What is entirely clear is the opinion of the Commissioner that the proper party to withhold the corresponding taxes on certain specified items of income is the payor-corporation and/or person. In the same way, in the case of interests earned from Philippine currency deposits made in a bank, then it is the bank which is liable to withhold the corresponding taxes considering that the bank is the payor-corporation. Thus, the ruling that a cooperative is not the proper party to withhold the corresponding taxes on the aforementioned accounts is correct.However, this ruling does not hold true if the savings and time deposits are being maintained in the cooperative, for in this case, it is the cooperative which becomes the payor-corporation, a separate entity acting no more than an agent of the government for the collection of taxes, liable to withhold the corresponding taxes on the interests earned. 27 (Underscoring ours) The CTA En Banc affirmed the above-quoted Decision and found petitioners invocation of BIR Ruling No. 551-88 misplaced. According to the CTA En Banc, the BIR Ruling was based on the premise that the savings and time deposits were placed by the members of the cooperative in the bank.28 Consequently, it ruled that the BIR Ruling does not apply when the deposits are maintained in the cooperative such as the instant case. We disagree. There is nothing in the ruling to suggest that it applies only when deposits are maintained in a bank. Rather, the ruling clearly states, without any qualification, that since interest from any Philippine currency bank deposit and yield or any other monetary benefit from deposit substitutes are paid by banks, cooperatives are not required to withhold the corresponding tax on the interest from savings and time deposits of their members. This interpretation was reiterated in BIR Ruling [DA-591-2006] dated October 5, 2006, which was issued by Assistant Commissioner James H. Roldan upon the request of the cooperatives for a confirmatory ruling on several issues, among which is the alleged exemption of interest income on members deposit (over and above the share capital holdings) from the 20% final withholding tax. In the said ruling, the BIR opined that: xxxx 3. Exemption of interest income on members deposit (over and above the share capital holdings) from the 20% Final Withholding Tax. The National Internal Revenue Code states that a "final tax at the rate of twenty percent (20%) is hereby imposed upon the amount of interest on currency bank deposit and yield or any other monetary benefit from the deposit substitutes and from trust funds and similar arrangement x x x" for individuals under Section 24(B)(1) and for domestic

corporations under Section 27(D)(1). Considering the members deposits with the cooperatives are not currency bank deposits nor deposit substitutes, Section 24(B)(1) and Section 27(D)(1), therefore, do not apply to members of cooperatives and to deposits of primaries with federations, respectively. It bears stressing that interpretations of administrative agencies in charge of enforcing a law are entitled to great weight and consideration by the courts, unless such interpretations are in a sharp conflict with the governing statute or the Constitution and other laws.29 In this case, BIR Ruling No. 551-888 and BIR Ruling [DA-591-2006] are in perfect harmony with the Constitution and the laws they seek to implement. Accordingly, the interpretation in BIR Ruling No. 551-888 that cooperatives are not required to withhold the corresponding tax on the interest from savings and time deposits of their members, which was reiterated in BIR Ruling [DA-591-2006], applies to the instant case. Members of cooperatives deserve a preferential tax treatment pursuant to RA 6938, as amended by RA 9520. Given that petitioner is a credit cooperative duly registered with the Cooperative Development Authority (CDA), Section 24(B)(1) of the NIRC must be read together with RA 6938, as amended by RA 9520. Under Article 2 of RA 6938, as amended by RA 9520, it is a declared policy of the State to foster the creation and growth of cooperatives as a practical vehicle for promoting self-reliance and harnessing people power towards the attainment of economic development and social justice. Thus, to encourage the formation of cooperatives and to create an atmosphere conducive to their growth and development, the State extends all forms of assistance to them, one of which is providing cooperatives a preferential tax treatment. The legislative intent to give cooperatives a preferential tax treatment is apparent in Articles 61 and 62 of RA 6938, which read: ART. 61. Tax Treatment of Cooperatives. Duly registered cooperatives under this Code which do not transact any business with non-members or the general public shall not be subject to any government taxes and fees imposed under the Internal Revenue Laws and other tax laws. Cooperatives not falling under this article shall be governed by the succeeding section. ART. 62. Tax and Other Exemptions. Cooperatives transacting business with both members and nonmembers shall not be subject to tax on their transactions to members. Notwithstanding the provision of any law or regulation to the contrary, such cooperatives dealing with nonmembers shall enjoy the following tax exemptions; x x x. This exemption extends to members of cooperatives. It must be emphasized that cooperatives exist for the benefit of their members. In fact, the primary objective of every cooperative is to provide goods and services to its members to enable them to attain increased income, savings, investments, and productivity.30 Therefore, limiting the application of the tax exemption to cooperatives would go against the very purpose of a credit cooperative. Extending the exemption to members of cooperatives, on the other hand, would be consistent with the intent of the legislature. Thus, although the tax exemption only mentions cooperatives, this should be construed to include the members, pursuant to Article 126 of RA 6938, which provides: ART. 126. Interpretation and Construction. In case of doubt as to the meaning of any provision of this Code or the regulations issued in pursuance thereof, the same shall be resolved liberally in favor of the cooperatives and their members. We need not belabor that what is within the spirit is within the law even if it is not within the letter of the law because the spirit prevails over the letter.31 Apropos is the ruling in the case of Alonzo v. Intermediate Appellate Court,32 to wit:

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 intent 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.1avvphi1 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, [is] 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." 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 lawmakers 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 statute 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. (Underscoring ours) It is also worthy to note that the tax exemption in RA 6938 was retained in RA 9520. The only difference is that Article 61 of RA 9520 (formerly Section 62 of RA 6938) now expressly states that transactions of members with the cooperatives are not subject to any taxes and fees. Thus: ART. 61. Tax and Other Exemptions. Cooperatives transacting business with both members and non-members shall not be subjected to tax on their transactions with members. In relation to this, the transactions of members with the cooperative shall not be subject to any taxes and fees, including but not limited to final taxes on members deposits and documentary tax. Notwithstanding the provisions of any law or regulation to the contrary, such cooperatives dealing with nonmembers shall enjoy the following tax exemptions: (Underscoring ours) xxxx This amendment in Article 61 of RA 9520, specifically providing that members of cooperatives are not subject to final taxes on their deposits, affirms the interpretation of the BIR that Section 24(B)(1) of the NIRC does not apply to cooperatives and confirms that such ruling carries out the legislative intent. Under the principle of legislative approval of administrative interpretation by reenactment, the reenactment of a statute substantially unchanged is persuasive indication of the adoption by Congress of a prior executive construction.33 Moreover, no less than our Constitution guarantees the protection of cooperatives. Section 15, Article XII of the Constitution considers cooperatives as instruments for social justice and economic development. At the same time, Section 10 of Article II of the Constitution declares that it is a policy of the State to promote social justice in all phases of national development. In relation thereto,

Section 2 of Article XIII of the Constitution states that the promotion of social justice shall include the commitment to create economic opportunities based on freedom of initiative and self-reliance. Bearing in mind the foregoing provisions, we find that an interpretation exempting the members of cooperatives from the imposition of the final tax under Section 24(B)(1) of the NIRC is more in keeping with the letter and spirit of our Constitution. All told, we hold that petitioner is not liable to pay the assessed deficiency withholding taxes on interest from the savings and time deposits of its members, as well as the delinquency interest of 20% per annum. In closing, cooperatives, including their members, deserve a preferential tax treatment because of the vital role they play in the attainment of economic development and social justice. Thus, although taxes are the lifeblood of the government, the States power to tax must give way to foster the creation and growth of cooperatives. To borrow the words of Justice Isagani A. Cruz: "The power of taxation, while indispensable, is not absolute and may be subordinated to the demands of social justice."34 WHEREFORE, the Petition is hereby GRANTED. The assailed December 18, 2007 Decision of the Court of Tax Appeals and the April 11, 2008 Resolution are REVERSED and SET ASIDE. Accordingly, the assessments for deficiency withholding taxes on interest from the savings and time deposits of petitioners members for the taxable years 1999 and 2000 as well as the delinquency interest of 20% per annum are hereby CANCELLED. SO ORDERED. MARIANO C. DEL CASTILLO Associate Justice

Federation of Free Farmers

BARREDO, J: Four separate petitions of the respective parties concerned for the review of the decision of the Court of Appeals in CA G.R. No. 47298-R, entitled Federation of Free Farmers, et al. vs. Victorias Milling Co., Inc., et al. of August 12,1975. The appellate court held that notwithstanding the provisions of Section 9, in relation to Section 1 of the Sugar Act of 1952, Republic Act 809, providing that of any increase in the share of the proceeds of milled sugarcane and derivatives obtained by the planters from the centrals in any sugar milling district in the Philippines, 60% of said increase shall correspond to and should be paid by the planters to their respective laborers, the laborers of the planters affiliated to the Victorias Milling District who are members of or represented by the Federation of Free Farmers, one of herein petitioners, have not been fully paid their share thus provided by law, corresponding to crop years 1955 to 1974, in spite of clear evidence in the record showing that the increase of 4% in the share of the Planters, Victorias Milling District, corresponding to all the years since the enforcement of the aforementioned Act had already been paid by petitioner Victorias Milling Co., Inc. to said planters. The Court of Appeals further found that even the shares of the laborers corresponding to crop years 1952-1955, when by operation of the Act, the increase was 10%, had not been paid. The appellate court rendered judgment holding the planters of the district and Victorias Milling Co., Inc. jointly and severally liable to the said laborers for all said alleged unpaid amounts. All the four parties involved, namely, (1) the FEDERATION, (2) the PLANTERS, as an association and on behalf of all planters in the Victorias district, (3) two individual planters (SANTOS and TIROL) as

well as (4) the CENTRAL (VICTORIAS) are now before Us with their respective opposing positions relative to such decision. In G. R. No. L-41161, the FEDERATION maintains that (1) the plantation laborers, its members, have not only not been fully paid the amounts indisputably due them from crop year 1952-1953 to November 1, 1955, during which period all the parties are agreed that Section I of Republic Act 809 was fully applicable, but that (2) in 1956, VICTORIAS and the PLANTERS had entered into an agreement which they had no legal right to enter into the way they did, (providing for a 64-36 ratio) that is, in a manner that did not conform with the ratio of sharing between planters and millers specified in the just mentioned legal provision, (which correspondingly provides for a 70-30 ratio) the FEDERATION maintaining that after the enactment of Republic Act 809, all planters and millers in all the sugar milling districts in the Philippines were deprived of the freedom to stipulate any ratio of sharing of the proceeds of sugarcane milled by the respective centrals, as well as their derivatives, in any proportion different from, specially if less for the planters, than that listed in Section 1 of the Act; and (3) assuming the PLANTERS and VICTORIAS had the legal right to enter into any such agreement, that the 60% of the increase given to the PLANTERS under said agreement has not been paid up to now to the respective laborers of said PLANTERS. In this connection, the FEDERATION further urges, in this instance, that the Court of Appeals' decision is correct in holding that under the law on torts, the PLANTERS and the CENTRAL are jointly and severally liable for the payment of the amounts thus due them. In G.R. No. L-41222, the contentions of petitioner VICTORIAS are: (1) that the evidence incontrovertibly shows that it has already paid in full to the PLANTERS their respective shares in the proceeds of the sugarcane and derivatives milled by said central from the moment it was legally decided and agreed that it should do so, (aside, of course, from other issues which albeit related thereto may need not be resolved here anymore, for reasons herein under to be stated) (2) in its initial petitions in the trial court, the FEDERATION admitted that the laborers have been given what is due them as far as the 1952-53 to 1954-55 crops are concerned, and (3) that, even if it were true that the PLANTERS have not paid their laborers the corresponding share provided for them by law, the facts and circumstances extant in the records do not factually and legally justify the holding of the Court of Appeals that the Victorias Milling Company, Inc. is jointly and severally liable to the laborers for what the latter's respective planters-employers might have failed or refused to pay their laborers or which said planters might have otherwise appropriated unto themselves or absconded. The CENTRAL also posits that the action as filed below was not founded on torts but on either an obligation created by contract or by law, under neither of which it could be liable, and moreover, even if such action might be deemed based on torts, it has already prescribed, apart from the fact that since the Federation's pleadings alleged and prayed for payment of the laborers' share in 1955-56-1973-74 crop years, the Court of Appeals had no jurisdiction to render judgment concerning the 1952-53-1954-55 crop years, the latter not having been the subject of the allegations and prayers of the FEDERATION in its pleadings in the trial court and all evidence regarding said matters outside of the pleaded issues were properly and opportunely objected to. In G. R. No. L-43153, the PLANTERS, aside from asserting (1) their freedom to stipulate with the CENTRAL such ratio of sharing as they might agree upon, regardless of the ratios specified in Section 1 of the Sugar Act, (2) insist that their respective laborers have already been fully paid what is due them, under the law insofar as the 1952-53 to 1954-55 crop years are concerned, thereby impliedly if not directly admitting that as provided by law, the CENTRAL or VICTORIAS had already paid them the increase they had agreed upon and (3) that, in any event, the milling company should reimburse them whatever amounts they might be adjudged to pay the laborers. Lastly, in G. R. No. L-43369, planters PRIMO SANTOS and ROBERTO H. TIROL, who are among the planters in the Victorias District, complain that the decision of the Court of Appeals ignored their plea of lack of jurisdiction of the trial court over their persons in spite of their proven claim that they had not been properly served with summons, and that the portion of said decision holding them jointly and severally liable with VICTORIAS and the PLANTERS to the latter's

laborers for the amounts here in question has no factual and legal basis, considering they were not parties to the pertinent questioned agreements. I In its petition, the FEDERATION assigns the following alleged errors in the decision under review: I RESPONDENT THE HONORABLE COURT OF APPEALS erred in not holding that as contended by the Honorable Secretary of Labor, and, in effect the Honorable Secretary of Justice, the phrase 'written milling agreements' in the aforequoted Section I of Republic Act No. 809 has exclusive reference to written milling agreements still existing upon the effectivity of the law on June 22, 1952, and, not to those executed subsequent to said date. II RESPONDENT THE HONORABLE COURT OF APPEALS erred in not holding that the purpose and intendment of Republic Act No. 809 is to exempt from its operation milling districts in which there were still existing, on June 22, 1952, written milling agreements between the majority of planters and the millers. III RESPONDENT THE HONORABLE COURT OF APPEALS erred in not holding that as contended by the Honorable Secretary of Labor, and ,in effect, the Honorable Secretary of Justice, the purpose and intendment of Republic Act No. 809, admittedly pattern after the Rice Share Tenancy Act, is to firmly fix by law, effective and, therefore, the legal effect June 22, 1952, the sharing participation among the millers, the planters and the latter's laborers in the unrefined sugar produced in districts not exempt, as well as all byproducts and derivatives thereof, and, consequently, to prohibit in said districts written milling agreements, executed subsequent to said date, providing for sharing arrangements different from or contrary to the schedule fixed under said Sections 1 and 9, and, to prevent any form of circumvention thereof. IV RESPONDENT THE HONORABLE COURT OF APPEALS erred in holding that in order 'to safeguard, preserve, and maintain the integrity, viability, and health of an industry so vital to the entire economy of the country' as sugar industry the lawmakers intended to place in the hands of the millers and the planters the operation of Republic Act No. 809 -- i. e. to enable them to stipulate in their written milling agreements executed subsequent to June 22, 1952 participations those prescribed in Section 1 thereof V RESPONDENT THE HONORABLE COURT OF APPEALS erred in invoking the 'Rules and Regulations to Implement Section 9 of Republic Act 809 dated February 23,1956, as amended on May 4, 1956 (Exhibit GGG) to support its conclusion that the lawmakers intended to place in the hands of the millers and the planters the operation of Republic Act No. 809 - i. e. to enable them to stipulate in their written milling agreements executed subsequent to June 22, 1952 participations different from those prescribed in Section 1 thereof (Pp. 44-45, L-41161 Rec., Vol. 1.)

In its brief here, however, it assigns ten alleged errors thus: -IRESPONDENT COURT ERRED IN DISREGARDING THE OPINION OF THE HONORABLE SECRETARY OF LABOR AND, IN EFFECT, OF THE HONORABLE SECRETARY OF JUSTICE, AND, IN NOT HOLDING THAT THE 'WRITTEN MILLING AGREEMENTS' CONTEMPLATED IN SECTION I OF REPUBLIC ACT NO. 809 BY THE FRAMERS THEREOF WERE THOSE LONG-TERM WRITTEN MILLING AGREEMENTS REFERRED TO IN THE REPORT OF CHIEF JUSTICE MANUEL V. MORAN, MOST, IF NOT ALL, OF WHICH HAD EXPIRED AS EARLY AS 1951, AND, NOT THOSE WHICH THE MILLERS AND THE PLANTERS MIGHT EXECUTE SUBSEQUENT TO THE DATE THE ACT WOULD TAKE EFFECT -IIRESPONDENT COURT ERRED IN DISREGARDING THE EXPLANATION MADE BY REPRESENTATIVE CARLOS HILADO, SPONSOR OF HOUSE BILL NO. 1517, AND, IN NOT HOLDING THAT, BY INSERTING BEFORE THE TEXT OF SECTION I OF REPUBLIC ACT NO. 809 THE PHRASE IN THE ABSENCE OF WRITTEN MILLING AGREEMENTS BETWEEN THE MAJORITY OF PLANTERS AND THE MILLERS OF SUGARCANE IN ANY MILLING DISTRICT,' THE FRAMERS OF SAID LAW INTENDED TO EXEMPT FROM THE OPERATION THEREOF THOSE MILLING DISTRICTS, IF ANY, WHEREIN THERE WERE STILL EXISTING, ON THE DATE THE LAW WOULD TAKE EFFECT, THOSE LONG-TERM WRITTEN MILLING AGREEMENTS BETWEEN THE MILLERS AND A MAJORITY OF THEIR ADHERENT PLANTERS PROVIDING FOR SHARING ARRANGEMENTS; SAID EXEMPTION BEING MERELY A PRECAUTIONARY MEASURE TO PRECLUDE SAID MILLERS, IF ANY, FROM CHALLENGING THE LAW AS BEING VIOLATIVE OF PARAGRAPH 10, SECTION 1, ARTICLE III OF THE OLD CONSTITUTION -IIIRESPONDENT COURT ERRED IN DISREGARDING THE OPINION OF THE HONORABLE SECRETARY OF LABOR AND, IN EFFECT, OF THE HONORABLE SECRETARY OF JUSTICE, AND, IN NOT HOLDING THAT IT IS CONTRARY TO THE PURPOSE AND INTENDMENT OF THE FRAMERS OF REPUBLIC ACT NO. 809 THAT 'THE OPERATION AND APPLICABILITY OF THE SUGAR ACT WOULD REST UPON THE AGREEMENT, THE BILATERAL WILL OF THE CENTRAL AND THE MAJORITY OF THE PLANTERS OR PERHAPS THEIR COLLUSION, TO THE EXCLUSION OF AND THE DETRIMENT OF THE LABORERS, WHOM CONGRESS AS A MEASURE OF LAW AND PUBLIC POLICY CLEARLY INTENDED TO BENEFIT' -IVRESPONDENT COURT ERRED IN NOT HOLDING THAT WHAT THE FRAMERS OF

REPUBLIC ACT NO. 809 HAD CONTEMPLATED IN ORDER TO SAFEGUARD, PRESERVE, AND MAINTAIN THE INTEGRITY, VIABILITY, AND HEALTH OF AN INDUSTRY SO VITAL TO THE ENTIRE ECONOMY OF THE COUNTRY AS THE SUGAR INDUSTRY WAS TO PROMOTE SOCIAL JUSTICE AND PROTECT THE PLANTATION LABORERS THEREIN BY DETERMINING AND FIXING THE RESPECTIVE JUST PARTICIPATIONS IN THE BENEFITS FROM SAID INDUSTRY AMONG THE MILLERS, THE PLANTERS AND THE PLANTATION LABORERS -VRESPONDENT COURT ERRED IN DISREGARDING THE OPINION OF THE HONORABLE SECRETARY OF LABOR AND, IN EFFECT, OF THE HONORABLE SECRETARY OF JUSTICE, AND, IN NOT HOLDING THAT, EFFECTIVE JUNE 22, 1952 AND THEREAFTER, EVEN BEYOND CROP MILLING YEAR 19731974 AS LONG AS THE ACTUAL PRODUCTION CONTINUES TO EXCEED ONE MILLION TWO HUNDRED THOUSAND (1,200,000) PICULS, THE SUGAR PRODUCE IN THE VICTORIAS MILL DISTRICT, AS WELL AS ALL ITS BYPRODUCTS AND DERIVATIVES, SHOULD BE DIVIDED AMONG THE CENTRAL, THE PLANTERS AND THE LABORERS AS FOLLOWS: THIRTY (30%) PER CENT FOR THE CENTRAL, SIXTY-FOUR (64%) PER CENT FOR THE PLANTERS AND SIX (6%) PER CENT FOR THE LABORERS. -VIRESPONDENT COURT ERRED IN DISREGARDING THE OPINION OF THE HONORABLE SECRETARY OF LABOR AND, IN EFFECT, OF THE HONORABLE SECRETARY OF JUSTICE, THAT THE 'AMICABLE SETTLEMENT-COMPROMISE AGREEMENT DATED MARCH 5, 1956 (EXHIBITS XXX THRU XXX-6) IS CONTRARY TO REPUBLIC ACT NO. 809, AND, THEREFORE, NULL AND VOID AB INITIO -VIIRESPONDENT COURT ERRED IN DISREGARDING THE OPINION OF THE HONORABLE SECRETARY OF LABOR AND, IN EFFECT, OF THE HONORABLE SECRETARY OF JUSTICE, THAT 'THE GENERAL COLLECTIVE SUGAR MILLING CONTRACT (EXHIBITS YYY THRU YYY-7) AND THE INDIVIDUAL SUGAR MILLING CONTRACTS' (EXHIBITS SSS THRU SSS-28 AND ZZZ THRU ZZZ-7), IN SO FAR AS THEY REPRODUCE, CONFIRM AND RATIFY THE 'AMICABLE SETTLEMENT- COMPROMISE AGREEMENT' DATED MARCH 5,1956 (EXHIBITS XXX THRU XXX-6) AND/OR ARE DERIVED THEREFROM, ARE CONTRARY TO REPUBLIC ACT NO. 809, AND, THEREFORE, NULL AND VOID AB INITIO -VIIIRESPONDENT COURT ERRED IN NOT ORDERING THE CENTRAL AND THE PLANTERS, JOINTLY AND SEVERALLY, TO ACCOUNT AND PAY FOR THE FAIR MARKET VALUE OF THE SIX (6%) PER CENT SHARE OF

THE LABORERS IN THE PROCEEDS OF THE ANNUAL UNREFINED SUGAR PRODUCE AS WELL AS ITS BY-PRODUCTS AND DERIVATIVES FOR THE PERIOD BEGINNING NOVEMBER 1, 1955, WITH LEGAL INTEREST THEREON COMMENCING FROM OCTOBER 31, 1956 UNTIL FULLY PAID -IXRESPONDENT COURT ERRED IN FAILING TO CONSIDER AND RESOLVE THE LABORERS' TWENTY-SEVENTH ASSIGNMENT OF ERROR AND IN NOT IMPOSING UPON THE CENTRAL AND THE PLANTERS, JOINTLY AND SEVERALLY, THE LIABILITY TO PAY THE LABORERS BY WAY OF EXEMPLARY DAMAGES, TO SET AN EXAMPLE FOR THE PUBLIC GOOD, THE SUM EQUIVALENT TO AT LEAST TWENTY (20%) PER CENT OF ALL THE AMOUNTS TO WHICH THE LABORERS MAY BE ENTITLED -XRESPONDENT COURT ERRED IN REDUCING THE JOINT AND SEVERAL LIABILITY OF THE CENTRAL AND THE PLANTERS FOR CONTINGENT ATTORNEY'S FEES FROM THE STIPULATED SUM EQUIVALENT TO TWENTY (20%) PER CENT OF ALL THE AMOUNTS TO WHICH THE LABORERS MAY BE ENTITLED TO A SUM EQUIVALENT TO TEN (10%) PER CENT THEREOF On the other hand, VICTORIAS presents in its petition the following socalled issues of substance and grounds for allowance of its petition: 1. Considering the attendant existence of written milling agreements between petitioner Vicmico and the planters, which written milling agreements were held to be legal and valid by the Court of Appeals, is Republic Act No. 809 applicable in the case at bar? 2. In interpreting the phrase 'under this Act' appearing in Section 9 of Republic Act No. 809, as embracing written milling agreements executed subsequent to the effectivity of said law, did not the Court of Appeals unauthorizedly and unfoundedly indulge in judicial legislation? 3. Assuming arguendo that the phrase 'under this Act' includes subsequently executed written milling contracts providing for increased participation on the part of the planters in the amount of 4%, on the basis of which milling contracts the claim of the FFF et als. to 60% of said 4% share' is founded, did not the Court of Appeals erroneously hold, said Court acting contrary to law and to the facts and admissions of the parties, that petitioner Vicmico is jointly and solidarily liable, on the ground of tort, with the planters for said 60% of 4%? 4. May petitioner Vicmico be held jointly and solidarily liable for tort for 60% of the 4% increased participation of the planters as provided for the latter under the milling contracts, even in the absence of allegations or evidence of acts constituting tort and notwithstanding the admitted fact that petitioner Vicmico has, since November 1, 1955, regularly delivered to the planters, as

required by law and contract, said 4% increase in participation? 5. May respondent Court of Appeals, on the basis of tort, validly hold petitioner Vicmico jointly and severally liable with the planters (a) for said 60% of the 4% increase in the planters' participation notwithstanding the fact that FFF et als. did not proceed on the theory of tort which had long prescribed, as admitted by FFF et als. but on the basis of contract or obligations created by law, (b) as well as for alleged causes of action that accrued subsequent to the filing on November 9, 1962 of the petition of the FFF et als., even in the absence of any supplemental petition or amendment to the pleadings effected before judgment? 6. Did not the Court of Appeals gravely abuse its discretion, said abuse amounting to lack of jurisdiction when it awarded the laborers P 6,399,105.00, plus interest thereon at 6% and P180,769.38, plus interest thereon at 6%, said awards allegedly representing the share pertaining to the laborers from June 22, 1952 to October 31, 1955, - (a) in the face of the laborers' admission that they had received their lawful participation during said period; (b) in the face of any lack of allegation in the petition concerning any cause of action relative thereto; (c) in the face of the Court of Appeals' ruling that the amicable settlement is legal and valid; and (d) in the face of the undeniable fact that, as per the very evidence presented by the FFF, et als., Vicmico delivered all the amounts pertaining to the laborers to the planters, and the laborers actually received said amounts as demonstrated by Exhibit '23-Vicmico'? 7. The petition of the FFF, et als. being essentially a suit for accounting, considering that the amicable settlement and milling agreements are valid and binding, as held by the Court of Appeals on the basis of facts found by it, and considering, further, the evidence and admissions of the parties to the effect that petitioner Vicmico complied with all of its obligations thereunder, by delivering all of the increased share to the planters, as required by law and contract, did not the Court of Appeals manifestly err and grossly abuse its discretion in not taking the foregoing matters into consideration and nevertheless holding petitioner Vicmico jointly and severally liable with the planters? 8. In any event, is Republic Act No. 809, otherwise known as the 'Sugar Act of 1952', constitutional? 9. Is the action filed by the laborers properly brought as a class suit? 10. Did the Court of Agrarian Relations have jurisdiction over the subject matter of the laborers' suit at the time the same was filed on November 9,1962?" (Pp 18-22, Rec., G.R. No. L-41222) and the following assignment of errors: I First Assignment of Error THE COURT OF APPEALS ERRED IN HOLDING THAT REPUBLIC ACT 809 IS APPLICABLE EVEN IN THE PRESENCE OF WRITTEN

MILLING AGREEMENTS BETWEEN THE CENTRAL AND THE PLANTERS, SINCE THE PROVISIONS OF SAID ACT AS CLEARLY STATED IN THE STATUTE ITSELF BECOME OPERATIVE ONLY 'IN THE ABSENCE' OF WRITTEN MILLING AGREEMENTS. II Second Assignment of Error THE COURT OF APPEALS ERRED IN CONSTRUING THE PHRASE UNDER THIS ACT EMBODIED IN SECTION 9 OF REPUBLIC ACT NO. 809 AS INCLUDING OR EMBRACING WRITTEN MILLING AGREEMENTS EXECUTED AFTER SAID ACT TOOK EFFECT ON JUNE 22,1952, IN VIEW OF THE FACT THAT THE EXPRESS IMPORT OF SAID PHRASE CLEARLY EXCLUDES WRITTEN MILLING AGREEMENTS AND IN VIEW OF THE CIRCUMSTANCE THAT THE APPLICABILITY OF SECTION 9 IS DEPENDENT UPON THE ENFORCEMENT OF SECTION I OF THE SAME LAW. III Third Assignment of Error THE COURT OF APPEALS ERRED IN HOLDING THAT THE LEGISLATIVE INTENT AND HISTORY OF REPUBLIC ACT 809 POINT TO NO OTHER CONCLUSION THAN THAT SECTION 9 OF SAID ACT ALSO EMBRACES WRITTEN MILLING AGREEMENTS, SINCE THE LEGISLATIVE INTENT AND HISTORY DEMONSTRATE OTHERWISE AND CLEARLY SHOW THAT SECTION 9 IS NOT AT ALL APPLICABLE DURING PERIODS WHEN MILLING CONTRACTS EXIST BETWEEN THE CENTRAL AND THE PLANTERS. IV Fourth Assignment of Error THE COURT OF APPEALS ERRED IN HOLDING THAT REPUBLIC ACT 809 IS A PIECE OF SOCIAL LEGISLATION THAT UNCONDITIONALLY AND EQUALLY GRANTS BENEFITS TO LABORERS IN THE SUGAR INDUSTRY. SINCE SAID ACT IS DISCRIMATORY, SAID SELECTIVE OR DISCRIMINATORY FEATURE BEING MADE MORE MANIFEST BY THE INTERPRETATION OF THE COURT OF APPEALS AS WELL AS BY THE AMENDED RULES OF THE DEPARTMENT OF LABOR, WHICH AMENDED RULES ARE NULL AND VOID AS CONTRARY TO LAW. V Fifth Assignment of Error ASSUMING ARGUENDO, THAT THE HONORABLE COURT OF APPEALS CORRECTLY INTERPRETED REPUBLIC ACT 809 AS APPLICABLE EVEN WHEN THE CENTRAL AND THE PLANTERS HAVE SUBSEQUENTLY EXECUTED WRITTEN MILLING AGREEMENTS, AS IN THE CASE AT BAR, THE COURT OF APPEALS ERRED IN

HOLDING PETITIONER VICMICO JOINTLY AND SEVERALLY LIABLE WITH THE PLANTERS ON THE BASIS OF TORT FOR 60% OF THE 4% INCREASED PARTICIPATION OF THE PLANTERS AND FOR AMOUNTS ALLEGEDLY DUE THE LABORERS FROM JUNE 22,1952 TO OCTOBER 31,1955, SAID ERROR BEING EVIDENT IN VIEW OF THE FACT THAT RESPONDENTS FFF ET ALS. DID NOT PROCEED ON THE THEORY OF TORT BUT ON THE THEORY OF CONTRACTS OR OBLIGATIONS CREATED BY LAW AND IN VIEW OF THE FACT THAT SAID WRITTEN MILLING AGREEMENTS HAVE NOT PROVIDED FOR ANY SOLIDARY LIABILITY, THE TERMS OF SAID WRITTEN MILLING AGREEMENTS HAVING, MOREOVER, BEEN FAITHFULLY COMPLIED WITH BY PETITIONER VICMICO VI Sixth Assignment of Error THERE BEING NO ALLEGATION OR PROOF OF ACTS CONSTITUTING TORT OR EVEN CONSTITUTING ANY VIOLATION OF THE WRITTEN MILLING CONTRACTS ON THE PART OF PETITIONER VICMICO IN CONNECTION WITH THE LABORERS CLAIM OF 60% OF THE 4% INCREASED PARTICIPATION OF THE PLANTERS AND THERE BEING, MOREOVER, NO AMENDED OR SUPPLEMENTAL PLEADINGS FILED BY FFF ET ALS. INVOLVING ANY CAUSE OF ACTION BASED ON TORT, THE COURT OF APPEALS ERRED IN NEVERTHELESS HOLDING PETITIONER VICMICO JOINTLY AND SEVERALLY LIABLE WITH PLANTERS, ON THE BASIS OF TORT VII Seventh Assignment of Error THE COURT OF APPEALS ERRED, IN ANY EVENT, IN NOT HOLDING THAT ANY ACTION BASED ON TORTS HAS LONG PRESCRIBED. VIII Eighth Assignment of Error IN ANY EVENT, THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE PLANTERS WERE THE AGENTS OF THE LABORERS WHOSE CAUSE OF ACTION, IF ANY, FOR 60% OF THE 4% INCREASED PARTICIPATION OR FOR THOSE AMOUNTS PERTAINING TO 'THE PERIOD FROM JUNE 1952 TO OCTOBER 31, 1955, SOLELY LIES AGAINST SAID PLANTERS AS THEIR AGENTS. IN VIEW OF THE FACT THAT PETITIONER VICMICO FAITHFULLY DELIVERED, AS ADMITTED BY THE PARTIES AND FOUND BY THE HONORABLE COURT, ALL OF SAID AMOUNTS TO THE PLANTERS WHOSE OBLIGATION, IN TURN, WAS TO DISTRIBUTE TO THEIR RESPECTIVE LABORERS THE LATTER'S SHARE. IX Ninth Assignment of Error

WITH REFERENCE TO THE AMOUNT OF P6,399,105.00 AND THE AMOUNT OF P180,769.38, WHICH ACCRUED IN FAVOR OF THE LABORERS FROM JUNE 22, 1952 TO OCTOBER 31,1955 WHEN THERE WAS AS YET NO WRITTEN MILLING AGREEMENT, IN VIEW OF THE FACT THAT THE LABORERS ADMITTED IN THEIR PETITION THAT THE PLANTERS GAVE THEM THEIR LAWFUL PARTICIPATION FROM JUNE 22,1952 TO OCTOBER 31,1955 AND THERE BEING, MOREOVER, NO ALLEGATION OF ANY CAUSE OF ACTION RELATIVE THERETO, THE COURT OF APPEALS ERRED AND ACTED WITH GRAVE ABUSE OF DISCRETION WHEN IT HELD PETITIONER VICMICO AND THE PLANTERS JOINTLY AND SEVERALLY LIABLE VIA TORT FOR SAID AMOUNTS. X

UNDETERMINED AND SPECIFIC AMOUNTS, NOTWITHSTANDING FFF, ET ALS.' ABSENCE OF ANY RIGHT TO ACCOUNTING AGAINST PETITIONER VICMICO, THEIR RIGHT, IF ANY, BEING EXCLUSIVELY AGAINST THE PLANTERS. XIII Thirteenth Assignment of Error IN ANY EVENT, THE COURT OF APPEALS ERRED IN NOT HOLDING THAT REPUBLIC ACT 809, OTHERWISE KNOWN AS THE SUGAR ACT OF 1952, IS UNCONSTITUTIONAL. XIV Fourteenth Assignment of Error

Tenth Assignment of Error HAVING FOUND THE MILLING AGREEMENT AND THE AMICABLE SETTLEMENTCOMPROMISE AGREEMENT (ASCA) TO BE VALID, THE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER VICMICO AND THE PLANTERS HAD NO AUTHORITY TO STIPULATE IN SAID ASCA ON THE DISPOSITION OF THE AMOUNTS PERTAINING TO THE LABORERS FROM JUNE 22, 1952 TO OCTOBER 31,1955, THE PLANTERS BEING THE AUTHORIZED AGENTS OF THE LABORERS BY, AMONG OTHERS, HAVING RECEIVED ALL THE AMOUNTS DUE THEM, HAVING MOREOVER RATIFIED SAID ASCA. XI Eleventh Assignment of Error THE COURT OF APPEALS ERRED IN CONCLUDING THAT THE LABORERS DID NOT RECEIVE THE AMOUNT OF P6,399,105.00 AND IN HOLDING, ON THE BASIS OF TORT, PETITIONER VICMICO, JOINTLY AND SEVERALLY LIABLE WITH THE PLANTERS THEREFOR, EXHIBIT 23-VICMICO CLEARLY SHOWING ON ITS FACE THAT THE LABORERS ACTUALLY RECEIVED A TOTAL OF P6,536,741.98 AND THE COURT OF APPEALS HAVING FOUND THAT ALL AMOUNTS PERTAINING TO THE LABORERS HAD BEEN RECEIVED BY THE PLANTERS, THE FOREGOING DEMONSTRATING, AMONG OTHERS, THAT PETITIONER VICMICO CANNOT BE ACCUSED OF ANY TORTIOUS ACT. XII Twelfth Assignment of Error THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE PETITION OF FFF, ET ALS. IS ESSENTIALLY AN ACTION FOR ACCOUNTING, SAID ACTION REQUIRING A PRIOR DETERMINATION OF THE RIGHT TO ACCOUNTING AND THE ACCOUNTING ITSELF, A SEQUENCE THAT HAS NOT BEEN ADHERED TO BY THE COURT OF APPEALS WHEN IT ENTERED A FINAL JUDGMENT FOR THE COURT OF APPEALS ERRED IN HOLDING THAT THE ACTION FFF, ET ALS. HAS BEEN IMPROPERLY BROUGHT AS A CLASS SUIT. XV Fifteenth Assignment of Error THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE COURT OF AGRARIAN RELATIONS HAD NO JURISDICTION OVER THE SUBJECT MATTER OF THE SUIT AT THE TIME THE SAME WAS FILED ON NOVEMBER 9, 1962. XVI Sixteenth Assignment of Error THE COURT OF APPEALS ACCORDINGLY ERRED IN NOT ABSOLVING PETITIONER VICMICO FROM ALL OBLIGATIONS (A) FOR 60% OF THE 4%, INCREASED PARTICIPATION OF THE PLANTERS, (B) FOR P 6,399,105.00 AND P 180,768.38, AND (C) FOR ATTORNEY'S FEES. (A to K of VICTORIAS' Brief) On its part, as grounds relied upon for the allowance of their petition, the PLANTERS submit that: -ATHE COURT OF APPEALS ERRED IN CONCLUDING THAT, WHILE THE AGREEMENT BETWEEN THE CENTRAL AND THE PLANTERS WITH RESPECT TO THE 64-36 SHARING BASIS IS VALID, YET THERE MUST BE READ INTO IT THE PROVISO THAT 60% OF THE INCREASE IN THE PARTICIPATION OF THE PLANTERS SHALL PERTAIN TO THE PLANTATION LABORERS IN ACCORDANCE WITH SECTION 9 OF REPUBLIC ACT NO. 809, OTHERWISE KNOWN AS THE SUGAR ACT OF 1952. -B THE COURT OF APPEALS ERRED IN HOLDING PETITIONER PLANTERS JOINTLY AND SEVERALLY LIABLE, ON THE BASIS OF TORT

WITH CENTRAL NOTWITHSTANDING THE FACT THAT IT FOUND THE ASCA PERFECTLY VALID AND NOT IN CIRCUMVENTION OF THE LAW. -CTHE COURT OF APPEALS ERRED IN FINDING THAT THE P4,000,000.00, OF THE P5,186,083.34, PERTAINING TO THE SHARE OF THE PLANTATION LABORERS WITHIN THE VICTORIAS MILL DISTRICT FROM JUNE 22,1952 TO OCTOBER 31, 1955, WAS NOT DISTRIBUTED TO THE SAID PLANTATION LABORERS SIMPLY BECAUSE NEITHER THE CENTRAL, NOR THE PLANTERS NOR THE SPECIAL COMMITTEE PRESENTED EVIDENCE AS TO ITS DISTRIBUTION. -D THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE RESPONDENTS' PETITION IS NOT PROPER AS A CLASS SUIT. -ETHE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE COURT OF AGRARIAN RELATIONS HAD NO JURISDICTION OVER THE SUBJECT MATTER OF THE SUIT AT THE TIME THE SAME WAS FILED BY THE FFF, ET ALS. ON NOVEMBER 9,1962. -FTHE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE COURT OF AGRARIAN RELATIONS HAD NOT ACQUIRED JURISDICTION OVER THE PERSONS OF THE PLANTERS WHO WERE SERVED SUMMONS BY PUBLICATION, DUE TO DEFECTIVE SERVICE OF SUMMONS BY PUBLICATION. (Pp. 33-34, L-43153 Rec., Vol, 1.) Petitioners Primo Santos and Roberto H. Tirol formulate their reasons for their petition for review thus: 1. The Hon. Court of Appeals failed to resolve a most important question as to whether or not the lower court had acquired jurisdiction over the persons of defendants-appellees Primo Santos and Roberto H. Tirol due to defective service of summons by publication. 2. The Sugar Act of 1952 (Rep. Act No. 809) may be interpreted as not to preclude freedom of contract between the majority of the plantation owners and the central; but the law should not later be applied only in part as to benefit and favor the Central to the great prejudice of both the plantation owners and the laborers. 3. Defendant Primo Santos being a mere LESSEE, not the owner of "Hda. Kana-an" and NOT having signed any milling contract with the Victorias Milling Co., he should not be made jointly andseverally liable with the central and the plantation owners for acts and/or contracts in which he had no part nor intervention whatsoever.

4. There is no evidence that the individual planters, particularly the defendantsmovants herein had any knowledge of nor intervention in the custody of the sum of P4,000,000 belonging to the plantation laborers which was supposedly entrusted to a "Special Committee" of five (5) members; and, therefore, they (the movants) should not be adjudged jointly and severally liable for the alleged loss of such amount and its increments. (Page 7, L- 43369 Rec.) The foregoing numerous assignments of error supposedly committed by the Court of Appeals would, if all of them were to be separately considered, call for a very extended discussion, necessarily making this opinion tediously long. But We have repeatedly received from all the parties motions for early resolution of these cases, which although relatively new in this Court, were indeed started in the Court of Agrarian Relations, Bacolod Branch, more than eighteen (18) years ago. And, considering they involve an enormous amount constituting, as it were, another windfall for the least favored element - the farm laborers - of the once prosperous sugar industry in Negros Occidental, We will limit Ourselves to the fundamental and pivotal matters, and thus put finis as briefly as possible, to this important controversy together with all hardships its long pendency has entailed for all the parties concerned, particularly the laborers. Anyway, going carefully with detailed attention over the numerous issues raised in the so-called grounds for allowance alleged by the parties in their respective petitions, it would be readily noted, that most of them deal with but a few fundamental issues, some of them, already settled and determined, as a matter of fact, by this Supreme Court, in its decision in a related case, that of Asociacion de Agricultores de Talisay-Silay Inc. vs. Talisay-Silay Milling Co., Inc., 88 SCRA 294, and its resolution of the motion for reconsideration thereof as reported in 89 SCRA 311. Indeed, in its second motion dated July 8,1980 for promulgation of decision, the FEDERATION acknowledges expressly that "the constitutionality of the Sugar Act of 1952 as well as the construction and interpretation thereof" have been set at rest by Us in said case. In the main, therefore, insofar as such basically similar and resolved issues are concerned, We shall refer to them here already as settled juridical premises whenever it should be proper to do so in resolving the issues in these cases. II To set them forth briefly, among the issues in these instant cases, which this Court has already resolved with finality in the Talisay- Silay case are the following: -AThat Republic Act 809, as a social legislation founded not only on police power but more importantly on the social welfare mandates of the Constitution, is undoubtedly constitutional in all its aspects material and relevant to the instant cases. We deem it would be a fruitless exercise for Us to rediscuss and belabor that point here. Indeed, We find the position of the Court of Appeals thereon to be well studied and discussed and totally correct, being as they are substantially in line with the pertinent considerations on the same point expressed in Our Talisay-Silay decision. -BAside from upholding the constitutionality of Republic Act 809, We further ruled in Talisay-Silay that the predicate or prerequisite of absence of milling agreements for the application of Section 1 of the Act does not refer exclusively to the expiration of the then existing contracts (those that expired before the approval of the Act) but even to future failure of centrals and planters to enter into written milling contracts; that, therefore, there is nothing in the law that excludes the right of said parties to enter into new contracts, and that in said new contracts, they could provide for a ratio of sharing different from that stipulated in Section I of the Act, provided, of course, that any increase

of their share in the proceeds of milling that the PLANTERS would get, 60% thereof must be paid by them to their respective plantation laborers. Suffice it, therefore, to refer, insofar as said issues are concerned, to the decision of the Court of Appeals, which We hereby uphold, and to Our own discourse thereon as well as Our construction of Section 1 thereof regarding the freedom of the centrals and the planters to agree on how they would share the proceeds of the milled sugarcane made in Our decision of April 3, 1979 and resolution of February 19, 1979 earlier mentioned above. Covered here by this adoption by reference and, therefore deemed resolved in line with Talisay-Silay are the following assignments of error of the parties hereto, an of which We have quoted at the outset of this opinion: A. I to V in the FEDERATION's brief in G.R.No.L-41161 in Federation, etc., et al. vs. Court of Appeals, et al.; B. Nos. 1, 2 and 8 of its so-called questions of substance and assignment of errors I, II and IX, of VICTORIAS in G.R. No. L-41222 in Victorias Milling Co., Inc. vs. Court of Appeals, et al.; and C. Ground A of the PLANTERS in G.R. No. L-43153 in Planters, Victorias Milling District vs. Court of Appeals, et al. as well as the corresponding refutations thereof and counterassignments of the respective parties relative to the just-mentioned assignments of error or grounds for allowance, but none of the points raised by petitioners in Santos and Tirol vs. Court of Appeals, et al. G.R. No. L-43369. III To facilitate understanding of the resolution of these cases, let it be recalled that, as is more extensively discussed in the portions of the decision of the Court of Appeals herein under to be quoted, previous to the passage of Republic Act 809 or the Sugar Act of 1952, almost all over the country, and particularly in the sugar milling districts of Negros Occidental, the centrals practically dominated the economic fate of the planters and the laborers of the latter. The common prevalent ratio of sharing of the proceeds of the sugarcane milled by said centrals was fixed at 40% for the centrals and 60% for the planters, both parties dealing with and paying their respective laborers at rates which were considered subnormal, so much so that President Manuel Quezon had to appoint a committee headed by Chief Justice Manuel Moran to investigate the economic and social conditions in the whole sugar industry. As expected, the report recommended more effective measures to ease the stranglehold of the centrals over the planters, and more importantly, to ameliorate the conditions of labor, even to the extent of utilizing police power steps for the purpose, if needed. Hence, the above mentioned Sugar Act came into being . 1 Section 1 thereof provides thus: SECTION 1 In the absence of written milling agreements between the majority of planters and the millers of sugar-cane in any milling district in the Philippines, the unrefined sugar produced in that district from the milling by any sugar central of the sugar-cane of any sugar-cane planter or plantation owner as well as all by-products and derivatives thereof, shall be divided between them as follows: Sixty per centum for the planter, and forty per centum for the central in any milling district the maximum actual production of which is not more than four hundred thousand piculs: Provided, That the provisions of this section shall not apply to sugar centrals with an actual production of less than one hundred fifty thousand piculs;

Sixty-two and one-half per centum for the planter, and thirty-seven and one-half per centum for the central in any milling district the maximum actual production of which exceeds four hundred thousand piculs but does not exceed six hundred thousand piculs; Sixty-five per centum for the planter, and thirty-five per centum for the central in any milling district the maximum actual production of which exceeds six hundred thousand piculs but does not exceed nine hundred thousand piculs; Sixty-seven and one-half per centum for the planter, and thirty-two and one-half per centum for the central in any milling district the maximum actual production of which exceeds nine hundred thousand piculs but does not exceed one million two hundred thousand piculs; Seventy per centum for the planter, and thirty per centum for the central in any milling district the maximum actual production of which exceeds one million two hundred thousand piculs. Complementing the above provision, Section 9 thereof provides for a 60/40 partition between the planters and laborers (60% for the laborers and 40% for the planters) of any increase that the planters might obtain under the Act. (Sec. 9 is quoted in the portion of the decision of the Court of Appeals to be quoted on pages 25 and 26 hereof.) In the wake of such legislation, litigations were started questioning the constitutionality thereof, and among such cases was Talisay- Silay which, as already stated, We have already decided. To reiterate, in that case, We did not only uphold the statute's validity, We also held that the Act was not intended to deprive the mills and the planters of the right to divide the proceeds of the milled sugarcane in each district in the proportion they might agree on, without regard to the ratios specified in Section 1 of the Act, provided that any increase that the planters might be given, as expected in consequence of the implicit compulsion of the law, has to be shared by them with their respective laborers in their plantations, whether owned or leased by them, in the proportion of 60% for said laborers and 40% only for them. Nothing in the pleadings and the briefs of the parties in the instant cases persuades Us to rule otherwise. In fact, at the request of the FEDERATION, We already had occasion to go over the main points raised by it here, when they asked Us to consider in deciding that case their arguments in their brief filed with the Court of Appeals, copy of which was furnished Us. The decision of this case must then be predicated fundamentally on the Talisay-Silay rulings insofar as they may be pertinent here. We can now, therefore, proceed to discuss the aspects of the cases that require disquisition and disposal. IV To start with, the PLANTERS, VICTORIAS and SANTOS-TIROL impugn the jurisdiction of the Court of Agrarian Relations, 11th Regional District, Branch I Bacolod City, in taking cognizance of this case, with SANTOS and TIROL contending that since this is an action in personam, service to them by publication is invalid, hence, the trial court did not acquire jurisdiction over their person; even as VICTORIAS and PLANTERS maintain that not all the planters' members have been properly summoned, considering that some of them were served summons only also by publication. We are not going to tarry long on these two points of jurisdiction. We are sufficiently convinced that, by and large, Sections 1 and 7 of Republic Act 1267, which created the Court of Agrarian Relations, providing that:

SEC. 1. Creation. For the enforcement of all laws and regulations governing the relation of capital and labor on all agricultural lands under any system of cultivation, there is hereby created a court of Agrarian Relations, which shall be under the executive supervision of the Department of Justice. xxx xxx xxx SEC. 7. Jurisdiction of the Court. - The Court shall have original and exclusive jurisdiction over the entire Philippines, to consider and investigate, decide and settle all questions, matters, controversies, or disputes involving all those relationships established by law which determine the varying rights of those persons in the cultivation and use of agricultural land where one of the parties works the land; Provided, however, that cases pending in the Court of Industrial Relations upon approval of the Act which are within the jurisdiction of the Court of Agrarian Relations, shall be transferred to, and the proceedings therein continued in, the latter court. and which was the law at the time of the filing of the FEDERATION's suit on November 10, 1962, contemplated the transfer from the Court of Industrial Relations, established under Commonwealth Act No. 3, to the Court of Agrarian Relations of all controversies of whatever nature involving agricultural laborers, particularly those referring to the employer-employee relationship with their respective employers, which naturally include the sugar planters and their plantation workers. (Santos vs. C.I.R., 3 SCRA 759.) Hence, it cannot be said that the trial court, the Court of Agrarian Relations of Bacolod City, had no jurisdiction to take cognizance of the vital petition that spawned the instant cases before Us. V Also, considering the number of laborers involved herein, We hold that it cannot be seriously argued that the trial court erred in holding that the laborers and/or the FEDERATION had properly initiated their action as a class suit, it being a matter of common knowledge that "the subject matter of the controversy (herein) is one of common or general interest to persons - (so) numerous that it is impracticable to bring them all before the court," and after all, it appears that "the parties actually before (the trial court were) sufficiently numerous and representative, so that all interests concerned (were) sufficiently protected." (Sec. 12, Rule 3.) Anent the plaint of the PLANTERS that since not all the 422 individual planters named respondents in the amended petition filed below were personally or by proper substitute form of service served with summons, the court did not acquire jurisdiction over the persons of all the planters concerned, suffice it to say that the record shows that at the hearing of December 14, 1967 in the court below, there was the following clarification of the PLANTERS' appearance: Atty. SOTO: Attys. Sanicas and Soto appearing for Planters' Association. ATTY. SABIO Do I understand that Attys. Soto, Banzon and Associates represent the members of the Victorias Mill District Planters' Association, Inc.?

ATTY. SOTO: Those planters who are respondents in this case as well as planters which (sic) are not duly represented by counsel, who are not present in court. (t.s.n. pp. 5-6) We understand this manifestation to mean that Atty. Soto assumed representation presumably with due authority of all the planters in the district. In any event, the filing of the FEDERATION's petition must have been well known or was of public knowledge in the Victorias milling district and We believe that all the rest of the planters not here mentioned by name were as much concerned as the latter and may be deemed to have felt that all of them would eventually have the same fate. Besides, it is Our impression that the interests of all the planters concerned cannot be better presented and defended than by how the PLANTERS have done in these cases before Us now. In view whereof, We consider it rather superfluous to cite any authorities for a holding, as We do hold, that the persons of all the planters in the Victorias Mill District had been properly placed within the jurisdiction of the trial court. (Aguilos vs. Sepulveda, 53 SCRA 269.) Moreover, the issues of jurisdiction just discussed may be considered as resolved by the provisions of the law reorganizing the Courts of Agrarian Relations, under which technical rules have hardly any force or applicability, and considering that the acquisition of jurisdiction over the persons of defendants is an adjective matter, this significant modification of the procedural rules in the Court of Agrarian Relations from which these cases originated may be given retroactive effect. (See Presidential Decree 946, Sec. 16.) VI Coming now to the real meat of the problem before Us, which is the question of how much money the laborers belonging to the FEDERATION should be paid by the PLANTERS and/or VICTORIAS, corresponding to all the years from the passage of Republic Act 809 up to November 1974 (which is the year both parties seemingly are agreed the factual premises of further controversy among them came to an end due to shortage of production), it should be helpful for a deeper insight into the issues between the parties to quote pertinent portions of the decision of the Court of Appeals. According to said court: Section 9 of the Sugar Act provides as follows: SECTION 9. In addition to the benefits granted by the Minimum Wage Law, the proceeds of any increase in the participation granted the planters under this Act and above their present share shall be divided between the planter and his laborer in the plantation in the following proportion: Sixty per centum of the increased participation for the laborers and forty per centum for the planters. The distribution of the share corresponding to the laborers shall be made under the supervision of the Department of Labor. The benefits granted to laborers in sugar plantations under this Act and in the

Minimum Wage Law shall not in any way be diminished by such labor contracts known as "by the piece", "by the volume, "by the area", or by any other system of "pakyaw", the Secretary of Labor being hereby authorized to issue the necessary orders for the enforcement of this provision. The petition in the lower court alleged that, while pursuant to Section 9 of the Act. as above quoted, "respondents PLANTERS gave to petitioners LABORERS the latter's participation in the sugar production as well as in the by-products and derivatives thereof and continued to give the same until November 1, 1955", they "ceased to do so until the present ," (par. 10, petition). It likewise charged that 'with evident intent to evade compliance with said Act and to the grave prejudice of the laborers, some of the respondents PLANTERS and respondent CENTRAL prepared and executed a General Collective Sugar Milling Contract sometime in March, 1956', (par. 11, petition) the substance of which is discussed, supra. Appellants forthwith prayed for a judgment: declaring the applicability to the Victorias Mill District of the sharing participation prescribed by the Act, starting with the 1955-1956 crop year; ordering Central and/or Planters to pay Appellants' lawful share in the production beginning the crop year 1955- 1956, plus legal interests thereon; awarding exemplary damages in an amount that the Court may deem sufficient; and granting attorney's fees of 20% of whatever amount the Appellants might be entitled to. Denying material allegations of the petition, respondent Central, in its answer, claims in substance that petitioners did not have any cause of action against it since it had existing written milling agreements with respondent Planters, and Republic Act 809 is applicable only in the absence of written milling agreements. As special defenses, it advanced the propositions that the lower court had no jurisdiction over the subject-matter of the action at the time of the filing thereof prior to the effectivity of the Land Reform Code; that Republic Act 809 is unconstitutional; that appellant Federation of Free Farmers has no legal authority and capacity to intervene in the action; and that the action was not proper for a class suit. It likewise filed a counterclaim for attorney's fees in the amount of P 20,000.00, alleging that the action instituted against it was clearly unfounded. On their part, respondent Planters, in answers filed singly or in groups, substantially echoed Central's defenses, adding, however, that should judgment be rendered against them, they should be entitled to reimbursement from Central. Assuming jurisdiction over the action, recognizing the personality of the respondent Federation of Free Farmers, and considering the case as proper for a class suit, the lower court, after hearing, relying principally on the interpretation of Section 1 of Republic Act 809 that the law applies only in the absence of written milling agreements, dismissed the petition, having found that written milling agreements do exist between respondent Central and respondent Planters, the dispositive portion of the decision, dated December 14, 1970, reading as follows:

IN VIEW OF THE FOREGOING PREMISES, judgment is hereby rendered, dismissing this case as it is hereby ordered DISMISSED, without pronouncement as to cost. The matter now before this Court is the appeal taken by the petitioners from the decision referred to. Respondents Central and Planters did not interpose any appeal In their appeal, appellants ventilate twenty-eight assignments of error (pp. 67 to 77, Appellant's Brief). These, however, may be reduced to the following issues, namely: First: Whether, as held by the lower court, the existence of written milling agreements between Central and Planters (Exhibits XXX thru XXX-6; YYY thru YYY-7, and SSS thru SSS-28 and ZZZ thru ZZZ-7) renders inapplicable the operation of Republic Act 809; Second: Whether, as appellants' claim these milling agreements have been entered into in circumvention of Republic Act 809 and are, for that reason, void ab initio; and Third; Whether, Central and Planters misappropriated money belonging to appellants amounting to million of pesos. We find substantial merit in the appeal. On the basis of the historical facts bearing upon the case, we find the decision of the lower court in error. For, historically, the facts that triggered the enactment of Republic Act 809 and the case at bar are as follows: In 1918, 1919, and 1920, Central and Planters executed 30-year milling agreements under which the former was to receive 40% and the latter 60% of the proceeds of sugarcane produced and milled in the Victorias Mill District in Negros Occidental. As early as the 1930's, however, agitations were already made to increase the participation of the Planters. Planters sought to justify their demands upon the claims that there was too great a disparity in profits in favor of Central and that the increase was necessary to improve the condition of their plantation laborers. The situation in the sugar industry at the time was such that on February 23, 1938, President Manuel L. Quezon appointed Chief Justice Moran of the Supreme Court as Special Investigator to study the 'alleged inequitable distribution of sugar resulting from the milling of sugarcane between the centrals and the plantations, with a view to ameliorating the condition of the planters' laborers'. On April 30, 1939, Justice Moran, in his report, verified the disparity and observed that unless the participation of the planters were increased, they could not be made to ameliorate the condition of their plantation laborers. Moran's investigations were followed up by similar ones conducted by the National Sugar Board created by President Quezon under Executive Orders Nos. 157 and 168, and the Board's findings

confirmed those of Justice Moran's according to its report of August 2,1939. On June 7, 1940, Commonwealth Act No. 567 took effect. Noting the great disparity in the proportion of benefits "being received from the industry by each of its component elements", it declared it to be a 'national policy to obtain a readjustment of the benefits derived from the sugar industry by the component elements thereof the mill the landowner, the planters of the sugarcane, and the laborers in the factory and the field.' The years during World War Il may have momentarily stilled and agitations for the increase, but during the Second Congress of the Republic the same were resumed with vigor. Four bills were filed, three in the House and one in the Senate, all entitled "An Act To Regulate the Relations between Planters and Millers of Sugarcane". After a series of amendments, the Senate version (SB No. 138) was finally sent to President Quirino who, however, vetoed the same on grounds, among others, "that the bill contains no provisions granting to the laborers a share in the increased participation of the planters nor does it expressly require the latter to improve the lot of their laborers". On January 15, 1951, House Bill No. 1517 (which ultimately became Republic Act No. 809) entitled 'An Act To Regulate the Relations Among Persons Engaged in the Sugar Industry', was introduced to remedy the presidential objections to the vetoed SB No. 138. The remedy introduced by HB No. 1517 was in the form of its Section 10 (which was amended later to become Section 9 of Republic Act 809) providing, in essence, that 60% of any increase in participation granted to planters under the Act 'above their present share' should go to their plantation laborers. In the meantime, Planters, on the one hand, and Central, on the other, were locked in a tug-of-war, the former continuing the demand for increase, the latter insisting in refusing to grant any. Meanwhile, a new element had entered into the dimensions of the controversy: the Planters now contended that new written milling agreements should be concluded because their 30-year contracts with Central had already expired. Central countered with the argument that its contracts were still in force although the 30-year period may already have run out, because 6 years had to be excluded from the computation of the 30-year period for the reason that during 4 of the 6 years, the mills were not in operation because of the Japanese occupation, and during the last 2 years of the 6, the mills had to be reconstructed and rehabilitated so that the mills were not in operation either. As the conflict continued unresolved, with Central adamant in its position not to offer any increase in Planters' participation the expiration of the preferential treatment of sugar in the American market was fast approaching: beginning July 4, 1954, graduated customs duties were going to be taxed on Philippine sugar. There was therefore, in the language of Section 1 of the sugar bills deliberated on in Congress on May 9, 1950, a need 'to insure the maximum utilization of the benefits of preferential treatment for the Philippine sugar in the American market for the few remaining years.

The need for increasing the planters' participation, the approaching expiry date of the preferential treatment of Philippine sugar in the American market, the impasse between Central and Planters despite the termination or near termination of their 30- year written milling contracts, and the need for Congress to step in and pass a sugar law, found expression in the 'Explanatory Note' of House Bill No. 1517 introduced on January 15, 1951, thus: The necessity for increasing the share of the planters and the laborers in the income derived from the sugar industry for its stabilization is not a new question but an admitted fact even before the outbreak of World War II. On February 23, 1938, President Quezon appointed Justice Manuel V. Moran to make a study of the distribution of sugar resulting from the milling of sugarcane between the centrals and the planters with a view to ameliorating the condition of the planters "laborers", and after an exhaustive investigation covering several months, Justice Moran filed his report on April 30, 1939, recommending the increase in the participation of sugar planters, even in violation of existing milling contracts, contending that such a law is constitutional as a valid exercise of the police power of the state. The National Sugar Board created by Executive Orders Nos. 157 and 168, which made another investigation of the sugar industry, in its report to the President of the Philippines on August 2, 1939, confirmed practically the findings of Justice Moran. Five crop years after liberation find the Philippine sugar industry still behind its production allotment. In the meantime, only three more years of preferential treatment in the American market remain. Serious as the situation is, it is further aggravated by the fact that a determined struggle continues between millers and planters. Most of the milling contracts are due to expire next year, if they have not already done so. Recently, a serious crisis faced the industry when planters of the Victorias-Manapla district with a quota of 1,711,235.11 piculs declared a sit-down strike, refusing to mill their canes due to the obstinate refusal of the central to discuss terms

for a new milling contract. It is feared that with this antecedent, the disagreement between the millers and planters will lead to more serious disruption of the industry and ultimately to a complete paralization of production. The dispute as to the ownership of the sugar quota has already reached our Courts. It is therefore believed that national interest requires that Congress should take immediate steps to save or promote an industry, which is not only a source of livelihood for many millions of Filipinos but is also one of our most important dollar producing industries. Our country can ill afford to waste time in longdrawn out disagreements and litigations between millers and planters with only three more years of free American trade under the terms of the PhilippineTrade Act of 1946. The present bill seeks to avoid fatal controversies in the sugar industry by determining the respective share of millers and sugar cane planters in the absence of milling agreements, on the pattern set by the Rice Share Tenancy Act, the constitutionality of which has been already upheld and on the basis of the declarations of emergency and national interest made in Act No. 4166. Commonwealth Act No. 567, and Republic Act No. 279. This bill is also in harmony with the recommendation of the Bell Report for the improvement of the living condition of the laboring class by providing higher wages therefor. This bill does not violate existing milling agreements between planters and millers of sugar-cane as its provisions are only applicable in the absence of such milling contracts.' Notwithstanding the facts faithfully reflected in the aforequoted 'Explanatory Note' to HB 1517, Central and Planters still had not entered into new written milling contracts, and there were no prospects that such contracts would soon be entered into. In fact, on June 16, 1952, Planters went to court in Civil Case No. 16815 filed with the Manila Court of First Instance praying that a judgment be rendered declaring their 30-year written milling agreements with Central terminated. Under this air of extreme uncertainty and necessity, Congress approved HB 1517 to

become law as Republic Act 809 on June 22, 1952. Under this law, Planters claimed, the Victorias Mill District fell in the category of districts producing, 1,200,000 piculs or more. By prescription of its Section 1, Central would have a share of 30% and Planters, 70%. Since, before June 22, 1952, Planters had a participation of only 60% while Central had 40% , and since, under their contention, their 30-year milling contracts had already expired. Planters demanded that Central, pursuant to the new law, give them an increase equivalent to 10% over their previous 60% participation. On July 1, 1952, however, Central replied to Planters (Exhibit N-14): We refer to your letter of June 25, 1952. We reiterate our opinion that our milling contracts have not yet expired, and that we are under no obligation to deliver to the planters the increased participation of 70% provided in the Sugar Act of 1952. On the other hand, there is pending in the Court of First Instance of Manila (Case No. 16815), the action instituted by you against our Company for a declaratory judgment as to whether or not our milling contracts have already expired. In view of the foregoing, we suggest matters be held in abeyance until final judgment is rendered in the said case No. 16815. Notwithstanding this reply, Central beginning June 22, 19,52. set aside a "reserve" of 10% as a precautionary measure to take care of Planters' demand just in case it had to glue that 10% increase.Central, however, did not actually give it to. Planters; it merely set it aside for future disposition, "because", explained Central's treasurer-comptroller, "apparently there was no milling contract at that time and the company was afraid to incur liability under Republic Act 809 and therefore the company set aside every year 10%" (tsn., August 14, 1969, p. 6). On April 19, 1954, Central filed an action (Exhibits H to H- 12) against Planters in Civil Case No. 22577 asking the Manila Court of First Instance to declare Republic Act 809 unconstitutional. In the meantime, on March 19, 1953, the Manila Court of First Instance, in Civil Case No. 16815 brought by Planters (Exhibits F thru F-22) decided that the 30-year milling contracts had indeed expired in 1951, at the latest, or before June 22, 1952. On appeal, this decision was affirmed by the Supreme Court in G. R. No. L- 6648 dated July 25, 1955 (Exhibits G-1 thru G-6).

On December 14, 1955, some 20 months after filing Civil Case No. 22577, Central filed a motion (Exhibit U) alleging that negotiations were in progress for the amicable settlement of its differences with Planters. On February 25, 1956, similar motions (Exhibit V) were filed by both Central and Planters manifesting to the court that such negotiations were going on and that there was probability that they would reach an amicable settlement. On March 5, 1956, Central and Planters executed the controversial 'Amicable SettlementCompromise Agreement' (Exhibits XXX thru XXX6). On April 23, 1956, Central and Planters filed a manifestation (Exhibit Y) to the effect that they had already compromised and settled their differences, but that the execution by the majority of Planters of their new individual sugar milling contracts had not yet been completed, and that as soon as this was done, Central would ask for the dismissal of Civil Case No. 22577. On May 2, 1956, three persons, planters themselves (the spouses Jose V. Corua and Jesusa Rodriquez, and Felipe L. Lacson), filed a "Motion for Intervention" (Exhibits Z thru Z-19) in which they attacked the "Amicable SettlementCompromise Agreement" (referred to hereafter as ASCA for convenience), as a circumvention and violation of Republic Act 809 because it eliminates the share of the laborers, from November 1, 1955 to October 31, 1974. On May 5, 1956, the Secretary of Labor filed a manifestation (Exhibits AA thru AA-1) adopting the allegations of the three planters' motion for intervention, and assailing the ASCA as being contrary to law because it totally deprives the plantation laborers of the benefits granted them by Republic Act 809 for the period commencing November 1, 1955 up to the end of the 1973-1974 crop milling season, and because, with respect to the period from June 22, 1952 to October 31, 1955, their share is not being disposed of in accordance with the provisions of republic A ct 809. On May 28, 1956, another group of 6 laborers filed a motion (Exhibits BB thru BB-17) with the court, likewise attacking the ASCA as a 'device by which the petitioner and a majority of the planters seek to circumvent the provisions of the Sugar Act of 1952, and conniving and confabulating together thereby denying to labor its just rights granted them by the said law'. On June 4, 1956, almost three months to the day from the execution of the ASCA on March 5, 1956, Central filed with the court, in Civil Case No. 22577, a 'Petition for Provisional Dismissal' (Exhibit FF-2). On June 8, 1956, the 3 planters earlier referred to file an opposition (Exhibits II thru II-3) to the petition for provisional dismissal. On the same date, June 8, 1956, the Secretary of Labor filed a similar opposition (Exhibits JJ thru JJ-10), assailing the ASCA sharing of the sugar between Planters and Central at 64% and 36%, respectively, with nothing going to the plantation

laborers, as being contrary to Section 1 of Republic Act 809 which had increased Planters' participation from 60% to 70%, representing an increase of 10% and to Section 9 of the Act which grants the plantation laborers a participation of 60% of such 10% increase. On June 22, 1956, the Manila Court of First Instance denied the motions for intervention and dismissed Civil Case No. 22577, without prejudice, from which denial and dismissal (Exhibits KK thru KK-6) the Secretary of Labor, the three planters, and the six laborers referred to above, took an appeal to the Supreme Court. In G. R. No. L11218 (Exhibit UU-1) the Supreme Court dismissed the appeal on November 5, 1956. As is readily evident from the foregoing recital of facts, the major bone of contention between the appellants, on the one hand, and the appellees, on the other, consists in the "Amicable SettlementCompromise Agreement" (Exhibits XXX thru XXX6, hereafter referred to as the ASCA for convenience) executed on March 5, 1956 by Central, on the one hand, and Planters, on the other, and reproduced in substance in the "General Collective Sugar Milling Contract" (Exhibits YYY thru YYY-7) and the 'Individual Sugar Milling Contracts' (Exhibits SSS thru SSS28 and ZZZ thru ZZZ-7). For a deeper insight into the conflicts that divide the parties to this case, the ASCA is hereunder reproduced in full as follows: AMICABLE SETTLEMENT-COMPROMISE AGREEMENT This document, executed by VICTORIAS MILLING COMPANY, INC., a corporation organized and existing under the laws of the Philippines, and domiciled in the City of Manila (hereinafter referred to as the 'COMPANY') represented herein by its President, Carlos L. Locsin, of age, Philippine citizen, married, and resident of the Province of Negros Occidental. as Party of the First Part. -andVICENTE F. GUSTILO, JESUS SUAREZ, SIMON DE PAULA, FERNANDO J. GONZAGA and JOSE GASTON, of age, Philippine citizens, married, and residents of the Province of Negros Occidental, and duly authorized to execute this document by the sugarcane planters affiliated with the COMPANY, (hereinafter referred to as the 'PLANTERS') as Party of the Second Part; WITNESSETH: That

WHEREAS, long before the war in 1941 the COMPANY and NORTH NEGROS SUGAR CO., INC., (a domestic corporation, domiciled in the City of Manila, whose obligations were assumed by the COMPANY) and several sugarcane planters in Manapla, Cadiz and Victorias, Negros Occidental, entered into, and executed, sugar milling contracts which have already expired; WHEREAS, on June 22,1952, Republic Act 809 was passed; WHEREAS, prior to June 22, 1952, the sugar manufactured by the Party of the First Part from the sugarcane delivered to it by the planters affiliated with the COMPANY was divided between the COMPANY and the PLANTERS on a 40-60 basis, respectively, pursuant to the aforementioned sugar milling contracts; WHEREAS, after the passage of said Republic Act 809 the PLANTERS made a demand on the COMPANY for a division of the sugar and byproducts manufactured by the COMPANY from the sugarcane delivered to it by the PLANTERS from and after said date, June 22, 1952, on a basis of 70-30, for the PLANTERS and the COMPANY, respectively, under the provisions of said Republic Act 809; WHEREAS, the COMPANY denied said demand made by the PLANTERS; WHEREAS, the COMPANY has heretofore filed a petition in the Court of first Instance of Manila for a declaratory judgment declaring Republic Act 809 unconstitutional and invalid, and for other relief, which petition was opposed by the PLANTERS WHEREAS pending the determination of the action or petition above-mentioned, the COMPANY, as an accounting precautionary measure, has, since the enactment of Republic Act 809, annually set aside a reserve corresponding to the disputed TEN PERCENT (10%) increase in participation demanded by the planters under said Republic Act 809; WHEREAS , the COMPANY and the PLANTERS desire to avoid a prolonged litigation and amicably settle and compromise their differences, and enter into, and execute new sugar milling contracts WHEREAS, a "Special Committee" herein accepted and recognized by the Party of the First part, has been created by the PLANTERS for the purpose of effectuating the present amicable settlement and compromise, which 'Special Committee' is composed of the five (5) sugarcane planters hereinabove mentioned, executing this agreement as "Party of the Second Part", NOW, THEREFORE, the COMPANY and the PLANTERS affiliated with it, the latter being represented herein by the Party of the Second Part, hereby agree to amicably settle and compromise, and do hereby amicably settle and compromise, all their differences, as follows: (l) The PLANTERS shall execute the "General Collective Sugar Milling Contract" as well as supplemental new individual sugar milling contracts, effective November 1, 1955, the sugar

and by-products manufactured by the COMPANY from the sugarcane delivered to it by the PLANTERS to be divided between them, SIXTYFOUR PER CENT (64%) for the PLANTERS and THIRTY SIX PER CENT (36%) for the COMPANY; As to the sugar and molasses manufactured by the COMPANY from June 22, 1952 (the date of the passage of Republic Act 809), to October 31, 1955, (the end of the COMPANY's fiscal year), the COMPANY suggested to divide the same on a 6535 basis, SIXTY-FIVE PER CENT (65%) for the PLANTERS and THIRTY- FIVE PER CENT (35%) for the COMPANY, as part of a 65-35 milling contract to begin June 16, 1952, and to end with the 1973-1974 crop milling year, on the same basis of participation. But as the COMPANY and the PLANTERS failed to reach an agreement thereon the COMPANY agrees to reduce its share or participation to 30, in favor of the PLANTERS, for the said period of June 22, 1952-October 31, 1955, and the PLANTERS, in turn agree to reduce their share or participation to 64, in favor of the COMPANY, for the period commencing November 1, 1955, to the end of the 1973-1974 crop milling season, that is, October 31, 1974, and the COMPANY, upon all the PLANTERS affiliated with it executing their new individual milling contracts shall pay them the total value of the reserve referred to in the seventh "WHEREAS' clause now amounting to P 8,643,472.24, as follows: (a) The Party of the Second Part shall set aside Sixty Per Cent (60%) of the said sum of P8,643,472-24 as received by them to be held in trust for the benefit of their laborers that may be entitled thereto because some of them have already died and their heirs are unknown while a great number of them are hard to locate and Identify, the Party of the Second Part, shall dispose of the said Sixty Per Cent (60%) of the sum of P8,643,472,24 as received by them as follows: (b) The Party of the Second Part shall invest P4,000,000.00 of the P5,186,083.34, w``hich is Sixty Per Cent (60%) of the said sum of P8,643,472.24, in 40,000 voting and transferable shares of capital stock of the COMPANY of the par value of P 100.00 per share which shall be issued in four (4) blocks of 10,000 shares per block by the COMPANY to the Party of the Second Part upon effectivity, of this agreement as provided in Clause (2) hereof, it being understood that the issuance of such shares does not involve an increase in the present authorized capitalization of the COMPANY.

The above-mentioned 40,000 shares of the capital stock of the COMPANY will enable the laborers/planters to become part owners of the COMPANY but if within the period of eighteen (18) months, but not earlier than six (6) months, from and after date of delivery of the said 40,000 shares by the COMPANY to the Party of the Second Part, the Party of the Second Part should desire to have the value of the said 40,000 shares to wit, P4,000,000 00, or such portions thereof in blocks of 10,000 shares at P1,000,000.00 per block, paid in cash, the COMPANY will pay in cash to the Party of the Second Part or its successors the said value of the said 4O,000 shares or of such blocks of 10,000 shares per block, as the Party of the Second Part may decide to have converted into cash as to such blocks of 10,000 shares per block, that the Party of the Second Part may retain such shares may be retained by the PLANTERS for their own account upon their payment to the Party of the Second Part or its successors of the value thereof of P l,000,000.00 per block. The COMPANY shall have a period of Thirty (30) days after receipt of written request of the Party of the Second Part within which to make such cash payment of the value of the shares. The balance of P l,186,083.34 shall be distributed under the supervision of the Secretary of Labor among the present laborers of the party of the Second Part who were already laborers of the PLANTERS during the period comprised between June 22, 1952 (the date of the passage of Republic Act 809) and October 31, 1955 (the end of the COMPANY's fiscal year); (ii) As to the sum of P 3,457,388.90, which is the Forty Per Cent (40%) of the P8,643,472.24, the Party of the Second Part shall distribute this amount among the PLANTERS in proportion to the sugar milled for them by the COMPANY during the aforementioned period of June 22, 1952, to October 31. 1955. (b) As to the manner of delivery of the cash involved in the foregoing transaction amounting to P 4,643,472.24, a "General Collective Sugar

Milling Contract" has heretofore been prepared for the signature of the PLANTERS affiliated with the COMPANY signing the said "General Collective Sugar Milling Contract", the COMPANY shall pay and deliver to the Party of the Second Part at least fifty per cent (50%) of the said cash balance of P4,643,472.24 or that portion thereof corresponding to the said majority of the PLANTERS affiliated with the COMPANY who have already signed the said "General Collective Sugar Milling Contract", and the remaining fifty per cent (50%) or remainder thereof will be paid, one half upon the execution of their new individual sugar milling contracts, and the other half upon the registration thereof in the Office of the Register of Deeds for the Province of Negros Occidental; (c) It is understood, as part of this settlement agreement, that the block of the COMPANY's common shares mentioned in sub- paragraph (i) and all its earnings shall constitute a trust fund to be dedicated to the amelioration of the plantation laborers of the PLANTERS in the VictoriasManapla-Cadiz milling district Said trust fund shall be administered by the Party of the Second Part for the benefit of the PLANTERS' laborers under the supervision of the Secretary of Labor and in accordance with the trust laws of the Philippines. Should the trust fund be liquidated by order of the Court of justice or in the manner provided for in paragraph (1) (a) (i) then the PLANTERS shall have the first option from the trustees, and the COMPANY the second option from the trustees and or from the planters themselves to buy said Victorias Milling Co., Inc, shares in blocks of 10,000 shares at their value of P 1,000,000.00 per block. And in case both the Party of the First Part and Party of the Second Part refuse to exercise their right, then said block of VMC shares may be sold in. the open market' (2) This agreement will become effective if and when the majority of the planters affiliated with the Party of the First Part have signed the said "General Collective Sugar Milling Contract". Executed at Victorias, Negros Occidental, this 5th day of March, 1957. VICTORIAS MILLING CO., INC. By: (Sgd.) CARLOS L. LOCSIN CARLOS L. LOCSIN President (Party of the First Part) (Sgd.) VICENTE F. GUSTILO VICENTE F. GUSTILO (Sgd.) JESUSS UAREZ JESUS SUAREZ (Sgd.) SIMON DE PAULA SIMON

DE PAULA (Sgd.) FERNANDO J. GONZAGA FERNANDO J. GONZAGA (Sgd.) JOSE GASTON JOSE GASTON (Party of Second Part) (Decision of CA, pp. 177-198, Rollo of L-41161) VII Before proceeding any further, and in order to place in proper perspective the matters covered by the numerous assignment of errors presented by the parties for Our resolution, We believe We must underscore at this point that as may be readily noted in the portion of the decision under review We have just quoted, the Court of Appeals summed up the allegations of the petition (and presumably the amended one) filed with the trial court and stated unqualifiedly the premises that, per its own petition the Federation admitted that the laborers' share in the 1952-53 to 1954-55, the PLANTERS gave to petitioners LABORERS the latters' participation in the sugar production as well as in the by-products and' derivatives thereof and continued to give the same until November 1, 1955, etc. (Italics Ours) Then the Court proceeded to state the defense of the defendants PLANTERS and CENTRAL or VICTORIAS. And after quoting the dispositive portion of the trial court's judgment, the Court went on to say that appellants (meaning the laborers represented by the FEDERATION) ventilate twenty-eight assignment of errors giving rise, in that Court's view to the three issues it enumerated. (supra) The point We want to clarify as early as at this juncture is that it is at once evident that technically, the second and third issues referred to cannot be deemed to contemplate any question beyond those raised in the petition, namely, the non-payment of the laborers' share in the proceeds of production after November 1, 1955. Whatever, therefore, might have been covered by the FEDERATION's twenty eight assignment of errors in respect to matters before November 1, 1955 were obviously new matter, and could be resolved by the Appellate Court only if evidence thereon were received by the trial court without objection of the adverse parties seasonably as if the same were tried with by agreement of all the parties. We have to make this early elucidation and setting of the proper perspective of the issues, because, as will be seen later, one of the decisive considerations We will dwell on will be whether or not the Appellate Court legally acquired authority to act on said new matter and/or whether or not it resolved the issues of fact and law relative thereto in accordance with the evidence and the law. Hereunder is how the Court of Appeals resolved the three issues that it held came out from the assignment of errors of appellant Federation. VII The appellate court resolved the three issues it enumerated as follows: Regarding the first issue, the Court held: We agree that millers and planters may indeed enter into written milling agreements stipulating participations different from those prescribed in Section 1 of the Sugar Act. This conclusion is justified by the language of Section I itself which declares that In the absence of written milling agreements between the majority of the planters and the millers of sugarcane in any milling district in the Philippines, the unrefined sugar produced in that district . . . . shall be divided between them.

in the proportions established therein. The phrase "in the absence of clearly" indicates that the division of the sugar between the millers and the planters in accordance with the schedule of participations mentioned, has to be complied with only during periods when millers and planters are bound by no written milling agreements, and need not govern the sharing system of the contracting parties who have entered into such agreements. That this is the real intendment of the law can hardly be shrouded in doubt. For the law is not merely social in that it means to uplift the wretched condition of the laborers in the country's sugarcane plantations; it is also economic in that the law is calculated to safeguard, preserve, and maintain the integrity, viability, and health of an industry so vital to the entire economy of the country. When the sugar bill (which ultimately became Republic Act 809) was being debated in Congress in 1950, 1951, and 1952, one of the urgent reasons advanced by its sponsors in pleading for the expeditious passage of the measure was the fact that in a year or so the preferential treatment of Philippine sugar in the American market was expiring, and it was imperative that the situation in the sugar industry be stabilized as quickly as possible by the passage of the bill in order to take advantage of the remaining few years of such preferential treatment. The provisions of the law authorizing the take-over by the government of centrals which refuse to mill or of plantations which neglect to plant, indicate the concern of the industry to the over-all posture of the national economy. The respective participations of the millers and the planters cannot, therefore, be regulated, at all times, by the same proportions established in Section I of the law. On the contrary, such participations should be understood as subordinated, at all times, to the superior interests of the industry as a whole. No one, least of all the very people involved in the industry - millers, planters, and laborers - has a right, so to speak, "to kill the goose that lay the golden eggs." Particularly when production costs are so high and sales are so low, sacrifice on the part of everyone is in order. In such cases, millers and planters should be able to adjust their respective participations in response to the economic realities obtaining in the industry, that is, stipulate in their written milling agreements participations lower or higher than those prescribed in Section 1 of the law. Fears may be expressed, as a result of the conclusion we have reached, that millers and planters may be thrown back into the same situation that the Sugar Act was passed to remedy that is, a situation where the weak planters would be continually demanding an increase in their participation and the strong millers would persist in refusing to grant the increase, the same stalemate, in the same impasse that characterized the relations between Central and Planters before the Act became law and which, in fact, precipitated the enactment of the law in 1952. Such fears, however, may not be seriously entertained. A continuing period of no contract would result in a definite disadvantage to the centrals. Section 1 provides summary increases dictated by Section I would continue to accrue in favor of the planters. For reasons of sheer self-interest, therefore, the centrals would thus be compelled to negotiate written contracts with the planters.

In such a situation, the planters, understandably would not be in too great hurry. If, however, they must write new contracts with the millers, there is hardly any doubt that, after enjoying the increases as decreed in Section I of the law in the absence of written milling agreements they would not yield to less in negotiating new milling agreements with the millers. Proof of this is the fact, in the instant case, that Planters, enjoying a 4% increase in their participation by virtue of Section 1 when they had no milling agreements with Central, did not settle for less when they finally executed the ASCA with Central on March 5, 1956. But we disagree with appellees when they assert that plantation laborers have no right to any share in any increase in planters' participation where such increase is granted not "under this Act " (a phrase used in Section 9 of the law) but by contract, as in the case of the ASCA of March 5, 1956. The argument loses sight of the fact that the Sugar Act of 1952 is, by and large, a piece of social legislation intended to grant increases in the planters' participation for the primary purpose of enabling the planters to improve the lot of their plantation laborers. Thus, in 1938, when President Manuel L. Quezon appointed Chief Justice Moran to study the "alleged inequitable distribution of sugar resulting from the milling of Sugarcane between the centrals and the plantation", the study was undertaken with a view to "ameliorating the condition of the planters" laborers. When Justice Moran finally submitted his report on April 30, 1939, he came up with the conclusion that unless the participation of the planters was increased, they could not be made to 'ameliorate the condition of their plantation laborers. The Court then went into an extended discussion of practically the same considerations discussed by Us in Talisay-Silay, hence We will not quote them anymore. As We did in Talisay-Silay, the Court concluded: In keeping with this spirit, the Department of Labor has made a correct interpretation of the scope and extent of the applicability of Republic Act 809 in respect to the benefits of plantation laborers, in issuing the 'Rules and Regulations to implement Section 9 of Republic Act 809 (Exhibit GGG), dated February 23, 1956, as amended on May 4,1956, providing: SECTION 1. The benefits granted to laborers under the Act shall apply to all laborers of sugar plantations in any milling district wherein the planters' sharehas increased in accordance with the schedule of participations established in Section 1 of said Act, due either to the absence or expiration of written milling agreements between the majority of the planters and their respective millers or under subsequent milling agreements executed after the date of effectivity of the Act. It is clear from the foregoing provisions of the "Rules and Regulations", that the benefits to which the plantation laborers are entitled refer to the increases in planters' participation granted either

under Section 1 of the law (in the absence of written milling agreements on the date said law became effective, June 22, 1952) or under any subsequent contracts executed after the date of effectivity of the said Act. It is likewise clear that such increase is the difference determined, as basis, either on the lower participation of the planter under the last milling contract expired immediately prior to June 22, 1952, or on the lower participation of the planter under a milling contract which, although subsisting on that date, expired immediately thereafter, in relation either to the higher participation of the planter under Section 1 of the law (in the absence of a milling contract) or to the higher participation of the planter under a milling agreement executed subsequent to June 22, 1952. Thus, provides the 'Rules and Regulations Increase in participation shall mean the difference between the participation of the planters under Section 1 of the Act or the participation of the planters in any milling agreement subsequent to the effectivity of the Act, and the participation of said planters under the milling contract subsisting at the date of the effectivity of the Act, or in the absence thereof, under the last milling contract immediately prior to the enactment of said Act.' Consequently, we hold that, since, as the facts of this case show, under their milling contracts which expired before June 22, 1952, Planters had a participation of 60%, while Central had 40%, and since, under the ASCA executed between them on March 5, 1956, but made retroactive to November 1, 1955, Planters have a participation of 64% while Central has 36%, with such participations to run and remain in force until October 31, 1974, Planters enjoy a 4% increase in participation under the said ASCA. Pursuant to Section 9 of Republic Act 809, the plantation laborers, or appellants herein, are entitled to a share of 60% of such 4% increase during the entire period of the 19-year term of the ASCA. In the light of all the foregoing, we hold, in disposing of the first issue herein discussed, that the existence of milling agreements does not necessarily render Republic Act 809 inapplicable or inoperative as to the contracting parties but the Act remains applicable and operative in all cases where the milling agreements, executed subsequent to June 22, 1952, provide any increase in planters' participation, as the term 'increase in participation 'is defined herein. Accordingly, the ASCA and the other derivative sugar milling contracts are hereby declared modified so as to be caused to be read thereinto a provision granting the plantation laborers, or the appellants herein, 60% of the 4% increase in planters' participation stipulated therein, commencing from November 1, 1955 to October 31, 1974. They should likewise be entitled to legal interest for the same period.

As already stated earlier in this opinion, the above ruling of the Court of Appeals conforms with Our decision in Talisay-Silay ,which We here reaffirm for the purposes of these cases, no new and cogent reasons having been advanced by the FEDERATION to convince Us to alter Our view. As We have earlier indicated, in the latest motions filed by it for early resolution of these cases, it is quite apparent that the FEDERATION is more or less resigned to accept Our Talisay-Silay rulings. - VIII Anent the second issue, the Court discoursed thus: We shall now take up the second issue under which appellants claim that the ASCA of March 5, 1956 (Exhibits XXX thru XXX-6), and derivative contracts, the 'General Collective Sugar Milling Contract' (Exhibits YYY thru YYY-7) and the 'Individual Sugar Milling Contract' (Exhibits SSS thru SSS-28 and ZZZ thru ZZZ-7) executed by Central, on the one hand, and Planters, on the other, have been entered into in circumvention of Republic Act 809 and are, for that reason, void ab initio. In their twelfth assignment of error (appellants' brief, pp. 265-278), appellants argue that while appellees are free to enter into written milling agreements subsequent to June 22, 1952, the intent of Republic Act 809 is that the provisions of such agreements 'must be without prejudice to the sharing arrangement laid down in Sections I and 9 of the law. In support of this position, they cite the proceedings on the deliberations of the Senate on House Bill No. 1517 (which ultimately became Republic Act 809) particularly on what became Section 5 of the law. In their sixteenth assignment of error (appellants' brief, pp. 292-306), appellants charge that the motive of the appellees in executing the milling agreements is 'to have a pretext for evading and circumventing Sections 1 and 9 of Republic 809 and thereby to be able to appropriate with impunity the six (6%) per cent share' of appellants in the unrefined sugar and its derivatives. We have gone over the arguments of appellants in both assignments of error but found no evidence of circumvention as appellants have charged. Under their twelfth assignment of error, it is true that Senator Zulueta introduced an amendment so as to subject the schedule of participations under Section 1 of the law to decisions by a proposed Board of Arbitration to be appointed by the President of the Philippines 'in the event that any central, shall be unable to arrive at a milling agreement with a majority of the planters affiliated with it, and shall refuse to mill the sugar cane of such planters in the absence of such agreement', and that this amendment was voted down on the ground, strongly advocated by Senator Taada, that since the bill already fixed the ratio of participation between the millers and the planters, it would be wrong to 'open it to further inquiry or arbitration.' Senator Taada was correct in taking such position. There was no point to creating a Board of Arbitration to determine the participations of the millers and the planters which the bill under discussion had already fixed as a congressional determination of the matter. But no inference may be drawn from Senator Taada's position that the sharing proportions established under Section 1 of the law may not be deviated from in contracts

executed subsequent to the passage of the law on June 22, 1952. Appellees are correct in their view that indeed if it were the intention of Congress for the millers and planters to observe no other sharing arrangements than those established under Section 1, there would be little point, if at all, entering into any written milling agreements which cannot stipulate other proportions in the sharing arrangements than those prescribed under Section 1. In our resolution of the first issue, we adverted to the fact that Republic Act 809, although not a revenue-raising measure, is, in addition to being social, also an economic piece of legislation. It bears repeating in connection with the issue at hand that Congress could not have intended, by Section 1, to prevent the millers and planters from agreeing to other sharing proportions, even at the cost of the preservation of the sugar industry. We do not believe we need say more. Under their sixteenth assignment of error, appellants cite the various acts of Central in resorting to maneuvers to get Planters to execute the ASCA of March 5, 1956, and the other derivative sugar milling agreements. Appellants are of the view that they are entitled to 6% of the sugar proceeds effective June 22, 1952 without contract, as under Section 1 of the law, or with contract, as under the ASCA, and that the maneuvers of Central in offering Planters 64%, provided Central got 36%, which the latter finally succeeded in getting the former to agree to under the ASCA, constitute a circumvention of the law. Central's tactics may not be exactly moral, but they are standard operating procedure of businesses - using every possible leverage and device to bring about the best bargain under given circumstances -- for profit. The contracts, therefore, which it wrung from Planters are not in circumvention of the law but in legitimate pursuit of profit -- which is the end all and be-all of business. That Central, as a result of the ASCA which appellants claim it (Central) to have 'engineered', got 36% and Planters 64%, while the plantation laborers got nothing, is no reason for considering the contract a circumvention of the law which does not in the first place impose upon it any duty or require of it the performance of any obligation to yield any part of its participation in favor of planters laborers. In other words, we do not find in Central's conduct in the premises anything so odious or so obnoxious as to render the contracts it has entered into with Planters illegal or repugnant to public policy. In the course of negotiations, Central acted under the belief that if it succeeded in writing new written milling agreements, the agreements could stipulate other proportions in the sharing system than those established under Section 1 of the law, since in its view, the law would no longer be applicable the moment such agreements were entered into. There is evidence that Planters, on their part, at first recoiled from Central's suggestion that the latter was willing to increase the former's participation from 60% to 64% provided Planters agreed to give 36% to Central for the duration of the contract. The sense of repulsion was understandable, since, under Central's suggestion, the 6% which the Planters' laborers were to enjoy from June 22, 1952 to October 31, 1955, would an go to Central during the next 19 years, from November 1, 1955 to October 31, 1974. But Planters seemed to have little choice as Central appeared to have all the aces: from June 22, 1952, it had started setting aside a 'reserve'

equivalent to 10% of the annual production, this being the amount of increase which the Planters had demanded as due to them under Section 1 of the law. Although Central still insisted, even after the passage of the law on June 22, 1952, that its 30-year milling contracts with Planters had not yet expired because of its belief that 4 years of Japanese occupation and 2 years of rehabilitation of the mills during which the mills were not in operation should be deducted from the 30- year periods of the contracts, it set aside this 'reserve' just in case it was finally decided by the courts before which the issue had been brought by the planters, that its 30-year contracts had indeed expired as of the date of effectivity of the law. As of October 31, 1955, this 'reserve' had accumulated to P 8,643,472.24. Central's suggestion was that this amount of 'reserve' built up during the period from June 22, 1952, to October 31, 1955, be divided between Planters and the plantation laborers on the proportion of 40% for the former and 60% for the latter, the same proportions prescribed by Section 9 of republic Act 809. With 40% of the 'reserve, Planters would stand to get P 3,457,388.90, while the plantation laborers, with 60% would have P 5,186,083.34. These participations in the 'reserve of 40% for Planters and 60% for the plantation laborers in the 'reserve', would be equivalent to participations of 4% and 6%, respectively, in the total annual production within the period from June 22, 1952 to October 31, 1955, Planters' total participation for the period, therefore, would be 64%. Confronted by an acute need for money and these enticements dangled before them: 3,457,388.90 in cash (equivalent to 40% of their participation in the reserve or to 4% in the total annual production) for the period June 22, 1952 to October 31, 1955, and a similar total participation of 64% for the next 19 years, that is, from November 1, 1955 to October 31, 1974, coupled by the speculation perhaps that their 4% increase for the 19 years could not be touched by the plantation laborers because of the argument that Republic Act 809 would no longer be applicable once written milling agreements were entered into, Planters found no better alternative than sign, as they did sign, on March 5, 1956, the controversial ASCA and subsequently, the other agreements reproducing the provisions of the ASCA. That Planters might not have gotten the better end of the bargain since, under the ASCA the 6% that would go to their plantation laborers for the period from June 22, 1952 to October 31, 1.955, would go instead to Central for the next 19 years, from November 1, 1955 to October 31, 1974, is no evidence of circumvention of Republic Act 809. As we have said in our resolution of the first issue, the millers and planters may stipulate in their written milling agreements other sharing proportions than those prescribed in Section 1 of the law which were so prescribed only in the absence or because of the absence of written milling agreements. Central's drive, therefore, to get all the 6% for itself is a perfectly legitimate one, not a circumvention Again, fundamentally, the above position of the Court of Appeals is in accord with Talisay-Silay, except for some apparent inconsistencies therein, to which We will hereinunder address Ourselves regarding the conduct of VICTORIAS in entering into the so-called ASCA. It is quite obvious that the Appellate Court tried very hard to look for some way of making VICTORIAS somehow liable for whatever might be due the

laborers of the PLANTERS, notwithstanding its categorical finding and holding that VICTORIAS did nothing more than to obtain as legitimate a bargain as any sensible businessman or industrialist having an eye for profit would do. We see no legal, equitable nor moral reason for such effort, even as We reaffirm for the purposes of the instant cases, Our ruling in TalisaySilay that under no circumstances should the plantation laborers be deprived of 60% of whatever increase in share their respective planters employers had obtained from the Central, that is, whether by the application of Section 1 of the Act when there were not enough written contracts, or, under the said contracts upon there being a majority of them. After holding that the ASCA is legal and, what is more, not conceived to circumvent the law, surprisingly, the Court went into a matter not alleged in the petitions in the trial court. It proceeded to go into a disquisition of the effects of the provisions of the ASCA regarding the manner of paying the. share of the laborers in the 10% increase of the PLANTERS' share from June 22, 1952 to October 31, 1955. As will be noted in the earlier quoted provisions of the ASCA, it was stipulated that the PLANTERS would be paid their: 10% increase, 60% of which would pertain to the laborers, with the condition, however, that instead of the PLANTERS receiving the total share of the laborers in cash, only a portion would be in cash and the balance of Four Million (P 4-M) Pesos would be in the form of certificates of shares of stock to be issued to the PLANTERS, who formed a Special Committee or Board of Trustees for the purpose, expressly in trust for the laborers. The Court condemned such provisions as entirely beyond the authority of the PLANTERS and VICTORIAS to stipulate just between them without the express consent or prior assent of the laborers or the Federation or even the Secretary (now Minister) of Labor, who, under Section 9 of the Act, was supposed to supervise "the distribution of the share corresponding to the laborers. " On such premises, the Court concluded: In the light of all the foregoing, we hold, in resolution of the second issue, that, while we do not find appellees to have circumvented Republic Act 809 in entering into the ASCA and in stipulating a participation of 64% for Planters and 36% for Central, and for this reason, declare the ASCA and the other derivative sugar milling contracts valid, the appellees are jointly and severally liable for tort in disposing, upon their own accord, and without any authority of the plantation laborers, of the money of the said laborers in the total amount of P5,186,083.34, and in thus causing the loss of shares of stock and their earnings purchased out of the P 4,000,000.00 of such amount. X While, as We have said, We are in agreement with the Court of Appeals in its construction and application of Sections 1 and 9 of Republic Act 809 as discussed above, We cannot, as We will show anon, fully accept its conclusions as to the pretended liability of the PLANTERS and VICTORIAS for the amount that the FEDERATION claims the laborers of the PLANTERS have not been paid as their share of the proceeds of the crop years 1952- 1953 to 1954-1955 as well as those of the crop years 1956-1957 to 1973-1974. In passing upon, as We have just quoted, the second issue formulated by it to resolve the appeal to it of the Federation, it held the appellees, the PLANTERS (including Primo Santos and Benjamin Tirol) and VICTORIAS "jointly and severally liable for tort in disposing, upon their own accord, and without any authority of the plantation laborers, of the money of the said laborers in the total amount of P 5,186,083.34 and thus Causing the loss of shares of stock and their earnings purchased out of P 4,000,000.00 of such amount." Not only that, the Court of Appeals adjudged the PLANTERS and VICTORIAS also jointly and severally liable for the 2.4% share of the laborers in the proceeds, which they maintain they have not received, of the crop years 1956-57 to 1973-74. Indeed, in the course of resolving the second issue and in disposing of the third issue, the Appellate Court found the PLANTERS

and VICTORIAS guilty of misappropriation and conversion of P7,385,950.00 corresponding to the P4M worth of VICTORIAS shares of stock which under the ASCA was stipulated to be received by the PLANTERS in trust for the laborers. Obviously, this particular aspect of these instant cases before Us involve questions both of fact and of law. To put things in their proper order and to pin liability for the claim of the laborers on the proper part or parties it would be best to discuss and dispose of separately the two stages of sharing and payment in question, namely, (1) that which refers to the proceeds of the 1952-53 to 1954-55 crop years and (2) that referring to the proceeds from crop year 1955-56 to crop year 1973-74. XI -AWe will start with what We feel is the stage that involves factual and legal issues which may be easily and readily determined, which is that referring to the proceeds of 1955-56 to 1973-74 crop years. Under the terms of the ASCA, the ratio of sharing between the PLANTERS and VICTORIAS during that period was to be 64% of said proceeds for the former and 36% thereof for the latter. As this Supreme Court held in Talisay-Silay and as held in the decision of the Court of Appeals under review, We reiterate, it is indubitable that said proportion of sharing is legal, the ratios fixed in Section 1 of Republic Act 809 notwithstanding. Although nothing is provided in the ASCA as to the share of the laborers in the 4% increase the PLANTERS were thus given by VICTORIAS, which under Talisay-Silay and the decision of the Court of Appeals ought to be 2.4%, or 60% of said 4%, it is admitted on all sides that VICTORIAS religiously gave the PLANTERS their full increase of 4% annually from crop year 1955- 56 to crop year 1973-74 thereby leaving it to the PLANTERS to pay their respective laborers the said 2.4%. The FEDERATION claims and the Court of Appeals so found that the laborers were not paid by their respective planters-employers what is legally due them. Such being the case, We cannot but affirm the judgment of the Court of Appeals that the PLANTERS are liable therefor. -BWe cannot, however, share the Appellate Court's holding that VICTORIAS is jointly and severally liable with the PLANTERS. We cannot perceive any factual or legal basis for such solidary liability. From the very beginning of the sugar industry, the centrals have never had any privity of any kind with the plantation laborers, since they had their own laborers to take care of. In other words, both the centrals and the planters have always been the one dealing with their respective laborers regarding the terms and condition of their employment, particularly, as to wages. Nowhere in Republic Act 809 can We find anything that creates any relationship between the laborers of the planters and the centrals. Under the terms of said Act, the old practice of the centrals issuing the quedans to the respective PLANTERS for their share of proceeds of milled sugar per their milling contracts has not been altered or modified. In other words, the language of the Act does not in any manner make the central the insurer on behalf of the plantation laborers that the latter's respectively employers-planters would pay them their share. Had the legislature intended to make the central as such insurer, We have no doubt that clear words to such effect would have been used. Much less is there in the ASCA any provision making VICTORIAS responsible in any way for the share due the plantation laborers in the 4% obtained by the PLANTERS under said agreement. Section 9 of the Act unequivocally provides that 60% of "the proceeds of any increase in the participation granted the planters under this Act and above their present share shall be divided between the planter and his laborer. Further, the same provision explicitly mandates that the "distribution of the share corresponding to the laborers shall be made under the supervision of the Department of Labor." Accordingly, the only obligation of the centrals, like VICTORIAS, is to give to the

respective planters, like the PLANTERS herein, the planters' share of the proceeds of the milled sugar in the proportion stipulated in the milling contract, which would necessarily include the portion of 60%, pertaining to the laborers. Once this has been done, the central is already out of the picture, and thereafter, the matter of paying the plantation laborers of the respective planters becomes the exclusively the concern of the planters, the laborers and the Department of Labor . Under no principle of law or equity can We impose on the central here VICTORIAS - any liability to the plantation laborers, should any of their respective planters-employers fail to pay their legal share. After all, since, under the law, it is the Department of Labor which is the office directly called upon to supervise such payment, it is but reasonable to maintain that if any blame is to be fixed for the unfortunate situation of the unpaid laborers, the same should principally be laid on the planters and secondarily on the Department of Labor, but surely, never on the central. -CMoreover, when We consider that according to their own petitions, both original and amended in the court below, the laborers had not been paid their share since after the 1954-55 crop year, and their original petition was filed only in November 1962, We feel inclined to believe that if the laborers were convinced that they had any kind of cause of action against VICTORIAS, it is quite unexplainable why it took them practically more than six years to file their suit. It is just as remarkable that they did not move even against their very employers, the PLANTERS, during all that time. In any event, as We have already stated, We find no legal nor equitable basis for the pretended joint and several or solidary liability of VICTORIAS with the PLANTERS to the laborers. Its act of paying the PLANTERS the full 4% increase was not illegal or contrary to law, for it was in fact in fulfillment of its obligation both under Our Talisay-Silay ruling and the provisions of the ASCA. -DIncidentally, it may be added, the Rules and Relations to implement Section 9 of Republic Act 809, "issued by the Secretary of Labor on February 23, 1956, as amended on May 4, 1956, do provide pertinently that the laborers' share in the increase in participation accruing to the planters shall be included in the quedans covering said increase issued in the planters' name with the following notation on the face of the quedan sixty per centum (60%) share of laborers in the increase in the participation of planters under Sugar Act of 1952 included." But absent any iota of evidence indicating that such was not done, We are under the law supposed to presume that the regulations have been complied with. Nowhere in the Federation's unusually lengthy and prolific brief is there any indication otherwise. And whatever the respective PLANTERS did after those quedans were issued to them cannot under any concept of law or equity be imputed to VICTORIAS or to any imaginable connivance between it and the PLANTERS to prejudice the laborers. There was nothing that VICTORIAS could conceivably gain in any such nefarious arrangement to induce it to take the risk of ultimately being made liable in the manner done by the Court of Appeals. -EIt is indeed noteworthy that whereas, as We shall discuss presently, with regard to the payment of the laborers' share in the proceeds of the 1952-53 to 1954-55 crop year (60% of 6% out of the 10% provided in Section 1 of Republic Act 809), the Court of Appeals rather extensively argued and discoursed, with, to be sure, seeming or apparent plausibility what considerations, in its view, ought to make VICTORIAS, jointly and severally or solidarily liable with the PLANTERS, 2 hardly did said Court lay down any premise for the following portion of its judgment now under review: 3. Declaring that the participation of 64% for Planters and 36% for Central commencing from November 1, 1955 to October 31, 1974, as stipulated in these written milling agreements, is valid, but that there should be deemed written into said agreements a stipulation providing that 60%

of Planters '4% increase in participation belongs to appellants herein for the entire duration of the same period pursuant to Section 9 of Republic Act 809; xxx xxx xxx 5. Ordering appellees, jointly and severally, to pay appellants: (a) The sum equivalent to sixty (60) percent of Planters' increase in participation of four (4%) percent, beginning November 1, 1955, and ending October 31, 1974, inclusive, with interests thereon at the legal rate of 6% per annum until fully paid;" (Pp. 79-80, Annex A, CENTRAL's Brief) The only statement or finding or holding We can see in such challenged decision which might be said to refer to the point under discussion is the following: In the light of all the foregoing, we hold, in disposing of the first issue herein discussed, that the existence of milling agreements does not necessarily render Republic Act 809 inapplicable or inoperative as to the contracting parties but the Act remains applicable and operative in all cases where the milling agreements, executed subsequent to June 22, 1952, provide any increase in planters' participation, as the term 'increase in participation is defined herein. Accordingly, the ASCA and the other derivative sugar milling contracts are hereby declared modified so as to be caused to be read thereinto a provision granting the plantation laborers, or the appellants herein, 60% of the 4% increase in planters' participation stipulated therein, commencing from November 1, 1955 to October 31, 1974. They should likewise be entitled to legal interest for the same period. (Page 49, Id.) Well and good, but the Appellate Court did not say that with such construction it had made of the Act, (to be sure, in accord with TalisaySilay) it became the obligation of VICTORIAS to see to it that the respective laborers of the PLANTERS were duly paid their share of 2.4% or 10% of the 4% increase the PLANTERS were given. The foregoing judgment becomes more incomprehensible when it is recalled that in its minute analysis of the ASCA insofar as the provisions thereof stipulating a 64%-36% sharing between the PLANTERS and the CENTRAL of the proceeds of milled sugar during crop years l955-56 to 1973-74, it found that in so stipulating such ratio of sharing in said ASCA, there was no evidence at all that on the part of VICTORIAS and the PLANTERS, for that matter-of any circumvention, and We can add, even of any intent to circumvent, the provisions of the Section 1 of the Act. To Our mind, for the Appellate Court to impose upon VICTORIAS join and several liability with the PLANTERS, in the light of its just quoted predicates, for the latter's failure to pay their respective laborers the 2.4% corresponding to said workers, is not only a veritable non sequitur but an utterly baseless legal conclusion that cannot be allowed to stand uncorrected. Accordingly, it is Our considered opinion, and We so hold , that the portion of the judgement of the Court of Appeals just quoted should be as it is hereby REVERSED, and whatever liability there exists in favor of the plantation laborers should be pinned exclusively on the PLANTERS, their respective employers. We must add though, that it was the Department of Labor's unexplainable inattention, not to say negligence, in performing its own corresponding obligations under Section 9 of the act that contributed to a considerable extent to the said plight that befell the said laborers. 'There was perceptible lack of sufficient concern and initiative, to say the least, in the Department's attitude and actuations in the premises. lt may be said that its vigilance

concerning the rights of labor was unhappily not up to the expectations of the lawmakers when they approved the Act. XII With the matter of the liabilities relative to the share of the laborers in the proceeds of the 1955-56 to 1973-74 crop year thus clarified and determined, We can now pass to what happened to the participation due the laborers during the 1952-53 to 1954-55 crop years. Again, this is an inquiry that involves both issues of fact and of law. In this connection, let us hearken first to how the Court of Appeals made its conclusion of fact in respect to P5,185,083.34 that it found to be the unpaid share of the laborers before the execution of the ASCA: In resolving the third and last issue set forth above, we have taken note of appellants' position that Central and Planters are guilty Of 'misappropriation' of the amount of P 5,185,083.34 belonging to them which accrued during the period from June 22, 1952, to October 31, 1955 as their 60% share of Planters 10% increase in participation totalling, during the same period, P 8,643,472.24. That will now be resolved, therefore, is whether or not appellants have, in fact, received the amount of P 5,185,083.34. By way of a short flashback, it is to be recalled that the laborers' P5,185,083.34 was under the ASCA, to be disposed of as follows: P1,186,083.34 was to be distributed to the laborers, under the supervision of the Secretary of Labor, and P4,000,000.00 was to be invested in Central's shares of stock. It may be pertinent, at this point, to make a brief reference to the mechanics of this investment. As provided in the ASCA, the P4,000,000.00 of the P5,185,083.34 belonging to the appellants laborers was to be invested in 40,000 shares of Central's capital stock (with par value of P100.00 per share) redeemable after a period of time by Central. This investment was to be administered by the 'Special Committee', designated in the ASCA as representative of Planters. On August 13,1956, pursuant to the ASCA of March 5,1956, Central issued the 40,000 shares in four certificates of 10,000 shares each, in the names of five members of the 'Special Committee' or 'Board of Trustees', to wit: Vicente F. Gustilo, Jesus Suarez, Simon de Paula, Fernando J. and Jose Gaston, in their capacity as 'trustees' for appellants-laborers. Three of these five having died, Gustilo and Gaston, with the assistance of legal counsel of Central, filed a petition for their replacement, with the Court of First Instance of Negros Occidental (Exhibits JJJJJ-1 thru JJJJJ-3) resulting in the appointment of three new members: Ysmael Reinoso, Newton Jison, and Enrique Hinlo (Exhibits JJJJJ-7 thru JJJJJ-9). Gaston and Gustilo themselves having died, only the three new members could testify during the hearing of the case in the court below. Through subpoenas duces tecum (Exhibits IIIIII, KKKKKK and LLLLLL each of the three was commanded: ... to bring with him the complete record of the Board of Trustees beginning March 5, 1956, of the sums of P4,000,000.00 and Pl,186,083.34 referred to in

the Amicable Settlement Compromise Agreement dated March 5, 1956, executed between Victorias Milling Co., Inc., represented by its President Carlos L. Locsin and, Vicente F. Gustilo, Jesus Suarez, Simon de Paula, Fernando. The evidence shows that, except for a small part (P 180,679.38) of the sum of P 5,185,083.34, the entire P l,186,083.34 was actually paid to the laborers. Thus, testified witness Felipe de Guia, representative of the Department of Labor in charge of the distribution: COURT: Q. Mr. de Guia, you said that there were some amounts that were not distributed because some laborers cannot be located; is this the amount mentioned in this Exh. "23", under the words 'amount of undistributed of windfall'? A. Yes, sir, P 180,679.38 (tsn.p.23,Junel8,1970) Appellants themselves, in their brief, have made the following observations; So, it can be assumed without fear of contradiction that the last portion of the said amount of P l,186,083.34 was delivered, if ever, to PLANTERS-APPELLANTSLABORERS after February 18,1957.(Appellants' Brief, p. 326) The evidence, however, fails to show that the amount of P 4,000,000.00 (invested in Central's shares of stock pursuant to the ASCA) and its accruals have ever been received by appellantslaborers. S. Gonzaga and Jose Gaston, representing the sugarcane planters affiliated with the Company in connection with Civil Case No. 22577 of the CFI of Manila. Testifying on June 17, 1970, Jison, vice-chairman said he could not bring the documents asked of him because Gaston, as chairman of the Board of Trustees, had taken custody of all the records; that these records remained in Gaston's custody up to the time of his death; that since Gaston's death in 1969, 'we did not have any meeting and practically we forgot all about it. And he has still all the records so I cannot bring the records requested of me.' (p. 37, tsn., June 17, 1970). Hinlo, secretary to the Board of Trustees, could not bring any of the documents subpoenaed,

either, 'because I have resigned already as Secretary of the Board of Trustees in February, 1970, and the records are all in the hands of the late Jose Gaston.' (P. 58, tsn., June 18,1970). Reinoso, treasurer of the Board of Trustees, did not appear at the hearing set for June 18, 1970, but his lawyer manifested that the only document he, Reinoso, had, was a copy of the ASCA of March 5, 1956. For his part, Pfiffner, treasurer-comptroller of Central, testified that Central had nothing to do with the sale of the 40,000 shares in which the P4,000,000.00 was invested; that it was the Board of Trustees, which sold the shares. Thus: Q. Are you trying to say, Mr. Pfiffner that the amount of 40,000 shares of stock and their dividend also in stock were sold with the consent only of the Board of Trustees? A. Yes, Sir. Q. ... And the defendant Victorias Milling Co., Inc., had nothing to do with it? A. That is correct.'(p.86,tsn.,June 16, 1970). Appellees claim that witness Felipe de Guia, Chief of the Agricultural Wage Section of the Department of Labor, had testified on the distribution to and receipt by appellants-laborers of the principal and earnings of the P 4,000,000.00 invested in the 40,000 shares. This claim however, is not borne out by the records in fact, de Guia denied any knowledge of the whereabouts of the proceeds of the sale and earnings of the 40,000 shares of stock. (Emphasis Ours) Testifying on June 18, 1970, as a representative of the Secretary of Labor, witness de Guia stated: that he had no knowledge of the 40,000 share of stock, and that he did not know about the prices at which the 40,000 shares of stock were sold (p. 14, tsn., June 18, 1970). He further stated that he did not know about the income in dividends earned by the 40,000 shares of stock (p. 16, tsn., June 18, 1970), although he admitted having supervised the first distribution of the amount of P l,186,083.36 to appellants-laborers (p. 2 1, tsn., June 18, 1970). It is clear from the evidence that, after Central issued the 40,000 shares of stock in the names of the five members of the "Special Committee'" or "Board of Trustees" representing, vis-a-vis Central ,both Planters and appellants-laborers, the said 'Special Committee" or "Board of Trustees" in its capacity as trustee for appellants-laborers, sold these 40,000 shares to various buyers, some of the shares going to Central and some to Planters, and that proceeds of the sales of these shares were received by the said "Special Committee" or 'Board of Trustees' and delivered to Planters for distribution to appellants-laborers. Thus, 'Special Committee' vice-chairman Jison explained: Q. Would you like to tell this Honorable Court what

happened to the money, whether in cash, check or in terms of shares of stock which was delivered by the Victorias Milling Co., Inc. to the Board of Trustees? A. The stock of shares of the Victorias Milling Co., Inc. which was delivered to the Board of Trustees was sold and liquidated according to the Amicable SettlementCompromise Agreement and in such case, checks were issued to be delivered to the respective laborers under the supervision of the Department of Labor. So fat the record is concerned, the Department of labor has all the records.' (pp. 37-38, tsn., June 17, 1970). Not a shred of evidence, however, has been introduced into the record to show that the proceeds of the sales of the 40,000 shares of stock and the increments in cash and stock dividends have been actually delivered to or received by appellants-laborers. The three surviving members of the 'Special Committee' or 'Board of Trustees', namely Messrs. Ismael Reinoso Newton Jison, and Enrique Hinlo, who were supposed to be the guardians or administrators of the P4,000,000.00 invested in Central's 40,000 shares of stock, could not present any document whatsoever showing or tending to show that the proceeds of the sales were actually delivered to the Planters concerned and subsequently paid to the laborers. Central argues that in the petition of appellantslaborers, no issue has been raised by the allegations concerning the latter's 6% participation from June 22, 1952 to October 31, 1955, amounting to P 5,186,083.34. Neither, it says, have appellants-laborers prayed for any relief in connection therewith. In fact, it goes on to say, appellants-laborers have admitted receipt of all amounts due them within the period mentioned, citing paragraphs 8, 9 and 10 of the petition, thereby estopping themselves from raising any issue as to such amounts in the instant appeal. These arguments are more technical than substantial. It is true enough that the petition does not categorically state any specific relief desired with respect to the amount of 15,186,083.34, but it does contain a general prayer 'for such other relief as may be just and equitable in the premises'. And this general prayer is broad enough 'to justify extension of a remedy different from or together with the specific remedy sought. (Schenker v. Gemperk L-16449, Aug. 31, 1962, 5 SCRA 1042). lt is also true that paragraph 10 of the petition states That pursuant to Sec. 9 of said Act, respondents PLANTERS gave to petitioners LABORERS the latters' lawful participation in the sugar production as well as in the by-products and derivatives thereof and continue to give the same until November 1, 1955, when they ceased to do so until the present

but appellants-laborers have explained that what they meant by the quoted paragraph was that their 6% share had actually been set aside during the period from June 22,1952, to October 31, 1955 (p. 1446, Appellants' Reply Brier, not that the amounts due were actually delivered to or received by plaintiffs-appellants-laborers. Besides, no questions were raised during the trial of this case when the matter of the investment of the P4,000,000.00 was taken up by counsel of plaintiffs-appellants-laborers. In fact, counsel of Central agreed that what happened to the P4,000,000.00 was a proper issue in the case (p. 26, tsn., April 28, 1970). Furthermore, when Felipe de Guia, Chief Agricultural Wage Section, Department of Labor, testified as representative of the Secretary of Labor, on the matter of distribution of the P1,186,083.34, no objections were raised either by defendants-appellees. Again, when counsel for plaintiffs-appellantslaborers asked witness de Guia about the records of the distribution of the amounts of P1,186,083.34 and the P4,000,000.00 and its dividend earnings, counsel for Central likewise agreed to the production of whatever records there were available concerning these amounts (p. 157, tsn., June 16, 1970). But no records whatsoever were produced until the presentation of the evidence of the parties was closed. In effect what has been established by the evidence is that the P4,000,000.00 together with its earnings in dividends in the total amount of P3,385,950.00 (p. 66, tsn., June 16, 1970), has not be en distributed to or received by plaintiffsappellants-laborers. (Pp. 6574, Appendix A, Victorias' Brief) -BIn their brief filed with Us, the PLANTERS vehemently dispute these conclusions and argue thus: THIRD ASSIGNMENT OF ERROR THAT THE COURT OF APPEALS ERRED IN FINDING AND CONCLUDING THAT THE SUM OF FOUR MILLION (P 4,000,000.00) PESOS OUT OF THE FIVE MILLION ONE HUNDRED EIGHTY SIX THOUSAND AND EIGHTY THREE & 34/ (P5.186,083.34) PESOS CONSTITUTING THE 60% SHARE OF THE LABORERS IN THE 10% INCREASE IN PARTICIPATION OF THE PLANTERS FROM THE CENTRAL UNDER REPUBLIC ACT NO. 809 FROM JUNE 22, 1952 (THE DATE OF THE EFFECTIVITY OF SAID ACT) TO OCTOBER 31, 1955 (THE DAY PREVIOUS TO NOVEMBER 1, 1955 WHICH IS THE EFFECTIVE DATE OF THE MILLING AGREEMENTS OF THE PLANTERS AND THE CENTRAL), WAS NOT DISTRIBUTED TO AND RECEIVED BY THE LABORERS, SUCH FINDINGS BEING BASED ON A MISAPPREHENSION OF THE SPECIFIC ISSUES INVOLVED IN THE CASE AND GOES BEYOND THE RANGE OF SUCH ISSUES, ASIDE FROM BEING CONTRARY TO THE ALLEGATIONS OF THE ORIGINAL PETITION. AS A COROLLARY, THE COURT OF APPEALS ERRED IN HOLDING THAT THE PLANTERS AND THE CENTRAL ARE JOINTLY AND SOLIDARILY LIABLE THEREFOR.

In relation to this assignment of error, the Honorable Court of Appeals stated thus: ... if it is further considered, as shown in our resolution of the third issue, that this amount of P 4,000,000.00, along with its accruals, was never received by the plantation laborers to this day, the unwisdom of investment, let alone its illegality, is hardly in doubt.' (Appendix "A" pp. 75-76). ... and the fact that the laborer's P4,000,000.00 worth of shares and their earnings have, without any explanation from anyone from the Central from the Planters. or from the Special Committee, vanished into limbo without the laborers being able to actually receive any cent of the same.' (Appendix "A", p. 77) In effect, what has been established by the evidence is that the P4,000,000.00, together with its earnings in dividends in the total amount of P3,385,950.00 (pp. 6, tsn., June 16,1970), has not been distributed to or received by the plaintiffsappellants-laborers. (Appendix "A", p. 91). For the Purposes of clarification, let us inquire into the question as to what P4,000,000.00 does the Court of Appeals refer to: On pages 17 et seq. of the Decision of the Court of Appeals, reference is made to a document known as the "Amicable Settlement-Compromise Agreement' and referred to by the Court of Appeals for convenience as ASCA. This ASCA is quoted in full on pages 18-24 of the Decision. (Appendix 'A', pp. 25-35). In said ASCA, which was executed on 5 March 1956, it was stipulated that from June 22, 1952, when the Sugar Act took effect, to October 31, 1955, the parties recognized that said Sugar Act was applicable. Consequently, the Planters were entitled to a 70- 30 sharing basis from the Central, thereby earning a 10% increase in their previous participation of 60%. This 10% increase amounted to P8,643,472.24. Of this P8,643,472.24, the Planters were entitled to 40% thereof or P3,457,388.90 and the laborers were entitled to 60% thereof or to the amount of P5,186,083.34. Of this latter amount, it was agreed that P1,186,083.34 was to be distributed by the Planters to their laborers while the remaining P4,000,000.00 was to be invested by a Special Committee in shares of stock of the Central. It is this amount of P4,000,000.00, therefore, that is involved in the present consideration. The Court of Appeals held that this amount was not distributed to and received by the Laborers.

We respectfully and humbly submit that this finding and conclusion of the Court of Appeals has no basis in law and fact, and is contrary to the law of evidence and to evidence on records. Said finding has no basis in law and in act. Before we proceed, it might be pertinent to inquire into what is being claimed (their cause of action) by the Laborers in their petition or complaint. A simple perusal of the petition will reveal that the Laborers are asking for their share under the Sugar Act of 1952, from November 1, 1955 to date. In other words, there is no claim whatsoever in the petition for any amount corresponding to the period covered from June 22, 1952 to October 31, 1955. Thus, the Laborers in their petition dated November 9, 1962 alleged: That pursuant to Sec. 9 of said act, respondents planters gave petitioners-laborers the latter's lawful participation in the sugar production as well as in the by-products and derivatives thereof and continued to give the same until November 1, 1955 when they ceased to do so until the present.' In consonance with their allegations in said paragraph 10 of their petition dated November 9, 1962, laborers in paragraphs 1 and 2 of their prayer, prayed that judgment be rendered: (1) Declaring the applicability of the Victorias Mills District of the sharing participation prescribed by Republic Act 809 for every crop year starting with the crop year 1955-56. (2) Ordering respondent planters and/or respondent Central to account for and petitioners laborers' lawful share in the sugar produce, as well as the by-products and derivatives thereof, for every crop year from the crop year 1955-56, in accordance with Rep. Act No. 809. plus legal interests thereon computed on the basis of the average market price during the month in which the sugar was sold; (See Annex 'C' of the Petitioner's Petition) Said admission of the laborers in paragraph 10 of their petition dated November 9, 1962 and in their prayer, to the effect that they have already received their lawful participation in the sugar production as well as in the by-products and derivatives thereof from 1952 until November 1, 1955 was again reiterated in the 'consolidated opposition to the motion to dismiss', dated February 28, 1963, when they argued and we quote: To recapitulate, inasmuch as the present action is not merely for the recovery of money, but is primarily brought for the enforcement of

Republic Act No. 809 and the declaration of its applicability to the respondents for the crop year starting with the crop year 1955-56, we respectfully submit that this Honorable Court has jurisdiction over the subject matter of the present action. (See Annex 'C' of respondents' Petition for Review on certiorari by respondent Victorias Milling Co., Inc.' (emphasis supplied). Said allegation in paragraph 10 of the laborers petition dated November 9, 1962 as well as in paragraphs 1 and 2 of the prayer were again reproduced verbatim in their amended petition dated March 6, 1964, (See Annex C-1, Central's petition for review on certiorari). The Honorable Court of Appeals itself found also as a fact that: ... it is also true that paragraph 10 of the petition statesThat pursuant to Sec. 9 of said Act, respondents PLANTERS gave to petitioners laborers the tatters' lawful participation in the sugar production as well as in the by-products and derivatives thereof and continued to give the same until November 1, 1955, when they ceased to do so until the present; (Appendix "A", p. 89, Italic supplied) From the foregoing, it is obvious that the share pertaining to the laborers covering the period from October 31, 1952 to June 22, 1955 was never made an issue in the case at bar. Since the share pertaining to the laborers was never made an issue in the case at bar for the simple reason that the Laborers have expressly admitted in their pleadings the receipt of their entire share covering from October 31, 1932 to June 22, 1955, therefore, the Court of Appeals, in holding the planters jointly and solidarily liable with the central for P6,399,105.00 plus 6% interest per annum and P180,768.38 plus 6% per annum all representing the laborers' share pertaining to said period, gravely abused its discretion said abuse of discretion amounting to lack of jurisdiction. It is a well settled principle in procedure that courts of justice have no jurisdiction or power to decide question not in issue (Limtoco vs. Go Fay, 80 Phil. 166-176). Thus in the following cases this court held: It is a fundamental principle that judgments must conform to both the pleadings and the proof, and must in accordance with theory of the action upon which the pleadings were framed and the case was tried; that a party can no more succeed upon a case proved, but, not alleged than upon one

alleged but not proved (Ramon vs. Ortuzar, 89 Phil. 730, 742). (emphasi supplied) A judgment going outside the issues and purporting to adjudicate something upon which the parties were not heard, is not merely irregular, but extrajudicial and invalid.' Salvante vs. Cruz, 88 Phil. 236, 244; Lazo vs. Republic Surety & Insurance Co., Inc., 31 SCRA 329, 334). The actuation of the trial court was not legally permissible, especially because the theory on which it proceeded involved factual considerations neither touched upon in the pleadings nor made the subject of evidence at the allegations of the parties of their respective claims and defenses submitted to the court for trial and judgment.' This rule has been consistently applied and adhered to by the courts. Moreover, to award damages in favor of petitioner Miguel Tolentino, Sr., and against herein private respondents would violate the cardinal rule that a judgment must conform to and be supported by both the pleadings and the proofs, and should be in accordance with the theory of the action on which the pleadings were framed and the case was tried (Secundum allegata et probata Republic vs. de los Angeles, 41 SCRA 422, 450, Emphasis supplied). Said findings is contrary to the law on evidence As previously shown, the Laborers have expressly admitted in their pleadings the receipt of their entire share covering the period from October 31, 1952 to June 22, 1955, or all of the P5,186,083.00. What then is the legal effect of said admission by the Laborers. Section 2, Rule 129 of the Rules of Court provides: Judicial admissions. Admissions made by the parties in their pleadings, or in the course of the trial or other proceedings do not require proof and cannot be contradicted unless previously shown to have been made through palpable mistake. (Emphasis supplied) In relation to the foregoing rule, this Honorable Court in the following cases held: Soriano is bound by his own petition and by the adjudication of his claim made in consonance with his prayer. A party cannot trifle with a court's decision or order which he himself sought with full awareness of his rights under the premises, by taking it or leaving it at pleasure. The allegations, statements or admissions contained in a pleading are conclusive as against the pleader. A party cannot subsequently take a

position contradictory to, or inconsistent with, his pleadings, (Mc Daniel vs. Apacible, 44 Phil., 448; 49 C.J. 128-134). Specifically, he is not allowed to ask his money back when the peso value is good, and later say he wants to keep the land when the peso purchasing power is down. 'Cunanan vs. Amparo, et al., 45 Off. Gaz., 3796, (The Revised Rules of Court by Francisco Evidence, p. 66). An admission in a pleading may be made by an express acknowledgment of some fact or facts set forth in the pleading of the opposite party, or by a failure to deny or otherwise controvert the truth of such fact or facts. Thus, facts alleged in the complaint are deemed admissions of the plaintiff and binding upon him. Facts alleged in the answer are deemed admissions of the defendant and binding upon him. And facts stipulated in an agreement Of facts are deemed admissions of both parties and binding upon them. Facts stated in a motion are deemed admissions of the movant and binding upon him. The allegations, statements or admissions in a pleading are conclusive as against the pleader who cannot subsequently take a position contradictory to, or inconsistent with his pleadings.' (Cunanan vs. Amparo, 45 O.G. 3796) (The Revised Rules of Court, Evidence, Francisco, p. 66). An admission may occur in the complaint as well as in the answer. Thus where a complaint alleged the amount of the account to be $541.90, and that there was a balance due, after deducting all payments, of $175.75, it was held that the plaintiff admitted the payment of $366.15, and that the defendant was not precluded from insisting upon this admission by disputing the correctness of the items of the account. (White vs. Smith, 46 N. Y. 418.) The defendant's allegation in his answer that the plaintiff still owes him after deducting the value of the goods alleged to have been taken by the defendant from the plaintiff, if, interpreted in conjunction with the defendant's counterclaim for the balance resulting, after deducting the price of said goods, is an express admission of the existence of the obligation for the value of said goods. (Jurika vs. Castillo, 36 Off. Gaz., 476.) Notwithstanding that the law on evidence So declares that such an admission does not require proof and cannot be contradicted, the Court of Appeals still gave credence to respondent Laborers' explanation in their Reply Brief. (Appendix "A", pp. 89-90), which is not evidence at all. To sustain this finding is to give evidentiary value to an argument in party's reply brief. This is against all rules of evidence required such test as to admissibility, competency, relevancy, and materiality and which can only be accomplished during the trial proper. The Honorable Court of Appeals, in futile effort to justify its ruling that the share pertaining to labor covering the period from June 22, 1952 to October 31, 1955 was not distributed to the laborers despite the admission made by the laborers in

their pleadings that they have already received their share covering said period, argued that respondents laborers have explained that what they meant by the quoted paragraph was that their 60% had actually been set aside during the period from June 22, 1952 to October 31, 1955, (page 1446, appellants' Reply Brief), not that the amounts due were actually delivered to or received by plaintiff appellants laborers. (Appendix 'A', pp. 89-90) But it should be noted that this contention of the Laborers was raised for the first time only in their Reply Brief long after the trial of the case. In other words, it was a second thought of the Laborers brought about in their Reply Brief, thus amounting to change in theory and a deprivation of the right of the Planters to be apprised of the real issue for their defense. Although it may be true, that under Section 2, Rule 129 of the Rules of Court by way of exception the Court may in its reasonable discretion relieve the party from the effects of his admission, yet the same can be had only upon proper showing that said admission was made thru palpable mistake. In the instant case the admission made by the respondent-laborers found in paragraph 10 of their petition as well as paragraphs 1 and 2 of their prayer was never shown to have been made thru palpable mistake. Reading of the explanation of respondent-laborers as appearing in page 1446 of their reply brief relied upon by the Court of Appeals reveals that the allegations in paragraph 10 of their petition dated November 9, 1962 as well as the amended petition dated March 6, 1964 was never made thru palpable mistake. What was explained by respondents-laborers in page 1446 of their reply brief was the meaning of said paragraph 10. According to the respondentlaborers what they meant by their allegation in paragraph 10 ... . that pursuant to Sec. 9 of said act, respondentplanters gave petitioners-laborers the latter's lawful participation in the sugar production as well as in the by-products and derivatives thereof and continued to give the same until November 1, 1955 when they ceased to do so until the present.. is that ... the 60% of plaintiff-appellant-laborers in the annual 10% increase participation of the defendant appellees planters had in fact been set aside pursuant to Section 9 of Republic Act 809 for the duration of the period beginning June 22, 1952 and ending October 31, 1955. Since said admissions were never withdrawn, modified or explained or shown to have been made thru palpable mistake, therefore, Laborers were never relieved of the effects of their admission which under the rule on evidence is conclusive upon them. Suffice it to state their admission in paragraph 10 of their petition being conclusive as against them which they cannot thereafter contradict (Cunanan v. Amparo, Supra) established the fact that they

already received their share under the Sugar act of 1952 up to November 1, 1955 and against this fact no argument can prevail. CONTRA FACTUM NON VALET ARGUMENTUM. That the record is replete with evidence showing that the share of the laborers were distributed to them. Not only is there an admission by the Laborers of their receipt of the participation granted them by the Sugar Act up to November 1, 1955, but the record is replete with evidence showing that there was a distribution of this amount of P4,000,000.00 and its accruals, from year to year from a witness presented by the Laborers themselves. Mr. Felipe de Guia, Chief of Agriculture wage Section of the Department of Labor, a witness for the laborers testified that they made a distribution, or supervised the distribution of the participation of labor covering the period from June 22, 1952 to October 31, 1955, pursuant to the provision of Section 9, paragraph 2 of the Sugar Act that 'The distribution of the share corresponding to the laborers shall be made under the supervision of the Department of Labor.' Thus he testified: xxx xxx xxx Q. Mr. Guia, what steps, if you know the Department of Labor has taken. . . . I withdraw the question. Q. As Chief of the Agricultural Wages Section under the Department of Labor, do you know what steps your section of the Department of Labor has taken to implement Section 9 of RA 809, otherwise, known as Sugar Act of 1952, with the Victorias Milling District, Negros Occidental? A. Yes, sir, we have distributed also the supposed share of the laborers amounting to 6,717,360.00. COURT Q. When was that distribution made? A. It was made in the year 1955. Proceed. ATTY. SABIO

Q. This distribution covered the period from June 22, 1952 to what period? A. To October 3l, 1955. Q. Will you kindly tell the Court the basis of the distribution of the amount distributed? A. As I understand, this amount was the participation due to the laborers working in that milling district, from June 22, 1952 up to October 31,1955. COURT Q. June 22 of what year? A. June 22, 1952 to October 3l, 1955. Proceed. ATTY. SABIO Q. Under what law that is due to them? 'A. RA 809, otherwise, known as Sugar Act of 1952. A. By the way, Mr. Guia, what section or Division of the Department of Labor is embodied the implementation of RA 809? 'A. The Agricultural Wage Section of which I am the Chief. ATTY. HAGAD CROSS EXAMINATION Q. How was this amount of P9,612,421.36 distributed? A. The original amount which is supposed to be distributed is P5,186,083.36; but on account of converting the 4,000 shares of the laborers' shares of the stock, it was distributed continuously year to year. The dividends amounted to more than 1,000,000.00, which is added to this amount. It was based practically on the 10% increase participation due to the planters of the Victorias Milling District, wherein 60% of the 10% increase participation represented the said amount which was distributed among the laborers of the Victorias Milling District. Q So, P5,186,083.36 was 60% Of 10% was the increase

participation of the planters within the Victorias Milling District, for the period from June 22, 1952 to October 31, 1955; is that right? A. Yes, sir.

COURT: Why not find out from Mr. de Guia the record about the distribution how much was distributed? WITNESS:

(t.s.n., pp. 17-21, December 15, 1967) Lorenzo C. Caraig; emphasis supplied). ATTY. SABIO Q. Do you have in your possession the record on how this amount of P1,186,083.34 marked as Exhibits 'XXX' thru XXX-6? A. Yes, sir. Q. Would you be able to bring that next time? A. I think so. Q. Would you be able or do you have in your possession a record showing how the amount of P4,000,000.00 marked as Exhibit XXX-10 was disposed of ? A. Not with the P4,000,000.00 because the distribution of this amount was made in five releases as per what is stated in the statement as presented here. Q. At any rate, my question is: Do you have in your possession the record of the distribution of the P 4,000,000.00? A. Yes, sir. (t.s.n., pp. 143-144, June 16, 1970, L. Caraig; emphasis supplied). Again: ATTY. SABIO:

Atty. Sabio, I just want to clarify your statement the distribution I personally handled, I want that to be corrected. If you will allow me, sir, if Mr. Bascug can recall that in our distribution from the first to the fourth I think each and everyone of them even their members could really testify to the effect that the distribution was orderly undertaken. I just want to put that on record. There should be no insinuations, with due tolerance, being the supervisor of the distribution.

We do not make any insinuation. We only want the record. In the interest of all concerned and in the interest of justice, if the records will be brought here we hope that the records are not irregular and we believe if they are regular no responsibility would be incurred by any official of the Department of Labor. WITNESS: Which are you referring to, Atty. Sabio ? ATTY. SABIO: Any official of the Department of Labor. WITNESS: What charge of irregularity? ATTY. SABIO:

COURT: What is the purpose now of Atty. Sabio in presenting those records? ATTY. SABIO: ' We will show that not only a portion of the amount of P5,186,083.34, including of course the earnings, was distributed that properly belong to the laborers. The distribution of P5,186,083.34. WITNESS: In order to facilitate all those records in bringing here, can I request Atty. Sabio any personnel that can accompany me. Because the records are so voluminous. For one distribution of one planter there are no less than

28 pages and there are fivedistributions. So I am requesting Atty. Sabio to give me an assistant to come as well as bring the records and I am willing to bring all those records because I have nothing to hide. It is also shown that there are those laborers who were not able to receive and it stated in the undistributed amount.' (t.s.n., pp. 151-154, June 16, 1970, V. Salvarino emphasis supplied). On cross examination, this witness further testified thus: Atty. Hagad O. My question Mr. de Guia, is this, the figures referred to in Exh. 23. Victorias Milling Co., Inc. came from the records of your office, is that correct? A. Yes, sir. Q. Exh. 23 mentioned first, second and up to the fifth distribution. What do you mean by this ? A. There are distributions undertaken in the Victorias Milling Co., Inc. The first distribution was stated here is in accordance with the number that is corresponding to the amount distributed or released for distribution among the laborers of the Victorias Milling Co., Inc. Q. By the first distribution, you are referring to the Amicable Settlement Compromise Agreement the amount of P1,186,083.36 and this correspond to the same amount indicated in the Amicable SettlementCompromise Agreement you also Identified,: is that correct ? A. I do not know exactly if this figure stated there is correct but I have to check whether it tallies with it. Q. Which figures is reflected in Exh. XXX and Exh-XXX-9? A. There is difference of 2 centavos. Q. These other distributions that you made, were those

also done under your supervision beginning from the second up to the fifth distribution')? A. (Correction, please). I was not the one who made the distribution: I was only concerned on the first distribution which was supervised. Q. As first of the team of supervisors, you supervised the actual delivery of the money to the laborers; is that correct? A. Yes, sir. (t.s.n., pp. 20-22, June 18, 1970; Lorenzo Caraig). Silence of Central Planters, and Special Committee According to this Honorable Court, because there was no 'explanation from anyone from the Central ,from the Planters or from the Special Committee. (Appendix 'A', p. 77) as to the distribution of this amount of P4,000,000.00 then the conclusion is that the said amount was never distributed to the plantation laborers. This conclusion is entirely lacking in basis. For it has been established in the preceding paragraphs that according to law (Section 2, Rule 129, Rules of Court), such an admitted fact does not require proof. If so, what was there to be proved by the Planters, the Central or the Special Committee as to the distribution of the said P4,000,000.00 when there is no dispute as to this fact, the same being admitted in the pleadings. Not only did this Honorable Court err in finding that the P4,000,000.00 was not distributed to the Plantation laborers, but it also fell into error when it held that it could order Planters and Central to pay the said amount to the Laborers even something they did not ask specifically under the general prayer, especially so because such a relief is inconsistent with the admission of the respondent laborers that they were already given their share corresponding to the period from June 22, 1952 to October 31, 1955. While it may be true that a general prayer is probably broad enough 'to justify extension of a remedy different from or together with specific remedy sought' a general prayer is no longer broad enough to justify extension of a remedy which is INCONSISTENT with the specific allegation in the petition as in the case at bar. The case of Schenker vs. Gemperk, L-16449, Aug. 31, 1962, 5 SCRA 1042 relied upon by the Court of Appeal cannot, therefore, be made applicable to the case at bar, for the facts in said case are far different from the one at bar. In the aforecited case, the remedy extended is merely different from or together with the specific prayer sought; in the case at bar, the remedy extended is INCONSISTENT with the specific allegation and cause of action of respondent laborers' petition.

The cause of action of the respondent laborers is only for their alleged share from November 1, 1955 and is further bolstered by paragraph 1 of their prayer reading thus; Declaring the applicability of the Victorias Mill District of the sharing participation prescribed by Republic Act 809 for every crop year starting with the crop year 1955-56 (EMPHASIS SUPPLIED) With respect to the investment of the P4,000,000.00 in 40,000 shares of stock of the Victorias Milling Co., Inc., no prejudice was really caused to the plantation laborers because these shares of stock remained their property. It was never claimed by the PLANTERS or by the Special Committee as theirs. It was only held in trust for them by the Board of Trustees. (Art. 1448, New Civil Code). This was not only a wise investment; it also earned a good return, for on the principal of P4,000,000.00, its stock and cash dividends amounted to about P3,385,950.00 (p. 50, Decision). (Pp 69-97, PLANTERS' Brief.) We have carefully scrutinized the foregoing arguments, supported as they are by the pleadings on record as well as unexpurgated and unquestioned parts of the transcript of the stenographic notes of the testimony of the FEDERATION's principal witness, Mr. de Guia, in the light of the pertinent conclusions of the Court of Appeals, and at this point, We are already apprehensive that said conclusions can be said to be supported by such substantial evidence as would preclude this Court from accepting them as unreviewable by this Court under the general limitation of this Supreme Court in regard to findings of fact of the Court of Appeals. -C'This impression of Ours that the Appellate Court's above conclusions cannot be said to be sufficiently grounded gathers added force when the following able discussion of the same apparent misapprehension of the evidence by the Appellate Court in the brief of VICTORIAS' ninth to eleventh (IX to XI) assignments of error in its brief with Us is taken into account: Ninth Assignment of Error WITH REFERENCE TO THE AMOUNT OF P6,399,105.00 AND THE AMOUNT OF P180,769.38, WHICH ACCRUED IN FAVOR OF THE LABORERS FROM JUNE 22, 1952 to OCTOBER 31, 1955 WHEN THERE WAS AS YET NO WRITTEN MILLING AGREEMENT, IN VIEW OF THE FACT THAT THE LABORERS ADMITTED IN THEIR PETITION THAT THE PLANTERS GAVE THEM THEIR LAWFUL PARTICIPATION FROM JUNE 22, 1952 TO OCTOBER 31, 1955 AND THERE BEING, MOREOVER, NO ALLEGATION OF ANY CAUSE OF ACTION RELATIVE THERETO, THE COURT OF APPEALS ERRED AND ACTED WITH GRAVE ABUSE OF DISCRETION WHEN IT HELD PETITIONER VICMICO AND THE PLANTERS JOINTLY AND SEVERALLY LIABLE VIA TORT FOR SAID AMOUNTS. Aside from adjudging petitioner VICMICO and the planters jointly and severally liable for the money equivalent of 60% of the 4% increased participation of the planters from November 1, 1955 to October 31, 1974, which amount would run to tens of millions of pesos, a judgment that,

as previously discussed, finds no basis in law and in fact, the Court of Appeals likewise adjudged petitioner VICMICO and the planters jointly and severally liable for tort for P6,399,105.00 and for P180,769.38, which sums pertained to the amounts that accrued in favor of the laborers from June 22, 1952 to October 31, 1955, during which period there was no milling agreement. The Court of Appeals, in attempted justification of its aforesaid ruling, stated that while FFF, et als. admitted in paragraph 10 of their petition that the 'planters gave to petitioners-laborers the latter's lawful participation in the sugar production as well as in the by-products or derivatives thereof and continued giving the same until November 1, 1955' (Par. 10, Petition of FFF et als.), the FFF et als. in their brief filed before the Court of Appeals, 'explained that what they meant ... was that their 6% share had actually been set aside during the period from June 22, 1952 to October 31, 1955' (Decision, p. 61). The Court of Appeals further stated that counsel for petitioner VICMICO allegedly agreed that what happened to the P4 Million was a proper issue in this case' (ibid., p. 62) and that the general prayer of FFF et als. 'for such other relief as may be just and equitable under the premises is broad enough to justify extension of a remedy not specifically sought' (ibid., p. 61 ). Petitioner VICMICO respectfully submits that the justification advanced by the Court of Appeals is untenable as we shall hereunder discuss and as shown by the fact that the laborers did actually receive said amounts (Vide Exh. 23-VICMICO or Annex I of VICMICO's Petition for Certiorari), as discussed at length in the Tenth Assignment of Error.) The FFF, et als. did not allege any cause of action in their petition concerning their share from June 22, 1952 to October 31, 1.955, during the period when there was as yet no written milling agreement; as a matter of fact, FFF et als. expressly admitted receipt of their lawful participation pertaining to said period. (emphasis supplied) As previously noted, VICMICO and the planters did not have any written milling Contract from Julie 22, 1952, when Republic Act 809 took effect, until October 31,1955 the last day prior to the written milling agreements' having become effective. The amounts pertaining to the planters' laborers representing 60% of the planters' increased participation, pursuant to the sharing proportion prescribed in Section I of Republic Act 809, were expressly provided for in the amicable settlementcompromise agreement ASCA executed between the central and the planters. The Court of Appeals, in its Decision (Annex Q to VICMICO'S petition for Certiorari) declared the foregoing amicable settlement-compromise agreement or ASCA to be valid and legal and not violative of Republic Act 809. (Vide, Annex Q, p. 43) pursuant to the amicable settlementcompromise agreement, the entire share of the planters' laborers was eventually delivered and distributed to them ,the distribution having amounted to a grand total of P 6,536,741.98, involving 474,811 laborers in five (5) distributions. (Vide Exh. 23 VICMICO or Annex I hereof). FFF et als. expressly admitted receipt of all amounts

pertaining to the laborers during the period June 22, 1952 to October 31, 1955. Thus the petition of FFF et als., reads in part: 08. That on June 22, 1952, Republic Act No. 809 otherwise known as the Sugar Act of 1952, was enacted the pertinent provisions of which are as follows: xxx xxx xxx 9. That at the time that the said Act went into effect, a majority of sugarcane planters of the Victorias Mill District had no milling agreements with respondents CENTRAL. 10. That pursuant to Sec. 9 of said Act, respondent PLANTERS gave to petitioners LABORERS the latter's lawful participation in the sugar production as well as in the by-products and derivatives thereof and continued to give the same until November 1, 1955 when they ceased to do so until the present;' (Vide Annex A to VICMICO's petition for certiorari.) In view of the foregoing express admissions of et als., herein petitioner VICMICO stated in its answer to the petition that the 'windfall bonuses, if any, given by the adherent planters to their plantation laborers was the consequence of the terms of the amicable settlement-compromise agreement arrived at between respondent central and its adherent planters within the district in relation to a then pending court case between them'. (Vide, par. 7 of Annex E to VICMOCO's petition for Centiorari.) On the part of the planters, they averred that the 'windfall bonuses that respondent planters herein gave to their plantation laborers ... are legal and valid and were the result or consequence of the terms and conditions of the amicable settlement arrived at between the respondent central and its adherent planters within the district ... (Vide Annex 'G' to VICMICO's Petition for Certiorari.) It is obvious that FFF, et als. did not allege any cause of action with reference to those amounts which accrued in favor of the laborers from June 22, 1952 to October 31, 1955) as they, in fact, admitted that the planters gave to petitioners laborers the latter's lawful participation in the sugar production as well as in the by-products or derivatives thereof and continued to give the same until November 1, 1955. That FFF et als. did not allege ally cause of action relative thereto is evident, the essential elements constituting a cause of action not being present. There is a cause of action only if certain essential elements are alleged in the petition. We quote: A cause of action is an act or omission of one party in violation of the legal right of the others. Its essential elements are, namely: (1) the existence of a legal right in the plaintiff, (2) a correlative legal duty in the defendant, and (3) an act or omission of the defendant in violation of plaintiff's right with consequential injury or damage to the plaintiff for which he may maintain an

action for the recovery of damages or other appropriate relief.' (Mathay vs. Consolidated Bank & Trust Co., 58 SCRA 559.) While FFF et als. alleged that the laborers had the legal right to a certain percentage share of the sugar produced from June 22, 1952 to October 31, 1955, they did not allege any correlative duty on the part of petitioner VICMICO to deliver those shares to the laborers, as said laborers, in fact, expressly admitted that the planters, who had that exclusive correlative duty under Section 9 of Republic Act 809 had already delivered to the laborers the latter's lawful participation. Moreover, insofar as any amounts due the laborers during the period when there was no milling contract are concerned, the petition of FFF et als. did not allege any act or omission whatsoever, on the part of petitioner VICMICO or on the part of the planters in violation of the laborer's rights. There having been no allegation whatsoever of such a cause of action, the Court of Appeals acted with grave abuse of discretion in nevertheless adjudging petitioner VICMICO jointly and severally liable with the planters for the amounts pertaining to the laborers during the period June 22, 1952 to October 31, 1955. FFF et als. could not be permitted to controvert their express admission and any proof contrary thereto or inconsistent therewith should have been ignored. (Underlining of emphasis supplied) It is a fundamental principle that an admission made in a pleading cannot be controverted by the party making such an admission. We quote: Our decisions from Irlanda v. Pitargue, announced in a 1912 decision, to De Borja v. Vda. de Borja, promulgated in 1972, speak to that effect. It is a familiar doctrine according to Justice J.B.L. Reyes in Joe's Radio & Electrical Supply v. Alto Electronics Corp., 'that an admission made in the pleadings cannot be controverted by the party making such admission and are conclusive as to him, and that all proofs submitted by him contrary thereto or inconsistent therewith, should be ignored, whether objection is interposed by the party or not (Santiago vs. De los Santos, 61 SCRA 146, 149.) The explanation given by FFF et als. to the effect that what they meant by the word 'gave' is that the laborers' share during the period was merely set aside for said laborers is not only a belated and forced explanation advanced only at the time FFF et als., filed their reply brief with the Court of Appeals under date of April 30, 1972, or almost ten years from the date said parties filed their petition on or about November 9, 1962, but is also contrary to the ordinary and generally understood meaning of the word 'gave'. The matter is rather substantial in the sense that it involves an amount representing millions of pesos which has not been treated as a cause of action in the petition of FFF et als., nor has it been specifically mentioned in their prayer. What was required of the FFF was that they amend their petition, with prior leave of court, so that petitioner VICMICO as well as the planters could have directly met the issue. This procedural requirement not having been complied with by the FFF et als. and the Court of Appeals having proceeded to decide the case on certain

issues not raised by the parties, said Court of Appeals acted with grave abuse of discretion, (Evangelista vs. Alto Surety and Insurance Co., Inc., 103 Phil. 40 1). The Court of Appeals moreover contends (Vide Annex Q to VICMICO's Petition for Certiorari, p. 61) that while the petition of the FFF et als., did not specifically pray for recovery of the amounts pertaining to the period from June 22, 1952 to October 31, 1955, their general prayer 'for such other relief as may be just and equitable in the premises' is broad enough to justify extensions of a remedy different from the specific amounts sought. While the phrase 'for such other relief as may be just and equitable in the premises' may embrace all other reliefs not specifically prayed for, only those reliefs which are alleged or supported by the allegations in the petition or the complaint can validly be adjudged. In the absence of any such allegation, as in the case at bar, no relief other than that justified by the allegations and proof may be awarded. We quote: Moreover, to award damages in favor of petitioner Miguel Tolentino, Sr., and against herein private respondents would violate the cardinal rule that a judgment must conform to and be supported by both the pleadings and the proofs, and should be in accordance with the theory of the action on which the pleadings were framed and the case was tried (secundum allegata et probata )(Republic vs. De los Angeles, 41 SCRA 422, 450). xxx xxx xxx The actuation of the trial court was not legally permissible, especially because the theory on which it proceeded involved factual considerations neither touched upon in the pleadings nor made the subject of evidence at the trial. Rule 6, Section 1, is quite explicit in providing that 'pleadings are written allegations of the parties of their respective claims and defenses submitted to the court for trial and judgment.' This rule has been consistently applied and adhered to by the courts. The subject matter of any given case is determined ... by the nature and character of the pleadings submitted by the parties to the court for trial and judgment. (Belandres vs. Lopez Sugar Central Mill Co., Inc., 97 Phil. 100, 103). It is a fundamental principle that judgments must conform to both the pleadings and the proof, and must be in accordance with the theory of the action upon which the pleadings were framed and the case was tried; that party can no more succeed upon a case proved, but not alleged,

than upon one alleged but not proved. (Ramon v. Ortuzar, 89 Phil. 730, 742). It is a well-known principle in procedure that courts of justice have no jurisdiction or power to decide a question not in issue. (Lim Toco vs. Go Fay, 80 Phil. 166). A judgment going outside the issues and purporting to adjudicate something upon which the parties were not heard, is not merely irregular, but extrajudicial and invalid. (Salvante vs. Cruz, 88 Phil. 236, 244).' [Lazo vs. Republic Surety & Insurance Co., Inc. 31 SCRA 329, 334).] Plaintiffs-appellants FFF et als. sought to bang up matters concerning the share of the laborers from June 22,1952 to October 3l, 1955 not by way of recovery thereof, as FFF et als. in fact admitted receipt of everything due, but merely by way of pursuing their theory that the amicable settlementcompromise agreement is allegedly null and void (Emphasis supplied) When counsel for plaintiffs-appellants propounded questions to Mr. de Guia concerning the alleged disagreement of the Department of Labor concerning the procedure adopted in the disposition of the shares of the laborers, Atty. Ditching, a planter, as counsel for himself and his wife, objected thereto on the ground that, as per paragraph 10 of their petition, plaintiffs-appellants admitted receipt of all of the shares up to October 31, 1955. Q You stated that your Department disagreed with the procedure adopted by the Victorias Milling Co., Inc. and its planters in the disposition of the amount of money due the laborers under Republic Act 809; and you also mentioned that you have document in your possession of the objection of your Department to such procedure; is that right? ATTY. DITCHING: We object to that because there is no necessity of bringing that point because the petition itself admitted that the petitioners received their participation. lt is here in paragraph 10 of the petition. COURT: I believe the objection is tenable because the supposed participation of the laborers from the 40-60 sharing which was later on

increased to 60-40 according to that amicable settlement. ATTY. SABIO: This amicable settlement, Your Honor, we are trying to impugn it. (t.s.n. pp. 64-66, December 15, 1967). When counsel for plaintiffs-appellants FFF et als. was reminded that, pursuant to his petition, FFF et als., had admitted receipt of what was due them prior to November 1, 1955 and that said counsel could not introduce evidence which would contradict said admission unless the petition would first be amended, counsel for plaintiffs-appellants stated that he was not amending his petition, as his purpose was only to pursue his theory that the milling contracts were null and void. We quote: ATTY. TIROL I think we are trying this case and not to impugn that document, whereas compaero stated that there is an allegation in the petition that prior to November 1, 1955, the planters have complied with the law . . . that is your pleading. Are you going to amend your petition? ATTY. SABIO:

She cannot go against his allegation. COURT: Let us go to the question now so the ruling could be issued. ATTY. SABIO: My question is the matter of document presented by the witness was not asked by me but by Atty. Hilado Jr. So the document was mentioned by the witness. ATTY. HILADO, JR. The Rules of Court says that, agreement of the parties could not be contradicted. ATTY. SABIO: We disagree on the qualification of the fact. COURT: Let us go to the question now. Proceed. ATTY. SABIO:

We are not but paragraph 11 of the petition states: '11. That with evident intent to evade compliance of said Act and to the grave prejudice of the laborers, some of respondents PLANTERS and respondent CENTRAL prepared and executed a General Collective Sugar Milling Contract sometime in March, 1956; and, that adherence thereto, even as late as April 29, 1960, was made to retroact to November 1, 1955;' This contract which we are trying to impugn was not presented to court. ATTY. HILADO, JR. We doubt very much if counsel for the plaintiffs can give us reason why this amicable settlement was not presented by the parties in court. In that case then, granting that he can so prove his allegation, because the Victorias Milling Co., Inc. under Par. 10 of the petition, states that up to October 31, 1955, the laborers received their lawful participation under RA 809. This milling contract was executed but that was after October, 1955 already.

You stated during the cross examination by Atty. Hilado Jr. That you have a document in your possession to show that your office disagreed with the procedure in the disposition of the money due to the laborer's share which was made by the Central and the planters; where is that document now? ATTY. DITCHING: Objection. In the pleading, par. 10 of the petition, the petitioners admitted that they have received their lawful share up to November, 1955 COURT: That is not denied. ATTY. DITCHING: The petitioners admitted that in par. 10 of petition, they have received their lawful share up to November 1, 1955; so that question is immaterial.

COURT: The question asked is, with reference only to the procedure of the Department of Labor. ATTY. HILADO, JR. Are they not in a position to ascertain all their allegations in the petition? COURT: The position of counsel for the plaintiff is that, he is trying to find out his procedure that is being followed. Let the witness answer. A. Witness is showing a certain document which for purposes of Identification has been marked as Exhibit HHHHHH-5 for the plaintiffs. It is a Memorandum addressed to the Hon. Secretary of Labor by Mr. Ruben F. Santos of the Wage Board Division. COURT: Q. Why did your Department object to such arrangement of the planters and Victorias Milling Co., Inc. referring to the disposition of increase participation? A . The only objection of our Department as stated in the memorandum is the conversion of P4,000,000.00 into shares of stock. Q. So your objection is in the conversion into share of stock of certain amount of dividend is that it? A Yes, Sir, the memorandum in our office speaks for it . (t.s.n., pp. 67-72, December 15, 1967). It is obvious that plaintiffs-appellants were not seeking recovery of what pertained to them from June 22, 1952 to October 3 1, 1955, not only because they admitted receipt of their shares corresponding to said period, but also because Mr. de Guia likewise affirmed the laborers' receipt of the corresponding share. While, according to Mr. de Guia, the Department of Labor disagreed merely with reference to the initial conversion of the P4 Million into VICMICO shares, said VICMICO shares were subsequently converted into cash and, ultimately, distributed to the laborers who interposed no disagreements or objection thereto, Mr. de Guia testified:

Q. Is it not a fact that those shares of stock were sold and proceeds of your distribution as indicated in your report was up to the 5th distribution made by your office? A. Yes, Sir. Q. And as a matter of fact, with the sale of shares of stock, you realized that not only the original amount of investment which correspond to the part of 60% for the laborers but by more than million dividend; is that right? A. Yes, Sir. Q. Is it not a fact that the reason why after October 31, 1955 your office did not distribute the windfall or bonuses because there had been milling contracts that were signed by the management and the planters in the milling district? A. Yes, Sir. Q. Was there a report of your office with reference to the 5th distribution of payments of money? A. Yes, Sir. Q. Who gave the money? A. The planters. (t.s.n., pp. 35-36, December 15, 1967.) xxx xxx xxx Q. And there was no disagreement on that matter, correct ? A. Yes, Sir. Q. And there was no complaint from the laborers after the participation; is that correct? A. There was none. Q. So that its distribution was accepted by all, including the laborers who were the participants in this distribution; correct? A. There was none.

Q. So that this distribution was accepted by all, including the laborers who were the participants in this distribution; correct? A. That is only within the period that is covered by the distribution. (t.s.n., p. 53, December 15, 1967.) As a matter of fact, when Mr. de Guia testified that one planter did not allegedly distribute the share corresponding to his own laborers, Atty. Ditching, as counsel for himself and his wife, moved to strike out the answer of the witness on the ground that the laborers, in their petition, admitted having received all of their shares, and the trial court granted the motion. We quote from the transcript: Q. Of the 400 planters adhered to the Victorias Milling District, only one planter has not distributed the corresponding participation of the laborers; is that right? A. Yes, Sir. ATTY. DITCHING: I move for the striking out of the answer of the witness, it is admitted by the petitioners themselves in par. 10 of the petition filed with this court on November 9, 1962, which says: '10. That pursuant to Sec. 9 of said Act, respondents PLANTERS gave to petitioners LABORERS the latter's lawful participation in the sugar production as well as in the by-products and derivatives thereof and continued to give the same until November 1, 1955 when they ceased to do so until the present.' So regarding the distribution, I object to that because there was already an answer. I move to strike out with respect to the answer because it will affect us. COURT: Strike out that from the record regarding that one planter has not distributed the participation of the laborers. It is enough that the Department of Labor have that in the record. (t.s.n., pp. 48-50, December 16, 1967).

The contention of the Court of Appeals that 'Counsel for central agreed that whatever happened to the P4,000,000 was a proper issue in this case' (Annex Q, p. 62) finds no justification. While counsel for VICMICO made the foregoing remark in the course of an exchange of manifestations with counsel for FFF et als., said remark should be taken in the context in which it was uttered. Counsel for FFF et als. was requesting for records concerning the P4,000,000 invested in VICMICO shares of stock, and counsel for VICMICO insisted that counsel for FFF et. als. specify the documents being asked for (tsn, pp. 7 to 32, April 28, 1970). It should be noted moreover that counsel for VICMICO objected to the presentation of evidence concerning the existence of any alleged fraud because 'there is no allegation to the effect that complaint and that should not be brought in the rebuttal because that is improper. (tsn, pp. 14-15, April 28, 1970). Moreover, the said statement of counsel of VICMICO was meant merely to emphasize what VICMICO alleged in Par. 7 of its answer to the petition, which Par. 7 reads as follows: 7. That, being the mill company, respondent Central does not have sufficient information so as to be able to admit or deny the truth of the allegations of paragraph 10 of the petition; and it here further states that the wind-fall bonuses, if any, given by the adherent planters to their plantation laborers was the consequence of the terms of the amicable settlement arrived at between the respondent Central and its adherent planters within the district in relation to the pending court case between them.' (Vide, Annex E, Par. 7, thereof, Petition for certiorari of Vicmico) If there was any issue at an with reference to the P4,000,000 investment in VICMICO shares, it was not an issue in relation to any cause of action filed by FFF et als. to recover the proceeds thereof, as FFF. et als. never made such an allegation and even expressly admitted receipt of said amount. X Tenth Assignment of Error HAVING FOUND THE MILLING AGREEMENT AND THE AMICABLE SETTLEMENTCOMPROMISE AGREEMENT (ASCA) to be valid, THE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER VICMICO AND THE PLANTERS HAD NO AUTHORITY TO STIPULATE IN SAID ASCA ON THE DISPOSITION OF THE AMOUNTS PERTAINING TO THE LABORERS FROM JUNE 22,1952 TO OCTOBER 31, 1955, THE PLANTERS BEING THE AUTHORIZED AGENTS OF THE LABORERS BY, AMONG OTHERS, HAVING RECEIVED ALL THE AMOUNTS DUE THEM, HAVING MOREOVER RATIFIED SAID ASCA. The ruling by the Court of Appeals to the effect that the milling agreements and the ASCA are valid renders legally untenable its conclusion that the parties thereto had no authority to provide for the disposition of the amounts pertaining to the laborers from June 22,1952 to October 31, 1955.(Emphasis supplied)

The Court of Appeals, after a review of the records, "found no evidence of circumvention" in the execution of the milling agreements and of the ASCA 'as appellants (FFF et als.) charged.' (Decision, p. 41, Annex 'Q' to Vicmico's Petition for Certiorari). It added that the 'contracts, therefore, which it (Vicmico) wrung from Planters are not in circumvention of the law but in legitimate pursuit of profit which is the end all and be-all of business. That Central (Vicmico), as a result of the ASCA which appellants (FFF et als.) claim it (Central) to have 'engineered' got 36 % and Planters 64 % while the plantation laborers got nothing, is no reason for considering the contracts a circumvention of the law which does not in the first place interpose upon it any duty or require of it the performance of any obligation to yield any part of its participation in favor of planters laborers. In other words, we do not find in Central's conduct anything so odious or so obnoxious as to render the contracts it has entered into with Planters illegal or repugnant to public policy.' (Ibid., p. 43). The Court of Appeals, thus, declared 'the ASCA and the other derivative sugar milling contracts valid.' (Ibid., p. 54) Notwithstanding its finding and conclusion that the ASCA and its derivative sugar milling contracts were valid, the Court of Appeals stated that the Central and the Planters had no authority to provide in the ASCA for the disposition of the amounts pertaining to the laborers from June 22, 1952 to October 31, 1955. Thus, the Court of Appeals ruled in part: Central and Planters could stipulate whatever they might wish upon the share (P3,457,388.90) of Planters in the 'reserve how or when such share would be paid to the latter. After all they were the only contracting parties in the ASCA. But it was absolutely beyond the power and competence of either Central or Planters or both Central and Planters to stipulate upon the share (115,186,083.34) of the plantation laborers in the 'reserve'. As though the share of the plantation laborers were their own property, however, both Central and Planters, on March 5, 1956, sat down in judgment upon the question of its disposition. On that date, therefore, they both decided, in the ASCA, on how the laborers' share was to be disposed of. P4,000,000.00 was to be invested in shares of capital stock of Central, the balance of P1,186,083.34 to be distributed among the plantation laborers " under the supervision of the Secretary of Labor". (Decision, pp. 48-49; Vide, Annex "Q" to Vicmico's Petition for Certiorari.) The foregoing conclusion of the Court of Appeals is legally inconsistent with its finding and ruling that the ASCA was legal and valid. A ruling that a contract is valid presupposes that all the essential elements of a contract are present, namely: (1) consent of the contracting parties; (2) object certain which is the subject matter of the contract; and (3) cause of the obligation which is established. (Art. 1318, Civil Code). Consent presupposes legal capacity, that is, that the Planters who entered into said ASCA on behalf of their laborers had been authorized by the latter. (Tolentino, Civil Code of the Philippines, p. 407 [1956]; cf. Tolentino v. Paraiso, 34 Phil. 609 [1916]). In any event the planters were the authorized agents of the respective laborers, and Vicmico had

the right to rely on that authority. (Emphasis supplied) Section 9 of Republic Act 809 reads: In addition to the benefits granted by the Minimum Wage Law, the proceeds of any increase in the participation granted the planters under this Act and above their present share shall be divided between the planter and his laborer in the plantation in the following proportion: Sixty per centum of the increased participation for the laborers and forty per centum for the planters. The distribution of the share corresponding to the laborers shall be made under the supervision of the Department of Labor. The benefits granted to laborers in sugar plantations under this Act and in the Minimum Wage Law shall not in any way be diminished by such labor contracts known as "by the piece", "by the volume", "by the area", or by any other system of "pakyaw", the Secretary of Labor being hereby authorized to issue the necessary orders for the enforcement of this provision. The above provision has constituted the planters the agents of their respective laborers with reference to any share to which they may be entitled from the increased participation of the planters granted under the Act. It is an agency created by law (Art. 1317, Civil Code). Accordingly, when the planters entered into the ASCA with the Central, they did so, insofar as the share of their laborers was concerned, as agents of their laborers and no authority was necessary from the laborers because the planters had, by law, a right to represent them. Moreover, the planters are the employers of their respective laborers; they speak for their laborers in matters involving whatever percentage share the laborers would be entitled to from the increased participation of the planters granted under Republic Act 809. These laborers were so numerous (cf. Exh. 23-Vicmico) that only the respective planters who, under the law, are obliged to prepare their payrolls, knew who they were. Hence, Vicmico has the right to rely on the representations of the planters relative to their laborers. Moreover, the laborers ratified the ASCA by their silence for six (6) years and by their enjoyment of the benefits accruing therefrom. (Emphasis supplied) From November 5, 1956 when this Honorable Court dismissed the appeal of the laborers in G. R.

No. L-11218 up to November 9, 1962 when the petition of FFF, et als. was filed with the trial court, about six (6) years had elapsed. Within that long period, the laborers never questioned the validity of the ASCA on the ground that the Central and the Planters had no authority to provide for the manner of preservation and distribution of their share corresponding to the period from June 22, 1952 to October 31, 1955 when there was as yet no written milling contract in the VictoriasManapla-Cadiz mill district. They never, within such period, filed any action to nullify the ASCA for lack of consent on their part, notwithstanding their knowledge thereof, some of the laborers having intervened in Civil Case No. 22577 (Exh. "H") and in G. R. No. L-11218, where the question of validity of the ASCA and of the milling agreement was in issue (Exhs. "VV", "VV-I", "VV-2"). Article 1317 of the Civil Code reads: ... . No one may contract in the name of another without being authorized by the latter, or unless he has by law a right to represent him. A contract entered into in the name of another by one who has no authority or legal representation, or who has acted beyond his powers, shall be unenforceable, unless it is ratified, expressly or impliedly, by the person on whose behalf it has been executed, before it is revoked by the other contracting party. By their silence for six (6) years, notwithstanding their knowledge of the ASCA, the laborers are deemed to have ratified the contract. We quote: Nor has Concepcion directly impugned the validity of the obligation contracted by her mother in her behalf and therefore it may be taken for granted that she has by her silence ratified the obligation to pay, jointly with her mother and brothers, the sum her father owed when he died. (Art. 1313, Civil Code.)' (Fable v. Yulo, 24 Phil. 240, 247 [1913], emphasis supplied.) On the contrary, the case comes squarely within the purview of the provisions of the Civil Code under the subject of Nullity of Contracts which pertain to ratification. Codal article 1309 provides: 'The action of nullity is extinguished from the moment the contract may have been validly ratified.' Article 1311 following provides: 'Ratification may be either express or implied. It shall be deemed that there is an implied ratification when a person entitled to avail himself of any ground for the annulment of the contract should, with knowledge of its existence and after it has ceased, do anything which necessarily implies an intention to waive such right.' Finally comes article 1313 which provides: 'Ratification purges the contract of all defects to which it may have been subject as from the moment it was entered into'. It results, therefore, that after a contract is validly ratified, no action to annul the same can be maintained based upon defects relating to its original validity. (Gutierrez Hermanos vs. Orense [1914], 28 Phil. 571; Vales vs. Villa [1916], 35 Phil. 769.)' [Ten Ah Chan and Kwong Kam Koon vs, Gonzales, No. 28595, October 11, 1928.)

Article 1313 of the Old Civil Code cited by the Supreme Court in the Fable v. Yulo case quoted above corresponds to Article 1396 of the New Civil Code, which reads: Art. 1396. Ratification cleanses the contract from all its defects from the moment it was constituted (Art. 1313). When FFF, et als. did file on November 9, 1962 a petition with the trial court, they also did not question the authority of the Central or the Planters to provide, in the ASCA, the manner in which their share from June 22, 1952 to October 31, 1955 would be held and distributed. In fact, they expressly admitted that the planters gave them their corresponding participation. We quote paragraph 10 of their petition: That pursuant to Sec. 9 of said Act, respondents PLANTERS gave petitioners LABORERS the latters' lawful participation in the sugar production as well as in the by-products and derivatives thereof and continued to give the same until November 1, 1955 when they ceased to do so until the present; ... (Annex "A", Vicmico's Petition). Moreover, the laborers received the benefits of the ASCA when their share was distributed to them (Exh. 23-Vicmico; see also Eleventh Assignment of Error, infra.) Their receipt of such benefits amounted to a ratification of the authority of the planters to represent them in the ASCA. (ZamboangaTransportation Co. v. Bachrach Motor Co., 52 Phil 244; Ibanez u. Rodriguez, 47 Phil. 554; Tacalinar v. Corro, 34 Phil. 889; Emphasis supplied) XI Eleventh Assignment of Error THE COURT OF APPEALS ERRED IN CONCLUDING THAT THE LABORERS DID NOT RECEIVE THE AMOUNT OF P6,399,105.00 AND IN HOLDING, ON THE BASIS OF TORT, PETITIONER VICMICO, JOINTLY AND SEVERALLY LIABLE WITH THE PLANTERS THEREFOR, EXHIBIT 23-VICMICO CLEARLY SHOWING ON ITS FACE THAT THE LABORERS ACTUALLY RECEIVED A TOTAL OF P6,536,741.98 AND THE COURT OF APPEALS HAVING FOUND THAT ALL AMOUNTS PERTAINING TO THE LABORERS HAD BEEN RECEIVED BY THE PLANTERS. THE FOREGOING DEMONSTRATING, AMONG OTHERS, THAT PETITIONER VICMICO CANNOT BE ACCUSED OF ANY TORTIOUS ACT. The conclusion of the Court of Appeals to the effect that the laborers received only Pl,186,083.34 and not the whole amount of P6,399,105.00 has no basis in fact, the evidence as testified to by a representative of the Labor Department being to the contrary.

Notwithstanding the express admission in the petition of FFF, et als., to the effect that the 'Planters gave petitioners (FFF, et als.) the latter's lawful participation in the sugar production and derivatives thereof and continued to give the same until November 1, 1955, when they ceased to do so until the present' (Par. 10, Petition of FFF, et als., filed with the trial court, Vide Annex "A" to Vicmico's Petition for Certiorari), which fact, having been admitted, requires no proof and cannot be contradicted (Rule 129, Sec. 2, Rules of Court; Sta. Ana v. Maliwat, 24 SCRA 1018), the Court of Appeals made the following unfounded statements: ... if it is further considered, as shown in our resolution of the third issue, that this amount of P4,000,000.00, along with its accruals was never received by the plantation laborers to this day, the unwisdom of the investment, let alone, its illegality, is hardly in doubt.' (p. 52, Decision, Annex "Q" to Vicmico's Petition for Certiorari). xxx xxx xxx

Q. Mr. Guia, what steps, if you know the Department of Labor has taken . . . I withdraw the question. Q. As Chief of the Agricultural Wages Section under the Department of Labor, do you know what steps your section of the Department of Labor has taken to implement Section 9 of RA 809, otherwise, known as Sugar Act of 1952, with the Victorias Milling District, Negros Occidental? A. Yes, sir, we have distributed also the supposed share of the laborers amounting to P6,717,360.00. (emphasis supplied). COURT:

... and the fact that the laborers' P4,000,000.00 worth of shares and their earnings have, without any explanation from anyone from the Central, from the Planters, or from the Special Committee vanished into limbo without the laborers being able to actually receive any cent of the same.' (Idem., p. 53). xxx xxx xxx In effect, what has been established by the evidence is that the P4,000,000.00, together with its earnings in dividends in the total amount of P3,385,950.00 (p. 6, tsn.. June 16, 1970), has not been distributed to or received by plaintiffsappellants-laborers. (Idem., p. 62). xxx xxx xxx The evidence shows that, except for a small part (P180,679.38) of the sum of P5,185,083.34, the entire P1,186,083.34 was actually paid to the laborers ...' (Idem, p. 55; Annex "Q" to Vicmico's Petition for certiorari xxx xxx xxx Not a shred of evidence, however, has been introduced into the record to show that the proceeds of the sales of the 40,000 shares of stock and the increments in cash and stock dividends have been actually delivered to or received by appellants-laborers. ... ' (Annex "Q"to Vicmico's Petition for Certiorari, p. 60). None of the foregoing statements finds any basis in fact and the Court of Appeals' unwarranted conclusions constitute a grave abuse of discretion tantamount to an excess of jurisdiction. (Duran v. Court of Appeals, L-39758, May 7, 1976). Mr. Felipe de Guia testified lengthily on the point, but the Court of Appeals apparently was oblivious of his testimony which established distributions of over P 6,000,000.00 in favor of the laborers. We quote the testimony of Mr. de Guia:

Q. When was that distribution made? A. It was made in the year 1995. Proceed. ATTY. SABIO: Q. This distribution covered the period from June 22, 1952 to what period? A. To October 31, 1955. Q. Will you kindly tell the Court the basis of the distribution of the amount distributed? A. As I understand, this amount was the participation due to the laborers working in that milling district, from June 22, 1952 up to October 31, 1955 (Emphasis supplied). COURT: Q. June 22 of what year? A. June 22, 1952 to October 3l, 1955. Proceed. ATTY. SABIO: Q. Under what law that is due to them? A. RA 809, otherwise known as Sugar Act of l952. Q. By the way, Mr. Guia, what Section or Division of the

Department of Labor is embodied the implementation of RA 809? A. The Agricultural Wage Section of which I am the Chief. ATTY. HAGAD: CROSS EXAMINATION: Q. How was this amount of P9,612,421.36 distributed? A. The original amount which is supposed to be distributed is P5,186,083.36; but on account of converting the 4,000 shares of the laborers' share of stock, it was distributed continuously year to year. The dividends amounted to more than Pl,000,000.00 which is added to this amount. It was based practically on the 10% increase participation due to the planters of the Victorias Milling District, wherein 60% represent this said amount; otherwise, 60% of the 10% increase participation represented the said amount which was distributed among the laborers of the Victorias Milling District. Q So, P 5,186,183.36 was 60% of 10% was the increase participation of the planters within the Victorias Milling District, for the period from June 22, 1952 to October 31, 1955; is that right? A. Yes, sir. (pp. 17-21, December 15, 1967, Lorenzo C. Caraig; emphasis supplied) xxx xxx xxx ATTY. SABIO: Q Do you have in your possession the record on how this amount of Pl,186,083.34 marked as Exhibits 'XXX' thru XXX-6 A Yes, sir. Q. Would you be able to bring that next time? A. I think so. Q. Would you be able or do you have in your possession a record showing how this

amount of P4,000,000.00 marked as Exhibit XXX-10 was disposed of? A. Not with the P4,000,000.00 because the distribution of this amount was made in five releases as per what is stated in the statement as presented here. Q. At any rate, my question is: Do you have in your possession the record of the distribution of the P4,000,000.00? A. Yes, sir. (pp. 143-144, June 16, 1970, L. Caraig; Emphasis supplied). COURT: What is the purpose now of Atty. Sabio in presenting those records? ATTY. SABIO: We will show that not only a portion of the amount of P5,186,083.34, including of course the earnings, was distributed that properly belong to the laborers. COURT: Why not find out from Mr. de Guia the record about the distribution how much was distributed? WITNESS: Atty. Sabio, I just want to clarify your statement the distribution I personally handled, I want that to be corrected. If you will allow me, sir, If Mr. Bascug can recall that in our distribution from the first to the fourth I think each and everyone of them even their members could really testify to the effect that the distribution was orderly undertaken just want to put that on record. There should be no insinuations, with due tolerance, being the supervisor of the distribution. ATTY. SABIO: We do not make any insinuation. We only want the record. In the interest of all concerned and in the interest of justice, if the records will be brought here we hope that the

records are not irregular and we believe if they are regular no responsibility would be incurred by any official of the Department of Labor. WITNESS: Which are you referring to, Atty. Sabio? ATTY. SABIO: Any official of the Department of Labor. WITNESS: What charge of irregularity. ATTY. SABIO: The distribution of P5.186,083.34. WITNESS: In order to facilitate all those records in bringing here, can I request Atty. Sabio any personnel that can accompany me. Because the records are so voluminous. For one distribution of one planter there are no less than 28 pages and there are five distributions. So I am requesting Atty. Sabio to give me an assistant to come as well as bring the records and I am willing to bring all those records because I have nothing to hide, It is also shown that there are those laborers who were not able to receive and it is stated in the undistributed amount.( t.s.n., pp. 151-154, June 16, 1970, V. Salvarino, italics supplied). On cross examination, this witness further testified thus: ATTY. HAGAD: Q My question Mr. be Guia is this, the figures referred to in Exh. 23 Victorias Milling Co., Inc. came from the records of your office, is that correct ? A. Yes sir. Q. Exh. 23 mentioned first, second and up to the fifth distribution. What do you mean by this?

A. There are distributions undertaken in the Victorias Milling Co., Inc. The first distribution as stated here is in accordance with the number that is corresponding to the amount distributed or release for distribution among the laborers of the Victorias Milling Co., Inc. Q. By first distribution you are referring to the Amicable Settlement-Compromise Agreement the amount of P 1,166,083.36 and this correspond to the same amount indicated in the Amicable SettlementCompromise Agreement you also Identified; is that correct? A. I do not know exactly if this figure stated there is correct but I have to check whether it tallies with it. Q. Which figure is reflected in Exh. XXX and Exh. XXX-9? A. There is a difference of 2 centavos. Q These other distributions that you made, were those also done under your supervision beginning from the second up to the fifth distribution'? A. (Correction, please). I was not the one who made the distribution; I was only concerned on the first distribution which was supervised. Q. As first of the team of supervisors, you supervised the actual delivery of the money to laborers; is that correct? A. Yes, sir. (t.s.n., pp. 20-22, June 18, 1970; Lorenzo Caraig). The above testimony of Mr. de Guia clearly demonstrates that the laborers received their entire share corresponding to the period from June 22, 1952 to October 31, 1955 when there was as yet no written milling contract between the Central and the Planters. Exh. 23-Vicmico which summarizes the amounts received by the laborers totalling P6,536,741.,98 (except for the sum of

P180,679.38) having been relied upon in part by the Court of Appeals when it required payment of P180,679.38 to the laborers, the whole contents thereof deserve full credit, namely, that the laborers received the total amount of P6,536,741.98. (emphasis supplied) The Court of Appeals, quoting the testimony of Mr. Felipe de Guia, stated in part: The evidence shows that, except for a small part (P 180,679.38) of the sum of P 5,185,083.34, the entire P 1,186,083.34 was actually paid to the laborers. Thus, testified witness Felipe de Guia, representative of the Department of Labor in charge of the distribution: COURT:

As of June 30, 1967 AMOUNT RELEASED FOR DISTRIBUTION: 1st Distribution .........................P1,186.083.36 2nd Distribution ..........................1,841,338.00 3rd Distribution ..........................1,390,000.00 4th Distribution ..........................1,100,000.00 5th Distribution ...........................1,200,000.00 P6,717,421.36 AMOUNT PAID BY DISTRIBUTOR: 1st Distribution ............................P1,162,040.79 2nd Distribution .............................1,815,326.40 3rd Distribution ..............................1,357,067.88 4th Distribution ...............................1,059,895.05 5th Distribution ...............................1,142,411.86 P6,536,741.98

Q. Mr. de Guia, you said that there were some amounts that were not distributed because some laborers cannot be located; is this the amount mentioned in this 'Exhibit 23', under the words 'amount of undistributed or wind-fall? A. Yes, sir, P180,679.38. (t.s.n., p. 28, June 18, 1970; Annex 'Q' to Vicmicos Petition forCertiorari, p. 55). Apparently giving full credit to the foregoing testimony of Mr. de Guia, the Court of Appeals, in the dispositive part of the decision, ordered the Central and the Planters, jointly and severally, to pay the laborers '(1) the sum of P180,679.38, not distributed to appellants, with interests thereon at 6% per annum commencing from February 19, 1957, until fully paid'. (Decision, pp. 68-69; Annex 'Q' to Vicmicos Petition for Certiorari). But Exh. '23' which was the basis of Mr. de Guia's testimony to the effect that there was an undistributed amount of P 180,679.38 (t. t.s.n., p. 28, June 18, 1970) clearly shows that P6,536,741.98 was distributed in favor of the laborers, with only P 18O,679.38 remaining undistributed. Exh. '23' reads: Republic of the Philippines

AMOUNT OF UNDISTRIBUTED WINDFALLS BY DISTRIBUTION: 1st Distribution .................................P 24,042.57 2nd Distribution ...................................26,011.60 3rd Distribution ...................................32,932.12 4th Distribution ....................................40,104.9,5 5th Distribution .....................................57,588.14 P 180,679.38 LABORERS PAID BY DISTRIBUTION: 1st Distribution .....................................96,229 2nd Distribution.................................... 97,170 3rd Distribution .....................................95,411 4th Distribution .....................................93,747 5th Distribution .....................................92,254 474,811

Department of Labor Respectfully submitted: BUREAU OF LABOR STANDARDS (Sgd.) ROM J. MALACON Manila Statement of Windfall Distributions of the Victorias Milling Districts Victorias, Negros Occidental Explaining the distribution appearing in Exhibit '23', Mr. de Guia testified: Q. As first of the team of supervisors, you supervised the actual delivery of the money to the laborers: is that correct ?

A. Yes, sir. Q. In other words, you went to the haciendas and gathered all the laborers and gave the corresponding amount to the laborers; is that correct ? A. Yes, sir. Q. And before that distribution, your supervisor inquired if all those payrolls are prepared by the respective planters concerned; is it not? A. Yes, sir. Q. And your obligation is to check the payrolls regarding the names of the laborers and the amount indicated in the payrolls; is that correct ? A. Not necessarily check the individual names appearing on the payrolls but also verify whether the amount released to be distributed tally with the amount appearing on the payrolls. Q What about the actual payment of the amount to the laborers, were you present there? A. Yes, sir. Q. So that, in all those distributions reflected in this Exhibit '23' - Victorias Milling Company' Inc. either you or the member of your team or any representative of the laborer see to it that the money is delivered to the laborers concerned; is that correct'? A. Yes, sir, that is the duty of the supervisor to see to it that the corresponding amount is actually received by the laborers. Q. And you keep that record in the course of the distributions; is that correct? A. Yes, sir. Q. If I correctly get, there would be about 20,000 payrolls of the planters in the haciendas; is that correct'? A. I can say that there are some planters who have 15 to

50 sheets of payrolls of the haciendas: so you can just imagine the number of payrolls of the haciendas. (T.s.n., pp. 22-25, June is, 19-10). Since the Court of Appeals relied upon the foregoing Exhibit '23' in its finding that the sum of P180,679.38 had not been distributed, that exhibit should not have been segregated in parts with the Court having chosen that portion which afforded advantage to the laborers and disregard the other parts which were to the advantage of the Central and the planters. (cf. inter alia, Orient Insurance Co. vs. Revilla, 54 Phil. 919. where it was held that when a party introduces in evidence part of the privileged document, he cannot remove the seal of confidentiality as makes for his advantage and insist that is previleged as to so much as makes for the advantage of his adversary). The whole contents of Exh. '23' should therefore be given full weight and credit, namely that P6,536,741.98 had been actually distributed in favor of the laborers. (VICTORIA'S Brief, pp. 286-336, G.R. No. L-41222). -DTrue it is, as already stated earlier, that in petitions for review of decisions of the Court of Appeals, well and long settled it is that We are as a rule bound by its findings or conclusions of fact. In the instant cases, however, after carefully considering its ratiocination and bases in finding that the share of the laborers in the proceeds of the 1952-53 to 1954-55 crop years, and after mature study of and searching deliberation on the arguments and authorities very comprehensively advanced and cited in the briefs of the PLANTERS and VICTORIAS in the portions thereof extensively quoted above, We find Ourselves sufficiently convinced that the clear and unequivocal admission of such payment in the FEDERATION'S original and amended petitions in the trial court, if it cannot be deemed strictly binding upon it, is a significant persuasive factor We have to count with in deciding the particular issue of fact now under discussion. In our opinion, there is hardly anything in the FEDERATION'S main and reply briefs cogent enough to convince Us contrariwise. We wish to make it clear that in connection with said issue, We have not overlooked the laudable principles and guidelines that inform both Republic Act 1257, the charter of the agrarian courts, and Presidential Decree 946, both of which prod the courts to be as liberal as possible in disposing of labor cases and to be ever mindful of the constitutional precept on the promotion of social justice, (Sec. 6, Art. II, Philippine Constitution of 1973) and of the rather emphatic injunction in the constitution that "the State shall afford protection to labor. " 3 But We have are of the considered opinion that the secondary force to which the ordinary rules of procedure and evidence have been relegated by the aforementioned agrarian court laws do not oblige Us to be unjust and unfair to employers. After all, in the eyes of all fair-minded men, injustice to the more affluent and fortunate sectors of society cannot be less condemnable and reprehensible, and should be avoided as much as injustice to labor and the poor. It is divinely compassionate no doubt to afford more in law those who have less in life, but clear injustice to anyone amounts definitely to injustice to everyone, and all hopes for judicial redress for wrongdoings would vanish, if the even hand of law, justice and equity were to be made to favor anyone or any group or level of society, whoever they maybe. It is verily not an exaggeration to assert that in a sense, courts that uphold and afford real justice can hold back and even repel the forces of malcontent and subversion more effectively and without loss of lives and blood and without destruction or devastation than the best equipped regiments of soldiers of the army. Justice, in its real and deepest essence, more than statute law must always prevail, and the courts are inexorably expected to do justice to every men at all times. This Supreme Court yields to no one in that respect. That is its sacred duty and its sworn pledge that will remain unbroken ruat caelum

-EThus, while We are in agreement with the Court of Appeals in its construction and application of Sections 1 and 9 of Republic Act 809 as discussed above, We cannot agree with its conclusions regarding the pretended liability of the PLANTERS and VICTORIAS for the amount that the FEDERATION claims the laborers of the PLANTERS have not been paid as their share of the proceeds of the crop years 1952-53 to 1954-55. In resolving in the manner We have quoted, the second issue formulated by it relative to the appeal to it of the FEDERATION, it holds the appellees, the PLANTERS, including petitioners herein Primo Santos and Benjamin Tirol, and VICTORIAS "jointly and severally liable for tort in disposing, upon their own accord, and without any authority of the plantation laborers, of the money of the said laborers in the total amount of P5,186,083.34 and thus causing the loss of shares of stock and their earnings purchased out of P4,000,000.00 of such amount." Indeed, in the course of resolving the second issue and in disposing of the third issue, the Appellate Court found the PLANTERS and VICTORIAS guilty of misappropriation and conversion of the P5,186,083.34 plus the accrual thereof, corresponding to P4 M worth of VICTORIAS shares of stock which under the ASCA was stipulated to be received by the PLANTERS in trust for the laborers. Again, this aspect of these instant cases before Us involve questions both of fact and of law. -FAt this juncture, and referring first to the issues of fact, let it be clear that We find from the record as found by the Court of Appeals, of the cash portion of P5,185,083.34 corresponding to the laborers pursuant to the ASCA, namely, P1,185,083.34, what actually the laborers received under the supervision of the representative of the Secretary (now Ministry) of Labor, was short only by P180,679.38 per the testimony of Mr. Felipe de Guia, the representative of the Department of Labor: The evidence shows that, except for a small part (P180,679.38) of the sum of P5,185,083.34, the entire P1,186,083.34 was actually paid to the laborers. Thus, testified witness Felipe de Guia, representative of the Department of Labor in charge of the distribution: COURT: Q. Mr. de Guia, you said that there were some amounts that were not distributed because some laborers cannot be located; is this the amount mentioned in this Exh. '23', under the words 'amount of undistributed or windfall"? A. Yes, sir, P180,679.38 (tsn. p. 28, June 18, 1970) Appellants themselves, in their brief, have made the following observations: So, it can be assumed without fear of contradiction that the last portion of the said amount of P1,186,083.34 was delivered, if ever, to PLANTERS-APPELLANTS-LABORERS after February 18, 1957. (Appellants' Brief, p. 326) (VICTORIAS' Brief, pp. 65-66, Appendix 'A', G. R. No. L41222.) There is no explanation anywhere in the records as to what happened subsequently to the shortage of P180,679.38, and We, therefore, agree with the Court of Appeals that judgment should be rendered for the payment thereof, there being no dispute that the said amount has not been received by the laborers.

-GWe find it difficult, however, to subscribe to the finding of the Court of Appeals that the greater portion of the P5,185,083.34 in cash and in shares of stock of VICTORIAS was not received by the laborers and was instead malversed and misappropriated by the PLANTERS and VICTORIAS. To start with, We have to state again that the petition that initiated the instant cases before Us was filed only under date of November 9, 1962 with the Court of Agrarian Relations in Bacolod City, that is to say, more than six years after the execution of the ASCA on March 5, 1956 and the subsequent payment and transfer of shares pursuant thereto had been factually accomplished. The inaction of the laborers for such a long space of time cannot but cast shadows of doubt as to the truthfulness of their claim, considering particularly the hugeness of the amount involved, which anyone aggrieved would lose no time to move to recover, specially if one takes into account the value of the Philippine peso during said period. Second, and indeed rather importantly, the said initial petition made no reference whatsoever to the now pretended non-payment, but, on the contrary, as well shown and argued by the PLANTERS and VICTORIAS in the portions of their respective briefs We have quoted above, such payment was not only admitted in said petition as well as in the amended one filed in March, 1964, both of which referred exclusively to the laborers' share in the 1955-56 to 1973-74 crop years but even in the prayer portions thereof. What is more, as will be presently discussed, the payment in question appears proven by the evidence both oral and documentary submitted to the trial court. Of course, We must say again, as a general rule, in petitions for review of decisions of the Court of Appeals, this Supreme Court is bound by the findings of fact of that Court and that We are limited only to any inquiry as to whether or not its decision predicated on its factual conclusions is in accordance with law. In these cases at bar, however, the factual matter of whether or not the laborers had already been paid their share corresponding to the 1952-53 to 1954-55 crop years is being laid before Us inextricably intertwined with a question of law arising from the indisputable fact that in the initial pleadings below what is manifest is not only that there is an express admission in paragraph 10 of the petition of the laborers "that pursuant to Section 9 of said Act (R.A. 809), respondent planters gave petitioners-laborers the latter's lawful participation in the sugar production as well as in the byproducts and derivatives thereof and continued to give the same until November 1, 1955 when they ceased to do so until the present" but even in the prayer thereof, the FEDERATION confined the remedy it asked for to the payment of the laborers' share in the proceeds of the crop years after 1954-55 and up to 1973-74. We cannot conceive of a more emphatic and unequivocal words to convey the admission of the payment here in question. We are now asked to rule on the legal effect of such admission in the light of the other circumstances extent in the record. In that connection, there appears no alternative for Us than to rule that as contended by the PLANTERS and VICTORIAS, under the law, even if liberally applied, such admission should be considered as having some persuasive force, unless it was made through palpable mistake or misapprehension of the relevant circumstances. And what makes such admission more credible is the fact that not one single laborer was presented at the trial to deny that he had received his due share. The Court of Appeals has attempted to extricate the laborers from their lamentable predicament by accepting the explanation of counsel for the FEDERATION that what the above-quoted paragraph actually was intended to mean was that VICTORIAS had only reserved the corresponding amount in the liquidation of the share of the planters in the proceeds during that period. Quite misleadingly, to be sure, the FEDERATION argues in its brief that they could not have made such a factual admission since at the time their petition was prepared and filed, the money was still with the central. How false such a pretension is can be readily perceived by merely recalling that the FEDERATION filed its initial petition below in November of 1962, whereas the record

shows indisputably that the payments and transfer of shares had already been made more than five years before. And as regards the rather naive acceptance by the Court of Appeals of the explanation of the FEDERATION, We hold that it was legally improper to do so, it appearing that such explanation was made, according to the brief of the PLANTERS, very much belatedly, only in the FEDERATION'S reply brief in that court at page 1446 thereof, without any hint as to why it was not made earlier in the trial court, where it appears that FEDERATION had even filed an amended petition in 1964. Besides, there was no allegation of mistake; all that was done was to unconvincingly attribute a different subjective meaning to a word that is clear and unmistakable in itself, by explaining that what the pleader wished to convey by the word "given" was that the corresponding amount due that laborers had already been placed in reserve by the central. The Court of Appeals further tried to sustain the Federation by citing Section 5 of Rule 10 of the Rules of Court authorizing the courts to decide cases on the basis of evidence on matters not alleged in the pleadings. In the first place, the cited rule applies only when the evidence on which the court would rely is presented without objection of the adverse party, since they would then correspond to issues "tried by express and implied consent of the parties." Here, however, the record shows that the PLANTERS and VICTORIAS vehemently objected to any evidence touching on the 1952-53 to 1954-55 crop years, precisely because of the explicit admissions contained in the plaintiff FEDERATION'S petition. This is not, however, to ignore that nevertheless, the record shows that somehow both parties did present evidence touching on such payment. But judging from what such evidence consisted of, as reproduced in all the briefs before Us, We are fully satisfied that the findings and conclusions of fact of the Court of Appeals on the point at issue do not square with such evidence. To cite just one example, the testimony of the principal witness of the Federation, Atty. de Guia is more indicative of the complete and full payment in question than otherwise. For another instance, the ruling of the Court of Appeals that Exhibit 23 VICMICO is inadmissible because it is merely secondary evidence is, in Our view, erroneous, considering not only that the trial court was informed by Mr. de Guia himself that the original documents are so voluminous as to make it impracticable to take them to the court, but also that it was precisely on the basis of said exhibit that that court made the finding of a shortage of P180,679.38 in the cash payment, not to mention the obvious fact that the same witness actually made continuous reference to said exhibit while he was explaining the distribution of the full amount due the laborers. The contention of the Federation that said exhibit is a worthless piece of paper is an exaggeration that cannot hold water. In fact, no one pretends it is a mere fabrication, being part of the records of the Department of Labor. Of course, it is possible, as Mr. de Guia claimed, that he did not know of the actual issuance, sale and proceeds of sale of the 40,000 shares of stock, but the fact remains that it was he himself who referred to said documents with notable degree of certainty, at the start, and it was only later in his testimony that he disclaimed personal knowledge of the truth of its contents. Thirdly, insofar as the joining of issues in regard to the point under discussion, by the PLANTERS and VICTORIAS, on the one hand, with the FEDERATION, on the other, in their briefs filed with the Court of Appeals, it is understandable that the PLANTERS and VICTORIAS had no alternative than to do so as a matter of defense, even as they maintained all the time it was not a proper issue and was beyond the jurisdiction of the Court of Appeals to consider. Moreover, it is quite obvious that the cited provision is by its very nature and context applicable only in trial courts and not in the Appellate Courts. 4 What is more, it bears repeating, there was actually no allegation of mistake here; all that was done by the FEDERATION was to unconvincingly attribute to the word "give" another meaning convenient and suitable to its purposes, casting aside the obvious fact that said word is clear and unmistakable in itself. Moreover, it appears that said purported explanation was made only in its reply brief, by way of argument unsupported by any scintilla of relevant evidence presented in the court below. Perhaps, We may emphasize again that We are not unaware that We are dealing with a review of a decision of the Court of Appeals in an appeal from a case which originated in the Court of Agrarian Relations in Bacolod City and that, therefore, We are not supposed to adhere

strictly to the tenets regarding evidence of the Rules of Court, but must be guided as liberally as possible in favor of the laborers in searching for the true facts upon which their claim is based, having in view Republic Act 1257 and Presidential Decree 946 and more imperatively, the constitutional provisions on social justice and protection to labor. But, as can be seen, it is indeed in the light of these principles that We have scrutinized the reasoning and argumentation of the Appellate Court. We reiterate, at this point, that observing the Rules of Court only secondarily per mandate of Republic Act 1267 and Presidential Decree No. 946 does not, in Our considered opinion, preclude the Courts of Agrarian Relations and the Appellate Courts, from applying long established principles in judicial fact finding that are founded on reason and the common sense and experience of mankind. Admissions, specially if express, have always been universally considered by all authorized triers of facts as evidence of the highest order. To obviate their effect as such, there must be potent and cogent considerations that are as equally convincing to the mind as the compulsive persuasiveness of a man's statement or declaration against his own interest. In the cases at bar, We are satisfied, We regret to say, that the FEDERATION has failed to provide Us with anything but pleas for emotional sympathy to enable this Court to pay little heed to or much less ignore the persuasive force of its written formal admission that their members have already been given and "continue to be given" their due legal share of the proceeds of 1952-53 to 1954-55 crop years in question except for the amount of P 180,679.38. lt is Our conclusion from such admission and the evidence supporting the same, and more particularly from the absence of contrary evidence duly presented by the FEDERATION at the trial, that the truth is what said admission expressly declares. -HWith the matter of the cash payment thus resolved, We may now turn Our eyes to the Four Million (P4M) Pesos worth of shares of stock of VICTORIAS which, under the terms of the ASCA, were stipulated to be issued to the PLANTERS or their authorized Special Committee or Board of Trustees in trust for the benefit of the laborers. In regard to this matter, there are, as We view the situation, two controversial issues to be settled, namely, first, whether or not, it was proper for the PLANTERS and VICTORIAS to provide for such manner of payment to the laborers instead of in cash, and, second, disregarding the matter of such alleged impropriety, whether or not said shares or the proceeds thereof were received by the laborers. For obvious reasons, We have to deal with the second issue ahead of the other. And in this respect, suffice it to say that the question of whether or not the proceeds of the VICTORIAS shares of stock corresponding to them under the ASCA had been actually received by them from their respective planters has already been resolved by Us above not only as necessarily included in the binding force of the admission of the FEDERATION in its original petition and amended petitions below but as proven by overwhelming evidence overlooked apparently by the Court of Appeals. To be clearer, contrary to the finding of the Court of Appeals, We hereby hold that the proceeds of all the P 4M worth of VICTORIAS shares corresponding to the laborers under the ASCA were not only received in the form of shares by the PLANTERS from VICTORIAS but that the proceeds of the sale thereof by the Board of Trustees, together with their accruals, were actually received by the laborers from their respective planters-employers. We reiterate that not a single laborers had testified to the contrary. Additionally, Chairman Newton Jison testified positively to such effect. With the foregoing conclusion, it is hardly of any consequence for Us to discuss what the Court of Appeals, breathing, as it were, with evident indignation and a stirring sense of reprobation, condemned to be an unauthorized and improper act of the PLANTERS and VICTORIAS of planning, so to speak, and agreeing just between the two of them how the share of the laborers of 6% of the proceeds from 1952 to 1955 should be paid. Inferentially, if not directly, the Appellate Court found that the payment partly in cash and partly in shares of stock could have been done and should have been done only upon consultation with and with the consent or assent of the laborers either thru the FEDERATION or any of their authorized representative. We can admit that indeed that would have been most Ideal to do. Actually, however, what happened was not exactly that way. Just the same, We shall

proceed to show that the laborers were never at the short end of the bargain. The pertinent portions of the ASCA read as follows: (a) The Party of the Second Part shall set aside Sixty Per Cent (60%) of the said sum of P8,643,472.24 as received by them to be held in trust for the benefit of their laborers that may be entitled thereto because some of them have already died and their heirs are unknown while a great number of them are hard to locate and Identify, the Party of the Second Part, shall dispose of the said Sixty Per Cent (60%) of the sum of P8,643,472.24 as received by them, as follows: (1) The Party of the Second Part shall invest P4,000,000.00 of the P5,186,083.34, which is Sixty Per Cent (60%) of the said sum of P8,643,472.24, in 40,000 voting and transferable shares of capital stock of the COMPANY of the par value of P100.00 per share which shall be issued in four (4) blocks of 10,000 shares per block by the COMPANY to the Party of the Second Part upon effectivity, of this agreement as provided in Clause (2) hereof, it being understood that the issuance of such shares does not involve an increase in the present authorized capitalization of the COMPANY. The above-mentioned 40,000 shares of the capital stock of the COMPANY will enable the laborers/planters to become part owners of the COMPANY but if within the period of eighteen (18) months, but not earlier than six (6) months, from and after date of delivery of the said 40,000 shares by the COMPANY to the Party of the Second Part, the Party of the Second Part should desire to have the value of the said 40,000 shares to wit, P4,000,000.00 or such portions thereof in blocks of 10,000 shares at Pl,000.00 per block, paid in cash, the COMPANY will pay in cash to the Party of the Second Party or its successors the said value of the said 40,000 shares or of such blocks of 10,000 shares per block, as the Party of the Second Part may decide to have converted into cash, as to such blocks of 10,000 shares per block, that the Party of the Second Part may decide within the period above stipulated to retain, such shares may be retained by the PLANTERS for their own account upon their payment to the Party of the Second Part or its successors of the value thereof of P1,000,000.00 per block. The COMPANY shall have a period of Thirty (30) days after receipt of written request of the Party of the Second Part within which to make such cash payment of the value of the shares. The balance of P1,186,083.34 shall be distributed under the supervision of the Secretary of Labor among the present laborers of the Party of the Second Part who were already laborers of the PLANTERS during the period comprised between June 22, 1952 (the date of the passage of Republic Act 809) and October 31, 1955 (the end of the COMPANY's fiscal year); (ii) As to the sum of P3,457,388.90, which is the Forty Per Cent (40%) of the P8,643,472.24, the Party of the Second Part shall distribute this amount among the PLANTERS in proportion to the sugar milled for them by the COMPANY during the aforementioned period of June 22, 1952, to October 31, 1955.'

(b) As to the manner of delivery of the cash involved in the foregoing transaction amounting to P4,643,472.24, a 'General Collective Sugar Milling Contract' has heretofore been prepared for the signature of the PLANTERS affiliated with the COMPANY signing the said 'General Collective, Sugar Milling Contract, the Company shall pay and deliver to the Party of the Second Part at least fifty per cent (50%) of the said cash balance of P4,643,472.24 or that portion thereof corresponding to the said majority of the PLANTERS affiliated with the COMPANY who have already signed the said 'General Collective Sugar Milling Contract', and the remaining fifty per cent (50%) or remainder thereof will be paid, one half upon the execution of their new individual sugar milling contracts, and the other half upon the registration thereof in the Office of the Register of Deeds for the Province of Negros Occidental; (c) It is understood, as part of this settlement agreement, that the block of the COMPANY's common shares mentioned in subparagraph (i) and all its earnings shall constitute a trust fund to be dedicated to the amelioration of the plantation laborers of the PLANTERS in the VictoriasManapla-Cadiz milling district. Said trust fund shall be administered by the Party of the Second Part for the benefit of the PLANTERS' laborers under the supervision of the Secretary of Labor and in accordance with the trust laws of the Philippines. Should the trust fund be liquidated by order of the Court of Justice or in the manner provided for in paragraph (1) (a) (i) then the PLANTERS shall have the first option from the trustees, and the COMPANY the second option from the trustees and/or from the planters themselves, to buy said Victorias Milling Co., Inc., shares in blocks of 10,000 shares at their value of P1,000,000.00 per block. And in case both the Party of the First Part and Party of the Second Part refuse to exercise their right, then said block of VMC shares may be sold in the open market.' (2) This agreement will become effective if and when the majority of the planters affiliated with the Party of the First Part have signed the said 'General Collective Sugar Milling Contract'. Executed at Victorias, Negros Ocidental this 5th day of March, 1957. (VICTORIAS' Brief, pp. 26-30, Appendix A, G.R. No. L-41222.) Thus, it is unmistakably clear that as far as VICTORIAS was concerned, it agreed to give to the PLANTERS the 10% it has precisely reserved for that purpose in order to comply with the mandate of the law in the event its challenge against its constitutionality should fail. And as it happened, it opted soon enough not to continue pressing that challenge by extrajudicially entering into a settlement with the PLANTERS. And as regards the actual implementation of the portion of the agreement regarding the share of the laborers, apart from the admission of the FEDERATION, oft repeated earlier; relative to the actual receipt by its members of their legal share of 1952 to 1955 crop years, We might relevantly point out that Chairman Jison testified without contradiction thus: Q. Would you like to tell this Honorable Court what happened to the money, whether in cash, check or in terms of shares of stock which was delivered by the Victorias Milling Co., Inc. to the Board of Trustees?

A. The stock of shares of the Victorias Milling Co.,Inc. which was delivered to the Board of Trustees was sold and liquidated according to the Amicable SettlementCompromise Agreement and in such case, checks were issued to the respondents planters and also to be delivered to the respective laborers under the supervision of the Department of Labor. So far the record is concerned, the Department of Labor has all the records. (pp. 37-38, tsn., June 17, 1970). (VICTORIAS' Brief, Appendix A, p. 71, G.R. No. L-41222.) These, in addition to the testimony to the same effect of Mr. de Guia of the Department (now Ministry) of Labor lengthily quoted above as parts of the portions of the briefs of the PLANTERS and VICTORIAS. We say, to the same effect, because it is Our definite impression that read as a whole, and evaluated together with Exhibit 23-VICMICO, that testimony, albeit rather vague, confusing and at some places evasive, proved sufficiently that what were due the laborers in cash and in shares of stock (or the proceeds of the sale thereof) had been fully settled under the supervision of Mr. de Guia and his men not later than 1956 or 1957 in five phases of distribution. True it is that Exhibit 23VICMICO was declared inadmissible as secondary evidence by the Court of Appeals, but what is even more legally accurate is that such ruling is erroneous, if only because said exhibit was precisely used by Mr. de Guia as basis for his testimony, and he explained that the pertinent records supporting the same were so voluminous that it would be impractical to take them to the court. Incidentally, We are persuaded it cannot be said that the FEDERATION or the laborers did not agree to the modality of payment provided for in the ASCA. If at all they muttered against it, it was only belatedly during the trial, that is, after they had already received the cash portion therein provided. Indeed, We cannot share the view implicit in the decision of the Court of Appeals that the principal witness regarding the same, Mr. Felipe de Guia, the representative of the Secretary of Labor, under whose supervision, Section 9 of the Act requires the payments to the laborers to be made, was not duly aware of the medium provided in said ASCA that P4 M of the share due the laborers would not be paid in cash but would be invested in the form of 40,000 shares of VICTORIAS. As may be noted from the Appellate Court's decision, the transcript of the stenographic notes of Mr. de Guia's testimony evidences that he had in his possession the record of the distribution of the P4 M, although the said court held such assertion not to be the best evidence. Whether such ruling is correct or not, it refers only to the actual distribution of the cash and the shares of stock or the proceeds of the sale thereof, but the fact that P4 M were to be paid in shares appears indubitably proven. We are thus of the considered opinion that the findings of fact of the Court of Appeals inconsistent with Our observations herein do not accord with conventional knowledge of men and the general experience of the business world, hence Our authority to modify the same. 5 It is to Us but natural to assume that said witness, Mr. de Guia, knew or ought to have known of such medium of settling the laborers' claim because it is to be presumed that in the regularity of the performances of his duties to supervise the payment to the laborers, on behalf of the Secretary of Labor, he had read and did know the pertinent contents of the ASCA before supervising any payment at all to the laborers. He admitted that of P1,186,083.34 due in cash to the laborers, the latter were actually paid under his supervision, the said amount minus P180,679.38. We cannot suppose that he undertook that task without inquiring into the whys and wherefores thereof, that is to say, the reasons and details related to the amount being then paid. How could it have been possible for him to have supervised the payment of any amount to the laborers without determining first whether such payment was in full or not or in faithful compliance with Section 9 of the Republic Act 809? We have no doubt he must have

been told about or even shown the ASCA, which was the basis for the payment. If it were otherwise, it was his inescapable duty to inquire. We presume, by mandate of the law, that he had complied with that duty. More, it is highly improbable that the FEDERATION did not know that what was due its members was P5,186,083.34. In truth, there is nothing before Us showing that the FEDERATION objected at all to the manner of payment provided in the ASCA when the time for implementation came. As far as the records before Us indicate, the laborers received under Mr. de Guia's supervision P1,186,083.34 (minus P180,679.38) without a word of complaint from anyone, either the FEDERATION or the SECRETARY. We are, therefore, not disposed to find that the mode of payment agreed upon in the ASCA was without the conformity or consent, even if subsequent to its execution, of the laborers and the Secretary of Labor. We hold that there was such consent. In this connection, it should be recalled that after Civil Case No. 16815 of the Court of First Instance of Manila, wherein it was held that all the contracts being insisted upon by VICTORIAS as still existent had already expired on June 22, 1952, which decision was affirmed by this Supreme Court in G. R. No. L-6648 on July 25, 1955, in another suit, Civil Case No. 22577, also in the Court of First Instance of Manila, wherein the constitutionality of Republic Act 809 was impugned by VICTORIAS, the validity of ASCA itself was put to question when VICTORIAS and the PLANTERS submitted to the court their manifestation on April 23, 1956 that they had come to an extrajudicial settlement effective upon the signing of the General Collective Sugar Contract (Exhibits YYY and YYY-7) which was ultimately signed by majority of the PLANTERS on or before May 31, 1956. The challenge was made not only by some individual planters, like the Coruas, Lacson, Chapa, Valencia, et al., but more importantly also by the Secretary of labor. However, the intervention of these challengers was not allowed by the court, and on November 5, 1956, We issued a resolution in G. R. No. L-11218 dismissing a petition against such denial. So, while it is true that the ASCA was questioned as being violative of Section 1 of the Sugar Act of 1952, the challenge was in relation alone to the contention of the FEDERATION, the SECRETARY OF LABOR and some planters that the ratio of sharing provided for in Section 1 of the Act is unalterable by contract. Insofar as the manner in which the payment of what is due to the laborers was concerned, that is, that stipulated in the ASCA, We are impressed convincingly that the same must have appeared satisfactory to all the parties concerned. Indeed, if the FEDERATION had felt that the mode or medium of payment stipulated in the ASCA was prejudicial or in any way inimical to the interests of its members, why was the cash payment of P1.8 M plus accepted without, as far as We can see from the records, any qualification or reservation on its part or on that of the Secretary of labor.6 On the contrary, what We note is that the transfer to the PLANTERS of 40,000 shares of VICTORIAS in trust for the laborers could have been viewed by the laborers with alacrity, not only because of the attractively high increment it was supposed to earn for them, but, what is more, the laborers would become thereby co-owners of the mill. It is to Us of little, nay insignificant, moment who conceived or "engineered" the plan, whether VICTORIAS or any other party and what motivated the same. What cannot be denied is that under normal standards, no one can perceive therein any prejudice or risk to the pecuniary interests of the laborers. To speak of it, therefore, as approximating something immoral or improper, even illegal, for VICTORIAS to agree to it, as the Appellate Court did, is to miscomprehend entirely its concept, which under the circumstances then prevailing appeared to be the most practical and feasible way of meeting the situation for the convenience and benefit of the laborers themselves, the PLANTERS and VICTORIAS. -IHaving arrived at the conclusion that of the cash portion stipulated in the ASCA plus the proceeds of the sale of the 40,000 shares of VICTORIAS stock had already been "given", to use the word of the FEDERATION itself in its pleadings below, long before the case in the trial court was initiated, only P180,679.38 of the claim of the laborers

pertaining to the 195253 to 1954-55 crop years remain unpaid, We shall now dwell on the curious and strange holding of the Court of Appeals that VICMICO and the PLANTERS are jointly and solidarily liable to the laborers for the payment of their claims, but only insofar as said P 180,679.38 are concerned. Referring to the FEDERATION'S position in this respect, that is, the joint and solidary liability of the PLANTERS and VICTORIAS vis-a-vis the 1952 to 1955 phase of these cases, We must say that the same looks more like a dragnet intended to catch both the PLANTERS and VICTORIAS one way or another. After having admitted in its initial pleadings with an express assertion that the laborers concerned had already been "given" what is due them for the period in question, at the trial, its claim bulged to over P7 M for the 1952-1955 period, albeit it came out from the evidence that of such claim only P180,679.38 had not been paid. (According to Mr. de Guia, the corresponding laborers could not be located. Under the law, however, in such an instance, the money due the lost laborers goes to be a designated government fund for the general amelioration of labor and labor conditions in the whole country.) Actually, We might reiterate, said initial pleadings of the Federation made no reference at all to the crop years 1952-53 to 195455, but was confined itself to the claim that from 1955-56 crop year to 1973-74, the laborers were not being paid what is due them under the law, which they insisted then was 6% of the 10% increase due the PLANTERS. In other words, the FEDERATION based its original claim on the theory of obligation created by law, but, of course, in reference only to the 1956 to 1974 crop years nothing of 1952-53 to 1954-55. However, as may be gleaned from the decision of the Court of Appeals, in that Court, the FEDERATION shifted to another pose. It claimed, contrary to its admission in its original and amended petition in the trial court, that the laborers had not been actually fully paid what is due them for 1952 to 1955, and notwithstanding their receipt or acceptance, without any protest or qualification of the cash portion (which turned out to be short by P180,679.38) provided in the ASCA, it assailed, rather belatedly, the legality and propriety of that agreement's provision to the effect that P4 M due them would be paid in 40,000 shares of stock to be entrusted to a Special Committee or Board of Trustees composed of five planters, and what is more, it contended vehemently that the laborers had not received any of said shares or any portion of the proceeds of the sale thereof. As to the legal aspect of such belated claim, its basis became no longer an obligation created by law but a liability imposed according to it by Articles 20 and 21 of the Civil Code. But it must have also relied on torts, for in its decision, the Court of Appeals found "the Central (VICTORIAS) and PLANTERS jointly and severally liable for tort", while citing in another portion of its decision also Articles 20 and 21 of the Civil Code. We must confess We are perplexed by such evident confusion of the pertinent juridical concepts in civil law in such postures of the Court of Appeals and the FEDERATION. The only legal provision that could impute joint and several or solidarity to the PLANTERS and VICTORIAS is Article 2194 of the Civil Code which reads: ART. 2194. The responsibility of two or more persons who are liable for a quasi-delict is solidary. Since in this jurisdiction torts is generally equated with the quasi-delict or culpa aquiliana or extra-contractualdefined and elucidated in Chapter 2, Title XVII, comprising of Articles 2176 to 2194 of the Civil Code, it must have been for this reason, that without mentioning the codal provisions just referred to, and trying to play safe, as it were, with its reference to torts in general, the Court of Appeals made its holding under discussion. Surprisingly, however, it later on cited Articles 20 and 21 of the Civil Code, thereby implying that its reference to torts might be in relations to these two later articles under Chapter 2 on Human Relations of Chapter I of the Code. We do not hesitate to hold as We hereby hold that such a confusion of simple and well-known civil law concepts is unfortunate, to say the least. There is an obvious mixup of the several sources of obligation under existing laws, and one is left uncertain whether what is being relied on is only one of them or a combination of them or all of them together, which would naturally be a veritable juridical and legal abnormality. For the benefit of everyone concerned, We shall make a brief analysis of each of them that have been directly or indirectly referred to by the Court of Appeals or the FEDERATION.

In regard to the FEDERATION'S initial contention about obligation created by law, undoubtedly, it had in mind Sections 1 and 9 of Republic Act 809. But since in such initial pleading, the subject matter and cause of action referred to crop years 1955-56 to 1973- 74, the FEDERATION is correct in sustaining that the laborers are entitled to a 60% share in the increase given to the PLANTERS by the CENTRAL. Its only misconception in such posture is that it assumed that the ratios in Section I of the Act have to be followed even if there were a majority of planters with written contracts with VICTORIAS. Under Talisay-Silay and the decision of the Court of Appeals, that position is untenable. However, the laborers are nevertheless entitled to 2.4% out of the 4% increase that pertained to the PLANTERS under the ASCA. Accordingly, the PLANTERS are liable to their respective laborers for the 2.4% that indisputably they have not paid since 1955 to 1974. Obviously, that is an obligation created by law. But arising as it does from Republic Act 809, the relevant question that arises is whether such liability of the PLANTERS is joint and several or solidary. After mature deliberation, considering the peculiar facts of these cases wherein it appears that the PLANTERS always acted in concert with one another or as a single unit, We hold that the PLANTERS as an association, if it is, or all the planters in the Victorias sugar milling district, whether members or not of such possible association, and this includes petitioners Santos, as a lessee planter, and Tirol, are jointly and severally liable for the whole amount due all the laborers involved in these cases. As regards the pretended liability of VICTORIAS in this respect, We have already disposed of that matter earlier above. Coming now to the matter of torts, the FEDERATION cites from Judge C. P. Caguioa's Comments and Cases on Civil Law, Vol. I, 1967 ed. to evidently give the impression that Article 20 of the Civil Code has adopted or imported into Our jurisdiction the so-called Anglo-American concept of torts which adds malice to the fault or negligence contemplated in the quasi-delict or culpa aquiliana or extracontractual of our Civil Code. Such citation, We regret to say, does not reenforce at all the stand of the laborers. 'Truth to tell, with all due respect to the opinion of Judge Caguioa, a known civilian, Article 20 does not contemplate malice per se. The article reads thus: ART. 20. Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same. This article creates a new source of obligation in addition to culpa aquiliana. While Article 2176 mentions only fault or negligence, as can be seen, the above-quoted article requires that the person to be held liable must have acted "contrary to law" unwilfully or negligently caus(ing) damage to another." If We are to believe the following citation in VICTORIAS brief: In order that liability under Article 2176 of the Civil Code will arise the following requisites must exist: (a) There must be damage or prejudice which must be proven by the party claiming it; (b) There must be an unlawful act or omission amounting to fault or negligence; and (c) There must be a direct causal connection between the damage or prejudice and the act or omission. (12 Manresa, 640-641; Taylor v. Manila Electric Co., 16 Phil. 8; Jarencio, Torts and Damages, 1968 Edition, p. 25). (Page 222). even under culpa aquiliana "there must be an unlawful act or omission" for any liability to attach. It is thus clear from the foregoing brief discussion of the juridical concepts of torts, culpa aquiliana and Article 20 of the Civil Code that neither the PLANTERS, and much less VICTORIAS, appears to be guilty of tort in any sense. Accordingly, the holding of the Court of Appeals that "the Central and PLANTERS are liable in tort" to the laborers of the former has no factual nor legal basis. In consequence, it necessarily follows that the joint and several liability imposed by the Court of Appeals upon VICTORIAS must be, as it is hereby, held to be

erroneous and uncalled for, factually, as shown earlier in Our discussion of the relationship between the laborers of the PLANTERS and VICTORIAS, and legally, in the light of what we have just explained is the only correct legal basis of the laborers' claim, namely, an obligation arising from law. To reiterate, the law, that is, Republic Act 809, does not impose upon the centrals, whether expressly or impliedly, any joint and several liability with the planters for the share which the Act apportions for the laborers of the planters, since it is the responsibility exclusively of the planters to pay their laborers after they have been given by the central what is due them. In other words, the inherent nature of the obligation of the planters, that of paying their own laborers, has never been from the inception of the sugar industry up to the present, solidary with the Centrals. Article 1207 of the Civil Code provides in this respect thus: ART. 1207. The concurrence of two or more creditors or two or more debtors in one and the same obligation does not imply that each one of the former has a right to demand, or that each one of the latter is bound to render, entire compliance with the prestation. There is a solidary liability only when the obligation expressly so states, or when the law or the nature of the obligation requires solidarity. In these premises, We cannot see how VICTORIAS may be held jointly and severally liable with the PLANTERS, contrary to what has been held by the Court of Appeals. XIII The foregoing sufficiently resolve, the first eight (I to VIII) of the ten (10) assignment of errors of the FEDERATION. We shall now tackle the remaining two of them. -AIn its Assignment of Error IX, the FEDERATION ascribes to the Court of Appeals the alleged error of not holding VICTORIAS and the PLANTERS jointly and severally liable for exemplary damages for the losses that the laborers have suffered because they were not paid their share of the 1952-53 to 1954-55 crop years production. Needless to say, as a consequence of Our holding that by their own admission and the evidence misapprehended, in Our view, by the Court of Appeals, all the amounts due them for said period have already been paid, except P180,679.38, We can perceive no legal reason why such claim for exemplary damages should be awarded. With particular reference to the P180,679.38 left unpaid in 1955, FEDERATION'S own witness de Guia explained that the laborers to which the same correspond could not be located. In the light of such explanation, it would be unfair to even think of exemplary damages for the non-payment thereof. -BAs to the matter of the non-payment by the PLANTERS of the 2.4% due their laborers, a little clarification may be called for. We feel that the legal provision mandating such payment may indeed not be readily understood by or comprehensible to everyone in the same sense it was construed by this Court in Talisay-Silay and by the Court of Appeals in its subject decision. For, it is undeniable that Section 9 of Republic Act 809 uses the words "any increase in participation granted the planters under this Act". (emphasis supplied) Read literally, there could be a little shade of plausibility in the posture of VICTORIAS and PLANTERS that only any increase as a result of the application of Section 1 of the Act is contemplated in its Section 9, and not an increase by virtue of a written milling contract executed after the effectivity of the Act, even if those who do so might constitute the majority of the planters in the district. But, as We postulated in TalisaySilay, any increase given to the planters by any central after the passage of the Act cannot be viewed in any way than that which has been induced or forced to be done on account of the compulsive effect of the various related provisions of the Act. Virtually, therefore, any such increase should be deemed as an "increase under this Act", since it is a result of its operation. Understandably, since it is only

because of this Court's construction of the Act rather liberally, to be sure, in favor of labor, We cannot say that, in the words of Article 2233 of the Civil Code, the laborers here are entitled to recover exemplary damages "as a matter of right. " We must consider that per Article 2234, "the plaintiff must show that he is entitled to moral, temperate or compensatory damages before the court may consider the question of whether or not exemplary damages should be awarded." In the instant cases, all relevant circumstances considered, We fail to see Our way clear to granting any kind of moral, temperate or compensatory damages to the laborers, and We are not doing so. In fact and in law, We have no basis to go that far. Thus, it is pointless to speak of exemplary damages here. -CLastly, the FEDERATION complains that the Court of Appeals erred in reducing to 10% the 20% attorney's contingent fees stipulated in the laborers' contract with their counsel. (Page 307, Laborers' Brief) Every material point discussed in the brief taken into account, We share the conclusion of the Appellate Court that the said ten (10%) per centum award of attorney's fees is just and adequate. XIV Insofar as VICTORIAS' petition is concerned, there are only three assignments of error (VII, VIII and XII) that may not be said to be squarely resolved in the above opinion. -AVICTORIAS vehemently maintains in its Assignment of Errors No. VII that nowhere in the course of the proceedings below, starting from the allegations of both the original and amended petition of the FEDERATION through the evidence it presented without opportune and appropriate objection, may there be traced any theory having the semblance of reliance on the law on torts, whether in the concept of culpa aquiliana or under Articles 20 and 21 of the Civil Code, the alleged Anglo-Saxon version, per Judge Caguioa, supra, or, any other variant thereof. According to VICTORIAS, the alternative bases perceptible in the FEDERATION'S petitions which ultimately led to the instant cases before Us now were either an obligation arising from law (Republic Act, 809) or one that is contractual, the latter being somewhat vague to Us, since it is in fact premised on the alleged invalidity of the provisions of the ASCA. And here, it is the position of VICTORIAS that assuming the cause of action of the FEDERATION could still be legally convertible in the appellate stage of the proceedings, either in the Court of Appeals or here, to one of "torts", We should dismiss the FEDERATION'S petition, the same having been filed in November 1962 or more than four (4) years after the alleged cause of action arose in 1955 or 1956, citing Article 1146 (2) of the Civil Code. With the view We have taken of the whole controversy as discussed in the above opinion, We deem it unnecessary to pass on such seventh assignment of error of VICTORIAS regarding prescription of an action on torts, whether We look at it in relation to the 1952-53 to 1954-55 crop years controversy or in connection with the 2.4% claim of the laborers for crop years 1956 to 1974. -BIt is VICTORIAS' posture in its assignment of error No. XII that the real nature of the action of the laborers in these cases is one for accounting, hence, as a preliminary matter, We should first determine whether or not they are entitled to such accounting. Stated otherwise, it looks to Us that VICTORIAS claim is that it is premature yet at this stage of the controversy to deal with any sums of money or amounts due the laborers, there being no showing extant in the record that such entitlement exists. Again, We hold We do not have to spend more ink and paper to deal with such contention. Either it is quite clear that the FEDERATION has sufficiently established the predicate for accounting insofar as the PLANTERS are concerned or We consider it superfluous to make any ruling as to the point in question for the purposes of these

cases, since the ultimate result of Our above opinion would virtually not be different anyway. -CThere is one point raised by VICTORIAS which although generally covered somehow in the above opinion, deserves special mention and discussion. The central maintains that in the interrelation among the planters, the plantation laborers and the miller, it has always been the practice and actually a legal axiom that the central, on the one hand, and the planter, on the other, whether the latter be a landowner or lessee or one who just factually plants and delivers his harvest for milling to the central of the corresponding district under any other arrangement with the landowner concerned, are the only ones who enter into contractual relations with each other, and in all the contracts between them, since the sugar industry began, nothing whatsoever has been provided with respect to the laborers, either of the miller or the planters, except, in any event, precisely to make it clear that neither of them would have anything to do with the terms and conditions of each other's workers or laborers. We have stated earlier and We reiterate Our view that there is nothing in Republic Act No. 809 that alters such a long standing factual and juridical situation. However, it cannot be denied that under Republic Act 809, for the first time, outside of enacting the Minimum Wage Law and expressly extending fringe benefits, like cost-of-living allowances, bonuses, etc. to the workers in the sugar industry not only in the farms but also in the mills, the government has never fixed the manner in which the planters should share the proceeds of milled sugarcane with their respective plantation laborers. And notably, in Section 9 of the Act, the Congress made it abundantly specific that what the provision contemplates in the partition between the planters, on the one hand, and their respective plantation laborers, on the other, is of "any increase in the participation granted the planters under this Act and above their present share," which the provision explicitly mandates "shall be divided between the planter and his laborer in the plantation (and that) (T)he (said) distribution of the share corresponding to the laborers shall be made under the supervision of the Department of Labor." Such being the case, VICTORIAS suggests the proposition that, therefore, if somehow the Act creates any link at all between the plantation laborers and the central, Section 9 itself makes the planter the agent of his laborers in such relationship and speaks for them and is responsible to them, as their principal. When, therefore, the PLANTERS entered into and signed the ASCA, they did so not only for themselves but for and on behalf of their principal, the laborers, in respect to all matters concerning the latter. Consequently, VICTORIAS argues that the plantation laborers are bound by the terms and conditions of the ASCA as parties thereto, represented by their agent, the PLANTERS. There may be something in such pose, but rather than go into the intricacies and complications that evidently would need to be elucidated and resolved in relation thereto, but which anyway would be inconsequential as far as the basic views of these cases expressed in Our above opinion are concerned, We prefer to deal with VICTORIAS' argument under discussion on some other appropriate occasion when its resolution should become indispensable, After all, in the cases at bar, it is already altogether clear, as We have discussed in Our above opinion, that whatever the plantation laborers are claiming is due them must be the exclusive responsibility and liability of the PLANTERS jointly and severally among themselves, to the complete exclusion of VICTORIAS. XV All of the assignments of errors of the PLANTERS (I to VI) in their brief with Us have been resolved in Our opinion above. There is, however, something they mentioned in their prayer that We might just as well clear up and dispose of. The PLANTERS pray that they should not be made liable to their respective laborers for any of the claims herein involved because they have not "engineered nor pocketed that which allegedly belong to the laborers as a result of the ASCA, for they (the PLANTERS) got only what they are entitled to under Republic Act 809", and elsewhere, they suggest that should they be found somehow liable, VICTORIAS should be adjudged to reimburse them therefor.

We shall not concern Ourselves about the "engineering" that brought forth the ASCA. The Court of Appeals discussed that matter in detail in its decision now under review, and its factual conclusions relative thereto, whether right or wrong, cannot, to Our mind be of pivotal influence in the ultimate resolution of these cases. In a sense, what circumstances go into the process of formulating contracts between the sugar centrals and the planters are matters of public knowledge among all those duly informed about and concerned with the sugar industry, and We must assume that whatever comes out of their bargaining cannot be but their voluntary and mutual agreements, even if, in this connection, it is but fair to admit that by force of the inherent nature of the indispensability of the centrals as the last factor of production of the saleable milled sugar, its superior position is an economic reality everyone must accept. The Court of Appeals realistically considered the matter as something that is not illegal (and not exactly immoral), much less in contravention or circumvention of the Sugar Act, but dictated by the legitimate exercise of all individuals to make a profitable bargain. Emphatically, it must be said though, that the PLANTERS were not entirely helpless, for as We see the scenario that may be flashed out of Republic Act 809, all that the PLANTERS had to do was to refuse to sign any contract with VICTORIAS, in which event, the government, thru a receiver, would have run the mill and the PLANTERS could have gotten the 10% increase provided in Section I. If they signed, as they did, a contract, the ASCA, providing for a 3664% partition, We can only deduce ineluctably that such was the better option for them under the circumstances. And since, everyone is presumed to know the law, for ignorance thereof "excuses no one from compliance therewith ", and the courts, after all, are not guardians of parties, sui juris, who might get the shorter end at bargaining tables, We have no alternative but to conclude that when they signed the ASCA, the PLANTERS were well aware that of the 4% increase granted therein to them, 60% had to be paid by them to their respective laborers. Thus, when they plead that what they got under the ASCA was only what they are entitled to under the Act, they must not be understood as referring to the whole 4% but only to 1.6%. Let it be plainly understood, in this connection, that under Our TalisaySilay ruling, the laborers are entitled to no more than 60% of any increase in any increase in participation their respective plantersemployers might be granted. Beyond that whatever goes to the PLANTERS and to VICTORIAS, for that matter, are theirs as a matter of law and right. To speak of "pocketing" by anyone of somebody else's rightful and lawful share is somehow malicious and entirely unwarranted. From the facts extant in the record, and applying the law thereto, it is the conclusion of this Court that the PLANTERS are inescapably liable to their respective laborers in the amounts and manner hereinabove set forth. They should know better than to place the blame on anyone else. Their respective laborers have been deprived long enough of what is legally and rightfully theirs. It is unimaginable how said laborers could have had better lives and living conditions, worthy of their work, had the PLANTERS been more socially-minded and humanely concerned about the welfare of those that have made them the "sugar lords" during better times in Negros Occidental. To make things clearer, the claim for reimbursement by the PLANTERS is hereby overruled. XVI The petition of planters Primo Santos and Roberto Tirol requires no separate discussion. Their claims that the trial court had no jurisdiction over their persons and that they should not be held liable for obligations under a contract they have not signed deserve scant consideration. In fact, those points are already properly dealt with in the above opinion, hence all their assignment of errors are hereby held to be untenable. JUDGMENT Accordingly, the Court AFFIRMS the judgment of the Court of Appeals holding that the LABORERS are entitled to the payment of 60% of the 4% increase paid by VICTORIAS to the PLANTERS every crop year, from crop year 1955-56 to crop year 1973-74, the exact amount thereof in pesos to be determined by the trial court after a hearing to

be held within thirty (30) days from the finality of this decision, the yearly amount thus determined to bear the corresponding legal interests up to the date of payment to the LABORERS, 7 the PLANTERS, including appellants Primo Santos and Roberto Tirol, are sentenced to pay the said LABORERS the amount to be so determined, under the supervision of the Ministry of Labor. In addition, the said PLANTERS shall also pay to the LABORERS, the sum of P 180,679.38, the balance unpaid of the latter's share in the 1952- 53 to 1954-55 crop years 8 also with the same rates of interest and under the same supervision. The judgment of the Court of Appeals is hereby modified by eliminating the joint and several or solidary liability of VICTORIAS with the PLANTERS for the above amounts, the said liability being solely and exclusively of the PLANTERS. Moreover, contrary to the finding of the Court of Appeals, the Court finds and holds that per their own admission in their complaint and the extant evidence, the laborers had already been paid their share in the 1952-53 to 1954-55 crop years, except for the P 180,679.38 aforementioned. In all other respects, the judgment of the Court of Appeals is AFFIRMED insofar as the liability of the PLANTERS to their laborers are concerned. And We hold that said liability is joint and several among all the planters in the Victorias District from 1952 to 1973, provided that in the execution of this judgment, the primary and priority recourse should be against the members of the Special Committee or Board of Trustees and secondly, the PLANTERS, as an association, before they (the planters) are proceeded against individually. This estimate is subject to the amount to be determined by the trial court. Costs against the PLANTERS also in the same character of liability just set forth as to their principal liability. Concepcion, Jr., Fernandez, Guerrero, Abad Santos, De Castro and Melencio-Herrera, JJ., concur. Fernando, C.J., concurs in the result. Teehankee, Aquino, J., took no part. Makasiar, J., the Court of Appeals should be entirely affirmed.

EXECUTIVE SECRETARY PAQUITO N. OCHOA, JR. and DEPARTMENT OF BUDGET AND MANAGEMENT SECRETARY FLORENCIO B. ABAD, Respondents.

DEL CASTI ABAD, VILLARAMA PEREZ, MENDOZA SERENO, J

Promulgate December x -------------------------------------------------------------------------------------- x

DECISION MENDOZA, J.:

When the judiciary mediates to allocate constitutional boundaries, it does not assert any superiority over the other departments; it does not in reality nullify or invalidate an act of the legislature, but only asserts the solemn and sacred obligation assigned to it by the Constitution to determine conflicting claims of authority under the Constitution and to establish for the parties in an actual controversy the rights which that instrument secures and guarantees to them.

--- Justice Jose P. Laurel[1]

The role of the Constitution cannot be overlooked. It is through the Constitution that the fundamental powers of government are established, limited and defined, and by which these powers are distributed among the several departments.[2] The Constitution is the basic and paramount law to which all other laws must conform and to which all persons, including the highest officials of the land, must defer.[3] Constitutional doctrines must remain steadfast no matter what

EN BANC

may be the tides of time. It cannot be simply made to sway and accommodate the call of situations and much more tailor itself to the

LOUIS BAROK C. BIRAOGO, Petitioner, - versus THE PHILIPPINE TRUTH COMMISSION OF 2010, Respondent. x-----------------------x REP. EDCEL C. LAGMAN, REP. RODOLFO B. ALBANO, JR., REP. SIMEON A. DATUMANONG, and REP. ORLANDO B. FUA, SR., Petitioners,

whims and caprices of government and the people who run it.[4] G.R. No. 192935

For consideration before the Court are two consolidated cases[5] both of which essentially assail the validity and constitutionality of Executive Order No. 1, dated July 30, 2010, entitled Creating the G.R. No. 193036 Philippine Truth Commission of 2010. Present: CORONA, C.J., CARPIO, CARPIO MORALES, The first case is G.R. No. 192935, a special civil action for VELASCO, JR., NACHURA, prohibition instituted by petitioner Louis Biraogo (Biraogo) in his LEONARDO-DE CASTRO, BRION, capacity as a citizen and taxpayer. Biraogo assails Executive Order PERALTA, BERSAMIN, No. 1 for being violative of the legislative power of Congress under

- versus -

Section 1, Article VI of the Constitution[6] as it usurps the constitutional authority of the legislature to create a public office and to appropriate funds therefor.[7]

economic, and social life of a nation; in a very special way it inflicts untold misfortune and misery on the poor, the marginalized and underprivileged sector of society; WHEREAS, corruption in the Philippines has reached very alarming levels, and undermined the peoples trust and confidence in the Government and its institutions; WHEREAS, there is an urgent call for the determination of the truth regarding certain reports of large scale graft and corruption in the government and to put a closure to them by the filing of the appropriate cases against those involved, if warranted, and to deter others from committing the evil, restore the peoples faith and confidence in the Government and in their public servants; WHEREAS, the Presidents battlecry during his campaign for the Presidency in the last elections kung walang corrupt, walang mahirap expresses a solemn pledge that if elected, he would end corruption and the evil it breeds; WHEREAS, there is a need for a separate body dedicated solely to investigating and finding out the truth concerning the reported cases of graft and corruption during the previous administration, and which will recommend the prosecution of the offenders and secure justice for all; WHEREAS, Book III, Chapter 10, Section 31 of Executive Order No. 292, otherwise known as the Revised Administrative Code of the Philippines, gives the President the continuing authority to reorganize the Office of the President. NOW, THEREFORE, I, BENIGNO SIMEON AQUINO III, President of the Republic of the Philippines, by virtue of the powers vested in me by law, do hereby order: SECTION 1. Creation of a Commission. There is hereby created the PHILIPPINE TRUTH COMMISSION, hereinafter referred to as the COMMISSION, which shall primarily seek and find the truth on, and toward this end, investigate reports of graft and corruption of such scale and magnitude that shock and offend the moral and ethical sensibilities of the people, committed by public officers and employees, their co-principals, accomplices and accessories from the private sector, if any, during the previous administration; and thereafter recommend the appropriate action or measure to be taken thereon to ensure that the full measure of justice shall be served without fear or favor. The Commission shall be composed of a Chairman and four (4) members who will act as an independent collegial body.

The second case, G.R. No. 193036, is a special civil action for certiorari and prohibition filed by petitioners Edcel C. Lagman, Rodolfo B. Albano Jr., Simeon A. Datumanong, and Orlando B. Fua, Sr. (petitioners-legislators) as incumbent members of the House of Representatives.

The genesis of the foregoing cases can be traced to the events prior to the historic May 2010 elections, when then Senator Benigno Simeon Aquino III declared his staunch condemnation of graft and corruption with his slogan, Kung walang corrupt, walang

mahirap. The Filipino people, convinced of his sincerity and of his ability to carry out this noble objective, catapulted the good senator to the presidency.

To transform his campaign slogan into reality, President Aquino found a need for a special body to investigate reported cases of graft and corruption allegedly committed during the previous administration.

Thus, at the dawn of his administration, the President on July 30, 2010, signed Executive Order of No. 1 2010 establishing (Truth

the Philippine Truth

Commission

Commission). Pertinent provisions of said executive order read: EXECUTIVE ORDER NO. 1 CREATING THE PHILIPPINE TRUTH COMMISSION OF 2010 WHEREAS, Article XI, Section 1 of the 1987 Constitution of the Philippines solemnly enshrines the principle that a public office is a public trust and mandates that public officers and employees, who are servants of the people, must at all times be accountable to the latter, serve them with utmost responsibility, integrity, loyalty and efficiency, act with patriotism and justice, and lead modest lives; WHEREAS, corruption is among the most despicable acts of defiance of this principle and notorious violation of this mandate; WHEREAS, corruption is an evil and scourge which seriously affects the political,

SECTION 2. Powers and Functions. The Commission, which shall have all the powers of an investigative body under Section 37, Chapter 9, Book I of the Administrative Code of 1987, is primarily tasked to conduct a thorough fact-finding investigation of reported cases of graft and corruption referred to in Section 1, involving third level public officers and higher, their co-principals, accomplices and accessories from the private sector, if any, during the previous administration and thereafter submit its finding and recommendations to the President, Congress and the Ombudsman. In particular, it shall: a) Identify and determine the reported cases of such graft and corruption which it will investigate; b) Collect, receive, review and evaluate evidence related to or regarding the cases of large scale corruption which it has chosen to investigate, and to this end require any agency, official or employee of the Executive Branch, including government-owned or controlled corporations, to produce documents, books, records and other papers; c) Upon proper request or representation, obtain information and documents from the Senate and the House of Representatives records of investigations conducted by committees thereof relating to matters or subjects being investigated by the Commission; d) Upon proper request and representation, obtain information from the courts, including the Sandiganbayan and the Office of the Court Administrator, information or documents in respect to corruption cases filed with the Sandiganbayan or the regular courts, as the case may be; e) Invite or subpoena witnesses and take their testimonies and for that purpose, administer oaths or affirmations as the case may be; f) Recommend, in cases where there is a need to utilize any person as a state witness to ensure that the ends of justice be fully served, that such person who qualifies as a state witness under the Revised Rules of Court of the Philippines be admitted for that purpose; g) Turn over from time to time, for expeditious prosecution, to the appropriate prosecutorial authorities, by means of a special or interim report and recommendation, all evidence on corruption of public officers and employees and their private sector co-principals, accomplices or accessories, if any, when in the course of its investigation the Commission finds that there is reasonable ground to believe that they are liable for graft and corruption under pertinent applicable laws;

h) Call upon any government investigative or prosecutorial agency such as the Department of Justice or any of the agencies under it, and the Presidential Anti-Graft Commission, for such assistance and cooperation as it may require in the discharge of its functions and duties; i) Engage or contract the services of resource persons, professionals and other personnel determined by it as necessary to carry out its mandate; j) Promulgate its rules and regulations or rules of procedure it deems necessary to effectively and efficiently carry out the objectives of this Executive Order and to ensure the orderly conduct of its investigations, proceedings and hearings, including the presentation of evidence; k) Exercise such other acts incident to or are appropriate and necessary in connection with the objectives and purposes of this Order. SECTION 3. Staffing Requirements. x x x. SECTION 4. Detail of Employees. x x x. SECTION 5. Engagement of Experts. x x x SECTION 6. Conduct of Proceedings. x x x. SECTION 7. Right to Counsel Witnesses/Resource Persons. x x x. SECTION 8. Protection Witnesses/Resource Persons. x x x. of

of

SECTION 9. Refusal to Obey Subpoena, Take Oath or Give Testimony. Any government official or personnel who, without lawful excuse, fails to appear upon subpoena issued by the Commission or who, appearing before the Commission refuses to take oath or affirmation, give testimony or produce documents for inspection, when required, shall be subject to administrative disciplinary action. Any private person who does the same may be dealt with in accordance with law. SECTION 10. Duty to Extend Assistance to the Commission. x x x. SECTION 11. Budget for the Commission. The Office of the President shall provide the necessary funds for the Commission to ensure that it can exercise its powers, execute its functions, and perform its duties and responsibilities as effectively, efficiently, and expeditiously as possible.

SECTION 12. Office. x x x. SECTION 13. Furniture/Equipment. x x x. SECTION 14. Term of the Commission. The Commission shall accomplish its mission on or before December 31, 2012. SECTION 15. Publication of Final Report. x x x.

President Proper and subject to his control. Doubtless, it constitutes a public office, as an ad hoc body is one.[8] To accomplish its task, the PTC shall have all the powers of an investigative body under Section 37, Chapter 9, Book I of the Administrative Code of 1987. It is not, however, a quasi-judicial body as it cannot adjudicate, arbitrate, resolve, settle, or render awards

SECTION 16. Transfer of Records and Facilities of the Commission. x x x. SECTION 17. Special Provision Concerning Mandate. If and when in the judgment of the President there is a need to expand the mandate of the Commission as defined in Section 1 hereof to include the investigation of cases and instances of graft and corruption during the prior administrations, such mandate may be so extended accordingly by way of a supplemental Executive Order.

in disputes between contending parties. All it can do is gather, collect and assess evidence of graft and corruption and make

recommendations. It may have subpoena powers but it has no power to cite people in contempt, much less order their arrest. Although it is a fact-finding body, it cannot determine from such facts if probable cause exists as to warrant the filing of an information in our courts of law. Needless to state, it cannot impose criminal, civil or administrative penalties or sanctions.

SECTION 18. Separability Clause. If any provision of this Order is declared unconstitutional, the same shall not affect the validity and effectivity of the other provisions hereof. SECTION 19. Effectivity. This Executive Order shall take effect immediately. DONE in the City of Manila, Philippines, this 30th day of July 2010. (SGD.) AQUINO III By the President: (SGD.) PAQUITO N. OCHOA, JR. Executive Secretary BENIGNO S.

The PTC is different from the truth commissions in other countries which have been created as official, transitory and nonjudicial fact-finding bodies to establish the facts and context of serious violations of human rights or of international humanitarian law in a countrys past.[9] They are usually established by states emerging from periods of internal unrest, civil strife or authoritarianism to serve as mechanisms for transitional justice.

Truth commissions have been described as bodies that share the following characteristics: (1) they examine only past events; (2) they investigate patterns of abuse committed over a period of time, as opposed to a particular event; (3) they are temporary bodies that finish their work with the submission of a report containing conclusions

Nature of the Truth Commission

and recommendations; and (4) they are officially sanctioned, authorized or empowered by the State.[10] Commissions members are

As can be gleaned from the above-quoted provisions, the Philippine Truth Commission (PTC) is a mere ad hoc body formed under the Office of the President with the primary task to investigate reports of graft and corruption committed by third-level public officers and employees, their co-principals, accomplices and accessories during the previous administration, and thereafter to submit its finding and recommendations to the President, Congress and the

usually empowered to conduct research, support victims, and propose policy recommendations to prevent recurrence of crimes. Through their investigations, the commissions may aim to discover and learn more about past abuses, or formally acknowledge them. They may aim to prepare the way for prosecutions and recommend institutional reforms.[11] Thus, their main goals range from retribution to

Ombudsman. Though it has been described as an independent collegial body, it is essentially an entity within the Office of the

reconciliation. The Nuremburg and Tokyo war crime tribunals are

examples of a retributory or vindicatory body set up to try and punish those responsible for crimes against humanity. A form of a reconciliatory tribunal is the Truth and Reconciliation Commission of South Africa, the principal function of which was to heal the wounds of past violence and to prevent future conflict by providing a cathartic experience for victims.

personnel of the previous administration as if corruption is their peculiar species even as it excludes those of the other administrations, past and present, who may be indictable. (e) The creation of the Philippine Truth Commission of 2010 violates the consistent and general international practice of four decades wherein States constitute truth commissions to exclusively investigate human rights violations, which customary practice forms part of the generally accepted principles of international law which the Philippines is mandated to adhere to pursuant to the Declaration of Principles enshrined in the Constitution. (f) The creation of the Truth Commission is an exercise in futility, an adventure in partisan hostility, a launching pad for trial/conviction by publicity and a mere populist propaganda to mistakenly impress the people that widespread poverty will altogether vanish if corruption is eliminated without even addressing the other major causes of poverty. (g) The mere fact that previous commissions were not constitutionally challenged is of no moment because neither laches nor estoppel can bar an eventual question on the constitutionality and validity of an executive issuance or even a statute.[13]

The PTC is a far cry from South Africas model. The latter placed more emphasis on reconciliation than on judicial retribution, while the marching order of the PTC is the identification and punishment of perpetrators. As one writer[12] puts it: The order ruled out reconciliation. It translated the Draconian code spelled out by Aquino in his inaugural speech: To those who talk about reconciliation, if they mean that they would like us to simply forget about the wrongs that they have committed in the past, we have this to say: There can be no reconciliation without justice. When we allow crimes to go unpunished, we give consent to their occurring over and over again.

In their Consolidated Comment,[14] the respondents, through The Thrusts of the Petitions the Office of the Solicitor General (OSG), essentially questioned the legal standing of petitioners and defended the assailed executive order Barely a month after the issuance of Executive Order No. 1, the petitioners asked the Court to declare it unconstitutional and to enjoin the PTC from performing its functions. A perusal of the arguments of the petitioners in both cases shows that they are essentially the same. The petitioners-legislators summarized them in the following manner: (a) E.O. No. 1 violates the separation of powers as it arrogates the power of the Congress to create a public office and appropriate funds for its operation. (b) The provision of Book III, Chapter 10, Section 31 of the Administrative Code of 1987 cannot legitimize E.O. No. 1 because the delegated authority of the President to structurally reorganize the Office of the President to achieve economy, simplicity and efficiency does not include the power to create an entirely new public office which was hitherto inexistent like the Truth Commission. (c) E.O. No. 1 illegally amended the Constitution and pertinent statutes when it vested the Truth Commission with quasi-judicial powers duplicating, if not superseding, those of the Office of the Ombudsman created under the 1987 Constitution and the Department of Justice created under the Administrative Code of 1987. (d) E.O. No. 1 violates the equal protection clause as it selectively targets for investigation and prosecution officials and with the following arguments: 1] E.O. No. 1 does not arrogate the powers of Congress to create a public office because the Presidents executive power and power of control necessarily include the inherent power to conduct investigations to ensure that laws are faithfully executed and that, in any event, the Constitution, Revised Administrative Code of 1987 (E.O. No. 292), [15] Presidential Decree (P.D.) No. 1416[16] (as amended by P.D. No. 1772), R.A. No. 9970,[17] and settled jurisprudence that authorize the President to create or form such bodies. 2] E.O. No. 1 does not usurp the power of Congress to appropriate funds because there is no appropriation but a mere allocation of funds already appropriated by Congress. 3] The Truth Commission does not duplicate or supersede the functions of the Office of the Ombudsman (Ombudsman) and the Department of Justice (DOJ), because it is a factfinding body and not a quasi-judicial body and its functions do not duplicate, supplant or erode the latters jurisdiction. 4] The Truth Commission does not violate the equal protection clause because it was validly created for laudable purposes.

The OSG then points to the continued existence and validity of other executive orders and presidential issuances creating similar

bodies to justify the creation of the PTC such as Presidential Complaint and Action Commission (PCAC) by President Ramon B. Magsaysay, Presidential Committee on Administrative Performance

the person challenging the act must have the standing to question the validity of the subject act or issuance; otherwise stated, he must have a personal and substantial interest in the case such that he has sustained, or will sustain, direct injury as a result of its enforcement; (3) the question of constitutionality must be raised at the earliest opportunity; and (4) the issue of constitutionality must be the very lis mota of the case.[19]

Efficiency (PCAPE) by President Carlos P. Garcia and Presidential Agency on Reform and Government Operations (PARGO) by President Ferdinand E. Marcos.
[18]

From the petitions, pleadings, transcripts, and memoranda, the following are the principal issues to be resolved:

Among all these limitations, only the legal standing of the 1. Whether or not the petitioners has been put at issue. petitioners have the legal standing to file their respective petitions and question Executive Order Legal Standing of the Petitioners No. 1; The OSG attacks the legal personality of the petitioners2. Whether or not legislators to file their petition for failure to demonstrate their personal Executive Order No. 1 violates the principle of stake in the outcome of the case. It argues that the petitioners have separation of powers by usurping the powers of not shown that they have sustained or are in danger of sustaining any Congress to create and to appropriate funds for personal injury attributable to the creation of the PTC. Not claiming to public offices, agencies and commissions; be the subject of the commissions investigations, petitioners will not sustain injury in its creation or as a result of its proceedings.[20] 3. Whether or not Executive Order No. 1 supplants the powers of the Ombudsman and the The Court disagrees with the OSG in questioning the legal DOJ; standing of the petitioners-legislators to assail Executive Order No. 1. Evidently, their petition primarily invokes usurpation of the power of the 4. Whether or not Executive Order No. 1 Congress as a body to which they belong as members. This certainly violates the equal protection clause; and justifies their resolve to take the cudgels for Congress as an institution and present the complaints on the usurpation of their power and rights 5. Whether or not petitioners are entitled as members of the legislature before the Court. As held in Philippine to injunctive relief. Constitution Association v. Enriquez,[21] To the extent the powers of Congress are impaired, so is the power of each member thereof, since his office confers a right to participate in the exercise of the powers of that institution. An act of the Executive which injures the institution of Congress causes a derivative but nonetheless substantial injury, which can be questioned by a member of Congress. In such a case, any member of Congress can have a resort to the courts.

Essential requisites for judicial review Before proceeding to resolve the issue of the constitutionality of Executive Order No. 1, the Court needs to ascertain whether the requisites for a valid exercise of its power of judicial review are present.

Like almost all powers conferred by the Constitution, the power of judicial review is subject to limitations, to wit: (1) there must be an actual case or controversy calling for the exercise of judicial power; (2) Indeed, legislators have a legal standing to see to it that the prerogative, powers and privileges vested by the Constitution in their

office remain inviolate. Thus, they are allowed to question the validity of any official action which, to their mind, infringes on their prerogatives as legislators.[22]

With regard to Biraogo, the OSG argues that, as a taxpayer, he has no standing to question the creation of the PTC and the budget for its operations.[23] It emphasizes that the funds to be used for the creation and operation of the commission are to be taken from those funds already appropriated by Congress. Thus, the allocation and disbursement of funds for the commission will not entail congressional action but will simply be an exercise of the Presidents power over contingent funds.

mere instrument of the public concern. As held by the New York Supreme Court in People ex rel Case v. Collins: In matter of mere public right, howeverthe people are the real partiesIt is at least the right, if not the duty, of every citizen to interfere and see that a public offence be properly pursued and punished, and that a public grievance be remedied. With respect to taxpayers suits, Terr v. Jordan held that the right of a citizen and a taxpayer to maintain an action in courts to restrain the unlawful use of public funds to his injury cannot be denied. However, to prevent just about any person from seeking judicial interference in any official policy or act with which he disagreed with, and thus hinders the activities of governmental agencies engaged in public service, the United State Supreme Court laid down the more stringent direct injury test in Ex Parte Levitt, later reaffirmed in Tileston v. Ullman. The same Court ruled that for a private individual to invoke the judicial power to determine the validity of an executive or legislative action, he must show that he has sustained a direct injury as a result of that action, and it is not sufficient that he has a general interest common to all members of the public. This Court adopted the direct injury test in our jurisdiction. In People v. Vera, it held that the person who impugns the validity of a statute must have a personal and substantial interest in the case such that he has sustained, or will sustain direct injury as a result. The Vera doctrine was upheld in a litany of cases, such as,Custodio v. President of the Senate, Manila Race Horse Trainers Association v. De la Fuente, Pascual v. Secretary of Public Works and Anti-Chinese League of the Philippines v. Felix. [Emphases included. Citations omitted]

As correctly pointed out by the OSG, Biraogo has not shown that he sustained, or is in danger of sustaining, any personal and direct injury attributable to the implementation of Executive Order No. 1. Nowhere in his petition is an assertion of a clear right that may justify his clamor for the Court to exercise judicial power and to wield the axe over presidential issuances in defense of the Constitution. The case of David v. Arroyo[24] explained the deep-seated rules on locus standi. Thus: Locus standi is defined as a right of appearance in a court of justice on a given question. In private suits, standing is governed by the real-parties-in interest rule as contained in Section 2, Rule 3 of the 1997 Rules of Civil Procedure, as amended. It provides that every action must be prosecuted or defended in the name of the real party in interest. Accordingly, the real-party-in interest is the party who stands to be benefited or injured by the judgment in the suit or the party entitled to the avails of the suit. Succinctly put, the plaintiffs standing is based on his own right to the relief sought. The difficulty of determining locus standi arises in public suits. Here, the plaintiff who asserts a public right in assailing an allegedly illegal official action, does so as a representative of the general public. He may be a person who is affected no differently from any other person. He could be suing as a stranger, or in the category of a citizen, or taxpayer. In either case, he has to adequately show that he is entitled to seek judicial protection. In other words, he has to make out a sufficient interest in the vindication of the public order and the securing of relief as a citizen or taxpayer. Case law in most jurisdictions now allows both citizen and taxpayer standing in public actions. The distinction was first laid down in Beauchamp v. Silk, where it was held that the plaintiff in a taxpayers suit is in a different category from the plaintiff in a citizens suit. In the former, the plaintiff is affected by the expenditure of public funds, while in the latter, he is but the

Notwithstanding, the Court leans on the doctrine that the rule on standing is a matter of procedure, hence, can be relaxed for nontraditional plaintiffs like ordinary citizens, taxpayers, and legislators when the public interest so requires, such as when the matter is of transcendental importance, of overreaching significance to society, or of paramount public interest.[25] Thus, Torres,
[26]

in Coconut

Oil

Refiners

Association,

Inc.

v.

the Court held that in cases of paramount importance where constitutional questions are involved, the standing

serious

requirements may be relaxed and a suit may be allowed to prosper even where there is no direct injury to the party claiming the right of judicial review. In the first Emergency Powers Cases,[27] ordinary citizens and taxpayers were allowed to question the constitutionality of several executive orders although they had only an indirect and general interest shared in common with the public.

The OSG claims that the determinants of transcendental importance

[28]

and not with the executive branch of government. They maintain that the delegated authority of the President to reorganize under Section 31 of the Revised Administrative Code: 1) does not permit the President to create a public office, much less a truth commission; 2) is limited to the reorganization of the administrative structure of the Office of the President; 3) is limited to the restructuring of the internal organs of the Office of the President Proper, transfer of functions and transfer of agencies; and 4) only to achieve simplicity, economy and

laid down in CREBA v. ERC and Meralco

[29]

are non-

existent in this case. The Court, however, finds reason in Biraogos assertion that the petition covers matters of transcendental importance to justify the exercise of jurisdiction by the Court. There

areconstitutional issues in the petition which deserve the attention of this Court in view of their seriousness, novelty and weight as precedents. Where the issues are of transcendental and paramount importance not only to the public but also to the Bench and the Bar, they should be resolved for the guidance of all.[30] Undoubtedly, the Filipino people are more than interested to know the status of the Presidents first effort to bring about a promised change to the country. The Court takes cognizance of the petition not due to overwhelming political undertones that clothe the issue in the eyes of the public, but because the Court stands firm in its oath to perform its constitutional duty to settle legal controversies with overreaching significance to society.

efficiency.[36] Such continuing authority of the President to reorganize his office is limited, and by issuing Executive Order No. 1, the President overstepped the limits of this delegated authority.

The OSG counters that there is nothing exclusively legislative about the creation by the President of a fact-finding body such as a truth commission. Pointing to numerous offices created by past presidents, it argues that the authority of the President to create public offices within the Office of the President Proper has long been recognized.[37] According to the OSG, the Executive, just like the other

Power of the President to Create the Truth Commission In his memorandum in G.R. No. 192935, Biraogo asserts

two branches of government, possesses the inherent authority to create fact-finding committees to assist it in the performance of its constitutionally mandated functions and in the exercise of its

that the Truth Commission is a public office and not merely an adjunct body of the Office of the President.[31] Thus, in order that the President may create a public office he must be empowered by the Constitution,

administrative functions.[38] This power, as the OSG explains it, is but an adjunct of the plenary powers wielded by the President under Section 1 and his power of control under Section 17, both of Article VII

a statute or an authorization vested in him by law. According to petitioner, such power cannot be presumed[32] since there is no provision in the Constitution or any specific law that authorizes the President to create a truth commission.[33] He adds that Section 31 of the Administrative Code of 1987, granting the President the continuing

of the Constitution.[39]

It contends that the President is necessarily vested with the power to conduct fact-finding investigations, pursuant to his duty to ensure that all laws are enforced by public officials and employees of

authority to reorganize his office, cannot serve as basis for the creation his department and in the exercise of his authority to assume directly of a truth commission considering the aforesaid provision merely uses the functions of the executive department, bureau and office, or verbs such as reorganize, transfer, consolidate, merge, and abolish.[34] Insofar as it vests in the President the plenary power to reorganize the Office of the President to the extent of creating a public control over his subordinates in the executive branch, but extends office, Section 31 is inconsistent with the principle of separation of further in the exercise of his other powers, such as his power to powers enshrined in the Constitution and must be deemed repealed upon the effectivity thereof.[35] Similarly, in G.R. No. 193036, petitioners-legislators argue that the creation of a public office lies within the province of Congress discipline subordinates,[41] his power for rule making, adjudication and licensing purposes[42] and in order to be informed on matters which he is entitled to know.[43] interfere with the discretion of his officials.[40] The power of the President to investigate is not limited to the exercise of his power of

The

OSG

also

cites

the

recent

case

of Banda v.

Ermita,[44] where it was held that the President has the power to reorganize the offices and agencies in the executive department in line with his constitutionally granted power of control and by virtue of a valid delegation of the legislative power to reorganize executive offices under existing statutes.

Thus, the OSG concludes that the power of control necessarily includes the power to create offices. For the OSG, the President may create the PTC in order to, among others, put a closure to the reported large scale graft and corruption in the government.[45]

The question, therefore, before the Court is this: Does the creation of the PTC fall within the ambit of the power to reorganize as expressed in Section 31 of the Revised Administrative Code? Section 31 contemplates reorganization as limited by the following functional and structural lines: (1) restructuring the internal organization of the Office of the President Proper by abolishing, consolidating or merging units thereof or transferring functions from one unit to another; (2) transferring any function under the Office of the President to any other Department/Agency or vice versa; or (3) transferring any agency under the Office of the President to any other Department/Agency or vice versa. Clearly, the provision refers to reduction of personnel, consolidation of offices, or abolition thereof by reason of economy or redundancy of functions. These point to situations where a body or an office is already existent but a modification or alteration thereof has to be effected. The creation of an office is nowhere mentioned, much less envisioned in said provision. Accordingly, the answer to the question is in the negative.

does not have to end here. We must not lose sight of the very source of the power that which constitutes an express grant of power. Under Section 31, Book III of Executive Order No. 292 (otherwise known as the Administrative Code of 1987), "the President, subject to the policy in the Executive Office and in order to achieve simplicity, economy and efficiency, shall have the continuing authority to reorganize the administrative structure of the Office of the President." For this purpose, he may transfer the functions of other Departments or Agencies to the Office of the President. In Canonizado v. Aguirre [323 SCRA 312 (2000)], we ruled that reorganization "involves the reduction of personnel, consolidation of offices, or abolition thereof by reason of economy or redundancy of functions." It takes place when there is an alteration of the existing structure of government offices or units therein, including the lines of control, authority and responsibility between them. The EIIB is a bureau attached to the Department of Finance. It falls under the Office of the President. Hence, it is subject to the Presidents continuing authority to reorganize. [Emphasis Supplied]

In the same vein, the creation of the PTC is not justified by the Presidents power of control. Control is essentially the power to alter or modify or nullify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former with that of the latter.[47] Clearly, the power of control is entirely different from the power to create public offices. The former is inherent in the Executive, while the latter finds basis from either a valid delegation from Congress, or his inherent duty to faithfully execute the laws.

The question is this, is there a valid delegation of power from Congress, empowering the President to create a public office?

According to the OSG, the power to create a truth commission pursuant to the above provision finds statutory basis under P.D. 1416, as amended by P.D. No. 1772. [48] The said law granted the

To say that the PTC is borne out of a restructuring of the Office of the President under Section 31 is a misplaced supposition, even in the plainest meaning attributable to the term restructure an alteration of an existing structure. Evidently, the PTC was not part of the structure of the Office of the President prior to the enactment of Executive Order No. 1. As held in Buklod ng Kawaning EIIB v. Hon. Executive Secretary,
[46]

President the continuing authority to reorganize the national government, including the power to group, consolidate bureaus and agencies, to abolish offices, to transfer functions, to create and classify functions, services and activities, transfer appropriations, and to standardize salaries and materials. This decree, in relation to Section 20, Title I, Book III of E.O. 292 has been invoked in several cases such as Larin v. Executive Secretary.[49]

But of course, the list of legal basis authorizing the President to reorganize any department or agency in the executive branch

The Court, however, declines to recognize P.D. No. 1416 as a justification for the President to create a public office. Said decree is already stale, anachronistic and inoperable. P.D. No. 1416 was a delegation to then President Marcos of the authority to reorganize the administrative structure of the national government including the power to create offices and transfer appropriations pursuant to one of the purposes of the decree, embodied in its last Whereas clause:

c l a u s e o f P . D . 1 4 1 6 s a y s i t w a s e n a c t e d t o p r e p a r e t h e t r a n s i t i o n f r o m p r e s i

WHEREAS, the parliamentary national government. form

the transition towards of government will

necessitate flexibility in the organization of the

Clearly, as it was only for the purpose of providing manageability and resiliency during the interim, P.D. No. 1416, as amended by P.D. No. 1772, became functus oficio upon the

convening of the First Congress, as expressly provided in Section 6, Article XVIII of the 1987 Constitution. In fact, even the Solicitor General agrees with this view. Thus:

ASSOCIATE JUSTICE CARPIO: Because P.D. 1 4 1 6 w a s e n a c t e d w a s t h e l a s t w h e r e a s

d e n t i a l t o p a r l i a m e n t a r y . N o w , i n a p a r l i a m e n t a r y SOLICITOR f o r m o f ASSOCIATE JUSTICE CARPIO: g o v e r n m e n t , t h e l e g i That is why, GENERAL CADIZ: Yes, Your

s l a t i v e a n d e x e c u t i v e p o w e r s a r e f u s e d , c o r r e c t ?

H o n o r .

t h a t P . D . 1 4 1 6 w a s i

s s u e d . N o w w o u l d y o u a g r e e w i t h m e t h a t P . D . 1 4 1 6 s h o u l d n o t b e c o n s i d e r e d e f f

e c t i v e a n y m o r e u p o n t h e p r o m u l g a t i o n , a d o p t i o n , r a t i f i c a t i o n o f t h e 1 9 8 7 C o n s t

i t u t i o n . SOLICITOR GENERAL CADIZ: Not the whole o f P . D . [ N o . ] 1 4 1 6 , Y o u r H o n o r . ASSOCIATE JUSTICE CARPIO: The power of t h e P r e s i d e n t t o r e o r g a n i z e t h e e n t

i r e N a t i o n a l G o v e r n m e n t i s d e e m e d r e p e a l e d , a t l e a s t , u p o n t h e a d o p t i o n o f t h e

1 9 8 7 C o n s t i t u t i o n , c o r r e c t . SOLICITOR GENERAL CADIZ: Yes, Your H o n o r .

[ 5 0 ]

Constitution or in statutes does not mean that he is bereft of such authority.[51] As Manglapus:[52] x x x. The 1987 Constitution, however, brought back the presidential system of government and restored the separation of legislative, executive and judicial powers by their actual distribution among three distinct branches of government with provision for checks and balances. It would not be accurate, however, to state that "executive power" is the power to enforce the laws, for the President is head of state as well as head of government and whatever powers inhere in such positions pertain to the office unless the Constitution itself withholds it. Furthermore, the Constitution itself provides that the execution of the laws is only one of the powers of the President. It also grants the President other powers that do not involve the execution of any provision of law, e.g., his power over the country's foreign relations. explained in the landmark case of Marcos v.

On these premises, we hold the view that although the 1987 Constitution imposes limitations on the exercise of specific powers of the President, it maintains intact what is traditionally considered as within the scope of "executive power." Corollarily, the powers of the President cannot be said to be limited only to the specific powers enumerated in the Constitution. In other words, executive power is more than the sum of specific powers so enumerated. It has been advanced that whatever power inherent in the government that is neither legislative nor judicial has to be executive. x x x.

While the power to create a truth commission cannot pass muster on the basis of P.D. No. 1416 as amended by P.D. No. 1772, the creation of the PTC finds justification under Section 17, Article VII of the Constitution, imposing upon the President the duty to ensure that the laws are faithfully executed. Section 17 reads: Section 17. The President shall have control of all the executive departments, bureaus, and offices. He shall ensure that the laws be faithfully executed. (Emphasis supplied).

Indeed, the Executive is given much leeway in ensuring that our laws are faithfully executed. As stated above, the powers of the President are not limited to those specific powers under the Constitution.[53] One of the recognized powers of the President granted pursuant to this constitutionally-mandated duty is the power to createad hoc committees. This flows from the obvious need to ascertain facts and determine if laws have been faithfully executed. Thus, in Department of Health v. Camposano,[54] the authority of the President to issue Administrative Order No. 298, creating an

As correctly pointed out by the respondents, the allocation of power in the three principal branches of government is a grant of all powers inherent in them. The Presidents power to conduct investigations to aid him in ensuring the faithful execution of laws in this case, fundamental laws on public accountability and transparency is inherent in the Presidents powers as the Chief Executive. That the authority of the President to conduct investigations and to create bodies to execute this power is not explicitly mentioned in the

investigative committee to look into the administrative charges filed against the employees of the Department of Health for the anomalous purchase of medicines was upheld. In said case, it was ruled: The Chief Executives power to create the Ad hoc Investigating Committee cannot be doubted. Having been constitutionally granted full control of the Executive Department, to which respondents belong, the President has the obligation to ensure that all executive officials and employees faithfully comply with the law. With AO 298 as mandate, the legality of the investigation is

sustained. Such validity is not affected by the fact that the investigating team and the PCAGC had the same composition, or that the former used the offices and facilities of the latter in conducting the inquiry. [Emphasis supplied] It should be stressed that the purpose of allowing ad hoc investigating bodies to exist is to allow an inquiry into matters which the President is entitled to know so that he can be properly advised and guided in the performance of his duties relative to the execution and enforcement of the laws of the land. And if history is to be revisited, this was also the objective of the investigative bodies created in the past like the PCAC, PCAPE, PARGO, the Feliciano Commission, the Melo Commission and the Zenarosa Commission. There being no changes in the government structure, the Court is not inclined to declare such executive power as non-existent just because the direction of the political winds have changed. On the charge that Executive Order No. 1 transgresses the power of Congress to appropriate funds for the operation of a public office, suffice it to say that there will be no appropriation but only an allotment or allocations of existing funds already

the appropriate action. As previously stated, no quasi-judicial powers have been vested in the said body as it cannot adjudicate rights of persons who come before it. It has been said that Quasi -judicial powers involve the power to hear and determine questions of fact to which the legislative policy is to apply and to decide in accordance with the standards laid down by law itself in enforcing and administering the same law.[58] In simpler terms, judicial discretion is involved in the exercise of these quasi-judicial power, such that it is exclusively vested in the judiciary and must be clearly authorized by the legislature in the case of administrative agencies.

The distinction between the power to investigate and the power to adjudicate was delineated by the Court in Cario v. Commission on Human Rights.[59] Thus: "Investigate," commonly understood, means to examine, explore, inquire or delve or probe into, research on, study. The dictionary definition of "investigate" is "to observe or study closely: inquire into systematically: "to search or inquire into: x x to subject to an official probe x x: to conduct an official inquiry." The purpose of investigation, of course, is to discover, to find out, to learn, obtain information. Nowhere included or intimated is the notion of settling, deciding or resolving a controversy involved in the facts inquired into by application of the law to the facts established by the inquiry. The legal meaning of "investigate" is essentially the same: "(t)o follow up step by step by patient inquiry or observation. To trace or track; to search into; to examine and inquire into with care and accuracy; to find out by careful inquisition; examination; the taking of evidence; a legal inquiry;" "to inquire; to make an investigation," "investigation" being in turn described as "(a)n administrative function, the exercise of which ordinarily does not require a hearing. 2 Am J2d Adm L Sec. 257; x x an inquiry, judicial or otherwise, for the discovery and collection of facts concerning a certain matter or matters." "Adjudicate," commonly or popularly understood, means to adjudge, arbitrate, judge, decide, determine, resolve, rule on, settle. The dictionary defines the term as "to settle finally (the rights and duties of the parties to a court case) on the merits of issues raised: x x to pass judgment on: settle judicially: x x act as judge." And "adjudge" means "to decide or rule upon as a judge or with judicial or quasi-judicial powers: x x to award or grant judicially in a case of controversy x x." In the legal sense, "adjudicate" means: "To settle in the exercise of judicial authority. To determine finally. Synonymous with adjudge in its strictest sense;" and "adjudge" means: "To pass on judicially, to decide, settle or decree, or to sentence or condemn. x x. Implies a judicial determination of a fact, and the entry of a judgment." [Italics included. Citations Omitted]

appropriated. Accordingly, there is no usurpation on the part of the Executive of the power of Congress to appropriate funds. Further, there is no need to specify the amount to be earmarked for the operation of the commission because, in the words of the Solicitor General, whatever funds the Congress has provided for the Office of the President will be the very source of the funds for the commission.[55] Moreover, since the amount that would be allocated to the PTC shall be subject to existing auditing rules and regulations, there is no impropriety in the funding. Power of the Truth Commission to Investigate The Presidents power to conduct investigations to ensure that laws are faithfully executed is well recognized. It flows from

the faithful-execution clause of the Constitution under Article VII, Section 17 thereof.[56] As the Chief Executive, the president represents the government as a whole and sees to it that all laws are enforced by the officials and employees of his department. He has the authority to directly assume the functions of the executive department.[57]

Invoking this authority, the President constituted the PTC to primarily investigate reports of graft and corruption and to recommend

against local supplied]. Fact-finding is not adjudication and it cannot be likened to the judicial function of a court of justice, or even a quasi-judicial agency or office. The function of receiving evidence and ascertaining therefrom the facts of a controversy is not a judicial function. To be considered as such, the act of receiving evidence and arriving at factual conclusions in a controversy must be accompanied by the authority of applying the law to the factual conclusions to the end that the controversy may be decided or resolved authoritatively, finally and definitively, subject to appeals or modes of review as may be provided by law. [60] Even respondents themselves admit that the commission is bereft of any quasi-judicial power.[61] Contrary to petitioners apprehension, the PTC will not supplant the Ombudsman or the DOJ or erode their respective powers. If at all, the investigative function of the commission will complement those of the two offices. As pointed out by the Solicitor General, the recommendation to prosecute is but a consequence of the overall task of the commission to conduct a fact-finding investigation.[62] The actual prosecution of suspected offenders, much less adjudication on the merits of the charges against them,[63] is certainly not a function given to the commission. The phrase, when in the course of its investigation, under Section 2(g), highlights this fact and gives credence to a contrary interpretation from that of the petitioners. The function of determining probable cause for the filing of the appropriate complaints before the courts remains to be with the DOJ and the Ombudsman.[64]

elective

officials.

[Emphasis

Also, Executive Order No. 1 cannot contravene the power of the Ombudsman to investigate criminal cases under Section 15 (1) of R.A. No. 6770, which states: (1) Investigate and prosecute on its own or on complaint by any person, any act or omission of any public officer or employee, office or agency, when such act or omission appears to be illegal, unjust, improper or inefficient. It has primary jurisdiction over cases cognizable by the Sandiganbayan and, in the exercise of its primary jurisdiction, it may take over, at any stage, from any investigatory agency of government, the investigation of such cases. [Emphases supplied]

The act of investigation by the Ombudsman as enunciated above contemplates the conduct of a preliminary investigation or the determination of the existence of probable cause. This is categorically out of the PTCs sphere of functions. Its power to investigate is limited to obtaining facts so that it can advise and guide the President in the performance of his duties relative to the execution and enforcement of the laws of the land. In this regard, the PTC commits no act of usurpation of the Ombudsmans primordial duties. The same holds true with respect to the DOJ. Its authority under Section 3 (2), Chapter 1, Title III, Book IV in the Revised Administrative Code is by no means exclusive and, thus, can be shared with a body likewise tasked to investigate the commission of crimes.

Finally, nowhere in Executive Order No. 1 can it be inferred that the findings of the PTC are to be accorded conclusiveness. Much like

At any rate, the Ombudsmans power to investigate under R.A. No. 6770 is not exclusive but is shared with other similarly authorized government agencies. Thus, in the case of Ombudsman v. Galicia,[65] it was written: This power of investigation granted to the Ombudsman by the 1987 Constitution and The Ombudsman Act is not exclusive but is shared with other similarly authorized government agencies such as the PCGG and judges of municipal trial courts and municipal circuit trial courts. The power to conduct preliminary investigation on charges against public employees and officials is likewise concurrently shared with the Department of Justice. Despite the passage of the Local Government Code in 1991, the Ombudsman retains concurrent jurisdiction with the Office of the President and the local Sanggunians to investigate complaints

its predecessors, the Davide Commission, the Feliciano Commission and the Zenarosa Commission, its findings would, at best, be recommendatory in nature. And being so, the Ombudsman and the DOJ have a wider degree of latitude to decide whether or not to reject the recommendation. These offices, therefore, are not deprived of their mandated duties but will instead be aided by the reports of the PTC for possible indictments for violations of graft laws.

Violation of the Equal Protection Clause

Although the purpose of the Truth Commission falls within the investigative power of the President, the Court finds difficulty in

upholding the constitutionality of Executive Order No. 1 in view of its apparent transgression of the equal protection clause enshrined in Section 1, Article III (Bill of Rights) of the 1987 Constitution. Section 1 reads:

itself to cases of large scale graft and corruption solely during the said administration.[71] Assuming arguendo that the commission would

confine its proceedings to officials of the previous administration, the petitioners argue that no offense is committed against the equal protection clause for the segregation of the transactions of public

Section 1. No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws.

officers during the previous administration as possible subjects of investigation is a valid classification based on substantial distinctions and is germane to the evils which the Executive Order seeks to correct.[72] To distinguish the Arroyo administration from past

The petitioners assail Executive Order No. 1 because it is violative of this constitutional safeguard. They contend that it does not apply equally to all members of the same class such that the intent of singling out the previous administration as its sole object makes the PTC an adventure in partisan hostility.[66] Thus, in order to be accorded with validity, the commission must also cover reports of graft and corruption in virtually all administrations previous to that of former President Arroyo.[67]

administrations, it recited the following: First. E.O. No. 1 was issued in view of widespread reports of large scale graft and corruption in the previous administration which have eroded public confidence in public institutions. There is, therefore, an urgent call for the determination of the truth regarding certain reports of large scale graft and corruption in the government and to put a closure to them by the filing of the appropriate cases against those involved, if warranted, and to deter others from committing the evil, restore the peoples faith and confidence in the Government and in their public servants. Second. The segregation of the preceding administration as the object of factfinding is warranted by the reality that unlike with administrations long gone, the current administration will most likely bear the immediate consequence of the policies of the previous administration. Third. The classification of the previous administration as a separate class for investigation lies in the reality that the evidence of possible criminal activity, the evidence that could lead to recovery of public monies illegally dissipated, the policy lessons to be learned to ensure that anticorruption laws are faithfully executed, are more easily established in the regime that immediately precede the current administration. Fourth. Many administrations subject the transactions of their predecessors to investigations to provide closure to issues that are pivotal to national life or even as a routine measure of due diligence and good housekeeping by a nascent administration like the Presidential Commission on Good Government (PCGG), created by the late President Corazon C. Aquino under Executive Order No. 1 to pursue the recovery of ill-gotten wealth of her predecessor former President Ferdinand Marcos and his cronies, and the Saguisag Commission created by former President Joseph Estrada under Administrative Order No, 53, to form an ad-hoc and independent citizens committee to investigate all the facts and circumstances surrounding Philippine Centennial projects of his predecessor, former President Fidel V. Ramos.[73] [Emphases supplied]

The petitioners argue that the search for truth behind the reported cases of graft and corruption must encompass acts committed not only during the administration of former President Arroyo but also during prior administrations where the same magnitude of controversies and anomalies[68] were reported to have been committed against the Filipino people. They assail the classification formulated by the respondents as it does not fall under the recognized exceptions because first, there is no substantial distinction between the group of officials targeted for investigation by Executive Order No. 1 and other groups or persons who abused their public office for personal gain; and second, the selective classification is not germane to the purpose of Executive Order No. 1 to end corruption.[69] In order to attain constitutional permission, the

petitioners advocate that the commission should deal with graft and grafters prior and subsequent to the Arroyo administration with the strong arm of the law with equal force.[70]

Position of respondents According to respondents, while Executive Order No. 1 identifies the previous administration as the initial subject of the

Concept of the Equal Protection Clause investigation, following Section 17 thereof, the PTC will not confine

One of the basic principles on which this government was founded is that of the equality of right which is embodied in Section 1, Article III of the 1987 Constitution. The equal protection of the laws is embraced in the concept of due process, as every unfair discrimination offends the requirements of justice and fair play. It has been embodied in a separate clause, however, to provide for a more specific guaranty against any form of undue favoritism or hostility from the government. Arbitrariness in general may be challenged on the basis of the due process clause. But if the particular act assailed partakes of an unwarranted partiality or prejudice, the sharper weapon to cut it down is the equal protection clause.[74]

According to a long line of decisions, equal protection simply requires that all persons or things similarly situated should be treated alike, both as to rights conferred and responsibilities imposed.[75] It requires public bodies and institutions to treat similarly situated individuals in a similar manner.[76] The purpose of the equal protection clause is to secure every person within a states jurisdiction against intentional and arbitrary discrimination, whether occasioned by the express terms of a statue or by its improper execution through the states duly constituted authorities.[77] In other words, the concept of equal justice under the law requires the state to govern impartially, and it may not draw distinctions between individuals solely on differences that are irrelevant to a legitimate governmental objective.[78]

The equal protection clause is aimed at all official state actions, not just those of the legislature.[79] Its inhibitions cover all the departments of the government including the political and executive departments, and extend to all actions of a state denying equal protection of the laws, through whatever agency or whatever guise is taken. [80]

It, however, does not require the universal application of the laws to all persons or things without distinction. What it simply requires is equality among equals as determined according to a valid classification. Indeed, the equal protection clause permits

classification. Such classification, however, to be valid must pass the test ofreasonableness. The test has four requisites: (1) The classification rests on substantial distinctions; (2) It is germane to the purpose of the law; (3) It is not limited to existing conditions only; and

(4) It applies equally to all members of the same class.[81] Superficial differences do not make for a valid classification.[82]

For

classification

to

meet

the

requirements

of

constitutionality, it must include or embrace all persons who naturally belong to the class.[83] The classification will be regarded as invalid if all the members of the class are not similarly treated, both as to rights conferred and obligations imposed. It is not necessary that the classification be made with absolute symmetry, in the sense that the members of the class should possess the same characteristics in equal degree. Substantial similarity will suffice; and as long as this is achieved, all those covered by the classification are to be treated equally. The mere fact that an individual belonging to a class differs from the other members, as long as that class is substantially distinguishable from all others, does not justify the non-application of the law to him.
[84]

required of a valid classification is that it be reasonable, which means that the classification should be based on substantial distinctions which make for real differences, that it must be germane to the purpose of the law; that it must not be limited to existing conditions only; and that it must apply equally to each member of the class. This Court has held that the standard is satisfied if the classification or distinction is based on a reasonable foundation or rational basis and is not palpably arbitrary. [Citations omitted] Applying these precepts to this case, Executive Order No. 1 should be struck down as violative of the equal protection clause. The clear mandate of the envisioned truth commission is to investigate and find out the truth concerning the reported cases of graft and corruption during the previous administration[87] only. The intent to single out the previous administration is plain, patent and manifest. Mention of it has been made in at least three portions of the questioned executive order. Specifically, these are: WHEREAS, there is a need for a separate body dedicated solely to investigating and finding out the truth concerning the reported cases of graft and corruption during the previous administration, and which will recommend the prosecution of the offenders and secure justice for all; SECTION 1. Creation of a Commission. There is hereby created the PHILIPPINE TRUTH COMMISSION, hereinafter referred to as the COMMISSION, which shall primarily seek and find the truth on, and toward this end, investigate reports of graft and corruption of such scale and magnitude that shock and offend the moral and ethical sensibilities of the people, committed by public officers and employees, their co-principals, accomplices and accessories from the private sector, if any, during the previous administration; and thereafter recommend the appropriate action or measure to be taken thereon to ensure that the full measure of justice shall be served without fear or favor. SECTION 2. Powers and Functions. The Commission, which shall have all the powers of an investigative body under Section 37, Chapter 9, Book I of the Administrative Code of 1987, is primarily tasked to conduct a thorough fact-finding investigation of reported cases of graft and corruption referred to in Section 1, involving third level public officers and higher, their co-principals, accomplices and accessories from the private sector, if any, during the previous administration and thereafter submit its finding and recommendations to the President, Congress and the Ombudsman. [Emphases supplied] In this regard, it must be borne in mind that the Arroyo administration is but just a member of a class, that is, a class of past administrations. It is not a class of its own. Not to include past administrations similarly situated constitutes arbitrariness which the equal protection clause cannot sanction. Such discriminating

The

classification

must

not

be

based

on

existing

circumstances only, or so constituted as to preclude addition to the number included in the class. It must be of such a nature as to embrace all those who may thereafter be in similar circumstances and conditions. It must not leave out or underinclude those that should otherwise fall into a certain classification. As elucidated in Victoriano v. Elizalde Rope Workers' Union[85] and reiterated in a long line of cases,[86] The guaranty of equal protection of the laws is not a guaranty of equality in the application of the laws upon all citizens of the state. It is not, therefore, a requirement, in order to avoid the constitutional prohibition against inequality, that every man, woman and child should be affected alike by a statute. Equality of operation of statutes does not mean indiscriminate operation on persons merely as such, but on persons according to the circumstances surrounding them. It guarantees equality, not identity of rights. The Constitution does not require that things which are different in fact be treated in law as though they were the same. The equal protection clause does not forbid discrimination as to things that are different. It does not prohibit legislation which is limited either in the object to which it is directed or by the territory within which it is to operate. The equal protection of the laws clause of the Constitution allows classification. Classification in law, as in the other departments of knowledge or practice, is the grouping of things in speculation or practice because they agree with one another in certain particulars. A law is not invalid because of simple inequality. The very idea of classification is that of inequality, so that it goes without saying that the mere fact of inequality in no manner determines the matter of constitutionality. All that is

differentiation clearly reverberates to label the commission as a vehicle for vindictiveness and selective retribution. Though the OSG enumerates several differences between the Arroyo administration and other past administrations, these distinctions are not substantial enough to merit the restriction of the investigation to the previous administration only. The reports of widespread corruption in the Arroyo administration cannot be taken as basis for distinguishing said administration from earlier administrations which were also blemished by similar widespread reports of impropriety. They are not inherent in, and do not inure solely to, the Arroyo administration. As Justice Isagani Cruz put it, Superficial differences do not make for a valid classification.
[88]

down for being unconstitutional. In the often quoted language of Yick Wo v. Hopkins,[92]

Though the law itself be fair on its face and impartial in appearance, yet, if applied and administered by public authority with an evil eye and an unequal hand, so as practically to make unjust and illegal discriminations between persons in similar circumstances, material to their rights, the denial of equal justice is still within the prohibition of the constitution. [Emphasis supplied]

It could be argued that considering that the PTC is an ad hoc body, its scope is limited. The Court, however, is of the considered view that although its focus is restricted, the constitutional

The public needs to be enlightened why Executive Order No. 1 chooses to limit the scope of the intended investigation to the previous administration only. The OSG ventures to opine that to include other past administrations, at this point, may unnecessarily overburden the commission and lead it to lose its effectiveness.
[89]

guarantee of equal protection under the laws should not in any way be circumvented. The Constitution is the fundamental and paramount law of the nation to which all other laws must conform and in accordance with which all private rights determined and all public authority administered.[93] Laws that do not conform to the Constitution should be stricken down for being unconstitutional.[94] While the thrust of the PTC is specific, that is, for investigation of acts of graft and corruption, Executive Order No. 1, to survive, must be read together with the provisions of the Constitution. To exclude the earlier administrations in

The

reason given is specious. It is without doubt irrelevant to the legitimate and noble objective of the PTC to stamp out or end corruption and the evil it breeds.
[90]

The probability that there would be difficulty in unearthing evidence or that the earlier reports involving the earlier administrations were already inquired into is beside the point. Obviously, deceased presidents and cases which have already prescribed can no longer be the subjects of inquiry by the PTC. Neither is the PTC expected to conduct simultaneous investigations of previous administrations, given the bodys limited time and resources. The law does not require the impossible(Lex non cogit ad impossibilia).
[91]

the guise of substantial distinctions would only confirm the petitioners lament that the subject executive order is only an adventure in partisan hostility. In the case of US v. Cyprian,[95] it was written: A rather limited number of such classifications have routinely been held or assumed to be arbitrary; those include: race, national origin, gender, political activity or membership in a political party, union activity or membership in a labor union, or more generally the exercise of first amendment rights. To reiterate, in order for a classification to meet the

Given the foregoing physical and legal impossibility, the requirements of constitutionality, it must include or embrace all persons Court logically recognizes the unfeasibility of investigating almost a centurys worth of graft cases. However, the fact remains that Executive Order No. 1 suffers from arbitrary classification. The PTC, additions to the number included within a class, but must be of such a to be true to its mandate of searching for the truth, must not exclude nature as to embrace all those who may thereafter be in similar the other past administrations. The PTC must, at least, have the circumstances and conditions. Furthermore, all who are in situations authority to investigate all past administrations. While reasonable and circumstances which are relative to the discriminatory legislation prioritization is permitted, it should not be arbitrary lest it be struck who naturally belong to the class.[96]Such a classification must not be based on existing circumstances only, or so constituted as to preclude

and which are indistinguishable from those of the members of the class must be brought under the influence of the law and treated by it in the same way as are the members of the class.[97] The Court is not convinced. Although Section 17 allows the President the discretion to expand the scope of investigations of the PTC so as to include the acts of graft and corruption committed in The Court is not unaware that mere underinclusiveness is not fatal to the validity of a law under the equal protection clause.[98] Legislation is not unconstitutional merely because it is not all-embracing and does not include all the evils within its reach.
[99]

other past administrations, it does not guarantee that they would be covered in the future. Such expanded mandate of the commission will still depend on the whim and caprice of the President. If he would decide not to include them, the section would then be meaningless. This will only fortify the fears of the petitioners that the Executive Order No. 1 was crafted to tailor-fit the prosecution of officials and personalities of the Arroyo administration.[105]

It

has been written that a regulation challenged under the equal protection clause is not devoid of a rational predicate simply because it happens to be incomplete.[100] In several instances, the

underinclusiveness was not considered a valid reason to strike down a law or regulation where the purpose can be attained in future legislations or regulations. These cases refer to the step by step process.[101] With regard to equal protection claims, a legislature does not run the risk of losing the entire remedial scheme simply because it fails, through inadvertence or otherwise, to cover every evil that might conceivably have been attacked.
[102]

The Court tried to seek guidance from the pronouncement in the case of Virata v. Sandiganbayan,[106] that the PCGG Charter (composed of Executive Orders Nos. 1, 2 and 14) does not violate the equal protection clause. The decision, however, was devoid of any discussion on how such conclusory statement was arrived at, the

In

Executive

Order

No.

1,

however,

there

is

no

principal issue in said case being only the sufficiency of a cause of action. A final word

inadvertence. That the previous administration was picked out was deliberate and intentional as can be gleaned from the fact that it was underscored at least three times in the assailed executive order. It must be noted that Executive Order No. 1 does not even mention any particular act, event or report to be focused on unlike the investigative commissions created in the past. The equal protection clause is violated by purposeful and intentional discrimination.[103]

The issue that seems to take center stage at present is whether or not the Supreme Court, in the exercise of its constitutionally mandated power of Judicial Review with respect to recent initiatives of the legislature and the executive department, is exercising undue interference. Is the Highest Tribunal, which is expected to be the

To disprove petitioners contention that there is deliberate discrimination, the OSG clarifies that the commission does not only confine itself to cases of large scale graft and corruption committed during the previous administration.
[104]

protector of the Constitution, itself guilty of violating fundamental tenets like the doctrine of separation of powers? Time and again, this issue has been addressed by the Court, but it seems that the present political situation calls for it to once again explain the legal basis of its action lest it continually be accused of being a hindrance to the nations thrust to progress.

The OSG points to Section 17

of Executive Order No. 1, which provides:

SECTION 17. Special Provision Concerning Mandate. If and when in the judgment of the President there is a need to expand the mandate of the Commission as defined in Section 1 hereof to include the investigation of cases and instances of graft and corruption during the prior administrations, such mandate may be so extended accordingly by way of a supplemental Executive Order.

The Philippine Supreme Court, according to Article VIII, Section 1 of the 1987 Constitution, is vested with Judicial Power that includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to

determine whether or not there has been a grave of abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the government. Furthermore, in Section 4(2) thereof, it is vested with the power of judicial review which is the power to declare a treaty, international or executive agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation

constitutional parameters, then it cannot still be allowed. [108] The Court cannot just turn a blind eye and simply let it pass. It will continue to uphold the Constitution and its enshrined principles. The Constitution must ever remain supreme. All must bow to the mandate of this law. Expediency must not be allowed to sap its strength nor greed for power debase its rectitude.[109]

unconstitutional. This power also includes the duty to rule on the constitutionality of the application, or operation of presidential decrees, proclamations, orders, instructions, ordinances, and other regulations. These provisions, however, have been fertile grounds of conflict between the Supreme Court, on one hand, and the two co-equal bodies of government, on the other. Many times the Court has been accused of asserting superiority over the other departments. To answer this accusation, the words of Justice Laurel would be a good source of enlightenment, to wit: And when the judiciary mediates to allocate constitutional boundaries, it does not assert any superiority over the other departments; it does not in reality nullify or invalidate an act of the legislature, but only asserts the solemn and sacred obligation assigned to it by the Constitution to determine conflicting claims of authority under the Constitution and to establish for the parties in an actual controversy the rights which that instrument secures and guarantees to them.[107] Thus, the Court, in exercising its power of judicial review, is not imposing its own will upon a co-equal body but rather simply making sure that any act of government is done in consonance with the authorities and rights allocated to it by the Constitution. And, if after said review, the Court finds no constitutional violations of any sort, then, it has no more authority of proscribing the actions under review. Otherwise, the Court will not be deterred to pronounce said act as void and unconstitutional. It cannot be denied that most government actions are inspired with noble intentions, all geared towards the betterment of the nation and its people. But then again, it is important to remember this ethical principle: The end does not justify the means. No matter how noble and worthy of admiration the purpose of an act, but if the means to be employed in accomplishing it is simply irreconcilable with ESCOLIN, J.: G.R. No. L-63915 April 24, 1985 LORENZO M. TAADA, ABRAHAM F. SARMIENTO, and MOVEMENT OF ATTORNEYS FOR BROTHERHOOD, INTEGRITY AND NATIONALISM, INC. [MABINI], petitioners, vs. HON. JUAN C. TUVERA, in his capacity as Executive Assistant to the President, HON. JOAQUIN VENUS, in his capacity as Deputy Executive Assistant to the President , MELQUIADES P. DE LA CRUZ, in his capacity as Director, Malacaang Records Office, and FLORENDO S. PABLO, in his capacity as Director, Bureau of Printing, respondents. Order WHEREFORE, the petitions are GRANTED. Executive truth Lest it be misunderstood, this is not the death knell for a commission as nobly envisioned by the present

administration. Perhaps a revision of the executive issuance so as to include the earlier past administrations would allow it to pass the test of reasonableness and not be an affront to the Constitution. Of all the branches of the government, it is the judiciary which is the most interested in knowing the truth and so it will not allow itself to be a hindrance or obstacle to its attainment. It must, however, be emphasized that the search for the truth must be within constitutional bounds for ours is still a government of laws and not of men.[110]

No. 1 is hereby declared UNCONSTITUTIONAL insofar as it

is violative of the equal protection clause of the Constitution. As also prayed for, the respondents are hereby ordered to cease and desist from carrying out the provisions of Executive Order No. 1. SO ORDERED.

Invoking the people's right to be informed on matters of public concern, a right recognized in Section 6, Article IV of the 1973 Philippine Constitution, 1 as well as the principle that laws to be valid and enforceable must be published in the Official Gazette or otherwise effectively promulgated, petitioners seek a writ of mandamus to compel respondent public officials to publish, and/or cause the publication in the Official Gazette of various presidential decrees, letters of instructions, general orders, proclamations, executive orders, letter of implementation and administrative orders. Specifically, the publication of the following presidential issuances is sought: a] Presidential Decrees Nos. 12, 22, 37, 38, 59, 64, 103, 171, 179, 184, 197, 200, 234, 265, 286, 298, 303, 312, 324, 325, 326, 337, 355, 358, 359, 360, 361, 368, 404, 406, 415, 427, 429, 445, 447, 473, 486, 491, 503, 504, 521, 528, 551, 566, 573, 574, 594, 599, 644, 658, 661, 718, 731, 733, 793, 800, 802, 835, 836, 923, 935, 961, 1017-1030, 1050, 1060-1061, 1085, 1143, 1165, 1166, 1242, 1246, 1250, 1278, 1279, 1300, 1644, 1772, 1808, 1810, 1813-1817, 1819-1826, 1829-1840, 18421847. b] Letter of Instructions Nos.: 10, 39, 49, 72, 107, 108, 116, 130, 136, 141, 150, 153, 155, 161, 173, 180, 187, 188, 192, 193, 199, 202, 204, 205, 209, 211-213, 215-224, 226-228, 231-239, 241-245, 248, 251, 253-261, 263-269, 271-273, 275-283, 285-289, 291, 293, 297-299, 301-303, 309, 312315, 325, 327, 343, 346, 349, 357, 358, 362, 367, 370, 382, 385, 386, 396-397, 405, 438-440, 444445, 473, 486, 488, 498, 501, 399, 527, 561, 576, 587, 594, 599, 600, 602, 609, 610, 611, 612, 615, 641, 642, 665, 702, 712-713, 726, 837-839, 878879, 881, 882, 939-940, 964,997,1149-1178,11801278. c] General Orders Nos.: 14, 52, 58, 59, 60, 62, 63, 64 & 65. d] Proclamation Nos.: 1126, 1144, 1147, 1151, 1196, 1270, 1281, 1319-1526, 1529, 1532, 1535, 1538, 1540-1547, 1550-1558, 1561-1588, 15901595, 1594-1600, 1606-1609, 1612-1628, 16301649, 1694-1695, 1697-1701, 1705-1723, 17311734, 1737-1742, 1744, 1746-1751, 1752, 1754, 1762, 1764-1787, 1789-1795, 1797, 1800, 18021804, 1806-1807, 1812-1814, 1816, 1825-1826, 1829, 1831-1832, 1835-1836, 1839-1840, 18431844, 1846-1847, 1849, 1853-1858, 1860, 1866, 1868, 1870, 1876-1889, 1892, 1900, 1918, 1923, 1933, 1952, 1963, 1965-1966, 1968-1984, 19862028, 2030-2044, 2046-2145, 2147-2161, 21632244. e] Executive Orders Nos.: 411, 413, 414, 427, 429-454, 457- 471, 474-492, 494-507, 509-510, 522, 524-528, 531-532, 536, 538, 543-544, 549, 551-553, 560, 563, 567-568, 570, 574, 593, 594, 598-604, 609, 611- 647, 649-677, 679-703, 705707, 712-786, 788-852, 854-857. f] Letters of Implementation Nos.: 7, 8, 9, 10, 1122, 25-27, 39, 50, 51, 59, 76, 80-81, 92, 94, 95, 107, 120, 122, 123. g] Administrative Orders Nos.: 347, 348, 352-354, 360- 378, 380-433, 436-439. The respondents, through the Solicitor General, would have this case dismissed outright on the ground that petitioners have no legal

personality or standing to bring the instant petition. The view is submitted that in the absence of any showing that petitioners are personally and directly affected or prejudiced by the alleged nonpublication of the presidential issuances in question 2 said petitioners are without the requisite legal personality to institute this mandamus proceeding, they are not being "aggrieved parties" within the meaning of Section 3, Rule 65 of the Rules of Court, which we quote: SEC. 3. Petition for Mandamus.When any tribunal, corporation, board or person unlawfully neglects the performance of an act which the law specifically enjoins as a duty resulting from an office, trust, or station, or unlawfully excludes another from the use a rd enjoyment of a right or office to which such other is entitled, and there is no other plain, speedy and adequate remedy in the ordinary course of law, the person aggrieved thereby may file a verified petition in the proper court alleging the facts with certainty and praying that judgment be rendered commanding the defendant, immediately or at some other specified time, to do the act required to be done to Protect the rights of the petitioner, and to pay the damages sustained by the petitioner by reason of the wrongful acts of the defendant. Upon the other hand, petitioners maintain that since the subject of the petition concerns a public right and its object is to compel the performance of a public duty, they need not show any specific interest for their petition to be given due course. The issue posed is not one of first impression. As early as the 1910 case of Severino vs. Governor General, 3 this Court held that while the general rule is that "a writ of mandamus would be granted to a private individual only in those cases where he has some private or particular interest to be subserved, or some particular right to be protected, independent of that which he holds with the public at large," and "it is for the public officers exclusively to apply for the writ when public rights are to be subserved [Mithchell vs. Boardmen, 79 M.e., 469]," nevertheless, "when the question is one of public right and the object of the mandamus is to procure the enforcement of a public duty, the people are regarded as the real party in interest and the relator at whose instigation the proceedings are instituted need not show that he has any legal or special interest in the result, it being sufficient to show that he is a citizen and as such interested in the execution of the laws [High, Extraordinary Legal Remedies, 3rd ed., sec. 431]. Thus, in said case, this Court recognized the relator Lope Severino, a private individual, as a proper party to the mandamus proceedings brought to compel the Governor General to call a special election for the position of municipal president in the town of Silay, Negros Occidental. Speaking for this Court, Mr. Justice Grant T. Trent said: We are therefore of the opinion that the weight of authority supports the proposition that the relator is a proper party to proceedings of this character when a public right is sought to be enforced. If the general rule in America were otherwise, we think that it would not be applicable to the case at bar for the reason 'that it is always dangerous to apply a general rule to a particular case without keeping in mind the reason for the rule, because, if under the particular circumstances the reason for the rule does not exist, the rule itself is not applicable and reliance upon the rule may well lead to error' No reason exists in the case at bar for applying the general rule insisted upon by counsel for the respondent. The circumstances which surround this case are different from those in the United States, inasmuch as if the relator is not a proper party to these proceedings no other person could be, as we have seen that it is not the duty of the law officer of the Government to appear and represent the people in cases of this character.

The reasons given by the Court in recognizing a private citizen's legal personality in the aforementioned case apply squarely to the present petition. Clearly, the right sought to be enforced by petitioners herein is a public right recognized by no less than the fundamental law of the land. If petitioners were not allowed to institute this proceeding, it would indeed be difficult to conceive of any other person to initiate the same, considering that the Solicitor General, the government officer generally empowered to represent the people, has entered his appearance for respondents in this case. Respondents further contend that publication in the Official Gazette is not a sine qua non requirement for the effectivity of laws where the laws themselves provide for their own effectivity dates. It is thus submitted that since the presidential issuances in question contain special provisions as to the date they are to take effect, publication in the Official Gazette is not indispensable for their effectivity. The point stressed is anchored on Article 2 of the Civil Code: Art. 2. Laws shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is otherwise provided, ... The interpretation given by respondent is in accord with this Court's construction of said article. In a long line of decisions, 4 this Court has ruled that publication in the Official Gazette is necessary in those cases where the legislation itself does not provide for its effectivity date-for then the date of publication is material for determining its date of effectivity, which is the fifteenth day following its publication-but not when the law itself provides for the date when it goes into effect. Respondents' argument, however, is logically correct only insofar as it equates the effectivity of laws with the fact of publication. Considered in the light of other statutes applicable to the issue at hand, the conclusion is easily reached that said Article 2 does not preclude the requirement of publication in the Official Gazette, even if the law itself provides for the date of its effectivity. Thus, Section 1 of Commonwealth Act 638 provides as follows: Section 1. There shall be published in the Official Gazette [1] all important legisiative acts and resolutions of a public nature of the, Congress of the Philippines; [2] all executive and administrative orders and proclamations, except such as have no general applicability; [3] decisions or abstracts of decisions of the Supreme Court and the Court of Appeals as may be deemed by said courts of sufficient importance to be so published; [4] such documents or classes of documents as may be required so to be published by law; and [5] such documents or classes of documents as the President of the Philippines shall determine from time to time to have general applicability and legal effect, or which he may authorize so to be published. ... The clear object of the above-quoted provision is to give the general public adequate notice of the various laws which are to regulate their actions and conduct as citizens. Without such notice and publication, there would be no basis for the application of the maxim "ignorantia legis non excusat." It would be the height of injustice to punish or otherwise burden a citizen for the transgression of a law of which he had no notice whatsoever, not even a constructive one. Perhaps at no time since the establishment of the Philippine Republic has the publication of laws taken so vital significance that at this time when the people have bestowed upon the President a power heretofore enjoyed solely by the legislature. While the people are kept abreast by the mass media of the debates and deliberations in the Batasan Pambansaand for the diligent ones, ready access to the legislative recordsno such publicity accompanies the law-making process of the President. Thus, without publication, the people have no means of knowing what presidential decrees have actually been promulgated, much less a definite way of informing themselves of the specific contents and texts of such decrees. As the Supreme Court of

Spain ruled: "Bajo la denominacion generica de leyes, se comprenden tambien los reglamentos, Reales decretos, Instrucciones, Circulares y Reales ordines dictadas de conformidad con las mismas por el Gobierno en uso de su potestad. 5 The very first clause of Section I of Commonwealth Act 638 reads: "There shall be published in the Official Gazette ... ." The word "shall" used therein imposes upon respondent officials an imperative duty. That duty must be enforced if the Constitutional right of the people to be informed on matters of public concern is to be given substance and reality. The law itself makes a list of what should be published in the Official Gazette. Such listing, to our mind, leaves respondents with no discretion whatsoever as to what must be included or excluded from such publication. The publication of all presidential issuances "of a public nature" or "of general applicability" is mandated by law. Obviously, presidential decrees that provide for fines, forfeitures or penalties for their violation or otherwise impose a burden or. the people, such as tax and revenue measures, fall within this category. Other presidential issuances which apply only to particular persons or class of persons such as administrative and executive orders need not be published on the assumption that they have been circularized to all concerned. 6 It is needless to add that the publication of presidential issuances "of a public nature" or "of general applicability" is a requirement of due process. It is a rule of law that before a person may be bound by law, he must first be officially and specifically informed of its contents. As Justice Claudio Teehankee said in Peralta vs. COMELEC 7: In a time of proliferating decrees, orders and letters of instructions which all form part of the law of the land, the requirement of due process and the Rule of Law demand that the Official Gazette as the official government repository promulgate and publish the texts of all such decrees, orders and instructions so that the people may know where to obtain their official and specific contents. The Court therefore declares that presidential issuances of general application, which have not been published, shall have no force and effect. Some members of the Court, quite apprehensive about the possible unsettling effect this decision might have on acts done in reliance of the validity of those presidential decrees which were published only during the pendency of this petition, have put the question as to whether the Court's declaration of invalidity apply to P.D.s which had been enforced or implemented prior to their publication. The answer is all too familiar. In similar situations in the past this Court had taken the pragmatic and realistic course set forth in Chicot County Drainage District vs. Baxter Bank 8 to wit: The courts below have proceeded on the theory that the Act of Congress, having been found to be unconstitutional, was not a law; that it was inoperative, conferring no rights and imposing no duties, and hence affording no basis for the challenged decree. Norton v. Shelby County, 118 U.S. 425, 442; Chicago, 1. & L. Ry. Co. v. Hackett, 228 U.S. 559, 566. It is quite clear, however, that such broad statements as to the effect of a determination of unconstitutionality must be taken with qualifications. The actual existence of a statute, prior to such a determination, is an operative fact and may have consequences which cannot justly be ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to invalidity may have to be considered in various aspects-with respect to particular conduct, private and official. Questions of rights claimed to have become vested, of status, of prior determinations deemed to have finality and acted upon accordingly, of public policy in the light of the nature both of the statute and of its previous application, demand examination. These questions are among the most difficult of

those which have engaged the attention of courts, state and federal and it is manifest from numerous decisions that an all-inclusive statement of a principle of absolute retroactive invalidity cannot be justified. Consistently with the above principle, this Court in Rutter vs. Esteban 9 sustained the right of a party under the Moratorium Law, albeit said right had accrued in his favor before said law was declared unconstitutional by this Court. Similarly, the implementation/enforcement of presidential decrees prior to their publication in the Official Gazette is "an operative fact which may have consequences which cannot be justly ignored. The past cannot always be erased by a new judicial declaration ... that an allinclusive statement of a principle of absolute retroactive invalidity cannot be justified." From the report submitted to the Court by the Clerk of Court, it appears that of the presidential decrees sought by petitioners to be published in the Official Gazette, only Presidential Decrees Nos. 1019 to 1030, inclusive, 1278, and 1937 to 1939, inclusive, have not been so published. 10 Neither the subject matters nor the texts of these PDs can be ascertained since no copies thereof are available. But whatever their subject matter may be, it is undisputed that none of these unpublished PDs has ever been implemented or enforced by the government. InPesigan vs. Angeles, 11 the Court, through Justice Ramon Aquino, ruled that "publication is necessary to apprise the public of the contents of [penal] regulations and make the said penalties binding on the persons affected thereby. " The cogency of this holding is apparently recognized by respondent officials considering the manifestation in their comment that "the government, as a matter of policy, refrains from prosecuting violations of criminal laws until the same shall have been published in the Official Gazette or in some other publication, even though some criminal laws provide that they shall take effect immediately. WHEREFORE, the Court hereby orders respondents to publish in the Official Gazette all unpublished presidential issuances which are of general application, and unless so published, they shall have no binding force and effect. SO ORDERED. Relova, J., concurs. Aquino, J., took no part. Concepcion, Jr., J., is on leave.

Petitioners are members of the House of Representatives. They brought this suit against respondents Jose de Venecia, Speaker of the House of Representatives, Deputy Speaker Raul Daza, Majority Leader Rodolfo Albano, the Executive Secretary, the Secretary of Finance, and the Commissioner of Internal Revenue, charging violation of the rules of the House which petitioners claim are constitutionally mandated so that their violation is tantamount to a violation of the Constitution. The law originated in the House of Representatives as H. No. 7198. This bill was approved on third reading on September 12, 1996 and transmitted on September 16, 1996 to the Senate which approved it with certain amendments on third reading on November 17, 1996. A bicameral conference committee was formed to reconcile the disagreeing provisions of the House and Senate versions of the bill. The bicameral conference committee submitted its report to the House at 8 a.m. on November 21, 1996. At 11:48 a.m., after a recess, Rep. Exequiel Javier, chairman of the Committee on Ways and Means, proceeded to deliver his sponsorship speech, after which he was interpellated. Rep. Rogelio Sarmiento was first to interpellate. He was interrupted when Rep. Arroyo moved to adjourn for lack of quorum. Rep. Antonio Cuenco objected to the motion and asked for a head count. After a roll call, the Chair (Deputy Speaker Raul Daza) declared the presence of a quorum.[1] Rep. Arroyo appealed the ruling of the Chair, but his motion was defeated when put to a vote. The interpellation of the sponsor thereafter proceeded. Petitioner Rep. Joker Arroyo registered to interpellate. He was fourth in the order, following Rep. Rogelio Sarmiento, Rep. Edcel C. Lagman and Rep. Enrique Garcia. In the course of his interpellation, Rep. Arroyo announced that he was going to raise a question on the quorum, although until the end of his interpellation he never did. What happened thereafter is shown in the following transcript of the session on November 21, 1996 of the House of Representatives, as published by Congress in the newspaper issues of December 5 and 6, 1996: MR. ALBANO. Mr. Speaker, I move that we now approve and ratify the conference committee report. THE DEPUTY SPEAKER (Mr. Daza). Any objection to the motion? MR. ARROYO. What is that, Mr. Speaker? THE DEPUTY SPEAKER (Mr. Daza). There being none, approved. (Gavel) MR. ARROYO. No, no, no, wait a minute, Mr. Speaker, I stood up. I want to know what is the question that the Chair asked the distinguished sponsor. THE DEPUTY SPEAKER (Mr. Daza). There was a motion by the Majority Leader for approval of the report, and the Chair called for the motion. MR. ARROYO. Objection, I stood up, so I wanted to object.

OKER P. ARROYO, EDCEL C. LAGMAN, JOHN HENRY R. OSMEA, WIGBERTO E. TAADA, and RONALDO B. ZAMORA, petitioners, vs. JOSE DE VENECIA, RAUL DAZA, RODOLFO ALBANO, THE EXECUTIVE SECRETARY, THE SECRETARY OF FINANCE, AND THE COMMISSIONER OF INTERNAL REVENUE, respondents. DECISION MENDOZA, J.: This is a petition for certiorari and/or prohibition challenging the validity of Republic Act No. 8240, which amends certain provisions of the National Internal Revenue Code by imposing so-called sin taxes (actually specific taxes) on the manufacture and sale of beer and cigarettes.

THE DEPUTY SPEAKER (Mr. Daza). The session is suspended for one minute. (It was 3:01 p.m.) (3:40 p.m., the session was resumed) THE DEPUTY SPEAKER (Mr. Daza). The session is resumed. MR. ALBANO. Mr. Speaker, I move to adjourn until four oclock, Wednesday, next week. THE DEPUTY SPEAKER (Mr. Daza). The session is adjourned until four oclock, Wednesday, next week. (It was 3:40 p.m.) On the same day, the bill was signed by the Speaker of the House of Representatives and the President of the Senate and

certified by the respective secretaries of both Houses of Congress as having been finally passed by the House of Representatives and by the Senate on November 21, 1996. The enrolled bill was signed into law by President Fidel V. Ramos on November 22, 1996. Petitioners claim that there are actually four different versions of the transcript of this portion of Rep. Arroyos interpellation: (1) the transcript of audio-sound recording of the proceedings in the session hall immediately after the session adjourned at 3:40 p.m. on November 21, 1996, which petitioner Rep. Edcel C. Lagman obtained from the operators of the sound system; (2) the transcript of the proceedings from 3:00 p.m. to 3:40 p.m. of November 21, 1996, as certified by the Chief of the Transcription Division on November 21, 1996, also obtained by Rep. Lagman; (3) the transcript of the proceedings from 3:00 p.m. to 3:40 p.m. of November 21, 1996 as certified by the Chief of the Transcription Division on November 28, 1996, also obtained by Rep. Lagman; and (4) the published version abovequoted. According to petitioners, the four versions differ on three points, to wit: (1) in the audio-sound recording the word approved, which appears on line 13 in the three other versions, cannot be heard; (2) in the transcript certified on November 21, 1996 the word no on line 17 appears only once, while in the other versions it is repeated three times; and (3) the published version does not contain the sentence (Y)ou better prepare for a quorum because I will raise the question of the quorum, which appears in the other versions. Petitioners allegations are vehemently denied by respondents. However, there is no need to discuss this point as petitioners have announced that, in order to expedite the resolution of this petition, they admit, without conceding, the correctness of the transcripts relied upon by the respondents. Petitioners agree that for purposes of this proceeding the word approved appears in the transcripts. Only the proceedings of the House of Representatives on the conference committee report on H. No. 7198 are in question. Petitioners principal argument is that R.A. No. 8240 is null and void because it was passed in violation of the rules of the House; that these rules embody the constitutional mandate in Art. VI, 16(3) that each House may determine the rules of its proceedings and that, consequently, violation of the House rules is a violation of the Constitution itself. They contend that the certification of Speaker De Venecia that the law was properly passed is false and spurious. More specifically, petitioners charge that (1) in violation of Rule VIII, 35 and Rule XVII, 103 of the rules of the House, [2] the Chair, in submitting the conference committee report to the House, did not call for the yeas or nays, but simply asked for its approval by motion in order to prevent petitioner Arroyo from questioning the presence of a quorum; (2) in violation of Rule XIX, 112,[3] the Chair deliberately ignored Rep. Arroyos question, What is that . . . Mr. Speaker? and did not repeat Rep. Albanos motion to approve or ratify; (3) in violation of Rule XVI, 97,[4] the Chair refused to recognize Rep. Arroyo and instead proceeded to act on Rep. Albanos motion and afterward declared the report approved; and (4) in violation of Rule XX, 121122, Rule XXI, 123, and Rule XVIII, 109,[5] the Chair suspended the session without first ruling on Rep. Arroyos question which, it is alleged, is a point of order or a privileged motion. It is argued that Rep. Arroyos query should have been resolved upon the resumption of the session on November 28, 1996, because the parliamentary situation at the time of the adjournment remained upon the resumption of the session. Petitioners also charge that the session was hastily adjourned at 3:40 p.m. on November 21, 1996 and the bill certified by Speaker Jose De Venecia to prevent petitioner Rep. Arroyo from formally challenging the existence of a quorum and asking for a reconsideration. Petitioners urge the Court not to feel bound by the certification of the Speaker of the House that the law had been properly passed, considering the Courts power under Art. VIII, 1 to pass on claims of grave abuse of discretion by the other departments of the government, and they ask for a reexamination of Tolentino v. Secretary of Finance,[6] which affirmed the conclusiveness of an enrolled bill, in view of the changed membership of the Court. The Solicitor General filed a comment in behalf of all respondents. In addition, respondent De Venecia filed a supplemental comment. Respondents defense is anchored on the principle of

separation of powers and the enrolled bill doctrine. They argue that the Court is not the proper forum for the enforcement of the rules of the House and that there is no justification for reconsidering the enrolled bill doctrine. Although the Constitution provides in Art. VI, 16(3) for the adoption by each House of its rules of proceedings, enforcement of the rules cannot be sought in the courts except insofar as they implement constitutional requirements such as that relating to three readings on separate days before a bill may be passed. At all events, respondents contend that, in passing the bill which became R.A. No. 8240, the rules of the House, as well as parliamentary precedents for approval of conference committee reports on mere motion, were faithfully observed. In his supplemental comment, respondent De Venecia denies that his certification of H. No. 7198 is false and spurious and contends that under the journal entry rule, the judicial inquiry sought by the petitioners is barred. Indeed, Journal No. 39 of the House of Representatives, covering the sessions of November 20 and 21, 1996, shows that On Motion of Mr. Albano, there being no objection, the Body approved the Conference Committee Report on House Bill No. 7198.[7] This Journal was approved on December 2, 1996 over the lone objection of petitioner Rep. Lagman.[8] After considering the arguments of the parties, the Court finds no ground for holding that Congress committed a grave abuse of discretion in enacting R.A. No. 8240. This case is therefore dismissed. First. It is clear from the foregoing facts that what is alleged to have been violated in the enactment of R.A. No. 8240 are merely internal rules of procedure of the House rather than constitutional requirements for the enactment of a law, i.e., Art. VI, 2627. Petitioners do not claim that there was no quorum but only that, by some maneuver allegedly in violation of the rules of the House, Rep. Arroyo was effectively prevented from questioning the presence of a quorum. Petitioners contend that the House rules were adopted pursuant to the constitutional provision that each House may determine the rules of its proceedings[9] and that for this reason they are judicially enforceable. To begin with, this contention stands the principle on its head. In the decided cases,[10] the constitutional provision that each House may determine the rules of its proceedings was invoked by parties, although not successfully, precisely to support claims of autonomy of the legislative branch to conduct its business free from interference by courts. Here petitioners cite the provision for the opposite purpose of invoking judicial review. But the cases, both here and abroad, in varying forms of expression, all deny to the courts the power to inquire into allegations that, in enacting a law, a House of Congress failed to comply with its own rules, in the absence of showing that there was a violation of a constitutional provision or the rights of private individuals. In Osmea v. Pendatun,[11] it was held: At any rate, courts have declared that the rules adopted by deliberative bodies are subject to revocation, modification or waiver at the pleasure of the body adopting them. And it has been said that Parliamentary rules are merely procedural, and with their observance, the courts have no concern. They may be waived or disregarded by the legislative body. Consequently, mere failure to conform to parliamentary usage will not invalidate the action (taken by a deliberative body) when the requisite number of members have agreed to a particular measure. In United States v. Ballin, Joseph & Co.,[12] the rule was stated thus: The Constitution empowers each house to determine its rules of proceedings. It may not by its rules ignore constitutional restraints or violate fundamental rights, and there should be a reasonable relation between the mode or method of proceeding established by the rule and the result which is sought to be attained. But within these limitations all matters of method are open to the determination of the House, and it is no impeachment of the rule to say that some other way would be better, more accurate, or even more just. It is no objection to the validity of a rule that a different one has been prescribed and in force for a length of time. The power to make rules is not one which once exercised is exhausted. It is a continuous power, always subject to be exercised by the House, and within the limitations suggested, absolute and beyond the challenge of any other body or tribunal.

In Crawford v. Gilchrist,[13] it was held: The provision that each House shall determine the rules of its proceedings does not restrict the power given to a mere formulation of standing rules, or to the proceedings of the body in ordinary legislative matters; but in the absence of constitutional restraints, and when exercised by a majority of a constitutional quorum, such authority extends to a determination of the propriety and effect of any action as it is taken by the body as it proceeds in the exercise of any power, in the transaction of any business, or in the performance of any duty conferred upon it by the Constitution. In State ex rel. City Loan & Savings Co. v. Moore,[14] the Supreme Court of Ohio stated: The provision for reconsideration is no part of the Constitution and is therefore entirely within the control of the General Assembly. Having made the rule, it should be regarded, but a failure to regard it is not the subject-matter of judicial inquiry. It has been decided by the courts of last resort of many states, and also by the United States Supreme Court, that a legislative act will not be declared invalid for noncompliance with rules. In State v. Savings Bank,[15] the Supreme Court of Errors of Connecticut declared itself as follows: The Constitution declares that each house shall determine the rules of its own proceedings and shall have all powers necessary for a branch of the Legislature of a free and independent state. Rules of proceedings are the servants of the House and subject to its authority. This authority may be abused, but when the House has acted in a matter clearly within its power, it would be an unwarranted invasion of the independence of the legislative department for the court to set aside such action as void because it may think that the House has misconstrued or departed from its own rules of procedure. In McDonald v. State,[16] the Wisconsin Supreme Court held: When it appears that an act was so passed, no inquiry will be permitted to ascertain whether the two houses have or have not complied strictly with their own rules in their procedure upon the bill, intermediate its introduction and final passage. The presumption is conclusive that they have done so. We think no court has ever declared an act of the legislature void for non-compliance with the rules of procedure made by itself, or the respective branches thereof, and which it or they may change or suspend at will. If there are any such adjudications, we decline to follow them. Schweizer v. Territory[17] is illustrative of the rule in these cases. The 1893 Statutes of Oklahoma provided for three readings on separate days before a bill may be passed by each house of the legislature, with the proviso that in case of an emergency the house concerned may, by two-thirds vote, suspend the operation of the rule. Plaintiff was convicted in the district court of violation of a law punishing gambling. He appealed contending that the gambling statute was not properly passed by the legislature because the suspension of the rule on three readings had not been approved by the requisite two-thirds vote. Dismissing this contention, the State Supreme Court of Oklahoma held: We have no constitutional provision requiring that the legislature should read a bill in any particular manner. It may, then, read or deliberate upon a bill as it sees fit, either in accordance with its own rules, or in violation thereof, or without making any rules. The provision of section 17 referred to is merely a statutory provision for the direction of the legislature in its action upon proposed measures. It receives its entire force from legislative sanction, and it exists only at legislative pleasure. The failure of the legislature to properly weigh and consider an act, its passage through the legislature in a hasty manner, might be reasons for the governor withholding his signature thereto; but this alone, even though it is shown to be a violation of a rule which the legislature had made to govern its own proceedings, could be no reason for the courts refusing its enforcement after it was actually passed by a majority of each branch of the legislature, and duly signed by the governor. The courts cannot declare an act of the legislature void on account of noncompliance with rules of procedure made by itself to govern its deliberations. McDonald v. State, 80 Wis. 407, 50 N.W. 185; In re Ryan, 80 Wis. 414, 50 N. W. 187; State v. Brown, 33 S.C. 151, 11 S. E. 641; Railway Co. v. Gill, 54 Ark. 101, 15 S. W. 18.

We conclude this survey with the useful summary of the rulings by former Chief Justice Fernando, commenting on the power of each House of Congress to determine its rules of proceedings. He wrote: Rules are hardly permanent in character. The prevailing view is that they are subject to revocation, modification or waiver at the pleasure of the body adopting them as they are primarily procedural. Courts ordinarily have no concern with their observance. They may be waived or disregarded by the legislative body. Consequently, mere failure to conform to them does not have the effect of nullifying the act taken if the requisite number of members have agreed to a particular measure. The above principle is subject, however, to this qualification. Where the construction to be given to a rule affects persons other than members of the legislative body the question presented is necessarily judicial in character. Even its validity is open to question in a case where private rights are involved.[18] In this case no rights of private individuals are involved but only those of a member who, instead of seeking redress in the House, chose to transfer the dispute to this Court. We have no more power to look into the internal proceedings of a House than members of that House have to look over our shoulders, as long as no violation of constitutional provisions is shown. Petitioners must realize that each of the three departments of our government has its separate sphere which the others may not invade without upsetting the delicate balance on which our constitutional order rests. Due regard for the working of our system of government, more than mere comity, compels reluctance on our part to enter upon an inquiry into an alleged violation of the rules of the House. We must accordingly decline the invitation to exercise our power. Second. Petitioners, quoting former Chief Justice Roberto Concepcions sponsorship in the Constitutional Commission, contend that under Art. VIII, 1, nothing involving abuse of discretion [by the other branches of the government] amounting to lack or excess of jurisdiction is beyond judicial review.[19] Implicit in this statement of the former Chief Justice, however, is an acknowledgment that the jurisdiction of this Court is subject to the case and controversy requirement of Art. VIII, 5 and, therefore, to the requirement of a justiciable controversy before courts can adjudicate constitutional questions such as those which arise in the field of foreign relations. For while Art. VIII, 1 has broadened the scope of judicial inquiry into areas normally left to the political departments to decide, such as those relating to national security,[20] it has not altogether done away with political questions such as those which arise in the field of foreign relations. As we have already held, under Art. VIII, 1, this Courts function is merely [to] check whether or not the governmental branch or agency has gone beyond the constitutional limits of its jurisdiction, not that it erred or has a different view. In the absence of a showing . . . [of] grave abuse of discretion amounting to lack of jurisdiction, there is no occasion for the Court to exercise its corrective power. . . . It has no power to look into what it thinks is apparent error.[21] If, then, the established rule is that courts cannot declare an act of the legislature void on account merely of noncompliance with rules of procedure made by itself, it follows that such a case does not present a situation in which a branch of the government has gone beyond the constitutional limits of its jurisdiction so as to call for the exercise of our Art. VIII, 1 power. Third. Petitioners claim that the passage of the law in the House was railroaded. They claim that Rep. Arroyo was still making a query to the Chair when the latter declared Rep. Albanos motion approved. What happened is that, after Rep. Arroyos interpellation of the sponsor of the committee report, Majority Leader Rodolfo Albano moved for the approval and ratification of the conference committee report. The Chair called out for objections to the motion. Then the Chair declared: There being none, approved. At the same time the Chair was saying this, however, Rep. Arroyo was asking, What is that . . . Mr. Speaker? The Chair and Rep. Arroyo were talking simultaneously. Thus, although Rep. Arroyo subsequently objected to the Majority Leaders motion, the approval of the conference

committee report had by then already been declared by the Chair, symbolized by its banging of the gavel. Petitioners argue that, in accordance with the rules of the House, Rep. Albanos motion for the approval of the conference committee report should have been stated by the Chair and later the individual votes of the Members should have been taken. They say that the method used in this case is a legislators nightmare because it suggests unanimity when the fact was that one or some legislators opposed the report. No rule of the House of Representatives has been cited which specifically requires that in cases such as this involving approval of a conference committee report, the Chair must restate the motion and conduct a viva voce or nominal voting. On the other hand, as the Solicitor General has pointed out, the manner in which the conference committee report on H. No. 7198 was approved was by no means a unique one. It has basis in legislative practice. It was the way the conference committee report on the bills which became the Local Government Code of 1991 and the conference committee report on the bills amending the Tariff and Customs Code were approved. In 1957, the practice was questioned as being contrary to the rules of the House. The point was answered by Majority Leader Arturo M. Tolentino and his answer became the ruling of the Chair. Mr. Tolentino said: Mr. Tolentino. The fact that nobody objects means a unanimous action of the House. Insofar as the matter of procedure is concerned, this has been a precedent since I came here seven years ago, and it has been the procedure in this House that if somebody objects, then a debate follows and after the debate, then the voting comes in. .... Mr. Speaker, a point of order was raised by the gentleman from Leyte, and I wonder what his attitude is now on his point of order. I should just like to state that I believe that we have had a substantial compliance with the Rules. The Rule invoked is not one that refers to statutory or constitutional requirement, and a substantial compliance, to my mind, is sufficient. When the Chair announces the vote by saying Is there any objection? and nobody objects, then the Chair announces The bill is approved on second reading. If there was any doubt as to the vote, any motion to divide would have been proper. So, if that motion is not presented, we assume that the House approves the measure. So I believe there is substantial compliance here, and if anybody wants a division of the House he can always ask for it, and the Chair can announce how many are in favor and how many are against.[22] Indeed, it is no impeachment of the method to say that some other way would be better, more accurate and even more just.[23] The advantages or disadvantages, the wisdom or folly of a method do not present any matter for judicial consideration.[24] In the words of the U.S. Circuit Court of Appeals, this Court cannot provide a second opinion on what is the best procedure. Notwithstanding the deference and esteem that is properly tendered to individual congressional actors, our deference and esteem for the institution as a whole and for the constitutional command that the institution be allowed to manage its own affairs precludes us from even attempting a diagnosis of the problem.[25] Nor does the Constitution require that the yeas and the nays of the Members be taken every time a House has to vote, except only in the following instances: upon the last and third readings of a bill, [26] at the request of one-fifth of the Members present,[27] and in repassing a bill over the veto of the President.[28] Indeed, considering the fact that in the approval of the original bill the votes of the Members by yeas and nays had already been taken, it would have been sheer tedium to repeat the process. Petitioners claim that they were prevented from seeking reconsideration allegedly as a result of the precipitate suspension and subsequent adjournment of the session.[29] It would appear, however, that the session was suspended to allow the parties to settle the problem, because when it resumed at 3:40 p.m. on that day Rep. Arroyo did not say anything anymore. While it is true that the Majority

Leader moved for adjournment until 4 p.m. of Wednesday of the following week, Rep. Arroyo could at least have objected if there was anything he wanted to say. The fact, however, is that he did not. The Journal of November 21, 1996 of the House shows: ADJOURNMENT OF SESSION On motion of Mr. Albano, there being no objection, the Chair declared the session adjourned until four oclock in the afternoon of Wednesday, November 27, 1996. It was 3:40 p.m. Thursday, November 21, 1996. (emphasis added) This Journal was approved on December 2, 1996. Again, no one objected to its approval except Rep. Lagman. It is thus apparent that petitioners predicament was largely of their own making. Instead of submitting the proper motions for the House to act upon, petitioners insisted on the pendency of Rep. Arroyos question as an obstacle to the passage of the bill. But Rep. Arroyos question was not, in form or substance, a point of order or a question of privilege entitled to precedence.[30] And even if Rep. Arroyos question were so, Rep. Albanos motion to adjourn would have precedence and would have put an end to any further consideration of the question.[31] Given this fact, it is difficult to see how it can plausibly be contended that in signing the bill which became R.A. No. 8240, respondent Speaker of the House be acted with grave abuse of his discretion. Indeed, the phrase grave abuse of discretion amounting to lack or excess of jurisdiction has a settled meaning in the jurisprudence of procedure. It means such capricious and whimsical exercise of judgment by a tribunal exercising judicial or quasi judicial power as to amount to lack of power. As Chief Justice Concepcion himself said in explaining this provision, the power granted to the courts by Art. VIII, 1 extends to cases where a branch of the government or any of its officials has acted without jurisdiction or in excess of jurisdiction, or so capriciously as to constitute an abuse of discretion amounting to excess of jurisdiction.[32] Here, the matter complained of concerns a matter of internal procedure of the House with which the Court should not be concerned. To repeat, the claim is not that there was noquorum but only that Rep. Arroyo was effectively prevented from questioning the presence of a quorum. Rep. Arroyos earlier motion to adjourn for lack of quorum had already been defeated, as the roll call established the existence of a quorum. The question of quorum cannot be raised repeatedly especially when the quorum is obviously present for the purpose of delaying the business of the House.[33] Rep. Arroyo waived his objection by his continued interpellation of the sponsor for in so doing he in effect acknowledged the presence of a quorum. [34] At any rate it is noteworthy that of the 111 members of the House earlier found to be present on November 21, 1996, only the five, i.e., petitioners in this case, are questioning the manner by which the conference committee report on H. No. 7198 was approved on that day. No one, except Rep. Arroyo, appears to have objected to the manner by which the report was approved. Rep. John Henry Osmea did not participate in the bicameral conference committee proceedings.[35] Rep. Lagman and Rep. Zamora objected to the report[36] but not to the manner it was approved; while it is said that, if voting had been conducted, Rep. Taada would have voted in favor of the conference committee report.[37] Fourth. Under the enrolled bill doctrine, the signing of H. No. 7198 by the Speaker of the House and the President of the Senate and the certification by the secretaries of both Houses of Congress that it was passed on November 21, 1996 are conclusive of its due enactment. Much energy and learning is devoted in the separate opinion of Justice Puno, joined by Justice Davide, to disputing this doctrine. To be sure, there is no claim either here or in the decision in the EVAT cases [Tolentino v. Secretary of Finance] that the enrolled bill embodies a conclusive presumption. In one case[38] we went behind an enrolled bill and consulted the Journal to determine whether certain provisions of a statute had been approved by the Senate.

But, where as here there is no evidence to the contrary, this Court will respect the certification of the presiding officers of both Houses that a bill has been duly passed. Under this rule, this Court has refused to determine claims that the three-fourths vote needed to pass a proposed amendment to the Constitution had not been obtained, because a duly authenticated bill or resolution imports absolute verity and is binding on the courts.[39] This Court quoted from Wigmore on Evidence the following excerpt which embodies good, if old-fashioned, democratic theory: The truth is that many have been carried away with the righteous desire to check at any cost the misdoings of Legislatures. They have set such store by the Judiciary for this purpose that they have almost made them a second and higher Legislature. But they aim in the wrong direction. Instead of trusting a faithful Judiciary to check an inefficient Legislature, they should turn to improve the Legislature. The sensible solution is not to patch and mend casual errors by asking the Judiciary to violate legal principle and to do impossibilities with the Constitution; but to represent ourselves with competent, careful, and honest legislators, the work of whose hands on the statute-roll may come to reflect credit upon the name of popular government.[40] This Court has refused to even look into allegations that the enrolled bill sent to the President contained provisions which had been surreptitiously inserted in the conference committee: [W]here allegations that the constitutional procedures for the passage of bills have not been observed have no more basis than another allegation that the Conference Committee surreptitiously inserted provisions into a bill which it had prepared, we should decline the invitation to go behind the enrolled copy of the bill. To disregard the enrolled bill rule in such cases would be to disregard the respect due the other two departments of our government.[41] It has refused to look into charges that an amendment was made upon the last reading of a bill in violation of Art. VI, 26(2) of the Constitution that upon the last reading of a bill, no amendment shall be allowed. [42] In other cases,[43] this Court has denied claims that the tenor of a bill was otherwise than as certified by the presiding officers of both Houses of Congress. The enrolled bill doctrine, as a rule of evidence, is well established. It is cited with approval by text writers here and abroad.[44] The enrolled bill rule rests on the following considerations: . . . As the President has no authority to approve a bill not passed by Congress, an enrolled Act in the custody of the Secretary of State, and having the official attestations of the Speaker of the House of Representatives, of the President of the Senate, and of the President of the United States, carries, on its face, a solemn assurance by the legislative and executive departments of the government, charged, respectively, with the duty of enacting and executing the laws, that it was passed by Congress. The respect due to coequal and independent departments requires the judicial department to act upon that assurance, and to accept, as having passed Congress, all bills authenticated in the manner stated; leaving the court to determine, when the question properly arises, whether the Act, so authenticated, is in conformity with the Constitution.[45] To overrule the doctrine now, as the dissent urges, is to repudiate the massive teaching of our cases and overthrow an established rule of evidence. Indeed, petitioners have advanced no argument to warrant a departure from the rule, except to say that, with a change in the membership of the Court, the three new members may be assumed to have an open mind on the question of the enrolled bill rule. Actually, not three but four (Cruz, Feliciano, Bidin, and Quiason, JJ.) have departed from the Court since our decision in the EVAT cases and their places have since been taken by four new members (Francisco, Hermosisima, Panganiban, and Torres, JJ.) Petitioners are thus simply banking on the change in the membership of the Court.

Moreover, as already noted, the due enactment of the law in question is confirmed by the Journal of the House of November 21, 1996 which shows that the conference committee report on H. No. 7198, which became R.A. No. 8240, was approved on that day. The keeping of the Journal is required by the Constitution. Art. VI, 16(4) provides: Each House shall keep a Journal of its proceedings, and from time to time publish the same, excepting such parts as may, in its judgment, affect national security; and the yeas and nays on any question shall, at the request of one-fifth of the Members present, be entered in the Journal. Each House shall also keep a Record of its proceedings. The Journal is regarded as conclusive with respect to matters that are required by the Constitution to be recorded therein.[46] With respect to other matters, in the absence of evidence to the contrary, the Journals have also been accorded conclusive effect. Thus, in United States v. Pons,[47] this Court spoke of the imperatives of public policy for regarding the Journals as public memorials of the most permanent character, thus: They should be public, because all are required to conform to them; they should be permanent, that rights acquired today upon the faith of what has been declared to be law shall not be destroyed tomorrow, or at some remote period of time, by facts resting only in the memory of individuals. As already noted, the bill which became R.A. No. 8240 is shown in the Journal. Hence its due enactment has been duly proven. ___________________ It would be an unwarranted invasion of the prerogative of a coequal department for this Court either to set aside a legislative action as void because the Court thinks the House has disregarded its own rules of procedure, or to allow those defeated in the political arena to seek a rematch in the judicial forum when petitioners can find their remedy in that department itself. The Court has not been invested with a roving commission to inquire into complaints, real or imagined, of legislative skullduggery. It would be acting in excess of its power and would itself be guilty of grave abuse of its discretion were it to do so. The suggestion made in a case[48] may instead appropriately be made here: petitioners can seek the enactment of a new law or the repeal or amendment of R.A. No. 8240. In the absence of anything to the contrary, the Court must assume that Congress or any House thereof acted in the good faith belief that its conduct was permitted by its rules, and deference rather than disrespect is due the judgment of that body.[49] WHEREFORE, the DISMISSED. petition for certiorari and prohibition is