V. PRESUMPTIONS IN AID OF CONSTRUCTION AND INTERPRETATION LAWYERS AGAINST MONOPOLY AND POVERTY (LAMP), represented Se&ret$r!

'( D)M MENDO*A, J.+ For consideration of the Court is an original action for certiorari assailing the constitutionality and legality of the implementation of the Priority Development Assistance Fund (PDAF) as provided for in Republic Act (R.A.) 9206 or the eneral Appropriations Act for 200! (GAA of 2004)" Petitioner #a$yers Against %onopoly and Poverty (LAMP)& a group of la$yers $ho have banded together $ith a mission of dismantling all forms of political& economic or social monopoly in the country&'() also sought the issuance of a $rit of preliminary in*unction or temporary restraining order to en*oin respondent +ecretary of the Department of ,udget and %anagement (DBM) from ma-ing& and& thereafter& releasing budgetary allocations to individual members of Congress as .por- barrel/ funds out of PDAF" #A%P li-e$ise aimed to stop the 0ational 1reasurer and the Commission on Audit (COA) from enforcing the 2uestioned provision" 3n +eptember (!& 200!& the Court re2uired respondents& including the President of the +enate and the +pea-er of the 4ouse of Representatives& to comment on the petition" 3n April 5& 2006& petitioner filed a Reply thereto" '2) 3n April 26& 2006& both parties $ere re2uired to submit their respective memoranda" 1he AA of 200! contains the follo$ing provision sub*ect of this petition7 ! "ts C#$"r%$n Vs.

PR83R819 D:;:#3P%:01 A++8+1A0C: F<0D For fund re2uirements of priority development programs and pro*ects& as indicated hereunder = >?&@25&000&000"00 ABBBB +pecial Provision (" <se and Release of the Fund" 1he amount herein appropriated shall be used to fund priority programs and pro*ects or to fund the re2uired counterpart for foreignC assisted programs and pro*ects7 PR3;8D:D& 1hat such amount shall be released directly to the implementing agency or #ocal overnment <nit concerned7 PR3;8D:D& F<R14:R& 1hat the allocations authoriDed herein may be realigned to any eBpense class& if deemed necessary7 PR3;8D:D F<R14:R%3R:& 1hat a maBimum of ten percent E(0FG of the authoriDed allocations by district may be used for procurement of rice and other basic commodities $hich shall be purchased from the 0ational Food Authority"

Petitioners Position According to #A%P& the above provision is silent and& therefore& prohibits an automatic or direct allocation of lump sums to individual senators and congressmen for the funding of pro*ects" 8t does not empo$er individual %embers of Congress to propose& select and identify programs and pro*ects to be funded out of PDAF" .8n previous AAs& said allocation and identification of pro*ects $ere the main features of the Hpor- barrelI system technically -no$n as Country$ide Development Fund ECDFG" 0othing of the sort is no$ seen in the present la$ ER"A" 0o" 9206 of C9 200!G"'@) 8n its memorandum& #A%P insists that .'t)he silence in the la$ of direct or even indirect participation by members of Congress betrays a deliberate intent on the part of the :Becutive and the Congress to scrap and do a$ay $ith the Hpor- barrelI system"/ '!) 8n other $ords& .'t)he omission of the PDAF provision to specify sums as HallocationsI to individual %embers of Congress is a Hcasus omissus signifying an omission intentionally made by Congress that this Court is forbidden to supply"/ '6) 4ence& #A%P is of the conclusion that .the por- barrel has become legally defunct under the present state of AA 200!"/ '6) (

#A%P further decries the supposed fla$s in the implementation of the provision& namely7 (G the D,% illegally made and directly released budgetary allocations out of PDAF in favor of individual %embers of CongressJ and 2G the latter do not possess the po$er to propose& select and identify $hich pro*ects are to be actually funded by PDAF" For #A%P& this situation runs afoul against the principle of separation of po$ers because in receiving and& thereafter& spending funds for their chosen pro*ects& the %embers of Congress in effect intrude into an eBecutive function" 8n other $ords& they cannot directly spend the funds& the appropriation for $hich $as made by them" 8n their individual capacities& the %embers of Congress cannot .virtually tell or dictate upon the :Becutive Department ho$ to spend taBpayerIs money"'5) Further& the authority to propose and select pro*ects does not pertain to legislation" .8t is& in fact& a nonClegislative function devoid of constitutional sanction&/ '?) and& therefore& impermissible and must be considered nothing less than malfeasance" 1he proposal and identification of the pro*ects do not involve the ma-ing of la$s or the repeal and amendment thereof& $hich is the only function given to the Congress by the Constitution" ;erily& the po$er of appropriation granted to Congress as a collegial body& .does not include the po$er of the %embers thereof to individually propose& select and identify $hich pro*ects are to be actually implemented and funded C a function $hich essentially and eBclusively pertains to the :Becutive Department"/'9) ,y allo$ing the %embers of Congress to receive direct allotment from the fund& to propose and identify pro*ects to be funded and to perform the actual spending of the fund& the implementation of the PDAF provision becomes legally infirm and constitutionally repugnant" Respondents Position For their part& the respondents '(0) contend that the petition miserably lac-s legal and factual grounds" Although they admit that PDAF traced its roots to CDF& '(() they argue that the former should not be e2uated $ith .por- barrel&/ $hich has gained a derogatory meaning referring .to government pro*ects affording political opportunism"/ '(2) 8n the petition& no proof of this $as offered" 8t cannot be gainsaid then that the petition cannot stand on inconclusive media reports& assumptions and con*ectures alone" Kithout probative value& media reports cited by the petitioner deserve scant consideration especially the accusation that corrupt legislators have allegedly proposed cuts or slashes from their por- barrel" 4ence& the Court should decline the petitionerIs plea to ta-e *udicial notice of the supposed ini2uity of PDAF because there is no concrete proof that PDAF& in the guise of .por- barrel&/ is a source of .dirty money/ for unscrupulous la$ma-ers and other officials $ho tend to misuse their allocations" 1hese .facts/ have no attributes of sufficient notoriety or general recognition accepted by the public $ithout 2ualification& to be sub*ected to *udicial notice" 1his applies& a fortiori& to the claim that %embers of Congress are beneficiaries of commissions E-ic-bac-sG ta-en out of the PDAF allocations and releases and preferred by favored contractors representing from 20F to 60F of the approved budget for a particular pro*ect" '(@) +uffice it to say& the perceptions of #A%P on the implementation of PDAF must not be based on mere speculations circulated in the ne$s media preaching the evils of por- barrel" Failing to present even an iota of proof that the D,% +ecretary has been releasing lump sums from PDAF directly or indirectly to individual %embers of Congress& the petition falls short of its cause" #i-e$ise admitting that CDF and PDAF are .appropriations for substantially similar& if not the same& beneficial purposes&/ '(!) the respondents invo-e Phi co!sa ". #!ri$ue%&'(6) $here CDF $as described as an imaginative and innovative process or mechanism of implementing priority programsLpro*ects specified in the la$" 8n Phi co!sa& the Court upheld the authority of individual %embers of Congress to propose and identify priority pro*ects because this $as merely recommendatory in nature" 8n said case& it $as also recogniDed that individual members of Congress far more than the President and their congressional colleagues $ere li-ely to be -no$ledgeable about the needs of their respective constituents and the priority to be given each pro*ect" The Issues 1he respondents urge the Court to dismiss the petition for its failure to establish factual and legal basis to support its claims& thereby lac-ing an essential re2uisite of *udicial revie$Man actual case or controversy" 2

The Courts Ruling 1o the Court& the case boils do$n to these issues7 (G $hether or not the mandatory re2uisites for the eBercise of *udicial revie$ are met in this caseJ and 2G $hether or not the implementation of PDAF by the %embers of Congress is unconstitutional and illegal" #i-e almost all po$ers conferred by the Constitution& the po$er of *udicial revie$ is sub*ect to limitations& to $it7 E(G there must be an actual case or controversy calling for the eBercise of *udicial po$erJ E2G the person challenging the act must have the standing to 2uestion the validity of the sub*ect act or issuanceJ other$ise stated& he must have a personal and substantial interest in the case such that he has sustained& or $ill sustain& direct in*ury as a result of its enforcementJ E@G the 2uestion of constitutionality must be raised at the earliest opportunityJ and E!G the issue of constitutionality must be the very is mota of the case"'(6) An aspect of the .caseCorCcontroversy/ re2uirement is the re2uisite of .ripeness"/ 8n the <nited +tates& courts are centrally concerned $ith $hether a case involves uncertain contingent future events that may not occur as anticipated& or indeed may not occur at all" Another concern is the evaluation of the t$ofold aspect of ripeness7 first& the fitness of the issues for *udicial decisionJ and second& the hardship to the parties entailed by $ithholding court consideration" 8n our *urisdiction& the issue of ripeness is generally treated in terms of actual in*ury to the plaintiff" 4ence& a 2uestion is ripe for ad*udication $hen the act being challenged has had a direct adverse effect on the individual challenging it" '(5) 8n this case& the petitioner contested the im' eme!tatio! of an alleged unconstitutional statute& as citiDens and taBpayers" According to #A%P& the practice of (irectallocation and release of funds to the %embers of Congress and the authority given to them to propose and select pro*ects is the core of the la$Is fla$ed eBecution resulting in a serious constitutional transgression involving the eBpenditure of public funds" <ndeniably& as taBpayers& #A%P $ould someho$ be adversely affected by this" A finding of unconstitutionality $ould necessarily be tantamount to a misapplication of public funds $hich& in turn& cause in*ury or hardship to taBpayers" 1his affords .ripeness/ to the present controversy" Further& the allegations in the petition do not aim to obtain sheer legal opinion in the nature of advice concerning legislative or eBecutive action" 1he possibility of constitutional violations in the implementation of PDAF surely involves the interplay of legal rights susceptible of *udicial resolution" For #A%P& this is the right to recover public funds possibly misapplied by no less than the %embers of Congress" 4ence& $ithout pre*udice to other recourse against erring public officials& allegations of illegal eBpenditure of public funds reflect a concrete in*ury that may have been committed by other branches of government before the court intervenes" 1he possibility that this in*ury $as indeed committed cannot be discounted" 1he petition complains of illegal disbursement of public funds derived from taBation and this is sufficient reason to say that there indeed eBists adefinite& concrete& real or substantial controversy before the Court" Anent ocus sta!(i& .the rule is that the person $ho impugns the validity of a statute must have a personal and substantial interest in the case such that he has sustained& or $ill sustained& direct in*ury as a result of its enforcement" '(?) 1he gist of the 2uestion of standing is $hether a party alleges .such a personal sta-e in the outcome of the controversy as to assure that concrete adverseness $hich sharpens the presentation of issues upon $hich the court so largely depends for illumination of difficult constitutional 2uestions"/ '(9) 8n public suits& the plaintiff& representing the general public& asserts a .public right/ in assailing an allegedly illegal official action" 1he plaintiff may be a person $ho is affected no differently from any other person& and could be suing as a .stranger&/ or as a .citiDen/ or .taBpayer"/ '20) 1hus& taBpayers have been allo$ed to sue $here there is a claim that public funds are illegally disbursed or that public money is being deflected to any improper purpose& or that public funds are $asted through the enforcement of an invalid or unconstitutional la$"'2() 3f greater import than the damage caused by the illegal eBpenditure of public funds is the mortal $ound inflicted upon the fundamental la$ by the enforcement of an invalid statute" '22) 4ere& the sufficient interest preventing the illegal eBpenditure of money raised by taBation re2uired in taBpayersI suits is established" 1hus& in the claim that PDAF funds have been illegally disbursed and $asted through the enforcement of an invalid or unconstitutional la$& #A%P should @

be allo$ed to sue" 1he case of Pascua ". )ecretar* of Pu+ ic ,or-s '2@) is authority in support of the petitioner7 8n the determination of the degree of interest essential to give the re2uisite standing to attac- the constitutionality of a statute& the general rule is that not only persons individually affected& but also t$,p$!ers #$-e s.(("&"ent "nterest "n pre-ent"n/ t#e "00e/$0 e,pend"t.res '( %'ne!s r$"sed ! t$,$t"'n $nd %$! t#ere('re 1.est"'n t#e &'nst"t.t"'n$0"t! '( st$t.tes re1."r"n/ e,pend"t.re '( p. 0"& %'ne!s. '(( Am" Nur" 56(& :mphasis supplied") #astly& the Court is of the vie$ that the petition poses issues impressed $ith paramount public interest" 1he ramification of issues involving the unconstitutional spending of PDAF deserves the consideration of the Court& $arranting the assumption of *urisdiction over the petition" 0o$& on the substantive issue" 1he po$ers of government are generally divided into three branches7 the #egislative& the :Becutive and the Nudiciary" :ach branch is supreme $ithin its o$n sphere being independent from one another and it is this supremacy $hich enables the courts to determine $hether a la$ is constitutional or unconstitutional"'2!) 1he Nudiciary is the final arbiter on the 2uestion of $hether or not a branch of government or any of its officials has acted $ithout *urisdiction or in eBcess of *urisdiction or so capriciously as to constitute an abuse of discretion amounting to eBcess of *urisdiction" 1his is not only a *udicial po$er but a duty to pass *udgment on matters of this nature"
'26)

Kith these longCestablished precepts in mind& the Court no$ goes to the crucial 2uestion7 8n allo$ing the direct allocation and release of PDAF funds to the %embers of Congress based on their o$n list of proposed pro*ects& did the implementation of the PDAF provision under the AA of 200! violate the Constitution or the la$sO 1he Court rules in the negative" 8n determining $hether or not a statute is unconstitutional& the Court does not lose sight of the presumption of validity accorded to statutory acts of Congress" 8n Fari.as ". /he #0ecuti"e )ecretar*&'26) the Court held that7 :very statute is presumed valid" 1he presumption is that the legislature intended to enact a valid& sensible and *ust la$ and one $hich operates no further than may be necessary to effectuate the specific purpose of the la$" E-er! pres.%pt"'n s#'.0d e "nd.0/ed "n ($-'r '( t#e &'nst"t.t"'n$0"t! $nd t#e .rden '( pr''( "s 'n t#e p$rt! $00e/"n/ t#$t t#ere "s $ &0e$r $nd .ne1."-'&$0 re$&# '( t#e C'nst"t.t"'n" 1o *ustify the nullification of the la$ or its implementation& there must be a clear and une2uivocal& not a doubtful& breach of the Constitution" 8n case of doubt in the sufficiency of proof establishing unconstitutionality& the Court must sustain legislation because .to invalidate 'a la$) based on B B B baseless supposition is an affront to the $isdom not only of the legislature that passed it but also of the eBecutive $hich approved it"/ '25) 1his presumption of constitutionality can be overcome only by the clearest sho$ing that there $as indeed an infraction of the Constitution& and only $hen such a conclusion is reached by the re2uired ma*ority may the Court pronounce& in the discharge of the duty it cannot escape& that the challenged act must be struc- do$n" '2?) 1he petition is miserably $anting in this regard" #A%P $ould have the Court declare the unconstitutionality of the PDAFIs enforcement based on the absence of eBpress provision in the AA allocating PDAF funds to the %embers of Congress and the latterIs encroachment on eBecutive po$er in proposing and selecting pro*ects to be funded by PDAF" Regrettably& these allegations lac- substantiation" 0o convincing proof $as presented sho$ing that& indeed& there $ere direct releases of funds to the %embers of Congress& $ho actually spend them according to their sole discretion" 0ot even a documentation of the disbursement of funds by the D,% in favor of the %embers of Congress $as presented by the petitioner to convince the Court to probe into !

the truth of their claims" Devoid of any pertinent evidentiary support that illegal misuse of PDAF in the form of -ic-bac-s has become a common eBercise of unscrupulous %embers of Congress& the Court cannot indulge the petitionerIs re2uest for re*ection of a la$ $hich is out$ardly legal and capable of la$ful enforcement" 8n a case li-e this& the CourtIs hands are tied in deference to the presumption of constitutionality lest the Court commits unpardonable *udicial legislation" 1he Court is not endo$ed $ith the po$er of clairvoyance to divine from scanty allegations in pleadings $here *ustice and truth lie" '29) Again& ne$spaper or electronic reports sho$ing the appalling effects of PDAF cannot be appreciated by the Court& 1not because of any issue as to their truth& accuracy& or impartiality& but for the simple reason that facts must be established in accordance $ith the rules of evidence"/'@0) 4ence& absent a clear sho$ing that an offense to the principle of separation of po$ers $as committed& much less tolerated by both the #egislative and :Becutive& the Court is constrained to hold that a la$ful and regular government budgeting and appropriation process ensued during the enactment and all throughout the implementation of the AA of 200!" 1he process $as eBplained in this $ise& in Gui!2o!a ". Cara2ue3'@() (" Bu(2et 're'aratio!" 1he first step is essentially tas-ed upon the :Becutive ,ranch and covers the estimation of government revenues& the determination of budgetary priorities and activities $ithin the constraints imposed by a"ai a+ e re"e!ues and by +orro4i!2 imits& and the translation of desired priorities and activities into eBpenditure levels" ,udget preparation starts $ith the budget call issued by the Department of ,udget and %anagement" :ach agency is re2uired to submit agency budget estimates in line $ith the re2uirements consistent $ith the general ceilings set by the Development ,udget Coordinating Council ED,CCG" Kith regard to debt servicing& the D,CC staff& based on the macroCeconomic pro*ections of interest rates Ee"g" #8,3R rateG and estimated sources of domestic and foreign financing& estimates debt service levels" <pon issuance of budget call& the ,ureau of 1reasury computes for the interest and principal payments for the year for all direct national government borro$ings and other liabilities assumed by the same" 2" Le2is ati"e authori%atio!" == At this stage& Congress enters the picture and deliberates or acts on the budget proposals of the President& and Congress in the eBercise of its o$n *udgment and $isdom formu ates an appropriation act precisely follo$ing the process established by the Constitution& $hich specifies that no money may be paid from the 1reasury eBcept in accordance $ith an appropriation made by la$" BBB @" Bu(2et #0ecutio!" 1as-ed on the :Becutive& the third phase of the budget process covers the various o'eratio!a aspects of budgeting" 1he establishment of obligation authority ceilings& the evaluation of $or- and financial plans for individual activities& the continuing revie$ of government fiscal position& the regulation of funds releases& the implementation of cash payment schedules& and other related activities comprise this phase of the budget cycle" !" Bu(2et accou!ta+i it*" 1he fourth phase refers to the evaluation of actual performance and initially approved $or- targets& obligations incurred& personnel hired and $or- accomplished are compared $ith the targets set at the time the agency budgets $ere approved" <nder the Constitution& the po$er of appropriation is vested in the #egislature& sub*ect to the re2uirement that appropriation bills originate eBclusively in the 4ouse of Representatives $ith the option of the +enate to propose or concur $ith amendments" '@2) Khile the budgetary process commences from the proposal submitted by the President to Congress& it is the latter $hich concludes the eBercise by crafting an appropriation act it may deem beneficial to the nation& based on its o$n *udgment& $isdom and purposes" #i-e any other piece of legislation& the appropriation act may then be susceptible to ob*ection from the branch tas-ed to implement it& by $ay of a Presidential veto" 1hereafter& budget eBecution comes under the domain of the :Becutive branch $hich deals $ith the operational aspects of the cycle including the allocation and release of funds earmar-ed for various pro*ects" +imply put& from the regulation of fund releases& the implementation of payment schedules and up to the actual spending of the funds specified in the la$& the :Becutive ta-es the $heel" .1he D,% lays do$n the guidelines for the disbursement of the fund" 1he %embers of Congress are then re2uested by the President to 6

recommend pro*ects and programs $hich may be funded from the PDAF" 1he list submitted by the %embers of Congress is endorsed by the +pea-er of the 4ouse of Representatives to the D,%& $hich revie$s and determines $hether such list of pro*ects submitted are consistent $ith the guidelines and the priorities set by the :Becutive"/ '@@) 1his demonstrates the po$er given to the President to eBecute appropriation la$s and therefore& to eBercise the spending 'er se of the budget" As applied to this case& the petition is seriously $anting in establishing that individual %embers of Congress receive and thereafter spend funds out of PDAF" Although the possibility of this unscrupulous practice cannot be entirely discounted& surmises and con*ectures are not sufficient bases for the Court to stri-e do$n the practice for being offensive to the Constitution" %oreover& the authority granted the %embers of Congress to propose and select pro*ects $as already upheld in Phi co!sa. 1his remains as valid case la$" 1he Court sees no need to revie$ or reverse the standing pronouncements in the said case" +o long as there is no sho$ing of a direct participation of legislators in the actual spending of the budget& the constitutional boundaries bet$een the :Becutive and the #egislative in the budgetary process remain intact" Khile the Court is not una$are of the yo-e caused by graft and corruption& the evils propagated by a piece of valid legislation cannot be used as a tool to overstep constitutional limits and arbitrarily annul acts of Congress" Again& .all presumptions are indulged in favor of constitutionalityJ one $ho attac-s a statute& alleging unconstitutionality must prove its invalidity beyond a reasonable doubtJ that a la$ may $or- hardship does not render it unconstitutionalJ that if any reasonable basis may be conceived $hich supports the statute& it $ill be upheld& and the challenger must negate all possible basesJ that the courts are not concerned $ith the $isdom& *ustice& policy& or eBpediency of a statuteJ and that a liberal interpretation of the constitution in favor of the constitutionality of legislation should be adopted"/ '@!) 1here can be no 2uestion as to the patriotism and good motive of the petitioner in filing this petition" <nfortunately& the petition must fail based on the foregoing reasons" W2EREFORE& the petition is DISMISSED $ithout pronouncement as to costs"

SO ORDERED

3G.R. N'. 45678. A./.st 79, 9446:

;AREN E. SALVACION, %"n'r, t#r. Feder"&' N. S$0-$&"'n, <r., ($t#er $nd N$t.r$0 G.$rd"$n, $nd Sp'.ses FEDERICO N. SALVACION, <R., $nd EVELINA E. SALVACION, petitioners, vs. CENTRAL )AN; OF T2E P2ILIPPINES, C2INA )AN;ING CORPORATION $nd GREG )ARTELLI ! NORT2COTT, respondents. DECISION TORRES, <R., J.+ 8n our predisposition to discover the .original intent/ of a statute& courts become the unfeeling pillars of the status $uo" #ittle do $e realiDe that statutes or even constitutions are bundles of compromises thro$n our $ay by their framers" <nless $e eBercise vigilance& the statute may already be out of tune and irrelevant to our day" 1he petition is for declaratory relief" 8t prays for the follo$ing reliefs7 a"G 8mmediately upon the filing of this petition& an 3rder be issued restraining the respondents from applying and enforcing +ection ((@ of Central ,an- Circular 0o" 960J b"G After hearing& *udgment be rendered7 6

("G Declaring the respective rights and duties of petitioners and respondentsJ 2"G Ad*udging +ection ((@ of Central ,an- Circular 0o" 960 as contrary to the provision of the Constitution& hence voidJ because its provision that .Foreign currency deposits shall be eBempt from attachment& garnishment& or any other order to process of any court& legislative body& government agency or any administrative body $hatsoever/ i"G has ta-en a$ay the right of petitioners to have the ban- deposit of defendant reg ,artelli y 0orthcott garnished to satisfy the *udgment rendered in petitionersI favor in violation of substantive due process guaranteed by the ConstitutionJ ii"G has given foreign currency depositors an undue favor or a class privilege in violation of the e2ual protection clause of the ConstitutionJ iii"G has provided a safe haven for criminals li-e the herein respondent reg ,artelli y 0orthcott since criminals could escape civil liability for their $rongful acts by merely converting their money to a foreign currency and depositing it in a foreign currency deposit account $ith an authoriDed ban-" 1he antecedents facts7 3n February !& (9?9& reg ,artelli y 0orthcott& an American tourist& coaBed and lured petitioner Paren +alvacion& then (2 years old to go $ith him to his apartment" 1herein& reg ,artelli detained Paren +alvacion for four days& or up to February 5& (9?9 and $as able to rape the child once on February !& and three times each day on February 6& 6& and 5& (9?9" 3n February 5& (9?9& after policemen and people living nearby& rescued Paren& reg ,artelli $as arrested and detained at the %a-ati %unicipal Nail" 1he policemen recovered from ,artelli the follo$ing items7 ("G Dollar Chec0o" @6?& Control 0o" 02(00065?C((66(((@0@& <+ @&90@"20J 2"G C3C3,A0P ,an- ,oo- 0o" (0!C(0?56?C? EPeso Acct"GJ @"G Dollar Account = China ,an-ing Corp"& <+ QLAR6!(0602?C2J !"G 8DC(22C@0C??55J 6"G Philippine %oney EP2@!"00G cashJ 6"G Door Peys 6 piecesJ 5"G +tuffed Doll E1eddy ,earG used in seducing the complainant" 3n February (6& (9?9& %a-ati 8nvestigating Fiscal :d$in " Condaya filed against reg ,artelli& Criminal Case 0o" ?0( for +erious 8llegal Detention and Criminal Cases 0os" ?02& ?0@& ?0!& and ?06 for four E!G counts of Rape" 3n the same day& petitioners filed $ith the Regional 1rial Court of %a-ati Civil Case 0o" ?9C@2(! for damages $ith preliminary attachment against reg ,artelli" 3n February 2!& (9?9& the day there $as a scheduled hearing for ,artelliIs petition for bail the latter escaped from *ail" 3n February 2?& (9?9& the court granted the fiscalIs <rgent #05Parte %otion for the 8ssuance of Karrant of Arrest and 4old Departure 3rder" Pending the arrest of the accused reg ,artelli y 0orthcott& the criminal cases $ere archived in an 3rder dated February 2?& (9?9" %ean$hile& in Civil Case 0o" ?9C@2(!& the Nudge issued an 3rder dated February 22& (9?9 granting the application of herein petitioners& for the issuance of the $rit of preliminary attachment" After petitioners gave ,ond 0o" NC# E!G (9?( by F < 8nsurance Corporation in the amount P(00&000"00& a Krit of Preliminary Attachment $as issued by the trial court on February 2?& (9?9" 3n %arch (& (9?9& the Deputy +heriff of %a-ati served a 0otice of arnishment on China ,an-ing Corporation" 8n a letter dated %arch (@& (9?9 to the Deputy +heriff of %a-ati& China ,an-ing Corporation invo-ed Republic Act 0o" (!06 as its ans$er to the notice of garnishment served on it" 3n %arch (6& (9?9& Deputy +heriff of %a-ati Armando de uDman sent his reply to China ,an-ing Corporation saying that the garnishment did not violate the secrecy of bandeposits since the disclosure is merely incidental to a garnishment properly and legally made by virtue of a court order $hich has placed the sub*ect deposits in custo(ia e2is" 8n ans$er to this letter of the Deputy +heriff of %a-ati& China ,an-ing Corporation& in a letter dated %arch 20& (9?9& invo-ed +ection ((@ of Central ,an- Circular 0o" 960 to the effect that the dollar deposits of defendant reg ,artelli are eBempt from attachment& garnishment& or any other order or process of any court& legislative body& government agency or any administrative body& $hatsoever" 1his prompted the counsel for petitioners to ma-e an in2uiry $ith the Central ,an- in a letter dated April 26& (9?9 on $hether +ection ((@ of C, Circular 0o" 960 has any eBception or $hether said section has been repealed or amended since said section has rendered nugatory the substantive right of the plaintiff to have the claim sought to be enforced by the civil action 5

secured by $ay of the $rit of preliminary attachment as granted to the plaintiff under Rule 65 of the Revised Rules of Court" 1he Central ,an- responded as follo$s7 .%ay 26& (9?9 .%s" :rlinda +" Carolino (2 Pres" 3smeSa Avenue +outh Admiral ;illage Parana2ue& %etro %anila .Dear %s" Carolino7 .1his is in reply to your letter dated April 26& (9?9 regarding your in2uiry on +ection ((@& C, Circular 0o" 960 E(9?@G" .1he cited provision is absolute in application" 8t does not admit of any eBception& nor has the same been repealed nor amended" .1he purpose of the la$ is to encourage dollar accounts $ithin the countryIs ban-ing system $hich $ould help in the development of the economy" 1here is no intention to render futile the basic rights of a person as $as suggested in your sub*ect letter" 1he la$ may be harsh as some perceive it& but it is still the la$" Compliance is& therefore& en*oined" .;ery truly yours& E+ DG A AP813 +" FANARD3 Director/'() %ean$hile& on April (0& (9?9& the trial court granted petitionersI motion for leave to serve summons by publication in the Civil Case 0o" ?9C@2(! entitled .Paren +alvacion" et a . "s" reg ,artelli y 0orthcott"/ +ummons $ith the complaint $as published in the %anila 1imes once a $ee- for three consecutive $ee-s" reg ,artelli failed to file his ans$er to the complaint and $as declared in default on August 5& (9?9" After hearing the case e05'arte& the court rendered *udgment in favor of petitioners on %arch 29& (990& the dispositive portion of $hich reads7 .K4:R:F3R:& *udgment is hereby rendered in favor of plaintiffs and against defendant& ordering the latter7 .(" 1o pay plaintiff Paren :" +alvacion the amount of P600&000"00 as moral damagesJ .2" 1o pay her parents& plaintiffs spouses Federico 0" +alvacion& Nr"& and :velina :" +alvacion the amount of P(60&000"00 each or a total of P@00&000"00 for both of themJ .@" 1o pay plaintiffs eBemplary damages of P(00&000"00J and .!" 1o pay attorneyIs fees in an amount e2uivalent to 26F of the total amount of damages herein a$ardedJ .6" 1o pay litigation eBpenses of P(0&000"00J plus .6" Costs of the suit" .+3 3RD:R:D"/ 1he heinous acts of respondents reg ,artelli $hich gave rise to the a$ard $ere related in graphic detail by the trial court in its decision as follo$s7 .1he defendant in this case $as originally detained in the municipal *ail of %a-ati but $as able to escape therefrom on February 2!& (9?9 as per report of the Nail Karden of %a-ati to the Presiding Nudge& 4onorable %anuel %" Cosico of the Regional 1rial Court of %a-ati& ,ranch (@6& $here he $as charged $ith four counts of Rape and +erious 8llegal Detention ECrim" Cases 0os" ?02 to ?06G" Accordingly& upon motion of plaintiffs& through counsel& summons $as served upon defendant by publication in the %anila 1imes& a ne$spaper of general circulation as attested by the Advertising %anager of the %etro %edia 1imes& 8nc"& the publisher of the said ne$spaper" Defendant& ho$ever& failed to file his ans$er to the complaint despite the lapse of the period of siBty E60G days from the last publicationJ hence& upon motion of the plaintiffs ?

through counsel& defendant $as declared in default and plaintiffs $ere authoriDed to present their evidence e0 'arte" .8n support of the complaint& plaintiffs presented as $itness the minor Paren :" +alvacion& her father& Federico 0" +alacion& Nr"& a certain Noseph Aguilar and a certain #iberato %andulio& $ho gave the follo$ing testimony7 .Paren too- her first year high school in +t" %aryIs Academy in Pasay City but has recently transferred to Arellano <niversity for her second year" .8n the afternoon of February !& (9?9& Paren $as at the PlaDa Fair %a-ati Cinema +2uare& $ith her friend :dna 1angile $hiling a$ay her free time" At about @7@0 p"m" $hile she $as finishing her snac- on a concrete bench in front of PlaDa Fair& an American approached her" +he $as then alone because :dna 1angile had already left& and she $as about to go home" E1+0& Aug" (6& (9?9& pp" 2 to 6G .1he American as-ed her name and introduced himself as reg ,artelli" 4e sat beside her $hen he tal-ed to her" 4e said he $as a %ath teacher and told her that he has a sister $ho is a nurse in 0e$ 9or-" 4is sister allegedly has a daughter $ho is about ParenIs age and $ho $as $ith him in his house along Palayaan Avenue" E1+0& Aug" (6& (9?9& pp" !C6G" .1he American as-ed Paren $hat $as her favorite sub*ect and she told him itIs Pilipino" 4e then invited her to go $ith him to his house $here she could teach Pilipino to his niece" 4e even gave her a stuffed toy to persuade her to teach his niece" E6("& pp"6C6G .1hey $al-ed from PlaDa Fair along Pasong 1amo& turning right to reach the defendantIs house along Palayaan Avenue" E6("& p"6G .Khen they reached the apartment house& Paren notices that defendantIs alleged niece $as not outside the house but defendant told her maybe his niece $as inside" Khen Paren did not see the alleged niece inside the house& defendant told her maybe his niece $as upstairs& and invited Paren to go upstairs" E6("& p" 5G .<pon entering the bedroom defendant suddenly loc-ed the door" Paren became nervous because his niece $as not there" Defendant got a piece of cotton cord and tied ParenIs hands $ith it& and then he undressed her" Paren cried for help but defendant strangled her" 4e too- a pac-ing tape and he covered her mouth $ith it and he circled it around her head" E 6("& p" 5G .1hen& defendant suddenly pushed Paren to$ards the bed $hich $as *ust near the door" 4e tied her feet and hands spread apart to the bed posts" 4e -nelt in front of her and inserted his finger in her seB organ" +he felt severe pain" +he tried to shout but no sound could come out because there $ere tapes on her mouth" Khen defendant $ithdre$ his finger it $as full of blood and Paren felt more pain after the $ithdra$al of the finger" E 6("& p"?G .4e then got a Nohnsons ,aby 3il and he applied it to his seB organ as $ell as to her seB organ" After that he forced his seB organ into her but he $as not able to do so" Khile he $as doing it& Paren found it difficult to breathe and she perspired a lot $hile feeling severe pain" +he merely presumed that he $as able to insert his seB organ a little& because she could not see" Paren could not recall ho$ long the defendant $as in that position" E6("& pp" ?C9G .After that& he stood up and $ent to the bathroom to $ash" 4e also told Paren to ta-e a sho$er and he untied her hands" Paren could only hear the sound of the $ater $hile the defendant& she presumed& $as in the bathroom $ashing his seB organ" Khen she too- a sho$er more blood came out from her" 8n the meantime& defendant changed the mattress because it $as full of blood" After the sho$er& Paren $as allo$ed by defendant to sleep" +he fell asleep because she got tired crying" 1he incident happened at about !700 p"m" Paren had no $ay of determining the eBact time because defendant removed her $atch" Defendant did not care to give her food before she $ent to sleep" Paren $o-e up at about ?700 oIcloc- the follo$ing morning" E6("& pp" 9C (0G

.1he follo$ing day& February 6& (9?9& a +unday& after brea-fast of biscuit and co-e at about ?7@0 to 9700 a"m" defendant raped Paren $hile she $as still bleeding" For lunch& they also too- biscuit and co-e" +he $as raped for the second time at about (2700 to 2700 p"m" 8n the evening& they had rice for dinner $hich defendant had stored do$nstairsJ it $as he $ho coo-ed the rice that is $hy it loo-s li-e .luga$/" For the third time& Paren $as raped again during the night" During those three times defendant succeeded in inserting his seB organ but she could not say $hether the organ $as inserted $holly" .Paren did not see any firearm or any bladed $eapon" 1he defendant did not tie her hands and feet nor put a tape on her mouth anymore but she did not cry for help for fear that she might be -illedJ besides& all those $indo$s and doors $ere closed" And even if she shouted for help& nobody $ould hear her" +he $as so afraid that if somebody $ould hear her and $ould be able to call a police& it $as still possible that as she $as still inside the house& defendant might -ill her" ,esides& the defendant did not leave that +unday& ruling out her chance to call for help" At nighttime he slept $ith her again" E1+0& Aug" (6& (9?9& pp" (2C(!G .3n February 6& (9?9& %onday& Paren $as raped three times& once in the morning for thirty minutes after brea-fast of biscuitsJ again in the afternoonJ and again in the evening" At first& Paren did not -no$ that there $as a $indo$ because everything $as covered by a carpet& until defendant opened the $indo$ for around fifteen minutes or less to let some air in& and she found that the $indo$ $as covered by styrofoam and ply$ood" After that& he again closed the $indo$ $ith a hammer and he put the styrofoam& ply$ood& and carpet bac-" E6("& pp" (!C(6G .1hat %onday evening& Paren had a chance to call for help& although defendant left but -ept the door closed" +he $ent to the bathroom and sa$ a small $indo$ covered by styrofoam and she also spotted a small hole" +he stepped on the bo$l and she cried for help through the hole" +he cried3 7Maa4a !a 'o -a*o sa a-i!. /u u!2a! !*o a-o!2 ma-a a+as (ito. 8i!i(!a' a-o9 +omebody heard her" 8t $as a $oman& probably a neighbor& but she got angry and said she $as Histor+o"I Paren pleaded for help and the $oman told her to sleep and she $ill call the police" +he finally fell asleep but no policeman came" E1+0& Aug" (6& (9?9& pp" (6C(6G .+he $o-e up at 6700 oIcloc- the follo$ing morning& and she sa$ defendant in bed& this time sleeping" +he $aited for him to $a-e up" Khen he $o-e up& he again got some food but he al$ays -ept the door loc-ed" As usual& she $as merely fed $ith biscuit and co-e" 3n that day& February 5& (9?9& she $as again raped three times" 1he first at about 67@0 to 5700 a"m"& the second at about ?7@0 = 9700& and the third $as after lunch at (2700 noon" After he had raped her for the second time he left but only for a short $hile" <pon his return& he caught her shouting for help but he did not understand $hat she $as shouting about" After she $as raped the third time& he left the house" E1+0& Aug" (6& (9?9& pp" (6C(5G +he again $ent to the bathroom and shouted for help" After shouting for about five minutes& she heard many voices" 1he voices $ere as-ing for her name and she gave her name as Paren +alvacion" After a $hile& she heard a voice of a $oman saying they $ill *ust call the police" 1hey $ere also telling her to change her clothes" +he $ent from the bathroom to the room but she did not change her clothes being afraid that should the neighbors call the police and the defendant see her in different clothes& he might -ill her" At that time she $as $earing a 1Cshirt of the American bacause the latter $ashed her dress" E6("& p" (6G .After$ards& defendant arrived and opened the door" 4e as-ed her if she had as-ed for help because there $ere many policemen outside and she denied it" 4e told her to change her clothes& and she did change to the one she $as $earing on +aturday" 4e instructed her to tell the police that she left home and $illinglyJ then he $ent do$nstairs but he loc-ed the door" +he could hear people conversing but she could not understand $hat they $ere saying" E6("& p" (9G .Khen she heard the voices of many people $ho $ere conversing do$nstairs& she -noc-ed repeatedly at the door as hard as she could" +he heard somebody going upstairs and $hen the door $as opened& she sa$ a policeman" 1he policeman as-ed her name and the reason $hy she $as there" +he told him she $as -idnapped" Do$nstairs& he sa$ about five policemen in uniform and the defendant $as tal-ing to them. 7:a-i-i'a25are2 o 'o sa m2a 'u is& Paren added" .1he policeman told him to *ust eBplain at the precinct" E6("& p" 20G

(0

.1hey $ent out of the house and she sa$ some of her neighbors in front of the house" 1hey rode the car of a certain person she called Puya ,oy together $ith defendant& the policeman& and t$o of her neighbors $hom she called Puya ,ong #acson and one Ate 0ita" 1hey $ere brought to +ubC +tation 8 and there she $as investigated by a policeman" At about 2700 a"m"& her father arrived& follo$ed by her mother together $ith some of their neighbors" 1hen they $ere brought to the second floor of the police head2uarters" (6("& p" 2(G .At the head2uarters& she $as as-ed several 2uestions by the investigator" 1he $ritten statement she gave to the police $as mar-ed :Bhibit A" 1hen they proceeded to the 0ational ,ureau of 8nvestigation together $ith the investigator and her parents" At the 0,8& a doctor& a me(ico5 e2a officer& eBamined her private parts" 8t $as already @700 in early morning& of the follo$ing day $hen they reached the 0,8& E1+0& Aug" (6& (9?9& p" 22G 1he findings of the me(ico5 e2a officer has been mar-ed as :Bhibit ," .+he $as studying at the +t" %aryIs Academy in Pasay City at the time of the 8ncident but she subse2uently transferred to Apolinario %abini& Arellano <niversity& situated along 1aft Avenue& because she $as ashamed to be the sub*ect of conversation in the school" +he first applied for transfer to Nose Abad +antos& Arellano <niversity along 1aft Avenue near the #ight Rail 1ransit +tation but she $as denied admission after she told the school the true reason for her transfer" 1he reason for their denial $as that they might be implicated in the case" E1+0& Aug" (6& (9?9& p" !6G BBB BBB BBB

.After the incident& Paren has changed a lot" +he does not play $ith her brother and sister anymore& and she is al$ays in a state of shoc-J she has been absentCminded and is ashamed even to go out of the house" E1+0& +ept" (2& (9?9& p" (0G +he appears to be restless or sad" E6("& p" ((G 1he father prays for P600&000"00 moral damages for Paren for this shoc-ing eBperience $hich probably& she $ould al$ays recall until she reaches old age& and he is not sure if she could ever recover from this eBperience"/ E1+0& +ept" 2!& (9?9& pp" (0C((G Pursuant to an 3rder granting leave to publish notice of decision& said notice $as published in the %anila ,ulletin once a $ee- for three consecutive $ee-s" After the lapse of fifteen E(6G days from the date of the last publication of the notice of *udgment and the decision of the trial court had become final& petitioners tried to eBecute on ,artelliIs dollar deposit $ith China ,an-ing Corporation" #i-e$ise& the ban- invo-ed +ection ((@ of Central ,an- Circular 0o" 960" 1hus& petitioners decided to see- relief from this Court" 1he issues raised and the arguments articulated by the parties boil do$n to t$o7 %ay this Court entertain the instant petition despite the fact that original *urisdiction in petitions for declaratory relief rests $ith the lo$er courtO +he +ection ((@ of Central ,an- Circular 0o" 960 and +ection ? of R"A" 6!26& as amended by P"D" (2!6& other$ise -no$n as the Foreign Currency Deposit Act be made applicable to a foreign transientO Petitioners aver as heretofore stated that +ection ((@ of Central ,an- Circular 0o" 960 providing that .Foreign currency deposits shall be eBempt from attachment& garnishment& or any other order or process of any court& legislative body& government agency or any administrative body $hatsoever"/ should be ad*udged as unconstitutional on the grounds that7 ("G it has ta-en a$ay the right of petitioners to have the ban- deposit of defendant reg ,artelli y 0orthcott garnished to satisfy the *udgment rendered in petitionersI favor in violation of substantive due process guaranteed by the ConstitutionJ 2"G it has given foreign currency depositors an undue favor or a class privilege n violation of the e2ual protection clause of the ConstitutionJ @"G it has provided a safe haven for criminals li-e the herein respondent reg ,artelli y 0orthcott since criminal could escape civil liability for their $rongful acts by merely converting their money to a foreign currency and depositing it in a foreign currency deposit account $ith an authoriDed ban-J and !"G 1he %onetary ,oard& in issuing +ection ((@ of Central ,an- Circular 0o" 960 has eBceeded its delegated 2uasiC legislative po$er $hen it too- a$ay7 a"G the plaintiffIs substantive right to have the claim sought to be enforced by the civil action secured by $ay of the $rit of preliminary attachment as granted by Rule 65 of the Revised Rules of CourtJ b"G the plaintiffIs substantive right to have the *udgment credit satisfied by $ay of the $rit of eBecution out of the ((

ban- deposit of the *udgment debtor as granted to the *udgment creditor by Rule @9 of the Revised Rules of Court& $hich is beyond its po$er to do so" 3n the other hand& respondent Central ,an-& in its Comment alleges that the %onetary ,oard in issuing +ection ((@ of C, Circular 0o" 960 did not eBceed its po$er or authority because the sub*ect +ection is copied verbatim from a portion of R"A" 0o" 6!26 as amended by P"D" (2!6" 4ence& it $as not the %onetary ,oard that grants eBemption from attachment or garnishment to foreign currency deposits& but the la$ ER"A" 6!26 as amendedG itselfJ that it does not violate the substantive due process guaranteed by the Constitution because a"G it $as based on a la$J b"G the la$ seems to be reasonableJ c"G it is enforced according to regular methods of procedureJ and d"G it applies to all members of a class" :Bpanding& the Central ,an- saidJ that one reason for eBempting the foreign currency deposits from attachment& garnishment or any other order process of any court& is to assure the development and speedy gro$th of the Foreign Currency Deposit +ystem and the 3ffshore ,an-ing +ystem in the PhilippinesJ that another reason is to encourage the inflo$ of foreign currency deposits into the ban-ing institutions thereby placing such institutions more in a position to properly channel the same to loans and investments in the Philippines& thus directly contributing to the economic development of the countryJ that the sub*ect section is being enforced according to the regular methods of procedureJ and that it applies to all currency deposits made by any person and therefore does not violate the e2ual protection clause of the Constitution" Respondent Central ,an- further avers that the 2uestioned provision is needed to promote the public interest and the general $elfareJ that the +tate cannot *ust stand idly by $hile a considerable segment of the society suffers from economic distressJ that the +tate had to ta-e some measures to encourage economic developmentJ and that in so doing persons and property may be sub*ected to some -inds of restraints or burdens to secure the general $elfare or public interest" Respondent Central ,an- also alleges that Rule @9 and Rule 65 of the Revised Rules of Court provide that some properties are eBempted from eBecutionLattachment especially provided by la$ and R"A" 0o" 6!26 as amended is such a la$& in that it specifically provides& among others& that foreign currency deposits shall be eBempted from attachment& garnishment& or any other order or process of any court& legislative body& government agency or any administrative body $hatsoever" For its part& respondent China ,an-ing Corporation& aside from giving reasons similar to that of respondent Central ,an-& also stated that respondent China ,an- is not unmindful of the inhuman sufferings eBperienced by the minor Paren :" +alvacion from the beastly hands of reg ,artelliJ that it is not only too $illing to release the dollar deposit of ,artelli $hich may perhaps partly mitigate the sufferings petitioner has undergoneJ but it is restrained from doing so in vie$ of R"A" 0o" 6!26 and +ection ((@ of Central ,an- Circular 0o" 960J and that despite the harsh effect to these la$s on petitioners& C,C has no other alternative but to follo$ the same" 1his court finds the petition to be partly meritorious" Petitioner deserves to receive the damages a$arded to her by the court" ,ut this petition for declaratory relief can only be entertained and treated as a petition for mandamus to re2uire respondents to honor and comply $ith the $rit of eBecution in Civil Case 0o" ?9C@2(!" 1he Court has no original and eBclusive *urisdiction over a petition for declatory relief" 4o$ever& eBceptions to this rule have been recogniDed" 1hus& $here the petition has farC reaching implications and raises 2uestions that should be resolved& it may be treated as one for mandamus"'@)
'2)

4ere is a child& a (2Cyear old girl& $ho in her belief that all Americans are good and in her gesture of -indness by teaching his alleged niece the Filipino language as re2uested by the American& trustingly $ent $ith said stranger to his apartment& and there she $as raped by said American tourist reg ,artelli" 0ot once& but ten times" +he $as detained therein for four E!G days" 1his American tourist $as able to escape from the *ail and avoid punishment" 3n the other hand& the child& having received a favorable *udgment in the Civil Case for damages in the amount of more than P(&000&000"00& $hich amount could alleviate the humiliation& anBiety& and besmirched reputation she had suffered and may continue to suffer for a long& long timeJ and -no$ing that this person $ho had $ronged her has the money& could not& ho$ever get the a$ard of damages because of this unreasonable la$" 1his 2uestioned la$& therefore ma-es futile the (2

favorable *udgment and a$ard of damages that she and her parents fully deserve" As stated by the trial court in its decision& .8ndeed& after hearing the testimony of Paren& the Court believes that it $as indoubtedly a shoc-ing and traumatic eBperience she had undergone $hich could haunt her mind for a long& long time& the mere recall of $hich could ma-e her feel so humiliated& as in fact she had been actually humiliated once $hen she $as refused admission at the Abad +antos 4igh +chool& Arellano <niversity& $here she sought to transfer from another school& simply because the school authorities of the said 4igh +chool learned about $hat happened to her and allegedly feared that they might be implicated in the case" BBB 1he reason for imposing eBemplary or corrective damages is due to the $anton and bestial manner defendant had committed the acts of rape during a period of serious illegal detention of his hapless victim& the minor Paren +alvacion $hose only fault $as in her being so naive and credulous to believe easily that defendant& an American national& could not have such a bestial desire on her nor capable of committing such heinous crime" ,eing only (2 years old $hen that unfortunate incident happened& she has never heard of an old Filipino adage that in every forest there is a sna-e& BBB"/'!) 8f ParenIs sad fate had happened to anybodyIs o$n -in& it $ould be difficult for him to fathom ho$ the incentive for foreign currency deposit could be more important than his childIs right to said a$ard of damagesJ in this case& the victimIs claim for damages from this alien $ho had the gall to $rong a child of tender years of a country $here he is mere visitor" 1his further illustrates the fla$ in the 2uestioned provisions" 8t is $orth mentioning that R"A" 0o" 6!26 $as enacted in (9?@ or at a time $hen the countryIs economy $as in a shamblesJ $hen foreign investments $ere minimal and presumably& this $as the reason $hy said statute $as enacted" ,ut the realities of the present times sho$ that the country has recovered economicallyJ and even if not& the 2uestioned la$ still denies those entitled to due process of la$ for being unreasonable and oppressive" 1he intention of the 2uestioned la$ may be good $hen enacted" 1he la$ failed to anticipate the in2uitous effects producing outright in*ustice and ine2uality such as as the case before us" 8t has thus been said thatC .,ut 8 also -no$&'6) that la$s and institutions must go hand in hand $ith the progress of the human mind" As that becomes more developed& more enlightened& as ne$ discoveries are made& ne$ truths are disclosed and manners and opinions change $ith the change of circumstances& institutions must advance also& and -eep pace $ith the timesT Ke might as $ell re2uire a man to $ear still the coat $hich fitted him $hen a boy& as civiliDed society to remain ever under the regimen of their barbarous ancestors"/ 8n his comment& the +olicitor eneral correctly opined& thus7 U1he present petition has farCreaching implications on the right of a national to obtain redress for a $rong committed by an alien $ho ta-es refuge under a la$ and regulation promulgated for a purpose $hich does not contemplate the application thereof envisaged by the allien" %ore specifically& the petition raises the 2uestion $hether the protection against attachment& garnishment or other court process accorded to foreign currency deposits PD 0o" (2!6 and C, Circular 0o" 960 applies $hen the deposit does not come from a lender or investor but from a mere transient $ho is not eBpected to maintain the deposit in the ban- for long" .1he resolution of this 2uestion is important for the protection of nationals $ho are victimiDed in the forum by foreigners $ho are merely passing through" BBB .BBB Respondents China ,an-ing Corporation and Central ,an- of the Philippines refused to honor the $rit of eBecution issued in Civil Case 0o" ?9C@2(! on the strength of the follo$ing provision of Central ,an- Circular 0o" 9607 H+ec" ((@ :Bemption from attachment" = Foreign currency deposits shall be eBempt from attachment& garnishment& or any other order or process of any court& legislative body& government agency or any administrative body $hatsoever"I (@

.Central ,an- Circular 0o" 960 $as issued pursuant to +ection 5 of Republic Act 0o" 6!267 H+ec" 5" Rules and Regulations" 1he %onetary ,oard of the Central ,an- shall promulgate such rules and regulations as may be necessary to carry out the provisions of this Act $hich shall ta-e effect after the publication of such rules and regulations in the 3fficial aDette and in a ne$spaper of national circulation for at least once a $ee- for three consecutive $ee-s" 8n case the Central ,an- promulgates ne$ rules and regulations decreasing the rights of depositors& the rules and regulations at the time the deposit $as made shall govern"/ .1he aforecited +ection ((@ $as copied from +ection ? of Republic Act 0o" 6!26" As amended by P"D" (2!6& thus7 H+ec" ?" +ecrecy of Foreign Currency Deposits" CC All foreign currency deposits authoriDed under this Act& as amended by Presidential Decree 0o" (0@6& as $ell as foreign currency deposits authoriDed under Presidential Decree 0o" (0@!& are hereby declared as and considered of an absolutely confidential nature and& eBcept upon the $ritten permission of the depositor& in no instance shall such foreign currency deposits be eBamined& in2uired or loo-ed into by any person& government official& bureau or office $hether *udicial or administrative or legislative or any other entity $hether public or private7 Provided& ho$ever& that said foreign currency deposits shall be eBempt from attachment& garnishment& or any other order or process of any court& legislative body& government agency or any administrative body $hatsoever"I .1he purpose of PD (2!6 in according protection against attachment& garnishment and other court process to foreign currency deposits is stated in its $hereases& "i%"7 HK4:R:A+& under Republic Act 0o" 6!26& as amended by Presidential Decree 0o" (0@6& certain Philippine ban-ing institutions and branches of foreign ban-s are authoriDed to accept deposits in foreign currencyJ HK4:R:A+& under provisions of Presidential Decree 0o" (0@! authoriDing the establishment of an offshore ban-ing system in the Philippines& offshore ban-ing units are also authoriDed to receive foreign currency deposits in certain casesJ HK4:R:A+& in order to assure the development and speedy gro$th of the Foreign Currency Deposit +ystem and the 3ffshore ,an-ing +ystem in the Philippines& certain incentives $ere provided for under the t$o +ystems such as confidentiality sub*ect to certain eBceptions and taB eBemptions on the interest income of depositors $ho are nonresidents and are not engaged in trade or business in the PhilippinesJ HK4:R:A+& ma-ing absolute the protective cloa- of confidentiality over such foreign currency deposits& eBempting such deposits from taB& and guaranteeing the vested right of depositors $ould better encourage the inflo$ of foreign currency deposits into the ban-ing institutions authoriDed to accept such deposits in the Philippines thereby placing such institutions more in a position to properly channel the same to loans and investments in the Philippines& thus directly contributing to the economic development of the countryJI .1hus& one of the principal purposes of the protection accorded to foreign currency deposits is to assure the development and speedy gro$th of the Foreign Currency Deposit system and the 3ffshore ,an-ing in the PhilippinesI E@ rd KhereasG" .1he 3ffshore ,an-ing +ystem $as established by PD 0o" (0@!" 8n turn& the purposes of PD 0o" (0@! are as follo$s7 HK4:R:A+& conditions conducive to the establishment of an offshore ban-ing system& such as political stability& a gro$ing economy and ade2uate communication facilities& among others& eBist in the PhilippinesJ HK4:R:A+& it is in the interest of developing countries to have as $ide access as possible to the sources of capital funds for economic developmentJ HK4:R:A+& an offshore ban-ing system based in the Philippines $ill be advantageous and beneficial to the country by increasing our lin-s $ith foreign lenders& facilitating the flo$ (!

of desired investments into the Philippines& creating employment opportunities and eBpertise in international finance& and contributing to the national development effort" HK4:R:A+& the geographical location& physical and human resources& and other positive factors provide the Philippines $ith the clear potential to develop as another financial center in AsiaJI .3n the other hand& the Foreign Currency Deposit system $as created by PD 0o" (0@6" 8ts purpose are as follo$s7 HK4:R:A+& the establishment of an offshore ban-ing system in the Philippines has been authoriDed under a separate decreeJ HK4:R:A+& a number of local commercial ban-s& as depository ban- under the Foreign Currency Deposit Act ERA 0o" 6!26G& have the resources and managerial competence to more actively engage in foreign eBchange transactions and participate in the grant of foreign currency loans to resident corporations and firmsJ HK4:R:A+& it is timely to eBpand the foreign currency lending authority of the said depository ban-s under RA 6!26 and apply to their transactions the same taBes as $ould be applicable to transaction of the proposed offshore ban-ing unitsJI .8t is evident from the above 'Khereas clauses) that the 3ffshore ,an-ing +ystem and the Foreign Currency Deposit +ystem $ere designed to dra$ deposits from foreign lenders and investors E;ide second Khereas of PD 0o" (0@!J third Khereas of PD 0o" (0@6G" 8t is these depositors that are induced by the t$o la$s and given protection and incentives by them" .3bviously& the foreign currency deposit made by a transient or a tourist is not the -ind of deposit encourage by PD 0os" (0@! and (0@6 and given incentives and protection by said la$s because such depositor stays only for a fe$ days in the country and& therefore& $ill maintain his deposit in the ban- only for a short time" .Respondent reg ,artelli& as stated& is *ust a tourist or a transient" 4e deposited his dollars $ith respondent China ,an-ing Corporation only for safe-eeping during his temporary stay in the Philippines" .For the reasons stated above& the +olicitor eneral thus submits that the dollar deposit of respondent reg ,artelli is not entitled to the protection of +ection ((@ of Central ,anCircular 0o" 960 and PD 0o" (2!6 against attachment& garnishment or other court processes"/'6) 8n fine& the application of the la$ depends on the eBtent of its *ustice" :ventually& if $e rule that the 2uestioned +ection ((@ of Central ,an- Circular 0o" 960 $hich eBempts from attachment& garnishment& or any other order or process of any court" #egislative body& government agency or any administrative body $hatsoever& is applicable to a foreign transient& in*ustice $ould result especially to a citiDen aggrieved by a foreign guest li-e accused reg ,artelli" 1his $ould negate Article (0 of the 0e$ Civil Code $hich provides that .in case of doubt in the interpretation or application of la$s& it is presumed that the la$ma-ing body intended right and *ustice to prevail. 1:i!2u!o !o! (eue e!ri$uecerse torti%er%me!te co! (amo (e otro.; +imply stated& $hen the statute is silent or ambiguous& this is one of those fundamental solutions that $ould respond to the vehement urge of conscience" EPadilla "s" Padilla& 5! Phil" @55G 8t $ould be unthin-able& that the 2uestioned +ection ((@ of Central ,an- 0o" 960 $ould be used as a device by accused reg ,artelli for $rongdoing& and in so doing& ac2uitting the guilty at the eBpense of the innocent" Call it $hat it may = but is there no conflict of legal policy hereO Dollar against PesoO <pholding the final and eBecutory *udgment of the lo$er court against the Central ,anCircular protecting the foreign depositorO +hielding or protecting the dollar deposit of a transient alien depositor against in*ustice to a national and victim of a crimeO 1his situation calls for fairness legal tyranny" Ke definitely cannot have both $ays and rest in the belief that $e have served the ends of *ustice"

(6

IN VIEW W2EREOF& the provisions of +ection ((@ of C, Circular 0o" 960 and PD 0o" (2!6& insofar as it amends +ection ? of R"A" 6!26 are hereby held to be 80APP#8CA,#: to this case because of its peculiar circumstances" Respondents are hereby R:V<8R:D to C3%P#9 $ith the $rit of eBecution issued in Civil Case 0o" ?9C@2(!& .Paren +alvacion& et a . "s. reg ,artelli y 0orthcott& by ,ranch CA#8;& R1C %a-ati and to R:#:A+: to petitioners the dollar deposit of respondent reg ,artelli y 0orthcott in such amount as $ould satisfy the *udgment" SO ORDERED.

Republic of the Philippines SUPREME COURT %anila EN )ANC G.R. N'. 67=68 M$! 7=, 94=6 CARLOS ALON*O $nd CASIMIRA ALON*O, pet"t"'ners, -s. INTERMEDIATE APPELLATE COURT $nd TECLA PADUA, resp'ndents. Perpetuo L.B. Alonzo for petitioners. Luis R. Reyes for private respondent.

CRU*, J. 1he 2uestion is sometimes as-ed& in serious in2uiry or in curious con*ecture& $hether $e are a court of la$ or a court of *ustice" Do $e apply the la$ even if it is un*ust or do $e administer *ustice even against the la$O 1hus 2ueried& $e do not e2uivocate" 1he ans$er is that $e do neither because $e are a court +oth of la$ and of *ustice" Ke apply the la$ 4ith *ustice for that is our mission and purpose in the scheme of our Republic" 1his case is an illustration" Five brothers and sisters inherited in e2ual 'ro i!(i"iso shares a parcel of land registered in Wthe name of their deceased parents under 3C1 0o" (0955 of the Registry of Deeds of 1arlac" 9 3n %arch (6& (96@& one of them& Celestino Padua& transferred his undivided share of the herein petitioners for the sum of P660"00 by $ay of absolute sale" 7 3ne year later& on April 22& (96!& :usta2uia Padua& his sister& sold her o$n share to the same vendees& in an instrument denominated UCon Pacto de Retro +ale&U for the sum of P !!0"00" 8 ,y virtue of such agreements& the petitioners occupied& after the said sales& an area corresponding to t$oCfifths of the said lot& representing the portions sold to them" 1he vendees subse2uently enclosed the same $ith a fence" 8n (956& $ith their consent& their son :duardo AlonDo and his $ife built a semiCconcrete house on a part of the enclosed area" 5 3n February 26& (956& %ariano Padua& one of the five coheirs& sought to redeem the area sold to the spouses AlonDo& but his complaint $as dismissed $hen it appeared that he $as an American citiDen " > 3n %ay 25& (955& ho$ever& 1ecla Padua& another coCheir& filed her o$n complaint invo-ing the same right of redemption claimed by her brother" ? 1he trial court @ also dismiss this complaint& no$ on the ground that the right had lapsed& not having been eBercised $ithin thirty days from notice of the sales in (96@ and (96!" Although there $as no $ritten notice& it $as held that actua -no$ledge of the sales by the coCheirs satisfied the re2uirement of the la$" 6 (6

8n truth& such actual notice as ac2uired by the coCheirs cannot be plausibly denied" 1he other coC heirs& including 1ecla Padua& lived on the same lot& $hich consisted of only 60! s2uare meters& including the portions sold to the petitioners " = :usta2uia herself& $ho had sold her portion& $as staying in the same house $ith her sister 1ecla& $ho later claimed redemption petition" 4 %oreover& the petitioners and the private respondents $ere close friends and neighbors $hose children $ent to school together" 9A 8t is highly improbable that the other coCheirs $ere una$are of the sales and that they thought& as they alleged& that the area occupied by the petitioners had merely been mortgaged by Celestino and :usta2uia" 8n the circumstances *ust narrated& it $as impossible for 1ecla not to -no$ that the area occupied by the petitioners had been purchased by them from the other" coCheirs" :specially significant $as the erection thereon of the permanent semiCconcrete structure by the petitionersW son& $hich $as done $ithout ob*ection on her part or of any of the other coCheirs" 1he only real 2uestion in this case& therefore& is the correct interpretation and application of the pertinent la$ as invo-ed& interestingly enough& by both the petitioners and the private respondents" 1his is Article (0?? of the Civil Code& providing as follo$s7 Art" (0??" +hould any of the heirs sell his hereditary rights to a stranger before the partition& any or all of the coCheirs may be subrogated to the rights of the purchaser by reimbursing him for the price of the sale& provided they do so $ithin the period of one month from the time they $ere notified in $riting of the sale by the vendor" 8n reversing the trial court& the respondent court @@ declared that the notice re2uired by the said article $as 4ritte!notice and that actual notice $ould not suffice as a substitute" Citing the same case of De Co!e<ero ". Court of A''ea s 99 applied by the trial court& the respondent court held that that decision& interpreting a li-e rule in Article (62@& stressed the need for $ritten notice although no particular form $as re2uired" 1hus& according to Nustice N","#" Reyes& $ho $as the 'o!e!te of the Court& furnishing the coCheirs $ith a copy of the deed of sale of the property sub*ect to redemption $ould satisfy the re2uirement for $ritten notice" U+o long& therefore& as the latter Ei"e"& the redemptionerG is informed in $riting of the sale and the particulars thereof&U he declared& Uthe thirty days for redemption start running" U 8n the earlier decision of Butte ". =>& 97 U the Court& spea-ing through the same learned *urist& emphasiDed that the $ritten notice should be given by the vendor and not the vendees& conformably to a similar re2uirement under Article (62@& reading as follo$s7 Art" (62@" 1he right of legal preCemption or redemption shall not be eBercised eBcept $ithin thirty days from the notice in $riting by the prospective vendor& or by the vendors& as the case may be" 1he deed of sale shall not be recorded in the Registry of Property& unless accompanied by an affidavit of the vendor that he has given $ritten notice thereof to all possible redemptioners" 1he right of redemption of coCo$ners eBcludes that of the ad*oining o$ners" As Uit is thus apparent that the Philippine legislature in Article (62@ deliberately selected a particular method of giving notice& and that notice must be deemed eBclusive&U the Court held that notice given by the "e!(ees and not the "e!(or $ould not toll the running of the @0Cday period" 1he petition before us appears to be an illustration of the 4olmes dictum that Uhard cases ma-e bad la$sU as the petitioners obviously cannot argue against the fact that there $as really no $ritten notice given by the vendors to their coCheirs" +trictly applied and interpreted& Article (0?? can lead to only one conclusion& to $it& that in vie$ of such deficiency& the @0 day period for redemption had not begun to run& much less eBpired in (955" ,ut as has also been aptly observed& $e test a la$ by its resultsJ and li-e$ise& $e may add& by its purposes" 8t is a cardinal rule that& in see-ing the meaning of the la$& the first concern of the *udge should be to discover in its provisions the in tent of the la$ma-er" <n2uestionably& the la$ (5

should never be interpreted in such a $ay as to cause in*ustice as this is never $ithin the legislative intent" An indispensable part of that intent& in fact& for $e presume the good motives of the legislature& is to re!(er <ustice. 1hus& $e interpret and apply the la$ not independently of but in consonance $ith *ustice" #a$ and *ustice are inseparable& and $e must -eep them so" 1o be sure& there are some la$s that& $hile generally valid& may seem arbitrary $hen applied in a particular case because of its peculiar circumstances" 8n such a situation& $e are not bound& because only of our nature and functions& to apply them *ust the same& in slavish obedience to their language" Khat $e do instead is find a balance bet$een the $ord and the $ill& that *ustice may be done even as the la$ is obeyed" As *udges& $e are not automatons" Ke do not and must not unfeelingly apply the la$ as it is $orded& yielding li-e robots to the literal command $ithout regard to its cause and conse2uence" UCourts are apt to err by stic-ing too closely to the $ords of a la$&U so $e are $arned& by Nustice 4olmes again& U$here these $ords import a policy that goes beyond them"U 98 Khile $e admittedly may not legislate& $e nevertheless have the po$er to interpret the la$ in such a $ay as to reflect the $ill of the legislature" Khile $e may not read i!to the la$ a purpose that is not there& $e nevertheless have the right to read out of it the reason for its enactment" 8n doing so& $e defer not to Uthe letter that -illethU but to Uthe spirit that vivifieth&U to give effect to the la$ ma-erWs $ill" 1he spirit& rather than the letter of a statute determines its construction& hence& a statute must be read according to its spirit or intent" For $hat is $ithin the spirit is $ithin the letter but although it is not $ithin the letter thereof& and that $hich is $ithin the letter but not $ithin the spirit is not $ithin the statute" +tated differently& a thing $hich is $ithin the intent of the la$ma-er is as much $ithin the statute as if $ithin the letterJ and a thing $hich is $ithin the letter of the statute is not $ithin the statute unless $ithin the intent of the la$ma-ers" 95 8n re2uiring $ritten notice& Article (0?? see-s to ensure that the redemptioner is properly notified of the sale and to indicate the date of such notice as the starting time of the @0Cday period of redemption" Considering the shortness of the period& it is really necessary& as a general rule& to pinpoint the precise date it is supposed to begin& to obviate any problem of alleged delays& sometimes consisting of only a day or t$o" 1he instant case presents no such problem because the right of redemption $as invo-ed not (a*s but *ears after the sales $ere made in (96@ and (96!" 1he complaint $as filed by 1ecla Padua in (955& thirteen years after the first sale and fourteen years after the second sale" 1he delay invo-ed by the petitioners eBtends to more than a decade& assuming of course that there $as a valid notice that tolled the running of the period of redemption" Kas there a valid noticeO ranting that the la$ re2uires the notice to be $ritten& $ould such notice be necessary in this caseO Assuming there $as a valid notice although it $as not in $riting" $ould there be any 2uestion that the @0Cday period for redemption had eBpired long before the complaint $as filed in (955O 8n the face of the established facts& $e cannot accept the private respondentsW pretense that they $ere una$are of the sales made by their brother and sister in (96@ and (96!" ,y re2uiring $ritten proof of such notice& $e $ould be closing our eyes to the obvious truth in favor of their palpably false claim of ignorance& thus eBalting the letter of the la$ over its purpose" 1he purpose is clear enough7 to ma-e sure that the redemptioners are duly notified" Ke are satisfied that in this case the other brothers and sisters $ere actually informed& although not in $riting& of the sales made in (96@ and (96!& and that such notice $as sufficient" 0o$& $hen did the @0Cday period of redemption beginO Khile $e do not here declare that this period started from the dates of such sales in (96@ and (96!& $e do say that sometime bet$een those years and (956& $hen the first complaint for redemption $as filed& the other coCheirs $ere actually informed of the sale and that thereafter the @0Cday period started running and ultimately eBpired" 1his could have happened any time during the interval of thirteen years& $hen none of the coCheirs made a move to redeem the properties (?

sold" ,y (955& in other $ords& $hen 1ecla Padua filed her complaint& the right of redemption had already been eBtinguished because the period for its eBercise had already eBpired" 1he follo$ing doctrine is also $orth noting7 Khile the general rule is& that to charge a party $ith laches in the assertion of an alleged right it is essential that he should have -no$ledge of the facts upon $hich he bases his claim& yet if the circumstances $ere such as should have induced in2uiry& and the means of ascertaining the truth $ere readily available upon in2uiry& but the party neglects to ma-e it& he $ill be chargeable $ith laches& the same as if he had -no$n the facts" 9> 8t $as the perfectly natural thing for the coCheirs to $onder $hy the spouses AlonDo& $ho $ere not among them& should enclose a portion of the inherited lot and build thereon a house of strong materials" 1his definitely $as not the act of a temporary possessor or a mere mortgagee" 1his certainly loo-ed li-e an act of o$nership" 9et& given this unseemly situation& none of the coCheirs sa$ fit to ob*ect or at least in2uire& to ascertain the facts& $hich $ere readily available" 8t too- all of thirtee! years before one of them chose to claim the right of redemption& but then it $as already too late" Ke realiDe that in arriving at our conclusion today& $e are deviating from the strict letter of the la$& $hich the respondent court understandably applied pursuant to eBisting *urisprudence" 1he said court acted properly as it had no competence to reverse the doctrines laid do$n by this Court in the aboveCcited cases" 8n fact& and this should be clearly stressed& $e ourselves are not abandoning the De Cone*ero and ,uttle doctrines" Khat $e are doing simply is adopting an eBception to the general rule& in vie$ of the peculiar circumstances of this case" 1he coCheirs in this case $ere undeniably informed of the sales although no notice in $riting $as given them" And there is no doubt either that the @0Cday period began and ended during the (! years bet$een the sales in 2uestion and the filing of the complaint for redemption in (955& $ithout the coCheirs eBercising their right of redemption" 1hese are the *ustifications for this eBception" %ore than t$enty centuries ago& Nustinian defined *ustice Uas the constant and perpetual $ish to render every one his due"U 9? 1hat $ish continues to motivate this Court $hen it assesses the facts and the la$ in every case brought to it for decision" Nustice is al$ays an essential ingredient of its decisions" 1hus $hen the facts $arrants& $e interpret the la$ in a $ay that $ill render *ustice& presuming that it $as the intention of the la$ma-er& to begin $ith& that the la$ be dispensed $ith *ustice" +o $e have done in this case" K4:R:F3R:& the petition is granted" 1he decision of the respondent court is R:;:R+:D and that of the trial court is reinstated& $ithout any pronouncement as to costs" 8t is so ordered"

CARMELITA LLEDO V. ATTY LLEDO FE)RUARY 4 7A9A

RESOLUTION NAC2URA, J.+ %ay a government employee& dismissed from the service for cause& be allo$ed to recover the personal contributions he paid to the overnment +ervice 8nsurance +ystem E +8+GO 1his is the 2uestion that confronts this Court in the instant case& the factual antecedents of $hich are as follo$s7

(9

3n December 2(& (99?& this Court promulgated a Decision '() in the aboveCcaptioned case& dismissing from the service Atty" Cesar ;" #ledo& former branch cler- of court of the Regional 1rial Court of VueDon City& ,ranch 9!" CesarIs $ife& Carmelita& had filed an administrative case against him& charging the latter $ith immorality& abandonment& and conduct unbecoming a public official" During the investigation& it $as established that Cesar had left his family to live $ith another $oman $ith $hom he also begot children" 4e failed to provide support for his family" 1he investigating *udge recommended CesarIs dismissal from the service" 1he 3ffice of the Court Administrator E3CAG adopted the recommendation" 1he Court& in its December 2(& (99? Decision& disposed of the case in this $ise7 K4:R:F3R:& Cesar ;" #ledo& branch cler- of court of R1C& ,ranch 9!& VueDon City& is hereby !I"#I""$! from the service& $ith forfeiture of all retirement benefits and leave credits and $ith pre*udice to reemployment in any branch or instrumentality of the government& including any governmentCo$ned or controlled corporation" 1his case is R$%$RR$! to the 8,P ,oard of overnors pursuant to +ection ( of Rule (@9C, of the Rules of Court" +3 3RD:R:D"'2) 8n a letter'@) dated Nanuary (6& (999& Carmelita and her children $rote to then Chief Nustice 4ilario " Davide& Nr"& begging for humane consideration and as-ing that part of the money due Cesar be applied to the payment of the arrearages of their amortiDed house and lot then facing foreclosure by the +8+" 1hey averred that CesarIs abandonment had been painful enoughJ and to lose their home of 26 years $ould be even more painful and traumatic for the children" 1he Court directed the 3CA to comment" 1he 3CA recommended that the CourtIs December 2(& (99? Decision be reconsidered insofar as the forfeiture of CesarIs leave credits $as concerned& underscoring& ho$ever& that said benefits $ould only be released to Carmelita and her children"'!) 8n a Resolution dated August @& (999&'6) the Court resolved to deny the motion for reconsideration for lac- of merit" 3n April @& 2006& Cesar #" #ledo& Nr"& CesarIs son& $rote a letter '6) to then Chief Nustice Artemio ;" Panganiban" 4e related that his father had been bedridden after suffering a severe stro-e and acute renal failure" 4e had been abandoned by his mistress and had been under Cesar Nr"Is care since 200(" 1he latter appealed to the Court to reconsider its December 2(& (99? Decision& specifically the forfeiture of leave credits& $hich money $ould be used to pay for his fatherIs medical eBpenses" Cesar Nr" as-ed the Court for retroactive application of the CourtIs ruling subse2uent to his fatherIs dismissal& $herein the Court ruled that despite being dismissed from the service& government employees are entitled to the monetary e2uivalent of their leave credits since these $ere earned prior to dismissal" 1reating the letter as a motion for reconsideration& the Court& on %ay @& 2006& granted the same& specifically on the forfeiture of accrued leave credits" '5) Cesar Nr" $rote the Court again on 0ovember 25& 2006& eBpressing his gratitude for the CourtIs consideration of his re2uest for his fatherIs leave credits" 4e again as-ed for *udicial clemency in connection $ith his fatherIs claim for refund of the latterIs personal contributions to +8+"'?) 1he Court directed the +8+ to comment& $ithin (0 days from notice& on Cesar Nr"Is letter" For failing to file the re2uired Comment& the Court& in a Resolution dated December ((& 2005& '(0) re2uired the +8+ to sho$ cause $hy it should not be held in contempt for failure to comply $ith the Resolution directing it to file its Comment" 1he Court reiterated its December ((& 2005 Resolution on Nune (5& 200?& and directed compliance"
'9)

8n a letter'(() dated April (6& 2009& Nason C" 1eng& Regional %anager of the +8+ VueDon City Regional 3ffice& eBplained that a re2uest for a refund of retirement premiums is disallo$ed" 4e eBplained7 20

1he rate of contribution for both government and personal shares of retirement premiums $as actuarially computed to allo$ the +8+ to generate enough investment returns to be able to pay off future claims" During actuarial computation& the eBpected demographics considered the percentages of different types of future claims Eand nonCclaimsG" As such& if those that $ere eBpected to have no future claim Ee"g" those $ith forfeited retirement benefitsG $ere suddenly allo$ed to receive claims for payment of benefits& this $ould have a negative impact on the financial viability of the +8+" :ven as the Court noted the letter in its Nune @0& 2009 Resolution& '(2) it further re2uired the ,oard of Directors of the +8+ E +8+ ,oardG to file a separate Comment $ithin (0 days from notice" 8n its Comment&'(@) the +8+ ,oard said that Cesar is not entitled to the refund of his personal contributions of the retirement premiums because .it is the policy of the +8+ that an employeeLmember $ho had been dismissed from the service $ith forfeiture of retirement benefits cannot recover the retirement premiums he has paid unless the dismissal provides other$ise"/ 1he +8+ ,oard pointed out that the CourtIs Decision did not provide that Cesar is entitled to a refund of his retirement premiums" 1here is no gainsaying that dismissal from the service carries $ith it the forfeiture of retirement benefits" <nder the <niform Rules in Administrative Cases in the Civil +ervice& it is provided that7'(!) +ection 6?" Administrative Disabilities 8nherent in Certain Penalties"

a" 1he penalty of dismissal shall carry $ith it that of cancellation of eligibility& forfeiture of retirement benefits& and the perpetual dis2ualification for reemployment in the government service& unless other$ise provided in the decision" 4o$ever& in the instant case& Cesar Nr" see-s only the return of his fatherIs personal contributions to the +8+" 4e is not claiming any of the benefits that Cesar $ould have been entitled to had he not been dismissed from the service& such as retirement benefits" 1o determine the propriety of Cesar Nr"Is re2uest& a reeBamination of the la$s governing the +8+ is in order" 1he +8+ $as created in (9@6 by Common$ealth Act 0o" (?6" 8t $as intended to .promote the efficiency and $elfare of the employees of the overnment of thePhilippines/ and to replace the pension systems in eBistence at that time" '(6) +ection 9 of Common$ealth Act 0o" (?6 states7 +ection 9" :ffect of dismissal or separation from service" M Up'n d"s%"ss$0 ('r &$.se '( $ %e% er '( t#e S!ste%, t#e ene("ts .nder #"s %e% ers#"p p'0"&! s#$00 e $.t'%$t"&$00! ('r(e"ted t' t#e S!ste%, e,&ept 'neB#$0( '( t#e &$s# 'r s.rrender -$0.e, C#"&# $%'.nt s#$00 e p$"d t' s.&# %e% er, 'r "n &$se '( de$t#, t' #"s ene("&"$r!. 8n other cases of separation before maturity of a policy& the overnment contributions shall cease& and the insured member shall have the follo$ing options7 EaG to collect the cash surrender value of the policyJ or EbG to continue the policy by paying the full premiums thereofJ or EcG to obtain a paid up or eBtended term insurance in such amount or period& respectively& as the paid premiums may $arrant& in accordance $ith the conditions contained in said policyJ o'r) EdG to avail himself of such other options as may be provided in the policy"'(6) 8n (96(& Common$ealth Act 0o" (?6 $as amended by Republic Act ER"A"G 0o" 660" R"A" 0o" 660 amended +ections 2EaG& EdG& and EfGJ !J 6J 6J 5J ?J (0J ((J (2J (@J (!J (6J and (6 of 2(

Common$ealth Act 0o" (?6" R"A" 0o" 660 li-e$ise added ne$ provisions to the earlier la$& one of $hich reads7 +ection ?" 0umbered 1he follo$ing ne$ sections are hereby inserted in Common$ealth Act 3ne hundred and eightyCsiB7

88" M Retirement 8nsurance ,enefit .+ection ((" EaG Amount of annuity" M <pon retirement a member shall be automatically entitled to a life annuity payable monthly for at least five years and thereafter as long as he live" EsicG 1he amount of the monthly annuity at the age of fiftyCseven years shall be t$enty pesos& plus& for each year of service rendered after the approval of this Act& one and siBCtenths per centum of the average monthly salary received by him during the last five years of service& plus& for each year of service rendered prior to the approval of this Act& if said service $as at least seven years& one and t$oCtenths per centum of said average monthly salary7 Provided& 1hat this amount shall be ad*usted actuarially if retirement be at an age other than fiftyCseven years7 Provided& further& 1hat the maBimum amount of monthly annuity at age fiftyCseven shall not in any case eBceed t$oCthirds of said average monthly salary or five hundred pesos& $hichever is the smaller amount7 And provided& finally& 1hat retirement benefit shall be paid not earlier than one year after the approval of this Act" 8n lieu of this annuity& he may prior to his retirement elect one of the follo$ing e2uivalent benefits7 .E(G %onthly annuity during his lifetimeJ

.E2G %onthly annuity during the *ointClives of the employee and his $ife or other designated beneficiary& $hich annuity& ho$ever& shall be reduced upon the death of either to oneChalf and be paid to the survivorJ .E@G For those $ho are at least siBtyCfive years of age& lump sum payment of present value of annuity for first five years and future annuity to be paid monthlyJ or UE!G +uch other benefit as may be approved by the +ystem"

UEbG +urvivors benefit" M <pon death before he becomes eligible for retirement& his beneficiaries as recorded in the application of retirement annuity filed $ith the +ystem shall be paid his o$n premiums $ith interest of three per centum per annum& compounded monthly" 8f on his death he is eligible for retirement& then the automatic retirement annuity or the annuity chosen by him previously shall be paid accordingly" UEcG Disability benefit" M 8f he becomes permanently and totally disabled and his services are no longer desirable& he shall be discharged and paid his o$n contributions $ith interest of three per centum per annum& compounded monthly& if he has served less than five yearsJ if he has served at least five years but less than fifteen years& he shall be paid also the corresponding employerWs premiums& $ithout interest& described in subsection EaG of section five hereofJ and if he has served at least fifteen years he shall be retired and be entitled to the benefit provided under subsection EaG of this section" UEdG Up'n d"s%"ss$0 ('r &$.se 'r 'n -'0.nt$r! sep$r$t"'n, #e s#$00 e ent"t0ed 'n0! t' #"s 'Cn pre%".%s $nd -'0.nt$r! dep's"ts, "( $n!, p0.s "nterest '( t#ree per &ent.% per $nn.%, &'%p'.nded %'nt#0!.D'(5) 1hus& +ection ((EdG of R"A" 0o" 660 should be deemed to have amended Common$ealth Act 0o" (?6" 8n (955& then President Ferdinand %arcos issued Presidential Decree EP"D"G 0o" ((!6& an act .Amending& :Bpanding& 8ncreasing and 8ntegrating the +ocial +ecurity and 8nsurance ,enefits of overnment :mployees and Facilitating the Payment thereof under Common$ealth Act 0o" (?6& as amended& and for other purposes"/ 22

+ection ! of P"D" 0o" ((!6 reads7 +ection !" #ffect of )e'aratio! from the )er"ice. A member shall continue to be a member& not$ithstanding his separation from the service and& unless the terms of his separation provide other$ise& he shall be entitled to $hatever benefits $hich shall have accrued or been earned at the time of his separation in the event of any contingency compensable under this Act" 1here is no provision in P"D" 0o" ((!6 dealing specifically $ith +8+ members dismissed from the service for cause& or their entitlement to the premiums they have paid" +ubse2uently& R"A" 0o" ?29( $as enacted in (995& and it provides7 +ection (" Presidential Decree 0o" ((!6& as amended& other$ise -no$n as the .Revised overnment +ervice 8nsurance Act of (955/& is hereby amended to read as follo$s7 BBBB +:C" !" #ffect of )e'aratio! from the )er"ice. = A member separated from the service shall continue to be a member& and shall be entitled to $hatever benefits he has 2ualified to in the event of any contingency compensable under this Act" 8t is note$orthy that none of the subse2uent la$s eBpressly repealed +ection 9 of Common$ealth Act 0o" (?6& as amended" 8n fact& none of the subse2uent la$s eBpressly repealed the earlier la$s" ,e that as it may& $e must still resolve the issue of $hether the same has been impliedly repealed" Ke ans$er in the negative" As a general rule& repeals by implication are not favored" Khen statutes are i! 'ari materia& they should be construed together" A la$ cannot be deemed repealed unless it is clearly manifested that the legislature so intended it" '(?) 1he repealing clause of P"D" 0o" ((!6 reads7 +ection !?. Re'ea i!2 C ause. All la$s or parts of la$ specifically inconsistent here$ith shall be considered amended or repealed accordingly" 3n the other hand R"A" 0o" ?29(Is repealing clause states7 +:C" @" Re'ea i!2 C ause. = All la$s and any other la$ or parts of la$ specifically inconsistent here$ith are hereby repealed or modified accordingly7 Pro"i(e(& 1hat the rights under eBisting la$s& rules and regulations vested upon or ac2uired by an employee $ho is already in the service as of the effectivity of this Act shall remain in force and effect7 Pro"i(e(& further& 1hat subse2uent to the effectivity of this Act& a ne$ employee or an employee $ho has previously retired or separated and is reemployed in the service shall be covered by the provisions of this Act"

1his Court has previously determined the nature of similarlyC$orded repealing clauses" 1hus7 1he holding of this Court in Meca!o "s. COA is instructive7 .1he 2uestion that should be as-ed is7 Khat is the nature of this repealing clauseO 8t is certainly not an eBpress repealing clause because it fails to identify or designate the act or acts that are intended to 2@

be repealed" Rather& it is an eBample of a general repealing provision& as stated in 3pinion 0o" 5@& s" (99(" 8t is a clause $hich predicates the intended repeal under the condition that a substantial conflict must be found in eBisting and prior acts" 1he failure to add a specific repealing clause indicates that the intent $as not to repeal any eBisting la$& unless an irreconcilable inconsistency and repugnancy eBist in the terms of the ne$ and old la$s" 1his latter situation falls under the category of an implied repeal"/ '(9) 1here are t$o accepted instances of implied repeal" 1he first ta-es place $hen the provisions in the t$o acts on the same sub*ect matter are irreconcilably contradictory& in $hich case& the later act& to the eBtent of the conflict& constitutes an implied repeal of the earlier one" 1he second occurs $hen the later act covers the $hole sub*ect of the earlier one and is clearly intended as a substituteJ thus& it $ill operate to repeal the earlier la$" '20) Addressing the second instance& $e pose the 2uestion7 $ere the later enactments intended to substitute the earlier onesO Ke hold that there $as no such substitution" P"D" 0o" ((!6 $as not intended to replace Common$ealth Act 0o" (?6& as amended by R"A" 0o" 660& but .to eBpand and improve the social security and insurance programs administered by the overnment +ervice 8nsurance +ystem"/ '2() 1hus& as the aboveC2uoted repealing clause indicates& only the la$s or parts of la$ specifically inconsistent $ith P"D" 0o" ((!6 $ere considered amended or repealed"'22) 8n fact& +ection @! of P"D" 0o" ((!6 mandates that the +8+& as create( a!( esta+ ishe( u!(er Commo!4ea th Act :o. ?@A& shall implement the provisions of that la$"%oreover& +ection (@ states7 +ection (@" Retireme!t O'tio!. :mployees $ho are in the government service upon the effectivity of this Act shall& at the time of their retirement& have the option to retire under this Act or under Common$ealth Act 0o" (?6& as previously amended" Accordingly& Common$ealth Act 0o" (?6& as amended& had not been abrogated by P"D" 0o" ((!6" %ean$hile& R"A" 0o" ?29(& although enacted to amend P"D" 0o" ((!6& did not eBpressly repeal Common$ealth Act 0o" (?6" <nder the first instance of implied repeal& $e are guided by the principle that in order to effect a repeal by implication& the later statute must be so irreconcilably inconsistent $ith and repugnant to the eBisting la$ that they cannot be reconciled and made to stand together" 1he clearest case of inconsistency must be made before the inference of implied repeal can be dra$n& for inconsistency is never presumed"'2@) Ke no$ eBamine the effect of the later statutes on the provision specifically dealing $ith employees dismissed for cause" Ke again 2uote +ection ((EdG of Common$ealth Act 0o" (?6& as amended7 EdG <pon dismissal for cause or on voluntary separation& he shall be entitled only to his o$n premiums and voluntary deposits& if any& plus interest of three per centum per annum& compounded monthly" Compare this $ith +ection ! of P"D" 0o" ((!6& to $it7 +ection !" #ffect of )e'aratio! from the )er"ice. A member shall continue to be a member& not$ithstanding his separation from the service and& unless the terms of his separation provide other$ise& he shall be entitled to $hatever benefits $hich shall have accrued or been earned at the time of his separation in the event of any contingency compensable under this Act" 2!

and +ection ( of R"A" 0o" ?29(& $hich amended +ection ! of P"D" 0o" ((!6 and the la$ in force at the time of CesarIs dismissal from the service7 +:C" !. #ffect of )e'aratio! from the )er"ice. = A member separated from the service shall continue to be a member& and shall be entitled to $hatever benefits he has 2ualified to in the event of any contingency compensable under this Act" 1here is no manifest inconsistency bet$een +ection ((EdG of Common$ealth Act 0o" (?6& as amended& and +ection ! of R"A" 0o" ?29(" 1he latter provision is a general statement intended to cover members separated from the service $hether the separation is voluntary or involuntary& and $hether the same $as for cause or not" %oreover& the same deals only $ith the benefits the member is entitled to at the time of separation" For the latter la$ to be deemed as having repealed the earlier la$& it is necessary to sho$ that the statutes or statutory provisions deal $ith the same sub*ect matter and that the latter be inconsistent $ith the former" 1here must be a sho$ing of repugnance& clear and convincing in character" 1he language used in the later statute must be such as to render it irreconcilable $ith $hat had been formerly enacted" An inconsistency that falls short of that standard does not suffice"'2!) As mentioned earlier& neither P"D" 0o" ((!6 nor R"A" 0o" ?29( contains any provision specifically dealing $ith employees dismissed for cause and the status of their personal contributions" 1hus& there is no inconsistency bet$een +ection ((EdG of Common$ealth Act 0o" (?6& as amended& and +ection ! of P"D" 0o" ((!6& and& subse2uently& R"A" 0o" ?29(" 1he inevitable conclusion then is that +ection ((EdG of Common$ealth Act 0o" (?6& as amended& continues to govern cases of employees dismissed for cause and their claims for the return of their personal contributions" Finally& it should be remembered that the +8+ la$s are in the nature of social legislation& to be liberally construed in favor of the government employees" '26) 1he money sub*ect of the instant re2uest consists of personal contributions made by the employee& premiums paid in anticipation of benefits eBpected upon retirement" 1he occurrence of a contingency& i.e.& his dismissal from the service prior to reaching retirement age& should not deprive him of the money that belongs to him from the outset" 1o allo$ forfeiture of these personal contributions in favor of the +8+ $ould condone undue enrichment" Pursuant to the foregoing discussion& Cesar is entitled to the return of his premiums and voluntary deposits& if any& $ith interest of three per centum per annum& compounded monthly" W2EREFORE& the foregoing premises considered& the overnment +ervice 8nsurance +ystem is hereby DIRECTED to return to Atty" Cesar #ledo his o$n premiums and voluntary deposits& if any& plus interest of three per centum per annum& compounded monthly" SO ORDERED

:0 ,A0C

3G.R. N'. 9789?4. N'-e% er 5, 944?:

DANILO E. PARAS, petitioner, vs. COMMISSION ON ELECTIONS, respondent. 26

RESOLUTION FRANCISCO, J.+ Petitioner Danilo :" Paras is the incumbent Punong ,arangay of Pula& Cabanatuan City $ho $on during the last regular barangay election in (99!" A petition for his recall as Punong ,arangay $as filed by the registered voters of the barangay" Acting on the petition for recall& public respondent Commission on :lections EC3%:#:CG resolved to approve the petition& scheduled the petition signing on 3ctober (!& (996& and set the recall election on 0ovember (@& (996"'() At least 29"@0F of the registered voters signed the petition& $ell above the 26F re2uirement provided by la$" 1he C3%:#:C& ho$ever& deferred the recall election in vie$ of petitionerIs opposition" 3n December 6& (996& the C3%:#:C set ane$ the recall election& this time on December (6& (996" 1o prevent the holding of the recall election& petitioner filed before the Regional 1rial Court of Cabanatuan City a petition for in*unction& doc-eted as +P Civil Action 0o" 226!CAF& $ith the trial court issuing a temporary restraining order" After conducting a summary hearing& the trial court lifted the restraining order& dismissed the petition and re2uired petitioner and his counsel to eBplain $hy they should not be cited for contempt for misrepresenting that the barangay recall election $as $ithout C3%:#:C approval" '2) 8n a resolution dated Nanuary 6& (996& the C3%:#:C& for the third time& reCscheduled the recall election on Nanuary (@& (996J hence& the instant petition for certiorari $ith urgent prayer for in*unction" 3n Nanuary (2& (996& the Court issued a temporary restraining order and re2uired the 3ffice of the +olicitor eneral& in behalf of public respondent& to comment on the petition" 8n vie$ of the 3ffice of the +olicitor eneralIs manifestation maintaining an opinion adverse to that of the C3%:#:C& the latter through its la$ department filed the re2uired comment" Petitioner thereafter filed a reply"'@) PetitionerIs argument is simple and to the point" Citing +ection 5! EbG of Republic Act 0o" 5(60& other$ise -no$n as the #ocal overnment Code& $hich states that . !o reca sha ta-e ' ace 4ithi! o!e (?) *ear from the (ate of the officia s assum'tio! to office or o!e (?) *ear imme(iate * 'rece(i!2 a re2u ar oca e ectio! /& petitioner insists that the scheduled Nanuary (@& (996 recall election is no$ barred as the +angguniang Pabataan E+PG election $as set by Republic Act 0o" 5?0? on the first %onday of %ay (996& and every three years thereafter" 8n support thereof& petitioner cites Associate( La+or =!io! ". Letro!(o5Mo!te<o & 2@5 +CRA 62(& $here the Court considered the +P election as a regular local election" Petitioner maintains that as the +P election is a regular local election& hence no recall election can be had for barely four months separate the +P election from the recall election" Ke do not agree" 1he sub*ect provision of the #ocal overnment Code provides7

.+:C" 5!" Limitatio!s o! Reca " M EaG Any elective local official may be the sub*ect of a recall election only once during his term of office for loss of confidence" EbG N' re&$00 s#$00 t$Ee p0$&e C"t#"n one E(G year from the date of the officialIs assumption to office or 'ne (9) !e$r "%%ed"$te0! pre&ed"n/ $ regular lo&al ele&tion.; ':mphasis added") 8t is a rule in statutory construction that every part of the statute must be interpreted $ith reference to the conteBt& i"e"& that every part of the statute must be considered together $ith the other parts& and -ept subservient to the general intent of the $hole enactment" '!) 1he evident intent of +ection 5! is to sub*ect an elective local official to recall election once during his term of office" Paragraph EbG construed together $ith paragraph EaG merely designates the period $hen such elective local official may be sub*ect of a recall election& that is& during the second year of his term of office" 1hus& subscribing to petitionerIs interpretation of the phrase re2u ar oca e ectio! to include the +P election $ill unduly circumscribe the novel provision of the #ocal overnment Code on recall& a mode of removal of public officers by initiation of the people before the end of his term" And if the +P election $hich is set by R"A" 0o" 5?0? to be held every three years from %ay (996 $ere to be deemed $ithin the purvie$ of the phrase . re2u ar oca e ectio!/& as erroneously insisted by petitioner& then no recall election can be conducted rendering inutile the recall provision of the #ocal overnment Code" 26

8n the interpretation of a statute& the Court should start $ith the assumption that the legislature intended to enact an effective la$& and the legislature is not presumed to have done a vain thing in the enactment of a statute" '6) An interpretation should& if possible& be avoided under $hich a statute or provision being construed is defeated& or as other$ise eBpressed& nullified& destroyed& emasculated& repealed& eBplained a$ay& or rendered insignificant& meaningless& inoperative or nugatory"'6) 8t is li-e$ise a basic precept in statutory construction that a statute should be interpreted in harmony $ith the Constitution"'5) 1hus& the interpretation of +ection 5! of the #ocal overnment Code& specifically paragraph EbG thereof& should not be in conflict $ith the Constitutional mandate of +ection @ of Article A of the Constitution to .enact a local government code $hich shall provide for a more responsive and accountable local government structure instituted through a system of decentraliDation $ith effecti"e mecha!isms of reca & initiative& and referendum B B B"/ %oreover& petitionerIs too literal interpretation of the la$ leads to absurdity $hich $e cannot countenance" 1hus& in a case& the Court made the follo$ing admonition7 .Ke admonish against a tooCliteral reading of the la$ as this is apt to constrict rather than fulfill its purpose and defeat the intention of its authors" 1hat intention is usually found not in Hthe letter that -illeth but in the spirit that vivifiethI B B B/ '?) 1he spirit& rather than the letter of a la$ determines its constructionJ hence& a statute& as in this case& must be read according to its spirit and intent" Finally& recall election is potentially disruptive of the normal $or-ing of the local government unit necessitating additional eBpenses& hence the prohibition against the conduct of recall election one year immediately preceding the re2u ar oca e ectio!" 1he proscription is due to the proBimity of the neBt regular election for the office of the local elective official concerned" 1he electorate could choose the officialIs replacement in the said election $ho certainly has a longer tenure in office than a successor elected through a recall election" 8t $ould& therefore& be more in -eeping $ith the intent of the recall provision of the Code to construe re2u ar oca e ectio! as one referring to an election $here the office held by the local elective official sought to be recalled $ill be contested and be filled by the electorate" 0evertheless& recall at this time is no longer possible because of the limitation stated under +ection 5! EbG of the Code considering that the neBt regular election involving the barangay office concerned is barely seven E5G months a$ay& the same having been scheduled on %ay (995" '9) ACCORDINGLY& the petition is hereby dismissed for having become moot and academic" 1he temporary restraining order issued by the Court on Nanuary (2& (996& en*oining the recall election should be as it is hereby made permanent" SO ORDERED.

Republic of the Philippines SUPREME COURT %anila F8R+1 D8;8+830 G.R. N's. LB7=>A7BA8 Apr"0 9=, 94=4 COMMISSIONER OF INTERNAL REVENUE, petitioner& vs" ESSO STANDARD EASTERN, INC. $nd T2E COURT OF TAF APPEALS, respondents"

25

NARVASA, J. 8n t$o E2G cases appealed to it 9 by the private respondent& hereafter simply referred to as :++3& the Court of 1aB Appeals rendered *udgment 7 sustaining the decisions of the Commissioner of 8nternal Revenue eBcepted to& save Uthe refundCclaim "" in the amount of P@9&5?5"9! as overpaid interest $hich it ordered refunded to :++3 Reversal of this decision is sought by the Commissioner by a petition for revie$ on certiorari filed $ith this Court" 4e ascribes to the 1aB Court one sole error7 Uof applying the taB credit for overpayment of the (969 income taB of "" :++3& granted by the petitioner ECommissionerG& to "" E:++3WsG basic (960 deficiency income taB liability B B and imposing the (C(L2F monthly interests 8 only on the remaining balance thereof in the sum of P(!6&96("00U 5Einstead of the full amount of the (960 deficiency liability in the amount of P@65&99!"00G" Reversal of the same *udgment of the Court of 1aB Appeals is also sought by :++3 in its o$n appeal Edoc-eted as "R" 0os" #2?60?C09GJ but in the brief filed by it in this case& it indicates that it $ill not press its appeal in the event that Uthe instant petition for revie$ be denied and that *udgment be rendered affirming the decision of the Court of 1aB Appeals"U 1he facts are simple enough and are 2uite 2uic-ly recounted" :++3 overpaid its (969 income taB by P22(&0@@"00" 8t $as accordingly granted a taB credit in this amount by the Comissioner on August 6&(96!" 4o$ever& :++3s payment of its income taB for (960 $as found to be short by P@65&99!"00" +o& on Nuly (0& (96!& the Commissioner $rote to :++3 demanding payment of the deficiency taB& together $ith interest thereon for the period from April (?&(96( to April (?&(96!" 3n August (0& (96!& :++3 paid under protest the amount alleged to be due& including the interest as rec-oned by the Commissioner" 8t protested the computation of interest& contending it $as more than that properly due" 8t claimed that it should not have been re2uired to pay interest on the total amount of the deficiency taB& P@65&99!"00& but only on the amount of P(!6&96("00M representing the difference bet$een said deficiency& P@65&99!"00& and :++3s earlier overpayment of P22(&0@@"00 Efor $hich it had been granted a taB creditG" :++3 thus as-ed for a refund" 1he 8nternal Revenue Commissioner denied the claim for refund" :++3 appealed to the Court of 1aB Appeals" As aforestated" that Court ordered payment to :++3 of its UrefundCclaim B B in the amount of P@9&5?5"9! as overpaid interest" 4ence& this appeal by the Commissioner" 1he C1A *ustified its a$ard of the refund as follo$s7 """ 8n the letter of August 6& (96!& "" Ethe CommissionerG admitted that "" :++3 had overpaid its (969 income taB by P22(&0@@"00" Accordingly "" Ethe CommissionerG granted to "" :++3 a taB credit of P22(&0@@"00" 8n short& the said sum of P22(&0@@"00 of :++3Ws money $as in the overnmentWs hands at the latest on Nuly (6& (960 $hen it :++3 paid in full its second installment of income taB for (969" 3n Nuly (0& (96! "" Ethe CommissionerG claimed that for (960& "" :++3 underpaid its income taB by P@65&99!"00" 4o$ever& instead of deducting from P@65&99!"00 the taB credit of P22(&0@@"00 $hich "" Ethe CommissionerG had already admitted $as due "" :++3 "" Ethe CommissionerG still insists in collecting the interest on the full amount of P@65&99!"00 for the period April (?& (96( to April (?&(96! $hen the overnment had already in its hands the sum of P22(&0@@"00 of "" :++3s money even before the latterWs income taB for (960 $as due and payable" 8f the imposition of interest does not amount to a penalty but merely a *ust compensation to the +tate for the delay in paying the taB& and for the concomitant use by the taBpayer of funds that rightfully should be in the overnmentWs hand ECastro v" Collector& "R" 0o" #C(25!& Dec" 2?& (962G& the collection of the interest on the full amount of P@65&99!"00 $ithout deducting first the taB credit of P22(&0@@"00& $hich has long been in the hands of the overnment& becomes erroneous& illegal and arbitrary" "" E:++3G could hardly be charged of delin2uency in paying P22(&0@@"00 out of the deficiency income taB of P@65&99!"00& for $hich the +tate should be compensated by the payment of interest& because the said amount of P22(&0@@"00 $as already in the coffers of the overnment" 0either could "" :++3 be charged for the concomitant use of funds that rightfully belong to the overnment because as early as Nuly (6& (960& it $as the overnment that $as using "" :++3s funds of P22(&0@@"00" 8n the circumstances& $e find it unfair and un*ust for "" Ethe CommissionerG to eBact the interest on the said sum of P22(&0@@"00 $hich& after all& $as paid to and received by the overnment even before the incidence of the deficiency income taB of P@65&99!"00" E8togonC +uyoc %ines& 8nc" v" Commissioner& C"1"A" Case 0o" (@25& +ept" @0&(966G" 3n the contrary& the 2?

overnment should be the first to blaDe the trail and set the eBample of fairness and honest dealing in the administration of taB la$s" Accordingly& $e hold that the taB credit of P22(&0@@"00 for (969 should first be deducted from the basic deficiency taB of P@65&99!"00 for (960 and the resulting difference of P(!6&96("00 $ould be sub*ect to the (?F interest prescribed by +ection 6( EdG of the Revenue Code" According to the prayer of ""E:++3G "" Ethe CommissionerG is hereby ordered to refund to "" E:++3G the amount of P@9&5?5"9! as overpaid interest in the settlement of its (960 income taB liability" 4o$ever& as the collection of the taB $as not attended $ith arbitrariness because "" E:++3G itself follo$ed B B Ethe CommissionerWsG manner of computing the taB in paying the sum of P2(@&(?9"9@ on August (0& (96!& the prayer of "" E:++3G that it be granted the legal rate of interest on its overpayment of P@9&5?5"9! from August (0& (96! to the time it is actually refunded is denied" E+ee Collector of 8nternal Revenue v" ,inalbagan :state& 8nc"& "R" 0o" (&(2562& Nan" @0& (966G" 1he CommissionerWs position is that income taBes are determined and paid on an annual basis& and that such determination and payment of annual taBes are separate and independent transactionsJ and that a taB credit could not be so considered until it has been finally approved and the taBpayer duly notified thereof" +ince in this case& he argues& the taB credit of P22(&0@@"00 $as approved only on August 6& (96!& it could not be availed of in reduction of :++3s earlier taB deficiency for the year (960J as of that year& (960& there $as as yet no taB credit to spea- of& $hich $ould reduce the deficiency taB liability for (960" 8n support of his position& the Commissioner invo-es the provisions of +ection 6( of the 1aB Code pertinently reading as follo$s7 EcG Definition of deficiency" As used in this Chapter in respect of taB imposed by this 1itle& the term WdeficiencyW means7 E(G 1he amount by $hich the taB imposed by this 1itle eBceeds the amount sho$n as the taB by the taBpayer upon his returnJ but the amount so sho$n on the return shall first be increased by the amounts previously assessed Eor collected $ithout assessmentG as a deficiency& and decreased by the amount previously abated credited& returned& or other$ise in respect of such taBJ "" BBB BBB BBB EdG 8nterest on deficiency" M 8nterest upon the amount determined as deficiency shall be assessed at the same time as the deficiency and shall be paid upon notice and demand from the Commissioner of 8nternal RevenueJ and shall be collected as a part of the taB& at the rate of siB per centum per annum from the date prescribed for the payment of the taB Eor& if the taB is paid in installments& from the date prescribed for the payment of the first installmentG to the date the deficiency is assessedJ Pro"i(e(& 1hat the amount that may be collected as interest on deficiency shall in no case eBceed the amount corresponding to a period of three years& the present provision regarding prescription to the contrary not$ithstanding" 1he fact is that& as respondent Court of 1aB Appeals has stressed& as early as Nuly (6& (960& the overnment already had in its hands the sum of P22(&0@@"00 representing eBcess payment" 4aving been paid and received by mista-e& as petitioner Commissioner subse2uently ac-no$ledged& that sum un2uestionably belonged to :++3& and the overnment had the obligation to return it to :++3 1hat ac-no$ledgment of the erroneous payment came some four E!G years after$ards in no$ise negates or detracts from its actuality" 1he obligation to return money mista-enly paid arises from the moment that payment is made& and not from the time that the payee admits the obligation to reimburse" 1he obligation of the payee to reimburse an amount paid to him results from the mista-e& not from the payeeWs confession of the mista-e or recognition of the obligation to reimburse" 8n other $ords& since the amount of P22(&0@@"00 belonging to :++3 $as already in the hands of the overnment as of Nuly& (960& although the latter had no right $hatever to the amount and indeed $as bound to return it to :++3& it $as neither legally nor logically possible for :++3 thereafter to be considered a debtor of the overnment in that amount of P22(&0@@"00J and $hatever other obligation :++3 might subse2uently incur in favor of the overnment $ould have to be reduced by that sum& in respect of $hich no interest could be charged" 1o interpret the $ords of the statute in such a manner as to subvert these truisms simply can not and should not be countenanced" U0othing is better settled than that courts are not to give $ords a meaning $hich $ould lead to absurd or unreasonable 29

conse2uences" 1hat is a principle that goes bac- to 6! re A e! E2 Phil" 6@0G decided on 3ctober 29& (90@& $here it $as held that a literal interpretation is to be re*ected if it $ould be un*ust or lead to absurd results"U ?U+tatutes should receive a sensible construction& such as $ill give effect to the legislative intention and so as to avoid an un*ust or absurd conclusion"U 6 K4:R:F3R:& the petition for revie$ is D:08:D& and the Decision of the Court of 1aB Appeals dated 3ctober 2?& (965 sub*ect of the petition is AFF8R%:D& $ithout pronouncement as to costs"

CESARIO URSUA, petitioner, vs. COURT OF APPEALS AND PEOPLE OF T2E P'ILIPPI($", respondents. DECISION )ELLOSILLO, J.+ 1his is a petition for a revie$ of the decision of the Court of Appeals $hich affirmed the conviction of petitioner by the Regional 1rial Court of Davao City for violation of +ec" ( of C"A" 0o" (!2& as amended by R"A" 0o" A0@B& other$ise -no$n as 1A! Act to Re2u ate the =se of A iases.; '() Petitioner Cesario <rsua $as a Community :nvironment and 0atural Resources 3fficer assigned in Pidapa$an& Cotabato" 3n 9 %ay (9?9 the Provincial overnor of Cotabato re2uested the 3ffice of the 3mbudsman in %anila to conduct an investigation on a complaint for bribery& dishonesty& abuse of authority and giving of un$arranted benefits by petitioner and other officials of the Department of :nvironment and 0atural Resources" 1he complaint $as initiated by the +angguniang Panlala$igan of Cotabato through a resolution advising the overnor to report the involvement of petitioner and others in the illegal cutting of mahogany trees and hauling of illegallyCcut logs in the area"'2) 3n ( August (9?9 Atty" Francis Palmones& counsel for petitioner& $rote the 3ffice of the 3mbudsman in Davao City re2uesting that he be furnished copy of the complaint against petitioner" Atty" Palmones then as-ed his client <rsua to ta-e his letterCre2uest to the 3ffice of the 3mbudsman because his la$ firmIs messenger& 3scar PereD& had to attend to some personal matters" ,efore proceeding to the 3ffice of the 3mbudsman petitioner tal-ed to 3scar PereD and told him that he $as reluctant to personally as- for the document since he $as one of the respondents before the 3mbudsman" 4o$ever& PereD advised him not to $orry as he could *ust sign his EPereDG name if ever he $ould be re2uired to ac-no$ledge receipt of the complaint" '@) Khen petitioner arrived at the 3ffice of the 3mbudsman in Davao City he $as instructed by the security officer to register in the visitorsI logboo-" 8nstead of $riting do$n his name petitioner $rote the name .3scar PereD/ after $hich he $as told to proceed to the Administrative Division for the copy of the complaint he needed" 4e handed the letter of Atty" Palmones to the Chief of the Administrative Division& %s" #oida Pahulugan& $ho then gave him a copy of the complaint& receipt of $hich he ac-no$ledged by $riting the name .3scar PereD"/ '!) ,efore petitioner could leave the premises he $as greeted by an ac2uaintance& Nosefa Amparo& $ho also $or-ed in the same office" 1hey conversed for a $hile then he left" Khen #oida learned that the person $ho introduced himself as .3scar PereD/ $as actually petitioner Cesario <rsua& a customer of Nosefa Amparo in her gasoline station& #oida reported the matter to the Deputy 3mbudsman $ho recommended that petitioner be accordingly charged" 3n (? December (990& after the prosecution had completed the presentation of its evidence& petitioner $ithout leave of court filed a demurrer to evidence alleging that the failure of the prosecution to prove that his supposed a ias $as different from his registered name in the local civil registry $as fatal to its cause" Petitioner argued that no document from the local civil registry $as presented to sho$ the registered name of accused $hich according to him $as a condition si!e $ua !o! for the validity of his conviction" 1he trial court re*ected his contentions and found him guilty of violating +ec" ( of C"A" 0o" (!2 as amended by R" A" 0o" 60?6" 4e $as sentenced to suffer a prison term of one E(G year and one E(G day of 'risio! correccio!a minimum as minimum& to four E!G years of 'risio! @0

correccio!a medium as maBimum& $ith all the accessory penalties provided for by la$& and to pay a fine of P!&000"00 plus costs" Petitioner appealed to the Court of Appeals" 3n @( %ay (99@ the Court of Appeals affirmed the conviction of petitioner but modified the penalty by imposing an indeterminate term of one E(G year as minimum to three E@G years as maBimum and a fine of P6&000"00" Petitioner no$ comes to us for revie$ of his conviction as" he reasserts his innocence" 4e contends that he has not violated C"A" 0o" (!2 as amended by R" A" 0o" 60?6 as he never used any a ias nameJ neither is .3scar PereD/ his a ias. An a ias& according to him& is a term $hich connotes the habitual use of another name by $hich a person is also -no$n" 4e claims that he has never been -no$n as .3scar PereD/ and that he only used such name on one occasion and it $as $ith the eBpress consent of 3scar PereD himself" 8t is his position that an essential re2uirement for a conviction under C"A" 0o" (!2 as amended by R" A" 0o" 60?6 has not been complied $ith $hen the prosecution failed to prove that his supposed a ias $as different from his registered name in the Registry of ,irths" 4e further argues that the Court of Appeals erred in not considering the defense theory that he $as charged under the $rong la$" '6) 1ime and again $e have decreed that statutes are to be construed in the light of the purposes to be achieved and the evils sought to be remedied" 1hus in construing a statute the reason for its enactment should be -ept in mind and the statute should be construed $ith reference to the intended scope and purpose" '6) 1he court may consider the spirit and reason of the statute& $here a literal meaning $ould lead to absurdity& contradiction& in*ustice& or $ould defeat the clear purpose of the la$ma-ers"'5) For a clear understanding of the purpose of C"A" 0o" (!2 as amended& $hich $as allegedly violated by petitioner& and the surrounding circumstances under $hich the la$ $as enacted& the pertinent provisions thereof& its amendments and related statutes are herein cited" C"A" 0o" (!2& $hich $as approved on 5 0ovember (9@6& and before its amendment by R" A" 0o" 60?6& is entitled An Act to Re2u ate the =se of A iases. 8t provides as follo$s7 +ection (" :Bcept as a pseudonym for literary purposes& no person shall use any name different from the one $ith $hich he $as christened or by $hich he has been -no$n since his childhood& or such substitute name as may have been authoriDed by a competent court" 1he name shall comprise the patronymic name and one or t$o surnames" +ection 2" Any person desiring to use an a ias or a iases shall apply for authority therefor in proceedings li-e those legally provided to obtain *udicial authority for a change of name" +eparate proceedings shall be had for each a ias& and each ne$ petition shall set forth the original name and the a ias or a iases for the use of $hich *udicial authority has been obtained& specifying the proceedings and the date on $hich such authority $as granted" Nudicial authorities for the use of aliases shall be recorded in the proper civil register B B B" 1he above la$ $as subse2uently amended by R" A" 0o" 60?6& approved on ! August (969" As amended& C"A" 0o" (!2 no$ reads7 +ection (" :Bcept as a pseudonym solely for literary& cinema& television& radio or other entertainment purposes and in athletic events $here the use of pseudonym is a normally accepted practice& no person shall use any name different from the one $ith $hich he $as registered at birth in the office of the local civil registry or $ith $hich he $as baptiDed for the first time& or in case of an alien& $ith $hich he $as registered in the bureau of immigration upon entryJ or such substitute name as may have been authoriDed by a competent court7 Provided& 1hat persons $hose births have not been registered in any local civil registry and $ho have not been baptiDed& have one year from the approval of this act $ithin $hich to register their names in the civil registry of their residence" 1he name shall comprise the patronymic name and one or t$o surnames" +ec" 2" Any person desiring to use an a ias shall apply for authority therefor in proceedings li-e those legally provided to obtain *udicial authority for a change of name and no person shall be allo$ed to secure such *udicial authority for more than one a ias. 1he petition for an a ias shall set forth the personIs baptismal and family name and the name recorded in the civil registry& if @(

different& his immigrantIs name& if an alien& and his pseudonym& if he has such names other than his original or real name& specifying the reason or reasons for the desired a ias. 1he *udicial authority for the use of a ias& the christian name and the alien immigrantIs name shall be recorded in the proper local civil registry& and no person shall use any name or names other than his original or real name unless the same is or are duly recorded in the proper local civil registry" 1he ob*ective and purpose of C" A" 0o" (!2 have their origin and basis in Act 0o" @??@& An Act to Regulate the <se in ,usiness 1ransactions of 0ames other than 1rue 0ames& Prescribing the Duties of the Director of the ,ureau of Commerce And 8ndustry in its :nforcement& Providing Penalties for ;iolations thereof& and for other purposes& $hich $as approved on (! 0ovember (9@( and amended by Act 0o" !(!5& approved on 2? 0ovember (9@!" '?) 1he pertinent provisions of Act 0o" @??@ as amended follo$ C+ection (" 8t shall be unla$ful for any person to use or sign& on any $ritten or printed receipt including receipt for taB or business or any $ritten or printed contract not verified by a notary public or on any $ritten or printed evidence of any agreement or business transactions& any name used in connection $ith his business other than his true name& or -eep conspicuously eBhibited in plain vie$ in or at the place $here his business is conducted& if he is engaged in a business& any sign announcing a firm name or business name or style $ithout first registering such other name& or such firm name& or business name or style in the ,ureau of Commerce together $ith his true name and that of any other person having a *oint or common interest $ith him in such contract agreement& business transaction& or business B B B" For a bit of history& the enactment of C"A" 0o" (!2 as amended $as made primarily to curb the common practice among the Chinese of adopting scores of different names and a iases $hich created tremendous confusion in the field of trade" +uch a practice almost bordered on the crime of using fictitious names $hich for obvious reasons could not be successfully maintained against the Chinese $ho& rightly or $rongly& claimed they possessed a thousand and one names" CA" 0o" (!2 thus penaliDed the act of using a! a ias name& unless such a ias $as duly authoriDed by proper *udicial proceedings and recorded in the civil register" '9) 8n >u 8he!2 Chiau ". Re'u+ ic '(0) the Court had occasion to eBplain the meaning& concept and ill effects of the use of an a ias $ithin the purvie$ of C"A" 0o" (!2 $hen $e ruled = 1here can hardly be any doubt that petitionerIs use of a ias HPheng Chiau 9oungI in addition to his real name H9u Cheng ChiauI $ould add to more confusion" 1hat he is -no$n in his business& as manager of the Robert Reid& 8nc"& by the former name& is not sufficient reason to allo$ him its use" After all& petitioner admitted that he is -no$n to his associates by both names" 8n fact& the Anselmo 1rinidad& 8nc"& of $hich he is a customer& -no$s him by his real name" 0either $ould the fact that he had encountered certain difficulties in his transactions $ith government offices $hich re2uired him to eBplain $hy he bore t$o names& *ustify the grant of his petition& for petitioner could easily avoid said difficulties by simply using and stic-ing only to his real name H9u Cheng Chiau"I 1he fact that petitioner intends to reside permanently in the Philippines& as sho$n by his having filed a petition for naturaliDation in ,ranch ; of the abovementioned court& argues the more against the grant of his petition& because if naturaliDed as a Filipino citiDen& there $ould then be no necessity for his further using said a ias& as it $ould be contrary to the usual Filipino $ay and practice of using only one name in ordinary as $ell as business transactions" And& as the lo$er court correctly observed& if he believes Eafter he is naturaliDedG that it $ould be better for him to $rite his name follo$ing the 3ccidental method& Hhe can easily file a petition for change of name& so that in lieu of the name H9u Pheng Chian&I he can& abandoning the same& as- for authority to adopt the name HPheng Chiau 9oung"I All things considered& $e are of the opinion and so hold& that petitioner has not sho$n satisfactory proper and reasonable grounds under the afore2uoted provisions of Common$ealth Act 0o" (!2 and the Rules of Court& to $arrant the grant of his petition for the use of an a ias name" Clearly therefore an a ias is a name or names used by a person or intended to be used by him publicly and habitually usually in business transactions in addition to his real name by $hich he is registered at birth or baptiDed the first time or substitute name authoriDed by a competent authority" A manIs name is simply the sound or sounds by $hich he is commonly designated by his fello$s and by $hich they distinguish him but sometimes a man is -no$n by several different @2

names and these are -no$n as a iases.'(() 4ence& the use of a fictitious name or a different name belonging to another person in a single instance $ithout any sign or indication that the user intends to be -no$n by this name in addition to his real name from that day forth does not fall $ithin the prohibition contained in C"A" 0o" (!2 as amended" 1his is so in the case at bench" 8t is not disputed that petitioner introduced himself in the 3ffice of the 3mbudsman as .3scar PereD&/ $hich $as the name of the messenger of his la$yer $ho should have brought the letter to that office in the first place instead of petitioner" 4e did so $hile merely serving the re2uest of his la$yer to obtain a copy of the complaint in $hich petitioner $as a respondent" 1here is no 2uestion then that .3scar PereD/ is not an a ias name of petitioner" 1here is no evidence sho$ing that he had used or $as intending to use that name as his second name in addition to his real name" 1he use of the name .3scar PereD/ $as made by petitioner in an isolated transaction $here he $as not even legally re2uired to eBpose his real identity" For& even if he had identified himself properly at the 3ffice of the 3mbudsman& petitioner $ould still be able to get a copy of the complaint as a matter of right& and the 3ffice of the 3mbudsman could not refuse him because the complaint $as part of public records hence open to inspection and eBamination by anyone under the proper circumstances" Khile the act of petitioner may be covered by other provisions of la$& such does not constitute an offense $ithin the concept of C"A" 0o" (!2 as amended under $hich he is prosecuted" 1he confusion and fraud in business transactions $hich the a!ti5a ias a4 and its related statutes seeto prevent are not present here as the circumstances are peculiar and distinct from those contemplated by the legislature in enacting C"A" 0o" (!2 as amended" 1here eBists a valid presumption that undesirable conse2uences $ere never intended by a legislative measure and that a construction of $hich the statute is fairly susceptible is favored& $hich $ill avoid all ob*ectionable& mischievous& indefensible& $rongful& evil and in*urious conse2uences" '(2) %oreover& as C"A" 0o" (!2 is a penal statute& it should be construed strictly against the +tate and in favor of the accused"'(@) 1he reason for this principle is the tenderness of the la$ for the rights of individuals and the ob*ect is to establish a certain rule by conformity to $hich man-ind $ould be safe& and the discretion of the court limited" '(!) 8ndeed& our mind cannot rest easy on the proposition that petitioner should be convicted on a la$ that does not clearly penaliDe the act done by him" W2EREFORE& the 2uestioned decision of the Court of Appeals affirming that of the Regional 1rial Court of Davao City is R:;:R+:D and +:1 A+8D: and petitioner C:+AR83 <R+<A is ACV<811:D of the crime charged" SO ORDERED.

SECOND DIVISION 14: C819 3F DA;A3& C819 1R:A+<R:R A0D 14: C819 A++:++3R 3F DA;A3 C819& Petitio!ers& "R" 0o" (25@?@ Present7

P<03& C.& Chairma!& A<+1R8AC%AR180:X& CA##:N3& +R"& C versus C 180 A& and C48C3C0AXAR83& CC.

14: R: 830A# 1R8A# Promulgated7 C3<R1& ,RA0C4 A88& DA;A3 C819 A0D 14: 3;:R0%:01 August (?& 2006 +:R;8C: 80+<RA0C: +9+1:% E +8+G& Res'o!(e!ts. BCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCB @@

DECISION 180 A& C.7 A Davao City Regional 1rial Court ER1CG upheld the taBCeBempt status of the overnment +ervice 8nsurance +ystem E +8+G for the years (992 to (99! in contravention of the mandate under the #ocal overnment Code of (992& '() the precedent set by this Court in Macta!5Ce+u 6!ter!atio!a Air'ort Authorit* ". Do!. Marcos& '2) and the public policy on local autonomy enshrined in the Constitution"'@)
'!)

1he matter $as elevated to this Court directly from the trial court on a pure 2uestion of la$" 1he facts are uncontroverted"

3n ? April (99!& the +8+ Davao City branch office received a 0otice of Public Auction scheduling the public bidding of +8+ properties located in %atina and <las& Davao City for nonC payment of realty taBes for the years (992 to (99! totaling 1$o 4undred 0inety Five 1housand +even 4undred 1$enty 3ne Pesos and +iBty 3ne Centavos EP296&52("6(G"'6) 1he auction $as subse2uently reset by virtue of a deadline eBtension allo$ed by Davao City for the payment of delin2uent real property taBes"'6)

3n 2? Nuly (99!& the +8+ received Karrants of #evy and 0otices of #evy on three parcels of land o$ned by the +8+" Another 0otice of Public Auction $as received by the +8+ on 29 August (99!& setting the date of auction sale for 20 +eptember (99!" 3n (@ +eptember (99!& the +8+ filed a Petitio! for Certiorari& Prohi+itio!& Ma!(amus A!(EOr Dec arator* Re ief $ith the R1C of Davao City" 8t also sought the issuance of a temporary restraining order" 1he case $as raffled to ,ranch (2& presided by Nudge %aBimo %agno #ibre" 3n (@ +eptember (99!& the R1C issued a temporary restraining order for a period of t$enty E20G days&'5) effectively en*oining the auction sale scheduled seven days later" Follo$ing eBchange of arguments& the R1C issued an Or(er dated @ April (996 issuing a $rit of preliminary in*unction effective for the duration of the suit" '?) At the preCtrial& it $as agreed that the sole issue for resolution $as purely a 2uestion of la$& that is& $hether +ections 2@! and 6@! of the #ocal overnment Code& $hich have $ithdra$n real property taB eBemptions of government o$ned and controlled corporations E 3CCsG& have also $ithdra$n from the +8+ its right to be eBempted from payment of the realty taBes sought to be levied by Davao City"'9) 1he parties submitted their respective memoranda" 3n 2? %ay (996& the R1C rendered the Decisio!'(0) no$ assailed before this Court" 8t concluded that not$ithstanding the enactment of the #ocal overnment Code& the +8+ retained its eBemption from all taBes& including real estate taBes" 1he R1C cited +ection @@ of Presidential Decree EP"D"G 0o" ((!6& the Revised overnment +ervice 8nsurance Act of (955& as amended by P" D" 0o" (9?(& $hich mandated such eBemption" 1he R1C conceded that the taB eBempting statute& P"D" 0o" ((!6& $as enacted prior to the #ocal overnment Code" 4o$ever& it noted that the earlier la$ had prescribed t$o conditions in order that the taB eBemption provided therein could be $ithdra$n by future enactments& namely7 E(G that +ection @@ be eBpressly and categorically repealed by la$J and E2G that a provision be enacted to substitute the declared policy of eBemption from any and all taBes as an essential factor for the solvency of the +8+ fund"'(() 1he R1C concluded that both conditions had not been satisfied by the #ocal overnment Code" 1he R1C li-e$ise accorded $eight to #egal 3pinion 0o" (66 of the +ecretary of Nustice dated (6 December (996 concluding that +ection @@ $as not repealed by the #ocal overnment Code& and a memorandum emanating from the 3ffice of the President dated (! February (996 eBpressing the same opinion" '(2) 1he dispositive portion of the assailed Decisio! reads7 @!

0o$ then& in light of the foregoing observation& the court perceives& that the cause of action asseverated by petitioner in its petition has been $ell established by la$ and *urisprudence& and therefore the follo$ing relief should be granted7 aG 1he taB eBemption privilege of petitioner should be upheld and continued and that the $arrants of levy and notices of levy issued by the respondent 1reasurer is hereby voided and declared of no effectJ bG #et a $rit of prohibition be issued restraining the City 1reasurer from proceeding $ith the auction sale of the sub*ect properties& as $ell as the respondents Register of Deeds from annotating the $arrantsLnotices of levy on the certificate of titles of petitioners real properties sub*ect of this suitJ and cG Compelling the City Assessor of Davao City to include the properties of petitioner in the list of properties eBempt from payment of realty taB and if the $arrants and levies issued by the City 1reasurer had been annotated in the memorandum of encumbrance on the certificates of title of petitionerIs properties& to cancel such annotation so that the certificates of titles of petitioners $ill be free from such liens and encumbrances" +3 3RD:R:D"'(@) PetitionersI Motio! for Reco!si(eratio! $as denied by the R1C in an Or(er dated @0 3ctober (996& hence the present petition" Petitioners argue that the eBemption granted in +ection @@ of P"D" 0o" ((!6& as amended& $as effectively $ithdra$n upon the enactment of the #ocal overnment Code& particularly +ections (9@ and 29! thereof" 1hese provisions made the +8+& along $ith all other 3CCs& sub*ect to realty taBes" Petitioners point out that under +ection 6@!EfG of the #ocal overnment Code& even special la$s& such as PD 0o" ((!6& $hich are inconsistent $ith the #ocal overnment Code& are repealed or modified accordingly" 3n the other hand& +8+ contends& as the R1C held& that the re2uisites for repeal are laid do$n in +ection @@ of P"D" 0o" ((!6& as amended& namely that it be done eBpressly and categorically by la$& and that a provision be enacted to substitute the declared policy of eBemption from taBes as an essential factor for the solvency of the +8+ fund" 8t stresses that it had been eBempt from taBation as far bac- as (9@6& $hen its original charter $as enacted through Common$ealth Act 0o" (?6"'(!) 8t asserts further that this Court had previously recogniDed the .eBtraordinary eBemption/ of +8+ in /estate #state of Co!cor(ia /. Lim ". Cit* of Ma!i a& '(6) and such eBemption has similarly been affirmed by the +ecretary of Nustice and the 3ffice of the President in the aforementioned issuances also cited by the R1C" '(6) +8+ li-e$ise notes that had it been the intention of the legislature to repeal +ection @@ of P"D" 0o" ((!6 through the #ocal overnment Code& said la$ $ould have included the appropriate retraction in its repealing clause found in +ection 6@!EfG" 4o$ever& said section& according to the +8+& parta-es the nature of a general repealing provision $hich is accorded less $eight in light of the rule that implied repeals are not favored" Conse2uently $ith its position that it remains eBempt from realty taBation& the +8+ argues that the 0otices of Assessment& Karrants and 0otices of #evy& 0otices of Public Auction +ale and the Annotations of the 0otice of #evy are void a+ i!itio"

A revie$ of the relevant statutory provisions is in order" Presidential Decree 0o" ((!6 $as enacted in (955 by President %arcos in the eBercise of his legislative po$ers" +ection @@& as originally enacted& read7 +ec" @@" :Bemption from taB& #egal Process and #ien"C 8t is hereby declared to be the policy of the +tate that the actuarial solvency of the funds of the +ystem shall be preserved and maintained at all times and that the contribution rates necessary to sustain the benefits under this Act shall be -ept as lo$ as possible in order not to burden the @6

members of the system andLor their employees" " " " Accordingly& not$ithstanding any la$s to the contrary& the +ystem& its assets& revenues including the accruals thereto& and benefits paid& shall be eBempt from all taBes" 1hese eBemptions shall continue unless eBpressly and specifically revo-ed and any assessment against the +ystem as of the approval of this Act are hereby considered paid" As it stood then& +ection @@ merely provided a general rule eBempting the +8+ from all taBes" 4o$ever& +ection @@ of P"D" 0o" ((!6 $as amended in (9?6 by President %arcos& again in the eBercise of his legislative po$ers& through P"D" 0o" (9?(" 8t $as through this latter decree that a second paragraph $as added to +ection @@ delineating the re2uisites for repeal of the taB eBemption en*oyed by the +8+ by incorporating the follo$ing7

T %oreover& these eBemptions shall not be affected by subse2uent la$s to the contrary& such as the provisions of Presidential Decree 0o" (9@( and other similar la$s that have been or $ill be enacted& unless this section is eBpressly and categorically repealed by la$ and a provision is enacted to substitute the declared policy of eBemption from any and all taBes as an essential factor for the solvency of the fund" '(5) 8t bears noting though& and it is perhaps -ey to understanding the necessity of the addendum provided under P"D" 0o" (9?(& that a presidential decree enacted a year earlier& P"D" 0o" (9@(& effectively $ithdre$ all taB eBemption privileges granted to 3CCs" '(?) 8n fact& P"D" 0o" (9@( $as specifically named in the aforeC2uoted addendum as among those la$s $hich& despite passage& $ould not affect the taB eBempt status of +8+" +ection ( of P"D" 0o" (9@( states7 +ec" (" 1he provisions of special or general la$ to the contrary not$ithstanding& all eBemptions from the payment of duties& taBes& fees& imposts and other charges heretofore granted in favor of governmentCo$ned or controlled corporations including their subsidiaries& are hereby $ithdra$n" 1here is no doubt that the +8+ $hich $as established $ay bac- in (9@5 is a 3CC& a fact that +8+ itself admits in its petition for certiorari before the R1C" '(9) 8t thus clear that +ection ( of P"D" 0o" (9@( eBpressly $ithdre$ those eBemptions granted to the +8+" Presidential Decree 0o" (9@( did allo$ the eBemption to be restored in special cases through an application for restoration $ith the +ecretary of Finance& but other$ise& the eBemptions granted to the +8+ prior to the enactment of P"D" 0o" (9@( $ere $ithdra$n" 0otably& P"D" 0o" (9@( $as also an eBercise of legislative po$ers then accorded to President %arcos by virtue of Amendment 0o" 6 to the (95@ Constitution" Khether he $as a$are of the effect of P"D" 0o" (9@( on the +8+Is taBCeBempt status or the ramifications of the decree thereon is un-no$nJ but apparently& he immediately reconsidered the $ithdra$al of the eBemptions on the +8+" 1hus& P"D" 0o" (9?( $as enacted& eBpressly stating that the taBCeBempt status of the +8+ under +ection @@ of P"D" 0o" ((!6 remained in place& not$ithstanding the passage of P"D" 0o" (9@(" 4o$ever& P"D" 0o" (9?( did not stop there& serving merely as it should to restore the previous eBemptions on the +8+" 8t also attempted to proscribe future attempts to alter the taBC eBempt status of the +8+ by imposing unorthodoB conditions for its future repeal" 1hus& as intimated earlier& a second paragraph $as added to +ection @@& containing the restrictions relied upon by the R1C and presently invo-ed by the +8+ before this Court" 1hese la$s have to be $eighed against the #ocal overnment Code of (992& a landmar- la$ $hich implemented the constitutional aspirations for a more eBtensive breadth of local autonomy" 1he Court& in Macta!& $as as-ed to consider the effect of the #ocal overnment Code on the @6

taBability by local governments of 3CCs such as the %actan Cebu 8nternational Airport Authority E%C8AAG" Particularly& %C8AA invo-ed +ection (@@EoG of the #ocal overnment Code as the basis for its claimed eBemption& the provision reading7 +:C1830 (@@. Commo! Limitatio!s o! the /a0i!2 Po4ers of Loca Go"er!me!t =!its. M <nless other$ise provided herein& the eBercise of the taBing po$ers of provinces& cities& municipalities& and barangays shall not eBtend to the levy of the follo$ing7 """" EoG 1aBes& fees or charges of any -ind on the 0ational instrumentalities and local government units" overnment& its agencies and

4o$ever& the Court& in ruling %C8AA nonCeBempt from realty taBes& considered that +ection (@@ 2ualified the eBemption of the 0ational overnment& its agencies and instrumentalities from local taBation $ith the phrase .unless other$ise provided herein"/ 1he Court then considered the other relevant provisions of the #ocal overnment Code& particularly the follo$ing7 +:C1830 (9@" ,ith(ra4a of /a0 #0em'tio! Pri"i e2es. = <nless other$ise provided in this Code, t$, e,e%pt"'n 'r "n&ent"-es /r$nted t', 'r enG'!ed ! $00 pers'ns, C#et#er n$t.r$0 'r G.r"d"&$0& "n&0.d"n/ /'-ern%entB'Cned $nd &'ntr'00ed &'rp'r$t"'ns, eBcept local $ater districts& cooperatives duly registered under R"A" 0o" 69@?& nonCstoc- and nonC profit hospitals and educational institutions& $re #ere ! C"t#dr$Cn .p'n t#e e((e&t"-"t! '( t#"s C'de" +:C1830 2@2" Po4er to Le"* Rea Pro'ert* /a0. F A province or city or a municipality $ithin the %etropolitan %anila area may levy an annual a( "a orem taB on real property such as land& building& machinery& and other improvements not hereafter specifically eBempted" +:C1830 2@!" #0em'tio!s from Rea payment of the real property taB7 Pro'ert* /a0. 55 1he follo$ing are eBempted from

EaG

EbG

EcG

EdG

EeG

Real property o$ned by the Republic of the Philippines or any of its political subdivisions eBcept $hen the beneficial use thereof has been granted& for consideration or other$ise& to a taBable personJ Charitable institutions& churches& parsonages or convents appurtenant thereto& mos2ues& nonCprofit or religious cemeteries and all lands& buildings& and improvements actually& directly& and eBclusively used for religious charitable or educational purposesJ All machineries and e2uipment that are actually& directly and eBclusively used by local $ater districts and governmentCo$ned and controlled corporations engaged in the distribution of $ater andLor generation and transmission of electric po$erJ All real property o$ned by duly registered cooperatives as provided for under R"A" 0o" 69@?J and %achinery and e2uipment used for pollution control and environmental protection" :Bcept as provided herein& $n! e,e%pt"'n (r'% p$!%ent '( re$0 pr'pert! t$, pre-"'.s0! /r$nted t', 'r present0! enG'!ed !, $00 pers'ns, C#et#er n$t.r$0 'r G.r"d"&$0& "n&0.d"n/ $00 /'-ern%entB'Cned 'r &'ntr'00ed &'rp'r$t"'ns $re #ere ! C"t#dr$Cn .p'n t#e e((e&t"-"t! '( t#"s C'de" E:mphasis supplied"G :vidently& +ection (@@ $as not intended to be so absolute a prohibition on the po$er of # <s to taB the 0ational overnment& its agencies and instrumentalities& as evidenced by these cited provisions $hich .other$ise provided"/ ,ut $hat $as the eBtent of the limitation under +ection (@@O 1his is ho$ the Court& in a discussion of farCreaching conse2uence& defined the parameters in Macta!7 1he foregoing sections of the # C spea- of7 EaG the limitations on the taBing po$ers of local government units and the eBceptions to such limitationsJ and EbG the rule on taB eBemptions and the eBceptions thereto" 1he use of eBceptions or provisos in these sections& as sho$n by the follo$ing clauses7 @5

E(G E2G E@G E!G

Uunless other$ise provided hereinU in the opening paragraph of +ection (@@J U<nless other$ise provided in this CodeU in +ection (9@J Unot hereafter specifically eBemptedU in +ection 2@2J and U:Bcept as provided hereinU in the last paragraph of +ection 2@!

initially hampers a ready understanding of the sections" 0ote& too& that the aforementioned clause in +ection (@@ seems to be inaccurately $orded" 8nstead of the clause Uunless other$ise provided herein&U $ith the UhereinU to mean& of course& the section& it should have used the clause Uunless other$ise provided in this Code"U 1he former results in absurdity since the section itself enumerates $hat are beyond the taBing po$ers of local government units and& $here eBceptions $ere intended& the eBceptions are eBplicitly indicated in the neBt" For instance& in item EaG $hich eBcepts income taBes U$hen levied on ban-s and other financial institutionsUJ item EdG $hich eBcepts U$harfage on $harves constructed and maintained by the local government unit concernedUJ and item E(G $hich eBcepts taBes& fees and charges for the registration and issuance of licenses or permits for the driving of Utricycles"U 8t may also be observed that $ithin the body itself of the section& there are eBceptions $hich can be found only in other parts of the # C& but the section interchangeably uses therein the clause& UeBcept as other$ise provided hereinU as in items EcG and EiG& or the clause UeBcept as provided in this CodeU in item E*G" 1hese clauses $ould be obviously unnecessary or mere surplusages if the opening clause of the section $ere U<nless other$ise provided in this CodeU instead of U<nless other$ise provided herein"U 8n any event& even if the latter is used& since under +ection 2@2 local government units have the po$er to levy real property taB& eBcept those eBempted therefrom under +ection 2@!& then +ection 2@2 must be deemed to 2ualify +ection (@@" T#.s, re$d"n/ t'/et#er Se&t"'ns 988, 787, $nd 785 '( t#e LGC, Ce &'n&0.de t#$t $s $ /ener$0 r.0e, $s 0$"d d'Cn "n Se&t"'n 988, t#e t$,"n/ p'Cers '( 0'&$0 /'-ern%ent .n"ts &$nn't e,tend t' t#e 0e-! '(, inter alia, Ht$,es, (ees $nd &#$r/es '( $n! E"nd 'n t#e N$t"'n$0 G'-ern%ent, "ts $/en&"es $nd "nstr.%ent$0"t"es, $nd 0'&$0 /'-ern%ent .n"tsHI #'Ce-er, p.rs.$nt t' Se&t"'n 787, pr'-"n&es, &"t"es, $nd %.n"&"p$0"t"es "n t#e Metr'p'0"t$n M$n"0$ Are$ %$! "%p'se t#e re$0 pr'pert! t$, e,&ept 'n, inter alia, Hre$0 pr'pert! 'Cned ! t#e Rep. 0"& '( t#e P#"0"pp"nes 'r $n! '( "ts p'0"t"&$0 s. d"-"s"'ns e,&ept C#en t#e ene("&"$0 .se t#ere'( #$s een /r$nted, ('r &'ns"der$t"'n 'r 't#erC"se, t' $ t$,$ 0e pers'n,H $s pr'-"ded "n "te% ($) '( t#e ("rst p$r$/r$p# '( Se&t"'n 785. As to taB eBemptions or incentives granted to or presently en*oyed by natural or *udicial persons& including governmentCo$ned and controlled corporations& +ection (9@ of the # C prescribes the general rule& viD"& they are $ithdra$n upon the effectivity of the # C& eBcept those granted to local $ater districts& cooperatives duly registered under R"A" 0o" 69@?& nonCstoc- and nonCprofit hospitals and educational institutions& and unless other$ise provided in the # C" 1he latter proviso could refer to +ection 2@! $hich enumerates the properties eBempt from real property taB" ,ut the last paragraph of +ection 2@! further 2ualifies the retention of the eBemption insofar as real property taBes are concerned by limiting the retention only to those enumerated thereinJ all others not included in the enumeration lost the privilege upon the effectivity of the # C" %oreover& even as to real property o$ned by the Republic of the Philippines or any of its political subdivisions covered by item EaG of the first paragraph of +ection 2@!& the eBemption is $ithdra$n if the beneficial use of such property has been granted to a taBable person for consideration or other$ise" +ince the last paragraph of +ection 2@! une2uivocally $ithdre$& upon the effectivity of the # C& eBemptions from payment of real property taBes granted to natural or *uridical persons& including governmentCo$ned or controlled corporations& eBcept as provided in the said section& and the petitioner is& undoubtedly& a governmentC o$ned corporation& it necessarily follo$s that its eBemption from such taB granted it in +ection (! of its Charter& R"A" 0o" 696?& has been $ithdra$n" Any claim to the contrary can only be *ustified if the petitioner can see- refuge under any of the eBceptions @?

provided in +ection 2@!& but not under +ection (@@& as it no$ asserts& since& as sho$n above& the said section is 2ualified by +ections 2@2 and 2@!" '20) E:mphasis supplied"G 1his Court& in Macta!& ac-no$ledged that under +ection (@@& instrumentalities $ere generally eBempt from all forms of local government taBation& unless other$ise provided in the Code" 3n the other hand& +ection 2@2 .other$ise provides/ insofar as it allo$ed local government units to levy an a( "a orem real property taB& irrespective of $ho o$ned the property" At the same time& the imposition of real property taBes under +ection 2@2 is in turn 2ualified by the phrase .not hereinafter specifically eBempted"/ 1he eBemptions from real property taBes are enumerated in +ection 2@!& $hich specifically states that only real properties o$ned .by the Republic of the Philippines or any of its political subdivisions/ are eBempted from the payment of the taB" Clearly& instrumentalities or 3CCs do not fall $ithin the eBceptions under +ection 2@!" Korth rec-oning& ho$ever& is an essential difference bet$een the situation of the %C8AA Eand most other 3CCs& for that matterG and that of the +8+" <nli-e most other 3CCs& there is a statutory provisionM +ection @@ of P"D" 0o" ((!6& as amendedM$hich imposes conditions on the subse2uent $ithdra$al of the +8+Is taB eBemptions" 1he R1C *ustified the affirmance of the taB eBemptions based on the nonCcompliance by the #ocal overnment Code $ith these conditionalities& and not by reason of a general proposition that 3CCs or instrumentalities remain eBempt from local government taBation"

Absent +ection @@ of P"D" 0o" ((!6& as amended& there $ould be no impediment in s2uarely applying the eBpress provisions of +ections (9@& 2@2 and 2@! of the #ocal overnment Code& as the Court did in Macta! and recently in Phi i''i!e Rura # ectric Coo'erati"es Associatio!& 6!c. et a . ". )ecretar* of 6!terior A!( Loca Go"er!me!t& et a . '2() and in ruling that the taB eBemptions of +8+ $ere $ithdra$n by the Code" 1hus& the crucial proposition is $hether the +8+ taB eBemptions can be deemed as $ithdra$n by the #ocal overnment Code not$ithstanding +ection @@ of P"D" 0o" ((!6 as amended" Concededly& it does not appear that at the very least& the second conditionality of +ection @@ has been met" 0o provision has been enacted .to substitute the declared policy of eBemption from any and all taBes as an essential factor for the solvency of the fund"/ '22) 9et the Court is averse to employing this frame$or-& in the first place as utiliDed by the R1C& for $e recogniDe a fundamental fla$ in +ection @@& particularly the amendatory second paragraph introduced by P"D" 0o" (9?("

1he second paragraph of +ection @@ of P"D" 0o" ((!6& as amended& effectively imposes restrictions on the competency of the Congress to enact future legislation on the taBability of the +8+" 1his places an undue restraint on the plenary po$er of the legislature to amend or repeal la$s& especially considering that it is a la$ma-erIs act that imposes such burden" 3nly the Constitution may operate to preclude or place restrictions on the amendment or repeal of la$s" Constitutional dicta is of higher order than legislative statutes& and the latter should al$ays yield to the former in cases of irreconcilable conflict" 8t is a basic precept that among the implied substantive limitations on the legislative po$ers is the prohibition against the passage of irrepealable la$s" '2@) 8rrepealable la$s deprive succeeding legislatures of the fundamental best senses carte + a!che in crafting la$s appropriate to the operative milieu" 1heir allo$ance promotes an unhealthy stasis in the legislative front and dissuades dynamic democratic impetus that may be responsive to the times" As +enior Associate Nustice Reynato +" Puno once observed& .'t)o be sure& there are no irrepealable la$s *ust as there are no irrepealable Constitutions" Change is the predicate of progress and $e should not fear change"/'2!) %oreover& it $ould be noBious anathema to democratic principles for a legislative body to have the ability to bind the actions of future legislative body& considering that both assemblies are @9

regarded $ith e2ual footing& eBercising as they do the same plenary po$ers" Perpetual infallibility is not one of the attributes desired in a legislative body& and a legislature $hich attempts to forestall future amendments or repeals of its enactments labors under delusions of omniscience" 8t might be argued that +ection @@ of P"D" 0o" ((!6& as amended& does not preclude the repeal of the taBCeBempt status of +8+& but merely imposes conditions for such to validly occur" 9et these conditions& if honored& have the precise effect of limiting the po$ers of Congress" 1hus& the same rationale for prohibiting irrepealable la$s applies in prohibiting restraints on future amendatory la$s" President %arcos& $ho eBercised his legislative po$ers in amending P"D" 0o" ((!6& could not have demanded obeisance from future legislators by imposing restrictions on their ability to legislate amendments or repeals" 1he concerns that may have militated his enactment of these restrictions need not necessarily be shared by subse2uent Congresses" Ke do not mean to trivialiDe the need to ensure the solvency of the +8+ fund& a concern that has seen legislative eBpression& even $ith the most recently enacted overnment +ervice '26) 8nsurance +ystem Act of (995" 9et at the same time& $e recogniDe that Congress has the putative authority& through valid legislation& to diminish such fund& or even abolish the +8+ itself if it so desires" 1he +8+ may provide vital services and security to employees of the civil service& yet it is not a sacred co$ that is beyond abolition by Congress if& for eBample& more innovative methods are devised to ensure stable pension funds for government employees" 8f Congress has the inherent po$er to abrogate the +8+ itself& then it necessarily has the ability to inflict less detrimental burdens& such as abolishing its taBCeBempt status" 8f there could be legal authority proscribing the Congress from enacting such legislation& such should be sourced from the Constitution itself& and not from antecedent statutes $hich $ere themselves enacted by legislative po$er"

1he CourtIs position is aligned $ith entrenched norms of statutory construction" 8n Duarte ". Da(e&)*+, the Court cited $ith approval #e$isI +outherland on +tatutory Construction& $hich states7 A state legislature has a plenary la$Cma-ing po$er over all sub*ects& $hether pertaining to persons or things& $ithin its territorial *urisdiction& either to introduce ne$ la$s or repeal the old& unless prohibited eBpressly or by implication by the federal constitution or limited or restrained by its o$n" 8t cannot bind itself or its successors by enacting irrepealable la$s eBcept $hen so restrained" :very legislative body may modify or abolish the acts passed by itself or its predecessors" 1his po$er of repeal may be eBercised at the same session at $hich the original act $as passedJ and even $hile a bill is in its progress and before it becomes a la$" T#"s 0e/"s0$t.re &$nn't "nd $ (.t.re 0e/"s0$t.re t' $ p$rt"&.0$r %'de '( repe$0. It &$nn't de&0$re "n $d-$n&e t#e "ntent '( s. se1.ent 0e/"s0$t.res 'r t#e e((e&t '( s. se1.ent 0e/"s0$t"'n .p'n e,"st"n/ st$t.tes " E:mphasis supplied"G'25) 1he citation is particularly a'ro'os to our present tas-& since the 2uestion for resolution is primarily one of statutory construction& i.e.& $hether or not +ection @@ of P"D" 0o" ((!6 has been repealed by the #ocal overnment Code" 8t is evident that $e cannot render effective the amendatory second paragraph of +ection @@ as the R1C did& for by doing so& $e $ould be giving sanction to a disingenuous means employed through legislative po$er to bind subse2uent legislators to a particular mode of repeal" 1hus& the t$o conditionalities of +ection @@ cannot bear relevance on $hether the #ocal overnment Code removed the taBCeBempt status of the +8+" 1he eBpress $ithdra$al of all taB eBemptions accorded to all persons& natural or *uridical& as stated in +ection (9@ of the #ocal overnment Code& applies $ithout impediment to the present case" +uch position is bolstered by the other cited provisions of the #ocal overnment Code& and by the Macta! ruling" 1here are other reasons that guide us to construe the #ocal overnment Code in favor of the City of DavaoIs position" +ection 6 of the #ocal overnment Code provides the guidelines on ho$ to construe the CodeIs provisions in cases of doubt& and they are selfCeBplanatory& thus7 !0

+ection 6" Ru es of 6!ter'retatio!" = 8n the interpretation of the provisions of this Code& the follo$ing rules shall apply7 EaG An! pr'-"s"'n 'n $ p'Cer '( $ 0'&$0 /'-ern%ent .n"t s#$00 e 0" er$00! "nterpreted "n "ts ($-'r, $nd "n &$se '( d'. t, $n! 1.est"'n t#ere'n s#$00 e res'0-ed "n ($-'r '( de-'0.t"'n '( p'Cers $nd '( t#e 0'Cer 0'&$0 /'-ern%ent .n"t. An! ($"r $nd re$s'n$ 0e d'. t $s t' t#e e,"sten&e '( t#e p'Cer s#$00 e "nterpreted "n ($-'r '( t#e 0'&$0 /'-ern%ent .n"t &'n&ernedJ EbG 8n case of doubt& any taB ordinance or revenue measure shall be construed strictly against the local government unit enacting it& and liberally in favor of the taBpayer" An! t$, e,e%pt"'n, "n&ent"-e 'r re0"e( /r$nted ! $n! 0'&$0 /'-ern%ent .n"t p.rs.$nt t' t#e pr'-"s"'ns '( t#"s C'de s#$00 e &'nstr.ed str"&t0! $/$"nst t#e pers'n &0$"%"n/ "t J E:mphasis supplied"G Also $orthy of note is that the Constitution itself promotes the principles of local autonomy as embodied in the #ocal overnment Code" 1he +tate is mandated to ensure the autonomy of local governments&'2?) and local governments are empo$ered to levy taBes& fees and charges that accrue eBclusively to them& sub*ect to congressional guidelines and limitations" '29) 1he principle of local autonomy is no mere passing dalliance but a constitutionally enshrined precept that deserves respect and appropriate enforcement by this Court"

Ke are a$are that this stance runs contrary to that $hich $as adopted by the +ecretary of Nustice in his 3pinion dated 22 Nuly (99@& as $ell as the memorandum from the 3ffice of the President dated (! February (996& eBpressing the same opinion" 4o$ever& statutory interpretations of these eBecutive bodies do not hold decisive s$ay upon the *udiciary but are merely persuasive" 1hese issuances cannot derogate from the binding precept that one legislature cannot enact irrepealable legislation or limit or restrict its o$n po$er or the po$er of its successors as to the repeal of statutes" '@0) 1he act of one legislature is not binding upon and does not tie the hands of future legislatures" '@() 1he +8+Is taBCeBempt status& in sum& $as $ithdra$n in (992 by the #ocal overnment Code but restored by the overnment +ervice 8nsurance +ystem Act of (995& the operative provision of $hich is +ection @9"'@2) 1he sub*ect real property taBes for the years (992 to (99! $ere assessed against +8+ $hile the #ocal overnment Code provisions prevailed and& thus& may be collected by the City of Davao"

K4:R:F3R:& premises considered& the Petitio! for Re"ie4 is hereby RA01:D" 1he appealed Decisio! of the Regional 1rial Court ofDavao City& ,ranch (2 is R:;:R+:D and +:1 A+8D:" Costs (e oficio" +3 3RD:R:D"

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